Episode Transcript
[00:00:00] Speaker A: Foreign.
Welcome back. If you've listened before to the Real Estate Chicago Style podcast, I'm your host, Joe Smazel.
I'm a active multifamily broker in Chicago at Interra Realty and I also own and operate some small apartment buildings on the north side of the city with my wife Kate. Business is called Smiles Apartments.
Today we've got Kevin Werner, CEO and co founder of Renovo Financial.
Kevin, welcome to the show.
[00:00:35] Speaker B: Thanks for having me. I've been excited to be on here since you asked.
[00:00:38] Speaker A: Pleasure to do it.
The scheduling of it with busy. We try to do two of these in a session to help for the setup and efficiency of it. And it's like the scheduling of these is definitely my worst part or my least favorite part of it. So appreciate your patience and getting it on the books.
[00:00:55] Speaker B: No, you're great. It was no problem at all. It was awesome.
[00:00:58] Speaker A: Renovo, for anybody who is not familiar, is a private real estate lender that specializes in rehab loans, new construction loans, term loans, and multi family loans.
They've completed over $6 billion in originations. Is that a real time number?
[00:01:13] Speaker B: That's pretty old. It's probably closer to 10 at this point.
[00:01:17] Speaker A: Update the website.
[00:01:17] Speaker B: Gotta update that website.
[00:01:18] Speaker A: All right, well, is this number date you have 30 offices across the country?
[00:01:22] Speaker B: Yeah, it's about right. Yeah.
[00:01:23] Speaker A: Okay.
You've been named Inc.com and Chicago Tribune's best places to work and have a 4.6 Google rating, which is essentially perfect.
[00:01:33] Speaker B: It all sounds world. Pretty good. Yeah.
[00:01:35] Speaker A: Is that pretty good?
[00:01:36] Speaker B: Yeah.
[00:01:38] Speaker A: Business, I mean, that's incredible, incredible growth for a business that's 13 years old or 14 years old.
Anything I missed about what you guys do?
[00:01:48] Speaker B: No.
You know, if I was to go a little bit deeper, it's that we're, you know, a private real estate lender that's national but operating extremely local.
[00:01:59] Speaker A: Yeah.
[00:02:00] Speaker B: So the approach we've taken since we started the business in Chicago, you know, nearly 15 years ago, is that we only want to lend where we live.
So, you know, when we decided to grow outside of Chicago, we. Which took us a very, very, very long time to, to kind of figure out how to do it.
But once we started to have success, it was really about finding amazing people that were living in the cities we wanted to lend and then getting them onboarded with the Renovo Way, which has again taken a very long time. But I think we've in our industry might be the slowest growing, you know, kind of big player, but something that we're proud of.
[00:02:42] Speaker A: I mean, not slowest growing. Now you were. You were late to grow and then grew quickly in a short period of time.
[00:02:49] Speaker B: That's probably right. We laid a lot of foundation. That's fair enough. So we, you know, we. I would say it took us like eight to ten years almost to, like, lay an awesome foundation.
[00:03:00] Speaker A: Yeah.
[00:03:01] Speaker B: That we felt could grow quick. You're right. As soon as. Really coming out of COVID was our. Our growth moment. Like.
[00:03:10] Speaker A: Yeah.
[00:03:10] Speaker B: I got addicted to the rocket ship emoji around the COVID time and have probably overused it a little bit, but, yeah, we grew a lot. You know, we really couldn't figure out how to grow for a while outside Chicago. But as soon as we kind of figured it out, now we're. Now, I would say we're somewhat obsessed with growth.
[00:03:31] Speaker A: All right, we're gonna dive deeper into the growth portion of the business, but before we get too far into it, we're going to. We're going to start with our rapid fire questions.
[00:03:41] Speaker B: Okay.
[00:03:41] Speaker A: Are you ready?
[00:03:42] Speaker B: I'm ready.
[00:03:43] Speaker A: You don't have to be very rapid with them, but some light questions to warm us up. What did you listen to on the way here?
[00:03:50] Speaker B: Your podcast with Drew Brennan.
[00:03:55] Speaker A: He wasn't on it yet.
[00:03:56] Speaker B: No, you were on his.
[00:03:57] Speaker A: Oh, okay, cool. Yeah, yeah, sorry, I. That was the first. Yeah, that was the.
[00:04:01] Speaker B: That was his first podcast, I think.
[00:04:03] Speaker A: Yeah.
[00:04:03] Speaker B: So I listened to that on the way over.
[00:04:05] Speaker A: Oh, cool.
[00:04:07] Speaker B: I'm sure you sold medical beds or.
[00:04:09] Speaker A: Hospitals, so I didn't know stuff that was. That was fun to do. Drew.
Yeah, he invited me on. I think it's called the Brennaman blueprint now. I don't know. I don't remember whether that was the name when he started it, but I had fun being on Drew's and a couple other. And I'm like, you know, I think we could have a good time with this and do a good. Good enough job for people to listen to. So hopefully we're not letting anybody down with that.
Favorite Chicago pizza place.
[00:04:37] Speaker B: Oh, man.
Paisanos.
[00:04:40] Speaker A: Okay, cool. First time. But I'm kind of surprised it took our ninth episode to get there. Coffee shop.
[00:04:47] Speaker B: Oh, LA Cologne, Armitage, Fremont.
[00:04:51] Speaker A: Early bird or night owl?
[00:04:53] Speaker B: Early bird.
[00:04:54] Speaker A: Even with the comeback.
[00:04:56] Speaker B: Well, both now.
So I'm not a big believer in sleep.
[00:05:00] Speaker A: We're just not to put him on blast. I think he's proud of it because he just told me about. He's. He's got a comeback of his.
Of his nightlife days.
I wasn't sure how you're gonna answer that. What's a word, One word that your colleagues would use to describe you?
[00:05:20] Speaker B: I would say positive.
[00:05:22] Speaker A: I like that.
Favorite intersection or corridor in the city.
[00:05:32] Speaker B: Halstead and Armitage.
[00:05:34] Speaker A: You live over there?
[00:05:35] Speaker B: I live over there.
[00:05:37] Speaker A: Totally like it. Yeah. Backyard answer.
Awesome. I'm not going to argue with you on it.
All right. Kind of a weird question, but if you were a NASCAR driver and could pick three sponsors for your car, what would you pick? Oh, that's an awesome sponsor. The Kevin Renovo.
[00:05:54] Speaker B: I mean, Red Bull.
Why not something with a rocket?
[00:05:59] Speaker A: Yeah.
[00:06:01] Speaker B: And that's a hard one.
I think of a lot of them right now.
Salesforce.
[00:06:09] Speaker A: Okay, cool.
[00:06:10] Speaker B: I really like that company.
[00:06:11] Speaker A: Cool. All right. Last Rapid Fire Plug. An up and coming Chicago real estate person that's hustling and you think deserves some recognition.
[00:06:20] Speaker B: Oh, I wish you would have brought me on that one.
That is.
[00:06:24] Speaker A: I'm sure you got a long list of those. Yes. I have a great team.
Maybe be diplomatic and go outside of Renovo so that you don't let anybody down.
[00:06:34] Speaker B: I. Look, I would say the. Not that it's around becoming, but a lot of people on your team that I've met here, you're. You're past the up and coming phase. You're, you know, way beyond that. So I think a couple members of your team, for sure, that I've gotten to know. Cool. Lucas, for one, I've gotten to know over the years.
[00:06:50] Speaker A: Lucas Fryman's a good guy, and he's running, you know, he's running his business within Interra's business the right way and.
Yeah. Great, great representation of the firm.
[00:07:02] Speaker B: Yeah.
[00:07:03] Speaker A: All right, we're done with the Rapid Fire.
[00:07:06] Speaker B: I love the Chicago questions, though. It's awesome.
[00:07:08] Speaker A: Okay, good.
Tell us a little bit about growing up.
Lead us to how you got into real estate and why you got into real estate.
[00:07:19] Speaker B: You know, I grew up in the suburbs of Chicago, and that was Des Plaines. I grew up in Displaynes.
[00:07:24] Speaker A: Okay.
[00:07:24] Speaker B: My parents got divorced when I was little, so my dad moved to Lincoln park and my mom moved to Des Plaines with me and my sister.
So it was an upbringing that, in retrospect, was kind of perfect for me because I loved being in the city on the weekends.
My dad would come pick us up for weekends in the city, and we'd be in Lincoln park, and we'd be at Gibson's at night with my dad, Saturday night sometimes.
And then I would go back to the suburbs, which was. Which were great also. I had a great upbringing but, but that, you know, the big buildings and all the action was something at a young age that when I saw I was like, oh yeah, I really like this. So.
Which was pretty special for me. And then I was never a good student.
Pretty, pretty bad students actually.
[00:08:12] Speaker A: I would say same.
[00:08:14] Speaker B: Yeah, it didn't learn well. I'm not a good like classroom learner. So like I didn't get great grades, I didn't like school.
I love working. So ever since a young age I loved to work. I loved figuring out how to like sell people things and make money. And so at a really young age I was lucky enough to get on work program in high school and my junior year of high school I got on work program and a bunch of my buddies were also on work program but they were working at like local, you know, suburban, you know, whatever, auto shops and other stuff. I was lucky enough that they let me go downtown to my dad's office. So I would jump on the train junior year of high school at noon in Mount Prospect and I'd be downtown by 1 o' clock in the afternoon and I started learning the loan business.
[00:09:04] Speaker A: Oh, your dad was in the business?
[00:09:05] Speaker B: My dad was in the loan business.
[00:09:06] Speaker A: Okay.
[00:09:07] Speaker B: So yeah, my dad was in the home improvement lending business as a kid. So my dad was a Chicago based lender and made home improvement loans to people that were getting their kitchens and bathrooms and roofs and stuff remodeled.
But I would get downtown at 1 o' clock in the afternoon and start working at my dad's lending company.
I was a runner basically, you know, whatever, go for people.
[00:09:31] Speaker A: Did you, did you immediately like it? You know, you were leaving school to do the work program. Did you like what you were doing or was it just like you liked it because you were getting out of school early?
[00:09:42] Speaker B: No, I, I liked it more than, I mean I liked it more than school for sure. But I always liked business like as dorky as it sounds like my mom tells stories. When I was a little kid, I used to play with a briefcase. Like I'd walk around the house with like my own briefcase. And that was business was always super exciting to me. I, I would like set up comic book stores in my garage and sell comics to my neighbors and other things.
So the thought of being like downtown, first of all, I love coming into the big city.
[00:10:11] Speaker A: Yeah.
[00:10:11] Speaker B: And getting that fast paced and the big, I would stare at the big buildings and be like, oh, when I'm older I want to like do something with these buildings.
[00:10:19] Speaker A: Yeah.
[00:10:20] Speaker B: So I loved it.
[00:10:21] Speaker A: I'm smiling Because I, I grew up in Iowa and I remember I went to a Sox game with my buddy's family and I remember driving in 290 and like distinctly remember I have a horrible memory, horrible long term memory. And I distinctly remember the skyline and like what it represented to me at that time. From, I had never been to Chicago. I'd never been to a big city. And I was like, I was probably kindergarten or something.
[00:10:44] Speaker B: Yeah.
[00:10:45] Speaker A: And it was so, it was like a very powerful thing. And now I'm pretty numb to it. You know, we live in the city. I work downtown. You know, we're in a pretty fast paced industry, so we're not always like smelling the roses.
[00:11:00] Speaker B: Yeah.
[00:11:01] Speaker A: But occasionally I'll have like an epiphany of drive. It's usually driving in on one of the expressways from some different like kind of perspective of the city.
[00:11:08] Speaker B: Yeah.
[00:11:09] Speaker A: Damn. Oh, it's like cool. It's, it's.
[00:11:11] Speaker B: I still have that feeling just like.
[00:11:13] Speaker A: All the opportunity, it's like, it's just a huge amount of opportunity that I think the skyline represents.
[00:11:18] Speaker B: Totally agree. It's great from the boats, right? Also from the lake. You see that if you're out on a boat. But the.
I agree. I still pinch myself all the time. I still get excited driving on Lakeshore. Drive into the city, city. And I'll, I'll tell my kids I'll have a great song on. And I'm like, guys, isn't this the greatest place in the world? And they're like, shut up, dad, you're such a dork.
[00:11:37] Speaker A: Yeah. And they disagree that the song is cool. I mean the daughters want the Taylor Swift on or whatever.
[00:11:43] Speaker B: Yeah, for sure.
[00:11:45] Speaker A: I also, you know, I, I remember something else I think we have in common about that that time is I, I was a kid, I like to make money. I, I, it like mowing the grass and having the like gratification of getting paid afterwards was like. I was not a standout athlete.
[00:12:03] Speaker B: Surprisingly.
[00:12:07] Speaker A: I was not great in school. I was like a B student kind of through school but like just do, you know like half assing it to get bees through and not fall behind and stuff. And. But I always like to make money and I always had a work ethic for making money and I still like, I, I don't people talk about like why they do a job and they're like, you know, because I love the people and I love the, you know, and I love the.
All that is true. I do. But I also am not sure I like to make money. That's part of what I like to be in the real estate business for. I like that that provides a low overhead way to kind of run my own business and make money.
[00:12:42] Speaker B: And my mom tells this funny story. I think I was like, maybe like 6 or 7 years old. And we lived next, like, down the street from a little, like, pond in. A little tiny pond in the suburbs in Morton Grove.
And I took. One day, I took my wagon down to the pond and I cracked up a bunch of ice in the middle of winter. I got a bunch of ice in the. In the wagon, and I took the wagon full of ice, and I remember, I do remember this. And I went, I rang all the doorbells and I sold all the neighbors chunks of ice from the pond.
And I got home with a fistful of money. And my mom's like, whoa, where did you get all that money? I'm like, I went down to the lake and I sold neighbors. They're like, what? She's so embarrassed. What do you mean you sold the neighbor's ice?
But I remember that. And to your point, I love making money. I love doing deals. And that was like the first deal.
[00:13:33] Speaker A: Could you imagine how much, like, money you'd give a kid that rang your doorbell right now? That was exactly it equivalent of ice. It's like the hustle in. That is awesome.
[00:13:41] Speaker B: Well, when I see a kid with a lemonade stand, I'll park my car, I'll get out, I'll walk two blocks, you know.
[00:13:46] Speaker A: Yeah.
[00:13:46] Speaker B: Every time.
[00:13:48] Speaker A: That's great. So how did you go from you don't have to. You don't have to go step by step, but then maybe fast forward into. I read on your website you kind of talk a little bit about the origin story of Renovo in 2011.
[00:14:02] Speaker B: Yeah.
[00:14:03] Speaker A: Your partner in the business, Daniel Rosen, and you met in Starbucks in Lincoln Park.
[00:14:08] Speaker B: Armitage in Sheffield.
[00:14:10] Speaker A: Yeah. Recently renovated. And. And that was where he had a conversation about this new real estate company that you wanted to start.
[00:14:18] Speaker B: Yep.
[00:14:20] Speaker A: I mean, a pretty bold, like, topic for a meeting over coffee, you know, but also Daniel and I did back there.
[00:14:27] Speaker B: Yeah. So we did work together prior to that. So at my dad's lending business. So prior to that, I, with my dad, had a family business that my brother, myself and some other people were, you know, running for almost 10 years.
And we turned the home improvement lending business into lending to some developers, and we started to kind of experiment a little bit with what lending to rehabbers and developers would look like. Now, unfortunately, that. Fortunately and unfortunately that Business did not make it through the gfc.
But Daniel worked there also prior to that shutting down. So when that company shut down in May of 2010, that was a rough time. You know, everybody thought real estate was over forever.
The banking environment was a complete disaster.
[00:15:17] Speaker A: Yeah.
[00:15:18] Speaker B: But what we started to see is that, you know, rehabbers and builders were kind of coming out of the woodwork. Right? They were coming, it was like the walking dead. People were coming out of nowhere.
[00:15:31] Speaker A: Yeah, yeah.
[00:15:32] Speaker B: And I don't know, we just had a feeling that lending to developers and builders and rehabbers was like an expertise that was not going to go away, that the banks never really liked.
That's what I kind of figured out in early 2000s when I was doing even some fix and flips on the side was that the banks never really liked it. They would do a couple, but it was like pulling teeth. Right. And if they got distracted, they were gone. Right.
[00:16:02] Speaker A: The customer experience was also, it felt not consistent. You know, if somebody doesn't want to do that type of business, it's not going to be real smooth for the customer either. Exactly, exactly.
[00:16:13] Speaker B: So we kind of figured that out. And after being involved in my dad's lending business for about a decade, lending was in my blood. I kind of couldn't, couldn't. There's nothing, you know, the shutting down of that business was dramatic. Like I was so depressed for a long time, I kind of assumed I would work there my whole life. So when that shut down, it was pretty rough.
I had one of my best friends, dads sat me down and was basically like, hey, when are you going to kind of get back in the lending business? I was like, are you nuts? Did you see how I'm never getting back in the lending business? But honestly, he encouraged me a lot and I started thinking about it and there was so much about the lending business that I really loved.
And I love real estate and I loved the business aspect.
So I, in like late 2010 went, started going to Borders Books and sat down and wrote a business plan. Borders Books, Borders on North Avenue in Halstead.
I'll call out all the Chicago locations that, that things happen.
So I, it took me a long time because I never started a company before. I, I, I kind of worked at my dad's for a while, which, you.
[00:17:22] Speaker A: Know, you, you, you accelerated the business but you didn't start it from scratch.
[00:17:25] Speaker B: Starting from scratch is way different. So, so putting together a business plan, we're in the lending business and you need money.
So this isn't a capital Light business. It's like you need a lot of money and you need investors to get the thing off the ground.
So wrote a business plan, made a list of every kind of financial person I had ever met to pitch them on this idea of starting a lending company. And in the middle of the great crisis of 2010, which 8 out of 10 people that I would meet with were like, you're nuts. You know, many people told me, why don't you go get a job at Groupon?
Like literally many people. And I was just like, groupon?
[00:18:07] Speaker A: Why Groupon?
[00:18:08] Speaker B: And I, that was a very like.
[00:18:11] Speaker A: In vogue business at that point. Yeah, yeah.
[00:18:14] Speaker B: But, you know, I just kind of kept at it and meetings started getting a little bit better and a little bit better and then luckily stumbled through a couple meetings that went great and investor meeting.
[00:18:24] Speaker A: Investor, okay.
[00:18:25] Speaker B: Yeah, investor.
[00:18:25] Speaker A: Because you needed the capital to lend or.
[00:18:28] Speaker B: Yes. You know, if you don't have money to lend, you can't be a lender.
[00:18:31] Speaker A: Yeah. Or it's going to be really expensive to source the money to lend. Right?
[00:18:35] Speaker B: Yeah, you kind of have to have it. Right. I had learned enough run, you know, kind of running my dad's lending business for years that you need money to lend money, you know, to your inventory is money. You have nothing else besides money. Right?
[00:18:45] Speaker A: Yeah.
[00:18:46] Speaker B: So one decision was if we couldn't get a private Equity Investor Day 1, we were not going to start the business. That was basically the decision that, that, that I had made at the time was that if we didn't get the right partner day one, the company would never get off the ground. So wrote the plan, went and pitched a bunch of private equity investors and ended up cutting a deal with a Chicago based group called Granite Creek Partners.
[00:19:13] Speaker A: Still your partner.
[00:19:13] Speaker B: Still a partner in the business today, which is uncharacteristic of private equity. Typically they want to get out, but luckily for me, they still in and you know, cutting the deal with them.
And then, and then I ran over to Starbucks to meet Daniel and I was like, hey, I think we're going to get the lending business off the ground.
What are you doing?
[00:19:34] Speaker A: And he was like, I'm going to wear a Groupon. Dude, you're an idiot.
[00:19:37] Speaker B: Well, not only that, this poor guy, he was flipping house. He was making money flipping houses. But he was going to, he got into University of Chicago and he was going back to business school.
So he's like, well, I'm going to University of Chicago. I'm like, well, you'd have to like not go there.
And he's like, what do you mean? Like, you kind of have to drop out and do this full time. Like, you know, this is like, I got investors now. This is like a real thing. And luckily for me, by the time our coffee was over, he was like, out of. He was like dropping out of University of Chicago and we were starting Renovo and we rented a little hole in the wall office in the West Loop, which wasn't, you know what it is.
[00:20:15] Speaker A: So you made the West Loop cool too.
[00:20:17] Speaker B: By no stretch. It made me cool, actually.
It was part of the comeb.
So, yeah, we rented a little office space in Fulton, Mark in like West Loop and Jackson and Monroe.
And we got started. We rented one room. I took a desk on one side of the room. Daniel took a desk on the other side of the room. He started calling prospective borrowers and I was working with our investors on getting like loan documents ready and every detail you need to like, start a lending business from scratch.
[00:20:51] Speaker A: So do you.
You know, I, I started as a broker in 2011 and a lot of people said it was, you know, gave me similar feedback, like, why, you know, why are you starting the real estate business? And, and I remember how hard it was to get people to like these buildings. In hindsight, they were like pennies on the dollar to what they are today. But you couldn't get anybody out. And. But I'm so thankful that I started the business at my little business within, you know, firm I'm at at that time because it was not a. Not a popular business to be in and there wasn't a lot of new blood. There wasn't a lot of like, new energy. And so in hindsight, I'm very thankful for it.
At the time, it was really hard, but I think it allowed me to kind of get ramped up quicker when some of the competition was, you know, kind of beat up from working through a tough market or it, you know, there was a lot of attrition in real estate brokerage world at that time too. Do you. Do you think about that time and similarly, like.
[00:21:48] Speaker B: Oh, for sure.
[00:21:49] Speaker A: You know, because of kind of the hole in the market and because they're in addition to just like transaction velocity was down, it's harder to get money. But just like the new energy you were bringing towards this, I mean, you have this in your blood. You have this partner who's making this big life change. Yeah, I imagine that you insert a tremendous amount of energy into.
[00:22:09] Speaker B: Oh, it was a lot of that. Yeah. A lot of eating. No cracker. We made no money for years and years and years and years.
And so yes, it took a lot of energy to like to do what we were doing. It was a really lucky time to start. It was real estate had kind of bottomed out. Right. I mean, people in the market today who didn't go through that don't really appreciate how bad it was. I mean, it was, it was horrible.
[00:22:32] Speaker A: Yeah, right. I mean, you, you, yeah, I made, I went from a cushy job to making no money and like, you know, now I have some flexibility to make a good living and you know, it's like, oh, you know, I'm 15 years into doing it.
[00:22:45] Speaker B: Yeah.
[00:22:45] Speaker A: Or something like, what was good about.
[00:22:47] Speaker B: That time was that being a lender, you know, you, you, you will not be a lender very long if you lose money, it's, you know, you can't really lose money. We're not in, you know, we, we really truly can't and we do a little bit here and there or, you know, but I mean, it's you, you will not be in this business long if you don't have good loans that you make.
So the good thing about starting at that time, money was so scarce that we all had to move a little slow. Whether we liked it or not, you know, you just had to, so you had to put the right things in place. You had to put the right follow ups and procedures and underwriting guidelines. And as a lender, I mean, you, you, at that time, we were so petrified of making a mistake because what we saw happen in 07 and 8 and 9 and 10, you, you literally saw properties, you know, buildings that we would make a $500,000 loan on. That when we made the loan in, oh, six was worth 750 grand. Right.
And by the time the financial crisis happened, we had half a million dollar loans on buildings that were worth 750 that now we're selling for 190.
It's pretty sobering.
It's very sobering.
[00:24:00] Speaker A: Right.
[00:24:00] Speaker B: And you know, we all, if you were active in that period of time, everything you think won't ever happen, happen.
No one really lived through watching banks go bankrupt.
[00:24:16] Speaker A: I think it's interesting that you say that because it trains you, you know, you have to set up the procedures, but you also just have to like, you have to follow up. You have to do everything right.
When you're just constantly into a headwind.
The market's not gonna bail out a marginal deal. The market's not gonna like bail out marginal customer service or you know, salesmanship or you know, nothing. Everything has to go right if you're going to make it through that time. And you're also like, you don't have a track record. You know, you don't have.
[00:24:48] Speaker B: Correct.
[00:24:49] Speaker A: No one have relationships, but you don't have transactional relationships with people you know at that time.
[00:24:54] Speaker B: No. Because actually even if you were around before that, everyone's reputation, everyone's track record actually got wiped out.
[00:25:01] Speaker A: Yeah.
[00:25:01] Speaker B: Because whatever you were doing before didn't even apply anymore.
[00:25:04] Speaker A: Yeah.
[00:25:04] Speaker B: It got so rough.
[00:25:06] Speaker A: But it's interesting because you have to be. You talked about your word they used to describe, that your colleagues would use to describe you as positive. Like you have to be.
There's probably a better internally positive. You have to be very self reassuring in your positivity because.
[00:25:22] Speaker B: Yeah.
[00:25:22] Speaker A: Like when you know the real estate.
The real estate market has been good in some ways lately. In other ways it's been tricky. And there's real opportunity when it gets tougher. Because yes, good companies, good service providers, good principals, whatever, they get ahead when things get a little bit trickier. I mean that there is, it sounds cheesy to say, but there's opportunity when things get trickier, when market conditions are not perfect. That's when somebody who's really ambitious and in it for the long haul can. Can get ahead. Yeah, really, really tough to get ahead when everything's rosy.
And I just think that if I was starting out now, there are parts of the business that are better than when I started. There are parts that are, you know, there's other things. It's probably more challenging to get a listing. It's very competitive to get a listing. Probably easier to sell it because there's more liquidity in the market. There's more buyer demand.
So the opportunity is, it's tricky on one side of it and you have to like. And I'm sure there's similarities in the lending business too.
[00:26:29] Speaker B: Oh yeah.
[00:26:30] Speaker A: But that'd be a. It'd be something to remind if somebody's getting started and saying, man, it's a tough time to get started. That's a good thing.
[00:26:36] Speaker B: It's a great.
[00:26:37] Speaker A: Otherwise if it's really easy, tough time to start.
[00:26:40] Speaker B: If it's easy, everyone be doing it, you know, I mean, yes, it's, it's. We were lucky to start at that time.
[00:26:44] Speaker A: What when you think back in the meeting you had with, with Daniel or just you think back at the first like year or so of the business, what core values of the business or what, you know, initiatives of the business are where you just.
Are you spot on today. It's just. This is, like. This is exactly how we thought it would go. We're doing a great job of it. And is there anything that you underestimated or that you guys pivoted away from?
[00:27:14] Speaker B: It's a great question.
You know, if I really think about it, the thing I'm really proud about is, you know, we've been in business now nearly 15 years.
We have about 300 people with the company.
And when we first started, my business coach at the time had me write out, you know, like, he was big in making me write out a vision and in narrative form. So at that time, I spent a lot of time. He was like, okay, go buy a notebook. I want you to write in that thing, paragraph after paragraph after paragraph of what you want this business to be. Be. How do you want it to feel? How do you want it to look? You know, what do you want people to be saying about it?
And at that, even when we were starting, I was always, like, really excited about customer service and also very excited about company culture.
And those were two things that, like, from day one, if. You know. And one of the things he had me do around that period of time was also. You might laugh about this.
To write my eulogy.
[00:28:17] Speaker A: Oh, shit.
[00:28:17] Speaker B: Yeah, shit. It's gonna go deep here.
[00:28:19] Speaker A: Yeah.
[00:28:20] Speaker B: Because he's like, look, what's worth doing is worth writing down. Like, what do you want to be? Someone saying when you're dead? Like, what do you want? You know, and so, you know, one of the. So I've done that, and I have the same eulogy I wrote at that time. And a big part of it is obviously my family.
[00:28:37] Speaker A: Yeah.
[00:28:38] Speaker B: But a big part of it is also the business, you know, engagement. And a big part of it was being a part of a company that people love to work at and be at and can build their career and, like, you know, make money for their family and, you know, to have that kind of, you know, to be a part of that environment.
And when I do look around today and I see people, for the most part, I think really like working at Renovo, and I think we have a great culture and great people.
I mean, that's something that I. I am blown away every day with and I'm proud of and. And gets me even more excited about the next 15 years.
You know, keep it going.
[00:29:21] Speaker A: Well, you.
The company culture, you. You can't fake. You know, it's. I think it's very evident in the way that you're the people on your team carry themselves and just are present in the market. Like, I know.
Oops. I know Brandon and Eric, probably the best. And they're just like too.
They are living the brand and they are so, like, they're so personal. They're, you know, Brandon was in here for a workshop not too long ago. It's like, is.
He's just very serious about it, but all with the undertone of I like to do this.
And I think that that's a tough thing. It's a tough thing to do and establish even locally.
But the question is, how do you do it when you have 30 offices from coast to coast and maintain like I see everybody's posts like you, you guys have a happy business. Like, there's, there's clearly like a camaraderie even when, as I understand there's some, some offices around the country that don't have big teams there. So how do you.
[00:30:24] Speaker B: Yeah.
[00:30:25] Speaker A: How do you extend it past. It's, you know, I would imagine that it's easier to do at your headquarters here where you have a team.
How do you, how do you take it outside Chicago?
[00:30:35] Speaker B: Thousands of details. I mean, I don't think there's an easy answer. I think it does, it does kind of start at the bottom, which is me and Daniel.
I'm saying that on purpose, not the top.
Because, you know, if you have a servant leadership mentality, I think that really sets you up for the possibility of having a great culture.
[00:30:59] Speaker A: Yeah.
[00:30:59] Speaker B: Because there's nothing that someone's not going to see me or Daniel do, if that makes sense. Right. Like. Yeah, yeah.
And having a culture where, you know, servant leadership is present every single day and the, the obsession with customer service is present all day long.
[00:31:17] Speaker A: Yeah.
[00:31:18] Speaker B: The obsession with growth.
Growth. Not for greed, growth. Because if we're going to have all these talented, amazing people, these people want careers. Right. And they're not going to have careers at Renova unless we're growing. So it's.
[00:31:33] Speaker A: They deserve it and it's this responsibility to them and to each other. Yeah, yeah, exactly.
[00:31:38] Speaker B: So, you know, and if you can. And you kind of have to incubate that early on and get people and be really discerning about the people you bring on the team. You know, early on, we made plenty of tons of mistakes and we still make mistakes, but we would bring people on that were clearly not a culture fit for that kind of environment.
[00:31:56] Speaker A: Yeah.
[00:31:56] Speaker B: And.
[00:31:57] Speaker A: But they were smart or they had the right, like, resume for the position. You're like, you talked yourselves into like, oh, you know, we can make it work.
[00:32:03] Speaker B: Totally.
[00:32:04] Speaker A: And it didn't work.
[00:32:04] Speaker B: And it didn't work.
[00:32:05] Speaker A: Yeah.
[00:32:05] Speaker B: And you know what? Every day that you let those kind of people sit in the company, you're, you're just burning goodwill.
[00:32:11] Speaker A: Yeah.
[00:32:12] Speaker B: And you're, you got a problem. So that's a huge piece of it.
[00:32:16] Speaker A: When you, especially before you've grown to, you know, now you're 300 or so people. But when you're starting, there's less to dilute somebody like that too. So, you know, in ter's got a brand of, you know, call it. We've got 25 or so people. I don't know the exact count, but if one person goes rogue or is even just like, negative in the office or, you know, a jerk, whatever, like, there's not much to offset, you know, like, it just, it spreads pretty quick.
[00:32:42] Speaker B: Yeah. And it builds, though, quick too. So once you build to that, it, you know, the cool thing now, it's not real. You know, there's lots of people enforcing that culture.
[00:32:51] Speaker A: Yeah.
[00:32:52] Speaker B: It's hard to be at Renovo if you have a bad attitude. You kind of suck. I mean, it's, it's kind of bad.
[00:32:58] Speaker A: You are, you get kicked off the island.
[00:33:00] Speaker B: It's obvious, right? It's, it's you. Yeah. Hopefully you kicked off the island.
[00:33:05] Speaker A: So some of your products are what folks would characterize as like in the hard money loans, you know, or it's not. All right. No, but it, but the reason I'm not saying it that way is because the question I'll ask hopefully makes sense is like, I think that there's a stigma attached to that product of loan about kind of a sharky lender.
And you guys, I'm sure, because of, partly because of your culture, partly because of the customer service, are radically different than that stigma. That kind of shark you guys are. And I, I, I know that this isn't just like a marketing song and dance, very much partnered with your clients, very much like, let's grow our businesses together.
So does that make it. I guess there's a couple questions in there. Does it make it hard to maintain the culture when somebody coming in might believe that it, you know, it's that kind of sharky type business? Or have you guys laid the groundwork for getting, you know, kind of debunking.
[00:34:09] Speaker B: That stigma from, like, an employee standpoint? Like, if they come in with the.
[00:34:13] Speaker A: Like, what do you guys do when somebody's like, what do you guys do? Oh, we make loans to rehabbers and you know, smaller developers. Oh, so you guys are like hard money on it. It's like. Well, you know, we do that, but we're not like that. Is that, is that something that you have to sell through?
[00:34:28] Speaker B: Not as much as we used to, I would say. You know, when we started 15 years ago, you know, again, the, the lending world got really shooken up because prior to the, the gfc, the great financial crisis, banks were pretty active, right? They were a lot more active than.
[00:34:45] Speaker A: They are too active. In hindsight, they were a little too.
[00:34:47] Speaker B: Active, but they were very active. Right.
[00:34:49] Speaker A: Accommodating.
[00:34:50] Speaker B: And we were like the shadow market, I would say. Yeah, you know, we were kind of the shadow market. Like we were, you know, we were in the, in the darkness in the back. Like no one talked about the private lender.
[00:35:00] Speaker A: You can't, if you can't do with them, then maybe you talk to you guys, Right? Yeah.
[00:35:05] Speaker B: And you know, I think since, since the banks really, truly have not fully come back and in a lot of US cities, they're not, they're not active at all. I mean, Chicago happens to have a somewhat active banking community, but many markets we're in, they don't. There isn't at all.
[00:35:19] Speaker A: Yeah.
[00:35:21] Speaker B: So I would say what's really evolved is, yes, we started out of the hard money kind of world where we started, but always since day one, you know, we've had the mentality that we're going to be customer service obsessed with, we're going to have a great culture, we're going to partner with clients, we're not going to gouge people, and we're never ever loan to own, ever. Like, I would put our, our loan performance up against any bank any day of the week, hands down.
So nationally, any day.
So because of that now, what are you talking about? Hard money? I guess. What do you want to call hard money? You know, the word has kind of gone away because. Because private credit now is really mainstream.
[00:36:04] Speaker A: Well, so talk about that. I mean, because the banks are under increased scrutiny of late.
Right?
[00:36:11] Speaker B: The banks are under scrutiny.
[00:36:12] Speaker A: The opportunity expanded for private credit.
[00:36:15] Speaker B: Oh my God. Yeah. When we started, like when we started the company, you know, our big humongous goal was to lend $100 million for the, that was a goal for the check to have 100 million out in the in out in portfolio. Okay. That was the goal. And I remember when we started, our investors said, hey, you know, that's a big goal. If you even get halfway there, we're going to be really excited. It took five years for us to do that. Took five years to get 100 million out.
[00:36:41] Speaker A: Yeah.
[00:36:42] Speaker B: So fast forward to today.
We just equipped 7 billion outstanding.
I'm always saying it to put in perspective. I never, ever would have thought we'd have a billion outstanding, let alone 7 billion outstanding.
So, yes, to answer your question, the market has changed so much that private credit, not only in real estate, but in corporate lending, all types of lending, is happening outside of bank balance sheets.
It's happening globally. It's kind of happening everywhere. It's not a bad thing.
[00:37:14] Speaker A: No, it's not.
[00:37:14] Speaker B: I mean, bank balance sheets are not really built well for loans.
[00:37:18] Speaker A: Well, especially like when we do deals with Renovo. They're fast, They're. They're decisive. You're dealing. If you feel like you're dealing with another business that's trying to paddle in the same direction.
[00:37:32] Speaker B: Yeah.
[00:37:33] Speaker A: Versus, like, the minutiae that can come with doing, for instance, an agency loan. And, and there's, you know, I'm not. I've got. There's a lot of deals that are suited for that product. Oh, for sure. Deals that are suited for, you know, local banks.
[00:37:47] Speaker B: Yeah, 100%.
[00:37:49] Speaker A: But it's a refreshing execution because it's like, Yeah, I don't know how to say other than, you know, everybody's kind of rowing in the same direction.
[00:37:57] Speaker B: And like, there's an entrepreneurism, you know.
[00:37:59] Speaker A: That is there too loose, but also not just like, muddy in the waters just for the sake of, like, another document and another thing. And, you know, and we got to wait for the, you know, the committee in three weeks on Friday and all, you know, they're all thinking, you know, he's out of town that day, so we're pushing it to next month. It's like, like, well, it always cra.
[00:38:17] Speaker B: You know, people, you know, when I meet people and they ask about our, like, you know, how fast can you close a loan? I don't know. We typically are closing loans in, like, 10 to 15 days.
What do you mean? The bank takes 90 days. Like, but, you know, a loan doesn't take 90 days.
[00:38:30] Speaker A: Right.
[00:38:31] Speaker B: A loan only takes 15 days. The other 45 or 60, they're golfing, sitting around doing nothing.
[00:38:38] Speaker A: You know, it's just like that. People are conditioned for it to take that long.
[00:38:43] Speaker B: It doesn't have to.
[00:38:44] Speaker A: Yeah.
Good stuff. So when you look at your book of business, what may. What constitutes, you know, a good deal, what. And I know it doesn't sound like there are too many examples of the other side of the Spectrum.
[00:38:59] Speaker B: Oh, we've had our, we've made a lot of loans. We've had plenty of workouts.
[00:39:02] Speaker A: Right. Okay. So.
[00:39:02] Speaker B: Yeah.
[00:39:03] Speaker A: Are there any common threads on either side? You know, like what? For sure. You know, what do you guys look for? What do you know, Brandon and Eric and the rest of the guys, what do they look for in borrowers? Opportunities. And then on the other side, what are, in hindsight you can say, like, it's like hiring an employee that wasn't the right culture fit. Like the deals that you guys talked yourselves into doing that didn't go well.
[00:39:25] Speaker B: You know, similar to the hard money comment. I'll, I'll kind of tie it to that. So, first of all, the way we lend is we always are going to start with the sponsor first.
[00:39:34] Speaker A: Yeah. Don't I gather that.
[00:39:35] Speaker B: You know what I mean? So it's all about the person. You know, borrowers pay you back. Buildings don't, you know, and I understand that we may have to go to the building to get our money if the borrower doesn't pay us.
But, you know, it's an old, you know, JP Morgan, the guy who started the bank a long time ago, that was like his philosophy that he would say is borrowers are going to pay, you know, good borrowers will pay the bill. You know, you don't want to have to go to the building or the business to get your loan. You want the borrower to pay. And that's the business we're in. We're in the sponsor backing business. We're in the business of backing great real estate sponsors. Yeah, we consider ourselves in the real estate business, although we're not developers. We never, you know, we're not doing that whatsoever. We're trying to find the best sponsors we can and then finance their business.
So then it's sitting. If we find the right sponsors, they're going to be better under. They better be better underwriting underwriters than us on the deal.
[00:40:27] Speaker A: Yeah, right. Yeah.
[00:40:28] Speaker B: I mean, if you're, for example, if your best, you know, clients.
[00:40:32] Speaker A: Yeah.
[00:40:32] Speaker B: They better be able to underwrite the deal better than, you know, better.
[00:40:36] Speaker A: Better than me.
[00:40:37] Speaker B: I hope so.
[00:40:38] Speaker A: So they know, they know what they're going to do. Like, so there's, you know, underwriting is a funny thing because it's so subjective. It's like, and especially if you're executing a business plan to renovate something or develop something, then there's just, there's a range of opinions on every variable through the process.
So as brokers or as lenders we can underwrite a deal as we, you know, based on prevailing market conditions and based on, like, industry standards for maintenance and for, you know, cost to build. Yeah, but they are the ones that should and usually do if they're. If they've got a tracker. No, you know, actually know where they're going to be and there's a degree of risk in them. You know, there's variables that can change through the process, but, like, they know. So when we're underwriting something and.
And somebody says, you know, why did you plug this for management or this for leasing commissions or means? Well, you know, we try to underwrite things consistently so somebody can review our opportunities and, and look at them fairly, apples to apples, and then make their own determinations on how they're going to run it going forward.
[00:41:46] Speaker B: Right.
[00:41:47] Speaker A: I'm never playing. I'm not presenting the way that we underwrite something as gospel. Quite the opposite. It's like do your thing to however you're. However you see fit. So when you guys are looking at something, you have some trust after you're gonna. The sponsor, we're gonna trust in their.
[00:42:04] Speaker B: Numbers because it is, at the end of the day, we're putting money behind their ideas. So first of all, it's about the sponsor and it's about their credit worth, you know, their credit, their financial situation. We underwrite, we're gonna take a deep dive into their financials. We're going to want to see who is our sponsor, do they have the right capital, you know, they have the money to pay us back.
[00:42:24] Speaker A: Yeah.
The insinuation was not that you're reckless about it. It's just that, like, once you find those, once you do that vetting of.
[00:42:32] Speaker B: Them, once you find the right sponsor.
[00:42:33] Speaker A: Then you can really, like, kind of throw gas on it together that we've.
[00:42:38] Speaker B: Been funding since when we started. We've got many clients that we've been with for 10 years.
[00:42:45] Speaker A: Yeah.
[00:42:46] Speaker B: That have done hundreds of loans with us. And, you know, those are important relationships.
[00:42:53] Speaker A: Yeah.
I want to kind of pivot to talk about something that you touched on a little bit in, like, the introduction, and that's the foundation that you laid for your firm before you grew outside of Chicago. So anybody that's established some success in their business and thinks that they can grow it outside, you know, a lot more now than you did when you started the growth. So what was the most important for setting up the framework for Renovo Beyond Chicago?
Because lately you've.
When I go on LinkedIn like you, you've Set up offices across the country and clearly found good people. Yep.
How'd you start? What'd you get right? What'd you get wrong on the growth side of it?
[00:43:44] Speaker B: You know, I. I put Renovo into. We've had three phases so far. You know, phase one was growing Chicago.
Phase two was. And these were all five year increments, roughly. Okay, so the first five years was growing Chicago.
[00:43:57] Speaker A: Yeah.
[00:43:58] Speaker B: Second five years was trying to figure out how to get out of Chicago. And I don't mean out like exit, but just like how to expand our business outside. It took five years because we tried everything that kind of didn't work.
We, for years thought we had to go acquire other companies.
So we would go out and we would look for other renovos that were in Dallas or Boston or other parts of the country. We'd go meet with our teams, we'd meet with the ownership and spent years trying to acquire other companies.
Thank God that didn't work because I don't think we'd be where we're at today if we would have.
[00:44:31] Speaker A: If those would have worked, why didn't it work? They weren't doing it as well as you guys thought you could. Or it was a discount value or like, what was the.
[00:44:39] Speaker B: You know what? Honestly, everyone of them told, left us at the altar consistently. We would. We would find a great company that we like the culture and we like the people, we like the city and the market that they're in. And we would do all this work, we'd make them an offer, we decide what they wanted, and to some extent, we'd have term sheets signed two, three times. Companies just literally, like, left us at the altar. And finally when the third one happened, I remember our investors were like, kevin, stop doing this. Go do what you guys do best. Go find great people.
Literally, go.
One of our main investors was like, kevin, if you want to be on the east coast, go get a hotel room in New York.
Just go find the great, great people. And honestly, we kind of did that. So we, we got lucky and we started. Dallas was our first market outside Chicago, so we found the right person.
[00:45:31] Speaker A: When was that?
[00:45:33] Speaker B: It was 2019 is when we met John Shipley.
And John was an experienced guy, culture fit, smart, talented.
You know, I was introduced to John from one of the other guys on our team, and I had come back from vacation and they were like, kevin, we found this guy in Dallas. We think you're gonna like him. So I jump on a call. This was before zoom, right? People weren't zooming then So I get on a phone call.
[00:45:58] Speaker A: I hate Zoom.
[00:45:58] Speaker B: Yeah. I get on a phone call with John and we hit it off and I'm like, hey, what are you doing tomorrow? He's like, what do you mean? I'm like, are you available? I was like, yeah. I'm like, let's go to lunch. He's like, you're in Chicago. I'm like, not tomorrow. I'm not. I'm in Dallas. And he's like, really? I'm like, yeah. So anyway, I flew to Dallas, John and I went to lunch and I, you know, I said, here's the. Here's a key thing. I said, john, what's it going to take? What do we need to do to be successful in Dallas? Who. You know, that's the main thing we got to think about.
No one should be thinking about what we do Right. In Chicago because it's irrelevant. What are all the things we need to do to be successful in Dallas? Tell me the key things. And John knew the key things. And I'll tell you, it's different.
80% of it is exactly the same, but 20% of it is different.
And that's where you would totally lose.
[00:46:46] Speaker A: Yeah, right. Right. Yeah.
[00:46:47] Speaker B: I mean, I can't think of a good analogy to that. But you can imagine, like, if you're 80% right, 20% wrong in investing, you probably suck.
[00:46:55] Speaker A: Yeah. Look at the outsiders trying to do ish.
[00:46:58] Speaker B: So, you know, that was key. So getting John on the team and having him teach us what that 20% was in Dallas, I'll tell you a big difference. In, like, Texas, for example, versus a place like Chicago.
How fast do your deals need to close here?
[00:47:14] Speaker A: 60 days.
[00:47:15] Speaker B: 60 days?
[00:47:15] Speaker A: Yeah.
[00:47:16] Speaker B: Well, in Dallas it's like 10.
And if you can't close in 10, they're like, what's wrong with you? What are you doing? And it truly is a really fast paced market there.
[00:47:25] Speaker A: So the banks are all conditioned to be able to move.
[00:47:27] Speaker B: They are.
[00:47:28] Speaker A: Wow. So the speed is not such an advantage down there.
[00:47:31] Speaker B: It's a requirement to play the game.
[00:47:33] Speaker A: Wow.
[00:47:34] Speaker B: Well, we have to in Texas. I bet you are. Don't hold me to this, but I bet you our average days to close in Texas is like 6 or 7.
[00:47:40] Speaker A: Damn.
[00:47:42] Speaker B: And we had to. We had to figure that out because in order to play in Dallas and be a player, and if you look up, we are the number one private lender in Texas. There's no one more active in Texas. In Texas?
[00:47:53] Speaker A: Yeah. Wow.
[00:47:54] Speaker B: Yeah.
[00:47:54] Speaker A: Wow. How many states do you hold that distinction? Do you think?
[00:47:58] Speaker B: I think there's like number one, probably not that many. But if you say the top three, like if we're like where the markets were. Top three, probably 5ish markets. Yeah, top 10.
[00:48:12] Speaker A: So you're not going to these, all these, you know, different markets and dipping your toe in. I mean.
[00:48:16] Speaker B: No, no, no.
[00:48:17] Speaker A: The goal is to establish the goals.
Market two or three.
[00:48:20] Speaker B: Yeah, yeah. And the other thing is when we go to a new market and this is something also I would, I would think hard about if I was in a real estate related business is we never went to a tier 2 market.
We always went to a tier, to all the tier ones, big cities.
[00:48:37] Speaker A: Was it, was it transaction velocity or talent or combination?
[00:48:41] Speaker B: All the above. Right? Velocity. In order like here, in order to be a number one player in let's say a place like Texas, in Texas this year we'll probably land $500 million.
We don't have 5% of the market, you know, but we're still number one. But in order to do 500 million in no offense to any other Midwest town, you'd have to have 80% of the market.
[00:49:05] Speaker A: Right.
[00:49:06] Speaker B: Does that make sense? You know, as a lender you don't want 80% of the market.
[00:49:09] Speaker A: I grew up in Iowa and loved, you know, my upbringing. But like there's a generalization. But a lot of the ambitious folks that you, that you need to launch a business gravitate towards major markets. That's where you know, there's just this. That's why Chicago in the Midwest is such a beacon for like ambitious midwesterners is like if you have that like fire in your belly to grow a business, which is what you guys are looking for when you start a new market.
[00:49:34] Speaker B: Yeah.
[00:49:34] Speaker A: You're probably not in Des Moines. Well, that's where you're in Des Moines maybe you know, is like it's kind of on the come up.
[00:49:40] Speaker B: But that's where our loans work the best too. You know, we're making short term loans, we're putting money behind developers ideas to do a one to two, three year project. Right?
[00:49:49] Speaker A: Yeah.
[00:49:49] Speaker B: So in order to do that you need hustle.
[00:49:51] Speaker A: Yeah.
[00:49:52] Speaker B: Our clients have to be hustlers. They have to be in a market where there's a lot of velocity. People are buying, selling, moving.
If it's a slow moving market, you can't take a short term loan in a slow moving market.
[00:50:02] Speaker A: What's given now your exposure to all these different markets and how things could go.
What's a, what's something that we could do differently in Chicago.
I know there's, you know, that could be a long answer, but that would. It's a positive Chicago podcast. I'll remind you before it is for me too, as it's my favorite place that we could kind of open the floodgates for the business community or for the real estate community.
Is there a thing that you could, like if you distill down what really makes things click in some other market or other markets across the country that you have exposure to, is there anything that you think could, could change in Chicago for the better that would really make things flow a lot better here?
[00:50:54] Speaker B: This is going to sound funny.
You know, we're.
[00:50:57] Speaker A: It was a very rambly question.
[00:50:58] Speaker B: No, no, I get it, I get it, I get it, I get it. And look, I spend a lot of time myself personally in other markets, so I go to a lot of the cities we're in and I spend time there and I'm meeting with our clients and I'm seeing our projects and hearing about what they're doing. I actually think Chicago is an amazing place to, to invest and to be, you know, so there's, there's a lot less that I would suggest we change here. Like.
[00:51:21] Speaker A: Yeah.
[00:51:21] Speaker B: Not that I matter, but I mean, first of all, we got to get the property tax thing figured out. It's, it's, it's holding us back that we can't predict our property taxes. Yeah, it's, it's, it's, it's honestly idiotic that we can't predict. That's one, two is.
You know, it's not a, it's not the most business friendly city. It's unfortunate. You know, you don't see a lot of cranes in the air. It'd be better for confidence if we could see some more cranes.
[00:51:49] Speaker A: Yeah.
[00:51:49] Speaker B: You know, and there's need for apartment buildings. There's need for certain things and.
But all that being said, there's, there's headwinds like that in, in Chicago.
But in some ways, the fact that there hasn't been a lot of housing built here, you know, is what's also helping this market a lot.
[00:52:08] Speaker A: Oh, it puts a moat around existing inventory.
[00:52:11] Speaker B: Yeah. So, you know, it cuts both ways.
[00:52:13] Speaker A: Yeah. If it's this difficult, if it's difficult to build and you know, it's difficult to build in a lot of ways. I mean, number one, we have a very mature city. And so in a lot of these neighborhoods, there's scarcity of sites.
[00:52:24] Speaker B: Yes.
[00:52:25] Speaker A: And then there's zoning restrictions that you don't have, for example, in Dallas, which much looser and more Houston is.
[00:52:30] Speaker B: Especially Houston. There's not. No, you could. You could. You could build anything, anything, anything, anywhere. But honestly, it's not a positive. It's not?
[00:52:38] Speaker A: No, it's not. And people, you know, the grass is not greener. And so, like, then the market is good. And, you know, we also have geographic constraints. We've got the lake, we've got the river. You know, if you go west, you kind of run out of the city feel pretty quick. Right.
[00:52:50] Speaker B: Y.
[00:52:52] Speaker A: So, you know, for existing stock, it's a good thing. But, you know, if we want to see creation of additional housing, which kind of trickles through the whole ecosystem of housing.
[00:53:01] Speaker B: Yeah.
[00:53:02] Speaker A: It needs to loosen up a little bit. Right.
[00:53:04] Speaker B: It'd be better if we had, you know, a more positive outlook on business in general.
[00:53:09] Speaker A: Yeah.
[00:53:10] Speaker B: But you know what?
[00:53:11] Speaker A: You know, I'm sorry to interrupt you. I think that you are an example of what we could do as a business community to facilitate that conversation. Because my observation of the real estate world is that we have gotten.
This is, you know, more real estate specific than general business. But I think the same logic applies. We've gotten kind of beat up lately by, like, legislation and kind of like political f. The landlord type sentiment.
And it has put the real estate community kind of on its heels and gotten very defensive.
And I think the way that that translates to the customer is in a defensive manner. And it's like. And it's not. That's not a very welcoming way for, you know, somebody that sees the world or sees our, you know, the housing environment different. Yeah, it's not a very welcoming thing if you have a defensive community that's just gotten together at these, you know, in our circles and ranted about how unfair everything is and gotten all wound up about that, which it is. I agree. Some of this stuff is, like, totally nonsensical.
The way that it presents to the market is not in a very collaborative, let's figure this out way. So I think you are a good example. I try to be an example of it, too, is like, let's at least be people that come across as somebody you could have a constructive conversation about solving.
Yeah, this stuff.
[00:54:49] Speaker B: Yeah. I think positively what we have going for us in Chicago, and I'm sure you see this, right? You. You travel around you the country.
I. I get the luxury of traveling around a lot. And anywhere I go, people. Oh, where are you from? Chicago. Oh, I love Chicago. How many people love Chicago? My cousin lives there. I. You Know, it's really Peoria they're talking about, but I'm like, you know, but nonetheless, it's, you know, they. Chicago has a little bit of a marketing problem nationally because so many people love the city.
There's a deep love for this place, and we don't market it enough. I feel like that would be a good thing to get out there.
[00:55:25] Speaker A: Yeah, I agree.
Let's go back and then we'll kind of wrap things up with a few questions that I'm asking everybody that comes on, one of which we just touched on. But I know that you travel a lot. How do you manage the, the travel from, you know, in your personal life. But I also see you at the gym in a routine in the morning. So, you know, and so, like, I.
[00:55:48] Speaker B: Know you're there more than me.
[00:55:50] Speaker A: Structure to your day here, and you have a young family and stuff.
[00:55:53] Speaker B: Yeah.
[00:55:53] Speaker A: How do you manage jumping around so much with, with family life? And then also, you know, your business here, that requires some attention.
[00:56:02] Speaker B: Yeah.
You know, luckily, Renovo has an amazing team.
[00:56:07] Speaker A: Yeah.
[00:56:07] Speaker B: So I get to.
Because the team does such a great job and they run the business every single day. I mean, there's lots of things happening.
We're signing nearly 200 new LOIs every week. Like new, new term sheets every week. Right. So think about that. We're basically saying yes, and we're funding 200 projects a week around the country. There's a lot going on.
But the team is awesome. I mean, they're truly amazing. And we've, we've built this up over time. So that gives me the ability to spend a few days in new markets. And I'm not necessarily plugged in to every single, you know, I'm not plugged in everything that's happening. There's. People do. They're doing a better job than I would do.
Look, I, I, I, I'm in love with what we do, so that helps. I think if you love what you do, it gets a lot easier.
[00:56:54] Speaker A: Yeah.
[00:56:54] Speaker B: I feel like the luckiest guy in the world that this is like the door. The dorky thing. I get that I love to do, which is make loans on real estate. Oh, my God. Those are the two best things.
[00:57:03] Speaker A: Well, you're doing it for me. A city that you like. Yeah. This, these aspirations about when you were young. And then also, like, you know, like you talked about, there's a greater, like, you like the, you like making money, you like the success of the business, but you also have 300 team members now, and there's. Yeah, there's a lot to be proud of with the business.
[00:57:23] Speaker B: There's a lot to be proud of.
[00:57:24] Speaker A: It's pretty cool.
[00:57:25] Speaker B: And I'm still pretty much so, you know.
[00:57:27] Speaker A: And you got your foot on the gas still.
[00:57:28] Speaker B: Clearly two feet.
[00:57:30] Speaker A: Yeah.
[00:57:30] Speaker B: And I don't know, I don't think about it very much. You know, I don't overthink the travel. Here's what I would say. I try not to overthink it because even my wife's like, aren't you tired? I'm like, I don't. I can't get tired. It's like I can't actually go there. Have you seen the Walking Dead?
[00:57:45] Speaker A: I don't think so.
[00:57:46] Speaker B: Oh, it's a great show.
[00:57:46] Speaker A: You should watch it.
[00:57:47] Speaker B: There's these zombies that like can't think. And in some ways I've kind of related to this the Walking Dead because I'm like, my alarm goes off at 5:30. I'm not thinking about being tired. There's. I can't be tired because if I am, what's the difference? I still have to go to the gym. Like, I still have to go to tra. I still have to travel. I go to these markets. I want to see our team. I want to see people.
[00:58:08] Speaker A: So do you have any like, particular goals for the business, you know, for the next, Next level of Renovo the.
[00:58:17] Speaker B: Way we've approached goal? Yeah, so the, the next kind of goals are to get to 5 billion a year of annual loan originations and have 10 billion outstanding.
So those are the new. Those are the big milestones that we're.
[00:58:29] Speaker A: Working on and how close. So you're at. You said you're at 7 outstanding.
[00:58:32] Speaker B: We're about 7 billion. We've just eclipsed 7 billion today. So I think we can get to 10 billion by the end of the year. A good chance. By the end of the year we'll get 10 and I think we'll originate about 300, about 3.5 billion this year. So I think 5 billion is hopefully somewhere between one to two years, you know, away.
I have not been a big believer in setting. This is going to sound funny, but like setting dates with the goals.
I kind of believe in setting the goals with no dates in a sense because it's about getting there the right way.
[00:59:05] Speaker A: Yeah, that's what.
[00:59:05] Speaker B: Yeah, you know, there's a real reckless way. Oh, 5 billion.
[00:59:08] Speaker A: We could have just given away expense.
[00:59:10] Speaker B: Yeah, fuck it. Let's just, you know, who cares if they pay the loan back or not? Let's just do it, but that's been, been really helpful to set those big goals and everyone and I really, you know, I think if you asked almost anybody at Renovo what the goals are, they would know.
[00:59:26] Speaker A: Yeah.
[00:59:26] Speaker B: They would say those two numbers. 5 billion, 10 billion.
[00:59:29] Speaker A: I've met a lot of folks from your team and I, I think that they would understand the goals and I also am confident that they would understand the how, you know, and, and that's a pretty cool thing to be able to like give everybody that same, same vision.
That's. No, I mean you should, you should smell the roses on the success every now and then. It's pretty cool what you guys have built it too. So.
[00:59:55] Speaker B: Thank you.
[00:59:56] Speaker A: A couple questions to, to wrap it up before we let you out of here.
We talked about this a little bit. But for someone getting started in their real estate career, what's a piece of advice you'd give them to propel them in their career or to set themselves up for long term success?
[01:00:13] Speaker B: I'm biased, I'm sure.
Two things I would say.
One is seek mentorship.
Personally, I'm a huge believer in mentor mentors. To this day I literally always seeking out mentorship.
I've got this belief that if someone's doing something I want to do that I should go find the person that's doing the thing I want to do at the biggest scale I can get and I should try everything I can to be their friend, to become friends with them.
[01:00:43] Speaker A: Yeah.
[01:00:44] Speaker B: And then get their advice. Because you, you, here's the thing. You are who you hang around.
[01:00:49] Speaker A: That's true.
[01:00:50] Speaker B: It's an old school thing. It's totally true. Your parents told you that when you're a kid, stop hanging out with Bobby because he's.
[01:00:55] Speaker A: Dude, it's true. It's true.
[01:00:57] Speaker B: Yeah.
[01:00:57] Speaker A: Like the average of the five people you spend the most time with or whatever the expression is. I mean, but when somebody's trying to get to know you and you have a lot of polls on your time, you know, I, I try to reciprocate what I would.
I'm not so far removed from being the young guy that was looking for advice either. And I, I have the same kind of like seeking mentorship goal still today, but if somebody does it in a lazy fashion or without a actionable like response from me, I, I just, I don't really engage with it. Are you similar?
[01:01:38] Speaker B: What do you mean by that?
[01:01:39] Speaker A: So, so if somebody reaches out on LinkedIn and is like, hey, what can I do to get started in real estate? And I'M like, I don't. This is like, this isn't like a LinkedIn answer, but I feel like a dick.
[01:01:50] Speaker B: Look for a one on one relationship.
[01:01:51] Speaker A: Like, but if they come and they say hey I'm. Do you, do you have two minutes? Because I'm. Here's where I'm at in my decision making path to get into real estate. I'm thinking about these two different kind of avenues. Was wondering if I could talk to you about this.
I'm 100 say yes. Those are just very different ways.
[01:02:12] Speaker B: Building relationships to me is kind of the same thing no matter what. Like you're not going to walk up to some random woman on the street and ask her on a date totally randomly either. Right. Like if you, I mean maybe someone can. Yeah, I was never that.
[01:02:24] Speaker A: I got a buddy Donnie that could.
[01:02:25] Speaker B: Yeah, I was never that guy.
[01:02:28] Speaker A: So.
[01:02:28] Speaker B: You know, most relationships take some nurturing. You know, they shouldn't be awkward. You know, so there's a little bit of a natural element to it. But, but I do. So if you were to ask me, I think seek mentorship and keep those relationships and build those relationships and care about those relationships is huge.
The other is, I think real estate at the end of the day is finance.
Like these buildings are. I mean they're just buildings. There's bricks right. At the end of the day it's a financial situation.
So I would say try to do. You know, I'm biased. This is the part I was gonna say I'm biased about because I always wanted to know how money worked and that's why I, the lending to me was so exciting because like I kind of wanted to understand like how's this money thing work? You know, because it. And, and lending to me was a way to kind of like figure out like okay, I guess this is kind of how this money. Yeah. So that's the other thing. I think if you're going to be in real estate and be active, I think kind of understanding how this money thing works is like really important.
[01:03:31] Speaker A: I, I agree and I like the way that you expressed it. I also, the way that I think about an apartment building is its own little like kind of business within the bricks. Right. Like so they. And somebody could look at a development or redevelopment that way too. But if you approach an investment as this is a business and you're rather than.
This is a, you know, just a passive investment, passive real estate investment, I'm going to kind of milk it for whatever it can produce.
You're not gonna, you're Gonna pull a lot more constructive levers if you're approaching it. Like, how can I affect positive change in this business than if you're just like, it's just a building. Let's see how it goes. Yeah.
So last question.
You talked about it a little bit, but why do you love Chicago as a place to.
To live and to raise your kids, to work, to run your, you know, headquarters of your business, you know, to invest?
Why do you love Chicago?
[01:04:33] Speaker B: The list is, anyone who knows me knows I'm like, I won't shut up about. About how much I love Chicago.
You know, Chicago's people, to me, are our biggest plus. Right. Amazing people everywhere. We have a beautiful city.
We have. It's international.
It's also Midwestern.
It's like a soup. It's like, the best soup you could possibly get. Like, you can mix up, like, amazing Midwestern people with an international city.
You can do everything here, big and small.
[01:05:07] Speaker A: Yeah.
[01:05:07] Speaker B: And I think, you know, I'm raising my kids in the city, and we're lucky to be able to be in a. Think about this. We're in the. We're in the third biggest city in the United States, and it's not. I don't think it's in the top 20 for affordability.
[01:05:23] Speaker A: Yeah.
[01:05:24] Speaker B: That's hard to find. Right. Like. Like, how do you do that? Like, where you and I live in Chicago, the equivalent to that in New York.
[01:05:31] Speaker A: Oh, would like, West Village or whatever.
[01:05:33] Speaker B: I mean, we.
[01:05:34] Speaker A: Yeah.
[01:05:34] Speaker B: I mean, couldn't do it. Like. No.
[01:05:36] Speaker A: And it's also livable as a big city. There's these neighborhoods that have their own, like, little ecosystem. Little. You know.
[01:05:45] Speaker B: Yeah.
[01:05:45] Speaker A: That you can settle into. And, like, where we live, we both. Kevin and I live in Lincoln park, and we walk our kids to school.
They ride their bikes, and there are so many young families walking with us. And, like. And they don't all go to the neighborhood school that we go to. They go. You know, the kids from the block come up and, like, shoot hoops in our backyard or whatever. And, like, they go to different schools, and that's fine, too. But, like. Because I think of the. That we're like a city of neighborhoods. I think it makes it so you can. You don't feel like it's so vast that you can't. How can you settle down and live there? Because everybody gets a little bit, you know, their neighborhood becomes a kind of an extension of their home.
[01:06:25] Speaker B: Yeah.
[01:06:26] Speaker A: Which I don't think is the same in all big cities. As far as I've gathered.
[01:06:30] Speaker B: I don't know. I've never lived.
I never left Chicago. I've been here forever, and I, I, I'm not tired of it.
[01:06:36] Speaker A: Yeah. Yeah, you know, me neither. I, I'm, in fact, the opposite. Like, I am trying to appreciate more and more everything that I like about it because I think, you know, it's been. It's been good to, to me and my family. The city has. And I just get so sick of people dogging on it, like, same here. And, And, And I'm over it.
[01:06:56] Speaker B: But the people. You know, the funny thing is the people here dog on it more than anyone else externally does.
[01:07:02] Speaker A: I know. And that's part of the problem. You're talking about the marketing problem here.
[01:07:05] Speaker B: We need to be sub people here that dog on it the most.
[01:07:08] Speaker A: Yeah, right.
[01:07:08] Speaker B: Like, speaking to you right now.
Knock it off. Come down here for dinner. It's like when my friends from the burbs come down sometimes, they're like, oh, my God, the restaurants are packed. I'm like, yeah, where have you been? For the last time during COVID it was like the walking Dead. Yeah, it was a little rough.
[01:07:23] Speaker A: Yeah. But that was weird. Ever everywhere.
[01:07:24] Speaker B: No, I know.
[01:07:24] Speaker A: Yeah.
[01:07:25] Speaker B: But, you know, since then.
[01:07:26] Speaker A: Dude, I agree. It's also like, it's. I think it's way more.
I think if you're not living here, it's easier to read headlines and makes. Okay, Chicago is a big city. Happens. And it's like, on a per capita basis, it doesn't happen that much. And I think it's cooled down from a crime and safety standpoint. Cooled down from a crime standpoint. Perked up from a safety standpoint. Like, it feels like there's just less restlessness that way.
[01:07:56] Speaker B: Yeah.
[01:07:57] Speaker A: And I am.
I'm. I'm here for the positivity in Chicago. I'm not here to let people dog on the city.
[01:08:06] Speaker B: No, me neither.
[01:08:07] Speaker A: And I'm done doing it myself. I'm, I'm. I'm not griping on the little things.
Thanks for making the time.
[01:08:12] Speaker B: I'll try not to.
You're an inspiration.
[01:08:16] Speaker A: No, but thanks for doing this.
[01:08:18] Speaker B: Oh, man, this was fun. Thanks for having me.
[01:08:20] Speaker A: Keep being a great steward of Chicago.
[01:08:22] Speaker B: Well, you too.
[01:08:23] Speaker A: Thanks, man.
[01:08:23] Speaker B: Let's do it together.
[01:08:24] Speaker A: Appreciate you.
[01:08:25] Speaker B: Thanks.
