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SUMMARY:I Survived Real Estate 2020 National and Commercial Townhall Part 4
DESCRIPTION:The Norris Group proudly presents its 13th annual\, award-winning black-tie event\, “I Survived Real Estate”. Industry experts join Bruce and Aaron Norris to discuss perplexing industry trends\, head-scratching legislation\, and opportunities emerging for real estate professionals headed into 2021. All proceeds from the event benefit Make-A-Wish and St. Jude Children’s Research Hospital. \nCOVID forced us to cancel our black-tie event at the Nixon Library for the very first time. But we thought the content for this evening was even more important than ever. So important\, we’ve split it into two nights. First\, we had the California Residential Town Hall.  Next\, we have the National and Commercial Townhall. We purposely positioned this after the election\, bringing together experts from all over the United States that also focused on different asset classes and strategies. With the uncertainty\, we’re facing how are people feeling about 2021 shifts they are making and what they see for the year ahead. \n  \nPlatinum Partners:\n\nNorada Real Estate Investments\nSan Diego Creative Investors Association\nThe Outspoken Investor\, Tony Alvarez\nThink Realty Magazine\nRealty 411\nWilson Investment Properties\n\n  \nGold Sponsors:\n\n7 Figure Flipping\nInland Valley Association of Realtors\nKeller Williams Corona Keystone CPA\, Inc.\nLas Brisas Escrow\nLeivas Tax Wealth Management\nNorCal REIA NSDREI\nPasadena FIBI\nReal Wealth Network\nIn A Day Development\nSpinnaker Loans\nuDirect IRA\n\nThe Norris Group originates and services loans in California and Florida under California DRE License 01219911\, Florida Mortgage Lender License 1577\, and NMLS License 1623669.  For more information on hard money lending\, go www.thenorrisgroup.com and click the Hard Money tab. \nThis is our weekly radio broadcast. We recorded the show last week and will be featuring him on the radio show starting today. You can view the transcription and full broadcast here
URL:https://www.thenorrisgroup.com/event/i-survived-real-estate-2020-national-and-commercial-townhall-part-4/
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SUMMARY:I Survived Real Estate 2020 National and Commercial Townhall Part 4
DESCRIPTION:  \nThe Norris Group proudly presents it’s 13th annual\, award-winning black-tie event\, “I Survived Real Estate”. Industry experts join Bruce and Aaron Norris to discuss perplexing industry trends\, head-scratching legislation\, and opportunities emerging for real estate professionals headed into 2021. All proceeds from the event benefit Make-A-Wish and St. Jude Children’s Research Hospital. \nThis episode features Terry Burger of 7 Figure Flipping and Tom Wilson of Wilson Investment Properties. \nPlatinum Partners:\n  \n\nNorada Real Estate Investments\nSan Diego Creative Investors Association\nThe Outspoken Investor\, Tony Alvarez\nThink Realty Magazine\nWilson Investment Properties\nRealty 411\n\n\nGold Sponsors:\n  \n\n7 Figure Flipping\nInland Valley Association of Realtors\nKeller Williams Corona Keystone CPA\, Inc.\nLas Brisas Escrow\nLeivas Tax Wealth Management\nNorCal REIA NSDREI\nPasadena FIBI\nReal Wealth Network\nIn A Day Development\nSpinnaker Loans\nuDirect IRA\n\nSee below for the full video and resources. \nEpisode Notes:\n  \nNarrator  Welcome to The Norris Group’s 13th annual I Survived Real Estate Gala. The Norris Group would like to thank the following Platinum Partners: Norada Real Estate Investments\, San Diego Creative Investors Association\, The Outspoken Investor Tony Alvarez\, Think Realty Magazine and Realty 411. We’d also like to thank our Gold Sponsors: Seven Figure Flipping\, Inland Valley Association of Realtors\, Keller Williams Corona\, Keystone CPA\, Inc.\, Las Brisas Escrow\, Leivas Tax Wealth Management\, In a Day Development\, NorCal REIA\, NSDREI\, Pasadena\, FIBI\, Real Wealth Network. SoCal Cash Flow\, Spinnaker Loans\, and uDirect IRA. \nAaron Norris  I want to follow up with a question. Institutional money\, there’s a lot of rumors that the media is like they’re all raising money because the foreclosures are gonna pile on\, my God\, where? It is my theory that they are planning on spending that money in the build to rent model\, would you agree? Is that where a lot of the institutional players are going to play? \nNeal Bawa  Yes\, but not by choice. I think that people have raised money\, and now they don’t know what to do with it. So\, we’ve got so many funds that by this time we’re expecting to see something in that market. I think they’re not gonna see anything for six months\, and they may never see it\, we’ll see. Right? There\, I think that there’s still a significant number of foreclosures coming. But I think that they’re gonna\, there’s the\, the people that raise large amounts of money\, they need to see a very large amount of distress because they need to go to a bank and buy 20 or 30 properties\, not one at a time\, because they’re never\, they’ll never spend even 5% of the money. So\, they’re going to build the rent\, not by choice\, but simply because the money has been raised and built around is the closest thing that they can do. So\, we’re seeing. So\, for an asset class\, that’s two years old bill to rent is now the lowest cap rate asset class in the United States\, even lower than data centers\, even lower than medical. And the reason people are doing it is it combines the benefits of single family where you have\, you know\, a lot family staying for the long term. So\, you don’t have apartment like churn\, your maintenance costs are lower\, and you’re buildingnew products. So\, your maintenance is low anyway\, but it has the benefit of scale as well. So\, I think that\, we think that\, that’s the big winner for the next 10 years. It’s a brand-new asset class. People have been doing\, you know\, building stuff\, but they haven’t done it at scale. Where do we do it? I think we do it in places like Houston\, we do it places in Florida for sure. Atlanta\, we’re gonna see it in places like Huntsville\, Alabama\, where\, where the Huntsville market is booming because of all the other markets around the booming. So\, we’re seeing a humongous number of trends in that marketplace. And yes\, institutional money is going in there because they raised it and now\, they can service that money. \nAaron Norris  One specific question\, are some of the rental vacancies in San Francisco due to Airbnb and Vacation Rentals being turned into long term rentals? \n  \nNeal Bawa  I think they’ll\, they’ll have to\, um\, I can tell you that the distress in the San Francisco multifamily market is massively greater than 2008. 2008 was absolutely nothing compared to what we were seeing\, New York is even worse. So\, it’s\, there is a market worse in San Francisco right now from multifamily perspective. And it’s New York\, they are seeing record level of vacancies\, record level\, record levels of concessions\, I don’t think that these markets will\, will come back very quickly. So\, I do think that there’s going to be some interesting twists and turns that we’re going to see. The Airbnb market was very highly leveraged. A lot of this stuff was purchased at very expensive prices in the last two or three years. They need that revenue; they need to pay massive mortgages. And given how slow the markets been to come back on that side\, you’re going to see some pivots. It’s inevitable. But I think that what’s interesting is we’re not seeing such price drops on the rental side in the single-family San Francisco market. So\, if you take an Airbnb and you pivot\, you’re actually not in as bad of a market. It’s the multifamily market\, especially high-density multifamily market that’s really suffering in San Francisco. So\, there’s actually\, once again\, you know\, Tom said\, don’t look at the 30\,000-foot view\, this\, if you have a single-family rental in San Francisco\, you’re not doing too badly. So\, maybe we’ll see some pivots from the Airbnb side. \nAaron Norris  Okay\, well\, we’re starting to get some questions. Dad\, that you might have some things that you had in mind. \nBruce Noris  Well\, let’s\, let’s let the\, let’s let the group ask questions. And I’ll maybe ask one later. \nAaron Norris  Okay. Is international\, this could be anybody\, is international money coming to us? Where is the money going? I don’t know if anybody has a lot of foreign investors coming their way but doubted\, probably China? \nNeal Bawa  I have just one data point. So\, international investment in the United States has dropped 50%. We think it’s a short-term trend\, because the\, the when surveyed\, by far\, almost every investor said inability to travel is the primary reason not because we’re afraid of the US market. So\, the lack of travel means that we’ve seen a 50% drop at this point that those were\, those were September numbers. So\, we’ve still seen a 50% drop. The Canadian market is the one that’s\, that shrunk the most in terms of foreign investment. Well\, investors coming in from Canada that’s been affected the most I’m not sure why because their travel is actually the easiest. But I think\, I think it’s a short-term trend. I do think that\, that money will start to flow again. \nTom Wilson  I think it’s; I believe it’s very\, very short term. We\, were under negotiations for a product now in Florida. That is being sold by someone in Canada. And the reason\, because their principal likes to be hands on. And every time they come down to see the property when they go back\, they’re facing a two-week quarantine. So\, that’s why they’re selling it. \nAaron Norris Go ahead. \nKathy Fettke  We are very luckily sold a 250-unit apartment building in Mountain View in January to a Korean company and\, but we had put it on the market. We had like lots and lots of offers from Chinese firms over the summer\, and we weren’t quite ready to sell it. And then by the fall\, they were all gone. There was only the Korean company left. So\, I think it was part of the Chinese policy\, they were pulling back their investment in large assets like that in the US. I don’t I don’t know where that will be headed. Next year\, but\, I’m really\, really glad we sold that. \nAaron Norris  Agreed. This is a really good question. You know what\, and maybe I’ll throw this one out. You\, Terry\, do you think there are lots of people who will be forced to walk away from their homes when forbearance ends? With the end of forbearance\, what amount of subject to volume do you think lenders will tolerate? And do you see your team sort of talking about those kinds of things? \nTerry Burger  Yeah\, we’re definitely talking about subject to opportunities. I think. So\, I think when people walk away from\, forced to walk away because of forbearance\, and they can’t catch up\, right\, let’s just assume that’s\, that’s the way this whole thing goes down. My assumption is most of those people have equity. And they’ll just decide to sell their home. And there won’t be foreclosures\, by and large\, because they’ve got equity in their home. You know\, I’m not sure what the exact stat is today. But that equity ratio is pretty high. \nAaron Norris  Yeah\, what do you call a short sale when it’s not a short sale and have the money they just can’t make their payment? \nTerry Burger  Yeah. Spread out margins now. \nBruce Norris  Now\, they call it a listing. Yeah. \nAaron Norris  There you go \nBruce Norris  You know\, what’s interesting about that policy that you brought up subject to when we were in Washington\, DC\, we did meet with FHA at the time\, Raphael Bostic was the man in charge of that. And he and I were across the table and I\, I said\, what do you think of the subject to? And he said I’m all for it. And I was surprised by that. I said\, what can you put that in writing for me? And he smiled\, he said\, No\, I can’t do that. But he understood the concept was smart because it would avoid a lot of foreclosures. \nTom Wilson  Although securitize alone is what made that difficult\, right? Because it got\, got sliced up and spread out. And now they can’t go back to get everybody to agree. So\, you got to do it. You know\, undercover. \nBruce Norris Under the table. \nTom Wilson  Just hope nobody finds out but usually done \nBruce Norris  Okay. \nKathy Fettke  I mean\, if I were going to put my bets on it\, I would think that banks would be looking at loan modification for those forbearances because these people met\, most of them\, it was no fault of their own. I mean\, if you\, if you wanted to start your business up again\, you\, you weren’t allowed. In LA\, they would just shut your power off. You’re just literally weren’t allowed. So\, how can you be faulted for that? I just\, I think it’s gonna go into modification. \nTom Wilson  I agree that if they were ever time to get a pass\, right. \nKathy Fettke  I don’t know. \nAaron Norris  Nationwide pandemic. Yeah. \nKathy Fettke  I think Newsom or there’s some talk about. They didn’t. And I always wondered why this wasn’t happening in 2009. But Newsom just said that he won’t that homeowners will get first dibs on those properties and not the funds that they won’t be able to sell in bulk that homeowners should get the first shot\, which makes sense. \nAaron Norris  I just don’t know why after the foreclosure just makes no sense. Like why not do that before it goes through? \nKathy Fettke  Right. Right. \nAaron Norris  We tried. Question. Any data on cashout refi or HELOCs? \nTerry Burger  Any data? \nAaron Norris  I don’t know. Let’s go tell me more. Tell me what were you looking for? I have a question for you. \nBruce Norris  Well\, I think she’s trying to\, I think she’s trying to wonder if they’re like 2004\, or five and six\, we were cranking out hundreds of millions of dollars. \nAaron Norris  Right? People have equity\, and they’re not behaving the same way\, buying up toys like they were back then. Right? \nBruce Norris  That’s right now it’s been very muted. So\, the amount of equity has never been greater. That’s why really\, really hard to conceive of a foreclosure crisis with the amount of equity because if you go to a trustee sale\, you know\, bidders are not trying to buy those at 60 cents on the dollar anymore. So\, very\, very few of those would actually make it to the REO status. So\, and that’s where you really have price damages when that becomes the dominant inventory for sale. I just don’t see how that’s possible. \nAaron Norris  I wanted to ask a question about quality of life. You know\, getting to think about people from the tech space getting to move I talked to some realtors I mentioned last week moving to San Diego from the Bay Area or Palm Springs because it was close to an airport if they absolutely had to be up north for a meeting\, you know the amount of money that they can save still living in a very high quality of life. They could they could easily buy a ticket back and forth many\, many times a year to make that happen. But quality of life of education isn’t going to matter as much people could have hop on zoom and be educated\, whether it be K through 12\, or through college. What does that look like? As we’re exploring secondary and tertiary markets? What’s the quality-of-life piece that we’re looking for where we don’t think this is a flash in the pan? Are people really going to move to Blythe? Mentone?  Is that like\, that’s like a good like\, I’m going to go there and really love that market or I don’t know? \nKathy Fettke  I got to say one thing\, Aaron\, we’ve been\, we’ve been helping investors buy in tertiary markets for 15 years. And that includes\, like\, well\, it there’s little areas called Butler County in between Cincinnati\, and Cleveland. And that area\, prices have been going up. Prices have been 20% over asking price over the last six months. So\, massive\, this Butler County\, okay? In Ohio\, so\, and so\, I think what’s happened personally\, that in the tertiary markets\, builders just weren’t going there. You weren’t going to make any money as a builder in\, in Cincinnati. You know\, if you’re\, if you’re going to build a house and sell for $200\,000\, where’s your profit? So\, they were going to New York\, and they were going to San Francisco\, and that’s where they’re\, they’re building. So\, a lot of these tertiary markets do not have inventory\, because there it just wasn’t built. And people are moving back home. I mean\, if I were\, if I had to work at home with two young kids\, I’d be moving back near mom and dad so they could take the kids out of the house so I could get some work done\, right? I mean\, that I think that’s part of what’s happening. \nNeal Bawa  Absolutely. \nAaron Norris  I have written down your summer garage-ification. I’ve noticed more people in garages these days\, like the kids are doing school inside it. \nTom Wilson  As far as they’re being\, everything can be done online. You would think if there’s anyone that would want to do that it would be millennials right\, and enter in the summer going to Santa Clara University in elite school. And he\, they decided not to open a campus and they were going to do online training. He opted out for the semester. He said\, No\, I’m not going to have my parents pay this kind of money and have a non in class\, human relationship\, you know\, experience. So\, he opted out. I think 20% of Harvard’s freshmen students this year\, skipped the semester\, because they were doing online that not open the campus. \nAaron Norris  Wow. \nKathy Fettke  On the other hand\, in San Diego State\, the cheap school where I got my kids to go\, Hey\, they are living together in houses and they are having a blast. And they’re they’re studying together. And my daughter’s got straight A’s and\, and they’re still\, you know\, having a college experience. And so\, I’ve heard that a lot of the housing around the colleges is booming\, because kids can go there and live and get away from mom and dad and live together. \nAaron Norris  And let’s be honest\, the parents also are very. \nKathy Fettke  Very happy. \nAaron Norris  To have them out of the house I’ve heard that\, I have heard that. They’re not staying in the dorms. The kids are moving into the local housing\, that’s housing. \nKathy Fettke  Yeah\, they renting houses and piling in there. \nAaron Norris  Lenska brings up another great question that we can definitely round robin any real-life examples of converting malls or strip centers into different spaces. \nNeal Bawa  It’s a\, it’s really difficult. The price point for malls is such that most asset classes are priced out you can’t do industrial. So\, it’s\, it’s going to be very interesting. I think that you know\, in certain expensive markets\, if the city allows you to build above the model\, and there’s plenty of parking\, you might be able to do multifamily. But what I found is in general\, repurposing malls has just been a very boutique sort of thing. There are certain malls in certain areas because of the way that they were\, where they are\, you can repurpose them. But I’ve been asked by people\, well\, why can’t you turn malls into senior housing? Why can’t you turn it into something else? And the answer is the\, the mathematics of it mean that 90% of the time\, it just will not work. So\, it is\, this is a very difficult issue. \nAaron Norris   \nAnybody buying old hotels and turning them into anything interesting? No? Well\, I try. \nTom Wilson  I know one principal who had his hotel that was nearly empty\, and he found health healthcare workers that he was able to fill it up with. But that’s\, I think that’s not\, not typical. \nAaron Norris  Jason wanted to let us know Harvard didn’t even lower the tuition. Yeah\, I haven’t seen too many colleges\, lower tuition while this is all going on. So\, in the universities\, it’s interesting to say that like here in Riverside\, I know several we have four universities in the city. And they’ve all had very different experiences with this. One of them is very reliant on foreign students that none of them showed up and they pay cash and they pay top dollar and they’re not here. So\, they’re struggling with a lot of different things and not sure If they’re even going to come back in spring semester\, yet\, they haven’t decided\, I really don’t know how they survive. I thought the education space was ripe for just disruption as it was\, but it’s a little scary. \nBruce Norris  Can I ask a question? \nAaron Norris  Sure. \nBruce Norris  I kind of asked us as the other group\, as well. The $40 trillion comment that we made on our cover of that report is going to come to fruition at some point. And I’m wondering if\, I mean\, real estate has gotten some amazing breaks. So\, we’re all talking about escalation of values. But if we own it\, we get to depreciate it as if it’s going to be worthless in 30 or 27 years. If we sell our residents\, which I just did\, you can make a half a million dollars if you’re a couple and not pay tax. And you can 1031 exchange and never pay tax. So\, I’m wondering i\, if real estate is going to be in the crosshairs of people that say\, you know\, what\, we\, we need the revenue\, and we’re gonna we have the power to make changes. \nAaron Norris  And we were having such a nice time. \nBruce Norris  Sorry. \nTom Wilson  I think it has been in the crosshairs\, Bruce for a long\, long time. And I think was it you Mark or Terry\, who said earlier that\, that the\, the reason is that most of the lawmakers own a lot of real estate\, and they’re able to sell 1031\, question is come up time and time and time again. And every time they bail from it\, I think it’s because it hurts\, hurts to shoot themselves in the foot. If they do it. That’s\, that’s my feeling. \nKathy Fettke  I’m thinking the opposite. I think this time\, we might see those changes\, because the\, the anger is so intense\, towards the haves. And it’s\, you know\, based on at least what I’ve seen from what could be in the Biden tax plan\, there could be changes. But if\, let’s just say that the 1031 goes away\, and you do have to pay your tax\, it’s a capital gain tax\, it’s not the worst thing in the world is not as bad as some other taxes. So\, unless that goes up as well\, then there would be an effect. But I\, I would probably if I had to bet on it say that we will feel the impact this time. \nAaron Norris  Actually\, I just read an article San Francisco did institute the policy of taxing at one point\, point one\, I forget what kind of tax to call it\, but it’s for CEOs that make more than 100% of their bottom employee. Is that what I read? \nBruce Norris  100% or? \nAaron Norris  100 times? 100 times. \nBruce Norris 100 times\, okay. \nAaron Norris  They get a\, they get some kind of I don’t know which kind of tax but it was new\, and I had not heard that before. So\, I am worried about the state of California. Now that some of these bills that were attached to real estate don’t look like they’re going to go through where are they gonna get the money? Sales tax. I mean\, we should all expect sales tax across the board to increase in all the cities. But I’m looking at the other revenue. I mean\, that’s weird. We’ve had a great\, we’ve had a great economy\, especially in California\, so\, we knew the pensions were already covering\, causing a lot of issues. So\, when this happened\, you’re like\, Oh\, my gosh\, what are they gonna do? I don’t have a good answer. I’m just asking. I’m Bruce May and Jason Hartman. We’re talking about homelessness. Yeah. Struggling motels and hotels being converted. And then Jason was saying that they’re looking at hotels for low income housing in Arizona. I certainly think that’s a possibility. Our city Riverside actually tore down a lot of struggling hotels\, because they had become such blight during the downturn. So\, it’ll be interesting to seeing some other creative things. Um\, let me see contractors. I don’t know too many people going out of high school right now raising their hand saying\, you know what sounds like a good idea. hard labor\, sign me up. The builders have just started talking a little bit more at the International builders show about manufactured housing\, and\, you know\, not the dirty word not mobile housing. It’s\, you know\, it’s green\, sustainable\, more robotics are going to be involved. I think we’re gonna have to look at that. I mean\, are any of you guys looking at anything like modular housing or manufactured because labor has become such an issue? \nTerry Burger  I’ve started attending webinars that\, you know\, that I’ll see across my Facebook feed. I think it’s fascinating. The question is\, the local municipality is going to allow it to happen. I think it would solve a lot of problems. \nTom Wilson  Well\, long past due\, it’s the code. It’s the code the\, just the Detroit nature of the building code. It I think keeps it from happening. mixed up. It’s penciled out for decades. \nAaron Norris  Andy Teasley is on the call giving me a hard time he’s like who said mobile homes are a dirty word?  He’s always Oh\, my goodness. Um\, anybody else have any have\, they had any experience\, especially with the Accessory Dwelling Unit conversation? I’ve definitely had my eye on modular specifically but manufactured homes. Hey\, Warren Buffett owns a what’s the company he owns? Berkshire\, Berkshire Hathaway owns a modular home manufacture. \nKathy Fettke  I can’t think of it. \nAaron Norris  I can’t think of it either. But they’re beautiful. You would not know that. This is not the Andy Teasley mobile homes that we’re talking about. \nBruce Norris  Oh. \nAaron Norris  Clayton Homes. Thank you\, Andy. Clayton Homes. So\, when you’ve got somebody with that much money and power behind it\, I just think we’re going to have to look at other things. And the government entities are looking more into the data. I just interviewed Doug Duncan as well. And I said that a bullet points they’re trying to get more data on and they said yes\, so\, I would expect manufactured to come into play\, especially as robotics gets more sophisticated. When I was at CES. A couple years ago\, I saw my first 3d printer that was printing metal. And it blew my mind that and chocolate. There was the other side of that too\, but I was most impressed by the metal. That’s pretty interesting. And I was at this media event. And there was it was a desktop model it. I don’t know if you could call it desktop\, it was still huge. And he’s like\, it’s just 100 grand. I’m like\, of course I need one in my garage. But the cost\, I mean\, it’s just so interesting\, some of the things going on. Any more questions? Dad? \nBruce Norris  I was just going to john\, Jay Leno\, 3d printed a car that he drove out of his garage. I don’t know what that costs\, but. \nAaron Norris  And it probably took a really long time. \nBruce Norris  Yeah\, I’m sure it did. \nAaron Norris Um\, Tom\, maybe this is a question for you. malls. There’s been a lot of talk retail has been struggling for a really long time\, there’s been the conversation that Amazon has been eyeing these malls because they’re typically an extremely well-located areas of cities. I would hate to see my local mall become a distribution center. And then at that point\, it gets really political. I don’t know if Amazon is going to want that much politics. Talk about nimbyism\, that should be a fun ride. Are you hearing much about that in your space? \nTom Wilson  I think the main attraction of a mall is for this\, you know\, famous last mile distribution trying to get closer. And it’s I think\, just like\, I think Neal spoke earlier\, is the problem a lot of these is they just don’t pencil out very well\, they’re. It’s kind of almost cheaper to scrape them and build something more purposeful. So\, I\, yeah\, it’s\, I agree with Neal it’s very\, it’s very hard to repurpose them the ideas that you can make distribution or service or entertainment\, but it’s their expensive piece of real estate. \nAaron Norris  \nAll right. Well\, I think we’re getting about close to that eight o’clock mark Pops. Maybe we should go around the room and sort of close out tonight. \nBruce Norris  Okay. \nNeal Bawa  Aaron\, can I take one question? \nAaron Norris  Sure. \nNeal Bawa  So\, there was this question\, and this is a passion area for me. Are you considering climate change in your investment decisions? I think that we are just about getting there. It\, I’m writing a two-part presentation on the devastating impact of climate change on\, on real estate migration patterns. And we’re beginning to see that so this is actually the best year where people are paying attention to this. So\, doesn’t\, I mean a lot of real estate people are above republicans that don’t believe in climate change. It really doesn’t matter if you believe in climate change or not\, because it’s going to impact your real estate investment in\, over the next five years. Whether you like it or not insurance\, insurers believe in climate change\, because they are seeing insurance costs go up. And in a radical rate\, the people that were ensuring the sun this year in California\, they believe in climate change\, institutional capital\, that people that buy billions or 10s of billions of dollars of stuff. They are hiring companies\, I think there’s one famous one called 427 to give them a\, almost\, a you know\, red two pin indicator like a five-step indicator of where to buy and where not to buy. And actually\, the state that’s going to be threatened the most by this is going to be parts of Florida\, because what’s happening is Florida has the worst rating for sea level rise. And then there’s parts of Louisiana there’s parts of Tennessee and Texas that have really high ratings for or bad ratings for\, for\, for hurricanes. California has the worst rating\, or some parts of California have the worst rating for\, for wildfires. As we see more of this\, I mean\, this year\, we burned down more forests than we had in the last five or six years. Phoenix had 53 days of 115% temperature\, 115-degree temperature. So\, what we’re seeing is doesn’t matter whether you believe it or not\, institutional capital is now beginning to look at Keynes in inundation. They’re also beginning to look at wildfires. And they’re using that to decide where to invest. So\, the answer is\, at our level\, we’re not making those decisions yet. But you’re going to start seeing within the next few years cap rates in the United States change based on climate change\, or perception of climate change. This is a big deal. It is a massive deal. It’s just not in the\, in the general public doesn’t understand this yet. I’m doing actually a series of webinars on it next year\, because I am fascinated by how important this is. And the fact that nobody’s really paying attention to what’s happening. \nAaron Norris  I just had a meeting today with the Casualty Insurance Association\, tackling the same thing. I agree with you fires\, besides fire insurance. I know I had several properties where at least doubled. How about having a property where they just decided to turn off the power for three days? Because there was there’s wind? I mean\, yeah\, that’s a quality-of-life issue\, y’all. \nTom Wilson  By the way\, I have electrical\, electrical contractor who can’t keep up right now with in California here with installing new\, you know. \nBruce Norris  Generator? Generators? \nTom Wilson  Yup. \nBruce Norris  Solar power. Yeah. \nTom Wilson  Yup. \nBruce Norris  I’ve got a question. Because we’re all looking at different areas. Do you make decisions based on what you think might happen to the oil industry? \nNeal Bawa  That’s a tough one. \nTom Wilson  Yes. And a. \nAaron Norris  Yeah which sector\, shale fracking or drilling? \nBruce Norris  Well\, okay\, but just\, just if you’re if you have an area that’s dominated by one type of employment\, Grand Junction\, Colorado\, for me in the early 80s\, fracking closed in Grand Junction\, real estate went down 80%. And we were able to buy the properties\, you know\, after the fact. But it took a while for that to recover\, because it was such a dominant industry. So\, if you have\, if you have a desire going forward to eliminate fossil fuel\, that would be a really\, I’m just wondering\, Neal\, as would you\, you brought up the climate change? Are you also concerned about what we’re going to source as fuel? \nNeal Bawa  Yeah\, I think it\, the answer is in Republican administrations\, I don’t worry about it. In Democratic administrations\, I worry about fracking\, more so than any other type\, I think natural gas is\, is at this point\, cleaner burning than\, than\, than oil\, and is also cheaper than oil. But I think that fracking is one that is likely to be targeted by Democrats each also as the impact of climate change increases over time\, it’s going to get targeted by regard\, whatever administration there is\, areas in Oklahoma\, the Permian Basin\, as well as areas in North Dakota\, I think are going to see severe declines in in home prices. Also\, because I think that we are now beginning to see depletion in the US on the fracking side at a national level. I mean\, you know\, the most of the basins are now seeing depletion levels\, you know\, depletion in fracking is much quicker than\, than traditional oil wells. So\, I think traditional oil wells\, I tend not to worry about them too much. Fracking I do\, simply because of its extraordinarily volatile nature. It’s not necessarily a bad thing\, though\, Bruce\, I think that it’s an opportunity. You see it go up and down. \nTom Wilson  We had that property\, I was just going to say because we have a property in Houston and we’re so\, we watch that closely. And it’s a it’s softened a little bit the economy\, and I think that’s it’s only 17% tied to energy and only 10% of that is tied to fracking\, but the south side of Houston\, where there’s fracking is certainly\, you know\, impacted the economy. So\, I also follow a couple of have a couple of people who were traders and the oil futures\, and there\, there\, they’ve been shorting for some time. Oil\, Brent oil\, but they also think it’s going to recover within start recovering and going back up in a year or two\, but you know\, who knows? If I can find throughout 1\,1\,1 comment here that I think is interesting when I was when my recent chats with Doug Duncan\, he\, he indicated that he thought one of the most\, one of the most important metrics and watching our economic recovery was the net reformations small businesses. There are 29 million small businesses\, they’re the ones that are impacted the most by all this\, by the virus and pandemic. And he said\, If I start looking at new formations minus the ones that die\, and look at that curve\, that\, that’s probably one of the leading indicators of our recovery. Just wanted to share that then. Yeah. \nAaron Norris  Terry\, I wanted to ask you a question about marketing. With foreclosures not likely going to be a thing. If you had any feedback on what small business owners in the flipping and wholesaling. We’re having success doing? Getting people to respond\, whether it be text messaging\, direct mail\, paid ads? \nTerry Burger  Yeah\, that’s an excellent question. Those are the three big ones. Direct Mail\, probably number one. We’ve\, so\, when COVID hits\, we pretty much shut down the expensive marketing and went straight to text messaging. That was a fatal mistake on our end\, because most of our deals came from direct mail from the previous quarter. So\, and a lot of flippers did that they started pulling back their advertising\, should never ever\, as a business owner\, pull back your marketing. But\, but you know\, we thought that we’re moving to tax people being in the homes\, right? Be\, and the response rate was through the roof. We just didn’t get; we didn’t see the purchase rate on the text messages as big as we thought we would. But we get deals from text messaging\, but by and large for us. It’s still the good old fashioned direct mail postcard sent every single month. \nAaron Norris  Very cool. \nTerry Burger  Yeah. \nAaron Norris  All right. I have a question about ADUs. How will ADUs work in the future in California if rental laws become even more restrictive for property owners? Oddly\, I think ADUs are\, I think the state is figuring out it’s one of the only pass to affordable housing here in the state of California\, because they can’t figure out how to build at a reasonable rate. So\, they’re leaning on it. So\, the\, the latest bill\, we talked about it last session\, where HOAs can’t use a to use as part of their calculation into the\, the rental percentage. So\, one of the games that the HOA is we’re playing is like\, oh\, sorry\, we already have 25% rentals. It’s a cap. Sorry\, can’t you get an ADU? This new law that was signed by Newsom says Nope. ADUs do not count toward that percentage. So\, everywhere these NIMBYs turn\, the answer is too bad. They’ve lost absolute control. So\, Dad\, that’s all the questions I’ve got. And it’s eight o’clock and it’s on a Friday. So. \nBruce Norris  All right. \nAaron Norris  Let’s finish up with a question. Maybe? Let’s the 2021 question? \nBruce Norris  The 2021 question. \nAaron Norris  What are you excited about in 2021? \nBruce Norris  Okay\, there you go. \nAaron Norris  All right. Marco\, let’s start with you\, we haven’t heard from you in a while. \nMarco Santarelli  Okay. What am I excited about in 2021? I just think that the opportunity to invest and create a profitable real estate portfolio over the years to come is very high. In fact\, all the deck is stacked in your favor. We’ve got historically low interest rates\, we’ve got very tight inventory across the country\, we have strong demand\, the demand is increasing. We have Gen X\, excuse me\, Gen Y and Gen Z coming into the scene pushing demand up\, we’re still becoming more and more of a renter’s nation. Just because the primary markets are very expensive and overpriced doesn’t mean that opportunities don’t exist\, you just look at other markets. I’ve always said that. It’s always a good time to buy real estate\, because it’s not so much about when you buy real estate\, it’s where you buy real estate\, as long as you have the right formula\, you can always do well\, create wealth\, and passive income from real estate. So\, I’m perpetually bullish on residential real estate\, specifically single-family homes\, but one-to-four-unit properties. It’s just working with the right team being in the right markets and in the right locations. And it’s very hard to screw that up. You just need to know what you’re doing. And if you don’t know what you’re doing\, get some help. The people are out there to help you. \nAaron Norris  Okay\, Tom\, 2021\, what are you excited about? \nTom Wilson  I think the recovery is going to continue. We may have a slight setback here as we go through phase three before we get the vaccine\, I don’t know\, but I think it’s going to continue to\, to grow and get stronger. And I I feel that it as always you look at locations that got strong economic growth and good business policies. So\, I don’t think it’s hard to figure those out. And I think you\, you don’t want to limit yourself to any one asset class or some asset class. I think you keep the net open and you look at their great opportunities in every asset class and most metros as long as you analyze it and underwrite it conservatively. \nAaron Norris  Alright\, I’ve got these windows on my computer. So\, no rhyme or reason\, Neal\, how about you? \nNeal Bawa  I’m really excited about the fact that COVID has completely destroyed the paradigm of technology being tied to big centers like Silicon Valley\, I think that we just bought freedom to this country. COVID is going to be seen in some weird ways\, as a\, as a great happening 20 years from now\, obviously\, people are going to die. And that’s horrifying. But it will be seen as a change in America in the way that it’s going to restructure America\, we’re using 5% of America’s land. And that’s causing most of our problems. It’s slowing down the economy. And I think the big impact of COVID is it will accelerate it because now we’ll start using some of that other land. And most importantly\, you know\, it’s not just San Francisco\, that’s going to be a technological powerhouse. We’ll see technological powerhouses everywhere. Kansas City will be a technological powerhouse. So\, we’ll Austin’s already there. Provo\, Utah\, that creates a much fundamentally better America\, it creates an America where more people have choices. There’s more entrepreneurship\, and it is not in the super expensive blue states. \nAaron Norris  I like that. Kathy\, you’re up 2021. \nKathy Fettke I am so looking forward to 2021 not being 2020. \nBruce Norris  All right. \nKathy Fettke  So\, I want to say that we have so much to look forward to really once all this is behind us. We are moving into a time of new technology. This is so much of what happened in 2020 was already somewhat predicted. Just last summer\, I was invited to Singularity University\, which is Peter Diamandis’ university\, and very much looking into the future. And the future is very exciting with what’s coming in the technologies\, the ability to get water out of clouds. And I mean\, you know\, there’s good things coming. \nBruce Norris  I thought we already got water out of clouds? Like even more. \nKathy Fettke  But for drinking\, you know\, there\, there’s so many new technologies that are coming that these little\, these little things the size of a car can power an entire village. So\, there\, and also Peter Diamandis was saying that\, that schooling\, universities\, were already going to go to VR technology\, where you would\, you would have your own instructor teaching you at your own level in your own home\, this was predicted over the next 10 years. So\, we’ve kind of moved there. And I think a lot of kids are learning you know that they can get one on one training at home. So\, I think more people are gonna have access to education that they’ve never had before. And\, and technologies in places like Reno\, the reason we’re building there is because it is now a technology hub. And they had to literally\, that the way Tesla was able to even get the land for so cheap was they had to donate a tremendous amount of money to the college there to train people on those new jobs. And we’re going to see more and more of that. So\, things are gonna get better. They’re gonna get better. 2020 is almost over. \nAaron Norris  I like it a little bright spot. Terry\, don’t\, don’t disappoint us now. \nTerry Burger  No pressure. \nAaron Norris  No pressure. \nTerry Burger  I joke with my son. I’m so excited. It’s such a great time to be alive. I wish I was 20 years younger. So\, I could I could see the next 20 years down the road. Like Kathy\, I think Tony Robbins said something six months ago before COVID hit about the apprentice. This is about to be the greatest apprentice generation we’ve ever seen\, with people taking online courses and classes and stuff\, masterminds and all that kind of thing to be great at a thing that they do without having to take English and stuff again in college. Right? Like it’s a\, it’s really exciting. I love single family and multifamily houses. It’s a great time to be in that class\, right? But I think there’s opportunities in small commercial\, like Tom said\, when\, when these indicators come back that small businesses are starting to come back in full force\, if you’re able to go in there and take some opportunity now with\, you know\, with things not going very well for small businesses that own small real estate\, and you can buy some small commercial if that’s what you want to do. And I’m I I’m elated about the idea of modular housing. I just don’t know when it’s gonna hit. So\, and I’m honored to be here with you all. It’s been an amazing experience. Thank you. \nAaron Norris  Well\, this sucker has produced a ton of content we started with\, you know\, Doug Duncan and Sean O’Toole\, some of our favorite panelists. We then went into the legacy series we had the Residential Town Hall and now the Commercial Town Hall. This has definitely created probably the most content we’ve ever done with this event and just thank you all for being part of the legacy and the million-dollar mark. I really appreciate it Dad\, how about you close out tonight? \nBruce Norris  I want to thank all of you for coming. It was quite an education for me. I’m very impressed with what our guests know. And I’ll close with this. And I’ve told this story before. But it’s really important as we deal with something that’s challenging. After 911\, I went to an angel game and had season tickets\, and I’ve been there many times. And on this particular game\, when the national anthem was played 45\,000 people stood up and they sang. And I\, I had tears in my eyes. And I looked around and I said\, Wow\, there’s no differences today. We’re just all Americans. And that’s what I hope that we remember is that we have much more in common than we haven’t have different. And there’s a lot at stake right now when we better remember that we have a lot more in common. \nAaron Norris  Amen. \nTom Wilson  All right\, we’re all unique. \nAaron Norris  All right\, guys\, have a great weekend. This will all start going up on amazon prime and YouTube starting this weekend\, and the financial branch that we’re doing. Hopefully\, we’ll know who the President is and sort of where we need to go as far as real estate investors here in California. And that’s next Saturday. So\, thanks so much\, guys. Have a great night. \nTom Wilson  Thank you all. \nBruce Norris  Thank you\, everybody. All right \nKathy Fettke  Goodbye. \nJoey Romero  Thank you for tuning into I Survived Real Estate 2020. To watch the full video in its entirety. Or to learn more about speakers and sponsors. Please go to isurvivedrealestate.com and be sure to tune in next week for more I Survived Real Estate 2020. Thank you. \n  \n 
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