May 2020 Market Update Investor – Investor Letter #13

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Costco there was a little flyer in the lunchroom saying that the last day for complimentary food and drinks at the food court will be Friday me. Which kind of is a sign of the times is like we’re getting back to swing of things. The pity party is over and we’re getting back to work. This is a story about a dude named Lane he moved to the mainland and bought one place to stay. And then one day he went try to rent them out. And then he became one real investor. All right, welcome, everybody. This is the May 2020 monthly market update. You guys can access a lot of past my update everybody at simple passive cash flow calm slash investor letter, but we’ll get going here. Obviously a lot of this this month will be surrounding the COVID-19 demick in news

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affecting our real estate investments

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from there, if you guys haven’t heard about me My name is Lane Kawaoka a professional engineer or ex engineer, I’m still have the P. I have a podcast called Simple passive cash flow found on iTunes, Google Play I Heart Radio and also have a pretty robust YouTube channel and if you would like to join our tribe, we have a free Facebook group for to get to know folks in our group a little bit better. So I’m going to run through there’s quite a bit of articles this month. If you guys know my style run through it pretty quickly, but here we go. The shopping center business reports that gap Macy’s koehlers bowls and to furlough most employees as stores remain closed or and COVID-19 and demmick are up Business Online reports that Under Armour to furlough 6600 workers beginning April 12. And I’m going to go a little bit chronologically here to kind of recap the month of April. So I put it this way, because hopefully it puts things a little bit more context for everybody to see how the story unfolded. Of course, March was the first last month march was the first month that COVID-19 kind of took effect. In my opinion, that second third week of March is when things emotionally turn towards kind of the fear base. And what we’re going to kind of see is how the story kind of unfolded here with a lot of big businesses furloughing and people having to stay at home. Commercial Property executive reported beginning of April that us braces for more job losses. Economies expect this week’s unemployment claim number to jump well beyond the record three people 3 million filed last week. And then later on, they reported unemployment ployment claims top 6.6 million. And I do believe later on the month, you know, these numbers and estimates have increased. So with people unable to go out a lot of restaurants and other industries just not able to make money.

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Unemployment, skyrocketed.

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Also in the beginning of month, April 3, Warren Buffett, Berkshire Hathaway sells part of their Delta Southwest Airlines steaks, sold about 18% of his Delta Airlines and 4% of their Southwest Airlines. So this is right after I’d say a lot of the big Fallout, the initial fallout of the stock market. A lot of this is you know, kind of duh, obviously this stuff happened. GDP fell at 400 Point 8% annual rate the first quarterly drops since 2014. Worst dropped since 2008. Consumer spending plunged 7.6% the most since 1980. It accounts for 70% of the GDP. Services drop the most on record driven mostly by one industry, health care and demick require providers to pull back on most often drivers like electronic procedures and routine visits. I know in our who invested group, like a lot of the dentists really got hurt bad and a lot of the non emergency doctors wouldn’t take in and do their procedures. So it’s really unusual how this pandemic impacted some people very greatly. And others they were relatively unimpacted next quarter economists are projecting at least a 30% annual decline or a business online Line reports that US economy loses 700,000 jobs in March due to efforts to contain spread of Corona virus. And you can see if you guys are tuning in on the YouTube channel when we do this live you can see sort of the comparison

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on on a graph of how

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the monthly change in job gains normally were hovering around 100 to 200 jobs have created 200,000 100 to 200,000 jobs created July, August, September, October, November, December, January, February, then in March and negative 700,000 per week in review them. I have a couple of these reports in here. This came out in the beginning of the the month. So again, kind of showing how things progressed. Some of the you guys can read it. On the screen here, those of you guys are on the YouTube but I will read some of the highlights here. So they’re commenting and appearing to be past the peak of infections but the US US GDP is expected to contract severely in quarter two, before giving up to stronger growth starting in quarter three supported by government stimulus and pent up demand. They’re calling calling for a second half of the year recovery. Certainly going into 2021 things are looking strong from this and a variety of other sources and this, this is reported by CBR ri. Some of the other highlights here Dallas Fort Worth Houston, Atlanta are hopeful markets to watch as their economies begin to open in phases and these are a lot of the early adopters of those trying to get out there

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quicker than others I do believe in.

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In Texas, a lot of the restaurants are kind of open at this point. I’m glad Her talking to some other partners, frontline workers get access to 3 million hotel guest rooms. And this is one of those, you know, kind of warm and fuzzy articles, where despite the suffering of massive pandemic business loss, the lodging industry is pulling together to provide temporary housing for workers on the front lines. Part of this is probably got to be some kind of trade in the background with the government and the hotel industry. But it’s the right thing to do. I think these are some, you know, some nice, people aren’t staying in hotels, right? hotels are hurting really bad. We’ll kind of get into some of the data that supports that here in a little bit later. The question that’s on everybody’s mind and honestly, what made me a little anxious this month and last month, is are people going to pay their rent? Wall Street Journal’s tried to scare everybody by releasing this article. That headline, nearly a third of us apartment renters didn’t pay for rent. And I don’t know where the heck they’re getting their data from. But this was entirely not true from my point of view, and, hey, maybe they’re just, they’re just taking their survey from a lot of more primary markets, like California, where people got it in their head and they don’t need to pay rent this month. I don’t know where the heck they get that numbers from Instagram. But this is an example of fake news, in my opinion, I mean, Wall Street Journal wrong, but depends how they sampled their data. I like to use these more industry publications multi housing news, reported that the majority of residents paid April rents reported that nearly 70% of rental households across the nation paid their rent this month and then that that was the first week of April. And then the they reported later on the month that rent payments hit 89%. And this is pretty typical what we saw across our portfolio, you know, anywhere from a normal normally collections are in the 95% range, you know, you’re gonna have people not pay period any month. But the impact that Coronavirus and the pandemic had to that number was we saw in the month of April and a little bit for that was a maybe a few point decrease from there. And that’s what is kind of shown across the multi housing news. Another source commented that the rent payment rate at 93% of prior month so it’s, I think this is to be expected. This is what sort of what I personally inspected across my portfolio. You know, there were some slight decline in collections but it is wasn’t a big deal. And those who were going through some trouble we were able to make individual plans with and they eventually caught up later, at the end of the month. Thus far, it is the first week of May. This is not not good data, but thus far it looks like collections are tracking maybe a little bit less than what it was in May. But still overall, I’m, I’m pretty, pretty relieved from what I’m seeing.

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We’re going to kind of dig into some of the individual asset classes and see how they’re, they’re faring. But multi housing news is has an article will student housing be impacted? And Heck, Yeah, it is. A lot of kids had to get pulled out of colleges couldn’t finish up the year and a lot of parents, here’s the deal. A lot of parents are the ones who make the financial decisions and a lot of parents are a little apprehensive is their kid going to go back to his or kids school is going to open a time. So a quote that I pulled from here is, it was common that I think the reality is in a fairly likely scenario that some of the pre leasing will be backloaded until parents and students feel comfortable with the university’s fall semester will open. That’s a wait and see. And this is this is why in my box, I don’t really focus on student housing because very impacted by times like these office leasing now commercial property executive had an article and they quote, tenants and landlords are all trying to work together on understanding the respective needs for one another. I’d even go as far as say lenders are doing the same thing. Everybody is trying to play nicely in that sandbox. And we can all understand that right now. People are not going into the office. They are taught to work from home for the most part, and that this is dropping the demand for housing or for office space. And maybe it might lead to a longer term trend that people don’t need to go into the office. We didn’t need all these good meetings to get things done we’re good with work working virtually I know I am. Short term rentals. I think these are the ones getting killed the most there was a great article. You guys can check out CB lab COMM But was entitled can Airbnb survive Coronavirus, air DNA which is a great source for data for you guys who do do short term lease lease rentals. They said that there was a dropping 80% compared to the previous week in the beginning of March. bookings in New York City, San Francisco and Seattle had dropped more than 50% compared to the week beginning January, and drops over 35% in Washington, DC and Chicago. Again, this is another reason why I don’t invest in short term rentals. And you guys, there’s an article I wrote about the cons of short term rentals at simple passive cash flow calm, slash STL. For short term rental or str. Slash str is that URL. Another image of some of the Airbnb bees from air DNA showing on a graph. All much of a decline from the beginning of March to the end of April. In terms of bookings contracted, I think a lot of like, you know, here in Hawaii, and I’m sure this is across the nation. There was a lot of government regulation over they wanted to shut down down these short term rentals and people who had short term rentals, they’re desperate they need to pay their mortgage because they weren’t getting any, any type of tenants to come through. So they’re being very strategic or tricky on when they would list it so they would hide it away from their the government regulators. Again, which I don’t really condone doing that type of stuff. I don’t stick to a normal investment like workforce housing, something that that everybody needs. So here’s a graph that retreat advisors put together where they just put all the asset classes on a graph and show which ones get impacted the most. Some of the more sensitive to a pandemic short term rentals sniffs which are assisted living developments senior house Students housing, gaming, lodging I think these are like a lot of the hospitality think Las Vegas. And then strip malls and malls are impacted some of the things that aren’t the bottom of the list of you know, little impact or short term rentals, apartments, industrial storage.

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And that that leads to the, you know, what should you invest best value in a downturn might be workforce housing says multi housing news. They came up with this white paper, assessing the impact of a recession related to COVID-19 crisis might have on apartment properties. So they came up with this analysis on Which they created this category of vulnerable industries, which is comprised of those who work in hospitality and food. So you know, thinking restaurants or people like that. And, and like hotels or casinos, that type of stuff. They took those type of people who are getting hit the hardest. And they tried to figure out where did these people live right like if you if you are a landlord, you have one of these people working or paying your rent. So they realize that 52% of these guys are living in houses, they’re renting houses.

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Another 28% are in single family home.

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And if it sorry, the 52% was houses that they own themselves 28% our rent, they’re renting single family homes and just 18% of these guys are In apartments while they found the rentals. So, again, the conclusion of this article was that a vulnerable industries hospitality and food, only 18% of these guys are an apartment and therefore the single family home landlord is going to get hit harder. things to think about right because you know, you try and bulletproof your portfolio to whatever can happen. And pandemic is just one of those things that we have just added to the list. So CB re came up with this executive summary in the beginning of April. Some of the highlights here are, you know, all this will lead to increased multifamily vacancy and declining rents over the next two months. And they expect the multifamily market to bottom out in quarter three and begin a recovery in 2020. For. So they’re seeing us kind of popping right out of this overall vacancy expected to rise at 2.7 percentage points to 6.3 in quarter three and fully recover in 2021. The Federal Reserve pledged to keep interest rates near zero until full employment returns and inflation exceed so so that’s something to keep in mind for those of you guys who are always constantly monitoring those, those rates and wanting to refinance or or pull money out.

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CNBC reports that JP Morgan Chase to re raise mortgage borrowing standards as economic outlook Garcons. So, people are saying, well, like there’s gonna be a lot of distress inventory of this COVID-19 thing which I don’t really quite buy. I mean, if it was if it gets that issue I probably wouldn’t buy it. But the problem is with this theory is like, what’s happening is the lending market is getting more difficult. So if your deal gets better, which I’ll argue that may or may not be true and your lending gets worse, then is it really a better deal, I mean on lending as part of this whole equation. So, from from, you know, middle of April, customers applying for a new mortgage will need a credit score of at least 700 and will be required to make a down payment equal to 20% of the home value. So that credit score need is coming up. So the change highlights how banks are quickly shifting gears to respond to the darkening US economic outlook. So what does that mean? Well, more apartment renters and people renting because they can’t meet the qualifications to buy a house. And I think this also means Lower condo prices, because they’ll be less demand for condos. Because a lot of the guys who are on the bubble with lending are the guys who don’t have much money at all. So they’re trying to get into condos as opposed to you know that that second or for lifetime house, the bigger house. Other developments and this is more affecting us on our our multifamily apartments or bigger commercial deals, people are always asking, you know, how does it impact us? So, fannie and freddie mac backed agency that is now requiring six to 18 months of payments in reserve. And this just means that we essentially we can kind of borrow less less proceeds, which slightly lowers returns, not much but it you know, this is all just kind of moving the needle very slightly. It depends on the debt service coverage ratio of the deal. But this can have a negative impact on whether a deal works or not. There have been also some changes in forbearance based on some of the agency debt and ultimately I think this flows down to the single family home mom and Paul landlord. See some of the the guidances and the policy that the Fannie Mae Freddie Mac, the big guys rolling up to the bigger operators in syndication deals, top 15 fastest growing mega cities on on here. First one is Gonzo. I don’t know if I’m saying that right. Cairo, Jakarta, Indonesia Tokyo at 33 million New Delhi but the point of putting this up The discussion that was happening in this article is, with this whole pandemic, thing may potentially being a part of our lives in the future. Perhaps these mega cities are less of a option people is going to be, you know, people are going to want more space, they’re going to want to move to the suburbs. The United States biggest city, which is New York has 15 million people, which is only 15 on this list. So that’s the question, right? Are these bigger cities? Are people going to want to live downtown? Are they are they going to want to move out to the suburbs and have more space? I think these are some of the more the macro trends. If you’re an investor and you’re buying an individual deal, that makes sense. I think it’s sort of it’s sort of this doesn’t matter to you. I mean, I think this type of data is for the guys who are investing Like 10s of millions of dollars, and they’re buying it on an institutional level, but you as a mom and pop investor should always be buying the outlier deal that doesn’t matter if it’s in the deep in the heart of the city or out in a tertiary market. I think that the biggest things are are you buying at a discount? Are the rents undervalued and his ability to pump rents? We talked a little bit about which asset classes are hurting the most and which ones are more resilient. This is a slide on which sectors

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and mainly what markets are to be on the lookout for.

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As I mentioned earlier, some of the biggest impacted

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sectors are leisure and hospitality employment. And those ones that the top some of the top 10 are Las Vegas. Orlando for Mickey Mouse the Florida coast Orange County and then San Antonio, San Diego, Miami, Austin Charlotte Los Angeles. So not saying that there will be a you know, these are at risk thing not to say that there’ll be another pandemic in the future, right? Who knows, but this is just another thing to kind of keep on your radar. Add your add on to your laundry list of other things tornadoes, floods, hurricanes, locusts and append them. Which industries did better this past month? Well, grocery stores went up 26% and the losers were closing clothing. I’ll be closure of all the malls and people just aren’t the only way to impress anybody. You don’t need to buy clothes again. Your times had a cool article. I like how they have you know, their interactive graphs. You know, people are spending more money on groceries, less on travel. shopping and transportation, who are the winners, shops, supermarkets, General merchants and e commerce. Home Improvement saw an increase. I don’t know how they became essential stay at home or so they’re able to stay open. But I went to Home Depot to buy some seeds to plant in my garden because I was bored and then the line was like going outside. And some of the losers were airlines cruises fitness. A lot of gyms are hurting. movie theaters lodging and apparel. Alcohol sells well. I’m just another way of you know, movie theaters. I’m sure some of the losers movie theaters, events and attractions, toys, entertainment, book retailers arts and crafts, music sporting goods were some of the big losers. Some of the winners were gaming and video streaming and music streaming. So a lot of people playing at home playing video games, passing the time. Again, I I bought one of the Echelon bikes that you work out and there was like a one month backlog. And I also bought a better webcam to come to you guys at 4k and that thing is still on backorder last month we reported that Cheesecake Factory was going bankrupt. Well, the RV business online reports that Rona capital invest $200 million to keep them alive. So you guys can continue to have your cake. At least that’s the ticker symbol for Cheesecake Factory or a business online officer reports at Amelie buys multifamily development site on South Broadway in Denver. Now for those you guys know who Amelie is Emily is a developer that focuses on residential Class A. So these are pretty hip places to live a lot of like, I would say like the yuppies will live in Emily’s they’ll have a movie theater inside the amenity someone might even have bars. I would call them Class A rentals more than luxury type. But you know they’ll they’ll build in a lot of the big sick primary markets and big institutional player but when the way I read this type of article is like, I’m kind of seeing that all Mali, their their institutional player, they’re going to do the research, but maybe when they go on ups, maybe when I think that a, by the time they actually build the thing, the market has maybe got an overheated, starting to pull down. So you guys can interpret this type of news however you guys want, but that’s just my two cents. Commercial cmbs late payments starting to mushroom. So this is another kind of stress tests on different asset classes on some of the late payments. delinquency is starting to happen and well, below you’ll see a lot of these hotel retail multifamily industrial office all had sub 3% delinquency, and hotel jumped all the way up to 20%. One every five hotels are behind on their payments. One on every 10 retail 10% are behind on their payments and multifamily industrial and office are all around 5% or less so they are less impacted by this bill. Again, you know, this is a data hotel and retail are getting killed out there. One of the biggest

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hot topics that’s been happening in our Facebook group is people are complaining that they can’t evict people. And so here is a map put together by Marcus and Milla job, outlining which states have moratoriums on eviction.

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Most of them do at this point.

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Some of the ones obviously a lot of the blue states will have this. Some of the states with no programs are Oklahoma, Arkansas, Missouri, Georgia, South Dakota. Well, no one who lives in South Dakota and nobody cares about that. states that suspended court eviction proceedings, not necessarily had an eviction moratorium where New Mexico Wyoming, Idaho, North Dakota,

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Maine, Vermont,

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and

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I don’t know what that is. I don’t investor near Kentucky, and Virginia. Hey, simple, passive casual listeners. I’m wearing my sleeve shirt here because we make our money in our sleep. One of those things that I’ve been playing around with is tradeline hacking, and if you haven’t heard of that, it’s a great way to make Make some side cash hundred a bunch of books off each credit card every month. To learn more go to simple passive cash flow calm slash tradelines and check out our E course to learn all about this cool way to make some money on the side. We’re going to get into a little bit of actionable things you guys can do and I’ve been, I have been keeping a list and a running note sheet of all the COVID-19 cares act. developments at simple passive cash flow calm slash COVID-19. serve a living guide. Always consult your CPA attorney and do your own due diligence but here Here are some of the developments that happened this past month. So you guys should have received your your share of the 16 million checks the most checks through direct deposit, may 4 Iris will start the seven paper stimulus checks. And I’m pretty impressed how much how quickly they actually moved in and actually got the eight out to where it’s needed most. One of the biggest perks of the cares act is that you’re able to take $100,000 out of your retirement funds and what I call jailbreaking getting it out of those property mutual funds and into real investments. So the cares Act allows each person so you can you can take 100 grand and your spouse can take 100 grand penalty free normally there’s a 10% early withdrawal penalty, but with the care under the cares act, as long as you’re impacted by the COVID-19 thing, which in my opinion, are to consult your own professional or get a new professional. We are all impacted. So you might, you might be able to take that out and pay the taxes back in three years, I think is the what the guidance to say. If you don’t want to withdraw, maybe you want to, now’s the time you’ve been mulling it over at home, you want to do a rollover. Here’s a nice rollover chart. Whether going from Roth traditional simple IRA, SEP IRA, 457 403, B or any design Roth account, a lot of the retirement information is located on my GOP site at simple passive cash flow calm slash q RP, which is short for a qualified retirement plan. So here is a map of the United States showing which states small businesses were able to get the payroll protection aid. A lot of during the first 10 days of the federal government small business rescue program. It was crazy guys. I mean, the money was just going out and One of the headlines was that the bigger companies who were asking for more got help first because the lazy banker just want to get it out. And it’s easier when you disapprove the top five guys and instead of the bottom 5050 something guys, I guess you don’t blame them when the goal is to get the money out. Again, a lot of more COVID-19 developments we have a great webinar that we did on April 15 with my CPA, again that that video is hosted at simple passive cash flow calm slash COVID-19. So if you guys haven’t been keeping up in March, beginning of March, the Fed drop the funds wait rate to zero percent. And the analogy I like to use is we gave up all our dry powder at that point and I was actually kind of surprised they they dropped it so quickly. Normally they’re dropping the rate, maybe a quarter point more half a point but they dropped to think like a full point or more just in a matter of a few weeks. So no more dry powder, which is a little scary, but then they came through later on and signed the cares Act, which is 2 trillion or minus would be a gazillion dollars. In my opinion, you got to pay that back probably with higher taxes in the future. Some of the provisions of the COVID-19 cares act enacted on March 27, was a five year carry back on net operating losses. And I would consult your CPA on on a lot of these things. On one of our deals, we had submitted the K ones back to the CPA

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to take advantage of some of this stuff. Here’s some markets likely to experience a longer post COVID-19 recovery, Florida because of the high population of visitors and 19 percent of their population is over 65 and older, New York mostly because of the density. They might have a lot of people moving out is what they do they say and off 63 million tourists per year so a lot of visitors there. And Illinois because of everybody knows Illinois everybody wants out of Illinois. One of the reasons the high corporate taxes, they have a 45% increase in January 2020. High property taxes. People are just leaving that city that poor city of Chicago source on this a CL and Associates a markets likely to exceed a long recovery. Again, more California. They locked out 40 million people for many weeks is economic, devastating high gas taxes, unfunded pension liabilities and they ranked Number 48 of all US states and overall economic freedom. Well, that’s why they call it the Socialist Republic of California. Nevada is another one that’s going to see it hard. 56 million tourists 50 million are in Las Vegas. Just going to be those casinos and hotels are going to be hit the hardest. airline hub cities like Dallas, Atlanta, Chicago, New York, Denver, Orlando, Washington, DC, la Seattle, Charlotte, Houston, Seattle, are among the top airports for passenger traffic. And then oil dependent markets because you know, behind this COVID-19 there was just another big headline of all the crude oil dropping prices. A lot of these are like Houston, real estate sectors likely to experience and how enhance building operation regulations, which is typically not good for the mom, Pon vesser. Sometimes the institutions can actually benefit from this. But these are lodging facilities or apartment communities, retail centers, gaming facilities, health care, office buildings, commercial conference facilities, entertainment centers, outdoor assembly venues, I’m sure they’re going to tell everybody to wipe surfaces like five times a day or do whatnot. It’s just going to make business harder in these sectors impact on COVID-19 on development. You could see incorporating more hands free amenities like motion, active doors, restroom faucets, tissue dispensers, parking gate, doors and building designs. You know, more point of sale stuff come out. I mean, like when I would go pick up my food it just kind of befuddled me how you saw that like sign the credit card thing and put the credit card and I guess or like press the screen I’m like, can’t they like just call it good and as soon as it touches touches, utilization of new building materials, inclusion of pandemic in forced mature clauses in construction contracts. I know on our syndication documents I think that word got like thrown in in like future feature versions, which is just added to the laundry list of things that can go wrong. upgrades to h fac systems regarding air quality and circulation and regular on site health inspections during construction before certificate occupancy is cut. But it’s not all doom and gloom why real estate will remain a preferred investment class. Post COVID-19 is still in a low interest rate environment. Americans need a place to live like apartments they need a place to shop like grocery anchored retail and produce distribute goods in warehouse and distributed facilities.

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Continue strong demographics, population still going up and favorable tax treatments with all the goodies in there like the 1031 carried interest, capital gains opportunity zones, cost segregations etc. So I’ve been watching a lot of other informational videos with my time and one of these is some content done by Richard Duncan economists. Um, you can see some of his past work and podcasts at simple passive cash flow calm slash Duncan, but I subscribed to his newsletter, it’s a paid program. So it sounds like some free stuff. But you know, he he kind of outlined some demand shocks as inflationary demand shocks that will increase demand and push prices higher. And that’s what happens in a war and the deflationary demand shock that increases demand and pushes prices lower like however in a Coronavirus example Like this. So that’s how a situation where a war, inflationary demand is and a deflation in demand like how we’re at now. It’s just interesting that like, kind of hear from more academic viewpoint of what what’s happening here. Some of the supply shocks were decrease supply push prices higher was the oil shocks in the 1970s and other deflationary supply shocks increase supply and push prices lower, which can be a event like the general globalization. There was a big controversial headline that came out where California was forcing landlords to reduce rents by 25%. Even if a tenant cannot demonstrate their hardship or need, allowing judges and the court system to set rents and change the rental agreements already in place. I’m not going to read the other two books. point, but you guys are probably getting upset. But hopefully this does not go through in California. But this is another reason why you don’t invest in California or if we state that stuff kind of happens. More than a third of the population lives in states that are partially reopened or will soon This might be obsolete by now. I think the things to watch out for are Texas and and George are are some of the front runners in this and see how they react. I think most people who are kind of, you know riding that the fear train, are scared of that second wave. Will it happen? Will it won’t? I mean, it probably will. But yeah, there’s there’s two kind of voices out there. One that you know, says you know, enough is enough. We need to get out there when you get the economy going. And of course the other one is, you know, we need to kind of protect human life. One of the best models I’ve seen of this Is this thing right here, that kind of predicting that we got to the peak? Now we’re gonna see the second third wave. And then how does the vaccine fall into all this? I’ve been following a lot of the vaccine happenings at stack news.com. But everybody’s, you know, thinking that it’s either going to be later on this year or, you know, some people are like, well, three years from now. It’s been affecting the stock market every day. And that’s why I don’t invest in the stock market, so emotional. Whereas I think, you know, where we’re tracking with collections and May, and how we’re already kind of getting back to work. I think the impact is very little. I don’t want to say that too soon, because I don’t feel like we’re out of the woods. But you know, that’s why you invest in real estate and especially cash flow for these situations like this. All different ways that people are kind of viewing this pandemic and how we’re coming out is going to be at Nike swish is going to be a V is the beginning of the end or, you know, some people are even optimistic. One quick reminder that that, you know, some of the older HIV AIDS SARS MERS Ebola measles Zika virus, you know, the six months after show, sometimes a quite a big, big of a gain. After SARS, things bounce 14 and a half percent. Stock market returns are going to go up and down.

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But I think you know if that’s why, again, you invest in real estate, this was a model that I made last month, which kind of showed Well, at what point does my real estate book down in value? Well, the first step here was the Black Swan event happened which is the Coronavirus then fear set in I will say this was probably in the beginning. till March 15. And then when the stakeholders began, business income definitely decreased. Companies cut jobs as as outlined early in April. But I don’t think we got to a point where the tenants couldn’t pay the rent. And again, I don’t want to jinx thanks for myself. But um, based on where collections are, I’d say the books kind of stuck between us tenants can pay rents, and we didn’t really see market vacancies go up. Hopefully this this, the trend doesn’t continue. But there were a few other stock gaps to happen before our prices go down, which is decrease market rents, which impacts lower operating income, which means less income for properties. And then that impacts the macro market to be higher cap rates, which equates to lower property values. And this is why we invest in real estate. I think after all, this is all said and done. People are Gonna be just dumbfounded. How much was $2.3 trillion was spent to basically have people stay at home and not just stop the economy. How are we going to pay for this? I don’t know. But it’s probably going to be higher taxes in the future or finding some ways to get at the retirement funds of everybody. Investors are kind of cheering in their homes because when you own rental properties, you own commodities, you want houses and as things inflation starts to happen to pay off all these debts, I’m pretty much riding on the right side of the wave of this thing is your properties kind of go up as inflation starts to happen. The kind of wrap things up the with the news, you know, to take a page out of Edward de Bono’s philosophy yellow hat which is the optimistic hat to counteract all the fear mongering out there. Here’s some of the good things that’s been happening you know, appreciation for stay at home spouses. I don’t think people realize how much work that was to, to watch the kiddos, people getting outside and walking around and embracing physical fitness. I look outside in the evenings it looks like Halloween out there with all the people walking around, although they’re not wearing any costume. Virtual Learning being accepted. And I think in our corporate settings, less streaking meetings. Amen to that. We’re actually getting things done and we don’t have to see each other face to face. People. I think what’s nice is people are questioning the news and media. There’s so much information out there and people have their smartphones and their computers and trying to figure out you know, the nobody knows what’s really the fact out there. There’s some reports and some real like, like videos of like hospitals. being filmed and yet there’s other things that are being recorded. Number five here appreciation for teachers who watch our kids. I think this week is Teacher Appreciation Week.

47:14
So if you have a teacher, I would encourage you to get them something nice even though there’s not going to be that last day of school for them on number six time with our smaller family units. And let’s face it, if you’re kind of listening to this economic report, you’re probably in the upper half of the economic scale and you may be doing the white collar warranty. Nothing wrong with that. It’s just, you know, I think we can all be fortunate that we are able to just call grubhub and get takeout and, you know, we we have our jobs and we’ll continue to bring in our salary and income. And at the end of the day, this is just a time where we We just work closer to our immediate nuclear family. And another cool thing or the creation of virtual wine tastings and zoom cocktail parties. We had a couple of these, these with our simple passive cash flow group and our mastermind recently, a lot of fun. And it’s a thing now for wine tastings, check it out. More VOD, some other trends online shopping more effective through Amazon and visa remote base environments, outsource it. contactless transactions coming. I think you’re going to see about a lot more and more telemedicine for medical and veterinary clinics. So that kind of wraps up the the monthly report. Um, the next few slides are about what’s going on with me personally, as I kind of make my way through this world. I’m always trying to find ways to grow and This month what I put together was I created a completed my trade line course, which I’ve been working on in 2019 to guinea pig for you guys. So I made $10,000 putting authorized users onto my credit cards and in my spare time and so I put a resource out there for you guys to check out simple passive cash flow comm slash trade lines. There is also a company force along with that if you guys want to dig into it and actually do the hobby make up the six five figures I guess I guess you could make six figures you have enough credit cards. Next on my list is I’m I’m trying to help out people getting started with this real estate thing and I’m trying to work on the turnkey remote rental course already have a couple modules in my ecourse and simple passive cash flow calm slash course but I think then the feedback I’m getting from a lot of people appreciate the feedback from a lot of you guys that said, it’s just a lot of stuff. So I’m trying to break them out into more individual shorter courses for you guys. How I get contributed to this world this month? Well, we a lot of the K ones come back and we gave our passive investors a lot of great losses on their taxes. Here’s an example k one from one of our investors who put in $100,000, they got back $98,000 of passive losses on line two, they’re also way I tried to communicate, contribute to the community was I gave away my ecourse access for the quarantine time because I figure a lot of people are busy or not doing anything at home, they got a little more time on their hands. And look, these are interesting times uncertain times, whatever you want to call it. And I just feel like people needed a break. So I just figured I’d give it away for free. For the time being, it’s normally 800 bucks. Hopefully, if you guys like it, you guys will pay for it. So we can try and find and use the money to improve the program for the next guy coming through. But for just the rest of this month, that coupon code is cool. Okay, oh, you have access to that expires at the end of this month. However, other ways that I got significant this month, my stocks did not go down 30% in value, so I felt very special about that. I didn’t have stocks, I don’t invest in that stuff. And it didn’t go employed. There’s always a you always have to try and create uncertainty in your life, um, and there was a lot of uncertainty in my life. staying at home just watching I would watch a lot more news than normal.

51:53
And there’s always a little low level of anxiety that is my tans going to pay rent and as of today, With me looking Okay, with a little bit easier, one month at a time, and I think we’re kind of coming out of it, but I’m not going to jinx myself. Some things I achieve certainty. So we lock, the lending market kind of froze up there March. But we have our lenders locked up for our next project. And things are looking good there. So it’s always nice to have some certainty in your life that you can kind of move forward and kind of tackle the next project. I think it’s hard to find love and connection in our lives these days. But you know, virtual cocktail parties was one way of doing it. But soon we’ll be able to get out there and hang out with each other. Once again. Some new articles and podcasts I like to highlight again, the trade line article, learn how to make I made $110,000 in 2019. And I’ll continue to do so simple passive cash flow calm Straight lines and the cares act guide, double pass a casual comm slash COVID-19 to see how you can get some of your whether it’s the PPP, Hero protection, or the idol grants, or some of those. Some distractions I had to deal with is, you know, being at home and kind of a lot of the world slowing down a little bit, I have no excuses not to get anything done. And there is time to do, what, what I need to do. It’s just of all a matter of priorities. And this is why I encourage all of you guys to get a coach, my coach really helped me define what I needed to get done and what are the barriers and also man, like I said earlier, like my coaches effectively just calls me on my Bs and keeps me moving. And some people aren’t willing to pay a little bit money for that, like Well, that’s cool. But um, all people in my peer group who do Real Estate and you know, entrepreneurs will swear by it their their coach, which is kind of a glorified accountability partner but um you know some people believe one thing somebody the other All I know is I want to be like one subset and seven to follow what they do some fun things I bought this month we call them doodads because they don’t put money in our pocket, but let’s just acknowledge the fact that we’re just blowing some cash on that. I bought that Echelon mirror. actually haven’t used it yet. But I got it working all over report next time on how it’s been working. And I really like popcorn. So I found this thing on Amazon where it’s like a 10 pack variety set. I didn’t know there was 10 varieties of popcorn. But you can you can see which one you like the best. I like that mushroom one out on the left side but they give you like 10 bags 10 different varieties of popcorn kind of cool. Some of the lessons learned I had this month was the pay consultants navigate that PPP of idle grants and loans. Um, this is something I’d really like to spend my time on. You know, I have the COVID-19 guide that you guys can pick through and to see if it’s appealing. But, you know, I’m kind of changing the way I do business where I stopped trying to be cheap, easy and free. Because normally I get hurt, hurt doing that. So weighing back to see what I get from the PPP and idle grants. And as a group, we have a book club, you can join that at simple passive cash flow calm slash lien hack. And the title that we are reading by Mark Manson is everything is theft. I thought it would be a cool book about

55:52
with everything uncertain in the world.

55:57
It’s a book about hope, and I like Mark Manson. He’s kind of got a more of a stoic viewpoint on the world. And

56:04
it’s a good book on philosophy.

56:09
And again, if you guys are interested in joining the passive investor accelerator mastermind we do a couple calls on Mondays every month, you get the course for free, we have 50 plus numbers in there now most of which are accredited. So if you guys are tired of kicking tires with the other people at the local Ria, who don’t have money, or the other trolls on the online, free online forums out there, and you want to actually build real relationships with real people who are sort of filtered and coming into this community, go to simple passive, casual comm slash journey, we just got a membership coordinator to help facilitate some of the networking because it’s all about getting people to connect within our group and to extract the most value we can for each member and they kept things off Here’s a little thing I found on Reddit I guess at Costco there was a little flyer in the lunchroom saying that the last day for complimentary food and drinks at the food court will be Friday me, which kind of is a sign of the times is like we’re getting back to swing of things. The pity party is over, and we’re getting back to work. So again, a lot of this stuff here. Consult your own legal professionals. This is information is presented for informational purposes only. But unless we have any questions we’ll see you guys next month. Oh Ha.

57:44
This website offers very general information concerning real estate for investment purposes every investor situation is unique. Always seek the services of licensed third party appraisers inspectors to verify the value and condition of any property you intend to purchase. Use the services of professional title and as companies and licensed tax investment and or legal advisor before relying on any information contained here and information is not guaranteed as an every investment there is risk. The content found here is just my opinion and things change and I reserve the right to change my mind. Above all else, do your own analysis and think for yourself because in the end, you’re the only person who is going to look out for your best interests.

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