Be The Bank

015 - Forbearance Does Not Equal Forgiveness

July 27, 2022 Justin Bogard Season 4 Episode 15
Be The Bank
015 - Forbearance Does Not Equal Forgiveness
Show Notes Transcript

Be The Bank S4 Ep15 - Forbearance Does Not Equal Forgiveness

On episode 15 of season 4, Justin Bogard and Richard Thornton discuss Non-performing Loan inventory. Also, they compare conventional loans versus seller finance loans!

Key Takeaways:

  1. Is the sky falling? Should you be ready for the wave?
  2. Middle Income Band - In the most trouble
  3. Can't be a one hit wonder in Real Estate Investing - It's the long play for wealth

Resources and links discussed

About the Host

Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!

Connect with the Host:

Narrator:

Interested in real estate. How about wealth? Well, they go hand in hand and here you'll learn all about it, about it. Welcome to be the bank, a podcast where we discuss and debate the topics centered around real estate. Investing your host, Justin Bogar shares insights into investing in real estate to create real wealth and passive income for you and your family. He'll share stories of real estate investments done, right? Walk you through the process of owning a real estate note. And most importantly, educate you so you can be the bank , your bank. This is be the bank brought to you by bright path notes. Now here's your host, Justin Bogard

Justin Bogard:

It's episode number 15 today. And I wanna get into some subject matter with my friend, Richard Thornton again, and we're gonna start debating some topics about what we see as an non-performing loans that are coming down that are gonna be available to purchase investors and potentially go to the Sheriff's sale to your local state. We're also gonna be breaking down the fact that what , uh , price ban that's going to be in to help you understand and give some story and some background around that. And then also comparing, and to contrasting what we call seller finance paper versus conventional paper. So stay tuned. This episode's brought to you by bright path notes. Hi Richard, how are you, man ?

Richard Thornton:

Great. You sir.

Justin Bogard:

I'm doing pretty well. It is pegging the 97 , uh , degree mark today in Indiana as we're recording this.

Richard Thornton:

Unbelievable. If you notice I'm in California, I have a flannel shirt on,

Justin Bogard:

Right. Is it that cold in your house? You

Richard Thornton:

Know , it's not. Yeah. I'm sort of sitting here thinking. Hmm . Um , yeah, long

Justin Bogard:

Time you don't have air conditioning either. So that's even more of a shocker.

Richard Thornton:

That's right. It's not , you do not need air conditioning in California today.

Justin Bogard:

Wow. I just, I can't fathom it. I need air conditioning every day . We're right in the jet stream to where all the humidity kind of follows right here in middle Indiana and other states as well. But that's typically why we, this is still humid here. Sometimes that it's just like, it's like when it gets to 90 and stuff, it feels like it's more like a hundred. It says .

Richard Thornton:

But if I was in the central valley, it's a different deal, but okay . Um , anywhere coastal sort of Northern California today is not that warm.

Justin Bogard:

Okay. I know Texas is getting a big heat wave and I think you just actually came from Texas.

Richard Thornton:

Oh my God. I was, I was down there last week and I, I I'm usually an outside outdoors kind of guy. Yeah. But , uh, I did not want to go outside at all. I , my , my heart goes down to those folks. Um , the night I landed, it was 97 degrees at midnight and it went up to 110 that day. And it's just like walking into a sauna with your clothes on, oh God, you go. Why, why do I wanna be in this

Justin Bogard:

Now? Were people wearing like jeans and long sleeves? Did you see anybody wearing that?

Richard Thornton:

No.

Justin Bogard:

That sort of weather? No, because sometimes when it's really hot outside, I'll see some people wear like , uh , even dark, like black clothing or they wear jeans and stuff. And it's like, how can , how do you survive wearing jeans on like a 95 plus degree day?

Richard Thornton:

Yeah. So not to get too off the top here , but that's throughout Morocco , um , Northern Africa and things like that. That is something they do. You see, right ? You walk along summertime , you see these guys and these heavy, heavy , um , Barb , and they'll sit around and drink tea, which is also hot and sweat. And the idea is that if they sweat underneath those , that guard , then that'll actually cool them down in the long run. I don't think I buy that, but <laugh> whatever you wanna do.

Justin Bogard:

Yeah. I , I don't know if I buy that either. Okay . Richard , um , some conversations of topic for today, as I mentioned in the opening, the package there is that there's been talk about non-performing coming through for a while . Now there's been talk about how much or how little non-performing is coming through you and I have talked about this openly, either on this, this podcast, a couple of different times. And we've also talked about it in our monthly broadcast that we do live on YouTube. And by the way , those of you that are listening on this podcast today, you can go to the bright path notes , YouTube channel, and you can watch the video stream of this podcast as well. So Richard, I wanted to bring to your attention something a quick topic, just to start off with here, which is , um, 2020, I think it was January or February, 2020. We kind of heard COVID was coming to the United States kind of in , in full bore. Right? And so a lot of people saw this coming in February and February and March. We started to see a lot of , uh , things shut down and, and , and all of a sudden, you know, a lot of people were , uh , what's whether I wanna say chicken little, the sky is falling. The sky is falling mm-hmm <affirmative>. And so a lot of talk for like non note investing people was saying, you know, foreclosures are just gonna go crazy, just be prepared for the whole economy to tank, be prepared for tons of job loss and this, that, and the other. And so, as we progressed through the COVID timeline, it didn't seem as bad like that fast forward to today ,

Richard Thornton:

Wave be ready , ready for the wave,

Justin Bogard:

The wave. Yeah, the

Richard Thornton:

Wave. And you have to say , you have to see it with a really low voice. I got you go the wave, you know , wave that's right. It's coming. It's coming. Okay .

Justin Bogard:

So we know this today that there is no tsunami that we see in front of us today. Right now mm-hmm , <affirmative> , uh , we do see an increase in non-performing loans. We do see an increase in defaulted , uh , residential real estate paper. We , we won't have conversations about, you know, paper for vehicles and paper for, you know , credit card and student loan debt. That's kind of a different subject matter that we won't get into, but we'll just isolate on the real estate part of it. Mm-hmm <affirmative> . And so it's, it's , it's interesting what's happening right now. And Richard, I know you came from a conference , um , down in Texas and there was a lot of talk about non-performing today. And I wanted to hear what you heard from that conference, as far as the non-performing stuff. And then I want you and I to talk about what we see and how we feel about that information.

Richard Thornton:

Yeah. I mean, I think the general consensus is that , um, we will see non form non-performing notes. We are starting to see them , uh , the forbearance periods have , uh, uh , been , um, extinguished. And , uh, unfortunately I think a lot of people thought with , uh , forbearance, they thought that they weren't going to have to make up those payments. So they didn't save that money that they should have been paying , uh , nor did they make any allowance to make that up in the , in the , you know , short term . So now they've got a huge bill for , uh , a year or two of , uh , debt service , uh , mortgage payments, and they don't have any money to do it. So we are seeing a lot of , um, loan mods , uh , are starting to see those, but those are much easier to do with a private mortgage than they are with a conventional, because as you probably know, Justin , um , most of the Fanny fairity paper , um , is sold to wall street and then sold and put into pension funds and things like that. Well , once you do that, you're locked into a structure. So you can't go back and just modify a whole bunch of loans because they accepted it on a certain basis. So I think the actual , the private market , um , is gonna be a little bit safer in terms of , uh , the conventional market for that reason.

Justin Bogard:

Okay . So I seem to, I seem to , to , to think that back in the February 20, 20 timeframe, when I was noticing things around me, I was looking at who's, who's having the problem who is losing their job, where are they economically at in our , our band of economic income per, per home. And I was noticing it was we'll call what I'll call the middle incomer. And that may , may not be exactly right, but I'll say the middle income, you have the super high earners, you have the high earners, you have the middle income, you have lower income, you have, you know, poverty type of income, right, right. Say the middle incomers. And that, that, and the it's all relative to where you live, cuz the , that house for a middle income could be a $200,000 house. Or it could be an $800,000 house depending on where you live mm-hmm <affirmative> . But I was noticing those jobs weren't as secure as they were before. And I also noticed a lot of those middle incomers, they seemed to live paycheck to paycheck a lot more often than they would, the different bands of the income pricing. So it didn't surprise me, Richard, that when we're starting to see these, non-performance come through that, they're not like the low end homes. They're kind of the middle, the middle band homes.

Richard Thornton:

Right.

Justin Bogard:

So, which is actually really good for real estate investors to be able to , uh , capture some of that stuff and, and resell it. I think it'll help stimulate that market a little bit stronger for that, that area. Cause I think the stuff that struggles now is the higher we'll take Indiana for example. So a $500,000 house in Indiana is a very, is a very expensive house.

Richard Thornton:

Right ?

Justin Bogard:

So anything above that, you're not seeing a lot of flippers go after right now. In fact, most flippers are looking about two 50 and under to find a house to fix and flip because they know they wanna rehab it as minimal as possible now. And they wanna protect the fact that when they flip these houses, that they know they don't have a lot into it. And they, they are they're protected that way because I did have a conversation. I was at a round table with local real estate investors a week or so ago. And that was one of the subject to conversation was that they're not really going after those higher band houses . They're kind of stuck in the , in the higher middle band to lower middle band is kind of where they're at right now.

Richard Thornton:

Right. So , uh , and it's interesting, you would bring that up too, in terms of them not going after the higher band stuff trip . Uh , typically the higher band is a little bit narrower, but the , the big thing is, and I think this was a , uh , MBA , uh , um, stat or something that one of the, one of the national groups, just with the , the , uh , rise in rates over the last 90 days that increase in rate has decreased the eligible pool of buyers by 40% meaning meaning that they can no longer qualify and meet the 33 and 44% requirements that you need for your income ratios. That is significant.

Justin Bogard:

So that, that leads me , leads me to believe that maybe some of the best deals, if you're the person that wants to sit on dry powder, meaning you're , you're saving all of your cash for something. And you're okay to sit on it for a while, the upper price point of that middle band house . So let's say in Indiana, it's gonna be five to $600,000 house. Mm-hmm <affirmative>, that could be a pretty sweet deal for you if you're willing to wait for some of those to get foreclosed on, because you could probably get them for a really good price reduction versus buying a more common 250 to $200,000 house that you might not get as great of a discount on because of what you said, Richard, right? The affordability of that house, you're gonna see a lot more struggles with making those payments. And I think there'll be more of those available after a while than there would be the lower, lower price band of the middle, the middle income.

Richard Thornton:

Yeah. And I think we're just starting there. So , um, my significant other and I, as you may know, we're up in , uh , bend Oregon and bend is kind of a nice little town now. It's kind of , she , she is , um, some money up there, but it's got a real outdoorsy feel to it. And a lot of people are buying , uh , homes up there. So we're now on the, the realtor's email list in getting , um, uh , pricing data. And , uh , just over the last two weeks , uh , there was nothing that was discounted when we were there. And now we're already seeing on a 500 to $700,000 house. We're seeing price reductions of 25 to $50,000 already.

Justin Bogard:

Wow. That could be , huh ?

Richard Thornton:

Yeah, that's already. So you're gonna see a lot more of that.

Justin Bogard:

Okay . So does this answer the question in your opinion and I'll give you mind and do you see a tsunami of nonperforming loans coming through the pipeline, going through foreclosure?

Richard Thornton:

I still don't see a tsunami. I, I , I see a , a, a buildup, a significant buildup. Um, they're gonna be on the conventional side, maybe more so than on the, the , the private side. You have to look at it and see, do you wanna buy conventional paper? Cuz your yields are gonna be lower than if you're buying private paper. Um, but yes. Is there gonna be a lot of product product out there? Yes. Is it gonna be something that came out of the oh nine , uh , oh eight recession and, and literally be the tsunami? I don't think so. It's more like the, the wave that you see building offshore , um, and you know, it's coming , uh , and it's gonna be a six foot wave as opposed to a 12 or 14 foot wave

Justin Bogard:

Richard. I , I totally agree with what you're saying and , and I see the same thing. So I , I do see there , there is , um, there is some more coming mm-hmm <affirmative> and we don't know how much , uh , I just think it's gonna be more controlled. It's gonna be more of a slow drip. I think I've been saying as opposed to the turning on the faucet and letting it all come out. Cause you're right. I don't know if we'll ever see another time, like 2000 , 19, 11, 12 , where there was just, I think at one time Richard, there was 250 to 275 foreclosures, 275,000 foreclosures going on in like one month mm-hmm <affirmative> it was, it was a fire sale. And if you didn't leave the Sheriff's sale or the courthouse steps with a house and you plan on buying a house, then I , you must not have done your homework well enough because it seemed like there was leftover inventory even after people were, were off the courthouse steps.

Richard Thornton:

Right. So you're in a , you're in a real disadvantage in Indianapolis as supposed to be in California, cuz I can drive 12 miles from my house and I'm at the shore and I can see those waves coming, but you're in the Atlanta . You're at a long ways away.

Justin Bogard:

Depends on which way the wind's blowing, right? Yeah . The east coast. Yeah . Okay . So we, we talked through that. So you did mention something that I wanted to talk about today and thanks for segueing into that. And you talked about the conventional loan versus the private loan mm-hmm <affirmative> and there are some similarities and there are some differences in those two types of loans that we buy as note investors. And one of the things that I've noticed , uh , recently, and we've had Tracy Z on , uh , you weren't on the episode, Richard, but I know, you know, Tracy and the dated that she has. And so she looks at a lot of seller finance data and she kind of gave us a recap of 2021 . I'll just quickly shout out some numbers here for the sake of the podcast. Just so we have a reference point to talk about. There were about 90 th just under 90,000 seller finance loans created in 2021 that comprised a residential commercial and land notes . So these are seller carryback with seller owns the property or the land, and then they carry back financing for the borrower. So the buyer borrower, so they become the bank on that of those , uh , 90016% of those were actually from one note holder that created two notes in a year. So I thought that was pretty interesting. That seems like a pretty good chunk. Um, the average loan to value on the residential seller finance notes created was about 77% loan to value . Meaning they probably put down a 23% , uh , down payment. Uh , uh , the land notes is a little bit better. The LTV was 70% meaning about a 30% down payment was at originate. So that's about 27 billion worth of seller finance paper. And that's across , uh , I'm just gonna say the continental United States. I don't think there was outliers with some of the other islands and stuff, but that's, that was a lot, a lot of data. Now. It wasn't as big as 2014 where they think they had maybe 120,000 that were created in one year mm-hmm <affirmative>. And so we've gone down since then and we've gone under, under 90,000 and we're back up to 90 and we'll probably go up probably closer to 95 maybe next year, but we'll see what the numbers are for 2022 . So what I'm getting at Richard is that it , it would appear that down payments are, are a good sizable option for seller financeers that have those borrowers that, that do that.

Richard Thornton:

So down payments,

Justin Bogard:

It seems like down payments are much larger for seller finance deals than they are for conventional

Richard Thornton:

Overall. Yes. Um , I mean, obviously you can do an FHA deal , um, and put down 3% and that's where they have some of the highest default rates as you would cause people are already stretching. Um, we, we tend to see a lot more of that. Also a lot of what this seller finance stuff is done is on vacant land. I can't remember what your, your land stat versus , um , single family residential stat was, but a lot of, lot of lenders want 50% down yeah . On that kind of stuff. Um, so you're gonna see , uh , um , much , uh , safer on the private note area there.

Justin Bogard:

Yeah. It makes sense as a lender. Yeah. I would like to see 50% down on anything, but yeah, Don land, I definitely would feel a lot more comfortable at 50% than I would at 70, I mean, 30% down.

Richard Thornton:

Right. So definitely .

Justin Bogard:

So that, that's kind of what I wanted to get into a conversation about Richard is that , um, it would appear that, you know, someone would wanna buy a bank note versus a seller finance note because the seller finance note may look on the surface as kind of taboo or kind of a problem. Or why did you have to carry back financing on that property? In all actuality, Richard and I, we can disclose this cuz we , we buy a lot of seller finance mom and pop paper and we have bought a lot of conventional type of paper there . There are some differences. Yes. There are a good and bad things about both of them, but overall it feels like, and it seems like with our portfolio that the borrowers are a lot stronger in a seller finance market than they are in the conventional market per se.

Richard Thornton:

Yeah . I would say also too, in general, the payments are a lot lower. I mean your interest rates are higher. Yep . But the, a lot of the notes that we're buying were only 70 to $80,000 notes to start with. Yeah . And if your mortgage, payment's only $350 a month , uh , that's a whole lot easier to keep current on as opposed to what's, you know, I've got friends out here, who've got a mortgage payment of $6,000 a month. Yeah. I mean, you , that's not unheard of at all. It's pretty common actually.

Justin Bogard:

Yeah. I mean that , that $350 payment that's like, that's less than rent probably in the area too. So

Richard Thornton:

It , yeah, it , it quite often is. And, and I always tell my , my clients, this , you may run into some of this too, but a lot of people say, they'll see , they'll, we'll get through the process. They'll see the eventual note rate. And it was done at nine or 10% and they'll say, well, why , you know , why didn't they refinance that? Um, and in some cases it's because they can't, because they're not, maybe I've got , um, a number of clients who are , um, they're not American citizens they're in, in , uh , Wisconsin or Michigan and they're Canadians. So they can't qualify for that . But more often or not , um , it's a little bit like buy a car where people buy a car on either , um , priced or payment. And they're used to making that $350 a month payment and they really don't wanna refinance and go to that so fine. I'll just stay with it. So that works well for us because we did a lot of nice long term investment out of that.

Justin Bogard:

Yeah. I would say off , off the top of my head, some quick combating things , uh , for the , the seller finance paper versus conventional paper, or the fact that conventional paper is usually more expensive, right ? You said we're averaging, you know, between 60 to 80,000 for seller finance paper . So the conventional paper is probably gonna be over a hundred grand pretty easily, cuz like you said, banks, aren't gonna be , um , you know, refinancing or giving out loans really under a hundred grand depending on the bank. Maybe there might be a few that do some lower, but more than likely it's the house has gotta have some more value to it. Mm-hmm <affirmative> and then you got the fact that the interest rates are gonna be a little bit lower as far as what the borrower pays for that conventional paper . So that doesn't help , uh , our situation as a note investor that much. Um, also the borrowers aren't putting down as much of a down payment from the get, go as a seller finance here , paper. And so those are kind of the , the middle negative factors there that compare the seller finance paper versus the conventional paper , but they both have their good points and they both have their bad points. Um, as you get more expensive paper, right, you probably get a better higher credit score borrower and a more reliable borrower. But then again, it's all relative, you know, to their situation. We talked about the middle band , economic , uh , income folks, how those houses are probably gonna be more available and go through the foreclosure because they got kind of hit the hardest for this COVID stuff, I think. Um, so you're gonna see those houses available, but would you rather spend 500 grand on one house? Would you rather spend 500 grand on, on 20 notes? Right ? It , it all comes down to how you wanna diversify your portfolio. So Richard and I are of the same mindset, right? We're gonna buy more. We're gonna go for quantity as opposed to, you know, getting a one hit wonder that's a lot higher, higher , um, price point to go after for our loans.

Richard Thornton:

So I like that one hit wonder, I like that. That's great.

Justin Bogard:

Wonder it's that's the , the song right? One hit wonder for those , uh , bands or, or , uh , solo musicians that just had the , the one hit, I can't think of off the top of my head or else I'd say one, but I

Richard Thornton:

Oh, no, that was a Tom Hanks movie , uh , couple years , about four or five years ago. Um, all the things you do were something I got that's what that was about. It was a really great movie. Um, so, but you also something else I wanted to mention , um, I know there are a lot of listeners out here from all over the country. And so if you decide that you want to get into something that has participate in it , um, whoever you're dealing with, if you're dealing with us or somebody else , um, do a little bit of homework in terms of , uh , where the notes they're buying are , uh , I'll give you a little bit of an extreme example just to make my point. Um, overall the unemployment, the foreclosure rate here in the bay area is gonna be much lower , um, than other places. Why? Because you've got a lot of tech and people are making a lot of money because of that, but you've got a lot, you've got , um, five universities. Um, you've got , uh , a lot of companies that weren't really negatively affected by COVID mm-hmm <affirmative> um , matter of fact, tech, you know, as you know, went , went through the roof. So a lot of people have gone through this pandemic financially and it's been a great big, so what, right. But if you're, you know, in an area that , um, has a lot of , um , industry , uh , was really depending on the supply chain , um, a lot of meat production throughout the Midwest or something like that , um, that could have had a big impact. And so that's gonna affect the overall economics of your area. So just something you need to , to look at.

Justin Bogard:

Absolutely all , all that stuff weighs in. So I think , uh , I wanna curtail back to the beginning conversation when I mentioned about the re the traditional real estate investor in my little group that I had round table , and a lot of the , the questions were being kind of put out there to the group. And I was invited in there because what I do is a little bit different than what the other guys do in the group, but it all kind of ties into each other. And so there was a lot of questions about what is your biggest fear right now, going on, a lot of people were answering questions about, you know, not finding , uh , the property or not making enough money in the deal because the properties are harder to find, and the deals are a little bit thinner having to get creative and I'm, I'm sitting back here going , I didn't even, you know, I've been so entrenched in what we are doing with solar , our finance paper, that I didn't even realize that a lot of this stuff, not only has it been affecting the consumer to buy properties because they're having to pay a lot more and the I inventories down, but it's also affecting the investors that lives off of the wholesale deals, the flip deals and not necessarily the renters , I think they're doing okay, but mm-hmm , <affirmative> , um , a lot of that stuff really does affect them. And , and , um, when it came my turn to kind of give my 2 cents on the subject matter, you know, I kind of, I kind of push them in a way to say, you know , sometimes you have to think outside the box, sometimes you have to figure out how can I buy something on terms as we call it, meaning I wanna buy it with someone carrying the financing, forming means the seller, then how can I resell it with seller financing, knowing that the margins may look thin on paper, but overall you can, you can use that interest and hold that paper longer and you can make yourself a really, really, really good deal. So I was pushing those other wholesalers in the group to, to kind of study and learn some opportunities about how you can use creative financing to make your deals a little bit sweeter. Mm-hmm <affirmative> . And also you have people like myself that can buy those deals as well. You're not stuck with that paper per se . Cause I think that's their perception is that if I don't sell it quickly and I don't sell it now I'm not gonna make any money on it. Mm-hmm <affirmative> so it seemed like they have lost that perception. Now, luckily, Richard, you and I have ran to several people across the country that are wholesalers that have learned and tuned into that creative financing wheel part of the deal. And they're making some really good money and they're also making some really nice notes for us to buy as well.

Richard Thornton:

Right. Right.

Justin Bogard:

So Richard , um , did we hit the nail on the head as far as answering the questions about the nonperforming loans? Was there something else that we needed to mention about nonperforming loans? I'm thinking in my head, you and I earlier talked about <laugh> something else that nonperforming we wanted to point out and I , I don't , I'm not recalling what it was.

Richard Thornton:

Well , I think, I think we covered pretty much everything. I mean, we talked , talked about the breadth of the market , um , conventional versus non-conventional what we didn't talk about. Well , you , no , you talked about a little bit in terms of the, the whole phenomenon on being more of a, a, a middle market. I mean, there are a lot of people out there who thought that forbearances was forgiveness and forbearance, forbearance is not forgiveness. Yeah . And that's why we're starting to see an uptick here is because all of a sudden they've got , uh , a year or two years of mortgage payments that they have to make and they went out and sent the money.

Justin Bogard:

So <affirmative> , so I , I wanna dovetail that into a side topic. Uh , I don't think we have too much time to talk about it, but a couple of notes that we've bought, I've been looking at the liens on there currently. And a couple of the notes that we're buying happen to be delinquent. I would say probably, I dunno , Richard, maybe five to 10% of loans. They'll we actually look at may have a little bit of a problem to 'em as far as delinquency or not performing as well, may maybe a smaller percentage than that. I , I don't wanna make the numbers sound really big, but one of them that we looked at recently, Richard, I don't think you had a chance to dive into some of the details, but I discovered that, you know, I'm sorry to see some condo association , uh , delinquencies pop up in there and some liens record against the property that could be an HOA or a COA as we call 'em. And some states are super lies where they, you know, they go in front of the first mortgage as opposed, excuse me, as opposed to being a junior lean to the mortgage mm-hmm <affirmative> . And so those are things you have to watch out for now in this market coming up, like you talked about some of the more expensive priced homes that are going to, we both talked about the more expensive price homes that are going to be up for sale and probably gonna go through foreclosure. That's something to keep an eye on too, about the HOA and the , and the condo association part of it, because those liens can jump in front of you and , and those lean can be kind of salty as well. And so it's not just about delinquent taxes, right? There's other liens that you want be aware of and monitor. So I , I bring that up to kind of refresh our memory about, you know, it's not just about buying the debt at a discount. It's not just about what the borrower owes from forbearance and that stuff. There is some , some stuff you gotta take care of as the other , uh , folks that need to get their money from you, which are the other lean record against the proper ,

Richard Thornton:

Right ? So, and that brings up a good point too, of just something else to, to consider when I was doing flips, the worst flip I did , um, was great as far as the financing and, and the sailing and the selling of it. And LA da da , what I didn't count on, and this is something that could happen right now was a fact that the HOA had deferred maintenance on, on roofs. And because, because of , uh , they couldn't make a lot of their payments. They had a one time assessment, well like game of musical chairs, I happened to be the guy who owned, who was sitting in the chair at that time. And I got whacked with a $22,000 bill , um , to contribute to the HOA for , uh , roofing. And , um, you know, that was at that point a quarter of my product , uh , my, my private . So , um, you have to be careful for little things like that.

Justin Bogard:

Yeah. So non performers can be great. A lot of people see it as, you know, maybe, maybe the greed dollars start rolling in the back of their eyes and all they can see is like, oh, this is gonna be a great deal. But there , there are a lot of things that can slow you down. There are a lot of things that can impede your profit as you get closer to the finish line. And , um , you can't just do one and make money, right? You gotta do several of them to make really good money. Then you have to be very patient with it . So there's a whole, it's a whole history with nonperforming loans. So if you're a first timer investing in mortgages, don't think that you want just to go nonperforming first, we highly encourage you to do some performing loans first, before you get into stuff. But that's a conversation that Richard, I more and welcome to have with you folks. So Richard, that's about all the time that we have for today. Thank you again for being on episode number 15 with me of the, be the bank podcast. And this episode is brought to you by bright path notes. You have any closing thoughts today, Richard ,

Richard Thornton:

Um, invest wisely and carefully

Justin Bogard:

<laugh>. I was gonna say, that's good. I was gonna say , um, it's the long play. You know, you never get into real estate investing. Assuming, assuming you're gonna be making a fast nickel or assuming it's gonna be in and out quickly, you always have to be prepared to have your investment out there longer to expect the unexpected and to be in it for the long haul. If you're only gonna play on being in it for a couple years, you might not be as happy as you will be looking at it, being in it for about 30 years down road .

Richard Thornton:

Exactly .

Justin Bogard:

All right . Episode number 15. Don't forget to check out the video version of this on our bright path , YouTube channel till next time guys. See you .

Richard Thornton:

Okay . Bye .

Narrator:

Thanks for listening to be the bank. We hope you learned something from today's show. If you enjoyed this episode, please rate and review us. Plus check out our bright path notes channel on YouTube and follow us on Facebook and Twitter at be the bank and on Instagram at be the bank podcast. Be the bank is sponsored by bright path notes. Thanks again for listening.