Born and raised in Lakewood, California, Craig Hill attended Lakewood High, Long Beach City College, and received his Bachelor of Science degree from California State University, Long Beach. While attending CSULB, he followed his love of baseball by making his profession buying and selling baseball cards.
In 1984, Craig took his first job in the lending industry working for Vanguard Mortgage as a loan officer and loan manager. While employed there, he met and began funding REO purchases with Bruce Norris. When Bruce officially started The Norris Group in 1994, Craig came aboard as both loan officer and investment manager and never looked back. Since that time, they have arranged hundreds of millions worth of investor loans.
Recently Craig served several years as vice chairman for Exbound, a nonprofit organization designed to help developmentally disabled adults increase their social interaction. Craig enjoys sports and spending time with his wife Laura and daughter Caitlin.
In this episode:
- Craig Hill shares key guidelines for evaluating trust deed investments.
- Why multiple sources are crucial for accurate property value assessment
- Understanding the Trust Deed Process
- Essential criteria for trust deed investments in California.
- A look at the company’s history and its approach to changing market conditions.
- Balancing Fair Rates – The importance of offering competitive terms for both borrowers and investors.
- How to apply and get started with trust deed investing.
Episode:
Narrator  Welcome to The Norris Group real estate podcast, a show committed to bringing you insights from thought leaders shaping the real estate industry. In each episode, we’ll dive into conversations with industry experts and local insiders, all aimed at helping you thrive in an ever-changing real estate market. continuing the legacy that Bruce Norris created, sharing valuable knowledge, and empowering you on your real estate journey. Whether you’re a seasoned pro or a newcomer, this is your go-to source for insider tips, market trends and success strategies. Here’s your host, Craig Evans.
Craig Evans  Hey everybody. Thanks so much for coming back this week. Get ready for part two with Craig Hill on trust deed investing. Well, so, what do you think are the top three criteria that you consider when you’re looking to approve or after again, in terms…
Craig Hill  Okay. Well, I think one is the the property itself, obviously. And it’s not just, you know, it doesn’t have to be say, like, you know, a stucco house in Irvine. That doesn’t make it say better. What I really look for is, like conformity of the product and how it is with regards to the neighborhood, because if you have something you know that, like, say, Lakewood, where I grew up, you know, Lakewood has all these little 1000 square foot houses.
Craig Evans  Yep.
Craig Hill  Well, you know what? If you’re going to buy a house there, you’re probably going to have ample comps that are exactly like it.
Craig Evans  Right.
Craig Hill  So, you’re really we talked about those basic numbers earlier. The biggest mistake is when you can’t get an accurate After Repaired Value, because what you’re looking at is unique, like, maybe everything is, you know, stucco in Irvine, you know, 2500 square feet on a quarter acre, let’s say.
Craig Evans  Yep.
Craig Hill  Well, now you have a property in a similar, you know, not too far away, but it’s on an acre and it’s older. You don’t know what that’s worth.
Craig Evans  Right.
Craig Hill  You just really don’t know what that property is worth. So number one is just trying to find, like, a property that you’re pretty sure what the value is. I think that’s so helpful to both sides. Probably number two, is the amount of liquid cash. And I know for people just starting out, that’s kind of like, it seems hard to get to that point, but you really do need to have the cash, because so often there’s going to be something that comes up that you don’t prepare for, and you just want to make sure you have ample cash so that if the property takes more than a year to sell, or whatever the case may be. Because, I think, geez, it’s over 6000 maybe 7000 loans that I’ve done with The Norris Group.
Craig Evans  Yep.
Craig Hill  You know what? Not every one of those goes like they think it’s going to go.
Craig Evans  Sure.
Craig Hill  So, you have to be prepared, you know, to do that. You can’t be relying on that one deal to pay your bills. Like, if that’s the case, then you need to bring on a partner, you know, somebody that can take that load off you, but you’re willing to do all the work and do all the learning. So, I do think it’s important to have cash, and then equally important is going to be, say, experience and credit, kind of, those are equal. That’s two other things. But credit, we’re not really looking for a credit score, but we’re looking for, but really, I compare two different scenarios. One is somebody that has like, a 580 credit score, and they got 300 grand in the bank.
Craig Evans Yeah.
Craig Hill  Because they already went through their crisis, and now they’ve come out of the other end, you know.
Craig Evans  Right.
Craig Hill  Now, the other one has like, 740 and they have 100 grand worth of credit cards, and they’re up 98 is what’s barred. See, they’re one purchase away from being the other guy five years ago.
Craig Evans  Right.
Craig Hill  So, you kind of have to look at that, you know, sometimes score is deceptive. You know, obviously, if somebody has acting judgments, bank, you know, things like that, you can’t do it. But you know you tax liens, but you know, you just try to look at it once again. As we talk, we’ve been talking, it’s more common sense to do it. And then I think any experience is good for somebody new. Maybe they’re a realtor, so that kind of gives them one, you know, one aspect of the, you know, the repairs and etc, the pricing. Maybe they’re a contractor. Maybe they have a family member, that’s one of those. So all those things are helpful to get, you know, to get somebody make it just a more likelihood of success, you know. One time, but just a quick story on that, I had a guy, and I was asking him my three questions, right? And I said, ‘Well, you know, what do you think you can sell it for? What do you think the repairs are?’ And I said, ‘Well, where’d you get your information?’ And he said, ‘From the selling agent.’ I said, ‘Well, he’s the guy making the Commission on it, right?’ You know what I mean?
Craig Evans  Yep.
Craig Hill  But I mean, to me, that was just such a red flag, the guy might have been the most honest guy in the world, but, I mean, you have to have another source beside the guy that’s making money on your buy.
Craig Evans  Exactly.
Craig Hill  So, like I say, so we really do try to help. And then, you know, not to forget, we got so many repetitive borrowers that I’m so thankful for. I mean, I really am thankful because they like the service we provide, the speed at which we work, and I think just the honesty with how we work with them, you know. So, you know, it’s not only new people, but we have a large following of, like, investors. And a lot of times what happens Craig is they outgrow us.
Craig Evans  Yep.
Craig Hill  You know, like, you know, I use Mike. I’ll be Oh, Mike, doesn’t. Well, just say Mike, so you know, but you know, a guy like Mike, he outgrows the need for, you know, good investors outgrow the need for this. But you know, you’re happy to see that too, because you know, you know, you got the next guy that you’re bringing up that could turn into that next, you know, really good client so well.
Craig Evans  And I know what’s interesting is we’ve had a lot of investors that have grown, you know, from being borrowers, with us. And you know now they’re growing to where there’s different paper out there and there’s different lending forms that are more affordable for them. Understand that completely. You know, they’ve grown their portfolio, to be able to afford that and handle that and do that. And then what’s interesting is they still believe in this form, and so they’re coming back now, and they’re investors with us, so they’re investing in other people’s trustees, you know, and that’s cool to see. So, in that before, before we kind of go into the lender side, I want to talk from the lending side of just a minute. But before we do that, you know, do a favor. Walk through kind of, you know, briefly, the mechanics of, you know, from the borrower to The Norris Group, and then from The Norris Group to the lender, you know.
Craig Hill  Okay.
Craig Evans  How that transpires?
Craig Hill  Okay, basically, what the start of the process will be, usually a phone call, but then it leads into them sending in an application. So, we’ll get the application, I’ll do a quick review of it, like, I say, just kind of check the numbers, talk to them, you know, see if it looks like there’s anything on the surface that would prevent it from like, say, moving into the appraisal. So after that, we’ll do the appraisal. So, once we get the appraisal, then we have the real numbers. So, you know, we have the numbers we’re going to work with. So, we get the appraisal, Ron is working on getting escrow and prelim, so we’re just kind of putting together a quick package. We’ll get a credit report on the borrower, so we’re going to run the credit and, you know, we put the package together from the borrower’s position that way. Then for the investor side of it, the process there would be, once we have the appraisal, will kind of send out the appraisal with the numbers that are going to be attached to the deal. So, you know it’s going to be this property, this, this loan amount, this ARV, and usually I tell them now at this point is, you know, realize a lot of people have done hundreds of deals with this, so it’s kind of a real quick process. But for somebody new, let’s say so I always tell them, uh, if it’s somebody new, I don’t want to, like, say, you know, I have to know, like, by, you know, in a half hour. So, usually I’ll try to give them some time. Just give me kind of tentative up, you know. Okay, just in case they want to go look at the property, if they’re in the vicinity, if they, you know, they want to do their own research, what have you sure we’ll send them a copy of the credit report so they have that so you know, that’s something that you. Know, they kind of look at the credit and the property, those are the two things that they look at.
Craig Evans  A lot of our investors are investing in our trust deeds, because a lot of your experience and what you look at and understand how you write your paper, you know.
Craig Hill  Yeah, because the way I kind of look at it, they’re relying on The Norris Group and myself and Rhonda, you know, who looks at the pre lambs and Robin before, you know we’re looking at all that for them.
Craig Evans  Sure.
Craig Hill  So, I do think it simplifies it, because then they’re just looking at the property, which they can kind of see, and then, you know, the credit of the person they’re lending the money to. So, that’s just kind of, those are kind of the two aspects they go with.
Craig Evans  And that’s a benefit, because obviously we don’t, you know the investors that are investing in hard money loans, you know, they got to do their own due diligence. But there’s a big value to understanding that, Hey, if Craig is underwriting and he’s bringing us the paper to invest in and to look at, you know, you’ve already done the due diligence to know what’s the equity to ARV relationship in this scenario, and what’s their cash flow situation? And so you’re not bringing scrub paper, so to speak. I think that brings up a big value there to that investor, you know. So, the the other thing I think is interesting, you know, there’s different requirements for California versus Florida being an investor. You know, if you’re investing, either from California or in California, there’s certain requirements that have to be met. Walk our audience through what that looks like to say, hey, I need to qualify to be a trust deed investor.
Craig Hill  Yeah.
Craig Evans  So what does it look like?
Craig Hill  Yeah. So in California, the guideline is, any one trust deed, can be no more than 10% of your net worth. So, you know, it didn’t used to be that way, but that’s how it has been, maybe the last 10, maybe even longer now, years. So, that’s a little bit, you know, for some people, that’s challenging. Unfortunately for me, you know, for the longest time, I had a lot of my friends that gradually saw what I did, but, you know, a lot of them maybe just didn’t have that much net worth, especially when they were buying, like, a $200,000 trust deed, you know.
Craig Evans  Sure.
Craig Hill  You know, so it is a little bit where you do have to have it, but then, once again, they’re making it where, you know, a trust deed shouldn’t be an investment that you’re really living on it, per se. I know a lot of people kind of feel that like, ‘oh geez, you know, if the payments later. So, you know, geez, you know, I can’t buy bread.’ But, I mean, I, I know the guy’s got like, another 20 grand a month coming in, you know.
Craig Evans  Right.
Craig Hill  So, he can buy bread, you know. But you don’t want to be in the situation where, you know, they truly are waiting on it to live on. So, that’s kind of the general rule of thumb.
Craig Evans  Raising money in anything is always, I mean, it’s, it’s not just an easy snap of the, you know, snap of the hand to speak. I think for trust deeds can sometimes even be a little more difficult. Yes, it’s a one to one relationship, but then their risk aversion, you know, is all focused on that one trust deed into one asset, right?So in, you know, raising money for trust deeds isn’t just as simple as connecting people with money, to people that need money, right? So, I mean, so when you’re looking at it, what makes, aside from, ‘Hey, your net worth has to be 10%’, you know? What do you think makes someone a good trust deed lender candidate?
Craig Hill  Well, I think a general understanding of like, what it i,s like, you know, which takes, say, the scary part out of it, like, you know, some people probably would be better off just to putting it in the savings account, you know, personally, I would have thought that’s me, you know, I know my personality. Going back to, like, when I first met Bruce, my whole thing was like, oh, I want to be a property buyer, you know, this looks like I looked at everything that was involved in that and Bruce, and I was like, man, I just want to invest in trustees. You know what I mean? So I gravitated to that because it was a business I understood, but it was a risk level that I was comfortable.
Craig Evans  Sure.
Craig Hill  And I think maybe that’s it’s for an investor that is, you know, maybe a little risk adverse, but on the other hand, that not to the fact where they don’t want to do anything. So it kind of puts most of the risk is on the person say, if it’s Bruce doing the deal way back when he’s the one that’s, you know, taking the risk.
Craig Evans  So, let’s face it, over the last well, since 2020 you know, COVID hit. And I’m not going to go back to 2008 and what we looked through, through that transference of timing, maybe we’ll go back to a little bit. But the reality is the private lending space, whether it’s first position trust deed, fund lending, things like that space…It’s a good and interesting space, right? 2020, all of a sudden that became a really interesting space based off what was happening in the market and where things were going. What do you see is in the market is helping to dictate what type of loan we offer at The Norris Group?
Craig Hill  Yeah. I think just looking at our history, we’ve always tried to be like looking into the future, if you will. One thing I realized, because I remember, like, the first five years of The Norris Group, Bruce always coming in my office, like, what are we going to do next? There might be a time when there’s no hard money.
Craig Evans  Sure.
Craig Hill  But year after year after year, we did realize there always was hard money, with the exception of, you know, maybe ’06 and ’07 we really slowed down. I think one reason we didn’t get hit as hard and had such, nobody got through unscathed, but we came out very favorable, because it was painfully obvious that this was way too high.
Craig Evans  Yeah.
Craig Hill  So, with the exception of those two years, it just seems like that there’s always something on the horizon. So, what happened with that, and then I’ll get to the current but like, we came out for hard money, which was really unheard of at the time, in ’08 maybe ’09. We started an eight year low, at a really low interest rate at the time.
Craig Evans  Okay.
Craig Hill  And the reason being, it made sense. So, you’re always trying to look for something that makes sense. And then gradually we went down to five and down to three. And currently we’re really just doing one, because a lot of the money side is not sure what’s next, if you will. So, you know, you’re always trying to find what’s next, and it’s usually because it makes sense for both sides, like right now, buying a house in California as a rental using hard money, that doesn’t make sense.
Craig Evans  Right. Sure.
Craig Hill  Even if we did go eight years, you know what I mean, it doesn’t make sense. In ’09, it did because the prices were so low, and we were able to offer a rate that was very competitive at the time, so the borrowers aren’t looking for that product. So, because of that, almost everybody’s doing like a flip situation. So, the one year loan is sufficient. So, it seems to be that’s where most of the business is right now. I mean, occasionally somebody will have something that just makes so much sense from a loan to value point of view that we might go longer right now. But you know, just as far as the business goes, just right now, the one year loan seems to be what the investors are comfortable with, and it also seems to make sense with what the, you know, the long time buyers are looking for.
Craig Evans  So, I think that’s a key point to look at, because there’s so many people that ask me all the time, you know, why are your rates this when I can go to, you know, we use B of A earlier, right? I can go to B of A, in other words, your bank on the street, so to speak, and get a different rate. And I think that people forget that private money, there’s a yield that has to be met, that we’re not talking about institutional rate money or Fed rate money. We’re talking about private money, that a yield has to be met. And when you’ve got certificates and bonds that are generating yield at one point, the rate of private mortgages, private lending, hard money, the whatever term we’re going to throw at that, it’s got to make sense to those investors, you know, when you’ve got high volatility in markets, and there’s so many factors that come into play in that process. So, talk to our audience about what we’ve currently got. I know we’re primarily in a one year term right now for most of our loans. Again, that’s not because we don’t want to offer more. It’s that’s what the market is saying, Hey, that’s where we can offer and have a good product for investors at a rate, and also a very fair rate for our, I’m sorry, good rate for our borrowers, and then a good yield for our investors. So, we’ve got that one year time frame. What is the current ARV, the points, the offerings…
Craig Hill  Yeah, so, basically now, and there’s always fluctuations on this.
Craig Evans  Sure.
Craig Hill  The typical deal is going to be like a one year loan. It’s going to be 10.9% one point and most of the deals are around 15% down on the purchase price.
Craig Evans  Okay.
Craig Hill  And then there are some that are less, some that are more. We do add, you know, sometimes we add repairs and such. So, it’s just really to go with that one basic scenario, because everything else from there is really depending on the appraisal, what you bought it for. In other words, it’s a matter of math, like, if you know the same 500 grand house, if one client bought it for 350 and another one bought it for 310 you know. I mean, the guy that bought it for 310 is going to have less doubt. I mean, you know, so it’s kind of hard to just say this is what it is going to be.
Craig Evans  Yep.
Craig Hill  So, that’s why I’m very open to like, having people call me with numbers and discussing numbers, and I always take the time on the phone to say, ‘what’s the address?’ I do what I told you. I look it up on Google while they’re on the phone.
Craig Evans  Yep.
Craig Hill  To see where it is. Because sometimes if I don’t do that, I’ve found that I do all this talking, then I look it up on Google, and it’s something we won’t even do. Or you know what I mean, so I always like to be able to try to give them a real, fair assessment of what I think we can do right in that initial conversation.
Craig Evans  Sure. So, we’ve got audience members out there listeners today. How do they apply for a loan from us? And can they actually find you? Will they be able to talk with you? What does that process look like, walk them through that.
Craig Hill  One thing that’s always surprised me is all my clients the whole time who said, ‘it’s amazing you pick up the phone,’ so, the best way to reach me is just probably call me at the office. So, 951-780-5856, and it’s extension 102 so that’s probably the easiest way. I still like talking on the phone. I know a lot of people don’t. So, if you want to send an email, just shoot me an email at Craig, C, R, A, I G, Craig@thenorrisgroup.com and, you know, say I have a deal I’d like to run by you. Usually I’ll respond with, you know, send me these basic information, you know, like address, the three things I told you, what you think it’s worth, the repairs, so, and then what I’ll do is, I’ll, then I’ll take a look at it, and I’ll probably email them and say, hey, you know, here’s what I’ll do. Give me a call if you want. So, you know, at that point we can talk about it. So, that’s probably the easiest way, just to say, get started. And that also our website, thenorrisgroup.com, you can just go on there and fill out a loan application. And those come to Joey, Rhonda and myself. So we always catch those. And I tell people, that’s the one thing that I work quickly on. So, if you send in an application, you know, at one o’clock in the afternoon, and you haven’t heard by four or five or certainly the next morning, first thing, shoot them an email or call, because sometimes, the way the system is it’ll go to what they call the back end. You know, me. I’m not a computer person. No idea what that is.
Craig Evans  How long does it take somebody to fill out an application and get that to us so it’s in your hands?
Craig Hill  Yeah, that’s good, good question, because it really probably only takes about five minutes. We just asked, there’s two ways to two ways to go about it. It’ll say, I have a deal I want you to review, or I just want you to look at me per se. So you pick one of those two, even if it’s the deal you want to review, it should only take about five minutes or so. It just has some basic contact information. It asks a little bit about the property. It asks like cash available. You don’t have to fill out a credit report, or, you know that doesn’t ask for credit. It’s actually a very simple process, so it shouldn’t really be hard to start that process.
Craig Evans  If you want to learn more about investing in trust deeds, you can go to our website at wwwthenorrisgroup.com, you’ll click on that Hard Money tab, you get to download a FREE BOOK that we’ve written and updated called it’s our eBook for trust deed investing. You can also reach out to Joey, send him an email to Joey@thenorrisgroup.com and again, if you’re interested in being a borrower from us, you can reach out to Craig@thenorrisgroup.com, and we’ll take great care of you. We appreciate the loyalty of all of our listeners, all of our investors, all of our borrowers throughout the years. We’re so grateful. Listen, till next time, everybody. Thank you for joining today. Craig. Thank you, my friend.
Craig Hill  Right. Thanks Craig.
Narrator  For more information on hard money loans, trust deed investing, and upcoming events with The Norris group. Check out thenorrisgroup.com. For more information on passive investing through the DBL Capital Real Estate Investment Fund, please visit dblapital.com.
Joey Romero  The Norris group originates and services loans in California and Florida under California DRE license 01219911. Florida mortgage lender license 1577 and NMLS license 1623669. For more information on hard money lending go to thenorrisgroup.com and click the hard money tab.