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- [00:00]
David Green
Welcome to Real Talk Real Estate, the show where we cover how to build wealth in real estate with no fluff, no BS, and no sales pitches. I'm David Green, and I've been doing this for over 10 years. I've seen the ups, the downs, and everything in between. This is the show where we pull back the curtain and show it to you, too. So if you want to build wealth through real estate or you just love learning about it, you found your home. What's up, everyone? This is Real Talk Real Estate, and this is the David Green Show. Welcome. Hope everybody is doing well. Thank you for your continued support. I know I missed last week was in Austin with Brandon Turner at the REI Summit, hanging out with other real estate investors, talking shop, trying to figure out how to navigate this economy. And the consensus is it's hard. So if you're out there feeling the pressure right now of an economy that's not really moving anywhere, of continued inflationary pressures pushing expenses up while income's not keeping track, you are not alone. That's what we're all dealing with right now, just trying to hang on to what we got. My two cents here is if you're someone who struggles with fomo, if you have a lot of people telling you, hey, you should be doing more, you should be growing, you should have more units, that may not be the case. It's easy to take on more units or easier when the economy is crushing it and your equity is growing and your rents are increasing and you're making more money at work, so you got more disposable income to put into real estate. But right now, that's not the case. In fact, the whole world's kind of sitting under the cloud of this AI tsunami that we're all waiting to crash on our heads and see what it's like. And there's not a whole lot of talk going on about what we can do to get the American economy moving, because we're dealing with tariffs in other countries and a big, beautiful bill that should be passing. Well, maybe passing. Who knows how that's going to go. A little bit of drama between DJT and all Elon and there's a whole lot of stuff going on in the world. There's wars, there's rumors of wars, there's conflicts, there's the AI wave, and there's not a lot of talk about what's going on in today's economy, which kind of sucks for those of us that are trying to figure out how to put food on the table, pay the bills and not end up in foreclosure or in bankruptcy or having to take on massive credit card debt just to keep feeding your kids. So if that's you, hang in there. I know it's tough, but send me your questions. Head to davidgreen24.com ask send me a question. It doesn't have to be about real estate. You can put something in there about what you're worried about, what you should think about certain things, what concerns you have with your personal finances or your financial situation and what you can do to improve it. I'm here for you and I want to answer them. In today's show, we're going to be getting some of my thoughts on managing and employing equity, some experiential advice, a viewer looking for partnership and how to navigate conflict, help on a couple who made big moves with an Airbnb lakehouse with rental insurance dilemma and more. Today's show is seeing Green style, which means it's made by you and for you, the Greenigins those that are listening to the David Green Show. And remember, I want your questions. So head over to david green24.com Ask where you can ask them couple other things. Today's show is sponsored by the One Brokerage. That's my mortgage company. We're currently crushing it for investors all over the country who want to buy real estate. Don't want to get ripped off, Want a whole bunch of different loan products, Want talented, honest and skilled loan officers, want great rates. If you don't want to have to sacrifice and you want to work with the company you trust, you should come to us. I don't see any reason you should be using anyone else. So send me a DM on Instagram or send me an email. Let me know you'd like to be put in touch with the loan officer at the One Brokerage and I will gladly make an introduction for you. Also, if you listen to Mortgage Mondays, that's a show I do with my partner at the One Broker in Christian Bashelder. You'll learn a lot about what's going on in the mortgage industry. You can follow that on YouTube or if you're listening to this on Apple or Spotify, it airs every single Monday. In addition to the David Green show, we've also got Real Talk Realtor. If you're a real estate agent and you want to learn more about selling homes or how to be better at that, I have a brokerage in the works that I'm working on so you can hang your license with me. Learn how to be a real estate agent and grow your wealth in real estate, pretty much all things real estate. We're here for you and we appreciate you being here to listen. So without much more ado, let's get into today's first question from Harrison Rosenbaum in eastern North Carolina.
- [04:21]
Harrison Rosenbaum
Hey, Dave, my name is Harrison Rosenbaum. First off, I just want to say thank you for, you know, all the, the content, the podcast, the books, everything that you put out there. It's all great and I really appreciate it, being able to consume it. My question today revolves around equity. So my wife and I have some long term buy and hold properties that have built up equity over time. When we talk about putting that energy to work, I'm just not sure where I should start in the process of how to employ that. If I'm evaluating, looking at getting a HELOC or selling a property for better opportunity. If you just talk me through how you would go through that decision making process of what to do with equity in a property, how to re employ it to, you know, advance your real estate. Thank you.
- [05:12]
David Green
This is a great question, Harrison. Thank you very much for asking this. I think it's on a lot of people's minds right now. First off, I like to think about equity as energy. In my mind, wealth is a form of energy. It can be kept in the form of cash, it can be kept in the form of savings, it can be kept in the form of equity, it can be kept in a bank account, it can be kept in a 401k. These are all vehicles that store energy. Your goal is to create a vehicle that keeps energy and stops it from bleeding because that's what inflation will do to it and actually allows it to grow, ideally at a rate that outpaces inflation. So that's, let's start off with the foundation of, that's what equity is. It's a form of energy. When the market is hot and real estate's doing well, which is what most people have experienced and what most influencers are portraying. So if you're listening to YouTube videos, if you're going to real estate events, they're not full of people that are getting up saying, here's where I lost my shirt, here's where I got crushed. This is a deal I had that went terrible. They're usually highlighting how great they are because they want your money and your attention for whatever it is that they're selling. You get this idea that you need to pull the equity out of a property and put it into more property. It's a good strategy when everything's going up, when rents are going up and when values are going up and when expenses are staying the same. You want to get as much energy out of your savings account, out of your cash, out of your 401k, sometimes out of your stocks. And you want to put it in real estate because real estate outpaces inflation and you can use leverage. There's a big win there. But what about when the economy's not crushing it, when you don't have that feeling of man, if I can get more of my assets put into the real estate world, I can make even more money. At that point, equity might be okay to be left alone. Now, you mentioned a heloc. A HELOC is a vehicle that we use to get equity out of a property and it comes at a price, comes at interest. So you're going to have to pay money when you pull the energy out. But if the place you put that energy makes more than the interest that you had to pay to get it out, it ends up being a win. When it doesn't, it could be a bad move. Not all real estate is good real estate. I just want you to repeat that for everybody here. It's not always inherently good to buy real estate. If you're buying deals and you're putting your money into action in the wrong areas, if you're paying too much for the deal, if it's not going to cash flow, well, if it's not the right real estate or it's not the right time in your life, or it's not the right time in the market, or you have too much of it and you can't keep up. Buying more real estate can be detrimental to your wealth building. It's, it's like hiring an employee. There's going to be oversight that has to be had. It's not just set it and forget it like the way that people describe it. So that being said, I just want to go on the record here and say it is okay to not tap into your equity. It is okay to sit back and be glad that you have that equity. You don't have to put it into play. Now if you're going to put it into play, you've got two main vehicles. You've got a home equity line of credit, like you said, heloc. You've also got a cash out refinance option. We can do both at the one brokerage sponsor of today's show. So please reach out to me directly, either email, Facebook messenger, Instagram, or you could go to davidgreen24.com and use the chat option and let me know that you heard the show and you would like to be put in touch with someone to talk about your options. We're happy to do it, but don't think you have to. The one brokerage is here for when you want to buy real estate. It's not here to make you buy real estate. It's not even here to encourage you to buy real estate. Because like I said, it's not always a great market to buy into. Now, in a bad market, you can still find a good deal, and that's the key. That's what you really want to be looking for. It's not that you shouldn't buy real estate. It's more. You should maybe buy less real estate and be pickier. And in a good market, you could buy more real estate and you could get away with being less picky because the market is going to be carrying you. So that's how I like to look at equity. I like to look at it as a form of a savings account that grows every month because you're paying the mortgage off. And sometimes in a market that's not doing great, like this market, we're not in a collapse. We're not really in a growth either. We're kind of just stagnant. Maybe you just make extra mortgage payments towards your interest, especially if you're at 7, 8, 9% interest on your house, just pay the loan down a little bit. If you've got some money in the bank and you can grow equity that way too, your house can function a bit like a piggy bank where you continually pay off the mortgage with money from your tenants as well as with extra money from the cash flow that instead of going in the bank, it goes towards the mortgage. You pay the house off faster, you get rid of the interest, you get into the deeper parts of your loan where a higher percentage is going to principal, not interest. That is a viable strategy that I talk about in my book. Better than cash flow. The 10 ways you make money in real estate. There's an entire chapter committed. Just do how you can accelerate loan paydowns and build up equity without risk as opposed to buying real estate, which is gonna have risk. Now there's another nine methods, plus one bonus method in that book with a chapter committed to each of them. Some of them have more than one chapter committed to them. Highly recommend you guys check out that book on Amazon. It's probably the deepest and most thorough book that I've ever written on how to think about investing in real estate and all the ways you can make money and in a single deal. Great question though, Harrison. Thank you for that. All right, next up, we have a question from Ryan Johnson in Prescott, Arizona about partnerships. Ryan Johnson with what might be the most all American name that a person could have.
- [10:47]
Ryan Johnson
Hey, David, my name is Ryan. I'm in the Prescott, Arizona market and I have a question for you about partnerships. Business partner of mine, he is a general contractor. We had an agreement where he would build them. I would pay him a management fee and I would supply all the money. We build them cash and then sell the duplexes in this market. And recently we had a conversation where he wasn't quite happy with that arrangement anymore. He saw the profit margins and thought about doing it himself, financing it. But we are really good friends and we want to just try and come to an agreement, trying to figure out what is fair if I supply the money. And he's doing pretty much all the legwork. He's also making some money on some additional tasks that he can do. I was wondering if you had any insight or thoughts into what a fair split would be if I just. I'm strictly the bank and he's doing all the work and we want to try to split it with equity instead of having him have a management fee. So thank you so much for all your help. Thank you for your podcast and your wisdom and your insight and I look forward to hearing from you.
- [11:50]
David Green
Thanks. Oh, Ryan, Ryan, Ryan, Ryan. The age old question about partnerships. I've answered so many of these on the Bigger Pockets podcast. They are intriguing and they are also practical. So many people want to talk about this and I tend to have a contrarian viewpoint. I could answer this very quickly. Let's give you the short answer than the long answer. So if you guys just want the short answer, you can fast forward to the next question. The short answer is there probably isn't a fair equity split because equity is a sharing of risk and profits. So you probably should just give. He should pay you to use your money and you should be taking the risk and he shouldn't have to worry. You shouldn't have to worry about how well the house does. You just get paid. In most cases, erasing the equity portion also erases the competition, also erases the hurt feelings, also erases the feelings of betrayal. And that's what we're going to get into in this question is what happens in partnerships and how they go bad. It's almost always Unmet expectations. In fact, I was at church yesterday. My buddy Tracy, strike property manager in Tulsa, Oklahoma, runs renters place. Really good guy, really like him. Found out he's a pretty incredible pickleball player. The other day I pickleballed for the first time. It was a little different than I was expecting it to be. I'm dealing with some right shoulder pain though, so I don't know if I'll be getting back out there for a while because I heard it diving on a ball. Don't ask me why I died a pickleball. It's not smart. And I never claim to be a smart man, but Tracy said that. Oh, how did he put this? Expectations are premeditated disappointments. And this is the difficulty with partnerships is we think they're going to solve all of the problems that we don't want to deal with. But what they do is they create additional problems. What do I mean by that? We think if we get a partnership, we're going to solve the feeling of fear because we're going to do it with somebody else. But we create the problem of greed. They got more than I did. We think that we're going to solve the problem of time. Hey, I'm going to do half the work because I have a partner. But we actually create a problem of resentment because we end up doing our job and their job or looking at their job. We think we're going to solve the problem of lack of skill or experience. I don't know how to do this part. They do. But you create the problem of resentment because they didn't do it the way that you wanted them to do it. This is the reality of what happens and why so few partnerships and ever exist over a long period of time. There's also the fact that if we're looking at human nature, expectations shift. The goalpost shifts over time. Okay, has anyone ever seen a couple in a relationship where both people were happy? One person loses a lot of weight there. You'd think that they would do this for their partner to make them happier. But what happens is when they lose a lot of weight, the expectations they had for their partner change and they now want their partner to lose weight. And if the partner doesn't lose weight, the original side now is unhappy with the deal. The goal post has shifted and the goal post is now where they are at their current weight and fitness level. And they feel it's unfair to be with somebody who didn't shift. Have you seen a couple where they had an agreement where one side Made more than the other. Usually the man was making more than the woman. And then the woman gets into business or graduates college or does something where she starts making more money. The goalpost shifts. The commitment she made to the guy no longer feels right to her because now she's making more money and she's thinking, hey, I could find a guy that makes even more than this. Or why do I want to deal with this guy when I can make my own money? We've all seen how this plays out in non business relationships. Well, it also does it with business. You end up in a deal with somebody where both of you are broke. You get into business, you start making money. One of you is probably pushing things forward more than the other. Like you're saying here, Ryan, you're the bank. Your partner feels like he's doing more work and he's not going to say it, but he feels like you're a form of a freeloader, that you're not bringing as much value as him. So he's unhappy in the business. Now that's going to affect your friendship. You're asking me the question, which you should be doing. Head to davidgreen24.com ask to put in yours because you want to save the friendship and you want to keep working together. But this is what's tricky. If the deals went poorly and you lost your money and he didn't because he didn't finance any of it, you would feel like you were taken advantage of that. This is what's like amazing, right? He might make money on two of them and then lose money on two of them. And how do you know who got treated unfairly? What I don't love about partnerships is when it goes well. The person who's contributing more work and less risk feels like they're being taken advantage of. When it goes poorly, they don't feel like they owe you anything. They're like, well, that's the part of the deal. Yeah, you were an investment, you lost money. The person who was taking the risk without the work, they feel taken advantage of. It's so hard to balance this where you feel even and what everyone does is what you're saying they go to. What's the split? What's the percentage? That's the part that's always going to move. With literally every deal, you'll find yourself moving the goalpost of the percentage of equity based on how well the deals are going, what the market's doing, who's losing, who's winning, who's providing more and I feel like it never ends. And if you don't move the equity every time somebody's expectation moves, the goalpost moves, but the agreement stays the same. And that discrepancy between the two leads to resentment and hurts the relationship. And I hate this. It's freaking hard. And I have a feeling this is what it's like in a marriage. I've never been married. But if you keep score in your marriage and you pay attention to what you're doing and what they're not doing, it's premeditated disappointment. You will figure out a way to now resent your partner because they think you're doing it because you love them and you think you're doing it because you want credit for it and you want them to do something for you. If both sides are keeping score, it tends to not work out because they're keeping different scores, they're valuing things differently. If one side keeps score and the other one doesn't, the one not keeping score is happy. The one keeping score is not. The only way you make a marriage work is that both sides don't keep score. Now, how do you bring that into business? Everyone's keeping score. That's what business is. And the score is money and time. I don't know that you can figure this out with your partner. That's what I'm getting at. I like to move the dial away from equity and into debt. Hey, you can borrow my money at 12% interest in two points and I'll put a lien on the property, and that's how I'll protect myself against risk. And for as long as you want to use my money, you can. And then maybe you can add equity as a bit of a kicker. Hey, I'll tell you what, I'll let you borrow it at 6%, not 12. So you're getting great debt, and I want 20% of the upside. So now you've moved a little bit of his risk off of him and onto you, and you've moved a little bit of the upside off of him and. Sorry, you moved a little bit of risk off of you and onto him. A little bit of the upside off of him and onto you. And maybe you could balance it out that way. I don't think you're going to get there if you start at 50, 50 and you just move the dial because when the deals go poorly, you're going to be messaging me and you're like, hey, we agreed that he would do all the work and I would fund it. And then we would split the results. And guess what? There was nothing to split. And I lost money and he didn't. So how do I get him to kick in before I do my next deal with them? And he's going to be like, I'm not kicking anything in. That was the deal. You took the risk. It didn't work out. I'll find someone else to borrow money from. And then they're trying to figure out a partnership. I just don't love the idea of the way you're describing it. What I would prefer to see, and this is what I try to do in my own partnerships, is rather than splitting the individual transaction, you create an entity, you split ownership of the entity, and you both put your efforts towards the entity. Okay, so if he's the guy that's good at finding deals, managing rehabs, getting them sold, that's his role in the entity, and he has a percentage of it. And if you can get five deals in there, he does that for all five. Now, there's a certain part where he's going to say, I hate this part. I'm not good at this part. This part takes all my time, and I don't like it. I just want to do this. This is inevitable. This is what will happen every time. No matter what you do in life, let's say you're just playing a sport. You're playing basketball. I love passing the ball. I love shooting the ball. I don't love setting screens. I don't love playing defense. I don't love rebounding. You find a way to say, I want to play this position that doesn't do as much of that and let someone else play the position. That does make sense. Business will work the same way. You can then hire a person within that entity to do the jobs that your partner doesn't like. So he's like, I love finding deals, but I just want to talk to the guy on the phone and creatively put it together. I don't want to have to send the letters. I don't want to lick the stamps. I don't want to take the phone calls. I don't want to screen it. Well, that's what you hire for. And maybe you play that role as the hiring person and also the bankroll. Well, I'll find the person and I'll oversee them, and I'll manage them, and I'll check in with them, and they'll screen the buyers, and I'll make sure he's only getting the good ones. Now, he stays happy. Now you're happy because the happier he is, the more deals he's closing, the more money the business is making, the more you have to split up. And you've taken things off your plate that are draining you, and then you're bankrolling that business. But maybe you get to five houses, you don't have enough money for that. It becomes your responsibility to go find additional capital, negotiate the best terms you can get, bring the capital into the entity, and then put it towards the houses that you're buying that he's finding. I like that method more. If you're going to partner, it's also harder to break apart the entity if it goes really poorly. Like, all right, we'll just stop doing deals through the entity if it keeps doing good. It's hard for one side to take advantage of the other because neither of you can really get much done without the other. That's my advice for you guys. Figure out a way to start, like, an llc. Split up ownership of it however you want, put all your resources into growing that. And at a certain point, if somebody says, hey, I feel like I'm doing more than the other, and the other person agrees you are doing more, don't change the ownership or the equity of the company. Cut them out a split from the the entity and pay it out to them. Okay, so maybe like, he feels like he's doing more work and you didn't have to do as much to bring the money in. And you're like, yeah, I agree. You're still 50. 50 owners be like, all right, for every deal you do with the profits x amount, we're going to cut you another 10 that's paid to you directly, and then we will split 50, 50. What's left after that, 10%. Does that make sense? Or you say, hey, we'll hire a person that will do this work for you that will take some of the load off of you, and you have more flexibility and creativity to keep everybody happy, because that's really what you're trying to do in a partnership, is make everyone feel like they're being supported equally and no one's being taken advantage of. Ryan, great question. Thank you for asking it. Thank you for submitting it, and thank you for giving me the opportunity to kind of work through this with everybody so they can see options that give them a little more flexibility, a little less rigidity. All right, coming up, we have an Airbnb dilemma from a viewer in the Charlotte, North Carolina area. And this is right in my wheelhouse because I've got some airbnbs, myself, or STRs, if you will. And I'm knee deep in that market, understanding what's going on in it and what challenges short term rental investors are facing. So this is going to be fun. We'll be right back after this very short break. Hey, what's going on? You may have heard me mention my new book, Better than cash flow, the 10 ways you make money in real estate. Well, I just want to let you know you can go buy it on Amazon and it's not that expensive. This book covers 10 different ways you make money in real estate, breaking down into specifics, different forms of cash flow, different forms of equity, as well as loan pay down, tax strategies, and a bonus resource which is actually working in real estate and making money. The idea is if you can look at the real estate through these unique goggles and see all the ways you can make money in real estate, you can combine several methods together to turn boring deals into home runs. It's a new way of looking at real estate that I think is desperately needed in this environment where just analyzing for cash flow is not enough. And it uses the principles that experienced investors that do big deals like multif family and commercial deals have been using for years, bringing them into the residential space to give the little guy like us a chance to compete. See what everybody else is talking about, get your copy on Amazon, tag me on Instagram, and I will shout you out. All right, let's get back to the show. All righty. We got Scotty Tyson. Man, we had some really good names on the show today. This guy sounds like an all American basketball player from Belmont, North Carolina, a basketball rich area who has a question about a lake house rental insurance policy. Scotty's got a great head of hair if you're watching on Spotify or YouTube.
- [25:05]
Harrison Rosenbaum
Hey, what's up, David and my fellow real talkers. First of all, David, want to thank you for all that you do in the faith community and in the real estate community. You touch so many people, including my wife and I. We've been big fans for many years. So our current dilemma today is we've moved out of our primary residence, which is a lake house in Belmont, North Carolina. We've turned it into an Airbnb, but we might have jumped the gun. We're currently in a townhouse. And when we made this move, we knew that the lake house would support the mortgages for both itself and the townhouse. But we didn't think about insurance. Our insurance broker has advised us that if we update our policy to a rental insurance or a short term rental insurance policy, then it may trigger a loan reconstruction with our mortgage company. So we don't want to do that. We don't want to lose our rate. We don't want to lose our monthly payment on the lake house, but we want it to be properly insured and we don't want to lie to get there. So we've given you the facts. Look forward to hearing you talk through the scenario. Our interest rate on the lake house is 3%. The mortgage is just shy of $2,000. The town has home payment is about $3,500. The lake house covers both comfortably. But if we have to refigure the loan for the lake house, then that could put us well over $4,000 just for it. So look forward to hearing what you have to say. And if you're looking for a great place to stay in Belmont, right outside of Charlotte, check out Barefoot Oasis on Airbnb. Thanks, David.
- [26:40]
David Green
All right, thank you, Scotty. There you have it, folks. Check out Barefoot Oasis on Airbnb. You can also check out the properties that I manage on Instagram @CTC Getaways. That's coast to coast. And I am now managing properties for other people that have short term rentals, particularly in the Smoky Mountains of Tennessee. So if you've got property up there you're tired of managing it, we'd love to take it off your hands. We looks like we'll be picking up four cabins in Gatlinburg from someone that was just referred to me me from a listener of this podcast. So thank you folks. Side note, this is going to blow you away. You know what, I'm going to save this story for later in the show when we get into a new segment. So you're going to have to listen. You're going to hear a crazy story about how this lead got brought my way and what his property manager was doing to him because there's a lot of shady ones, especially in short term rental space. Now Scotty, to your question, this is a bit of a problem because if what you're telling me is you've got a loan at 3% and it's a rental property and you've got insurance that needs to be updated to show that the property is a rental property, not a primary, if I hear understand you correctly, and changing the insurance is something that your insurance carrier is telling you, you need to tell the lender about, which my assumption would be you're now telling the lender that you're using the property As a, a investment property, not a primary residence. And you don't want them to say, well, then we have to change your rate to a secondary home or an investment property, which would make it go up. So I see the dilemma that you're in here and you don't want to lie to anybody, which is admirable. If we had done the loan for you at the one brokerage, I'd be able to help you a lot more. So if we did, reach out and let me know and I'll get you connected to someone directly. But you didn't mention that, so we're assuming that you didn't. You also probably got this, this loan a while ago if you're at 3%. I don't know for a fact that there's a lot of lenders that require you to change anything because in your insurance company, guy you talk to, he might just be mistaken about how loans work. And I don't want to speak out of turn because every lender has different rules and there could be some mortgage officials listening to this saying, David doesn't always talk about. So let me just tell you right now, I don't know everything and I may not know what I'm talking about about with this, but here's my understanding of it. When you buy a property with a conventional loan, there are three main ways you classify it. It is a primary residence, it is a secondary or vacation home, or it's an investment property. Primaries, you can get 3 to 5% down. Second homes, we can get you at 10% down. Investment properties are 20% and above, and those down payments are related to risk. You also get the best interest rate on a primary, a little bit worse on a second home, and a little bit worse than that on investment property. Again, associated with the risk assumed by the lender who's giving you their money to buy the property. There's no rule that says if you buy it as a primary, you have to keep it only as a primary on the vast majority of the loans that I'm familiar with. So I would do it all the time. It's part of the sneaky rental strategy. That's the next book that I'm working on is you buy it with a primary residence loan. You turn it into a rental property after you've lived in it. Usually it's about a year and then you move on. That's not illegal. That's normal. A lot of people do that. Lenders know you're going to do that. It's a misconception that when you move out, you have to like refinance it. Not true. So if you guys are hearing this, I hope you keep an eye out for the sneaky rental book that talks about how you scale a portfolio with very low money down without using gimmicky tricks. You just incorporate house hacking and rental property strategies together and you get a rental property for less than 20% down. That's the goal. Like 5% or less is, is. And it's nothing illegal about that at all. So you may not have to notify the lender or if you do, you may. They may not do anything differently because they're assuming that you're not going to live in that property forever. Now let's say you have a DSCR loan, that's a debt service coverage ratio loan and that's a non QM loan. So it's not conventional. Those are different in the sense that if you declare it to be an investment property, which it is, if it's dscr, you can't live in it. You often have to sign a loan doc that says I will not live in this as my primary residence if that makes sense to you. So usually you can't go that direction. But I'm guessing you have a conventional loan with the rate you have. I don't know for sure this is going to be a problem. Here's my recommendation. Have somebody else call your lender and say, if I have a house under these conditions and I make it a short term rental or I turn it into an investment property, I'm going to get new insurance. Do I need to update you guys? Do you even care? And they're probably going to say if it's insured, you're good. If they have an issue with it, they'll tell that person. Then you can make up your mind how you want to go about handling that decision. But great question. Gave us an opportunity to kind of get into this and explain different loans. And I wouldn't be surprised if you're allowed to change your insurance and there's nothing the lender is going to do as long as you're abiding by the terms of your loan. And I don't know of very many primary residence loans that say you have to live in the house for the life of the loan. The ones that I've seen say you have to intend to live in the house when you're buying it. All right folks, we've got some really good questions here today. Just a reminder, I've got a free text letter with relevant news what's going on in the world of real estate, what book I'm working on, where I'll be speaking, what's happening with different laws that are changing what's going on in the world of sales? You can sign up for that@DavidGreen24.com you can sign up for that@DavidGreen24.com textletter or you can head over to realtalkrealestate.com text letter all right, in this segment of the show we get into comments by you, the listeners that often come from my YouTube or my Instagram. This first comment comes from Mortgage Monday Trade wars and mortgage rates Episode 56 from NSFitter3134 Hey David, now that you're out on your own and not in the BP orbit, do you offer any tools for analyzing short term rentals like BP did? I'm looking at using my next flip as a short term rental versus selling it. I think it's in a great location and that it could do pretty well. I've just never had anything other than LTRs and flips. Would love your feedback. Thanks. All right, here's the reason it's super hard to find a calculator for a short term rental. Like finding the expenses is is the same as on a long term rental. For the most part you don't really need a special calculator for that. But finding what your rents are going to be on a short term rental are way harder and anticipating the expenses that come that are not like reoccurring is very difficult. Maintenance expenses are way different because you're not just sending a handyman to a house when there's a leak. You're paying trip fees you're having to pay money to for an H Vac guy to go on a Sunday. You're desperately trying to keep the guests from leaving you a bad review. When you get into the short term rental game, you're getting into a space where you're giving up all the leverage and you're just like begging and pleading people to not leave you a bad review. And many of them know that and they use it to take advantage of you. So I don't know of any calculators that are accurate that can do what you're saying. A better approach would be to find a property management company. This is the approach that I recommend in my book Long Distance Real Estate Investing and have them tell you what they think your revenue would be and then talk to an experienced short term rental operator and get a feel for what expenses will come out of that. And then do your analysis on all the other expenses associated with the house. There's also the fact that when you get into a short term rental, you have more like, I don't know if capex is the right word, but you're gonna have a budget you need to put together for upgrades. So you're always gonna be having to like paint it, make it look cooler, add more games to it, increase your sleep count, add an amenity. This is like an arms race when you get into this space. It's not set it and forget it. Like old investing was. You have people you're competing with that are like, oh, that house is making that much money, let me go buy one and do the same thing they did. Now you're splitting guests, you're each getting half of them and then you split and you split and you split as it gets more diluted. And now you have to take more of your profits and put it into improving your property, which means you may never make money. You may be fighting to break even. And calculators aren't going to be able to give you that much insight. If it's a cabin in an area like the Smokies or South Florida or Cooperstown or one of the areas where we're managing, send me a message and we can maybe help you with trying to get a feel for what it might make and helping you buy it. But if you're doing this yourself, you're going to have to use apps like Price Labs and Air DNA to come up with the expenses. You're not gonna be able to use a calculator for something that popular. At least not a calculator that I have come across that I think was trustworthy. But great comment from Seeing Green Real Talk Real Estate with Al Iaquinta From Real Talk Real Estate with Al Iaquinta Episode 58 Jenna Jennifer Roof says doing business with a non believer is a great opportunity to live Christ in front of them. You need to do your due diligence and make sure you're morally aligned. A lot of non believers are really good people and can bring knowledge or skill that you may need. From seeing Green market adaptation episode 55 Kelvin Gavin says, so we are going to convince young adults to work in factories. When I see most making YouTube videos, Ubering and doing tech jobs, good luck. That was likely in response to me talking about bringing manufacturing back to America. And part of maybe one of the consequences of the tariff issues is that we may manufacture. Kelvin thinks you're not gonna be able to get young adults to do physical labor, which is part of my point too. It's gonna be difficult. Like, there's gonna need to be a sizable amount of pain before you get the younger generation to be willing to go, like, break their back and sweat and make an honest living when they all want to be Internet celebrities. He makes a great point. And from the same episode, Bizbuck says Trump is doing a great job so far. Those that throw shade are really not very educated on the larger macro issues. Country. The USA was a was a patient on life support and in desperate need of emergency surgery. Cue the surgeon on duty, Donald J. Trump. I think this is an insightful comment because it points to the fact that your opinion on tariffs being good or bad has less to do with if tariffs are good or bad and more to do with your perspective on the country as a whole. If you think America is doing pretty good and we just need to tweak a few things, you think tariffs are terrible because the short term ramifications are pretty negative. Things get more expensive. We already have inflation. If you think America was about to die, it's a patient on life support. And we were about to go over a cliff because we're so dependent on all these other countries and our debt is growing to outrageous amounts and we don't make anything here because it's so cheap to bring it so we lose the jobs. If you were looking at from that perspective, you're like, yeah, tariffs are going to be painful, but so is exercise when you're out of shape. We need this. We need to get our blood good, we need to get the cholesterol out of it. We need to go to work. And so just depending on your perspective, if pain is good or bad, you're going to have a different take on the tariffs. And on my YouTube channel, I have been covering what's going on with the economy, how it affects real estate, and a lot of it was on the tariff stuff because that's what everybody was talking about. Now that's moved towards the big beautiful bill. That's what everybody is talking about. I really encourage all of you to go follow me on there or look up the David green show on YouTube because if you're not following the economy as a whole, you're not following the ocean's tide. You're just looking at the individual ships, which are the houses. And the tide has a lot to do with how that that ship is going to be performing. You should be looking at the economy. It's one of the Things I talk about in my book Better Than Cash Flow, Natural equity is tied to what economic conditions are doing when we're printing more money, when we're not printing more money, when we have economic stimulus or when we don't. You can expect your property to perform differently based on those scenarios. So you need to follow the weather report before you decide what you're going to go out there and do. And I wish more real estate investors would talk about it because when the economy was great and people were buying houses, everybody was talking about like they were so smart. And now that the economy is doing poorly and they're not doing well, everybody's talking about it like they had bad luck. But you can actually monitor what's going on with the economy to know when you should be buying more, when you should be buying more expensive, and when you shouldn't be. And there's other things in the book that talk about like the area, how you pick the location, what to look for, how to like kind of not just leave it all up to luck and chance when you're dealing with equity and be intentional about it, but the economy is what you're following. And so I follow economic updates a lot because I'm really interested in real estate. And I think the economy has more to do with how real estate performs, including, including your tenants, how much money they're paying, how much they can pay for rent, how much you can raise rents, or how much you have to drop rents. It's all tied to the economy. So make sure you guys go follow my channel there. Michael Goodman says, love your lives, Dave. Keep them coming. Michael Gonzalez says, love the real talk that affects U.S. investors, that some will not let their mind open up past their conditioning. Jordan Taylor says, have you started doing more politically focused videos now? I used to love watching and listening to your real estate videos on my way to work each morning, but now I'm having to scroll through so many videos just to get back to the type of real estate focused videos you were once doing. Sigh. I'm so close to getting started in real estate and I'm so much more interested in the how to videos and the interview videos you were doing with people who have done extremely well in real estate. I loved your straight talk real estate style and that's what kept me coming back. But I watch your stuff for real estate. I'll watch Patrick David Betts. I think they meant Patrick, but David and the others for politics. Sigh. Do I need a new channel to follow for solid real estate advice and how to this is a good question and I would answer it by saying, Jordan, if you hear this, watch the podcast for the how to stuff. Watch the YouTube lives for like I just mentioned, I don't think it's politics. It's what's going on in the economy which is tied to politics. Patrick by David's going to share the news from his perspective. I'm going to share it from the perspective that would affect real estate investors. But if you don't like that style and you just want the practical stuff, follow me on Spotify or Apple and you'll only get the podcast and not the Lives X Amish says Honestly, I think this new bill is actually a great plan. It might sound tough at first, but I believe it will help people stay more productive and focused. Sometimes structure is what we need most. Even if it feels hard in the moment, this could be a game changer for a lot of folks. All right, moving into the next segment of the show, this is the real news report. We get into real estate news and what's going on in that world. First off, we have a Yahoo Finance article that says mortgage rates tick down as US Housing inventory recovers. US Mortgage rates saw slight pullbacks this past week according to data out of Freddie Mac with a 30 year fixed rate mortgage ticking down to 6.85% while the 15 year rate moved to 5.99. These are the first declines in several weeks. Now folks, when you hear this, I need you to understand not every single mortgage lender gives you the same rates. There's a lot of things that affect those. Also, you can get two quotes from two different companies on the rate and they may not tell you. In fact, they often won't tell you. The reason that the rate that they quoted you is lower is because they added closing costs to buy down the rate. Now here's the trick. If you call a lender and you say what's your rate? They're probably going to give you one of the lowest rates they can offer you and not tell you that that comes with a very significant closing costs. If you say what are your closing costs? They're probably going to quote you the lowest closing cost they have and not tell you that that comes at the very significant rate. There is a balance. It's very difficult and that's why I have a mortgage company to be straightforward and honest, where if you ask us what's your rate, we're going to say, depends. What do you want to pay? I want to pay as little as possible. Well, then you're probably going to be here. Oh, that's high. I want to pay less. Well then you're probably going to have this much. Now what we like to do is get you a cheaper rate for higher closing costs and then have the seller give you a credit to buy your rate down for you, which your real estate agent should be negotiating for you. Which is why we like it when our clients use real estate agents that we know because when they all work together, they can get you the better deal. All right, let's go on with the article here. The Yahoo. Finance housing reporter Claire Boston weighed in on how rates appear in limbo and remain in these General Ranges throughout 2025 while also commenting on data pointing to a recovery in US housing inventories. The 30 year mortgage rate this week is 6.85% and that's down just a bit from 6.89 a week ago. 15 year mortgage rates are at 5.99 and that's down a bit from 6.03 a week ago. Now these are very small declines and they're the first declines we've seen in many weeks. But it's honestly not really moving the needle at all when we talk about mortgage rate affordability. We've really been stuck. We've really been stuck range bound in this sort of 6.7 to 6.9 for pretty much all of the year. Overall inventory is up about 30% and we've crossed this key, you know, 1 million threshold for the first time in many years. That being said, when you look at the number, it's still around 14% lower than in the pre pandemic levels. So we've made really big strides on inventory, but we're not really all the way there yet. Also, when you look geographically where these homes for sale are, there is more inventory than we've ever had before in the south and in the Midwest. But then let me say that again, there is more inventory than we've ever had before in the south and in the West. But the Midwest and the Northeast, there are still very few homes for sale. So it's kind of a really. So it's really a tale of a bunch of different markets here. Welcome to real estate. That's exactly right. And if you read Better than Cash Flow, it will give you a serious advantage in knowing where to invest. I talk about in that book why so many people are moving to the Midwest right now, why this is really predictable. It's not dumb luck if you go by there and why I think that certain Midwest markets are primed to be the next place where a lot of wealth is built. If you don't believe me, go check out the book and send me your questions about why that might be@davidgreen24.com ask and maybe we can do a show just on Midwest real estate. If you are a Midwest investor and you think you've got a beat on a really healthy market, I want to interview you. Send me a message on Instagram or Facebook. Tell me that you invest there and let's talk about what you're seeing and what strategies are working. From Newsweek Americans are slashing prices on home listings almost 20% of homes for sale in the US housing market last month had their originally listed prices cut by sellers in an attempt to attract reluctance reluctant buyers. It's the highest number of listed properties offering price reductions since 2016, signaling that the market is about to reach a breaking point that would flip it solidly in favor of buyers. For years, sellers have had the upper hand in the housing market. The pandemic home buying frenzy triggered by historically low mortgage rates and a chronic housing shortage sent home prices through the roof, with home values jumping by 8 to 9% every year since 2019. This market is now different for sellers, with elevated mortgage rates, skyrocketing prices and rising housing costs, including HOA fees and home insurance premiums, many have Prospective buyers have been pushed to the sidelines, dampening demand. A growing number of homes for sale across the country are now spending more time on the market before going under contract or failing to sell at all. May marked the fifth consecutive month of increasing price reductions in the U.S. according to realtor.com in May 2024, by comparison, about 17% of homes for sale had price drops. These progressive increases show that the US Housing market has changed over the past few months, which was chronically low for years. Since the pandemic home buying boom. Inventory is rising because many sellers who were waiting for mortgage rates to come down have stopped hoping for that to happen anytime soon. But it is also rising because more listings are sitting idle on the market. The total national inventory of homes for sale climbed 31.5% year over year in May. This marks the 19th consecutive month of growth, but still falling about 14% short of pre pandemic levels. As I've been saying for a while now, the market has slowed down, listings are sitting for longer, but it's not at the point where home prices are starting to like completely drop. That will happen if inventory grows. That's the metric you gotta watch if you're waiting for a crash. You should be looking for days on market when there are a lot of houses for sale and no one is buying them. That's when sellers are forced to drop their prices. The non serious sellers will put a tenant in their house and rent it out or they will wait. The most motivated sellers will drop the price. If enough sellers all drop their prices, you start getting appraisals coming in at these lower numbers and now everybody else has to list their house at that same level. That's how you push a market down. So if you've been sitting on the sidelines waiting for a crash to happen, it may not be a crash, but you should be watching to see if inventory continues to grow which could lead to that crash just like it did in 2010. All right, next segment of the show is Quick Hitters. This is where we answer questions delivered directly to me on social media or on videos from Mortgage Monday Jamie Blash says Love that hair Christian. Jamie that hurts. This is because I asked if somebody would rather be with a guy that was bald or had hair and Jamie clearly prefers Christian Benjamin Maciel says King Big Dog about me or AI. I think I was asking who would you rather hear from, me or an AI podcast? And I would be King Big Dog three Trials Barbecue says David it takes a real person to admit their flaws and be transparent. Keep doing what you're doing. I got a lot of those things and I admit them all the time. So thank you. Jay Weld says, wow, this is the best show ever. Blows my mind every time. Talk about drops of Jupiter with the massive amount of words in wisdom and golden nuggets. Well thanks Jay. That comes from the scene Green Episode 55 Market Adaptation all right, one of the reviews from the cabins that we manage in an area right between Pigeon Forge and Gatlinburg in the Smoky Mountains. This comes from Moonlight Ridge. This property by the way has an incredible view. You can see it on Instagram if you head to CTC getaways or David Green 24 beautiful cabin in an even more beautiful area. I booked this cabin for a last minute anniversary trip and it was perfect. Has a beautiful view from the deck. The game room was our favorite part. The host is super nice and very responsive. We'll definitely keep this cabin in mind for future trips. 5 stars from Amity Man. I love seeing that, especially when you get so many that are just picky people that found a speck of dust somewhere on a dresser. So thank you for that five star review. If you guys want to see the view, they're talking about. Go Give us a follow at CTC Getaways on Instagram From Jenna of all the cabins we have stayed in, this one had the most beautiful views. Very clean property. You can actually see a rainbow in the view that the guest sent us a video of. And from Becky. Can't say enough about this beautiful home and view. Our entire stay was amazing with plenty to do and comfortable beds to sleep in at night, close to everything, responsive hosts and perfectly clean home. We love the hot tub and the peaceful surroundings away from the busy tourist areas but close enough to get to them. Picky side note, that's what you want to look for when you're buying. Close enough to the places people want to be but secluded from everyone else. Nobody likes to step on on their deck and be looking at somebody else in their underwear with a cup of coffee. So if you guys would like to see Moonlight Ridge or you'd like to see some of the other cabins that I manage, send us a message at CTC Getaways after following us on Instagram or there's a website that you can find there where you can check them out. Tell us that you're a listener of real talk real estate. Say that you're a real talker and we will work on getting you a loyal listener discount on your stay. And on a post on CTC Getaways that showed a movie room remodel that my property manager and I did on one of our cabins. Daily Jewel says Fantastic job guys. Give Daily Jewel a follow on Instagram. I met her at the REI Summit along with their husband Mateo and they are amazing, wonderful people. Big fans of those two. Serendipity Obix says Nice setup. Also get the higher end celebrity cutouts and put them outside the door so people take pics and put them on the gram. Maybe I'll get a big cutout of me now. Maybe I won't do that because then people are just going to try to sue. Ally Quinta put gem house and upward right graph emojis and said so nice. If you guys know Al, you'll know why that is so funny. Hilarious dude. Check him out on Real Talk Realtor where I interviewed him. He also joined me for a scene green and gave his two cents on the show. GMAC Miami says. Seems like a little screen for such a big room might be the way that it was filmed because that movie room in that cabin, it's an 8,000square foot cabin with a 16 person dedicated movie room, has an 85 inch TV. It's pretty, pretty freaking big. If you've ever seen an 85 inch or so, I don't think it's going to be as small as what you were worried about. But thank you for the comments there. If you are a short term rental investor, if you're facing challenges, if it's going good for you, if you want to be transparent, talk about the good, the bad and the ugly, I want to interview you for the show. Especially if you've got a cabin or you're in an area where a lot of other investors are and you're facing the same things that other listeners might be going through. And hey, if you're considering getting into short term rentals, it's really helpful to hear about what it's actually like doing it to know if it's could be a good fit for you. Make sure that you reach out to me on Instagram or Facebook and say, hey, I'm a short term rental operator. I got cabins in this area. I want to talk and we'll put you on the show, folks. That's what I have for you for today. Again, thank you for listening to the show. I sincerely appreciate it. There's a whole lot of podcasts out there with a lot of fluff, a lot of glitz, a lot of glamour and not a lot of real talk. So you're a real one for being here on today's show. And thank you for always supporting me in this fight that we fight, the good fight for real estate investors, the path to wealth and the path to being the best version of you that you could be. I will see you guys next week on the David Green Show. Sam.