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- [00:01]
David Green
What's going on, everyone? I am David Green. He is Christian Bashelder, and we are Mortgage Monday. Hope everybody's doing well. It's been a couple weeks. I have been moving across the country and we were not able to get content recorded, mostly because of me. Christian has still been in the trenches, working very hard, closing loans, saving deals, basically being the Lone Ranger. And he's here joining me today to talk about what the heck is going on in the world of lending. Christian, how are you?
- [00:27]
Christian Bashelder
I'm doing good. I know we've got a lot of, a lot of concerns, a lot of things about what's going on with Mortgage Mondays. We are still planning on going strong, guys. So obviously this will probably be one of the first episodes that you see after our brief hiatus. But David and I are alive and well, I promise. So we're, we just had a little bit of a delay for David's move, but we're going to be back at it here in the coming weeks. So stay tuned, stay on the channel, look out for new content updates, and follow us every step of the way.
- [00:54]
David Green
And that is a good reminder to go ahead and subscribe to the channel now if you're not already done so so that you can get notifications of future episodes. And hey, if you're listening every single episode, you might notice new little things starting to pop up in my background. And you might see Christian's beard slowly growing over time. Christian, let's get into what is on the forefront of most people's minds. It's the economy, stupid. Not that you're stupid, but that's just what the saying is. Who? Where did that come from, by the way? Do you know who first said that?
- [01:21]
Christian Bashelder
I don't know. I've heard that for years. I don't know what the actual origin of that is.
- [01:24]
David Green
It was like a campaigning on what's the most important thing or something. I realized that it sounded like I was calling you stupid, and I definitely was not doing that because you're big brain. But we have had Doge ripping through the ranks of federal employees and looking for inefficiencies. And there's some people that are listening to this that are probably cheering for that. There's other people that are probably terrified of it, and there's others that are probably angry or scared because they have family members in that position. We want to make sure that today's show is very sensitive to the fact that people could be losing their jobs and not all of them are going to be wasteful, bad employees. You're always going to get some of the good ones when you go after the bad. And so there's going to be a big shakeup probably though, in federal jobs. And a lot of those are located in a very specific part of the country. So talk a little bit about where you see this impacting geographically the most.
- [02:15]
Christian Bashelder
Yeah, so I mean, obviously, you know, our nation's capital, right. In the greater D.C. area. You know, I don't know how much you guys follow, you guys, being our listeners, follow kind of more locale news, you know, in different locales across the country. But the D.C. area is in a weird position right now, right? The entirety of D.C. metro, mainly because there's a surge of people without work now. Right. So a lot of people that may have recently moved there, a lot of people that owned houses there, I think I saw this weekend. I, I follow a couple agents in the area and just different realtors on, on social media. And I think the surge was up to like 18, 000 current houses on the market right now in the greater D.C. area. And that may be more now. It's been a couple of days since I saw that post. Now we're a nationwide lender, so I don't, you know, it's not like we're huge in the D.C. area. However, it's a very unique opportunity for David and I to kind of discuss how locale, locales, how, you know, different factors outside of your control can really impact the housing market sometimes with no, you know, no press briefing before it. Right. You know, obviously Doge came in. Seems like sounds like you can't talk about current events nowadays without mentioning Elon Musk and Trump. They're kind of at the forefront of most things. Right. And regardless of whether you hate them or love them, they're very polarizing people. But, you know, they're taking actions that are impacting a lot of things. Right. And housing was not one of the first things that they were looking to, to impact by cutting government spending. And it's kind of a, it's an after effect, right. Where if a lot of these federal employees, a lot of the people that do live around the D.C. metro area, if they don't have work anymore, they're looking to move. You know, D.C. is an expensive area. It's not a cheap place to live. Right. And it's a very, you know, it's a relatively, in the grand scheme of things, a relatively small area that, you know, historically has kind of packed in a lot of people and a lot of those people May be looking to move now. Right. If you're not working in the White House or government buildings anymore, why do you want to live there? Right. You know, and that's, that's seen as proof now on the houses on market. And just like everything we talk about, basic rules of, you know, economics, supply and demand. What do you guys think happen when the housing that is available on the market, you know, surges by 2x, 3x 4x? That turns it much more in the favor of the buyers. And sellers are not getting even in a lot of cases, what they probably paid for that house, right?
- [04:31]
David Green
Yes. For the first time in God knows how long, we are seeing a market where inventory has grown to the point that there are more houses for sale than buyers that want them. In many markets now, we don't know if that's because there are no buyers that want the house or because buyers are sitting on the sidelines waiting to see if prices drop. But we do know that there's only one thing that leads to prices dropping, and that's when the days on market increases to the point that the seller has to cut the price to get someone to buy. And this can get nasty when all of the buyers collectively remove themselves from the market and they all decide, hey, we're not going to buy even if we can afford to, because we don't have to. Let's see if we can create an avalanche where prices all just continue to collapse. And we're not seeing that now. But to use that avalanche analogy, I am starting to see the snow building on some of these hills. This is the most worried that I've been in over a decade that we could be watching ourselves slipping into housing prices falling and potentially a recession coming. Now if we cut a whole bunch of jobs, a lot of people that were making money are not making it. That's money that was being spent in the economy not being spent. That's people that may have to put their house up for sale because they just got fired at the same time that everyone else is doing the same thing. That's where you get the localized avalanche. That's what the concern would be. Doesn't mean it's going to stay that way. Right. Might be a quick one. Might be home prices drop, they hit, they stabilize. At a certain point, people that have other jobs in that area buy them. At some point, it stabilizes. It also doesn't mean it's going to affect the entire country, but that could happen. If you see layoffs happening at a big level, you may see one of our first ever times in a long time when housing prices have dropped. And based on what I'm seeing in the news I read today, the Southwest is having layoffs, the that I believe Exxon is having layoffs, that Meta is having layoffs. It's not at the point that everyone's laying people off, but I think we are getting to the point where if you're the average American worker and you've been comfortable and you've been working two or three hours out of your eight hour day and feeling entitled to that, there may be a rude awakening coming, there may be a reckoning coming as the market is starting to reject that type of effort. And we may need to see Americans get back to what Americans used to do best, which is work very hard, very grind, like you do, Christian, and like I do to, to be the best that we can be at what we do. And there might be some pain in that process. Just like if you let yourself get out of shape and you got to start going to the gym, it freaking hurts. There's no fun way about it until you start to get used to it. For those that are kind of sitting on the sidelines waiting to see what's going to happen, Christian, what's your advice to them and does it to matter and does it matter where they live?
- [07:14]
Christian Bashelder
Yeah, I mean, you know, it's like the, the golden rule of real estate, right? The three L's, location, location, location. Right. That's what a lot of, a lot of agents tell you. A lot of investing, you know, kind of celebrities will tell you that. I don't think that will ever not matter. Right. I mean that's, that's obviously, you know, David, not you don't anymore. But I'm still in California. Right. And that's, that's been California's name to fame for so long as we can have half of the people who live here leave and we still won't really see a drop in house prices. Right. I see every time I see like a comment online of like house prices are dropping or like, you know, it's always usually somewhere outside of California. And even though we have this max mass exodus, it's like there's still not enough houses for the people here. Right. Because so many people want to live here, whether it's weather or Hollywood or you know, whatever comes along with that being on the ocean. Right. So really at the end of the day, yes, real estate is always going to have a local dynamic. But there is a general consensus that people, especially with the ease and quickness with how news permeates society nowadays, whether it's through social media or wherever you go to, to get your news. Right. I mean, I feel like non stop, you know, all the apps nowadays track what your interests are. I feel like my Instagram and Tick Tock and everything, it's all real estate all the time, right. And even if it's someone in the middle of Kansas, right, nowhere near me, I'm hearing their opinions on the market. Right. And it's funny, it definitely varies a lot based on where it's coming from. But at the end of the day, I think, you know, there, there is a growing consensus that, you know, definitely people are worried right now. We don't know where Trump's tariffs are going to take us. We don't know if he's going to follow through with them. Right. We don't know if it's just a bargaining, you know, tool. You know, we don't know how these government kind of re. Rebirths, right. We're kind of having like a government renaissance here, right, with you know, all of these departments being, being cut, all these departments having, you know, staff cut significantly. And like David said, in reality, if you guys work at a long, like a big company, right, With a, with a, with a long list of a workforce, you probably know somebody in your company who puts in those two to three hour days and then goes home and got paid for eight hours. It's like I hear it all the time. And that's, that's a side effect of long term economic success is these companies have such a cash flow surplus. You know, these Facebooks and these metas and these Googles, they could afford to just get a really talented person to come in and work for two hours and pay them really well. Right. But when the economy turns a little bit, it's not that like the person who's fundamentally valuable to the company, typically they're not the first one to go, right. But those people who are kind of on the fringe, who are probably overpaid for what they're putting in, they're usually the first people to get looked at. And you know, that's, that's, I think what we're seeing is the crack starting to form of companies tightening up, right. Looking at their bottom line, put it paying more attention to their margin. And you know, we're, we're seeing how big of an impact that may have on the economy as a whole. Right.
- [10:08]
David Green
Let's run through a little experiment. This is something that I like to do, especially when it comes to politics because 99 of people that I come across, they pick one side or the other. They choose heads or tails in this quarter. And if something comes along that favors their side, they're happy and they cheer. And if something comes along that doesn't favor their side, they whine, they complain, and they write Facebook posts about it. But you're best off. I actually got this from Robert Kiyosaki when I talked to him years ago. To take the perspective of somebody that doesn't look at heads or tails. You look at the edge of the quarter, and you look over on either side, and you see what the heads are doing, and you see what the tails are doing, and you try to anticipate how these decisions are going to affect the economy and then where you should place your money. So let's run through a little thought exercise here that, that I do, that I'll share with everyone that would benefit them when it comes to investing in real estate, where they should buy and what type of financing they should get. One of the big things that President Trump has talked about is these tariffs. And if you've heard the word tariff, but you don't know what they are, you might have just heard it, like a negative thing. But it's basically a way of charging a country who sells their items in your country extra so they can do it. So let's say China is selling a car that is $100,000. I don't know if they make $100,000 car. That's kind of a funny idea there. They're typically known for making cheap things. And we make a car here that's $100,000. But people buy the Chinese car because they're selling it for $75,000. If you put a 25% tariff on it, it forces them to sell their $75,000 car for what's effectively $100,000 to the consumer. And then the US government gets that extra $25,000, which would go into the income it creates outside of where we normally create our income, which is income taxes. So President Trump has said, I want to create an external revenue service, which is a way of collecting income for the country where we tariff other countries who sell their items to us instead of taxing our citizens on the income that they produce at their job. Now, theoretically, what this would do is incentivize people to want to work more because they're paying less in taxes. This is all theoretically because it doesn't always work that way. And it incentivize people to buy Less products from other countries, which would cut down on consumerism and would force you to buy more American products because American products now have the price advantage. The downside, as we've all heard people say, is the stuff that we're used to buying from other countries now becomes theoretically 25% more expensive in this example. Now what this does is it creates pressure for Americans to produce more things in our own country because buying things from other countries becomes more expensive. It's kind of been a cheap code that you could buy socks and underwear for almost less money than it costs the time to wash them and fold them and put them away. A lot of people were just buying things cheaply all the time. If this happens, we will bring manufacturing back to America. We will make more things here. I don't know that that's going to go over really well because 10 years of everybody wanting to be an Internet influencer and a white collar worker and have all this prestige and kind of be faking it on social media. Now you got to go work in a factory and actually stand on that line and, and do something with your hands for 8 hours a day or 12 hours a day if you want to get overtime. I think we're going to get some pushback from that. But let's say that we, we push through it. We get through starting the workout. When you're out of shape, you start to get in shape again. What I think we'll see is more plants opening, more manufacturing jobs coming in and more blue collar careers starting. So that would be instead of having a small number of people that make a lot of money, which is kind of what we have right now, and then the people on the bottom sort of get taken care of by taxes that come from people on the top. You'll have less people on the top making a lot of money and you'll have more people on the bottom making a little money and the whole thing kind of evens out into the middle a little bit more. This is all theoretical. If it plays out that way, what that means is you will have a higher percentage of the workforce that is making enough money to pay rent, but probably not enough to buy a house that would theoretically create a resurgency in your tenant base. But it's not going to happen in San Diego, California and Miami and all of these really expensive cities where we saw the money moving to and big things happening. It's probably going to happen in the Midwest. If Christian. If you're going to start a company that makes tires because you see that there's an advantage if we're tariffing Japan, who sells their tires here? Do you want to go put that company in Washington D.C. where the real estate's really expensive?
- [14:41]
Christian Bashelder
Yeah. It's the same argument as to why, you know, some American companies have taken work out of the country. Right?
- [14:47]
David Green
I mean, that's exactly right.
- [14:49]
Christian Bashelder
There's, there's an objective benefit that you can realize with lower cost of productions. Right. Whether that's certain markets. I mean, even the little things you don't think about, like how much does it take to get to the office in the morning, the gas prices, somebody come in Los Angeles, then go to Kansas and tell me where it's cheaper to live. Right. I mean, great point. Just, it's just how it works. Now like David said, the goal of the Trump tariffs is to get the Los Angeles company to go to Kansas instead of China. Right. And it stays in America. It stays, you know, American made and manufactured. And whether or not it works, there's been varying different attempts at tariffs in the past that have had varying levels of success or failure. I think everybody is very interested to see, you know, we, we don't quite know where it's going to take us.
- [15:32]
David Green
No, we don't. And that's why this is a theoretical exercise and we don't need to know right now. We will continue to develop it and we'll talk about it and we'll share what we see happening. But assuming we're on this path, then it looks like we're going on. I would expect to see more jobs and manufacturing plants moving to the Midwest because that is the cheapest place where you can put something. Minimum wage is much lower. Energy levels are much lower. There is less of a housing crunch out there because there's more land so they could build more houses. The whole thing is cheaper. Right. Where, where we live in California, minimum wage is currently $20 an hour. Okay. You go to get Taco Bell or Carl's Jr. You're, you're paying the same price that you would pay at a sit down restaurant. It's not really any cheaper. Then you go to some other state and minimum wage might be eight or nine dollars. That doesn't mean that manufacturing jobs are going to pay minimum wage. But if you can pay someone 20 bucks an hour, you could get a good worker versus in California for 20 bucks an hour that person could make minimum wage at Chick Fil A. I guess they probably pay more than minimum wage there. Minimum wage at a gas station somewhere versus somebody who is, who's more ambitious and wants to work harder. I think that what we will see is more of the population moving into the middle of the country where things are cheaper. What does that mean for you as a real estate investor? You will have opportunities to buy properties that are not incredibly expensive, like in Florida, like in California, like in all the markets that we've been talking about previously where people made money that might be finally shifting now if the tariff thing never takes place or if we never see the resurgence in manufacturing jobs catch on. Let's say Americans rebel and they're like, no, our 22 year olds don't want to go get a blue collar job. Maybe this doesn't happen, maybe it doesn't work, but if it does, I would definitely keep an eye out for opportunities to buy in those markets where they are more affordable, where you don't need as big of a down payment and where you might be able to actually eke out some cash flow for the first time in a long time. So I don't know if I'm going to say I'm super excited about tariffs because I don't know how it's going to play out. But I am very excited about the fact of jobs moving into the country. Entry level jobs, just like entry level housing is needed, we need something in between unemployed and working at Google in Cupertino making $220,000 in your first year. We need some of these like stepping stones so that our younger generation can get into the workforce, learn how to have a job, learn how to build skills, learn how to get confidence and then develop the value that they can bring to the market where they can start to get managerial positions and then executive positions and then maybe go and help open a plant somewhere else. So I'm excited at the thought that that could happen as well as the thought that investors might finally be able to start making money in some of the markets that we've just written off. Like you've mentioned Kansas a few times. When's the last time you heard about an investor crushing it in Kansas? It might actually be a thing that could happen. What are your thoughts?
- [18:19]
Christian Bashelder
Yeah, I was just thinking as you're talking, I was literally just on an intro call the other day with, with a young kid, he was 20, 21, 22 I think. And he had just finished his, his trade school. He was an electrician. Right. And it was funny, we kind of connected because he was an engineering major in college. Yeah, just like me. For those unaware, I majored in chemical engineering. Go figure. Of all things and so we kind of vibed over that we were connecting and he bailed out of college because he got pitched from a trade school. He went and he did, I think he did like 18 months for some electrical certification and he made 94k his first year. And you guys just go online and check that's less than what he would probably make with his 4 year chem E degree for the same thing working in some lab or tech firm or something somewhere. Now obviously, you know, you can go through your ranks in a big company and get up and whatnot, but I was thinking, I was like, man, I actually think I'm, I'm somewhat positive, you know, outlooking towards this. David of I think there's going to be a lot of people that look the, at the trade school route and if you look, I was looking at these stats the other day. If you look at the average age of a carpenter or an electrician or a mason or all these people that like work with their hands, it's like 40, 50, 60 years on average. That's like the average person in the industry is getting close to retirement age. There's going to be an exodus of blue collar workers, right that I think few smart, you know, people may not want to take the college route, may not want to stack up hundreds of thousand dollars in student debt, you know, may not want to have to do all that. You go take an 18th to 24 month trade school, you cut your education costs in half and you go get 100k starting, you know, position somewhere working in the trades. You know, I don't know, I know another guy who's a mechanic for Caterpillar, the, you know, the forklifts and the bulldozers and everything. And he did the same thing. He did a nine month certificate, went and got his, his whatever, you know, certification that requires that and he fixed them all day and he makes 140k a year. It's pretty good, right? And that's somebody working with their hands, you know, it's not some glorified tech job or something like that. But that's, that's hard, honest work that makes a very livable wage first year in the industry, you know, first few years I should say. And I, I think I, I'm fairly positive that I think we're going to have a surge in people who see that as a, a normal alternative that, that can potentially put them ahead in life from income at an early age as well as, you know, limiting.
- [20:50]
David Green
Well, we need that in my, from my perspective we need two laborers making $60,000 a year each instead of one making $95,000 a year because there's only one person doing the work, right? It's two people making jobs. It's two people paying mortgages. It's two people buying food. It's two people spending money in the economy. And for the real estate investors, it's a 50% reduction in the labor costs you have to pay when something breaks in your property. And it's twice as fast to get somebody out there. We have this problem of everything becoming expensive because there's fewer people that are actually being productive and on our economy. And that doesn't mean nobody's doing it. And maybe you live in Oklahoma or you live in Wisconsin. You're like, everybody works over here.
- [21:35]
Christian Bashelder
Cool.
- [21:36]
David Green
Go to Southern California. That's not the case. There's a lot of people that are not.
- [21:39]
Christian Bashelder
Nobody's working, right?
- [21:40]
David Green
I can tell you they're waiting for the job. That makes it worth it to them to do it. And that's the problem, right? We need people with lower expectations of what they think is worth it to go be productive and more of them and more competition. And I'm not saying that we want to turn people into slaves. That's not the case at all. You only get better when you do something. You only get better when you're competing with other people. When you push yourself, you grow. If you're at the gym and you're not really lifting the weights, you're sitting around talking, you're not getting stronger. We have a bunch of people in the workforce that are sort of milking it. And they don't know they're milking it because for the, like you said, for the last 10 years, it's been such a great economy that's normal to work two hours instead of a eight hour day. I want to see our bright minds like you, like the engineers out there, working really hard every single day getting better at what they do so that we engineer better things, we produce better things, more things get made in America. We are less dependent on some of these other countries to import stuff there. If we tariff them, it doesn't hurt as much. And it forces them to play fair with us in sort of like global trading games. And it forces them to make better products to compete with us. So we don't know how things are going to go. But this is one of the more encouraging times that we've had in the economy where like Christian said, we might see a resurgence in productivity and more people getting into the workforce. And are they amazing jobs? No, but entry level jobs lead to amazing jobs, especially when you're younger and you start on that path. So I think that could be maybe.
- [23:08]
Christian Bashelder
Exiting the, the market. Right. I mean, if those owners has his masonry shop and he's 65, he's looking to get out that new kid who comes in who works real hard, I mean, maybe you end up being the owner in five, 10 years. Right. I mean, now that, that's the beauty of it is that we're getting good minds, you know, motivated people in that are taking over these businesses from, from retiring, you know, 60, 70, 80 year.
- [23:28]
David Green
Olds with some energy.
- [23:30]
Christian Bashelder
With some energy. They're revamping, maybe they're adding some marketing, they're adding more, you know, GDP to the country. I mean that's, that's how this should work. Right. I think.
- [23:38]
David Green
And they're probably not charging as much and hopefully they're not charging as much as the 62 year old who doesn't want to do the job anyway. But he just is like, well, it needs to get done. You got two 24 year olds competing for that business. You're going to get a better price and that's two people that are now paying rent that need to put money into the economy that real estate investors can provide housing for and the thing could get turned around. So I would expect things to get worse in the short term as we're going through some of these layoffs as the economy moves around as white collar jobs may disappear and blue collar jobs kind of come in and we all have to adapt to what this is like. But long term, I would think this will be very healthy for the real estate market. We might get a price correction that makes it relatively affordable to get into it. Be even better if, if the Trump administration can figure out some way to incentivize builders to put more inventory back into the market and boom, we could be back in business again.
- [24:26]
Christian Bashelder
Yeah, yeah, that's the big one for sure.
- [24:30]
David Green
Well, thank you, Christian. I appreciate it. We've, we put out a 20, 25 minute episode here today, longer than we normally do, but this was some good stuff. If somebody wants to get a loan, if they know a real estate agent who needs some support for their clients and they want an honest lender, where can they go to get a hold of you?
- [24:48]
Christian Bashelder
Yeah, you can find anything about our company@the1brokerage.com if you ever want to catch me directly, you can catch me on Instagram @the1 broker. It's got some underscores between the words the underscore1/broker, please make sure it's me. There's so many scams out. I just saw a fake account for me that got sent to me yesterday. Make sure it's me. Guys, all of my stuff will have my licenses, the company address, all that stuff. So make sure you're talking to the right person. And I don't do crypto. Don't send me crypto. I promise it's not me. If I'm asking for crypto.
- [25:18]
David Green
You can also get a hold of me directly@davidgreen24.com check out the website. There's a chat feature that will link you directly to me and I can put you in touch with Christian if you want to make sure that you're getting in touch with the right person. He does all of my loans. He does all of my personal friends loans. So guys, when I bring him on the show, this isn't just he's not paying to be here. This isn't a paid ad or anything. This is the person that finances my real estate and my mom's real estate and my friend's real estate. He's the best loan officer that I know out there. So definitely reach out and let us take care of you. Also, if you're not already subscribed to the channel, make sure you do so and leave us a comment letting us know what you think about tariffs and the direction of the economy overall. Did we miss something or did we get something wrong? Let us know what you think. We want to hear your opinion and subscribe to the channel so you can see us next week on Mortgage Monday.