Joe Graham: Dallas Legend of Real Estate, Risk, and Reinvention

DEAN (00:01.251)
You can do the intro.

All right, so yeah, hearing the music in my head, blah, blah, blah. It's a small business living a podcast with Dean Castellano. Hey, what's going on? How you doing?

hey

There's again another version of the studio. It looks better every time I at

Another version

WES (00:22.286)
I tried to actually this one was me. This wasn't a Victoria. This wasn't a Victoria brainchild. This was I had this, you know, just make it more relaxed. Kind of go with the talk show.

It's warmer, feels warmer. today we're going to do the second Legends series. know, we did our Joe Foster. We got a lot of good feedback on that.

That one got a lot of good, yeah.

WES (00:50.542)
And I've been wanting this to happen for over a year now.

I'm excited. So we got the boss, the chief, founder. You know, we got Joe Graham up here with us.

El Jefe El Padrino

Yeah, Joe. you doing?

Contrary to popular belief, I am alive. If I'm a legend, think that does that mean you're alive or not?

WES (01:08.206)
Living legend. Living legend. Yeah, yeah, clarification.

We're not standing over your grave, right?

No offense to Joe Foster, who burped about two months ago.

Right. is. Joe is not a living legend anymore. Joe Foster.

He's in the he's with the Mickey Manos of that.

DEAN (01:28.034)
Joe Graham, living legend. So this is episode one of Living Legend. Thank you for the clarification and welcome.

Yeah, I have to speak up. You can't tell the difference.

Right.

That's why we mic'd you.

So, you know, I'll say that Joe asked me for a little bit of an outline and what I know about him is that this will go where it goes. So it'll be fun and entertaining.

WES (01:49.004)
Yeah. That's why I always tell people just we take one topic, we jump from there. But after that, just let it ride.

That's where to go. Let me just say that in terms of, think I've talked many times about who the most important people in my life and business career are. And I've been fortunate enough to have Joe here and Philip Askew and others, but the two primary partners I've had in my business career. So I'm going to try and get Philip up here someday because he's the one that coined the phrase, living it.

So, Joe, welcome. I think you and I have been together now for almost 19 years.

Well.

2006 I came we're in Turtle Creek I guess maybe the first question was why did you hire me? That makes sense. No.

JOE (02:51.921)
I was desperate.

I thought that I can't remember Dean when I did not know you. It goes back so far. And I just always was impressed with you. And I thought that in our company, it's a little bit different than most, than a lot of lending operations because in our, in our environment, you have to turn your own deal down. That's unlike, you know, most places, a bank or somewhere you have somebody else can turn your deal down.

and that's somewhat critical to making the company work. You just add lot of integrity and BS, all of the critical things you need.

proportion. Right. Well, to your point, my pedigree was lending. And then I went to mortgage banking, and we both had similar pedigrees. And we'll get that in a second. But I loved lending, the lending side of it. But when you say unregulated lending, and you say, as you say, a lot of autonomy, freedom, creativity, that's really what attracted me.

Well, I got addicted to it. I didn't start out to have to be that way, but it worked out and I was fortunate.

DEAN (04:10.336)
That kind of can lead into the, us about the beginning. What is it that, well, do you want to talk about how you got to Dallas first? Do you want to talk about how the beginnings of the company?

Well, in the beginning, I, I was, nine years old and, I didn't like to, born in Midland and I didn't like to play with kids cause they had stuff dripping out of them. And the, in, Midland is a lot of sand and dirt and all that. sports were way overrated. thought this, it took a lot of energy and you could get hurt. And so,

Anyhow, I have a vivid memory, and I know it was nine years old because we moved when I was 10, of being in the back hallway. And I was just fascinated by Series E bonds, the compound interest. At that era, you would buy them for $18.75, and 10 years later, they were worth $25. And why do people work? This thing, this is really a deal here. I'd found the

Magic elixir. And, yeah, I, took me longer than I should have to realize I needed more than four of those, but, I don't know why I just, everybody has their thing. was my, yeah. And I was, I was hungry enough that I wanted to make a living. So it really, one of the motivations was I thought that since I didn't have any money when I got out of school,

Amen. Money working for you.

DEAN (05:36.558)
fucking money.

JOE (05:50.914)
that if the two businesses that seemed to me that you could borrow a lot of money to operate on were real estate and oil. And it just happened that I had a job with Jefferson Standard Life, now Lincoln National, and the Wonky's loan department. And they were wonderful people. They didn't pay much, but it was a wonderful group.

My similar story is New York life in Manhattan, same pay scale, different year, but yeah, learned a lot, right? mean, good culture.

They were wonderful people. So anyhow, I went through a training program for 17 months in Greensboro, North Carolina, and I got sent to Dallas. Then after about seven years there, I was managing the office and IDS, which was a subsidiary, not a subsidiary, IDS, parent company, was the second largest manager of mutual funds in the country.

and they wanted to open a nationwide mortgage banking operation. And I got to open the Dallas office. And then the way I started Graham Mortgage and Graham Investments was that they had in the seventies, they made really large speculative land loans in Florida and California. And it was about to sink the wreath that they had and the mortgage company. And they were concerned because the customer

of IDS that put up the debt didn't really know the difference between the parent company credit and the REIT. They were supposedly told, but evidently really didn't understand that. And so IDS was concerned that if the REIT went down and the mortgage company, people were cashing all their life insurance and mutual funds. So anyway, I got the chore of doing a workout. One day in the late 70s, I got

JOE (07:52.238)
I was back down to Sherry Kirkendall and myself. Sherry's still around, she's also a legend. She worked for me, or I worked for her, I'm not sure, for 46 years.

Shout out to Sherry.

DEAN (08:07.936)
a great picture of her downstairs in her beehive. that her senior picture?

I hired her because that picture actually was she had three really wonderful sisters and they all went out to the mall and in that era you could have beauty shots made. You know and they would put on these wigs and I hired her because I thought she was really good-looking and had that big blonde hair. I didn't know she bought the blonde hair.

yeah, I remember, yeah.

DEAN (08:37.518)
didn't know it was a wig either till you just told me. Oh wow. I've been looking at that.

So that was the secret. It wasn't the hairspray,

no. Yeah. So, you know, obviously there was a lot of discernment and thought went into this operation and, unfortunately ideas said, you've done all we've got all out of you. can get, we're going out of business. so the last year and a half, said, you can do whatever you want to do the other half of the time and then finish up our stuff. So otherwise I probably would not have been, brave enough.

Interesting.

JOE (09:15.822)
to start my own business.

So you had a little support there as you transitioned over to your own business owner. I do wanna make one quick clarification, or this goes without saying in Joe's mind, but as he said, he and Sherry worked together for 46 years. They were, in my mind, partners. Sherry was multifaceted. I mean, she was smart, she was tough, she had a great mind for business.

She dealt with some very institutional, sophisticated clients and some not so sophisticated clients.

Amen.

What did you find not so sophisticated?

DEAN (09:58.83)
I can remember one of her last assignments which was so stressful is that we sold a house that had furniture in it and the person who bought it thought the furniture came with it. Boom! And it was a litigious lawyer or a doctor, I don't remember.

It doesn't, doesn't allow you.

And got in the end and Sherry was right in the middle of it and she just kind of took it on and dealt with it. And I know it was very stressful, she took on all those tough assignments. Is that fair to say?

That's sass.

JOE (10:34.654)
It's very fair to say. then also she was really respected by UT Southwestern Medical. And in addition to my mortgage stuff, I don't play golf or have any hobbies. I wouldn't call Southwestern a hobby, but did have two other businesses in that I was the exclusive outsource real estate department for UT Southwestern for 29 years and then still do something similar to that with Scottish Rite Hospital.

she actually negotiated a 170,000-foot lease out there and hopefully this doesn't get too widespread. I never saw the building. Anyway, she really did a wonderful job. People like their credentials, she was a graduate of Middle Ocean High School and one of the more memorable things was that a broker came in the office one day when it was just the two of us.

Yeah.

JOE (11:31.182)
And she at that time answered the phone and filled out the pegboard and was doing other things. And this guy comes in and starts giving her a hard time. And that poor guy is about an inch shorter when he left. That guy, I won't name names, but that guy has currently has a listing for the Exxon home office. So he was a pretty big dude in town. I imagine he would still get the shakes if you mentioned her name.

Right

DEAN (11:51.349)
Interesting.

DEAN (11:58.644)
There go. And a lovely and she's.

make a guy ex on shaking his boots. That's that's saying something.

Awesome and fun. You know, this leads me to, I knew this would take me to other places, but other than real estate, you have invested in so many very interesting businesses and I'm going to let you do your home Vestor line. I won't steal that, but before we get to home Vestor, I do want to talk about what is now the KD Trail ice out.

yeah, that's Trey's favorite spot.

Yes, well it was me and three Jewish doctors, one of them was the lead general partner, and they decided that we could take this old car barn down at the end of Rue Street on what was then the Katy railroad, and later the trail. Anyway, we were going to rent this building and then we'd put these

JOE (13:04.674)
picnic tables together from Home Depot. And we were hired the so-called star from Texas Tea House. And Texas Tea House was a place you'd drink a lot of beer and stand on the tables and all that kind of stuff. Yeah, it really was. And to call him a star, have been told is a little bit of a stretch. He actually worked for IBM during the day and then he did this at night, think. anyhow, not to take anything

Sounds awesome.

DEAN (13:31.949)
reputation.

His name was Will Barnes. We called the place Will's Barn. It lasted probably nine or ten months before it went broke.

Hey man, they almost made it a year.

Well, we had a, we're off to a great start. One of the doctors that was the general partner hired his mistress to run the thing. I guess it'd be better if I not name names here, but you know, one of the problems about working for yourself for about 30 years is your filter is not quite as good as you corporate guys.

I recommend.

WES (14:07.18)
Well, that's good because I don't have a filter either. So me and you are on that same weight.

It'll be on the internet forever. You can filter yourself.

Well, this again

There's called post-production. So anything that you say I can bleep out

Okay. Well, Dr. John Doe, artist mistress, the, she'd never done this before, but that's okay. Cause probably would have gone broke anyway. And, we got sued by Vesta Hughes who lived across the trail in a big, high rise for making too much noise.

DEAN (14:40.174)
who was an incredibly powerful lawyer here in town.

Yeah. Yes, I was using loose. And so, you know, at that time I didn't think it was that loud. I would today, of course.

So like, was like, what were you playing that was so loud? Okay, was there like a certain song that you like to play?

I'm just trying to...

There's two of them come to mind that I can't even name on this deal.

WES (15:06.954)
Okay

There we go. Okay, so I'm going to switch to another business. I've heard, so let's talk about home investors for a second. I think people kind of know what that is. We buy ugly houses kind of a deal. So what was your tagline?

Well, it was, I'm not sure if this might be what you're talking about, but we had the only houses that you had to wipe your feet when you came out instead of when you went in. It was, they were really raw.

gonna be the name of the episode.

DEAN (15:30.562)
to do with your feet.

DEAN (15:42.188)
That's it, wiping your feet on the way out.

Wiping your feet on the way out. I like that. That's pretty soft

That kind of sums up what kind of deal we're dealing with. And you think you've heard some crazy people. that, it was pretty amazing. We did about 160 houses and it was a good business. But the problem was the Wall Street boys, uh, while wise deputy at the end, we, we would finance Bruce, uh, Butler and Les Davis. were great guys, fill around and

we would buy the houses and do the, we would have the loan and be, we were partners. Jerry and I also was a partner with them for Tarrant in Dallas County. And we would do those. And then the homeowner would be financed by at that time Ford Motor Credit and they'd make a long-term loan. Bruce and Les had good credits. The homeowners typically were not so great. We were really pre subprime.

understand what you were providing. You were making those ugly houses prettier.

JOE (16:49.384)
one of the things I particularly remember is we drove up in front of this house and it had the loudest purple. They couldn't sell the house. It was a iridescent purple house. And I think they said it took three or four coats to cover that color because of the purple. We're really had a bad time. You know, some of this was just common sense, but

my gosh.

WES (17:10.584)
Somebody had to think that was a good idea to that person.

DEAN (17:16.543)
Yeah, what fascinates me is that when people talk about real estate and finance and you think about banks and insurance companies and so forth, when you kind of became this entrepreneur, if you will, on the financial side here in Dallas, that you there was a whole bunch of businesses. You had a towing business. You had a brick. Did you have a foundry for brick business? What what else?

Put it in.

DEAN (17:44.984)
What else am I?

One thing that was a little more far out was that we had a prototype of a one-man jet helicopter.

out.

I don't know what you call it. It a one-man jet helicopter. Okay. And I'm not a physicist particularly, if you think about this, if you put a motor on this rotor, the passenger is just as likely to turn as the blade. Oh, yeah. It's a little bit of a problem.

that's interesting, I understand what you're saying.

JOE (18:20.842)
So this this dude out of Midland figured out that if you had a screen on the end of the broders and you ran hydrogen peroxide through that it would explode or some such thing and we actually were on the head on the cover at one time of a popular science magazine. Yeah, and we had a Navy contract and like a lot of small businesses our guy was more of a dreamer than doer and it went broke, but we had a lot of fun.

Yeah, I guess this is kind of a lesson for the aspiring entrepreneurs out there. I'm afraid so. Some wisdom, it's like don't be afraid to fail or you're gonna fail for sure.

it's just you never know. Well, in the other side, had my great partner, great guy, Jimmy Asaph, when I ran on these deals, and we figured out that you could use soybeans to make flour and use that to make bread. so Jimmy actually got Mrs. Baird's bread to run

Yeah.

WES (19:30.312)
I remember that office central, right?

huh. Yeah. They actually ran a sample of this. So we went over there and put the stuff in and there was a little bit of a problem with soy stuff in that would tend to be a little bit pink. And so they, they, they put this flower in and we went to lunch and came back and the guy looked like a windmill. He just, where'd it go? They couldn't, it had gone out on the truck and they didn't, they didn't know where it'd gone.

So it was in some store or someone.

Yes, so far as had. Pink bread? Pink bread.

God.

DEAN (20:05.314)
Well, somebody won the prize.

Yeah, you wonder how I made a living as we tell these stories.

Well, so that's a really good segue because what I think is that one of the worst financial calamities in the state of Texas and in the banking industry created one of the best opportunities and led to the longevity of Graham Mortgage and Graham Investments and that was the SNL. Yes, that was wonderful.

That was wonderful.

Did you say the SNL? Okay, well, so for a guy like me that's...

DEAN (20:39.864)
Savings and love.

All right, the savings and loan crisis where the I get Joe, you can you can explain what you think happened there.

Well, part of it started out that particularly a really conservative savings loan was Dallas Federal Savings Loan because they had 5%, 30-year loans, and their clients were so good they didn't move a lot. They were a very stable group. And North Dallas type of part of the borrower. And when the interest rates went, when the prime got to 20.5%,

there was 30 or 5 % loans went down in value about 30, 40%. Yeah. Well, savings loans and bank have what? 7, 10 % network. So they all were under water. And part of the remedy was that they said, if you're running a savings loan, you can be more entrepreneurial. You can go into the joint venture business and you can start financing home builders and building, be an owner and do all this stuff. Well, the staff had obviously no

ability in that area and it really created a crisis. And of course, when the thing got taken over, the government took over, I guess, most of the savings loans and for banks in Dallas.

DEAN (22:02.42)
Yeah. This is the early 80s. what I would say, what it resulted in was reckless lending. So what was happening is, for instance, there was 50 million square feet of office space in the DFW area. It's my understanding that within a five year period of time, that doubled to a hundred million. So we already had enough and then we just went because there was capital to do it.

What was this?

DEAN (22:32.364)
because people kind of, would you call it fudge, the underwriting?

I don't know what they did, but I actually had a friend that got a contract and I went with him. We got a holiday in Memphis, Tennessee on the contract for a million and half dollars. And he said, well, we're going to get a million nine loan. I thought about that for a while. Well, know, it seems to me somebody's going to get a short stick in this deal. So I actually called the lender and I

Right.

JOE (23:05.9)
I always remember this guy actually going home and the dog was barking at him anyway. said, you're going to loan a million nine on this. And he said, yes, but I have an appraisal for 2 million, four. Not a problem. Well, you know, that now, you know that we're only paying a million and a half. And he said, but I've got this appraisal. So this is not something they never made loans on motels in the savings loan business at that time.

So I thought, you know more I thought about that. I've never been to jail and I don't want to go again.

Right.

That's a Yogi Barrett I was saying right there.

Those are, to your point, federally insured institutions and government regulations.

WES (23:46.966)
So when you said the early days, it reminds me that's the mortgage back securities. Is that what you're referring to?

No, that's that's that's coming later. Yeah. OK. That's 2008. What this is is the famous one was the condo crisis. And by the way, I have to do my job, which is approving a wire. Oh, so yeah. So I'll talk, Joe, you can talk about. Yeah. I 30 condo.

I hope so.

WES (24:13.698)
Yeah, Joe, talk to me, man. What's up?

Well, they were along the same lines as my story about the Memphis Hotel. Right. They were such believers in the appraisals and the appraisers were making a lot of money. know, appraisers don't get paid necessarily to have a value estimate, to get paid to get the answer that the client wants. Right. If you don't do what the client wants two or three times, you may not get

used again. Again, I hope this is limited coverage here because that's not the general story and it's different now than it was then. But anyway, we built so many condos and apartments out on Lake Ray Hubbard and there was one fellow in particular, Danny Faulkner, that was the king of that and he made millions and millions and they all went in default. And so there was

JOE (25:15.298)
plenty of guilt to go around but clearly he was fudging the dealer.

He was beside you.

Yeah, you know Wes so if you look him up Danny Faulkner he he claimed he couldn't read Remember that

Wait, he worked in banking.

He was a borrower, was a developer, and he claims he couldn't read so like I think part of his defense was he didn't know what he was reading. He signed documents with an X.

JOE (25:35.31)
He was the developer.

WES (25:48.087)
Like, like, John Belushi and Blues Brothers.

I don't know if some of this is legend, but that's the way it was kind of the story's been told.

think it's pretty close to the truth. The net result was correct in that all this stuff came back and the government lost a ton of money. then of course he had a terrible heart condition and all this when it came time for sentencing.

because he couldn't read the label on his heart medication.

There you go, I thought of that. And of course, you know, there are a number of miraculous recoveries after they get out of jail about, or get out early that seem to, and he's not the only one in that regard.

DEAN (26:30.828)
Yeah, there was. So, know, I'll just say from my perspective, when I was young, living here in Dallas, and this is about the time you were born, Wes, and you and Drew, and the whole real estate market collapsed because we had all this stuff everywhere that had no people to occupy it, no businesses, no people. It was just built so that the money could be spent and people could, whether it's brokers, title companies, appraisers, know, overfunding developer fees,

anything that could have been put into a budget, I live it. Right? mean...

Well, the bomb goes off about every 10 or 15 years and I've been doing this about 60 years and no one has ever known in advance. Never figured it out one minute earlier except one guy did figure out the subprime and he happens to be here in Dallas.

It's the guy in Big Short? Yeah. Yeah, he was the guy. I'm trying to think what was his... So we're talking about the subprime that's like the tranches throwing all the crappy loans. Yeah, the Big Short. I love it.

That's it.

DEAN (27:35.885)
the big short.

He was a securities guy. And you could, if you had a nine-year-old handy, they could look at these things until they had absolutely no chance of paying. I mean...

Yeah, what was it like? No FICO score, no proof of income. Were they called ninja loans?

Well, and even besides that, there was one example and it was a great time for us because we bought a lot of this paper and the government in their inevitable way, so that based on, what the state, where the savings alone was and what they, what loans they had not on the property. So if you wanted to buy a hundred lots and play, no, you had to also, and I'm, this is a real example. You had to take 15 home loans of some kind.

out in West Texas. And so we put zero value on those. We put about 40 % value on the subdivision land and we got it. And every one of those home loans paid off. At par. Wow. You would open the file and in some cases there'd be a check stapled in there and a note in there from Miss Minnie saying, where I took my payment, they said they weren't in business anymore.

DEAN (28:38.358)
at par.

JOE (28:54.262)
And that is some other savings alone. And, but, then they said the government had taken it over. So where do I send my check? And here, here, the thing was right there for the taking. Yeah. And, also if you were a land guy, you didn't want a motel in El Campo or, you know, home loans out in West Texas. Right. So the matrix they put together was just awful.

Was it awful because it was just so complex? I don't want to say complex in a good way, but they just made it just as this was all nonsense? Oh, okay.

They were just totally overwhelmed. All these banks, so every bank in the state of Texas basically was taken over. Very few were not. And the operations parts to the bank were, you know, some of them remained intact where they had deposits and customers and tellers and all that kind of stuff. But the assets held by those banks in terms of where they invested their money and loans were all shipped out to

the junkyard in essence called the bad bank.

They had what they called a bad bank and a lot of that went to RTC, which is the resolution trust corporation or the FSLIC or FDIC. Some of the government acronyms got this and the way they were done was just unbelievably good for us. It was stupid in the way they did it.

DEAN (30:22.858)
I think what they were doing, so here's a take on the other side of it in my opinion, is that when you have a supply of things and you really have no demand and there's no liquidity in the market, things won't sell for beyond pennies on the dollar. So if you're trying to get liquidity back into the system, you have to reduce the price low enough so people will

so people can spend.

come back in the market and put their capital at risk because if you bought an office, so here's the deal. We would lend on office buildings at 80 and $100 a foot. They would sell office buildings for 15 and $20 a foot, right? Somebody had to be brave enough to invest 20 bucks a foot and have no tenants paying no rent.

Right.

WES (31:12.448)
So yeah.

In some ways, there was some reason to cut the price. But in other ways, to Joe's point, I think I think there were guys on the inside that were selling to their buddies, maybe.

no, that wouldn't happen. with bankers. no, not the government.

Well, these were federal government workers. Well, then, and what you said is true, but they would, you're basically we're bidding on these things and it would, it would hurt the sale of my previous example. If you wanted these lots, you really just gave them nothing for all this. Got it. you can get away with that.

strategy of liquidation was

JOE (31:53.878)
an institution like Fox and Jacobs, a centennial, they weren't going to buy something that had a motel, lots of houses in West Texas or had a motel in El Campo. Right. You know, they were corporate entities that had to have the lot. And that gave us an opportunity again, at that time we had pretty good money in our accounts and we could buy that package and sell the lot to the builder and sell. kept the loans because they were

reasonably short term and they're paid off.

So here's, so I'm going to kind of transition this into Graham mortgage, what the one and Graham investments, but the one thing I want to kind of emphasize is that, that everybody has expected that to happen again for the government to liquidate the banks, to take over the banks, to wholesale sell and foreclose all these assets. so lots of war chests have been.

formed and to Joe's point, the bomb went off, but the bomb in Texas after the SNL crisis might've been a nuclear bomb compared to all these other downturns and all the other locations because it was like a death penalty. mean, it was, it decimated and destroyed us. And what, what, to Joe's point, private money sitting on the sidelines was

Yes.

DEAN (33:24.67)
was able to come in and somehow see value in some of these acts.

Is that why Texas now, you were saying with private money, why so many companies want to come here? Is it just? Well, I know because of like the business.

Honestly, think we got the bad reputation and people didn't, we were laughed at. We had no money. Philip and I didn't do deals for five years, but as an economic environment and engine, Dallas was coming up because the airport was built in 1974. So this is 10 years after the airport was built and it was just, the economic engine was.

I like to also think that the show Dallas, I don't know, pop culture, but no, no, it brought Dallas into the spotlight. there was people starting to know. I know it had nothing to do with it, but you know, I like to think that some pop culture people were like, Dallas, there is oil money. I don't know. Maybe I'm just talking. The cold for a land man. I don't know. I'm just talking.

Well, my

JOE (34:24.716)
My benchmarks for this was when I worked for IDS, I would go up there every couple of months. And if it was anywhere near the end of the month or the first of the month, you'd walk in an IDS tower and there'd be a savings loan in the bank. And there'd be a dozen people or so standing in line with their little passbook waiting to put it in there and get their four and a half percent. I mean, in Dallas, anybody in, you know, I mean, they'd go put an option down on some land in Plano.

I had to buy a property that is, let's see, it's now the Walgreens up on Malkinburg. And it was an old house and it was owned by the Oram girls. were three sisters that lived in this house and they must've been, God, they were old. were nearly, nearly 20 years old, younger than I am probably. That's old. So anyhow, I thought, man, I'm finally going to find me a pigeon. And I was trying to be nice about it. wasn't going to really shaft them, but

Those old ladies were trading genuine May futures in the back. I'm convinced. Yeah, they were Yeah, I didn't find any special deals

Kated

Yeah. Hey, Wes, so just to your point, though, I think that Dallas, at that point, Dallas was known for the assassination of JFK. Right. That's right. had a rough reputation. think the show Dallas kind of shined a different light on.

WES (35:47.616)
All the Dallas Cowboys were also... I'm just thinking of things where you look... The center of the world before television was really... New York was the land, right? So then you start...

Yeah, so I'm going to give you the Chamber of Commerce reasons. Okay. Yeah. Yeah. I think, I think aesthetically you can say, the TV show, the Dallas Cowboys, it's all kind of glitz and glamour and beautiful people. That's all true. Right. But it is in the middle of the country. No, yeah. It is in a warmer climate. It did have a bigger, airport. It does not have state income tax. It has a friendly business climate. So all these things were now being pointed out.

And by the way, cheap housing, cheap office space, cheap, cheap, because all these assets were so.

So kind of fair to say the aesthetics got your attention and then you're like, take one extra look. You're like, wait, we can do business here.

one or the other.

JOE (36:45.698)
Well, and the point of my little story just was that generally the people in Dallas were more entrepreneurial and positive business-wise. And my wife came from Chicago and went to the University of Iowa, and they're just still are more conservative. They might have a lot of money, but they don't flash it like you do in Dallas. Particularly back then, they just are not as much of a risk taker.

It's like this system works. We're not going to change it. Is that the kind of the mentality up there?

Joe's point, he wasn't born into Dallas society, right? Neither was I.

Right, so you're the rebel. You guys are the outlaw.

What I'm saying is that the environment here is different. Not that he was unique to it and that he needed a special kind of talent. It's an environment where people just, know, startup businesses, entrepreneurial spirit. I mean, that's what you're describing.

JOE (37:48.48)
When I lived in Greensboro, North Carolina for 17 months, wonderful people, wonderful town. But if you go out into a social event, they'd always get, are you the Grahams from Smartboro or somewhere? Right. Yeah. In Dallas, they're more like to ask, can you get me this loan by Tuesday? I can't remember one person in Dallas ever asking me if I'm the Grahams of

It's all about networking, not about pedigree.

JOE (38:17.739)
Anything.

It's a really good point and that's why when I came here I was 25. I had a four syllable last name driving a Volkswagen with no air conditioning in New York license plate. I never sensed any obstacles.

Right. Because never kind of to your point to North Carolina Charleston, you know, if you had the last name of Ravenel or one of those names like you were royalty. I'm like, but that was like 150 years ago. Nobody gives a. They do. Well, like, but I'm with you. Like, cares?

Obviously they did.

You didn't say West, I forgot that you lived in Charleston.

WES (39:00.302)
Yeah, 20 years.

So no, it's cool. It's kind of like, it's the, the, the, makes Dallas, Dallas is energy and spirit and not necessarily, there's plenty of wealthy families here that have big names and they do a lot for the philanthropy and they carry a lot of half. But really the reason I liked living here as a young business guy was I didn't feel like there were,

barriers to entry to making a good living. And then after we went through all that pain and suffering, we started to raise and rise and shine, so to speak.

It is an amazing thing. can talk about it all you want to, but you have to live it to really appreciate it. I have a clipping down in my office where the Republic Bank of Dallas was triple A rated by Moody's. And I think it was seven or eight months later they in bankrupt. paid. I mean, that's how fast this thing can come apart. Right.

But I feel like the infrastructure for the real estate world is now not so fragile.

DEAN (40:11.692)
No, because it's demand driven, to your point. We were adding to the supply of everything without it being backed by demand. Right. So it became, at some point it kind of flipped where we had enough product and more and more people are coming in and you have to keep up now with demand. So at some point we all said it, now it's a demand driven local economy.

The Dalles is one of the fastest, next to Houston, one of the fastest growing cities.

Well, I think over the last 30 years, could say Dallas, Houston, Austin, you know, a little bit of San Antonio, it goes a little bit slower, but it's all because of what I would call the spirit of, of can do. I, you know, we have some, some fun conversations about calling New York, no York. It's like there's so many damn rules. It's like no walking, no.

100.

DEAN (41:11.884)
No running, no this, no that, no this. And you come here and you're like, you know, it feels like there's people here supporting what you want to do more than trying to prevent you.

Yes, for sure.

So they let's so we're we're so we're 45 minutes in how does this feel? Wow. It's fun, right? Yeah.

I'm telling you, it's good. It's like therapy. gotta just, you just kind of start letting it out. You feel good and relaxed.

So what was the vision for Grand Mortgage? Why did it have, why, why did it birth? Why did it?

JOE (41:47.182)
because the owner wanted to make money.

There it is. There's the spirit.

What's it? Yeah, I cut it all. Yeah, I cut it down. I like to make money.

Do you have any other questions?

Great stories have a kind of a reason or you recognize the gap, right? In terms of, was it the lady with the bakery in Highland Park? They couldn't borrow.

JOE (42:14.018)
Well, that was kind of how I got started. Yeah. didn't realize and it's still, I'm. Yeah. She was a tenant in Highland Park village. Okay. Running a bakery. Gotcha. when you go in, she'd give it to kids and more stuff than you bought. And just a wonderful sweet lady. anyhow, that was how I kind of got it. Wait a minute. Maybe there's something out here. And I still even to this day.

Yeah

WES (42:19.374)
It's a silent park village. I'm just trying

was a house in

JOE (42:42.67)
I just can't believe how many opportunities come up. had lunch the day down at Suster bank and ran into Sam for a few minutes and he was talking about the regulators and all. And he was a little taken aback. said, man, isn't that, that's just wonderful for grand mortgage. I think that's a great idea. And it's just amazing what banks can or won't do. and I, I'm not sure.

Ha ha ha.

JOE (43:11.118)
really good ground with this, but one of those that amazes me the most is the, uh, the cash out loans. If somebody has a $4 million warehouse and they want a million dollar loan is I understand this and I may not be really, you know, I've told people, said, if you want the million dollars, if you want to go to Vegas, I don't care. I'll take your warehouse if you don't pay back. But, you know, I mean, I'm not alone to own where we're not alone. don't know. We're still not, but.

Yeah.

JOE (43:41.058)
I mean, it just doesn't make sense to me that you wouldn't do those. And yet people are at banks that they don't.

And I think in a lot of ways banks, they have a 90 % insurance policy from the federal government, right? I mean, if you're a hundred million dollar bank, typically 90 million of that is deposits and 10 million of it is your capital. So in some ways, you you're beholden to them because they're your insurance underwriters.

Just think about this for a minute. Let's say that we chipped up, um, dipped in, uh, I don't know, a million dollars and had three million. And then let's see, what would that be? We'd go out and borrow, uh, uh, well, I say it was 10 million. We'd go out and borrow another, uh, $90 million, uh, uh, on an hourly basis. Our lender could call our note in the same day, not, not, not a day, but that same day. Right. And let's go loan that out for five, seven years.

Is there anything wrong with that? Think about that for a minute. You came down here from Mars. I mean, it's all because the government backs it. It's the only way it works.

Yeah, I would say that. So again, I think that lots of good business models that are in established areas like financial services recognize gaps, right? So we're providing liquidity. Gramm-Morgans provided liquidity where liquidity was needed in a reliable and speedy, rapid way that avoided a lot of what we would call unnecessary friction.

JOE (45:26.702)
Well, it's a good example for me is, and I will not name names here because there's some good people, but the former, well, a former major top person at the mercantile bank, um, a person that was the head of real estate department at a large bank here and a fellow that was on the, a trustee of the, um, large pension fund of some $3 billion decided they wanted to buy a grand mortgage and

they, when I wouldn't sell to them, they, they decided to go in business with them on their own and compete with me. It took me 17 months to run them out of business. It was, they did it just like you were the bank. had a certain amount of money. had the first tier of a committee and then you had a second tier and then you had an appraisal you had to have. And at end of the day, they had the same matrix as the bank. Right. You know,

So the point is we used our own, we use our own experience resources skill to do the underwriting. Right. And that we've got a model because it's a first lane data trust. It's a senior note. It's a very safe, if you will, business model because we control the property with the data trust.

Well, not to take anything away from the appraisers, but that's historical data. And if you want to know something about shopping centers, you'd call John Byrne or Marcus, there's about six people we work with, you'd call and what's the market today? Not a year or two years ago. And you know, there's wonderful appraisers and good people, but they're sort of the least involved and knowledgeable person in the pile.

and make the least, That's what drives the value for banks.

WES (47:20.398)
because it's really based on.

DEAN (47:26.402)
Yeah, and I would say that they're better data these days just because things are recorded better, market data is more accessible. Remember, we had to call Wayne Swearingen to get office rent.

Was that like pulling teeth or?

WES (47:48.486)
so you just have like a...

Well, when I came here there were probably a dozen individuals that could go to lunch and they could cut a check for me and dollars I mean there was Homer Raider there was the Corgans there was Gail Williams and Trammell Crowe and the Simmons people and None of those people today or there is no Even the Perot family is has a committee. Yeah, everybody that has money that has a family office with the committee and so it is

a lot more with Dean's point, there's a lot more data available and also there's more discipline than there used to be.

Yeah. So what do you think? Well, I was just I'm trying to form a question about what's different. What's the biggest difference about business? I think we can probably say relationships still matter a lot, and maybe they're not as easy to form.

Or just a lot of things. think the computers make a difference. The data available. when I came to you, didn't have JLLs and all those big companies. It would be maybe five or six guys were real estate brokers. And that, don't, I can't, maybe Sean Byrne and I can't even think of more than two or three that are independent brokers. It's all done by large companies now. And, and that makes a difference in how it all works. And I think the,

JOE (49:18.604)
The data available is just dramatically different, better now.

Yeah, so do I. I think the tools we have are evolving in a lot of good ways, but I to your, I think to your point is that decision making has to be based, the tools and the data need to be discerned and decisions need to be made informed by the data, but you still need a dude to make those decisions, those investment decisions.

It's much more discipline than it was. mean, I know, and you were a part of knowing some people fairly well that started happy hour about 2 30 in the afternoon and the buying criteria opened up a lot by six.

it's a

WES (50:05.614)
There you go.

And they probably had a lot of really good relationships. It was collegiality.

expense report man

Here's another thing not to forget. The really important item here is that the economy in Dallas made a lot of really smart mortgage people, real estate people, and a monkey could have done some of this stuff.

Yeah. know, I would say today that Dallas as a city is a world-class city. mean, we've lived through it. I would say the airport continues to be a big driver of that. Now we have Lovefield in addition.

WES (50:44.619)
I see.

to get Matt out here. was, you know, his sister-in-law, like, kind of like, you should go to Dallas. It's awesome. And I remember when we left Dallas, everybody I met, I've never been. Like, you know, it was just the name on the map. But now it seems that, you know, people are flying out here, either for conferences or something. So Dallas, like to your point is, yeah, it is.

Lots of reasons to come. And particularly if you're, if you really want, know, Joe made that statement because the guy who started it wanted to make money. Well, this town is filled with a lot of guys who started it. We were trying to make money.

Yeah

WES (51:27.606)
I today and I just go some of these houses are just trying to say I have too much money

Well, and you have entrepreneurial spirit. mean, there are guys from different countries that come here and really put the hustle on that do really well. you know, again, I do think that the barriers to entry here in society and in business are low in terms of it. You have, you know, you can get capital. There's guys, if you know how to hustle, there's plenty of

There's 200 mortgage bankers in town, probably, whether that's Northmark, JLL, CBRE, all those guys. And we'll put the plug in for Northmark as the best. Yeah. Yeah. We'll put that, those guys.

Good guy.

Yeah, I think I've been there before.

JOE (52:16.846)
Yeah, that's

So anyway, so we're coming up on the hour.

This is only part one as far as I'm concerned.

We're going to have to do this more. Is there any broad statements about the future? What would you tell the intern downstairs about our business?

handsome guy.

JOE (52:38.952)
yeah, he's got hair and everything. I'd just work hard and try to be smart. And you talk about a goal. I have a dear friend that we do that had his, he didn't say, I want it. Didn't come here to make a lot of money. I want it all the bunny.

Yeah.

DEAN (52:46.296)
Amen.

WES (52:57.134)
Yeah. Oh, was it on? What was in Spaceballs? We're not just doing it for the money. We're doing it for a shitload of money.

There it is.

DEAN (53:04.302)
And, and, no, I would say the other thing is that, that Joe practices and Phillip preached as well is honor your work. Right. mean, grand mortgage is known for backing it up.

I don't

We don't leave people in the lurch and we honor, even if it costs us money, we honor.

I will say that is the big part of the, and that was something important to me to be carried on that I can tell you there's a large number of people that wanted to buy. had 20 or 30 people and they moved them would not have done like Dean does, which is just what he said. We had, we have had people that would come by and spread out their stuff. And the month or two months later, they called ready to fund. just based on the conversation, they know that they had batted a hundred percent on 20 deals. Right.

I can pray that Jim Douglas, said, Jim, you never made the application. He said, geez, I got it closed in a week. And we did it. But I mean, I really can believe that in 10, 15 minutes at our table is more of a commitment that can get at the bank after six or eight kiss your face meetings.

DEAN (54:21.368)
So the kissy face lunches are we'll promise you 3 % and turn your loan down. You come to grand mortgage, we'll spend 15 minutes at the table and charge you 12 and get your money.

Yeah, I mean, that's a solid and you know that you're not getting screwed. I mean, it seems that you guys have the reputation that, you know, hey, you go to Graham.

Well, we have two programs. That one is the first one where we'll have some kissy face meetings and talk about 3 % and then not fund the money. Or you can do the 12 if you want the money.

Yeah, exactly. But who's buying lunch though? mean, that's the

Me. I'm buying. I'm buying. So let's give a couple more shout outs in terms of longevity. let's say Jerry Donahue was an important, important ingredient who I took his place. He bought my desk. I went back and sat at that desk. Just a wonderful man, sweet man, Kay McKinney, who was here with you for a million years.

JOE (54:58.366)
He's always good about

JOE (55:09.208)
I don't

JOE (55:24.604)
yeah. Well, just a quick thing about Jerry. When Jerry retired and moved to Colorado and Dean came along, I bet I've had, I don't know, a couple of dozen people say, how did you find another Jerry Donahue? And that is a super compliment.

I tell you, that's a real comp.

It's like calling you Mickey Mantle or something like that.

knew what he was doing, but a really nice guy.

Jerry, Jerry, and he's having his memory care struggles right now. So we'll just send some love out to him.

WES (55:53.132)
Well, I mean what we did with pop this this is a good thing to jog the memory. Yeah. OK.

I'm not so sure he's in that kind of shape. think he's past that. I got you. We love you, Jerry. We love you, Sherry. And I didn't know it was a wig. I'll show you the picture, Joe. that might be fun. Yeah. her permission to put that picture of Sherry as the promo for the

Yeah, I want to see what I Won't put it as the promo. Yeah, I need to see.

JOE (56:20.848)
That could be the cover photo. That would be kind of cool.

yeah. And is there anybody else? so who's the gentleman that worked for you that passed away that was the SMU football player, Dale? Darrell Comer. Darrell Comer. Let's give him a shout

think that's a

WES (56:39.106)
Sounds like a football name.

My girl was wonderful guy. was, he was, made the whole office enjoyable for so long.

Yeah, I've heard you talk so and I got to meet him and was a wonderful guy. there anybody else that came in into the Graham circle that well.

Sherry was out in town one time and Jerry Donahue and I hired the runner up to the Miss Texas contest. Nice. And Sherry fired her when she got there, but it was a pretty big time for two weeks.

And there you have it. I would say there it is, quick decision making at Graham Mortgage. Sometimes it works, sometimes

WES (57:18.592)
I just take the shot, right? That's another one, man. There are some good quotes I need to pull.

When in doubt, make a decision.

DEAN (57:26.648)
So we're going to do it one day when Joe retires, which is never we're going to do a we're going to quote one of them. One of my all time favorites is if there's if you're sitting around the table with guys in suits and ties, there's no work going on.

Which is never.

WES (57:41.294)
Right. Well, that was, you remind me of Leslie Nutt from Parks and Rec. She goes, no, I'll scale back to four days a week when I turn 80. Oh, that sounds so boring. I'm already bored thinking about it. So that's all I can think about.

Any closing remarks here too? No, you were good.

think I've had two or three already.

I know those are what we're selling. no, no!

Well, you get to listen to it. He can edit it, but you're coming back. Thanks so much.

WES (58:06.142)
All right guys, it was a pleasure. This was fun. And we'll do multicam next time

Appreciate it. Yeah.

You're right, that would have gone fine.

So what kind of music would be kind of the...