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For more with us on how the US economy is doing, We've got Bloomberg Economics US and Canada economist Stort Paul. He joins us here in the Bloomberg Business Week Studio. So start, we are one week out from the last FMC decision by the FED this year. The data that we're getting now, the data that we get between now and then, will it do anything to change the thinking about an expected twenty five basis point great cut.
I don't think that it'll do anything to change whether or not we will get a cut. I think that the only thing that it can change is what the coalition of voters looks like. Basically, all of the data that we got today was pretty bad. We had layoffs as reported by ADP in the month of November. We saw ism services yes, it's surprise to the upside, but it's surprised because of slowing supply chains, like a very
peculiar reason for ISM to surprise to the upside. We saw new orders that were weakening, employment that continued to decline. In the ISM Services report, we saw import prices that were flat basically, so that gives a little bit of room for the FED to consider cut because tariff passed
through is slow. And the final thing that we saw was September's industrial production numbers with manufacturing output basically flat, and so all of it just sort of points to this final FED decision for the year looking like it's going to be made by a pretty robust coalition. In my view, when we get the summary of Economic projections in December, that's where I expect to see a lot of dissent and a lot of division among the committee.
You know, we've been talking to Matthew on Balance of Power about USMCA, the trade deal that replaced NAFTA. You obviously follow the Canadian economy. I mean, in the past this has been an important economy for the US, US has been important economy for the for Canada. Excuse me, so, how are you thinking also too about where trade is kind of settling between what has been really important trading partners for the United States.
Well, I think that the thing that most important remember from the Canadians perspective in the context of USMCA, is that Canadian negotiators are basically going to be waiting for the US and Mexico to sort out trade and border disputes, trade and border deals. For example, how much security Mexico should be deploying to the US southern border before Canada actually gets to come to the table to discuss its
own trade relationship. Right now, the average effective TARIF rate on Canadian exports to the US is in the low single digits, you know, three to four. Yeah, because of how many carve outs there are, and because of you know, the importance of the US as an energy export market for Canada. All the energy just flows through the United States.
Canada is right.
Now relatively content just to wait. The bigger issue for Canada right now is dealing with pretty lackluster domestic output and domestic demand. The labor market has softened materially over the summer. It looks like there's a little bit of a glimber of hope there right now, it seems as though, excuse me, trade is sort of normalizing. Of course, you know, the second quarter was really really rough. Yeah, and so
we saw an outperformance in the third quarter. But trade balances are starting to normalize, and any sort of negotiation is just gonna be on hold until the US and Mexico can sort out their differences.
Okay, So just a realistic timeline for what that could be.
I think that in earnest we're going to start seeing some important talking points rolled out in the second quarter of twenty twenty six. Of course, there are if any sort of negotiation can be sped up by let's say, Carney Prime Minister Karney visiting the White House. He's already been to the US now I think twice so far since he took the leadership role. But right now I'm expecting to see some more definitive deal points getting rolled out in the second.
Quarter next year.
It's just kind of wild. I thought we were kind of we're not done with trade. I know we're not done with trade, but it just keeps creeping back. One of the other things that we've been talking a lot about are retail earnings this week and over the last couple of weeks. Nations retail companies continuing to report out earnings amid the holiday shopping season now under ray too. It's going to stay with us. Want to get to tim some of the earnings we got today.
Yeah, let's bring in Emily Cone. She's Bloomberg News Consumer team leader. She joins us here in a studio. So I'm a little confused about what's going on with Macy's because shares initially fell after the company reported earnings forecasts that disappointed investors. But now we're seeing them up two percent. What's going on with Macy's. What do we learn?
I mean, macy has basically had a good report, solid lead up to the holiday season. I think the shares are volatile. I think the thing that brought shares down initially this morning was a disappointing profit forecast, and I think that that speaks to we had the CEO tell us this morning a cautious consumer, so they're being, you know, a little bit conservative with their forecast. I think that initially disappointed investors, but all in all, it is a
pretty good report for the company. I think they're also they're stocks up thirty four percent this year, so I think anything a little bit disappointing, might.
Be two percent swaying from high to low. It's a lot, it's a lot.
It's like a.
Confusing investor or a confused investor.
Right, yeah, a little bit, yeah, yeah, But I do think it comes on the backdrop of really strong performance this year.
Just throw Dollartry. They reported better than expected profit. They also raised their full year earnings outlook, and we saw that stock ralling in today's session. So a good report. And what does it say about what type of consumer?
Yeah?
For sure, I mean this is the kind of store that does well in this kind of economy. Right. They said on their earnings call they're seeing middle to high income shoppers trading down to Dollar Tree. That's good news for a store like this, And it continues to paint this picture that we saw last week in the week before, which is this split screen picture of how the consumer
is doing. Consumers are still spending, but they're looking for value and they're looking for places where the price is right and Dollar Tree definitely fits in that better category.
So Stuart, come on back in here and just give us your take on how the US consumer is doing and the context of the retail earnings that we continue to hear about. To Emily's point, consumers trading down higher and consumers trading down, that's good news in an environment
such as this for a company like dollar Tree. We had Dana Telsa in earlier this week and she basically said, listen, if you're offering something unique to the consumer, like if you're a Levi's for example, if you have a marketing campaign that is unique, you're still able to bring in consumers. How do you characterize the environment.
It's interesting when I read so. Of course, I think about the economy mostly from the top down, and I enjoy when I get to participate in a round table with somebody like Emily who provides some insight about the broader economy from the bottom up. And what's interesting is when I see rotation to a lower end retailer like dollar Tree, it speaks of the price sensitivity of consumers. And then when we look at some of the more macroeconomic data, we see that firms are struggling to pass
through some of the costs of tariffs. A lot of firms are reporting that they're getting squeezed in terms of profitability. Again, this is when I zoom out to the macroeconomic level, we're seeing squeezed profits in the aggregate data because a lot of the cost of tariffs are sitting with those producers. When you have consumers that are especially price sensitive, it's just sort of a tenuous balance that you're walking in the economy.
Now. It's no wonder why.
Policymakers are going to be pushing for a rate cut, because you're hoping that looser credit conditions will help to alleviate some of the pressure that consumers are feeling so that you can continue to have that expansion. But right now, it's just characteristic of a sort of tenuous balance in the broader macroeconomy.
Yeah.
I also feel like characteristic and Emily come on back in here, is that we are constantly hearing, even from retailers that do well, right, I think even Walmart, that there's like a cautious consumer out there, I mean cautious consumers. So they're spending, but they're being careful, they're being cautious, they're making choices, they're trading down. Is that a fair narrative takeaway?
I think that's exactly right, and I think that's what we heard from Tony Spring this morning where you know, Macy's generally it's a middle to high income shopper, but around the holidays they have more aspirational shoppers come in. Those are the people who they're seeing pull back be extra cautious, and I think that's right.
So, you know, before we wrap up, just kind of on the specifics, Emily, just real quickly, who else are we done from the retailers, And didn't we just have like a pretty impressive Black Friday and Cyber Monday?
We did?
We had, we had an interesting Black Friday Cyber Monday. We don't really know the full results yet, and I think we'll see that. We have some more retailers reporting the rest of the week. We have Kroger tomorrow. Five below are right too, I think exactly PVH. Yeah, so we're still the retail earning season really never steps.
Yeah, all right, and then we'll get into the holiday results. Emily, thank you so much, really appreciate it. Bloomberg News Consumer team leader Emily Cone with the latest don retailers. Stuart Paul still with us talking about economics. I mean, there's a lot going on, and I guess we are just so focused about the FED meeting next week. Is it all but done? Another quarter point cut? And is it all then about what kind of color we get on
twenty twenty six? And does it really matter because Fetcher J. Powell, we assume will be on his way out.
Yeah, I think that the twenty five basis point cut in December is a done deal. When I think back to October, we only had one descent in favor of hole rates steady and that was from Kansas City FED President Jeffrey Schmid. So when, of course the Beige book came out, I was particularly interested to know what's going on in Kansas City. Is it possible that he would join the coalition of voters come December who would favor
a twenty five basis point cut? And Kansas City conditions looked quite a bit worse in the last Fed Beige Book, So I expect that there is this broader coalition forming for December cut. You know that Governor Myron is going to vote in favor of more than twenty five basis points in December. What's going to be a little bit peculiar,
And we've seen this. We saw this last year. In particular, is that when the Summary of Economic projections comes out with the dot plot, I would not be surprised to see other FOMC participants keeping their dots a quarter point higher than where we end the year. That's to say, there are sort of shadowed descents among FOMC participants who are not voting, who would have preferred rates to not be a low in December, even though the actual voters
decide to lower by twenty five. Explain why, because we have other FOMC participants who are not voters, and among those people are Cleveland FED President Beth Hammock, Dallas FED President Lori Logan, Folks like that who are going to be voters next year, who were more hawkish in all of their public comments. They don't get a vote this time, but we expect that they would try to send a signal to the rest of the world, Hey, we're not going to be moving at the same pace next year.
And so when we see dots for twenty twenty six, I expect there is going to be a pretty wide distribution. I expect that the incoming cohort of FMC voters from the regional banks are actually going to be quite a bit more hawkish in twenty twenty six than they have been this year.
Are we nuts to be thinking? Are for traders and investors to be assuming that Kevin Hassett is the next FED share because it does seem like all roads are leading, all FED roads are leading to him.
At this point, it looks like that's going to be the case. It looks like it's going to be a Hasset nomination. President Trump was alluding to Kevin Hassett being the nominee when he had a press conference. I guess just yesterday, there was a story from the Financial Times today that apparently in one on one conversations between bond market investors and the White House, some folks expressed concern.
But then you look at the price action when the trial balloon has floated last week with Kevin Hassetts name, and he passed the financial markets test with flying colors. And so I'm less concerned about what folks are saying to the White House than what the market is saying to the White House. And the market is giving a clear go ahead.
I don't want to put the cart before the horse, but if you're saying the market is giving the clear go ahead, then what does the Senate confirmation process look like.
I think that what's different between let's say the Senate confirmation process for Trump's nominees this time versus in his first term is that I guess you could say the MAGA movement has last. Then there is a broader coalition that is in support of President Trump's agenda, and so the division between the Senate Republicans, for example, and the White House is pretty narrow. There is not a lot of a descent among Centerate Republicans in the White House.
Every now and then you see somebody pop up like Mitch McConnell who has their own voice. But I expect that somebody like Kevin Hassett should make it through the confirmation process and the Senate Banking Committee pretty easily, and then it'll be mostly a party lion's vote when it actually gets to the Senate itself, to the Senate floor. So I don't think that it's going to be an easy process. I think that it's going to be one where you're gonna have some pretty dramatic headlines when he
gets questions from let's say Senator Warren from Massachusetts. It's going to be a pretty ugly back and forth. But when it comes time to actually counting the votes. I think you just get party lines votes and gets he gets his shot if that's what the White House ultimately decide to do.
And speaking of Spoke, she wants lower rates.
Yeah, that's right.
This is what's tricky is.
That sometimes sometimes.
Political partisans find a way to make sort of funny bedfellows. And yes, she does want lower rates, but does it come at a cost of politicizing the FED as an institution. I think she's going to try to make it more difficult for him, even though they both might want the same thing.
When it comes to policy, it's just the Fed, all of it around the FED. I mean, you had Treasury Secretary Scott best And today saying he's going to push for this new rule that regional FED presidents must have lived in that district for the last three years. For the last three years, I just feel like there's just so many things going on. You're going to come back. We will continue the Fed conversation, but keep in mind, one week from today we will have the last decision
of twenty twenty five. Stuart Paul Bloomberg Economics, US and Canada economists.
Stay with us. More from Bloomberg Business Week Daily coming up after.
This listening to the Bloomberg Business Week Daily Podcast. Catch US live weekday afternoons from two to five eas during Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch US Live on YouTube.
We promised you that we were going to continue on the US economy and really the US consumer, the online lending marketplace and platform for loans, credit cards, deposit accounts, insurance, and where we're talking about Lending Club. They announced one hundred million dollars share buy back just about one month ago. It was about fifty not fifty, nearly five percent of the company's market value on the day of the announcement.
Now Atlas have been raising their price targets on the stock this year, most recently again raising them since the company reported earnings late October. The company posted third quarter results that be estimates. They provided a guidance range for new fourth quarter originations with a midpoint above estimates. And the stock it's actually up this year.
Yeah, it is. Shares of the two point one billion dollar market cap company about fourteen percent of more than twelve percent since reporting those earnings back on October twenty second, delighted to have with us. Scott Sanborn, CEO of Lending Club, also CEO for close to a decade at Lending Club for fifteen years now, also with us here in the Bloomberg BusinessWeek studio Herman Chant Bloomberg Intelligence senior analysts for
US regional banks. He helped bring all of this together. Scott, I want to start with you and just give us some size and scope of the business, the consumers that you're working with, who's interacting with the platform.
Yeah, So we serve a customer base we call the middle majority. They are if you think about credit, which we are a credit centric bank. If you've got a lot of money, you don't need a lot of access to credit, You pay cash for car, you save up to send your kids to college. If you're on the other end of the spectrum, you can't really access credits. So there's this middle group that are high income, heavy users of credit.
So they can afford a car, they can afford to send their kids to school, but they need to use credit to do it. That's who we serve.
It's a really big customer base that represents about a third of the US population, but it's close.
To half of the credit wallets.
They are more likely than average to have every form of credit, and that credit is with the exception mortgages also larger than average.
That's what we starve.
How much do these people usually make our average?
And you know, obviously misleading averages can be misleading, but average is about one hundred and twenty five thousand dollars.
But you can think of it of ranging between call it eighty.
Thousand dollars in individual income to about two hundred thousand is where we really over index.
Great.
One of the real highlights of your recent investor day last week last month was the panel discussion with Marketplace Investors, and we talked about this earlier before your appearance here on radio. One of the panelists talked about being aligning performance expectations partnering with better operators. Are you seeing that with the private private credit space, Yeah, we do so.
You know, we were born as a marketplace. Initially, everything we originated we sold. When we acquired the bank in twenty one, we started to hold a portion of our loans on our balance sheet.
That both gives us a stronger and more resilient earnings.
Profile also allows us to do other things innovate using our balance sheet, and what we found is just by aligning our interest with our loan buyers, we're the largest eater of our own cooking. We're the largest holder of lending club loans. We care very deeply about the performance of the credit, and credit is always evolving. It's very dynamic. Because we have a balance sheet, what we can do is when we want to test something new, we test
it on our balance sheet. Let's try longer duration, let's try a larger loan size, let's try a new marketing channel. We hold that first, we see it, we own it, we make sure it performs the way we expect, and then we release that to the marketplace. If you don't have a balance sheet, you can't really do that. And so that's visible in our results across every aspect of underwriting.
So lower delinquencies than the rest of the industry, thirty or forty percent below, lower roll rates, covery rates, lower prepayments, lower fraud, literally every aspect that you can measure of credit.
We're out performing on.
Has that remained consistent this year, in recent months, in recent weeks, like you have a great real time view of the consumer in the form of how well they are doing in terms of paying back their loans. That's right, still looking good.
Yeah, so that's been consistent for you know, we release four years of data we put out there and so it's remained consistent. But you know it's not it's kind of like a duck on a pond. It's remained consistent because we're doing a lot of work underneath the cover. So you know, something that we shared an investor Day is at any given time we have more than two hundred tests in the market where we're evaluating price points,
changes to the credit. So we're constantly adjusting to reflect what's happening with the consumer, and that's what's giving us the consistent results.
Well, so that to me says you're very picky about who you lend to.
That's true.
We are so in terms of your test, So tell me what it is I mean, and how many of people who apply or want to access your platform. You're like, I'm out.
Yeah, So we're pretty good at selecting who we want to have in our portfolio and reaching out to those people.
And then both delivering the price.
And product experience, but also let's call it the user experience that gets them all the way through. So we look for areas where, for example, we can control the use of the fund proceeds. If you come to me and say i want twenty thousand dollars because I'm going to do whatever my kid needs braces or I moving cross country, great, But unless I'm paying the orthodontists, I don't actually know that that's what you're using it for.
Yeah, So we.
Try to set ourselves up so that we are in some ways controlling the use of proceeds and then making the experience such that it makes it really easy. So our largest use cases for people who already have debt, credit card debt, notably, which at this point more than half of all Americans are carrying. They're carrying it at really high rates twenty three percent interest rate. It's highest they've ever been in history. And we say, great, you
should do this instead. It takes less than five minutes. We're going to save you seven hundred basis points. And by the way, check all the credit cards that you have that you want us to pay off, like we see you have Chase or a cap One. Great, check those and we're going to pay them directly, so we know you are paying off your credit card debt. You're not just saying you're going to pay off your credit card debt and.
Taking out more money. We are paying it off for you.
Benefit for you is you know you've consolidated everything into one bill. Other benefit is your FYCO score usually goes up by thirty thirty five points, right because you've lowered, you know, your utilization.
How much can you lower? Like I going to tell you, credit card rates just blow my mind about how high they are. And I'm just curious, why are they so high? Are people so bad? Is it to cover? No, I'm curious.
Yeah, No, it's a great question.
It just seems like it's out of control, and I think it prevents people from becoming financially solvent or creating, you know, kind of getting ahead of the game if you will.
Yeah, there's a lot to unpack in that it is.
No, No, it's a great question, and you know there's a number of questions underneath.
But I'd say the biggest thing is.
If you think about how people choose credit cards, it is not based on the interest rate. Yeah right, it's my Skymiles card or whatever, my retail store card.
I'm going to get rewards for this.
They don't even know what the interest rate is, or it's a promotional rate that resets, So that's one they don't choose based on that. Half of the people don't revolve on the card. They're collecting these rewards. Yeah, but they're not carrying a balance. Well, guess who's paying for that. All the people that are carrying a balance, those people don't know.
What their rates are.
The research we've done is half of all customers don't say they don't know the interest rate on their credit cards, and half that say they do. More than half of them are wrong, right. They think they know their rate, but they don't, right. And so cards have been able and one of the big resets with the cards was was driven by the Card Act, which limited how much cards could increase rates, so they factored in higher rates.
I just want to jump in real quick. We are speaking with Scott Sanborn, CEO of a lending club. He's been CEO for close to a decade. We're also just getting some breaking news too on Apple. Apple's design executive Alan Dye poached by Meta in at Major coup This is the most prominent design executives executive at Apple. This underscore is a push by the social networking giant into AI equipped consumer devices. We also have here with us
Herman Chan. He's Bloomberg Intelligence Senior analyst for US regional banks.
Thanks.
I wanted to follow up with you, Scott on some of the medium term expectations you laid out an investor Day. You talked about doubling loan originations. We're talking about eighteen to twenty billion dollars a year. What are some of the levers to get you to that level? You mentioned use cases. Maybe talk about home improvement as a use case, and how do you maintain solid credit quality as you ramp up that?
And home improvement is something you're getting into, right.
That's right, yep.
So first and foremost is as I mentioned, you know, credit card refining people out of their credit card debt into a fixed rate.
Lower rate loan is number one use case.
It's it's about eighty percent of what we do. That market is the largest it's ever been. There's one point three.
Trillion eighty percent of what you do.
Is that? Wow?
Go ahead?
Sorry?
So that is you know one point three trillion in balance is priced at really really high rates. We you know, when the rate environment shifted and the inflationary pressure shifted, we pulled back on a lot of our marketing. So we're currently running today at sort of below our historical volumes. So we're just going back into that market, turning back on marketing channels that we had turned off, and then
the other areas. You know, personals can be used literally for anything, right and before credit cards came around and came to be, we're the dominant way consumers accessed you know, credit for everyday need. So we have a major purchase finance business that's growing today, call it fifty plus percent
year on year. That's allowing things like elective medical procedures, you know, lay six races for your kid, you know, all kinds of procedure of fertility treatments, teeth implants, so things that insurance doesn't pay for but you want to.
Do and you want to do right away.
Private school education it's another one. So home improvement is sort of an next adjacency. People right now are staying in their homes longer. You know, seventy five percent of Americans their mortgage rate is under five percent. They're not going anywhere, and the homes are getting older, so the homes need to be invested in they need to be improved, so effectively enabling home improvement through an unsecured loan, where again we are controlling the use of proceeds. We can
pay the supplier, we can pay the con tractor. We've got the capability through an acquisition we announced to you know, disperse this in phases to multiple parties.
So we're really excited to kick that off.
We've only got like thirty seconds left here. Consumer doing okay.
I'd say the consumer we serve is demonstrating themselves to be remarkably resilient.
That a lot.
It's a drinking game, but we'll acknowledge the sentiment isn't great.
Yeah, come back soon. I have to tell you that I think we're all like I want to go.
I want to go.
Please come back late, because I think you have a great advantage and view into what's going on in the economy. We'd love to Okay, we would too. Scott Sandborn, chief executive Officer of Lending Club. Are amazing. Herman Chin, Bloomberg Intelligence, Senior analyst for US regional Banks.
Stay with us. More from Bloomberg Business with Daily coming up after this.
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from two to five y's during Listen on Apple Karplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube.
If you've been listening or watching us the past couple of days, you know we've spent a couple of days talking about residential real estate. We did that with Ron Eliosov, founder and managing director over at north Wind Group, and then yesterday with Louise Phillips Forbes of Brown Harris Stevens are focused with them, really what's been happening in New York City and what will happen in New York City.
We want to take a different look, another look at a different type of real estate and kind of go further Afield. Back with us is Amy Rubinstein. She's CEO of Clear Investment Group. It's a Chicago based firm that specializes in opportunistic real estate investments, specifically in the distressed mid size multi family sector in mostly secondary and tertiary markets around the US. She joins us once again here
in our Bloomberg Interactive Brokers Studio. Welcome back, Thank you so much so it has been a little over months since you were last with us. It was actually during the government shutdown. Yes, a lot has happened since then. We've gotten some day, we've gotten some delayed data. An update on just how things are looking in your world, and remind everybody what markets you focus on.
Yeah, we're seeing definitely two ends of the spectrum right now. So we are seeing some struggles that operators are having. I guess what we're really looking at more than two months ago, well, not so much more so than.
Two months ago, but we're really feeling that.
Key shaped economy that everybody's talking about where some of these lower income tenents are struggling a little bit on expenses. We are still feeling inflationary pricing, and we're feeling a little bit of a lack of labor. And I think that that is something that is starting to grow. Is really looking more towards where does this construction labor come from? And I think that's a product of deportations and a product of not having a great immigration policies right now, are you think you.
Yeah, I was trying to remember who I was talking to about this just in the last couple of days, talking about how they are having a hard time finding people to do the work right now.
Yeah, construction is a little bit tough.
So what type of construction specifically, Just talk about any kind.
Of of rehab, any sort of It could be anywhere from ground up construction where developer as struggling a little bit on prices, both from inflation and also from lack of labor, and then also just on the rehab in general.
Just like Flamer is really because of immigration, no doubt about it. That's what we're seeing. Yeah, we're seeing it.
A lot of people don't show up to work, even if they do have a legal status. People are a little bit scared. On the flip side, you are seeing incredible opportunities right now for investments because there is a lot of distress.
We happen to be buying a lot right now.
We're in the middle of a fundraise on a fund because there is so much to buy.
There's opportunity, much great.
Opportunity out there, and not a ton of competition because right now lenders and investors are really not pricing in performa. They want in place cash flow, in place NI. And if you can find stuff where the fundamentals are strong, but and the NI is fixable but not quite there. Then you really have a great opportunity for buy.
Mikayla and our control room one of our producers reminding us that just a couple of weeks ago we spoke to Christina Stambul of farm Girl Flowers and they bought a farm to grow flowers on a small portion of their flowers. She said they were having She was hearing about a hard time.
With labor, right, and we know that right. The farm industry is another one you mentioned ni net operating income. Help me understand something though, when you are finding lots of opportunities because there's distress out there, it's when things aren't going so well that's actually a good environment for you guys. I will say, is there a little bit of a balance. There's different kinds of distress.
You feel some people that are really being strained by higher interest rates, by higher expenses, by higher delinquencies, and so you feel some strain and what that could cause is definitely some pricing adjustments as people are trying to sell. I do think, as you were talking about before, interest rates are going to start to give a little bit of wind to cap rate compression, and so you'll start to get buyers and sellers coming together more. But that's
not the type of distress that I'm talking about. I'm talking about distress that's even deeper than that, where operators maybe didn't have a lot of experience and overextended themselves.
And so there's.
More to it than just that there's layers of distress there our tenants doing so I think that, you know, I think we see a little bit of both ends, right, We're back to that cay shape where you see the higher end tenants doing very very well and you see some of your lower income tenants that are struggling a bit more.
Is it manifesting in the operators needing to offer concessions? Are you seeing delays in rent? What are you saying?
So we've tried to start getting creative on different ways to help tenants keep up with their rent and help them with budgeting, teaching budgeting classes, trying to pull out their rent in different stages during the month as their paychecks come in.
So just try to help keep people on track a little bit.
It's fascinating.
We just had a long, deep conversation with the CEO of lending Tree, and the same thing I see here. Yeah, lending club, Oh, lending club, sorrylending club, forgive me lending club. But the same thing in terms of when they are giving loans, like they want to know where it's going, and if it's to pay off credit card debt, they will make those payments directly and really kind of teaching some financial responsibility and how big a part of that is what you guys do.
Know.
It's really interesting because this is a new trend for us. This wasn't something that we were doing five years ago helping tenants learn about budgeting and finances, and it's something that now we're starting to really look into.
How can we be partners with these tenants.
As opposed to the people that are forcing them to pay their rent?
Why are you doing it? Is it just business sense? It's a win win for everybody.
Okay, If people can prioritize their finances and get their rent paid and stay in their houses, it's better for us, we don't lose the income, we don't have to go through evictions. It's better for them they don't have to be relocated. So it's a win win for everybody. It's a matter of can can that have an effect? Can we be effective enough to help shape that.
Do you do the tenants feel like they're they're being partnered with? I mean, there's this idea of an adversarial relationship when it comes to landlord and tenant.
Sure, I think there can be, and I think you get a little bit more of that in places.
I would say a place like New York, where you've.
Got rent control and the landlord and the tenant are not really aligned because they're not both choosing that rental rate.
I think of.
Some landlords I've had in my day where I was not completely aligned with Carrol.
Anybody who's lived in New York. You know what's interesting.
Of all the places that we rented that I rented in New York, one landlord who was good. Really yeah, no.
One ever talks about their good landlord. Four out of.
Four Yeah, well yeah, that was pretty good. Twenty five percent. That's not bad.
She was unique. Okay, yeah, what's you again? Unique?
Unique?
Your properties remind me because I think initially you guys were in Chicago.
We're based out of Chicago, but right now we have properties and Louisianaia not anymore.
Not anymore. There just is not cash flow in California.
It's a little more like New York City where everything's just based on appreciation.
Do you will if California builds more, would you go back?
You know, we look for stabilized cash flow, not for incoming cash flow. We actually don't care about the n OI in place when we purchase things. We actually look for negative NI because we want to be able to fix that NI and that's how we.
Add better opportunity.
Right, but we want to eventually get to strong, strong cash flow.
Best places in terms of geography right now, for you guys.
I think there's tons of opportunity in Atlanta, Atlanta, we keep looking over there.
Lots in the Midwest, we love it.
We love Ohio and Indiana. Right now we're buying in Alabama. We have a deal under contract in Illinois. We're in Ohio, we're in Columbus. We really like Cleveland as well, So there there are you know, people are looking a lot in Cincinnati.
There's lots of lots of places to go there. I know we talked we go kind of all over with you. But when we talk about afforda housing, what is the answer, which is something that we have talked about for decades, right, what do you think is the answer. And forgive me, I'm only giving you about forty seconds solve a problem that is. I think different.
Markets are going to have different answers. I think generally speaking, it's easier for us. We see a better opportunity in rehabbing and rehabilitating as opposed to ground up construction where you need a lot of government subsidies or some sort of incentives to be able to get it done. Us we see the opportunity in existing assets that just need to lift back up. But then again, you've got to be willing to buy something that's negative CASHLNG in the beginning.
And most of those assets are going to be outside the major cities or in the major city, not necessarily. You know, we own in DC, so it can be all over the place. Great stuff. Thank you for coming by again. Thank you for having right the real estate.
Amy Rubinstein, the CEO of a Clear Investment Group.
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