Latest / Connor with Honor: AI, Real Estate and Real Life / The Honor Roll Show 01: Mike Meena, Augusta Financial, on Rates, Condos, and the Crash That Isn't Coming

Transcript

The Honor Roll Show 01: Mike Meena, Augusta Financial, on Rates, Condos, and the Crash That Isn't Coming · Connor with Honor: AI, Real Estate and Real Life

0:00
SPEAKER_00: Hey everybody, welcome to the show.
0:01
SPEAKER_00: This is going to be the honor roll show today.
0:03
SPEAKER_00: I'm, of course, Connor McIver.
0:05
SPEAKER_00: I want to talk to Mike Mina.
0:06
SPEAKER_00: He's a longtime friend and real estate lender in multiple states, multiple areas.
0:12
SPEAKER_00: He'll talk about that in a moment.
0:13
SPEAKER_00: But the one thing I wanted to I I guess open with before we even ask him, ask him anything about his business or fill us in is I want to ask you, I want to say, Mike, do you have anybody that monitors that phone number at the office after hours?
0:26
SPEAKER_00: So if I were to call in the middle of the night, would it be picked up without having to wait till tomorrow?
0:32
SPEAKER_01: Generally speaking, uh I picked one up at nine o'clock the other night because my phone line goes straight to my cell phone.
0:38
SPEAKER_01: So if I'm awake, I'm answering it.
0:41
SPEAKER_00: And you let me tell you why I'm asking.
0:44
SPEAKER_00: I have maybe three phone numbers floating up around in my head, and one's uh 661-260-2970.
0:51
SPEAKER_00: It's it's just memorized.
0:53
SPEAKER_00: It's in my head.
0:54
SPEAKER_00: So I'm thinking if I get booked into a jail, let's say in Mexico, and I need to make one phone call, it's probably going to be to your office.
1:01
SPEAKER_01: That's fine.
1:01
SPEAKER_01: That's probably not the right one.
1:02
SPEAKER_01: I would call my director, my cell phone, the 291-222 or my cell, the 661-714-6258.
1:09
SPEAKER_01: So the 260 does not with no, that goes straight to voicemail.
1:13
SPEAKER_00: And then sometimes it'll it'll alert us though.
1:15
SPEAKER_00: Maybe I don't have room for any more numbers in my head.
1:18
SPEAKER_00: Maybe that's the only one.
1:18
SPEAKER_00: So maybe we should make an allowance.
1:20
SPEAKER_01: I think you've got a big brain, brother, Doc.
1:23
SPEAKER_00: So it's here's the question of the day how the hell are you and what's going on?
1:27
SPEAKER_01: I'm amazing.
1:28
SPEAKER_01: I mean, life is good.
1:30
SPEAKER_01: Uh, business could be better.
1:31
SPEAKER_01: Uh, very interesting market with interest rates the way they're going right now.
1:35
SPEAKER_01: And I think that uh people are very hesitant to jump into the market because they don't know where we are.
1:40
SPEAKER_01: We're kind of teetering on some are selling above, some are selling below, some are sitting for a while.
1:45
SPEAKER_01: So it's it's hard to say where this market's going.
1:47
SPEAKER_01: And I think our buyers are kind of, I don't want to say hesitant, but not as excited as they were in 2020 or 2021 or even 2022 for that matter, to be jumping into the market.
1:59
SPEAKER_00: Isn't there a rule that kind of exists when the when the when the regular the economy gets a little hard, people kind of hunker down and they buy stuff they can hold on to like gold and real estate?
2:10
SPEAKER_01: Yeah, I was watching something yesterday and it said the average person who does not own a home has a net worth of like$12,000.
2:18
SPEAKER_01: And the average person who owns a home has an average net worth of$400,000.
2:22
SPEAKER_01: So I think, you know, we we get into it, and the hardest thing is that first-time buy to jump into that market right there.
2:29
SPEAKER_01: And again, owning real estate long term, how are you gonna lose?
2:32
SPEAKER_01: My grandmother bought a house in Los Feliz for$3,000, and my parents bought in North Hollywood for$300, and I bought in Saugas for$200, you know.
2:41
SPEAKER_01: So my parents paid$30, excuse me.
2:43
SPEAKER_01: But but what I'm getting at is over generations, these things are gonna continue to rise.
2:48
SPEAKER_01: It's like we remember when milk was 99 cents a gallon.
2:51
SPEAKER_01: I don't think it is anymore.
2:53
SPEAKER_01: So$5.
2:55
SPEAKER_01: Yeah, so these are things that that we have to look at long term, but too often are uh we get caught in the way of we got to get the right deal.
3:05
SPEAKER_01: We got to wait for the market to drop, we're waiting for interest rates to drop, we're waiting for this, we're waiting for that.
3:10
SPEAKER_01: You can make excuses all day long until you know Sunday, but at the end of the day, do you have a plan to get into real estate, buy that first property, hopefully buy a second property, and build your wealth and set up your retirement?
3:27
SPEAKER_01: Because that's really the most important thing for people is to get in there and build themselves up so they can retire at some point comfortably.
3:35
SPEAKER_01: And we know the people who can't do it comfortably.
3:38
SPEAKER_01: And some people, you know, we see seniors all the time that have milk the equity out of their property, milk the equity out of their property.
3:43
SPEAKER_01: What would they have done before that?
3:45
SPEAKER_01: Now they're in trouble at 84 or whatever it is, and they're all their equity's gone.
3:49
SPEAKER_01: But what would they have done?
3:50
SPEAKER_01: They would have been dead at 65 or financially dead at that point.
3:54
SPEAKER_01: So we've got to really focus on what that is.
3:56
SPEAKER_01: And we can't allow, you know, I don't think we have so much of that Black Rock stuff happening here in California where they're saying, oh, they're buying up properties left and right and everything like that.
4:06
SPEAKER_01: Price point's too high.
4:07
SPEAKER_01: Yeah.
4:07
SPEAKER_01: But it's it's too expensive for that.
4:09
SPEAKER_01: And it doesn't make sense for a rental market right now.
4:11
SPEAKER_01: So it's it's prime for buyers to buy properties at this point in time.
4:16
SPEAKER_00: What about those five influencers out there that are saying, I've never bought real estate, you should never own real estate, nobody should buy real estate, everybody should just rent and just put it to rest.
4:26
SPEAKER_00: What would you say to that?
4:27
SPEAKER_01: I I don't think, well, first of all, if I if I sat here and I ran numbers real quick and I said, Connor, you're paying$3,000 a month in rent right now, and you're 55 years old and you're gonna live till you're 85.
4:39
SPEAKER_01: And let's just say your rent goes up uh th a little bit every year, and your your rent at the end of 30 years will be$7,300 a month.
4:48
SPEAKER_01: I'm sure you know that Social Security is going to be there for you because they're not trying to cut that for people who are making a decent living.
4:54
SPEAKER_01: I trust the government.
4:56
SPEAKER_01: So so what is the answer there?
4:59
SPEAKER_01: So we're going from$3,000 to$7,300.
5:02
SPEAKER_01: We're still in an apartment that we don't want to be in, and our landlord's done nothing but pay that mortgage off and done well.
5:08
SPEAKER_01: What happens to the landlord's property that he's renting that was$600,000 when you bought it originally and he had a mortgage on there?
5:16
SPEAKER_01: Now he doesn't, and that thing goes up 4% a year for 30 years.
5:20
SPEAKER_01: That thing's now worth$2 million.
5:22
SPEAKER_01: Wouldn't that have been better to be your property, even if you had to pay a little bit more, that's worth$2 million in 30 years?
5:28
SPEAKER_00: Yeah, absolutely right.
5:30
SPEAKER_00: No doubt.
5:31
SPEAKER_01: So for them to say that, I understand my real estate, you know, my rental properties, they cost me time and they cost me money and they cost me this and they cost me that, but they also make me money and they bring in income and they pay down mortgages and this and that and the other.
5:47
SPEAKER_01: And as I look at it every month and I'm going, oh, that one pays down four grand, that one pays down three grand, that one pays down$1,500.
5:53
SPEAKER_01: Whatever these things are, that's money in my pocket long term.
5:57
SPEAKER_01: Right.
5:58
SPEAKER_01: Now, could I extract that cash out of it?
6:00
SPEAKER_01: Yes.
6:00
SPEAKER_01: My house for the same thing, you know, it pays off$3,000 a month on the mortgage.
6:04
SPEAKER_01: That's great.
6:05
SPEAKER_01: It's that's not a cost of the house.
6:07
SPEAKER_01: That's just helping me get to point B.
6:09
SPEAKER_01: Are there expenses in a house?
6:10
SPEAKER_01: Yeah, I just fixed something in my house the other day, an air conditioner.
6:13
SPEAKER_01: It was eight or nine hundred bucks, whatever it was.
6:16
SPEAKER_01: Not a big deal because in the big picture, I know that that property is going to continue to rise over a long period of time.
6:23
SPEAKER_00: You know, you have a lot of people, you've been in the business a long time.
6:26
SPEAKER_00: I mean, just for me to have your office number memorized, that's insane.
6:29
SPEAKER_00: But you've been in business so long, you have buyers directly going through you and then seeking to purchase real estate, you as the first stop, not the real estate agent as the first stop.
6:38
SPEAKER_00: Knowing that, what would you tell these agents out there that might be lucky enough to have a buyer contact them first when they say, you know, I don't know if now's a good time to buy?
6:48
SPEAKER_00: That same story you said, or should they what should that agent do?
6:52
SPEAKER_00: Just if you were teaching a class on that?
6:55
SPEAKER_01: The agent needs to ask the question more specifically of what is what is stopping you from buying a house right now?
7:00
SPEAKER_01: And if the answer is, well, I don't like where the interest rates are, well, then what at what time do you think the interest rates are gonna be better to where you're gonna be able to buy?
7:10
SPEAKER_01: And do you think property values are gonna be there?
7:11
SPEAKER_01: So now we have to find out what's affecting that buyer right now.
7:15
SPEAKER_01: So you're saying, Connor, that you don't want to buy now because the interest rates are too high.
7:19
SPEAKER_00: So well, you know, I've seen the interest rates.
7:20
SPEAKER_00: I have an uncle of mine that's got like a 2.6, and and I'm hoping they're gonna go there again.
7:25
SPEAKER_00: But I, you know, and then they say refining.
7:27
SPEAKER_00: I don't want to do anything.
7:28
SPEAKER_00: I just I want I'm waiting for H to come down before I buy.
7:31
SPEAKER_01: Okay.
7:31
SPEAKER_01: So you want to get down to five and a half percent or something like that.
7:34
SPEAKER_00: Yeah, yeah.
7:35
SPEAKER_00: Five, five and a half would be good.
7:36
SPEAKER_00: And they they're saying on the news, you know, it's gonna happen.
7:39
SPEAKER_00: I'm somebody's gonna make that change.
7:41
SPEAKER_00: What are you thinking?
7:42
SPEAKER_00: One to two years, Connor?
7:44
SPEAKER_00: I'm I'm hoping maybe, maybe in the next few months.
7:46
SPEAKER_00: I mean, I'm I'm watching some people that are saying, hey, just hold off for a few more months and it's gonna be just wonderful.
7:52
SPEAKER_01: Okay.
7:52
SPEAKER_01: So let's just say you think that rates, I can get you a rate of, say, six and a half percent today on a 30 year.
7:57
SPEAKER_01: But if I got you a one-year buy down and I got you a five and a half percent rate for the first year, then we just do one refinance free of charge to you a year from now, okay?
8:07
SPEAKER_01: Or before the year from now.
8:09
SPEAKER_01: So if they come down by Christmas, I'm covered by that refi.
8:12
SPEAKER_01: You're covered.
8:13
SPEAKER_01: We'll go ahead and do that refi down to five and a half, assuming they came down to that low.
8:17
SPEAKER_01: So I think that if your fear is the fact that you're paying six and a half, I can get you the next 12 months at five and a half, and then we go to six and a half after that.
8:25
SPEAKER_01: And you and I both believe that the market's gonna be lower at some point in the future.
8:29
SPEAKER_01: And the best part is if we pay for that buy down for you right now, okay, and you refinance, say, in six months, you're gonna get half that buy down money back in your pocket too.
8:38
SPEAKER_01: And like I said, I'm gonna do a free refinance for you anyway.
8:41
SPEAKER_01: So we need to know what the fear is of the buyer.
8:44
SPEAKER_01: If the buyer's saying, well, I want a$4,000 payment and the payment's$5,500, then I'm gonna come backwards and they go, okay, do you want this$800,000 payment,$800,000 house, or let's just start there and we do our 20% down, um, and our payment now is gonna be$5,178.
9:01
SPEAKER_01: You're like, I'm comfortable at$4,000.
9:02
SPEAKER_01: And I go, Great, Connor, I'm glad you're comfortable at$4,000.
9:06
SPEAKER_01: But to get your payment down to$4,000, you're gonna have to be at a 3.5% interest rate.
9:14
SPEAKER_01: So now we have to have reality set in with you, and that$4,000 is not gonna happen unless rates really come down 3% from where we are right now, which means we need another pandemic, which please, guys, we need another pandemic.
9:27
SPEAKER_01: No, I'm just kidding.
9:28
SPEAKER_01: Um, and and we need some other things to happen.
9:31
SPEAKER_01: But Connor, what we don't understand is the money that you're gonna save by buying versus renting at$4,000 a month.
9:39
SPEAKER_01: So if we get this loan today and you're paying 6.5%, your payment's$5,200, you're paying off principal.
9:46
SPEAKER_01: You're paying, you're getting an interest deduction for the interest you pay on that mortgage, which is something that people don't often talk about.
9:54
SPEAKER_01: That's a big deal, actually.
9:55
SPEAKER_01: Correct, yes.
9:56
SPEAKER_01: Um, so we have$41,000 in interest write-off.
9:59
SPEAKER_01: We have another$10,000 for your property taxes.
10:02
SPEAKER_00: So now we're real quick.
10:04
SPEAKER_00: Can we segue in there?
10:05
SPEAKER_00: Just talk a little bit more about that interest deduction.
10:07
SPEAKER_00: I know we're not CPAs and all that, but you've seen this enough.
10:10
SPEAKER_00: Explain that to the normal person listening.
10:12
SPEAKER_00: What does that even mean?
10:14
SPEAKER_01: Okay.
10:14
SPEAKER_01: So I have my interest that I'm paying.
10:16
SPEAKER_01: My interest is tax deductible, 100% on my house.
10:18
SPEAKER_01: Okay.
10:19
SPEAKER_01: My property taxes are tax deductible on my house.
10:21
SPEAKER_01: So if I have those two, and that's$51,000, and I'm in, say, the 24% federal tax bracket.
10:27
SPEAKER_01: And this is the$800,000 purchase.
10:29
SPEAKER_01: It's the$800,000 purchase with I think I did 20% down.
10:33
SPEAKER_00: Yes, you did.
10:34
SPEAKER_01: Um, so if I have that, I now have this$51,000 write-off, and I'm gonna be in the 24% tax bracket.
10:42
SPEAKER_01: Say I make$200,000 a year, and I'm in the 24%.
10:46
SPEAKER_01: So what do I have?
10:47
SPEAKER_01: I have a write-off for that amount, which is gonna put twelve thousand dollars a year back in my pocket or a thousand dollars a month back in my pocket.
10:54
SPEAKER_01: So what I would do is I would adjust my dependence on a monthly basis so I could bring an extra$1,000 a month home, and that$5,100 payment is like paying rent for$4,100.
11:07
SPEAKER_01: It's not that bad.
11:08
SPEAKER_01: Now, the best part of it with what we're doing is we're also paying in principle$7,200 the first year.
11:20
SPEAKER_01: So we're paying$600 off.
11:22
SPEAKER_00: So we're paying down the the what we bought in that house, what we paid for the house, we're paying that down by that much money.
11:28
SPEAKER_01: By$600 a month.
11:30
SPEAKER_00: Equity.
11:30
SPEAKER_01: Long-term savings.
11:32
SPEAKER_00: Okay.
11:32
SPEAKER_01: And then we've averaged five and a half percent plus or minus in appreciation over the last 50 plus, 75 plus years.
11:40
SPEAKER_01: So now what do I do?
11:41
SPEAKER_01: So if I say, okay, we've averaged five and a half percent, let's just say we have a four percent appreciation annually, that's thirty-two thousand dollars a year.
11:49
SPEAKER_01: That's another twenty six hundred dollars a month.
11:53
SPEAKER_01: So if we start adding that up, we go, okay, we're paying 51 less a thousand, that puts us at 41, less we're paying off 600.
12:01
SPEAKER_01: Now we're 35.
12:02
SPEAKER_01: And then I just said another$2,600 is my long-term appreciation.
12:06
SPEAKER_01: What's this house really costing me?
12:08
SPEAKER_01: $900 a month long term.
12:12
SPEAKER_01: Now, I think the best part of it is uh let's say you're a single guy, okay?
12:18
SPEAKER_01: Okay, and that property you pay$800,000 for, and you live there for six or seven years, and now the property's worth a million fifty.
12:24
SPEAKER_01: And you say, you know what, I'm out of here.
12:26
SPEAKER_01: I'm gonna sell for a million one, I'm gonna move to Cleveland because I hear it's really nice.
12:30
SPEAKER_01: They have the rock and roll hall of fame there.
12:32
SPEAKER_00: Perfect.
12:35
SPEAKER_01: Everybody wants to go to Cleveland, you're right.
12:37
SPEAKER_01: Yeah, it's crazy great there.
12:39
SPEAKER_01: So um, so you get up and you say, I'm selling my 1.1 at that time, five years from now, I'm gonna owe on my house five five hundred ninety-nine thousand.
12:52
SPEAKER_01: So I paid forty thousand dollars off in five years.
12:55
SPEAKER_01: I sell for one point one, I now have four hundred and fifty thousand dollars I'm gonna walk with, but I put down one sixty and my tax liability is zero because I have that two hundred fifty thousand dollar exemption as a single guy, and if you're married, um you end up you have a five hundred thousand dollar exemption.
13:17
SPEAKER_01: So you can't tell me.
13:18
SPEAKER_01: So to go and earn that same two hundred and fifty thousand dollars and save it, you would have had to earn five hundred thousand dollars on the outside.
13:28
SPEAKER_01: You got a tax deduction for everything else, and this house cost you nine hundred dollars a month, and you made two hundred fifty thousand dollars tax-free in five years, assuming property values go up like that, and my game I'm playing is going to be work.
13:44
SPEAKER_01: So why those guys are saying that, I don't understand at all.
13:50
SPEAKER_01: And every wealthy person starts with real estate, unless their name's like Elon or Bezos or something like that.
13:56
SPEAKER_01: But most people, you know, started in real estate, and that's where they make their money.
14:03
SPEAKER_00: Okay, so we want to buy real estate, perfect.
14:07
SPEAKER_00: How do we select?
14:08
SPEAKER_00: And and and just taking for granted that we're gonna need a loan, what's that process?
14:13
SPEAKER_00: How does that thing work?
14:14
SPEAKER_00: Because these same people that are advising, these same people have companies, these same people might even lend people money and they're hooking people by trying to be anti-buying a house and teasing them into it.
14:25
SPEAKER_00: But when you go into a lender, what are the differences?
14:28
SPEAKER_00: You're a mortgage broker.
14:29
SPEAKER_00: What if somebody goes to B of A or these other banks and wants to get a loan or their credit union?
14:34
SPEAKER_00: Right.
14:34
SPEAKER_01: So we're a banker/slash broker, so a credit union is going to have their products.
14:39
SPEAKER_01: They usually like to sell, had a lot of clients come to us that went to a local credit union and got what they call a 5.6 arm five years ago in 2021.
14:49
SPEAKER_00: Okay.
14:50
SPEAKER_00: Those are that that's that adjustable, right?
14:52
SPEAKER_00: Adjustable rates.
14:53
SPEAKER_01: Yeah.
14:54
SPEAKER_01: So they didn't get a 30-year mortgage when they had rates at 2.75.
14:58
SPEAKER_01: They got a 5.6 arm.
14:59
SPEAKER_01: Now it's adjustable.
15:00
SPEAKER_01: It's going from 2.75 to 3.75 to 4.75 to 5 to 6 to 7 or wherever it is.
15:07
SPEAKER_01: Because they went to their credit union and that's what the credit union's money is based on because they're using bank deposits to do that.
15:15
SPEAKER_00: Okay.
15:15
SPEAKER_01: But banks like the Bank of America's, the Wells Fardos, the Chases, that's who we sell to at the end of the day on the back end.
15:21
SPEAKER_01: But those guys there um aren't going to give you the one-on-one service.
15:25
SPEAKER_01: They're going to have guys who are in their office who may not be loan officers per se, or they may be loan officers, but not necessarily guys as knowledgeable that are doing that.
15:34
SPEAKER_01: Or they're doing their private banking stuff.
15:36
SPEAKER_01: Like the private banking Wells or Chase guys are pretty good when it comes to that.
15:40
SPEAKER_01: But that's your millionaires.
15:41
SPEAKER_00: That's your that's not have a whole bunch of money in that account.
15:44
SPEAKER_01: Yeah, exactly.
15:45
SPEAKER_01: So if you have five million dollars with us at Merrill Lynch, bank you X amount for you, and they're going to give you a little special pricing.
15:52
SPEAKER_00: Yeah.
15:53
SPEAKER_01: Now compare the lenders, and then if you say a mortgage broker, a broker is able to broker to whoever, and then we broker and we bank.
16:02
SPEAKER_01: So we do everything across the board, where it's uh any kind of loan you're gonna need.
16:07
SPEAKER_01: You know, this morning I got someone ask me, I have a client who needs$50,000, blah, blah, blah, blah, blah.
16:11
SPEAKER_01: We're doing what we call a flex bridge loan, which is really our personal funds.
16:15
SPEAKER_01: We're lending them that money just to get their credit straight so they can move on to the next house.
16:20
SPEAKER_00: Okay.
16:21
SPEAKER_01: So so you're looking at all those things, but really the worst place to go to me is the internet because you're you're getting that payment, and that's that's turning the client off when they walk in and they go, 5,100.
16:37
SPEAKER_01: I only wanted to spend 4,000.
16:39
SPEAKER_01: But it's 900.
16:40
SPEAKER_01: We know it's 900 to live in that house, but they think it's 51 and they think it's 51 all day long, right?
16:46
SPEAKER_01: Because they didn't look at the details behind it.
16:49
SPEAKER_01: The fine print that shows, and again, I can't guarantee that the property value is gonna go up.
16:53
SPEAKER_01: I can guarantee that your mortgage balance will go down.
16:55
SPEAKER_01: I can guarantee that your payment principal and interest will stay the same for all 30 years or get less if we're able to refinance.
17:01
SPEAKER_01: I can guarantee that you're gonna get your$250,000 exemption, assuming they don't change that one, but there's only talk of increasing it, not getting rid of it.
17:10
SPEAKER_01: So those are all really important things that we have to talk about when we're when we're talking mortgages and things like that.
17:17
SPEAKER_01: Getting a person to a comfort zone rather than scaring the crap out of them with a number.
17:22
SPEAKER_00: You know, it and it's it's the same thing.
17:24
SPEAKER_00: It's it's not a yes or no answer.
17:25
SPEAKER_00: It's it's let's explore this whole idea, this whole concept of purchasing real estate and talk about it instead of you know just being a hardliner and say, well, this is what my uncle said.
17:36
SPEAKER_00: Well, I why would your uncle say that?
17:38
SPEAKER_00: Let's explore that.
17:38
SPEAKER_00: Get the uncle on the phone and talk about it.
17:40
SPEAKER_00: That's incredibly valuable just to strip it apart.
17:43
SPEAKER_00: And for new agents listening to this or watching Sage advice from uh a fantastic lender.
17:49
SPEAKER_00: What you've seen, Mike, in the last 30 or 90 days, what are the reasons why you've had transactions or transactions have have gotten shaky or fallen out, where buyers have lost their ability to be to be financed?
18:02
SPEAKER_00: Do you see much of that at all?
18:03
SPEAKER_00: We see it on the other end in real estate.
18:05
SPEAKER_00: We see listings go back on the market because buyers had a change of heart, but what about on the lending end?
18:10
SPEAKER_01: We don't see it here because we're we do our due diligence up front.
18:14
SPEAKER_01: Now, we've had deals fall apart because of inspections and it's the same old crap.
18:21
SPEAKER_01: Um, but never because of the loan, or it could be we just closed one the other day where the appraisal was just crap and we close the loan and then fix the fixed the garage after the fact.
18:32
SPEAKER_01: You know, so you're gonna get things that you have to do to make a deal work, and we'll do it.
18:37
SPEAKER_01: That's not a problem.
18:38
SPEAKER_01: The the issue that I have is there's a lot of lenders that, you know, let's say you go to one of the big online lenders again, okay, and they'll give you a pre-approval today.
18:48
SPEAKER_01: You talk to them, you go, Hey, my name's Mike.
18:50
SPEAKER_01: I want to buy a house, I make 200 grand a year, blah, blah, blah, blah, blah.
18:54
SPEAKER_01: I have no debts, my credit's perfect, everything's good, great, bop, bop, bop, bop, bop.
18:58
SPEAKER_01: They'll send you a pre-approval letter right there, instantaneous.
19:01
SPEAKER_01: Okay.
19:02
SPEAKER_01: They tell me my payment's 5100 bucks a month.
19:04
SPEAKER_01: They didn't ask if I was self-employed.
19:06
SPEAKER_01: And even if they did, I would say, Oh, yeah, but I show that income on my taxes.
19:09
SPEAKER_01: Then they get my taxes and they see, oh, yeah, he doesn't make that kind of money.
19:13
SPEAKER_01: Oh, he's all cash.
19:14
SPEAKER_00: He's very so real quick, they already have a pre-approval letter, so they're already looking with their agents, so they're already probably writing offers.
19:20
SPEAKER_00: They might be very close to having one accepted, and then it blows up.
19:24
SPEAKER_01: Yeah.
19:25
SPEAKER_01: And and what happens there?
19:27
SPEAKER_01: That's just a nightmare.
19:29
SPEAKER_01: The other ones we're seeing is these condo buyers, and and where condos are a big issue, obviously.
19:34
SPEAKER_01: Oh, yeah, yeah, good, good right now.
19:36
SPEAKER_01: So I was just arguing with a woman that we sent her an email over the over the evening, last evening, and she was saying, Well, you can't do a loan in this condo complex.
19:43
SPEAKER_01: He says, uh, we've done loans in that condo complex because you can't.
19:46
SPEAKER_01: Nobody can.
19:47
SPEAKER_01: It's non-warrantable.
19:48
SPEAKER_01: They're working on the on the balconies.
19:50
SPEAKER_01: And I'm like, I understand we do that all the time.
19:53
SPEAKER_01: We're doing them here, we're doing them there, we've done this, blah, blah, blah, blah, blah.
19:56
SPEAKER_01: She's, I said, I'm not going to argue with you.
19:58
SPEAKER_01: We've got plenty of business that we don't need to argue for the business.
20:01
SPEAKER_01: But certain lenders are unable to do that.
20:02
SPEAKER_01: She's I've called 50 different lenders and they can't do that.
20:05
SPEAKER_01: Okay, great.
20:06
SPEAKER_01: I can do it.
20:07
SPEAKER_01: But that's what happens.
20:08
SPEAKER_01: They get into escrow, they find out there's a balcony issue, they get into escrow, they find out there's an insurance issue.
20:13
SPEAKER_01: So, knowing your neighborhood where you are, first thing we do when we get a new contract is pull that contract, look up Fannie Mae's review and say, oh, Fannie has not reviewed this complex.
20:25
SPEAKER_01: Therefore, we need to get the review done like that, instantaneously.
20:29
SPEAKER_01: Call the agents, let them know.
20:30
SPEAKER_00: This is what does that mean, real quick?
20:32
SPEAKER_00: I'm sorry, Fannie Mae review.
20:33
SPEAKER_00: Why would that matter to somebody buying a condo?
20:36
SPEAKER_01: So there was this the seaside condo, remember that in Florida that collapsed to the ground?
20:41
SPEAKER_01: Oh, yes, yes, yes.
20:42
SPEAKER_01: Okay.
20:42
SPEAKER_01: So after that, Fanny says, whoa, whoa, whoa, whoa, whoa, wait a minute.
20:46
SPEAKER_01: We didn't check to see what the structure was like, that there was deferred maintenance in this complex.
20:51
SPEAKER_01: This is a me problem.
20:53
SPEAKER_01: We need to make sure we need to put this back onto the condos.
20:57
SPEAKER_01: And so they threw that back on all the condos.
20:59
SPEAKER_01: And as of January 1 this year, they required all of the condos to have all their deferred maintenance completed.
21:06
SPEAKER_01: Okay.
21:07
SPEAKER_01: And if they haven't completed it, then that's going to be an issue.
21:11
SPEAKER_01: Now, Fannie has not reviewed every complex, but they expect us to review it as a lender and then report back to Fannie.
21:18
SPEAKER_01: So if we see something that we don't like, we report it back to Fannie and we say this has deferred maintenance balconies, blah, blah, blah, blah, blah, blah, blah.
21:26
SPEAKER_01: Or the HOA is supposed to self-report to Fannie and Freddie also in the same way.
21:31
SPEAKER_01: So these are some of the things that are a challenge in the industry right now.
21:36
SPEAKER_01: And a lot of lenders don't want to lend if there's a balcony issue.
21:39
SPEAKER_01: They don't want to lend if there's an insurance issue.
21:41
SPEAKER_00: Is it because of ignorance, laziness?
21:44
SPEAKER_00: What they just what why is that?
21:46
SPEAKER_00: Do you know?
21:47
SPEAKER_01: They're calling it non warrantable.
21:48
SPEAKER_01: It's not meeting the guidelines that Fannie may want.
21:50
SPEAKER_01: Fannie wants a perfect complex.
21:52
SPEAKER_01: They want to have enough reserves to do all the repairs.
21:55
SPEAKER_01: They want a client to walk into a complex with a$450 HOA and Only see it go up three or four or five percent per year.
22:03
SPEAKER_01: They don't want to see someone walk into a complex at a 450 HOA and all of a sudden it go to 950 and then they get foreclosed on because they can't afford the HOA payments.
22:12
SPEAKER_01: They're trying to make sure everything is out there on the level right from day one.
22:16
SPEAKER_01: And so uh they're doing that.
22:18
SPEAKER_01: Now we have other lenders that will do it, but it takes away the 3% and the 5% down buyer, and it makes it be a 10% down, excuse me, a 10% down minimum.
22:30
SPEAKER_00: Okay.
22:32
SPEAKER_00: Um, so that's where we are uh on that.
22:37
SPEAKER_00: Tell me tell tell me about um these loan programs that are out there.
22:40
SPEAKER_00: And again, more internet garbage, but you know, zero down, uh 100% financing, USDA loans.
22:48
SPEAKER_00: You can buy like a veteran without being a veteran, all of these other things.
22:51
SPEAKER_00: Shed some light on all of this.
22:53
SPEAKER_01: Okay.
22:54
SPEAKER_01: So we'll start with with VA is very simple.
22:56
SPEAKER_01: I mean, thank you for your service, you guys that did that.
22:59
SPEAKER_01: VA 100.
23:00
SPEAKER_01: I just got off the phone with a VA when we were talking.
23:02
SPEAKER_01: I was a VA like.
23:03
SPEAKER_00: And you can loan, I'm sorry to interject, you can loan VA where credit unions, they seem to farm it out, it seems.
23:09
SPEAKER_00: Yeah, credit union, the one I with LAPD, they they never did it themselves.
23:13
SPEAKER_00: They farm them out to somebody in Santa Anita or wherever.
23:16
SPEAKER_01: Yeah, so they'll they'll not want to do those kinds of things.
23:19
SPEAKER_01: So we'll do the VA here.
23:21
SPEAKER_01: We underwrite it, fund it, close it, sell it.
23:24
SPEAKER_01: Um, that's our job here.
23:25
SPEAKER_01: Um, with uh your other 100% financing, a lot of it's like a 96% first and then a 4% second or something like that, where you're doing an FHA first and a small second that can be deferred, or you can pay on that second over a period of time.
23:41
SPEAKER_01: Uh there's USDA, which is more of a rural thing.
23:44
SPEAKER_01: There's some income restrictions on that one.
23:47
SPEAKER_01: There's uh Cal HFA, those are zero-down loans.
23:51
SPEAKER_01: Those are all great loans if you fit in the box.
23:54
SPEAKER_01: Um, the one that everybody loved was the uh uh loan for all.
24:01
SPEAKER_01: What do they call that?
24:01
SPEAKER_01: The it's FHA?
24:03
SPEAKER_00: No.
24:04
SPEAKER_01: Uh no, it's the uh it's the 20% where the state is giving 20% and it's an equity share.
24:12
SPEAKER_01: Okay.
24:13
SPEAKER_01: Uh the dream for all, excuse me.
24:15
SPEAKER_01: The California Dream for All.
24:16
SPEAKER_01: And it turned out it was the dream for about 400 homes, 400 families, not for all, or 1200 families, or whatever the number was.
24:23
SPEAKER_01: It was not even clever name.
24:25
SPEAKER_01: But you had to, you had to win the lottery, and you had to have you had to be first generation buyers like your parents didn't own, or something like that.
24:34
SPEAKER_01: One of the people in the deal had to be that way.
24:36
SPEAKER_01: So there was a lot of different restrictions there.
24:38
SPEAKER_01: There's income restrictions, and then they give you the 20% down, and then you equity share with the government, but you pay all the expenses of the house and that kind of thing uh when you do that.
24:48
SPEAKER_01: So that was a very popular program when there was money available for it.
24:52
SPEAKER_01: You know, a lot of these don't have a ton of money available for a long period of time, and so that's that's where the challenge is on a lot of the zero-down great loan programs.
25:01
SPEAKER_01: And we have some others that are low-income areas where the rates are a half a percent or three-quarters of a percent lower than your standard Fanny Freddie rates.
25:09
SPEAKER_01: Okay.
25:10
SPEAKER_01: And those are great too.
25:12
SPEAKER_00: Tell me about last 90 days or so.
25:14
SPEAKER_00: What's what's your deal from hell?
25:16
SPEAKER_00: What's what's something that you were able to hold together by maybe the skin of your teeth?
25:20
SPEAKER_00: Explain that one.
25:21
SPEAKER_00: What does that look like?
25:23
SPEAKER_01: Well, I just had one in uh West Hollywood.
25:26
SPEAKER_01: We had a fourplex, but that was more of the the seller.
25:31
SPEAKER_01: The seller and the buyer were fighting over title.
25:34
SPEAKER_01: Um, and what was owed, and this and that, and the other.
25:36
SPEAKER_01: So that was that was my deal from hell.
25:38
SPEAKER_01: But you know, for the most part, we really don't deal with with anything that struggles.
25:42
SPEAKER_01: Sometimes we'll uh get clients that are right on the cusp and you have to pay down this to get them to qualify or pay down that.
25:50
SPEAKER_01: I have one right now where the guy has a$1.2 million house going through a divorce, and we're gonna extract 90% of equity out of house A so the wife can stay there.
26:00
SPEAKER_01: Then we're gonna come back with house B and he's gonna buy another 1.2 uh with another with a new girlfriend, and they're gonna buy that.
26:09
SPEAKER_01: But we have you know$170,000 worth of credit card debt, and we're trying to figure out what we're gonna do.
26:14
SPEAKER_01: He just sold a car, you know, that kind of stuff.
26:17
SPEAKER_01: Those are the challenges, is how do we how do we fit this square peg into a round hole and make this thing work for everybody?
26:24
SPEAKER_01: And those are the biggest challenges with clients like that.
26:27
SPEAKER_01: We get the client with the bad credit scores and we go and work with them to get the credit scores up.
26:32
SPEAKER_01: We get the client that's not showing the income, and we go, okay, well, we need this much down to do us, you know, a profit and loss statement loan, or a bank statement loan, or a you know, a debt service loan where we're doing that.
26:45
SPEAKER_01: But we got one right now where we're ready to close on our debt service loan, and the client calls me yelling last day.
26:52
SPEAKER_01: He says, I don't understand.
26:53
SPEAKER_00: What do you mean a debt service loan?
26:54
SPEAKER_01: What's what's so he's buying a property in like Boston or Massachusetts or something like that?
26:59
SPEAKER_01: Okay, and I the property's like 300 grand or something, it puts 25% down.
27:04
SPEAKER_01: The rental income covers the mortgage payment.
27:07
SPEAKER_01: Okay, so he has$75,000 down, the payments say call it$1,800 a month.
27:12
SPEAKER_01: The renter is going to pay over$1,800, qualifies, assuming his credit's good, everything's like that.
27:17
SPEAKER_01: We don't need his income to qualify.
27:19
SPEAKER_01: So we're solid.
27:20
SPEAKER_01: But when the underwriter went through the file, they pulled a property that he had here in California and they said, Well, sir, you have a lien on that property and we need a mortgage rating on that property.
27:32
SPEAKER_01: It's like, well, I paid that loan off four years ago.
27:34
SPEAKER_01: And so I said, Well, you paid the loan off four years ago.
27:38
SPEAKER_01: We either need 12 months canceled checks from the last 12 months or proof that that's no longer on the title.
27:43
SPEAKER_01: That's what the lender's asking for.
27:44
SPEAKER_01: And he's going, I don't understand this.
27:46
SPEAKER_01: This doesn't make any sense.
27:47
SPEAKER_01: And I'm like, dude, we need one of two things.
27:49
SPEAKER_01: It's really simple.
27:50
SPEAKER_01: We either need 12 months rating or we need that off.
27:53
SPEAKER_01: He goes, Well, she's going to take it off, but she's old.
27:55
SPEAKER_01: I'm like, have her take it off.
27:56
SPEAKER_01: It's that simple.
27:57
SPEAKER_01: It's one piece of paper notarized, recorded, done.
28:00
SPEAKER_01: We're out.
28:01
SPEAKER_01: Okay.
28:01
SPEAKER_01: It's that simple.
28:02
SPEAKER_01: And that's all the underwriter wants.
28:04
SPEAKER_01: So those are some of the challenges we run into that we don't see with the early pre-approvals because we don't pull title on every property the guy has.
28:12
SPEAKER_00: Right.
28:14
SPEAKER_00: What's the worst more what's what's the worst mortgage advice you're you're hearing out there online in these circles?
28:19
SPEAKER_00: People, people are telling people about mortgages.
28:21
SPEAKER_00: What can you add to that?
28:25
SPEAKER_01: I I think going in too excited about rates coming down because I don't know when they're going to come down.
28:31
SPEAKER_01: I know we we joked about you know rates being five and a half a year from now.
28:35
SPEAKER_01: That could happen.
28:36
SPEAKER_01: I I don't see it.
28:37
SPEAKER_01: But again, we we were approaching that number and then we we set war uh out there and it decided to do what we did with Iran and everything else.
28:46
SPEAKER_01: So we never know what tomorrow's gonna bring.
28:51
SPEAKER_01: And I think if you put all your cookies into that basket, I think that's kind of scary.
28:56
SPEAKER_01: We had already thought the last four or five years that rates would come down by now.
29:00
SPEAKER_01: Um so I think you don't do that, don't overbuy.
29:04
SPEAKER_01: Buy something you can afford and get something that you can qualify for and afford today.
29:09
SPEAKER_01: And if you can't afford it, don't do it because it's too risky and don't bet on the cum.
29:14
SPEAKER_01: Oh, I made eight grand last month, I made six the month before, it's gonna be 10, 12, 14, 16 every month going forward.
29:20
SPEAKER_01: No, we don't have a track record of that.
29:23
SPEAKER_01: We can get you qualified based on whatever you did the last couple of months, but we don't have a track record.
29:28
SPEAKER_01: You don't have a track record.
29:29
SPEAKER_01: So, you know, put your money away, I think is is always my thing to say.
29:33
SPEAKER_01: Put money away, think about tomorrow.
29:36
SPEAKER_01: Um, I tell people, I says, you know, I think my peak earn, I know my peak earning years are behind me.
29:40
SPEAKER_01: I'm 61 years old.
29:41
SPEAKER_01: I know I still can make a great living, but I'm not gonna make what I made in 20 and 21 ever again.
29:47
SPEAKER_01: Knock on wood, we don't have another pandemic, and I probably will never make that kind of money again.
29:53
SPEAKER_01: Um but at the end of the day, guys are just quoting rates.
29:58
SPEAKER_01: They're quoting payments and rates and quote payments and rates, and they're not giving the advice and they're not sitting down with the client and saying, hey, this is what we can do, and this is where your tax breaks are, and this is what this, this is what the whole picture is.
30:10
SPEAKER_01: Because if we look at the whole picture, we go, it's not as bad and not as ugly as what you were trying to say originally.
30:17
SPEAKER_01: What is bad is the fact that my payment's$5,100.
30:21
SPEAKER_01: What is good is it's really only costing me$900 a month.
30:25
SPEAKER_01: So I was trying to explain this to a friend the other day.
30:30
SPEAKER_01: Uh-huh.
30:30
SPEAKER_01: I say, I look at the full big picture when I look at an investment property.
30:34
SPEAKER_01: So we have a property I'm interested in right now.
30:36
SPEAKER_01: The last sale was$500.
30:38
SPEAKER_01: This one's going to go for$380.
30:40
SPEAKER_01: I don't know why this guy's selling this condo, but whatever.
30:43
SPEAKER_01: Non-warrantable condo down in the valley.
30:45
SPEAKER_01: And I said, okay, let me take a look and blah, blah, blah, blah, blah.
30:48
SPEAKER_01: If I break even on it and we make 4% per year on appreciation, and again, it's 20% under market in my eyes.
30:57
SPEAKER_01: If we make 4% on appreciation and we pay down 2% per month on that mortgage or 1% per year, excuse me, on that mortgage, all of a sudden I'm making I'm making pretty decent money.
31:10
SPEAKER_01: It was, I was saying$76,000,$100,000.
31:13
SPEAKER_01: I'm going to be pulling down uh 14 or 15%, assuming I break even on the mortgage, break even on the mortgage payment with my rent every month.
31:24
SPEAKER_01: So I'm making 14 or 15% on a hundred and something thousand dollars that I have to invest into a property.
31:30
SPEAKER_01: And when values go up, I'll probably end up doubling my money that I put into it, turn around and sell it when we get back to that 500-ish level or more as the market moves up.
31:40
SPEAKER_01: So, where is the concern in buying that property?
31:44
SPEAKER_01: I don't have a concern in buying that property, but I just want to make sure that people understand what they're getting.
31:51
SPEAKER_01: I know what I'm getting.
31:52
SPEAKER_01: I'm getting a 14% return day one, but it could be 30 over the next five years, depending on where we go.
32:00
SPEAKER_01: So that's a great investment.
32:01
SPEAKER_01: On$100,000, I make 30%,$40,000 a year, done.
32:05
SPEAKER_01: Count me in.
32:06
SPEAKER_01: Where else do I sign up for two more like that?
32:08
SPEAKER_00: Right.
32:08
SPEAKER_01: Those are the kinds of things that we have to look at.
32:11
SPEAKER_01: But people are looking at this as a payment, and you can't look at the payment without understanding what's inside that payment.
32:18
SPEAKER_01: You know, I know if I take a car payment on, it's$900 a month.
32:21
SPEAKER_01: I'm buying a car for$40,000.
32:24
SPEAKER_01: You can see how long it's been since I bought a car.
32:26
SPEAKER_01: Yeah.
32:26
SPEAKER_01: And that's$900 a month.
32:28
SPEAKER_01: And at the at the end of five years, I'm going to owe zero.
32:31
SPEAKER_01: I'm going to have that car paid off.
32:32
SPEAKER_01: Great.
32:33
SPEAKER_01: I got it paid off$54,000 later, and the car's worth$12,000.
32:38
SPEAKER_01: Where is my investment?
32:39
SPEAKER_01: There is none.
32:40
SPEAKER_01: You have a five-year-old car that's now worth$12,000 that you paid$40,000 for.
32:44
SPEAKER_01: If I buy a house and do the same thing, I've got a house that's worth three times it in 30 years.
32:51
SPEAKER_01: Or every seven, every 10 years or so it doubles, or 50% more, whatever the number is.
32:56
SPEAKER_01: 50% every 10 years is probably a good number.
32:58
SPEAKER_01: So how where am I losing?
33:00
SPEAKER_01: I'm leveraging that mortgage, assuming that we're going to have appreciation over a long period of time.
33:06
SPEAKER_01: There's never been a 10-year period in California where we saw any kind of depreciation where property values went down.
33:13
SPEAKER_01: Now, again, you've been in this for a long time.
33:16
SPEAKER_00: We saw the 2008 Yeah, 2006, 7, 8.
33:21
SPEAKER_00: Yeah.
33:22
SPEAKER_01: Yeah.
33:22
SPEAKER_01: Where we went down until about 2011.
33:24
SPEAKER_01: People say, when's the best time to buy?
33:26
SPEAKER_01: I say 2011.
33:27
SPEAKER_01: You bought in 2011.
33:28
SPEAKER_00: Bottom of 2011, beginning of 2012, suitcases full of money.
33:32
SPEAKER_00: Yeah.
33:33
SPEAKER_01: It's done.
33:34
SPEAKER_01: You know, had you bought 10 more properties, then we could have all been retired.
33:37
SPEAKER_00: Done.
33:37
SPEAKER_01: Yeah.
33:38
SPEAKER_01: But the problem is we didn't do that because we were afraid at that time because we didn't know we were going to what about when people tell you, Mike, it's not going to keep going.
33:44
SPEAKER_00: It's going to pop.
33:45
SPEAKER_00: There's got to be some bubble.
33:46
SPEAKER_00: It's it can't be keep going like this.
33:49
SPEAKER_00: You know, and if I buy today and it collapses tomorrow, oh my God, what am I going to do then?
33:53
SPEAKER_01: Hey, Connor, what did you when was the last time you worked as a LAPD guy?
33:57
SPEAKER_01: Oh, 2010, 2010.
34:01
SPEAKER_01: 2010.
34:01
SPEAKER_01: Okay.
34:02
SPEAKER_01: Full-time cop in 2010 was making about what 120, 150?
34:06
SPEAKER_01: Yeah, just about there.
34:07
SPEAKER_01: A little bit of overtime got him to 175, maybe.
34:09
SPEAKER_01: Yeah.
34:10
SPEAKER_01: Okay.
34:10
SPEAKER_01: What's a cop making today?
34:12
SPEAKER_00: Oh boy.
34:13
SPEAKER_00: They're probably pushing 170, 180, I'd guess.
34:16
SPEAKER_01: I'd say 250 to 300.
34:18
SPEAKER_01: I'm seeing sometimes.
34:19
SPEAKER_01: It's been a while.
34:20
SPEAKER_01: With the overtime.
34:21
SPEAKER_01: I what's what I'm saying.
34:22
SPEAKER_00: Right.
34:23
SPEAKER_01: So we look at what that is.
34:24
SPEAKER_01: I was reading I read reading something over the weekend, and they said uh the average person who goes and works for a government agency, after 90 days, they get a fire, after one year, they get a 4% raise.
34:34
SPEAKER_01: They get away.
34:35
SPEAKER_01: If they do average work or fair work or you know, I'm like, okay, they're getting their 4% raise every year.
34:42
SPEAKER_01: The cops are building that in.
34:43
SPEAKER_01: The firefighters are building that in.
34:45
SPEAKER_01: A lot of the a lot of the people that we work with are still making more and more money as the market goes up.
34:51
SPEAKER_01: So a serious crash, we're not going to see because you're holding a mortgage at 2.75.
34:57
SPEAKER_01: So Steve, Bob, Joe, and Gene all have mortgages at 2.5.
35:01
SPEAKER_01: Why would they drop their price?
35:02
SPEAKER_01: They could just stay there.
35:03
SPEAKER_01: They could hold it as a rental.
35:05
SPEAKER_01: They could extract some cash on a second and keep that property and still pay it off in X amount of years.
35:10
SPEAKER_00: The golden handcuffs apply very well to the crash of the market or whatever might be opinionated.
35:17
SPEAKER_00: That's very interesting.
35:18
SPEAKER_00: I didn't put that together.
35:20
SPEAKER_01: Because yeah, the golden handcuffs are keeping people in those houses with a huge amount of equity, just a huge amount of equity.
35:26
SPEAKER_00: Oh, yeah, it's bonkers, right?
35:27
SPEAKER_01: Yeah.
35:28
SPEAKER_01: So where is it going to crash if 50% of the market, and I think we're over 50% of the market, has a mortgage sub-4%.
35:35
SPEAKER_01: Okay.
35:36
SPEAKER_01: Those people ain't going anywhere.
35:37
SPEAKER_01: And if they're sub 4%, they've been there for five or six years and paid a ton of equity off.
35:42
SPEAKER_01: That's right.
35:42
SPEAKER_01: So think about a guy who had a$600,000 mortgage.
35:46
SPEAKER_01: Just get this for a second.
35:48
SPEAKER_01: And he got a 3% rate in 2020.
35:51
SPEAKER_01: And he is now six years into that mortgage.
35:56
SPEAKER_01: He's down to$518, but every payment he makes is paying off$61 per amor.
36:09
SPEAKER_01: Paying$1,200 in principal and$1,400 in interest.
36:13
SPEAKER_01: Wow.
36:14
SPEAKER_01: So he's paying off$15,000 a year on his$30,000,$31,000 mortgage.
36:22
SPEAKER_01: He's going nowhere.
36:23
SPEAKER_01: And so he turns around and says, Oh, I've got this$600,000 mortgage that I'm paying$2,500 plus tax insurance,$37,000.
36:31
SPEAKER_01: I've got a million-dollar house that can rent for five grand.
36:35
SPEAKER_01: Mike, what's it going to cost me to get a$1,300 second 20-year term, say 8%?
36:43
SPEAKER_01: I'll get you$155,000.
36:46
SPEAKER_01: We'll put 10% down on that$1.2 million house.
36:49
SPEAKER_01: Now you do that.
36:50
SPEAKER_01: You're going to be able to write off the interest on the new house.
36:53
SPEAKER_01: We're going to play this game again.
36:54
SPEAKER_01: You're going to rent that.
36:55
SPEAKER_01: You're going to jack your rents up every year.
36:56
SPEAKER_01: Your mortgage balance is going to go down 24 grand a year, what you know, 20 grand a year, whatever it is.
37:02
SPEAKER_01: It's just this snowball.
37:04
SPEAKER_01: They're not selling, they're not moving.
37:06
SPEAKER_01: They hate to get rid of that 2.75% rate.
37:09
SPEAKER_01: And again, that's my argument as a real estate agent.
37:12
SPEAKER_01: Okay, you don't want to sell your house because you have a 2.75% interest rate.
37:15
SPEAKER_01: I understand.
37:16
SPEAKER_01: Do you understand that if you sold that house, okay, and you took your$600,000,$500,000 in equity to the next house, you could have the house you want, bigger tax write-off, more appreciation over the long haul.
37:31
SPEAKER_01: I can make it look good to get that person to go from their million-dollar house with their$550,000 mortgage to the$1.5 that they really want and have them understand why.
37:42
SPEAKER_01: Even though their payments are going up a dramatic amount, the appreciation is going to go up on that extra$500,000.
37:47
SPEAKER_01: The tax write-off is going to go up on their new house because they have zero tax write-off on a 2.75% rate or darn close to zero.
37:55
SPEAKER_01: So those are the things we have to do.
37:57
SPEAKER_01: So we have to find out what's the reason you're not wanting to sell.
38:01
SPEAKER_01: Oh, okay, it's the interest rate you have on your house.
38:04
SPEAKER_01: Are you saying that you couldn't use the extra bedroom?
38:06
SPEAKER_01: Well, we're thinking of adding on.
38:07
SPEAKER_01: We're thinking of doing this, we're thinking of doing that.
38:09
SPEAKER_01: We're going to get an 8% second or a 7.5% second.
38:12
SPEAKER_00: So then you're talking leverage.
38:13
SPEAKER_00: Yeah.
38:14
SPEAKER_01: Yeah.
38:15
SPEAKER_01: So those are the things that we have to find out as real estate agents or people in the real estate business is what is the thing that's really holding them back?
38:22
SPEAKER_01: And again, if they're saying, oh, I want a 2.7, when are you going to sell if you do that?
38:26
SPEAKER_01: Oh, Tommy wants a little pool.
38:28
SPEAKER_01: So you're going to put a$150,000 pool in the backyard rather than sell this house that's 2,200 square feet and buy the one up the street that's 2,700 square feet with the pool already.
38:38
SPEAKER_01: And we're talking about a$250,000 difference there.
38:41
SPEAKER_01: No headache.
38:42
SPEAKER_01: You get the bedroom, you get to this, you get to that.
38:44
SPEAKER_01: Everything that you've got.
38:45
SPEAKER_01: Here's why we're going to do that and why it makes sense for you.
38:48
SPEAKER_01: By the way, you've already made your$500,000 exemption on that house.
38:52
SPEAKER_01: You sell this house, you can get another$500,000 exemption on the next house.
38:57
SPEAKER_00: So get all the numbers done.
38:59
SPEAKER_00: And just like you said earlier, even if it's not investing, don't overstretch yourself on that first purchase.
39:05
SPEAKER_00: Don't go mortgage poor.
39:07
SPEAKER_00: Don't go all the way to the hilt on that.
39:09
SPEAKER_00: And that's stage advice.
39:11
SPEAKER_01: Oh my God.
39:12
SPEAKER_01: And if you can hold it as a rental, do it.
39:14
SPEAKER_00: Oh, absolutely.
39:15
SPEAKER_00: That's that's the other thing I think agents make a big mistake.
39:18
SPEAKER_00: It's all about selling.
39:19
SPEAKER_00: But my God, if if I wouldn't sell, I sure as hell wouldn't give that advice to somebody else and say, oh, yeah, you need to sell it all day long so I can make my money.
39:27
SPEAKER_00: That's ridiculous as well.
39:28
SPEAKER_00: That's what gives us a bad name.
39:29
SPEAKER_00: You're coming at it from a whole different angle.
39:31
SPEAKER_00: You're looking at all of the numbers, what makes sense financially, and a crash and a market collapsing and all that.
39:38
SPEAKER_00: That's not where we're overextending ourselves.
39:40
SPEAKER_00: You're buying so you fit.
39:42
SPEAKER_00: You're buying, not overextending yourself.
39:44
SPEAKER_00: And then if anything happens, you're still good.
39:46
SPEAKER_00: You still got a 30-year fixed product, you still got your payment, everything stays the same.
39:50
SPEAKER_00: And death happens, job loss, all that shit happens.
39:53
SPEAKER_00: But this, you're protected.
39:54
SPEAKER_00: You got your stake in the ground.
39:57
SPEAKER_01: Right.
39:57
SPEAKER_01: And that's that's all we're looking to do to help these guys out is that just make them understand what the finance piece is.
40:04
SPEAKER_01: Um, you know, you you know a lot of people.
40:07
SPEAKER_01: I know a lot of people, you know, some of them that if you handed them 100 grand, it would be gone by the end of the month.
40:11
SPEAKER_00: Yeah, for sure.
40:12
SPEAKER_01: And and that's the problem is people don't understand money or the value of money a lot of times.
40:18
SPEAKER_01: Some do, and some value money like me, probably too much.
40:22
SPEAKER_01: And think about that.
40:24
SPEAKER_01: And I I have conversations either with my girlfriend's kids or my own kids or my girlfriend for that matter.
40:29
SPEAKER_01: And I I sit there and go, you guys don't get what I get.
40:33
SPEAKER_01: And we we were we were heading out to Santa Monica last week, and one of the kids goes, Oh, we got to stop at Starbucks.
40:40
SPEAKER_01: And I says, and I'm sitting there going, Starbucks.
40:42
SPEAKER_01: If it's seven bucks, it's seven bucks 30 days a month.
40:46
SPEAKER_01: That's$210,$2,520 a year.
40:50
SPEAKER_01: Okay.
40:50
SPEAKER_01: And that$2,500, if you would put that into a long-term, you know, stock account or something like that, and that's all I'm thinking.
40:56
SPEAKER_01: I'm thinking that$2,500 seven years is$5,000 and 14 years, it's$10 and 21 years.
41:04
SPEAKER_01: It's like, and and my brain won't stop.
41:06
SPEAKER_01: And I've never bought a Starbucks for myself unless I had to stop for a pit stop and I feel guilty and go just go buy something, Mike.
41:13
SPEAKER_01: You know, your cheapskate.
41:15
SPEAKER_01: But I used your head, yeah.
41:17
SPEAKER_01: My my brain thinks differently from the average show.
41:19
SPEAKER_01: Now, if we go out to dinner, I'm not I'm not afraid to pick up a check because but I've I built my life around put away, put away, put away, put away.
41:28
SPEAKER_01: And then when you have that rainy day, you you know, you have to go spend the money where you have to spend the money.
41:32
SPEAKER_01: I I'm not gonna scrimp and scrimp now, but I did early on, and I feel bad for my first wife with that, where I was cheap, where it was like, no, we don't need that.
41:41
SPEAKER_01: We don't need this, we don't need that, and we'd have fights over things that we didn't need.
41:44
SPEAKER_01: Now it doesn't matter because I've put enough away where the money comes in every month, and I'm like, oh, okay, that's good.
41:49
SPEAKER_01: It's not the mortgage income anymore, but it's the other uh exterior or other income that comes in each month, you know?
41:57
SPEAKER_01: Yeah, so those are the things that we have to look at.
41:59
SPEAKER_01: So I think that people need that lesson in understanding of money.
42:03
SPEAKER_01: I think that people have to understand how to save for a house because they they think it's so far away that they're gonna go buy.
42:11
SPEAKER_01: Yeah, if you walk through my closet today and you saw 125 pairs of shoes, you're missing probably 40 pairs for my girlfriend.
42:19
SPEAKER_01: And I I'm laughing.
42:21
SPEAKER_01: And I said, honey, I think they're sleeping with each other because it seems like they're multiplying out there.
42:27
SPEAKER_01: I don't know what's going on.
42:28
SPEAKER_01: I said, Did you know if you wore one pair of shoes a day, you wouldn't be able to wear them three times in a year if you just switched off every day?
42:35
SPEAKER_01: She was oh, didn't know that.
42:36
SPEAKER_01: And I guarantee you there's shoes in there that have never been worn.
42:39
SPEAKER_01: But she has no understanding of money at all.
42:41
SPEAKER_01: So I have to control it.
42:42
SPEAKER_01: And I give her this much, and that's it each month.
42:44
SPEAKER_01: That's it.
42:45
SPEAKER_01: Um, that's how it goes.
42:48
SPEAKER_01: And with you, uh with some people, it almost has to be controlled that way.
42:53
SPEAKER_01: And if they could control it and put it in their savings, put it in your 401k.
42:57
SPEAKER_01: If you have money matching from your employer, money match it.
42:59
SPEAKER_01: All of those things are so damn important when it comes to that, and which is and mortgage is just a piece.
43:05
SPEAKER_01: And then I'll give you another one, Connor.
43:07
SPEAKER_01: Go ahead.
43:07
SPEAKER_01: You've self-employed your whole life or since you've become a cop, but since you left the police academy.
43:12
SPEAKER_01: But imagine if you were out there making 250 grand on the street today, okay, as a cop, and you are W-2 employee, and you have your house and you got your little write-off, and you're you're getting to retirement.
43:23
SPEAKER_01: You know you got your 401k coming in the future, and you said, Jesus, Mike, I want to redo my kitchen.
43:29
SPEAKER_01: And it's gonna be$80,000 to redo my kitchen.
43:31
SPEAKER_01: And that's I have to earn$150,000 to get$80,000 in net income, you know, whatever that is.
43:38
SPEAKER_01: Right.
43:39
SPEAKER_01: And you go, Yeah.
43:40
SPEAKER_01: Um how do I do that?
43:42
SPEAKER_01: And I said, Connor, if you just had one stinking rental property, you could put the new kitchen in to the rental property and write it off as a W 2 employee.
43:55
SPEAKER_01: But our W 2 employees don't see that.
43:59
SPEAKER_01: We The other problem is this damn thing here.
44:02
SPEAKER_01: Because it we do this more than we do this.
44:05
SPEAKER_01: Oh my god, so true.
44:06
SPEAKER_01: And if we could talk more, I was just talking to Neil about that at the gym this morning.
44:10
SPEAKER_01: I said, if we could just talk more, people, we would learn so much more than texting or emailing.
44:18
SPEAKER_01: And we're just, you know, I used to walk back from lunch and I'd have 25 messages from lunch, and I'd be like, oh, 25 voicemails, let's find out.
44:24
SPEAKER_01: Blah, blah, blah, blah, blah.
44:26
SPEAKER_01: You know, and now I come back and I've got 25 emails.
44:29
SPEAKER_01: Well, more like five because it's slow.
44:31
SPEAKER_01: But what I'm getting at is why can't we pick up the phone and talk to people and ask the questions and then follow up with an email and then talk again and talk again and talk again?
44:43
SPEAKER_01: Because talking answers the questions, and we can have that conversation of Connor, you're making 350 grand a year, your spouse is making 150, you guys are making 500 grand W2.
44:54
SPEAKER_01: You need write-offs, brother.
44:55
SPEAKER_01: Buy a rental property, buy a rental property, and buy a rental property.
44:58
SPEAKER_01: And this is why.
44:59
SPEAKER_01: Oh, you go to relandscape your backyard, rental property.
45:02
SPEAKER_01: You want to put a roof on rental property.
45:04
SPEAKER_01: All of that's a write-off.
45:05
SPEAKER_01: The guy who came over to my house the other day, same kind of thing.
45:07
SPEAKER_01: Oh, he goes, I'll put that on one of your properties.
45:09
SPEAKER_01: Great.
45:11
SPEAKER_01: No problem.
45:12
SPEAKER_01: You know?
45:12
SPEAKER_01: Perfect.
45:13
SPEAKER_01: So those are the kinds of things that we need to do and understand better as and and lenders and realtors can be those advisors.
45:21
SPEAKER_00: Yes.
45:22
SPEAKER_00: So and I'm being slowly conditioned, the world's being slowly conditioned to pull the human element out, go into the thing that I I've been climbing down that rabbit hole on with AI.
45:32
SPEAKER_00: And that's just something where people are.
45:35
SPEAKER_00: Very soon, people are going to be very dismayed.
45:37
SPEAKER_00: They're going to pop right back to human-to-human connection.
45:40
SPEAKER_00: But there's nothing like talking to somebody that's been through this and somebody that takes the time and somebody just doesn't get people's numbers over the phone and say, okay, you're approved.
45:48
SPEAKER_00: Here it is.
45:48
SPEAKER_00: The other thing, too, Mike, is you and your lenders being available off hours, holidays, weekends.
45:55
SPEAKER_00: I mean, pretty much as late as some people can go.
45:58
SPEAKER_00: That's when buyers have questions.
45:59
SPEAKER_00: And that's almost non-existent in this world of mortgage lending, especially amongst the big players out there, the big banks, I should say.
46:07
SPEAKER_00: They're just nine to five Monday through Friday.
46:09
SPEAKER_00: Good luck.
46:09
SPEAKER_00: And buyers have questions when they're writing that offer Saturday night at 9 p.m.
46:14
SPEAKER_00: after exhausting an entire day looking at 50 houses with their agent.
46:18
SPEAKER_01: And to me, there's there's no, I'm always working.
46:22
SPEAKER_01: You're never bothering me.
46:23
SPEAKER_01: I don't care.
46:25
SPEAKER_01: I'm gonna do force gum.
46:26
SPEAKER_01: I'm gonna work and I'm gonna work and I'm gonna work.
46:27
SPEAKER_01: And then one day I'm gonna stop in the middle of a road.
46:29
SPEAKER_01: I'm gonna say, okay, I'm done now.
46:31
SPEAKER_01: I say I can't do this anymore.
46:33
SPEAKER_01: But until that day, and that day's no time soon, yeah um until that day, it's not worth it to not take a phone call on a Saturday or a Sunday or a Tuesday night or whatever it is.
46:46
SPEAKER_01: You know, if I'm having dinner with my daughter and someone calls, I'm gonna pick up the darn phone.
46:49
SPEAKER_01: Or I'll text them and say, Hey, can I call you in 15 minutes or something like that?
46:53
SPEAKER_01: We're almost done.
46:54
SPEAKER_01: That's just what it that's what it comes down to.
46:56
SPEAKER_01: Yeah, rare.
46:57
SPEAKER_01: We don't want to play this game otherwise.
47:00
SPEAKER_01: So um, and that's what it is.
47:02
SPEAKER_01: It's it's being all in though.
47:04
SPEAKER_01: Um, and there's a lot of lenders that are not all in, there's a lot of realtors that aren't all in.
47:09
SPEAKER_00: That's true.
47:09
SPEAKER_01: Um, and I think we have to be all in and we have to have that mamba mentality every single day of I'm at my desk.
47:16
SPEAKER_01: If you're gonna find me at my desk 24-7, pretty much, and and that's what it is.
47:20
SPEAKER_01: If I need to go out, I'll go out and I'll do whatever I need to do, but I'll be back here because this is where I work the best.
47:25
SPEAKER_01: I can work from home, but I work the best here, and that's what I want to continue to do is keep working from the place I'm most comfortable and having my my clients taken care of.
47:35
SPEAKER_01: I can answer questions for Dwayne or Anna or David or or Whitney or whatever they need, my team needs or other loan officers in my company if I'm here.
47:44
SPEAKER_01: If I'm not here, it makes it very difficult to do that.
47:47
SPEAKER_01: And you know, those those are the challenges that we have.
47:50
SPEAKER_01: Um, and and that's what I just love doing is helping these people and answering the questions the way they need them answered, which is the right way.
47:58
SPEAKER_01: It's not, I'm not faking shit for you.
48:01
SPEAKER_01: I'm just telling you um, this is how we're gonna do it, this is what's gonna be best for you.
48:06
SPEAKER_01: This is what you need to also see.
48:07
SPEAKER_01: And again, I'm not saying your payments 900 a month, I'm saying your 51 really costs you 900 a month.
48:14
SPEAKER_01: Maybe you pull a little out of your 401k for a little while.
48:16
SPEAKER_01: Stop putting into your 401 so you can buy this house and afford it.
48:19
SPEAKER_01: Maybe you adjust your dependence on your on your payroll so you can afford that.
48:23
SPEAKER_01: Maybe you know you're you're gonna have to work something else out.
48:26
SPEAKER_01: Maybe you pull an overtime shift.
48:28
SPEAKER_01: And I can't tell you how many nurses or police officers people come to me like, well, I made 170 last year and da da da.
48:35
SPEAKER_01: I'm like, could you work overtime?
48:36
SPEAKER_01: Oh, yeah, I have all the overtime.
48:38
SPEAKER_01: Well, I know what I would do.
48:40
SPEAKER_01: I'd work every freaking overtime shift I could, yeah, you know, because that's me.
48:45
SPEAKER_01: But I'm not expecting that with you, and so I don't say that to my client.
48:48
SPEAKER_01: Well, you can work overtime.
48:49
SPEAKER_01: What would you make in an overtime shift, Connor?
48:51
SPEAKER_01: Oh, you'd make an extra$700 for the week.
48:54
SPEAKER_01: So if you pull two extra a month, that's$1,400.
48:59
SPEAKER_01: Okay, that's not bad.
49:01
SPEAKER_01: Okay, you understand where we're coming from now.
49:04
SPEAKER_01: Absolutely.
49:04
SPEAKER_01: Okay, so if we can do that, and we can then we can get the house we really want.
49:09
SPEAKER_01: Yes, it's gonna cost us 16 hours a month that we didn't want to put in, but eventually we'll get that raise or we'll get used to it.
49:16
SPEAKER_01: I mean, you remember when you didn't work out.
49:19
SPEAKER_01: Oh, absolutely.
49:20
SPEAKER_01: Did you like walking into the gym the first day you walked in there?
49:23
SPEAKER_00: Oh, for a couple years it sucked.
49:27
SPEAKER_00: That was a lot of fat.
49:29
SPEAKER_00: But but what I'm getting at is it wasn't easy to learn that.
49:33
SPEAKER_00: No, it's it's but you grow into it, but that's if you have the motivation and you have that drive towards your business, the people can smell it.
49:40
SPEAKER_00: They see it when they walk in, they see it in your ability just to be there at all particular hours, and you've coordinated your whole life around serving the client, and that is it's still a rarity.
49:52
SPEAKER_00: And on the and the police front and these other jobs, the W-2 jobs working those extra overtime ships, you know it.
49:58
SPEAKER_00: There's some guys.
49:59
SPEAKER_00: Uh I remember Joe Barnes, my God, you couldn't stop that guy from working.
50:02
SPEAKER_00: He was a UPS driver before he was a cop.
50:04
SPEAKER_00: And you've seen UPS drivers.
50:06
SPEAKER_00: Holy hand, I don't think there's a fat one.
50:08
SPEAKER_00: These people move and they they're like driven.
50:10
SPEAKER_00: He's that way.
50:11
SPEAKER_00: There are some people that aren't, but they need the introduction.
50:14
SPEAKER_00: When you explain it like that, you know, a couple overtime shifts per month, which for a lot of these guys, it's not the on the street, you know, thumping the bad guys, it's something easier for that overtime.
50:24
SPEAKER_00: Yeah, I could pick that up.
50:25
SPEAKER_00: I I could do, I could do a couple.
50:27
SPEAKER_01: Right.
50:27
SPEAKER_01: I and again, that's where I that's where I go.
50:30
SPEAKER_01: I mean, I used to have this speech that I'd give to clients who wanted to move out to Antelope Valley, and I don't do this anymore because Antelope Valley is much less expensive than San Corita, but when it was close, and you get a single family here for 200 or a single family there for 100, way back in the day.
50:44
SPEAKER_01: Okay.
50:45
SPEAKER_01: And you would look at that payment difference, you say, okay, it's about$700 difference in payment or$600 difference in payment to go from here to there.
50:52
SPEAKER_01: You're gonna spend your money in gas, your your new tires, your oil, your this, you're that, the other.
50:57
SPEAKER_01: Gas was not cheap, it's probably three bucks back then or whatever it was.
51:00
SPEAKER_01: I says, if you just picked up a job at a bar one or two nights a week and waited tables one or two nights a week, you would cover that.
51:08
SPEAKER_01: And it saves you the time, the extra hour on the road each day.
51:11
SPEAKER_00: That's right.
51:11
SPEAKER_01: And so that was my old speech.
51:13
SPEAKER_01: I can't use that anymore because it's definitely a bigger difference between Santa Cruita and Palm De Lancaster.
51:18
SPEAKER_01: But those are the things that we used to talk about, and it's it's going out and giving that extra that we need to do to get ourselves over the hump.
51:27
SPEAKER_01: And and in this economy, if I had a regular, I mean some days I think about should I drive Uber uh in and out of my office, you know, because if I drove Uber, would that would that change my life?
51:39
SPEAKER_01: No, it wouldn't.
51:40
SPEAKER_01: But again, you know, I had a buddy who used to drive to downtown, and I said, dude, when you drive downtown, pick up three or four Uber drivers.
51:46
SPEAKER_01: You can come in at nine or 10, pick up three rides on the way in and three rides on the way home, and you've you picked up an extra 150 bucks for the day.
51:53
SPEAKER_01: He's like, that's a great idea.
51:54
SPEAKER_01: And he did it for a couple years, you know, and he just he says, Well, a lot of times I went backwards and then went forwards.
52:00
SPEAKER_01: Who cares?
52:01
SPEAKER_01: You're picking up 40 or 50 bucks an hour on the way down, and sometimes it was a straight shot where a guy just needed to ride downtown and he's picking up 40 bucks for having a passenger in his car.
52:10
SPEAKER_00: So that whole entrepreneurial mindset where I mean you're you're you're thinking about Starbucks, you're thinking about the money, and you're screaming inside because you know it's uh you just save that and you hold on to that and you save it day after day.
52:23
SPEAKER_00: My dad used to say when I was a kid, he'd give me 20 bucks every two weeks, and he'd say, you know, you can spin this all today, but you don't have to.
52:30
SPEAKER_00: You can hold on to it for a couple of days.
52:32
SPEAKER_00: He knew.
52:34
SPEAKER_00: You didn't spend it?
52:35
SPEAKER_00: No, I spent it, but you know, he at least he told me he didn't have to.
52:40
SPEAKER_01: So I have a question for you.
52:41
SPEAKER_01: So, so tell me about AI and tell me about what you think that's gonna do in the real estate industry because some people have, oh my God, it's gonna be the end of the world.
52:49
SPEAKER_01: And I don't see AI negotiating a contract.
52:52
SPEAKER_00: That's uh that's awesome.
52:53
SPEAKER_00: So I'm having another class at the SRAR this Thursday.
52:56
SPEAKER_00: I I've done all the brokers and everything.
52:58
SPEAKER_00: So that's the big thing that comes up when we talk.
53:00
SPEAKER_00: And they want to, they, the the world is selling them that either you adopt AI or you're gonna fall out of the business because AI is going to replace you.
53:09
SPEAKER_00: It actually isn't.
53:10
SPEAKER_00: It's it's AI plus human.
53:12
SPEAKER_00: There's not gonna be a time when you're talking to that widow at two o'clock in the morning about how she's gonna be selling this house that her husband happened to die in.
53:19
SPEAKER_00: And she has all those questions.
53:20
SPEAKER_00: There's no way artificial intelligence is going to be able to help her through that emotional, that emotional anchor of a process.
53:27
SPEAKER_00: So it's gonna require a human being.
53:29
SPEAKER_00: Negotiation, showing property, again, human being, because nobody wants to go into it.
53:35
SPEAKER_00: But where AI is now, it's only getting better.
53:38
SPEAKER_00: For a real estate agent, if they're not learning the tools, it's it's like, so with the LAPD, this is gonna be part of my Thursday speech.
53:46
SPEAKER_00: Did you know, real, do you realize in law enforcement we have a 30% hit ratio?
53:50
SPEAKER_00: When you get into a shooting with a bad guy, we miss 70% of the time.
53:55
SPEAKER_00: Only 30% hits.
53:56
SPEAKER_00: And these are trained, professional people with guns, they've qualified, they've been on the range.
54:01
SPEAKER_00: The factor that gets involved in that is stress.
54:04
SPEAKER_00: Now you have other people in the law enforcement, they never miss.
54:08
SPEAKER_00: And they're just better with the tool.
54:10
SPEAKER_00: They're better under stress.
54:12
SPEAKER_00: A contractor, if you've ever seen a contractor recently, have you ever watched a framer drive a nail?
54:16
SPEAKER_00: Holy shit, they can go from up here and slam that nail and never miss.
54:21
SPEAKER_00: But me, when I'm trying to drive a nail into a board, it's all floppy and I got to bend it up and I hit my thumb and I scream and it sucks.
54:27
SPEAKER_00: It's hard.
54:28
SPEAKER_00: These people are good with their hammer.
54:29
SPEAKER_00: That's what an agent needs to be with AI.
54:32
SPEAKER_00: They need to be dangerous with AI.
54:34
SPEAKER_00: They need to know the tools, they need to know how to use it, and they need to, just like we talk about buyers, how you educate them on the process of where their life happens to be.
54:43
SPEAKER_00: I mean, almost practically a financial advisor.
54:46
SPEAKER_00: I break that down with agents.
54:48
SPEAKER_00: I say, listen, what's your workflow?
54:49
SPEAKER_00: Like a Neil Weichel, for example.
54:51
SPEAKER_00: Neil has door knocked, I think, every house out here at one point.
54:54
SPEAKER_00: That was always back in the day.
54:55
SPEAKER_00: And he's still successful because he still picks up the phone and he gets however many no's he has to get to a yes.
55:01
SPEAKER_00: And he connects with people real time.
55:04
SPEAKER_00: But agents don't want to admit that.
55:05
SPEAKER_00: And you think, well, Neil, Neil's, you know, this and Neil's that bullshit.
55:09
SPEAKER_00: Neil is Neil, and he will always be until Neil's done.
55:12
SPEAKER_00: And I'm sure everybody's just waiting.
55:14
SPEAKER_00: Thank God he's out of here.
55:15
SPEAKER_00: But while he's here, that's what he does.
55:17
SPEAKER_00: An agent needs to look at their workflow and process, even Neil and their places in there.
55:22
SPEAKER_00: They can automate with AI and change with AI, put workflows and triggers in that AI coordinates.
55:28
SPEAKER_00: So now Neil has an extra five hours a day to call or six hours a day to call.
55:32
SPEAKER_00: And each one of those people gets taken care of with a system that's put in place that answers their questions, sends them an email, and not an email from AI, an email that looks just like Neil, sounds like Neil, smells like Neil, Neil's own mother, God rest her soul, I'm guessing, but Neil's own mother wouldn't be able to tell the difference.
55:52
SPEAKER_00: That's what you use AI for.
55:53
SPEAKER_00: And I'm not talking about avatar because people are making these bullshit.
55:58
SPEAKER_00: People look at that as a joke.
56:00
SPEAKER_00: And it's even if it is you, once they find out it's not you, they switch you off.
56:05
SPEAKER_00: So whenever I do videos as you do videos, there's mistakes, there's fuck-ups.
56:09
SPEAKER_00: I will say something wrong, I'll mispronounce, I'll do whatever.
56:14
SPEAKER_00: Like this.
56:14
SPEAKER_00: We recorded this beginning to end.
56:16
SPEAKER_00: There's not going to be any edits, it's going to be put out there F-words, F-bombs.
56:19
SPEAKER_00: I'm protecting it from being seen by kids and all that.
56:22
SPEAKER_00: But it's just done naturally.
56:24
SPEAKER_00: When you use AI, you use it to add to your workflows.
56:27
SPEAKER_00: It's not going to replace agents, but the agents using it are going to replace the ones that aren't using it.
56:33
SPEAKER_00: But agents can barely turn on a fricking computer.
56:37
SPEAKER_00: I sit with these people and well, how am I going to learn?
56:40
SPEAKER_00: And it's so hard.
56:42
SPEAKER_00: And I don't know where to start.
56:44
SPEAKER_00: And oh my God, just sit in front of ChatGPT and say, how do I use you in my real estate?
56:50
SPEAKER_00: Show me how to use you in real estate.
56:52
SPEAKER_00: And it's going to tell you.
56:53
SPEAKER_00: And you use Claude or any of these others, it's going to tell you.
56:56
SPEAKER_00: But that's the biggest problem, I think, with agents.
56:59
SPEAKER_00: They don't like change.
57:01
SPEAKER_00: They don't want to learn anything new.
57:02
SPEAKER_00: But the other thing is there's a bunch of bullshit out there from agents that are selling AI systems saying, oh, you need this webinar system with AI.
57:11
SPEAKER_00: You need this.
57:12
SPEAKER_00: These are all not necessary.
57:15
SPEAKER_00: There are things that you can do.
57:16
SPEAKER_00: You don't have to buy their Instagram posting system.
57:18
SPEAKER_00: You can have your own Instagram posting system.
57:21
SPEAKER_00: You don't have to buy their CRM.
57:22
SPEAKER_00: You can have their own.
57:23
SPEAKER_00: It's all become low-hanging fruit, but to learn it is the trick.
57:28
SPEAKER_00: And it doesn't take long.
57:29
SPEAKER_00: And if you want to hire somebody to do it, I do that.
57:32
SPEAKER_00: But ultimately, you do need to learn the tool so you don't get sold a false bill of goods and end up spending more money that you can pay out every month.
57:40
SPEAKER_01: And there's so many things from, you know, not so much reading contracts, but you could feasibly read a contract and make sure you didn't miss a box or whatever and ask AI to look at all of those things.
57:51
SPEAKER_01: And what else should I be doing that's better?
57:53
SPEAKER_01: This, that, the other.
57:54
SPEAKER_01: These are my and you could tell AI everything you want to tell it and put that in there and have it spit it out for you and at least have a second set of eyes for what you did.
58:03
SPEAKER_01: And same thing when you get a contract coming back, or reading C C and Rs.
58:07
SPEAKER_01: What are the what are the fine points that I need to worry about for my client on these CCNRs or whatever it is, looking at a solar lease, finding out what the details are on the solar lease rather than reading the 322-page contract.
58:19
SPEAKER_00: You know, using AI adds 80 to 90 IQ points to me, and I'm about a moron, so I'm about a 50.
58:25
SPEAKER_00: So I come out of this looking at like Einstein whenever I tie myself with AI.
58:30
SPEAKER_00: And that's what you do.
58:31
SPEAKER_00: You put the contract in, it goes over it, it'll look at it, it'll give you the high points and low points.
58:35
SPEAKER_00: You're still responsible for everything that happens, but my God, it it sits you with a PhD level real estate expert, same thing as a PhDL advertiser and marketer, PhD level, everything.
58:47
SPEAKER_00: You just have to ask it to assume the role.
58:50
SPEAKER_00: And pretty soon you're not gonna have to ask.
58:52
SPEAKER_00: It's just going to assume it.
58:53
SPEAKER_00: But what you said was super important, that's part of my presentation.
58:57
SPEAKER_00: Agents need to teach AI about them.
59:01
SPEAKER_00: So nobody ever wants to write, you know, I'm Connor McIver, I was LAPD, I did this, I 30 years, marriage, bullshit, all this other stuff.
59:08
SPEAKER_00: Nobody wants to do that, but you talk.
59:10
SPEAKER_00: You put it in a microphone and you spit it out in your computer, have it transcribed, give that to AI, and then say, AI, ask me more about me so you can learn about me and be better in my work performance.
59:21
SPEAKER_00: And it will do it.
59:22
SPEAKER_00: That's the first step every agent should grab onto and just go down the yellow brick road.
59:28
SPEAKER_01: Yeah.
59:29
SPEAKER_01: No, I mean, I I've used it so much in my business, it's crazy.
59:31
SPEAKER_01: And I would never tell anybody how much I use it, but we're using it now for my next little campaign that we're doing and my next marketing for later this year or early next year.
59:40
SPEAKER_01: So that's just kind of what we're gonna be doing, and this is what we got to continue to do to continue to grow our businesses, and we gotta get we gotta be better at everything we do because the competition's getting smarter.
59:52
SPEAKER_01: We've got AI as a competition now, not so much a competition, but a helper for others.
59:57
SPEAKER_01: And if we're not learning all the tools, that's gonna be a problem.
1:00:00
SPEAKER_00: Yeah, homes.com revealed their AI helper.
1:00:02
SPEAKER_00: And I I was on a phone call with one of their CEOs, uh, one of their corporate level people, going over their AI bot, which I was honored to even get the phone call.
1:00:11
SPEAKER_00: And it's it's pretty good, it's pretty wonderful.
1:00:13
SPEAKER_00: So then I started getting the idea, well, shit, I bet you I can build that.
1:00:15
SPEAKER_00: So I built that at Santa ClaritoOpenhouses.com, an interactive agent, not voice, but just text.
1:00:20
SPEAKER_00: But, you know, those are those things.
1:00:22
SPEAKER_00: If if you learn about it, a person can build it, whether it's an agent or a lender, it's capable of.
1:00:29
SPEAKER_00: The thing that's gonna create issues for real estate agents are gonna be the major Zillows and Redfins and these taking over that spear because they're gonna go out there and they're gonna try to take over entire agent businesses on the agent's behalf.
1:00:44
SPEAKER_00: But where you in that game is what you and I talked about at the very beginning.
1:00:48
SPEAKER_00: You have the human-to-human contact like Neil.
1:00:50
SPEAKER_00: You talk to these people, you explain things to them, and you give them the run out.
1:00:54
SPEAKER_00: AI will never beat you, Zillow will never beat you, Redfin will never beat you, they will never beat you.
1:00:59
SPEAKER_00: But you got to get the no's.
1:01:01
SPEAKER_00: You got to get the no's from these people and you got to keep selling them until you get a no.
1:01:05
SPEAKER_00: So many people leave shit on the table, and I'm maybe not so much in reference to to real estate, but when I'm working with people talking about AI systems that I'm building for them, I always go to the no.
1:01:16
SPEAKER_00: They want this, they want this, they want this, and do they oh, they don't want that.
1:01:19
SPEAKER_00: Okay, so there's the no.
1:01:21
SPEAKER_00: So now I stop.
1:01:22
SPEAKER_00: Now I know that I've exhausted everything I'm possibly add value for them with.
1:01:26
SPEAKER_00: But agents don't do that, people in business don't do that.
1:01:29
SPEAKER_00: But that's what you do.
1:01:31
SPEAKER_00: You're on the phone all day long.
1:01:32
SPEAKER_00: Instead of you you try not to text because talking to people, Mike, is so valuable.
1:01:37
SPEAKER_01: Oh, absolutely.
1:01:38
SPEAKER_01: I mean, you you can't sell via text, you can't sell via email.
1:01:42
SPEAKER_01: You can't you can't let people know everything you want to let them know.
1:01:46
SPEAKER_01: And you talk to them about it, and then maybe you email the information back over, and then you follow up with the answers to what they have on the questions that they sent that you sent them over.
1:01:55
SPEAKER_00: So hey Mike, do you want to go to dinner?
1:01:58
SPEAKER_00: And you respond, yeah, whatever.
1:02:00
SPEAKER_00: And I'm like, Yeah, whatever.
1:02:02
SPEAKER_00: Well, do you want to go or do you want to go?
1:02:03
SPEAKER_00: Yeah, I guess it'd be all right.
1:02:04
SPEAKER_00: What do you mean?
1:02:05
SPEAKER_00: I guess so.
1:02:06
SPEAKER_00: There's so much lost in the translation.
1:02:08
SPEAKER_00: I can't even feel how to had a skit like that.
1:02:11
SPEAKER_00: It's so good, but you're right, you got to hear the voice.
1:02:14
SPEAKER_00: And sitting in front is so much better, too.
1:02:17
SPEAKER_01: Yeah, I had a client who used to say, You're so nice in person, but you're not very nice via email.
1:02:21
SPEAKER_01: I'm like, really?
1:02:22
SPEAKER_01: And because I have a lot of explan exclamation points and other things like that that shouldn't be there, you know.
1:02:28
SPEAKER_01: But I put them there because I'm, you know, that way.
1:02:31
SPEAKER_00: Yeah, you'd be regurgitating, you you know, write war and peace because you got to cover all this stuff.
1:02:36
SPEAKER_00: In person, you can look at their face and say, they look confused.
1:02:40
SPEAKER_00: Let me answer it here.
1:02:41
SPEAKER_00: But here you don't know what they're gonna be confused about, so it's much longer and yeah, much more sterile.
1:02:47
SPEAKER_00: Yeah, totally.
1:02:48
SPEAKER_01: So yeah, very cool stuff.
1:02:49
SPEAKER_01: So yeah, Connor, you're you're amazing.
1:02:51
SPEAKER_01: I'll tell you all your all your knowledge is incredible.
1:02:54
SPEAKER_01: And and I appreciate you having me on here today.
1:02:56
SPEAKER_00: No, I'm very much I'm I'm gonna um put this everywhere.
1:02:59
SPEAKER_00: You've been you've been kind to to be the first on my new resurrected show.
1:03:04
SPEAKER_00: You are my first guest.
1:03:05
SPEAKER_00: Uh for the last five years, I've been not doing it.
1:03:08
SPEAKER_00: So I'm glad to be back and my calendar's filling up.
1:03:11
SPEAKER_00: And I appreciate you taking the time with me today.
1:03:13
SPEAKER_00: Anytime, brother.
1:03:14
SPEAKER_00: Anytime you need anything, leave let me know.
1:03:15
SPEAKER_00: I will.
1:03:16
SPEAKER_00: Thank you again, Mike, for your friendship and your work ethic.
1:03:19
SPEAKER_00: Big hugs, brother.
1:03:20
SPEAKER_00: I'll talk to you soon.
1:03:21
SPEAKER_00: Be well.
1:03:21
SPEAKER_00: Peace.
1:03:22
SPEAKER_00: Peace.