Latest / Earn Your Leisure / Scholars Corner: 2023 IS THE YEAR OF REAL ESTATE OPPORTUNITY

Transcript

Scholars Corner: 2023 IS THE YEAR OF REAL ESTATE OPPORTUNITY · Earn Your Leisure

• 0:00
  Speaker 1: An illegal alien from Guatemala charged with raping a child
• 0:03
  Speaker 1: in Massachusetts. An MS thirteen gang member from Al Salvador
• 0:07
  Speaker 1: accused of murdering a Texas man of Venezuelan charged with
• 0:11
  Speaker 1: filming and selling child pornography in Michigan. These are just
• 0:15
  Speaker 1: some of the heinous migrant criminals caught because of President
• 0:19
  Speaker 1: Donald J. Trump's leadership. I'm Christy nom the United States
• 0:23
  Speaker 1: Secretary of Homeland Security. Under President Trump, attempted illegal border
• 0:28
  Speaker 1: crossings are at the lowest levels ever recorded, and over
• 0:31
  Speaker 1: one hundred thousand illegal aliens have been arrested. If you
• 0:35
  Speaker 1: are here illegally, your next you will be fined nearly
• 0:39
  Speaker 1: one thousand dollars a day, imprisoned, and deported. You will
• 0:43
  Speaker 1: never return. But if you register using our CBP home
• 0:46
  Speaker 1: app and leave now, you could be allowed to return legally.
• 0:50
  Speaker 1: Do what's right. Leave now. Under President Trump, America's laws,
• 0:55
  Speaker 1: border and families will be protected.
• 0:57
  Speaker 2: Sponsored by the United States Department of Homeland Security.
• 1:00
  Speaker 3: If you're familiar with no Noise, Don Peebles brilliant, brilliant gentleman,
• 1:09
  Speaker 3: the most successful black real estate developer in American history,
• 1:13
  Speaker 3: absolutely one of the most successful relevant real estate developers
• 1:16
  Speaker 3: in the world. He probably doesn't want me to say this,
• 1:20
  Speaker 3: but because we asked him, you know, he kind of
• 1:22
  Speaker 3: likes yeah. But it's important because so many people probably
• 1:27
  Speaker 3: are not familiar with his story and we need to
• 1:30
  Speaker 3: be familiarized with people that have wealth because it's not
• 1:34
  Speaker 3: only inspirational motivational, but it can actually stay the direction
• 1:38
  Speaker 3: of where you want to go with your career.
• 1:39
  Speaker 4: You don't necessarily have to.
• 1:41
  Speaker 3: Be an athlete or entertainer to reach a high level
• 1:44
  Speaker 3: of success. So you know, Forbes said that he was
• 1:46
  Speaker 3: worth nine hundred million dollars. That was ten years ago.
• 1:48
  Speaker 3: But if you know how Fork does their recording, you
• 1:51
  Speaker 3: have to cooperate with them, and he stopped recording. He
• 1:54
  Speaker 3: stopped cooperating with them ten years ago, So I mean,
• 1:57
  Speaker 3: you know, you can kind of gauge it from there,
• 1:59
  Speaker 3: but the one that's yeah.
• 2:01
  Speaker 4: So you know, it's very important that we understand.
• 2:04
  Speaker 3: You know that this is somebody that has reached that level,
• 2:09
  Speaker 3: that billion dollar level, not by any means of athletic
• 2:14
  Speaker 3: ability or entertainment, but through real estate development. And he
• 2:19
  Speaker 3: was working on building the first black owned and black
• 2:22
  Speaker 3: developed skyscraper in Manhattan called the Africa. Yeah, so without
• 2:29
  Speaker 3: further ado, we will bring out Don Peeble's cash rules.
• 2:33
  Speaker 3: Everything around me very fitting, very fitting.
• 2:37
  Speaker 5: Clapping up for this grape brother again. Yes, give me
• 2:40
  Speaker 5: more energy for him. This is a legend, y'all. Yes, yes,
• 2:47
  Speaker 5: I told him when I met on.
• 2:48
  Speaker 3: My dad brought me his book to People's Principal when
• 2:51
  Speaker 3: I was probably a teenager. So if anybody has not
• 2:53
  Speaker 3: read that book, it's extremely extremely good read, and I
• 2:57
  Speaker 3: highly recommend that you read that book. That's one of
• 2:59
  Speaker 3: the must read when it comes to financial literacy, business
• 3:02
  Speaker 3: and investing.
• 3:03
  Speaker 4: So thank you for joining us today. Appreciate it. Great
• 3:05
  Speaker 4: to be here. So let's get right into it.
• 3:07
  Speaker 3: So, how do you feel the investment market holds for
• 3:10
  Speaker 3: Q one of twenty twenty three?
• 3:11
  Speaker 4: Like, what do you what's your outlook for Q one
• 3:13
  Speaker 4: of twenty twenty three?
• 3:14
  Speaker 6: Time of Opportunity.
• 3:16
  Speaker 7: I just heard the Einstein of Wall Street on and
• 3:20
  Speaker 7: I agree with his concept. But if I think back,
• 3:24
  Speaker 7: I mean history repeats itself constantly, So if you go
• 3:28
  Speaker 7: back to nineteen between nineteen seventy eight and nineteen eighty one,
• 3:35
  Speaker 7: the Federal Reserve raised the interest rates from six percent
• 3:40
  Speaker 7: to eighteen percent, Jesus, and the market kept functioning until
• 3:47
  Speaker 7: it didn't because people didn't catch the interest rates. The
• 3:51
  Speaker 7: economy didn't adjust to the interest rates. But then the
• 3:54
  Speaker 7: interest rates started going back down, and by nineteen eighty seven,
• 3:59
  Speaker 7: I bought my first house and I paid nine hundred
• 4:03
  Speaker 7: and twenty five thousand dollars for it, and I got
• 4:06
  Speaker 7: a mortgage on it from City Bank that was indexed
• 4:10
  Speaker 7: with Libor and the rate was nine point two five percent.
• 4:15
  Speaker 3: Wow.
• 4:16
  Speaker 7: So I was able to buy a house pay nine
• 4:20
  Speaker 7: and a quarter percent and feel good about it. So
• 4:22
  Speaker 7: what will happen is that interest rates were just way
• 4:25
  Speaker 7: too low. So, for example, that house, if I were
• 4:29
  Speaker 7: buying it two years ago, if I had the same
• 4:32
  Speaker 7: ink money that I was paying on debt service, which
• 4:35
  Speaker 7: in that instance was almost one hundred thousand dollars a year,
• 4:39
  Speaker 7: that would have bought me a five million dollar mortgage.
• 4:42
  Speaker 7: So the question we have to ask ourselves is how
• 4:44
  Speaker 7: much does real estate appreciate and how much does it
• 4:46
  Speaker 7: fluctuate based on interest rates? And interest rates have a
• 4:49
  Speaker 7: lot to do with home values because people borrow money
• 4:52
  Speaker 7: to buy their homes in real estate overall is a
• 4:54
  Speaker 7: leverage business, and so interest rates affect valuation very quickly.
• 4:59
  Speaker 4: I'll see trail over there. I know that.
• 5:01
  Speaker 6: Look, now you've got what are you sure?
• 5:03
  Speaker 2: Yeah?
• 5:03
  Speaker 8: Good?
• 5:03
  Speaker 2: Like this.
• 5:04
  Speaker 9: I want to ask the question that everyone in the
• 5:05
  Speaker 9: audience wants to know. Let's say we're started from scratch,
• 5:08
  Speaker 9: and let's just say I was your best friend. How
• 5:11
  Speaker 9: do we get rich in real estate from twenty twenty
• 5:13
  Speaker 9: three to twenty twenty five?
• 5:15
  Speaker 4: Is that what you guys want to know?
• 5:16
  Speaker 6: Please?
• 5:17
  Speaker 4: How do we get rich in real estate?
• 5:18
  Speaker 2: Brother?
• 5:18
  Speaker 7: Well, look, I know a little bit of how to
• 5:20
  Speaker 7: do it because I started off with about six hundred
• 5:22
  Speaker 7: dollars and then last count, I mean, you know, I
• 5:27
  Speaker 7: was at close to a billion dollars.
• 5:28
  Speaker 6: I think I've done that.
• 5:30
  Speaker 4: Class that off for him. That's amazing, very yeah, close
• 5:33
  Speaker 4: to a billion.
• 5:34
  Speaker 6: But right now we are built.
• 5:37
  Speaker 7: We have a pipeline and a portfolio of about ten
• 5:40
  Speaker 7: billion dollars in real estate. And I started off doing
• 5:42
  Speaker 7: My first building was ten million dollars. So real estate's
• 5:46
  Speaker 7: a leverage business and so we can't be afraid to borrow.
• 5:49
  Speaker 7: That's the first thing I mean I learned a long
• 5:51
  Speaker 7: long time ago. One of my mentors said that if
• 5:54
  Speaker 7: you owe the bank fifty thousand dollars. You can't sleep
• 5:56
  Speaker 7: at night if you own fifty million. Why should you
• 5:59
  Speaker 7: both be away?
• 6:01
  Speaker 6: So the idea is to get comfortable borrowing money.
• 6:05
  Speaker 4: And what interest rate would be great to borrow at?
• 6:07
  Speaker 6: I mean it doesn't. I mean I think it's more
• 6:09
  Speaker 6: about income.
• 6:11
  Speaker 7: You can do look in the real estate business at
• 6:13
  Speaker 7: the level that we operate in.
• 6:16
  Speaker 2: So for example, earners, what's up?
• 6:19
  Speaker 8: You ever walk into a small business and everything just
• 6:21
  Speaker 8: works like the checkout is fast, the receipts are digital,
• 6:25
  Speaker 8: tipping is a breeze, and you're out the door before
• 6:28
  Speaker 8: the line even builds odds are they're using Square. We
• 6:32
  Speaker 8: love supporting businesses that run on Square because it just
• 6:35
  Speaker 8: feels seamless. Whether it's a local coffee shop, a vendor
• 6:38
  Speaker 8: at a pop up market, or even one.
• 6:40
  Speaker 2: Of our merch partners.
• 6:42
  Speaker 8: Square makes it easy for them to take payments, manage inventory,
• 6:45
  Speaker 8: and run their business with confidence, all from one simple system.
• 6:50
  Speaker 8: If you're a business owner or even just thinking about
• 6:52
  Speaker 8: launching something soon, Square is hands down one of the
• 6:56
  Speaker 8: best tools out there to help you start, run and grow.
• 6:59
  Speaker 8: It's not just about payments, it's about giving you time
• 7:02
  Speaker 8: back so you can focus on what matters most Ready
• 7:05
  Speaker 8: to see how Square can transform your business, visit Square
• 7:09
  Speaker 8: dot com backslash go backslash eyl to learn more that
• 7:14
  Speaker 8: Square dot Com backslash, go backslash eyl. Don't wait, don't hesitate,
• 7:19
  Speaker 8: Let Square handle the back end so you can keep
• 7:22
  Speaker 8: pushing your vision forward. This episode is brought to you
• 7:28
  Speaker 8: by P and C Bank. A lot of people think
• 7:30
  Speaker 8: podcasts about work are boring, and sure they definitely can be,
• 7:34
  Speaker 8: but understanding a professionals routine shows us how they achieve
• 7:38
  Speaker 8: their success little by little, day after day. It's like
• 7:42
  Speaker 8: banking with P and C Bank. It might seem boring
• 7:45
  Speaker 8: to save, plan and make calculated decisions with your bank,
• 7:48
  Speaker 8: but keeping your money boring is what helps you live
• 7:51
  Speaker 8: or more happily fulfilled life. P and C Bank Brilliantly
• 7:55
  Speaker 8: Boring since eighteen sixty five. Brilliantly Boring since eighteen sixty
• 7:59
  Speaker 8: five is a service mark of the P and C
• 8:01
  Speaker 8: Financial Service Group, Inc. P and C Bank National Association
• 8:06
  Speaker 8: Member a FDIC.
• 8:08
  Speaker 1: An illegal alien from Guatemala charged with raping a child
• 8:12
  Speaker 1: in Massachusetts. An MS thirteen gang member from Al Salvador
• 8:16
  Speaker 1: accused of murdering a Texas man of Venezuelan charged with
• 8:20
  Speaker 1: filming and selling child pornography in Michigan. These are just
• 8:24
  Speaker 1: some of the heinous migrant criminals caught because of President
• 8:28
  Speaker 1: Donald J. Trump's leadership. I'm Christy Noman, the United States
• 8:32
  Speaker 1: Secretary of Homeland Security. Under President Trump, attempted illegal border
• 8:36
  Speaker 1: crossings are at the lowest levels ever recorded, and over
• 8:40
  Speaker 1: one hundred thousand illegal aliens have been arrested. If you
• 8:43
  Speaker 1: are here illegally, your next you will be fined nearly
• 8:47
  Speaker 1: one thousand dollars a day, imprisoned, and deported. You will
• 8:51
  Speaker 1: never return. But if you register using our CBP home
• 8:55
  Speaker 1: app and leave now, you could be allowed to return legally.
• 8:59
  Speaker 1: Do what's right to leave now. Under President Trump, America's laws,
• 9:04
  Speaker 1: border and families will be protected.
• 9:06
  Speaker 2: Sponsored by the United States Department of Homeland Security.
• 9:09
  Speaker 7: Let's take a let's make it easy. Let's take a
• 9:13
  Speaker 7: billion dollar a half a billion dollar building. So half
• 9:16
  Speaker 7: a billion dollar building, we are going to get sixty
• 9:18
  Speaker 7: percent in debt. Okay, so that's going to be three
• 9:21
  Speaker 7: hundred million dollars, and then that other two hundred million
• 9:25
  Speaker 7: is equity. And I won't put up all that two
• 9:29
  Speaker 7: hundred million. I'll go to Goldman Sacks or you know,
• 9:32
  Speaker 7: Apollo or one of these private equity funds, and they'll
• 9:34
  Speaker 7: put up ninety percent of it, and we'll put up
• 9:37
  Speaker 7: ten percent. So I'll put up twenty million, they'll put
• 9:39
  Speaker 7: up one hundred and eighty million dollars they are going
• 9:41
  Speaker 7: to charge. If we were doing this right now, they
• 9:45
  Speaker 7: would be charging what's called the preferred return of about
• 9:48
  Speaker 7: fourteen percent, and they'd be looking to earn twenty five
• 9:52
  Speaker 7: percent on their money. So it's really not it's just
• 9:56
  Speaker 7: the interest rate fluctuation just really affects equity to a degree.
• 10:00
  Speaker 7: Read except when you're buying very tight deals like cap
• 10:03
  Speaker 7: rate deals on apartment buildings. If you're buying it a
• 10:05
  Speaker 7: four and a half percent cap writing and interest rates
• 10:07
  Speaker 7: are six, and that's a tough deal to make because
• 10:10
  Speaker 7: you're not making a spread. But real estate is all
• 10:12
  Speaker 7: about leveraging, and so your cost of capital is one
• 10:17
  Speaker 7: function of it, but it's also what is the market
• 10:21
  Speaker 7: value of the asset. The challenge was residential real estate
• 10:25
  Speaker 7: on right now, for say, buying homes, is people's buying
• 10:28
  Speaker 7: power has been diminished significantly because most Americans buy homes
• 10:33
  Speaker 7: with mortgages, and so they're buying power has been cut
• 10:36
  Speaker 7: in half at a minimum, and it's sometimes more sot
• 10:40
  Speaker 7: six months ago, eight months ago, somebody could buy a
• 10:42
  Speaker 7: million dollar home if they're making one hundred thousand dollars
• 10:44
  Speaker 7: a year. Now they got to look at a half
• 10:47
  Speaker 7: a million dollar home, and so their mindset's not there.
• 10:50
  Speaker 7: So that would lead somebody like that to rent. And
• 10:52
  Speaker 7: so what happens is when people can't buy, they rent,
• 10:57
  Speaker 7: and or they can't buy what they want, they rent,
• 11:01
  Speaker 7: and so the rental market will continue to get stronger
• 11:04
  Speaker 7: as interest rates go up. But what will happen also
• 11:07
  Speaker 7: is how home values will go down. And so right
• 11:10
  Speaker 7: now we're in the time of this uncertainty. No one
• 11:13
  Speaker 7: kind of knows what's going to happen. But the fundamentals
• 11:16
  Speaker 7: for real estate are very good. Unemployment's very low, income
• 11:22
  Speaker 7: and salaries are high, wages are high, there's a backlog
• 11:27
  Speaker 7: and demand for products. So every element of the economy
• 11:32
  Speaker 7: fundamentally is good. So it's just are people willing to
• 11:37
  Speaker 7: pay what it costs to buy or will they pay
• 11:40
  Speaker 7: a little bit more to rent and wait until there's
• 11:43
  Speaker 7: another time. So right now, our strategic direction is that
• 11:47
  Speaker 7: we're focused on buying. We're developing rental properties now. No
• 11:52
  Speaker 7: longer we did condos before. Now our real focus is
• 11:55
  Speaker 7: more on rentals, except at the ultra high level, and
• 11:58
  Speaker 7: then people are buying in cash interfraate sensitive.
• 12:02
  Speaker 10: So during COVID there was this mass exodus. Everybody was
• 12:05
  Speaker 10: leaving New York. They said the price is too high,
• 12:07
  Speaker 10: rents too damn high. I know you have real estate
• 12:10
  Speaker 10: obviously developments out in Miami, but the affirmation toile is
• 12:14
  Speaker 10: going to be here in New York City.
• 12:16
  Speaker 6: Right, we just had the midterm election.
• 12:18
  Speaker 10: You know, our governor is still in place. I wonder
• 12:20
  Speaker 10: what your your thoughts are the future economy of New
• 12:23
  Speaker 10: York and why it's so important that the affirmation TOWE
• 12:25
  Speaker 10: is here.
• 12:26
  Speaker 7: Well, New York is one of, if not the greatest
• 12:29
  Speaker 7: city in the world. So there's always a demand for
• 12:32
  Speaker 7: New York. And what happened is there's another generation of
• 12:35
  Speaker 7: people who want to come here. New York got a
• 12:38
  Speaker 7: little bit more affordable. And also most people in New
• 12:41
  Speaker 7: York rent seventy five percent. Everybody who lives really rents,
• 12:46
  Speaker 7: and so the idea that the condo market is softened up.
• 12:51
  Speaker 7: Jeff means that the developers who can't sell those condos
• 12:53
  Speaker 7: will now put them in the rental pool. So New
• 12:55
  Speaker 7: York is getting younger, and I think, look, New York
• 12:59
  Speaker 7: used to be up until really Bloomberg came in. It
• 13:04
  Speaker 7: was a city about creativity. It was the city about excitement.
• 13:08
  Speaker 7: It was a city that of the first people. It
• 13:10
  Speaker 7: was a city of different walks of life. Financially, just
• 13:13
  Speaker 7: a unique melting pot. And then Mike Bloomberg, over twelve years,
• 13:18
  Speaker 7: made it almost a Beverly Hills or you know, and
• 13:22
  Speaker 7: you know, it became a money center place and everything
• 13:25
  Speaker 7: was about money.
• 13:25
  Speaker 6: It was about money, and so property values ran up.
• 13:30
  Speaker 7: Especially Mike Bloomberg's focus was attracting really rich people to
• 13:34
  Speaker 7: come here and buy apartments. Well they ran up the
• 13:36
  Speaker 7: price and so, but that has nothing to do with
• 13:40
  Speaker 7: the fundamentals of New York. It's such a small market.
• 13:43
  Speaker 7: So New York's not dead. It's strong. We can all
• 13:46
  Speaker 7: see it all the traffic. We were walking around going
• 13:49
  Speaker 7: into the storage. You're seeing people's shop and spending money.
• 13:51
  Speaker 7: They're going out to the clubs. Everybody's active here. So
• 13:55
  Speaker 7: New York's don't have another big run. I mean It's
• 13:58
  Speaker 7: an expensive market to get into, so that makes it
• 14:01
  Speaker 7: a bit more challenging as a real estate investor, especially
• 14:04
  Speaker 7: an early investor.
• 14:07
  Speaker 3: My graduates from my school being fores bad drop drop Mike,
• 14:13
  Speaker 3: drop bagdropft.
• 14:25
  Speaker 1: An illegal alien from Guatemala charged with raping a child
• 14:29
  Speaker 1: in Massachusetts. An MS thirteen gang member from Al Salvador
• 14:33
  Speaker 1: accused of murdering a Texas. Man of Venezuelan charged with
• 14:37
  Speaker 1: filming and selling child pornography in Michigan. These are just
• 14:41
  Speaker 1: some of the heinous migrant criminals caught because of President
• 14:45
  Speaker 1: Donald J. Trump's leadership. I'm Christy Noman, the United States
• 14:49
  Speaker 1: Secretary of Homeland Security. Under President Trump, attempted illegal border
• 14:53
  Speaker 1: crossings are at the lowest levels ever recorded, and over
• 14:57
  Speaker 1: one hundred thousand illegal aliens have been arrested. If you
• 15:00
  Speaker 1: are here illegally, your next you will be fine nearly
• 15:04
  Speaker 1: one thousand dollars a day, imprisoned and deported. You will
• 15:08
  Speaker 1: never return. But if you register using our CBP home
• 15:12
  Speaker 1: app and leave now, you could be allowed to return legally.
• 15:16
  Speaker 1: Do what's right. Leave now. Under President Trump, America's laws,
• 15:21
  Speaker 1: border and families will be protected.
• 15:23
  Speaker 2: Sponsored by the United States Department of Homeland Security,