Epic Real Estate Investing - How the Media Lies to You About the Real Estate Market and the Economy | 1219

Episode Date: July 19, 2022

It is not a secret that the media is lying to us daily! Can those lies potentially affect our business ideas and maybe even our career? Stay tuned as Matt reveals the truth about the real estate market hiding under the latest lies from the headlines and articles! BUT BEFORE THAT, Matt shows you how seller financing works in real estate, and how motivated seller hints at the shifting of the housing market. Are you ready? Let’s go! Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. What is seller financing in real estate? Well, it's a creative financing strategy that's going to rock your world as a real estate investor. After more than 100 owner finance deals under my belt, with one as recently as last week, I'm going to show you how it works. You ready? 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, epic rei.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 reiase.com. Here's Matt. All right, so by the time we're done, You'll know what seller financing in real estate is, a few tips and tricks to help you get it done yourself, and at the end, I'll even give you my own owner finance contract that I and my students use to pull off seller finance deals.

And this is a really big deal because when I first started investing in real estate, I was just coming out of a bankruptcy after Napster turned the music industry upside down, and my record label went right down with it. So needless to say, banks didn't see me as a lendable person when I got started. So I was very attracted to all of the creative financing strategies that my mentor at the time was using. I mean, I didn't really have a choice. But today, I do. And I still prefer the creative financing strategies.

I mean, there's so much easier than dealing with a bank and less expensive, too. At the center of most of my deals is some form of seller financing. And what I look for mostly are motivated sellers who own their properties free and clear, with the idea that some will be willing to accept most of their purchase price in the form of financing. I'm buying their properties with an IOU, if you will. And it works like this. I give a small amount of money as a down payment, and the seller takes a note for the rest of the purchase price.

And that note is secured by a mortgage or deed of trust against the property, just like a bank would do if I got financing from them. And just as if a bank were involved, you get title to the property too. Ownership would be in your name or a name of a trust or an LLC that you set up. And if you need to set up an LLC, check out my friends over at, Freeentity.com, the best deal around for an LLC. And as real estate investors, we need a lot of these. It's a great resource, free entity.com.

Check them out. So, you own the property and the seller would have a lien against the property. And if you don't make your payments to the seller, they could foreclose on you under state law. Now, it's not required that the seller own the property free and clear to do deals like this, as I've covered here many other times with different strategies, and I'll continue to do so. And if you're wondering, by the way, who owns their properties free and clear these days? I get it. I mean, you might think that the country is mortgaged up to their necks, but not true. The reality is that 31% of property owners aren't carrying any debt on their properties.

I mean, there's a lot of opportunity out there for what I'm showing you right now. By the way, you can buy a list of properties that are owned free and clear from public record sources, that you could mail to and propose your offers. At the end, though, I'll show you how to get one of these lists in your market for free. Now, the real trick to getting sellers to open up to the idea of carrying financing for you is it's all in the presentation. I mean, even if I want seller financing, I always start with the price because it's what sellers understand. And almost every time, it's what they start out wanting the most. They start that way because they're not aware of the alternatives.

So if the seller and I aren't able to come to an agreement on the price, I'll then share some of these alternatives. And this is how it plays out most of the time because the initial all-cash price that's proposed is typically way too low for them, like in the ballpark of 50 to 65% of the after-repair value. It depends greatly on the condition of the property, though. Still, that cash offer is going to be too low for most sellers. And that's okay, because the alternative will be a much higher price, like 80 to 100% of the after-repair value, assuming that the work needed on the property is minimal. I mean, a little carpet, a little paint, that's easy stuff.

But if there's substantial work that needs to be done, that's going to come off the price. And that first suggestion of seller financing sounds something like this. Mr. Seller, the market might allow me to get close to your price. If you could take some money now and the rest later. How much do you need right now? You see, I like to frame it in simple English like this at first before talking financing, rates and terms and stuff. I want an agreement in principle first, and then we can work out the detail.

Also, you might have noticed when I said, the market might allow me to get close to your price. You see, I phrase it that way to position the market as the bad guy. And me is the good guy trying to solve the seller's problem. A little psychology there, and there's some more to come in just a second. Now, if they're open to the idea, they'll let me know how much of a down payment that they need, and then I'll say, great, if I could get you that, could I divide the balance up into 300 equal monthly payments? And that's my typical starting point. but I did something different last week when talking to a seller,

a total accident, and it worked out so well, I might start switching it up when the occasion calls for it. And I'll tell you what I did in just a second and how it turned out. Now, the reason that I start with price is to ease the seller into the idea of seller financing. It's a practical way to go about it. But there's some psychology to this as well. After hearing that initial low-ball offer, it's pretty common for it to be a cringe moment for the seller.

And when the alternative is presented, it's common for it to be a moment of relief when the seller learns that there is another option. Further, when presented with two different options, it doesn't always occur to sellers that there is a third option. I mean, they could just say no to both. So they find themselves deliberating in their head, do I want the low price cash now or the higher price and the cash over time? And that is how I normally go about it.

I've been doing it that way for a decade now. But last week, I did something different. The seller and I, we clicked relatively quickly. And he wanted to just cut to the chase. And he threw out a price that was pretty darn close to what I was going to offer for my seller finance option. And I was like, listen, no need to go back and forth on this. I'll go ahead, I'll give you your price if you give me my terms. Because if I had to pay cash, it's going to be a much lower number.

And you're probably not going to like it. And he was cool with it. And this now has me kind of rethinking some stuff as I never start with the terms. But this time, I did. And it worked just as well, made even better, certainly faster. But the situation was just right, and I had built better than normal rapport with the seller. So it could have been a flu. I'm going to try it this way a few more times to see how it goes, and then I'll report back to you with what I find.

All right, so now, after the down payment is negotiated, I told you that I will then ask if it's okay if I divide the balance up into 300 equal monthly payments. And I do that because this is an indirect way of asking for principle-only financing. There's no interest. This would never, ever fly with a bank. but when you're dealing directly with sellers, everything is negotiable. Now, the most common response from a seller

when I ask about the 300 payments is something to the fact that, you know, I don't want to wait that long. And my reply is, you know, well, how long are you willing to wait? And we typically end up somewhere between 50 and 100 payments, like four to eight years.

But I leave the payment as if the balance were divided by 300, and then I pay a lump sum after I made the agreed-upon number of payments. This lump sum, is what's called a balloon payment. And it's pretty typical with seller financing because most people, they don't want to wait for 30 years to collect all of their money like a banquet. The more sophisticated sellers will ask for an interest rate, which is fine. And I'd say my average seller finance deal ends up with a 5 to 10% down payment, 3 to 5% interest, and a 4 to 7 year

payment. Most of the time, I'll hold on to these as rental properties. But in the last year or so, with such a hot retail market and inventory being so low, I've been selling them. on the multiple listing service and wrapping my own seller financing around the existing financing that I received from the previous owner. The market is so hot right now for this strategy. Anyway, once the seller and I have agreed, we use a standard real estate purchase agreement. And then you could hire an attorney to put the finance contract together for you, but it's not necessary. I just give my title officer my note with some instructions, and then she does it for me. If you'd like a copy of the financing contract that I used for this particular deal, you can grab it for

free at Epic PromissoryNote.com. Oh, and I didn't forget your list of free and clear properties either. I can tell that you're eager to start doing deals like these yourself. You can get a free list for your market by going to Epic PropStream.com, accept their free seven-day access, and then just download your list. And if you like their service, after seven days, you can pay their very reasonable subscription fee. Or if you want to cancel, cancel. Either way, you've got your free list of free and clear property. And if you'd like to dive in and make some quick money in real estate and flip a house and just one day, while using my funds to do it, I'll show you how you can pull this off in your market right now

at matsfreetraining.com. We'll be back with more right after this. It's the matcha or the three ensemble Cadocephora of the fact that I've been to deniches so much. It's the ensemble. The format standard and mini-regrouped, and hello, Ben. And the embellage, too beau,

who is practically pre-a-donned. And I know that I'd love these offriars, but I guard the Summer Fridays and Rare Beauty by Selena Gomez. you to come from. The most best ensemble

the co-dough of the fair and stuff before summer Friday's

because things and stuff and stuff for the free for your form of

free for a free on line on C4 or in magazine

or a financial strategy let's get back to work I want

to share these two things with you really quickly before I go

first things I just got a call from a motivated seller

and that's not the big news the big news is that this is the fourth

call I've gotten the last 72 hours or so, and they're all of somewhat the same nature. And so what I think it's representing is a real shift in the market. So I'm going to play that recording for you so you can kind of get a sense of what's going on. I think there's really pivotal time for us as real estate investors to really take advantage of what's happening. We've been waiting for this moment for a long time. And I think there's going to be a lot more opportunity in deals on the table for all of us to scoop up. There's a lot of motivated sellers out there that are struggling and they need our help.

So we're here to help them. All right. So I want to share that recording with you. And the second thing is next Saturday, I'm hosting a real estate investing marketing masterclass. It's live. It's virtual. And I'm going to share with you all of the marketing strategies that I'm doing right now

that are generating these types of calls. This one in particular that generated this call that you're about to hear was a completely free strategy. Didn't cost me a dime. It's right there out there on a public website. And if you know how to interact with them, then you can generate these types of calls of yourself. So I'm going to be sharing that as well as I've invited a bunch of my real estate

investing friends to come and share their best marketing strategies as well. I don't know if you knew this. We're not really real estate investors. We are marketers first. We need to get the marketing down so we can be real estate investors. So that's why this is critical that you get your marketing up to speed and you get it going consistently and you systemize it and you know where to look and how to look and who to look for and we're going to cover all of that next Saturday.

So you can go to R EI Marketing Masters.com and you get the information for that. So the call is coming up. I'll play with this recording. And then second, if you want to join us, that's next. Saturday. And yeah, I guess you can join us if you want. All right. Take care. Bye. Good morning. Is this Matt? Yes, he is.

Matt, my name is. I saw that you left the message on about property. Yes. And I saw you were looking. I'm not certain I'm following what you're asking about the property. It's technically not for rent. It's listed for sale. Okay. Is that the only way to list, I don't know why has it set up like this, but the only way to list it on there is you have to say that it's for rent and sale. I see. So, but it is technically listed on the MLF, but do you want to look at it? What's the, I send that actual few properties.

What's your property address? It is. Okay. Can you explain me a little bit about the condition of the property? Is it in good shape? Yeah, it's in really great faith. The current owners have been here for 17 years. The driveway, concrete, and everything is less than three years old.

There's a five-year-old roof that it still has some warranty left on it. There's a new storage shed out in the back. There's a four-car garage. Two cars is heated and cooled with flooring and a separate tool. all of the bathrooms are they're not they're still kind of original to the property but they have been updated

like the tile colors have you know have been updated vanities are newer toilets are newer there's a huge laundry room let's see down all the flooring is new

there's like laminate like hardwood laminet flooring and most of the downstairs with the exception of new carpet and all the bedroom all the downstairs doors

are brand new tons of storage on the property there's two attic the upstairs could actually be converted into like an efficiency apartment if needed and it's kind of separate from the house it's over the garage area

but it's technically a fixed bedroom house. They have one of the rooms is kind of small like a nursery size and it's attached to the upstairs master and then there is a downstairs master and one of the downstairs bedrooms that's currently being used as an office

but it could be converted back into a bedroom very easily. It has a closet everything that is required but the property it's very well maintained. There's new landscaping throughout. There's pool that has new filter system, new eco-fienish liner that saves on chemicals, then it's kind of pretty cool, actually. The backyard is fully landscaped with a pergola.

There is a safety cover for the pool and an additional fence that could be put back up to, you know, separate the for safety reasons for kids or whatnot. And the front yard is then separately from the backyard, but there's a gate that, you know, you can keep closed if you want to, if you have pets or kids and you want to keep them in the front of the back. Right. It's a great location. It's like right in the middle of everything. It's close to city, which is, you know, where Air Force is. And it's right less than five minutes from I-49 and I-20.

and all the magnet and the good public school are within five minutes from the house. Okay. Sweet. Sounds like a great property. Are you the agent or your owner? I am actually the owner, but I work with the agent. Okay. That's got it listed.

The listing agent's name is. All right. Good. Well, it sounds like a great property. It sounds like it might be there. fit for it. Why are you selling it? We are asked, so I was Air Force

and we had since retired and my husband is retiring this year. So my family is all back in New York and my father unfortunately just got diagnosed with cancer so we are trying to get back to, you know,

closer to home. So. But otherwise we would take, keep this house forever. Right. But I have, I raised four kids here.

They loved it. It's like I said, super close to everything. Okay. And I will tell you, we've had it listed for, it's been on the market for about 90 days now,

and we've had a lot of interest. I think people, some people are not quite qualified because of the difference some changes in the interest rates, but I'm also hearing the interest rates are about to go up again, so I'm hoping we can get it sold before, so people can afford it and actually enjoy living here like we have. That's interesting with the market is there.

I'm getting a lot more incoming calls in the last couple weeks. Right. That's an affordability issue. Right. So if I chose to buy it, would I have to pay up any mortgages liens? or judgment or anything like that? Let's say that one more time. Yeah, if I chose to buy it,

would I have to pay off any mortgages or wames or judgment or something like that? Oh, no. Yeah. Okay. Yeah. So do you have an idea of what, how like yours are selling for right now? So we are currently, for the size of our home, we are currently the lowest price per square foot in the area.

and, you know, I did that just because, you know, we're not marked up a great deal from what we bought it for. And I just, I'm kind of a, kind of an old cell. I want someone to buy us that's going to love it and, you know, be happy here and we have great favors. And we just wanted it to be a smooth transition so we can get a fairly quickly. and, you know, but to answer your question, as far as the comp go, we're anywhere,

for any of, I think the lowest comp is about $25,000 higher than we are. And then, of course, now I'm telling you they are, are you from the area? Are you familiar with the report? No, I'm not.

No, I'm not. No, I'm not. So it's kind of a very touchy city. You have, like, the area where we live in is kind of like the safer, you know, my husband is a police officer. So we're very close to high crime areas, but our neighborhood where we are at is safe. So if you go five minutes down the road for a house the same size as ours, the price may be considerably lower,

but is extremely unsafe. So the comps are kind of hard. But as far, I think we're at 117 per square foot right now and in a safe neighborhood around here, you would be looking at

at least 150 per square foot for a half-bar side. Okay. All right. Well, have you thought about what the lowest price you guys would pay? I mean, realistically, it would depend on whether or not it was a cash offer. The list price we have right now, we don't have a lot of wiggle room,

especially depending on if it's a dual agency or cash offer or, you know, obviously it's going to depend on the conditions of this purchase. but yeah like we started we've dropped it about 35,000 since we first listed mm-hmm yeah that's a common story right now yeah you know I don't know if I'm gonna be the right buyer you have an idea of what it might rent for if I would turn it into a rental oh gosh um I would say probably easily three three three If you rent it to military, you could probably actually get more. Just because they're BHA and, you know, military typically get a pretty good little lump money for a rental.

But I would say at least 3,000. Okay. All right, let me look at it a little bit. I don't know if I'm going to be the white fire for you, but let me look. look at what the market is doing and see, I'm an investor if I have a responsible that a company together. I got to make sure that we get an ROI on this city.

He's called on a little bit of free. So I've got options right now. So it's like that's a total change and I wanted to visit a couple months ago. So let me look at it and I'll certainly get back to you and let you know what I can do here. Actually, there's one other thing I'm going to ask you what was it? I don't know about the conditions.

You do that, do that. Oh, if I were able to come in at your price, if I can't come in as a cash offer, would you be willing to take the little bit money now and then like the wreck later over time? I would consider it. Okay. I don't know if that's the way I'm going to go, but I don't want to have that option while I'm looking at the, it's a market situation. Right. Right. and yeah if I am or if I'll get back to you in a couple hours would that be fine

yeah that'll be fine okay um super yeah and if I'm not I mean it's something that you might want to look at it I mean you're working close sounds like your friends with your agent and everything and I was an agent there's like 16 17 years ago and um right right before the crash and uh you know what the market starts doing it's doing this right now and I don't think we're going to have a crash I don't think it's going to be this giant collapse I do think we're going to go through a little bit of an adjustment. And kind of the story you're sharing with me right now, like you've adjusted your price and lowered your price.

And like I said, this is a common story or conversation I'm having right now with people. You know, sometimes rather than chasing the market down to be like a really bad strategy, doing an aggressive drop and then letting the people that are in the market kind of compete, and then that will drive the price up and you'll kind of land right at where market value is. So, right. I'm thinking about right now with the offer that I'm putting together. But people that, you know, if we want to go ahead and get what our value was that's 30 days ago, and if we could get creative on the financing, that I might be able to help you on that way too.

Right. Okay. All right. So just something to think about, let me, give me a couple hours. I got to take care of my little one. And then it's, and I'll call you back, okay? Okay, sounds good. Thanks, Matt.

You bet. Take care. Please stand by. We've got overhead to pay. We'll be right back. Boarding for Flight 246 to Toronto is delayed 50 minutes. Ugh, what? Sounds like Ojo time.

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Neither do I. Let's keep going. Back to the show. Today I want to talk to you about how the media is lying to you, to us, about the real estate market and about the economy and how it's really could be causing everybody. to make some really bad financial decisions. I'm not here to tell you what decisions to make, but I do want to show you the data so you're operating with facts and not opinion and not fiction.

So you can make those important decisions on your own. Make sense? Cool. We're going to talk about foreclosures. You're going to talk about the housing inventory. We're talking about deflation, of course. Talk about is there going to be a market crash? Is this a good time to be in real estate?

Should you keep buying? Should you sit on the sidelines and wait for the crash? or wait for a dip. And then I'm going to talk about the deals. Where are they going? Where should you be looking for them and where you should focus? Oh, and then just recently, this is just, I mean, so much has happened. I planned this, what, 24 hours ago.

And so much has happened in between then and now that I really want to share with you as far as my own real estate business and that, those, the business of my RIA's private clients, some really exciting things there. I'm going to share with you a brand new strategy or brand new approach to where, It's an old tactic I had, I don't know, tactics is right word, but a whole piece of advice I used to give to home sellers when I was a real estate agent. This was what 14, 15 years ago. And then combine that with the pitch that I have to get seller financing accepted.

Combine those two things. And I use those twice this week and both times they turned it into a seller finance deal. So I'm going to share that with you so you can copy that, take that out in your own mark. All right. We're just going to start with a headline that could be scared a lot of people. Okay, so this right here says foreclosures are up 700%. And I've heard people quote 800%.

And this could be a scary thing, right? Here at the Motley Fool is, is this a red flag for the housing market? And that could we have somebody thinking like, oh, gosh, I'm not going to buy a house now because price is about to plummet because everyone's going to foreclosure. And although foreclosures are up 700%. That may be factual, but there's a big distinction between what's factual and what's actual. And let me show you what I mean. This is from Adam Data and U.S. foreclosure activity sets post-pandemic highs in first port.

So it's another thing. Oh, my gosh, it's setting a new high is what most people will read. But you have to understand two things. Actually, maybe three things. One, there's two parts, two foreclosures. There's foreclosure starts and then there's foreclosure completions. So two totally different things. So a foreclosure start is typically a notice of default.

Someone missed a payment or two or three, depending on when the bank actually files that. So if we look at it, at this, this chart, right, a foreclosure starts. So they may be up 700%. But if you come down here, like here's our little spike right there, right? And so that's this line across here represents 100,000 foreclosure starts. We're basically right at 50,000. And if we look at that historically, that's still half of what we're at a little more

than half. It is basically an all time low just before the pandemic hit. So just about half of that, actually it's very low. Factually, yes, it might be up 700% from 2021, 2000, or first quarter, or second quarter, or 2021. So yeah, it's up 700%. But that's factual, what's actual, we're down 40% from our all-time lows pre-pandemic. So we could look at that in two different ways. So there's a book out there and I read it for a long one time ago.

You can get too deep into it. The cover it kind of said at all, but it says how to lie with statistics. So anytime you see a news source sharing you some dramatic data and they're using a statistic, you got to stop and question it. What is that statistic or not statistic or a percentage? So what you see, that percentage is up 700% what sounds like a giant number. But if it's 700% from a thousand, you know, that's some 7,000. But if it's up 700% from 100,000, that's 700,000, right?

So the difference between 7,000 and 700,000, that's a huge gap. But the difference between 700%, 700% is the same. It sounds really dramatic. So keep that in mind. When you're hearing the percentages, question what that's the percentage of? So here's our foreclosure starts. So this is what people have missed a payment. But if we go down to see the foreclosure completions, so if our median line here is 50,

and here we are, the foreclosure completions is right about. out, what's that? And maybe 10,000. So we've got 50,000 starts, but only 10,000 of those went to completion. Now, granted, you have to have the starts that's going to take some time before you can actually have the completion. So seeing the starts, that's a good precursor. It could be a hint of what's to come. And it most likely is, but is it really some sort of tragedy or it's going to, some sort of crisis going to happen? Because if we look at the completions right here, we're still less than half of the completions just before the pandemic. So percentage wise, what's factual is high. Historically, actual, it's really, really low.

And then we look at this. So here's the average days to complete foreclosure. So it's an average day to complete of foreclosure is 900 or so day. So it's almost a little less than three years, two and a half years, I guess. So we have all of these starts, it's going to say, to two and a half years for that to even hit the market. So we're going to see this giant flood of foreclosures in the market, probably not. And so here's the second reason. And I would say that historically speaking, but let's look at what's actually happening right now. If we look at home equity,

home equity skyrocketed during the first quarter of 2022. So here's the home equity. As a two, this is June 2020, right? Here's 2020 and then here are 2022. So, We're pretty well created by the pandemic housing market. And our headline over here was, you know, home equity skyrocket during the first quarter. So people that are missing payments, they just don't, and they have a bunch of equity. They just don't call the bank and say, sorry, I can't make any more payments come take my house back. They're either going to likely sell or potentially refinance because they are rich with equity. So the foreclosure thing, yes, they may come.

Times are getting rough and I don't know, I don't have a crystal ball. I don't know how far this is going to go. It looks like it's not as up this morning. The inflation rates going up another percent of 9.1. You know, it's not getting better. So we're suddenly headed in the wrong direction, but nothing has really happened yet. All right.

Housing shortage starts easing as listings surge in June, right? Look at that word surge. So housing inventory in June was 19% higher than a year ago. But overall, inventory is still about half, pre-COVID levels. So that 19% sounds like a big increase over a year, but 19% of what? We're talking about 19% of essentially an all-time low, right? And then so if we look at that, let's look what our active listing count is.

So this represents a full calendar year by month because listings, active listings will even flow seasonally. So up here at the top, this blue line was 2017. That's kind of where that market was. And then 2018, we dipped a little bit, but kind of followed the same pattern. And then 2019, pretty much the same thing. Not too much difference between 2017, 2019. Then the pandemic hit.

And we saw the listing count drop, right? So there's during the pandemic. So people stopped selling their houses. In 2021, 21 started to ease up a little bit, but still really, really low, historically speaking. And here we are in 2022 at our all time low. And we are edging up, right? I wouldn't know if it's a surge. I mean, this could be a surge,

but it's not up that much as far as quantity goes. And it's going right in alignment with the season. So this will probably continue to go up for the next few months, and then it will probably dip just like it always has it seasonally. So be careful what they're saying out there with regard to a surge. This is definitely a surge from April here, because that's kind of my, the most upward line that we got.

But over here was nice and flat, but we still had a surge. a lot more of the number. So factually, we have surged. Actually, we are still very, very low. So this is what we had up here at this time. Typically is about 120 to 130 or 1.3 million to 2.1.2 million. And here we are less than a million.

All right. So next one. So a housing market falling like a brick and like this one. If the housing market is falling like a brick, well, the median listing price in June hit another record high of 450,000. $1,000, right? Not really falling like a brick. But that's how they describe it to us.

That gets us all riled up. It gets into our mindset. It gets into our thinking. And that impacts our actions. And it could cause us to pull back when we might be wanting to move forward and vice versa. So here we got redfin stock tumbles after it says housing market deals are falling through at the fastest rate in two years. So what this is saying is the pending sales, sellers that are, excuse me, buyers that are in contract are canceling contracts at the fastest rate in two years.

So this sounds like they're falling through at the fastest rate, but just at the fastest rate in the last two years when we've had an amazing market. So it doesn't take too many cancellations for it to be the fastest rate out of the last two years. And so then here's the other one. Home sales face highest cancellation rate since pandemic start. Asking rents show smallest increase. So the asking rents. So they're saying they're telling you that the rents,

aren't increasing that much. So they're trying to paint this picture of how we have this highest cancellation rate and the asking rents show the smaller. But this is the asking rents. It's not the actual rents, which I'll show you here in a second. All right, scroll down here. These are the deals in the housing market are falling through with the fastest clip since 2020. So this is pretty much a flat line.

We haven't, I mean, obviously this was the pandemic. So a lot of stuff got canceled. This would be a little bit higher than usual since 2017. But we're not seeing any real big jump here. But then while we're all, also looking at this is not the number of cancellations. Again, pay attention when you see percentages. This is the percentage of pending home sales are being canceled.

But we're at a slowing down activity of pending home sales. So this 14% is of a smaller number. So if we're 14% of all-time home sales, then that would be a big significant number. So again, right here where we are factual, 14%. point nine percent cancellation. But it's of what's actual, it's a 14.9% cancellation of a historically low pending home sale number. But here's why it's happening.

And I'm not saying to ignore this. I'm not saying this isn't important. I'm not saying that, you know, just, you know, close your eyes and just move forward as usual. You definitely want to pay attention to this. And it's good because this is the trend. This is what it's pointing to. But it's a very brief trend. I mean, this is all within just the last few weeks where we're actually seeing this happen.

So let's look at this though. This is why rising interest rates are crushing. I love to have to say crushing, right? We decide how can we hit an all-time high in prices and these mortgage rates are crushing the U.S. housing market. But let's look at this as to why they are being crushed. Okay, so cancellations are happening. We have this house right here and save this house is $400,000, right?

So back in January of 2022, you have had two. you'd pay $400,000, you would have borrowed $300,000 from the bank. So you put 20% down, right? Or it's 25%. We'll just say it's 300%. Or 300,000. We'd have borrowed this money at 3.5%. That's what the mortgage rates were, which would equate to a mortgage rate of $306,

$1,300 a $1,306 a month to buy this house, so what your payment would have been. Now, we'll come here today in June. 2002 and just in six months we've had a six percent increase in price six percent from here to here okay and so what that puts us at is 339 thousand dollars what we're paying for the exact same house that we'll pay for january but here's the kicker now the rates by point 25 percent and so we take this and what's our payment there now it's 1879 a month so in just six months for the exact same house, even though the prices went up just 6%, which is still a lot for six months, but our affordability went way down to pay basically almost $600 more for the

house right now. And this is what happens to people while they're in the middle of escrow. And this is why they're canceling. That's what's actually happening right now. And so the sales may slow down an activity. And so although it's hurting some people in the market, it's not crushing the market because the prices couldn't go up if it was being crushed. So these people that are falling out of the market and they're not buying a house, where are they going to live? They got to go rent a house, right?

And that's what we're seeing right now. So this is as of June 2020. So the national average rent price trends for a one bedroom is up 25% year over year. So the home prices have increased, I believe it's 14, 15% year over year, 6% just in the last six months. But the rent year over year is up 25% for a one bedroom, up 26% for a two bedroom. Now, this is a rare moment in history where rents are rising faster than the housing prices. And there's a reason for this. So there's something I want to point out here.

And it really comes down to supply and demand. Here's another way of how many people are. of a news or lie with their percentage of their statistics. Because we're hearing that the growth of the population is decreasing and it's slowing down. That's what we keep hearing. From a percentage-wise percentage of growth, that's this orange line that you see here, going down in the middle, definitely the percentage of growth is slowing. But this blue line represents the actual population.

So factually, we're decreasing in growth rate. But factually, excuse me, actually, we are increasing in population. So we've got a lot of people right now. We've got more people that housing. You've probably heard me say that before if you've been around for a little while. But here's what's significant about our population is if we look right here, here's our population broken down by age. And so if you look right here at the peak, we are 20, the age of 29 years old,

29 years old right there. And so if we come back, just go before two years. So there's a big chunk of the population that's coming right through. The average age of the homebuyer, the average age of the first time homebuyer is 31 years old. And the peak of our population is 29. So as this little peak ages and becomes 31 years old over the next 24 months, we're going to have more demand for housing than we have ever seen before in the history of the country. There are more people already walking the earth.

They're already here. and they're looking for homes. They're going to need shelter. And if the monetary policy at the time being is pushing them out of the sales market, there's a reason that we're seeing this big increase in the rental market. So the question you want to ask yourself is, is how do I win from this information? Well, if the housing is kind of decreasing a little bit in the affordability,

and they have to live somewhere and they got to rent somewhere, You want them renting your property, don't you? You want to be investing in income property. That's how I see. That's how I interpret this information. So there's that. And then what's the other part of this information I want to share with you real quickly? So there's the demand.

We know the demand is there. But this is an incomplete calculation without the supply, right? So we come up here and we saw the supply. Here is our inventory. I showed you that chart already. This was from April. I showed you the recent one of June. So we've increased up a little bit.

But historically speaking, we're still really. low. But this is an issue. We're not going to see any impact from a foreclosure market that's going to move the needle too much on this. We might see some, but I don't think it's going to move the needle too much. Here's the other part you want to look at. This was an article from Forbes. This was back this time last year. So the housing shortage is worse than ever and will take a decade of record construction to fix. So a year ago, we're at a shortage that was

worse than ever. Right now, based on the number I just showed you with our inventory, it's not worse than ever. but it's pretty darn low, right? But here's why it's going to take a decade to fix because if we look at the new home building starts, right here at the peak, this was where the crash started, right? It was 2006 where we had all the houses

and then 2007, 2008, one more, and we know a lot of people got wrecked during this. They got totally destroyed. And a lot of those people that got hurt the most were the new home builders, the people that were responsible for producing property or producing houses. And so they were, hurt. So a lot of them just, you know, were licking their wounds and went off to do some, learn something else. And those that stuck around, you know, those, that took a long time for those wounds to heal. And the memory is really strong. So it took a long time for them

to catch up and start building and building and building. And even here in 2022, and we've had just this little drop here just recently, but even here at the peak of 2022, we were not even at the new building home starts that we had in 2006. So why? Why? is that? Why did these are the new home building starts on right here and may it totally plummeted? Why did this happen? Builders said, whoa, stop. We can't build anymore. So we know that the supply is going to continue to be suppressed, but here's why. We have the price of inputs of residential construction are skyrocketing between labor and between the supplies. It's more expensive to build a house than it's ever been. And builders aren't going to build houses if it costs them more to build

than they can to sell. So they're pulling back. They're slowing down. And so when you have the supply already suppressed, where we had up here, the inventory already suppressed, the supply already suppressed, with the population growing

and with the biggest chunk of this population, this demand, growing at aging at a point where now they actually need housing, probably not a crash company. Now, the big variable, what I point out, would be the interest rates, right? would be the affordability, but people are still buying houses. The first time home buyers are getting

crushed, they're getting hurt, but there's a lot of money in the system still, and people are still buying houses. And so if they weren't, we would see a drop in prices. And we just saw a new record high for June, $450,000. We just broke $400,000 for the first time ever in history in May, and we're $50,000 more here 30 days later. Really, really remarkable. We've never been never seen growth like that all at the time when it's supposed to be declining. Now, you might be hearing prices are dropping. You're going to hear that a lot. But here's another way that they're lying. It's not the actual value of the houses that's dropping. It's the seller's expectations are dropping. So if someone, I'm going to put my house on the market today and I know my neighbor sold their

house for 550,000, well, mine must be, I'm in a hot market. Mine must be worth 600,000, right? So I'm going to put my house on the market for 600,000. And then after a few weeks, I don't have an offer. I'm going to start dropping that price. So I didn't sell it for 600,000, but I probably sold it for $560, 570, which is still $10,000, $20,000, done more than my neighbor. So did the price really drop? No, just the seller's expectations dropped.

But the housing price actually continued to go up. Now, I'm not saying it's going to go up forever. I'm just saying that's what's happening right now. But the headlines and the statistics, particularly the percentages, whether talking about percentages in decrease and decrease, increase, be really, really careful with those percentages. All right. So let me look at the inflation numbers. So our inflation numbers can be really misleading as well.

Go back to 2020, August of 2020 when General Powell said the central bank will be more inclined to allow inflation to run higher than the standard 2% target before hiking interest rates. That should have been a clue to all of us. None of us really recognized it as that. Plus, we were all very much distracted at this time in August of 2020. We were watching a very divisive election. We are paying attention to social injustice and we're still dealing with a crazy pandemic. So those are the three stories that really dominated the headlines,

but this stuff was happening underneath and we just paid it no mind. And then here we are just in May of 2002 at 8.16. And as of this morning, it was 9.1%. So inflation. So what they're saying right now is if I had $100 in the bank one year ago and I didn't touch my money, I didn't do anything, I would still have my bank account balance will still show $100 today. But per the year over year inflation, I could only buy $92 worth of stuff.

I lost $8 in my purchasing power of my bank account, even though I still had $100 there. So that's how inflation is working. And so we want to look at, is it really just 8%? Did it really drop to 9%? Well, I have this kind of thing that I use. It's called the subway index, the subway five dollar foot long index. So we don't really see this commercial anymore, do we? No, not really.

We don't see it at all. So remember we have to get a $5 foot long sandwich for $5. Then October 1st of 2021, that sandwich was $7.29. cents. Now, that's not a 91% increase. That's a 45% increase. Then we come over here to January earlier this year. That's now $8.99 for the $5 foot law. It's now 79%. So the impact to your purchasing power, that $100 you had in your bank account, is it really just worth the $91 as of today's numbers? Or is it worth, say, $20, $21, because we're more inclined to be trying to eat every day, right?

And if you don't like the, well, subway, that's just a subway example. Let's look at something else that we all use every day. So inflation continues to rise, and gas prices are up nearly 50%. So let's make that a nice, easy number. It's 50%. So you're $100 now, if you've got to get to work, you've got to go places. Now that $100 of your bank account from a year ago is not only worth $50. It's cut in half.

So this is really important. And there was this article that came out about the same time. This was in September of 2020. This is Ray Dalio. And this was on Market Watch. It's a really long article. You can go look it up. But the headline of this was the world is going to change in shocking ways in the next five years.

This was two years come. And here was one of the final quotes. And I grabbed this quote and put this here says, worry as much about the value of your money as you worry about the value of your investments. This is from one of the richest men in the world who runs one of the biggest hedge funds in the world, worry as much about the value of your money as you worry about the value of your investments. And so what he's saying is, you have that $100, but now it takes you, it only buys you $50 worth of gas because the prices have doubled. If you didn't have your money

invested in something that at least got you 50%, you lost money. So that's what he's saying here. And this is what I want to really pay attention to moving forward. And when you're looking at the prices of real estate, you're looking at the affordability, and you're looking at, oh, we went up to 5.25% or 6% whatever it may be right now. Oh, my gosh, it's so high. Well, historically first, that's really, really low. Second is you've got your eye focused on the wrong number because inflation is reaching into a bank account and grabbing the value of your spending powers,

grabbing your money and you don't even know it because your bank account still says $100. but only buys $50 worth of stuff. Right? So understand inflation. It destroys the value of your cash savings, your stocks, your bonds, your cash, your equity, and thankfully, the value of your debt. So if inflation is robbing the purchasing power of your money, would you rather have it, it's an equal opportunity destroyer, by the way.

Would you rather have it destroy the value of your money or the value of somebody else's money? somebody else is money right let him go destroy the other person leave mine a loving well the way that you can do that put yourself on the winning side of this terrible situation that the economy is in right now that this country is in right now is borrowing money to buy hedge inflation hedged assets inflation inflation and income producing assets that's all hedged by inflation so here's what i mean by that so as i gave this presentation last week in our cpi index was 8.6 today's 9.1 so this would be even worse but the wages increased by 5.4%. And the current administration is bragging about this.

Look how much we increased the wages. But per the CPI index, we're at negative 3.2%. So those that got their 5.4% increase per the CPI index, they lost net 3.2%. But if we're going to look at our $5 footlong index or we're going to look at our gasoline bill, we lost a whole lot more than that. But housing went up 14.8%. which gave you a 6.2% increase based on inflation. And rents went at 15%, 6.4% increase.

So if you are an employee and you don't own real estate, or if you were on a fixed income and you don't own real estate, you got totally screwed. And you're likely to continue being screwed unless you get some real estate. Now, we could buy gold, right? People all think that, you know, a hedge against inflation is either a real estate. estate or gold. That's kind of the time oner wisdom. But let's look at that if that's our option, if that's what we're thinking. So it is that the US national home price index and US dollars and

gold. So traditionally back from 1975 where I got this chart, pretty much they go neck and neck. The blue line is our housing index. The red line is our gold index. But right here, on 2004, 2005, the two started to separate. So as inflation continued to go up, So did our housing values continue to go up. Certainly we had a little bit of a dip here, but this little dip right here never dropped below the inflation rate. So the inflation rate was a straight line right under here. So even though we had this nice little climb, it never dropped and then it continued to go up. But gold didn't fare as well.

And why is that? Do you have any idea? Well, at the same time, when we were concerned with who was going to win President Trump or Joe Biden, and we're concerned with racial injustice and we're concerned with the pandemic and masks and social distancing, this little piece of information came out that really nobody even noticed. So J.P. Morgan pays the largest penalty over $920 million. It admits wrongdoing in market manipulation. JP Morgan, our friend, a lot of you could probably have a banking count at Chase.

They were manipulating the price of gold. They were manipulating the price so they could purchase more and get more at a cheaper price. So that's why you see the separation and they got busted. And none of us even heard about it because we were watching another thing. on the news. And the news was talking about other things, so we'd really not have a choice. So what is our choice then? The only thing that's standing the test of time is going to be real estate. You know, and I guess maybe that's a big clue as to why Bill Gates is buying up all the farmland and basil is doing something similar. Commodities, food, shelter, water, air,

I guess they could buy the air. They'd do that too. But all the basic human needs that we're going to spend our money on regardless. Those aren't luxuries. Those are necessities. So in a time of rapid inflation like this and what we're going through, you want to be owning the necessities. And housing is the one that's most accessible to you and I, the average person. So is this a good time to be in real estate? Potentially, it's critical that you are in real estate. Critical. Okay.

Next, one more thing I want to share with you, I believe, I covered that, the good time to be real estate. Okay, so the deals. Right here in our own office over the last two weeks or so. So notice a little shift in the attitude and the conversations we're having with sellers. Not a big one, but a little one. And what we'll find is when prices start to drop a little bit and that the market starts to soften, typically the sellers are going to be the last ones on board. They're going to be in denial.

They're going to think their house is worth a billion dollars. And they're going to try it until the very end to get that price. I think we're getting a little bit of help from the media that might be intimidating you or, scary you or manipulating the masses. And I think it's hitting the sellers also at the same time because we're seeing a little bit of a softening. Because right now as we're in this transition, typically the sellers are still in denial because we're right at the tip of this transition if we are in one.

Certainly there's a few indicators at point that we very well could be. But typically the sellers aren't even close to being on board yet. They're not even going to be buying into this. Price is dropping for another six months, historically speaking. But we're noticing there already. the second thing that and then so that was in the last couple weeks here's what happened the last 24 hours i took some calls for some of our ria ace clients that's fallen up with some of their leads for them and there's one seller who just a week ago 10 days ago said absolutely no to seller finance

and i had another one very much like oh that's a good idea but i don't think so i'm just going to still try and get my price so i have one that was adamantly against it one that was kind of against it so here's the what we did this week where we actually turned both of these people who were against seller financing into seller finance deals for my clients. When I was a real estate agent, this was something I would do. When I add a listing, and this all happened in 2007, 2008, because I've been through one of these downturns before.

So I know how the sellers think, and I know how to kind of manage this at what needs to happen. And the way that I would counsel them back then is, here's the house, right? And here's the house is valley. Say it's $500,000. There's a value. And the market is supporting a $500,000. So the market's been doing this, right? The market's doing this.

And right about here peaks in it. The house is worth $500,000. Now the market starts to adjust a little bit and maybe it comes down, right? And it starts to come down. And right about here, this seller is thinking, uh-oh, I haven't sold my house yet for $500,000. So the agent comes and says we should lower the price. So they'll drop it down to say 480. And then the market continues to drop and they're like, oops, I've sold my house.

So we should drop up 60. How the market continues to drop and they're like, oops, 450. What happens here is the seller is chasing the market down, but they're behind the market. So what happens over time is they get, they're having to ask less and less and less and less for their house. So as an agent, what I would have recommended or what I did recommend was, you know what? If the market is doing this, we got to get ahead of it. We got to drop down here really quickly. So if we're at this point, I was like, we need to drop this down to $3.90.

So we can wait for the market to come down and it reach us. But the market won't reach us. There's still the demand down here that still want to buy houses. And if they're looking at all these houses up here at this price, and all of a sudden a house comes down the market at this price, then they all go and they all start getting for this house. And then they do it a little bidding more on that. And this house comes up and it may be sells for $4.30, 440.

See how that works? So this is what I haven't had been explaining my sellers. Whether it's like they don't like our cash price, I'm like, okay, well, Mr. Seller, Mrs. Seller, I'm probably not the buyer for you. That's okay. I don't expect to buy them all. But here's what I recommend is if you are going to put your house on the market,

be careful that you don't chase the market down and follow it down primarily. and you want to get jumped out in front of it and down here. So you can get these people to bid it and then it's going to rise up. And then it's going to it'll land at market value wherever that is. Because we don't know exactly where that is, but all we can do is base it on we want to underprice it. So it causes the people that are in the market shopping for house. Get them to bid on it and get it and they will bid it up to actual market value.

So when you get ahead of it. So I was like, I'm saying, Ms. Seller it. Okay, it's okay. I'm not to buy it for you. You know, go ahead. And just, but this is what I recommend is you get ahead of this thing or else you're going to be chasing this thing down potentially for a very long time. You're going to get a lot less money than if you had just done your massive price reduction right now.

And then I left them with that. And I did that for two people last week. And then they came back this week. And I said, you know, we've gone through a few price reductions already. And I think you're right. And we really want to get maximum dollar for our property. So can you explain to me how that seller finance? thing works again. So I think there's a huge opportunity to be the good guy. You get to be the

good guy, the good girl, and say, you don't miss a sell. It's okay. I'm not going to try and grind you on your price anymore. I'm not trying to get it a deep discount. I got plenty of opportunity over here. I don't expect to buy them all. But if you're going to go ahead and go with the agent or continue with your agent, this is what I recommend you do. Get ahead of the market and do an aggressive drop. And just kind of take it away from them. And that's exactly what we did. And it worked two times in a I don't know if it's going to work again, but it was kind of a unique situation, a rare situation where it did work two times in a row in this particular market environment. Hey, so keep that. Make the market the bad guy.

I'm sorry, Mr. Seller, I think your house is well worth that $500,000. It's a beautiful house, but the house is only worth what the market is willing to pay for it. And right now the market is saying, uh, uh, ain't worth it. The rising rates are causing people to, uh, it's causing their house to become unaffordable to them. So they might like it. may be willing to pay for it, but the bank is not allowing them to. We can only sell their house for the people that are in the market that want it and have the

ability to pay for it. So you want to get ahead of that, go get ahead of that. If you change your mind and you want to get the top dollar and not give the $500,000 right now, if you're willing to take some money right now and the rest later, those are kind of your two options. And you leave them with that and now they got a very, very, a very basic decision to make. Should we buy to rent? This is a good question.

I got to be really careful because when you use the word should, right, that's a big loaded question. I am not slowing down. I feel I should and I am. I see the, and we have this conversation with a bunch of our cash flow savvy clients right now, where we go out when we find income property, we fix them up,

we put a tenant in place, we coordinate the property match, we do that for busy professionals. That's one of the business we have. But the neighborhood company is cash flow. savvy. And right now with the rising interest rates, you know, the cash flow is getting squeezed a little bit. And the properties that we're used to selling and the assets and the portfolios that we're used to building are the newer purchases right now are cash flowing as much as they

were. Some of them are like just kind of break even. But I would encourage everybody when you're looking at the inflation data that we just looked at first. And the second thing, the supply and demand, the population is the number of people to soak up all the houses that are available. We know we're probably not going to give this giant influx of foreclosures. We know that the new home builders have pulled back because they're terrified. So the supply is still going to stay low. It's going to stay low, low, low. But the demand is already here.

Over the next 24 months, we're going to have more demand, more people looking for housing than ever before in the history of this country. And then we got Gen Z right behind them. So I'd say the next 10, 20 years, I think buying income property is a really, really safe bet. Let's see. Is building to rent a good option? If you can build it cheap enough, like it all depends. Like what are you going to build?

If you're going to build a multifamily property, we have multiple units and you can, and, you know, you can take up the income from a bunch of them, a bunch of units to pay for the cost. Then yeah, it may be, right? But it all is all going to depend on how cheaply you can, uh, or affordably or inexpensively, build the property to rent out. So thanks for being here. I really appreciate you. I just wanted to share that information with you because there's a lot of information going

around that could be caused of some confusion, could be causing you to panic a little bit, could be causing you to get, be scared a little bit. I would say if you have, there's two things. If you have been successful investing in those, even if you've just done a couple deals every year over the last three, four years, I think you are positioned to be extremely successful over. the next couple years because I think if the interest rates continue, if sellers start to panic a little bit, then that could be a little bit of, there could be some opportunity in there.

And so I think you might be finding a little less resistance as far as the negotiating goes with yourselves. Like we have just in the last couple weeks. So there's one thing. The second thing is when you're evaluating property, you know, if you take the basic vanilla formula of nice quick and dirty math, of formulated what your wholesale price is going to be. You know, you got your value, multiply it by 70 percent. You multiply it to subtract your repairs, then you, you subtract your profit, and then you're going to wholesale that to a fix and flipper in most cases.

Or if you're going to fix and flip it yourself, these are two things you need because or what you need to be concerned about is that that formula was based off of the comparable data, the comparable sales of today. Now, if you're going to go fix and flip that property, or if you're going to sell to a fix on Flipper. And that's going to take them two, three, four months to complete that rehab. What is the value of that property going to be three, four months from that? What is going to be that, that we know the demand is going to be there,

but will that demand have the ability to purchase at that price down the road? So you want to be really, really careful when you're evaluating your properties and you're evaluating your deals and you're probably going to start wanting to be a little bit more conservative. And that data that I just shared you through right there, that line of thinking, you could share that with your sellers. I understand that's what the house is worth today. But we all see what the market is doing. That darn old market, it keeps getting on the way of our progress.

But it is what it is and it's doing what it's doing. I'm going to have to come in and fix this house and put some money into it, put some time into it to get it to the full market value. That's going to take me three, four months. And, you know, it's not looking good with the markets that will look like in three or four months. So that's why the adjustment now. So make the market the bad guy. Not your opinion.

Just laying out the facts. All the media, all the news out there, they're seeing all the same things you're seeing. And also, I think this is an amazing opportunity to really hone in your creative financing skills. Because if I'm curious, I'm going to tell the seller that you know, you need to do a massive price drop to get out ahead of this market before. So you don't keep chasing it down and making less and less and less money. That's one option. Or, you know, we could maximize your bottom line and get you your full price if you're willing to take some money now and the rest later. So which one you want to do?

Massive price drop, or do you want full price? Right? And it's going to be a great conversation. And I see that happen with foreseeable future. You better know how to structure those types of deals because I think that's all the opportunity is. And if you can take those properties with seller financing so you don't have to go to the banks, now you're on an income property.

And then now we see what the rental demand is going on right now. It was a 24% year over year for a two bedroom. That's remarkable. That's like double what the sales price is. And traditionally, it's reversed. Here we are. Okay. As a newbie, where would you get started?

The same place, a season veteran would get started. We're looking for motivated sellers. And so how do we find motivated sellers or what causes a seller to be motivated? Typically, life's happening to them. It's death, it's disease, it's drug, is delinquency, it's job loss. It's all kinds of things. They're frustrated. They may become a bad landlord or had a bad landlord.

experience or the tenants messed up their property. All these types of things are happening to people. And with the economy doing what it's doing, and you've got the stock market crashing, people are hurting there. We've got people losing their jobs. That's people hurting there. And so a lot of these people are going to be financially stressed or distressed. And they're going to be looking for some sort of financial relief.

And a lot of these people where life is happening to them right now, unfortunately, they're going to be own property and they're going to be turning to their property for financial relief. And they're going to want to pass. So we need to start reaching out to the people that are having these problems. So whether you're going to knock on doors of pre-foreclosures, or you're going to start cold calling landlords that got vacant properties and just went through evictions, or you're going to send direct mail or you're going to run pay-per-click ads.

It's all the exact same thing. This is a people business. Every piece of real estate, we buy ourselves and be from or to another person. So we need to start talking to people and say, hey, how can I help you? Right. People will right now that are freaking out a little bit, they will exchange, equity for peace of mind. And that's what we do.

We go ahead. We're going to give them some peace of mind in exchange for some of that. So what do you think developers should be doing now? Should they be on the sideline for now? What is the sign that they should be get back on the game? I think for a developer is looking at what you're always looking at. Where are the opportunities where you can build for cheap enough to where you can sell for high enough to make a profit? I got a buddy in Los Angeles that only does luxury rehabs.

And so he's like, this is the only place I can really make a work right now. I'm sure my materials are higher. My money costs are going to be higher. But I'm selling to a clientele that can afford it. And I'm selling to a clientele that's willing to pay it. So that's one way. I don't dabble too much in multifamily, certainly not in the context of developing. So I don't know what those would cost and what that cost analysis is.

But that's all you're looking for. If you're a developer, if you're a builder, if you can build it low enough to where you can sell it high enough, then yeah, maybe you get in the game. But we saw what the builder starts are doing, right? Well, if you can figure it out, then by all means, there's a lot of demand out there and you can make it killing, but you've got to figure out how to build for cheaper than what you can sell.

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. You didn't know home for us. We got the cash flow. This podcast is a part of the C-suite Radio Network. For more top business podcasts, visit c-sweetradio.com. Thank you.