Coach, the energy out there felt different. What changed for the team today?
It was a new game day, scratches from the California Lottery players everything.
Those games sent the team's energy through the roof.
Are you saying it was the off field play that made the difference on the field.
Hey, little play makes your day, and today it made the game.
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That mortgage gott Let's get into this conversation. I might even gonna waste any time. I feel like we haven't. We haven't talked about real estate in a while, and just the basics of it, as far as a lot of people are concerned, they are raising interest rates, has been. They have been raising interest rates for a while now, and we hear a lot of fear that that's going
to cause us slowed down in the housing market. So can you just give you as a as a loan professional loan office, I'm not show you the exact title. What does raising interest rates mean? Is it going to have a drastic effect on real estate? What are some tips that people should be aware of? Give us the rundown.
First of all, shout out to all the earner's going crazy in a chat for me, I love y'all and love his love, So shout out to all the earners. So, first of all, this is Matt Goland, NMLS number five eight seven zero zero, better known as MG the Mortgage God. I am a licensed long professional for almost twenty years in this business. I've been through a couple of cycles. And what you guys are seeing, ladies and gentlemen, is something that is normal. This is not something that is abnormal.
This is something that happens all the time. I've been preaching this for god knows how long on this Internet, that interest rates will always go up and down. Right, what we've seen over the past two years during the pandemic was a once in a life time opportunity. And when these opportunities happen, you have to take action. And this is why I've been screaming to my lungs, guys, go out there and buy real estate. Money is the cheapest it's ever been, and it will never be this
cheap again, and it won't stay like this for long. Now. Did any of us expect rates to go up two percent and a two three month timeframe. Absolutely not. No one was prepared for this, not no one in the industry, not the consumers. But this is not abnormal. This is how the market moves, and this is a good lesson for everybody to learn, is that the market does not wait for you and your plans. The market doesn't care if you want to get an eight hundred credit score.
The market doesn't care if you want to save more money. The market will do what the market will always do. Now, will this create a slow down? Absolutely, There's a lot of buyers who will not be able to qualify because of home prices increasing and interest rates increasing at the same time. Will this cause a crash? Absolutely not. This will cause a slow down. This will cause a correction, a correction that is needed. Home prices appreciate it too fast,
too soon. You know, we have twenty plus percent appreciation year over year during the pandemic years. That is that is not normal appreciation for real estate. Real estate normally appreciates three to five percent depending on the market, maybe seven percent, just depending on where you are. What we're going to see for the remainder of twenty twenty two is that home prices will start to level out a bit.
But that does not mean a crash. Ladies and gentlemen, I need you to understand that home prices will still appreciate five to ten percent this year, depending on what market you're in. But again, that's not a crash. So you're going to start seeing more houses stay on the market longer, which is a good thing for you. You buyers who've been waiting to buy a house, right You're going to see some sellers now start to reduce their prices because they were unrealistic from the beginning. They were
just trying to milk everything that they could get. So when you start seeing prices go down by ten twenty thousand, please understand that that does not mean a crash. That just means they were just overpriced from the beginning. They tried to test the market, and now the market is telling them they have to reverse and go a little bit lower. But what we're still seeing is homes are
still going under contract in less than two weeks. We still have less than two months of inventory nationwide, and the supply issue is the biggest problem that we have here in America when it comes to pretty much everything from cars. We was having this conversation we ran into Eric the car industry. You can't get a car right now.
Right.
Lumber prices are going down right now, which is good for those of us who are building homes and things of that nature, but again, you still can't get the lumber right So these issues will still continue to keep it a seller's market. I believe up until twenty twenty three, and I've been very vocal about this and I've told everybody this several times that I think in twenty twenty three third quarter is when we're going to start seeing
a significance slow down. I'm in the market because it's going to take time for what's happening right now with the fedes raising rates and things of that nature, for it to go through the system to kind of like marinate, so to speak, and for us as the consumers to
really start seeing some price reductions. So I think right now, if you're looking to buy, I'm always going to tell you, if you're financially secure, you have down payment, closing costs, and you have reserves, and you have job security, or your business is doing good and you need to buy primary residence, you should absolutely do so, but just be smart about it, you know, don't pay above asking price. I've never been on here saying hey, guys, go out
hand bid one hundred thousand over over asking price. I'm not a fan of that because I'm not going to do it for myself. So I'm not going to tell you guys to do something that I'm not gonna do. But I think people should still go by primary residence if you need a place to live, and absolutely you should go out here and start investing because there's gonna be a lot of people that are going to sit on the sidelines because they're waiting for something to happen
that might never happen. So there's going to leave more opportunities for buyers out there who are educated, who have capital to go out here and pick up some deals.
Mat cool question before y'all saw a common over and over again, can you define what percentage is they crash for the housing market?
Ah Man, I will probably say when you start talking crashes, you're talking about negative twenty percent in home prices. Will that would be that would be a crash kind of same similar to the stock market. But again, let's let's call a spate of state. Right, the market has appreciated almost forty percent in real estate in the past two years, probably more in certain areas like Arizona, probably them in
fifty six two percent. Right, Let's just say the housing market goes flat in these areas, it's still up forty to fifty percent, you know what I'm saying. So even if everything is going back to what the levels it should be, it's just going back to where it should be. So even if you're talking about, well it didn't appreciate twenty percent, it only did five percent, that's not a crash. It's still up right, Like it's still recalibration. Yeah, it's
a it's a correction. Right, it's getting back to some sort of normalcy, which we need in real estate. I mean, let's call a state of state. You people cannot afford for it to keep going up at these prices. So we need this intervention to happen right now. We need people, we need home prices to kind of level out so people can afford. There's an affordability crisis in America. There's a houses in America. So everybody who's looking to invest.
As a message, you got to start looking at the opportunities. Right, here's a great opportunity because I know we like to do actionable items and actual steps. Here on market Money's rag Panda and eyl University. Right, So here's an action step. Pay attention to the zoning laws. I've been telling you guys about this for the past year. Look at the infrastructure build that they signed it to law. It's huge on zoning. For a DU's for death assessory dwelling units.
Look at Georgia, look at Seattle, look at California. Hell in Seattle, if you have a fifty fi one hundred lot, a five thousand square foot lot, you can put up to if you buy a single family home, you could put three four additional ADUs on that property. Now you can create a d U is an accessory dwelling unit. Right, So look at your garage. You can convert that basically
into an apartment. Look at your basement. In New York, we've been doing adu's illegally forever, right, So they're looking the past laws in New York to make basements legal because what housing, housing crisis and affordability. People need places to live live, So they're putting zoning laws in place from a federal level, which is trickling down now to
state and county levels. Freddie MATC just changed their whole guidelines when it comes to ADUs, where you could now you can use rental income from an ADU on a single family to help you qualify for a loan, whereas you can only use rental income to qualify on two to four families. So now you see the programs Fannie May, Freddie MATC are now changing their guidelines to recognize ad US or something here to stay. This is not rocket signs, y'all.
Look at what all the institutional investors are buying. They're buying single families right. There's a reason because they know the zoning laws are going to change and what they're probably going to do in the next five to ten years. I wouldn't be surprised if you start seeing these hetch funds tear down these entire communities and start building up three, four or five properties on one property and expand their networth. So you got to pay attention to the opportunities when
it comes to real estate investment. What's the new flow, what's the new wave? And you gotta go with that? Now.
You always say this to me, right, I always ask you when's a good time to lock in your interest rate? And you always say now, because there's no guarantee that tomorrow it won't go up. So right now, we got the thirty year fixed at like five and a half percent almost right. Obviously, as the interest rates go up, it becomes less affordable for people to get these these loans.
And so, in your expertise and your experience in the field, how high do you think we can go with the interest rates in the next twelve to sixteen months.
Oh, we're going to be six and a half percent? What's the fat raise? These fund the federal funds rate up another point this year? I mean we're going to go probably seven percent on the thirty yar six by the end of the year. Not even gonna hold you guys up. So you think it's expensive now?
And also, wait, god, the reason why these are the levels that interest rates were adding three two oh five when there was no quantitative easing. So when I told you, did you guys last year? They're letting crypto NFT stocks, real estate use cars run up because they're going to say, hey, we gave you a chance to get money, you didn't take advantage of it. Now there is a base level or median or moving average for what interest rates should be.
Go look and see what they were when the fail was not pumping money into the market, and go back since nineteen twenty nine. The base rate should be eight and a half percent.
Oh, look when I first, when I first came in the industry, I was refining to people out of ten eleven percent interest And I came in the industry two thousand and three right when I was refining into people out of ten percent rates and getting them into seven percent eight percent rates. My first house that I've a purchased was a seven and a quarter on a two year arm right, and then I refinanced that bad boy a year later until like a six and a quarter, and I was happy to a pig and slot. Right.
This is so be having rates in that five to seven percent on the thirtyeth fix. That's kind of normal, guys. It just hasn't been normal because the market crashed in a nine and when Obama President Obama's administration came in they enacted like Ian said, that QE and then they started buying these bonds at a very high level and we all got spoiled to interest rates being in the fours threes. And then in the pandemic, they reactivated the
program and now went into the tools. So that's why I was so vocal because I seen this firsthand how the government back Ina they did not want to save everyday Americans. They wanted to save the big banks. And that's when that's why they came up with quantitative ease, and was to save corporate and Wall Street, not America. But now this time around was a health price, so they had no choice but to save everybody. And that's when they started bumping forty fifty eighty billion dollars a
month into NBS's and treasuries. I said, oh my god, this is going to get crazy. Everybody needs to take advantage of this because it's not going to last long and they can't keep printing this type of money and doing this. So now we're in the normal the state economy. I've always said, everybody's a top producer when money is cheap. Let's see what happens now when money is regular and you ain't got all these buyers out here in the market. So now you guys who've been overheld sitting here on
the sidelines. Even in the pandemic years, people were saying, we're gonna wait, We're gonna wait. What the hell are you waiting for rates two in a quarter? What is there to wait about it?
Right?
But that zero you thought we were gonna go negative. And that's why I tell you guys, every market is tied together. Go look at what's on a balance sheet of big banks. Real estate, now crypto. They actually said that Crypto is a number one alternative investment futures housing when Blackstone and black Rock began to buy it like large communities at one time. I keep telling you guys, the number one job of every head front of every bank is to make sure they make money in any market.
That's why you have to invest in everything.
That's why I'm not just the stock guy.
That's why I also have a business and stock well, and.
You you also have to look at Really, real estate is the test of time. Right, real estate has been around when out.
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Grandparents who was around you know what I'm saying. So real estate is not going to never go anywhere, and you have to realize that no matter what happens. And this is why I'm vocal about we as a community need to continue by Our home ownership rate is forty two percent, right the Hispanic home ownership And shout out to all my Hispanic brothers and sisters. In the past ten years they did their thing. They were lower than us ten years ago. Now they had a fifty one
percent home ownership rate. But our home ownership rate is less now than it was ten years ago. That's a goddamn shame. So when you guys are listening to all these influencers, YouTubers, instagrammers, tiktoks telling us not to go and wait and this, that and the third that shit don't apply to us. I'm sorry it don't apply to us because our wealth is saying we're going to be broke in twenty thirty years. So for us, we need to buy real estate because real estate is a true
wealth builder over the test and time. If the market goes up or down, guess what, you can still go outside and touch your property. If your stock account, your future's account, your options account goes negative, then guess what. You lose all your money. Game over. Sorry, but it's not market.
To the market, so you're not seeing fluctuations like imagine if you saw like the ticket for your house every day, So let me ask you to hold everything for teams go ahead.
That's true, but right, but when's the last time you've seen rent go down?
Well, no, that's what I was gonna say.
Also, is that preparing for a possible you know, economic downturn, receession, whatever you want to call it. One of these things that's gonna benefit is landlords because now, unfortunately, not only will people probably not be able to buy homes at the rate that they was buying because it's less money. They lost their job, they have less savings, and they're raising interest rates and they're getting laid off, but also people will be losing their homes too for foreclosures so
you got to live somewhere. That's the number one rule in life is that you have to live somewhere. So unless unless you're homeless, you have to live somewhere. So now you have to rent. So now what that does is that puts more renters on the market applying demand. So multi family apartment buildings, these are things that you know could potentially benefit from a downturn in the economy.
That's always a upmarket in something. Yes, but.
Again, look while look at all the institutional investments, right, were always talking about studying, studying and studying. Here on market money, study with the biggest real estate players are doing, and that's the institutional guys. They're buying single family homes when everybody on TikTok and YouTube is saying don't buy, there's a crash. But why you think black Rocks still buying because they weren't some.
Of the biggest institutional players real quickly in real estate space.
Oh black Rock Buffet, you know what I'm saying, Just to name a few, right, these guys own probably half of America and they're going to continue to buy all of the real estate because our people are just sitting here on the sidelines not buying nothing, and then they're going to then we're gonna complain and say, well, they're gingerfried in the hood. They're kicking us all out. Well, we have the same opportunity to gentrify our own hounds. Right.
Rant is going to go up, it's going to continue to go up, regardless of what anybody says, whether you like it or not. Landlords are not going to lower their price, doesn't matter what happens in the housing market. And it's actually the housing market and interest rate increasing helps landlords more because now why people are not going to be able to afford the buyers. So you're going to have to come rent my apartment or you're gonna have to come rent my house. You want to live
in this nice a rated school district. Guess what we have availability. We have this five bedroom house. It's going to cost you seven thousand a month now when you could just brought it in and able to cost you forty five hundred. This is what's going to happen. Period. Point blanking is nothing that no one can do about it. So what side of the fence do you want to be on? Ladies and gentlemen, do you want to pay somebody else's mortgage. Do you want to pay your own
and get your tax benefits? Because real estate is a business right and you get tax benefits from it. So let's not discount, especially in our community, the opportunities that we have in front of us to build our wealth through real estate. I know we talk a lot of stocks and everything like that, but we can't. We cannot put we can't treat real estate like the red had a stepchild no more, because if we have to put our earnings into real estate place, we just have to.
There's three people that had a big impact on my life and who I'm out of my career after Warren Buffer was one of them. Everybody put in chat how many doors is Birtshire Hathaway. That's why I was said master investor. Anybody in real estate, if you're looking to buy, like commercial property or residential property, and you want to know the best price to get on let me flex. Let me put what the comps are top five. I'll tell you the price you would to buy. Your job
is to know where about every commodity on earth. Trust me, if revote go for sale, man and boys and grands. I'm like saying with Urban One. That's I put out the challenge, right, if we really want the culture to win the why don't we pile into one company and take over that one company and own majority of it. Then, even with the biggest real estate player in the space right now is still McDonald's and now Apple is making a move there, Bill Gates owns the most farm land.
The system is always the same. Go study the greats from nineteen twenty back. Go watch the documentary The Guys Who Built The Men Who Built America. Your job is to own everything. James Pierpop Morgan bailed out the United States of America, and banking regulation came from one person bailing out the country. Tech investing as an angel, venture, real estate stocks, crypto, NFT, long term investing, short term commodities. You have to own everything and quit selling grandma's house.
The fucking praise.
Praise, I mean, I think you just touched on something good. Look at McDonald's, man, McDonald's the biggest real estate player US out there. But they flip Burgers, you know what I'm saying.
But of the franchise flip Burgers. Yeah, McDonald's holse real estate.
And it's an incredible model, and we all have that opportunity. Look, if you're a first time home buyer, if you have a business that is that needs a brick and mortar, look at mixed use properties. Right, you can buy mixed use property, which is a commercial property that has residential units attached to it. As long as it's less than four total units. You can use an FAHA long three and a half percent down and you can buy commercial property using the fah loan.
So Derek Falcon told not to cut you off with Derek Falcon told him that that was episode eleven arguably arguably the greatest episode ever.
Recorded in Earn Your Leisure history, in podcast history.
No, Derek Falcon is the goat on all podcast episodes like shout Out to Homemade and Derek Falcon.
Shout Out to Cloudy Special.
But in G's episode with episode twelve, and that changed the game. Also, so that's a good combo because Derek is a restaurant owner. So if you understand about restaurants, you know about ninety percent of restaurants fails. It's an almost impossible business to be successful at One of the reasons why restaurants fail is because they have a high overhead, and they have an inconsistent cash revenue that comes in. So one month you might make ten thousand, the next
month you might make one hundred thousand. Next month, you might not make any money if it's a pandemic when restaurants closed, but you still have to pay your staff, you still have to pay you know, your light bill, you still have to pay for food. So it's a very capital intensive industry. So one of his things is that he only opens up restaurants and mixed hues properties.
What does the mix shoes properties very popular in the Northeast, like New York City and Baltimore and things of that nature, where you might have like three units where people are actually living up top and then there's a restaurant on the bottom. VK nine. Our family in Brooklyn they have that. So now he's saying that, you know, sixty percent of the expenses is probably covered by the rent that's coming.
So that takes a tremendous amount of pressure off him financially, so he doesn't have to come up with, you know, a tremendous amount of money every single month, because now not only is he a restaurant owner, but he is he's a landlord owner.
So what it is is it's actually a real estate play.
Now you couple that with MG strategy, with the you know, with the FHA, which allows you to buy these properties at three point five percent down, if I'm not mistaken, Matt. So, now, so now you can get you know, uh, let's say a three hundred thousand dollars home, just saying that's like you know, that would be like twelve thousand dollars.
Something like that, right, like a little bit less than ten grand.
All right, So yeah, so whatever the price is is it allows you and even if even if it's much higher, you're still putting three point five percent down. So three point five percent obviously is a lot lower than the traditional.
Twenty percent.
So and then from my understanding, correct me if I'm wrong, you have to live in the FAHA property for one year to be compliant.
So now, if you're the restaurant.
Owner, you live in one unit for a year and then you can actually move out and then you can rent that unit and then you can do an FHA again, correct.
Correct, So once you refinance out of that fa and go into a conventional mortgage, then you can go ahead and use your FHA again for your next primary residence, and that could be a four unit, that could be a three unit, a duplex. You know, it's kind of like the birth strategy, you know that buy and renovate, refire, you know what I'm saying, strategy that investors use. It's the same thing for just good everyday homeowner to build day wealth by house hacket and on buying mix shues properties.
It's a good play also, you know, I want people to focus on So we spoke about mixed chues. We spoke about accessory dwelling units, which is a good play. We have to look at other opportunities, like there's a housing shortage, right, and there's going to be a housing shorts I think that the reports I've been reading, we need about five million homes to catch up with the demand because you know, we're growing. The population is just
growing and growing and growing. So you got to start now looking into construction, right, A lot of old properties. You know, maybe you can't find land, but maybe you find a property that's in the area where it's zone and you find out the zoning where maybe you can turn that single family into a multifamily or you can turn that single family into a new ground up construction.
You know, these are the opportunities because the buyers that are coming up, they want brand new, they want you know, less maintenance, and new construction is going to give it to you. So we have to start looking into these things as a community and stop trying to go like the old ways. Look at these new opportunities because that's where the money is going to be made. Development is
not going to go nowhere. We need to build more houses, right, So guys, learn how to develop, learn about construction, loans, learn about these things. So now you can get yourself in the game. Because these these are fundamental steps that you can take. You don't need to go out here and buy one hundred doors if you're not ready to. You can take your baby steps because the real estate
is a long term goal, a long term play. You can look up ten years from there and be wealthy off of real estate, y'all.
And also, to back your point, so not only does Burch your own, so I still want you guys put in a chat how many doors is Burke your own? They also own the real estate firm that is the biggest in the country, Home Services of America, that there three hundred and forty six thousand transactions. So not only do they own the doors, they own the biggest company in real estate. While Buffett is known for stocks.
But you also you also you know who the number one developer of mobile homes in America is? Tell them Warren Buffet's company.
Y'all don't have to listen to me verify your portfolio.
Even last week was about my past and telling y'all, man, if you're black, you'll only have two years if you're not up.
Twenty four months? Is it?
Don't follow what I say.
Follow with the top five governments, top five countries, and top five richest people, do how do you get the money out? I know somebody gonna say that partnership. If you are of integrity and you're trustworthy, if you go to these meetups that we have, you'll be able.
To find partnership.
And I always ask you guys, if you guys have a great idea, why don't you ask us to partner with you. Collaboration is the way. And so last week I'm not even me. I'm not gonna yell again because if you guys choose not to listen, cool, I'm going to focus on the ones that do so for those of you that are focused on getting doors and long term investing, and you can short term invest and long term and build a business. Follow what we're telling you.
This mark, I'm gonna be real market Mondays is more valuable than the.
NBA because they don't it's not even close. They don't even teach that's in the market and shout too. I love the league.
I love the league, but I mean, you can't compare educational entertainment. And that's no disrespect, it's just it's just it's not comparable.
My graduates from my school being forced bad drop bag drop Mike drop bad drop bag drops.
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