The Jon Sanchez Show
6/25 - What are the best real estate strategies now?
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Yeah, just a little bit. Yeah. It's like we can't get everybody to move simultaneously as we have, you know, a day where, you know, the now goes up and as that goes down and then reverse that the following day, and yeah, it's just a really, really bizarre patterns right now. And, you know, what we're seeing as far as underneath the surface, you know, yesterday as an example, 261 gain on the Dow yesterday. Today we lost 300. Yesterday, we rose, or excuse me, we lost 193 on the NASDAQ. Today we gained 220. So yeah, it was just absolutely amazing. And S&P was down 20 yesterday and today, up 21. So, but the only thing that's, you know, showing a little bit of calmness, Dwight, is your world, the world of the bond market. You know, it's just kind of bizarre how everything is shaping up at this point. Well, Mark, it's not really having a lot of information to digest, had a pretty good two year treasury today. So rates were relatively quiet, but yeah, you got to be happy. I mean, things are nice and calm for you, man. Yeah, Corey says it often boring, right? It's really boring, but the consumer is just chomping at the bit for rates to go down. You just, you see it when you're out there all the time that the moment you get a little bit of a three day slide, you know, and the media gets a hold of it and all that. Sometimes it's too late by the time they get out there. But it, it truly is fascinating to watch the activity and subdivisions that it realtors offices when, when, when, you know, the, the, the commentaries rates are down, you know, they don't have much. They're down. They just know they're dead. They just know they're down. Yeah. Well, that's how sensitive the consumer is to everything. And we'll touch on that somewhat similar to that tonight, Dwight, when we talk about the consumer confidence number, because there were some interesting bits of data that were revealed inside that report. And again, all three of us know how important the consumer is to everything's at this point. Corey, do you do you sympathize with Dwight that how sensitive the consumer is right now, just even hearing that rates are down, even though really they're not just how sensitive they are and anxious. They are to continue to buy. Corey. OK, there we go. All right. So were you able to hear that question, Corey? I was. Yeah, no, no. And I think that they're, I think the buyers are pleasantly surprised because I don't know that they watch it as closely. And so they may be have maybe they were quoted a rate 30 days ago. And then when they finally get a property and try to lock it in there, they're very happy to lock that in, which is, you know, psychologically speaking, you know, like we're all super thrilled to get 6.3 or 6.75, you know, because it wasn't seven and a quarter. But a year ago, you were two years ago. That's a good point that that. Hey, Dwight, I just got a way that I can make you the number one mortgage banker in the entire country. I don't know how it is. I just figured this out for you. Two percent rate. No, when you give them the pre-qualification letter quoted at seven and a half to eight percent, then when the reality happens and they come back and they go, okay, we're ready to lock and close and so on and so forth. Then you quote them, you know, this seven percent mark that we can't seem to get away from it. See, you'll look like a girl then. And to Corey's point, they'll be extremely happy. Like, my gosh, you know, we just did good. Wouldn't it be great if it was that simple. But to Corey's point and your point, I mean, it is really amazing what a quarter point and we're flirting with it. You know, like I said, we've been boring, but you flirt with it. And people just come out of the woodwork thinking, okay, maybe this is and they come out maybe ahead of it a little bit thinking that it's going to be more. But, you know, we just kind of settle back in, go up, go down. So we've been in this nice holding pattern for quite a while. Indeed, no doubt about it. No doubt about it. All right. Let me tell you what we have lined up for you tonight. We're going to introduce you to the world of real estate cycles, right? We deal with cycles in the stock market all the time. Even though historically cycles have not, or I should say, currently cycles have not reacted like they do on a historical basis. Historically, stock market goes up for three to five years, down for three to five years. Not quite the case that we are seeing these days, right? We're on a tremendous bull run for a number of years at this point. And basically what we find at that point is, you know, it's a brand new cycle, right? This is what we call it, a new bull market scenario. But when it comes to real estate cycles, you know, we need to pay very close attention to this. All three of us know a gentleman that very prominent in the local real estate industry. We've had him on this show. We won't mention any names. But you guys remember when he was on the show, gosh, you know, what was it? Probably 18 years ago and he emphasized how he makes his real estate decisions and that was based upon real estate cycles. And so what we feel is most important for you right now is we are in a cycle, right? And it's amazing to see again, as we were just discussing, how strong the consumer is with the insatiable appetite is of the consumer wanting to get a mortgage, get a house, et cetera, at this 7% mark. We never thought that that would be possible. And of course, there's nothing out there to buy. So you've got the supply and demand effect there. So what we're going to do tonight is we're going to look at, first of all, kind of define, what are the four common real estate cycles that we see from a historical or we've seen from a historical standpoint? But most importantly, what we want to get to tonight is what are the best strategies for you right now, right? There's a million things you can do in real estate. And guys, I'll be honest with you, what prompted me to create this topic tonight. I read a great story yesterday in the Wall Street Journal about how some, I'm sure there's more. They only featured four people, but these four people, the Wall Street Journal, featured that decided to cash in their 401ks years ago and put it into real estate and talking about how, again, they like to buy in down markets, which everybody does, but that they like the tangible aspect of real estate versus the stock market. All four of them said, I like to be able to see it, touch it, feel it, et cetera, versus the stock market, which is completely intangible. But I want to do that as a topic somewhere down the road where we talked about using some of your stock market assets for real estate, because, again, they're different animals, right? Many times they should be non-correlated, so that's a one advantage. But of course, the cash flow that they can produce, the tax advantages and so on and so forth. But I thought it was interesting that even the Wall Street Journal was talking in the story about cycles and so on and so forth. So that's kind of what prompted me to start thinking about this topic just a little bit. So, Corey, when we start on this, I want you to kind of hit on these four cycles that use a real estate professional kind of look at and we'll describe what these are, et cetera. So let me get the stock market side going and then we'll let you guys take it over from there. So overall today, it was a quiet day, but someone had a negative tone and it really started out of the gate this morning with the Dow Jones Industrial Average. We were okay in the pre-market session, at least when I did my first update at 5.23. Then by 6.23, so seven minutes before the stock market opened, we went from that loss of 17 at 5.23 to a loss of about 71 by 6.23. So, again, as the morning progressed in the pre-market session, we started to weaken a bit. NASDAQ was doing just the opposite, it slowly started moving higher. But then once the market opened up, the market kind of sat back and waited for two reports that we received today. One was more influential and that's the consumer confidence number that really kind of set the pace for today. So the first report, Corey Chime-in on this one, of course, this was the S&P Case Shiller Home Price Index. Again, we always criticize it. It's old data. This is April's data, but it showed home prices increasing 7.2% year over year. Corey, I thought that was a pretty strong number considering, again, it's April's data. But really, we hadn't got into the real heart of the buying season at that point, but that's a pretty substantial year over year increase. Don't you agree? I do. Yeah, especially for that early in the year. And remember, we had a pretty mild winter, so we had a pretty strong winter and the summer's been good. And we'll talk about it in a couple months. We're starting to, I see on the street. I don't know how Dwight looks at it, but it's, he's starting to crest out a little bit. I can just tell him a number, a little bit of a number of people out there. But it's, we'll talk about cycles. You have these big cycles or any of these little cycles and an area of smaller cycles. And, you know, currently we're cycling through the year. But yeah, it's a strong number and we'll see where it goes in a couple months. Yeah, okay, good, good, good, good. All right, so the second report that we received today was the Consumer Confidence Report. Now, these numbers don't make any sense to you, but I just want to digest them and explain what we, you know, what the takeaway of this report was. And so the reading came in for the month of June at a reading of 100.4. Now, that was a decrease from a reading of 101.3 that we received in the month of May. So, okay, so it's pretty simple to digest a consumer, you know, not feeling quite as confident, but looking deep into the report. What was really the big standard of this, tying into the consumer is the consumer is not confident on their wages. They are not happy. They are not confident that their wages are going to continue to grow, of course, to keep up with the rising demand. Of inflation and housing prices, car prices, everything in our lives. And so, soon as that report came out, that seems to be, or seem to be the time period that we saw the market really begin to kind of weaken and accelerate on to the downside. Now, why is this? Well, if the consumer is not confident that their wages are going to continue to increase from a Wall Street perspective, we look at it and go, well, guess what? Remember the, I've said this a million times, the consumer represents basically two thirds of economic spending. If the consumer is not out there, spending because he or she does not feel confident that their wages are going to continue to grow, what are they going to do? They're going to pull back. They're not going to spend. They're not going to go out and buy their favorite widget. You know what I mean? And therefore, if the consumer is not strong, then everything else begins to weaken. And it was amazing. Soon as that report came out, guys, we saw very consumer sensitive stocks. Just looking at the Dow began to falter. Home Depot was one of the first ones and finished the worst stock down $12.40 today on this report. Three and a half percent loss to 338.48 Nike down $2.26 Walmart lost $1.31 almost 2% there. Even McDonald's was down $3.28. So that's how important this report is. Again, watching what the consumer is doing. So, you know, to your guys's point and starting to see a little few signs here and there of a slowdown, I think this data just very much substantiate. Well, you were just saying, Corey, that, you know, there are some, you know, as we like to say, a few few little cracks in the eggshells that we're seeing out there, but that's why you tune into the show. So we can keep you abreast of that. All right. So when we come back, we will begin to tackle our real estate topic, real estate cycles. What are the best strategies for you now based upon the cycle that the guys see us in at the particular time? Let us turn it over. Kristen Snow, she's in the right now. Traffic center. Hey, Kristen. Welcome back to the John Sanchez show on this talk. 780 K. Oh, which was a core edge of edge related to white malard of a guild mortgage. Hey, my good friends over at S&W tractor, they are ready, willing, and able to make you a great deal for your summer projects by using a coyote tractor. That's right. You only need a couple acres or a couple hundred. They got the models that will suit you. I promise you will be impressed with the quality, the durability and the longevity of these incredible machines. I know I've owned them. Now, what do you need to do? Just go down and tell Stan and the crew what you need, but your projects are and they will design an entire package with the implements, et cetera, all for you specifically for you. They're located at 4880 East Nylane in Carson City. Phone number is 882-1225 online s&wattractor.com. They've got it all a plus incredible service after the sale. S&W tractor. Go see them. I promise you will not be disappointed, as I said. All right. So we finished with a loss, like I said, of 299 on the Dow, a gain of 220 on the NASDAQ and a rise of 21 on the S&P 500 commodity wise. We lost 1% on oil, finished at 80 81 a barrel, had some strength in the dollar. So gold prices were down a bit, $13.60 lost, 2003, 30 80 an ounce, and a one basis point declined on the 10 year treasury for 24. Dwight, how do we do on the 30 year mortgage today? Well, I think we were all last week at 7.02 today. We're at 7.03, according mortgages daily. So two year earlier point, it's just been flat and boring. So but, you know, it, it, well, the nice thing about that too, is it just takes a few couple days of minor rallies and you're inside the seven. And that'll get the headlines and then people come out and then they'll go up. They'll go, you know, so. Right. Right. We'll see how that we'll see how this little merry-go-round keeps going. But yeah, it's, but we're just right there. We've been sitting at the 7.0345 for, what, five, six weeks now? Yeah. Yeah, it's been quite some time. Yeah. Now things could change. Of course, on Fridays, you and I both know, and Corey knows the end of the week. And on Friday, we're going to have the PCE, the personal consumption expenditure report, which again, as we always say, is the Fed's favorite measure of inflation. So this could give us a little insight, could give it a little volatility. They're not expecting major changes on it. That we're up 2/10 of a percent on the core last report. This will be mazed out of that we receive. They're expecting that number to show an increase of just 1/10 of a percent. So a slight decrease. I think that falls on the heels of those two weaker than expected reports. The CPI and PPI were received a few days ago. So let's hope that happens to white and that could be very positive, of course, for the bond market side of things. All right. Let's get to our real estate topic, guys. We got a lot to talk about tonight. So I want to get an early start on it. Real estate cycles, right? It cycles in everything, right? cycles in the stock market, the economy, et cetera. The key, of course, one of the major keys of making money in real estate is knowing what cycle we're in. Therefore, what type of real estate is going to be the most appropriate for the next cycle, right? You're always looking down the road. And so Corey, let's kind of start off with as you put these four different cycles that we go through in real estate. Explain those and then most importantly, we're going to get to the brunt of our topic tonight, which is what are the best strategies for you right now based upon the cycle that we're in. So take it away, Corey. If you look at the first cycle that we kind of share before you've got the recovery cycle, I mean, I'm just going to talk to it in the most specific order that we're in right now, but recovery cycles. So if you remember coming out of the great recession, when everything kind of went down, we got to 2009, 10 right in there. When you get into a recovery, everybody started feeling better about it. That was the time to point talking about the article. People switching to 401Ks and I'm going to say 10. That was at the time when you're into recovery, people feeling better about it. You're going into an expansion mode. You can get some pretty good deals, some pretty good cap rates and just move forward from there with a little bit of ease at a time when really nobody else is wanting to jump into the pond with. Yeah, I was just going to bring that point up. Let's stop real quick, Corey. I think this is an important point. That is the scariest time to buy real estate, right? If we reflect back on Oh, when everybody was terrified, because again, we didn't know if things were going to go down further or if this was the bottom, right? No one can call a bottom, but this is the time when you make the money, right? This is the old adage running into the burning building when everyone else is running out. What's your, what's your advice to people the next time we go through a recovery cycle? How do you, how do you mentally overcome the fear that's associated with that? Well, I don't know, I guess you could talk to your psychiatrist, but that is the, that is the best time to buy. I mean, it's, it's no different than Warren Buffett's theory of, you know, running towards the burning building, like you mentioned, or everybody else is out of it. That's when you want to kind of dive into it. And it, I think if you leave it to the math, that things make sense. And I've probably stories so many times before, you know, back then we were buying stuff at 20 caps. I mean, anytime you can buy something, like a real estate that at the time was pushing off a 20% return, it, it's just, it's very rare that that's going to go wrong on you. Of course, it could, it could take longer than you expect for things to recover over time. It's always going to work in so far. And so if you just rely on math instead of emotion, and nine times the, the answer you come up with is going to be the right answer. Right. Right. And typically we see low construction activity during that time period and rental rates starting to increase, which those have continued, of course. But are those some of the telltale signs of the recovery phase or cycle? I think when you see things, now, I got to say, when you go through these cycles, these are traditional cycles, looking back decades and decades and decades. But the pandemic kind of messed up some of these cycles and my personal opinion, the Federal Reserve has really messed up these cycles. So you can't take these verbatim to say, oh, no, we're here next, we'll be here because in the area of easy money, when the Fed is out to make sure nobody loses anything, or we're going to be safe. You know, sometimes these cycles expand and they elongate and they go longer and longer and longer, or each specific cycle. So the question, yes, when you start, when things feel the worst, but you start seeing people dip their toes in the market, you want to be one of those people dip in your toes and or at least be right after them. And then if you go back to the recession, if you remember, it was down, down, down, down, down, and we used to come on the show and say, oh, you know, the market's down another 5% this month, but down there are 6% we were buying and flipping properties. And we had to do it fast enough because we were losing value every single day. So the goal wasn't to sit and increase value. The goal was to get out and hopefully get out before the value, you know, came down to power and you were losing money. It was a pretty wacky world, but then you saw the Wall Street guys step in and some cash started coming in and things started to stabilize. And as soon as you see that, just jump in. Yeah, as soon as you start to see that, that means you're probably moving to the next cycle, which is the expansion cycle. So we'll talk about that. And every ingredient of the expansion cycle, Corey, it looks like that's what we're in right now. So Corey will highlight that along with Dwight. All right, we come back. We'll hit on that two more cycles after the expansion and then get into what's the best thing you need to be doing right now from our real estate perspective. Let's turn it over to Kristen Snow. She has news, traffic and weather. How you doing, Kristen? Welcome back to the John Sanchez show on his talk, 780K, which with Dwight Mallard of Guild mortgage, Corey edge of Idrility to 99 loss on the Dow, a gain of 221 on the NASDAQ and a small increase of 21 on the S&P 500. All right, what are the best strategies right now based upon the real estate cycles that we are current or cycle that we are currently in. Remember, folks, as Corey eloquently said, there are four historical real estate cycles recovery. He just went over number two expansion Dwight chime in on this one after Corey goes through this. Because this is also some things that affect you as the lender. So great. What's our expansion cycle? And again, it looks like this is something that we are in at the moment. Yeah, I mean, this is where these things kind of crossed here. We could be in this one. We could be in the next one, which we'll get to. But expansion is you're coming out of the recovery. Everybody starts feeling good about our case real estate again. Money starts flowing again to developers. And then the next thing you know, everybody's right back in buying houses. Guys are building apartments, you see the home builders, you know, taken down land and foreign foundations and building again. You see the big, you know, cranes coming out, building the skyscrapers. Again, it's, it's just, you know, it gets a mentality of the fear is gone. But it's also a function of money flowing again. And typically in our industry, when the money is flowing, people will do something. When the money stops, the people would still do something. They just don't have the money to do it. So that expansion is kind of like everybody's happy, money's plentiful. You know, we don't have enough of anything. So there's just build everything we can. It doesn't FOMO kind of step into this. This cycle also, Corey, the fear of missing out. I think there's yes, I mean, on various degrees, right? So if we, if you and I are apartment builders and we see people don't apartments all over town and they have good leasing rates, then we want to jump in because we think the market is super deep and we can get there. In my world, in Duite's world, we see them residential real estate. A lot of, a lot of the activity is just people following other people. Am I at that point? Yeah. Hey, exactly. You hear about, you know, your hairdresser or your neighbor or somebody now buying something, then you're going to go buy something. And then somebody that knows you is going to go buy something because you did. And it's just kind of that, that overall panic is relieved and people stop thinking about. And sometimes John, they stop thinking about what got them into the previous cycle to start. Sure, that's right. But that's why things repeat themselves. Hey, Duite, before we go on to the third cycle with Corey, I want to, I want you to chime in on this one. One of the common denominators I'm seeing of these different cycles from Corey is rental rates, vacancy rates, et cetera. Now, as Corey just so greatly said a moment ago, it's all about the flow of the money, right? You are the purse stringer, right? If you, the lender are opening up the faucet and lending, lending, lending. Obviously, we are going to find ourselves in an expansion phase. Again, if we're looking across the country with you as well as other lenders. What have you seen in your 30 plus years as a, as a lender, define as the expansion phase? Do you get word from higher up saying, all right, open up the spigot. Let's, let's maybe lower credit standards. Let's, you know, do whatever we can to get this money flowing. Well, yeah, and what people would identify with the last expansion would be the, the term subprime mortgages. You know, I mean, it was going so fast. Everybody wanted in and, and you guys nailed it. I mean, it was every, it was FOMO. Hey, my neighbor, you know, my friend just bought at a sub, you know, remember at 300 people on a list. You know, most of this. So, I mean, that was a crazy, you know, historically, we're going back to the mid 80s and things. The expansion wasn't a result of, you know, federal dropping, the federal government dropping trillions of dollars. And it was just a matter of, okay. Hey, you know, a cycle just ended. And the guests that you were talking about that we had on before, I think I recall him saying that cycles were every seven years to his. Okay, okay. Yeah. Was it was the right, Corey? I don't, I don't, I thought that was what I remember, but yeah, but I, I just think the expansion. It produced, unfortunately, John, it produces unscrupulous practices. You know, people are trying to just try it. People are just trying to stay ahead of this massive thing. And, and, and an expansion phase would also be grief and answers doing crazy too. Right. I mean, the money's out there. Everybody remember the 125 home equity loans we had. I mean, can you imagine that now today, 125% of your value and I didn't have to get an appraisal. I just, I mean, it was crazy. So that, that is what everybody, I think that, you know, is our generation court. You know, that's what they remember. It was such an crazy expansion time, but then it came back to the next one in business. But, you know, but that, yeah, yeah, that's what that's how I, that's how I see the expansion. But you're right. Rental rates are a big determination in that too. Absolutely. You know, you can almost watch rental rates to the. That's what I was thinking the score is describing this exactly. It's like, okay, one of the biggest indicators we need to be looking at vacancy slash rental rates. Yeah. You agree with that, Corey? Agreed indicator. I think like I said, these markets somehow, they've been a little bit bifurcated lately because we'll get into it. You know, the apartment frenzy seems to be petering out a little bit. But the housing frenzy doesn't seem to be petering out yet. The offices are as obviously going through stuff. So that's the other thing for people to remember is don't just look at all real estate as one piece all moving together. When you get into the last phase where things are crashing, they do all crash at the same time. But they, they kind of grow it different. Yes. Different speeds. But, but, but do they crash at the same time? I've been an outsider looking in Corey. To me, it seems like they kind of almost working about two year cycles. You know, office seems to be the, excuse me, retail seems to be the first one, the consumer weekends, then office. And then again, office is so screwing up because of COVID. And then it seems to be the last one. A couple of years later is the industrial slash warehouse. You know, commercial type space because businesses begin to falter. They can't make their rent payments and, you know, those warehouses and things like that begin to fall. I don't know what you guys, you know, I get a lot of emails from local real estate brokers on the commercial side. I'm again, I may be wrong. I'm just, you know, a little John Sanchez and not in the, not in the commercial real estate game. But I'm seeing a lot of properties coming up for sub lease, Corey. And that, that, I mean, big properties, you know, big, big rental, big warehouses and things like that. So I don't know. Well, I'm looking at the, you know, we'll, we'll get into the, again, the more cycle of it. But look how many have been built and are being built around here, you know, right now and how many are occupied, not that many of them. That's right. That's right. Exactly. It's drive down, you know, 580 on the, you know, south into town. You see a whole bunch of them there just newly built. All right. Let's go to our third cycle, which is the hyper supply. Describe that one, Corey. Yeah. So hyper supply is again, you never really know, there's no tail tail sign to say, Oh, that's where it's like, predicting your recession. Right. Right. I'll tell you four or five years after it happened that it happened. Otherwise you wouldn't know. But the hyper supply would be, okay, we've gone through this massive expansion. Everybody's building every piece of real estate they can and all different categories. And then they wake up one day and say, Oh, I got more real estate than users. Now we need to cut back on construction starts, flash prices, do whatever we can to get rid of some of this inventory and a lot of that, you know, it is, it is circular. So one causes the other, but a lot of that goes back to money to the lenders, you know, get a talk into or somebody steps and says, wait a minute, you got a lot of this stuff on your books and you're assuming a lot of different things going to happen. But if they don't, you know, you're going to be in trouble. So stop lending to this portion of the market until they burn things up. And don't you agree? This is a discussion we had a few months ago that we're starting to see some signs of this right now. Yeah, that's where we're. That's what I was talking earlier. You know, are we in an expansion? Maybe if we are to my opinion, we're at the tail end of it, right? Are we in a hyper supply? Probably more than likely is where we're at and that's where it gets individualized. If you look at apartments, I'm not saying we're grossly overbuilt, but there's a lot of apartments now. And, you know, I got a, I get the same things you get about this and that. And I got an email from a very large apartment complex last week. I should have sent it to you that you could get almost six months free by signing a 12-month lease. Wow, that's right. It's an 18-month lease, I should say. But it was a it was really interesting. And so those are the kind of things you start seeing kind of hyper supply. Like, hey, there's not enough absorption in the market to take all of this down. And those take a while, right? It's not like you can fix it in a month. It's going to work its way through the system. And, you know, that's what the Fed was going after. And those are the long variable lags that might not have felt it yet, but it's going to be felt at some point. Absolutely. Dwight, let's put your lenders hat on for a second and take you out of the residential lending. Let's say you're a commercial lender and we're, we're obviously their group of economists. Your group of economists are looking at what cycle are we in? I mean, this is what bank economists do. Are we in recovery expansion? Now we're hyper supply discussing you starting again, soften demand, oversupply, so on and so forth. What are you telling your loan officers at that point? If you feel you're in this hyper supply cycle, start closing down the spigot a little bit on the lending side. What are you telling them? Well, I just, yeah, I think you need to be almost take a defensive approach. You know, going, okay, hey, we've got to, you know, look at our costs. We've got to look at, you know, how do we survive? What we don't know how long this, this hyper supply cycle will be, you know. And I agree with Corey, I think we're somewhere between the expansion and the hyper supply, you know. And I think if you're in the commercial world, you are really getting a little nervous, but you can even see some of the commercial lending is starting to tighten up. If for strange reasons, you know, there, there's just odd, oddness going on in that, in that particular field, I've heard a couple of stories recently that just don't make any sense, John, that, you know, of the commercial arrangement. But I think everybody's trying to kind of predict, hey, we better just, you know, and sometimes you can cut your costs way through it. But generally that's tough and you got to get in front of it because you're usually behind it. You know, by the time you got to that. So, yeah, I got. All right, Corey, let's begin the discussion. No, we got to go to break here in about a minute, the final cycle of real estate, the recession. The recession. And so that's where it kicks into money supply starts to really tighten up and slow down. The construction stops from what we were just talking about earlier and no offense to lenders, but I don't know any individual lender who's going to shut down the ticket. It's usually the people that are in control of the bank or the institution that tell the lenders to shut down the ticket because they're out of money or they can't get additional funds to make the additional loans. And so that's when you kind of see things in the, for whatever reason, the consumer, the consumer, a lot of times is the one that I would say causes it if you will, but they're the last one to know if that makes sense. So, right, if you look through to your point, the commercial stuff slows down. The apartment building slows down. The retail stuff slows down, but people are still buying houses, still buying houses. And then one day they wake up and it happened to us in 2007. It's wake up and it just shuts itself off like a wink of an eye, like a light switch. It's nuts. And so that's, you know, kind of what that end cycle will be. Yeah, and one of the ingredients, of course, is new construction projects that are halted. They're delayed. We've been hearing some signs of that, correct? Correct. Yeah. So that is the little things. That's where you don't know. I mean, the Fed has done, depending on what study you're looking at, either a fantastic job or a poor job, but they have kept things going, going, going, probably be on their natural life. So you never know if you're in one of these. Hey, we're might be heading toward downturn. Well, here comes a Fed. We're going to juicy economy again with super low rates and they revive it. You know, so I don't really ever get too worried about these little general slowdowns, assuming the Fed does what it's been doing for the last 20 years. Right. Could change that knows, but so far they've saved the day. Yeah, yeah, exactly. All right. So those are the cycles again, tough to tell. It sounds like a little mixture or maybe in the little bit of the expansion tail into the ninth inning, hyper supply. Yeah, I would say we're right there and maybe just a smidgen of first inning of recession. So interesting time period we're in now as far as the cycle. Now, what's the best strategies for you? We'll discuss that when we come back. In the meantime, let's wrap it up with Kristin Snow in the right now, traffic center. Welcome back to the John Sanchez Show a new stock 780K. Which Mr. Ed, your phone number. 6736700. Mr. Rillard. 2402022. All right. Thank you, fellows. All right, so it's important to understand where we sit as far as the different real estate cycles because now we got to figure out what are we going to do? What's going to be our best strategies to move forward? So guys, let's hustle through some of our points here. Dwight, we'll start with you. Wait, pay off or pay down debt and safe, right? As we're in a cycle. Yeah, I mean, that's an obvious one. We've talked about it several times. If you just don't know, or aren't sure, just wait and then why you're waiting. I guess I just expanded on, you know, take, you know, improve your situation when it comes time to actually buy. So, you know, those are always good things. Pay off and pay down debt and just keep saving. Exactly. Cory, another great strategy. Obviously, try to buy in locations that have a strong diversified economy. I mean, we're getting here in local or we're getting there locally. You know, as all of us growing up in Reno is nothing but gaming. Now we're starting to get more diversified. So we kind of check the box there. What else do we need to be thinking about in different locations? Yeah, and I think that diversification is a big thing because a lot of times, if you get into these downturns, it's shall be later. But when you're in a diversified economy or diversified city, there'll be other opportunities for jobs and I'm going to be more plentiful in that regard. So I think that's a good one to keep on. And Reno's doing a pretty good job of that right now. I mean, I mean, I'd rather have fewer people. But I guess we're going to have a bunch of work for. That's true. That's a good point. You've mentioned this one a couple of times. So let's go to you on this one. Pick up your investment properties in areas that have potential growth opportunities like college towns. You seem to like those I noticed recently. And we'll probably sometime. But yeah, yeah, I mean, I might my most recent experiences, my daughters at, you know, down at Baylor and Waco, Texas. And I mean, it's just a it just seems like a sleepy little town, but they constantly have people coming in for conventions and college, you know, the athletics and all that. I sit there and go, you know, those type of things are opportunities. I mean, if you went back and bought rental property around you and are, you know, 15 years ago, you're sitting pretty good right now. Absolutely. Absolutely. Corey, the next one at Red State versus Blue State, government regs, taxes, policies. Yeah, the kind of the behind the scenes stuff. Yeah, you got to remember the people you load into office are going to have a big impact on your, your real estate holdings, your taxes, all kinds of good stuff. So it is, it is a good idea. And granted, you could move there and then all that stuff could change. What is going on, what they offer, you know, currently, because it does impact a lot of the cash flow and different things on the investment properties. Boy, does it ever? And let's spend a year since we've had major tax changes in real estate, but that's always possible to depend upon what their original makeup is. Do I your last one? I'm going to do it for you. The two to four units using three and a half percent down FHA financing with the intent to occupy one unit. You've touched on that one. That's a great strategy. So great job on that one, buddy. Great job. Alrighty, fellas, it's been a lot of fun. We will do it again tomorrow night on the John Sanchez Show. Excellent job as always. We'll see you then. 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