Welcome to the Purpose Driven Investor, where we build more than portfolios, we build communities. I'm your host, Robert Howell, a real estate investor and founder of Define Communities. Each week we'll explore how purpose and profit connect through affordable housing, land home packages, and impact driven investing. If you're a lender, land seller, or a partner who believes money should move with meaning, you're in the right place. Welcome back to the Purpose Driven Investor podcast. Today I'm joined by Jamie with Nextdoor Capital. Jamie has over 25 years of real estate experience as a broker, advisor, developer, investor, and now a private lender. So, Jamie, appreciate you being here and welcome to the show. Yeah, thank you, Robert. Appreciate it. All right, so let's start. Before we get into your real estate journey, let's talk about kind of a typical day. What's a typical day for you look like today? Yeah. Right now I'm focused really growing on my private lending business. And that takes most of my time meeting with borrowers, evaluating deals and underwriting loans. All right, what are your hobbies? What do you like, what do you like doing after work? Well, I've got two new hobbies that I'm trying. I'm picking up golf again. I played a lot when I was younger than took quite a bit of time off, so I was trying to get back into that. And then fly fishing is my new passion. I love getting out on the streams here in Western pa. Okay, you got some good streams around there? Oh, yeah, it's, it's, it's nice. Within an hour's drive, there's a couple different options that are great for us beginners to get out there and, you know, get hooked in a tree or something. That's awesome. My son, he's in high school and he loves fishing. If he could spend every men of his day fishing, he would. And I didn't grow up. I grew up fishing every once in a while. Right. But not, not a ton. And him fishing has got me more into it because when he was younger, I had to, had to go with him, which was a great time to spend together. But now he's a little bit older, he goes out probably 70% of the time on his own, but then 30% of time, I'll, I'll go around with them depending on how far we're going to go. Nice. Nice. He hasn't really gotten into fly fish. And we did buy him a fly fishing rod like two, two Christmases ago, but, and he's used it some, but he likes the rod and reel more sure, sure. It's. It's a. It's a hard thing to learn, but it's fun once you get a hang of it. That's cool. You ever been out west? I have not. Well, I mean, I lived out west for a long time, but I haven't fly fished out there. Okay. That'd be fun. Well, cool. Well, let's get into your real estate journey. So how'd you first get into real estate? Well, like most people, I was just trying to figure out a place to live and I was. I guess I was house hacking before that was even a term. I wanted to live in a particular neighborhood. I couldn't afford to buy a house straight out, so I bought it and rented out the bedrooms so I could live close to the beach. That's cool. Where was that house at? That was in Los Angeles, in the South Bay area. Okay. You probably wish you still had that house, right? I wish I had that house. Yes. We can talk about buy and hold strategies, but yes, definitely, that would be one I wish I would have held on to. Yeah, there's a lot of those houses. Right. It's like every. Every house I think about that I've sold, I'm like, oh, man, I wish I would have. Would have either I wish I would have bought it and I didn't buy it, or I wish I would have just held on to it. Correct. I. I'm changing my strategy a little bit now as I get older. You know, the buy and hold was always my manto for, for many years. But now I'm looking at return on equity and return on time. Some projects, as you know, just take more effort and more time to keep management and keep updated. Yeah, the return on equity is an interesting thing. Right. And I think it's one that a lot of investors don't think about, but it's one that I think about because I'd usually buy and sounds like you do buy things that are undervalued and then you improve it and increase the value or maybe you just have held it long enough where the values increased. So now you have this asset and you got all this equity that you can't really access. Right. And how do you get a better return on it? Yeah, I think we just sold a duplex. I looked at it. Cash on cash, 12%. Pretty decent. But my return on equity was like below 5%. I was like, I could probably utilize that money somewhere else for better than a 5% return. That's great. I made a post on TikTok and the title of the post was your, your home is paying you. Or I think it was your home is paying you nothing. And it ended up getting like, I think I'm at like 130,000 views and so many people that are in the comments. And it's both sides, right? It's like, hey, like, why am I going to tap into that equity of my personal house and risk that other people are like, hey, that's exactly right. Like, let's put that equity to work. So I think there's. There's two sides of the coin, right? And two side. Two opinions that aren't just casual opinions. They're very strong opinions. Either way, people have passions on that, right? Yeah. Especially when it comes to your personal resident. That's even a little bit different of a nuance. Yeah. Yeah, for sure. All right, cool. So house hacking got you started. You've been involved in so many different areas of the business. Brokerage, development, advising, investment. Which one? Which role or which job? Which area taught you the most? No, starting out in brokerage was probably the, the biggest education because I didn't really know anything. Walking in. Basically had a friend that was doing it, making good money. I was like, I can do this too. Why not? Started jumping in as a commercial broker, selling, you know, little strip centers, apartment buildings, office space, whatever the case may be. It was just a trial by fire. Right. You jump in, trying to figure it out. I was very young, right out of school. It was a great education. That's great. Yeah. You probably see all, all the sides of the business. If you look back over the last 25 years, what was that turning point that really set your career and gave you the momentum that you needed? Nobody's momentum. But I think I learned the most from being a developer. And when it went bad. So I took my initial Southern California house that you said I should have kept, took all that equity, and started to develop and started building, ground up. And that was an adventure that I really always wanted to be a developer. Every actor wants to direct, every real estate agent wants to develop. So I jumped in with building 2005, 6, 7, and it was great. And then 2008, 9 happened and everything went to pot. You know, we were stuck in the middle of building townhomes, condos in kind of a resort community. And when the market failed, I mean, you couldn't refi out to save your life. There was no way out. Banks basically were selling the loans left and right, and we basically ended up having to short sale back to the banks. You know, several Million dollars worth of assets. And you asked me what got me the farthest ahead. But I think I learned that while appreciation and upside is great, that without cash flow is very risky. So when I. When I pivoted and started, I took quite a little hiatus off. Right. And went back into the corporate world, licked my wounds a little bit and got the, you know, the salary job. When I decided I want to jump back in, I was looking for not just the big pop appreciation or the flip money, if you will, but I wanted to backstop that with cash flow as my defense strategy. Love that. Love that. Yeah. Net worth can disappear really quickly. Right. And I guess that you Learned that in 2008, cash flow is a little harder to disappear. Well, you know, if the market softens. Right. You can always rent something. You just have to adjust accordingly to the market. But if you're stuck holding, you know, 12, $15,000 a month in mortgage payments, that there's no cash flow coming in. That eats up really quick. Yeah, 100%. Was there a deal or a moment in your real estate career early on where you knew that real estate was going to be your lifelong pursuit? I don't know about. I really think when I started buying in the greater Pittsburgh market, the first one I bought was a triplex. And it was a bit rough. Neighborhood was a bit rough in transition. But after I got that done and, you know, got it stabilized, I realized really quickly, one, it cash flowed quite nicely, and two, I was kind of in the path of progress. So it started rapidly appreciating very quickly. So I think that was the one that got me my appetite back into the real estate mode. And then it was just, let's go, you know, let's grow. That's great. That's great. All right, let's talk about 2008 and surviving and learning from that experience. Sounds like you experienced 2008 firsthand. What do you think happened, from your perspective that caused the 2008 crash? Well, I mean, there's been so many news reports and even a movie on this thing. Right. About how they were basically lending to people that shouldn't be getting these loans. Right. People that couldn't qualify for loans. So the whole lending institution just got out of control. It was just way too easy for somebody to get a loan for a expensive home, second home, third home, where there's just. There was no foreseeable exit. Yeah. So eventually that just has to crash. Right. And I think at the time when I was young and naive and excited, I was all caught up in the hype and didn't see the big picture. So I spent a lot of time now looking at the economy, the world, the economics, the politics of it. Because it all affects you as real estate investors, right? Right. Yeah, a hundred percent. I guess, at this point in the world, it's no longer, hey, what is happening in your city or state or even the U.S. right. It's what's happening in the world. Yeah, you can do everything right. I think, like, you could buy the right property in the right location and just do everything perfect. But if you're not aware of what's going on in the world and the economy as a whole, it can really come back to stingy, I think. Yeah, I agree. So you spent 15 years in corporate America afterwards and continued to invest. Tell us why you chose that path. Well, you know, I always. I get. A lot of people come to me and they say, how do I get into real estate so I can quit my day job? I mean, that is a common thing. I want to quit my day jobs. I'm going to flip properties, I'm going to buy rentals, whatever the case may be. And I tell everybody is, don't do that. Keep your day job. Keep your W2 job, and that is your income generator for your next down payment. And it's also your reserve account. Right. So it. Without that, I mean, you have to have so many rentals per se to live off a good income. It's. I'm not saying it's impossible, but once you get to that level, then you have a different job. Now you've got a management company managing your portfolio. So, you know, you can get rich or wealthy buying five or six rental properties, and that's something you can manage on the side. You don't have to have 100 units, which becomes a whole nother set of problems. So I like the W2 job to, you know, be your backstop again and, you know, have your real estate grow. I'm sure you get it to a certain point where you can leave it, which, you know, I've kind of done. But it doesn't happen overnight. Yeah, I love that you say that. We should. We should have side conversation about it. I just launched actually last week a platform called don't quit your job. And it's all of. It's all about like, hey, all the real estate gurus out there are telling you, hey, quit your job, go all in. When reality is your paycheck is your big, biggest asset. Right. It makes banks trust you. It gives you that backstop there's so many other things that it does to help you grow your wealth and expedite either your retirement or maybe just your overall wealth at retirement. Well, and you know, as banks are getting tighter on their underwriting criteria right now, I mean, it's really nice to have a W2 job when you're going to bank for either investment property or your private residence. If you are just a real estate investor, boy, it's going to get tough, I think, in the near future to go get financing on them. I know there's DSCR loans and there's some other things that are catering to that, but the banks are getting much stricter and I think they're kind of foreseeing, you know, some hiccups in the market. Maybe it's not 2008 crash, but they're definitely getting harder to get loans. So on that topic of working full time, keeping your W2, you've successfully had a W2 and built a portfolio. What advice would you give to people that are listening that still have their job, they want to build a portfolio? Well, you know, I had a unique situation where I was working in real estate, but a wholly different genre like corporate real estate, doing corporate expansions. And I'd be very busy for months. And then when the project was done, I had some break in my schedule. I had free time. So that's when I doubled down on my real estate. And I think a lot of jobs are that way now. Everybody's remote. Everybody's, you know, doing things independently. So I think those opportunities are becoming more and more available. If you don't have one of those jobs where you're required to be in an office or required to go somewhere, I mean, you just got to carve out time after hours. It's all there is to it. You have to spend the time learning your market and figuring out what it is you want to accomplish. Were there any specific strategies or asset types that work really well for you during that, that time period where you had the W2? Yeah. So I what I was. My whole focus was to buy single family and small multifamily properties that were value add. In our market, you could buy a house significantly below value, put an upgrade into it, and, you know, have it cash flow. Day one. That was what I was looking for. And it was, you know, not every market you can do that. But in Pittsburgh, especially back 10, 15 years ago, it wasn't which it wasn't finding a property that cash flowed. It was, which one do you want that cash flows? It's much harder now. But back then it was, it was, there was lots of options out there. Okay, that's great. All right, so let's talk about private lending and the market today. So now you're focused on growing your lending business. What, what attracted. Well, I guess let's first start. Tell us about your lending business. Yeah, so we do private lending, meaning short term, some people call it hard money. Lending to real estate. Investors started off primarily as a fix and flip model where people need short term money for six to 12 months and you know, we'll fund a part of the purchase price and usually the majority of your renovations, they go do the work and at the end they either flip it out or refi it into a permanent loan. So that's what I've been focused on for the last several years. And it really started off as kind of a, an alternative way to generate some cash flow. Because I couldn't find deals, the market got tighter, harder to find good things. And I had some friends that were flipping, so I started lending to them and then started lending to their friends and their friends. And pretty soon I was surprised. I had a business that was taking up a lot of my time and focus. And that's where I made the jump from the corporate world. That's great. That's great. What do you think separates a borrower that you'll fund for and one that you'll pass on? Well, I always say it's part science and part art. So the science, of course, I have some standard criteria that you have to meet. Does the property plan make sense? Since I only lend in the greater Pittsburgh market, I know the areas. A lot of people fly in from New Jersey or California or wherever and try to make deals here. And they just don't understand the market. So I first underwrite the project and the business plan and then I look at the experience of the borrower. So sometimes I get projects that are borderline approval, but the experience of the borrower is very strong or the, the income and the credit is very strong and sometimes it's vice versa. So it's a little bit of art, a little bit of science. Got it, Got it. What do you think for investors? What, what mistakes are they making when they seek private capital? Well, I think the number one mistake, and this is very controversial right now, so if you hop on the Internet anywhere, you'll see people advertising 100% financing on deals. And yes, it is available out there. And yes, I've done a few of those type deals, but most people in My opinion shouldn't be doing that because really what that does is it just accelerates your risk. Your risk now goes. If you have no equity in the deal from day one, if the market hiccups, your project goes off a little bit, your expenses go up, your holding cost is longer, you will take, your profit will disappear very quickly. So it sounds great that, hey, I'm going to buy this property with somebody else's money, put the work in and I'm going to make a profit. And I come out of nothing, out of pocket. I think that is just the super risky way to do it. Yep, Yep. All right, let's talk about purpose and legacy and impact. The name of this show is Purpose Driven Investor. What does purpose driven mean to you as you think about your business, your life? Well, obviously things changed over the years. I originally just wanted to, like, say, quit my day job and get wealthy and make some more money and travel the world. That was the whole goal. But now I've slowed down the growth, especially on the real estate side. My real goal is to help other investors avoid the mistakes that I made through the process. And I've made every single mistake you could think of at least once, sometimes two or three times. So I do a lot of networking with in meetups and I speak with a lot of younger borrowers or people just getting started, and if I can help shortcut their success, that's really what my focus is on. That's great. I love that. What's the number one thing that you tell them when you meet a younger borrower? Younger investor? Two things is buy. Right. Because a lot of people are overpaying for things right now. But the other thing is don't do it by yourself. You got to build yourself a team. I know when I started off, I thought I had to do everything. I had to find it, I had to rehab it. I physically had to put tile down and put kitchens in. I've done all that and I thought that was the way to make it because I'm going to save all this money, right? Yeah. But in hindsight, that was the worst way to do it because it took up so much time and so much energy. I was missing other deals because I was focused on, you know, putting in ceiling fans and tile and whatnot. So figure out what you're good at and focus on that and the rest of it. You outsource and build a team and yeah, it costs a little bit more, but I think what it does is it forces you to buy better deals. Yep, yep. Got It. Okay. And what's your, as you think about your legacy, what do you, what are you hoping to build from a legacy standpoint through your investments and your lending? Well, as far as like legacy, I, I'm not a big proponent of let's accumulate all this cash and pass it down to the next generation. I think that while that sounds good in theory, I think the actual cash can be a detriment. What I'm trying to teach is the skills. We've got two kids, a son and a stepdaughter. I try to pass on the skills more than the funds, if you will. Love that. I think that will make them happier in the long run. Yeah, yeah. Skills last forever. Right. Money doesn't exactly, especially if you get a big lump sum. I've seen other people get big lump sums and their life is in the pursuit of pleasure, but they'll never find it because they don't have any skills or any. The quality isn't there. Yeah, that's great. So with your lending company, are you lending nationwide or are you lending just in Pittsburgh? Yeah. Right now we are focused on our local market and that is the, I'm going to say like a literally a one hour drive. So we'll do all the counties surrounding the greater Pittsburgh market. We're dipping our toes into eastern Ohio right now because there's some good opportunities out there. At some point we will look to expand in some other markets. But I've seen it too many times that people that start small and they grow really fast and they hop into the markets, that's where they fail quickly because they don't understand the nuances. So if I do expand into other markets, I'm going to look for another me or somebody that has that 10, 15 years of investing experience and that'll be the boots on the ground local. Because appraisers I don't think do a very good job of evaluating like fix and flip type properties. Right. A stabilized house in a neighborhood. Yeah, no problem. But that's really where they go wrong is the as is and the current value. So if God forbid, you have to take a property back, if you don't have some equity built in there, you're in trouble pretty quickly. Yeah, 100%. I think it's a good strategy. Right. You know, your market, as I think about my real real estate experience, it's all in South Carolina and somebody sends me a deal I know pretty quickly within a few minutes, like is it a deal or is it not a deal? Right. And that local expertise is huge and probably the same for you as a lender. Somebody sends you a deal in one hour radius of your office there really quick, hey, this is good. Or it's not because you probably lent money or you've done deals in the neighborhood already. Yeah, exactly. I've been there, I've done a deal, I've done a loan. Or we've evaluated deals and have passed on it. We land in all sorts of market. You know, some lower end neighborhoods, lower end cost and then definitely some higher end neighborhoods. But you need to be able to know that, run off the basis without having to, you know, spin your wheels for a week to try to figure that out. Because we try to make decisions within 24 hours if we're going to do a deal or not. That's awesome. That's great. Well, this has been great. I really appreciate you sharing all the insight about your company, your advice to younger investors. If somebody wants to reach out to you, where can they contact you? Well, we're all over the place. The website is nextdoorcapital.net you can email me directly@nextdoorcapitalmail.com or the phone number is 412-337-0884. That's great. Well, I appreciate that, Jamie. And any final words of wisdom for our audience here? Well, it's one of the things I tell all my new investors. When you're buying, buy quality properties in good neighborhoods. Don't chase cash flow. So the buying in poor neighborhoods or challenging neighborhoods looking, thinking you're going to get this cash flow is a fool's errand. It might be great for a year or two, but in year five you're going to want to have the quality asset and hold long term. That's true. Yep. That's great advice. Well, I appreciate you joining Jamie and if you guys listen, want to reach out to Jamie, make sure you reach out. I'm sure he can offer lots of great advice and we'll see you on the next episode. Great. Thank you, Robert. Thank you. Thanks for listening to the Purpose Driven Investor. If today's episode sparked an idea or inspired you to make an impact, connect with me@howlandsuns.com Join our community of purpose driven investors who are helping families find stable homes while building real returns. Because when we invest with purpose, everyone wins.