Spotlight on the Current Real Estate Market Frenzy - Pacific Private Money

Best of Investing

Episode Aired: May 9th, 2020

Show Speakers: Edward Brown, Patti Cohn, Mark Hanf, and Nam Phan

Title: Spotlight on the Current Real Estate Market Frenzy

Topics Discussed: Navigating real estate during these uncertain times, the uptick in activity, and showing homes during the virus crisis 

Segment 1 of 5

Edward Brown:

Welcome. You’re listening to the Best of Investing. I’m your host, Edward Brown, along with my co-hosts, Mark Hanf and Nam Phan of Pacific Private Money, and Patti Cohn of Compass Realty. Our phone number is 888-912-1190. Use that number to answer the trivia questions for a five-pack tanning certificate, giving it during away this show. The certificate is not sponsored by the radio station, but by Tan Bella Tanning Salon with two locations in San Francisco and one in Marin. Check them out. Today’s trivia theme is general trivia. Patti, what do you got for us today?

Patti Cohn:

Well, it’s pretty amazing, actually. Since May 1st-

Edward Brown:

Okay, let’s try it again. May 1st.

Patti Cohn:

I’m trying. The less I use my brain, the sharper I am. LOL Anyways, so… Yes, since May 1st, the market has been on fire. It’s a lot easier to work as well, because everybody that’s out there is really motivated, the buyers and the sellers. There’s no open houses, buyers and sellers both have to sign a form swearing that they don’t have the virus, that they don’t have any symptoms. They wear masks. They wear gloves. They wear booties so, there’s less drama, and there’s more just serious buyers. The escrows are much faster, because people don’t want to mess around. They don’t want to mess anything up. They don’t know what’s going to happen tomorrow. They are just ready to go. So, it’s pretty darn exciting.

Patti Cohn:

And then I looked at, by the way, for example, I just took Marin County. We’re doing the whole Bay area, but I looked at what happened since April 1st til now, versus last year. So, in Marin County, a very small market, we’ve had 194 new listings, 54 coming soon, but 135 went in to escrow since April 1st. So a good barometer is to look at the relationship between how many on the market and how many in escrow.

Edward Brown:

You look in the Sunday paper and you don’t see any open houses.

Patti Cohn:

We’re not allowed to have them.

Edward Brown:

No, I know, but it just, it almost gives the appearance that the whole real estate market dried up.

Patti Cohn:

Exactly. Like it’s dead and it’s quite the contrary…

Mark Hanf:

Patti, you’re talking about Miranda in the Bay area. Well, that is happening nationwide. So Zillow came out today and said, the bottom has already happened. So if you think you’re going to buy houses for steep discounts in the coming months, that’s not going to happen. And the Noris Group blog said the same thing, home sales are picking up nationwide…

Patti Cohn:

Yes.

Mark Hanf:

…an interest in homes and activity.

Patti Cohn:

It’s nationwide, for sure.

Edward Brown:

It’s your typical supply and demand situation, not a credit bubble as we experienced in 2008.

Patti Cohn:

In fact, I’ve got a graph here, major financial institutions, Goldman Sachs, JP Morgan, Morgan Stanley, and Wells Fargo are all calling for a recovery in the second half of the year. I have a graph showing the

Mark Hanf:

The radio audience can see that too.

Patti Cohn:

Exactly. So, in terms of prices, the escrows are faster. The list price to sales price is tighter. I’m talking about this time last year. So April 1st until May 7th, escrows are faster. The list price to sales price ratio are tighter than last year.

Edward Brown:

I wonder if that’s maybe why the stock market hasn’t continually crashed down, because the investors are seeing, you know what? Maybe this is going to start recovering a lot sooner than we thought.

Patti Cohn:

Well, I’m just talking dollars now and the rate, but let’s get real for a second. Number of sales? Way down.

Patti Cohn:

So for example, since April 1st, 138 sold. And I chose April 1st, because as soon as this happened, there were a lot of escrows where people were bailing and the contract did not work. Our CAR, California Association of Realtors, contract does not provide for people baling, and sellers were holding them to it. However, so there were 138 that’s sold since April 1st, this year. Last year, it was 521. So it’s on fire, but yet it’s the people that are playing are really swinging hard. One buyer’s agent said to me, he used the word panicking, “Buyers are panicking. They are afraid they’re not going to find a house and sellers are in the game too.”

Mark Hanf:

Well, you’ve hit something on the head. There’s two parts to this. When you read the papers in the coming weeks, you’re going to see headlines that make it sound like the whole real estate market is crashing. They’re going to talk about year-over-year sales and other activity being down in historical declines. “Real estate, 25% down!” or something. That has nothing to do with what most people really care about, which is what’s going to happen to the value of my home? What’s going to happen to the value of real estate in general? In the Bay area, in California, in the United States. And if I’m an investor who invests in mortgage backed products, is my investment at risk? So what we’re saying now is, “Yeah, unit volume’s way down.” Well, duh, but you know what? The virus has created a number of new efficiencies that are going to continue on beyond this into recovery and because of supply and demand home prices, they’ve already hit bottom. If you could even call it that.

Patti Cohn:

Right now the supply and demand curve are about even. When I do believe that if you’re going to sell, now’s the time, because think about it: our absolute peak season, March 15th, is when it died. So it’s going to come back. It’s already coming back, but that’s all the pent up sellers from spring. The buyer demand is going to get absorbed and there’s going to be more and more people selling.

Edward Brown:

Patti, stay with us. We’re going to cut through a quick commercial break here.

Edward Brown:

I’ve got a couple of easy ones. One that’s not as easy. First Trivia question is: Of the four Beatles, who was known as the quiet Beatle. All right. Call 888-912-1190. The first caller with the correct answer is going to win that tanning certificate worth over a hundred dollars. Again, of the four Beatles, who was known as the quiet Beatle?

Edward Brown:

Stay with us. You’re listening to the Best of Investing. We’re going to be right back.

Segment 2 of 5

Edward Brown:

Welcome back to the best of investing. Again, I’m Edward Brown, your host, along with Mark Hanf, Nam Phan, and Patty Cohn. First trivia question was of the four Beatles who is known as the quiet Beatle? Anyone?

Mark Hanf:

George.

Patti Cohn:

George.

Edward Brown:

George Harrison. That is correct. Want to make a quick mentioned here for Mountain Mike’s Pizza in San Rafael. They are open for takeout and delivery. So how many of you people are sitting home going, “I’m tired of cooking. I want to go out.” Well here. Go out and pick up a nice pizza.

Mark Hanf:

Right here.

Edward Brown:

Yeah. Mountain Mike’s Pizza in San Rafael, (415) 454-4300 or go to https://www.mountainmikespizza.com/locations/san-rafael-4th-st/. All right, Nam, you wanted to ask Patti a question?

Nam Phan:

Yeah. So on the last segment, Mark was talking about a lot of efficiencies happening because people need to alter their way of doing business. So I wanted to find out from you, Patti, you said things are moving a lot faster. Have there been new processes that have been implemented in showing a home or transacting, going through documents with your clients? I know DocuSign has been around for a while, but are there things that you’ve seen happen in the last 30, 45 days to get a sale done that have staying power?

Patti Cohn:

Yeah. Well, that’s a great question. I mean, some people have bought houses without even going inside. I haven’t seen that happen. I mean, I wasn’t experienced that, but you know, people are wearing masks, gloves, and booties, and that’s going to continue for a while. I don’t know how long. The big question that everyone has is what’s going to happen in fall. But putting that aside, I think that there’s going to be less tire kickers out there because so much available is available online. You can see the view, you can drive by. There’s a lot you can surmise from all that. Rarely do you get… I mean, a lot of times actually you do. Realtors tend to like the photos over promise and over deliver. But I think there’s going to be a lot more respect to the homeowner, even though… So you will have 50 people at an open house. I don’t know when we’ll have Sunday open houses. I don’t know when we’ll have brokers open.

Edward Brown:

Well, at least also with virtual showings, you won’t have to worry about people stealing your jewelry.

Patti Cohn:

That’s right.

Edward Brown:

So quick question actually comes in here. An email question comes in. I figured, since you’re talking about this, it’s right up your alley here for Patti, it looks like the rules for showing a house are starting to ease up soon. How much more business do you expect when that happens or is the virtual tours enough?

Patti Cohn:

Yeah, that’s a great question. I mean, here’s the easing the first 15 days or really the first week we couldn’t, everything just stopped. And then, then they realized, okay, if you’re in escrow, you have to let an inspector in or you have to let the buyer measure or whatever. So, but then as of April 1st, we were able to show houses, but not if they were owner occupied. Now I had a couple of sellers that said, you know what, it’s my house and I can let them in. So they had to drive by, they had to look at, they had to drive by, they had to look at other videos. They had to like wear masks, gloves and everything else just as you would a vacant house and not touch anything. So that’s what we’re operating under now, which happened May 1st.

Patti Cohn:

Excuse me, May 1st. Now we can show occupied houses and people are out in droves. I mean, I shouldn’t say droves. People are out, it’s a frenzy, the buyer and the seller balance supply and demand is pretty balanced. The way it always is-

Edward Brown:

In general, I’m noticing a lot more traffic than I did, you know, a month ago.

Patti Cohn:

Exactly.

Edward Brown:

I know some people are going out hiking, go to the beach and all that kind of stuff. But I wouldn’t say it’s business as usual, but it sure seems like there’s a lot more people out, doesn’t it?

Patti Cohn:

Yes, I think so. Yeah. Yeah.

Mark Hanf:

Patti, I’ve seen a bunch of articles posting in the real estate blogs talking about that the high end, a lot of sellers pulled their high end homes off the market and there seems to be a shortage in that area. Is that a [inaudible 00:04:11] and again, this was a nationwide or California wide. Are you seeing that in Marin and San Francisco as well?

Patti Cohn:

Well, that was initially, but they’re back out and the higher end is selling.

Mark Hanf:

Okay.

Patti Cohn:

And I think that Marin is also going to benefit from people leaving the city where there were it’s close quarters. So even, yeah. I think all of the suburbs in the Bay area are going to benefit or everywhere. It’s going to benefit from that.

Edward Brown:

$600 a square foot.

Mark Hanf:

No, that was Stinson beach. That was an outlier. You’re talking about that one?

Edward Brown:

Yeah.

Mark Hanf:

$3,800 a square foot.

Edward Brown:

$3,800 a square foot? I mean, that is just ridiculous.

Patti Cohn:

That was Phil Lesh’s house.

Edward Brown:

Oh was it really?

Patti Cohn:

Yeah. And I mean, so somebody wanted it, and see what’s happening too, is people with really big money like that, that can just do it and go over asking. Well, they want to shelter in place and people are spending more time in their homes. So they’re, they’re really looking at it like this, this where I want to be. I can afford more. Yeah.

Edward Brown:

Very good point.

Mark Hanf:

That brings up that just, that brings up one thing because we’ve got a few more minutes in the segment.

Mark Hanf:

If this, this might not be the first and only shelter in place that we’re going to experience, this could be something that happens with more frequency. And for example, if there’s another SARS, like there was 10 years ago, if that happens again next year, something similar, you can bet that the government’s probably not going to take the lax reaction that they had 10 years ago, but will probably have the same reaction they’ve had to COVID-19 and so you’re absolutely right. I think where there for a while, there was this trend towards smaller homes. I, maybe that’s going to reverse and people are going to go, you know what, we’re going to do less traveling, spend less time on airplanes and spend more time creating a family compound where we can enjoy and relax and feel safe.

Patti Cohn:

Yeah. And also if schools are going to close, maybe I want a second home where I don’t have to get on an airplane like Stinson or like Tahoe.

Edward Brown:

Or a second home to just send the kids to.

Patti Cohn:

Exactly

Mark Hanf:

Absolutely. No, it’s interesting how this is all going to flesh out differently. You know, it’s, the fires are having certain impacts on certainly on inventory and, less than half of the homes that the tens of thousands of homes that burned down in California in the last three years, less than half have been rebuilt. And we were already behind the eight ball in terms of building new homes. You know? So when you look at all these various things, it just, it just bodes well for people investing in their home, investing in, in bigger homes, if they want to do more stay cations. And, and just in terms of home values themselves remaining stable, in spite of the fact that for all intents and purposes, we’re probably in a recession right now.

Edward Brown:

You know and I wonder if you’ll get more neighbors to kind of stand up and argue for no more buildings, such and such. Cause they don’t want to have neighbors do things that’ll, impact their health potential. You know what I mean?

Mark Hanf:

Nimbyism will never go away.

Edward Brown:

It might even be more..hey Patti, before we get to the break, why don’t you give out your information in case people have questions about real estate.

Patti Cohn:

Sure! I’m Patti Cohn at Compass. I’m based out of Marin County and I’m at (415) 722-4842.

Edward Brown:

All right. We’re going to cut to another commercial break. When we come back, we have an email for Mark and Nam that discusses deferments and how to handle those. All right. Here’s our second trivia question. This was also a fairly easy one in Disney’s Pinocchio, what animal does Pinocchio get trapped inside? Now Nam you got to get this one cause you have a daughter.

Nam Phan:

Yeah. I don’t think we watched that. I don’t want to watch that now.

Edward Brown:

No, it’s so funny. I didn’t see Pinocchio until about-

Mark Hanf:

They haven’t remade Pinocchio. That’s why we haven’t seen it.

Edward Brown:

Great. You haven’t seen what?

Mark Hanf:

If they would remake Pinocchio, like they remade everything else, then we’d probably all have seen it.

Edward Brown:

Oh yeah, that’s true. It’s actually kind of scary. I waited until I was 56 years old to see it. All right. Call 888-912-1190, first caller that correctly answers is going to win that tanning certificate. In Disney’s Pinocchio, what animal does Pinocchio get trapped inside of? Stay with us. You’ll see to the best of investing. We’re going to be right back.

Segment 3 of 5

Edward Brown:

Welcome back to The Best of Investing. One more time, I’m Edward Brown, your host, along with Mark Hanf, Nam Phan, and Patti Cohn. Second trivia question, in Disney’s Pinocchio, what animal does Pinocchio get trapped inside of?

Mark Hanf:

Is it a whale?

Edward Brown:

A whale. Yeah.

Patti Cohn:

Yeah, yeah.

Edward Brown:

It’s so funny, because Jonah and the whale. And in the Bible, it doesn’t say a whale, just says a big fish. Probably a parody

Mark Hanf:

Yep. But off the air, you were guessing it was a woodchuck.

Edward Brown:

That’s right.

Edward Brown:

Okay, Mark and Nam, and we’ve got a question here comes in from a listener. It says, have you had many borrowers ask for a deferment and how are you handling those requests?

Nam Phan:

Yeah, good question. In April we did have an uptick in borrowers requesting deferment or saying that they’re going to have trouble making their payments. So we like every other lender, you have to take it on a case by case basis. And you can break down a lot of these deferments into different categories. Obviously one of them being there is a bonafide financial hardship because their income was cut off or they own a business and their source of income as the business where they work for an employer who couldn’t operate.

Nam Phan:

So there’s that one category. And then there’s people who can make the payment, but are being opportunistic. So you kind of have to look at each scenario and determine whether or not their request merits an actual deferment for us. It would a deferment would be to allow them to not make payments for 60 to 90 days, but add it to the end of their loan because we make it a lot of short term loans. So it doesn’t mean that in 30 years they’re going to catch up. It’s going to be at the end of six months or nine months when their loan was scheduled to mature, they would make those payments. Other lenders are actually tacking on those two or three months to the fourth month. They’re making them do all at once.

Nam Phan:

But we’ve actually really in evaluating the deferments we’ve gotten, we received, we’re approving a fraction of them because after kind of further diligence and having them fill out a mortgage assistance application, we’re seeing that actually many of these bars actually more opportunistic than really having a bonafide financial hardship. But obviously for those who are having a hardship where either approving the deferment or if the loan is the lender is one of our trust deed investors, we’re suggesting or recommending to the trust deed investor to approve deferments. We’re not loan to own lenders. So we’ve always had a history of trying to work it out with the borrowers. And obviously this is unusual times and we understand that there’s a lot that was unavoidable.

Mark Hanf:

And, you know what, companies like Pacific Private Money, most of our loans are investment or business purpose. So a lot of people don’t realize that when the government said, “Hey, we’re mandating a three month moratorium on payments or deferment”. That’s really for your conventional bank and Fannie Freddie loans, it doesn’t include privately financed or business purpose or commercial loans. So really those types of loans, the business purpose, the commercial, the investment purpose, that’s what Nam’s talking about, they’re case by case. Now, of course, if their income did get shut off and you really can’t squeeze blood from a turnip, so we have to be realistic about it. But we’re not under any obligation. And it’s kind of funny, we did get calls from a few clients saying, “Hey, I want to get my three months free pass”.

Edward Brown:

Yeah, exactly.

Mark Hanf:

And we said, “No, thanks for sharing.”

Edward Brown:

It’s because I can ask for it. You know?

Mark Hanf:

Yeah. I mean, who wouldn’t want to? If I were told, there would be absolutely no repercussions for me to skip my next three mortgage payments, I would do it. But I made my mortgage payments the last two months because I don’t want it to hit my credit. And there’s no guarantee that it won’t. In fact, I’m probably pretty sure that those people who don’t make their mortgage payments to their conventional lender, it’s going to show up on their credit report as a no pay.

Edward Brown:

That’s a good question. I don’t think it is.

Patti Cohn:

It’s not.

Edward Brown:

If they get a formal deferment. If they just don’t make the payment, then I would be surprised if it didn’t show up. But if they get a-

Mark Hanf:

Well, I’ll believe it when I see it. Cause credit companies have a habit of making mistakes, as we know because we get a lot of loans because the bank turns them down for a mistake on their credit report. So we’ll see about that.

Edward Brown:

So even though, I’ll just pick Bank of America for a minute-

Mark Hanf:

Let’s beat on Bank of America.

Edward Brown:

Bank of America, but you know, they’re just a big bank. So if Bank of America just happens to accidentally report “Yeah. These guys just didn’t make their payments, even though they permit”. Yeah. Go ahead and try to-

Patti Cohn:

I don’t think they’re going to. I’ll tell you what official deferment is so simple. Like I have six different mortgages and I did not do that with any of them, but the way to do it is you just simply go on like, so Wells, I have three with Wells, you just go online, they preferred online banking, you can’t get through to any of them, because they’re all doing loans.

Mark Hanf:

Yeah.

Patti Cohn:

So you just go and click it’s one, click.

Edward Brown:

You know, you’re one hundred percent right but I also can see what Mark’s saying, because even though you formally do everything correct, certain things slip through the cracks. I know somebody who had their mortgage payment on auto pay from their checking account on the fifth, every single month, the bank was holding the mortgage and holding the checking account. So there’s zero risk in not paying the mortgage on time. Well, for whatever reason, the bank happened to pull it on the 12th of the month and sent them a late notice.

Patti Cohn:

Oh god.

Edward Brown:

You know, it’s like, should it happen? No. Does it? Sometimes it does.

Mark Hanf:

Yeah.

Edward Brown:

Nam, we got a quick minute here. Do you want to give us a quick deal of the week?

Nam Phan:

You know what, let me continue on the deferment real quick, because there are a couple of scenarios where the person had a home to sell and they were going to use the proceeds of the sale to pay us off. But when the real estate froze, then that kind of pushed things out. So they were asking for deferment, but they then backed off because the real estate market kind of picked back up again. They were able to get people into their homes. And so they said, you know what? I take it back. I’m not going to pursue this deferment because everything’s back on.

Edward Brown:

I wonder for those people who have the Airbnb, what do they do? They’re sort of like hotels. They can’t- is that a necessity?

Mark Hanf:

One of the deferments we approved was someone who had an investment home that was Airbnb, and they weren’t able to make the payments. And we gave him a 60-day deferment.

Edward Brown:

Gotcha.

Mark Hanf:

That was read hardship.

Edward Brown:

That was a legitimate one.

Edward Brown:

All right guys, to our third trivia question here, for which newspaper does Clark Kent work for? What’s the name? What’s the name of the newspaper? goes, “I know it. I know it.” Call (888) 912-1190, first caller with the correct answer is going to win that tanning certificate again, for which newspaper does Clark Kent work for?

Edward Brown:

All right. Stay with us. You are listening to the Best of Investing. When you come back, Nam’s going to give us a deal of the week, and let you know how you can invest in the Pacific Private Money Fund, which is currently paying over seven and a half percent secured by these mortgages. Don’t touch that dial. The Best of Investing is going to be right back.

Segment 4 of 5

Edward Brown:

Welcome back to the Best of Investing. It’s not the last time for today. We got one more segment. But I’m Edward Brown, your host. Mark Hanf, Nam Phan, and Patti Cohn are joining me. And the third trivia question was, “For which newspaper does Clark Kent work for?”

Patti Cohn:

The Daily Planet.

Edward Brown:

The Daily Planet, very good.

Mark Hanf:

Yeah.

Mark Hanf:

Three for three!

Edward Brown:

Three for three. Not bad.

Nam Phan:

[inaudible 00:00:27] What does our guest win today?

Edward Brown:

Okay. Nam. Tell us a little bit about Pacific Private Money, deal of the week, what do you guys do for a living?

Nam Phan:

What do we do for a living? We’re alternative finance lenders here at Pacific Private Money. We lend on primarily residential real estate, although we do some commercial, and some land in front of construction. We do actually everything private money, but concentration is owner occupied bridge lending, bridge loans. Deal of the week this week is what we call A-paper fallout.

Nam Phan:

A-paper. What is A-paper? A-paper for us are the conventional lenders. The one you want to go to first, when you want to get a loan and like B-of-A, let’s say something good about B-of-A this time. Everyone should try to go to A-paper lender first when they want to get their mortgage. But what’s happened since March is a lot of A-paper and non-QM lenders, specifically non-QM, we talk about it often on the show. It’s the lender between us and A-paper. They’re still very low rate loan products.

Nam Phan:

They were in the middle of an application for a loan and their loan got pulled from them because the institutional lenders pulled back. They said, “We don’t know what’s going on in the marketplace yet. We don’t know how real estate is going to be affected. So we’re not going to let you at this point.” And they were in the middle of a purchase. This case, it was a $1.8 million purchase in San Francisco, a 72% loan to value, a little bit on the upper end of what our typical max is, but their income is so strong, their FICO is so strong. This is somebody who we would never have seen 45 days ago or 60 days ago, because they could have gotten rates 5, 4, 3%. Their business owner, their business is still doing well, generating 150,000 a month in income. $1.8 million purchase, 700 FICO, but they couldn’t get a bank loan, conventional A-paper loan. We’re going to fund this loan. It came to us pretty quickly. I think it came to us late last week and it’s going to close next week.

Nam Phan:

They already have an alt lender lined up to take them out in a few months, but that’s just somebody who had to close. They were running out of time and therefore came to us.

Edward Brown:

Very good. On the other side, where do you guys get your money from?

Nam Phan:

You Edward!

Edward Brown:

Yeah, there you go.

Nam Phan:

In addition to Edward, we get it from retail investment. We get it from people who listen to the show and, you know what, I’ll tell you right now, more than ever. We’re thankful for what we call our retail investors because that institutional capital coming from Wall Street is what caused conventional lending, much of the non-QM to freeze up. They just said across the board, they just pulled out all of their warehouse clients, all their credit lines, and stopped buying loans from what I was saying earlier, non-QM lenders, but we get our money from individual investors who meet the accredited credit investor status. They can invest up to as little as 50,000 in the Pacific Private Money Fund. And to date, we have 200 plus investors and we’re paying them on a distributed basis about 7.5% annualized.

Nam Phan:

And we had a fund event about two weeks ago and it was really well attended. If people want to listen to it, they can go to our website and sign up to listen to a recording of it. And it was really timely. And we’ll probably have another one in early June because I think some of our existing investors, potential investors want to know, “Hey, how have things gone since your last fund information session? How’s the coronavirus affecting your business?” We’re busier than ever. It’s exciting. We feel like in a way, things have turned the corner in the Bay area.

Mark Hanf:

Yeah. And we talked earlier about how, the concern over California home values is a great concern to us at Pacific Private Money because we provide the returns we provide, which start out in the mid sevens, mid 7% range on an annual basis and go up from there. People investing with us make as much as 10%, depending on how they invest. And we’ve got multiple ways to put people’s money to work at Pacific Private Money. We have multiple investment vehicles. We’ve just launched a couple of new vehicles. Our website is going to be updated in the next couple of weeks, with a couple of those new programs, but the bottom line is that everything we do at Pacific Private Money, all of the investment opportunities we provide, there’s one core attribute to those investment products. Each and every one of them are secured by recorded mortgages against real estate. Most of that real estate’s in California. So we’re very, very concerned and we’re watchful over that.

Mark Hanf:

And we have pulled back on our loan to value ratios. We were at 70 for the longest time. And now we’re at 65. A lot of other lenders have followed suit in our industry. We’ve gotten more conservative. We’re looking at the use of funds. We’re careful about people who are looking to borrow against the equity in their home to rescue their business. Those are gambles that we may not want to take depending on the situation and the type of business.

Mark Hanf:

We’re very careful. We’re very mindful. We’re reading the blogs, we’re reading the articles. We’re listening to the economists. We happen to believe internally that we’re going to experience a V-shape recovery as opposed to a U or an L. But that’s not what you hear in the doom and gloom media, the CNNs of the world and the other sources would lead you to believe that, due to the massive unemployment that we’re going to have the worst recession since the Great Depression.

Mark Hanf:

Well, for some people that might be true, but for the economy as a whole and real estate values, which those of us here on the Best of Investing are most concerned about, we just don’t see that happening and look what the stock market’s doing, how come the stock market is not going down on a daily basis like you mentioned Edward? It’s because the public just doesn’t believe the doom and gloom media. I mean, they believe that we’re going to resume what before the coronavirus was. The longest running expansion in U.S. history. I think we’re going to get back on that horse again in 2021.

Edward Brown:

Very good. How do people get ahold of you guys if they are interested?

Mark Hanf:

Go to our website, pacificprivatemoney.com, all one word of course, pacificprivatemoney.com. Or call us we’re in the (415)! (415) 883-2150, (415) 883-2150.

Edward Brown:

When we come back, we’re going to have some closing comments. We don’t have another trivia question, but Patti, why don’t you give out your information one more time in case people have some questions about real estate and that kind of fun stuff.

Patti Cohn:

Thank you. Yes, I’m Patti Cohn. I’m based out of Marin County. I’m a real estate broker for 32 years. My phone number is (415) 722-4842.

Edward Brown:

Stay with us. You’re listening to the Best of Investing. We going to come back with some closing comments. Don’t touch that dial.

Segment 5 of 5

Edward Brown:

Welcome back to The Best of Investing, last time for today. I’m Edward Brown, your host, along with Mark Hanf, Nam Phan, and Patti Cohn. Now, Patti, you wanted to explain a little bit more about this deferment program, because there seems to be some misnomer out there about it.

Patti Cohn:

Yeah. I mean the same way that borrowers, if there’s a hardship, the banks will let them defer their payment. It doesn’t mean they’ll never pay it back. Well, there’s also 60 days where a landlord cannot evict a tenant. So first the tenant has to stop paying rent. Well, a lot of tenants, I own several properties, and some of them are confused. And although I got rent April 1st and May 1st from all of them. Full rent. But there’s a misconception that the landlord’s supposed to pick up the ball and we didn’t cause this.

Patti Cohn:

So they think that they… Many tenants feel like they should just stop paying rent. And then… Or that if there’s a deferment for… Or that you can’t evict somebody for two months, it means that you don’t have to pay for two months. That’s just wrong. So one tenant said to me, “Like rather than me doing that, maybe we can make a deal.” And I was like, “Well, here’s the deal. You’re both… Both of you are going to get $1,200 from the government. Both of you are going to get unemployment and then 600. So you’re going to have more and then you have nothing to spend it on. So rent comes first.”

Edward Brown:

There you go. Yeah because it…

Patti Cohn:

That’s garbage.

Edward Brown:

Yeah. As a landlord, the government doesn’t suddenly go, “Oh, sure. We’re going to pay all your tenants rents. And oh, by the way, you don’t have to pay for insurance or PG&E or all those costs. And by the way, the heater, if it breaks, don’t worry, you don’t have to fix it.” I mean, you know?

Patti Cohn:

Yeah, exactly. So, tenants… But I mean, I was a little worried both first of each month, but it was a hundred percent full payment. But just so, if there’s any tenants out there, that’s not how it works. And for landlords, stick to it because we have to pay our mortgages and our fences and everything. And if we get deferment, we’re going to have to pay that back too. Because we don’t have to pay our mortgages for two months.

Edward Brown:

The word defer means later on.

Patti Cohn:

Yeah.

Edward Brown:

It doesn’t mean free.

Patti Cohn:

Yeah.

Nam Phan:

De-free-ment might be free.

Edward Brown:

Unemployment might be free. What’s that?

Nam Phan:

It’s called de-free-ment.

Edward Brown:

De-free-ment. That’s right. Exactly. All right.

Nam Phan:

De-free-ment.

Edward Brown:

Oh, also, Nam, real quickly, the Pacific Private Money Fund, do you have to be… Do you have to qualify for that?

Nam Phan:

Yeah. So there’s three qualifications. If that’s where you’re going.

Edward Brown:

Yeah.

Nam Phan:

What are the qualifications? It’s a $50,000 minimum investment. Investors do need to be accredited. So it’s million dollar net worth exclusive of your primary residence. Or you can qualify in income, which is showing that you on your W2 that you made at least $200,000 per year for the last two years as an individual or a $300,000 as a couple. And…

Edward Brown:

And if people are listening and can’t qualify that way, you’ve got your Private Money Loans website.

Nam Phan:

Right. Right. Which is a marketplace where we… where investors can fund individual deeds of trust in different dollar amounts. You don’t need to be accredited to invest in trust deeds. And you can invest in increments, generally are from around a $100,000 to maybe $200,000 or $250,000. Our average loan on there is about $800,000 to a million. So that’s another option for investors who don’t meet the accredited investor status. The other thing I was going to say with the Pacific Private Money Fund is that there is a one year hold. So that first year, we ask that investors don’t redeem during that time period. And afterwards, though, you can redeem. Just give us a call. And if you add to your investments, let’s say six months into your first year, those additional funds aren’t subject to a new one year hold. It should be subject to the whatever remaining time period is on that initial hold.

Edward Brown:

That’s very friendly, very investor friendly, as they say.

Nam Phan:

Mark is very friendly.

Patti Cohn:

Yeah.

Edward Brown:

Fast, friendly, and…

Mark Hanf:

We’re all friendly.

Edward Brown:

Friendly. I like that. All right. Thank you very much, everybody, for joining us yet again for another good show. Good information. Here’s our thoughts for the day. There will always be someone who can’t see your worth. Don’t let that person be you. And I prefer not to think before speaking. I like to be as surprised as everyone else by what comes out of my mouth. Tune in next week-

Nam Phan:

We are, Edward.

Edward Brown:

Yes, you are. Tune in next week to The Best of Investing. We’re going to be giving away more free prizes for answering trivia questions. Thanks for listening. On behalf of our team, I’m Edward Brown wishing you the Best of Investing! So long.