Video Closed Captioning:
good morning good afternoon good evening
folks michael zuber one ritz-led time it
is thursday afternoon it’s my favorite
day of the week
yeah it’s my favorite day of the week
it’s the three amigos how you guys doing
we’ll go to dion first
howdy zoo we’re doing great ready for
round three
and matt how are you i’m still here so i
gotta be having some level of fun there
you go there you go uh so what i wanted
to talk about here is i think uh you
know on my channel specifically the
daily financial news we’ve been talking
about how i thought q4 was going to be
artificially goosed and it was
but that we might come into q1 and have
a very low if not negative gdp print
if in economics a recession is called
when you have two consecutive quarters
with negative gdp growth
and i fear that we have one of those in
our very near future so i thought i
would talk to both of you about a
recession
what it might mean because you both are
old enough to have been through several
right we can talk about it at the
business level right you were both
employees and business owners we could
talk about it from a real estate angle
rentals whatever you want but let’s talk
about a recession because first and
foremost i can guarantee the audience
this we will have several more
recessions in your lifetime you could
argue when they happen but they will
happen so dion
what’s the recession like in the
trucking industry
i
don’t know that i’ve ever understood
what a recession was because
until i made it to the age of 40
without ever having a thousand dollars
in the bank as a single parent with
three kids i always felt like i was
struggling so i don’t care if it was a
booming market if the world was falling
apart the housing crash of 08 the
dot-com crash i’ve never had any money
to worry about
so i want to be really careful with how
i say this because i don’t want to be
insensitive to the negative impact that
a recession has to people
one of the reasons i like making content
that helps people get on the property
ladder and well it helps you get to the
point where you make work optional is
because you’re buying cash flowing
assets
and when you own assets and you have
cash flow from those assets
inflation
is your friend
a recession
while somebody who’s working and working
very hard for the money that they make
goes to the store and worries about the
price of milk
i don’t care
it the recession when you own cash
flowing assets
if you’ve structured your portfolio
right with good diversification of where
the properties are the property types i
diversify my tenant base so they’re from
three different categories i’ve done
things to protect myself i i call i
don’t call it proof but i call it
recession resistant
that i’m actually and i’m not so i want
to careful how i say this i’m looking
forward
to not suffering from a recession like
taking the last 10 years of action in a
specific pattern to be ready for one
like my my strategy is designed for a
pandemic a stock market crash and you
know a recession or a prolonged
government shutdown i’ve been planning
for those so there are things where i
could have gotten better cash flow i
could have gotten better appreciation i
could have taken more risks to perform
better but instead i took the amount of
risks appropriate to the way i was able
to diversify
to be ready for what we’re going to
experience in the next year
very well said how are you matt you and
i’ve been through a couple of technology
recessions where you know you’re hiring
people then you’re having to let them go
that’s not fun no no i remember looking
at spreadsheets all the time going well
i got to find seven names on this list
so
what do you think about recession in the
technology space recession sucks
it’s horror it’s i mean you know it’s
like
multi-year contract stuff
that starts coming due like
just get ready to hear it right like
just
grind gr well we’re asking all of our
vendors to take a nine percent cut
across the board sure why not yeah i
mean i only make seven percent profit so
why wouldn’t i give you nine
like
that’s the kind of thing that you’re
that you have to emotionally prepare
yourself for i think
the this is why it’s so important that
these crisis videos so often on on
youtube are stupid yeah because agreed
they actually weren’t doing anything in
2008 except for taking another
beer hit
you know playing beer pong right so
that’s what i find a lot of the younger
guys on youtube are talking about and
they don’t know they have no clue they
were completely insulated from it they
were in college or they were in high
school or they had just gotten out of
college so they have no idea we lived
through it we invested through it so the
lessons that i learned from last time
were
don’t be over capitalized you can’t be
over capitalized you need to have as
much money as you possibly can have
don’t be over levered
don’t be heavy in margin other than what
you know scent even even questioning
what banks will give you that created a
lot of really good investors
the guys that got sunk some of them got
even better than what they were and
they’re like yeah i’m not going to get
caught like that again other guys are
going to learn exactly the same lesson
the other thing that i think
we’ve also put a lot of time effort and
energy into is we know that when that
correction happens
we know that it’s going to directly
impact workers
and so the thing that we want to do in
being a good properly run business and
making sure that we dance with the one
who brung us and that we help them in
their time of need
we make sure that we have
slate ready projects that we can put
into play immediately i literally have a
page of projects that we will do if the
market corrects 20 percent
and there’s a bunch of workers out there
materials are have have corrected in
price
i have a whole slate of projects that i
will keep our main subs busy for months
months if not a year year plus between
us and other customers that i know that
they have so they won’t feel the pinch
nearly as much
sort of the other thing that we will do
as well is say hey listen
you raised your price a lot
in the last five years my turn
and so i will put you to work but it’s
not going to be at the same
you know red retail price that you guys
have been getting me for because you
have 17 other people banging on your
door
you don’t have 17 other people banging
at your door and so the economy we will
be there to help you and support you but
we recognize you’re going to work with
us just so you can stay busy and and
make money yeah
great stuff there the only things that i
would add on top of that because again i
suffered through the 80s recession as a
teenager it’s one of my most painful
memories watching my mother not be able
to pay bills having to get a job as a
teenager at a fast food joint i mean i i
have these scars or baggage or whatever
you want to carry them what i would tell
you as an adult
is first and foremost your kids are
watching
right my parents
didn’t really get that we were watching
uh i took it one way my sister took it
entirely different we’re thus different
today
second uh first thing i would do is i
would evaluate my job yes i know the job
market 10 million jobs open blah blah
blah if we have a recession coming the
job market will get darker quicker
what i would do is i would
if you are a sales software sales rep
you love selling new products because
you have the lowest quota green field
you can share accounts all of this stuff
except
at the beginning of a recession
because what will happen is they will
slash r d they will slash marketing and
they will slash they will
that team that was selling that new
product will disappear
so
check yourself are you working on bread
and butter products or are you that
one-off that’s going to be the next
generation thing
that in a recession will go bye-bye so
check yourself don’t don’t get caught
next
time do you really audit needs and wants
might be time to stop spending on wants
just for a little while just to see
where this is going and then finally if
you are
ready
the best deals i’ve ever made were in a
recession
you can get seller financing creative
deals
again
the market in real estate is going to
change and prices may not fall
that who cares you just need one seller
who has to sell and move to texas for a
job and he wants out of california
50k 50 000 savings because i can close
tomorrow or whatever
so again be ready
a lot of people in a recession will
retreat when you should actually be
aggressive but change your numbers we
talk about good and great all the time
on this channel if great for you is
eight percent today
in a recession i want it to be 12.
we’re not going to do eights in a
recession we’re gonna do 12s we’re not
doing sixes today we’re gonna do tens
whatever they are
be aggressive be greedy but change your
number
um you know if that if we come to a
recession again a recession unemployment
might go from three nine to eight
percent that’s horrible it’s a double
it still means 92 percent of the people
are working
i say that all the time because people
are like oh what if unemployment goes to
12
so 88 of people still have their jobs
yeah well i’ll be just fine
but to dion’s point and to your guys
point
this is one of the things that i’ve
learned from you guys is diversification
by portfolio i had zero
housing you know voucher program housing
i had none of that i had no government
assisted housing none of it because the
market there was so much there that i
never needed to take any of that and
then it was looking at what we went
through in the pandemic it was
understanding what occurred and we still
only had two tenants that didn’t pay but
i said boy it really would be nice
if
50 of my nut can be covered with 25 of
my housing and it’s guaranteed money
that’s these guys are onto something
that’s something i need to do to start
to diversify which we actually haven’t
so i think we’re i think we’re at like
18 of our portfolio now is his assistant
yeah that’s awesome so in the end folks
reset again people hear me talk about a
recession that i’ve been calling for one
for a while they think i’m doom and
gloom i
i’m a realist i i’m not a you know to
the moon or diamond nonsense i’m like
hey i’ve been studying consumer for a
long time i think they’re about to
retreat from the market if they do that
will lead to a recession
and uh i’m excited i’m i’m excited
because again the hardest thing to do in
real estate is find a motivated seller
they only show up in a recession
so i’m excited any closing thoughts uh
dion will go to you first yeah let me
wrap up with
the person i’m most concerned about is
the person who relies on their income
from their job
if you have one source of income and it
is your w-2 job
we talk about making work optional so we
have income that comes from sources
where we don’t have to sell our life one
hour at a time because in a recession
what does that person do when nobody’s
buying
their life one hour at a time
you want multiple sources of income
coming in and that’s why in the one
rental at a time model the thing that i
really like is it’s not
don’t go buy a 60 unit apartment complex
because that’s in one area and if that
local market loses its economic drivers
and you don’t have tenants coming in
that’s a huge impact but what i like
about having one rental at a time and
duplex is i like to spread mine out i
only i only have seven properties but
they’re more than 10 miles apart close
to
boeing amazon a base a port a college a
hospital it’s like five or six
massive changes would have to happen to
impact my portfolio in a way that it
actually
hurt me because i think my balances are
around the same i think almost half of
our tenants would have to stop paying
rent
for us to have to figure out a way to
pay the mortgages right pretty close to
and that’s about where my average is
yeah um yep
and so i can’t stress the importance of
it in a booming market for the last
several years it’s been like you should
be getting on the property you know
ladder this is really important but when
we see things happen where companies
shut down or when a recession happens
and the jobs go away
people should have and should be getting
on the property ladder so that they have
income that doesn’t come from that w-2
well said matt any closing thoughts
can’t say it any better than that i
think that people need to be
you know mike you and i have spent the
last year dean you’ve got to do this man
mike and i spent the last year creating
cash
with the anticipation that we know
that
when that first shoe drops
we’re not gonna be able to get that cash
anymore
and you’re even if you pick up that
phone and you call today to refinance an
existing property you are at least six
weeks away if you’re not going in if
you’re not going non-qm if you’re going
traditional routes you’re at least six
weeks away if not eight
lucky you’ll be lucky if you lock in a
rate you’ll be lucky if they finish it
by the time the rate lock is done you’ll
be lucky if the appraiser at that point
isn’t even seeing some changes in the
market where now your numbers are going
to be adjusted
so the time to do it is when you don’t
need it
and i think largely that time has passed
i think there are a number of markets
where it hasn’t necessarily passed but
that’s why you have to be a good
business person and be able to at least
on some levels anticipate because i’m
going into this recession better
capitalized better percentage cash flow
than i ever have been so this is
something where even if we get hit with
war over in russia and all the craziness
that’s happening here it’s something
that i you know i believe will be in a
strong position to not only weather the
storm but be able to acquire from others
that weren’t positioned as well
yeah
dion would you like to respond or just
leave it there
i think that was a perfect summation
there you go well folks i got nothing
better to say again recessions are the
time to make some money take care of
your house first also remember your kids
are watching so if you want to stress
about money make sure they’re out of the
room because
you don’t want to have your kid your son
walk around the corner and see mom at
the kitchen table
weeping that was not a good memory in my
memory bank so uh folks take care uh the
three amigos will be back next thursday
bye
thanks