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From There to Here

Brett Worthington: Veteran To Innovative Disruptor by Alison Bishop “If you want to go fast, go alone. If you want to go far go together.” African Proverb. This African proverb is a core value of Brett Worthington, senior vice president of business development at Frontdoor. It symbolizes many things along his journey and in his life today. “I heard it from a great leader of mine whom I consider a mentor. I share it with anyone who’s ever worked for me and anyone who ever will work for me in the future, because it genuinely is a core value of mine.” Worthington’s journey is rooted in developing and leading high-performing teams, driving innovation and creating meaningful change for people and businesses. From a young boy growing up working on his grandfather’s farm, to his service in the Army, to becoming a true disruptor in businesses of all magnitudes, Worthington is no stranger to overcoming challenges and truly innovating in life and business in order to make something better. Worthington grew up no stranger to hard work and a strong work ethic. His dad was a banker who received his MBA. Both his grandfathers were farmers and ranchers, which is where he spent many summers working. “I got paid $5 a week. Every Friday my grandfather and I would walk to the bank. He would hand me $5 and say, ‘One dollar is yours, pay yourself first. The other $4 is to do whatever you want with.’ He was one of the smartest people I’ve ever known.” Worthington’s original career plan was to become a lawyer, until the age of 18 when he knew he was meant to do something bigger—bigger than his plan, than himself. He was going to make a difference. “A series of events led me to a phone conversation with an Army recruiter. On that call he wanted to talk about my ASVAB (Armed Services Vocational Aptitude Battery) score. To be honest, I don’t remember taking the ASVAB. I sat down with the recruiter for four hours at a Military Enrollment Processing Station and I told him I was going to make a difference.” Worthington enlisted as a 11 Bravo Infantry and dual MOS 12 Bravo, which at that time was a combat engineer. “When I told my parents, I had two weeks until I left. I will never forget the look on my parents’ faces, but it’s the best decision I ever made.” Worthington’s experience in the military not only shaped him as a leader and innovator, it taught him that you have to use the data and the inputs to make informed decisions, but it’s also important to trust your instincts and stay true to your values. “I think most successful entrepreneurs and leaders have that similar mindset. As long as you have the will and you’re grounded in who you are, and take a critical look at the opportunities ahead, whatever decision you are making—whether business, investment, family—those principles are there and sound.” After his time in the military, Worthington attended college where he earned a degree in political science from the University of Utah. From there, he went on to start building his resume and experience, which landed him an internship in the White House during the Clinton Administration, and he started forging his new path towards innovation. Over the last 13 years Worthington has been at the forefront of bringing new and innovative products to life. He served as vice president of global business development and strategic partnerships for Samsung SmartThings where he was responsible for the development of global partnerships and services as well as its go to market strategies. He led the development of an IoT smart home platform and served as director of business development for Ingersoll-Rand. He fostered and led innovation, invention and growth in the residential IoT Marketplace while at Quirky and Wink. Fostering innovation to drive change in the home With a passion for innovation and making a difference in the lives of others, it makes sense that Worthington sees tremendous opportunities to re-define how home services are delivered and experienced—especially now, with homes more essential to families than ever before. Frontdoor’s flagship brand, American Home Shield, has been providing home service plans to homeowners across the nation for 50 years. It’s leading home service plan brand founded the home warranty industry. In that time, the company has had more than 70 million service requests. “I didn’t know anything about the home warranty space before joining Frontdoor. But when I looked at the home and the opportunity to truly innovate and become the go-to solution for home services, I knew I had to be part of that transformation.” Worthington notes that after five decades of serving homeowners through its home service plans, the company is tapping into its strengths and expertise not just to drive transformation within its operations, but across the $400 billion U.S. home services industry. “What really drove me to take this role, outside of the opportunity to innovate and build a marketplace, was the culture at Frontdoor,” Worthington said. “To truly foster innovation, you have to have a culture that supports it and that is grounded in that mindset.” The foundation of Frontdoor is its House Rules, its commitments to obsess over customers’ problems; be an owner, not a renter; be transparent, build trust; and do great things every day. “The culture and the foundation of innovation and doing great things every day is what I get out of bed for every morning. Love problems, not solutions resonated with me. I think true innovators love digging deep to thoroughly understand a problem they’re trying to solve, never jumping to the easiest solution.” “When you think of owning a home, or several properties, you know there will inevitably be breakdowns to the home systems and appliances. When you add a home service plan to that home, you are adding convenience and budget protection for when those items wear down. Now, think about

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The Evans Brothers and Team

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How Cody and Chris Evans Turned a Small Idea into a Huge Reality In 2002, Cody and Chris Evans had an idea: “Let’s buy homes, remodel them, and sell them.” So, that is exactly what they did. Little did they know that their “part-time” idea would develop into an extremely successful real estate investment business. During the day, Chris was a real estate agent and Cody owned a construction company. This seemed like the perfect pairing of skills as they began their “after-hours” operation in LA County, and they very quickly recognized the financial potential in flipping houses. “Then the leads fizzled out,” said Cody.  While trying to figure out how to solve the leads dilemma, Cody saw a HomeVestors (HVA) billboard which sparked his curiosity. “We had been running a real estate brokerage, an appraisal company, and a construction business together and buying, repairing, and selling houses on the side for years, but around 2011-2012, the leads started drying up. We were not sure how HomeVestors would be able to find the leads we could not. We were working in the same industry, so if we were struggling, why weren’t they?” A couple of months later, after doing his due diligence and overcoming a bit of skepticism, Cody and his partners bought a HomeVestors® franchise in Los Angeles, and Patriot Holdings was formed. Shortly thereafter, they got their first deal in Pasadena which turned out to be a “win-win” for everybody involved, according to Chris. The Growth of a Team The Patriot Holdings partnership team expanded to the four Evans brothers, the sons of a professional drummer—Cody, Chris, Corey, and Casey; and Scott Mansfield and Britton Briscoe. They decided to go full steam ahead and own six HomeVestors franchises; three in California, two in Florida, and one in Texas. Scott handles Texas and assists across the board with valuations, and Britton handles Florida. Initially, just like other “newbie” HomeVestors independent business owners, they thought they knew more than their mentors and did not exactly follow the HVA model. Looking back, both Chris and Cody admit that they should have trusted the system from day one. After trusting the system, they purchased nearly 100 homes in one year. Today, Cody, Chris, and Britton are a Development Agent (DA) team covering California, Oregon, Seattle, and Florida. They are the second largest DA organization within HomeVestors. The DA program provides the necessary field support for both the new business owners as well as the seasoned ones. The Future is Bright The Patriot Holdings team is excited about the future. The first quarter of 2021 was their best yet, and they see the balance of 2021 being just as strong. Cody speaks for the entire team when he explains, “If you treat sellers the right way there will always be tremendous opportunities. The fact of the matter is that there are people in need of our services, and they will sell to someone they trust. What it comes down to is that it is about us and that seller—not about the house. HomeVestors teaches you to look at what a seller’s needs are, and then figure out how you can meet them. We love having that piece be a part of the work that we do every day—going to sleep knowing that we’ve helped someone else out of a difficult situation, but also made some money for ourselves and our families.” HomeVestors What exactly does it mean to be a HomeVestors business owner? Owning a real estate business is life changing and naturally comes with risks! When you become a HomeVestors® business owner, you get immediate access to motivated seller leads, financing resources, one-on-one coaching with your local Development Agent, proprietary software for analyzing properties and deals, and access to a nationwide network of coaches and peers. Your house-buying business is yours and you run it as your own venture. If you are interested in a franchise, contact April Nealey at april.nealey@homevestors.com Each franchise office is independently owned and operated.

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PlanOmatic 3D Tours Increase Single-Family Rental Property Leads by 25%

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PlanOmatic Measured the Impact of 3D Tours on Single-Family Rental Property Marketing in Partnership with a Leading Provider of SFR Homes Nationwide PlanOmatic, the biggest and fastest provider of Property Insights and marketing services for the single-family rental industry nationwide, announced the results of its test that measured the impact of 3D tours on single-family rental property marketing. The test was conducted in partnership with a leading provider of single-family rental homes nationwide. PlanOmatic’s test data found that property leads increased by 25 percent, and days on the market decreased by 23 percent when a 3D tour was used to market a property compared with only using professional photography. PlanOmatic’s test tracked more than 162 of its partners’ properties across three markets—Indianapolis, Memphis, and Dallas. PlanOmatic created 3D tours for each property utilizing new Ricoh Theta Z1 cameras, which produce the most visually accurate 3D tours and models on the market today. PlanOmatic formed a test group by adding a 3D tour alongside professional photography, alternating between Matterport 3D and Zillow 3D, to the property listing online. The test group was compared to a control group that used only professional photos to market the property, and the activity was monitored between February 8 and March 26th. “Most home searches start online today, and this has changed the way in which single-family rental properties are marketed,” said Kori Covrigaru, co-founder and CEO of PlanOmatic.  “Digital tools such as 3D tours allow a consumer to visualize a home without having to step foot in it, and the data from our test proves that single-family rental properties that are marketed with 3D tours online result in increased consumer leads, and fewer days on the market. Consumers are demanding 3D experiences online and prioritizing properties with 3D assets.” With a network of hundreds of contractors across the country now equipped with Ricoh Theta Z1 cameras, PlanOmatic is now the largest and fastest provider of 3D tours and digital floor plans to single-family rental investors, owners, and operators nationwide. PlanOmatic provides 3D tours, floor plans and property insights for properties nationwide within 48 hours from the time an order is placed. About PlanOmatic PlanOmatic is the biggest, fastest provider of Property Insights, 3D tours, photography, and floor plans for real estate nationwide. The company’s full suite of property insights and marketing services allow single-family rental (SFR) investors, owners, and operators to make fast, accurate and well-informed decisions throughout the property life cycle, including acquisition, renovation, and leasing. With a vetted network of hundreds of professional contractors across the country, PlanOmatic ensures SFR investors, owners, and operators receive all orders within 48 hours. For more information, visit www.PlanOmatic.com. Kori Covrigaru is the Co-Founder and CEO of PlanOmatic, the biggest, fastest provider of Property Insights, 3D tours, photography, and floor plans nationwide. With an unwavering determination for client success, he has created a team that thrives on the core value of “together we win”. With a national network of 200+ contractors and 40 employees, Covrigaru has met the moment with the unique value proposition PlanOmatic offers through technology combined with data to support their clients’ goals. 

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How COVID Has Changed CRE Lending

Debt Markets Are Improving by the Day by Cynthia A. Hammond Capital allocated to lending on commercial and multifamily real estate is plentiful today, especially for individual investments of over $30 million. The COVID shutdown caused lenders and investors to pull back from originating loans in the 2nd & 3rd quarters of 2020. As recovery from the COVID induced recession commenced, investors were awash with capital to be placed in commercial real estate debt. This was caused by existing funds allocated to commercial real estate (“CRE”) debt that was not invested in prior quarters, and new money being allocated to CRE debt and equity. Some lenders found themselves short staffed, as key staff had changed jobs during the recession, or were reassigned out of loan originations. Faced with large investment goals and limited staff, many lenders have increased their minimum loan size. In our survey of 40 middle market life insurance company lenders, 27% increased their minimum loan amount in 2021 to over twice the prior year’s minimum loan, from a 2020 average of $7 million minimum loan to a 2021 average of $15 million. Still, 19 life companies in our survey are actively making loans of $10 million or less. These small to mid-sized life companies generally lend through correspondent mortgage bankers in local markets. These mortgage bankers originate, underwrite, and often service the loans for their life company lenders. For a borrower to obtain a loan from these companies, they would work through the correspondent mortgage banker. The life companies generally charge zero or minimal loan origination fees, and the mortgage banker obtains an origination fee for the loan, paid by the borrower. These lenders generally will not take a loan from the borrower directly. Many do not require repayment guarantees. Different Approaches to CRE Lending Lenders writing smaller commercial property loans of under $15 million are composed of banks, life insurance companies, agency lenders and securitized CMBS lenders. Many national bankshave reduced or reached maximum capacity for construction loans, especially on multifamily properties, and are now competing head-to-head with life insurance companies for fixed interest rate loans of 3-10 years, often with minimal fees assessed for early prepayment of the debt. Community banks are stepping in to the gap, writing construction and permanent loans, both with personal guarantees. However, some will require no repayment guarantee at a leverage of 55% +/- loan to value or less. Life insurance companies emerged from COVID with different approaches to CRE lending. Interest rates dropped sharply in 2020, with the 10-year Treasury bond yield dropping from 1.88% on 1/2/20 to a low of .54% on 3/9/20, to 1.57% on 5/9/21. CRE loans are generally priced off the 10-year Treasury yield, and/or in comparison to corporate bonds of similar risk. Faced with very low rates on newly originated CRE loans, some pivoted their loan program to writing “bridge-light” loans, with interest rates fixed or floating of 3% or more. These 2 to 5-year bridge loans are made for a property in transition, with light value-add work to be done, and existing cash flow that can cover debt service on an interest only basis. Others are making fixed rate construction/permanent loans, heavy value-add bridge loans or mezzanine loans for new construction of multifamily or industrial properties. The majority of life companies decreased their maximum loan value to be closer to 60%, and offer very low fixed interest rates in the mid to high 2’s for leverage of 55% or less. Select life companies are writing non-recourse permanent loans at 70-75% of value, with 10 year fixed rates generally at 4% +. CMBS lenders became active again beginning in the 4th quarter of 2020, following a 39% decline in volume in 2020 from 2019. Commercial Mortgage Alert published a survey of 19 lenders and other industry pros, who predict a 28% increase in CMBS volume in 2021. Year to date, U.S. CMBS volume is 14% higher than 2020. Representative rates for a variety of loan and lenders are shown below. What Are the Desired Asset Types? Property types most desired by lenders are industrial, multifamily, self-storage, and medical office. Less favored are retail and office. For non-multifamily properties, most lenders are seeking diverse rent rolls with longer weighted average remaining lease terms or long-term leases with credit tenants generating sufficient income to cover debt service. CMBS lenders are filling in the gap in demand from life companies and banks to make non-recourse loans on retail and office. Grocery anchored retail and well-designed retail strip centers are being financed by banks, CMBS lenders, and a subset of life companies. Life companies seek a grocer anchor, preferably on a lease with the borrower, who has strong sales and is either in the top 3 in market share in their trade area or is a specialty grocer like Trader Joe’s. Some life companies have specific expertise in understanding retail real estate, and are finding success lending on solid retail centers that may not have all of the most desirable characteristics. An example is a recent loan done by a life company on an established, very well located strip center in an affluent Chicago suburb anchored by a CVS and Ace Hardware. This center had long, strong occupancy history and an excellent location. The life company made a non-recourse 15-year loan with a 25-year amortization, at a rate in the high 3’s, with a rate re-set in year 10, at 68% of appraised value. Industrial properties attract the greatest number of lenders and investors, and all are fighting to get their share of the business. Life companies will finance Class A distribution/logistics projects with very low interest rates and some will agree to close following completion while the property is in lease-up. Multi-tenant and credit single tenant industrial loans are being made by life companies, banks, and CMBS lenders with fixed rate terms from 3 to 25 years, at leverage maxing out at 75%, with the lowest rates for leverage at 60% or less. Multifamily generally ties

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Virginia Beach, Virginia

“Neptune City” is Ahead of the Curve, and That Could be Good News for Investors  by Carole VanSickle Ellis In Virginia Beach, Virginia, a lot of real estate metrics are heading down – but it is not the bad news you might think. In fact, Virginia Beach, also known by the nicknames “Neptune City” and “The Resort City,” could represent an exciting new market for real estate investors looking for opportunities in 2021’s white-hot housing sector. Recently dubbed one of the three “least competitive markets” in the country based on average down payment, length of time spent shopping around for a mortgage, and credit scores of homebuyers, Virginia Beach topped the list for a lack of competition. Riverside, California and Atlanta, Georgia, were second and third, respectively, and boast some of the most accessible real estate for comparable markets in the country as well as remaining relatively friendly to real estate investors. Virginia Beach also posted median list prices of “just” $305,000 at the end of April 2021, making it the fourth-most affordable housing market in the country. The average homebuyer in Virginia Beach can expect to dedicate just over 22 percent of their annual income to housing costs. Only Fort Wayne, Indiana; Wichita, Kansas; and Detroit, Michigan, can offer better numbers than that, and none of them offer the prime outdoor recreation options available “where Chesapeake Bay meets the Atlantic Ocean,” as local VB businesses like to boast. Finally, Virginia Beach housing starts were also trending downward at the start of Q2 2021, with Redfin reporting a drop of 10.5 percent year-over-year in the area. Redfin chief economist Taylor Marr credited the drop to the fact that cities with declining numbers of housing starts tend to “have less vacant land available and less space zoned for housing development.” So, why are these downtrends potentially good news for real estate investors? In the parlance of today’s housing analysts, the Virginia Beach real estate market is both “attainable” and highly desirable due, in large part, to the market’s forward movement through the “boom” that has left many areas of the country grasping desperately for both affordable and attainable housing and brought it out on the other side with relatively positive metrics for both. Thus, the downward trends actually place VB ahead of the housing cycle the rest of the nation is experiencing and positively position real estate investors to take advantage of a market with solid grounding ahead of the national curve. “Attainable housing” is a general description applied to nonsubsidized housing accessible to households earning between 80 and 120 percent of an area’s median income. Homebuyers seeking attainable housing tend to not only fall into a “gap” as far as availability of desirable housing is concerned, but they also tend to place a higher priority on trending homebuyer preferences than many developers and builders expect. This means that if homebuyer preferences are trending toward walkability or proximity to recreational greenspace, then a homebuyer with the ability to acquire attainable housing will opt to rent housing that meets their preferences rather than buy a property that does not do so. Although the COVID-19 pandemic and subsequent housing inventory crunch may have lessened that tendency slightly, markets like Virginia Beach that offer attainable housing that meets these buyers’ preferences are optimized for the post-pandemic market. Investors able to acquire existing inventory and upgrade that inventory are likely to find themselves with a highly desirable portfolio on their hands whether they elect to fix-and-flip or rehab-and-rent. Virginia Beach’s Strong Support for the Employment Base Says It All Although Virginia Beach, like much of the country, took an economic hit during the near-national lockdowns in response to the COVID-19 pandemic, the area has recovered rapidly since late summer last year. In October 2020, the area posted unemployment around 6.6 percent; by March 2021 that number had fallen to 5.8 percent and has periodically dipped lower. Although Virginia Beach mayor Bobby Dyer warned in early May that the area might continue to see relatively higher unemployment rates than other cities in the region, he credited ongoing unemployment benefits rather than a lack of opportunities for employment for that relatively high metric. “The blessing and the curse was the unemployment,” Dyer explained in a round table discussion with other mayors and public officials. “People elected not to go back to work even though they had the opportunity.” Businesses in the Virginia Beach area are both hiring and thriving, despite some worker reluctance to fill open positions. The area’s top employers are highly recession-resistant, which further solidifies the local economy. Local military bases are responsible for more than 10,000 civilian jobs, while a variety of healthcare and health science companies create another roughly 10,000 positions. Virginia Beach is a hub for international commerce, with 20 internationally based firms locating their headquarters or North American headquarters in the area, and Fortune 500 companies Dollar Tree and Huntington Ingalls both have their headquarters in the area. The Virginia Beach Economic Development Council (VBEDC) cites the city’s “numerous advantages for most companies” new to the area as a major reason the local economy continues to grow. Annual business license fees are capped at $50 for each of the first two years of operations; the state has a relatively low corporate income tax of 6 percent and has maintained that rate since 1972; and Virginia Beach offers $1,000 in tax credits per job created after the first 50 positions within a 12-month period. In a bid to attract more headquarters and larger employers, the state also offers discretionary incentive grants to companies “creating significant headquarters, administrative, or service sector operations,” the VBEDC reported. The results of these efforts are clear. CNNMoney.com Report ranked the city second on its list of “Most Business-Friendly Cities in America,” while Governing Magazine awarded it the same title in its own publication. Recently, agricultural startup Sunny Farms LLC announced it would build a $59.6 million hydroponic operation in the area, creating 155 jobs and opening

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Optimizing the Loan Life Cycle

NTC Keeps Focus on Core Competencies, Client Success by Carole VanSickle Ellis When it comes to protecting the interests of the nation’s largest investors, servicers, and mortgage lenders, Nationwide Title Clearing, Inc. takes an innovative, research-based approach to perhaps the most intimidating and complicated facets of real estate and lending. NTC’s official description is often listed as that of a “document processor” or “research service provider,” but that relatively simple nomenclature encompasses a vast array of services and a dedication to tracking down vital minutia in lending records that can make a difference of countless thousands—or even millions—of dollars for NTC clients. “We create processes and manage them based on very complex rules,” Jeremy Pomerantz, vice president of business development at NTC, explained. “There are more than 3,600 jurisdictions in the United States, each of them with a variety of rules and requirements in terms of the paperwork and processes that affect the loan life cycle. It is our job to understand those rules and help our clients remain compliant so they can get business done and mitigate risks.” NTC maintains an entire team of individuals operating “in the background,” as Pomerantz described it, to keep channels of communication between NTC and every county in the country. This provides the company with an ongoing, constantly updated series of requirements, templates, licensing processes, and recording information that enables institutional and large-scale investors to keep their loan portfolios in compliance. “Each deal is different,” Danny Byrnes, chief revenue officer at NTC, observed. “Sometimes our role is as simple as providing the assignments of mortgage from entity A to entity B. Other times, it involves clearing up faulty chains of title and perfecting what is on record for transfer.” Of course, all of this must be done with little or no delay, regardless of the complexity of the process, which is where NTC’s extensive experience beyond the conventional field of “title clearing” comes into play. “We have handled some of the largest transfers in our industry’s history,” Byrnes noted proudly. “In the last 15 years, we were involved in four of the largest transfers directly via boots on the ground and mechanical involvement in the capital markets sector.” A Track Record of Evolving to Meet Client Needs NTC was founded in 1991 in California and relocated to Palm Harbor, Florida, in 2002, where its headquarters have remained since that time. In the past 30 years, NTC has weathered multiple economic cycles and grown to more than 600 employees operating in three different states. “With each new growth phase, NTC keeps its focus on core competencies and client success,” said Pomerantz. The latest manifestation of that focus is the company’s new custody facility housed in Florida, which has a capacity of over 2 million collateral files, the latest in controlled access and security, and even Radio Frequency Identification (RFID) for use in locating, tracking, and updating files in record time. Thirty years ago, the concept of title clearing was relatively simple and close to what most investors envision when they think about the process today. Put simply, a title clearing company’s role in a real estate transaction was to investigate the chain of title on a property and determine if there were any issues to be resolved prior to a new individual or entity taking ownership of the property. These issues often involve unpaid liens, easements, and other situations wherein an unknown or undisclosed party holds interest in the property. In the event that such issues existed, the title clearing service or a settlement agency would work on each issue to resolve it and “clear” the title. If an issue were not resolvable, it would be noted as an exception in the final title policy and not covered by title insurance. That process, historically simple in light of today’s title clearing processes, is considered by most real estate investors today to be so complex that the services of a title company are invaluable and a nonnegotiable part of doing business. NTC’s role in the industry is magnitudes more complicated than its initial title-clearing processes from 30 years ago. Awareness of the vast array of complex scenarios that can exist in a large portfolio of loans and the ability to identify those scenarios and resolve them is a core strength for NTC operations. “Each client is unique and needs a different combination of our services, which include collateral cleanup, custody, prepping pools of loans for securitization, exception management, clearing exceptions, tracking payoffs with lien releases, and many other complex, high-volume processes integral to the successful packaging, sale, or purchase of loans,” Byrnes explained. “It is not uncommon for our prospective clients to tell us they have thousands or even hundreds of thousands of loans they need to move in the next six months, and they need our services on every one of them.” The cost of failure when it comes to the title clearing and post-closing processes is staggering in the mortgage industry, where a single oversight may be magnified thousands of times over across a loan portfolio. In the industry, both a buyer and a seller are responsible for their own due diligence on any acquisition and may attach a “side letter” to the loan sale agreement that essentially promises to “fix” any exceptions in the loan pool within a predetermined period of time. If the exceptions are not fixed, the buyer can sell the loans back, giving buyers a significant advantage over the seller if loans are not performing as expected. “‘Buy-back’ can be a four-letter word for sellers,” Byrnes said. “Our services are designed to make those side letters, which are a common and accepted aspect of the business, smaller and easier to manage. For example, some transactions might have side letters listing 2,500 exceptions on a pool of 5,000 loans. By comparison, a side letter with 600 is much easier to tolerate and manage.” NTC uses an internal platform to track exceptions and the widening pool of “ripples” that results

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