008 - Don't Break Your Process - Be The Bank

Episode Transcript
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Narrator (00:01):
Interested in real estate.
How about wealth?
Well, they go hand in hand.
And here you'll learn all aboutit.
About it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, Justin Bogart, sharesinsights into investing in real
estate to create real wealth andpassive income for you and your

(00:23):
family.
He'll share stories of realestate investments done right,
walk you through the process ofowning a real estate note, and
most importantly, educate you.
So you can be the bank.
Bank.
This is be the bank brought toyou by American Note buyers.
Now, here's your host, Justin.

Justin Bogard (00:45):
Hi, there it is episode number eight of season
five of the Be the Bankbroadcast, brought to you by
American Note Buyers.
And today I'm going to bediscussing, uh, I kind of had a
mistake that I made in some,doing some underwriting that I
wanna talk about.
Um, believe it or not, we dostill make mistakes in this
industry.
Uh, sometimes they're not, notas bad as others, but it'd be

(01:09):
nice to talk about that andexplain how you can learn from
others' mistakes.
And we did a broadcast recentlyon our live, on our YouTube
channel and our Facebook page,and we kind of found some
interesting data about theforeclosures and kind of what's
going on in the residentialcommunity as far as home prices

(01:29):
and month to month and year overyear, um, percentages if they're
going up or going down.
So stay tuned for more.
Richard, what's happening to mydude?

Richard Thornton (01:50):
Hey, uh, it's a beautiful day outside, but
judging from the fact that, uh,I'm sitting here in a down vest
and you're in a T-shirt,,we have switched places and that
, uh, sunny, California's sunny,but chilly and Indianapolis is
what's, what's it supposed to bethere today?

Uh, lemme check my watch here.
So it says it's 80 degrees rightnow.
There's not very much wind.
I was actually outside before westarted recording this.
I was actually hitting some golfballs, believe it or not.
Mm-hmm.
.
And it was, it was beautifuloutside, no, hardly any breeze.
80 degrees.
I started to sweat a little bit.
So we haven't, we haven't seenthat yet this year.
We've had a couple days thatI've peg close to that.

(02:28):
I think the next two days we'regonna have 75 to 80 again, and
then next week it's gonna beback down to what normal April
is, like, windy and 50 or 60.

Yeah.
I, well, we'd like a little bitof that here.
It finally stopped raining, but,uh, it's chilly.

Yeah, I, I, I was, when I first saw you get on
camera and I saw that vest on.
By the way, if those of you thatare listening to the podcast,
you can always watch the videoof our podcast on our American
Note Buyer's YouTube channel.
Uh, we have it posted in one ofour playlists called Be the Bank
.
So you can check us out there.
You can see Richard's, uh, got along sleeve button up on with a

(03:02):
nice, comfortable puffy vest, Iwould say,

Right?
Mm-hmm.
.
That's right.
That's accurate.
And it's keeping me warm.

Yeah.
It looks like you're ready to goon the slopes or something.

.
I wish.
I wish.
Although the slopes here are,you know, Tahoe, they got 750
inches of rain or snow thisyear,

750 inches.
Wow.

Inches.
That's, that's, that is a recordtied with 1950.

Wow.
So how, how consistently deep isit in on most of the mountain?

Well, uh, I'll tell you a, around the cabin
that we have up there, um, I'dsay there's about 10 feet of
snow consistently around there.

Huh.
That seems like

It's so, it's very interesting to drive down
the roadway because you feellike you're driving up against
this wall of snow.
Yeah.

Have you, do you remember the blizzard of 78?

I do.

So the blizzard of 78, I was born in 1978, for
those of you that are listeningand watching us here.
So my, my mom and dad would tellme about how, you know, cuz
that's very un unreal to havethat in Indiana.
And they said, yeah, that waslike driving down just a
corridor with two really highwalls next to you.
And they basically for a coupleweeks couldn't, couldn't really

(04:19):
do anything.
Those of you that experiencedthat, we'd love for you to chime
in on our YouTube channel orleave us a little comment about
it, cuz we'd like to hear aboutthat.

It makes parking difficult.

, you shouldn't even leave your house
really until melts, but,uh, what, what are you gonna do?
Right.
That's right.
That's not what we're here totalk about today.
Okay.
We are here to talk about somemistakes, uh, particularly from
this guy here talking with themicrophone.
So we have our companyportfolios that we have
together.
We have our company portfoliosoutside of what we do, Richard.

(04:52):
And then we also have ourprivate portfolios, uh, for
ourselves and mainly our, ourretirement accounts.
So I have one small retirementaccount that's more like a
trust.
And so I bought a note, um,about a year thir 13 months ago
and I bought it from another,another, um, hedge fund that had
the account and it was escrowand stuff.

(05:13):
And so I bought it and Iborrowed it with my servicer.
It's actually the only loan, um,for that specific servicer that
I had with my retirementaccount.
So I just kind of moved forwardwith it and the borrower's
paying and everything's fine.
I get a email last week thatsaid that, hey, the borrower
mentioned that the house burnt,I was caught on fire.

(05:34):
And um, it's no longer livable.
And they want to know what theiroptions are because they have no
insurance.

Insurance.

Oh.
I'm thinking, oh yeah, Iprobably got force place
insurance on it.
Not a big deal.
Let's, let's go ahead and dosome research on it.
And sure enough, I did not havea force place policy on that
house.
Uh, even a blanket coveragebecause I missed a step when I
was boarding that loan with myservicer.
Uh, this is something that Itypically would look out for,

(06:06):
especially, you know, all of ourbusiness stuff, everything's
kind of automatic, it's set upwith a process.
But with my retirement account Idon't really go in the same
asset management channel lanesas I do for like our company
portfolio cuz it's obviouslymuch larger.
And so I made that mistake.
So, um, I don't really have anyoptions, Richard.
I pretty much have to accept thefact that it's not livable and

(06:27):
they need to sell it and I needto get as much money as I can
from it so that they can payoff, you know, the debt that
they owe.
Luckily this balance is onlyabout$14,000.
It's a pretty low balance, um,loan.
When I bought it, it was, youknow, towards the end of its
life anyways, so I should beable to get, um, the unpaid
balance out of it by selling it.

(06:48):
But man, did I dodge a bulletthere,

So, um, do you think they're gonna sell it?

Well, they have no option.
They, hey, either have to keeppaying on it, which I don't see
why they would if they can'tlive there or they have to sell
it outright.

Mm-hmm.
.
So you're saying it's beyondtheir means to do re do the
repairs of the house?

That's what they're telling me.
They, they have.
And maybe that's just a, um,just a initial knee jerk
reaction to what had happenedbecause, and, and by the way,
nobody got seriously injured.
Nobody was seriously hurt.
Um, it actually wasn't as bad asthey described it.
Mm-hmm.
the entire housefrom the exterior.
Cuz I happened to be near thishouse when we were on vacation

(07:26):
actually on spring break.
And it was about an hour, hourand 15 minutes away from where
we were at.
Just by coincidence, um, it didnot seem like there was any fire
damage.
When you look at it from theoutside, it wasn't burnt to the
ground.
There wasn't any roof, therewasn't smoke coming out of it.
There was one window broken onthe second floor that I had saw
and I, I kind of peeked throughit, you know, from a distance

(07:47):
and I could see, you know, justblack inside there.
So my assumption was basicallythe upstairs just kind of burnt
really bad and uh, they wereable to put it out where the
fire department was able to putit out.

Mm-hmm.
, uh, yeah, soundslike a flip to me.

Yeah.
Yeah.
So be, because it's such a lowbalance, I think that's my
saving grace in this.
Otherwise it could have beenreally bad.
But this is another, anothergood reminder of the fact that
you really don't wanna breakyour process.
You know, you have a checklist,uh, you wanna do things just,
you know, like, like it'shabitual.
Right?
Right.

And

This is one of the things that I dropped the
ball on,

Right.
So for them or, or you, yourhope is that they'll just
quietly give you a deed and lie.
Um, and you don't have to, uh,miss things or foreclosure or
anything.
Right?

I could, my hope is that they just go and sell
and do all the work for me andjust pay, pay off the debt.
Mm-hmm.
.
So then I don't really wanna getinvolved with my trust or have
my trustee kind of get involvedwith this.
It's more work than I want todo.
Right.
Uh, since it's kind of, kind ofan arm length, arms length, uh,
transaction here mm-hmm.
.
So my hope is that they'll justgo out and sell it, which I

(08:54):
think that they end up will.
They, they end up well-doing,but if they keep paying on it,
I'm happy with that too cuz I'mstill making the return that I

Want.
Right.
And um

Right.
So we're gonna send somebody outthere to take some pictures of
the inside and get like thewhole story, get, you know, the
fire department maybe if theyhave some sort of report or, um,
you know, write up that they didbased on, on putting, putting
out the fire just so I have allthe documentation.
Right.
But I, I can't go and getinsurance on it now cuz it's
it's already done.

Yeah.

Yeah.
Papers have been done.

Yeah.
Those, those ongoing things, Imean it's one thing to miss
something during underwriting orwhatever and we all do that from
time to time.
But Yeah, I think cuz we all getso busy, it's very interesting,
very easy to um, forgo and ormiss one of those ongoing items.

Yeah.
It's, and this was just a kindof a brain fart.
Um, the servicer that I wasusing for this, this is part of
onboarding with them for yourfirst loan with them for Right.
Because every account you haveto have your own account ID and
is treated as if you're a brandnew entity to the company.
So whatever blanket insurancecoverage you have on another
account, it doesn't overlap tothis other account.

(10:03):
Right.
So I just didn't go throughthose steps in the beginning
just not thinking, cuz I waslike, oh, this is, I'm doing air
quotes here, escrow account.
It was escrow, but it was justescrow for taxes and I didn't
notice that when I was, um,getting the loan boarded over to
my new servicer.
So, you know, shame on me.
Uh, it's the first time that'shappened to me, but believe me,
it'll never happen on mypersonal account again.

(10:24):
Right.
I definitely have good steps onour business accounts where that
doesn't happen

Either, so.
Right.
So if something along that sameline that, that doesn't have
the, the downside potential, uh,that yours does, but that's
happened to me that actually Ihad forgotten about until you
were just talking about it alittle bit here mm-hmm.
is that I've, I'vehad, um, more refis in my
portfolio.
I think we've talked about thisthan I would like.

(10:48):
Um, I've had about five now.
Uh, and the reason for that, uh,is that we're obviously still in
high equity, uh, people's, Iguess credit ratings have
improved enough so that thatequity offsets some of the risk
and they're able to go out andget conventional loans.
Um, great.
Um, what I'm finding though is,is that, uh, to the degree that

(11:12):
maybe there was an assignment orsomething like that that was
unrecorded, I think, uh, some ofthe people in our crowd have are
saying, Hey, look, you know, ifthis isn't recorded, it's not a
big deal and just, you know, gosort of move on.
Well, if they're closingthrough, if they're refining you
out and cl uh, closing through aconventional, um, title company,

(11:33):
they're gonna want everythingrecorded and they're gonna want
it recorded, um, correctly.
And so I've had to go throughsome somewhat painful situations
where in the state of Georgia,you have to have two witnesses.
If you don't have two witnesseson your assignments, they're not
valid.
So we had to go through andcorrect every assignment with

(11:54):
everybody all the way back tothe, you know, when the property
was first sold, it took threemonths.

Yeah.

Well, so, uh, you kind of have to be careful
for things like that and goahead and get the stuff recorded
and, uh, not let it lay around.

Yeah.
And another state, just becauseyou mentioned it, is South
Carolina that requires uh, uh,two witnesses as well.

Right.
So, right.
I I I thought it was very odd.
Uh, they also, state of Virginiaor state of Georgia says that
the, in the notary statementthat they actually have seen,
uh, you signed the paper infront of them mm-hmm.
the document.
Um, a lot of, uh, notary, uh,statements don't have that from,

(12:39):
you know, x, y, Z state.
Yeah.
Uh, because my, my owner was inCalifornia, he got something
done in California, it didn'tfit the, the, uh, Georgia
requirement.
And guess what?
Ding, ding, ding.

No bueno,

No boyo.

Yeah.
Those, those things are kind oftrivial right.
When you're going through it andyou're thinking, eh, that's not
a big deal.
But your example says like,look, you know, as much as a
pain in the, the butt that it isto set up, you know, going
through it the first time, youmight as well do it Right.
,

Maybe headache in the future.
You don't Yeah.
You don't know what's gonnahappen because in this case,
rates were rising, um, and theguy was losing his, uh, ability
to close.
Yeah.
Yeah.
He was no longer gonna qualify.

Yeah.
This is, this is why we useattorneys to help us draft
documents.
Yes.
We never, we never draft anylegal documents ourselves or use
a template system for thatspecific reason.
Right.
Some things you can use atemplate for like, you know,
purchase and sale agreements andyou know, a launches you pretty
much can use a template for analane.
Mm-hmm.
Um, most assignments are verysimilar in, in about every

(13:48):
state.
There's a few of'em.
Like for example, you needdouble witnesses and you have to
tweak some things, but for themost part the assignment is
pretty much the same.
Mm-hmm.
indeed.
You definitely don't wanna doyourself for tempo times.
Right.
Cause it'll not work

At all.
Right.
So you've switched us right fromour current efforts from from
one company to the next andyou're kind of liking

New one.
Yeah, we we're using a new, anewer company.
So we're still using bothcompanies.
We have a different, um, vendorthat does our, well, our
collateral management I guess Iwould call it mm-hmm.
, which includescreating new assignments, uh,
new deeds, new launches andstuff.
So we're gonna try them out, see, see how they work and see if
it's a good flow.
Uh, since we have the fund andoperation and we have our other

(14:28):
accounts, we're just kind of,we're not putting all of our
eggs in one basket.
We're kind of spreading stuffout into for different vendors
as well.
Cuz as you get larger Right, youdon't wanna put all of your
stuff with one specific vendorbecause that could be a
catastrophe if something wentwrong.
So.

Right.
So tell me a little bit aboutcollateral management with a
firm like that rather than sayyour servicer.

Well, the servicer doesn't specialize in
managing collateral.
That's not their area ofexpertise and their area of
expertise is really, you know,servicing the loan, which is
borrower outreach, you know,collecting payments, documenting
the principle balance on it on amonthly, a daily basis.
And that that's really theirmain area of expertise.

(15:12):
A lot of servicers will holdyour collateral and, and can,
they're competent enough to dothe collateral, but if they're
not attorneys, why, why put themin that situation?
Right.
Even if you save a few bucks,you know, with as many examples
that we have together in the onesmall example you mentioned
before mm-hmm.
, a lot of thisstuff can be avoided if you just

(15:32):
have a professional that doesthis day in and day out, uh,
collateral management companyjust handle this stuff for

You.
And so how much are theycharging?
How much is our new groupcharging us?

Well, I don't know what the new prices are.
It's all a la carte.
Right.
You got different, differentprices for some, for them to
basically take your collateralfile and what they call intake
it mm-hmm.
when they intakeit, they just go through and
review it and make sure that thechain is sound on the assignment
or the launches and the deedsif, if necessary.
Um, they look for anythingthat's missing, like title

(16:01):
policies that they may need withit.
Then they give you the thumbs upor thumbs down or they show you
an exception report.
Um, and that is a cost to it.
I don't know what the cost isoff the top of my head.
Obviously they can holdeverything in a secure vault
after they digit digitize allthe files and then they
basically, it stays there untilyou have a change and that
change is selling a note orselling a partial or

(16:23):
hypothecating it and then youjust keep on adding to the
collateral file.

Right.
So how much are they charging orhow much is the last group, uh,
charging to say prepare a deedand record it?

Recording?
Always depends on the county.
It's anywhere from, you know,$30to maybe$80 mm-hmm.
just to record adocument depending on if it's a
deed or a mortgage.
Mortgages are usually cheaperthan deeds.
Preparing a deed is the mostexpensive documents that I've
seen.
It's, it's typically in betweenthe 60 to$110 range for one of

(16:55):
our custodians that have done itbefore to prepare a deed.

Mm-hmm.
, the reason I askis because I just wanted to get
your take on I'm, cuz I'mgetting one right now.
I've, I've completely inagreement with you for both our
A and b um, fund documents, butalso my, my own personal stuff.
Um, they're charging me$90 toreview all the docs mm-hmm.

(17:19):
, uh, chain oftitle, uh, to make sure my
assignments are all correct tomake the, I'm getting ready to
sell the note, uh, to actuallyprepare, uh, the assignment, the
elange, uh, and the deed.
Um, and then the, they'll chargeme whatever the recording
charges are mm-hmm.
in addition to thenumber I'm gonna give you right
now, but they're doing all thatfor$90.

(17:40):
To me, that's the best$90 I everspent.
Yeah.
I, a I don't have to think aboutit.
B I know it's correct.
C I don't have to have it kickedback to me because sometimes
Yeah.
As you know, some of thecounties will kick back, kick'em
back to you because you've onlygot a three inch margin on the
top of the


As opposed to three and a half.
And the first time that happenedto me, I was floored.
I said, you, I won't say what Isaid, but you know, you've gotta
be kidding me and, and withextra words.
Right.
Uh, but that's the way they are.
So Yeah.

It, it, it can seem expensive on the surface
where you're looking at thedocuments and you're seeing why
is it, why, why is it costing mea couple hundred dollars to go
through this transaction justfor that part of it?
Well, there's a reason for itbecause you have, you basically
have a guarantee that ifsomething screws up, they're
gonna fix it and might as well.
Right.
When you're doing a lot of theseloans at the same time, well
then that cost becomes, itbecomes a very large cost

(18:38):
overall.
So you look for ways to kind oflower that cost, which is what
another company that we have isgonna be more, um, what I say
less hands-on and more autoprocesses.
So there's still a humaninteraction and a human quality
check to it, but most of thepreparation is done through some
sort of like automation process.

Right.
And so you're doing somethingthat thinks very smart that I
think a lot of note buyers don'tdo.
Uh, I didn't do it when I firststarted out mm-hmm.
, uh, and that is,uh, you're, you're pricing, um,
you're basing our prices thatwe're offering people on a net
basis.
So you're figuring all the, allthose costs, all the servicing

(19:21):
costs, all the everything.
And you're saying, all right,here's our net yield.
So does this meet ourrequirement as opposed to a
gross yield?
Because I think a lot of peopleYeah.
You know, will, will buysomething, they'll have, its
serviced by say Allied that onlycharges$18, but then they switch
to FCI that charges 50 orwhatever.
And I'm not saying one is betterthan next, but they go, oops,

(19:43):
you know, there goes part of myyield and didn't really think
about

It.
Exactly.
Exactly.
Yeah.
So when you're buying inquantity like we do, and we
obviously borrow money, which iswhat the fund is for, we have to
take all that into considerationto say, okay, we know what we
owe our investors.
We know what we owe themanagement fee for the company.
We know what kind of, kind ofslush we need, kind of slush
fund, if you will, and all thatinto consideration.

(20:06):
Like we, we do know the expensesup upfront, like it's gonna cost
X amount of dollars for us justto just to buy this loan and to
kind of hold it for however longwe need to hold it.
Since we know that we might aswell throw that in the equation.
Right.
It's just like you owning, uh, astore that, uh, buys widgets
from another company and thenyou resell them to consumers.
You have to know what thatwidget cost and your internal

(20:28):
operations, uh, what you'regonna spend to kind of sell that
product as well.
And so that way you kind of knowyour profit margins and you can
predict your future cash

Flow.
Right.
Right.

Enough of that business nonsense.
Right.

Okay.
Enough enough of how to makemoney.
We don't need to.
Right.

so last night as we're recording this,
we actually had, the nightbefore we had a live YouTube
stream of our broadcast.
It was the April broadcast thatwe do.
And we had found some reallygood data of kind of what's been
going on today, the past 60, 90days, past couple years as well

(21:08):
as far as like foreclosures andkind of the residential, um,
home pricing index month overmonth, year over year.
And so what surprised, well,didn't really surprise us, but
what gave truth and a fact towhat we've been saying and we've
been kind of, uh, shouting outto the masses is that there
hasn't been a lot of negative,um, home pricing.

(21:31):
There hasn't been a lot ofnegative things with
foreclosures happening as, asfar as, uh, being bad for let's
say the, we'll say the economyand the real estate for
residential, like single family.
Uh, what we find is that back inthe great recession around the
nine eight, 2009, 2, 10, 11, 12,13 timeframe, that's when the s

(21:55):
hit the fan.
Right?
Right.
And we had a lot of banksforeclosing on properties
because they were reallyunderwater and they do, they,
they couldn't get them off theirbooks fast enough.
So at some point, Richard, theyhad an average of 210 to 240,000
loans starting foreclosure permonth.

(22:16):
Right.
That's how bad it got.
Mm-hmm.
, the nationaldefault rate was well over
10.5%.
I think it got close to 11 and0.7 0.4% as a national default
rate.
Mm-hmm.
, um, even at ourworst during Covid and in the,
in the pandemic, we only got toabout a 7, 7 6 or 7%, I wanna

(22:38):
say seven and three quarters,but I'm not sure if that's right
off the top of my head as anational default rate.
And then we did have a lot ofloans go through forbearance,
uh, during Covid about 8.8million, but 85% of those loans,
I'm, I'm just guessing it'sbetween 80 to 90% of them came
through their forbearance andstarted to repay.
They either sold the home sothey paid off the debt or they

(23:02):
just started repaying again.
So that's a really positivesign.
Now the foreclosure starts overthe past couple years.
So during Covid Richard, it, itdropped to 8,000 starts a month.
Right.
So those are special cases that,you know, the judges would allow
cuz they basically weren'tallowed to foreclose almost
every county.
Um, the foreclosure starts nowhave, have gotten up to about

(23:25):
32,000, uh, 38,000, 32,000 permonth.
And now they're sta they'rehovering steady between 29 to
30,000.
That average hasn't been seensince like 2001 or 2002.
Right.
So we are not anywhere near a, apanic on residential real

(23:45):
estate.
Um, the home prices that we sawon the home pricing index,
Richard, the Midwest and thesouthern states, and basically
east of the Mississippi, it'sbeen holding strong and it
hasn't really gone up crazynumbers and it hasn't gone down
crazy numbers either.
It's just kind of stayed justplain Jane.
Right.
3, 4, 5, 6% just appreciatingmonth over month or year over

(24:07):
year.

So it would be interesting to, to uh, look at
the stats at some point, and Idon't know if they keep stats in
this on, uh, what percentage ofthe, those loans have been
modified mm-hmm.
, because really ifyou think about it, rather than
a bank taking a hit, if somebodycouldn't pay during the
recession for say seven months,um, it would be much less

(24:29):
expensive for a bank just tothrow those payments at the back
of the mortgage re amortize andgo on their merry way because
then they don't have to meetloan loss reserves and, and all
those things, number one andnumber two, you know, to what
degree did the federal programs,um, which is saving one of our,
our loans that we have, uh, andhelp the borrower make up their

(24:52):
payments and pay it even forlike the next six months beyond
that offset all of that,

You get the day on the head.
So that's exactly what's goingon.
The, the appreciation and equityin people's homes has, has not
fallen, it's only risen in thisenvironment.
It, it takes a lot of pressureoff what happened during covid
with, with everything that'sshut down.
Right.

Right.

10 years, 12 years prior, before that it was
the opposite.
The real estate droppedcompletely and went underwater
under the mortgage value andthat's when it became a really
bad recession.
So again, we, we've said thisbefore, we've preached this on
our broadcast broadcast, we'vepreached this on the podcast

(25:39):
, I dunno, I sometimesmakes

Sense.
That's interesting word.
That's an

Interesting word.
We need to have the, uh, the theword mess up jar start putting
coins in Yeah.
To see how far we get when Italk, since I ramble on too
much, but this is a completeopposite timeframe.
So home appreciation has savedthe economy Right.
For residential mortgages.

Right.
And even if, I think some of thestats that we saw, which I don't
totally agree with, especiallyin the Bay area, they're saying
is that there's a 13% drop overthe last 12 months.
Uh, I I I think there's gotta besome downtown San Francisco, uh,
condo numbers that are draggingthis down and, and things like

(26:21):
that because out here, I don'twanna say I'm not in the burbs
exactly, but even if you wentinto the East Bay, uh, people
would tell you that prices maybedropped 2%, um, but they went up
15 to 20.
So even even with that, you'restill so far ahead of the, the
game.

So these are misleading stats that someone
can read them wrong prettyquickly.
And quite frankly, most peopleread those numbers and they,
they misinterpret what theyreally mean when you see a month
over month change percentage, itdoes not mean that the house
appreciated that much.
It means there was a change inthe appreciation amount of that

(27:02):
much.
So if it was a 13% change yearover year, that means it grew in
appreciation 13%.
But if it has a negative number,you had already appreciated so
much that it says it was anegative 5% growth from year
over year.
It doesn't mean it dr it lostvalue.
It just mean it didn't grow asfast as 13% the prior year or

(27:23):
the month over month, whateverstat you're looking at.
So hopefully I explained thatwell.
But that's what the misleadingstats is, is out there.
And that's what a lot of realestate, uh, agents or brokerage
firms, they kind of misleadpeople and maybe they don't mean
to, but that's what the panic isabout.
People see those negativenumbers out on the West coast
and they're thinking like, oh myGod, don't live out there.

(27:44):
It's terrible.
Whoa, whoa, whoa, whoa.
They're not losing value.
They just didn't grow as fast asthey did before.
Right.
So that's all it means.

Right.
And I think, you know, as we'recalling around to buy various
notes, uh, we are seeing whatthat data indicated, which is,
uh, nationally housing priceshave not dropped that much if,
if at all.
Yeah.
I think that data said thatthey've actually are still
increasing, albeit slowly.
Maybe it's only, you know, two,2.2 or 0.3%.

(28:16):
Um, but hey, that's better thansome huge drop.
Yeah.
Um, and I know certainly here inthe North Bay area of San
Francisco, um, I saw a, a, um,presentation for the entire Bay
Area, uh, by a realtors board.
Uh, and they were saying ingeneral, uh, yes, the market has

(28:38):
slowed.
Yes, you can say that overallit's dropped, uh, maybe 2%.
Um, but for houses that are wellpriced and desirable, we're
still getting multiple offers.
Mm-hmm.
, one of the onesin my neighborhood here, um, got
five offers over and went for$150,000 over asking, I mean,

(28:58):
you know, that's still prettystrong market.

It is.
And the short, the shortage,this, uh, I'm making up word
here.
This is a Richard term shortageness.

, thank you.

of inventory and causes that, um,
that, that economy, that, that,uh, that lack of supply.

Yeah.

So you have people, this is, this is the hot
season now we're, we're in themiddle of April as we're
recording this.
So we got May, it's gonna turnup a lot more with people
winding to buy houses in Juneand July.
It's gonna get even heavier.
So you're gonna have a lot moresituations to where if inventory
isn't starting to be released,if people aren't wanting to move
and who's to blame them if theydon't wanna move because the

(29:40):
mortgage rates have gone upthree, three and a half percent
from when they had theirmortgage, so why would they want
to?
Right.
It doesn't make sense unless youhave to move always.
Somebody always has to move,someone always has to buy.
Right.
But that's why you're gonna seeanother log jam, uh, during
this, this selling season of alot of sellers being happy going
Yep, I'm getting multipleoffers.
Again, cuz there's not that muchinventory out

There.
Yeah.
There's not that much inventory.
Certainly here in the North Bay.
There's not that much space tobuild.
Yeah.
I mean we got a lot of wetlandsand people, um, you know, sort
of beef, I think about MarinCounty and areas like that and
say, oh gee, it's very ritzy.
Mm-hmm.
.
But what they're not thinkingabout or acknowledging or
knowing I should say is that,uh, I think it's 85% of Marin

(30:22):
County is agricultural.
Huh?
It's got cows on it, it's got, you know, all this
other stuff and you think, ohwell gee, you know, it's, it's
very shehe.
Well there's just not that manyplaces you can build.
And uh, so that's, um, a large,large part of it.

Richard, awesome having you on the podcast again
today.
Thanks for being my partner inthe business.
I

Appreciate us.

Oh, enjoy it.
Talking about our mistakes, uh,that we make cuz you know, we
all make mistakes still.
Uh, we try not to make them veryoften, but, uh, we're definitely
not afraid to, to admit thembecause, uh, if anything we
learn from them.
Right?

We do.
We do.
Sometimes it's painful, but wedo

.
It's not fun to admit yourmistakes sometimes, but hey,
this is how we grow.

That's right.

All right everybody, until next time.
This is episode eight of theBeta Bank podcast, season number
five, brought to you by AmericanNote Buyers and we will see you
on episode nine.
See

You.
See you then.

Speaker 4 (31:21):
Thanks

Narrator (31:22):
For listening to Be the Bank.
We hope you learned somethingfrom today's show.
If you enjoyed this episode,please rate and review us.
Plus check out our channel onYouTube and follow us on
Facebook and Twitter at Be TheBank and on Instagram at Be the
Bank Podcast, be The Bank issponsored by American Note
Buyers.
Thanks again for listening.

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