Closed Captioning:
good morning good afternoon good evening
folks michael zuber one rental at a time
back with his good friend matt the
lumberjack landlord how you doing buddy
i am super excited to be here it’s
tuesday
long weekends trying to really ease my
way into things so hitting it off this
way on a tuesday i love it i love it
well hey one of the things we need to
talk about is um really kind of a
two-step function
i don’t think there’s any question that
inventory is going to be rising in lots
of things obviously we talk about real
estate all the time i don’t think it’s
any secret that inventory is going up my
buy box is doubled in six weeks
we saw retail earnings from walmart and
uh target in amber carmy and fitch and
many others talking about inventory up
so uh one of the things that we need to
talk about now is we need to translate
inventory going up
what might happen
and
could there be deflation
around the corner and we’ll talk about
maybe by the fall this is obviously a
topic that kathy wood has been talking
about for quite a while
uh that what we are going through is
kind of a
snap and on the other side of this is
massive deflation so where do you come
down on this you know inventory leading
to a massive deflation
as soon as the fall
too fast
yeah potentially but just too fast i
think so i think we’ve seen
you know inventories while they’ve
increased six weeks right they’re not
going to double again in six weeks
they might go up
that the same rate right like 500 500
yes so we’ll go up 50 yeah i think
that’s exactly reasonable because if we
look at what happened like with
foreclosures back in eight nine and ten
it was three it was kind of consistently
like 250 to 300 and sometimes there were
ups and sometimes there were downs but
it was kind of consistently in that
range i think largely we’ll start to see
that happen you know and it’s already
started happening in a number of markets
um my market is uh for
uh for my buy box
is up 300 in in two weeks wow we went
from we went from one to three well so
that’s that’s why you got all these
channels talking percentages right right
exactly up 300
yes exactly so i get the shock value of
that but again it went from making one
bad decision or one opportunity to make
a bad decision to three opportunities to
make a bad decision because they are all
outrageously overpriced yeah like at
least 20
over what they would appraise for or
combat like what 20 over so
i like what we always talk about which
is
that’s a that’s a wish price not a real
price and so so long as you’re dialing
it back
and looking at the sales figure you’ll
see that there’s still an increase over
last year so i think on the deflation
side i think that
it’s
it’s tough to make those calls because
we don’t know what the fed’s going to do
we don’t know what the government’s
going to do we don’t know what room new
rules there are going to be so i think
it’s tough to make those calls
i think i think the best call at this
point to make is that there’s an ever
shifting market
i think that people should still be
doing the work every single day to make
sure that they’re seeing exactly what’s
occurring in their market but i think
deflation by the fall
mike we’re talking three months yeah
september’s the fall
come on like
three months and all of a sudden we’re
gonna go from
inflation to deflation
and there is the whipsaw i’m gonna take
your word for it on the abercrombie
thing because they haven’t made a pair
of pants that i’ve been in since i was
about 13 years old
so that ain’t happening for me
i just go and i test out how big my arms
are when i put their leg when i put them
in the leg
i’m just like it gets stuck at the calf
here every single time
so what i think is really interesting is
i think there is that whip saw effect
i’m seeing that in construction products
too yeah um lumber
lumber lumber’s coming down quite
significantly you know we’re we’re less
than half of where we were at the peak
yeah so i think i think i think there’s
really when you talk about deflation
and then you talk about the fall you’re
right three months away so as an
economist as somebody has looked at cpi
in details kind of how it breaks it
apart
i think there is every chance
that some aspects of cpi show negative
numbers aka are deflationary
i think clothing is a great example yeah
i think what we are seeing
when you read target and walmart and
others right calls and there there’s a
whole list of five or six companies
retail companies that saw inventories
explode uh 30 to 50
that’s a problem
so i think there will certainly be some
aspects of cpi that will be deflationary
uh they will be line items not entire
categories yes uh i think some of that
can move quickly
when you step back and you look at the
larger asset of real estate which is
what i’ve looked at for 20 some odd
years it just doesn’t move that fast
right for heaven’s sake a natural
transaction i.e contract
to closing let alone
listing to closing
is 60 days right right you go into
contract today there’s a good chance it
doesn’t even record
for 60 days correct so to call deflation
in real estate by the fall or a hundred
days from now
is
it’s just way too fast it’s just way too
yeah prices
prices don’t correct that fast no if you
were going to talk about now nobody ever
talks this way
because transactions aren’t deflationary
but if you wanted to tell me real estate
transactions would be down 20 by the
fall
i could get behind that yep absolutely
i think i think it’s going to be faster
than that i think transactions are going
to fall fast than that so
you know
in looking at my market i saw a property
that went on for i think it was
619 um
wish price yeah
they still got six
wow now
that six
is like 27
higher than a year ago
geez so all i’m gonna say is
wish price
actualized price yes it’s a yeah it’s a
comp now
right that’s now a comp and the problem
is is that you know still appraisers
they have a difficult job in that regard
with a fast-moving market fast moving
either way makes a appraiser’s job
really difficult yeah but i’ve seen
stuff not appraised out but i’ve also
seen stuff where i was just like
how did they get there like that
number’s nuts but to your point becomes
a comp
yeah so so when we look at deflation
longer term which is i think what more
like we should talk i believe if you’re
going to talk about deflation in in cpi
or in in housing you really got to look
out at least six months yeah i agree
right if we if we were talking spring of
2022 or 22 2023 gosh getting ahold um
that’s probably an interesting
conversation certainly summer of 2023
but yeah i think there’s a lot of hopium
yeah i think there’s just a lot of
people that hope real estate crashes
like tomorrow
and unfortunately
um transactions can crash that fast look
at new homes right 17 in 30 days that’s
a crash sure but it wasn’t price right
it’s just it’s it’s
real estate’s much slower than that but
any in the end i certainly hope cpi
comes down let me kind of close with
this cpi is way too high 8.3 i hope it
comes down there will be components of
it coming down but there will be others
like food and gas that are going up
so it’s it’s
it’s not getting better for a lot of
folks i wish i could tell you i thought
it was
nothing would make me happier than
saying inflation is breaking because
i’ve been that kid who didn’t have food
who packed up his you know all his toys
in one suitcase and was a weekend from
moving i remember that and um
i know there’s some some some just
uncomfortable conversations going on and
thoughts and moms and dads crying over
their checkbook because they don’t have
money to buy food and all of that
we had a cocaine and red bull fueled uh
two years uh stemi checks and stimulus
and all of this stuff rained down and
uh
monetary policy was
drunk and unfortunately the the price is
inflation so i don’t see deflation
in 90 days i don’t see it by the fall i
certainly don’t see it in housing
housing doesn’t move that fast i do see
transactions adjusting very quickly we
have destroyed demand i think we’ve
destroyed supply as well
uh so that’s my thoughts on deflation by
the fall any closing thoughts and where
can people find you
um they can find me lumberjack landlord
at on youtube and on instagram and i
think my only closing thought is i think
that where we’re different than the
posers who talk about this stuff that
don’t do it yeah is that you know we’re
gonna have other videos today they’re
gonna talk about exactly what we did and
kind of take people through that and how
we prepared if you don’t know how we
prepared look at any of the 7000 videos
that mike’s done on his channel but
especially the last six months we did a
lot of things preparing for this exactly
we’re not talking our book when we say
that the market’s not going to crash
we’re actually talking the opposite of
our book but we’re happy to do that
because we’re just telling you what we
think is coming based on our experiences
and what we’re doing day to day yeah and
let’s not be confused you and i are in
the market for lots of things right we
own some rental properties right over
300 combined
and uh i don’t know i bet you our
combined spend on expenses in a month or
just on just on capital right fencing
and windows and all that stuff’s got to
be six figures
combined yeah i’m always in the business
and i can tell you a fence a fence i
just did a new fence it was it was
smaller than the one i did last year but
not by much
was about 40 off lumber’s cheaper yeah
right so that’s inflationary we were 8
000 bucks on a roof and now we’re 6 400
on that same roof so yeah we just and we
had a bunch of stuff that we quoted out
kind of last year we could
kind of looked at you know and so um
yeah definitely i agree yeah
very cool thanks buddy thanks mike