Seeing Greene - Real Talk Real Estate | Episode #41

Summary

The David Greene Show: Episode #41 – Seeing Greene | Real Talk Real Estate

Release Date: March 20, 2025

Introduction and Guest Introduction

In Episode #41 of Real Talk Real Estate, host David Green welcomes his audience to a special edition focused on answering listener questions with the help of a seasoned guest, Chris Lloyd. Chris, a real estate broker from Hampton Roads, Virginia, brings a fresh perspective with four years of experience in real estate sales and ownership through house hacking. David introduces Chris as someone who can relate to many listeners seeking to build wealth or pivot their careers in real estate.

Listener Questions and Expert Answers

Refinancing and Scaling Portfolio

The episode kicks off with a listener question from Ty, a young investor managing a duplex with strong cash flow. Ty seeks advice on whether to refinance his property to fund additional investments without falling prey to conflicting advice from various sources.

Chris Lloyd responds thoughtfully, emphasizing the importance of understanding the why behind refinancing:

“The first thing that I would want to know is why is he looking to refinance? [...] If you're financially strong and you've got a good amount of equity and you're looking to refinance to liquidate and park in another long-term investment. As long as the numbers work, I have no problem with it.” [04:52]

David Green adds depth to this advice by cautioning against scaling for the wrong reasons:

“When you're in that position and you're unhappy and you're making moves out of discomfort or unhappiness, you're more likely to make poor choices.” [05:21]

He further discusses market conditions, noting the variance across different regions:

“If you are in a market like Chris is, where there's a lot of action going on, yeah, you probably do want to jump in and you want to buy more.” [08:52]

Business Structure for Real Estate

Next, Ryan Geisler from Dallas poses a question about optimizing his real estate business structure, contemplating a switch from an S Corporation to a Series LLC for better legal protection and tax efficiency.

Chris Lloyd advises consulting with professionals:

“Refer to your own legal counsel and CPAs is what I would say, because your situation might be completely different than ours.” [11:17]

David Green elaborates on the nuances of business structures, balancing liability protection and tax benefits:

“If you have a property that is profitable and makes you a lot of money that you get taxed on really hard... you can offset your overall gains with the losses from the properties that did bad.” [12:08]

Financial Freedom through Real Estate Investments

The discussion moves to Josh, a 23-year-old aiming for financial freedom through real estate, seeking advice on deploying $150,000 from selling a property to achieve $15,000 monthly passive income.

Chris Lloyd recommends focusing on commercial real estate and multifamily properties for higher cash flow:

“If your goal is cash flow, I didn't hear anything about appreciation in there. I would say that you might want to entertain a market that you can secure a five plus unit property.” [17:14]

He also highlights the challenges of relying solely on rental income:

“Relying off rental income in cash flow can be very unreliable.” [22:10]

David Green concurs, emphasizing the importance of balancing cash flow with asset appreciation:

“If you've got a good buying opportunity, you're getting a really good deal. If you're going to add units and you're going to add equity, I could be on board with this.” [27:30]

Converting Residence to Rental Property

Eric Burden from Thousand Oaks, California, asks about selling a long-term rental property with favorable mortgage terms to invest in a duplex.

Chris Lloyd suggests leveraging the existing HELOC instead of liquidating the property to maintain advantageous mortgage rates:

“I would much rather see him utilize the HELOC he has on that for short term financing to do what he wants to do.” [25:05]

David Green evaluates the return on equity, advising caution if the current asset isn't maximizing returns:

“If it's 700 a month, which is really good times 12 months, that's $8,400 in a year. If you're trying to maximize cash flow, if you can get an 8% return on this multifamily idea that he has, you basically multiply the cash flow.” [27:32]

Market Trends and Economic Insights

David and Chris delve into broader market dynamics, discussing the ongoing housing supply shortage and its implications. They highlight how restrictive zoning, high construction costs, and labor shortages are stifling new home construction, exacerbating the inventory deficit of 3.8 million homes nationwide.

Chris Lloyd points out the mismatch between new construction and buyer demand:

“Builders are still building, but they're not building what we would consider to be more affordable housing that the average Joe can make in the area.” [64:04]

David Green shares personal anecdotes about labor shortages and inflated service costs, underscoring the impact on property management and real estate investments.

Listener Comments and Discussions

The episode transitions to listener feedback, addressing various topics:

Feedback on Episode Structure

Listener Bruce Benson criticizes the episode's length and content density, suggesting shorter episodes for clarity.

Montage of Responses:

“Do you think I should? Should I change the name to Real Talk Real Estate or should I leave it as David Green 24?” [00:00]

Political Opinions and Financial Advice

Comments touch on the intersection of political views and financial advice. Maria Christina expresses dissatisfaction with David's perceived political stance influencing his advice, to which both David and Chris advocate for objective financial guidance detached from partisan views.

Chris Lloyd emphasizes treating investments as a business:

“Investing as a business [...] look at all of the different policies going into effect, whether you agree with them or not.” [32:06]

AI and Job Market Impacts

Listener Max OneTrust discusses the threat of AI to blue-collar jobs, sparking a conversation about the future of labor.

Chris Lloyd concurs on the importance of blue-collar work:

“There's a very strong need for blue collar work and also a great opportunity for people that decide to pursue that because there aren't many people that are looking to pursue that.” [39:13]

David Green shares observations on the rising costs of labor and the dwindling supply of tradespeople, reinforcing the need for skilled blue-collar workers.

Florida's Property Tax Proposal

The episode examines a significant policy shift in Florida, wherein Governor Ron DeSantis proposes eliminating property taxes. This move aims to reduce the financial burden on property owners but poses challenges in revenue generation.

Chris Lloyd supports the initiative, citing efficiency and economic incentives:

“I personally believe that this is a great idea [...] I can get behind it personally.” [54:52]

David Green analyzes the potential benefits and drawbacks, noting that while property ownership becomes more affordable, increased sales tax could burden consumers.

Buyer's Representation Agreements and Industry Changes

Discussing the Sitzer Burnett verdict, which mandates written buyer representation agreements, David and Chris explore its impact on real estate transactions. The ruling requires buyers to commit to an agent through formal agreements, altering traditional commission structures.

Chris Lloyd explains the practical outcomes:

“Now they have to pay their own commission [...] it's going to result in more pressure on the sellers to having to pay the buyer's agent.” [59:38]

David Green reflects on the challenges this poses for buyers, who are already managing significant financial commitments:

“They got to pay their own commission [...] everything else. But the judge was like, nope, they got to pay this too.” [59:36]

Conclusion and Closing Remarks

David wraps up the episode by encouraging listeners to engage with Chris and other resources mentioned. He emphasizes the value of the show in providing unbiased, practical real estate advice and thanks sponsors Turbo Tenant, Hospitable, and The One Brokerage for their support.

“You are choosing to come here. I really appreciate that. Please consider taking a minute to like, share and subscribe to this channel.” [68:03]

Notable Quotes with Speaker Attribution and Timestamps

• Chris Lloyd on refinancing strategy:
  “If you're financially strong and you've got a good amount of equity and you're looking to refinance to liquidate and park in another long-term investment. As long as the numbers work, I have no problem with it.” [04:52]

• David Green on scaling for the right reasons:
  “When you're in that position and you're unhappy and you're making moves out of discomfort or unhappiness, you're more likely to make poor choices.” [05:21]

• Chris Lloyd on business structure:
  “Refer to your own legal counsel and CPAs is what I would say, because your situation might be completely different than ours.” [11:17]

• David Green on balancing cash flow and appreciation:
  “If you've got a good buying opportunity, you're getting a really good deal. If you're going to add units and you're going to add equity, I could be on board with this.” [27:30]

• Chris Lloyd on blue-collar opportunities:
  “There's a very strong need for blue collar work and also a great opportunity for people that decide to pursue that because there aren't many people that are looking to pursue that.” [39:13]

• Chris Lloyd on Florida's property tax proposal:
  “I personally believe that this is a great idea [...] I can get behind it personally.” [54:52]

Final Thoughts

Episode #41 of Real Talk Real Estate offers a comprehensive dive into real estate strategies, market dynamics, and the evolving landscape of property management and investment. With insightful discussions led by David Green and guest expert Chris Lloyd, listeners gain valuable perspectives on navigating the complexities of building and maintaining a profitable real estate portfolio. The episode also engages with real-world economic policies and their direct impact on property owners and investors, making it an essential listen for anyone involved in the real estate industry.

Transcript

[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 going on, everybody? Welcome to Real Talk Real Estate. This is the David Green show and I am David Green. Got a good show for you today. We're going to be taking some questions from you, the listener base, and answering them for everybody to hear. And I love getting to do this. If you'd like to have your question featured on the show, or if you'd like to make sure that I even have a podcast that I can do that isn't just guest interviews, head to davidgreen24.com Ask where you can submit your question to be featured on the David Green Show. So if you want to learn from other people, you want to learn from me, you want to be entertained, you want to laugh, you want to cry, you've come to the right place. Before we get into our first question today, our show sponsor for today's show is Turbo Tenant. Turbo Tenant is a property management software designed to help landlords streamline the rental process by providing tools for listing properties, screening tenants, collecting rent online, and managing leases. I use Turbo Tenant to manage my own properties. It helps my team and I simplify our administrative tasks, saves us a ton of time, and reduces the complexity of managing rental properties. We love them. My team loves them. So we're here on the show talking about them. If you guys are not already doing so, please take a second while you're listening to this to go. Give me a follow on the old gram. It's David Green 24. I may change the name. Do you guys think I should? Should I change the name to Real Talk Real Estate or should I leave it as David Green 24? I'm not sure and I could use your help. Today's show is a little bit different. Rather than just offering my insight into what's going on in the world of real estate and how, I think that I can offer advice to the people who are asking questions, I going to bring somebody in with a different perspective. His name's Chris. Good dude. Real estate agent out of Virginia, younger. So he helps clients and he owns real estate, but he hasn't been in the game as long as me. And my idea here is I want to get the perspective of someone that might be more like you. As you're listening to this, thinking how you would solve that or what advice you would give, then contrast it with the advice I give so you can get two different perspectives that hopefully blend together to give you more context into how to take this information and move forward in the way that's best for you. And so I'm joined today with Chris Lloyd out of Virginia. Chris, tell the people a little bit about your background and experience in real estate. Absolutely.

[Chris Lloyd]

Thanks for having me, David. So I am a real estate agent out here in Hampton Roads, Virginia. I actually got into real estate through house hacking. I decided to buy a property because I wasn't too excited about how corporate America was setting me up for retirement. And so I turned to real estate. House hacked. My first deal, two unit property, moved out, turned them into midterm rentals. I'm on a second house hack right now renting out rooms. And I've also been a real estate agent over the last four years. In fact, I got my broker's license last year and we are beginning to grow our team. So I live, eat, sleep, real estate, absolutely love this field. And thanks for having me on, David.

[David Green]

All right, so we got a real estate broker, growing a team, selling houses and kind of inching your way into the world of real estate ownership through house hacking, which I teach all the time. Very relatable to a lot of the listeners. Let's get into the first question that you and I will answer together here.

[Chris Lloyd]

Hey David, my name is Ty and I'm a, I'm a younger investor as far as being, being an investor goes. I've been co managing a single family for about four or five years now and I've had my own duplex that I've been self managing for, excuse me, two years now. I'm at this crossroads where I'm not really 100 sure what I need to do as far as is it time to, you know, cash out, refi my duplex so that I can move that money into the next property. And I'm finding myself kind of being super cautious about who's whose information that I take. You know, I've listened to BP and I've listened to other things and then I've got some experience with taking a course. It wasn't for real estate but ended up kind of burning me. So I was wondering if you might have some advice on what might be the best Way forward. I've got really good cash flow in my duplex and I'm not, I'm not opposed to obviously taking a cut on that. I just want to do it smartly. And I'm just trying to sort through all the information that I get. Any insight that you may want to share.

[David Green]

If you want to talk or have.

[Chris Lloyd]

Me on the, the podcast, that'd be great. If not, thank you for everything that you do and take care.

[David Green]

All right, Chris, so Ty here has a duplex that's going well. He wants to scale his portfolio, but he doesn't want to do something stupid and mess things up, it sounds like. And he's getting conflicting advice because you listen to these podcasts and you hear everyone tell you something different. So if you're in Tai's position, what are you thinking?

[Chris Lloyd]

The first thing that I would want to know is why is he looking to refinance? Because when you think about the grand scheme of things, there's a lot of people that are struggling right now. And I do know a lot of investors that are looking to refinancing as a way to pull money out of a deal, even if they have underlying financial issues, because they believe that real estate's going to fix those issues. So first off, I would say, why are you looking to refinance? Are you in a position right now where you're strong? If you are, it might be a great route to move forward and build your portfolio. Also, the property that you're, this duplex that you have, what's your interest rate on it? Interest rate isn't everything, but it might be more advantageous to do a HELOC if you're going to be doing some short term financing, such as a flip. So it also depends on the deal you're looking to do. If you're financially strong and you've got a good amount of equity and you're looking to refinance to liquidate and park in another long term investment. As long as the numbers work, I have no problem with it. And then I would be looking at the HELOC route if you're looking to flip. But if you're looking to real estate to solve other financial problems, think twice about refinancing. If it is a stable investment right now is my opinion on it, that's pretty solid.

[David Green]

I think most people in today's environment are looking to refinance because they want money out of the deal. It used to be you would refinance to get a better interest rate when they were coming down they haven't been coming down much for a while. So usually people are trading in that better rate to get money out. And they want money out because they want to scale. Now why do they want to scale? That's where I want to know. Where is this person stuck? Because your motivation for wanting to get bigger can either give you clarity on what the right move is or can confuse you. I think there's a lot of people right now in life that are not happy with their job, that are not happy with their current living situation. They want a new car and they don't know what to do. They don't know how to improve their situation. And so they think, if I just own more real estate, I would have more wealth, I would have more cash flow, I would like my life more. When you're in that position and you're unhappy and you're making moves out of discomfort or unhappiness, you're more likely to make poor choices. You're going to refinance a house into a higher rate. You're going to take something that was good. You're going to potentially put yourself in a position where it's not good in order to get another house. That might also not be good. Okay, I am not saying that people shouldn't scale, but I will say in the last 10 years, every story you've heard, people did well. So owning real estate equaled making money. I mean, Chris, how many posts did you see on social media of somebody posting them, signing the documents, closing day, signing on another 10 units, signing on another 20? Right. You see those, but you don't see the posts where they're like just dumped another hundred grand into sighting on this to fix dry rot issues, Horrific plumbing mistake costing us 75,000 that we had to take out a HELOC to pay for. 4 years of cash flow is gone because something went wrong. You just don't see that post. You only see that somebody else got something that you didn't get and you start to feel bad. So I don't know your situation tie enough to tell you if you should take the money out. I think Chris made some good points with like, what's the reason you're looking to refinance? I think the majority of people right now should err on the side of chill. I don't know for sure, but I don't see in most markets now, some markets are different. Like, I think in your market, Chris, you said Virginia is like pretty hot right now, right? There's a lot of houses that are moving Is that the case?

[Chris Lloyd]

It is, yeah. In southeastern Virginia, we're going into a little bit of a hot period. We usually see this every year because we're heavy military, and this is the time that they're all moving. So we're seeing a really hot market. We just came out of a really slow market. However, overall, we've got some pretty healthy dynamics over here, and it's moving quickly. We're just making sure that when we're working with our clients that they're understanding it's not just about the house, it's about the financial position that they're in after they purchase and making sure that we set them up for strength.

[David Green]

So your market is still pretty strong, but in other markets, I'm seeing inventory increase faster than buyers want the deals. So I was running some CMAs on some houses I'm selling in Florida as well as California, and I'm looking at eight active comps and one pending. I haven't seen that in forever. That's been very rare. So if you are looking to get into real estate and you're in one of those markets where there's more inventory than there are buyers for them, you definitely shouldn't be feeling like you got to be chomping at the bit to get in there and get something. You could be picky about looking for that motivated seller. If you're in a market like Chris is, where there's a lot of action going on, yeah, you probably do want to jump in and you want to buy more. So, Ty, if you're in a position where your market is red hot, there's. There's not enough inventory that's out there. The rents are still going up, the economy, solid. Yeah. Maybe consider refinancing and buying another property, but if things are stagnant, let the deal dictate when you buy. Don't let your personal situation in life dictate when you buy. That's when you're going to end up making mistakes. All right, our next video comes from Ryan Geisler in Dallas, Texas. Hey, David.

[Chris Lloyd]

I'm Ryan from Dallas. I had a question about business structure.

[David Green]

So I currently have an S Corp.

[Chris Lloyd]

For my real estate business. The mortgage for the property, I only.

[David Green]

Have one at this point, but it's.

[Chris Lloyd]

In my personal name.

[David Green]

However, all the expenses currently are done.

[Chris Lloyd]

Through that S Corp. Talking with an.

[David Green]

Attorney and a cpa. They recommended maybe switching that into a series LLC for legal purposes and all that kind of stuff, and then eventually.

[Chris Lloyd]

Having a holding company control each individual series llc. That would Each have their own deed and property with each llc. So just wanted to see if you had experience with that and what your.

[David Green]

Recommendations would be as far as LLC and business structure. I was really hoping that we would get a legal question here that you and I, Chris, could answer and get ourselves sued in the process. These are my favorite. So, guys, please send me more legal questions where I could absolutely be put on the hook for any bad advice that I give you. Let's try to sum this up before we get into it. By the way, we have to make this disclaimer. Neither Chris nor I are legal experts or lawyers, and we are not giving legal advice. We're just answering this question with our knowledge as good as we can. I think that what he's saying here is that he would own the properties in an individual llc. The LLC is themselves what he called the series LLC would be owned by what's called a parent company, which could be an S Corp. Do you have any insight to offer on how to structure things like this?

[Chris Lloyd]

Not necessarily, no. I'm not in the situation where that structure has really presented a benefit to me. Again, I'm not a lawyer or cpa. However, the conversations I have had with my CPA has really dictated what I've done in terms of formation for myself. And this can really be a personal situation. And I would trust your professionals you're working with because they're going to understand the unique intricacies of your personal situation a whole lot more than, say, David or I will. For example, an LLC taxes an S Corp. My cpa. We were just a standard LLC for a couple of years until we decided to file for an S Corp election due to the tax benefits. It didn't make sense when we were early on, but at one, once we hit a certain level of revenue, it made a whole lot more sense for us. Now, at the end of the day, some people might just say, hey, form an LLC taxes and S Corp right off the bat. Might be good for your situation. Might not be so. So refer to your own legal counsel and CPAs is what I would say, because your situation might be completely different than ours.

[David Green]

Well done. You were able to say, talk to a CPA and still made it sound like you gave an answer. It's kind of like in the NBA when they're like, what do you think about the game today? And the guy's like, well, you know, it's a team sport. We all made an effort. It's really all about the fans. We do everything for them and they talk for two minutes and you're like, what? They didn't really say anything. Right?

[Chris Lloyd]

Right.

[David Green]

You actually gave some pretty good advice, though. It is different for everybody. My understanding of this question is that Ryan is thinking correctly. When you, you don't want to have like 20 properties in the same LLC because if there's a lot of equity in there and you get sued, they could get into the equity from the other properties more easily. But if you own them in individual LLC and then that LLC is not owned by you personally, it is owned by an entity that you are the manager of, there is another layer of protection before it gets to you. Also, what happens is if you have, again, I don't know this. This is my understanding of it. If you have a property that is profitable and makes you a lot of money that you get taxed on really hard and then you have another property that is not profitable and maybe lost money, if they're in individual ones, the one that took the loss doesn't help you, but the one that you made the money on hurts you because you pay taxes. If you they are both owned by a parent company, the losses combine with the wins from the other one and so you can kind of offset your overall gains with the losses from the properties that did bad. There might be some CPA jumping out of his chair screaming, david Green is wrong. Please give me grace if that's the case. This is my understanding after conversations with my cpa, the stuff is complicated because when it comes to structuring things, you're looking to avoid taxes and you're looking to minimize risk. And sometimes those things work against each other. So. So not everybody structures it in a way that's going to be the safest or the most profitable. You're often trying to balance it basing based on where you are. If you guys would like a really good cpa, I'm very happy with mine. You can reach out to me either on instagram@davidgreen24. You could go to davidgreen24.com and you could send me a chat and I can connect you there. Or if you have my email, I can send it to you there. And Chris is going to give his information at the end of the show. If you would like to talk to him about his, reach out to him. Great question, though, Ryan. Thanks for that. All right, coming up, folks, we have a question regarding where and how to deploy cash flow and exploring the options for a rental property. We'll be right back after this short break, super short break here. Here to talk About Hospitable. It's a property management platform tailored for short term rental hosts. We use it because it helps us automate guest communications, booking management and has a pricing optimization function across multiple booking sites. It really does a great job streamlining our operations and allows us to manage our properties more efficiently and most of all improve the guest experience, which is huge with the short term rental. In layman's terms, Hospitable is the app that we use to manage all the communication from Airbnb, from vrbo, from our direct bookings. They all go through Hospitable and we just monitor that and then we communicate through that app to the people. So no matter where they booked from, we don't have to check four or five different places, direct booking websites or online travel agencies to communicate with them separately. It all goes through one place. The calendar all syncs up with all the other ones so you can advertise your property on multiple different sites without having to check multiple different apps. It's lovely. I love the company. I love their representatives. We've had a great experience with them. I highly recommend checking out Hospitable. Tell them David Green sent you.

[Chris Lloyd]

Hey David, I love this new podcast you're doing.

[David Green]

Quick question. I am 23 years old.

[Chris Lloyd]

My goal is to have financial freedom through real estate. I'm trying to get to 15k a month in passive income so I can.

[David Green]

Travel and serve God in mission works overseas, hopefully.

[Chris Lloyd]

Currently I have 14 units in Pennsylvania that I self manage. My cash flow is right around 4000. I'm coming into about 150k this year on a property that I'm selling and was wondering what would be your advice as far as deploying that?

[David Green]

Should I continue doing small multi family, single family or look into mobile home.

[Chris Lloyd]

Parks is something I'm interested as well.

[David Green]

What would you recommend between these two?

[Chris Lloyd]

Asset class that would give me the lowest amount of, I guess, stress or.

[David Green]

Whatever while I'm doing it and, and help me get to my goals faster there.

[Chris Lloyd]

I'm definitely willing to do the work.

[David Green]

And I appreciate all your knowledge and being able to share with people. Thank you. All right, so Mr. Josh here has 50k with which to play. What do you think, Chris?

[Chris Lloyd]

Did he say 50k or 150k?

[David Green]

Maybe he said 150k. I might have glitched.

[Chris Lloyd]

That's a lot more money if I heard it correctly. First of all, congratulations. At 22 years old, that's a good portfolio to put together. Good numbers on that. So first of all, congratulations on that. My first thing is going to be okay, so if your goal is cash flow, I didn't hear anything about appreciation in there. I would say that you might want to entertain a market that you can secure a five plus unit property. Property on. And the reason I say that is, at least in my market, I don't know what you're seeing across, you know, the country, David. In my market, two to four unit multi family is extremely competitive from people that are just looking for a discount on their monthly living expenses and they're buying what we would consider to be poor deals which is going to result in say less monthly payoff for you, less cash flow. Now, the commercial sector is valued differently. It's valued on how profitable the asset is. You have the bank playing a much larger role in that and just because you can't afford it doesn't mean you're going to obtain the financing for it. So in commercial real estate, it's going to be easier for you to get a more cash flowing asset. And at $150,000, if that's what you have to play with, you might be able to start looking into some of the smaller apartment complexes. Now do keep in mind your interest rates are going to be higher, but it's going to be a little bit more of a controlled environment for your goal. In particular, if it is $50,000, if I misheard that now, then you're probably going to have to stick with single family and small multifamily. So you're going to want to go into more cash flow. Heavy markets, say the Midwest is what I would recommend.

[David Green]

Sound advice. I thought the same thing. Two to four units is best. If you're wondering why we said two to four units are not five, eight, ten units is because the financing changes significantly when you get to five units or above. Those are considered commercial properties. You can't use Fannie Mae and Freddie Mac lending terms once you get over four units, which means you're going to put down more than the smaller down payments, you're not going to get a 30 year fixed rate. It's going to be an adjustable rate mortgage and you're going to have to refinance it every three, five, maybe seven years if you're lucky, as opposed to just having the same loan for 30 years. So they're much easier to get started. Here's what Josh has working against him. His goal is to use real estate to provide income so that he can go focus on his mission, work overseas, which means he doesn't want to have to do A lot of work. He just wants it to, like, set and forget. Real estate does not work very good for that purpose. Your tenants are going to have things that break. You're going to have to shop around to get different construction workers. If you let a property manager manage it, most of the time they're just going to try to get the thing fixed as fast as they can, not as well as they can. And so your cash flow gets eaten up when you're not paying attention to it. When you are paying attention to it, you'll save some money, but you can't be paying attention to the other stuff. I'm not a huge fan of the. I bought real estate, I live off the cash flow now. I don't have to look at it anymore. I've just seen too many people lose their assets. That's not a. That's not a plan words. But it kind of does lose their assets when they're approaching it that way. You almost have to look at real estate like it's a kid. Like you had a kid. You gotta pay a lot of attention to that kid. When they're young, when they get more matured and developed, you don't have to pay as much attention to them until eventually you forget that they're there. Unless it's a holiday, it's not a good idea to ever have an employee that you don't pay attention to. They will probably just stop being productive and your business will suffer. So if that's what you want to do here, Josh, I'm all about what you're trying to accomplish here. Wanting to go help other people and not just live for yourself. You might want to invest that money differently. Maybe use real estate to grow a portfolio. Grow your wealth. Sell in 1031 into more properties. Until you can get a big enough portfolio that you can pay someone to manage it. Or keep selling properties and adding value by buying new ones. Where you buy equity and you force equity and you get a bunch of money in the bank and then you keep some of that money in real estate and some of it goes in the bank and you live off of that, that money in the bank until you come home and you work again. Might be a better approach. Great question, though. I think a lot of people are in Josh's position. Anything you want to add to that?

[Chris Lloyd]

No. Certainly there are a lot of people in Josh's situation where over the last couple of years. Cash flow. Cash flow. Cash flow is the thing that's pitched and with how crazy the market's been a Lot of people are sitting on equity and they're trying to figure out how to reposition this. But I completely agree with you. Relying off rental income in cash flow can be very unreliable. For example, just last week, I was supposed to have a tenant move into one of my midterm rentals. We had a really bad rainstorm and the. The inside had flooded and we had to fully refund them. And I'm not getting the rent that I was expecting. And I'm spending a whole lot more money addressing the issue right now. If I was relying off that income to be living right now, I would be in a very tough situation.

[David Green]

That's a great point. And I'm not a hater of cash flow. I've somehow got the reputation in the space of David doesn't believe in cash flow. Not that at all. I think cash flow is a shaky foundation on which to build your financial life. It is a wonderful supplement to what you have going on. It is not as reliable as a W2 job, and that's what people are comparing it to while Josh here is looking to go overseas and do mission work. Maybe you're somebody who wants to grow in your faith. Maybe you're somebody who doesn't know why people believe in the first place. Maybe you're someone who does believe and you know God has more for you, but you just can't figure out what the heck you're supposed to do. You're not alone. Most of us are living in an environment that is hostile to people that think that way, and you don't know what to do. I've got a group for you. If you're listening to this, you're like, I'd like to learn how. How to have a deeper relationship with God or to understand what it means to have faith in this world at all. Go on my Instagram and DM me the word faith. You'll get a link, fill it out, and I'll be putting together a webinar for those that are looking to grow in that area of their life. All right, our next question comes from Eric Burden in Thousand Oaks, California, which is Southern California, which is where Christian Bachelder lives, which, coincidentally, is our next show sponsor. The One Brokerage. If you've ever wanted to get a loan and you wanted an honest loan officer, you wanted a good rate and you want a good service, well, I've got the product for you. The one brokerage is the brokerage that has it all. We work with investors, we work with primary residence homeowners. We've got HELOCs, we've got bridge loans, we've got commercial finding everything that you want, all at a great rate and great service. Great. Check us [e-mail] or go to my Instagram davidgreen24 and tell me you'd like to be put in touch with one of our loan officers and I will gladly pick the right one for you and make the connection myself. Also, if you like following what's going on in the mortgage industry, make sure you follow Mortgage Mondays here at Real Talk Real Estate that air every Monday on YouTube, Spotify or Apple.

[Chris Lloyd]

Hello, Mr. Green. My wife and I converted our primary.

[David Green]

Residence to a long term rental about a year ago. We cash flow around $800 a month and we have a first mortgage of $700,000 at 2.5% interest and a HELOC at $110,000 paying about 10% interest on that.

[Chris Lloyd]

Now my wife is a realtor. She wants to sell the property and.

[David Green]

Get the about $400,000 in proceeds we'd get from the sale to put into.

[Chris Lloyd]

Buying a duplex that we can fix up and add units to.

[David Green]

I love that idea, although I'm hesitant to give up the 2.5% interest rate.

[Chris Lloyd]

We could add an ADU in the.

[David Green]

Back of the property at our rental, but we'd probably lose our current tenants as the construction and eating up a chunk of the backyard wouldn't go over well with them, I don't think. Curious what you would do in our situation and how you'd crunch the numbers to decide what to do next.

[Chris Lloyd]

Thank you.

[David Green]

Well, Eric certainly has a voice for radio that was silky smooth. All right, Chris, what do you think about this conundrum?

[Chris Lloyd]

Yeah, so I didn't hear anything about pain with the current property. I heard that he has a good amount of equity. He's got a HELOC on it as well and he was looking to liquidate that and move it into another property that he's going to need to fix up. And that can go one of two ways. It can be, it can go great, it can go awful. I would much rather see him utilize the HELOC he has on that for short term financing to do what he wants to do. If he decides to pursue that because he has a property that sounded like is performing very well for him. I mean, at the end of the day, I don't like the idea of liquidating a property that is performing well and moving it into a more risky investment. That's me personally.

[David Green]

That's Actually some pretty good advice. I. I didn't like that his concern was over losing the rate. While it is an awesome rate, you wouldn't want to lose it for no reason. That's the only way that you get the equity out. So if you're gonna do something, it. I wouldn't let the rate stop you from doing it. In fact, I was thinking, well, if you sold and you bought a duplex for cash with that 400 grand or maybe 350, and you kept 50 to do the rehab or something, you're basically getting a zero percent rate because you don't have a mortgage at all. So wouldn't that be better than even like the two and a half that he's got right now? So that's one way to think about it. What I did like was his property isn't built for cash flow, though it is cash flowing. In fact, I think he said, am I remembering correctly that you said $700 a month, is that right?

[Chris Lloyd]

Yeah, about 7, $800 a month is what he was making.

[David Green]

Okay, so if it's 700amonth, which is really good times 12 months, that's 8,400 in a year. If we divide that by the 400,000 he has in equity, his return on equity is about 2%. So though that cash flow is pretty good, it's not great for 400 grand, he's only making a 2.1% return on that equity. So if he's trying to maximize cash flow, if he can get an 8% return on this multifamily idea that he has, he basically multiplies the cash flow times four, which would be about 2,800 instead of 700amonth. He's trading what's probably an asset that's gonna appreciate more. It sounds like this is a good house in a good area, for one, that's probably gonna appreciate less. So that is something to think about. You're giving up the appreciation play here. I call that market appreciation equity. Like, you're in a good market and you're gonna make more money to go invest in multifamily real estate, which is often in areas that don't appreciate as much. They've been very popular the last couple years because every investor wants it. But when you go into a rece are not nearly as popular. People avoid those. They don't want to rent this stuff out to a tenant in a recession who's losing their job. So that's another thing to think about. I would only say I'm on board for this if there was a big equity play in the property. I like that he mentioned that he wants to add units. So that's something else that I call forced cash flow. This is all coming, this terminology is coming out of my book Better than cash flow, the 10 ways you make money in real estate. You guys can find that on Amazon. It's currently not a paperback version available yet. It's just the electric Kindle one, but I'm working on the paperback now. It's ways to build wealth other than just straight cash flow, which is what most people have been taught about. So if you've got a good area that you can buy in, if you've got a good buying opportunity, you're getting a really good deal. If you're going to add units and you're going to add equity, I could be on board with this. But if any of those pieces are missing, this is not the market that I want to see you make a big swing to try to hit a home run in. I, I think that we're going to be kind of coming into some rough seas here and owning a stable cash flowing asset which right now is boring. That starts to be kind of sexy and comforting if the market turns around. Alrighty everybody. I hope that you're enjoying today's show. Chris and I are going to be moving into the next segment of the show called the comment section. In this section of the show, I read comments from my YouTube, my Instagram, my Facebook, wherever people are leaving them and I share them for everybody to hear. The first comment comes from Mortgage Monday. I believe it was probably episode 40 about tariffs and the future of the economy from Bruce Benson, 5908. Your show was longer than usual and your content was thinner, so you didn't look as sharp as normal. Consider going shorter when you're dealing with so much theory and what ifs. The show will be better and you will look smarter. Well, Bruce, are we trying to make me look smarter or are we trying to make me look thinner? Chris, which of those two things do you think would benefit the show more? Smarter or thinner?

[Chris Lloyd]

I'm a lean on smarter.

[David Green]

That's a good answer there. Didn't call me fat on my own show. Thank you for that. Yeah, that show did go a little bit longer. The tariff thing is pretty big on people's mind. It was tough to get that thing out. And if you guys know anything about Christian Bachelder, the guy can talk and he likes to talk and once he gets going, he's like a dog that you took outside. It just runs around and gets the zoomies. He gets that way verbally sometimes. So yes, typically the Mortgage Monday shows are shorter. That one got away from us, but it had been several weeks since we were able to get one out, which is completely my fault. Not Christians at all. I was moving across the country and I was in Tennessee doing everything I could to try to improve some of my cabins and some cabins that we manage for other people as well. So I just was in front of a computer. But as you can see, I got a new studio here and we plan on pumping those things out for you every single Monday. All right, next comment. Also from YouTube Mortgage Monday Tariffs in the Future of the Economy comes from Maria Christina. I used to love David and followed him in all BP episodes. But the fact that you agree with the clown's policies, I am just going to look for someone else's real estate and economy advise. I think she meant advice. What do you think about that, Chris? And, and also, don't assume that I do agree with the clown's policies because I don't know that I said I agree with them. I explained pretty clearly you shouldn't pick a side when it comes to financial advice. You should look at what both sides are doing and try to make a good decision. But what's your overall thought on if somebody says something you don't like politically, that you should just stop listening to them?

[Chris Lloyd]

I don't agree with that. Because, you know, one of the, one of the number one reasons why companies fail is because they subject themselves to groupthink and they get a whole bunch of people in the organization that just agree with them and they fail fail to see threats to their business. And I think that you should look at your investing as a business as well and look at all of the different policies going into effect, whether you agree with them or not. And I listened to that episode. I don't think you agreed with anything in particular. You just stated the facts, what is currently in front of us and the different directions that this could go and if it does go a certain direction where the potential opportunities may be there. There's many people that have different opinions on what the current administration is doing. At the end of the day, as an investor, it's not our jobs. To agree or disagree is to see what the policy is, how it's going to affect us, and how we need to react as a result. Treat your investing as a business. That's how they would. That's how they would look at these situations.

[David Green]

It's a great point, actually. If you let your emotions get into this and you say I don't like Biden or I don't like Trump, and so I'm not going to listen to someone that says Biden's doing this, so we should consider investing. This way, you're not prioritizing the health of your business, you're prioritizing the health of your feelings. And that can be dangerous. Jesse Kendra on that episode commented, James Carville coined It's the economy, stupid. I remember I couldn't tell who said that. I said it and I couldn't remember who it was. Ironically enough, James Carville is a Democrat and I still quoted him. Crystal Ball Barr, at around seven minutes in, commented, complete false equivalence. Often being laid off has nothing to do with performance, as evidenced by Elon firing everyone who has been in a job less than a year. Nothing to do with performance. Everything to do with the ease of firing, the less legally complicated situation. This sounds like it is in response to me talking about doge that's going through and trying to eliminate government waste, which unfortunately means a lot of people probably are going to lose their jobs. And I mentioned in the show some of those could be good people, right? When you're making that many cuts, you're going to get some of the good fish in with the bad when you haul the net in. What is your thoughts here on people that are being fired having nothing to do with performance? Like, do you think that that's how this works, is that humans are fired and every position is the same? Or when you're running your business, Chris, do you see that there are certain people that perform better than others and you want to keep some people in, let go of others?

[Chris Lloyd]

Most certainly, yeah. We definitely want to keep the highest performers as a business owner. But in the event, you know, my business is nowhere near the size of somewhere where we do mass layoffs and stuff like that. However, my background from college was economics and business. And when you are looking to streamline and make something more efficient and you're doing these mass layoffs, there will be good people coming cut. Now let's look at the other side of that. If you are looking to slowly trim off the fat of your company, you're going to have underperformers for a longer time, sucking that money out of the company and they're going to be around for longer. So if you move too slow, you're going to have underperformers for too long if you move too fast. Cutting good performers is unfortunately a sad reality of that process. And I think that's one of the things that we're gonna see, you know, moving forward if all of these things go through. So at the end of the day, no one likes to talk about it, but I am afraid that is the reality of Quick Cuts.

[David Green]

Yeah, Good point there. Alanis5193 said, I enjoyed this episode and the way you didn't take sides but just considered hypothetical ways that it might play out. I'm enjoying your show. Funny that that's what she saw when someone else saw me agreeing with the clown's policies. I wonder how much of our own lens affects the way that we see other people. And it's much easier to pretend like we see things objectively when we don't. And the last comment from this episode came from Max OneTrust. Love your episodes, but I think the rapid development of AI will soon eliminate warehouse, repetitive and labor intensive blue collar jobs. Rather than promote blue collar jobs, we should encourage our youth to train and become educated in jobs and industries that support AI development. AI and technology advancements will eliminate many jobs within our child's lifetime and they must be flexible and prepared. This sounds like this was in response to me saying a lot of jobs like computer programming are being replaced by artificial intelligence. They can code better than people can, so people should go out there and learn a trade. I call that blue collar work. They should learn how to fix H Vacs, how to work with their hands, electrical stuff like things that people are still going to need in the world when appliances break or when vehicles need to be repaired. Because it's going to be very difficult for artificial intelligence to change a tire. I don't know that I'm right about that. What's your thoughts on if we should be encouraging people to learn blue collar or if we should just double, triple, quadruple down on AI and say nothing else matters? Let's just put all of our investment in that. That.

[Chris Lloyd]

Well, you know, to be honest with you, I really think that blue collar work is something that we as a nation have not promoted enough. I do know, you know, given that many millennials and Gen Z's, you know, my generation, we were told, go to college, get a professional white collar job. And then we're also watching on Instagram every day all these influence influencers and glorified jobs and everything like that, we're seeing that every day and we're constantly being told there's an easier, better way. However, I do believe artificial intel intelligence poses a threat to any repetitive job, any job that has an easy solution. You know, I think that we should look for problems because money is made in solving problems, in my opinion. And I think that given the fact you mentioned in that episode that the average age of a blue collar worker was something crazy, like the high 50s, I believe is what you said. Was that. Was that about right? Yeah. So they're going to be exiting the workforce, which is going to leave a lower supply for those things. But last time I checked, anyone living in a home has an H Vac system. If all of the H Vac guys are getting out of the business and there's less people in that business to service H Vac system systems and all the same people owning homes, guess what? The prices are going to go up. I think that there is a very strong need for blue collar work and also a great opportunity for people that decide to pursue that because there aren't many people that are looking to pursue that. Most of the people in my generation want to become Instagram influencers. They don't want to get their hands dirty, they don't want to work hard. But if you go towards the thing that nobody wants to do and solve that problem problem, that's where you can really move forward in life. And I think that's what people should be focusing on right now. So I completely agree. Blue collar work is where the opportunity is, because if your job can easily be replaced, it will be.

[David Green]

That's your economic background poking its head into this conversation. You're talking about supply and demand. Yeah, right. And my take was there are less people willing to do blue collar work and willing or able. And so they can charge more to do it. And that's exactly what I've seen in my portfolio. People that can work with their hands are charging what used to be what a CPA would charge to do stuff because it used to be hard to be a cpa and there was a ton of people that could work with their hands. It seems to be the opposite of that right now. In fact, one of the comments that came out of the last Seeing green episode on YouTube was from Legacy op 9318 who said plumbers are not overpriced because of lack of them. That's a ridiculous statement. I don't know why plumbers seem to be charging way more than they used to, but it does seem like we don't have a ton of plumbing options. And the plumbers themselves, like the plumbing companies, they don't have a lot of people that are wanting to go out to the Property and do the work. I'm not getting this. Like, we really want your business. We'll do it for this price. Please give us a chance. Like you get when there is a whole lot of options. It's kind of like, hey, this is what we charge. Take it or leave it. We got a whole bunch of other people that can do it. That's why I think that they're charging more because there is not enough supply of them for the demand. We typically look at the supply of housing and the demand of buyers. But this principle applies to more than just that. It also applies to the trades. Is that what you were getting at when you said we should have more blue collar workers?

[Chris Lloyd]

Absolutely. Absolutely. Because when we reach out to contractors for our rentals, our property management team is reaching out to contractors. We're working on their schedule. We don't say, hey, I need you buy the property today. It's hey, when are you available to come by and get us a quote on this? They do have the upper hand in the control aspect of that conversation because they understand there are not that many options. They understand what they can charge for their work. And even if we do feel that it is over priced, we may not have many other options.

[David Green]

Great point. Let me give you an example from real life in my own portfolio. I moved to Oklahoma and I'm in a new house right now. It was a house I was going to flip. I decided I was ready for a change. Want to get out of California? I like the neighborhood of this house. So I literally just, instead of selling it at the end, I just changed a little bit of the decor and got new appliances and I moved into it instead. I have a outdoor patio that I had framed up and converted into a movie theater room. So I need to put carpet down in that room. I went to a discount carpet place and I found a guy that would sell me carpet for it for $8 a square foot. So a really good price. But I need a person to install it. I asked the contractor who is doing the work on the rest of the house, does he have a carpet guy? The carpet guy comes by, he measures it, gives me a quote, just for labor for a thousand dollars. Now this guy's driving a big carpet truck. He's got a lot of different contractors that are all sending him business and no doubt he's tacking something onto that to pay the contractor who tells me that I can talk to his carpet guy. That's just the way that this thing works. So he gives me a thousand bucks and I'm like, that seems really high for a 18 by 13 foot room. Like, that's gonna maybe take this guy probably less than half a day, and he's gonna charge me a thousand bucks. Like, if he did two of these jobs in a day, he could make $2,000 in a day. For someone that. It's not like we. It's not like it's a useless skill. But we're not talking about an electrician or somebody that's highly educated and had to go to a lot of training to be able to do this. So I make. I meet actually another guy, funny enough, Hector, shout out to you if you're listening to this. Walked into Golden Corral to get some rotisserie chicken. After working out, Hector recognizes me. He listens to the David Green show. He introduces himself, we take a picture, and he's an investor out here in Oklahoma. And he's like, hey, I can connect you with one of the guys that did work for for me. I send a video of the room and he's like, okay. He says he can do that for 250 bucks. That is a dude that is looking for a job and is happy to make $250 for half of a day's work, even if it took you the whole day. $250 is like a fair wage that I would think to pay somebody to come in and lay down the carpet. That is one quarter of the thousand dollars that the guy with the big truck and the marketing budget and all the contractors that are calling them and the uniform that's like, so and so carpet that he's going to charge. In my head, that is the difference between a person who wants the work and the person who doesn't need the work. They're willing to do the work if you pay them enough. And I think that sums up what our labor pool is like. You don't have a generation of people that are wanting to get after it. They're like, I got to get a job. I want to go to work. Someone give me an opportunity. You have a bunch of people that are willing to go to work if you make it worth their while. And that is what concerns me about the overall economy. And here's why we're talking about this. This is not me as an old man shaking his fist at a cloud like Homer Simpson's grandpa. These are your tenants. These people are the ones that rent from you. These are the people that make money to pay their rent. And if they're not able to make what they used to make and they have to work more or harder and they don't want to and they make less money. This will turn into you not being able to charge more for rent or not collecting rents at all. Do you think, Chris, that there is a contingency of real estate investors that look at the housing market but they ignore the overall economy? And is that wise?

[Chris Lloyd]

Absolutely. No, they need to be. I think you need to be taking a look at the entire economy. You know, one of the things that, you know, we look at is how healthy is the job market. Our area. That's why, you know, southeastern Virginia, I believe, has still been a very strong market, is because most of our employment is military. We've got a, a massive military presence. These are, you know, full of hard working people that are having steady wages going into it and then also when they get out they're finding local jobs in this area. One of our largest jobs in the area is in shipbuilding. So hard heavy trades and I do believe that is the backbone as to why our market has been so strong is because we have a lot of hard working individuals just by the nature of how people make money in this area. Now if you're in say another area that's full of Instagram influencers and people looking for the next best thing in the time that a recession comes around, I would be a little. Are a whole lot more concerned because as the economy begins to crack, I think you're going to have a lot more. I hate to say it this way, but weak minded individuals that don't look for a solution to their problem and they just cave in. And then when they cave in and they're not making money, they're not paying your rent. And when they're not paying your rent now that puts you in a tough predicament where you're looking at liquidating something that otherwise could be a good investment.

[David Green]

All right, last comment for this segment of the show comes from Matt Lewis, 2110. Please make more content. You help me start my journey. I think that everyone that is not holding physical gold and silver is going to be in a bad spot. I know that is not your area of expertise. Pillars of wealth is a great way for people to take a look at what they spend, how to make more and how to make more real estate as an incredible tool, the dollar is going to collapse. How do we navigate that with properties with debt and future planning. Pillars of wealth is the last book I published right before Better Than Cash Flow and it basically has a holistic approach to wealth building. Instead of saying how do I scale? It's how do I make more money, how do I save more money and then how do I invest that money wisely? Matt here believes that the dollar is going to collapse and he thinks that silver and gold, if you're not holding that, you're going to be in a bad spot. What's your thoughts on that Mr. Economists for the Day, Chris Lloyd I think.

[Chris Lloyd]

That one of the things we look at and look I'm not, I don't invest in gold and silver so I can't really speak to that asset very much. But I think that inherently us as humans like to see opportunity and like to see if, if you think that the dollar is going to devalue every single article that you, you read on that is going to be a self fulfilling prophecy of that. I personally don't believe that there is much risk for the American dollar. I could be wrong. However, that's a tough one. David. I, I think we like to see opportunity even when opportunity is not there. And I'm assuming his opportunity is gold, silver, maybe crypto or something like that. For me, I don't understand it. So I'm not even looking over there. I could be missing something, you know, full disclosure. But I understand real estate. I invest in real estate. I invest in what I understand. And Robert Kiyosaki, Rich Dad, Poor dad, talked just about that. Invest in what you understand.

[David Green]

Here's, here's one thing. I mean this is an awesome topic. I didn't think this section was going to go this long, but I think that there's a lot of wisdom in this. I'm trying racking my brain to think about who, who I first heard this information. I think it was Michael Sailor who's a bitcoin advocate. And this is not me telling everyone to go buy bitcoin. I own a tiny little bit of bitcoin but I'm not like super excited about it. I'm excited about real estate. But I think Michael Sailor is an intelligent guy that made some really good points. One of the points I heard him make is that a country's economy and assets are tied to its currency. What he was saying is look, if the Venezuelan dollar or whatever they have collapses, all of their real estate is not, is going to be tough to sell. All of their businesses are going to struggle. Their beachfront property is not going to be worth as much. You're not going to be able to pay people to move goods and services with trucks throughout the country. Like you can't have a country's fiat currency collapse, but then another part of the country is fine. It's all tied to the currency. And then he went on to talk about how money is used for three main purposes. And I put this in pillars of wealth. It's a unit of exchange. We all know that, like, I give you a dollar, you give me a thing. It is a means of account. So it's a way of saying, like, hey, this thing is worth X amount of money. It's a way of gauging the value of something is expressed in fiat currency. And then it's a store of value, like there's value in dollars, because they can get you something. If our dollar collapses, what would likely happen is we would try to spur the economy by, like, making more of them, or people would stop valuing the dollar itself. We would create some other form of currency that could store the value better. But people will still need food, people will still need jobs, and people will still need real estate. And if you own the real estate that people need, they'll pay you in whatever the currency becomes comes. All the cash in the bank might become worthless, but your assets, if they're good, those are less likely to be affected. And if your tenants start collecting their income in something other than the dollar they collected in something else, you just have them pay you in that. So in the event that the dollar does collapse, I kind of like the idea of owning real estate. And if we then create a bunch of inflation to try to get out of that, the debt you hold becomes less valuable. It's better for you, Right? So it's not like I'm rooting for this to happen, but if I'm planning that this could happen, I maybe want to own real estate. I just don't want to own real estate that is like, absolutely leveraged the hilt. Because it's probably going to be rough before it gets better. And I need a bit of a Runway if the economy does get bad to continue making my payments before it recovers. All right, moving on. We're going to get into the next segment of the show, which is the real news report. The real news report is sponsored by the one brokerage. As I said earlier, if you are looking for a loan, if you want to finance real estate, if you know someone in your family that you love and trust and you don't want them to get ripped off. And if you want a loan officer that explains all your loan options and shops around to find you the best rate, send me a message on Instagram. Check out our website the1brokerage.com or email us [e-mail] all right, the real news report first article comes out of wptv.com and this is about Florida possibly ending property taxes and what would happen. A nonpartisan group says the state would have to make up about 43 billion in revenue. WPTV is asking questions about the impacts if property taxes ended in Florida. Florida Governor Ron DeSantis kickstarted the push against property taxes at a news conference last month in Miami Dade County. Ultimately, you buy a house and own the land and you have to pay the government for the courtesy of just exercising your property rights. Not really a good thing, desantis said at the Capitol in Tallahassee. Fellow Republicans responded with bills to either cut property taxes or eliminate them. This article says, what about the loss of revenue? You will have to make up for that income somewhere else, which oftentimes where you make up for it is very regressive, like a sales tax. State Senator Lori Berman out of Boca Raton said. Berman told WPTV that counties and cities would make up the millions of billions by raising taxes on purchases. Property taxes are really important when it comes to the fiscal economy, like home rule power came out of Estimona Santis from Florida's Policy Institute. They finance things like schools, public safety. This includes police and fire rescue, public libraries, parks and infrastructure. The Florida Policy Institute study the effects of eliminating property taxes and ways to make up the 43 billion statewide revenue that would be lost. And it fell on the state sales tax, which which would have to rise from 6% to 12%, making it the highest in the country, and would drive up the cost of most everything we buy. All right, so Florida here is flirting with the idea, it sounds like at least Governor DeSantis is, of eliminating property taxes and they're wisely recognizing if we do that, we're going to have to get the money from somewhere else. To me, it looks like if you own real estate, it becomes cheaper, which is desperately needed right now. For those that own real estate, whether they're investors or whether they just own the house themselves, insurance is going up, labor is going up, materials are going up, interest rates, everything is going up except for rent. This would be a way to eliminate an expense. It would hurt you when you go to buy things as sales tax would have to go up. So what would happen is you would reward those who own property and you would punish those who buy things. Things that doesn't sound so bad to me. What do you think about that?

[Chris Lloyd]

I completely, you know, can get behind that. You know, I've always believed that instituting a higher sales tax, and this is just my beliefs personally, higher. Instituting a higher sales tax to replace other tax revenue sources is going to be a lot more of an efficient way to. One encourage things like this such as homeownership and discourage, you know, wasteful spending from a personal standpoint. And then also we spend a lot of money for the payroll of people in local and state level governments that are collecting these taxes, reviewing it, doing the assessments and everything like that. When if we just tack it to the end of sales tax, we could have a lot more efficient of say, local and state governments. I personally believe that this is a great idea and you know, they're smart to say, hey, if we get rid of, you know, property tax taxes, we have to make up for it somewhere else. But the way that they're doing this I completely agree with. I can get behind it personally.

[David Green]

Yeah, I watched the documentary, I can't remember the name of it, but it was basically about consumerism and how much packaging we are using like plastics and things that are destroying the ocean and destroying third world countries where we pay them basically to dump all of our garbage. This becomes a common thing. And these big companies, people that used to work there were being interviewed, people might recognize this now that I'm saying this, and they would say, yeah, our job was to create a phone or an appliance that would not last more than two years. So you had to get a new toaster. But we couldn't have the toaster fall apart. We'd get a bad review. So we needed to have one little piece in the toaster that couldn't last more than 12 months. So that you had to either get a new piece or just get a new toaster, which was almost the same price. Like companies would literally do this. And they compared it to the 40s and the 50s, 50s when they would advertise, buy this washing machine, it'll last you for a decade. Now they're like, we don't want people with the same washing machine for a decade. We need to get them to get a new one. But if we add some stupid new feature every year, they can justify spending the money over and over and over. And that's like what Apple does with its phones, right? I get a new phone, I just did this. I got the 16 I used to have, I think the 13. I put it off for a long time. Well, now I got to buy all new charger cables for Every single car that I'm going to be having, every place in the house, I'm going to have it. My travel bag. It's like six or seven new charger cables that I have to buy because I'm one of those people that keeps a charger everywhere I go. There's one in my office, there's one in my desk, there's one at the chair, there's one by my bed. And like, they're simultaneously smart for doing that and evil for doing that. Because you got to go spend more stuff. If we start taxing you a higher sales tax, it forces you to keep the stuff you've got longer. Right? You just take more care of the things that you own. You're more likely to take care of that car because a new car is more expensive. You're more likely to take care of your clothes or your shoes or whatever. I don't know that that's bad. And it also creates a lot less waste in the environment and a lot less shipping of stuff from Amazon all the time. I kind of like this idea as well as it promotes people to buy more real estate. If you're someone who's not super wealthy, this is like sending a message to you, hey, you better take this seriously and save your money. Because if you can buy some property, it will build wealth for you, and we can get the lower levels of the demographics in our society into creating wealth. And then when you get a taste of it, when you get someone that doesn't know how money works, that buy a property and five years later they've gained 70 grand in equity, it's more likely something's going to click and they're going to get into it. They're going to get excited about it. You have the same perspective there.

[Chris Lloyd]

Absolutely, Absolutely.

[David Green]

All right. Our next article is about buyer representation agreements. It comes out of Real Estate News. Chris is the perfect person to have here. So, Chris, can you break down your understanding of the Sitzer Burnett verdict, basically, and how that changed the landscape for real estate agents and agency agreements?

[Chris Lloyd]

For sure. My opinion, long story short, was it was a whole big nothing sandwich. At the end of the day, the result of it, how it's actually been implemented in the industry, is that before we can show you a home, we have to have a written buyer representation agreement that outlines exactly how and how much we're going to get paid. How that is actually worked out in the field, from my personal experience, is when I bring on a buyer, nine times out of 10, they can afford their down payment. And maybe their closing cost. And if they can afford their closing costs, they're still going to be asking for seller concessions if they're already at the point where they can barely afford their loan. Every offer that sellers are going to be receiving will be asking the seller to compensate the buyer's agent, more or less. So, you know, it goes back to supply and demand. We've got a very low money supply on the buyer side of a transaction, and that is going to result in more pressure on the sellers to having to pay the buyer's agent. Now. Now we enter into the agreement up front saying, hey, buyer's agent, you're entitled to make this from, you know, me as the buyer. The way that we work that and, you know, we're telling our buyers is like, hey, you're responsible for ensuring that this gets paid. How it gets paid is going to depend on the contract we negotiate with the seller. And typically in our market, we're seeing commission concessions going in about this amount, and then we work from there. That's about where we have seen it, actually, in the field. You know how it has. How do you say it transpired? Gone into effect.

[David Green]

Yeah. How it's played out.

[Chris Lloyd]

Yeah, right, Played out.

[David Green]

I think that's a good summary of it in my mind. There were basically two components that changed. One was, you can't date your agent. You got to marry him at least for a period of time. You got to commit to using that agent before they can go show you homes. And two, you have to pay your own commission. The judge did not like sellers offering to pay a buyer's agent's commission, even though the buyers have to pay for everything else. They got to pay the down payment, they got to pay the home inspection, the pest inspection, the roof inspection, all the repairs that come from those inspections. They got to pay to paint the house. They got to pay the moving fees to get into it. They got to pay the utility bills to get them turned on. They got to pay half the closing costs. Like, they got to pay everything. But the. The judge was like, nope, they got to pay this too. However, even though you. You're responsible for paying it, you can't ask the seller to pay it and just work that into the contract. So like you said, it turned into a big nothing burger. You. You used to have the conversation about who's going to pay the buyer's agent commission. The seller would have it at the listing agreement. Now they still have that conversation, and they say, we can offer to pay this much, and then the buyers agree how much they're going to pay their agent and then you hope that number is the same and if it's different, then you just renegotiate when the offer gets written. It created a whole bunch more work for everybody and a whole bunch more commitment to being forced to use an agent. It really didn't help the buyers out at all, which they were the ones that were getting hammered in most transactions as it was, the sellers were the ones that were doing really. It was probably the worst thing that could have happened for the health of the industry. But that's the way that it played out. And this article basically just breaks down what buyer representation is and how it has played out in different states. So if you are an agent and you are looking for direction in how to have these conversations and you think your broker sucks Good news. I've got another podcast that's going to be airing on this same channel. We're going to call it Real Talk Realtors and it's going to be for real estate agents. If you're not an agent and you don't like agents and you don't want to hear about them, the good news for you is you can just skip that episode whenever it airs and you can still listen to these episodes for investors or the Mortgage Monday ones. But I'm doing my best to try to improve the industry, make it better, get the right agents getting more business so less consumers get ripped off by the bad ones. All right. And our last article has to do with the housing supply. So this article comes also out of Real Estate News and it says, when will we have enough houses? It could take decades. The nationwide inventory shortage, 3.8 million homes is reaching a point of no return. In some parts of the country, though, new construction is increasing. There is a deficit of millions of homes that the US is short about 3.8 million of them, which is the largest supply gap since 2012. New construction has increased in recent years, but it's still not enough to plug the supply home. While new homes are accounting for a greater share of total home sales, other factors are stymieing builders ability to deliver more homes in the places that need them. The most notably restrictive local zoning, high construction costs, and policy decisions at the federal level that are creating uncertainty in the economy. This kind of goes back to what Chris and I had mentioned earlier. Construction costs are higher because inflation has created material costs more and the labor costs have gone up a lot because it's very hard to find people that want to do this work. You just have to pay way more than you used to, to get someone to want to work with their hands. And this is one of the downsides of having a white collar economy where everybody wants to be an Internet influencer or have the soft life they're going into their soft guy era or their soft girl era is all the things that actually make the world run become more expensive. Like all those things that you take for granted, like housing or air conditioning or electricity. Somebody has to keep that going. And it's become so expensive that builders have said, we're not even going to bother trying to build these houses because somebody would have to pay so much from them to buy them that I don't think I can sell it. And the article also notes, which I think is insightful, this is happening, the supply of homes is happening at the same time that there's uncertainty in the economy and the job market. So there's not enough houses for everybody to live in. So the prices aren't coming down. And there's not enough people that want to buy a house at all. So they're kind of like everybody's kind of forced to live together. They're all sharing spaces right now. I know you're in a market that's like heavily influenced by the military. What are you seeing, Chris, as far as people? There's a shortage of homes, but a lot of people don't want to buy one.

[Chris Lloyd]

So one of the things, you know, in regards to this is there's a unique dynamic that we're seeing with new construction right now where builders are still building, but they're not building what we would consider to be more affordable housing that the average Joe can make in the area. So not only are we behind on housing, we're also not building the housing to fit where the demand actually is. The largest portion of homeowners right now are, you know, mid 30 year old, like millennials. A lot of those people cannot qualify for most of the homes that they these builders are building. We've got that. And also a lot of the would be first homes for these people are getting snagged up by wholesalers going to flippers and then selling for really high prices.

[David Green]

Yeah.

[Chris Lloyd]

So homeownership is getting very difficult to enter into as a whole. And I think there's a lot of factors and I think this new construction thing is a factor to look at. But, you know, to your point, we have low supply and we're not fixing the supply that we need. And at least in my market, we have enough buyers. Even though you know, supply is going, it is going up, but we've got enough buyers to exceed that supply, if you will.

[David Green]

Yeah.

[Chris Lloyd]

And so I'm interested to see where it goes. I don't have a complete opinion made up completely on this yet. All I know is, hey, we don't have supply now. I don't foresee the supply of the right homes getting better, but we have a lot of people on the sidelines. And then also another side note, my buyers that are getting qualified are some of the most financially qualified buyers to buy homes right now. That's another interesting dynamic. Like the people that I'm working with have got great savings. They haven't entered into a whole lot of debt. How much longer do we have with that? Because we all know right now the consumer debt is the highest it's been in a long time. So how many more actually qualified buyers? Not people saying, I want to buy a home, but the people that can buy a home do we have left? And then when is the supply that we're not feeding them going to completely, you know, dissolve, if that makes sense. That's my biggest concern with this.

[David Green]

It's a solid point. And you are highlighting that real estate is local. So in your market where you have a strong military presence, they have certain in their jobs, they're buying properties in other markets where they don't like. I am wondering what's going to happen in the DMV Market. Washington, D.C. maryland, Virginia, where you have areas that have a lot of people that work for the federal government. If we do have sweeping layoffs, you might see a whole bunch of houses hit the market at the same time. And depending like if, if you're in the area where federal workers tend to live, you might get a massive influx of supply and not enough buyers for them. That could cause housing to drop. While at the same time, a different part of Virginia where you don't have a whole bunch of government workers could be actually prices going up. So, like within several different counties apart, you could see a completely different shift in what the housing market looks like as people move around. And this is an exciting thing for real estate investors. We need undulations, we need movement, we need prices going up or down in order to make money. If the market just stays solid and consistent forever, it's very hard to provide value in it. Chris, thank you for joining me today. Appreciate you adding your perspective into Seeing Green. If anybody wants to reach out and get a hold of you, how can.

[Chris Lloyd]

They do so they can reach out to me on Instagram at Chris Lloyd. That's L L O Y D underscore Realestate. Feel free to shoot me a dm. I'm on there quite a bit. Would be happy to chat with you one on one. If you're looking to invest in our market, we've also got a team of agents that are specifically focused on helping investors. So we have someone that works specifically with Flippers and then I myself, you know, with my house hacking background and Buy and Hold. We've worked with plenty of people looking to invest in our market and can get you up to speed on what's going on here.

[David Green]

There you go. So reach out to Chris if you're looking to buy out there and when you do, say, hey, David said that I should use the one brokerage to finance this and Chris will get you in touch with me and I'll put you in touch with them. Thanks everybody for listening. I know you could be getting your real estate advice anywhere and you're choosing to come here. I really appreciate that. Please consider taking a minute to like, share and subscribe to this channel as well as leave me a comment about what you thought about bringing in Chris and what it was like having the tag team effect answering these questions. Lastly, a thank you to our show sponsors, Turbo Tenant, Hospitable and the one Brokerage. And if you're interested in what we talked about earlier and growing in your faith, send me a DM on Instagram that says faith and follow the prompts. We'll see you guys next week on the David Green Show.