Financial Friday: Hedge Fund Houses

0:00Welcome to the Real Power Family Radio Show, brought to you by Family Success Triangle. Where we talk about how we achieved financial freedom in two years, by the time we were 30. If we can do it, so can you. We will bring you the people who can help you achieve financial freedom, time freedom, and location freedom. Learn how we integrated our business, investing, and homeschooling into everyday life. And now, here is the Real Power Family, Eric, Lila, Devon, and Ethan. Welcome to the Real Power Family Radio Show, I'm your host on this financial Friday. And as you can hear, I'm a little stopped up. So Lila and Devon are going to run this show today. Take it over, Lila. Well, Trump came out with a big announcement where he wants to prevent institutional investors from buying single-family homes. And there's so many questions that that brings up. Because he wasn't very specific in anything he said, just that he wants to keep larger investors

1:04from buying these homes to, quote, unquote, make it more affordable for people to buy a home. Which I get, like a lot of Devon, Devon, your generation wants to buy homes and they don't believe they can afford to do so, correct? Yes. And yet it's not just the price of the homes, the price of the homes and the mortgage payment is actually easier than it was 40 some years ago. So that's not the real problem. And yet that's what they're going after. And even if that was the problem, mom, how big is these institutional, the black rock or, should I say, black stone and any of the others? How much does that actually impact the price? How many of those actually are there? Well, you know me, I'm big on research. So I literally took a couple hours over the weekend, last weekend, and I was looking up a whole bunch of stats. And I wanted to know like, how, like who are the biggest institutional investors? How many homes do they own? How many homes are there total?

2:04Like I went into a deep dive of this. So I think we need to go over this today because I think that makes a big difference when you actually see the numbers and go, wait a second, I know Trump says this is the solution but I don't know if he's really trying to address the actual problem. I think he's trying to address one of the symptoms of the problem. It's like you were saying it actually should be easier for your generation to be buying a home and yet it's not, which doesn't mean there's not a problem. I just don't think it's the one Trump thinks it is. If the home price isn't the problem, like I've talked about in a couple of previous shows, then well, what could it be, mom? What else are some of the biggest things that are the hardest for people when buying a home? Well, we've talked before about the cost of insurance going up, the cost of property taxes going up and all of this makes a huge impact when somebody's buying a home because it's not just the price of the home that makes the difference. It's being able to keep up on everything every month. And I think we've seen, I talked about it before, but we've seen a lot of cracks in the

3:07housing market, people literally walking away from deals in progress because they realized that if I close on this home, I'm not going to afford it, not because I couldn't afford the mortgage, but I can't afford everything else that goes along with it. And I think that's causing some people to panic and walk away. So we're actually seeing deals fall apart before they ever get to closing because people are realizing what it's going to be like after they close. And I think that's part of the problem. I don't know that that's all of the problem. But do you have any numbers on how many of those or what percentage of... Let's go into the actual meat, so to speak, of some of the problems that are out there. Because my question was when I first showed what Trump wanted to do, how many single family homes are these institutional investors buying? Now, obviously... Before you get into that, I do have something to add here. Okay. Trump said we need to do something about this. That's very reminiscent of when he said we need to do something about these evictions.

4:08People are dying during COVID during the end of his first term. And that led to our lawsuit against the CDC because the CDC arbitrarily came up with the rules, which then we beat them in federal court that said, oh, you're not allowed to be victim to anybody. Well, of course, we can't run a business with that eviction. It was bad enough they shut down the judicial system. And I'm thankful that people didn't go to arms and say, hey, if the courts aren't open, we're handling this on our own. You're giving us no other option. It could easily have gone that way. And I think that the further they push, the more likely we are to go that way. And I'll specifically talk about some of the, you know, I'm thinking about some of the different places in France, in a handful of different European countries. And it looks like we're getting there in Minneapolis and maybe other US cities. So it scares me when he just says we need to do something about this. But he did follow up and say, we're going to all tell you what we're going to do or I'll

5:12make an announcement in Davos. Now, Davos is the World Economic Forum's meeting in Davos, Switzerland. That's coming up on the 19th through the 23rd. So all next week, which means we only have about three days to wait to see what he's going to say. That being said, the Republican Senator from Ohio, Bernie Moreno, who we supported. We were there helping, I think Devon and you guys even knocked doors and stuff for him made phone calls. He goes, yes. So I'll write the law. Now what scares me is we have another, he's the Senator in Washington, DC. He's our, you know, national. But in the Ohio Senate, isn't it blessing in the Ohio Senate that came up with this outrageous law? And he was talking about a year or two ago that says anybody that owns 50 property properties or more in any number of entities. Well, that means you have to bring back the corporate transparency act, which is just

6:13absolutely horrible and thankfully Trump got rid of. But this was passed years ago because they knew there'd be so much outrage and it didn't take effect until the next Congress and president was in office. Well, they got rid of the beneficial ownership requirements, reporting requirements where you had to directly report yourself to the financial crimes enforcement network. There's absolutely no way, unless they have a government agency. And of course, I believe every company should have a point of contact. But I don't think the government needs to know. I am absolutely certain that I don't need to know every single owner in the exact ownership percentage. I mean, what happens if we own stock in a reach and that reach own single family homes? If it owns, you know, 51 homes, do we get fined? Because that's the way blessings law was written in Ohio that thankfully never even came up for a vote. But if they try and do that, they're going to have to bring back so they can figure out exactly who owns every single thing.

7:15This is going right along that we want total control. We want to know everything about you because when we know it, then we can confiscate it and take control of your lives. Then this is the, we're leaning into a CBDC. We've got to get rid of cash before they can take control and make it all digital. Well they have to get rid of privacy before they can take control and enforce what Trump is talking about. And I think that even if they do get something to pass, which I'm not convinced they will, I'm hoping that even though this was a Democrat-based thing, I think the first time I heard it's really a Democrat move. Now Trump's saying it, but then again, he's been a Democrat for most of his life. I can't believe people are still calling him the ultra right wing when Lucas on his team, Tulsi Cabard, Elon Musk, we're talking about Kennedy, the Democrat of Democrat. This is not one extreme or the other.

8:18They're promoting a bunch of the things that the left wanted done a few years ago. So it'll be interesting if the Democrats in Congress come up and say, oh yeah, that's a wonderful idea. We've been wanting to do this for years. Or if they say no, we hate you, Trump, and we're going to vote against you no matter what you say, even if we think it's the best thing in the world. But this was a traditionally Democrat idea to get rid of those big bad hedge funds. And everybody knows that the hedge funds, I mean, if that's what they're saying at least, the hedge funds are the only reason that your generation can't buy a house, right, Devon? Or at least that's what a lot of people seem to be saying, it has nothing to do with the outrageously sky high property taxes that went up 40% last year and are going up again this year. It has nothing to do with the skyrocketing rates for insurance. It doesn't even have anything to do with the cost of labor. You know, they just raised minimum wage to $11 here. Remember when we were so proud, we didn't pay anybody less than $10 ever.

9:21But minimum wage is like six, maybe seven bucks. And we used to, you know, brag about, yeah, there's nobody that works for me. That works for minimum wage. We don't have anybody at less than 10, which if you think about it, that was 50%. We're not talking a little teeny bit more. We're talking 50% more than minimum wage. And now we're still like that. I doubt there's anybody less than 18. So we're even hot, we're paying even more today as a relation of minimum wage. That's what they're, I don't know, I'm losing my mind and thought. Take over. Well, we can continue this right after this break. I am Ethan Wolland from the Real Power family. My book The Treehouse is a story about a group of teenagers looking for a place of their own with some scrap wood and a lot of help from their friends and neighbors. They built a treehouse, relationships, and a dream that turned into a business. Get a copy of The Treehouse by Ethan Wolland on Amazon today.

10:23And don't forget to listen to my family on the Real Power family radio show on the Brushwood Media Network weekdays at 7 a.m. Eastern time. Welcome back to the Real Power family radio show where home prices may be going up, but they're not going up nearly as fast as people seem to think. And yet when the bigger problems is the outrageous taxes, the outrageous other things, insurance going up and how many other prices going up, that's what's going on. Host the building supplies, costs some roofing, cost the labor, look at the middle way, just the labor. When I am paying my laborers a significantly more than a minimum wage, but it's went up significantly in the last 10 years. And my question is the tariffs could not have helped the cost of building a home or repairing a home or renovating a home. So how much is that playing into it that the government doesn't want you to be questioning? I haven't been able to put, we started putting metal roofs on. I thought they were better.

11:23I haven't been able to put a metal roof on since Trump 1.0 of his tariffs on steel. It just got to be too expensive. So I have a story, an analogy, and I shamelessly stole this from somebody. I think it was Alan Hebrard or Mike Maloney if I am, but I'm pretty sure it wasn't one of their videos or possibly Ron Paul, I've listened to so many people were talking about this. So I wish I could give exact credit to where I heard, but I'm sure massively paraphrasing. So we'll tell this a story between Devon and me. Devon, you own a fast food joint, we'll call it subway because that's where you like to eat. Everybody knows. Well, we'll call me the rich guy compared to the people that eat it subway. You know, you teenagers, I probably make significantly more money than you. What the government's going to do to help you? Have you noticed how expensive subway is getting and how much you spent on it last year? Yeah, most of the subway places, prices have gone up some. I think we have a crisis and subway prices.

12:26We need to declare war on subway prices. No, because that's a politician's idea. Now Lila, you're going to play the big bad politician because you know, so what happens is I come in and I buy subway and I buy enough for my whole office. So Devon, does that mean you have to wait in line while they make 10 subs? Yeah, it might. Yeah. And I pay with a hundred dollar bill and the girl behind the counter immediately says we can't take 50 or a hundred dollar bills and I have to explain to her. You understand why they have that rule because you can't make change. But being that I'm a hundred and fifty two dollars worth of stuff, doesn't it make sense for me to give you a hundred and a fifty and then a really small bill you have to make change with and after we argue and she calls the manager, this really happened, by the way. Wow. And the manager, I'm like, had to explain to them, you understand why you can't take that I don't have a 20s or whatever.

13:27But I have a hundred, I have a 50 and I have a 10 and the bill is a hundred and fifty two. So you do the math. Would you? If Devon bought a five dollar sub, would you let him pay with a 20, aren't you giving him more change? Hmm. Okay. So now I've wasted more of your time. So also big bad rich people are obviously ruining the entire market of Subway. But do you really think that if we come in and put in that big order every day, it's going to, they're going to raise prices because I can afford it and you can't? I don't think that's what's going to happen and I know where this analogy came from. It's a George Cameron, by the way. Thank you. Yeah. I was talking about McDonald's, you know, and selling a big Mac and if rich people buy big Macs, does that make the price go up for everybody doing the van rich people from eating a McDonald's? Not that I think they would eat it McDonald's, but technically that was his analogy. Warren Buffett did. But it all comes down to the Subway in this instance is charging based on what their input costs are. They're not charging based on how many people walk through the door.

14:29And if they only sold rich people, then their customer base would dramatically drop. They would have to shut down many branches. They're going for the most net income. They're getting as much as they can for a sub while still providing as many subs to as many people as possible. They have a floor of what they can charge based on what's it cost to make bread, pay the electric bill, pay the rent by the meat and she's in vegetables. Right. If you pass increased minimum wage, you've got to charge more to pay the staff put in the meat and cheese on the bread. So there's a floor you can't sell a sub for less than the input cost of the sub. But then there's also a maximum amount they can charge. And when the maximum amount drops down to the same as the minimum amount and especially if it goes lower, the business shuts down. And that's where we had hardies. They shut down all but a couple of hardies all across the state of Ohio. Completely redesigned and came back and this is 10 or 15 years ago, but I said, why

15:31did you shut down? I was talking to some managers that everything in my preview, we were losing an average of $50,000 a year per store. And it was ironic that one owner in Strasbourg and New Philly, they owned at least those two restaurants. They were doing very well in those two state open, which are the only hardies. They used to be hardies everywhere, just like McDonald's, at least around here. So one person made good enough decisions or had enough, whatever it was, they kept theirs open. But almost all of the others, I mean, we had to drive 40 minutes north before we could find one. So yeah, you can't sell a good for less than the input cost. And it's that bottom line that is pushing up the housing price. It's ridiculous to think that BlackRock coming in and it's BlackRock. Blackstone is the oil sample people, Devon. We love Blackstone. We don't necessarily look like BlackRock. I'm confused the two. Although, let me double, Blackstone may be the oil people, but there's also a Blackstone

16:32related to BlackRock, which as I recalls the ones buying houses, I'm going to go double check that. Well, I like the people that do the oil analysis. That's wonderful. Thank you, Blackstone. That Blackstone is good. Blackstone audio that helps with the one Atlas shrugged, that's good. It's just the Blackstone that's related to the BlackRock people that were not a huge fan of that's the issue. And are they even keeping the Blackstone name since there's a smurger with TriCon? I don't even know how that's affected. Oh, that's the merger. Okay. I haven't heard of that yet. What's going on? Well, that's it's Blackstone, but they're merging with TriCon and that's, it'll give them, I think, 55,000 homes when the mergers are done. All right. Well, whoa, stop right there. Yeah. Okay. You steal in the thunder for the next episode. Oh, sorry. Or at least the next section of this episode. Okay. So the only way that these big bad hedge funds, and again, I personally don't think hedge funds should be in the single family home business.

17:33And nobody cares about my opinion. I think way more than anything that either we have free market capitalism or we do not. And as soon as you tell somebody they can't buy or sell something, well, you end up where they are in New York City. And that is just a whole ball of mass right there. Yes. So the only way, if a rich person came into subway and bought a sub, they could raise the price up to what the rich person can afford, but the average Joe cannot is if the rich person bought enough subs to pay for all of the underlying cost of the subway, makes sense. So if they paid $100,000 to get a sub, which would be ridiculous, they would literally go to Quiznos or any other sub shop. But if they did that, they'd only have to sell one a month or however long. And then they'd be like, oh, well, you just call us and we'll open our doors the day you want to come in and we'll give you, you know, the highest class treatment ever because

18:36we only need to sell one sub a month. But being that they don't, they have to sell 100,000 subs a month with a $1 markup, then they can't adjust the price up to what the highest can afford. They have to adjust it to where the most people can afford it. The only way that can change is if the highest bidder, the hedge funds in this case are literally compressing the demand. If they have so much demand, they're eating up all of the supply. So it's a supply demand issue. So right after this break, we're going to ask Lila, as the real estate broker and the one that spent all weekend researching this, just how much demand, what part of the supply are they absorbing? Because if they're absorbing, you know, 90 percent, it's all their fault. If they're absorbing 50 or 60 percent, maybe they're having a fact. But if it's, you know, less than that, I don't think it's going to affect it all that much.

19:37We'll be right back. Have you or a loved one been affected by inflation? Yes. Well, we have the product for you. Hard assets that hold their value like the real power family silk around are available at American Gold Exchange. You can visit American Gold Exchange at AMERgold.com or by calling 1-800-61-393-23. Welcome back to the real power family radio show. Today we're talking about Trump's announcement to take institutional investors out of buying single-family homes and whether that is actually going to solve any problems or make things worse. I mean, I did the math over break. Yeah. You said 55,000 homes on my godly. That's a lot. Oh, owned by this big bad wolf of a hedge fund, man, 55,000 homes. That's like 70 percent of the city of Canton. It might be pushing 80 percent. So do they own 55,000 homes in Canton, Ohio?

20:40No. This is across the U.S. So it's not 55,000 homes in Stark County. No. It's not in the entire state of Ohio because Devon figure out how many rental units there are or how many housing units total. There are in Columbus, Ohio. It stretches over four counties and see if you can figure out or just take what the population is if that's easier. Let's see. They say that these big bad corporate people they're going after own as many as 20. 20 percent of the rentals just in Columbus, Ohio. And I believe that the total of 55,000 is way less than the number of housing units, 20 percent of the housing units in Columbus units. That's one of the things I had to be looking at is how many single family homes do we have in the entire U.S.? How many of those are rentals? How many do these institutional investors? But of course, there's the concept of what is the large investor trump wants to go after?

21:42I mean, is this 100 units or more? Is it a thousand units or more? Is it only if you're a hedge fund? Like, what's their definition and they really haven't come out and said that? All right. Columbus alone has around 420,000 housing units. So of every single property that BlackRock owned was in the city of Columbus, it still would be 12 percent. If I did the 11, 12 percent, there's no way it's 20 percent, which is what they are saying. It's 10 percent across the board and 20 percent in places like Columbus. So that is absolutely a lie. Well, I'm seeing that a lot of places, Eric, one of the things that was sent to us was a report. It was completely and totally based on the Lincoln Institute of Land Policy and Center for Geospatial Solutions. And they did this survey where they looked at 500 urban counties and concluded that of the residential parcel ownership, 8.9 percent were owned by corporations. And I just laughed because if you look at how many counties there are in the entire

22:47US, there's 3,229 counties and they only looked at 500 of them. And they specifically looked at just certain urban ones. Well, if I if I pick and choose where I'm looking, I can make results look like anything I want to. Did you do that? I did not. I was not able to find as much information as I wanted and I didn't take the extra time to keep looking. So I was I continued looking at nationwide. I do have all those stats. But if you look at Carroll County, Holmes County, which are two of the counties right here where we are, I bet that there are very few corporate owned. So let's break down. What's a hedge fund? Fred ran a hedge fund. He's a good friend of mine. And it was this dinky little thing with maybe a dozen people or less. I considered starting a hedge fund. And all that means is we pay $10,000 to put out a document that says, these are all the ways you're going to lose your money. And if you're still stupid enough to give it to me, don't sue me. And then I can kind of co-mingle their funds and don't believe me.

23:49Ask a lawyer before you do get really good legal. This is not something you throw together on your own. But we were considering doing that and I decided no, I'd rather just, you know, have individual partners where there's no more than three or four of us. But if we have me and my wife and then my buddy and his wife, well, there's four partners. Does we own it under the structure of an LLC because it's absolutely ridiculous. Nobody in their right mind should ever own a rental property in their own personal name. My kids never owned it in their personal name. They have an LLC. So what if, you know, Devin's company, which he is a 90% owner of and I own 10%. It does that count as a hedge fund because there's two owners, but he's my son. Do I have to count the only reason I have 10% is because it's so dangerous to be a single owner of an LLC. Yeah, then it's considered a disregarded entity. Right. And you just, you've got to have protection because literally everybody suits everybody nowadays. And if you own rentals, if you get a handful, you are going to get sued someday for something.

24:53What do we figure out about every 4,000 leases? I think we're a little bit past that maybe 5,000 leases. We get sick. Yeah, approximately. But you've got to, we sign 5,000 leases. So what percentage of the people is that it's so insignificant, but it's going to happen if you have a thousand property. Yeah, that can make a big difference. Obviously, the numbers matter. So the more that you own, the more likely it would be or the longer your time in. Because maybe you only have 100 properties, but obviously that still can make a difference. Exactly. So the way that they wrote the law is if you own any part of any company and you add them on together, if it touches 50, then you're one of the big bad hedge funds. That's the way it was written for the Ohio State Law that never really made it anywhere thankfully. If that's what Trump proposes, which I'm really hoping he doesn't, then we're in trouble. That's going to crash the entire housing market. Yes.

25:54It will be, you think he has a lot of, a lot of lawsuits now, wait until you see when people from both sides are saying, this is ridiculous. It'll be tied up in court forever. There's no possibility. Oh, in the fine, according to blessings law, the way he wrote it, which since he is from Ohio, Marino might, these people don't have any originality. They just still laws that were already written by special interest groups, by the way. And then they wait until there's disaster or a tragedy and say, hey, we're going to read up and pass this and then make you think that everybody in the world is going to die if you don't pass it. That's how they got tarp through, which was the prerequisite for QE2345 forever. And that's what they're going to do here. Oh, we're in a house and they've been building up to this for a year or so. And then Trump trying to say, oh, I'm the, you know, everybody knows he makes his money in real estate, but he has big hotels and apartments. He's doesn't, I don't think he owns single family.

26:54I don't know. Only single family homes is horrible. And the people that own it, yeah, there might be a few thousand, you know, 55,000 Lila said owned by one big hedge fund. Maybe there's three hedge funds doing that. That doesn't even rock. It doesn't even move the needle on prices. I've been saying for months, this is ridiculous. It's only two or three percent. I still stand by that. And now the politicians are saying 10 or 20 percent. That's ridiculous, isn't it? Yeah, absolutely. And again, we come back to a lot of different numbers looking at all of these things. But I think we need to be looking at what's actually causing the problems and not just saying, oh, this is the problem when it's not because the numbers don't match. I even told you while I was researching, every data point I found says this whole thing is wrong. So yeah, anyway, we can talk more about that right after this break. Brushwood Media Network. Ethan, you're known for being the youngest teenager on the Real Power Family radio show on the Brushwood Media Network. You're also known for being quite successful and you're only 15.

27:58How'd you do that? Well, you've always taught me to buy more hard assets faster. And one of those hard assets that I've bought is the Real Power Family Silver Round from American Gold Exchange. Take your real power family Silver Round by going to AMERgold.com or calling 800-613-932-3. Welcome back to the Real Power Family Radio Show. And mom, what other details do you have because we've been talking about housing so far? What else do you have on this or what else are they attempting to do to solve this problem? Well, looking at the numbers, we've got under 16.5 million rental homes in the U.S. And about 10% of those are vacant is what I'm finding on multiple different research sites. So if we say they leave about 14.5 million homes, of these 70% of them are owned by really small landlords. So that's the bulk of it. And there's another 15.4% that are owned by LLCs, LPs.

29:02LPs are probably somewhat bigger landlords, but probably still- So you're telling me 70% of these are owned like, I own two duplexes. Yes. Stop following me. You really can't retire on less than 30 to 50 houses. No. No, but the bulk of landlords, they're, you know, 10 to 20 units. They are not huge. 20 units or less is pretty small. Yeah. Considering that, you know, we've got not only our family, but Devon's 18 now. Yep. Yep. Uh, and how many retirees are we had to, literally all of our partners are on the verge of retiring or recently retired? A lot of them at least. And this is their supplemental income so they don't have to live on so security. If you go after them, are they going to get punished because we own more? I don't know. I have to look. It depends on what's their definition of large landlord. If we blessing wanted 50 units, well, that 50 homes is, you know, not that big.

30:04We know lots of people in our area, they're small, mom and pop operations that have around 50 to 55 units. And if you look at it, you really, when you have two, you don't know the laws so you're more likely to break the fair housing laws and all these other things. True. The one guy that owned one building and asked you to manage, we quit after like, two months because he demanded the fair housing law and we're like, no, we're not allowed. He goes, well, I don't ever want children living upstairs. I go, that is like the definition of breaking familial status laws. Uh, so no, we can't do what you're asking. How about we just cancel the contract and you take back management on your own? Once you get the people that have 30 to 50, they actually know more and are better. Absolutely. The educated persons, the one you want that's owning the rentals because if they know the laws, if they know how to do things appropriately, if they can be professional, there's so many less problems. I always said the most entertaining part of eviction court is watching the uneducated

31:06investor get up there and say, oh, yeah, well, she stopped paying her rent. So I took out the bathroom, which is some of the things that you hear. I mean, they do crazy things because they don't know what they're doing. You want the experienced educated person out there. You want people who know what they're doing, which is why getting educated on it from the right people is incredibly important. And mom, you have, uh, like you've had to learn from a lot of different people over how many years plus your own experience to be able to get to where you are now. Absolutely. And that's one of the things that one of the things I always would recommend to somebody that's new to investing is either find a mentor or find a management company because you've got to have the people that know what to do, how to do it, how to maximize profit, how to keep tenants happy, how to do all the things that take a while to learn if you're just getting started. So you've got to have that education and that knowledge behind you in order to make this all work. So they've made all these big investors out to be some big bad wolf, but they were the

32:09ones that really rescued us during the great financial crisis because when people needed to sell their homes, those were the ones that could buy. And as they were plummeting in value, they hit a bottom around 2012. Without us, I mean, we were out there buying and we had to regroup because we had a really bad year in 2007. Yes. But once we regrouped and got things settled down by 2010, we really started expanding. And we weren't big back then. We would definitely have been nowhere near their 50 unit limit. But then we grew massively in that time because nobody could get alone. And we found a way to get private lenders that wanted to make a better than average return, taught them how they can loan us money. We'll put a first mortgage on the property and you're just like the bank at the same time that, you know, these lenders believe they should be getting four, five, six percent interest from a bank with no risk.

33:11I said, well, you, there's some risk, but at least it's secured by a mortgage. And, you know, I'll pay you six, seven, eight percent. I think back then we were even paying nine and 10 percent to some of them. And they're like, wow, that's way better. And if he doesn't pay me, I get the house. So we were helping the retirees that have been told their whole life. You should get a reasonable return. And now the banks are paying zero or, you know, less than one percent. And we're saying not only can get the six percent you thought you deserved, but we'll pay you a couple more than that. So we're helping them out and we're using that money to go and buy single family home. And what homes do it? The ones that no homeowner could ever buy. Yes. How many people your age do you know, Devin, with the exception of your brother and your friends like Tyler and Paul? Yep. How many 20 something year olds out there could go in and buy a rundown house like your mom and I did the warehouse when we were in our early 20s?

34:11Not many people or at least not many of it would be willing to do it even if they could. You've gotten bank loans now. How many banks will loan to somebody on a broken down house? Have you ever found one? I mean, they might loan on it, but they're probably not going to loan very much on it. They won't even loan. Yeah, I remember when we bought the house on vine, I had to pay $600 out of our pockets, which was outrageous back in 2003. That was such a massive amount of money. I mean, that's a mortgage payment and a half. We had to pay $600 to put in a new meter base for the electric. Yeah, so we could have the electric turned on so we could get it appraised or the bank wouldn't finance it. And I did that even though I didn't own the home and I might not, you know, the whole thing might fall through, I paid $600 on a bank owned home that nobody else could buy. And most people trying to buy their own home, they would not do that. They wouldn't risk what now cost $2,000 before they even bought the home.

35:16And then we had another one, the furnace wasn't turned on. And we were having trouble getting it. We had to turn on the utilities in our name to prove it worked. And I'll never forget that appraiser that ruined the deal, Wendy Fox. And she would not turn in an appraisal. She goes, no, I won't do it. I go, what do you mean you won't do it? I don't know that the HVAC system works. I don't know your furnace works. A new furnace is $2,000. Just take five grand off the appraisal and turn that in. And she wouldn't do it. So literally the bank loan fell apart at like three o'clock in the afternoon the night before we were supposed to close. And that is how I learned to get a private lender in less than 12 hours for the very first time ever. But I've given my word that I would close on that house on South Street no matter what. And I didn't say if the bank loan falls through or if I can get the gas turned on or if the furnace were, no, I said, this is what I'll pay. And I will close on this date.

36:18And so, you know, we had already been passed because the bank had already approved everything. But then they said, no, we can't fund the deal until the appraisal's in and the appraisal's not in. I'm like, what do you mean we're supposed to close tomorrow morning? So I called up to set a company. I said, we're no longer closing at 10 a.m. Give me something later in the afternoon and change it to a cash deal. They're like, okay, where's the cash coming from? I said, I don't know, but I'll have it by then. I promise. Like, you're going to come up with $40,000 and 12 hours. I said, in my bank account balance might be, it's definitely closer to $4 and 400. And I said, yep, we're going to come up with 40 grand and like 12 hours. I guess I'd 15 or 16 then. So yeah, these are the houses that we were buying. And these are the houses that most investors buy. And even with the investors buying this many houses, tell us some of the ways we'll take a quick break. And then I went dev into tell us some of the ways and investors can save a home owner, even if they can't save the home, they can at least not have them foreclosed on.

37:20So they have terrible credit for the next how many years we'll be right back. Hi, this is Eric Wohen from the real power family and best selling author of family success triangle, learn how my wife and I became financially free. By the time we were only 30 and how we taught these sickers to our kids. So they could do the same without any of our money or credit when they were just teenagers. Pick up a copy of our book, family success triangle available on Amazon today. And don't forget to tune in to the real power family radio show. Weekdays at 7 a.m. Eastern on the brushwood median network. Welcome back to the real power family radio show today. We're talking about housing and Devon. Can you tell us ways that investors can save a home owner so that they don't have a foreclosure or other problems? Yes, there's quite a few ways and one of the more common ones I've heard is just if there is some kind of either major expense or something that's been building up over time, say that somebody got behind on their mortgage or their taxes or anything else,

38:21investor can and they frequently do come in and buy those homes from the people so that they don't have that foreclosure on their record. So they can move into another house and still survive it basically. And what's the benefit of an investor buying over another home owner? An investor at least a lot of times can figure out how to get the extra money or what not to cover the major expense or what not from that or they can fix it up, say if it needs a lot of repairs, which sometimes it does, sometimes it doesn't, it depends on the home. And like in our last example, they frequently have lenders and we're talking about Fred. He ran a hedge fund, but it was like, you know, 12 family members and friends. It might have only been six. There were not many of them. And he financed you for your first deal because you could have never got a bank loan at seven years old. Yeah, right? But he said, I don't care. The houses worth at least 80,000 and you're

39:25only borrowing 50 all do that. So they have the cash that all of their friends and family members have thrown in. It's still technically a hedge fund, but it's not at all what you're thinking about black rock with, you know, hundreds of thousands of owners and a trillion dollars or whatever they're worth. I don't even know a lot. So we can come in and if you absolutely, you've got to pay off your mortgage and lila, you did short sales before. That's an advantage. I did which investors can help. Yeah. If you owe more on your home than what it's worth, that's a problem for somebody that needs to sell that property. But an investor can work with that. They can work with the bank. There's things that they can do on terms like investors can create a lot of very interesting and workable deals when most people would look at it and go, well, there's no way I can buy this, you know, $100,000 house if you owe 120 on it. And there's not a lot of those today, but there were an awful lot in 2009, 10, 11, 12, weren't there? Yes. Oh, absolutely. That was

40:26a huge thing that actually started started in 2005 where I was doing them. And then I realized by the time a lot of other real estate agents were getting involved around 2007, 2008 that it wasn't the best time to be doing them anymore. And that's how, you know, the market works. We feel avoid that other people don't feel it when other people step up and take that like right now. I was talking an investor friend of mine who, you know, probably owns 150 and they're all single family homes and duplexes. He's not into getting big apartments. He wants to buy this entire army, uh, Old World War II Army barracks type of thing where it must have been office or housing or something. But you can tell the army built this in the 40s. And I was talking to him. And he does, he's like, yeah, I don't, it, it would just absolutely decimate him because the fines that they put into that ridiculous law were a $1500. And I know we had multiple shows about this when it was going on. $1500 per month per house. We don't have a single house

41:28that runs for $1500. We are in Northeast Ohio. We're in the middle of the rust belt. Our most expensive house might be 1200 or 1250. So there's like literally if we didn't have a mortgage, didn't pay taxes, didn't pay insurance, nothing ever broke. Nobody ever moved out. They always we would still lose $250. It would absolutely bankrupt us to try and pay that. So it's just absolutely ridiculous, which is a terrible violation of the eighth amendment. Uh, and they'd only do that so they can seize your property, which is really why we went to, you know, we've got to stand up for our rights like our fourth amendment, right? That's why we're just in the Supreme Court. And we're fighting it. Take this to the Supreme Court and the fines are so ridiculous. I'd never pay him. Yeah. It's insane for some of the things that they're doing in $1500 per unit per month that you just you cannot pay that. Then you there's not enough money to pay that. It's intentionally meant, or as far as I can tell, it's intentionally meant to just

42:32drive anyone that owns that much away. Except mom, what happens when you drive all of those people away that have those 50 units or more? Well, if you're going to drive out the people that are educated, knowledgeable, know how to repair these homes, rehabilitate them, that are filling the void and buying properties that a regular homeowner couldn't even buy, you're going to end up with a lot of vacancy broken down homes. You're actually going to cause, you're going to exacerbate the problem instead of trying to make it better. And I'm going to expand the problem you're originally trying to solve. You're going to make it worse. And maybe you will lower the prices of homes. And yet this sounds more like the 2008 crash than it does anything normal and reasonable. Anytime you try to control the the market, you end up with problems that you aren't going to necessarily foresee in the in at the time. But we're going to end up with a lot of unintended consequences if Trump passes this. Well, even without it,

43:35what is already happening for closures are up for the ninth straight month. So I was just talking to my buddy George, he goes, man, there's like nothing out there to buy. And it's so hard to find a deal for these new guys when you're buying their first 10 properties. I mean, you can go through everything and take your time, but it's not like us people that own 100 or 200 or 400. We don't need to buy anymore. So when the deals, when you're not going to make any money, we just walk away from them. And I've been known to August that, you know what? I went in and there were two or three people driving an old pickup trucks that came up looking at this, you know, dilapidated house. You know what? I don't want to do that much work. You guys go ahead and I'm not even going to bid against you. But as of right now, I think this is whenever I could get data from a couple months ago for closures are up for the ninth straight month. That means people that they couldn't sell their home or chose not to. They couldn't pay their mortgage and their taxes and whatever. Nine months in a row, people are losing their homes. So if you want to stop the housing crisis,

44:41maybe start by what the government problems, the problems the government itself is causing, like the skyrocketing property taxes. If property taxes weren't so high, maybe we wouldn't have foreclosures going up nine months in a row. Flipping houses, the margins have absolutely crater. They are down next to nothing. And so flippers are just quitting because they can't make any money. They can't sell it. That tells me that either there's a glut of properties for sale on the market or we've reached the maximum amount that people can pay for properties. Builders aren't building properties because they can build houses for 450 green, but they can't build a 200,000 dollar home. If you really want to increase the supply for the people that need it, all you'd have to do, and this would be so easy to do with taxes and stuff, what would you do if they said, hey, on single family homes, I'm not going to help out you big boys in on apartment buildings, but if you sell a single family home or maybe a single family in a duplex and you've got to prove

45:44it's a homeowner, they got to live in it, right? But if it's a homeowner and you're selling them a single family home, so you're actually helping them buy their own home. This is typically what they say they want to do. We'll cut your capital gains taxes in half for every house you do with that. And imagine if I could sell these with way less capital gains because maybe I've owned them for 20, 30 years, they're all depreciated out. Well, I'm going to put that money back into something else. I'll buy one of these dilapidated ones that's going into foreclosure that nobody else can buy and I would start fixing that up again, but it doesn't make sense for me to pay all the taxes and do all the hassle. And you might actually raise more taxes that way by cutting it in half and getting a lot of people to sell. And they'd sell until the prices came down. And this isn't just for the hedge funds. This is for all the mom and pop investors that owned four single family homes, right? Yeah, that would absolutely help some of these that there's small time landlords and they

46:45want to retire instead of trying to find another investor to take them to be able to sell them to homeowners and then not have all this capital gains would really help. You know, we have a across the board, there were 6% more foreclosures last year and 25 than the year before. So who's buying these? Where are they going? Most of the time, these foreclosures, they need to be bought by, you know, the rehabbers, the investors. And then they'll turn around and flip, but people aren't rehabbing and flipping anymore. We just talked about that. So there's another decrease in supply. And what are you going to do? You're going to push the very people that do all these rehabs, all of these investors out of the market and say, you can't do this for more than 50, or what we don't know what the number is, but I'm really hoping he doesn't come up with something ridiculously low like that. And I know if you don't own any rental part, you think 50, oh my godly, that's so many. It's really not that well, once you learn how to do this, if this is your life, if this is your business, we've spent 25 years building this business up. Our kids were raised

47:50from birth to learn how to do this. It's really not, imagine all the time that you spent going to school and working your way up and having business mentors to grow and getting different licenses and different degrees to get to where you are if you're 50 years old working in a job today. Well, that's what we did. We traveled all over and paying hundreds of thousands of dollars to get education from people that have done this. How many, I can't tell you how many months that we have spent sitting in seminars. And I'm talking, you know, 30 days that we'd go the National Real Estate Summit every year. And I just countless other real estate and business seminars to learn to get to where we are. This is the stuff we did to do it. You can't just recreate that. You can't get 20 years of experience overnight. So when they flip it off and say, you people that know the laws and, you know, do your best to follow the laws, we're going to throw you out. So, you know,

48:51more people can buy two houses. The ones that don't even know enough to start an LLC. Because if you want an LLC, you're too sophisticated, we don't want you. I can see all kinds of ways that goes wrong. Don't you, Devon? Yes, that could go wrong in so many ways. The more you try and push out the people that try to help you, the worse it's going to get. And I mean, look at New York. How much have they pushed out and tried to freeze rents? How much have they done to all of the housing providers in that city? And where has it gotten them? Mom, do you have you seen all of that? How bad are prices there? Even with all of the things that they try to do, it seems like every time that the government on any level says, we're going to go to war against this thing or we're going to fight against this. So, we're going to fix this. It always seems to get worse. Can you please just leave it alone or put it back the way it was and stop touching stuff? Yeah, that would be so much better if the government will leave it alone. You're like a toddler playing with advanced

49:53mathematics and I don't know something very complex and fragile and you keep breaking stuff. Please stop trying to fix it. Well, I have a plan. I think Trump, who is proposing a very, very left-wing idea in Bernie Moreno and other Republican that says I'm going to write the law for this left-wing idea. Let's stop capitalism and extracts. I mean, if you want to do it, we always preach as you get mentors. They should call it Gavin Newsom. There is literally nobody better. California is absolutely the top of the list for the riskiest housing market to own in. And that's exactly what you're doing. Actually, out of the top 10 counties, California has number one and number two worst counties to own real estate in. Do you know what number three is, Lila? I do not. What is number three? Charlotte County, Florida is in third place. Wow. And everybody talks about how great DeSanis is, but look at how they're trying to steal. They refuse to give a permit to somebody unless he gives up half of his yard. You sent me that article.

50:55Yeah, that was, yeah, that's a whole other ordeal. Look at P. Fortune out of they refuse to allow you to pull permits. You got to tear down houses and build all new ones. From the hurricane years ago, they are trying to take over all the land. Florida is one of the worst places. And then we have in fourth place, we've got Louisiana. Louisiana is down in 10th. Eight out of the top 10 are in California and New Jersey for the riskiest place. That explains why our one investor from New Jersey said the heck with that and is buying here and start counting Ohio because he's like, I'm not taking the risk of owning in Jersey. Well, if you pass this law that you're saying, oh, we're going to help people. It's never worked that way before. We pointed out just a few of the problems with it and a few solutions that might actually help. But yeah, if you pass this law, you're simply going to turn the entire US into California and New Jersey when it comes to real estate laws. Essentially, if you look at the numbers, there are 14 million single-family home rentals and 80,

51:57no, 94% are owned by mom and pop landlords that have 99 units or less. Then you're looking at another 3% that are 100 to 99. And only 3% that are 1000 plus. So this isn't much of the rental market at all. This is not something we need to be concerned about. And it's definitely not causing the problems that they say it is. If you want more information, you can email us at info at realpowerfamily.com. You can also call us at 833-B2 have that's 833-233-6428. Thank you, everybody for listening. Think about this and realize what they have normally and historically grouped into all of these big bad landlords. There is a massive difference between somebody that owns, you know, one, two, three hundred of these and somebody that owns 55,000. And how are you going to know exactly how many they own unless, you know, every company in the exact beneficial

53:02ownership. And if you own 100 properties, but you're only a 10% owner, does that count as 100? Does it count as 10? It's just ridiculous and impossible to enforce. So hopefully that if Trump announces some very low number like 50 or even 100 endavos, enough people will stand up and say that's ridiculous. This could dramatically affect me getting my next rental property. This could affect my business of providing houses to others. But there's no way to look at this to see it in good as any light. And they're going to try and spin it and say we're here to help the poor people. It never works that way. It always makes it worse for the people they're trying to help. Just look at the war on poverty and the war on drugs. We have more poverty and more drugs than we did before we started the war. Think about that. And maybe together we can make the world a better place. Talk to you next week. We hope you enjoyed the real power family radio show brought to you by Family Success Triangle. We want you and your family to be financially free so you can go where

54:07you want, when you want, with whomever you want. Learn how we can help you live the life you've always dreamed of at realpowerfamily.com. To hear more, subscribe to Real Power Family on YouTube. Until next time, go out and make the world a better place.