Video Closed Captioning:
good morning good afternoon good evening
folks michael zuber one rental at a time
it is thursday afternoon which means
it’s the three amigos how you doing matt
i’m doing awesome i’m so excited for
this topic i can’t wait and dion how are
you
howdy i’m doing great ready for round
two i’m glad you gave me a couple
seconds to catch my breath because the
things you guys say between recordings
that’s me every time
it is a lot of fun it is a lot of fun
well guys what we’re gonna do in episode
number two uh is we are going to revisit
the 50-year spreadsheet this is actually
something i first created seven months
ago
to highlight that i believe we were
entering 70s environment wage inflation
people at the time thought i was crazy
look at where we are now we have more
and more people including the ceos of
goldman sachs and jp morgan saying wage
inflation is everywhere that is their
words their quote not mine
so now that more people agree that we
are in wage inflation i want to bring it
back
and remind people what happens when
rates go up 300 when rates double uh
because most people think of rates
double housing crashes so we will remind
people what happened
um yeah so we’re going to go back and
revisit the 50-year spreadsheet i’m
sorry but again most more and more
people need to see it you ready
very ready now if you updated the
spreadsheet to have a sound clip when
you go to update the field and you
return to where it actually laughs no
not yet
now yeah that would be sophistication
and skills that i do not have i’ll get
on it there you go there you go
so folks just a reminder i created this
spreadsheet all the data sources are
highlighted if you want to go see that i
got the right numbers all the links are
here go to go
go check it out i’ve summarized stuff by
decades highs and lows so there’s a lot
of stuff in here and most importantly i
thought this was so valuable i give it
away for free in my free course link
below and in the paid course it’s just
in the bonus sections but specifically
let’s talk about the 1970s
and the first thing i want to do is i
want to look at 1973
which you see here in column e
and then i want to go right over here to
column i don’t know what that is behind
the lumberjack m um
yeah and it’s a 16 interest
right so it goes from here to here and
that would be a 800 percent
increase or 800 yeah 800 percent um
not not percent 800 basis points
yeah increase and so again it is
possible for rates
uh to double and uh that’s that’s pretty
crazy so any thoughts on on interest
rates doubling what that might do to
housing uh we’ll go to dion first i
guess
so what i don’t think people understand
is how likely it is that interest rates
double
i think they’re going to go up quite a
bit
i still think middle of the year middle
22 we’re going to see rates come down
because of the fear of deflation but
right now as the data is coming out
first saying inflation is transitory and
then saying something ridiculous like
inflation is seven percent yeah it’s way
more than that it’s when it’s way more
than that yeah i i wonder what crystal
palace with a gated community and a
guard standing at the edge those people
live in that they’re looking at the
numbers thinking it’s only seven percent
or you see something like rents have
gone up two point three percent oh that
makes me mad i actually had to recompute
cpi because i’m such a stupid number
right and in my area
at tenants request
rents are increasing 20 to 40 percent
and there is data out there that’s
showing 2.3 and they’re saying that
that’s part of inflation
when the data comes out and they can
prove that inflation is multiples of
what people think it is currently rates
could go up and i i could see it easily
doubling
and that’s key that’s that’s one of the
things that i want people to take away
from this 10 or 20 minutes the chances
that the 30-year mortgage rate double
aren’t zero
and they’re not even 10 they’re it’s a
significant number and the one reason
we’re doing the spreadsheet again
because six months ago when i created
this nobody thought everybody thought i
was crazy
and
now we’re here in wage inflation is real
so again
rates doubling matt what do you think
i called four by july first and i called
um
upper four up between upper four and
five by the end of the year yeah i still
think i’m right and you know what i’m
not only just saying it
i refinanced exactly 80 of my portfolio
because that’s what i believed
so i’m not saying anybody else should go
out and do what i did but that’s what i
did
that’s what i did millions upon millions
of dollars of real estate
i spent the
hundreds of hours with my lovely wife
putting together all these spreadsheets
because this is what i feared the most i
fear that the rates that we saw as
investors at four percent
30-year fixed-rate debt was likely the
last time that we were going to see that
and worst case scenario
is i have all the fresh data
and i have all the data already put
together if in six months dion’s right
i’m going to go back and i’m going to
refi them again exactly
that’s the worst case scenario that’s
what i’m going to do best case scenario
is or
depending on what you call best case
i’ll keep it the way it is and i got 30
year fixed rate debt
yeah and a bunch of cash
yeah again the beauty of our channel is
we really do this we think about our
market every day we talk to the audience
but we’re doing this for a living so
yeah i did the same thing yeah so so
again the other prevailing
call out there is if interest rates go
up you know if they go up one point it
has to fall 10
so in this example it goes from 8 to 16
it’s supposed to fall 80 percent right
you guys you guys have heard that yeah
well let’s see what actually happened
in in 1973 it was 27 000
and in 81 it was 59 000 so just in case
you’re not good with math that’s more
than a hundred percent
that’s not supposed to be possible
i don’t get it how can that be
what do you think matt wages
exactly
it’s just that simple wages so look at
this wage line folks
this is why i keep telling people the
wage inflation cycle is real it’s going
to
surprise a lot of people wages went up
almost 100 as well right the family of
four went from 10 05 to nineteen
cumulative percent never below five
point four percent now again i’m not
calling wage inflation like this for a
decade i’m just saying
don’t be an idiot talking about rates in
price
without understanding that wages can
make all of that go away correct
correct yeah
yeah i think there’s
i was gonna say i think there’s this i
think there’s this component which is
the wages piece you know on top of the
pricing and price of pressure but the
other thing that’s also not being ever
really discussed in any of these crisis
videos is inventory yeah exactly
and when you put
the four of these things together
i mean this is a monster like we’ve
never seen before
because there’s never been this much
cash in the market there’s never been
wage increases like what we’re gonna
like actual real wage increases
not what the government’s telling you
they are but what they actually are you
know the whole reason that you know we
had talked about you know doing that
when you did that number it was like
factoring cpi over 10 yeah you and i
were laughing in between a videotape
we were laughing between the tank
because i was like there’s no way it’s
two percent annually on rents
it’s not the number it’s not the number
anywhere
like i don’t care where you are it’s two
percent nowhere no you know and so again
it’s just one of those things where
people will be lazy
and allow themselves to get permission
to not do the work
and to sit back and wait and like well
you know what i just wasn’t doing it
listen if warren buffett listened to the
news
every day on how to invest he wouldn’t
be warren buffett
yeah
dion you want to add anything to this
there’s a couple of things that changed
between 1970 and now too we had
in a family in a family of four in the
70s generally you had one income true
and so if one income
goes up
it’s kind of like owning a single-family
house versus a duplex yeah if if a
single-family house if rents increased
200
you get 200 more with a single family
house with a duplex it’s 400 more
because my duplex is rent for exactly
what single family do in my in my area
there’s no difference because they’re a
small multi-family so a couple of units
will increase more so if yeah if you
have currently
and in the 70s and 80s which is what our
parents time yep you would have a job
and you would stay at one job for a long
period of time so you saw those
incremental increases in wages where
people would say oh i’m i’m making seven
percent more than i did last year so
that brings the average to these numbers
that you’re seeing
in the 2000s it’s more common to change
jobs every two to three years and see a
significant increase instead of that
gradual increase from the same employer
but the wage inflation that we’re seeing
now is partially due to this um what are
they called the
great resignation of the uh november and
december of four million plus people
quitting jobs that’s not four million
people who went on unemployment that’s
four million people who changed jobs
exactly changing jobs increases wages a
lot more than the percentage of wage
increase that we’re going to see wages
drives rent
people by buy houses based on payment
and the 40-year mortgage so
again i see
and see a significant increase in
housing prices in the next couple of
years based on this data and even with
interest rates going up because we have
those other in factors increasing the
ability for people to buy more and more
expensive places yeah and and just for
the final one because more and more
people ask for it i did add s p data row
- look at the s p 500 1973 january 1st
close it’s 118.
look at it
january 1st at the end of 82
it’s 117. s p 500 did nothing for a
decade that is dead money dead money
dead money real estate doubled rents
went up
uh again this is just a repeat of what’s
going on in the 70s i believe we are in
a very similar environment where the
stock market may have some dead years
ahead
but real estate because it’s levered
because you need a roof over your head
nobody likes to live in a car
wages are going up wage inflation again
jamie dimon ceo of goldman’s like
wage inflation is everywhere
i don’t know what you guys want to see
i’m glad i brought this to you six or
seven months ago if you didn’t pay
attention then you might want to pay
attention now go get this spreadsheet is
in the free course uh link below uh deon
any closing thoughts
what is measured can be improved
follow the data
don’t don’t think
my real estate agent or my lender said
said this and follow or worse
the lender who’s telling my friends to
get their adjustable rate mortgages
follow the data what caused 2008 a lot
of the problems in 2005 adjustable rate
mortgages ninja loans 105 percent loan
to value borrowing we can look at
historical data like that
to know what to do now
and so when you put all the work into
this spreadsheet that’s actually helping
me figuring out
here’s my plan if rates go up here’s my
plan if rates go down here’s my plan if
they stay the same have a plan for each
outcome
love it
and how can people find you
right here on youtube dion talk
financial freedom very cool and matt
what do you think
um yeah i think at the end of the day
why are graphs on these other channels
more important and more valid than your
graph it’s your spreadsheet like they’ll
they’re taking i will i will always
pick the winner of an argument that
brings nine data elements and how they
correlate to the one that brings two and
how they correlate so i’ll take the
narrative that’s supported by the most
factors of data
i’m a slave to it i’m a slave to the
number it’s the way it goes i don’t
invest on feelings
it’s not what makes me warm and fuzzy on
the inside the numbers the facts
touchy feely lumberjack
is that possible that’s what makes
that’s what makes me giggle like a
schoolboy there you go is the numbers i
want to see the numbers and i want to
see if you’re going to give me a
narrative i need to see the supporting
data elements and when you and i were
talking about the spreadsheet and the
original was 10 years and then you were
like okay 20 and then it was like 50.
and it was like yeah like let’s see what
the story is and that is the story and i
think that so many things
i mean the gas crisis then food crisis
now yeah exactly
i mean everything and everything’s up
off the charts so at the end of the day
when you walk out your door when you’re
paying your bills do you feel better
about where you are now versus even two
years ago
how could you how could you and so
recognizing that things are shifting in
the market it’s your opportunity if
you’ve done the work put in the time
brought in the right number of resources
you will be playing at an elite level
that puts you far and above the other
people in in the game that will be on
pause right now because they read a
report that said
yeah and how can people find you
lumberjack landlord mr mrs lumberjack
tonight live stream at 8pm eastern time
hopefully uh
we have i expect we’ll have some fun but
i have no idea what ashley’s gonna say
because i haven’t really seen her so in
other words you might be in trouble i
should probably
i don’t know i think she might have seen
the video where you said that we were a
great couple and that she was the half
of a great couple and then i said 72
percent
i don’t i mean i was saying that about
me
i’m hoping that she understood the joke
but i don’t know
ashley he really does love you for sure
there you go thanks guys