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Friday, October 15, 2021

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    What is the Future of Housing & Real Estate? (with BiggerPockets’ David Greene)

    Welcome to the real estate strategies podcast, a place for conversations that matter in order to obtain infinite wealth. I’m your host, Ken McElroy. This show is meant to keep you updated on what is going on in real estate while getting you on track to have infinite wealth and financial freedom. This episode, as well as all the others can be downloaded on Spotify, apple podcasts, and various other platforms, so that you’re able to listen on the, go to get my weekly newsletter, where we keep these conversations going and explore the trending topics in real estate today, please go to www.kenmcelroy.


    Let’s dive into today’s episode. Hey, everybody it’s Ken and Danille! Hello! We’re here with my friend David Greene, and you guys probably know of David through biggerpockets, but he also has a very, very big team.

    He’s based out of California. His, uh, his business is going to trend well over $200 million. This year, he’s written three books on how to buy out of state, the Burr method. His recent books sold David as always. Great to have you on the podcast.

    Thank you guys. This is always a good time when I get to talk to you too. So, so David let’s, uh, let’s start right off, you know, here we are with, uh, Biden once again, uh, you know, extending the eviction moratorium and Danille, you know, we all have rentals. I mean, I know you have a lot, Danielle has a lot, I have a lot and you know, we’re all, all kind of dealing with this early on. We were all wondering if we would get to get paid.

    Um, and oddly enough, as a landlord, I kind of agreed with, you know, Hey, we kicked everyone at the curb. You know, they can’t work, you know, there’s, what’s going to happen financially. You know, how are we going to make it at the beginning? But then now we’re at like, I don’t know how many times this thing has gotten extended. Um, you know, what do you think?

    Well, yeah, I mean, it’s been a year and a half now and it’s like, if you still can’t pay your rent, you either need to apply for aid, there’s hiring signs everywhere, or get a roommate, just do what you gotta do. I know, plus we’ve thrown a ton of money at this, obviously through all kinds of programs, not none of Lisa’s unemployment.

    And I know that’s winding down now, but there’s still millions and millions actually, billions of dollars in behind back rent. So how are you dealing with David? Um, so every time something like this happens, there’s always a temptation to get bitter when you’re an investor.

    And I really think, I mean, if you think about it, it’s the tenants who were bitter for a long time. Cause they’re, they don’t make no, I don’t want to generalize tenants, not every tenant, but some tenants are in that position because they’re not making wise financial decisions. Most people would rather own than rent. Some people are, they like the renting. They don’t like the responsibility of owning, but it’s that bitterness, that things should be cheaper.

    That leads them, put pressure on politicians to then change rules. So that lent– like rent control and moratoriums on rent collection. That’s where it comes from. So I don’t want to make the same mistake by as the landlord just getting ticked off like, oh, this sucks.

    And I shouldn’t buy real estate.

    Right? It does suck. And I think it is objectively a little ridiculous at this point that we’re going to keep saying, you don’t have to pay your rent while like Danielle said, there are most businesses are dying for somebody to come in and work. Like you go to a restaurant right now, the service is really bad that you go to a doctor’s office. They don’t have enough staff at overall.

    It’s hurting all of us that people don’t want to work. And so that to me is as obvious. But what I’ve taken from this is every time this happens, it’s similar to if you’re a general manager of a football team. So imagine your portfolio is like the players that you bring in and the, the league has changed the rules. So I liked this example, cause recently football had a drastic change to their rules.

    You can’t touch a quarterback right there. Most people agree. They’re extra protected and wide receivers, very similar. You can’t put your hands on them at all. Until after five yards, and even then, if you, if you hit them hard and they’re declared defenseless, then you’re major penalize, but receivers can smash into defensive players and nothing’s going to happen.

    There’s definitely a skewing of the rules, favoring offense. So if you built your team to be a defensive team that does not benefit you, they’re taking weight away from the way that you built your team. You just have to recognize that’s going to happen in the NFL, like the rules of wealth, building the rules of the economy, the rules of your sport, whatever it is you’re doing, they are going to change. And if you have this belief that they shouldn’t change, that’s where the bitterness comes from. Your, you don’t want to adapt.

    You want the world to adapt to you. You get bitter when it doesn’t work. When you adapt with the rules, bitterness never sets in, okay. So if you’re a tenant and your rent keeps going up, that could be a positive thing that could cause you to say, you know what? I need to change something about what I’m doing.

    I need to work harder. I need to get a better job. I need to get more skills. I need to go back to school. I needed something to improve my situation.

    So I don’t want to make the same mistake as a landlord of falling into that negativity. So I just embrace. I may not like what the government’s doing. I may think it’s not healthy for the country as a whole, but at the same time, I still need to do what’s healthy for David as a whole. I still need to make the best decisions with the rule.

    So I need to spend less money on middle linebackers and more money on a quarterback or a wide receiver. However, the rules are going to benefit me. So what I’ve noticed is that the homes, cause this was your original question. I know I just went on a little bit of a rant there at the homes that I own in, in the worst areas are the ones with the tenants that aren’t wanting to pay.

    And there’s not much I can do my homes in the, in the, a, B and C plus neighborhoods.

    People are paying just fine. So what I’ve found is, and this it’s hard to know like what kind of tenant you’re going to get, but the higher quality tenant that you put in your property and they will be drawn to the better areas. The less likely you need the law on your side. Okay? So like, if your players are playing the game the right way, you don’t have to go yell at the referees, try to get the calls that only happens when your players are falling too much or they’re not doing a good job.

    And that’s one of the reasons I’ve made money investing in a tenant friendly state like California. Everyone’s scared. I don’t want to go there. It’s Senate friendly. Well, you know, when those laws matter is when you’ve already screwed up and you’ve got an eviction going on and you want the referees to be on your side, right.

    I never get into that problem because my tenants don’t want their credit to be affected. They don’t want to get dragged into court. They don’t want to even lose a day out of work. They’re all on a positive progress when it comes to life. And so I hear a lot of the complaints that come from landlords, but if I really look at my own portfolio, I’m only seeing that on the properties.

    I probably shouldn’t have bought anyways. They were like some of the first ones I bought or I bought into a market that wasn’t as good as I thought. And so that’s really the advice I’m giving investors is like, don’t say this is unfair. I won’t do it. Just suggest your strategy by in better areas, buy better dirt.

    Maybe you get a lower return than what you were hoping for in the short term to have a better asset in the longterm.

    Right. Right. And that’s a good point, David, because you know, all my tenants are paying, but you know, they all have great credit, good jobs, stable jobs, you know, and, and I do believe that some people with good credit were initially affected by the, um, you know, potentially losing their job, but people with good credit, I mean, credit tends to be a good indicator of how put together, you know, you are with your finances and those people figured it out. You know what I mean?

    Even if maybe they couldn’t pay for a month or two, they figured it out.

    So one of the things David, it’s interesting. So we have, as you know, about 10,000 tenants. So you can imagine them, you know, the magnitude of trying to collect virtually, you know, 10,000 tenants. And so we kind of put tenants into three buckets.

    So bucket number one, what were the people like you said that the communicated with us and paid on time and said, Hey, you know, we’re going through this crazy time, but we’re going to continue paying a bucket. Number two, where the people that came in and said, I’m going through a tough time. Will you work with me? And, um, of course we worked with them because the last thing as a landlord or an owner we want is to boot people out.

    Of course that’s not what we want and we don’t want to ruin people’s credit.

    We just want to be, uh, collect the money so we can of course pay the mortgage as well. And all the expenses. Um, then there was bucket three, which ended up being a small amount of people, which were the people that basically kind of hid behind the CDC, um, you know, policy, they, they, they didn’t communicate, they were answering the doors. They weren’t, you know, coming home at night and leave early in the morning and all those kinds of things.

    And so we did have those number of folks that we were dealing with on, on every one of our properties, um, you know, throughout the west coast.

    But, um, what I did is I went back to my management company, which I own, and I said, okay, where did we make the mistake? Let’s take a look at the tenants that we put in those properties, kind of, kind of back to your point. I w I took full ownership of you, you know, uh, because I said, why is it that the overwhelming majority of the people that are living in our properties are paying and communicating. And we had this really small percentage, where did we go wrong? Did we make shortcuts on the credit and the criminal background checks and you know, all the different kinds of things that you do, and guess what the answer was.

    Yes, we had, you know, to your point, we had people down the line that the policies were all in place.

    You know, you could pull out the manual and point to something and said, Hey, this is what you were supposed to do, but they broke the rules or bended the rules for things. And, and guess what it showed up when you know, things, man. And so it was really on the property manager and on the landlord. Um, and I found that most people, to your point, Danille, they don’t want to mess with their credit.

    If they have good credit, that’s the last thing they want. Yeah. That’s you need someone with something to lose. That’s the key that I’ve found when it comes to getting good tenants. So this may not be the best example, but when I was in law enforcement, I thought about my entire career.

    And I don’t think I took even one person to jail that had something to lose. And I guess, I mean, there’s certain people maybe that like research, search warrants on that, we caught you doing something you didn’t expect, but in general, like I call for service and I ask you, Hey, can you leave? Or can you stop doing this thing? And they don’t want to do it if I ask Ken that, and he’s like, I don’t want to go to jail. Even if I’m in the right.

    I don’t want to last day of productivity that I can’t get out. You’re just going to leave the people that would always make your job hardest were the ones that had nothing to lose a night in jail was not any different than a night on the street. And, and then such as for tennis, but in business, in general, the people you work with that have the most to lose like a great credit score that they value and they want to maintain sure, the moratorium stops you from evicting them, but it’s not stopping them from having a consequence. They’re still going to have that eventually on their record and their credit is going to be effected by it. So, um, that’s the key is you, you get tenants that have something to lose and then they work with you, right?

    They’re going to come to you and say, look, I got nowhere to go, but I don’t have the full rent. Can we work something out? That’s what you’re looking for.

    And then I guess to your point about the employees, that bent rules, that’s another thing that people just don’t recognize about businesses. People tend to say, well, I need the system.

    What are the steps? What am I supposed to do? But that’s just half the battle riding out the steps is half of it actually having someone that executes them well is the other half. And that’s always the wild card of business. Yeah.

    That’s the property management piece. And let’s discuss too. So we have all these tenants that, um, aren’t paying their rent. Right. And funnily enough is that ends right about when the extended unemployment ends.

    So instead it’s going to be a big double whammy. So where do we see those tenants living? How do we see them getting another rental? What do you think is going to happen there? So I went through this in oh eight.

    Um, and I’ll tell you, I don’t see the massive issues. You know, that the media is making it out to be both on the foreclosure and on the evictions. Obviously we’re going to have a bunch of people that, oh, you know, but if you look at people that are caught up in the medical system and can’t pay, let’s say a big medical bill, it goes on their credit. They work it out over time and things get worked out. So I think there’s going to be some displacement.

    What, what, what landlords really want? We want our, we want our properties back. W we want to clean them up and put good tenants in there that can pay.

    That’s what we want. And that’s the biggest issue for me.

    Um, maybe you get the money, maybe you don’t, but it’s just going to go on their credit and there’s going to be some displacement. But I think the other thing David, that they’re going to find is they’re going to be in for a rude awakening because the, um, everybody’s kind of learned from this, they’re going to be a lot tighter on who does pay rent, who doesn’t pay rent. That was kind of an afterthought for a lot of people. It’s now top of mind. Um, and the other thing is, um, my belief is, is that we’re going to move into more of a, uh, um, a higher, uh, a red period of time.

    So, so these folks are, they’re going to leave wherever they’re going to leave. And they’re going to have a bit of a sticker shock, just like we’re seeing with, you know, houses and cars and, and rents, uh, rent growth. So, you know, it’s going to be that I think is we’re, we’re heading into a pretty big affordability issue.

    What do you think, David? So.

    I would say a thousand percent. I agree with you that for all the reasons you just mentioned is there almost no way that something else could happen. It has to be that you’re going to see landlords that say, well, last time someone rented to you and you chose not to leave. I’m not going to let you take me hostage.

    So I’m not going to rent.

    That’s going to create even more of a housing shortage. As landlords are only going to want to rent to people that they trust. And so all of these displaced people who thought they got over are now going to find themselves paying. They just kicked the can down the road. Now they have a bigger consequence.

    What I like to do is try to get even a step ahead of that. So my mind goes to you’re now going to have a wave of people that are complaining, that homes are unaffordable, greedy landlords. Won’t let me live there. I am going to be homeless. I need something.

    And they’re going to take those complaints to politicians. And politicians are going to hear that. And they’re gonna say, you know what? We have to do something to make these people happy.

    We need to keep their votes.

    And what I think will happen is the section eight program will get a boost of steroids. I think the government’s going to say housing is a right. Just like education is a right. And healthcare is a right. And food is a right, like all the ways that the government provides something is because they call it a right.

    And they’re going to say, we need to put a $3 trillion stimulus package into the section eight program. And so what’ll happen is you’ll see a lot more housing vouchers. I’m just, I just can kind of feel this coming right? And then the government’s going to need a place to put these people. And that’s what will happen is they’ll go right back into the same properties that they were living into before.

    But the government will be paying the lion’s share of their rent. And so the landlord will ultimately win because they have the asset. You know, the taxpayer will lose.

    You’ll see a lot more inflation happened from this stuff happening. And you’ll see that, like the more taxes we have to go up to pay for these programs.

    But again, David Greene, I can’t stop that from happening. I also don’t know what’s going to happen. I don’t have a crystal ball, but that’s just based on my limited experience of 38 years in this world, that tends to be what I, what I see happen is complaints happen. It creates pressure. People take pressure to politicians.

    Politicians try to fix the plan with the new policy. That policy makes everything more expensive taxes go up.

    Inflation goes up. This is that cycles always it repeats. So that’s why I want to own a lot of real estate because they’re going to need a place to put people and the government’s going to be paying their rent.

    And so even though the landlords right now feel like they’re losing from this rule change, I do think it will come back around and they’ll look like geniuses. Everyone’s going to say, wow, how smart of you to own all this rental property? When the section eight program blew up and you had a whole bunch of tenants, and it’ll just be that, you know, you were smart and you owned assets.

    And so the ball bounced your way. I agree.

    I tell you, I a hundred percent agree with you. I think it’s going to come through some form of stimulus and I keep telling everybody, I go, why would you be upset if the governor or the government is going to give a bunch of people, a bunch of rent money, and then they’re going to turn around and give it to you.

    I’d property that you own already. That’s actually a bit easier. Um, and to your point, so we’ve, we’ve bought and, and own a bunch of over the years, I have a bunch of HUD experience, section eight experience, even tax credit, a fordable housing experience, a low income tenant, um, housing, uh, programs and things like that.

    The one thing that the landlord can still do is screen. So, you know, I remember one property that we had in Phoenix, literally I was walking the property and I walked into one unit and the guy had an AK 47, literally in his living room propped up next to the front door.

    Um, and the very next unit was a woman that had just gone through a divorce and was trying to raise kids. And she said, listen, I’m just, this is temporary. I’m just trying to get on my feet.

    That’s what section eight is for, um, one guy with the AK 47, you know, he was a drug dealer. And then, um, and the, so the point is, is that as on section eight, you can actually still screen who you put in there. Section eight is a great program. It’s, uh, it’s meant for people that need a hand. And, um, and I think that a lot of it has a kind of this negative connotation on it.

    And it, it can be, cause your hands are tied in a lot of cases with the reds and things like that. But, um, obviously you can’t discriminate, but you can still run credit. You can still take a look at people, how they, you know, what they do and, and how they do it. And, uh, are they trying to get off of, um, assistance, you know, and all those kinds of things. And you can, you can, uh, create your screening guidelines to, uh, as long as they don’t change from tenant to tenant.

    And, uh, it can be a very, very, very, very good way to be able to take, uh, an income in.

    Yeah. Section eight, isn’t it shouldn’t be knee-jerk response. That’s bad. There may be a higher percentage of what we would call a bad tenant in the program.

    I don’t know if that’s the case. It doesn’t really matter. You’re still going to screen every tenant individually. And I would even say all things being equal, apples to apples. I have a solid tenant, section eight, a solid tenant, non section eight, the same tenant.

    I’m going to put weight towards the section eight one, right? Because I, you never know, sometimes send it just hit a run of bad luck. They lose their job and it wasn’t any fault of their own.

    They have car trouble, they have to go fix up their car. Like things can happen that stopped good people from paying their rent.

    And section eight is just another layer of security. So I actually think that like in the future, your ability to leverage the section eight program to get better tenants and run a better business model will be one of the factors that we use when we’re analyzing deals. Yeah. And what better to know that your government’s gonna be paying your rent each and every month on a, on a 12 month contract. You know, that is one thing that most landlords don’t have right now.

    So in a lot of ways, this call it UBI, call it section eight, call it whatever they want to call it. The money that flows, you know, for people’s rent is going to go right to the landlord at some point. And, uh, you know, that’s why I still believe in my heart, that real estate investing is so good because people are going to need housing. And don’t forget guys, this rent that, that people are getting from the government or, or, or, or maybe not is paying down your mortgage.

    So, so you’re getting the tax benefits, you’re getting the mortgage paid out and hopefully you’re getting cashflow.

    So there’s just so many, so many benefits. I mean, if you own section eight properties for this whole COVID crisis thing, you did pretty well. I mean the government paid you those checks every single month. Yeah. The other thing we haven’t talked about is, and this is hypothetical.

    We don’t know that, like my plan, that where my idea that section eight is going to expand will happen. But if it does, or let’s just take something that did happen, they just passed that huge infrastructure bill that didn’t have a whole lot of infrastructure in it. Right. That just came out there.

    That’s, that’s a lot of money.

    I mean, if you can get like a visual understanding of how much several trillion dollars is your a thousand billions, okay, there’s zero chance that doesn’t create inflation and everything we are talking about, which is basically the government solving some form of problem. And I’m not trying to pick a political side here, but it does create inflation just like when the NFL changes the rules to favor the offense, the points per game goes up, you look at how much, how many average points a team scores now versus 50 years ago in the NFL, the points that are scored is way higher than when it was a defense oriented league. There isn’t a better place to have your wealth in real estate. If inflation is going to carry everything up. And a lot of the things where landlords are taking it in the shorts right now are still not even going to compare to the benefit they’re getting from the inflationary rise in both rents and their asset price as their debt service stays the same.

    Right. I, I just, we just did a video. Uh, Danielle, I just did a live this week, uh, but also a video on how I believe everything’s kind of moving toward a renter nation. You know, if you take a look at, uh, I’ve been obviously investing, you know, for 25 years and, and, you know, back during the Bush era, they were saying homeownership, homeownership, homeownership, which was completely fine, but we were losing people to homes. And then later when it started to crash in ’08, 9, 10, 11, they kind of went back into obviously into rental.

    So we went up to almost a 68, 69% home ownership rate. Now we’re down into the low sixties already. And, um, I think it’s going to go even further. Yeah. Because we have some affordability issues, uh, certainly with, with the rising prices.

    And, and, and to your point on inflation, I don’t know how the government’s going to curb inflation without maybe ticking up interest rates, which is only gonna make things right. Well, yeah. And I mean, I think that, you know, with wages, you’re already seeing wages are not rising with the little bit of inflation that we’ve already had. So as the inflation goes up, it’s going to be harder and harder for these people that don’t own any real estate to get into the market.

    So we really are going to be dealing with mainly runners.

    It’s not going to be normal for people to own a home. That’s very wise insight. That’s exactly how I see it playing out. So if it, if what I said, I think will happen, does happen. What happens is if you’re the tenant who never intended to buy real estate, you win because the government’s going to help subsidize your rent.

    If you’re the landlord who owns the asset, you win because you’re going to get more tenants and more subsidization for the rent that you’re collecting. The person that loses is the person that doesn’t own real estate.

    They want to rent, but they don’t qualify for the section eight payment. They’re going to get squeezed on both sides. And so what happens is wealthy.

    People now want to own more real estate because it’s a better asset to own. It’s like, I want all the quarterbacks and wide receivers I can get, they’re changing the rules here. And the people who were like, no, I don’t want to play the game that way. I like a strong running game and a solid defense. You’re the one who’s going to lose.

    And so we’re out here banging this drum. So people hear, and they don’t get caught with their pants down.

    And they’re just, oh, this sucks. You know, this, no you’re being told right now, this is coming down the pipe. We don’t have a crystal ball, but it’s much more likely that this is going to happen.

    Then we’re going to become a completely capitalistic country and we’re going to let people fail and we’re going to let businesses fail. And like, that just doesn’t happen anymore. The government steps in to intercede every time there’s something wrong. We saw that happen with COVID-19 and we’ve seen the way that, that changed the way the economy works. Like you guys just said, people don’t want to go back to work anymore.

    If you run a small business, it’s very hard. All right. And people ask all the time, you know, like, who do you favor is a Republican Democrat. I go, the truth is they both have their policies. And you know, you basically, it’s a playbook for whatever it is for the next administration.

    And, and, uh, and that’s it, it’s, it’s not really, I don’t really care. You know, there’s tax there’s tax advantages that you get and they get taken away. There’s money that you get that can take it away, you know? And it’s all kind of a balanced with the end of the day, David, to your point, we, we have a housing crisis right now. We have a housing shortage right now.

    There’s, you know, we’re going to see rent growth. We’re going to see, um, some real stress on the renter side. And we’re going to have big affordability issues and we’re going to have big inflation. And guys it’s like, if you’re still trying to play old school football and still, and about why the rules are different today, then you’re going to get left behind. Right?

    You want to have some sympathy for those people out there that are saving for their first house.

    I mean, my God that, you know, the prices went up so much and they’re just not able to save to keep up, you know? So what advice would you have for them? You know, if they just can’t seem to get enough to get that down payment with prices continuing to go up. So the first thing I would say is I started a mortgage company this year and it’s actually doing super good.

    It’s been in business for about six months now, and we’re top 25 in the state of California. So that, that business is growing really quick. And I like having my hands in different pieces like this. Cause it helps just like a general manager when you’re sitting above the field and you see how all the pieces play together, you can have two great players, but if they don’t have a good chemistry, you’re not getting a good return on the money. You’re paying them.

    And right now, for every thousand dollars that you save, you’re saving yourself about $3 and 75 cents a month.

    So what I’m getting at is that putting more money down on your house when rates are this low has a very, very low impact on how much money you actually saved it. Traditionally, it’s been so much wiser to tell people, save money, put more down don’t spend. And I would agree that is the, it’s almost like a coach.

    That’s like, look, don’t throw the long bomb.

    Every time you’re going to get interceptions, you’re going to lose the ball. It’s safer to just chip away three, four yards, every run. And it did work that way under the old rules. But now that the rules have changed so much, you’ll lose to the teams that are throwing the long bomb. And so you have to be somewhat aggressively.

    So it will feel aggressive compared to conventional wisdom because of inflation. When they push rates down this far, and there’s this much money going in the economy in our head, we hear, I got to spend $30,000 more. That’s insane, but $30,000, isn’t what it used to be. And it doesn’t cost as much to borrow as it used to borrow. And I don’t think this is good.

    I’m not advocating for more of this. I’m just saying these are the rules and football is played different. And for the people who want to buy real estate, I’m saying borrow more, keep more of the money as a down payment in reserves. It’s much healthier to be there. That’s where it’s actually going to help you.

    If something goes wrong and buy real estate where the rents are going to go up and then try to make that asset. So let’s say it’s single family housing look for a house that you could turn into two to three units and rent them out separately, that house with the basement, that house, with the ADU, that house with the floor plan that you can put up a wall in the middle and have two different tenant basis is so much more valuable, okay. Make the property work, but buy it. Right. And, and I really think that if the people who don’t okay, that’s the way it’s going.

    And I’m going to get in line. They’re going to hit a point where real estate is so expensive that only wealthy people can buy it at all.

    And that’s a shame because part of what made America great was that you could be an average, Joe, like my buddy, Daniel Del real, his dad moved here from Mexico. Didn’t speak any English. He was a landscaper.

    He basically cut people’s grass in Modesto, California, and ended up with several rental properties that made him a millionaire. Right. And, and he, you could do that at the day and I’m afraid it’s moving in a direction where the average person can’t do that. And as that window’s closing, I’m kind of telling everyone that a David Green team client, or anyone that’s out there thinking about buying rental property, you got to do this even just to buy a house for yourself, got to do it.

    And you got to think about five years from now, 10 years from now.

    What’s my rent going to be. Don’t just ask yourself if it’s cheaper to own or if it’s cheaper to rent and in year one right now. Yeah, yeah. You’re right, David. Cause I can tell you one thing for sure.

    Rent is going up folks. Um, and so if you’re a renter, I can assure you, your rent is going to go up over the next 10 years because it’s just math. You know, the, you know, there’s more people pouring into, uh, an industry where there’s not enough supply and you know, no matter what that is in this particular case, it’s rentals, it’s going to, it’s going to push rents and, and you’re going to start to see more and more and more of this.

    And, and then people, in addition to that, obviously on the, uh, you know, we’re buying as much as we can, like, like you David, and you know, we’re, we’re, we’re, we’re locking rates at, you know, 2.8, you know, low threes on these, um, um, uh, Fannie and Freddie deals that we’re doing.

    Uh, and, and my partner and I are just like shaking our heads because you know, the interest or the inflation rates are higher than we’re borrowing. So we’re like, oh my gosh, like we’re literally taking other people’s money in the form of debt.

    And, and it’s actually cheaper than having cash. Yes. And it feels weird to say that because that’s so different than how it used to be.

    Right. But if you think about it with like my football analogy, it would be like a GM who says, look, I’m paying this player 20% more than market value. Okay. Like I could get a better player for the same amount of money. However, this player sells more tickets.

    So we’re going to make more money, having them on the team. And the tickets that they sell are more than the extra 20% that I’m having to pay them. And that is how wise business people look at the big picture. They don’t just get focused in on that one little thing. And so with as fast as the rules are changing, can I think what you’re saying is what people have to think.

    I heard someone say the other day debt is an asset and it was a crazy concept. And my immediate response was like, how dare you say something, but then I know that actually is, that’s exactly right.

    It’s weird to say that, like, I need an, I have a lot of cash because I like to have solid reserves. Okay. But I’m also aware that is losing its value.

    I’m under no impression that I’m wealthy because I have a lot of cash. It actually kind of irritates me that I have to keep it in reserves. Um, what, what is building my wealth is the debt that I’ve taken on and the assets that are appreciating and value. And what you said is a people need to hear that, that I can borrow money for less than what inflation is doing in that sense. It’s almost in a way like free money.

    And if you’re not taking advantage of those rule changes, you’re, you’re gonna start losing. Yes. Especially if it’s covered, you’re barring it. It’s covered by a renter. That’s the key, I didn’t mention that.

    Right. Let’s highlight that. We’re not talking about buying motorcycles and RVs and boats and things that just cost you money.

    That’s what got people in trouble. In the last recession we had, we’re literally talking about buying assets that cover the debt service of owning them.

    And especially when that the income that they bring in is expected to rise over time. It’s like planting a tree. All right. So David, once again, man, thank you. I can’t wait to have you on again and let’s, uh, let’s see how this eviction moratorium this fall out and let’s jump back on, you know, uh, you know, uh, maybe toward the end of the year and we can go back and take a look at, see if we were right on, you know, this stuff and, and how do people get ahold of you?


    I’m on social media, @DavidGreene24, pretty much everywhere. You can direct message me there. You can connect with us with a mastermind. I have that teaches people how to be successful.

    It’s sort of, we teach people how to make more money. That’s offense, how to save more money living beneath your means that’s defense and then how to invest the difference, which is where you’re going to grow your wealth at DavidGreenMastermind.com. And then if you go to DavidGreene24.com, That’s my website.

    If you click on connect, if you live in California, you can get ahold of me or one of the agents on my team about buying real estate. Awesome. David, as always, I appreciate your wisdom. I appreciate what you’re doing and I appreciate you educating people and trying to help them. Uh, I really think that a one by one, we’re making a little bit of a difference and hopefully can change.

    People’s directional, um, you know, financial direction in their lives. So I always appreciate having you on, thank you. Yeah. I had a blast. People gotta know, like, no one’s coming to save you.

    We all have to make these decisions and you got to understand the way the rules are being played. So Ken you’re one of the few people that I think said gives really sound reasonable as smart advice. I like listening to you myself. So thanks for having me on. I appreciate it.

    Thank you. And Danille, thank you.

    Cheers buddy..

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