Video Closed Captioning:
good morning good afternoon good evening
folks michael zuber one rental at a time
back with this real estate entrepreneur
omar afaro how you doing buddy
pretty good michael what’s up everybody
uh so omar we just uh we just need to
put it out there uh i’ve said this i’ve
said this on my daily financial news
some kind of personal one-on-one
discussions but i think we are in for
six months of pain in the real estate
market
i want to describe the pain yeah i want
to talk about what i see coming and then
more importantly
recognize
and pounce on opportunity
because where there is pain there is
opportunity
so pain
as a real estate entrepreneur for you
really is going to come in two
forms one is you have a list you know
realtors you’re a broker um you know
listing and sale agreements
are probably already down for the year
i think as the 30-year rate goes to
seven percent it’s going to get smaller
so you’re going to be operating on less
and less transactions it would not shock
me
if by march your business is down 50
that part of the business that part of
the business
okay just again i i would love to be
wrong but i’m just telling you what i
feel
you know you are the best of the best
you know you may be that’s like a
blended average for the high desert it
would not shock me if transactions are
down fifty percent that’s what
that’s that’s crazy
two
you are a real estate entrepreneur you
have airbnbs you do flips you do all of
these things
i believe and i think we talked about
this in the last couple of weeks the
flipping business uh you have to plan
for
an extra 90 days of hold time
you have to plan for fha buyers which
means you have that 90 day rule
you have to plan for pickier buyers you
have to plan for three percent credit at
closing you have to you just have to
plan for more expenses
so you have to buy better i know you are
hearing me i know you are changing but a
lot of your peers
in the high desert in california across
the country
are being stupid
they’re not buying better
the next six months as the 30-year
mortgage rate exceeds seven in my
opinion or my guess
think about the affordability it’s going
to crash to record lows
so you just have to realize i would tell
every flippers to do less projects the
next six i’m not telling you to stop
i’m not telling you to disband your team
if you used to do 10 a month
do three a month
until march we have to know where we are
in march in march
we have maybe we may have rates over
seven we might have unemployment at five
percent we may be in a nasty recession
this war in ukraine may be going on oil
might be over 100 bucks food we it may
be ugly
so i want everybody to prepare
for six months of pain
what do you think about that how do you
react what kind of questions jump out at
you what do you got yeah
this six months the first thing that
comes to mind is
um do you got do you have enough
reserves to withstand six months
um you know i ask myself that question
every day
can i look i look at my finances and i
look at the
account and it’s like okay where are we
at if it’s x per month you know do we
have
six months eight months a year
if we had zero income where are we at
like these are the conversations you
need to have for yourself if you’re in
this business as an investor um the next
thing is if 50 of transactions are down
and you’re in that 80
group or 85 percent group maybe even the
90 group because 10 obviously have that
reserve
then you got to adjust for it earlier
uh in a previous in our previous um
topic
we talked about like okay well if you’re
a realtor professional if you’re out
there with a license uh for the ones
that i’m talking to um then go represent
some more buyers or sellers because you
have to be able to to bridge the gap
of the expense that you will be
incurring
um with the uh
with 50 lower transactions because that
goes that’s going to affect you too
because when we say 50
less transactions that means there’s
gonna be less buyers buying your flips
that means it’s gonna be less people
showing your houses
because even with the agents that are
out there so what do you gotta do you
gotta like figure out a way to bridge
the gap just to keep things moving
forward
um
buying better what we talked about just
now
is you have to be like i don’t want to
say this in a mat in a bad way but you
got to literally insult the seller if
you’re going to want to buy a property
yeah okay you’ve got to be cheap you’ve
got to be cheap you got to be you have
to because guess what at the end of the
day they hold the asset you don’t you
don’t need to buy it
you don’t need to buy it i have two
deals now that i just sent out a text
yesterday and i said we need to
rediscuss terms because otherwise i’m
canceling
and they owe nothing on the property so
guess what they’re still going to make a
big chunk and i’m going to ask for a 30
000 reduction
not because i bought it wrong because
the market’s slipping exactly and i’m
seeing what it’s going to be in four
months when my exit is in four months or
three months so you have to be uh you
know you got to be ahead of that game
and the less projects
spot on 100 spot on like
i’m a i’m a deal junkie okay i will say
that online i love deals i love figuring
them out i love taking a listing for a
hundred thousand dollars and making a
fourth or three or four thousand dollar
check but then i also like doing the big
deals that i make 50 60 80k um in profit
so it’s i’m a deal junkie so at the same
time i’m checking myself
and letting you know hey where am i at
okay i’m selling this one this one this
one i’m not buying anything i’m gonna
keep everything away because i need to
see this adjustment you think before it
was um it was something you needed to
adjust it’s now you need to adjust
yeah so spot on all those all those
points uh michael it’s a little scary
you know it does punch you in the face
but
this is the reality of it right now yeah
brian libo uh the guy uh amazing broker
in vegas in vegas uh yeah he he’s been
through i mean vegas is talk about hot
and cold it’s it’s it’s kind of like you
know the high desert on steroids right
um
he talked about something i think it was
two months ago called he calls it mole
it stands for months of life
months of life i like this
what i would tell every real estate
agent broker flipper wholesaler if
you’re in the game of real estate and
that’s your income
you must calculate your months of life
look at your reserves today
look at your expenses today
and see how long you could survive
brian libo did this uh at the peak of
the last environment brian lebo was
living the good life
three different cars this that the other
just living it up
and he saw what was coming he reduced
his head count brokerage
he he got rid of every toy
and vegas went through three or four
years of pain
and it was because he appreciated the
month of life he survived and frankly
thrived
so what i want to tell people about this
next six months is we all will
experience the pain together
some of us will get crushed and leave
the business
some of us
will prepare
learn invest thrive and come out
stronger
again the six months of pain will hit
everyone
everyone everyone everyone
uh you can either get ready early
and get through it
or not uh the last thing i would tell
investors is kind of what you said
get greedy like if you happen to be in a
market where open door is
write offers that are insulting now
don’t write them on first day listings
let’s not be stupid
like 60 days 75 days on market write
insulting offers
what i’m telling you insulting right get
a get a counter if you write an offer
today and it gets accepted by the seller
you pay too much
i say that all the time i was like get
the counter get them to say will you do
this yes okay great yeah yeah yeah
exactly and again get closing costs buy
downs all of those things this is going
to happen
six months of pain
the pain will end
i hope on march 15th which will be the
launch of the spring selling season from
september 15th is when i announced phase
two of the housing crash it is going to
get to march 15th in march 15th i have
no idea will it go lower will it go
higher i don’t know where’s the economy
where is unemployment where rates too
far away let’s just survive the next six
months so we can survive after that what
do you think
if we survive this next win i shouldn’t
say if sorry sorry when march 5th when
march 15th you know that puts us there
at the end of the first quarter
um
of 2023 and i guess that’s gonna dictate
a lot of stuff
i think we gotta withstand
your uh this winter
and this and i think the winter
is fourth and first quarter oh great
um and
which is the six months of pain
and this is just something you gotta
bear down
um i’m gonna give some advice to
everybody that’s out there now
like you know what got you to where
you’re at now cool
be happy that you’re there
but you got to probably do three times
the work to get what you just got the
last six months
the last nine months
um you’re gonna do three times the
amount of work to probably make the same
amount of income
why because you gotta probably have to
do more and be a little bit more
conservative and i like the fact that
um that brian
he uh this month of living
he got rid of his toys and everything
else probably before the uh the
adjustment or during he saw it coming he
was still at the peak right a lot of
people a lot of people don’t realize
what’s happening you as a real estate
agent have all the data right in front
of you you just have to look so yeah
months of life um
saved it and again whack i you know i
actually saw a first post on facebook
the other day because i i’ve been
talking about get rid of your toys
somebody said look somebody’s getting
rid of their toys they’re selling like
some big fancy atv or off-road vehicle
i’m like yeah dude it’s coming
it’s coming up
yesterday full transparency
i texted my lady and i’m like hey um
selling the boat selling both boats um i
could withstand the mortgage payment or
whatever it is right my rental is
covered but at the same time
how much capital do i have tied up in in
a non-performing asset or a lot a
liability so i’m like you know
what it sits in a damn garage so get rid
of that get rid of that let me get
another 280
300k back in my bank account that i can
take that 300k
and go produce another
even if it was 10 or 20
for you the 300 grand might be i’m just
making this up as i go that 300 grand
might be your six months of life that
way
like honey i’m going to take that 300k
i’m going to put it in that separate
bank account we’re going to be fine no
matter what now i’m going to go run my
business on everything else and not
worry about 100
done you know
that or obviously what we do we push all
that 300k back in the mix and try to
make
300k more to double it and then go back
off and then go buy the liabilities that
i sold
for you know 75 off
because this is the thing it correlates
with the housing industry exactly all
the toys correlate with the housing
industry sell your toys early yeah if
there’s if there’s a 30 decrease in in
the housing industry right
you think there’s going to be a 30
increase in in boats and recreational
toys no it’s going to be a 50 dude real
estate agents like toys the last two
years have been amazing and easy money
we’ve said it many many times there are
lots of toys coming
there is a lot of toys coming yeah and
you guys can buy my toys no problem
somebody wants to buy them go
you’re happy for it
facebook marketplace and everything else
so yeah you’re good there you go well do
me a favor i love to transfer you love
the honesty love this conversation about
six months of pain i know you’re going
to survive and thrive uh we will be
talking about it it’s not going to be
fun
just because you know you’re gonna saw
it doesn’t mean it’s fun um but uh yeah
it’s
march 15th is only six months away so
we’ll get there where can people find
you
guys follow me and invest with omar
invest some of your time and and i’m
helping you guys with some more
knowledge in real estate so come follow
me there you go buddy thanks