When interest rates go zero or negative, what do we do? In this episode, learn about the trend of the rates in real estate and what happens to it when interest rates go negative as Jason Bible and Robert Orfino talk about the previous economic recession, how it relates to real estate, and how it could possibly happen again. Diving into how the overflow of cash in the economy affects the real estate market and why there are no deals to be made, they also tackle how this could affect the small flippers and developers greatly but benefit the investors. Don’t miss out on this episode to discover the big bank’s strategies in terms of real estate and how this can be detrimental to the small scale people.
Listen to the podcast here:
Expo Wrap up, INSANE Market News
I don’t think Rob is enjoying the school’s back traffic all the way from Cypress which is okay. I keep telling him, “There are some great houses in Memorial and there are some in the Heights.” When I first became a real estate investor, I started going to the class as much as most of you all do. You’ll hear the, “Come out for the weekend seminar.” Here’s this big weekend seminar for $97 or maybe it’s a free one or you pay to be a member of some club. You’re sitting there in the room and you’re trying to figure real estate out.
My first thought was that even if this real estate investing thing doesn’t work out, figuring out how to get a big discount on my personal residence would be a huge win for me. I was like, “If being a landlord or a lender is not for me, at least I can figure out how to buy real estate inexpensively. When I go and buy my personal residence, I can pay less for it. If I go and buy a beach house, I can figure out how to pay less for it.” That was always the mode I was operating on for years. Even if I can’t figure this real estate thing out, maybe I could do it at least once or twice in a couple of years when I’m buying my own residence.
We are talking about the wrap up from the Quest Expo and all the crazy stuff that’s been going on as a result of the yield curve inversion and negative interest rates. If you are looking for additional information on any of this stuff, I’m posting multiple times a day in the Mr. Texas Real Estate group on Facebook. If you go to Facebook, type in Mr. Texas Real Estate and say, “Mr. Texas Real Estate – Jason Bible and Robert Orfino.” Ask to be a member of that group. When I get around to it, I’ll add you in there. If you want to jump in there, I will put short little comments. I’ll put a little blurb about the article like, “This is why I think this is important.” You can read it if you want instead of trying to sift through all the financial news. There’s an article that I posted that talks about the impact of quantitative easing and negative interest rates for real estate in Europe. I believe it was the UK or France. What they found is as soon as rates went to almost zero, real estate increases in price by 16%. If you think real estate is expensive, just wait.
We were listening to Bloomberg Radio. They had this high-powered bond expert and she said, “It is likely you will never see rates higher than 3% or 4%.” You will never see that above 3% for the rest of our lives. She said, “The best time to have bought all that stuff was in the middle of the crash because there were some 3% coupons out there. It’s not coming back ever.” When people tell you, “Interest rates have to rise.” No, they don’t. It could be free money forever.
What we’ve been talking about over and over is, “What does this mean to you?” It means that when money gets cheap, the price of real estate goes up. For us, as investors, our struggle is not going to be money. In the last crash, we couldn’t find the money. There were tons of deals but we couldn’t find money. We expect it to be the opposite. There’ll be tons of money and no deals. People will run to real estate as a safe haven and because it’s cheap. You’ll have cheap mortgages and people move back into that space.
I’ll give you a great example of this. My truck has almost 30,000 miles and it’s not even a year old yet. I spent a lot of time driving around the state and the city. I’ll tell you this, jump in your truck, go drive around even to what you would consider the worst parts of town and tell me how many of those apartment complexes have been renovating the last few years. For real estate investors, this is the next crisis. There’s nowhere to put the money. Here’s a natural law of investing. It’s a teeter-totter. There’s money and there are deals. They’re always in some back and forth. They’re rarely in equilibrium. We have a preponderance of money and a shortage of deals. That’s only going to get worse.
You’re all seeing it because there are a ton of hard money lenders coming out of the woodwork. They’re all over the place. “Have you heard of this guy? They’ll do 1.8%.” We’re getting introduced and invited to go speak to banks who are telling me 5% on apartment buildings, which is amazing. This money is being pushed out there because there’s a fear that if we leave it with the treasury in the market, it’s not going to grow as fast or it’s not as safe as real estate. When big banks start putting money on the street, that’s when we, little investors, get pushed out. It’s that simple. That happened in 2012 in Los Angeles. I saw it. Blackstone and Colony came in and bought over 6,000 houses. In the middle of a recession, it still hadn’t gotten better and they couldn’t find a deal. The money finally hit the streets in 2012 to 2013 and all that pent-up. It came running out there and they bought everything. We haven’t quite got an EMD up but we’ve got two competitive offers.
I saw another email. Your wife gave me a business card to email this guy. I’m like, “Those houses sound like they’re gone.”
We’re getting close. We would like an EMD checked. The California guy got a fund coming out scraping.
He’s scraping buildings because those are all contiguous lots. He’s going to build big beautiful homes next to our duplexes.
Three townhouses, maybe squeeze four in. One of the things was you could rehab the home, the cheaper way. The genius was rehab the home, so we’re getting it out and put $40,000 or $50,000 in. Because the lots are big enough, they built a garage with an apartment above it in the back. I was like, “That’s genius.” You could do that for about $30,000. You could be all in at $70,000 and still have your $1,200 or $1,400 two-unit on there.
Let’s say you’re in for $70,000 and we sell it for $150,000.
The $220,000 was a duplex in EaDo.
I’m going to call her Eastwood. That’s her nickname.
We’re going to call her Clint? I’ll call and tell her that. I’m like, “You’ve officially been on my to-do list here for a couple of weeks, so you get a nickname, Clint.” We have nicknames for everybody, the people that we work most and some that have something quirky about them.
That’s going to happen. It’ll be tough to find deals. In 2013, the economy is still rough and nobody can find a deal in Los Angeles because 6,000 were taken off the street.When money gets cheap, the price of real estate goes up. Click To Tweet
As big as LA, you’ve got to think about how many more rental properties are there. Condos, townhomes, apartments, and they’re all single-family homes. That’s a gigantic market.
There are 3.2 million residencies in Los Angeles County.
In Houston Texas, for those who are real estate investors and brand-new investors that are getting started like, “I’m not sure.” Do you want to get down to brass tacks? I’ll get down the bottom line. I’m sure at some time I’m going to speak at the Redneck Country Club. I love asking this question to an audience that size because I’m looking for the detractors. It’s like a wedding and somebody says, “Does anybody have anything to say on why this couple shouldn’t get married?”
Speak now or forever hold your peace.
I will get on stage and I’ll say this, “How many of you have been in real estate for over five years?” That will be a lot of people there. I’ll say, “How many of you wish you bought more houses?” Everybody’s hands go up. I’ll say, “Who wishes they didn’t buy houses five years ago?” Nobody raises their hands. None. Zero. I guarantee you it’s going to happen again. We have a guy who a follower. We think the guy is fantastic. I’m trying to get him to come in and do an interview. We’ll have to do it by mask thing so nobody knows who he is. It was amazing to talk about his portfolio. He had 100 plus properties before the crash and ended up losing them during the crash. I said, “What’s the challenge?” He said, “I’ve gone through the QuickBooks and all that. My cash burn as the market turned over.” It means, people he was getting out of the houses, he was releasing, he’s having a little bit of rehab and rents were going up.
Even in the worst recession ever, it was about eighteen months, even landlords were like, “I got a lot of portfolio churn evicting people out of their stuff.” He said, “If I had a little bit more cash to shoot over the last six months.” He said that his portfolios were $11 million. I said, “What about now?” He said, “$20 million.” The reason I’m telling you this is even during the crash, it’s not that bad ’08, ‘09 if you could shoot that gap. If you are a flipper or a developer, you’re going straight to bankruptcy. There’s no way around it.
The developer never believes. That’s the problem.
We decided at the last minute to take our office furniture for our reception area to the Quest Trust event and set up a living room in the middle of the conference. It was the best booth ever. I just couldn’t sit in those conference room chairs or the upright steel chairs.
It was a little steamy and hot in our area. There’s a lack of ventilation there.
I started thinking about what we’re going to do for the boot there. We had a good time with the Quest Trust event. I got to meet a lot of people. I sent an email out and I said, “It’s good to know that’s more than Rob and I’s parents that are watching the show.”
I don’t even think my dad does.
It was good to meet a lot of you. There’s a lot of investors and lenders that want to meet with us. If you are interested in partnering with us on Airbnb properties on our hotel and any of the other stuff that we got going on, let us know.
The hotel is hot, so we’re about ready from wrapping up the prospectus. We got to go through that. We got to sit down. You and I go through and tweak the language a little bit but we’re excited about that.
If you guys are interested in any of that, the number is 281-401-9008. If you want to dip your toe in real estate investing and put some money to work, send us a text message. We’ll put together a little meeting and have a conversation. You got to sit on a panel. When I walked into the room, there were 30 of you all in that panel.
It’s a big panel.
They are trying to get an entire stage worth of panel there. That’s what’s going on. I walked in I was like, “I didn’t know there were that many people doing Airbnb.”
There’s probably three of us and then the rest were not and maybe two were actively against it.
There were two haters. Why didn’t they want to do Airbnb?
It requires work.
That’s right. One of my favorite terms that people throw around is, “It shows up in the mailbox. It’s easy. It’s on the mailbox money.”
I don’t think any of our investors want to give us their money to work with or loan us their money because we’re lazy.
There are a couple of people that I heard and they’re like, “I’m lazy. I do this and the mailbox money. Can I borrow your $200 out of your IRA to go do this deal?” You look at me go, “No, you can’t. I don’t want late. I don’t want to give lazy people my money.”
I’m like, “I hustle so much for people.” I wish I could get to that mindset where I feel like it’s okay to take other people’s money and be lazy with it.
That doesn’t sound right.
It did not come off right. That’s not what we do. We worked our butts off to find good deals and help people out. The panel was fun and it was good. I’ve never had a long conversation with Michael Plaks. He’s an interesting guy and he was appreciative of what we do. He’s clearly a smart guy when it comes to taxes.
What makes Plaks unique is he’s a CPA here in Houston and active in the investor community. He sees a lot of people sign up for the real estate guru. They pull money out of their 401(k) or credit cards then it is the end of the year what is he supposed to do with it? It’s like, “What do you mean?” They spend all this money on “the business” and they never got started.
They didn’t even start an LLC. That’s the one who gets it.
There are all kinds of crazy stuff that the accountants and attorneys have. You had an interview with Jeff Watson. The CPA’s and the attorney see a lot of crazy stuff. It’s always fun to have those guys at your events because you can say, “They’re the people that see the end-product of all this real estate guruee education stuff.”
I didn’t want to go there because some revelations came to us and I was like, “I can’t believe that.” I did a little research and I’m like, “No, not good.” Maybe we’ll talk a little bit about that but it is important that you do your due diligence.
This is why we started that Private Lender Summit where it said, “Lenders, you all are doing stuff you shouldn’t be doing. Here’s how you need to protect your principle and protect yourself legally from borrowers.” The flip side is I’ve seen lenders do some wild stuff to borrowers because they’re not educated.
It bothers me that it’s greed when I hear people talking 12%, 13%, 15% or 18%. There’s a guy talking about 20% and 40% yields and I’m like, “Come on.” Not that I have a ton of investment dollars, but my dollars go to a hard money lender in New Jersey. It gives me 6.5% and I’m happy. I trust them and he’s got one of the smartest little deals that he does and that’s it. “Rob, here’s $45,000 or Roth, go grow it. Here you go, Robert. Thank you.”
If you want large rates of return, you have to work for it. We’re talking about the EaDo deal. We’re going to do well in that thing. We also spend a couple of hours a day doing real estate. It’s not a passive pursuit for us.
I talked to a lot of people there and they want to get into it. There isn’t a lot of new investors there. I’m trying to figure it all out and understand it. There are a lot of people looking for money in that crowd and there’s a big whiff of desperation as you walk by. It’s scary when you hear the names that you hear and you’re like, “I know that guy. I’ve heard that name over and over. That guy ran REIA club. Are you kidding me?” I understand from the other side because we’ve had some bad communication problems on our side. We’ve taken care of them. There’s a difference between being a bad communicator to your investors and fraud.
There’s some weird stuff going on out there.Investing is a teeter-totter. The money and the deals always go back and forth, but rarely in equilibrium. Click To Tweet
The event was fantastic.
When you get that many people in a room and everyone starts sharing stories, you’re like, “Did that happen?” This other guy goes, “That happened to you, too?” You’re like, “Jeez.”
The guy was there who runs the wholesale sweatshop.
Was he? Is this where you can come in and work for free?
No, you pay him how to coach and he takes a portion of your deal. He’s not the only one that does that business model.
Is this the guy that calls you and says, “Your house has been sold. Call me back.”
No, that’s someone else.
I was reading a bunch of articles and I went home turn on and get the music going. I’m sitting there reading through a bunch of financial articles. Let me explain a little bit about the world of finance, Wall Street, capital markets, mutual funds, and ETFs. Those entire worlds were built on a handful of financial modeling theory. Some of these guys that developed academics principally went on to win Nobel Prizes in Economics and Mathematics. A lot of it comes from Physics and Statistics. Also, your portfolio, if you’ve got somebody managing for you, was built on Math intended for something else. They overlaid it on Finance and Investing. There’s a handful of these theories out there. I’m reading this article here and it’s absolutely fantastic.
I’m going to read this one little paragraph and I’ll tell you what it means. “Much of the literacy and the modeling and finance over history assumes rates to be floored at zero. None of the founding fathers of Economics and Finance had to deal with this shape and form of the market economy. It follows that we cannot reach out easily and comfortably to work with Keen, Smith, Campbellton, and Friedman nor the pricing models of Cox-Ingersoll-Ross and Black-Scholes Hull for guidance. What’s the value in modeling the term structure of interest rates similar to portfolio management tools like Capital Asset Pricing Model, Modern Portfolio Theory, and Value at Risk Parity in a world of negative interest rates.” It means that all of these financial tools, all the models and all the guys that have Nobel Prize like the smartest people in the world in finance, all of their model’s breakdown at the zero-bound layer. It means that we have no idea what any of this stuff is worth when interest rates go negative.
That’s the old Jim Rohn line, “It used to be you lost it all.” You keep sailing right by zero.
We’ve got all these financial models. You’re meeting with your money manager guy, “We’re going to do this. We’re going to do that.” How does Modern Portfolio Theory deal with negative interest rates? There used to be something called the risk-free rate of return. It’s critical and a handful of these models where it says, “I can go buy treasuries at 2%. I’m going to get inflation-adjusted treasury tips for 1.5% to 3%. I know my assumption is, my floor is 3%. I start at a 3% return and it’s relatively risk-free.” The market calls it to the risk-free rate of return. We start there. How do I compare that to a share of Apple? How do I compare this treasury to a whole basket of different financial products including real estate? We’ve got this problem. If interest rates are negative, what is all this stuff worth? Do you see negative cap rates at some point? The cap rates get low, you’re buying zero caps to park the money.
It’s already happening in Southern California, Chicago, and New York City. They have negative cap rates. Remember, there are five ways to make money in real estate. You can wholesale, you can fix and flip, you can buy and hold, you can lend or you can go for the depreciation. If I have a lot of money somewhere else, I buy negative cap rates. I don’t care. My money is safe because I have an eighteen-unit in Los Angeles right across from UCLA that’s worth $7 million. These are tiny little beat-up apartments. Our stuff is better looking than that but it’s worth $7 million and I get the depreciation of $7 million.
They start running the IARC.
That absolutely happens. When we get Steven in here, he’ll explain that the market has been there for a long time because people have a lot of money and you talk about it. We named the international markets. LA, Seattle, New York City and Miami are international markets. You’ve got people bringing cash from a lot of different places and in the ‘70s in LA which boomed all that stuff on the west side was Persian money. There’s a lot of money that came out before the collapse of Iran that grant at Los Angeles and bought a lot of townhouses and big homes. There’s been an exodus of Chinese money and Russian money. There are always these international markets that drive down those cap rates because people don’t want to lose it. Even if I lose a little bit and if Donald Trump gives me a break on my taxes into the form of depreciation, I’ll do that investment.
Where we’re seeing a lot of this is obviously in China. You’ve got these wealthy Chinese that are looking around going, “Things aren’t working out that well.”
Because they’re 8% was never real anyway. If I can get that money out of China and if I put it in American real estate, it is real.
Where can I pick American real estate? A lot of my friends are investing in Texas. There are a lot of Chinese money here in Texas. There are a couple of brokers I follow on Facebook. Their posts are private. You’ve got to be friends with them. One of them keeps talking about his Chinese clients and he’s like, “They are figuratively flying over here with suitcases of money and setting up manufacturing facilities here and warehousing operations.” Where is all that money going to go? It’s going to come right to Texas.
The first that comes to the United States, democracy, safe as it can be with opportunity and capitalism, not socialism. You can look at Canada when it comes there and then we look around and say, “Where’s the best place for us to deploy our money once were in the United States?” All of a sudden, Texas becomes a big target.
Because they look at California, they go, “Negative or zero. Why don’t I go buy $7 million to $10 million?”
They live in California.
They live there and invest here. Since I got back from Utah, I’m like, “I don’t know.” I don’t mind June or July. It’s the tail end of July through the first two weeks of September. The humidity and the heat are awful. Which is cool because I’m going to Austin. I have to enjoy the Hill Country there and have a little barbecue. It would be a lot of fun.
Six-hour lunch and a winery out there.
That’s only when you take your SEC attorney. Did she sent an invoice for the billable hours? This is the most expensive lunch I’ve been to in a while. When you look at negative caps and zero caps in California, that’s going to come to Texas. It’s going to happen.
It hit Dallas first.
I know, Dallas first.
The more I live in Texas, the more I realize that I have something some conservative streaks in me. I always believed in 7%. I always thought 7% was a good number. The rule of seven. I thought, “That’s a good number.” If I can get 7% on my investments, I’m happy. That’s why I’ll give it to Glenn and let it keep rolling. What happens is because people are going to be pulling their money out of the stock market and treasuries will be so low, there’s a competition for those private dollars which we saw all throughout that expo. Everyone had a fund. There was a guy who opened a suitcase up and had all his materials. He’s walking around with a fund in his suitcase. He opened it up and has little pop-ups and his tablecloth. I was like, “If that was made out of a carpet, that would be the absolutely perfect device to carry your material here, too.”
What happens is there’s going to be competitiveness. What happens when overall the world has lower interest rates and people still believe they should be getting 12% or 15% on their money? That’s risk. That 12% becomes risky. If I can get 7% doubled in ten years, I’m okay. Plus, I keep funding and go a little bit faster maybe 7.2 years. I’m happy with that. The people out there who are looking for 12%, 15% or 18%. “I know this guy, if I give him $30,000 into escrow, he gives me 26% back.” That all sounds absolutely crazy to me. What happens in this market place is people are running around looking for this Golden Goose who’s 12%. We have met with banks and the number they keep saying to us is 5% to 6%. We’re meeting with banks saying, “We’ll do construction.” I’m like, “I’ve got a bank does 5.5% to 6%. Why are you coming to my office and telling me I got to pay you 12% in three-points?” I’ve been vetted by this bank. I got my check-up with them.
They know everything.
They’ve stripped me down naked.
That’s why I tell people don’t dress up for banker meetings.
You’re going to be dropping your drawers.
It’s not going to be a flattering experience. No reason to get all dressed up for that.
The good thing about those expos are the people on stage who are sharing wisdom. That above all is why you would go. It’s the wisdom that is shared. There are some clever ways to protect yourself and to take advantage of every legal way to avoid taxes. In this market place, capital is losing its value.
That’s important. Capital is losing its value daily. I don’t think people understand because these rates are getting low, your money is being depreciated away. That is not an economically correct term but it’s the best way to describe it. You’ll hear them say, “Losing buying power.” Your money is worth less every single day. You spent 25 years working your butt off for you and your wife saving, driving the old crappy cars, and not going on in cool vacations every year. It is slowly rotting.The good thing about expos are the people on stage who are sharing wisdom. That, above all, is why you go - for the wisdom that is shared. Click To Tweet
The guy who had the most powerful booth there was the guy who had the non-recourse loans because you can take things in control. You can get an honorary recourse loan. You can get a mortgage in your Roth or your 401(k) then you go talk to the guys at the Quest and explain, “I’m not a professional.” In that way, you can go ahead and pick your targets versus some of the stuff that you put your money into an asset that’s going to appreciate for 6% or 7% a year over the next five years. You feel good about that.
Let’s go back to this little nuance because I hear this all the time. It’s people lying with math. They’ll say, “You’ll get a 40% return.” I’m like, “Over what time period?” It’s 4% a year. Let’s agree on the independent variable.
Yield or return?
That’s right. You get these, “You make 25% in five years.” I’m like, “It’s 5% a year.” They look at you like you pulled some, “How’d you do that? What kind of magic do you use it?” I’m like, “Who told you? Have you been talking to my attorney?” That’s why I have a hard time sometimes going to all those booths. I like talking to hard money lender guys. When I start talking to some of these fun people, I’m like, “Oh my gosh.”
There’s always a risk everywhere. That’s a big thing and there are things that I don’t know. When I had a conversation about notes like, “You should be doing notes.” I don’t know anything about notes. I don’t understand that you have a piece of paper that has attached to a property but you never seen the property. How do you know that the property’s worth the piece of paper?
The notes you buy, there are some in Illinois, Florida, and New Jersey. You’re like, “How I don’t live in any of those places.”
I just happened to be visiting and I got a call from someone in California said, “My friend from Texas is in New Jersey looking at a property. He’s a little nervous that he bought this note and it may not be worth it. Would you come down and take a look?” I drive down there and I’m like, “Would you pay for this?” He’s like, “I paid $70,000.” I’m like, “You paid about $60,000 too much.” He’s like, “I’m going to go ahead and sell this,” I’m like, “What?”
I’ll sell this with some other known investors because they know what they’re doing.
That terrified me. I’m like, “I’m not doing those. I’m going to have to go three years of education before I figure that out.”
Here’s my little sound bite on notes. When someone says, “I’m a real estate investor, I’m getting in the note business.” No, you’re not a real estate investor. You are in the derivatives market and they go, “What does that mean?” The mortgage derives its value from the borrower and the asset. You are now a derivatives trader and they look at you like, “I don’t even know what that means.” I said, “Exactly, so it’s not real estate investing.” Until you take that property back, it’s not real estate investing. In three years, I’ll tell you the way you and I would do notes would be different than how 99% of people out there do notes. We buy the packages and then sell off the assets and notes we didn’t want. The next group will do it $10 million at a time and that’s how I do notes. I wouldn’t do notes the way we’re buying six, we’re going to do workouts, some are foreclosures and some are deed-in-lieu. I’m like, “I don’t want to do any of that stuff.” Learn all the taking people to foreclosure, learn all the real estate laws in each one of these states.
No, I don’t want to do that.
I got a servicing company, contact the borrower, but I can’t contact the borrower. It’s all crazy stuff and it’s hard. The way I do it is I wholesale notes and then the ones I want which most note buyers don’t buy are non-owner-occupied notes. Those are the best ones because that’s what we buy Airbnb’s around Florida. That’s how you do that.
I get this, “I listened to you and Jason on the radio. Do you know what you should do?” No. I don’t want to know what I should do. I’m still trying to figure out what I’m doing.
I flipped six houses and you’ll be on your show. I’m like, “No. We don’t need that here.” When I was at the University of Texas, we built an apartment complex and I was involved in a life safety side but it was all the biomedical research stuff. I’m trying to remember if we’re out a foot. I’m looking at this class-A deal and I want to say new construction for class-A when they built it few years ago was 275,000 a unit. I don’t know how big the units are. I have to go back and look.
Over three stories?
It’s a tower.
You have 250,000 right there.
They said the current construction and land costs almost $400,000 a unit which is amazing when you think about it. I was running some numbers. The cost of construction and land close to your central business districts in any of the major markets in Texas have doubled in little over years. San Antonio is a little different. When you look at the cost of construction, I’m like, “People are going to figure out if they have some already have.” Investors are starting to figure out. If I can buy nearly brand-new construction, let’s say it’s less than five years old, for 10% to 20% discount to new construction, it’s hard not to make money. The replacement cost alone makes it such that your competitors, even if they’re an all-cash, have got to be less expensive. Their rates have to be lower than yours because your basis is lower. It’s going to get to a point where maybe it is a three-cap on a Class-B. That’s ten years old, but it’s been renovated. I could see that happening because what are you going to replace it with? The buildings are getting expensive to build and the lands are not getting any cheaper.
The money’s cheap. What will happen is you’ll go into recession because of the cost of money and will come out of it with a real estate boom.
There is a real estate boom. The real estate crisis is not a crash and I heard people say it. I had a couple of guys come by our booth and they’re like, “I’m waiting for the crash” The guys that read our blog, Don was hilarious. We sat back down. He’s like, “Jason, you’re totally right. I’ve been looking at all this data. I have been talking to all these guys.” He’s like, “You are absolutely right. There’s about to be a housing affordability problem stuff. It’s expensive.” I looked at some numbers from 2002 to date. Houston’s appreciating at 4% over twenty years including a crash in the middle of that. It’s 4% a year and then it broke it down by neighborhoods. Do you know what the fourth neighborhood was? Most appreciation was Bear Creek which shouldn’t be a surprise to anybody. Oak Forest Heights and all that but that over there was generalized. Thanks for reading. We’ll be back on the next show.