• Scott Hill

• Speed to Lead

• Affordability

• Demand

• The Oncoming Crash

• Co-signing is back

• Develop a property

• VA Loan

• Another way to buy a house

• Buying with a partner

https://youtu.be/1emg3fbxi1s

https://financiaintelligence.blogspot.com/2023/12/lower-rates-after-8-percent-what.html

Rates are coming down, but will home prices go down? Not likely. In this video, we debate and discuss

https://financiaintelligence.blogspot.com/2023/12/lower-rates-after-8-percent-what.html

Podcast https://podcasters.spotify.com/pod/show/siliconvalleyliving/episodes/Lower-Rates-after-8-percent-what-happens-now-e2dajc3

Lower Rates after 8 percent  what happens now?

 Scott Hill, welcome back to our show. Patrick, have you two ever met? I don't think so.

No, Patrick. Nice to meet you, Beth. Yeah. Right back at you, man. Yeah. Sorry. We had some technical difficulties. It's always Vito's fault. Always.  He's very special and fancy schmancy with the gear and stuff. And which is nosed up at us, regular computer users. I'm surprised he doesn't have background singers and everything already that comes in post-production.

I'll let you guys talk for a little bit. We're recording right now. But let me, I need to get some more water. Hang on  Scott. Yes, sir. Do I have it right that you were, you used to be in the army at one, at some point that is sacrilegious. No, I was in the Navy. I was in the Navy. Yeah. So it's clear the army did beat the Navy. 

They did. I think the Navy just was feeling bad for the army and guys have to go through those grants. Get, we throw a bone every once in a while and that's what we did in 2023. We'll get them next year. Clearly.  Yeah. I was Navy. Now, was it you that you're, you were in the army, right?

Yeah, I'm still in. I'm a drilling reservist. Like my 20, I think I'm in my next March will be my 27th year. I think that's awesome. Thank you for your service. Oh, right on. Yeah. Thank you. Thank you. 27 years. Yeah,  dude. You were just saying you're like 28 years old.  No, I look  28 years old. At least that's how I started looking.

No, I think what I was saying is you look like you are 28 since you were there in this broadcast. That's great.

Oh, man. It's I like the narrow, I like the narrow frames of the video. It cuts off any holiday extra eating. Oh, there we go. Okay.  There we go.  Good deal.  I can make you the main guy when you're talking now. Fantastic.  So this is the first time, no, you and I've talked Scott, you and I've talked about.

Scott Hill

Talked on this before, right?  On which specific topic on this platform? Yes. Yeah. Just chatting about loans and what's going on. And yes, many times. Yep. We have,  it's got, so I'm not quite clear on exactly what it is. You do, if you could.  Yeah, I put people in debt. I am an I'm a loan officer.

I own a mortgage company. And yeah, so I help people finance their homes. And that's my joke is that I put people in debt, but it's the best debt you're ever going to get. Leverages your wealth, and changes lives. And enjoy doing it. I've been doing it for 26 years now. Oh, awesome. Is there a, I  want to say general purpose of what came up for me do you have a target market or are you just helping whoever, like, how does that work for you? 

It's home buyers. I'm more in residential lending, right? So I do the gamut as a broker. Everything from your conventional loans to your, jumbo loans, and your government loans, we do reverse mortgages. Home equity lines of credit.

We pretty much do everything. That's the reason I wanted to get back into brokering, which has done in the past is just so much more flexibility and options for clients. You could be a lot more nimble. But typically it's going to be residential real estate, whether it's, a primary second home, or investment does it all.

From that standpoint. What about yourself? I'm a financial advisor. I'm a wealth planner and I say again.  I said awesome. Oh yeah. That's right. See if you don't, why don't you ever respond that way?  Because you're a financial advisor.  Remember. You're like one step below realtors. Yeah.

Remember, he's a Marine. Just keep that in mind. And so I've been doing that off and on for I want to say about 24  years. I say off and on because, although I started pretty young, obviously after 9/11, things were busy. So I was gone a lot. Yeah. So I didn't actually. didn't have a long streak of focused work in this until about 2014.

Right. 14, something like that. Yeah. However, but however I mostly work with people who are self-employed or have a small business and Vito doesn't know this, but actually in 2000, 2024, I'm actually going to be Getting even,  I'm getting very, even more targeted. I plan on working,  although I'll still work with people who refer me for me, something, that they like, cause I only work with people I like except Vito, of course.

And so they refer somebody over. It's probably people I'd like like I would like as well. However, I'm only going to be actively pursuing people who are veterans veteran-owned businesses, or veteran self-employed types folks. So

glad to meet another veteran. Who's doing something that I might need some help with.

Awesome. That's awesome. I'd love to help you in any way possible. What's really cool is I work with my wife. She's actually been doing it longer than me. As I said, I was in the Navy for 10 years, so I didn't meet her until I got out. She has 10 years in the industry. She's a former underwriter and everything.

I do the fishing and, game planning, if you will, with the clients, but then gosh, she's so invaluable. From paperwork turned into approval all the way to closing so that, I can do what I like to do and she can do what she likes to do and we don't have to cross over.

It works out really good. So she's amazing. So and the follow-up with Scott's Lisa, right? Oh, yeah. Lisa is impeccable at follow-up, pushing things through, and making sure every file is completely done.  It's always a smooth process.  I can't say it was with Scott. It's really hard to partner with his wife too.

Like he makes the money. No. She, you make it. No. You spend it and make it. And she like, what?  Okay. No. Yeah. So I was initially attracted to it. She makes sure we don't lose it.  That we do a great job all the way through. I make the money and I get $20 a week. That's, you make the money. She keeps you from spending it.

That's correct. You make it, she keeps it. That's the partnership. There we go. Yeah. She's really good with it. Managing it. It works out. I always say the day she says, I'm not doing this business anymore.  I'm not doing it anymore. I'm too spoiled with how important it is to have a team member like that.

I couldn't find someone to replace her. It's impossible. Some. We have another veteran loan officer that we talked to, and he jumps from business to business. He's a great guy, right? And his Lisa recently left and in the middle of one of the deals that we were working on, it just fell apart. 

And What do you mean left? I don't get it.  She stopped working for him.  Oh. But it's not his spouse. No, yeah, no, yeah. So technically the term, the title that Lisa does is loan processor. She does.  All the heavy lifting. Scott's the pretty face, even though Lisa's beautiful. He's the one that's, he's the front man.

He's the one that brings in the business and she does face for radio only

face only a radio can love Joe Rogan. You're not. That's right. Yeah, and then Scott and I met five years ago by a friend of ours, mutual acquaintances since passed away.  And we've done a couple of deals together and I tell you every time a deal goes through with these guys, it's smooth like butter. 

Speed to Lead

So just yesterday I sent you a lead, right? What was that? I think I responded in 15 seconds, set the appointment in 45 seconds, and had the call today at 9:30.  And yeah, it's gonna be good. I gave him a little homework, though. He's got a He's got a touch base with you, and we got to figure out how to make this work and put a plan together with his price point, but we're not gonna give up trying to serve him, so it's going to be a long haul. Yeah. I'm excited that Vito finally introduced me to you. I didn't have a veteran loan officer in my sphere of, connection. I don't have a veteran financial planner, so this is a match made in heaven. Oh my God. Should we put you guys on mute for a little bit?

Take yourself off the screen. We don't need you anymore. Exactly.  So the reason why Scott, we asked you to come on board today is because of A couple of questions. I keep asking all these crazy hair, bone questions, and I'm pretty sure I know where the answers are right now,  but the main question I have is from your 26 years of experience, 27 years of experience.

What happens to the market when rates go down? Because this last week, what happened?  Yeah, it really depends, right? It depends on where the prices are. The fact of the matter is, that what drives the housing market is affordability and how paychecks match up to that affordability, whether it's coming from the interest rates that are causing the payment or the loan size and the interest rate that's causing the payment based on the house price and the ability to put down payment based on the house price.

Affordability

So it's multi-multifaceted. We have a problem right now with affordability. Even with rates coming down, we had a problem with affordability even when rates were low to some degree. It's just been exacerbated now. And I just did an email blast out, about rates coming down and it's, I've had some conversations with clients and, they're saying it's still unaffordable right now.

And, that's not something that's just gonna change because of a percentage drop in interest rates. We're down into the mid-sixes now, which is phenomenal. We were, we had eight, what, 67 weeks ago. Then, we still have an affordability problem. And I think that especially in the Bay Area, I don't really, and I'd love to get your take on it, but I don't see prices reducing themselves at all.

I see a huge problem next year. With affordability for borrowers from the standpoint of home prices going up because of lack of inventory, because of the interest that's going to be peaked. Once those rates do hit down into the low sixes and mid fives. And now we're going to have four times, five times the amount of buyers desperate to get into this inexpensive market bidding up the home prices, exacerbating the problem. 

So it is a problem. Yeah. So take on it. What I've been telling people for the last two years, that's about when.  April of last year, actually, April 22, when the rate started going up, that slowed down the market just a tad bit, right? Slowed down for about six months, eight months, saw prices contract because rates went up uh,  then 7 percent became the normal versus the 2%. 

And people started going back into normal buying mode. And I just closed on a deal yesterday and I just got into a contract on another one, a listing that I had. The first one was a listing of original everything over in the Cambrian area. And we listed at 1. 2 and we list, and we sold it for 1. 36 had 15 offers.

Yeah. One three, six, and we expected one three. So we listed at 1. 2  aggressively.  I could have done 1. 1. It doesn't matter. It's still the same thing that would have happened. And then yesterday we had the house on the market for seven days and found it real quick while I was talking,  which is not a good thing. 

Anyway, we, there it is. Let me share this with you there. Look at this house right here. Less than a thousand square feet. Listen, it's 700. So three bedrooms, two baths.  It's a train wreck, right? It's a three bedroom, two bath, less than a thousand square feet, less than a thousand square feet.

They converted the garage into an apartment and they had a sunroom in the back that they converted into a living room that could be used. So it has a little bit extra space, but you can look inside of it and I can tell you specifically that there's just nothing fancy about it. It needs to be complete. 

Not torn down, but everything needs to be redone. The kitchen, the bathrooms, the floors, the paint, the lights, the switches, the doors, the windows. It has wall furnaces. Not that's a bad thing, but  I listed it at 700, 000. We had 13 offers and we sold, I think it sold for 860? No, 835.  We were expecting it to sell for 750. 

Comps. On the low end suggested 750 would have been a strong offer. I got 800. I bumped it up obviously, but we finalized at 835.  Are you going to have any challenges appraising you think? It doesn't matter because I had 13 offers and the top ones had zero contingencies and more than 20 percent down and as is.

And so I guess I should reword that. Is it going to be worth it from an appraiser's standpoint? It's worth it from the buyer's standpoint because we know what is going to happen to the price of the home next year.  But we're talking about an appraiser looking at the opinion value of today,  right? That's amazing.

I was just listening to how you laid it out.  The dilemma going forward, Scott, is no matter what interest rates do up, down, left, or right. And we've talked about it earlier, about the whole housing situation in general. I think most people are working under the assumption that they're going to wait because there's some kind of 2008 or nine things going to happen again.

Because the economy, this economy, that inflation and rates are high. And at some point, something's gonna give and that's when I'm gonna get it.  I Feel like that's you're absolutely correct about that. And that's fear, false evidence appearing real.

The reason for that we all know was loose money. No skin in the game that all changed.  There was massive skin in the game. After that, there's massive equity in people's properties. Now there's massive interest to hold on to a home that has a two, to 3 percent interest rate right now at all costs, family members will jump in to help someone save that home. 

It's not going to happen. It's just very different. 2008 and nine was a different thing. It is not particularly when we talk about home values and property and buying in California, especially. Okay. It's just not the same. That's right. I don't see a scenario.  No matter, no matter what happens during the election, no matter what happens to the economy, there are still not enough homes and there are still more buyers.

I just don't see anything like that happen.  I heard a statistical while back about the whole 2 percent interest rate of the 60 percent of the 33 or 35 million homes in the United States, 80 percent of them,  I'm sorry, there's sorry, 60 percent of the homes across the United States have a mortgage on it.

40 percent are paid off.  80 percent of the homes that 80 percent 80 80 percent of the homes that have a mortgage on it refinance it to the two to two to three and a half percent range.  So those people will never sell unless they absolutely freaking have to what right? Divorce death, what have you never.

So that's. Basically half of our entire supply. So what we're working on are people that are dying.  That's why I'm selling these houses right now for divorce or relocation. And they just don't want to be a landlord.  And so our supply has dwindled to nothing. We have 200 units on the market right now in San Jose.

Demand

Yeah.  And the demand is out there. It doesn't matter. We do have houses that are overpriced with unrealistic expectations from the sellers and the sellers. Absolutely not touching any offers unless it's what they want. I get it. But for the most part, if you price it right,

I was gonna piggyback on something you were talking about people not leaving their properties unless divorce or death and all that.

 I just, I've been in some conversations with people that are like, if someone dies in the family, they're going to do everything they can to hold on to that property just because of the payment. To turn it into a rental, they're going to move into it themselves. They're like, we won't see this again.

Why would I? Why would I get rid of this? So with the fed doing what they did to cause that, There are a lot of very happy people, but it's causing a whole nother Massive problem that we now have it's called the second order effects, right? That's right. That's what's happening that's right.

And yet I think the other thing to consider here I'm sure you guys probably talked about it before is that interest rates are still historically Pretty good.  Yes. I think it is just, we can't help but compare it to the last 20 years.  I've got a graph up right now. We hit the peak in October.

Do you know how to share it?  Sure. Lemme try. Lemme go share. All right. And share the whole screen. It's just hard to stomach the race because they've been so low for so long. The last most of my adult life. We got to enjoy these incredibly low rates. And however you get beyond that you widen the lens a bit and it still.

Not terrible. It's still pretty good. Can you see this? Yeah, I'm jumping.  Okay,  you can see that  Here's what October 1981. Okay. Look at that. Look at the trend down  We have been improving for 20. What is that 40 years? This is why no one wants to let go of what they have right now Yeah, I mean you can Inflation graph right now.

These are all different generations of people enjoying and prospering and realizing it kept getting better and better and better.  No way they want to let go now after that. Yeah. It would be foolhardy for them to do it. I was talking to a guy this morning at Dad's coffee every Friday.

We get together with a bunch of dads that I know from school, from the kid's schools, and we can have coffee. And he's a watch guy. He just loves watches. And he said I'm never going to sell my watches. It's my legacy for my kids. I have a house. I have all that other, my fine, whatever. But that's, this is what people do to bank on the legacy of your name as a person that put theirs.

footprint on this earth, right? This is a total sidebar, but I can't help it. Remember you've seen that movie Pulp Fiction?  Yeah. Course Christopher Walking. Yeah.  And lose watch. Oh, that's right. Hope your dad's Easter. Wanna make sure you got it.  Anyway, I digressed. Wait, was that Pulp Fiction?

Yeah. Or was that the True romance.  No, it's just an incredible scene for walking in that one. Oh, am I getting confused? And maybe sitting there facing who was the actor? An easy rider famous actor,  not fond of it. The other one. Oh, he passed. Yeah. Yeah. Yeah. And that scene in there where he's talking about Christopher Walken about his Italian heritage.

A great scene. But anyway, I know we're sidebar, but check out True Romance when you get a chance over the holiday. A really good movie with,  uh, yeah,  good stuff. I'm sorry. If you don't go ahead,  we need to get an uplift with this, all this, inventory talk right now, though. So I have a lot of people that are in and out of the market, right?

They're like, Oh, I want to buy one. I want to buy it now. And I'm working with one of my escrow reps and her husband Oh, the market's going to crash. No,  it's not enough. There's not enough inventory for the pent-up demand. We have years of pent-up demand. Back in 2008, we had pent-up inventory because we had a shadow inventory of 30 months.

Of bank-owned properties that were going to be taken away from people and sold off on the market.  Yeah, I don't blame people for feeling that way though Only because they're not educated that if you're not in the industry or specifically understanding these things, how would you know that? How would you know to understand that's the situation not only that you're getting marketed to through social media about how that crash is coming, right?

The Oncoming Crash

Oh, there's a crash coming. Hell, that's gonna be the time to buy, right? Absolutely. But you should buy now and then save up enough to buy when the crash happens because  I think it's challenging for most home potential homeowners, I think, to truly understand, what's the strategy here?

Because the default is, I don't understand. So I'm not gonna do anything, but hopefully, there's a crash coming. Yeah, that's fair. Yeah. And that's going to keep you from buying into your future.  And we talked about it before, right? When you buy a house, unless you refinance and refinance, which is where Scott makes his money,  you buy your house and you get locked into that payment.

And if it makes sense to refinance, cause you can lower it, that's great. But you get economically locked into that payment. It doesn't go up every year. Like your rent you build a legacy, you build equity, you build the value of yours.  of your estate.  And that's when we can trade off to you, Patrick, because then you can start talking to them about investing in,  uh, real estate investment trust hedge funds, condos in Mexico. 

Yeah. There are so many different options, right? And there's so Scott, before you came on, we were talking about the hedge fund. The legislature is being pushed through. I read a little bit about that. Thank you. Not legislation being presented but not pushed through, that's for sure. And there's a really low chance of that happening, but it's. 

I get it, right? The reality is it's single-family homeowners have the majority of the homeownership, but then it's mom and pop, but the hedge funds seem to be the bad guys, which is 3%. It's a lot of people. There are a lot of houses, especially in metropolitan areas. But at the same time, that's where you're going to be able to jump in. 

Are you seeing people buy condos and townhouses right now? Yeah. I'm like I got two guys right now, two separate borrowers that are looking for him. One is a gentleman. I was just on the phone with about a half an hour ago. We've been talking for the last week. He's looking. He was looking for what he thought might be affordable when we ran numbers at about 800 K for either a townhome or condo somewhere in the South Bay, but on his single income, he's making really good money.

But He's just over the ratio because, just at least 28 years old. He's got a big car payment and we decided that he's not to get what he wants.  and afford it. Because that's what I always talk about with my clients. Hey, yeah, I can bring in a co-signer for you, but that increases your payment. You still have to make the payment.

How are we going to strategize to make that work? Okay, so we talked about him getting a roommate, maybe selling that car, and getting a cheaper car. And now we're gonna need the mom and dad to co-sign, put 10 percent down, and bump up to a million dollars to find something that he'll be satisfied with.

Co-signing is back

And we're starting that home search. Next week, most likely we got a mom and dad to get all their paperwork in now and get them pre-approved along with him. So that's what I'm what I'm seeing. And it's it really frustrates me that so many young people are entering and have good jobs.

that can't find what they want co-signing than problem doing that. It's a changing landscape, but I've never seen more co-signing than I have now or parents dipping into their retirement or their savings to help their kids qualify.  And maybe you're seeing Patrick as, a financial advisor, maybe people asking you.

Hey, how's this gonna affect me if I help my child or, from my retirement plans, but is definitely an increasing trend that's been happening. Probably. I want to say lasts probably five, 10 years. the baby boomer generation that started to get to that place where they can do that for kids. 

On the other side, there's no shortage of dual income, each making a quarter million husband and wife work in Silicon Valley. And I find the other trend is lots of income but haven't accumulated much savings yet. Yeah, but are on their way to that. They're waiting for their stocks to invest in and lots of other things that they want to enter.

So that tells me there, I have a lot of metrics that say there is no crash coming in. Anyoat thinks that is really getting bad advice. And it's up to all of us as advisors no matter what field when we're still all financial advisors one way or another we've got to educate.

Great.  And Vito, you've got a great platform here to continue doing that. So well, what I find is as I'm having some conversations with people right now, they're understanding that, that whole, okay, I wait till next year. It's going to cost me home and goes up 50, 000. It's really a hundred thousand dollars, cost to me because I didn't ride the equity up and I paid 50, 000 more.

Oh, by the way I'm going to now have a higher tax basis to pay because I waited. That's also six months to a year of not having four savings of paying a mortgage down. I'm also not getting a tax deduction and I can't save as fast anyway. There are all kinds of problems with waiting to buy. Plus you're paying 12 months of rent and you're paying months of rent.  And so you're  paying to buy, just not your house, right?  So my point is they have to see it.  And when you put it into numbers or put it into a spreadsheet or you put it on a graph, a pie chart or whatever, that's when their eyes open up  because they're just getting their quick little tick talks in there and whatever.

But if you show them, let's look at what your payment is going to do. If you wait until next year, let's look at what the lost equity is going to be. Let's look at what you're throwing away in rent when you show it to them.  I think the sense of urgency starts to develop. And it's just that they got to have the right advisor to do that who's out there looking out for their best interest and letting them know I'm not doing this to scare you into me doing a transaction for you.

It's the reality of what you're facing and you need to know that, I want you in the market. And you're gonna have a much harder time next year. So please don't let that fear stop you. Let's figure out how to do it.  That's right.  That's right. That whole narrative and vocabulary around market crash, which, or economy crash, all those things.

 Even if those things happen.  Again, like there's still, the math is clear. There are not enough homes for people who want to buy.  So even if something were to happen where, okay, there's less buyers out there because financially something happened to them.  The price is still high enough to where it's not going to cause some major crash in house price.

That's just not going to happen. That's just, it's just, that's not what the That's not what the math looks like. It's not 2008 or nine. It's not that anymore. And that's not to say the economy won't crash or could not crash or might not crash. We just don't see it happening on the one segment of our GDP that we're talking about right now.

It could be the automotive market. That's what I mean. Yeah. We just don't know if it has happened or is happening. I'm listening to a TikTok guy right now who sells cars, and used cars, and he says that there's a massive inventory of takebacks or repos.  There's the health industry that's overcharging and there's people that are completely overwhelmed in credit or debt for health care.

There's the prescription or pharmaceutical industry that could crash because of some sort of legislation. In the financial market, there's the military aerospace, right? That could just cause collapse because we shut ourselves off. We just don't know, but we can't just cut out, out anything.  We're talking about our little slice of the bubble, which is it has zero inventory, there's zero supply because we've stopped building.

If you look at the trends of new builds over the last 60, or 70 years, we're down to about 30 percent of what we've been doing. For the last few decades, the last 20 years have been horrible for new builds. We're building as much as we can, but bureaucracy cost overruns, and just a lack of desire.

We're just not building as many homes as we should be for the population.  Yeah, that's right. Curious what's your thoughts on this, we're obviously in our own bubble here. Sorry. Sorry for the word bubble in this conversation, but we're in our own little sphere if you will. Silicon Valley.  Do you feel because you've done a lot of research on this in other areas of the country where appreciation levels aren't very high, where equity isn't quite what it is here due to our appreciation that there could be a slowing or even a maybe a little crash in some areas where they're super dependent on one industry?

Do you feel that's something that could happen, even though it most likely isn't going to happen here? Yeah, it depends on the area and there are always micro-economies or micro-industries,  like smaller towns.  Like St. Louis. St. Louis has health care and they financial, but they don't have any other industry. and if that happens to collapse that could bring down that train. Take Detroit as the example, right? Detroit is a suffering city because its industry is left. Their, what's their industry? Automotive manufacturing, right? I went to Mexico and went to Indiana, Indianapolis, and all these other places.

That place is a death, a dust bowl. If you look at, let's say, Cape Coral, I look at Cape Coral every week, Cape Coral, Florida, Fort Myers, that inventory is growing over 6, 000 units. Compared to our  200 units, it's cyclical. It's seasonal. And when you look at Cape Coral, the main buyer there, the main demographic, there are retiree snowbirds. 

So the best time to sell your house is when people come down from. Indianapolis when they're all frozen over and they're like, I just want to buy a house here. I'm done living in the snow. And that's why there's a lot of houses for sale. Plus we also had Hurricane Ian go through last year and they're settling their insurance claims.

And they're like, I'm done living in Florida because I hate the hurricanes and the 10, 000 a year insurance. And we talked about that with Taylor the other day. Yeah. It's a Taylor. Yeah, Taylor, the insurance guy, and this whole challenge of not enough homes and too many people needing them.

That's a name. Totally not just a California thing. That is nationwide for sure. With some places that are doing better with the building compared to others.  That's a national problem. And Florida's Cape Coral is a different world than what we have. We, when you want to buy a new home here, there's a development.

Develop a property

There's a couple,  five or six acres and they develop as many houses as they can on it, they either have one developer or four or five and they develop the heck out every acre, every square inch in Cape Coral, it was developed. So that,t you can pick your property,  they put in the infrastructure, the utilities, the sewer and all that other stuff, and then they sell a lot, and then you can build on it, and they have multiple developers that way, they're also doing the standard traditional when we say traditional, the California way, where you buy swaths of land, but that's  you're under an HOA then too, what was surprising to me coming out of COVID was, the trend of people, more people working from home. And I thought that would play out in a way where you have people moving farther and farther away from traditionally most wanted, silicon Valley, they're moving to Colorado.

They're moving to Florida, moving wherever, right? So you're going to see demand spread to other places. I thought that was going to happen and be more sticky.  That has not seemed to be the case.  And there's been a big push to get people back into it. Into office buildings because there's like millions of square feet of office space left empty, right?

You're seeing huge problems with commercial space commercial landing space and commercial property space. As a result, I think it was a large company that just went under, they rented out small workspaces to people. Gosh, we're large in the country. Yeah. Yeah. I know what you're talking about. 

Anyways. And yet then you just suppose that against what we just talked about, about these large tech companies building their own communities and getting and owning the homes outright and renting them to their employees. And I thought that would be a trend that would probably alleviate some of the local housing costs, but that has not been something sustained at all. 

Yeah. And now metropolitan areas are coming back and saying, we're going to start charging you. By the mile, there's going to be told booths or toll charges on every road. So San Jose just put a supposition on because New York's doing it now and San Francisco is talking about it. So now San Jose has got to talk about it, but they're saying  10 to 30 cents depending on what time you drive.

There's like search charging and they're going to charge you. All the miles, even though we get paid, we charge, we get taxed on our property tax for roads, even though we get taxed on gas for roads, our roads are the worst in the nation, by my opinion, no other fact, and now they want to come back and charge us by the mile to use the road.

They're trying to get ahead of it, right? They want to get rid of gas cars eventually. It's just a money grab is what it is. The Santa Clara County property tax roll was 600 billion a couple of years ago, 600 billion. Now, a lot of that goes to retirement for ours. 

people who serve for 20, or 30 years. I get that.  But there's a lot of stuff that our 10 percent sales tax doesn't pay for that should, and we pay the highest gas in the nation. And all these are because we voted in these taxes so that we can have a better lifestyle and they're being mismanaged and misused.

And it's not political. That's just how the government is working. It's how the government is working. It's not. the politicians, right? Because that ebbs and flows is just a big problem that we're having. Wild. I know. I don't know if we, I don't know if I have time to get to today, but I think Vito, did you mention that you guys were talking about a veterans benefit that is literally very rarely heard of or used or I had never heard of this before. 

I know nothing about it. I just saw it on TikTok because I'm a TikTok addict. I admit it. I go to TikTok anonymously. Only friends use TikTok. Yeah, sorry. I'm stuck. Yeah.  So there's a VA loan that's very, not very well known. That wasn't something, that's something you know about. I thought that was something Scott knew about.

VA Loan

No, I asked you about it.  It's a unicorn to me. I've never heard it.  I talked to my wholesale reps. They don't know about it.  I can't say it doesn't exist, but I've never heard anyone talk about it. I've never seen anybody do it. I've never seen anybody lend on it. I got one it came from Veto two it came from TikTok, so believe what you want  But so this whole thing was you can have two veterans move in together and Agree to buy in together the hell's going on It's your birthday It didn't the other day, just a couple of minutes ago with my thumb too.

Actually, I said the word unicorn and the A. I. is like colors and  I thought you said all that for post-production. What's going on over there? Yeah. So you can get two veterans to get together and not just buy one to four units, which is the standard VA loan, but you can buy one to eight units, have one commercial unit, and then each veteran moves into one of the units. 

I don't think that's the other four, right? Yeah, each of them technically has four but because it's one APN. I don't think the VA would allow that yeah No, I think it's a  Unicorn like you said, yeah,  it was interesting. I haven't heard of that. But I Love though that the down payments have lightened On the units right now which is helpful for people who need affordability, jumping down to 5 percent on four units.

That's huge. And that's FHA, right? VA FA conventional is even 5 percent down. Oh, really? Yep.  Yeah. I believe it was what, 25%, I think for four units, 15 percent for three or two, anyways, 5 percent down even at four units.  So think about that from the standpoint of someone buying a home, a primary residence, and then using, that other income to help them make that payment. 

So they can rent out the rooms, but you can't, you have to qualify for it. You got to qualify. And so what do you do? So there's always a flip side to everything, right? Okay. Now I'm putting less down. So I'm borrowing more, which means my PITI is going to be higher. So how's that going to shake out with the rent and the qualifying income that I'm bringing to the table?

We got to work through that.  Those numbers make sure it's going to pencil out.  The flip side too, like FHA still has what is like eight 60 now, but like the VA, there's no income or there's no purchase limit, no loan limit.  Yeah. So essentially how that works is a lot of people think it's zero down indefinitely and it's up to the maximum amount, usually like in the high-cost areas, about a million 89, 300, which is going to change next year.

But the way it works is once you hit that. That maximum zero down. It's a really simple formula for every 4. You go over and purchase price. The vet puts 1 down.  So if they bought a home that was 4 over the limit, they would have a 1 down payment because of the 25 percent VA guarantee. So you got to put 1 down for every 4 over.

So I had a client that bought, 1. 8 million home and they took the difference between what they could get up to zero down. Yeah. And then 25 percent of the overage was the down payment. Awesome. And took advantage of the VA pricing, which rates are typically lower. And if you have a disability rating, you get no funding fee.

That's huge.  And the funding fee is a percentage of the loan, right? Yeah. It's a percentage of the loan. And you would think that if you used it a second time, it'd be the same or cheaper. But they actually increase the funding fee on you the second time around it gets a little bit more expensive So the second time you use your valo.

Yeah. Yeah, it jumps up. If you have a disability rating Or minimum zero no just if you have it, even if you have a zero disability rating That used to not be the case years back. You had to have 10 percent or more. Now it's if you get a zero rating, which you can get, which is really minor stuff and not a joke.

I'm not gonna, I'm not going to go there. This is being recorded for Vito.  I guess you text it to us later on. Yeah. But Yeah. Zero funding fee. And I want to say it's gosh, I should know at the top of my head. It's two and a quarter percent,  2. 35 something.  So do the math on a thousand-dollar loan.

That's a lot of money. Yeah. And using a VA loan, your rates,  I just saw. Three eights to a half lower typically so it's competitive, right? Definitely behooves you to use it back in my day when I was buying a house. We were stuck at 178 or once 180 and we bought a 225 thousand dollar loan and we just couldn't make that difference and we didn't have that option to do one dollar for every 20 Whatever the 25 one dollar for every four over.

Another way to buy a house

Yeah, and we just didn't have that so we Did an 80, 15, five, 5 percent down, 15 percent second at 80 percent loan. And my fifth, my second was like 13, 14, 15%, but I didn't care. Cause I, it was 225, 000 for a house. I'm like, let's buy it, but we can't afford it. We can afford it. We'll just eat top ramen for six months. 

And our values went up and then we refined,  just a side note. You made me think about just from a conversational piece with clients that 80, 15, five, first of all, it avoids PMI.  And sometimes PMI, it's not, there's nothing wrong with it, but that's another way to avoid the PMI. But I tell clients, listen, who cares what the rate is on that?

I go, here's what's cool about having a second.  You can attack that second.  You could pay that second off. And now you're left with a payment on just a first mortgage as if you had 20 percent when you bought the home. So you have that to look forward to in the future. Your payment's actually going down where you don't, where you're borrowing 95 percent in one loan and just dropping PMI one day, right? 

And with the PMI, it depends on the loan, right? Do you have to refinance? For instance, let's say one of our wholesalers that we'll use often is Rocket. They're phenomenal by the way, on wholesale, but they're terrible on retail. They're priced higher and you get the headset jockeys from across the nation wholesale set up for  It's streamlined.

It's phenomenal. But the way they do it is their PMI is some of the lowest in the nation and the way they, the way their metric is to eliminate PMI and it's different for everyone is, let's say I bought my home. I put 10 percent down.  If in the next two years I can come up with a lump sum of that 10 percent that I didn't have and I can send it on the loan,  they'll let you remove PMI typically right away. 

If I don't, I've got to keep their inexpensive PMI for 24 months.  Then I'm in the window to go ahead and show an appraisal that says, Hey I'm at that 80 percent or lower equity mark I'd like to petition to remove my PMI. So that's how they do it, which is cool. Can you still write off PMI? 

PMI typically again, I'm not a tax professional. Wait, I'm in a skinny window here. So I gotta do it like this. I can't do it like this. How PMI typically worked was in the past as I understood it. From a hundred thousand dollars gross income to $110,000 gross income, every $1,000 over a hundred grand of income you lose 10% deductibility of PMI  and phase out all the way up to $110,000 of earned income.

Then there's no deductibility on PMI.  But with that said, check with your tax professional. Yeah, that's how I understand it. That's over my head taxes, so fucking  tax. But yeah, typically PMI is still a deductible thing in many cases based on your income.  All right. I have a question for you.  Can you lend to corporations, LLCs, trusts, et cetera? 

Some programs you can do that. Your typical Fannie Mae, Freddie Mac stuff, no. But some non-QM stuff, you can lend to those. Non QM? Okay. Yeah. Typically non-QM. I've not, I haven't seen it on any Fannie Mae products and the majority of Jumbo products. But no, there are nonhuman programs that will absolutely lend to that nonqualified mortgage.

It's it's typically for investors. So instead of buying a house  Looking at your income and your credit score, you're looking at the value of the potential income of that property. So if you're renting it out and you can make 2, 500, that's what you're going to be qualified on. That's a DSCR loan, debt service coverage ratio, which falls under the umbrella of non-QM.

But non-QM, nonqualified mortgage, is also, it can be for a primary residence. Just means you're not falling under the typical ATR ability to repay. metrics that need to be met. And so that's, what's wonderful about a non-QM nonqualified mortgage, which means, Hey, self-employed person,  I know you don't have a lot to show on your tax returns.

You make a lot of money. We shouldn't keep you out of the market. There's a loan program for you. Let's average your bank statement deposits for the last 12 months or 24 months. That would be an example of a non-QM loan. Another non cum loan, exactly what Vito just said, would be a DSCR. Great loan for an investor, who doesn't want to show any income, and doesn't want to deal with a whole bunch of paperwork.

Hey, how does this rent pencil out to my principal interest taxes and insurance? Let's just focus on that and make this loan work on this product.  Those are typically respite, right? One to four units, not five and six. I go up to, gosh, I want to say even eight on some of those. And once the down payment on those typically you're putting down if it's nonowner, gosh, I'd have to see, 'cause it's changing, right?

The landscape's changing right now, but probably minimum. 15 percent or more.  I want to say there might be someone aggressive out there to do 10%, but probably not. And you gotta have a lot of, you gotta have reserves, good credit, and you've got to have some experience sometimes with some of the down, lower down payment scenarios as an investor.

They're not going to lend you on that program because they're not even bringing your income into it. They're saying you're an investor. We're relying only on them. income coming in. Hopefully that income does come in so you can make your mortgage payment. So a little bit more risk there. And then one other product that's great for primary residents, since we're talking about it is the no ratio program.

Perfect for the person who wants to buy a primary residence, which a lot of these products don't work for because you have to meet the ability to repay if they've tightened it a little bit. It was 20%. I believe they're at 25 now, but let's see, you got a million dollars in the bank, but you're a teacher.

and you can't afford this home you want to buy. But your husband who wants to stay home with the baby talking about the example I had and have some alone time with the baby and not have to work for a while. Hey, they can afford it. Just draw off of that 1, 000, 000 in the bank in that trust. They can't afford that 1, 000, 000 home on the teacher's salary.

So as long as we've got enough money in the bank we can go no ratio as long as we can show 12 to 24 months reserves depending on the down payment great way to help a person get into a primary residence  And not meet the income qualifying no job on the application at all.  Oh, wow.  And there's no impact on they don't get penalized by interest rate or like that.

That sounds like a ninja. Oh, we lost you.  Oh, I don't call it a penalty. I call it a a golden ticket to get into real estate where you're going to make a lot of money. And in a year you refinance that property. That's the don't look at the pennies, look for the dollars, right? Mindset don't trip over the pennies.

So that's that fear. You got to get the client over because that their first thing is all right. Just like they're doing now.  I'm not gonna buy it because the rates are high. I'm waiting for them to come down. So they don't want to lose 3, 000 in extra interest, but they're going to lose 75, 000 in home price, right?

And that's our job to help them understand the difference. You can refinance that rate, right? I don't want to use that overused. Statement. We all, we know the marriage and the, the date and all that. I'm not going to use it because it's so overused, but that's what typically happens, right? If you buy now,  save money on the property price, and refinance your loan next year when everyone's running around like ants trying to overbid on properties. 

It's, they're gonna, they're going to spend more money.  So one more question for you, Scott, only because we had talked about it earlier. Yeah. You reminded me right now a single. or a private investor owns their home.  Now they're buying investment, single-family residences. I believe they could only, there's some kind of rule here where they can only get up to, I want to say it's 10 and then they have to get different kinds of financing, right?

Cause you, yeah, 10, 10 was the norm. Like I was doing, I have a family that has like 20, 23 to 25 properties in their family. And we ran into it. The guy that, that, that's, that process right there for certain kinds of loans, then we found other kinds of loans where you can go to 20.  Then we had a problem because they were going to 22 and 23, and then we were able to go to 25.

So it just depends on the lender, but some of these non-QM DSCR lenders.  We were at like 25. Okay. And yeah, you could do it.  Up to about nine, 10 down to that. You may have to look at, you got to look at. Yeah. Yeah. I can't remember the latest for Fannie and Freddie right now. A quick Google search would bring that up, but I think they were at 10.

I haven't looked for a while, but I will tell you one thing. I did their first loan without doing a DSCR and going to Fannie Mae, and I will never do that again. I'll get out of the business before I will ever. Do a traditional loan for someone that owns that many properties because you've got to document everything Every single property every mortgage statement every piece of insurance on that property every hoa  What's the history of payments for the last?

    

I mean it My poor wife, I thought she was going to quit and I wasn't, I was going to be a realtor on Vito's team and move over and become an agent. You'd make a lot of money.  It was so much work. I told them we're only doing DSCR now. It's based on the property you buy or you got to get another loan officer because we won't do that again.

It was a nightmare.  Yeah. And they realized it too. They didn't like getting all the paperwork and it took forever to gather it all up.  Imagine being that organized. And 25 properties and the analysis that goes into it, it's a disaster. It was probably in multiple states. You have to have tax returns for multiple states.

And yeah no, most of it's concentrated in Salinas and the Marina Salinas area down there is where they have it in Monterey Salinas. Oh, terrible. Yeah.  Great family. Wonderful family. A nightmare though, to handle that many properties, to do one loan at a time, and then have to do it again and again, every time. 

It's a beauty of DSVR. Do you handle commercials?  We do. I don't typically focus on it or market for it, but we can do it. Yeah, we have wholesale lenders that we can set our clients up with and do it. Absolutely.

Yeah, I know we're going to talk about where the market's going to go, but we all agree that it's going to go up even if the economy collapses.  It's only a matter of a few months, right? That's what we saw just this last time. April was the peak. It went down all the way to August, which was like  4 months, 5 months. 

And I started building back up and now we're like this last week, I looked at San Jose's average sales prices were 17, 000 away from 17,,000 average from the 2022  April peak.  That was an all-time high, so only 17, 000 away from it, and yet we're supposed to be in a recession, and yet,  not, not saying that's not happening in Merced, or Marina, or St.

Louis, sorry to pick on poor St. Louis, but, different areas have different numbers, so you have to be very educated on what's going on,  when you have 200 I definitely think, that, that's still that problem, not enough homes for too many people, that's still a trend line, that's not getting closer, it's getting farther apart, if anything  Yeah.

Yeah. Yeah. You look at every one of the counties, the 10 counties around the Bay area, and only one is below 90%, which is Napa and Napa is just hurting. I don't know why they only had 16 sales last week.  The most expensive one is obviously San Mateo and then Santa Clara. And we have by far the most units sold, which is 6, 800 units sold.

And that's down by.  1900 year to date, we just don't have the inventory for the demand and you're like, how in the hell? I make X amount of money. How can I afford it?  There are places for you to buy, right? You might have to travel a little bit, but homeownership is not out of reach. I can get you into a house in Napa Contra Costa or Alameda.

Are you in Alameda Scott?  My office, Alameda County. Yeah. Yeah. And do you guys provide financing for folks buying out of state too, as well, Scott? I don't, I'm a broker. I'm just, it's a lot to go through licensing and multiple states, a lot of your big bankers get, somebody point of contact that's licensed in all the states and they can do that.

I may expand a couple more states, but if I look at the Opportunities out of state. It's maybe one,  one, or two every quarter that it comes out. It doesn't come up a lot. But Florida is on the radar,  Texas, for me, but right now, just California,  Oregon to Tijuana, those borders.

Yeah. I don't know about Tijuana.  The only reason why I was asking is I think for some folks, maybe they just really, it is an affordability problem for them too. Yeah. And the math is an issue that they can't solve their current income renting is cheaper somehow. But maybe buying because I was like on the flip side of not enough homes, this means if you're home, if you're a landlord, it's, that's pretty, it's pretty good, right?

Yeah. You, you got that's in your favor. Those numbers are in your favor if you're a landlord. So it doesn't mean maybe you don't buy, the house you're living in, but maybe you buy a home somewhere where you can. That's interesting. You brought that up. I have a client right now who can't afford to live here and is looking at we're looking at a property search in Roseville for a rental property.

Yeah. So he's going to put 25 percent down. And in fact, we're going to use a DSCR loan.  And we're going to buy rental property there and he'll continue to rent here. And for a few more years, cause he's just too unaffordable for him, but he doesn't want to not be able to ride the wave of real estate wealth and growth that he knows is important for his family.

So it's a new way. It's funny you brought that up. Cause that is how some people are starting to think. Well, if I can't buy it here for myself, I'll buy it somewhere else, but I got to buy it exactly.  It's totally a viable strategy for a lot of folks who probably have not considered it as well as they could. And then to your point earlier, it just means advisors need to advise, right?

Yeah. Yeah.  And people have to take that plunge, right? Once you start buying into it, then you're like, you completely understand it. And if you're paying rent here and you're still riding that economic lock of a house, then you can buy. And then once you save up, you buy another one and then you buy another one.

It's the same thing with the fourplex. That's why I talked to that lead yesterday. You buy a fourplex. And then a few years later down the road, you buy another one. And then you move into that one, you fix it up or what have you. And then as you go, those rent, those rents will always increase.  And you're having other people pay down that mortgage.

That's right. And then next thing, after 10, 15 years, you have four or five and your payoff speeds up because you can pay off your first purchase in 15 years. After all, you're taking all the spare equity out of those or the spare income. And you're putting it towards that house. There are tax reasons and all sorts of different things to do that.

But  I know a lot of people that are set up that way. And they're just,  they don't have to worry about anything,  but we need to build more fourplexes. Yeah.  What are the stats on those right now for availability? Probably pretty low, right? between and you can get into it pretty easily.  But I can tell you that there's a lot of slum Lords that are outdoor,  so they're willing to just sell it as is and that's it.

But then, if you're working with a VA, certain habitability issues need to be repaired. Before you can make a move, I'm just, I'm looking at Santa Cruz. It's my daughter is a junior in high school and she wants to go to Santa Cruz University. So as we were talking, I was just looking, there's only one fourplex available in Santa Cruz. 

It's two and a half million.  Oh, there you go. That's not, I got that in your back pocket there. But the rents are over 3000 each. So I can tell you that it's probably close to 14, 000 a month that would pretty much pay for half of that,  right?  Yeah, you're if she's gonna move into it, you're gonna get three units, right?

Buying with a partner

I'm not the four but What's that property gonna be worth in 15 years? Yeah, and you're paying it down,  you know,  it's an interesting time but where there's a will there's a way, and we got to help our clients understand the solutions on How to own and get into the market somehow one way or the other, but any kind of massive drop in prices isn't going to happen.

So we've got to find other solutions to make sure that means you're buying one to live in yourself or you are like we talked about earlier, you're buying a rental property, whether it's here in California, preferably because California is a great place to own real estate or out of state, whatever it is, whatever it takes.

I'll bet you one of the next trends is people going in together to buy a rental property. Oh yeah, absolutely. They can't do it. They're on their own, 'cause it's a way to at least get in. Hey, let's get in and do this together. It feels safer. Yeah. And then we'll split off after we get a hang of this and sell and buy on our own or whatever.

But it's a great way to start and get in. 'cause you can do that.  I could tell you from experience that we did that in Tahoe. We bought a cabin up in Tahoe. With another couple, but we didn't, I made a mistake and we didn't have an exit strategy. We didn't understand the nuts and bolts, who's going to pay what, how much, what is that going to look like? 

And we said we'd buy it for five and own it for five years and maintain it. And we put a lot of money into it.  And then at the end of the day, we had, this equity that we had and we're like, how are we going to. Split it out. We're going to refinance, take us off the market.  And there was a lot of squabbling about who's paying what.

So if you do that, it's very smart, but how a lawyer draw something up.  Sit down with your partner because they're a partner now and say, this is what we want to do. What are some negatives? What, and they're just basically a third party, unbiased expert on how to deal with things like that, how to get out of it.

    

Who's responsible for what, what happens if I get laid off and I can't make my payments? What. What if, right? So it might cost a couple thousand dollars, but it's a couple 1, of 000 worth not having that grief when you're exiting that partnership.  Absolutely.  Yeah, totally worth it. Another term I used to hear growing up in Spanish is cuentas claras, amistades largas.

So in English, it's, clear accounting between friends means leads to long-term relationships, right? Be careful who you do things with for sure. And that is totally the way to do it.  I, it was making me think if I was to do that right now, what's one of the ways to hold us accountable. And just what popped into my mind after it was written out. 

I would have the details of that on an automated email that just pops up in both our accounts every three months. It says, Four years,  nine months left.  Here's the agreement. Yeah. Don't forget because your mind does wander, right? Here's the agreement. Four years, three months left. Here's the agreement that, lets technology hold everyone accountable.

 You still gotta have the right person because the wrong person would be like, okay, I have four years and six months to figure out a way to have four years and three months to figure out a way to, that was one of the rubs is like we set clear goals saying five years and we held onto it for five years and we did the VRBO thing was pre Airbnb, so we rented it out and then we had this one client that rented it out the entire ski season.

We never got to use it.  So for three years,  he paid for the entire mortgage for the entire year. That was great. But I wanted to go skiing,  so defeated the purpose.  There are certain things to think about. And I think, so the reason why we're having supply issues is not just the hedge funds that we talked about the hour before, but also the two and a half percent, the very low rates. 

But also people are investing in Airbnb. And also some people are just dying, choosing to die into the, in their property, right? More people can't afford to sell their property and buy another one.  Yeah. You piggy off the low-rate one, but you could do that in different states, but here we have Proposition 19 that allows you to do that.

You can sell it and move it out. But in other States, it's not a possibility. So yeah, absolutely. So all that.  Pushes into the fact that it's really hard to sell a property when it's when you're not ready. So my supply, my business is really the passing of my friend's parents, my, my contact's parents.

, I do divorce. I do,  uh, trust. I do like relocation. But I don't work with a lot of buyers relocating because there's not a lot. And then when they see sticker shock of how much it costs to live here, they're like, I'm just going to move back to New Hampshire. Forget this place.  And that's just part of life, right?

Yeah. But yeah, absolutely. It's just, it.  I think we're going to see our supply dwindle even further in the next two, or three years until we start pushing builders to develop more property because of the problems that we have with the hedge funds owning the Airbnbs, Airbnb could topple. You never know.

Cause they're getting greedy.  I have a couple of videos on that. And then the people that are buying property  It'll just that's not going to go away the people that have two percent houses They're never going to get rid of those houses. They can't I mean it's Foolhardy for them to do that.

Even if it's assumable  It's foolhardy to do that. My only pushback on that is that southern California or southern California in general Is full of people who have been conditioned to refinance every so often because they find themselves in additional consumer debt  And you're right at home has been the way to take care of that, which has been made way easier because Hey, the way the rates have been working.

    

I'll be curious to see what happens 3 or 4 years from now, even sooner than that, I think I already read an article the other day that said national levels, the levels of credit card debt that people are now having a startup, shoot way up again. I'll be interested to see even those folks who. 

took advantage and got those rates as their spending habits have not changed as their lifestyle habits have not changed and that consumer debt creeps up again,  whether they'll be, forced to make some of those choices because the seven, the six or seven or 8 percent on their home is still better than the,  the cumulated credit card debt or whatnot, if that makes sense.

Yeah,  it's true. You're absolutely correct. The credit card debt is at an all-time high and they're gonna look at it, how do I stop drowning?  I'll take a little higher rate on my mortgage, but my overall cash flow just improved by a thousand dollars. Of course that makes sense. And I'm writing it off on my mortgage.

That's still a thing.  So come down again at some point and I'll take advantage of that. And then you being a financial advisor would think like I do, it's okay, you're three years into this mortgage. Let's not put you on a 27-year mortgage. Now  I don't want you to fall behind and front load that interest.

I want you to keep going on the track you're on, valuable advice we can get, but it's you're right. Gotcha. There. People will get rid of those rates for, that we won't necessarily sell,  which is the inventory problem. That's a good point. Yeah. They'll refine. They won't necessarily, they won't sell for that's for sure.

There's, those are people that are out there that like,  I can brag a little bit. I go to the gym every day. And other people go, I should go to the gym. I should live a more disciplined life. I should, I don't eat better, but I should eat better. I should, there are certain things that you habitually do, and it takes a conscious choice to live under your means and become more responsible.

However, the inflation that we've all witnessed over the last couple of years. Has made it really difficult for people to live because wages have not kept up with inflation  So you're in a quandary and I understand a majority of Americans are going to continue to do that But we're not looking for those people.

We're looking for people who want to get out of that situation who want to be disciplined and Do it every day and get up at five o'clock every morning whether they want to or not and just show up at the gym because  That's how you get to financial security, r every day, right? Little consistency.

So I showed up today.  Yeah, we know Vito. We know me and my belly.  Get in my belly. You're ever just on the cycle, Vito, just your legs are just going like this and you're working on your phone, but talking on my phone this morning. Yeah.

barely breaking a sweat, just looking, got my earphones on. I'm like, yeah, this is awesome. Tick tock. Yeah. Yeah. So yeah, it's good to talk and I think  I'd love to check in with you in another month just to see what's going on. If there's anything groundbreaking in the legislature, we should absolutely do another talk, talk like this.

It'll be interesting to see you also next year.  Is the Federal Reserve paused interest rate hike, right? And then the market immediately responded. So ridiculous.  None of it's based on the actual performance of a company,  God forbid. But we'll see if they actually drop interest rates next year. 

They're talking about potentially what, three, three drops next year, right? All of it's so speculative at this point, but we'll see. But whenever it's time for them to make that decision, they announce it to see what happens.  Housing will respond to all that.  Yeah. But at the end of the day, like we already talked about, there's still this problem of not enough homes. 

That's not going away. You're right. Going away. So interest rates may go down.  That's great.  Pricing was still,  well, I don't see how prices will go down, but at least your monthly cost of service and debt will.  All right, Scott, I have a great scenario. You don't have to answer this right now. What if I bought a house over in Palo Alto?

At 4. 20pm, I have to be at Best Buy to pick up a laptop that I had to replace the one that broke. This is a good seed. This is a good seed. I actually have to buy a laptop for my son who's in Chico right now. Posting this idea. I want to buy, and use the VA loan to buy A property in Palo Alto, million, 2 million, 3 million, third acre is what I'm looking for.

I don't care about the house. It could be a piece of crap ready to burn down.  Get my brothers over in New York to burn it down. No questions asked.  By the way, that's a Navy story. I had a guy drive his truck that he didn't couldn't afford anymore, didn't want, drove it down to Tijuana and thought, put it, drove it down somewhere and knocked on his door a week later, the police found it thinking he was going to be so excited that, Hey, we found your truck, man.

He was so pissed off. He was already working on the insurance paperwork. He wanted a different vehicle. Typical military guy, right? I think he's found a way to get rid of the truck. Yeah. And down in Mexico found it, brought it back to his house,. Anyway, sorry I digressed, but maybe not, exactly. It's the same not the unethical illegal stuff, but yeah.

Tear,  tear it down, and then put like a McMansion on there, like a 10,000, 12,000 square foot house that I could sell for $20 million.  Is that possible with the VA loan?  So there, there is, I have not done any con VA construction stuff. But you're talking about. a possibility because there is construction with V.

A. I haven't done any. What those guidelines are is how much equity you have to be and have in that property and all that would have to be figured out. But I think you probably could do it. The benefit of the V. A. Of course is going to be cheaper pricing, right? Better overall loan. I just don't know all the criteria for it, but I wouldn't tell him that you were buying it to burn it down.

I would keep that silent.  Burn it down. Put it clear, veto government loans and everything, and build that mansion. You will be.  Disliked by every neighbor on your street.  Not in Palo Alto, that's where all the money is, right? You might bring the values up even more, they might help you build it, yeah, they might like, help me plant. Give advice. I was just throwing that idea out there, and I'm looking, and I'm like, What if I could do that? How much would it cost me? Do I have to make monthly payments because I don't want to make monthly payments?  How do I make this thing a thing? How much money do I  What am I going to have to come up with all in because crotchety old neighbor then I guess when the dude next door knocks down his house and builds his mansion, I'll be like, you mother lover.

You can move anytime you want, right? That's the glory of the United States. We're a capitalist society. That's what BlackRock would say, wouldn't they? That's right. You could have been in an episode of Ozark, man. I could, can you see him in Ozark at that McMansion down there in Mexico, right?

That's right. With the What is it, St. Bernard's or Doberman's. And you got that, that, that look, man, would he be a henchman or would he be like an I know, what do you mean exactly?  Look, or he'd be the guy who's trying to break out, he wants to turn his life around and he's just trying to figure it out.

the right way to do it because he's a made man. And, once you're in, right? It's hard to get out.  I thought you said you're like, I'm looking at you, man. You just look like somebody needs to turn their life around.  No, I'm just trying to get on it. So I'm not saying you're just an assassin and taking on that role.

I can see you in there being in that show, man, you got that look, man. I like it. Right on.  You know what happens to those guys that want to break out, right?  They get whacked. Yeah, that's why the Italian. Yeah Hey Scott, you better go the Best Buy and pick up that computer. Yeah. Yeah, that laptop that They'll sell you all the extra memory you now need and this you know what I'll do before I go just don't you?

Don't you just hate buying a new computer though First of all, they have to get all the bloatware off. I have them do that. But then they got a new iOS. Nothing works the way you used to get used to it. Takes time to acclimate.  I know there are worse things in life, but I'm dreading that part of it this weekend, trying to figure out how to get everything working again on the laptop so that I can use it functionally next week.

But anyway, let's just do it slowly. I gave my son my 2016  MacBook. Yeah. And within six months it was destroyed because he's a boy. Yeah. It was the monitor cable for the laptop where it goes like this right there at that little hinge. There's a ribbon cable that goes from the to the monitor.

This particular kind of MacBook can't just replace the fricking ribbon. Which would be like a hundred bucks. No, you have to replace the entire screen, $575 for 200 2016 computers. So there you go. That is on top of the labor. On top of what? 6, 6, 700 bucks?  I might as well buy 'em a little MacBook error, have a brand new, absolutely. 

Absolutely.  This was a pleasure. I got a lot out of it. I hope we all did. And I hope our audience did. And I enjoyed it. Thank you for having me on.  Absolutely. Great meeting you, man. I hope enough. I'll reach out to you here. Yeah, we'll reach out. I'd like to get together and grab lunch minus veto.

That'd be fun. And no, we could veto could be there. It could be there. Probably not. It helps some marine humor you can throw in, pepper in here and there, so we're all going to get together here next year. There are a whole lot of different classes that we're doing at San Jose State. 

And Scott, you got invited into this, right?  Have you been, have you talked to Kimberly yet?  Not that I'm aware of. Yeah. Maybe I need another invite. Send it out.  Like Bob Davis, I don't know if you met him, but he's working on the alumni network now and we're doing this idea of financial intelligence for the veterans, but now it's being expanded out to the alumni network.

That's awesome. So we're supporting that. And we're also going to go to students and faculty next.  Let's be champions of education. That's how people get help we've got to give them the knowledge we've got to and it's so easy to do and so I love that idea of doing that. I think that's great.

That's why we do this every week. We talk about, we talk to experts like you to come in and we're not pitching anything, right? We're just talking about ideas and different scenarios and different things and trying to get people intelligent because we're not taught that in school. We're not taught that at home.

We're not taught that period. And. What have I got to lose you, if you call me great, if not, you're going to call your aunt Betty, who sells real estate. I get that. I understand that, but at least we've done our part.  And that's what this whole thing's about. Love it. Love the concept.

Awesome.  Yep. All right, Scott.  I appreciate you guys. All right, man.

Reminds me of so many of the military comedy shows in the '70s right there, man. Bitty Hill. Yeah.  All right, get out of here. I used to stay up late to catch any glimpses of Bitty Hill I could, man. Heck yeah. All the little bikinis and stuff. Heck yeah. Formative years.

Sayonara.

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