Building in the ashes: Land Gorilla is rewiring construction lending

Name: Building in the ashes: Land Gorilla is rewiring construction lending
Uploaded: 2026-09-10T08:00:00+00:00
Duration: 46 min 53 s
Channel: HousingWire

00:00Today's guest is Sean Ferries, founder and CEO of LandGuerrilla, the leading construction loan management platform in the country.

00:08Construction lending is something that the mortgage industry has always treated as too complicated to scale.

00:14But with the housing shortage measured in the millions and a rate environment that's starting to unlock demand, the argument

00:20for getting it right has never been more important.

00:33All right, Sean, thank you for joining me.

00:35How's it going? Glad to be here.

00:37Yes, sir. Yes, sir. So I'm happy to have you on and excited about the conversation that we're going to

00:44have today.

00:45But before we kind of get into the get into the specifics of.

00:51Well, just everything that I've got lined up for.

00:53I wanted to introduce a bit of you to our audience and kind of set up what LandGuerrilla actually is.

01:00So can you can you just kind of start with explaining what what LandGuerrilla does, what services you guys perform?

01:07Yeah, no, great, great question. We've been around for just over 16 years now.

01:12It's interesting. My son just got his driver's license and when we founded the company and when he was bored,

01:18like just strictly coincide.

01:20So I always kind of like look at him and all the big milestones and it's it's just kind of

01:24amazing to watch him grow up.

01:25But then also be reminded that the company is maturing at the same time.

01:29And, you know, we got into this in 2010, you know, with the idea of, you know, really helping construction

01:37lenders.

01:38And if you think about the time time frame, it was, you know, a few years after the financial meltdown.

01:43You know, so timing timing was great for for a company.

01:47And we out there, our customers are, you know, banks, credit unions, IMBs, private capital lenders, those with an interest

01:55in construction lending.

01:58And LandGuerrilla, you know, really tries to be, you know, a helpful platform.

02:04And what I mean by that is we service them kind of in the entire spectrum of construction lending.

02:11We help them with the due diligence up front.

02:13We just released a cool AI product to help them manage all the due diligence when they're looking at a

02:18construction loan.

02:19And then our core product really sits after a construction loan closes and helps them administer a construction loan through

02:27its lifecycle.

02:27So from the day they close the loan to the day that they take it off their books, you know,

02:32is really where we have been focused, you know, the greater part of our existence, you know, and that allows

02:38them to manage inspections and title updates and title monitoring.

02:43And, you know, the administration servicing provides experiences for borrowers and contractors and title companies.

02:50It's just kind of an all-in-one place for them to get to manage a construction portfolio safely.

02:57Can you explain?

02:58I've got a background.

03:01I'm going to I don't originate anymore, but I still have my license.

03:04I got into the industry as an originator.

03:06Actually, my first the first loan that I ever did was a 203k loan, which is exactly the branch manager.

03:15That's it.

03:16That's his exact reaction.

03:17Actually, when I went in, I was very excited about my first loan being a rehab loan.

03:21And he started laughing.

03:23But man, you have no idea what you're about to about to the fire that you're about to walk through.

03:29So can you and you know, and as a result, I think in the lending space, the construction loans are

03:35kind of seen as this niche product.

03:37So can you explain or help explain what makes construction lending categorically different than the traditional, you know, purchase or

03:43refi?

03:44Yeah, it's a, you know, I'd sum it up.

03:47It's a little bit more complicated, right?

03:49You know, I laughed when you when you said 203k.

03:51That's like the entry level drug for construction lending, right?

03:56You know, you know, FHA 203k, you know, they're they're complicated, but they're simple.

04:02And I know that sounds, you know, like a contradictory statement, but, you know, once you kind of get good

04:07at it in the muscle memory, you're kind of in for in for the long haul, which makes it interesting.

04:13But, you know, the way I would describe just construction lending in general, you know, there's really two types, you

04:18know, there's the business purpose, you know, construction loans that are out there.

04:23If you're doing commercial multifamily, you know, your, you know, entity lending, it has a business purpose.

04:28And then you got the consumer side.

04:30And I think, you know, when we're talking on the consumer side, it the best way to explain that it's

04:36all the other stuff that you have to do to manufacture a loan, you know, credit income assets, appraisals, DAX,

04:44I mean, you got to look at all of that plus more, right?

04:46So, you know, where it's nuanced is you have these components that are related to the construction part of it.

04:53You know, you're making this hypothetical, you know, you're making this hypothetical, you know, loan, you know, hypothetical situation that

04:59this home is going to be built, you're going to disperse it as improvements are made.

05:04You know, there's a level of due diligence, you know, and you have your, you know, credit, capital, character, you

05:11know, all your traditional underwriting that goes into a traditional mortgage loan.

05:15But with construction, now you got to look at, well, who's building it, you know, how are they building it?

05:21What are they building?

05:22And I think that adds a layer of complexity for people, you know, and having just a process, a good,

05:29well-established process, somebody that knows what they're doing, looking at that, you know, before the loan even closes, you

05:34know, do I have a project?

05:35Do I not have a project?

05:36Do I have enough money to hold back?

05:37You know, is the builder a good guy and going to be able to get this thing completed?

05:43You know, basically it boils down to a couple simple questions is, you know, when you add that construction component,

05:49you know, as a lender, you have to say, do I accept this added risk, right?

05:53And having to understand what that risk is, you know, the builder's qualifications, looking at the budget, the plans, the

06:01specs, the construction contract, the differences in the appraisal of what a traditional appraisal looks like versus the hypothetical one,

06:10and being able to answer that question confidently, you know, is really the big probably difference at the end of

06:16the day.

06:16Not to mention all the work that has to go in.

06:20It's not like typical servicing where you're just, you know, collecting the coupon and, you know, managing that.

06:25That's pretty well, you know, you develop muscle memory over that and it's just, you know, set it and forget

06:31it.

06:31But with a construction loan, you got to administer the draws, you got to order inspections, you got to make

06:35sure documentation's up to date, you got to make sure no liens are being filed, you got to make sure

06:38people are happy.

06:39You know, there's a therapist component, you know, you got two people in this high stakes thing, a builder, you

06:44know, is running a business and you got to borrow.

06:47That's wanting to know when they can move in and it always starts out like a honeymoon, but at some

06:51point that starts to, you know, get a little, little fractured.

06:55You know, they don't have, you know, pre-construction counseling.

07:00This should be mandatory for people wanting to build a home.

07:03So, you know, that's it in a nutshell.

07:06You started Land Gorilla at a really, I'll let you share from what I know and a little bit of

07:12the research that I did on you before, before having you on.

07:15You were at a period in your life, I think that you, I think it would say to say that

07:20most people would not be starting a company.

07:23They would go get a job at the intersection of many different circumstances in which you found yourself.

07:30So can you unpack a little bit about your, you know, that part of your life, how you just, why

07:36you decided to start a company?

07:38Like I said, when most people would be leaning towards getting a job, looking at a guaranteed salary and benefits.

07:44Like what made you bet on this?

07:46It is, it's an interesting story, you know, and I, when we started the company, I didn't really tell a

07:54lot of people about, you know, what that was.

07:57I was more focused on just getting everything to succeed.

07:59But, you know, our, um, when I did become a little bit more vulnerable and started sharing the story with

08:07our intern, I mean, they, they were really moved by it.

08:11Um, and it's, it's a personal story, but, you know, I mentioned the financial crisis and the whole, whole meltdown,

08:19you know, it took me, it was a horrible, horrible experience.

08:23I lost my personal residence.

08:24I, we lost a business that, that we were managing at the time.

08:28And, you know, to no fault of our own, you know, it was just, just bad times and people weren't

08:33going out to eat and drink.

08:34And, you know, it was a real dark time, you know, to lose kind of everything that, you know, your

08:40foundation was, was built on.

08:43Moved back at home, you know, living on the couch with my parents and, you know, it was just a

08:48really rough period of time.

08:50Had a kid on the way.

08:53And, you know, I remember applying for, for a job, you know, you, you mentioned this.

08:57I remember applying for a job and getting, you know, having, having a call, Hey, great, we're offering you this

09:05job.

09:06And, you know, you're going to start in weeks.

09:08They're just kind of processing some paperwork.

09:09And she calls me back a couple of days later and goes, you know, you never finished college.

09:14And, you know, this requires a bachelor's.

09:16And I'm like, wait, what the hell does that have to do with anything?

09:19And, you know, you talk about getting hit with a ton of bricks.

09:23You know, that was, that was a rough period of time.

09:26And it's not like there were a lot of, a lot of jobs.

09:27Economy was still in the, in the pooper back then.

09:32And, you know, I, I founded Land Grill.

09:35I just had a necessity to live, absolute necessity to live.

09:39And somebody that I had worked for doing draw inspections, you know, years before that called me up and said,

09:45Hey, you know, there's a couple of banks.

09:47Now you was retired and said, Hey, I've got a couple of banks that are calling, looking for, for this.

09:52I heard you're, you know, you're out looking for work.

09:54You want to go do this?

09:55And I'm like, heck yeah, you know, I'll go out and do a couple of inspections and, you know, work

10:00for them.

10:00And just kind of did that and slowly grew it.

10:02You know, they called me back and said, Hey, can you go do some more and go do some more?

10:05And then called a friend and helped me with a webpage and got an auto assistant, an auto attendant phone.

10:11And it just slowly grew.

10:12I think the first year did like five grand and revenue and second year, maybe 30, but, you know, slow

10:18and steady.

10:20Just focused.

10:22Yeah.

10:22So I was going to mention this.

10:24You started, I mean, you were doing the physical, I mean, you were doing the inspection yourself.

10:28You were out there, you know, driving to job sites, boots on the ground.

10:30And I'm curious to know at what point, where in this, I don't know, journey, did you realize that the

10:38problem, you know, or the hangup wasn't necessarily really maybe the inspections.

10:43It was kind of everything else.

10:44It was draw management, you know, coordinating the chaos that you were unpacking earlier, compliance exposure that there wasn't a

10:52real solution for.

10:54When did you come to that realization?

10:56Yeah, there were not a lot of companies making construction loans at this time, too.

11:00Like, I think it's kind of important to understand the time.

11:02So the ones that were, you know, they were probably loans that were already in process or, you know, some

11:07high net worth individuals.

11:08But, you know, these programs had survived.

11:11And it was more about me managing the process and seeing that opportunity.

11:16I think, you know, people always kind of joke about the timing, how the timing of Land Grill on the

11:24beginning was so bad because it really took from 2010 to 2016, you know, them figuring out disclosures and markets

11:32started.

11:32I mean, it was, God, close to a decade before things really started to recover for construction.

11:39And if anything, you know, it just gave me a lot of time to just focus and understand our customers

11:45and understand the problems and to build things kind of behind the scenes, knowing that when things come back, that,

11:52you know, they could be done differently.

11:55And I think taking that time while everybody else kind of abandoned the space, you know, and I mean abandoned

12:01the space, like, hey, you know, we're not going to do any construction.

12:03We're going to step away.

12:07We're going to step away.

12:13You know, and if you think about what was going on in 2010, I think we were just we were

12:18on the iPhone 1.

12:20SAS was not an acronym that people under knew.

12:25Like the general public did not know what SAS was.

12:27Everything was install this CD on your on your desktop.

12:31You know, and that's something that, you know, as I was paying attention, you know, I remember sitting down with

12:38the company that was helping us with some some web development and who later became our CTO and just telling

12:44them, like, hey, man, I think I think there's something here.

12:47We need to do this. And let's spend the next six months building out a platform and seeing if people

12:52would would do it.

12:53Just just trust me, you know, believe in me in this in this thing.

12:56And we went ahead and did it. And I remember debuting it to a couple of customers and they're like,

13:01oh, this this could be really be great.

13:03Oh, this is great. And it was it was just enough.

13:06It was just enough that we needed to to believe that that we had something and to keep investing and

13:14keep investing.

13:15But what really wasn't for maybe a little bit longer that the platform was like actually decent enough to solve

13:23problems, you know,

13:24and then once we saw that first glimpse, it's like, oh, people want to give us money like, wow, this

13:29even this this got a lot more exciting.

13:30We're not just building something, but they want to give us money for it.

13:33And I think that was the the exciting beginning for for what we were on for a journey.

13:38You know, and and our I think I feel like our industry is is really bad about it.

13:46Once once something becomes, you know, perceived in any given way in our industry, we just don't it just does

13:54not change.

13:55Right. And that can be everything from reverse when people think about reverse mortgages, what they are now are fundamentally

14:01different than what got reverse mortgages.

14:04The bad reputation that they received, you know, decades ago, manufactured, you know, modular housing, the manufactured modular homes of

14:13today are of much, much, much higher quality,

14:17higher caliber across the board than a modular home or manufactured home in 1985.

14:24And I feel that a lot of that, you know, the problem still exists with with construction loans.

14:31Right. Like the way that that there's this kind of stigma around construction loans that persists in the industry that

14:38that that keeps so many people from kind of diving in and ultimately building out an entire other book of

14:44business for themselves.

14:45What do you for any number of any number of reasons?

14:50But I'm interested in your perspective on what keeps what do you think keeps most people out of, you know,

14:57exploring or leaning into construction loans?

15:01Well, I think they may be smarter than we think.

15:04And I know that I know that sounds weird that I'm not trying to talk anybody out of doing a

15:08construction loan, but it's not right for everybody.

15:11And, you know, I think that's something that I've learned along the journey is if you're not if you're not

15:16committed or you think the program runs itself, you're horribly, horribly mistaken.

15:21You know, it needs true product ownership and not just by somebody entitled, but by somebody that has the the

15:28passion for for the product and passion for the customer and wants to see success there.

15:32And I think there's you know, there's that stigma that that exists.

15:38And, you know, we've talked a lot about that internally.

15:42And, you know, what that means and means for us as an organization, you know, and we view ourselves as

15:49somewhat of stewards of keeping this program and keeping these ideas alive and how to do it safer and how

15:56to do it more efficiently.

15:58And, you know, I think that is, you know, when you look at kind of where we've been and where

16:03we're going, you know, we put an immense amount of energy into that, you know, and even our most recent,

16:09you know, product launches or releases or features or whatever you want to call it have been centered around that.

16:17You know, we did, you know, we're, we're heavy with AI, we talked about it a little before we started

16:23the podcast, but we're, we're so committed in that space because what we see the true potential being and our

16:30most recent product, we call it x-ray.

16:33This is not a, not a pitch.

16:34I'm not talking about it in the sense of like, Hey, everybody go out and go and check it out.

16:37But it's a, it's one of the things that, that you kind of, you marvel over, you know, that it's

16:43fast, it's truly faster, it's truly safer, it's truly more efficient.

16:46And it really aligns with that stewardship of being able to look at how these loans are manufactured.

16:54You know, we think about what goes into it upfront or what really needs to go to it upfront so

16:59it doesn't, you know, develop that stigma after the fact.

17:03And I love the way that, that we talk about this and that is, you know, when we, we look

17:13at how the, the construction loan process is, is formulated upfront before it closes that a phone call can resolve

17:21so many issues upfront rather than dealing with the lawsuit that happens in the end.

17:27And when we think about the framing of that and how it's, and how we think about it, that if

17:36you're able to resolve these things safely and with the conversation and everybody understands what's going into it upfront and

17:41what needs to change can make a profound impact of that stigma that develops over time, you know, and we

17:50developed this product.

17:51You know, I want to say that, you know, probably on average, you're on the low end 650, you know,

17:57whether you do it in house, you know, maybe $600 to $1,200 per loan is what it costs to

18:02do, you know, really good due diligence background on the builder, you know, understanding your project, making sure it formulates

18:09out correctly, the time and energy goes in there, you're probably somewhere in there.

18:14And, you know, how do we get that down where it's, where it's no cost, where a lender can look

18:20at a project quickly, efficiently, and with great confidence and know they're going to have a positive outcome, right?

18:29Because if we can do that, you know, then we're being good stewards, then we're helping, you know, that stigma,

18:35you know, in the next decade, that it'll be gone, right?

18:38It'll be, it'll be something, it'll be the next bottleneck in the process.

18:44So, you know, I think there's a lot of interesting things about construction loans and the things that are happening

18:49today that, that make people look at them a different way to see them as a possibility as a product

18:55that could be added.

18:57You know, they may have those ideas and preconceived or actually, you know, real experiences that say like, hey, we

19:04got burnt, you know, the lawsuit, we had to keep it on our books or, you know, had to eat

19:08this or whatever that story may be.

19:10But, you know, I think it's, it's changed today, you know, definitely for the better that, you know, more people

19:17can participate because the more of these loans that get made, you know, the more homes that get made and

19:21community impact.

19:22And it's just such a positive, positive product at the end of the day.

19:28And the, you know, when you think about the difference between a, you know, $700,000 construction loan and a

19:37$700,000 refi, right?

19:41Or even a purchase.

19:43What happens as those dollars roll out into that project, the permits that go to local municipalities and local jurisdictions,

19:52you know, building permits, the architect that gets paid, the, the company that comes out and does the grading and

19:58earthwork, the concrete pump guy that shows up and pumps all the concrete.

20:03The framing contractors, the framing contractors, the drywall people, the insulation people, the plumbers, electricians, the roofing, like, landscapers, right?

20:14That puts so many people to work and feeds so many families.

20:19And maybe I'm getting a little philosophical, but it truly makes an impact to those communities.

20:25You just pumped directly into that community, $700,000 plus, $1,000, you know, and I think that's the, you

20:33know, that's kind of the good, the really good positive side about what we do is we get to see

20:38that impact in the long run.

20:41Talk to me about the relationship between the builder and lender, which ultimately that funnels down to the, the, the,

20:48the borrower experience.

20:49What, in practice, what does a good builder lender relationship look like?

20:56Yeah, you know, and, and, you know, I'll speak to the consumer side of that, you know, a good builder

21:01lender relationship is, I think, I think there's kind of a conversation that needs to be had.

21:09We got to set up a foundation to this conversation.

21:12The lender has legal responsibilities with the borrower.

21:16That's their borrower.

21:17That's their primary relationship.

21:19That's who they are looking out for.

21:21You know, that's, there's a loan agreement between the two.

21:25There's performance expectations between both.

21:28But then you inject this slightly complicated, you know, what do you call it when you got three people in

21:37a relationship?

21:38You know, you know, you, you've got this triangle of relationship and there's a word for that, but I'm not

21:45in trouble.

21:46Yeah, there, there, there's a word for it out there.

21:48And I'm, you know, we'll skip that part.

21:51But the, the idea is the lender has to really juggle and maintain, it's important that they maintain a professional

21:57relationship.

21:59And that it's not, they're not circumventing their, their customer at the end of the day, because that carries a

22:05lot of risk when you do that.

22:07And you want to maintain a relationship and that relationship should be, you know, number one, very, very professional, but

22:15also, you know, be based on the, the, the stat, the, you know, solid expectations, but also their performance.

22:25Where the lender can really shine with that relationship is around their performance.

22:29How fast can they process draws?

22:31What can they, you know, are they meeting all the expectations?

22:34Are they not holding back for stuff that, you know, doesn't make sense?

22:39You know, are you holding back my profit overhead and supervision?

22:41Like why?

22:42The house is 50% complete.

22:44Let me have 50%.

22:44You know, you don't want to run into, you know, be bumping your head against a wall going, you know,

22:50why is this happening this way?

22:51So, you know, I think that's where the lender needs to maintain the relationship is, is making it performance-based.

22:58Not let me take you out to lunch.

23:00Let me promote you.

23:01Let me refer you.

23:02All of that comes with great liability.

23:04You know, once you have a construction lender making recommendations, like, hey, you should use Bob over here.

23:11Bob's builders.

23:14The dynamic legally changes, right?

23:17And maybe that's where I have my opinions here is the dynamic legally changes.

23:26Now that's not the consumer choosing that builder.

23:29That's the lender choosing it.

23:30Now the lender's playing a different role.

23:32They're my project manager.

23:33They're responsible for the builder's performance.

23:36So that, that triangular relationship is really important, but, you know, you, you really have to establish guidelines and understanding

23:46of, you know, even for originators that are out there, it's the, you know, ops needs to step in and

23:52make sure everybody is not, is using the right terminology, is, is, you know, managing the relationship correctly.

23:58And everybody understands that, uh, what the impact can be if that is not adhered to.

24:04Thruple, by the way, I think that's the most politically clear.

24:07Oh, is that what it is?

24:08I got, I got, I got others.

24:10I think I said, we would just get in trouble.

24:12The third wheel, you know, it's, it's the third, it's the third wheel.

24:15Let's, I'd like that one.

24:16Yeah, that works.

24:18Okay.

24:18So let me, so, um, uh, you brought up, or you had an interesting, uh, response, which I appreciate when

24:24I asked about the preconceptions and, you know, around construction loans and more lenders doing them and you're like, well,

24:31they're not, they're not for everyone.

24:33And so to me, that begs the question, like, well, what kind of lenders are they for?

24:38What, you know, when, when you see a good, uh, or what, what sort of lender or lender type, uh,

24:44do you feel is best suited for doing construction loans?

24:49And, you know, I always, um, appreciate our perspective.

24:55You know, we get to see, you know, work with title companies and lenders and borrowers and builders.

25:00And I always feel we have this unique perspective of being able to see the field, see the game differently

25:06than everybody else.

25:09And, you know, I, I really appreciate that.

25:12And what it's, what it's given us is we've seen lenders startup programs by themselves.

25:18We've seen lenders bring people in to start them up.

25:20We've seen them, uh, uh, call on us for advice.

25:25You know, we've provided consulting, uh, we've referred people for consulting.

25:30We've seen well-established programs.

25:32We've seen companies inherit programs.

25:35We've seen everything or just about everything.

25:39Right.

25:39And I could say with a lot of confidence, with a whole lot of confidence that it's not for everybody.

25:47And there's certain characteristics that, that we have identified, uh, from our perspective.

25:56And number one, you, it's, it's not like, um, a certain program where ops can just come in and build

26:02out the marketing and build out the systems and configure and compass and your LOS to work a certain way.

26:06And you just add that program and, and it goes, you know, it is something that needs true ownership.

26:14And not only does it need true ownership, but it has to have a specific person, a very specific person.

26:24And that person, you know, if you had to, if you were interviewing somebody, um, today to hire that, hire

26:32that person is definitely, you want the experience, right?

26:35You know, so we'll talk about the experience and the passion side, the experience is you want somebody that hasn't

26:40bounced around, you know, and you look at that resume and, you know, you want to see five plus years

26:46at a place, right?

26:47You know, you don't want to see somebody, you know, when you see the two years, two years, two years,

26:52what that says is the person, you know, was responsible for a program.

26:58Construction loans don't show their ugly side for a couple of years because of bad decisions at the two year

27:03mark, you got problems and they go on to the next.

27:06And there's resumes out there.

27:08There's people out there.

27:10And, you know, that, that's a big, big, you know, thing of advice.

27:14Uh, the other one is if you have a person that is passionate about it, passionate about it, I'd say

27:23if I had to look at one thing is, is the passion thing, right?

27:27If they've got the passion and, um, you know, that the heart to get out there and do it, and

27:35they want to own it and they want to do it, like it's, it makes a world of difference.

27:40It's, it's because they're not programs that run themselves.

27:43There's a lot of moving parts.

27:44There's the builder relationship.

27:45There's the internal team.

27:46There's the coaching, setting expectations.

27:48There's the administration part.

27:50You know, we talk about the, the origination versus administration being kind of, you know, you need that separation of

27:55church and state, you know, so you're not loading up your portfolio with junk, right?

28:00Like, Hey, we're just going to put everything we can.

28:02I'm going to be compensated on origination and you guys go figure it out.

28:05You know, that's where problems happen.

28:07So I think the, you know, I think the passion piece and the experienced person, you know, you, you, you

28:15can't go wrong.

28:17You know, when you get that, that combination.

28:21So, you know, otherwise don't do it, you know, and, and I'd probably say the last, uh, three or four

28:28years, you know, our confidence has really been in there and telling people no, you know, and that was a,

28:33I'd say a huge milestone for us.

28:35Whereas before, you know, we were scared to say no.

28:39And we weren't in necessarily always in a position to say no.

28:44And, you know, when we sit down with people looking to get into it for the first time is, you

28:48know, we're very upfront with them about like, you guys probably shouldn't do this, you know, or, or if you're

28:54not doing this, then you shouldn't, shouldn't do it.

28:56Or if you're not willing to make this commitment, you're not going to make money for the first year.

29:00You know, it'd be amazing if you make money for the first year, because you got to be out salaries

29:04and infrastructure costs.

29:06And, you know, that takes a lot to recoup, you know, so I think there's some timing there with the

29:11commitment that also scares people a little bit.

29:13But when you do do it and you do do it right, whether you're a bank or whether you're an

29:19IMB or a private lender, there's so much opportunity that comes to that.

29:25You know, and it's not just the revenue that comes from origination, right?

29:30You know, you have earned interest income, you know, which is great.

29:34You know, you got, there's people that, you know, have other circumstances and need to extend their loans.

29:39It's not, you know, greatest revenue income from, from loan extensions.

29:44But it's the other businesses, especially for, for banks and credit unions that, that come up that, the deposit revenue

29:51that a builder brings.

29:52You know, you get a good builder that you're doing business with and they're doing repeat business.

29:58There's unbelievable other, you know, there's the takeout mortgage, you know, that can't be overlooked.

30:03So it's not just the revenue that's generated from origination.

30:09It's all the other revenue that comes of it.

30:13And I think when you see a company that, that does a lot of it, they know, they know what

30:20the balance sheet isn't necessarily what the balance sheet looks like for that program or the P&L, but it's,

30:25it's, you know, it's synergistic with other lines of business that they may be offering.

30:31I wanted to ask you, you were talking to me earlier about actually before, before we started recording, and then

30:37you mentioned earlier AI and you pretty about spoken with your development and use and embracing of AI.

30:44And I'm curious, not so much at, I guess, a little more heady conversation, a little more abstract because of

30:52the conversations that you get to have with so many lenders across the country.

30:56AI, you know, at HousingWire, we have an AI summit coming up in August.

31:01It's just, it's, it's the buzzword will last three years, at least the last three years, and probably going to

31:06continue to be so for another couple.

31:08And I'm curious what you see working with other companies for AI adoption.

31:18Like, I think that you said something along the lines previously is that most, you know, most companies, they can't

31:24really articulate what they want.

31:27They know that they want AI, they know that they should be using AI, and I'm curious to know, like,

31:33one, what have you learned from implementing and building out AI for your own company, kind of through the mistakes

31:42of, or using your, not using your relationships, but through your relationships with other companies, other lenders, kind of like

31:49as a cautionary, cautionary tale.

31:52Does that, does that make sense?

31:53Yeah, yeah.

31:54I mean, the podcast is only so long, you know, and there's definitely, I mean, we could probably outpace Joe

32:03Rogan in a three-hour podcast for talking about AI easily, you know.

32:10And I'd say there's a good place to start is, you know, well, what exactly, you know, when people say

32:17they adopt AI, really doesn't give us, or give me a whole lot of, well, what are you guys doing?

32:27Oh, you're having to rewrite emails?

32:28Gosh, that's, you know, you're using a little widget on your email, you know, Microsoft email or Google, Gmail.

32:36That's great.

32:37Oh, you're using chat?

32:40That's fantastic, right?

32:41So there's...

32:42I think that's a problem.

32:42I mean, I've said this for, I've been harping on this and beating this drum for a long time.

32:48It's that there's not even a codified, you know, definition or agreed upon definition of what, especially within our industry,

32:52at least, like what AI actually is.

32:54Because like, to your point, AI, they could be using a chat bot, right?

32:59And like, yeah, we've implemented AI.

33:01Machine learning, OCR, AI, augmented AI, authentic AI, you know, generative AI, like, what does it all mean?

33:11You know, and I think there's, for us, in our journey, there's two sides that we distinguish differently.

33:20And that's our internal team member use of AI, right?

33:25Through enterprise platforms, right?

33:28We're a Google house, so we use a lot of Gemini and Cloud, right?

33:33And then we have what's called the productization of AI, which is where we build AI into our products and

33:40services.

33:41You know, so we look at it from those two frameworks.

33:45And when we talk about, like, the team member use of AI, you know, it's really broken down for us

33:50into kind of three categories.

33:51There's the enterprise use of what the company...

33:54The company approves this.

33:55We have the safeguards here in Gemini.

33:57You can put this type of data in there.

33:59You can expect these results.

34:00You're responsible for all the results, so double-check it.

34:03Then there's, you know, on that side, there's, you know, AI-enabled applications, right?

34:09So our CRM or our origination tool or whatever the tool is has AI enabled.

34:16And that's kind of a spookier gray area because we've seen companies automatically turn it on without your permission, right?

34:24And you've got, you know, employees using it.

34:26They don't understand what's what.

34:28You know, and that makes a little bit people nervous.

34:30And then you have the third category, which is the scariest, which is, like, the rogue AI offset.

34:35You know, hey, I'm using this AI tool that I found, and nobody's vetted it.

34:40Nobody's looked at it.

34:41You know, that's the scary part.

34:42So dividing that up with, you know, your AI policy and making sure it's enforced is probably, like, the low

34:48-hanging fruit, right?

34:49Is just responsible AI, it's really going to make a massive impact with your team, whether they're building it into

34:56emails or reusing prompts or sharing them amongst teams.

35:00We have a foundations of excellence program, and we built a part of that just strictly for AI that talks

35:10about the responsibilities, what you should use it for, what you shouldn't use it for.

35:13And, you know, what started out as kind of a large project took us a little bit longer, but what

35:20we also were very cautious over was not restricting their use in AI where it handicaps their creativity.

35:31You know, I think that was a very, very important balance that we wanted to maintain, make sure that they

35:39were using it safely and compliance with our policies, first and foremost.

35:46You know, but don't box them in and tell them, you know, and create such an environment where it just

35:53no longer serves its purpose.

35:56You know, that was important to us.

35:58So, you know, really getting everybody in leadership, you know, making sure your policy is current, you know, it's probably

36:04changing every few months with AI.

36:07But then, you know, comes the flip side of that is the whole productization side.

36:11That's, to me, that's the exciting piece.

36:14You know, and I think we're on our third product with probably a dozen in the hopper that just make

36:24the world more exciting when you wake up.

36:26You know, I think that's the way that I think about it is every morning feels like Christmas right now.

36:34And it's scary and it's exciting at the same time.

36:39But when you're able to wake up and look at, you know, six months worth of work that were done

36:44in six minutes, it is, it's a lot like, you know, you're able to essentially like build your own home.

36:57But you're doing it in real time without having all these long, drawn out building processes.

37:02And I got to meet with my contractor and I got to meet with the architect and I got to

37:06meet this.

37:07And oh, man, God, we're 18 months in and we should have moved that window over about four feet because

37:13the way that light comes through and bounces off the glass here just hits us in the kitchen.

37:17And we spent a million bucks building this home and, oh, but today it's more like, oh, we built that

37:23in the wrong place.

37:24You know, six minutes later, it's like, it's perfect.

37:28And it's that same idea that people are innovating.

37:36I mean, one of the little things that, you know, if you're listening to this podcast, you probably haven't pieced

37:40together is all your little apps.

37:42You know, even your, the apps on your phone are changing a lot more, updating a lot more rapidly.

37:48You know, the designs are getting, you know, more fluid and user friendly.

37:53The button location, the colors, the way it moves, the way it loads, the speed, all of that is, you

38:02know, when you turn the water on, you expect it to be hot.

38:04When it's not hot, then you notice.

38:06But this is one thing that you probably noticed that I point out that, you know, these companies that are

38:11using it to innovate, that are just so much more faster.

38:14And code is, you know, what was it back in Q4 of last year, AI surpassed humans, you know, when

38:20it comes to coding.

38:21And, you know, you're listening to the best coders in the world say, you know, I stopped coding last year.

38:25You know, I, I orchestrate or I architect or I pilot.

38:29And, you know, that's the same way it's, it's becoming to a lot of, a lot of roles and positions.

38:34It's, it's amazing.

38:36It's scary, but it, it's a really exciting time to be in.

38:42So I wanted, I got, I got one last question for you.

38:45And you're right.

38:46I mean, I could talk to you about, I want to talk about AI for, for five hours straight.

38:51But I wanted the, the, the future of, of kind of construction lending and tied into the affordability issue, the

38:59supply issue.

39:00It's, this is a big, big final question for you.

39:03But where, what do you see, you know, moving forward over the next five to 10 years, obviously, you know,

39:10construction as home building has taken a major hit when, just like everything else, whenever rates jumped up.

39:17But I, but there's more of a, I feel like there's more of a, a delay, a delay in, in,

39:25in kickstarting construction whenever rates inevitably either even out or they, or hit six, sub six to where people will

39:33quickly become more comfortable buying a home than building a home.

39:39There's also the supply chain issues.

39:41It's just the, you know, you know, there's home building lags.

39:44So what do you see?

39:47And I, cause I remember also seeing a quote from you or hearing you say something along the lines of,

39:51of, of, of the, of housing affordability being a multi-generational problem.

39:55Right.

39:55And so what do you see on the map over the next five, 10, 15 years as a, as a,

40:01you know, as it ties into the home building industry, construction, lending at large, its relationship to, you know, supply

40:09and affordability from where you sit, what do you, what does the next five, 10, 15 years look like for

40:14you?

40:14I think I'm kind of conflicted.

40:16Um, you know, there's what I feel and what I see and, um, what I, what I feel, you know,

40:26uh, number one, custom home building is up, which is super crazy.

40:29You know, when you look at actually pull back the data and you're like, Oh, home building slowed down, not

40:34for custom home builders, not for consumer C2P loans.

40:38Those are through the roof.

40:39You know, why is that?

40:41Um, and, um, you know, I think a lot about, you know, my son who's turning 16, no way he's

40:48going to be able to afford a home where we live.

40:50You know, let me go back to the custom thing.

40:52I'm curious, do you feel that, I mean, when I think of what I know of custom homes being built,

40:58that does not tie into, that still would not tie into affordability, uh, affordability issue.

41:04People are trying to create their own inventory, right?

41:06You know, so when I think about, you know, what, where I was going with my son, this, this kind

41:11of ties in is like, he's not going to be able to afford a home.

41:13You know, how do you, how do you create equity?

41:16You know, building a home is one way to do that.

41:18But the, you know, where, where we live, there's not a lot of homes, homes for sale at all.

41:23And if they are there, you know, it's, it's a little painful to get up to that amount.

41:27Not only is it, is it painful, it's, it's even more painful to jump where we're locked in at now

41:32to the, you know, 6% range.

41:35You know, how do you go from two to six and like, dude, and then double the cost of your

41:38home in that same period of time for when you purchased, you know, that's the, that's the painful part.

41:44Um, you know, will they come down?

41:46Will they come, like my dad taught me not to play the crystal ball game a long time ago.

41:51And, uh, you know, it's ruined lives and made people millionaires, I guess.

41:55But I don't know on that front.

41:58I think there's a lot of, um, a lot of things that we can agree on.

42:03And if you're, you're probably in a market where housing prices is really high, you know, relative to what, what

42:09it used to be, you know, and I think that's an important thing here.

42:12But then you start throwing into, you know, the baby boomer generation retiring, you know, that's kind of interesting.

42:18I think it's, um, you know, there's some, uh, uh, declining population rates, you know, is getting closer and closer,

42:26you know, what kind of, you know, I think that's probably going to have a bigger impact than, uh, than,

42:30than everything out there, you know, and really what effect will that have?

42:34You know, I think that's a big question mark, you know, will that solve everything naturally?

42:39You also have this, it feels like, you know, the, it's always, you know, probably in one of the top,

42:46top three political things that are being talked about is housing affordability.

42:51You know, are they really going to do something about it?

42:53Probably not, you know, but it seems like it's getting a little bit more.

42:56I mean, since I've been born, we've been talking about it, you know, and I live in California and it's

43:02only gotten worse and politicians make more rules and local areas make more rules.

43:06And, you know, are we going to see some deregulation like we saw with ADUs?

43:10Like, it is hard to roll things back.

43:13It is hard.

43:15You know, but ADUs seem to have been a big successful model in California.

43:20We're seeing other states copy that.

43:22You know, the missing middle seems to be a, um, a big conversation.

43:28Zoning, you know, looking at zoning, um, you know, looking at local authority.

43:33You know, I, do we do, it's not going to be the complete game changer unless somebody comes in and

43:38says, Hey, we're going to get rid of permitting.

43:39We're going to get rid of zoning.

43:40We're like, they got to be pretty, pretty drastic to make some impacts there.

43:43So I think we're still going to have the problem, you know, because I just sit and look around and

43:48go, well, my son's not going to be able to afford a place.

43:52So how does that, how do things start coming back to, to such a normalized level that, you know, things

43:59really take off?

43:59Interest rates go down.

44:00Yeah.

44:01You know, I think the interest rate thing plays a much bigger role than people think at the end of

44:04the day.

44:05So a lot of things to look at.

44:08Yeah.

44:09I'm, uh, I'm, I'm split myself.

44:11I think it's, you know, things happen, things happen a little bit at a time and then they happen all

44:17at once.

44:18When it comes to, you know, the affordability issue and the supply issue, the housing crisis that we're kind of,

44:24well, some people feel we're in the middle of a housing crisis.

44:26Some people feel like it's coming.

44:27Uh, I tend to think that if it's, if, you know, these problems that they don't arise overnight.

44:34And so whenever they do become a massive issue that needs to be addressed immediately, whatever the solution is to

44:39fix it overnight or to fix it immediately is never going to be sufficient.

44:44Right.

44:44Because the problem didn't occur overnight either.

44:47There's a really interesting wild card.

44:51Um, you know, this is probably just me in my own head, but it's the, the technology component.

44:59You know, when we look back, you know, the financial crisis was, you know, 06, 07, you know, data was

45:07becoming more and more profound platforms were starting to pop up.

45:11Relatively, you know, we're still using fax machines.

45:13Uh, we're still on the iPhone one, right.

45:16You know, uh, you know, so think about that in the last big, you know, significant, you know, crisis.

45:23And we think about, you know, overbuilding and oversupply, uh, type situations.

45:29What's different now that I think is, is not talked about enough is the availability of information.

45:38You know, whether I'm a home builder, understanding my market, trying not to get over leveraged, trying not to create

45:43oversupply.

45:44I now have visibility to what everybody's building in real time, all at once, permits, lot changes, um, uh, you,

45:54you, just the abundance of information and data.

45:56So I think the alarm can sound a lot earlier.

45:59And, you know, instead of the government having to get involved, I think there's this, um, um, ability, you know,

46:06this desire now with those tools in place to, to self-correct before it becomes too, too bad.

46:11It's not like everybody's going to go try to overbuild and then continue to do it and then wait for

46:14something to happen.

46:15And it's, Hey man, we're, we need to cool this off a little bit or we're going to, we're going

46:19to eat it pretty hard.

46:20So, you know, I think there's a little bit better tools that are out there to help them see some

46:26more.

46:26So my take on that.

46:28Yeah, I appreciate it.

46:29I like that thing.

46:31And I thank you for, for sharing your time with us and coming on and talking to me.

46:35It was a, it was a pleasure.

46:36Oh, no.

46:37Thank you for having me on.

46:38I always love to talk about stuff like this.

46:40It's fantastic.

46:41Appreciate it.

46:42Yes, sir.

Building in the ashes: Land Gorilla is rewiring construction lending

Category

Transcript

Comments

Recommended