WEBVTT - This SHADOW DATA Shows Real Estate Will Push Higher (Post Pandemic) | Jason Hartman 0:00:13.880 --> 0:00:16.840 Everyone, Welcome to another episode of the Market Disruptor Show. 0:00:17.720 --> 0:00:23.400 I am sitting down again with real estate expert Jason Hartman. Um. 0:00:23.400 --> 0:00:26.200 We've had some great discussions and I have a lot 0:00:26.239 --> 0:00:29.040 of questions for him. I'm really looking forward to. Uh So, Jason, 0:00:29.080 --> 0:00:32.120 Welcome to the show. Hey Mark, Thanks, it's good to 0:00:32.159 --> 0:00:34.839 be back. And uh go boy, we we've got to 0:00:34.920 --> 0:00:37.080 talk more often. There is so much going on in 0:00:37.080 --> 0:00:40.400 the world that I've been every time, you know, something 0:00:40.840 --> 0:00:42.760 is going on, I'm thinking, I want to ask Mark, 0:00:42.800 --> 0:00:45.840 what would he think of this? You know, yeah, yeah, 0:00:46.000 --> 0:00:49.120 things are There's a quote I can't remember who says it, 0:00:49.159 --> 0:00:53.040 but it's something about there's decades, uh that seemed like 0:00:53.120 --> 0:00:58.080 they I'm butchering the quote now, but there's years go 0:00:58.160 --> 0:01:00.560 by with nothing, and then sometimes there's days that seemed 0:01:00.560 --> 0:01:02.560 like years or whatever. Anyway, there's so much stuff going 0:01:02.600 --> 0:01:04.880 on right now. You know. Another way to say that 0:01:05.040 --> 0:01:12.560 is in a time of like pandemic COVID and and 0:01:12.680 --> 0:01:15.760 civil unrest and race riots, you know, it's like a 0:01:15.840 --> 0:01:18.320 week is like a year. I mean, it's changing so 0:01:18.400 --> 0:01:22.039 quickly and there's so much to talk about that it's 0:01:22.080 --> 0:01:24.440 like dog years, right, that's a that's a that's a 0:01:24.440 --> 0:01:26.640 better way to put it. So, Um, you're the real 0:01:26.720 --> 0:01:29.080 estate expert, you're an investing expert. You get the whole 0:01:29.120 --> 0:01:31.080 big picture, which is why I like talking to you. Right, 0:01:31.120 --> 0:01:33.000 you can't just look at one segment. You have to 0:01:33.120 --> 0:01:36.600 understand everything. Um, And so you you get that. And 0:01:36.600 --> 0:01:38.520 there's some questions that I have, and I know my 0:01:38.560 --> 0:01:42.560 audience has, because I've recently done a series of videos 0:01:42.840 --> 0:01:46.240 and I've talked about different segments of the market. Um, 0:01:46.360 --> 0:01:48.360 I've made the case that there's going to be this 0:01:48.440 --> 0:01:51.040 great migration happening for different reasons. I've made the case 0:01:51.080 --> 0:01:54.760 that maybe prices are still cheap, but everybody's fixated on 0:01:54.760 --> 0:02:00.240 one thing, and that is the pandemic. And because fifty 0:02:00.280 --> 0:02:02.240 million people are out of jobs and maybe a lot 0:02:02.280 --> 0:02:04.160 of these jobs might not come back, who knows how 0:02:04.160 --> 0:02:07.200 long it's going to take. Whatever. Because of that, the 0:02:07.400 --> 0:02:11.080 entire real estate market must crash. People are stuck in 0:02:11.120 --> 0:02:14.519 that trap. And I don't see it that way. I 0:02:14.800 --> 0:02:18.200 believe there's nuance in there. But people have this view 0:02:18.280 --> 0:02:21.800 where because the pandemic, real estate has to crash. What 0:02:21.840 --> 0:02:26.560 would you say about that? Well, Uh, it's a multilayered discussion. 0:02:26.760 --> 0:02:29.280 So first of all, UM, you know when you say 0:02:29.320 --> 0:02:31.800 people say that, I know some people say that because 0:02:31.800 --> 0:02:34.040 I get the comments on my YouTube videos you get 0:02:34.080 --> 0:02:39.239 on yours. UM, but they're completely wrong. I'm just here 0:02:39.280 --> 0:02:43.440 to tell you, okay. I mean business is freaking booming 0:02:43.720 --> 0:02:47.720 for us. UM. We do not have nearly enough inventory 0:02:47.760 --> 0:02:52.520 of properties. My company helps investors by properties nationwide, and 0:02:53.000 --> 0:02:56.600 I mean inventory is super scarce. Things are going like that. Now, 0:02:57.200 --> 0:03:01.600 that's what we do. But like you were saying, UM, 0:03:01.680 --> 0:03:04.200 in in some segments of the market and in some 0:03:04.560 --> 0:03:09.040 geographical areas, it is a completely different picture. If we 0:03:09.040 --> 0:03:15.040 were offering uh properties in any high density city or 0:03:15.080 --> 0:03:19.839 you know, urban area. UM, if we were offering expensive properties, 0:03:20.400 --> 0:03:24.400 I would not be thinking or saying that now. Interestingly, though, 0:03:24.480 --> 0:03:27.639 some of the expensive properties in low density areas are 0:03:27.680 --> 0:03:30.440 actually booming because there's still a lot of people in 0:03:30.440 --> 0:03:33.519 the world with a lot of money, and that money 0:03:33.760 --> 0:03:37.800 is moving. This is a a migration of people and 0:03:38.280 --> 0:03:42.800 money that is happening right now. So whenever a crisis hits, 0:03:42.840 --> 0:03:45.320 and we are definitely in a crisis, I will be 0:03:45.360 --> 0:03:49.000 the first to agree. Please don't give me any silly 0:03:49.040 --> 0:03:52.480 comments on this video that oh gosh, this guy's god 0:03:52.560 --> 0:03:57.040 rose colored glasses. You know. Yeah, no, everything is not okay. 0:03:57.240 --> 0:03:59.160 It's not okay at all. I mean, we are in 0:03:59.160 --> 0:04:02.000 a time of crisis, and um, but in a time 0:04:02.040 --> 0:04:06.440 of crisis, money moves around. People move move around, the 0:04:06.440 --> 0:04:09.120 the you know, the checkers on the checkerboard move around, 0:04:09.640 --> 0:04:13.240 and uh, and that's what's happening now and so uh 0:04:13.240 --> 0:04:16.679 that that reallocation is happening. And you know, I'll share 0:04:16.960 --> 0:04:19.880 some math when when I share my screen and show 0:04:19.880 --> 0:04:22.160 you some of this migration that's going on, and show 0:04:22.200 --> 0:04:26.880 you some of the calculations for the possible migration to come. 0:04:26.960 --> 0:04:31.000 It's just begun. This is I mean, a damn is breaking, 0:04:31.600 --> 0:04:37.040 a tsunami is is forming, and uh, if you're an investor, 0:04:37.279 --> 0:04:39.200 you want to ride this wave and you don't want 0:04:39.240 --> 0:04:40.479 to be on the wrong side of it to where 0:04:40.480 --> 0:04:44.120 it breaks on your head because that is definitely happening 0:04:44.440 --> 0:04:48.679 in some areas. Yeah. Now, um, you last time we talked, 0:04:48.720 --> 0:04:50.920 you had brought up a statement which I've echoed, and 0:04:51.200 --> 0:04:53.240 I want to just kind of stay stay one more 0:04:53.240 --> 0:04:55.640 time for everybody that's listening and say that things you 0:04:55.640 --> 0:04:58.640 are painting it with rose colored glasses. Is that there 0:04:58.920 --> 0:05:05.080 is no such thing as the real estate market, thousands 0:05:05.120 --> 0:05:08.359 of sub markets broken up by area, by price, range, 0:05:08.400 --> 0:05:15.080 by type, by all different types of things, and finance 0:05:15.360 --> 0:05:19.040 markets can be complicated, and there's reasons why people want 0:05:19.040 --> 0:05:22.000 them to be complicated, but really everything breaks down to 0:05:22.080 --> 0:05:27.000 the most simple, which is supply and demand. And everything 0:05:27.120 --> 0:05:30.799 is always driven by supply and demand. And so because 0:05:30.920 --> 0:05:35.400 there's this massive pandemic and there are fifty million people 0:05:35.440 --> 0:05:37.800 out of work, and there are a lot of jobs 0:05:37.800 --> 0:05:40.680 that won't come back, there's a lot of things happening. 0:05:40.680 --> 0:05:42.360 People are gonna be working from home, People want to 0:05:42.360 --> 0:05:44.880 lose certain areas, and and as you just made the case, 0:05:46.200 --> 0:05:50.440 people start moving. And it's the moving that creates supply 0:05:50.520 --> 0:05:53.400 and demand. And so if you can chase those trends, 0:05:53.839 --> 0:05:55.440 you can find the pockets. I mean, I guess is 0:05:55.440 --> 0:05:58.160 that is that what you're seeing? Yeah? And I mean 0:05:58.240 --> 0:06:00.560 better than chasing them, even although you can still make 0:06:00.560 --> 0:06:02.400 a lot of money chasing them. But is to do 0:06:02.680 --> 0:06:06.039 what the great Wayne Gretzky said, And you probably know 0:06:06.040 --> 0:06:08.560 what I'm gonna say, right, I skate to where the 0:06:08.560 --> 0:06:11.400 puck is going, right, you know, like that's that's the 0:06:11.400 --> 0:06:13.000 thing you want to do is skate to where the 0:06:13.000 --> 0:06:16.479 puck is going. And uh so it's definitely going to 0:06:16.960 --> 0:06:23.440 suburban markets, and it's leaving urban markets. And eight of 0:06:23.480 --> 0:06:26.120 the population of the United States lives in what the 0:06:26.240 --> 0:06:31.760 census considers an urban market. Okay, now, let's kind of 0:06:32.160 --> 0:06:34.440 lay a little groundwork if we can, because you're alluded 0:06:34.480 --> 0:06:36.760 to it just a second ago. Mark. Um. You know, 0:06:36.839 --> 0:06:40.080 I've always talked for the last sixteen seventeen years, as 0:06:40.120 --> 0:06:43.640 I've been educating investors and helping them invest nationwide, I've 0:06:43.680 --> 0:06:48.560 always talked about three types of markets. Linear markets, cyclical markets, 0:06:48.560 --> 0:06:52.240 and hybrid markets. Linear markets are the markets we like 0:06:52.440 --> 0:06:57.200 and invest in, their boring markets. Uh their places like um, 0:06:57.240 --> 0:07:01.479 you know, Memphis, Tennessee, Little Rock, Arkans Saw, Um, some 0:07:01.600 --> 0:07:05.640 of the Texas cities, their places like Indianapolis. Um, there's 0:07:05.640 --> 0:07:07.080 a bunch of them, and you know they're all on 0:07:07.080 --> 0:07:09.560 my website at Jason Hartman dot com, so you can 0:07:09.560 --> 0:07:12.760 see what linear markets are. Most of the world is 0:07:12.800 --> 0:07:15.280 a linear market. It's most of the world is a 0:07:15.360 --> 0:07:18.480 boring real estate market where prices just chug along. They 0:07:18.520 --> 0:07:20.920 don't go up much, but they don't go down much 0:07:20.920 --> 0:07:24.400 either in bad times, and these properties have really good 0:07:24.440 --> 0:07:26.400 cash flow. And I know you you agree with me 0:07:26.480 --> 0:07:29.720 on this type of investing. The problem is the news 0:07:29.760 --> 0:07:32.440 media doesn't pay attention to these markets. But the news 0:07:32.480 --> 0:07:35.560 media pays attention to is the cyclical markets, the markets that, 0:07:35.600 --> 0:07:38.000 if you're looking at a graph, look like a roller coaster. 0:07:38.320 --> 0:07:41.800 They have glorious highs and ugly lows. Those are places 0:07:41.840 --> 0:07:45.080 like the West coast of the United States, South Florida, 0:07:45.160 --> 0:07:47.600 just a little bit south of where I live. Um, 0:07:47.640 --> 0:07:50.720 you know, Miami area, Fort Lauderdale, UM, the expense of 0:07:50.800 --> 0:07:54.400 Northeastern markets, New York, Washington, d C, Boston, some of 0:07:54.400 --> 0:07:56.960 the areas of Connecticut, et cetera. Around the world, they 0:07:57.000 --> 0:08:00.080 are places like Dubai, Paris, London, Hong Kong, a k 0:08:00.480 --> 0:08:02.880 In these markets, I wouldn't touch them with a ten 0:08:02.920 --> 0:08:07.600 foot poll Okay. Also, interestingly, the cyclical markets tend to 0:08:07.600 --> 0:08:10.679 be urban markets that are high density. That are markets 0:08:10.720 --> 0:08:13.840 that people are fleeing. They have civil unrest, they have 0:08:14.760 --> 0:08:17.760 a high chance of catching a virus, a place where 0:08:17.800 --> 0:08:21.440 you can't socially distance, and they're expensive, and most of 0:08:21.480 --> 0:08:25.520 them are business unfriendly. There they have high taxes, they 0:08:25.520 --> 0:08:29.360 have intrusive governments. Um. And you know, I think people 0:08:29.560 --> 0:08:31.840 have just woken up that these they just don't have 0:08:31.920 --> 0:08:34.199 that much to offer. You know, I have several friends, 0:08:34.200 --> 0:08:36.439 as I'm sure you do, Mark that live in places 0:08:36.440 --> 0:08:39.200 like New York City, and one of them, for example, 0:08:39.679 --> 0:08:43.160 just Um, left New York City, uh, a six hundred 0:08:43.200 --> 0:08:46.480 square foot apartment that was thirty eight hundred dollars a month, 0:08:47.000 --> 0:08:51.120 and moved to South Carolina, Okay, And you know it's 0:08:51.160 --> 0:08:53.480 like you can you can trade in your four thousand 0:08:53.520 --> 0:08:56.720 dollar a month, six d square foot apartment for a 0:08:56.920 --> 0:09:00.360 three bedroom, two bath, two car garage fifty a hundred 0:09:00.400 --> 0:09:03.640 square foot home for one third of the costs. Yeah, 0:09:03.840 --> 0:09:06.040 in some of these markets that we're in, it's just 0:09:06.080 --> 0:09:09.360 a much better deal. And now that everybody's telecommuting and 0:09:09.480 --> 0:09:12.840 you know, working on Zoom and stuff, it doesn't matter 0:09:12.880 --> 0:09:15.680 where you live. It just it doesn't matter that much. 0:09:16.160 --> 0:09:19.640 So that's the trend we're seeing. So then I think 0:09:19.679 --> 0:09:22.560 maybe it could be easy for some people to believe 0:09:22.600 --> 0:09:26.400 there's this migration happening. Um. Baby boomers want to leave 0:09:26.400 --> 0:09:29.240 expensive areas and move to sunbelt states. People want to 0:09:29.240 --> 0:09:31.520 get out of high density areas go to low tax areas. 0:09:31.880 --> 0:09:34.319 So maybe and and now Twitter and Facebook say you 0:09:34.360 --> 0:09:35.760 don't have to work at the office anymore. You can 0:09:35.800 --> 0:09:38.720 live wherever you want for another year than just that 0:09:38.840 --> 0:09:41.840 was just out today, right, and uh so, so maybe people, 0:09:42.320 --> 0:09:46.800 maybe people can believe that that great migration is happening. Um, 0:09:46.800 --> 0:09:50.560 but will the amount of people going out of work 0:09:51.320 --> 0:09:55.280 be too much to offset that? Yeah, that's a great question. 0:09:55.440 --> 0:09:58.839 And even let me just broaden your your thesis a 0:09:58.920 --> 0:10:01.400 little bit there, because that's a great question and it's 0:10:01.440 --> 0:10:04.280 one that definitely needs to be answered. Look, there is 0:10:04.320 --> 0:10:07.440 no doubt the economy is in crisis. The question is 0:10:07.840 --> 0:10:11.280 which trend is bigger? Is the trend of the economy 0:10:11.360 --> 0:10:15.359 being in crisis or the trend of the mass migration 0:10:15.640 --> 0:10:20.120 of people and money both of those things, people and money, Um, 0:10:20.200 --> 0:10:23.840 which trend is bigger? Well, I don't know the answer, 0:10:24.040 --> 0:10:25.880 and I've tried to figure it out, and it's very 0:10:25.920 --> 0:10:28.200 hard to figure out. But I don't know if we 0:10:28.280 --> 0:10:31.040 need to know the answer to that question. All we 0:10:31.120 --> 0:10:34.320 need to do is play in our little piece of 0:10:34.360 --> 0:10:37.760 that and we know for sure that there's a migration 0:10:37.840 --> 0:10:41.240 out of high density areas to low density areas. So 0:10:41.320 --> 0:10:47.880 people would rather live in Indianapolis, Memphis, Little Rock, Atlanta, Okalla, Florida. 0:10:48.160 --> 0:10:51.640 That's Florida by the way, Ocala, Jacksonville, any of these 0:10:51.679 --> 0:10:55.280 markets that we sell properties in, then they would in 0:10:55.640 --> 0:11:00.120 you know, New York City, downtown Chicago, and um, you 0:11:00.160 --> 0:11:03.760 know that is happening. So I don't know about the 0:11:03.760 --> 0:11:07.040 broader economy. I mean, we are certainly in trouble, but 0:11:07.080 --> 0:11:10.000 I think what what I would say is that you're 0:11:10.040 --> 0:11:13.160 you're right, Uh, you can't look at the broad economy. 0:11:13.280 --> 0:11:16.840 So all of that selling, that potential selling, is going 0:11:16.880 --> 0:11:21.079 to cause an impact. But again back to supply and demand. 0:11:21.880 --> 0:11:24.960 When people leave one area and mass leave a bunch 0:11:24.960 --> 0:11:27.160 of areas to go to a few a few areas, 0:11:27.200 --> 0:11:31.040 the supply and demand is going to offset that. And um, yeah, 0:11:31.080 --> 0:11:32.920 you have a lot of people losing their jobs, but 0:11:32.960 --> 0:11:36.160 there's always people gonna need the place to live, and 0:11:36.200 --> 0:11:38.240 so there's always gonna be segments of the market. Maybe 0:11:38.240 --> 0:11:40.640 the MC mansions are soft, but maybe the entry level 0:11:40.679 --> 0:11:42.679 homes are always gonna have high demand because someone's always 0:11:42.679 --> 0:11:44.560 going to be an entry level home. So you have 0:11:44.640 --> 0:11:46.240 to look at the areas, you have to look at 0:11:46.240 --> 0:11:50.000 the property types. You have to really dig into the segments, right, yes, 0:11:50.080 --> 0:11:52.480 you do. You have to. You have to peel back 0:11:52.600 --> 0:11:57.160 the onion people that make these silly generalizations about, oh, 0:11:57.280 --> 0:11:59.160 it's a terrible time to buy real estate. Well, you 0:11:59.200 --> 0:12:02.640 know what they said that night too. Would you like 0:12:02.720 --> 0:12:04.679 to own have owned some property that you purchased in 0:12:04.760 --> 0:12:09.160 ninety or night or two thousand and eight. You'll be 0:12:09.200 --> 0:12:12.440 doing great right now. Okay. They people always say that 0:12:12.559 --> 0:12:17.640 stuff because they make silly, sweeping generalizations. Um Mark, Right 0:12:17.679 --> 0:12:20.960 before we started today, you said something that was very 0:12:21.080 --> 0:12:25.960 very important. You talked about how people don't uh, they don't. 0:12:26.200 --> 0:12:29.440 You basically were saying that people don't buy a house 0:12:29.880 --> 0:12:31.880 based on the price, they buy it based on the 0:12:31.920 --> 0:12:37.120 payment and because the interest rates are so incredibly insanely low, 0:12:37.600 --> 0:12:41.160 where they're literally paying us to borrow the money after 0:12:41.200 --> 0:12:43.800 inflation and taxes. You're getting paid to borrow even if 0:12:43.840 --> 0:12:46.760 you never write your house out, okay, even if it's vacant, 0:12:47.080 --> 0:12:51.480 you're getting paid to borrow after inflation and taxes. Okay. 0:12:51.600 --> 0:12:54.840 So with that said, we're in an era of truly 0:12:54.960 --> 0:12:58.560 negative interest rates. You get that dead asset with the house, 0:12:59.120 --> 0:13:03.480 and if you look at the average mortgage payments, or 0:13:03.520 --> 0:13:07.000 you compare an apples to Apple's property in terms of 0:13:07.120 --> 0:13:11.240 what it was ten years ago, fifteen years ago. And now, yes, 0:13:11.360 --> 0:13:14.760 the price is higher, I get it, but the payment 0:13:15.000 --> 0:13:18.560 is lower, okay. So so real estate for most people 0:13:18.600 --> 0:13:23.120 has actually gotten cheaper okay, based on a payment. But interestingly, 0:13:23.679 --> 0:13:26.880 the rent has continued to go up, right even though 0:13:26.920 --> 0:13:29.760 the payment got lower for the landlord. So um, I 0:13:29.760 --> 0:13:31.520 want to dig into that a little bit. But um, 0:13:31.520 --> 0:13:33.960 just for the listeners, um that are that are paying attention. 0:13:34.000 --> 0:13:37.800 I wanna, I really want to talk about this great migration. 0:13:37.840 --> 0:13:40.640 And as you said, the great Wayne Gretzky says, skate 0:13:40.679 --> 0:13:42.240 to where the puck is going to be. You told me, 0:13:42.960 --> 0:13:45.120 don't chase the money, get in front of it, so 0:13:45.840 --> 0:13:47.760 you can make a lot of money chasing it too, right, 0:13:48.640 --> 0:13:51.080 smart money gets in front of it. And so I 0:13:51.160 --> 0:13:53.800 want you to tell us, uh and maybe show us. 0:13:53.800 --> 0:13:56.760 You said you have some charts of where what's happening 0:13:56.760 --> 0:13:59.800 with this great migration? And but before we jump into 0:13:59.800 --> 0:14:01.880 those lines, let's not. Let's not jumping up yet. So 0:14:01.920 --> 0:14:03.480 I want to get into I'm just telling the listeners 0:14:03.520 --> 0:14:04.679 I want to. I want to I want to. I 0:14:04.760 --> 0:14:06.320 want you to show us some slides and show us 0:14:06.320 --> 0:14:08.080 this great migration so we can understand where the puck 0:14:08.120 --> 0:14:11.800 is going to be. But before we do that, UM, 0:14:11.840 --> 0:14:14.080 I just wanted to dig into what you said real quick. 0:14:14.360 --> 0:14:17.920 And you said that interest rates are so low that 0:14:17.960 --> 0:14:21.800 we're basically getting paid to borrow. Now, interest rates are 0:14:21.920 --> 0:14:24.920 what two and a half percent or whatever? Um, And 0:14:25.000 --> 0:14:27.200 I understand what you mean, but most people probably don't 0:14:27.200 --> 0:14:28.840 follow that. So if I'm paying two and a half 0:14:28.920 --> 0:14:31.000 or three percent, what do you mean I'm actually getting 0:14:31.000 --> 0:14:34.120 paid to borrow. Let's say you're paying even more. Let's 0:14:34.160 --> 0:14:37.040 take the example, a real world example of one of 0:14:37.080 --> 0:14:40.600 our clients who just purchased the property and closed on it. 0:14:41.000 --> 0:14:43.960 And I had him, I interviewed him on my podcast 0:14:44.560 --> 0:14:47.400 and I talked about it. He's got a three and 0:14:47.560 --> 0:14:53.120 a half percent, three decade long mortgage, so literally he 0:14:53.200 --> 0:14:55.000 will not make the last payment on that mortgage he 0:14:55.040 --> 0:14:59.400 and his wife until two thousand and fifty. Okay, Like, 0:14:59.520 --> 0:15:02.840 think about that two thousand and fifty, three decades from now. 0:15:03.040 --> 0:15:06.560 In three decades, there will be about ninety million more 0:15:06.600 --> 0:15:10.160 people in the United States. And who thinks with all 0:15:10.200 --> 0:15:13.720 this money printing and all this quantitative using that we're 0:15:13.760 --> 0:15:16.280 going to have some inflation somewhere in there. Maybe it 0:15:16.280 --> 0:15:18.080 won't be right away. I get it, you know, I 0:15:18.080 --> 0:15:20.400 don't know when it will be, but it's coming eventually. 0:15:20.440 --> 0:15:23.680 It has to come. Okay, Like Milton Friedman said, and 0:15:23.760 --> 0:15:26.200 you know, people disagree with us, but he said it's 0:15:26.200 --> 0:15:30.320 a good quote. He said, inflation is everywhere and always 0:15:30.360 --> 0:15:34.520 a monetary phenomenon. And what that means is that when 0:15:34.560 --> 0:15:38.600 the printing press runs, when there's more supply of money 0:15:38.880 --> 0:15:42.840 chasing a limited supply of goods and services, prices have 0:15:42.960 --> 0:15:44.840 to go up. You talk about supply and demand a 0:15:44.840 --> 0:15:47.720 lot mark and you know you're you're a bitcoin investor, 0:15:47.840 --> 0:15:49.600 and you know that's one of the reasons I think 0:15:49.600 --> 0:15:52.240 you like it, right because it can't be inflated like 0:15:52.520 --> 0:15:55.880 dollar can. Right. So um to add to that, um, 0:15:55.920 --> 0:15:58.480 just real quick, Um, the Fed right there printing money, 0:15:58.560 --> 0:16:02.200 endless money, trillions and trillions of dollars and they said, uh, 0:16:02.400 --> 0:16:04.040 just recently, I think it was a week or two ago, 0:16:04.320 --> 0:16:08.360 they said, quote, they are going to let the inflation 0:16:08.560 --> 0:16:12.040 run hot. So what happens is typically as they're starting 0:16:12.040 --> 0:16:14.120 to get close to their two percent target, they start 0:16:14.160 --> 0:16:16.320 to taper down to slow it down. They said they're 0:16:16.320 --> 0:16:18.880 gonna run it hot, let it just run pat, which 0:16:18.920 --> 0:16:22.200 means they're gonna overshoot that too. And and as you said, 0:16:22.200 --> 0:16:24.560 what Milton Freema said, it's a phenomenon that I don't 0:16:24.560 --> 0:16:27.040 believe can be controlled. So if they're gonna let it 0:16:27.080 --> 0:16:29.520 run hot past two percent, it's gonna overshoot the ten 0:16:29.560 --> 0:16:32.720 percent or something. Who knows, right? So, Um, anyway, but 0:16:32.720 --> 0:16:34.680 go ahead and finish back with your example. So he 0:16:34.760 --> 0:16:37.680 pays pain three and a half percent, but because inflation 0:16:37.760 --> 0:16:39.800 will end up running as high as two and a 0:16:39.840 --> 0:16:42.880 half or three percent, the goals two percent. Um. Somehow 0:16:42.920 --> 0:16:46.240 that means that he's getting paid to borrow. Yeah. So, UM, 0:16:46.280 --> 0:16:49.000 just one comment before that on on your inflation comment. 0:16:49.280 --> 0:16:52.080 You know, um on shadow stats dot com, which I'm 0:16:52.400 --> 0:16:53.840 we haven't talked about it, but I'm sure that's a 0:16:53.880 --> 0:16:57.880 website you've referenced before. Um. John Williams, the founder, was 0:16:57.920 --> 0:17:02.760 on my show before, and he has a real inflation 0:17:03.160 --> 0:17:06.240 calculator on shadow stats, and people should go check that 0:17:06.280 --> 0:17:09.960 out and you will just see how inflation is much 0:17:10.040 --> 0:17:13.920 higher than we're being told five or six percent at least. Yeah. Yeah, 0:17:14.040 --> 0:17:17.199 but but that said, you know, the the FED and 0:17:17.240 --> 0:17:19.800 the government clearly state that their goal is to have 0:17:19.840 --> 0:17:22.080 two percent inflation. Okay, so let's just take them at 0:17:22.080 --> 0:17:25.399 their order and say it's two percent for this example. Okay. 0:17:25.600 --> 0:17:29.719 Mortgage interest is tax deductible. Okay. So if you are 0:17:29.760 --> 0:17:32.480 paying three percent or three sorry, three and a half 0:17:32.520 --> 0:17:35.639 percent on the mortgage, depending on your tax bracket, you know, 0:17:35.720 --> 0:17:39.840 state and federal tax combined, you're gonna have about one 0:17:39.920 --> 0:17:43.719 point five percent of that be deductible. Okay. I'm assuming 0:17:43.720 --> 0:17:46.240 there's no income against it. The house is vacant, you 0:17:46.320 --> 0:17:48.320 never rent it to anybody, which is terrible. Of course 0:17:48.320 --> 0:17:51.360 you're gonna rent it, okay, but let's say you don't, okay. 0:17:51.400 --> 0:17:55.119 So uh, and if you have two percent inflation in 0:17:55.640 --> 0:18:01.359 one point five percent tax deduction, okay, then you're getting 0:18:01.359 --> 0:18:02.879 the money for free. If you're paying three and a 0:18:02.920 --> 0:18:07.919 half percent, period, it's free money even if you never 0:18:08.000 --> 0:18:10.280 ever rent the house out. Now, if you rent the 0:18:10.320 --> 0:18:13.840 house out, you have got uh. The reason we love 0:18:14.000 --> 0:18:16.040 real estate investing is because we have what we call 0:18:16.200 --> 0:18:21.639 self liquidating debt. Okay, lookay, I love debt when I 0:18:21.680 --> 0:18:23.760 don't have to pay it when I can outsource the 0:18:23.760 --> 0:18:28.080 repayment obligation to someone called a tenant dead is awesome. Otherwise, 0:18:28.160 --> 0:18:30.840 I don't like debt at all. I mean, the only 0:18:31.400 --> 0:18:34.080 supposed debt I have is my car lease, and I 0:18:34.080 --> 0:18:36.320 do think the car lease is actually a decent deal. 0:18:36.480 --> 0:18:38.560 So I usually lease my car. Is not always sometimes 0:18:38.560 --> 0:18:41.439 I just buy them, but uh, sometimes I lease them. 0:18:41.480 --> 0:18:43.359 So my current car is on a lease and the 0:18:43.480 --> 0:18:47.119 rate is super cheap. Okay, so I think that's a 0:18:47.160 --> 0:18:50.520 good deal to lease the car. Um But the only 0:18:50.560 --> 0:18:53.520 debt I have is mortgage debt. That's it. Other debts 0:18:53.600 --> 0:18:57.560 are too expensive and they're not self liquidating. They require 0:18:57.640 --> 0:18:59.800 me to pay it. Now, if you think back to 0:19:00.040 --> 0:19:04.760 all these famous corporate raiders Ivan bow Ski, Okay t 0:19:04.920 --> 0:19:09.200 Boon Pickens who you know passed away recently, um Carl Icon, 0:19:09.640 --> 0:19:11.800 you know all these names we've all heard about, right. 0:19:12.640 --> 0:19:16.320 What they are sometimes famous for is what's called an 0:19:16.520 --> 0:19:21.879 l BO leveraged buyout, and that leveraged buyout basically is 0:19:21.920 --> 0:19:26.360 the technique where they will acquire a company and then 0:19:26.600 --> 0:19:29.680 the way they pay for the they levered up with debt. 0:19:29.800 --> 0:19:31.760 They put a lot of debt on the company, but 0:19:31.800 --> 0:19:33.960 the way they pay the debt back is through the 0:19:33.960 --> 0:19:36.920 company's own revenue that it generates. So it's a self 0:19:37.040 --> 0:19:40.800 liquidating debt. It's like it's like, you know, buying a 0:19:40.840 --> 0:19:43.720 cow and then paying for the cow with the milk 0:19:43.760 --> 0:19:47.399 the cow produces. Right, you don't pay for it yourself. 0:19:47.720 --> 0:19:50.920 It's only only half the milk it produces. Yeah, that's 0:19:50.920 --> 0:19:55.120 even better. That means that's called positive cash flow. Um. Yeah, 0:19:55.200 --> 0:19:57.440 that's that's a great example. So yeah, I mean there's 0:19:57.480 --> 0:19:59.920 there's all these things that are happening. Um, there's one 0:20:00.040 --> 0:20:01.639 more thing that I want to throw out there before 0:20:01.640 --> 0:20:04.720 we jump into telling you telling us where people are moving, 0:20:04.720 --> 0:20:06.400 where the puck is going to be. But the other 0:20:06.440 --> 0:20:08.200 thing that I think people need to keep in mind 0:20:08.280 --> 0:20:10.840 is that the future is uncertain. We have no idea 0:20:10.880 --> 0:20:14.520 what's going to happen. Um, I think we we have probabilities. 0:20:14.560 --> 0:20:16.240 We deal with probabilities, right, we don't. We don't. We 0:20:16.240 --> 0:20:18.560 don't make predictions. We deal with probabilities. The probability of 0:20:18.600 --> 0:20:21.160 inflation is extremely high. I mean, they're printing chillions of dollars. 0:20:21.200 --> 0:20:23.360 They're probably gonna print another tenant chillion before it's over. 0:20:23.800 --> 0:20:26.280 So the probability of inflation is really high. But there's 0:20:26.280 --> 0:20:30.240 another probability that people are are completely dismissing and they're 0:20:30.280 --> 0:20:35.600 automatically assuming that foreclosures are going to rock the entire economy. 0:20:35.640 --> 0:20:37.879 But there's no reason to really believe that because in 0:20:37.880 --> 0:20:40.560 two thousand and eight the government held off foreclosures for 0:20:40.600 --> 0:20:45.320 four years. Yeah, and we're already seen already. We've seen 0:20:45.760 --> 0:20:51.320 rent forgiveness, mortgage forgiveness, rent uh eviction forbearance, rent payment forbearance. 0:20:51.480 --> 0:20:54.040 So we've already seen it just in the beginning. To 0:20:54.080 --> 0:20:57.720 imagine how much more the government could do to just 0:20:58.080 --> 0:21:01.440 forgive payments or whole full foreclosures or whatever. They've already 0:21:01.480 --> 0:21:05.080 done it before, Why wouldn't they do it again? Absolutely, 0:21:05.160 --> 0:21:09.879 you're absolutely right. Look at the government. Um, no government 0:21:10.280 --> 0:21:14.480 and no central bank wants a bad economy. That's a 0:21:14.520 --> 0:21:17.240 bad deal for them. One thing we know for sure 0:21:17.280 --> 0:21:21.040 that they want is inflation, because inflation makes it cheaper 0:21:21.320 --> 0:21:24.280 for them to pay their debts off. And the US 0:21:24.480 --> 0:21:28.240 is in a very enviable position having the world's reserve currency. 0:21:28.640 --> 0:21:31.240 People like Peter Shifts saying, you know, the US is 0:21:31.280 --> 0:21:34.480 going to lose its reserve currency status. You know, he'll 0:21:34.520 --> 0:21:38.240 probably be right long after he's gone. Okay, I mean, yes, 0:21:38.320 --> 0:21:42.560 someday that may happen, sure, But the reality is, at 0:21:42.600 --> 0:21:45.040 the end of the day, the country that's going to 0:21:45.160 --> 0:21:47.679 control the reserve currency to the world is the country 0:21:47.720 --> 0:21:52.359 with the most aircraft carriers and that's the United States. Okay, Um, 0:21:52.400 --> 0:21:56.439 I mean the ability to wage war and you know, 0:21:56.800 --> 0:21:59.440 keep us interests are that's gonna win the day. It 0:21:59.520 --> 0:22:02.680 always as it always boils down to the military at 0:22:02.680 --> 0:22:04.680 the end of the day. Well, that's a whole separate 0:22:04.680 --> 0:22:07.119 conversation that we could definitely discuss because I don't know 0:22:07.119 --> 0:22:09.959 if we see that eye to eye, but um, that's okay. 0:22:09.960 --> 0:22:12.600