Tornados, Tariffs, and Treasurys

Come near my house, but I, I, I think it was a little bit south of us. Um, but Patrick, you went out to a property that you guys own and were inspecting some damage shingles on the ground. I mean, you guys had some, some real, uh, damage and effects from an actual tornado on the ground. And I think this is an important place to start with this conversation because when you're a real estate investor. You're an entrepreneur, you are a go-getter.

You are on the ground doing some really hard stuff that they don't tell you about in business school. And I think it's really important to share some of these stories of like, Hey, if you want to get into this game, this is, this is hard. This is not for the faint of heart. And so, uh, Patrick, I, I'd love to hear like, what was your experience on Tuesday? As a real estate investor and a tornado blew through and you had to do some cleanup, uh, there's project management involved in that.

You know, Christian's been out there doing a great job. So tell us a little bit about your experience this week.

But, um, you get there and you realize that the, that whole process is way more involved. There's a lot more that goes on than just like, we'll get, you know, a roof route and bid it. We will, um, get the tenants somewhere and, make sure that they're, you know, set up for however long it takes, transfer 'em to a new unit or whatever. Like, those are the obvious things. Like what you don't think about is like the fire marshal's gonna come out.

They're gonna say, Hey, we're not sure anymore if this, if the entire building, this affected three units. Um, where the roof blew off, but the building that it hit has 36 units. And so, uh, the fire marshal was like, Hey, until we can get a structural engineer and an electrician to sign off saying that this building is safe for everyone to inhabit and that there's no, you know, potential fire risk from any electrical damage, like you need to have everybody out. so

And so, I mean, that's what it was really. I feel like I'm going on a long time, but it was, um, the, when, when you wonder why cleanups and disaster recovery and all that seems to go a lot slower than you would expect it to. Um, when you really go through it, you realize, man, there's all these hoops to jump through that you would've never. Pondered yourself you realize like how that stuff takes so much longer than you would've thought.

There was no line item for like, I don't know, stuff happens, you know, like I, I never had that. And so I'm realizing that as a business owner, there's so many of these tiny little details that actually are like 70% of what you do. It's just kind of taking in these kind of things that happen throughout the day. And so this is a perfect example that it's like you wanna be a real estate investor and you're thinking about, you know. The curve.

I don't wanna say libor curve's, not LIOR anymore, but, you know, you're thinking about all these like spreadsheets and doing projections and cash flows and cap rates and all this, but what you don't think about is a tornado blowing up one of your buildings and just destroying your entire week, essentially. And that's a, that's a major, you know, fire that you gotta go handle.

So, um, yeah, I love this story and I think it's really important for, for investors, business owners to be thinking about.

But, he's got a contact for every. Capital improvement that you would ever need.

And there's no other real way. I mean, you can read books, you can have a mentor, um, and those are, those are amazing things, right? I'm not saying like other people's experience, I've heard this said before, is sometimes the best experience, 'cause it keeps you from some of the pain, but there's no substitute for actually going through things yourself as hard as they may be. And that, and that's not to belittle tough things and challenging things.

They're, they can be incredibly painful, but I think if we keep 'em in the right light. And we handle them, uh, with an expectation that we're not alone. And that there, there couldn't, can be like joy and, and peace and, and something great at the end of it. And, and not only that, once you get through it, that you can experience those things, but you are better as a person for it. And you can take that with you as well. Then you have a different perspective. Doesn't make it easy.

Doesn't make it fun. Um, but you know, if you've got that faith foundation that, okay, like we gotta get up, we gotta go like, no, you don't want to, I don't wanna deal with this, but we gotta deal with this. And there's only one way. And there, and that way is through and you just gotta keep going through. I.

My wife and I got into argument last night about me putting the meat in the freezer when she needed it to cook dinner, and we were under a time crunch and, but it's, it's like this one little thing just kind of snaps because of all this pressure that you might feel, you know?

And it's just, and God is, is, is in this, like, I I, we, we had a, our small group last night from church and we were talking about like, God feels so near in these times of suffering and pain and trials because he's growing you to, to Josh's point, you know, but it. That doesn't make it easier, you know, he's not removing that pain. It's like that saying, people say like, oh, well God will never give you more than he can handle. And it's like he gives me more than I can handle all the time.

You know? That's the point.

And I'm not saying that it's easy to just stop and recognize. Hey, get this up, or, Hey, I like, I, I need to be still and try to think and, and process and hear. It's not easy to do that, especially when you're getting the phone calls about, you know, Hey, we need to act now. Um, but to the best of our ability, try to, to, to give, to, to give it away. And that mean, and that doesn't mean not work hard and work with excellence, but I'm talking about the stress and the anxiety and the worry.

If we can give that away and trust that ultimately the outcome doesn't rely on us, and thank goodness that that's true. Then at least we can go through those difficulties. We can go through those hard times knowing that, hey, we're, we're gonna get through. Not by my strength, but by his. And, um, and it's just a different perspective. It's what allows you to get up and go. It's what allows you to, to run when all you feel like is just lumbering, right?

Be because you're, you're, you're doing it in anticipation of something good or or anticipation that he's, he's going to provide, he's gonna be there with you. He's, he's gonna walk you through it. Um. That being said, it's a decision that you've gotta make constantly, and it's something that, uh, doesn't come, doesn't come easy when, when you feel like you know, the, the, the world's on your shoulders.

But it doesn't, I guess what we're saying is it doesn't have to feel that way, but you just gotta get to a point where, you know, you understand how to, how to give it up, how to, how to give that to him and still. Work to the best of your ability and with excellence. I think that's more of a men. I think it's more of an emotional and a mental thing. God, I don't think we're called just to sit it out. Hey, I'm gonna do this. Like, you don't see that anywhere, right?

It's not like, Hey, you don't, you don't have a role here. So you absolutely have a role here. Like you activate your faith by taking those steps to get it done. But it's the pressure and the anxiety that you can let go of and trusting that the outcome's gonna be okay.

But this internal stuff is really, really hard and it's actually the most important things in running a business. I think it's, it's been my experience.

was like before anything had even happened to him, he was just ready to throw in the towel and God didn't respond like, now watch what I'm gonna do. It was like, Hey, there's still work to be done here. You've gotta get back up the next day and go back again and get back up again. And I'm working through it all too, and I'm unfolding something that, that you can't see yet. you're playing a P, you're participating in it. You're not just watching me do it. You are actively do every single day.

I'm gonna do this for 10 plagues that are gonna last a long time and you're gonna feel like you're not making any progress. And then you're gonna wake up and there's gonna be dry water in the middle of the ocean. Um. um, you know, it's the same mentality that we want to have every day. We get up just.

It's just, it's just keep showing up, keep and, and not just showing up, like just showing up, not doing anything. Keep showing up, doing what you know to do as best as you can. Show up. Just keep showing up, keep going. Um, and a lot of times that's what separates people that are successful and those that aren't, it's not talent. I mean, like, like the quote says, it's so right.

I mean, we're surrounded by talented, uh, great people that just weren't persistent, weren't determined to see it all the way through. And, and oftentimes it's the ones that maybe aren't as smart or aren't as talented or aren't as gifted, but just keep showing up that are the most successful. Yeah, I'm not claiming to be.

You know, talk or maybe blistering or positioning or negotiation about tariffs and with different countries and different industries and things like that. Uh, but Josh, you had this great point of, uh, how that is a part of, seems to be part of a much larger plan with a very specific goal, very specific outcome pointed at treasuries and how important that is related to real estate. And so you guys have even seen some benefits of some of this kind of turmoil, uh, even just this week.

So Josh, could you recap a little bit about what we talked about, because I thought it was so great. Um, it's just this perspective of. What, what is happening? And more importantly, what, why do you see this happening? Like, what is all the, all this turmoil that we're seeing in the news related to what, what do you, what do you see as like a larger plan that might be out there?

For a lot of private sector borrowing, including mortgages, including commercial real estate, some of the, some really key important sectors really rely on that 10 year being in a good place because then that, opens up options. We can start to refi, we can start to transact. Um, so my thoughts are like, looking at it, I, it doesn't appear to me that the Trump administration is as concerned.

With the stock market right now, um, the stock market's had an amazing run over the last few years, so I think if it comes in a little bit, it might, some people would argue that's probably healthier for it to, for it to move down. Just, just some, um, from where it is. Because, because I mean, it's, it's so, it, it's been so hot and so it is moved so high in such a short period of time. And one, one area that we're seeing the Trump administration really focus on is Doge, right?

Everyone's familiar with Doge. Everyone, everyone's keeping up with what Doge is doing, but they're eliminating a lot of. Government jobs and government contracts. And those government contracts affect, um, a lot of people as well. All these, all these companies that rely so heavily on government work and government contracts are, are likely going to have to let people go as well.

So it seems pretty clear to me that, and, and Trump's said this before, we've heard and we've heard, uh, people with his administration say this, that they're okay with a little bit of pain. Right. They think that we're gonna have to go through a little bit of pain in order to reset, in order to get inflation down, in order to get these treasury yields down so that we can ultimately have a better foundation moving forward.

Um, and like we discussed, I mean, when we're seeing, like we see all this volatility, we see like the, the tariffs, like how much and when and what are the exceptions? Um, a lot we, and you know, something that we talked about that a lot of people don't is. How much revenue are these tariffs gonna bring in? I mean, that's something to consider, right? The more revenue that comes in that's gonna offset what the government needs to borrow. So that, that's important.

I mean, there's a lot more to that. It's, it's a holistic view and they've got a lot of things going. But our view of what, what we're seeing is we think there, there, there, obviously intentionally going after government spending. They want, they wanna be more efficient as, as a government. They want government to get smaller.

Hopefully these people that are being let go from the government or government contractors, uh, will be able to find jobs and, and, and start producing quickly in the private sector. And I think that the administration is doing, hopefully they're deregulating to make, to kind of spur the private sector so that they can start hiring, um, and ultimately be more productive and better for the economy. So that, that's the way that I see it.

Uh, we're, anytime we see the 10 year move down, you know, we're celebrating you, you, the one concern, right, is that it moves down too quickly because it's reacting to a potential recession and then people are lose, or, or too many people are losing their jobs too, uh, too quickly. And that ultimately affects, you know, all kinds of things, consumer spending and, and for us who, uh, rent out apartments, you know, that, that could be worrisome because we, we wanna make sure that, uh.

Are, it's important for us that, that tenants are able to afford the rent. So it, it, I, we don't think, I, I don't think that we're, we're getting into, uh, that's a, a major concern. I don't like that. I, I think we are, obviously it, the economy is slowing down. I mean, look at the GDP, um, forecast for the first quarter, it was negative. So I mean, it's slowing down. It's slowing down quickly. But I think that it's all in pursuit of a better foundation and a better way forward.

I think it, we're gonna see a little bit of a blip, um, but then it's gonna be, uh, stabilized. And if all goes well, no one knows the future, but hopefully it starts to, starts to, to go up at a really, um, in a really healthy way from there. So yeah, the, the tenure moving down is, is good for us. I mean, it's everybody in commercial real estate. Every, you, you saw that the, the, the mortgage numbers that came out early this week.

All of a sudden people are trying to refi like crazy because the mortgage rate came down. So, I mean, the Trump administration knows that they've got there, there's a, there's a lot of government debt that's gotta be refinanced. They've gotta get the housing market moving and they know there's a lot of commercial property that's up for refinance. So I, I like what they're doing. I, I, I think they've got a good plan here.

It's just a matter of like, time will tell, you know how successful it's gonna be.

Um, and there's some signs of maybe some of that, maybe some of that pain, like you're talking about. The, the, uh, headline on the front page of the Wall Street Journal this morning. This is Friday morning, 10 45. It says that US added 150 thou, 151,000 jobs last month, slightly below expectations. The jobless rate ticked up to 4.1%, 10,000 government jobs lost. And so there's a little bit of this, you know, kind of pain and uncertainty. Markets are down.

Investors are kind of pulling back and reassessing the sentiment of how things are gonna kind of play out with the Trump administration, you know, and how they're working on markets. But. Taking a longer view in the way that you guys feel from a, a, a real estate perspective, especially in North Texas, um, it could potentially help and do some good things in the real estate, uh, market. And so you guys are seeing some of that.

So Patrick, you had mentioned that there might be even some, some benefits that are coming outta this even this week. Um, so tell us a little bit about that. Maybe what, what you guys are seeing on the ground.

if you're set up to hold a property for another five years, then name of the game is having, cash that makes operation, easier. And there's gonna be a lot of short term benefit for those who can capitalize on it quickly, I suspect, like Josh was saying, you'll start to see that in mortgages too. that activity should, mortgages probably drop what, half a point in the last three weeks. that's, a, big number on your budget. I think that's all, good news.

I think people assume free trade was free, uh, on both sides. And, uh, but you know, we, this is a, a bigger conversation and for better or worse kind of what's happening, big picture in the United States, but we've supported that ecosystem worldwide for so long. And I, I, the. Tone in the, of the conversation seems to be shifting to, we've done that and I don't think we're getting, we don't feel like we're getting the benefit of it anymore.

Um, and so now we're gonna start to pull back and I mean, we will see what happens over time with that, but, uh, there's a, a big shift happening right now and I don't think anyone really understands the full effects of it yet.

So you mentioned, you know, Egypt, ancient Egypt 3000 years ago. There's a lot that's been happening in the last few thousand years. And so some of these things that we're thinking about and talking about and what's affecting markets, it's this very, very narrow window. An experiment almost in the grand scheme of human history, there is so much more that's been happening. There's other things that have been tried, you know, other ways to view things.

And I think that's a great point about trade is there's a lot of different ways that you can do trade. And we're exiting maybe an era of something that we tried for the last 50, 60 years. And, uh, and, and maybe that's okay. Maybe there are benefits that will come out of that, you know, nobody knows. And that's, that's your point. Nobody really knows. This is kind of confusing. Um, okay. Well, uh, guys, thank you so much for, for running us through that. I know this is a little bit, uh, uh.

The conversation was in a bunch of different places, but to me it seems all related on the point that we don't know the future. We don't know tomorrow. Literally this afternoon, something could blow up and we have no idea. And it's important for us as investors and owners, uh, being in real estate and trying to predict a future. That's what we get paid to do, and that's very hard. So wait on the Lord, he'll provide.