2024 Year In Review

Zac Ruiz [0:00] All right, so I'm just gonna get it started here. Welcome to the first AVLmeetup of 2024, or 5. That's where I'm at. So let's go over the agenda. We're gonna do this one a little bit different. So if this is your first one, this isn't how it usually goes. We usually do a little bit of, like, a class and then, a kind of a live studio audience panel. But tonight, we're trying something different. So, welcome housekeeping. We're gonna tell you how we did over 2024. And then we're gonna have three segments. So they won't be talking for 20 minutes. What's gonna happen is, each person's gonna talk for about 10 minutes. We have Kim Winters, who's gonna break down the mortgage market.

We have Rodrigo, the co host, who's gonna talk about property management, so that rental market. I'm gonna go over, let's call it, business systems and processes. It's an architecture we're calling Hub and Spoke. talk about it, for about 10 minutes each. And then we're gonna kick it to a 10 minute table question. So everyone's gonna get the opportunity to meet the people around them. Maybe by the second or third table question. You meet some new people. and get... like, Like 10 minutes is a good enough time to get a medium, deep dive into the topic with your peers. And then we'll have Q and A with everyone, pass the mic around. It'll be a good time.

So, AV, I'll meet up, we're in the business of bringing the movers and shakers under one roof, right? So we are about, if you haven't heard it, our net profit philosophy, right? What does that stand for? Net is for networking, education, and transactions. If you do those three things, then you will profit, and nobody cares about gross profit, right? So what do you keep? So networking, uh, just shove hands who's in the room. How many realtors, less and less? Oh, look at that. That's a good show in this time. How many investors, hopefully, your same hands are going up, right, if you're in the game, lenders, or is the money? Well, everyone turn around, pay attention to that.

Uh, service providers. Are you a contractor? Oh, we got one right there. Um, end rep. Non real estate person. Who has nothing to do with real estate here? We love seeing more of these hands go up. That's fun, right? Then there's Education. Education is partly by tonight, right? So, we have done just shy. We thought we almost beat it in 2024. Just shy, 5,000 hours of education and networking. And we're gonna talk about those numbers actually coming up here in a second. And then, finally, transactions. Show of hands, who's done a deal with someone in the room? More hands go up every meetup? That's awesome. That's why you're here. Right?

You're here to meet the other movers and Shakers, so that you can do more transactions. Right? Easiest way to do that. Volunteer. The tables were set up. People are checking you in. The tables will get unset up. That all happens with volunteers. Right? So huge thanks to our volunteers, get a first actual round of applause real quick. Um... As you will soon see, The Price is Right. It's a free show, and there's nothing for sale. So if it wasn't for the community, pitching in and helping out wouldn't be the same. Speaking of which, if you want to volunteer, it's really easy. I have added a volunteer button, everywhere buttons can go. You can't go to a page without seeing a volunteer button.

So, that's all you gotta do. You can either help us set it up, tear it down, facilitate, so just kind of, like, mingle, right? Or, uh, welcome tables. Check people in. Very important. We're gonna talk about that today. So let's get to the numbers. AVLmeetup in 2024, by the numbers, one of my favorite gifs. Oh, get ready, all right? 'Cause there's gonna be graphs. We're gonna be talking about numbers. It's gonna be fun. So quick, just a breakdown. This was our year over year. This is all 2024. These were our RSVP counts. What you'll find out is, maybe this means nothing. Um, so RSVP, one topic everyone seemed to really love, is building buildings.

And so we're actually gonna redo that one this year. Obviously, Helene kind of knocked us out for two months, and we were right back for the end of the year. Then there's check ins. So people RSVP? Ah, not all those people show up. But check ins is all of you who actually signed in today. We're gonna talk about that. That's kind of up and down, and that's where the volunteers come in, uh, the most help for us. Then there's head count. We're gonna put these two graphs next to each other. This number, these numbers, they're calculated based on people who check in. That's why they're honest. all data driven.

If you checked in, we have a multiplication thing that you got some networking and education. What do you notice about this chart? So this is the head count. This is where we clicked the button, like, counted you, and these are the people that checked in. Hmm. I feel like there's always more people here than people that check in. We'd appreciate it if you guys checked in. It helps us a great deal. Then there's first timers. We are trying to broaden our appeal and meet some new people. So, first harm is super important to us. Uh, so if we any first timers here, raise of hand? Very cool. Very cool. All right. And they get a round of applause, too. So, uh, we also track a few other things.

We track a few other things. So we like to see how RSVPs are going. So this was your interview this morning, and you'll see these spikes. We track whenever we have our total aggregate RSVP count. That's when our emails go out. That's how we know whether these emails are effective or not. And you can hover over and see that when that one on the seventh got us 20 RSVPs. Pretty sweet. Right? And then each meetup has its own attendance numbers, like we were talking about, we've got Ray Ray counting right now. I may have just totally ruined her ability to count. Um, but so, each, each, we have attendance stats that we keep. Right?

So we've got the percentage of people who RSVP'd, and then checked in. That's what I was saying. That RSVP number is not always that great. It means almost nothing. Right? And then you'll see, on our little page, that means you've got, you know, you're an honorable man, or woman. You get a trophy for honoring your agreement. Then we have the percent of check ins, who RSVP'd? Sounds the same, it's not. Right? The denominator for the one is of all RSVPs. The denominator for the other is all our check ins, excuse me? Then we go, The people who checked in who completed the survey, and that's the welcome question this time, right? You'll see they get a cute little thing there.

And then we've got the percentage of people who completed their profile, and the profile's good, because it tells you who's in the community. That member directory. You should use it. How do you reach out to people and let them know that they can reach out to you? And that's a sad face. We had nobody. All right, so 5% of the people from the last one had completed their profile. Oh, well. We also like to see how we're doing compared to the previous six months. So we'd keep track to see if we're doing well. So, you see, we didn't really do any... So this is the day of the meetup all the way on the right, and then a month out.

So you'll see this green line is this one in particular, the year in review. We didn't really do anything. I was enjoying Christmas vacation game. All right? You didn't get any emails, and that's why. But we ended up trending just around what we've been doing. And again, as you can see, these are our event emails. You'll see those spikes when we got more people. And then this one is the recap email, so it's not exactly selling the next thing. It's just kind of doing it. And there's the magic sauce. That's our email cadence. Four emails one a week. Speaking of emails. This was our newsletter list. It didn't exactly grow the way we wanted to this year.

And that's a function of people not really checking in and signing up, and also us not doing a good enough job of getting you on board. We also lost two months 'cause we didn't do anything. So we didn't grow it the way we wanted to, but... Look at that. That's a 60% open rate on average. We have a super, super, super healthy newsletter. We also stopped, dropped off at the end of the year because of Helene and the holidays, and this is really impressive. Not a one for the whole year. Not a one complaint about spam. Right? So we, uh, we honor and respect your inbox. We appreciate that. All right, so putting most of this together, we got this funny looking graph here. Right?

And so what can we tell for 2024. Basically, on average, we get 86 RSVPs an event, on average. We get 61 check ins. Let's keep that number in mind, 61 people checked in. But we get a head count of about an average of 100. You see a difference in that number?

Unknown [7:53] All right?

Zac Ruiz [7:55] Help me. Help me, right? And then 35, average, first timers. Amazing. The more we grow the community, the more we can move and shake, and do the net profit thing. But why? Like, what's the point of gathering all this information? It's a tremendous amount of information for no reason. Well, our data driven lineup 420, 25 is live. You could go to upcoming events and see all the topics we're talking about. It's because we know what you like. So when you check in, when you answer the polls, when you open the email, when you RSVP, and when you talk to us, please continue to talk to us, we get to put together a lineup. For example, next month, we're doing hospitality in WNC.

And that's, we're talking about hospitality in the wake of Helene. So we've got Katie Button from Corte. We have Molly from Chipani. We have Jordan from Horseshoe Farm. Like, we are getting the people, the movers and Shakers to come and talk, thanks to all of you. So finally, an exciting announcement coming up, and then I'm done. Would any of you like to open the show and give the market update? So we're thinking about every month, just giving someone else the opportunity to just kind of do the quick little five minute intro, give the two minute Ruiz Report version, what changed month over month, 'cause we are real estate based. That was our foundation. What's going on in the market?

Let us know. Send us an email. More to follow about that. And I'm gonna pass it over to Kim Winters, who is gonna break down the mortgage market for you.

Unknown [0:00] Hi, guys.

Kim Winters [0:01] Happy 2025. So when we talk about numbers, yeah, that sounds boring, doesn't it? But there's a couple things that I think we need to cover to look at how 2025 is gonna shake out, and we'll have a quick overview of 2024. So we're gonna talk about the 2025 labor market, because that is a hot topic as it pertains to interest rates. And the factors involved in what we expect to see for this year, we're gonna talk about the Fed. I know, I know, I know. How many fed cuts are we gonna get? You turn on the news. And why are the rates not going down if the Feds cut rates? So we're gonna talk about how short term rates and long term rates are sort of impacted.

And then we're gonna talk quickly about the housing market nationally. Now, I know Zach is really, really good about talking about hyper local stuff. But after Helene and looking at 2024, and I'll give you some information about our team, because we obviously do mortgages, we saw 2024 pretty flat, but if you look at how many events we had to do to replicate the same amount of volume, we had 90 different events or meetings with folks. That is, uh, in comparison to about 37 in 2024, or 2023. So, if we look at 2025, and what's gonna happen with the mortgage rates, the labor market is gonna be really critical.

If you look at 24, unemployment did go up, and one of the most fascinating things, as we sort of deep dive into this, is that in the last seven months, we saw the duration of unemployment benefits extended by 21%. In other words, 21% of the people who were on unemployment had to stay on it longer. We also saw big box stores closing, big lots, Party City. Did you know that Walgreens closed 1,200 stores last year? So what does that mean? All those people who work at Walgreens and all of these stores have to find jobs. And then we're gonna look at the jobs report or the jolts report. This is, uh, how many new jobs are created?

And we'll talk about data, because I think, um, information is power, but you need accurate information, right? So if you looked at how many jobs were created from January 24 to November, after the revisions, we actually created 1.1 million less jobs than we thought. And so when we get all excited, 'cause there's a jobs report, and the market's gonna move, what would have happened if they had accurate data? Maybe rates might have been a little bit lower? And then, if you look at unemployment, what happens with the correlation between rates and unemployment? So whenever unemployment goes up, typically, the photo try to lower rates to respond to that and to stimulate the economy.

This year, right now we're currently at 4.1%, we're predicted to go to 4.5 to 4.6%. But this isn't fascinating, this is a fascinating chart, because if you look at this time last year, we had 8.8 million job openings in this country. If you look at, through October, we had 7.7 million. So that means we have people losing their jobs, and there's less jobs to be able to find. The other thing that's gonna impact rates, really, and we've heard about this, and we go to the grocery store, and we see how much things go up, is the personal consumption expenditures. That's the measurement, or one of the things that the feds look like, look at when they're talking about inflation.

If you were to look on this chart, over to the red chart here, and the blue chart, you can see that we've seen inflation dropping. We were almost at 9% in the last 18 months, but we are now at 2.8% year over year, and we expect that, if all things are, there's no, you know, COVID or crazy catastrophes. We expect that to go down to around 2.1 to 2.2. But one thing that I think is important to mention, as people are really frustrated. Because it's now 2.8. That's on top of the increased prices people already felt. That's not rates or inflation is falling. That means that if it was 9%, and it's continued to go up, it's on the cumulative, people, their pocketbooks are being impacted.

And when you combine that with the unemployment rates, which we look at every single month, the data that we get, though, is a little bit dated and a lot bit not accurate. And why is that? Why is that that we saw 1.1 million less jobs or revisions. If you think about it, 100,000 jobs were created less than what the unemployment numbers say. It's called ghost openings. If you think about companies and the way that they gather data for unemployment, it's by state. So they go around and they survey all the states, how many job openings do you have?

Now that people, a lot of people work from home, you have companies that are posting the same job in multiple states, that might be why we keep having so many revisions, because you're double counting triple counting, counting one job four, five, six, seven times. So that is going to mean that the data that we're getting is a little bit delayed, but it's moving the markets in a really big way. The other thing that the Fed is watching, and we need to talk about the different investment buckets. So we have cash. That would be money markets, checking accounts, savings accounts. We have stocks, the stock market. We have the bond market, which is closely tied to mortgage rates.

You've got crypto now. You have people talking about crypto. You also have real estate. But as the Feds reduce the Fed Funds rate, right now, a lot of investors have money sitting in cash, right? They can get 5%, 4.5% on their money. When the rates start to go down, and those yields go down. The investors are gonna switch to a little bit riskier 10 year treasury. We need to have more money coming into the bond market. Sadly, and so I was talking to someone here earlier. You almost want the economy, or there to be a recession for mortgage rates to get better. But as money flows in away from those short term investments to longer term investments, we're going to see mortgage rates drop.

The 30 year fixed rate mortgage versus the 10 year treasury. So everybody says, Ah, the rates dropped a quarter point. Yes, but that's the rates for your credit card. That's the rates for your car loans. That is short term rates. Long term rates are tied to the tenure treasury. One thing to mention, if you look at this graph, Generally speaking, the numbers, the spread between, what, at 30 year mortgages and what, a 10 year treasury, is about 1.6 to 2%. But what happened down here after COVID? Look at that chart.

Really, right now, if you think about 1.6, the Fed, the 10 year treasury is around, what, 4.6, if we add 1.6 on to that, we're getting closer in line, but at one point in October of 23, when rates were 8%, the spread between the 10 year and the 30 year fix was about 3.1%. So we have so much, so many factors that really impact wide, mortgage rates are what they are. And if the 10 year treasury comes down, then mortgage rates are going to respond. We're predicting that rates will be in the high fives to low sixes, barring, you know, craziness, like government intervention with them buying mortgage backed securities.

I mean, that's gonna be because a lot of people are moving from short term investments to long term. But we also are really gonna watch that unemployment rate, because as the unemployment rate rises and inflation slows, those are gonna be the triggers that say to the government, we really need to intervene to help people with affordability. Now, if we look at the housing market, what's gonna happen there, housing demand is outpacing supplies, what is inflation, too much money, chasing too few goods. So if we look at housing, it seems like that, you know, these prizes are so high, but they gotta come down. We don't have enough housing in this country for the, we have to create more supply.

And if you look at the demographics, demographics as destiny, that's gonna give you some clues as to who is coming into the market, you see the populations by generation on this chart. The millennial is the biggest population sector, and if you look at the homeownership rates, they're 45% on average. And when you look at the age of 30 as compared to a boomer, 33% of them own homes. So all of these people are gonna be aging, and they're going to need to find a place to live. Now, if you look at demand, household creations or formations, if you looked last year, we created about 1.915 million households, and we built 1.289 million homes. Is that a problem?

That is why housing is so expensive in a lot of areas. I know there's some pockets where it's going down. So we've got to increase supply. If we want prices to come down, I think real estate is a great investment, and we're going to continue to see appreciation, there is a lot of things, we watch the news, global instability, can really move the financial markets, I think a lot of these natural disasters that we've had are going to burden supply chains. And that's gonna make it harder and more expensive for things to get done, and it's gonna take a lot longer. Because housing has went up so much, you can now get a conventional loan for $806,000.

I've done this 25 years, I remember when the conventional loan limit was around $276,000. It wasn't that long ago, was it, if you're a lender? If you want to buy a home and use an FHA loan, one unit, you can do that at $524,225. So we are trying to make it so that folks can get a 30 year fixed rate mortgage with low down payments to help people. We're very aware of that. So we're gonna take a minute. And to have 10 minutes for you guys to talk about this. And the question I want you to sort of chat about is, how do you think the recent economic data revisions will influence future interest rates? Remember me talking about the ghost jobs? Just talk about that.

And if you look at your pockets in different areas, natural disasters, probably are gonna be some of that, right? So I'll let you guys ponder that, and we'll go from there.

Rodrigo Afanador [0:00] All right. So, for those of you who don't know me, my name's Rodrigo, uh, you might know me more, primarily from what I do at night, my night job, which is, uh, co host of AVI'll meet up here with Zach, but during the day, uh, I work, uh, with us, a property manager, and we've managed rental properties here in the Asheville area. And we're gonna talk a little bit about what's going on in the market. So here's the outline of what we got. We're gonna talk about the Vesta lens. I'll explain to you why that's an important in a moment. State of the rental market.

My opinions on why the market is, what it is, what 2025 is gonna look like, and how to win in the market, even though I think most people would agree it's a little funky market, if you will. Definitely not as easy as it was 12 to 18 months ago. All right, so the vestal ends. Why did we pick Vesta? What's the name about? So, for us, when we were thinking about the name, we really wanted to pick something that would be a symbol and communicate what we believe is really important. So, Vesta stands for the goddess of home hearth and hospitality in Roman mythology. And for us, that was really important because of this. We believe that we need to turn houses into homes.

And when we do that, then we're able to turn investments into returns. And that's a really big key, because those returns come from finding stability, comfort, safety in your house. And so, there's a big difference when you think about what home means to you versus what a house represents. The way I always think about is when you think about where you want to go, you want to put down roots, you want to, you know, create a home environment. It's not very daydreaming about creating a house environment. And home, again, is about stability.

That stability is really important, um, for us at Vesta, because it's what allows us to make better decisions and communicate good with our landlords and with our tenants. And the reason this matters, or the Vesta Lens matters, is because the state of the market for rentals is a little bit more nuanced than it is for real estate values or mortgages, we don't have available the same data. So you guys know there's no rental, uh, MLS, and so the what's going on the market is gonna be the Vesta market. And so, oh, no such thing as I'm lost. So our market, what is our market?

So we manage right now 163 units, primarily in the Asheville area, got a couple of properties in, you know, Heywood County, and in Madison, but our focus is Buncombe County. And there's 163 units, we've had 41 turns. So we've placed 41 new people in 2024 in the houses. Thank goodness, we did not have 41 vacancies. I would either have only gray hair or no hair at all, so... What did the market showed us in '24 today? We really learned something, is that it's certifiably crazy. I think that anybody who's been involved in the rental market in the last three to six months or so would keep saying things like, I don't understand, or I'm surprised by what I'm seeing.

I'm surprised by what I'm experiencing. And that's definitely been true for us. Finding tenants has never been this hard as it was in yours. A lot of this reminds me, did anybody own property in, like, 2015, 2014, that they're trying to fill vacancies? It was kind of like that. You really had to have a good sales approach. You had to have a really good lead magnet to get people to show up, get appointments there, and to convince them to apply. It was a much slower process back then. Short term memory, you know, 2020 to 2022, 2023. It was, like, renting things was obviously a very easy and enjoyable experience at that point. So, what did that translate?

For us inside of our portfolio, it took us an average of 61 leads or conversations, and out of those 61 people, we'd be able to get to five showings. 61 conversations, five showings, and out of those five showings, it would take us 34 days to get to a lease. And so, a big key to here is a signed lease does not even mean that somebody's moving into the house. For example, we're signing a lease today. And the move in date was for February 20th.

So if you really think about that, our days on market ends when the lease gets signed, but there's a lot of variability on how quickly, or how slowly, that lease comes into effect, which means that 34 days, in some cases, couldn't be a lot longer until you actually get that first rent check deposit in your bank account. So, even when we got the lease, the big question is, does it cash flow? And so that's what we're gonna go talk about a little bit now. Property cash flows have changed a lot in the last year or two. So why is this happening in the market? Why is rental property, why is there even a conversation as to whether it's cash flows?

So, something that Zach does a great job of always reminding us is that these types of conversations are simple, right? Supply and demand. Uh, where did the supply come from? I think that we've had a lot of conversations. Even last year, we had build and be buildings. It was, like, one of their most attended meetups, and we were talking about building property. And then, in August, we talked about this conversation here, uh, in AVL Mid, about the missing middle. How do we add more housing? How do we add more inventory? And we've done a really good job of that overall in Asheville. Is it enough to be determined, but it's not like building isn't happening.

Zach's gonna talk a little bit at his presentation with 2020 builders, how they've added 130 units to the market in 2024. So there's building is happening, development is happening. But why, half price has not come down? Or have they? So, they have, uh, sorry, that supplies, set the stage for what happened to Helene, and then we saw that, in addition to high supplies from building, we had a lot of short term rental markets, or STRs, come on on long term. So, does anybody own an Airbnb? Helene happened, you had your vacancies dry up, and you're basically presented with three choices at that point, right? Be patient. Try to find a long term tenant or sell.

We ended up competing postaline with a lot of short term rentals. That, you know, if you're a short term rental, you're going to look a lot better than your average long term rental side by side. You're gonna have better amenities, you're going to have a little bit more of a polished look. And so, what that happened is there was a lot of supply on the market. So then what happened with the demand? Where did the demand go? That was a question we asked ourselves internally a lot. The first two weeks after Helene, we were putting out fires every which way, but every other conversation was like, Okay, this is a huge opportunity. We got it, like, end of month of October with zero vacancies.

Everybody needs housing. This is, like, this is a good opportunity to fill units. Well, demand went down after Helene. Very big surprise. Never saw that coming. Why did that happen? Well, tenants left. For example, in our own portfolio, we had seven tenants. House totally perfect shape, thankfully, it was not affected, but just because of the surrounding circumstances, they decided to leave. And so, they were, like, out of Asheville, and then the other thing that we found is, a lot of the people that did need housing, we're finding housing in two different ways.

Their insurance was either helping them, and they were going to the nice STRs that were furnished, and, you know, were happy to take insurance money to for their rates, or the people who didn't have as good insurance, or tenants who were struggling, ended up in hotel rooms that were getting backed by FEMA. So it was like this false sense of demand for housing. So, load demand, high supply, rentals went down. If you guys remember if you were here last month in October, or in December, Mike Fagoro was talking about that, that they were seeing, like, 20% decrease in rent rates in some cases, and that's something we've seen inside of our own portfolio.

We've had houses that, in 2023, 2022, were renting for, say, $1,700 or more, and now we're re renting them in that $1,500 range. So that's... you know, if you're a landlord, that's a huge decrease, and if you're a renter, it's not a big enough decrease. But it's definitely on trending downward. So, that's how 2024 is shaped up, that's kind of the state of the market as we see it through the Vesta lens, as I mentioned. to the data that we have available internally. And it wouldn't be a good show about the market without a prediction for what's coming next. So, my prediction for 2025 is that rents will stay about where they're at.

However, I think we'll see a small pike spike near the end of the year that will end up with momentum going to rates kind of matching 2023 rates somewhere in spring of 2026 to summer of 2026. The interesting thing, though, is that as these, as our rents go back up, I actually think that the cash flow challenges are gonna become bigger for landlords than they are today. And there's a reason for this. Despite the higher rents, we're going to have an increase in insurance, and some of you guys might have already gotten rewritten tax bills, so insurance and tax costs are gonna go up.

So our rents are gonna go up, but they're not gonna bounce back without the additional costs that are gonna be injected into the taxing and insurance. That's gonna happen over the next 12 months or so. So over the next 12 months, if you're a rental owner, your costs are gonna go up, rents will not go up right away, and it's gonna be a lag effect. That's the prediction, that the rents will start going up middle of 2026 to kind of compensate for that, but it's not going to be enough to reach the same cash flow benefits that you were having in 2023. So how do you win in this market? It's definitely a little funky. Moving pieces. Speed to lease is what we're focusing on a lot right now.

And we're finding that that's a little bit more valuable than higher rents. The reason that we think for that is because in 2026, as the rental market starts to reset, we think that that's gonna be a better opportunity to push your rental prices then, and right now, what we're recommending, and we're having conversations with, is trying to get 18 to 20% 24 month leases in place now to just kind of lock in some stability, if you're a rental owner, and then kind of reassess and reenter the marketplace in spring or summer of 2026. So, small tweaks make big changes.

A lot of the changes that we're seeing aren't necessarily, like, you have to renovate a kitchen, uh, or anything like that to get that speed to lease. It's small variables that make that difference. So for us, it's fenced in yards that allow pets, and then the bonus is, if you have a garage, everybody's asking for a garage. So get a fenced in yard, if at all possible, say yes to pets, obviously screen them and do that process well, and then if you have a garage, that's just a bonus, but that's not really a small tweak if you don't have one. So last thing, this is just a small thing, is just stay in the market, right?

Be a mover and shaker, come Tavia, I'll meet up, talk to your peers, know your numbers, buy when you can, sell when you must. But most importantly, you don't want to be this guy, right? Wondering why you didn't buy anything in 2025 and keep adding to the benefit of owning rentals. So, with that being said, I'll turn it over to... Oh wait, table questions. I'm sorry, I forgot. So, the table question is a cash flow question. And as we talk about it, anybody's familiar with David Green from bigger pockets, he has this statement, and it's kind of become more and more true to me.

The longer I've thought about it, which is that cash flow is a defensive metric when you own rental property, it's not something that's gonna win you the game. It's gonna keep you in the game, and then you get to take advantage of all the other benefits of owning houses. So that's the question, is, do you think cash flow from rentals is about keeping you in the game, or is it cash flow from rentals is gonna win you the game?

Zac Ruiz [0:03] All right everyone. Let's bring it back. The last segment before Q and A, the last segment before Q and A. There'll be one more table discussion, so you'll either pick up this conversation or move to the next one. Um, for those of you that don't know me, my name's Zach Ruiz. I run the Ruiz Report. Um, and REMC.co. So, data, data for real estate. But we're gonna talk about something a little bit different tonight. So an outline of what we're gonna be covering. We're gonna cover a homebuilder loop, and that's just an example. that I'm gonna use to explain, uh, something else, which is the hub and spoke.

We're gonna talk about the hub and spoke architecture, essentially, for your business or even your life. All of you are using different softwares. You need a hub. We're gonna talk about what that means. Then I'm gonna show you the hub and spoke that I built for 2020 builders. So leveraging existing systems that they had, built a software architecture around it, and we built, completed 111 homes in 2024. We were on track for 130, if it weren't for Helene. So this is at scale. This is, like, this is doing it. Then examples for you. Cool that I can do it. How can you do it? So I'm gonna give you through a little wire frame, how to do it? And then we're gonna go to our table question, all right?

So let's start with the homebuilder loop. But some of you are asking, like, Aren't you the data guy? Like, don't you always talk about data? I've got a surprise for you, right? I'm gonna unmask myself tonight. All right? Uh, so, my day job, like, what I do outside of my side things is essentially. So I work for 2020 builders, and I'm the director of technology and strategic growth. So I'm like, If a business guy and a software engineer had a baby, they'd have me. Right? So that's what I do all day. Oh, yeah. And so, we're gonna talk about that, right? And why? So how does that align with the data guy thing?

If you can control the data, then you are in the best position to design the perfect system. And all of you control the data for your businesses, whether you know it or not, so you can make that perfect system for yourselves. And that's where I see, like, the AI revolution and everything going. We gonna kind of talk about that. All right? So here's how, by way of example. So let's look at a loop. So if you're building homes, you've got to place a bunch of offers on lots, right? And so, if you were gonna turn this into a flywheel, you'd need to know how many offers do I need to place? On my offer acceptance rates to do some due diligence.

I don't close on all of those lots, 'cause none of them work, right? And you'd see, I need to close on so many knots. And then PMHD, so that's, I would do, you know, my project, my horizontal construction, permitting and horizontal construction.

Speaker 2 [2:30] Then I'd get those homes built, right? So I could sell them, and get enough money to place offers on lots, and now you see, that's how it goes, right? So as long as I'm placing offers and selling enough to place more offers, then I keep going. I get to stay in business. So now you just need some numbers. So I made these up.

Zac Ruiz [2:47] This is not 2020 numbers. If I place five offers and one gets accepted, you know, two to one closing ratio, it takes me about 60 days to get there, 190 to build it, and every lot I sell gets me two lots, then that one for two there, one sale equals two lots, spins this thing. And it keeps going. Right, so congrats. You've got a business flywheel. Hey, right? All of your businesses and all of your endeavors should have this framework. And they do, whether you've identified it or not, they do, but the more you identify it, the better you will be, because these are those specific metrics that you track. And so long as you're tracking those metrics, then you will grow. All right?

Simplified, or we're gonna get a little bit more. So let's talk about hugging the spokes. So here is the problem. All your data is everywhere. It's all over the place, right? And if we were gonna do that by a graph, they call it point to point. Right? So your CRM is there, and then your newsletter is here, and, like, all the different things, right? Whatever it is that you're doing. You've got data all over the place, right? And or, another way to put that, is your data is in someone else's database. And I'm not even necessarily talking about ownership, even though that's a big thing, switching to different softwares and everything. You can only use it the way they let you use it.

And if they don't have the feature that you want, and they can't help you grow your business, yeah, you're kind of out of luck. Right? No bueno. So, let's talk about the hub and spoke. What is that? That's if you take all those same points and put them to a hub. Right? Put them in the middle. So let's go over this example again. Lot offers, that's, like, the MLS in real estate people. Right? Due diligence, that's what the closing attorneys, the agents, all that stuff. The land bank, so remember that was, like, permitting and stuff? That's with the city, the county, subs and contractors. Project management teams and subcontractors build the home.

And then your MLS in real estate team, again, they sell the home. So remember that diagram? These are all the different places where we have data. Right? So, let me show you a hub I've actually built. This is real life. This didn't exist until we started. But a caveat is standing on the shoulders of giants, right? This business existed before I walked into it. And it had great systems and processes. What I did is button them up. Straighten them a little bit, and put them all under a one centralized location with a lot of automation. All right? And this is test data. Take all the pictures you want. It's fake, all right? This is not 2020's business. You're not learning anything special here.

other than how it works, kind of, right? So let's go through. So a lot offers in due diligence. Remember, all that data does live in real life in the MLS in a closing attorney's office in a lender's office, right? Not for us. We have insight over every stage of every deal. So, from the MLS listings, these are this is fake, right? These are the lot listings that we care about. We pull them in, we do some fun stuff to them to see if they matter. Then we send out offers. So these are fake again. These are all the offers waiting for the agent to say yes or no.

And then once they're actually under contract, we track them, too, and all the updates, so the due diligence changed, all the real estate stuff that happens, we know.

Speaker 2 [5:48] We don't need to. about the agent or someone else telling us. We update it on our own. We've brought that point into the hub, right?

Zac Ruiz [5:56] So now let's go over here, land bank and vertical construction, right? That's, like, the doing of the home building. So here's where the hub really starts making a difference. So this is what it, like, a dashboard that we made for vertical construction. It's just, illustrative purposes, is builder trend as a software. It doesn't matter what you use. Some other software helps you build a home. We take all that data in, right?

Speaker 2 [6:17] And then we get to aggregate it and track those KPIs, those key performance indicators, those numbers that matter. And this is a dashboard that doesn't exist in the software where we need it to exist. But we can make it for our tailored purposes, because we have all of the data. We brought it in, right?

Zac Ruiz [6:34] And we can create views that don't exist at all. So, for example, if I want to click on one person and see all of their past due schedule items, I can do that. Whereas in the software, I've got to go to each job and add it up. So you start seeing how owning your data makes you more efficient at what you're doing, but it gets even better.

Speaker 2 [6:51] Because then you can proactively track things and do something about it. Right? So we have performance standards, and we say, Hey, you've got to do this thing so many times in this period. You've got to build this quickly, these daily logs, all that stuff. Keep the schedule updated, right?

Zac Ruiz [7:05] And then I've got, you can't see that, but this is the guy who runs construction. I made his face, like, the Matrix. And so that's Corebot. His last name is Corbett. It's hilarious. Right? So, several times a week, you get an update where you're publicly called out, essentially, or praised, for doing the right thing, or not enough. So it keeps every single person on track on your team to make sure that they're doing that. Right?

Speaker 2 [7:29] And then he gets his sales. Once again, hey, we've got everything at every stage. Even though it's at the MLS. We know what's active at any given time. We know price adjustments, how many offers, how many under contracts, can't really see that in the MLS. We can, 'cause you have that thing. Depending offers. Hey, what's going on there? Update it, we got to move a thing, we got to do due diligence, real estate terms, right? Uh, we can update all of that. This doesn't exist on the MLS. Realtors don't have this tool, for the most part, but we have it internally, 'cause we're doing a hub and spoke, right?

Zac Ruiz [7:58] It does a lot of other super, super cool stuff, but we're only talking about the general idea tonight, right? So, let's do an example for you. That's cool, right? You're probably not a software developer. You don't need to be. All right?

Speaker 2 [8:11] So it does not have to be that fancy. So remember this picture? That, like, this happened because I came in afterwards, right? They already had a lot of Google Sheets. The Google sheets were doing a lot of the heavy lifting. Excel, your favorite program here. It doesn't matter. Right? And a lot of those sheets still exist, 'cause they're the best way to do it. It's super simple. Someone can log in and change it at whim. You don't need to replace everything. So, what I'm about to show you is just basically how to do this with free tools from Google. Right? So here's an example for you. You've got a business website, and you've got ads, inbound marketing, account based marketing, stuff, right?

Your Instagram account, all the things that make your business tick.

Unknown [8:51] You've got all that.

Speaker 2 [8:52] Which you're probably missing is this hub, which is a website in this picture, but we're gonna talk about the hub. So here's the hacky solution. This is how you do it, right? Step one, you got to download your data. Now, so we're actually working with Vesta and Rodrigo on how to, like, automate some of this.

Zac Ruiz [9:06] You can do it in a scrappy manner the whole way through. If you guys know Zapier, you get zaps, and you get, like, all the guides in the world to tell you how to do it. Hey, go to this thing, download the file, and stick it here. That's all you gotta do. Right?

Speaker 2 [9:19] Then you want to create a tab or sheet for each individual data source, for all the places you're pulling data, they need to live in one tab at the bottom there. Right? Then you got to clean the data. And that is its own talk. We're gonna skip over. We're just gonna gloss over that and say that it works. It won't, but it will, eventually, with the muscle, right?

Zac Ruiz [9:39] And then you're gonna create a pivot table, or it doesn't matter. You're just gonna link to the different sheets, right? And congrats, you have a hub.

Speaker 2 [9:45] Now, all that data that's living in all the different places, you've got it somewhere, even if it's a Google Sheet, who cares? It's gonna do the same thing. And what is the thing it's gonna do, the fun part. All right? This is where nerds get excited. All right? This is real life. This is AVLmeetup, right?

Zac Ruiz [10:02] This is how we do it. Right? So we pull in all of our data from the event, RSVPs, the newsletter, YouTube likes, Instagram, Spotify. And we get this pretty thing. Look, red, yellow, green, good.

Speaker 2 [10:13] You can see, at a moment, notice how your kingdom is doing. Not how your individual software is doing, 'cause that doesn't matter in and of itself, right? All those other things feed different parts of your business. And if you're not looking at it holistically, If you're not seeing what each individual spoke is contributing to your overall business, you're probably missing the forest through the trees. Right? So going back to this picture here, there's something else that's super cool about this. There's something else that's super cool. So if we look at those, like, the column headings, and then the rows, and then they all go across. So when a computer sees that, you can get even more fun.

Because now, now that my data is structured in a structured way, sorry about that, right? Now I can really start using AI. Now I can take that hub, that sheet that I made, that's my business across everything, and I can punch it into AI, because now it's the computer talking computer language. This is a big difference. AI, everyone loves ChatGPT and all this good stuff, that's great. It scraped all the data on the Internet, so you can talk to it, and it sounds really smart. It doesn't actually know anything about your business. But when you give your data in a structured manner, then it can start doing its thing. Right?

They don't have your dating yet, thankfully, but you can give it to them with privacy, hopefully. Right? So now, based on what you saw, can you recommend actions to improve my email sign ups? These aren't off the shelf suggestion, off the shelf suggestions. excuse me. This is based on what they're seeing month over month. Comparing attendance and all that, and then I can talk to it. So you can start using that AR revolution. What I'm talking about? I don't, like, you know, ignore the word AI there. LLM. Ignore the fancy words. The point is, if you feed it your data, you can start using it in a way that nobody else can.

Zac Ruiz [11:54] And that's another good thing about the hub and spoke. So let's wrap it all up, all right? Hub, hub data, better than spoke data, because it's holistic.

Speaker 2 [12:02] It's everything all at once, right? Your business is a hub. Whether you think it is or it isn't, it is. You use different things, but you, the business in the middle, needs to know what's going on and all the things all at once, right? If you're not connecting those folks, no good. You're hurting yourself, right? Your hub, it tells you where you are in that loop. We're bringing it back to that loop. Every stage is essentially a different spoke, potentially. You can see where you're, like, driving around the road, and it's bumpy, and you can address it, because you're holistic. It keeps you on track. You can see when you're missing those KPIs and falling behind.

Back to the red, green, yellow, if you choose to do it that way. Yellow? Attention, red? A lot of attention. Right? Green, how's it deeper green? It identifies problems before they arise, 'cause you have a natural cadence of things, right? It's a better alternative, or rather, an air quotes better alternative to the hub and spoke, is owning the entire system. If you remember from the intro for AVLmeetup, we own the entire system. There is no software that we buy. You check into our software, RRSVP, RRAPIs. So that's another solution, but that's another day. All right, so table question. Are you currently implementing a hub and spoke in your business? If you are, share with the table.

This is great insight. Most people don't look at business and data this way. And if you're not, based on what you've just heard, how do you think you can implement it?