Eddie Demas (6:15)

Hey, David, so thanks for taking my question on the year of 2023. In April, I purchased my home for around 180k. Coming May of 2024, you year later, it appraised from the District county appraisals office at 370k or so. So close to about 200k in equity just one year later. And my question to you was, should I try and hurry and get that equity out and a cash out refi or a heloc or should I wait until, you know, prices go up, Whether that's because interest rates go down or just whatever shift in the market there is and get the most that I can at that point. And on a side note, I am looking into getting my real estate license just so I can help other friends and family, you know, do good decisions as best as I can help them in real estate. And I'm also also thinking about purchasing a property in Michigan for around 60k or so. So I might be contacting you and your brokerage for that. Thank you so much. I appreciate you taking my question. Let me know your thoughts. Thanks for everything you do. Bye.

David Green (7:33)

Eddie Demas, thanks for the question. That was great. Love your attitude, love your energy, love the positivity. And you're asking very relevant questions for what's going on in our country right now with the economy. All right, so first off, congratulations on $200,000 of equity. If you want to just put that into context, think about if you were working a job where you made $60,000 a year. I'm assuming you probably keep $50,000 of that. I'm assuming you probably spend 40 grand a year on bare bones expenses. So you're able to maybe scrimp and save 10 grand a year. It would take 20 years to do what Eddie did with that one property because he bought a house and he waited, which he was only able to do because he saved his money and he was able to put a down payment down. So good for you, Eddie. I think this is an example of what everybody should be doing. What I don't want to see you do is be in a rush to scale your portfolio. Look, when the market is doing great, which it was for the last 10 years, it's no surprise that I think that's because we printed a lot of money. All the real estate's going up and you get a lot of fomo. You get a lot of people that are like, man, it's going up, I can't miss. I just want to buy as much as I possibly can. Then I can quit this job, I can tell my boss to shove it, and I can finally get myself one of those girlfriends to go out on the yacht that I bought with all my equity and I can say that I made it. And maybe, just maybe, the cat will sit on my lap instead of my mom's because I'm tired of living at home. And then people go scale their real estate and they get themselves in trouble. Scaling is not inherently good. It makes sense when the economy is doing well. I'm a fan of scaling if you can do it safely. But I don't think everyone should be on that same path. Sometimes it's okay to say, I just made $200,000 of equity. I just set my future kids up and my future family up really nice. I just basically took 20 years off of having to save with one deal. So be happy there. I am a fan of getting a HELOC on that property, but not of using it. So at the one brokerage we can do helocs on investment properties, not just your primary residence. So, Eddie, I'd like you to reach out, contact us. I'll put you in touch with one of our people. Randall's my favorite when it comes to these helocs. Shout out Randall if you guys know who Charlie Kirk is. Randall looks like a mix of Charlie Kirk and a Ken doll. And I believe he's single. So if you are a single young lady and you'd like a good looking loan officer to date, let me know and I'll connect you with Randall. Anyways, he's also really good at doing helocs on investment property. So I want you to open up the HELOC on the investment property but not spend it. Just wait. I don't know what your market's like, but there is a very good chance that in many markets across the country, we're going to see prices going down. Now, I open the show talking about the overall economic state. And this is why I want you guys to understand something. In my entire career of real estate sales, I've only seen one thing make prices go down. And it's actually very simple. But it's one of those things nobody talks about. Sellers don't list their house for less than what the highest comp in the neighborhood is. They like to push it as hard as they Can. And if you were a seller, you would do that too. What sellers do is they list their house as high as they can. And then as the days on market creeps up and it doesn't sell, they, they start incrementally lowering it. This is the pattern of human behavior. At a certain point it hits a point where a buyer wants the house of lowering it and they buy it. But what happens if you have way more inventory on the market then you have buyers that want to buy them. For years this has never been a problem. We haven't even considered that this is something we have to think about because there were more buyers than there were houses to buy. That's when there was a high velocity of money. A lot of people were doing well. There was a lot of economic security and certainty people wanted to gain. We are now entering into a market where a lot of people are like, look, I don't want to lose, I don't want to buy a house. That's risky. What if my tenant can't pay their rent? What if lumber goes up because we put tariffs on Canada where we get wood from? What if, what if, what if? So what happens is the buyers back out of the market collectively, just like they all collectively entered into it. That's why real estate tends to move as a feeding frenzy. It's either red hot or ice cold. It's rarely ever just steady. So the buyers back out. Now you have these sellers that start putting their houses on the market and the inventory grows as there are fewer buyers chasing them. At that point, the only option is everybody has to lower their price. When the buyers see that, they go, oh, I'm not going to buy right now because how much lower could they go? And we end up in a self induced housing catastrophe as the buyers don't buy and the prices on those homes keeps going down, down, down, down, down. And then what happens? They get to a point where investors say, that makes sense for me. The investors jump in to buy. It creates a feeding frenzy. They go right back up. This is exactly what we saw in 2010 when everybody put their house on the market and no one was buying. And by 2013, in the markets like California, Phoenix, Nevada, Las Vegas, even some in Florida, you saw all of the buyers jump in at the same time and boom. It went from houses that on the market a long time to houses are selling like hotcakes. I'm not predicting that's going to happen. I'm watching to see because the pieces are starting to fall in place where in some markets in the country. We could see this happen, happening. This might be an opportunity to buy a house when prices go down and then refinance into a lower rate later if President Trump gets his way. He's mentioned before that he wants to lower interest rates, but that Jerome Powell of the Fed is going to fight him on that. If Trump can figure out a way to do that to get them lowered, which he's been pretty successful so far, and workarounds to get the stuff done that he wants to get done, you might see this perfect storm of buying opportunities where houses come down to a price that's lower than what they used to be and your interest rate is higher, but then you refinance in lower rate and you got the lower price. That's where great deals are made of. So Eddie, I want you to be ready, which means opening the heloc. But I don't want you to have this like I gotta buy a house, I gotta buy a house, I got this money's burning a hole in my pocket type of situation. So great question, you're thinking the right way. Thank you for submitting that. And make sure that you reach out to me either through Instagram, DMS or the chat option on the website and I'll get your email and I'll get you connected. All right everybody, in a second we've got another question coming out. This one is about house hacking. We'll get to that right after this. Quick break. Thanks for listening to Real Talk Real Estate. Very short commercial break here. Just want to let everybody know to go check out CTC Getaways on Instagram. That is my property management company, brand new page. We are working on building it out. But if you've got a cabin in the Smoky Mountains that you would like someone else to manage, or if you've got a short term rental that you are tired of dealing with and you want someone else to manage it, send us a DM and let us know or get in touch with me and I'll let you know if that's a property that we might want to take on. All right. Our next question comes from Grace in Fort Collins, Colorado.

Grace (14:15)

Hello, my name is Grace and I have a quick question. So when you are. I'm a first time homebuyer. I'm looking at a property that is pretty expensive in terms of what the mortgage would be. But I plan to house hack one complete side of the property. So my question is, is it usually a poor financial decision to use the house hack situation in order to make the mortgage More affordable. Meaning let's say the mortgage would be $4,000 per month, but I comfortably want to pay, let's say, 2000. And I know that I can rent that other side for going. Rates in my town and city are basically around 2500 for the size rental that I'm looking at renting out with that property. So is it a bad idea to use the house hack situation to be able to pay for more of that mortgage? I could afford the mortgage by myself for a few months, but outside of that, I would not want to afford that. So is it a bad idea to move forward with that decision? Is it a bad financial decision? Just trying to get some insight there. Thanks. Let me know if you have any other questions.

David Green (15:34)

All right, Grace, thank you for that. That's another great question. Man, we're on fire today. Let's talk about this. Is it okay to buy a house hack that doesn't cash flow? A lot of people would say, no, you should never buy anything that doesn't cash flow. What happens is they go spend 20, 25% on property, find something that cash flows, use up all their savings on this investment property, wait a couple years to save up money and buy the next one. Meanwhile, they're living in their primary residence, and they're forking out three grand a month on their mortgage. But they only buy real estate that cash flows. Now we've got you, and you're saying, hey, I can afford $4,000 a month, but I don't want to have to pay it. What if I rent out half the house and it brings it down to $2,000 a month? What I want you to think about is that $2,000 a month of income is the same whether it's coming from an investment property or your own property. If you're a. If you would have paid $4,000 a month on a mortgage, but now you're only paying $2,000 a month. That is the same as $2,000 a month of cash flow from investment property. If you weren't going to buy a house at all and you live with someone and got to stay for free, house hacking is less valuable because you're not saving money. You're just taking on an extra $2,000 a month of expenses. But in this case, you're saying, I would get the house anyways. And, Grace, I think what you're doing is what house hack was intended to be used for. It's meant for the people that have a house they want to live in, that are financially secure, that don't have to scrimp and save and sleep on couches and do the thing where you're trying to build momentum. But they're just smart. They don't want to pay the entire $4,000 mortgage. They want to pay $2,000 to live in a big house. Now, if you think about rent increases over time, that $2,000 a month out of pocket slowly becomes less. Eventually it's 1000 out of pocket. Eventually, you're living for free. Now, in my book Better Than Cash Flow, I detail the 10 different ways that we make money in real estate. So if you add in that you bought into a great area, that gets market appreciation, equity. If you can buy equity by getting that really big nice house at a good price, and if you can force equity in that house by making it better, you've now created a lot of wealth for yourself while simultaneously keeping your expenses low. It's the accumulation of all these base hits that turns real estate investors from oh, they did a good thing into that's a brilliant person who's really good with money. So I do like this idea. I don't like this idea if you buy a house in a bad neighborhood. I don't like this idea if you overpay for the house just because you fall in love with it. And I don't like this idea if the house it would be difficult to sell. If something changes in your life and you have to move. I don't want you to be saddled down with a $4,000 mortgage if you can't find a tenant and you decide you don't want to live there. And now it doesn't work as a rental. So if you avoid those pitfalls and you focus on this stuff we talked about, I think that's a great financial decision and I would love it if you'd send me a follow up video once you get the house and you maybe show us what it looks like and walk through what the numbers are and ask any questions from that point. Thanks a lot, Grace. That's a great question. All right, our next video comes from Malik. Malik is in Dallas and he has a VA loan question. And I have brought in the one brokerage zone, Christian Bashelder, to handle this question like a true professional.

Christian Bashelder (18:55)

Awesome. Yeah, happy to be here. We got a little last minute surprise mortgage Monday Mini coming at you here.

David Green (19:01)

That's exactly what we have. I do this all the time. I call Christian when he's got like four minutes in between calls and say, I need you to record.

Christian Bashelder (19:08)

Funny enough, I Won't name drop. But I am going to be talking to probably one of the viewers here in five minutes, so we'll knock this out quickly for you guys.

Eddie Demas (19:14)

Hey David. So recently a loan officer got in contact with me. I'm currently using my VA loan. That's how I purchased my house. He told me if I rent out my house, I can then use the other portion of my VA benefit to acquire another house, possibly a duplex or something along that those lines and just live in one for a year and rent out the other shop. I was just wondering, is this a viable option? Like, should I go forward with this?

David Green (19:52)

All right, Christian, what do you think?

Christian Bashelder (19:54)

Yeah, this is a super good question and one we actually, we talk through a lot of, of our veteran customers with. By the way, in case anybody's wondering, we do do VA loans. I got a question the other day that somebody thought we only did loans for investors. We do not. We do primary residence buyers. We do va, fha, all that good stuff you've heard. I know you guys see a bunch of animals in the background here, but we'll, we'll, we'll, we'll fight through it. So sorry for if there's a distraction behind me here. So yeah, just so you guys are aware, VA loans, super awesome, 0% down, has to be for a primary residence for one year. Okay, so our client here sounds like he has. Sorry, I know it's super distracted behind me. Stay with me. So our client, it sounds like, has satisfied his 12 months of a VA loan in his current primary. Now, with VA loans there, there's something called an entitlement. It's how much of a VA loan you have to use for your first time use. There isn't a max. You can, you can get like a $4 million first time VA loan. However, on follow up loans, you can use the remainder of what your entitlement is. Okay, now let's say your county loan limit is 800,000, just for an example. And if you're ever curious about your county loan limit, you can look it up. And you used a $400,000 first VA loan, technically means you have a $400,000 second VA loan left. You can use the remainder of your entitlement as long as you move into that new property for a new 12 months, satisfy your occupancy requirement there. So guys, I know I just said a lot of words, but in summary, yes is the answer to this question. Assuming there is a remainder of his entitlement and obviously this bar where I would want to talk through his numbers and see how much of that's remaining. But if you have an existing VA loan out and you have a remainder left over on your entitlement, for instance, if you didn't use your entire entitlement on the first one, you can use the remainder of it on a second purchase. Okay, so in our example $800,000 entitlement, he used 400 on the first one. He has 400 left over on the second one. He could theoretically go buy his second VA house, assuming he's lived in the first one for 12 months.

David Green (22:08)

All right, if people want to have more questions directly at you because they don't have time to wait to ask it on the David Green show, how can they find you?

Christian Bashelder (22:15)

Absolutely. You can always find me at the one broker on Instagram. You can DM me. That's probably the most quick, the straightforward way to get me. And if you want to know Anything else about the one brokerage in total as a company, the one brokerage.com is where you can find us.

David Green (22:27)

All right, thanks for joining us, Chris.

Christian Bashelder (22:29)

Absolutely. Appreciate you.

David Green (22:31)

All right, we're going to be taking a short break in a second. When we come back, when are we answering questions, one of them about personal finance and another about the state of the US dollar. But before we do, I've got a quick Instagram comment to read here. This comes from a post about one of the cabins that we manage in the Smoky Mountains. We were up there and we added a fire pit to the backyard. And it's a big, beautiful, gorgeous fire pit. So if you check out CTC Getaways and you scroll all the way to the end of the a frame post, you will see the fire pit. Billy Panic said, hey, David, great transformation. I've never used rubber mulch. It looks great, though. Does it track around from people's shoes like regular mulch, or is it minimal? I like mulch, but it bleaches out and looks bad after a short time. I like that the rubber probably looks fresh for a lot longer. Billy, that is exactly what I was thinking when I did it. So it's about twice as expensive as the regular mulch. But mulch is not that expensive. So I It's normally three or four bucks a bag. This was probably eight or nine bucks a bag, maybe seven, eight. But I had to buy a lot of it because it's a really big fire pit. So it looks like it was made from some form of tires. I haven't researched what it was, but basically we had the fire pit built. There was landscaping timbers that were put in a big kind of octagon shape around the outside. And then there was a. The fire pit itself was on the inside with some chairs. I put down some black plastic mat and then I just poured rubber mulch all over. It. Cost a couple hundred bucks, but it makes this really nice contrast with the dark mulch and the greenery or the browns of being outside. So now this fire pit really, really pops. And we've been getting more bookings faster because we have another picture that shows this fire pit. And then we took these, like oak barrels that were cut in half. I filled them up with concrete. We put 4x4 posts in those and then put potting soil on top of the concrete. We strung string lights around the posts and then we took six by sixes. And my contractor built basically like a frame to hang a swing from. So now we have a hanging swing as well as several chairs to sit in around the fire pit. And then you have cafe lights strung around the entire thing that connect to the cabin where the hot tub is. So it kind of pulls together the area where you can sit in the hot tub under a covered overhang. And the fire pit area where other people can be sitting. We put a chair and some coolers and a barbecue. So if you want to cook out there, you can do it. And we got some really good pictures and this was all pretty cheap, like a couple thousand bucks and you're able to do the whole thing. So thanks for the comment on Instagram. If you guys would like to follow some of the ideas that we're using to improve short term rental performances, go check out the page. All right, thanks everybody. Before we get to our next question, quick word from one of today's show sponsors, Spartan League. Spartan League is my real estate mastermind. And if you're looking for a community of real estate investors where you can learn from, get ideas from, and get advice from, I highly recommend you check out SpartanLeague.com or go to DavidGreen24.com look for the chat option. Tell me you're interested in it and I'll get you connected with somebody from Spartan League to explain it and see if you think that it's right for you. All right, getting into the next question, this comes from Zayad in Houston.

Zayad (25:42)

Hey, David, I'm a big fan of your show. Been listening to it for many years now, and it has helped me grow a lot over the years. My situation now is I have about seven rental properties and I also have a Big portfolio in stocks and 401k. And my biggest fear is if the US dollar crash crashes, it's gonna affect my portfolio and it's gonna go down in value a lot. And that's. That's a lot of money that I worked really hard for over the last 10, 11 years. The reason I'm recording this video is I want to pick your brains to see what you would do in. In my shoes. I would much rather have this money sitting in a real estate asset that is tangible and offers a lot of benefits. But at the same time, I do believe in diversifying the portfolio. But my question to you is, what would you do? Would you liquidate all these stocks? Keeping in mind, you know, since I have a large 401k, it's gonna. I'm gonna have to pay a penalty fee plus. Plus taxes, but would that be better or just hold on to it. And if I decide to sell those, you know, it's a big chunk that can get me a good multi family, you know, anywhere from 8 to 16 units. So let me know your thoughts.

David Green (27:04)

All right, Zayad, thank you for that. Seven rental properties, big portfolio of stocks, and you want to make sure that you don't lose all that money that you work so hard to create. All right, I can sense from the tone of your voice that you're worried, and there's a little bit of fear. There's this feeling of like, someone's going to take away what I have. Let's just talk about a little psychological experiment that I thought about a couple years ago, and it helped me to understand your situation. If I said to you, hey, there's someone coming, and they're going to take all the cash in your wallet, and you had 400 in your wallet, you would gear yourself up for battle. You would gird your loins. You would be ready to get down, because no one's going to take 400 from your wallet. But if I said, hey, if you go knock on doors in this neighborhood and you tell them that you're selling solar panels or something, you could make $20,000 in two days. Most people would not do that because there's something about keeping what we already have that triggers our emotions more than the thought of going to get something new that we don't yet have. So part of why you're feeling this anxiety about the dollar losing value is you're afraid of losing what you already have. What I would like to bring up is you don't really have it. The value of money is not real. We just agree that it's worth something. When we print a lot of dollars, it makes it easy to get new assets that appreciate, but the dollars that we already have become worth less. When we say that real estate is appreciating, it doesn't always mean that the value of it is. It often just means that the price of it is because the dollar is becoming worth less. Now, with that in mind, I will give you my advice. I don't think we're at a point that panic selling makes sense for you. You're not in a financial situation where you're facing personal hardship. You're not in a situation where you can't feed your kids. You might lose some money. Yes. But my guess would be the taxes that you would pay if you sell and have to pay capital gains on that are going to be more, probably significantly more than what you might lose if you keep your money in there and the market goes down. Now, I can't predict the future. I don't know for sure, but I'm not seeing any signs that would make me think a huge crash is coming and you need to sell everything thing. When it comes to buying another multi family property, that's something that I think being patient might pay off for. I think you should be ready to buy one because I think we're going to be seeing a lot of those things getting taken back by a bank. And a bank give it to a broker to sell and a broker throw it up on the market. And if your client is a bank and you're a commercial broker, you're probably not working super, super hard to get your client the best deal. You're going to throw it up there and it sells for what it sells for. I think we are moving into a market like that. Real estate agents and commercial brokers, there's too many of them and they've been beat up emotionally and they're kind of just checked out. Not all of them. I'm not saying that this is a problem with agents. I'm saying this is a problem with individuals who work as agents that are just kind of over it. They're tired of having their commissions beat up. They're tired of people yelling at them. They're tired of just browsing the MLS constantly to find deals for investors who keep saying it doesn't pencil out, you don't know what you're doing. They're tired of taking listings that reduce commissions at way too much money and organizing the showings and letting their clients know about what's happening. And then the house doesn't sell at all and the client goes, I'll just keep it rented out anyways. Thanks. You're not getting as much effort out of real estate agents as you used to get at the same time that there's too many of them coming into the market and they're not making enough money to get quality people doing the job. So I think if you're a good investor and you're looking in the multifamily space with what we see coming, which is going to be more inventory hitting the market because people can't refinance their properties at today's cap rates and people's balloon payments are coming up and they can't sell them for what they owe on the property, you're going to see foreclosures. Foreclosures will equal more inventory. That will equal more opportunity. Now, let me also say if this creates a recession, the tenants that can rent those spaces are going to be affected as well. It's not like it. We got to get out of thinking that you're going to get the red hot economy where every business is thriving and all of the tenants are paying their rent and all of your leases are working and your property is going up in value. When properties go down in value, it's because the income they can produce has gone down. So you're going to have to deal with that too. A lot of the tenants are going to start and not be able to pay. You're going to have a harder time finding tenants. Your tenants are going to have more leverage. They're going to be able to ask for tenant improvements or TI's at a much higher rate than what you thought you were going to get. So I wouldn't tell everyone to be super thirsty about jumping in and buying as much commercial property as you can. Now, if we're talking about apartment complexes, that's another thing to think about. If the economy goes bad, if people get laid off, if we have a hard time finding work, if AI takes more and more jobs, how are those people going to pay their rents? They might get late, they might pay partial rents, they might have to be evicted. When you have an eviction, not only are you not collecting income, so you're losing money, but now you have an additional expense as you are spending money to try to get someone out. It hurts in both directions. So if you're an experienced operator, I do think there will be opportunities. If you're an inexperienced operator, don't think that you're jumping into the blue lagoon and it's going to be great. You might be junking in, you might be jumping into a big puddle, that you're going to have to learn how to swim in the muck, in the mire a little bit. So I do think that real estate investing in the environment is going to have a change. I think we've needed a change. It's been too much of the same, just red hot. Prices up, rents up, the rich get richer and the poor have a harder time catching up for too long. And I think it's going to be changing. I don't know exactly what it looks like, but I think we should be moving forward with caution. So to sum this up, no, I don't think you should panic sell your portfolio, and I don't think that you should jump in and buy the first commercial property that you see. I think you should be patient and give yourself time to see how the market is going to respond, how the correction is going to happen, and make sure you buy in one of the areas that people are moving into for work, not leaving because the jobs left. All right, next question comes from Mitchell M. In Columbus, Ohio. Speaking about markets where everybody's moving into, this seems to be one of them. Hi, David. My name is Mitchell. I'm 24.

Zayad (33:10)

I live and invest in Columbus, Ohio. My question is if I should get.

David Green (33:13)

A real estate license primarily to represent myself in my own deals to make more appealing offers with 0% buyer's commission.

Zayad (33:20)

The good properties I'm going after in.

David Green (33:22)

Columbus usually come on market and are.

Zayad (33:24)

Bought within a few days.

David Green (33:25)

I think making competitive offers this way.

Zayad (33:27)

Would be much easier. I worked with an experienced agent who.

David Green (33:30)

Also invests, but I'm not too concerned that I couldn't do the work for myself and negotiate for myself.

Zayad (33:36)

Logistically, I think communicating with the seller's agent would also be much easier. If this is a viable strategy, would.

David Green (33:42)

I have a hard time staying at.

Christian Bashelder (33:43)

A brokerage if I didn't bring in.

Zayad (33:44)

Any commission and only did deals for myself?

David Green (33:47)

Thanks, and I look forward to hearing your advice. Very good question here. I like it, Mitchell. We're going to be able to dig deep into the world of real estate sales. All right, you asked everything directly, so I'll do my best to respond directly. Do I think that you should do this because you can represent yourself and you can save on the buyer's agent commission and put better deals together? I don't know. I'm guessing in Columbus, Ohio, your buyer's commission is probably somewhere between 2,500 and $5,000 on some of these deals. So I don't know that you're saving yourself a ton of money when you could just pay the agent yourself and not ask the seller to pay for it. That solves the same thing. But let's say you're trying to save that money. Now you're going to have to go spend a bunch of money to get licensed. Just so everyone's aware, you're going to have to spend money to join the national association of Realtors, the Ohio State association of Realtors, your local association of realtors for the area you live in. That local association of realtors is going to require you to join their MLS and maybe other MLS is if you want to go look at houses that aren't in your specific area, as well as paying money for access into the lockboxes to be able to go and show homes. I recently had to renew this in California. It was over a thousand dollars just to be able to get in the MLS and over the thousand dollars to be able to access the lockboxes. And I had to do this for two different MLs. So the next thing you know, you're spending $4,000 just to be allowed to be a Realtor. So it depends how many houses you're going to buy. Now you got to find a brokerage because you're looking at it like I can negotiate for myself. And I bet you can. What you're not understanding is all of the forms that have to be done to buy a house the legal way. Your broker has a lot of requirements that they're forced to make sure you're doing correctly. You're going to have to explain things to people. You're going to be risking lawsuits. You're going to need error and omission insurance to make sure that when you do get sued by somebody else. Because this happens all the time in real estate. Because real estate agents are typically highly pretentious and emotional people that get angry and then their clients pick up on that anger. And the next thing you know, everybody is suing everybody. And the brokers phones are ringing off the hook as everybody's screaming and threatening lawsuits and demanding things be made right. And no one's actually a lawyer, so none of the brokers really know who's in the right and who's in the wrong. And this ends up going all the way to court or mediation before court where the facts come out and it's a big headache for everybody. So what they typically do is they just say, all right, our insurance is going to Cover this. But if you're not bringing money in for the brokerage, they don't have any way to pay your errors and omission insurance, you're going to probably have to pay that too. And yes, if their phone is ringing off the hook with you asking questions, which it 100% will be because you won't understand all the stuff you have to do. Nobody does when they're new. They're not going to want to keep pouring into you and helping you so that you can save money and they can make no money. And here's just something I want everyone to understand that already is a real estate agent or is doing what Mitchell's talking about and wanting to be a real estate investor that represents themselves as an agent in your quest to save money. Because you don't want to spend money. You want a better split, you want a lower cap, you want all the perks that a broker could provide. If you're not bringing value to the people that you're asking value from, the relationship ends. Think about if you're dating someone and you're like, look, I want someone that's going to cook for me, clean for me, tell me that I'm great, rub my feet at the end of the day, make a shrine to how awesome that I am, listen to me talk all the time, remind me that I'm wonderful, give me a massage and post about me on social media about how great I am. That's what I'm looking for in a relationship. And you find someone that does that, they're gonna expect that you do the same back for them. So if you walk into that not expecting to give, only expecting to get, the relationship ends very fast. This is even more prevalent in business because certain people will stay in an unhealthy relationship because they have low self esteem. You can get away with that for a while. Not in business. So if you're going to join a brokerage, they are going to be expecting you to pay money. And they may say, oh no, no problem at all, you don't have to pay. You can keep 100% of your commission, but we're going to charge you a desk fee, a tech fee, a fee to use our CRM, a fee to have questions answered. We're going to have insurance, we're going to have a transaction fee. They're just gonna nickel and dime you on all the other things that make you think that you won. And you can't even blame them because they have to make money somehow. They have to pay the salaries for all the support pieces. They're going to be helping you in selling these houses. So, long story short, I don't think it's great for investors to say, I want to get my license so that I don't have to pay commissions unless it is worth it to them to learn an entire new vocation. Being a real estate agent is having to learn entirely new things. You could use this same logic for everything, Mitchell. You could say, hey, I don't want to pay a mechanic to work on my car. Can't I just learn how to be a mechanic and work on it myself? Hey, I don't want to pay a contractor to have to fix up my house. Can't I just learn plumbing and electricity and framing and foundation pouring? I don't want to have to pay a lawyer when I'm in legal trouble. Can I just learn how to be a lawyer? Of course you can. Everybody can do all of these. And if you've got a mind that likes it, have at it. Get out there and make it happen. But if that's not the case, quit looking for how to save money unless you're willing to learn another person's job. You want to manage a property yourself, that's awesome. You're going to have to learn what property managers have to specialize in. It's still going to be work, it's still going to take time, and it might be more expensive than if you had paid somebody else to do it. Now, I'll tell you what I am a fan of, Mitchell. I am a fan of you getting your license to represent yourself and to represent clients. Because we need more people in the industry that understand what investors are looking for to help people build wealth through real estate, not just ask them if they think the kitchen is cute and get the docusign filled out. So if you're saying, hey, I'm an investor and I have a job, but I would like to make some side money as an agent and I think I can do it, that's the person I think should do exactly what you're talking about. I think we need to blur the lines between I'm an agent, I'm a property manager, I'm an investor, I'm a flipper, I'm a buy and hold, I'm a short term rental person, and we need to get more people that are. I am a real estate individual and I will learn all of these things. If you are that real estate individual. One of the things I've been talking to Spartan League members that are struggling with this same issue is most of the time you get burned out because you can't be picky about your client and you can't be picky about your client because you're picky about the value that you offer people. If you say, I only work with buyers, I only do listings, I am only a property manager, I'm only this kind of a property manager. I only work in this area because that's convenient for you. You now can't be picky about who you work with. And that's where burnout comes from. But if you say, hey, I'm going to work in all these areas, I'm going to provide all these services, I'm going to seek excellence overall and be the best at what I do. Now when Mr. Butthead comes along, you can tell them to kick rocks and you can only work with good people, that brings down burnout. So some of this is just picking the right poison. If you learn how to do several things in real estate, you can work with the best people and then you don't hate it. If you don't learn how to do several things in real estate, you can only take what you get and you have to deal with it. So hope that brings a little bit of clarity to you, Mitchell. I would hate to see you try to save a couple grand and end up burning yourself out trying to learn a whole new profession. All right, our next question comes from Stephen Holden in Oklahoma City.

Stephen Holden (41:18)

Hi David. I'm struggling with a house I bought in Oklahoma City in 2022. It's a half duplex set up as an Airbnb. Despite good reviews, I often cover costs with my W2 income. My goal is to use cash flow from this and an LTR to help pay for school for my daughter and and in 15 years used them to help pay for her college. I bought this for 270 and I owe 200. It's in a historically struggling area that's getting actively improved. It's five minutes from University Hospital, Medical School, entertainment district, New Resort and innovation district. I'm considering selling it or switching to an MTR or LTR if I sell it. We got an owner financed offer for 320 with regular financing. My agent estimates selling it at 300. I'm considering using 110,000 from my 401k to refinance it to $100,000 loan and reduce payments from 1700 to 1000amonth and forcing this to cash flow. I'd recover the penalty in 18 months and keep the property for future appreciation? Are there better financing options than a 401k withdrawal? And do you have any other suggestions? Thanks for your advice.

David Green (42:17)

All right, so you've got an asset that is struggling to perform. And really it doesn't matter if it's close to hospitals or what area it's in. If it's not bringing in the cash flow, then those things don't matter. Those things matter because they make it more likely to cash flow strongly. So it's not. And you're basically saying, hey, David, I could put more money down and recast the mortgage and buy it down to where my payment drops by 700 bucks and then it would cash flow. Or I can sell it and buy a better asset that might cash flow without having to do that and keep my 401k. And option two sounds like you're a much better option. This house is not a great rental property. It is a great property for someone to live in. And so somebody who wants to live in it is trying to buy it from you for $320,000 or some investor that thinks that they can maybe manage it better than you were. Let the house that's better used for someone to live in go to someone to live in and take the equity out of it and put it into a house that makes more sense as a rental property. Don't feel bad about this. This is a common thing. When most people get into real estate investing, they miss way more than they hit. You just don't hear those stories. So it doesn't mean you suck at this. It doesn't mean you shouldn't be an investor. This is a normal process. The first time you go to the gym, you're not going to have a great workout. It's going to burn. You're going to be sore and you're going to feel bad. And after a couple more times going, that goes away. It's the same way with buying houses. So congratulations for being in the game. Thank you for listening to the show. I'm proud of you for the progress that you've already made. Do not blow up your entire finances by dumping good money into a bad asset. Also, if you're considering doing all of this to fund your daughter's schooling, that's your choice. Can't tell you how to think, but I would like to propose a different way of looking at it. Paying for your daughter's school and then paying for her college is subconsciously teaching her that the way that she gets ahead in life and the way that she wins is to find somebody else to pay for her stuff. I don't think there's anything wrong with supplementing it. But I would prefer to see you teach your daughter how to make money, then you make money and give it to her. I would prefer you teach your daughter how to have a good work ethic and how to bring value to the marketplace, to her friendships, to her relationships, to the family, whatever it is, then do it for her. What you don't want to see is kids that had things given to them and then they get their school paid for and then their college paid for and they graduate college with that same attitude of, well, who's going to pay for the next thing? And it slaps them in the face. There is no one to pay for it. It now you have to figure out how to make it in this world. And they're incredibly unprepared. This is just my subjective opinion of what I see with our educational system that sort of functions as a extension of adolescence. I know you didn't ask about this, but for everybody who's listening, I don't think we serve our kids by extending their adolescence. I think we serve them by preparing them for what's going to happen in adulthood, which is what we call the real world. And I think that there's a way that you can figure out how to help her get a job, contribute to her own schooling, run the books, understand what's coming in and what's going out, and let that fire get built underneath her to earn money to pay for the things she's going to want. Those are habits and those are skills and those are patterns that are going to serve her as she gets older. So for everybody listening to this, if your goal was to buy real estate to pay for your kids stuff, not telling you not to do it, I'm saying I don't think it's wise to just throw money at kids and expect them to grow up. They need to be led, they need to be shown. If nobody shows you how to use the weight weights at the gym, you're not going to use them unless you get lucky and you watch somebody else doing it. It's much better to take your kid to the gym to show them how to do the exercise, to do it with them, to push them, to spot them, to let them build up the pattern and the habits that go with working out and then they'll be fit for life and it won't be you having to carry that load forever. So thank you for the question. I think it's a really good one. You're in okc. I'm out here in Tulsa right now. So maybe at some point we will cross paths. Thank you for the question, Stephen, and I got my fingers crossed for you. All right, moving on to the next segment of the show, this is the comment section where I read comments from YouTube, Instagram and other social media posts. Just a quick reminder, if I didn't get to your question, it might be on a future episode. But if you can't wait, you can find me on the Minec app. M I N N E C T. It's done through valuetainment. You can log in there and you can ask me a question and I can get you a faster answer. All right, first comment comes from YouTube episode 32, Building Wealth Through Real Estate with Ryan Pineda. Brave Dream says real estate. You guys are king. But Trump is going to do way more damage than his first term. Let's see. I wish you'd given me a little bit more there to know what damage you're talking about. Are you saying he's going to crush it, do great for the economy, or are you saying he's going to ruin things? Brave dream. I need to hear more. Not shocking, though, to hear a Trump comment on something completely unrelated to politics. From Mortgage Monday on the NAR fallout, what happened, why, and how to adjust for 2025 video. Tammy Russell Rice says Realtor dues are being filtered by the national association of Realtors into non profit organizations that don't necessarily benefit the profession. What's up with that P S? David, your beard is perfect as is. Oh, now I kind of want to see what that one one look like. Maybe the editors will put in a little clip of what my beard looked like on that episode of Mortgage Monday. You know, Doge is kind of exposing a lot of that that we are seeing that what was often happening is people like me and you pay money through taxes into the government. I don't know why I did this with the taxes thing because that's their real taxes. And then the government gets the money and it's often then filtered into non government organizations or NGOs that do something that they claim is a noble cause. We're going to help teach kids how to read that can't. We are going to provide birth control to certain areas. We're going to help disenfranchise people. Something that just tugs on your heartstrings. Okay. And that's their job. But then that NGO has no supervision and no authority and the person who's managing it is collecting A whole bunch of money. And who knows how much of that is actually going to the cause they say said they were wanting to provide. And I heard someone else talking about this. It's not verified, but they mentioned how. How George Soros became an expert at doing this is he would start an NGO with some name like the Giving Fund or Benevolent Enterprises Inc. Or something like that, and he would know how to get the government to then fund it because he said, hey, we're going to go provide this great service that the government's going to sponsor. And then they didn't. They use that money for themselves. They used to pay for their jet or their cars or their house or their parties or their dinners or all these things. So is it the government wasting the money? Technically, it's not. It's the NGOs that are doing it. But the government is funding them. And that could be happening by government officials that have no idea what's going on. It might just be ignorance. They think they're doing something good by funding the NGOs. So I think what Tammy here is saying is that NAR is guilty of the same thing. The funds go from Realtors to nar. NAR has all this money. What do people do that have more money than they need? They spend it on dumb things. NAR funnels this into NGOs that aren't helping Realtors, aren't helping people that are being served by Realtors. Who knows what they're actually doing with it. This is my first time hearing of it, but I wouldn't be surprised just because this seems to be happening with our government as well. A comment from the episode I did with Landon Chase. Building a strong reputation, the power of integrity and caring. Austin Woe says being a good person is a lost art. Landon is a buddy of mine. He's in Scottsdale, Arizona and he is selling property out there. We had a really good conversation about building a business as a Realtor based on integrity. Just do people know they can trust you? Are you just trying to line your pockets as easily as possible, or are you really trying to serve people and trusting that the money will come? This is a big problem in our country and it shows up in the profession of real estate just like it shows up everywhere else. So shout out to you Lando, for being one of the good ones. And if you guys haven't heard that episode, if you are a real estate agent, make sure you check it out. It's here on the podcast stream. And a comment from the show on Lessons from Failed Flips from Corey G. David Green, do you still like short term rentals in 2025 or are you staying more with long term rentals? I think it just depends on the deal. I don't know a whole lot of long term rentals that are crushing it right now either. I think overall for the first time in my life we are seeing that expenses are going faster than rent. That's crazy. How much it costs for materials and how much it costs for labor are growing at a rate faster than people can have their rent increased. And when you add in insurance on top of that, we have this really weird dynamic where all the people that were cash flow investors that thought I'd buy a property for cash flow are watching their cash flow getting eaten up because of market dynamics outside of their control. So you want to hire a person to come fix your plumbing, they charge you an outrageous number because we don't have a lot of plumbers. You need new materials for your thing. It costs a lot of money because we ship them in from other countries. Your insurance is doubling or sometimes tripling on the exact same property because the replacement cost is so high. So it's a really hard time to make real estate work. And unfortunately what happens is it's only the people that are financially stable that can weather this storm. The people that were looking to real estate to get them out of a bad financial picture are the ones that are going to get wiped out the most. All right, thank you guys. If you would like to be featured on the David Green show, all you got to do is comment on YouTube videos and Instagram posts and we search those and bring the best ones out to put on the show. Moving into the next segment, this is the REAL News Report. The Real News Report is sponsored by the ONE Brokerage. This is my mortgage company. We help people with regular loans, loans for investors, bridge loans, HELOCs, pretty much everything you can think of. FHA, VA, DSCR. We do all of it and you will be treated great with great rates, great service and great skill. We also are investors ourselves so we understand how to put a plan together to help you grow and scale your portfolio safely. So check out the one brokerage.com or DME directly at David Green, 24 and I will connect you with the right loan officer based on what your goals are. First section in the Real News report, a new CEO for Keller Williams as it announces a major investor. KW says the strategic investment by CoreLogic owner Stone Point Capital is designed to fuel growth. As Christopher Czarnecki takes the helm private equity and Big capital continuing its move into real estate as Stone Points investment in Keller Williams validates the continued involvement of private equity and big capital in the residential brokerage industry. Half of the top 20 brokerages and all of the top five enterprises which are anywhere Keller Williams, ReMax Home Services of America and Compass are now publicly traded or have substantial private equity backers, Miller said. The partnership announcement also touched on Stone Point Capital's other investments in the real estate space and its strong track record of partnering with winning businesses to help them scale and reach their full potential. Part of reaching that full potential, the announcement suggests, is a continued focus on agent marketing and branding, education and coaching with data and technology support. Keller Williams has previously touted its training in tech as key advantages over other brokerage companies. What does this mean? Probably I don't know this, but probably a fallout from the lawsuit that went on the sitzer Burnett where all these brokerages were forced to pay a lot of money, has bankrupted them and they have been forced to go reach out for private equity help to keep them funded. I think we're going to be seeing this with a lot more residential brokerages which could turn them into publicly traded companies which will unfortunately create a war even bigger between all of the brokerages. Now the good news is most people do not choose a brokerage, they choose an agent. So if you're someone who just wants to know that you can sell your house, you don't have to worry about any of this. You just got to find a person with integrity, like we talked about earlier, pick them and let them worry about what brokerage that they work in. Many of you already know as it's public information, but Bigger Pockets was bought by private equity who came in and made some really big changes with the way that things go down. That's what private equity does. They buy ownership in the company and then they come put their mark on it and put their branding on it and it often changes things. So a lot of agents at Keller Williams are waiting to see what kind of changes Stone Point Capital is going to bring and you may see more people joining or you may see more people leaving, but it's definitely a shakeup. So that's a pretty big piece of news in the real estate world, especially for those that are real estate agents. Our next story is about falling prices and lower rates putting buyers in the driver's seat. This comes from a website called Chesko and the article is titled your Dream home awaits falling Prices and lower Rates. Article basically states that falling home Prices and lower mortgage rates in the US Are occurring as the market is cooling. Median home prices rising just three and a half percent year over year and mortgage rates dropping to 6.78, which boost a buyer's purchasing power. More homes are available for sale, giving buyers more leverage. Homes are selling for about 2% below asking price as demand picks up with higher levels of home tours and online searches. Pending sales are still down 6.2% compared to last year. So that's a pretty significant drop from where we were. And as spring approaches, competition may intensify and buyers are advised to act now to negotiate better deals before prices rise again. I think this spring will be the litmus test for what's happening in the market. If things heat up again, then it was just a temporary little bump. If things don't heat up going into spring, that is a sign that buyers are legitimately concerned about not wanting to buy houses right now. If you're somebody who thinks that we're going to see the market take off again and you want to get pre approved to buy a house, we definitely want to help you. Send me the DM and I'll connect you with somebody from the one brokerage to get you pre approved. All right? And our last article is about mortgage rates dipping, but not enough to ease consumer concerns. Mortgage rates have eased to 6.76%, which is the lowest in 2025, but they remain above September's low, with expectations that home sales may pick up by late spring or early summer as buyers return to the market. Remember earlier when I said buyers tend to leave and come in as a group? I've written about this in books and I call it the flock of birds theory. So if you ever watch the way birds fly, one of them moves and then they all move as one. It's kind of cool to watch how, how these entire flocks move. Buyers are like that. They jump in and they jump out at the same time. Personal income and savings have increased, but consumer confidence has dropped for three consecutive months, indicating growth caution amid concerns about the economic outlook. New home sales and pending home sales both declined, suggesting slower future sales, although new construction homes outperformed and maintained a pace similar to 2022 or 2023. So like we started the episode off talking about the market is slower. There is no way around it. There are less homes that are being sold. Does that mean you're going to get the deal of the century? Probably not. But the deal of the century usually only happens when the market has collapsed. And if that happened, that means the economy has collapsed, and if that happened, you got bigger problems to worry about than finding the deal of the century. Last segment of the show, we're going to do the Quick hitters. This is comments that come from my Instagram, Facebook or other posts that I thought were funny or relevant. Luke Jensen says you and Vanilla Ice should collab on a burr track because we're cold. Eric Olson said, hey David, I love the new book. Thanks for writing it. He's referring to Better Than cash flow, the 10 ways you make money in real estate. Rich Fetke, husband of Kathy Fecky Good friends of mine saw one of my posts where I took my shirt off and he said, I need your training plan, which is extra funny because Rick is in incredible shape. David's 13 said at David Green 24 haters will say this is AI and PTA Jones said David Green 24 what happened to the podcast? Well, here's your answer. It's back now. It has been a very challenging time in my business and my personal life. I moved studios and I left California. So in the craziness of that entire story, which maybe I'll talk about on a future podcast, I fell behind on getting these things released. But we're locked in now and I think you should continue to see them coming. If you're someone who would like to sponsor the David Green show, or if you have experience with setting up a podcast studio and you'd like to help me with this, definitely reach out to me via social media or the davidgreen24.com chat option. All right, folks, that's what I have for you for today. Hope you enjoyed today's show. Hope you're paying attention to what is going on in the market. And I hope above all that you are not letting despair take root. If you are struggling right now, if you if times are tough, I'm with you. Other people are with you. This is a normal cycle in the economy and in life. You're not always on top. And you know what else? You're not always on bottom. When things are good, they're going to get bad. And when things are bad, they're going to get better. Learning to hold the things of this world with a loose hand, take what you're given and be grateful for what you have is one of the lost arts to having a happy life. So even as bad as things get, there's always something that you have that somebody else wishes they could have have. If your finances are doing bad but your kids are healthy, you're lucky if your kids are struggling but your relationship is going good, you're lucky. If your relationship is struggling but you're gainfully employed, you're lucky. There's always something to focus on that hurts, and there's always something to focus on to be grateful for. And what you choose will determine what kind of a day you have today. Thanks again as always for listening to the David Green Show. Please share this with somebody else who's involved in real estate who needs to learn. And if you're not already doing so, make sure that you follow me on YouTube where you will get notifications about mortgage Monday episodes as well as the David Green Show. I will see you guys next week.