42 Dennis Hampton II
Wendy Sweet (00:05):
Hello, this is Bill Fairman.
Bill Fairman (00:09):
By the way, as you can tell, it’s early in the morning for me and it takes me awhile to get going even though it’s after nine o’clock it’s still early in the morning.
Bill Fairman (00:18):
So let’s start again. Hi, I’m Bill Fairman with Carolina Capital Management, my lovely sister Wendy Sweet. She’s also my partner. And we’re here with, with our friend Dennis Hampton. He is a builder / developer that we do business with and he’s doing these remarkably beautiful Charleston style houses in the city of Rock Hill. And for those of you who are not familiar with Rock Hill, South Carolina is a bedroom community of Charlotte. It’s a beautiful community. We love it. Our office is based here and it’s being redeveloped all around the downtown area and making it nice and walkable. The city has done a marvelous job promoting the development of the downtown area. These homes are within walking distance of this beautiful park called Fountain Park. And you’re going to see pictures of Fountain Park and the house throughout this interview.
Wendy Sweet (01:14):
Right.We’ll poke it in.
Bill Fairman (01:16):
That’s right. So, what was the story Dennis? What? Oh, I’m sorry. Let me back up. By the way, share, like, subscribe.
Wendy Sweet (01:25):
And all those good things. Check us out on Snap A Chat. That’s what I always say.
Bill Fairman (01:32):
Dennis, how did you get started in this business in the first place?
Dennis Hampton (01:36):
Well I have a trades back background. Started off actually. Getting an associates degree in Mechanical HVC and going, going through trade programs, apprenticeships for plumbing pipe fitting HVC. I’ve worked for 10 years doing commercial industrial HVC service work and on this side I would always build my own homes. And so retirement, just continue that process of construction and building and it led into me starting my own business as a general contractor.
Wendy Sweet (02:11):
Wow! Knowing all that kind of makes your traits a little nervous I’m sure. Cause now, you really know what to, he really know what to check and how to stay on top of them. That’s awesome.
Bill Fairman (02:21):
By the way, just to add onto this, I know most, most young people are getting pushed to go to four year colleges because you’re not worth a darn unless you’ve gone to a four year school.
Wendy Sweet (02:31):
And come out with that $200,000 debt.
Bill Fairman (02:34):
I remember during the crash you couldn’t even apply for a job as a receptionist unless you had a four year degree. Right. The point that I’m trying to make is if you have any business acumen at all and you go to any kind of a trade school and learn a trade, then number one you can always make money at that trade, but if you have business acumen as well, it won’t be very long before you own the company or your own company. So keep that in mind.
Wendy Sweet (03:01):
Right, right. Hint, City View Builders. Right? Correct. Awesome.
Bill Fairman (03:06):
So when did you get your GC license?
Dennis Hampton (03:08):
Bill Fairman (03:10):
Okay. Right when we were thinking everything was going to go smoothly.
Wendy Sweet (03:16):
And it did for a few years. Right?
Bill Fairman (03:17):
Well that, you know, markets are secular. Typically, and Wendy and I had been in the mortgage business for, I’m not going to say how many years because then it really puts an age on us, but 20 to 30 markets are always going to change. But it’s typically interest rate based and you know, that last crash had nothing to do with interest rates. It just ran out of money.
Wendy Sweet (03:42):
That’s for sure. That’s for sure. So, well what is it that got you into constructing houses? What was your big why? What is it that you were trying to accomplish?
Dennis Hampton (03:53):
Well, I enjoyed building homes. Awesome. So as far as that, that was fairly simple and straight forward. I enjoy the trades, I enjoy construction. I had an opportunity starting around 2004 to start doing the significant rehabs in additions and developments around downtown Charlotte. And around the downtown, uptown area of Charlotte. At the time it was, it was not what we know it to be today, right.
Dennis Hampton (04:24):
As we started to purchase homes and renovate them and sell them, it actually led to more individuals offering properties to us at the time. And so we, our business grew from there. We were able to acquire rehab, resale and develop. As you all mentioned, the market, you know, changed, but we had a fairly strong market through the end of 2008 in the Charlotte region.
Wendy Sweet (04:52):
Awesome. And so what did you do during that time period when you know, like 2008 till about what, 10 or 11 what did you do? How did you survive?
Dennis Hampton (05:02):
It was very, very difficult. In 2009 actually I had the opportunity and privilege to work as a Charlotte fireman.
Wendy Sweet (05:11):
Oh, awesome. Thank you.
Dennis Hampton (05:13):
And so I was able to do that. The schedule was such, where you work 10, 24 hour shifts. So we maintained and rebuild our business. Obviously workload had changed just because there was little to no construction. Right. For nine years. Right.
Bill Fairman (05:28):
A lot of people completely gone out of that industry and that’s why we have shortages of labor now, correct? Yes. You know, they just said, Hey, what’s really funny is as soon as the crash happened, I finally started seeing trade schools advertising for construction of education. I’m going a little late on that boat, you know.
Wendy Sweet (05:52):
That’s for sure. So, so you do rehabs and new construction, which do like better?
Dennis Hampton (06:00):
New construction is easier, but I enjoy rehabs, especially old beautiful historic homes in that you can actually came back to life. So they, they each have their own reward, I’ll put it that way.
Wendy Sweet (06:12):
Right now, when you’re building a home, are you doing custom homes or are you, spec homes? What’s your, what’s your main gig on that?
Dennis Hampton (06:22):
What we do probably falls in the category of semi-custom. It’s not in the category of track homes. Well, but nor is it the high end custom homes that, that’s a different market itself. For our price point, we’ve, we’ve developed homes anywhere from 200 and has sold as high as 600,000. So, so we’re, we’re about at that price point.
Wendy Sweet (06:43):
And then you say semi-custom, that means you kind of build it and they come as you’re building it and, and pick little things out. I would assume that’s the hardest thing to do.
Dennis Hampton (06:55):
Yes. Everyone thinks they know what they want until they have to make that decision.
Wendy Sweet (07:01):
That’s right. And it’s door number one or two or three, Oh no, no, what am I going to do? That’s right. And then, and then two, you know, they’ll say, Hey, I want this wall this way. And then you know, they can back out at any time. And then you’ve created something, some kind of niche for them that’s different. Correct. That and now, now you’ve got to go to sell that to somebody else. Boy, is that tough? Correct. How do you handle that?
Dennis Hampton (07:28):
Well, you do your best you can in reference to when a client makes significant changes, then you have to have them put a deposit down, help secure those investments. I mean standard selections are, are different obviously, but, but they, they typically, we try to steer our clients in a way where make decisions that still allow them to have some personal touches while also balancing what everyone wants. And that’s something that’s going to fit their budget.
Wendy Sweet (07:57):
Right. And you’ve brought budget and financing up a couple of times. So, what are some of the ways that your financing the, the deals that you’re doing, how do you go about that? I, you know, you’ve used us for a deal or two and we’re thrilled. Thank you. But what is it that, what, what’s your preference? What are the things that you’re doing to get things financed?
Dennis Hampton (08:20):
So over the years I’ve had a chance to use a lot of different financing. I’ve used just conventional bank financing where there’s a commercial loan from a lender that does a typical 12 month interest only construction.
Wendy Sweet (08:33):
Are they easy?
Dennis Hampton (08:34):
I wouldn’t say easy is the right term. They all come with a level of application. Paperwork is a process to get them closed.
Wendy Sweet (08:45):
Lots of red tag.
Bill Fairman (08:46):
It is, it is. And over the years I’ve seen all that change. So I work pre, yeah, 2009 yeah, yeah, pre recession and after the recession. So it’s a different environment today which can add another layer of complications.
Wendy Sweet (09:05):
And what are some of the other ways that you do?
Dennis Hampton (09:08):
The other ways is partnerships with investors silently.
Wendy Sweet (09:11):
You tell me how that works.
Dennis Hampton (09:13):
Typically an investor will come in and partner with me and they will fund a project that we have with either a certain percentage on the money that they lend us or splitting the profits at the end. It depends on the relationship that we do.
Wendy Sweet (09:27):
Now are they having a say in what you build and how you build that?
Dennis Hampton (09:30):
Typically they don’t want to have really any part in it. As long as it’s profitable and meet certain timelines. They’re usually happy. Now with that also can come as a builder. Slash. Developer, you may lose more of your, your profits. You know.
Wendy Sweet (09:48):
But that’s just like paying interest. Right? You’re just paying it in a different way. Correct. That’s awesome.
Dennis Hampton (09:56):
So each has its advantages. Disadvantages. One thing in particular I’ve enjoyed working with your company is that the process has been relatively smooth and seamless on time.
Bill Fairman (10:10):
Awesome. Time is important. So have you done any builds for people that on their land and they, they’ve gotten the financing themselves and you’re just drag to this building?
Dennis Hampton (10:24):
I do. And that’s why in a lot of ways working with your company is so important to our company. A lot of homeowners today, they may easily qualify for the purchase of a home. They may even have gone as far as, maybe securing a lot, but a lot of buyers today are not in a position to secure a construction loan. The bank standards have changed over the years. We’re now, regardless of how much equity is in it, they’re looking for 10% down. So on a third, $300,000 bill, even though they may have already purchased their land, they may still have to come out of pocket the additional funds.
Bill Fairman (11:08):
That’s interesting. I know when we had our house built back, you know, turn of the century, I did the same thing. I already owned the lot and I signed a lot over to the builder. He got the construction loan and then I ended up with a purchase loan is at the end and use the lot as the down payments. I didn’t have any cash out. So that leads me to my next question. You always start off as really good friends in the beginning. Do you end these friends, when the house is finished?
Dennis Hampton (11:43):
Hopefully. Oh yeah. Yeah, it is. It’s a very stressful private process. And that’s why for, for builders, builders are really nervous about taking additional risks after any builder that went through 2008, 2009 sure. They’re, they’re nervous about taking that risk because a typical construction loan is just that. It’s just temporary financing six to 12 months interest only, which means that the builder, if the project isn’t sold, has to find a way, a path to refinancing or attaching permanent financing to it. And so because of that, you know, builders are nervous, they are somewhat hesitant because of that, even though it’s a very strong market,
Bill Fairman (12:27):
well, markets can change at any time. You say you go up to 600,000. I know there’s, has been some flatness in the above 500 market in Charlotte, but you know, 300 or under, they’re lining up for them. That’s right. And that’s liable to change it at some point. But the thing about working with investors, partnerships, private money, those types of relationships are going to work with you as the market cycles change in the middle of a build, right, versus your more traditional bank financing because they don’t really have the bandwidth to do anything different other than just take it back. Correct. Correct. So that’s why I, in our own stuff we always push towards, even if it’s a private lender, the thing is private lenders going to be less expensive, but they don’t have infinitely deep pockets. So it’s hard to scale.
Dennis Hampton (13:28):
That’s right. If that’s all you’re using as well. That’s right.
Wendy Sweet (13:30):
You know, before the, we started rolling the cameras, we talked a little bit about the market and the Charleston style houses that you’re building in Rock Hill and how the buyers kind of surprised you. Can you talk a little bit about that?
Dennis Hampton (13:47):
Yeah. The buyers that are lining up. We anticipated that it would be a lot of millennials, young professionals, couples, maybe ones considering having a family or just starting a family who are now tired of paying maybe 1500 a month to rent an apartment who want to transition over to ownership where they can do at the same, same relative calls. And while we do have interests from that category, the interest that’s been surprising is how many are 50 and older and are really looking at our homes as some with downsides.
Wendy Sweet (14:22):
Yeah. Yeah. And their complaint about the master. So there’s plant masters down in some plans, but in other plans they’re upstairs and…
Dennis Hampton (14:32):
Not everyone likes stairs.
Wendy Sweet (14:33):
That’s right. I don’t, I don’t like stairs, but the fact that you can put an elevator in for 10 to 15,000, you know, you think it’s going to cost so much, but that’s a great option.
Bill Fairman (14:44):
Well, I was going to mention, now that I’ve thought about it, it’s probably not as surprising as you would think about the downsizing because let’s face it, it’s not cost-effective for most track builders to build affordable homes. There’s not a lot of margin. It just takes one little mistake. And you said they’re already nervous. Think about doing a whole subdivision. There’s a lot at risk when you’re doing that and if the market shifts and then you’re kind of stuck and if you don’t have any margin to work with, you know it’s even tougher. So I’m assuming that the 50 somethings are having a hard time finding new builds that are going to be at that price point.
Dennis Hampton (15:28):
It’s very difficult to, for it, in my opinion, any builder track home or semi-custom to actually be profitable building anything less than 250 yeah, it’s very difficult. Yeah.
Bill Fairman (15:44):
So you have to be more of a, you have to have a fix and flip investor mentality when you’re going out searching for the lots that you’re going to build on. Correct. And have to get them at the right price in order to help maximize your margins on those
Wendy Sweet (16:01):
And then location means everything.
Dennis Hampton (16:03):
A location, and just as important as that is time. Right. So if I do find something that works and I need to secure financing with it, I need to be able to approach a partner quickly and say, we have X, Y, Z time. Let’s see, we can move forward with it.
Bill Fairman (16:19):
Once again, you’re not getting that with your large financial institutions. They move at the speed of snail. It’s difficult. Now you get great rates with them and if you end up refinancing along the way, if that’s possible, because most of them don’t like refinancing something in the middle of a build in the first place. But yeah, most, most people go towards the, the partnerships or the private money really based on speed and being able to take care of takes it down a deal when you can because all of us across the country suffering from an inventory shortage.
Wendy Sweet (16:54):
Yeah. And for builders, we’ve been doing a loan to at least let you do the take down to get a hold of that lot or hold of that house that you’re going to knock down and hold onto it until you get your permitting and zoning and all of that stuff in order. And then we’ll modify the loan to include the build cost to, to, to try and save you some money from having to throw it all out at the beginning. So we do what we can to, to work with you.
Bill Fairman (17:20):
So are you considering doing any multifamily stuff? Maybe condos or…
Dennis Hampton (17:25):
I like to, I’ve had as we were talking earlier about the 50 and older and they’re interested in flats, right? So…
Bill Fairman (17:35):
Yeah, no need for an elevator. Yeah, they’re great. Cheers.
Dennis Hampton (17:41):
And so, and so the key to doing it is being able to again, find land and that, that works for you to, that, that level of development.
Bill Fairman (17:51):
And I think, and, most people know this already but I’ll just reiterate it, it’s a lot easier to find the affordable land in the bedroom communities around the major cities. And it is to find them in the, in the major cities. It’s funny, when we had our home build, everybody was moving out to the suburbs. Then of course, as soon as you get comfortable, everybody went back to that.
Bill Fairman and Wendy Sweet (18:22):
Thank you so much for joining us again. Really had an awesome time. I knew Wendy dis as well. We do. So if you like what you heard and you want to see more. What do we do? You can hit one of these. I feel like the hippy dippy weather girl, because we’ve got a green screen going on so we could have a cold front moving in from Virginia or… Right? Come on.That’s funny I don’t care who you are. So you can pick any of these other shows. We have some here. We have some here. We have some here. Just pick one. Test it out, right?. Also subscribe like, and our website is easy. That’d be a w. w. w. w. w. That’s a lot of W’s.
Bill Fairman (19:13):
CarolinaHardMoney.com. Tell all your friends.