My Thoughts on the Coming Housing & Stock Market Crash.

hey everyone meet kevin here so i'm in

bakersfield because we have a rally

tomorrow if you want to come go to

meetkevin.com bakersfield rally's gonna

be great but i want to talk a little bit

about housing

and real estate so i've mentioned in

prior videos

that not only am i a little bit nervous

about a slow bleed in the stock

market but i'm also starting to see a

little bit of an inflection point in

real estate and so i want to talk about

real estate and my strategies going

forward a little bit i do

i do believe i owe you a little bit of

clarity on what i said yesterday some

folks who

were saying hey wait a minute kevin

don't you still expect rallies coming

uh that is like uh rallies in the stock

market by september and october

uh and and i do i still personally this

is my personal opinion i know about

fifty percent of folks won't believe

with this but at least you know what my

opinion is right and then you can build

perspectives from there but i still

think it's likely that

when we see inflation data actually

start coming down which i don't think

we're going to see in

august uh i don't know that we're gonna

even see it in september it's really the

september october readings

which come out in october november

that's when i kind of expect some some

rotation down in inflation rates

then i do think there will be some form

of a rally in the market

the problem is from from like what level

and and how much of a rally

based on what i've seen the last five

months i think the rally is going to be

much more muted

i don't think we're gonna see these some

of these september february highs

as soon as maybe we've been expecting or

hoping to anymore

sort of just just those thoughts i still

think we're going to see

excitement some potential euphoria

that's when you dump your call options

right

but but i have dampened my expectations

for how much of a rally i expect to see

how soon

and i think that's worth noting because

you don't want to wait for like oh well

no i'm waiting to get back to this level

or whatever i don't know that

might take longer than we think okay so

you have an update on

first of all where the heck i am the

executive or my thoughts

on the stock market and in prior videos

i've talked about this inflection point

in real estate

in fact i've been talking about this for

about the last three four weeks now

and this inflection point is really this

decline

in uh in in all this well let me put it

this way we're seeing an

increase of new listings we're seeing

new listing

asking prices go up but we're actually

seeing pending sales

decline sharper and sooner

excuse me sharper and sooner than we

would expect

uh it compared to at least 2018 2019

we're seeing that pullback sooner

i think that is going to put some

potential downward pressure on the real

estate market

uh and and this is where i think it's

worth giving you an updated kind of

thinking on on how to invest in this

market and the

real estate market so i many have

noticed

i love buying single family real estate

there are a great opportunities where if

you have great connections

you can get multi-family real estate

under market value if you get properties

that have under market value rents

sorry they're a bunch of people

screaming in the pool and follow up

if you could get multi-family real

estate under market value hey

great and that's awesome the way you do

that again is you've got to find

properties that are being sold ideally

that are fixed up and the rents are low

personally i find when i look at most

real estate funds and syndications

obviously i can't say all because i

don't know all

but most of the funds i look at they

they're looking for properties that are

just

where can we plop 50 million dollars and

buy 100 150 million dollar

building and they're just buying

properties from people who are selling

these projects for excessively high

prices uh in

in my opinion folks are buying sort of

at a peak market some of these fully

renovated

uh fully rented fully market rent ready

multi-family real estate properties and

that's where i still believe there's

this

really unique opportunity and it's

something everybody can really do

especially if you're heavy into

investing in the stock market everybody

could get involved

in buying single families now i know

that there

you know some folks are like oh but it's

harder to manage or there's there's

less scale you know look you get pros

and cons with everything

sure single family homes might not all

be next to each other but

in our experience there's way less

management intensity

with single-family homes that are fixed

up and ready to go because most people

just leave you alone

whereas with multi-family you've got

neighbor disputes that you're

arbitrating frequently

you tend to have more of a revolving

door with units you're generally over

there more

because you're re-renting the units at a

higher rate because they're smaller

so those are just some quick differences

and this isn't a bag on multi-family

don't get me wrong

i own multi-family i get it like it's

it's fine

but why am i mentioning this

multi-family single family

talk now well it's because i believe

that if we do see

which i believe the federal reserve

starts tapering

interest rates don't start going up

until

maybe uh 2023 or quite frankly could

even be 2024

if if we start getting lower inflation

again like you expect

then then i believe that as we slowly

start seeing the real estate market

chillax a little bit because remember

we're seeing pending sales go down and

that's a sign that we're

going to probably start building up

inventory again we build up inventory

again more supply gets built up

that means we're likely to potentially

see prices come down a little bit prices

come down again a little bit and sellers

all of a sudden have less power

i think the opportunity to get good

deals in real estate

is going to be much more plentiful we'll

have more options

we'll have more frustrated sellers who

are like man i thought

i thought it'd be easier to sell now

it's not as easy to sell

and maybe those are going to create

opportunities to go shopping and buying

again

that's what i'm looking for now i did

just buy a property a few months ago

actually

i think it's about nine weeks ago now

we're about to put it on the market for

rent i'll have to do a before and after

on that i've got the before footage but

i never went back to film it

again so i have to do that and i'll show

you this property i bought for 570 000

in like a 715 000 neighborhood but

anyway

uh these are the kind of deals that i'm

looking for and i think it's gonna be

easier to get more of these

now why don't i just try to go get a big

multi-family building

so i've thought about that as well i've

been thinking to myself like should i

just go buy a big multi-family

building somewhere first of all i think

the odds of me getting

a good deal in multi-family on a big

building that's on the market

very low unless i could get it again

below market value rent

i don't know if i could find that unless

i go move to an area

and i know all the agents in an area i

think if i really put the effort in i

could probably find it

but then i'm also not an expert in other

areas like if before i ever bought real

estate in an area

i'd probably want to be there and

understand the neighborhoods understand

the people for a good six months

and go to go to all the different bars

go to all the different clubs go go to

the different restaurants talk to the

people there and look

the funny thing about when you go to

bars and restaurants is people are very

willing to talk

very candidly about the good and bad of

different areas

uh i like doing that by the way for even

just political research

because again people are very candid

about the problems that are happening or

things that are good in an area

so uh just strategies to think about

that work also for real estate

but anyway that that is leaving me in

this place where okay

well what if i just go back into

buying real estate uh more so than i've

been buying stocks

and what if i'm wrong about inflation

see that's that's another big piece here

what if i'm wrong about inflation

all right so let's analyze this first if

i'm right about inflation then i don't

think we're going to see rates go up and

i think we're potentially going to see a

little bit of softening and pricing as

supply goes up for real estate

and i think i'm going to be able to get

more and better

wedge deals in single-family real estate

again real estate where i'm buying below

market value

if i'm wrong about inflation which of

course i can be wrong i've been wrong

many times before

and i do my best to learn from all my

mistakes and make those as transparent

as possible

so if i'm wrong about inflation and we

end up having

larger or high inflation then i think

first of all stocks are

especially the tech and growth stocks

i'm in their future earnings are going

to get sort of

discounted much more heavily and the

market could pull back

we could have a very bad few years for

like caffeine would

uh arc invest and and uh and even the

growth place that i have

again because if we see higher inflation

well it's gonna be a problem uh we'll

expect to see higher rates from the fed

we'll we'll see

more again more earnings discounting

would be a problem

but what's interesting is if we see

higher inflation

one of the easiest ways to hedge

yourself against higher inflation

is owning rental real estate so if i can

get into

below market value rental real estate

because we're going to maybe we start

seeing a little bit of a supply backlog

coming up finally which we need

desperately need that i get a little bit

more negotiating power with some of the

sellers who are just asking ridiculous

prices right now

then i could actually load up more on

single family real estate

getting good deals and hedge myself for

inflation why because i'm locking in

20 30 year fixed rate debt

at today's pricings which is actually

really exciting

uh and today's pricing that is today's

interest rates right

so i take advantage of having better

leverage opportunities with sellers

but then also cheaper financing cheaper

financing means i'm locking in

you know four or five percent debt if

you're a homeowner you could lock in 2.8

you know one 2.35 percent debt i have to

unfortunately get commercial financing

so it's a little bit more expensive for

me because we we can't get conventional

financing anymore we have too many

properties i mean it's a good problem to

have

but it just means i get crappier

financing but even still if i can lock

in debt

at five percent even and then let's say

we have hyperinflation generally

assets benefit and the appreciation of

assets rides on top of an inflation wave

and hard assets like real estate do very

well

you're able to pay your rent off with

with inflated uh sorry you're able to

pay your mortgage off with inflated

rents

because if we end up saying

hyperinflation then i do think that

rents are going to come up substantially

in fact one of the things that could

quite frankly drive up inflation

and where i could be wrong could be

substantially higher rents

which again would be phenomenal to own

more real estate in so i'd lock in a

payment

price appreciation i think would be

better in the long term under

hyperinflation or large inflationary

period in inflation it'll be worse for

stocks uh or in real estate it'll be

better

and rents would go up which would give

me more cash flow or

more negotiating power when it's it's

time for rental increases every year at

at least renewal time

so in a crazy way what i'm saying in

this video

is while there's so much uncertainty in

the stock market and i'm diamond handing

the stock market

i think there could be some very unique

opportunities that if

real estate starts backing up a little

bit more again more inventory more

leverage power with sellers

and i can lock in whatever rates i can

lock in now before powell makes any kind

of changes on rates

then i think i can again get good deals

on wedge deals again

it's probably the most conservative

easiest way to get

sort of a compounded annual return on

your money of 10 to 15

which is pretty good you know that's

kind of like a kathy wood art goal is

15 uh as an annual compounded goal

unless there's a big market dip and then

she bumps it to 25

because she's justifying buying the dip

which is fair too totally fair

uh but but also i protect myself if i'm

wrong so like

if i'm right about lower inflation and

lower rates great i have more time to

acquire if i'm

wrong i'm hedging my stocks with real

estate

so right now i've got about 50 of my

wealth and real estate 50 in stocks now

i do want to also provide a little bit

more clarity about cash flows in real

estate

uh i i don't really care about cash

flows in real estate i'm a very

different kind of investor

what i'm looking for is long-term wealth

and when i buy properties a hundred

thousand dollars under market value

i don't really care if there's no cash

flow

i quite frankly i'd rather have zero

cash flow because it means i'm not

paying those taxes

over time you get more cash flow as

rents go up right but if i'm buying

something at a break even or even a

slight negative 100 200 bucks a month

that's really good in my opinion because

okay so say you have a 200

negative cash flow that's 2 400 a year

of negative

but if you just bought a place a hundred

thousand dollars under market value

first of all if if the market continues

the way i expect even just

nominally not not at this unsustainable

15 20 but even if we just have two

percent growth

which is two percent on a six seven

hundred thousand dollar property

is is uh twelve fourteen thousand

dollars who cares like whatever two

thousand dollars negative right

big deal it means i'm not paying taxes

uh in fact i'm taking more tax

write-offs more tax benefits which is a

good thing

uh while also locking in that wealth

which then i can

unleash or unlock tax-free through

refinancing

but only when rents have gone up so that

way you're not because the last thing

you want to do is be going

massive negative into into real estate

right

you don't want these massive like you

don't what you don't want to have

ideally is a portfolio where you have

like 10 properties or

50 properties and they're literally all

negative because that's a lot to sustain

that's a lot of burden on your shoulders

right

but let's say you started with your

first property a couple hundred bucks a

month negative

after two or three years you buy your

next property and your first property

you've raised the rent 50 bucks a year

or whatever

or however and now your break even and

now you break even on that one or you

have a slight cash flow

100 200 cash flow whatever however works

out you buy your next one

you make sure you're you're able to

sustain whatever kind of portfolio nag

you have

uh and again i'm not here trying to make

a video going oh get rich quick by

having negative cash flows like no no no

no

uh i i just mentioned this because i

understand a lot of folks they leave me

comments

and they're like well how you know if i

buy rental real estate right now i have

a slight negative what do i do

and so in my opinion you protect

yourself with having a very very good

deal

the worst thing i think you could do is

buy a property that

is market value and has a negative cash

flow

that's horrible that would be the worst

thing you could do i would recommend

against that highly

uh however then again you know there are

plenty of people who bought market value

real estate in november

and uh they're up 10 right now because

the market just appreciated that much

you know that's just fluke i don't like

to plan on market appreciation

that's a that's the icing on the cake

right that's why i like getting

properties under market value you get

these massive boosts in your net worth

and that's usable at times of crises

like what we saw in march of 2020 when i

refinanced a bunch of properties took

that money and went

buying stocks so anyway there you have

some insights

uh into my current thoughts i really

appreciate you watching this this was

definitely a longer video than i

expected but hopefully you enjoyed it

it's a big old one take now let's see if

i can upload this longer video

wish me luck thanks for watching

everyone we'll see you in the next one

make sure to go to my bakersfield rally

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thanks so much folks we'll see you next

one bye