The Good Stewards Real Estate Podcast

Background and Power of Buy & Hold with Students: 2:20: Bill stumbled into student rentals at the age of 35 and came across a house across the street from the University of Oregon where he could turn a 3-bedroom house into a 5-bedroom house. 5:30: That first house Bill bought was $80,000 and over 30 years has put $175,000 into it and it's now worth $950,000, cash flowing $6000-$7000 a month. That's the power of real estate investing. 8:39: Student rentals require a different mindset than traditional market stuff. There's way more turnover in a shortened period of time. Managing Student Rentals: 10:20: By January, we're asking students to sign a new lease and make sure they know they're moving out. We then hit the ground running in February getting those houses rented for the following school year. 13:40: The bedrooms are usually kept nice, but the common areas are destroyed. 15:30: We rent the entire property, not rent by the room but like to set up a “house manager” in our houses to be our go to point of contact. 17:20: We start our rehabs and turns the moment school is out, but over the last 10 years have staggered the move out dates. We know cleaning, painting, carpet, etc. all have to be prescheduled. Strategizing Student Rentals: 19:20: Hone your efficiency in general. Every single day lost is the day of a rent lost. 21:30: We're always upgrading a little bit so we can keep up with the changing market. 24:40: You don't have to be across the street to start investing in student rentals. There's different circles around the campus that still make it accessible by walking, biking and driving. 27:16: You can do student rentals in different markets, but we think it's geared more for a college town. Follow the Path of Progress: 30:11: Subscribe to your local business journal to keep a pulse on the early conversations or commercial investments in areas that could gentrify. How To Succeed With Student Rentals: 31:50: Be careful if your only option is renting to students. You need multiple exit strategies. 33:17: One of the most important things with buying student rentals, you need to be sure the timeline lines up to where you can rent it out for the upcoming school year. 35:01: Make sure you're marketing to students. Dorm mailers, Facebook ads, ads in the student news paper, using an online program endorsed by a university, etc. 35:00: Bottom line, if you want to treat this as a business, you have to have access to where all of the business has done. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Position of Leverage in Negotiation: 1:54: Life is negotiation, and the better you are at negotiating, the better you will be at life. 4:25: It's okay to ask for what you want in a respectful way. 6:15: We always need to be willing to walk away. The person most willing to walk away is usually the one who'll get the better end into the deal. Motive for Negotiating: 8:15: when you make a seller an offer and they hit you with a “Let me think about it”, in their mind, they have their house in your money. 10:48: What is the key to finding out what is motivating a seller in particular? 13:40: For sellers, it's often more about the freedom or the flexibility in quickly getting out of the house or apartment. 16:20: In Ryan's typical negotiation, he'll come up $1,000 or $2,000 for every $10,000 - $20,000 - $30,000, the seller is coming down. 18:35: You don't want to be negotiating with yourself. If the sellers don't counter, then we can't really see where we're at from a negotiating standpoint and that's not going to end well. Anchoring For Leverage: 21:13: Anchoring is a psychological concept where you can use a numerical or qualitative “anchor” to position yourself at the start of negotiation. 23:26: Every seller underestimates actual rehab costs. Leverage that as another critical anchor point since you know the actual rehab costs. 25:13: Use your phone, pull up the retail costs for a new roof. Your guys can likely do it cheaper, but you can leverage that better cost. Weakness In Negotiation: 29:55: Confrontation is hard, but you need to push one step further. If they say no, ask “well what could you do?” This keeps dialogue open. 31:48: Don't get wrapped up in the story where you end up overpaying. It's happened to all of us. 33:45: The best skill you can have in this part of business is empathy. Being able to put yourself in someone else's life situation to be able to identify their point of view. Books Mentioned: 16:14: Never Split the Difference by Chris Voss Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Finding Any Dirt: 1:36: It's worse to have an apartment full of tenants who aren't paying anything and are causing all sorts of problems and have an apartment full of...no one. 2:50: You want to make sure of what they reported to the IRS. If anything seems off there, it probably is. 5:10: You should never rely on a proforma, which is just an estimate and they will always be in the seller's favor. 6:33: Schedule E's are part of the 1040 IRS form which is where income or loss from rentals, royalties, S-Corps, partnerships, estates, trusts, etc. is reported. Basically not “earned income” but investment income only. 8:32: You want to see their list of capital expenses for at least the last year for two reasons. (1) you need to see how much they're spending and (2) you need to see whether they're correctly capitalizing things. 10:43: Pay attention to utility costs. What tenants would pay and what the landlord would pay. Contracts & Analyzing Property Actuals: 13:11: Write up 30-30-30 contracts that are in your favor. 30 until the contract is hard, 30 to line up financing and 30 days extra for something that might come up. 16:23: You want to look at the rent roll and get copies of all the leases. Look for rent price, deposit amount, late fees, when the late fee is charged, pets, etc. 19:28: Talking with the property manager is always a good point of contact. 20:50: Ryan has seen a lot of landlords spend their security deposits, so make sure to pull those out from proceeds . Inspections & Holding Your Emotions: 24:30: You don't need an inspector to walk through every unit, but maybe 1 for each building. 26:50: Get a 3rd-Party inspection to go over key systems and the units the sellers don't want you to see. 30:21: If there are red flags, regardless of how much work you've put into it, let the property go. The “Well I just spent X money” is going to keep going. 32:12: Include a letter of intent (LOI) before the contract so you clearly dictate what you're anticipating. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Property Tax Discussion: 3:07: Property tax is one of the taxes we can help try and control on our own. 4:58: Property tax bills are a matter of public record, for most states. Review the records, determine how they're calculated and evaluate to see if it seems reasonable or if you should challenge it. 8:15: In Indiana there are homestead tax breaks. So you would pay 1% of the assessed value, but if you're an investor, you pay 2%. Alot of investors don't often factor in situations like that--know your laws. 10:55: The easiest time to appeal your property taxes is when you purchase it. Surprise Tax Hikes: 12:11: In Kansas City the county screwed up one year and our property taxes saw an average increase of 70%. So we got very familiar with the county office and challenged just about every property we had. 15:12: In all, property taxes only went up by 20% in Kansas City. This worked out because Stewardship Properties has a system in place ready to monitor it. 20:14: Call up your local county or government office and ask questions. You're going to get some great information. 22:23: Make sure you're getting all the exemptions you qualify for. Facing and Understanding The County: 25:00: Sometimes you won't be successful in lowering your property taxes. 27:10: Texas doesn't have any sales tax, but they're pretty greedy with their property tax. Seemingly every year, the county tries to double property taxes. 28:33: If you're wanting to invest out of state, talk to people who have owned for 5-10 years to get an idea of the property tax environment. Disputing: 29:55: The best thing to have when you go to dispute property taxes is your purchase documents. . 32:27: After all the appeals Andrew has done, he's never seen the committee go above the original property taxes. 33:45: It's great to get used to dealing with local government so you learn the ins and outs of how they can best serve you. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Agent VS Non-Agent: 2:01: Ryan is the only one of the Good Stewards who's licensed, but Amanda has considered it. 4:00: Be careful of the trap of becoming an agent and getting commissions as kind of your source of income--commissions are quick short-term money. 6:45: If you are going “direct to seller” as a real estate agent, you have to tell any person you talk to that you are a realtor. 9:10: Being an agent is one of the very best ways to get into real estate investment. Property management is another good way. 11:01: In Oregon and Kansas City, they've built up a lot of great relationships with agents that bring us short sales, distressed property situations or other deals  that aren't going to work well on a market. They interim give us comps. Zillow Is Usually Off: 13:05: The MLS has the best data because they fine agents who don't upload correct information. Zillow on the other hand may utilize some of the MLS data, but they're largely using information from 3rd parties. 14:20: Zillow claims to be within 2% of the actual sales prices. But in our experience it's usually been 10% in either direction. One went as high as being 32% off. MLS Tools: 17:00: Ryan's favorite tool is utilizing the saved search function. Set a search for specific property types, listing expirations, etc and let the MLS basically prospect for you. 19:00: There's really just two ways to get deals on the MLS. Be the first to make an offer or look at data points, going back in time and making “offensive” offers. 22:09: The best strategy for newbie's on the MLS is setting a particular farm area, property type and then look for what listings have expired over the last 2 years. The best thing is that these properties have since appreciated and you can use that as leverage to get the deal. 24:20: The best feature of PropStream is the equity filter--Ryan uses it all the time. Larger Complexes and Commercial: 25:50: These types of properties are usually acquired through relationships. You can utilize the MLS to identify who the players of those deals are. See if there's one agent that usually gets those contracts. 27:10: You want to be the guy who's everyone's go-to in your market and get in on their pocket listings. If they know you'll close, you'll reap the benefits. Not Having Direct MLS Access: 29:17: In Eugene, OR, it's pretty easy to determine comps since the market is so small. 31:43: The Eugene team has even leveraged one of their broker relationships to mail letters in their name. He doesn't do much work, but he's someone we can bounce ideas off of on what it would take to get the property to top shape for a retail buyer. 35:00: Bottom line, if you want to treat this as a business, you have to have access to where all of the business has done. Tools Mentioned: 23:15: Skip Genie -- unlimited manual searches for skip tracing. 23:58: PropStream -- “The poor man's MLS.” Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Wealth By Buy and Hold Is Slow: 4:20: This is a get rich slow thing, but not too slow. 4:50: You can flip or wholesale to get to buy and hold. 6:17: Look at your portfolio's needs when determining what to do with a property. Can you take on a project or do you need the liquid cash? Considerations for a Buy/Hold Strategy: 10:24: Andrew's goal is to keep everything as long as it's not too expensive to cashflow. 12:30: You have to have diversity in your portfolio, A to C minus class. That's one of Ryan's mistakes when he started out. 14:48: Niche, group home story in the expensive Portland market. 17:10: AirBnb can work, but be careful. 20:22: Anything that helps you build up your cash flow is what it's all about. 22:17: If you are in a more expensive area, don't give up. Think outside the box and ask yourself if you're really committed to this buy and hold model. Survive Till You Thrive in Buy and Hold: 26:13: Analyze your deals up front to determine if you're doing a cash out refinance or if you're into the property for 75% ARV on a mortgage. Does it still cashflow? You've got to make sure it's paying for itself. 28:50: Ryan looks at his buy and hold portfolio as a really cool 401k. But on the transactional side from wholesaling, wholetailing and flipping is the “now money”. 30:45: Where you make your, your good, large chunks of money is in the appreciation. In the debt pay down in the depreciation, the tax benefits, and then occasionally you get a really nice cash out refi check. 31:38: Real estate's always generally tight when you're using the BRRRR strategy. People expect just tons and tons of cash flow when you have debt on the property, especially early on, are just kidding themselves. Treat it with patience. 34:52: What thriving in Buy and Hold looks like. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

What's Going On With Commercial: 2:30: COVID has exposed people that have been leveraged with a lot of debt and highlighted the ones that are well capitalized and able to make it through. 4:51: There's going to be a lot of vacancy if it hasn't already from an office standpoint. From a retail perspective, COVID has opened up a tremendous amount of opportunity for people that want to get into the restaurant business. 8:45: Anything with a high labor model, like a restaurant, is going to take a while to come back from. But the low labor model like carwashes and gas stations remained open and will still trade in higher multiples. 10:14: Ryan wonders if we'll see people spending more on their homes since the work from home model is more widely acceptable and they're not commuting as much.  12:00: With the hard hit areas with expensive rent (the Bay Area), they're having to hold out longer now. Millennials aren't patient, so it will be interesting to watch those markets.  Who's Buying and Selling: 14:20: Thomas act's as an acquisition and dispositions manager for buyers and sellers. He's usually flipping these to private equity groups, institutional buyers and individual one-off buyer's or sellers. 16:30: A lot of commercial investors are one block away from success in commercial real estate. Specifically with car washes, traffic counts, accessibility and site visibility is crucial. Due Diligence for Commercial: 18:20: in residential real estate, sometimes you can cross the street and you're in a bad area, then you just subtract 5%, 10%. With commercial, that could be 50%. 21:51: The gas and carwash business is so fragmented compared to restaurant retail. You'll find a lot of mom and pop style operations as well as the institutional-types. 24:45: If you're wanting to start out, don't start with a new build. There's alot of hurdles with that. I'd recommend letting a tenant drive the acquisition. 28:00: A lot of the best commercial opportunities that you can flip or assign a contract to, are not going to be on CoStar, LoopNet or on the MLS. They're going to be something that you drive by and see that they just closed. Tools Of The Trade: 30:00: CREXI, commercial real estate exchange is a great resource to find comps. 30:54: ESRI-STDB, ESRI site to do business is great for finding demographics and traffic counts. 32:00: Land Vision is a great resource to give you all property details including the owner information. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Adding Value to a Property: 2:30: every time you look at a property in your mind should be, “How can I add value to this property, this situation?” And sometimes you're adding value by rectifying a problem. 4:40: Different people respond to different things. Perhaps try a direct mail campaign directly from the realtor? 6:00: It's a good idea to go out and take a look at what the new builders are doing and see what you can add to your properties that people want. 9:10: We pay Sherman Williams $150 to advise us on the colors and trends anytime we flip a house to a retail buyer.  Selling to Retail Buyers: 13:00: One thing that's really cool about older properties and why they are so desirable for flips is especially in the pacific northwest is that they tend to be on bigger lots while new construction is crammed together. 15:40: The longer you hold a property you intend to sell to a retail buyer, the more expensive it is. There's a lot for a limited payout. Get contractors there quick and limit your holding costs. 18:53: For something that's being wholetailed, Ryan looks for little to no work required, builder grade or something that needs a major systems update like a roof. Maximizing Value Add: 20:30: The most obvious form of value add is to see if you can easily go from a 2-bedroom to a 3-bedroom.   21:45: With basements, we don't usually finish them unless it's a walkout. Egress windows are incredibly expensive. 23:18: Always ask if a garage conversion is permitted. If it's not, you've got to take it out. 25:17: The way people live changes, it's cyclical. ADUs, Title Companies, Narrowing Focus: 26:10: Cites are particular with ADU's and we get around it by renting out the entire property and leaving it up to the renters to decide what they do with the additional unit. 30:19: If a title company ever tells you that there's a glitch, you need to pay very close attention to what that glitch is. 32:00: We're really talking about rentability here, by adding value and making sure you're meeting the market demand, you're going to be able to rent to quality tenants. 34:45: As Stephen Covey would say, begin with the end in mind. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Starting Out: 2:00: Starting out, you're the one doing everything. Marketing, meeting with sellers, analyzing deals, etc. It's easy to get stuck in that phase. 4:45: How comfortable are you going to be IF you're not doing everything? 6:44: It's a lot easier to delegate things if you have a process and system of monitoring the results. 10:00: At a certain point you have to ask yourself if you're the bottleneck? Does everything have to run through you? If so, you need to put yourself in a position to leverage others expertise.  The Critical Hires: 13:55: We're really focused on one kind of person we want, an acquisition's specialist. Someone who can leverage our time and efforts to find great deals. 17:40: I would expect a bare minimum when you're starting out. You need to be able to guarantee somebody about $2,000 a month minimum. 20:00: you just want to make sure that your people are incentivized in the same way that you are. 23:15: With a disposition hire, they need to be good on the phone and with investor-centric relationships. Their job is to phrase deals in a way where it's attractive. 27:17: When Ryan started, he had a buyer's made up of two people. You don't have to have a huge list to get started. 29:00: For admin hires, they need to be able to pay attention to the details and make sure all the pieces are in place.  General Principles: 33:14: The right people on your team are people that you want to make feel good about working for you.   36:43: If you're having success and you're growing, you also want to be cognizant that you don't hire too many people too fast, too quickly. Connect with the Good Stewards:Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

What's Keeping Us Moving In This Market: 2:30: We saw the upward pressure in the market. Homeowners pulled their properties off the market, which has kept inventory low. 5:10: Conventional wisdom is to pull back off the market, but Ryan's team nor the Eugene team hasn't scaled back their business. 7:15: Buying at the best of your ability is Stewardship's form of dollar-cost averaging. 9:00: The margin of safety is a very important indicator of the soundness of a business.  11:05: We talk all the time about being able to get deals at price points that make sense for you. Why stop if they still make sense for you? 12:00: People are perpetually sitting on the sideline making sure they don't catch a falling knife. 14:30: Amanda has a different perspective, it may not make sense for you to start out your investing career right now. Everything moved so fast and in our case, economies of scale are working in our favor. 17:00: Every investor should have at all times multiple exit strategies and contingency plans. Government Regulation Has Increased: 21:00: Real estate investing kind of mirrors business, and you want to be in a market that is pro-business. Educate yourself on the local laws and regulations. 23:30: Anytime there is more government regulation, there are usually unintended consequences. What Banks Are Doing--Student Rentals?: 24:26: The one thing that helped Stewardship through 2007, 2008, 2009 was keeping a pulse on the market of financing for buyers. At this point, it hasn't really dried up, but it could. 27:50: Focus on expanding the number of banking relationships whenever you can. 30:30: One of Stewardship's four bankers said that they're watching the Universities closely and probably won't refinance our student rentals. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Terms May Shift, Build Your Banking Relationships: 4:18: Market shifts have moved rapidly in the last few weeks and banks may change their minds based on the information of today. This is whyThe way to approach your issue is to understand that it's going to happen. Now you understand why it is so important to build and then nourish your banking relationships. 6:30: Every bank is different in the same way that every investor, every agent, every property, every seller is different. Other banks are still lending. Due Diligence During COVID-19: 8:00: Always go through every single unit in an apartment complex. In the event of COVID, these procedures have changed, so make sure you have a clause in your contract to extend closing if you're unable to complete your due diligence.   11:30: If you were considering or in the process of purchasing pre-Covid, don't close post-Covid without additional due diligence. Ask yourself, “What if the residents in there no longer have jobs?” 13:41: Renegotiate the price and retrade only if you need to. 15:10: Negative cash flow is a losing proposition because there is no guarantee of appreciation. Especially iIn this market because of Covid-19 since there is possibly a guarantee of depreciation. You better be confident that the area is going to appreciate. 17:30: If it isn't cash flowing, can you fix it? Reduce utilities, add a bathroom and increase rent, etc. 20:28: When a market crash happens, having cash reserves (1) makes you antifragile and (2) gives you the ability to jump onto future opportunities in a down market.  24:21 Never see your equity as cash reserves. Equity protects you from going down, but having cash reserves is what makes you antifragile. Will Coronavirus Kill BRRRR?: 27:16: Remember that the market was already tight in a lot of markets going into COVID. We're watching for what will happen to the supply of foreclosures once the courts open back up and start processing them again. Will that increase supply? Will demand change? This is what affects home prices. 29:05: Bottom line is we don't know. There were already signs of an impending recession to begin with last year. Home values were hurt the worst last recession and will probably not be hurt the worst in the next one. 31:00: The general rule of thumb is when you're buying on the upslope, you want to be aggressive. When you're buying at the peak, you want to be careful. When you're buying on the trough and upslope, you want to be super aggressive. Books mentioned: Antifragile, by Nassim Taleb Connect with the Good Stewards:Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

COVID-19 And Your Strategy: 2:00: Things change, and you may need to change at this time. There's a common saying, the only constant is change. 3:30: You might be in Seattle, or a market similar where they've recently extended the eviction ban by 6 months after the stay-at-home order has lifted. You should contact your lender on the properties that you're having difficulty collecting rent, they likely will be pretty understanding if they're local. 7:22: The general rule of thumb is you want to focus, you want to stay focused on your niche, master that niche and be a master of one trade and not a jack of all. Developing Your Strategy: 10:54: It's critical to have your business built on a firm foundation and your strategy should guide you. Not to say that you can't add additional strategies, just shoot bullets, not cannonballs as Jim Collins would say.   15:20: When developing the strategy at the beginning, it will be something that you have to build and work towards and create as you go along. General business mindset in general, nothing is ever complete, you're always working towards something. When Opportunities Arise: 17:34: Say COVID is really impacting you right now, you still don't want to radically change things. Do your due diligence and execute with excellence as best you can. 20:50: After you've niched way down, you're now an expert and can start to niche up. We've got a solid financial base after 31 years.  24:47: Ryan found a 12-plex that looked to be a great opportunity, but ended up being his most expensive lesson he's made. Always verify deposits. 27:45: Buying other people's problem is not Amanda's favorite 29:40: Part of your strategy is really building up to it. And then part of it is making sure you're in the position to cover all the bases. When Things Go Bad, Which They Will: 32:10: Even if things do go bad, knowing your exit strategy is less stressful when you have options. 35:00: Ryan looks at it, kind of like a race car. Things are going to run great, then something explodes and then you rebuild that piece. You're going to get further down the track, you're going to get faster, but something else is going to break. If You're Starting The Process: 36:44: Realize it's a process and there's a lot of trial and error. At the same time, be conscious of who you're taking advice from and that they're people who are where you want to be. Books mentioned: Good to Great, by Jim Collins Connect with the Good Stewards:Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Why We've Sold In Indianapolis: 2:50: We bought a vinyl village era property a year and half a go that never was an issue renting out, but we felt that it would be good to elevate our cash position given the time of  uncertainty. 4:56: Our net profit was $42,000-45,000 which can cover a lot of residents who decide to stop paying rent. 6:12: This is a great example of solid preplanning. I've been a motivated seller before and that's a bad place to be. 9:00: If you're plan is to manage a large portfolio, your time counts for something. You can only manage so much and your growth is going to be limited if you hold on to it. Why We've Sold in Springfield, OR: 11:19: We got a bit better than vinyl village property under contract last week. Bottom line, it's hard to cashflow in the west coast. We think this is a good flip candidate at a purchase price of $200,000 and reno budget of $20,000.  13:45: The good news for the Eugene area is that the university of oregon is planning to reopen for the fall semester, though is expecting about 15% less students. The 38-Unit Development Property in Portland: 17:00: We bought a piece of land 2 years ago and planned a 38-unit development. But we've done everything wrong on this project. It's hard to figure out how to manage a property when the city requires a certain number of units dedicated to affordable housing. 19:57: We didn't do our due diligence on this one as we might end up with millions of our own locked into this deal. But we're pivoting this project to be affordable housing and if it still doesn't work out, we'll sell it. 21:49: sometimes you sell a property to pull in liquidity. Sometimes you may have to sell one to stop the bleeding. 23:50: Buy and hold is multi-faceted with segments of business dedicated to acquisitions, overseeing rehab, property management, and then lending. It takes a very rare and special person to be good at all those areas, most aren't and it takes years to master. $2k Profit Flip in Kansas City: 29:00: Making smaller mistakes is always better, and even the larger mistakes we've still been able to keep. 30:22: We blew through the reno budget because of dry rot issues. We had originally planned to BRRRR this property, but we just had too much cash in the project at that point to make it a good buy and hold. So we listed it. 32:24: We didn't have to sell that property, but we were kind of trying to hold ourselves to a different standard. 33:32: When you get a bigger portfolio, keeping your cash reserves strong and your liquidity strong so you can stomach a rainy day and jump at opportunities. BRRRR is all about an accumulation of decisions for your business. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

State of Business Discussion: 1:45: we got a deal under contract on Monday, had it assigned by Tuesday. Um. Wholesale deals are still closing. 3:24: I think we've closed since COVID three properties. We've closed a couple of refinances that were in process. We've started refinances, um, during this process. 4:55: I have heard from various investors that, uh, banks are getting tight with LTVs and lines of credit. 8:10: I read an article on a study of rent paid in April saying that 35% of people didn't pay their rent. And then if you read in their article. When they did the study the previous year, it was like 25% of people were late, so really there was a 10% dip based on their data. 11:00: Ryan's team has 17,000 pieces of mail going out in May, while many investors are holding back and expects that to translate into eight or nine deals. With values, our team dropped down to 70% of ARV initially, but first-time home buyer inventory hasn't changed, so we're back at 75%. 15:45: Of the people that couldn't pay, our group has had communication with about 80 to 90% of them. They've been really proactive about communicating their circumstances Is Airbnb an Opportunity?: 20:20: Most people who bought Airbnb properties overpaid, over remodeled and over furnished. That's why those investors are in so much trouble as the only way they were cash flowing or breaking even was off of that premium. 23:05: really good thing to just keep in mind of building your business on the back of an industry that you don't control or on the back of another company that's susceptible to issues or changes. 24:45: I would say if you're going to get into Airbnb. Maybe you have properties that you can rent out conventionally and maybe you choose to Airbnb them, but you know, you can drop back to that. What We're Doing Now: 27:00: The best time to start buying is right before you hit the trough. That way you've got a little bit of lead up, but you don't want to buy right at the beginning of the down point, so Kansas City isn't buying too much just yet. 28:20: every legit buy and hold investor I know has overextended themselves then started to struggle with property management or construction 29:30: It took 10 to 15 years to get property management like into a well oiled machine in Oregon. 33:00: You as a business owner have to always kind of be in the driver's seat of your feelings and your emotions, especially kind of on the logical side. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Market Discussion: 4:15: in terms of unemployment insurance, all rollouts are simply overwhelmed with the volume. 6:01: Stewardship Properties has tried to stick with our regional banks since they're quicker to respond on our commercial loans. Start with those lenders. What's Happening In Mortgages: 9:20: Liquidity is an issue for lenders, primarily because of forbearance, but they are still accepting applications at decent rates. 14:29: When lenders are pulling the plug, these are locked loans. That's only about 10% of what we do. Business-conforming loans are the other 90%, which are still being written. 17:00: You can't ask people's credit scores as an investor, buy you can cross qualify your buyers with their lender for a second set of eyes. 20:27: Ryan has never sold to people that have anything other than cash, private or hard money. But on the retail side, a 1031 Exchange came in with a cash offer 5k below list, last weekend. 23:00: What's been interesting to see is how Indianapolis has become a cash-heavy market overnight with 20-25% down. 24:15: With COVID-19 overlays, you can still go up to 50% debt to income on a conventional loan. 26:30: You can still get up to 80% on a cash out refinance. 28:47: VA loans are still being done, lenders just don't know right away if they have someone to service it. So rates are higher. Title Companies: 30:36: Title companies are “modified” business as usual. Thankfully for Indianapolis and Kansas City allow scanned documents. What Do The Next Few Months Look Like: 33:49: Eugene Brokers is gearing up for a full refinance season. Rates track the 10-year treasury note, so they think great rates will be around for awhile. 32:40: Contact Matt at 541-359-7212 or by email at matt@eugenebrokers.com. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Addressing Concerns and Disputes: 2:05: April was sort of the first month that we had to figure out if people were going to pay rent, what they are dealing with and how many of our residents are without jobs. 4:20: We basically said that rent is still due and to feel free to reach out if there is an issue. We didn't want to extend an open invite, but we planned to give an additional payment plan allowance and waive April late fees. 7:29: With regard to student rentals, we had alot of calls since the University of Oregon closed their dorms and we had an insurgence of rental inquiries. At the same time, we had nervous people reaching out about cancelling leases for the 2020-2021 school year, which is a ways off still. 10:30: If you're struggling with vacancy issues or whatever you had to really think about lowering rents, trying to get on the front side of being as attractive as possible to any would-be residents coming your way. This May Encourage Changes To Your Process: 11:49: We don't take people who've had evictions. So, we have a lot of people that I think are going to fight tooth and nail to not go the route of ending up with an eviction. 15:41: When you're talking to your residents about these situations, you really want to emphasize that both of your goals are the same for the person to stay in the property and not have them leave. 18:30: If you've been into real estate as a hobby or rental properties as a hobby, this is really time to change directions here. It's not the time to be informal with your residents. 20:58: Remember, you've got a business on your hands. If every single property you own is free and clear, you still are operating a business. You need to keep that kind of mindset. 25:47: Part of being business owners too is you need to look into the future of who you're renting to. What's the job outlook like for that industry? What Are We Seeing In Our Communities?: 30:00: Most people are doing pretty well. They're down a bit, we're down a bit, but it's by no means a catastrophe. And it probably won't be in terms of rental income questions, unless this drags on for another couple of months. 32:40: I'm hoping for a lot of people that this is kind of not necessarily a wakeup call, but a chance to just kind of reassess what they want out of life and really go after that. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

State of Economy Discussion: 3:25: The purpose of the stimulus is to keep us from a recession spiraling into a depression, which none of us want and would make matters all that much worse. 5:10: So many people are being affected even if you're not. So with that in mind, this has now extended past a “few weeks”, there will be impact. 8:35: The world does sort of feel like everything stopped, but people are still working. We were mid-refinance in several markets, those are still happening. 12:15: Go ahead and think about your absolute worst case scenario so you can just deal with it. If college football doesn't start back up and the universities don't start back up, that's our worst case. What You Do Now, Makes A Difference: 14:25: I would say now more than ever those that are going to come out on the winning side of it are those who are acting proactively, who are looking at their businesses, looking at the models, figuring out how to tweak them. 16:13: It can be uncomfortable to think about doing something different because in your mind it's like this is how we do things. Reality check is that “how we do things” could have ended two weeks or three weeks ago at this point. 19:30: Back in the recession of 2008, Bill asked two private lenders on a fairly expensive property if they'd be willing to take less in interest from what we owed them. In times like these, having those conversations may be necessary. Are Home Values Changing?: 22:45: If your business is relying on an FHA loan buyer, those investor-backed loans might be hard to close right now. 23:49: Be careful with flipping right now. CNBC reported recently that home sales could fall by 35% this year. 25:32: What's your exit strategy? DO you have multiple? 27:40: It's so hard to guess if prices are going to go to 2008 levels. That happened because of bad lending practices. We're going through something entirely different, there's not an actual issue in the economy. 29:18: The Dot-Com crash was stock related. It was the only recession in history to date* where home values actually increased. 32:35: The biggest takeaway is that just because you've always done it that way doesn't mean that's going to work now. It's time to get out of your comfort zone and be proactive. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Pre-2008 Similarities: 3:21: Everyone wanted to be in real estate in 2005-2006. 5:15: instead of being a “buy and hold” investment company, we had to flip our mindset and say, we're going to start flipping properties and that evolved into a short-sale segment as well. 9:25: By April of 2010, the $8,000 home-buyer credit program ran out and that's when homesales really stopped. By that point short sale deals were taking 3, 6, 8, even 10 months to close and that's no longer a lucrative deal. 11:00: Normally you don't want to make a major shift in your business, but in a recession you may have to. 13:50: Prices had gone down significantly in the country, which meant that there were lots of cashflow opportunities. Going Forward in 2020: 16:10: We don't know where these types of opportunities are going to pop up from this and from this particular crisis. It could be in commercial real estate. 19:13: We are still figuring things out because I do feel like we're not even quite two weeks into this, but one of the things is we have some deals under contract. 21:15: as business owners, we really have to make the best decisions we can make today based off the data that we have today. Typical closing periods last 30-60 days, so we don't really know what the ARV of those properties will be. 26:20: Brandon Turner, of BiggerPockets, about what he's doing to kind of lay the groundwork of what is likely coming our way. 28:30: One of the other big things I see happening in the real estate market is you can't get away with subpar product anymore. 29:42: Amanda made a huge pivot after going through a foreclosure first hand in 2008. In this time, people will make decisions based on past experiences, so I built a house with an accessory dwelling unit that cuts my mortgage by a 1/3rd. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

Maintain Your Perspective: 3:15: Remember, don't make rash decisions based on fear. If you're looking to be afraid, you'll find it, if you're looking for opportunity, you'll find that as well. 5:25: People are going to keep living. You just have to look at it from a daily, weekly or monthly basis. 8:33: Hal Elrod's book, Miracle Morning, is a great book for those looking for perspective. 12:43: Depression is anti-people and anti-movement. So, to reverse the effects of depression, you've got to get around people. You've got to start moving. Strategy for This Time Period: 14:10: For now, we're not buying new rentals. We're not trying to catch a falling knife before it hits the floor. We simply just don't know where the floor is just yet, so we're being ultra conservative. 16:17: Refinance! Amanada scored a 3.125% refinance on her personal property from 4%. That's huge savings over 30 years. 18:23: Now's a great time to learn how to find your own deals. We're shifting our marketing to C class or lower since we believe those properties will always be in demand. 21:45: If you don't know what to do, go out to those people who are still buying. Cash Reserves: 23:52: It's difficult to build cash reserves during a crisis or recession. But look into the transactional side of investing to build that up. Wholesaling or wholetailing if you can. Our Way of Business is Shifting Slightly: 25:40: We're reducing the 75% rule to be conservative. We're using DocuSign and ShowMojo. 29:30: We still need to maintain properties and get them leased. Connect with the Good Stewards: Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast

General COVID-19 Discussion: 5:50: This is not our new normal. This is a very temporary situation. 7:55: You don't want to make rash decisions that are going to affect people just because you yourself are anxious.  What is a Black Swan?: 12:10: A black Swan is an extremely unlikely event or unpredictable. Like 9/11 for example. What Black Swan Events Bring: 15:30: The first thing that goes away in an economic crisis is the ability to get credit. So it's critical to have cash reserves. 19:51: If our residents lose their job and have been great for us, we're going to work hard to keep them. 25:40: Remember that there's always going to be value with the assets we're buying. People are always going to trade cash for something of value. 27:01: Stewardship Properties is not thinking about the worst case scenario right now. We're planned financially out 12-18 months in advance.  Connect with the Good Stewards:Visit Our Website and Subscribe Email | Ask@TheGoodStewards.com Twitter | @TheGoodStewards Instagram | @GoodStewardsPodcast Facebook | @GoodStewardsPodcast