End Hedge Fund Control of American Homes Act of 2023 - Sen. Jeff Merkley
- Sleeping...
- Is it time to get hedge funds out of real estate?
- What is the 500 foot view?
- Will it hurt the market if they are pulled out?
- It will still hurt buyers because there's not enough inventory
- Developers need to build more
https://financiaintelligence.blogspot.com/2023/12/end-hedge-fund-control-of-american.html
End Hedge Fund Control of American Homes Act of 2023 - Sen. Jeff Merkley
https://financiaintelligence.blogspot.com/2023/12/end-hedge-fund-control-of-american.html
Sleeping...
Yeah, I miss sleeping. I miss sleeping. Dude, that nap yesterday was, but here's the thing, right? As you get older, you wake up more often because your bladder gets weaker. I heard it's a thing. I haven't had that challenge yet. I just wake up often because of the baby. So I wake up and what I try to do is stop drinking any kind of liquids.
I just drink water at home. Any liquid around four or five. But Monday or Tuesday, I went to a networking engagement and I was drinking iced tea and water and I got home around. 10:30 and I went back, I crashed easily, but when I did, I woke up cause my body was full of fluid and I had to take care of business and then I couldn't go back to sleep.
So now I have earphones and an iPad and I watch like boring doc documentaries to get me to sleep because I have tinnitus from being a mortal man and I have old man insomnia and it's never easy. Yeah, when was the last time you had a full eight hours? The other problem is now that I have kids it's still newer to me Although my son's gonna be three in March or April When I'm not home, like I go do some army stuff I don't sleep comfortably because I'm not home now where before I was never a problem I'll sleep wherever I wherever but I'm not home.
So it's like it's weird And so you should be taking full advantage of that. I should be a man but like I then I can't sleep right because I'm used to being woken up and so I don't sleep through the night. I'm like, I'm thinking like it's just odd. It's a strange place to be for me and it's awesome in its own way.
However, I do miss sleep because yeah, sleep's good. Sleep's fun. I like sleep and I want more of it in my life. One day you should take your wife, what's her name? Diana. Diana. You should take Diana, and drop off the kids at the parent's house. Whatever parent you have just go get a hotel room and sleep.
That sounds awesome, actually. Yeah! It's funny that you mention that because she got this little dating game like that little card thing oh, you scratch this and this is the date. I want to sleep. All of that, like, when do these things? Like, when do you plan on, when, these two little kids, when do you think they'll let us do all this stuff?
Anyways, I'll see But that's exactly what I told her. I was like, you know what's a fun date for me right now? Let's go get a, let's drop the kids off. Let's go get a hotel room and then sleep. It's so funny you said that. That's why I do this Carmel thing not every, I try to do it every Friday, cause you're in real estate.
You get to make your own hours and typically Friday mornings are really dead. So I take my dogs there. And I just go walk up and down the beach to Carmel by the Sea. Oh, nice. And it's off-leash for the dogs, as long as they're in control. And I get grounded, I get relaxed, and It's my time, right? I totally just enjoy it.
Yeah. That's the one thing, but my kids are older. They don't need me anymore unless they need me to take them to gymnastics or wherever. Two of them drive. One's out of the house. The other one drives and then the other one just got her permit. Now we're spending time and I should be enjoying it because it's the last one in my life that I get to do is teach him how to drive, right?
So yeah, one of the last things you do as a parent is teach your child how to drive. And then they're pretty much, you're pretty much on the mentor-mentee stage, not the parenting stage. You can't paddle their ass or. Ground them or anything because it's just useless. You can threaten them with their lives.
Yes, I brought you in I'll kill you. I'll take you out Yeah, so how often do you call it drill is that what you call it when you go to the army so about Ten years ago. I don't know. It's probably more than that Somebody somewhere, the simple answer to the question is yes. When I first joined the reserve, it was a drill.
It was a drill for the longest. And then at some point, somebody decided that was no longer an appropriate term, and that was not what it was going to be called. From henceforward, it shall be called Battle Assembly. So
of course, I can always tell who's newer and who's not because I'll stay drunk, I just have a habit that's what I know it as. And a youngster would call it Battle, or B. A. B. A., Battle Assembly. Badass. Bad attitude. Battle Assembly. We will assemble for battle. Anyways yeah, it's typically once a month.
Sometimes it's a little longer. I was just up there for I was right down the street from you from November 28th to the 2nd, I think it was. Yeah. But I was actually there a couple of days longer. I was seeing, I had to see some folks there in town. What do you, where is it heading?
Is it that? No, it's over there. Mountain View. It's actually no, it's not. It's not right down the street from you. But okay it's just a mountain view from a couple of days ago. Yeah. Speaking of Mountain View. So I got something. It really lines up with what you want to talk about on the housing stuff.
Yeah, it's amazing.
Is it time to get hedge funds out of real estate?
Can you share your screen? Yeah, go ahead. Let me bring this up. Yeah, so folks at home, if you're, if the reason why you're on is because we're talking about this legislation that's being pushed through legislation. Let's go there. 1st. Yeah. So what they're doing right now is trying to get the hedge funds who buy real estate, and single-family homes to not buy single-family homes, because it's taking away from home buyers, from the real reason why we have homes, right?
The single-family home is the American dream. People want to buy a house and live in it. Pay it off, raise your children in it, make memories, have some financial stability, and hedge funds are coming in and buying swaths of it at a time. Now they're not doing it across the nation. They're doing it in certain metropolitan areas like Phoenix and I don't know, Albuquerque and wherever, when they say that it takes up, it's only 3 percent of the houses that are.
owned right now, but that's still pretty large. We think about that's a huge amount. To say only 3 percent is crazy, like as if that's like nothing, but that's not the that's the available homes. So let's just say that there are 30 million, say 35 million homes in America. That's 3 percent of that, but Only a few homes become for sale or come up for sale every year.
And what typically happens is you put it up on the market. And then you wait for the offers to come in. And typically these hedge funds have billions of dollars, so they don't care if they overpay for it. And they'll overpay for it. Like for example, I just sold Inman a couple of days ago.
Yesterday we wanted to contract two days ago. We wanted to contract listed at one seven, the same under 800 or under a thousand square feet. So I want to say nine 83 for my memory, 983 square feet. Everything needs to be replaced. Just an old single. So one car garage was converted. It has a bonus room in the back that they converted from a screen room into a living room.
Just not the best house listed at 700 expecting 750. I had 13 offers and sold it for 835, 000 and it went to a mom-and-pop investor. I can tell you that right now. I know that, Oh, we have, we're a family. I'm like, Nah, you're full of crap. Because when you see houses, when you see all the offers come through, all 13 of them come through and they're all popping in around seven to 770, 780.
And then all of a sudden there's one that's just above and beyond. So obviously I negotiated it up a bit, but that's my job to do that. But I don't think it was a, I think it was a mom-and-pop investor. And I saw a graph a couple of days ago and I was trying to look for it real quick before you popped on, but.
There's only like 3 percent of the investors that are out there that are actually institutional, or at least that are categorized that way. And then 75 or 80 percent of them are mom-and-pop, which means they own one to 10 units. And that's now the American dream, right? You want to be able to buy your house, fix it up, buy another house, move into that, rent this other one out, and have somebody else pay off your mortgage.
And there's nothing wrong with that. It's just. But I don't think that's a problem. I think the real problem is legislation should not be pushed. It should be about curtailing hedge funds from buying property. I agree with that. There's a lot to unpack there. I think first, just going back to where we first started the conversation.
So sleep. Investing in, or real estate investing for a lot of people has been out of, or it's not really easy for them to do. They don't have, I don't want to say this. Hundreds of thousands of dollars. Yeah, they don't have the hundreds of thousands of dollars. So on one hand, there is a problem that something like a real estate investment trust provides a solution to where.
A mom-and-pop investor, a retiree, or somebody saving for retirement can participate in real estate investing without that risk of directly owning or without the capital they might need to do so by putting some money aside into a real estate investment trust. And there's, there's all kinds of different kinds of real estate investment trust from.
Commercial to industrial to office space specific to the data center. It goes on and on about how diversified and specific you can get when it comes to different types of real estate investment trusts. However, I think what's changed over the last 10 to 15 years, and you can track this with the rise of.
I'd say the internet and social media and how easier it is for people to access information. I think that's probably one of the reasons why you've seen a rise in more people buying multiple homes and trying to get those 10 homes. , I think 10 is a number you can max at for a certain type of loan, right?
After you have 10 of these 10 certain loans, you have to get something different kind of getting off the subject a little bit, but I think. I think that's a thing. I'm not sure. That's more your lane than mine. That's something we can ask Scott, but I think you have to go to more of a commercial loan.
I think you can only get, once you get to 10, you get, if you have 10, I think it's nine or 10 loans, then your financing starts to look different anyways. But I think that's a very clear you can track that. I should say, that I think the rise of those types of mom-and-pop investors with the rise in.
What is the 500 foot view?
Podcasts, YouTube, all that stuff, right? That just people get more information and generally, we've gotten wealthier as a nation, at least a certain class of people has. So people have been doing that. And then you have this other part where large institutions like. Blackrock, Vanguard, Blackrock is a big player here where they're creating funds that's hoovering up, large amounts of single-family residences, just like you, you pointed out.
And. There's nothing like those funds don't usually get smaller, right? They grow, right? So you have these institutional funds that are out seeking ways to grow and create returns. And yeah, just like you said, they come in over the top with cash and of course, who's going to say no to a higher offer.
And so they're buying up homes like crazy. Absolutely. But there's a danger to that. We talked about it yesterday, right? Yeah. And you know what? I had not thought that far into it. Frankly. I thought that was an amazing point. What I thought was the major problem was the affordability here. Wow, this is creating.
This is. It may not be the only reason. However, I'm sure there are other factors we could talk about when it comes to creating the affordability problem when it comes to buying your home. However, this is certainly to me part of the problem, right? Having large institutions like a BlackRock, like a Vanguard or whoever coming in and buying just, Outright buying whole communities in some places.
I think this happened in Florida. I was reading an article about this Yeah, there was a place where there was a new home development and they stopped selling houses because the market burned This was last year and BlackRock came in and sucked them all up. And it's not just BlackRock, right? And we can't see it's just, yeah, multiple.
It's an industry thing. Yeah. To me, it was like, okay, this is creating an affordability problem. Of course, okay, we're turning, long, it's long been part of the national lore, buying you, buying a home, part of the American dream, owning real estate. And then this is a challenge though, because if we just scale this out and move forward, like, where does this go?
Where does this end? And it's going to create problems for people to be able to buy homes. It's just. There's a lot of problems there. However, you brought up a great point. If you want to go into that. Yeah, it's a, and it happens to big corporations too. Like I can remember watching Hewlett Packard grow up so large not just by creating new products because Hewlett Packard started off.
in the test industry, right? And then they went into the computer industry and then they went into the printers and then they did this and then they did that. And by and large, what they did is they started growing so excessively large. That they, their stockholders were demanding better returns every year.
So what they would do is they would start buying other companies, right? They had the money, they had the extra liquid assets and they transferred over and they would buy printer companies and their competitors and they squashed everything. And then it got so big that they had to split up. Hewlett Packard, the original name, just did, uh, computers and printers and the other ancillary products that fell in line with that.
And then they scooted their test, the original product that they sold was test measurement. They scooted it over to a company called Agilent. Which is fantastic. But then they started having growing pains because the market turned just like every industry you have. It's cyclical. You can be in the chip business.
You can be in the aerospace business. You can be in the housing business. You can be in the automotive business is all cyclical. And when you're in a growth pattern and you have to grow and you have to grow and you have to grow and the market turns on you. Your stocks are going to shrink because you're going to not fulfill the requirements that your stock and stakeholders demand for the increased value of your stocks, right?
Will it hurt the market if they are pulled out?
So what happens? Your stock becomes lower and people start losing money. And that was the dot com thing in the early 2000s. In a way is the same thing that happened in 2008, except that was just unethical and completely illegal, but it was swept under the Rug, but what we're seeing today, is that it's illegal.
And if you look through the newscasts right now, a few people are talking about it. This is a Ponzi scheme and people are buying into this expecting heavy returns. They're like, Oh, I'll just put my hundred thousand dollar retirement into Black Rock because they're going to buy this stuff.
And it's going to continue to go up. And if, and when the market collapses, cause we don't know if it's going to. You don't have a crystal ball. I don't have a crystal ball. Things are cyclical. What happens if they put it in there? They're betting that this thing's gonna turn into, their 100, 000 investment's gonna turn into a couple million dollars over a couple years, and all of a sudden it's worth 25, 000.
It screws people over. It's the same thing that happened in 2008. Totally. And not only that just doubling down on what you're talking about here. How wise is it to have such an important asset like real estate, particularly single-family homes, which is just the core of the social fabric of our communities and country?
For families to be able to afford that. I don't know how wise that is for it, for so much that to get concentrated in big institutions who are who are beholden to shareholders companies beholden to shareholders Have a track record of making decisions and choices just like you said to try to honor right their commitment to those shareholders and to make sure that share price is still rising which leads to That's their job.
That's the whole reason for being right? Yeah, it can and it can lead to some ethical dilemmas where they make decisions that ultimately blow up right and cause huge problems. So yeah, now there's been, there's a counter-argument there that some folks have made that well, they would point out that these institutions are.
providing value on one end to shareholders, to investors who otherwise couldn't buy real estate. We're going to talk about that. Also, they are purchasing homes and making sure that they are kept upright. You won't have a problem with a landlord who isn't, I guess what's the term deadbeat landlord, I guess for lack of a better term.
That's a term. And there's that argument, there's also an argument out there and said, this is more about the challenge with not enough new homes being built. Therefore, if these institutions can keep doing this, it gives a signal demand to builders so that they will build more homes, which would therefore increase affordability.
I don't know if I buy into all that. I can definitely see how some of that could be true. However, all things being equal or not equal either way, I still think. Given the choice, I would not want to have large institutions using so much of their investor's money to buy so many single-family homes.
It's just it's getting. A little out of hand is all I would say. Yeah. You're losing, you're going to lose the personal touch, right? There's no concierge service. There's no person you're going to talk to. I went to, I can't remember the name of the company, but they're all across the United States.
And maybe I sent it to you by text. So I'll go dig it through while you talk next. Their whole purpose is to buy it and rent it out to you, which is horrible. If you're going to be a renter. Rent an apartment, rent a townhouse, or whatever. I get it. But the home should be maintained and they should be owned by human beings, not corporations, which, and there's a dilemma here, I think it's what segway into the legislation you're talking about, like there's a dilemma here on, in my opinion, on.
Like we're a capitalist economy, right? And that's the system we have. And how do you balance that out when it comes to what a corporation can or cannot do in a marketplace? So I could see there'd be some challenges there and that's why I. I'd be surprised if this legislation pushes through. I think it's a great headline.
It's a great effort. I wonder how much of it has to do and just reading from what I was able to read about it, how much of it has to do with, certain members of either House or Congress who want to Congress, we'll say by putting forth legislation they know won't pass, they can say they put the effort in.
And so it looks good for them. However, it achieves nothing. So that's exactly what this housing wire is, I can share it with you real quick. This housing wire article, it's still like the, who the passage is low, right? No matter how hard we try, capitalism is going to win over, and whether you're a capitalist or a communist or whichever mark, I don't care.
This is a capitalist society. That's how it's run. That's the engine that runs this country. There's going to be whether or not the pork barrel is the guys that are in Congress that pay off the Congress lobbyists, they're going to have lobbyists lobby against this because it's not in their best.
The best interests of their stockholders, right? I get it. It's so they're probably doing this to get a few people to talk about it. And I'm neither Democrat nor Republican. I see this as a valuable tool for us to at least realize that maybe this is not the smartest thing for people to do.
Or for corporations to do as an investment vehicle, because there's so many different that you could buy airports, you can buy airplanes, you can buy storage. There's a huge industry of storage, right? Why pick on the. The single-family house. Yeah. Yeah. By apartments. And there's definitely reach for all that stuff.
And I'm not, I don't say, I'm not saying that these corporations should have the ability. Should be barred from being able to do this. I just think the scale is ridiculous and it's not going to get smaller. It's going to keep growing. And he's talking about international investors now. So you have people from around the world investing here, because of our, safety and. And the deepest of our markets. And I just don't know how great it is to have whole communities in, in our communities, I'm sorry, whole communities in our country. That's like her own. That's parent's sleep for you right there. Yeah. You ain't lying, man. That's for real right there.
Last night was a good one, but anyway owning. Such important parts of what our country stands for. Yeah, I think it's a problem for sure. Yeah, I don't know. And who are the major? Owners of these stocks of these black hedge, black, whatever, and vanguards and they're multi-billionaires, right?
That, but it's not just the head. It's not just hedge funds though. It's not just although that's a big piece of it, but also a big piece of this is pension holders, pension state-run pensions. These pensions are in dire need of return because of the commitments they have to pensioners.
They're constantly seeking ways to grow that pot of money. And I keep saying BlackRock, but they deserve to be mentioned because of how big they are. And how much influence they have in these things. And when they target something and they pour Billions of money into things it's like a gravitational pull for these other companies to do the same, if you will.
And then, but they have so much money and so much leverage, it's like they push out even smaller players. Yeah. So I don't have actually a problem saying their name, but anyway. But every time we say it, we go up in SEO ranking. So that's good.
BlackRock, Hedge Fund, Vanguard, Open Door. There's hundreds of them out there and you look at the holdings. A lot of them have certain funds that only focus on real estate some only focus on companies and some only focus on. Financial instruments, what have you? I get it. It's it is what it is.
That's more your ballywick I understand you have to spread load but having a reet Or a cartel, is that what they're called? No, cartel. REIT that develops, this is basically a cartel of a Ponzi scheme is what it is. It's an oligarchy of people that are in, that have swaths of energy, Of power and money buying up stuff keeping it away from people that can't afford to live anywhere People are having struggles living anywhere today because you're like, oh I could just move from California to Arkansas, if you move to Arkansas your minimum wage isn't going to be twenty dollars an hour anymore.
It's going to be 7 an hour because it reflects the cost of living in a minimum way. And now because of inflation, you're still paying more money for everything, gas, food, et cetera. Diapers. I was going to mention the other thing that came up for me, or it reminded me that's a problem as well. I think I'll share this here.
And where is that diapers? Diapers are a problem, man. 'cause God, Lee, you know what I need to buy? I need to buy shares in a diaper company. 'cause goodness gracious. Yes. Anyways actually I heard the US population's shrinking now. Is it? I haven't heard that. I know. We're, I know we're the average age's getting older, but No, I haven't seen that that it's shrinking.
It will still hurt buyers because there's not enough inventory
It's getting older because your generation and lower are choosing not to have as many children. That's right. We're 1. 7 and you're like 1. 5 and my kid's generation is going to be like 0. 9. So we're going to have a lot less population, which is one of the arguments that builders are having.
And if you go back into some of these these articles that I shared, you'll see that it's, A combination of things, right? There's a lack of supply. There's a lack of supply. There's, uh, the low rates that we had two years ago. Some people are paying off their houses and choosing to stay there instead of going into a retirement community, but builders are just not building as much.
We haven't built as many houses as we needed to over the last 20 years compared to our projected growth. That's putting upward pressure on pricing, making everything less affordable. No, that's right. That's definitely part of the problem. And like I said, that's what some of the people, the counter-argument to those who are in favor of this, of these This investment strategy for these hedge funds and reach to do so is because if it applies pressure to the problem and the signals to homebuilders to keep building right or to build more.
That's what they would say. The other thing I was going to bring up and this is right in your neighborhood is some of this article with this article talks about this phenomenon where a lot of these large tech companies, a few in particular in this article, talk about Facebook and, scroll up a bit. There you go. Google and Tesla that they're building their own communities and that's when I talk about North Bay Shore master proposed development in Mountain View. So it's just an interesting thing in that we've seen this before. Where have we seen large, powerful? U. S.
Companies build company towns for their workers. It's happened before, right? Forged coal mining, the coal mining industry did it. And guess what? Those were all disasters. I'm not saying this is going to be like that. However, history does rhyme a little bit. How much more power do you want to give your employer over you now they have your job and now they have your house.
Like now you're renting from them too. Come on, like, how crazy is that? And you tell me if, if a development this size goes to one owner, essentially, what could that possibly do to the availability of homes everywhere else? It's gotta go down, right? Like, how does this help the problem?
It helps.
That's cool. Oh, I think you dropped either. I dropped off or you dropped off. Can you not hear me? Oh, there you go. Now I got you. Yeah. So they, the T we're doing, we're trying to do that for teachers. So because we're not willing to pay them the going rate to live here in Silicon Valley, we're trying to build houses for teachers.
So I see this as. It's okay, except for to what end, when is it going to, because when you go to work for Google, they give you lunch, they give you dinner, they give you breakfast, they give you everything you need to live there, there's exercise, there's dry cleaning, there's, it's basically they want you to live for the company.
Yeah. Yeah. No, it becomes almost like an indentured servant there. Exactly. They're a very well-paid servant. Yeah. It's not compared to the two of these, the coal mining, the coal mine towns of, the turn of the century, or anything like that. It's definitely a lot better than that for sure.
However, it's just to me, it's just an increase. There's an increasing power differential between employer and employee in this situation, man, it's huge. Oh my gosh. They definitely rope you in a little bit tighter saying, Hey, if you're going to work for us, we're going to make you work 12, 15 hour days.
That's right. That's right. Oh, and guess what? Now that we own the house No, you can't work from home because you're right down the street from the next quarter. You're coming in money. Get in your Google Lime scooter and scoot to your office right now. On one side, it's yeah, it's great. These communities probably kept very clean, very tight, and very nice.
And everything will be. Kept up pretty well. However, if you're not one of these employees, you're not going to live in that community. That, that community isn't open to you is my guess, right? You're not allowed to live there. I can see stuff, something like a Twilight Zone where this kind of combines with Stepford wives where, you know, all the wives stay at home and then they get programmed from Elon's chip to be the perfect wife and they all have this little crux and then there's this little commune.
Yeah. And then if things go awry, who knows? Yeah, so I think there's potential for that to get out of hand. And we'll see how that goes. I think Disney is also mentioned in there. So you think, but think of any large corporation that size and they're all thinking about building. And owning communities like this for their employees.
So pretty wild, man. I just, I trip out in that. And so if you're not some high-paid tech employee, you're, you'll be renting for life because all you have is a house from BlackRock that you can rent from. I have a Wayne, my buddy who does, he bought the pool service business.
Yeah. He he services, he's servicing a pool right now where a couple bought the house next door, the one with the pool issue so they can move into it for a year while they're with how other. 12, 000, 13, 000 square foot house gets refurbished. So it's something like this. So the whole crux and value of what real estate allows you to do is build value to your estate, to your legacy plan, and to living.
If you're a renter, I know a lot of people are renters and they want to become homeowners because they understand it. One, you become economically locked into that house. I have a thumbs up. What the hell was that? Put my thumb away when you get economically locked into that house We bought this house around six hundred thousand dollars.
It's worth twice that now But we had a certain payment that payment didn't go up or down now in California We have Proposition 13 where our price our property tax only goes up two percent max every year whereas if you lived in Nevada And your price doubles, your taxes double up into a certain point.
Then you get something like a homestead rule in certain States. So we got we live very comfortably after the first five years, after the first five years were a struggle, but then we got to a point where we started making more money. We got more leveled off on managing our money, right? Not living extravagantly, me being more disciplined with my money spent.
And we got economically locked into that payment. When you rent, your rent goes up erroneously every year. It goes up no matter what 5 percent max every year in California. That's right. Whereas in your, the fixed payment of your mortgage is, really it gets cheaper over time. Where like in a Googleplex where you buy or rent a house like that, they're going to rent the house.
Developers need to build more
They might not rent it, increase the rent to you every year. There might be something you negotiate, but once you move out, that rent goes back up to market rate. So definitely it's a plus for, it's an added advantage to Google stockholders. It's a small advantage for the Google employee.
Yeah. And it also goes back to something you mentioned earlier about Hubert Packard, I think it's what you mentioned I don't know if Google's core business is real estate, right? I don't know if that's what. They should really be focusing on. However, that's what they're doing.
It's it's like, the companies like this just can't help themselves, but start to grow and get into different things. And it takes some kind of economic of people or change in the market cycle for them to Oh, we got to get back to what we were supposed to be focusing on.
But I think that's the natural growth and progression of mega companies. Yeah. And you have to. You have to expand yourself to where, wherever the new trends are, where you can capitalize and maximize the values for your stakeholders and your stockholders. It's a calming thing, right? And, when I did my business degree, I understood that it just totally made sense.
As, as angry as you can be about it that every corporation like that when you become a mega-corporation, that's the main purpose. It's not the product. It's not customer service. It's not the employees. It's stakeholders and stockholders. That's the massive value. That's right. That's right. And here's the other challenge.
So all of it is like you're either growing or you're dying, right? So there is no stability or in-between. It's either growth or decline. And That just goes right along with what you're saying. And then you either do that or if you're in a great position, you buy back some of your stocks so that eventually you can put it back on the market when you can sell it for three times what you bought it back for.
Yeah, there are all sorts of different ways. And then there's M& A and people get compensated really well being in that department as well. And I get it. It's just. Some companies will succeed and be successful and some companies will be pushed to the wayside like, IBM was up and from the 40s up to the 70s 80s.
IBM was the key player, a key player. It was a blue ribbon stock, right? They paid dividends,, they were a very well-established company, and then they lost their way because they expanded so hard and so fast and so desperate. So spread out and different things that they lost their way. They didn't change what the times is enough.
Losing the way, I think that could be applied to a lot of things today. And we'll see, I think this is something we should check in on, maybe four or five months from now. See like, where is this all at now? I'm going to start, I definitely will be tracking this a little bit closer as far as what these large institutional players are doing in this specific issue because I just think it's a problem.
That's it. I'm excited. I'm excited. Like this NAR lawsuit, okay, it's not affecting me. I'm still going to do business the way I always did it. And guess what? There's just another piece of paper you have to sign. Okay. But you already had it. We just never really enforced it. But now it's if you want me to represent you, you have to sign this document.
And that's just a rule. That's my rule. It's not a law. It's not my,, buyer, my broker's not requiring me to do it. I work. I'm a broker, but I work under a broker. I Choose to do this because It explains explicitly how I'm going to be compensated if I'm representing you as a buyer's agent, which is that's the whole lawsuit if you want to dig into that.
I really don't care to talk about that right now. I think there's some important, I think, what's the word I want to use? There's a lot of different, I'll even say misinformation out there about that lawsuit. I don't know. I don't want to get to today, but we should probably talk about it some other time.
So just so people understand what it is exactly about how it actually plays out and who It affects the lawyer that gets 400 million dollars out of that whole thing. And yeah It's it's your money and if you boil it down and talk about how much The rest of the plaintiffs get and divide it by 250, 000 plaintiffs.
You walk away with 4, 000, about 4, 000 plus or minus pre-tax. So yeah, great. I'm super happy for that lawyer.
What are we going to say? It's a class action lawyer. It's going to make a filthy amount of money. 400 million, 600 million. I don't know what it was. And that's, I, it's the funny thing is this whole lawsuit about disclosing how much compensation an agent makes, but there's no disclosure is how much that lawyer is making.
That's
wow. I'll come to America, baby. Yeah. But here's the thing. If you're going to do that, then doctors have to disclose how much money they make, and how much they're going to charge you upfront. Oh, by the way, you have appendicitis, and because I'm a specialist we have to do all this stuff. Here's your quote of how much it's going to cost you and this is how much I'm going to make out of it.
That's what the lawsuit is about. Or like you're selling a car. How much is my salesman going to make? He's going to make, I don't know, 20 percent off the profit. I don't know. Whatever it is. It doesn't matter. It shouldn't matter. But if we get sued for that, then everybody should have to disclose how much they make off of every deal.
Like you. How much money do you make? I can't ask you how much you make off of me 'cause it's not a whole lot of money.
I, yeah, I don't care. It's not my transparency's good. It's hard to argue against it. I don't know if they need a form in their lawsuit to do that, but I don't know. The DOJ tried to change something about five years, four or five years ago on the same concept and they walked away from it because they said, no, we don't have really an argument.
And then this guy comes up and sues Missouri, something like 1. 6 billion and then they lose and they're appealing the NAR is appealing it. It's going to go across the nation now. Oh, sure. Yeah. You know what that meant to me is I had to go through extra hours of training and how to talk about it, how to handle it, how to prepare for it, and how to protect my clients.
The good and bad about it, and it is what it is. Are we going to be, are we staying on till is it Scott we're waiting on? Cause there are two folks for me today, right? Or what are we doing? We have two Scots. There are two Scots. I was getting a little confused there. Yeah. Yeah. So folks at home, if you're listening still.
Probably not, but if you are listening, we have Scott Hill, one of my mortgage brokers going to talk about loans, what the new rates mean, uh, and probably deeply to barely touch a little bit on what the VA loan can do with multi-units. And on it. So with the VA loan, you can buy one to four-unit property, right?
Anything under the RESPA guidelines. There's a new little known it's not new. It's been around a long time, but it's very little known. There's a VA loan where two veterans can get together and buy a seven-unit apartment, making one of them commercial. And then each of them lives in. Wow. I don't think I've ever heard of that.
Yeah. Nobody talks about it. And I just heard about it on TickTock. And I'm like, Hey, we got to learn about this. Tell me everything. He's I don't know anything about it. Okay. Let me do it. Let me do some research. And then Scott Wilson is a Mona Vista Matador. I'm a, I went to Mana Vista. I met him at a class reunion, he's army.
So you guys are going to chum up pretty well. Outstanding. And he's a family lawyer and he handles trust. So the whole idea is I have some friends, I have a lot of people that have parents that are aging and they're going through processes of handling trusts and how to handle situations when you're trying to get help through Medicare, Medicaid, Medi Cal, and get help through social work.
And that's what we're going to be talking about. Later on. Awesome. Yeah. Dude, this is stuff that's some really deep stuff because, when you're, when you get older, you have to start preparing for it. And when you're 60 and you're planning on retiring at 65, you better have. Your plan is completely set up and you need to know Patrick because there are certain ways to move money and assets around that make the person look broke in the eyes of Medicare so that you get assistance and I have friends that are going through that right now with their parents and they're fairly wealthy they're not like but they're won't touch them no so much money and she's a can't put her into a home
They didn't take the right steps to do this. So I think that's going to be, an important discussion for a lot of people, including me. Cause me, my mom just turned 80 and everybody every elder person from every walk of life, rich or poor, should understand strategies on how to use, not abuse Medicare and Medi-Cal to their benefit.
Sure. Yeah, absolutely. I would get totally behind that. And I think people are under-prepared for, generally speaking, under-prepared for how long they'll potentially live and how many resources that might involve. That's just, it's hard to wrap your head around that, 'cause we're not really wired that way and it's a kind of a new phenomenon. It's not, it's a that's not something that was a problem, a hundred years ago, but about a phenomenon.
No, it's, this is a modern problem conversation over here at the sorry, the candy's kicking in. So it's, I see it happening. To everybody, I know right now because I'm a little bit older than you. Just a little bit. But all of our parents are, we're clear you are older though, just so we're just a little bit
phenomenon. But it's going to happen. It is not if it happens but count on it happening. If it doesn't, you are blessed and thank the Lord and the universe or whatever God you believe in that it doesn't happen to you but to Parkinson's. Alzheimer's and dementia are taking over a majority of our elders.
And we're not talking about it enough. We are living longer. Yup. And middle to upper class, you have some means, you have some resources. It means you've probably eaten a little better, taking care of yourself a little better. So you're getting to your sixties and seventies. pretty much intact.
And so there's a probability that you'll make it to your nineties and to a hundred. It's getting higher and higher challenges. People are living more feebly though. They're more, they're living longer, but sicker. So it's not that lifespan and health aren't the same thing. And quality of life.
Is that what you're talking about? There's your health span, meaning how long you can, how long you're healthy, and can do stuff without support. You can still drive. You can still pick things up. You can still take care of yourself. That's not the same thing as lifespan, like how much, how long you're actually alive for.
Dr. Peter Attila, he has a podcast, which some people can check out. He talks a lot about this stuff. He actually has a new book out on this very subject. And how to increase your health spans, not just your lifespan. It's important, right? Yeah. Who wants to be getting spoon-fed and Heather's diaper changed, right?
You want to stay off that stuff for as long as possible. Although some people may want that. I don't know. I just married a younger wife. That's how I covered that base. But she's going to age you faster, no, it's true. Because, the more I talk about it, the more. I'm not worried about it.
The more I'm not even concerned about it because I'm actively talking about it and I'm sharing my questions with you and my trust lawyer and insurance companies and everybody that I can, because the more I talk about it, the more educated I am about it. And I only have some of the answers. That's what this podcast is all about so that we can learn to ask more questions.
And the thing is there's no perfect answer, right? That's right. And people must keep in mind that, Medicare does not cover, assisted living or nursing homes or things like that, that Medicare does not cover those things. It does if you're worth less than 2, 000.
No, I'm not, I'm gonna, I'm gonna, I'm gonna push back you on that. What do you mean? What do you think it covers? So you can see worth less than 2, 000, you can own a house and then you can have a car and then you can have 2, 000 in your bank and you can't have any other assets that Medicare can touch.
If you're less, if you're right, right, you got me that's right. That's right. And then if you have social security coming in, that goes to counting your right qualification score or whatever. And if you have a retirement coming in from say, PERS, CalPERS, or some other kind of non 401k or IRA type.
Union or thing that money comes in that's active money for you for Medicare to take back Because it's going to cost them to provide for you, right? so what that does is it takes away from Your family's inheritance. It takes care of your well-being. It takes care of everything, but you're living like a pauper because until you're not worth 2, 000 cash Of all assets, then then they're not going to help you.
That's what's happening to my friend's mom right now. She has Parkinson's and dementia, and she's in a hospital right now. I asked him to step up and talk about these woes because he's encountering roadblocks that maybe somebody who's listening can help. Because, dude, I don't have these answers.
I'm not a senior healthcare specialist or social security specialist, but all that money that comes in goes to, gets funneled right to Medicare. So what that does is it sucks out all the work that you've done, all the money that you've saved up over the years for retirement, because you have to mention now you have to become a ward of the state.
So all that money goes, toward paying for long-term disability. rest home or now nursing facilities, healthcare professionals. And once you're broke, then the state will take over. No. And so you're talking about more I think that's more Medicaid though. I think, I don't think Medic, I'm pretty sure Medicare does not cover long-term care.
If you've got to get admitted somewhere and you'd help, cause you can normally take care of yourself, uh, past 23 days, like I'm pretty sure they don't. They will not pay for that, but that must be a Medicaid thing. But anyway, maybe that's something Scott can speak to. Yeah, that's a lot.
It's the long-term care conundrum that we're faced to talk about right now because you have a few more years to work before you're retired and then you're going to get old. And the last thing you want is for your children to have to take care of you. Think about it though.
You just mentioned it earlier. I think you said you believe that the population is shrinking. I don't think it is, but I don't know. I haven't researched it, but I thought we were still getting enough immigration to keep pushing the total body count in the country higher. Although we're getting older still on average, the average age I think is getting closer.
I think it's the birth rate that I was talking about. Not immigration. Say again? I think it was birth rates, not immigration. Oh yeah. Birth. No birth rates for sure going down, but the total population is still increasing. However, you're getting the rise of couples who don't have kids. And they will be wards of the state.
'cause if they don't have a plan because of what they got, there's no kid there to do it. Yeah, I don't know. I know it's crazy. Yeah. Imagine being a high-powered dink. Dual income, no children. There you go. That's that is a thing. That's right. That's right. It is. And that's to get rent from Google and Facebook.
And it's not just dual incomes either anymore. It's a single pair of people. People are choosing to stay single. I understand that, right? It's just part of life. There's, it ebbs and flows. And right now people just choose to not deal with the insanity of living with another person. Sometimes your mind's What's he talking about? No, it's just something that. it's just a thing. I think we're going to see a fad of, if they start building, we're going to see one and two-bedroom houses become more popular again because having families is going out of style, not on the whole, on a certain percentage.
It's definitely a demographic now. Yeah, we'll see. Things have a way of turning around. You could very well see the newest generation arriving in America as babies will grow up wanting to have five kids again. We'll see what happens here. What do you want to do? Are we keep recording until or what are we doing here?
Yeah, we can keep recording. I think I have it set up so that when Scott says he's going to be on at 3:30. Let me text him and find out.
I'm curious what the lawyer might have some input. We should probably have somebody who could specialize and speak exactly to this Medicare versus Medicaid instead of California. Cause it, it's not the same in every state. I know it changes from state to state. But generally speaking, it's a lot of the implications are the same.
My understanding is. You're right. However, if you show yourself as that poor to the state and they're going to provide services, I'm not sure what Medicaid will do for your care at home. If you want to stay at home, I'm sure they will do something. However, if you get into a facility and you want the state to pay for it, you're going to a state facility.
I don't know if somebody would want that. They have the assets. Yeah. So I'm hearing a lot of different chatters about that. Yeah. Having a family trust and within that trust, you own an LLC that owns all the assets, which I don't know, I can see how that can help a lot of things. However, if it comes down to the situation where you need to be in a facility and you want the state to pay for it because you want to shield your assets.
You're going to a state facility. I don't know if you have the assets, you'd want to go to a state facility. You probably want to go to a private facility. I'm not talking about billionaires and a hundred millionaires talking about people who live comfortably. Yeah. Me too. I'm talking about those people too.
I think with proper planning, you could choose your facility. And if you wait until your 70, yeah, it's probably too late to plan for that. That's why we're talking about it now. So I get a little bit.
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