Mastering Passive Income & Wealth Building with Omar Ruiz

What's up, you guys? Welcome back to the podcast. It's Thursday at 4:00 PM. You know what that means? We're here live, hanging out with you, talking real estate. This is the New and Experienced Investor Podcast, the number one live podcast in Laguna Hills. I'm one of your hosts. I'm Alex Barnett. I'm the new guy.

And I'm Joe Homs. I guess that makes me the old guy. Oh no, no, the experienced guy.

Over 40 years.

Yes.

That's a lot.

That is a lot.

That's good.

Don't, don't start me off being depressed.

No, no, no, that's good. That's what I— I can't wait till I have that much time under my belt.

No, you can wait, believe me. Yeah, yeah, take your time.

Okay, I'll wait.

Take your time.

That's fine. We have an amazing guest in studio today. Um, he's, uh, you know, getting ready to rock the show. Before we bring him in, let's talk about our meetup we got coming up December 23rd.

December 23rd. Hope you can make it. I know it's 2 days before Christmas. Uh, we debated whether we were gonna have it or not, but we decided to have it. It's, uh, our crystal ball event, basically where I predict the future. And Alex is looking through the archives to see what I predicted last year. And we'll see if any of it came true.

Yeah, yeah.

And then I'll predict again.

Yeah, the thing is—

I mean, I got a 50/50 chance.

Yeah, we have the archives. It's sort of like, um, at the Vatican. I had to go underground and dust it off. So I had to go down these long hallways. It's crazy.

So do you have any security?

No security, actually. No. Yeah, it's just wide open door, but nobody ever walks in. Yeah, it's pretty interesting.

We have a guard cat.

That's right. We have a cat that guards the door.

The guard cat.

Yeah.

Nice.

Yeah, we trained her. Trained her right.

Yeah. She hisses at you.

That's right.

As you come by. Anyway, December 23rd, Hangar 24, 6 o'clock. Be there, please. So you can listen to my predictions. It's going to be very interesting this year.

Yeah.

We've got a lot of things happening. Not to get political, but we have a lot of things happening this year. So yeah, yeah, be there. It'll be very interesting again this year.

Yeah, it's gonna be great. It's a great place to just meet all different types of people from all walks of life, uh, in different sectors of real estate. So if you're looking for a partner or looking for private money contractors, they're all there. So please come out, hang out. You have the time off. Everyone's off that Monday. I know already. So it's like, what else are you gonna do?

Yeah, what else are you gonna do? You sit around the house and do the honey-dos that your wife tells you, you know, you have to do.

Yeah.

You don't wanna do that.

You don't wanna do that.

No, no, no. Get out there, meet some other people.

Exactly.

Put some deals together.

Exactly. Start the year off right.

Yeah.

So anyway, let's stop messing around here. Let's go ahead and bring our guest in. We're super pumped. This guy, he is helping others invest and create wealth, build wealth and cash flow. Those are the two things I'm looking for in my life. So we're lucky to have him. Please, everybody, welcome Omar Ruiz.

Thank you very much, guys. I'm excited to be here and share some stories.

Heck yeah. Why don't you go ahead, you know, introduce yourself to the audience? How'd you get into real estate? What were you doing before that? What led you here?

Yeah, sure. Absolutely. So, yeah, like Alex was saying, my name's Omar Ruiz. My company's called LaRue Investments. And I've been investing in real estate just, uh, actually started just after the Great Recession. Um, before then, uh, me and another partner friend of mine, we were actually— we actually started a property management company with the intentions of being apartment owners. And so we figured that if there's— if we know everything there is about the property management side of the business, Because in those kind of operations, the property management, um, really is what makes you successful or can, you know, kill your property. So there's everything we, we know, everything there is about the property management side of the business. Doesn't matter, matter whether we're in Texas, in Indiana, Ohio, or wherever. We can hire third-party managers. And as long as they're implementing our systems and procedures, then we mitigate that risk of, you know, having bad property management. Now, saying that, I won't say I've never had to fire property managers, but it's definitely helped us to spot, spot out the red flags, identify them, and, you know, correct course. So when we started, it was— we— it's kind of, it's kind of interesting, but we actually— we were— me and my partner Jeffrey, we were big fans of Robert Kiyosaki. He came out with the, uh, you know, the book Rich Dad Poor Dad. And, you know, I, I loved playing the game Cashflow back then. And, you know, we used to host the games in, in our offices and, uh, we there was this late night— I used to watch a lot of public TV, you know, back then it was like KCET or, you know, PBS, you know, late at night, uh, you know, at 1 or 2 in the morning. And so there was this ad for, uh, you know, Kiyosaki was talking out there educating people. And then somewhere, somewhere along the lines, there was this big event happened at the LA Convention Center I believe it was called the Wealth Annex at that time. But Kiyosaki was a big headliner there. But actually, you know, and Trump was also a big draw there. Now at that time, you know, I wasn't a big, you know, Trump guy. I wasn't, you know, I've never been a big ego guy. But, you know, I respected what he did. But we went there to see Kiyosaki, you know. And it was a great experience because we went there and there was everything under the sun having to do with real estate, everything from fix and flipping, wholesaling, commercial development, notes. And us being, you know, kind of newbies, we went there, you know, with pen and paper in hand and we just took notes, furious notes like, you know, none other because we were just so motivated. that we wanted to soak up as much knowledge as we could. And there was a particular gentleman at that time, his name was Dave Lindahl, and, uh, he was the one guy that was talking about apartment buildings. And what I liked was his, his, um, and it's not his concept, but I guess the general idea about these, you know, market cycles and You know, I was, uh, I'm, uh, my degree was in marketing at that time, so he's kind of speaking my language. And it all, it all made a, a lot of sense, you know, having, having more units under less roofs, economies of scale. And so the, the whole concept made a lot of sense to us. Um, we got educated there and went to a couple of boot camps and just, you know, From there, we were going to meetings here and there, and there was a meeting that met up in Long Beach once every week that we'd go on religiously. It was the only meeting that I knew of locally that was meeting every week continuously. So I really liked that consistency. And like I said, we're just very motivated guys, and we just wanted to be around that, other investors around that energy, people that— were also learning just like us. Um, and through a family member, we kind of created a win-win situation. They had a, uh, small little, uh, uh, apartment complex out by the Mission Inn area of Riverside. And, but they were kind of struggling a little bit over there. And so we said, look, we want to get into this business.

Mm-hmm.

We'll do a win-win. Oh, that's what it was. They were trying to actually— they were struggling so much they were actually trying to sell it.

Hmm.

But they had difficulty with that because they weren't really keeping clean financials. And so when you're looking to sell a property, you know, the buyers want to see some financials so they can kind of figure out the cap rate and all that. And, you know, they weren't really, you know, um, uh, savvy about that stuff. So we said, look, let us come up there, we'll manage it for you, and then we'll give you some clean financials, present those to a buyer, and, you know, you get what you want, you have the property operating well, and, uh, you get your financials, and we get that experience. And so that's what we did. And, uh, so it was a little 7-unit out there by the downtown area of Riverside there. Um, and back then it wasn't as, as, you know, revitalized like it is now. Back then it was in that revitalization, you know, um, stage. And it was, it was very interesting, you know, for me being kind of a markets guy, just kind of seeing how that whole neighborhood and area was transitioning. But being there on site, uh, I mean, I, I, I, I really enjoyed it because, uh, You know, we, we would drive out there, um, you know, every day and just, uh, you know, and, and I still remember it to this day, you know. I'd go in there with the, uh, you know, with the broom on one hand, the, uh, sweeper on the other, and I'd just be in there walking around the parking lot, you know, sweeping it up, like feeling like it was like my place, you know what I mean? And, and, uh, I think that kind of helped me out because, you know, it, you know, they kind of— there's, um, there's kind of a, uh, I guess like a success principle, you know. You You want to try to be as close, you know, whatever you want to get, you want to try to be as close to it as possible. So it's like being there on site, I kind of felt like, oh man, it was just, it was just a really great experience for me. Um, but we learned a lot there, you know. We had to kind of, uh, um, we, we had to kind of tame some tenants over there. Um, there were some people that were kind of running roughshod over there, and it was affecting the good tenants over there. And I kind of I remember a great story. Now, I don't recommend people do this, but one of our tenants was telling us that it's got so many stories over there. So one of our tenants, this is shortly after we took over there. He calls us just like a Saturday or Friday night in the evening. And it was a young couple, and they call us up, and the guy was kind of nervous. He's like, "Hey, you know there's guys over here. They're you know they're drinking. They're being loud and all that stuff." I was like, "Oh, okay. Yeah, okay. Go ahead and call the cops." And he was surprised. He was like, "What? It's okay if I call the cops?" Yeah, call the cops right now. In fact, you know what? Don't worry about it. I'll call the cops. So the cops go. It was like seven cop cars. Wind up, you know, just coming down on this place. And, and yeah, so there was, and then there with the same, with the same guy, there was one Saturday morning we would, we would go there like at odd times to just kind of see what exactly was going on, you know. And one time we got there was like really early on a Saturday, like, like probably 7 or 8 in the morning. We get there. And we just see these guys like, you know, just lying all over a pickup truck. I mean, these guys were just, you know, drunk off their asses and, uh, you know, probably had just an all-nighter over there. And, uh, and I just went up to the guys, you know, said, hey, do you live here? Like, no. I was like, okay, get out of here. You guys gotta go. So, and they were very annoyed because they had never had anybody, you know, approached them there that way, you know. And I told them, hey, I'm the manager here, you guys got to get out of here or else I'm calling the cops. They got out of there. Um, and then the, uh, the tenant who's, you know, those were all his buddies and, and all that. Um, you know, we had to put pressure on the guy and eventually he, you know, eventually he just moved on. And, uh, I, I think the last, the last draw Was another tenant was calling me up and he was saying, hey, you know, this guy, he's blasting his radio at 7 o'clock in the morning when he's going to work while he's warming up his truck. I said, okay, all right, I'll talk to the guy. And I just told the guy, hey, you know, and then, you know, he was a Spanish speaker and, you know, I told him, hey man, this, you know, you rent here, there's other people, you gotta respect other people's, you know, peace and quiet enjoyment of their place.

Yeah.

You know, I told him, hey, you know, if you want to go, you know, play your radio as loud as you want and have your drunk buddies and all that stuff, why don't you go, you know, maybe you should go buy a house. And, uh, I don't know, maybe that's what he did. You know, back then houses were still a lot cheaper, but eventually he moved out of there. And then, because usually it's, it's sometimes it just takes one bad tenant to ruin it for all the other good tenants.

Mm-hmm.

And that was a bad guy. And once he moved out of there, then we were able to bring in good people in there. Everybody was paying on time. We were collecting rents. Everything was going smooth. We provided them several months of financial statements, and eventually they found a buyer. I helped them tour the place, and and it worked out. And they sold it. They sold it actually. God, I don't. It was probably just before like 2008, right? Right before the the collapse was going to happen—the Great Recession. So yeah, fun times.

Yeah, really. What a great experience as far as, like you said, getting hands-on experience, being around something that you wanted to do eventually, like owning apartment buildings, learning how to operate it. Yeah, that's all great. So I guess fast forward, now you're buying your own properties and you have all that knowledge behind you. What else have you learned along the way that's kind of helped you become the operator that you are?

Well, one of the really important things is being really good at qualifying tenants. That is something that I think we have probably one of the most robust practices out there. And we've learned this through trial and error and all that. Um, over time. Um, so let me kind of give you just, just for some historical context, you know, back then at that time, you know, the economy was still shaky, still a lot of people, you know, that weren't working, you know, regularly and all that. You know, you— it, it was not uncommon that you'd have people with credit blemishes, maybe they had a foreclosure You know, things like that, you know, you would see, you know, it was pretty common back then. But, uh, there was, there was, um, there was 2 things that we adjusted that changed a lot for us. Um, and one, uh, one of the— I believe it was the second— we, we purchased this, uh, this, you know, smaller apartment complex. It was out in San Bernardino.

Okay.

And now at that time, we were, we were kind of on a winning streak. We bought a property, it was doing well, we bought another one, and, and, and it was, it was, it was a, a nice little successful run there. So I think we got— we definitely got, you know, overconfident. That's what happened. Um, but this property definitely humbled us. And I'm thankful that we had that experience because I think that's where you really learn how to do things correctly. You can do, if you're always winning and having good deals and all that stuff, but it's the more challenging ones that you really improve. You improve your game. And on this particular property that I'm thinking of, Right now, um, because we had been doing well with the, with the surrounding areas, we felt pretty confident about this, this particular property. It was, it was kind of in this area, and, and I was really good at kind of, um, deciphering what I call, what I call our, our like transition lines. So when you go from a, say, from a rough area to a good area, you know, there's usually— there's some kind of a, uh, of a geographic, you know, barrier, either a, you know, a freeway or a street or maybe mountains or something that separate one area from the other. And so in this particular, um, area, there was a street there that I determined that was the, uh, the transition zone. Everything from there going up north was cool, no problem. Everything from there and south, and not so much. But we had actually— we had purchased further in the north and then way down in the south, and that one was okay down there in the south. But, but then something here in the middle came up, and that's where we weren't, um, very acute and aware of that particular market, that little neighborhood area there. But like I said, we'd had all these successes, so we kind of got overconfident, figured, okay, we can take this thing, no problem. Well, it turns out that was like one of the worst areas, you know, to be in. Um, but we kind of had— we can't— we, we actually, I think we had probably the— I don't know if it was the worst, but it was definitely a problem property on that street. So once we cleaned our property up Then things got better around us because, you know, they were— it was like our problem tenants there. And, and, and this property not only had one problem tenant, it had about, you know, 12 of them, and it was 13 units. So, so, um, one of the big things I learned on that one as far as acquisitions are concerned is to verify the deposits. Because, you know, sellers aren't always the most, you know, honorable people out there and, you know, have integrity. And these guys were telling us, oh yeah, rents are coming in and all that. And okay, um, and they had financial statements that supposedly backed that up, right? Oh geez. Well, that wasn't the case. We took it over and, uh, and I think the majority of the people were— had either balances And we started, we started, um, you know, just collecting on it and just, you know, we were there. We, we were very present. That was a good thing that we've always, you know, done in all our deals. We've always been very present, very like, hey, you know, kind of, you know, the buck stops here. Um, there's, there's a great phrase that I, that I learned along the way is that, you know, for, for property management, you want to be fair but firm. You know, us as property managers and owners, you know, we're going to provide you, you know, a clean, safe place to live. We're going to take care of our end of the, of the deal, our end of the bargain here. You got to pay your rent, take care of your end of the deal there. Um, but these people were not doing that. And, uh, so we had to evict, uh, you know, the majority of the— residents. I think, I think the only one that stuck around was a Section 8 lady, and, uh, she, she was— she actually stuck around there until we sold the place. But, uh, yeah, I mean, it was, it was craziness. We had, you know, upstairs there was a guy selling drugs upstairs. There was a guy in the back building, he was some kind of a gunrunner selling, selling weapons. There was, uh, I think there was a prostitute in another unit, and, uh, just all sorts of craziness. And, uh, so we get it, we get rid of everybody, and now we have to start leasing out. We got to find qualified tenants, right? So we kind of did what, you know, I guess like most landlords do, you know. Yeah, okay, dude, you could— you got your income docs? Are you making enough income? And, and then like I said, at that time, you know, the credit issues were kind of, you know, were always kind of questionable, so you kind of had to like be a little bit flexible. But as long as people were working and the income was there, um, you know, some people would be like in the $500s, but we kind of try to stay in that $600 range. Um, but something unexpected happened to us while we were there. We went through actually, I believe it was like 2— after we'd gotten people in there, we went to a through with like a second round of evictions where you had to evict, you know, a bunch of other people out of there. So, so something, something wasn't right. Um, we'd figured that our qualification practices were solid, but some— something, something, you know, was amiss. There was a gap in there. So I, I went into the tenant files of all the people that were evicted and see if I could find some clues there. What did we miss? Maybe we thought we were doing everything right. Maybe we missed something. I don't know. So I discovered something very interesting, 2 things. Now, the one thing that was a commonality there Um, I don't think this was the reason, but, uh, but all the, all the people— and, and I'm not trying to, you know, say anything— but, uh, all the people that had been evicted, they were all single moms. But like I said, that— I don't think that's the reason. I think, you know, that was just a situation that— but what was the reason that I can pinpoint to it is that all of them had been at their jobs for less than 12 months. So I said, okay, well, that's kind of interesting, you know. And, and, and, you know, my background, you know, I worked in aerospace for many years. I ran quality control, uh, for, for machine shops. And, um, you know, so you're always doing, you know, statistical analysis and that kind of stuff. Um, And so I looked at that and I kind of started reflecting on my own experience, you know, hiring people, overseeing people, firing people. And it made a lot of— it— I kind of started seeing some connections where it's like, if you can imagine, when you're hiring somebody, you don't really know whether that employee is going to work out for several months, sometimes maybe even 6 months. But by a certain point in that probationary period or whatever, you're either going to decide, okay, this person is not going to work out, or maybe they need more training or whatever. But if they're not going to work out, you're probably not going to keep them for more than a year.

Hmm.

And so that was a tweak that we changed. So now we had a requirement In order to qualify, you need to be at your job a minimum of 12 months. Once we made that change, no more evictions. And we do that on everything that we manage. And even during the COVID period, when, you know, there was, uh, you know, people were losing their jobs or whatever, as far as our stuff here that we manage here in SoCal, I can only think of one resident and they actually hit us up. They told us ahead of time, hey, they were working as a lifeguard, I think at the beach or something like that. They said, hey, we lost our job. We're not going to be able to continue. And I appreciate that they communicated with me and we were able to work it out and everything was cool. No problem there. But that was the big thing that changed. Changed for us, and we continue to do that.

Over the years, what, what, um, how has evictions changed for you?

Oh, dramatically. You know, when we first started, we used to do our own evictions. You know, it was, it was a very straightforward process. You know, you file your paperwork at the court, you go through your processes. Um, make sure your filings are on there. It was not as crazy complicated as, as it is now. But one of the things, and this is an interesting thing about back in those times, people would actually, um, ask me because they knew I was in management. And these were people that were, that were working— these people that worked at the aerospace because I was, I was consulting Um, part-time and focusing on the real estate business and the property management and all that. So they would ask me, hey Omar, how do you know if the place that you're renting at is going into foreclosure? I said, oh, that's, that's a strange question. Why are you asking me that? Well, it turns out it was— this was something that was happening a lot because so many people were getting foreclosed on in those times. that what people would do, they'd get scared because, you know, majority of public does not know how an eviction works. So when people lose their jobs and they were scared of being foreclosed, in the middle of the night they would leave their houses and then believing that any day the sheriff is going to come. But it doesn't work like that. There's a statutory process. When once these, you know, homeowners that were in default on their mortgage started figuring out, wow, My house is still empty, maybe I can rent it. That's what they did. And those rents, because they weren't paying the mortgages, those rents became their primary source of income. They call them shadow inventory back then.

Mm-hmm.

Um, and because that was happening so much that— and, and, you know, we were talking about, you know, Schwarzenegger was the governor back then and all that stuff. So he, he put in the law where if The property— if you were getting evicted on a property that was foreclosed on, you had to give people— I think now it was— they changed it to like a 90-day notice, something like that. And basically, the— you know, to answer your question here, um, the eviction process became so laborious, and, you know, you had to, you know, Make sure everything— you cross your, uh, you cross your T's and dot your I's. And, you know, it, uh, for us, it became too, too risky, you know, especially for us managing other people's properties. I didn't, I didn't want to be responsible for, um, not doing something correctly with the courts and all that on the eviction, that then most people were forced to start working with attorneys. And, and that's, that's the big thing that, that was— that has changed. So I, you know, I don't advise people to try to do their own evictions. Um, now when you go to court on an eviction, it depends, you know, different, um, municipalities. It's, it's a, it's a lot— I'll tell you this, a lot more easier Orange County and the Inland Empire than it is in LA. Mm-hmm. You know, Ellie's a whole different animal. Um, and it also depends a lot on the judges that you get. In fact, it's interesting because the attorneys, you know, there's, there's kind of a, uh, they almost kind of have like their own little kind of, you know, group or whatever. They see each other all the time in the courts. They have their, you know, their friendships and whatnot. And so they know the judges very well. They know who's, who's, uh, who's more fair And who's more tenant-friendly? And, uh, and, and in fact, it's interesting because, uh, you know, there's a property, a new client, we inherited their, their residence over there. And, um, and this is, this is up in LA. It's a property out there in Inglewood. And, uh, I kind of picked up on this. It seemed to me like the, like the judge, um, was Trying to give them, you know, some flexibility because, uh, and, and I almost kind of had a sense that out there, especially in LA, because of the homeless issue that's out there, they kind of— they don't, they don't want to put more people homeless, basically, is what it is. So most people don't— when they get in front of a courthouse, it's, it's, you know, you get very anxious. You know, it's the first time going in there and people think it's a people's court. What? No, it's not like that. You know, it's, it's, it's a lot more intimidating and all that. And I think, you know, the judges, obviously they know that. So it's like once a, once a resident that's getting evicted is in court, it's, you know, it's like the judge is trying to get the, hey, this is for reals, you know, you got to get your act together, you got to make some serious decisions, but I'm going to give you some flexibility. And that's kind of, that's kind of how it seems to be out there.

Yeah, we, we had an eviction one time where We had, I think it was a judge from LA was substituting for the normal judge that we had out in Riverside County.

Hmm.

And we were supposed to be getting the judgment that day. And she comes in and, and then, you know, the, the tenant was giving the sob story and you can see her like tearing up a little, you know, the judge. And I'm like, oh boy, this isn't gonna go good. She's like, okay, there you go. We're gonna give you some more time to, you know, you say that you actually own this property, you know, and we don't know that. We're like, no, we have the title right here. We're like, no, we're gonna let her Yeah, we're gonna let her, you know, bring her paperwork in if she says she has proof. So we're gonna give her, you know, another 3 weeks to do that. Come back 3 weeks later, she's like, do you have the proof? They're like, no. So like, she just got 3 weeks for free, basically.

Yeah, that's— it's same similar situation in that. Yeah. And yeah, yeah.

So, you know, and the normal guy was a little bit more, you know, he's like, this is what it is, you're not paying, boom, done, judgment, move on. Yep. And, uh, once we saw her—

Those guys are great.

Yeah, but, um, that's a lot of good experience. I mean, I, I— we, we had like 2 rentals and the— just went sideways just because of not knowing exactly what, uh, you know.

Yeah, you guys should hire us. Exactly.

Well, now, yeah, now we're like, if we have any more rentals, we're definitely getting property management. So It's a whole nother learning curve.

Yeah. I like that 12-month tip on the employment though. I think that's something I haven't heard to look for before.

Yeah. That mitigates people getting laid off.

Yeah.

It's a good idea.

And what's interesting in California, at least, people's records can be sealed. So you can be a—

Well, that was a recent thing.

Okay.

That was a recent thing. And I know that because I was trying to get rid of a tenant out there in Long Beach.

Right.

Okay. Um, and we didn't find out. It was— I mean, I don't want to get too into the weeds about it, but, uh, um, basically there, there was a case that had to do with, uh, something about marijuana and some, some guy's personal— I think it was a date of birth or something. It was a court case, but it wasn't— at that time, it wasn't actually law.

Hmm.

It was because of that court case that they made some kind of change in there. So We let this guy in and his— everything looked clean, no criminal record. Well, we didn't know about this thing because like I said, it wasn't law. They just changed the procedure in the courts. And so what my guys do now is that they go on— there's other websites. There's one called PACER out there, but you can actually go in there and search by people's names. And that stuff. And so when he did that extra layer there, oh, then, uh, you know, list of other things came up and we were like, oh man, because he was, he was just, he was just kind of a rude tenant to the neighbors there. And, uh, you know, with parking and just that kind of stuff. And so we said, hey, you know, it's, it's over. You got to go.

Yeah. Do you have some videos for us to watch?

I do.

Yeah. So, uh, we have a part of the show where we bring up some, some videos and we have you react to them. Oh, okay. Yeah. There's Joe's smooth transition there.

This is gonna be some some fun videos.

They're all like real estate related. Yeah. Yeah. Awesome. Yeah.

Here we go. They're harmless.

Harmless. A lot of YouTube Shorts. So the first one is 2025 crash predictions.

Mark my word. Oh, I've seen this guy. Savings accounts or current accounts in Bust it up loud, please.

I have it as loud as I can.

Okay, one second. So click on this, and then that.

Ah, I see.

There you go. Yep. Okay, let me bring this back down then. Sorry, guys.

You are the techie guy. I know, I know.

I always get stuck with, like, what's going on. All right, we'll start this from the top.

Here we go. Mark my word, if you leave money in savings accounts or current accounts in mainstream banks or even Challenger banks, that's a fucking risk.

Because Robert Kiyosaki's been saying that— You realize the world economy is based on debt, and the whole world is floating on it. And you have all of these people who think, oh, I don't have to worry, I have Treasury. Because those lying financial planners, all they want to do is sell you that stuff. But without financial education, the average person is stuffing their 401s full of fake money, fake stocks, bonds. We haven't seen the crash yet. It's coming. It's the biggest in world history.

And they're this close to a bank run all the time. Mark my word, if you leave—

Kiyosaki's getting younger. I believe that.

He's on something. I don't know what he's got, but whatever it is, it's working for him.

Yeah, for sure. That's kind of interesting that you brought him up earlier because he— I was like, oh, he's in the first video. Although he has been predicting the biggest world crash, I think, now for the last like 10 years. Yeah.

There's been a lot of guys predicting crashes for—

yeah, it makes for great videos like that, all the down graphs and the money and it's all burning. What are your thoughts?

Yeah, here we are at the end of the year. What are your thoughts?

Well, you know, I, I tell you, I, I think it's— it is so difficult to predict things more now than ever because you have several things that are kind of throwing wrenches in the spokes. So One of the, uh, obviously, you know, the, the interest rates are going up, but, uh, what a lot of people are not— well, they're talking about it more now, but I— what I think is not getting the respect that it's due is the insurance. The insurance has blindsided a lot of people, you know, in the commercial spaces, especially in the commercial space. Um, but that, that is something that You know, maybe 3 or 4 years ago, um, when you'd underwrite deals, you'd kind of have a standard kind of underwriting, uh, number there, a factor. Um, but now that has gotten a lot more, um, you know, I don't know if nebulous is the right word, but it's definitely more difficult to pinpoint. And you hear other, you know, experienced apartment investors You know, definitely increasing their, their price per door on the insurance.

Right.

Um, but I don't see— we actually did like a little analysis on one of our properties, and, and, and believe me, I've, I've learned more about insurance in the last 2, 3 years than I did in the previous 10. Um, but, uh, there's, there's just, uh, there's just not enough of the reinsurers out there That insured the insurance companies, and that's basically what happened there. But we did a little analysis to kind of gauge, okay, is are they coming down? And it was funny because we were expecting last year's to at least flatten out, and to our surprise, it actually went up a little bit. And we were like, oh well, you know, this is this is that was that was very unexpected. But I think that's something that a lot of you. You know, in, in the last several years, probably maybe since COVID because everybody was sitting around at home and, you know, watching, you know, whatever videos and thinking, you know, that the real estate game was, you know, easier than, you know, people led on to believe. Um, they kind of haphazardly got involved, um, didn't do their numbers right. And now with the double whammy of interest rates going up and insurance going up, it was too much for them to absorb. And then if they weren't properly running their operations, it just wasn't working out. So I guess to get to the bottom line on that, I think 2025 is going to be a kind of a transition year where 2024 has mostly been a year where what we call the general partners on the deals, the syndication of deals that we do where those guys have been taking losses. And now 2025, I believe, is going to be the year where the banks will start taking losses. They've already— actually, they've already taken losses, but they're doing a lot of this extend and pretend type of stuff. So how long they can do that and absorb that, um, I really don't know enough about the, the, you know, internal machine there and I don't know if anybody, um, really does have a clear picture on that. Um, but that's really kind of what's, what's sustaining things. And, and, you know, the, the interesting thing when, when I reflect back to, you know, the, the Great Recession and, you know, 2007, between 2007 and '08, is that even back then there were still guys that were saying, hey, it's— and these were guys that were on TV saying, hey, this thing's going to come back and all that stuff. And, uh, and it went the other way. Now, saying that, um, there, there is a guy that I, that I respect a lot. Um, you guys probably know this guy named Bruce Norris, and he thinks that it's gonna be more like the early 1980s where it w— it is actually gonna be flat.

Mm-hmm.

And he makes a good argument because if you think about it, if prices have been going up but inflation is also causing wages to go up, so if eventually those wages keep going up and up to the point where it's like, okay, people can afford the monthly payment, it's gonna keep the prices, you know, from really crashing down. And the other thing is, it's, it's very difficult to argue for a crash in housing because, um, people that have owned houses, especially people that refinanced, you know, when the rates were like 2%— there's, there's a large amount of people that have rates that are less than 4%, okay? So they, they're, they're going to be sitting pretty for a long time. They're not going to want to, you know, sell their house and go get a, you know, 6%, you know, loan. Um, so you, so you got that working for you. You got people out there that have equity in their homes, and the, and the people that had, that do have loans, they're, they're, they qualified them with good FICOs. So it's not, there's not none of that subprime stuff that affected the, uh, the recession before. Um, so it's— I, and I'm— so I'm kind of more in that camp. I think it's gonna kind of flatten out, you know, there, there might be some corrections, but overall I think it'll flatten out. Inflation will bring our wages to go up. We'll eventually be able to afford those mortgages, and then, you know, things will continue on. But, um, I, I don't think there's going to be this massive crash like there was in 2008. I really don't see that. Corrections is possible, and those can be overcome.

All right, well, we'll bring this up next year and see if you're right.

There you go.

That's good. Perfect.

We got you on tape now. Make me eat my words.

All right, ready for the next one? Yeah. Okay. Lower rates? Question mark. It'll be interesting. Oh, another low volume. Bear with me one minute. I'll just put it all the way up. Start it over here.

Here we go. It'll be interesting to see. But long story short, every single economist, every single trend is showing lower rates. By the end of '24 and lower rates by the end of 2025? I'd love to hear from you below. Hopefully, if you're thinking about purchasing a home, I will hypothesize or summarize with this. I believe there's going to be more buyers in 2025 than there is in '24 because we're going to see that lower rates. I believe we're still going to have short inventory, meaning there's going to be more buyers for that same house and thus they're going to drive up the price. So if you want to purchase a home in the next few years, I would contend now is a great time. Now, great is a relative term to your individual market. Make sure and consult with your team. It'll be interesting to see. You ever notice, long story short, everything—

That the rates are going to come down so that people start buying and selling.

All you have to do is refinance.

What are your thoughts on the rates?

I know you kind of mentioned it, but Well, okay, the, the thing that people is important to understand about interest rates is that because the Fed has already lowered rates twice, okay, but yet rates are still elevated. So why is that? What people need to understand is that above the Fed funds rate, there's what is called the risk premium. That risk premium is based on the bond market out there, and those are all, you know, investors out there I mean, you guys have probably heard, you know, the smart market, or what is it, smart money's in the bond market or something like that. Um, so it's interesting that even though the Fed's cutting rates, you know, the bond market is still keeping that risk premium kind of elevated. Okay, so what is that? What, what did they know that, you know, everybody else doesn't know? You know, what are they seeing? Um, so that's— so you have to kind of pay attention to that. Um, you know, there, there, there is quite a bit of debt out there, and, you know, and, and I'm talking about, you know, besides, besides real estate, I'm talking more like credit cards and, you know, auto loans and things of that nature. Um, so does that play a factor in the bond market? I mean, maybe it does, because these bond investors, you know, they're They're not just— look, they're probably not even just in the real estate market. They're in many other bonds out there. So they're seeing a whole other segment of the world out there that us guys, you know, on the— in, in real estate aren't even involved in. Okay. So when I see those risk premiums still being kind of elevated, it kind of tells me something, that there's a certain world in the bond market out there that still that still sees some risk out there, you know, perceived or not in, in reality. Okay. Um, so, and, and this is, this is the thing that, uh, that, uh, I believe Bruce Norris was saying also, is that he, he believes that there's going to be, you know, higher rates for longer. There's been people saying that. Um, and I don't think we'll ever see like, you know, those 2% or 3% rates. Um, but, you know, I could probably see, you know, in the 5s. I think, I think that's, that's a reasonable, um, you know, uh, projection, I guess, that you can make. And I mean, we're probably— I'm not gonna see it like next month or something like that.

Right.

But, you know, sometime later on next year, maybe 2026. Um, You know, but, but look, if we get a crazy, uh, um, you know, what do they call it, black swan event, and that nobody sees, and, you know, rates can come down to zero again, you know. So it's, it's, you know, you got Kiyosaki over here, he's saying that the Earth is gonna, you know, explode or whatever. Um, you know, it, it, uh, it's, it's, it's I, I don't, unless, like I said, it's a black swan event. Right. I think, I think we'll probably be somewhere in those, in those, in those 5, high 5s maybe.

Yeah. Yeah. And it's like, just buy the real estate if it's a good deal. Hold onto it for as long as you can, as long as it's cash flowing.

I agree. Yeah.

Well, and aren't, I know they're high right now to us, but aren't interest rates still pretty historically low?

Yeah, actually they're kind of, uh, I think they're kind of at an average right now. Mm-hmm. And you know, I was, I was having a conversation with my brother, you know, and he's like, yeah, you know, you know, there was times where the interest rates were like 20%. He's like, yeah, you know, it's like, you know, when I bought my house, I think, you know, he was in the 8s or whatever. It's like, yeah, the rates would go down. I just refinance, you know? So, yeah, you have that working for you.

Right. Absolutely. I think it's fair. Nice. Anything else?

Uh, we got one more video. Okay. The year's almost over, but real estate is a different game in 2024. Let's see about this volume here. Oh, Logan. And here we go.

When you're getting started in real estate, we have to acknowledge that 10 years ago it was very different. I bought my first duplex and it was $12,000 down, $240,000 property. My mortgage was $1,500 including principal, interest, taxes, and insurance, and each side rented for $1,100. That same property today, if I sold it at a 20% discount, would go for $500,000 and the principal and interest would be $3,600. Each side would rent for $1,600. So it's just way harder for a Gen Z or somebody that's just getting started on their journey to financial independence to house hack. It's not as simple as it used to be. So absolutely want to acknowledge that challenge. You've really got to be willing to make some sacrifices, move out of town, move to a different location, get really creative, find short-term, midterm, or other opportunities, maybe find assumable mortgages, those types of things to make house hacking as obvious as a win as it was for me. It can still be a much better alternative to renting or homeowning. When you're getting started in real estate, we have to acknowledge that 10 years ago, it was very different.

Yeah. And we met on BiggerPockets too. That was— BiggerPockets was all house hacking. That was like That's how you get started, you know, you rent out your room and do all that. But it is kind of interesting. Maybe it's just you can't, you can't cut it anymore like that, so you gotta go a different direction.

He had a failure to launch problem, and so his parents said, you should move out of state. Yeah, buy something less expensive, go out of town. That's why he went.

Exactly. We'll put the down payment. $12,000? No, we'll cover that.

Yeah, we'll cover that. Yeah.

And, you know, and there are markets like that out there. You know, it's, it's, I've seen stuff out in the Midwest and the Southwest that, uh, you know, it's, um, you know, it's, it's, it's not gonna be in a gated neighborhood or anything, you know, but, you know, you can, you know, get a house out there, $200,000, $300,000. Right. You know, put, put your 10% down, your $20,000 down. Yeah. You're good to go.

Yeah. I just like living by the beach, so that's not gonna work.

Yeah, yeah, I'm with you on that. But, you know, he did say something interesting about the assumable loans things. I think that's something that's going to be very popular. Um, it's, it's, it is, uh, pretty popular right now in the commercial space because, right, because you do have a lot of, uh, um, um, you know, uh, Fannie and Freddie commercial loans out there that allow for that. Um, and Uh, I'm not, I'm not, I'm not too sure if that is— does, does that work too into in residential right now, or certain loans?

FHA, VA?

Oh, it's just the FHA. Yeah, yeah, yeah.

But yeah, you have creative finance, you have sub-2, you have seller finance. Yeah. And get around all that.

Yeah. And those, those, those are— yeah, I think those are really great ways to try to get into a deal and, uh, And, you know, make a win-win for both sides there.

Yeah, yeah. I mean, I see people in these groups who are taking over people's loans that are at the 3%, you know, and for whatever reason they have to move, relocate, and, you know, maybe they don't have a lot of equity, so they're willing to give up that mortgage and you could take it over. And yeah, there you go, now you got a 3% loan. Yeah, not too bad.

I saw one the other day. The only problem was It was in Hemet.

Oh.

Oh, yeah.

It was a nice place.

Yeah?

Yeah, it was a very nice place.

Okay.

But it was like the value, I think the value was like, I want to say close to $500,000 and they were wanting to sell it for $480,000. So there's not a lot of equity in there, but you could literally move in with, you know, $20,000.

Hmm. Send that one to me.

The Hemet one? Okay.

No, no, I mean, no, you could buy it as a rental, I guess. Yeah, yeah. All right.

No, no, no, no. Your favorite renter in there.

I'll give her a call. Okay.

Say Alex has another place to rent for you.

That's where it all went down, was in Hemet. So yeah, I just don't have a lot better— it's better flipping market for me out there. Awesome. Well, we really enjoyed having you here, Omar. How can how can people you know reach out to you if they have any deals or they want to learn more about multifamily or maybe property management? Well, well, be my websites larueinvestments.com.

Okay. And you know that people can email me omar@larueinvestments.com. And yeah, that's where I'm hanging out.

Perfect. Nice. Yeah. Awesome. Well, I appreciate it. And If you can make it out to the meetup, we'd love to have you there. And if not, then we'll absolutely yeah, we'll see you in the new year. And thank you so much.

Yeah, thank you, guests, for having me. I had a really fun time.

Thanks for coming.

All right, you guys, we will be back here next week, so make sure you tune in. Please share this episode with any any new or experienced investors, and we'll see you next Thursday. Take care. Bye.

If you want If you want some more advice on real estate investing, reach out to us one-on-one. 949-625-4533.