Epic Real Estate Investing - He Bought a House in 2015. In 2035, He Regrets EVERYTHING. | 1479

Episode Date: May 2, 2025

In this episode, we follow the journey of Ethan Wallace, a logistics coordinator from Phoenix, who saw his mortgage payments soar from $1,500 in 2015 to $3,400 in 2025, and eventually faced renting for $6,000 a month by 2035. We delve into the economic factors and decisions that led to this financial strain, contrasting it with the story of Enrique Silva, who navigated the same landscape but made one critical investment decision that created a lifetime of passive income. By purchasing rental properties and letting time appreciate their value, Enrique built substantial wealth and financial freedom. The episode underscores the importance of smart real estate investments and the urgency to act as market conditions rapidly evolve. About that thing in Vegas: https://docs.google.com/document/d/1WCsH9-05vQzgZf9MAGBpUahyTqBcu9VgVqQ8pcACMT8/edit?tab=t.0 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, strap in. It's time for the epic real estate investing show. We'll be your guides as we navigate the housing market, the landscape of creative financing strategies, and everything you need to swap that office chair for a beach chair. If you're looking for some one-on-one help, meet us at rei-aise.com. Let's go, let's go, let's go, let's go, let's go, let's go.

Let's go. In 2015, you could have bought this home. for $2,000 a month. In 2005, it's going to run you $6,000 a month to rent. I'm going to show you what happened in between. We're going to follow one man's journey to reveal how it happened to, step by step year by year. And the reason I'm doing this is because of this graph. It's going up fast, which is a problem.

Let's start in 2015, where Ethan's story begins. Ethan Wallace is 35, married, two kids, boy and a girl, lives in Phoenix, Arizona, works as a logistics coordinator. Household income, $71,000 a year. It's about $4,400 a month after taxes. He just bought a home, a simple three-bedroom, two-bath, ranch-style house with a small backyard, dated beige carpet and kitchen appliances from the early 2000s.

Nothing fancy, but it's in a decent school district with friendly neighbors. $290,000. He put 20% down, locked in a 30-year fixed mortgage at 3.85%. Principal and interest, $1,090 a month. Taxes and insurance add another $4,000. $400. Total housing payment, $1,500 a month. That's 34% of his take-home pay. That's a bit above the classic 28% rule you'll hear from financial advisors, but it's actually pretty typical for the average homebuyer then. His budget breakdown looks like this. Groceries, $500, weekly trips to

Krober, store brand cereal, occasional stakes for weekend grilling, car, $400, payments on a five-year-old Honda Accord, insurance, and gas. Health insurance, $200, employer-subsidized plan with a $3,000 And utilities, internet, phone, 300 bucks. Basic cable package, unlimited data family plan. Savings and extras, $400, mostly going toward a family vacation to San Diego next summer. Leftover, about $1,100 a month for everything else. Now, Ethan doesn't feel rich, but he feels like an adult now. He feels secure and on track. He's building equity. His payment is fixed. The system feels like it's working for now. Because over the next 10 years, a lot is going to change. The U.S. economy.

It continued its long recovery from the Great Recession. It was the longest economic expansion in history, slow but steady. GDP grew around 2 to 3% a year, unemployment fell to historic lows, and inflation stayed tame. The Federal Reserve began raising interest rates cautiously, trying to normalize monetary policy after years of near zero rates. Meanwhile, housing prices kept climbing.

Supply couldn't keep up. Builders were still nervous from the last crash, and new construction remained, below historical norms. More or less, it was business as usual. Then the pandemic hit. Supply chains broke, the Fed slashed interest rates right back to zero, and the government printed trillions of dollars in stimulus. Demand for housing surged. Remote work reshaped where people lived. Hedge funds and Wall Street investors ramped up bulk purchases of single-family homes. Prices exploded. And now it's 2025. We're living with the consequences. Home prices are at all-time

highs, mortgage rates have doubled, inflation is volatile, the cost of groceries, gas, insurance. I mean, everything is up. And for most people, wages didn't keep up. People are working harder, spending more, and getting less in return. Ethan's now 45, still in Phoenix, still married, kids are doing great. Ethan has been promoted to senior ops manager. Household income now is $92,000 a year, about $5,600 a month after taxes. He's climbing the corporate ladder. He wants a better home now. He feels like he deserves it. Everyone around him seems to be upgrading. At night, he finds himself staring at the ceiling thinking,

If I don't move now, I might never be able to. My friends are buying nicer homes. Am I falling behind? I'm making more money than ever, so why does it feel like I have less? It's what my parents did. It's what success looks like. I should do it. And so he did.

He finds a newer, three-bedroom, two-bath, not much bigger than the one he has, but it's cleaner. It's updated. Quartz countertops instead of laminate. Smart home features, a walk-in closet in the master, trendy gray walls instead of beige, the yard is smaller, but there's a community pool and a small gym in the neighborhood.

The price, $520,000. So he sells his previous home to pull together the down payment, 20% down. His mortgage rate, though, is 6.62%. Principal and interest, $2,700 a month. Taxes and insurance, another $700 bucks. Total monthly payment, $3,400 a month, 61% of his income. He's now well beyond the typical 28%.

rule of thumb for housing costs. But like most people, he's just doing whatever it takes to make it work. His new budget is stretched thin, grocery's 600 bucks shopping at Aldi to save. Fewer stakes, more chicken and pasta. Car, $500. Newer SUV with higher payments, plus gas prices have doubled. Health, $300. Same coverage, but premiums keep rising. Utilities, $250. Energy costs are up. Premium internet package for remote work days. Kid stuff. Random life, $600. soccer equipment, braces for the oldest, summer camps. With prices rising across the board, Ethan starts leaning on credit cards to cover what his paycheck can't. He tells himself it's temporary, but the balance keeps climbing, slowly turning into a second mortgage he didn't plan for.

Leftover, maybe he breaks even. Ethan thought he was leveling up. But really, he's just paying more to stand still. He's house poor, no savings, no margin. He thinks we're living the same life just with twice the stress. So how did Ethan get here? From a $1,500 mortgage payment in 2015 to $3,400 a month for essentially the same house in 2025. This is the part most people miss. Prices didn't just go up. The system evolved, slowly, quietly, behind the scenes.

See, between 2015 and 2025, a massive supply and demand imbalance began to take shape. Millennials in Gen Z entered the housing market, driving up household formations. But builders couldn't keep up. I mean, they were still licking their wounds, extremely cautious after the 2008 crash. Meanwhile, the government printed unprecedented amounts of money, injecting liquidity into everything, including real estate. Immigration surged, adding even more demand there. Hedge funds continued buying homes in bulk and competing directly with average families.

Foreclosures dropped, but not because the economy was stronger. No, they dropped because banks tightened their standards, and the people who already owned had built up so much equity that if they needed to sell, they did because they could. Now, inventory has dried up. Ownership has become more and more difficult. As prices soar, the Federal Reserve does the one thing it can to cool things off. It raises interest rates. That move slows down buying activity, but it also creates a new problem, the lock-in effect. Millions of homeowners with ultra-low mortgage rates stay put. They can't afford to move without doubling their payments. That freezes up inventory even more.

And that's where we are now. That's how the same house that cost $3,400 a month today was just $1,500 10 years ago. And if the next decade looks anything like the last, we know exactly where this is going. Let's take a look. In 2035, Ethan will be 55 years old. He will have been laid off in 2006 during a round of corporate downsizing. AI made the logistics department more efficient, and Ethan didn't make the cut. Eventually, he found a lower paying job, but it wasn't enough to keep the house.

His daughter got married, his son started college, both brought joy and big financial stress. Ethan had to postpone retirement. Rising costs and reduced income left him no choice. So he sold the house. And now he's renting, but not the house he had before. It's corporate owned now, $6,000 a month for rent. With his $88,000 a year income, $5,000 a month or so after tax, less than what he earned a decade earlier, it's far more than he can afford. He had to downsize, a smaller house,

further out, less space, less comfort, a two-bedroom with water stains on the ceiling, cracked tile in the bathroom, and a landlord who takes weeks to fix anything. The commute to his job is now 45 minutes each way, burning through his budget with gas and maintenance on his aging car. He's renting for $4,200 a month, which now consumes over 80% of his income. And in basic expenses, groceries, insurance, utilities, and he's back to zero every single month if he's lucky. No equity, no cushion, no control. He drives past the house he used to own, the one he sold just to stay afloat. It's now a rental managed by a national firm. The kitchen he remodeled? Still there, but it belongs to someone else. He's not building wealth anymore. He's just paying for access. And here's the truth.

Ethan didn't do anything wrong. He followed the plan, but he was just on the wrong side of it. Others? They weren't smarter. They didn't get lucky. But let me show you someone who did just one thing differently. Meet Enrique, Silva. He's the same age as Ethan, same city, same income. In 2015, they both bought their first home right down the street from each other. But Enrique made one small move that Ethan did not. He saved a little more, asked a few extra questions, and in 2017, he bought a second property, a small rental on the edge of town. It wasn't anything special, a modest two-bedroom, one-bath fixture-upper built in the 1970s. Dated wood paneling, avocado-colored bathroom, wobbly ceiling fan, but the bones were good. The roof was solid, and the neighborhood was stable

with a good elementary school nearby. He put $35,000 down, 14%. He found a reliable tenant, a young nurse at the nearby hospital, and cleared $245 in positive cash flow each month after the mortgage, taxes, insurance, and setting aside money for repairs. That's after accounting for occasional vacancies as well. Nothing fancy, just to start her home with good bones. He rented it out and made a couple hundred bucks a month after expenses. That's it, but that one move changed everything. He didn't study inflation, didn't try to time the market, didn't even need to understand interest rates and how they work other than adjustable, bad, fixed, good. Then hold. Let rent appreciation and inflation do the work. Here's the timeline of how Enrique's one rental

property turned into a lifetime of passive income. He bought that one rental property in 2017. It's not a mansion, just a regular house for $250,000. He put some money down, rented it out, and kept a little extra each month after all the bills were paid. Now, watch what happens over time. Every year, the house is worth a little more. Every year, the rent goes up a little more. In 2020, his first tenant moved out after getting married. Enrique spent $3,200 bucks on fresh paint, new carpets, and updated light fixtures. He raised the rent from $1,400. to $1650, boosting his monthly cash flow to $3.95 a month. After a couple of years, he used the value he'd built up, we call that equity, to buy a second house without saving up all over again. The house

bought the second house for him. So his second property was a three-bedroom townhouse closer to downtown. He bought it in 2002 for $310,000, with a 6% down payment using an FHA loan. He found a small family as tenants, and they've been there ever since, paying on time every month. This property started with just $110 in monthly cash flow, but has gradually increased to $320 as rents have risen. Then, a couple years later, he did it again. And then again. He's not flipping homes.

He's not gambling on the market. Enrique is just buying and holding and letting time do the work. Here's what it looked like by the year, 2035. In 2025, he owns five properties, cash flowing $3,000 a month. In 2013, he's up to 12 properties cash flowing $6,500 a month. $1.4 million in equity he has now.

And from there, he decides, hey, I've got enough. And in 2035, he's cash flowing $7,585 per month. And his portfolio's equity amounts to $2.8 million. No fancy degree, no crash course in economics, no timing the market. Just one smart move repeated over time. He made the shift. Now you can too. If you want some help with that, let me know.

I put a doc in the description below about this thing in Vegas that we're doing this month. Take a look. If you like what you see, join us. Yeah, Matt, but what about the crash? It's not going to. But if it does, a crash only hurts if you sell. If you buy right with fixed terms and positive cash flow, you don't need to sell during a downturn. You just hold.

You rent it out and let time do its thing. There's not a single 20-year stretch in modern history where this strategy wouldn't have worked. Not one. But here's where this plan gets really interesting. The way things are lining up, the opportunity to use this strategy, it's closing fast. Inventory is still low. Prices keep climbing. Big institutions are still buying.

And now, the world is moving faster than ever. I built this 2035 projection by looking at the last 10 years and projecting the next 10 years would be the same. That's really the best anyone can do. But with AI, automation, global disruption, and capital accelerating everything, the next 10 years might move faster than the last 50. I don't know that for sure. No crystal ball over here, but that's where I'd put my money. The window is still open, but it's closing quickly.

The best time to start was 10 years ago. The second best time right now before the next 10 years makes today look cheap because it will. I'll see you next time. Take care. And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance you know someone else who would. And when their name comes to mind, please share it with them. And ask them to click the subscribe button when they get here and I'll 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. We didn't know home for us. We got the cash flow. This podcast is a part of the C-Sweet Radio Network.

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