EP 623 - Real Estate Market Projections For 2020: The Second Half

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This is the no Closer show, where you get the latest developments in distressed note investing and learn the secrets of how you can control millions of dollars worth of property for pennies on the dollar. Get educated and entertained by someone who has closed thousands of deals and lives to support you in achieving the same. Now here's your host, CEO of We Close Notes, Scott Carson.

Good morning, good afternoon, and good evening, everybody. Welcome to this episode of the Note Closer Show. As always, Scott Carson. Excited to be here today. And I just wanted to apologize to you guys out there. And you're like, why are you apologizing? Well, I just haven't done a solo episode in a few weeks. I mean, we've been really busy here at We Close Notes and with a lot of the craziness going on there. Well, not just there, but everywhere. I don't know about you guys who are listening out there, but I often feel like I'm In Stanley Kubrick's 20 space, you know, Odyssey 2020, whatever the heck it is. Just because of the craziness of, you know, we've had the extended stay at home order here in Austin, Texas. So oftentimes I feel like I'm astronaut going outside on a spacewalk if I'm leaving the house, but I'm not leaving the house very much. Staying here, going to the grocery store, going to Lowe's. Steph and I have been doing a lot of great work in our backyard. Even though we don't have a very big one. It's become a really great place. Chill. I should probably record an episode out there because it is just amazing amount of energy with all the negativity going on with COVID and the politics of crap, everything like that there, and all the defaults and unemployment. So let's just get into this and talk about what's really kind of going on a little bit. And what you can be looking for is opportunities to excel with everything. So we obviously, if you've not been in my email list, you have probably seen it over the last through most of July and big chunk of August. We had our Note Nation Top 40 Tour, and I believe it was really productive. We saw quite a few people join us if you were on one of those webinars or have watched a replay on YouTube. Great. Thank you so much. If you have not. We focused on 40 of the biggest markets across the country, literally spent roughly about 45 minutes to an hour on each market talking about the foreclosure timeframes in that market, what's going on that state as far as defaults, what's going on is unemployment, foreclosures, opportunities in the residential and commercial markets in each state and city out there, and really a lot of great stuff out there. So you can always check that out by going to Notenation Top 40, where it's 410notenationtop40.com, we'll put the link in the description below and then also the show notes. But check it out. If you are living in one of the top 40 markets, markets out there, east coast to west coast, you definitely want to take some time. What's nice is that we're getting a lot of people off the Facebook replays, reaching out with questions as they grow and obviously would love for you to hear your advice. What's going on in your market if you're in one of the top four now, if you're not in one of the top 40, let us know. Depending on the size of the city, we may do a special episode on markets, which one of the things that we're planning to do over the next few months. But as we roll into September now, it's hard to believe that this is going on six months now, maybe not such a surprise. I knew it would go on longer than the 60 days that they talked about. But we are obviously seeing a lot of difficulties out there with people across the country. With the eviction moratorium being kicked in place just recently by the cdc, or I should say by the White House on the advisement of the CDC, we are going to see things struggle into 2021. Now, what does a eviction moratorium mean for real estate investors? Well, hopefully your tenants are still paying if they're working. We've seen a lot of people out there. A lot of people say, oh, about 85% of people are still paying their rent. That's a good thing. But for those that aren't or those that are continue to struggle, it's going to come down. Do I keep the power on? Do I keep food on the table or do I pay my rent or do I pay my mortgage? And obviously there's still somewhere around 4.1, 4.2 million people in forbearance agreements out there on their primary residence. When you look at what the banks filed in Q2, especially the big four, with over 151 billion in forbearance agreements or loan deferments in the second quarter, along with a record amount of 32 billion set aside in reserves, it's close to a record dating back to 2008 or no 2010. And that's not the type of record you want to have as a bank. So it means a lot of this. Craziness and chaos means opportunities. And that's one of the biggest things that we have looked at with the donation. Top 42 is looking where the opportunities lie and you have to plant the seeds. That's part of the reason we spent so much time on the notation. Top 42 is planting seeds, not just for then. I mean, there's some webinars, some nights we had just a few people. On others we had a lot of people watch the replays. So it just depends because we're a big believer. Hey, plant seeds and eventually water your garden, fertilize your garden and those seeds will grow, which is obvious. If you look at a backyard which was nothing but a desolate wall, now it looks like a tropical garden. It's the same thing in the no business. Plant the seeds, make the connections, stay on top of it, and eventually they will nurture. You'll nurture that connection that lead into something that makes a lot of sense, that continues to feed you on a regular basis. So that's the big thing that we've been doing, planting seeds, spending some time on the marketing side of things. Obviously, we still have had our monthly note weekend classes, which have really done well. A lot of people in and learning more about the note business in our one day, kind of dip your toe in the water, Cliff Notes version of training and encourage you to check that out. Usually the third Saturday of the month, sometimes the fourth Saturday. There's five weeks in the month, but you always check that out. Noteweekend.com Very, very inexpensive for those out there at 49 bucks. But as we did back in, I think it was June, we had a calling bank split, really successful. And we did that again last week, the last part of August. Great, great day of calling banks for five hours. You can always go to callingbanks.com to check out the next one available. We'll be doing this on a monthly basis going into the fourth quarter. And we'll also do it on a monthly basis moving into the first quarter. So we've got basically when we pick one Wednesday and I'm dialing for dollars for four to five hours. Sometimes we get 20 phone calls and sometimes we get 50 phone calls. And last last week, roughly closer to about 20, 25 phone calls, but contacts and emails at almost every contact. And then what was really impressive, I won't say on my part, was just the fact that I had bankers Call me afterwards. And here's what I wanted to share with you with what those conversations look like. Okay. I had a couple phone calls on my hot list. What did I did? I pulled the Bar financial list and looked at the banks that were zero to three and a half star ratings, which was roughly about 99 banks. And then we re ranked them, ranked them by the percentage of the default in their portfolio. And then we just started dialing for dollars from basically noon to 5pm Central Time. On that list was 4 Bank from Florida. And I'm not gonna name any names, But I had one bank who's roughly got at least 20% of their portfolio in default and had a great conversation, actually left a message. The banker called me afterwards and we talked for roughly about 45 minutes. Not only about where things are at currently, but the future or what they expect. And then also in the past talking about what happened. Cause that banker had been around at that bank in Florida for over a decade. So we were talking about what the market did beforehand, what it was doing. Now he's got stuff on his books, you know, 20% of his portfolios in default mostly. That's a lot of SB loans which if you're trying to buy an SBA loan, the SBA loan, SBA company has to approve the loan sale before the bank can sell that loan off. Most of you may not know that, but they've got to approve that. And he was talking about, hey, I don't have a lot out of my books right now that I can sell. But keep up with me. Contact me back every month. Let's just touch base and see how this all shakes out. And we all are expecting it to shake out in a negative fashion for banks for the most part. A positive fashion though for note investors. And people ask, well Scott, what's the residential side versus the commercial side look like? And there's a difference on both sides. Residential side we're in still a kind of a wait and hold phase for I think for a lot of places, a lot of people out there. As we get closer here in the next month or two, we'll start probably seeing banks looking to move some of their, the residential portfolio because they've had, you know, they'll add almost, you know, they had six plus months to look at their list of borrowers who have either been paying or haven't been paying. Now the ones that aren't paying that are in forbearance agreements that are probably have higher percentages of debt on other things, their credit cards, their Student loans, their auto debt. If they've got a relationship with that bank, that bank can really have have a great picture snapshot at the idea is once this shakes out, is the borrower going to be back on the nice list or are they going to continue to stay on the naughty list as we roll through December? The naughty list, if it's a government backed loan they're probably going to try to keep it unless it's in a portfolio that they can move off their books. I foresee especially if we start seeing more defaults, more spikes in unemployment, more spikes in people getting sick and there's no question the default rate on residential loans is going to go up. It's going to continue to go up. It's at 8.22 right now, which is up about a half point where it was. That's July's numbers. August aren't in yet but as we get here in two weeks we'll have August numbers and I would simply say that that number is probably going to climb from eight and a quarter, probably closer to nine and went up a half point it's probably going to go closer up to 9%. One in 11 borrowers is at least 90 days of fault. The reason that's no surprise if you just look at numbers and read the numbers now how do I read the numbers? Well we look at the bar financial as we've talked about this quite a bit before financial and the thing to keep in mind is when you look at what the banks get or what the quarterly file government reports that they're following with the fdic, this is just on banks, I'm not talking about credit unions, the banks it'll show how much in 90 day defaults they have anything that's 90 plus greater. But they're also sharing the 30 to 89 day lates. Now obviously in the space of a quarter a chunk of that portfolio that's 30 to 89 days as the borrowers continue not paying that's going to roll into that default status. Let's just face it, most things haven't gotten better out there for a so if a borrower is 60 days behind already, it's probably going to continue to drag into that 90 day and the 90 day plus. That's why we expect to see a spike. Now is it a half a point? One point? Are we going to hit 10%? I don't know. I hope we don't. But if you look at where things are at and if you have to take it on a national level, I think we're going to see that. I think we're going to see close to 10% default rate across the country, which is basically what it was. It got bad like it did back 10 years ago. Now the wave of loans that are hitting this is the FHA loans. Now the FHA loans have skyrocketed in defaults from basically 1 out of 10 like 9.69% back in June to over almost 16% of all FHA loans are in default. Why is that? Well we talked a little about this on the previous episode with Merrill Chandler. But the reason that is is you have borrowers in the FH coming in. We're getting an FHA loan first time home buyers basically they're not putting much down three and a half percent if they're having to put anything down. Now what I mean by If FHA requires 3 and a half percent down payment but the banks, the lenders can a donate that percentage. And then you also have a lot of the bigger banks out there that are only paying the three and a half percent down payment. They're also paying upwards of ten grand or up to ten grand in closing costs. Now that's 100% finance loan to somebody who probably doesn't have the most pristine credit. All right, it's great for people that want to buy houses, great for the real estate industry to get property moving. But what you have though is you got somebody who probably scraped by to get in the house. They're very budget mindset. We're not talking a high end home. This is the first time home buyer the 200,000 really 250 and below for the most part the on the market and when they lose their job or their hour has been reduced or they can't work, that's the level where they don't have a lot of savings, they don't have a lot of retirement. Usually they don't have a lot of cushion. So that's why you see a big skyrocketing rate in the FHA. Now also what also happens that beating people out of work 9 o'. Clock. You've also when you have people. This has led to why the big four bank of America, Chase, Citi, Wells Fargo have seen a huge high default rate in their portfolios. Chase came out and stated that 12% of their second liens and then 10% of their first lien port entire residential portfolio is in default or sorry default in deferment. I say that default deferment because they're basically being paid they're at least 90 days behind, about the same thing when you really look at it, that leads why those big four banks, are those just big losses, especially on the residential side, because they financed this stuff. They carried the paper for these people. Now when you give and give and nobody has any skin in the game, yeah, you're gonna have defaults because they've got to pick, like I said before, hey, that $600 a month or that 275amonth. Now unemployment, I'm going to pay for either food, my table and the power versus I pay for the roof over my. Because I can drag this out. I can put into a forbearance agreement. I can say the government's bailing me out. They're not bailing out the banks yet for the most part, they're not bailing out investors. And that's the biggest thing. So that's why you see big FHA defaults out there. That number is going to continue to climb. What's also been the big kicker here going through this is the property appraisals or the tax appraisal districts reevaluating new home purchases, new homes, because a lot of these people are using FHA loans to get into new homes, new home communities. And the taxes have been readjusted from just an empty lot to a lot plus improvements now. So that's the big kicker. People don't expect that. They look at their budget, but they can afford them. They're not looking at six to 12 months when the taxes go from a few hundred bucks to a few thousand. Some cases, okay, so that's a. Tax defaults, as I like to say, that's going to. It's going to increase. Governments are trying to delay things. They're delaying, like with the irs, delaying filing your tax return. That's a good for some people. Some people repay their taxes anyway to get that check to cover things to help them, you know, stay afloat. A lot of times we see that happening. So that's the thing. Where's the opportunity lie for you? Well, here's where I would be focused on and where we're seeing our focus really for the next 90 to 120 days. As we get to the end of the year, through New Year's into January, I would be obviously contacting banks on a regular basis is still one of the best things that you can be doing. Whether it's via LinkedIn connections, whether it's email blasts or it's on the phone picking up a dollar for dollars. Those three things are still probably the most fruitful things that you'd be doing to make money in notes these days. Okay? Those three things are the most important things that you can be doing. If you're not doing one of the. If you're not doing all of them, that's fine, I get it. Hey, some people are working so you don't have time to make phone calls. Totally fine. But you can still send an email blast out. You still can jump on a mailchimp pre write your email and get it out at a scheduled time. You can Also jump on LinkedIn on your phone or on your laptop and send out connections at any time, day or night, rain, sunshine, whatever. Okay? Whether you're sitting home binging Netflix or you're at the office, whatever it might be, you can be sending out LinkedIn invites to asset manager. A very valuable thing to do because those. Here's the thing, ladies and gentlemen, banks and the conversations we're having with the special assets, the secondary marketing, the chief credit risk officers, the whole loan traders, they are looking all right. They know that they're going to have to move a big chunk of their portfolio, whether it's residential, commercial. They know they're not lying. They're not blind to the obvious fact of things out there. And this is something nobody's talking about. They're not blind to the fact that in the fourth quarter they're going to be evaluating things to move off their books. Now the biggest, biggest underlying pain, I guess you could say the needle in their nail, underneath the skin, whatever it might be, bur in their saddle is the small balance commercial stuff. And you can look at articles on Wall street and all that stuff about the commercial space. The CMBS guys, the bigger obviously we talked about on a no nightmare call a few months back, where was a big $50 billion meltdown in the CMBS market that has not recovered yet because of all the defaults. Now the banks out there, your banks have a bigger piece of the pie when it comes to financing that stuff than they did ago when CMBS guys financed 64% of the previous portfolio 10 years ago. Your banks have been responsible for 53, 54% of what's in default right now. And that is the small bread and butter smaller commercial property loan. And we're talking sub five million predominantly in that million to two and a half million dollar value. Don't get me wrong, you see small balance commercial stuff below that. We see it all the time, depending on the market. That's the stuff that is clogged of a bank's book and obviously what's being hit hard in that commercial space, obviously lodging, hotels, motels. Okay. You also see retail space, you see restaurant space, vacancies across the board on that. You see, we've talked to some of our multifamily friends who've invested a lot in college housing. It's struggling because students aren't back to school. They're not going back. They're working from, I mean, they're studying from home. Colleges are going to virtual, so people aren't going to the dorms or they're refusing to do that. That's the biggest issues that's on the bank's book. And obviously banks aren't financing like the regular banks are in residential one at 90, 95, 90, 700% financing. They're not financing commercial debt. They're in the mid-60s, usually up to. But as we know, when values drop, rents drop in the commercial space, your LTV increases because that's how banks evaluate commercial properties off your net operating income cap rates to figure out value. And they want to be roughly above 65, 70%. Well, when your values drop, your loan doesn't drop. Your loan, LTV, that's what LTV stands for, increases. So you're at 75, 80%. And that leads to the banks then going to the borrowers. And they've been lenient right now. They have been very lenient in our conversations. They've been giving the people, the operating, the restaurants, these things time, time to get caught back up, time to get back rock and rolling again before they're going to start asking. And believe me, it's going to come this fourth quarter, end of the year, you're going to see a lot of banks going back to their borrowers on a small commercial. Listen, I need you to bring 5, 10, 15% or something cash to pay down your loan to get us at that 64% or 65% of LTV. And you know what? Most of this commercial borrowers aren't going to have that. What's the opportunity in that, Scott? Because I get that question. Well, why would I want to buy a loan from a bank where the borrower isn't performing? Here's the big situation, the fact that you'll be able to buy this debt. And here's the kicker. A lot of hotel loans, Wall street selling hotel debt roughly at 20 cents on the dollar or less. We've seen this happen, okay? And we've seen opportunity there. You have to look at a couple of things at that opportunity. Yes, hotel loans. Who wants to Open a hotel. We flew to Charlotte for a day to pick up some stuff. Recently the hotel that we stayed at, Nice Renaissance, had been closed for two and a half months during all this. Laid their whole staff off. They're just up and operating. The opportunity isn't in the hotel space. The opportunity really lies in the pivoting of those assets. Maybe you need to take it from a hotel and turn it into housing apartments. We've seen this with a couple of our students doing a good job with that. Maybe you need to take the office space, the mixed use that we've seen, or not the mixed use, but maybe the office space and turn it into self storage. We've seen that a couple executive offices that were set up, they just made a pivot and converted to a self storage facility versus office. Because nobody's in their offices. People are moving away from having offices. So you got to learn to convert it to something. Well, you know what happens when people leave offices or they go to work from home. They have a lot of office space. When leases end or they're moving out, they need a place to store that. Well, self storage facilities will see a boom. I believe in occupancy, a reduced vacancy because people storing stuff away. Already seen that for years obviously. But that's an opportunity for you, hey, let's convert this to this office space into self storage. We can. And then also converting hotels, even some vacant stuff because there's some small are hotels out there that you can convert into short term residential. We saw that happen immediately here in Austin. Now they did that. The city took over a sleep in off of Interstate 35 here and converted from a hotel into apartments for the homeless people that were sick people who quarantine. I'm not saying that you want to do that with a hotel note, but I think it makes more sense to turn it into housing. Short term, temporary housing. Convert. You could always convert it back to a hotel after time for a lot of things because let's face it, we've all been to places. I'll give you an example. One of our favorite places to go in San Diego is the Hard Rock Hotel downtown town in Gaslam district. And they have hotels, but there's also a big portion, our condos that are people living there on site. So having a mix of that, having a mixture of apartments, you can still having a chunk of rooms, that's the thing to look at. You've just got to be flexible on what you can do and adjust this accordingly to do that. Now you're going to need to have some on site management, you're going to need to have people out there. But it's happened before. I mean, we've bought condos that were part of a Wyndham resort. People living there or people renting it out on a nightly basis. The short term rentals, the Airbnb plays, the people that have use single family homes to turn those into short term rentals. If you're in the rural areas, you're away from the big cities. Hey, I think you're going to do okay. I think you're going to be hit hard though if you're in an area not doing any marketing. As the president or CEO of Airbnb stated, they lost six years of growth in six weeks. You know, we've had Avery Carl on the podcast release before talking about short term rentals. Her stuff is booming because they're in nice areas, they're bigger houses so families can get away from the city. People have that separate working space for bedrooms to work in. That's the thing that will do well. I think a lot of people that got into this rural, not those rural, but the downtown Airbnbs where everything's at, unless you're close to a hospital, close to other things out there. That's what we've seen a lot of people struggling with that. And that's also kind of leads into that investor loan, that second home, the non owner occupied loan, people taking out loans, 60, 70%, 80% LTV. Sometimes those are going to be, I think the first foreclosures that we see on the market and that leads. Are we going to see a foreclosure spike? Not so much foreclosure spike this year. You'll see it happening next year. I should have gone back and said those are going to be the loan stunt type types that we see moved. Probably more so here this fourth quarter. On the residential side, the investment loans, the non government backed loans. Yeah. You may not be able to evict for a while if you could start to process or start buying that debt at a discount. And the fact that you can buy the debt at a discount, that can work in your favor now that you've got the flexibility on your side. Yeah, the borrower is 120 grand. Maybe they don't worry about the six months they haven't paid or the eight months they haven't paid. Hey, could you start paying now or can you pay half now and we increase it as you get back to increase it by 100 bucks or $50 a month on A stair step basis, getting back to closer to what market rent would be, or a mortgage payment, trial payment period to get you back on track. That's the play that you have to look at. If you're thinking you're going to foreclose and take the real estate back, Honestly, that's not an effective strategy right now because things being delayed, things being dropped. Yes, a lot of states have started back foreclosures. But when you start looking at the eviction moratoriums, okay, you're going to have to basically, oh, yeah, you can foreclose, but you may not be able to evict. And I think the foreclosure moratorium is just a few weeks away, everybody. I think it's just a few weeks away. And then you're going to have the haves and the have nots. Yeah. Hey, those are still paying on time. Great. That's a beautiful thing. If you're in a forbearance agreement, great. But if you have not called or you're the landlord or the property owner who isn't getting paid rent, but you still got to pay your mortgage, if the bank isn't willing to give you a longer forbearance agreement, that's where we're going to see the biggest uproar. I've been so concerned with investors out there that have rental property. And I've been saying this for the last couple of years without speaking. I'm not trying to blow harm, but you're going to see property values drop in some cases, especially in that lower value stuff as foreclosures spike up. Realtors are running around the end of the world. Oh, it's a great time to buy a house. Great time, low rates. I get that that's not the norm. Most people are sheltered at home or trying to stay at home, are trying to survive out there. And the banks have this building purge coming, this building pressure. The government's not required them to fully pony up on reserves like they require to. You're starting to see the bigger banks put money away. Bank of America announced 5.1 billion. 7 billion. I mean, they put away, like I said, the top four put away 32.1 billion this second quarter. You have to realize that's an opportunity. But if you're a real estate investor and not a note investor, if you're a note investor and you're targeting the debt, plenty of opportunity for you. I won't let anybody sit there. Oh, you have to wait. You're not gonna be able to buy. Yeah, you're not gonna be able to go buy the government backed loans from the bigger boys. But there are plenty of smaller institutions out there that have stuff on their books that they're enjoying. The phone calls, they're reaching out. Some of my activity, we're seeing more profile views on our LinkedIn profile for note investors, people reaching out to us. So here's the biggest thing, like I say, reaching out to the banks to small balance commercial asset stuff, that's an important thing and seeing if it's an asset that you can pivot, seeing if you've got the recent numbers as far as cash flow, operating things, if the borrowers have provided that to the bank, which is important thing in your commercial due diligence, I would basically be making sure you put eyes on just about every asset. Is that business operating? If you're buying commercial, what kind of. Is it a restaurant? Is it still operating? All right, do they have the financials? What are the conversations been from the bank to the borrower? Borrower on those properties. Is it vacant? It's vacant. It's probably gonna be vacant for a while. Unless you can convert it into something that's gonna make sense for that market. What's the biggest need, as we talked about in the commercial space, Do I need to convert this to smaller office? Do I need to go to like a Regis office and target bigger companies that are looking to move out? Do I need to convert it to self storage? Do I need to convert it to office space? I mean storage space. Cause there's a big need for that. If you're in an area out there looking at retail spaces, we all know retail space, especially you have, have. I'll give you an example. Like right across, not too far from US Pier 1 Imports is going out of business. They're trying to sell everything. Looking at the other retail stores, do they have a place to store their inventory? Whether it's clothing or whatever it might be. If they're ending their lease, do you have a place to put their stuff temporarily to help solve that transition, that can be an opportunity by taking some lemons and turning to lemonade as best as possible. So there's a lot of things and it's all going to vary on a market by market basis. Looking at your market, looking at what's the opportunity there and if it's not in your market market. And guess what everybody, there's plenty other markets out there that have been affected. All right. I think the biggest opportunities which has been kind of an oddity would be your commercial space. In your bigger markets, your 40 to 50 top cities out there, get me wrong, they have. The ones in California I think are still going to be overpriced because it's California out there. But I would stay away from the west coast and be more focused on states sub nine months foreclosure and see if you can't look at the assets in some sort of occupancy. Some sort of occupancy to work with things. We're going to see a of lot, lot of for rent for lease signs out there. They're popping up left and right. Commercial realtors are going to be struggling for a little bit because of that stuff. But the commercial debt investors, this is the opportunity to really put those connections in place, really start reaching out, really start honing your skills and understanding what's going on in the market and finding the opportunity because there's a ton of opportunities out there. Wall street has been socking money away for two years. The bigger guys to take advantage of what's going on and they're going to gobble up a big majority, majority of the bigger asset stuff. But that still leaves plenty of crust crumbs for us to fall through the cracks. For investors like you and me, that literally can make a buku returns. If you're looking properly, if you're taking action, making this now, if you're just sitting around waiting, you know, you're watching Cobra Kai, you're sitting around watching Game of Thrones for the third time. If you've gone through the Sopranos and not done anything, okay, hey, get off your keister and start doing something. All right? But if you're sitting here waiting and keep delaying and delaying, and that's the biggest fallacy I see with note investors or just real estate investors, I'm just going to wait. Well, you can't wait any longer. I mean, you can, of course you can. But if you really want to get out of where you're at and start making the connection, if you wait another six months or really until the end of the year and 20, 21, start taking action, hate to say it, you're going to miss out majority of the opportunity. I can't tell you how many people I've talked to. They're like, oh, I've got my real estate license for the REO wave, it's going to show up. And I'm like, well, you're going to sit around, wait for another 12 to 24 months, the REO wave will come. Maybe. All depends what the government does. That's the residential side, commercial side. Like I say, we're already seeing that stuff. Yeah, we seen a big foreclosure wave because they've been delaying that for the most part. But like I said, the decision time is in the next, really six months, the fourth quarter and the first quarter, as the banks look at and value at the portfolio and look to move stuff as they get that off their end of the year. Their end of their fiscal year is either December or March. And the conversations we're having is that they definitely want phone calls. They want to talk to us, Note investors. They want. They're building a list themselves who to reach out to when things start hitting the fan. So encourage you all to take action, everybody. One of the most important things that you can do is start putting things listen, I get it. It's not sexy to send out and dial for dollars. It can get exciting. But doing that on a regular basis, hey, don't. You're not gonna be doing it three days a week for the most part. I pick a day, knock out two or three hours and follow up with it, maybe increase it a little bit. Time. It's the 21st century. I get it, everybody. It's not like it was in 2008. We've got a lot more tools with LinkedIn and some other things out there, but start making those connections. If you're waiting around for the foreclosure wave to hit and then go to the foreclosure auctions, no offense, those lists are picked over. That's one of the biggest things I could tell you right now. Years ago, I think it was karma. I was out here in Austin, Texas, at a bar one night with some friends. I'm sitting there and a girl sitting next to me. I got to talking with her. Turns out she works for the assistant to the vice president of special assets here in Austin, Texas, for Chase Bank. And it was funny is I asked her what she did, and she's like, oh. I kind of like, oh, you know, space, special assets. And she's like, what? How the hell do you know that? And of course, when you speak limbo. So I found out that she's like, yeah, we get a list in the third week of the month for the next month's foreclosures, because here in Texas, everything has got to be advertised 21 days prior foreclosing. And she goes, what happens is that notes go, that list comes up, it comes out a week later, and there's a lot missing off that list. I'm like, what do you mean a lot is missing? Well, other entities pick up the stuff, other things get transferred, they get sold off. And we only have half of what we originally started with because they've been sold off or other people have picked them up. And what do you mean by other people? Investors. Oh, yeah, or the big wigs. The company pick up the debt. Aha. Doesn't surprise me. Doesn't surprise me at all. Or Wall Street's picked it up and stuff like that. We got other people taking down things. So here's. That's why I say you're waiting for the foreclosure auctions. Guess what? It may not come. They may not come free at all. But if you're looking for debt, you know what, everybody? It is like not quite Christmas Eve, but it is getting pretty damn close, okay? And if you really take action, especially going into September, October, November, your December may be one of the sweetest Decembers you have. And 2021 can be a complete polar opposite of what this year has been for a lot of people. They're like, oh, God, when is 2020 going to be done with? What a lemon of a year. What a shit show. It's a big shit sandwich and we all got to take a bite out of it, everybody. And the idea here is, can you take that n turn into fertilizer to help things sprout for you? Or you can just sit here and just, oh, woe is me. Life is horrible. Look, I get everybody. Everybody has ups and downs. Look, I've had ups and downs the last six months. There's been times I've been great. In other days, I've been like, oh, it is the same old same. Oh, I made a comparison today that it feels like this is anything how the astronauts feel being stuck in a tin can in space. Okay? Going out for a spacewalk is exciting. Going out here with a mask to go somewhere besides the office, office or here in the house can be exciting, but it also can be dangerous for a lot of people, especially suffer from things. People take it very seriously. And I'm not minimalizing anybody how they feel about their feelings about the virus. And we're not going to get into. Is this conspiracy or is this other things? There's some. There's weird shit going on. All right, everybody. But the best thing I can tell you is cut through the weird shit. Cut through the politics of stuff. It doesn't matter if Biden is elected or Trump gets elected. Neither one are going to affect what I do on a daily basis. And for Most of Americans what goes on at Presidential Avenue really doesn't make a big difference in what we do on a daily basis. So I would spend time get off the Facebook binging and start really like I say, those three core activities that you can do as a real estate investor to find notes, reaching out on LinkedIn. Simplest thing, everybody can do that with a free account. Dropping an email blast out to go through our virtual workshop in a few weeks. Guess what? You can learn how to do that and find how to pull this and then dial for dollars. The old fashioned. Hey, let's start dialing for dollars. Making 50 to 100 phone calls a day. The whole wolf of Wall street. Not quite the line on the phone, but wolf Wall Street Pursuit of Happiness with Will Smith. Those are some of the biggest movies I think you guys could watch the big shorts start looking at those things. If you need motivation to get things done and make it a game. If you can knock out 20 phone calls twice a week or three times a week, you don't need to have a lot of bank connections to have a lot of stuff sent to you here in the next 90 days. So take action is the best thing I can tell you. Guys. Guys, there are opportunities if you know where to look at small balance commercial, that non owner occupied mortgages, non government backed loans. Those are some of the biggest opportunities that we're going to see that have seen since 2010, 11 and 12. And the world's on sale if you know where to look and know how to buy right and how to get your foot in the door and be ready for when the banks start putting these notes on the clearance aisles. So it's not quite a Kmart blue light special buddy. But. Attention note investors. The world is on sale and it's up to you to take advantage of cashing in or just sitting around waiting for something to come. If you're waiting for a ship to come in, everybody. Hey, can you hear it? I can hear the sound of the ship docking right now. For you guys that are interested in. Okay. And when I hear that I think of the Disney Cruise Lines. Hey, be really, you know, whatever the big foghorn sounds when the boat's entering the port or leaving the harbor. So get on the boat guys. Get on the train. Whatever your analogy is, go do something, something. Take some action, start marketing. Just a little bit goes a long way. Start doing, building those daily habits we can and you'll be a whole lot better off once we get through this. So everybody stay safe out there and thanks for listening to this episode of the Up Close Show. Appreciate it so much. Check out our next round. You check out our workshop September 25th through the 27th, or the next one available at note buying for dummies.com or our callingbanks.com for us calling the asset managers or our one day sales Saturday cliff notes version@noteweekend.com but be safe everybody, and we'll see you all up top. Bye. It.