STOP Making these 4 DUMB Real Estate Mistakes NOW!

okay listen y'all real estate fan folks

i'm about to say four blunt things that

need to be heard in the real estate

community there are four things that you

need to stop freaking doing in real

estate here in q1 2022 why because

interest rates are going to the freaking

moon

they're not going to stop anytime soon i

believe the 10-year treasury yield which

is closely correlated to 30-year

mortgage rates and of course 15-year

mortgage rates down the line arms

whatever

are going to go over 3 and when they go

over three percent we are going to see

five and a quarter percent mortgage

rates when the fed goes too far we will

see periods of panic where the 10-year

treasury yield actually goes above three

percent three and a half percent is

possible that could lead to mortgage

rates of five and a half five point

three quarters six percent we have not

seen mortgage rates like that

uh quite frankly in decades i mean

certainly not while i've been in the

business i've started in the business in

oh nine yeah we have not seen rates like

this okay

so look

there are four things in the real estate

industry that you have got to stop doing

and i'll even throw in a bonus fifth one

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public number one

this is not the time for renovations

i'm serious i am getting so many people

who feel freaking rich because the real

estate market is hot right now and

prices are very very high right now that

they're asking me kevin kevin i can

refinance and with that money

i could remodel my home

i could get a heloc come on man

i want to build a deck i got asked this

morning by a course member which by the

way we got a coupon code expiring in

three days for any of the courses either

real estate sales real estate investing

do-it-yourself property management

rental renovations or of course the

other programs like stocks and building

your wealth

i got this kevin

you know i haven't gone through all the

lectures yet but i should build a deck

right now because i could get a heloc

and i could get so much money come on i

could get a nice trex deck you know one

one they say won't warp in the sun

resistant to termites and rot come on

man i gotta get myself a dick

no

what are you doing you're throwing money

out of the goddamn window listen look at

the stock market right now if you are a

real estate investor you should always

have your eyes on the stock market

because when there's an opportunity in

the stock market and you're below those

50 30 20 fibonacci lines those are the

perfect numbers okay i'm simplifying

because y'all real estate folks you

probably don't even like fibonaccis okay

no nobody cares about fibonaccis and

real estate okay stocks is lower than

they have been okay simple

when stocks is lower

you don't go spend money on a damn deck

because here's what you're doing

when you're renovating right now let me

show you okay and listen i

i've licensed contracting staff

we do renovations all the time i will

never stop doing renovations i love

buying fixer-upper real estate and

fixing it up okay i love that

but listen

if you're trying to remodel a stupid

home right now this is what you're doing

you are

number one losing money due to

massive opportunity cost in the stock

market or

not just stocks

but also because we're going to have

this rate shock you're losing a real

estate opportunity so for all those of

you like i don't do stocks anyway

through stocks that's just paper that's

not a real asset well that's stupid

because your dumb deed for your real

estate is also just paper but i guess we

won't go there so anyway

you are losing money in both a stock

market opportunity and a potential

future real estate opportunity in the

event we have a real estate shock which

i think is quite likely by the third and

fourth quarter of 2022 and all of a

sudden you have cnbc and tucker carlson

and all the financial news media going

oh my gosh real estate prices are down

compared to january what

come on man purchasing power goes down

as rate goes rates go up this is this is

simple okay

so why would you take that money and

spend it on a stupid deck or some dumb

freaking renovation for your own home

it's stupid it's very stupid don't do it

listen

listen

we almost personal okay personal

personal person person we don't need it

i don't want to buy a home for myself

right now but a home came up that we

were looking at like oh we could use

this for like studio space or whatever

or we could move into it because it has

a nice backyard for the kids we don't it

came up for lease which i hate leasing

but it's got a very nice backyard and

there are only like five of these homes

in the neighborhood so we're like okay

maybe maybe we just lease that and then

we'll use the home that we own in the

neighborhood as a studio in addition to

the second home that we own in the

neighborhood which is also used for

studio and work purposes so we own two

homes that we already use for work and

we can just move the family into the one

with the backyard right

and we're thinking to ourselves well

wait a minute we'd want to update some

of things in the property before living

in and i'm like no way jose am i

spending a dime in this market

renovating anything for my own benefit

i'll fix it up for a tenant i'll fix it

up rental grade but i am not

wasting that money that could be

invested in the stock market or

potential future real estate

opportunities

i'm fixing crap up right now for myself

uh-uh no no no no no no big mistake

second problem let's be real have you

heard of

commodity price

inflation

commodities are going or i've gone to

the freaking moon

this is this look we don't even have to

be technical about this it's just it's

just obvious

copper is way up sheet metal is way

up

the lumber costs

the lbs google it okay lbs lumber prices

you slap that thing into google

here i'll pull it up for us i don't even

have to wait for it to load because i

know it's going to be a poop show okay

we're going to go ahead and pull it up

on this little computer over here and

then we're going to go ahead and pull up

the one-year chart and then we'll look

at the five-year chart together and you

tell me

you want to spend money on lumber right

now okay you tell me if you want to be

buying here

or here

okay

it's not hard

go to the five-year

you really want to be buying lumber

right now okay it's no different from oh

you're not supposed to see that it's no

different

from what the doomberg terminal says

about commodities

i look at copper

year-to-date uh it's only a five percent

sheet metal 25

i don't even get me started on nickel up

51

year uh to date

if we go year over year

i'll try it i'll change it to the one

year now copper starts getting a little

uglier 15 percent

nickel up 92 percent aluminum up 52 come

on why would you be spending the money

in this market with these kinds of

commodity prices it's astonishing it's

stupid but it's not just the commodity

prices that are insane right now it's

the labor prices that are insane for

construction right now but not only is

it the opportunity cost of commodity

prices and the labor costs it is also

the fact that most contractors the good

contractors are so booked up that what

are they doing because they're so booked

up because all the people who don't

understand what investing is or spending

their money renovating their homes

you're paying massive fat premiums right

now it's stupid you are wasting your

money to renovate your home right now it

is a terrible terrible time to do this

wait a year

maybe when the economy is a little bit

more depressed or the next time a

recession comes around you think you're

going to get good deals

on construction when there's a recession

let me like seriously think about that

if we are in a recession and you call up

a contractor go hey you know i'm looking

to do a deck but please i'll be there in

five minutes

right now it's like hey i'm looking at a

deck yeah yeah i'll schedule you in two

weeks just to come take a look at the

project and maybe we'll build it out in

six months so we'll put you down on the

list and we're gonna charge you a fat

premium too come on man

when you want to be buying it's stupid

for what a deck get it it's ridiculous

renovations ridiculous second problem

new construction come on man you know

you're not getting new construction at a

discount now look i don't want to hear

all the people i know you're thinking it

you're like oh

i bought i signed a deposit for new

construction and the price went up well

no freaking duh the real estate market

has only been going straight up one of

the cool things about new construction

is you have a free option on real estate

okay that doesn't mean you made a good

deal it means you got a free option on

real estate you know the stock market

options cost money but here's what

happens when the real estate market is

doing this and you sign a contract an

option to buy new construction and it

goes from here to here

duh

everybody made money but you still paid

market value honestly you probably paid

a little bit above market value because

that's what happens with new

construction you tend to pay a little

bit above market value you're paying a

little bit more than the neighborhood's

actually going for because it's no like

it's somewhat like a new car okay

so

instead

of buying new construction you should be

insulating yourself right now you should

be trying to purposefully find

fixer-uppers now wait a minute kevin you

just said not to do renovations oh my

god

well this is really where we need to

take another shot of whiskey i mean my

first shot of whiskey because clearly

if that's your reaction you're missing

the boat okay look

building a deck for yourself is an

expensive endeavor me replacing carpet

for fifteen hundred bucks me painting

the interior over thirteen hundred

square foot property and scraping the

ceiling for five thousand dollars me

painting the cabinets of my kitchen on a

weekend myself for 500 bucks or less in

materials with handles we'll call it

with material fine with handles and

materials that

that is an investment that is called

making money i don't care if i'm paying

10 percent more on a 40 000 renovation

for a rental okay so what it cost me 44

grand if i'm getting a wedge deal if i'm

getting a below market cosmetic

fixer-upper i'm still getting a good

deal if you still don't know what a

wedge deal is you've got to check out

those real estate investing programs

linked down below okay listen

you buy a rental property you do rental

grade i don't want to hear that your 499

stove is now 580 but if you're trying to

buy a 5 000 stove you've lost your damn

marbles right now this is not the market

to do that in no no no no stop it don't

build a pool don't build a deck stop

buying expensive garbage get invested in

the stock market or prepare for deals in

the real estate market and they will not

last long i do not see a 2008 style

recession coming it would be a very

short window

if at all but i'd rather you find a good

deal anyway then waste your money on

this kind of garbage so it's stupid it's

just this is just dumb okay next

this is not the time for all the

aforementioned reasons to build an adu i

don't care that you think your passive

incomes are going to go up

there's no passive income passive income

is garbage passive income is either

active income that you think is passive

income it's you dealing with a tenant or

whatever all the other garbage or it's

extra cash flow that you get that makes

you feel rich so you go out for an extra

dinner a week and then you're left with

no actual passive net income because you

spent it all okay you should be focused

on wealth

building the last thing i would

recommend for wealth building right now

is building adus

for all the aforementioned region their

reasons contractors commodities

okay

next

there are a lot of people who are pissed

because interest rates just went up

terrible a lot

i'll pull up my favorite tool

it's called the

zillow mortgage calculator not that big

of a deal

zillow mortgage calculator okay

just take a look

at the two-year chart

once it pops up

for mortgage rates here you go

you notice this is not actually two

years right this is actually more like

four to five months

that's a poop show you went from 2.8 to

4.3 that means if you try to go

refinance uh you know a 500 000 home

right now you're probably getting quoted

4.75 and you're like what

other people were just getting three and

a half for three and a quarter or 2.8

why am i getting quoted 4.75 or 4.5 or

four and a quarter you know what i'll

pay points to buy down the rate

oh gosh more people who have not taken

the course on real estate investing

whatever oh but you could just google

this stuff why would you have to take a

course oh wait because you can't google

the stuff because you won't google this

stuff because you don't even know what

to look for you don't even know

that you don't even know if you're

paying points you don't even know

that you don't even know that it's gonna

take you seven to ten years to break

even on paying points for a stupid dumb

loan buy down very bad idea to buy down

your loan in my opinion you're probably

going to refinance way before then

because j pal is going to hike rates

between now and 2024 and then guess

what's going to happen oh crap we over

tightened time to rotate down as soon as

we rotate down now the expectation of no

more rights rate hikes goes away which

now amplifies the reduction of rates to

the downside it's not just the downside

of the fed but now it's the expectation

that okay rate increases are done so you

see a larger and more substantial drop

in mortgage rates

that's the time to refinance

so

don't pay the points now take negative

points right now what does negative

points mean

okay so you take a five and a quarter

rate and you get a free refinance

basically you suck it up for two or

three years and then you refinance in

the future oh but what if values are

lower whatever don't take a loan that

you can't afford to pay but if you're

complaining about a few hundred dollars

here or there quite frankly per month

you should not be in real estate if

you're complaining about a few hundred

dollars of cash flow or not cash flow

per month you should not be in real

estate it's kind of like the people who

are like oh my gosh kevin i'm i'm buying

a house with five percent down and if i

were to rent it out today

i won't because i got to live there for

a year but if i were to rent it out for

a year uh or you know once once uh once

i lived there for a year you know i'd

have a negative cash flow of 200 a month

oh my gosh

two thousand four hundred dollars a year

is what it's gonna cost you you mean

less than your principal pay down as

well it's gonna cost you to own this

property and you tell me you can't save

an extra two thousand four dollars a

year don't get into real estate then

it's not endorsing negative cash flows

you have a portfolio of negative cash

flows you're gonna go bankrupt

you don't want more than one or two of

those negative cash flowing properties

but over time the goal is that you raise

uh

rental rates

and uh you catch up to market and uh

your equity goes up

value goes up over time and then you get

out of those negative cash flows in

those situations where you're especially

where you're putting down less than 25

percent when you put down 25 now in like

california you're gonna be negative cash

flow it's gonna be the same story uh

you're gonna have to put down like 35

percent to be breakeven but listen

stay away from these big four mistakes

renovations overpaying for due

construction building adus paying points

and number five as a bonus one because

they promised you a bonus one and stay

away from syndications because they rip

off

that's all i got

talked about the ripoff before delaying

a fees until the end the massive

waterfalls the uh advertising pitch of

oh yeah well

only by value-add and then they never

add value they just ride the wave and

profit off your own equity it's bull

crap