Home Buying 101 with Ken Claytor and Mike Collier

Sit back and enjoy today's podcast , but before I get there , I wanted to take a moment just to invite our audience out to a live conference . And so every year in October , the second week in October , we have a special conference that we call a live conference , and this is what we say that these three days could change the next 30 years of your life .

Our goal is to try to give people at least four times the amount that they invested in a ticket . We're gonna have seven main sessions this year , six master classes , three after parties , but one encounter with God . And I believe that one encounter with God is what it's all about .

Ac 23 is that conference . It's that encounter , like you're saying , where you just like Wednesday , thursday , friday , all day , every day , you are like enveloped in the presence of God , just daring to go beyond your own personal boundaries . It is amazing .

Welcome to another episode of Doing Life with Ken and Tabitha . We are pumped and I got a special show for you today . Today is entitled Home Buying 101 . And I got my main man with me today , Mike Collier , Say hello to the audience today .

You know , my goal behind this show was there's a lot of people who are renting and not owning , and we simply wanna give them some keys of home ownership steps that they need to take . Then there's some people who are thinking of selling and they don't know whether they should sell in this market . There's some people who wanna invest , and I don't know .

I just believe , like home ownership is actually a part of the covenant package , almost like a promise from God , because he talks about him giving us houses and lands and this and that and the other and leaving an inheritance to our children's children .

So I don't know , I just believe that this is an important part of every person's portfolio , and so can you just tell a little bit about who you are , what you do ?

You guys have just jumped in from the day that you've started coming to our church which how long has it been now ?

I used to be a real estate guy before I was a pastor , and so I really have a heart for real estate . I'm investing a little bit here and there now , nothing to really take me away from my main thing that I'm doing , which is preaching , but I'm having some fun with it .

But I just thought that this would be a benefit for our audience , just to hear some things from you . And so how did you get into real estate man ? How did you get into real estate ?

I read that book and it truly changed my idea of what entrepreneurship looks like , what time freedom could look like , what financial freedom could look like , and I realized that can all be done through real estate , and so I started pursuing that at an earlier age , like I was in my teens , knowing that real estate was where I wanted to go , but I didn't have

no cash to do it , and so I decided well , you know what , I'll dibble and dabble in that a little bit . And so what I started doing was when I worked at Disney . I kept my foot on it . I always stayed close to real estate investing .

I started learning a lot more about how to flip homes , and so when I did finally leave Disney in 2016 , I jumped right into real estate investing and I started flipping homes . I was flipping mobile homes and I had made enough money to where I was able to even start doing some hard money lending .

So I was lending money out to investors who were looking to flip homes . So yeah , right , yeah . And then I got into wholesaling so I became a partner in a wholesaling firm , so I started wholesaling properties as well , and when I was flipping homes , I was doing a lot of the work myself .

So I learned a lot about construction , load bearing walls and all the stuff . And so that is actually .

It's so beautiful how God sets things up like that , because that experience is now helping me to sell and be a great real estate advisor , as I am now , because when I walk through properties and people are like man , I really wish that wall wasn't there , I wish these cabinets would be different .

I'm like , well , you actually can do that and I have the people to do it .

I was in business school and they was teaching me accounting and all this stuff that I knew I would never use . So I said I'm going to start investing in real estate . So I actually put my first company together when I was in college .

It was called Sunrise Properties and it was me and it was my dad and it was a family friend , and none of them had any money man . They had good credit score and I just thought , because they was older I'm like 20 , I thought , because they was older , that was going to qualify me to go out and get some duplexes , and it didn't .

I'm telling you , I don't think we purchased one property together . And so after I graduated school back in 2000 with a business management degree and I always thought I would be in business I was an entrepreneur since middle school and so I never thought I would be in ministry . I always thought I would be in business . So I got my business degree .

I moved from West Virginia over to Washington DC and I never took a job working for somebody . I went right into real estate sales Right on , and so my wife . She was actually an executive assistant making 35,000 a year and we both lived off her salary while I went to get my real estate license and that's all that I did .

From day one I sold real estate and for the first year I sucked . I just wasn't good at it . I couldn't close things , but I just stuck with it . And then I went from . I started in commercial real estate , then came back over to residential , found some success in residential , but all of it started , I mean , years ago .

I remember seeing my dad when I was growing up . He would have maybe one or two rental properties . It wasn't nothing magnificent . I seen my dad move a house on an 18 wheeler from one part of a city and hook it up for my uncle . His brother and I was down there and he would be putting a sewer together . You know , he's just like a handyman .

He would do it all himself and I think that he sowed the seeds of real estate investment into me even when I was a kid .

So as I came through college , I said this is what I'm going to do and I went right into it and , thankfully , really by the time I was 24 , 25 , was probably making $500,000 a year and so as a career , I think it's super lucrative and we don't really want to get into that today because I believe there's there's just people that you start with just owning

something , correct , I believe . Do you believe that Absolutely ? That's the beginning of wealth creation is on your home . Don't just throw away money and rent .

My grandmother didn't own that home , she was renting that home and so , you know , when I looked back over , like my childhood , nobody really owned their home and so it was in . It was once I got into sixth grade that my parents bought their first home .

Right , and I remember how big of a deal that was , because now I knew we were going to be here for a while . Right , I'm entering sixth grade . I'm still in a whole , completely different side of town , I am the new kid now , but I'm actually going to grow up with these kids and I actually I met my best friend to this day .

He was my best man in my wedding , everything in sixth grade , and he's still my best friend to this day . Matter of fact , he's a real estate investor . He buys apartment complexes in Atlanta . So I saw him getting it out the mud .

I saw him when he bought his very first house to rent and then , you know , bought duplex and was creating opportunities for people to have a place to rent and then , ultimately , they even created a program where the people who were renting could actually buy , almost like a rent to own program .

And so I remember how impactful it was for me when we bought our first home and I was like man . I want to do that as well , like one of these days I'm definitely gonna own my own house , and so I also know that having home ownership does change the trajectory of even children right In a family , because they have a lot more stability .

When your kids know that they're not gonna have to move again another two or three years , they don't have as many trust issues , they're able to make friends that are gonna be friends for a while , you know , they're able to focus a little bit more at school , and so you actually will see the studies that show that academics actually increases because they know

that they have that stability .

That's a fixed rate and you're paying something off , which means that as over time , the home value increases and the difference between what your home value is and what you have left on that loan that's called equity , Right , that's money that's literally in the walls of the home that you live in .

That's one of the best bank accounts there is , because you can do so much with that .

So basically , you've invested $24,000 and you get absolutely nothing . The other way around , you sell your house in two years and you could walk away $30,000 , not including closing costs . That's the difference , that's the big difference .

Years what more over the next eight years and you go to sell that home Because now you've paid that loan down even further and the house is worth that much more .

So in 2018 , we decided , okay , we're gonna obey God and we're gonna be a part of the launch team . And so we sold our house in Gainesville and we moved to Orlando . And at the time it was like 2017 , 2018 , the market was good , but it wasn't like it was about to get . And we bought a house . It was a five bedroom home , 3,200 square feet .

We bought it for $450,000 . And I'm slapping high fives I'm like bruh because the house I bought in Gainesville in 2007 was $700,000 . I came out of real estate , so for me to like dumb down into ministry was a really hard transition , because I was a kingdom builder and I was used to making a certain thing . So to me , hey , it's always gonna be that way .

So I left Washington DC , was like , oh yeah , I'll take that $700,000 new home . And I struggled . I was cash strapped for many years . But thank God , for the grace of God . So I said , when I'm coming to Orlando , I ain't gonna be house poor . I said $450,000 , we'll take that .

What I didn't know is that the market would shift and I sold that house last year . No , it was like seven months ago , like August . So I sold it for $760,000 . I bought it for $450,000 . I showed it . You do the math Tax-free money , tax-free . All I did was live there . I made $300,000 .

All I did was live there , and that's what I'm saying , that and you're gonna live somewhere , I'm gonna live somewhere , and that's beautiful

. Now , of course , I had to use a lot of that to fix up my new place and do all that kind of stuff , so it wasn't just free cash .

I was able to give a lot and that's very important to me so many different things , but that was actually enabled me to get back into the flip game , because I just lived in a house for three years and just waited on the Lord and waited for the market to shift and it did , and that always happens at some point we talk about the dream of home ownership .

Like , if you have the equity in that house the bank is going to give you , we'll give you a loan towards that and say , hey , listen , you got a lot of money in the walls of your house . We'll actually take some of the money out of the walls of your house and give that to you as a loan .

Yes , you're gonna pay that back to us , but whatever you decide to use that for , you can go use it . And so we call that a cash out refund when you refinance and you pull some cash out of your house . And so my wife and I , we did that recently .

And so it's really powerful and impactful , Because there's so many of us who are like man , I don't really have anything . So many people work day to day and go to the same job , get the same paycheck every single week and never feel like they're actually getting ahead . Yeah , Right . And so they just hate the next day because they have to do the same thing .

It's like Groundhog Day all over again . Right , You're going to do that anyway , Right ? Like , whether that person owns a house or they're renting , they're going to be feeling that exact same way anyway .

But at least , if they own a home , they could still be building something up so that they can have a legacy to live , to leave towards their kids or again begin to buy themselves out of that job and start buying into their dream .

So basically , you're living in an appreciating asset . The national average , I think , is 5% a year . But you'll get into certain markets that are like shoo shoo and that's what happened to me between 2018 , 2022 , it's shoo on you , okay , and so you got equity , but I also think you have a tax advantage .

And I don't think people understand that you get to deduct . Tell me if I'm right you still get to deduct , is it your ?

Because of your tax deduction it's going to feel like $700 , meaning that even if your mortgage payments a tad bit more than your rent , your mortgage payment is still going to be better at the end of the year after you do your taxes . Right , right . And so not only do you have equity , you also have a tax advantage .

I mean , there's just so many benefits with it .

Plus , if they're buying a home now , they have these deductions and they're also building their equity . It's why so many people are moving into the state .

Yet it's going to be one of those three things that come up , and sometimes they don't necessarily want to admit it Sometimes . Sometimes it's just lack of knowledge . Okay , they . The lack of knowledge is because there is a bit of a fear of of being accountable , okay . So here's what I mean .

I get people who say , yeah , man , my credit score is only like a 680 , you know . And you know , we don't have much of much money for a down payment , so we're just going to go ahead and rent for another one or two years . Okay , I say okay , 680 , huh , you know , you can buy a house with 680 credit .

I heard something about that , Okay , but I'm not really sure how that works . Okay , so you're fearful of understanding how that works , or even asking the question about how that works , because now , once you know better , you got to do better , right , and ?

And so I try to help people in that conversation and say listen , let's , let's put all three on the table Credit , money and fear . I got you on the fear part because we're going to help you with the knowledge and all that kind of stuff . Right , you still have to take action , but I can at least give you the knowledge .

And then , as far as the money part , like I said , there are options for you , and you know one of the most underused ways to buy a house or at least to get a down payment is to get a gift , okay , gift funds From who Anybody .

I used to be an intern for Enterprise Rent-A-Car when I was in college and I looked on their website and it says if you've worked for any of these organizations , you can join our credit union . I said I used to work at Enterprise Rent-A-Car . They said do you have proof , bro ? I don't know where I pulled proof out of a hat that I used to work at .

Enterprise Rent-A-Car and they had let me join there and I got 100% down . What people say ? Oh , that doesn't exist anymore . No , you better keep looking . Yeah , so they're not a lot over the place , but I've seen some . I think NASA Federal Credit Union , navy Federal Credit .

3.5% . Back in the day it was 3% . We would connect it with a Nehemiah which was basically a nonprofit . They would allow that nonprofit money to connect to pay the other 3% to make it 100% . Do they still have stuff like that ?

So we just check the USDA map with the lender preferred lender and the lender say , yeah , that that actually qualifies .

I just feel like you can probably sell it as long as you don't go way up in price . I just feel like you have appreciation . I feel like the detriment of renting is much stronger than the detriment of owning and maybe getting stuck . I just can let rent it out . You don't rent a room , you can Airbnb it .

I mean , when you got the asset , you can do some stuff , that's it .

I don't like the idea of me paying $2,500 or $2,000 a month in rent right now , and it might be $2,500 a year , a month , next year , just depending on how my landlord feels . I don't like that right , and so I like to have some certainty because I can also plan and , you know , set goals and everything for my Family .

If I have some of that certainty and home ownership allows you to have that .

Now , again , it might take you three months , it might take you six months , nine months , twelve months , whatever it is , but at least you're working towards the goal , bro , I don't been there .

And then I learned tricks of , as it relates to our credit cards that we have . Try to get them down to a 50% or less balance . That will help your credit things . Try not to have a bunch of different inquiries . I mean you can literally Google how to repair your credit and you can do some things .

I mean you can go through a company like you have or know of , or you can just do some things like I did , which was just Prudence . I'm knowing what to do , knowing what to dispute .

And I'm happy to say that I haven't had a personal credit card in 15 years and business credit cards , but that when I got out of debt and credit debt I'm like I'm never going . Now , lately I've been like when I need a business one , you know , cuz it's the whole rental car , airport thing , but I for 15 years , yeah , yeah .

So they're looking at you keeping it under that 30% what they call credit utilization so that they can actually help you to build the credit , and it truly does like . Credit cards are not the devil . Credit cards can actually help you to build your credit . Right , because it's a great way of showing , see , here's the other thing .

Man , renting Doesn't go on your credit Unless you stop paying , and then it goes . Oh yeah , right , all of a sudden , see , see , see , when it's benefiting the landlord . Right , it ain't gonna go on your credit , it's just gonna benefit its pockets .

If I could do everything cash and be completely debt-free , I would feel really good about it . If you listen to , like Dave Ramsey , people like that , they will tell you who cares about a credit score when you got cash .

But if you come over into the real world like we don't want you to try to save to buy house cash for the next 30 years of your life , that means that you don't understand leverage . That's right . Leveraging is basically when you use somebody else's money to help you gain a little bit . That's right .

And that's what you do whenever you get alone is , basically , I'm gonna get alone for 200,000 , but if my house goes up and I pay it down at 250 , I'm gonna make $50,000 because I leverage somebody else's money .

And so , yeah , that might be a great long-term plan that you want to be debt-free and oh no man , nothing but love , but the reality is gonna take you all of your life to get there if you do not know how to leverage properly . And so I just think that we shouldn't be afraid of loans or afraid of credit cards .

We just have to use them with great diligence and discipline , or they will come back to bite you .

I'm helping you very much , like you have a financial advisor . Okay , right , you got a financial advisor because you don't know everything about stocks . You can dibble and down well , you can download Robin Hood or whatever else right , and buy some stocks . But you may not necessarily know about all of that . Just , you have a legal advisor , right .

Church has a legal advisor , right . Well , you also need a real estate advisor because it does change the laws change . I get people who used to be a realtor , you know 30 years ago , and they're like , yeah , but when I did it back , when I'm back in my day , bro .

I say , hey , listen , you know , if you're watching this now and you don't own a home and we're talking about buying a home , yeah , we're talking about buying this home , but guess what ? We're already gonna be start talking about buying the next home , because I'm gonna start already talking about , hey , when you're ready to transition out of this , right , are we ?

Maybe we're turning this into a rental so you can go buy the next one ? We're gonna pull the equity out . We're gonna use that equity that we've already talked about to now use that as the down payment to buy your bigger and better home . Right now , you got rental income coming from .

This is paying a large portion of your new , bigger and better home , and so you might be paying the same , if not a lower , payment than you were paying on the first home . So we start talking about that with young people especially . I'm talking about house hacking .

House hacking is simply this man , you buy a three bedroom home or four bedroom home , you rent out those other three bedrooms . Now your mortgage payment is being covered . Like you can't tell me that you can't afford a home .

All right , I don't care what your mortgage payment is right now or what your rent payment is right now , because , quite honestly , if you're smart about this , you can even have TOKYO be at the same , if not lower , than , what you're already paying . Right , there are ways to do it , yeah definitely .

I mean , we can get you within an hour of downtown , let's say , but we're not going to be able to get you downtown .

I always used to tell people when I was in real estate that everybody is only 12 months away from owning at the most , meaning that I feel like I could get your credit to the place . I feel like you could save everybody . So that's for the people , that's like they got this . Well , I'm about home one day .

Well , I think like my encouragement to you would be like start today , like call a real estate advisor , call someone and say pull my credit , tell me what I got to do , because I'm only six to 12 months away from buying , no matter how bad my situation is and I know that there are some people that's further along than that .

But I just feel like I just want people to be blessed and successful , to be good with money to leave an inheritance for their kids , kids and man . It just depends on even what culture you come from and your background .

I'm seeing certain people that their parents , you know , gave them money to they don't owe anything on their first house when they got married . I wish , I wish they would . You know I'm saying they would , but a lot of us are first generation or even second generation , but the last generation didn't give us that kind of substance .

So now we got to work hard and we got to be good with money , yeah . And so let's flip it a little bit . Do you feel like these principles that we're sharing ? Do you feel like they work for many cities around the nation , just because my audience is so broad internationally , or not sure ? What do you think ?

They don't even offer financing on homes . Like you gotta pay a cash .

They own the land yeah , exactly right . But they build it as they get the money , so they get the money , they put some more into it and then it might be untouched for the next four months . Yeah , in .

And can you just speak to where the market is and should I be buying in this market ? Should I be selling in this market ? Should I hold up ? Fold up , walk away , run . What's the deal ?

What that means , simply , is that if there were no more houses that were put on the market in Orlando , the houses that are currently on the market for sale would be depleted within the next two months . Okay , okay , so it would be gone that fast , all right . So , with very little inventory , we still have buyers out there who want to buy .

However , many of them are choosing not to buy because of where the interest rates are right now . Okay , interest rates are sitting around 6.5% , 7% . Okay .

And so , but that's a large reason . That's one of the large reasons why the inventory is so tight right now , because for a lot of our folks we have , like people who have been on , I mean they locked in at a 2% , 3% interest rate and they're not trying to give that house up . Yeah , yeah , yeah .

Now , if you start looking at what the Fed if you're watching the news the Fed is talking about pausing interest rate hikes , right . So what's gonna happen is we're expecting by the end of this year , maybe early next year , that these mortgage interest rates are gonna start softening again . What's gonna happen when interest rates start going down ?

All the pent up demand from all these buyers ? They're gonna . It's gonna start happening , right , that pipeline's gonna start getting clear . You're gonna get a lot of buyers who are flooding into the market , but there's not enough homes for themselves . So if you have a very big demand but you have very little supply , what does that do to prices ? They increase .

So when should you be buying a home ? Right now , you buy a house now . Yes , it's at a higher interest rate , but we're already expecting interest rate to start to drop in another six to nine months . So if that's gonna happen , you simply refinance into a smaller , in a lower interest rate , but you also get to get the equity gain , the home value gain .

I always say this Listen , there are people who are sitting on the sidelines watching home prices and going man , home prices are just crazy . They keep on going up , up , up . Ain't that a shame . Like it's gonna come back now , right , right and then . But you got the homeowners who were sitting here and saying they're not talking about home prices .

Homeowners talk about home value , and home values , they're saying , are going up , up , up and keep on going . That's the difference . When you're in the game , you're looking at it as a home value and you want it to go up . When you're on the sideline , you're watching it going like man . When should I get in ?

There's still some overpriced homes and most of what you're seeing where home prices are starting to come down in some areas it's the seller who kind of missed that window , those unicorn years where the prices were skyrocketing , home values were skyrocketing and they kind of wish that they would have sold it back then .

So now they're still trying to price it and test the market and they kind of missed that market . So many of what you a lot of what you're seeing is homes that were overpriced are starting to have to humble themselves a bit .

It's like you gotta come in pretty much at asking price but just know that your benefit's gonna be where it appreciates over the next 12 to 24 months . And so I don't know . Being in Florida , I think I heard in Orlando there's 10,000 people a month moving here . I don't know if it's true , but I don't feel like prices are gonna be going down .

I don't care what happens to the interest rate , cause they taught me in real estate years ago , you either buy , rent or live in a tent , and so we're not gonna live in a tent , so everybody has to buy or rent and rent's going up and rent is not beneficial .

That means that everybody's gonna have to buy and so people are coming in from all over the place to buy and I might as well capitalize on that .

So , anyway , yes , themikecalliercom , and you can book a schedule book , what we call a strategy call , and it can be 15 minutes , it can be 30 minutes , but it's simply just to get your questions answered .

Even where I am right now , I'm thinking about moving to Florida , whatever it is Like , let's just have the conversation . We're going to talk credit , money and fear , yeah , and we're going to move all those things out of the way , and then you get to make that decision .

There's an email address If you have any questions for us . Every once in a while we do an Ask Ken in Tabitha . Tabitha's not here today , but , hey , we're going to answer your questions when she's back . Just know that we love you guys . We're praying for you . If you're looking for an encounter with God , come to a live conference .

It's happening the second week in October . You can find the website in our show notes where you can get your tickets . Supplies are limited , so make sure you get your ticket today . Thank you so much for tuning in to today and until next week . We'll see you soon . Peace , thanks置 .