What Experienced Real Estate Investors Are Doing Today

0:00Kayak gets my flight, hotel, and rental car right, so I can tune out travel advice that's just plain wrong. Stop taking bad travel advice. Start comparing hundreds of sites with Kayak and get your trip right. Kayak got that right. Happy Thursday, today we're switching it up, instead of Mike interviewing us, I'm going to ask Mike a question because of all the craziness going on. Mike, you've seen kind of a lot of cycles, you know, you've been investing for a very, very long time. And obviously right now is one of those moments where oil is going up, inflation obviously has gone up. The markets are in turmoil and everyone seems to be running around with their head cut

1:02off wondering what is going to happen next. So what's going on, Mike? What is going on? So I think there's a couple of things that are going on and again, I've been reading financial news for 30 years every day and I've studied things back to the 70s. So the oil embargo and all of this other stuff is experience I have. And I guess I would tell, and I'm going to speak to investors first, then we'll talk to homeowners and whatnot after. But if you're an investor, sometimes it is in our best interest to take advantage of a situation. What do I mean by that? Like you said, there's a lot of people running around with their head cut off thinking that, you know, world war three is going to break out and the world is going to end. Now again, that's not a non zero possibility, but it's unlikely. And if it does happen, frankly, nothing else matters.

2:03So I just write that off. But what I do look at is, you know, we're operating in a environment at least in the housing market where it's better to be a buyer than a seller. And that was true before the war. Now it is really true because demand is falling apart, right? You're seeing it left right in the center and people are like, I was interested. I was shopping. Now I'm not because I'm nervous, right? I'm scared, right? Demand turns on and off like a heartbeat supply, not so much. Once you've committed to selling, you're pretty committed, right? Many of you have already bought another property somewhere else. You've already packed up all your belongings, right? You've mentally checked out. So, you know, if you're a seller in this environment, especially if you do the work, like the people that watch my channel, I hope they are doing the work. So what I would be looking for today is I want to find a property in my buy box that was listed last year. It was withdrawn from the market around the holidays.

3:05And then it was re listed. And now it's 45 days later. And now we have a war going on. Why do I want that? Because I want to write a disrespectful offer. I want to find a seller who has already tried to sell a couple of times. It's been on the market for 45 days. Now there's wars going on and they're pulling their hair out and they're just done. I want to take advantage of that situation. Yes, call me a bad guy if you want, but my job is to write a great offer and find a great deal for my family. You, Mr. and Mrs. seller, don't have to sell. But today I might be the only buyer. And that is the situation I'm looking for. So the message to investors is whatever your buy box was and whatever your ARV or whatever your model was, please do me a favor, write better offers. I'll give you an example. Let's say there was a property that you thought was had an ARV of 400.

4:09Let's just say for heaven's sake, you can try to, your model today says buy it for 300. I'm telling you to write it at 275 or 265 or shoot 250 because again, I think half the buyers are gone and most of us are going to do one deal a year. So you might as well make it a banger. The last thing I'll say about wars is generally speaking. They're over sooner rather than later. Now there's always a chance of a forever war. There's always a chance of ground invasion. There's always a chance of this going sideways. But if you buy something 20% better than you normally would, doesn't matter. This will eventually end. We will eventually get the straight or her moves open again. We will eventually be shipping oil. It might go to 150 shoot, it might go to 200, but it won't be there forever. So my message to investors and I'll stop and let you ask questions because I've been

5:12rambling for a while is today, use the noise to your advantage. Write better offers, lock in your cost to capital. If you like it, lock it because you know, if this is the last thing I'll say, if this goes on for a long time, like most people are afraid of. If you lock in the day at six and a half and it cash flows because you bought it for 50K less than you normally would. And then heaven forbid we get into a recession. Do you not know what the feds playbook is going to be? They're going to take rates to zero and you'll be able to refi that six and a half with a rate in term refi in 18 months at four percent. How do you like me now? So I'll stop there. We can go on longer. That's my general message to people is use this to your advantage. I think that's great. And then how about people that are going trying to now use this because now people I think are more than ever waking up to the fact that distress in the market, like you said,

6:16means opportunity for buying opportunities. They're still kind of tight on their personal capital, but they're sitting on a lot of equity. Would you recommend those same clients now? Hey, let me call my mortgage person and try to unlock that equity in a higher rate environment today than it was like three weeks ago, right? Would you still recommend they do that so that they can capture the better opportunity for the next month or two months or would you tell them, hey, sit and wait? Well, again, I love living out loud, right? You and I for a month now, maybe six weeks have been talking about Olivia and I raising a million dollars. Now again, we raised it and we struck when the iron was hot. You got us a five nine nine couple of properties. Thank you, thank you, thank you. But again, does a six three today make that much difference than a five nine nine? Not really. It's like $28, right? Maybe it's $31. Again, if you're still in growth mode and let's be clear, Olivia and I are not in growth

7:17mode, but you know, I'm going to take all the free money I can get. And if I find a desperate seller, that's why I raised a million bucks. I already had plenty of money, but I wanted to be able to write crazy cash offers. So that's why I raised a million bucks and you helped me do that. But yeah, I don't think dude, six three does not scare me. I've raised money at 12%. So six three does not scare me. It's just the deals have to work. So yeah, I would, I mean, if I was in growth mode, I'm in year eight, for example, and I'm sitting on half a million bucks in equity, I would go grab 150, assuming the property still cash flows rule number one, no alligator. So don't don't ever do that. But other than that rule, hell yeah, I'd go get that money six three versus five nine nine. It's, you know, it's noise. Yeah, absolutely. And also, I think what's been more popular now than ever and kind of segueing into where the market is versus where it was like we're still talking about a market that has the lower margin spreads between the yields and the rates.

8:18Like we're not talking about the sevens and eights, which was a reality that we were living in for almost a year over a year, remember, like we are talking about the sixes. And then with the opportunity now, like we've been talking about to buy it down, right? So if you're like wanting to just kind of set it, forget it, lock it and move on. You can do that. Still, like Zuber said, get it six three and then buy it down to five, eight, five, seven, five, five, seven, five if you want to, right, and just kind of lock it in and forget about it. If you want to go that route, right? And you're in the, you're in the room that you're said, I just want to be risk averse and do as much as I can right now to prevent me having to do anything in the future. That's your plan. If you are betting that, hey, the war goes on and it actually stops in, you know, or continues to go, sorry, it continues to go on for longer than a year. The feds have to step in like your example and drop rates to zero, right? And the federal funds reserve rate and mortgage rates you think will crash in that sense. And take a no prepay loan or a, or a shorter prepayment penalty loan that doesn't penalize

9:21you for leaving the actual loan itself and paying it off. So I think there's a lot of opportunities there that obviously definitely have to be entertained between the current market conditions and stats. Oh, do we freeze?