Epic Real Estate Investing - What Every Investor Needs to Know About Market Fluctuations w/Dolf De Roos | 1305

Episode Date: June 6, 2024

Dive into a world of real estate wisdom with host Matt Theriault and special guest Dolf DeRoos on the Epic Real Estate Investing Show! Join them on a captivating journey through Dolf's remarkable life story, filled with invaluable lessons learned from challenges and triumphs. Discover the enduring power of integrity, the secrets to navigating economic downturns, and the transformative impact of real estate education. Gain insights into the evolving real estate market dynamics, receive practical advice for novice investors, and explore the influence of international experiences on entrepreneurial strategies. Whether you're a seasoned investor or a newcomer to the real estate scene, this episode offers a wealth of knowledge and inspiration to propel your financial success. Hit play now and unlock the keys to achieving financial freedom and mastering the art of real estate investing! P.S. Whenever you're ready to go deeper and further with your real estate investing, looking into my partner program to help you get your first deal might be the move... take the first step here for free 👉 https://epicearnwhileyoulearn.com/ Sponsor: Baselane - Banking Built for Real Estate Investors Learn more about your ad choices. Visit megaphone.fm/adchoices

You can't describe the pleasure you get. I'm sure you have it too. When someone says, you know what, I stumbled across you two years ago, 20 years ago, whatever it is, I read some of your books. I didn't think I could do it. But I went ahead and now look at where I am. This is Terrio 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.

All right. So today we are talking to the man, the myth and really truly is a legend. So help me welcome Mr. Dolph DeRuce to the Epic Real Estate Investing show. Dolph, welcome to Epic. Matt, thank you so much. It's a pleasure to be here. Your show is one of the most popular around there. So it's a real honor to be here. Thank you. Awesome. Well, thanks for saying You know, I was talking to somebody yesterday, a mutual friend, Ross, Denny. Yes, he reached out to me after your call and said, I can't believe you're meeting with Matt tomorrow. So, yes, we get back a long way. We met in Egypt out of all places, probably a couple of decades ago, yeah.

Were you flipping pyramids or why? No, trying. He was living in Kentucky at the time. I was in California. And then through a quirk of fate, we both ended up moving to Phoenix, unrelated. And we met up again by chance. So that was really cool. Awesome, sweet.

Yeah, everyone I ever talked to about you has nothing but great things to say about you. That says a lot because you've been doing this for a long time and to maintain such a stellar reputation. I think that's fantastic. So congrats and nice to finally meet you. Well, thank you. And again, my pleasure, yeah.

I think we've belonged to a couple of same groups or a group. I can't know which one it was. Were you a member of Collective Genius ever? No, that does not ring a bell. No? Were you part of Taki Moore's group and boardroom? That doesn't ring a bell either, no. No?

Nothing with Frank Kern or anything like that? I remember the name Frank Kern. I thought he was involved with something Ross did, maybe. So I recognize the name. But I think we sat at the same dinner table for some reason, and I can't remember why or where we were. But anyway. In that case, Matt, I hope both you and I have evolved since then,

Because if you're right, if we did share a dinner table a number of years ago, and it's more than a few, it's got to be at least 10. And we don't remember each other. That says something about our then selves. I hope we've evolved a bit so that now if we were to share a dinner, we'd remember years to come. I think it also says something that we've come back together again, right? That's true. So for sure. So I know of you, but I don't know a lot about you.

So did you have a life before real estate, or was it always been real estate? technically I had a life before real estate but I got started really young I was 17 so you know if you consider that for guys anyway they don't really remember much before the age of six

girls are lucky they remember back far further than that so I only had if you take six from 17 I had about 11 years of non real estate activities when you look at it that way so how did it you know it's such a young age

I didn't get involved as I was like 38 39 no no I'm sorry about 34 But I got investor-sided later in life, but I was an agent early on. But what sparked the interest so early? Was it in your family? No, ironically, it wasn't in my family at all. My family had the unique aspect, like a lot of people born in their era,

that they never got a chance to go to university. The war interfered with that. So that for my sister and I, they indoctrinated us with this notion that to do one in life, you have to study hard and get a degree because it was the degree that was the key to success. and ironically, just as an aside, I read an article this week where they're saying that the four-year degree is almost worthless these days and there are some doubts as to the merits of going.

But anyway, my sister and I were imbued with this thought, so when I finished high school, off I went to university. Didn't even know what I wanted to study. I didn't like the side of blood, still don't really. Medicine was out. The thought of peering into people's mouths all day long was pretty off-putting to me, so that's dentistry. And I went through this process of elimination.

And I ended up with engineering that was the only one that I hadn't eliminated, so I decided to do that. And during my first week at university, Matt, I looked around here at the other people with degrees in electrical engineering, the tutors, the lecturers, the professors, and it occurred to me that they were not uniformly wealthy. Now, obviously, some engineers get very wealthy, the person who put all those Starlink satellites up in orbit, he seems to be doing pretty well, I understand. But on average, I didn't feel that they were doing really well. So I decided to take it upon myself to make a study of the rich. I wanted to know, What do the rich have in common, thinking, perhaps somewhat naively, that if I could identify 30 or 40 things that

they did have in common, and if I could emulate some, maybe all of those things that I'd have a good shot of being rich. It's a good theory, right? But the challenge was I could hardly find anything that they had in common. It wasn't age. By all accounts, Bill Gates was a young man when he made his first billion. It wasn't gender. It wasn't religious belief. It wasn't whether you're an immigrant family or not. It wasn't whether you're the firstborn or the last born or anywhere in between, I could only find two things that the rich had in common. Number one, almost without exception, the rich tended to have integrity. Now, to be clear, you don't need to have integrity to get rich.

Matt, you and I could decide after the podcast to rob a bank, right? And to the extent that we wouldn't get caught, we could be rich instantly. The challenge with robbing a bank is usually you need to engage the services of a few assistants, a couple of lookouts, a getaway driver. and when you and I haul that big bag of loot into the trunk of the car, our getaway driver, I'm newly a quiet friend, hits the accelerator before you and I have a chance to get in, right? He splits the proceeds with fewer people.

So you live by the sword, you die by the sword. The honor among thieves is that such an answer. So I found that those who got rich and stayed rich tended to have integrity, their word was the honor. And the interesting thing about integrity is it's not genetic. In other words, if you decide in this moment, even before I finish the sentence to increase one's level of integrity, then better things, according to me, what happened to you?

Anyway, when I was 17, I couldn't put much theory behind that or attachment to it. I didn't know what to do with it. The only other thing I found that the rich tended to have a comment across the board is that almost without exception, the rich either made their money or held their wealth in real estate. And I thought, man, if that's all it is, I can do that. So I set about to find a good property and it took a bit of searching, but I found what I thought was a great deal. And I went to the bank to apply for a mortgage as one does, right?

Now, I've got to add, when I was 17, I looked about 12, which was horrible as a 17-year-old kid. That makes sense because you looked about 17 today. Not quite, but thank you. So it was especially bad if you wanted to date a 17-year-old girl, right? And she'd also think you were 12. Even if she knew you were 17, she didn't want to be seen by her girlfriends with someone who looked 12. So that was a problem. Right. That was a challenge at the bank too, because I finished my spiel.

And when I stopped talking, the bank manager leaned forward and he said, are you done? And I thought, that's a strange question. But I said yes. And he said, this is a hoax, isn't it? He thought it was a university prank. And I was devastated. But here's the good thing, Matt. Fortunately, I didn't say, well, clearly, I'm not cut out to your real estate investor. Let me try my hand at something else. I went to bank after bank after bank. And I think I ended up going to 11 before one of them said, you know what, son, I'll take a chance on you. And I would have preferred to hear, oh my gosh, that's such a good deal. I wish I'd found it.

But I was happy with I'll take a chance on you. Bought my first property, you didn't know what I was doing. And at the end of the first month, Matt, the rent I collected from, it was four units. It was a wooden villa divided into two flats, as we called them, and then two more motel-style units out the back. I collected the rent for that month. It was more money than that month's allocation of mortgage and property tax and insurance. insurance and a little fund for any contingencies. I'd made money and hadn't worked for it.

So I thought, this is, I've got to do this again. So I did it again and again. It took four years to get an honours bachelor's degree. The university came to me and said, Dolph, it's only one more year from Masters. Why don't you do that? And I said, because, and I couldn't think of a reason. So I ended up doing it. And then halfway through that, they said, you're doing so well. Why don't to switch to doing a PhD and I said, because, and again, I didn't have an answer. So the lesson here is make sure you know why you're doing what you're doing. Otherwise, you end up leading other people's lives, right? But to keep the story short, Matt, I spent eight years at university. I got a PhD in electrical engineering, not the easiest topic around. And at the end of it, you can imagine my parents

that were sitting by the phone waiting for me to announce the acceptance of a job that was their ideal. And for disclosure, I did go to two job interviews. And at the end of the The second one, I was offered a job at 32,000 a year, which back then was a lot of money. But the problem for my prospective employer is the week before I landed a real estate deal that netted me $35,000. And I remember thinking, why would anyone in his or her right mind work for 40 hours a week, 50 weeks of the year for 32,000, when in one week you can make 35 and take the rest of the year off or read books on the beach or repeat it or do whatever? So I didn't take that job, and to this day, I've never had one. Got it. Let you know how slow my parents were to get it.

I was 35 years old, and visiting my parents that were living back in Europe at that stage, they picked me up from the airport, and my mother said, you know, Dolph, it's not too late. And I looked at my watch thinking too late for what? Dinner with an aunt or something like that. And she said, to get a job. And I said, why would I want a job? And she said, because you don't have a pension plan, like a 401K or something. And anyway, so that's, you know, it's a long answer, but that's how I got started in it.

And I fell into it. And then it was so good that I decided to focus on it. I come from a family of civil servants. And I'm the only entrepreneur in the whole family. It's tough, isn't it? You had to be a rebel. It is. It's very tough.

And very similar encounter was with my grandmother, not my mom. But I was in the music business first. So I had done very well for myself, very early in life. and then the digital download came along and just kind of wiped that whole industry out. Right. And so I wasn't really prepared for anything. So at the age of 34, I had to start life over again, and I just took something. I went bagged groceries for a minute for about six months.

I remember coming home for that. I think it was a Christmas or Thanksgiving. And grandma asked me how I was doing, and she was like, and I told her, and I'm devastated. Like I'm 34 years old bagging groceries with 16-year-olds. And she has said, oh, well, thank goodness. I mean, the bright side is now you've got a real job. job. But it's from that generation, you know, the thought that bagging groceries was a real job and creating something that hopefully millions of people wanted wasn't real. It's so interesting.

And two years later, I visited them again and my mother said, you know, maybe you did the right thing. And I thought there was a great concession, but I said to, I'll know you'll really believe it when you can drop the word maybe from maybe you did the right thing. How big just you did the right thing, you know. Right, right. So, I guess, I guess, I guess it was just your own self-realization and your own awareness that had you draw the conclusion that, hey, you know, working for someone else is not for me in this real estate thing is the way to go, right? Or did you have a mentor early on? Did he have any sort of inspiration? Or is this total entire self-discovery? Well, people often ask, were you know, were your parents super rich? And the answer is, no, we did travel around a lot. And they'll say, you know, were you in the military? And I'll say, no, well, were you in this, what is it, diplomatic service? And I'll say, no. Well, why did you travel so much? I said, I think we were on the run. But the truth is they're just adventurous and tried things. So I lived in Australia for two years. And I don't want to demean my parents at all. I love them dearly. And my mother's still around. She's 96 now, bless her. But for the two years, we lived in Australia, my parents ran a convenience. store. They didn't own it and lease it out. They leased it from a landlord and worked at seven days a week. We were open from 6 a.m. to 11 p.m. every day. And then once a month, I saw the landlord come and collect money. And it wasn't a small amount of money relative to what was being

made. And I thought, how come he's getting all this money when he hasn't even spent one hour behind the counter-serving customers? And I think that was my first awakening that there are different ways of doing things. And some people are scald into believing that you have a real job bagging groceries to use your words, but my parents not only bag the groceries, they put them off the shelf, they rang them up and did everything, right? And they earn a relatively small amount. And other people seem to do very little, and they collect a lot of money. Now, this is not a disparaging mark about land builds. I guess I am one. And it's not to defend the position I hold. Every industry has a mix of all kinds of things you need electricity and premises to work out of

and customers and you name it. And the real estate is a valid component, and we live in a capitalistic society, so there's a market value on everything. But I'd rather spend my time finding another commercial building to lease out than operating a business inside of one. And everyone can do that.

To give another weak analogy, and when Uber first came out, and I was forced to grab the odd taxi ride because Uber mightn't have been allowed in a certain airport or something, I'd hear these taxi. driver complains, you know, it's unfair these ubers. They don't have to sit licenses.

They don't need to get a medallion like they did in New York. And they're taking business away from us. It's unfair. And my response would be, well, have you ever considered becoming an Uber driver? If it's so much better, if it's so unfair, just become one. And this is the price we pay for progress. When cars were introduced into the streets of New York, people wrote letters to the editor of complaints saying that all the young boys who used to scoop the horse manure,

that they'd be put out of work. And guess what? They were put out of work. And just as well, it would still be dealing with horse manure on the streets. Yeah, very much like people stopped buying compact discs and records.

Exactly. And that brings me to another interesting point. I used to shoot a video every week. It was called Discussions with Dolph. It's not a promo for it. I don't have it anymore. But I did that from wherever I was in the world. And every Tuesday morning,

And this isn't the day before there were video streaming servers, no YouTube or anything. So I had to build my own video streaming server. And if a client's credit card had cleared that month, they used to get the videos from where I was. And I shot one of them years ago, now about 20 years ago in Tokyo in a suburb called Akihabra, sort of the electronics capital of the world. And I found a particular spot that had lots of geometric weird things. Like there was a train railway system going over there in big wide zebra crossings. it was just visually stimulating.

So I shot the video there, and it happened to be next to a shop that sold Walkman. And some of your listeners might not be old enough to remember what they were, but they were little portable cassette tape players. I know, I haven't heard that word in a very long time. I know, and they were really calling Japan. Always had the latest auto-search and auto-reverse, and you name it. And then about eight years later, I happened to be back in Tokyo,

and I thought, you know, I'll shoot another video, and for fun, I'll shoot it on the same spot. No more Walkman's for sale. They died. It was now Discman, as you referred to. to do. We have multiple CD players. And then I was there about five years later and there were MP3 players. And then the world turned to iPods. And the last time I was there and shot a video, they had anime, whatever, gadgetry and accessories there. And it just occurred to me that someone

who put his life and soul into learning all there is about cassette players and how to sell them and the relative merits of them and the wow and flutter that you get, most people wouldn't even know what that is today while and flutter. But we had those things and with disk and how they would skip track or avoid skipping tracks through suspension systems. All of that knowledge went to waste. They went out of business. But the owner of that commercial business that leased that premise out firstly to the Walkman salesman

and then the Discman salesman and the MP3s. He's still around. He's still collected money. So there's something about real estate that really appeals to me and that is that just about any other business or interest that you can think of, it goes through a cycle that comes and goes. Telex machines were popular. They were replaced by fax machines.

I remember getting my first fax machine. So excited. Plug it into the mains. Plug this line into the telephone. Now send a test fax to someone. I didn't have anyone to send it to. No one else had a fax machine. They couldn't receive you.

Nowadays, no one would want a fax machine. It's old technology thermal paper that curls up and fades. You need a phone line. You can't send two faxes at once because the line's engaged. Now we do it by email. So these things evolve. The only constant is that we still live in what we generically call homes. And we work in premises.

I'm in a studio. Now I'm not in my home. I have a small studio in my home, but this is a beautiful, fancy studio. And I take it, you're in some kind of a studio. People still go to supermarkets to buy their groceries. They buy shoes and shoe stores. I know you can buy some online.

The challenge for me in buying shoes online is I can't try them on. Right. Anyway, so I think real estate will be around as long as people are around. Yeah. I always say there's really no threat to this industry until shelter goes out of style somehow. Exactly. And I don't think it will, you know.

I don't get to talk to too many people. I mean, it's kind of weird me talking like I'm an old guy now because I got started it in real estate in 2001, 2002-ish. And so I've gone through a downturn, right? I've gone through, went through 2007, 2008. There's a couple of hiccups after that. But very few people have experienced anything but a bowl market in real estate. And it's nice to talk.

to somebody that's been there and done that. So I wanted to kind of get your reference point because you've been around for a while, so I always want to take advantage of these moments that, when I get to talk to wiser people and more experienced people. What's different about real estate today than when you got started? You know, you touched on some very interesting points because it's absolutely true. Most people now, and as time goes on and the longer it is since we had the last major downturn, the GFC of 2008-2009, the more people there are who have never experienced a downturn.

So they think the market's always going to go up. And the interesting thing, and it works to your and my advantage, when the market does crash is inevitably it will, because real estate, I say it always goes up. But it doesn't do so, as mathematicians would call it monolithically and monotonically. It doesn't go in a straight line. It goes in fits and starts. But the interesting thing is that each peak tends to be higher than the previous peak,

and each trough tends to be higher than the previous trough. So when the market has been going up for all of their conscious, existence on this planet. I'm talking about young people. They think they can't go wrong. So they'll buy at silly prices. In fact, when everyone else is buying and the market's being driven up by ridiculous amounts and a house goes on the market and there are 24 offers before 3pm, they think it must be a good time to buy. The season people know that we have to be countercyclical and that's the time to sit back and start reading more books on more beaches. And conversely, when the downturn inevitably happens, as we said, it will happen.

They think, oh, real estate's really bad. And no matter how low prices go, they say, oh, no, I wouldn't touch real estate. And you hear all these stories coming out of the woodwork. Oh, I had an uncle once. He invested in real estate. He got really burnt, you know, and these stories fuel themselves, and people leave the market. And that's when you can buy bargains.

So I'm kind of hoping there's going to be a downturn, because prices are pretty high right now, and I can't buy anything in this competitive market. But if there is a downturn, let's just wait for it to get near what we hope will be the bottom. You can't wait for the exact bottom point because you'll never find it. The person who waited for the perfect time to buy a piece of real estate, I've got a photo of them, and it's a photo of a skeleton.

There's never the perfect time, but there are better times and worse times. Be countercyclical. I've probably been through more downturns than you have. You've very politely said that you thought you were old, but now you're with someone that I think it's a polite way of saying I've been around so long. I'm ancient and I am. But with being ancient comes memory, and with memory comes certain patterns.

And you observe patterns after a while. And I remember with the GFC, they'd be selling houses in Phoenix. At one stage, we had 90,000 homes in foreclosure. And unfortunately, for me, I was fully deployed. I had all my cash out there, and it went down and valued tremendously. So I wasn't in a position to buy a lot of it,

but I'd go to some of these auctions, literally on the courthouse steps, and they'd sell one house about every minute and say, okay, here's one, here's the address who'll give me 20,000, 20, 25, I've got 25, no more, okay, sold. And you couldn't buy the land for that value.

You couldn't buy the materials to assemble it for that value. And people were spending another 10, 15, 20,000 renovating them in a very rudimentary, minimalistic way, and suddenly, you know, they're in it for say 50, but they're worth 110 or 120. And it takes a while for people to realize this, because they read about the 90,000 in foreclosure.

And you can look at it. Is that good or bad? And any time I pose a question, the appropriate answer is it depends. It depends on whether you're one of the people going through the foreclosure process, then it's probably bad. And if you're one of the people that's cashed up, I wasn't, but you're able to buy these things, then it's good. And these circumstances always repeat because human nature is to repeat mistakes we made before, because our memories are very short.

we tend to forget about the downturns when times are good. And when times are bad, we forget that it turns around. Right. Just think differently. Be countercyclical. Yeah, we talk. I mean, I'm in the education and training space as you are. And I know when we talk to people, we go through these ebts and flows of where it's popular and when it's not.

And just like you said, people say, well, I wouldn't get in real estate right now. The market is terrible. I was like, well, are you going to wait until it's expensive again? You know, it's right. We forget that it bounces back and we forget that this is the time to do it. I don't know where we are right now. I think we're in a very unique situation. I'd love your take on this.

In 2008, we really experienced this crash for a number of reasons, but primarily we just had more houses than we had people of buying age. And we just overbuilt. Right. There was a now we've. Absolutely. Yep. Now we've flipped, right? And with the big giant, what they call the gopher going through the garden hose, we have this generation, the millennials.

and they're all hitting first-time homebuyer age, and we don't have enough houses. And I don't know if there will be like a crash. I think if we do have a crash, it's not going to be because of a supply and demand issue will be something else that we probably haven't even foreseen or could have predicted something similar to the secondary market in 2008.

So who knows what it's going to be. But where do you see the opportunities in the market right now today, particularly if somebody was just getting started? So firstly, I agree with what you've said. these are unique circumstances. Right now, there are various estimates as to what the housing shortages. I've heard 4.1 million shortage across the country. I've also had 6.3 million.

So there's a chronic shortage. I heard five, I'm right in the middle, so we're close. But there's a lot of shortage. The challenge is that they're building more houses today than they have in previous years. The number of home starts is higher than ever. But it's going to take years at least before that shortage has taken up. And the challenge to us, the number. of dollars required to buy a house is going up. And I put it that way specifically because there

are two reasons why you need more dollars to buy a house. One is demand inflation. It's more demand than supply. So people outbid each other. But another one is the devaluation of currency. And we can talk about the reasons for that. The government's printing more money. So there are more dollars chasing the same goods. But what that essentially means is if what you can buy today for $100,000, if in a year's time you need $110,000 to buy the same thing, it doesn't mean the price of those things have gone up. It just means that the value of money has gone down, and we now need more units of currency, more dollars to buy that same thing. But those two factors compound each other. So for a young person today of home buying age, they're facing a daunting

prospect and you can measure it in terms of how many years of salary do you need to accumulate to come up with the minimum required down payment. That number has gotten worse in recent times. And I lament young people who are starting out. You know, when I was starting out in commercial real estate, I wouldn't look at a deal if the return was less than 15%. And nowadays, you'd be lucky to find one on the market at that return, because the market's got more savvy to it. It's partially to blame on the internet. I always say one of the things I love about real estate relative to the stock market, for instance, and I know there'll be lots of people promoting the stock market, but here's one aspect that is a valid reason for me.

me. And that is when I look at stocks on the stock market, they are controlled electronically, and the price I pay for one share of IBM or whatever else is the same that someone in Helsinki pays or in Zurich or in Boston or in Singapore or wherever. Whereas real estate doesn't have this normalization factor, you can find anomalies. You can always find a property that for some reason is listed below market value. Perhaps the seller is too stinky to engage the services of a real estate agent. They thought, well, why should I take the advice from some 21-year-old snooty-noisse real estate agent? I've lived here for 40 years. I know this market better than anyone. I'm going to get 800,000 for it and it's worth 1.2. Or maybe, you know, they do engage the

services of an agent. The aging just doesn't know. Or maybe they want to do a FISB for sale by owner. And half the time, I find it for sale by owner, they're asking way too much. They've got this distorted view of reality and they'll think they'll get $2 million for it when it's not even worth $900,000. And of course, it doesn't. doesn't sell. But sometimes you see a property on the market at 900,000, it's worth 1.3. And the great thing about a FISB is there are fewer people looking at those because it's not advertised on one of the electronic boards. So I find it is easier to beat the average in real estate than any other investment that I can think of because I'll always find anomalies.

You know, the share market is very normalized, very average. And I'll give you another example. I find there's a strong correlation between population growth and capital. value growth. So if you pick a country that has higher than average population growth, chances our real estate goes up faster in value there than countries where there's low population. And I can give you a stark example. The U.S. has high population growth. We've got a surplus of immigration over immigration. That's a contingent topic right now. And births over death. You take a country like Japan and full disclosure. I love Japan. I learned the language as a kid. I love the culture. I love how safe it is. But right now, they're in steep population.

decline. It's currently about 127 million. They think that by 2016 it's going to drop below 80 million. Currently, talk about homes, a shortage or surplus. There are 16 million vacant homes in Japan, and you can buy them for about $100

and in case you think, well, that's got to be a good deal. It's a hopeless deal because you can't get a tenant for it. There are 16 million other ones and they think by the end of the year it's going to increase to 20 million. Universities are shutting down. Kindergarten's is shutting down. Just lack of of population. So there's not much growth in real estate there. Values. Whereas in the U.S., you've got growth in real estate. So pick a country where there's population growth. But beyond the country,

there are states in the U.S. that have higher population growth than others. Texas and Arizona, whether you like it or not, whether you like those states or not, it doesn't matter. They have a higher population growth than North Dakota. It doesn't say anything about the scenery in North Dakota or how friendly the people are. It's just a fact, a numerical fact, the population growth is faster in Arizona and Texas. So if we look at Arizona, as a state, it's got higher than average population growth, but Phoenix as a city has higher population growth than other places. And within Phoenix, there are some suburbs that do better than, and you can go down to

whatever level you want. And these things are easy to fight. It's so easy to beat the average. People say, Dole, you just invest in Phoenix because you live here. No, I choose to live here because I want to invest here. That's a mindset. And we have that freedom to do that. So they're all interesting things, Matt.

They're all interrelated and we can figure them out. But I just love the whole concept that we have some control over our own financial fate. We'll be back with more right after this. Stop spending countless hours on busy work and focus on growing your real estate business and maximizing your return. Base lane is a comprehensive property management platform that caters to the needs. of landlords and real estate investors by offering a suite of financial tools designed to simplify the management of rental properties. The platform provides features like dedicated banking services, automated bookkeeping, rent collection, and insightful analytics to help landlords manage their

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Baselane.com slash Matt. That's B-A-S-E-L-A-N-E. dot com slash M-A-T-T. Hope is not a financial strategy. Let's get back to work. We're preaching to the choir right now. But to me, it's such a simple supply and demand conversation. And everyone understands supply and demand when it comes to baseball cards, right?

Or when it comes to fine art or collectibles. But when it comes to real estate, people kind of just, their brain gets scrambled and they can't see the supply and demand aspect of it. Have you noticed that? Is that accurate? That just my observation. Yes. And they don't tend to see it for the long. term or the broad picture. They look at a specific house. It's been on the market for three months.

The market's got to be bad. Not necessarily. It could be something fundamentally wrong with the house, or the price could be wrong, or the agent could be unfriendly or anything. So you've got to look at broader trends. In fact, talking about being old, you start to see trends of when people get old. And when you consider that, when most Americans retire, you know, 65, 70, whatever the ages, their biggest asset isn't the stamp collection that their uncle gave them and said, one day, son, this is going to be worth a lot of money. It isn't the classic car they bought

where they were told if you hang on to it long enough and it's going to go up and value tremendously. Their biggest asset tends to be their home and you'll hear them say, oh my gosh, honey, if only this is to each other, of course, if only we'd bought another one, we would have been so much better off. And yet they've had a lifetime of financial advisors

who told them to get into stocks and bonds and futures and options and treasurer. bills and anything but real estate. And I know I'll wrinkle a few feathers here, but it's my contention that the reason why many financial planners don't recommend real estate much beyond owning the home you live in is that they haven't yet figured out a way of earning commission on it. Whereas when they tip you into these other things, they own an entry commission, a switching commission, a transfer commission, a trading commission, an exit commission.

Okay, maybe that's more than there actually is. They need a different license of what they need. Yeah. So, you know, and those who did buy five or six, properties, they still wish they'd bought more, but they're so happy they did. And I think that's very telling. I don't think that trend is going to go away. I don't either. I listen to a lot of podcasts. I live when I'm in the gym and stuff. And there was one guy who was talking, like, he really sees a future and we're not too far away from.

And it could be just as short as 10 years away to where people will be like, oh my God, you own a house? Like that'll be like, wow, you have your own house. Wow, that's an interesting thought. Yeah, I don't know if it's too far. It blew me away when I first heard it, but I started to think about it. I was like, maybe, maybe that's it. Maybe that will be the case. And I always tell my students, you know, whenever you talk to somebody that's been in the business longer than 20 years,

if you ask them what their biggest regret is in real estate, most of them will answer somewhere to the, I wish I would have bought more and I wish I would have sold less. Yeah, right? Yeah. Almost across the board, you'll have a hard time finding someone that would disagree with that nerd and say, no, no, I have too many. I have too much money. They keep dumping money off of that back in that damn truck up to the bank and pouring it in my account. I need them to stop. Like, no one ever says that. You know, the Federal Reserve, and I don't know why they're the source of it. I didn't look that much into it, but I've seen it all over the place. Well, they actually said just by the age of 65, the average homeowner is 40 times, 4.0. times wealthier than the person that rented their whole life. And that's just one house. And like you said, what if I bought two, I'd be 80 times wealthier? Yeah, he would be, right?

And there are reasons for it that we all tend to forget. And you and I talking with each other, it's like, as you said, it's preaching to the converted and the choir because we already believe this. But there's so much evidence to point to this. And some of the advantages, like we talk briefly about stocks, and I'm not here to bash stocks. I think real estate stands on its own merit. But, man, let's assume we've got 100,000.

cash and we want to invest it in stocks or bonds or futures or options or real estate. The first question I'd ask is, well, how many dollars worth of stock can you buy with $100,000 cash? The answer is $100,000. I know some people can buy on margin, but you have to be pretty well healed to do that. And if the stock value goes down there, it was called a margin call. For most investors, if you've got $100,000 cash, you want to buy stock, you can buy exactly $100,000 worth.

Let's compare that with real estate. You've got $100,000 cash. Can you buy $100,000 property? Of course you can. But you can also buy a $200,000 property with a 50% mortgage or a $300,000 property with a 67% mortgage, or believe it or not, you can buy a million dollar property with $100,000 cash and a $900,000 mortgage. Yes, you'd have a 90% mortgage. You'd probably have to pay PMI personal mortgage insurance, or private mortgage insurance it's sometimes known as.

But you can do it. And the consequence of that is if everything goes up by 10%, your stock will have gone from 100 to 110,000. made 10%, that's good, but your property would have gone from 1 million to 1.1 million. You've made 100% on your equity. And to keep it all balanced, Matt, we better go over the situation. What if everything goes down by 10%? Sure, your stock will only have gone to 90,000. You've lost 10%. Whereas your property would go to 900,000, you've wiped out your equity, right? I'm aware of that. But for reasons that we've already discussed, I'm not concerned in the long term. On the long term, property tends to go up in value. So that's question number one. Number two, when you're

spend $100,000 on stock and you get $100,000 worth a stock. What is that stock portfolio worth? And it sounds like a silly question, but the answer is $100,000, the market determined that. But when you buy a property for a million dollars using $100,000 cash and a $900,000 mortgage, what's that property worth? And it could be worth a million, could also only be worth $800,000. And some fast-talking agent or seller talked into paying too much for it.

Does it happen every day of the week? But by the same token, is it not possible that there? that property is worth one and a half million and you just bought a bargain. And the answer is yes, that happens every day of the week as well. And I can give you 101 reasons why you can buy a property for less than its true value. In fact, I think one exception, every property I bought has been bought at a discount to what I could have sold it for the next day. Fortunately, I didn't sell it the next day because I'm not a trader. I'm a long-term investor.

So third question, when you buy a $100,000 is worth a stock. It's worth $100,000. What can you personally do to increase the value? And before you say nothing, let's be creative. You can hope and you can pray and you can write letters of encouragement to the directors of those companies, right? There's not much you can do, guys. But when you buy a property worth $1.5 million for a contract price of $1 million using $100,000 of this cash and a $900,000, there are $101 things you can do to massively increase the value of that property.

Just painting a house for $2.5 grand might increase the value by $20,000. And if you've never done that, you should change what you're doing this. weekend, right? And, you know, it's true, or put flower bids, or remodel the kitchen, or do any of those sorts of things. And in fact, I so strongly believe that, and I always put my money where my mouth is, I've got a book called exactly that, 101 ways to massively increase the value of your real estate without spending much money. And then the final comparison point at make is, let's say everything doubles in value. And your stock portfolio has gone from 100 to 200,000, what do you have to do to reap some of the benefit of that increase in value? And the answer is, you know,

you sell. It seems counterintuitive. We invest to have it go up, but when it goes up, we divest or we sell. Whereas when your property has gone, not from one million to two million guys, that was the contract price. It was worth one and a half when you bought it. So when it doubles, it goes to three million. What must you do to get some of the benefit of that increase in value? Well, you could sell, but then you're paying a selling commission and capital gains tax and depreciation, recapture tax and all kinds of sales. You don't have to sell, though. You simply refinance. You go back to the bank and say, remember when you gave me 900,000 on what you thought was a 1 million valuation, now it's worth 3 million. Can we do this again? They're in the game of lending money,

especially to people who always pay the mortgage on time, right? So they're so sure. They'll give you 2.7 million. You use 900,000 to pay off the first mortgage. You've now got $1.8 million in your pocket and ask yourself the following question. Is it earned income like a salary? No, there's no income tax owed on it. Is it the sale or something? No. didn't sell anything, no sales tax, no sales commission, no capital. It's tax-free money to do it as you see fit. And for all those reasons, this is why when people retire, their home is their biggest asset, and they'll lament if only we'd bought one more or ten more.

And those who did buy ten more would say, dang, if only we bought twenty more, but at least they bought ten more. Yeah, yeah. And I know you believe all of this. I'm not trying to come down to see it all, mate. But it's just my take on why it's so good. Yeah, I don't know why everybody doesn't do it. But I'm on a mission.

We're spreading the word, right? Yeah, exactly. So, Dolph, what does life look like for you today? What's your business look like now? I tend to be quite enthusiastic when I share my feelings about real estate. And people think I'm a professional real estate evangelist or something. And the truth is no, I'm a real estate investor. I love finding deals and figuring out ways of getting tenants for them

and getting a tenant on a commercial deal, at least I increase the value tremendously. And then I happen to share what I do as a sideline. It's my way of giving back. I always say some people donate to other things. There's, you know, the cat society or refuge for abused people, and they're all great causes. And I happen to like helping people become financially free because I think when people become financially free, it doesn't only help them. It doesn't just help their generational legacy, but it actually helps the country. Because everyone can do well.

Everyone can be a bit more entrepreneurial and figure out ways of doing better. And to the extent that they do that, we're all better off. So that's sort of what drives me to do this. And I genuinely believe it's a lot of fun. People say, how did you think of doing that, whatever that is? I can give you plenty of examples. If you'd come to me 40 years ago, men said, how about we start a coffee chain? I would have said, no, Americans don't drink enough coffee.

And look at what Starbucks has done. There's now a Starbucks just about on every corner. Some streets have two or three on them. So we've become a nation of coffee drinkers. it's an activity that I'm personally not impartial to. I like a good cup of coffee in the morning as well. So I've had tremendous success converting other commercial premises into coffee shops, for instance, a thrift store that may have been paying $12 a square foot in rent.

And they weren't sure about wanting to renew the lease, and it didn't attract the sort of people you want in that part of the shopping center anyway. So by having them agree not to renew and then getting one of the chains, it could be any of them, Seattle's best, Gloria, been, Pete's coffee start, you know, it doesn't matter, or an independent in there, and they paid $24 a foot, you've doubled the rent. And the way commercial real estate works, unlike residential, is when you double the rent, you double the value of the property. Yeah. So it's a simple trick like that. Now, I had one instance where I had a location that I thought was perfect for a coffee shop.

And so I advertised for a tenant and I couldn't get one. And so here's what I did. I started the coffee shop myself. I bought the tables and the chairs in it, fancy barrisen. the machine and fridges and all the ingredients and the beans and the grinder and the milk and you name it. And I employed stuff. I made myself Chief Quality Control Officer. I don't know if I needed such a role, but I sure had fun fulfilling that way. Every morning, right? Every morning. I had to check the quality. And I spent about $30,000 getting this thing set up. And then I sold the business, I think it was four months later for $35,000. And my friend said to you, oh my gosh, Dove, you've put all that effort in to make $5,000, they didn't get it. I said, no, I put that little effort

and it was actually fun to make half a million dollars. And they said, you're right, show me the bank account. How did you do that? I said, guys, I sold the business with a five-year lease in place. And when you cap out the rental income from that lease, it works out to an increase in value of the building of half a million. And they said, yeah, but it's not real. It's just on paper. And, you know, the thing is you can borrow against it, it's just so fascinating these different perspectives. So part of my aim, and I think you've got the same thing, is we want to help people realize it is this good. You've just got to be creative. Now, can you put a coffee shop into any old dungery building?

No, of course you can. You've got to have the creativity to figure out what would work in a certain place. But once you've figured that out, then the sky's the limit. Yeah. You know, you just said something. It just occurred to me, I think, for the very first time, I think the reason, we share this enthusiasm, it just popped just the second, is that we didn't really, we didn't come from entrepreneurial families. We didn't come from wealthy families, right? We didn't come from

real estate investors as our parents. And I have a couple of friends that came from wealthy families and they do think differently. They do things differently. Just because they were raised in an environment of where they were, it was a different environment. And I'm always kind of envious of that. I wish I had a dad to like show me the ropes on how to go make a bunch of money. And I wish I had that like early on in my teens. And I started doing this and I have a 13 year old and it's, I'm going to create that for him, right? I get to create something for him that I feel like I really missed out on or just wasn't born at the right time and the right place to experience what seemed like privilege. I mean, they have their pros and cons to their life as well.

Right. I was just kind of always envious that I didn't have parents to teach it to me. I had to go out I'll learn it on my own. Well, interesting thought, and you say that that thought just occurred to you while we were speaking. And I also had just right now a similar experience where I've had a thought, if I've had a thought because I've sometimes thought, yeah, it would have been nice to have had that. However, I wonder, is there any merit to the thought that maybe the reason why you've done so well is because you didn't have that? You had to figure out a way on your own because it's my observation that people who come from a

background where they create businesses and have real estate holders in that, I don't know how the mechanism would work, I can guess at it. But I think a lot of those children growing up and those families think, well, I don't need to work that hard. I'm going to inherit it. I'm going to get this. So they goof off doing other things and they don't hone that skill. I had this burning desire to crack the nut because I thought if I don't crack the nut, I'm going to repeat the life that my parents live. And as I said, I love them dearly. And they had good lives and all that sort of thing. But it wasn't what I aspired to. I wanted more than being a shopkeeper seven days a week. And so I wonder whether our lack

of having that sort of environment actually created the money machine monsters that maybe we are now, you know? Yeah. Yeah, there is another side to that. You're right. Because I'd heard a quote when I just first became a father and it said, everything that you give to your kids that you didn't have, you take away from them something you got. Interesting. And so I kind of support what you just said.

Who knows? I just look at some people that just kind of. grew up in some of my friends and they inherited the business and they've done very successful and they've made it bigger than what their parents had it as and I'm just like, wow, they just were kind of like they had their path set and I had to figure mine out so much. And then I'm not crying about it. It was just like I look at it and from different eyes, I guess, than what they got. And I don't know, I haven't thought this totally through because it actually did just pop when

we were saying that right. Right. When we're a share. I'm more animated right now than I was, you know, an hour ago. when I was talking about my golf swing, right? Well, at least you get to play golf. My name prevents me because my friends would have to call and say, hey, do you want a game a golf, golf?

It just sounds too weird. It never happens. That's why I have a theory. Guys with the name Dennis never get to play tennis for the same reason. So I'm going to do with that. No, you've got to look at life as, you know, the good and bad happens to everyone. And we mentioned this before, actually,

as we're getting started, that, you know, it's not what happens in life that counts, but how you react. And that's what I think differentiates winners from those who struggle all the time. They think the world's against them or people are out there. No one's out to get you. And the scheme of the world, you're insignificant. You know, the planets have been going around the sun for apparently about five billion years and they'll continue to long after the human race has probably been wiped off the face of this planet. Just accept that it is what it is and see what you can do. And I always believe, too, in addition to everything else,

it's not even how much money you can accumulate or how much you can spend or what car you drive. it's whether you've had fun and whether you can put your head down on your pillow at night and say, you know what? Today was a cool day and I want tomorrow to be another cool day because if you're not having fun,

change what you're doing. Do something different. There's so many ways of having fun. Amen to that. So, Dolf, being just 17 years old, what's in your future that you're so excited about? I just, I mean, I still love travel. Some people don't travel.

Americans have the lowest, apparently, uptake of passports in the Western world. And I know there's good justification that the country's so big and vast and so many contrasting things to do and see here. I get it. But on the other hand, when you do go beyond the borders of your own country, there are so many other worlds to explore and things you're not aware of. And you can do it just for the sheer fun of it and trying different things to eat and different architecture styles and different national costumes and you name it. But you can also deploy it in real estate. I find I can't go anywhere else without figuring out something that I can bring from America to help them out with their lives or something I bring from overseas to bring here. Japan, for instance, they've got a chronic shortage of space. So car parking is very expensive, very hard to come by. So they've come up with these contraptions, Matt, where you drive your car in a hole in the wall,

it's barely big enough for the car to fit. And it goes on to a contraption. I can best describe it like a ferrous wheel, but instead of being circular, it's sort of squashed together. If you know what a part of Noster elevator is, it's like that. It just goes up and down. And as you put your car in, you get a car,

credit card size card, letting the system know where your car is. So when you come back, no matter where your car is and that Ferris wheel, you put your card in and it pops back out. And now you can fit 80 or 100 cars, whoever tall the thing is, into a space that's two and a half car widths wide, one car length deep and as tall as that blank rear end of the building will let you go. It's far more efficient than the parks we have here. Would it work in Phoenix? No, because land is so cheaper we build out rather than up. We've only got about 20, high rises in Phoenix. Would it work in New York or Paris or London, of course? So I brought some of those machines back, not personally, but I've organized for them to be installed here, and they

work well. But it goes in all directions. So part of the wonder for me of travel is just seeing how things can be done differently. And I'll give you another example of an anomaly that I haven't yet rationalized. And that is, you know, most homes in America have air conditioning. But here we have with a central air conditioning plant, usually on the roof or in the attic, and then ducts, ducted pipes going to all the rooms with little outlets. Nothing right or wrong with that is just the way it's done for 99% of homes in America. And yet you go outside of America, and 99% of homes use the same technology, reverse cycle, heat pumps, but they have what's called mini-splits.

They have a little condenser unit outside, and then they have short tubes going into the room on the inside. where your air handler is and it pushes the cold air into the room. And to do a house with mini-splits, you might need five of these heads in a house. Frozen cons of both, of course. One of the advantage of the non-American system, if that one unit dies, you've still got four others keeping the rest of the house cool. Whereas when my AC plant dies at home, my home is sufficiently small, I only have one AC plant.

When it dies, the whole house gets hot. And at the summer, that's pretty brutal. But also, you don't have all the ducting, which is very inefficient. You don't get lesionnaires disease. You don't get dust bill. up. So pros and consens. How can it be that one nation has almost exclusively one system and the rest of the world has another? There's got to be an optimal system. And I just wonder how do these things historically come about. And I think it's just momentum. It's always been done this way. So it'll always continue to do it this way. Until the technology is usurped by something new, the way in a sense that internal combustion cars, no matter what technology, whether you have a turbocharger or a supercharger, it's now maybe going to be usurped by electric vehicles. and they'll in turn be replaced by hydrogen-powered vehicles. It just changes.

Some people are amenable to change and some are not. And what I like doing is bringing new technologies to existing homes to increase their value. That's great. I don't know if you do this or not anymore, but if someone wanted to get in touch with you, what would be the best way for them to do that? Oh, gosh. I mean, if we open the floodgates,

I wouldn't be able to do anything than answer questions. But we do have systems. So I've got a website called Dolph Live, D-O-L-F-L-L-I-V-Dolf Live.com. And there I'm always giving away things. I'll either give away books. And right now we're giving away a course whereby you can just come in and listen to information on real estate. It's my way of sharing. And beyond that, we have programs where I mentor people.

Sometimes I like next month I'm flying out to the UK to spend three days with a client who wants me to help him go to the next level. So there are all kinds of mechanisms for doing that. but probably the best way is to go to either my website, Dolf deroose.com, but more specifically, if you've got things you'd like to participate in Dolf Live, D-O-L-F-L-I-V-E, dot com, and that's a way of, you know, getting more interaction. I love this stuff.

I love sharing why real estate is so good, and I'm sure you've got it too, Matt, but when you have a live audience, and sometimes, and especially in years gone by, Matt, because they did look quite young. I know that I put on an event saying no matter what was charged, They had $20 ad or $2,000 head. They would sit there with their arms folded and say, oh, my God, we paid money to listen to a kid.

And you could sort of tell that was the first reaction. But then after a while, when they've had sufficient ideas that they think, yeah, we can try that, we can deploy that, we can do that to existing properties we own. Or this is how we might. Suddenly, you can see the light go on inside their head, and that makes it all worthwhile. You can't describe the pleasure you get. I'm sure you have it too. When someone says, you know what, I stumble.

but across you two years ago, 20 years ago, whatever it is. I read some of your books. I didn't think I could do it. But I went ahead and now look at where I am. In fact, it reminds me if I may share a story. I don't know how we're doing for time. So I was doing an event in Fiji, which is this idyllic country in the middle of the Pacific. And we had about 2,000 people in the audience. And it was the first time that my parents managed to come in to see me speak live. And I'd been doing it for years already. We just lived in different parts of the world. So I had them in the audience. And it was quite funny because there was one guy. He was a New Zealander who stood up. And he said, Dolph, I followed you. I read your books. And I managed to accumulate five houses. But then my

wife threatened me and said, if you even think of buying one more house, I'm going to leave you. And at that point, the audience went completely silent. And that's not easy to in a room of 2,000 people, but they went quiet. And I said, so, you know, what do you say? I said, so what happened? He said, well, I went ahead and bought it. And you'd think that being a room full of real estate investors or potential investors, that all cheer and clap and that sort of thing, no, the room just stayed completely silent, zero reaction. It was as if it was frozen in time. And I posed the question that was on everyone's mind. I said, okay, but what happened with your wife. And he hesitated and she said, she now supports me 100%. She's right here now.

We now own 10 properties and I can't thank you enough. And with that, the audience just roared into rapturous clapping and laughter and all that sort of thing. And as, you know, I couldn't have scripted it better. But for my parents to experience that, that, hey, you know, our kid is changing lives, even if it's only this one. That sort of makes it all worthwhile. That's why we do it, I think. We get the odd email or whatever that makes us think, hey, this is worthwhile. We change someone's life forever probably. Yeah. I have a handful of students that I know.

We haven't compared bank accounts, but I know they're doing far better than I am. And they weren't when we met. And that's just like, that's a glorious thing. That is just remarkable that, you know, we get to participate and create that. So not every day I get to talk to a living legend off. It's been an absolute pleasure. I've enjoyed every second of it. I'd love to stay in touch.

I'd love to do it again. Well, thank you. I enjoyed it too. Yes, let's do it again. Let's stay in touch. I'm sure we've got many stories we can compare notes on. For sure. I think we could go on forever.

I looked at the time. I guess we have been doing this for a while. Let's leave, I got a set of questions here, and I didn't ask any of them. But there was one here that I wanted to ask, which I thought was kind of good, because people talk about the cost of education.

And then, you know, there's a little bit, I don't know, say a stigma or whatever. around an education where you don't actually get a degree or they don't have a job placement program and stuff like that. And I always share with people how many lessons I've learned that were so much more expensive than the education. And I did because the school of Hard Knocks can be very, very expensive. So if we could share, like, what's your biggest, most costly lesson that you just hold

really near and dear to your heart and valuable? And like, thank God I learned that. do you have a mistake or just a lesson that was just like worth millions? Yes, on several levels. I mean, firstly, I agree with what you say. And people do think education is expensive. And in America, it is expensive to get a college education. You pay for it.

And most countries, it's free. I spent eight years at university. I talked to that PhD, electrical engineering. And my tuition fee, I think I had a registration fee of $300 a year. That was it. I mean, it's an investment. the government makes in its people to make your country more educated. And I will say this, it's a well-known saying,

but if you think education's expensive, try ignorance. That will cost you a lot more. And that's what you alluded to. You've made mistakes. I've made mistakes who, even with the GFC, I was financially totally deployed. And so I didn't have a reserve of even 100,000,

little in 10 million to put into real estate, because I could have traveled it within four or five years. But I should have been bolder in just, figuring out way of scraping money together, of convincing other people to join me, of getting investors. And I was too timid because I thought prices have gone so low. What if it is the end?

What if it's the Irish potato famer where it just dissolves and disappears? Silly thought, because people have to live somewhere. So I know when I say these things, you know, it goes and fits and starts and every peak is higher than the previous peak. It's easy even for me to start disbelieving it when things get bad enough. but that's where age does help you. Right now, people are panicking about 8% interest rates, and that is pretty bad compared with what you and I used to.

But I'm old enough to remember, and I might have mentioned this, that I paid 23% interest at one stage. And I knew that in all probability interest rates would eventually come down. They wouldn't continue to go up the way they did in Argentina or Israel, for instance, were at one stage, interest rates hit 1,000% overnight, right, for on-call rates. But I knew that in all probability, that come down, and they did. And so we tend to survive all these things.

So the lesson is when you seek the advice of someone, ask people who've been there before you. And often the pundits who give the advice, like we've heard so many predictions today from, I should say this year, right, today I mean generically, but this year so far, we've heard so many predictions from well-known economists that the market's going to tank more severely than it ever has. Inflation's going to run through the roof and all that. And so far it hasn't happened. And eventually it will.

And then those same people are going to see, I told you so, I called this. But they call it every year for eight years. And then once every eight years it happens, and they try and get credit for the seven years that they called it wrong. I'm making a prediction now. My market's going to have a massive downturn. I'm just not going to say when. I think it's got so room to move first. I think we're holding our own.

We've hit inflation. It's way back on what it was. And interest rates are still higher than I'd like them to be. but I think they're going to start creeping down. And even if I'm wrong, and someone listens to this in eight months' time, say, and the market will have crashed by then say, just wait another five years. Don't sell what you've got in a matter if you can avoid it,

no matter how low it goes, because eventually it's going to bounce back up so long as we're in a country where the population is still increasing. Yep. You know, I say if you would have bought in 2008, the day before all hell broke loose and it crashed, you've still almost quadrupled your money if you just didn't sell.

Absolutely. The day before the crash, not at the bottom of the crash. Yeah, the day before. Yeah. Yeah. Well, Dobb has been a pleasure. Let's do it again. Thank you for being here.

Sounds good. The pleasure's been mine. Thank you so much. And yeah, I look forward to the next time we connect. Thank you. Awesome. Take care. Stop spending countless hours on busy work

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Back to the show. The Great Reset could be underway. And they're not coming through the front door, but rather through the back with a Trojan horse-style stimulus package. Because they know the country could sure use it. And most of the country would gladly take it. But could it be a trap? Because this isn't your usual check-in-the-mail kind of stimulus. Remember those?

Yeah, this is not that because that would be way too expensive for the government. Recently, they've had a big aha moment to stimulate the economy without spending one dime of their own money, but rather spending yours. You see, according to the Federal Reserve Bank of St. Louis, there is more than $31 trillion in U.S. home equity as of the fourth quarter of 2003, and they want to give you access to it to at least two trillion of it through a massive reform of secondary money. mortgages. And it's almost assuredly going to happen late summer, early fall, just in time for, you guessed it, the election. But by offering such a large amount of credit to homeowners, and then selling that credit or debt rather, again on the secondary market as mortgage-backed securities, remember those? Stock market tanked, credit dried up. Yeah, we could see after the election

dust settles, a repeat situation similar to the 2008 financial crisis, where, you know, it was a lot of many people lost their homes to the shenanigans that were going on in the secondary market. And that doesn't even take into account the current economic pressures that people are experiencing, like record high credit card debts and rising bankruptcy rates, which has painted a picture of an economy really on the brink of collapse already. And people are almost assuredly going to take the stimulus, and as much as they can get to pull through what they're currently dealing with. Makes sense.

I don't blame them, because this move, it could help a lot of people, but it comes with consequences. You see, with inflation on its way back up, and middle-class Americans already stretched thin, this new policy could push many into a precarious financial situation. You see, the idea of tapping into home equity to stimulate consumer spending sounds like a good idea, maybe, or not, because it also means taking on additional debt.

And like first mortgages, second mortgages, also use your home as collateral. Now, this increased consumer spending. I mean, this move would likely cause, I mean, would almost certainly erase all of the Fed's progress on decreasing inflation, reversing it in the other direction. And this could lead to a dangerous cycle of borrowing, spending, and borrowing to repay what people spent, ultimately increasing the risk of losing your home if the economy should take a downturn. And if inflation takes off again, it could very quickly transform your most valuable asset, your home, into your biggest liability. and ultimately losing it altogether. But could that actually be the plan?

Could this be a setup leading to financial instability and creating a tsunami of foreclosures? I mean, here's what I mean. We already know private equity firms have been carving out an increasingly substantial share of single-family homes. Black Rock, Blackstone, State Street, Vanguard. They are robbing Americans of their ability to own homes. According to RFK, one of them has a goal of owning 60%

of all U.S. homes by 2030. And then even Jeff Bezos seemingly came out of nowhere, came out of retirement to get into the single-family home game himself, raising and driving concern about the potential consequences for housing affordability and market competitiveness. And depending on how deep you want to go with the conspiracies, question you want to ask is who is going to own all of these second mortgages when Americans start to default? The whole idea of owning nothing and being happy, that could be happening sooner than we expected if we don't stay awake. And then you've got to wonder, are we even being told the truth about any of this?

How do we make a decision about anything? I mean, if you look at reliable sources like, say, a Newsweek or a Redfin, you know, one source might report dropping home prices, while another claims that prices are stable. Inconsistencies like this, they've got to make you wonder, right? I mean, moreover, certain foreclosure data, such as VA data and FHA loans, that stuff, it's no longer being reported. And you've got to wonder why. Why is that data now being withheld? Are we getting the full picture?

And there's likely to be a disproportionate impact from the stimulus plan on middle-class Americans because they're among the most vulnerable right now to this economic pressure of additional debt. You know, there's a real fear that we could be on the verge of witnessing the greatest transfer of wealth in history when Americans are given the ability to unlock the equity in their homes and then deploy that into the economy. The stakes, they are incredibly high, and the fear of financial ruin is real. So what do you do? What can you do? Is there any way for you to navigate this without falling into financial devastation? And as bad as that may sound,

this isn't time to panic. It's a time to prepare and strategize. We've been given a warning. The risks real, it's true that home equity could be lost and your financial burdens could increase if you play your hand wrong. But if you play your hand right, this can be a chance to really unlock new financial opportunities. For example, secondary mortgages, when used wisely, they can be a powerful tool for financial growth. Imagine tapping into your home's equity to invest in a new business or additional properties, the types of things that actually benefit from higher inflation. This can diversify your assets and actually reduce risk leading to long-term financial stability. Think of it as leveraging what you have to build something even greater.

This summer, ahead of the presidential election, we're going to see significant changes. Timing is everything, and being informed now means you connect quickly and strategically. The key is to stay ahead of the curve and use these changes to your advantage. Yes, I know that the stakes are high, but so are the potential rewards. know the current economic environment, it's ripe with opportunities for those that are ready to take informed action. Economic shifts have always created incredible opportunities for those with their eyes open and willing to take calculated risks. Savvy investors have historically turned crisis into moments of substantial growth. By staying informed and proactive, you can turn potential risks into your greatest wins.

And as bad as the last housing market crash was for so many people, the recovery saw, the rich get richer. And this is the game, the elite, they're going to play this game again. They're going to make the same strategic moves and win all over again. So here's what they know and what they're going to do. They're going to take advantage of these secondary mortgages because when used wisely, they can be an exceptional tool for financial growth as opposed to a liability. All the Dave Ramsey fans are going to assume it is. But that could be a dangerous assumption when you consider many successful real estate investors began by leveraging home equity to finance their first rental properties. By using the equity in their primary residence,

they were able to purchase income properties to help pay their day-to-day bills while building wealth while they slept. The real play here of the elite this time around, and this is it in a nutshell. That's to borrow a depreciating asset money from your secondary mortgage to purchase and income-producing appreciating asset real estate. Now, if that sounds cliche, I get it. There's nothing wrong with ignoring this advice and playing it safe. I get that feeling. I understand.

I mean, we're heading into some seemingly really scary times, but know that there's a substantial risk in playing it safe. You know, taking zero risk and hoping for the best is potentially a bigger risk than taking a calculated one. And here's what I mean. If people dip into their home equity by way of these second mortgages, inflation, it's kind of skyrocket when all of this money hits the economy. I mean, we just saw it happen during COVID.

It's not going to be different this time when more money is pumped into circulation. And all the progress the Fed is made, fighting inflation, is going to be undone. Groceries are going to rise in price again. Gasoline is going to rise. Restaurants and everyday services, all of that stuff is going to continue to go up. So if you don't tap into your second mortgage and put that money to work, you better have a plan to increase your income so you can keep up with inflation. Those on fixed incomes, hourly wages, salaries without bonus potential,

those are the people that lose the most during inflationary times. You don't even have to take my word for it. I mean, just look around, and you don't have to look too far either to see those who are hurting right now. They all fall into the fixed income category. You know, when it comes down to it, most people, they just won't be able to outwork inflation. But if you play your hand right, your money can. Ignoring this opportunity, it means missing out on a potential financial windfall. But what's worse, ignoring it and doing nothing means getting crushed by rising prices.

So the key is to stay informed, plan strategically now, and be ready to take action, with a strong understanding that taking no action could be the worst thing that you could do. So subscribe to stay in touch, to stay in the know. And I'll see you next time. All right, 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. You didn't know home world, we got the cash flow.

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