February 6, 2025 • 26 mins
Born and raised in Lakewood, California, Craig Hill attended Lakewood High, Long Beach City College, and received his Bachelor of Science degree from California State University, Long Beach. While attending CSULB, he followed his love of baseball by making his profession buying and selling baseball cards.
In 1984, Craig took his first job in the lending industry working for Vanguard Mortgage as a loan officer and loan manager. While employed there, he met and began funding REO purchases with Bruce Norris. When Bruce officially started The Norris Group in 1994, Craig came aboard as both loan officer and investment manager and never looked back. Since that time, they have arranged hundreds of millions worth of investor loans.
Recently Craig served several years as vice chairman for Exbound, a nonprofit organization designed to help developmentally disabled adults increase their social interaction. Craig enjoys sports and spending time with his wife Laura and daughter Caitlin.
In this episode:
- Craig Hill shares key guidelines for evaluating trust deed investments.
- Why multiple sources are crucial for accurate property value assessment
- Understanding the Trust Deed Process
- Essential criteria for trust deed investments in California.
- A look at the company’s history and its approach to changing market conditions.
- Balancing Fair Rates – The importance of offering competitive terms for both borrowers and investors.
- How to apply and get started with trust deed investing.
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 (00:01):
Welcome to The Norris Group real estate podcast, a
show committed to bringing youinsights from thought leaders
shaping the real estateindustry. In each episode, we'll
dive into conversations withindustry experts and local
insiders, all aimed at helpingyou thrive in an ever-changing
real estate market. continuingthe legacy that Bruce Norris
(00:24):
created, sharing valuableknowledge, and empowering you on
your real estate journey.
Whether you're a seasoned pro ora newcomer, this is your go-to
source for insider tips, markettrends and success strategies.
Here's your host, Craig Evans.
Craig Evans (00:45):
Hey everybody.
Thanks so much for coming backthis week. Get ready for part
two with Craig Hill on trustdeed investing. Well, so, what
do you think are the top threecriteria that you consider when
you're looking to approve orafter again, in terms...
Craig Hill (01:02):
Okay. Well, I think one is the the property itself,
obviously. And it's not just,you know, it doesn't have to be
say, like, you know, a stuccohouse in Irvine. That doesn't
make it say better. What Ireally look for is, like
conformity of the product andhow it is with regards to the
(01:28):
neighborhood, because if youhave something you know that,
like, say, Lakewood, where Igrew up, you know, Lakewood has
all these little 1000 squarefoot houses.
Craig Evans (01:38):
Yep.
Craig Hill (01:38):
Well, you know what?
If you're going to buy a housethere, you're probably going to
have ample comps that areexactly like it.
Craig Evans (01:46):
Right.
Craig Hill (01:46):
So you're really we talked about those basic numbers
earlier. The biggest mistake iswhen you can't get an accurate
After Repaired Value, becausewhat you're looking at is
unique, like, maybe everythingis, you know, stucco in Irvine,
(02:08):
you know, 2500 square feet on aquarter acre, let's say.
Craig Evans (02:13):
Yep.
Craig Hill (02:14):
Well, now you have a property in a similar, you know,
not too far away, but it's on anacre and it's older. You don't
know what that's worth.
Craig Evans (02:23):
Right.
Craig Hill (02:23):
You just really don't know what that property is
worth. So number one is justtrying to find, like, a property
that you're pretty sure what thevalue is. I think that's so
helpful to both sides. Probablynumber two, is the amount of
liquid cash. And I know forpeople just starting out, that's
(02:46):
kind of like, it seems hard toget to that point, but you
really do need to have the cash,because so often there's going
to be something that comes upthat you don't prepare for, and
you just want to make sure youhave ample cash so that if the
property takes more than a yearto sell, or whatever the case
(03:08):
may be. Because, I think, geez,it's over 6000 maybe 7000 loans
that I've done with The NorrisGroup.
Craig Evans (03:16):
Yep.
Craig Hill (03:17):
You know what? Not every one of those goes like
they think it's going to go.
Craig Evans (03:22):
Sure.
Craig Hill (03:23):
So you have to be prepared, you know, to do that.
You can't be relying on that onedeal to pay your bills. Like, if
that's the case, then you needto bring on a partner, you know,
somebody that can take that loadoff you, but you're willing to
do all the work and do all thelearning. So, I do think it's
(03:45):
important to have cash, and thenequally important is going to
be, say, experience and credit,kind of, those are equal. That's
two other things. But credit,we're not really looking for a
credit score, but we're lookingfor, but really, I compare two
(04:05):
different scenarios. One issomebody that has like, a 580
credit score, and they got 300grand in the bank.
Craig Evans (04:15):
Yeah.
Craig Hill (04:15):
Because they already went through their crisis, and
now they've come out of theother end, you know.
Craig Evans (04:20):
Right.
Craig Hill (04:22):
Now, the other one has like, 740 and they have 100
grand worth of credit cards, andthey're up 98 is what's barred.
See, they're one purchase awayfrom being the other guy five
years ago.
Craig Evans (04:36):
Right.
Craig Hill (04:37):
So, you kind of have to look at that, you know,
sometimes score is deceptive.
You know, obviously, if somebodyhas acting judgments, bank, you
know, things like that, youcan't do it. But you know you
tax liens, but you know, youjust try to look at it once
again. As we talk, we've beentalking, it's more common sense
to do it. And then I think anyexperience is good for somebody
new. Maybe they're a realtor, sothat kind of gives them one, you
(05:01):
know, one aspect of the, youknow, the repairs and etc, the
pricing. Maybe they're acontractor. Maybe they have a
family member, that's one ofthose. So all those things are
helpful to get, you know, to getsomebody make it just a more
likelihood of success, you know.
(05:28):
One time, but just a quick storyon that, I had a guy, and I was
asking him my three questions,right? And I said, 'Well, you
know, what do you think you cansell it for? What do you think
the repairs are?' And I said,'Well, where'd you get your
information?' And he said, 'Fromthe selling agent.' I said,
'Well, he's the guy making theCommission on it, right?' You
(05:51):
know what I mean?
Craig Evans (05:52):
Yep.
Craig Hill (05:54):
But I mean, to me, that was just such a red flag,
the guy might have been the mosthonest guy in the world, but, I
mean, you have to have anothersource beside the guy that's
making money on your buy.
Craig Evans (06:04):
Exactly.
Craig Hill (06:05):
So, like I say, so we really do try to help. And
then, you know, not to forget,we got so many repetitive
borrowers that I'm so thankfulfor. I mean, I really am
thankful because they like theservice we provide, the speed at
which we work, and I think justthe honesty with how we work
(06:27):
with them, you know. So, youknow, it's not only new people,
but we have a large followingof, like, investors. And a lot
of times what happens Craig isthey outgrow us.
Craig Evans (06:36):
Yep.
Craig Hill (06:37):
You know, like, you know, I use Mike. I'll be Oh,
Mike, doesn't. Well, just sayMike, so you know, but you know,
a guy like Mike, he outgrows theneed for, you know, good
investors outgrow the need forthis. But you know, you're happy
to see that too, because youknow, you know, you got the next
guy that you're bringing up thatcould turn into that next, you
(06:58):
know, really good client sowell.
Craig Evans (07:00):
And I know what's interesting is we've had a lot
of investors that have grown,you know, from being borrowers,
with us. And you know nowthey're growing to where there's
different paper out there andthere's different lending forms
that are more affordable forthem. Understand that
completely. You know, they'vegrown their portfolio, to be
(07:21):
able to afford that and handlethat and do that. And then
what's interesting is they stillbelieve in this form, and so
they're coming back now, andthey're investors with us, so
they're investing in otherpeople's trustees, you know, and
that's cool to see. So, in thatbefore, before we kind of go
into the lender side, I want totalk from the lending side of
just a minute. But before we dothat, you know, do a favor. Walk
(07:43):
through kind of, you know,briefly, the mechanics of, you
know, from the borrower to TheNorris Group, and then from The
Norris Group to the lender, youknow.
Craig Hill (07:53):
Okay.
Craig Evans (07:54):
How that transpires?
Craig Hill (07:56):
Okay, basically, what the start of the process
will be, usually a phone call,but then it leads into them
sending in an application. So,we'll get the application, I'll
do a quick review of it, like, Isay, just kind of check the
numbers, talk to them, you know,see if it looks like there's
anything on the surface thatwould prevent it from like, say,
(08:18):
moving into the appraisal. Soafter that, we'll do the
appraisal. So, once we get theappraisal, then we have the real
numbers. So, you know, we havethe numbers we're going to work
with. So, we get the appraisal,Ron is working on getting escrow
(08:39):
and prelim, so we're just kindof putting together a quick
package. We'll get a creditreport on the borrower, so we're
going to run the credit and, youknow, we put the package
together from the borrower'sposition that way. Then for the
investor side of it, the processthere would be, once we have the
(08:59):
appraisal, will kind of send outthe appraisal with the numbers
that are going to be attached tothe deal. So, you know it's
going to be this property, this,this loan amount, this ARV, and
usually I tell them now at thispoint is, you know, realize a
(09:20):
lot of people have done hundredsof deals with this, so it's kind
of a real quick process. But forsomebody new, let's say so I
always tell them, uh, if it'ssomebody new, I don't want to,
like, say, you know, I have toknow, like, by, you know, in a
half hour. So, usually I'll tryto give them some time. Just
give me kind of tentative up,you know. Okay, just in case
(09:40):
they want to go look at theproperty, if they're in the
vicinity, if they, you know,they want to do their own
research, what have you surewe'll send them a copy of the
credit report so they have thatso you know, that's something
that you. Know, they kind oflook at the credit and the
(10:03):
property, those are the twothings that they look at.
Craig Evans (10:10):
A lot of our investors are investing in our
trust deeds, because a lot ofyour experience and what you
look at and understand how youwrite your paper, you know.
Craig Hill (10:21):
Yeah, because the way I kind of look at it,
they're relying on The NorrisGroup and myself and Rhonda, you
know, who looks at the pre lambsand Robin before, you know we're
looking at all that for them.
Craig Evans (10:35):
Sure.
Craig Hill (10:36):
So, I do think it simplifies it, because then
they're just looking at theproperty, which they can kind of
see, and then, you know, thecredit of the person they're
lending the money to. So, that'sjust kind of, those are kind of
the two aspects they go with.
Craig Evans (10:57):
And that's a benefit, because obviously we
don't, you know the investorsthat are investing in hard money
loans, you know, they got to dotheir own due diligence. But
there's a big value tounderstanding that, Hey, if
Craig is underwriting and he'sbringing us the paper to invest
in and to look at, you know,you've already done the due
(11:17):
diligence to know what's theequity to ARV relationship in
this scenario, and what's theircash flow situation? And so
you're not bringing scrub paper,so to speak. I think that brings
up a big value there to thatinvestor, you know. So, the the
other thing I think isinteresting, you know, there's
different requirements forCalifornia versus Florida being
(11:39):
an investor. You know, if you'reinvesting, either from
California or in California,there's certain requirements
that have to be met. Walk ouraudience through what that looks
like to say, hey, I need toqualify to be a trust deed
investor.
Craig Hill (11:55):
Yeah.
Craig Evans (11:55):
So what does it look like?
Craig Hill (11:57):
Yeah. So in California, the guideline is,
any one trust deed, can be nomore than 10% of your net worth.
So, you know, it didn't used tobe that way, but that's how it
has been, maybe the last 10,maybe even longer now, years.
(12:17):
So, that's a little bit, youknow, for some people, that's
challenging. Unfortunately forme, you know, for the longest
time, I had a lot of my friendsthat gradually saw what I did,
but, you know, a lot of themmaybe just didn't have that much
net worth, especially when theywere buying, like, a $200,000
(12:39):
trust deed, you know.
Craig Evans (12:40):
Sure.
Craig Hill (12:41):
You know, so it is a little bit where you do have to
have it, but then, once again,they're making it where, you
know, a trust deed shouldn't bean investment that you're really
living on it, per se. I know alot of people kind of feel that
like, 'oh geez, you know, if thepayments later. So, you know,
(13:02):
geez, you know, I can't buybread.' But, I mean, I, I know
the guy's got like, another 20grand a month coming in, you
know.
Craig Evans (13:09):
Right.
Craig Hill (13:09):
So, he can buy bread, you know. But you don't
want to be in the situationwhere, you know, they truly are
waiting on it to live on. So,that's kind of the general rule
of thumb.
Craig Evans (13:23):
Raising money in anything is always, I mean,
it's, it's not just an easy snapof the, you know, snap of the
hand to speak. I think for trustdeeds can sometimes even be a
little more difficult. Yes, it'sa one to one relationship, but
then their risk aversion, youknow, is all focused on that one
(13:47):
trust deed into one asset,right?So in, you know, raising
money for trust deeds isn't justas simple as connecting people
with money, to people that needmoney, right? So, I mean, so
when you're looking at it, whatmakes, aside from, 'Hey, your
net worth has to be 10%', youknow? What do you think makes
(14:09):
someone a good trust deed lendercandidate?
Craig Hill (14:13):
Well, I think a general understanding of like,
what it i,s like, you know,which takes, say, the scary part
out of it, like, you know, somepeople probably would be better
off just to putting it in thesavings account, you know,
personally, I would have thoughtthat's me, you know, I know my
(14:36):
personality. Going back to,like, when I first met Bruce, my
whole thing was like, oh, I wantto be a property buyer, you
know, this looks like I lookedat everything that was involved
in that and Bruce, and I waslike, man, I just want to invest
in trustees. You know what Imean? So I gravitated to that
(14:59):
because it was a business Iunderstood, but it was a risk
level that I was comfortable.
Craig Evans (15:07):
Sure.
Craig Hill (15:08):
And I think maybe that's it's for an investor that
is, you know, maybe a littlerisk adverse, but on the other
hand, that not to the fact wherethey don't want to do anything.
So it kind of puts most of therisk is on the person say, if
it's Bruce doing the deal wayback when he's the one that's,
(15:29):
you know, taking the risk.
Craig Evans (15:33):
So, let's face it, over the last well, since 2020
you know, COVID hit. And I'm notgoing to go back to 2008 and
what we looked through, throughthat transference of timing,
maybe we'll go back to a littlebit. But the reality is the
private lending space, whetherit's first position trust deed,
(15:57):
fund lending, things like thatspace...It's a good and
interesting space, right? 2020,all of a sudden that became a
really interesting space basedoff what was happening in the
market and where things weregoing. What do you see is in the
(16:20):
market is helping to dictatewhat type of loan we offer at
The Norris Group?
Craig Hill (16:26):
Yeah. I think just looking at our history, we've
always tried to be like lookinginto the future, if you will.
One thing I realized, because Iremember, like, the first five
years of The Norris Group, Brucealways coming in my office,
(16:47):
like, what are we going to donext? There might be a time when
there's no hard money.
Craig Evans (16:53):
Sure.
Craig Hill (16:54):
But year after year after year, we did realize there
always was hard money, with theexception of, you know, maybe
'06 and '07 we really sloweddown. I think one reason we
didn't get hit as hard and hadsuch, nobody got through
(17:15):
unscathed, but we came out veryfavorable, because it was
painfully obvious that this wasway too high.
Craig Evans (17:23):
Yeah.
Craig Hill (17:24):
So, with the exception of those two years, it
just seems like that there'salways something on the horizon.
So, what happened with that, andthen I'll get to the current but
like, we came out for hardmoney, which was really unheard
(17:44):
of at the time, in '08 maybe'09. We started an eight year
low, at a really low interestrate at the time.
Craig Evans (17:53):
Okay.
Craig Hill (17:54):
And the reason being, it made sense. So, you're
always trying to look forsomething that makes sense. And
then gradually we went down tofive and down to three. And
currently we're really justdoing one, because a lot of the
money side is not sure what'snext, if you will. So, you know,
(18:17):
you're always trying to findwhat's next, and it's usually
because it makes sense for bothsides, like right now, buying a
house in California as a rentalusing hard money, that doesn't
make sense.
Craig Evans (18:33):
Right.
Sure.
Craig Hill (18:33):
Even if we did go eight years, you know what I
But you know, justas far as the business goes,
mean, it doesn't make sense. In'09, it did because the prices
just right now, the one yearloan seems to be what the
investors are comfortable with,and it also seems to make sense
were so low, and we were able tooffer a rate that was very
with what the, you know, thelong time buyers are looking
competitive at the time, so theborrowers aren't looking for
that product. So, because ofthat, almost everybody's doing
(18:54):
like a flip situation. So, theone year loan is sufficient. So,
it seems to be that's where mostof the business is right now. I
mean, occasionally somebody willhave something that just makes
so much sense from a loan tovalue point of view that we
might go longer right now.
(19:29):
for.
Craig Evans (19:30):
So, I think that's a key point to look at, because
there's so many people that askme all the time, you know, why
are your rates this when I cango to, you know, we use B of A
earlier, right? I can go to B ofA, in other words, your bank on
the street, so to speak, and geta different rate. And I think
that people forget that privatemoney, there's a yield that has
(19:52):
to be met, that we're nottalking about institutional rate
money or Fed rate money. We'retalking about private money,
that a yield has to be met. Andwhen you've got certificates and
bonds that are generating yieldat one point, the rate of
private mortgages, privatelending, hard money, the
(20:12):
whatever term we're going tothrow at that, it's got to make
sense to those investors, youknow, when you've got high
volatility in markets, andthere's so many factors that
come into play in that process.
So, talk to our audience aboutwhat we've currently got. I know
we're primarily in a one yearterm right now for most of our
(20:35):
loans. Again, that's not becausewe don't want to offer more.
It's that's what the market issaying, Hey, that's where we can
offer and have a good productfor investors at a rate, and
also a very fair rate for our,I'm sorry, good rate for our
borrowers, and then a good yieldfor our investors. So, we've got
that one year time frame. Whatis the current ARV, the points,
(20:57):
the offerings...
Craig Hill (21:01):
Yeah, so, basically now, and there's always
fluctuations on this.
Craig Evans (21:07):
Sure.
Craig Hill (21:07):
The typical deal is going to be like a one year
loan. It's going to be 10.9% onepoint and most of the deals are
around 15% down on the purchaseprice.
Craig Evans (21:21):
Okay.
Craig Hill (21:22):
And then there are some that are less, some that
are more. We do add, you know,sometimes we add repairs and
such. So, it's just really to gowith that one basic scenario,
because everything else fromthere is really depending on the
appraisal, what you bought itfor. In other words, it's a
(21:44):
matter of math, like, if youknow the same 500 grand house,
if one client bought it for 350and another one bought it for
310 you know. I mean, the guythat bought it for 310 is going
to have less doubt. I mean, youknow, so it's kind of hard to
just say this is what it isgoing to be.
Craig Evans (22:02):
Yep.
Craig Hill (22:02):
So, that's why I'm very open to like, having people
call me with numbers anddiscussing numbers, and I always
take the time on the phone tosay, 'what's the address?' I do
what I told you. I look it up onGoogle while they're on the
phone.
Craig Evans (22:16):
Yep.
Craig Hill (22:17):
To see where it is.
Because sometimes if I don't dothat, I've found that I do all
this talking, then I look it upon Google, and it's something we
won't even do.
Or you know what Imean, so I always like to be
Craig Evans (22:27):
Sure.
able to try to give them a real,fair assessment of what I think
we can do right in that initialconversation.
So, we've gotaudience members out there
listeners today. How do theyapply for a loan from us? And
can they actually find you? Willthey be able to talk with you?
(22:49):
What does that process looklike, walk them through that.
Craig Hill (22:53):
One thing that's always surprised me is all my
clients the whole time who said,'it's amazing you pick up the
phone,' so, the best way toreach me is just probably call
me at the office. So,951-780-5856, and it's extension
102 so that's probably theeasiest way. I still like
(23:15):
talking on the phone. I know alot of people don't. So, if you
want to send an email, justshoot me an email at Craig, C,
R, A, I G,Craig@thenorrisgroup.com and,
you know, say I have a deal I'dlike to run by you. Usually I'll
(23:35):
respond with, you know, send methese basic information, you
know, like address, the threethings I told you, what you
think it's worth, the repairs,so, and then what I'll do is,
I'll, then I'll take a look atit, and I'll probably email them
and say, hey, you know, here'swhat I'll do. Give me a call if
you want. So, you know, at thatpoint we can talk about it. So,
(23:58):
that's probably the easiest way,just to say, get started. And
that also our website,thenorrisgroup.com, you can just
go on there and fill out a loanapplication. And those come to
Joey, Rhonda and myself. So wealways catch those. And I tell
(24:18):
people, that's the one thingthat I work quickly on. So, if
you send in an application, youknow, at one o'clock in the
afternoon, and you haven't heardby four or five or certainly the
next morning, first thing, shootthem an email or call, because
sometimes, the way the system isit'll go to what they call the
back end. You know, me. I'm nota computer person. No idea what
(24:41):
that is.
Craig Evans (24:41):
How long does it take somebody to fill out an
application and get that to usso it's in your hands?
Craig Hill (24:46):
Yeah, that's good, good question, because it really
probably only takes about fiveminutes. We just asked, there's
two ways to two ways to go aboutit. It'll say, I have a deal I
want you to review, or I justwant you to look at me per se.
So you pick one of those two,even if it's the deal you want
(25:09):
to review, it should only takeabout five minutes or so. It
just has some basic contactinformation. It asks a little
bit about the property. It askslike cash available. You don't
have to fill out a creditreport, or, you know that
doesn't ask for credit. It'sactually a very simple process,
(25:29):
so it shouldn't really be hardto start that process.
Craig Evans (25:32):
If you want to learn more about investing in
trust deeds, you can go to ourwebsite at
wwwthenorrisgroup.com, you'llclick on that Hard Money tab,
you get to download a FREE BOOKthat we've written and updated
called it's our eBook for trustdeed investing. You can also
reach out to Joey, send him anemail to Joey@thenorrisgroup.com
(25:55):
and again, if you're interestedin being a borrower from us, you
can reach out toCraig@thenorrisgroup.com, and
we'll take great care of you. Weappreciate the loyalty of all of
our listeners, all of ourinvestors, all of our borrowers
throughout the years. We're sograteful. Listen, till next
time, everybody. Thank you forjoining today. Craig. Thank you,
(26:17):
my friend.
Craig Hill (26:18):
Right. Thanks Craig.
Narrator (26:19):
For more information on hard money loans, trust deed
investing, and upcoming eventswith The Norris group. Check out
thenorrisgroup.com. For moreinformation on passive investing
through the DBL Capital RealEstate Investment Fund, please
visit dblapital.com.
Joey Romero (26:39):
The Norris group originates and services loans in
California and Florida underCalifornia DRE license 01219911.
Florida mortgage lender license1577 and NMLS license 1623669.
For more information on hardmoney lending go to
thenorrisgroup.com and click thehard money tab.
Welcome to The Norris Group real estate podcast, a
show committed to bringing youinsights from thought leaders
shaping the real estateindustry. In each episode, we'll
dive into conversations withindustry experts and local
insiders, all aimed at helpingyou thrive in an ever-changing
real estate market. continuingthe legacy that Bruce Norris
(00:24):
created, sharing valuableknowledge, and empowering you on
your real estate journey.
Whether you're a seasoned pro ora newcomer, this is your go-to
source for insider tips, markettrends and success strategies.
Here's your host, Craig Evans.
Craig Evans (00:45):
Hey everybody.
Thanks so much for coming backthis week. Get ready for part
two with Craig Hill on trustdeed investing. Well, so, what
do you think are the top threecriteria that you consider when
you're looking to approve orafter again, in terms...
Craig Hill (01:02):
Okay. Well, I think one is the the property itself,
obviously. And it's not just,you know, it doesn't have to be
say, like, you know, a stuccohouse in Irvine. That doesn't
make it say better. What Ireally look for is, like
conformity of the product andhow it is with regards to the
(01:28):
neighborhood, because if youhave something you know that,
like, say, Lakewood, where Igrew up, you know, Lakewood has
all these little 1000 squarefoot houses.
Craig Evans (01:38):
Yep.
Craig Hill (01:38):
Well, you know what?
If you're going to buy a housethere, you're probably going to
have ample comps that areexactly like it.
Craig Evans (01:46):
Right.
Craig Hill (01:46):
So you're really we talked about those basic numbers
earlier. The biggest mistake iswhen you can't get an accurate
After Repaired Value, becausewhat you're looking at is
unique, like, maybe everythingis, you know, stucco in Irvine,
(02:08):
you know, 2500 square feet on aquarter acre, let's say.
Craig Evans (02:13):
Yep.
Craig Hill (02:14):
Well, now you have a property in a similar, you know,
not too far away, but it's on anacre and it's older. You don't
know what that's worth.
Craig Evans (02:23):
Right.
Craig Hill (02:23):
You just really don't know what that property is
worth. So number one is justtrying to find, like, a property
that you're pretty sure what thevalue is. I think that's so
helpful to both sides. Probablynumber two, is the amount of
liquid cash. And I know forpeople just starting out, that's
(02:46):
kind of like, it seems hard toget to that point, but you
really do need to have the cash,because so often there's going
to be something that comes upthat you don't prepare for, and
you just want to make sure youhave ample cash so that if the
property takes more than a yearto sell, or whatever the case
(03:08):
may be. Because, I think, geez,it's over 6000 maybe 7000 loans
that I've done with The NorrisGroup.
Craig Evans (03:16):
Yep.
Craig Hill (03:17):
You know what? Not every one of those goes like
they think it's going to go.
Craig Evans (03:22):
Sure.
Craig Hill (03:23):
So you have to be prepared, you know, to do that.
You can't be relying on that onedeal to pay your bills. Like, if
that's the case, then you needto bring on a partner, you know,
somebody that can take that loadoff you, but you're willing to
do all the work and do all thelearning. So, I do think it's
(03:45):
important to have cash, and thenequally important is going to
be, say, experience and credit,kind of, those are equal. That's
two other things. But credit,we're not really looking for a
credit score, but we're lookingfor, but really, I compare two
(04:05):
different scenarios. One issomebody that has like, a 580
credit score, and they got 300grand in the bank.
Craig Evans (04:15):
Yeah.
Craig Hill (04:15):
Because they already went through their crisis, and
now they've come out of theother end, you know.
Craig Evans (04:20):
Right.
Craig Hill (04:22):
Now, the other one has like, 740 and they have 100
grand worth of credit cards, andthey're up 98 is what's barred.
See, they're one purchase awayfrom being the other guy five
years ago.
Craig Evans (04:36):
Right.
Craig Hill (04:37):
So, you kind of have to look at that, you know,
sometimes score is deceptive.
You know, obviously, if somebodyhas acting judgments, bank, you
know, things like that, youcan't do it. But you know you
tax liens, but you know, youjust try to look at it once
again. As we talk, we've beentalking, it's more common sense
to do it. And then I think anyexperience is good for somebody
new. Maybe they're a realtor, sothat kind of gives them one, you
(05:01):
know, one aspect of the, youknow, the repairs and etc, the
pricing. Maybe they're acontractor. Maybe they have a
family member, that's one ofthose. So all those things are
helpful to get, you know, to getsomebody make it just a more
likelihood of success, you know.
(05:28):
One time, but just a quick storyon that, I had a guy, and I was
asking him my three questions,right? And I said, 'Well, you
know, what do you think you cansell it for? What do you think
the repairs are?' And I said,'Well, where'd you get your
information?' And he said, 'Fromthe selling agent.' I said,
'Well, he's the guy making theCommission on it, right?' You
(05:51):
know what I mean?
Craig Evans (05:52):
Yep.
Craig Hill (05:54):
But I mean, to me, that was just such a red flag,
the guy might have been the mosthonest guy in the world, but, I
mean, you have to have anothersource beside the guy that's
making money on your buy.
Craig Evans (06:04):
Exactly.
Craig Hill (06:05):
So, like I say, so we really do try to help. And
then, you know, not to forget,we got so many repetitive
borrowers that I'm so thankfulfor. I mean, I really am
thankful because they like theservice we provide, the speed at
which we work, and I think justthe honesty with how we work
(06:27):
with them, you know. So, youknow, it's not only new people,
but we have a large followingof, like, investors. And a lot
of times what happens Craig isthey outgrow us.
Craig Evans (06:36):
Yep.
Craig Hill (06:37):
You know, like, you know, I use Mike. I'll be Oh,
Mike, doesn't. Well, just sayMike, so you know, but you know,
a guy like Mike, he outgrows theneed for, you know, good
investors outgrow the need forthis. But you know, you're happy
to see that too, because youknow, you know, you got the next
guy that you're bringing up thatcould turn into that next, you
(06:58):
know, really good client sowell.
Craig Evans (07:00):
And I know what's interesting is we've had a lot
of investors that have grown,you know, from being borrowers,
with us. And you know nowthey're growing to where there's
different paper out there andthere's different lending forms
that are more affordable forthem. Understand that
completely. You know, they'vegrown their portfolio, to be
(07:21):
able to afford that and handlethat and do that. And then
what's interesting is they stillbelieve in this form, and so
they're coming back now, andthey're investors with us, so
they're investing in otherpeople's trustees, you know, and
that's cool to see. So, in thatbefore, before we kind of go
into the lender side, I want totalk from the lending side of
just a minute. But before we dothat, you know, do a favor. Walk
(07:43):
through kind of, you know,briefly, the mechanics of, you
know, from the borrower to TheNorris Group, and then from The
Norris Group to the lender, youknow.
Craig Hill (07:53):
Okay.
Craig Evans (07:54):
How that transpires?
Craig Hill (07:56):
Okay, basically, what the start of the process
will be, usually a phone call,but then it leads into them
sending in an application. So,we'll get the application, I'll
do a quick review of it, like, Isay, just kind of check the
numbers, talk to them, you know,see if it looks like there's
anything on the surface thatwould prevent it from like, say,
(08:18):
moving into the appraisal. Soafter that, we'll do the
appraisal. So, once we get theappraisal, then we have the real
numbers. So, you know, we havethe numbers we're going to work
with. So, we get the appraisal,Ron is working on getting escrow
(08:39):
and prelim, so we're just kindof putting together a quick
package. We'll get a creditreport on the borrower, so we're
going to run the credit and, youknow, we put the package
together from the borrower'sposition that way. Then for the
investor side of it, the processthere would be, once we have the
(08:59):
appraisal, will kind of send outthe appraisal with the numbers
that are going to be attached tothe deal. So, you know it's
going to be this property, this,this loan amount, this ARV, and
usually I tell them now at thispoint is, you know, realize a
(09:20):
lot of people have done hundredsof deals with this, so it's kind
of a real quick process. But forsomebody new, let's say so I
always tell them, uh, if it'ssomebody new, I don't want to,
like, say, you know, I have toknow, like, by, you know, in a
half hour. So, usually I'll tryto give them some time. Just
give me kind of tentative up,you know. Okay, just in case
(09:40):
they want to go look at theproperty, if they're in the
vicinity, if they, you know,they want to do their own
research, what have you surewe'll send them a copy of the
credit report so they have thatso you know, that's something
that you. Know, they kind oflook at the credit and the
(10:03):
property, those are the twothings that they look at.
Craig Evans (10:10):
A lot of our investors are investing in our
trust deeds, because a lot ofyour experience and what you
look at and understand how youwrite your paper, you know.
Craig Hill (10:21):
Yeah, because the way I kind of look at it,
they're relying on The NorrisGroup and myself and Rhonda, you
know, who looks at the pre lambsand Robin before, you know we're
looking at all that for them.
Craig Evans (10:35):
Sure.
Craig Hill (10:36):
So, I do think it simplifies it, because then
they're just looking at theproperty, which they can kind of
see, and then, you know, thecredit of the person they're
lending the money to. So, that'sjust kind of, those are kind of
the two aspects they go with.
Craig Evans (10:57):
And that's a benefit, because obviously we
don't, you know the investorsthat are investing in hard money
loans, you know, they got to dotheir own due diligence. But
there's a big value tounderstanding that, Hey, if
Craig is underwriting and he'sbringing us the paper to invest
in and to look at, you know,you've already done the due
(11:17):
diligence to know what's theequity to ARV relationship in
this scenario, and what's theircash flow situation? And so
you're not bringing scrub paper,so to speak. I think that brings
up a big value there to thatinvestor, you know. So, the the
other thing I think isinteresting, you know, there's
different requirements forCalifornia versus Florida being
(11:39):
an investor. You know, if you'reinvesting, either from
California or in California,there's certain requirements
that have to be met. Walk ouraudience through what that looks
like to say, hey, I need toqualify to be a trust deed
investor.
Craig Hill (11:55):
Yeah.
Craig Evans (11:55):
So what does it look like?
Craig Hill (11:57):
Yeah. So in California, the guideline is,
any one trust deed, can be nomore than 10% of your net worth.
So, you know, it didn't used tobe that way, but that's how it
has been, maybe the last 10,maybe even longer now, years.
(12:17):
So, that's a little bit, youknow, for some people, that's
challenging. Unfortunately forme, you know, for the longest
time, I had a lot of my friendsthat gradually saw what I did,
but, you know, a lot of themmaybe just didn't have that much
net worth, especially when theywere buying, like, a $200,000
(12:39):
trust deed, you know.
Craig Evans (12:40):
Sure.
Craig Hill (12:41):
You know, so it is a little bit where you do have to
have it, but then, once again,they're making it where, you
know, a trust deed shouldn't bean investment that you're really
living on it, per se. I know alot of people kind of feel that
like, 'oh geez, you know, if thepayments later. So, you know,
(13:02):
geez, you know, I can't buybread.' But, I mean, I, I know
the guy's got like, another 20grand a month coming in, you
know.
Craig Evans (13:09):
Right.
Craig Hill (13:09):
So, he can buy bread, you know. But you don't
want to be in the situationwhere, you know, they truly are
waiting on it to live on. So,that's kind of the general rule
of thumb.
Craig Evans (13:23):
Raising money in anything is always, I mean,
it's, it's not just an easy snapof the, you know, snap of the
hand to speak. I think for trustdeeds can sometimes even be a
little more difficult. Yes, it'sa one to one relationship, but
then their risk aversion, youknow, is all focused on that one
(13:47):
trust deed into one asset,right?So in, you know, raising
money for trust deeds isn't justas simple as connecting people
with money, to people that needmoney, right? So, I mean, so
when you're looking at it, whatmakes, aside from, 'Hey, your
net worth has to be 10%', youknow? What do you think makes
(14:09):
someone a good trust deed lendercandidate?
Craig Hill (14:13):
Well, I think a general understanding of like,
what it i,s like, you know,which takes, say, the scary part
out of it, like, you know, somepeople probably would be better
off just to putting it in thesavings account, you know,
personally, I would have thoughtthat's me, you know, I know my
(14:36):
personality. Going back to,like, when I first met Bruce, my
whole thing was like, oh, I wantto be a property buyer, you
know, this looks like I lookedat everything that was involved
in that and Bruce, and I waslike, man, I just want to invest
in trustees. You know what Imean? So I gravitated to that
(14:59):
because it was a business Iunderstood, but it was a risk
level that I was comfortable.
Craig Evans (15:07):
Sure.
Craig Hill (15:08):
And I think maybe that's it's for an investor that
is, you know, maybe a littlerisk adverse, but on the other
hand, that not to the fact wherethey don't want to do anything.
So it kind of puts most of therisk is on the person say, if
it's Bruce doing the deal wayback when he's the one that's,
(15:29):
you know, taking the risk.
Craig Evans (15:33):
So, let's face it, over the last well, since 2020
you know, COVID hit. And I'm notgoing to go back to 2008 and
what we looked through, throughthat transference of timing,
maybe we'll go back to a littlebit. But the reality is the
private lending space, whetherit's first position trust deed,
(15:57):
fund lending, things like thatspace...It's a good and
interesting space, right? 2020,all of a sudden that became a
really interesting space basedoff what was happening in the
market and where things weregoing. What do you see is in the
(16:20):
market is helping to dictatewhat type of loan we offer at
The Norris Group?
Craig Hill (16:26):
Yeah. I think just looking at our history, we've
always tried to be like lookinginto the future, if you will.
One thing I realized, because Iremember, like, the first five
years of The Norris Group, Brucealways coming in my office,
(16:47):
like, what are we going to donext? There might be a time when
there's no hard money.
Craig Evans (16:53):
Sure.
Craig Hill (16:54):
But year after year after year, we did realize there
always was hard money, with theexception of, you know, maybe
'06 and '07 we really sloweddown. I think one reason we
didn't get hit as hard and hadsuch, nobody got through
(17:15):
unscathed, but we came out veryfavorable, because it was
painfully obvious that this wasway too high.
Craig Evans (17:23):
Yeah.
Craig Hill (17:24):
So, with the exception of those two years, it
just seems like that there'salways something on the horizon.
So, what happened with that, andthen I'll get to the current but
like, we came out for hardmoney, which was really unheard
(17:44):
of at the time, in '08 maybe'09. We started an eight year
low, at a really low interestrate at the time.
Craig Evans (17:53):
Okay.
Craig Hill (17:54):
And the reason being, it made sense. So, you're
always trying to look forsomething that makes sense. And
then gradually we went down tofive and down to three. And
currently we're really justdoing one, because a lot of the
money side is not sure what'snext, if you will. So, you know,
(18:17):
you're always trying to findwhat's next, and it's usually
because it makes sense for bothsides, like right now, buying a
house in California as a rentalusing hard money, that doesn't
make sense.
Craig Evans (18:33):
Right.
Sure.
Craig Hill (18:33):
Even if we did go eight years, you know what I
But you know, justas far as the business goes,
mean, it doesn't make sense. In'09, it did because the prices
just right now, the one yearloan seems to be what the
investors are comfortable with,and it also seems to make sense
were so low, and we were able tooffer a rate that was very
with what the, you know, thelong time buyers are looking
competitive at the time, so theborrowers aren't looking for
that product. So, because ofthat, almost everybody's doing
(18:54):
like a flip situation. So, theone year loan is sufficient. So,
it seems to be that's where mostof the business is right now. I
mean, occasionally somebody willhave something that just makes
so much sense from a loan tovalue point of view that we
might go longer right now.
(19:29):
for.
Craig Evans (19:30):
So, I think that's a key point to look at, because
there's so many people that askme all the time, you know, why
are your rates this when I cango to, you know, we use B of A
earlier, right? I can go to B ofA, in other words, your bank on
the street, so to speak, and geta different rate. And I think
that people forget that privatemoney, there's a yield that has
(19:52):
to be met, that we're nottalking about institutional rate
money or Fed rate money. We'retalking about private money,
that a yield has to be met. Andwhen you've got certificates and
bonds that are generating yieldat one point, the rate of
private mortgages, privatelending, hard money, the
(20:12):
whatever term we're going tothrow at that, it's got to make
sense to those investors, youknow, when you've got high
volatility in markets, andthere's so many factors that
come into play in that process.
So, talk to our audience aboutwhat we've currently got. I know
we're primarily in a one yearterm right now for most of our
(20:35):
loans. Again, that's not becausewe don't want to offer more.
It's that's what the market issaying, Hey, that's where we can
offer and have a good productfor investors at a rate, and
also a very fair rate for our,I'm sorry, good rate for our
borrowers, and then a good yieldfor our investors. So, we've got
that one year time frame. Whatis the current ARV, the points,
(20:57):
the offerings...
Craig Hill (21:01):
Yeah, so, basically now, and there's always
fluctuations on this.
Craig Evans (21:07):
Sure.
Craig Hill (21:07):
The typical deal is going to be like a one year
loan. It's going to be 10.9% onepoint and most of the deals are
around 15% down on the purchaseprice.
Craig Evans (21:21):
Okay.
Craig Hill (21:22):
And then there are some that are less, some that
are more. We do add, you know,sometimes we add repairs and
such. So, it's just really to gowith that one basic scenario,
because everything else fromthere is really depending on the
appraisal, what you bought itfor. In other words, it's a
(21:44):
matter of math, like, if youknow the same 500 grand house,
if one client bought it for 350and another one bought it for
310 you know. I mean, the guythat bought it for 310 is going
to have less doubt. I mean, youknow, so it's kind of hard to
just say this is what it isgoing to be.
Craig Evans (22:02):
Yep.
Craig Hill (22:02):
So, that's why I'm very open to like, having people
call me with numbers anddiscussing numbers, and I always
take the time on the phone tosay, 'what's the address?' I do
what I told you. I look it up onGoogle while they're on the
phone.
Craig Evans (22:16):
Yep.
Craig Hill (22:17):
To see where it is.
Because sometimes if I don't dothat, I've found that I do all
this talking, then I look it upon Google, and it's something we
won't even do.
Or you know what Imean, so I always like to be
Craig Evans (22:27):
Sure.
able to try to give them a real,fair assessment of what I think
we can do right in that initialconversation.
So, we've gotaudience members out there
listeners today. How do theyapply for a loan from us? And
can they actually find you? Willthey be able to talk with you?
(22:49):
What does that process looklike, walk them through that.
Craig Hill (22:53):
One thing that's always surprised me is all my
clients the whole time who said,'it's amazing you pick up the
phone,' so, the best way toreach me is just probably call
me at the office. So,951-780-5856, and it's extension
102 so that's probably theeasiest way. I still like
(23:15):
talking on the phone. I know alot of people don't. So, if you
want to send an email, justshoot me an email at Craig, C,
R, A, I G,Craig@thenorrisgroup.com and,
you know, say I have a deal I'dlike to run by you. Usually I'll
(23:35):
respond with, you know, send methese basic information, you
know, like address, the threethings I told you, what you
think it's worth, the repairs,so, and then what I'll do is,
I'll, then I'll take a look atit, and I'll probably email them
and say, hey, you know, here'swhat I'll do. Give me a call if
you want. So, you know, at thatpoint we can talk about it. So,
(23:58):
that's probably the easiest way,just to say, get started. And
that also our website,thenorrisgroup.com, you can just
go on there and fill out a loanapplication. And those come to
Joey, Rhonda and myself. So wealways catch those. And I tell
(24:18):
people, that's the one thingthat I work quickly on. So, if
you send in an application, youknow, at one o'clock in the
afternoon, and you haven't heardby four or five or certainly the
next morning, first thing, shootthem an email or call, because
sometimes, the way the system isit'll go to what they call the
back end. You know, me. I'm nota computer person. No idea what
(24:41):
that is.
Craig Evans (24:41):
How long does it take somebody to fill out an
application and get that to usso it's in your hands?
Craig Hill (24:46):
Yeah, that's good, good question, because it really
probably only takes about fiveminutes. We just asked, there's
two ways to two ways to go aboutit. It'll say, I have a deal I
want you to review, or I justwant you to look at me per se.
So you pick one of those two,even if it's the deal you want
(25:09):
to review, it should only takeabout five minutes or so. It
just has some basic contactinformation. It asks a little
bit about the property. It askslike cash available. You don't
have to fill out a creditreport, or, you know that
doesn't ask for credit. It'sactually a very simple process,
(25:29):
so it shouldn't really be hardto start that process.
Craig Evans (25:32):
If you want to learn more about investing in
trust deeds, you can go to ourwebsite at
wwwthenorrisgroup.com, you'llclick on that Hard Money tab,
you get to download a FREE BOOKthat we've written and updated
called it's our eBook for trustdeed investing. You can also
reach out to Joey, send him anemail to Joey@thenorrisgroup.com
(25:55):
and again, if you're interestedin being a borrower from us, you
can reach out toCraig@thenorrisgroup.com, and
we'll take great care of you. Weappreciate the loyalty of all of
our listeners, all of ourinvestors, all of our borrowers
throughout the years. We're sograteful. Listen, till next
time, everybody. Thank you forjoining today. Craig. Thank you,
(26:17):
my friend.
Craig Hill (26:18):
Right. Thanks Craig.
Narrator (26:19):
For more information on hard money loans, trust deed
investing, and upcoming eventswith The Norris group. Check out
thenorrisgroup.com. For moreinformation on passive investing
through the DBL Capital RealEstate Investment Fund, please
visit dblapital.com.
Joey Romero (26:39):
The Norris group originates and services loans in
California and Florida underCalifornia DRE license 01219911.
Florida mortgage lender license1577 and NMLS license 1623669.
For more information on hardmoney lending go to
thenorrisgroup.com and click thehard money tab.
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