Scaling Real Estate Investing to $500M in Ground-Up Deals

Hey everybody, Toby Potter here at Global Trading Finance. We're here in Dallas today at LeverageCon. Have a big expo going on, real estate investors. We've got a ton of capital markets, ton of lenders. I mean, if you are looking to get into real estate, real estate investing, and you need a resource for funding for evaluations, for docs, all that.

It's here at LeverageCon.

But right now we have the honor and privilege of meeting with Ryan Garland with Paradigm, right? And we're going to talk to Ryan about what he does, what sets Paradigm, you know, what makes them unique into the industry, and how they can help you grow your book of business. Ryan, welcome aboard, buddy.

Well, thank you for having me. It's an honor.

You bet. So tell us a little bit about you, the company, and what your sweet spots Sure.

So based out of Southern California, I like long walks on the beach. Yeah.

So Southern California.

Yeah.

So L.A.?

Yeah. So L.A. area, San Diego. I believe it or not, I actually started in the private lending space, but even before that in subprime. So right before the market crashed, way back before. Yeah. So I— a lot of people know me because I'm actually the number one man cave developer in the country. But I started in hard money lending, believe it or not. So back in the man cave developer, I build man caves for a living. Yeah. I actually have it. I build storage units like boat and RV storage condos.

Yeah.

I also build a lot of single-family homes. I built 17 homes on the show Million Dollar Listing.

Really?

So I've— I used to work for Anchor Loans. I was their top producer. I had— I had 19 processors, 72 employees while under my origination, number one originator in the country. This is right after the crash, right? Yeah. So I created a huge network of borrowers kind of throughout Southern— in fact, the really how I built my network was Remember Armando Montalongo? Yeah. Okay.

Yes. Yeah.

So when they did their Master Mentor program, what they would do is they would have bus tours. People would pay $40,000, $60,000 to get on these bus tours and learn how to flip properties.

Yep.

And two of the brokers in SoCal that built the relationship with them on the Master Mentor program used to come to me and I was the private lender for all of their clients. Wow. So I would do a bus tour of 300 people. Yeah. You know, let's just say every quarter. And I would have, you know, 40, 50 loans right out the gate. Yeah. So I really started building my reputation there. And then obviously when, when the 2008 crash hit, you know, the only money that was hitting the market was workout turnaround, distressed asset capital. And so I ended up rubbing elbows with a guy. I don't know if you were in the space. I've been doing this for 20 years, but I was working, I was working with a gentleman that, believe it or not, approached me in Las Vegas. Who was a former pension fund manager out of China. He came over with $2 billion of family office capital and started buying up distressed assets all over Las Vegas and then Inland Empire, Southern California. Yeah, two most recognized distressed asset REOs for just regular residential, right, in the country. Those two locations, I think. And then I think second, there's a place here in Texas. I don't remember exactly where, but anyway, so he basically gave me an open checkbook for anywhere between $30 to $40 million a month to go out and either do workout turnaround loans or start buying assets and do fixing and flipping myself.

So, so if, if they, if you couldn't do a workout with the, with the client, then you had the option just to buy the property outright.

Yeah.

At a discounted rate.

So I was actually the guy who spearheaded and founded the leaseback program where we would go in and in essence we would work with the borrowers at the time and they would, if they couldn't get a loan modification, we'd convert it into a, into a, into a short sale. Remember, you know, Obama did put the Forgiveness Act in 2008.

Right.

So the, the, whatever the deficit was, it was forgiven. Right. So it was a big incentive to try to short sell homes. What I was doing is I was going to the homeowners and going to the attorneys that were charging upfront fees back in the day, whatever it was. Unbelievable. They were getting disbarred for that.

And so I should have been.

And I built a, I built a business around targeting them saying, hey, why don't you come to me and I'll convert your borrowers from not able to get a loan mod, but short sell it. I'll buy it and then at a discount, right? Like $0.70 on the dollar.

Right.

And then I'll do a 36-month leaseback and give them the option to purchase.

Then they could get their credit, everything fixed up, financing, and come back and buy it back.

There you go. And obviously, you know, usually at that time, you know, maybe one of the spouses, you know, had lost their job and they were on one income, right? So they really needed to bring down their payment or they had an option arm, negam, and they needed to get that interest on, right? So we were able to figure out a way to compress the cost from a monthly payment side based off of what our strike price was on the acquisition.

Right.

Keep families in their home. And then again, they'd have the ability to buy back the home in 36 months. That's an amazing— we did in August of 2009, I opened up the Paradigm brand. Yeah. And we did 276 short sales in October for $33 million. And that really kickstarted kind of the private money kind of overall investment in the real estate sector, whether it was commercial land acquisition, you know, land banking, whatever it was. I really kind of started playing around in that world.

So what do you guys, what do you guys do today that, that our clients and our customers can jump on and, and, and run on this amazing legacy that you're building?

Honestly, I'm at, I'm at a different place in my career. I, I still manage a $100 million debt fund. I fund loans, sell notes all throughout the country. Um, I do more commercial, larger, larger dollar amount debt pieces. More ground-up construction. I own a construction company. We're vertically integrated as a private equity firm.

Yeah.

So really what I'm doing now is I'm teaching borrowers how to cut their teeth flipping properties, or a lot of real estate agents or brokers that are like, look, I've been, you know, it's brain damage working with first-time buyers. It's time to start getting into fix and flips and start building their portfolio. What I'm doing is I'm telling them, hey, you need to think beyond that. Now it's time to get into maybe some commercial, maybe some land acquisition development. Building homes, whatever the case would be, we're kind of that— I would say that that's next step from borrowing money for fix and flips into now doing ground-up construction and start developing projects to the next layer. Yeah, because it never really ends.

No, it shouldn't.

Building high-rises.

Yeah, yeah. It should never end. It should never get stagnant to where you're only doing one thing horizontally. You got to keep going vertically.

And honestly, I tell everybody, I'm a perfect example of it. When I got into the business, I was literally slinging loans in a, in a in a call center, man. Yeah, I was doing— I was working for Aegis Lending and Subprime, and I was dealing with leads, and I was slinging loans and selling 228s, and I did option ARMs and 5/1s. I was just— we were just all about it. Well, and I think fun—

Aegis is one of those that came out with the 80/20 loan. So yeah, a guy with crappy credit, self-employed, can get 100% financing. And we sold a ton of those deals back in, uh, early 2000s.

Man, I think I, just kind of a funny analogy or funny, because I was in Vegas right before the crash. I was doing loans for women that were strippers.

Yeah.

They were doing, you know, I had one girl.

Oh, cash flow.

She built a business out of it. In fact, she was getting to a point where she's renting rooms for the week and weekend.

Yeah.

She was buying 4-bedroom homes and these girls would just rent them out for the weekend. Single room occupancy. She started, so she went from dancing to like owning real estate portfolios. Nice. So they were using our brand and in essence, our funding capital source to do it. That's awesome. So it's really kind of, so it's funny because even from then, you know, we had been helping people how to really start building their net worth through real estate.

And that's what it's all about. When you, when people look at why, you know, we ask, why do you want to get into real estate? And every one of them, 100% of the thousands of people I've talked to say, because tomorrow doesn't look as good as I thought it would.

Right.

Through my job, through my 401k, through my stocks. Tomorrow is not what I had hoped it to be now. And I got to do something now quicker. Yeah. Faster for a better legacy of financial security. Real estate is that place to get into. And we, you know, like you, we coach them to crawl, walk, then run, which is maybe do some wholesaling, understand the demographics of the market, maybe do some small lipstick flips, and then evolve that up into ground-up construction, multifamily. Now you're building generational wealth through that strategy and platform.

You know, it's kind of cool because a lot of, a lot of, you know, let's say the average folk, they have 401(k)s and IRAs and maybe had changed companies and they have a 401(k), they want to self-direct an IRA, right? We teach people how to, how to access the capital and retirement plan that they have, because obviously wherever the money's sitting right now, it's not making much.

No.

So how do you park it? Right. And when you have the volatility and, you know, if you look at the track record since what, '30s, '40s, you know, the hedge against inflation has always been real estate, right? When you have this type of volatility, the reason why you saw Warren Buffett liquidate all of his assets and he's at $290 billion cash reserves and he's sitting in a brokerage account at JPMorgan Private generating 5% behind access to his capital. Right. Because he knows the market was going to shift and it did a couple of weeks ago. Yes. So what's happening is people are becoming more sophisticated and they're starting to say, hey, I'm going to go to a cash position and start looking for opportunities, typically through real estate, because boomers are the ones with 401(k)s and IRAs.

That's right.

They're more comfortable in the real estate space rather than I AI or stocks or crypto. So what's happening is they're going like, look, in my time in my life, it's time to be a little more conservative. I don't want to take that risk, but I need to build my wealth and my healthcare costs are going up. I need cash flow. I need to start positioning myself.

Yeah.

So we're helping these people really create a timeline and really what— if they're saying, hey, I'm retiring in 3, 4, 5, 10 years, how do you get there? And we're not necessarily giving them, you know, retirement planning, but strategic real estate investment planning to really kind of start building their net worth? Because really, there's more millionaires made in real estate than anywhere else.

Well, Warren Buffett said it. Andrew Carnegie said it. I mean, you go back generation after generation. Every billionaire that I know says I have more money in real estate than I do anywhere else. And if those guys have, you know, 9-figure, 10-figure, 11-figure digits in their bank account and they're in real estate, a little guy like me needs to be in real estate too.

Oh yeah.

A little guy like you needs to be in real estate.

Well, if you think about their net worth really was built through that matter, you know, it's all just so So they're sitting there going, hey, look, you know, I'm continuing to acquire assets. And really, you know, what they say is cash is king.

Yes.

Right. So when you have the volatility like it is, really what we're doing is we're just targeting markets where you're seeing mass, mass migration.

Yes.

Right. So you're seeing people try to exit out of assets and they're moving into Texas or, you know, Florida, Georgia.

Yeah.

Phoenix. And so we like to hover in the older home space where you may have asbestos, you're tearing houses down. The layout's ugly, right? And you're starting to just tear them down, build maybe a duplex or whatever. But those are really the good, you know, good locations to start, you know, paying attention to for borrowers or even for building your net worth. Because ultimately it's like you can never go wrong buying real estate. Just really like watching the data and going where people are going, where's the demand, and just start building network, building your network of agents and brokers and, you know, start posting on social media what you're doing and build awareness that you're trying to build your portfolio. But here's your practice and here's your business plan and just start, you know, throwing it, throwing it out there.

Well, the key thing is for anybody and everybody, you know, I teach you have to have 3 things to be successful in real estate. Number 1, you have to have capital, whether it's yours or somebody else's. Number 2, you have to have the right property. It doesn't matter how much capital you have. If you don't have the right property, you'll lose your ass. But number 3, you have to have knowledge.

Yeah.

And most people are missing that knowledge. Maybe they got a good deal. Maybe they got a little bit of money, 401(k), IRA, whatever, but they just don't know what they don't know. This is where you find a guy like Ryan that can come in here, mentor, coach you, and guide you until you've done 10, 15, 20 deals and now you're set for success.

Well, now you rock and roll. You nailed it. You know, I went from a lender to really, you know, lending hard money loans and, you know, fix and flips. And because I was managing money, I was foreclosing on properties, right? I was— that didn't perform. Then I would get in there and cut my teeth on the construction. So I really kind of put— I was forced, forced into that, um, and I had to get outside my comfort zone. And I tell people all the time, you know, really, it's all about who you surround yourself— I teach my kids that, right? So at the end of the day, that's really where you want to be. It's like, if you're the smartest person in the room, you're in the wrong room.

You're in the wrong—

try to get into rooms where people are sophisticated, they've done this before, there's no emotion, it's straight data and facts, right? But at the same time, understand that you have to lose money. You are going to lose money. You will lose money. Your first, you know, 2, 3 flips, you may make a little bit, but really it's about the learning experience. That's the value. So don't think you're going to go in there and slay it. You're going to have the right people as mentors to go in there and say, okay, once you come up with a budget, stick to your budget, right? Because change orders are working to kill you. So, but make sure you do your homework. And they, you know, my uncle was the owner of Standard Pacific Homes, sold to Lennar. He told me, he goes, the number one, the way we made our money was based on our acquisition. Yeah. We knew our numbers. As long as we don't change our— what we're planning on doing with the rehab, what have you, or development, as long as we stayed on our numbers, you're good. The likelihood of us being successful was way high. It's all those change orders and, oh, maybe I'll change tile, or maybe I want to change, you know, or maybe I'll open up this wall. Oh yeah, that's when you get in trouble.

I'm only $1,000 over here, but then I'm another—

oh, it all adds up.

Yeah, yeah. And so we, you know, we tell people that, or I do, if you can break even on your first 2 to 3 deals, you are money ahead because your life experience is profound and priceless. It's, it's the same thing.

It's like they say, you know, you can go to a— go get a college degree, you're throwing money away because at the end of year 4, all the things you learned in year 1 was all a waste.

That's right.

It's so true. So really, the value, yeah, is actually doing the work. It's the emotions that you got to go through. It's the, the network, devil in the details, and working with your agent, uh, how to manage your laborers, how to manage your subs, and when, how to order your materials, like All of that management skill set goes through the roof. And what it did for me was learn how to manage people.

Right, right.

That's how I was able to grow my business because I'm only one person. Right. I was able to learn how to manage people, create expectations, realistic expectations, put things in writing.

Yeah.

Hold people up. I hold myself accountable.

Right.

And over time I got to a point where I was building trust with people. You kind of have to kiss a bunch of frogs. Oh, but once you find them, you stick with them. Yeah. Loyalty goes up and then now you're starting to build you know, a downline of people to support you. And now all of a sudden your business starts growing.

Yeah.

And if anybody— and you're going to nail this because you're successful in your space— any flipper that I know has a team like that, that they have a real team.

They have to build them.

Yeah. They have a controller, which is usually sometimes starts off with your wife managing the money, which is a really bad idea for my wife because she's out like, you know, paying off credit cards and going out and having fun. I'm like, babe, hold on, I needed that money. Yeah. But, but, you know, at the same time, it usually starts there. It starts like a family office. Yeah. And then you expand and then you start bringing in specialists in their field, whether it's a superintendent or a project manager or a buyer's agent or a rep. You know, you start bolting on departments of your company and all of a sudden you start turning into a heartbeat. And that heartbeat just produces a lot of fruit, man. So one of the— I'm watching people make very good money.

Yep. One of the things we promote, and it's a tagline, your net worth is equal to your network.

Oh, by far.

As you build your network, contractors, subcontractors, realtors, Wholesalers, you know, all those people that expands your ability to do more business. Oh yeah. Hey, Ryan, how do people find you to do business with you and how do they hook up with you?

But so first of all, I own a company called Paradigm Funding or Paradigm Company. So you can go to ParadigmCompanies.com. We spell it a little differently. It's P-A-R-A-D-Y-M-E. If you just Google Paradigm Private Equity, we'll be all over the place. You'll see we build a bunch of man caves. I'm an offshore boat racer. I have I'm actually right now I'm building a gym. I'm, I'm, I have a very rare Aventador SV.

Yeah.

So Lamborghini SV. I'm hanging it as a chandelier in my gym. I'm building.

No way.

Yeah. So I have all kinds of cool things that I do, but that's where you'd find me. But ultimately the big takeaway was I started from nothing. I was just a call center with a young man with hoops in my ears and black spiked hair and my shit down to my butt.

I can see that.

And I was slinging loans and now I'm here doing podcasts with gentlemen like you. So.

It's amazing.

Yeah. So right now we have $500 million under development. We're building, uh, in an area where we're the largest commercial developer. It's called Lake Havasu, Arizona. So we're really more of the West Coast.

Yep.

Um, I have stuff here in— I'm building apartments in San Antonio. Wow. Um, but you could also find me on Instagram. Look up Ryan J. Garland Paradigm. You'll find me on Instagram. That's usually how I really build my connection because it's constantly farming, right? And I'm always updating. Like right now, you know, I just posted right before we got on. Hey, I'm right here, you know. But really kind of encouraging people to step outside their comfort zone, it's okay to, you know, to push yourself. I mean, that's just the bottom line. It's like falling in love. It's a risk.

It's a risk.

It's a risk.

Yeah, you don't know.

You want to make money, you got to take the risk, man.

You got to take the first step. So hey everybody, uh, thank you so much for, for listening. My man Ryan here. Like, share, subscribe. Help him build his business, build our business. Tie into a network. Let's all grow together. Look forward to talking to you soon.

Thank you so much.