The Everyday Millionaire Show
The Everyday Millionaire Show
Real Estate Wisdom: Market Trends and Smart Decisions - Ryan, Nick, and Chase (Full Podcast)
Can mastering the chaos of property management really lead to financial freedom? Find out how a recent merger has catapulted our management portfolio to over 750 units, setting the stage for a new era of efficiency. We'll break down our newly structured team, revealing how the strategic delegation of maintenance, leasing, accounting, legal, and construction roles can eliminate the stress of multitasking and enhance operational success.
Tune in as we share insights on business decision-making, refinancing strategies, and the state of the current real estate market, sprinkled with humorous tales from our marketing adventures. This episode is packed with actionable advice and real-life stories to guide your journey in the real estate world.
I think, just like in any business and I've talked to Chase about this like a million times it's like I'm out in the field handling a construction issue and then I get a call for a property management issue, and then you're like switching from one thing to another. You're never like fully like.
Speaker 2:multitasking is not like a real thing, you know I feel like there's people that are definitely slowing down on buying, and I don't know if it's just because there's not much out there or people are just hanging around. I mean, interest rates are coming down now, which is a good sign.
Speaker 1:Yeah, but people are locked in a two, seven, two five like you, who, the who?
Speaker 1:we're not getting there. We're not there. When you're getting into this game, you need to find people that like, really know what they're doing and run the deals through other people and show them like what you're doing and just have them kind it. Welcome to the Everyday Millionaire Show with Ryan Greenberg and Nick Kalfas. Hi guys, welcome back to another episode of the Everyday Millionaire Show. We're here doing an internal pod with Chase and Nick to catch up on some catch-ups. We haven't been together doing this in a little while. Right, how long has it been? A couple months.
Speaker 2:It's been about two years. We're finally back at it. Welcome back, guys.
Speaker 3:It's been a while since we did it last time.
Speaker 1:Yeah, it's, definitely been like a month or two, so a couple. I mean, we could talk about a couple things. One, nick, we were talking a couple times when you were here. We were talking about my potential merger in my property management company Let me fix this. And so that happened Finally happened Not officially, like in the same office yet, but we did agree on a number and we are merging and it's going to bring our unit count to over 750 units.
Speaker 2:Oh wait, that's okay. So that was someone else that you were talking about. I thought you were talking about the merger with Diana. Oh yeah.
Speaker 1:So basically we merged with them and during that time Jacob, who was kind of in the picture for a while we were talking back and forth and I just wasn't in the position to like take over any kind of any more operations, basically. But we ended up making a deal. So now we're putting this big property management firm together and it should be interesting.
Speaker 2:Now is the plan. It sounds like a lot of properties. Is the plan with that to plan an exit by getting that many properties together in one bundle and having it sold in the future?
Speaker 1:Yeah, so essentially the goal is one creating like a little bit of a corporate structure with I'm going to be in charge of like maintenance and leasing, and then Jacob, who's an accountant by trade, is going to take care of like the accounting department, and then obviously Diana is going to handle like legal that kind of thing it's failure to pay rents, collections, all that kind of stuff and then her husband, bobby um, will handle, help her handle that kind of with that operation, and then Tyler will handle all the construction that gets put through the property management company.
Speaker 2:So we have like kind of sectors instead of one person just being so in your opinion, when you were running your property management company and it was basically just you doing a lot of the work what was the hardest thing about those different aspects that now are going to be delegated to each person? What was the hardest part of that?
Speaker 1:I think, just like in any business and I've talked to Chase about this like a million times making sure that he's not making the same mistakes that I did is just like wearing too many hats, and I think that was the biggest hurdle. It's like I'm out in the field handling a construction issue and then I get a call for a property management issue and then you're like switching from one thing to another. You're never like fully, fully like. Multitasking is not like a real thing, you know.
Speaker 2:So like what? Like? More specifically, like, was it the leasing finding tenants? Was it dealing with the failure to pays? Was it dealing with turnovers? Like what?
Speaker 1:more specifically was, like the most property management, just like a little bit of everything you know. It's just like every day there's a new problem. So maintenance some days will be a crazy issue because there's a big sewage backup in an apartment building and six people can't go to the bathroom, or the next day we could be, you know, in court for failure to pay rent and the tenant has some, you know, rent escrow issue or whatever. Like every day is just a new. Uh, it's a new fun story.
Speaker 2:Yeah, the reason I asked is because you know, obviously me and Lupe pretty much run my property management on our properties and a lot of the times the hardest thing for us is just the leasing like having properties sit for so long and not having the time to actually properly screen people. So I've, you know, been working with other like like Jack, for example, to play section eight tenants just, and that's helpful because that definitely takes the weight off of our backs to get these properties rented. When there's so much other stuff going on and along the property sits vacant, it's like you're losing out on all that money and it months would go by where properties just sitting vacant and we're like, oh man, we got to get these properties rented. And then when it piles up when you have like eight or nine or 10 vacant properties at once, it's definitely helpful to bring other people in.
Speaker 1:It's hard to get, like even agents, like we can't get agents. We have a broker. No agent even wants to do them, even though, like I feel like the system that I've kind of created with doing rentals, like I still do a couple every once in a while myself because they're kind of like slam dunks, especially in the higher end market. Like, we take a month's rent. Some of these rents are 3,200 bucks and sometimes it takes me an hour to showing one person the property and, you know, doing a pre-screening and all that stuff. Um, but it's hard to get people to want to rent properties. That's just.
Speaker 3:Well, I mean to be thorough as an agent. Right, Like actually screen these people, that's a different story. But like showing a household no, but house or brothers familiar, I think like that's another thing.
Speaker 1:But like actually putting a quality tenant and then like get something out of the whole screen yeah, I think if you had the best way to do it honestly and now, obviously that we have so many units, we just have a person that's dedicated to just leasing. It's just if you could find somebody that's kind of good at leasing and they could just be your in-house leasing person. That's, all they focus on is leasing, and if they get time, that's their board or something. They don't have leasings, which probably wouldn't be the case with a portfolio of your size. They could do some other admin tasks, like monthly audits of the app folio system to make sure.
Speaker 1:That's what I do with our vas especially like if they're not doing something, jocelyn will have them doing some sort of audit. So it's like every month we look through all the water bills again to make sure, after they've been paid out, that they're all balanced in app folio. Every month we have somebody go through and make sure that the people that got hit up, that moved down and have the security deposit with us. Or every month we have like five or six different audits that happen. So that person could do like all the leasing and then when they're not doing leasing, they get an FOLIO and do the audits.
Speaker 2:Yeah. So either that or just hiring a tenant placement company.
Speaker 1:See, the problem with tenant placement companies that I found is that once they're in your house, they don't care. I just feel like they're not incentivized to put the best person. Now, jack Resnick. He's a great guy Like I love. We use him, but he's Section 8 only and we have a very small like. We don't have a lot of Section 8 properties. I have more now than I did. I don't trust many other people to want to put quality tenants in the house and then not just say, oh well, it's your problem.
Speaker 2:now, yeah, well, it's your problem now Like yeah, Well, that's why Go ahead.
Speaker 3:Do you think that you'll ever like hire out or delegate the property management, or do you think you guys will always earn money from that? So?
Speaker 2:I think I am tightening things up to where I think I'll always oversee it and run it, but I am delegating more, such, as you know, focusing on. You know, back in the day I had a tenant who was able to stay a whole year without paying rent, which is insane, and mainly because I didn't know what I was doing and secondly because I didn't have a rental license so I couldn't file for an eviction. And I'm just like you know, I just kept left it on the back burner. They were living there. They would tell me a story on how they're going to get their rent paid and it just never was. And then eventually they moved out. And then the other side it's, you know, dealing with, uh, tenant placement. You know, I use Jack. He's great at, you know, placing tenants. He actually goes to their house, um, and make sure that they're in in good.
Speaker 1:He's the only one that I've used and trust. I've used, we've worked with others, but he's the only one that I've used and trust, but he only does.
Speaker 2:Section eight yeah, so and then, um, I don't know if I can say this, but I do love the hispanic tenant pool also, you know, and lupe is very helpful with speaking to them. You know, I always have good experiences with them Not that I don't with other people, but you know a lot of them. Maybe they're illegal or they don't have all the documentation, so it's kind of like you have to trust that they're going to pay the rent on time. Maybe we should cut that, because I don't even know if I'm allowed to say all that.
Speaker 3:Yeah, I don't even know if I'm allowed to say all that. Yeah, I'm good. Have you ever calculated how much money?
Speaker 2:you're saving from actually hiring a property manager? Not exactly, but I've always ran this calculation. So let's say you cash flow. Let's say you pay a property management company 10% just for easy numbers, 10% and the rent is $1,000 a month. And let's say you cash flow $300, well, you're already giving away 33% of your cash flow by giving them $100. If you're only cash flowing $300. Just on that, giving them 10%, you may look at it like an 8% or 10% number as a low number, but then when you factor it in, how much of that is your cash flow?
Speaker 3:And that certainly does add up and it does eat away at your cash flow. Yeah, absolutely yeah. I guess I would just say about from the perspective of, like does the cash flow outweigh? How would you pay?
Speaker 1:like, yeah, but I mean right now it's just him and his one like his wife, basically. So like I mean what you're not paying anybody else full time, yeah, no. So I mean it would be eat into a lot of cashflow, like that's a lot, that's a big chunk. But if you're not making money other places, which you're focusing on building your portfolio, so like if you were, if you had a full-time job or something, obviously this wouldn't be, you couldn't do that.
Speaker 2:Yeah, no, if I was got into it with a full-time job so that was already that would be the expectation to where, oh, I would need to hire a property management company from the beginning because I have a full-time job. Um, so, looking at it that way, you know, it is all situational. However, whatever situation someone's in, if they're working full-time and they can't manage it, then that's probably the most logical thing to do.
Speaker 1:Yeah, I mean mean, if you think about it too, you could. You can hire like a pretty decent full-time employee for, like just call, like 5k a month, you know, and if that person can like rent down all your units and you don't go, you had like, let's just say, you had five units that are now vacant for the third month and they would have been rented the first month. That almost pays for like a quarter of their salary right there. So it could be worth it just to bring somebody in house, but not hire a company like mine, but hire somebody internally to just help you like move this stuff along, cause I feel like you do need that size portfolio, cause I went through this like whole stage where we had 50 properties you know, a hundred properties, whatever.
Speaker 1:I feel like you need a really solid person in app fololio, like in front of the computer basically all day. They can assign maintenance requests. They could take in any kind of influx of stuff from tenants or future tenants or whatever, and they need somebody in the field that's either meeting people for leasing or getting inside the units to make sure that people are taking care of the stuff. Like you know, we do quarterly check-ins, like making sure that the HVAC filters are changed, like, if you can find somebody that can do like that, get in the field, do little minor check-ins and app folio reports and stuff like that, as well as leasing and they can. You can easily manage a hundred, 150 properties that way.
Speaker 2:Yeah, I agree and thing and they can, you can easily manage 100, 150 properties that way. Yeah, I agree, and that's that's probably a good idea, especially when you mentioned the hvac. You know, changing the filters, like it's hard to get your tenants to do it, it's hard to remember to tell your tenants to do it, and then it's hard to send the maintenance guy out there to do it until it breaks down and you're like, oh, maybe I should have sent someone out there to change a filter earlier yeah, we have something this interesting actually that we're trying to roll out right now.
Speaker 1:We haven't done it so I don't want to like speak on it, but it seems like a really cool system. It's called the tenant benefit package. Have you heard of that? So it's something that you as a property manager, basically make it a fee on their lease. So in AppFolio it'll be a fee for this, but every two months they get sent a um HVAC filter with like a QR code and it'll tell them. If they scan the QR code, it'll tell you that they changed the filter, um, and then I think they get some sort of like credit for that.
Speaker 1:And then, if they get like um, there's just like different benefits that they get as a tenant. Oh, if they'd ever signed up for insurance, they get insurance covered, like renter's insurance is covered automatically, and then if they submit their renter's insurance to the people, then that fee goes away. But it's just a way to like all the things that give you peace of mind as a landlord. Filters, renter's insurance, that kind of stuff. They cover it for the tenants. And then let's just say, like you pay them $20 and you charge the tenants $10, you're making like an extra $10 a unit on top of that and the tenants get some benefit from it and you have peace of mind that all the units are covered with renter's insurance and all that kind of stuff.
Speaker 2:Yeah, that's actually a good idea because it would take even if you had a full-time maintenance guy that was just focusing on doing stuff like that. It would take him a lot to just go out to these properties and it doesn't take much to change a filter. But the time consuming aspect will come in when you're trying to coordinate, when tenants will be home around working around their schedule, trying to coordinate in certain areas that are close by, and that's when it can probably be a headache if you're looking to do 100 at once.
Speaker 1:Yeah, yeah, property management. I've told like I'd say, chase his life with that because he was starting a property manager.
Speaker 1:I was like, don't do it, man, it is so painful and like you said in the beginning, like we are building this and merging together for an eventual eventual exit and sale of the company. Not that it's happening. You know I don't want to scare any clients or anything, but it's not happening in the near future. But 10 plus years down the road, when I'm tired of doing this and we have a couple thousand units, the multiple for selling property management companies gets much better after 1,500 units. So that's the goal there. Enough of property management. We have other. We have other stuff to talk about. Um, so Chase and I have been doing hitting the wholesale game. Um, we started talking on the podcast about it a while ago, saying that we were starting like the cold calling and doing all that stuff. To say that it's been a grind is an understatement, dude. Um, I haven't even been like the one spearheading it and it's a.
Speaker 3:I've been feeling the fucking pain it's, it's rough dude there. There's a point in time in which you just think, oh, this is, this is easy, like all it is is picking up the phone and calling sellers and getting deals, but that's just not all that goes into it. And then, when people stop answering the phone, you got to find other. You know resources that leads and you got to figure out what that avenue is going to be. And so, like going through developing logos and websites and having photo shoots we like we came over here last weekend or whatever just just for the website, just to get our pictures up.
Speaker 1:I felt so silly. My wife is taking pictures of us grown ass men pointing at nothing and like pointing at nothing and like crossing our arms and I'm like, oh my god, this better make us some fucking money it was very interesting, the business profile.
Speaker 3:How much of a hassle it was just to get our business, our google business profile, on the internet. Like we had jocelyn going around our office like taking videos. Yeah, our office was real, like it was. It was such a hassle. And and then you had like the marketing cost. If you you asked us earlier you know how much we're spending. Like it's only like two grand a month but that adds up over time. And then you have your CRM and then you have your website and then you have your MLS and prop screen and everything else that goes into like analyzing the deals themselves.
Speaker 1:And then we talked about doing some direct mail, because we hear that's starting to hit a little bit, but that's a big nut too. So you got to really target. Where do you want to do it? Where do you want the leads to come from? Are you okay sending mailers for four or five months and not getting a single dollar back for it, like all of those things are just they're, they're crazy dude.
Speaker 3:It's interesting, you know we're we're adding people to our team now. I'm like guy like justin that came in and hit the phones right away. He's, he's a savage seller dude, like he gets a little phone and he he talks to him how he wants to talk to him, he makes him do what he wants and uh, he's a funny guy.
Speaker 1:Yeah, have you? Have you talked to him very much, justin? Oh my god, dude, he makes me laugh like no other person. We have a Wednesday run club. Anybody that's listening? Pasadena, la Fitness, 6.30 am. Wednesdays. You can be there too. How long do you guys run? Four to five miles usually. That'd be great.
Speaker 2:You're more crazy than I've ever done.
Speaker 3:We just can't let Sean set the pace again.
Speaker 1:Yeah, yeah, yeah, we got some quick boys that try to go a little too fast. But Justin rides his bike behind us all and he'll just sell people. He'll just be selling on the bike. We'll be running in front of him and he'll be yelling at Jesse like Jesse. Let me tell you about this.
Speaker 3:Hale Thorpe deal that I got.
Speaker 1:It is the funniest thing ever. I just bought a deal from jesse oh, you did which one? It was in pig town, um, so yeah, so that that whole thing. We've done a couple deals, though. We've had some success with the cold calling. Um, we just got a massive listing in my neighborhood here from the cold callers, which is cool Um, like a $900,000 traditional listing and I got a little construction job from it, which was cool too. So that we're going to keep going. We're going to keep it going, um, oh, that's the other thing too I wanted to talk to you about. So we we on the podcast live went through this deal, benfield deal, talked about it with with brookhane. We've talked about it with you. You voted to sell. We had people that voted to keep the place, people that didn't know what they were talking about and well, just listen, just listen here, nicky boy.
Speaker 1:we just had the appraisal done at the building next door $1.15 million and our cash out is $175,000, $173,000. So we would have sold it and maybe we would have hoped to make $200,000 taxable income as a sale, not have the asset we're cashing out with still cash flowing. We're cashing out and getting paid 175 000 no taxes so how much is the mortgage?
Speaker 2:well, I mean how much of a loan?
Speaker 1:uh, 700 and something thousand 780, something maybe. So that's like um it's like if it's under it's. I think it's 5200 a month, piti, with everything, it's 200 bucks. Yeah, yeah. And our after we raise the rent, um, when these leases are up, we'll be bringing in hopefully 62 to 60, 6300, so300. So I think he's going to have next door that he's going to probably be a little bit higher than us. I think that his is like a tad bit better set up, yeah.
Speaker 1:They opened up some walls and yeah, but we'll be somewhere in that like 3000 a piece, three 3,100 a piece. So you know almost a thousand bucks cashflow and cashed out you know 175 grand. That's pretty good.
Speaker 2:It sounds a little risky to me, Would you? I wouldn't do that. I still would have sold it. Why the loan amount is way too high for the for for that cashflow.
Speaker 1:But you're not taking into consideration the area.
Speaker 2:This is not pig town, this is like I mean, unless you think it's going to keep appreciating like more than other areas, then maybe yeah, 100.
Speaker 3:Not only that, though, like it's not gonna sit naked, that's yeah and are you cashing out at 75?
Speaker 1:no, it's like 60 oh 60 okay so that so then I wouldn't be too concerned, because if I mean it appraised at 1.15 and we're only pulling out like 700 and change, so we still have like 400 grand in equity.
Speaker 2:Yeah, so even though it's a higher mortgage payment, I would say because you have a lot of equity. It's two houses too.
Speaker 1:So it's yeah, it sounds like a lot, we're blanketing one loan, but it's two houses that we could sell separately if we wanted to. So the fact that they each appraised at what 5, was that 575 or something like that, like that, we bought them for fucking $275,000, dude Put 50K in each one. So we win, you lose.
Speaker 2:Wrap it up, mic drop, mic drop. I don't know, maybe I just I guess, because my average loan amounts are like 160.
Speaker 1:Yeah, but I think one of the things that I really love is high-end houses, high-end tenants. You don't worry about turnovers because they don't ruin the house, they barely ever leave and it won't sit vacant. It's next to like the number one high school like around. So for us, like the risk of losing a month or two of vacancy, like isn't a real thing, like it doesn't, like I don't really worry about that, like well, I mean, I yes and no.
Speaker 2:Even if somebody's lined up, I feel like doing a turnover is going to take. It's like who wants to move in in the middle of the month. So like, let's say, somebody moves out september 1st, it's gonna be hard to get somebody in there september 1st. You're gonna lose at least.
Speaker 1:Well, no, it's just so strategically with something like that, I always base it around school time, so I want them to move out in like end of may, beginning of june. So then the people that are moving in most likely will have kids that will probably want to go to the school next door. That person we will time the move in to be when summertime is, so they're not like pulling their kids out of school, not as far as time frames far as the school.
Speaker 2:But I'm saying, if they moved out at the first of one month or the, you know, the 30th or 31st of that month, I don't think someone's gonna be able to move in the first. Basically is what I'm saying. So you're automatically going to lose.
Speaker 1:I mean, we do that.
Speaker 2:Do you yeah, oh yeah.
Speaker 1:Typically, we do like a list of whatever, if there's anything that needs to be done, but a lot of these people don't want us to take any of their security deposits. So, like they're they, they take care of the houses. That's what it all is like they just that high-class yeah, it's totally different, man.
Speaker 1:Like they really care about the house. Like even tomorrow I'm going to bend to these houses because the guy's concerned with how a couple things came out. He's like those tenants don't give a shit about that, but these people do, like it's a high-end house.
Speaker 2:So I guess it's different. I mean, that's something that I'm not used to, so that's probably why it's a little different for me, but I can. I guess I can understand it from that perspective we don't have headaches.
Speaker 1:I never have to call them for rent. They're calling me when, like two days before rents do, and be like hey, can I still drop off a check this month, or whatever, because we haven't onboarded them into app folio yet. But, um, so yeah, so I, I don't know. I am a huge fan of this area, so I'm glad we ended up keeping it. Some people might have sold it. We ended up keeping it. Some people might have sold it. We ended up keeping it.
Speaker 3:We wanted to hold the asset. My first bird deal is pretty high.
Speaker 1:You guys are happy with it? Then let's talk about this for a second. So his first bird deal. First wait wait, this kid has a golden horseshoe, I think, stuck up his ass because his first flip he made like 70 grand profit. His first bird deal he got involved with us pulling out a fucking giant bag of money first. Triathlon a couple weeks ago comes in third place in his age group when opportunities present themselves, you just gotta strike.
Speaker 3:That's what I did. I stood around waiting for Ryan, only to not strike. Let me ask you this, though what's the worst case scenario with this deal?
Speaker 2:With that deal. Yeah, I just think like I take risks, but maybe because I'm so used to the price point two, 50 and less when owning rental properties, it's just more of a comfort zone for me. Um, you know, having a high mortgage like that I mean because I'm understanding Ryan's point of like the turnover, so then you won't lose a lot.
Speaker 3:So I guess, Even after we cash out, we'll be sitting on $78,000. So, like I just don't know, it's too much that could go wrong that we couldn't cover with that money.
Speaker 1:Considering the roof is new. Hvac systems are new.
Speaker 2:Yeah, putting that money aside. That's not going to be money. Money, right?
Speaker 1:you guys aren't using that money for it, yeah we're gonna probably buy another building that money's not gonna be there after a little while.
Speaker 2:No, we got other money yeah, no, but you're saying you're, you're, you're saying like, that money is there. Just you know, if something were to happen, we cashed out this money. So we can allocate this money even if it's not there, but you can use it for whatever, we don't have to use it all yeah, because we we put in 100, we basically put in 100k.
Speaker 1:We're getting 175 back at closing. So like we're taking our money back and we're still going to have another 75 grand we're going to we're we have our eyes on a three unit building with this developer that we we've been working with, that we're gonna probably buy in glen bernie. We're gonna use that money for that building and get seller financing for the rest of that. But if something goes wrong and like they don't pay their rent or something crazy, like that happens it's two units, so if one unit doesn't pay, we just have to come up with three grand and like they're not gonna, it's not gonna come to an eviction situation, like that's just like very I would be very perplexed if that actually happened. Um, so in our situation it's like okay, well, if, uh, they stop paying or something does go wrong, I mean it's a couple thousand bucks a month in mortgage. It's not like having three houses sitting vacant in a big portfolio is the same as what we're doing. Wait a minute.
Speaker 2:So you said that you could sell it and make 200, but if it appraises for like a million and you had how much into it? 500 or 550?
Speaker 1:Yeah, it appraised at 1.15 million and we had 650 in it at the end of the day.
Speaker 2:So what do you think it would sell for?
Speaker 1:Well, that's a hard number because it's like an investor is most likely going to buy it, obviously. So hopefully the appraisal value is right and it could have sold. And sure, it would have been a lot more than $200K if we sold it. It would have been.
Speaker 3:But then you're getting hit with all that tax, and that's what I was talking to Ryan about. That was like one of the big reasons I pushed for the bird was because, okay, not just made our, not only did we cash out tax-free money, but now we just made our loan amount that much higher. So when we do go to sell we're not realizing all of that profit.
Speaker 1:So we're getting kind of a tax discount on some of that money. But now these do say that we probably would have made like if it did sell at appraised value it would have made a half a million dollars. We would have put a half a million dollars in there. Yeah, we would have got taxed on that.
Speaker 3:Yeah, now we just you know what I'm saying like we limited our tax liability in a way yeah, I, I understand, but if you would have walked away with 400 000, we probably would have ended up walking away with like $350,000 at the end of the day.
Speaker 1:If you think about it, if it actually sold at appraised value, we would have walked away with like, after taxes, $350,000. So half of what we refied out. I don't know Dick, I don't know Nick, I don't know.
Speaker 2:There's a lot of processes. Yeah, I mean, it's just a high loan amount for me. I could have taken that three 50 and turned it into a couple of smaller rental properties and pay cash for them at three 50 and cashflow more than.
Speaker 1:Yeah, but you have vacancies and you have more turnover and more failure to pay rents and all that stuff does cut into your profits where, like none of my properties that are like in that higher end market, I've ever had to be done an eviction for. I've never missed, like you know, like we don't like miss, months of rent. So there is that to be said. I mean it's just if you think about it. What about a multifamily building? That's, you know, 20 units. It's a big mortgage payment split 20 ways of units. You know this is the same same shit.
Speaker 2:It's just two units true, but it's not like 350,000 per unit, though it's more like 100,000 per unit. Yeah, I don't know, I mean I I'm getting some of your points and it, you know, makes me feel a little bit better about it.
Speaker 1:But I'm glad you feel better about it because I feel OK. I feel OK Now that I just think it would have been, like you know, close to 500K profit. Maybe I would have reguessed it, but we didn't know that it was going to appraise so high.
Speaker 1:Yeah, honestly, if we, if it was known that it was going to appraise so high, matt Fullerton would have never sold us those deals or he would have sold them for a lot more, right, I mean, I'm sure he was kicking himself. Can you imagine? I'm sure he was kicking himself. I'll have to ask him and hopefully he listens to this because if I had sold two, if I had sold two units off, that would have potentially got me, like another, like another half a million dollars plus the 50k assignment fee that he already made off of us. That might hurt, that might hurt my feelings a little bit. But well, you know what they say you win some, you lose some. So another thing how's life at KW?
Speaker 2:How's life at KW? I actually don't know. I'm still an agent there, but I don't visit the office I don't really interact with.
Speaker 1:But you still pay the other agents it's not really a desk fee.
Speaker 2:It's more of like an eno insurance and like fee.
Speaker 1:It's like 128 do we have that fee at lux?
Speaker 3:I'd say no, actually I don't think I paid anything.
Speaker 1:Wow, Speaking of Lux, good segue, we are getting a bunch of agents not Nick Kalfas, but a bunch of agents that are signing onto Lux, which is cool. So that's growing. We'll we'll work on, we'll work on you eventually, Nick. But we've had, um, a couple of people on board and a couple of conversations this week of new agents that are like coming from pretty big brokerages that are just looking for, you know, a smaller, like all one-stop shop. I'm not going to name names, but there's a couple of guys that like sold 50, 60 deals last year that are going to be coming over. So I'm stoked about that. Chase is doing a good job. He's the kind of the pretty face of the organization.
Speaker 3:Yeah, yeah, we're getting our website up here right now, looking good.
Speaker 1:We've been through how many different websites with all these businesses. Dude, I've paid like Engage, which is a company that we use for a couple of our websites. I've paid them to build like two websites that we've canceled and now gone to other people, and I think we've made like four different websites for these businesses already. So hopefully we're done soon.
Speaker 3:It's like five third hours every time you start a website plus like 130 bucks a month that we've been paying.
Speaker 1:and then we're like actually scrap it all we're going to. We're going to a different server, a different person. They can't use any of what you've built. It's garbage, throw it away. So I'm like, okay, great, I'm just like writing all the losses down on a little piece of paper in my pocket so I can cry about it later.
Speaker 3:Yeah, see, Nick, if you just come over to lunch, Ryan will write the checks and we'll just scrap everything. That's how it works.
Speaker 1:No, I mean, but that's how you do it. You know it's like that's business. Unfortunately, like there's no uh, there's no handbook on how to build all these companies, right? So, like you spend money, you try things. If they work, you put more money and more effort behind them.
Speaker 3:If they don't work, you'd readjust and redo it I mean, that's something like spending a lot of time with you, like that's something I've learned about. You is like you just do, instead of like analyzing. I mean, you, you analyze triathlon data like nobody's ever seen before, but that's a different subject. Um, those are life points, this is business points, and he just he did, he does it. And for someone like me like I'll analyze, like oh, what's the best website before I go and do it, whereas like he's the guy that is just like all right, let's just do it. And then, on my side of things, sometimes shit gets procrastinated and it doesn't get done for a while, whereas like someone like that just gets stuff done I think it's.
Speaker 1:it's also like, like you said, if, if I don't just do it, I'm that hamster wheel of a brain where the next thing will get stuck and then I'll keep focusing on the next thing and then I'll never go back to that thing, so it's just like, okay, we have one solution here.
Speaker 1:It's Engage. It will give us a website. Twisted way, it makes the money that I'm spending on that website and then if it doesn't produce and it doesn't work, if that was never even existed I would never worried about it. But now, because I'm like spending money on it and it's a real thing and we look at it like, oh, that kind of looks like shit, let's, let's tweak it, let's change it. Now it's at the forefront of all of our brains where, like, we have to fix this website because it's a website and we need, we need it. Where I just feel like, if you, just if you analyze too much, you then find the next thing to look at, especially if you're like me in any way, like my brain just keeps going and going and going I'll be starting a plumbing business. We were talking about plumbing business before and then, you know, you kind of put the cart before the horse.
Speaker 3:so sometimes you just just gotta you, just gotta do it.
Speaker 1:Yeah, no, I think to a fault like impulse control was probably like always a thing that I had to like work on. You know, um, and then you have to work on it as a kid, I feel like because you like blurt out and you get in trouble in school and you do all that stuff and not like bad intentions, but like you, just you want to be, you know, in the forefront or whatever, and then it gets really like dangerous when you start doing it in business. But it there's like a gift and a curse, like a happy medium that you got to find because, again, adelphi is a deal that I'm I just did it and we're going to lose a lot of money on it. And that was all my bad, like I didn't analyze enough.
Speaker 1:I should have went to the neighborhood more. I should have done a lot of being located. It's in a beautiful area at University Park, right next to College Park. If you're a professor, it's a perfect house for you Four bedrooms, two bathrooms, beautiful smud room, yard, two car garage, detached Just a great place. Extra fridge in the garage. You can keep that if you bought the house.
Speaker 3:The seller said he's even willing to do a kitchen on me.
Speaker 1:And I will remodel the kitchen, add a half bath on the main floor. Wherever you'd like Buy the house, call Chase kintzer at luxe realty. Um, yeah, it's in university park, right next to college park. It's great neighborhood, but I misanalyzed the road that it was on. So if you're listening, this is something that's very common that people say, like double yellow line, don't buy, blah, blah, blah. Well, I did. I bought on a two main of a road, internal of this house, like the internal part of the neighborhood sells an 800 plus into the millions. The external block of this neighborhood that's on like kind of a main road, even though there's a private alley and two-car garage behind the house. It's just not selling and I'm gonna lose a bunch of money.
Speaker 1:So when you're flipping houses, make sure you don't just do it all the time because I'm, I did it and I did. I am going to lose some money on that one. Well, luckily we've had more wins and losses and that kind of is what you know keeps the ball moving. But if you're a one-time flipper or you're like, you know this is something that could bury somebody. I mean, we're going to lose. If this was my second flip, it would have been. Yeah, it could bankrupt somebody very easily. We're going to lose $50,000 plus.
Speaker 2:Not only that, it would just deter that person from wanting to do it again, right, and then maybe they would have kept going if they never ran into that in the beginning with so that just do it.
Speaker 1:Attitude does get dangerous, especially when you start playing with big numbers and big money. So there is, you know that. So there is, you know.
Speaker 2:That's when the big numbers come into play.
Speaker 3:Yeah.
Speaker 2:That's what I don't.
Speaker 3:Yeah, for sure.
Speaker 2:So well, let's talk a little bit about the market also. I feel like the market, so I have four active listings right now and marketing, I feel like, is just softening up, Not getting many showings even when I do price reductions. So what are you guys thinking? You think it's because the school, like I mean obviously election year I think people are sidelining themselves because of the election.
Speaker 1:I think we're seeing the rates come down. I think people are trying to wait to see if they're going to come down even further. I think that also, that people are just waiting in general august is historic.
Speaker 3:This well, it's not august anymore, september now. But august through september has always been a slower time to sell a house, just because everybody's going to move back from vacation, they're getting their kids in school, those type of things. And then you add election year on top of that, plus we're rates up and it's like, okay, well, our rate's going to keep dropping, but let me just sit and wait and see what happens next. And if rates go back up, all right, I'll jump back in. But I don't know, man, it's a weird time. Margins are definitely tight than nothing.
Speaker 2:Yeah, it's never something that I recognized before, because I would always buy and hold and not sell anything. This year I've been selling a little bit more, as last year as well, but I'm definitely starting to notice that, like interest rates are coming down, but I don't see any additional showings on on the listings that I have, even, like I said, when we do price reductions, not really yielding any more showings.
Speaker 1:So I will say, though, there is markets that are still doing very, very good, because, like Justin just put, put up a listing and had 17 offers. We have 17 showings and a couple of offers, and 17K involved asking. Yeah, so there's still like pockets of the county in that. If you're in that like I feel like 250 to 400, 450 range, it's like gone.
Speaker 3:Yeah, houses in my neighborhood, still in Limerick, over in Creekside, still within three days.
Speaker 1:I mean I expect to sell this house in my neighborhood for $900,000 in a couple of days. Once that goes live, I think there are still pockets.
Speaker 2:I guess the price point that you just mentioned also has to be specific to areas, because that's my price range of the houses that I have listed Are they a city. One's in Pigtown, one's in Essex One is in uh dundalk and the other ones over there by brook road.
Speaker 1:The city gets hit harder during these down like down times. I think it's not only but the city. You have high water bills, you have high taxes, so people that are buying a 250 000 house it's like the same mortgage payment as like a 350 000 house in the county when you take into consideration 120 a month water bill and the taxes being double like that, that hurts that range of buyers, you know.
Speaker 1:I mean those are like mid-level earners. What do you think somebody that's buying a 250 000 house? They make 60 to 75 thousand dollars a year yeah, but the water bills?
Speaker 2:the water bill isn't factored in the mortgage, it would only be the taxes.
Speaker 1:No, but they factor it into their monthly what they're figuring out. Their budget is Not the lender. Not the lender, but the human being buying the house. Maybe, hopefully, yeah.
Speaker 2:Because I don't even think they factor in, like the BG&E, the electric.
Speaker 1:Because they're going to be foreclosing soon.
Speaker 2:I mean when the lender underwrites somebody, they don't look at how much the BG&E is going to cost the electric, how much the water is going to cost, how much it's going to cost to maintain that's the huge one. Yeah, they got to account for that, obviously. But the other stuff that you know if you're barely eligible for a $250,000 mortgage, you got all these other bills like the lender's not looking at that I'm not talking about a lender.
Speaker 1:I'm just talking about somebody that's looking to buy a house and they're looking at their monthly expense, their monthly budget, and they're saying, okay, I have a, what would that be? A $1,500 mortgage, and then I have to pay the electric bill, which is whatever, it doesn't matter. If you're in the county or the city, then you have the water, which in the county it would be a hundred dollars per quarter, where in the city it's a hundred dollars per month. So you're factoring in all these things. I just think people in the city are are it's it's tougher, and I think the city people are more transient.
Speaker 1:There's more people moving in and out of the city. It's not as a more of a permanent place anymore. Like most people, especially like coming up our age, they move to the city. They party for a little while after college, they get their job, they live with roommates and they might buy their own house, they might get married in the city. Then, as soon as they have start having kids, typically they're moving out of the city. It's just. I feel like there's just more. It's just more transient.
Speaker 1:I don't know, but there are neighborhoods. I mean the house chase sold recently in uh, catonsville that had a ton of showings like multiple offers. I mean there are places that are selling. It's just you got to find, I think these pockets gotta find what the deals are. It's not a Delphi road in college park, that is not the pocket. Um, so no, that that one definitely hurt.
Speaker 1:But I do want to like kind of break, break into that a little bit because I feel like people need and I've gotten somebody that recently told me like I love hearing about your failures, which is true Like I think that when you can, we can talk about our wins and how much that house is worth and this and that it's great.
Speaker 1:But when you talk about your losses and like people that are just getting into this, like how you said you have how many sitting for for sale right now? Four, four. So you think about it like somebody that's trying to get into this game. You got four houses that you're paying hard money on, right? So what's that? At least 8K a month and something like that. So you're burning, like our buddy Justin was here and he has a startup going on. He's like he's talking about his cash burn rate, like I'm burning 6,200 a month just on that hard money watching that property sit there. You're burning $8,000 a month on those mortgages while these things sit there and there's no light at the end of the tunnel, like we just keep paying until something happens until something sells.
Speaker 1:So you know, be careful if you're out there Like we, as people that have done this hundreds of times are still making mistakes and still losing. And there's still money to be lost in this game and the numbers in real estate are big. So, like when your losses add up, there's a bunch of zeros typically on these transactions.
Speaker 3:Yeah, I mean you could touch on like that deal Ike's going through right now and how we've kind of warned him about that deal and that one's scary for us and we're looking at it like dude. I don't know if you should move forward with that. You only have 10k in right now and yeah, there's, yeah, so there's a deal.
Speaker 1:Uh, one of our agents are doing and I, I hate buying in these neighborhoods. They're just like they're they always they're very low-end neighborhoods. So, like the house was 10k, so you know where it's at, you know two, three or one of those neighborhoods over there and the rehab on it is a six figure. Like to do a full gut on anything anymore. It's a six-figure rehab. Right, talk about all new duct work, electric panel, the whole nine. It's six figures. It's not like where, what 2018? Where you could do a house for 50k like that? Just, the numbers don't add up anymore.
Speaker 1:Like, between the trades the trades are the biggest thing, um, and all the material costs. You're spending a bunch of money and, the way I look at it, people, people aren't really buying in these neighborhoods to live in there. It's typically people, investors buying and most of the time, like we just had an investor in town from new zealand the other day um, she's looking to burst, she's looking to capture that you know the equity gain, um, and he's trying to flip this house and and I'm like you know, as an investor fully rehabbed, I probably would pay 75k for it, but it's gonna cost him 100 plus thousand dollars to fix it. So I just feel like in in, uh, when you're getting into this game, you need to find people that like really know what they're doing and run the deals through other people and show them, like, what you're doing and just have them kind of like audit it. Because I know for a fact that if I had done that with the delphi to a couple of people, they would have been like whoa, whoa, calm your, calm, your roll, and I probably wouldn't have bought that.
Speaker 1:Um and I. I truly think that there's definitely some mistakes that are being made. Right now. We're looking at wintertime coming up, which is a scary time to have listings live, and we don't know what's going to happen with this election. Put politics aside elections mess up markets. Let's go with Trump. Whether up or down, they mess up the markets. So, yeah, I don't know, man, we definitely need to, I think, be more analytical with the flips and rentals really are just if you can find a deal that cash flows and great.
Speaker 1:But, with the flips especially. I think you just really got to do due diligence contract, get your contractors in line, make sure you have solid numbers for rehab costs. I think that's another big thing that people constantly will call me and be like, hey, well, I just did one today. Um, they called me. I do like a $300 consultation where I go out, do an estimate and write them a scope of work and basically tell them what it's going to take to get the job done.
Speaker 1:And this dude, you know he came to me and it was a house on um. And this dude, you know he came to me and it was a house on um, breisterstown road house had human shit everywhere, like literally it was just the most vile house I've ever been in. But he wants to do tray ceilings, 42 inch cabinets, all this stuff and showed me a comp of like 233,000. I'm like I hate to say this, I'll write you a scope of work, but I wrote him an estimate says like $140,000. So unless he's getting the house for free, there's no, there's no money. And even if you take out 10, 15, 20% of what I'm making on that deal as a contractor, which arguably he's probably going to spend more anyway. If he tries to do it himself, which, arguably, he's probably going to spend more anyway. If he tries to do it himself, there's still not enough money in that deal, so I think the best $300 that guy ever spent probably, though, was him finding out that that rehab is like was that before he bought it?
Speaker 1:Yeah, he's under contract but he has to till the end of today to like say no or yes. So and I do like a ton of those estimates like I do, at least probably two a week of like where people pay me to go out and estimate deals um, which I'm happy to do, and unfortunately there's a lot of people that don't end up buying the deals, but I guess, fortunately for them in kind of most situations, because a lot of them think that it's going to cost that's probably the worst spot to be in, not knowing and already bought it, and then you find out after the fact.
Speaker 1:Yeah, yeah, that was. That was a guy that I guess listened to our podcast as a new client of mine and he bought a four unit and then, like got jerked around by some contractors. The place is still not like a hundred percent done, but he's kind of run out of money and it's vacant. So we're going to take over management and start filling, trying to fill it up with tenants and stuff. But, like, if you're not dialed in and you need to have somebody that's dialed in with you, like aside you to either help consult like we use consultants for all this stuff, like for zoning for, like we pay people that know more than us that's what you need to do, like in business in general. So, like, if you're new into this game and flipping or whatever, like call somebody that you trust that knows what they're doing.
Speaker 1:In any of these facets, whether it's finding deals, you find a realtor, like chase. If it's doing like a burr, you find Nick and ask him to help you through a deal and maybe you get involved with a partnership or you help they pay you a consulting fee or whatever pay me to write you an estimate. You need to do that in the beginning and you can't like, feel ashamed or anything. And if you waste 300 bucks to not lose $20,000, it's a win. It's it's a win.
Speaker 2:And it's kind of like getting like a home inspection. When you're a first time home buyer or just any home buyer buying a house to live in, and you're getting a home inspection done, you may put out $400 or $500, but there may be a structural issue that you wouldn't have seen if you didn't get a home inspection or any other issue that may make you back out of it to where if you would have just not gotten that done, because that's out of pocket, the the home inspection when you buy a house. So it's right, it's just something you got to do and it protects you.
Speaker 3:We advise all our buyers to get home inspections. Why? Why would you, as an investor, want to weigh that on the sheet yeah it makes sense to me. But you know I we were talking at the gym today and like talking about the market and like he was like hey, less, eight less investors are hitting me up to go do these estimates. He's. He's like so the market's definitely kind of slowing down.
Speaker 2:No, I feel people. Yeah, I feel like there's people that are definitely slowing down on buying, and I don't know if it's just because there's not much out there or people are just hanging around. I mean, I'm still looking for deals, I just I'm just not coming across.
Speaker 3:I think so many. Some sellers are kind of sitting on the sidelines too, of just even selling, because it's like where are they going to go? You know, like inventory is still shallow.
Speaker 2:Especially if they're locked in at the lower interest rate. I mean, interest rates are coming down now, which is a good sign.
Speaker 1:Yeah, but people are locked in at 2.7, 2.5. Like who the hell? We're not getting there? We're not there. But I one of my vendors. Today I had a call with one of my vendors and I've been having some issues. I'm not going to name names, but I've been having some issues with them and they've changed systems, blah, blah, blah. Whatever. He was like dude, we need the business right now. Like I'm really sorry, but he's like we are.
Speaker 1:Like I think all of these contractors, vendors, are really slow or like slowing down big time. And I know like uh, I was telling Chase this morning that like just less investors in general have been calling us for estimates, so I know that's definitely down. And then I saw a video recently that Home Depot spend, I think is down like 50% year over year. Wow, so that means like all the people I guess that were like tired of seeing their vanities and stuff during COVID and wanted to do all these repairs, and now they're back to work in the office and they're not doing repairs in their house and like we're getting a decent amount of homeowner quotes, but it's definitely slowing down but a little bit that shows.
Speaker 3:On one hand, though, if you're getting more quotes to do jobs inside the home, people aren aren't planning to move anymore.
Speaker 1:That's the other thing too. We're getting quotes. I'm doing an addition in Gaithersburg that we're starting on Tuesday. I'm doing a design meeting on Tuesday for that. So they're locked in at a very low interest rate. They have a four-bedroom house. They just had another kid. They need a five-bedroom house. We're putting an addition on. They're not leaving, they're moving. You know they're not moving, um, doing a couple bathrooms, a couple decks. In my neighborhood people are just choosing, even people here that are like the deck that I'm doing. They're like empty nesters, they're like in their 60s, they have no kids that live at home and they're just staying at home and they have a giant house like way too big to be to. Really for two people like you don't need a five-bedroom house, but they're just staying because it's cheaper to stay in that five-bedroom house than it is to downgrade and buy a three-bedroom house because the rate is so high.
Speaker 1:So unless you're coming in with cash, which some people are- like yeah, like the house that we just sold in silver spring, that flip that we did, they just came in and bought in cash, so then you don't have to worry about the rates. Yeah so, but yeah, definitely be careful out there. I I hate to tell people to not invest in real estate. Obviously you got to keep investing, you got to keep doing things, but you need to be diligent, you need to do your due diligence and, like, I feel like, um, I've broken record, but like partner with somebody like chase partnered with us and got some, some experience under his belt and learned, watched me crash and burn with adelphi he's not gonna make that mistake, right?
Speaker 3:I mean, it's true well then I saw like all you, you were managing four different flips at one time. Like all that stress, all the planning and everything that goes into that. So like that's always helpful, and not only that, like through you, I get to see what other investors are doing too, because you're doing their projects and, like you, you're coming and telling me like, oh they, this is what happened. This time it's the rehabs cost. So that was the big thing for me is like man, I can analyze the deal, I, I can do that to the t, but I don't know how much rehab costs are.
Speaker 3:And that's one of the big points is, like you got to find that person that you can kind of lean on and they can lean on you back. You can't just be a leech, in a way. So you got to make sure you're providing value of bringing bringing people deals. Or like if I were to come to you and be like I have this bird deal right, like can you teach me how to jv, like I'll give you 50 or whatever. Like you gotta have some type of value there it's. It's not enough anymore just to be like, hey, can I take you out?
Speaker 1:yeah, yeah, yeah, no, that's that's definitely not working anymore. But if you're really trying to get involved in it, like go work for somebody and like all, like intern Mike, I mean he literally the dude is in college and has come, has just come to me and basically offered to work for us for free. And now he worked a summer in our property management office. This past summer he worked doing demo and hauling, and when he comes back from winter break he usually does something with us. And now, like he's going to be 22 graduated with like four years experience working for real estate investor, we pay him. He offered to work for us for free. So, like, do that.
Speaker 1:If you have time to offer somebody, be like hey, can I help you analyze deals, can I help you bring you potential deals or whatever it is, and if I find one, I just I don't want a referral fee, I just want to learn the process right, like I've had people do that to me too, where they're like I have this deal, I need you to basically flip it. I don't know what to do besides having this deal. So at that point you know I can help them through that whole process where we're doing the construction and then we pass them on to Chase to sell the property. But I think that's the best way to start getting involved in this stuff. Safe.
Speaker 2:Safe. So I want to talk briefly about the prepayment penalty and that's for people who are buying investment properties and either refinancing them Typically what I do with the Byrd Method you're going to refinance the property, refinancing them Typically what I do with the Byrd method you're going to refinance the property. And last year, from September to October right now it's September, now in 2024, September through, like October, November 2023, I did a handful of refinances and they were anywhere from eight to eight and a half percent, Whereas now I just did a refinance about two weeks ago and it was 6.5%. So the refinances that I did last year 8.5% they all had five-year prepayment penalties. So a lot of the listeners, that means and it was a descending 5, 4, 3, 2, 1.
Speaker 2:So if I've refinanced in the first year, I would have to pay 5%. So, like I said earlier, my average loan amount is about 160. So if I've refinanced in the first year, I have to pay 5%. If I refinance in the second year, I'd have to pay 4%. And one year of principal pay down is like 1200 bucks on $160,000 loan for 30 year. So it's not much at all. So let's say 160,000, you're refinancing year two, that's $6,400 that you have to pay just to get out of that loan. It doesn't include points that you have to pay to the lender to refinance it at a lower rate and closing costs and such. So at that time I don't know exactly what I could have paid to not have the prepayment penalty, but I know now that it was an extra like three quarter of a percent, so that was maybe like three quarters of a percent of 160, I is like around 1200 bucks and then it was probably an additional um quarter of a percent higher each month.
Speaker 1:Five percent is a lot to pay, yeah to get out of that in another point and a half for lender fees. And then, yeah, I personally I feel like you'd have to. I think you have to do the the math where you, okay, if I'm going to save, like you'd have to basically be able to recoup that in savings in year one in my opinion, because you can wait another year. And what if the rates drop again, like you're at six and a half now? What if they do go down to five and a half next year? And then you're like, oh fuck, I should have waited, have waited, like I feel like if you don't recoup those savings, the whole savings, I mean the prepayment penalty, your points to lender, any other refinance cost, title fees, anything, whatever I think you have to recoup that year one or you just have to wait it out or just pay the extra to not have the prepayment penalty up front, but you've already done that.
Speaker 1:Yeah, yeah, yeah, that ship has sailed for you.
Speaker 2:So this is like a mistake that I'm bringing up that I didn't really think about. At the time I didn't know where rates were going to go, but exactly one year ago I refinanced a handful at 8.5. And exactly two weeks ago I refinanced at 6.5%. So it's like a 2% drop is huge in one year. No one knew that was what was going to happen. I mean, typically they come down election year, but I'm hoping they come down more and anytime I get into loans now.
Speaker 1:Five-year prepayment. That's a tough prepayment penalty.
Speaker 2:Yeah, especially with the higher interest rates Back when I was refinancing at four and a quarter and 21, 22, five-year prepayment penalties aren't that bad, because I'm not going to refinance out of that.
Speaker 1:So for people, like newbies that are listening. Typically, what like an investor loan would be is a 3-2-1. It's a 3%, 2%, 1%, descending from year one to year three and then it's done. But I think they, during this rate hike, they did start putting in more five-year prepayment penalties because they knew, I mean, lending companies aren't stupid, right if, if the rates did come down at all and people ticked down, they're going to instantly get out of those loans.
Speaker 3:So I feel like that's when the five five year prepayment penalties started being more popular not only that, I think they're trying to recoup some of those two and a half percent people that you know they were laying two and a half, three percent, four percent, like those really low late. So now, like they're like oh seven, I'm gonna lock these guys in for a hot minute.
Speaker 1:I gotta make my money back but, I I do agree with you that if you were to pay an extra, let's say half a point or three quarters of a point, to have no prepayment penalty or a three to one prepayment penalty probably makes a lot, of a lot more sense that way, because you're even on year one, you're saving. If you did refine, pay a three to one, you're saving two points.
Speaker 1:That's over three thousand dollars in just in just fees yeah and, like you said you, you're only paying off 1200 bucks a year in equity in the first, you know, in principle in the first year. So yeah, that's. That's a tough one. Prepayment penalties suck and if you can refinance properties without prepayment penalties or getting as low prepayment penalty as possible, that's the most ideal. And I have a couple of houses that are currently at the end of their prepayment penalty now that I am now looking at potentially selling as well. So there's that factor too, because what happened three, four years ago to now, the values have spiked a little bit and I have a bunch of equity prepayment penalties done. Now might be time to take some.
Speaker 3:We should sell and buy more nvidia oh my god.
Speaker 1:Nvidia got crushed today so I have 1100 nvidia shares. That's like my baby. I just keep buying more and more and more and it just dropped. So I watch every dollar that it moves. I watch my net worth go up or down by eleven hundred dollars. I was Today. It dropped by like $20. So I lost like $20,000 in one day. It was pretty sick, but that means we buy more. We buy more tomorrow $10,000 more. Tomorrow we're going to own a piece of NVIDIA.
Speaker 2:What was the article of why it dropped?
Speaker 1:There was like a DOJ subpoena that came out because of some antitrust stuff. I think it's because they have the entire market share of chip manufacturers. So AMD is like and now we're talking on this podcast about stocks. We know nothing about stocks. I'm not a stock trader. I'm not a stock broker. Don't take my stock advice. Don't go put your whole life savings into NVIDIA, like I did. Take my stock advice. Don't go put your whole life savings into nvidia, like I did. Um, uh, but they're.
Speaker 1:Nvidia has a three trillion dollar market cap. They control three trillion dollars. Amd, which is like the next company under them, is like 298 million. So it's like a small baby, tiny fraction of nvidia and that's the next company and naturally, like the Facebooks of the world and stuff like, what happens to that little company is they typically get like engulfed by the bigger firm. But we'll see. I believe in them. My price prediction $200 by Q2 of next year, $200. Wait, the AMD or no NVIDIA? So my average cost right now on 1100 shares is like $85 a share and I think it was closed at like $105 or $108 today, but it was up at like the $140s for a little while. So we're going to hang on tight, ride it out.
Speaker 1:I do, I bit until I started losing money back in the fun days of 2021, 2022 I buy a little bit each week, um, but I don't like pay attention to it at all. I just buy like a little tiny bit each week. Um, it's on auto, auto buy 50 bucks or something like that a week. Um, I try not to look at crypto, I try not to pay attention to it. I only buy and own bitcoin. That's the only one, um, but I don't pay attention, I try not to think about it, because that shit will make you crazy, because it's 24 hours a day. It dude, it's 24 hours a day. At least the stock market at 4 30. You're just like okay, it's over for a day. At least the stock market at 4.30,. You're just like okay, it's over for the day. Because I watch NVIDIA. Not that I'm even going to sell any of these shares, I just watch it all day like it's an obsession. And with Bitcoin, you can do it all night and all day.
Speaker 1:This is why I have the steep buying houses.
Speaker 3:Yeah same, I do the same thing.
Speaker 2:I'll just be a movie or a. I did buy Facebook when I went public at $32 a share about $5,000 worth and then I sold it shortly after oh my god. Because it started going down You'd have a lot of money right now yeah, that was a good buy. I think I needed the money so I sold it. Or I saw it come down and I sold it.
Speaker 1:I think there's so many situations and people that are like now, like oh my God, I owned this stock at this price and now look at it. So that's why I'm not buying. I'm not selling my NVIDIA, I'm just buying more. And then, when it does run up to a thousand, again before the next split like I'll have a million bucks. I have over a million bucks.
Speaker 2:That's how I feel about real estate. I always, anytime you talk to someone, they always regret selling. They never regret holding on to it. So that was my whole thought from the beginning when I started investing to hold hold.
Speaker 1:Hold Another point for.
Speaker 2:Benfield.
Speaker 1:Right, why would I sell Another point for Benfield Nicky? Nicky Califas is making my point for us.
Speaker 3:Yeah, I'm on for it, so.
Speaker 1:All, yeah, I'm on for it.
Speaker 2:So all right, guys, let's wrap that up here, um, we need to get another event on the calendar.
Speaker 1:October we went to talk about the location, had some I've had some issues with the last one, but we'll see. We'll see we're gonna do another one, uh, fall, another fall event. So we'll uh, we'll be announcing that pretty soon all right all right guys, till next time.
