Episode 5 | A Show About Nothing

Welcome back to the podcast, The New and Experienced Investor. I'm one of your hosts, Alex Barnett.

And I'm Joe Homs. I have over 40 years of experience. I'm a real estate broker, mentor, and investor.

And I'm the new guy. What do you want to talk about tonight, Joe? What are you thinking?

You know, I don't think there's anything going on right now from everything that we're doing, so let's talk about nothing. How's that sound?

Yeah, yeah, that sounds good.

So tell me, you're— we're still doing our, you know, texting campaigns and all that stuff, and, um, I don't see any deals coming through. So what, what's going on?

Yeah, apparently at the end of January You know, the carriers got together and basically said, we've had it with these spam texts, you know, just from every sector, not just real estate in general, but they pretty much rely, they're pretty much putting it onto the, the carriers are putting it onto these texting platforms and basically saying, if you send anything through, we're gonna fine you. So they're really cracking down on their users. And so you have to be sure that the people are opting in To get the text. They don't really want any unsolicited texts. So now, as if we're pushing out the numbers that we were before, our accounts are getting shut down and we're having to kind of scramble and turn off the campaigns and make sure we're not, you know, missing prospects. And it's just kind of a big headache. So we've seen a lot of, I guess, slowdown in the lead generation, which is— You know, kind of annoying. But then, you know, it just trickles down into the pipelines, the deals, all that stuff.

Yeah.

If you don't have leads, then you don't have a business.

And so that's why we have nothing to talk about.

That's why we have nothing to talk about.

Exactly. So when you started, uh, texting campaigns, you know, back years ago, how many texts were you sending out a month? Uh, or I'm sorry, not a month, a day.

Yeah, a day. We were up to like 1,000, and then we went up to 1,500 texts. Um, and now we're down to, you know, 300 texts a day per account.

Okay.

So yeah.

And it seems to be okay at that point. And yeah, they're not flagging you.

They're not flagging it. Exactly. And before you could put, you know, you could kind of just reach out to the, to the owner and say, you know, are you looking to sell? Now you have to kind of dance around it because they have these certain keywords that will, you know, trigger the carriers even more. So you have to You kind of have to say, you know, hey, I'm looking at 123 Main Street. What would it take? And they're like, what are you talking about? When before you could be like, hey, I'm looking at 123 Main Street. All right, have you thought about selling? And get right to the point. Now you kind of have to dance around it. Plus you have to put an opt-out message.

Mm-hmm.

Press stop if you no longer want to receive these texts.

Yeah.

So they know it's sort of a marketing campaign.

Yeah.

It's not— before we were approaching it as just a neighbor. You know, which is always a nice way to do it. But now it's kind of, um, you know, coming from a company, so they're not even responding at that point anymore.

So— What about cold calling?

Cold calling is still good. Cold calling, I think, is still tried and true. Um, I mean, it's— I think it's just going to be here. And especially with AI coming out, I'm sure they're going to come out with some sort of AI caller. But in the meantime, You know, you can just hire somebody overseas to work for a little bit less. But yeah, it's still, it's still good. You know, it's still a tried and true way to, to dig up leads.

Speaking of AI caller, I, I think I actually got one today. And, you know, pick up the phone, hello. And the voice said, hi, my name is Evelyn. And is this Joe? I mean, They identified me by name and stuff, and Joe, and then I said yes. And then there was a pause, and that's— I think that's why you can always tell.

Yeah.

It's an AI, right? There was a pause, and then, uh, she came back on and says, oh great, I wanted to talk to you about, uh, medical insurance, you know.

Oh yeah.

And I go, oh, and, you know, and I kept talking and she just kept talking. So I knew at that point that it was an AI. Yeah. Um, you know, normally I would just like hang up, but I like listening to that stuff because like you said, Yeah. Uh, where we're headed.

Yeah.

So it's, it's always good to listen to what other people are doing and stuff.

Yeah.

Uh, but anyways, uh, you know, I ended up, I ended the conversation and, uh, and then blocked the number.

Yeah. Yeah, exactly. I mean, we've already implemented the AI into our systems and it, it, it definitely helps, at least with the text, the, the little bit of, 'cause we were, we were messing with that, like how quickly to respond.

Yeah.

Because it'll be like, we'll send a text and then you have to wait. And then it'll respond. So it's definitely missing that human element of the timing, you know, it's very robotic. So, but it's, it's gonna be the future for sure. And who knows, who knows how good they'll make it, but I'm sure it'll be undetectable at some point.

Yeah, pretty scary, you know, that, you know, that, that's gonna happen. But I think, I think you're correct. I think you're totally correct, you know.

Yeah. Yeah, and it helps because now, I mean, we, I don't, I think I have one VA on my account and then we have our account, but the AI is fielding the people. And when I see the response, I'm like, that's a decent response.

Mm-hmm.

And it's pretty cool 'cause you can go in there, write a prompt and just say, hey, you're very empathetic, you know, don't be too excited. You're there to help the homeowner. And you give it this whole background story and then it responds to the people and it's pretty powerful. I feel like if we were able to send out 1,000 a day, it would be, You know, bringing us some, some decent leads. So that's the only thing kind of holding us back. But, um, there's going to be a workaround. It's always a song and dance, I guess, with regulations. That's why you don't really want to rely on just one sort of thing, you know?

Yeah, yeah, absolutely.

Yeah, because there's, there's ups and downs and changes in the industry and all that kind of stuff.

Yeah, yeah. So anyways, something else that's not going on I just finished taking possession of a property that I was foreclosing— I'm sorry, not foreclosing, evicting somebody out of for a client. And I had a text from the tenant on Sunday. They said, we're out. Well, we've already gone through the process. We've got the eviction ordered, ready to go. The sheriff was ready to come out. But obviously, you know, I, I, our goal is to get the property back. So I went over there Sunday and took possession of the property. To my surprise, it was pretty clean. There was some stuff that was left behind. There was some damage to, you know, a couple of walls, some, some dings and stuff like that, which is really minor at this point. Uh, but you know, talking about nothing, we have a property that we bought subject to, and we bought it with tenants. And so what's going on with that property?

As far as I can tell, nothing.

So why are we at nothing with this property?

Right, right. Yeah, I mean, we said we were gonna work with them, you know, obviously, but we know that that's most likely a lie when they say, okay, we're gonna do something about it. And so you just said, just keep reaching out. And I reached out, I got ghosted pretty much. And then he texted me, it looked like 2 in the morning and 4 in the morning saying that they're working on moving, finding a place, but I think that's just buying them more time.

Yeah, so they're doing nothing.

They're doing nothing.

Yeah, right along with this podcast, they're doing nothing.

Yeah, so I always like to believe people, but that's gotten me into hot waters.

Yeah, yeah.

Joe's just like, just start the eviction.

Yeah, when you called me and told me you had met with them and you didn't explain what I asked you to explain, which was The cash for keys process, the eviction process, and you had the paperwork there ready to go, but you walked away and said, uh, yeah, I couldn't do it. Yeah. Um, so hopefully that was a big lesson for you.

Yeah.

Okay. That you can't just not do nothing.

Exactly. Exactly.

You have to do something. And I, and I told you, uh, from the beginning as well that, uh, they're not going to tell you the truth. They're going to try to prolong this. And I don't think people, you know, tenants in that situation really start to wake up until you actually serve them a notice that they're going to get evicted.

Yeah.

Okay. Either that or come up with a bunch of money, which they probably don't have anyways.

Yeah.

You know, and this, this is a, a really unique— I shouldn't say unique. This is a normal situation. Um, you know, this, this house is about worth about what, $550,000, somewhere around there, $525,000, $550,000. And what do you see outside parked? A brand new Corvette.

Yep.

A brand new motorhome.

Yep.

Okay. They got all these toys and stuff, but they, they couldn't pay the mortgage.

Yeah.

So they ended up losing, you know, the house.

Brand new Harley as well.

Oh, brand new Harley. Yeah. It's like, Okay, these people obviously have enough money or enough credit that they buy all these things. Who knows if they pay cash? Probably not. But, you know, there it is. That's just another normal situation.

Yeah.

Nothing going on.

I know. And I was trying to use logic with them, which I don't think was the right approach because I was saying, you know, the bank was going to take this away anyway. We came in And we basically stopped the foreclosure process, you know, giving you extra time as it is. And he's like, just kept saying, well, just see what you can do, you know, like maybe we could do a rent-to-own thing. And I was like, no, that's not gonna happen. Yeah, he's just like, just see, man, you know, like God's looking down on you. He started using—

yeah, I have the paper in my hand and I'm like, I'll see what I can do.

Yeah. And then I told Joe, I was like, I couldn't tell him And he's like, all right, go back. And then I did try to go back, but he wasn't there.

Yeah, and then, and then he's ghosting you and doesn't answer. And, you know, I think the last text that you got was that he was looking for a place to move to because not only is it him and his girlfriend in there, but I guess they have other boarders in there as well who are paying.

Yeah, that's what I think.

But, you know, what's going on? You're getting paid from other people and Uh, but you're still not paying your mortgage.

Yeah, exactly.

You know, when were you gonna wake up? When did you think that, uh, you know, something was gonna happen?

Yeah, they must have known it was gonna happen for a while, 'cause it had defaulted 10 years ago, which is the crazy part.

Yeah.

So I don't get— they just got away with it for that long.

Yeah.

And then it finally got down to the day. I mean, we, we talked to the actual owner 4 days before the auction. And they had given up. She said, I'll give you the house. I don't even want it anymore.

Yeah, she was frustrated. She was absolutely— I mean, and the woman that's in there is her sister. And that's probably the frustration. And I think she said her sister was, you know, part-time on drugs.

Right.

You know, if you can do that, I don't know that you can do that.

Yeah, I don't think it's a part-time gig.

Yeah.

I mean, maybe some people can, but I don't know.

Yeah, and she said she had given her, you know, millions of chances to make things right and pay the back due, the back interest payments and stuff. And she never did. So like you said, she literally, um, and was that through a text or was that—

yeah, that was a text. That was one of ours.

That was one of the first ones that we started recently. And, um, we texted and, um, that, you know, she literally just— you could kind of see her through the text and then the follow-up phone call. It's like she's throwing her hands up in the air going, take it, please take it. I don't want anything to do with it. Just take Yeah. You know, just take it.

Yeah, I know. And I think that's, that's probably a good time to hit up the foreclosures, um, is when that, that looming auction date is right there.

Yeah.

Because otherwise, I'm sure— I mean, it looked like they pushed it out too, maybe one or two other times. And, you know, kind of, it seems like the lender was willing to work with them a little bit, and then at some point they're like, okay, they're not gonna, they're not gonna do anything.

Yeah, it's just time. Yeah, yeah. And, and you ended up negotiating that second down, you know, to a price where it actually made sense to take over this deal.

Yeah.

Um, so which was good.

Yeah, I was pretty surprised. I learned a lot about that, which, yeah, I think, I think with the, the texting campaigns now that they're gonna be sort of throttling the amount, we're gonna have to go for the most motivated people. When before it was sort of like we were just pulling absentee owners, any sort of absentee owners. And then we found this one person actually motivated. I think we need to maybe target that, the motivation, like, and really just hone in, niche it down.

Yeah.

And then just focus on that. So that could be a, that could be a good list.

So real estate, you know, brokerage-wise, listings and sales and stuff. There's nothing happening. I mean, it's, it's pretty dead. It really is. I agree with you. I mean, unless there's something on the market that has been totally rehabbed, that looks gorgeous, those are the ones that are getting attention. The other ones that are, you know, way under market, whatever condition that they're in, are getting attention. But normal standard deals that are out there, There's nothing happening at all.

I've seen the days on market are just looking crazy now.

Yeah.

I mean, seeing stuff over 150 days is just like normal.

Yeah. But what, you know, what I don't see is I, you know, watch YouTube and I see a lot of these real estate gurus out there, you know, the sky's going to fall and, you know, get ready for foreclosures. People are, you know, going to be losing their, their properties left and right. I don't see a lot of that at all. And I think it's because Um, you know, our employment rate is really low. It's like 3.5, somewhere around there. Um, in California, it's 3.5. I'm kind of waiting to see what happens with the tech markets because we're like up in Northern California, very heavily involved with tech. And if these, uh, tech people start losing their jobs and, um, you know, Twitter's a perfect example, they start losing their jobs, you know, if they have houses, Maybe they're going to get into the situation where they're going to be distressed.

Right.

Because they can't get a job right away. In California, we're a foreclosure state. So literally, once the bank sends a notice of default, you have 3 months and 21 days to cure that. If you don't, they can evict you. You know, they can foreclose on you. I'm sorry, not evict you. That comes later. But they could foreclose on you right away. But I just— again, there's nothing happening there. It really is. I keep an eye on it.

Yeah.

You know, I think there's going to be a great source of, you know, revenue in real estate here, helping those people out of their situations and, and buying these properties at a discount. Because, you know, last few years, you could have purchased something at $500,000, 3 years ago that's worth $900,000 or $1 million. So it's gone up in value that much. We've backed down probably 10 to 15% of that, but we're still not back to, you know, what this person purchased a home for.

Yeah.

And then obviously they put 20% down, so their loan's a little bit less. So it's, it's not like, you know, there's going to be a fire sale on these things, but there's going to be some people that are stressed out.

stressed out. And it'll be the time for, I think, more creative deals. I'm getting a lot of leads right now for people that bought houses in 2021, put down the 20%, tried to turn them into Airbnb. So they dropped another $100 grand into it. And just because nothing's going on and nobody wants to, you know, live it up vacation style, they're not getting the return that they thought they were gonna get.

Yeah.

And so they're just, they don't know what to do 'cause they know if they list it right now, it's just gonna sit. Or they're not gonna, you know, they're gonna have to sell it for maybe what they bought it at before they put all the, you know, bells and whistles into it. So I'm trying to figure out how to help those people.

Any particular areas?

Um, a lot in the desert, a lot of Yucca Valley, Joshua Tree, Landers, Twentynine Palms. That was just a crazy bubble 2020, 2021, 2022. And just started dying at the end of 2022.

Yeah.

And now nobody's in there.

Yeah.

So I'm getting like some— they're, they're nice properties too. They're really nice. It's just I don't think you can get the, the rates that they were getting, right, during the pandemic. And people— I think people just saw the pandemic return and then just went all in. And then now it's like nobody's going to the desert anymore. That's, that's done.

Yeah.

For now. Um, and so they're just like, I don't know what to do. And so, yeah, I'm seeing a lot of that. It's crazy.

So, and you know, they're, they're not doing nothing, or they're trying to get out from, you know, the hole that they dug?

They're trying to get out. They're saying, you can take over my payments, but you know, I want, you know, some sort of— they just want some sort of return to where they're not losing any money.

Nobody wants to lose. Yeah, it's like, you know, and, and unfortunately, um, to this point, I've, I've lost money in real estate one time in my life over the 40 years I've been doing this.

Wow.

Um, and so I kind of learned my lessons along the way that these things can happen and to make sure that you're prepared, especially here in California. So you can't, you can't sit on the sidelines and do nothing and You know, the property I lost money on, it was a matter of either lose this amount or lose a lot more.

Mm-hmm.

And so I, you know, ended up selling the property. It was a flip. It just took way too long to flip it. And I had a business partner at the time, and that's why we ended up losing, because we were, we were in a 2022 January type of market where it was, Gangbusters. By the time we finished, the property was like September, October. Um, and then the market was going down and then I was what we call chasing the market down. So I, I dropped the price down a little, nothing happened. I dropped it a little bit more. Finally I said, let me drop it down to where I know I'm going to start at least getting some offers. I did and then sold it. But yeah, we lost some money on that property, on that deal. You know, so you still—

Stings.

It still stings, but you can't, you can't sit back and, you know, not do nothing.

Yeah.

You know, it's like, make up your mind. You know, this is the situation you're in. Either keep the property and continue to lose money. If you don't, then you're going to have to do some heavy discounting to get that, you know, off your books, so to speak.

I mean, what's, what's going to be the catalyst for getting things moving again? It's just stagnant right now.

Um, interest rates. That, that's what's holding everybody back right now, interest rates. And, you know, hopefully the economy and the job market stays good. I'm actually surprised that the lending industry hasn't jumped into this a little bit more. Um, last time what happened was, uh, they started coming up with this creative financing of their own, you know, no money down on these properties. Um, there was a lender out there, um, you know, back in, um, '80s, you know, no, I'm sorry. Um, 2015, '16. Around there, '14, uh, was crazy. There was just like, uh, you want to buy this property? We'll give you 110% loan. It's like you get 10% of this money back in your pocket if you buy this. It's like crazy. Oh, but we, we don't want to tell you this. It's like we're going to start you off with what we call a teaser rate, 2%. But then in a year it goes up to 9%, you know? And it's like—

What could go wrong?

Pretty much like everything else. Nobody reads anything anymore. Nobody's going to explain this to them. And sure enough, all these loans started blowing up.

Oh my gosh.

You know, and it wasn't like they couldn't do anything. They had— the banks had to do something. And so we ended up doing, you know, a lot of short sales and the banks ended up losing money, which I'm not crying at all over.

Oh yeah.

You know, because the banks got plenty of money and they know what they're doing. They're the professionals out there, you know. Yeah, I would say they probably didn't lose a lot of money. There was a lot of consolidation and stuff like that, which individuals don't have the ability to do. And the federal government was bailing them out left and right. Nobody went to jail, but whatever.

Crazy.

That's another nothing happening.

Yeah, yeah, exactly. Yeah, it seems a lot harder to get, you know, a loan right now. I mean, I don't think they're lending as much.

No, no, not at all. Yeah.

Yeah. So I guess you just sit and wait, get ready, stay ready.

So you don't have to get ready. I mean, this is a good time if you're just starting in real estate is to educate yourself on what it is that you want to do. There's so many different things that you can do, you know, purchasing, flipping, buying notes, creative financing, subject-to deals. This is a perfect time to start learning about all that stuff, because when the market does have a more extreme downturn, which I think it will, I don't think we're going to get back to, you know, 2008 levels. But I think, I think we're going to have a downturn, you know. And you were talking about people that had purchased in 2021.

Mm-hmm.

That's, that's a perfect example. And if they were purchasing, you know, with 20% down, there's still equity there available. And it might be a good property if you could take over, you know, the existing loan subject to. You don't have to pull any money out of your pocket. Yeah. And, um, you know, if you can afford the payments, then that's a great way to buy a home for yourself.

Yeah.

You know, it doesn't have to be an investment property. Um, it can be, you know. So— I know.

Yeah, I'm getting one in Yucca Valley, $10,000 down. It's like a 2-point-something percent interest rate. I'm just gonna put a long-term renter in there until maybe, maybe it starts picking back up as far as a short-term rental. But I would be down to live in it, but it's out in the desert.

No.

That's the only problem. I'm not kidding. I'm not going out there.

No, no, no. So, but I mean, I've been investing in Orange County pretty much my whole life, and people ask me, well, you know, what if you go someplace else and stuff? And Um, my son-in-law does Riverside, San Bernardino. I, I stick to Orange County. The prices here have gotten crazy, so I'm not doing a lot of business here in Orange County, but this is, you know, what, what I know, um, that makes me comfortable. And, uh, no, I'm not moving out to Yucca Valley or, you know, all those far places.

I know.

No, thank you.

Yeah. Yeah, everybody—

I mean, I guess if I had nothing to do Okay.

I don't think so. I'd be more of a Palm Springs guy before Yucca Valley.

Yeah, I don't like Palm Springs either. And I mean, I don't like Vegas that much either, right? You know, because, um, nice thing about California is I don't run into many people that smoke anymore, but Vegas still has that smoking thing out there. It's like, yeah, no, no. And then, you know, again, Palm Springs and Yeah, no, that, that doesn't float my boat. You know, that, that's where I'd rather be, on a cruise ship.

Yeah.

Okay, now if I could live on there full-time, oh, that might be an option.

Okay.

You know, especially the last cruise ship I, I took, uh, was about, um, about a couple months ago, um, and I was pleasantly surprised that, um, they had really fast internet. And so they had this little card on the table and it said internet provided by Starlink.

Ooh, yeah, there you go.

And it's like, okay, yeah. So for me, with internet, you can do anything. Yeah, you know, my phone connects to the internet. I can make phone calls from my phone anywhere in the world. I mean, I could literally be out in the middle of the ocean and we're— again, we're still talking about nothing here, but I can be out in the middle of the ocean and I can make a phone call. You know, I mean, I could work from my laptop and stuff.

Cruise ship condos. Do they have that?

Yeah, they do. Yeah, I saw one advertised the other day. It was $1 million for, you know, like a 1,400-square-foot cabin. But I don't know if that included, you know, port fees or food or anything like that. I would hope that it would, but who knows? Who knows what it would, uh, what it would cost. And yeah, buy one of those and the itinerary is literally just go around the world.

Yeah.

You know, just, hey, where are we stopping tomorrow? Well, we'll be in Beijing tomorrow. Like, okay, that sounds good. And then you're gonna get off.

Yeah, exactly. Eventually you'd be like, ah, I've been there 3 times.

I'm not getting off. And then, yeah, yeah, exactly. We're going to be in Cuba tomorrow. Okay, we're gonna stop in Ukraine.

Yeah, I don't think so. Yeah, I'll stay on, stay on board.

Pass. You know, so yeah.

Wow. Okay, well, I'm hoping you don't leave the mainland for a little while longer.

No, I don't plan on it. I don't plan on it. No.

Good.

No.

Good.

I'd rather do nothing here than do nothing in the middle of the ocean where there's nothing to do sometimes. Right.

Yeah. Well, we'll make something happen. Make something happen around here.

Well, I hope so. I, you know, I hope we continue to do what we're doing and refine it because, you know, that's the name of the real estate game here. You're always refining things, especially flipping. You know, you start out and you, you know, you do your first flip and you spent all this money and then you start looking at what you spent money on and you start saying, yeah, maybe I shouldn't use the heavy-duty nails. In this place, you know, maybe I should just get the normal Home Depot nails instead of buying those heavy-duty nails at, uh, you know, a more expensive shop. So you start looking at all your line items and you go, you know what, next time I flip, I can do a lot better than I did the first time, which is usually a first-time flipper's mistake.

Yeah, you know, there's a house in Seal that's sitting right now The guy just timed it so bad. Um, it's a flip, but the, the thing is, I mean, this is like his thing because I talked to the agent and it's like this agent lists all this guy's flips. He's like, yeah, he always goes above and beyond on all of his flips.

Oh yeah, geez, that's a typical real estate agent talking.

And then, but now it's sitting there for so long. Like, it's the highest priced one and smallest square Footage. It's like 800 square feet. It's right next to this huge apartment, the building. And so everyone's like, oh, that's not gonna sell for a while. And I think they just dropped it down to $1.6 million, and it's like, it's still got to come way down. Yeah, I'm thinking like $1.3 or something.

Wow.

Yeah. So, but he was always— he was like, I go, he always goes above and beyond all of his flips.

Of course he does.

And I was like, oh, he's one of those guys.

Yeah. I always go above and beyond.

Yeah. Oh yeah, yeah, no, of course. Yeah, no, yeah, gotta.

You have to. Yeah.

But yeah, no, you could tell it's like— but then he didn't have a fence on the side. He went all out and then forgot like to put the fence on both sides, and that's what everyone's like complaining about when they do the walkthrough. They're like, there's no privacy, there's no fence.

Yeah.

And so I don't know, it's like those little things. But he has a waterfall feature in the back.

It's nice that that's, you know, that's an easy fix.

Just put up a fence. Yeah, I know.

You know, but he probably doesn't because he's put too much money into the property. He's like, I'm gonna do nothing. Okay. Which is again, what we're talking about.

Exactly.

Yeah.

Yeah. All right. Yeah. That's probably, it's probably a good way to— yeah, a good way to end it.

I think so. Yeah.

Okay. Well, hopefully we'll have some more news on the next one or possibly a guest. You know, we're still working on all of our guests coming and, um, you know, inspiring you guys to Stay active, keep learning, and, um, stay ready so you don't have to get ready.

I want to do one more thing. I do want to say one more thing, and hopefully this video gets out before April hits. There's something very important coming out on my YouTube channel in April that you can't miss. I'm not going to tell you what it is right now because we're talking about nothing, But this is something. So if you see this video before April, then make sure you subscribe to my YouTube channel because in April you're going to be totally amazed and shocked at the video that we put together. So make sure you watch out for that, and we'll see you next time.

Thank you, Joe.

If you want some more advice on real estate investing, reach out to us one-on-one.