Robert Leonard (00:05:48):

Last time we talked, we spent most of the conversation talking about your flipping business and how you got to where you were with all your flipping. And I think it was a great conversation, but I want to talk about a few different topics today because the world has changed so much. But for anybody that’s interested in flipping, I highly recommend that you go back and listen to that last episode that I had J on, that was episode 13. Today, I want to talk about recession-proof real estate. Like I just said, a lot has changed since we last talked. And the biggest thing, the elephant in the room is COVID-19. COVID hit since we last talked, and I think that’s dramatically changed the landscape of real estate. So let’s start right from the very beginning and talk about how our economy works and how the listeners of the show can make it work for them.

J Scott (00:06:32):

That’s a big topic, but let’s start with how the economy works. And for some people, some of this will probably be a recap of what you already know. For some, it might be new information. But if we’re going to start at the beginning, let’s start at the very beginning. And that’s that our economy works in cycles. Economies in general work in cycles. We have ups, we have downs. For a lot of younger investors, they may not realize it, but recessions and then booms and busts, these cycles are actually more common than a lot of us realize. For the most part, they occur every five, six, seven years. In fact, if you go back to the mid 1800s, the last 160 years or so, we’ve had 33 recessions. 33 full cycles of the economy going up, the economy coming down, and then the economy going back up. And simple math tells us if we’ve had 33 of these over the last 160 years, 160 divided by 33 is somewhere in the five to six years range.

J Scott (00:07:25):

So every five or six years, we see the economy go up, and it comes crashing down. Now, a lot of us, especially again, younger investors don’t necessarily realize this because over the last 12 years, the economy has essentially been going up. We had a big crash back in 2008, a big recession. But since 2009 or 10, we’ve had an economy that’s been booming. Things have been doing great at least until earlier this year. So this actually has been the longest expansion, economic expansion, economic uptick in the history of our country. And so it throws some people for a loop. Some people don’t remember or some people are too young to remember the fact that we typically have downturns more often than we’ve had in the last decade.

J Scott (00:08:08):

So it’s important to, number one, understand that the economy works in cycles. Let’s step back again and talk about as real estate investors, because I know a lot of people listening to this are real estate investors, why is that important? Why is understanding these cycles, why is the fact that the economy work in cycles, why are those things important in general? Number one, because the economy works in cycles, real estate to some extent is going to work in cycles. Real estate industry is highly influenced by the economy. The economy affects real estate even if real estate isn’t necessarily the driving force behind the economy. I know a lot of people probably remember 2008 when the economy came crashing down because real estate was messed up. The lending industry, Wall Street, and all these things we remember, bonds and debt instruments related to real estate got all messed up and it caused the entire economy to implode.

J Scott (00:09:03):

And so a lot of people think, okay, if real state is doing well, then the economy is doing well in general. They think that before the economy crashes, we’re going to see some big issue with real estate. But historically, that hasn’t been the case. Historically, the economy will cycle up and down based on things that have absolutely nothing to do with real estate. So again, 2008 was completely related to real estate. But go back to 2001, anybody that remembers 2001 and the recession we had there, that was caused by two things. It was caused by the tech bubble, so internet stocks going absolutely nuts and all these internet company is emerging, and that bubble bursting and 9/11. So we had 9/11 happen, and that messed up our economy for several months. And so that was 2001, nothing to do with real estate. Go back to the early 90s, we had this thing called the savings and loan crisis, which a lot of people are probably too young to remember. But basically banks were making some bad loans, not necessarily related to real estate, but just some bad loans in general.

J Scott (00:10:00):

That impacted the economy negatively, but again, not a real estate downturn. Go back to the 70s, and we had an oil crisis which caused major ripples throughout the economy. Go back to World War II, and we had things like trade imbalances. Go back to The Great Depression, and it was tariffs. So basically we had these regular cycles up and down, but rarely is it related directly to real estate, but still real estate is often impacted. So 2001, real estate market got hit pretty hard. In the 90s, we saw a recession, but real estate didn’t get hit. But go back to the 70s and real estate got hit pretty hard. So generally speaking, the economy works for whatever reasons the economy works. And in a lot of cases, it impacts real estate.

J Scott (00:10:42):

So understanding how the economy works in many cases can warn us of impending issues with the real estate market even if the real estate market itself looks super strong and you don’t see any issues by looking at real estate data. Number two, real estate tends to be what’s called a lagging indicator, which means things happen in the broader economy and then things happen real estate generally two, three, four months later. So if you see the market, for example, start to drop or you see other indicators in the broader economy start to take a negative hit or even a positive hit, typically three, four months later, we’re going to see those same types of impact whether negative or positive in the real estate industry. So often if we can track what’s going on in the broader economy, it gives us some clue of what’s likely to happen with real estate just a few months ahead of time so it allows us to prepare.

J Scott (00:11:33):

And then finally, understanding how the economy works and understanding how it may relate to real estate in general, it allows us to modify our strategies and our tactics that we’re using in real estate. And that will allow us to maximize our profits, it’ll allow us to minimize our risk. If we see certain things happening in the broader economy, it can give us a good indication of what we should be doing as real estate investors to take advantage of that because not all real estate strategies, not all real estate tactics work equally well in all markets. When the market’s going up, and when I say the market, I mean the economy, when the economy is going up and things are good, certain real estate strategies are going to work really well. When the economy is going down and we’re heading into a recession, other real estate strategies tend to work well. So knowing where we are in the economy gives us a good indication of what we should be doing with our real estate investing to maximize profits and again reduce risk.

J Scott (00:12:24):

So what are those things that drive the economy up and down? I’m not going to go into a ton of detail because it’s a complex subject. But at the end of the day, it boils down to two things, interest rates and inflation. And interest rates, we know what those are. Those are the rates that impact how much money we get when we put money in the bank or how much we can borrow money for. And inflation is the cost of the things that we buy every day, are they going up in price, are they going down in price? And the interplay of those two things causes, I mean, people will disagree, but most people agree that the interplay of these two things causes the cycles that we see, and ultimately impacts whether the economy is good or bad.

Robert Leonard (00:13:05):

This show is tailored towards new real estate investors. They don’t have to be young, they can be any age. You can be 45 and be a new investor, 50, 60, but it is tailored towards newer investors. However, I do have a second show called Millennial Investing that is tailored towards millennials, which is typically we focus on like 20 to 35 age. And so on that show, it’s been difficult. And even in the real estate space, it’s difficult because like you said, we’ve been in the longest economic expansion we’ve seen in a very long time, if not ever.

Robert Leonard (00:13:36):

And so for me, it’s difficult to have these conversations because I’m a student of history, I’ve studied this stuff like you have. And I understand that these things come in cycles, and so I tend not to take on the risk that we see a lot of millennials taking mostly in the stock market but some in real estate. And it’s really hard to have those conversations. So how do you approach people, whether they’re millennials or not who just say, “Well, I’ve only invested the last 10 years, things have been amazing. How do I know that a cycle’s coming? How do I know that this is how it always is going to be”?

J Scott (00:14:04):

It’s something that hopefully you believe me when I say it, but if you don’t, the data is all out there. Again, a lot of us, even the younger folks probably remember 2008. But go talk to some of the older investors that you network with or that are in your local community or that you talk to on Facebook or BiggerPockets or wherever it is. And just ask them, “What was 2001 like for you? What was 1989 and 1990 like for you? What was the early 80s like for you?” Maybe they’re really old, “What was the 70s like?” And you’re going to hear things that might be a little bit unexpected. A lot of people don’t realize I’m in my 40s, I vaguely remember the late 70s when I went and opened up a bank account for the first time as a kid. My mom took me to open up a bank account, and I put some money in. And I was literally getting 16, 17% interest on my money.

J Scott (00:14:58):

And I tell that to my kids today, they’re younger, so it doesn’t really mean anything. But if I tell older kids that they’re friends with how I was getting 16 or 17% interest on a savings account, that blows people’s minds. But it just goes to show that what we’re seeing today isn’t necessarily indicative of what we’ve seen in the past or what we’re going to see in the future. And so talking to people that lived through it, hearing about 17% interest rates, hearing about the oil crisis where oil was at the time about 3 or $4 a gallon. And this is back when typical oil prices were probably about 35 or 40 cents. It really makes you realize that the economy does change, and things are impacted. And the hardest thing to get people to understand, and I even see this with people who lived through 2008, it’s hard to get people to understand just how devastating a real downturn can be.

J Scott (00:15:52):

I know a lot of people through 2008 who said, “I’m never going to invest again, I lost everything. I woke up in the middle of the night, I couldn’t sleep because things were so bad.” And here we are 10 years later and they’re doing the exact same things they were doing in 2005, 6, and 7 because they just don’t remember. I use the analogy, think back to that last time you had a really horrible stomach ache or really horrible toothache. We all know in the back of our heads that that was a horrible feeling, but we can’t really feel that again. If we’re not going through it now, we can’t really remember pain.

J Scott (00:16:26):

Pain is something that goes away and we can remember being unhappy at the time, but we can’t recreate that feeling. And it’s the same thing with recessions and downturns. I know a lot of people who have, they were traumatized by 2008, but now they’ve forgotten about it because they can’t feel that pain again. And I have a feeling there’re going to be a lot of people who are reliving that now in the COVID time or will be reliving that in the next year or two or three when we really see a downturn in real estate.

Robert Leonard (00:16:55):

I can relate to that analogy very well because I tend to have a pretty sensitive stomach. And there’s some things that are my favorite food that if I eat it really hurts my stomach the next day, yet I still do it. The next week, I will still do it because, one, I like that food so much. But two, because I know it hurt, but I forget what it felt like. And then I’m reminded, I’m like, “Oh my God, don’t do that again.” So I know exactly what you’re talking about. And it’s the same thing, like you said. It’s really unfortunate that for a lot of people, they need to experience it themselves to really understand what it feels like.

Robert Leonard (00:17:25):

I guess for me, it’s just tough because I really want to try and help people from what I’ve studied and help them see it and understand it so that they can protect themselves before it happens so they can learn from other people’s mistakes rather than having to experience it themselves. But it’s just one of those things that I think unfortunately people have to experience themselves to really understand that it’s real and it’s a reality.

J Scott (00:17:44):

Yeah. And it’s one of those things that, again, like you, I’m a student of history. And we like to think that this time is different. That’s the common saying no matter what’s going on, this time is different. But at the end of the day, this time is rarely different. Typically this time is exactly the same as the last time and the time before that, and the time before that even though it might feel like it’s different. Because again, we can’t go back and put ourselves how we felt back then. And I remember having conversations a year ago and almost exactly a year ago where I was telling people, “Look, we’re likely at a point in the economic cycle where the next phase is going to be a downturn, and we’re not going to see this uptick in real estate prices forever.”

J Scott (00:18:29):

It’s funny here we are a year later and in a lot of ways, and we can talk about this, we’re still seeing that uptick in real estate prices. But there are a lot of people who thought that the economy and everything would just go on, going up and up, and up for the next 10 years. I literally had people saying, “Yeah, I think we’re 10 years from the next recession.” When a year ago we were about 10 years into the current expansion, and historically we average five or six years, maybe seven years. And it was at that point already the longest expansion in history. So to believe that the economy was just going to keep going like that for another 10 years was to some degree preposterous. But there are a lot of people who were thinking, “Nope, this time is different. Instead of it being a 5 or 6 or 7-year cycle, we’re 10 years in. Why not 20? Why not 25 or 30?” And as much as that didn’t make sense, there are a lot of people who really believed it because they thought this time is going to be different.

Robert Leonard (00:19:25):

Yeah. This time is never different. And I think if people try to tell you that they know when the next cycle is going to end or start, then you should probably run the other way. J, you and I both study this, you know your stuff. And I don’t think you would claim to know when it’s going to end, right? We can say by fact that on average every five to seven years, we go through a cycle, that is a fact. But we’re not going to say that it’s guaranteed, we think that it could happen because of history, but that doesn’t mean we’re going to say this. Yet, there are people who will say, “Oh, I think 10 years from now we’ll hit a cycle.” How does anybody know that? Nobody knows.

J Scott (00:19:58):

Exactly. And it’s somewhat easier to say, this is where I think we are in the cycle. We can define phases of the cycle, and we can say, “We’re likely in this phase of the cycle.” Just because you know you’re in a phase of the cycle doesn’t mean that that phase is going to last a year or two years or three years, we don’t know that for certain. We can know that we’re at the top of the market, and I believe we were at the top of the market two years ago and people were asking me then, “Where do you think we are?” “So I think we’re at the top of the market.” And they said, “So does that mean we’re a couple of months from a recession?’ I said, “I don’t know.” I mean, we could stay at the top of the market for two or three or four years. Just because I’m confident we’re at the top or near the top of the market doesn’t mean I’m confident that I know when we’re going to get out of that phase and into the next phase.

J Scott (00:20:41):

So you’re absolutely right, we can often pinpoint about where we are. But things can get elongated, things can get shortened. And we never know exactly how long we’re going to be where we are even though we can often pinpoint where we are, if that makes sense.

Robert Leonard (00:20:54):

Yeah. An issue I’m seeing too is that even if you can talk to somebody and get them to understand what we’re talking about and they say okay, well, this is probably the economic reality of it. They’ll see their friend who goes out and makes just say a speculative trade in the stock market with options on Robin Hood or maybe they go flip a house and they make a bunch of money. They’ll see their friends doing that, and they’ll be like, “I’m not being conservative, I’m going to go try and be more risky.” And then they eventually get stuck, what they say is, ‘holding the bag’ at the top of the cycle. But you mentioned phases, and I want to go into the Four Phases of the Economic Cycle. And there are expansion, peak, recession, and recovery. Walk us through each of these four phases.

J Scott (00:21:33):

Hopefully, some of your listeners have studied a little bit of math and know the idea of a sine wave. And that’s that curve that goes up and then peaks, and then it goes down and troughs and then goes back up, and it just repeats. And while the economy doesn’t work cleanly like that, we can think of a nice clean sine wave or a nice, clean, up and down pattern to talk about this. So let’s imagine that you are about halfway up the uphill part of that arc. And that’s about where the phase of the cycle that we call the expansion is starting. And to give you an idea of what the expansion is, the expansion is that point, to add some time into it, imagine back in 2013 or 14 maybe. We’re well past the darkest days of the last recession, everything’s getting better, businesses are starting to do better.

J Scott (00:22:25):

People are not nearly as unemployed as they were, unemployment rates are starting to drop. People are making more money again, people have disposable income. A lot of the debt from the previous cycle has gone away. People have gotten foreclosed on if they were having trouble paying their mortgage, they’ve declared bankruptcy perhaps, maybe they defaulted on their credit cards. So basically people have a lot less debt than they had a few years earlier during the downturn. And generally speaking, things are good, people are optimistic. And as we move up that curve, that expansion curve, what we see is that people are making more money, businesses are doing well. People are well employed, salaries are going up, everything’s great. When people make more money, what are they doing? They’re spending more money. And as people spend more money, businesses start doing better.

J Scott (00:23:10):

And as businesses do better, they pay their employees more and they hire more employees, so unemployment goes down even more. They give bonuses, they add hours to people’s schedules. So then employees, well, they’re consumers. So they’re making more money, so they’re spending more money. If it as a snowball up the hill, people are making more money, so they’re spending more money, so businesses are doing well. Well, at some point, people are doing so well and businesses are doing so well that the demand for goods and services, let’s think you go to a restaurant or you buy clothes or whatever it is, demand for all this stuff gets to the point where businesses can’t handle the demand anymore.

J Scott (00:23:51):

People are making so much money that they’re going out to restaurants more than they’ve ever gone out to restaurants, and so restaurants basically, they need to hire more waiters and waitresses. They need to add on space, they need to buy more food, they need to buy more dishes and chairs and tables. And all of this stuff costs money to expand. To keep up with all the demand that they’re getting from customers who are making and spending so much money, they need to start spending lots of money on inventory, on warehouse space if they’re storing stuff, on retail space if they’re selling stuff, on hiring people. But they can’t hire people because everybody has a job at this point, so they have to start paying their staff more to get them away from their other jobs. You see where I’m going with this. Basically, the economy is booming and everything’s doing great.

J Scott (00:24:39):

Fir businesses though, because they’re spending more money to meet this demand, they need to raise prices. All of this stuff isn’t free. So if they’re going to hire more workers and pay their workers more and all that stuff, they need to pass those costs on to consumers. So they start raising their prices. This idea of raising prices and things costing more is what we refer to and not technically, but we’ll use the term inflation. Inflation is this idea that the price of stuff goes up naturally for whatever reason. And when the price of stuff goes up and we start seeing this inflation, the government doesn’t like that. The government realizes that inflation is bad for consumers because if things cost more tomorrow than they did today, I’m not going to be able to buy as much and that’s going to hurt businesses, and that’s going to hurt the economy.

J Scott (00:25:24):

And so the government doesn’t like to see inflation. So when we get to the top of this curve, near the peak of that curve, the government says, “This is not good. We need to slow down the economy to slow down inflation so that things don’t go out of control and prices don’t go up too fast.” And they basically do that using, the most common way they do that is they raise interest rates. And now people say, “Well, what does raising interest rates do?” Well, here’s how you think about interest rates. Raising interest rates does two things. One, it increases the amount of money that you make when you put money in the bank. So if your savings account, if interest rates go up, your savings account might go from 1% to 2% or 2% to 3%. You’re now making more money by putting money in the bank in interest.

J Scott (00:26:11):

So when interest rates go up, people think, “Oh, well, now I have a more viable thing to do with my money, I’m going to put it in the bank.” When people put money in the bank, well, they’re not spending money. The second thing is when interest rates go up, it costs more to get loans. If you want to buy a house or a car or take out a credit card, you’re going to be paying more in interest on your loans. And so people are thinking, “I can’t afford as much house, I can’t afford as much car. Interest rates are too high, I don’t want to buy stuff,” so they stop spending money. So between saving more and spending less, people basically cause the economy to slow down. So as we get towards the top of the expansion phase, we see the governor raise interest rates to slow things down because inflation is getting out of control. And raising interest rates starts to slow things down.

J Scott (00:26:56):

So we get to the top of that curve. And at some point, things slow to the point, and we call that top of the curve the peak phase. And the peak phase is where interest rates are up, the economy is slowing down, people are saving more money, spending less money. This is good potentially for consumers, but it’s bad for businesses, and businesses drive the economy at the end of the day. And so because businesses are now suffering because people aren’t spending as much, things start to slow down. So in this peak phase, we see a flattening. So the economy is not going up, it’s not going down. It’s just moving along horizontally, just a consistent pace. And at some point, because the government does a real bad job of course-correcting, think of a ship where you turn the wheel really hard. But the ship doesn’t start to steer off in that direction real sharply, it takes a while for the turn to catch up.

J Scott (00:27:51):

And before you know it, you’ve now turned too far, and so you start to turn back the other direction. And it takes a while for that to kick in, you find yourself over correcting. The government does that with interest rates. So they’ll increase interest rates really quickly to slow down inflation. But they’ll do it too quickly, and that will eventually lead to the economy slowing down too much. And then from that peak phase, we go into the third phase, which is the recession phase. And that’s where the government has caused the economy to slow down a little bit too much, and then we snowball downhill.

J Scott (00:28:22):

So businesses are doing poorly, they have to lay people off, they have to cut their hours, they have to cut their wages. People don’t have enough money to pay their mortgage or to pay their credit card, so they start defaulting on debt. They start defaulting on their mortgages, and they get foreclosed on. And that leads to them not being able to spend money, and so that hurts businesses even more, which hurts their employees even more. And again, it’s a snowball downhill. And this is the recession, this is the recession phase of the cycle. Well, at some point, the government realizes this is really bad, we have to do something about this. So they’ll do the opposite of what they did when the economy was heating up, they’ll say, “Okay, we want to encourage people to spend money.” And how do you encourage people to spend money? Well, you lower interest rates.

J Scott (00:29:05):

And lowering interest rates, again, does two things. One, you’re not making any money in your savings account, so you have no incentive to save. And two, it’s now really cheap to borrow money, again, because interest rates are down, so now it’s time to start borrowing money to buy all those things that you want to buy. And that spurs on the economy. So we’re in this recession phase, we’re heading down that long hill. The government lowers interest rates, lowering interest rates spurs the economy on again. It gets people to start spending money again, it gets businesses back on track. And so at some point we’re going to hit the very bottom of that curve, and we’re going to start working our way up the other side. And the way up the other side is what we call the recovery phase of the cycle.

J Scott (00:29:47):

And this is the point where generally we’ve seen a lot of foreclosures, we’ve seen a lot of people defaulting on their debt, which actually in a way is really, really bad. But it’s also a reset for the economy. When you go from 30 or 50 or $100,000 in debt because you were spending all this money and borrowing all this money to now you’ve defaulted on your credit card, you’ve declared bankruptcy. You’ve lost your house, so you don’t have a mortgage. While it might be really bad for you personally, for the economy as a whole, when all this debt goes away and all these people no longer have debt, what do they do? They think, “Oh, I don’t have debt anymore, I can start spending money again.”

J Scott (00:30:26):

And that helps the economy. And eventually, obviously those people are going to get back into debt. But that helps the economy, and we go through this recovery where everything starts to get better, which leads us into halfway up that hill where we start the next expansion, next peak, next recession, next recovery. And that cycle just continues on and on, and on. And I know that was a really long explanation, but it’s something that I think is really important for us as investors to understand that that cycle is going to happen. And this time isn’t different, normally this time isn’t different.

Robert Leonard (00:31:00):

It’s not different, it’s just prolonged. That S is just a little longer, if you will. If you lay it down horizontally, that last piece is just spread out a little bit. Before we talked about those phases, I mentioned that none of us can time it. None of us know exactly when things are going to happen, so my next question might be a little unfair. But I’m not asking you to time it, and I’m not asking you to say, when is this going to end? But where do you think we are right now? What phase do you think we’re in?

J Scott (00:31:27):

Well, this is why I said normally we say it’s not different, but even I fall into the trap sometime. I think this time actually is a little bit different. I think with COVID, things are a little bit different. And we need to start talking about that economic cycle a little bit differently than we have in the past. And I’m sure in five years I’m going to look back and realize, no, it actually wasn’t different. But I’m going to go with … For the sake of this discussion, let’s think about things a little bit differently. Where are we in the cycle? Let’s start with where I thought we were right before COVID. Like I said, I felt like we were in the peak. And I actually felt like we were in the peak for the last year or two.

J Scott (00:32:04):

And again, the peak is where the government is lowering or increasing interest rates a little bit or trying to increase interest rates, in this case, they weren’t very successful to slow down the economy. Basically, we’re getting to the point where asset prices weren’t necessarily going up, but they weren’t going down. We’re just moving along nicely. I feel like that’s where we were for a year or two before COVID. Certainly, some things were doing better than others, but overall things had flattened out and were just moving along. Then COVID hit. And I think the first reaction after COVID was, okay, this is that start of the downturn, this is the start of another really deep recession like we saw in 2008, maybe worse than we saw in 2008. And in some ways, it absolutely was.

J Scott (00:32:46):

I mean, if you look at things like GDP, which stands for Gross Domestic Product, which is the total output of the country, it’s how much companies are producing and people are spending. If you looked at that number, the economy halted in Q2 of this year. So in some ways, we really did fall off a cliff. And what we saw was a recession or economic numbers that indicated a recession that was worse than anything this country’s ever seen. Go back to The Great Depression, and the numbers we saw during Q2 and going into Q3 made The Great Depression look like a fantastic economic event. Things really were horrendous. But by the same token, there were a lot of things that didn’t look horrendous. With the exception of that at steep drop that we saw back in March and part of April in the stock market, the stock market recovered well. And for the most part, people were saving money and people were spending money and businesses seemed to be doing okay. I mean, it was a dichotomy.

J Scott (00:33:45):

In some ways, it looked like literally the worst economic event in the history of the world. And in other ways, it looked like just a blip on the radar and things were actually getting better. So how do you reconcile the fact that our economy and the data and the observational piece is just what we were seeing and feeling, that everything was so divided. And the way you reconcile that is stimulus. So for the last 8, 9, 10 months, the government has been creating so much stimulus, creating so much money that we can’t ignore those horrendous economic numbers, but we can hide them. We can create a facade around the economy that makes everything look a little bit better than it’s been. And when we talk about stimulus, we’re talking about things like offer small businesses, there were these PPP and EIDL loans, basically free money handed to every small business owner. Big businesses were getting bailouts obviously.

J Scott (00:34:39):

We were seeing direct to consumer payments. The government gave essentially every American $1,200. So just ridiculous amounts of money flowing into the economy. Then when you add on things like eviction moratorium, basically we can’t evict tenants who’ve stopped paying and mortgage forbearances. Big mortgage companies are saying, “If you can’t pay your mortgage, we’re not going to foreclose on you, and we’ll figure something out later.” So there are literally 7, 8, 9% of the home owning population that hasn’t paid their mortgage in several months. And there’s a larger percentage of renters who haven’t paid their rent in several years. And when people aren’t seeing any ramifications, any repercussions for not paying their mortgage, not paying their rent, what are they going to do? They’re going to take that money that they might have, and they’re going to spend it somewhere else or they’re going to put it in the bank.

J Scott (00:35:28):

And so because we’re not seeing all the negative repercussions of things that normal would be happening right now, businesses going out of business, renters getting kicked out, homeowners getting foreclosed on. Because we’re not seeing the negative ramifications, things look better than they actually are. Those renters aren’t caught up on their rent, they still owe back rent. And the homeowners still owe back payments on their mortgages. And business owners are still struggling even when that money runs out. So basically what we did is we put a band-aid on a wound. We cut somebody’s leg off, and then we put a bandaid on it. And for some reason, we were able to find enough band-aids that that wound hasn’t looked nearly as bad as it was.

J Scott (00:36:14):

So right now, we’re at this place in the economy where, I’m not going to say we’re in the recession phase. Certainly, there are a lot of things that make it look like we’re in the recession phase. There are other things that make it look like we’re still in the peak phase. And then there are some economic indicators that you can look at like the stock market that would make you think that we’re still in the expansion phase, and everything’s getting better. So right now, I like to call this the fake economy where we’re not really in any phase, we’re just hovering all over the place. And at some point, and I suspect it will be in the next three to six months. I’m just guessing, I don’t know for certain. But I suspect the next three to six months, a lot of the stimulus is going to run out and the eviction moratoriums are going to end, and the foreclosure or the forbearances are going to end. And the PPP money is going to run out, and the direct to American payments are going to stop.

J Scott (00:37:07):

And at that point, we’ll find out where the economy is. When all the stimulus stops or slows down, we’re going to see where the economy is. My take is that we’re going to find ourselves heading downwards into the depths of a recession, but we don’t know for certain. Like you said earlier, like I said earlier, we can all guess, but nobody knows for certain. And I have a feeling in the next three to six months when everything shakes out, we’re going to have a better idea of where we are.

Robert Leonard (00:37:33):

What are the positive and negative impacts of each phase that we just talked about on the different real estate strategies?

J Scott (00:37:40):

We talked earlier about the fact that during each phase of the economic cycle, there are going to be things we should be doing, things we shouldn’t be doing. I like to talk in terms of two things, I like to talk in terms of strategies and tactics. So strategies are these big, high-level things that we as real estate investors do. And so we can think of strategies as, house flipping is a strategy, buy and hold or rental landlording is a strategy, investing in multi-family is a strategy, syndications are a strategy, lending is a strategy, notes are a strategy. These are the big high-level things we do in the real estate business. Within each strategy, we have tactics. We have more tactical and day-to-day things that we do that differentiate. So for example, in the rental space, we can talk about, well, there’s renting, that’s the strategy, being a landlord. But within that, maybe we’re buying and renting out class C properties versus class B properties. That’s a strategy shift.

J Scott (00:38:36):

If we go from renting out or buying and renting class B properties to class C strategies, that’s a small shift within that strategy, that’s a tactical shift. So when I think of what we should be doing in each phase of the economic cycle, what I like to be thinking about is what are the strategies we should be pursuing, those big things that we should be pursuing? And then within those strategies, what are the right tactical shifts we should be making for each phase? So let’s talk because I think most people care about what they should be doing today as opposed to in general what they should be doing in a year or two or five. So let’s talk a little bit about what I think people should be doing today.

J Scott (00:39:13):

One, let me throw out there that, again, I think once the stimulus runs out in the next 3 to 6 months, maybe it’s 9 months, maybe it’s 12 months, I don’t know. But once that happens, I have a feeling that we’re going to see a softening in the real estate market. One of the things that’s worth discussing is why we’ve seen the real estate market going up and up, and up if we have such a bad economy. If things are so bad like I’ve been saying, why is real estate going up? And one of the big reasons I think is that right now everybody, not everybody, but most people know that prices are driven by supply and demand. When there’s more supply than demand, when they’re more sellers than buyers, prices go down. When there’s more demand than supply, when they’re more buyers than sellers, prices tend to go up. Right now, we have a lot of demand. There are a lot of people that want to buy houses because people aren’t scared to go out there and generally walk through other people’s houses with COVID.

J Scott (00:40:08):

They’re not scared to go out there and look for a new house because COVID is forcing people to move to new locations or encouraging people to move to new locations. So there are a lot of people out there looking to buy houses, more than there has been year over year actually. But there are a whole lot fewer people looking to sell houses right now. There are a lot of people out there who are terrified of having random strangers trouncing through their house when they could be contagious, they could have COVID. And so there are a lot of people right now who would otherwise be selling their house, but they’re saying, “Nope, I’m not going to sell right now. I’m going to hold off until this whole COVID thing has passed.” So we have a whole lot of buyers, we have just as many buyers as we normally have, if not more, we have a whole lot fewer sellers.

J Scott (00:40:52):

In my area, year over year, we’re down 25% in total number of listed houses. So 25% is a huge decrease in supply. When you have a big decrease in supply but you have the same amount of demand or even more demand, what happens? Prices tend to go up. And so right now we’re seeing prices go up because we have very little supply or relatively little supply and a whole lot of demand. Again, when things shake out and we see COVID hopefully go away, hopefully there’s a vaccine in the next six to nine months, we’re going to see a whole lot of sellers who say, “Okay, I’ve been waiting a year, I’ve been waiting a year and a half to sell my house, now’s the time to list my house.” We’re still probably going to have a lot of demand, but at that point, we’re also going to have a ton of supply.

J Scott (00:41:37):

And when the supply starts to go up and the demand stays even, we’re going to see a drop in prices. So I have a feeling that first things first, when COVID comes to an end, hopefully, again, in the next six to nine months, we’re going to see a softening in the real estate market. I think we’re also, like I said, we’re going to see a downturn in the economy in general. And I think that’s going to lead to a bigger softening in the real estate market. I’m not saying we’re going to see 2008, I’m not saying we’re going to see The Great Depression sort of thing. But I think we are going to see a downturn in real estate, and we’re going to see a downturn in the economy. Let’s talk about what that means, let’s get back to what that means for real estate investors and the strategies we should be looking at.

J Scott (00:42:16):

Starting with the biggest picture, there are two general highest-level strategies that real estate investors employ. One is transactional, and the other is long-term cash flow. So when I say transactional, I mean a lot of us as real estate investors, we buy property, we renovate the property, we do something to bring the value of the property up, and then we resell it. It’s a transaction, we buy, we do something, and we sell. So there are a whole bunch of strategies, fix and flip and wholesale being the two big ones that fall into this transactional category. Then the other big category is long-term cash flow. We buy something, and we make money off of it month over month, over month. We hold it for a long time, 5 years, 10 years, 30 years.

J Scott (00:42:59):

Those are the two big strategies. In the cash flow strategy, that’s rental real estate, that’s multifamily, that’s notes, that’s lending. We buy an asset and we just hold onto it for a while and collect the cash flow. So transactional and cash flow, these are the two big buckets. Typically speaking, when the market is doing well and going up, transactional is great. Even if the market is staying flat, if you buy it distressed property, you add value and you resell it, you make money. If the market’s going up, well, you’re going to make even more money because the market’s gone up between the time you bought it and the time you sold it. So generally speaking, transactional type real estate, flipping, wholesaling, those types of things tend to work really well during the expansion phase and even the peak phase of the cycle, the uptick, and then the flattening of the cycle.

J Scott (00:43:48):

Even works pretty well during the recovery phase of the cycle, that lower part of the uptick right after the recession. The buy and hold, the cash flowing strategy tends to work well throughout the entire cycle. So it works well during the recovery phase, it works well during the expansion phase, it works well during the peak phase just like transactional does. But buy and hold also tends to work pretty well during a recession. And that’s because even though values tend to go down during a recession, rents tend not to go down. So if you look at 2008 data, what we saw is that in a lot of areas, real estate prices were dropping 5, 10, 15, even 25, 30 or 50%.

J Scott (00:44:27):

I was in Atlanta, and I saw parts of Atlanta back in 2008 where real estate prices were literally dropping nearly 50%. But even in those areas, rents weren’t dropping that much if at all. In some places, we saw a few percent. In the worst hit parts of the country, we saw about a 10% drop in market rents. But in a lot of areas of the country in 2008, rent stayed pretty flat. Maybe they dropped a couple percent, but for the most part they stayed pretty flat. And so if a buy a rental property, let’s say even at the top of the market. Let’s say right now we think it’s the top of the market, and we think everything’s going to drop by 50% over the next year. And I’m not saying I think that, I don’t think that’s going to happen. But let’s say we think everything’s going to drop by 50% in the next year, let’s say I buy a rental property for $100,000. It’s cash flowing $1,000 a month or $1,500 a month.

J Scott (00:45:17):

If tomorrow the real estate market collapses and that $100,000 property is now worth $50,000. If I’m a house flipper, that sucks, that’s going to destroy me. But if I’m buying for cash flow and I’m not looking to sell that property, as long as market rent stay somewhere around $1,000 or $1,500, whatever I was planning to rent it for. As long as market rent stays steady, I’m going to be making money month over month, over month. Even if it takes 2 or 3 or 5 or 10 years for the value of that property to get back to where I bought it, I’m making money every month. So even during a downturn, because rents tend not to get hit nearly as hard as real estate values, buy and hold investing will tend to work even if you buy at the top of the market.

J Scott (00:46:02):

So what I’m telling people is even if you think today is the top of the market, if you can find a good buy and hold deal, go buy it. Because again, even if tomorrow or next week or next month real estate values drop, you’re going to be holding that for two or three or five years. And by the time you’re ready to sell it, value’s going to be back and probably surpass where it was when you bought it.

Robert Leonard (00:46:22):

The two big keys to buying and holding rentals during this whole cycle is one, you got to make sure the numbers still make sense, and you mentioned that. You can buy deals right now, I’m buying a deal on Friday, we talked about this before the interview. And there’s still deals to be had. Are they harder to find because prices are elevated? Sure. You could argue that, but they’re still out there. So you can still buy rentals at any point in the cycle, you just got to make sure the numbers make sense. And two, rentals, you just have to make sure that you can weather the storm. The value that drops doesn’t matter as long as you can hold onto the property, you just have to make sure that you can actually cash for that property the whole time. And again, that goes back to your numbers really making sense.

J Scott (00:46:58):

And that’s where the second piece of the puzzle comes in, and that’s the more tactical pieces. But from a high-level strategy, transactional tends not to work during a recession, all three other phases does. And cash flowing tends to work throughout the entire economic cycle, all four phases. But there are things we can be doing tactically and things we should be doing tactically at different points in the cycle. So we’re going to be doing different things with rental real estate during an expansion than we’re going to be doing during a recession. Like you said, you have to be more conservative. So what I tell people is while rental real estate, buying rental property is still going to work during a downturn, still going to work during a recession. If you’re going to buy rentals during a recessionary period, there are a few things that you should be doing differently.

J Scott (00:47:42):

One, just like you said, be more conservative in your numbers. I like to say assume a 10% market rent drop, 10%. Like I said, back in 2008, the worst hit area saw about a 10% drop in rents. They saw much harder hit values, but rents 10% was a worst case. So if you want to be ultra conservative, assume your rents are going to drop 10% during the recession and do your underwriting with a 10% lower number. Additionally, occupancies tend to drop, vacancies tend to rise a little bit during recessions. People tend to move out of one place back in with family or they double up. And so we tend to see occupancy drop. So again, be conservative, model your numbers more conservatively. Assuming 10% drop in occupancy. If you normally assume an 8 or 9% vacancy rate, assume 9 or 10%, so 10% more than you normally assume, and underwrite to those numbers.

J Scott (00:48:32):

And if the numbers still work, if you use those tactical shifts of being more conservative and the numbers still work, go ahead and buy the property. Other types of tactical things I tell people is during a recession, we typically see a larger drop in both values and rents at the highest class of properties. Class A properties tend to see the most rent drop or what we refer to as rent compression. If you go down to class B properties, we tend to see a smaller rent compression. Go down to class C properties, we tend to see an even smaller rent compression. Everybody needs a place to live, and so worst case people end up at that C class property barring homelessness, obviously. And so typically what I tell people is if you think we’re heading towards a recession, if you’re buying in the peak phase or during the recession, don’t focus on class A properties. Focus on class B properties or class B minus properties, focus on class C properties because you’ll tend to see that a lower drop in rents than you would in those class A properties.

J Scott (00:49:30):

So that’s a tactical shift as well. Another tactical shift is during a recession, we often see reduced access to credit, we sometimes see HELOCs getting called due, interest rates tend to be a little bit higher. so if you have an adjustable rate mortgage that’s resetting, it might be resetting at a higher rate than if you got that mortgage back during the expansion phase when rates were lower. So I tell people to be more conservative with leverage. So don’t necessarily do 90% loan to value loans because if the market drops by 10 or 20%, you can find yourself underwater. Instead do 70 or 80% loan to value loans, so then the market can still drop 20 or 30% and you still have equity in your property. So be a lot more conservative on your leverage.

J Scott (00:50:17):

And then if you want to flip houses, what I tell people is you can flip in any phase of the market cycle. You can even flip during a recession, you just have to be really, really careful. I don’t recommend people do it, but if you’re going to employ that strategy, make sure you’re employing the right tactics that will allow you to keep from getting crushed when the market drops. And so one of the things I tell people, if you’re going to do a flip during a phase where you think the market’s likely to turn down in the next several months, keep your flips really, really short. The market’s a lot less likely to drop precipitously in the next month or 2 than it is in the next 5 to 10 months. So if you can keep your projects really short, you’re a lot less likely to get caught in that massive drop or even a short prolonged drop.

J Scott (00:51:02):

Number two, focus on medium-priced houses. So in any area, there are going to be like this median average price that houses go for. And what we tend to see is when the market starts to shift and we tend to head into a recession, properties that are at a much higher price point than the median tend to slow down first. And then properties much lower than the median price houses tend to slow down second. Those properties at the medium price point, they tend to sell well for a longer period of time. So if you’re going to do flips in any particular market, find out what the median price point in that market is and focus there on the flips because that’s where the market’s going to be strongest for the most amount of time. So if you see things starting to soften, you can sell off those properties, you have a little bit more time to sell off those properties before you take a loss.

J Scott (00:51:45):

And then finally I’ll tell people, make sure you buy in good school districts. If you look at the data, especially from 2008, those good school districts held their real estate values. They still lost value in 2008, most places still lost value, but good school districts tend to hold their real estate values much better than mediocre and bad school districts. People like to buy in good school districts. So when prices drop and the few people that actually have money and can buy a house, where are they going to buy it? They’re going to buy in the good school districts. So if you’re going to flip during a time of uncertainty, make sure you focus on those markets that have good school districts.

Robert Leonard (00:52:22):

I was really glad to hear you talk about the different grades and how rents compressed differently because that’s how I’ve approached my rentals. And again, we talk about how neither of us can time the market, and I’m not trying to time the market, but I am a student of history, like we’ve said a couple of times. And I have felt, similar to you, that we were towards the peak phase, if you will, of the cycle. And so I was trying to hedge my downside risk for the last year and a half, two years buying rentals. I’ve pretty much been buying C plus, B minus properties because of exactly what you said is, one, we’re not going to see as much rent compression, if at all. And tow, those people that are in your A properties, they’re probably not going to be able to afford that in a recession, so they’re going to come down to B.

Robert Leonard (00:53:03):

Those people in B are going to come down to C or maybe even the As are going to come down to your C plus, B minus area. And so in general, I expect the demand to still be there pretty high and strong for your C plus and B minus areas. So that’s really where I’ve been focusing a lot as this economic cycle has unfolded over the last year and a half.

J Scott (00:53:21):

Yeah. And I think that’s smart. And you said don’t try and time the market. I know everybody says don’t try and time the market. It’s a truism in investing in general, don’t try and time the market. But I’m going to say that are some exceptions. And it’s not really timing the market, but there are some things that you should be doing and be cognizant of as the market changes. So I wouldn’t tell you if you think we’re getting towards the top of the market to go sell all your properties. That’s timing the market, that’s not something I would recommend. But what I would recommend is if you think we’re getting towards the top of the market, find those properties in your portfolio that you think this isn’t a property I’d necessarily want to hold for the next five years or this is a property that maybe I have an adjustable mortgage where we’re going to be adjusting in a year or two, not necessarily adjusting, but we have a loan coming due. And I’m not sure I’m necessarily going to be able to refine a year or two if the market drops.

J Scott (00:54:14):

Or maybe you have a property where you think, “This hasn’t necessarily been a winner for me, I’ve been cash flowing, but I’d rather have the cash and just be able to sit on the cash.” If you can strategically time the market, if you can pick the assets in your portfolio that you’re thinking, “I’m looking to get rid of those anyway,” or, “it might be a good idea to get rid of those anyway.” Prior to where you think there’s going to be a shift in the economy is the perfect time to execute on that. So don’t sell a property that you wouldn’t otherwise sell. But if you’ve been looking for an excuse to sell a property before when we’re heading into the peak, even if you’re a little bit early, it’s better to be early than to be a little bit late if it’s a property that you’re thinking for other reasons I was going to sell anyway. So in some cases, I do like the idea of timing the market to some extent with those properties that you’re not looking to hold long-term anyway.

Robert Leonard (00:55:01):

And there’s a big difference between trying to time the market and strategically acquiring properties in your portfolio. I’m not trying to time the market, I’m not saying … If I was trying to time the market, I probably wouldn’t buy rentals really right now. I’d wait for property values to come down, and then I would buy them, that would be timing the market. Whereas I’m just trying to more hedge my risk, strategically think about, okay, this is what I think might happen, I’m going to hedge my risk a little bit. I think my returns are still going to be good, but I’m giving up … If I bought A, maybe my returns will be a little bit better, but I’m going to hedge that a little, play it a little more conservative and just go with the C in case something does happen. Not to time the market, just to be strategic.

J Scott (00:55:41):

I think what a lot of people don’t realize about timing the market, and one of the big reasons why we don’t. We all know the reasons like because we can’t predict where the market’s going. But there’s even more just pragmatic reasons not to try and time the market. If I sell today with the expectation that I’m going to buy back in two years when prices are lower, obviously we know I may be wrong and maybe prices aren’t going to be lower. But the bigger reason not to do that is that if I sell today, I’m going to pay taxes. And if my marginal tax rate is, let’s say 22% and I’m paying 22%, especially when you add on self-employment taxes in the real estate world, potentially if you’re flipping or even if you’re not, if you pay estate taxes, very easy to pay 20, 25% in taxes on the gain of a rental property.

J Scott (00:56:30):

I’d have to buy that property back for 25% less for a sale today to make sense given the fact that I’m going to pay taxes on that sale, on the gain of that sale. And so unless I think the market’s going to drop 25% or more than 25%, that really doesn’t make any sense. If you think about it, there’s been exactly twice in the history of this country where we’ve seen real estate values drop more than 25% across the board. And in one of those, it was barely, barely 25%. So the likelihood that we’re going to see a 25% drop is pretty low. So paying 20 or 25% in taxes to try and time the market just doesn’t make it.

Robert Leonard (00:57:11):

And it has to be a material amount, right? I mean, if the market drops 26%, sure, you made 1%, 2%, something like that. Is that worth it? Is it worth trying to time it for that much? I mean, you’d have to see the markets in my opinion drop 30, 40% before you make a margin of what, 5, 10, 15%? And then even, is that really worth it? It’s like, at what point is it material? At what point is it worth? I’m 25, so I’m not old. But as I get older, I’m starting to value simplicity. And to me, I’m just wondering, is that worth it? Is all that paperwork, is going through that transaction … We were talking before the show the headaches that I’m having with my two transactions right now. And it’s like I just want simplicity, and I don’t think 3 to 10% is really worth all that headache for me.

J Scott (00:57:54):

I think people don’t recognize, and I hate to say it, I sound old saying it, but I think the youngins don’t recognize the value of a dollar. If I’m thinking I can sell this property and make $100,000, it’s easy for me to think, “Okay. So I’m going to lose 20,000 of that to taxes, I’m still making $80,000.” And it’s easy to not care about $20,000 when you look at it in the scope of I’m making 80. But in the bigger picture, if I said to you, “Hey, would you give up a dollar to make 80 cents?” Obviously, you’re not going to do that. But when we get into $80,000, it’s like, “Yeah, I’ll give up $20,000 to make 80 because that sounds like such a big number.” And as you get older, you start to realize that the number scale and $20,000 is a lot of money, even though 80,000 is a lot to get at one time and it feels good, losing 20,000 to get that 80,000 isn’t worth it.

Robert Leonard (00:58:49):

Yeah. A lot of people don’t think about it like this. A lot of people don’t think about the tax component. They just try and time the market and think that’s always going to be the best is if they can time it right, then that’s going to be the best strategy for them. I mean, the conversation, the few sentences that we just said back and forth, I think that proves it, it’s not always the best case. As we’ve been going through this pandemic, I think there are people that are using it as a time to Slack off and be lazy. And then there’s other people that are using it to better themselves and really double down, get better and do personal improvement. I’m curious, J, what have you been doing during this time to better yourself?

J Scott (00:59:23):

Yeah. It’s funny because I like to admit when I make mistakes because a lot of people look me and they say, “Wow, he’s done real estate for a long time, he’s done a lot of transactions, he probably doesn’t make too many mistakes.” Biggest mistake I’ve made over the last couple of years, like I said, I thought we were at the top of the market a year or two ago, and so I held off buying a whole bunch of buy and hold properties even though I just came on here and said don’t do that. But my thought was, “Okay, I have a bunch of cash sitting.” I didn’t sell in order to wait to buy something low, but I had a bunch of cash and I said, “I’m just going to hold off, I’m going to wait for the market to correct a little bit, and I’m going to buy low.”

J Scott (01:00:00):

And two years in, I realized that, hey, the market’s not correcting. And here comes COVID, and I’m still sitting on a bunch of cash. And June, July of this past summer came along and I said, “You know what, we’re probably really at the top of the market now with just the craziness of COVID, but I’m going to take my own advice, and I’m not going to hold off buying just because I think we’re at the top of the market.” And I didn’t buy in 2018 when prices were pretty good, I didn’t buy a lot in 2019 when prices were good, I didn’t buy at the beginning of 2020 before COVID. COVID comes along, prices spike, and what did I do? I started buying because I finally took my own advice and realized that it’s better to buy something now if the deal makes sense, obviously the deal has to make sense, than to hold off just in the hopes that prices are going to come down.

J Scott (01:00:48):

So over the summer, I actually bought more buy and hold real estate than I bought in the last two years. We added over a dozen properties to our portfolio, we bought a 150-unit apartment complex in Houston just about a month and a half ago. And so I’ve been doing more buying over the last few months than I’ve done in the last few years. So COVID for me was actually a wake up call that I wasn’t taking my own advice. Now, that’s me. What I recommend to other people is if you’re concerned about the market, if you’re not an experienced investor, if you’re thinking, now’s not the right time to do my first deal or my second deal or my third deal, I see nothing wrong with that. There’s no reason people should be doing deals if they’re not comfortable, if the market’s making them uncomfortable, if they just want to wait and see how things play out.

J Scott (01:01:36):

But what I would say, and you hit on this as well is just because you’re not doing deals right now doesn’t mean you can’t be bettering yourself. It doesn’t mean you can’t be preparing. What I tell anybody that’s sitting on the sidelines right now because they’ve made a conscious decision to sit on the sidelines, use this as an opportunity to get better at whatever you’re going to be doing when you decide to come off the sidelines. If you want to flip houses, well, use this as an opportunity to go and walk through 100 houses and learn to do rehab estimates or walk through 100 houses and do an ARV analysis, a comp analysis so you know how much these houses are worth. Or use this opportunity to figure out what your marketing plan is going to be. Use this opportunity to get good at design skills and figure out what things cost and find a contractor network. Use this time to build up the skills that you’re going to be using when COVID is over and you find yourself ready to take that next step.

J Scott (01:02:28):

Like you said, I see too many people that are sitting around and just kind of saying, “I’m not doing any deals right now, I’m going to go watch TV,” or, “I’m going to go do something else.” Don’t do that, be productive. Just because you’re not buying deals right now, and again, I see nothing wrong with not buying deals if you’re not comfortable buying deals. But don’t be lazy and don’t be doing nothing. Do something that’s going to get you better prepared for when you do start buying deals.

Robert Leonard (01:02:55):

That’s exactly why I asked that question. And I asked the same question on my other show because I want my listeners of both my shows to be bettering themselves. I don’t want people listening to this show to be … Because you’re listening to this show, I’m probably guessing that you’re not just sitting around watching Netflix. But if you are, I want this to be a reminder to you that you need to get out there, work on yourself. It doesn’t matter what it is, it could be for investing, it could be for your health, it could be for your personal finances. It could be whatever, I just want you to be bettering yourself during this pandemic. I don’t want you to look back. I think a lot of people you’re going to look back on this, and I think it’s going to separate a lot of people.

Robert Leonard (01:03:24):

I think a lot of people are going to go backwards, I think a lot of people are going to make a lot of strides forward. And I want you guys who are listening to this show to be part of the group that are going to take those strides forward, come out of this pandemic and this awful situation that we’ve been dealing with in 2020 better than you went into it. So that’s my goal, that’s why I asked that question of the guests. J, I have a lot more questions, a lot more stuff that we could talk about just like last time. So we’ll have to bring you back for a third time. I really appreciate you joining me again. For those listening that want to learn more about economic cycles, how they impact real estate investors, just about you in general, where’s the best place for them to go?

J Scott (01:03:59):

To make it easy, the best place to find me is www.connectwithjscott, just the letter J, .com, connectwithjscott.com. And that’ll link out to everything you might want to know about me.

Robert Leonard (01:04:13):

That is simple enough. I will put that link in the show notes below. Whether you’re watching this on YouTube or you’re listening to it in your podcast player, that link will be below. Be sure to go check out everything that J’s got going on, I love all this content. I know you guys will too. J, thanks so much.

J Scott (01:04:27):

Thanks Robert.

Robert Leonard (01:04:28):

All right guys, that’s all I had for this week’s episode of real estate investing. I’ll see you again next week.

Outro (01:04:34):

Thank you for listening to TIP. To access our show notes, courses or forums, go to theinvestorspodcast.com. This show is for entertainment purposes only. Before making any decisions, consultant a professional. The show is copyrighted by The Investor’s Podcast Network, written permissions must be granted before syndication or reforecasting.