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Yes, in this video we'll talk about financial startups from scratch, data centers, working in AI, and more , but tonight is Lauren's birthday, and I'm going to bed as soon as I post this video. We will set the expiration date for that holiday coupon, the code for Lauren's birthday, by limiting the number of coupons remaining.
So, it will be over while I sleep. So be sure to take advantage of this on meetkevin.com. In this video, we'll go over 14 different questions that you all submitted completely free on the Meet Kevin app. You, as a viewer, can do this too, and we'll literally cover topics like: what do we think about backyards in homes?
We'll talk about what you would do if you were starting from scratch financially? We will discuss the labor market report. We'll talk about investing in private equity through your job and how to diversify your assets afterward. We'll also talk about data center stocks, PEG ratios of infrastructure projects, how they work, and a little bit about real estate.
We have a lot to discuss, so let 's get started. We'll spend an average of about 2 minutes on each question so as not to go too deep, but let's start with this scenario. Imagine you are 33 years old, about to get married, and essentially starting from scratch financially. Your current net worth, I calculated , is about $299,000.
Let's say $300,000. Given these underlying assets and this significant life transition, what step-by-step strategy would you employ? OK. To try to rebuild or reach a net worth of $1 million within 5 years, and also with respect to tax efficiency and other things. So, first of all , I don't usually think of this as some kind of huge transition .
Of course, everyone has their own opinion on this, but I usually think before marriage, and religious views can differ here, right? You must have already been with the person for a certain amount of time. At best, you've been living together for a while. Do you already know if this will work in the long run?
And so, you come in with 300k, not sure if you'll be entering into a prenuptial agreement, that's a topic for another video , but definitely look into this issue. If you are going to do this, consult with a lawyer, it is very important. But it doesn't have to be such a big transition. Getting married should be peaceful, because you are essentially moving from a relationship you are already in to its logical continuation.
Instead, what really matters is if you're talking about starting financially from scratch, and you haven't mentioned any work here. The most important thing, especially if you are getting married, is to make sure you have a job. It doesn't have to be a lifelong dream job. You just need to start somewhere.
I know a person who lost a job where she was earning well, and now has to work for minimum wage so that she can study at the same time. I'm not saying you have to do it that way , but you should be busy with something where you can develop. Personally, if I didn't have the skills, I would go dig trenches for an electrician to learn the trade, and after 4 years I would get my own contractor's license—whether it's electrical, plumbing, or HVAC.
Working professions are great. Now I also see a good strategic opportunity to enter real estate and start building a business, because if you can develop a business between 2026 and 2030 as an agent or lender while others are leaving the market due to high rates, you will already have a reputation. You'll be in this niche for four or five years when the rates go down again, because eventually they will, and—boom.
Now you have secured your success. I would start thinking about it now and try to combine these things. You know, you can work at such a job with minimal salary and at the same time get a realtor license. You can combine these things. Just ideas. But it all comes down to income. You need to maximize your income over the next five years.
The fact that you have, say, $300,000 in your accounts—it doesn't really matter what you invest it in, because if you have any diversification, it's going to be hard to get to a million in five years unless you take crazy risks. I think the best option is to maximize, maximize, and maximize your income and write off as many expenses as possible as an independent contractor.
Even if you work somewhere , have an extra job. Make sure you write down absolutely everything you can. If you have a job or are self-employed , it's worth considering a SEP IRA or maxing out your 401k at work. And, of course, if your income is below the limit, contribute to your Roth as well. I'm a big fan of such tools.
But beyond that, I mean these are just minor errors in building a retirement portfolio. Focus primarily on your income. So I'm less worried that getting married will be a big change. I'm more concerned about what you do with your income? We need to focus on increasing that revenue. So that, hopefully, in 5 years we can really make money.
And that's what builds a business or a salary with which we can truly create a million-dollar capital. Okay, let's move on to the next question. Next question: minus 23,000 jobs in this report, and that number will likely be revised downward next month, as historically they tend to decline after revisions.
Yes. Because the numbers are always revised downwards . Yes. I mean, there were times when they were revised upwards , but you're right. It seems that in the current conditions the trend is declining . Fewer labor market participants. Fewer jobs supposedly lost due to increased efficiency through AI.
Again, employment is a lagging indicator . I learned this from you at the beginning. So, when will this start showing up in the markets? Poor employment reports no longer seem to affect markets. The Fed is printing money for the Bank of Japan, but it doesn't seem to be affecting the market. Rising oil prices are not driving the market.
True. So, here's the thing. In my opinion, what's happening with our economy is that it's so fueled by artificial intelligence that we're breaking through a world of sin. We are breaking through a bleeding economy. We are literally like an artery that just leaks blood from below. Maybe not in a gushing stream, but we are gradually bleeding.
We are slowly bleeding. It will take some time, but we are slowly bleeding out . And you know, we constantly get new wounds. Tariffs, oil, war, private credit. You know, another private lending firm went bankrupt today. And you will eventually see that all of this is covered up by the wealth and spending that comes from the stock market boom.
The more the stock market grows, the greater the wealth effect, the more people spend on travel, food, entertainment. Retail spending is simply going off the charts. Personal savings are in deep crisis. So, we live life to the fullest because the party is on, at least some people do. Of course, not everyone.
This is not sustainable. At some point, something will break. And so the last few years I've been overly cautious, because we don't know how long this is going to last, how much longer the music is going to play. But at some point, you know, it could be something as simple as Anthropic and OpenAI going public, and their stocks would crash.
You know, SpaceX fell 50% in the first, you know, month. But these guys, let's say, will fall even harder because they only deal with AI and don't have anything else like Starlink or rockets, etc. So what will happen in the end ? These guys will no longer be able to raise capital. The last remaining spending is going into artificial intelligence, uh , you know, data center spending.
And this cycle will stop abruptly. When this AI cycle comes to a sudden halt, we are in big trouble. So, to answer your question, it's not really the labor market that's pushing us into recession . This is a cost-cutting measure . At some point the spending will stop. Not yet. We're not there yet, we're not there yet.
At some point, the credit cycle will end and spending will be forced to stop because no one will finance it anymore . Uh, then we'll see a surge in layoffs in a labor market that's too weak to absorb them. And that is why employment will be a lagging indicator. Rising oil prices are just another one of those small cuts, just like tariffs.
These are all minor cuts. But so far we've managed to get everything sorted out , because artificial intelligence has, frankly, been a gift to this economy. You know, I wonder if our economy would be as strong in 2023, '24, '25 or '26 , the last four years, if it weren't for artificial intelligence.
Uh, and I'm not saying that's a good thing. Uh, I mean, I really think there are good things that artificial intelligence does. But I really think it's good for the economy to reboot. And uh, that time will come. And I'm very concerned that Kevin Warsh won't be around to save people. The only thing he will do is lower rates to zero, which is why I mentioned earlier about getting a real estate and lending license.
Get ready, okay? This is going to be a crazy time. But uh, but there will be many opportunities and you will be able to earn well. So, the way I look at it is, everything you invest today, and this also applies to someone who's starting from scratch financially, everything you invest today, uh, none of this advice in the video is personalized financial advice, of course.
I don't know the whole situation. But, um, anything you invest in in the stock market today should be fine with you, even if it drops 80% or you go bankrupt and start over. And if the answer is : “No, I don't care. I'll just keep making money or, you know, whatever." Perfectly. Ideally. Then maybe you're ready.
Not sure you'll actually be ready. I don't think anyone is really prepared for a crisis when it comes, but, um, good question, but really that's why the labor market is lagging, because it's not the catalyst that breaks the , uh, camel's back. Something else breaks the camel's back. And then layoffs happen, and that's when the employment data becomes truly horrific.
OK. Now, uh, but this is certainly evidence of a slow decline. Here we have, um, a question from Joe, a longtime fan. Uh, let's see. Okay, I got the joke about the commercials. This is great. Joe actually says that if you use the coupon , you don't hear these inserts anymore. Er, here's my dilemma. Approximate distribution of equity.
35% of the shares in the private, er , private equity company where I work. Okay. Actually, uh, it could be, you know, a local software startup that has a bunch of, uh, investment from private funds. A private investor will someday try to take it to an IPO or take it over. Uh, and you own a stake in it , but you have no idea when it will happen.
No idea. That's usually the case. You have 46% of your capital in public markets, 12% in cash, and 7% in real estate. Okay. Perfectly. So, uh, about 80% of the shares, and half of them are illiquid. As long as you're working at your private equity firm, uh, or it's not a private equity firm but a company funded by them, I personally would just pretend that I don't have any stake in the company I work for.
Because the worst case scenario is your company, I, I don't think that's going to happen. I don't know what kind of company this is, but I do n't think it's going to happen. I'm just saying that in the worst case scenario, your company goes bankrupt, all your shares become zero, now you have no job, and that part of your capital is gone.
So I like to be as conservative as possible about it, so I just pretend and say, "Okay, if these stocks are worth something, that's the icing on the cake, but I'm going to live on what I earn." I will do everything possible in my company to make these shares increase in price , but I will not follow them and I will not pay attention to it .
I'll just know they exist and forget about it. As much as you can. Of course you will know. So then I would be very conservative in building up the rest of my portfolio. If you have 7% equity in your home, that's relatively little. I mean, I don't know what those numbers are. It depends on how big the amounts are, right?
Maybe, it's all millions of dollars, and 7% is already several hundred thousand dollars. But, uh , assuming that's not the case, since you're asking for some information here, maybe that's the case. Uh, you know, I think there's an opportunity to save up cash, use it, and think about paying off your mortgage only if your rate is higher than 5.5%.
That would be 5% . So if you have a rate around 6 or 7% , I would start paying off that debt. This is the easiest way to generate income on your investment. And now you can take some of your cash or savings each month, start paying down debt and growing your equity, and you will be more resilient in case something bad happens in the future.
I know this may not be considered the most profitable move , but I think it's a great way to diversify your portfolio a bit since you already have 46% in public markets and the rest of your real estate and cash is relatively small. So, of course, anything you can do to increase your income at your main job or part-time job is a bonus.
Not everyone can handle a part-time job. Some jobs take up all your time, and that's okay, because you still have to earn your main income from your main job. Part-time work is a great tool for additional tax deductions, and perhaps one day it will grow into something more. But, uh, I think you're in a good position to think about this debt .
Now, if you have a very low interest rate on your loan, well, let's say this. So maybe you have 2.93%. So, of course, it's much more painful to pay it off. Something you might consider for more aggressiveness , and that's if you really want to be aggressive, and it depends on your income. So, you're considering getting a home equity line of credit or simply refinancing that "little thing." You have 7% equity in your home, it won't work.
Never mind. I thought it would be nice to get you a rental property, but with 7% equity— it's like you just bought a house with a 5% down payment, you know. Uh, so that's not going to happen. Uh, and if you moved and rented it out, you'd probably have negative cash flow at 7% equity. You need to build your own capital.
Despite everything, you just have to grow your equity. I think this is the best answer. Build equity in your home, try to increase your income, and, you know, if you have any other debt under those stocks, you didn't mention that you have, you should pay it off immediately. But, uh, since you did n't mention it, I do n't think you have one .
So, that sounds good. I like the company I work for, I'm happy to own the shares I have. I have already recorded part of the profit once. Another recapitalization from a private equity firm should free up even more funds later. I'm not asking how to get out, I'm asking how to estimate the size and everything else, right?
Does this frozen 35% count towards my overall budget? Again, I personally think you should reduce this to almost zero. So, let's say you had $46 in public stocks, 12% in r-or $12 in cash, and $7 in equity in your home. You had $65 total in this example, right? Uh , that means to me that you have 70% in stocks and 7/65—only 10% equity in your home.
And I would like to try to make it a little more balanced. Uh, okay. Aha. So, I think that's, that's the way I would look at it , right? Okay, cool. Here's the next one. Kevin, you said that data centers and hyperscalers will suffer in the long term and you prefer not to hold these stocks. This is quite aggressive.
This is probably true. Uh, CMIW. Er, wait a second. I don't know what that means. Correct me if I'm wrong. I've never heard of this before. I've never seen this in my life. I guess I'm too limited in information. Er, correct me if I'm wrong. Your point is that they will have outdated chips that they overpaid for.
Yes, I mean that's one of the reasons. However, even when tokens become cheaper, the demand for AI will remain high, right? It's this whole Jevons story, the Jevons paradox that you hear about from Satya Nadella and see in X. Wow, wow, wow. In fact, I would argue that it will grow as people start experimenting more and doing more.
So, wouldn't data centers still be good business? Even if the chips are outdated, there is a high probability that they will be used. In particular, wouldn't Oracle be fine, especially with their "bring your own chip" model? This further reduces their risk. OK. There is a lot to sort out here. So let 's start from the beginning.
I don't like consumer goods. I like things that are an indicator of pricing power. So I'm a big fan of Nvidia and Nvidia chips. Maybe not for the next decade , because they have such a high growth bar that I'm not sure if it will stay at that level, and that greatly affects the valuation. More on that, we'll talk about Nvidia in a moment when we look at the Capeg and Peg ratios.
I'll put it on the shelves. But I like companies with pricing power. Personally, I just don't think data center chips have pricing power. I think they have it now because there is a shortage, but when there is a shortage, you have pricing power not because you are better. You have pricing power because there is a shortage.
This is completely different. It's like, you know, if you're in the middle of the desert and you really want to drink, and someone has a bag of water , you don't care where that water comes from. You just drink it, pay $100 for this bag of water and drink it. You don't even care what might be inside, because the risk of death in the near term is so high that the pricing power becomes enormous due to the lack of water.
Let's say, let's say you're dehydrated in the desert, right? Whereas when you go to a store today, where there's no shortage of water, you think, "Okay, there 's a free drinking fountain near the restrooms." They can be pretty gross sometimes, those fountains in the back of stores, but they work. It's free.
You can get a chilled Dasani for about a dollar and a half at the counter, or you can get an Evian for $3, right? And so, people who take Evian prove that the price advantage over H2O, over the same damn molecule, exists. I like Evian too. Yeah, I don't know how they make it taste different, but I don't care.
So the point of this whole example is that when something becomes a commodity, like computing power, the reality is that in the long run I don't care whether I get it from SpaceX or from Riot, which was a crypto company, right? They just made a $9 billion deal with Anthropic, because Anthropic doesn't care if it's Riot chips, or Oracle chips, or, you know, SpaceX chips, or Coreweave chips— they don't care.
They just need computing power. And that's why they don't actually choose SpaceX, because SpaceX is a better company. They choose it because they have a product. In the future, I expect there will be no shortage. You will not...you will not faint from thirst in the desert. Instead, you'll find yourself in a grocery store full of water bottles.
And then the challenge will be the question: okay, so what's the difference? Because this is n't even a comparison of Evian with Dasani. This is literally a comparison of GB300 at Nebius, GB300 at Microsoft, and GB300 at SpaceX. Why should I pay $11 at one place when I can pay six at another? Assuming the availability is the same , I wouldn't.
I will pay...all costs will converge to one price. So, there is literally no difference. Again, assuming equal availability for the same equipment, there is no difference in price advantage for these companies. So these companies cannot really prove their price advantage. And I think that's why when you notice that SpaceX raised money for data centers before it was SpaceX, when it was just xAI, they were paying 12.5% on their debt.
This is very risky. This will become a mass-market commodity. Coreweave spends over 10% on interest. This is risky. This will become a mass- market commodity. Everyone, even your mothers, knows that this will become a commodity. And that's where, if you watch my branching video that I posted this morning, we know that there are two elements in these calculations for the LLM.
There is a computing side to the LLM that you talked about, which is enterprise computing. Alibaba models, Meta models with open scales, Deep Seek models, Kimmy models with open scales—it doesn't matter. All of these models we can use in a venture like House Hacker Reinvest, we could use them and actually solve problems, whether it's in Stock AI or Homes AI or other things that we build, we can functionally make these things work, but we don't need GB 300, we don't need cutting-edge technology.
We need a 5090. We don't even need an RTX 6000 because it has too much VRAM, 96 GB of VRAM, we don't need that much, we need about 32 because we just need a lot of them. So, the point is that corporate AI doesn't care what these data centers install. Corporate AI, which can be done on a smaller scale on workstations, can be made money there.
I'm a big fan of this and a big fan of companies that can actually turn AI into money. Palantir is a great example. Axon would be another example, in my opinion, with no guarantees. Uh, you know, Salesforce, we'll see. Will they be able to change everything? Will they be able to really integrate AI into Salesforce and make it something it wasn't before?
We'll see. Same with UiPath. We'll see. So these companies will be able to prove their pricing power. Palantir is already doing this. Salesforce and UiPath may be in question. Axon is already proving its pricing power. These data centers do not have pricing power. They, uh , make a profit from renting out their assets, which they overpay for.
It's like someone going to Southern California and overpaying for a bunch of houses, paying 20% above market value, renting them out , and then saying, " Look at all our cash flow. We just bought all these houses." But then you look at the equity and it looks like you just overpaid for all of them.
This is bad. You know, we like to do the opposite. We like to pay 20% less than market value for these properties after we renovate them. This is our trump card, right? So here's how we can take a commodity like housing and actually turn it into something where we create wealth from the ground up. But then we can also use leverage in the future, say when rates fall to zero.
We have a huge call option in the company. In principle. Uh, data centers—it's like the opposite of a call option. They're, uh, popular today. I expect that within the next, uh, 10 years, probably 5 years , uh, they will be converted into a mass-market product. And, uh , GPU rental rates will go down .
I hope the companies will have time to recoup their investments. But many analysts are pricing these companies as if high rents will last forever, which is not the case. So , even if you get your money back for all the equipment and pay off your debts, which would be nice, and you're still generating income by then —great.
You have finally turned a profit. Do you know? So, you bought equipment, which , of course, includes paying off debts. And now you're making a profit, that's great, but how long will it last? I don't believe it. I don't believe it. I don't think this will last long. And I hope I'm wrong , because I think it supports the economy.
So when I look at a company like Oracle, I see their balance sheet, and I want to cry. Just by looking at the size of their debt. It's been a while since I last looked at Oracle's balance sheet. So, since the question has been asked, I'll take a look there. By the way, while I'm opening this report, you can also ask your questions if you want.
All you need to do is download the Meet Kevin app from the Android or Apple store and you too can join the discussion. OK. So what do we have here? Oracle. This is Oracle's annual report . Again, sorry, it's been a long time since the last review , so let's do a kind of live analysis. We are recording a video.
Everything happens live . But we will find a balance now. Wherever he is. Oh, it's loading. Well, here it is . So, I have cash. Looks like they raised some money. I have $31 billion in cash. That's not bad. So, $31 billion . I need to pay the bills by 11 plus 2.2. 11 plus 2.2 plus deferred payments, which I will not take into account.
11.4, that's 24.6. Bills payable plus 7.2. I have 31.8 to pay bills. Wow, they literally barely have enough cash to cover the bills. So , they barely have enough cash to pay off their debts. And on top of that, the company has another $122 billion in debt, not including lease obligations, $11.7 billion in taxes due, and $ 16.2 billion in other current liabilities.
So, I see another $150 billion in debt. The problem is that when companies have a lot of debt, interest costs at current rates become too high. This company has $150 $435 billion. They barely have enough cash. This is truly a huge debt. And if I look at their interest costs, that worries me too. SpaceX will eventually do the same.
They will accumulate so much debt that they will have enormous interest expenses. So, their operating profit is 20.6 billion. They spend almost $5.6 billion on interest. Of course, they still have income. And that's good. They still have profits . But let's take a look at their cash flow. If I look at the cash flow: net operating income is 32 billion, but we spend 55.
So we're still short 24 here. Where does the money come from ? Oh, exactly. We are borrowing another $46 billion. The debt scares me because I believe these data centers will become a commodity. And what will you get in the end? You will end up with high-interest debt on your balance sheet that will pull you down like an anchor into the zombie company zone during a recession.
OK. I'm exaggerating a bit, but things like this make me nervous. I think SpaceX will probably go this route, which is a little disappointing, but whatever. Next, Omar has a similar question about these AI infrastructure companies, IREN and so on . I hate them in the long run because I believe they will be left with nothing in the future.
Yes, I didn't mention them in the next equipment rally. This is true . I'll probably do another detailed analysis on them. Ambis, IREN, and many other similar projects that have moved from crypto to data centers—they are all in the same boat. They are all playing the game in the goods market. And it's just not for me.
Okay, next question. KPEG vs. PEG . Okay, the easiest thing we can do is look at Nvidia. We'll make it very simple so you can see how it works in practice. This is really important because there is a risk factor in PEG ratios that we often forget about. So, let's take Nvidia for example. And, uh, what we're going to do is look at their current forecasts.
I always like to look ahead to the end of next year. This way I get a certain forward PE ratio. I don't like to look back because then you have to take into account the growth that has already occurred. And I'm more interested in predictions of what future growth might be like. Okay, let's go. So, the current earnings per share forecast.
That would be, uh, we have exactly $9. OK. So, this is earnings per share. Now the stock price, I don't know if it's trading at 220 or something like that. Okay, that's it . 217.55. OK. So, to get the PE ratio, we all know how to do it. All we will do is PE stands for price to earnings. So price divided by profit equals...okay, that's it .
We got a PE ratio of 24. Now, what will be the growth rate for Nvidia? Well, the best way to estimate growth rates, as I like to do, is to take the average of analysts or my adjusted forecasts for the next 4 years. I'm going to add these numbers up right here. So, whatever these numbers are. So, this would be the first forecast year, the second forecast year, right?
Third forecast year, fourth forecast year. Good? Now we'll write down some growth rates here. And these growth rates will be current forecasts from Wall Street. This is the Wall Street consensus. 43.4, 24, 91, and then it gets interesting, -22.6 . Let's write them down. Look at this. So, you're already seeing this decline, right?
Now this is actually very dangerous because, first of all, let's break this down, and this is how you would normally calculate the PEG ratio. We're going to divide this into four, into 4 forecast years. That's all. We now have an average growth rate for the next 4 years at 33.9. And now, technically, if I want to calculate the PEG ratio, what I'll do is this: I'll just take the growth divided by the PE ratio, ignoring the percentages.
Boom. Uh, sorry, I did it wrong. Er, that would be the PE ratio divided by growth. And that's actually all. Since growth is higher than the P/E ratio, I know I'm paying less than one PEG, because that's essentially the price-to- earnings ratio adjusted for growth. And you just did these calculations with me .
I just think sometimes it's really helpful to visualize what a PEG actually looks like . Once you see this , it should help you. It helped me, okay? Look, you know how to calculate the P/E ratio, right? Price to profit. OK? So if the profit is 5 and the price is 100, then in this case it would be 20, right ?
Price to earnings, P/E, get it? Now, if I do this and add the growth here, I'm literally just dividing by the factor that the division has already been done. So it's like " divide once, divide again." And then, if you look closely, you can see the price-to-earnings ratio, taking growth into account.
See? PEG. OK? So, if the growth here is 20, then the PEG is one. Hindsight is 20/20, right? Okay, great. So, um...that's the problem. And I struggle with that myself, but when I look at a company and I really like it, I can say, "Hey, I really think this company's growth rate is going to be 50." Well, in that case, if I think the growth rate is going to be 50, and I think analysts are undervaluing the stock— I call it CAPE PEG— then I'll just divide that by 50, and my PEG ratio will look even more attractive.
This is just an example of KPEG. But here's the problem with Nvidia. I want you to plot this graph, and then you'll see everything much more clearly. And for you to build this graph, just watch how I do it. It should work. That's it. Look at this graph. Let's bring it a little closer. If we look here, we see that we are hovering somewhere around 50 percent growth.
Wow, that sounds good. Maybe a little lower. Okay, let's call it 40% growth. Sounds good. But over the last year it has actually been decreasing. Wait, it actually becomes negative. So what happens if I get to 2030 and my growth forecasts for Nvidia are -22.6, -3, -5, -2? In other words, I will never return to that peak.
Well, in this case, my PEG ratio is actually undefined because there is no growth. This is just a complete minus, okay? Well, let's say it's -10, +11, and then stable, okay? So you're going to have very, very little uh - I deleted the formula. Wait, like this. We will have very, very little growth here.
Let's take e -e -10, 11, 0, 0. That's it. Very low growth. Eh 0.25. If I were to split this now, the PEG ratio would be off the charts. Ready for this? Uh, P/E divided by growth, PEG, PEG ratio 96. You would n't even touch that with a ten-meter stick. OK. So these growth estimates are of great importance.
And that's one of the reasons why memory stocks look so cheap, because the markets know that everything is going to fall into the abyss. Well, when I had that other abyss schedule. So, uh, I still have a little bit of that cruise cold. I hate this . OK. These are Capex and PEG. Good. Next question. Hi Kevin, I have an apartment in the greater Seattle area that I bought in 2021 for $505,000.
I do n't live there now. I rented it out for 2650. My monthly payment is 2550. Okay, so you're in the red. Uh, because you probably, if you I hope, you hire a manager so you don't have to deal with all this [ __ ], but you understand, then you're going to have negative cash flow. You can write off some of this.
Let's see what happens in Seattle. Redfin Data Center . So, the first thing we'll do is look at housing prices in the Seattle market . If we can get this thing to boot, that's it. Okay, let's move on to the subway. Let's see if we can find Seattle here. We can. And let's see how we're doing each month.
So, year over year in Seattle, the median sales price, the year over year change, it's pretty stable. This is coming up to uh It's only until February 24th. Well, that's compared to the present day. Okay, let me look here. What do we have here? So, he gives you the summary right here. It says minus about 5%.
This roughly agrees with what you are saying. It doesn't look like we're falling into an abyss here. Obviously, there is volatility. This volatility is largely based on interest rates, right? But in reality, everything is holding up quite well. So the fact that you're saying, "Hey, well, you know, I've seen prices drop from a peak of 650 to 550 over time." I don't know if it was that critical, maybe it is.
But overall across Seattle, well, if you compare depending on when you bought, to some of those peaks, yes, prices have come down. So if you take the peak, the peak was 870, and now we're at 827. If we're at 870, that's about 5%, right? So , 650*0.95 is about 617. So I'm not sure the value dropped by a whole hundred thousand, unless something completely unexpected happened to your neighborhood or condominium.
But you have a loan of $410,000. You have made a 5% down payment. This is a 30- year loan at a fixed 3% . This is an asset. This, this is almost an inflation-protected loan. I mean, inflation is higher than this figure. This loan becomes cheaper every month due to inflation alone. This is a good deal.
I wouldn't want to get rid of it. And to make you feel better, I would advise you to look at paying off the principal amount of the debt. You owe $410,000. I paid 5% when purchasing. So, let's say you put down ...let's say it was a $450,000 property, and you put down 5% . This gives you 427 plus some payments on the principal.
Okay, okay. So you probably have a loan with an amortization of around 427, fixed for 30 years. Okay, let's write that down. Mortgage amortization table. OK. So, let's find the depreciation table. Let's see what your payment is on the principal debt. You probably started with about 427. Your rate is 3%.
You 've owned it for 5 years now, because you bought it in 21, right? You bought it in 2021. So, you've been in business for 5 years now. This is great. Okay, look here. Where is this table? Oh my God. They used to give us this table. Oh, look, the end of the fifth year. How wonderful. What did I say?
I hope I said that out loud. 500 dollars. You are probably paying $500 to $550 per month on principal. So, even if it seems like you're losing money, you have this little forced savings account. And now you're already itemizing your taxes, if you're doing it for part-time work or other purposes anyway.
You know, any additional costs here are simply written off by property managers. But I would keep it as a little piggy bank and let the manager deal with it, because if you decide to sell it, no matter how much you want to get rid of it, that's what it will cost you. She will go for $550,000. You will probably pay around 7%.
Two and a half to one realtor, two and a half to another, 1% for processing costs, one and a half percent for minor repairs, maybe even more, I'm just a realist. You will most likely only receive 92% of that value. You spent $44,000 just to get rid of this asset. Why? Save that capital, man. Preserve capital.
What do you have here? My financial situation is not bad, as far as I'm concerned. I have 750k in cash and stocks and another property in Austin with a loan at 6.5%. I would start paying off that $270,000 loan. Here's what I would do. You have cash and stocks, that's good, you're doing pretty well. You know , you're not dying for the 90 thousand you'll get from that condo.
Instead, take some of that cash and pay off a 6.5% mortgage on a home in Austin . Well, it's an easy return on invested capital. Get rid of this. 6.5% - I like it already. However, okay. Let's do the following. How would you invest as an 18-year-old boy working on your father's farm? So is your father a farmer or are you a farmer?
And he doesn't get paid in the traditional way . That is, he gets paid by pickup truck or something similar. Of course. I want to farm, but it 's hard to find land that a beginner can afford. I'm not going to college because I do n't see the point in it. I have an account at WeBull , I'm a little in the black, but I'm having a hard time finding a stock before it goes up.
What would you recommend to earn more and invest? Well, son, look, it all comes down to earning potential . You know, farming is very hard work, but it can be very rewarding. So I would be very upfront with my father and say, "Hey, is this a business that we can grow together? Father and son, can we scale this business up and make more money?
I don't know, maybe it's already making a lot of money, right?" But I would ask myself these questions. And you know, the fact that you're not getting paid in a traditional way suggests that the answer is probably no. And then I would try to figure out what it would take to make this legal? Can we set it up as an S corporation or an LLC?
Can we go to a payroll? Let's take care of the retirement savings . 401k, Roth or something. Let's set up company health insurance. It still allows you to write off your taxes. You still have to pay for insurance. And let's turn this into a real business. What do we need to expand and grow? Whether it's more livestock or more land, I don't know.
These are all questions. But that's what I would ask. And then I would try to figure out what the potential is? Because I don't want to criticize anyone's business. But if your parents are telling you, "Look, this is enough to live on," it pays the bills, but you know, time is against us. Like, I don't know.
Maybe there are some specific reasons that make the longevity of the business questionable? Your business. Then I would like to know that. And then, as I said at the very beginning of the video, I would start some kind of side job on the side. You don't have to go to college if you don't want to. There are a lot of businesses that you can do.
So there's a lot to think about. Okay. Well, let's take this. So Lack of Swag writes, "Hey Keve , I love your content. With Anduril and OpenAI likely to IPO in the near future, what are your thoughts on investing?" Should I consider them? " Look, I think Anduril is going to be a cool company. It's really exciting, really cool.
But I'm less bullish on OpenAI, but we'll see. I'm not trying to dismiss it, but it's hard for me to say how I feel about an IPO until I see the financials. The financials are everything. And anyone who's looking should learn to read financial statements ." You need to know what the three main financial statements are.
It's very simple. Income statement, balance sheet, cash flow statement . It's very important. And how they affect each other. The three components of a cash flow statement: operating cash flow, investing cash flow, and financing activities . What goes where? Capital expenditures are investments. You know, salaries and administrative expenses are operating expenses.
They're not actually on the cash flow statement, they're on the income statement, but they show up on the cash flow statement. How? They appear as net income at the beginning. Got it? That's important . And so what I would do to prepare for any IPO is study the financial statements. So that when your favorite company goes public, you can analyze it carefully and justify your choice.
Because if you buy the stock and it goes down in price, you'll be confident in your decision and not panic. You can protect your ownership of that stock. I think that's valuable. Okay. Someone else asks, "Hey Kevin, are you still bullish on Meta by the end of the year?" To me, Meta has really good long-term prospects.
I see them more as an advertising tool than just a bet on the midterms or even the presidential election . I think they're probably the biggest beneficiary of AI advertising. Advertising is going to be so effective , and with 3 billion daily active users, Zuckerberg has it all in his hands. It's really impressive.
So I'm paying less attention to data center leases . I know they have ways out of some of these contracts. And I think Zuckerberg is getting smarter, getting more people into the Meta ecosystem , showing them ads and giving them free LLMs. That's pretty smart. But he's changing course, isn't he? He's like, "Wait, we don't want to be a cutting-edge lab." And I think he's changing course in the right way .
So I'm bullish. You know, I have a price target of about 1,377 on this company. Nothing in this video is personalized financial advice. What do you know now about finding beauty in life that you wish you had known earlier? Um, wow. Well, at the ripe old age of 34, let me tell you. No , I -- I think, um -- probably the biggest problem is that everyone has these regrets eventually.
And they just eat away at your soul. For example, when people hear the word "regret," they often get a little emotional and think, "Oh, that moment when I screwed up, did this, or I shouldn't have done that, or I shouldn't have signed that contract, or worked with that person." It doesn't matter. Or worse, it's the opposite .
If only I had done that. If only I had done this or that, right? These "ifs and what ifs" eat you alive. And all you can do is just look around you and say, " Man, I have good things right now." Maybe that's not all that you need. we want to, but is that a good life? I hope the answer to that is "yes," I don't know what your situation is.
But, uh. We humans tend to have a very hard time mentally accepting life in the present moment . People always say, " Oh, live in the present." Live every moment like it's your last." That's impossible. You're programmed to think about what I can do differently in the future to protect myself, my income, my family's income, or whatever, right?
It's hard. And that's something that... the sooner you come to terms with it and just let go of your regrets, the more uncontrollable you become. And honestly, the best example of that, of someone who just doesn't give a damn, maybe too much, is Donald Trump. Dude, he has plenty of regrets on many fronts, and he doesn't seem to care.
Maybe it's because he's richer than ever now, and that's overshadowed everything. But, damn, I even remember, you know, in 2021, 2022, he disappeared for a while , especially in 2021. And when he came back and gave campaign speeches, he seemed kind of depressed. Dude campaigned, It felt like two and a half years to get back in office.
And somehow he swallowed all his guilt, his frustration, whatever it was, and got down to business to get back in. So you have to give him credit for that. A lot of people, you know, say some not-so- nice things about Donald Trump. This is not a political video, but I think as an example, or a testimony to an example, it's pretty interesting.
Okay. The last question we have is this. Hi Kevin, I wasn't able to participate in the first Reinvest investment because I didn't have the liquidity in time. I'm wondering if the minimum is still going to be 10 grand in the next round. Just so I can try to put some money aside. Okay. So we're not 100% sure about the minimum yet.
Let's go over the minimum. You know, if you're in a situation where you were going to invest before but missed it and you want to invest in this round. Maybe you have a little less than minimum amount. I can't promise, but you can always write to us at [email protected]. You can refer to this video. But, uh, I don't know exactly what the final situation will be yet.
We haven't filed yet . But we're planning to start raising funds. So we 'll see. It's going to be a preferred dividend vehicle, which I think is going to be really cool. And I'm really excited because it's going to replenish our resources so that we can buy good deals and continue to develop the real estate that we have.
We have enough cash to develop a lot of our properties, but we want to grow even more, buy more good deals and of course continue to expand our AI work . So we're really excited. Well, we 'll see. You know, we'll wait for the filing, and then we'll have a lot more details, disclosures and risks, right?
Of course, this is not a solicitation for investment. There's no offer at this time . So , yeah, We'll see. But thanks. Thanks for mentioning your interest. And folks, if you want to leave a comment, feel free to do so. Download the Meet Kevin app from the Apple App Store or Google Play. After signing up with your email or Gmail, whichever is more convenient for you.
That's what I do. I just log in with Gmail because I don't need to remember another password. Once you've created an account on the app on your phone, you can also go to app.meetkevin.com and use the app there. everyon. This is .
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