The End of Real Estate | The 2021 Housing Crisis.

if things continue the way they are

today in 20 years 80 to 90

of americans will be renters and buy and

hold landlords will be

multi-millionaires hey everyone me kevin

here the housing market is a complete

disaster right now not necessarily for

the wrong reasons

it's really good for sellers it's just

really bad

for buyers in fact buyers today are more

qualified than ever

the average credit score of a house

purchase right now for a buyer is 800.

there are so few deals available that

very well capitalized folks are winning

deals with higher quality loan terms

higher down payments

locked in 30-year rate loans and lower

quality borrowers people with lower

credit scores or less stable income

aren't even able to get pre-approval

letters these are the opposite

characteristics of what we saw in the

2006-2007 housing bubble bust

when anybody was able to get a loan dead

people were able to get a loan people

without jobs

income or assets were able to get loans

and people with horrible credit scores

were able to get loans

it's literally the opposite today

however something that

never ceases to amaze me is the way

society and the market reacts

to prices going up the more unaffordable

housing gets it seems

the more and more people are buying up

all of the housing that exists

and in my opinion this is the definition

of insanity last april

when everyone believed the housing

market was going to crash

as people stopped buying houses or that

people would stop buying houses

people would die leading to a flood of

housing inventory because we're in a

pandemic

tenants would stop paying rent and

rental investments would end up bleeding

money and people would go bankrupt and

there'd be these

floods of foreclosures and eviction

homes or whatever

i said on this channel and the videos

still exist

folks the data shows real estate

is holding firm it's time to buy real

estate

now before everybody else does you can

see those videos they're still there

just go look at my real estate videos

from april of 2020. between march and

august

after saying this i bought 13 properties

over the last year i plowed money into

real estate

now real estate in my area is up 20 year

over year

and i think we're just getting started

and most of these 20

gains from this year-over-year

comparison didn't come over the entire

year

they came between september and today

so basically right when i stopped buying

now i'm not trying to pat myself on the

back

but i want to show you or what i want to

show you is the ludicrousness

of how buyers of any kind of securities

or real estate operate when real estate

goes up

people want to buy when real estate is

suffering or potentially about to suffer

nobody wants real estate when arc

invests in the stock market and kathy

wood

has her funds skyrocketing 20 percent

per month people plow money in

when kathy woods fund falls 33

in a month people leave like crazy

this is so the opposite of what we

should do this is why we say

by the dip diamond hand it applies not

just to stocks but it applies to real

estate as well now that's great

but the problem is still present right

now

people are buying homes like crazy but

it's not just the regular retail buyers

because the suits are coming in as well

ordinarily only 10

of houses are sold to investors of

houses multifamily you're usually 50 50

investors and retail buyers with houses

though

ordinarily only 10 percent are sold to

investors that means most of the time

when you're competing for a house you're

competing against other home buyers

one of the reasons i've loved single

family so much because as an investor

part of that 10 percent

i know how to dominate when i'm

negotiating well

the wall street journal just this

weekend reported that in areas like

texas 25 of all homes are being sold to

investors and in some cases pension

funds are now coming in

buying up blocks of houses and when

houses get commoditized

like they are it becomes almost

impossible for the everyday buyer to

compete

when i was buying last summer it was

easy for me to buy a wedge deal

i was getting properties for below

market value left and right

and anyone buying with me should be way

up today

yet euphoria has officially hit real

estate and now i'm very concerned

that buying on the market value or on

market real estate

is next impossible i'm seeing hoarding

housers and fixer-uppers

sell for nearly the price of fixed-up

properties

it's absolutely incredible what's

happening

in the real estate market right now it's

one of the reasons i'm doubling down on

my efforts

to find properties before they hit the

market my favorite way to do this right

now because it's really lazy and it

doesn't take a lot of effort

is downloading the deal machine app

which you can get some free credits for

by going to medkevin.com deals

and then i as i'm driving around when i

go around look for houses looking for

houses or multi-family

i just click on the different properties

i want to send postcards to and it

automatically does it for me

with my own custom postcard so that way

hopefully if people want to sell

they call me before just putting a

property on the market that way

hopefully i can get a deal without

having 20 or 30 offers against it

again that's medken.com deals but why

the heck does it even make sense to buy

real estate

well because remember this last summer

when i was buying real estate it was

easy to buy deals there were wedge deals

everywhere i was getting properties

below market value left and right

and again things were wonderful there

was balance in the market

but today we don't have that balance

anymore today people are paying whatever

they can just to get in

now i don't necessarily blame people for

paying whatever they can just to get in

because here's the thing interest rates

are expected to go up in the future

at least over the next the near term

here the next four or five years

but who cares when you can lock in a

30-year low fixed rate loan right now

and besides that real estate might run

hot for

years to come which means the potential

for

appreciation which is a form of

speculation is very high

last night i talked to lauren about how

i'm concerned that our area in ventura

california

is potentially going to turn into the

next mini san francisco in terms of real

estate pricing

not only because people now work from

home but why live in san francisco when

you can live

in the southern california coastline

climate which makes up only well i

should say the southern california

coastline climate is part of the

mediterranean or chopper all climate

which is just found in seven percent of

the world and the only place you can

find it is in socal

in the united states all of a sudden you

have a lot more people

with lots of money moving into areas

with really desirable weather

and what i like i mean look don't get me

wrong i i love

i love seeing people want to move to the

area but i'm very concerned about what

i'm seeing

in regards to pricing i don't want to

become a mini san francisco

even though that means my little six

hundred thousand dollar rentals which is

already

really really high some of them that i

bought for three 300 000

even though they might go to a million

dollars which sounds even crazier

that's what happened in san francisco i

don't believe that right now we actually

have the catalyst for this bubble to

burst

and that's the crazy and concerning

thing is i think the catalysts all point

to

people just continuously buying real

estate and prices going up and inventory

not being around why would inventory be

around when joe biden says hey

having trouble paying your loan no

problem our administration over at the

consumer financial protection bureau is

now

going to potentially they're working on

this rule but this is what they're

working on

allow you to extend your loan if you're

behind on payments by 40 years

we just don't want you to lose your

house we're going to stop foreclosures

through

or at least into 2022. look i'm not

forecasting doom and gloom here in fact

i'm kind of forecasting the opposite

i think the market's gonna keep booming

it's kind of crazy so i'm i'm

forecasting boom and zooming instead of

doom and gloom

but i'm very concerned about the

widening of the massive

wealth gap that we already have the

massive k-shaped recovery is just

getting exacerbated by real estate

and i've said this time and time again

since the start of the pandemic and if

you've watched this channel you already

know this

hopefully you've taken advice if you

don't own real estate stocks or an

established business you're screwed

this country's manipulated capitalistic

environment bails

people with assets out first like i just

described with the biden plan

at the same time housing inventory is

nearly non-existent at the end of 2012

in my city we had 80 houses on the

market today

which by the way 80 houses on the market

was well below uh

our healthy average of 250 to 300 houses

on the market which is when we would

have a three to four month supply

that then in 2012 the end of 2012

beginning of 13 we had one month of

inventory

as a supply around 80 houses six months

later

beginning you know i would say march

april of 2013 real estate prices went up

20 to 25 in a matter of two months it

was literally like march and april it

was like

okay we're going up up up adjust and it

was up 25

like that i'll never forget it because i

was actively working with buyers and

sellers at the time trying to figure it

all out

we're charting it day by day everything

went to the moon nearly instantly

because inventory was so low and the

same thing is happening again today

except it's even worse see today instead

of having 80 houses on the market in my

city we have 40

houses on the market less than half the

supply

we had right before the market popped 20

to 25

now unfortunately what's ironic about

this rally is like i said i think it can

sustain itself i don't

see the signs of a bubble yet i don't

see the red flags yet

even break even real estate for cash

flow purposes

is desirable right now why because when

people go buy a house with 10

down and turn it into a rental later

let's say they put their entire net

worth in at 50 grand and they buy a 500

000

house that's their 10 down payment maybe

they got credits to cover their closing

costs

this breaks even you know let's say on

on rent so they're making no cash flow

they're getting rent and they're paying

their mortgage with it guess what's

happening

well when property values go up 10 that

person doubles their net worth

when property values go up 20 that

person triples their net worth

not considering selling costs it's gonna

be smaller over time anyway

they're doing this because the reason

people are buying homes is because

you're able to lock in 30-year fixed

rate debt

so even if the market falls you can't

get margin called on a house

all they have to do is rent out the

rooms or rent out the entire house if

they can't make the payment

as long as they're buying in a quality

area they're not at risk of not being

able to fight a tenant

worst case scenario you just drop the

rent a little bit and find maybe your

negative 200 bucks a month but if you

can't afford twenty four hundred dollars

a year as a negative worst case scenario

if the market fell and you had a lower

rents

you probably shouldn't be buying real

estate anyway the point is you're not

having to float the entire payment

and even if there's a crisis where all

of a sudden tenants stop buying what

happened or tenants stop paying what

happens oh the government pays landlords

out

mortgage mortgages first remember

mortgages got the big bailout

it's nuts every month you're also paying

off the property

so really even though it feels like

you're spending this money every single

month

it's really your tenants paying off your

properties for you all you have to do is

follow your simple

rental renovation rules which i talk

about in my do-it-yourself property

management and rental renovations course

where you can make a ton of money by not

over improving your real estate

stop going in and we're tearing out

countertops and bathrooms and

kitchens focus on what matters making

your house nice and safe

and that's different from cheaping out

in lipstick on a pig nice and safe is

important

but the point is people are looking at

housing right now as

way less risky than stocks or at least

wealthy people are

people see frothy valuations in the

stock market so they're flooding into

the housing market

even with break-even real estate they're

speculating on the future value

and even if worst case scenario they're

wrong in the speculation they'll either

get bail down or they won't have to sell

with a 30-year mortgage and they'll just

keep renting out the property

that's the crazy thing about real estate

and you've got really high quality

borrowers right now to where

you might not necessarily see these high

quality borrowers default

now obviously real estate does come with

risk the biggest risk right now

are interest rates if interest rates all

of a sudden pop 2 percent

real estate prices will get instant

downward pressure of 20

which could start a little bit of a

downward spiral or a large downward

spiral

which that would mean that if the person

who just bought a 500 000 house with 10

down their entire 50 000 net worth they

would all of a sudden be upside down

they would have eradicated their net

worth

all because of interest rate risk but

they won't have to sell

they won't get margin called and

historically buying and holding

hodling real estate is a hedge against

inflation and when there's inflation

inflation makes paying your debt off

easier

so even if real estate only goes up at

the rate of inflation which usually it

exceeds the rate of

inflation slightly there are real

returns on top of inflation not

massively but there are some

when you consider leverage and the fact

that leverage makes it easier and well

inflation makes it easier for you to

deleverage to pay off your debt it

almost is a no-brainer

that you should be trying to buy real

estate the hard thing now is finding

a good deal now this all makes it seem

like i'm saying go out there and overpay

for real estate no i'm not

exactly saying that if you could find a

good deal on real estate or at least a

deal

of some degree on real estate at this

point the margins have gotten a lot

tighter

for me i operate differently i spent a

ton of money

when things crashed or were when things

were down in real estate whether that

was 2012

2013 or right when that pandemic was not

crashing real estate and i'm like

people are dumping real estate because

they think it's going to crash

i don't think it is because i'm not

seeing it in the data and i saw it two

months before everybody else probably

six months before

the entire market really started getting

excited about real estate that's when i

saw it and that's when i was buying like

crazy

it's the same thing i do with stocks

like at the end of february and early

march i've invested over four million

dollars in the stock market only some of

that cash came from luckily selling

right before the crash

but i've plowed more money into the

stock market

but focusing on real estate here i'm

nervous i'm very nervous i'm nervous

that in 10 to 20 years

if you do not own real estate if you do

not own assets

you're gonna get left behind 80 to 90 of

owners

will end up being institutions funds or

wealthy landlords buying up all the

cheap houses they can

the american dream is evaporating and we

are going to become a renter nation at

this rate

and it's going to rob people of the

easiest way to build wealth in existence

it's not stocks it's real estate if your

net worth is under a hundred thousand

dollars the easiest way to build wealth

is real estate and i teach you all about

that in my programs linked down below

check out that coupon code and it won't

be long now before politicians just wait

for it

start pushing zero percent down loans

for everyone to try to make housing

somewhat accessible again we'll see but

for right now

i'm very nervous that this is the start

of a cycle

of the one percent getting even

richer thanks so much for watching very

concerned

and folks we'll see in the next video

you