Loading summary
Transcript103 lines
- [00:00]
David Green
Welcome to Real Talk Real Estate, the show where we cover how to build wealth in real estate with no fluff, no BS and no sales pitches. I'm David Green and I've been doing this for over 10 years. I've seen the ups, the downs and everything in between. This is the show where we pull back the curtain and show it to you too. So if you want to build wealth through real estate or you just love learning about it, you found your home. What's going on everyone? Welcome to Real Talk Real Estate. This is the David Green show and I am joined today for a Seeing Green episode with none other than Joseph Hamer. Joseph and I did an interview on the Real Talk Realtor podcast where we got into how he sold over 30 houses in this first 12 months of being agent. Very impressive. And he's a very impressive individual who's here to weigh in, give his insight into what we can do as investors to manage our portfolios better and build more wealth. Joseph, how are you today?
- [00:48]
Joseph Hamer
Hey, lovely. The high praise is a little bit funny to hear, but I'm grateful to be here, David, and I'm looking forward to helping out and having a good conversation.
- [00:58]
David Green
Yes, well I should have also mentioned he's incredibly humble and so he's uncomfortable with getting high praise as if there wasn't enough to love about Joseph as it is. And if you guys like this, remember we would like your questions answer on today's show. You can submit it by going to davidgreen24.com ask and submitting a 60 second video question over there which we'd love to answer on the show. And if you get value out of this, in addition to subscribing to the channel and liking the video, please consider reaching out to me at my website, davidgreen24.com There's a chat feature. You can get in touch with me directly and I can put you in touch with one of the one brokerage loan officers to finance your real estate, give you a connection to a real estate agent in the area where you might be looking to buy, give you a recommendation on a good cpa. Whatever I can do to help you in your wealth building journey, I'm here for. All right, let's get into our first question today. Hey there. My question is if I'm looking to relocate out of state and trade up in my personal residence within the next 12 to 18 months, when do you think is the best time for me to sell and repurchase out of state? I understand that the two markets are very Different. But I'm interested in your opinion on the timing standpoint. To me, things look like they'll continue to deteriorate. This is a very good question. Also, Kayla started this thing off flexing her guns. And so my first question for you, Kayla, is how much are you curling? Because that was. Did you see that? Like bicep full right in front of the camera to show this thing off? Definitely not shy.
- [02:25]
Joseph Hamer
Well, yeah. Kayla, again, what a good question. And it's one I'm sure thousands of people are asking right now as life happens and they move and the market's a little bit different in multiple markets. I'm interested to hear your thoughts, David, as there's going to be a lot of variable factors here depending on what market you're moving from and what market you're moving into. Because depending on where you're moving from and where you're moving to, you could be moving from a seller's market to a buyer's market or vice versa. And so there's definitely a lot of variables there, but I'm sure we'll be able to take some general approaches here.
- [03:04]
David Green
That's a really good point. A couple things that I would be weighing in. You hit the first one and the most important one right off the bat. Not every market's the same, so it could be deteriorating further in her market, but the one she moves into might be on the way up. Ideally. That's kind of what you want to do as an out of state investor is you want to take advantage of how different markets fluctuate because they don't all go up and down the same way. So you want to sell in the market that already had a run and then you want to get into the next one. I use the the analogy when I describe this in some of my books. Like you want to ride the elevator to the top and then get off and then get on the next one that's low and ride that one up, too. So if that's the case, it makes sense to just sell and jump into the next market. But if we're going to answer this like all things are equal and she's going to be buying into a market that's the same as the one she's getting out of, where she thinks prices are going to keep coming down. I'm a fan of selling and then moving somewhere temporarily if you can and taking your time to get either the house you really want or the deal you really want. You're a realtor. I'm a realtor. In fact, I'll tell a little bit of a story here. One of the first clients that I helped with buying a house, Funny story, Joseph, you ever heard, have you ever heard that phrase where somebody looks at somebody's stupid looking shoes and says, what are those?
- [04:17]
Joseph Hamer
Yeah, what are those?
- [04:19]
David Green
Did you ever see the video? What are those? That video?
- [04:22]
Joseph Hamer
Yeah, the same.
- [04:23]
David Green
That cop is my. Is a friend of mine. He was wearing some boots. In fact, this is funny story. Today's his birthday. So, Sean, if you're watching this right now, happy birthday to you. And he had just a super disrespectful guy at the North Berkeley BART station and made fun of his shoes because they looked like they had like a little bit of a platform to him. And it went viral. But. Well, I was helping to sell his house and he was going to buy another one. And he fell in love with his next house before he sold the one he had, which is like what we always tell people don't do. But he went out of state. The realtor in Georgia kind of pressured him into buying a house over there. So he puts that one in contract. He comes back, he's like, David, we need to sell my house now. In a red hot market, that's not really a big problem. The problem was he really wanted to sell to this like, veteran using a VA loan because Sean had been a veteran as well. And that person ended up jerking us around quite a bit. They wanted a bunch of repairs made and then they wanted a bunch of closing costs covered. And then they kept wanting extensions. They were hoping that rates would go down and they didn't want to tell us that. So they kept asking for extensions on the loan. Meanwhile, his contingency is running up on the house that he's looking to go buy. His earnest money is going to be at stake and he's coming like, dude, David, this guy needs to make up his mind. And I'm like, we're, we can't make them. We can just cut them out of contract.
- [05:41]
Joseph Hamer
Right?
- [05:42]
David Green
But if we cut them out of contract, you are for sure losing the house that you're trying to buy. This is why you don't ever want to get into that position. And the other realtor didn't want to tell him that because she's like, he's visiting from out of state. I got a short window to put this guy in contract. I'm going to do it. That story highlights why we don't want Kayla here in a similar situation. You don't want to, to buy your next one before you've sold the one you have, you always want to sell it for as much as you can get with as smooth of a transaction as you can, and then rent somewhere, put your stuff in storage, go live with a friend and take your time to get the house that you want. If you don't do that, your buyer's agent ends up with a horrible job because you're trying to frantically find the perfect house. You probably don't understand. You can't be picky about it. When you find it, you're still going to have the expectation. I want to write a low price. Because you're like, well, prices are dropping, so I don't want to pay what it's worth right now. I want to pay what it's going to be worth. But the seller doesn't care about that. And you create so much internal pressure on yourself trying to execute this plan. So when you're in this position, you either buy the one you want first and you take your time. And then once you've bought it and it's either in contract and you waive contingencies or you've closed on it, then you move into it and you take the one you have and you either sell it or make it a rental. That's the smoothest way to go about it if your DTI can take the hit. So sometimes you can take a HELOC out on your first house. That's what we used to do a lot of the time is the down payment for your next one. It just takes so much pressure off of you than trying to balance this. And now you've got like moving day scheduled and whenever one party switches something in this, they need more time, which to them seems reasonable. All the other parties that are involved in this contingent firing squad get really mad and everyone goes and yells at you. So I would prefer to see Kayla sort of take her time, especially if she thinks the prices are going down. The exception that I can see that would change this would be if the Fed is either replaced Jerome Powell or chooses to lower rates a significant amount. And that also leads to lower interest rates on mortgages. If we don't have that, I think many markets are going to continue to keep going down as days on market gets high. But if we have a mortgage rate drop, I think a lot of buyers are going to come in from the sidelines and we're going to go from a slow market to a hot market like that. And a lot of people that have not been around real estate for a long time don't understand that markets tend to cool off kind of slowly, but they heat up fast when they get going. What do you think?
- [08:15]
Joseph Hamer
No, and I think, you know, without knowing too much about her situation and maybe this is the realtor side of me of like I need to know a lot more details right before, before I really advise. But you know, there's, there's definitely a lot of plays. The HELOC is a great choice, especially if she doesn't have the cash saved up for that next home to be able to start that search on. On the flip side, if she can't manage a new mortgage payment and her HELOC payment alongside of her previous mortgage payment, you know, if, if that doesn't work out, maybe it is best to sell first. Find a place to rent, whether that's for a six month lease, a 12 month lease or whatever it might be and still be patient in that next buy. It sounds like it's more so primary whether it's a house hack or whatever it might be. So regardless of what avenue she goes in in terms of that transition, I think being patient on the purchase and making sure she gets the right location, the right price, the right on the buy side is what's going to be critically important if, if the markets are like for like.
- [09:21]
David Green
I like that. It's a really good point. You also just made me realize why my answers on the Seeing Green shows are so long wind because I make up like four hypotheticals from the information I didn't get and then I try to answer every hypothetical because I'm afraid that some other influencer out there is going to try to take a shot at me and be like David said to do this. But here's the time it didn't work because I, I missed the one hypothetical in there that I should have covered. But we do appreciate when they make them short and sweet like that. Nobody wants to listen to a seven minute ramble with their question like then all my listeners start dropping off. So Kayla, thank you for giving this and also thank you for asking a question that's relevant to everybody listening because this is what everyone's thinking. Like I don't want to be the one that sells and then buys when I should have sold and then wait. I don't want to be the one that waits when I should have sold. There's, there's always that question about what's going on in the market. And you know, you made another good point, Joseph. When you sell and you go to move into your next house, this used to Be a lot trickier because you would typically have to like, agree to a 12 month lease. But with the amount of midterm options that are out there now or short term, there's so many easier ways that you could just go to a short term rental, be like, hey, I want it for two months. I can give you this price. And then if you want to extend from there, they're not going to be mad that they're getting another month out of you or something when they don't have to organize all the turns. Like short term rental operators would love that. So take advantage of the options that we have in today's market and give yourself the very best leverage that you can when buying the next deal. Like you said, uh, you don't want to get that situation where you're frantic, you're, you're looking at a bunch of houses. You write an offer on something you don't like, but it's the cleanest shirt in the dirty laundry. And then right around the time that the inspection contingency has to get waived is when you get cold feet and you go to your agent, you're like, no, no, no, I don't think I want to do this. What else is out there? And you're asking the wrong questions.
- [11:05]
Joseph Hamer
Yeah, especially in an out of state move, you know, there. Unless she's very familiar with that new market, there's a good chance the perfect home online, you drive the streets and you find out maybe that's not where she wants to live. So, yeah, I think patience on the buy side and then navigating, you know, she, she probably has six different options when it comes to how that looks between selling and buying. Regardless of which option she chooses, just making sure she's patient in the buy. Assuming markets are like, for, like.
- [11:34]
David Green
Yeah. And if you're going to sell, you ideally want to try to do it before the summer ends. If you get into October, November, December, especially like December, you might just wait until spring and you'll probably get more for your house. All right, next question here. Hey, guys, what's going on? So my question is, is there any type of mortgage products out there that would help assist buying a home before selling my current one? We've never had a horse make an appearance on the David Green.
- [12:14]
Joseph Hamer
I think that was two different horses.
- [12:16]
David Green
Was it really double horsed?
- [12:18]
Joseph Hamer
Yeah.
- [12:18]
David Green
Well done. I mean, like, the delivery was nice and slow. He had strong Matthew McConaughey and Days of confused vibes. Like, we were this close to getting an all right, all right, all Right. Two different horse cameos. And I wonder how many times he had to film that because it was like really good timing and he still was able to get out the sentences he was looking at. This is very similar to the question that we just answered, which my producer probably did on purpose. So what's your thought so far, Joe?
- [12:45]
Joseph Hamer
Yeah, I think one, this is why your lender is so critically important, right? If you're going to just your local bank, they're only going to have the products that they have. Now. I'm a huge fan of local banks for, for my home buyers here locally, but I'm also a huge fan of my mortgage broker connection because of the access to different products they have, whether that is, you know, more short term money or a DSCR loan or being able to collateralize the equity that you have in your current home. There's, there's certainly a lot of different options. My advice would be to go talk to lenders from different places. And even if you have to get your credit pulled, assuming, assuming this is a change that's coming up soon, you can have your credit pulled within, what is it, 60 or 90 days without it looking like you get hit, hit, hit and hit again. So my advice would be to get connected with a great mortgage broker in this situation who may have the opportunity to be a little bit more creative with you in terms of the product or if you have a great standing relationship with a local bank, sometimes they may have some flexible ideas that a larger bank may not be willing to do because they have a relationship with you already.
- [14:07]
David Green
Yeah, that's really good. Especially in today's market, there are more loan programs than I ever had when I was like buying lots of real estate and in the, in the middle of it trying to figure it out. And you did kind of have to call a lot of different banks and ask them about what they can do and what programs they had. And my big frustration was they would always tell me, of course, Mr. Green, of course we can do that for you. Can I send you a loan application? Can we pull your credit? Can we get you invested in this? And then after I had already put the house in contract, oh, I'm sorry, Mr. Green, it turns out that our low down payment option that I told you about is not available. It's going to be 30% down, but that's okay because you will get the next one type of a deal. Now there's so much more flexibility. If you go to a loan broker, we can shop your loan to all these different banks. And if it's one we've worked with before, we know if they're credible or if we're not, we can tell you, hey, we can give it a shot here, but we've never worked with them. They could be full of it. At least you have the option to make that decision. Your best bet is usually going to be taking a HELOC out on your original house, which because they're low closing costs or no closing costs, usually it's like the cost of an appraisal, maybe an application fee. It's not that expensive. It's not like refinancing your entire mortgage and spending 8 to $15,000 to get the money to go buy the next one. You just get it cheap. You use the money from the HELOC on your next house. Then when you sell your original one, you pay off the HELOC and the first mortgage and you can kind of just get the, the equity out of it, much simpler. The trouble part of that would be if it affects your debt to income ratio, because you now have to qualify for two mortgages at one time. If you're planning on renting out the house you're living in. Sometimes we can get around that by getting a lease from somebody that says, hey, I will be renting this house. Now we can qualify the money in the lease as part of your income. So it washes out the debt with the new income. And now you only have to have enough income for the debt on the second house, which is you're probably going to have if you were able to pay it on your first house. Most of the time, that's what we do. There's also like hard money loans that we can get that you can use to get the second one, especially if it's a fixer. You can borrow the money to buy it and you can borrow the money to rehab it. And then once it's fixed up, you refinance that into a primary residence loan. Pay off your hard money. And this is something else to consider when you're getting a hard money loan that everybody hates because they have high rates. The high rate doesn't hurt you. If you only have it for three months, the points are worse. Right? So we'll try to put you with the lender that has low points and a higher rate. If it's going to be a quick rehab and you can get in and out really fast, it can sometimes only be like a difference of $1,000 or something. But between the mortgage of a traditional rate with the hard money rate if it's for a short period of time, it hurts you when it's for 30 years, and it never goes away. So I. I'm always of the mindset that investors trying. People trying to build wealth with real estate should be trying to build their dream house, not buy their dream house. Go find that ugly son of a gun. It's kind of like if you're dating right now and you're on apps, which I would not recommend anyone does. But if you do that, don't look for the girl who's, like, going to get an insane amount of attention with perfect pictures and then be mad that she doesn't respond to your mess. You probably want to look for the person who put, like, very little effort into their profile at all because they're probably not getting many messages. You got a shot that they might come back to you. You're gonna say something there.
- [17:17]
Joseph Hamer
No comment on this.
- [17:18]
David Green
Yeah, you're. He's married, so he doesn't want to get into this whole thing. But with real estate, if you're looking at the houses on Zillow that are just sparkling gems, they're so nice. And you go to your agent, you're like, you think we can get this one cheap? And it's been saved a bazillion times in the first seven minutes of. No, you're not gonna get that one cheap. They're just getting tons of showings. They're getting multiple offers. You're gonna have to pay over. Look for the one poorly marketed. Look for the one that the bad listing agent didn't do a good job with. Look for the one that doesn't have enough photos. Like, you're looking for a house that looks terrible but has really good character, similar to. I think it's like a better dating strategy. Look for the woman with great character that's not trying to get the attention of the entire world because you don't want to be competing with every single other guy that's out there. And when you find those homes, you can pay a better price for them, which is what I call buying equity. You can fix them up, which is what I call forcing equity. Now, when you go to refinance it, you're walking into a house you got at a better price, rehab, the way you want it, and you're walking into equity. So much better than paying more than you had to for the convenience. That's for people that are already rich. If you're. If you're already wealthy and you don't care about money, let them go Chase after those homes, but not for the people that are. That are listening to this podcast. Do you disagree with any of that? No.
- [18:32]
Joseph Hamer
But to tie it back to the dating app, my only comment would be, you know, a correlation would be all the while while you're swiping left and swiping right, you should be working on yourself. Right. I'm under contract. I close a week from today. On our next flip. This flip had been the house had been on the market for quite some time. I offered considerably less than what they had it on the market for. The agent told me they've had several investor offers, but nobody brought them hard numbers and actually walked it with their contractor like I did. And so they were choosing me. Right. And so on. On one end, yeah, I think just. Just relating it back to kind of that search method. Right. If you're not presenting yourself in a way that people would also be attracted to, doesn't matter what fish you're going for. Right. If. If they don't want you in the end. So all the while, while you're hunting that, make sure that you are making yourself a better product and you're presenting yourself in a way that highlights. Yeah.
- [19:33]
David Green
Your.
- [19:33]
Joseph Hamer
Your best features as well.
- [19:35]
David Green
That is really good wisdom. That is really good wisdom. In fact, you brought up another story that we can share. This is one of my favorite parts of doing a podcast. When you're not just an investor, but you are a broker, we do loans. Like, I see real estate from every angle. I've been the person selling the houses. I've been people buying houses. I've been an agent. I've worked with agents. I've been a person that has to work with an agent. I pretty much see each perspective of how real estate works, and I get to share that with people who normally only hear one perspective. So they listen to a Realtor podcast, or they listen to an investor podcast, or they listen to a mortgage podcast, but the person giving advice only sees their side of it. Right. So I'm selling my primary residence in California. I moved into Oklahoma, which is where I met you, in Kansas, not too long ago. And there is a Realtor who showed it to her clients and they want to write an offer. Well, first off, they tried to buy it before they even had their house on the market. And I was like, no, I'm not going into contract with you in the hopes that you can put your house on the market. When your house is sold, if it's still here, we come back and we can talk then. So she comes Back again. She's like, hey, we sold their house. They still like yours. Can we go look at it? I'm like, yeah, it's vacant. You can show it anytime you want. She comes back, she goes, hey, my clients are asking for. What do they want? Like, the CC and rs covenant code and restrictions. And one other thing. I think she wanted the disclosures. And I was like, oh, I don't have the disclosures filled out, but there's not gonna be anything in them. I'll fill those out when we go into contract. That's actually what the law requires you to do. It becomes standard realtor practice that typically fill them out ahead of time. I just wasn't sure if I was going to sell my house or if I was going to rent it out to somebody else, so I didn't want to do it, and I'm only hurting myself. But she doesn't know that it's my house. Like, I don't think she looked in the MLS to see that you disclose like, that. The agent is related to the owner. And the owner and I are pretty close, actually. We've been sharing a body for our entire lives. So she's texting me, and then she calls a couple times, and I don't get back to her because she wants these CCNRs. Finally, she calls my phone five times in a row. It's just. And I'm like, this has got to be an emergency. So I click over and it's her. And she's like, yeah, I've been trying to get a hold of you forever. Like, do you think that I can get those CC and rs? And I was, like, flabbergasted that this person trying to buy the house is this rude and thinks it's a good idea to blow up my phone when she could easily get these from so many other places. It's not like these are held under lock and key by the CIA. You do not have to ask me. She spent way more time trying to get me to give these to her than just going to get them for her clients. And I. I didn't know what to say. And I just was like, lori, you know, there's more than one way to get these, right? You don't have to be asking me. And she just gets, like, really quiet, and she goes, well, I just feel like you think that your time is more valuable than mine. Now, the minute she says that, I realize, okay, your clients don't want this house that bad. This is not about you putting the house in contract. Your ego has taken over this entire thing. You would rather blow my phone up for four days than just go to the city website, download the CC&Rs and hand it to your clients for the neighborhood, or contact the HOA and ask whatever question you had. Like, she's got it in her mind that this is a job that the listing agent has to do, and she's not going to let me get away with it. She doesn't know that I'm also the decision maker. It's my house now. Her buyers have no idea that I am so turned off by this woman that I'm not going to want to work with them. That's the point here, right? When you're in the position of trying to buy the house. And by the way, her clients wanted a deal on it. They wanted to pay less than what it was, being what the asking price was. And I actually listed it, got three offers right away. But nobody wanted to go over asking price because they feel like California is a bad market. So even though there was multiple offers, nobody would increase their price. So I just said, okay, fine, I rejected all of them and I jacked up the price. 40 grand. And I was like, now you guys can pay the number that you should have paid. And you don't have to feel like you overpaid because now I just listed it higher. This house was listed lower than all the other houses in the neighborhood. She. They wanted to get it for, like, lower than what it was originally listed for. For. It was like. This is why I didn't fill out the disclosures. You could have been transparent when you told me my clients are going to write a really aggressive offer here. But you're not presenting this in a way that I would even consider it. I would never want to go in a contract and have to deal with you the entire time. Now, compare that to what you did. You presented yourself well. You communicated good to the listing agent. You walked the house with a contractor. They knew you were serious. They didn't think that they were getting jerked around and you were going to come back later and say, oh, the rehab's more than I thought. I need you to knock another 40k off. And you got the house under contract, and she didn't. And the point here is, for everyone who's working, they probably aren't realtors like us that can represent ourselves. They're at the mercy of another agent. You need to be thinking about how much of your agent is doing this for ego and how much they're doing this for you. Because I can Promise you, as somebody who works in the industry, a lot of them, especially in California, are not doing this for the clients. They're doing this because they want to be a top producer. They want to get the love that they never got from their mom. They want a plaque to put on the wall. They need something to talk about when they drink their next martini. And it's not about the clients. Do you have anything on that insight that you want to share as a newer agent? Because you were an investor first, I believe, before. Right. So you've seen both sides as well. What do you. What do you think about this?
- [25:00]
Joseph Hamer
Yeah, I do love being able to portray even low offers in a way that is unoffensive. Right. So even just this specific example, when I reached out to her, I told her what my maximum allowable offer was. I let her know, hey, if this is offensive, if you know this is going to offend your sellers, you don't even have to present it. And I'm not pulling a number out of nowhere. This is truly my maximum allowable offer, and that's what I want to give you. And so I just worded it in a way that kind of, like, disarms. Right. I'm not offending them. If she doesn't want to present it, she doesn't have to. And then she responded back, right, with, yeah, let me work up a net sheet. And so that way that right away let me know, like, okay, we're gonna play some ball here. Right? When I was an investor working with, actually my team lead now, but he was my realtor for maybe 10 or 12 transactions before I switched over to becoming a realtor myself, we definitely had good conversations. And he was always willing to. To craft a lower offer, but always did it in a way of like, hey, let's provide some example of why we might be offering 20 or 30, 000 less. Right. Let's not pull a number out of nowhere. Let's have some comps and some estimated rehab to provide so that the seller isn't thinking we offended them, they're thinking the renovation budget offended them. Right. It's kind of a third party that we can look at. But, yeah, I would say if you. If your realtor, or if you're not getting as many deals as you feel like you should, it's probably your realtor's ego. I think egos, specifically realtor egos, kill more deals than probably any other factor in real estate.
- [26:47]
David Green
I've seen this a lot. I could. I mean, I can almost smell it coming now. Before it comes, you're just like, oh no, you're going to be one of those ones. And I got some heat from an Instagram post I recently put up where I said, hey guys, if you're picking your Realtor based off of their sales pitch that their social media presence is so strong, they're going to sell your house, you need to understand, nobody buys houses off social media. I don't know, in my whole career, I've never heard a story of a person that goes, you know what? I was scrolling TikTok and I saw a realtor make a really funny video about a house and I thought, I have to have that house. And I went and got pre approved that day and I wrote a full price offer and I bought a house that I saw on TikTok. People pick their realtor from what they see on TikTok because the realtor is advertising themselves. And a lot of realtors got mad that I pointed this out. So this is a good opportunity because some of them are probably listening. To clarify, I am not against Realtors promoting themselves on social media. I am against Realtors telling clients this will sell your house. If anything, they're using that listing to promote their own brand. They are not using their brand to promote your listing. So when you are choosing an agent, I don't think people should look at, well, this person has a lot of followers on social media because none of the buyers are going to come from there. The buyers compare every house in their price range in their area to every other house and then they write the best price offer that they think they can get away with on the house they like the most. And they either adjust the offer or they adjust the house until they find a winner. This is how, that's how simple it works when you're looking to buy a house. I just know that when they promote your house, they are getting their next client. Very similar to how an open house works. I don't think that people walk into, they're not driving down the road and see an open house sign and say, let's go check it out and decide I'm going to go buy it. That may happen on a car lot at some point. Like someone might make an impulse decision to buy a car based on what they saw on a car lot. But the process of buying a house is too complicated. There's too many moving steps. Just the financing part of it alone stops that from happening. So when you're talking to your agents, do the ego test. How much of this is about the agent Needing their ego padded. And how much about this is them saying, hey, I'm good. I know how real estate works. I know how buyers work. I know how to price your house. I know how to put it in the best condition it can possibly be in. I know how to read whether a buyer's agent is serious or whether they're a joke. I will treat it like it was mine. That's the agent that I think people want to hire. That's one of the reasons that I wanted to have you on the show, because I got that energy from you when we met that you're a bit of a shark. You're like, hey, if I'm buying houses, this is what I do and it's high pressure and I make moves. And so when I'm helping my buyers, I'm going to go out there and I'm going to say what I got to say to get it under contract. When I'm working with sellers, I'm going to test the buyers as much as I can to protect my sellers. I'm not here because I want everyone to like me. I'm not here because I really want that award. And I wish we had more Realtors like that, frankly, in the business. And now some of them are going to be mad that I just blew up their spot. But hey, that's okay. That's why we call this Real Talk Real Estate.
- [29:53]
Joseph Hamer
Well, just one final callback to that initial question. He was asking about specific loan products. But I think what's more important is who you end up choosing to work with. Right? So whether that's your Realtor, whether that's your broker, I would say those two things are probably most important because your Realtor is also going to help you with your home inspector and etc. Etc. So I know he was asking about specific products that might be the solution. But instead I, I would maybe encourage him to focus on finding a really high quality lender and a realtor partner.
- [30:30]
David Green
Great point there. Yeah. And if you contact us and you say that exact question, one of my loan officers will walk you through every conceivable option that we possibly have. So go to davidgreen24.com hit me with the chat and say, hey man, I'm the guy with the horses in the video and I'll know what to do. All right, our last question here is written, and it comes from a YouTube comment, believe it or not, this is from Punakar. Let's talk about mortgage rates coming down. If it comes down to say, 5 to 6%. I think we would create a bigger problem on our hands. It's not low enough for sellers to trade in their payments, but it's enough to get more buyers in the market, soak up all the inventory and drive home prices up. That would help businesses like yours a little. And a few name home buyers, a few new home buyers, but not for long. For sellers to trade up, I think we need rates somewhere in the fours. At least that would require the Fed to be below where economists believe the R Star to be. So it's possible, but it would take more than a mild recession. So be careful what you wish for. In my opinion, the only preferable solution is keep rates where they are for a long time, which essentially causes reversal to the mean over time. But unfortunately that doesn't bode well for real estate transaction driven businesses. And I think the implication is like mine. This is a pretty well worded and thought out comment. What's your thoughts on it?
- [31:55]
Joseph Hamer
Yeah, one, I think if interest rates were to drop down into the fives, certainly more buyers would be back in the market. The percentage of those buyers being buyers and sellers, I don't, I don't know about that. I do think people at some extent are tired of waiting to move. And so I don't think it's going to take a drastic cut. I think it's going to take something substantial, but it's not going to have to. In my opinion, it wouldn't have to be a 4. In my market specifically we still have 2.3, 2.4 months of invent inventory. So we're very much still on the lower side of inventory. I think buyers jumping in would scoop it back up, but I don't, I don't see how that would create as much as a problem as much as it would relate to closer to the markets that we had seen previously. I think it would. His, his suggestion of maintaining rates I think will take us more back to a neutral market nationwide. But I don't see rates dropping creating a larger problem. If anything, it might be a larger problem for first time home buyers just because that buyer pool is growing so largely as people are waiting longer and longer to buy that first home. Those younger first time home buyers may start having more competition as other people are, are also willing to jump in and purchase homes at that time.
- [33:27]
David Green
Yeah, it's a good perspective there. I see his point. Because if we drop them down enough to get buyers into the game, but not enough to get sellers to put more, more inventory in, you don't increase supply but you do increase demand, which would push prices higher and we'd have a bigger problem. So I think this is a very. I don't disagree with what he's saying, but I disagree the part where he says, in my opinion, the only preferable solution is keep rates where they are for a long time. I do not think that is the only solution. I think that is a damaging solution. I would be on board for that. If our economy was red hot and kicking butt and taking names. If we. If it was like 10 years ago and just everyone's crushing it and you're slowing the housing market down, I'll be on board for that. I'm looking at it and I'm thinking we are in for a world of hurt that people are not talking about. You're in Kansas. I don't know if this is going to affect your market as much, but what I see going on in Austin, South Florida, California, New York, the big markets where the big money is, people are getting laid off. Microsoft just announced their second wave of cuts, this one for 9,000 jobs up there in Seattle. You can be sure they're not the only tech company laying people off. This stuff tends to happen in big waves. So you're getting humans beings being laid off. Beings being. I've never said that before. It didn't sound right, but it is right at the same time that AI is threatening to take over jobs. So we have this recession causing natural layoffs. We're going to absorb that blow, and right around the time we stand up to fight again, AI is going to smack us and it's going to lay people off. And unless we get manufacturing coming back here, which is what I think is probably behind the tariff thing that everyone's missing, I think Trump's probably looking at, like, five steps ahead. Not right now. We have too much inflation and we don't need it. Worse, we're probably going to become in a devastating economy where no one's going to be making money. What I proposed was, I see this picture in my head of like a lot of the housing inventory has rates in the 3 and 4. It's like, now we're up at 7, 8 up here. This is like ground that you got to get down to where the threes and fours are. If you can get rates close to where they are on the sellers that are not selling, they will put their houses on the market and they'll trade to the house they want. You can uncover the inventory and then you can raise them all slowly over time. So it was like get it down to fours, mid fours, low fours. Then every year raise it a percent, or every six months, raise it three quarters of a percent, something like that, that everyone understands. Absence, something wild, changing. We are. They're going to be going up. So get, make your moves. Now, if this is what you want to do, this is a gift we're giving you, it's not going to stay here. Then all the inventory moves from the three to the four and fours to fives and fives to six, and like the whole thing kind of comes up together. Stabilize it wherever you want rates to be. And then once, once you don't have this buried inventory, which is what I call it, houses in the threes that never, never want to sell. Now you can adjust rates up or down, like we're currently doing, and the whole market moves with it, not just the very tip of it, which is what we're getting right now, which are the new home buyers. You see any flaw in that logic?
- [36:37]
Joseph Hamer
Only, Only the sense that if you drop back down to a low four to kick that process off, the number of people that purchase in that if they were to wait three years, you know, the average home, home ownership is close to seven years, right? Just under seven years. If, if that was the, the current logic, if they were to buy in at a four when they were about ready to sell again, you know, my, my thought would be okay, when they're ready to sell again, our rate's going to be up at that. But I, I got to be honest, most of my perspective doesn't forecast out that far. I like to kind of look at where things are at, maybe where things will be in the next six months. But ultimately, my advice is there's a lot of mortgage companies that do a free refinance in the first, you know, two years if rates were to drop back down. And it's, it's tough for me to, to, to put my bets in a crystal ball. I like to advise people on what the current market is like and maybe what may be coming soon. But ultimately it's a, it's a tough question, definitely, for, for me to answer, because at the end of the day, I always resort back to the best time to own real estate. You know, was always in the past, right? Real real estate is continuing to go up. Now this makes a bigger difference for people doing luxury flips that are taking longer and all of this. But, yeah, ultimately I think you're right. If we were to drop rates down and kind of create a publicized plan, there would be A greater understanding, and I think that's a big hesitancy right now, is the unknown or not understanding what rates are and why they're that way?
- [38:20]
David Green
Absolutely. I mean, the overall answer is instead of adjusting interest rates, you adjust the actual supply of housing. I'd much rather see that. Let's just build more homes. And if you build enough of them, it's bad for investors because rents can't go up and prices can't go up because supply is bigger than demand is. But it's good for the people that are renting. And so if that's who you're trying to help, decrease government regulation, create incentives for people to build more homes, say if you build a home that's beneath whatever the median price for a home is in that area, you'll give the builder some kind of a tax incentive. So now there's a reason to build affordable homes and let the supply thing work itself out. And I don't say this because I would like to see that happen. From my own selfish perspective, I would lose money if that happened. But it makes so much more sense to try to fix this problem that way than the typical rent control, stop people from owning too many homes. That stuff never works. It never has worked. So that's what I'd like to see. And so we just tinker with interest rates less than what we do, but that's harder. So I don't know. I'm not holding my breath over that. All right, our next video here comes out of the Wall Street Journal. Real estate agency under fire after video hitting back at couch critics goes viral. A Sydney real estate agency has come under fire after sharing a video supposedly clapping back at critics, which has been sparking more chaos in the process.
- [39:47]
Unnamed News Reporter
Reporting housing stress Australia's housing crisis has reached a critical point. Two thirds of Australians are now reporting housing stress fueled by high interest rates, soaring rents and sky high prices, locking younger Aussies out of the market. It's no secret that Sydney is Australia's least affordable city for property. In fact, houses here are the second most expensive in the world, behind only Hong Kong. But next to Sydney, what is Australia's most costly city for housing? It's actually Brisbane. The Queensland capital overtook Canberra in June this year to become Australia's second most expensive city for housing for the first time in 25 years. At the start of September, Queensland was the only state to record double digit growth for houses and units, with Brisbane's median house price now sitting at over $960,000. To put that figure into perspective, Brisbane house prices have jumped 74% since the pandemic started. Regional Queensland is no better, with houses up almost 12% to an average of 714,000. So what's the solution? The federal government's $32 billion National Housing Accord policy seeks to build 1.2 million homes over the next five years. But the construction industry has warned it's already doomed to fail. Master Builders Australia forecasts there will be just over 1 million new dwellings built over the five years to 2029. That's 40% below target. Experts say the biggest challenge facing the construction industry right now is a massive skill shortage which we can't fill domestically. At the same time, most of these new dwellings will be made up of high density developments. But these kinds of projects have been hampered by major delays and budget blowouts. It doesn't help that the Reserve bank is refusing to lower interest rates. With inflation further killing capacity, the Albanese government is facing calls to scrap negative gearing and capital gains tax benefits for property investors. But both labor and the coalition have ruled these out. And in the meantime, the Australian dream is just moving further and further away.
- [41:59]
David Green
All right, it looks like we're not the only country having this problem of shortage which they're blaming on labor shortage. Now this is obviously not happening in America, but their situation is similar to ours and I'm seeing parallels where we aren't building enough homes. We have too much government regulation that stops people from doing it. There is economic uncertainty. So home builders don't want to put their chips in the middle of the table and build homes that maybe nobody buys. And the big elephant in the room, or is it gorilla in the room? Is it both? Elephant. Isn't there like some about an 800 pound gorilla? Is that different?
- [42:34]
Joseph Hamer
I think it's. Yeah, I think it's just the elephant. There is a meme about like a gorilla fighting people or something. But no, I think it's the elephant.
- [42:43]
David Green
One gorilla kill 100 men. What's your thoughts on that by the way? You think it could.
- [42:46]
Joseph Hamer
Oh, it depends on. Yeah, like how angry it is, you.
- [42:51]
David Green
Know, how angry can it stay because you get tired when you get angry.
- [42:55]
Joseph Hamer
Yeah, I don't know. When I'm angry, I feel like I could go for probably some time.
- [43:00]
David Green
You always feel like that the first couple punches of a fight feel so good and then 45 seconds in you're like, I shouldn't have done this. It's terrible. Like nothing in the world is exhausting as routinely fighting. That's one of the things that doing martial arts makes you realize is how uncool fighting actually is, because it's exhausting.
- [43:18]
Joseph Hamer
Who are these hundred people that signed up to fight a gorilla?
- [43:22]
David Green
Yeah, that's my question is like, are we grabbing guys at a geek squad? Are they heavy enough that they could just lay on the gorilla so it could. They couldn't move? Are they going to be going like five at a time type of a deal? Nothing to do with real estate, but. Okay, yeah. Did you have. You have another thought you want to share on this? If you think you could take a gorilla, there's a little thing in your mind that's like, well, if I was one of them, there's 100 Josephs. Maybe there's a chance.
- [43:46]
Joseph Hamer
No, I. I would definitely sit at the back. And if it gets to my time, I'll do the best I can. But I'm not afraid to be 100 out out of 100 to give it.
- [43:57]
David Green
My shot, because that's when it's tired. I'm telling you, man, this is how smart people fight. This is how America became a world power. We waited to the end of World War II when everybody else had blown the smithereens out of each other, and we stepped in when they were all exhausted and beaten up, and we were just like, pushed a couple. Well, I'm obviously belittling the contribution of America. I didn't mean it sound like that, but we waited until everybody else was economically destroyed and busted, and we had most of our military still, and they all had to rebuild. And we were like, well, I guess we're the world power now. Here's some loans that we'll give everybody. And we just became super rich. That's how you beat the gorilla. And that's how you take over the world now with real estate. Because even if you beat a gorilla, you still need to go home and take a shower somewhere, which means you need a house, there's a labor shortage. And I think this is one of the things that's leading to real estate becoming more expensive and less profitable to own. Because when I was new, if you needed someone to fix a fence, if you needed somebody to spray for bugs, if you needed landscaping work, it was like you had so many options. So many options. Everybody was doing blue collar work, and it was pretty freaking cheap. And the idea back then was like, if I give you this job, it's not a lot of money, but I'll give you a bunch of other jobs. And so everyone wanted the consistent volume of work. Now the, the bids I get are outrageous for just simple, simple unskilled manual labor. And I think that that's destroying cash flow. It's making it very hard to own rental properties. Any short term rental investors or just anyone that has a portfolio of properties. When you got to send somebody out there to do like really simple things, the trip charge is expensive, the labor, nobody wants to do this work. Do you think that's contributing to the housing shortage? It's just you got to pay people so much money to build homes. Or do you think that like what happening in Australia has nothing to do with what's going on here?
- [45:38]
Joseph Hamer
No, I think there's a lot of similarities. Even their numbers, like on, on pre pandemic inflation of housing, housing prices. I think that's very common in most markets, at least around the United states as well. 74% doesn't seem that far off of what it probably was in vast majority of markets around the United States. But I do think when it comes to skill and labor shortage, I think this has a bigger overall implication beyond the housing market. I think when you're talking about, about even you know, potentially bringing manufacturing jobs back to America, I don't think we have people to work. The current shortage right now of job, you know, we have a current job shortage in manufacturing. If we were to bring hundreds of thousands of jobs in manufacturing back here, hard work is not cool right now and I don't know how to fix that. But even as you said, a lot of contractors are not taking small jobs, right? They don't want to just do the simple fix. They want to take the 20, 30, 40 thousand dollar project. They don't want to be the handyman. And if they are a handyman, they'll tell you their goal is to start taking on bigger projects. And so I do think blue collar work is harder to find. It's harder to find good people that are doing it consistently. Proud of the work, take ownership of the work. I think that sort of labor is becoming harder to find and I think that's a much larger problem than just skilled labor in real estate. I think that's hard blue collar work in all sectors of the economy.
- [47:23]
David Green
I had this little epiphany when I was in the Smoky Mountains talking to a guy I met out there. Shout out to you Marcy, if you're listening. His name's Marcy, but it's a dude and he's working on my properties. He's a very talented construction guy, but he can't find anyone to work for him with half a Brain and a quarter of work ethic. It's just so difficult. And so he's, like, really good at building things and designing things, but he finds himself having to paint things, having to repair things, having to literally, like, stain the wood of the deck. I'm like, bro, you should be building the deck. Let the guy stain it. He's like, I can't even get a person that can stain a deck the right way. They don't listen to what I tell them. It's this labor shortage. And here's what I realized when he was talking to me. Happens. And I think this is happening to a lot of construction workers across the country. If they hear this, they're probably screaming, hallelujah. They learn how to do construction, and the natural order is, I did it, I learned it. Now I teach it to someone. They do what I learned, and I go learn the harder things. And then the guy that I taught behind me, he should be coming up to learn the harder thing next. And then he should teach the person that does the new thing. And you get this barrel of monkeys where one hand's going up and one hand's going down. And this is the way that, like, a business organically grows, like a cell going through mitosis, and it's growing, but when there's no one to come along behind you because people don't want to do the work, it stunts his growth from getting into the more complicated, harder, more rewarding, and more financially beneficial things. I can't use him to build a new roof for my property because he's stuck doing the landscaping stuff that he can never really get out of. And I think across the nation, that's the problem of the mom and pops is if you don't have a labor force that wants to learn something, you can't become your own version of your best potential. Like, at a certain point, Joseph, you're a new agent. You're going to be crushing it. You're like, all right, I should just be doing listings. I shouldn't be working with tons of buyers. But if you can't find a decent number of buyer's agents that have your heart and your work ethic, you're going to get sucked into working with the buyers again. And you're going to bounce back and forth between, I got a couple listings, and then I had to go back to the buyers, and I got a couple listings, and it goes on and on and on like this, and it stops your business from growing. So unless we get the younger generation to come along here and Say, hey, I want to learn how to do something new. I want to do better. We're going to have the problem of, like, only a handful of really big construction companies and not a whole bunch of small mom and pops that want the small jobs that give you a competitive bid to do them. Now, if we understand that dynamic that I just shared, we realize that it's very hard for small businesses to grow into bigger businesses when there's not people to hire, which means you never get competitive bids on small jobs because there's no one to do them. There's either, like the employees of the big companies that can't take that job, or there's the big companies that only want the bigger job, which is what makes everything expensive. Do you think this is just going to lead to real estate becoming like an asset that only the rich can own, or do you think that there is a way to get a labor force back doing blue collar work, especially with AI threatening to take white collar jobs?
- [50:38]
Joseph Hamer
Yeah, it's tough. And I do have a moment where I'm kind of pausing because not that I've talked bad by any means on general contractors, but several times I've helped people understand that generally general contractors were really good at construction. They weren't always good about managing people, and they weren't always good about that personal connection with whoever they're doing the work for. And those are skills that they have to grow into. And at first when you were talking about that, I realized maybe they don't have the. They aren't given the capacity to grow those skills because they're still doing so much of the work themselves. But I do see that being kind of a common theme. And I don't know if it's going to be as much as, as only the, the wealthy, but I certainly could see it be more segregated in the sense of investors holding their cards or their people closer to their chest. Right now, if you, if you called me and said, hey, I bought this property in Witch, I need a good contractor, I would tell you my contractor in a heartbeat. I could see that going away and that. And that's not the case in many markets. Witchita is a very big, small market for being a big city. Everybody is really interconnected. I could see as labor shortage gets more intense, people who are just starting out, trying to get their first house going are going to have a lot harder time convincing the skilled labor to come work for them because they are busy with the people who have always used them and are keeping them busy themselves, themselves.
- [52:21]
David Green
Great Point. Okay, getting to our next video here. Editor, give me a second.
- [52:33]
Joseph Hamer
I did have a question really quick. David. I don't know, I don't know if you saw that or caught this, but it said two thirds of Australia's population, it feels stressed about their housing. If you were to put a general number on the United States, and then I, then I'll also ask you to do California and Oklahoma, what would be your fraction of people who are stressed about their housing? United States, California, Oklahoma.
- [53:02]
David Green
That is a great question. I think California, everyone is stressed about housing. And unaffordability in general, I think actually has a negative impact on families. Because when you are in a state like California, not just state like the actual geographic boundaries, but like a condition like you're living in California where gas is incredibly expensive, food is incredibly expensive, the minimum wage is $20 there. So when I left, if you try to like save money going to Jack in the Box or some fast food restaurant, it was the same or more than if you went to a restaurant on it. It's. It's stupid, right? And it's because of the way that their government is structured because there's so many people there that move to California because there's wealth that they can vote in, politicians that take wealth away from the people that work and give it to the people that don't, which just makes it more expensive for the people that are trying to work. You end up with both spouses feeling like they both have to work. And then you start to use the government, the state, to do the job that parents used to do. So not only do you drop your kids off at daycare and then drop your kids off at school, you usually don't have enough energy at night to meet with your kid and talk to them about what happened at school. So they're getting bullied and you don't know they're falling behind, they're struggling with reading, they're getting teased. You don't know. The kids are not used to talking to their parents about what they're feeling or what they're going through because they only see them for a super short period of time and they pick up on the stress the parents have. So that they all develop this like, I don't want to be a burden mentality like middle child syndrome. It's like a whole generation of middle child syndrome over there where you meet someone and you're dating them, or you meet a new friend, or you get an employee that works for you. Nobody wants to come out and say, this is What I'm experiencing, this is what I'm feeling that you have to dig into, like everyone that lives there. As the boss, you got to make such an effort to get them to talk about what their struggle is. And it's incredibly inefficient way to run a business. There's isn't enough time and energy in the day to be able to do this for all of your employees. And it hit me. It's because they did not grow up having parents that did this. They don't get direction, they don't get guidance, they don't get values. You're kind of like just letting the social structure that you're in tell you what to think. And then you become conditioned to just follow along with whatever the other fish in the school are doing, and you become one of them. And so that's like, massively impacting just the quality of life that people have. It's. When I moved to Oklahoma, Oklahoma, I was shocked at how much family structure is just a part of what everyone does. Like, they get together every holiday. The parents like their kids. I see them smiling at the stuff that their kids do. The kids listen to their parents. It was. This is probably normal for a lot of people, but I did not see that in California. It's kind of like the kids are on a tablet or the kids are off doing their own thing, and then the parents are talking about some accomplishment that they did at their job that they're so proud of. And those two worlds aren't really connected like what I see in the Midwest. And I also noticed that there is less stress on the people that are living in the Midwest. They don't seem as worried about how they're going to pay their rent or how they're going to pay for their food. And a lot of them don't have both spouses working, especially when the kids are young. That typically happens after the kids, like, get into high school or something. Now one of the spouses might go get another job. And the difference with how people treat each other just blows me away. It is default respect. When you come here, you are not treated like, you know that. That joke about if you ran into a guy in the woods, would you rather run into a guy in the woods or a bear? Have you heard that they'll ask, like, young women, hey, would you rather run into a man in the middle of the woods alone or a grizzly bear? And they all pick the bear. Because this idea is that men are so mean and scary. Right? That doesn't exist out here, I just see men protecting women. I see women checking in on men. This is a weird example, but, like, I was at a restaurant the other day and they have like, all, you can eat soup with your dinner, and they ask you, do you want a soup? To go? And I was just like, what? Like, in California, the fact that they have to be there pisses them off. Like, the thought of them having to scoop soup into a bucket and give it to you to take home with you. No one would ever voluntarily sign themselves up for more work. And they're just, like, looking for ways to serve people and treat people like they would want to be treated. And it's normal. And to answer your question, the stress levels are way down. The way people treat each other is way better. There's way less conflict. People like to have conversations and meet new people. It's not like California, where if you and I have no reason to be speaking to each other, we are never going to be speaking to each other. And I. I have to wonder how much of this is because the. The overall affordability level is so much lower that you don't have to put as much time towards making wealth and you can put more time towards building family. Is that what you're expecting?
- [57:56]
Joseph Hamer
No. I'm happy you shared. Yeah. I think you have a. Definitely have a unique perspective from being in several different markets and for a considerable amount of time.
- [58:06]
David Green
Well, that's why I've been saying that I think the next markets are going to grow. I don't. I can't tell you exactly what city or state, but it's basically going to be the middle of the US when people realize, like, you can actually have a fun life. Going to a barbecue and throwing cornhole. It doesn't have to be going wine tasting in the nicest place and staying at the swankiest hotel that a lot of that is, is avoiding connection with other human beings and just trying to turn yourself into some form of a celebrity on your own social media. And you get a taste of that, man, it's so much better than what you kind of see going on in, like. Have you been to Miami at all recently?
- [58:39]
Joseph Hamer
Nope.
- [58:40]
David Green
Yeah, it's like a circus, dude. It's. I go there to record with the Fresh and Fit podcast sometimes, and it, like, it is an absolute circus. Just watching the people that are running around over there and they don't know. They think that they're living the good life, but I think they're missing out on what really matters. All right, moving on to the Next segment of the show, we call this the comment section. This is where I read comments from YouTube videos that our audience shares and we get to see if there's anything worth laughing, joking or crying about. From Frank Poppy. This information in this video is gold from Tim K. I wish the appraiser would do income based and not comparable based. They use sales from the last five years and average it out. Bedroom count doesn't matter either. A unit is a unit. A studio is worth the same as a three bedroom. Our appraisals include an income based method but he changes the cap rate to fit his a unit is a unit method. Totally sucks because he's the only one that does the 30 to 45 mile radius that we invest in. We have a 6 plex worth 240,000 and a 5 200,000 despite the income on the 5 plex. After all bills and set asides makes 1500 dollars a month more than the 6 plex because of the location. And we tried to talk to the appraiser about the cash flow is more but he won't listen to anything. He knows all and the bank we use won't question it. Sorry, this is just events about this because I'm stuck with what he says. All right. He's talking about the income based approach versus the comparable sales based approach. What's your thoughts on the way that we value real estate in the residential space?
- [60:10]
Joseph Hamer
I think appraisers have a pretty tough job. You know I don't, I'm not a rarely am I praising appraisers but I also think they have a job where when they do it right everyone just says like yeah, good job, we already knew that. And when they do it wrong then everybody goes up in flames and isn't a fan of them. My actual thought is if there really is only one appraiser in that entire area, you should definitely be working to start an appraisal company. I mean think, I mean I, I've had an appraiser show up at my house and say hey, sorry, it's late, I didn't want to take this. They offered me this amount. I told them I wasn't going to do it and I got them to pay me double of what a normal appraiser is. And so I, that was my first thought is if, if that's truly the only appraiser and what do you say like a 40 mile square or 40 square mile area, whatever it is man, start an appraisal company. Get somebody, a couple people on your team and start. Yeah, Doing things the right way.
- [61:10]
David Green
I've always found it odd that residential real estate is valued based on what someone else paid for it, because the assumption is that, that someone else has a clue what they're doing. It's, it's sort of embarrassing when I really think about why it happened because. And you can't blame the appraiser. It's just the way humans make decisions. If I say, do you want to buy that house? And you say yes, and I say how much? Most people need some form of a baseline to decide if they're, if they're getting a good deal or not. But we don't say, well, how much would it cost for me to build that house from scratch? Well, this one's 20 years old. So let me take the price of a new house and subtract this and maybe I'll add something in if they remodeled it. There's some logic there doesn't happen. Then there's the income based approach, which is what commercial properties will do. And residential real estate is often used for income producing purposes, but it's not built for that reason. So we don't really care what it would bring in for income. Then there could be like, well, would this house be worth more in the future compared to a different house house? Nope, we don't think about that. We literally go, well, what did my neighbors pay for theirs? He paid this much. Well, this one's a little bigger, so I'll pay a little more. Like that simple, silly method of just I don't want to pay more than the Joneses paid becomes the comparable sales approach. And you have to understand as an investor that it's based in that. So the appraiser doesn't really hold the appraisal, does not hold any objective value. It will matter when you go to sell the house to someone else. And that's about all. When you're buying a house, you have to ask yourself what it means to you and write your offer based on that or make your choice based on that and not find the sense of comfort from an appraisal. Because by the way, when the market crashes, nobody cares what it appraised for a year ago. They only want to know what it's worth today. It doesn't have any objective value there.
- [62:53]
Joseph Hamer
Yeah. And if you need that appraisal for a refinance and your income is so high, maybe you take, take a different loan product like a DSCR or something in which you can kind of use that more to your advantage. But yeah, I think I, I mean it is. There's. There's a lot of nuances. I have a. An FHA deal that's going to be closing a week from today, and because my investor is selling it for more than double what he paid for it, we were going to need to have two appraisals, and then the bank would take the lowest one because they. They don't believe that a. A house could double its value in such a short amount of time. However, because we signed the contract 181 days after he bought it, not 179 two days later, we only have to have the one appraisal. So we're singing and hooping and hollering, but how crazy is that, that a bank two days ago would have said, no, no, no, no, no. I need to get a second opinion on this. But we hit 181 days for a signed contract, and suddenly. All right, yeah, that one appraisal, I'm happy with it.
- [64:02]
David Green
So have you seen that Nate Bargotchi sketch where it's like he's playing one of the forefathers making America? That was on Saturday Night Live.
- [64:10]
Joseph Hamer
No. Oh, wait. Where he starts. Yeah, the. The. He's kind of making fun of, like. And we'll. We'll call this one football. He's like, yes. That's hilarious.
- [64:21]
David Green
Because you. Because we'll use our feet and the ball.
- [64:24]
Joseph Hamer
Yeah.
- [64:24]
David Green
We will not. We will use our hands and an egg. Yeah, that. That should, like what you just said. That should be the next one that he does.
- [64:32]
Joseph Hamer
Definitely. You could definitely remake that into a realist, a real estate.
- [64:37]
David Green
Yeah, that's really funny. And on the test for realtors, they will all have to know how many square feet are in an acre, because they will use this every day. They will not. Why are we using acres anyways? Because it will confuse the people. That's. I mean, take your agent test. If you'll be asking yourself.
- [64:55]
Joseph Hamer
One of my favorite parts about that skit is like. And what about the hamburger? Is it made from ham? He's like, no. It's like in a hot dog. Nobody knows. Yeah. That's hilarious.
- [65:09]
David Green
Yes. So good, man. If you guys have not listened to Nate Bargazi, do yourselves a favor. Look him up. He's clean. The whole family can listen. You will be very grateful that Uncle David passed this one along to you, because the dude's hilarious. From Quinn Alford. I'm seeing a ton of for sale signs in my neighborhood in Indy and long market times. Obviously, studying markets, you should always look to take chunks out of the middle when trading. It appears we are on a down trend, nearing a free fall, which is too late to avoid. My question is for your advice to hold on to short term rental real estate and weather the cycle. Being that statistics always favor diamond hands. I don't know what he means by diamond hands, but there is some validity to this concern that once you, when you wait too long to sell, you can't sell because everyone else puts their house on the market at the same time and it creates a dynamic where nobody's going to buy. There's way too much supply. When this happens, do you have any advice for somebody? I don't think you've probably experienced one of these downward trends yourself yet because we haven't had one since 2010. But what do you think for someone in this position?
- [66:16]
Joseph Hamer
Yeah, well, one, I think this is why you've always got to analyze your deals for multiple exit strategies. Right? If your primarily primary goal is to flip a house, make sure it can work as a medium term rental, a long term rental, a short term rental, make sure you have a second exit strategy. Because yeah, if you're pulling up comps and you have 40 active listings that are competing with you, maybe your best exit strategy is not in fact to try and compete against those houses. You know, ideally you're looking at a market when you're, when it comes to sell where there's a couple active, a handful of pending and all lot of close. If you're looking at a market that's flipped on that and you are bullnosed into selling, I think your weakness in the money you're leaving on the table is not being willing to pivot. And that likely has come because of the decision you made when you bought, not the decision you made when you tried to sell.
- [67:18]
David Green
Yeah, really good point. This also is a very familiar pattern with real estate. The markets that were the hottest are almost always the ones that take the biggest hit. So because real estate investors insist on being cheap and following what everyone else does and they go see what everyone else on Bigger Pocket says that they're buying or they listen to the trends that everyone else listens to as well. You see these markets that get super hot and then everyone feels safe because they all got in at the same time and then it overheats and then you get extended. This is happening in Austin, Texas, horrible market right now. This is happening in Miami, Florida. Horrible market right now. This is happening in like Phoenix and Las Vegas. They both tend to be really hot when the market's doing well, and then they're the first ones to get hammered when the market goes bad. Indiana was the bell of the ball for realtime investors chasing that cash flow. Man, those little crack addicts that were like, I gotta get cash flow, I gotta get cash flow. They all ran to Indianapolis and areas around it. And now there's too much supply and not enough demand. Doesn't mean that you're a terrible person. Doesn't mean you're a bad investor. You just bought when everyone else was buying. You'd have been better off to look for a place that no one else was talking about and do your investing over there if it cash flow. So hang on if you can. And if you can't, don't take it personal. You learn the next time around you're a little bit smarter there. Nobody learned how to snowboard without crashing on their snowboard. Nobody learned how to do. I can't think of another example but do anything hard without sucking at it first. Investors. Sometimes you're going to lose a property. Sometimes you're going to lose money on a property that is part of getting good at anything. We have never talked about this on real estate podcasts because for the last 10 years, every time this moment came when we normally would have had a recession, we printed a bunch of money and we just bailed ourselves out. And a lot of people started to think that they're a lot smarter than they really are are. They just were like, I'm a great investor instead of. I live in a government that continually bails people out that make bad financial decisions. So I do think we have a pretty nasty crash coming and I don't want to see anybody doing anything. What's a nice way to say this for the Internet? Making a permanent decision about your life during a temporary situation. Don't beat yourself up too hard if this happens because the. The timing of real estate is not something people can predict because you don't know what the government's going to do. All right, moving on to quick hitters. These come from social media. The most underrated podcast on YouTube from Martinez for baseball. Thanks, Martinez. From Accelerated Video Production. So when's the crash in California? Since it's been brain drained. I love the show, David. If you guys aren't following me on social media, you can get this off David Green, 24. These come from Instagram, where I'm putting show clips from the podcast now. Might even get to see one with Joe on there. And I talked about a brain drain, meaning, like when you push people out of an area because you punish them for being successful. It's the smartest, most successful people that leave first. This is a big reason why Tennessee and Texas and Florida did so well the last decade because a lot of those people left California and left New York because they were punished. What do you predict for, let's say those two markets in general that have just been pushing out their successful business people?
- [70:28]
Joseph Hamer
Man, I, I don't think I'm in a position to make a good prediction on that. On, on my end of things. I'm really focused into my current market and I've got the benefit of being really insulated on big swings in markets and big swings in politics and big swings and, and all sorts of things. And that has its pros and cons for sure, but I don't know if I would be able to make a sound prediction. What do you think?
- [70:56]
David Green
I think you did a very good job of being a politician with that question and you said a whole bunch of words and you didn't have to give a prediction and you still sounded very intelligent and then kicked it back to me in a form of honor. We could all learn for how to communicate when you don't know what to say right there very well. I think that California and New York are going to continue in a bad way. I think there's a lot of people that think the pendulum is going to swing back. I tend to think the belief the pendulum is going to swing back is oftentimes over simplistic. They don't think about how it would swing back. Like the population in California is. Is too lopsided with people that produce income to pay taxes and people that don't. So if all the people that produce leave, there's nowhere for the pendulum to swing back to. Right? What happens is those people that have been, for lack better phrase, like draining the system without contributing to it. They, they're like, if we use this really ugly analogy of a parasite and the people that make the money is the host or the state is the host, they're just going to find another host. That what else? That's what anyone would do. They're going to find another state that wants them, that has social programs that will welcome them. They will move there and then they will start draining that state too. This is not a California problem. They just went to California because that's where the money has been. And so every time I hear someone outside of California go, oh, them Californians are stupid. They didn't used to be. That's what happened when they Became incredibly wealthy. And then they drew people in that then voted for politicians to move the resources in their direction until there's nothing left. Then like when the locusts have eaten all the food in the field, they move to the next place. So I am thinking about, like, when I'm advising people where to invest or where do I invest is where would those people not want to go. And it might be that going to where the climate is harsher or there's less big swings in income like you just described, might actually be the safe bet long term because you avoid some of those factors that can crash an economy. Like people voting for politicians that will move money away from people that make it towards the people that are not. And it's actually kind of predictable. Right? Like you can think through some of these things instead of just complaining about them, which is what I think most people do. They just complain about something they don't like instead of asking themselves, well, why is it happening? And how can I take that into consideration? All right, moving on to the next segment here. This is where we get into my property management company, coast to Coast Getaways, and we share some of what's been going on in the world of property management and short term property management. And we have a cute picture to share. This was taken at one of my cabins in the Smoky Mountains. It's in a gated community, actually. And this bear and her cubs were like hanging out at the very front. This was wild to me when I first went out there. Like how these bears are everywhere and it can be very scary when you're not used to it, but when you're there. I've been in cabins where like, the cleaner calls me and goes, hey, here's a video. And it's a bear literally walking it, like in front of the front door on the deck. They're like, we can't leave this one to go clean your next one. So the bear goes away. So we're just going to be chilling until the bear leaves. It is like, you don't really hear about people getting attacked by them very often, but they just will screw your property up. Like, I've got one cabin where three different hot tub covers have been eaten, probably by the same freaking bear in this one spot. But it's funny when they show up and they're pretty cute.
- [74:17]
Joseph Hamer
So is this the new way of how you can begin squatting in a property? Hey, I'm gonna need to explain. Extend my stay. There's a bear out front.
- [74:25]
David Green
Yeah, bro, you got me wondering if this is. Could be like a squatter repellent. Like if you get a squatter, can I attract a bear there?
- [74:33]
Joseph Hamer
I have heard there is, there is a loophole. You know, most states that are renter friendly still allow the landlord to store their own materials and supplies in a house. So should you have something maybe more legal but equally as scary, like a bunch of pythons or something, you could store them in your Airbnb temporarily. And there's, there's a little bit of a way around that, but I don't know if I would feel as comfortable trusting a mama bear in her cub to, to listen to my lead when helping evict some tenants.
- [75:09]
David Green
That's a good point. Hopefully they stay on your side. That's the thing, man. You trust a bear, it's like trusting that elephant or that 800lb gorilla. You don't know if it's going to turn on you. All right, and the feature property of the week today. If you guys are not listening to this on YouTube, if you're listening on Apple podcast, you can catch the video on Spotify or on YouTube. And if not, if you're just listening on Apple, I'm going to force Joseph to have to describe exactly what he sees so that you feel like you're not missing out on anything. This is the rest of that property. So those bears that we were looking at, if you can see my cursor, they were like right here. And we were looking at it from the front, front of the cabin. This is a fire pit that, that Marcy and I, actually, the contractor I told you about built the last time I was out there, designed that myself with his help. And then we built it. This is a hot tub over here with some cafe lights that kind of go around. The whole thing looks really nice at night. So if you guys wanted to visit one of these properties, this is what this one looks like. Let me see if I can figure out a cycle through these pictures.
- [76:05]
Joseph Hamer
Big fan of a swing, David. Big fan.
- [76:08]
David Green
Are you?
- [76:09]
Joseph Hamer
I'm a rocker. I'm a mover. You know, I like to move. And man, my. The biggest scene I miss of my last house is the front porch swing. Look at that swing. I'd sit on that.
- [76:21]
David Green
I mean, if it passes the Joseph Hamer swing test. And you got a fire pit.
- [76:26]
Joseph Hamer
Yeah. And a bear.
- [76:27]
David Green
You got this nice backyard and a bear that might come up to you. That's exactly right.
- [76:30]
Joseph Hamer
We fire pit not keeping you warm enough. Cuddle up with a cub not warm enough. Get in the hot tub.
- [76:38]
David Green
Get in the hot tub. It's right there. I need to hire you to do the marketing for some, for some of my properties here. This is the newly improved game room. So when I bought it, this was basically just like nothing but this little table that was sitting up here. And so I threw in a foosball table, air hockey table, tv, a sleeper sofa, some beanbag chairs, the rug, and this little like really big four in.
- [77:02]
Joseph Hamer
A row game for people listening. David, how did you, how, how are you going to track the impact that makes on your revenue as far as the return goes on the air hockey or foosball or whatever it might be? Are you, are you putting those things in properties just because of what you've seen it do to other properties? Are you putting them in seeing if it makes sense a difference like how, how closely are you analyzing those returns?
- [77:29]
David Green
The problem with trying to track it the way you're describing is there's too many variables happening right now to be able to tell. So like you can compare year over year. But the economy has so much more to do with vacation rentals than any individual improvement that you made. It becomes incredibly difficult to be able to do that. It's more of like if your property isn't booking at all, you're going to need to do something like this. If it's routinely booking all the time, putting a air hockey table in it is probably not going to increase your bookings.
- [77:57]
Joseph Hamer
Sure.
- [77:58]
David Green
This is more of like to compete with the Joneses. A lot of the time you have to do this kind of thing and it's actually if you own a short term rental, it's not like doing this is going to make you money. If we're being transparent, you almost have to do this to not lose money. Like so many people that own successful like cabins out there. There, they're only successful because they keep dumping all their profits back into the property to keep up with the Joneses. It's sort of this like nuclear arms race right now where people that don't have money are just losing them and people that do are putting their money back into the properties in order to try to survive this that doesn't get talked about very often. I will tell you this air hockey table was a beast to get up the stairs. Much heavier than what it's like one of the tournament size ones. And then once you get up there you got to put it back together. But I think it came out much. But you have this really cool view. It's like an a frame cabin and that these Lofts make pretty good game room. Sometimes I'll put a bunk bed up there as well if I need to increase the sleep count. And this one, I didn't quite have to do this, but I will say that like, these pictures were recently taken and they're better than the other pictures that I had for it. And I have noticed like your highest ROI is usually going to be in getting new pictures as opposed to just new amenities.
- [79:13]
Joseph Hamer
Question if, if that house depended on it and you had to go 1v1 with someone, you choose an air hockey or foosball.
- [79:25]
David Green
To beat them, you have.
- [79:26]
Joseph Hamer
To beat someone in one of those games. You beat them, you keep the house.
- [79:31]
David Green
Air hockey.
- [79:32]
Joseph Hamer
Air hockey, yeah.
- [79:33]
David Green
What about you?
- [79:35]
Joseph Hamer
Probably air hockey. I feel like it's a. I have a little bit more control. Foosball gets a little bit tough sometimes.
- [79:41]
David Green
But see, you know what I should have thought of is that's tough for the other person too. Gus, I was thinking the same as you, but it foosball may give me an advantage because my brain works really fast. It's just unnerving because you never know where to put your hand. And then as soon as you figure out where to put your hand and move the character of the ball ball somewhere else, you got to do it again. But that might also. My opponent might have the same problem. That might be something to consider. This is our question of the week. I thought this was hilarious and I had to share it. I got a DM from a follower when I was asking her question on Instagram. By the way, if you guys are too shy to submit a video question, go to my Instagram @David Green24 and you can submit your question there. And they said, how to buy real estate with a 401k. We replied by saying, hey, could you submit this@davidgreen24.com Ask and the follower response was, what supplements do you recommend for osteoporosis? I don't know where we got mixed up, but I thought this was so hilarious that we actually did look up the answer. And we would like to remind you anonymous person whose name we're not going to put out there, calcium, vitamin D and magnesium are highly recommended and the dangers of osteoporosis cannot be outstated. We definitely don't want to see you visiting one of our cabins, walking up the stairs, and God forbid, breaking a leg. So please get some sun, increase your magnesium and your calcium levels, and we'd love to see you at coast to coast getaways. And this week's Guest dilemma. We had a guest who didn't know the name of his sister's husband. Now we have to ask for the names of the people that visit this cabin that we showed specifically and one other one because they are in a gated community in the mountains. And so you have to register the names of your drivers. And so we were like, hey, give us the names of the drivers. And the guest said, I don't know my sister's husband's name. And so we weren't able to put that person on the guest list. Do you have any guesses, Joseph, about what could be going on with those family dynamics that they wouldn't know the name of their sister's husband?
- [81:44]
Joseph Hamer
Husband. Tell you what, that sounds like a California couple. If you ask somebody in Oklahoma, their, their sister's husband's name, they're going to tell you their name and their birthday. All right. Yeah, I, I would say either it's the fifth husband or it's. Yeah, it's a, it's a, it's a family trying to put some puzzle pieces back together. That's my guess.
- [82:10]
David Green
That's a great way to put it. Well done. I like how you said that. And then before we go, I'll just share a couple views of the property of the week because I realize I only show the new photos of the game room, but we actually have some of the views. So the front of the cabin looks like this. This is before that. It was all green and nice outside. This was taken during the winter. That's one reason we got new photos taken. But imagine that when it's green and lush. Gorgeous to be staying up there. It's one of the reasons that I like owning these cabins is you get to go hang out and see this. This is before we like finished the fire pit. It was in the middle of being made with the drone footage there. That was your swing being built before it was stained.
- [82:59]
Joseph Hamer
Beautiful.
- [83:02]
David Green
All right, there you have it, folks. Joseph, thanks for joining me today. Really appreciate it. You want to let the people know where they can get a hold of you if they want to reach out?
- [83:08]
Joseph Hamer
Yeah, of course. You can find me on Instagram, Joseph Hamer, which is like hammer but with one M. JOSEPH Hamer REALTOR but honestly, the best way if you're going to reach out to me is my cell phone. 316-213-4986. I'm happy to talk about investing, flipping, medium term rentals and of course the witchita market.
- [83:28]
David Green
And if you guys are shy, would like a direct meeting with Joseph and you don't want to go to him, you can reach out to me, and I'll make a connection for you and also connect you with one of our loan officers, get you all set up. Thanks for being here, Joseph. We appreciate you guys. Make sure you go check out Joseph's interview with me on Real Talk Realtor, where he discusses how he built his business and what he's doing. I'm sure we'll have him on again in the future. And we will see all of you next week on the David Green Show. Go.