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We educate investors and potential investors on the in's and out's of investing in rental property. We focus on residential and multifamily investing, but include commerical, storage, mobile home parks, and more. We interview industry experts on tax strategies, property management, vendor selection, syndications, capex, and more.
Hey, investors. Welcome to the Retire on Rentals podcast. I'm your host, Nicholas Cook. And in this show, we explore how to optimize real estate investing, create passive income, discuss operational tactics in ways you and your family can retire on rental income. If you wanna invest in real estate or currently do, then this podcast is for you.
Nicholas Cook:Right. So today, we're here with Noah Blanton with WFG Title. He's the chief growth officer. Yep. So, Noah, I'm super excited to have you here.
Nicholas Cook:And, you know, I know our audience may not know as much about title insurance as you do, but it's definitely an important component of the transaction. It's a good place to build relationships. But before we kind of get into that, maybe you could give us a little bit of a background about how you got into, you know, title insurance. I'm sure you didn't, you know, grow up as a kid wanting to, you know, to do this. And so, yeah, tell us a little bit about, you know, your kind of role in the company, how you got here, and about WFG, you know, national title, and maybe you can unpack that acronym for us because it's a little bit of a mystery.
Noah Blanton:Yeah. Yeah. Kind of a joke. Yeah.
Nicholas Cook:Kind of a joke. Exactly.
Noah Blanton:Well, thanks, Nick. It's good to be here, and it's good to see you. It's true. Nobody intends to get into title insurance. It kinda happens by accident and and did to me as well.
Noah Blanton:It's a great business, great little niche part of of real estate that everybody ends up eventually if they're transacting in real estate.
Nicholas Cook:Sure.
Noah Blanton:And I've been doing it for twenty eight years. Transactional real estate got in. Incredible. Yeah. I was kind of on the edge of real estate and interacted with title companies and got referred to one.
Noah Blanton:I needed a job.
Nicholas Cook:Yeah. You got in must have been super young.
Noah Blanton:I was young. Okay. Yeah. I still am young.
Nicholas Cook:You are you look incredibly young. I mean, people who are watching this are gonna be shocked that you could be anywhere for twenty eight years. Yeah. You look 28.
Noah Blanton:Well, I feel yeah. I feel 75. So I say Well You're only as old as you feel.
Nicholas Cook:That's true. Yeah. That's actually very true. Yeah.
Noah Blanton:No. I I did. I got in young. Yeah. It's been a great business to be in, and so it's given me some tenure in the business at a young age, which is which is great.
Noah Blanton:I got in in in customer service, and I was working at an agency at the time. And the the president of the company, you know, you did your first review. And in those days, you sat down and it was a paper review, and they asked you, you know, what where do you see yourself in five years? And I said, well, I want your job. So I thought that's what you were supposed to say.
Noah Blanton:That show ambition.
Nicholas Cook:Yeah. Exactly. Yeah.
Noah Blanton:And, eventually, I did have his job. And it's a great business because like many parts of real estate, as hard as you're willing to work, you can you can grow and advance, and it's been a really good good business for me. So WFG is a interesting company. It's an Oregon based company, and we're one of only six national underwriters. So we underwrite in all 50 states.
Noah Blanton:Wow. And we're only 16 years old.
Nicholas Cook:Of our nuts.
Noah Blanton:Competitors most of our competitors are over a 100 years old, and they're publicly traded companies. Good good companies. Good competitors. Yeah. But we're a private organ based company that expanded sixteen years ago to all 50 states, and we do primarily this maybe will mean something to some of your audience, but not others.
Noah Blanton:We primarily do direct operations in the West Western States.
Nicholas Cook:Okay.
Noah Blanton:And then Eastern states, we have agency operations. So at our at our core and most people, you know, kinda tend to miss this maybe, but at our core, we're an insurance company. We're an underwriter, and we have agents just like Farmers does or State Farm or anybody that could write their policies. We have agents that write our policies as well.
Nicholas Cook:Oh, interesting. Okay. So you're kind of like so when you talk about direct, it's you're working with customers directly. It's, you know, whereas the agency might be more of your, like, a carrier that people Correct. Okay.
Nicholas Cook:Yeah.
Noah Blanton:And title insurance is interesting. Some people will say, well, how come this insurance how come State Farm doesn't write title insurance, or how come the big ones don't write title insurance? And it's kind of a a throwback to the savings and loan era where title insurance was carved out. It was deemed important enough that it remains stable that it was carved out, and it's a monoline line of insurance. So if you write title insurance, it's the only type you can write.
Noah Blanton:Yeah. And the reserves are a lot of regulatory over overlay reserve requirements. So it's kind of I mean, it's interesting as an insurance product that way.
Nicholas Cook:Yeah. Yeah. That is interesting. And, you know, WFG has grown astronomically, you know, especially in sixteen years. I mean, I've had Sleep Town for eighteen years, and we Yeah.
Nicholas Cook:Nowhere near have experienced that level of growth. What do you think separates you guys from your competitors? I mean, like, what do you think has driven that growth? You know, that and and why are people choosing you guys?
Noah Blanton:Yeah. Well, I I think first off, I mean, we have really good competitors. Our business offers a really high level of service in general or you don't survive. It's sort of trite to say it, but the differentiator in our business really is service and relationships. Yeah.
Noah Blanton:In Oregon, as a for instance, we all charge the same rates. It's a promulgated rate state. The state sets what our rates are. The rating agency does or approves them, and we all charge the same thing.
Nicholas Cook:It's interesting. I didn't know the state set those.
Noah Blanton:Yeah. Well, there's a rating agency, and the state approves them.
Nicholas Cook:Oh, okay.
Noah Blanton:So and some states are promulgated, and some states are filed. But most of our markets, there isn't a big price differentiator. So we've got great competitors, and it's a really service oriented business that I think largely does a a great job. But what differentiates WFG, I think, is that it is smaller. It's private.
Noah Blanton:We're a pretty flat organization structurally, so it attracts a different type of person. Mhmm. Our big publicly traded competitors have a place, and so do we. I think people wanted something a little bit smaller where you mattered a little bit more Yeah. Or maybe you had a little bit more of a direct impact.
Noah Blanton:And then, obviously, there's a growth story. Sure. So for me, it was about coming to a place where I could grow and impact and and also have some control over my own career. So I guess it's just a different feel.
Nicholas Cook:Yeah. And I
Noah Blanton:think it attracts a different type of employee and a different type of customer as well. Got it. So Okay.
Nicholas Cook:Yeah. I mean, I I think that, you know, I've done a lot of transactions with WFG on the residential side, and, I've always had a great experience. You know? I think it's it's pretty wild to think about. I mean, a lot of times people don't realize that, it's unique industry in that you don't get to change the closing date.
Nicholas Cook:Right? Yeah. And I've worked with a lot of realtors on the other side of the table, and they're not always the organized and prompt people. Right? So there's just so many little grenades that get thrown in everyone's lap at, like, the last minute or whatever it happens to be.
Nicholas Cook:So I I definitely think, I mean, you've gotta recruit special type of people to to wanna be in that industry and make that work.
Noah Blanton:It's a very particular type of person on the closing side, and and really it on all sides of the business that's successful. And you do need a couple of of characteristics, and one of them is you have to be flexible. You gotta be able to multitask. And you're right. We don't drive transaction timeline.
Noah Blanton:We respond to it. Yeah. And we also don't create transaction volume. We respond to it. So in in many cases, our business is in a completely responsive relationship with our client base and and the market.
Noah Blanton:And if you're a realtor or you're a developer or you're a a buyer, you can go out and you get to choose when you transact. And and if you're a realtor, you could probably you you can mine for business and create transactions. We don't.
Nicholas Cook:Yeah.
Noah Blanton:And so our job is to be responsive to what the principles and the transaction need, make sure that they meet their deadlines and do our part, and it takes a special person to do it. Yeah. No no doubt about that.
Nicholas Cook:And, you know, what are some of the, you know, I would say common, you know, misconceptions, you know, that you've seen from investors that they might have about title insurance or the role title company plays in the transaction? Are there some themes you see that, you know, if someone's listening that they could take away from, like, hey. This is what people think about it versus not, or is it pretty straightforward kind of product?
Noah Blanton:There's probably a couple there's probably a couple of things. I mean, depending on where you are, there are some local customs, which I would assume people transacting are familiar with, especially if you're developing or you're you're in commercial or multifamily residential real estate. But I would say most most people that that are pretty sophisticated understand it. They they understand the the preliminary commitment or whatever it's called in the particular location that they're in. I would say the one thing on the I mean, our business is two distinct businesses.
Noah Blanton:One is settlement services, and one is the insurance product. Mhmm.
Nicholas Cook:You go to
Noah Blanton:the East Coast, you have attorneys that are closing the transaction. We're ensuring it. Our role is completely different. On the settlement services side, on the West Coast where we're both generally
Nicholas Cook:Mhmm.
Noah Blanton:Maybe the the biggest misconception is that we're a party to the transaction or that we're in some way invested or advocating for the transaction, and we're not. Got it. Yeah. Our job is to remain neutral, take instruction, execute the desire of the principles so long as they don't, you know, violate the law or or our policy. And I think maybe that's the sometimes the biggest misconception is that we're in some way or another a party to the transaction.
Noah Blanton:We're not. Yeah. And and that's good. You don't want us to be.
Nicholas Cook:No. I mean, that kinda defeats the part
Noah Blanton:Yeah.
Nicholas Cook:Point of a neutral party, you might say.
Noah Blanton:Yeah.
Nicholas Cook:And so, again, you know, why do you think investors should care about title insurance beyond just satisfying the lender requirement? I mean, a lot times people are like, they're doing it because the lender requirement, but, you know, we gotten to a point of, you know, this day and age where there's a lot of history in title insurance. People may not appreciate, like, why it exists.
Noah Blanton:Yeah. I think in in terms of a single market, you might in fact say, well, why would I want this? I understand the property. I know the seller. I know you know, all of these different things.
Noah Blanton:But, I mean, essentially, it comes down to trust, and it's a fairly modest premium to pay to trust that what you're getting is marketable title subject to whatever exceptions Yeah. You agree to, and that you can then turn around and divest yourself of that property at any point in time that you wish. Obviously, for a lender, it's very important that they know that they have a lien position that puts them in the position, whichever position it is that they accept, and that they can foreclose on the property. And, individually, you might say, well, I don't need that. As a market, you do need it because institutional lenders won't lend without that guarantee.
Noah Blanton:And one transaction, it may not matter, but a 100,000 transactions and you extrapolate across that, it does matter for the entire market. So one of the reasons we have low fixed rates in this country is because you have title insurance. And people don't, like, people don't think about where that loan goes that you originate after the fact. It goes to a secondary market, and it must come with a policy of insurance that ensures whoever is acquiring that that they also have the right to foreclose and that they're collateral they're secured by collateral. So it was kind of this knock on effect, and it it's at the transaction level, but then into the secondary market as well, the stability that the industry provides to lending rates, and and today, actually fraud.
Noah Blanton:Yeah. Our business catches a lot of fraud, and it's probably the the highest climbing as a percentage loss in our business today is fraud versus insurance claims. That's interesting. Wow. So, ideally, our our product is like any insurance product.
Noah Blanton:You hope never to interact with it. Yeah. Exactly. Yeah. Except for our product is a look back product, not a product insuring against a future.
Noah Blanton:So if you never end up interacting with our product, we did our job.
Nicholas Cook:Yeah. Exactly.
Noah Blanton:That can make the value of it seem somewhat like, how come this all just works? And well, that's the point.
Nicholas Cook:Yeah. Well, it's kinda like property management. Right? It's just like if things go smoothly and you don't hear about it, then we're doing our job. You know?
Nicholas Cook:And sometimes people don't realize it's like, we've given you a lot of stability over a period of time, and they're like, you know, I feel like I'm not paying for anything. It's like, well, if we logged everything that we did for you during that period of time, then you'd see the value. But Yep. You know, people tend to realize it when something pops up and it's a problem. So
Noah Blanton:I think about the, I think about a bank as an analogy, which is you don't wanna hear from your bank about everything that they're doing to manage their operations. You just wanna be able to log on on your phone and transfer money or or send it somewhere. But the complexity behind that is significant, and the the settlement services, title insurance industry moves hundreds of billions of dollars a day. I mean, that is one of our core functions is settling that transaction and moving that money around. No one wants to understand the complexity of managing that.
Noah Blanton:Everyone just wants it to happen. And if you're a seller, you just want the money to hit your account and the amount that you signed for. And as a buyer, you just wanna own the property. And and it should be something that you don't think about Yeah. Ideally.
Nicholas Cook:Yeah. No. Definitely. And I and I think that, you know, those are systems that, you know, are pretty incredible. A lot of this stuff really wasn't around seventy five, eighty years ago, and it radically changed the way the market is.
Nicholas Cook:And I think, you know, that's where I wish that people were taught about this on a really high level at least in school. Because what you just indicated about interest rates and the correlation between interest rates being able to be lower and the stability title insurance provides to essentially investors who are lending the money. Right? They want the ability to be able to foreclose.
Noah Blanton:Yep.
Nicholas Cook:That's like a fundamental aspect of that market existing. And it's same thing with evictions. Right? Like, if you don't have the ability to recover your asset, then you're not gonna be in that asset class. Yeah.
Nicholas Cook:And a lot of people get upset because they're like, well, people who are foreclosing are evil or people who are evicting are evil. And it's like, that's actually not the case. Nobody who's doing those things wants to be doing those things. They're doing those things because that's their last resort. And in order for this, you know, opportunity to exist, it's why people in, you know, most of the world don't own property.
Nicholas Cook:I mean, it's just they don't have the markets for it. So I think that's interesting. Well, yeah, I think
Noah Blanton:in both cases, you could see it as the offsetting of a premium that would be paid elsewhere. Sure. So if you're going to internalize that risk as a lender, you're gonna say, well, I'm gonna charge you a higher interest rate. Yeah. So which would you rather have?
Noah Blanton:A onetime premium that secures the collateral for the lender or a much higher interest rate so that they can spread that risk across an entire portfolio?
Nicholas Cook:Yeah.
Noah Blanton:And and I would I would agree. I mean, maybe at a high level, it'd be great if if it was better understood, but that's what we're doing Yeah. Right now.
Nicholas Cook:Yeah. Yeah. Fair enough. Yeah. Can you maybe just, like, kinda help to illustrate, like, the value of this?
Nicholas Cook:Can you share a real world example where you've seen title insurance protect an investor from a major loss?
Noah Blanton:Yeah. I can. We had we had a I'll tell you about a a a actual local story.
Nicholas Cook:Sure.
Noah Blanton:Not so it's not an abstraction. Yeah. And then I'll tell you about some larger industry stories as well maybe. But I'll tell you one about fraud in particular because I think it it matters in this case. And this was an investor.
Noah Blanton:This was a single family investor if that's an okay story.
Nicholas Cook:That works. That's great.
Noah Blanton:Yeah. And we had gone there was a transaction. Transaction actually closed. I'll shorten the story, but the the punch line is the seller was fraudulent. And the lender had already lent money, and money had already been sent out, and there was the transaction had settled.
Noah Blanton:And the investor went. They were going to take this property, fix it up, turn it into a rental, or flip it. I'm not sure what their intention was with it. And showed up, and the the owner was there, the real owner. Oh.
Noah Blanton:And they said, hey. Who are you? And he said, I own the house. And the owner said, well, no. You don't.
Noah Blanton:I own this house. Yeah. He said, well, I got $1,800 junk here to get all this stuff out of the house. And he said, that's my junk.
Nicholas Cook:Yeah.
Noah Blanton:Anyways, I mean, it was a a tense moment, and and the point of that was one of the things that our policy covers is fraud.
Nicholas Cook:Okay.
Noah Blanton:So in this case, obviously, the the buyer didn't get to keep the property. The deed was fraudulent. So but there was a certain amount of money that had already been dispersed and could not be recovered, and we covered that for the lender. So it's a 5 figure loss that that was covered by the lender. One of the more common ones or one of the ones that we're more cautious about is probably liens against new construction, and a a well known industry loss was in Vegas on one of the casinos where there was broken priority, and I think it was I think that loss ran into the hundreds of millions of dollars Wow.
Noah Blanton:For construction coverage. And at that level, you have reinsurance agreements, and you have four or five underwriters that are sharing that. This is some of the complexity behind the scenes as well. When you get to some of these large mega deals, especially if they're construction, the industry will also, behind the scenes, spread that risk around inside of the industry so that it remains stable. And this is transparent to to, you know, the participants in the transaction, but it allowed for the payment of hundreds of millions of dollars of broken priority construction liens that then ended up making the subcontractor base whole or or what have you.
Noah Blanton:So the money goes somewhere to make people whole in the transaction. So those are two extremes of an industry wide one and then a local one where everyone was made whole Yeah. Because there was a policy.
Nicholas Cook:And can you unpack broken priority or what that means a little bit more for people?
Noah Blanton:Yeah. So in and the the laws are different in depending on what state you're in. But if I'm a a subcontractor and I'm doing work on a new construction or or actually if I just go in and do work on your house, I establish a priority for my work in terms of a claim against that that real property. Yeah. And I say, I've done work.
Noah Blanton:I have a certain period of time to either, one, you pay me, or two, if you don't, I can place a lien on your property. Yeah. And depending on the priority of the underlying loan, I may have priority over that that loan. And lenders obviously don't like that.
Nicholas Cook:True.
Noah Blanton:And so there's a very there's a so there's a very robust system behind broken priority, looking for broken priority, sometimes even construction disbursement services to make sure that if we're going to say that the priority isn't broken, we're the ones that have controlled the money. And at the end of the day, it's to make sure that the money goes where it's supposed to go and that no one can claim a lien of higher priority than the lender has on the property.
Nicholas Cook:Got it.
Noah Blanton:If you have several 100 subcontractors doing work at different periods of time and lien lien periods expiring at hundreds of different dates, you can imagine that gets fairly complex to manage. Yeah. And then if you have a I wouldn't I wouldn't maybe call it outright fraud, but a construction project can snowball on itself pretty quick if it gets underwater. And depending on who's controlling the money and the draws that are coming, there's a lot of complexity there. Yeah.
Noah Blanton:And so some of these transactions get get really complex, especially if there's construction involved. Today, one of the, I mean, one of the complexities is also could be the financing. I mean, in Oregon, probably in every state, but in Oregon, the state housing authorities and the financing and the complexity of the bonds that go to Yeah. Putting those transactions together, we participate in all of that. And each of those participants has a different requirement in terms of what policy they want and what endorsements they want.
Noah Blanton:What most people will never interact with is there's an endorsement manual with dozens and dozens and dozens of different endorsements that you can tack onto these policies for different reasons. I would never interact with that as a residential buyer or seller.
Nicholas Cook:Sure.
Noah Blanton:But if I was transacting a particular type of real estate, sometimes it's the ground is leased and the the improvements are owned, and there's a lot of complexity to the structure of the transactions, both from an ownership and a financing perspective. Yeah. And so the industry has developed all of these different endorsements that meet the needs of all of those parties.
Nicholas Cook:Got it. Yeah. Well, some follow-up questions to that. So, obviously, you know, people think about insurance as essentially being a fund that pays out claims. Right?
Noah Blanton:Yep.
Nicholas Cook:In other areas of insurance, those companies are required to have a certain amount of, like, liquidity or assets and things like that. Yeah. Is that also true in title insurance? Like, what if somebody needs to make a claim and then I mean, are there situations where those companies can't pay the claims?
Noah Blanton:Rarely. Very, very rarely, and recently, never. So, yes, this goes back to kind of the savings and loans loan piece of little regulation, little requirement for reserves. Today, all of the title insurers have reserve requirements for the policies that they have outstanding. Got it.
Noah Blanton:And it's either hundreds of millions or billions of dollars that sit in reserves depending on their outstanding policies. The banks like you. Banks like it because they yeah. They do because we got a lot of money sitting there. And we also have a lot of money flowing through our accounts because, ultimately, everybody's comes there.
Noah Blanton:So Yeah. Pooled trust accounts are another complexity. I mean, you understand this. But, no, all of the all of the insurers today are rated by industry ratings. All of their financials are transparent.
Noah Blanton:It's one of the things that lenders will will look for is the ratings and their financials and their reserves and make sure that if you're gonna write me a $200,000,000 policy, I wanna make sure you can pay it if I if I have a total loss of title.
Nicholas Cook:Yeah. And so on the other end of that, you know, you talked about some of the complexity of these projects, you know, whether in Oregon or elsewhere. Are you underwriting the customers? Like, do you ever say, like, we're not gonna insure this project?
Noah Blanton:Yeah. Okay. Yeah. Absolutely.
Nicholas Cook:Yeah.
Noah Blanton:I think I think there are cases where you are underwriting the customer, but not in the way that you would not not like a credit underwriting or but it is still a business and maybe not at at a $100,000,000 level. You're underwriting the project, and everything needs to be the way that it is. But but in some cases, you're underwriting the the customer. Yes. Yeah.
Noah Blanton:And that gets to be a little bit of a I mean, there's an insurability and a business risk decision that we're making. Sure. And it's why people in the markets are so important because they understand the markets, the players in the market, and where there may be business risk and may where there may be insurance risk. Those are two different things. But, yeah, we we would underwrite a customer.
Nicholas Cook:Got it. Yep. And you talked about this book of endorsements, which is sounds like more tailored for commercial transactions. Yeah. And you also mentioned earlier that title insurance companies, you're a neutral party.
Nicholas Cook:Right? Do you ever act in some sort of advisories, you know, capacity in terms of, like, hey. You have this commercial prod project. Here's some endorsements we offer you might wanna consider, or is that something you're really reliant on the customer coming to you and asking for those specific endorsements?
Noah Blanton:No. We we would we would rarely, if ever, act in any sort of advisory capacity. Okay. That would be up to the the customer and their counsel.
Nicholas Cook:Got
Noah Blanton:it. And I think it it the more complex the transaction, the more you probably need, unless you're very good at it, counsel and people that can tell you you want this endorsement or that endorsement. Most lenders of size have in house counsel that will be very familiar with this and know what it is that they want, but we would we would never suggest an endorsement to someone.
Nicholas Cook:Got
Noah Blanton:it. If someone came to us or their counsel came and said, well, we want to protect against this particular risk Mhmm. We would say, okay. There is an endorsement for that or there is not. And depending on the complexity of the of the transaction, we may do ad hoc endorsements.
Noah Blanton:Or the more complex the transaction, the more flexible it becomes in terms of what coverages you'll provide.
Nicholas Cook:Got
Noah Blanton:it. But we would we would never go and tell somebody, you should do this. Yeah. And to be clear, the title insurer is not a neutral party. They have a customer.
Noah Blanton:It's the person paying for their policy.
Nicholas Cook:Okay. Yeah. Because yeah.
Noah Blanton:Yeah. The settlement service is the neutral part.
Nicholas Cook:Got it. Okay.
Noah Blanton:And and on the West Coast, those two things are 95% of the time, unless you get to Southern California, always the same thing.
Nicholas Cook:Mhmm.
Noah Blanton:You get to the East Coast, totally different. It could be fifty fifty where the insurer and the settlement agent is two different things. Got it. So completely different market dynamics there.
Nicholas Cook:Yeah. And is the reason that it's different state by state, is that just kind of because of a historical precedent? Is it because regulatory reasons? Maybe both?
Noah Blanton:Both. Yeah. It's a little bit of both. You get to some attorney states, and only an attorney can close Yeah. A transaction.
Noah Blanton:You come out west, and lay people can close a transaction. The state of Washington is actually the only state in the country that the bar association licenses people that close transactions and regulates them the same as they would an attorney.
Nicholas Cook:Yeah. It's in here. Yeah. It's a Only state in the country.
Noah Blanton:LPO or something. Practice office, and they actually admit you to the bar for the limited practice of of law. And those people that hold that license can be held liable in the same way that an attorney can who's licensed to
Nicholas Cook:the Oh,
Noah Blanton:wow. And sued personally.
Nicholas Cook:Yeah. Oh. Well, that's the next level of It risk.
Noah Blanton:It it is a next level of risk for closing. It's actually a good I think it's a great one of the few times I would advocate for government regulation. Yeah. But I think it's actually made the business professional, more professional, and makes the people who do it sit up a little bit more and pay a
Nicholas Cook:Yeah. A little
Noah Blanton:bit more attention.
Nicholas Cook:Take a little more seriously.
Noah Blanton:Personal liability. Liability. So Yeah. More states should do it.
Nicholas Cook:There you go. Maybe a little Oregon hasn't done it. I feel like Oregon and Washington tend to have a lot of similar ideas.
Noah Blanton:Yeah. So Maybe the bar doesn't isn't interested in. I don't know.
Nicholas Cook:Who knows what's going on at Oregon's bar. It's crazy. So, you know, when purchasing, you know, an apartment building multifamily structure, you know, what additional title concerns, you know, should, you know, investors be paying attention to? Like, they've got a checklist, you know, of here are the things I need to be thinking about. What would what would you wanna see on that checklist?
Noah Blanton:Yeah. I mean, if it's a if it's an existing building
Nicholas Cook:Yeah. Then I use that as an example.
Noah Blanton:Yeah. Then I think I would just look for all of the the regular things. Are there any things with the real property itself that you wanna pay attention to? And the more urban the environment, the more you may want to look at that. Sometimes our exam will reveal code violations or existing issues that you may not be aware of.
Noah Blanton:Always looking for encroachments or easements or anything that would restrict your ability to do something with that existing piece of property. Zoning. I mean, I think you'd wanna be aware of all of those things. If it was damaged, if it was in some way a total loss, what what would could you reconstruct? I mean, there's maybe a lot of things that you'd wanna look at there.
Noah Blanton:And you'd obviously start from whatever the report was that came out, and it'll give you the condition, and then you'll you'll kinda go from there. And then there can be some other complexities, overlays that come from the municipalities. Sometimes, depending on when the property was built, there's tax deferrals or other things that you wanna be aware of Yeah.
Nicholas Cook:That's a good point.
Noah Blanton:That that might be disclosed in the financials, but you maybe not. And so in that case, depending on, again, when it was built, you'd wanna say, should I look for any concessions? I would particularly look for that now. Yeah. And and is there something that's coming later on that's gonna increase my cost?
Noah Blanton:New construction, you'd look for all of those things, but normally, construction's a little bit more cleaned up because somebody's got a construction loan. In that case, you're very concerned that your policy is either clean. We would call it a clean policy, which says that there's no liens. Or if it's a a dirty policy, we would call it that you've done your due diligence to make sure that you're okay with the gap between broken priority. That that would be the number one thing I'd be looking at in new construction.
Nicholas Cook:And so you talked about, you know, WFG essentially providing two different services. Right? You've got the title insurance component. You've got the settlement services. Are there other services that WFG provides that you think investors should know about?
Noah Blanton:Yeah. I think we we would provide we provide a lot of assistant with the assistance with development. So we will help customers develop land
Nicholas Cook:or help them through
Noah Blanton:well, all the way through plotting. I mean, we'll do we will assist with and and run the entire plotting process if they're gonna redevelop or plot property.
Nicholas Cook:Okay.
Noah Blanton:We would help them through zoning changes. There's a number of things that we would help with and have services. We have a development services department that would help through that process and guide through that process and help interact with the different surveyors and engineers and attorneys and kinda coordinate that process to drive it to a close and all the different municipalities. And oftentimes, a policy would come out at the end of that as well depending on the structure of that transaction, but it doesn't necessarily have to.
Nicholas Cook:Interesting. Okay.
Noah Blanton:So we we do help with with that.
Nicholas Cook:Got it. And, obviously, you guys have access to an enormous amount of data. Right? So ownership information, you know, just general market perspective. Do you help people with sourcing or identifying off market opportunities?
Nicholas Cook:We can.
Noah Blanton:Yeah. Yeah. We absolutely can. So, yes, we have access to lots of data sources, a lot of information about properties, potential off market opportunities, non owner occupied opportunities. Yeah, we we can also assist with that depending on on the nature of the customer.
Noah Blanton:So we we generally we generally aren't providing that to somebody that would walk in off the street and say I mean, we want we would want to know that we're interacting with a real estate professional and what they were gonna do with the information, and that information is increasingly accessible today
Nicholas Cook:Yeah.
Noah Blanton:To to anyone that would want it. So we do not provide nonpublic information. So there is no information that we have that is nonpublic that we would provide.
Nicholas Cook:Got it. Okay. Interesting. What would be an example of, like, nonpublic information that somebody might want that isn't really out there?
Noah Blanton:I would say any sort of transaction that hasn't closed or is publicly available that is in the pipeline. Got it. Any sort of application for a change in zoning or some other transactional part of a of a property that we would be aware of that's not been made public yet. So there could be any number of things that have happened before whatever that is is recorded and become a public record that's that's accessible through an auditor's office. None of that, we would not disclose any of that.
Nicholas Cook:Got it. And that sounds like maybe primarily for confidentiality reasons.
Noah Blanton:Yeah. That that would be for for our business purposes. We would obviously not be allowed to disclose that. Yeah. And and no one in the industry would.
Noah Blanton:Yeah. So anything that we're working on that we would be aware of that hadn't hit the public record, we wouldn't disclose. I I don't think there's trying to think about other things that we would have access to. I mean, obviously, any of our transactional data, we would not disclose. And there are states that are are nondisclosure states Mhmm.
Noah Blanton:That you don't know who's buying and selling property, or you may not know the price. Got it. Yeah. We would know it. We would not disclose that.
Noah Blanton:So you get to a disclosure versus a nondisclosure state. We may have a bucket of information about a certain number of properties where we know things that aren't a public record. We would we would not disclose that. Got it. Ownership or contact information that we might have that isn't public record, we wouldn't disclose that.
Nicholas Cook:Okay. So that kind brings up an interesting point. Sometimes I've seen in Oregon, you know, deed recordings that don't have a price. They don't tell you what to transact to that. Is that a gray area for you guys?
Nicholas Cook:If somebody called and said, hey. What would what did this property sell for? Would you be able to say that? Or do you not have that information because it wasn't
Noah Blanton:Well, if we closed it, we'd have the information, and we wouldn't tell you.
Nicholas Cook:Okay.
Noah Blanton:So Got it. We would tell you what was a public record.
Nicholas Cook:Interesting. Yep. Got it. And why do some people decide not to disclose transaction price and others do?
Noah Blanton:There there could be a number of reasons why. The consideration may be not entirely monetary. There could be a a host of complexities behind that. I'm pretty sure in the state of Oregon that they require that you disclose some consideration.
Nicholas Cook:Washington
Noah Blanton:as as a for instance, has a standard, you know, $10 and other good and valuable consideration. So most deeds will require that that consideration is passed for it to be valid and legal. So those deeds would say there was some consideration. They may just not disclose the price. Okay.
Noah Blanton:And those parties may not wish to know. It could be a a trust or a fund or it could be any reason that they would have for not wanting to disclose that price. And I I don't know what all of them would be, but Sure. There has to be some consideration listed on the deed. Sometimes there's there's complexities inside of the entity Mhmm.
Noah Blanton:That doesn't allow them to disclose. I mean, there could be a lot of reasons why. It's pretty rare, though Yeah. That you don't see the the disclosure.
Nicholas Cook:Yeah. I've only seen a few times, you know, you're looking something up maybe on Portland maps or something like that, and you try to see and it just it may just be that it's an old enough transaction. They just decided not to publish the information perhaps. But, I mean, imagine if you're trying to acquire, you know, neighboring lots, adjacent lots that maybe you don't want that to be known because you don't want to set
Noah Blanton:Yeah. I I and you you're I don't know that you can just arbitrarily decide. Okay. I don't wanna disclose it or I or I do wanna disclose it because I'll I'll go to something that's kind of adjacent to this. But so there are some cases where a buyer or seller would not be disclosed, where it would be redacted if there's a court order that protects that person, if there's a order of protection in place or something else in place that's from the court that would say, okay.
Noah Blanton:We can legally keep this from the public record.
Nicholas Cook:Witness protection or something.
Noah Blanton:Yeah. Witness protection or, you know, stalkers or violence or other things where it's been through the court, and it says we're not gonna disclose that this person is buying or selling real estate.
Nicholas Cook:Got
Noah Blanton:it. So we would know, but it would be redacted to the public record. So that's a a one method where you may get some set of information redacted from the public record. But, generally, I think most of the time disclosure is required in the state of Oregon for a price a sale price.
Nicholas Cook:Okay. That's good to know. Well, great. We're gonna take a quick break. K.
Nicholas Cook:And then we're gonna transition to some other stuff. I wanna hear your thoughts on kind of larger macro market Yeah. In The US, also regionally, things like that. But we'll take a quick break and be right back. K.
Nicholas Cook:Sounds good. This show is sponsored by SleepSound Property Management, one of Portland's largest and top rated management companies that specializes in multifamily and residential real estate. They can help you acquire, operate, protect, and sell or exchange your properties. If you want to invest in real estate, give them a call or visit them online @sleepsoundpm.com. That's sleepsoundpm.com.
Nicholas Cook:Okay. Great. So why don't we transition to a little bit of, you know, market perspective. Right? You know, you're in a unique position, in that you see a lot of transaction volume.
Nicholas Cook:Right? And so that's kinda telling you a story about the market. You know, what are you kinda seeing right now? Are you seeing people, you know, investors in particular being more active? Are they being more cautious right now?
Nicholas Cook:Like, what has some of the data been showing you especially, you know, so far this year? We're halfway through the year. Is it, you know, kinda what you expected it was gonna be like, or has it gone in a different direction?
Noah Blanton:Yeah. You sure you wanna stop talking about title insurance?
Nicholas Cook:As interesting as that is, I I know we could probably go for hours. But you know, I think we wanna wanna get a little bit more of the insight you have. Because I know you've done some just incredible presentations on on, you know, the local economy, the macro economy, and so I think people would really enjoy that.
Noah Blanton:Yeah. So I would say investors are generally always active in any market. That's that is one thing that that we have learned, and the pricing signals for investors are, I think, paid attention to much more closely, and they act on them much faster because the motivation is obviously completely different than me or you buying a home we're gonna live in. So investors are are always active, and the deal structure just becomes harder depending on where you're at in the cycle. Okay.
Noah Blanton:So if we're talking about single family residential real estate, we have very active investors always looking for property that they can take, add value to, and put back into the market as as inventory Mhmm. Which is a positive. I mean, it's one of the things that I think in this market and across many other markets continues to provide inventory where otherwise we would not have inventory. Multifamily commercial investment, that is just a much more pure pricing signal play. And we've seen some of that in in Oregon, not just here, but in other marketplaces where you're looking at large sort of headline assets trading at 70% value drops.
Noah Blanton:Yeah. And that signal's pretty clear. Somebody then comes in, recognize the value, buys it. It's a much cleaner marketplace. So we always I I I think investors are always active, and the pricing adjusts a lot faster Got it.
Noah Blanton:As they signal to each other what it is they're they're willing to transact at. In in this market, like many markets, you know, there's some speculation now about, well, what's the next five, six, seven years gonna look like? Are we people are kinda reading the tea leaves and saying, is this the perfect timing for whatever their goals are? But investors are always an active part of of the market. Their desire to transact is undiminished.
Noah Blanton:Their ability to transact
Nicholas Cook:Mhmm.
Noah Blanton:Depending on the on the market cycle is is different. And so I would say right now, the desire remains high as it always has. The ability is probably, like in other parts of the market, diminished somewhat. And, you know, it depends on your cash position, a lot of other things, but very active investors in our market
Nicholas Cook:Yeah.
Noah Blanton:Which is good. The longer term, you know, if we're looking at the overall market, I I think that we've kind of gone from mega cycle to mini cycle to mega cycle. And the first mega cycle, you know, whatever we'd call it whatever we want, but was 2005 through probably 02/1213, and where we just fundamentally changed our marketplace all across the entire nation. The Fed's role in in home financing completely changed at that point. I mean and this set up, the big run up, the drop off Yeah.
Noah Blanton:All of the attempts to fix that. We come up and do a kind of a stable market. COVID ox you know, completely changed the marketplace Mhmm. Both on the on the investor side and the the, you know, just regular purchaser side, residential home purchaser side, we had this very short intent cycle that now will carry us into this next cycle. And some of that is, know, the value destruction we see in commercial real estate.
Noah Blanton:That's part of that cycle. Little less apparent to most people. But the feature is very on the residential side is very, very low transaction volume and pretty high sort of sticky pricing.
Nicholas Cook:Yeah. And That's interesting. Yeah.
Noah Blanton:If you look at I mean, we've got four years, I think, of near 4,000,000 residential transactions, historically low. I mean, we should be
Nicholas Cook:Is that national?
Noah Blanton:National. A national number. We should be closer to 4.75 to, let's call it, five and a half million.
Nicholas Cook:Okay.
Noah Blanton:So you have a lot of you know, there's a big chunk of what we would call normal Yeah. Transacting that didn't take place. And one of the things I think a lot of people don't realize is I think we tend to think of COVID as a really, really intense, like, the most intense cycle. But from a transaction velocity perspective, the o five to o eight run up was 30 to 40% higher in terms of transaction volume
Nicholas Cook:Oh, that's interesting.
Noah Blanton:With fewer people. Wow. In the metro market specifically. So we had a really brief intense amount of transactions during COVID, but a massive amount of those were refinancing.
Nicholas Cook:Yeah.
Noah Blanton:And it's one of the reasons that our country has probably weathered inflation a little bit better than a lot of other countries because 60% of homeowners have a fixed rate below 4%. Yeah. That's wild. So when you have a real world negative interest rate fixed for thirty years
Nicholas Cook:Mhmm.
Noah Blanton:You might gripe about the price of eggs, but you're in a better position to absorb it. Yeah. Absolutely. Yeah. It's one of the the miracles of a thirty year fixed rate mortgage.
Noah Blanton:I think we're one of only three countries in the world that has such a thing. Yeah. And it's probably the most effective way for a household to hedge against inflation is to take on a large amount of debt, somewhat counterintuitively Yeah. And fix the rate of that debt at a at a moment in time. So we, I think, have survived.
Noah Blanton:It accounts for some of the strength of the consumer in the market more broadly because, you know, when you've dropped $4.05, $6,800 off of your mortgage payment, you still experience some of the wage gains that were inside of the marketplace. And now you might be stuck in your house, but you can consume.
Nicholas Cook:Yeah. No. That makes sense. And, you know, I guess speaking of interest rates, how have they, you know, impacted investor, you know, behavior over the last few years?
Noah Blanton:Well, from an investor perspective, obviously, rates are are a massive part of you writing your pro form a as to whether or not this makes sense or not. We saw private companies get driven out of the market during COVID because interest rates were so low. There was a lot more institutional money. Private investors came back afterwards, higher cost of capital, but they made more sense. Mhmm.
Noah Blanton:Speed to market, a lot of other a lot of other things. But I think I think the what was the question again?
Nicholas Cook:Well, just how do you think rates have, you know, impacted the behavior of investors? You know? Are they are they doing things differently than they were, you know, pre COVID? I mean, in the last few years, obviously.
Noah Blanton:Yeah. I think I think that there's a lot better underwriting being done, and the valuations can't get so out of control because the interest rate's constraining that, which is the point. Right? Yeah. To not let that kind of run away.
Noah Blanton:But you could go back. You know this. You could go back to when interest rates were incredibly historically, artificially, I might add low. Yeah. And you make an assumption that this is the market you're functioning in.
Noah Blanton:Well, the valuation just becomes crazy.
Nicholas Cook:Yeah. Balloons and Yeah. Yeah.
Noah Blanton:And so what follows on is, hey. If I can get a loan for that, then you pay less attention to your construction costs or or whatever it else it is. You don't manage those things as closely, and you just get this ballooning price if you don't have discipline inside of that transaction. The interest rate allows also maybe people who shouldn't be involved to get involved. Yeah.
Noah Blanton:That aren't as technically proficient or experienced to come into the marketplace and start to mess around, which also then starts impacting volumes. I would say today, you have very disciplined investors who are writing and underwriting their transactions in an environment that makes a little bit more sense. And and what you're seeing is the pricing signals adjusting for the interest rate.
Nicholas Cook:Yeah. Starting to. It took a while. Yeah. It took a while.
Nicholas Cook:I think that's really, like, I've seen maybe in the last six months, maybe twelve months, that adjustment, you know, with cap rates and, you know, know, seller expectations. I mean, I've talked to a handful of people who've closed a few different multifamily deals, and some of these people are, you know, closing transactions where they had presented these same offers six months ago, and they got rejected. And now now those investors are or sellers are coming back and saying, okay. We'll accept that.
Noah Blanton:Well and I think that is the point at which you know the market has begun to I mean, when you have seller starting to capitulate and they say, okay. I've adjusted to what the market is. I mean, you can want it to be different. Yeah. But if you underwrite it like you're the buyer, it's like, well, there's only one other lever left to pull, and it's the price.
Noah Blanton:Yeah. And, unfortunately, you bought into one market, and you're selling into another one. Yeah. And interest rates are everything in that environment. I mean, if you're if the if the cash flow that that asset's developing is not competitive in the marketplace, you're gonna go somewhere else.
Noah Blanton:So that that part of the market is a little bit less emotional, and ironically, it's less emotional the higher the cost of the asset is.
Nicholas Cook:Yeah. That is interesting. Yeah. I I've noticed that as well. And, I mean, the you know, one of the early signs that things mentality was shifting was buildings being priced based on actual rents and not projected rents.
Noah Blanton:Yeah.
Nicholas Cook:Because there was a period of time where people were selling these assets based on what you can what you can get. Yeah. And right now, you know, you see some of that still a little bit, but most part it's on on actual rents.
Noah Blanton:That's moved to AI stock valuations now. Yeah.
Nicholas Cook:That's some serious volatility in there, but yeah. No. That's gonna be really interesting.
Noah Blanton:But that so let me ask you a question. So when it comes to pricing based on projected rents, was that a new phenomenon in the marketplace? Was that something that kind of grew up in the low interest rate environment, or is that something that you see happen through the market cycle?
Nicholas Cook:I mean, I think that it was mostly with the really low interest rate environment is where I noticed that to be more present, and it was just because, you know, some of this was also before rent control in Oregon. And so it was kind of just like, you know, and, you know, some of this was even before Portland relocation. So some of it was basically like, look, you buy this building, you can you can get these rents in a reasonable amount of time. And a lot of it was just probably because some of the sellers were people who who had owned these assets for a long period of time. They didn't want to go through the process of increasing the rents themselves.
Noah Blanton:Yeah. Okay.
Nicholas Cook:You know? Whereas, you know, then there's a period of time where these regulations were in place. And that's also where you've just either got some, you know, brokers that are expecting maybe the buyer's naive or whatever it happens to be where they don't know what all the constraints are. Meaning, like, okay. Well, sure.
Nicholas Cook:I can raise the rents. Like, for example, like, Portland relocation came into play, you know, and there was no rent control, yeah, you could get the rents to that level, but it's gonna trigger relocation. So $4,500 payment, $4,200 payment. So if you weren't familiar with those nuances, then that would create an issue. And then you had rent control, and then that's taking different forms where it was CPI plus 7%, and now it's CPI plus, you know, 7% or 10, whichever is less.
Nicholas Cook:So there's all these little mechanisms where you're like, okay. Yeah. I could get those rents, but from a practical standpoint operation, I can't it's gonna take me five years
Noah Blanton:to get there. Yeah.
Nicholas Cook:Right? So you kinda have to know what you're you're looking at, but we are starting to see that kinda reset more towards some reality.
Noah Blanton:Are there markets where it would be reasonable to do that? So if you go outside of Portland as a for instance Mhmm. Is there a time where it would make sense to say, alright. Yeah. This is a rapidly expanding market.
Noah Blanton:I do see that it's reasonable. I'll pay you a projected rent valuation today. I mean
Nicholas Cook:Yeah. I mean, I think there are times where it would make sense. I mean, if you're gonna be holding the asset for a long period of time, then it'd probably becomes a little bit less significant to you. It also depends on how extensive the value add project could be. If you're talking about, you know, you know, units you're gonna go in and gut, and they're telling you this is what the potential, you know, rents are, then you're like, okay.
Nicholas Cook:Well, yeah, that makes sense. And I we have the tools to achieve it and so forth. Yeah. But a lot of times, you know, people were projecting these off, not a lot of operational change, but more of just like, hey, you're gonna go in and put in LVT flooring and update the countertops, and all of a sudden, the tenants are gonna pay more. And it's like, that's not necessarily gonna be the case.
Nicholas Cook:Because value add investing is effective, but it's also very risky because you're you're trying to anticipate what other tenants are going to be willing to pay. Yeah. You know, and your biggest threat to that is supply. Right? And that's kinda where Yeah.
Nicholas Cook:Some people have gotten stuck is, you know, a lot of supply. Certainly, certain types of class of supply, like class a supply
Noah Blanton:Yeah.
Nicholas Cook:Kind of being too significant. So, obviously, like, you know, tracking some of this, you know, economic behavior is important. So what sort of indicators are you looking at personally that you're kind of tracking closely right now to kind of be leading indicators for you or to give you an idea of, you know, hey. Should WFG be, you know, ramping up its staff to deal with the incoming, you know, potential orders?
Noah Blanton:Yeah. So on a from a purchase perspective, our basis is always two things, and it sounds simple, but it really is the basis for everything. Population growth, that could be either migration or household formation and employment. So those are the basis for I mean, we're a transaction velocity business, so we need residential real estate transactions in order to to make our business work. So those two things is a basis we're always always tracking.
Noah Blanton:And then from a a we can also close refinances and reorganizations. That's an interest rate driven play. And there was a I forget who did the study, but there was a study that came out where there's some empirical evidence now about how much motivation or demand is destroyed when you get above the interest rate that people already have. Mhmm. Yeah.
Noah Blanton:So there's some models now that are starting to tell us what we should expect, but most people will will refinance for three quarters to a quarter of a point. Mhmm. So anytime you get to a point where there's some folks that it would make sense for them to refinance, you get a point under, that's fine. We're not close to that now, so there's very little refinance going on. But employment and and population growth are the two things that we look at.
Noah Blanton:So population growth that that cannot buy or sell real estate, transact in real estate isn't helpful to us. Not that we shouldn't notice it, but just from our business planning perspective, doesn't matter. And if the population can't afford the price of a house, then then you got a problem. And that problem exists a lot of places now.
Nicholas Cook:Yeah. So you're thinking as kind of a third data set of, you know, basically purchasing power of households and things like that. Yep. Got it.
Noah Blanton:Yeah. Yeah. Pure population growth or household formation doesn't tell the whole story. You still have to have the ability to transact. And I said earlier about investors, I'll say it again about residential real estate.
Noah Blanton:With great exception, everyone wants to own real estate. Yeah. It's not about desire. It's about ability. Yeah.
Noah Blanton:And the ability to transact is a function of interest rates, pricing, but also employment and wages. So I think Oregon if we're looking at I think Oregon's median priced home, this is one major, is 6.2 times the median salary. K. Detroit is three. Sure.
Noah Blanton:I think Kauai is 14. So as a Mhmm. You know, on on the spectrum, five and a half times is considered a constrained or unaffordable market.
Nicholas Cook:Oh, interesting. Okay.
Noah Blanton:So we're we're at 6.2. So it it's it's expensive, and you take away the $3.04, $5,600 that an interest rate gives you back. Mhmm. That's tough. I mean, it's tough.
Noah Blanton:So but the other thing that people don't talk about a lot that I don't hear as part of the affordability conversation is taxes and insurance. Yeah. And it's a significant contributor to the ability to make a monthly payment. And taxes, I think, on average have gone up 25 to 30% through COVID, and insurance, in some cases, a 120 to a 150%. And then depending on the market you're in, maybe even more than that.
Noah Blanton:Yeah. So if your insurance premium and, you know, some places in California is $30 a year
Nicholas Cook:That's wild. Yeah.
Noah Blanton:That's pretty wild. Yeah. So I think that's not enough of the a part of the affordability conversation because it's a a significant and rising contributor to the ability to make a monthly payment.
Nicholas Cook:Yeah. And when you're talking about taxes, are you talking about overall taxes? Are you talking about more specifically property taxes?
Noah Blanton:I'm talking about specifically property taxes. So that would be the, you know, you're you're taking more money on a monthly basis, and then you could have another conversation about those places where you're not even receiving that money because of taxes. Yeah. Two different sides of that equation, but specifically property taxes, which are are a big part of a monthly payment and an increasing part. So something that we don't talk a lot about.
Nicholas Cook:Yeah. That's a good point. I mean, do you think that people are sitting like, for the people that are sitting on the sidelines of buying a home, do you think most of those people, the barrier to buying right now is that they believe interest rates are gonna come down, or they just don't have the down payment to buy?
Noah Blanton:Yeah. Here's what I've learned about most of us as consumers. When interest rates are going up, we believe they're going to come down. Sure. And when interest rates are going down, we believe they're gonna come down further.
Noah Blanton:We always think they're coming down. So there is some of that where, you know, you get at six and a half, six and three quarters. It's like, oh, that's that's tough because I'm pretty sure they're gonna go down. And, you know, maybe that's a good bet that they are enough to make a big difference. I don't know.
Noah Blanton:Maybe not. Yeah. But but then there's a significant barrier for the down payment or the ability to to afford the monthly payment. So we see a lot of if you're talking about just residential real estate, we see a lot of gift funds to help people get into homes. And it's it's a much larger part of down payment than you might might suggest.
Noah Blanton:Now if you already own a home, down payment's no problem because you probably got some pretty significant equity built up, and you just roll that over into the next place. Yeah. Which is why it's so important to get your foot on the bottom rung of that property ladder. Yeah. Because that's how you get to the next one and the next one and the next one.
Noah Blanton:But the other thing that that I I have noticed, and this is just anecdotal in our own business, is that the the younger or first time homebuyer is at least the ones that are transacting are much more willing to buy whatever it is they can afford
Nicholas Cook:Mhmm.
Noah Blanton:Rather than say, I want the HGTV house or the you know, it has to be perfect. Or they're willing to say, I'm buy what I can afford to get my foot on the bottom rung of the property ladder. I I think that's a positive.
Nicholas Cook:Sure.
Noah Blanton:Unlike o eight, o nine, ten where you can go back and read articles where everybody said, oh, no one's ever gonna wanna own real estate. It's terrible. We're all gonna live in communes with, you know, shared bathrooms, and it's gonna be great. Well, we won't own. That has turned out to not be true.
Noah Blanton:People wanna own real estate. Yeah. Where in this cycle, it's it is I wanna own. It's really unaffordable, but I really wanna own.
Nicholas Cook:Yeah.
Noah Blanton:And so it's a different narrative this cycle than it was the great recession cycle. But people accepting what they can afford versus what they want, which I think is really smart. Mhmm. And then a lot of down payment assistance where I've told we've told our own kids, you know, wedding or down payment. You you choose.
Noah Blanton:Fair enough. Fair enough. Yeah. And we'll only give you money for one. It's the down payment.
Nicholas Cook:Smarter choice in the long run.
Noah Blanton:Yeah. I think so.
Nicholas Cook:Yeah. Well, that's interesting. I mean, I think that, you know, before obviously, we've we've been talking a lot about just the the market interest rates and mortgages, and you talked about the secondary market earlier. But, like, prior to all that, existing sellers would oftentimes just do what's called seller financing. Right?
Nicholas Cook:That's, like, how properties were Yeah. Sold, whether it was, like, on a, you know, contract basis or something like that. Do you think that that's gonna be something that might emerge in the future, or do you think that that's just old old school methodology that no one's going to?
Noah Blanton:I don't. Yeah. No. Not in any significant I think our market's not not really set up for that. Largely, you need to own the home free and clear in order to be able to do that.
Noah Blanton:The people that do own their home free and clear are probably of the demographic that don't wanna deal with a potential repossession or collection or anything else that may come along. So the premium to do that, I mean, there's a subset of people that will always be willing to do it. But Sure. At scale, no.
Nicholas Cook:Yeah.
Noah Blanton:I don't think so. And I think we have an entire generation or two that's so removed from that concept. Yeah. That they would just say, ah, this this doesn't make sense. And the financing market is robust enough now that there's probably a product for them and probably one that is better suited than than seller financing.
Noah Blanton:I think seller financing has a really narrow window where it makes where it makes sense. And the problem is always an arm's length seller finance transaction.
Nicholas Cook:Yeah. Yeah.
Noah Blanton:If you know the person, it's totally different. Yeah. If you don't know them, where's your protection for collection? How do you foreclose if you have to? I mean, you know, you don't think about if everything goes good.
Noah Blanton:No. Yeah. Think about what do I do in this transaction if it goes blow?
Nicholas Cook:Blows up. Yeah. Yeah.
Noah Blanton:And most people are willing to say, I would take a a some premium hit, some percentage hit in order to just take my capital and go. Yeah. Yeah. So I don't see that as a significant part. Down payment assistance, that's a significant part.
Noah Blanton:That's something we're seeing more and more where families are giving money sooner to help members get into into housing.
Nicholas Cook:Yeah. That'd be interesting because, you know, you can gift money up to a certain amount without that person having to pay taxes on it. And I wonder if they're gonna do any sort of work around that policy in terms of allowing gifts for certain purposes that might be tax free because, you know, and maybe this is something that you would agree with, but my understanding is that, you know, you were talking about population growth. Right? You're talking about household formation.
Nicholas Cook:Well, a lot of that kind of means like marriage and kids. Right? Mhmm. Ultimately. Well, a big barrier to that is stability, which is oftentimes something that people see as like homeownership.
Nicholas Cook:Right? Like a lot of times people are like, well, I don't wanna do those things until I can afford a house. Right? And so that might be your kind of downstream effect of, you know, prices either being too high or having challenges with down payments is those things that you're tracking are are not necessarily moving in the right direction. It could be for other reasons too, but, you
Noah Blanton:know Yeah. I can see the two things coming together as a longer term demographic cycle where you say, I can't own real estate, so I'm gonna defer or delay family formation or having children, and that kinda compounds on itself. I could definitely see how in a longer cycle that may the two may influence each other. Yeah. I think, actually, one of the largest demographics of household formation, though, is single women forming up households, I think, at a higher rate in in the twenties demographic than any other portion of demographic, married or I have to check that number, but it's a very high percentage is single women forming up households.
Nicholas Cook:Got it. Okay. Well, you know, I guess this is the last kind of formal question I have about, you know, professional stuff, then we'll move to a few just quick questions to get to know you better. But, you know, if you were advising let's kind of put on the investor hat again. You know, a real estate investor who's got capital to deploy today, what opportunities would you be telling them that they should be paying attention to?
Noah Blanton:Well, that's a good question. I think there is I'll I'll kinda set this up with a few caveats first. But Okay. You know, let's assume it's a a sophisticated investor with capital, and they kind of understand it's not their first real estate investment. Sure.
Noah Blanton:Yeah. I think there's a I think I might look outside of what I had traditionally invested in. So as a for instance, if I was traditionally a residential investor, I may look to other property types right now because the opportunity may be better there. And I might say, well, maybe is now the time for me to look at something that's a little bit outside of what I've done historically because maybe the pricing is better there, or perhaps there's an opportunity that I'm not seeing. I might also look to buy and this is, like, a little bit even more outside.
Noah Blanton:I might be looking to buy businesses that own real estate and consider operating that business as well
Nicholas Cook:Interesting. Yeah.
Noah Blanton:As a as a vehicle for real estate investment. There can be some really good knock on effects that come from that. And then if I'm a if I'm a if I wanna stay in let's say it's residential multifamily, As a buyer, I think I would probably become a lot more active at the price point that made sense for me. What difference is it to you if you make 27 offers and all of them are rejected? Yeah.
Noah Blanton:You may get one that hits your price point, but the amount of and you know this well. There are sellers out there that will transact with you.
Nicholas Cook:Mhmm.
Noah Blanton:And so if I was committed to investing, I would become really, really active at the price point that made sense for me. I probably would be cautious about running to other markets that I didn't understand well for a variety of of different reasons. I would probably stick to the market I knew the best and make the offers that I thought made sense for me, and I'd make a lot of them.
Nicholas Cook:Cool. That's good advice. Yeah. Yeah. It's always good to think outside the box and, you know, sometimes, yeah, there are opportunities that you you don't see because you're not wearing that kind of lens.
Nicholas Cook:No. That's great. Well, one of things we're gonna transition real quick, I just have a few wrap up questions because you've spent a lot of time with me here. Appreciate. It's just some questions to get to know you a little bit better.
Nicholas Cook:It's a way for, you know, the guests to learn more about you, and it's always kind of fun. So one of the first questions I've got here is, know, growing up, you know, what experience or influence, you know, had the biggest impact on, you know, who you are today?
Noah Blanton:Oh, man. That's that's like a big massive life question. I would say it probably wasn't an individual. It was probably the way I grew up.
Nicholas Cook:Okay.
Noah Blanton:I was one of nine children Alright. Wow. From the same two parents.
Nicholas Cook:More impressive. Uh-huh. I know.
Noah Blanton:And we grew up out in the country, and it was there was always people around, and it was a great way to grow up, and your siblings become your your friends. And so I don't know if there was maybe a a single influencer as much as it was the the way I grew up. It was a great way to grow up, and and it's unique. Anytime you tell people you grew up with eight siblings, they're like, what was that like? Yeah.
Noah Blanton:It was great. You learned a lot. Sure. You learned how to negotiate. You learned how to share.
Noah Blanton:You knew when you had power. You knew when you didn't. Yeah. You learned to fight for resources.
Nicholas Cook:I mean, you Yeah.
Noah Blanton:You learned a lot of things. And I think you also look at the sacrifices that your parents make and those you understand later on, but but probably the way I grew up, but not not an individual.
Nicholas Cook:Got it. Got it. And did you grow up in Desert or did you grow up somewhere else?
Noah Blanton:So I grew up in in Northern Clark County, largely. I'm from Ohio, but came out here pretty young and grew up in the sticks in North Clark County. Cool.
Nicholas Cook:Yeah. Fair enough. And so my next question is is, you know, you obviously have held really senior positions, you know, in your career, obviously, WFG title and so forth and and prior to that. Those those roles require you know, they're demanding, right, from an energy standpoint because you're oftentimes dealing with complex issues, not straightforward issues. What do you do to keep your energy up and just have that, you know, stamina?
Nicholas Cook:Because it's something that you've obviously had to maintain for a long time.
Noah Blanton:Yeah. Well, I think, I've I like working. I've always enjoyed working. I don't mind working hard, so maybe there's some natural sort of motivation there. Sure.
Noah Blanton:I will tell you, I've paid a lot more attention to my health in the last, you know, six, seven, eight years. And you get to a certain age and you realize I I need to pay closer and closer attention to this. Yeah. I'm not, you know, 25. So I would say more recently, I've I've tried to do the regular things that you do, eat better food, drink less Yeah.
Noah Blanton:Try to exercise. Exercise. I've exercised more in the last five years of my life than I probably did all the years before that.
Nicholas Cook:Gotta start sometime.
Noah Blanton:Yeah. And those things have made a difference in terms of just focus and energy. And but I'm also I don't I don't and really never have burned the candle at both ends. I'm a in bed at 08:30 type of guy, and I'm up at four.
Nicholas Cook:Okay. So That balances out, though.
Noah Blanton:It does. That's that's what I mean. Yeah. It's like I don't it's not like I go to bed at at midnight and get up at four. I'm I I go to bed early.
Noah Blanton:Yeah.
Nicholas Cook:When did you start that habit? I mean, I don't imagine you're going to bed 08:30 when you're No.
Noah Blanton:It's probably no. Probably not. But I'd say it's probably been a decade
Nicholas Cook:Okay.
Noah Blanton:That I've gone to bed early, and I get up early. Cool. So
Nicholas Cook:Sounds good. My final question here is, you know, what's the biggest insight you've had from being a parent?
Noah Blanton:Oh, that one is easy. Your children are a reflection of yourself. And I think you also realize as you look back that your parents were just probably doing the best they could with the information they had at the time. Yeah. And they probably made some mistakes, and that's okay.
Noah Blanton:And you want that same grace from your children because you realize, oops, I probably made some mistakes, and Sure. I hope you'll be okay with that. But mostly that they're a reflection and a mirror of yourself. And so both what you love and what probably annoys you about them is probably a reflection of yourself.
Nicholas Cook:Fair enough. Fair Yeah. Yep. Cool. Great.
Nicholas Cook:Yeah. Well, thank you so much, Noah, for being here today. This is great to learn a little bit more about the title world, WFG, and kind of your whole experience in there. So Yeah.
Noah Blanton:Good to be here.
Nicholas Cook:Thanks for joining us.
Noah Blanton:Yep. You bet.
Nicholas Cook:And that concludes today's episode of Retire on Rentals. But we do have a quick favor to ask before you jump off. If haven't already, please go ahead and like and subscribe. More engagement means better content and more excellent guests. And we look forward to joining you on your real estate journey.
Nicholas Cook:Now remember, stay focused, stay driven, so you can retire on rentals.