Real Estate Crash of 2024 - How to Navigate the Noise

Prepare to navigate the unpredictable tides of the real estate market with our latest episode that features the collective wisdom of industry titans Allen Corona and Michael Schultz. Together, we dissect the looming question of a 2024 market crash by weaving personal tales of adversity, triumph, and the clout of strategic networking. From the lenses of YouTube influence to top-tier luxury agency achievements, their stories are a beacon for both the budding realtor and the seasoned investor.

Our dialogue traverses the intricate landscape of market trends, economic education, and the lingering effects of COVID-19 on real estate. As interest rates bob and weave, learn how they're influencing specialized markets, and why the family economics narrative demands transparency. We shed light on the more nuanced aspects of investment, such as the art of negotiation, pricing properties aptly, and why sometimes the biggest gamble is not in the bidding, but in holding your ground.

By the time you finish listening, you'll have garnered insights on credit, long-term investment strategies, and the weight of broker designations in cementing professional credibility. Our journey through real estate is one of empowerment, providing you with the compass to make informed decisions that could chart your course to prosperity. Alen and Michael are more than just guides; they're the proof that in real estate, knowledge isn't just power—it's profit.

Join host Mark Jones in a pivotal episode of the Key Factors Podcast, where we delve into the turbulent waters of the 2024 Real Estate Crash. With expert insights from renowned realtors Allen Corona and Michael Shultz, this episode promises a comprehensive analysis of the current housing market turmoil.

🏡 Episode Highlights:

2008 vs. 2024: A Comparative Analysis - Unravel the key differences between the 2008 financial crisis and the 2024 real estate downturn. Understand how historical patterns shape today's market dynamics.

Crash Catalysts: Explore what triggers a real estate crash, focusing on the critical balance between inventory and demand. Discover why today's market is shifting rapidly towards a buyers' landscape.

Market Freeze Alert: Realtor.com reports a frozen market scenario. What does this mean for buyers, sellers, and investors?

Home Affordability Index: Dive into the crucial metrics that determine home affordability, including a special segment on the emergence of a 'Renters Nation'.

Data Deep-Dive:

Mortgage Rates & Buyer Behavior
Inventory Analysis across key areas: Texas, San Antonio, and Austin
The rising influence of investors in the property market
Twitter Poll Insights: Future buying plans of renters
2023 - A landmark year with the fewest home sales since 1995
Record-breaking average home prices in the U.S. and Texas
Final Thoughts & Strategies:

The pros and cons of 30-year mortgages
A critical look at Adjustable Rate Mortgages (ARMs)
When and why to consider refinancing
🎙️ Why Listen: This episode is a must for anyone interested in real estate, from first-time buyers to seasoned investors. Gain clarity amidst the noise and understand the dynamics at play in the 2024 Real Estate Crash. Mark, Allen, and Michael provide not just analysis but actionable advice to navigate these challenging times.

Tune in to the Key Factors Podcast for this enlightening discussion on one of the most pressing issues in today's economy - the 2024 Real Estate Crash. Stay informed, stay ahead. 🌐🔑

Key Factors Podcast is Powered by ReviewMyMortgage.com
Host: Mark Jones | Sr. Loan Officer | NMLS# 513437
If you would like to work with Mark on your next home purchase or as a partner visit iThink Mortgage.

Transcript

Speaker 1: 0:00

Welcome back to another episode of Key Factors Podcast. I'm your host, mark Jones, and we are sponsored by ReviewMyMortgagecom, the largest index of mortgage programs in the nation, and the past couple of episodes have been very insightful in regards to what's going on with realtors and the attack on them. We had guests talking about different types of marketing tactics that you can use, especially using humor, in your business, to grow your business, and lately I've been hearing a lot of chatter about a crash a crash in 2024 to be exact and I brought two friends along to help me navigate through all of this minutia. So I'm going to introduce my guests and let them tell themselves about themselves, and then we'll get right into this. So if you are listening, if you're watching, you get something out of this, like subscribe, share with a friend, even help leave a review on podcast, apple podcast. It helps tremendously. So, without further ado, let me introduce my first guest, which is Alan Corona.

Speaker 2: 1:11

Alan, how you doing. How's it going? How's it going? Good Thanks for having me here, man, excited. I've been seeing you all the time on YouTube, man, follow you for quite some time and finally get to be on the podcast.

Speaker 1: 1:19

Now you're a part of it. Yeah, part of it, man, that's right. So the next guest is Michael Schultz. Michael, what up, dude, what up man? Good to see you again.

Speaker 3: 1:28

Yeah, sir, yeah, I know we've both been busy and everything, but it's been an interesting year, say the least. But man pumped to be here, excited, absolutely. You know, if I get to do the Ricky Bobby thing, just maybe just wink at me a little bit, I'll put my hands up.

Speaker 1: 1:41

And those of you that are out there that are just listening to the audio on Spotify or Apple Podcast. If you close your eyes, you may think that I have a super special guest on Anywho. I won't get into that. But guys, tell us who you are, what you're about, so the folks listening know why they should listen to the things that you guys are about to say. Who wants to go first?

Speaker 3: 2:07

I can go first. You know again, my name is Michael Schultz. I've been doing this for almost 13 years. April, in fact, will be 13 years.

Speaker 3: 2:15

Local guy here in town was born in Florida, but, you know, got over here as soon as I could, got to Texas as soon as I could, even though even now, florida is just as free as we are, if not a little bit more. So, who knows, I might end it back over there. I already own a house over there. I can just go back and forth. So, but yeah, I've been doing this for a long time, man, I got in the business right in 2011, when stuff still wasn't fully back in, right in full swing from the 08 crash. You know, got my license, I think. I gave the company I was with two weeks notice and say I'm gone, and I got my license in 32 days. So I found a way to kind of say this on the podcast. But I befriended some people at Trek and just annoyed them every day, yeah, times a day until I think they just pushed my file through and was like let's get rid of this guy.

Speaker 2: 3:00

You know he stamped your license.

Speaker 3: 3:02

Yeah, so did it and then, just started out at a little mom and pop brokerage in Bernie and I mean century 21, but small Sure I was. Literally it was me and the receptionist. She doesn't know the questions I have.

Speaker 3: 3:15

No she knows some things from just dealing with office work. So it's like, okay, I gave it six months, no broker helped, know nothing. I was like, okay, and I was really good friends and close with Mike Holloway at the time. I grew up with his kids at school we went to Reagan and and and just were super close and I valued his opinion, his experiences and he was like, hey, go to go to Cole banker, went there Super corporate from me, you know, did six months there. I feel like I had six months, six months, six months. But I found my groove when I went to Kelly Williams luxury. Right after there I started doing some luxury deals off the bat after, you know, really doing nothing for the first year. I think I might. It's funny when I tell people this. You know I've been in the business journal the last nine years in a row for being one of the top 20 luxury agents in San Antonio.

Speaker 1: 3:57

One more time with that one, just in case for the people in the back in the top 25 San Antonio business journal.

Speaker 3: 4:02

I'll give a little golf pass. Nine years. I'm super proud of that. I love the fact of that. You know like I love helping families. I love finding you know investment properties or flip properties, whatever it may be. But I just like walking that stage getting my little you know crystal ball of an award and just feeling recognized, right, like it's not even about anything else. It's like hey, I'm on, I made this list. So when the movers and shakers in town are opening that magazine, because you know they're right, they're looking at there and I'm boom, I'm the youngest one. I keep creeping up the list. I love it. So this past year was number nine and press it. Hopefully I'm in four or five or whatever. But the first year I made it Mark, I was like this is a joke. I deleted the email. There's no way.

Speaker 3: 4:42

I was like I did eight minutes this is like my third year selling real estate, was still trying to find my groove and everything, and I did like 8.6 million. I was like there's no way I'm on this list. Like no, deleted it. And then I got it again, so I forwarded it to my manager. I was at Sotheby's at the time. She's like no, no, you're on it. Oh man, okay, so like I was exacting and back then they were doing top 25.

Speaker 3: 5:04

So I was number 25, baby, that's all it counts Like once I got me in the door they can't get rid of me now I'm just going to call that list, but it's been really good man, I'm really really good. I found my niche, which is, you know, luxury houses and ranch sales. So I deal with people who are buying these bigger properties, more expensive properties, and they're also buying investment properties, you know. So they may have a portfolio of this ranch, this farm, this house they live in full time. They may have a house along the coast, they Airbnb, things like that. So I've been involved in every aspect of that. They may buy three or four houses at a time in between 200, 300, flip it and sell for five or six.

Speaker 3: 5:38

It just by doing the higher end market, I get to do everything underneath it as well, so it's been great for me. I'm feeding my team and everything as well.

Speaker 1: 5:47

And a lot of folks believe that once you make that transition into luxury, that you don't fiddle with the lower priced homes.

Speaker 1: 5:55

Yeah, so I find that that is so much of a myth. I mean, I work and I'm close friends with Robert Elder and their crew. They take what they can get. Oh yeah, you know. Now, mind you, of course they're going to take the luxury listings, just like you, 100%. But it shows their spectrum of what they do in their tenacity to take anything, because they are the experts. You are the expert in what you do, right you?

Speaker 3: 6:19

know, for a while we would post everything we sold. You know, hey, just sold this or just sold cards, whatever it may be, and I noticed our interaction and activity on social media was just dropping when I'd post something like that.

Speaker 3: 6:31

So I don't post them anymore. But now I have where it's like I gotta figure out a happy medium, because then I, if I post just the cool stuff, you know, if I post the million dollar listing TV type stuff, I'll get approached by people oh hey, you know, I would have called you and working with me anyways, because they'll miss some other properties, that we'll get together and work. But at first they'll say hey, I would have called you, but you only do this stuff.

Speaker 1: 6:55

Yeah.

Speaker 3: 6:56

Like no, I don't. You don't know that last year I sold a lot for $75,000 off Scenic Loop and then we drove literally to Witsit, Texas, to sell a house for $35,000 that should have been abandoned Right so we literally do everything.

Speaker 1: 7:09

I love everything under the sun and it shows your expertise. And now that we've heard from Alex Jones, I mean Michael Schultz, you're trying to shut me down.

Speaker 2: 7:21

So Allen tell us about yourself, brother. It was a big shoes to fill right there, man. I've been in the industry for three years now.

Speaker 3: 7:28

There you go, actually two years and 11 months.

Speaker 2: 7:30

Rising rock star, yeah, coming up, coming up. I come from Laredo, Texas, born and raised there, graduated there, came to San Antonio as fast as I can as well. So I always had a fascination with San Antonio and the history and the very thing. I'm pretty much a history buff too. I love that Nerd yeah yeah.

Speaker 2: 7:45

Common nerd. I love that. I love that. So move from San Antonio. I'm moving from Laredo to San Antonio. Been here for the past. I want to say it's now nine years, technically three years. I used to be in the oil industry, worked there for seven years and then just recently in COVID they laid me off. So I gave them seven faithful years and they just say, hey, you're too expensive.

Speaker 3: 8:05

Lucky for them, huh, oh exactly.

Speaker 2: 8:08

But it was kind of something that I grew to hate for quite some time. Now it's just I was young, making money, and I was like what else am I going to do with my life? At this point. Where can I take my skills Then? Until they let me go, then I decided to jump into real estate. That was the next thing for me. I've always been fascinated with I actually read Rich, that, poor, that Everybody starts off with that book.

Speaker 1: 8:29

I feel that's my first book that I ever read cover to cover yeah, At age like 22.

Speaker 2: 8:34

It took me some time because of my ADHD, but I got it done and then I got into podcasting I'm sorry, listening to the audio books actually. So that helped me out and then that kind of just brought the fascination of real estate for me. I started off with a brokerage called RD Realty Group. Very good, I would have been with them for the majority of my career. I actually just made a switch to real brokerage, okay. So I'm pretty excited of what the future has for me. As far as my niche goes, I'm usually helping out people with the second time home buying options, trying to expand growing families. I've helped out a couple of investors in my career as well and that's ultimately where I want to end up investment side. I don't want to be doing the whole real estate thing selling for a long time. I want to get into education, helping people out Not everybody's a poiser educated on finances and be able to purchase a house and stuff like that, or just managing money or managing portfolios and stuff like that.

Speaker 2: 9:26

It's not something that they teach in school. It's not, and it should be. History is great, but what am I going to do with?

Speaker 3: 9:32

that. No, you know my favorite classes in high school because I feel like college. I did just what I had to do and then we were out the door, right. But high school when we had electives was awesome, because my elective wasn't like I was bummed that it gets shopped. We didn't get stuff like that, but I took accounting.

Speaker 2: 9:50

That's great.

Speaker 3: 9:51

So accounting to economics, those were my favorite classes. Everything else was like right, you know, I excelled in all that stuff, but it was like I had no interest in it. It was like I would do my work to where that was fine, and the other stuff was like okay, here's where I'm putting my attention into. Absolutely, and I'm glad I did that because it set me up for what we're doing today.

Speaker 2: 10:11

Absolutely, and you know now, I think Elon Musk is important like a bunch of money to like a specialized school that just science, math and that's pretty cool.

Speaker 1: 10:19

So, and to your point you mentioned well, I mentioned they don't teach it in schools and they should, but now thinking about it, I don't know if they should have teachers who are intending to give our kids the basics. It's like financial advice could be the wrong one.

Speaker 1: 10:40

Teaching financial advice to the kids and they're getting this incorrect. I don't know. Maybe it is how it should be. The financial stuff should be coming from the parents. Maybe the parents need to just step up a little bit more and start teaching them younger. Fill them in on what's going on in their life.

Speaker 1: 10:57

Absolutely. For me, my parents were super transparent as possible. Matter of fact, when it was time to go to college, I'm like, okay, I've got partial scholarship to play football, but I need money for the rest. My dad was like, well, you want to fill out that FAFSA form? I'm like, okay, how do I do it? He's like here's my tax returns. Go ahead, knock that out, Okay a little bit of fraud here.

Speaker 1: 11:22

Well, I just didn't, I didn't know, and it was that transparent that I knew where my parents stood, I knew kind of what their goals were, what our income was. We weren't well off but we weren't hurting, et cetera. So I think that transparency is going to to help all the way around, and that leads to the education piece that you were mentioning, which ties into the conversation that we're having today. So, to open it up, I want to get a take on, and I'm sure you guys view this topic the same way, but I'm going to play devil's advocate throughout this episode, just so that we can get a different perspective and make us think a little bit. Daunting question when is the crash happening in 2024, guys, who wants to start? It's not, it's not gonna happen. Yeah, I agree with you. I agree with my plan out.

Speaker 3: 12:17

I honestly think if we have a crash at all, it's gonna be after 2024. I think 2025, maybe the end of it. Like you know how we had the COVID pricing and things were skyrocketing. Rates were super low. I mean, I know I took advantage of that you know we bought the house in Florida.

Speaker 3: 12:32

I did a $1.2 million house at 2.7%. Yeah, I mean, it was like free money. I'm like okay, and we rented it out and did things like that and have made money off of it. But I honestly think we're gonna see something like we saw in 2022. Okay, when you know, halfway through the year it started trailing off and rates were going up and people were starting to back down and do things. Now, I still sold a bunch of stuff, sure, and during that time it was just a little bit slower, you know. And then, being in the luxury market as well, too, or the ranch market, people are still buying stuff.

Speaker 2: 13:02

Right.

Speaker 3: 13:03

I feel like if I go back and put everything pinned to paper, 85% and 90% of my deals are cash only anyways.

Speaker 2: 13:10

Right.

Speaker 3: 13:11

You know, so I do a bunch of that stuff. Or their portfolio loans. You know doing other things like that and they're not your typical conforming conventional right, and so they have some more freedom in doing things like that. But I honestly think we'll get through 2024. I think it's gonna be a great year.

Speaker 1: 13:25

Yeah.

Speaker 3: 13:26

You know, not saying, hey, I'm listening to these real estate influencers on social media because I think that's garbage too. You know all this other stuff. But just talking to who I talk to, like talking to you. Talking to you know someone because we share an office gold in our office. So I've got some friends in there. You just cooler talk. Right, We'll call it. You know, talking to some people who are on obviously a higher pay scale than I am, just from around the country.

Speaker 3: 13:46

People I know from you know I've sold homes to several of the USA executives, so you're just hearing their insight different things like that Again, people over my pay scale who I feel like are gonna be a little bit more smarter than me, a little bit more older than me and been around the block a couple of times, I feel like 2024 is going to be a fantastic year. I think we're going to have the beginning of 2025 be the same, you know, because I don't think they can be like oh, 2024 is over, boom, we're back at eight or nine percent or whatever we're going to be at. I think it's going to be that slow rollback into it again, but somewhere in the middle of 2025, middle to late, I think they may start going back up again. I think they're going to be so good in 2024 because I think it's an election year, I know.

Speaker 1: 14:30

I feel, like they're going to go hey, the president cannot dictate that. It's not the president. It's technically not the president, it's more so. What leads up to that, in hopes that the president will remain, or be replaced, correct and you see, it's all going to be market specific really, San Antonio has always been strong, our economic strong, you know.

Speaker 2: 14:50

So we have a lot of military, medical, you know all that keeps our economy going here in San Antonio. Travel Right. And then not only that, all the developments, all the companies pushing to Texas, you know, just on the outskirts, you know, towards New Braunfels, san Matagos. We're getting all that developed too. So it's just people are willing to commute a little bit longer to get a you know home out there and then come back into the city for work and stuff like that.

Speaker 2: 15:11

So I don't see San, we'll see we're seeing it now and pull back on the prices, right, but a crash I highly don't not see that Right.

Speaker 3: 15:20

I mean Microsoft came in and paid $54,000 an acre in an area where everything's going, for 20 an acre.

Speaker 1: 15:26

Oh yeah.

Speaker 3: 15:26

You know, and they're obviously betting and they're a lot smarter than I am too they're obviously betting. Hey, we're going to come in and do this, pay this much to make sure we get it, and build our suite and then have now executives here and all this other stuff here, correct? I feel like little signs like that are all over the place. Yeah, and I was going, you know, I'm glad he said it because it's true, just like in 2008 crash and moving through there, we had foreclosures, we had all these things, but we were still one of the strongest states to come out of this, absolutely, you know.

Speaker 1: 15:53

Yes, oh yeah, and most of this conversation is because you look in the media and it's hard for the layman, even the novice realtor, to understand and navigate through everything that's being told to them, especially if it's from someone that they know and respect, like a Grant Cardone figure or any of those folks that may or may not have a hidden agenda behind it, the concept of location being super important. I believe you are accurate in that. I believe that Texas, like you mentioned, we have not seen any kind of downturn other than when 2008 occurred. It actually took a two year period for us to feel it in 2010 and then it shot right back up. If you look at a chart and do a zoom out, you've got places like California that are constantly going to be riding that wave, that roller coaster, but again, taking a snapshot back, it's a constant upwards trajectory on that.

Speaker 1: 17:00

Real estate is the thing that gets people out of the cyclical poverty situation, and we're faced with having to educate renters, consumers, sellers all of that in a short period of time. How do we go about doing that? What are the things that we talk about with them, and we'll roll into that a little bit later, but I want to get into the concept of what is being told in the media and what you should believe, what you shouldn't believe. You guys seeing anything on the news or you seeing anything on the bulletins, youtubers and a lot of it is clickbait for sure.

Speaker 3: 17:45

Yeah, a lot of it's clickbait, a lot of it's hey, read this, or it's worded just enough to where I feel like they say they can't come back and get in trouble for what they wrote or have to redact it or write the apology thing, but if they're right, they're going to say I was right, yeah, but if they're right, they'll say I was right.

Speaker 3: 17:58

But a lot of it's like okay, we're not breaking it down into micro markets, Correct. And if you want to say a macro market would be even the state and then an even higher market to the country. All these statistics are showing you are nationwide. So they're saying, hey, the mass excess from California, because half of everyone moved from California I was looking at numbers the other day are going. You know, some small percentage are going to other places, but the majority, the two biggest pieces, and it's almost directly in half, is Florida and Texas, Absolutely, and so the little ones are going to other places.

Speaker 3: 18:33

But like that makes the prices in California come down a lot. If everyone's mass exodus they're going to have obviously flooding the market with listing. So you know it's, they're going to have a longer time on market things like that price are going to come down. So I mean they're really not looking at anything like that. Right, you know I'm. I'm still selling luxury homes and Aqua Springs, Dominion, Oakland's condos downtown over the Riverwalk and penthouse stuff and we're negotiating again. But the price is so inflated from COVID that they're still selling, so the market's not dropping. No, I feel like I was just doing an update for a client last week where I said, look, sales are down, but now by like one or 2%. You know, like we, if we had 100 sales December of last year, we have, we have 90 this year. Ok, so 10 homes didn't sell. Ok, but those 10 homes are going to sell in January. Right, Like in December is a weird month to look at. Anyway, right, Travel, like we'll still, we'll still contracting, showing and things like that, but still a little slower.

Speaker 1: 19:29

And when people mention that prices are coming down no, and I'll tell them.

Speaker 3: 19:36

They're not talking about a normal value.

Speaker 1: 19:38

Right, they're not talking values are coming down. We're talking sales list prices, because they were already over inflated, thinking that we could get that price, and, matter of fact, they could in the last couple of years. But now fast forward to reality. Yeah, compile that with higher interest rates. The affordability of it just doesn't make sense, right? But at the end of the day, these folks aren't going to give away their property. No Risk of losing their current low payment to go and trade it in for a higher, equal property Correct, higher payment.

Speaker 3: 20:11

Correct. So here's an example I just closed on one week and a half ago, one two weeks ago maybe most, but I went to him, or he came to me, as a referral. I sold a three and a half million dollar property on the lake. Okay, they were friends, it was on Canyon. Three days, five full offers, one full price offers, one was lower, one was way lower from a neighbor just trying to get it. But I had that many offers on a three and a half million dollar property on Lake, sold it in 72 hours. You know, easy deal. We had a lease back for free, everything else, so she had time to get out. I was referred to one of her friends and he was like, oh well, she did that. And well, you're not on the lake, you're not this. You know, you're, you're, you're, you're.

Speaker 3: 20:50

Two different products here, right, right, but still, a luxury home nonetheless was in the Oakland. Yep, I ran numbers for him after seeing the house, because on a luxury deal I will always go to the appointment, take all my notes, all my photos and my iPad and my phone. Take one of my agents with me to help with that. So I'm talking to the agent or the seller, not just staring at my iPad at the time and I come back and tell him hey, flat out, your house is worth one six, 50. They got irate. No, it's not blah, blah, blah. We built it 22 years ago, was the original house in the neighborhood, the biggest house in the neighborhood, the biggest lot in the neighborhood. So he had all this stuff going for him, but all original now prestige condition. I don't know how he kept the house that nice, but like everything was nice. Okay. So probably ex military or something Builds nursing homes across the state.

Speaker 1: 21:39

There you go yeah.

Speaker 3: 21:42

So so I tell him one six, 15 loses mine. It says no, it's worth one nine, 50.

Speaker 3: 21:48

And I said no, I mean I respectfully agree to disagree, right Like I'm at the point in my career now where I don't have to take every deal especially if I know it's going to not waste my time but like waste my other clients time Cause I'm doing so much for this one person and they're not being realistic, Then that's unfair to my other clients, right? Or unfair to my kids and my wife, cause I'm on the phone with them constantly all the time trying to get a price reduction or whatever. After thinking about it, after we did photos, he called me back and we lowered it $120,000 from theirs. We're at a million eight 35 ish from million eight 30.

Speaker 1: 22:21

And the market sees that. The market sees that. Well, we weren't even on the market yet.

Speaker 3: 22:24

Okay, gotcha, yeah, we weren't on the market yet. So thank God. But then I sell it in two weeks. But I sell it for one, six, 50. Hmm, weird, weird. Right, that's as high as they'll go. He's tired of arguing with them back and forth. We get it done. Then he's like, well, I'm not making any repairs, I'm not doing any of this stuff. I'm like, well, hey, you're, I'm not trying to argue with you with your AC is 20 years old. Yeah, this is that and this is that. You know there are some, some things here. I wouldn't fix anything and then ended up fixing a bunch of just small stuff. So, thank you, but I'm sure he needed a lot to show you like, hey, the height, and that's where I'm going with this, this whole story. So if I get on a tangent, just smack me in the back of the head, but the highest price go get it on the highest price in that neighborhood was $1.3 million a year before, so a year before right.

Speaker 3: 23:08

When we were, you know it was pre-June July. It was like an April or May closing for that one. So the rates were still low, Everything's great yeah. Sold for top of the market a little bit over ass, like 35,000, 40,000 over ass.

Speaker 2: 23:20

Right.

Speaker 3: 23:21

Not not too terrible as some of we've seen. They've gone a couple hundred over ass in that price point but a great cop Nonetheless. Now we had extra land, we had extra this, but I sold his house the highest price home in the neighborhood for $350,000 over the nearest comparable in a down market or whatever they want to call it. It wasn't what he wanted, but he was seeing all these COVID prices for years, there you go.

Speaker 3: 23:49

But my thing to him was we still made you this much money, over and above and beyond this other house. And in that case, he doesn't see it till the end. But then he's like oh yeah, you're, you know, you're right.

Speaker 1: 24:01

You should have been a rock star in his mind, but he's already referring to more people after the whole thing because of the media, it downplays your expertise in the data that you provide to him. Oh yeah, I'm the emotion that he brings to the table.

Speaker 2: 24:15

Right, if that makes sense. Yeah, normally I've got people going on Zillow and stuff and seeing what their house is worth. That evaluation model is like off, so it is it is.

Speaker 1: 24:24

It's a gimmick and it just kind of like credit karma You've got to have a score to give some reason why you're paying for it, you know. So I want to kind of break down the concept of what would cause a crash. We're going to play hypothetical and break down the basics of what it would take to create a crash. So the first thing, in my opinion, is unemployment. Correct, Right.

Speaker 2: 24:54

I believe I got this statistic here 3.2 right now 3.6. Nationally at least, when the heck did I put that?

Speaker 1: 25:04

Unemployment is data?

Speaker 3: 25:07

I think we're at COVID-22, followed by robotic birds dropping the COVID virus throughout the country.

Speaker 1: 25:12

I think we're at 4.0. Where did I put that sucker? We're somewhere around 4%. You know what? Here I'll look it up. I have it right here we are at 4.1%, and that is in Texas. Okay, I don't see that spiking.

Speaker 1: 25:34

As a matter of fact, even if it spiked, let's see Half the people that own homes lost their job. They have so much equity in their property that the next thing would be, okay, let's see how much it is to sell it. But then you have this caveat of if we do actually sell this property, where do we go to live? So they're going to then face the issue of I'm going to trade in this low payment at this low rate to get the capital because I can't make my payment or I'm scared I might not be able to make the payment because nothing's saying that they can't get another job. Maybe have some cash reserves hey, maybe they're late on their mortgage a couple of times to then trade it in for the equivalent. That is now a higher payment, whether you're buying or renting. It just doesn't jive in my opinion. What are your thoughts on that? I won't ever sell that house.

Speaker 2: 26:33

So I got my first house in 2021 at like 3.2%.

Speaker 3: 26:37

There you go yeah.

Speaker 2: 26:38

I won't ever let that go. I'll figure something out, I'll rent it out.

Speaker 3: 26:41

Well, currently is rented out making some great money on the payment.

Speaker 2: 26:43

There you go 1100, I'm running out for $1650. There you go, it's perfect. I won't ever let go of that house. I'll figure something out creative to be able to cover that. If I happen to lose my job or whatever the case is, I'm going to get into an apartment, do so, but this is where you have to be versed in finances. Typically, everybody has to be six months in that in reserves. You have to, but that's not the case with everybody.

Speaker 2: 27:07

Some people don't even have $1,000 in their bank account Usually right. So you need to be able to understand the repercussions of if you lose your job. This is where we come in and educate people also, Like don't buy a house if you're not ready, if you're not situated with this whole blanket as far, as you know, right.

Speaker 2: 27:24

But some people they need to move and they have to buy the house, no matter what, right. But you kind of stay in communication with them to educate them and continue giving them information on how to protect yourself and stuff like that, and that's why they have relationships like you too, you know. So you guys are the numbers number geeks, right, it's supposed to be, it's supposed to be so definitely educating everybody on that sense. But no, back to your question I'll definitely won't ever sell that one. I bought it for $200,000, now it's $250, I could sell for $250, the Compton area support that.

Speaker 1: 27:54

And that's within a two-year period, correct?

Speaker 2: 27:57

Right, so it's insane so what is that?

Speaker 1: 27:59

Almost 150%. Yeah, you know yeah. It's not bad, you're the numbers guy, right, and then some math is not my strong suit, but definitely, I definitely will keep that one until you know to another one goes Any thoughts on that, because my next thing would be a recession, which, in my opinion, we almost need one, and the reason why I say that is because, parlaying it with more data, we just hit a trillion dollars in credit card debt, just consumers together.

Speaker 3: 28:36

What does that tell me? You can't believe me on that. Me neither man. I still got the debit credit card.

Speaker 1: 28:40

It's like an AMX pay you off every month. Use the points travel pays that I got that.

Speaker 3: 28:44

Zolve, I got my first credit card at 36 years old. No way. Yeah, so it had to get secured, though it's only got $500 on it.

Speaker 1: 28:50

I believe that.

Speaker 3: 28:51

It'll give me one tank of diesel. I got to pay it off, okay, but I'm working on it. I was just the aspects of like, if I don't have it, I'm not going to buy it, I'll pay cash for it. And then it's like I'll finance vehicles, all this other stuff, and then you learn that that doesn't count as much as having a house or even the credit card on them. The revolving, yeah. So it's like, okay, I'm going to take my own advice now and go get a credit card.

Speaker 1: 29:16

That's right. I'm not going to pay 1.6 million cash right now.

Speaker 3: 29:19

My wife's got like seven, but I got my first one.

Speaker 1: 29:21

Authorized user, that'll help. Yeah, that's funny. I mean, what does that look like?

Speaker 2: 29:26

We have trillion dollars in debt right now. If that crumbles, what does that look like? You think the government's not going to have that happen.

Speaker 1: 29:31

That's something that in my opinion, would still not affect the housing market, simply because those cards are unsecured debt that can be charged off and written off by the creditors. And would it be bad? Sure it would, but not affecting the housing market at all. I mean, let's say you have hard times, are you going to pay your credit card or are you going to pay your mortgage?

Speaker 1: 29:57

I'm paying my mortgage Every single time 100%, even though, like, for example, texas, there's nothing to toot our horns about when it comes to credit scores average. We're at like 660 average credit score for San Antonio, but yet we are the lowest foreclosure rates. Why? Because Texans are known for paying their mortgage regardless.

Speaker 3: 30:22

Yeah, right, come and take it yeah.

Speaker 1: 30:27

And a recession in theory would cause a crash in all of the markets. But in this case scenario, I just think that inflation, of things that are not calculated in the inflation, are not being noticed by the consumers. More people are eating out, left and right. Restaurants raise their prices. They still eat out left and right. Business comes around Still spending, still spending. Where does it go? On the credit cards? Right, but again back to that point, I don't see that affecting the housing market prices in any way, shape or form. So, taking what we know about 2008, which I was not in the business, you weren't in the business, you weren't in the business. I got it in 2012,. You were in 2011,. You were in 2021.

Speaker 2: 31:22

I was being crowned homecoming king that year. That's awesome.

Speaker 1: 31:27

Let's talk about what the difference was. What do you guys know about the crash of 2008? Subprime loans?

Speaker 2: 31:34

Yeah, you nailed it. Yeah, I mean my first dose of that when I started getting into it, like actually researching it, I saw the movie the Big Short. It's on the money, yeah, it's on the money. So they're giving loans out left and right to babies. People are using other people's social security cards. They weren't even verifying employment and stuff like that. So I mean, now they have a lot of regulations in place to avoid that situation. It wasn't really a housing issue, it was the lending issue.

Speaker 1: 31:59

I suppose Right, and you are on the money. It was a greed issue, right, it was a greed issue on top of the fact that fraud was running amok. And they didn't even believe that they were doing fraud because it was acceptable, correct. You know, that is the huge piece that is missing in all that we have here, in addition to the inventory shortage. I've got some stats that we looked up before. Let's see here Inventory-wise, we have 2.7 months of inventory in all of Texas. That is on the market. But then when we hone in and get a little bit more specific, san Antonio has 4.6 months and Austin has 4 months. Typically, they say the market shifts at 6 months plus in inventory to a now it's a buyer's market. We can wheel and deal and get prices dropped, et cetera. I for one believe that even if we had 6 months worth of inventory, it would be a little different, because you now have sellers that are not enticed in any way to trade in that current rate for the new rate, right.

Speaker 3: 33:09

Well, and not only that, Mark, but we have these sellers. So, like you know, I'd see it as a buyer's market. Or some of my clients right now, buyers and sellers saying hey, we're in a buyer's market Because we're negotiating, or you know we had to come off 100,000, 200,000, whatever it may be, but that's not true either. Right, to me, that's like a false positive test, right? So it's. No, you overpriced it because you still think it's 2021, even though we're two years later in the height of it. Right, you still think you're looking back two years and you're picking and choosing when you're going to listen to Zillow and realtorcom and not all this stuff that's saying we're in a recession, or it's coming, or the market's tanking. Look how horrible it is, it's on fire, but you're still pricing it. You're listening to that, but you're still pricing it up here. And then, during another conversation, you're picking which conversation you want to argue with me right but we're not.

Speaker 3: 34:04

We're not a buyer's market where we're just giving the property away. Now we're. We're bringing it back to reality, which, by the way, reality is still higher than it was two or three years ago. We had this upward trajectory. If you're looking at a graph or a chart, you've still been following this chart, even though the chart stabilized Right. I don't know what chart you're looking at and maybe you made it on your MacBook, but you're still looking at this chart that goes up and you're not seeing the dip.

Speaker 3: 34:33

And it's, and it look, it's a dip, right, but it's still higher than you were two to three years ago. Absolutely so, because it dipped, right, like, look at the stock market, you say, oh, play the stock market, put in something safe for 10 years. Yeah, you'll see ebbs and flows, but you still make money, correct, right, Unless the company just tanked or something like that, right, yeah, and Ron type deal, whatever.

Speaker 1: 34:53

Sure.

Speaker 3: 34:54

Again based on fraud. Right Year over year, exactly Year over year, you're still making money. What was the normal percentage rate? I think we're not a percentage rate, the percent of of of of your money back type thing, right? Or a value add Right Was what? 40 percent? Well shit, Last year.

Speaker 1: 35:15

But you can shit all you want. Last year yeah.

Speaker 3: 35:18

But last year, you know, last year we were. We were going from a four per six, four to six percent increase in value every year and then 21 we jumped. What was it like on our neighbor? Our national average?

Speaker 1: 35:28

like 40 percent in value Jumped tremendously Cool.

Speaker 3: 35:32

Well, you should have bought and sold then, right, but we're not. So now, now we've dropped, let's say, even 10 percent, you're still at 30 percent more than it was worth in 2020.

Speaker 1: 35:41

And let's say for whatever reason, guys, because we're just throwing numbers out, that makes sense. But let's say we're off by 10 percent in that initial 30 that he said Shit, that's 20.

Speaker 3: 35:51

Yeah, that's more than you're going to make on a on a bank investment you know, any way you look at it. Yeah, you're still cashing out, man, you're still making the right decision. That's why all these influencers, all this stuff and we can get into a little bit how disgusting they mostly are, but they are right about one thing like invest in real estate whether even if it's just your own, your, your single home.

Speaker 3: 36:11

Right, you're still making a solid investment. Agree, you can rent. I've got an apartment complex I bought. Thank you, 2021 was really good to me, so I bought an apartment complex. We bought a beach house, like you can still rent from me. Yeah, I'm not making you a deal. I'm going to, I'm going to profit off that. I'm not trying to be a dick, but I bought that for a reason. That was a business for me. That's right. Both were businesses. So I'm going to, I'm still going to make money. Do you want to buy or do you want to rent? Because rent you're paying me, that's right. I feel like when you're buying it, you're paying yourself. Right, I know you're paying the bank and whatever, and you can, we can argue whatever point we want, but at the end of the day, you're still paying yourself. Correct? Because if I'm putting money in every month, here's $2,000, $2,000, $2,000, but like on my house, so here. I bought this house six years ago. Our payment was 1890 something when we first got it. Now it's $2,100, taxes went up Taxes.

Speaker 3: 36:59

You know, my house is over doubled in six years. The little bit of it was the last couple of years, sure, but it was an older home. We remodeled a little bit but we've doubled the value in it, or, I'm sorry, over doubled the value. Like I can't go put $100,000 in the bank and six years later have 200. There's no way. No.

Speaker 2: 37:19

Matter of fact, the bank probably wouldn't even let you do that. No, I had, and it'll take 24 hours to get your money, the down payment for the beach house.

Speaker 3: 37:24

So I sold a ranch, made $306,000 on my commission, okay, okay, burning a hole in my pocket. And then we'd always wanted a house and, like over by Seaside Florida on 30A, we now have one. But I took all of that money and put it down, reinvested I get that right to reinvest into that, practicing what you put for six months while we were looking. I think I made $13 in interest guys, yeah.

Speaker 1: 37:48

Of the money sitting there, allowing the bank to use your money $13.

Speaker 3: 37:53

That would not even give me, that would not even buy me a meal at Saltcrest. Right Okay, my house, now that I've put that money into, has now gone up 400K in value.

Speaker 1: 38:04

Yeah that you could tap into when you need it.

Speaker 3: 38:07

That will buy me a saltgrass franchise right, Absolutely so, it's true. So when you look at stuff like that, you just got to make the right decision. You got to partner with someone like one of us or you know in yourself and just make sure that there's someone helping you right, because we always weren't helped. I bought my first house in the recession in 2008.

Speaker 1: 38:25

Okay.

Speaker 3: 38:26

The neighborhood was giving great deals. There were incentives, there was a spec home. They did what I wanted, moved some things around. It was a DR Horton. I mean it was a great first house but, I, bought that in the downturn, but we were booming business-wise.

Speaker 3: 38:38

I used to work for my parents' construction company and I was running all that, doing that stuff and we was a concrete company, right, but we were blowing and going. I mean, our house stuff slowed down a little bit, sure, but we did a ton of commercial. I don't know if you remember, but in 2008, I know we weren't in the business in the business, right, but I was in the construction field. Commercial was still going.

Speaker 2: 38:54

Commercial was booming.

Speaker 3: 38:56

You know, I know commercial is slowing down now, but that I feel like that's a little bit of mix of like hey, it's 2023. We're working from home. Covid made us work from home, it worked. It's like I know that's a good thing to do, I mean it's a big thing to do.

Speaker 3: 39:04

But you know I'm tired of renting and it's like I'm not going to be able to go into that, you know, but like it was still going strong. So my paycheck didn't decrease over that and that's not the both. But that's saying like, look, I took advantage and said you know what?

Speaker 1: 39:20

I'm tired of renting, I can get a deal on this thing now, let me buy it. And this is just a guess, but I believe you were on that trajectory because you had solid money.

Speaker 3: 39:33

And you were doing the right thing, or what you believe to be the right thing, and you followed their footsteps 100%. My parents were a huge help and I don't mean like, hey, give me down payment Because we worked all that out with the builder, but just teaching me the fundamentals of this is how you run a business. This is what you do with the profits. It's you know all these things that taught me to be more business minded by example. Yeah, the only thing I wish I would have done.

Speaker 2: 39:57

Man, you know what is it? Looking back is 2020.

Speaker 3: 39:59

I should have kept it.

Speaker 1: 40:00

Yeah.

Speaker 3: 40:01

You know, I sold it four years later and made 10 grand, whatever. Not that big of a deal. But I had a friend that lived in the neighborhood too and we sold hers another four years later. So she was there for eight, I was there for four and she made like 180k. Yeah, when I made 10. And I'm like I should have honestly do it was in, it was in shirts to below. I should have like rented it out somewhere in the military that was going to take care of it, because I sold it when it got an apartment, because I was like, oh man, I'm not you know, I'm brand new in the business.

Speaker 3: 40:26

I freaked out. I mean I need to keep my credit and I can let a late payment do this or that. And I was just starting out selling real estate.

Speaker 1: 40:33

And that perspective, that mentality, is what I believe is happening in the minds of many consumers.

Speaker 3: 40:40

I moved out, got an apartment. I should have just moved out, got an apartment and put a renter in there. Absolutely, because at least the mortgage is being covered. Absolutely, yep, even if I only made $100, $200 a month. But now they're paying my mortgage and I sell it four years later and make $100,000 on it, or I still own it to this time today and I'm borrowing against it to buy something else, right.

Speaker 2: 40:58

You see, market conditions shouldn't dictate whether you buy or not. It should dictate your strategy right, 100%? Oh preach, you need to be able to, you know, get creative with all these. Even now, with the high interest rates, so much like financing. Creative finance has been brought on and laws have been kind of changed or things are making them more attainable for people to. You know, buy a house now. So no matter what the market is doing, as long as you negotiate an amazing deal, you strategize on how to acquire it, you know your finances are in order, then you're. It's hard to. Real estate is a long term play guy.

Speaker 1: 41:30

Well, I mean real estate. I think the rule of thumb is you don't even actualize any losses until you have to sell. So at the end of the day, if you're holding on to it, what have you lost Anymore?

Speaker 2: 41:42

that's not devil's advocate though, no, it's not, Unfortunately.

Speaker 1: 41:45

Unfortunately it's not. Here's some devil's advocate. I should have held on to our investment properties longer than we should or than we did. We sold them all back in 2019, held on to that. I was starting a new company, so we had to have reserves and just money to make moves. And then we started flipping properties in 2020 or 2021. And then that market it didn't completely dry up, but people shifted to buy and hold. When we ended our flipping, you, looking back on it hindsight, we should have just kept them, but at that time, being younger, doing what we were doing, we saw the capital as something to use to leverage even more. It worked out for us but, like you said, holding on to it in any situation. Consumers believe that the housing market is similar to stock in the sense that you have to actualize your losses every time you look at it. How often do you look at your value other than when you pay your taxes? And that's if you pay your taxes separately from your actual?

Speaker 3: 42:50

mortgage payment On some of the investment things we own. We got together with a group of us in the office and, depending on what deal it is, there's 10 to 15 of us on a deal right. The apartment complex, there's 10 or 11 of us and we all just put a bunch of money into it and however much money you put into it, that was your interest stake in it. I don't look at the value of any of that until we get our K-1s and looking at doing taxes into the year and protesting Things like that. We look at it and I go back okay, it's either we broke even or, hey, we lost a little bit. But I'm writing that off, things like that too. But it's still going strong.

Speaker 1: 43:19

I was going to say that should help because you've got to offset some of the income that was made in that year as well. And then back to the concept of the shortage of inventory. I've got a chart up here existing housing units relative to the population demand in the US. Even though we've got four months of inventory here in San Antonio, four months over in Austin what was it? 2.0 something nationally we're still 3.2 million units behind on what needs to be there for the demand that's out there.

Speaker 2: 43:57

It's crazy and people think just because they said the feds are going to drop the basis points 25, you know, three times next year, they don't understand that it's not going to be aggressively, it's not going to be a quick thing, it's going to be over time and they're going to have to look at the reports of GDP.

Speaker 1: 44:12

Well, that's cool that you brought that up.

Speaker 2: 44:14

So go ahead. They can't bank on it going down. So actually I was looking at some stats of the day the first week of December, like 298 homes sold right.

Speaker 2: 44:24

And then they announced that whole feds going to drop the rates and all that stuff. Next week. Following week, it was up by 144 homes sold in San Antonio. So what happens, people, you know? Right now there's a lot of pentabire demand, so they want to get into the market. As soon as they hear something about interest rates dropping, they act on it right. So you know it's going to. Definitely don't pay attention to the basis points and all that stuff. You can always get creative. On our second home that we bought, we bought it for $332,000. Right now that same home selling for $315,000, right, but we bought down our interest rates. You know, and we understand it's a long-term hold. So my fiance and I were trying to acquire as many properties as we can to be able to rent them out and build up our portfolio right.

Speaker 2: 45:05

Something similar to you I want to get into, you know, commercial real estate and stuff like that. So we're not worried. I'm not worried that they're selling the same house down the street for, you know, 15k less. I know my house is a praise for X amount. I know eventually I'm going to get that value back. That's a 10-year hold for us. If anything, and anybody that's buying a house right now, I'm at least selling them and you're staying within, you know, five years. At least be able to combat these. You know pullbacks or whatever the case is going to happen with the market. If you do happen to see that the market's going to go up in value, you're going to be getting an email from me. Hey, your value's up. Would you like to sell what's?

Speaker 1: 45:35

going on.

Speaker 2: 45:36

What do you want to do with this? You know?

Speaker 1: 45:37

scenario and from a consumer's perspective, on what Alan just mentioned rates announcement they're coming down a little bit. All of a sudden transactions go up. What does that do to values, guys? It shoots up.

Speaker 3: 45:51

They're going to go back up again. There you go. I'm telling people to buy down. They're looking at me like I'm stupid, but I'm like. You know, some of my hiring clients tell they get it. They don't care, they're doing this, doing that, right, they'll move money around.

Speaker 3: 46:01

But some of my let's say, the more normal transactions- let's say anywhere from 300K to 600K, they're like no, that doesn't make any sense. And I'm like no, but they're just drop rates once. Yep, they're going to drop them again If they do, or whatever. How many times they do, no matter if they drop rates or not, though your value is still going to creep up a little bit, right? So the best thing for you is this house works for you, right? You like it, you want it. The locations a rockstar location for where you want to be, you know it. Just, everything aligns except that rate. Right, but you're qualified to do this. Yep, do it.

Speaker 3: 46:36

And I look, I'm, I'm, I'll tell, I'm not pushing you. If you don't want to buy this house, you don't have to buy this house. You don't like anything else. $100,000 lower, where you feel a little bit better, right, but you'd like it. It works. Re-fi it in six months to a year, absolutely, but it's always to me it's like about the stronghold. If you can physically make these payments happen and it's everything on your list like it checks every box, do it.

Speaker 1: 46:57

I have to agree wholeheartedly with that, and bringing to the table a couple of statistics, there was a Twitter poll that was going around that mentioned 59% of renters plan to buy within the next two years. How, and in that same poll, the same people that took that said that the interest rate was more important to them than the price of the home. You?

Speaker 2: 47:26

can't change the price.

Speaker 1: 47:27

It's like where and what are they listening to? What are they consuming? That is getting them to think bass-acquarts.

Speaker 3: 47:36

Yeah, do a buy-down. You get some seller concessions for that Even still so.

Speaker 1: 47:42

Not a buyer's market, but willing to negotiate, not changing the price, but will give you some closing costs which will help you with the affordability factor. But at the same time, we're focused on the rate which equates to payment and leaving the equity piece to just whatever no big deal when it should be.

Speaker 1: 48:06

Can you afford this payment right now? If so, would you be able to afford it for, let's say, the next five years, if nothing changes? Right, yes, great. Then let's move forward with this property, because at the end of the day, you can't go backwards to buy the home at what it was before.

Speaker 2: 48:25

Here's the other advocate what do you say if refinancing extends your loan another 30 years? I was on TikTok and I posted a video in saying about refinancing and stuff like that. Some guy went on there and said oh, that's so retarded, that's going to extend your loan for another 30 years. You're going to pay more interest. I told him man, if you're taking 30 years to pay your house off, you're doing it wrong.

Speaker 3: 48:48

You should not take the 30 years. If you're living there for 30 years, that's something you have to retort.

Speaker 1: 48:54

It's just not in our culture these days to stay in the home. Matter of fact, the previous tenure in a home first time home buyer used to be less than five years. It creeped up to eight when they took the statistic during COVID. Well, no shit, we're in our homes, we can't do anything, we're not going to sell, rates are low, et cetera. I have a feeling that we're going to get back to that five year mark in the next couple of years just because that's what we do in this generation this is the largest generation that's buying. We like the new change of scenery, we like to make moves, et cetera. In addition, we use social media as our everything, and it's sad but true. Therefore, aren't you trying to keep up with the Joneses type concept? So they're going to continue to leverage and move that equity over. Now. My point here is I took six contracts in the last week. Out of those six, three of them were first time investors already own a home. They don't want to sell their home, but they want to get in the investor pool. That, to me, is an astonishing figure, because I'm not the only one doing loans these days. I would imagine that plenty of folks out there are actually getting on the investor side to combat this institutional thing that's going on, because the other day and I brought it up on the last episode, but it had nothing to do with this Now I can talk about it a little bit more If you go to any CAD county appraisal and just type in a zip code and just start scrolling, you would be astounded at the amount of LLCs that you see owning properties.

Speaker 1: 50:49

The layman doesn't look at these types of things. The layman doesn't even know what that means in those scenarios. What that means is the rates are not affecting investors getting in the market. At the end of the day, they believe home prices are going to continue to go up. At minimum they'll be able to cover the rent and it's going to be a long game. What it's actually doing is pushing anybody out of the market that had a chance to become a home owner, putting them on the sidelines hoping that prices are going to drop.

Speaker 1: 51:28

What's funny is that you hear I'm waiting for prices to drop and then you've got another crew I'm waiting for interest rates to drop. What if neither of them do? You're just going to keep paying rent, yeah.

Speaker 3: 51:41

I mean, I guess that's what they think. It's a sad way to look at it, but I'm just going to buy another apartment complex. They can pay it to me.

Speaker 2: 51:50

When I first started, I remember you and I were having conversation and you told me time in the market beats time in the market all the time.

Speaker 3: 51:58

Absolutely Every time.

Speaker 2: 52:01

That's something I try preaching to everybody. As long as you structure it correctly, your time in the market is always going to outweigh it Absolutely. The people that try to get in the low interest rate they said COVID's happening. They were scared for their jobs, but they saw the 2.3, they saw the prices skyrocket and they didn't jump in the market. Now they're over here. All interest rates are high. I don't want to get in. Prices are high. You've got to be able to educate these people and tell them how we could structure Like you said. There's so much ways to get creative financing seller concessions, lender concessions. At times Even realtors are willing to help out with their commissions too. So there's a lot you can do to be able to take that back. You can delete it out of there, hell?

Speaker 1: 52:39

no, we don't let it nothing. Do you guys believe that it is a basic excuse that they're giving due to fear, or is it a lack of education?

Speaker 3: 52:53

I think it's 100% both. It's a 50-50 split, I think. If them being uneducated, and no matter how hard I mean, and you know how many of us realtors, right, brokers, are actually educating them, and then the other question is how many of us that are actually educating them Are they listening to us, right? Because I feel like a lot of stuff goes in one ear now. The other because they know Absolutely. They see the news, they look at Zillow, they watch Modern Family and Phil Dumpy thing and it's whatever it is Like, whatever they're doing.

Speaker 1: 53:22

Meanwhile I watch, Kill Tony, y'all.

Speaker 3: 53:24

Yeah, but what you know what I'm saying. But like, whatever it is that they're ingesting, that's what they know and that's it, and they'll stick by it, no matter how many times I could be like, hey, let's meet at my office. Look at all these little trophies here. Here's on my book of lists I've been in. Here's all my continued education. So, side tangent, what's the number one designation you think that the public knows? I mean, you see these realtors that have cards that's like alphabet soup, it's like GRI, ibr, ibr G-R-M-T and.

Speaker 3: 53:53

L-N-O-B. I went, okay, I got a few of those and I'm like this is stupid, like I keep adding to SABOR and my business card. I'm like no. I don't put anything on that anymore. I use one CLHMS for certified luxury home marketing specialist. There you go. And broker. I went and got my broker's license.

Speaker 1: 54:08

Good for you.

Speaker 3: 54:08

People will literally go and go. Oh, you're a broker, You're not just a realtor. Yeah, so I just added that in there.

Speaker 3: 54:14

Perception. Yeah, I added that in there and said, okay, listen to me. So I feel like people listen to me a little bit more because of that. I'm not being like, oh, look at me, but like it's just the fact that it says that, right, like you're going to listen to an attorney more than you would like, the intern of the law office type, right, so you see that stuff? Yeah, exactly, even though they probably know everything because they're sitting there listening to the attorney.

Speaker 1: 54:31

Absolutely.

Speaker 3: 54:32

You know, 13 years experience. I got my broker's license in 2020. Okay, and it took eight months to get it? No, I did 580 hours because I did the bare minimum. Right, like I had to do the bare minimum because I didn't want my broker's license. But I just woke up one day and said I'm getting this, so I like 500, no, it's 548 hours. I did it the entire month of December 2019, the first week of January, and was done, went to submit everything because I had to do it before April, but then COVID came, so it delayed everything. It took eight months. I've had a friend that just got it the other day. It took 30 days.

Speaker 1: 55:10

So let me ask you, Michael, are you the broker on record at your brokerage? No, no, there's 1200. Some odd people.

Speaker 3: 55:17

I'm at portfolio, which is a boutique brokerage within Kelleway and Heritage, but we're still a part of there. I'm in the office every day. There's 1200 people on file. Our broker record, lisa Munoz, got you Amazing lady.

Speaker 1: 55:31

So I've got a point here because I've had folks on the show and I've seen it on social. I've seen it everywhere. I'm not going to become a broker. It's not work that to become a broker. I don't want all that responsibility. Blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah, blah. At minimum, if you've been in the industry practicing realtor, I believe what is it Five years that you have to be four years to?

Speaker 3: 55:52

be two and then it doubled. I should have gotten it when it was two because I had enough experience. I didn't because I'm like I said, I didn't want to do it.

Speaker 1: 56:00

But? But I truly believe what you said is gospel, because it says broker, you're going to get more business because of the perception of the layman, the consumer. So at minimum, it cost you X amount of hours, x amount of money to get your brokerage broker license. Excuse me, at minimum pro tip, go get your broker's license, put it on your card or on your signature line or your designation or your social media, because you don't have to be the broker of record. It just shows your accolade, it shows your expertise.

Speaker 3: 56:37

Absolutely. You're a broker associate. At that point, there you go.

Speaker 1: 56:41

But I don't think people even and I don't say people I don't believe realtors even get that concept because they think all of this responsibility comes in way.

Speaker 3: 56:50

Yeah, no, I mean you're held at a higher standard.

Speaker 3: 56:52

You know if you go if you go under a Trek review or a complaint, they're going to hold you at a higher standard. But like, if you're doing what you're supposed to be doing, you know what you're doing. You're not going to get to that point, right? I mean, look, there's always going to be that client or that person or that lead who called in, you know whatever, that you pissed off for some sort of reason, right, because you didn't call her back within 30 minutes. It was an hour. Or him, or whatever, or she, him, her thing, you know whatever. It is right, alphabet soup, you're not going to know who you're going to piss off or whatever. Anyone can find a complaint, right? But like, you're still going to be held at a higher standard, but you know better too. So just just use your experience, use your designation of being a broker and just be smart about it. Right, damn it, do the right thing.

Speaker 3: 57:34

But I feel like more people and not saying, hey, when I got my broker's license, people just like started staring at me and just like listening more, but I feel like it took relationships I had prior Sure To where they would say, yeah, I hear what you're saying, but but you know, now, after a few years of having it, you know I've got a client and he's like just make it happen, that's right.

Speaker 1: 57:52

They want it, I want it under this price.

Speaker 3: 57:54

Make it happen. Oh yeah, call me when it's done, I'll sign it.

Speaker 1: 57:57

Boom Like, and that that speaks volumes just to that designation, right, you know. So I've got two more things to to chat about. I want to get you guys's opinion on this statement. This quote right here says a house is never going to pay you. You're going to pay the house and keep paying the house, adding that the four walls of your family home are never going to make you rich. If you look at Elon Musk or Warren Buffett and ask them how they got wealthy, none of them mention their house.

Speaker 2: 58:34

Of course, your personal house is not going to make you rich. Your investment on the real estate is going to pay your personal house.

Speaker 1: 58:40

I would, honestly, I would even go as far as to say that even your personal house, at least at some point, when it gets paid off oh yeah, even though you still have to pay taxes and insurance if you want to make sure that your property is good you're now allowing cash flow that would have gone towards rent or something else to be put back into your pocket. In addition, you've got another nest egg that you can tap in 80 percent of its equity, if you still qualify, etc. To leverage, to fall back on to what have you. I mean, I can go down this. I want to hear you guys's thoughts. Yeah, I mean, look, so I bought my house.

Speaker 3: 59:17

That we're in right now. We rented for a year after we got married, my wife and I, because we didn't know where we wanted to go. Right. So I sold my house in Bernie. We moved to Leon Springs, rented over there for a while. It was a great deal, way too big of a house, but it was on the market, nice condition, great, great price and it was sort of close where we wanted to be, at least half in town, half not, but it was.

Speaker 3: 59:38

It was a good deal off Bernie's stage road and did that for a year until we found it that, got out, went into an apartment because I was like, well, I don't want to stay here, it's really too much houses than that. But like where are we going to go? Right, so did the apartment for eight months only because it was like the leases of I don't want to extend to another year because we're trying to find something. But doing this every day I'm the most picky person, especially when I'm in like these one, two, three, four, five million dollar houses. I mean I can't do that right now, but like it took us eight months where my wife was like just pick something.

Speaker 3: 1:00:09

Yeah, like my daughter was born and we had her in the apartment for like a month and I was like, okay, I'll go time, I just picked it. Like I showed up to the open house with a contract just after seeing it.

Speaker 2: 1:00:17

Let's go, let's just do it, let's just do it.

Speaker 3: 1:00:18

Right, so it's the house right now. But, like, that house was the best decision I made, even though it took a while to make it. I feel like maybe it just happened on when it was supposed to, but the house has over doubled what I bought it for. Right, I owe like a quarter of what it's worth of my mortgage. So to say that, like, the house is never going to pay me, no, no, I'll tell you what's going to pay me. It's going to pay me when I sell it. Yep, and by my new house. Because, look here, I've saved up money for a down payment, right, I'm up at 20% down, whatever it is, or unless I can create a fine. You know we figure that out right, because a million things can happen. But I'm now going to get all this extra money in equity that I've been paying on at $2,000 a month. I've been paying on this stuff. Now, where my new payment?

Speaker 3: 1:01:01

I know it's probably going to be around $6,000, $7,000 a month, right, so it'll be a much bigger house, much different zip code you know neighborhood, but I just got all that money for free. In my mind, I just got all that money for free, I could have been paying rent.

Speaker 1: 1:01:13

Yep.

Speaker 3: 1:01:15

And it just gone away, right.

Speaker 1: 1:01:16

Poof gone. Yeah, that's right.

Speaker 3: 1:01:18

At least I'm writing off my interest. Yep, I'm paying, I'm writing off all this stuff. You know, home improvements, whatever I can do, you know it's benefited me along the way. Yeah, he's true that it doesn't pay me every month. Right, my apartment pay me every month.

Speaker 1: 1:01:32

Yeah.

Speaker 3: 1:01:33

My rental home. My Fortinet Bandera pay me every month. It's not huge numbers, but they're paying me. My beach house pays me per month A lot higher than the other ones, because that's being VRBO.

Speaker 1: 1:01:42

Airbnb yeah.

Speaker 3: 1:01:44

Like the statement's wrong. Now, that was Grant Cardone right.

Speaker 1: 1:01:50

Yeah so now this statement and you stole my little segway Now. This statement was made by Grant Cardone, who built his wealth on commercial real estate On real estate.

Speaker 3: 1:02:03

Yeah, but your house doesn't pay you, but you should pay Grant. Right, so he can buy properties and you can get like a.

Speaker 1: 1:02:10

You know, like a, like a not even a real estate, but a real estate, a residual of like $35 a month, yeah, so, yeah, here's your $35 a month for two years. So it kind of full circles, this whole concept of what the media is spewing about a crash in 2024 and folks that built their wealth, warren Buffett, where he built his wealth, guys.

Speaker 2: 1:02:33

Real estate, yeah, real estate.

Speaker 1: 1:02:36

Elon Musk totally different. He built his wealth with fucking genius. Okay, taking risks, leveraging, doing things and creating things that we needed, that were not available.

Speaker 3: 1:02:47

But he still is. But he's still dipping in the real estate and he building like those little smart home things.

Speaker 2: 1:02:51

Little tiny homes, absolutely yeah. So I mean, he even stepped, he built his whole city.

Speaker 3: 1:02:56

And then stepped into it. Right, but all, all of his plants, all of his warehouses, all that stuff, all of it, all real estate Maybe owned by the LLC, yeah, but still owns the real estate.

Speaker 1: 1:03:06

So, to this point of full circle, I'm wondering if this is a mass upper level people pulling the strings, creating a narrative that is creating more fear for renters to continue to sit on the sidelines while they continue to gobble up real estate. Because what we're seeing, trend wise and going back to the BCAD looking up the LLC concept, investors have not stopped purchasing. Institutions have not stopped purchasing. Your vanguards, your black rocks, are still purchasing in droves single family residents, and we're having bills that are coming out. Will they get passed? Probably not, but they're at least attempting and bringing it to the forefront that, hey guys, there's an issue here and it's your affordability in what you can actually make out of your life for the future. But yet we're seeing all of the scare tactics come in way of that's it's not going to pay you.

Speaker 1: 1:04:11

Well, no, I work for a living, right, that's what pays me, and then I spend my money. Where do I put it? At least I'll put it in something that pays me back, versus a savings account that's going to give me pennies on the dollar, if even that, because you've got this institutional concept and it freaks me out a little bit, simply because if we are not wise enough, the renters, the folks on the sidelines, to see what's happening, it's not just institutions that are jumping into this pool your average homeowner is now going. Hmm, I can afford this. This makes sense. How do I build some wealth? Hey, mark, what do I qualify for If I go and buy another home? Maybe a second home, beach house, maybe a duplex, quadruplex? What does that look like? And the conversations that I'm having with this folks are incredibly inspirational and I wish I could record every zoom that I have with them to show it to the public, but for some odd reason, they probably wouldn't even watch unless I titled it crash 2024.

Speaker 3: 1:05:21

Yeah, put a cool thumbnail pic on it like yeah, house falling on the on your client. Yeah, that's all of that.

Speaker 2: 1:05:26

I mean it's our job to be able to combat that legacy media stuff situation. It's our job to put that information out there and get in front of these people. You know, most of my business I mean 90% of my business came from Instagram this past year and it was amazing. I just put out a couple videos and stuff and they weren't even informational. But once I got those people I was able to educate and they didn't. They weren't aware of all these other things they can do to be able to acquire a home or a second home investment, whatever the case was. So it's I think it's our job as professionals in this industry to be able to combat all those narratives out there with the. You know the crash is going to.

Speaker 3: 1:05:57

Crash is happening and all that stuff.

Speaker 2: 1:05:58

Not only that, I hardly don't think that it's a crash is going to happen here, at least in San Antonio, or maybe Texas, you know, because you got a lot of people running national comps now yeah, they got. What can my daughter get me in New York or California? What can you get me in San Antonio? You bring a $1.2 million over here to San Antonio. You can get a real nice house with some land. California. You're getting a shack, you know.

Speaker 2: 1:06:20

If that if that, yeah, and not a lot of people can afford without the state tax and all that stuff over there. So they're coming over here, you know.

Speaker 1: 1:06:27

So you mentioned and this is the last kind of question topic of this episode, because we're doing damn good on time Affordability. I believe it's going to become an issue that it doesn't necessarily go backwards once it's at that point. You're now going to need to pull your money together with family to buy a house, to create that same effect that you could have had with a single income or a dual income. What, what do we do? What do they do? I mean, I know what I'm going to do. I'm going to keep financing properties.

Speaker 3: 1:07:06

Yeah, I mean. So we've got to change the way. You know, social media has done this to most of America and the world now, where it's created this false sense of what I need, what I deserve, all this other stuff. And you know, I saw this thing the other day where it was either the news or someone, someone's local account was like bashing on Lenard I think it was Lenard who's building these now like tiny homes and then $100,000. But look but think about it like OK, if I'm only qualified for one to 150, I'm just proud of you for going to get qualified Right, right, like you're not renting, you're not doing this, you're putting the money towards your future, for your family or kids or whatever. Or if you're a new married couple or a single guy or girl, whatever, and you can qualify for this house, go buy this tiny ass, lenard. That's right, that's right.

Speaker 3: 1:07:51

Because, look, you're going to live there until you can move up. You may want to keep it because you got equity in it. Now, let's say it's five years from now. Right Now, the houses were 250. You paid 100, 150, you now have 100,000 equity in the house. Pull it out Right. Pull a he log, do whatever. And I'm not saying like, don't take this, I'm not a financial advisor, but just, based on experience, pull the money out, go buy yourself a new house, combine that with whatever down payment you saved up, rent it out, leverage, leverage it. You know there's always going to be someone that needs a house, absolutely. So you don't rent because you want to move up Right, but someone's going to need to rent, right. They may be getting back on their feet or they may be just starting out. They're 10 years younger than you and they're in the same. You know they're walking through your footsteps, not knowing you, but they're going through your same life plan. Rent it out to them.

Speaker 3: 1:08:40

Or sell or finance it to them.

Speaker 1: 1:08:41

There you go, become the bank.

Speaker 3: 1:08:43

Become the bank. You know, make your own rate up and people think, oh, I'm 12%, no Make it reasonable, yeah, like even in this market we're in now. I've done two seller finances lately on listings of mine and we've been under where the banks are at right now, you know, because they're still above where they were and I mean they're paid off now or whatever, and chances are you're going to get more equity because they put more down.

Speaker 3: 1:09:05

You're willing to get more out of your house because they're like hey, you know my payments, this and that, blah, blah blah. It's not as bad as underwear prime is right now. And it's a good deal, and so we've sold those. They're happy, you know, they may pay it off at a year, two, three years, but they won't reach their five year balloon. If they do, they'll pay it, then Right, but it gets them into something, right, I mean?

Speaker 1: 1:09:22

I think that Lenar is on to something, and I believe you're going to see others follow suit, because, looking up at the board here, 99% of US average homeowners cannot afford to live in the average home. Yeah, there's a niche for that product, absolutely. So if they're in these companies or big companies, they do their research. Maybe they know something that we don't know, or maybe they know exactly what we know, which is there needs to be more affordable housing and prices aren't going to go backwards, so therefore it needs to be created. Yeah, and if there's a niche for it, if there's a profit margin for it, they're going to fulfill that.

Speaker 3: 1:10:01

Yeah, you know, capitalism became this dirty, scary word and it turns me on.

Speaker 1: 1:10:06

Thanks, old mom.

Speaker 3: 1:10:06

Yeah, like I'm, like yeah, capitalism, you know like we're all going to better ourselves by following that kind of model right. And I know we all believe in that to some extent, whether some more or some less, but still believe in that fundamental. Basically and that's the only way we're going to get out of any of this right Like prices are going to go up, whatever. That's normal. They were going up before. And you know, in the 80s and people were paying 18, 19, whatever percent.

Speaker 2: 1:10:36

Right, that's right.

Speaker 3: 1:10:37

They were still doing it and then someone may go yeah, but the house is only 50,000. It was all relevant too. They weren't making, you know, $300,000 in their manufacturing job.

Speaker 2: 1:10:44

They're making 40,000, right, or 20,000 or less right.

Speaker 3: 1:10:47

So it's like it's all relevant. I know I've seen some other bullshit where they're like the 300,000 is a new 100,000 and it may be right. Whatever like right, this is a situation you're in.

Speaker 2: 1:10:57

Yeah, that's on Instagram, right, so you got to believe everything you see on the Internet.

Speaker 3: 1:10:59

Ok, but like it's all relevant to something right. So like go out and make 200,000. I know that sounds so easy, it's not. But like but find something, do a side hustle. Do something like this like better yourself, take five years and work your ass off Absolutely and to better yourself, get into a better position. Because once you can get into that better position whether it's five years, 10 years or you luck out and do it in one the rest of it just falls into place. Not that you're going to have to stop working and doing that, you keep working hard. But the higher you get on that ladder, the easier the hard work becomes.

Speaker 2: 1:11:34

I know that sounds kind of ridiculous, no that sounds damn good, it's like it's exactly what it is.

Speaker 3: 1:11:38

You know you got to. Everyone's afraid to work and do all this stuff. Or I don't want to go in, or I got to have this, or I'm going to hold out. For I was watching this movie and the husband hadn't worked in a couple of years and she's like, well, he's really holding out for. Oh no, it was a national ampoune's Christmas vacation. He hasn't worked in years he's holding out for a management position.

Speaker 2: 1:11:58

Dude, I would have been running.

Speaker 3: 1:11:59

Fries graduated from fries to making the burgers. Went from burgers to drive through assistant to assistant to the assistant to the regional manager.

Speaker 1: 1:12:09

Meanwhile he's the first one to go grab the boss and bring his ass to the actual party.

Speaker 2: 1:12:13

And he goes back to people can't wait other people think about it.

Speaker 3: 1:12:16

He had initiative when he kidnapped that guy. But like, look even on one of our favorite shows, Dwight Shrewt. Yeah, what did Dwight do in the office? He bought the building, dude. Yeah, there you go. Dude, he bought the fucking building. That's right. How'd he do that? His side hustle. Matter of fact, jay-z said His beats beat farm and B&B. He had two side hustles all out of the same location. That's right, you know.

Speaker 1: 1:12:40

And do it dude. These quotes said stack the shelves until you're stacking for yourself.

Speaker 3: 1:12:46

Yeah.

Speaker 1: 1:12:47

You've got to put in the work. It doesn't happen overnight. Not a single one of us.

Speaker 3: 1:12:51

No dude.

Speaker 1: 1:12:52

It became where we are and we're not where we want to be, even, but are still grinding every single day. Gentlemen, that was a fantastic discussion.

Speaker 3: 1:13:01

I had a good time, I think that was a lot of insight.

Speaker 1: 1:13:04

Is there anything else that you guys want to add before we close this out?

Speaker 3: 1:13:07

No, definitely. I can talk about Cardone or Chris Cohn or whatever. Do yourself a favor, get on Instagram and look up ballerbusters Best thing I can give you right now Best piece of advice I can give you aside from buy more real estate. Boom yeah.

Speaker 2: 1:13:20

Invest in real estate, invest in your wealth, your future generation as well, and just don't listen to that media. I like it, just get to a professional. I like it, just get to a professional.

Speaker 1: 1:13:29

All right. Well, gentlemen, again I want to thank you for giving us all of the wealth of information that you have in this discussion. Very insightful, and hopefully people can pull out different nuggets that they can utilize in their everyday life. For those of you listening, for those of you tuning in, I've got a couple of tips for you as we lead into 2024. First tip if you are in a position that you're able to buy and the payment is right and you can afford that payment, make sure that you are looking at a 30-year loan. And the reason why I say that is plenty of people out there are going to go what you're going to pay so much interest over 30 years, as we discussed in here. You're not going to keep the damn thing for over 30 years, or even close to it. So if you want to pay it off in 15 years, double up your payment, y'all it is that simple?

Speaker 3: 1:14:25

Yeah, make a payment every two weeks.

Speaker 1: 1:14:26

That's right.

Speaker 3: 1:14:27

Or what is it?

Speaker 1: 1:14:27

Cut your payment in half and just make one every two weeks. That's right. I think that's the key. Yeah, my uncle taught me that back in the day. Shout out, uncle Ernie.

Speaker 3: 1:14:35

We called it. I used that, but for some different.

Speaker 1: 1:14:39

I love it. The second thing to this is lock in a fixed rate. Stop listening to all the hogwash about this adjustable rate mortgage crap. Rates are going to come down, so you might as well get an AP Dude. You're saving pennies and the risk of having an adjustable rate mortgage is drastic. Let's say and I'm going to tell you exactly why I don't promote adjustable rate mortgages let's say you're going to save a half a percent every payment, etc. Because you went with an adjustable rate mortgage. Well, let's say rates are dropping For some odd reason, there is a risk that you may not qualify when the time comes to refinance.

Speaker 1: 1:15:22

And then shit hits the fan and you're out of luck. Looking at all of these additional alternative options, don't put yourself in that situation. Stay conservative and make sure it's a 30-year fixed mortgage, no matter what program you go with. The last thing is refinance when it makes sense. Everybody wants to refinance right away when rates drop, but you're only adding money to your actual mortgage and stretching it out. The concept of refinancing should always make financial sense and you're going to have plenty of lenders blowing up your inbox as soon as the rates drop by a half a point. Hold off, guys, because then, when it drops another half a point or another quarter of a point, you're going to turn around and refinance again.

Speaker 1: 1:16:09

This is not a refinance game. This is about saving money. This is about making right financial decisions. So get with a lender that's going to be honest and show you the figures in comparative to what it could be, because we're all in this to make a buck. But, at the end of the day, the true lenders are the ones that can actually show and stand behind their work. And the last thing that I leave you with, guys, is make sure you understand the concept of crawl before you walk, walk before you run and run before you jump off that cliff and fly. Other than that, again, thank you, guys for joining me on this episode.

Speaker 3: 1:16:47

Thank you for the invite. Thanks for facing me while I was in the shower this morning.

Speaker 1: 1:16:50

I appreciate that.

Speaker 3: 1:16:51

Everyone's scared to do them.

Speaker 1: 1:16:53

Odd.

Speaker 3: 1:16:53

Just ball out, balls out, there you go.

Speaker 1: 1:16:58

Guys. That being said, make sure to like, subscribe, share this with a friend. You never know who's going to need it at the time, but we'll catch you on the next one. Peace.

Speaker 3: 1:17:07

Have a good day.