Part 2: An in-depth look at the real estate market with Mike Madsen of RealSource Equities on The RealCrowd Podcast - The Fundamentals of Commercial Real Estate Investing.
Mike Madsen a Client Services representative since 2005, has participated in workshops around the nation in the National Association of Real Estate Investors, as well as analyzing multi-family properties and doing market due diligence for RealSource.
To help clients improve their retirement investments Mike and Jeremy Hanks formed RealSource Retirement Services.
Adam Hooper - Hey Tyler
Tyler Stewart - Hey Adam, how are you today?
Adam Hooper - I'm great. Welcome back listeners again to another episode of the RealCrowd podcast. Tyler, who's back?
Tyler Stewart - We have Mike Madsen back for part two of our series on the real estate market.
Adam Hooper - Yeah hopefully listeners you got a good dose with the last round and we're back for the second part of Mike's discussion. Talk again, a lot of stuff, get that notebook ready. We're talking about cap rate trends. We're talking about hedging against inflation. We're talking about millennials, debt markets. What else are we talking about?
Tyler Stewart - Everything. We're talking about macroeconomics, what's happening in the global markets, how that's impacting us here in the US. Again Mike covered a lot of information. Break out your notepad again or download the transcript from our blog.
Adam Hooper - Yeah and one of the big things too, that he's looking at with a pretty concerned or curious eye is this whole repatriation issue. Potentially trillions. That could have some impact.
Tyler Stewart - That could have some huge impact on real estate and other investment classes and Mike goes over that and he thinks we might be in for a once-in-a-decade type of capital event here.
Adam Hooper - Yeah. Interesting times.
Tyler Stewart - Yeah
Adam Hooper - Well I think that's enough of us talking. Let's get back to it. As always listeners, thank you for listening. We're getting close to rounding out the year now so we appreciate any comments and feedback. Send us emails to email@example.com. And if you want to go on iTunes, and throw us a rating, we'd be very appreciative of that. But with that Tyler, let's get to it.
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Adam Hooper - You mentioned a little bit before repatriation and some kind of bigger global trends. Let's start going there a little bit. What are you guys seeing globally both public equities with this potential repatriation how is that informing or changing or trying to understand that side of macroeconomics, how is that impacting what you guys are seeing?
Mike Madsen - Well nobody knows what's going to happen obviously and RealSource doesn't have a crystal ball but...
Adam Hooper - I was hoping that-- We'll hold that for next time then, the crystal ball.
Mike Madsen - But, yeah that'd be nice to have but what we really try to do is focus on capital flows, focus on what is making cap rates go up. Or what's making cap rates go down in some places, and we've really taken a lot of time to study this and grasp this and kind of consider ourselves one of the leaders in the industry of understanding cap rates and understanding where they're going to go in the next couple years ahead and there's no doubt that there's a major trend of capital flowing into the United States. This is more to do because there's turmoil outside the U.S. than it is about things just being unbelievably good in the U.S. But there's no doubt that the bond market is 10 times larger or more than the stock market. People forget that and when there's rising interest rates or solvency issues around the world for different bonds for different countries and regions, then that can create a big wave of capital in a global economy and the stock market has a chance to increase quite a bit in the next couple years. It's going to be more due to the P/E ratios adjusting rather than earnings and growth and that's a trend that we've seen the last two years and we don't see that reversing. We see that only picking up and that's going to lead to asset inflation. There's different types of inflation, but asset inflation for apartments is when there's so much demand for the asset that people are willing to pay more of a price.
Mike Madsen - That's why you're seeing the stock market rise. I think that's why you're seeing cap rates fall in most markets and that's going to have a big impact. I don't think that it necessarily has much to do with tax reform. I think the trend is showing that it's going to continue either way. But if you do get a repatriation of one, two, three, or four trillion dollars, that's going to have a huge impact on U.S. equities and basically kind of the higher interest rates go, the more of a rush to the exits could occur in the bond market. And there's a potential a big, big upside for asset inflation. It's not something we speculate on and are underwriting, but at the same time as we sit back and our world is invested into these assets we really want to know what's driving cap rates, where they're going to move and why and there's definitely big potential for asset inflation in 2018, for the next four or five years. And I think it's going to surprise people pleasantly that are invested in equities and it could unpleasantly surprise people if you're holding IOUs or bonds. It's definitely something we track. We track, you know, the threats and the opportunities that we see and it's encouraging to us. We were a little bit more worried about interest rates rising a couple years ago when we didn't know if the assets could handle it. But we're a lot less worried about that now. I mean, obviously there's different degrees of interest rate rises but
Mike Madsen - moderate rising interest rates will be good for apartments and it'll be good for asset inflation for commercial real estate.
Adam Hooper - And is this repatriation of the potentially one, two, or three trillion, is this something we've seen before in the markets? Or is this a brand new occurrence within the U.S.?
Mike Madsen - It's a long-term trend. We've definitely, you know, seen capital come and go but I think over the last couple decades, as the U.S. has been a little bit less competitive on a global scale. The long-term trend has unfortunately been manufacturing jobs and capital going to more favorable environments so it's something that we probably really haven't seen in the last 20 or 30 years and we'll see how it shakes out but there's no doubt that it has potential to be one of the biggest and positive economic events of the decade, if not longer. We'll watch it and we'll see what happens but there's no doubt that people that own real assets and own equities are going to benefit. And it's just a matter of how much and to what degree.
Adam Hooper - And now the, again, I mean even trying to get a scope or frame of reference of several trillion dollars is a pretty tall task, but on a more real-time and actually observable trend is this international capital coming to the U.S. As you mentioned, anytime there's turmoil elsewhere the U.S. is still a safe place, relatively, to put capital. That has a different capital requirement, when you factor in that kind of flight to safety issue, than domestic capital, which we've seen again in pricing certain cities, even Vancouver they've put in just a huge foreign investment tax, essentially for non-resident buyers. How are you seeing that different character of the capital those maybe lower-return requirements when it's a flight to safety issue, and how is that going to be further increasing this trend possibly, of again, tighter pricing?
Mike Madsen - Yeah, there's no doubt that that that's a good questio. How low can cap rates really go? But again the flight to quality and the flight to safety has traditionally been when people are fearful or worried about the market, they'll go buy U.S. treasury bonds. But that flight to safety, as we talked about, could switch, especially if you're outside the U.S. It could create that wave of capital coming to the U.S., which will a lot of it will probably go to the stock market, which is why you could really see the stock market take off, as far as the P/E ratio. But, you're right, if initially this wave of capital comes into the apartment world and cap rates go down, everybody's going to be conservative and pencil their returns without the inflation and from a pro forma standpoint it's not going to look as attractive, because you're not pricing in that inflation yet. But remember that a lot of people out there will pay a three cap for an asset they think is going to be a 10 or 12 cap in two or three years. We talk a lot about cap rates. It's how we can find fair market value compared to what other buyers are paying at the time, but think of it in terms of future cap rate not trailing cap rate. Because a cap rate is going to basically be normally a trailing 12 reflection of an asset, but you may see people paying a five cap in anticipation that that five cap is going to be a 10 cap in not very long. You may not see that 10 cap in the underwriting
Mike Madsen - if people are doing it right and doing it conservatively. People are going to under-promise and hope to over-deliver, but as time goes on and people start to realize that there's inflation coming, particularly you know, asset or currency inflation, then those expectations are going to change and as we start to see, inflation in the economy and inflation in wage growth and things like that then that's going to adjust people's expectations and you may feel a lot more comfortable buying a five cap if you're confident that the future cap rate's going to go up. We're not advocating hyperinflation by any means, we're not advocating, go buy low cap rate deals in bigger markets but at the same time the smart money is going to look more at the future potential cap rate and cash flow rather than what it was the last 12 months.
Adam Hooper - Now real estate has often been historically seen as a hedge against that inflation. That's what you were just talking about. Can you go a little bit more on how historically, from a, again a hedge against inflation, real estate has been used compared to, again bond or equity markets and where you see that going in the future, will that remain the same? Is there going to be a spread, widening there as well or how do you see that playing out?
Mike Madsen - Traditionally, how many assets can you go to the bank and the bank you know, you can put up two dollars and they'll put up eight dollars and you can buy a $10 asset? There's a reason that the banks will loan for real estate. They know it, they realize it. Over time if you go back 30 or 40 years and somebody has two grandpas and one grandpa left the guy $10,000, the other guy, the other grandpa left his grandson a $10,000 house, obviously that $10,000 house is probably worth, certainly a lot more than the 10 grand. And so people have always known that the purchasing of our currency declines over time. They know that, you know, economic growth creates inflation. Certainly, too much inflation is good. Deflation is really, really bad and I think we'll aim to keep inflation under control. I don't think it's going to be hyperinflation, like so many people have been speculating, since really 2010. That's never really happened, you know? I think there'll be a time down the road where the dollar peaks and you do get some currency inflation. We think that's a little bit down the road, but there's no doubt that investing in real estate, especially commercial real estate, has always been the best hedge to protect your wealth against inflation and now's an interesting time because it's not just the place to preserve capital but it's also the place to make money. If you're doing it right, and that's what makes right now such a good time to own multi-family assets. Interesting times.
Adam Hooper - This is so, you talked about asset inflation, you just mentioned currency inflation. What are the different types of inflation that we might see and how do those impact commercial real estate owners?
Mike Madsen - Yeah, that's a deep question we could go into quite a bit, but just to kind of keep it simple, again the asset reflection is more a reflection of demand for an asset. That's where you get kind of your cap rates and values of things going up as cap rates go down. The demand inflation would be more of there's so many people trying to rent an apartment and there's not enough apartments to rent, so naturally the price is going to rise a little bit, which is what we've seen in a lot of these RealSource target markets like Dallas or Orlando or Colorado Springs. A lot of that appreciation has come from really kind of both asset inflation and demand inflation. We think that all those different kinds and factors of inflation are favorable to commercial real estate, which makes it really, really exciting because the upside can really, really increase as those factors move. And that's why we love commercial real estate. That's why we live and breathe it every day and that's why we want to teach it to our children. It's a good thing to be involved with and a good thing to be knowledgeable with and not just make money but protect you wealth and protect your hard-earned dollars.
Adam Hooper - Yeah and so now, all those things in mind, what kind of opportunities does that create for individual investors, again either whether they're choosing to partner with someone like a RealSource or we don't necessarily have to get into the equities or bond markets, but what kind of opportunities does that create when you see these different, again influx of potential foreign capital, this potential repatriation, these asset inflation, currency, all these different factors, what kind of opportunities is that creating for the next X number of years?
Mike Madsen - It really creates an opportunity to build wealth and create wealth. In the past real estate was kind of reserved for people that could get the big loans and sign on the dotted line and it kind of took money to make money but there's going to be a lot of people in the next five to 10 years that become wealthy or reposition their assets. Maybe they made money somewhere else and it wasn't in real estate, but they've realized okay I've got to manage this money and diversify and do different things but That's the opportunity is there's a big chance for a runaway to the upside way beyond what you're going to see in the pro formas and what people are going to underwrite and there's a lot of factors that depend on that but there's a huge opportunity out there to make a lot of money and it's exciting, I mean there's there's a lot of people that, want to make their money work for them and put it in the right place and when you use leverage the right way in commercial real estate, you can make a lot of money really fast.
Adam Hooper - So still--
Mike Madsen - It's exciting.
Adam Hooper - Yeah a lot of room for growth that maybe hasn't been priced in as much in this asset class as it has been in some of the other more liquid markets that we've been seeing.
Mike Madsen - Yeah, no doubt. The stock market's confident in it. People are speculating, you know, you're seeing the way the markets move that there's confidence in inflation. It's certainly a good thing for commercial real estate and apartment investors. And think of how good the last four years or six years have been to us. Now imagine it when the whole economy is doing better, that there is big time wage growth. We talk about millennial demand and how the millennials will impact apartments. There's a study that came out about a year ago that one in three people in the U.S. that are aged 18 to 34 live at home with their mom and dad. And that trend is starting to show signs of reversing and I think it will reverse. There'll be a delay in household formation, but that trend has potential to change with economic growth and that's when you could get, you know, a wave of millions of people aged 18 to 34 leaving their parents' home and going out and renting because they have a good job and they have a good income and they're confident in their future. They're confident that they can save money and they're confident that they can invest their saved money and make more money. That's a big trend that can change so, as good as real estate's been the last four years, if we get wage, inflation, and U.S. GDP growth over 3%, I mean it's going to be even better the next four or five or 10. So those are long-term trends that are reversing that people should be looking at,
Mike Madsen - people should be excited about because there's a lot of people out there that are about to enter the renter pool.
Adam Hooper - Wow, that's a lot of growth potential that's coming our way. In our last podcast we did with you Mike, I believe you mentioned what RealSource looks for is an economy or a market that's going up and you gave the baseball analogy of when a market is starting to go up that's the first inning, when it's at the top it's the ninth inning, RealSource likes to get in I believe you said the third inning, once you have some confirmation of the up trend. Get in early but it's a confirmation and still give yourself enough opportunity to see the growth. With the increased competition you're seeing in markets has that changed the timing from your end? Are you looking to get in markets a little bit earlier than you would have?
Mike Madsen - Yeah, we definitely like to to see the market turn. We like to see the evidence of the numbers adjusting the way that we've forecasted them to in our model. You don't want to get in too early, but yeah there's no doubt that there's a few markets out there that we'd like to be in, that we'd like to buy in, but we're not going to close in 30 days like some of these other big, huge institutional firms can. There's definitely the competitiveness. There's a couple cities that we really wish we could buy in but it's just, when there's 15 other groups lining up to buy the same asset, then you're not going to get as much traction there and our goal is to acquire deals and acquire them at the right price and there's definitely strategy in okay, maybe we can't go to our number one or number two market this year but three, four, and five we're going to be able to get deals done and we're going to do just about just as well so there's definitely those adjustments that we make and sometimes we don't know until we get there and dig into the market and make some offers on a couple properties. So then we figure it out. It's definitely a process and we're just trying to stay ahead of the herd and stay where we get traction and get deals done for our clients.
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Jack (RealCrowd User) - My name is Jack and I've been in the financial services industry for over 30 years. I've done six different deals, when I first started doing these deals I was looking for sort of core real estate cash flow. I wasn't looking for a lot of upside return. I wanted more immediate yield and so I went conservative to start and then as I've gone through I've just looked really at the quality of the sponsors first and foremost, and their level of experience. Now I'm trying to mix in different types of properties, different geographies, and I wanted some core plus and a little bit of development, so it's still a pretty, in my view, a conservative portfolio. Mostly focused on sponsors and then looking at the the projections as far as how much of the return would come from current income and yield and how much of it would be based on appreciation and thinking through whether or not, how much risk there is in the appreciation being realized. So it's really a portfolio approach for me, looking at different sponsors, different geographies, different property types, and even different types of properties as far as core or core plus or development. You know, I'm looking for, I guess I would start with a certain level of return because my investments are primarily in equities and I look at the direct real estate investing through RealCrowd as being diversification play, but I also want, you know, a pretty substantial return. So I typically look for properties that have a yield of 7, 8, 9%, current income. And then an IRR that's in the mid to upper teens,
Jack (RealCrowd User) - low twenties in some cases. So I start with return, I focus on sponsor, I look at, I look for property types that I don't have already invested in the portfolio and I guess finally I look at geography. Well I think that diversification's important to any portfolio. I looked at a number of different crowdfunding portals. I chose RealCrowd because I like the transparency. I like the fact that the sponsors pay a fee to be on the portal and that they there's not built-in fees for RealCrowd in the compensation structure of the deal 'cause these deals are fairly complicated to understand anyway because you've got to pay a management fee and an incentive fee and things like that and if there are embedded fees from, the portal provider it just makes the complexity so much higher. So I think the key for me is the transparency and I just think that direct real estate is a great complement to a lot of other stock and bond portfolios. I think it provides inflation protection, current income, and appreciation potential. For me direct real estate is better than REITs which are more subject to market fluctuation and price. I just think with the minimums that are out there now and the quality of the sponsors it's a really good way for a lot of investors to access direct real estate without the hassles of property management on your own. So I think it's an important advancement for a lot of investors to diversify their portfolio.
RealCrowd - Thanks again for the RealCrowd Podcast. If you like what you're hearing, please visit realcrowd.com to learn more and subscribe at iTunes, Google Music, and Soundcloud. RealCrowd, invest smarter.
Adam Hooper - I was talking with Nate Hanks a week or so ago at a conference we did a little presentation together. And one of the things that we were talking about was as you just said, with this increased demand for increased supply of capital, I guess you'll call it, that is chasing these deals that makes the return expectations not as juicy as they have been, right? These last four, five, six years so one of the things that we're trying to help educate listeners and our users and investors on RealCrowd is that this has been a pretty atypical return environment that we've been in for the last four or five years. And so starting to help kind of take a look at, not necessarily fully resetting expectations but kind of forecasting that those days of the the 25, 30 plus IRR deals, they're not entirely behind us but those deals are much fewer and far between. So two questions would be I guess, how has RealSource, and with your existing investor base, how are you kind of having that conversation and helping people get ready for this next phasein the market? How much of a change in that return environment do you guys see going forward? And then, if you had capital that had a lower return expectation, would that allow you guys to or just real estate sponsors in general how does the return expectation of the capital base dictate what you can do on the acquisitions side?
Mike Madsen - Yeah, no doubt that that's a big impact. I think Nate's correct there. Those that don't know, Nate Hanks is our CEO at RealSource. He's a really good guy. I've known him over half my life and he's somebody that I trust as much as anybody out there and he's a very, you know, sharp guy. He's a very conservative businessman and he understands risk and he understands lowering risk for himself and his investors very well. RealSource may see that there's potential for increased returns and we've underwritten a couple deals that we may package to go out at say an 18 IRR, to where a lot of us wouldn't be surprised if it's kicks out the 25 or 30 IRR. But we're responsible and we do things the right way to where we're going to underwrite as honestly and with integrity, as much as we can. And we're not going to speculate. We're going to let the data tell us where to go and how to underwrite and I think that's something investors should be careful about. There's some underwriters out there that will speculate a little bit too early and it may look good in the pro forma. It may look good on an IRR, but I think the smartest and you know, the sponsors that have been around the longest will just stay conservative, under-promise and over-deliver and there's no doubt that we've been worried that we've seen returns go down the last two years with our underwriting standards. And there's been a worry that if a return is 9% average cash on cash
Mike Madsen - and 17% IRR, how is the marketplace going to react to that? But what's been really reassuring and encouraging is that the investors out there understand what's going on. They understand that rent growth has cooled down a little bit. They're scrutinizing the underwriting. They're asking a lot of questions and a lot of people out there are becoming more comfortable with a lower projected IRR, as long as they kind of trust the sponsor. And I think that's one thing that I'm excited to see is that people aren't out there with unrealistic expectations that they can break down the numbers, break down the underwriting themselves and see, okay this is pretty conservative underwriting. They're not using aggressive assumptions in their growth and I'll be okay if this produces a 16% IRR 'cause I'm confident that it's going to produce the 16 instead of looking at something that's a 20 and go, man I don't know if it'll get there. I think it's more of a 15, so it's been impressive you know, our history is with individual investors. RealSource started in 1989 and we, you know, just grew and grew and grew by word of mouth and eventually along the way we started marketing to potential investors and clients and we're at a couple thousand investor/clients that are all kind of individuals that like to manage their own money and like to own assets and not just trust a big bank, so to speak. So it's been really interesting to see how investors have looked at the deals and how their expectations have changed as the market's changed.
Mike Madsen - So we're encouraged that people can understand that a 16 IRR has big upside, but we're really confident that we're going to get them that 16 IRR. It's definitely changing but we're encouraged that we'll move right along and get deals done along the way and people's expectations are in line with reality.
Adam Hooper - That's great and then, for our listeners out there on the topic of conservative versus aggressive underwriting, where could a listener go to determine whether or not a sponsor's being conservative or aggressive?
Mike Madsen - Probably the biggest thing would be to look at their rent growth assumptions. Anything over 3% right now is probably getting a little bit speculative, depending on the market. There's a couple markets I can think of that you know, it warrants a 3%, a 3.5% assumption. But not just in the growth assumptions, I would look into the debt. One of the issues we're having is we're primarily a value-add buyer. RealSource really focused on value-add properties in 2011, and I think we were not the first but we were one of the first people to really focus in on that and kind of make that our niche, along with target markets. And now there's a lot more people doing it. But one of those issues in conservative underwriting is a lot of people look at your average cash on cash and if you're doing a true reposition of an asset, say you're doing a three year hold and you're remodeling the amenities, you're remodeling the interiors, you're doing a new parking lot, adding some dog parks and things like that. Along the way as that repositioning happens, and occupancy decreases, you know, there's a little bit of that natural delayed gratification. And a lot of these value-adds won't show an awesome year one return because it's not about that year one cash flow. It's about where you can get the stable cash flow after the reposition and remodeling so I would encourage some investors to look at a value-add deal and not necessarily get too caught up on what the cash flow number is. Look kind of more on the IRR and the upside
Mike Madsen - because those, a lot of the times, those value-add deals are three to five year holds and you want to get in and do the remodeling and recapitalize the deal, whether that's a refinance 'cause the market's still doing well or just an exit. And it's definitely, being a value-add underwriter, we're seeing lower year one and year two returns and just hoping that people will be patient and realize that yes, it's a more competitive environment chasing these value-adds but if you're patient and you do it right, it pays off in the end big time. We've bought deals that have doubled people's money in two and half years and they went into the next year and they doubled their money again in two and a half years when we weren't sure if it was going to be, two or four years so it's really exciting when you get in there and you've done it a few times and you know, you've been able to turn 100 grand into 400 grand and you're kind of investing with gains. And it's been exciting to see that and it's happening more and more and I think that's kind of the opportunity cost that some people miss out on as you get a couple years into this process and you look back and go, man why didn't I do this a lot sooner. I was so worried up front on how the first deal would go but when you're up that much then you start to worry a little bit less about that and realize there's a lot of lost opportunity by not investing or staying on the sideline and I think more and more people have realized that
Mike Madsen - and the people that got in early are pretty happy.
Adam Hooper - Yeah and now you mention on the underwriting side and resulting I guess metrics around that with renovation dollars and cash flow. On the finance side, maybe just a quick and this is maybe getting a little bit into the weeds here but where are you guys seeing the financing, the debt markets right now for financing and when you're looking at doing those rehabs, do you typically see those coming from cash flow? Or do you see those as coming from additional debt proceeds and how that impacts what those return metrics might be?
Mike Madsen - There's some very favorable loans out there. The lenders have really learned to like the value-add projects and really get confident in them. There's a couple green programs to where if you take a property and kind of reduce the water and electricity use that you can actually get a better interest rate through, different incentives. The financing for value-adds right now is really, really attractive. We hope it stays that way, you know, you wonder in a rising interest rate environment how long we'll be able to get such attractive loans. But we're doing as many as we can while we can get them and while rates are low and, you know, I'm sure in four, five years we'll look back at this and go, man do you remember when we could get a value-add loan on a property for around 4%? And we'll go, man, those were the days. And we'll look back and realize how favorable those loans are and how they can really create a high yield for investors that are doing the value-add properties the right way. You want to look for those properties that aren't so heavy on the deferred maintenance. Putting a new roof on an apartment isn't going to excite anybody to rent there. They're kind of going to expect that, but when you can go in and put a brand new interior that looks like a brand new place on the inside and a renter comes along and says, "Man it's, you know, 75, 95 bucks more for a new interior like that." Then a lot of people, a lot of renters out there are excited to see that in their market so
Mike Madsen - it's a good niche to be in right now and there's no doubt that the value-add deals are getting combed through a little bit in some of the larger metro areas where markets like maybe Atlanta, to where everybody knows it's hot and everybody knows that it's got room to grow and that the rents are still very affordable so, the value-add deals are a little bit tougher to find but we're still finding them in our secondary markets. And that's kind of one of the advantages of working with somebody like RealSource. As you know, we've got an eye and traction and relationships in a lot of these key markets so it's really easy for us to, you know, leave a Dallas or Atlanta to find value-add in Colorado Springs or you know, Raleigh, North Carolina or something like that so value-add deals are still there, so they're
Adam Hooper - Got to find them, got to work a little harder to find them I guess. This will probably launch maybe first part of December after the Thanksgiving holiday here, heading into 2018, I know you said you don't have a crystal ball but it doesn't mean we're not going to try. What should we be looking at going into 2018, first part of that? Any indicators that we're, should be paying attention to or anything that you guys have identified on the horizon that might be, you know, some kind of leading indicators or things to look out for going into the new year?
Mike Madsen - There's no doubt that everybody's waiting to see what's going to happen with the tax reform, whether you're a fan of it or not. The intention is to create more economic growth and I think that whatever happens there's going to be a little bit of a pivot point for investors or sponsor strategy. So we're looking at it, preparing, analyzing what kind of adjustments and how we need to adapt to the marketplace with whichever way it goes. But there's no doubt about it that it's a little bit of a pivot point and it's going to have an effect on how the economic outlook is going to be, especially on kind of a state to state level. I think, there'll be a lot to discuss. I know we've talked about doing a returning podcast kind of after this shakes out so that we can provide an outlook for RealCrowd clients either way. But we're going to see interest rates rise either way so. I know there's a lot of people out there that feel interest rates will always stay down and that may be the case. There may be some financial engineering to hold them down and that would also be great for real estate investors, you know, especially the single-family investors, but at the same time, these global capital flows and the bond market is going to most likely create rising interest rates, it's just a matter of how much how fast. That trend is already in place. It's already happening and it will continue so, there'll be a lot to talk about in you know, debt structuring, potential liquidity issues in some markets
Mike Madsen - that you want to be aware of and you want to time right. I'm really excited to get back on the phone with you guys and kind of give a 2018 outlook and some key areas to focus on and some key risks to just make sure that you're thinking about as you make these decisions.
Adam Hooper - Yeah, that's a great reminder, to any listeners out there. As you hear this, if you have any questions or anything that you want us to ask Mike in that episode, send us note to firstname.lastname@example.org and we'll be sure to get it addressed, but gosh, another great overview, Mike. That's always just a ton of information when we talk to you so, we really appreciate it.
Mike Madsen - Yeah it's a lot. We're passionate about this. We're kind of nerdy about it but there's so much opportunity, there's so much growth. And we're so glad to be in this business and certainly if any of the listeners out there, please submit a question so we can cover it. Ask the tough questions.
Adam Hooper - Well, Mike, again really appreciate it as always. Looking forward to getting you back on. Maybe we'll have you here in the studio in the Portland office here after the first of the year. And as Mike just said, reach out to him if you have any questions. Certainly send us a note to email@example.com. Would love if you wanted to go on iTunes, Google Play, SoundCloud, wherever you choose to listen to this podcast give us a rating, let us know your thoughts. Really appreciate it and with that Mike, thanks again. Have a wonderful holiday season and we look forward to the next one.
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