REI INK

Justin Parker

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“Getting Into the Weeds” to Achieve Success Where did you attend college and what did you study? I got my undergraduate degree at Clemson University majoring in finance and accounting. Then, I received my MBA with a focus on management and leadership at Queens University at the McColl School of Business. What positions led you to RCN Capital? Following my undergraduate time at Clemson I accepted a job at Ally Bank. The focus was within the Treasury Department, particularly within secured and unsecured funding. And really what that pertained to was managing our warehouse lines, our debt, and managing our securitization activity both on the secured and the unsecured front. It was a fantastic place to start my career and dip my toes in the water regarding financing, particularly within treasury. Most importantly, it was a way for me to start understanding the real world, and not just from an academic viewpoint. Where did you go after cutting your teeth at Ally Bank? My goal was to then take those experiences from Ally and apply them on a more granular level with a company that was newer to the space and start to help build something from the ground up. That’s when I made my transition from Ally to B2R Finance. My job at B2R was to come in and help solidify their securitization activity, which was a major focus for the company regarding what they were looking to achieve from a fiscal perspective, and then start to refine and grow the treasury and financial activities within the company. For me, it was a good way to go from what was well established in BS and ABS markets and bring that knowledge base into private mortgage lending which didn’t necessarily have the sophistication and the infrastructure at the time. So, it was a good way for me to step in and really start to have that level of impact. My goal was to continue to grow the company, continue to be ahead of the game in terms of the products we were offering, and be fiscally sound. Then, I met Jeff Tesch, which is ultimately what led me to RCN. Tell us about your move to RCN? I joined RCN in March of 2017 as a Vice President of Treasury and Capital Markets. Jeff had built a remarkable platform for private lending and a remarkable brand. That is what attracted me to RCN. And the goal was to blow this thing up and really expand our significance within the industry. So, the goal when I stepped in was to bring in new debt alternatives, new capital structures, new business models pertaining to how we’re funded, and to help scale the company. Jeff just kind of handed me the keys and said, “here’s what we got, go get it, I’m here to help, now make it happen.” Two years later, I moved into a Senior Vice President role working remotely out of Charlotte while the company was still primarily focused in Connecticut. As we grew the team and our structure, Jeff entrusted me to start building out a team here in Charlotte. The private lending industry allows for flexibility and creativity which ultimately leads to growth. Growing the RCN team was such a unique and awesome thing for me to be able to do during my time here at the company. Then in March of 2021 I was promoted to Chief Financial Officer. The company and Jeff really pushed me to achieve things that I quite frankly never thought possible. At RCN, what you put in is what you get out. If you walk in with a strong work ethic and are open-minded to new ideas and willing to listen, the company is set up in such a way where you can achieve things that you never thought possible. When I first joined the company, we had roughly 40 employees and doing about $100 million a year. Fast forward five years and we’re at 220+ employees and doing over $100 million a month. It’s all based on the company culture, attitude, and the trust we have in each other. Where do you see your future? First off, RCN will grow into a household name in terms of private lending. When you think of banks, you think of Bank of America or Wells Fargo. When you think of private lending, you WILL think of RCN. What I really expect to see next year, three years, five years down the road is, as a company, we will continue to grow and take advantage of this devolving marketplace called private lending. Personally, I don’t know if I have a great answer for this. I want to continue to grow and continue to evolve. And as the next year, three years, and five years progress, a lot of opportunities are going to present themselves for this market and for the company. I want to continue to grow my team and continue to put gas on the fire; take something that’s burning really well and just blow it out of the water. I’m a strong believer that “you don’t know what you don’t know,” and RCN is a great way for you to be able to learn and expand and discover. Looking back at your journey now, is there anything that sticks out that has shaped your outlook on your business principles or philosophies? One of the first things which I found to be so unique in my journey was when I started with Ally. Ally was a very well-established bank and a well-established corporate lending institution. You learn a lot about how these well-oiled machines operate, but you don’t necessarily get into the weeds. You understand the car runs, but you don’t understand what’s happening to make the car run. I learned a tremendous amount about successful treasury mechanics and what it means to have strong financial health, but most importantly, I learned about the weeds; understanding the goal and how to achieve it.

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Stockbroker to Real Estate

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The Key to Success is Mentorship Carl Bassett is a very proud “military brat” who has moved more times than he can remember. His father is a Vietnam veteran, and his grandfather was Brigadier General Roundy, who was the Commanding General of Fort Rucker, Alabama during the Vietnam war. While attending Westminster College, a private school in Salt Lake City, Utah, Carl Bassett began working as a stockbroker for Fidelity Investments in 1999 and completed his degree at the University of Phoenix, compliments of Fidelity. Successful as a stockbroker, Bassett decided to try his hand in the food industry and bought a Blimpie’s fast-food franchise two weeks prior to September 11, 2001. In 2003, he moved to Las Vegas to begin his ultimate adventure in real estate. The Beginning Carl Bassett was a real estate appraiser for ten years before transitioning to full-time real estate investing after regulations such as the Dodd-Frank Act came into play. He went to work as a consultant for Invitation Homes for a brief period until he bought his first HomeVestors franchise in Las Vegas in May of 2012 and became an independent business owner. In 2012, his new company, Black Rock Real Estate LLC, bought 67 houses and he was honored as “Rookie of the Year” by HomeVestors. Bassett attributes his success to following and trusting the HomeVestors systems and methods and to his Development Agent Mark McKeller and a trusted mentor, John Holman. In the next 10 years, mentorship will continue to be an invaluable part of his real estate successes. A New Business Model for Black Rock In 2021, Bassett began laying the groundwork for a new business model – buying houses near military bases and working with the military housing departments to rent his houses out to soldiers stationed at the base. The advantages to this model are many – most military bases are experiencing housing shortages, there is a built-in database of prospective renters, and late rent payments and maintenance issues are almost non-existent. As of December 2021, Bassett has bought 55 homes close to Fort Sill, Oklahoma and all were basically rented from day one. Obviously, Bassett is looking at expanding this model. The Present Day Black Rock Real Estate LLC is one of the top home flipping companies in the Las Vegas market. They have a staff of five full time employees and employ construction crews to repair and rehab the properties. Regarding his construction crews, Bassett says, “In terms of real estate investing, construction is #1 and property management is #2.” Their business approach focuses on long term relationships, and they are willing to walk away from a deal if it is not in the best interests of the parties involved. Bassett and his employees are passionate about first solving the sellers’ needs. “Real estate is about the person and not about the house; the house is secondary,” said Bassett. Bassett currently owns four franchises: Las Vegas, Kansas City (Missouri), Orlando, and a suburb just outside of Las Vegas. In 2021, he was recognized as “Franchise of the Year” having bought 157 homes that year alone. He also has the distinction of being the only HomeVestors independent business owner who has increased his volume year-over-year for ten straight years. Bassett’s key to success: Finding the right mentor. And of course, his wife Kalyn and their four children. Homevestors What exactly does it mean to be aHomeVestors® 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 for qualifying purchases and repairs, 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 with a focus toward your individual business goals. If you are interested in a franchise, call 855-454-4578. Each franchise office is independently owned and operated.

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SFR Marketing Plan

Study Shows One Marketing Tweak Results in 39% Reduction in Days on Market By Kori Covrigaru You can reduce a property’s time on the market by 39% by making one minor change to your single-family rental (SFR) listings: add 3D tours. Is there a return on investment when using 3D tours rather than still photography only? That is the question we set out to answer when we partnered with a client who was considering adding 3D tours to their rental listings. We will not bury the lead. We found that 3D Matterport tours reduced the number of days on the market. Not only that, but it also led to more pre-qualified leads and an increase in unique website visitors. To quantify that, if your carrying cost is $50 a day and you reduce the number of days on the market by seven, your ROI is 133.33% over one year. Considering your Matterport tours can be used repeatedly, you can extrapolate that over several years. That is a massive ROI. Let’s go deeper into what we found during our study, using 137 homes in Charlotte (91) and Dallas (46). Experiment Note: The control group used 15 photos and our test group used 15 photos and a Matterport 3D tour. Data Shows Decrease in Days on Market When we conducted this study, we analyzed 137 homes in two markets — Charlotte and Dallas. We found that on Zillow, listings with 3D Matterport tours received three to five leads per week. In Charlotte, this was an increase of 18%. On SmartRent Tours, we received one to three leads per week. This was a slight increase, likely because in-person tours are not necessary when you have already toured virtually. Our client also added Matterport tours to their website and found that the tours increased page views by 12% in Charlotte and 57% in Dallas. Unique visitors increased even more. Charlotte saw a jump of 18% while Dallas received an increase of 63%. Why Do 3D Tours Perform So Well? In a crowded market, there are many benefits to a 3D virtual tour: •          Extra visibility | They are more visible in listing apps. Zillow, Trulia, and the other major players highlight 3D tours in the list and map view, making them stand out. •          Special icons | Listing sites provide special icons indicating that the listing has a 3D tour. •          Pre-qualifies applicants | Because potential renters can see the whole home by virtually walking through it, they are less likely to pull their application or back out of a lease. With the extra attention that Matterport tours provide, the average days on the market decreased significantly. In Charlotte, the days on market decreased by 39% and in Dallas, the number decreased by 9%. After reviewing the data against different categories (such as price per category), we discovered that the reduction in days on the market was across the board. 3d Tours are Becoming Standard in SFR Marketing While conducting this study, we wanted to go beyond our test group, and research how many SFRs are using 3D tours in their marketing. We found that from 2021 to 2022, there was an increase in 3D tours among the three markets we researched. While not everyone is using 3D tours yet, we predict it will soon become standard. Now, you need to consider this question: are you going to implement 3D tours or be left behind?

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Q&A with Steve Johnston

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Sourcing the Right Agent Within the Single-Family Market With the spring homebuying season underway, REI INK asked Steve Johnston, CEO of IDEAL AGENT, how to sell single-family homes as quickly as possible at the maximum price. IDEAL AGENT’s goal is to help sellers earn top dollar on their residential property investments and minimize commissions paid to agents (which can be as little as 2%) while receiving high-touch service. The company is based in Tampa, FL and serves home sellers and buyers throughout the nation. Even after last year’s 17% rise in the price of existing homes, it appears that 2022 will continue to be a seller’s market. What is driving this trend? It is a pretty incredible time to be selling real estate. I have been in the profession more than 20 years and I have never seen a market like this one. The migration from the cities to the suburbs, largely fueled by work-from-home arrangements, remains a big driver. In popular suburban markets, this demand, coupled with inventory shortages, continues to incite bidding wars. At the same time, many buyers who left the market last year want to get back in while interest rates are comparatively low, and there are more and more signs of inventory coming soon. These trends also extend into the single-family-rental (SFR) market. Those potential buyers who cannot find exactly what they want would rather rent larger single-family homes than stay in cramped city apartments. Indeed, Green Street expects demand for about 7.5 million more housing units over the next five years, and they note that about “810,000 new households are expected to sign leases” for SFRs. The inventory shortages in the SFR market, too, make it an opportune time to sell. Given this overwhelming demand, why should sellers of permanent residences or single-family rentals be working with real estate agents? Shouldn’t they be able to achieve top-dollar sales on their own? No matter what their situation, sellers usually share two objectives—to maximize their yields, and to free up additional liquidity in the shortest possible timeframe. To accomplish both of these goals, experienced local realtors offer them a competitive advantage. These realtors have the right connections to begin marketing properties before they officially go on the market. They understand what improvements will offer a meaningful ROI, whether to sell with tenants in place or when a home is empty, the maximum value that the market will bear, and how to sort through multiple offers for any red flags. Many sellers shy away from realtors because they want to avoid high commissions. New technologies, however, have led to the creation of different kinds of real estate models so that sellers do not have to choose between earning top dollar, or minimizing fees. At IDEAL AGENT, for example, sellers are matched with a local professional who consistently ranks in the top 1% of their local market based on transaction and sales volume. The commissions sellers pay can be as small as 2%. IDEAL AGENT also represents buyers and has been educating them on the value of using a realtor, too—for the local market knowledge and connections they bring to the table. Especially for those who have been shut out of the market once, having access to well-respected realtors, with advance information about properties coming online, is invaluable. What are other advantages of using realtors in this market? Top realtors never work alone. They stay connected to a whole local ecosystem of mortgage lenders, appraisers, title and settlement service providers, real estate attorneys and others—educating one another on how they can collaborate to better support sellers and buyers. This is especially critical when it comes to getting to the closing table, and a mortgage is involved. Investors and sellers need to be agile and nimble, and mortgage transactions are the antithesis of this. Delays because of title curative, appraiser shortages and so forth can lengthen the housing finance cycle by two or more weeks. In meetings and networking events, realtors are introduced to local professionals who are focused on providing high-touch service, and are using technologies such as remote/desktop appraisals to streamline mortgage processes. They partner with these professionals and take advantage of new innovations to make sure deals get done as expeditiously and smoothly as possible. How else are technologies improving single-family home sales and investments? They are advancing the industry in several important ways. First, technologies are enabling the various parties in a real estate transaction to add more value by servicing sellers together. IDEAL AGENT is evolving here, too. Over time, the company will expand its original online platform, introducing sellers to a community of professionals who can work with them from listing to closing. Title agents are an example. Secondly, they will inspire new marketplaces that enable investors to capitalize on growth opportunities more quickly. There is potential for platforms where investors can pay cash for rentals, vetted and sold by realtors at low commissions, for use as long-term, income-generating properties. A third way is for property credentialing. Previously, I mentioned the frictions in mortgage lending that can be frustrating for investors. There is more industry discussion of ways to minimize this—such as the seller using technologies to provide the advance property credentials (titles, etc.) that their mortgage lenders will need. Do you have any parting words for single-family real estate investors? So much of the process of selling and buying real estate is a matter of timing. That is why it is important to find real estate partners who understand the urgency that is involved. Technology can never replace people with empathy, intelligence, drive, experience and a commitment to excellence. Sellers and buyers should devote the time and care they need to find the right realtor who will be 100% dedicated to meeting their goals, and then follow their proven advice. For instance, they may advise spending a few thousand dollars on small cosmetic improvements for a $20,000 boost in the sale price of a property. Alternatively, they may advise selling as

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Distressed Housing

A Winning Strategy for Main Street and Wall Street By Stuart Denyer It is no secret that the single-family housing market faces a severely constricted supply of inventory. Reports suggest that the country has experienced an “underbuilding gap” of 5.5 to 6.8 million units since 2001 with only a 1.7-month supply of homes currently for sale. The perfect storm of low supply and high demand has created record prices and fierce bidding wars. And now, investors and buyers face new fears of inflation, higher costs for labor and materials and skyrocketing rates—currently 4.8% for a 30-year mortgage. But there is a category of housing that has weathered the volatility of the Great Recession and is poised to continue to be a gamechanger for investors large and small: distressed housing. According to a White House brief, “approximately 40% of U.S. housing stock is at least 50 years old and more than 15 million properties are vacant even as families struggle to find affordable housing.” While builders are struggling to dig out of the hole and fill the gap, investors can fix-and-flip, or buy-and-rent, an older property much faster than a new build. From Wall Street to Main Street The opportunity with distressed housing is not new but was born out of the chaos of the 2008 foreclosure crisis. Companies like New Western served as an exit for institutions and banks to offload foreclosure properties and get out from under large pools of nonperforming assets. Many of these distressed properties made their way directly from Wall Street into the hands of Main Street investors who were only just beginning their journey as SFR investors. Not only did this provide opportunities for mom-and-pop investors, it also benefited communities across the country as these homes were given new life and neighborhoods were improved one property at a time. Prior to the Great Recession, small investors used conventional means to find and buy properties. But 2008 changed everything. It was time for disruption and data was the answer. In 2012, big institutions like Invitation Homes, a subsidiary of Blackstone, and American Homes 4 Rent began buying properties at the courthouse steps at or above market value. Their data projections allowed them to project future profit that local investors just did not anticipate.  New Western saw an opportunity to help bridge the gap. We aggregated foreclosure data and applied core algorithms to identify opportunities, allowing investors to identify and purchase their next property within days. Fast forward to today, and Wall Street’s investment in data and technology has made it to small investors on Main Street who can now tap into tools that they did not have access to before—from real estate platforms and apps to workflows and exit strategies. One example of how a small investor can capitalize on data is to identify properties with two lots on them. While a large institution is unable to work in such a fragmented space, a smaller investor can isolate available properties like this online and acquire them with a plan to resell the unit on one lot and retain the second lot for investment purposes. Bringing Wall Street technology to Main Street has also allowed for the online integration of property management, home viewing, and maintenance, all of which had historically been a time-consuming and inefficient process. These platforms, intuitive websites, and user-friendly apps have enabled small investors to easily expand and scale their business. On the flip side, big institutions may have big money and Big Data, but today’s market requires hyper-local intelligence. The Street has realized that technology cannot replace human insight. Pricing is happening at the neighborhood, block, and even individual house levels. Localized networks are a must. As a result, mom-and-pop investors are now offering inventory, local market information and understanding back to Wall Street institutions. The big institutions require large amounts of scale and swaths of land to build and rent. They are leaning heavily on local investors who aggregate inventory. Main Street plays an important role in helping Wall Street learn and scale. The Power of Small Being small allows tremendous flexibility and creativity to improve ROI—often in ways that are just not feasible for big buyers. In high-density areas, the small investor is able to capture benefits that are more difficult to attain for an institutional investor, such as renting garages or driveways to create cash flow. Savvy investors have gone into subsections of Seattle and have been very fast and innovative to create value—from getting a zoning exception for a pre-built nanny pad to building a free-standing apartment unit in the back. Investors are able to buy a property that looks like it is complete, but realize a significant profit—profit that would have been left on the table without an insider’s understanding of the local market. In expensive markets like Los Angeles, small investors have popped the top on detached garages to maximize limited lot size. Adding a room and renting a unit or simply reselling the property with an additional bed and bath creates huge value as the cost to build out the additional square footage is far surpassed by the potential return.  The Rental Reality “Investors are chasing rising prices because rental payments are also skyrocketing, incentivizinginvestors who plan to rent out the homes they buy,” notes Redfin economist Sheharyar Bokhari. However, large institutions often do what is in the best interest of share-holders, not middle-class Americans.  To put some numbers to it, institutional investors own approximately 450,000 homes in the U.S., more than half the total number of homes for sale right now. “Investors are buying everything from finished homes to entitled land and anything you can imagine to get scale,” commented Margaret Whelan, chief executive officer of Whelan Advisory Capital Markets. In some California markets, “neighborhoods that were formerly ownership neighborhoods…are being slowly, or not so slowly, turned into renter communities, and not renter communities owned by mom-and-pop landlords but by some of the biggest private-equity firms in the world,” commented Peter Kuhns, formerly director of

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Columbia, South Carolina

“Famously Hot” for Decades, City Remains a “Southern Hot Spot” By Carole Vansickle Ellis Columbia, South Carolina, has considered itself “Famously Hot” since 2008, when the state capital officially swapped its former slogan, “Where Friendliness Flows,” for the simpler description referencing, among other things, the city’s summer high temperatures of around 94°F. Unlike most city slogans that tend to last no more than four years, “Famously Hot” lasted nearly a decade before evolving to the longform “The Real Southern Hot Spot,” which the city adopted in 2017 and has retained since. Regardless of which slogan you prefer, the takeaway should be that the city’s real estate sector is certainly boasting serious heat, particularly for real estate investors prioritizing residential rental strategies. “Both the city and the surrounding suburbs have posted impressive population gains over the last 10 years,” observed Roofstock analyst Jeff Rohde at the end of March 2022. With just over half of the city’s population renting instead of buying, WalletHub listed Columbia as one of its “best cities for renters” in mid-2021 and, in Q1 2022, Redfin rated the Columbia housing “very competitive” for its multiple offers, waived contingencies, and sales for about 3% over list price and within as few as three days. Columbia, unlike many other metro areas, actually saw a slightly “cooling” in late 2021 as year-over-year metrics indicated slightly fewer homes (-5%) sold in September 2021 than did in September 2020. However, this cooling was likely more closely related to skyrocketing home prices and plummeting inventory than an actual decrease in value or demand. According to the South Carolina Realtors (SCR), median sales prices in Columbia climbed by more than 11% in 2021 while new listings volumes fell. By the start of 2022, Realtor.com had announced it expected Columbia home prices would rise about 12% in the coming year, which will likely increase demand for affordable rentals as more and more households elect to wait on a market shift to purchase a home. SCR president and ERA Wilder Realty broker Morris Lyles recalled a recent transaction that demonstrated just how difficult it can be to land a home in the area at present. “I have had one house listed [with] 19 offers on it,” Lyles said. “I literally put them all on my floor here in my office and was trying to sort through them.” Chris Winston, chief communications officer at the South Carolina State Housing Finance and Development Authority, warned that a serious dearth of affordable housing in Columbia and in the state at large is coming. “We know that across the state there are challenges because of lack of inventory,” he said. “There just are not enough affordable houses, whether that is apartments or homes.” Real estate investors are already moving in to help fill that gap, but it can be difficult to acquire properties due to the limited inventory available. “Willingness to Serve” Could be the Key to Residential Expansion One contributing factor to Columbia’s low housing inventory is its geographic location and municipal layout, which many developers found challenging early in the COVID-19 pandemic when buyers and renters both preferred single-family residential properties to multifamily properties that they feared might expose them to contagion. “It is kind of tough in the city because you do not just have large tracts of land where you can build single-family houses,” explained Columbia’s director of economic development, Ryan Coleman, in the fall of last year. Fortunately, as the general population has achieved a degree of clarity on the transmission of COVID and means of effective protection, the single-family preference is waning in favor of longer-established preferences for trendy living in business districts and downtown metro areas, making multifamily a good investment in the “famously hot” city. Investors should note that Columbia’s population is growing, but not as fast as other South Carolina cities on the state’s coast. However, Coleman said he sees “good trends” in the city with “a couple thousand people living on or around Main Street, down here in the BID (business improvement district) right now.” He added, “You did not have that 10 years ago.” The University of South Carolina (USC), with its flagship campus in Columbia, also plays a role in drawing in new residents over the long term, and investors providing student housing find a consistent demand for this unique asset class. However, USC does not just bring in students for four years; the school boasts nationally ranked research centers including the Center for GIS and Remote Sensing, the Center for Colon Cancer Research, and the Center for Digital Humanities as well as the Darla Moore School of Business, which is the top-ranked program nationally for its undergraduate program for international business, and the USC College of Engineering, which boasts undergraduate and graduate degrees in aerospace engineering and research opportunities funded by NASA at its McNair Aerospace Center. Roughly 40% of the Columbia population holds a bachelor’s degree or higher, and USC and other higher education institutions attract a combined 50,000 students in the area each year, many of whom remain in the area after graduation to work in the city’s thriving insurance and technology, software and IT, bio/life sciences, and transportation and logistics sectors. Columbia is also home to Fort Jackson, the largest military basic training installation in the country, and thousands of military veterans. The city supports this steady influx of desirable present and future professionals and employees by working hard to attract their employers to the area through tax credit and incentive programs, access to much-needed acreage for new development, and economic development grants awarded based on job creation, capital investment, and targeted industries. For investors seeking “crystal ball” insights into the area, watching Richland County’s designated “Willingness to Serve” reports indicating where developments may be pre-cleared for sewer services and other municipal services can provide insight into areas that may emerge as attractive residential areas in the near future. Columbia’s public transit agency, The COMET (Central Midlands Regional Transit Authority), announced this past

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