THE WORST MARKET Ever for First Time Home Buyers. What can you Do? Should you Wait or Change Goals?

Video Closed Captioning:

good morning good afternoon good evening

folks michael’s uber one rental at a

time it is thursday afternoon and that

means we all have the treat of speaking

with the three amigos how you doing matt

doing awesome super excited to be doing

this and not what i’ve been doing the

rest of the day but thanks for i’m happy

to be here yeah we can just tell the

audience that it’s been negative 25

windchill yeah yeah and uh pipes and

water don’t like that so uh

i’ll just apologize for all of us right


that’s fine yeah

sorry deal with it

this this is this is why this is why

only winners win right this is why only

winners won this too shall pass and dion

how are you

howdy guys doing great ready for round


i like thursday it’s my favorite day of

the week um and i don’t want to rub it

in matt’s face or anything but it is i’m


35 days without a tenant issue

35 days i broke a month so literally a

text we just need to send michael scott

on site he’ll be fine

don’t know that reference but that’s


that’s all right so um

yeah i don’t think i’ve gone

three and a half days without attendant

issue that’s that’s what happens to me

when you’re the kindergarten investor

and you only have 16 units

a lot smaller opportunity

yeah so you say i remember that it was

12 years ago exactly exactly exactly

well hey guys one of the things that i

was interviewed about yesterday the day

before is first time home buyers it was

an interesting discussion something we

don’t talk a lot about but basically the

question i got and i want to ask both of

you and i think we should just

acknowledge is the question i got was

really this

michael you’ve been doing this for

you’ve been buying rentals for 21 years

your competition you talk about his

owner occupants because that we’re kind

of a lot of at least first time own

rocks were fishing in the same pond the

question was is this the hardest real

estate market you have seen for

first-time home buyers so dion i’ll go

to you first

so i

i think it’s the hardest but not just

for first-time homebuyers for investors


i remember in 2018 having to cherry-pick


probably 10 deals that made sense and

figured out which one was the best one

offer on five or six at a time and then

hope to get one accepted

it’s not that way now now it takes a lot

more hunting and digging to find the


as an investor so as a first-time

homebuyer it would be difficult too so i

think the problem first-time homebuyers

and investors are running into is

in 2013 had i invested it would look

like this in 2017 had i invested it

would look like this and right now it’s

not going to look that good

what is the great deal for now that you

can get because getting on the property

ladder is going to have a bigger impact

than getting that perfect return that

you were looking for in a market that

we’re just not in now

inventory as low as it is is probably

the biggest challenge i think we have


increased competition for less things to

compare to

if somebody learns how to invest in this


they’re a rock star yeah

there could be some other black swan

event that we don’t see coming but the

odds of that are in my opinion under 5

where we have 95 chance that two years

from now it is going to be easier to


yeah i would agree with that two years

from now should be a lot easier uh but

matt when you think about the first time

um homeowners or new investors uh

definitely in the residential space is

this the hardest market you’ve seen i

think it’s the worst i’ve seen ever for

single family homes right i think it’s

one of the best i’ve ever seen from

multi small multi-family tooth okay

okay i like that i think it’s one of the

best and i think the reason that it’s

one of the best is that you know you’re

you’re looking to

you’re in there and you’re competing on

a single family home and you’re fighting

against a bunch of other people that

want a single family home

and it’s very rarely in a lot of these

markets there’s some investors for sure

on single family home

but we all know that owner ox that’s why

you lost 250 two years ago right right

is because you were losing them to own a


owner occupants and so this time around

i think where we are in this market is

that if you can reframe your mind as to


real estate success is

those two threes and fours

they can get a three and a half percent

loan down on a six hundred thousand

dollar duplex and they can live in one

side and it cost them a thousand bucks a

month out of pocket when if they were

living in a condo built exactly the same

way with a shared wall

they’d be paying

3000 or 3500 bucks a month so i think if

you can look at the math

i think that it is probably the best

time in history to be a


non-single family home purchasing uh

owner occupant in small multifamily 234

i think that’s a great way to put it i’m

glad we went there so when i was

thinking about this yesterday was

definitely single families because

that’s what most owner occupants look at

sure and

when i went back and broke it down after

right we talked about record low

inventory 920 000 homes which is unheard

of right but i went back and i peeled

the onion by price levels because again

920 000 home includes all the million

dollar homes right includes everything

right so when you try to put in

the threshold for first-time home buyers

across the country

we’re sitting at days of inventory right

um it’s never been this slow and then to

dion’s point when you add on top of that

there’s people like me preaching one

rental at a time and all the investors

are competing and then oh by the way

you’ve got wall street who strokes a

check and

you know you have all of this it’s it’s

very very um competitive so i’ve got mo

more there but i want to go back to what

you said matt and really what dion is


i think a lot of frustrated homeowners

or want to be homeowners first time home


take these guys

opinions and go give it a look

instead of looking for your forever home

or your first time single family

why don’t you at least kick the can on

some duplexes through quads

and then sacrifice a little bit like

both these gentlemen did like anna kelly

did like like so many others on my

channel have

you’re right

i think i think the owner-occupant buyer

of a dupe through quad has an advantage

over investor because you can get in for

three and a half where i gotta come in

with 25 or 30

that’s right that’s right that’s right

that’s a great little twist and so i

think that you know as i look at it and

they say you know


the new construction builds around us



so uh one one neighborhood just came in

um they’re selling at i think it’s 559

and i want to say that house is about

15 to 1600 square feet i just bought a

uh 3 400 square foot duplex for 5.25

um yeah and one side

was already rented out one side was

vacant the side that was already rented

out was two grand the side that was

vacant within three days i had it rented

for 3 100.


and my mortgage all in taxes insurance

the whole nine yards is 2907.

so they could be moving into either side

you know they could be a thousand bucks

out of pocket and let those people stay

or sorry gotta go then they’re moving to

that unit they’re renting out for 3100

they’re net


not a dime out of pocket and so that

previous mortgage that they would have

been paying three or 3 500 bucks a month

for because the taxes are higher on that

building their payment would have been 3

500 on that building

instead of paying 3 500 they’re making


and they now have an asset that will do

nothing appreciate so that 3 500 hey

where do i save how do i get my next

down payment one year of 3 500 a month

times 12 is 42 000

sounds to me like that’s well on your

way to your next down payment for your

next half million dollar duplex

just saying

yeah that’s pretty much how that worked

for me

the house hacking added to the savings

rate plus the savings that you already

have put those together took two years i

wasn’t making a lot of money

there is an asset class that can help in

a situation like this that a lot of

people skip over this asset class

doesn’t have home buyers pursuing it

like small multifamily so you take out

your biggest competition pool and even a

lot of investors forget to look for this

asset class because

searching for it is nuanced right a


with an adu

most people tell their agents look for

small multi-family in this footprint

with this price range and then they have

their criteria that they screen out home

buyers go i want single family houses in

this footprint with my price range but

hardly anybody because home buyers don’t

want tenants and

investors aren’t adding you have to have

the terminology in your search adu d adu

granny flat mother-in-law house whatever

colloquialism is used in your area you

have no control over what the listing

agent is going to put it under but if

you search for anything you can figure

out what they’re called in your area

the the real benefit to that is lending

even though it’s multi-family small

multi-family that is a single-family

house with an adu so conventional can be

three percent down for your first time

five percent down for

owner occupied second properties


but you’re taking out the investing

uh people that

don’t want to look at small multifamily

because their family can’t stand the

idea of their garage touching the garage

of their tenants

so now you actually have that forever

home feel of your property your

buildings don’t touch each other so if

you’re having trouble getting your

family on board with house hacking

because they don’t want their

garages to touch that’s another way to

solve that problem too so hopefully

people put that into their thought

process as new home buyer and first you

know adding as an investor that’s an

asset we should be looking for too yeah

totally i agree the other thing that’s

going on just to kind of round this out

as i thought about it is


developers or builders they’re at least

in my market they are certainly not

building first-time homebuyer homes i

mean they’re the price point is

25 above the median so it just doesn’t

play it’s definitely the move-up buyer

for me so you’re not getting that fresh

inventory coming in

talked about wall street wall street has

long said that the best risk adjusted

return is a single family rental

and then lastly we’ve got build for rent

right which is consuming developers

right so


we are fishing in a pond there’s

affordable homes that’s getting smaller

and smaller and it’s not being

replenished with new fish so it is going

to be hard when i i think you guys

nailed it if you’re going to be a

first-time home miner homeowner

you might need to do something

non-traditional get something with an

edu get a duplex through quad because

the magic of getting on the property

ladder means you’re building equity it

means that next move is so much easier

and you can save ie uh 42 000 bucks in

matt’s example so

uh yes it’s hard

yeah but maybe you just need to

tweak your mindset a little bit and get

on the property there because it’s

amazing once you get there uh instead of

just being frustrated what do you guys

think of that i’ll go to dion first

i think uh as much as i don’t like to do

it i have a

this big of a disagreement with

something that you advise okay go for it

one rental at a time focuses on learning

your area average and then going for

those great deals

i think the first time home buyer and

the investor in a market where there’s

this limited inventory

i’m okay with the base hit

don’t buy an alligator no don’t buy

something that’s only going to get a two

or three percent return but

if your area averages eight percent and

you haven’t seen an eight percent in a

while that’s not the area average

there’s so little inventory that the

area average is lower so if you find an

eight percent in your area take it and

it meets the other criteria of several

economic drivers you know aspects of the

property that’ll help limit tenant

turnover but your return might not be as



hard to disagree with i like that all

right and matt what do you think i think

delayed gratification remains the story

of the day right

delay just delay i mean get forget

single family think duplex

or triplex or quad if you really have

the stones but largely speaking yeah do

it do a duplex and

even in that example that i gave you

every single person i talked to said who

overpaid for that i was like let me show

you some math hmm

and i was like no no no it’s okay you

can show me all the properties you have

that are making 29 return on capital i’m

ready i’ll let me get comfortable i’m

done i’m good yeah yeah one two three go

okay none right so i mean that’s really

the thing is i think that people need to

look at it and

great business people

pivot pivot they pivot great business

people pivot yeah you know steve jobs

didn’t show up and go

yeah man wow uh yeah the mac’s not doing

pretty well you know it’s that next

isn’t going too well


i’m still going to make that computer

and that’s what we’re going to stick

with yeah like you greats pivot and

they’re known for their pivot so great

investors same exact thing even if

you’re new to the game

mike and i talked about this a couple of

weeks ago is your asset class that

you’re looking at before you think about

leaving your market yes look at all of

the asset classes in your market and i

bet you you will find a undervalued


that probably will get you pretty

incredible return and you don’t even

have to look for a single fame with an

adu you can look for a single family

that has a garage already on it that’s

separated from the house and likely you

can build on top of that i’m going

through the approval process right now

on a duplex that i absolutely stole

and we’re actually taking the two bay

garages and we’re gonna build a studio

apartment on top of each one of them

it’ll cost me like 50 grand the return

on that capital is gonna be like three

and a half years and then i own them

flat yeah that’s pretty awesome the last

thing i want to say is if you are an

owner-occupied buyer and you are dead

set on single family i have a word of

caution about the next six to ten weeks

we are in a low inventory environment

with rising rates and that means you are

going to have a lot of people who are

freaking out

and thinking they are gonna miss the

bottom so you are going to see a lot of

people overpay

you thought last april was bananas

it is bananas squared right now so if

you want to jump in that mess go ahead

you might

be a little bit more free in the summer

uh because again this rate rise is going

to cause some just unnatural behavior so


careful uh matt how can people find you

lumberjack landlord mr mrs lumberjack

live stream tonight at 8pm

damn the torpedoes we are doing this

thing even with all these burst pipes we

will figure it out that’d be that’s a

great way to start we had one here and

one here and one here

and dion how are you where can people

find you

right here on youtube dion talk

financial freedom my live streams are

tuesday afternoons 4 p.m how long did

the last one go

three hours and 29 minutes almost three

and a half you two are amazing i will

not be doing a three hour and 29. you

come really close though if you look at

your seven o’clock update or 7 30 update

8 o’clock youtube 9 o’clock private

group i mean your saturday mornings are

pretty close to what we do yeah

getting a couple hours

okay i feel better yeah

all right thank you very much

Leave a comment

Your email address will not be published.