How to Profit from Commercial Real Estate Notes | Real Estate Notes Show

Episode: How to Profit from Commercial Real Estate Notes - Full Dave's Goals and Plans: - Running a class teaching originators what makes notes valuable and what criteria note buyers look for - Posting links to website for Zoom calls about note origination - Organizing the Diversified Mortgage Expo conference May 31st - June 1st in Nashville - Transitioned from buying bank-origin notes to seller finance notes over the past year plus Nathan's Goals and Plans: - Experiencing deals happening during conferences - had a couple deals close at last year's event - Seeing improved paper quality from originators who have gone through ARMO training - Emphasizing importance of structuring notes correctly for future marketability and top dollar sale prices - Running bi-weekly show every other Friday featuring note industry guests Key Recommendations: - Structure commercial notes properly from inception to ensure marketability and maximize resale value - Originators should understand note buyer criteria and clean documentation requirements - Consider commercial structure (LLC/corporation lending) for advantages including shorter terms, higher rates, better remedies, and share pledging options - Participate in training and conferences to network with note buyers and potential deal partners - Plan for note sale scenarios even if intending to hold long-term Topics Discussed: - Differences between bank-origin notes and seller finance notes - Commercial note definition and structure (LLC vs individual borrowers) - Note origination best practices and documentation quality - Short-term commercial lending (12-24 months) vs traditional mortgages - Diversified Mortgage Expo conference details and benefits - Lower loan-to-value ratios and equity advantages with investor borrowers Guest Insights: - Commercial notes typically involve lending to LLCs/corporations rather than individuals, providing legal advantages and lower lender protection requirements - Investor borrowers have six-figure cash accounts and sizable down payments, creating higher loan-to-value and more secure positions - Commercial loans typically offer double-digit yields with 12-24 month terms, avoiding long-term inflation risk - Can require personal guarantees and pledge of entity shares as additional security layers - Fix-and-flip commercial lending provides more profit and security than traditional residential rentals [Music] welcome everybody to the real estate notes show I'm Dave puts from jkp Holdings alongside me as always Mr Nathan Turner hello hello hello today we're diving into the idea of originating and buying commercial notes yeah um and before we get there let's just catch up for a minute for those who may not know um we're both note buyers per se um and for us our experience in this note business has been vast on the buying side of real estate notes origin from Banks and whatnot so Nathan what would you say is big difference between buying the bank origin notes and getting involved in this commercial seller finance notes what are the biggest differences you're finding we've found in the last year plus so yeah like you say we've been buying Bank notes forever uh and then now we've kind of transitioned a little bit I want to say over to seller finance one I think one of the biggest differences is just the paperwork uh the bank stuff generally is pretty clean uh there may be some missing assignments and actually that's another difference now that I think about it but there might be some missing collateral there might be some missing documents but the the paperwork itself is really clean and with the seller finance first of all my experience has been there's there might be one assignment in between there uh so way fewer assignments to be tracking which is a pretty big deal you and I both have our our share of chasing collateral um but generally the the paperwork's maybe not quite as clean uh it's it takes a little bit more scrutiny when you're going through the those documents just make sure it's what we think it is absolutely and I think for us we got used to one set of things happening and we've shifted throughout the years from that typical bank note clean cut just dealing with AES and assignments to understanding what this whole world of owner finances and originations are so we're better buyers of that same paper yeah and and it's been interesting you know like you know my history where I started doing seller finance and my paper was just as ugly if not uglier than some of the stuff we're seeing yeah I didn't know what I was doing you know I was I was writing up a contract to the best of my knowledge and ability but it wasn't correct and as I learned more and as I experienced more I got cleaner and better and and now I'm satisfied where it's at and so it's kind of interesting going back to that now and seeing some of that same kind of paper coming through yeah and I'm gonna share with everyone uh in the comments on here and I'll share it on the YouTube channel when this is being recorded this will be on our podcast as well as our YouTube channel um we Nathan and I run a awesome class for those who are regining paper who want to be interested in selling it to note buyers um and we teach those Originators what makes a note valuable and what criteria note buyers are looking for so you guys do make quality notes to sell if you choose to or need to in the future and you know I honestly I I think we're making an impact from all the people been speaking to I'm seeing that you know I actually talked to u a guy that's creating notes out in North Carolina and when I might met him a year ago he's like armo you know and now he uh now he is going through an armo and he's he's kind of cleaned up on the origination side what he's building and it makes it much more attractive for not buyers absolutely so we definitely encourage you guys if you are regining it please jump in I I post a link to our our the website which will get you into Zoom calls and whatnot we're having one Wednesday night which we'll be talking about um also before we get dive into our awesome guest we have going on today Nathan share with those who may not know us uh about this conference that's coming up in May yeah oh man the closer it gets the more excited I get and I know we're still a few months out but man it's going to be so good we're just looking over kind of a preliminary schedule of speakers uh and man it's gonna be really good I've got you lined up I've got me lined up I've got a bunch of people that we know I won't I won't Spill the Beans too early but uh we've got some really great speakers coming up as well as this is for those fun things buying notes as well as originating putting them both in the same room exactly and I think that besides the speakers is probably the second awesomest thing that people who are originating are going to be able to have people who they look up to speak speaking on Stage Sound weirdly enough that those people who are doing rap notes origin notes don't have a conference right you can join in and take a look at it as well as meet other note buyers who rate your same table could be buying your notes yeah and and just looking over like really it's almost 5050 where it's kind of the traditional what we're used to and seller finance and so we' we're incorporating a lot of that coming in a lot of speakers a lot of Originators that are actually doing this uh that can that you know that all walks can relate to so whether you're originating paper you're buying property and selling it on terms creative Finance whatever uh we've got that covered and people that can speak to that as well as the note buyers and man oh man we're GNA make a lot of business coming together it's exciting yeah yeah last year's we had a couple deals actually happen that weekend which most conferences that never happened so excited about that perfect yeah so yeah if people don't know it's the Diversified mortgage Expo and it's coming up May 31st June 1st in Nashville and cannot wait to see everybody it's gonna be really great conference G be great so those who haven't signed up for it please go to the website uh and you'll find it if you can't find it have problems feel free to reach out to us to learn more so when we get back to the idea of riging buying commercial notes we're going to cover today the idea of what is a commercial note what does it mean or originate it what's the differences how do you find it how do you possibly if you're looking to buy it stuff like that and in next couple weeks we'll be talking to more people who are doing this stuff me today we're going just going talk about the overall line of what is this stuff how do you originate it correctly what do you do to make it safe Nathan I'm sure you've seen paper that's not written well and not originated what could what are some of the things you know of that could happen if you don't create good paper well number one you may not be able to sell it at all and then if you can sell it it's not going to be for a great price uh so just there's way there are some really simple ways to structure your your note in the first place to make sure it's a very marketable note and I know a lot of people get into notes uh where they're originating and their plan is just to hang on to the note forever great what if what if two three five down years on the road you do decide you want to sell it you you would like a lump sum of cash wouldn't it be nice to have that note structured in a way so that you can get top dollar for it so that's that's really what we're coming down to and hoping that people get that message absolutely and I just to remind everyone this is recorded I think you got comment about that we do run this show every other Friday uh so we'll be back in about two weeks so if you are and we'll be talking to another uh note guy who's been in the space for a long time so without further Ado let's bring on our guest Paulo Welcome to our show we're excited to have you on thank you for inviting me awesome can you share a little bit about your background how did you get involved in real estate how do you go towards this idea of commercial properties what does it look like how did you get started how did you get introduced to this space well I mean I I've been in real estate forever I'm actually from Italy I moved to the US uh around 12 years ago and I did Real Estate in Italy and when we came here initially I invested in rental properties while working my corporate job and I just back then when I came here copyrights are really good you could buy for really little a very uh good rental property and I used the build a portfolio 32 rentals at thens prices didn't make more sense because prices went up so much I decided to start lending and I did a b Cash Out RI and started this company uh and as a lent I realized that you could make a lot more profit with a more secure when you run a fix of flips rather than a normal home because you people need it for a shorter amount of time so they're okay with a much higher rate and uh you started working really well so I kept growing the business awesome interesting so commercial this you're you're GNA help us dispel a myth right away here so when we're talking about commercial notes we're always talking about strip malls and office space and things like that right hotels like massive stuff right no no no not not necessarily at all actually the vast majority of my notes so far have been on houses or small multifam that have but the reason why they're commercial is because you're not lending to an individual you're R lending typically to an llcb you're lending to corporation which has a lot more advantages uh and you know the the First Advantage is that legally you don't have the same requirements as a lender is a much much lower protection for NS this actually as I we decided to really lent in Georgia as we uh know the market extremely well you have really basically no protection as a borrower if you're at an LLC the low considers uh a commercial loan a commercial contract between two entities and is not particularly protecting one versus the other so the the legisl is not looking at a poor individual with a corporation is looking at two companies uh making a contract together so it doesn't really favor one versus the other uh and what you can do you can still have the personal hook having them sign a personal guarantee and you can also uh as you know the the worst case scenario is somebody does bankruptcy but if you do um commercial note you can have them share uh pledge their shares of their entity on top of the properties you can take over the enity if they try to bankrupt it so you have uh you know you effectively can take the property very quickly at a crazy speed with with this system the Second Great Advantage is equity you know when someone buys a property they typically uh either they have a regular mortgage where the Liv little down payment or you create a seller financing where they have they can't put as much money down as instead of a Real Estate Investors uh most of our investors have six figures cash bank account in order to and they have a sizable down payment they need to put down and they have to have cash reserves Etc so you have a much higher profile borrower that your typical borrower that you would have you have in you have instant Equity as you know uh investor will buy for a lower price than Market because that's their profession and on top of this they need to put a down payment so you have a lower uh loan to value and you typically have a higher rate you have a lot more remedies that a regular loan very interesting so are these are these typically short-term loans like 12 18 months kind of things yes you get 30-year mortgages no no no no no because you flet you they are trying to borrow for really a short period of time and therefore you have two advantages number one you're going to have a much higher yield so all the notes are really going to be double digit and then the second Advantage is they're going to be short term yes they're going to be typically 12 to 24 months uh which can be for no buyer a bit of a paperwork because uh you might get paid very quickly but uh the nice thing is you this allows you not to have all the inflation risk because now uh if you get your money back and inflation goes up you can reset and the rates constantly reset uh you can reinvest at whatever is the market rate at the Times a lot of people have suffered from this past inflation hike but if you have a note of 12% that matures after a year and maybe gets paid back after 10 months well now you have earned that money and if all of a sudden inflation spikes up a lot you can now have your next set of notes at the higher rate so you mentioned before and um about the fact you get double digit yield numbers right yes I'm gonna give you a softball here how about usury law I mean usury law says you can only do a cap of a certain interest great are you is US law apply here at all it does but uh it does a different regulations so for example for Georgia which is mainly what we do for thisle law US law is 60% 60 so yes it would be illegal to have an interest rate of 60 but obviously as we do 12 13 11 10 15 18 what other interest we do is well below user in law again that is not the same legislation that there is for individuals you also uh regarding legislation and another your advantage is you don't have to have the same type of Licensing there's not as many requirements for like statements or all these laws that make uh servicing or originated very complex um and can add additional risks that forces you to uh be very careful in the space aot it's not you don't have all that right type on Commercial you uh an example is this number I gave you amazing I'm curious like usually when we're looking at a at a at a note that we're going to buy um one of the factors we look at is what's the value of the the property and and when I'm looking at that I want to know today's value so not an after repair so I think what you're doing is lending more like you said to Flips so are you lending on the current value where it has not been repaired or are you lending on a future value so we look at three factors we look uh definitely we look at the future values we want to ensure the future value Lo to Value typically we like less than 75% uh in would try to really be conservative and having less than 70% so uh now be on an as's value um typically the only way to look at as's value on a property to be flipped they typically need some Renovations and therefore they only B from investors so if you try to look at comparable properties that all underpriced they only properties that an investor based so they already discounted so what you do in that case is we try to be 85% or below so because there there is a margin that investor will make from buying a distressed property and reselling a retail so the two RA are going to be different that 75 70 85 includes the cost to repair because you're not going to loan them 85% plus repair costs right well exactly so what we do is we do not Advance all the money to the borrower right away and uh we will just Advance uh an initial amount in order to ensure that we have a conservative leverage and then we'll go and give them the money as they ever repaired we're going to give them the second part of the loan so the SE so for example if there is a property for simple numbers that is uh worth 100K now and uh and it's going to be worth 200k once uh is done and uh you know we're giving a portion of the loan maybe we'll give them 80k now on the loan and it will give them a little more we might give them another 50k after they've done the renovation and how do you manage that renovation how do you manage that situation where you know they finished the roof or they finished kitchen are you going to the house and looking at it well this is another stream of revenue for us uh I have you know we do that's probably a lot why we stay here locally because we have people in the field that will go out and we can charge the customer an additional fee for the person to go out and do a report so typically what we do well in this case you know you could think it a two ways maybe for the audience one you can really uh you know if you know construction well and real estate investment well you can build your own business this way and now what you have is you have a lot of security and you have a lot of income and you do not need to run all the risks of the flippers that's one way to do it uh and if you would ever like to flip houses you know that if you ever get back the asset uh then you can finish it up and make a lot more money because you're going to you're effectively investing in the note a fraction of what the flipper is investing another way to do it is you know if you buy a note from me or from any of my other people that do this typically we'll we'll all service it for you so you'll you'll get the Dr reports you'll get everything and this will be completely managed for you w and then you're handling all that escrow money it sounds like are you servicing all this yourself or you have outside people helping you manage it so I have outside people that work for me uh managing it so you know we have approximately 80 notes right now on our uh either on our books or that we have sold and we are all managing them so we F people that will go and give us a draw Report with pictures and reconciling uh the scope of work and the Asal okay and then so you mentioned this already but this is I think a huge highlight is because it's a commercial note you're going it's B2B so um dodf Frank does not apply does not apply there are no rules there and even like you said you're in Georgia and and I I double checked this and you're right but again because it's B2B uh Georgia has usually has requirements about needing a debt collector's license but because it's B2B that does not apply either correct that not buyers we're always worried about debt collection being a huge because for those who don't know typically when you create a note even if you buy a note in certain States like Georgia you have to have a debt license but when you're doing a business a business you're in a different realm of exactly and you can do all this without dead license this is awesome and yeah and it you know if you are uh if you you know there are many other type of loans that we do they're not necessarily for Flippers so you could have situations where someone just needs for example a bridge loan where they are an investor they maybe are setting up an Airbnb and they can't get a loan a regular bank loan till they have some history in NBA so we can give them uh a loan for the 12 months typically that that is needed in order to create that history but again you on the loan like this will probably go 70% loan to value so you have a very secure nice property this is already cash flowing uh other other cases are some people sometimes have a short-term need uh for cash in order to buy quickly some properties and you can cross collateralize among a lot of the rentals and the old and in this Cas is having a rent Rider uh which basically means that you can if they don't pay the mortgage don't even have to foreclose on them you can just start collecting the rent uh and the the rent you just make sure the rent will cover more than a mortgage and so you have another remedy there so there's a lot of different type of notes again that you can have with very interesting rates and you have a lot of freedom to uh structure it in a way that is a win-win situation awesome just reminded someone asked what commercial note is this is talking about a note that's a business to business transaction um and whatnot and this will all be a replay on YouTube and our podcast so if you get lost let us know and just take a look at that we had a question regarding what's your concerns on the fact that a lot of people have fears of repairs and properties and St like crashing do you have a lot default how is that what's going your world for that okay well uh there are some situation well first of all I never just yet had a property that actually was fully foreclosed but we did have uh we do have approximately a little you know three to 5% of the loans where there is some TP of delay maybe of a week or a few days or something so the main concern it can be of uh to your point what if something happens that was not predicted at the beginning well number one we ensure that the borrower has enough cash to sustain 10 to 20% uh extra expenses on the budget secondly on extensive budget so on simple budgets where they just have to change kitchen change flooring or paint in the house they're very simple uh we just require that more complex if they're doing some add dises Etc we actually already include a contingency of five 10 or 15% depending on the project so we kind of know statistically that there is a certain uh there's certain amount that needs to be reserved for and then you know if you as mentioned before we do have a very conservative loan to value so we have had a couple of cases of uh we have had one CA two cases where there was a major Foundation issue where they actually were uh uh do extensive amount of work but you know because we ensure the the the expertise the cash we typically have cross collateralized other properties with that then if we were very conservative they still went through okay and you know from time to time uh we have given you know we also give them good referrals and we we also have other customers of ours that are gc's that are contractors so we have kind of a local community we know the municipality is very very well so we have never while this stuff can happen between the reserves the resources that we can give them and the conservative valuation that we do we never had to read for Club okay very interesting so now the question for all these greedy note buyers out there these these sound pretty great and it sounds like there's a lot of opportunity there are you selling any of these loans yes so sure sure absolutely absolutely I'm selling loans how we operate is we have uh limited amount of capital that we used in order to originate a note right away and then we you know we try to sell it now sometimes uh the note pays fast enough or sometimes we do loans that are very very short term but otherwise our business counts on selling around 80% of what weight so you're what you're saying is when you say you can sell an 80% you created a note at say 12 133% you can sell that at 80% here this note buyers this idea that you can buy a 133% yielding note at 80% no no that's not what I said I said you know about let's say four notes out of five we sell yeah four notes out of five we sell and one stays in the balance sheet what we typically do is yes we will sell the notes aart and typically what people will want to do is we we can all we can completely service the note for them if they want to another what does that look like to service note because I'm going to say most note buyers me and Nathan said this before we're lazy right you're we have to manage the rehab manage that stuff are you're saying that if we bought that note from you at 14% whatever it's at that you'll continue to maintain that woman service the property absolutely absolutely you know absolutely I continue servicing and one other thing that we do do uh you it's much more manageable on Commercial notes it's when we have a larger note we actually fractionalize it so what that means is you uh at times you have money you would like to invest you don't have it's hard to match dollar for dollar especially for people that have an IRA account that their for is locked they might have 42,5 $577 in it and they can they will always have unutilized cash because of that instead if you buy uh a participation in a note uh on a fraction on a note I we can also manage that for you so you can buy just a percentage of the note we'll retain the other the rest of the note and we can just pay you proportionally for your note you could also go as far as decide to differentiate your investment and instead of buying one note you might want to invest in 10% of 10 notes and that would allow you to have not only fully serviced but it will allow you to have um diversification of your risk without having to go in a fund which you don't really have any say what's happening next you can choose the notes you want you can choose how much you would like to invest wow for those want to be passive as an opportunity what typical yield are you offering to those people who want to get some money rolling 10 11% something there netted of you know my my servicing fees and yeah that's it and then if they uh they know on one hand they they know that probably they'll get the money back much sooner than in other places but there will be always other notes for them to invest in okay and you're only are you only doing this in Georgia are you doing other states well I would say probably 95% is in Georgia there two reasons number one we know the collateral extremely well and we also have a lot of local resources and you know uh if there is ever a situation where there is a distress situation we can always have another customer of ours that will buy that property so if that's another remediation that we have very often something happens to the borrower is a good property is a good project the borrower feels like it's too much for them or something upos to them we can sell it so because of this we create a lot of efficiency we're really retaining Georgia secondly Georgia is really a great state if you need a foreclose you can literally foreclose as a non judici in two months and uh and then you get a property with a lot of equity uh so that we know how to manage at that point never happen but if it were to happen uh we we can manage it very well and we can manage it locally with our own resources so we stay in Georgia I would say 95% of yeah 95% in Georgia probably 90% in Atlanta okay Georgia is a right state to foreclosing because of the short period of time it just for not buyers who buy residential you have to wear it by having a debt license so that's awesome now when you're create how are you finding these assets how are you finding these people who need money to fix up a property well they really have a lot of word of mouth because we close very quickly so very often they uh in order to close quickly and close on properties that need a rehab they can't get a regular loan the banks will not finance a loan they will not Finance rehabs Etc so there's a lot of word of mouth and the as the word of mouth go you know obviously we have some competition and so what we do is um we will adjust and kind of customize note by note a little bit of our products in order to match what uh what the need is but how we find it has been really word of mouth as we started a business and we started with some marketing the response was so overwhelming that we that we had to stop we didn't have enough that's why we started selling notes but even with that you know we need to uh you know we uh we're growing but we cannot afford to have more volume than we're already having so I'm curious how you like it seems like um it's almost kind of a hybrid between a first and a second in in the due diligence phase because on a first generally we're just looking at the property like I'm much more concerned on the value of the property making sure there's equity and on a second you're much more interested in the borrower making sure that they have the ability to pay and and kind of that history and it it seems like these shorter term notes is a bit of a hybrid where yes we're interested in the in the equity and and value but we're also looking at the borrower and looking at their ability and uh I don't know track record or or something so how do you do that like is am I right are you looking at both things oh absolutely so definitely the value is very important and now on we do look at the credit we do run uh Lexus Nexus bound check but we also look at the prior projects they did so typically uh some of the issues or repairs or gaps in the scope of work or not doing the correct valuation are really done by newbies and so with that in mind we will look at the projects they have done before and we're very careful to land to people that didn't do flips before or didn't do a similar project or didn't do an Airbnb before in that case we really cherry-pick the deals to only the people that can bring even more cash to cloes that even higher credit uh and and a lower leverage yes we definitely look at the person both on their credit and backround check as well as their expedience so you're you're pulling personal credit you're pulling personal W2s you're not just based off the company you're doing it based off the property as well as that borrower and are you are you if it's a partnership are you getting personal guarantees from them and their spouses or how do you kind of Ensure your safety on that okay well we definitely get personal guarantees from the majority members so typically they will be uh we do not necessarily look at W2s because they we want them to already have all the cash needed to do the project because uh the the interest payments at this yeld are going to be very hard to uh to be sustained in the long term so the and very often these people are professional flippers they do multiple projects that's their fulltime so they don't have a w to but they do have an experience of all the projects they've done and how much they earned so we if we again we do not count we typically do not unless we have cross collateralized with rentals that have a good rent history uh and then we can't count on the fact that we can collect rent ourself for them uh but otherwise we they need to have all the cash up front in order to sustain all the financial obligations and they need to have enough experience to demonstrate to us they can finish the project that's typically how works now uh other exceptions can be maybe if there is an apartment building then well that's again is rental and we know that after they do some fixes they can start renting very quickly after three or four months so we might be okay with them having just enough cash or two to three months uh and then knowing that some of the rent will come in but in general they need to have all the cash up front demonstrated awesome what's been your biggest uh worst situation you've been through for a property what was a a story that you kind of shake your head and say I've learn a good lesson from it I'll give you two okay I'll give you two so one of them has been and it this happened twice I uh went into a meeting to discuss the loan uh with in both cases were two ladies and they were there with their husbands and the lady appeared the two wives appeared this was two separate lws uh appear to be um just the only borrower and the in uh and the husbands was not involved and in reality that was not the case and what I found out later is that the wife had a good credit and a husband wanted to really run the project and because the wives were the only uh in fact you know one person in my team did tell me it was a uh uh her main job was a delivery nurse uh for babies and she's like you know this colleague of M it's weird that she all you know she doesn't look like the type of construction person and sure enough uh you know her husband started running everything and even though she signed a personal guarantee she had a perfect credit she had the cash uh Etc her her husband started running everything and he was definitely a person that was not a good barer very difficult to work with and at some criminal past and things of that nature so I had to uh I had to deal with a very very rough Capital situations uh when you know he had a scope Creek and he wanted me to do a low modification to cover res of I said no so that was uh that was kind of an uh very stressful story uh very similarly upen to with another loan uh a very difficult person to work work with and it just appeared out the Woodworks right after so the the rule there for now has been whoever participate to an initial meeting we typically have a zoom call with our borrowers be to go through the project whoever is in there we want to run them all because obviously whoever is in there has an interest in in the transaction what's been your best what's been your best or your best return oh I've had I've had one two weeks ago uh well we charged points so uh you know we charged points and someone uh needed for a very large apartment building to uh to lock a certain rate and you know this was we're talking about a downtown hundred million building and they needed 300K to locker before closes so I just I gave them for four and a half points of the four and a half% fee for uh of 300K for 10 days and they gave it back and it was secured by in this case was secured by True commercial property they uh they own a plaza with a Walmart on so it was you know I it was entry doesn't matter but what did you chart interest rate wise because 10 days is zero Interest really but 25 well I did charge 25% in that case so in that case% four and a half yes nice and yeah well they needed the money really quickly and I I did that and yes so it does matter on 10 days that is another 1% that's probably that's probably my best Lo that's probably my best Lo that's amazing that's czy aome so it's amazing you know uh that this world is out there and those who are interested in learning it you definitely reach out the Apollo and he'll answer any questions if you're a note buyer and looking and curious to buy these loans and have him manage it for you definitely look at that uh if you are interested in even investing in it Pao has some other opportunities for you guys feel free to use his contact information um to reach out and find out more about that stuff uh we're not going to talk publicly about that for obvious reasons but Nathan I'll let you uh go ahead and ask your question yeah we're we're always looking for you know what's coming up next um and you've got kind of an interesting perspective on on real estate in general and so I'm curious what do you see coming down the pipe like there's all kinds of predictions out there so we're looking for yours what do you see all the real estate valuations or are okay so down the PIP I believe that the prices um will not immediately Spike up I think what's happening now at a micro level is that when covid happened the government took a lot more Dept and really in order to get out of depbt you have three opportunities you can either uh increase taxs which is very unpopular you get lower government spending which effectively is not going to happen the third option is to print money so that uh as a lot of people expected the Fed rate to cut rates that did not happen we're uh at a historical high of fed rates so I believe that low interest rates are not going to come back very soon so uh contrary to other predictions what that means is that there is going to be a bit of a stagnation in General on on markets however what K did also at Chang the demand and offer on micro economies so there is uh there are some areas uh did obviously I've had a lot of certain places California had uh an exodus because of the expans of living some other places uh in Florida or in Atlanta for that matter uh had a lot of influx of people on where where is a better quality of life for lower cost of living so with that means is there is a local demand offer in balance in in certain areas that uh where if they're just certain areas in at is just not enough houses to meet the total demand and therefore that puts pressure on the prices so my belief is that the prices will go uh at a they will remain stable uh or stagnate so my belief will be prices up zero to 3% in the next per year the next on average next two to three years where the rates going to stay uh will low were just a TD now a lot of the fny May Freddy ma rate a lower rates and rate Cuts that's why they went down but if they don't materialize as much they will remain where they're at and I believe that locally there will be some changes as far as the mortgages themselves uh I believe that yeah the um unemployment has been at the alltime low and uh you know for for several factors I believe the unemployment will go a TD higher um making a little harder uh so I believe that's a good thing for people that are looking at loans for rentals might be a little uh different for people maybe that are looking for traditional fime Fredy M but a lot of the people probably in the conference are looking for alternative loans for individual that therefore should be a little better as the unemployment is going to creep up um as far as my own the space where we're work in uh I believe there is a constant transformation we have more and more Wall Street backed uh this is secret if you will on this loans that is coming out so slowly some of Wall Street uh companies are coming in our space but there's going to be always space for uh more and more uh specialized in Niche products that will continue to be profitable does that answer your question yeah yes yeah absolutely that was great we had additional question from Mario um where do you think the best lending opportunities for commercial in the future six months to a year where do you think the best lending opportunities are is it to rehab or or a different angle that you're seeing coming around well uh this is a very there is a space to really look at and uh which might sound unpopular but as a lot of people know you need to fear when everybody's excited and you need to be greedy when uh uh everybody fears yeah so uh office spaces right now uh if you have uh a good building on office uh use maybe the build cost 20 million ions and you used to trade at 35 Millions now you can buy for two or one and so there are that on the flip side because the e-commerce there is a lot of there's still demand of small suits so there's a there's a whole new and and a mailing address so there's there's a whole opportunity for investors to buy an office for a million dollars divided Streets Run it because the cash flow alone then that building will be worth 45 Millions yeah and in that space no one is landing so with that example A B you might can land half a million dollar or and you can fractionalize to many investors on a building that used to be worth 32 and he's going to be worth five and today is worth a million you have no competition and therefore you can charge whatever rates you want what other points you want and you know if you take back the property there still uh very good Market to go a fractional so because you're really buying something at five cents of the dollar or a three cents of the dollar is so low that you know it the reality is because the cost of construction is 20 million they will not buy they will not construct any new office building for the next 20 years and because of that if event eventually the office building will increase in value so there's also a lot of uh projects that you can do that are done from office building into another asset class for example apartment buildings so for those projects again there's no one financing it today so you can go to a lond value of 20% with a interest rate of 15 or 17 and five points on something because no one else is doing so that is a huge opportunity uh that is greatly overlooked today that's awesome good nugget yeah absolutely so well Paul I we appreciate you joining us on this Friday afternoon.