287: How to Really Be a Real Estate Investor with Gary Boomershine

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Hey, it's my pleasure to welcome Gary Boomershine. He's a friend of mine. I met him many years ago actually and he has vast experience in real estate investing with hundreds of properties and loves the buy and hold model. But he's done lots of different models and helped people and coach them in doing much more active real estate investing as well. I like how he makes the distinction that if you are a real estate person, I want to say that is out there actively involved in deals. If you're wholesaling, if you're flipping, you are not a real estate investor, you are a business owner. A real estate investor should be a buy and hold person who's not that actively involved in the whole scenario. So it's good how Gary makes that decision. Distinction. Gary, welcome. How you doing?

Jason? It's a pleasure. Really great to be on here. And you know, I gotta tell you, you know, I launched my own National Podcast, realestateinvestor.com Huddle. You were the inspiration. You don't even know that.

Thank you.

When you were speaking, there was a group of us in Tampa last year. I know we're going to see each other again, but when you were sharing of what you've done and I know that you've got such an incredible audience, I'm like, you know what, I want to do that too. So I, I learned from the best. And Jason, you're, you're one of them.

Well, thanks. I really appreciate that. I did not know I inspired you to do that. I'm always creating my competition.

It's a very bad business plan. No, you're not really a competitor. So you're doing different stuff than I'm doing. And you've got a whole like suite of services you offer to real estate investors, right?

Yeah, you know, I do and I know that you have a lot of buy and hold. You know, let's just start there because.

I do, or I should say real estate business owners actually.

Yeah, I told you that right before. A lot of people call themselves a Real estate investor. What is a real estate investor? It's like what Warren Buffett says, buy low, sell high, don't lose other people's money and follow the laws. A real estate investor, a true investor, is somebody that buys and holds. Right. They actually typically they have money and they're buying and taking the advantage of leveraging at one rate, renting and property managing at a higher rate, taking a spread and then getting all the benefits of real estate of the brick and mortar.

Right.

That's the physical asset. There are a lot of business models. There's wholesaling and flipping, lots of money to be made. I've got a lot of seven and eight figure a year friends and also using our service. But that's really a business owner. That's not an investor, it's a business owner. I call them a real estate entrepreneur.

Yeah. And that's a real estate entrepreneur is the right word for it. And you know what, I'm really glad you make this distinction because so many people are just confused about this and sort of relatively simple. But being that active in the business is running a business, isn't it?

It is. And let me just tell you, if you're a business owner, every business owner needs a CEO, right?

Yep.

And usually a team. And there's a business model, there's marketing and there's sales and there's finance and raising money and all that stuff. And so I'm the biggest fan ultimately, because I think a lot of us got into real estate because of Robert Kiyosaki. Right. We read Rich Dad, Poor Dad. At least I did. And it was all about how to become wealthy, which is when your passive income is greater than your expenses. And that's the definition of wealth. And you know, a lot of people lose themselves. It's all about deal volume. Like, I did a hundred deals this year and I didn't keep any. That's a job.

That's a J O, B. Yeah, it is. By the way, that job is highly taxed. It doesn't have the tax advantages of income. Property. That's something to think about too. And you know, you say you're an OG, an old guy, but listen, Robert Kiyosaki wasn't even in the business of doing books when I got into the business. I read Robert Allen. Okay. Another Robert. And that's who inspired my real estate career when I was 16 years old. So. But you know, I'd say the original sort of famous real estate guru, author was William Nickerson.

Yeah.

And when he was talking about how he was, he was buying these really expensive properties that were $7,000.

And they were in Redondo Beach. Just kidding.

Oh, my gosh.

Probably not Redondo beach, but they were a California guy.

I know. You're in Florida. I'm in Northern California. I'm in San Francisco. So my mom bought her house for $36,000 in Fremont, California, Northern California, Silicon Valley. That house, almost as a tear down today, is $1.6 million.

That's ridiculous.

So, and I will tell everybody, I went full time, I got excited about real estate. In fact, I got a little lost. I'll share that story. I've been in real estate. My licensed agent when I turned 18, I'm now 50. We had a family real estate business. And so I was holding open houses, door knocking, cold calling to pay for college. And I didn't want any of that business. I got a computer engineering degree. I got accepted, hired to Accenture, which is the largest technology consulting firm in the world. And worked 90 hour weeks, traveled all over the world, never saw sunshine. It was always in a building, working as a slave. And then I decided I was going to get into sales because I thought that would be easier, Jason. And it was even worse. I had 180,000 miles my first year on United States, and it was in 2004. So 15 years ago, my wife and I said, you know what, let's end this madness. Let's go back to what we know, brick and mortar. We'd lost, you know, made a fortune, lost a fortune in the dot com boom and bust. And so we were actually buying apartments. And so I got into apartment buying. But then what happened was I got a little lost. I went to a couple seminars and I saw these guys talking about flipping and then realized that that was a job.

Yeah, right.

I did hundreds of houses. But I will tell you, I look back, I've told this story, Jason, to so many people. I look every house I've ever sold.

Yeah. So, you know, I've had those regrets, too. And I did a spreadsheet and I looked at all the expensive properties I owned in Irvine and Newport beach and Newport Coast. You know, when I was back in Southern California, I immediately started to regret. I looked them all up in Zillow to see what, you know, approximately what they were worth today. And it's definitely an approximation. But I realized if I do the math and calculate the number of years I would have had to hold those properties, properties and the cash flow I would have lost holding those expensive properties. I don't know if you should really regret it. I mean, yeah, it always sounds like a great story, but people, Gary, only talk about the what they bought it for and what it's worth today price. They never talk about all that cash flow in between you would have had to pay to hold it. And if you bought properties in linear markets with better cash flow, you know, these properties that make sense, right? I mean you would have had positive cash flow every month versus negative. And I'm talking about fully leveraged properties. Of course you can make the cash flow look better if the leverage is lower. But I'm saying fully leveraged. So I don't know. I think you should feel a little better about selling those properties.

I heard this.

I'm trying to make you feel better.

No, I know. Let me just tell you. A friend of mine has a great term. I've been using it for a long time, but it's keep the best, keep, sell the rest. Right? I'm actively passive is what I should say. I believe in cash now, cash flow and cash later. So a lot of people don't necessarily have the investment capital upfront to basically be a true long term hold investor. So there's cash now that's typically an active business, that wholesaling, fix and flip, you know, all the guys that are out there banging a nail or wholesaling, what have you, that's cash now. Cash flow is typically rental income. Also private lending, I love private lending. And then there's cash later which is basically paying down notes and all the tax benefits, etc. So I like a combination. When I'm looking at my portfolio, I'm looking at all three of those because you could actually have a great portfolio and long term and making no money to cover the bills today.

Okay, so how do you do that? Talk to the listeners about how they execute on that strategy.

And the service that we have is very much focused on the people that are looking to get properties. They don't necessarily go and buy turnkey properties that already have everything built in. I think the best model is somebody that has the cash, possibly some family money, their own money and they're getting a great return and they go to somebody like you, they find a great property that's already property managed and they get all the benefits. That's the absolute best. But the people that I service are a lot of people that don't have the capital and they are building their business, they want to wholesale. I like going direct to the seller. That's a very hot market right now of Bypassing. They're not finding properties on the mls, Right. Like they were four or five years ago or foreclosure auctions. So they're going direct to the seller.

Here's a good thing. This is great. So usually unless you have money already, what you have to do to start out is you've got to be active. You've got to trade your sweat for more profit. Okay. So you got to go out and find deals. You got to do, you know, wholesaling or fix and flip. You got to get actively engaged and you know, that's a lot of work. Okay. But you got to do it. You've got to earn your stripes. Okay. And you're going to learn a lot doing it and it's going to be good for you. You're going to make some mistakes. Hopefully few get a mentor and follow that plan. Most of our clients, they've got a regular business or a day job and they've got money and they just want to invest and deploy capital and they want something better than Wall street, which we all know is a big scam. So it's different. You know, when you're starting out to be build that wealth, you've got to create it through some active stuff. You know, you got to get together that first down payment or there's first few down payments, and you're going to do it by doing something active. It's going to either be your job or you're going to inherit it or it's going to be actively finding deals and fixing and flipping or wholesaling.

Yeah. And I think for people that are doing the buy and hold, going and working with somebody like you, who's got the deal flow right in the right market that's got all the pieces and the property management. Right. There's a lot of work.

Yeah.

And whether you do it yourself or you have somebody else doing it, by the way, the cost is the same. It's between 5 and 8% of what you're collecting at rent typically.

Right.

So I think that's the best model. Followed by I love lending. I do a ton of lending. I actually do first position loans, but don't get any of the tax advantages.

Yeah. So let's talk about lending because I've done a ton of hard money lending too. And you know, I used to be able to say that I've only been burned, burned on second loans, second position loans, until recently. I got burned on a first. It's the only, only one time. But I did take a real haircut on A first loan. And that wasn't any fun. But you know, the guy was just, it was a fix and flip deal that I was, I was funding. It's like I'm going to foreclosure unless you cut some principal off and, and do a loan mod for me. So that's the way it goes. But your lending is all, is it all hard money type lending?

Yeah. So I have early cycle, late cycle. So we're late cycle from my perspective, especially here in the coast. Right. In California. So real estate's typically been about a seven year cycle. It's an incredible opportunity now. But what I'm doing right now in the late cycle is I'm doing low ltv, low loan to value, first position. I'm taking a lower interest rate. It's on purchase price. I'm sourcing all those deals directly through hard money brokers. They're bringing the deal flow to me. So I funded a $600,000 loan in Palo Alto, California, actually, the city next door. The buyer actually put $1 million down. So $1 million down.

They're not going to walk away from that.

Right. So in this cycle, especially in California, I look at every property, always the downside. Most investors are looking at the upside. I should say most real estate business owners are all looking at the upside.

Sure.

A lender like the bank is always downside. So I look at the property as if, hey, the market turns, there's an earthquake and I'm taking back land of rubble. Okay with it. And the answer is yes. Then I'm funding those deals and funding quite a few of those deals right now. So I'm moving some of my 401k money cash. Because I don't like cash sitting in the bank.

Yeah.

And do that. And then as I'm finding properties that I like to fund, like we're actually in four different markets. I've got a service.

Before you move on, tell us about that deal. So this deal, the Palo Alto deal, you did a $600,000 first trustee loan. Right. And they put a million dollars down. So your LTV was like 30% or something, whatever that is. Yeah. What's the interest rate and what's the term of the loan?

Low interest rate, 9%. I actually get nine and a quarter. I didn't do any work. The broker brought the deal to me. So I'm actually the lender on public record. So it's not part of a fund. I really don't invest in funds at all. Seen the downside of that.

Yeah, I agree the fund, there's too much opportunity for, you know, scamming and taking the profits off the top. So I like being a direct lender or direct investor.

Yeah. Make sure that I've got title insurance. It's through a reputable broker with the track record, all the bells and whistles. That particular loan is a three year term. Most of these are turning. So this particular loan will probably turn over within a year. They'll fix it up and then they'll resell it. So I'm doing those.

Okay, so. So on that one, is that a homeowner moving into it or is that.

A father and son?

Okay.

And they're buying properties in Menlo park in Palo Alto.

They're doing fix and flips.

And they're doing fix and flip.

Wow.

They'll put a half a million dollars and sell that for 3 million.

Wow. Wow. Okay. Yeah. All right, so it's a three year term. And do you do interest only? Do you do no payments? Do you amortize it over a longer term and doing.

I'm doing interest only. So straight note, three year term, balloon payment. I haven't had any in default, not a single one because there's too much equity. Yeah, I don't like the funding on after repaired value. I mean, some people do that. I just, I don't think I need to take the risk.

I don't really care what the ARV is or the value at all. If they're bringing A million to 30 the table, that's okay with me. We're. That's my appraisal. It's good enough. Yeah.

Yeah. I funded another one. It was a lady downsizing. She put 300,000. Actually, it was a $300,000 loan and she had $400,000 down from another property, had never made it, missed a payment and was downsizing.

Why, why do those borrowers need a hard money loan though? Why can't they just get a conventional loan?

Yeah, great question. The father, son, they had too many properties.

They exhausted their Fannie Mae, Freddie Mac loans.

Right, Exactly. This lady that I just funded, she didn't have stability in her job, so she didn't actually. She couldn't qualify because of the type of employment that she has. And so for whatever reason, sometimes they'll refi out, but I don't really care.

Are you requiring them to set up an LLC and do everything in an llc? So it's like a business loan?

No.

What about Dodd Frank? Don't you have some Dodd Frank issues on those short balloon payment loans?

Yeah, typically five years, but that's the hard money lender. So I always use a licensed broker to do everything. And so they typically, if it's owner occupied, there's a limit on the interest rate and also the five year term. But I don't really care. When I'm funding these types of deals, I can get out what's really nice. If I fund a $300,000, you know, 40% LTV, I can turn around and sell that note in a day for the same price. So if I really need the cash out, I'd call my broker and I'd be it in a day.

Yeah, right. That's interesting. I mean, look, the lending is not as good as the properties. It's better to own the property. But if you've got capital and it's not deployed and you're finding that the problem that some people are in is they just don't have enough time to go buy another property, honestly. So that's a good solution. Okay, good. So hard money lending, definitely one avenue. You, you don't have any tax advantages or anything, but you know, it beats a lot of other things, that's for sure. It's. I'd say it's my second favorite.

Yep. I'm picking up the, on the active side. And this is also where our company REI Vault comes in because I've got a lot of active investors, right. They're buying, fixing and flipping and I'll talk a little bit about that, but I'm in four markets, I got a small team, so I'm not high volume like Salt Lake City. We're in, we're actually in Santa Cruz, California in that county. And so we're finding properties, we're making offers to sellers, we're offering all cash. And also sometimes we're giving them a more of a creative where it's an owner financing deal.

Deal.

Okay.

And I'd say right now 1 out of 12 of the offers is actually owner financing. And I'm getting the fantastic terms. So most of those properties we're keeping. So I'm getting pretty much free capital, typically low interest, sometimes zero interest if structured properly. And then we're cash flowing those deals and some of those properties I'm trying to basically do Airbnb, VRBO stuff. And so that's been a model.

Now I'd be curious on the, on the short term rental model. I think it's a little bit of a bubble. There's just a lot of, it's like a mania. You know, whenever I see a Mania. And like, everybody's getting in and everybody's doing it. I worry that it's oversupplied probably okay right now because the economy is still booming. But it's not going to be this way forever. Right. What do you think about that?

Three magic words of real estate historically. Location, location, location. So it really comes down to, like, we have a place. It was actually the first one, the first investment property we bought in Maui, So in Kaanapali, two bedroom. Bought it in 2003 and been cash flowing it from day one. So that's on. VRBO takes very little work. We get all the benefits of real estate with depreciation, but a little bit more.

That would be kind of a hybrid. Right. That would be in between being the totally active guy who's fixing and flipping or wholesaling versus the long term buy and hold rental income. This is sort of a hybrid. It's a little in between. Right. Requires a little more involvement.

It certainly does. It certainly does. And so we're doing a few of those. So, like Santa Cruz, California, every once in a while we'll find something that's closer to the beach a couple blocks. Those are types, those are candidates for doing a vrbo.

Good, good stuff. What do you see out there? You know, you train a lot of people in fixing and flipping and wholesaling. You know what I think our listeners would be interested in, in hearing, Gary, is what they're like right now. And you've been around the industry for a long time, as I have, versus what they were like three years ago. Right. Like, do you notice, I think this is an indicator of the market, of the economy in general. Are they still as bullish as they were? Are they like, want to buy everything they can or are they cooling off a bit? Or like, what's the vibe out there, if you will?

Let me give a little backstory on this. So first off, I'm the largest marketer. For those of you that are following this today, I'm the largest marketer in the real estate niche. So we've sent out over 34 million pieces of direct mail for a small group of us.

Wow.

We're dropping about a million pieces of mail a month. I run an agency, marketing and inside sales team. So for the active investors, right, the people that are with a pickaxe and a shovel doing all the hard work and not just coming to you, Jason, and saying, hey, find me a property and let me make a lot of money over the long haul. Right, right. They've got the pickaxe and shovels. What they're doing is they're finding deals. Then they use a company like us to drive the direct mail, do the cold calling and all the work and phone conversations. We've done over a million seller calls, outbound seller calls. So just a little bit of background.

Sure.

So what I'm seeing, I'm talking and I'm in 10 masterminds right now. So I'm highly engaged. I'm a huge fan of the Mastermind.

And you are spending a lot of money. You know, one year I was spending a hundred grand a year on Mastermind groups. And that was about three years ago.

Yeah, yeah. Huge ROI for me because we find a lot of our members that are using our service through there. So it's a good roi. But here's what I'm finding. So number one, you know, I see especially the coastal areas, like I'm not a big fan of a lot of these coastal markets. I think that we have bubble opportunities again, if I were investing anywhere, you know, that's why I've, I'm in areas like Salt Lake City. I like the lower price. You know, a tear down in my neighborhood's over a million bucks. Yeah, 600,000 five years ago. It's a million dollars now. And so I would be in the center part of the country. I think people are in the euphoric stage of real estate again. Everybody in real estate, you know, we're going to see a little blip. But I also think that we're going to see housing prices skyrocket again. So the people that can survive and they've got the rentals where they're lending, doing what? In first position lending. They can survive for the 18 month turn. I think we're going to see an absolute inflationary skyrocket in this country because as you, I've heard you talk about you and I've chatted about this in the past. I mean there's only a couple of things that the Fed can do, right?

They just print. That's what they do. They create money. Yeah, it's. You know what's amazing to me, Gary, whenever I see, you know, I'm looking at the news or something or I read an article and it's like, oh, the world leaders met at the G20 summit, they met at Davos, you know, at the World Economic Forum or they went to Jackson Hole with and you know, all the Federal Reserve chair was there and all the rest. And I mean it's really quite a simple meeting. How much money should we create, you know, out of thin air. Like that's the tool they have, basically. I know they can over complicate it and well, we can do QE and we can do this and that. At the end of the day, it's all the same thing. Okay? It's create more currency. That's what it is. Okay. And pump it into the system.

It's a slow boil, Right. It's just like the frog. It's like the slow boil. If we look, go back before we had the problem in 2008, look at what a half a gallon of milk was and bread. And then look at what it is today. And that's inflation.

Yeah, of course. Yeah.

And I think we're going to see that. You know, I think real estate, a $400,000 house is a million dollar house in 10 years. 15.

And what's interesting about that is if you finance that $400,000 house and you had a, you know, a $320,000 loan on it, for example, the value of that loan declines with that inflation. And that's the hidden part, you know, you see the price goes up. Well, buy low, sell high. Yeah, that's great. But buy low, sell high and have your loan debased by inflation. That's beautiful thing.

Yeah, yeah, absolutely. Especially while the rates are so low right now. Right. I mean, it's incredible. We'll probably never see this again because we're probably going to see the interest rates go up once they hit the inflation. I don't think they can keep interest rates, you know, near zero percent, which is.

They can't. Hey, listen, they were, you know, we are arguably in an environment now that rates just came down. We are arguably in an environment of zero interest rates in real terms. I wouldn't necessarily say we're in negative interest rate category. And I'm only talking about home mortgages, by the way. I'm not talking about credit card, you know, that's very high interest rates. You know, if the real inflation rate is 4.2%, the real rate, not the official rate, and you're borrowing at 4.2%, you're paying zero.

Yeah.

So that's beautiful. Yeah.

So as the full time active investor, business owner, you got the buy and flip. I'm looking at every single property. Do I keep it in the portfolio or am I flipping it? Right. The ones that we're flipping, we're making nice money. Anywhere from 10 to 25,000 bucks. I'm owner financing some, you know, the rest I'm turning into a Rental pool and likewise, I'm also big metals guy, so I buy physical metals. I've been doing that for a long, long time. And I also do lending. I actually the private lending, first position lending is also a hedge. So if the market goes down and I have to acquire properties back, I don't want any debt on those properties. So it's kind of my ultimate plan.

You're saying because your first position on that loan.

That's right. Let's say that you're sitting on rental properties that they become over leveraged right now all of a sudden. The first position notes that I have, I have no debt against them. I am the debt.

Right.

So my worst case scenario is I got to take them back.

Yeah, I'd be curious. You know, I'm kind of surprised you like metals, but obviously you believe in inflation. So that's why the metals are in there. And that's probably just an insurance policy. But you know, they don't produce any cash flow, they don't have any tax benefits. So I mean, I own some metals, but not much, you know, long term.

It'S a long term hedge against a downturning fiat currency.

What do you think? I got to ask you about two other classes because you're into a lot of stuff. What do you think about tax liens and tax deeds and what do you think about cryptocurrency? I'm really curious to hear what. I've never asked you these questions. I'm curious what you'll say.

First one, I don't play in it at all. I know a few people that do. I think that people that are in. I know people that use our service to market. We market for people that are in tax lien.

Okay.

And have a tax lien against their property. I'm not a big fan of buying tax liens. I think highly competitive. I don't know anybody. It seems to be more of something that I know a lot of gurus sell a lot of product, but I don't know a lot of people that have made a lot of money doing that. That's my take.

And certainly you can't do it in California very well. I mean, in California it just doesn't work the way the laws are there. It takes too long, the yield's too low. Yeah.

If somebody has a tax lien on their house, it's a great list to market to. So that's one of the best lists actually that we're marketing to for our members is a tax lien list.

Okay.

A lot of Motivated sellers who need to sell because maybe they inherited the son, they inherited the property, and they haven't paid the tax collector in years.

Okay, what about crypto?

You know what? I don't know enough about crypto. I love the model. Yeah, it'll be really interesting to see who is ultimately behind it. I actually think it's the same group that's behind our fiat currency. But that's what my personal take.

Yeah, maybe. And listen, if there ever was a fiat currency, it's cryptocurrency that is total fiat. It's so hilarious, you know, to hear these crypto bugs, kind of like the gold bugs, making all the arguments of, oh, well, the dollar is just fiat currency. Well, at least the dollar has aircraft carriers and missiles and things behind it. You know, your Bitcoin doesn't have anything behind it. Okay. You know, I own nothing.

I don't own any crypto. I have a friend of mine who lives right down the street who has a fundamental. Keep telling him, I want to pick his brain.

But is it a cryptocurrency fund?

It's a cryptocurrency.

And you know what's interesting? A fund is like, it's just basically a derivative. So here you've got this fake currency and now you've got a fund that buys the fake currency. So you've got something that's fake, that has a derivative, another fake thing attached to it. And you know what I call derivatives? I call them the thing about the thing. I mean, I love these simple explanations.

Didn't we run into problems like with CMOs, CDOs, objects.

Yeah, absolutely.

Derivatives. The derivatives of derivatives and tranches. Oh, my God.

It's absurd. The amount of innovation in quotes, right, that the financial services industry can come up with is staggering. It's just staggering. And nothing is really there. It's like the more detached you get from the thing, the worse off you are. And Gary, that's what I love about what you do. You're a direct investor, you buy properties and you make loans. Those are all direct things. And you own metals. Okay, now listen, I'm not a metals bug, but, you know, you're a direct investor. Like if you're going to buy. If you're going to buy precious metals, take possession of them. Okay? Don't buy some funds or some, you know, gold money or bit gold or. Yeah, it's. God, the whole point is to have the thing, not to have the thing about the thing, right? Otherwise you might as well just buy an etf.

Isn't it, Isn't it weird how people don't think this through?

Is one of Germany. Germany came and claimed they wanted the gold back from the United States and found out there was none there. And so basically there's a payout of like over 20 years for like a trillion dollars worth of gold or something that Germany is up in arms in. It's exactly. I own physical. You want to take physical possession of gold and silver. It's a great hedge. It's a long term. You are right. It doesn't give you any of the benefits except long term appreciation if that ever happens. And that's by the way, that's also controlled by the same system that controls our fiat currency.

Hey, thank you for mentioning that, Gary. And I'm sure you know about gata, right? The Gold Antitrust Action Committee. You got to go to the GATA website and read all about it because the powers that be run everything and you are not independent from them. And if you think you are, you're delusional. Because what you need to do if you want a good strategy is just align your interest with their interest and just follow on that path. And that's why income, property is the greatest thing.

Amen. Amen to that. You know, one of the best books ever is the Creature from Jekyll Island.

Oh yeah, G. Edward Griffin. Had him on the show many times. Yeah, he's great.

I love him. He's awesome. I've been following him for years.

Yeah, yeah. You know, he spoke at one of our Meet the Masters conferences a few years ago. He was great. He's just such a good speaker, such a gentlemanly. It's sad to see that kind of era going away from society. But just a great guy. Really, really good. But yeah, that's a great book. So I'd recommend that to anybody. But just tell us anything more you can, Gary, about how bullish or bearish your clients are because you really have a meter on that. And how much money are they spending? Are they pulling back? Are they spending more? That tells us a lot about what the expectations are for the market and the economy.

There's two schools of thought and I'm with a lot of sharp people. And one of the schools of thought which I have concerns, I'm more of the pessimist. I'm also in California, so I think we are going to see a turn in the market. We've had seven year cycles for well.

Over 100 years and we're past that.

We'Re way past that. So I think we're going to see a market change. So I'm actually taking some chips off the table right now with the idea of being prepared to get back in. It's almost the dollar cost averaging concept, right?

Yep.

I see a lot of really, really smart friends of mine who are full steam ahead. One buddy who probably has $700 million of secured lines of credit he's buying on the east coast and I asked him, I said I won't give his name out but big player, I said is this the new normal or do you think there's some cause to take some chips back? And he said no, new normal, full speed ahead. I think to me that's concerning. I will tell you, I got together with ubs, our bankers and some dialogues just in terms of the market, some acquisitions on the side for us. And the smart money is also saying that they think that there's going to be a cycle change. Now typically that cycle change is about 18 months, right. So you can bear witness to the 18 month change. You're going to make an absolute fortune. Now if you're buying in the center part of the country and you got money, buy it and hold it for 20 years.

Yeah.

And period. Right.

Yeah. You don't need to worry too much about the cycles. If you're just buying conservative properties in linear markets, you know, a little bread and butter housing, don't worry about the cycle. But you know, if you want to be in like an opportunity type investor, and I don't mean opportunity zone because I think that's a whole nother overhyped scam in some ways. Not, not completely. But you know, there's just a lot of promoters out there that really are, I think they're ripping people off. But an opportunistic, I should say investor then you know, be ready to dive back in or be ready to survive that cycle change. And you know, 18 months to two years is about what it takes. You know, most people, that's when they lose it. Real estate is a law of attrition game. If you can stay in the game, you're going to make money no matter what. Right. But you got to be able to weather that storm.

Here's the three areas that I think are super high risk that I think people really need to take note of in this market. The rehabbers, I think the rehabbers are going to get crushed. That's what I'm seeing where they basically they're actually, their profits are shrinking. You look at people in Denver and Atlanta like what they were making three years ago on a rehab versus today. Some of these guys will break even just to keep their teams in float. So when the market turns they're going to be wiped out.

That's interesting that you say that because I saw that so many times with large institutional developers during the many cycles I've lived through and been in the business through. And you have too many. There is some wisdom actually they just keep building because they have a business and they got to keep the machine rolling and they'll roll right into the recession or depression if it's really bad and they'll keep building. And you sort of wonder why are they still, why are they still building when the market is softening so rapidly? Well, it's because they've got the financing and they've got to just complete the job. Right. So it, it's sort of illogical at some points.

Right. Well we just look at all the cycles over the last hundred years of what's happened to them. They get wiped out. So they get wiped out. Those are so the rehabbers. Those are the guys that are. That should really rethink in their model retail. By the way, retail is. A lot of people are buying strip malls and, and going into building retail. I think that's super high risk, dangerous.

Yeah.

And then a lot of these guys that are doing rehab lending where they're lending like 90% on after repaired value.

Very little skin in the game from these rehabbers. I think they're going to get wiped out too.

Yeah, yeah, I agree with you. I agree with you. Good stuff. Well Gary, we have an affiliate deal. We're involved in it and anybody who's interested in the services, if you're more active in the real estate game and you're interested in Gary's services, go to Jason hartman.com vault that's Jason hartman.com vault V A U L T can find out more there. Get some of these services going to really catapult your real estate entrepreneurship career, your career in real estate versus investment in real estate. But you know, the cool thing about having a career in real estate is you're around it and you're paying attention to it and that's where your focus is. And so you can come across some great investment opportunities too. It's like you said, keep the best, right?

Let me share. Young guy, Clay Manship, he's in Indianapolis. He's in his 20s. So he did 2.3 million last year. Half of that came from our service so direct mail and cold calling. So he's got a small team they did 2.3 million last year. He's lending, so he's taken those reserves and he's lending and he's built out a fairly sizable rental portfolio. So kind of following the cash now cash flow. So there's an opportunity, I think, for everybody. But I do like the buy and hold. I think everybody should ultimately do that. And I love your linear markets. That is absolutely where to be in this market right now, the linear markets.

Yeah, that's the safe bet. Gary, good stuff. Thanks for joining us. It's always good to talk to you and I'm glad I finally had you on the show, folks. Go check out that link. Jasonhardman.com vault Gary, thanks again.

Take care of.

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