Real Estate Markets Do NOT CRASH At the Same Time and the Same Rate. Where will PAIN BE FELT FIRST?

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 sir

i’m doing super awesome one was fun

let’s do two yeah this one was fun let’s

do two so hey uh one of the things i

wanted to talk about with you is i think

it’s very clear

uh that the housing market for the next

couple of years is

it’s not going to be running as smooth

as it should be right as i’ve said the

fed broke housing we don’t need to re we

don’t need to go there again they just

did

but to me that means there are parts of

the market that are really exposed to a

lot of pain

so i thought we should play some ping

pong go back and forth and talk about

those areas uh you’re the guest i will

let you go first what are one of the

areas you think are set up for a lot of

pain

you’re nothing if not a gentleman

michael

um i think the

i think

it is the

supporting cast

that is in the most trouble

because i think as i look at it you know

agents you can be a buyer’s agent you

can be a seller’s agent you’re going to

be whatever agent you need to be right

now

but i think that they can also go into

rentals they can go into foreclosures

they can go into other things and so as

much as everyone says all real estate

agents are screwed all the stupid ones

are screwed all the lazy ones are

screwed if you’re a worker and a grinder

guess what you’re gonna make a lot of

money and you’re gonna make even more

money because a lot of these people

haven’t set any of that network up so

you better get cracking now and do it

now but the people that are going to get

crushed

mortgage brokers

crushed

home inspectors

crushed

um

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like a lot of like so landscapers won’t

be as much because banks actually

contract with them to take care of the

properties but like general maintenance

guys or and certainly construction crews

those guys are gonna get crushed well

that and remodelers anything again if

you’re in an industry that benefits from

lots of housing transactions

and we see half as many transactions

of writing on the wall right so yeah

that’s one uh the the one that i

actually think is most at risk is um

i think airbnb i think a lot of people

got again if you’re doing airbnb right

like anna kelly does you know kind of

the top a properties

you’re going to be fine i’m not talking

to those i’m talking about all the

newbies that ran to airbnb because it

was easy money the thing that i’ve

learned about real estate in 22 years is

every now and again there’s this new

widget this new toy people play with

and you know a couple people have

success then they market it more people

come in they probably have medium

success and then

the wave comes

the stupid money comes you cut corners

you down select

and uh you lose your ass so i think

there’s a lot of kind of second-tier

cities a lot of second-tier properties

uh that people are going to lose money

in my world that’s an alligator uh

they’re gonna

uh and they bottom so high that they

don’t make sense as monthly rentals so i

think there’s going to be a lot of

people trying to desperately sell which

is going to impact some markets more

than others

uh but yeah i think i think there’s some

airbnb concentration that’s

it just has to reverse i think

yeah i agree um i think that the next

people that suffer are the older

landlords ooh

i think the older landlords suffer

because they didn’t raise the rents now

they’re going to be trying to raise the

rent in the in the flight of all of

these crazy cost increases

they might try to increase rents now the

quality of tenant has been drastically

reduced

um we actually looked at the numbers on

the latest unit that we posted it was a

three bedroom

we had about a hundred applicants in a

week

and 17 of them met the credit

requirement wow

wow only 17 so call it 17 of them credit

and our credit requirement is 680.

so

it’s not it’s not 720. right it’s not

720 it’s not 700. so i think the older

landlords now they can turn it they can

turn it around they can they can sell or

they can do a sub two or they can do our

seller based financing they have some

out yeah but to continue as a landlord

will be really really hard because the

quality of tenant is pretty bad yeah

i think one of the most unfortunate

places where the pain is coming so i

think airbnb is first

but i think right behind it are what’s

called limited partners or lp’s

inside of syndications oh i gotta tell

you man there are some lps that already

lost their their money it’s already gone

and they don’t even know it yet right

it’s it’s like oh i bought this hundred

unit or 400 or a thousand units i got

you know it’s at a four cap i i got

bridge debt of one year and don’t worry

we’re going to value-add and i mean

what are you doing right you there’s so

many people that got lucky the last two

years

and they just kept they just keep moving

their chips to the center of the table

it’s a very addictive thing

and um the casino’s going to come

calling and um

now not all i don’t want i’m by no means

saying all i’m just saying too many

there are too many lps that over the

next 12 to 18 months are going to reach

out to us and say i lost it all or worse

yet they came calling for a capital call

and i told them to f off and then they

lost it so

yeah so let’s do one more uh because

again i think there’s a bunch of pain

coming it’s definitely in in parts of

the market uh you got one more

yeah commercial oh yeah commercial so i

talked to one of my banks

they have a team

of

uh a team of uh you know basically

brokers

um in the last 30 days they have done

zero applications

wow

zero it’s not a tiny team

and they’ve done zero

zero now just so people know when you

say commercial that’s everything

multi-family office retail everything

it’s everything it’s basically anything

five units and greater

they have done zero applications nothing

so

that’s that just tells you that because

again that market is very interest rate

sensitive right shorter terms you have

to you know 25-year ams not 30. it’s

just so many differences that people

don’t see

what you really have is you have a push

and pull between price and expectations

i think it was um

rod khalif

he talked about he was already he was

already in contract and because rates

got him he had to he has to retrain and

lower like 10 million bucks or something

yeah all of this is happening right now

so yeah i think i think commercial is

going to soften

it’s just interest rate sensitive it’s

it it’s soft like puppy poo after a week

of rain

it is

it is not yet not good

it is not we’re not picking that up

honey exactly no one wants babe nuclear

winter is the next time i touch that

thing that’s right this is like this is

what we’re looking at and so i look at

it from a from a commercial perspective

and what’s really interesting is i said

let me ask you a question and this is a

rude question and you don’t have to

answer it it’s like go ahead and i said

seeing as how you have literally nothing

to do what are you doing now no

he goes um i was like i know you don’t

want to answer it but i already know the

answer so if you tell me i you’re just

going to tell you i already knew the

answer right he goes

yeah we’re looking through all of the

loans that reset in the next six months

yeah of course

because they’re gonna go from mike

they’re going from the mid threes

to the sevens

yeah think about that again that’s think

about that that’s why i think lps are

crushed right

right but if you like these are things

that were bought think about this these

are things that were bought in 18

because it’s five-year death large

so these are things that were bought in

18.

18 you’re just getting the asset you’re

putting money into it you’re getting it

up to speed then you finally get a

tenant in 19.

then

pandemic

pandemic

no everything working from home

and now they’re finally starting to come

back to the office in limited share

and

your debt is going to completely

restructure and likely raise your

payment 60 percent

again this is opportunities for folks

that have relationships go meet these

bankers i’m going to send another note

to a couple of banks that i work with

this morning saying hey just so you know

i’m out here

let me know if there’s somebody in

trouble and real quick mike talk about

can you just talk about that a little

bit because i don’t think people

understand

that bank is not going to come to you

and say i need 5 million

they’re going to come to you and say we

just want you to assume the paper

responsibility for the product yeah so

i’ve i’ve i’ve done

almost 50 units this way uh in the last

crash all you have to know all you have

to do is be a performer

um i bought

i’m trying to be accurate i bought an 18

and a 10

um nothing and then i got the 10 next

door i had to put 50k in escrow for the

repairs which was

i had to do it anyway

and all of them gave me the debt all of

them whacked the rate because again they

just wanted somebody they just want to

know banks don’t want to operate this

stuff especially if it’s in rough shape

like two of my three

they’re like get this off the books

this this is a liability this is bad

yeah it was it was a it was a bad asset

but they lended against it because the

market was going insane yeah because the

numbers made sense it was they made a

decision based on the spreadsheet not

based on the actual asset itself

so these are the areas where again

network network network i’ve gotten in

front of all of these different people

and said if you have that

underperforming asset and you just need

someone to assume the loan at least

let’s have a conversation about it there

might be mike i might get into a hundred

unit that way yeah you could

yeah the biggest i looked at last time

and maybe it’s just because i didn’t

have the scratch or the reputation it

was 40 some odd units

yeah it’s yeah the more you know the

bigger scratch the reputation you’ve got

20 years on you they should probably

bring you anything

right that’s the whole yeah exactly i

certainly call them enough

this is awesome man do me a favor where

can people find you lumberjack landlord

on youtube and instagram at 11 30 a.m

live streams on sundays awesome thanks

man thanks

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