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SHOW NOTES FOR EPISODE 135: REAL ESTATE INVESTING OUTSIDE THE BOX
For the last 40 plus years, Jay Henrichs has been a real estate broker, sold raw land, built developments, been a mortgage banker and hard money lender, sold timber, and survived multiple recessions. He became what he had to be based on the situation — even if it meant going outside the realm of conventional real estate investing. In this episode, Jay shares his sage wisdom and advice for those considering investing for the first time or for those already investing but considering a shift in their business model.
What You Will Learn
- The importance of good timing in real estate
- How changing careers in hard times is sometimes necessary to recover and rebuild
- What are the characteristics of an MSA worth investing in
- Four real estate investing options ideal for seniors
- How thinking “outside the box” can help you not just survive but thrive in recessions
About Our Guest
Jay Hinrichs
Jay Hinrichs is a serial entrepreneur, businessman and real estate investor who was born in Burlingham, California and grew up in Cupertino and Napa Valley.
As a youngster, Jay’s real estate career started with hanging “door hangers” for his dad who was a developer in the Clearlake, California. In the mid 70s, he got his California Broker’s license and became active in development and land sales. Later, Jay took an interest in lending, mentored with a family friend and eventually became president of Langer Mortgage in Oakland, California. At Langer he administered $35 million in assets funded by well over 250 investors. In 1991, he sold the mortgage company to Spartan Mortgage.
Moving north to Oregon in the mid 1990s, he started a company called Cedar Mountain where he bought and sold timber rights and timberlands. He later acquired his Oregon Brokers license and started developing housing subdivisions in the Portland Metro area. Forming the Silverado Group, LLC, he also became one of the top buyers of foreclosure and pre-foreclosure properties in Washington and Oregon. He got his Oregon Mortgage Banker license and founded Silverado Funding, LLC, a private money lending company. In 2005, after the Hurricane Katrina disaster, Jay flew to Mississippi to use his real estate expertise to address the housing shortage. His company provided more than 2,000 private loans to rehabbers who were renovating properties for renters in 8 different markets. Although hit pretty hard by the financial crisis in 2008, he rolled up his sleeves and was able to get through the crisis before moving back to Oregon.
Today, Jay is a home builder, building 25 homes a year in Portland and 10 homes a year in Charleston, SC. In addition, he funds over 200 fix ‘n flip deals a year for fix and flippers in 15 different states.
More About Jay
- Grew up in real estate family in Northern California
- Father was a real estate developer selling recreational lots
- Langer was family friend who taught Jay hard money lending. Able to eventually buy the business
- San Francisco earthquake and Gulf War/ Desert Storm impacted the economy profoundly resulting in a deep recession
- Learned how to adapt and move forward ’89-92
- Sold Langer Mortgage and moved to Oregon
Development in Portland
- People defaulted on loans for development projects
- He took on these projects and finished the homes
- He set-up a building division
- Infill, hard to find land to build
- For 5-6 years – no new inventory – shortage of 30-40K houses
- Prior to that, 10-12,000 doors a year being built a year for 20 years
- In 2009, they only built 700 doors – 2010-2,000 and 2011-3,000
- Because of inventory shortage, rents were shooting up
- He’s on his 100th Almost all his homes sell while still in the framing stage
- Shortage of construction labor and increase in land prices has squeezed profit margins
- Urban growth boundary that prevents squall
- Oregon is #1 “in migration” state on the west coast – more people move into Oregon per capita than any other state on the west coast
Development in Charleston, South Carolina
- 4 years ago, found another market to start building that reminds him of San Francisco bay area – Charleston, SC
- Sits on peninsula
- Surrounded by water on three sides
- Huge shortage of land and homes
- Boeing is moving in
- Volvo and Mercedes are building new factories
- 16 hotels under construction
- Got General Contractor friend in Las Vegas to move out to Charleston to head up building effort
- Built 30 beautiful houses
- Title challenges with older land
- Bought first lots for $40 k – worth $200K today
- Sold first houses for $350K – today worth $600K
- Half the homes are being bought with cash
- Where he finds land:
- MLS
- Wholesalers
- Seller (farmer, owner)
- He’s building on 23 lots right now
Biggest Mistakes
- Not buying more Oregon timberland in 1992-93 before prices skyrocketed
- Selling any homes he had in Palo Alto, California (averaged$200K each when he bought – now, over a million)
- 2007 should have sold lending company and retired (to avoid 2008-2009 recession)
Biggest Success
- His timber business was extremely successful – the timing was right!
Advice for People Starting in Real Estate Investing Later in Life
- Good places you can invest
- Hard money lending
- Rental property investing in midwest, deep south
- First deed of trusts – performing
- Crowdfunding
Plans for the Future
- Not looking to retire
- Will continue to fund people starting out and build where the opportunity is right
Rap-It-Up
- Favorite real estate book: Traction by Gene Wickman
- Favorite business book: Think and Grow Rick by Napoleon Hill
- Most valuable web site for success (other than your own): BiggerPockets.com
- Favorite app: FlightAware
- Favorite quote: “Tough times don’t last but tough people do.”
- If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Go to the Midwest to flip cars and houses. Would find houses for $1,000 and sell for $3,000.
How to Reach Jay
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