In episode 30 of Wake Up to Wealth, Brandon Brittingham interviews Tim Herriage, Founder and President of Ternus, as he shares invaluable insights into the importance of track records, the nuances of owner financing, and the power of adaptability in business.Tune in for a wealth of knowledge on real estate, business ethics, and the significance of reputation in achieving long-term success.SOCIAL MEDIA LINKSBrandon BrittinghamInstagram: https://www.instagram.com/mailboxmoneyb/Facebook: https://www.facebook.com/brandon.brittingham.1/ Tim HerriageInstagram: https://www.instagram.com/timherriage/Facebook: https://www.facebook.com/herriage/LinkedIn: https://www.linkedin.com/in/timherriage/WEBSITEBrandon Brittingham: https://www.brandonsbrain.org/homeTim Herriage: https://timherriage.com/Ternus: https://www.ternus.com/
Chapter 1: What is the focus of Wake Up To Wealth podcast?
This is Wake Up To Wealth, a podcast dedicated to helping you change the way you think about wealth. And now, here's your host, Brandon Brittingham.
Hey, what's up, everybody? We are back with another episode, and I got one of my homies on here. I'm super excited. My good friend, Tim Herridge. How are you doing today, brother? Good, B-Man. How are you? Good. So before we even get started into anything, I just have to say this because I use this so much.
I think probably the first time I was ever in a room with you, one of the things that you said, I actually used it on the podcast yesterday, and I say it so much, is in the real estate investing world, you cannot buy a track record.
Yeah, man, that actually came up yesterday in a conversation with some of our buddies. It's just I think it's an all business. I mean, especially the fund manager business, which you and I both do a lot of. I mean, I think people just don't understand that you cannot undo what you do and you only get one shot at this thing because you can't buy a new one and you can't get rid of the one you have.
So you have, for someone that's listened to this, we always bring on super interesting guests that have done all kinds of cool shit. You've seen the real estate world and been in the real estate world from a ton of different facets. So if you wouldn't mind, just give our listeners a high level of who you are and, you know, kind of a quick synopsis of your journey to what you're doing today.
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Chapter 2: Who is Tim Herriage and what is his background in real estate?
Chapter 3: What is the importance of a track record in real estate investing?
Yeah, man, that actually came up yesterday in a conversation with some of our buddies. It's just I think it's an all business. I mean, especially the fund manager business, which you and I both do a lot of. I mean, I think people just don't understand that you cannot undo what you do and you only get one shot at this thing because you can't buy a new one and you can't get rid of the one you have.
So you have, for someone that's listened to this, we always bring on super interesting guests that have done all kinds of cool shit. You've seen the real estate world and been in the real estate world from a ton of different facets. So if you wouldn't mind, just give our listeners a high level of who you are and, you know, kind of a quick synopsis of your journey to what you're doing today.
Yeah, you know, 20 something years ago, I got out of the Marine Corps, took a job as a project manager for a house flipper in Dallas. And within a year, I was in the acquisitions role. A year after that, I went out on my own. bought a home investors franchise. Well, actually, to be fair, married my wife who had a franchise. She was wholesaling houses to me at the time.
And, you know, we grew that to be number one in the nation, took all our licks in 08 and 09, miraculously stayed married through all that struggle, came out of that, kept buying houses, started a little thing called the REI Expo, sold that to Think Realty. I met Blackstone at a conference, started a B2R finance, which became Finance of America, which we IPO'd in 2021.
Kept buying houses, investing in multifamily, investing in commercial. Really liked the lending world. Executive director for RCN Capital, one of the top three lenders in the nation. I'm actually still on their board. They are more focused on broker business and correspondent lender business. I love retail. I love working with our people.
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Chapter 4: When is the right time to buy an investment property?
So earlier this year, I left my full time role there and started up Ternus and just trying to be the people's lender. You know, that's a little wrestling thing for you. I know. I know. I know you get it right.
Oh, yeah. Yeah. Yeah. I got my Project Rock shirt on today because I'm talking to you. Yeah. Um, so, so, you know, having seen multiple real estate cycles, right. And you're a real estate investor yourself. Um, one of the questions I know people always ask me, I'm sure you hear it too, is like, what is your answer to when is the right time to buy an investment property?
Well, I mean, the right time is always yesterday. The next best time is today. And if you can't do it that you need to do it tomorrow. Uh, That's not true on when to sell a property, but it's definitely true on when to buy a property.
Yeah. Now, you know, being on multiple sides of the coin, when did you decide and correct me if I'm wrong, the position you're in now, your focus is more your lender to investors, correct?
That's right.
So when did you decide, you know, I kind of really want to be on this lending side. I like the real estate investment side, but I like the lending side a lot better.
2003, actually, my first partner in the business was a hard money lender in Dallas. And we started a little wholesale operation back then. And we came up with a way to offer the wholesale inventory on terms. And back then, hard money was 18 and 2, right? It wasn't cheap like it is now.
And so we would buy a house and say sell it for $100,000, but instead of selling it for $100,000, we'd sell it for $10,000 down, 18% interest, and 2% origination. And I've always loved math. I'm not a college-educated guy, but... the math quickly showed you that you would double your profit just by offering the financing as well. And my partner, Scott, it was also a big owner finance guy.
He had about 500 owner finance notes and he started just showing me the power of debt and owning debt and originating debt and And I've always loved it. And it's always been a part of my business. By the time I was 30, we owned over 100 owner finance mortgages in Dallas.
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Chapter 5: What is owner financing and how does it work?
Yep. Yep. Which is not that long ago. I did not understand The liquidity that was in the side of you can create notes and sell them actually as a strategy and as a business. And there's way more people out there that will buy debt than you think. And almost sometimes faster than they'll actually buy real property. It's fucking wild.
Well, because you've already done the hard work. You've already found the house, fixed the house. sold the house, moved a family in. And typically, you know, you collect a couple payments to show that the borrower's real. And yeah, I mean, because then the investor, there's no theory in it, right? They're buying something that already exists from you.
And if you did your paperwork right and you complied with state laws, I do feel like it's very important. If you want to go down this rabbit hole, you really understand the state and federal laws that apply to it because you're offering consumer loans. So it, It's not as easy as it sounds, but there are people that do this for you as a service. But yeah, I mean, it's pretty juicy.
And oftentimes though, Brandon, what I love about it, and I think people need to look at, it is a way to do no money down real estate investing because you can get into the deal with private money. You can get enough of a down payment to offset your out-of-pocket costs and
And then you can sell that note and oftentimes either sell the whole note or part of the note or a couple of years worth of payments. There's so many options that allow you to recoup your out of pocket so that you can go do it again. And that's probably the best part of it in my opinion.
Yeah. Velocity of money. It gives you the ability to just continually turn money, which is the name of the game in real estate. Absolutely. You know what I mean?
Yeah. I mean, look, the hedge funds, as somebody was talking about it yesterday, I think it was Will Dennis. Ultimately, the reason they want an 80-20 split with you, if you're investing with them, is they want to turn $10 million four times a year, right? They don't want to place $10 million. They want $10 million to do $40 million. And
Anytime you can demonstrate, back to the track record, that you have an ability to turn money over and recycle your capital, it makes you so much more attractive to high net worth individuals and outside investors.
Yeah, I'm going to come out of left field on you a little bit with the next question. But just because I've sat in rooms with you and I've heard you share this, and I think it's pretty interesting. You mentioned the Marine Corps earlier, and I've heard you say this a few times. Give us one or two lessons you learned in the Marine Corps that you've been able to use and translate into business.
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Chapter 6: How can investors leverage liquidity in notes?
Chapter 7: What dual strategies should real estate investors consider?
You know, probably the same way you find for a motivated seller or in your realtor business, a retail seller. I think adaptability and always having a belief in a positive outcome is the number one thing that I learned in the Marine Corps. And then after that. It's got to be the power of a team because.
I will take four Marines, over 20 civilians, anytime, any day, because they've not only proven they have the mental fortitude to get the job done, they've proven that they can work together in a team, collaborate, follow orders. And focus on getting the job done instead of how they feel. So if I have to pick two, it would be adaptability and teamwork.
Got it. So let's talk a little bit about where you're at now. So you started... taken all your wealth of knowledge, experience, knowledge of real estate, knowledge of the markets. And you've now gone out and started, you know, entrepreneur, you're starting another company. Right. So tell us, like, give me a, Hey, what I do now and kind of what my vision, this is why I went and did this.
And this is where I see my company going.
Chapter 8: How can one manage rental properties versus owner finance notes?
You know, I think guys like us are always students first. And I'm always trying to learn. And I was on my way to Park City, Utah for spring break last year. And I re-listened to Simon Sinek's book, Start With Why. And I'm holding up an iPhone right now. I don't know what this thing costs. I know I'm getting a new one soon. I don't know what it costs. but I'm emotionally connected to it.
I need it to do my job. I need it to function throughout my day. And if you look at Apple commercials, there's never a price on it. The new iPhone 16, they're advertising it like crazy, but there's no price. And it just, Simon talks about that in his book, the emotional connection people have with Apple and Nike and Coke. And it just hit me that lending...
10 years ago, there was no institutional capital available, no Wall Street money available for us. Now, 90% of the products out there, Wall Street capital. And it's gotten all the way away from what we want really as a customer. As a customer of a lender, we really just want feed. We need you to move as fast as we do.
transparency just tell me the truth right and then dependability and dependability is all about like if you say you're going to close next friday damn it you need to close next friday because like we just talked about in the last part we already got plans for that money right we're we're ready to go to the next thing and so turnus my new company is actually latin for threefold because i really broke it down to those are the three things lenders should provide that they're not
And as my mentor, Jeff Tennyson said at our offsite this week, that's the main thing. And I'm really focused, Brandon, on keeping the main thing, the main thing, not about points and fees. Don't call me and ask me my rates because I'm going to ask you, when do you need to close? Right. Don't ask me about my LTV because I'm going to ask you, you know, how many times are you doing this?
Like points and fees are what we've been trained to talk about because that's We don't understand what we really need. And so in turn, we're just focused on we're a balance sheet lender. We don't use banks. It's all our own money. We do have a debt fund, but we're not looking for money there. We have plenty of that.
And we're really just trying to turn the industry on its head and put the customer back at the front of the desire, right, instead of Wall Street's demand for the no. So, look, it's tough. We're changing things. When I tell people we don't pull credit, they laugh and say that I have a bad credit culture.
When I tell people I don't get an appraisal, they laugh and think that I have a bad credit culture. For me, I bought thousands of houses. If I'm loaning you a hard money loan or an asset based loan on the deal you bought, what do I care what your credit score is? I'm loaning to your company and I'm going to take the house if you don't pay me back.
And I love houses. Nothing against appraisers as a profession, but I think an appraisal is almost worthless. I mean, I just do.
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