2335: Michael Zuber: Debunking Doomers and Creating Wealth in Real Estate

This show is produced by the Hartman Media Company. For more information and links to all our great podcasts, visit hartmanmedia.com so far the event's been fantastic. Lots of great speakers, so many good contacts. Just the amount of different people you see here and meet here is probably the biggest benefit. And the speakers are unbelievable. And it's jam packed with content. Basically can't miss a speaker. If you're on the fence at all about this, if you're even considering it, just jump on. Do it. You won't regret it. You're going to be able to close those time windows that you think take forever. Just do it. It'll be a great experience for you as an investor and you're going to be able to learn just through osmosis, through all these great people you're around. Welcome to the Creating wealth show with Jason Hartman.

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You really can do it. And now here's your host, Jason Hartman with the complete solution for real estate investors. Welcome empowered investors. This is episode 2335. Today we've got a great show where we are going to talk about the housing market with Michael Zuber. No, it's nothing like those last couple of short interviews you heard. This is an in depth topic and we are going to go through it in great detail. Be sure to register and join us for our upcoming event in Phoenix, Chase and Hartman University. You're going to learn a lot. This is a practical, small intimate workshop where you will learn all about how to do the math of properties, how to analyze properties, how to analyze and build a portfolio. That's at the end of September. Jason Hartman.com Phoenix Jason Hartman.com Phoenix to join us for that, get your tickets ASAP and we will send you the hotel information shortly after that. And also our Wednesday Master class is coming up again Jason hartman.com Wednesday to register for our free Master class every single month with a different topic and sometimes different guests. So join us for that as well. All right, let's go ahead and dive in to this in depth, dive into the market. It is my pleasure to welcome a returning guest back to the show, and that is my good friend Michael Zuber, the author of One Rental at a Time. And one of the reasons I really like Michael's work is that he just tells it like it is. He's like me. You know, we just tell it like it is. And the way it is is much better than the Doomers say. Michael, welcome back.

I appreciate that opportunity. I really been following you and admiring you for a long time. So to hear you say those nice things really means a lot. It frankly means I'm on the right track. So I appreciate that.

Yeah, yeah. And likewise, you know, you are on the right track. And like we said before we started today, we're going to save as many people as we can. And I'll tell you why I say that specifically. It's interesting to me the way, like, our legal system works and the way, you know, we view things and perceive things as humans. Okay? And here's my example on that. If someone pitches an investment to you and they tell you that the investment is going to be incredible and it doesn't work out as well as they say, you can take them to court, right? And you can say, this guy lied to me. He misrepresented the whole thing, right? Misrepresentation. But if someone tells you not to invest because the sky is falling and we better all think like Chicken Little and, you know, bury our heads in the sand and you miss the opportunity, you can't do anything to that guy, right? And the opportunity cost is the biggest cost. And think of people like Nick Jarelli, who's got a very big YouTube following because the doomers always have a bigger following. Or think about Peter Schiff, who's got a huge following. These people had been preaching doom and gloom forever and they have caused hundreds of thousands of people probably to miss opportunities. And that is the biggest cost. I mean, there's an old saying, I'd rather see a crooked furrow than a field unplowed. Right. I think Lincoln, Abraham Lincoln might have said that or something. And you know, it's so true. Like, even if you make an investment and it doesn't work out, you know, and you lose a little bit of money, say it goes badly. Is that worse than missing out on all of the big gain periods? Right? You know, you're going to have some winners and some losers and everything in life, and the opportunity cost is your biggest cost. But as humans, our minds don't really work that way. We don't back calculate that, but we back calculate what we lost if things don't go well. So it's just interesting, isn't it, Michael?

Yeah, I think there's a lot in that. It's really interesting. Both as somebody who has built wealth, helped others build wealth, but also seen a lot of people fall for the doom channels. And you're absolutely right. If you want to grow fast on YouTube, the formula is really easy. Just scare people every day.

Yeah, right.

As a human condition, we run away from fear or we chase, you know, good things and, you know, most people are happy to run away from fear. It's kept us alive.

Yeah. So that mentality worked really well up until the Industrial revolution, when we had the Industrial revolution and we got, you know, more law and order and we got more abundance. Then our old negative minds that looked for negativity to keep us alive. Right. It was a great trait that we had, otherwise we probably wouldn't be here. We had to put those on the shelf. Right. Mostly. And seek opportunity rather than avoid fear.

No, absolutely. But again, if you want to grow fast, preach fear. But if you want to be impactful, if you want to help people, tell them the truth, not what they want to hear. That's. That's really the big thing that we both do is we tell the truth, we back it up with data. A lot of people don't like it. A lot of people want to believe. Like, for example today, people want to believe we're on the cusp of the next great financial crisis in residential real estate. You are a complete moron if you think we're on the cusp of the great financial crisis. I'm willing to have a conversation about housing being, you know, unaffordable and all of those things, but to say it's the next GFC is to fundamentally not understand the gfc.

Right.

Have none of that kindling set up for this crisis. So, I mean, there's.

And so what you mean is this time we don't have a bunch of adjustable rate subprime mortgages that should have never been made, about to change the rates. We don't have a bunch of, well, that we know of, a bunch of Wall street fraud in the background, selling the same loan in pools of loans to investors 33 times over. We don't have the big short. We're not living in that world anymore.

No, I mean, here's again, these are all numbers you can all go back and look at. Why did 2008 start the housing crash which oh by the way lasted three or four years depending on your market. It wasn't because of 2008, it was because of 2006. 2006, 51% of loans originated were ARMs. Most of those were two year ARMs. So if you add two years to 2006, you get 2008.

Yeah, so, so the ARM, what you mean adjustable rate mortgage. Okay. And th those had low introductory teaser rates and then they adjusted and people got payment shock and they, they could never afford the property they somehow got a loan for. And so of course there was going to be a problem.

Yeah, exactly. I mean this is just to put it in context of today and why today is not the gfc. And anybody that wants to make this the gfc, you need to stop following them because they don't fundamentally understand they're just trying to produce doom porn and get paid.

Yep.

Shelter cost. It is the largest expense for most families ex taxes. In 2008 when these payments shocks happened, you went from having a very affordable shelter cost to something that was potentially 3 or 4x shelter costs. So let's put numbers on this. Let's just say for example Your payment was $800 2006, 2007 and let's say rent for a subsequent house of light quality was 1500. So buy with this teaser rate which is 1.9 you get in your mortgage payment is less than rent. You're good. Now in 2008 that you know, 750 or $800 payment goes to 3200. You now have a 3200 payment which oh by the way, you can't afford. And equivalent rent on a house of Same quality was 1500. You now are essentially incentivized to not pay, which lots of people did. Now fast forward to today. 98% of the loans done in 2023, two years ago were fixed rate mortgages. Do you remember people what mortgage rates were were in 22 and 23 and so on and so forth.

They were super cheap. Yeah.

So guess what? You have no payment shock. In fact, if you are a homeowner and have a mortgage rate below 4 and lots due below 3, you have an artificially low fixed housing cost which will be below the cost of rent for the life of the loan. It's just how it's going to work. Which oh by the way means you have more disposable income.

Right.

Means you can.

I would, I would also argue Michael, that you have a mortgage payment interest rate that in real terms is negative I mean, I, I talked to a guy that got a 1.9% mortgage.

I've talked to them as well.

Incredible. Right? But, you know, lots of people have 3% mortgages. Lots of people have 4% mortgages. If you have a mortgage, I would argue anywhere below 5%, you're literally getting paid to borrow. Because real inflation is easily 5%. Okay.

Yeah. Even if you use the government numbers, if you have something below three, you're winning. I mean, yeah, we can have. So even if you just believe their numbers, you got to rate below 3, it's a negative number. Right. Adjusted for in real terms and with.

The government's big incentive to understate inflation.

Yeah, of course. I mean, it's just, it's. You won. And for most people, it's not the house, it's the asset. It's the 30 year money at 2%. I mean, that's.

Right.

Now, how much of that do you want? The answer is all of it.

Yeah. Yeah. And think, think how rich those people are getting every day because not only are they getting paid to borrow that money, but they're also getting a free house. So it's like they don't even have a mortgage payment. Right. Like everybody else is saddled with a rent or a mortgage payment, but those people have a free house. Right.

This is, this is why Nick Durley and all the other channels really hurt people, to your point. Opportunity costs. All of them were producing videos calling for a crash in 21 and 22, which was actually the best time to buy in the last 50 years.

You know what I did? I took the screenshots of their YouTube videos with their outrageous thumbnails and outrageous clickbait titles, and I've got the dates on them. So, you know, if I took that screenshot two years ago, it says the video was posted two years before that. So that's a four year ago, a 2021 prediction they're making about, you know, epic crashes and stuff. And it's just, it's just unbelievable. The biggest cost is the people that have discouraged investment and the literally hundreds of millions of probably billions and billions of dollars that have been lost because people were afraid to do something.

Yeah, yeah. And it's really funny. I mean, there's two ways we can go with this. We can, we can talk about the market today, which I actually think is. It's the first buyer's market, Jason, that I've seen in the last 10 years. It's the time to write disrespectful offers. Is it's time to follow up because.

Again, as disrespectful offers.

Absolutely. I mean, I, you know, like just, I like to put real numbers on it. So I'm looking at a house in Vegas for four. It's listed for 400. My offer is going to be 300. Yeah, I don't need it. But if I can find the motivated seller, which again, I've done the research, they own it free and clear. They moved out, it's vacant. You know, all the, all the signs are there. I'm going to find a deal because Vegas has more inventory. It has the highest 77% increase in active inventory year on year. It's the highest in the market.

Yeah.

And I'm going to scoop in because all the buyers are disappearing. They're reading the headlines and I'm going to go, ham, are you still living.

In Fresno or did you move to Vegas?

So I have a place in Vegas and in California now.

Okay, got it, got it. Okay.

Yeah, I'm in Vegas 51% of the time at least.

Exactly. That's what. So you got the Nevada tax rate. Yeah, exactly.

You got it.

You know, I remember when I lived in Las Vegas for a whole year and a half and I was looking for houses and I was going to buy one of these big like mansion Vegas style houses, you know, back when Vegas was cool, when the mafia ran it, the corporations, I don't like what they've done to Vegas, but when the mafia had it, you know, as long as you weren't on their bad side, it was a pretty nice place. And they built some just glorious big houses, you know, 10, 11,000 square feet. And I couldn't believe the kinds of deals that were to be had on those mansions. And currently I'm looking for a high end home myself in Arizona because I decided to move back here and I want to, I want to get some kind of formula going for this. Michael, maybe we can brainstorm an idea. But there's a certain value just in having more choice. And I'll give you an example. So a couple of years ago I bought a house here and I was going to move back here a couple of years ago, but the deal didn't go through. It fell out. And I'm kind of glad it did in hindsight, but houses were a little cheaper back then, They're a little more expensive now. But the difference is there's a lot more to choose from now. There's much more inventory. So there is. Even though in aggregate I'm going to pay A slightly higher price than I would have a couple of years ago because even with the high rates, prices have appreciated a little bit. Right. The fact that I have more choice and I can get the right asset, the right home is well worth it. So, yeah, you know, there's. There's a benefit.

Yeah. It's funny. So you're looking for your, your, you know, your home. Right.

Personal residence.

Yeah, personal residence. Right. Which really takes the whole my model out the window.

But yeah.

Let me just ask you this question as an investor. What do we want? Well, I don't know about you, but I certainly want more inventory than. Less.

Yeah, check.

I want less competition.

Yep.

Check. Why do I want those two things? Because ultimately I have been buying real estate for 22 years and my best deals were done in markets with no competition in rising inventory. Because I'm a cheap son of a bitch. And I will write disrespectful offer after disrespectful offer. I will follow up until either A, you sell it to someone else, B, you take it off the market, or C, you sell it to me. This is a numbers game. And I will get a house in another one in Vegas with, you know, something like a greater than 25% discount because some people have to sell.

Yeah.

If you want to sell, you're going to take your market, you're going to take it off the market, and you're going to wait for the screen.

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Yeah. So let me set this spreadsheet up because again, this, this spreadsheet came to me in 2021. You know, I was an individual like you, Jason, who had a lot of real estate. And at the time we were going through the pandemic, we didn't know what was coming. And I was hearing, like you, a lot of people, including Ken McElroy saying a housing crash was coming. Right. I think Ken said, you know, 30, 40%, some scary number. And I'm like, oh, my God, not this again. So what I did is I went back at the time it was 2021 or 2022, and I went back all the way to 1970. So what you're about to see is a spreadsheet that has a column for every year since 1970 up until 2024, because I do it after the year end, so we're not done with 2025 yet. So it's going to have 54 columns. And then what I did is I went down and I collected lots of metrics. Transactions price, interest rates, stocks, unemployment rate, you know, you know, just everything I could think of because my background is economics. So you're going to see a spreadsheet with, I don't know, 25, 26 columns. It's going to have 40 rows. But what we're going to look at here was my basic question I asked myself, right?

And we've highlighted in color a few of these rows and if you're listening only on audio, don't worry, we're going to tell you the numbers.

Yes, we will.

And the point of the numbers, the lesson in the numbers.

Yeah. What I wanted to go back to was what I wanted to do from this research because it Took weeks and weeks. And, oh, by the way, if you see the spreadsheet, which I give away for free, it's all sourced. There's a whole worksheet that says St. Louis Fed. It has all the links, so you can go validate the numbers yourself, because I didn't make these up. These are all sourced from the government.

Oh, you mean you're not making big leaps in logic like all the tumors do?

No, it's all. In fact, if you followed all the links, you could rebuild the spreadsheet all by yourself. That's what I wanted people to do. So here's the question. Have we seen an environment where the Federal Reserve raised interest rates very, very quickly? And the answer is yes. You can go back and look at the late 70s and early 80s. Okay, great. We've been here because remember, this spreadsheet came to me in 2021. 2022.

Right.

Rates are being ripped higher. Jerome Powell said, you know, pain is coming in Jackson Hole. It's like, oh, God, what's coming? So I said, okay, great. Rates went higher. What happened? So we're going to look at that together. The rows are highlighted, and that's what led me to make the correct call. Jason, we are going to have a housing crash in transactions, not in price.

Right? Big difference. Big difference.

People threw eggs and fruit at me, and I'm like, okay, we've been here before. You're just. You are being so arrogant because you think everything has to be the gfc. Everybody is the last war. And it's like, guys, get out of your head. This is not the gfc. Go back and see what we've done before. So let me share it so we can orient everybody.

Yeah. And by the way, just for a little context, I want people to know that in 2004, in 2005 and 2006, I was a crash bro, okay? I was the one getting in arguments with realtors. I would do these seminars at my office back then in Newport beach, on San Joaquin Hills Road in Newport beach, if anyone knows where that is. You know, we would have 50 people come in and we would do these, you know, a couple times a month. Right? And a lot of them, of course, you know, Orange county is a heavily populated real estate agent mecca, okay? Like, like many attractive markets where there's money to be made. And I would show them the ridiculousness in the mortgage, lending, underwriting. I mean, there was no underwriting, basically. But I would show them all of this stuff and they would argue with me and say, oh, it's going to continue forever. So I'm not a perma optimist. Okay. Or a perma bull. When the data says things are bad, I'm. I'm going to tell you they're bad.

Okay, yeah, I'm with you. Because again, if you know my story, I had eight single family homes in 2006. I go to an event by Bruce Norris that says the California crash is coming. Yeah, I think he's right. So I sell all my homes, the one rental at a time. Guy sold all his eight homes in 1031 into 80 units in apartments. Turned out to be a genius. Moving great time. So I'm not a perma bull, which I get called all the time. I'm like, no, I. Not only am I not, but I took action. I sold all my houses in 06.

Well, and guess what I did? Guess what I did in 05? I sold my real estate company.

There you go.

My deal closed. Coldwell Banker bought my traditional real estate company in Orange county and it closed on November 11, 2005. Wow. Okay. So everybody said I had incredible timing and, you know, I was bearish, you know, because of the ridiculous mortgage length ending that really concerned me. I knew that there would be a problem.

There was a come. There was. Yeah, it was really bad. So let's get everybody again. If you look across the top, those are the years down. The first column, column A is all these like S P and rental vacancies. And I'm just adding more and more stuff, but we're going to focus on only four rows.

Okay, so just to know that this chart starts at 1970 and goes through the end of 2024. 2025 is not finished yet. So we can't talk about that year. But yeah, tell us, give us the highlights here.

So the big question for me Is, was row 10 that says 30 year fixed rate interest rate? Because again, we're now in 2022. The world's going to end pandemic, blah, blah, blah.

I'm like, 2025.

Yeah, we're in 25. But when I started building this spreadsheet, it was right after Jackson, Jackson Hole, where Jerome Powell said, rates are going higher.

Oh, God.

And I'm like, okay, what happened? So if you look at row 10 and you go to 1978, you can see the interest rate was 9.64.

Ouch.

If you go forward four years, it's now 16%. 1981, the interest rate is 16.6.

And that's the mortgage rate for 30 years.

30 year mortgage rate fixed 30 year mortgage rate. And again, there's a whole worksheet that says data sources at the bottom. Click on that to see where it's from. So this slide shows that mortgage rates went up 700 basis points. 700.

Which is 7%.

Which is 7%. And again, if you were believing the people back in the day, they were saying every 1% rise in mortgage rates mean prices have to fall 10%. That was, that was what they were saying. And I'm like, oh, okay, so if rates went up 700 voices points or 7%, then prices need to fall.

They're gonna fall 70.

And I'm like, okay, so what happened? Well, if you go here to row eight, you can see that home appreciation on a nominal basis was up every year. Every year. Not down.

Yeah, up. Right.

And I'm like, okay, well that doesn't make sense. What the hell are these guys talking? And then I'm like, oh, Zuber, you're an idiot. It's not price, it's payment. Interest rate went up 700 basis points mean payments went up. So if you go back and look at transactions, in 1978 we did 3.986 million.

That's about what we're doing now.

Yeah.

And the population is what, doubled since then?

I think so it's really certainly 50 million. Yeah, yeah.

No, it's more than 50 million since then. Do you have population on here? I can look it up for you.

I don't.

But folks, this is why everybody's complaining right here. Because in 1978 we had the same sales volume as we basically have now. Okay? So if you're in the real estate business, the mortgage business, the title business.

Yeah.

The furniture business, the home improvement business, the flooring business, Real estate has such a wide effect or a knock on effect on so much of the economy. That's why it's so important. Right.

12% of the economy, 12% of GDP is housing related.

So all of those 12% are complaining.

They should. It's a depression. You've been in depression for three and a half years.

Yeah, so?

So this is what I found. This is on the spreadsheet. Go back and validate yourself. So again, the Federal Reserve, Paul Volcker yanks interest rate higher. Mortgage rates go up 7 or 700 basis points. Transactions go from 3.986 to 1.9.

Wow.

Prices.

Talk about a dump in volume. Ouch.

Yeah. 50. Yeah. So again, prices did not fall any year. Crash. Bros are wrong every time. Yeah, we had a transaction crash.

So the worst Year depression. The worst year in price appreciation was 1982, where we saw point four percent appreciation. And the year before we saw six and a half percent appreciation. The year after we saw 8.9%.

Correct.

So this is why.

This is. This is what happened. And this is what led me in 2022 to go hard against all the crossroads. Because they were talking about prices going down 10 or 20 or 30%. They were wrong. I was right.

Yeah.

And you know, if you want to fast forward, I now believe again, we just this morning got existing home transactions reported by NAR at 3.93 million. Back to your point, about same as 1978.

Yeah.

And I think we're going to do less than 4 million in, in 2025 total. But then I think it gets better. And then here's the other. This is what really shocks people. So if you're in the housing industry and you see this chart going from 3.9 to 1.9, you're like, yep, I can believe it. Right to your point. Depression, you know, title, all of that.

But. And let's distinguish that, okay, that sales volume, even though price is still rising, sales volume, you know, cut in half. And when Michael says depression, that means depression. If you're in the transactional business, you're.

Getting a drip on the transaction.

If you're one of those 12 of the economy that is tied to housing, that's a depression for you. But it doesn't mean real estate prices came down. They actually have.

Yeah, exactly. Right. This is, this is for the 12. This is why, by one count, 60% of mortgage brokers have left. Some people say 40% of real estate agents. It's harder because there's that yearly renewal. But here's the question for folks like, if you're in that industry and you're struggling, how fast. This is wild. How fast did it take us to go from the bottom? 1982. Just back to 1979. That's the question. Because I think in 2026, we're going to slowly build out of the bottom. So let's just watch this together. And the answer is, when do we get above 3.8 million? So not 83, not 84, not 85, 86, 87, 88, 89, 90, 91, 92.

Okay. In 1994, we almost got there, right?

Almost got there.

Yeah.

And then 1995 is the first year we get above it.

Wait, wait, no, no, it's 1997.

Okay.

What?

So again, 1978, this is why the spreadsheet is so Fun.

Yeah, it's so big.

3.82.

Okay.

3.82. Okay. So yeah, it's quite.

Okay. Yeah, you're right, you're right. It's 3.86 there. It's barely above.

Barely above.

It took how many years is that? Like 14 years?

Yep. Yeah. So again I am calling August 2025. So next month will be the bottom for existing home sales year on year volume transactions. And September will be the first positive month in years.

Right.

Comparison year. And again, it's not a big number. Right. We only did 330,000 in 2024, but in 2025 will be the first time we have year on year sales growth, transaction growth, volume growth, but that will then be years, I'm saying at least five, if not eight years. To get back to, you know, the previous high which we have in the spreadsheet here, I'll just scroll over to. Because again, this is so big. And again you can get this on my website, one rental at a time, just your email and auto send to you.

Excellent.

So in 2021 we did 6.13 and then 22, 23 and then I have another one with 24 on it. But yeah, it's, it's going to be a while till we get back to 6 million. But again, these are transactions, not price.

Got it. So you're talking a lot about sales volume and that's interesting for, you know, a view of the industry and what's going on. But most of our listeners aren't in the transactional business, they're in the investing business. Right. And they want to know what rents are going to do, what inflation is going to do, what prices are going to do. You know, how that all pencils out. And one of the things we should say because we've addressed, you know, a lot of times I feel that I'm being way too reactive to the doomers. Right. And I'm trying to like talk about price and stuff like this. And you know, years ago they even talk about prices because prices only matter if you're buying or selling something. Right. What we really want to focus on is yield. You know, what is that rental income like. Now we all know expenses have been a bit higher, especially if you're in some of the really affected areas where insurance has been a lot higher. But yeah, you know, what does the rest of the equation look like? Which is really the real equation? Right?

Yeah, yeah. So let's talk about acquisition first. And again, I firmly believe, and I'm executing this because if you Watch my show. You know, I'm actively looking to buy the next rental property. The next couple of months, perhaps the rest of the year, depending on where you're in the country will be a buyer's market for most of the country. And by a buyer's market, I mean it's time to get aggressive. Right. I don't believe in paying list price. Certainly in a buyer's market.

Yeah. And you're going out there and you're hunting for deals. Right. Not everybody's doing that, but, but everybody could.

I'm not doing anything fancy. I'm doing strictly out of the mls. It's listed, it's a known seller. I'm not, I don't have a va. I don't have mailing campaigns. I'm not door knocking, I'm not texting. I'm just a, just a W2 employee.

You're just a guy who's just a guy looking at deals. Okay, so let's address this issue though, of what to expect for yield. Right. What do you do to optimize your rents? And do you trade or do you strictly buy and hold?

Well, I have, I do 1031 exchanges. It's funny, we come out of this and the multifamily implodes. I may be selling a bunch of singles and trading up to, you know, 10, 20, 30 unit buildings.

Okay. So that's just normal like buying and selling though. What I'm talking about is, are you flipping? Are you fixing or anything?

No, I flipped 51 properties from 2021 to 2023 because it was easy. But that's not my main model.

No. Yeah, right. Okay. Yeah, flipping. You think that's easy? I think it's hard.

Well, in that market it was easy because all you had to do was buy it, clean it out and sell it again.

Oh, so you weren't really like dealing with contractors and all that kind of stuff no more.

I think you would call it wholetailing today probably.

Yeah. Right. Okay. Okay, good, good. So share some tips on maximizing yield and that component of it, you know.

Yeah. So maximizing yield is really made up of two things. First off, obviously you've got to. You got to. You know, the acquisition price means a lot, and I'm willing to write lots of offers and perform lots of follow up to get the most advantageous deal. Second, you need to control the cost of debt. You can, you know, get bank lending. You can sometimes get seller financing. If you write the situation. I actually have a lender that will do something that's called a 504010 which I plan to use. That is they, they lend me 50% bank lending at 8%. They then allow me to subordinate a second to the seller which I can go up to 40% of the purchase price. And I've done deals where I got the seller at 2%. So 8% first, 2% second. And I only have to come in with 10%. So again, creating a yield on a 10% down payment where the blended capital is something in the low fives, a lot easier to do. I look for opportunities to add value. A lot of the older homes have just these boxy configurations that I can turn a room that wasn't a bedroom into a bedroom because in my mind.

Okay, so you are doing some work on these properties there.

I can, yeah, absolutely. I look for ways to create value. Right. And one way to increase the yield is to get an extra 200 bucks rent by having a fourth bedroom instead of a third.

And do you strictly self manage?

No, I, I've never self managed.

Oh, really? Wow.

Since day one. Yeah.

I'm going to disagree with you on that. Okay.

Yeah. It's certainly, certainly if you were, if you have the opportunity to self manage, you absolutely should. But you got to remember when I was building this portfolio, I was living, I was on the road three to five days a week, often in different countries and my wife was, you know, raising our daughter. So it was time prohibitive.

What were you doing?

I was selling enterprise software.

Oh, okay, got it.

Yeah. It was a world. I was either, I either ran North America or the world. So I could be in Japan, Australia and then in Chile and. Right. So I've done a fair amount of traveling my life. So it just was, it was a non starter for us. I've had a PM since a single house. Yeah.

All right.

So yeah, that's the magic of yield. The whole idea of yield, Jason, in my opinion is most people rush in and guess I believe you have to figure out in your market today what is an average yield. And let's just say an average Yield sucks. It's 2% or it's 3%. Well, you know, if you can get 5% in a money market account, you know, keep it in a money market account. I'm not, I'm telling nobody ever to buy.

Right. But remember that money in the money market account will never appreciate. It will only depreciate. Okay.

It'll be inflated away. Absolutely.

Yeah. Right. So. So there is a difference. It's not just about that yield. A lot of People make that mistake.

Yeah, yeah. So what I'm saying is, is I'm not telling you to do a bad deal. Right? I'm not telling you to do 2%. What I'm trying to do in my market, of my market in Vegas today, the average yield is zero, right? It's zero. It's. It's a tough market, but I'm trying to go in via getting a better price, finding ways to add value, building a casita. I'm willing to do what it takes to find the value I want. Nine or 10%, that's what I'm shooting for. And if I don't get it, I won't buy, but I will keep trying.

Got it, Got it. Okay. So what other things should we talk about in terms of, you know, predictions on the market or anything?

You know, you actually put out. You put out an excellent post, I want to say. It was on Instagram. I read all your stuff. So it might have been Twitter or something else, but you basically put out a video highlighting how many people unlock at different interest rates. That is magical. Because if you step back, because again, the headlines in real estate today are bad and probably going to get worse, at least in the short term. But if you step back from the equation and go, what happens if. What happens if rates go to 6, 5 or 6 or 5, 5. One of the things I think people need to realize is where we are going. Where we are and where we are going. There's this whole conversation is about where we have been. So where are we going? And you put out a post on Instagram that really highlighted for folks and frankly, should scare people and wake people up and that. And that was what you have here is what happens, just what happens if in the future interest rates fall just a little.

Yeah.

If they fall to six and a half or six. Look at this last column. The number of potential buyers that can unlock. And you know, we're talking 2.8 million if rates just got to six and.

A half and that. And that is almost a certainty. I mean.

Oh, for sure.

Yeah.

Yeah. I would even call six by the summer of next year.

Oh.

But what people don't. Yeah. What people don't realize is, folks. I don't even burst your bubble, but we only have about 800, maybe let's call it nine. Let's round up 900,000 homes available. If we run into an environment where we unlock 5.4 million potential buyers and we only have 900,000 available homes.

Yeah.

What the heck do you think happens?

It's a massive bidding war. So just to give some full frame to this, okay, so this chart is a mortgage rate sensitivity chart. And it shows how many people could qualify for the median priced house at different interest rates. We started a baseline of 7%, you know, because give or take, that's about where we are. And say it goes down a half a point or 50 basis points to 6.5. That means 2.8 million new people unlock, as Michael calls it, if we go to 6, 5.4 million people can now additional people can afford the median price home. And if it gets down to 5.5, 7.7 million new buyers can afford and qualify for the median price home. And like Michael says, we only have just under 900,000 homes for sale in the entire country.

Yeah. And it's really funny if you just want to go back in the last two years, we have hit 5.99 a couple of different times for very short windows. And you see that people come flying off the shelf.

Oh yeah.

With a five handle. That's the magic number. Everybody that asks me, what's the magic number to get this thing going? 599. You get a five handle, things are going to go bananas.

Yeah, five handle, I love it. Yeah, you're absolutely right. So you know, folks, look, you're buying and controlling an asset that is in short supply. It's very hard to create new supply. It's not like you're speeding up the factory to say, build more iPhones. Okay. You know, this is a, an asset that is low tech. It's very hard to create new supply. You want to own something that is in high demand. Everybody needs it. Obviously everybody needs a home and has supply constraints. That is always going to work in your favor. Yeah, yeah.

And the other thing you've just got to realize, you know, I have a shirt that says inflation's a feature that made me rich. Ask me how you've talked about inflation, debt destruction forever, which is just a genius move. I mean, nobody today can think inflation is going to go negative. Right. We're not going into deflation inflation.

Not, not with the amount of debt we have.

Oh, no, that in the money supply. And it's going to take years. I mean, it's just, it's not going to happen. Inflation is a feature, not a bug. Invest like it. And Jason's telling you guys for years how to do it. So, you know, step in.

Yeah, absolutely. Good stuff. Well, Michael, anything else you want to share? Maybe a question? I haven't asked you something. You haven't discussed.

Actually, there's. Like I said, I've stalked you on Instagram. You actually have a. I don't call it a category called Famous Friends. And one of the pictures I saw you with was Vanilla Ice. Yeah, I want to talk about that experience. Meeting the man with Ice. Ice baby. How was that?

Yeah, you know, I can't say I was any big fan or anything. You know, that was not really my music style. But he was a speaker along with me at a conference I was at, and he actually did a little concert for us. So at this conference, he did a few songs and we had fun dancing on stage with him. But he also spoke. And what's interesting is, you know, he lives in Florida and he is quite a real estate investor.

Yes.

Yeah, I didn't know that. And it's amazing how some of these people that sort of have their, you know, they have a few years of fame in the sun and they're making. They're making lots of money and they got all the, you know, benefits that go with fame. But, you know, a lot of them just don't do anything with their life. They just kind of become losers afterwards, you know, and we've all heard those stories, but some of them really get their act together. They, they, you know, build real estate portfolios. They do all kinds of cool stuff. And he's one of them. You know, he talked about his real estate investing and everything. It was really interesting.

Yeah, well, I remember I. I was into that music. I had the car with the speakers and all of that. So I was one of those.

Well, I was into different music because I'm probably a year or two older than you, so I was into Rush and, you know, music like that.

Very cool. Well, I appreciate your time, man. Thank you so much.

All right, sounds good. Michael Zuber, give out your website one.

Rental at a time. Website, YouTube, Instagram. That's one thing I've done right. Everything is one rental at a time.

Good stuff. Michael Zuber, thanks for joining us. Thank you so much for listening. Please be sure to subscribe so that you don't miss any episodes. Be sure to check out the show's specific website and our general website, hartmanmedia.com for appropriate disclaimers and terms of service. Remember that guest opinions are their own, and if you require specific legal or tax advice or advice in any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to itunes or Stitcher radio or whatever platform you're using and write a review for the show. We would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.