Episode Transcript
[00:00:05] Speaker A: Hey everybody, you're kicking it with the homeboys. And we've got a very interesting topic today. Could be a controversial topic depending on how stubborn and hard headed you are, but we are talking about the election. Just had the election and what does it mean for real estate? I'm a little scared of this topic, but here to help me is my buddy, Mr. Scott. How are you, bud?
[00:00:29] Speaker B: I'm doing great. Nothing to be scared of here. You know, we don't have a crystal ball, but we have some thoughts on, on what we think real estate could do.
[00:00:37] Speaker A: And it just really pisses me off the number of people that can't have a conversation when it comes to this, that they're so, you know, one sided. Like after I've watched friendships, you know, come to an end over politics, I see like these wars going on on Facebook and different things. And you know me, I hate politics. So it's easy for me to kind of come in with an unbiased, you know, opinion because I think a lot of people are brainwashed a certain way at a very early age or, you know, your family gets you into one side of politics or whatnot. But yeah, it, it's really hard for me to sit back and watch like how divided, you know, everybody is.
[00:01:21] Speaker B: Yeah, I couldn't agree more. I mean, I think brainwashed is the perfect term for it. But you know, at the end of the day, you know, we are students of the market. We care a lot about what real estate is going to do, we care about what it's done and there's some indicators showing what we think it will do. And there's some facts out there that haven't changed regardless of who won the election, such as there's a major shortage of housing and that fact hasn't changed. Neither party had a really concrete solution to that. They both had some, some ideas they kind of tossed out there. Just kind of fodder for to keep everyone happy, but not really a true plan from, from anyone out there. And so there's some facts that haven't changed. But we're through the election, which we think is a good thing. Just being through the election alone should bring a little more certainty. People wait, you know, they're a little nervous. Interest rates have been on the down, you know, which is a great thing. Interest rates are coming down. Most experts expect the rates to continue to fall a little bit and flatten. We don't expect them to go ever back down to what they were back in the day, near zero, basically.
But housing should become Available again, people aren't selling well.
[00:02:41] Speaker A: The Fed came out and said that they're kind of, you know, pausing, you know, going, going much lower, kind of like against, you know, what Trump, you know.
[00:02:52] Speaker B: Right.
[00:02:53] Speaker A: You know, wants, which, you know, I always kind of said, you know, I feel like, you know, if, if Trump wins, you know, his, his, his biggest issue is always keeping a, a thriving economy. I think sometimes, you know, that can lead to an event that maybe happens down the road. I think that my personal belief, Trump being in office will, the economy will still be strong under his watch. But I think, you know, at some point, you know, you look at, you look at history and you look at the market, you know, over time. Let's just, you know, talk about the economy in general.
You know, what goes up, you know, must come down at some point. You know, there's got to be some, some event. We've on a roller coaster ride, straight up, you know, more of an elevator ride because it's just gone, you know, one way, you know, for the last 10, 10 plus years.
And I think that, that, I think that our economy is, is safe for a while. But, you know, I do Worry, you know, four, five, six plus years from now that there could be a 2008 type event that will be out there.
[00:04:06] Speaker B: Well, there's, you know, we live in a cyclical economy and so these cycles occur where there's pullbacks and recessions.
I don't know that in the market there is enough volatility and doom and gloom to create another 2008. Really the only bad sector of the market right now is office space. And it's really bad. But, and that doesn't have the power to, I think, crash the market the way that every common Joe who has a heartbeat owning five houses like back in 2008 did. So there's some bad parts, but also we have much more of a housing shortage now than we did then, which should help prop the market up. We've got relatively low rates and room to drop them down if there is.
[00:04:54] Speaker A: Where do apartments fall into these housing shortage numbers? I mean, are the, are the new construction apartments part of that overall picture?
[00:05:06] Speaker B: Yeah, it's kind of, it's, it's kind of like the old communists used to say, you'll own nothing and like it. You know, the only affordable thing out there right now are apartments. So what happens if housing does become affordable again? You know, does then the apartment sector really, really hurt? You know, we live in the wealthiest county in our state, you and I do. And it's nothing but new apartments everywhere in downtown Carmel.
[00:05:29] Speaker A: And talk about downtown Carmel, like, you know, where you live, like, you go down there, it is mind blowing the number of super expensive, which mean Carmel's really the most expensive city in, in Indiana. But you know, how many apartments are going up, it's mind blowing. You know, I've got, you know, the intersection just down the street from my house, there's a 500 apartment, you know, community, right? That's, that's almost finished. That's, that's gone up. And I, you know, I just see all of this construction. And then you, you put that with the demographic of, you know, young, the younger generation doesn't care as much about having a house right. As you and I did.
[00:06:09] Speaker B: Right?
[00:06:10] Speaker A: That was always kind of like a benchmark of like what, you know, that you, you'd arrived when you remember, you know, buying your first house, like, my gosh, I'll never forget the feelings like, holy crap, I got my first house right?
I my personal opinion, I think a lot of, you know, people that are, you know, 20 plus years younger than us, they just don't care about that, you know, so apartment living, you know, is, you know, more for them.
[00:06:30] Speaker B: And they're being driven out and away from being buyers because all they see is how expensive housing is. So they don't even really attempt to go down that road because they've been scared away and think it's too, too expensive where it is in many markets, it's too expensive for them. But I hate seeing these, these younger generations sitting on the sidelines because they don't think they can when many of them can. You know, they haven't met with a mortgage broker, they haven't shopped with a realtor to see what they truly can do, and instead, you know, are renting. So, you know, there's that one little sector of the nation that I wish would get the message, go buy a house. Because it is the greatest wealth builder that you can do. The, you know, the average American's wealth is in their house. And it's what creates long term wealth, is owning real estate. It's the easiest way to build wealth. And I hate that this generation is missing out. I hate it. I hate it. And some of them don't have to. A lot of them can't afford it. It's a problem. But building all these apartments isn't really solving the core problem of creating a generation that has wealth. It's almost doing the opposite. And building affordable houses isn't in the cards for Most builders, because why would they put an affordable house on a lot when their sunk cost is the same for that lot? They got to put in roads, sewers, electric, all of those things that you and I know because we up neighborhoods ourselves. It's very expensive. So why would you sell the entry level house when you could sell the more expensive one?
[00:08:01] Speaker A: Well, it's not the builder's fault, you know, either. You see that, you know, the population think all these greedy builders. Well, you know, the local governments, they don't want it either. No, you know, we've met with a lot of, you know, city planners, city councilmen, mayors, and you know, none of them are saying, hey, we're looking for affordable housing. We won't let us.
[00:08:27] Speaker B: We tried to build affordable, you know, duplexes basically, where if somebody wanted, they could buy the duplex, live in half, and basically their tenant would pay, the tenant on the other side would pay their mortgage for them. Is that the perfect scenario for everyone? No, but it makes it affordable for young people to buy in. You know, it's a great way to get this next generation in. And we've had cities push us away.
[00:08:50] Speaker A: Yeah, people don't understand that in order to get, you know, a real estate development, you have to basically have approval, you know, from the local municipality. And in most cases, in order for the project to work, they have to come alongside of you. And what does that look like? It could look like a lot of different things, but you know, say, for example, they're willing to have the city do some of the infrastructure, the roads or connect to the sewer or just make water available. Correct. Water available. Like you have to have, you know, the city on your side to make it happen.
So it's not the builder's fault for not having affordable housing. They're leasing the properties at what they have to lease them for to be able to turn a profit. You know, the builders aren't a soup kitchen that are just putting up properties for people to be able to live in, you know, at a cheaper rate.
[00:09:45] Speaker B: No, no.
[00:09:46] Speaker A: And they're not getting rich right away either. The cash flow is exceptionally small.
[00:09:49] Speaker B: You know, I've always believed that if you're looking to the government for help, then you are in big, big trou. That is the last person, the last place you want to be looking for help. But the truth is the government does have the power to fix affordable housing by encouraging and getting behind these affordable housing developers. Right now, people like you and I, again, we try to build a duplex at an entry level Price that a first time home buyer could come in and actually afford to buy because you've got the help of the other side that you could rent out to help pay your mortgage. It's a brilliant idea and we get pushed away all of the time. There's, there's, right now we're doing it in three municipalities. For every three that say yes to us trying to help build these affordable housing and duplexes and investment properties. For every three that say yes, there's a hundred that have turned us away. And it's not, you need their help in order to make this, this happen. Instead what they want is expensive housing because that increases their tax base and, or really, really thick apartment den density. So you know, on that same piece of land you got a hundred people instead. So they'll either want incredible density of a bunch of apartments or high end homes. So I don't care what anyone says, part of this is the government's fault and if they back off from that, you know, builders will come and build what they can build affordable housing again. So some of this is in the government's hands to fix.
[00:11:23] Speaker A: Right.
[00:11:24] Speaker B: Which is a scary thought.
[00:11:26] Speaker A: It is. So what is that? What does it mean? Let's say for the next four years, you know, we just got out of election, you know, Trump's going to be in office the next four years. Does it really do anything?
[00:11:38] Speaker B: I don't think so. Yeah, I think, you know, government on a local and state level is where the changes need to occur. I've always believed that that's where the power of government is.
You know, different municipalities, different states will solve it differently. But, but as far as I see right now, there's no solution on the horizon. I don't see a solution for it.
[00:11:58] Speaker A: Should you just buy up a lot of land that's on the U.S. mexico border because of a pending wall that's going to be pushed for.
[00:12:08] Speaker B: Yeah. And then let the government buy it from you to put up a wall. You know, I think the play is what we're doing. We're the only game in town building kind of affordable housing that isn't, you know, density just out of control. They're neat neighborhoods of duplexes that people can.
Is it ideal? No. I'd love to build single family homes that people could afford, but we can't afford to do that. The cities won't let us. They'll barely let us do what we're doing and these are great investments for us. So I think we keep doing what we're doing. I don't know what's going to happen. I really don't. I don't. I don't think the problem's going to be fixed anytime soon. Which is another reason why I think real estate is an amazing investment, because there's a major shortage and we don't see solutions actually being enacted. And even if they were enacted today, it takes years for that to be implemented. So, I mean, in the near term, I think real estate's never looked better.
[00:13:05] Speaker A: I think right now is a great time to get in because I think there is going to be, you know, future rate cuts. And people are like, well, why would it now be a good time? You know, why wouldn't I wait for the, for the, for the rate cut? Well, when the rates go down, prices go up. Prices go up and the market will be flooded with buyers. You're not going to have the same opportunity. You've got a much better opportunity now. Yeah, you may lose a quarter point, half a point maybe, but the prices are going to go up and there's going to be bidding wars on properties again whenever interest rates start going, you know, back down again. And I truly believe that's going to happen. So I think now is a wonderful time. It's also coming up on holiday time time.
A lot of, a lot of buyers, you know, aren't really in the game during the holidays. So you've got to leg up on everybody. So I think that was a great time.
[00:14:05] Speaker B: I couldn't agree more. I, you know, now is the time to buy before there's the volatility that could happen with rate drops. There's still amazing, especially for investors right now, there's amazing returns out there because there's a housing shortage. They're not building affordable housing. So all of these people, you look at the population of renters in America, that percentage keeps growing. Sadly, you know, I think it's 28% right now, and it just keeps growing and growing. So, you know, owning good quality rentals has never looked better. And if you sit around and wait for rates to drop, you, and I couldn't agree more, the prices of those, those investment properties are going to go up directly correlated to the interest rates. And you're going to just miss out. You're going to miss out and you could always, you know, buy and refi later if the rates really do drop. And besides, rates right now, I don't care what anyone says out there, are incredibly low. They're incredibly low. You can look at any historic chart of what interest rates are and they are low currently.
[00:15:07] Speaker A: I agree. I think that people get too emotional when it comes to, when it comes to politics and elections. And I'm with you. I don't think that you're going to see this great big shift. You got so many people saying, oh, well, if, if Trump wins, the sky's going to fall, or if Kamala wins, the sky is going to fall. At the end of the day, I don't think either one of those would have happened. No matter who, you know, would have. Would have won or lost.
[00:15:33] Speaker B: Like my brother always says, vote local. That's what really matters to you. And people don't pay as much attention to that as they should. You know, your local government really controls your environment that you're in and what developments happen, what changes in your area. And so, you know, vote local. I don't think this election is going to change much. We see a bright future for people who own real estate. We see it continuing to be hard for this younger generation generation, which we hate. But, you know, we're trying to build, build some good quality affordable housing. If they want to get in through that, great. If not, buy a darn investment property somewhere in the Midwest where it's still affordable. You know, there's, there's ways to still get in and not miss out, but you gotta get in. You have to get in.
[00:16:19] Speaker A: Well, whether you're red or blue, the homeboys don't care. We're going to give you some straight real estate advice and tell you exactly what we think is going to happen. Make sure you check out the homeboys on TikTok, YouTube and Instagram. We're going to keep bringing you the truth. Till next time, homies. Happy investing.
