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Christopher H. Loo, MD-PhD: So welcome everybody to this week's podcast episode for the Financial Freedom for Physicians Podcast. And I'm your host, Dr. Christopher Loo. And we talk about four different types of freedom: financial, time, location, and emotional freedom. And my mission is to bring you up to date information and education, on all things finance and business entrepreneurship, so that you can be empowered to make your decision toward freedom. So today, we have a guest, we're going to be talking about real estate, and name is Charles Chandler. And he's the co-founder and CEO of My Tennessee Home Solution, which is a real estate solution company. And I'll let him talk about what he does in his background. So, welcome.
Charles Chandler: Thank you so much, Chris, for I really appreciate being on. Thank you.
Christopher H. Loo, MD-PhD: Yeah, I know we were talking backstage. And we're going through very interesting times. That's gonna be what we're talking about in this podcast. And before we get started, tell us more about yourself how you got started, and we'll go from there.
Charles Chandler: Yeah, thank you. So yeah, my name is Charles, I grew up in a small town in Alabama. I had a heavy interest in wanting to join the military. And so through a long route, I was able to get there. I made my way to the United States Military Academy at West Point, where I was able to make some awesome relationships with my current partners in our company. After some time in service, I decided that I wanted to transition out, continue on with real estate, because at this point it was just a means to an end, to have financial freedom to live life on our terms of what we want to do and how we want to do it.
And so with my now partners, we decided as our time is transitioning out of the military to really just shift focus into real estate. The reason behind that was that we were able to kind of trend translate the work ethic that we were putting in and able to really see and reap the benefits and rewards in it through real estate, rather than really any other kind of industry. I'll be at the military or really anywhere else. And we did not need to go to school for it or anything like that. So that's why we just really went all in on real estate.
Christopher H. Loo, MD-PhD: Awesome, awesome. So yeah, I know that that's a very fascinating story. And most finance involves real estate of some sort, just because that's a place where you can store your wealth, can generate a business, cash flow, taxes, and so you’ve come to the right platform. So, before we get started, just tell us more about what my Tennessee home solution is, like what real estate solutions do you offer? And we can go from there?
Charles Chandler: Yeah, absolutely. So we just by the name, our single family residential side, focuses in the state of Tennessee, particularly the Middle Tennessee market, Nashville and greater Nashville. And what we do is focus on off market acquisition through an inbound pipeline of marketing. We run TV ads back to the website, referrals, and other investors. And our acquisition process is that we purchase properties at a deep discount from pre-foreclosures. These are individuals just with multiple properties, they want to let go of properties that are rundown.
And so from start to finish, someone is in a situation where they don't want to list with an agent or they need to have a quick closing. They search or reach out, give us a call or fill out our web form. And then we either stay on the phone with them or we'll come out and reach them or and meet them in person. And then we ended up closing on the property. And through that we will have it at a steep discount, so we're able to put the repairs that are necessary. Get it fixed up looking nice, put it back on the market, and then try to sell it to either someone that's moving in as a new homeowner, someone coming in with a VA home loan, really trying to stay within the affordable housing price range for Middle Tennessee. And then from that we're able to develop additional investor relations. And at times if we have too many projects, we'll look to wholesale as well. So the residential side of what we do sticks to fixing flips and wholesaling.
And then on the other side, we do syndications and focus on passive passive investments and passive investing. Really, the single family stuff is really the fuel and provides all the necessary funds for overhead. And also to fuel what we do on commercial multifamily acquisition through syndications. And that we focus on across the southeast. And so what we look to do there is provide opportunities for investors that are looking for passive investment opportunities to become limited partners on our deals. Most recently, we closed in a 32 unit hotel in Chattanooga, which we're renovating and we were able to bring on some investors as limited partners, and now they will be able to reap those benefits through Cost Segregation studies. So their taxes will be beneficial to this, again, passive investing letting us do the work. And then they'll be able to reap a really solid return through that.
We're gonna lock in a really low rate, it's a great hedge on inflation. And so now, because of the track record that we have, on the residential side, we're able to continue to provide value not only to sellers, but now to buyers and investors as well.
Christopher H. Loo, MD-PhD: Interesting. Yeah, so it's a really interesting and unique proposition. And a couple things that I had questions on when you were talking was, the Real Estate Commission for buyers and sellers is 3%. How is My Tennessee Home Solution competing in that market, where you don't have where you can list with your company and not have to bypass the realtor?
Charles Chandler: Right, basic human needs really boil down to housing, security needs, and comfort. And that's something where each individual that reached out to us, we understand that there's a reason they're in a situation where they need a quick closing, or they need to stay in a property after closing potentially, or they have no way of fixing the property up to get it ready to go on the market. And we do not charge any commissions, we come in with an all cash price, we try to see if it's a good fit for us. Not all of them are, and we communicate that. But we try to see what's best for the individual and have a tailored solution that's going to make sense and help and get them on to their next adventure of whatever it is that they're needing.
We come up with a lot of very creative financing solutions for individuals, and because of our ability to be flexible, being a lien team, being able to meet face to face and really listen and get a good grasp understanding with those that we work with is really a huge part of our competitive advantage to those that do similar businesses in our market.
Christopher H. Loo, MD-PhD: Yeah, yeah. Sounds like because you offer fast closing, all cash, pretty much seamless, and then people will go with you, the price will be lower, but they don't have to go through a broker and all that hassle, and then give them all the commissions, which is quite an interesting proposition. And it looks like your company's done 10 million in transaction volume last year, 1.2 million in revenue, it looks like you're it looks like you're on track for 3 million this year. And your portfolio ranges from the single family to the commercial side to the syndications which is really interesting.
Let's see here. So I have a lot of questions for the listeners, because we're living in interesting times. And I know, your expertise is building a team and processes and all of that. One question that a lot of my clients ask me, we're now in June 2022. And the main question is, are we in a housing bubble?
Charles Chandler: Yeah, no, that's a great question. So it's a hot topic being talked about.
Proceeding back to what occurred in 2008. The ripple effects are still being felt today, mainly because of the lack of houses. There's still a very low amount of supply and low inventory. So again, that's coming from construction, new build houses, the way lending was occurring in ‘08 and the effects of that, all the way until really the COVID timeframe around 2020, where again, now you hit the stop button really, and everything. Issues that occur with this global supply chain. And then we really saw the Fed in the US start to obviously stimulate, pump money in. People spending lower interest rates need to be able to easily borrow money. With that, you also see a record number of agents, lenders, and the like, really come into the space.
But now it is important to at least have a plan to know what to do if a recession or when a recession occurs, or a drawback, which I can get into as well. But for this, the way we view it, and the action steps that we're taking, is one, understanding that the affordable housing space is really where our focus is. People still need homes, people are still moving. Some properties are still burdens to individuals. And there's still crises that occur. So we don't see that due to the low amount of supply and inventory that houses will still remain on the market for what used to be 30 to 45 days, we're still seeing days on market and the low teens, and they've been in single digit numbers.
I would say instead of comparing data numbers to 2020, 20, and 2021, I do believe now we need to look at comparing numbers to 2018 2017 2018 2019, to really get a better idea of where the housing market is going. We're still operating at full speed ahead. And another significant reason for that is because we're able to acquire properties that have the built in equity, and ensure that there's multiple exit strategies as well.
So, those that believe that there is a housing bubble or a housing crash, that do often have real estate transactions, I do believe that those that have been relying upon just appreciation alone or buying at percentages or rates that maybe they're betting on or banking on a continued double digit growth rate. Individuals that are relying upon, kind of outside the norm qualifications for purchasing, are going to find themselves over leveraged, essentially.
So understanding that you have to have multiple exit strategies, meaning if we're purchasing a property, and we do try to put it on the market, well, could we refinance out and hold it as a rental? Could we keep it and hold it as possibly an Airbnb? Or do we or can we just put it on the market and sell it without doing any rehab? we, we do anytime we get a property, we go through a cycle of the multiple exit strategies that we believe we can run through.
And then same on a commercial multifamily side, locking in a 25 to 30 year rate term at a good interest rate that we can work with, and then using our numbers to know where we need to be at for any kind of value add type property, because that space on the multifamily side is still going to be extremely lucrative. And there's plenty of deals at. And so we understand, especially in our market, in our area. With a lot of low supply, the demand is still there, the buyer pool may shrink, and just due to the rise of interest rates, but those that are looking for properties, maybe end up in the $400,000 range. And if as interest rates rise, they get priced out. Well, now those buyers are just essentially going to start looking down at the $300,000 range now. So there's still a decent, very large pool of buyers that are still in strong demand, especially in the desirable living areas, desirable zip codes, school areas, and where businesses are moving to.
Which is in the migration of people and workers, which is all information and data that needs to be carefully looked at. But I'll say again, that just banking on one aspect of learning being appreciation, individuals will quickly realize that the growth rate that we've been seeing is just not sustainable. Not saying that it will go to the negative reverse, but essentially just slow to more realistic and sustainable rates.
Christopher H. Loo, MD-PhD: Yeah, yeah. It's interesting. You brought up a lot of points because it's all about risk management. And it's all of this all of the speculators and the flippers and people that, like you said, are banking on appreciation. And I always focus on the cash flow, if the cash flow and the rents can cover your expenses at least 10% cap rate or higher than the numbers make sense.
But it's quite interesting, I'm seeing a lot of trends recently. For example, a lot of private equity firms are buying up single families, and basically becoming landlords, and you mentioned the rising mortgage rates. And then recently, I read an article talking about these loans, it's quite easy to qualify, and then it's based on these short term rentals. So in a lot of these vacation areas, the price appreciation of these properties are just skyrocketing. So it really reminds me of back in 2008. So I think like current times, it kind of reminds me of like, ‘01 after 9/11, and then the Enron crisis, went into a recession, and then after that it was the housing boom. So it's quite interesting. Do you have thoughts on that?
Charles Chandler: I do. And overall, I think it is healthy that we do not sustain double digit growth rates in both appreciation and rent. Because at that point, it becomes too much weight, when individuals are not able to keep up, employers are not going to be able to keep up with pay, the pay increases. And now, despite what was looking like, positive trends and upside to global supply chain, getting back in order, now we see another invasion, right, that, again, disrupts supply chains, disrupts labor costs, disrupt soil disruption, many different assets, that all in all do affect housing and real estate one way or another.
And so the period that we're going through right now, while yes, inflation is very real. Again, our hedge is real estate, through this rent producing assets will outpace and beat the stock market. And real estate overall, as far as a place to park cash, because you could take a bet by holding and stacking cash, which there's a risk to that, or putting it into assets that can produce, return tangible assets that you are able to raise the rents on that you are able to purchase. If you're running the numbers correctly, at a discount that makes sense that provides the cash flow needed in that you're not over leveraged. Yes, there are risks to that. But 10 out of 10 times that will continue to purchase real estate, especially in the commercial multifamily sphere.
Christopher H. Loo, MD-PhD: Yeah. Yeah. Interesting. I know, you're from West Point, one of the top places, and then you talk about building a team. Can you talk about building a team of who not how, and also developing systems and processes for your company and team?
Charles Chandler: Yeah, absolutely. And that book, Who Not How, is extraordinary, and I highly recommend it. And it really goes more than just who by just finding a person, it has to be the right person, right? Like, we look for those A team type players that really fit the culture, they understand and fit and can really own our core values.
And then they just have a strong work ethic. And so really what matters most initially, when we were starting out was just getting the right people on the bus. Let's get the right people on this team. Yes, not everyone essentially made the cut. But it's important that, when that's identified, you have to cut quickly, and not just hope that things get better. So, getting the right people on the bus, and then really figuring out who fits in the best seat, and leveraging people's strengths. And then that way, that'll help mitigate any weaknesses that the individual has, but really ensure culture fit, believe and have the ownership of our core values. And also take an owners mentality really, where everything that we do or don't do, and the decisions that are made that each person feels valued, has an input and can speak on more than just being told kind of what to do but has that internal fortitude really to be able to take initiative, make decisions, work autonomously, and then provide feedback as needed. So that's kind of more or less how we define our Who not How.
And then to the processes. There's a book called Traction by Gino Wickman. The Entrepreneurial Operating System. And that says that is exactly to a tee what we follow and how we operate. And I can't speak enough about that, for any team that is really kind of in their early beginnings, or teams that are getting after right now. And if you feel a little lost, or have questions, or not really sure how things are really going and don't have the clarity needed, then that book, Traction, is an excellent resource to really align your team on how to operate and execute and didn't have that clarity, and have that time back to you to where you're as most efficient as possible.
Christopher H. Loo, MD-PhD: Yeah, I didn't go to the military. But one thing I like about the military is that it's very structured, and it's disciplined. And it's very regimented. So you have these systems and processes. Any takeaways after you transitioned from the military and into your learnings into what you do now, for your company and your team?
Charles Chandler: Yeah, absolutely. This really comes down to the mindset of not wanting to let anyone down, taking ownership. And really having extreme ownership of any kind of issue. Because, obviously, it's very easy when or when things are easy to pat yourself on the back, etc. But as issues occur as things change, having ownership and being able to not just have thick skin, but also be able to provide good constructive feedback, and have good and have strong conversations that just build a team. A lot of that definitely comes from the military background, and how a lot of us were molded and brought up to different styles of leadership, different styles and ways of executing leadership that we've been able to see and grasp and either internalize or just turn away and not want to not want to emulate at all.
But I would say the big things are just how we communicate, ensuring that we do monthly evals even how we get feedback, and how we talk to each other in the stream line of communication as well. Very concise to the point and then we're relatively efficient on time. So all of that has been very nice to see the transfer over into how we're executing now. And we definitely see results from that.
Christopher H. Loo, MD-PhD: Nice, nice. Yeah, it’s been a really fascinating conversation. And to all the listeners, Trey's resources will be included in the show notes, including the book Traction and also Who Not How, I just downloaded that on Audible now. And how can a lot of listeners contact you, follow you, get in touch with you or perhaps even work with you?
Charles Chandler: Yeah, absolutely. The best way probably to contact me would likely be Instagram. My handle is @_treychandler_, Trey is my nickname. Another way is on LinkedIn. Charles Chandler is my name on LinkedIn or you could even find our company account My Tennessee Home Solution, because we are we're always wanting to provide value to those that are looking to invest, park their money, hedge against inflation, that want to see good returns from tangible assets that is that are executed through operators that know the space know that they know what they're doing and can provide that comfort and security to those that in these kinds of times wonder what and where and who to work with. So I would love to work with more individuals through those that are listening here and the network that you have. Because there's a lot of value that our team can provide.
Christopher H. Loo, MD-PhD: Awesome, awesome. It's been a fantastic conversation. We'll call it a day, and thanks so much for coming on and we look forward to hearing more about your future successes.
Charles Chandler: Awesome. I appreciate it. Thank you so much.
Christopher H. Loo, MD-PhD: Many thanks again for being here. If you’re new, you can find me online at Christopher H. Loo, MD-PhD, where I have links to other episodes or links to online resources that will support you on your financial literacy journey. I’ll see you there in on next week’s show. While I bring you thoroughly vetted information on this show regarding a variety of financial topics, I cannot promise you a one size fits all solution. This is why I caution you to continue to learn. Educate yourself and seek professional advice unique to your situation. If you want to talk to me, I welcome it. Please reach out via my website or email at Chris@drchrisloomdphd.com. I read and personally respond to all of my emails. Talk soon!
Editor's note: This transcript has been edited for brevity and clarity.