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HIGHLIGHTS FROM THE PODCAST:
0:45 - Introduction to Price 2:00 - How Price began in real estate 5:44 - Lessons Prices learned from his dad 7:45 - The focus on hitting singles vs home runs 12:18 - Transition from flipping houses to building houses 17:04 - What Price attributes to surviving in the Recession (2007-2010) 28:41 - How did Price get into build to rent homes? 37:24 - Lessons Price has learned when he started vs today 42:26 - How learning has affected his business FULL TRANSCRIPT OF THE PODCAST AUDIO: Matthew Whitaker: That was your message to me was find something that you can scale. I guess you were going through this change in your career and the way you were seeing the business. And you said the one problem with flipping houses is it's not scalable. Spencer Sutton: Everybody welcome back to another episode of The Birmingham Real Estate Investor. I am one of your hosts, Spencer Sutton, and I've got with me my cohost, Matthew Whitaker. Matthew, welcome. Matthew Whitaker: Ah, thank you. Glad to be back. Spencer Sutton: And today I'm excited because we've got a great guest on, we have a Birmingham native and long time investor in the city. So Price Hightower, welcome to the show. Price Hightower: Thank you. Glad to be here. And I guess that's just a kind way of saying that I'm a lot older than Spencer and Matthew, right? Spencer Sutton: That's not necessarily true. Matthew Whitaker: Not true. So really funny story, I think I've got the two guys on this podcast that may have played the biggest part in me being stuck in the house business Spencer, as everybody knows, and well-documented on the show, sold me my first rental house and Price, when I was first thinking about investing in rental homes, you actually worked with my stepdad for a while over at South Trust Bank. And he said that you had quit your job and started buying and selling houses I think, flipping houses, is that how you got into it and then you and I literally met no more than 50 feet from where I'm sitting in the office next door to us. And I remember very clearly going in there and meeting you and just thinking how you had it all together. So you still have it all together. And I still think you're way ahead. So very excited to have you on here price. Do you remember us connecting by any chance, or? Price Hightower: I do remember I had forgotten the banking connection because I did start my career as a banker with South Trust Bank and worked there for about five and a half years, but I had forgotten that connection, but I do remember our meeting. Yes. Matthew Whitaker: Talk about the conversion from going from banker. What did you do as a banker and then actually moving into where did you start in the real estate world? Price Hightower: Sure. So I might back up a step before that. I grew up here in Birmingham and my father was a business owner and he and I were just really, really, really close. And you'll notice a theme throughout our conversation today, Matthew is that I'm a huge believer in a quote that I read one time. And it said, "If you ever see a turtle sitting on top of a fence post, you will know he had a lot of help getting there." And I am definitely that turtle sitting on top of a fence post and a ton of people such as yourself have helped get me there. But my dad was one of those guys. And so I just grew up in an environment where he was a business owner and he assumed some risk in his business. Price Hightower: And so to me, I had really had a nice leg up on a whole bunch of people just by thinking that that was normal as opposed to a corporate lifestyle looking normal. And so that's a really big part of my story is just growing up in a very stable household. One where my dad spent a lot of intentional time pouring into me. He was a very successful level five kind of a business owner. So to me it just seemed like that's what I was supposed to do is one day own my own business. So I went to work when I graduated from Auburn, I got a job at South Trust and was in commercial lending and learned a little bit about banking, did that for about five and a half years. Price Hightower: And I was involved in a local ministry in town called Young Business Leaders. And there was a guy who was on staff with Young Business Leaders named Jay Briley and Jay and I got to be good friends, and he was leading a small group Bible study with me and some other guys, and he got his real estate license and was one of the first real estate agents with LAH, LAH had just started. And so Jay was in Bible study one day and he said, Price, I think I could find a house somewhere in Homewood that we could buy and fix up and sell. If you could get us the money you're a banker see if you can do that. So I was able to get some money and Jay was able to find a house. And so we bought a house over on Melrose Place off of Broadway, and we did our first flip. Price Hightower: And that sounds normal now, but really back then, I'm 54 now and I think I started this business with Jay, I was about 25 or 26. It really wasn't a thing. There were a few people in town flipping houses, but there certainly were not infomercials about it. And there were not podcasts about it. And it wasn't a HGTV segment by any stretch of the imagination. So I think it really helped, it was a good time to enter the market, but so Jay and I flipped maybe a dozen houses together, and I decided it was more fun to flip houses than it was to sell money for the bank. And again, I was just wired to be my own guy. So I took a pretty significant leap when I was 27. So when I was 27, my wife, Meg, and I had our first child, I left my job at the bank and she left her job at BellSouth. Price Hightower: And I said, I'll be a real estate investor. So I really did not have nearly enough capital to be doing that. And while my dad had been a successful business person and was a great mentor of mine. I really decided since I did not enter into his business, that I wanted to do my business journey without his capital. So I was thinly capitalized from day one and had probably to hustle more as a result of that. But yeah, just started my business really flipping houses when flipping was not a thing. Matthew Whitaker: And talk a little bit about... I would love to dig in a little bit into some of the lessons you learned from your dad and how they've applied to what started out as investing and then got into some home building later. But talk about maybe the top two or three lessons you learned from your dad. Price Hightower: Probably one of the greatest benefits that I received from my dad was how he modeled and required self-discipline. He was a self-disciplined man and he taught me to be self-disciplined. I will admit that I'm a late bloomer. I don't think I really became a man till I was about 27. I was a kid for too long, but the verse in Corinthians that says, "When I became a man, I put aside childish things." Somehow when I became a man, I really turned it on. And that had been modeled to me by my dad, even though I was a bit of a late bloomer. So I think self discipline has been a huge factor in the success of Tower Homes is that we really, really focus on doing what we do well, and we really don't try to do the things that we don't do well. And that's very consistent with the flywheel that you read about in Good to Great by Jim Collins, just getting that flywheel turning. Price Hightower: And we have found the best way to keep that turning is by focusing on what we do well, and just try to hit as many singles as possible and don't really get distracted with trying to hit a home run. And I think that takes a lot of self-discipline in real estate. My dad was a great guy, but he and I shares another thing we both enjoy working hard. So I've got a lot of hobbies. I love to hunt fish, play golf, and do all that kind of stuff. But honestly, I just like to work. And so enjoying what you do and applying a lot of passion to that, I think is great fuel on the real estate fire. I think that was another thing that he taught me is just to love what you're doing as much as you love your hobbies. Matthew Whitaker: You mentioned something about hitting a bunch of singles, and that's something that I've found throughout my career is that as real estate investors or when you're doing something, it's like the singles get boring, and then it feels like you need to up the game, start swinging harder, swinging trying to hit home runs, or at least hit doubles and triples. I would love for you to talk about... My experience has been when you're hitting singles every now and then you'll get a double and a home run, that's more of a lucky or you capitalize on a lucky opportunity. Can you talk about the focus on hitting singles and have you ever seen people that are just trying to hit a home run after home run and end up striking out? Price Hightower: Sure. I think singles are boring. Singles are really conservative. My wife and I love to use the statement around our home with our kids, "Nobody should ever miss a layup." And even though in my basketball career, I vividly remember missing some in theory that is easiest shot on a basketball court, and you really shouldn't miss a layup. And so when you're thinly capitalized, as I was, when I began my career, the only shots I could take were layups. I really didn't have the luxury of trying a three-pointer and hoping it worked and risking a significant loss. And so I think I just started off, I'm conservative by nature. So I'm probably in the wrong industry, but my comfort level is just more single based and I never really wanted to go backwards. And you can read so many books. Price Hightower: Darren Hardy has a great book called The Compound Effect and just the whole concept of just stringing together a dozen singles, and as I mentioned, Jay and I met, probably flipped a dozen homes. I don't know how many homes I have built now, but I'm going to assume that between the remodels and flips and the new homes that we've built, I've probably hit 2000 singles and over the past 25 years and they just add up. So I don't think I've ever hit a home run. I'm not sure that I've ever hit a double, it's just been a lot of singles and your listeners can't see just what a conservative dorky guy I am like you guys can, while we're on Zoom, there's nothing about this face, that's glamorous or sexy or brilliant. It's just a grinder. And I think there's a beauty in the grind, there's a self-confidence that comes from the grind, knowing that you have the perseverance to just keep grinding, keep working, keep hitting singles with belief that over time the singles will pay off. Spencer Sutton: I think this business Price is the temptation is to go after home runs, right? Price Hightower: Sure. Spencer Sutton: That's the temptation. And that's what we see, and Matthew and I, and you have probably seen many investors come and go by trying to swing for the fence every single time. But I just want to say, you were around before I started, which I started in 2003, and I remember hearing your name around town. I think at one point you were building new homes in Irondale, which I thought, who is building new homes in Irondale? This is crazy, but you were doing it, but it's just, you were playing the long game. And it was just, again, single, single, singles. And for our listeners, having that mindset, having the self-discipline willing to just put in the work day after day is really how you build success. So kudos to you for that. That's great. Price Hightower: Well, thank you. It's not glamorous. And there are some guys who hit a lot of home runs in town who had done a really great job. And it's just not ever really been what I was suited to do. And I think knowing who you are, knowing what you're comfortable doing, being able to sleep at night, being able to focus, having a long-term vision, all those things have had served me well and our company well. Matthew Whitaker: Warren Buffet and Charlie Munger often talk about, don't lose money. And to me, that's what singles are, if you ever asked my wife one word to describe Matthew, because she's being nice, she'd say disciplined. What she means by discipline is boring. And so I like you have found that just getting up every day and grinding for single after single is the way to build a business without the threat of losses. I would love- Price Hightower: Sure. Matthew Whitaker: I would love to start building on your story. So you went from flipping houses and at some point you actually moved in and started building houses. Can you talk about that transition? Price Hightower: Sure. So I started off flipping houses with Jay and then we both pursued our own businesses in different ways. And I kept flipping, but I was really, really in the search of two things. I knew that I needed more capital to do what I wanted to do, and I was looking for scale and I really was not able to find scale and flipping. I was not as sophisticated in it as you guys are. And the other thing I was looking for was a business instead of a job. And I realized I'd left a very sophisticated business in South Trust Bank. And I thought that I'd started my own business, but really what I started was a job. And everybody does, if they start off as a thinly capitalized real estate investor, and there's nothing wrong with that. I was still tremendously proud of my job and the work that I was doing. Price Hightower: And it was paying me very well, but at the end of the day, if I didn't do it, it wasn't going to get done. Therefore, by definition, I had a job instead of a business. And so a book like E-Myth was very instrumental to me as it tells the stories of people who transitioned from a job into a more sophisticated business through scale and repetition. So I couldn't quite get to where I wanted to go with flipping. And so I had some friends really some builders who were at my church, who literally asked them the question, "How do you build a house?" And had a guy named Stuart Banks who was one of the premier builders in town, but when he was starting out got to know him through another friend, Fred Smith and all these guys are part of my fence posts. Price Hightower: All of these guys have been kind enough to pour into me and hopefully I've poured into them as well. And it's been a mutually beneficial relationship, but Stuart Banks, taught me how to build houses. Some guys at my church taught me how to build houses and what I was looking at, and the reason why I was pursuing building is because I was running all over town, trying to do flips. And the most I could ever do in a year was maybe 25 or 30 of them. And as I'm driving around, I would pass these subdivisions, I'll look at a cul-de-sac and one guy had bought all these lots on a cul-de-sac and was just building his way around that cul-de-sac. And I'm like, that looks like scale. Price Hightower: That looks like scale and real estate to me. And I'd like to learn how to do that. And then if I can learn how to do that, maybe I don't have to be the guy doing everything. Maybe I can hire a superintendent. Maybe I could hire a real estate agent. I could begin to leverage my time better and I could begin to transition into a business. So that was the motivation behind learning to build. And a lot of guys really poured into me. Another one that did is a guy named Brett Winford. Brett has been a lifelong friend, man for so long. And he really taught me how to go from being a builder of one or two homes into how to build a bunch of homes and being a production builder. And he and I partnered together on some subdivisions down in the Calera area and built hundreds of homes. Price Hightower: And he taught me how to operate a home building company where we could build a 100 homes a year instead of just one or two. So yeah, it was a search for scale and it was a search to transition my business from a job into more of a business that could function without relying solely on my effort. Matthew Whitaker: Price, the interesting thing going back to the first time that we met, that was your message to me was find something that you can scale. I guess you were going through this change in your career the way you were seeing the business. And you said, the one problem with flipping houses is it's not scalable. And I think since then there have been some people in town that have scaled it to some degree, but that was that your message to me when met was to try to find something that would scale. But it took me forever to listen to your message. Now, finally, I guess, almost 17, 18 years later, we're just now starting to scale a business. So a heart being a little hardheaded, it took me forever and you were way ahead on that. Price Hightower: You've scaled the business. Don't begin to try to push that off. You have definitely scaled the business. Matthew Whitaker: So I used to go around town telling everybody there's only one or two builders that built and made it through the recession. And one of those is Price Hightower. I still saw Hightower signs out down on Lakeshore. You were building down Oxmoor, Lakeshore area. Price Hightower: Right. Matthew Whitaker: So I would love to know what do you attribute being so successful or at least surviving that recession in 2007 through 2010 recession? Price Hightower: Well, there's a lot of things and luck is certainly one of them. We got a lot of lucky breaks during that season. And that was an incredibly difficult season of my life personally, professionally, really, really tough. I lost my dad in 2009 in a car accident and business was horrible. Nothing was working and I just... 2009 was a really, really tough year. But it was a year where I really relied on some of the foundational things that we discussed earlier. The fact that I had not been trying to hit home runs and was content string together singles and hitting singles instead of doubles, triples, and home runs really helped us. Some of the guys who had been swinging for home runs in the home building industry did not survive that season of time because they had too big of positions in land and lots. Price Hightower: And we fortunately just didn't, and that was a big factor, but I'll be honest with you. I realized this is a real estate podcast and not a faith podcast, but my faith was a huge factor in the success that I was lucky enough to experience in '09. And that on February the 11th of 2006 at 3:00 a.m. I woke up and I really can't repeat what I said, but the first word was, Oh, and I got up out of bed and went to my home office and just pulled out my financial statements. And I began to look at how highly leveraged I was. And again, this is 2006, everything is selling like crazy. And I made a pot of coffee and I would look at my balance sheet and then I would get up and I'd walk around to the corner of my desk, where my Bible was, and I would just pray. Price Hightower: And I prayed, I said, "God, if you can show me how to get out of this, I promise you I won't get back in." And so I got scared in '06 instead of getting scared in '09. And I can only attribute that to faith. I don't know, I can't tell you any other reason why I would have woken up at 3:00 a.m. But when I left my office at around 6:00 a.m. that day, I was a different business owner and I was a man on a mission to get right-sized and to reduce our leverage. At the time I was leveraged about 23 to one, and honestly, that was not even an unusual thing. I was very bankable being leveraged 23 to one. Today we're just a fraction of that. So I think those things really were factors in our success. Matthew Whitaker: Two things that come to mind, just listening to your story. Number one is the lessons that I'm pulling out of it is success is not linear. And people need to understand that. I think people look at you from the outside and think, Oh, he's always been successful and it's always just been a steady climb up the success mountain. And the more we talk, it just reminds me that nobody's climb up the mountain is consistent. And even us at Evernest with our business, it grows in plateaus. There are times where it feels very boring around here, very stagnant. And then all of a sudden it gets crazy and wild and grows again in plateaus. So that would be one of the things that I'm pulling out of just listening to you. The other thing is going back to Jim Collins, Good to Great is just confronting the brutal facts. Matthew Whitaker: It seems to me that one of the reasons that you were able to survive the recession was you weren't getting caught up in all the hoopla of everything going on in 2006. And you started to look under the rocks at all the squiggly things and realize, Oh my gosh, this is not a sustainable thing. And if anything bad happens, then I'm going to go down with the ship. And so I think it's about making objective decisions, even when it doesn't look like everybody else is going in one direction and you turn around and go the other and people might've thought you were crazy, but kudos to you because in the end you were the one that still standing. Spencer Sutton: Matthew and I we were waking up in the middle of the night, wondering how we could borrow more money. We weren't... Price Hightower: I get it. Spencer Sutton: In 2006. Price Hightower: I did that throughout my entire 30s. Yeah. I did a lot of that. It's funny in about 2008 or 2007, I guess it was, I was on the board of directors for the Home Builders Association. And I walked into a meeting and I was aggressively selling stuff in '06 and '07. I was selling land at a loss. I was like the only guy on the planet losing money in real estate in '06 and '07 because houses and everything were selling so well. And I walked into the meeting and I vividly remember saying, "Well, here comes Chicken Little, who's saying the sky is falling." And at the time I took it tough. I was still relatively new to the industry and an older guy had said that to me and it stung a little bit at the moment, but in reality being scared early was very helpful. Matthew Whitaker: Talk about post recession and we've been on a bull run in the 2010s. The market's been great, houses have been selling I would imagine pretty consistently from 2012 to today 2021. Talk about your house selling business from then until now. Price Hightower: Yeah. So somehow we showed a profit in 2009. And that was to me the most significant business achievement of my 27 year career in real estate is that we've found a way to make money. We went from selling maybe 110 homes to, I think we sold 42. We sold... We had 40 some odd finished homes on the ground on January 1st of 2009. We did not have a single sale in January. We had one in February and I think we might've written two contracts in March and we were used to selling about 10 a month and I just wasn't sure how we were going to make it. But anyway, so I think that was a very pivotal year. Then we started... I honestly, I got so mad in '09 because we had some banks that were calling our loans and it really, really made me mad because we were current, we were profitable and I'm looking at these bankers. Because I'm like, "Look, tiny little Tower Homes is making more money than your bank. What are you doing? Calling our loan." Price Hightower: And they literally would say, we have to call your loan because we know you're bankable and you can move it to somewhere else. And we have most of our other builders aren't in your position. So we got to call your loan, got to kick out the good guys- Matthew Whitaker: We got Keep the bad ones. We're going to keep the bad ones and get rid of the good ones. Spencer Sutton: They had to. Price Hightower: Because of federal and I understood, but that's just not what you want to hear when you're in the heat of battle. So I got so mad and so I said, "Okay, how can we turn the tide?" So in the middle of '09, I called a meeting with our employees at Tower. And we simply have the best people who work in our organization. I said, "Here's the thing. The great recession is not going to be applicable to Tower Homes. We're not going to participate in it and we're going to go on the offensive." And so I started going to the banks and I started buying lots like crazy. And in 2009 and '10 and '11, we literally bought hundreds of lots. So I'd sold some stuff at a loss, going into the thing. Price Hightower: And I'd gotten that capital that I so desperately needed. And then we deployed that capital at a time where things were still somewhat scary, but man, we're firing a rifle. We're not shooting a shotgun at me. We're getting the best lots in the best location at the lowest price. And I'm getting them for pennies on the dollar. So we ended up having a record year in 2010, a record year in '11, and record year in '12, and just really emerged a much stronger company. And at the end they can call me Chicken Little. They can call me whatever they want at that point, but I'm just so glad to have survived. Spencer Sutton: They're calling you for money. Matthew Whitaker: What's so interesting about this. I have this visual, I just got back from Disney World and you have these large crowds headed in one direction and anytime you're trying to fight through those crowds just feels really awkward. But I see you in 2006 going against those crowds. And then all of a sudden in 2009, the crowd turns around and then you turn around and now you're fighting to get back on the other side. And so it really, again, it's just all about confronting the brutal facts of reality is that there were great loss out and that recession wasn't going to last forever. And it was just a great opportunity for you to jump in and scoop up these lots at extreme discounts because of banks are making bad decisions about kicking bankable people out the door. They're also making probably poor decisions based on I guess, whatever the federal reserve was requiring them to do, but getting these lots off their balance sheet what an awesome time to be on the offensive. Price Hightower: And it was a good time to be able to speak the language of bankers. So I was able to pull back some knowledge that I had retained from my days as a banker. I knew how banks operated and that was very helpful. And another banker turned builder in town is Dwight Sandlin with Signature Homes and he was doing the exact thing that I was. So I was not exclusively alone in that there were other people fight against that crowd. Brooks and Russ did a great job with that with Harris and Doyle Homes. And so there were other builders in town playing that same game. I was not the only guy out there doing that. Matthew Whitaker: So from 2000, let's say 2010 till 2021. Do you have any idea how many homes you've built in that time? Price Hightower: I really don't. I probably should. I'm going to... Matthew Whitaker: That's the difference between me and you Price. I would have a spreadsheet, I would be putting tick marks on the wall and you're just like, Oh, I don't know, a couple thousand. Price Hightower: And I'll be honest in this. I'm rarely accused of being humble, but an area where I am humble is that I really don't build the houses. We have a team of people at Tower Homes that builds the homes. And I almost feel ashamed that the company has a portion of my name and its name because honestly, within the home building part of our business, we're in land development, home building and rentals. And within the home building, that is our most profitable business. And I'm probably involved the least in it of any of the three, I know I am. And we just have such a good team of people that I don't keep count because they're all team wins. And again, that's not like some fake humility because I'm rarely accused of being humble. That's just a fact, I'm not the guy building them. Matthew Whitaker: I do know some of Price's team members and they are excellent people. So he is speaking the truth. So I would like to say Price, you are sexy. One of the sexiest words in our business right now is build to rent and you're doing a lot of that. And people have probably waited online just to hear you talk about build to rent. So I'd love to know just like everything else, Price you were doing build to rent before it was cool. I would love to know the way you thought about it as a builder and how you got into it and then as it progressed and what it looks like today. Price Hightower: Sure. So I started off with single family rentals when I was in my late 20s and early 30s, and when I was flipping and I knew that it might be an avenue to help me get the capital that I so desperately needed to add scale to my business. So I started buying houses and setting them aside, and I've tried to make this as quick as possible. I ended up owning 36 single family homes that I rented and managed myself, not nearly as well as you guys manage, but I was doing my best. And I put half of them on a 10 year amortization. And I put half of them on a 15 year amortization and out of the 36 homes, not one of them had positive cashflow. And so I was using the income from my flipping business to offset the losses from the rental business. Price Hightower: And what I say is basically, I feel like I built a room that was the exact dimensions of a treadmill and turned that treadmill all the way up to its highest setting of speed and ramping up. And then I had an escape door that I would just jump in every morning and try to keep running on that treadmill as fast as I could, because I knew I had a negative cashflow machine. So I ran on that treadmill for about seven years. And in that seven years as luck would have it, and there was a ton of luck involved real estate in Birmingham just appreciated so much. And so those 36 houses had really, really appreciated. And naturally because they were on such aggressive amortizations I had really knocked down a bunch of debt. And so I sold those houses and I put a lot of money in the bank and that really helped me get capital. Price Hightower: And so I learned a lot doing that, but one thing that really stuck with me is how my rental business and how my flipping business complemented one another. And that might've been of a more valuable lesson than the money. And so as I kept thinking about that, I was like, "How can our home building company possibly complement a rental company?" So we had an investor come along and buy some houses of ours that we have built new about five years ago and they're a national player. And I said, "Okay, I'll sell you the houses, but it's just going to cost you a lunch." And so because I had to understand, how can you pay me this much for these houses and then rent them? And over the course of that lunch, I just started replaying in my mind, my late 20s and early 30s. Price Hightower: And I'm like, "If they can do it, I can do it." And I don't have to have 20,000 houses, I can have 200, and so they do so, so rental homes are really well complemented by new home sales and vice versa. So being a land developer, we can develop a lot at cost, being a builder we can build a home at cost. We can sell those to ourselves, so I'm able to wear multiple caps. And each of those caps, it's like a little sliver of profit pie, none of which are sexy, but when added up into a whole pie, you've got the savings from land development, the savings from home building, I'm the longterm investor. There's not any real estate fees involved and we manage them ourselves. It's just each of those little areas and then you take in some of the advantages of depreciation and appreciation and the financing that we're able to find in the market today. Price Hightower: Each one of those little slivers of pie turns into a very attractive pie, when you have the ability to produce an asset at its wholesale value, especially an asset that appreciates because not many people can manufacture an appreciating asset. Matthew Whitaker: So I'm going to pull out some lessons that I just learned from you. One of them is when things... Spencer and I always say is don't quit your day job. When you start investing in real estate, basically your day job is home builder, right? But it's not like you jumped out of home builder and started to be home renter landlord. And so I think everybody wants to get in and it feels sexy to be a full-time real estate investor. One of the things I've found is when you don't have a cashflow machine, you're building business or the house flipping business back when you were younger, it makes investing a lot harder because you have to live out of your investing. And that was one of the mistakes that Spencer and I made when we were living back in 2007 out of each deal that we made, we had to keep doing deals just to live out of it. Matthew Whitaker: And it made it even harder. But if you have a consistent income and you can invest on nights, and weekends to get started to me, that's very important that people don't quit their day job. Price Hightower: Right. Matthew Whitaker: The other thing that I have learned recently, and we're starting to experience this here is also having a beach head where you have something that you become really good at it, like your building is our property management. So when we move into a new market, we move in with the thing we know really well, which is property management. And you're the same way with building and what that allows you to do when you get that business going, when you get the flywheel going with that business, it allows you to add verticals on top of it that compliment each other. You were talking about how you are a developer, you're a home builder, and now you're a home renter. Matthew Whitaker: For us we're a property manager, a maintenance company, and now we just started a brokerage business. And what's been interesting about that brokerage business is if I was a brand new broker, just getting into real estate without having the Evernest brand behind me, there's no way I would do as many deals as I... Maybe I would have done one in the first couple of months. And that would have been really successful. And we just started a broker's business essentially in January. And we've already done 20 deals with that brokerage business, just selling houses to our clients, selling houses that our clients are wanting to sell. So we have a client over here, a client A, and client A wants to sell their rental house. Well, we have client B over here that wants to buy a rental house. And so all we're doing is connecting those people, or maybe client B wants to buy 10 more rental houses that we can go to the market and find for him or her. Matthew Whitaker: And so I think that's a big lesson that I've learned is once you have what I'm calling a beach head and you make sure that the cash cow is being taken care of, it really allows you to add these different businesses on the side. I think a lot of people try to do too many things to start out with versus finding the beachhead. And so I just think it's kind of cool how your story is matching my new mental model of how our platform businesses is continuing to grow into different verticals. Price Hightower: Sure. Yeah. I think you're really onto it there. And it's easy to get distracted and chase the shiny things. And so for years we've heard, "Oh gosh, multifamily is hot, multifamily is hot." And I kept thinking that I was doing something wrong by not being a multifamily guy. And they were all the cool kids. Right. But I've never been cool. So I don't know why I thought I was missing anything there, but I've just came to realize, what we do well at Tower Homes is we build really, really high quality homes, and what I think are the best homes in the Price points where we compete. And so how can I take some of what the multifamily guys are doing and replicate that in what I already know how to do? Instead of having some age 50 pivot where at 50 years old, try to go out and learn how to be a cool kid. In the reality that ship has sailed and there're guys younger, brighter, smarter, faster, everything else than me already doing that. So I really just needed to find a way to ramp up what we're already doing. Matthew Whitaker: Talk about some lessons you've learned, the houses that you built maybe four years ago when you were starting this, how they compare to the homes you're building for rent today, how have those changed? Price Hightower: Well one thing that I've done throughout my career is I just shamelessly ask questions of people who are smarter than I am. And fortunately that's almost everyone on the planet. So there's a lot of people that I can ask- Matthew Whitaker: That's why Spencer and I have a podcast, we just ask all the good questions and we learn- Spencer Sutton: They're listening. Price Hightower: And I went back this morning and listened to a lot of your podcasts. You have some really good questions that you've asked. And a lot of the things that I'm saying have been repeated were said earlier by guests on your show. But yeah, so I have made... Because I'm older and because I have more money than I used to have, I have the ability to not work as much in my business and spend a little bit more time working on my business. And so I think nothing of setting an appointment with somebody who's really good at built for rent in Florida and getting on a plane and going down and spending two days nor to have a one hour meeting with somebody who is 10 years ahead of me in knowledge and asking them the dumbest questions on the planet. Price Hightower: I go to a lot of seminars and I'll sit at the seminar and if I like the speaker, you're going to get yourself hurt if you're in between me and that speaker, when the speaker is finished, because I will be the first person to shake his hand, get his business card, and I'll tell him, "I know you don't believe me, but I'm going to call you next week and I'm going to be at your office." And it's just amazing how people will open up their playbook. And so to get back to your question, I have learned a little bit about the way built for rent works more efficiently. The house plans are essentially the same. We might modify the roof pitch a little bit to pick up some savings there. We might modify the floor coverings a little bit, but the houses are just not that different in the way that they look and feel than some of the homes that we retail, they typically are on a smaller lot and not all of them would have a garage. Price Hightower: So there's a little bit of difference there maybe, but it's not a radical difference. It's not like we're building some generic box. We still build a pretty darn good looking house, even if it's built for rent. Matthew Whitaker: Are you building entire communities that are a 100% rental or are you scattering these within communities you're building to sell? Price Hightower: Both. So we began scattering them in our subdivisions. And that was a good way that our rental business complemented our home building business because no matter what community you develop and we develop our own communities, you're always going to end up with some lots that are maybe a little bit less desirable. And so we've found that if we go ahead and build a rental house on all of the least desirable lots in the community and go ahead and have people living there that establishes a community more quickly, and it gets rid of lots that might've been difficult to sell anyway. Matthew Whitaker: So it compliments... I'm sorry, so it compliments your rental business and compliments your sales business too, because now you get some energy in the community and it helps you build traction. Price Hightower: Absolutely. Matthew Whitaker: Yeah, really interesting. Price Hightower: The best for sale sign is a moving van. When you see people moving in, that is the most effective advertising that you can do. So rentals really spur some of our new home communities by taking some of those lots and going ahead and putting them into rental. So we have about a 100 homes that we have built in our subdivisions that we have kept and that we rent. And the oldest of those homes is maybe five years old. And then we have three communities around Birmingham where we are doing entirely built for rent. We have a small one with 11 homes in it in the city of Vestavia on Green Valley Road, behind Whole Foods where we're building a very high end luxury rental product. Those are renting for about 3000 a month, a really, really nice looking high finished homes. Price Hightower: And then we have a community in the city of Leeds, behind the Lowes in Leeds called the Cottages of Weaver Avenue, where we have 63 built for rent garden homes. And then we have one that we're about to break ground on hopefully next month, that will be in the city of Irondale. And it will have 174 built for rent cottages, and it will be a fully amenitized community with clubhouse pool, fitness center, gated community, the whole thing, Matthew Whitaker: It becomes a scattered site apartment community, right? Price Hightower: Sure. Matthew Whitaker: Are you taking care of all of the landscaping and keeping up with all the things that need to be kept up with? Price Hightower: That varies by community. But certainly on the ones where we have every home in the community, we're providing 100% white glove care and we're taking care of everything on the outside and the inside of the homes. Matthew Whitaker: This has been really awesome, Price. I want to wrap this thing up and if anybody can't pick this up from this whole discussion. Price, is a voracious learner, he's quoted at least four books that I could count. And then is willing to hop on a plane for two straight days to go meet for an hour with people just to learn. And so what I would love to know is talk a little bit about how learning is affected or compliments your business and how you've continued to grow through learning. Price Hightower: Sure. So I really have just developed a love for professional development, and I read a ton of books. I use Audible, I listen to more books than I read. I'm kind of an ADD gas. I don't really enjoy sitting still and reading, but I listen to a ton of books and I think that's an area now where people who are getting into this industry have a huge advantage and that they have access to guys like you and your podcast. The videos that you guys have on your website are absolutely phenomenal. And so there's so much knowledge at people's fingertips. They don't have to get on a plane and go meet with a guy in Florida. They can literally sit on their couch and learn so much about real estate. So the speed of learning is much faster now than it was when I started off in this business. Price Hightower: However, I still think that real estate is a get rich, slow business, and I still believe it takes a long-term focus, it takes a long-term mindset. I know very few people who have gotten rich quick and stayed rich for a long period of time in real estate. You'll see people come in and make a big splash, and then they sink. I think the guys that I know and respect the most in the industry are the people who are committed to getting wealthy slow. I think learning whether it is on a podcast or reading books, I love Malcolm Gladwell's concept of 10,000 hours. Matthew Whitaker: Well Price. This has been really awesome. It's amazing to me that on a podcast, you can basically sit with somebody and be a part of a conversation with really successful people. It's taken me 20 years to get you to call me back, Price. Price Hightower: Not true. Matthew Whitaker: Price, he's a taker, but he's a great, great, great giver. And I've got a sign over my shoulder that people can't see since this is on audio, but it quotes the late great Dr. Seuss. "The more that you read, the more things you will know, and the more that you learn, the more places you'll go." And I think about Price, When I think about that quote he's a learner, he's going a lot of places and listen, he's still in the grind. So super excited about the future. Price, thanks so much for being a part of our podcast. Price Hightower: Sure. There's another Dr. Seuss quote and I might butcher it, but it says, "People that matter don't mind that people that mind don't matter." And I think there's a mindset there of it might not be the cool thing to rush the speaker at the end of a seminar. It might not be the cool thing to reach out to a total stranger and ask for help. But you just got to get that out of your mind and just go straight to it. Spencer Sutton: Perfect. That's great Price. We'll listen again, thank you so much for being on the show. And if you have not already subscribed, go ahead and subscribe. I would encourage you to share this episode with as many people as you can, who would probably find a lot of value in this. And we will be back in two weeks with another episode of The Birmingham Real Estate Investor.
