Altos Research Mike Simonsen Top of Mind Podcast Houston Vintage Homes Tyron McDaniel

Houston Vintage Homes’ Tyron McDaniel on Building Affordable Housing

By Mike Simonsen on June 7, 2023


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Mike Simonsen

Mike Simonsen is the founder and president of real estate analytics firm Altos Research, which has provided national and local real estate data to financial institutions, real estate professionals, and investors across the country for more than 15 years. An expert trendspotter, Mike uses Altos data to identify market shifts months before they hit the headlines.

In this episode of the Top of Mind podcast, Mike Simonsen sits down with Tyron McDaniel, CEO of Houston Vintage Homes, to talk about his vision for affordable and attainable housing. Tyron shares why he runs his companies for “impact over income”, discusses his approach to building that creates pride for his tenants and long-term value for communities, and outlines the techniques he uses to build affordable housing successfully. He also offers a look at which markets are most exciting for his work, and which tech trends are the most encouraging for the future of affordable housing.

About Tyron McDaniel


Tyron began his real estate career working in a mortgage broker’s office as a secretary back in 2000, with the ultimate goal of one day becoming a home builder and developer of affordable housing. After becoming a Mortgage Broker, then a Real Estate Agent, Tyron began to purchase rental properties before venturing into the Buy, Fix & Flip space. This ultimately led to him becoming a homebuilder in 2005, setting the foundation for Houston Vintage Homes and its sister companies, which are focused on the design and development of affordable housing in inner-city communities around the country.
With a keen eye for design and historical context, Tyron now works with multiple cities, and coaches and mentors investors, home builders and developers from around the country in creating affordable housing solutions to meet the ever-growing need for more affordable housing.


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Here’s a glimpse of what you’ll learn: 

  • Tyron’s vision for affordable and attainable housing
  • Why he runs his companies for “impact over income”
  • How affordable housing helps not only the existing residents but attracts desirable growth for a community
  • The difference between gentrification and displacement
  • How compassionate capitalism creates long-term value
  • Why he looks to build pride in the home for tenants in his properties
  • Techniques he uses for creating affordable housing when so few others can do so
  • Which markets are most exciting for his work in affordable housing
  • Which economic factors are hindering the ability to create affordable housing
  • Which technology trends are the most encouraging for the future of affordable housing

Resources mentioned in this episode:

About Altos Research

The Top of Mind Podcast is produced by Altos Research.

Each week, Altos tracks every home for sale in the country - all the pricing, and all the changes in pricing - and synthesizes those analytics to make them available before becoming visible through traditional channels.

Schedule a demo to see Altos in action. You can also get a copy of our free eBook: How To Use Market Data to Build Your Real Estate Business.

Episode Transcript

Mike Simonsen (00:04):

Welcome to the Top of Mind podcast from Altos Research. This is the show where we talk to real estate industry insiders and experts about the trends shaping the market today. Enjoy the show.

Mike Simonsen here. Thanks for joining me today. Welcome to The Top of Mind podcast. For three years now, we've been sharing the latest market data every week in our weekly Altos Research video series with the Top of Mind podcast, we're looking to add context to the discussion about what's happening in the market from leaders and thinkers and doers in the industry. Each week, of course, Altos research tracks every home for sale in the country, all the pricing, supply and demand, all the changes in that data. And we make it available to you before you see it in the traditional channels. People desperately need to know what's happening in the housing market right now. The market was frozen so solid last year, and now surprisingly, the landscape is changing again. So if you need to communicate about this market to your clients, buyers and sellers right now, go to altos and book a free consult with our team.

We can review your local market and help you understand how you can use market data in your business. Okay, that outta the way, let's get to the show. I've got a really great guest today. Tyron McDaniel is the founder of Houston Vintage Homes. Tyron became, began his real estate career working in a mortgage broker's office as a secretary more than 20 years ago, with the ultimate goal of one day becoming a home builder and a developer of affordable housing. He was a mortgage broker and a real estate agent when he began to purchase rental properties. And then he ventured into fix and flip, and ultimately he became a home builder in 2005 with Houston Vintage Homes, which is a focused on design and development of affordable housing in inner city communities across the country. Tyron is a, is a coach and a mentor for investors, home builders and developers who want to create affordable housing solutions. And I, affordability, availability is a real passion of mine. It's a real problem in this country, and I want to have Tyron on so we could discuss his model and the, the approaches, some of the ideas that we can, can tackle for the country. So, Tyron, welcome brother,

Tyron McDaniel (02:36):

My man. Well, number one, Mike, listen, you know, it's a pleasure to be here on your podcast and be able to create a little bit of value. you are one of the people, you know, commonly I get asked like, who are people that you follow? Where do you, you know, at at obtain information from? And so, you know, it's more than a pleasure, more than you know, to be here on a podcast with you. But thank you for that warm introduction. now somehow I gotta live up to all those things, but it's a pleasure to be here.

Mike Simonsen (03:03):

Great. Terrific. Well, let's start with your background. We read a little bit, I read a little bit about, you know, you started the Mortgage Biz. but, but tell me how you got here and, and like the vision for Houston Vintage Homes.

Tyron McDaniel (03:17):

Sure. You know so I could obviously start there and just talk about my entry via coming in as a loan officer. But honestly, when I look back from a serendipitous perspective and really look at my life, you know, real estate to me became a real industry and or opportunity when when I was 12 years old and my sister was buying a home via the Habitat for Humanity process. And as a result of that, you had to volunteer some hours. So, lo and behold, here I am 12 years old, helping build our house. And I'll never forget my, you know, this is, it's, you know, those of us in the real estate industry, most houses have a two by four wall. So here it is, they ha we have a wall and we're working on the siding process. So we put the sheeting on, put the vinyl siding on, and then, you know, subsequently, because they had all the inspections and things set up, as soon as we did that, we put the insulation and then we weren't a part of it, but they put the sheetrock up.

And so here it is, in a one Saturday, I get an opportunity to see a house go from just a shell on a slab with two by four walls to a closed in structure. And I remember thinking to myself, this is all that's in a house. Like, I could do this <laugh>. So that was really the seed planted in my mind, you know, even in my middle school days, lo and behold, I also took drafting in middle school and started to, and I was introduced to Frank Lloyd Wright. So again, now that was, you know, you're on, you're doing affordable volunteer work for Habitat for Humanity, which is one end of the spectrum. Then a year later you're, you know, being introduced to Frank Lloyd Wright. So very quickly, I gotta, I gotta, I hate, well, yeah, for the sake of this conversation, I'll say a baptism, if you will, into the brevity of real estate.

And so that was my first thing. And so that was always there. Lo and behold, fast forward, now I'm an adult and my background's in the transportation industry, but I was looking to get our transportation into something where I, where I could do what I saw in the infomercials. You know, I was one of those guys. Lo and behold, I don't have an academic background that's so illustrative and, you know, that makes everybody say, oh, okay, great. You know, so I was one of those people that saw the late night infomercials where people talked about real estate and stuff like that. And long story short, I said, man, I wanna own some houses. So I met a friend of mine that was a an account executive for lenders that provided financing, and they went on round and called on brokers. And he and I had a conversation. He was like, Hey, let's start a mortgage company. And when he explained that lenders mortgage companies provide financing for people who are wanting to buy a house or refinance, I was like, man, you're onto something. Because if I can figure out finance, I can do my goal, which is, you know, buy some houses, maybe build some one day, and so on and so forth. So that was really de genesis for me.

Mike Simonsen (06:13):

That's amazing. That's quite a story. And, and it's actually kind of funny because I was a teenage architecture geek too, like with, with like Frank Lloyd Wright and, and like I was always the hobbyist with it there. And I was never like really a skill, like skilled enough with the drafting, like, to, to be an architect. But like, I kept that and, and it was a, you know, it was a part of a motivation. And so, and, and you know, I think the path to the work you're doing now via finance was really wise, right? Like, right, because you like understanding the nuances of, of like how these things get financed and construct, like what a, what a great story. That's really, that's really neat to hear.

Tyron McDaniel (07:05):

You know, what, what I tell people today is, you know I say really it was a strategic advantage because I had a chance to cut my teeth talking to the average person that, you know, one client I'll never forget, you know, I had one client that was literally there at the inception of, you know, which I'm dating myself here, but they worked for Mark Andreessen at next Gate, you know, which is the, you know, the admin, you know, at the advent of internet. And then on the flip side, five minutes later, I'm talking to a person who, you know, is a lady that works at your local elementary school and she's trying to refinance a house that, you know, she bought five years ago, maybe she got behind on taxes cuz she didn't escrow. And now she's trying to refinance, take, do a cash out home equity loan, and she has a subprime credit score because back then there was a such loan financing mechanism called subprime that's no longer a thing today. But but that entry via financing just showed me the brevity of finance helped me understand the mechanics that controlled real estate and is a big part of why we're able to do some of the things we do today.

Mike Simonsen (08:12):

That's great. So, so that was like early two thousands

Tyron McDaniel (08:18):

Time? Yeah, like literally you know, I entered the industry in two thousands. So I was doing longs, you know doing subprime loans, me, my buddy and I, so, you know, the, as the story goes, so what my buddy did was got me a job working as a secretary answering the fax machines. No one knows the fax machines are anymore <laugh>

Mike Simonsen (08:39):


Tyron McDaniel (08:40):

But that was my start answering the phone and fax machines, not a cell phone, literal phones connected to a hub and connected to the wall. And so that was my start. And from there he and I set up a company that we created in, you know, the living room of his house that began to provide funding. And so I went from being the secretary for that entity where I could learn to he and I being partners on a company that funded loans. And from there, you know, I just continued to grow my skillset. So I became, went from a loan officer to a mortgage broker, then got my own net branch where I could now lend and provide my own funding and do it all across the country. And and so that was my initial start.

Mike Simonsen (09:20):

That's amazing. That's amazing. And so now the operation is Houston Vintage Homes. Tell me about that. Tell me about the project and, and the vision.

Tyron McDaniel (09:30):

Sure. So for me, getting into the lending space was only a stepping stone. And so simultaneously I became a real estate agent. And at around the same time we launched our company, my wife, who I've now met, we've been married 23 years, she was an an engineer, but she also had a real estate license. So I provide the loans, she handled the real estate side. What began to have a mic is we started to buy a house here to, you know whether it was clients calling us that wanted to refinance or, you know, they just wanted to sell. And they called a lender first. And so we started to pick up a house or two here or there whi which fed into what our bigger vision was, which was being able to be builders, investors, and developers ourselves. And so in 2005, I did my first new, new construction project because I had bought some houses.

I had rented some houses and then I said, Hey, listen, why don't I go build one now? It's time to build. and all fairness, we built two houses out of a project that should have had, you know, multiple houses. and we can get into that at some point in time, but that wasn't as successful of a project as I desired it for it to be. But it taught me, it gave me a foundation. You know, when you get it all right, you think you're a genius, when you get it all wrong, now you're forced to realize, oh, I'm a human <laugh>, I may make dumb decisions. So now I had to sit back and ask myself what mistakes did I make and how can I continue to use those lessons to project me into the future? So that led into creating Houston Vintage Homes because when I created Houston Vintage Homes, I was at a point in my life to where, you know, we had done pretty good doing real estate. We had done pretty good doing being lenders. My wife had handled real estate side, but I wanted to go back to communities that were like the community I grew up in. And so, Houston Vintage Homes was created with the mission to reshape the face of inner city Houston, and eventually other communities that were in disrepair had been underinvested that were in need of redevelopment.

Mike Simonsen (11:31):

So the vision was we want to go to the, those neighborhoods and do redevelopment. And was it really community driven or was it like, man, I can also make a lot of money here. What was the, tell me the logic. Tell me what was really driving you there.

Tyron McDaniel (11:46):

So, you know, I grew up in a neighborhood called Fifth Ward, which is east of downtown Houston. If you're ever listening, you know, rap music back in the day, there was a group called The Ghetto Boys that made it world, you know, nationally famous. But I, like many people that grew up in these areas, we have a great deal of pride in where we grew up from. And one of the things I recognized early on, because I had a dad that was an entrepreneur and a mom who was very progressive, as I recognized that most of us didn't own these communities. We had so much pride in, and so early on in my career, it was about I need to pay the bills. I need to, you know, provide a life for me and my family at a certain point in time.

Mike, one of the things I found is, as you become more self-aware, you get a little bit older, you start to get more in tune with who you are as a person. You become self-aware and you figure out what are those, what I call detonators? What are the things that make you take certain actions to achieve certain goals? And one of the things I figured out for me, it wasn't making the most amount of money. I, I literally can't tell you any goal that I have that's centered around a dollar amount. My goals were always centered around something that I coined today is impact over income. And so for me, when I created Houston Vintage Home, it was about redeveloping my neighborhood and other neighborhoods like it around Houston. And I felt like if I could figure that out one day, I could get to take it to other markets. Cuz there was no shortage of inner city communities that were lacking redevelopment, underinvested that were lacking creative new ideas to bring to these areas that had been blighted for whatever reason that we could, you know, spend in the next four or five, six hours naming.

Mike Simonsen (13:30):

Yeah, man, I, I can't wait to talk about those creative ideas. Oh, like, there's so many good things to do. I like the idea too, though of the infomercial as one of your detonators. Cause I remember those infomercials too, watching that and going, is that that easy? Should I be doing it right? I I've only, I've only dabbled in actually investing over the years, but, but the first house I bought was a tu plex in the city in Chicago and, and like, you know, a two flat. and, and I after that moved to San Francisco, but had I stayed in Chicago, I'm sure I would've stacked those up as just, you know, as, as owning those,

Tyron McDaniel (14:05):

It's a lot different market in Chicago versus San Francisco <laugh>. It's

Mike Simonsen (14:09):

A lot different market. It is a lot different market. but, okay, so impact over income. And I, and I, I like I like the thinking there in, in, and I do a lot of that with my work too, where it's like the, the income is a result not, not the goal in itself.

Tyron McDaniel (14:29):

It's a byproduct of certain actions. If you provide a certain level of service to enough people, the income that that actually happens by default, it's a byproduct. So some of us are more inclined to focus on the money, some of us are more inclined to focus on what creates the money. And for me, a certain dollar amount, having a certain car, having a certain quality of lifestyle wasn't as much of a motivating factor as was as much as it was for me to know that, man, you know, what if I were able to buy the house that, you know, I spent a lot of time with, you know, for instance, Mike, one of the projects we have right now was a house that when I was in the second grade and I moved to Fifth Ward, it was my buddy's grandparents' house. And through a a certain chain of events, that property got sold to multiple people and there was an opportunity for me to buy it.

Now, unfortunately, they weren't in a position to buy it, but I grew up, I spent many winters, I spent many holidays in this same house. My buddies grandparents proverbially adopted me, so they were like my grandparents as well. So the fast forward 15, 20, 30 years, and now buy a property like that in the neighborhood literally not even one block from the house I grew up in is a part of what makes what I do today's special is, you know, these are areas where I have an affinity for. I love these areas and there's so many other areas like them, but I've been able to bring about positive change there.

Mike Simonsen (15:56):

That's awesome. So one more question about the, the Houston Village homes, the, the business and then, and then let's talk about affordability and availability and some of those creative angles. So in the business. So, so, so what's the business model today? Are you, are you, is it owning? Is it, is it fix and flip? Is it new construction? What, what's the business look like today?

Tyron McDaniel (16:17):

Allow me to answer that question in this particular manner. One of the things I recognize about areas like the communities that we serve is they're faced with there are a few different property types. So you have vacant properties that are taxed delinquent and or that's been there for indefinite amount of years. And these generally tend to be vacant lots and or dilapidated properties. Then you have houses that are functionally obsolete. So it's a three bedroom, 13, 1400 square foot, one bedroom house one bathroom house, three bedroom, one bath or four bedroom, one bath. So it's not functional for how people enjoy houses today. and so you have vacant lots, you have old houses, then you have new construction because these areas are being redeveloped because their proximity to job, you know, places where people work, our inner city areas are downtown and and things of that nature.

So what my business model was to kind of create more products that one allowed people that were currently in these areas to try and stay there. And then number two, to create opportunities where people like myself, where at a certain point in my life I moved outta my neighborhood I grew up in, because that was a whole point back, you know, when I was in fifth Ward, it was a bloody nickel. So we were trying to escape the bloody nickel and get into an area that we thought was better. Now having understood real estate and cycles and what happens, the thing is you may leave there but still have some ownership interest there. And so I wanted to help people like myself who had left for whatever reason, to come back into these areas as they started to grow and develop. And so recognizing what, what was in the market and what ne needed transpire, I created my company to fulfill a need to provide housing for the people that were there for whatever financial economic reason weren't gonna be able to leave, but also create an environment to where as these areas grow, it could grow to a point to where someone who formally used to live there could see a, a quality enough lifestyle for them and their family to say, you know what?

I wanna go back to the neighborhood that I grew up in. And so I felt like at the time, no one was really servicing that market and there was no one kind of bridging the gap, if you will. And that was the space that we wanted to play in.

Mike Simonsen (18:34):

I like it. So you build properties that, that not only serve the folks that are there, but but serve to bring back folks like you because they go, wow, I can, I can really have a good quality of life here.

Tyron McDaniel (18:48):

100%. Because the reality of the matter, you know, and some we'll get into, so you have redevelopment and or gentrification, then you have displacement, okay? Then you have the lack of affordable housing. And what what happens is when we start to have these conversations around real estate, all three of those different things get lumped in all together without a necessary understanding. So, you know, what I commonly tell people is gentrification. As a poor PR department, the people that espouse the virtues of gentrification don't have a good enough group of individuals going out there educating the markets and the masses on what gentrification truly is. Likewise, there's a huge affordable housing deficit that no one seems to talk about when we're having these gentrification conversations. So you're labeling everything as gentrification, which when you say gentrification, that honestly has a negative connotation. But, you know, I've studied this, and I'm not saying that I'm 100% white, but what I can tell most people is that your issue isn't gentrification.

If I look at the community where I grew up in, there was a reason why the streets were in horrible condition. There was a reason why our schools were underfunded. There's a reason why we didn't have proper policing. There's a reason why we didn't have lights and things of that nature under the street. If you can turn in the neighborhood I grew up in, it was in Houston, at a point in time be when we created our land bank, what's commonly our land bank. Now they identified Fifth Ward as the area that had the highest concentration of tax toal lots. So if we look at why this area was called the bloody nickel, it's in direct proportion to the amount of taxes that aren't paid into our governmental ecosystem. It's a reason why our schools were in the disrepair. There was, it's a reason why the streets, sidewalks, things of this nature. So if you can turn some of this vacant, dilapidated housing and tax de link lots into people that are now paying taxes, contributing to the financial infrastructure of the communities, you can enhance them. Point number one, point number two, which is another conversation, is how can you do that without displacing people, which leads into the affordable housing conversation.

Mike Simonsen (20:59):

All right, that's awesome. And I've got some thought thinking, I wanna keep talking more about gentrification and zoning and things like that. But first, let's talk about affordable housing. And I'm specifically interested like what what you're doing for affordable housing. And you've talked about, you talk about a national view for affordable housing too. So I'm interested in hearing about how we, how we take those ideas and go national. So first tell me what when we look at Houston and the work you're doing there, what, what, how, how do you do it that makes it able to do affordable housing? What do you, what, what do you do specifically?

Tyron McDaniel (21:38):

So our primary business model from the outset with when I created our company was to do affordable housing to provide, to be able to provide affordable housing non-subsidized. So it wasn't where, you know, I went and took monies from different entities, but it was figuring out a business model where we could provide housing in these areas and do it in such a manner where we don't necessarily displace people. but at the same token, we make it better than what it currently was. So that was our first, that was at the foundation of what I wanted to be able to do. And then my premise, which is something that, you know, I, I've began to kind of espouse this using real estate development as a tool for economic development because one of the things I understood about these communities that were like, where I'm from, you know, real estate is one of the most impactful industries you can have when you build a house or renovate a house.

There's so many industries that get impacted. There's so many jobs that get impacted when you go out and build a house or renovate a house. So what happens if we can now start to engage people from these communities in the trades, whether they became a carpenter, whether they became a HVAC tech or a plumber or electrician. And so that's a more of a long-term perspective. Well, one of the things I understood early on is this is a multi-pronged approach. You're not gonna be able to just go into a community, provide housing, throw it up, and then not provide a means for the people who are from those areas. If you're paying $600 a month for a two bedroom house, but it's a deplorable condition, it's insane, in my opinion, to think that you're gonna get a brand new two bedroom house that's still 600. There's gonna be an increase.

Cuz you're staying in a deplorable state right now for 600. So maybe it's seven 50. What happens if I can provide, maybe not today, maybe it takes you three years, five years to re-care yourself and go from what whatever you're doing now, where they subsidize, earn any earnings, whatever the, your career path is. But what happens if you become HVAC tech now you go from making, you know, $20,000 in a warehouse to 45, 50 grand and you don't wanna take your family to, in Houston, we have the largest, one of the longest commute times in the country. So you don't wanna commute an hour to get to, you know where it is. You need to be, you wanna stay where you grew up from, allow your kids to go to a certain area. And so we started to look at housing is only one component, but the bigger picture is economic development.

And so, but this one thing has this, it's literally a hinge on a door that swings so much. So we wanted to have a more of a comprehensive view. So part of it was figuring out how to provide housing, not based on what people, you know, whenever I have conversations like this with people have a lot of DA data, they say, well, what's your definition of affordable housing? And they're looking for this academic answer. I don't have that academic answer. Cause I didn't learn any of the stuff we're talking about in an academic setting. I learned it from putting my money up, buying a house and being, understanding what people couldn't afford versus what market was, and figuring out where do I wanna be between market and what these people can afford or what they can sell. So for instance, we sold a duplex in a part of Houston that's very close to the medical center, the largest medical complex in the world.

It's called the communities called Sunnyside. Well, this was a duplex, it was two bedrooms one bath on each side that duplex would sell for $250,000. At the time that we sold it. We sold it for two 15. Why? Because we wanted to provide one equity for the person that will be buying it. Two, we wanted to ensure that it was affordable for those new owners. And three, because it was a duplex, it allowed them to occupy one unit and sell or not sell and rent out and subsidize what it costs for them to actually have that property. So affordability to us means it's not some academic answer. That sounds good. When you're having one of these types of conversations, it's more about understanding the markets you're serving and you know, what can people afford, what can the guy who delivers freight, who drives truck in a local community, can he afford to live there? The guy or the the guy or the young lady or a man who works at the school, can they afford to live there, the local store and things of that nature. So that's what a true affordable housing is. Those of us that are more upwardly mobile affordability is still an issue, but not as much of an issue for those of us that are not in some of the higher income brackets.

Mike Simonsen (26:10):

Yeah. So so part of your strategy of affordability for you, those communities that you're developing is like, Hey, I'm gonna take a less profit for myself on these

Tyron McDaniel (26:22):

One. You know it, yes. The short answer to that question is yes. what I tell people is this, to be an affordable housing builder developer means you're willing to do the same amount of work or more and make less amount of money. And there's no way to kind of sugarcoat that. It just is what it is. Now that within the context of our company, we have product that we offer that's market rate. but that allows us to now do the affordable stuff that we do, that submarket rate. But fundamentally it means that you're willing to do the same amount of work or more, but require less payment. And, you know, there's no shortage of, we're not a nonprofit entity. So I want the record to reflect that. so I'm not saying we, we've taken a vow of poverty, but what I do believe fundamentally is there's a concept called compassionate capitalism. I fundamentally think you can do good by doing good. And so my premise and my North Star has been figuring out a way to do that.

Mike Simonsen (27:23):

Amazing. That's really inspiring. The thought of like, hey, we're building this business with our north star of impact. Like that's a, that's a really bold way to build pretty rare, right? Is that but you've been doing it long enough that it's, it's sustainable. Thank you. Yes. Like so far so good.

Tyron McDaniel (27:47):

I'm still here, <laugh>.

Mike Simonsen (27:49):

There you go. You

Tyron McDaniel (27:50):

Know, my, my kids aren't skinny. You know, my son eats pretty good, so, you know, my wife is, you know, is, is pretty healthy. So I would say it's okay.

Mike Simonsen (27:58):

Awesome. Okay. That's amazing. So do you do other things like do you have an advantage or by the work you do or the way you structure things that allow you to keep costs lower? Do you do des design things that way?

Tyron McDaniel (28:12):

Sure. So, you know, there's a, so what I believe is, I think you have to have a multi-pronged approach. I think I call it a evergreen strategy. So you have to figure out a way for your business to sustain itself, irrespective of what's going on in the market. now that's only been afforded cuz you know, you know, if the camera zooms in, you can see I have a couple of grays. So, you know, I'm not a person that just joined this industry 3, 4, 5 years ago, or 10 years ago when the market has only had this upward trajectory. I've been fortunate enough to have been around for a little while and I've made a ton of mistakes. So I know it may seem or come across in, you know, a isolated snippet of a conversation like what we're having, oh, this guy got it all figured out.

Well, there's tons of mistakes that I've made to get to this particular point in how we do business today. So I say all that to say that, you know we've been able to figure out that, number one, having a financing background helped me understand how to leverage financing and capital and what I call deal structures. Creating a deal not based on some dollar metric or what you wanna accomplish, but more so what will lenders provide in the marketplace. You have your vision, but the lenders have a total nother vision. So rather than having your vision, cuz you don't have the money to execute exactly what you're trying to do, why not craft or formulate your projects so that, such that it meets the needs of the lenders that will lend on this type of type of transaction. So that's kind of like step number one.

step number two was, you know, for me, a lot of houses that we buy are houses that most people would tear down. Now, one of the things I figured out very quickly in a city like Houston is that I could tear this house down, but now I have to basically pay cash for that deal if I buy a house to tear it down. Number two, in a city like Houston, if I tear it down, I got design engineer and approve this new structure, which short is anywhere from really five to 7, 8, 9 months. Whereas if I kept the existing structure, even if I tore 90% of it down, if I left a portion of it, it'd be considered a renovation. Well, the eight, nine months it takes for me to get that new construction approved, I could be complete with the full gut renovation. That, for all intents and purposes, was new construction.

We've literally done houses where we took all the walls down and left only the foundation. We lifted it up 16 inches, built all new walls, made it two story. It was a one story, three bedroom, 900 square feet. Now it's a two story, three bedroom, two and a half bath, 1700 square feet. But we were able to do that because we didn't demolish the entire structure. So, and the strategic advantage became, yes, renovations are more headache, I call people like me, pain freaks. It's more headache to renovate an existing home or do a full gut than it is to do a new construction. However, there's a time benefit to buying existing houses and turning them into the next iteration of highest and best use. That makes sense. So that was one of the strategic advantages is houses that most people would tear down, we renovate 'em and make 'em really, really nice.

Simultaneously in those same markets. We're starting to create comps now and we would build, buy vacant land and build new build properties in some of these same communities where it made sense to you. So our strategic advantage was one, understanding finance, two, understanding how, not only to finance that deal, but because of my background experience, not only just in finance, but in the building and development side. not just a personal understands finance, I understand the building and development. And the last piece, which is not really the last piece, but it's inside of building and design, building and development, is I understood design. and that's just me being weird, me being a designer nerd, I, I literally fly to other cities and take pictures of houses. You know, I'm the weirdo. Most people go to New Orleans and they're hanging out on Bourbon Street and all this stuff. I literally go to Bourbon New York new Orleans and I hit bourbon like everyone else. But I literally walk all the streets that connect to it and, and run adjacent to it. Last time I was there I walked 25 miles taking pictures over 500 photos. Cause again, I'm a real estate nerd. So I added the design piece. So keeping it on code with talking about New Orleans, it became a, a financial design development gumbo, if you will. <laugh>.

Mike Simonsen (32:46):

That's awesome. That's awesome. I do a little bit of that kind of look at the, look at the architecture, self-guided tour on, and I, 25 miles might be a little big for me, but, but I definitely will do that. Like, that's that's great. That's super cool.

Tyron McDaniel (32:59):

17 in one day, eighth the next day. It was great. I didn't realize until I looked at my phone and I was like, wow. But you know, so I have this thing called design reconnaissance Mike, and whenever I'm looking to design a new project, we have some new we're working on, I'll travel to another part of the country that would inspire the particular design I want to introduce on that particular project. And I'll do this, I'll just walk the streets, drive, take pictures, and I'll bring that back home and figure out a way to introduce it or fuse it into the design of the existing community, as well as bring a couple of elements to that community that aren't already there.

Mike Simonsen (33:33):

Does the vintage in Houston Vintage Homes, is that, does that speak to your design aesthetic?

Tyron McDaniel (33:39):

Yeah, Houston identifies where we are vintage because I always borrow from the current aesthetic of the community. and so that's where the vintage, so I never want to introduce 'em to the community that has no connection from a design perspective. That's, that we see it all the time in affordable housing, you know, or not even in affordable housing, just housing in general. Someone builds something that's has no connection to any of the existing architecture and the way the community is designed. So the vintage is lending us lending credence to what's already made these areas great, but also introducing one or two concepts that for the sake of technology weren't around maybe in 1920 when this house was designed, but today it's a design component. And so we wanna bring that, so we wanna fuse the two together.

Mike Simonsen (34:30):

That's awesome. I really hope that I get a fair number of listeners who are, are like real estate investors, a lot of individual investors and a lot of folks who are new in that space in the last few years. I really hope they take a moment to listen to this and listen to you in the holistic view that, that you're, that you're talking about as opposed to like so many of them are like, Hey, I can go buy this and I can, you know, buy this like roic of of townhouses in Nashville and I can put the Nashville sign up and I have a short term rental for, you know, Airbnb and it look looks like all the others. It's you know, like, and like, it feels like it's a trying to be a money grab and it, and, and while it it may be efficient for now, it feels like a, that that is that never ends well. And b, that the real holistic view that, that you're coming with is, is really a terrific, and, and feels to me like a much longer term proposition. Like, hey, we're building a business here. We we have a vision of what we, we want to build. And, and so, you know, then when the, when the pain comes, inevitably comes, you're there, you're there to weather the storm

Tyron McDaniel (35:42):

Wonder. And you know, what happens is, so, you know, I can recant the conversations I had with people in the last 3, 4, 5 years and I'll always tell 'em, Hey, listen, make sure that you're doing video. You're taking pictures, you're journaling, you're doing all these things to document this time because this isn't real. Like this isn't anomaly. I know it seems real right now. I know I'm the old guy beating this drum and you can't relate. But trust me, I've been in real estate a little while. The last 5, 6, 7, 8, really the last 10 or 11 years hasn't been a real market. One day a real market's gonna come and all these bad habits you have are as a result of being in this market that's so super frothy. So over the top, it's, you're gonna have to be forced to make monumental changes to how you do business.

So it goes back to something we talked about earlier. So for instance, when it comes to affordable housing, let me give you a couple of design components. So like if our, so when we design an affordable house, most affordable houses, you walk in the ca in the kitchen, they're gonna have 36 inch cabinets. We're gonna do 40 twos and 40 eights. If we have nine foot ceiling, we're doing 40 twos. If we have a 10 foot ceiling or nine and a half, we're doing 40 eights. Why? It's a little extra three, 400 bucks. But you see, when you see that 36 inch cabinet, you also see that 12 to 18 inches above the cabinet and it just looks, it makes the cabinet look smaller. So that little so change, it's a few hundred bucks, but it creates that much more of an impact. Next thing, let's say we're all doing, you know, subway tile in the back splash.

Well hey, my affordable house has subway tile as well. The only difference is we're gonna spend about $50 extra and over the stove we're gonna do accent. So maybe we're gonna, if we got regular subway tile, we're gonna do chevron pattern or we're gonna do heroin bones, or we're gonna buy a mosaic tile that accentuates the backsplash with the floor in conjunction with the cabinets and and the countertops that now draws it all in. And just now we've done this on section eight rentals. Most people that are building a Section eight rental aren't gonna do accents. However we wanna do that because that person renting section eight, well, we want them to have a little bit more pride in the house. We want them to have, you know, Mike, allow me to say it like this. I call this the Ken folk factor. The ken folk factor is, Hey, listen at whatever quality of life you're in, Mike, me and you cousins, right?

You come to my house, you may be a cook guy, you love to cook. And you see I got a pot filler over my stove, but now you know, I'm not rich, I'm a section eight. I literally have a house. We did a pot filler and it was a section eight property that rented out for 1300 bucks at the time. But that one feature costs us an extra $300. I believe it contributed also to us never having any issues with vacancies. So there, they're generally speaking, any house that we do, we're gonna do two to three things that's gonna differentiate it from a normal house that you would see in the same area that's affordable so that it sticks out so that the occupants can now have a little bit more pride in the house. Because one of my premises is our affordables don't look like affordable housing.

Our rentals don't look like rentals. I want them to blend into the fabric of the community. Whereas in a lot of cases you'll drive in a community, you see a lot of owner occupied houses, then you can tell, oh, okay, this is a rental or this is affordable. That to me takes away from the fabric of the community and what you want to grow. So those are some design things we do to kinda separate our houses and it costs us a little bit more money, but it goes back to impact over income. I'd much rather have this amazing impact and have you see our house and instantly want it versus I did some just like everybody else. And now fundamentally going back to income, it takes longer to rent this house, it rents for less. and, but just because it doesn't have some of these things that makes it so much nicer and gives people a sense of pride.

Mike Simonsen (39:40):

That's awesome. Are you finding, as you're working with younger entrepreneurs, investors, builders, are they, are some of 'em hearing the message, the the impact over income, the, the pride in the house message? Are they, are some of them getting there?

Tyron McDaniel (39:58):

Yes. I i I can honestly say some of them are getting there and probably more than you would think. And I think there over the last couple of years there's been a renaissance to a certain degree of people. maybe it was covid maybe it was, it's just the natural order of events. But and I've seen this around the country, I've been afforded opportunity to travel a lot and talk to different people doing really cool things around the country. And there's a greater level of ownership that people are taking in our respective communities, our inner city urban communities that are in need of redevelopment because of the internet and technology and the connectivity that indivi like, you know, you and I connected on Twitter, so the conversations are now more prevalent and the education is more prevalent. And so now people are not only having greater expectations, but the service providers are, are recognizing that there is a demand in the marketplace for people who want more. And and so we're looking for ways to be able to provide it.

Mike Simonsen (40:58):

That's that's terrific. So we talked a little bit about gentrification versus displacement. and, and a little bit about Houston. tell me about like what does the, does the city of Houston, how does it feel towards like supporting affordable housing? Is the zoning working? Is it like, what, what's is it, what's, what should we know?

Tyron McDaniel (41:28):

So, you know, Houston doesn't have zoning, so it's one of the few major cities that doesn't have zoning. So you, you know, we're proverbially the wild, wild west. Now there are, what what's restrictive in Houston are our parking ordinances. So where you may not have zoning and you have freedom to do whatever it is you want to a certain degree, when you start dealing with inner city urban areas, you're relegated to the parking. And one of the issues, one things I alluded to earlier, Houston has one of the largest, longest commute times in the country. Well that's because our inner city corridor and urban core of our city isn't dense enough. And that's because we're the oil and gas, you know, capital of, you know, the southwest or the south, if you will. So Houston is a city that is, you, you referenced Nashville.

Houston is Nashville 20 years ago. And what happens in cities like this is the leadership doesn't understand the trajectory and the growth of the city. You know, when I was in, in, you know, I, I graduated from high school in 92 and I remember I had a really great economics teacher that started to educate us on, on growth of the city. And back then we were, you know, we were probably the equivalent of a city like St. Louis or Kansas City, but because of the diversity of our financial e ecosystem if you will, socioeconomic environment, we start to grow 10, then 15, then 20% year over year. What the, our issue was the city leadership didn't understand the trajectory of growth. So they didn't do things like smart mass transit. They didn't understand things like changing how we commute or get around a city so that you can not chop up the city with these freeways that cut up your inner city communities, but instead you make them denser and more bolder so that you can support the commercial infrastructure that needs to exist in these places.

So you have, you know, stores great schools and things of this nature. So Houston is trying to catch up with its growth. Same case, Nashville is, Nashville is Crane City. Everywhere you look, there's cranes. They're building an immense amount of new construction properties, but their average commute time is starting to get longer. There's not enough density in their inner city areas. They don't have mass transits. So all of these are things that seemingly you're just focused on, Hey, let me provide more housing. But what if you provide housing and it still takes that person 45 minutes to an hour to get to their job? Well, that impacts how much house they can afford. So we really gotta be a little bit more thoughtful and mindful on how we design our cities so that, you know, the housing component is only one piece to a multi-pronged issue, if you will, that we have to face when it comes to affordability.

And so I, I'm watching Houston, and now here we are the fourth to third largest city in America, but we have markets where we serve, where, you know, I made a post about this two days ago. Alright, so in 2020, just the end of 20 19, 20 20, we built a duplex that was 2,250 square feet, three bedrooms, two bath in each unit at the time that unit based in that area, which is very close to the med center here in Houston and community called Sunnyside praised for about 285,000. You fast forward because of the amount of people moving to Houston and the growth in our inner city areas, a duplex like that today is now four 60 to 470,000. Now you feel great if you bought or built one in 2019 if you're trying to buy today. And you're looking at where prices have gone over the last three years, like affordability's outta the issues.

And so, you know, it's figuring out ways to increase transit, figuring out ways to help people transition into careers that are in low paying careers into better paying careers. You know, one of the other issues about affordable housing is most plumbers, electricians, carpenters, and hvac guys to some degree are on their, they're, they're heading towards retirement and we're not doing enough to bring more of those people into the workforce. you either have people that just go to co school, high school, graduate and do whatever, or they are very, have a high trajectory to go to college. And there's not a lot of in between because we haven't done a great job of marketing our service-based businesses. So again, all of you ain't necessarily last this, I'm on die tribe now, but this is all a part of the affordable housing picture. And so we can focus on the housing, but there's other aspects of this that we have to deal with to, to get to a solution.

Mike Simonsen (46:06):

I really appreciate all the detail there and there's a lot of things we could, we could talk about. One question I have is, so I didn't know Houston was a no zoning city. So when you're thinking about building affordable housing impact housing impact housing would you recommend, would you export no zoning to the other parts of the country?

Tyron McDaniel (46:31):

I would, I would. Cause you know, to me, what I think it does is I, I think we are in a very, we're in a highly constricted environment when it comes to building. And it's kinda like I heard, you know, I've been married for going on 23 years now. One of the things that I learned from being married is they say men are like cruise ships, getting them to change. You know, cruise ships going in one direction for it to go in the opposite direction, it takes forever. That's the same way I see housing. And so what's happened is, in cities like Houston where you don't have housing, that affords us some advantages. However, this part of housing that's so slow to change, even though we don't have zoning, because we've always, it's, you know, we've always done it this certain way. It's hard to deviate from that. And I could only imagine in areas where you do have zoning, how much more difficult it is to make some of these changes. So I definitely agree. And like the fact that we don't have zoning, it's not perfect in and of itself because there are layers of guidelines that you can layer with no zoning to make it more difficult. But I do believe in what we've been able to have here in Houston with no zoning.

Mike Simonsen (47:47):

Yeah, so in general, zoning removes that no zoning removes hurdles that you might have to make in your affordable

Tyron McDaniel (47:54):

Product. 100%. You know, quite literally, I was, before we were recording this, I was researching a, a new part of town we hadn't done development in. But not only is there no zoning, there are no restrictions. And so in this particular part of which one of the suburbs of Houston, the reason why that's important to me as a builder and developer affordable housing is now it gives me autonomy with not only building design and material type. It gives me some autonomy there that I wouldn't have in certain areas. And because we have the right intent, this doesn't mean that the consumer gets a subpar product. They're gonna get a product that's at least to code, but in most cases it's gonna be superior to code. But minus all these limitations and additional fees, one of the things that happens with these different layers of bureaucracy are the fees associated with going from, Hey, here's a piece of land I wanna build x to having a set of plans where you can build it. So no, there's some advantages here. 100%.

Mike Simonsen (48:57):

That's, that is amazing. Yeah. Can you come to San Francisco and fix us please? Cause <laugh>,

Tyron McDaniel (49:04):

Listen, that's way above my pay grade <laugh>. I love the city. I love hanging out in the bay. It's way above my pay grade. Oh

Mike Simonsen (49:13):

Man. It's so so many restrictions. crazy man. This really, really terrific. I, I appreciate all of the detail and, and how much your experience translates into wisdom, like over, over time that you can share with us. let me just sort of finish up with a couple other last little questions. Are you with your operation scaling outside of Houston?

Tyron McDaniel (49:36):

Yeah, so one of the things that you know, my mission with the creation of our, what I would call our baby company, was to reshape the face of city Houston. I subsequently set up my own design and development consulting firm, which is really geared towards us having impact in other markets for a few different reasons. One, you know, if we can have impact in other markets and I support and help other developers and investors with the knowledge I've learned, now they get to leapfrog the learning experience that's taken us, you know, 20 years to build. So that's the first thing. The second thing which really supersedes that is America's in dire need of more affordable housing. And there's not a lack of people that have the desire, but there's a chasm between the people that have the desire and even the finances versus the ability to execute and take the idea and concept.

And I got money to execution. One of the things I've been afforded the opportunity is, you know, none of this I learned in college or anything. I didn't graduate from college. I graduated, I commonly say. So it's not like I learned this in, in some academic area. I learned this by putting up, you know, my hard earned dollars ourself, making tons of mistakes, learning some things along the way, getting a few successes here and there. And so via our design and development and consulting firm, we're able to now to impact other markets that aren't in Houston. So we've done des development, design and consulting in various markets outside of Houston. And that really to me is going leading into the future of what we are doing. So my mission with Houston Vintage Homes was to develop a formula, was to develop a template that we could utilize real estate development as a tool for economic development in inner city communities that are in need of redevelopment, growth and gentrification and not and create and doing it in such a manner where we don't displace people.

So so the future for us involves us taking everything we've learned and kind of extrapolating that into lessons that we can, you know, kind of start to duplicate another market. So currently we're working people that, you know, we're working in Kansas City, we have people that are in St. Louis, we have some people in Alabama. and we begin to kind of do this in other markets. Baton Rouge, Louisiana is another market where we've consulted on different projects. So yes, we are growing to expand the tentacles, if you will, of everything we've learned here in Houston to other markets.

Mike Simonsen (52:03):

That's, that is really inspiring. That's really cool. So let's wrap it up with one, I like to ask my guests about their vision of the future. Like what do you see in the future? And, you know, we've been talking about your impact, particular, we've been talking about afford the affordability crisis in, in American housing. What do you see, what do you see in the next, you know, 10 years?

Tyron McDaniel (52:26):

You know, I'm really excited, you know, the cup if is half full for sure. I see a lot of the technologies that have been around for years, whether it's modular housing, cargo, texture or ADUs multi-generational housing all of these things can be encapsulated within the missing middle housing. So I see more cities being in a position where, for lack of a better way of saying they're forced to kind of seek better ways of providing housing. So really we're in a really great position, I believe. I think we're at a stage in a tipping point to where, you know, you're gonna see more creative ideas get introduced in mass because we have to, we no longer have the ability to continue with the status quo and do what we've always done, because fundamentally, that hasn't worked, and we're only disenfranchising more and more people.

So we're actually on the other side of that, trying to provide more housing solutions to people. So that's gonna show up in a multitude of ways. everything from the housing types to the way we deliver housing, you know, that's why things like 3D printing are becoming new modular and things of that nature, which are technologies that have been around, but the timing hasn't been right for wide market acceptance. I think we're also going to see new iterations of financial instruments that make it easier for people to move from being renters into becoming home buyers. So I'm really excited about the future and just, you know, building a company that can be a part, you know, we're just a small cog and a bigger wheel, but we definitely wanna be a part of providing more affordable housing and even attainable housing to, you know, Houston and so many other cities around the country.

Mike Simonsen (54:06):

Yeah. Are there any of those technologies that you guys are like, like using right now that you are exciting? Like are ones that you're going to two first?

Tyron McDaniel (54:15):

Yeah, we've we've played with or I don't wanna say play, that wouldn't be the proper phraseology. We've done work within the cargo texture space, so utilizing containers just because of their, you know, we're in Texas, that's a you in Houston, a port city with a ton of these different containers. So it just makes sense for us to have traction in that particular space. It hasn't moved as fast as I would like, but that's one space that we're really excited about. The, another space that we're really excited about is in places like Houston, modular Housing hasn't been a big deal because historically labor costs have been in aligned with being able to just do a stick build. And now you get to, we are now in the situation because of the labor constraints in the market, where now you're being forced to look at other alternatives to be able to build housing more sustainable and even quicker.

So we're really excited about some of the opportunities in modular housing and, you know, we have a project where we're still in the proforma stages of vetting that, that out as the, as the construction output. but we're really excited about that. And then just staying true to what we've always been able to do, which is, you know, operate within a small residential space and continue to provide more housing. And so incorporate that in such a manner where we we're get, we've got more strategic in terms of creating more opportunities for people that are wanting to learn carpentry, wanting to learn framing, wanting to learn plumbing, electrical, and hvac because I, we can't solve the affordable housing crisis without solving the labor constraints we have in the market. You know, housing costs is a byproduct of what it takes to build that housing. And so until we can start to produce more people here internally in our country that can provide housing, we will forever have an issue. So those three areas or spaces that we're working really intently on to grow and build in the future,

Mike Simonsen (56:11):

That that is super inspiring. I love that, that you as a practitioner using those technologies, it, it helps me, you know, take it from like reading the article about it to, to going like, okay, we're experimenting with modular houses and, and with the, the cargo containers that we didn't even talk about labor costs today, man, we got all kinds of things. We get another hour on labor.

Tyron McDaniel (56:36):

Listen, that could be an entire podcast in and of itself. <laugh>

Mike Simonsen (56:40):

Sure can. Maybe I'll get figure out how to do one on, on housing labor. That would actually be what a great, what a great conversation that would be. Tyron. Man, thank you so much for your time and your wisdom. I, I appreciate the, the view you brought. It was exactly what I wanted to get to today because we have this affordability problem and, and it's very acute to me as a guy who measures the housing market and we go, like, prices are are not affordable for so much of the country.

Tyron McDaniel (57:10):

<laugh>, it's only going up. Yeah.

Mike Simonsen (57:13):

It's only going up. And so, so so thank you so much. Tyron where do people find you and like hear about like the consulting work and like your, your connect with you in general social media? What's, where do we want 'em to find you?

Tyron McDaniel (57:28):

You know, my two primary forms of media outlets are Instagram, you can find us at Houston Vintage Homes and on Twitter, which is where Mike and I connected. and so it's Tyron McDaniel, the urban c e o. So those are the two best places to find me, and you'll get a chance to see, you know, what our living body of work is. And yeah. again, Mike, listen, you know, it is been a pleasure to be here and you know, I've always followed what you guys are doing here at Altos and following you, you're a thought leader, obviously. I don't need to say that, but it's a pleasure to be here and I thank you for, you know, inviting me on.

Mike Simonsen (58:02):

Thank you so much. I really appreciate it. We'll do, we'll do some more. So the urban c e o on Twitter, is that also the Instagram handle?

Tyron McDaniel (58:09):

on Instagram is Houston Vintage Homes. Houston

Mike Simonsen (58:12):

Vintage Homes. Okay. Right. Houston Vintage hums. Great. Well everybody go follow Tar Own Men. It's like great, the great the wisdom. And I, and and this is the Top of Mind podcast. Thanks everybody. Thanks for listening to Top of Mind. If you enjoy the show, I'd really appreciate leaving a nice review on your favorite podcast app that helps other people find us as well. Be sure to subscribe so you don't miss future episodes

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