368: Rising Mortgage Rates, Rising Commodity Prices & Listener Questions

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We left off with Raj saying he liked the homeostasis strategy. He's a doctor, so he knows.

Yeah, we, we covered this with rated AS rates going up and as duplex price is going up.

And by the way, Adam, that's not rated, that's R rated. Oh. Do you get it? Yes.

Very nice. Nemo says, this is why I took out equity lines of credit against my Washington properties a couple years ago when lending was loose. Doing the equity stripping that Hartman recommends into the Midwest rentals. Yeah, this was definitely 2020, late 2020 was definitely the time to be doing equity stripping from your properties because a lot of times you get equity strip and lower your interest rate, you know, one, one and a half percent. So good job.

Equity stripping is a very important strategy. So Nemo, I'm glad you followed our strategy there and benefited from it. That's great.

And oh. So Nemo's equity line of credit was 4.24% variable interest rate, tax free money. And I don't pay unless I borrow. Yep. Some good rate, good stuff.

But I don't like variable interest rates. Just so you know.

Right.

Because I do think the rates are historically low and you should lock them in as much as possible.

But you know, doing that a couple years ago when she opened the line of credit, you know, 4.24 was pretty solid because probably set for a few years. Right. Juan down a little bit later said no single family homes in Miami under 250, 000. Not even unsafe neighborhoods. Yeah, we're not touching Miami.

Yeah. Doesn't surprise me at all. Miami has really never been one of our recommended markets. So. Too expensive. Yeah. But not, not too far from where I live. Okay. So do you want to get, I'm assuming R rated?

Said one of the duplexes I bought was mandated by the government as an investment in a poverty area and it said I would get some sort of tax credit because of this. Can you elaborate on this is. I'm assuming that's an opportunity zone.

It might be an opportunity zone. I don't know. There are other things out there besides opportunity zones, but that, that may be what you're looking at, the Opportunity zone thing. You know, we have never been very impressed by that. We've done some shows on it. Of course there's going to be a lot of scams in the opportunity zone world, so be careful. And it, it is somewhat complicated. It's really meant for developers who are doing somewhat significant building projects or renovation projects at the very least. You know, I interviewed the architect for the opportunity zone legislation on the podcast. He worked for Obama in the White House and really architected that whole legislation. And that was a fascinating interview, even though I'm not too impressed with opportunity zone stuff, unless some new information or, you know, comes along where maybe I'll get impressed by it in the future, but I just haven't been impressed with the whole thing.

Yeah, LG said lumber prices have gone up for a reason. The mortgage interest rates going up this quickly has me much more concerned. So I blame the mortgage increase on Jerome Powell opening his mouth and, and Fannie Mae just kind of throwing this 7% restriction on the market that nobody saw coming. However, what happened was Fannie Mae said, you know, all of you lenders, you need to have your, you know, investment loans can only be 7% of your portfolio or else we're going to hit you with penalties. And this made rates jump because the lenders, who were over 7% started saying, we need to cut back on the number of investment loans we make and we need to make more, you know, primary resident loans. And so that did make the rates jump. Now, a lot of it, you know, their banks at this point or lenders at this point have decided we're either going to take the hit or, you know, we're going to get under. So I don't, I don't know how much more rate increase we're going to see because of the Fannie Mae thing. Jerome Powell just happened because he opened his mouth and said, yeah, we might see inflation earlier than we expected, but it's still three years down the road, two to three years down the road, and people just freaked out about it. But rates, the rates have been coming down slowly recently, but I think we did see the big jump because of those two things. And now the market has kind of reached a little bit of an equilibrium until, who knows what happens next.

Yeah, and I will say Jerome Powell is not worried about inflation. He's been very clear about how he doesn't care or is not worried in the least. About inflation.

He is, yeah, we're not going to see the Fed rate rise anytime soon. But his, his comments about inflation caused the investors to need more return in order to, to make the loans.

Right.

So Ian asked, how about alternatives to lumber? Insulated concrete form construction with steel studs for interior walls. Part of the problem is all commodities are going up in price.

Oh, steel has, has risen dramatically. Adam, do you want to share anything from one of our North Carolina local market specialists?

They stopped doing steel.

Yeah, they were building steel frame homes because lumber got too expensive. Then they stopped building the steel frame homes and went back to lumber. But I think either way, it just, it just doesn't work, you know.

Yeah. Ben said, what about 3D houses? We covered that one.

We covered that. If, then, if. The end. If. I guess that's how you pronounce that. If you just joined. Go back and watch this and just kind of watch from the beginning. And we, we covered the 3D printed housing quite a bit and have definitely covered it on the podcast as well.

Okay, Trump tariffs of the issue. I mean, yeah, Trump hater.

Adam, this is your new friend.

Well, no, I covered it. I mean, the tariffs did hurt. I mean, and they did drop it, I believe to 9%. But you know, even a 9% tariff is going to get passed along. All right, so Eric says I'm looking at houses in Cape Coral next week. Plan to Airbnb and use as our vacation home. I figure a four hundred thousand dollar home will be 18 to 20% return on investment at 3% appreciation. If Airbnb can just cover the bills, I assume cover the bills while you're not there. I mean, it's not a bad strategy. And I think 3% appreciation in Florida is going to be very low. Like Florida is going to do better than 3% for a while.

Yeah.

Based on current builds for, for a.

While, I think you're definitely going to be much better off than 3%. And you know, we, we dabble in the short term rental market a bit, but not too much. We really like the long term buy and hold rentals. You know, Airbnb becomes your partner and they can really ruin your life. I've heard a lot of horror stories about Airbnb. You know, remember, it's this independent company. They can censor, they can cancel your reservations. They have way too much power. And you know, of course vacations are optional. Right. So in an economy that is really, really under stress, you know, remember, nobody is required to take a vacation. They do need a home to live In So we like the necessity housing. Certainly you can make money with, with short term rentals. Many people have, many of our clients have in properties that they purchase through our network. But you know, just keep that in mind. Balance out your portfolio. Don't go all in on that. Okay.

So Peter likes the look of the beetle kill lumber and likes the higher prices because he can actually buy what he needs. Lumber was unavailable. It's not all bad. Yeah, I mean there's trade offs for everything.

Every problem is an opportunity. You know, one man's terrorist is another man's freedom fighter as the saying goes. Right. So that's, that's true.

Nemo loves Oklahoma. Adding the portfolio there. Yep. Good, good state to do it. R rated said the builder of my duplex. Said that a guy from California came and bought all four of the duplexes, all cash. Said that he had a million dollar property in California could only charge 2100 month rent. I mean California, once you, you know, million dollar properties rarely make sense investment wise.

No they don't. They don't. You know this, this is the rent to value ratio, the RV ratio discussion that you know, I've been talking about for 20 years or so. And it's basically you're never going to get a good rent to value ratio on an expensive property, on an expensive single unit property. It's just never going to make sense. So you want to ideally rent a property like that for yourself. Right. That's the ultimate arbitrage. Rent the expensive property, live in it yourself, get a beneficial RV ratio for you and then own a lot of inexpensive rental properties, affordable housing that you rent other people where that rent to value ratio is also beneficial to you. So you get the best of both worlds from either side of that equation.

Yeah. And we've talked about how the RV ratio isn't as important now, but a 0.2 RV ratio is never going to do you. Do you good work.

Yeah, yeah. And what Adam means by that. And I did a podcast episode on this. I actually did two of them. It's very important that you hear these so that you are not too constrained to the rent to value ratio thing because it has been upended by the extremely low interest rates.

You know, things Maria says hardcore blue states suck for small landlords. Definitely can put a damper on your portfolio.

Yep, we'll, we'll, we'll say yes to that one. Absolutely.

Too much wood used in houses construction in usa. You should think more affordable input materials.

And what are those Juan, there, there's like I said a few minutes ago, there's a whole. There's a whole community of people trying to solve these problems with cheaper input materials, with new, new types of bricks made out of different materials. The 3D printing thing, you know, all the concrete is very expensive. So if you're 3D printing in concrete or doing it with some sort of brick material, I mean, all of these prices, for every input material, they have increased dramatically. So please don't just say cheaper input materials. Tell us what they are, because the whole world is looking for these. There's a global housing crisis. I mean, you know, entrepreneurs are trying to solve these problems. So do tell. Give us your suggestions for less expensive input materials.

Yeah, So R rated. Said daughter's teacher said that house across the street from her went for $200,000 over asking during the winter storm last month, sight unseen, here in Austin. It's insane here. Keep going.

Yeah. You live in Austin, so you could.

Yep. Being in Austin, especially Cedar park, why have the rents not gone up much out here? My house bought in 2015 and live in was a stew, but the rents barely have gone up here. I'm guessing steel. They sit around 1800-20, 200.

I don't know.

Yeah. So I don't know why Cedar park rents haven't gone up. I can tell you where I am. Down in Southwest Austin, rents have gone up, you know, 20% in the last year. I mean, home prices have gone up 30%, but, you know, they. I don't know why Cedar park hasn't. My guess would be this, because Cedar Park's kind of far out there. But, yeah, the Austin housing market is insane. We have 0.4 months of inventory in the market right now. Homes are going for 150,000 over asking price on a regular basis. Like, it's just, you know, Austin doesn't make sense right now.

It's absolutely incredible what's going on. Yeah. And. And by the way, I should mention, you know, hundreds of investors purchased through me in Austin 15 years ago. They made a fortune, an absolute fortune. And in Houston and Dallas and San Antonio and Charlotte and so many of our other markets. So, folks, don't miss the opportunity. Go to Jason hartman.com if you're not connected with us, or go to pandemicinvesting.com get your free book either way and connect with our investment counseling team. It's free to talk with them. They'll be happy to help you and help you develop a strategy to build a secure, prudent, nationwide real estate portfolio that that can just change your life. We've helped thousands of people do this over the years. And it's, it's just, I mean, we have so many testimonials. Just, you know, people on video. On the podcast, you can hear their client case studies where you'll hear them talk about the portfolio they bought, the good, the bad and the ugly, the, the problems, the benefits, everything. So, you know, we've been doing this for a long, long time and can help you do it too, so. Good. Okay. And All Nighter Hider is back. We haven't heard anything from you today, so welcome.

Nemo says. I have a saying about landlords and real estate investors. Anyone can be one. But are you still one 20 years later? Staying power is staying in the game is the name of the game.

Absolutely.

LG says new lockdowns in other countries. In the US a lot of people who wear masks at work do not want to wear masks on their leisure, so they're staying home. Rates are going up too fast now, lg. A lot of states are just opening up and saying, you don't have to wear a mask. Now you businesses can say you have to wear a mask if you come inside. But, you know, a lot of places are just opening up. I know Texas is, I think Mississippi did. Florida pretty much is, right, Jason?

Oh, Florida. I. I'm telling you, you know, we went to a concert the other night, Saturday night, and you would think, nothing, there's no pandemic. I mean, it's absolutely amazing. Covid 1984. You know, Florida is, is like pretty darn normal. Some people at the concert were wearing masks. They were packed in. You know, people had no qualms about getting together, restaurants open. You know, after the concert, we went out to dinner. I mean, it was, it was, it was great. You know, just everything, it's. It's like life pretty much pretty normal. Pretty normal.

Yep. All Nighter Hider says hit the like.

Hey, thank you, All Nighter Hider. I appreciate that. Thank you, everybody. I know there's a lot of you watching and listening right now. Smash the like button. Folks, we need you to hit the like button. And we appreciate your nice comments. Be sure to hit the like button. Subscribe, subscribe. And be sure to hit the notification button so you'll be notified when we come on. Because a lot of times we do these live streams very impromptu. You know, I just have something on my mind. I gotta get it off my chest. I gotta share it with you. It's just too good not to share and that'll be one of those impromptu live streams where I'll just jump on and say, hey, here's what's happening. I just learned this, I just heard this. Here's an article. I gotta talk to you about this. So make sure the notification bell is. You push the notification bell as well. So thank you very much and appreciate it.

So Nemo Deals says managing rental properties or managing the management company that manages your rental companies is a whole bottle of wax that goes beyond just converting your property to a rental.

Yes, that is true. And we help you do that, we help you manage your managers. We also teach you how to self manage and, and provide a bunch of tools for that as well. I have self managed many properties over the years, properties I have never seen, tenants I have never met, properties that were 2,000 miles away from where I live. And you know what, I'm amazed that you can do that. But you really can and it's a great thing. So you don't have to be beholden to a property manager.

So you know, I will say, Jason, I'm going to go see one of my properties for the first time ever.

Oh, yep. And where is that?

It's in Little Rock. But the only reason we're doing it is we're going to St. Louis for a vacation and we're going to swing by Little Rock on the way home so we can ride off the trip.

Oh, fantastic. Good stuff. Well, yeah, you're gonna go see one of your properties for the first time. I'm doing 1031 exchanges and selling some of my properties right now. And you know, I've never seen the properties. Didn't see them when I bought them 15 years ago, didn't see when I sold them, never saw them, never met the tenants. You know, it's great. I mean you really can do this remotely. So LG businesses have not recovered yet. Well, some businesses are doing great, some are struggling. We all know that it's very uneven. Adam, any comment on that?

I agree. Nemo says also not every property should be a rental property. Unfortunately, I think a lot of homeowners are going to find that out when they convert it over.

Yeah, yeah, absolutely.

I mean, but I will say the low interest rates that are going on now, if you can get a low enough payment, people might think they make sense, you know, in 10 years because they can make some form of cash flow on the property. The question is just is it worth turning it into a rental and making two hundred a month on your seven hundred thousand dollar house when you could, you know, convert that into four or five different rentals that can get you, you know, a couple hundred dollars a month cash flow on those in a potentially better market, you know, and safer market for a landlord.

Yep, absolutely. Okay. So fish fat. I love these names. Some of you come up with R rated fish fat. Oh, that's great.

Arizona market is insane due to Cali folk bidding outbidding locals.

Yep, that's. That's true. I totally agree. And Sarah says true. Yes. Nothing works in Arizona that we have found at least.

Yeah. Sarah says interest rates are where they were about a year ago, still better than pre pandemic and they were great then. Yeah. I mean, interest rates are still a little bit lower than they were, you know, back in January, February of last year. So, you know, we're still in a very good position.

Yeah. I love this comment.

Roland says waiting for the fat lady to sing, you might be waiting a while.

Yeah, I think you're going to be waiting a while. The fat lady is going to sing unevenly. She's going to sing in and that means it's over. Right. It's never over till the fat lady sings. That's the way that if, you know, I'm sure everybody knows the reference and you know, all markets will end. Everything is a cycle. We do not deny that we want to help you play it. We are not market timers. We buy prudent cash flowing properties that make sense the day you buy them. And they will only make more sense into the future. Okay. If you buy them right in the right markets with the right structure. So Roland, do not worry, you'll love it when you see the fat lady sing because it's going to benefit you. It's not going to hurt you.

Craig says equity stripping has another meaning. If you hear someone say it is illegal, it is a predatory practice referred to as equity stripping.

Yeah, well, I think you're referring to lenders and predatory lenders who were, you know, basically giving people very bad predatory loans, telling them to pull out money, use it stupidly. Sure, it could be referred to that way, but you know, anything can be referred to in a different way. Right. Or a different context. What we're talking about is the prudent use of the refi till you die strategy to strip equity out, add long term fixed rate mortgages and your rents are going up over the years. So they're covering more than the cost of that new financing. And that's tax free because there's no tax on borrowed money. Check out my refi till you die strategy on the podcast and on the YouTube channel, it's been extremely popular and extremely valuable. You know, income property is one of those few assets where you can buy the property and you can renegotiate the deal all along the way throughout your ownership by refinancing it, changing the structure, changing the rent, improving the property, you get to constantly renegotiate the deal. Right. And you can get all of your money back out of it and still own the asset. That's, that's just phenomenal with, with what we call self liquidating debt. So very, very valuable strategy.

And so Robby says question. If you had 500,000 to invest and you were Canadian, where house prices are astronom high and the best hedge for inflation is real estate fixed plus precious metals, where do you invest? This is a different answer today than it would have been a month ago. Right now as a Canadian real getting a property in the United States is much tougher just because of the lending practices. Now actually, if you're a Canadian, if you're a Canadian investor and you're not a US citizen, it will be different. The lending for foreigners has become tighter, has become harder, has become more expensive. So you would just have to check and see if, with the rates that they're able to give you if the properties make sense today. As a foreign investor.

Yeah. So foreign nationals do not get the benefit of the best financing, but it's still pretty good. And Ravi, most Canadian markets are very overpriced and they're very cyclical. So we are not fans of Canada. Remember, we could easily be recommending international properties anywhere. Okay. We're not attached to the United States for any particular reason other than the fact that the deals are very good and the US has a very special real estate market. I've traveled to 87 countries over the years. I've looked at real estate deals in many, many countries. Many developers and sellers of properties internationally are hitting us up on a regular basis trying to get us to recommend their properties and we just haven't found them to be that great. So we haven't done it.

So DVH says your labor costs on metal studs may make up for the offset on wood cost studs.

Well, you know, that's up to the builders and they keep going back and forth on that one. Adam, any comment?

I agree. I mean that's. If the steel was cheaper, I assume builders would use the steel.

Yep.

Yeah, they're going to use what they can make the most money on and what's still safe. So many towns are banning Airbnbs. Santa Barbara. What can you do to fight back?

It is tough to fight back. That is a difficult proposition. And you know, this is one of the reasons we just like long term rentals better. Santa Barbara, of course, is in the socialist republic of California. So it's, it's really tough. And, and Santa Barbara is particularly socialist itself as a, as a city or as a county even, but it's a beautiful area. So I would say rent a home there for yourself and buy lots of affordable housing through our network that you can rent to other people at much better rent to value ratios.

So steady exits push forbearance rate down to 5.05% Mike Fratten, Tony Mortgage Banker association senior vice president and chief economist said we expect that a stronger job market will help many successfully exit forbearance in the months ahead. Back in September, whenever we talked about forbearance, there were 3.4 million properties in forbearance. That has dropped to 2.5 million currently. So I just wanted we're seeing a steady outflow of people from forbearance and as the economy, you know, really picks back up and becomes full, they're expecting their forbearance to, you know, just become smaller and smaller. And so if you were waiting for that big flood of homes from forbearance not looking very good for you in terms of waiting there. That was, I believe, pretty much what I had there for forbearance.

Well, that was it. Okay.

Yep. It was just a quick thing. We, we haven't talked about forbearance much lately, so I just wanted to give an update of how many people were in forbearance and just showing that, you know, a lot of people back mid last year were saying there's going to be a massive flood. You know, we're going to have so many foreclosures, so many people getting kicked out, and my prediction came true. They're bailing people out until they can stay in their homes.

Right? Yeah. Just folks, if you are, if you are sitting by waiting for the market crash, don't do that. You're going to miss out.

If you're sitting by waiting, have a comfortable chair because you're going to be waiting.

I find that a lot of these people that keep saying, oh, you know, you're wrong about this and that. Listen, first off, I want to say I do not like this market. This market. And Adam, you're going to agree with me on this?

I agree.

My counselors will Agree. This market for us sucks, okay? It's, it's very difficult to operate in these crazy markets. We like a more even keel. We like homeostasis, okay, Where a market is a little bit more balanced. It's very imbalanced now, and it's, it's very hard to source good inventory. If we wanted to be sleazy operators and think short term, we'd be dumping a bunch of crappy inventory on our clients. But we're picky about it, right? Because, you know, we, we value the long term view of the business, of course, and really want to make sure our clients are getting good quality properties. So, you know, we curtail our business for that reason. It's not as good as it would be otherwise, but, you know, you got to just make good judgment calls like that. And it is not our wish to have this crazy, crazy market that we have. We, we do not love this type of market by any means.

I mean, I would love to have clients be able to, you know, look at three, four or five different properties, have time to really evaluate which one is best, you know, which one is best, and then make the offer and get the contract. But it's just not the way it's been for the last year and a half. Two years.

Yeah. No, it is definitely not. Okay, let me, let's finish up these comments and we'll wrap it up for today.

So LG says, I hope you are correct. I work in the stock market and this is not what I'm seeing across the board. There are problems brewing due to interest rates rising. If markets drop, wealth decreases.

Yeah, right. I, I agree. The economy is dysfunctional in so many ways. I mean, look at the repo market again and everything that's going on. There are tons of issues, okay? But these cheap mortgages, people are not going to want to let them go when interest rates rise. You've got to understand something, okay? The asset consists of two components. Yes, it's the house. That's what most people consider. But the mortgage is a huge part of the asset too. And if they sell that property, they lose the mortgage asset. So when rates rise, think of it like a bond. Look, you're in the Wall street world, okay? And by the way, another measuring stick that I didn't mention earlier at the beginning of this live stream today is the S and P, for example, or the Dow. Right? Use that as a measuring stick too, to compare it to the price of these materials. You know, what's one share of the S&P versus the cost of A home. Right. And I've got a whole presentation I'll be doing on this that you'll see on the channel in the future where we compare the price of real estate to a whole bunch of things. All right, but think of it like a bond. Okay, L.G. look, you understand bonds. You're in the Wall street world, right? When interest rates go up, bonds become less valuable. When interest rates go down, they become more valuable. So that's this inverse relationship. The same is true about all of these millions of mortgages on houses that are so cheap. When, when they've got these locked in, 30 year cheap mortgages and rates rise, all of those existing mortgages that are locked in become more valuable, causing people not to let go of those properties, creating an even more severe supply shortage. And we've already got a supply shortage. And it's, I mean, we're easily 300,000 homes a year short in supply. And I don't see how that's going to change. Tell me how that's going to change. What? Yeah, less buying occurs. That's your next comment. I agree with you. Less buying occurs. So what? There's still a shortage. How do you fill the gap of the existing shortage when these people that have those cheap mortgages won't let go of their properties? They won't sell them. Adam, any comments or thoughts on that?

I, I'm, I'm with you on that.

I think the shortage continues for quite a while now. Granted, it doesn't continue everywhere. Linear, cyclical and hybrid markets, they're different. Okay. We like the linear markets. And in the linear markets, this shortage is, you know, and then combine that with my pandemic investing strategy. Get that free book where I talk about the suburban tsunami and how people are moving to these suburban markets and the shortage is even more, more severe.

So think and grow. Rich says, my friends work for a home construction company in Austin. They stopped building custom homes because it takes six to nine months and supply costs are going up. They now just build and they sell within 48 hours. Yeah, I wouldn't, I wouldn't build custom homes right now in Austin. It's not worth it.

That's pretty risky stuff. Regression.

Explain regression value more.

Yeah, so a long time ago, I coined the phrase regression, regression to replacement cost. There's a lot on this on the Creating wealth podcast, especially on the old episodes around 2011 or so. And, and you know, those are all accessible@jason hartman.com or on any podcast platform. And the regression to replacement cost concept is that for a time properties were priced below the cost of actual construction. And what I used to say is that there's a distinction between price appreciation and regression to replacement cost. So when people are paying, when they buy a house, when they're paying for what a piece of wood costs, when they're paying the full price for the wood, the lumber or you know, the copper wire in the walls or whatever else, the ingredients, the packaged commodities that will cause prices to go up immediately and it won't be considered appreciation and should not be called appreciation. It's just regression to the replacement cost.

Craig says there's a 0.9 month supply in Twin Cities, Minnesota. Not very landlord friendly though.

Yeah, I mean landlord unfriendly, but a constrained supply is pretty much everywhere, Craig, so yeah, absolutely. Understood.

Benny Boo says how do you how to hedge against inflation and profit Buy income, property Short answer most historically proven asset class.

It's the most historically proven asset class in the world and the most tax favored asset class in America, that's for sure.

Michael says Vegas market getting insane. Saw a party track home listed for 1.7 as a resale, sold for 1.5 million with a dirt backyard. Absolutely insane.

Wow, I wonder how many square feet that was. I'm really curious, Michael, post the square footage probably 1300. Oh no, it's Vegas. Isn't that expensive.

But I mean you, that goes back to, you know, you were talking recently about, I think it was on one of the creating wealth podcasts how they were showing that homes were selling for over asking price on average now, so.

Oh yeah, yeah, yeah. No, houses are selling for about 101% of asking price now if you look at it nationwide. So yeah, it's absolutely incredible.

R rated said. Does Florida have the same situation as Texas with multiple offers and all cash buyers for investments? Also, won't flood insurance put a damper on cash flow for Florida? I heard it's expensive.

Well, flood insurance isn't required everywhere and it's not necessary everywhere. And yet, yes, we do have multiple offers and bidding wars in many cases. Texas has high property taxes. Florida has hurricanes. Okay, you know, pick your poison. Every, every place has something California.

And I, I will say when you come to our network, we don't do bidding wars. Yeah, our providers offer the property and whoever asks for the contract first gets the contract.

And we require, by the way, that they offer mo most favored nation pricing stat status as well. So keep that in mind.

Jessica wants to know where we recommend investing in Oklahoma. We're looking in and around the Oklahoma City Area. One of the biggest things you can do to help yourself if you're evaluating markets there is look at what industry is fueling the area and make sure that it's not an industry that can easily pick up and leave. Make sure your population is at least holding steady, if not increasing. We prefer increasing, obviously. And then, you know, just looking at the rents on the values and you know, whether or not it can cash flow. But even if it can cash flow, if it's cash flowing in a market where people are moving out and the industry could easily pick up and leave, I wouldn't look at that market.

Yeah.

Nemo says you guys have never seen your properties because your numbers are solid. Just repeating the process. Then a proven market, wash and repeat. Same here.

I mean, I don't want to say I haven't. I've seen some of my properties. Okay. It's not. I don't do everything remotely always I haven't. But you know, I'll give you an example. I went to visit my mom and she was taking me to the airport and a couple of my properties were near this airport she was taking me to when I was flying back home. And you know, it's like I was thinking, okay, it's going to take about an extra half hour to go and see a couple of my properties. And I didn't bother. Like, so what? I mean, I don't care. I've owned these properties for 15 years. I don't need to see them. What do I need to see there? You know, if I own stock in a company, do I need to go see the company? No.

What is driving by it going to do that Google Street View isn't going to do, really. I mean, unless you're going to knock on the door and go inside, which you're not.

And I don't care about going inside and I don't care about meeting the tenant. So good stuff.

So R rated said. What's your average cash on cash return you guys aim for when, when obtaining investment properties?

Let me answer that first, Adam. I'll let you after that. Less than it used to be. Yeah, go ahead.

Yeah, I think for me, I have my numbers that I like. They've definitely been hit by the current home prices escalating. What I'm looking at now as I'm looking at future properties is not necessarily what it might get me this first year. I want to make sure that it will positively cash flow the first year, but I'm looking at year two and year three more than I'm looking at year one because, you know, if you look at kind of how the rents have gone in the, in the market, just look at your market and say, you know, over the past year, rents have gone up 50, 60, $75. What's my cash flow going to look like and what's my cash on cash going to be next year? If my rents go up $40, you know, how am I going to be happy with that? You know, and then if it continues along that line. So I'm not looking so much at year one right now as I'm looking at year two and three.

Good stuff, good stuff. So happy investing, everybody. Bye bye.

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