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hey everyone meet kevin here so i'm in bakersfield because we have a rally tomorrow if you want to come go to meetkevin.com bakersfield rally's gonna be great but i want to talk a little bit about housing and real estate so i've mentioned in prior videos that not only am i a little bit nervous about a slow bleed in the stock market but i'm also starting to see a little bit of an inflection point in real estate and so i want to talk about real estate and my strategies going forward a little bit i do i do believe i owe you a little bit of clarity on what i said yesterday some folks who were saying hey wait a minute kevin don't you still expect rallies coming uh that is like uh rallies in the stock market by september and october uh and and i do i still personally this is my personal opinion i know about fifty percent of folks won't believe with this but at least you know what my opinion is right and then you can build perspectives from there but i still think it's likely that when we see inflation data actually start coming down which i don't think we're going to see in august uh i don't know that we're gonna even see it in september it's really the september october readings which come out in october november that's when i kind of expect some some rotation down in inflation rates then i do think there will be some form of a rally in the market the problem is from from like what level and and how much of a rally based on what i've seen the last five months i think the rally is going to be much more muted i don't think we're gonna see these some of these september february highs as soon as maybe we've been expecting or hoping to anymore sort of just just those thoughts i still think we're going to see excitement some potential euphoria that's when you dump your call options right but but i have dampened my expectations for how much of a rally i expect to see how soon and i think that's worth noting because you don't want to wait for like oh well no i'm waiting to get back to this level or whatever i don't know that might take longer than we think okay so you have an update on first of all where the heck i am the executive or my thoughts on the stock market and in prior videos i've talked about this inflection point in real estate in fact i've been talking about this for about the last three four weeks now and this inflection point is really this decline in uh in in all this well let me put it this way we're seeing an increase of new listings we're seeing new listing asking prices go up but we're actually seeing pending sales decline sharper and sooner excuse me sharper and sooner than we would expect uh it compared to at least 2018 2019 we're seeing that pullback sooner i think that is going to put some potential downward pressure on the real estate market uh and and this is where i think it's worth giving you an updated kind of thinking on on how to invest in this market and the real estate market so i many have noticed i love buying single family real estate there are a great opportunities where if you have great connections you can get multi-family real estate under market value if you get properties that have under market value rents sorry they're a bunch of people screaming in the pool and follow up if you could get multi-family real estate under market value hey great and that's awesome the way you do that again is you've got to find properties that are being sold ideally that are fixed up and the rents are low personally i find when i look at most real estate funds and syndications obviously i can't say all because i don't know all but most of the funds i look at they they're looking for properties that are just where can we plop 50 million dollars and buy 100 150 million dollar building and they're just buying properties from people who are selling these projects for excessively high prices uh in in my opinion folks are buying sort of at a peak market some of these fully renovated uh fully rented fully market rent ready multi-family real estate properties and that's where i still believe there's this really unique opportunity and it's something everybody can really do especially if you're heavy into investing in the stock market everybody could get involved in buying single families now i know that there you know some folks are like oh but it's harder to manage or there's there's less scale you know look you get pros and cons with everything sure single family homes might not all be next to each other but in our experience there's way less management intensity with single-family homes that are fixed up and ready to go because most people just leave you alone whereas with multi-family you've got neighbor disputes that you're arbitrating frequently you tend to have more of a revolving door with units you're generally over there more because you're re-renting the units at a higher rate because they're smaller so those are just some quick differences and this isn't a bag on multi-family don't get me wrong i own multi-family i get it like it's it's fine but why am i mentioning this multi-family single family talk now well it's because i believe that if we do see which i believe the federal reserve starts tapering interest rates don't start going up until maybe uh 2023 or quite frankly could even be 2024 if if we start getting lower inflation again like you expect then then i believe that as we slowly start seeing the real estate market chillax a little bit because remember we're seeing pending sales go down and that's a sign that we're going to probably start building up inventory again we build up inventory again more supply gets built up that means we're likely to potentially see prices come down a little bit prices come down again a little bit and sellers all of a sudden have less power i think the opportunity to get good deals in real estate is going to be much more plentiful we'll have more options we'll have more frustrated sellers who are like man i thought i thought it'd be easier to sell now it's not as easy to sell and maybe those are going to create opportunities to go shopping and buying again that's what i'm looking for now i did just buy a property a few months ago actually i think it's about nine weeks ago now we're about to put it on the market for rent i'll have to do a before and after on that i've got the before footage but i never went back to film it again so i have to do that and i'll show you this property i bought for 570 000 in like a 715 000 neighborhood but anyway uh these are the kind of deals that i'm looking for and i think it's gonna be easier to get more of these now why don't i just try to go get a big multi-family building so i've thought about that as well i've been thinking to myself like should i just go buy a big multi-family building somewhere first of all i think the odds of me getting a good deal in multi-family on a big building that's on the market very low unless i could get it again below market value rent i don't know if i could find that unless i go move to an area and i know all the agents in an area i think if i really put the effort in i could probably find it but then i'm also not an expert in other areas like if before i ever bought real estate in an area i'd probably want to be there and understand the neighborhoods understand the people for a good six months and go to go to all the different bars go to all the different clubs go go to the different restaurants talk to the people there and look the funny thing about when you go to bars and restaurants is people are very willing to talk very candidly about the good and bad of different areas uh i like doing that by the way for even just political research because again people are very candid about the problems that are happening or things that are good in an area so uh just strategies to think about that work also for real estate but anyway that that is leaving me in this place where okay well what if i just go back into buying real estate uh more so than i've been buying stocks and what if i'm wrong about inflation see that's that's another big piece here what if i'm wrong about inflation all right so let's analyze this first if i'm right about inflation then i don't think we're going to see rates go up and i think we're potentially going to see a little bit of softening and pricing as supply goes up for real estate and i think i'm going to be able to get more and better wedge deals in single-family real estate again real estate where i'm buying below market value if i'm wrong about inflation which of course i can be wrong i've been wrong many times before and i do my best to learn from all my mistakes and make those as transparent as possible so if i'm wrong about inflation and we end up having larger or high inflation then i think first of all stocks are especially the tech and growth stocks i'm in their future earnings are going to get sort of discounted much more heavily and the market could pull back we could have a very bad few years for like caffeine would uh arc invest and and uh and even the growth place that i have again because if we see higher inflation well it's gonna be a problem uh we'll expect to see higher rates from the fed we'll we'll see more again more earnings discounting would be a problem but what's interesting is if we see higher inflation one of the easiest ways to hedge yourself against higher inflation is owning rental real estate so if i can get into below market value rental real estate because we're going to maybe we start seeing a little bit of a supply backlog coming up finally which we need desperately need that i get a little bit more negotiating power with some of the sellers who are just asking ridiculous prices right now then i could actually load up more on single family real estate getting good deals and hedge myself for inflation why because i'm locking in 20 30 year fixed rate debt at today's pricings which is actually really exciting uh and today's pricing that is today's interest rates right so i take advantage of having better leverage opportunities with sellers but then also cheaper financing cheaper financing means i'm locking in you know four or five percent debt if you're a homeowner you could lock in 2.8 you know one 2.35 percent debt i have to unfortunately get commercial financing so it's a little bit more expensive for me because we we can't get conventional financing anymore we have too many properties i mean it's a good problem to have but it just means i get crappier financing but even still if i can lock in debt at five percent even and then let's say we have hyperinflation generally assets benefit and the appreciation of assets rides on top of an inflation wave and hard assets like real estate do very well you're able to pay your rent off with with inflated uh sorry you're able to pay your mortgage off with inflated rents because if we end up saying hyperinflation then i do think that rents are going to come up substantially in fact one of the things that could quite frankly drive up inflation and where i could be wrong could be substantially higher rents which again would be phenomenal to own more real estate in so i'd lock in a payment price appreciation i think would be better in the long term under hyperinflation or large inflationary period in inflation it'll be worse for stocks uh or in real estate it'll be better and rents would go up which would give me more cash flow or more negotiating power when it's it's time for rental increases every year at at least renewal time so in a crazy way what i'm saying in this video is while there's so much uncertainty in the stock market and i'm diamond handing the stock market i think there could be some very unique opportunities that if real estate starts backing up a little bit more again more inventory more leverage power with sellers and i can lock in whatever rates i can lock in now before powell makes any kind of changes on rates then i think i can again get good deals on wedge deals again it's probably the most conservative easiest way to get sort of a compounded annual return on your money of 10 to 15 which is pretty good you know that's kind of like a kathy wood art goal is 15 uh as an annual compounded goal unless there's a big market dip and then she bumps it to 25 because she's justifying buying the dip which is fair too totally fair uh but but also i protect myself if i'm wrong so like if i'm right about lower inflation and lower rates great i have more time to acquire if i'm wrong i'm hedging my stocks with real estate so right now i've got about 50 of my wealth and real estate 50 in stocks now i do want to also provide a little bit more clarity about cash flows in real estate uh i i don't really care about cash flows in real estate i'm a very different kind of investor what i'm looking for is long-term wealth and when i buy properties a hundred thousand dollars under market value i don't really care if there's no cash flow i quite frankly i'd rather have zero cash flow because it means i'm not paying those taxes over time you get more cash flow as rents go up right but if i'm buying something at a break even or even a slight negative 100 200 bucks a month that's really good in my opinion because okay so say you have a 200 negative cash flow that's 2 400 a year of negative but if you just bought a place a hundred thousand dollars under market value first of all if if the market continues the way i expect even just nominally not not at this unsustainable 15 20 but even if we just have two percent growth which is two percent on a six seven hundred thousand dollar property is is uh twelve fourteen thousand dollars who cares like whatever two thousand dollars negative right big deal it means i'm not paying taxes uh in fact i'm taking more tax write-offs more tax benefits which is a good thing uh while also locking in that wealth which then i can unleash or unlock tax-free through refinancing but only when rents have gone up so that way you're not because the last thing you want to do is be going massive negative into into real estate right you don't want these massive like you don't what you don't want to have ideally is a portfolio where you have like 10 properties or 50 properties and they're literally all negative because that's a lot to sustain that's a lot of burden on your shoulders right but let's say you started with your first property a couple hundred bucks a month negative after two or three years you buy your next property and your first property you've raised the rent 50 bucks a year or whatever or however and now your break even and now you break even on that one or you have a slight cash flow 100 200 cash flow whatever however works out you buy your next one you make sure you're you're able to sustain whatever kind of portfolio nag you have uh and again i'm not here trying to make a video going oh get rich quick by having negative cash flows like no no no no uh i i just mentioned this because i understand a lot of folks they leave me comments and they're like well how you know if i buy rental real estate right now i have a slight negative what do i do and so in my opinion you protect yourself with having a very very good deal the worst thing i think you could do is buy a property that is market value and has a negative cash flow that's horrible that would be the worst thing you could do i would recommend against that highly uh however then again you know there are plenty of people who bought market value real estate in november and uh they're up 10 right now because the market just appreciated that much you know that's just fluke i don't like to plan on market appreciation that's a that's the icing on the cake right that's why i like getting properties under market value you get these massive boosts in your net worth and that's usable at times of crises like what we saw in march of 2020 when i refinanced a bunch of properties took that money and went buying stocks so anyway there you have some insights uh into my current thoughts i really appreciate you watching this this was definitely a longer video than i expected but hopefully you enjoyed it it's a big old one take now let's see if i can upload this longer video wish me luck thanks for watching everyone we'll see you in the next one make sure to go to my bakersfield rally meet kevin.com get that 40 of coupon code on all of the programs or any of the programs we can make some match them too with the bundles we have on building your wealth so that's going to include uh you know programs on real estate investing do-it-yourself property management stocks psychology money real estate agents sales and making youtube videos making money from oh i may have already said that uh or do it yourself and uh rental renovations property management thanks so much folks we'll see you next one bye
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