What We’re Buying During This Real Estate Correction

Dave:Last week I spent an entire episode laying out that I think we are in a market correction. We’re not in a crash, but we’re in a period where home prices may go down, they may stay stagnant. And I hope that was a helpful conversation for ever to just to have realistic expectations for what to expect over the next couple of years. So today we’re going to shift that conversation from just data and background towards what you can actually do about it. In today’s episode, I’m joined by Kathy Fettke and Henry Washington to pressure test the frameworks and the data that I presented last week. I’d obviously love their opinion, compare notes on what they’re seeing in their own analysis of the market and turn the playbook into practical steps. During this episode, we’re going to talk about trends that we’re seeing in each of our own markets, how we’re adjusting our own investing strategy and frameworks that you can all apply to your portfolios to make profitable decisions during this market correction you’re listening to on the market. Let’s get into it.Alright, well I am assuming you guys don’t listen to on the markets episodes when you’re not on it. I won’t take offense. Last week I did a solo episode just sort of laying out what I believe to be the reality of the situations that we’re in a market correction. Basically the gist of it is that home prices are up one or 2% in real terms, but if you look at inflation adjusted terms, prices have been pretty flat or a little bit down for almost three years now, and I actually think that’s going to get a little bit more pronounced in the next year or so. I think the market is really slowing down and we might see nominal non inflation adjusted home prices go down one or 2% more in certain markets we’re seeing in Florida, Texas, they’re already down more than that. But on a national level, a couple percentage points, do you agree? Do you think that’s crazy? Do you think we’re going to see something totally different? Kathy, let’s start with you.

Kathy:I’m so glad because I am the A student on today’s episode because I did listen to that show. Oh, look at you

Henry:Henry. Did you? I listened to half the episode, yes, 100%. Yeah.

Kathy:So as I was listening, my thoughts were, yes, it’s a correction and my first thought was, if you’re in it for the long game, when I buy property I’m thinking long, long, long, long, long term. So it’s just part of it, it’s a softening, but if you are in the rental business, you don’t care because you’re not selling. All you care about are rents going down, that’s your income. So where are we there? It depends on your market. Some markets rents have softened, but if you’re still collecting rent, you’re in good shape.

Dave:Yep, absolutely. I totally agree and we’ll get into some of that about what you should be looking for, but Henry, you seeing a correction as well?

Henry:Yeah, I think we’re seeing a correction now. Again, my market has some insulation I think compared to a lot of other markets, but we are absolutely seeing a slowdown. We just hit four months of inventory on the market and that is about what we need to be considered a balanced market. But because we’re so used to listing something and it’s selling fairly quickly, even though we’re in a very balanced normal market, it feels like we’re not, it feels like we’re in a situation that’s more dire than that because things are moving slower than we’re accustomed to. But if you zoom out, I got in this business in 2017, it was pretty normal to list a property and it sit for 30 to 60 days and you only get a couple of offers and you have to do some concessions and then maybe you sell that property for a profit. We were buying properties and getting a 6%, six and a half percent interest rate as a rental property. This all feels like it did pre pandemic, but the pandemic went so crazy and people made so much money that now what used to be normal feels uncomfortable.

Dave:I kind of feel like the problem with real estate right now is not the market, it’s expectations. Yes. It’s just that people are thinking that real estate is supposed to be the way it was during the pandemic.

Speaker 4:And

Dave:Don’t get me wrong, I think the market is, there’s a lot of challenges with the market right now in most places. We’re not all magically in Henry’s northwest Arkansas bubble, but I think in most places there are challenges. But I think the biggest challenge is people are thinking that they could make easy money in this industry because there was a period where you could make easy money, but that is the exception to the rule, not the normal thing that happens in real estate. So I think that’s sort of why I wanted to have this conversation is just normalizing one, the fact that these things happen and that corrections are a normal part of the economic cycle and two, that it’s normal to invest in this part of the cycle or at least I think so. Yeah,

Kathy:That’s what I wanted to say is it’s like when you say people are thinking, I think what you mean is newer investors and those newer investors are learning or they’re growing up, basically they’re becoming experienced investors because experienced investors aren’t thinking that. They’re thinking finally, finally there’s a correction where I could get me some good buys out there and I don’t have the competition. We’ve been waiting for this moment. So you all just growing up, it’s part of that life just comparing it to the marriage. You had your first little fight and then you get through it and then things are better it work through it.

Dave:Yeah. You learned how to get through the fight.

Henry:I compare it to something you said in that solo episode, what you said was there is a cycle to market conditions and so the experienced investors are kind of excited for a period like this because we know how to make money through a correction. It’s just a matter of adjusting what you’re willing to buy and adjusting how much risk you’re willing to take on given the more risky environment, but you can still be profitable. But we know on the other side of this correction, if we’ve bought during the correctionThat we are going to see a lot of equity and appreciation and growth on the other side of it. And so it’s exciting for people who have that experience because now we’re like, we can buy good deals now we’ll make money. We won’t make 2022 flip prices if we’re flipping a house, but we’ll make a decent profit, but if we hold on to things and even if they’re breaking even now, we’ll be able to sell those and or get increased rents later or leverage the increased equity that we’re going to get. I’m excited because let’s get through the rough part so we can get to the good stuff again.

Kathy:Totally. One of the things you said in the show Dave, was affordability. Something has to give if things become unaffordable, and that’s probably the most important metric to ever look at whenever buying, can people afford what you’ve got? If what you’ve got is something you’re trying to sell, you’re flipping it and people can’t afford it, you’re in trouble. If you’re trying to rent it and people can’t afford it, you’re in trouble. It’s always that, and so when interest rates are low, that creates incredible affordability obviously, and then prices go up and then when prices go up and then rates go up at the same time, which is what we’ve seen, affordability is out the window, so something breaks and whatever that is, everybody’s been waiting for the interest rate to break, please be at that. If we could just get that to come down, then everything will be fine, but because that hasn’t happened, something else is going to break and that’s pricing and so that’s what we’re seeing. It has to happen. It’s what we have been waiting for. It’s why we just started our multifamily fund. It’s breaking and you can only get great deals when there’s a bit of a crisis. That’s how it works.

Henry:Amen.

Kathy:That’s what we’re seeing and not as much of a crisis in the single family world. People aren’t as much in a hurry to sell. They don’t have to in most cases, and when I say they, that’s lumping a lot of people into one category. There are obviously people in crisis because we are seeing the foreclosure rate creep up, but nothing out of hand, nothing abnormal, but more people are in that struggle bus and again, that means deals. I hate saying that. It’s like I don’t want to be a shark and take advantage of people in a difficult situation, but it’s during distress that you get the deals, right?

Dave:Yeah. It’s adapting and taking what the market is giving you. It’s not like you are putting those people in distress and they’re going to put those properties on the market and listen, I’m not trying to make real estate investors sound like angels, but a lot of what happens in a normal correction is investors set the floor for how things can fall because a lot of times what happens is normal home buyers get spooked by a correcting market. We saw this in 2008. That was a crash, not a correction. That was a real crash and homeowners no one wanted to touch real estate. And actually if you look at a lot of studies of what happened back then, the academic studies credit institutional investors getting into the single family space with setting a bottom for that market and allowing prices to bottom and then coming back in.And so I think you’re right, Kathy, investors do play an important part of getting the market back to a normal level because a lot of those distressed sellers aren’t going to be able to find homeowner buyers, especially when those homeowner buyers have more options right now and could buy stabilized properties at a discounted rate. And so I just think you’re entirely right that different people play different roles and I’m not wishing for anyone to lose their shirt. I certainly hope no one gets into distress, but that is sometimes part of this, but as you also said, it’s not even going to be a big part of this I don’t think in this correction. You look at distress levels, delinquency levels, like you said, it’s just not that high, which makes it to me seem like yeah, we’re probably going to have declining real home prices for a couple, I think maybe a couple of years even, but to me that’s at least predictable. That’s as an investor, the only thing I want is something that I can predict and can understand and is somewhat stable because it’s the really big swings that really are worrisome to me or create a lot of uncertainty. If we see a period of time where home prices stay flat, I can invest around that, can’t you?

Henry:Absolutely. I mean that’s what you want, right, is exactly. We haven’t had predictability in a long time and so predictability, there’s comfort in predictability because you can make more long-term decisions or I guess you should say you can make more midterm decisions because in the long-term, real estate’s going to go up in value, right? If you zoom out long enough, but it’s the short to midterm that can be a little more volatile and so it can help you have a more well-rounded investing approach where you buy some deals that are going to make you money in the short term, you buy some deals that are going to make you money in the midterm and you buy some deals that you’re going to hold and keep forever and create that true passive generational wealth. You can be a more well-rounded investor when there is predictability.

Dave:Alright, we got to take a quick break, but more with me, Kathy and Henry right after this. Welcome back to On the Market. I’m here with Kathy and Henry talking about how we’re adjusting our own investing strategies during the market correction. Let’s jump back in. I like what you said there. I set my own goals. I have long-term goals. What I’m trying to get to financial freedom, that’s like a 10, 15 year goal for me and then I have a three year goal and then a one year goal, and I find the three years the hardest right now. It’s really hard to figure out where we’re going to be three years from now or it has been, but I actually think it’s getting more clear personally that we’re going to be in this correction rates are not going to come down very much. Prices are going to be pretty flat. There’s always these black swan events things could happen with if Trump shakes up the Fed, if we have a massive job loss recession, of course those things could change that, but as of right now, it just seems like we’re going to get back to pretty flat and boring and I can plan around that.

Kathy:You called it and you’re amazing keynote at BP Con Dave, I loved it.

Dave:Thank you.

Kathy:And you gave these four different scenarios of what could happen, but you also gave this example of in what was it, 2010 or when did you

Dave:Buy that? Oh yeah, 2010. It was my first deal. Yeah,

Kathy:It was scary people, everyone’s like, oh, I wish I could have bought in 2010, but if you were there in 2010, it was terrifying. The world was falling apart. We didn’t know if we’d be the United States of America. We were stocking food and so to go out and buy real estate took a lot of nerve, but you did it and you didn’t know if prices were going to continue to go down and in fact they did, but you bought that fourplex based on fundamentals. Wherever the market goes, it doesn’t matter. This fits what I’m trying to do over time, it’s going to work out. It turns out prices went down for a few years, you weren’t selling, didn’t matter, and then whoa, prices took off and unbeknownst to you, you made a crap ton of money.

Dave:That’s right. Exactly. Yeah. There’s obviously a lot of difference in 2008, right? Prices are not going to get that cheap again, I think that might be a once in a lifetime kind of thing for the value that we got, but I don’t know if you guys follow Bill McBride’s housing analyst, but he put together this chart that just shows real housing prices, which is inflation adjusted housing prices over the long term in the US and what it shows is that the housing prices in terms of beating inflation, it’s actually like you have seven years of flat and then it kind of goes up and then you have seven years of flat and then you have these periods of amazing returns and this actually goes back in time in the nineties, it was pretty flat. Then you had the bubble. Obviously that wasn’t great. We saw actually for many years after the crash, it was flat, then it went up. We’re three years into flat again. I don’t know when it’s going to go up again, I don’t know when real home prices are going to go up, but I want to get into the market so that I don’t miss it because if you miss that, then you’re waiting another seven years, right?

Henry:Yes.

Dave:And so my whole game right now is like how do I find deals that make money today? There are deals that make money today, but I don’t care if my prices go up or down 2% next year because what I’m in it for is that next bump. I’m waiting, I’m just going to buy stuff, and then if it’s two years from now, it says four years from now, it’s five years from now. Sure, I’d love it to come sooner, but I don’t really care. I’m just trying to buy things that make money now and then get in for that next bump and even if the best bump is 10 years from now, I’m still making money now, so it’s fine. That to me is the psychology I am approaching this with. How are you sort of Henry changed your mindset given where we are right now?

Henry:Yeah, it is all about having multiple exit strategies for deals and one being short-term and one being more midterm or long-term, and if you can buy things that have multiple exit strategies, then that allows you to stay profitable. I’ll give you an example. We just closed on a house. We paid $102,000. It’s a four bedroom, three bathroom, but it’s not in a neighborhood where it’s going to sell for $400,000 for a home being that size. The ARV on this property is somewhere around $270,000. Okay, now I bought it as a flip. The goal is to spend about 50 to $70,000 on the renovation and then sell that property for 250 to $270,000. Now, there’s some caveats, there’s some problems with the neighbors in this area that could affect my sale price, so there’s some problems that could cause me not to sell this property for what I’m hoping to sell this property for, but at the end of the day, I bought a property worth $270,000 for a hundred thousand dollars.

Dave:Who cares what the market do? Who cares?

Henry:Because who care if I try to sell it and I don’t get what I want, I can throw a tenant in it and I can rent it for 1800 to $2,000 a month and it’ll cashflow at that price and I can just make money as a rental and I can keep it as a rental for a long time or I can keep it as a rental until the market tells me it’s a better time to sell it and I can make my profitability later so I can make cashflow now sell later. I can make cashflow forever. I can not make any cashflow and sell it for a profit. Even if I have to sell it for $230,000, I’ll still make money. It’s about finding deals that make sense with multiple exit strategies and then you can choose how you’re going to make money on it. The way to mitigate the risk is you’ve got to pay the appropriate price to weather the storm.

Dave:That’s just fundamentals, right? That’s just what we’re talking about, right? It’s just like

Henry:It’s just called real estate investing. Yes,

Dave:I know, but I think it’s important for people to remember that buying quality assets at a good price in a good location is just still the game. It’s just it, right? It’s like whether you’re flipping or rental or short-term rental, whatever it is that still works, the price you’re willing to pay has changed because there is more risk and you have to be more disciplined about what you’re willing to pay. If you were buying in 2022, if you overpaid by 10 grand who cared, it didn’t matter. Now it matters, so pay less.

Henry:There was a time I would’ve paid one 50 for this thing because I knew I could profit on it later, but that time has passed and it’s interesting. My realtor called me not long after I bought the property and he was like, buddy, I’m worried about this one. And I said, well, what are you worried about? He was like, I’m just worried that it won’t sell for what we want. And I was like, yeah, but I mean I could rent it for 18 to 2000. And he was like, oh, yeah. Oh yeah, you can do that. You’re okay, right? You’re just fine.

Kathy:The thing that always is I’m in awe for those of you who flip is that you have to be good on the buy side and the sales side,

Speaker 4:And

Kathy:That’s a lot of pressure and you have to do that in we’re talking months and most of the time the market’s not going to shift that much in three to six months, but it can, and that’s why the flipping world terrifies me because as buy and hold, you really only have to be great on the buy side for the most part right now. It’s not the best time to sell, it’s just not everywhere. But I’ll tell you what, probably what you’ve got to be better at right now than anything is pricing and selling it, right? Because it’s a buyer’s market. Buyer has the power seller does not. So if you think you can get last year’s price and act like a staunch, I don’t know, this is my price. I put all this money in it and you’re trying to, that you think you can get what you got two years ago, you’re going to be sitting and that’s the death of a sale. We have somebody who put their house on the market next door, and I’m mad because they went like, okay, granted, I am where I am, but millions over what it should be,And all the agents are like idiots. No one is buying it. It’s just going to sit there. It. That’s not great for me. But yeah, so right now you better be darn good at listing.

Dave:To me, just talking to a lot of flippers and starting to dip my toe into it a little bit, at least in Seattle and other markets I’m in, it feels like we’re still at the sort of tail end of what feels like the riskiest part of the market, which is the transition from sort of a growing market to a correcting one where you’re still buying at higher prices and then by the time you go to sell, things have sort of flattened out even in a market like the one I believe we’re going into, which is going to be maybe negative, that even I think is less risky because you know that going into, again, it’s the predictability and you’re going to buy even more disciplined expecting or assuming that prices are going to go down two to 3% by the time you sell them. But it was sort of like over the last year, it’s kind of been this time where, okay, sellers still had a lot of power. By the time you go to sell, you’ve lost your power as a seller. And that’s I think the riskiest part as anyone is trying to sell a property, right?

Henry:Yeah, absolutely. It’s all just healthy. I think there are ways to make money in this business right now, and I think there are very risky things to do, and as you can tell in this episode, risk is determined by who you are, where you are and what your strategy is. Kathy sees as what I’m doing as risky, and that’s fair. It is risky for her, and I see what I’m doing is far less risky because I am buying as a landlord, I am buying as a whole what my strategy is going to be if it doesn’t sell for what I need it to sell,

Kathy:You’ve got options.

Henry:So my risk is can I afford to have multiple rentals come on at the same time? If I can’t sell anything, can I afford to keep them all as rentals, right? That’s where you get in over your head because it does cost money to operate those properties as rental properties.

Dave:We got to take a quick break, but we’ll be back with more on the market right after this. Welcome back to On the Market. Let’s jump into our conversation about how to adjust your strategy and your investing decisions during a market correction with me, Henry and Kathy. Kathy, how are you changing your strategy? What’s your philosophical change to your approach?

Kathy:What we’ve been doing for 20, over 20, oh my gosh, 25 years. Anyway, what we’ve been doing is the same. Nothing has changed, and when I was telling your story for you about how you bought that property in 2010, you bought it, right? You bought it, not even, that’s fine. It wasn’t the steal of the century in it, but it fit your strategy. When I bought in Dallas, Texas, because I knew what was happening there, and I know some of you listening were not even born yet, but it was 2005 when we started buying and we bought stupid good deals, which were not good deals. They were like $140,000 homes in Rockwall, Texas. That to me as a Californian was free.

Henry:It was almost free cost of

Kathy:Car, cost of a garage here, but in Texas it was retail. Texans would just look down their nose at me and laugh like, oh, this out of state doesn’t know what she’s doing. She negotiated a $5,000 discount, but they were new. They were easy to manage and it made sense for me. Guess what? They’re like three or $400,000 today if not more. But guess who sold them didn’t hold because during that time, nothing kind of happened and we got out of those properties right before they took off in price, so we didn’t get that bonus that you got Dave and I didn’t stick with my plan, which was to hold them to forever. I started to listen to these people saying, oh, nothing’s ever going to happen in Texas. It’s just there’s too much land. Prices will never go up. So part of it is sticking with your strategy too, knowing Yeah,

Henry:Absolutely.

Kathy:Which is hard.

Dave:Yes, it is hard. I mean, I am a tinkerer and you shouldn’t, I’m always trying to think of ways to do it. It’s hard to just hold onto things when you have to be patient, but that is the game. Getting control of your own emotions in that way is a big part of being a buy and hold investor I think.

Kathy:Yeah, so coming back to what have I changed as far as our fundamental business of buy and hold, single family and strong growth markets that are landlord friendly where the average person can afford your rent, I love that philosophy. It’s like if we just focus on the average price and the average person who can afford that average means the most, the people in that area can afford what you have to offer. That has worked for us for 25 years and I think it’s going to continue for the next 25 years. So zero has changed with what we do and what we teach other people to do. On the syndication side, which is more advanced, I guess you could say for the past decade or 15 years, we’ve been doing subdivisions which take five to 10 years

Dave:To

Kathy:Get up and running, and if you think Henry, that you got to guess what’s happening in the market in three to six months, try guessing five to 10 years, you have no idea,And it’s so much riskier and so much harder, and we’ve done, we’ve knocked him out of the park and some have been the struggle bus for years. So I would say in the syndication side, we are going back to what I know what I love, which is acquiring things that cashflow, whether it’s apartments, whether it’s single family homes, so that you can just sit and hold them if you original plan didn’t go, but if you’ve got raw land and you sit and hold it, that’s expensive and there’s no income coming in and you got all the overhead and you got to put in the roads and the sewers and the utilities, and then nobody wants to buy what you got because all of a sudden you timed it on a down market. So what we’re changing is I’m getting older, I don’t need any more stress. We’re just going to do what’s tried and true, buy and hold rental income, improve it as you go, easy stuff,

Dave:Right? I love it. I completely agree. I think cashflow is the number one thing to be looking for right now. I’ve never bought a non cashflowing deal, but I know during the pandemic it got popular to invest for appreciation. You just say like, oh, you just buy something. Even if it’s negative cashflow, it’s going to go up, and people made a lot of money doing that, but that was very unique and I do not recommend doing that anymore. As I was saying, my whole philosophy is wait, make money now and wait until the next pop, and it’s honestly, the pop is not even the main thing. If you buy a good deal right now, that’s still going to be a better use of your money than almost anything else you could do. If you buy real estate right now, even in a correcting market, it should do better than the stock market.So to me, that’s kind of a no brainer. And then if another pop happens, that’s great, but the only way you can survive or the only way you know can survive to the next pop or to time your exit from that property optimally is if you have cashflow. Because otherwise you might, when Kathy was saying it’s got to get temping to sell, if nothing’s happening and you’re not cash flowing, that very tempting to sell, but if you’re sitting there collecting cash on cash return, that’s better than anywhere else you could put your money. It’s pretty easy to sit on those properties because you’re like, I can’t do anything else better. I’m just going to keep doing it and treat it sort like an index fund, just kind of set it and forget it.

Kathy:My properties were cash flowing just fine, hard.

Dave:I

Kathy:Was just like, greedy. It’s hard. I want to do better somewhere else. And then boom, market takes

Dave:Off. That’s the hard part though, of being in this industry, right? It’s like you’re seeing what everyone else is doing, so you start thinking like, oh, maybe I should do that, should do that, but in reality, you should just not

Henry:Trust yourself. Exactly.

Kathy:Which brings me to another asset class, which is the short-term rentals that we just started during COVID because my goodness, what a boom. We just were like, Hey, let’s just see if this works. And they were rented nonstop. They were rented same day. I had to have house cleaners there between 11 and three every day. It was just constant. I’m like, wow, this is a cool business. And now it’s not. I don’t want to say it’s not, but it has slowed down dramatically. Dramatically.

Dave:Mine too.

Kathy:So that’s another one where I was sort of just dabbling. It was easy. Money just came in. Sometimes I think I just used old furniture. I had my daughter walked in and she goes, mom, this is ugly. No matter, you need to get nice stuff in here. We would just use garage sale stuff. So if you’re noticing that with your short-term rentals is no longer the time, again, just to be lazy about it, you have to be very, very good at it.

Dave:But yeah, so I think cashflow, these are good advice. The last thing I talked about this BP Con I said before, but I just think the other thing in a correction is to, we always say underwriting conservatively. I’m like underwriting scared. I’m like, no rent growth for two years. Why not? If it works like that, I’ll be happy no matter what happens. I’d rather do it that way than try and force something to work. So that’s my last piece of advice.

Henry:Yeah, no underwrite, scared is kind of a perfect way to put it. I just made an offer on a property, and so on paper the deal kind of made sense. They were asking 95,000 for a two bed, one bath that I could turn into a three bed, two bath, and then I could sell it for about 210 to two 20 after about what I was estimating about a $50,000 rehab. That’s a solid base hit of a deal, but I don’t want to underwrite for a base hit. Now I kind of want to underwrite for a grand slam and if get a base hit, that’s cool.

Speaker 4:So

Henry:I sent someone out there to look at the property. We kind of estimated the rehab at about 65,000 and I was like, you know what I mean? Unless I’m going to make 50 grand on this because it’s just a little bit further away than I want it to be. I don’t know that I want do it. And so I made my offer at around 55, which I knew wouldn’t get accepted. Could I make money at 85? I mean probably a little bit, but I don’t want to get myself into a position in this market where my back’s against the wall and if I don’t hurry up and sell it for the price that I thought I could sell it for, then I won’t make any money. I don’t want to make five grand and put in all that work and be stressed out. I want to underwrite it to make 50, and if I get that deal, cool, I’ll go make somewhere between 30 and 50 rather than underwrite it to make 30 and then be sweating bullets, hoping that I make 30 and then end up making five to 10 after a whole lot of stress.That’s just the market we’re in is different now. And so talking to the wholesaler who had the deal, I tried to explain that to him and he didn’t like my offer and that’s fine, and he was like, I can get somebody that’s going to come pay me 85 to 95. Great, go sell it to them for that. And so it’s tough because as an investor it’s hard to look at a deal and walk away and go, am I walking away from 30 grand? Yeah, maybe. But you also may be walking away from a $10,000 loss that if you don’t play your cards right. That’s

Speaker 4:Right.

Henry:I’m kind of underwriting to shoot for the moon and if I hit the stars, that’s great, and yeah, that could mean I’m walking away from some deals where I’m leaving 10, 20, 30 grand on the table, but that’s okay. That’s okay. In this market,

Kathy:Henry, it’s time to share. You can just share it with someone. Let someone else have that

Henry:Risk. Let someone else go take that risk. I also like sleeping at night when I buy deals. I don’t want to be super stressed out. Yeah, totally.

Dave:Alright, well that is great advice. Thank you guys so much. This was a lot of fun. I really appreciate it. To try and just make sense of what’s going on and show that experienced investors are still buying, they’re just thinking about ways that they’re adjusting their strategies, not being as aggressive. I think sort of going back to fundamentals and that’s okay. It was okay to be aggressive during the last couple of years. It made sense to be aggressive during the last couple of years. Now it makes sense to be a little bit more conservative in your underwriting, a little bit more conservative with strategies and really just sticking with things that you know are going to work and not speculating. I think that’s one of the main things, one of the main takeaways from this conversation that we’re seeing here and giving yourself optionality was another big one. Henry hit on that I think makes a lot of sense here. So Henry, Kathy, thank you guys so much for being here. Kathy, I know after a day of partying, this was a big ask for you, so we appreciate you rolling out of bed to get here.

Kathy:It was two nights ago. I’m okay. I’m okay now.

Dave:Okay, good. All right. And Henry, thanks for being here as always.

Henry:Thank you sir.

Dave:And thank you all so much for listening to this episode on the Market. I’m Dave Meyer. We’ll see you next time.