Episode Transcript
[00:00:01] Speaker A: Welcome back to another episode of Deeds in the desert. I'm your host today, Izzy Urizari. And with me, I have the president of ignite funding, Kerry Cook, ready to talk about today's topic.
[00:00:10] Speaker B: What's the topic?
[00:00:12] Speaker A: All right, we're going to go over on reasons why people haven't invested with ignite funding, but what we're going to do is we're going to talk about it from multiple perspectives. Let's talk about it from people who don't know about trust deeds. And let's talk about it from people who do know about trustee, people who may have talked to us, people who may have already received our marketing, people we've seen at events, people who have seen everything from us, and they're maybe twelve months into road and why they still haven't invested with us. So we're gonna go from the beginner's guide. If you wanna say on why people haven't invested in trust deeds from the get go, I'll start it off with my initial thought is they don't know. They don't know what a trustee is. They know about stocks, bonds, mutual funds, and that's about it. What would you say for somebody who just hears the word trustees, where would you start? Where would you have them look into it and what would make them initially, the minute they look it up, not want to invest?
[00:01:07] Speaker B: Okay. That was three questions.
[00:01:08] Speaker A: I know.
[00:01:09] Speaker B: Let me unpack the first one.
I don't think in general, people have ever heard of a trustee.
[00:01:16] Speaker A: Correct?
[00:01:16] Speaker B: But I think in general, everybody has heard of a mortgage.
[00:01:20] Speaker A: Yes.
[00:01:21] Speaker B: And when you think of your traditional mortgage, a trustee is no different. And in fact, if you cut the United States in half, half of the United States refers to it as a deed of trust and the other half refers to it as a mortgage. So a deed of trust. When you're investing in a deed of trust, it's really you acting in the capacity of the bank. So when you go and you take a mortgage out, you're taking it out with a bank, you're paying interest and your principal to the bank with a deed of trust. The investor is the one that's receiving the interest and the principal return from the borrower. And in this particular case, yeah, in this particular case, a trustee is just that. We're taking a borrower's financing needs. You have a broker in between, which is us ignite funding, and then you have the investor. Borrower's looking for financing, investors looking to earn a double digit return. We put the two parties together and you have of a trustee investment?
[00:02:20] Speaker A: It's about as layman as it gets on that. Let's talk a little bit about what people are used to then, in that sense is like a fund or a reit. When they want to invest in those types of things, it's typically because it is attached to the stock market in a sense. But the other thing that they do is when they do invest in those, they don't even know what they're investing in half the time unless they dig deep and they can figure out what they're investing in. But would you say people typically like to go towards those because they're easier to invest in?
[00:02:45] Speaker B: Well, I think in general, we all understand, many of us have 401K plans or many of us have invested in a stock before. Right. That general knowledge or base knowledge is there. But is it really? So in your 401K plan, I wonder how many people have actually looked at their 401K plan, dissected it and said, I'm in this mutual fund, I'm in that mutual fund, I'm in this. How many of us have actually done that? Very few.
[00:03:12] Speaker A: Very few.
[00:03:12] Speaker B: Right. So we understand the concept. So when it comes to investing in real estate, you have two options. You can either invest directly in the collateral, so you purchase a rental property, you invest in a trustee that's collateralized by that asset, or you take the easy way out, kind of like a 401K plan. Many 401K plans are set up as set it and forget it. You're in the 2040 plan. You're in the 2050 plan. You're the 2060 plan. Right. You're in a plan, you set it, you forget it. You really never look at the, the granular details. With a real estate fund, that's exactly the same thing.
[00:03:51] Speaker A: Same, yeah.
[00:03:51] Speaker B: So take a mutual fund and a real estate fund. If we're comparing real estate and market related assets, that real estate fund is just layered with a variety of different assets inside of it. But you're investing in the entire fund itself, right?
[00:04:07] Speaker A: Yeah.
[00:04:08] Speaker B: But when you invest in that fund, when it's real estate, you're not investing so much in the asset. I mean, it's a core value of the fund, but you're really investing in the people that are managing that fund.
[00:04:18] Speaker A: Yeah. You have to make sure you have people who know what the hell they're doing. Yeah.
[00:04:21] Speaker B: And that's all it's about. But when you invest in a rental property, it's your property.
[00:04:26] Speaker A: Right.
[00:04:27] Speaker B: You know who's renting it. You know when they come and go, you know, when the toilet plugs up, you know all of those things. When you invest in a deed of trust or a trustee with us, you know what the asset is because you're selecting it. So in that particular case, I mean, varying differences, obviously, between the two, but we all understand the market general terms, but I don't think we all understand all the different aspects of real estate investing.
[00:04:55] Speaker A: I would agree with that. I think that's the hardest part for when people are doing their due diligence, especially a beginner. There's so much information, they don't even know where to even start. And I think that's what deter some people off, why they haven't invested with us, because it's like information overload. You know, I think that's also the reason why that some of these investors do dig too deep into the projects and they start almost underwriting the underwriting, and they're wanting to do things that, you know, that that's not what they're good at. You know, if you're an investor, remember, just be the investor. But I guess that's also the hard part on why some people haven't invested with us, because they're more of the doers. I love using that term. They're doers. Right. They're used to buying the property. They're used to fixing it and flipping it, handling the underwriting, handling the funding, and doing it all their self. And I think that's what some people don't want to do is get involved with us, because it is passive. It truly is passive. We do all the heavy lifting. Yes. You pick the project at the end of the day, but you're not managing that.
[00:05:52] Speaker B: But you know where that fear may have come from.
[00:05:54] Speaker A: What's that?
[00:05:55] Speaker B: You know, if you, if you roll back a little bit, because, you know, we have some, I'll call it more mature investors. And those more mature investors have probably invested in 6789. They remember what it was like to lose money.
[00:06:16] Speaker A: Yeah.
[00:06:17] Speaker B: And so we've got probably, I'm gonna go out on a limb here. This is probably a high number, 5% of our investor base is really interested in the intricate details of the investment itself, where they are re underwriting.
[00:06:30] Speaker A: Super analytical. Yeah.
[00:06:31] Speaker B: And there's nothing wrong with that.
[00:06:32] Speaker A: No.
[00:06:32] Speaker B: But the whole premise behind how I've built this business is for us to be the ones that do the job for you. Right. We become the dependable group that does the underwriting, that services the loan, that collects on the loan. That's not normal, though. Izzy, what they're used to or what they have been, they experienced in investing in trustees is a broker that just underwrites, feeds you the investment and then pieces out. Pieces out, right. With us, it's a little bit different. I want to see it all the way through. Some people refer to me as a revenue whore, and that's fine. But my investors always taken care of. Yes. Do we make money on originating it? But that's us doing basically yours and our due diligence, definitely. So making sure that that asset is, you know, the best, most well risk adjusted asset we could possibly put in front of our investors. And then to service that asset, we know that borrower and that project better than anybody else.
[00:07:33] Speaker A: I think that's something that people don't really understand either, though.
[00:07:36] Speaker B: But there's no reason to outsource that when you know it, right? And you're willing to maintain that relationship with the borrower. And I think that's important for people to understand because in 0708, if you had situations that occurred with deeds of trust that you invested in, it was likely a third party servicer that then became a third party collection agency. So, you know, so many variables that you have to look at.
[00:07:59] Speaker A: I think that's a really good point that you brought up because I literally just brought that up with the new sales staff that we're training right now. And they asked me that same question. I'm like, you have to pay attention to everybody's own experiences. Some people have some weird ideologies, too. I'm not going to invest in Colorado because my ex husband lives in Colorado. I'm not going to invest in Texas because I don't believe in the way they run their state, whatever have you. But that those are little barriers that we have to overcome, but they have to be willing to overcome those because at the end of the day, it's a blanket term. When you talk about zero, eight to eleven and everything. If you were in real estate, everybody pretty much lost at that point. So I think that's really hard for some people to come over. But again, do your due diligence, get over it, learn what you can about the new type of investment. So speaking of that, let's go over to some of the common misconceptions about trustees in general. And I think what some people, why people want to invest in them is because of who comes to a hard money lender. And they automatically assume, oh, well, they're not a bankable borrower, they're a crap developer who can't get any financing. So they had to go to what they want to call a loan shark, if you want to say, which is not what we do at all. But I think that's one thing, is that they think that it's not a good project because of who they had to come to. What would you say to an investor about that?
[00:09:12] Speaker B: Well, first and foremost, my son does refer to me as a loan shark.
That's funny. Yeah. And when borrowers don't make payments. Yeah. I will go on the attack because that's our job. But your question, as it pertains to why that initial fear happens, I guess, or fear by paralysis kind of thing, is it's hard to let go of our personal cash. Right. It's difficult to say, yeah. I want to invest in trustees and do my due diligence and all this other hoof law that comes along with it and how you trust it and why you should trust it and all the reasons behind wanting to start down this path.
And I may not be answering your question directly, but you have to overcome those obstacles. Right. You have to overcome. And you have to. At some point when you're doing your due diligence, you have to trust in the company, you have to trust in the investment. You have to trust in yourself making the right decision.
[00:10:21] Speaker A: Three great things on why people. If you don't have all those.
[00:10:24] Speaker B: Yeah. But you have to possess all three of those. You should possess all three of those before you make an investment. So, you know, do your due diligence. Like you said, do your due diligence on the company. How long have we been around?
[00:10:39] Speaker A: We are coming up. I mean, we started doing this thing in 2011, obviously on the commercial side, but I mean, we've been in the game since 95, so it's coming up to almost 30 years. Yeah.
[00:10:50] Speaker B: So start there.
[00:10:51] Speaker A: Yeah.
[00:10:51] Speaker B: Right. Get to know that company. Get to know the people behind that company.
[00:10:54] Speaker A: Yeah.
[00:10:55] Speaker B: Do your research and see who's running it.
[00:10:58] Speaker A: Yeah.
[00:10:58] Speaker B: Because even though you're investing in the collateral, you're still investing in the, the analytical concepts behind those individuals. How risk averse are they? How successful have they been? You need to look at those things 100% for sure.
[00:11:16] Speaker A: I think this is a great point. Really quick to make sure that if people are really enjoying this information and they like what they're hearing, to make sure to subscribe, comment below. Share this out there. We're on several different platforms, from Spotify to Apple podcasts to now on YouTube. That's why people are able to see us here live now. So we have some visuals. Definitely something that I think people really need to try to grasp on their own time. So if they can't catch it right now, make sure they do subscribe on a later time and they'll be able to listen to us. So great. Segue into the next thing I wanted to talk about is let's talk a little bit more about the clients who have seen us for years. Let's talk about the clients who have seen our marketing. They've seen our deal flow. They realize we're the real deal and they don't. They still haven't invested yet. Right. And I'm actually going to bring up an example that happened today with one of our salespeople who did reach out to somebody who's been inside of our marketing for the past year. And his biggest comeback was, oh, I'm getting 20 or 30% already somewhere else, then stay there.
[00:12:17] Speaker B: My comment to that would be I'm not willing to take on that degree of risk.
[00:12:22] Speaker A: Right.
[00:12:22] Speaker B: You know, we do not lend to borrowers to harm them financially. We lend to borrowers so that they can be successful, so that they can continue to borrow with us, that our investors can continue to receive the double digit returns.
[00:12:37] Speaker A: Yeah.
[00:12:37] Speaker B: You know, you're kind of going back into that. You know, Kerry, why didn't you increase your interest rates? Everybody else is.
[00:12:44] Speaker A: Great episode, by the way.
[00:12:46] Speaker B: And yes, it was. And you know, I still stand by that. You know, when the interest rates were at 2%, we were at twelve. When the interest rates are at 8%, we're at twelve. Why? Why are we doing that? You know, it doesn't help the borrower for us to increase it to 20%. What does it do?
[00:13:04] Speaker A: I mean, it hurts everybody inside.
[00:13:06] Speaker B: Yeah. It creates this.
[00:13:07] Speaker A: It might not even come to us to even borrow at that point.
[00:13:10] Speaker B: True.
[00:13:10] Speaker A: Can they even borrow?
[00:13:11] Speaker B: True.
[00:13:12] Speaker A: Yeah.
[00:13:12] Speaker B: But if they're coming to you at 20%, they're desperate.
[00:13:15] Speaker A: Oh, 100%.
[00:13:17] Speaker B: You know, there's still a lot of lenders out there at 8910.
[00:13:21] Speaker A: Yeah.
[00:13:21] Speaker B: So for us being at twelve, we're still on the higher end. If you look at the full gamut of what's going on, if you want to invest in twenties and that works for you, that's great. I can tell you that financial stack does not work for our borrowers. Our borrowers are used, our borrowers are bankable. They're used to the lower interest rates. They're not going to go after 20 when they could safely go after twelve money themselves and still return a positive return to our investors, it's super, super important to keep those borrowers financial strength very strong.
[00:14:00] Speaker A: I agree completely with all that. I think that is one thing that we try to train everybody here to understand is like, I know some salespeople get really bummed out. Well, what do I say? How do I respond to that? And you hit it around the head. Stay. That's.
[00:14:12] Speaker B: Stay where you're at.
[00:14:13] Speaker A: We're not forcing you to come over here at that point. And sometimes, I may be pushing this bit, but are you really earning 20, 30%? You know, like, when you really break it down, what are you getting? What have you potentially lost in that period of time? But people don't want to see it that way. No, totally understand. So let's go into the second part of it once again. You've seen everything we're putting out there, all the stuff we have going on, and you still haven't invested with us. I think a lot of people try to use this as their back pocket, as saying why they don't want to invest with us, but they're used to the control factor, and they say, oh, I want it. I want to find the perfect loan. I want to find the perfect investment, and I want to be the only investor on that loan.
What should we respond to that then?
[00:14:57] Speaker B: You probably should lend your own money to your friends and family that you believe you can trust.
Good luck.
[00:15:06] Speaker A: I won't be doing that.
[00:15:08] Speaker B: But that's okay, right? I mean, this type of investing, it's not for everyone.
If you stay on the sidelines for years waiting for the perfect loan, you will continue to be on the sidelines for years. There's a bunch of statistics out there about, I'll go back to the market for just a second. Those who stay in will earn 10,000 times the amount that those that stay out.
It's a long play with all types of investments. It's a long play. When you start investing in trustees, you should look at this as a ten to 15 year plan. Right. It should be a portion of your portfolio. Real estate should be a portion of everybody's portfolio.
What percentage? That's up to you, where your comfort level is. But ultimately, if you stay in trust deeds long enough, the same thing happens with the market. It goes up, it goes down. There are times where you'll have defaults. It goes up, it goes down.
Overall, if you look at it long play to make a 10% return over a 15 year period.
[00:16:12] Speaker A: Consistence.
[00:16:13] Speaker B: Yeah. Double your money. I mean, come on, there's very few investments that have that level of consistency that are collateralized, very, very few. And if you're getting twenties on it, stick with it. It's not what you're going to get here.
[00:16:28] Speaker A: I mean, I always like that providing the consistency, the passive fixed income is huge, but I think we are also, we provide a lot of reliability. You know, I want to touch a little bit on that right now and talk about something we haven't talked about at all. And I know we've been very humble and prideful about it, but I want to talk about a little bit off topic. Covid, you know, we heard so many things during COVID and there were so many bad things that were going on in the world, a lot of horrible things. But the one thing we heard great from our investors was we were the only thing providing some of our investors income. We were the only investment that was truly producing during that time. You know, we didn't miss any borrower payments during that time. And I think it's. It shows a test to, you know, our investment and what we have built here, which is huge. But I think those are some of the things that people need to reflect on. They don't look at what happened during that time of their other investments. And it's not something that we were really once again wanted to put out there. But I think one thing people don't do is go look at the investment as a whole. You know, people always look at the stock market 30, 40 years and look at all the major events that happened on. Right. But people look at it in the negative sense, like, oh, everybody lost. Everybody at that loss. You know, it was so good to see that we were something that was positive for some people and that we were getting into that. And I think that's another instance on why people just don't invest sometimes because they don't know. They don't know what they don't know and they don't realize what happened during that time. And I don't think sometimes people just glance over some of the stuff we put out. You know, people skim what we're putting out there. They don't really read. And if they're not going to put the effort, that's kind of the last thing I wanted to touch on, is if they don't put the effort to want to learn more about this investment, then they're just going to be stuck in their ways. And there's really not a lot we can do. I don't think there's much, you know, sending an email is great, calling them on the phone is great. Sending a text, you know, hey, we got a new loan coming out, but at the end of the day, they have to want this. That is another reason on why people haven't invested. They have to want this if they're okay with the 20% to 30%. At what risk? Totally fine.
[00:18:31] Speaker B: Or no percent sitting in the savings account, you know, earnings, a smaller interest rate. And that's okay. You know, all of us have a different risk profile.
And, you know, it's not for everyone.
It is for most, because, like I said, diversification in your portfolio is key. If you don't want to have the headache of, you know, the hands on rental properties, those sorts of things. Or maybe you're aging and you're just tired of it, and there's an opportunity right now to sell, pull that equity out, and invest in something that's more passive, then we're probably the right fit for you.
But it all comes down to that. You bring up a great point. The history. This is not our first rodeo.
[00:19:12] Speaker A: Yeah, definitely.
[00:19:12] Speaker B: And even before I worked at ignite funding, you know, I have been in real estate all my life. Yeah, no, just kidding.
There's no gray hair here. But, you know, I've been in real estate in this type of environment since 2005, so I know what 2008 was like. I know what it's like to take back properties in a collapsed market because I spent seven years, you know, really working through all of those assets. And Covid was, you know, very interesting for us. I'm very headstrong, and, you know, Covid for me was like business as usual.
[00:19:52] Speaker A: That was the term right there.
[00:19:54] Speaker B: You know, for me, I was like, we're gonna shut down for 12 hours until we get all our stuff together and send all our employees home, because governor says we have to. And we're gonna do that for six weeks. But when six weeks is over, and even when one day was over, let's get to work. You know, we have a job to do. We take the responsibility of, you know, protecting our investors capital very seriously. I mean, this is what we eat, breathe, and sleep. I mean, this is what we do. So let us do our job, and let us prove to you the results that we have. And if you're on a default from time to time, it will happen. If it's when companies have hardships from time to time, too. In the stock market, you see the stock prices go up and down.
There's no difference with any investment that you have. But give us some time. We'll work it out. That's why we underwrite, that's why we service, that's why we collect. We are one stop shop. So if we can't provide you a level of protection that makes you comfortable to invest, then this probably isn't the right fit for you. For everybody else that's looking for a collateralized real estate investment, double digit returns, where we take the borrower's relationship just as important as the investor, because it is right. It's really just reinforcing their return, then we are the right spot for you.
[00:21:11] Speaker A: Well, there goes my outro. That was pretty good for me right there. I mean, that culminates everything. That is truly what everything is. And to just add on that before we end today's episode is I just want everybody, whether it's any of the listeners out there, our current investors, anybody who's thinking about investing in trustees, whether it's with ignite funding or not, dig deep and find out why you're not investing. And don't just look at it from the trustee standpoint, look at it from every investment. Why are you not investing in that? Because you said a good point. If you're sitting on the sideline, 0%, and if you're on a very high end, 20, 30%, whatever it is, at what risk, and if you're okay with that, then that's your strategy and that's your profile. That's totally understandable. But what I hope to get out of this is, for anybody who is listening out there that has been following us and hasn't invested with us, figure out why, you know, what is your reservation, and let's see if we can overcome that and see if we can really answer the question. And if at the end of the day, it's still not something for you, it's okay. It's totally okay.
[00:22:07] Speaker B: We're not guerrilla marketers.
[00:22:08] Speaker A: No, no, we're good. I don't know about that. Yeah.
I think people just need to understand it's a good option and it's something that they should look into. So thank you for all of our listeners today, all of our followers out there. And if you are not a follower, make sure you are out there. You subscribe, you comment, you share Facebook, Twitter or not Twitter x now LinkedIn. Everything you have out there, make sure that you're out there and putting it out there. This is deeds in the desert, produced by ignite funding. And if you don't know what trust deeds are, we hope you know what they are. Now, we'll see you guys on the next episode. Thank you for joining us.
