2273: Multifamily Market Distress and Why It is the Perfect Time to Buy with Hunter Thompson

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I just.

Want to say thanks to you because I would never been able to retire if I hadn't got hooked on to you 10 years ago. And I really owe this to you that I'd met my goal, you know, to retire early and not work for the man and kind of be my own boss. And I would never been able to do that had I not. I guess I was a little discouraged 10 years ago, but hooking onto your podcast and learning from what you were teaching has made this all possible.

Welcome to the Creating wealth show with Jason Hartman. You're about to learn a new slant on investing, some exciting techniques and fresh new approaches to the world's most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine, self made multimillionaire who's actually been there and done it. He's an successful investor, lender, developer and entrepreneur who's owned properties in 11 states, had hundreds of tenants, and been involved in thousands of real estate transactions. This program will help you follow in Jason's footsteps on the road to your Financial Independence Day. You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors.

Welcome to episode 2273 and greetings from about one hour outside of Medellin, Colombia.

I'm here with Paul Hutchinson.

I've got an upcoming show with him you must see. It was such a fantastic interview we just recorded here at his beautiful retreat outside of Medellin.

He is the executive producer of the.

Blockbuster movie that probably many, many of you have seen called the Sound of Freedom. Paul, talk to us a little bit about that in the show we recorded because that'll be coming up for people. And this was a super fun show.

You're an amazing interviewer.

Thank you.

And we talked about building Bridge Investment Group, multi billion dollar investment fund, the strategies that we did in creating that. And then we talked about charity work and the Sound of Freedom movie and some of the missions that I was a part of. And we briefly touched on the healing retreat that we're in right now. So it was a good interview.

I just want to show you this place. If you're watching on video, look around, see some of the plant life here. Feels like it's out of the movie Avatar. It's really, really cool. So I'll kind of show you that Paul is an amazing person from A business perspective, but also from a philanthropy perspective. And having made the Sound of Freedom, which became such an amazing hit. Paul, you know, the budget for the movie, I just quickly want to kind of tease our interview a bit, but the budget for the movie was only about $12 million. Yeah. And just your box office alone was over a quarter of a billion dollars. 200. Over 250 million plus streaming rates to Amazon for another, what, $30 million. It's been an amazing hit. And the critics, they had, like, mixed reviews. They were lukewarm on the whole thing. How did it become such a success? Well, he just.

Well, the audience all loved it.

Yeah, right.

Forget the critics. You know, forget Hollywood. Forget the critics. Forget all that crap. The audience loved it. And we had a huge groundswell of good, good people on social media that told all of their friends, you need to see Sound of Free. And it became the number one independent film in history.

So that's incredible. It's just incredible. And, Paul, you know, during the show we have coming up that everybody will get real soon. You talk about your involvement in the missions where you were meeting with these human traffickers, offering them money, and then setting up sting operations. It's an incredible, incredible story. Just give a quick comment on that if you want.

Yeah, we. We touched on the fact that the movie Sound of freedom came from eight different rescue missions and about 20 different operators. We put all of these missions and these stories together to create one storyline. But we talk in depth about what happened on some of those missions. And. And the kids and the beautiful light at the end of the tunnel after the rescue.

Yeah. And how many kids did you rescue? There's a couple different ways to look at that. But. But give them some other.

The first one in Cartagena, Colombia, actually the one that we did called Triple take, we had three separate operations. 127 children on that first mission. And then I led or played a key part in over 70 undercover rescue missions over a period of 10 years. And our foundation, Child Liberation foundation, and others that we have helped to fund and start, over 7,000 victims are now back with their families.

That is awesome. What a great cause. What a great thing. And be sure you catch this upcoming show also. We start that show out with just an interview, which is the topic of today's show, which is all about rental housing, because you were incredibly successful in funding rental housing projects and financing them. And just, just amazing. I mean, your fund now has over $48 billion under management. So it's an amazing story. Along with John Pennington who I know is listener to the show. Hi, John. Hi, John. You're probably listening and it's going to be great interview. So we'll have that coming up real soon. Maybe next week or so, we'll see what the production schedule is. But I'm really looking forward to that and thank you for doing it.

Thanks for having me on the show.

All right. Before we get to today's episode, be sure you go get your tickets for Empowered Investor Live coming up very soon. We're only about six weeks away from that in Southern California. Empowered Investor live dot com. Get your tickets at early bird prices. Empowered Investor live dot com and let's get to today's episode with Hunter Thompson.

It is my pleasure welcome a returning guest back to the show. And that is my good buddy Hunter. Hunter Thompson. You've heard him before. He's the founder of raisingcapital.com and Asim Capital and he raised over $100 million from hundreds of investors. Hunter is the host of Raise Fest, the biggest conference, the number one conference in this field for raising money. He has a lot of insights on the market and everything that is going on in the housing industry. Hunter, welcome back.

Hey, it's an honor to be on. First of all, dude, you have the best guests. So to be featured for a second time amongst those greats for listeners, y' all are very lucky. So thanks again, Jason.

Oh, it's good to have you, buddy. I think it's your third time actually.

Let's go.

Yeah, we'll do it. He so you just got back from a big conference that addressed the multifamily housing industry. And of course, that is related. It's the cousin of the single family housing industry. Not directly the same, but, you know, shares a lot of the same things because it is housing. What are those big institutional players saying about the housing market? This was a very institutional oriented conference you were at, right?

That's right. It's the largest multifamily convention in the country. And it's not attended by beginners. It's by operators, buyers, sellers, debt brokers, institutions that are really participating. And they're the ones that kind of have the keys to the castle in terms of deal flow, equity and debt. So I've got some information to share. I'll kind of give some bullet points. But first I gotta say that we're going to talk both about commercial but also residential. But there's a big difference and it has a lot to do with debt. And so going back to 2022 and even before that prices had been bid up so much that in more of the competitive markets you couldn't really make deals pencil unless you took floating rate debt when it comes to buying multifamily assets. And so what ended up happening is you had this peak in transaction volume, peak in pricing and peak in people taking floating rate debt.

And this is all a bad recipe.

Right here, all of it together. And then what do you know, the market turns around and interest rates rise faster than they've risen in 40 years. And now there's a ton of distressed sellers in multifamily, especially in some very prime and competitive markets. Now real quick, you don't see this level of distress in single family because you didn't have this run up in massive transaction volume accompanied by floating rate debt product. And so for the first time, and I don't know, I haven't been able to find data that's really this similar at all where there's such a difference between multifamily commercial and also residential. But because people with, with debt, they got in 2021, it stuck at 3% and no one wants to sell. And why would you? Because the debt piece you have is so inexpensive, if you got a property that was half the value, you probably have the same monthly payment. So we're going to talk about all of it today.

Yeah, absolutely. So just to explain, and I have discussed this before on the show a few times, but to explain what happened to these apartment or multifamily investors, One scenario, and I'm sure you can add, you know, maybe another one or two if you want to add some color to this, a very typical scenario. And you know, maybe you read the article in the Wall Street Journal that went around and everybody was talking about that was maybe a year ago, a little more than a year ago. I think what happened is people would go out and they would find an apartment, they would raise money, they would syndicate it. And the typical deal is to add value by improving the units and re tenanting them and raising the rent by about 1/3. That's sort of the typical model, right? And then they thought they could get this short term debt or floating rate debt like Hun was saying. And they thought, well hey, we'll just refinance. And they thought they would refinance at Covid era rates and rates went through the roof. And at the same time these crazy rent increases that we saw a la Covid era, they stopped and rents kind of flattened out and a lot of new apartment product was delivering to the market because a Lot of, there was a lot of construction backlog and it's still delivering by the way, although most of it I think happened last year. So we're kind of past the point of major despair. But there's still a lag time, there's still a whole pipeline to clear out. Right. So Hunter, that's one scenario that was very common. If you want to correct any of that or add another scenario, feel free.

Here's the deal. Supply coming online, the economy cooling off. To some degree, these things played a role in headwinds, but it's nothing compared to the interest rate change.

Right.

And it's so much so that we now have properties that I've seen that they're above original projections in terms of, in a way, rents 8, 96% occupied but they're still below break even on debt because the debt is so expensive, it's double during the hold period. So it's an interesting time. But I'll tell you what I learned in MHC and, and by the way.

That just to end that story, yeah. Those people thought they would just refinance the whole property at another super cheap, ultra cheap mortgage for another 10 year span, right? And you know, they'd have 100 unit building, they could return all the money to the investors and then they, you know, they'd own it still, they own the asset still. But it just didn't work out like that. So what Hunter's saying is the income and expense ratio projections, the net operating income or NOI actually beat the projections. But the deal was still a disaster. It was still underwater because the debt stack, the capital stack was just so much worse than they expected. Now it's not that bad historically, but everybody got used to those super low Covid rates and they, I guess they thought they'd last forever, which was a fool's errand. Go ahead.

I mean there's so much we can say about this. I'd say that there's as I'm 38 years old, I got in this business when I was 25. I got in the industry and thought, you know, it was 2010 or so when I got in the business. I thought, wow, this is going to be easy buy low idiots. And turns out it's harder to do than I thought, you know, and it'll play a trick on you because as a young hungry entrepreneur, which many of your listeners are and I consider myself to be, you want to participate in the market. And so when I go back and look at that old underwriting, it's like we Were looking at sensitivity analysis that anticipate that interest rates could rise 200 basis points. And we thought that was conservative. And so the question is, what happens if it's worse? Well, if you assume that it's going to be worse than that, it's not that you're going to be really conservative and protect investors. It's that you won't be able to do deals. You would underwrite yourself out of a deal. Exactly. So I always try to be humble about that because I, I had to learn some lessons the hard way. And I want people to, especially people that haven't had to learn those lessons the hard way, to know that that's why it ends up happening is you have to make a choice whether to participate or how to participate. Let me give you some numbers that'll.

Yeah, so you can be too conservative and price yourself out of the market or you can be too irresponsible and price yourself into every deal. Either way, it's a disaster. You know, either way is a disaster. You've got to take some risk. You've got to take some chances in life.

That's the balancing act. That's the balancing act. But here's what's about to happen. So, and I follow Phoenix. I'm a Phoenix multifamily operator. My partner's local to Phoenix. That's all I know. However, Phoenix does tend to lead the country in terms of a couple of data points. So you get an insight in terms of where the market's going to go based on Phoenix. This is just a rule of thumb, but you get where I'm going with it. Here's the number. Phoenix units coming online in 2024 are the units that did come online. 30,000 in 2024, 2025-280002-02613,000. 2027, 1280.

Wow, that is a stark. So that was the number of units coming on the market.

That is Phoenix.

Wow, that's a lot of inventory to absorb. But then it has now come to a screeching halt.

Exactly. Tail end of 2025, you see this massive drop off where whatever the percentage is, it's about 5% of what it was in 2024. Now sometimes a couple units sneak in. A couple units maybe don't sneak in and don't make it through. But let's use that as a rule of thumb. That's probably speaks to the broader market as well. And so what I think is the message I wanted to get to you and your audience is that if you can go all in right now, in 2025, whatever that niche is. And by the way, wherever you are in your career, because if you're just getting started, education is where you need to go first. But if you've done a couple of deals, you have a flavor for the market, now is the time you got to go for it. Because by the time we get to 2027, the writing on the wall will be so clear that everyone will want to participate. And then all the risk metrics start to get cranked up again. So I have heard for 10 years about when's this buying opportunity going to happen? When are we going to get back to that massive dump, back the truck up moment? To me, it's now the moment that transaction volume has plummeted, the moment that you have to scratch and claw your way through every capital raise, that's when you know you're buying. Right? And that's what I'm most excited about, because I when you buy right, the next four years or six years are amazing. You can go take a nap. That's not what we do at Asym Capital, but you can when you buy right versus when you buy wrong. And you don't get to sleep at all and just scratch and claw your way through the whole period.

So back in 2024 or even 2023, the saying was survive until 25. But now, you know, it depends where you are. Like, if you want to be the real early adopter, you know, depending where you want to get in on that curve that you just referred to. Now it's persist until 2026, right? It was survive until 25, then it's persist till 26, right? Yep. So do you think you' the early, early phase now, or do you think there's some evidence that you're not like the first mover?

So it depends on the market, Right? So in Phoenix, I went from doing many calls with investors that were talking about catching a falling knife, and my partner and I would get off those calls and go, gosh, we're at the perfect moment. Because in Phoenix, it's very competitive. So if you hear some investors talking about a falling knife in Phoenix, you know you're buying. Right. It's just not going to last. In Phoenix, numbers are now up and to the right, and the, the demand story is so compelling, but the supply story starts to go away. But here's something that will apply to everyone when you're looking at, and I think we should definitely talk about interest rates, but when you're looking at just supply and demand, it's very predictable and it's just a one way street. If you know your market, you can find markets in single family, multifamily, office, industrial, etc, where the demand story is based on population growth, job growth, booming economies and the supply story is likely going to be stagnant or declining like I just outlined. So when you can get in front of that as an investor, you can benefit. But there's this other element which is the capital stack, the financing. So is it cool if we switch gears and talk about.

Yeah, let's, let's talk about that. And I definitely want to get into the new administration and we got to talk tariffs and labor and tenants, low income tenants and so forth. Go ahead, let's do it.

Well, we'll, we'll do both. So a lot of people are listening to this right now, been confused because over the last couple of months the Fed has reduced the federal funds rate a few times and they're now tracking to probably reduce the federal funds rate a couple more times in 2025. If you're interested in tracking what the market is looking at, you can search the term Fed Watch tool and you can see the probabilities that the Fed will reduce rates at various Fed meetings because there's a futures market for the federal funds rate being cut. So the market makes bets on what the cut will be and how likely it is that there will be.

There's a futures market for almost everything nowadays.

Yes, yes, that's exactly right. And so I always trust the market more than anything. In a second we're talking about politics. When I was looking at the election, I didn't look at any polls. I just went to polymarket.com to see what the market thought was going to be.

Most likely that's where people are putting their money.

Yeah, exactly. It's, it's not a biased thing. Capitalism isn't terribly biased in that regard. So if you're surprised with why the Fed reducing rates has not coincided with the 10 year going down, in fact it's actually seen some uplift. It's because those things are not the same, but they're also in some way opposite. So let me give an example. The federal funds rate is the overnight rate that banks that are in the Federal Reserve System charge each other when moving money back and forth, essentially. And they control that through a centrally planned committee, the Federal Open Market Committee. Fomc. Yeah, yeah, so they control that. And so that's an indicator of where interest rates will go over the long term or aggregate because it's like the most fundamental piece of the US economy is the cost of that money. But when the Fed starts lowering rates, what ends up happening is it creates more breathing room in businesses. And so people go, wait a minute, the Fed is lowering rates, it's time to risk on.

Right.

And so what they do is that the moment the Fed starts to reduce rates, it's very common historically for people to take money out of bonds and risk on by buying stocks, which makes the stock market go up. But what does it mean to the value of those bonds? They go down when bond values go down, when people start selling bonds, the bond rates go up. And so the 10 year people are moving money, people are selling the 10 year to buy stocks. This is broad and kind of a rule of thumb, but the interest rate of the 10 year goes up. And most real estate products are based on the 10 year, not the federal funds rate.

That's why they call it the bellwether rate. Yeah, right.

So that would be the most important metric, but the one that's centrally controlled and when you watch a fomc, meaning they're talking about the federal funds rate. So I just wanted to clear that up because a lot of people have asked recently. That's the reason for the Delta. It's common actually historically.

Right, but. But the Fed doesn't control mortgage rates at all. Exactly, that's the first thing to understand, they don't control them at all. The tenure influences mortgage rates the most. But they're certainly not controlled by the Fed. Have you ever wondered how the top real estate investors can see consistently find the best deals before anybody else? Well, listen up because this can transform how you invest. I'm excited to share something that's revolutionizing the real estate game. It's called Connected Investors. This is a really cool platform that gives you access to all of the property records nationwide. Truly amazing. It's not just a platform though, it's a secret weapon. It does a whole bunch of things besides the property data. It's a social network as well. It's built by successful real estate investors. For real estate investors, find off market deals instantly, access accurate ownership contact info, make smart data driven decisions and secure funding for your deals from a vast network of private and hard money lenders. Whether you're a beginner or a pro, Connected Investors is your go to tool tool for smarter, faster and more efficient Investing. Try a seven day free trial@JasonHartman.com Connected Again that's JasonHartman.com Connected and let us know how much you love this Software. Okay, where do you want to go next?

Listen, we got a new administration here and I don't all the time talk about this stuff, but I think it's.

Noteworthy and I think, oh, you've got to talk about it now because it's so impactful on everything. Tariffs, deportations, huge. The average construction worker is about 50 years old now and a lot of these illegals are young construction workers. So the labor shortage for construction is going to get much worse, which is going to drive up prices of construction and housing in general. Remodels to, you know, any fix up. These people live somewhere, they live in low end apartments. So if you have low end apartments or low end housing of any kind, that's going to matter if your tenants are no longer allowed in the country. Then of course there's tariffs making a lot of inflationary pressure. Regardless of what they settle at, you know, they're a negotiating tool. Obviously he's using it very successfully, I think, and very skillfully as a negotiating tool. But if you look at all the parts of a house or an apartment building and those prices go up by 25%. Wow, that's huge amount of inflation baked into the system.

And you bring up a good point. You know, I was mentioning, I don't really talk about politics a lot. I was kind of going down. I'll talk about politics for a second. But to your point. No, about the economics of politics. I talk about that all the time. And one of the reasons is that we want to position our portfolio in such a way that will benefit from tailwinds versus headwinds. Obviously that's what we do as investors. But let's take a double click on what you just mentioned. The tariffs are inflationary, reducing the amount of cheap labor in a country that's inflationary. Having lumber, for example, or steel for example, to a lesser extent, in some cases increase in price 20%, that is extremely consequential. But how can we position our portfolio in such a way that won't be negatively impacted, might even positively be impacted by some of that. So from my perspective, all the things you just mentioned, particularly as it relates to buying materials that leans towards significant renovations or development. And so what you find is that development is the most sensitive to inflationary costs because there's the most labor associated with doing development, most materials. When interest rates rise, it's the most sensitive to that as well. And so I see that the people that will be most negatively impacted are likely developers, builders, especially ground up builders in the construction space that is Also goes to your comment regarding deportations and stuff. However, it might be a tailwind if you're buying existing assets. Because if you don't think we saw the numbers for 2027 in Phoenix, what do you think is going to happen if lumber goes up by 20%?

Oh, yeah. When I teach the Hartman Risk Evaluator, which is about this idea. Right. It's all about the ingredients of the house. You're really a commodities investor. And every existing home or apartment complex or any built structure gets more valuable if it costs more to build a new one.

Bingo.

Because that means higher the cost of building the new one, the fewer new ones will be built, and the less supply will come online.

That's exactly my point. And. And you've done a great job, too. And I, separately from you, talked about this topic. And then one time I heard us both talking about it together, I was like, wow, I don't hear enough people talk about this. Which is the way that inflation erodes the purchasing power of debt.

Oh, yeah.

So if you're buying assets with debt, especially appreciating assets that appreciate during inflation, with a fixed dollar amount that you have to pay back, that dollar amount is eroded by inflation. And so imagine hyperinflation, where you borrow $10 million, and in five years, you pay them back by selling a banana for $10 million.

Yeah.

That's the story of the next four years. And we'll have to see. You know, the economy is tricky, and things are never as simple as they seem in the economy of 400 million.

People or the 8 billion people, really.

Exactly. Exactly. But you would be silly to put your head under the ground and say, I'm just going to play the game as if Biden had won. These are all the same things.

It's not a different environment.

Completely agree.

Yeah. Yeah. So I think there is going to be significant inflation. I mean, even just with optimism. I mean, look at the way the stock market reacted when we found out that Trump won and the Democrats couldn't cheat him out of the election this time. I guess look at the way the markets react. They just go up, up, up. So just optimism in general is inflationary. Okay, so that's true. Plus optimism, plus tariffs, plus deportations, you know, all of those things. Labor shortages, you know, they've been importing deflationary pressures from south of the border for decades now. And now that that's stopping, if American workers have to do your landscaping job or build your house, believe me, that house is going to get a lot more expensive.

Like yeah.

Labor cost is tripling.

Okay, I know that we try to keep these interviews short, but I got to make a comment around what you just said, because this optimism is extremely consequential. Right. And so for years, especially out of college, you know, I poo pooed the United States. I saw how big the government was, and I talked about how this leviathan that basically prints money creates wars, and these are things I hate.

Yeah.

But I met someone who works with billionaires, and he was like, you know, like most of the billionaires I work with want to send their children to the United States to work.

Right.

And it was really interesting to me because I. I never really realized why is it that most of the best inventions across virtually every vertical of the economy come from the United States? The idea that you can start a company and make money, the idea that you're one good idea away from being a billionaire is. Is very present in the United States. It's not the case in other countries.

By the way, the upward mobility here is amazing. It's incredible. Everybody in the world says that to me now. I've been to 99 countries now, and whenever I talk to someone about, you know, complaining about the US or this and that, and, you know, everybody has their complaints, but there is nowhere that you can move up like you can in the US Even in wealthier countries. I mean, you know, the US Is not the wealthiest country by any means. Look at those Middle Eastern countries. I was just in Qatar and, and the uae. And that's insane levels of wealth. Their per capita, you know, wealth and income is much higher than ours. But the upward mobility that we have, they do not have that. You know, rich countries, poor countries, none of them 100%.

And that's really interesting statistic, and it impacts the overall sentiment of the populace and it makes me love this country. And if you don't, but you have that sentiment, go. And I'm not talking crap because there's great people in every country, but go start a business in Spain.

Yeah.

Oh, and recognize that literally box will.

Come up in your face the minute you try to do anything.

There are tenure laws where after a certain number of years, it's like two. By the way, you can't fire people in Spanish companies. And so my point there is that.

Friend of mine owns an Irish company. Same way.

Really?

He. He acquired this company. They wanted to get rid of people. They couldn't lay them off.

I mean, that's how I learned that to. A friend of mine bought a company that has Spanish employees. So my point there is that this is exciting to be in a country where the outlook is positive, where the censorship brigade lost, where the team that tried to con. You mean that they, they didn't, they weren't able to cheat him out of it. They tried. And I don't even necessarily mean election fraud. I'm talking about lawfare, I'm talking about banning him from certain states in the election, all the things. And guess what? It didn't work. And the people that create businesses and jobs broadly are happy. And so if you're not happy for that, I'm sorry, but we're coming. We want to make money, we want to create jobs, we want to do this thing. So come along for the ride. So that's my message. That idea, though, is inflationary, but it's good for real estate investors.

Yeah, it is very good for real estate investors. One of the things I've addressed a lot is this idea of Trump wanting to build, allow builders to build on federal lands. This is not going to solve the housing shortage, folks. Not even close, okay? And here's, here's why. Because for low end housing, which is where these shortages most acute, right? In low and entry level housing, okay, the largest part of the value of that house is the construction materials. It's not the land. So if Trump just gave a bunch of developers, say, gave all the big developers a bunch of free land, right, it wouldn't matter that much. The land value, you know, in a typical rental property that we're looking at is like $25,000. It's nothing. It's not going to change anything in any real way. Okay? Now the other thing, though, that makes me think maybe there's a little bit of hope here. And when I say hope, I'm talking from the side of generally good for society. Like, I don't think it's good for society that there's a big housing shortage, okay? I think it's good for me as an investor, okay? But now that I've got some wealth, I'm kind of looking at the bigger picture, right? I'm not just about me, right? I mean, when you, when you don't have money, you're about, all about you, right? Because you've got to be. That's, you know, you're trying to achieve something, but once you're there, you can focus on the bigger picture, right? And so when you look at that issue of affordable housing, that problem is just not going to be solved. I mean, maybe reducing regulation. Trump has talked about that. Let's Reduce regulations, make it easier to build. Well, the problem is that even if you do, yeah, you could maybe shave a little bit of the cost of construction off. But people have become accustomed to things. And even if you reduce the regulation, like you say, okay, let them build houses without double pane energy efficient windows, but now everybody expects that that's like normal, you know, I mean, I remember when I grew up, I didn't have air conditioning. That was like a luxury, right? Like, you know, I had a couple friends that had air conditioning in their house. I thought, oh my God, this is incredible. Like, you know, we, we were poor, we didn't have air conditioning. Okay, that was a luxury. So people expect certain things and a lot of those are just baked into the regulatory pie. Right. It's not like changing the regulation is going to make the buyers all accept less, you know, necessarily.

Yeah, that's a fair point. I do think that that is one of the most important pieces of the affordable housing crisis. But even if they make some federal lands available, I mean, look, the reality is the state laws are extremely onerous. And I mean, in California, for example, it's just, it's not a supply and demand problem, it's not a land problem. Are you kidding me? We can drive from here to Vegas without seeing any houses. Essentially it's a zoning, you know, it's just over overregulation. Overregulation. And it scares people. That's why I prefer to be in markets where people are concerned about supply versus regulation. We talked about Phoenix, for example, but it's not pitch for Phenix. I would much rather have that story be the narrative because that's a story of market, not a story where one day you get an email that says, right, you've been rezoned.

Yeah, right, exactly. Exactly. Yeah, yeah. And you know, interestingly, to his credit, the disaster as governor of California, Newsom Newscom, Gavin Newscomb, when he gave the ability to put a second unit, additional dwelling unit on your property. Right. Everybody thought like a little while that that would fix the problem. That's not going to fix the problem. That it's like building that little accessory dwelling unit. It's 400 a square foot. You're not solving an affordable housing crisis with that. It's just, it's just no way. You know, we, we've got such a long way to go. I think manufacturing is the only real way to do it. Manufactured homes.

Yeah. I've got some good connections in the prefab space and they're very bullish about that space. But I'm not, you know, like you. I have my time in college, for example, I was always focused on what, what other people should do and how the economy should be configured. And at a certain point, most college students go from having this massive view of them changing the world and really impacting everyone.

Right.

And being, it's all, it's only going to work if I can impact everyone. And then as you get older, your circle of what you care about gets smaller and smaller. Some from cynicism, I'm sure, but some from you actually have something to protect.

Right.

And then you realize how much of responsibility it is to have a wife, kids, have your own house. And then it's like for me, what's best for me and my family. If the rich are going to get richer and the poor are going to get poorer because of the affordable housing crisis, there's only one side of that equation I'm going to be on and I will talk on podcasts about how it should be solved and the fact that it should be solved. But if prices are going to be going up, I'm going to buy existing units. Not going.

Absolutely. You've got to do, do what makes sense for you, you know, because that's the way capitalism works. I mean, Adam Smith outlined that, you know, a long, long time ago. Right. It's not the beneficence of the baker and the butcher. Right. Or what did he say? It was so eloquent the way he said it.

Yeah.

You know that it's, it's their greed and their own self motivation that makes it all happen. That's why they get up in the morning. So. Yeah, there's no problem with that at all, you know, no problem at all. But you know, there's lots of public private partnership possibilities and things like that. It's, it's going to be a very interesting year. I mean, it's only been a couple of weeks and it's already really interesting. So. Okay, Hunter, anything else you want to share? You want to do another topic area for a minute or two before you wrap up? I mean, what else?

You know what, I'll end it with this. I think I wanted to talk briefly about my experience with the market cycle because if you're listening to this right now and you're brand new, it's hard to get a sense of especially the multifamily sector, but also commercial real estate, broadly what we just went through, it was a once a multi decade type of downturn that if you're hearing this for the first time, or you joined Jason Hartman's podcast for the first time starting in 2022, you are in one of the most favorable times to buy in American history. And I'll substantiate that with a couple of claims. One, it's very rare to see downturns in real estate and 20% or more. It's very rare. You can go back and look at the couple of times it's happened. Two, it's almost never the case that you see a 20% downturn in a real estate asset class where you're not met with 12% unemployment and a totally destroyed rental base. Right now you see this massive distress. Not because of a dramatic.

Just because of the mortgages.

Yeah, exactly. That, my friends, is.

It's not like all the renters got evacuated from the market. The rental demand is actually increased. Okay.

Yeah, exactly, exactly. And so I'm just telling you this message right now. Depending on where you are in the stage of your growth, the question you should be asking yourself constantly right now is, what can I do to maximize this opportunity that will probably last no more than 24 months? That's the first thing. The second thing is the people that have been through it and are kind of getting their teeth kicked in right now.

I know when you say all this, you're speaking to apartment investors.

Yes, yes. Or anyone that's in the private equity space. If you've gone to do a deal and it's been difficult for you, you got to have the context that this is the hardest time to raise money in 10 years. And so that's how you know you're buying good deals regardless of where you are in the United States or otherwise. If you find the fact that you are not able to get as many deals as you thought, that's a good indicator that you're buying. Right. If you find that you have to scratch and claw your way through each capital raise, that's an indicator that you're buying. Right. If you have you find yourself constantly negotiating with the lender because they won't give you above 52% LTV, that's a time to buy, my friends, because in two years, you'll find it's easy to raise money, you'll find it's easy to get debt, you'll find it's easy to see the supply and demand disequilibrium. And at that point, it will no longer be the name of my company is a SIM Capital. It will no longer be asymmetric. Asymmetric. So freaking go for it, Jason. Is a great resource for you. Listen, just absorb the content and go after it and don't quit. And because it's hard, you know you're in the right spot. So keep freaking going.

Yeah, that's a very good point. And Hunter, you know that is true in all sorts of areas of life. When something is easy to do, everybody's doing it. Okay. When something is difficult to do, you're going to have a lot less competition. If people are throwing money at you, that means the market is near a peak most of the time. Right. Because they're throwing money at everybody, not just you. Right. Not just your deal. They're throwing money at everybody. But if it's hard to get the money right, then you can get a deal. Then you know, you're in an open path, you've got an open road. So that's a very good way to look at it. I'm glad you said that. Hey, Hunter, you've got your big event coming up. Tell people where they can find out about that.

So first of all, I'm super excited about this because from my perspective, the number one thing holding most private equity entrepreneurs back, whether it's real estate, multifamily buying, existing businesses, whatever, crypto funds, etc, it's about raising capital. Especially now. It's not deal flow, it's raising money. And whoever can make it rain is going to win in 2025. So we have a conference coming up in Phoenix February 19th through the 22nd. It's called Raise Fest. It's specifically focused on raising capital. It's a great place to learn about raising money, meet people who are raising money for other people's deals. Maybe there's some partnerships there. You can learn more about that@raisefest.com myself, Cody Sperber, pace Morby, Katherine Bell. Some rock stars are going to be there and people that have raised, maybe they're raising their first 10 million bucks and some other people that have raised, you know, $280 million of equity. Can Macro Label be there as well? So hopefully I'll see you there. Raise Fest.com Hunter Thompson, thanks for joining us. Yes, thanks again.

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