Epic Real Estate Investing - Everything You Want to Know About the Upcoming Foreclosures | 1162

Episode Date: September 2, 2021

The mortgage forbearance is ending and you may be wondering what are these 5,000,000 homeowners going to do? Are we going to see a tidal wave of foreclosures? If yes, where will they be available for sale? Stay tuned as Matt Theriault goes through data and gives answers to the aforementioned questions! Apart from that, you will learn how to treat your mortgage in a way the wealthy 1% does so you can reach your financial freedom and built the wealth you deserve! BUT THAT’S NOT ALL! Finally, you will hear the latest in the news and crypto updates that bring us together and set modern ideas on money-making activities! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. In today's show, I'll be answering the controversial question as to whether or not you should pay off your mortgage early or ever. Likely not if you have aspirations of retiring early, so I'll let you in on the winning secret game of the 1% and how they do it, and then you can decide which path you'd like to follow. And then the mortgage forbearance will be ending,

and you may be wondering, what are these 5 million homeowners going to do? Are we going to see a title, wave of foreclosures? Well, it's not quite the five million that mainstream media continues to mention. They put out more twists than a pretzel factory. Those were May 2020's numbers. Months ago, we're really about half that now, maybe even a little bit less as half the people, over half the people have already left the program and they left unscathed. But 2.5 million are left. And that's still a lot, right? Agreed. So what's going to happen to them when the

mortgage forbearance program expires? Where will you be able to find? all of these foreclosures for sale. Well, I've seen the data, and I'll share everything you want to know about the upcoming foreclosure crisis, but have just been too frustrated because you can't get a straight answer. Well, you're getting it today. All right? Let's go. Welcome to the all-new, epic real estate investing show. The longest running real estate investing podcast on the interwebs, your source for housing market updates, creative investing strategies, and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require visual support. To get the full premium experience,

check out Epic Real Estate's YouTube channel, EpicR-E-I.TV. If you want to make money in real estate, sit tight and stay tuned. If you want to go far, share this with a friend. If you want to go fast, go to rei-aise.com. Here's Matt. Hi, my name is Matt Terrio, CEO of Epic Real Estate, where we show people how to invest in real estate so they can escape this. daily grind and retire early. And for most people, just by the very nature of mentioning early retirement, red flags go up all over the place as if this seems too good to be true. Like, people only believe something if it's too bad to be false. I never understood that. Anyway, an early retirement is very much in the cards for anyone that wants it. You just have to change the way

you play the game. For most, the retirement game consists of a life having worked for 40 plus years, eliminating debt, maxing out the 401k, and paying off a home as fast as possible. If you want to retire at the age of 62, if you're okay with that, and then dramatically lower your living standards when you get there so that you don't run out of money before you run out of life, that's a good strategy. It's a good strategy for people that are bad with money. And it's time-honored wisdom even. I mean, you hear it from Dave Ramsey, Susie Orman, and just about every other certified

financial planner on the planet. People that listen to their advice are playing to not lose. And per the Department of Health and Human Services, 95% of the people playing that game ironically do lose. And further, playing this game steals your most precious asset, your time, and ultimately your life. But if you want to enjoy more of your life

while you're young enough to do so, without concern of running out of money, There's a different strategy for that. It's playing to win. And it's playing this game where winners are created. And we know them as the 1%. Well, it's 74% of the 1% if you wanna get specific. And this game works like this.

Rather than focusing on eliminating debt, get more of it. Rather than save your money in a 401k, stream your money in an asset. Rather than paying off your home, keep borrowing again. it. Craziness, right?

No, stay with me. You'll see. And don't get mad. It's just math. Here, this is something anyone can do. Start with your primary residence. If you've owned it more than 12 years, you've likely got some equity. A lot.

And you can start this right now. But first, if you don't own a home, get one. An FHA loan only requires 3.5% down. And you'll get a nice 30-year fixed loan for the rest. You can make this happen in almost, every state of the union with less than $25,000. I mean, here in Vegas where I live, we're talking $10,000 down,

maybe even a little less. Now, you're not going to live in a mansion, but it doesn't matter. You won't be there long anyway. You see, using the debt on your house and never paying it off can certify you financially independent and make you wealthy. And I'm gonna walk you through it,

but you've got to have a house first. So get one if you don't. All right, we're going to focus on three economic concepts, arbitrage, inflation, and the law of 72. So first, arbitrage. It works like this. We're going to borrow money from our home via a refinance or a home equity line of credit, say it 5%. And we're going to purchase an income property where the income pays us 10%. That 5% difference in the middle there. You get to keep that. This is arbitrage. You're benefiting from this arbitrage of leveraging two loans. That's right. A mortgage.

Debt. Debt can be good when used correctly. Now, 5% is nothing to throw a parade over, but it's better than nothing, but no one's getting rich off of 5%. And this was just an example of arbitrage. Yet we wouldn't be done calculating our return either. Let's just focus for now on the arbitrage. I'll get to the rest in a minute. Second, inflation. It may be the bane of an economy's health, but you can use it to your advantage and get stinking rich. And here's one of two reasons how this works. As inflation eats away at the value of your debt, your mortgage, over time, inflation will increase the amount of rent that you collect from your property over time. Thereby making the debt easier and easier to manage as time goes on. There's another part to

this inflation that I'm going to get to shortly, but let's look at this third economic concept, the law of 72. So this is a simplified formula that calculates how long it's going to take for an investment to double in value based on its rate of return. So if your property's average annual appreciation was 6%, and it was 24% last year, by the way, but we'll use 6%. Your property's value would double every 12 years. Considering our current inflationary environment

as of the recording of this video and the fact that historically, real estate appreciation outpaces inflation, this doubling is likely to happen faster and faster. But we'll just be concerned. and keep it at 12 years. So for just getting that one house, these three economic factors will play out

and put the average person in a much better place financially than if they didn't do this. The average homeowner at the age of retirement is 40 times wealthier than the average non-homeowner. But even with that said, a single house is not going to make you rich, but you don't need a ton of them either. Let's look at just 10 properties.

And to keep the math, simple, we'll use $100,000 properties. And not only for simplicity's sake, it's realistic too. Go get a free investor packet at cashflow savvy.com, and you'll see how realistic this example is. All right, we've got 10 properties at $100,000 each. That's a modest portfolio today of $1 million. We're gonna need 20% down, so that's $200,000

and maybe $25,000 in closing costs and another $25,000 in reserves. And then a total loan of $100,000. $800,000, but you need only $250,000 to make this happen. You know that home that Dave Ramsey is telling you to pay down so fast? Stop that and just pull as much equity from that property that you can by either a home equity line of credit or a refinance. At today's interest rates of, I don't know, 4%ish and this year's inflation rate at 7%ish so far, does that look familiar by the way?

That's right. It's arbitrage, isn't it? The economy right now is paying you to borrow money, about 3% at the time of this video's recording. Now, if you don't have enough equity in your home yet, you might want to liquidate that 401k after you see what I show you so you could make up the difference. And that's despite the taxes and penalties even. Now, I already know, that's sure to ruffle some feathers. But don't get mad. It's just math. Stay with me.

Now, these 10 properties, they're going to pay you a monthly income of $250 per property. times that by 10, that's $2,500 a month. And I understand that's likely not going to replace your income, but it'll certainly keep the lights on, it'll keep the tires rotated, and it'll keep the refrigerator stopped. Okay, so with our portfolio, let's stop there and do nothing else.

Nothing else but just letting time do its thing. From here, you'll just manage the property managers that are managing your properties for the next 12 years. That's it. At the end of year 12, we'll just check in on how the math played out. Per the law of 72, our $1 million portfolio is now worth $2 million. So far, so good. And we can now go back to the bank to refinance 75% of your portfolio's value.

We'll pull out $1.5 million, leaving your portfolio with $500,000 of equity. We'll pay off the original loan of $800,000, and that will leave you with $700,000 of cash. You can now use that to support yourself over the next 12-year period, leaving you with $58,333 per year to live. Tax-free, by the way, the IRS doesn't tax-borrowed money. So tax-adjusted, that's probably equivalent to an $80,000 a year salary. Oh, and thanks to inflation, increasing your rents, your cash flow has bumped up to approximately $300 per property, times that by 10, giving you an extra $3,000 per month. That's $36,000 per year, giving you what's equivalent to an annual salary of about $116,000.

Can you say early retirement? Yes. Now that you're retired, do nothing else with your portfolio, but manage the property managers that are managing your properties for another 12 years. At the end of those 12 years, we'll do the math all over again. The portfolio has doubled again, valued now at $4 million. We'll refinance 75% again, leaving $1 million of equity in the portfolio, and leaving you with $3 million of cash. You then pay off the $1.5 million mortgage, and then you put $1.5 million of cash in your pocket.

You're going to need some big pockets. You can now use that to support yourself over the next 12-year period, giving you $125,000 a year of tax-free money to live on. tax adjusted to approximately, I don't know, $160,000 salary. And then we're likely up to $400 of cash flow per property, times that by 10, giving you an extra $48,000 per year, totaling what would be equivalent to a salary that paid you, I don't know, $208,000 a year. Can you live on that?

And could you do it all over again in 12 more years? You know, if you started when you were 20, you're only 44 years old at this point. If you started when you were 30, you're only 54 years old. If you started when you were 40, you're only 64 years old. If you started when you were 50, you're only 74 years old. And you've got plenty of life ahead of you. You know, with modern medicine, we're all going to be living until we're 100.

Most people, though, will ignore this math and pay off their home as fast as they can anyway. The reason why is they've got conflicting values, meaning they outwardly say that they want financial freedom, but internally, they need financial security. It's how most humans are wired. And although freedom and security may sound similar, they are two entirely different strategies that people apply to attain them. One pans out, they win, and the other doesn't, they lose.

And the problem with security is, you never really get to stop working, or not for a very long time. And these days, is any job really secure? The other problem with security is that most people just don't make enough to save enough. Nor do they have enough time in the day or their lives to create the type of wealth and freedom

that leveraging your home's mortgage can. People are giving it a go for sure, but 95% of them are losing. And don't get mad. They're just the stats. And here's another thing. This is some really compelling irony for the people that follow the security path. and pay off their house as fast as they can.

You see, they will typically need to pull that money out in retirement anyway via a refinance or a reverse mortgage. Insane, right? And if that's the plan, why sock it away in your house in the first place? Don't pay off that mortgage. Keep borrowing against your house and you'll build your freedom far faster

than you ever could by paying it off. And not just faster with greater certainty of it actually happening. No one ever set them themselves free by solely eliminating debt. Now, this takes a bit of education, but not much. So invest in yourself too. Like my financially free students, there's Brad, Enrique, Josh, Brendan, and McKenzie, to name

a few. You see at Epic Real Estate, we know that most people are living a life of financial sacrifice and betrayal. So we've built a system that creates an opportunity for one's money to work harder for them than they did for it, saving them and their families. from a lifetime of financial wording. We'll be back with more right after this. Boarding for flight 246 to Toronto is delayed 50 minutes.

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The mortgage forbearance is ending. And you may be wondering, what are these 5 million homeowners going to do? Are we going to see a tidal wave of foreclosures? Well, it's not quite the 5 million in the mainstream media. continues to mention. You know, they put out more twists than a pretzel factory. Those were May 2020's numbers. As you can see here, we're about half that now, as people have already left the program and they left unscathed. But two and a half million are left. And that's still a lot, right? Agreed. So what's going to happen to them when the mortgage forbearance program expires?

Where will you be able to find all of these foreclosures for sale? Well, I've seen the data, and I'm going to share it with you. So you know, where to buy. And a big part of making this plan work is by finding discounted real estate. And everyone knows that foreclosures are typically sold at a discount. And everyone knows that there are a bunch of homeowners out there right now that haven't been making their mortgage payments. And as sad as this is for homeowners, and tragically by no fault of their own, there is the potential a good number of these homes could go to foreclosure. The bank will take them back and put them on the market. And someone is going to buy them. And I'm thinking,

thinking, why not you? Since the coronavirus aid relief and economic security act passed last year, more than 9 million Americans hit pause on making monthly mortgage payments, entering what's technically referred to as a forbearance. In June, this year, a second extension was announced, giving homeowners who have yet to enter the forbearance program a chance to do so. And when looking at the maximum forbearance periods allowed, we're still not looking at any homeowners technically being forced out of their forbearance program and potentially losing their homes until really the end of the year the exact date remains to be seen as the federal housing administration can't kick this can down the road forever the chickens will

come home to roost and when they do then what can we expect although we could see a real estate bubble pop at some point this is not 2008 and here's what I mean first borrowers are in the best financial shape they've ever been here look at this the average credit score for repeat home buyers is around 740. And when we're talking first-time home buyers, that score barely moves, approximately a 725 FICO. Second, the average back-end debt to income ratio is falling like Nate Robinson in a Jake Paul fight for both, repeat buyers and first-time home buyers alike. And third, and what's probably the most important metric when it comes to

looking at people's ability to make their mortgage payments is this chart here. The mortgage debt service payments as a percentage of disposable income ratio. It hasn't been this low like ever and it can't go much lower. So today's homeowner has got strong credit and low debt and they're all paying their bills. Okay sure, but there's still got to be some foreclosures coming, right? Well, let's take a look. The majority of homeowners in the program, according to the Mortgage Bankers Association, 77.1% of them have exited forbearance with a loss mitigation or modification plan in place. Loan deferrals or partial claims add up to 27.6%.

Continuation of monthly mortgage payments make up 24%, reinstatements 15.3% and loan modifications 10.2%. From September 2020 through June 13th of 2021, only about one in 10 homeowners opted to exit forbearance by selling their home. That accounts for 7.5%. And then losing their home by a deed in lieu or short sale represents just 2%, totaling an estimated 250,000 homes. So, no foreclosures coming out of these groups.

But here's where you've got a shot. 15.3% of homeowners exited the forbearance period without a workout plan, totaling about 400,000 homes. And with these, considering there is no data on whether these homeowners can affordably pay the mortgage or not, or whether they will likely end up in foreclosure, and on the market, we could see potentially three different scenarios play out here. If all 400,000 of these homes were to go into foreclosure

and get listed, that would add up to about 24 days of supply to the current housing market. That's it. If two-thirds of these homes end up on the market, that's about 268,000 homes, which will add just about 17 days of supply. If only one-third of these homes end up on the market, that's approximately 133,200 homes,

making up a paltry eight days of the market. additional housing supply. So given that only one in 10 borrowers are opting to list their homes, the more likely scenario is that one-third or even less could end up as listed homes. Hardly a tidal wave of foreclosures. Now if you're still having doubts about the number of foreclosures to hit the market and when the real estate bubble will burst, look at this. Home equity in the last year surged to $23 trillion as the value of the housing stock topped $33 trillion. It's very unlikely. even for the homeowners and the most dire straits

are going to just sit around and wait for the bank to come take their home. No, they'll put it on the market, they'll sell for top dollar, likely in just a few days, and use some of that equity to make up missed payments and then pocket the rest. Even for the very worst cases,

there's enough equity to satisfy their delinquent loan obligations and walk away with some profit too. So if you're waiting for the flood of foreclosures to buy your next piece of property, you could be waiting for a long time. And in the immortal words of Mark Twain, words that have stood the test of time, don't wait to buy real estate,

buy real estate and wait. Every single person that has ever listened to and he did this advice is better off today than if they ignored it. Listen, I know it's competitive out there, but it's worth the fight. Real estate works. You got this.

Mainstream media is ripping us apart. This is not. news to bring us together and make some money in the process. Good news for landlords, rents are moving higher. In the first half of the year, prices have increased more than 11 percent, well above the broader inflation rate. Now, rent prices in 87 of the country's 100 largest cities have fully returned to pre-pandemic levels. Housing inventory, August 30th update. Inventory is unchanged week over week. It's up 41% from low in early April, however, but that is a decline of 27.1% from the same week last year. Supply is low,

demand is high, so that's great news if you already own real estate and just more incentive if you don't. Bank rate reports that mortgage refies are not happening, and here's why homeowners who haven't refinanced don't believe it would save them enough money. There are recent report shows that less than one in five or about just 19% of homeowners with pre-pandemic mortgages have refinanced. Close to half, about 47% with pre-pandemic mortgages have yet to consider refinancing, while more than a quarter, about 27% have considered, but have yet to actually do it. In addition to this, 7% don't even know if they've refinanced their mortgage or not. The report found that 38% of homeowners, including 54% of millennials with a mortgage,

don't know their current interest rate and therefore don't know if they could benefit from refinancing or not. About 46% of total borrowers who have a rate of 3% or more are likely good candidates to refinance at lower rates. So you got to know your rate and you got to know what's available because cutting expenses like your mortgage is as important as raising your income. If you work on both, your rat race escape happens that much quicker. And if we're talking about your income properties, lowering your expenses is as important as raising your rents. Your ROI grows that much quicker. Lastly, the report showed that homeowners with an income level of $50,000 or more are also almost twice as likely to have refinanced compared to those with household incomes below 50,000,

of which translates to poor financial education of younger people. And that's why this show is here. So share it with one of the younger people in your life. It's not a passing fad, it's the future of money. What happened this week in cryptocurrency? Crypto Veteran, And Bitcoin Bull, Anthony Pompleano is predicting a Bitcoin FOMO fear of missing out phase that he says Wall Street investors aren't ready for. Pompiliano says, if we go back and look at the FOMO phase of 2017 and other bull markets, it superseded almost everyone's expectations. What we're talking about right now is in the heart of a bull market.

We had a 50 plus percent drawdown. The volatility on this thing is unlike any other asset. And so when you start thinking about all of these Wall Street guys that come in, whether they're hedge funds, whether they're corporations, whether they're some sort of asset manager, I don't think they're ready for this. This stuff is going to absolutely rip their faces off. Bloomberg reported last week, Cuba, said it would recognize and regulate Bitcoin and other cryptocurrencies for payment on the island.

Because of tough embargo rules in Cuba, it has become difficult to use dollars. And as a result, the popularity of Bitcoin has grown among Cuba's tech savvy. Asset manager, Giant Fidelity, who currently holds 10.4 trillion. billion dollars in assets under management projects a one million dollar Bitcoin price by 2026. The explosion and wealth that will occur as Bitcoin gains and value will create a new class of billionaires. The pseudo-anonymous Bitcoin analyst called Plan B gave his 704,000 Twitter followers an update on the notorious Stock to Flow Bitcoin price model. Plan B stressed on August 27th that the next months will be key as he believes the Bitcoin Stock to Flow model predicts a

minimal $100,000 by Christmas and also predicts Bitcoin continues its 10-plus year path and does another 10x in four years. In other trending Bitcoin news, Bitcoin bull and bear cycles to become a thing of the past, according to on-chain analyst Willie Wu, who says, he sees Bitcoin as being in its last cycle before entering a new era where Bitcoin no longer has obvious bull and bear markets. I don't think we're going to have these normal four-year cycles again. I'm calling this the last cycle. And people will think that's very somber and bearish, but no, I mean like, this thing does a drunk

walk of ups and downs trending upwards as it finds its adoption for indefinite amounts of time. These four-year cycles are gone. That's what I think might be happening, which is a big revelation because that's against the expectation of how the majority think. So we'll see if that plays out. And that wraps up the show. If you found this episode valuable, who else do you know that might too? There's a good chance you know someone else who would, and when their name comes to mind,

please share it with them and ask them to clear. the subscribe button when they get here and I'm going to take great care of them. God loves you and so do I. Health, peace, blessings, and success to you. I'm Matt Terrio, living the dream. Yeah, yeah, we got the cash flow. You didn't know home for us, we got the cash flow. This podcast is a part of the C-suite Radio Network.

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