저자: MeetKevin · 외국인
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Graham Stephan의 Ben Mallah 인터뷰를 리액션하는 영상. 부동산은 적은 자기자본으로 시작해 저가 주택·듀플렉스를 임대하는 방식이 소개되며, 진행자는 '65% 이하 부채', '시장 고점 매도', '할인 매입' 원칙을 강조. 2019년 기준 다가구 신축 시장이 고점이라 판단하고 대형 아파트 딜은 과열로 보며, 특정 자산 가격에 대한 구체적 방향 예측은 없음.
다듬은 글
Welcome to another Meet Kevin reaction video. In today's video, we'll be reacting to Graham Stephan's interview with Ben Mallah. In case you did n't know, Ben Mallah is a real estate magnate from the Tampa area of Florida. And we're going to, well, show off this lightsaber that I just got. Let's dive into the reaction video and see what lessons we can learn about investing and real estate.
Because the only thing that really matters to me is advice that makes money. After all, that's what I do on this channel. The videos are designed to make them money. A quick note: if you haven't yet see, be sure to use the coupon code 10x 2020 for a 22% discount. You can also meet me in person in Austin, San Francisco, Miami, or Charlotte soon.
For these events, there is a "plus one" coupon if you want to bring your partner or a friend. Details below. So, there are two videos about this. I'm going to react to the entire interview so we can extract as much knowledge as possible. Let's do it. Everything my parents did. I am the opposite. My mother used to beat me a lot when I was a child for no reason.
I never laid a hand on my children. My father always wanted to be a cheapskate, live in horrible places, save every penny he could, and sacrifice a decent life. I am the opposite. I'll tell you that the interview begins in a very powerful way. Now, obviously, he has that character that transcends life, but to say, " You know what?
I'm not going to try to save every penny." "I'm going to discover how to live my life differently than my parents." Very inspiring. I like where this is going. The first big revelation we get from Ben is right here. And this is where he begins to explain how he went from working hard to owning real estate.
Owning and controlling real estate surprisingly generates a lot of money and compensates for not always having to work hard . If you're willing to work hard, you do n't really need a lot of money if you think smart. The first house I bought, I think I used my VA loan and it was a no down payment deal because the VA had a program .
Just as a side note, the VA still has that program. If you're a veteran, you can get a house with no down payment and get your closing costs covered . If you're not a veteran, loans to access loans with a 3% down payment. And often states give you money to help you become a homeowner . So the ways to enter the real estate sector are wide open if you open the door.
Understand it, if you open yourself up to it. But I remember saving money, you know, back then I was basically buying dilapidated houses that nobody wanted, for about 20 or 30 thousand dollars. So basically, putting down 20% on something like that was only about four, five, or six thousand dollars. So, I didn't need to...
I saved some money, you know. I bought the worst junk that nobody else wanted, fixed it up, made money, and then took the profits from that or refinanced it. Yeah . I bought other things. He presents a good argument. If you start with cheap houses, the down payment, that 25% you need for a rental or investment property.
It's much easier to get. But reselling can often be more difficult. You're dealing with a more complicated tenant. I'm not sure that's the easiest and best way to start these days. I almost prefer to start with that 3 or 5% down payment and keep moving from one quality house to another . Not necessarily one that's freshly fixed.
It could be one to remodel, but I want to be in an A or B+ category neighborhood. I simply don't want to deal with tenants in bad neighborhoods. In the first deal I made, I think I paid around 275,000. In fact, it was a duplex. Both units are like three bedrooms. Those units were rented out once I cleaned them up and, you know, fixed everything and they passed inspection.
This, by the way, is brilliant. If you're going to get a duplex, which I think is amazing and you should, getting a duplex with larger units is perfect, because if you can get three bedrooms and two bathrooms, even in some cases three and one, but ideally three and two on each side. Oh, those are great because, generally, when you look at different cities across the country, you wonder , what is the average size of a home?
Typically, a 3 and 2 bedroom is around 1,300 to 1,400 square feet. Once you start to deviate from that, you start to go to something too small, people want to move away. They want to move to something better. Now, eventually people will move out of 1,300 to 1,400 square foot homes, especially if you're in areas like Texas where places are large or areas like Florida.
But hey, you know what? No problem. Tenants tend to stay for a while in the three- and two- bedroom apartments. I like that. It's a good way to start. Listen, I'd do whatever it took, I'd buy a used carpet and clean it. I would buy used materials from secondhand stores. You know, buy the cheapest one possible so it works, right?
What he just said might sound like something from the wrong side of the tracks. It might sound like : "Oh my god, secondhand stuff. Wow, used carpet. Are you serious? " Surprisingly, many carpets can be, and I mean, I wouldn't do this because the carpet is so cheap. I mean, I could carpet a three-bedroom house with a hallway for about $1,100 with a new mid-grade rental carpet.
So I wouldn't do this. But I understand what you're saying. You know, you replace the padding . Hey, you know what? Many times you can wash the carpet with shampoo and make it look good. But the second part he said is actually much more important. Get the cheapest option that will make it work. If you can invest in real estate and you can get something that solves a problem and postpones the issue for 5 years, it 's often a great way to go.
That doesn't make you a dive bar owner. It doesn't make you a bad landlord to walk into a house, look at it, and say, "Well, the house isn't grounded. That's how they were built in the 1950s." But we can comply with the code by installing GFCI. Those are the small electrical outlets with reset plugs.
Instead of rewiring the house, that is, instead of tearing out all the walls and running new cables and then repairing all the holes in the walls and a new panel, instead of all that junk, what's the cheapest thing we can do right now to make it work? That's the mindset of an investor. You know, I didn't spend a lot fixing it up, but I made it decent and safe, and I took a piece of junk I paid 275 for.
Notice how he clarified that. Actually, it's very smart of him to have clarified that. He made it decent and safe. That's because initially, when people hear, "Oh, just get cheap stuff. Just make it work." They think you're a landlord from a low-class neighborhood and that it's going to be unsafe and, you know, it's going to catch fire or something.
However, it was a decent-looking place . He had two contracts from the housing authority that proved he had his rent secured. The tenants only had to pay nothing or $20-30 a month because they had low incomes. I went to the bank, refinanced it, and got a loan of probably one hundred thousand dollars back then .
That's incredible. This is known as renting to Section 8 tenants or tenants who receive rental subsidies from the state. Actually, it's not a bad idea. We also rent to Section 8 tenants, as long as they continue to qualify with their credit. I know it may sound contradictory, how could someone in Section 8 have good credit?, but they do.
And that's very important to me because if someone has excellent credit, they're more likely to take care of the property . You see, I'm not just looking for tenants who pay, I'm looking for tenants who pay and take care of the property. That's one of the reasons why I'm not a big fan of student rentals.
He owned properties all over the city. It had single-family homes. He was buying duplexes. Duplexes began to be converted into triplexes. I bought a quadruple apartment. So, the guy I worked for in administration, he had him too. Then, he and I, with his money and his credit, started making bigger deals.
Basically, all I did was apartments and mostly affordable housing. Then, when I decided to move from California in 2004, because the market was very high in California that year. You need to know when it's time to sell. You don't want to miss the train. This is true. Many people think it's not possible to measure market time, but I believe it is.
In fact, many savvy investors began selling in California in 2004 and 2005. If you look back, you can see a steady decline in sale prices starting in November 2005 in most areas of California. But I'm a little skeptical here, because we went from him buying single-family homes, duplexes, triplexes, and quadruplexes to partnering with someone using their credit and money, and suddenly to doing apartment deals.
There's a little information missing here. And then Graham asks the question: "Hey, wait a minute." You know, how did you get from there? How did you actually manage to climb up to apartment buildings, shopping malls, and all that? And you know, Ben replies: " Okay, let's begin." And now I'm wondering, wait, is that the person he partnered with, or is it just him, or is there a company involved?
Let's do a quick Google search about this. So I just did some more research on Ben Mala just to try and understand what the heck is going on in this guy's life. I tried to close any potential tabs here that might be private, but here's basically the gist of what I discovered. Uh, Ben Mala runs Equity Management Partners.
This is a company that offers property management services, but they go a step further by saying that they not only provide management services, but also handle all aspects of acquisition, ownership, management, value analysis, sales, and anything else needed to maximize the value of our clients' investments and aggressively generate wealth among our business partners.
So, this Ben is really based on this right here, running a syndication where they take other people's money and invest it in deals. That's my assumption. Now, I could be wrong. So, where's my cup? Don't sue me, brother. But this is basically the same thing that Grant Cardone does. What's with all these people from Florida here?
Uh, but this is Ben's version , which is very interesting. Look, I also did some more research by checking out different articles here and I was able to find out that, you know, their company, they buy and sell many of these larger complexes. This was actually one of the squares featured in one of the YouTube videos in which Ben appeared on the Concrete channel, from which he has now separated.
But anyway, when I did some research on this square, I found that what was true for the house he lives in is true for this square and practically every other building his company seems to buy. They're always in LLCs to really hide the identity of who's controlling this. My guess is that, because he's really doing this for the benefit of the investors, they might have a group of investors participating in these deals, and that's why these LLCs are formed.
That's why you'll only see these addresses or John's Pass Plaza LLC. And even when you search for those real LLCs and try to get more information, all you end up getting is stuff like this. Here you go . Articles of Incorporation for John's Pass Plaza LLC. This is it. It was formed at the same time they bought the property.
And it all always comes back to a lawyer or an accountant, which is honestly a brilliant way to own real estate when you do business with partners. I'm not the biggest fan of LLCs for sole proprietorships. I think the idea of limited liability is greatly exaggerated when you are the sole member of an LLC.
But this is a very interesting setup that Ben Mala has. And I think that's why a little bit of the story is missing here, because that leap was too big to just say, "Oh, yeah." "Yes, I went from, you know, fixing up $27,000 houses and duplexes and triplexes, all of a sudden to, you know, big complex deals of 7, 10 or 20 million." " Something's missing there." Now, I don't think there's anything sinister here, but it just gives me a little more understanding.
Okay, great. No problem. When we see Ben, we have to realize that he is investing other people's money . At least that's what it seems. So , again, don't sue me, brother, but let's get back to the video. And you just keep doing that, carrying one property over to the next and the next. When did you start getting into apartment buildings and shopping malls and really leveling up?
Well, we started to grow a lot in the apartment business and, uh, that's pretty much all I did, apartments, and it was mostly affordable housing too. So, do you notice the emptiness there? Graham notes: Okay, wait a minute, so basically you kept doing single-family homes and then it becomes "well, we started to grow a lot in apartments." Yes , because it's a syndicate.
When you do syndication, it's about raising money from other people. You have to build apartments. You can't do everything with single-family homes when you're investing other people's money. So, okay, it's good to have that perspective, but let's move on. So I came to Florida. I found that this area had a lot of growth in the center of the state.
Miami was too expensive. North Florida was too cheap, and this one was right in the middle. So we came here and started building more apartments. And then, um, one of the boys in the family decided, the boys moved into the apartments like me. Yes. But the girl in the family, she wanted to go into hotel management.
So she studied for that and that got us into the hotel business. We bought a hotel. So, while she was going to school, she also managed a small hotel . Let's talk about an epic family business here. Ben and his son can manage investor money and acquisitions for their company, but now they have Ben's daughter, who has experience in the hotel industry.
This is like the perfect combination, the ideal setup for a company to basically run a syndication. I mean, this is great. This is what I want to do with my children. I think this is incredible. And then, about 5 years ago, I decided that I wanted to limit administration, because hotels are intensively managed.
Apartments may be intensive to manage, but commercial premises are not. It's interesting. Well, look, I understand that. So, look, at an older age , it's like: if I'm going to invest people's money, why not buy buildings that are easier to manage? Why should I have to deal with all these tenants and sanitation workers?
I want to put people's money into good businesses. And if I do believe there's value in commercial premises, hey, you know what? Let's put the money there. Remember, your company is dedicated to management and investments according to the website, and that makes sense. It is much more lucrative to run an investment company than a management company.
In fact, that's why most investment firms simply pay a management company to handle everything. There's no point in doing administration, sales, and investments when investments generate 99% of the money. Basically, you collect the rent from the business owner and that's it. You don't have to worry about anything else.
And they do n't usually move around much if they're making money because that's, you know, their livelihood. Yes. What happened, however, in 2008 and 2009 when the market...? The market crash? Yes. And all the properties I owned were now worth at least 25 or 30% less than they were before. Fortunately, I wasn't overleveraged.
That's what I regularly . 22% discount if you use the coupon code 10x2020. But let's talk about that. Many people hear me say: buy real estate, start owning real estate, and then they think, "Oh, but I don't want to have debt." But what Ben just said there is huge. Don't overleverage. In my opinion, a safe, or relatively safe, leverage position is to have no more than 65% debt in your portfolio.
That means property values could fall by 35%. And you'd still be okay, right? Ideally, they don't fall that much. And as you heard Ben say here, you know, his properties lost between 20 and 30% and he's buying retail. Generally, you have to put down between 35 and 50% anyway to buy these deals. So it makes sense that you can more or less ride the wave, but you're going to have some problems.
So I hope those problems come to light here. But as for how this applies to you, keep in mind when starting out in real estate: yes, it's nice to say "I don't want to have more than 65% debt," but you might have to start with more debt at the beginning. But that should be the goal you work towards. That's why I always say, look, if you can buy real estate that's even a little bit below market value, it's much better.
I prefer to put down 5% on a property that needs work and suddenly it's like I put down 20 or 25% because I got a good discount. I fixed it up a bit. Boom. Money in my pocket. That's what I like. I found...I prepared a big package with all my things. And luckily I sold a package with everything. Texas, Florida.
I simply put together a whole package of apartments and a group came and bought it at a price that wasn't the best. I would have gained more if I had kept it, but we still made enough profit to feel like, hey, I'm out now. I can start over and take advantage of all the offers that were available. I had to sell my things to raise the capital to go out and buy all the good opportunities that were available because the market was collapsing.
Hey, skeptic. I'm skeptical. Look, I...I don't know. And, look, Ben, I think the reason you had to—and this is speculation again, so remember, don't sue me, brother— but I think the reason, the only reason, Ben, someone who's been a property investor for 25 or 30 years , who's been through this before, you know, we had the recession in the late ' 80s, property values go down, they go back up, but Ben, Ben, I think you had to sell because your investors were losing their shirts and wanted to get their money back.
Now, the smart thing to do when you have investors is to find a way to keep them on during the bad times. But unfortunately, when people panic, as happened in the Great Recession, there was panic. People want to withdraw their money from a fund. And suddenly, as he said, I could have sold it for more if I had held on to it.
You can bet he knew that at the time, but he was forced to sell. Because? In order to raise capital again and buy at a discount. Okay, wait a minute. If you sell at the worst possible time and buy at the worst possible time, you're really just paying a lot of money in commissions. So I don't think he would have done that if he'd had the choice.
But I think he was forced to do it either by his partners, his investors, or, honestly, by both. So, what were some of your biggest challenges over the past 25 years? Well, buying far from where you live, you know, when you have to travel a lot. Yes, this is literally what I say all the time on my channel.
Don't buy more than 30 minutes from where you live. If you have to take a plane and you're talking about losing half a day or more, and then you end up exhausted just from visiting a rental property, guess what? Investing in real estate becomes a heavy task. Shop in your neighborhood. It's where you'll find the best deals.
It's where you discover the best streets. It's where you know which areas to avoid. Anyone can find deals in their neighborhood. If people are remodeling in your neighborhood, you can get deals there. I like to deal with real estate. I like getting my hands dirty. I like feeling them. You know, I like to deal with problems easily.
When things are far away, it's very difficult to deal with them. And you don't want to hire management companies because then you don't have control over your own investment and they can do things you don't want them to do. And he's a management company, but again, it's kind of like , you know, he said himself, you know, they're retiring from management.
So, I don't agree with this. I think having a property manager can be a great way to start, especially one who also invests in real estate , and you can learn from a manager, and yes, you can always take over in the future, but I mean , most property managers will consult you about things. At least that's what I would demand from my administrator .
So the most important thing was, you know, not to be so scattered because I didn't want to be a huge, giant company. I was happy being just a solid family business, you know, with my kids getting involved and helping me and all of us working together. So, uh, getting too scattered. Besides, you know, sometimes you can take on more than you can handle.
This is a really good point. You know, sometimes be happy with that small family business you have because once you start to grow too big, you start to lose it in other places. You know, other areas of your life start to suffer. I think it's very easy for everyone to say, "Oh, you should have 20 income streams and 20 different jobs or this or that or whatever." Why not just focus on the most profitable one?
You know, I like it, I think that might be unpopular, but honestly, look: if someone is making $55,000 a year, uh, you know, cleaning pools, I don't think they should be driving Ubers. I think they should try to figure out: a) how to earn more money in their main job, either by getting another job or increasing their efficiency, or b) invest in real estate and earn money that way.
Otherwise, you just end up with a complicated and stressful life, and that's not good. And what would your advice be to anyone watching who sees you in this position and wants to follow in your footsteps? You have to go out and look for the deal. Find a deal that has some kind of potential where you can improve it.
You can create value. You can gain some effort capital from it. It's called added value. Yes. Uh, you know, and typically. And now we call that buying a bargain. In other words, honestly, it's very true, because as I said, if you can invest the time from your side hustle in buying a property for which you pay a little more than a reseller, but then you can put paint and carpets in it, you can make a lot of money.
What a great and easy way to create wealth. I mean, more people should be doing this. There will usually always be a place like that . You know, people die, people retire. Hey, there's always a house you can fix up. Let me tell you another good one, uh, uh, something I did very well. I had a great experience with the student accommodation.
You can go out and buy, let's say you just buy a house. Notice how he's not telling you to go out and buy large apartment buildings. He says to go and look for added value. Hey, you know what? Single-family homes are actually a great opportunity for that. Oh, hey, then there's also this aspect of university housing, although I personally don't like it.
I think it requires a lot of management, but you can make more money. It's the same thing called rental arbitrage, where you could basically rent an entire unit for, say, I don't know, $2,000. But if you rent each room individually, you could usually get much more money per room. And that makes sense, but it requires much more management.
You generally deal with a lot more drama and headaches. And sometimes it's harder to evaluate those tenants because you have to accept people who want roommates instead of someone willing to rent the whole place out. And of course, you have more turnover and blah, blah, blah. But let's see what Ben says.
With students, you don't rent the whole place. You rent it by the bed, right? And we did very well in that because we went out and bought a property that had many four- bedroom apartments. And you can rent each room for about $500 a month or more, even $600. Now, you take a place that you would normally rent for $1,000 a month as a four- bedroom apartment, but you rent it individually by the bed and they share the kitchen, they share the living room, and you get $2,000 a month.
So , if you're near a university , look for student accommodation. You can do it on a small scale too. Make sure the parents always guarantee the lease agreement . So, if they don't pay, you go to the father: "Hey, your son didn't pay the rent." You know, it's totally true about including parents, but no, if you go into student housing, you're going to deal with a lot more renovation work between tenants, mainly because it's very difficult to assign blame like, well, who broke that?
Who broke that ? You know, good luck, it's your problem. How did you learn all this? Did you have someone to guide you? Simply by doing it, experiencing it, you know, and discovering that there is real value in something, above all. Yes. Just by doing it, you know, going out there , seeing a run-down place and, you know, fixing it.
But, you know, you have to be careful. You don't want to buy a place that needs too much work. You know, I tried to stay away from major structural work. You know, this is great. And this is very much in line with much of the advice I give. Stay away from these houses that need foundation repairs. And you know what?
Get your pre-approval letter. Begin. Let's analyze some of your businesses in the investment course. Let's see if you're on the right track. Let's try to prevent you from making mistakes. And you receive this all the time. Many people say, "Hey, that's an example of something good to buy." And then someone posts the deal and says, "Hey, here's a triplex right on the corner of a busy intersection." I say, "No, don't buy that." Know?
So why do you think you were successful when so many people want to do this? Many people fail. What do you think made you different? You know, to really be in the real estate sector, you have to live it . You have to breathe it in. You have to eat it. You have to, it has to be your life. I mean, you can do it as a side thing, but you're not going to do it at a high level as a side thing.
What he says here is correct, but I think it's important to differentiate when he says you can do it as a secondary thing, but you're not going to do it on a large scale. That's ok. We don't need a large scale. Most people own one property in their lifetime. That's all. Every time they want to move, they sell and move.
But think of it this way. If you retire with 10 properties and you've already paid off nine of them because you had 30-year fixed-rate loans, you simply kept them and retired, that's nine properties paying you every month. Let's say each one was rented for $2,500 net of taxes and everything else. 2,500 times 9 , that's $22,500 coming in each month.
And all you do is cash the check for maybe nine single-family homes. Think about it over 30 years. Nine single-family homes . It's like buying an extra house every 3 years. It's not that difficult. You could easily do it as a side job . Yes, you're not going to make deals worth 100 or 50 million dollars, but you can start with these and you can always move on to bigger things.
But yes, I mean, if you want to do this syndication work, of course, you have to dedicate yourself to it full time. If you want to raise capital and invest other people's money, oh yes, you have to do it full-time. You have to cross the line. You have to go where nobody else wants to go. You have to work those hours.
Nobody else wants those hours. You know, I neglected my children when I was young, but I did it knowing that I was trying to benefit them for their future. Obviously, it's helpful to invest a little in your education and surround yourself with mentors . But, uh, yes. Hey, you know what? It's inspiring, you know, go out there and do it.
I remember, uh, putting up drywall and painting and all that heavy work that, uh, sometimes takes many hours, you know, and, um, you have to make decisions in life. If you really want to be rich, you have to go beyond the average person next to you. Well, the good thing is that if you own one or two rental properties, you're already well above average.
And those with 30-year fixed-rate loans, with tenants paying them for you, creating wealth for you, you'll probably reach the average pretty quickly just by owning small deals. You always have to be juggling and, you know, make sure you have some properties that are long-term investments, and others that are short-term investments.
Uh, you have the ones in the middle. You know, every deal is different. So, you 're always readjusting your portfolio. You're buying, refinancing, repairing, selling. Actually, I'm not a big fan of that. Syndicates do this. Buy, sell, refinance, repair for the following reasons. First of all, syndicates refinance to return money to investors.
And then investors feel: " Ooh, I received this cash dividend ." Oh, great. Except that it's offset by more debt. Then, the other thing is, yes, repairing properties is good because you can increase rents and cash flow, that I do like. But that thing of "oh yeah, we're going to keep this going in the short term and then we're going to, you know, buy this over there and do this and this and this." I 'm not a big fan of that because the selling costs and capital gains taxes are extreme when doing that.
But syndicates do this because they charge for the purchase, that is, the acquisition, and the sale or disposal . Do you remember what they put on their website? They specialize in acquisition and disposal to maximize the value of our clients' investments. Yes. But you also get paid to do that. If you have any advice for someone out there , the worst thing is to overpay.
Alright . Because the worst thing in the world is that you don't want to work for free. It's like I went out this week. The market is ridiculous. Prices for apartments don't make sense right now . Yes. That's what I've been saying. Oh my God. Yes. And like every apartment deal I've been looking at, everything is way too expensive.
And why is everything so high? Because the people selling these apartment buildings will only sell if they can do so with a massive profit to reward their investors. So what happens then? Some other unsuspecting person comes along and overpays just to place the money of another group of investors so that everyone can collect their commissions.
But that's betting on the " bigger-than-me" theory, that someone else will just show up and, you know, pay more than you. I think it's a bad way to invest. I truly believe that buying deals below market value or buying distressed properties is the way to do it. And obviously Ben thinks the same way, which I admire.
I couldn't agree more . You want to make sure there's some benefit to that deal, whether it's in the sale or the monthly income. You don't want to work for free because then you won't get anywhere. You're like that hamster on the wheel, you know, constantly pedaling but not getting anywhere. You need to make sure there's a plan.
You need to have a plan. You need to have goals. Go out, search online, find a real estate agent. There are so many out there . A real estate agent will work for you for free. They get paid by the seller. Oh my God. I literally just said that yesterday in my video where I was in Star Wars. I said, find an agent.
Find a lender. They basically work for you for free. And I even said in that video, yeah, I mean, you could say that's probably included in the economic value of the property, but hey, you still don't have to write that person a check, you know? You know, go on all the websites that exist, find something in your area that you can afford.
The most important thing is that you fix your credit. Make sure you have good credit. Save as much money as you can for the down payment , for repairs, but your credit is more important than anything. The banks will lend you money to fix it. They'll lend you the money to buy and fix it, you know, and they're taking the biggest risk.
In a typical deal, if you go out and buy today with an FHA loan, you only put down 3%. That's three thousand for every one hundred thousand. If you buy a house for two hundred thousand, you only need six thousand. That's exactly how I bought my first property. And we talked about renovation loans during the course .
I need to interview Ben for the course because we seem to be totally on the same page. I like this. And I disagree with some things, but this, this is good. There are all kinds of different loan programs. The most important thing is to be friends with the bank. The bank is your friend. They are the ones with all the money.
They make money by lending you money. I don't know what my credit score is now. I'm sure it's very good. But when you reach a level where you're dealing with commercial banks, they might check your credit report just in case. But they, you know, are your assets. whenever you want. Look, he's hesitating a little here because it's true.
Once you make these syndication agreements or do retail, commercial or whatever, usually the financing of these agreements is what is known as non-recourse loans, which basically means that the bank will not come after you if for some reason you stop making payments. They are strictly after the property.
And that's why you generally need that 35 to 50% down payment, because the bank will finance properties that they evaluate and say, "Okay, if you stop paying us, we can keep the property, run it as a business, and still generate cash flow to cover the money we lent you." That's why they do n't care so much about credit at that point.
But again, notice what Ben says. He says, "For you, though, make sure your credit is in good shape and put down that 3% down payment. Go and buy something to remodel." Exact. Exact. Unless you have half a million lying around. When you want to make important deals , you have to show that you have the money and assets to back up that deal, you know.
So it's very important to have a good credit score. I think you should have at least a 750, that's a very good credit score. Bankruptcies only last seven years. After seven years, they practically forgive you. All those short sales you made back then, all those people are forgiven. Of course, that's absolutely true.
And that's the wonderful thing about the United States, that people can now buy property 2 to 4 years after a short sale, after a foreclosure, and after 7 years it disappears from your credit report. But banks will even lend to people before they disappear from their credit report. It is, it is, it is an incredible system that the United States has established.
I don't know if that's a bad thing. And now they can go out and get a second chance. Believe me, the banking world is very forgiving. Yes. And what do you think of the current real estate market and where it's headed right now? I think it's at a very, very high point. Very good. It's there, it 's at its peak.
I think a lot of the new product is going to suffer because they spent a lot of money on construction, overestimated their rents, and can't get the rents they thought they would get, because the same people who could pay you $1,500 a month for an apartment... Those people can go out and buy a house or a condo for that same $1,500 a month .
So many of them are going to rush into owning property, and then rents are going to go down. Now, Ben alluded to this before, but this is the part where Ben talks about how he feels the multifamily real estate market is at all-time highs , especially new multifamily construction. And this is the same thing I'm seeing in Ventura and Los Angeles, in different parts of California and the country, in multifamily buildings, especially those new move-in ready multifamily buildings , the prices are crazy.
So I totally agree with him that some of these numbers don't make sense. That's exactly why I look for deals below market value or strategic agreements. So, your plan is to wait now and eventually retire, and if the market goes down, maybe? I'm always looking to buy a good deal if one comes up. I'm always looking to sell when the market is high.
Well said. Always looking for a good deal when a good opportunity arises. I love that. when you do have money. Yes. Money gives you power because I don't answer to anyone. That's why I can compete with all the big players in Chicago, New York, and all the REITs, because they need all these approvals.
They are listed on the stock exchange . They have boards of directors. I don't answer to anyone. What he says here is 100% true. It is being compared to the large unions, which are slower. They have boards, regulatory approval, because , you know, they are publicly traded companies , as we just heard.
But these smaller syndication companies can often be very flexible and move quickly, and that , in my opinion, is clearly what Ben is doing, which I think is great. Wow. Well, there you have it. An analysis of the story of Ben Mala . I really enjoyed reviewing this interview. I think it's fascinating.
I think this type of reaction video should give you a lot of clarity and fill in some of the missing pieces, but also give you enthusiasm to get into the real estate sector, because I love this. I love this and I hope to make more reaction videos. Speaking of which, the idea to make a reaction video to this was sent to me via Instagram.
So be sure to follow me on Instagram and if you ever see a video you'd like me to react to or comment on, feel free to send me a message there. Thank you very much and until next time.
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