The Hiring Hack That Scales Companies in Under 1 Year | Tim Herriage

I'm sitting here today with Tim Herridge, founder and CEO of Turnus, which is a national private money lending company debt fund. They finance one to four unit residential properties for the most part that are. They'll fund up to 100% financing. And he has this crazy track record. Marine turned into real estate investor, turned into co founding a company with BlackRock and then taking that company public and selling that company, leading the national expansion of RCN Capital, which is another national residential real estate debt fund. And then now he launched Turnus. And we actually know each other through multiple different masterminds that we're in and excited to just hear your story. I have so many questions to ask you. You are an absolute powerhouse. And we were just talking offline too. He doesn't just work hard, he plays hard, he has fun and he's really living his best life. And I'm just. Thank you. Welcome. Welcome to the show.

Yeah, I got introduced at my buddy Mike Hamburgh. It's a mastermind investor fuel as the guy who put the fun in funding and, and, and I love that introduction, you know, God, I got out of the Marine Corps 24 years ago now, and if you told me that I'd be sitting here doing podcasts talking about the billions and billions of dollars of originations I've done, I'd been like, no, you get the wrong guy. So it's been a fun career and, you know, it's. It's great to have a true passion for what you do.

Yeah. Yeah. How did you. I mean, what was your upbringing like? And I mean, you went to the Marine Corps and then you got into real estate. So what led you to go into the Marine Corps? And then what led you to transition out into real estate?

So I ended up failing high school because of attendance issues. Came from a family that was kind of.

Yeah, like, kind of what?

Just not great. Divorce, drugs, that kind of stuff growing up. And when I. I graduated high school in summer school and I just needed to get out of town, so, like, there's no romantic story of 911 happened or whatever this was before 9 11. I just a buddy of mine, it's so unpoetic. We're at this party and this dude comes back from Navy boot camp and he's wearing his uniform and pulling all the chicks. And a buddy of mine goes, dude, we should join the Navy. And I go, nah, if we joined anything, I'd be the Marine Corps. He goes, let's do it. And we went and joined the next day. He didn't get to go because he had high blood pressure. So I went alone. We joined on the buddy program, but I went without my buddy. So then you know. But the Marine Corps really set me on the right track. I mean when I several combat things and a lot of culture, touring the world, getting to meet people from outside of my circle. I lived in Japan for two years. I've been, I was, I went to 17 countries in a five year period when I had never left the United States before. So it really helped me broaden my horizons. And then I saw you and Kiyosaki have done some things when I got out. So. So Robert Kiyosaki was a marine. When I got out of the Marine Corps, my gunnery sergeant, which killed Kiyosaki was a gunny, handed me the book Rich dad, Poor dad. And he goes, you should read this. And just like a good marine, I read it. And I was like, that sounds cool. And then I read Richest man in Babylon. Then I started out as a construction project manager for a house flipper in Dallas. Then I became someone's acquisitions guy. Then I became someone's dispositions guys. And mind you, this is like in 03, before all the social media information about this was available. I mean we didn't even use Google. We used Hydra as a search engine. My first website I built, I don't remember the platform but it was wholesalehouses.net and I built it in 2003. And I started with a constant contact email list and I'd go to the rias and collect business cards and like type them into constant contact the next day. And that's kind of how I got started. And then I got really lucky. Do you know Scott Horn in Dallas?

I don't think so.

He's got some title business out here in Arizona. Great mentor of mine. I sat down with him in oh 3,04. I said, I'm thinking about going out on my own and I want you to be my hard money lender. And he's like, dude, I've been watching you for a couple of years. Why don't we just partner and you can use all my money. And at that time he had like 600 houses. Everyone knew him and he was big into owner finance. So I'm going somewhere with this, just stay with me. And he's like, look, all these houses, you're wholesale and if you just wrap finance and around them you double your profit. I'm like, teach me that. And so then like, and that was back when hard money was 18 and 2 or 16 and 4. Like you could make good money with it. And then it got to where we were literally owner financing our wholesale inventory and turning $20,000 rips into $40,000 rips, like just by offering financing. And then we started building an owner finance portfolio. By the time 07 rolled around, I owned over 100 owner finance notes. I was like 28, 29 years old. Then, oh, eight hit. We lost everything. Fought our way out of foreclosure, fought our way out of everything. Ended up never having a foreclosure. But that type of market really hardens you. I hear people complaining about today's market. I'm just like, kids, it's fine. But yeah, I mean, and then out of that, I started this company called the REI Expo that I grew into the largest trade show in the nation. And then in 2014, I sold it to Eddie Wilson at Think Realty, and they now have sold that to Dan Fleischman at Aspire. And Andrew Cordle was one of my first partners over there. And. But through the Expo, I got to speak at the five star conference. Through the five star conference, I met the guys at Blackstone. Through that, we started B to our finance. We took that public in 2021. I was basically retired from 18 to 21, by the way. Don't do it. It's a horrible life. All I did was drink beer and eat barbecue and my mind kind of got stale. Like, I wasn't invigorated by anything anymore. Right. It was just blah. And then in 2021, the CEO of RCN Capital, good friend of mine, Jeff Tesh, called and said, hey, come join us. And so we worked it out. I joined as the executive director, took an equity position in the company. And then in late 2023, I listened to Start with Y again, and it put me on this course of Turnus, which, you know, is Latin for threefold. And threefold being, it's the golden triangle from the book, start with Y, there's three triangles inside the triangle. So everything is with meaning. So my entire company is built on the three core premises that gets everyone into everyone into real estate, which is, number one, they want to make money. Number two, they want passive income or cash flow. And number three, they want to build long term wealth or legacy. So our logo embodies our mission, embodies our name. So it's been fun. It took 12 months to do our first hundred loans. It took six months to do our second hundred loans. It took three months to do our third hundred loans. And we'll be doing 100 loans a month by the end of this, this year.

Amazing. Congratulations. I mean, you've just, you've done so many incredible things. I can't even begin to comprehend of, you know, partnering and partnering with Blackstone and then taking a company public and then going off and retiring and then starting a new one. So what were some of the, like, did you have a lot of success early on in your career, or was it a lot of force and resistance and failures before you were able to kind of break through and start to achieve some massive success in your life?

So many failures. I've started 17 companies. At least half have failed. Probably 20% were sold for profits, probably 20% were sold for losses, and then the rest still operates. So I actually still buy houses. I'm not as large as I used to be. We only buy like 50 a year, which some people would say, oh, my God, that's huge. But when you're used to doing two or three hundred a year, like 50s, light work. We wholesale some of them, we keep them as rentals. We've got short term rentals, midterm rentals, all that. I hate house buying now. It's boring to me. My wife would joke around and say that I'm the only person she knows that could work three hours a week and make a million dollars a year and refuses to do so. And. But once you've done it that long and that well, like, it's just not exciting. Yeah, I mean, God, the first year when I was a project manager, I remember. So this would have been, oh, two Christmas rolls around that year and, like, my cell phone's getting cut off. I don't have gas money. They owe me like $8,000 in back commissions. And I remember the owner of the company at that time had this Christmas party at his, you know, million dollar house over in the Elm streets in Dallas. And I go to it and I'm just thinking, this motherfucker, like, he owes me $8,000, which is $8,100 more than I got my bank account. And like, here he is throwing this lavish party. And, you know, that was tough. I ended up wholesaling a house that I bought that should have went through the company, and I ended up doing it on my own. And I deducted the commissions that they owed me, and I deducted the commission I would have got on that house. And I gave them the rest of the money. And the guy's like, you stole from us. I'm like, whatever, dude. Then I went to work with another Guy. And I knew early on that I did not want to just be transactional. I wanted to build a portfolio. Assets, right. And this guy promised me if I do a year, number one, he would take me to the homevestors convention. That was the ugly house company worked for for a while. And then I ended up having 50 offices and I made him number one in the nation. I bought 111 houses my first year with him. I wholesaled 87 of them. And then convention came around and we knew that we were going to be the number one office in the nation. And it was in Vegas and I'd never been to Vegas. So this is, I don't know, 28. I'm not even 28, I'm 25. And he's like, no, you got to stay. Someone's got to work. And I quit on the spot. And my dad's like, you are crazy, son. Who quits a six figure job at your age, no education. I'm like, I do. And that's when I met Scott. And Scott taught me finance and Scott taught me delayed gratification. He's like, no, no, we're going to make a bunch of money, but you're not taking it. You're going to put yourself on a reasonable salary and we're going to reinvest in the business. And I'd never been taught that before. So that was very important because it's the only thing that saved me when 08 rolled around because I had resources and patience and I'd built a stable company underneath the profit engine. So yeah, there's been. There's been a lot of failures.

So how did you not have a foreclosure in 2008 when you guys were financing? You guys are holding the notes on all these properties. I don't understand that.

Oh, I foreclosed on people. I just never had a bank foreclose.

On me and you. And you already had a bunch of properties at that time. Okay, gotcha. So you guys were. Your notes were in default that you had on the properties. So did that guy lose a bunch of money then? Did you guys lose a bunch of money?

Oh, yeah, Millions. Millions. I mean, it would be. I spent all of 08.09. I always joke around and I don't know, am I allowed to cuss on the show? Yeah, I joke around that it would be. I would have had a better time in 09 paying someone to come to my room and kick me in the nuts every morning to get back in bed than my life was because my Wife had to become a REO agent. So she was busy all day showing houses. And at night I'd go evict people, trash out houses, paint houses, sell them on owner finance, get the down payment, run to the bank to catch up on the payments. Like it was, it was a struggle. And the thing is, I've seen some people go through this in this real estate cycle. Oh, wait, I'm 30, right? I'm born in 78. So I turned 30 that year. And 27, 28 and 29. I was on top of the world. I was, I mean, there were months I made a million dollars, like we were crushing it. And by the way, that's like a million dollars in 07, not a million dollars today. And I had mentors and friends telling me, slow down, son, don't get over your skis, slow down. This doesn't last forever. I'm like, old timer doesn't know what he's talking about, man. Like, I'm Tim Harris. Like, I got this. Yeah, I mean, it was humbling. I think we lost about a million dollars. And when I say we, I don't mean like me and Blackstone or me in a big company. Like, I mean like me and my wife and fourth quarter, oh seven because the market actually crashed in August of 07 and we had 38 vacant flips going at that time. And all the subprime mortgages just evaporated. And so we were selling houses for 20, 30, $40,000 losses like crazy. I had one house. It's illustrative of the situation. I bought it for 300 grand and I had it sold for 375 on an assignment to this guy. So I'm going to make 75k market. The, the, the, the Lehman Brothers goes under, the subprime blown. Stop trading. The guy calls, says, you can keep my deposit. I'm out. I had a backup offer at like 3, 45. I called him, I'm like, hey, you can have this. And by the way, I got the 5,000 deposit, so you can have it for 340. He's like, no, man, that market's dead. I'm out. I'm just like, come on dude, like, I get it. Like, let's negotiate. Like what you want 320? He's like, Tim, you're not listening. I'm out. So I arrogantly close on that house, spend 50, $60,000 fixing it up and sell it for 270.

Jeez.

So literally in a 90 day period, that asset went from an easy 75k to 100k loss. And that was the world I lived in for a year and a half. Everything I knew got turned upside down.

How did you get through that?

When your back's against the wall, you know, you can either curl up or fight. And I mean, I'm a Marine, so obviously I pick to fight. I. I don't know. I mean, most of my friends ended up getting divorced, most of my friends ended up going bankrupt. I had some friends commit suicide during that time. People don't understand, like, how bad it was. Like, I mean, it was bad, but how do we get through it? Oh, and by the way, we had a kid in 09 as well, so. And my wife had cancer, so. My wife had cancer, we went through the recession and had a kid all within a 12 month period. Yeah. How do we get through it? Like, I think our marriage still has some of the scars from that time. We fought a lot, but she'd work her ass off during the day and I'd work my ass off at night and on weekends. And you just, you do what you have to do to get by. And I've just never been a tuck and run kind of guy, so it's like, there's a problem, solve for the problem, you know. The beautiful thing is though, it's made me a very resilient, confident businessman. And even more importantly, I say to my team all the time, like, no one's going to die. Like, there's not an IED underneath that piece of paper. Like, just calm down, we're good. Solve the problem, solve the problem, solve the problem. That's all you can do in life and business. And so it's made me a much calmer leader because, I mean, I've been in situations where people die. I've been in situations where the market was collapsing. And so like, the fact that a warehouse line doesn't fund a $200,000 loan and I gotta wire the money from my personal account, like, it's just. That's a small lift these days.

Yeah. How so? When you. I'm trying to think of the, the, like trajectory of your events. So what were you doing when you partnered up with Blackstone?

Yeah, so I was running the REI Expo and wholesaling houses, and through the REI Expo, I got introduced to the guy that runs the five Star conference in Dallas, which is like the biggest nationwide default and reo conference there is. Back then they had 5,6000 attendees. And through that event, Ed Delgado approached me and was like, hey, I need you to speak. And I Want you to speak about the individual investor, because this was in 13, 2013, and the hedge funds were getting all the attention, but the market was still 95, 96%, mom and pop investors. So I spoke there and I presented a survey that was done by a Phoenix publisher named Andrew Waite, called the Invaluable Investor. It was bankrolled by Home Depot and Homevestors, and I presented that. And the founder and CEO of Invitation Homes, Nick Gould, was in the audience, and he was obviously had worked with Blackstone to start Invitation Homes, and he was currently working with Blackstone to try to start a lending company. So he waits in line. I have to say it this way. And you know, because you're done speaking, people wait in line to talk to you. And he waits in line, comes up, and he goes, so we're working on a project and we need your help. And I was like, oh, great, who are you? He's like, oh, Invitation Homes. And at that time, nobody really knew who IH was. We just called it Blackstone. I go, oh, Invitation Homes. What do you do? He goes, you know, Blackstone. And like, when he said it, like, every article I had read about Invitation Homes and Blackstone buying houses, like, flew through the front of my mind. And I was like, oh, nice to meet you. How can I help? The next day, I'm in his office in a meeting. The next week, they fly me up to New York. Crazy, crazy story. Like, they put you on a plane, they fly you in, they get you a car, you go up over to Park Avenue. You. You go to the 43rd floor, and it's like mahogany walls. And you sit down at this, like, 20 foot long table, and there's analysts in every seat. And Nick puts me at the head of the table, and Nick's next to me. And then here come the three important dudes, right? The senior managing directors and that stuff. It was Blitz Hirsch and Jazz. And I'm sitting there and Nick's like, okay, tell him this. And I start talking. And he would. I was basically his puppet. And he'd be like, okay, never mind, enough of that. Now tell him this. And, okay, no, tell him this. And like, five minutes into it, mind you, they just flew me up there on the G6. And five minutes into it, Blitz goes, awesome, man, great to meet you. Hope we work something out. I gotta bounce. And he gets up and leaves. I'm like, the hell's going on with this? Like, I must be killed. I must be doing awfulness. And Nick, like, keeps going, tell him this, tell him this, tell him this. And then five minutes later, Hirsch is like, hey, man, nice to meet you. Gotta go, hope we work something out. And he leaves. I'm like, okay, like, we're getting attrition here. Five minutes later, Jaz is like, hey, Tim, great to meet you. Hope we do something together. I gotta bounce. So he leaves. I still got all these analysts around. And then Nick goes, okay, let's go. And I'm like, where am I going now? And we walk down the hall, he puts me in the elevator, and he doesn't get in the elevator with me. He goes, okay, we'll be in touch. And like, the doors close. I'm like, what the was that? Like, who flies you up here for a 20 minute meeting?

Yeah.

Long story short, two years later, I was the one doing that. Like, I would fly people in, like, and be like, ah, great. Yep, yep, I gotta bounce, you know? Anyway, so a couple weeks later, they call me and they're like, hey, write a job description of how you can help us as a consultant and maybe you help run the thing. I write this job description and I pick a number out of my ass, like, because I don't know what, like, what Blackstone will pay a consultant. But it was, it was a lot that I picked because I thought, why not swing for the fences? And I send it and I don't get anything back. I'm like, God, I offended them. Like, should I, like, counter myself? Like, like three weeks later, I get this contract in my email from some dude I've never met. And the job description is verbatim what I typed in the email. And the rate is exactly what I asked for. Because for these people, a couple hundred grand is nothing. Yeah, and, man, I started. We picked the name, we got the logo done, we went to market, I became the managing director. I ran it for two or three years and then decided I needed to escape corporate life for a little bit, but held on to my equity for the IPO in 2021.

You make it sound so easy. So you were already a bit pretty big player then, I'm assuming by the time BlackRock approached you with the Real Estate Expo and your wholesaling?

Yeah, at that point I probably bought a thousand houses. I mean, I've been number one in the nation several years for homevestors. I had, I think at that time I had 20 offices nationwide that were probably buying in aggregate three or 400 houses a year that I was mentoring and supporting. But it's all, like, I tell my kids this all the time. They want my destination, they don't want my journey.

Yeah.

And it's all just a series of choices that start compounding. And like, how did I become the largest development agent at HomeVestors, which is the. Where you have offices that are underneath you? Well, when the thing came around, I was already a franchisee and I said, that sounds cool. I didn't want to do it alone. I called Mike Hambright and I was like, how about this? I got this stage. I'll sell the franchises and you do the support. I don't want to deal with these dipshits. And he's like, love it, because I don't want to go sell on stage. So then I started the Ugly House seminar, and I'd just go around the nation and teach a two day seminar and sell franchises. And then I picked the timing. Right after I went to work with Blackstone, we. I sold all the offices and, like, the only one to exit out of that, like, because it just. The timing was right.

Yeah.

You know, it's just a series of choices. And then when you get kicked in the teeth, like, I mean, you just got a choice, right? Like, stand back up or lay down. And I'm just the guy that just keeps standing up.

Yeah. And I think having. It sounds like you had a pretty challenging childhood. And I think a lot of those early traumatic experiences give us that chip on our shoulder that is honestly the greatest gift that we could ever ask for because it gives us that. That drive, that relentless pursuit of excellence and always having to prove ourselves, always having to take care of ourselves, always having to not ever rely on anybody else but ourselves. Right. And I think that's such a unique gift and ability that a lot of the more entitled kids sometimes lack. A lot. And when I do these podcasts and hear people's backgrounds, most of the most successful people had pretty fucked up backgrounds. And they may not share it openly, but then we dig into it after, you know, offline, and they have pretty fucked up backgrounds. So it's just interesting to see, and I think it is a great gift and it can fuel you if you can ultimately heal from that stuff and not be operating from anger or resentment or anything anymore, it serves its purpose. But then those skills you have with you forever and you just don't give up. You just keep going. You find a way. And what were you driven as a kid?

Yeah, but probably more out of fear than anything else. I always worked in construction. My stepdad built houses, so I learned construction at an early age. I Mean, I had, I started my first business when I got my driver's license. I would, I bought a trailer and I would go pick up construction trash and go to the dump and dump it. Which was great because as a 16 year old in Texas, you could load a trailer by noon, go dump it, swing by the beer store, buy some beer, load half another trailer, finish a case of beer. You made 300 that day and you could do it again the next day. And like my buddy Cody and I, that's what we did every day. We just split the money. I mean, we're making, you know, 450 bucks a day and life was good. You know, I, I loved sports when I was in high school. I wasn't necessarily great at it, but I did miss that sense of being on a team. And I think that was part of the reason I went to the Marine Corps. I have always been driven. Now, whether or not it was because of codependency or toxic childhood and all that other stuff, I mean, you know, ask a different therapist, they'll tell you something different every day. But like, even in the Marine Corps, I got the gung ho award. I was meritoriously promoted. My love language is words of affirmation. So if I'm in an environment where achieving gets you attention, I tend to achieve. So I get attention. Right. And so, yeah, I guess I would say I've always been driven. I, I just. God. Have you read Dan Martell's book, buy back your time?

Oh, yeah.

There's also part of it. I have 100% accepted. I am addicted to chaos. Like, I thrive in chaos. I was born into chaos. I was raised in chaos. I went to the military in chaos. And I went through chaos in the, you know, 08. No, not like I thrive in chaos and I tend to create chaos. So, like, it's important to me that it's, it's, it's actually really good for my company right now. It probably won't be a year from now and I'll probably have to replace myself as the CEO and just step up to the board and get out of the day to day. Because there comes a point where the chaos is detrimental versus beneficial.

Yeah, yeah. And, you know, we, we get comfortable in chaos because it's all we've ever known. And when things aren't chaotic, we're like, something's wrong here. How do we function with this? This can't be right. Like, something's coming to get me, right?

Because, yeah, you guys are on Pacific Time or whatever, and I'm eating breakfast with Ron, my investor and friend this morning. And you know, it's 9:30, 10 o' clock and it just hits me. It's already 2 o' clock almost on the East Coast. And I had this overwhelming sense of fear. Like, what am I not taking care of? What is going wrong at the office? I. No one's called me. What's the pro? And I opened my phone because I have all my notifications turned off now. Like, I just had to finally, like, just cry uncle. And I got this text from my assistant, Michelle. She's amazing. And it's. I've sorted your email. Everything's okay. And that was the first text I read. And I literally just closed the phone and put it back down.

Nice.

Like, it was, it was a great feeling. And I wasn't there 60 days ago. And I read that book cover to cover in three days and I was like, oh, we're implementing this. And that's another thing that's really fueled my success. There's no pride of ownership or authorship. Like I will rip off or copy anything that I see work. Right. Like the Millionaire Real Estate Investor by Jay Papazon and Gary Keller talks about that. Right? Like you see a ladder that someone's already gone up and if you can get on the fourth or fifth rung, why start on the first? Like, skip all that. So I read a book. Makes sense to me. I'll implement it in like in a day. Yeah, I was like texting pictures of the email folder tree set up. I'm like, yeah, make that happen. And now it happens. So like I, I don't even know. Let's guess. I bet you I have less than 20 unread emails and I have not looked at this phone in a while. Zero.

Yeah, that's amazing. I have my, my assistant implement that as well. I, as soon as I read that book, I implemented it. It was a game changer. However, I'm starting to see emails creep back up because a lot of them are, I don't know, very like intricate or deal specific. And I'm trying to decide if that's a limiting belief on my head of like, oh, I have to handle this.

It absolutely is. Yeah, it absolutely is. If you're the smartest person in your company, you've done this wrong.

Yeah.

So I. Now this was not in the book, but I did it. I created a rule in Outlook that if I am not in the two line myself individually, it gets immediately marked as red and moved to a CC folder and ain't gonna Lie. There's some days I feel left out. Like I gotta go check that CC folder and see what's going on. Right. But it's amazing. Like it automatically leaves my inbox. And what it's done is it's made people really understand. Wait, if I need Tim's attention, I'm gonna have to ask Tim. I'm not. He's not going to swoop in and save me anymore because he's copied on everything.

Right.

Even on the distribution list. Like so we've got a, you know, we're 50 person company growing. We'll be 100 company into the year. Like people start CCing people and you get into email hell and as the founder, CEO and, and, and overachiever, you start seeing problems and you want to get involved. So I would bet some of this stuff that you're seeing creep back in is because you get involved and you fix everything for everyone. And if you do it, nobody's getting fired, right? If you're right, if they do it, it's on them.

It's mostly me watching to make sure that things get followed up on, the clients get responded to, that no balls are getting dropped and all that stuff. I'm like, I can't keep up with managing the whole company. Especially as we scale that everybody's doing everything and following up on everything. So yeah, just putting in those good systems in place. What operating system do you run off of? Like Eos or a certain operating system or.

We do eos. Right. My CEO coach, I pay a lot of people to give me advice. So I have a CEO coach. His name's Jeff Tennyson. He was a partner at CEO Coaching International.

Oh yeah, I know Mark. Yeah.

So Jeff's a partner there. Jeff's taking a couple companies public in the space I operated in. We work together at Blackstone. So he's my CEO coach. And they have their own system that's based on like okrs. It's like objectives and something. Something. Same as a rock and eos. So we've done EOS for over a year now. We have our final meeting on September 23rd and then we're going to move off of EOS and onto more of a corporate system with CEO Coaching International starting in October.

Awesome. And what has. I mean, because you started. When did you launch ternus?

January of 2024.

January 2024. Okay, so you're 19 months, pretty new company. Yeah. So what, you already have 50 people.

Yeah.

So how did you. I mean, obviously you had an exit and all these big Things. So it wasn't like it's a startup, but it's not your first startup. You've done this many times over. So what were like the most key decisions that you made early on to start to scale so quickly? Like, who did you hire? How did you. Did you hire from the top down or from the bottom up? Like, did you just start hiring loan originators? Because you guys do something different than us, because we finance commercial real estate and we will broker loans to you on the residential side, but you guys are actually like raising capital and funding your own deals and have your own underwriting guidelines and all that, where we're out just finding the best capital for that particular deal. But yeah, I guess who are those key hires when you made right away? And then how did you start to scale to get to 50 so quickly?

So after all the mistakes I've made in 24 years of business, what I learned was too many times, we start with a business plan that is in Microsoft Word, and we don't start with a business model in Microsoft Excel. So we created, and I learned this when I worked with Blackstone. It's known as a variable input model. And a variable input model is a tool you can use to say, okay, My assumption is one loan officer for every five loans. My assumption is, is one processor for every 25 loans. My assumption is one underwriter for every 25 loans. And you start breaking it down capacity. And then you build this org chart that's based on volume. So to answer your question, in January and February of, of 2024, I was the only employee. I was the originator, I was the processor, I was the underwriter, I was the closer. I was the doc prep reviewer, I was the wire sender. And I did it like that, very importantly, because I started to build out the ethos of we loan the way you buy. And since I bought more houses than almost anybody you'll ever meet, I wanted to make sure that the processes I built met the customer expectations and the ethos of the company. So then the next hire was a salesperson. The next hire was an ops person. The next hire was an ops person. Because typically in mortgage origination shops, you've got a 2 to 1 operations to sales ratio. And we're holding pretty true to that today. But then the rest was in the model. So like VP of sales came four or five months later. VP of ops came four or five months later. Like, it was like, hire the doers and then look for the chiefs. And that's what led me to Headquartering the company in Charlotte because I live in Dallas, but the mortgage market is really suffering right now. And Charlotte is the banking capital of America. And there's a lot of mortgage talent there that is or was unemployed last year, or if they were employed, they were being told every day, you're lucky to have a job. No, you're not getting a bonus. You're just lucky the company stayed in business. It was like, very flat. And then Tim Harris comes down like, holy, we're going to quadruple in volume. We're going to make a bunch of money. We're going to change the lending space. And they're like, I want to work for this guy.

Yeah.

So that's where I hired my chief revenue officer, who I'd worked with at Blackstone as well. I hired my chief operating officer, which he referred like. And then you just start this referral thing. And now we got a line of people that want to come work for us.

That's awesome. And so are they going to the office every day then and you don't, or is it remote?

Sore subject. We have an office, a really nice office. 6, 200 square feet, lots of cubes. You know, I buy people lunch and all that. Now we're in the office two or three days a week. We've got a small Regis suite in Dallas. I've got a couple people, kind of legacy hires still there. And my brother works for me because he used to buy houses for me and run all my construction. So I was like, dude, I need you to come work for me for at least a year. Because he wholesales and stuff too, but so he does my draw reviews. So, like, there's no human being on the face of this earth that's going to protect me like him. And while, like, when you think about business, you think about ways you could lose money or get stolen from, like, that draw department. I mean, like, today we've got like 1.6 million in trust funds just sitting there. Like, by this time next year, that'll be 20, 30 million dollars in cash just sitting there. And people could steal from you there. And like, like to have my brother kind of in charge of that. Like, I sleep good at night. Not scalable, but I'm going to figure that out next. But now almost every hire was in this model before I even incorporated the company. Like, I think a variable input model is something people need to plan their businesses with, because then you start building sensitivity tables. And where people screw up is like, oh, I'm gonna get to 100 loans a month. Why are you, what staff do you need to close 100 loans with good customer service? Right. And what's your ramp up timeline? What's the training process? Right, so if you need five active processors to close 100 loans in December, you have to hire them in August. And people don't realize that they don't plan for it.

So I wait till they need it and it's too late by that time.

Too late. Now you have poor customer performance or you have to customer service or you pull a sales guy or gal out of production to service the customer and now you're not producing. So 30, 60 days later, their pipeline's dead. Right. Like, so literally that example I just gave you is I am very confident we will be at 100 loans a month by December. So yesterday I did a new hire orientation where there were four new processors. Like, we were very committed to that model. Like, and then if we don't hit our numbers, you either delay hiring or you hold people accountable. And like Brian, my VP or chief revenue officer, I mean he knows he's accountable for that loan volume. Now right now he's out kicking his coverage and means I'm scrambling around for money a lot, which is fine because we fund our own loans. But yeah, it's, that model drives the hiring and it's, it's performance based. Right. So it's not only timeline based, like, and you build in. Once we get to X number of this, then we hire Y number of these so that if we continue that growth rate, we can support it, you know, four or five months down the road.

Are you using working with recruiting firms to hire all these staff or through your network?

So for about the last year, there's a company met through boardroom called Team Architects. Steve Richards runs it. You probably know him from Family and Mastermind. They do most of our recruiting. But now we have an applicant tracking system embedded into our webpage. And we're getting a good enough reputation in Charlotte that we're getting 15, 20 applications a week organically.

Wow.

Yeah.

That's awesome.

Yeah. Well, so one of the things I. So here's a. So number one, we sell stock in our company to general public on a crowdfunding thing. So if somebody wants to invest, they can buy a thousand dollars worth of stock and it's a dollar a share. But also what I did is I created an employee stock option program, like a true ESOP. So we earmarked 20% of our company for the employees. And so when you come work for Us, I give you ownership in the platform. I give you great medical benefits. I do 401k matching up to 4% and I think I do like 21 days a year in paid time off. I mean, it's, it's very important to me to take care of my people because I know I'm going to ask a lot out of them. Right. And I need to make sure that they're well paid, that the benefits are good, that they're building a nest egg for their future and that they have the resources they need if they get too stressed, too stressed out to, you know, take some time off.

Are you. Are most of your employees with your model salary plus bonus or just salary?

So the sales folks in the processing folks, our salary plus commission or incentive? Everyone else's salary and bonus.

Okay.

Yeah, we have a very large payroll.

Yeah, that's one thing nice about my company is it's mostly commission positions. I mean, obviously as we scale, I need more leadership and executives and management. Those would be more salary, but for now it's mostly commission.

Look, I mean, it takes a big stomach to build a big company. I mean, Yeah, I lost 2 million in the first year. I'm down about 4 million this year with Turnus. Yeah.

And what, what, Where'd most of that go?

We're building our own technology. It's super exciting with the things with AI. Like we're building a mobile app right now where when you want to loan on a house, you can just like click locate me. It'll pull in the tax rolls of the house you're at. It'll geotag all the pictures and you go around and take pictures and we'll have an AI engine built into that that analyzes the pictures and analyzes the scope of work and analyze the comps and, and analyzes. You'll sync with Plaid. That way we have your bank information and your background and your credit. Like instant and like we're driving towards a five minute pre approved. A five minute approval, all technology driven.

That's it. Badass.

And then if I do that right, my nirvana Sanjay, my VP of technology says we can get this done by the end of next year is when you need to draw on that hard money loan. You just take that same app, you click, you go to the line item on the budget that's already in the thingy and you click on that and it says, please take a picture. Take a picture of the cabinets with the granite countertops and the tile backsplash and the range and the plumbing fixtures and all that it geotags and date stamps and so it knows exactly where you're at and then AI will look at the picture and I see this world where if it's a 95% confidence score of that the kitchen cabinets and granite countertops and backsplash and appliances are in and they hit submit. I want the next screen to say ach is on the way. Yeah, like that's in. The beautiful thing is it's one of the reasons I started it in this down market. If I can build this now, when the market gets better in a year or two and rates start to drop, our growth curve, we're already growing 65% quarter over quarter. We'll get to 120, 130, 150% quarter over quarter. And that makes us a really ripe acquisition target for someone. And with the technology that we're building that's proprietary. So you know, loan origination systems as a lender is very difficult thing.

Yep.

So we started off with this one company but by the By December 31st we'll be 100% into our own proprietary LOS, fully automated AI engines, everything. Like I even have things now where this is so cool. If the salesperson's on the phone with Hannah Hammond and they're talking about DSCR and the salesperson hasn't asked you what your credit score is yet. Like three minutes into the call it'll pop up on the screen and say hey Tim, don't forget to ask for the credit score.

Nice.

All AI driven live call listening. Amazing.

And so you're obviously building to sell. What is your timeline that you would like to sell?

So we're actively selling securities. All investment is a risk. You should go to our webpage, invest.turnis.com and read all the disclosures. Most likely you'll lose all your money if you ever invest with us. That said, the idea, everything I do is intentional. I'm 47 right now. I turn 50 in 2028 and my last child will graduate high school in May of 28. It would be the best birthday present in the world when I turn 50 and become an empty nester that I've exited this company. All or in part, you know, maybe a merger with a good earnout where I could just step up and take a board seat and not have to do the day to day. But you know, we're raising money right now at a $55 million post money valuation.

Are you guys an open ended fund.

Or closed on our cash flow fund? It's open Ended on the crowdfunding. It's closed. It closes January 26th. Only have a year to do it from when you file the initial form C. But we'll raise more money next year through the, through A reg a probably at 100 million dollar valuation. And then I've seen sale comps of businesses in this space that I should be able to support and maintain 150 million dollar valuation by 2028, maybe 2027.

What for the debt fund space, what are common EBITDA multiples or is it based off revenue or how are they valued?

Well, the debt fund's not valued in anything because it's. But the platform, the origination platform, it's kind of book times two plus a premium based off of either projected growth and technology. So I imagine.

Are you talking revenue or EBITDA times two?

The last couple were one month origination. So if you're doing 150 million a month, you would get 150 million valuation at the start. So basically your active loan book and then you start getting multiples on EBITDA and then you get technology, you get premiums on EBITDA and then multiples on technology. Technology. So if I had to guess, we should be able to get at least EBITDA times five with technology. Yeah, if we do it right, it could be 10.

That'd be amazing. Yeah, I always wonder that too is like who, who is your end buyer? Right? Because if it's such a massive company, they, they do they care about the technology piece? I, I question myself with that with my own company is like, is it worth building technology? Because what if I sell to cbre? They don't give a about my technology. They have their own technology. They don't care. They just want the book a business. Right. So, um, that's one thing I'm trying to explore right now and is like, you know, if you are planning on selling at some point in the future, which I don't know if I would, I just like to learn all these different things of all the different avenues. But yeah, what, what is the right direction, the right thing to focus on? Because who is the end buyer and what do they want?

Yeah, yeah, I think you're right. If I was planning to sell to Kavi, the technology wouldn't matter. The only way I ever sell to someone like Kiavi is if they start to see, pursue, perceive me as a threat to their market share. And I mean, honestly that's like the best case scenario because then I kind of become Instagram the way Facebook bought them out to keep them from taking their market share. Right. That would be a much higher premium because they just kind of want to shut you down, stop you. You know, I see there's a lot of wholesale lenders out there that I think would like to add a retail origination platform. There's a lot of large capital funds that are buying notes that would like to have an origination platform. I kind of have a cheat code in that I knew rates wouldn't drop last year or this year and I knew they would start to drop later this year. And I knew by next spring we'll be in a refi boom for dscr. So I'm building a rate table lender that we won't be the largest DSCR lender in Q1 next year, but we'll be one of the top five in the nation. I have no doubt, because it's just going to be a bank rate style retail.

What sets you guys apart from all the other DSER lenders out there?

We're fast. I mean, I'm closing DSCR in 10 days. We're fast and we're transparent. And the other thing is we're really good at marketing. My marketing team is world class and like the amount of leads we're generating is.

Are you doing paid ads? Because I. Every time I've tried to have my marketing people run ads on in Facebook and Instagram, it shuts them down because he says you can't advertise finance or something. Yeah, it's like a nightmare. So like, how are you doing paid ads?

I'm hiring people that are really good at it. I'll introduce you.

Thank you. I need some good people because clearly.

There'S a company called Linder Lift that's doing a great job for us.

Okay.

But then also Robert Greenberg, I worked with him at Blackstone. He's been in marketing for 40 years and he just loves marketing technology and marketing automation. He's spoken at the Salesforce Dreamforce conference. I mean, he's an old guy, but not like stuck in his ways. Like he embraces all new technologies. I mean, Google, paid ads, Facebook, Instagram are great lead generators for us. We've got a bunch of strategic partners. I mean, Robert Winsley who we're going to hang out with later. You know, we're, we're there. We're their preferred lender now. I mean, investor lift is sending us 100 leads a week.

Geez.

Yeah.

That's insane. Yeah, that's awesome.

So then once you dial in your marketing in that production Environment, once you get into a declining rate environment. So like right now, when we sell a DSCR loan, we may make 200 basis points of margin. When you're in a declining rate environment, you start making 8, 900 basis points in margin. Gets really good, really fast.

Yeah, you, you mentioned that you guys will lend at 100% loan to value and you, you'll, you know, you'll lever the capital that you raise in order to be able to increase your leverage and deploy more loans, originate more loans, deploy more capital. How the hell do you do that and sleep at night? Like, I, because when I was starting my debt fund, I was, you know, I met one of the co founders of Kiavi and RCN and all these other people and I was just like, I don't understand how this is possible. Like, if there's any adjustment in the market, don't you lose it all? Like, so can you walk me through? I know we have to finish up here, but now you're good. I mean, yeah. Like, how do you do that? How do you protect yourself and your investors?

The first is with leverage exposure. So I never go above 70% of the ARV. So if it's a $300,000 house, you're never getting a loan above 210,000 for me. And then we back out the rehab. So if someone is good at buying houses and say that $300,000 house, they buy it for 150 and it needs 60 in work. I'll loan them the whole 150 and the whole 60. Now they still have to pay their points and fees and stuff at closing. But I care more about the leverage, the, the, the LTV of ARV than I care about the loan to cost.

Yeah, the loan to purchase, price of the loan to cost. Yeah. And then you're just basing it off their track.

No, not even that we loaned to newbies.

But how do, but what if they just take the money and run? Because that's happened to me before.

Well, they don't get the rehab till they complete it. Right. So that's.

So they have to front the rehab and then they get a drawback.

Yeah. And so we verify their liquidity, we make sure they have 10% of the rehab budget so they can get it started. And we make sure they have six months worth of interest payments in the bank because that's my assurance that they're going to be able to service the debt and start the rehab and then I'm going to give them the rest of the money.

Yeah.

If they use we have a great partnership with Offer Pad Renovations and if they'll use Offer Pad, we pay Offer Pad direct, they're half down and then we pay them the final payment. So literally we've got customers right now that are turnkey flipping houses in less than 30 days and they don't even have to write a check. Like we just, we send offer by the Offer Pad the money.

Yeah, that makes a lot of sense.

So easy. Yeah, but a lot of it, Hannah, is it's just an asset based focus. Like we don't get ourselves tripped up about worst case scenario. Because worst case scenario, I got a 70 LTV house that I can just keep. I mean.

Yeah, well, I guess worst case scenario is 2008 habits again.

And even then houses didn't go down by 30%.

They did not. Well, in a lot of places.

Yeah, but they didn't immediately. So that's another thing we do is we only do six month loans. So.

Yeah, you're turning it fast.

We're not, we're not looking to loan money to people that are dipshits that aren't going to get in, get out and get on with their life.

Yeah.

And they'll never be another 2008.

You don't think that I was going to ask you what's your outlook on the, the real estate market and economy as a whole over the next one?

73% of counties in America declining in median home price right now, which is a good thing. We're about to have some rate cuts. The DSCR loan amount loan interest rate is driven primarily by the five year Treasury. The 30 year mortgage is driven primarily by the 10 year. For residential. The 10 years coming in, the five years coming in just with the rate reduction forecast, we need another five to seven years for all that silliness of 2020 and 2021 to get all the way out of the market. We need some house values to come down, we need inflation to come down, we need cost of goods to come down. We actually need deflation. And what we're dealing with right now is stagflation and that's the worst possible because now you get wage price spirals. So I don't know, I mean like what I want to happen it would be we should like literally stay exact. Job market's doing great, inflation's reacting properly. It, you should stay where you're at. But we're not going to. So I don't think rates go as low as they did last time. But you know, I think, you know, the next two or Three years will be really good. And then by then housing should be really unaffordable and you should have another affordability crisis. And you're going to see 40 and 50 year mortgages that are just the standard norm. I mean, I was telling this story yesterday to someone. Are you a millionaire yet?

Yeah.

Do you remember the day you figured it out that you were? Yeah, me too. And I don't know if you're there yet. I remember the day I realized I was worth $10 million. Like, I. Every October I do the property spreadsheet thing for the bank and everything, and I'm just adding shit up. And you know, that final cell down at the bottom of the Excel thing, you're like, holy shit, Like I'm running down a hall. We're worth $10 million. Like, you know, and it's just so funny. That second nine was so much easier than the first one. And now I'm blessed that I get to play the IRR game because, I mean, let's just say when I'm 50, I have $50 million. Right? We'll just fast forward a couple years. Well, if I find some 20 IRR investments where I could like, help them get started and build their net worth and, you know, obviously win with them, give them all the capital they need, give them my resources, give them my experience, but, you know, then you can do that from anywhere in the world. Like on Zoom.

Yeah. Yeah. I want to be a billionaire, too. I'm going to be a billionaire too. So it's fun. I just love the game and I want to have such a great impact on others in the world. And I know I've been given a gift and I'm very passionate about what I do and I have very good intentions behind everything that I do. And I want to. I know I've been put on this earth to serve other people and help other people. And the more wealth I can create for myself and the more passive income I can create for myself, that's the more that I can give to the world and teach entrepreneurship and mentorship and emotional intelligence and healing from trauma and pain and like, all these things that a lot of people just don't have. We're not, they're not taught in school, you know, and so I think it's an exciting game. And I, I love to see people like you who are so passionate about it. They're not just grinding, miserable, suffering people like you. We're actually.

I went out and partied with some friends last night and got up this morning. I'VE done a couple podcasts. I've taken care of emails and meetings, and we're going to have a happy hour later, and then I'm going to fly home, have dinner with my kid, getting ready for Friday Night Lights tomorrow. And. But, you know, tomorrow, by 3 o', clock, I won't read another single email till Saturday.

Yeah.

Because I'm on the tunnel crew. You know what the tunnel crew is? They blow up the tunnel, the kids run through. So I get sideline passes. So, like, I go down and blow up the tunnel, and I gotta get to high five my kid as he goes onto the field, and I get to hang out on the sideline. And my wife's like, well, you just gonna leave me up in the stands? I'm like, absolutely. Like, I'm down here to watch football. I'm not here to talk, like. And so it's that work hard, play hard. And you know what? I know for a fact that I'm not watching my email today. I'm not going to be really watching it tomorrow. And I'll have to put in some hours on Saturday. I've got a couple tax returns on some entities I own to finish up that just need my review. They're done. But, you know, you can't just say yes. You got to read it. We'll hang out in the backyard and grill and cook out and watch football and have fun. And then, boy, the next four days, this is to your point. I got a ton to do on Tuesday, and then the boardroom starts in Dallas on Wednesday, and that's. And then again on Thursday and then again on Friday, and then Friday I gotta leave and, like, get my ass to Friday Night Football, so I don't even get to stay for the whole thing. And I'm on the board of directors, so it's like. Eddie's like, come on, dude. I was like, it's football, man. Like, yeah, we're done. But, yeah, then I'll go dove hunting on Saturday and Sunday, and I'll unplug and get off the grid. And that recharges me. Being in nature and, like, harvesting what you eat. Like, it. It's just part of who I am. And then, you know, God, the next week, I'm in Charlotte. Monday, Tuesday. Then I got an event in Dallas on Wednesday with Justin Colby. And then I got.

Is that exhausting? Yeah, it's exhausting, but I love it. It's so fun. And I recharge and I do the fun things. And it's not just all, you know, Computer, email, work that wants to make you want to blow your brains out. Like, it's this. It's connection, it's communication, it's speaking, it's podcasting, it's creating, it's being a visionary. It's going out on your own and thinking about the vision of your company. It's like, all these things that just excite me so much. I just. I couldn't stop if you paid me to stop. You know, I have to do it well.

And that's what I learned in my first retirement was, you know, they always say you are the average of the five people you spend the most time with. And, no, not. It got to where all my time was spent with my wife, my two children, and, like, a contractor or two, and it just wasn't intellectually stimulating. Right? I mean, because my wife's a brilliant woman, but, like, we don't talk about business. We talk about personal shit. There's actually a couple friends of mine here in Scottsdale that want to come. I told them I was doing a happy hour with you, and they follow you and, like, you're an inspiration to them because they see this young, attractive woman that is. Is, like, no, no, no. I'm playing in that space, and anyone that says I'm not welcome, I'll just run them the over.

That's right.

And, like, I think we need more women like that, and I think, you know, we need more men that are willing to be, like, just be a savage and just admit that you're a savage. Like, I love that about America. Like, no, no, no. Like, we can crush this. Like, and it's. There's not a problem with. You want to be a billionaire, I want to be a billionaire. Let's make billions together and, you know, start investing and find a way. Find a way to make 10 billion. I don't know. I mean, like, that's the fun, right?

Exactly.

I'm happy you joined the boardroom, because that's a quarterly party that you're guaranteed to get.

I'm excited. I'm not gonna be in Dallas, but I'll be in Cabo, Jamaica, San Diego, and then next year. But anyway, I'm excited.

Well, thanks for having me.

Thanks for coming on.