Christian Bachelor (4:21)

Yeah, yeah, good question. It gets, it gets a little deep into the loan guidelines. But what it immediately makes me think is Las Vegas, Atlanta City, maybe Miami thrown in there are, are going to probably see increases in real estate, in real estate values. Because whenever you have a type of income that has historically been taxed and now we're taking it sounds like potentially tips and overtime into the non taxable territory and it's sounding like there's going to be a limit of what we were reading, 25,000 potentially, right, of non tax tips. It creates a very unique opportunity for, for those types of workers. That's casino workers, you know, hosts at like a nightclub, waiters, you know, the people who historically, you know, get at least a significant portion of their checks via tips. You know, construction workers that work overtime, nurses that work overtime. There's a lot of opportunity there. And the reason why that's important is whenever you have untaxed income in terms of mortgage qualifying, you actually qualify for more. And the reason being is that an easy way to understand this, right? All of the guidelines in lending. So you guys have probably heard, you know, debt to income ratios, right? That's the, the, the biggest criteria in which determines what you qualify for. All of it is based on your gross income. Okay? So if you make 100 grand a year, Fannie Mae, Freddie Mac, the rule setters of conventional lending determine that usually around the loan product, you can go to like between 40 and 50% of your gross income in terms of your debt. So if you make a hundred grand a year, you can have up to 50,000 a year in debt. Now a lot of people say oh, 50% of all my income, that's a lot. Which is true, but that's because they assume, you know, probably between a 20 and a 40% tax rate, you know, and you need the rest to just live, right? And that 50% can just go towards all your debt. Not just your home, all your debt. That's your cars, your student loans, your personal loans, credit cards, everything that you pay, reoccurring every month. Now when you have a percentage of that that is not taxed, there's more wiggle room there. So what conventional guidelines actually allow you to do, and there's not very many examples of this because non taxable income is kind of rare. There's a lot of non tax income for veterans, for Social Security, you know, some aspects right now have non taxable income. But if tips and overtime join the fold, if you make 25000 in tips we're going to be able to gross that up now, which means for every dollar you make, we'll be able to give you like 125. So we'll be able to give you a $25 in qualifying potential. So you basically get 25% more borrowing potential on every dollar you make. What that means is people who get income via these now non, potentially non taxable avenues are going to qualify for more, which means there's going to be an increase in interest in those areas. Right. And the areas that are very known for taxes.

David Green (7:41)

You're talking about the geographical areas.

Christian Bachelor (7:43)

Yeah, yeah, 100%. Right. And that's, I mean, Vegas is the most obvious one that comes to my mind because if you ever talk to, you know, a blackjack dealer or a craps table dealer, I think like 70, 80% of their income is usually tips. Right. They get paid minimum wage basically on salary and then they, they make a good amount on tips. Those people are going to have a much higher qualifying potential knowing that we can give them more credit for every dollar they make that is non taxable. So that's, that's the only way that I really see this impacting the mortgage world outside of inflation, you know, outside of, you know, what the Fed may do to respond to this. If the Fed determines that this bill is inflationary, they could raise rates. So this is one of the things that David and I always talk about. If you're in regular communication and your goal is to whether refinance or buy in the near future, you should be in almost day to day contact with a mortgage broker. If that's us, awesome. If that's your bank, if that's whoever you trust. Because this bill is absolutely going to have a response from the Fed, whether that's higher for longer and increase rates or if it's, hey, this should have beneficial impacts to the economy and maybe we can bring them down. I think it's going to be the, the first option there because Jerome Powell is historically referred to Trump's policies as an inflationary and we'll see if he holds that stance. And Trump has many times said he wants to fire Jerome Powell. So we'll see what they land on. But to be determined, right, we got, we got some very interesting world economics that we're, that we're leading the way on right now. So we'll see how everything impacts us.

David Green (9:32)

Now this section that we jumped into right away, specifically the no overtime and no tips probably will affect real estate investors and those getting a mortgage more than all the other sections we're going to talk about. So that's why we're spending more time here. In addition to, like Christian mentioned, being able to qualify for more and geographical areas that will probably benefit from this, which are going to be places that are known for tourism, because there's going to be tips that are associated with that. You also need to think about the overtime factor here. When I was a cop in 2015, I worked, I think, every day of the year but three. I had three days off for the year, and most of those shifts were double time. So I was averaging about 95 hours a week on the clock, not including the driving. It's crazy. I was working all the time. I was sleeping in my car. My base pay, I think, was probably like $85,000, but I made over $300,000 that year because of the overtime. I got hammered on taxes, and when it was all said and done, I felt like a fool because I killed myself. I lost a year of my life. I gained a lot of weight. It was miserable. And then I paid so much in taxes, I was like, I should not have done it. That didn't make sense. But now that you aren't going to be taxed on your overtime, I mean, what's the math on that? That's like $240,000 or so that I would have not been taxed on. That's insane. And I don't know if the bill has specifics of if they're going to cap it at a certain point, but there are professions that just were disproportionately benefited from this public service people. I'm guessing some utility workers probably work overtime. What are some other jobs that we're not thinking of or. I'm not thinking of, Christian, that. That work over time.

Christian Bachelor (11:17)

I mean, I just know from my history, you know, my mom's a registered nurse. Yeah. Hospital got a lot of overtime, Right. So hospital workers, you know, a lot of school teachers that pick up shifts in the summer. Right. They may. They may stay late or do tutoring or whatever. And we see over time on so many people's, you know, even. Even, you know, something down to like, you know, a dental hygienist. Right. I mean, if they stay late during the day and they're helping out their dentist or a doctor's assistant or. I mean, really, it could be anybody, right? Anybody who has the ability to work over those eight hours a day or 40 hours a week. I mean, it's federally mandated. You get overtime, right? Yeah, now I do see that it sounds like the bill may potentially have caps, at least on the tip portion. I think we read up to $25,000 in tip income. I still have to do the research and see if that's the same thing for overtime. Because David and somebody, your position, you'd only get $25,000 of that knocked off. Right, right. I would like. That would be very interesting to see if the overtime is uncapped. And I think what Drum's trying to do there is motivate people to work overtime, which I don't think is a bad thing. Right. I mean, if you're getting a bigger bang for your buck for every hour you work, just like David did, I mean, you guys can see with his numbers, he took an $80,000 salary and made multiple six figures. That's. That's a game changer right now. It's not as big of a game changer if you're losing 50% of it to taxes in California. Right. If the federal portion of that goes away, I mean, you guys do the math. Yeah. Like David was saying, 30 to 50% of $300,000 every year. I mean, that's. You're keeping a significant amount of money. Yeah.

David Green (12:54)

So there's. So in. In addition to certain areas being able to qualify for more, certain professions are going to benefit. And that's going to do more than just help individuals, in a sense, qualify to get a mortgage, who I'm sure very happy to hear this. It's also going to help real estate investors as a whole, because if your tenants are people who rely on overtime, if you're renting to travel nurses, if you're renting to healthcare professionals, first resp jobs that have wages that are based on overtime, a lot of the time, contractual based employment situations, your tenants are going to have more money and be less likely to fall behind on their rent. If you live in an area like in California, none of the police officers that worked in San Francisco lived in San Francisco. That is impossible. No one could do it. I imagine it's similar in places like San Diego. High expensive places to live. It's very, very, very difficult to afford to live where you work. So suburbs like Brentwood, where I lived, were known for where all of your first responders would live and they'd commute an hour in to go work at a hospital or go work as a firefighter, be a deputy sheriff. Whatever they did, those communities are going to see an increase in the value of their homes because the people who live there are just going to become disproportionately wealthier. You're probably going to see now, I would imagine, a shift in the employment. You're going to have more people fighting to get those jobs where, which this has nothing to do with economics, but that's good news that we have better people trying to be firefighters and police officers and EMT drivers. We're going to get rid of some of that apathy and sluggishness because now those apartments can be pickier about who they bring on. So stuff like this will send ripple effects throughout the culture, not just the economy, although the economy is going to be affected as well. What about this car loan situation? So apparently, if I'm understanding this right, if you buy an American made car, which is funny because the whole tariff on auto bills from somewhere else was something that made everyone angry, cars are already expensive. Well, this bill says, well, hey, if you buy an American car like I wanted you to in the first place, we'll give you a $10,000 deduction on. Was it the interest of the auto loan? I believe. Does that sound right?

Christian Bachelor (14:56)

Yeah. And, and guys, you have to forgive us. This bill was literally just announced yesterday as we're recording this. So we're still, we're still learning about it and it may still be changed a little bit before it goes to Trump's desk. But, yeah, that is my understanding that there's going to be, I believe it's against the interest that you pay on your auto loan. So your auto interest is going to become deductible. And I believe it's like David said, if you buy an American made car. So I, I mean, I'm with auto real loans at all time, highs paying, you know, some people Pay, you know, 8, 10, 12, 20% on their auto loan interest. That's also a pretty substantial write off. Right. So people who, you know, who have those large auto loans and now have a big percentage of money to potentially count against their taxes every year, that's not bad. One thing that I want to draw attention to, that it's important to try to understand, you know, what are the actual core benefits that we get when there's a big overhaul like this. And I think it's very clear that we're trying to motivate people to work more and work better. Right. Because ultimately, tip income is a direct representation of how well you do your work. Right?

David Green (16:04)

Yeah, it's mayor talk.

Christian Bachelor (16:05)

Get higher tips. If you're better like David, you used to be, you used to work at a restaurant when you were younger, right? Like your Tip income was. You could probably take your tip income and compare it to anybody else in the restaurant and see who the good waiters were. Yeah, right. Like they're the people getting the highest tips. Right. Same thing with overtime if we're incentivizing the harder work. Now obviously you can't incentivize somebody to work 24 hours around the clock. It's within reason. But for the income that people were already, you know, going and seeking after, like David was when he was a cop, you know, I, I kind of like the idea of motivating that. Right. Motivating to do more work, to do better work. And it's funny, I think what this will have an impact for, you know, you think between three and ten years ago when, when people would go get new jobs like, you know, in North California or whatever, a lot of times they'd be asking for like, oh, what's your stock bonuses, what's your RSUs? Like, what do I get for working here? I think a lot of that's going to change now to say, what's your overtime structure? Can I work unlimited overtime? You know, and that's going to be like a perk of the job, you know, just the same way that like health insurance and 401ks are. I think a lot of, you know, hirees are going to come in saying, I want that overtime now. Right. And employers are going to have to cater a little bit and potentially start offering overtime where they wouldn't otherwise to motivate, you know, a good applicant. Right. And to get, get the, the top tier of the workforce. It's gonna have some interesting compounding effects all the way down the line.

David Green (17:29)

So if you're a real estate investor, I would be prioritizing right now communities and areas where first responders, healthcare workers, or anyone who gets overtime lives and rents and buys same as your. As if you're a real estate agent or your professional and if you work in those professions, you now is the time to consider taking advantage of that to buy a house where maybe you thought you weren't going to be able to buy previously. All right, moving on to some of the other parts in the big beautiful bill, the biggest, most beautiful, bigly bill that we've ever seen in this country that I am once again making great. No one could do it, Christian. They said that they could. They couldn't. Only I, only I could do it. And I have done it. And this will go down in history as the biggest beautiful bill. Medicaid changes. I love how you're speechless with that. You're like, I don't even know.

Christian Bachelor (18:14)

I just think it's funny. It's actually, it's kind of like a, like a master chess move to call your bill the Big beautiful Bill. Because then even the, the pundits of your bill, the people who don't like it, have to refer to it as here's all the problems with the big beautiful Bill. Yes, they have to call your bill beautiful. It's kind of like saying like, you know, the most handsome man in the world. Well, I don't actually think he's the most. But you're calling him the most handsome man. It's hilarious to me that, you know, even, even the people who criticize are going to have to call it the Big beautiful Bill.

David Green (18:42)

Touche. That's a great point. Focal point of the package is nearly $800 billion in reduced spending in Medicaid. So that won't really have a ton to do at least. I can't make a connection right now with mortgages or the economy. But it is a pretty significant part. So that's worth mentioning if people are hearing about it for the first time. Listening to Mortgage Monday here, part of the SNAP revamp, which is the Supplemental Nutrition and Assistance Program. My understanding of that, I'm not a politician, is that there were taxes that were collected to help make sure kids in school got healthier foods. They're going to be shifting a lot of that responsibility from the federal government to the states. So if you're in a state that doesn't have state income tax and they're taking on bigger burdens, you should pay attention to this kind of thing because that may lead to your states increasing taxes on you and passing that on once the food federal government says they don't want to pay for it. It could also lead to just maybe some of these programs being canceled when the state has to take them on. The SALT deductions, which are the state and local taxes have been changed to where you used to be able to write off $10,000 of state and local taxes. Now I. Someone's going to hammer me in the comments. We didn't read the entire bill, folks. We have an overview of it, just like many of you. But my understanding of this is that you could write off up to $10,000 from what you're taxed federally if you paid that money to the state. So like in California, I think I was paying, what was it, Christian, 13 and a half percent state income tax?

Christian Bachelor (20:13)

I believe it's around 13.8, something like.

David Green (20:16)

That, we would have been able to write off up to $10,000 of money that we paid to the states. We didn't have the double pay that's being bumped up to $40,000. So people overall, especially if you live in a state with high state income taxes or state local taxes, like New York, California, or an area where your municipalities hit you with special assessments, which a lot of the wealthier people live in communities where they have to pay a lot of money and their property taxes to pay for some of the people in the community that don't make as much money. You're getting some relief on how much you're paying in taxes. And that's why I said earlier, if we can't stop expenses from rising, what we can do is put more money in the pockets of the people by reducing the taxes that they're spending to try to combat that. There is a Trump saving account for kids, which is also going to go by the acronym maga, which. What did that stand for? I remember reading that somewhere. It doesn't say in this article, but it was some. It was like doge, right, where they made the acronym. The Department of Government Efficiency was a play on words for Elon's DOGE thing. This is similar where it's a savings account where, where parents or guardians who open Trump accounts for their children. Imagine calling it the Trump account. The federal government will contribute a thousand dollars for babies that are born between January 1 and December 31. So if you have a baby between 2024 and 2028, the government will contribute $1,000 to an account for that baby. And there's another deduction in here, I believe, where you get $2,000 instead of $1,000 if you have a kid. So they're incentivizing people to have children because the birth rate has been declining pretty significantly. You have anything you want to add on that, Christian?

Christian Bachelor (21:57)

Yeah, it's definitely interesting. I do think it's unique that the, the, the benefit is only during Trump's presidency. Right. 24 to 28. You know, that I, I feel like that could be used in 2029 to say, you know, if Democrats like to see he can't get your kids money.

David Green (22:19)

Right.

Christian Bachelor (22:19)

That's always, always interesting to see the political topic of it, but I don't think it's a bad thing. I do think we need to motivate, you know, people having kids in the right circumstances. I don't think just, you know, everybody should start having kids. But, you know, I do think really Worldwide, not even just in America. There's, there's a birth rate problem. You know, it's getting harder and harder to, to afford kids. And a lot of, you know, of the younger generations are, are, you know, double thinking, you know, starting families. And if this offers some relief there, I, I think ultimately that's a good thing. I don't really have any in terms of ways that it would impact mortgages, but I'm, I'm, I'm, I'm pro birth rate increases, if that's anything.

David Green (23:05)

So, yeah, that's good. There's a student loan overhaul in the big beautiful bill. A wholesale revamping of the current student loan program is key to the leg that provides 330 billion in budget cuts and savings. And it looks like they're trying to simplify the way that student loans are repaid. The proposal would replace all existing student loan repayment plans with two options. There's a standard option with monthly payments that are amortized over 10 to 25 years, and then there is a repayment assistance plan that's generally less generous than those that it would replace. Among other changes, the bill would repeal Biden error regulations that made it easier for borrowers to get loans canceled if their colleges deferred, frauded them, or closed suddenly. And then this section, I think, is also pretty relevant to real estate investors in general. And so we've saved it for the end. So if you've made it this far, thank you for being a loyal follower of the show and going all the way through. Leave us a comment, let us know what you thought of today's show and make sure you subscribe to the channel and share this with others. This is the drill baby drill section. To generate revenue, a section of the bill will allow the increased leasing of public lands for drilling, mining and logging, while also clearing the path for more development by speeding up government approvals. Less regulation. Royalty rates paid by companies to extract oil, gas and coal are going to be cut, which reverses Biden's attempts to curb fossil fuels to help address climate change. So Biden put some regulations in place where they increased how much people had to pay if you wanted to get oil, gas or coal out of the earth here, which meant we imported it from other countries instead, which moved wealth out of America and into those countries. And as this is related to the tariffs that are going on, Trump is kind of changing the pathway to get these items so that we can get them out of our earth instead of other countries. And I would imagine if you live in an Area with logging, mining or drilling, you are going to see some pretty significant improvements in the demand for rental property and home prices. I remember when fracking, when the, the fracking technology first kind of took off here, North Dakota exploded. That was a state that was the butt of everybody's jokes. There was a movie called Fargo. That was the only reason we even knew that this state existed. And all of a sudden, real estate investors are making money hand over fist, throwing up like just crazy cheap structures that had bunk beds for all of these oil workers to go sleep in because they were working in these fracking farms. And it was exploding and then all of a sudden just cut off right away because these regulations came in, shut down fracking. And then all those investors just got the music ended. They had nowhere to sit in the game of musical chairs, as does happen in our industry. This is likely going to reignite that. I found it interesting that it also talked about logging and mining. And I immediately thought about where would we be logging and where would we be mining? Because I'd keep an eye out on those areas to grow. Right. West Virginia comes to mind when you think about mining. I'm sure there's other people who locally understand, hey, we used to have a big, big mining operation here. Biden shut that down. If it opens up again, that may be some of the new hot markets that money moves to. What do you think about that?

Christian Bachelor (26:17)

Yeah, I think in the same way that we, we mentioned, you know, the, the tourist areas being benefited from the no tax on tips. Same thing, right. If there's a, a job search surge, so to speak, where, you know, there, there's an influx of, whether it's oil workers, mineral workers, logging workers, you know, I think Pacific Northwest, when I think of logging, right. All the, all the trees that are available there right now, obviously we want to do it in a way that's, you know, you know, responsible, but there's responsible ways to do that. Right. And I think if it's done the right way, it will lead to an increase in jobs in that area. And if you combine that, you know, you may, you think about the, the people who benefit three different ways from this bill. People who benefit from overtime who are, you know, could be manual labor workers working in mines, oil fields or logging farms. On top of the salt savings, I mean, you're talking about compounding savings now because not only are they not taxed on overtime, they can deduct their state income against their, you know, more of it against their federal tax. And there's more jobs in their field. Now you're like, oh, there's, there's a certain subset of the population that's really benefiting here. Right. And if for real estate investors to just keep that in mind here, you know, we always talk about location, location, location. This is a very good opportunity to maybe get ahead of this a little bit and start targeting those markets with overtime workers, with tip workers or with workers in the fields that David and I are speaking of now. That that should have a job surge coming right now.

David Green (27:47)

If people live in those areas, if they want to invest in those areas, if they've been following this and maybe this should show affirmed. Yeah, that is, I am thinking the right way. I do want to get ahead of this. Where can they go to get pre approved with you?

Christian Bachelor (28:00)

Yeah. First step, guys, is always a pre approval. If you want to trust us with that, which we would love. Your business the1brokerage.com is the best way to find out more about our company. And if you want to email me directly, it's Christian the1brokerage.com and you can find me on social media at the1broker. Instagram's best way to do reach out to him.

David Green (28:20)

You can also reach out to me. You could go to davidgreen24.com There's a chat option goes right to my cell phone. So you guys can communicate with me directly if you have questions. If you want to be featured on Seeing Green or the David Green show, you could go to davidgreen24.com ask. We do need questions to be able to make that podcast, so please do that. You can also find me on Instagram. Give me a follow. I'm David Green, 24. He's at the/1_ broker and you guys can communicate with us there. Basically, if you're listening to the show, if you're getting information, if you're both scared and excited about the direction the country is taking, don't stay in a hole. Reach out. Talk to us. Get connected. Tell us what you're looking to do. We will genuinely look for a way to help you accomplish your goals. And we'd love if you would help us accomplish ours. We are currently hiring more loan officers to work at the One Brokerage because we have too much opportunity, too many clients and too many leads and not enough people to work all of them. We also are just like every company is looking for good people. It's hard to find the good people that watch this show and our best people are pretty freaking busy. So if you're a mortgage officer. If you're watching this, if you like this kind of content, do reach out. And if you're a real estate agent and you know a mortgage officer, please reach out to me or Christian and say, hey, I know this person. You should reach out to them and talk. We would like to hire people. Anything else we should mention before we let these good folks go?

Christian Bachelor (29:41)

Christian no, I think this is a little bit of a longer episode than normal guys, but you don't have every day where a big beautiful bill is on the doctor to talk about. So hopefully you guys learned a lot from this and had a have a different perspective potentially what's coming.

David Green (29:57)

That's it. Christian I'll be meeting very shortly here to do another meeting. For people that are looking to join the ONE brokerage. We try to do one of those a month. So if you're a mortgage broker and you're curious about what we have going on, that would be a good place to start. Just reach out and we'll get you a link and you can join the next one. Thanks everybody for listening. Thanks everybody for being a hard working American and thanks everybody for loving your neighbor. We appreciate that. We are the one brokerage. We want to help you finance and scale your real estate portfolio as well as keep you abreast of what's going on so you can build your wealth. We will see you guys next week on Mortgage Monday. Sa.