Welcome to The Real Estate Underground Show #107!
In today’s episode, we're thrilled to feature special guests from Prefore Profits: Matthew Merenoff, William Bonnell, and Rick Hamrick. They share their journey from adversity to success, offering invaluable insights for those looking to make their mark in the real estate market.
In this episode, you'll discover:
If you're eager to learn more about the Prefore Profits conference, visit https://www.preforeprofits.com/. The event will be held in Clearwater, Florida, from February 28th to March 1st. Don't miss out on this opportunity to deepen your real estate knowledge and uncover hidden opportunities!
Resources:
Website: https://www.preforeprofits.com/
Additional Resources:
Welcome to The Real Estate Underground Show #107!
In today’s episode, we're thrilled to feature special guests from Prefore Profits: Matthew Merenoff, William Bonnell, and Rick Hamrick. They share their journey from adversity to success, offering invaluable insights for those looking to make their mark in the real estate market.
In this episode, you'll discover:
If you're eager to learn more about the Prefore Profits conference, visit https://www.preforeprofits.com/. The event will be held in Clearwater, Florida, from February 28th to March 1st. Don't miss out on this opportunity to deepen your real estate knowledge and uncover hidden opportunities!
Resources:
Website: https://www.preforeprofits.com/
Additional Resources:
Ed Mathews: So the big question is this, how do real estate investors who don't have a ton of free time don't have access to off market deals and didn't start life on third base? How do we conservatively grow our real estate business to support our families, finally leave the corporate rat race, and build a legacy?
Ed Mathews: That is the question. In this podcast, we'll give you the answers. I'm Ed Mathews, and this is Real Estate Underground. Greetings and salutations Real Estate Undergrounders. Thank you so much for joining us today at the top of the show, I wanted to just make mention that if you could, if you get something out of this and you're enjoying all these shows that we've done for you, if you could rate and review and subscribe, it really helps us grow.
Ed Mathews: Thank you so much for joining us today. So today with, if you're watching us on YouTube, I feel like the old Brady bunch, which I know I'm dating myself, where you've got the girls over on the right side and the boys on the left and mom and dad. And I guess that makes me Alice.
Mathew Merenoff: I'll be more sure.
Ed Mathews: You are the best looking one of us, Matt.
Ed Mathews: So there, so Prefore Profits, you know, this is an interesting opportunity because these guys have come together two separate, two separate companies. Right guys. Yeah, that's right. And professional problem solvers, which is something that is near and dear to my heart. And they are coming together to help real estate investors be able to recognize and work through creatively and otherwise, how to solve people's problems to be able to take on additional real estate and move it through their portfolio, whether they're flippers or long-term holders or something else.
Ed Mathews: So gentlemen, welcome to the show. Thank you so much for your time today. And I think we'll probably go clockwise if you all want to introduce yourselves, and then we'll get, we'll get into it. See you, William. Oh, cool.
William Bonnell: You just actually answered something for me and I'm being public here, but I've never really been sure of whether or not everybody is looking at the same display.
William Bonnell: So sometimes I think that for somebody else, maybe we're in different spots when you're looking at your screen and I'm, I'm glad to hear that anyway, my name's William Bonnell. I've been a full-time real estate investor since March of the year 2000. That's when I first got involved. So it's been 24 years of doing this.
William Bonnell: Literally the only thing I've ever done for a living is real estate in my adult life. I had some jobs as a teenager. All of which I got fired from, and I had this tiny little insubordination issue and problem with authority. So being self-employed and being a business owner, being an entrepreneur was really the only option I ever had.
William Bonnell: And thank God I was good enough at it that I didn't starve to death. Basically, I, when I first got into this, I really was attracted to the idea of problem-solving. I was really attracted to the idea of the chess game style approach to real estate where everything's strategic, everything's planned out, and I like to take on challenging stuff.
William Bonnell: It's, I find it really engaging mentally, and I think it's wonderful to be able to help people out of certain situations. We all know here in the United States, we don't exactly have the best financial education growing up. Nor do we have the best legal education growing up. And I found that with certain situations, such as being in pre-foreclosure or being behind on income taxes or things like that.
William Bonnell: People can end up in a situation where they're in what I like to refer to as a forced sales situation. So over the years, I perfected a ton of different techniques for resolving these issues favorably for people and either getting them out of foreclosure, getting the IRS off their back, getting state income tax agencies off their back.
William Bonnell: I've been doing real estate investing nationwide for since 2011. I was only working in the New England area from 2000 to 2011, and in 2011 I opened up and started working outside of New England. And since then I've successfully closed deals in 38 of the 50 states. So.
Ed Mathews: Cool. All right. Matthew, how about you?
Mathew Merenoff: Yes. I actually got involved in real estate. Believe it or not, I had a short run as a New Jersey transit train operator, and I got involved in the mortgage industry in early 2000, and I ran a forced sale by owner service and we were killing it. Towards the end of the forced sale by owner service, the physical service, I started to see where people were calling me in and asking me for help, asking me to get there before their spouse got home, which I thought was all weird.
Mathew Merenoff: Uh, I was married, obviously at the time. So I was, I can't, I don't know
Ed Mathews: what you guys, yeah, yeah, of
Mathew Merenoff: course. Yeah. People were in one of those particular loans and their mortgages were skyrocketing from whatever they thought the mortgage payment was going to be for life and mortgages weren't explained correctly to these people.
Mathew Merenoff: And my career started at the end of 2004, going into 2005. And I just, I took one of those classes and just put it all out there, figure out how to buy a house for as little as 10$ in a pocket. And, uh, I was fortunate enough to be at the right place at the right time. I had collection experience also too. I was trying to figure out how to jam a square peg into a round hole.
Mathew Merenoff: It was something that really worked with me and resonated. So followed through with it. Built, uh, built three different companies, kept going to where I feel comfortable where I am right now. 2015, I went nationwide with my concept to help people in other markets across the United States. I'm in New Jersey, Dirty Jersey.
Mathew Merenoff: And yeah, it was just fascinating. It's still as fascinating to this day, what had happened in the timeline. If you look at it from. Really 2005, all the way up to 2024 and the face of the pre-foreclosure market in 2024 has changed forever. It will never be the same due to what had happened during COVID.
Ed Mathew: Well, we're going to talk about that in a sec. Yep. Rick Hamrick, welcome to the show. Why don't you tell us about your background?
Rick Hamrick: As, as Ed said, I'm out of the Kansas City market. I started a little bit different than these gentlemen. I worked in the W2 world for a long time as a technical sales engineer and then VP of sales in a software company.
Rick Hamrick: Bought my first rental property in 2016, and then just dabbled in it as a hobby. And then got serious about real estate investing in 2020, right? Uh, when, when the big C word came out, it was like, okay, I need to do something for myself. And as I got into it very quickly, I realized with my technical sales engineering background, I'm more about solutions.
Rick Hamrick: I was very solution oriented and going where you're actually needing and solving problems and challenging situations. I met William in 2020 in another high-level mastermind and he actually walked me through my first pre-foreclosure property and that's when I said, ah, that's what I want to do instead of doing all of these 10, 000 cold calls and texts and all of that type of stuff and competing against 5, 10, 15 other people.
Rick Hamrick: For a deal where you end up being the biggest loser, if you win the deal is to go into the pre-foreclosure niche and actually learn how to provide solutions where somebody is forced to sell the property. And so since then, William and I have formed an educational group together called IPA4REI and then teamed up with Matt to do the Prefore Profits event, which is a national educational series.
Rick Hamrick: To help others actually add a, another niche or a new line of business to their market as we're getting ready to what's on our doorstep and what's coming over the next four to six years is really why we're putting our message out there as much as possible. So that's what I do full-time now. I, I basically quit my W2 job in 2021 and have focused on doing real estate both transactionally and from an investor standpoint, continuing to add to the portfolio, the whole portfolio, whether it's a rental property or a note.
Rick Hamrick: That's what I'm doing.
Ed Mathews: So, so let's pull the crystal ball out and let's talk about what you see coming. Obviously the residential market and the commercial market, although both under the real estate umbrella, aren't necessarily. The fortunes aren't necessarily tight, they're as tightly as people may think.
Ed Mathews: Let's talk about residential and then we can talk.
Mathew Merenoff: So maybe I'll talk about the residential. William and you could talk about commercial. Perfect. Yeah. And my bread and butter has always been the residential people not understanding that, do they have a right to modify their loan? Do they have a right to settle their mortgage?
Mathew Merenoff: Can they do a short sale on their property? Are they allowed to do it? Do they have any type of for foreclosure defense that they can rely on? For me, starting in 2005 to now, I've seen some wild stuff go on, on and on and off the scenes as far as properties that were conditionally put onto the, uh, mainstream real estate on local MLS indoor properties that were trial to be, you know, finagled behind the scenes.
Mathew Merenoff: That if it's a short sale, the investors frown upon that and they want the property listed on the local MLS is because they want one, the property fair chance to be shown and it's actually an investor guideline. They can actually push people to foreclosure if they feel that there's fraud involved. So there's a lot of things that people don't talk about.
Mathew Merenoff: That are behind the scenes. 2005, I saw the beginning of what was going on. 2007, 2008, we were in full-on crisis mode. And then at that time, I was teaching classes in Northern New Jersey. And, you know, everybody pretty much knew who I was and my name. And then, you know, for about another year or so, I was teaching.
Mathew Merenoff: And then I went dark for a couple of years because I felt like. I really wanted to understand the behind-the-scenes works, meaning that there really wasn't anybody that I could look up to and say, hey, you know what, I want him to be my mentor. There's so many different wholesalers out there. Uh, and flippers and everybody had these books.
Mathew Merenoff: There really wasn't anything like that. So for me, I was fortunate enough to get trained, believe it or not, by the asset managers themselves. They liked me. They liked the way that I acted. I didn't overreact like a lot of real estate agents or investors would be, or even attorneys or paralegals would flip out.
Mathew Merenoff: And say, why do we not have this while we have that? I was like monitoring across the board. They're like my personality of, hey, listen, listen, let's get off my back. But at the end of the day, I really want to take the property back. They liked that. Now going into and searching out and working with people really close to the United States.
Mathew Merenoff: When I started down in 2015, I had some major tragedies happen to me. So for me, for anybody that's listening to this, I want them to understand you can always have a reset. So if anything has ever happened in your life and you felt like you didn't have time to reset, I'm 53 years old. If everything went away and I had to reset again, I could make everything happen within two to three years and be back where I needed to be.
Mathew Merenoff: It's not a hard time. Everybody looks at real estate as something that's, it's either really like tedious and it's hard to do and they rent and they never buy or they own a piece of property, piece of real estate. And there's really never any like in between. So there's like a 1 percent or that really can excel in the type of market that we're in as far as helping people.
Mathew Merenoff: Let's fast forward to, let's say 2019. I did a really big event in New Jersey. And I was talking about how I thought there was going to be a correction in the market. Nobody knew COVID was going to come and definitely not at the magnitude that it came. COVID has really destroyed real estate. Because what it did to the banking industry and giving people deferments, giving them forbearances.
Mathew Merenoff: And a lot of the people that I work with, I've already had modifications in the bank, right? So it really didn't fit the mold. So some of these people were really trying to take advantage of the system itself, and they really screwed themselves because a lot of these homeowners already had a separate program and ended them, ended them at an interest rate of about three and a half percent.
Mathew Merenoff: Now you go through the whole COVID protocol. And those people didn't understand the model of what that was about, it was the forbearance. Now, their interest rates that were 3. 5 percent or creeping up to almost 8 percent right there. That's a, that's another way of foreclosure. So obviously there's a lot of all this stuff in there and I want to be fair to everybody else that's on here as well, but going forward, 2024, if you think short sales, you do not know short sales the way the three of us understand what's going on in the market,
Ed Mathews: but by the end of this 30 minutes, hopefully we'll at least take a few steps forward.
Mathew Merenoff: So 100%.
William Bonnell: Yeah, first and foremost, one of the things that I want to throw out there is every single time that I hear people talking about a wave of foreclosures, and I think there's a reasonable cause for this happening. The idea of losing the roof over your head, especially for a family, I mean, it's one thing for a 30 year old single guy that can just go out and rebuild their own life and do whatever.
William Bonnell: Still, it's sad, of course, but It's an entirely different thing when there's like children involved or elderly people or anything like that. Right. So I think people naturally assume foreclosure is something that happens almost exclusively to owner occupied residential real estate. And the reality of the matter is that's simply not the case.
William Bonnell: Especially right now, what I'm seeing in the marketplace right now, and I get a lot of, I get a lot of crap out of people that are extremely defensive of the residential real estate market being so strong right now and saying, there's not going to be a wave of foreclosures. There's not going to be this, there's not going to be that to some extent.
William Bonnell: I do agree with what they're saying. I don't think we're going to see 2008 again in terms of owner-occupied residential real estate. Because of things like Dodd-Frank, the CFPB, and many of the other things that have been done, the SAFE Act from 2008, many of those things that have been done have actually set it up in such a way where owner occupied real estate, generally speaking, they've got many more options from a consumer protection standpoint.
William Bonnell: However, where I'm seeing a massive uptick in pre-foreclosure activity right now, two separate things. Commercial real estate, number one, when I say commercial real estate, the two areas where I'm seeing them hit the worst, the two sub-sectors of commercial real estate that I'm seeing the worst damage in, although I will be candid and say, I'm seeing absolute crap in most areas of commercial real estate right now.
William Bonnell: Commercial real estate is taking a beating. Office space is dead. It's just plain dead. Some of the biggest, best office buildings in some of the largest and most powerful cities in this country are hovering at or below 50 percent occupancy right now. Let alone not cash flowing, they're not even covering their own expenses.
William Bonnell: Where that gets really scary is when you start thinking about some of these million-plus square-foot properties that used to house hundreds of companies Half of which have gone out of business. If these properties are unable to keep up with their financial obligations, in particular, the, their property taxes, that has an absolutely catastrophic event effect on those local cities.
William Bonnell: Right now we're seeing strategic defaults in the office space. Like I've never seen before. Yeah. We're seeing strategic defaults on hotels. Like I'd never seen before people just walking away because, and a lot of people don't think about this because they're not thinking about the causation of things, but when COVID hit one of the industries that got absolutely clobbered initially was the hotel industry, the hospitality industry got absolutely killed.
Ed Mathews: Ofcourse.
William Bonnell: So what happened is. Their finances plunged in a lot of cases, many of these hotels around the country, particularly ones that were built in the 70s, 80s and 90s are now at a point where they have balloon payments coming due. There's literally more than 6 trillion in balloon payments coming due inside of the next 24 months, some of which are next week, some of which is a week after that, some of which are 2 years from now.
William Bonnell: And the programs to refinance them are almost non-existent and the bulk of these properties do not qualify to refinance on their own financials, because as we all know, income property is less dependent on a credit score than it is on the financial performance of the actual asset. When you've got a hotel that's been performing.
William Bonnell: Miserably for the past four years, compared with what it did for the previous 25, trying to refinance that hotel is a pipe dream at best. It has to be liquidated at a much, much lower number, and it's going to have to go through a market cycle. The other thing where I'm seeing a lot of pre-foreclosure activity, that a lot of people don't talk about, some of the things that are technically residential property, but a commercial purpose.
William Bonnell: So I'm seeing a lot of investors. In two particular areas, residentially where I'm seeing investors getting slaughtered, short-term rentals is one, and that's largely because of HOAs, cities, and even counties placing restrictions on it. Also because of the hotel lobby that it's obviously been railing against it as well for years now and spending millions and millions of dollars trying to wipe out Airbnb and VRBO and all those other companies.
William Bonnell: And then we also see this BRRRR strategy that was really, really, really popular in the residential real estate investing world for a very long time. And now with the interest rates being what they are, a lot of people got caught in the short-term expensive loans that they used to acquire the properties, the hard money loans, where they anticipated being able to refinance out.
William Bonnell: And they're finding that when they refinance out into a fully amortized loan at 8 or 9 percent interest for their rental property. It's really not better than the 12 percent interest only or 10 percent interest only that they were paying on the hard money. But the hard money loan is of course, short term.
William Bonnell: So now they have to refinance out. Many of them simply aren't able to. So we're seeing investors in the residential space getting clobbered. You got to bear in mind. It wasn't just mortgages. People stopped paying. People stopped paying for the roof over their head, period. Renters, quadrupled the amount of mortgages that fell behind there were literally four times as many renters that were behind on their rent by 90 days or more than there were mortgages that were that far behind because it's a lot easier to fall behind on your rent when there's a moratorium on evictions.
William Bonnell: It's a lot easier to fall behind on your rent than it is to fall behind on a mortgage, because rent's typically not reported to your credit bureaus, and as long as your landlord isn't of the variety that does report to the credit bureau, as long as you don't actually get evicted, as long as you stop it before it gets to that point, there's much less tangible consequence, like system wise, so that's the biggest difference that I'm seeing right now.
William Bonnell: I don't think that residential owner-occupied foreclosure activity Is going to be anywhere near where it was in 2008. But I do firmly believe with every single cell in my body, that over the course of the next two to six years, what's going to happen to commercial real estate, particularly office space, apartments, and hotels, it's going to be, it might make 2008 look like a trip to Disneyland.
Ed Mathews: Really? Okay. Yeah.
Ed Mathews: You know that in a sec, Rick, I want you to tell me about the event that you're, you have come and how you can help real estate investors figure out how the heck to help with. All these various asset classes. And what are some of the strategies that you guys utilize every day to run your own businesses?
Rick Hamrick: Right. Yeah. Thank you for that. Uh, you know, the, the coming together, the culmination of RRG and IPA coming to together to put this event on is really to help others understand. How to build a sustainable business in any real estate or economic environment. And that is truly understanding what are the eight options that somebody has, whether it's a commercial property or a residential property.
Rick Hamrick: What are those options? Because the banks and the institutions aren't necessarily looking out. For the borrower or the consumer themselves, they have a specific KPI and they're going to steer in one direction. But if you truly understand what those eight options are, you know, starting with, you know, curing the arrears or curing the default to selling the property outright with equity in it to doing some type of a loan modification or a deferment all the way through the acquisition techniques, right?
Rick Hamrick: And that's largely what we'll focus on is, is the acquisition techniques. Some of the best ways to do that are to take over a property subject to the existing mortgage or do a lease option or other creative transaction and or a short sale, right? When there is no equity or low equity. How do you help a borrower or an institution out of that?
Rick Hamrick: So we'll be covering everything from how to source and find these leads, what do the systems and process and marketing look like, all the way through my eight options, all the way to the exit, because two of the last positions are Bankruptcy and foreclosure. And the three of us say any day and every day foreclosure should never be an option.
Rick Hamrick: Right. And when you know what you're doing and who you're talking to, the banks and the institutions really look at you as an asset on their side. They see you as part of the loss mitigation team, and they would much rather come up with a pre foreclosure solution than actually take the property back for a ton of reasons.
Rick Hamrick: So. That's what the two and a half days is really going to be about is enabling people who generally shy away from this niche, rightfully, right. If it's no money or no equity, low equity, they tend to trash the lead and throw it away because they don't know what they're doing. And they don't want to be the cause of the person on the other side getting foreclosed on.
Rick Hamrick: So it's really not understanding what to do in those situations that we're educating everybody on starting with that event. And then over the next couple of years, we plan to just continue. To do this. So that's what it'll look like. We've got a VIP session on raising private capital and exit strategies there.
Rick Hamrick: We have VIP dinner. We have an open reception. It's just going to be about networking and being in the room and building that army of resources around the country. Cause we don't focus on everything. We focus on our niche and our, like when I say the eight options. When it comes to a loan modification, William and I outsource to Matt.
Rick Hamrick: That is his income-producing lane. We're focused on more of the investor side, right? The subject to lease option or investor short sale side of things. So it's being aware of what's there, finding what fits your, your bag of tools, and then adding that to your business going forward so that you can remain relevant in any economy.
Ed Mathews: Sure. For any real estate investor out there, whether you are a single family, uh, commercial, like William was talking about, or multifamily for that matter, you know, having these tools, you know, having these clubs in your proverbial golf bag provide a, just one more way you can help a owner figure out how the heck to get out of the hole that they're in.
Ed Mathews: Because William, uh, was talking about the change in mortgage rates, I'm seeing the exact same thing. In multifamily world writ large, right? And it ranges from the four families down the street to the 250 plus unit buildings all over the Sunbelt and Midwest. And it was Moody's, I believe, had a report. It was a couple of years ago, but they reiterated it in this past January where they said, Basically, a quarter of the adjustable rate mortgages that were coming up for repricing or refinancing this year, and this is just multifamily commercial world, could not be repriced because of the exact reason that William mentioned, that they overpaid for a building at a 3 percent rate, and now that rate is 6.
Ed Mathews: 5%, 7. 5%, depending on the property area at the bank, and they simply don't pass the The DSCR test, they don't cashflow sufficiently to be able to warrant a refi, which is causing a lot of pressure on a lot of different investing groups to sell off these assets, try really hard to preserve equity. But the fact is that other investors know what's going on as well, and we are not going to overpay and make the same mistake that we've seen out in the market.
Ed Mathews: And so it's, it's definitely, I don't know that it's 2008. I'm not sure I agree with you. Let's talk in 18 months and perhaps I'll bet you dinner on it at some point. And I'm happy to come to you because Clearwater is an absolutely gorgeous place and Hadham, Connecticut is, yeah, it's nice, but it's more cows.
Ed Mathews: So you went on a vacation to work. So the, but the thing is that I think the banks are because of all the various regulations that occurred in 08, 09, 2010, 11, the banks are far better capitalized. Where I see the pressure is in the commercial lenders and the, the ones that are backed by hedge funds and private equity, those are the ones that the collar is getting a little tight.
Ed Mathews: Right. And, you know, the thing that you said really resonated with me, and that is, if you're out there listening and you have a, whether it's a development project or a commercial residential, commercial office, industrial, single-family home, whatever, there is always a solution because here's the inside thing.
Ed Mathews: You mentioned it. The bank doesn't want this on their balance sheet. They don't. Right? That's not the business they're in. And it becomes a dead asset on their balance sheet, which makes them and their company less valuable, which means everybody in that company that's entitled to bonuses don't get them because their balance sheet is, is jacked up.
Ed Mathews: So they will move heaven and earth, especially if you do the responsible thing and pick up the phone and answer, answer the calls or answer the emails and just talk to them because you will put you in the bucket of, hey, this is an asset protector. This is someone that's trying to figure this out. And we need to work with him because we don't want his portfolio on our balance sheet because then we have to go in and rehab it and get it right and, and then sell it off.
Ed Mathews: And none of that is the expertise of a private equity group or a hedge fund. Any comment?
William Bonnell: I absolutely agree with that. I think they're definitely interested in trying to work things out. And for that very same reason, in all honesty, commercial foreclosures, commercial pre-foreclosures are a thousand times more profitable than residential ones are for that exact reason, because all of the reasons that any given financial institution does not want to take back real estate.
William Bonnell: They like to lend paper. They like to own paper on real estate. They like the real estate to be the collateral, but all they want to own is debt. So they're getting paid. Because there are two types of entities on the face of this earth that absolutely thrive on evading all forms of responsibility and accountability.
William Bonnell: And those are banks and governments. Both of those institutions will do absolutely anything to avoid all personal accountability and responsibility in any given situation. And the very same reason that banks hate foreclosing on a bunch of houses all over the country and having to mow those lawns to stay off the radar of code enforcement.
William Bonnell: And having to shovel the driveways and What, 46 of the 50 states, and all the rest of that stuff? They don't want to deal with that. But it is a hundred times worse when you're dealing with a million-square-foot office building that's completely and utterly vacant, and you have to pay the taxes on it.
William Bonnell: You have to keep it insured. Now, of course, it's vacant and it's not occupied by anybody. So you end up with the same forced placement insurance situation that people end up with in the residential world, the carrying costs alone, most financial institutions cannot afford to foreclose on those types of assets, the carrying costs they would have thereafter during the REO timeframe could wipe them out completely and totally.
William Bonnell: So I'm finding that the discounts that I get on commercial short sales make residential short sales look irrelevant, quite frankly. We're getting on a regular basis. I'm making offers at 60 percent of as is value and not even getting a counteroffer.
Ed Mathews: So let me ask you, let me ask. So first off, I'm intrigue, the second, secondly is would you buy office when it's cratering?
William Bonnell: Because I believe in doing different things with the very same space. For example, one thing that I, this is. It's my personal thing. Okay. I kind of thought it was cool. I have a bunch of cats. I'm really into cats. I always wanted to get like a really old church building and turn that into a personal residence.
William Bonnell: Cause I believe a lot of commercial properties and a lot of these really overbuilt properties, whether it's a religious building or a government building or a massive office building that was once built for like Xerox. Xerox is a great example. The Xerox building in Washington, D. C. just sold for 25, 000, 000.
William Bonnell: Yeah, the last time that it sold was in 2011 for 115, 000, 000. So it just sold for less than 25 percent of what it sold in, sold for, nearly 15 years ago. That's not a good indicator. Buildings like that are constructed with such high quality. They're hurricane proof, they're tornado proof. Some of them are literally earthquake proof with the level of engineering that they have, and we have a massive housing shortage in this country, which is the reason that residential property is staying so high.
William Bonnell: It's so stubborn. There's not enough housing. We have too many people. Granted, our population, 20 years from now, 30 years from now, is going to be declining rather than inclining because nobody's breeding anymore. But, for the time being, we're in such a situation where we're shy of something like four or five million housing units in this country.
William Bonnell: Um, a huge portion of what I personally intend to do with vacant office space, vacant shopping malls, Hotels and hotels can be converted to apartment buildings readily. And they've got those tiny little suite rooms, which are much more of like an efficiency type unit.
William Bonnell: And the construction with some of them, you look at the average Marriott, the average Hilton, the average Hyatt that you go and stay in those buildings are built much, much better than the average apartment complex is. It's a much higher level of construction. And they can pretty easily be repurposed. I personally believe a lot of these office buildings that used to house a whole bunch of companies and dentists and doctors and lawyers and CPAs and real estate companies and all that other stuff.
William Bonnell: Many of them are no longer doing the brick and mortar thing, but the existing property in which those office buildings exist. In many cases could very easily be converted to residential property, and in some cases, a far superior quality of residential property, but you could be turning that Xerox building into a brand new version to Trump Tower.
Ed Mathews: Yeah it's a, it's an interesting play. I have friends. That's all they do now is the, and they were multifamily investors and now they've built a cohort of people that they go around the country. They look for very specific footprint and layout in terms of MEP. And when they find it, they jump on it and they convert them into one bedroom, uh, efficiencies, all of them.
Ed Mathews: And it's, it's a really interesting play. So Matt, I'm curious about what you're seeing in the residential space in terms of the, William mentioned FERS and, and short-term rentals. Obviously that's a big part of the residential world. And in fact, it was, if you talk to Bigger Pockets, it was. They were, that was two of their favorite asset classes for, wow, the better part of 10 years.
Ed Mathews: Right. And now people are starting to realize the risk that is, is around that. But the good news is there is a way out. And so I assume that's part of your world as well. So.
Mathew Merenoff: People right now that are not qualifying for the modifications, I shouldn't say they're not qualifying, they are qualifying for it, but the terms are unfavorable for them.
Mathew Merenoff: They're comfortable making, let's say, their payments 2, 500 a month. And now all of a sudden, their payment is now 3, 900 a month. So it's not that they can't make it, it's now that it's strapped. And if God forbid, one thing goes wrong, which I'll tell you guys, honestly, I had a water cleaner in my house. My insurance, my homeowner's insurance is at 2, 300 a month.
Mathew Merenoff: I got quoted almost 15, 000 right there. The insurance claim could put somebody into foreclosure.
William Bonnell: Please tell me you mean 2, 300 a year and not 2, 300 a month. I just had to throw that out there real quick. That sounds like an abnormally, I don't know what kind of house you live in, bro. But it sounded like you got that church that I was just talking about.
Mathew Merenoff: 2, 300 a year was my homeowners. I got a size 15, 000 and we ended up settling at 5, 300 a year. Which is still bananas and then they, they furthermore want to say that I live in an area that Jersey is considered a big area. So, so I said, now the insurance companies are redlining states. Uh, they're very cheerful of work, so I don't live in a flood zone.
Mathew Merenoff: I don't live in the floodplain. There's no water around me. It just, I'm had, we had freakish incident in our house. Happen to be the same pipe 18 months apart. I'm being told stay in the insurance for 10 months in the full year, your insurance rates will go back. No. So, so they have these, um, action forgiveness, thoughts and things.
Mathew Merenoff: I don't really believe in it, but as far as people that were in modifications and then tried to sell their houses, thinking that they have equity in their house and they did a forbearance. So let's just say you did year 10, 15 years ago, you did a modification. And now you have a silent second, or maybe you've got a partial claim on your property.
Mathew Merenoff: You don't even know about, which I actually have three transactions in my two now on close. In my pipeline for that very reason, thinking that they've got all this equity and then they realize they don't. And then going back to the homeowners and say, hey, sorry, Mr. And Mrs. Homeowner, you thought you had all this equity, but the reality is you have no equity at your house.
Mathew Merenoff: So it really shouldn't matter what your house sells for. I may or may not get shot by the mortgage industry, but I will say this. I'm telling people don't overpay because if you're going to overpay, you're going to keep increasing the value of these areas. Unnecessarily, and nobody's going to win because a lot of these banks have insurance policies and nobody talks about that.
Mathew Merenoff: And these are some of the things that I talk about and that I teach and it's important, I think, for people to understand across the United States. Yeah, people are going to overpay for property. My wife's doing a transaction right now. They're two months away from shower cell. The, uh, the woman's husband passed away three years ago.
Mathew Merenoff: Guess what? We years later, she had a cell there in her house. They had actually practically no mortgage left on their house. Now they owe 130, 000. My wife was because of the area and the neighborhood, she was able to get 65, 000 more for that house over asking price, but she never would have gotten that lead if it wasn't for me.
Mathew Merenoff: So I tell real estate agents, stop hiding. From distressed real estate. There's a ton of gold in there. You can help people, right? And, and you can make money. If you put people for profit, you'll find a better way. And real estate agents, unfortunately, cause I could say as well, why it's real estate agent. I am friends with a lot of them.
Mathew Merenoff: They're very cheap. They're on to the next deal. They're worrying about the next deal. They're not worried about. Amassing either profit, properties, or trying to figure out how to promote themselves or put things back in place where they can market to these types of situations. So I will never be out of business as far as I'm concerned.
Ed Mathews: It's just human nature. The fact is that realtors are they're salespeople and I don't mean grade that being one Rick, I spent a bunch of years in tech sales and marketing as well. And I'm just as coin-operated as any you're out there. And, but the fact is that their job is not to understand necessarily the ins and outs of a short sale.
Ed Mathews: Their job is to get the best possible price as fast as possible under the best terms, get it done and move on. And it's a valuable service. Just not necessarily congruent with somebody's situation when they're, when they're in, when they're in a bind. So guys, we're coming up on 36, 37 minutes into this conversation.
Ed Mathews: I could talk for days about this stuff. But Ed, I'm going to go to your conference and, and I'll do that one more time. Why don't we talk about the conference, who should go, who's this for? And, and how do they get more information on the event or setup?
Rick Hamrick: Yeah, very good. Yeah. You can visit preforprofits.com just P R E F O R E profits.
Rick Hamrick: com. And that's down in Clearwater, Florida here on the 28th of February. It'll be 28th, 29th, and then the 1st of March. Who should come? We're really having any real estate industry professional. We ultimately think it'll be an agent investor hybrid, but we've got attorneys and title companies and others like CPAs that are coming to the event.
Rick Hamrick: A nice list of sponsors and other interested parties that want to know how, as a lot of the industry is staying flat or even potentially declining in, in the asset sales, residential asset sales, we're William and Matt and myself are getting busier, right? So coming down to Clearwater, Florida is not only going to provide a lot of detail, a lot of education on some of the mysteries.
Rick Hamrick: Around the for sale pre-foreclosure world, but it's also going to put you in the room with a bunch of really awesome professionals around the country, essentially amassing and building an army of folks, because even in the residential space alone, there are more than 3 million homeowners that are more than 30 days behind the three of us cannot help 3 million people.
Rick Hamrick: So we are trying to scream from the rooftop as much as we can to, to educate as many solution providers as we can, because. Foreclosure should never be an option.
Ed Mathews: Gentlemen, William Bonnell, Matt Marinoff, Rick Hamrick, thank you so much for your time today. I am on your website now and I'm going to book a ticket.
Ed Mathews: I'm actually going to be in Arizona prior. So I'm coming up with a, I'm formulating a strategy on how I can convince my wife that it's a good thing, but we'll work on that, but she may be fully supported for now, but the, uh, gentlemen, thanks. And, uh, you're doing a lot of good out there for a lot of people.
Ed Mathews: Hope for it, and I wish you continued success, because every house that you acquire in your business solves a family's problem. That's a big deal, and I appreciate it. I appreciate it. So, congratulations, and we will put all of the additional information on the show notes as well as on the website, and we'll blast this, we'll blast this far and wide as well.
Ed Mathews: Let's see if we can't help you raise some additional interests in the event. So thank you for putting this on and good fortune. I greatly
William Bonnell: appreciated it.
Ed Mathews: Thank you. This has been the real estate underground podcast. Thank you so much for listening. Don't forget to rate, review, and subscribe. It helps us grow until next time.
Ed Mathews: Happy investing.