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In this episode of the Real Estate Pros podcast, host Micah Johnson interviews TC Cooksley Hackney, a seasoned real estate professional specializing in rent-to-own and multifamily properties. TC shares insights on navigating the current real estate market, the benefits of rent-to-own arrangements, and the importance of home warranties. He discusses his experiences with foreclosures, the challenges of converting office spaces to residential properties, and the significance of building relationships in the industry. The conversation also delves into the differences between investor and banker mindsets, emphasizing the need for education and due diligence in real estate transactions.

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  • Listen to the Audio Version of this Episode

    Investor Fuel Show Transcript:

    TC Cooksley Hackney (00:00)
    I just got a video the other day from one of my rent to owns. they moved in in October. So, and they have a bunch of kids. She sent me this little Christmas video she sent out to her friends that she made. And it has on there, the slogan, our first Christmas in our new home. And you know, it’s they, they videoed the front with their lights and they decorated the lawn and.

    It was just a cute little video, but it’s like, this is homeownership. They’re junior owners. They don’t have the ability to actually get a mortgage, but they’re working to fix their credit. They have goals that they didn’t have before, and they’re changing their mindset. I mean, they had a septic problem. It turned out not to be a big deal. It was that one of the kids unplugged the ejection crock.

    But it is a big deal when you don’t know what an injection crock is. So, and they had to pay $100 for a service to come out and plug it back in because they didn’t know. But I thought, you know what, this couple is so excited. This is why we do what we do.

    Micah Johnson (00:50)
    You know?

    Hey everyone, welcome to the Real Estate Pros podcast. I’m your host, Micah Johnson. And today I’m joined by TC who’s been making serious moves in the rent to own space and digging into the multifamily sub. TC, it’s great to have you.

    TC Cooksley Hackney (02:49)
    Thanks for having me, Micah.

    Micah Johnson (02:52)
    I’m excited for you to be here. I think our listeners are really going to take something away from really how you’re approaching real estate in general. You’ve been in it for a long time and adjusting with what you do well, adjusting for those market conditions to keep the business going. So let’s dive in there. For people who may not know you yet, what’s your main focus right now and what markets are you in?

    TC Cooksley Hackney (03:11)
    So right now I do mostly rent to owns and fix and flips. I’m in the Virginia market area. I go up to West Virginia. ⁓ We’ve done some in Maryland. We do look in Pennsylvania and Ohio. ⁓ But basically we are looking to ⁓ take something that needs some TLC, fix it up ⁓ and resell it either as a fix and flip or as a rent to own.

    We have a buyer’s list of rent to own people. So if it’s something they want, then we’ll put them in it and we help them with their credit until they’re at a point where they can pay us off down the road. So when they go in as a rent to own, they put down a down payment ⁓ and they agree to refinance it, actually purchase it in their own name and X amount of years, whatever we’ve agreed to.

    but we decide on the purchase price when they go in. So if they’re buying today and it’s 350,000 today, it might be, I just had one where they bought it for 300, the appraisal came in at 390, so they walked right in with equity and they didn’t have to have MI. So when you’re working that way, I don’t know what the market’s going to do.

    Micah Johnson (04:09)
    Okay.

    TC Cooksley Hackney (04:29)
    tell people all the time the market shifts and adjusts every five to seven years generally. However, this market has not shifted and it’s kind of been a long time coming.

    Micah Johnson (04:42)
    Yeah, we’re in a weird one. it’s for that rent to own, what led you to that space in general versus your traditional renting and being a landlord?

    TC Cooksley Hackney (04:46)
    you

    ⁓ Well, number one, being a landlord isn’t all that great. ⁓ Been there, done that. And the people really don’t take care of it. So when you have some skin in the game, we always had ⁓ home warranties and the tenants always had to pay for the home warranty. So if they had a repair cost, they always paid that repair cost. ⁓ And I grew up in a farm area and

    A lot of bought rent to own. You buy it, you take over the farm and you make payments to that landlord until it’s paid off. So rent to own wasn’t new to me.

    And I just had a rental property that people wanted. And so instead of renting it, because we had a whole lot of people apply for rentals, and I was just tired of them, we decided to do a rent to own. And that one worked out. And so we went from there. And the fact that we do the fix and flips, sometimes they’re older style and people want

    2000 and newer so the rent to own seemed to be a viable solution to making these really nice there there’s perfectly nice homes once you fix them up there’s no reason to tear them down that people would want but they didn’t have the way to get a mortgage

    Micah Johnson (07:04)
    And it kind of leans into, I said weird market a second ago, is affordability has been a big issue as of late, especially since we were talking pre-recording a little bit about that market does usually correct every five to seven years, there’s a cycle to it. And it seems like we skipped one during COVID where it looked like it was going to happen and then it didn’t happen. It accelerated and kept going up. How has this helped you stay stable in a market where it does that?

    TC Cooksley Hackney (07:31)
    It’s been a challenge and the rent to own is a way to meet that challenge because there’s a lot of people who want to own but can’t afford to buy. So if you give them a market rent and they can come up with a down payment, I’m figuring there is going to be an adjustment soon. So they’ll be able to buy the house. If we agree on a price today, I haven’t had any that come in below.

    Micah Johnson (07:32)
    Thanks.

    TC Cooksley Hackney (07:57)
    the price that we’ve agreed. But if we came to that point, I’m sure we would make some sort of an adjustment.

    Micah Johnson (08:04)
    So that gives you a lot of flexibility as the owner did, way more so than as the landlord in a way. And I love the idea of someone feeling that ownership of the property, because that’s one of the best things about owning your home is that sense of ownership. This is mine. And getting them, you’re 100 % correct that tenants tend not to take care of properties where it would make way more sense that someone that’s renting to own is thinking, this is mine.

    TC Cooksley Hackney (08:07)
    It does.

    Micah Johnson (08:31)
    This is my house. is all the things that I need to take care of. embracing that sooner.

    TC Cooksley Hackney (08:36)
    It is, it’s kind of fulfilling really. I mean,

    I just got a video the other day from one of my rent to owns. they moved in in October. So, and they have a bunch of kids. She sent me this little Christmas video she sent out to her friends that she made. And it has on there, the slogan, our first Christmas in our new home. And you know, it’s they, they videoed the front with their lights and they decorated the lawn and.

    It was just a cute little video, but it’s like, this is homeownership. They’re junior owners. They don’t have the ability to actually get a mortgage, but they’re working to fix their credit. They have goals that they didn’t have before, and they’re changing their mindset. I mean, they had a septic problem. It turned out not to be a big deal. It was that one of the kids unplugged the ejection crock.

    But it is a big deal when you don’t know what an injection crock is. So, and they had to pay $100 for a service to come out and plug it back in because they didn’t know. But I thought, you know what, this couple is so excited. This is why we do what we do.

    Micah Johnson (09:29)
    You know?

    It is fulfilling. It has to be for to see that thinking about that video like Christmas time you’re in like you’re in your space. There’s just I’m thinking about my Christmas. I have my family like that feeling of being in your own space that that that is powerful. ⁓ that made me forget a good question I had. here it is. On the opposite of that, have you had to go through the foreclosure process in any of these transactions?

    TC Cooksley Hackney (10:44)
    I did last year, I got a notice from the bankruptcy court that one of our tenants that had been in there for three years, she went through a bankruptcy, which means she isn’t going to be buying the property. It was right before her due date. I mean, she was going to have to buy it or move or rent or something. We got the notice in December and they were supposed to

    move out in the end of January and I called her and she was very nice on the phone. And so I told her, we could rent it to you for another year at current market rents because when you rent to own from us, we lock you in for an agreed period of time. For this couple, it was for three years. And she said they couldn’t afford the current market rent. And

    So I’m like, well, then you’re going to have to move. And ⁓ she asked about the down payment. And I said, I’m sorry that you for you that’s gone. You either buy it or you lose it. We went over this several times and we’ve talked about it. Like the year before she said she was going to refinance. And I said, that’s terrific. We apply that amount towards your refinance.

    But if you don’t wind up purchasing the property, you lose this money, that deposit is forfeit. And so she had done some damage to the property. I took a contractor out there and she was really snotty to the two of us. ⁓ she took all the outlet covers off when she moved out. we left a microwave and a stove. She had taken out our microwave and stove ⁓ because they were

    Micah Johnson (12:20)
    man.

    TC Cooksley Hackney (12:28)
    bottom of the line, I guess. And she put in these really fancy ones and she left those. And I’m thinking, I would have probably sold those and put back the cheap stuff. But then the refrigerator, side by side refrigerator. So she gave us an improved kitchen, basically. I was fine with that. mean, my son and I went around and put in new

    Micah Johnson (12:38)
    Yes, you know what I say.

    I just took your electric covers. That’s not a terrible trade.

    TC Cooksley Hackney (12:53)
    New cover, please.

    Micah Johnson (12:56)
    Yeah. Now you mentioned that you have them buy home warranties earlier. How does that help you in this process? And in that particular scenario where there was damage, was that something you were able to use to offset costs to get that back ready for the market?

    TC Cooksley Hackney (13:09)
    damage that they did were walls, so those weren’t covered in a home warranty. But I put a home warranty on every rental, on every rent to own. And then I explained to them that if they have a septic problem or an appliance issue, they call the home warranty and they pay the deductible. It’s about $100 typically. They pay the deductible and the home warranty either fixes or replaces it.

    Micah Johnson (13:14)
    Okay.

    TC Cooksley Hackney (13:35)
    And I tell them on HVAC systems and ⁓ septics that where it’s piping and stuff, the home warranty only pays half or a lump sum and they are responsible for the difference. It’s worked out really well actually. ⁓ Well, I ⁓ don’t stay with one company because, you know.

    Micah Johnson (13:51)
    What company do you use?

    TC Cooksley Hackney (14:00)
    It depends. If it’s well in septic, I use choice select because they cover well in septic. If it’s in town, I use, my gosh, it ran out of my mind. A guy that I used to work with just went to work for him too. But there’s a lot of them out there. ⁓ American Home Shield is very competitive, but they’re also kind of pricey.

    And there’s no apples to apples. So it really depends on what market I’m in, which one I use.

    Micah Johnson (14:32)
    Interesting. didn’t realize it was that different. I’ve heard of American Home Shield before, the reality of being able to, so you got options for depending on the property. That makes sense.

    TC Cooksley Hackney (14:42)
    Yeah. And you want to check them out and make sure that they’re a legitimate company as not all of them are. So I tend to stick with the top three companies and the one I can’t think of, they actually offer a toolkit to a realtor. So I’m a realtor, which is great. So they have this toolkit inside their system and they send me notifications if somebody’s made a claim and then you can reach out to that person.

    So it’s kind of nice.

    Micah Johnson (15:12)
    Yeah, yeah, keeps you up to date while also protecting some of your own money in the property because that means keeping up upkeep capital or yeah capital expenses on is a capital. No operating expenses on properties is what really can eat up a budget if you’re not prepared for it. ⁓

    TC Cooksley Hackney (15:17)
    Except.

    operating.

    It really can.

    I mean, having a home warranty on a rental ⁓ is beneficial to you as the landlord. And on a rent to own, it’s just great because you let these people know they’re really junior homeowners. And this is just another way to teach them.

    Micah Johnson (15:46)
    Yeah, and education is key. Now, in our pre-call, you said you traveled around the nation, done some education. What types of education is it that you really teach and what are you passionate about there?

    TC Cooksley Hackney (16:39)
    Well, so as I said, I am a real estate agent. I’m a real estate broker in Virginia. ⁓ And I’ve taught classes for the National Association of Realtors. ⁓ short sales and foreclosures are my specialty. I’ve been doing that since 2008. And ⁓ so ⁓ that’s something that people always want to know about, especially in rent to own businesses.

    property at auction. I teach people how to buy at auction. It’s really important numbers are a big deal. It’s not about ⁓ emotion. But you can easily overspend in an auction if you get caught up in it and you don’t know what you’re doing. ⁓

    Micah Johnson (17:20)
    Yeah, there’s something about raising your hand in one of those, right? gets you

    in that game. There’s a rush to it for sure.

    TC Cooksley Hackney (17:29)
    There definitely

    is a rush to it. You definitely have to pull yourself back.

    Micah Johnson (17:34)
    What’s your prep before you go in? How do you prepare yourself to go to an auction?

    TC Cooksley Hackney (17:38)
    So, well, if I can’t go and look at the property, I pull ⁓ comparables in the area. I know what my numbers are because ⁓ I’ll look at the property, either it’s online or in person, and realize I’m going to figure out how much work do I have to put in to make that livable and ⁓ attractive to others. So that is a big deal. And then I want, so I deduct that from,

    how much I’m going to pay for the property to begin with. So when I go to an auction, I already know my numbers and where I’m going to stop. And I think that’s key to anybody who’s going to an auction.

    Micah Johnson (18:18)
    You have more know your limit than your starting point.

    TC Cooksley Hackney (18:20)
    Right. And a lot of people think that you can’t have a loan and an auction, a mortgage. And that’s not true. Some of them, yes, but some of them will give you 30 days to get financing.

    Micah Johnson (18:21)
    and

    Really? I didn’t know that. Which ones do you typically find do that?

    TC Cooksley Hackney (18:33)
    See?

    Almost all of them, the ones on the courthouse that’s that day in person, they do not, they want the cash. But if it’s an online auction, or if it’s a big auction where it’s a tax auction and they’re selling off a bunch of properties at once, if you’re online, they’ll give you that 30 days. So if you’re in person and you talk to them beforehand, a lot of times they’ll give you that 30 day grace.

    Micah Johnson (18:59)
    Interesting, man, that could open up that market to a lot of people who may not even have thought about that before. Because typically you think courthouse steps, you got to have so much money in the account beforehand before you’re even allowed to raise your hand. there’s barriers, as it were, to keep the crowd down, I guess. But being able to do that, that’s cool. All right, I may have to revisit some auctions. Got me high growth.

    TC Cooksley Hackney (19:21)
    So yeah, you do, because some options,

    like I said, some options, they want it right then and there, but others will give you time to get financing.

    Micah Johnson (19:31)
    Now we were talking beforehand and you were saying you were making some ventures into the multifamily space. Now what has caused that and why the multifamily space?

    TC Cooksley Hackney (19:40)
    Well, I live in Virginia. I’m only two hours from DC. So the competition with investors and my price point is really huge. And the last two years at auctions, I noticed that people were running them up way beyond their value, which to me is insane. You’re there to get a deal and you’re there. You realize you’re paying a premium on top of whatever you bid. So if you’re bidding a hundred,

    thousand on a piece of property, you got to think about the 10 % premium you’re paying out of pocket on top of that. So really, you’re paying 110 or 120 for a property, make sure it’s worth that. If it’s only worth 100, then you’ve overbid. I mean, and people don’t think about that when they go to auction, I can tell these people don’t know what they’re doing, they can have it. And so after losing

    Micah Johnson (20:23)
    Yeah.

    TC Cooksley Hackney (20:33)
    several bids and then looking around and finding that my margin was getting smaller and smaller on what I could find that didn’t need a whole lot of work and talking to other investors in the area that do a whole lot more remodeling than I do. ⁓ I just thought, you know, it’s time to move into the multifamily phase where I’m more passive ⁓ income.

    where you have enough doors that you can step back.

    Micah Johnson (21:03)
    How are you going about finding those properties now?

    TC Cooksley Hackney (21:06)
    Well, we’re in the process of, haven’t bought a multifamily because again, the prices aren’t where we want them to be. But in talking to another partner, ⁓ we’re looking now for office space that we can convert. And that seems to be ⁓ something that might be more reasonable because a lot of this office space is set for a long time.

    time and hasn’t moved. So those landlords are probably going to be more agreeable to rate and term for some sort of terms.

    Micah Johnson (21:36)
    to expect those.

    Interesting.

    Yeah, I mean, post-COVID, office space kind of took a beating. A lot of them didn’t refill back up. So what are you learning about how that conversion process, how deep have you dug into that?

    TC Cooksley Hackney (21:47)
    Really good.

    Well, I’ve talked to a lot of people about it and ⁓ you really come up with zoning issues ⁓ and how much water is a huge issue when making that conversion, especially if it’s near a data center. The data center, the counties have now gotten wise to data centers. So they’re self-contained in water, electricity, but the older data centers are using the community’s water and electricity supply.

    So if you have an older data center in an area, there’s no point in converting because they don’t have the infrastructure to make that conversion. So you have to take into the zoning and what that building, the structure might be convertible, but the area might not be able to support the conversion.

    Micah Johnson (22:30)
    interesting.

    Interesting. That makes sense. Like if you’re in the middle of the industrial park, you probably can’t convert that one. So there’s kind of like the edges of town, I would guess. Whatever is lingering on the edge. Is there a certain zoning that you have found is easier to convert or one that you’ve heard is easier to get them to switch?

    TC Cooksley Hackney (22:58)
    Light industrial and office space is easiest to convert, but like I said, if they’re near one of those older data centers, then you might not, don’t even bother because they just don’t have the infrastructure to have people living there full time.

    Micah Johnson (23:13)
    How often do you see that in your world that they’re close to those older data centers?

    TC Cooksley Hackney (23:18)
    Northern Virginia is a big, it’s a reality. So that’s we look in West Virginia. Yeah, that’s why we look in West Virginia.

    Micah Johnson (23:24)
    Okay, big deal in Northern Virginia. All right, so if you’re, if you’re

    listening to this and you’re in Northern Virginia and you’re interested in that conversion, pay attention to that. That’s, that could have just saved you a ton of money and a lot of time and heartache by knowing that those older centers do that. Cause that’s that, that’s what I love talking to real estate folks about is you get those little nuggets that you, unless you’re talking to someone that’s deep into it and studying it, you wouldn’t think about.

    TC Cooksley Hackney (23:40)
    you

    Yeah, you wouldn’t. I ⁓ used to live in Fredericksburg, Virginia, and in Caroline County, there’s a housing development. One side of the road has its own water supply, but the other side buys water from Spotsylvania. And so their water bills were twice as much.

    So when you’re selling in that subdivision, you have to be aware which side of the road are you selling in and you have to let people know your water bill is high. This is why. So when you’re doing a conversion on an office space, it’s a very similar issue. Is there the infrastructure to support that conversion?

    Micah Johnson (24:31)
    So that’s pretty much step one after zoning. it in a zoning I can rezone and then does the infrastructure exist to actually pull the project off? Now, do y’all have any that you’re close to moving forward on?

    TC Cooksley Hackney (24:40)
    Right.

    No, we don’t. Like I said, so far what we’ve looked at ⁓ just hasn’t made that conversion. And you also have to take into account how old is the building. ⁓ I didn’t even know what knob and tube was until two years ago when I looked at a building that had knob and tube. And I’m like, what is this stuff?

    Micah Johnson (24:53)
    Interesting.

    TC Cooksley Hackney (25:08)
    My husband was like, oh, that’s not been to no, no, no, that’s like $100,000 to switch that over.

    Micah Johnson (25:15)
    Someone listening that wouldn’t know what it was. What is knob and tube?

    TC Cooksley Hackney (25:20)
    That’s an electrical

    setup that worked really well, but it is obsolete. So you have to replace it if you’re making a conversion.

    Micah Johnson (25:32)
    Wow, that can definitely drive your cost up for sure.

    TC Cooksley Hackney (25:35)
    Yeah, so it has been a real learning curve. Like I said, I’ve been in this for 30 some years and I didn’t know what that was when I saw it. It just looked kind of odd. Some odd electrical system.

    Micah Johnson (25:49)
    Yeah, yeah, if you haven’t seen it.

    It’s, love that. I love these tidbits for people that could be earlier in their process or trying to level up their game. What’s the, what’s made the biggest difference for you in real estate when it comes to building relationships and growing your network?

    TC Cooksley Hackney (26:05)
    Well, growing your network is tough in this business. ⁓ A few years ago, I worked with somebody I’d known, ⁓ I’d been an underwriting with in the 80s, and we were working on a deal in North Carolina, and it was a nice piece of land that we were gonna convert. And it didn’t happen because the husband,

    had done all the dealings with us, we had a great relation with him, but at one point in time he had added his wife to the property. When it came to closing, she said she wasn’t going to sign. So we did all this work, had a resold it, had all set up to be resold and everything, and she wasn’t going to sign. And he thought he could talk her into it, and he was wrong.

    Micah Johnson (26:55)
    That’s a tough

    day.

    TC Cooksley Hackney (26:56)
    yeah, that was a tough That was a tough one to swell ⁓ But when you get into this business, that’s just it a lot of times you trust people on face value and then you work with them and you realize What they said is not what they meant

    Micah Johnson (27:13)
    Any recommendations for how to recognize that sooner?

    TC Cooksley Hackney (27:13)
    Thanks. ⁓

    ⁓ If you have one, let me know. Really, it’s just doing due diligence. I took on an investor who said she wanted to invest, and she really wanted to be a banker. I’m sorry, but they’re two different kinds of people. If you’re an investor, you’re in it whether we win or lose. If you’re a banker, you’re going to get your money no matter what, but I pay a monthly.

    I don’t pay partner monthly.

    Micah Johnson (27:49)
    Interesting. So dive into that difference for me a little bit more. The difference between that lender and that investor, because someone may be listening to this that might be on that fence and not sure really which one. How do you know which one you are and that you might lean towards?

    TC Cooksley Hackney (28:03)
    So that’s a good question. So an investor is a person who gives you money to put into the project whether or not you’re going to win or lose. They’re betting that you’re going to win, just like if you went to Las Vegas. They’re betting that you’re going to win, but they’re okay if you don’t. A banker gives you the money and they say, this is what I want in return.

    Micah Johnson (28:05)
    So then.

    TC Cooksley Hackney (28:29)
    I want this amount on my return on my investment. That’s a banker. It’s a different mentality. So, I mean, when I did mortgage lending, I was a banker. People knew right up front, I want this money back. When you’re an investor, you’re like, exactly. I mean, I can’t guarantee you’ll get a 9 % return on every deal I do.

    Micah Johnson (28:41)
    Yeah, yeah, this isn’t really at risk.

    TC Cooksley Hackney (28:50)
    I can’t guarantee that you’re going to get it in 60 days. If I’m doing right to own, you’re going to have to wait three to five years. So, what is it?

    Micah Johnson (28:58)
    Yeah.

    Now, for your investors, do you find in that rent to own space there’s enough of those out there that like participating in it that way?

    TC Cooksley Hackney (29:09)
    There are. ⁓ There are investors who are happy. There are JVs. I have a couple from other countries. They’re happy to put their money in and wait for it to come back. And if there’s problems with the property, I let them know, and they’re OK. ⁓ They know that it might take longer to get their money back. And on a fix and flip, they’re looking to get it back in within a year.

    Micah Johnson (29:10)
    Yeah.

    TC Cooksley Hackney (29:38)
    I know rent to owner looking at long term. So they’re fine. They could care less. They write it off. And like I said, anchors.

    Micah Johnson (29:47)
    How do your terms

    change from the fix and flip to the rent to own? What is there something that sweetens that deal for the rent to own?

    TC Cooksley Hackney (29:54)
    For the investor? nope. ⁓ No, they just, ⁓ you know, there’s a lot of investors and I’m one, I have some properties I don’t even rent out, they’re just empty properties. Some of us actually need that write off at the end of the year to make everything else work.

    Micah Johnson (29:55)
    So. ⁓

    interest.

    Okay. Yeah. Okay. It makes sense. It makes sense.

    All right, so.

    Hey, it’s the points to win, right? In this game, you’re trying to play it to win. And that really depends on you as the investor, what you’re trying to get out of what you’re doing, you your life in general, how you’re trying to live it, what you’re trying to create, what’s the smartest way to do it. And again, one thing I like about real estate, there’s a lot of strategies. You don’t have to be pigeonholed into just one. You really have the, there’s space in the industry to find the way you enjoy doing it.

    TC Cooksley Hackney (30:28)
    No.

    Micah Johnson (30:44)
    and the way that makes creates the life that you want. All right, before we wrap up, if someone wanted to reach out, connect with you, maybe collaborate or learn more about what you’re doing, what’s the best way for them to reach you?

    TC Cooksley Hackney (30:54)
    You can email me at [email protected] or you can call me 540-455-1086 as myself. ⁓ And I’m on the web under 1simplerealty.us Confirm me.

    Micah Johnson (31:08)
    Excellent, excellent.

    All right, we’ll make sure that those are in the description of the episode so people can reach out to you. Perfect, well, listen, I appreciate your time, your story, your perspective. I think we need more people out in the space doing it like you’re doing it, being creative, solving ways under different market conditions to keep things going. And for those of you tuning in, if you got value from this, please make sure that you’ve subscribed to our channel, like the episode. We’ve got more conversations just like this one without.

    We’ve got more conversations coming up with operators just like TC who are out building real businesses in the industry. Thanks so much for watching and we’ll see you on the next episode.

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