2/23/26 A Conversation with Tomas delToro-Diaz: Risk, Capital & Growth

The Moneywise Radio Show and Podcast Monday, February 23rd BE MONEYWISE. Moneywise Wealth Management I "The Moneywise Radio Show & Podcast" call: 661-847-1000 text in anytime: 661-396-1000 website: www. MoneywiseGuys.com facebook: Moneywise_Wealth_Management LinkedIn: Moneywise_Wealth_Management Guest: Tomas delToro-Diaz, EDFP Music Produced by Tomas The opinions voiced in this podcast are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision. Tomas delToro-Diaz and his business are not affiliated with nor endorsed by LPL Financial or Moneywise Wealth Management].

• 0:00Speaker 00

  Live from the basement inside the historic Woolworths Building in downtown Bakersfield.

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  Call or text in at 661-396-1000.

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  Securities offered through LPL Financial, member FINRA/SIPC. Investment advisory services offered through LPL Financial. LPL Financial and MoneyWise Wealth Management are independently owned and operated.

• 0:37Speaker 00

  Now, let's start the MoneyWise Show.

• 0:40Speaker 03

  Money, money, money. Welcome to the MoneyWise Show. We are live from the basement of the historic Woolworths Building in downtown Bakersfield. For the next hour or so, you are on KGO Money Talk, 1230 AM, 101.1 FM, and always streaming at MoneyWiseGuys.com. You can call or text into the show 24 hours a day at 661-396-1000. That was 661-396-1000. I'm your host today, Sammy Abiyawie with...

• 1:06Speaker 00

  Steven Nicholas.

• 1:08Speaker 03

  Man, Steve, it's been what, like six months since you and I did a show?

• 1:11Speaker 00

  It's been a while.

• 1:12Speaker 03

  It's been a while.

• 1:13Speaker 00

  I thought we scared him off.

• 1:14Speaker 03

  I always look forward to actually doing a show with you because I have fun. I have fun.

• 1:19Speaker 00

  And we have a jam packed show as well today.

• 1:22Speaker 03

  We do, we do have a bunch of questions I want to go over first and then we go into the second segment. We have a great guest for the listeners today. Tomas Del Toro, we'll introduce him later in the show. But I'm looking forward to our conversation today. Tomas is a local developer. And today I learned he's a music producer. He's got a master's degree in music production.

• 1:43Speaker 00

  I believe it.

• 1:44Speaker 03

  So we're gonna have a packed show. So let's start with the first question, Steve.

• 1:49Speaker 00

  All right, the first one says, hey, guys, is social security going bankrupt? Or are the news channels just trying to scare us?

• 1:58Speaker 03

  The latter.

• 2:01Speaker 03

  I think the news outlets are scaring people that social security is going bankrupt. I do not believe that it's going to go bankrupt. I think it's the benefit might have to be reduced eventually. And there's, there's reasons for that. And the reason number one is we have a lot of people leaving work more than people coming into the labor force. Okay, so just as a comparison, nineteen sixty-five, we had four employees for one retiree. Okay, in twenty twenty-two, two point eight employees for one retiree. In twenty fifty, or the projected, we're looking at less than two and a half employees per retiree.

• 2:44Speaker 03

  So are we gonna, is the social security going bankrupt? I don't think so. Are the benefits going to be affected potentially by a reduction of about maybe fifteen to twenty percent, depending on where we are then? Now, if the big beautiful bill of President Trump works, and we can actually create these jobs, manufacturing jobs and all these jobs, and we'll bring them back from the rest of the world. Hey, maybe we'll have enough labor force to fund social security, and we don't have this problem, and social, and the media outlets can go and pick on something else.

• 3:16Speaker 00

  They'll find something.

• 3:18Speaker 03

  Of course, always, always. But no, uh, uh, rest assured, I don't believe, uh, uh, social security is going to go bankrupt. There will be changes eventually if things remain the same way they are today.

• 3:30Speaker 00

  Of course.

• 3:30Speaker 03

  That's for sure.

• 3:31Speaker 00

  Uh, the next one says, on top of helping with retirement, do you guys help with wills and trusts?

• 3:37Speaker 03

  Uh, not directly, but we recommend you to, we have people we do, we do business with. Kyle Jones is a name that comes to my mind, Stephen.

• 3:45Speaker 00

  He'll be on the show Wednesday this week. If you have any questions, send them in.

• 3:48Speaker 03

  So this listener can just chime in on Wednesday and ask, and Kyle Jones is an awesome dude. We used to, um, we used to be in the same office.

• 3:57Speaker 00

  Yeah, we used to share an office.

• 3:58Speaker 03

  On Stockdale, and, and then he got so big now, and he left us. Uh, no, Kyle Jones is an awesome guy. He did, he does a lot of work with our clients. We, uh, he's, he's a trusted source for us. So he's a name that comes to mind, definitely.

• 4:12Speaker 00

  Uh, the next one says, I want to build family wealth strategies and more skills. Where do you think I should start?

• 4:21Speaker 03

  Wow. Wow.

• 4:22Speaker 00

  That's a setup question for right for you.

• 4:25Speaker 03

  Well, look, um, multiple things you could do first. The first thing, I think this question has something to do with the last question we have to. So I'm gonna, if you want to read that question to Stephen, because they're kind of like close to each other.

• 4:39Speaker 00

  On top of helping with retirement, do you help with wills and trusts?

• 4:42Speaker 03

  No, the completely, completely.

• 4:44Speaker 00

  Oh, the, uh.

• 4:46Speaker 03

  The one that.

• 4:47Speaker 00

  That last one we haven't read yet?

• 4:48Speaker 03

  Yeah.

• 4:48Speaker 00

  Okay, well, this one is a good one for you. It says, hey, Money Wise, longtime listener here in Delano. I'm in my late 30s with a mortgage and kids and money feels tight. What should I prioritize first? Retirement, college savings, or paying down debt? I've always been told a small amount of debt isn't bad, so I've kept it under control.

• 5:13Speaker 03

  Great, both really, really good questions. So I think the answer is kind of like is gonna be inclusive of both questions, I'm hoping. But hey, he said that he's got kids and he's thinking about college and savings and all of that. Hey, welcome to the American dream, Stephen. He's part of us, this person.

• 5:34Speaker 03

  For me personally, an emergency fund is what comes to mind. Three to six months of savings, just in case things happen, changes in life. God forbid, loss of job or change of jobs or the economy changes where you need to go and do something different than what you're doing today. So build, build savings is number one. Build some savings, at least three to six months of operating cash flow based on your household budget.

• 6:05Speaker 03

  As an ex-banker, pay off loans or high interest debt. The, the American household carries a lot of credit card debt with an average interest of about 20 to 22% Stephen. So item number two or target number two is, hey, pay off those high interest debt and get them out of the way. Budget. Here's where we fail as I think as households is the average household does not have a budget. So we have an income coming in, we have a W-2 income for most of us, the majority of us. But we fail to budget. So we just spend, spend, spend. And if we're not spending our W two income, guess what? We're swiping.

• 6:50Speaker 03

  We're swiping that card. And that's what could be misleading at times is people say, well, the economy is still strong. The consumer spending is still high. Well, is it? Or are people just swiping credit cards and just supplementing the W two income with debt? That's the question that I have. Our, we're at an all time high in credit card debt and the trillion is 1.3 or 1.7 trillion dollars of credit card debt with our default rate going up. Not alarming, but it's going up. Okay. So I would say budget, that's, that's. And if you are in a situation where you have to rebuild, rebuild your credit.

• 7:33Speaker 03

  That definitely opens doors to just help in the future. If not you, maybe your kid that wants to go to college and he needs a cosigner or she needs a cosigner for either a student loan or a car loan or even a mortgage, to tell you the truth. Investment, something, again, we don't do as a society and a lot of it because we are just barely managing payment or bills.

• 7:58Speaker 00

  Check to check?

• 8:00Speaker 03

  Yes. You know, I, I, I read a statistic, I think last year, Sherrod and I were on the show, that the average American does not have, cannot pay for an emergency of $400. That could be a tire that blew up. And we, I mean, guess what happens again, Stephen? You go and swipe at 22% to 32%. And that just keeps you on that treadmill of, you know, it never.

• 8:24Speaker 00

  Yeah, that $400 ends up being $1,000.

• 8:26Speaker 03

  Correct.

• 8:27Speaker 00

  You pay it for 20 years.

• 8:29Speaker 03

  Yes. And the other thing for me personally is generational. You have to think generational and you have to educate your kids about the mistakes that you're making as a parent, if you are making, and if you're not, still teach your kids how to budget, how to spend responsibly, the usage of credit cards. You know, if you're in college and somebody is coming in with a pad, hey, sign up for this. Well, you don't need to sign up for 10 credit cards when you're in college in your first year. Guess what? A lot of these bankruptcies happen at the age of 22. A lot of these kids don't know how to use credit cards and then they get in trouble. So five, five steps for me, emergency savings, debt reduction, credit rebuilding,

• 9:12Speaker 03

  invest or teach your kids how to invest and just educate, educate yourself for that, that things don't happen.

• 9:20Speaker 00

  Yeah, I mean, we, we talked about that off the air before the show started. I mean, I was telling you, you know, things, things happen that you don't expect as a homeowner. You know, I, I don't have the biggest, you know, flashiest home and there's always going to be things to work on, but you know, I'd put back my emergency fund and you know, I, I have a teenager that I know money is tight, but you know, the, we had a windstorm. My wife calls me and says, Hey, three of our trees in our backyard just landed on our roof. If I didn't have that emergency savings, you know, we, we could have been in a way deeper hole and been swiping.

• 9:56Speaker 03

  Yes. And the average, the, the sad part is the average American does not have that. The average American is just barely, barely making it. And here, and, and here's why. One thing, when I was looking at all this stuff, I looked at the, the CPI, I looked at the, just inflation rate and the prices that went up in 2020, right? We have, we might have our inflation under control today, but we still have prices, you know, at the supermarket. But the salaries of these people that are going to the supermarkets did not go to up the same rate or the same speed as the inflation or the prices went up from 2020 until today.

• 10:38Speaker 03

  So these prices are here to stay. What needs to happen is the wages need to go up to match that, right? Or prices need to go down. Which one is going to give? I don't know. I think prices are here to stay. These prices that we have today for the gallon of milk, for the bread, for the eggs, for everything are here to stay. Unless you shop at Costco, of course.

• 11:01Speaker 00

  That doesn't get cheap either. Do you, do you think the, I mean, going off of that, you know, that is obviously hard for small businesses, you know, that, you know, as, as costs go up and they have to continue to pay enough for their employees to be able to live. I mean, do you think that's harder for small business owners or just business owners in general?

• 11:26Speaker 03

  Definitely. Now, now you, you also have to, this is a very good point. The number or the largest employer in the United States like as is Walmart, right? But when you collectively put the small businesses together, that's the largest employer in the US. We, small businesses employ most of the people in the US. That comes with the, with, with the responsibility and a burden. A small, a small business typically is family oriented. They'll take care of their employees. They know what their employees are going through, so they'll try to adjust. What I've seen is the bankers, a lot of these small businesses don't adjust quick enough. They hurt themselves in the long run.

• 12:06Speaker 03

  Okay, so it happened in oil fields, for instance, in 2014, when oil fields prices went down. A lot of the people that did not adjust or did not lay off people because like, well, prices are gonna go up. These are good people. I don't want to lose good people. Guess what? A lot of these people left the state. They went bankrupt. A lot of these small business owners lost their business and they have to go back on the workforce and be a W2 employee.

• 12:31Speaker 03

  You are completely correct. I think in my opinion, business, small businesses will carry the burden of, of that. And we see it, you know, especially in the state of California. With, with minimum wage, the way it is. It's very, very hard for small businesses to carry. You know, something's gotta give. And, and unfortunately, uh, uh, we see that happen, you know, time and time again.

• 12:57Speaker 03

  Very, very good, very good, very good questions and keep them coming. Um, we'll, we'll, we'll take our first break, Stephen. When we come back, I'm really, really excited to start a conversation with Tomas. There's a bunch of stuff I want to talk to him about. We'll be right back.

• 13:09Speaker 00

  Money Wise Wealth Management is the only locally owned independent firm that uses a comprehensive wealth tax and estate approach. Working closely with a highly trusted CPA and attorney. For information on how Money Wise can help you invest and plan for your future. Call 661-847-1000. That's 661-847-1000.

• 13:47Speaker 03

  This is cool, Steven. Who's this?

• 13:52Speaker 03

  Hmm, this sounds really good. We're back at the Money Wise Show. I'm Sammy Abiyawu with Steven Nicholas, joined here by Tomas del Toro Diaz. Tomas, welcome.

• 14:03Speaker 04

  Hey, thank you. Thanks for having me, guys.

• 14:04Speaker 03

  We're very excited. And this is some of the music you you put together, the one we just played.

• 14:09Speaker 04

  Yeah.

• 14:09Speaker 03

  This is all you?

• 14:10Speaker 04

  Yeah, it was released last year in 25. It's me and my cousin. It's a collaboration we do called Dia Luna. And I produce and engineer the music with her, play a lot of the instruments. So a lot of the synths you heard, those are all analog synths from the 80s. If you listen further in the song, you'll you'll hear even more guitars and all kinds of stuff.

• 14:31Speaker 00

  I'll put the link in on our our show notes.

• 14:34Speaker 04

  Yeah.

• 14:34Speaker 00

  Because I want to dig deeper in this. What? Every time I meet him, I find out something else that he does.

• 14:40Speaker 03

  Yes.

• 14:40Speaker 00

  Like, what else does this guy do?

• 14:42Speaker 03

  That's exactly, that was exactly what I was about to say. I've known him, we just figured I've known him for 10 years now.

• 14:48Speaker 04

  At least.

• 14:49Speaker 03

  At least. And and and time flies. And I've always known Tomas. And you have this this EDPFP behind or after your name, that's Certified Economic Development Finance Professional.

• 15:03Speaker 04

  Yes, sir. Yes.

• 15:03Speaker 03

  So that allows you to do what?

• 15:06Speaker 04

  Lots of stuff. So it was a rigorous four-week course. Each week was, you know, scheduled at a different time. And it's all about economic development and understanding the inner workings of the way a business works. So looking at a financial

• 15:23Speaker 04

  profile from a historical standpoint, so analyzing a business from their balance sheet and their profit and loss, and looking at it historically and understanding, okay, what's the business doing? Is it a dog? And basically just means whether or not the business is good or bad.

• 15:38Speaker 03

  In banking, we call that a pass.

• 15:39Speaker 04

  Yeah, yeah.

• 15:41Speaker 04

  Exactly. Sorry. Yeah.

• 15:43Speaker 03

  Pass.

• 15:44Speaker 04

  Yeah, exactly. Exactly. And then it involves stacking finance to understand how you can collaborate publicly and privately with, you know, financing a project, for example.

• 15:55Speaker 03

  So, so the way I learned about you is through banking and I was a patient of your wife. Your wife is a practicing doctor here in Beaufort. She's awesome by the way.

• 16:06Speaker 04

  Yes, she is.

• 16:06Speaker 03

  And, and, and, but you did a project in Lamont.

• 16:10Speaker 04

  Yes.

• 16:11Speaker 03

  And that was like years ago, but it was like, tell us a little bit more about that.

• 16:16Speaker 04

  Yeah. So that project started, it really started in 2012, but really got going in 2014. And a partner and I, we decided we were going to buy some land in Lamont and we wanted to put a car wash there.

• 16:34Speaker 04

  Car wash didn't really pan out. There wasn't enough traffic on that highway. It was on Weed Patch in Nidergio. And so we decided, okay, well, let's, what else can we do? Let's, let's try affordable housing. So we, we found another partner who claimed he had a lot of experience in affordable housing. And we went down that rabbit hole, started pre-development and funded everything ourselves. Basically designing, you know, floor plans, how many units we could put on the land. Essentially the whole package to then go submit for grant financing to build this affordable housing. As I got through the process, I learned that the experience wasn't quite there. And of course, this was my first project and I had no idea what we were supposed to be doing.

• 17:20Speaker 04

  And I had 50% of the money in. So I said, well, I better, you know, pull my shoes up and start going, figure it out.

• 17:29Speaker 03

  Yep.

• 17:29Speaker 04

  Yep. So I, I managed all of the pre-development. So I met with all the architects, all the engineers. I read a lot about the grants. I made applications, had meetings with politicians and with, you know, state officials. I spoke at the, the EPA in Sacramento, did a lot of lobbying over there. Kind of went through the whole process and, you know, we, we applied for four different grant sources. And on the fourth one is when we got funded. And I realized that we needed a partnership. So we partnered with the Housing Authority of County of Kern.

• 18:07Speaker 03

  Good organization.

• 18:08Speaker 04

  Yeah.

• 18:09Speaker 03

  I sat on the foundation board.

• 18:11Speaker 04

  Well, Steven Pels is phenomenal guy.

• 18:13Speaker 03

  He's good.

• 18:14Speaker 04

  And super sharp and he knows what he's doing.

• 18:16Speaker 03

  Yes.

• 18:17Speaker 04

  And prudent, which is important when you're talking about public dollars. So anyway, we partnered with him, partnered with Caltrans, made our project more competitive as far as the grant funding went and we finally got funded and broke ground in 2020.

• 18:33Speaker 03

  And you did the construction, you managed the construction project as well?

• 18:36Speaker 04

  No, at that, at that point, it was Wallace and Smith and the Housing Authority essentially managing everything.

• 18:41Speaker 03

  That's another familiar name to us too. I've heard that name before. Yeah. They kind of worked on the Woolworths.

• 18:47Speaker 04

  You guys know, you know, know a thing or two about Wallace and Smith?

• 18:49Speaker 03

  A little bit, just a little bit. Josh Layton.

• 18:54Speaker 03

  Josh Layton has managed our project here at the Woolworths with his team, Dan Aguilar and Philip Leviser. They've done an amazing job.

• 19:01Speaker 04

  Oh, yeah.

• 19:02Speaker 03

  Just a great local company.

• 19:03Speaker 04

  Yeah, absolutely. And, and they did great things for our project. And, and our project was amazing for me because it was kind of like a paid internship, if you will, you know, we got paid as developers.

• 19:15Speaker 03

  I see.

• 19:16Speaker 04

  It took six years to do, so that's why I call it a paid internship. But it taught me a lot about the whole process of development. And it also taught me that I wanted to do something that involved community benefit and financial benefit. And I wanted to marry those two things when I was choosing to move forward in any future development projects.

• 19:40Speaker 03

  Yeah, so, so, so that's 2012, but I know you've been busy.

• 19:43Speaker 04

  Yeah.

• 19:44Speaker 03

  You've been busy. You've, you've done a bunch of stuff downtown. What's, what's the latest in downtown?

• 19:49Speaker 04

  So the latest right now, we have a facade grant that we received from the city. And we're in the process of beginning that project. And that's going to be completed by the end of 26, so this year.

• 20:01Speaker 03

  Can you share the location?

• 20:02Speaker 04

  Yeah, it's the block on 19th Street North between N Street and O Street. And so you'll.

• 20:11Speaker 03

  That's where the.

• 20:12Speaker 04

  Where Hoagies and Killer Poki and Bottle Shock is.

• 20:16Speaker 03

  Killer Poki is, that's a great name for that place. I don't know if you've been there, Steven. I gotta take you there, man.

• 20:23Speaker 04

  Yeah.

• 20:23Speaker 03

  You've been hiding in the rock, you gotta come with me to Killer Poki. It's really, really good.

• 20:27Speaker 04

  Yeah, I mean, honestly, for me, it's arguably the best Poki in town. I'm a little biased since my office is upstairs.

• 20:36Speaker 00

  So you smell it all day.

• 20:38Speaker 04

  I sure do.

• 20:39Speaker 00

  When I get here, I smell the chili. I'm like, oh my god.

• 20:41Speaker 04

  Yeah.

• 20:42Speaker 03

  It's just their options of the fish.

• 20:44Speaker 04

  Yes.

• 20:44Speaker 03

  And flavors and all that. And when I used to work downtown at Mission, I used to go and walk there, myself, Scott Black and Steven and Kevin try it all the time.

• 20:54Speaker 04

  Yep.

• 20:55Speaker 03

  It was, it was an amazing place. We gotta go there, Steven.

• 20:58Speaker 04

  It's family run too, which is great.

• 21:00Speaker 00

  I'm always up for food.

• 21:01Speaker 03

  Can I switch from my hot dog that you owe me to a pokeball?

• 21:04Speaker 00

  Sure.

• 21:04Speaker 03

  Okay, great.

• 21:05Speaker 04

  They have chicken options too, by the way, and shrimp, and you can do all kinds of stuff, not just, you know, raw fish.

• 21:11Speaker 03

  So you're redoing the facade?

• 21:12Speaker 04

  Yes.

• 21:13Speaker 03

  Do you see that as a sign for downtown now that the world works, you're doing this, there's a bunch of other residential stuff coming down to or being built in downtown? Do you see this as a positive thing for downtown? Do you see this continuing to happen in the near future and the long future?

• 21:32Speaker 04

  Absolutely.

• 21:35Speaker 04

  You know, yes, it's a sign, but I think more importantly, it's intentional. And all of us who are revitalizing and making efforts downtown, we're all being intentional about what we're doing and we're putting focus on a desire to make our community and our city better. And downtown is very important to the lifeblood of a city.

• 22:01Speaker 03

  So with, with, me personally, I've, I've been down, I've worked downtown most of my professional life and I like it. We have the Haberfield Building. We have the building where the old gentleman used to be. We have a bunch of buildings downtown. Do you see like any movement on any of this? Can you share any?

• 22:20Speaker 04

  Yeah, I mean, you know, from our own projects, we, we like buying existing buildings and giving them life. And I think a great example would be Mucremery.

• 22:31Speaker 03

  Yeah.

• 22:32Speaker 04

  Mucremery came in and they redeveloped that building. We helped them do that. But they ultimately own their own building now.

• 22:40Speaker 03

  Good for them.

• 22:41Speaker 04

  And they put life back into a building that maybe wasn't quite there. But man, if you think about it, the New China Cafe from the 1920s was a really special building. You don't have a building like that anywhere in Bakersfield. And I think there's a lot of examples of each buildings like that in downtown.

• 23:01Speaker 03

  I would, I would agree and I would, and I encourage, I mean, thank you for what you're doing downtown. And I know it's not easy because the cost of rebuilding sometimes does not make economic sense. People that take that step, truly, truly care. And I'm biased, of course, to word shared and Emily, but also I'm hearing your story because it's easy to just race to the ground and rebuild. That's a lot cheaper. But also, it's a lot less headache because you don't need to deal with old electrical and old plumbing and this and that, right?

• 23:36Speaker 04

  Yes.

• 23:36Speaker 03

  Which we sometimes faced here in the world where when we moved, like, everything is brand new within the building, but the connection between us and the city, well, we gotta do something about this too.

• 23:48Speaker 04

  That's right. It's a, it's a bit of a mixed bag when you get into an existing building. And, you know, that's where creativity comes into play. And not only in how the architecture works and how the function and the layout design is, but also in how you finance it and what you do to be able to make it all work.

• 24:09Speaker 03

  So finance, and you just triggered me now because of my years in that financing. I want to talk about that, Stephen, when we come back from the break.

• 24:17Speaker 00

  Are you curious to learn more about how you can be money wise? Check out the Money Wise website at MoneyWiseGuys.com to get more info.

• 24:47Speaker 03

  Wow. Welcome back to the Money Wise Show. I'm Sammy Abiao here with Stephen Nicholas, joined here by Tomas del Toro Diaz. Tomas, this is music too, huh?

• 24:54Speaker 04

  Yes, sir.

• 24:55Speaker 03

  That's, I dig it.

• 24:57Speaker 04

  Thank you.

• 24:58Speaker 03

  Yeah, I can get behind this.

• 24:59Speaker 04

  I'm certainly behind it.

• 25:03Speaker 03

  Good one, very good one. We started talking about financing before we went on break, especially about special projects in general, especially by buying older buildings and doing a construction budget without demolishing might sometimes not make a bank loan feasible. You know, between a construction cost versus the actual value, final value of the building before it stabilizes. So what other avenues do you use to get financing for things like these?

• 25:36Speaker 04

  Yeah, it kind of starts with a vision, you know. Whenever you buy a building, you don't want to kind of buy it blindly. You want to focus on what you're going to do with it. And I think a large part of that is seeing what's not there. And if you can see what's not there, then there's a selling point to that building. And although a bank may not enter in on the forefront, it doesn't mean they can't on the back end. And knowing that, you know, you go to a bank, you test the waters with the bank. And if they say, yeah, we could do it, great. You might have to spend a little money to find out that answer. But if you, if they say no, well, then you got to be creative.

• 26:20Speaker 04

  And so some ways we've done that is using hard money loans, for example.

• 26:25Speaker 03

  So hard money loans, we got a lot of questions about financing, you know, other than banks. When you say hard money loans, these are loans that carry a little bit higher interest rates, of course.

• 26:36Speaker 04

  Yes, sir.

• 26:37Speaker 03

  Some upfront fees to the tune of about 4% at times, maybe even more.

• 26:41Speaker 04

  Yes.

• 26:41Speaker 03

  If your risk profile is a little bit high.

• 26:45Speaker 04

  Right.

• 26:46Speaker 03

  Right?

• 26:46Speaker 04

  Yeah, absolutely. Hard money loans are actually how I got started in real estate. But to give you a general concept, you know, usually it's between 10 to 13% interest. Amortized over 25 years with typically, which means, you know, it's the payment is lower and taken over 25 years to lower that payment. But it also means your principal is not reducing as quickly. It's not accelerating as fast and it's mostly interest in the beginning years. And then there's typically a balloon of, you know, three to five years typically on depending on the product. And that balloon means you have to pay off the principal balance at the end of that term.

• 27:31Speaker 03

  That's what you meant earlier by the bank comes in potentially at the end of the bank. Now, now, do they carry preparing penalties sometime? I mean, to my knowledge, they don't because they don't encourage you to pay to get.

• 27:44Speaker 04

  I think a bank typically takes their fee upfront and and that's usually in the form of points, that four percent you were talking about. And on the interest side, and usually the way hard money lenders do it is they get a percentage of that interest they're charging. And then the client, whoever's lending the money against the property typically makes the rest. And then there's it's secured by the real estate at a very aggressive loan to value, which is usually around thirty five percent.

• 28:13Speaker 03

  Wow.

• 28:14Speaker 04

  Or, excuse me, seventy, sixty five percent, thirty five percent down.

• 28:17Speaker 03

  So you put the thirty five percent down, you get an amortized loan over twenty, twenty five years with a four percent fee.

• 28:23Speaker 04

  Yes.

• 28:24Speaker 03

  Ten to twelve, thirteen percent interest, and you have a balloon payment in three years.

• 28:28Speaker 04

  Exactly.

• 28:29Speaker 03

  And the bank and the bank can come in at that point and pay off.

• 28:32Speaker 04

  Right.

• 28:32Speaker 03

  The hard money lender and just take over.

• 28:35Speaker 04

  Yeah, yeah, it's it's a it's aggressive for anybody to use a hard money loan.

• 28:41Speaker 03

  Yeah, and and in my past life, we used it a lot for special purpose properties, a lot of hotel owners, because they reach a certain level of debt with a certain bank or banks. Banks at that point don't wanna take.

• 28:54Speaker 04

  Right.

• 28:54Speaker 03

  So they'll just go, let me just get a hard or gas stations, special, another special purpose property. Or sometimes people that are just starting, they don't have the credit, they don't have the the balance sheet to back a special project.

• 29:08Speaker 04

  Correct.

• 29:09Speaker 03

  So they they tend to go into the hard money loans and and and I I banked a couple of people that did those and they do well for themselves.

• 29:16Speaker 04

  Yeah, I mean, I always tell people the story, you know, I walked into Tri-County's bank and the the head credit administrator asked me, well, you you wanna buy real estate? You don't have any experience, you know? And he kind of laughed at me. And, you know, I might have had the credit and maybe I had a little bit of capital, not a whole lot, but he's like, I don't know how you're gonna do this, you know? Go go look somewhere else.

• 29:40Speaker 03

  Yeah.

• 29:41Speaker 04

  And that's how that's how I got to hard money. And hard money gave me the opportunity just to use my credit to be able to buy an asset, rent it out and then refinance it later.

• 29:52Speaker 03

  So go fast forward to just these properties that you sometimes buy rehab and go back to a bank. What has been your experience, especially in the downtown area where you specialize or where you have you do a lot about office buildings in general? Seems like or whatever research I do, office vacancies high. Is that true? Is that the case?

• 30:15Speaker 04

  Yeah, I believe so. It depends on the size of office, I think is really what it boils down to. Office has been was pretty stable back in the day. I think when the pandemic happened, that stability changed completely. People, you know, went remote and now less people are going into an office. Although there is a culture shift again, I think that's happening where in person seems to make more sense for an efficiency of a company.

• 30:44Speaker 03

  Yeah, we we've experienced that when I was working for the bank, but here at Money Wise, we I would say, Stephen, you were here during COVID. I mean, the difference between being here next to somebody versus remote. I just I love being in the office personally, even during COVID. I never left the office. I always was in the office.

• 31:03Speaker 04

  Yeah.

• 31:03Speaker 00

  I personally, I mean, with the type of work I do, I can do it anywhere. But I can also see there was days where I needed to get out of that house. And, you know, it was it was a great thing. Once we can all be back because there's a lot of stuff that we couldn't do when we weren't at the office.

• 31:24Speaker 03

  Now, if I had your skill set, Stephen, I'll be doing this stuff from Morocco, dude. I will not be there.

• 31:28Speaker 00

  Don't tease me with a good time. I mean.

• 31:33Speaker 03

  No, I mean, seriously, it's it's but that's that's what you're describing is correct and it's I don't I think it's true not just for Bakersfield, but for.

• 31:42Speaker 04

  Yeah, I think on a larger scale, when you think about larger cities like New York, LA, San Francisco, you know, they have these huge office complexes. And those have been depressed for a long time since the pandemic. And you see developers converting those buildings into housing, or trying to, or find other creative uses to be able to subset them out.

• 32:05Speaker 03

  You would think that with all the shortage we have in housing, housing would make sense, Tomas. Does it make sense? Does it make financial sense in your experience?

• 32:14Speaker 04

  When you convert a specific use building into housing, you're now adding water, but this is one example. You're adding water to each and every room that you're creating.

• 32:26Speaker 03

  Yep.

• 32:27Speaker 04

  For an office, you don't have the water running there already. You don't have sewer running there. Then you have to size the ACs according to the housing use and meet green standards, which is typically, you know, green books and

• 32:45Speaker 04

  green energy stamps, I forget the term, but anyway, you have, you're converting, just if you have a 60-unit office complex and you want to make 30 to, you know, 45 units, you literally have to put infrastructure inside of a shell, a skeleton of a building to make that happen.

• 33:04Speaker 03

  Plumbing for both the kitchen, the bathrooms for each unit versus just one common bathroom maybe per floor.

• 33:10Speaker 04

  That's right.

• 33:10Speaker 03

  If you're an office building, or maybe two, if you have a large office.

• 33:14Speaker 04

  That's right. And then if you have housing standards like in California that are very strict, you also have to abide by certain things to make that happen. So I don't think it's necessarily feasible unless there's a public-private partnership that happens, or you have some kind of inclusionary housing where you have a mix of for-profit development and nonprofit development. I think that that could work, except that affordable housing also tends to be more costly because you're working at prevailing wage. And that's usually about a thirty to thirty-five percent increase in labor cost against the project. So then it's about figuring out.

• 33:52Speaker 03

  Yeah, I forgot about the prevailing wages for for for, yeah, because that's a public project, basically.

• 33:56Speaker 04

  Exactly, yep.

• 33:57Speaker 03

  Yeah, that makes that makes sense. Nothing against prevailing wages. I've dealt with that in the past.

• 34:02Speaker 04

  No, absolutely.

• 34:03Speaker 03

  I've got the I've got I spoke my mind one time about prevailing wages and I got the union picketing in front of the bank I used to work for. I'm like, this is the last time I would do this.

• 34:16Speaker 04

  No, you want to be friends with the union, for sure.

• 34:18Speaker 03

  That's right, that's right. And I've I've been, I've been.

• 34:23Speaker 03

  Construction cost, I mean, you're you're in this, you do it every day.

• 34:26Speaker 04

  Yeah.

• 34:27Speaker 03

  Is are they prohibitive? I I I'm hearing that from other developers, certainly here in this building. We had, you know, some some surprises.

• 34:35Speaker 04

  Yeah.

• 34:36Speaker 03

  Wallace and Smith have done a very amazing job in managing through all of that. So tell me a little bit more about construction costs and and and what it does to projects.

• 34:46Speaker 04

  Yeah, you know, um, maybe it's like standing on a diving board, you know, at the high dive and you're looking down and you're like, well, I could either do a straight dive, I could do a flip, or I could do a backflip into the pool. And I think most of the time, the costs that are being presented are kind of like a backflip or a flip into the pool. And you have to find a way to dive straight in.

• 35:13Speaker 03

  Yeah.

• 35:14Speaker 04

  And to minimize that cost as much as you can. And that's where your creativity, you know, creativity comes in.

• 35:20Speaker 03

  So I consulted on this project. I said that before I got hired by MoneyWise and Sherrod, I consulted for Sherrod and Emily on the actual loan. I I'm the one who put the loan together with with the with the bank. And my advice to Sherrod and Emily, because husband and wife typically, whenever they do a project, can we move this wall? How about this door? And I told her, under no circumstance, I want you to have any change orders. Or you can minimize those as much as possible. That's how you're gonna make this thing pencil eventually at the end, and we're gonna, we're gonna save some money. And he took that, man. I'm talk, talk about remembering what I said from my consulting days. And Sherrod is like, man, I remember that talk. You were like drilling that in my brain. No change orders, no change orders. But we still had, I mean,

• 36:04Speaker 04

  I was gonna say, what'd you learn? You're bound to have them.

• 36:07Speaker 03

  That's right. It's 1950 building, right? With, with 1950 rules and plans and permits and whatever was allowed back then is no longer allowed.

• 36:17Speaker 04

  That's right.

• 36:18Speaker 03

  So we just have to, to, to, to go with the flow. And after you invest that much, that, you know what? Let's finish, let's finish and get, get in. And we have an amazing building. At the end of the day, I'm super, super happy with what we've created here.

• 36:31Speaker 04

  Yeah, I think in any construction project that you embark upon, you really have to be aware that, you know, you're gonna have upfront costs that are gonna be more than you expect in the beginning.

• 36:43Speaker 03

  Yeah.

• 36:44Speaker 04

  In the middle of construction, you're gonna have costs that you're not expected to have.

• 36:49Speaker 03

  Yes, right.

• 36:50Speaker 04

  And at the end, you're also gonna have costs

• 36:52Speaker 03

  That's right.

• 36:53Speaker 04

  that you don't expect.

• 36:54Speaker 03

  That's right. And, and today, I learned that today. I mean, we moved in, what, three months ago, four months ago? And there's a couple of things here and there. So I, I called Philip from Wallace and Smith. I'm like, hey, can you come back? I got something to, to, to show you. I wanna take one more break. When we come back, I wanna talk to you about insurance premiums.

• 37:12Speaker 04

  Sounds great.

• 37:14Speaker 00

  An employee with a company-sponsored retirement plan? Do you fully understand how you're invested? And whether or not you are maximizing your retirement plan's options? For more information on a free assessment, contact MoneyWise's 401K specialist, Justin Leland, at 661-847-1000. That's 661-847-1000.

• 37:49Speaker 03

  I think we can make this into a live show at the Woolworths.

• 37:52Speaker 00

  Bring it on.

• 37:54Speaker 03

  That'll be pretty cool, man. I'll definitely buy a ticket for this personally.

• 37:57Speaker 00

  Yeah, cool, man.

• 37:59Speaker 03

  Yeah, I like it. We're back at the Money Wise Show. I'm Sammy Abiyawi with Steve Nicholas, joined by Tomas del Toro Diaz, our guest today.

• 38:08Speaker 00

  I was just gonna say, you know, we can do a whole nother hour if we start diving into music.

• 38:12Speaker 04

  Yeah, we can get there, for sure.

• 38:15Speaker 03

  And even even for a non-artist like me, I really like the the music. It's pretty cool.

• 38:21Speaker 04

  Yeah, we're pretty excited. We're working on a new album, too. It's gonna be.

• 38:24Speaker 03

  You said earlier you almost won a Grammy?

• 38:27Speaker 04

  Yeah, I was recording an audiobook for Carol Burnett, and she was nominated for a Grammy for that audiobook. It was the first time she broke down over a mic about her life story.

• 38:36Speaker 03

  Oh, that's cool, man.

• 38:37Speaker 04

  It's pretty amazing.

• 38:38Speaker 03

  That's cool. Well, I want to talk about insurance, insurance premiums, and what they are doing to real estate, real estate projects, development.

• 38:46Speaker 04

  No, I'm good. See you guys later.

• 38:48Speaker 00

  Scare our guest away.

• 38:51Speaker 03

  No, in my personal experience, I have a couple of, I mean, I have a house and I have a couple of rentals, and now we have the Woolworths. It's just been crazy.

• 38:59Speaker 04

  Yeah, it has been. Extreme hikes, you know, 200, 300% increases. It's definitely a hit to your bottom line, because it's supposedly, you know, a fixed cost. But if you are structured appropriately, you can withstand it and keep it going, you know, and which is what we've been doing. We find a way to essentially finance the premiums instead of do one pay upfront.

• 39:29Speaker 03

  Yeah, I looked into that. The finance is at like a nine and a quarter percent.

• 39:32Speaker 04

  It is. It's expensive, for sure. But when you think about your capital, your free capital, you know, what's more important?

• 39:41Speaker 03

  Yeah, no, the free capital, especially for an investor. I mean, your return is in, hopefully, in. Versus what you're paying nine and a quarter percent. I agree with you, but is that a cost that you eventually would pass to your tenant? Would the tenants see an increase if insurance premiums go up?

• 39:58Speaker 04

  Yeah, it, I mean, absolutely. You know, there's different types of leases out there. So there's triple net leases, there's gross leases. And those are kind of like the two sets. We're eventually going to convert to triple net for sure. And that's just

• 40:13Speaker 03

  Makes more sense.

• 40:14Speaker 04

  Necessity, you know, for the use of the building, but we're still aggressive on the rent. So that kind of offsets that cost for the tenant themselves.

• 40:22Speaker 03

  I see.

• 40:23Speaker 04

  And sometimes we might share in the cost with the tenant.

• 40:26Speaker 03

  So aggressive on the rent, is that because of competition or is just because, hey, I, I, I'm, I'm able to cut costs during the construction because of my experience? And now I'm going to pass this on to good tenants that hopefully I have for a long term. Is that your philosophy in investment?

• 40:42Speaker 04

  Yes, yes and no. We're really looking to support the community. And so supporting a business means having a lower fixed cost. And we've done that with Bakersfield Community Theater, with the center, with Central Cali Brewing, with Sonder. The list goes on. All of our tenants, we are really mindful of, you know, how much it costs to operate your business. And if you go to the west side, you're going to pay a lot more money and a lot more money.

• 41:12Speaker 03

  That's correct.

• 41:12Speaker 04

  You better have the volume to survive. And downtown is growing and new and we don't want to choke it up at the source.

• 41:20Speaker 03

  Especially with the revival that's going on.

• 41:22Speaker 04

  That's right. That's right. So, you know, and I go beyond that and I sit down with the tenants and help them through their business needs. Because of my knowledge, but that's just my investment in the community and my investment.

• 41:35Speaker 03

  That's your give back to the community.

• 41:36Speaker 04

  That's right. That's right.

• 41:37Speaker 03

  That's awesome. Is it possible for me to ask you about your big project on downtown that's just coming up hopefully? Or is that still in the The one next to the Bakersfield Museum of Art?

• 41:50Speaker 04

  Yeah, I can kind of hint at it, I guess.

• 41:53Speaker 03

  If not, that's fine.

• 41:53Speaker 04

  No, I don't mind. We purchased the Great American Antiques Building. And that burned down, if you may recall. We were in escrow when it burned down. And we have been working with a team of people that are actually very well versed in the entertainment business. So we have someone who does live productions all over the world for A-listers. And they've got an Emmy and are a couple Emmys and a Grammy and They flew in from Montreal a couple of weeks ago. We toured them around and they're pretty darn interested in our town. But more importantly, they're interested in the history of the town. And so we're hoping to develop something surrounding the sound of Bakersfield.

• 42:36Speaker 04

  And but not just limiting it to country music. We really feel like there's a lot of wonderful musicians here in Bakersfield, which I think your podcast highlighted last week.

• 42:48Speaker 03

  I was, again, I was very surprised, nicely surprised.

• 42:52Speaker 04

  Yeah.

• 42:53Speaker 03

  With the quality of their music. One of the songs I was telling you earlier off air that I was, yeah.

• 43:00Speaker 04

  Absolutely. I mean, so, you know, we want to tap that. And and I think we lost sight of how important the Bakersfield sound is.

• 43:10Speaker 03

  Yeah.

• 43:10Speaker 04

  And was. And we're all still here, so I think let's bring it back, but let's make it better. And let's bring it into the current times that we're living in now.

• 43:23Speaker 03

  That's great.

• 43:25Speaker 03

  We have two more, one question, I think, Stephen, that came, one from about Moo and the location and that's the, it's what 19th?

• 43:33Speaker 04

  Yeah, it's on 18th and Q.

• 43:35Speaker 03

  18th and Q, yeah.

• 43:36Speaker 00

  Yeah, they talked about where the new Moo is. Is it open? And also wanted to try the new Hoagies here in town.

• 43:43Speaker 04

  Yeah, so the address to Moo is 801 18th Street. And they're open and they're cracking and they're busy. So come see them.

• 43:52Speaker 03

  Yeah, I went there and it was so busy I couldn't sit down. I had to come back to the Woolworths and get a burger here.

• 43:56Speaker 04

  Yeah.

• 44:00Speaker 04

  Yeah, and then Hoagies is located at 1004. Uh, 19th Street and that's on the corner of O and 19.

• 44:07Speaker 03

  They have good stuff too.

• 44:09Speaker 04

  Kind of where the whole.

• 44:09Speaker 03

  Been there, Steven?

• 44:10Speaker 00

  I haven't been it here in town.

• 44:12Speaker 03

  Oh, okay.

• 44:13Speaker 04

  Yeah, they're great too. They just had an event actually on Sunday morning. They opened at four fifty-five in the morning for the uh, the America versus Canada hockey game. They opened their, they opened their bar at six AM or something like that.

• 44:28Speaker 00

  That's America, baby.

• 44:29Speaker 03

  I uh, I texted, I texted, we have, we have a Canadian guy working for us, Augie. And I sent him a text that says, I'm sorry. And he read it, but he'd never replied. So this morning I'm like, hey, you didn't reply to my text, man? And he was like, I thought it was just some butt dial. I'm like, oh no, that's, I'm sorry for beating you guys.

• 44:49Speaker 04

  That's great. Yeah, definitely try the new spots there and there's more to come.

• 44:54Speaker 03

  Awesome. Well, thank you very much for being with us today, Tomas. That was awesome. Great conversation.

• 44:58Speaker 04

  Thank you.

• 44:58Speaker 03

  We would love to have you back again. In the meantime, Steven, who do we have tomorrow?

• 45:02Speaker 00

  Tomorrow is the return of Taxman Tuesday with our guy, John Duffield. He'll be in here joining us talking all things taxes. But until then, be smart, be safe, be money wise.

• 45:28Speaker 02

  Securities offered through LPL Financial, member FINRA, SIPC. Investment advisory services offered through LPL Financial. LPL Financial and Money Wise Wealth Management are independently owned and operated.