Closed Caption:
good morning good afternoon good evening
folks michael zuber one rental at a time
back with the man myth the legend
somebody doing something for all of us
which we must thank him for millennial
mike how you doing sir
i’m good thanks for having me on as
always i still can’t believe you
volunteered to go through all of my
comments to find the ones that we need
to go deeper on i greatly appreciate it
uh as somebody who does watch all the
comments i don’t have time to give
detailed answers so the fact that you
will go through find the good ones the
heaters the ones that we should go
deeper on uh means the world to me so uh
what’d you find this week
yeah so we actually have uh we’ve got a
good list of questions this week some of
them projections you know for all the
people out there always like mike why do
you make projections
because people in the comments want to
know your opinion so we’ll get to those
we’ve got some projections some
questions about the economy um but i
actually thought this was a great way to
start so you always talk about doing the
work developing a buy box this applies
to investors looking to buy their first
deal but
the youtube user lo sierra she asked and
she says i came over to your channel and
the buy box concept intrigued me i tried
to do one with an excel spreadsheet but
i’m not sure how a first-time home buyer
can use this so how do you think a
first-time home buyer not interested in
owning rentals
can use the concept of a buy box to get
a great deal on a home purchase
that is a very good question uh so i do
think the buy box idea plays through uh
again i’ve only ever bought
one home to live in right we bought a
home in 99 and we’ve never moved but we
had a buy box for us it was a uh we had
two school systems
that we were willing to live in uh and
we had a price point right we had a
can’t go above right because we were
tapped out right we were making 40 45
grand a year or something in in 99.
so that was that was it for us and we
wanted three bedrooms i’m sorry there
was a third right we we wanted a bedroom
for olivia and i one for our daughter
and then an extra one for guests or
office or whatnot
so that is a buy box and
so i do think it applies i think most
people probably have a bigger buy box
than we did because we were i mean let’s
not let’s speak very very very clear our
number one thing uh was a school system
we we were renting in the best school
system
uh in our area cupertino california and
we would have we would have rented the
whole time to be in that school system
for our daughter
uh unless we were able to buy something
which we struggled for for for a couple
of years to to make happen
but i think everybody does
i think every homeowner has a buy box i
think
and you know if you look at my
spreadsheet the the
the all the expenses and all of that
yield calculation doesn’t matter but i
think you have a search criteria i think
you should look at it i think in a
market that’s slowing down you should
see trends i think again i would tell
every homeowner
uh i would not look at first day
listings unless you’re in a super hot
market for me days on market i want
motivation i can tell you as an investor
or a homeowner when you could deal with
a seller that’s motivated
it’s better right get don’t pay list pay
less than list get closing costs credit
get rate buy downs
um the market is slowing down
in most areas some florida still hot
some other areas still hot but
yeah i think i think i think it applies
it’s obviously not as much a math
equation but the daily discipline
that is built behind the buy box i think
it still plays at least it did for us
yeah i mean you know the reason why you
have a buy box so you can start to
figure out and accurately compare and
contrast the yield of a property versus
the yield of another property and so you
can find the best deal from a yield
perspective well if you’re not
interested in yield instead you just
name your own most important quality you
know for you it was a school district so
okay well what what’s the best value i
can get and still be in this school
district i mean so yeah but but at the
end of the day doing the daily work
looking at the market every day those
principles are going to help you
recognize the good deal the great value
in the neighborhood you want when it
comes your way so well that’s not let’s
not forget the last part of a buy box it
also tells you what to avoid
i can’t tell you how many homeowners
like hey i want to live in this area
and then they hear somebody say oh a new
development is springing up over there
well that’s not over i mean yeah so a
buy box is is focus and daily discipline
but it also is permission not to get
distracted
nope agreed okay so let’s move on to uh
the topic of a wage growth versus
inflation you’ve touched on this a few
times jt12 asks he says you’re literally
the only person i know who thinks wages
are keeping up and your response was to
say i didn’t say that they were keeping
up
six percent wages with eight and a half
percent inflation is not keeping up can
you elaborate uh for us your opinion on
wage growth yeah i’m glad you i’m glad
you caught this one um
so again i’m gonna be very clear
in a world of eight and a half percent
cpi and wage inflation of six percent
that is not keeping up in fact you just
do this math you’re everybody’s falling
behind if you’re not getting a 10 raise
you’re falling behind
my point about wages is to look out
years from now
i believe the wage spiral inflation i
believe
um i believe it’s just started i believe
cpi is going to keep coming down
headline
um
and i do believe wages maybe next year
maybe the year after wages will be up
six cpi will be four so you will be
getting ahead but you’re not getting
ahead today
i believe
housing affordability is a problem it’s
near record lows
if you follow affordability there are
three factors
that affect it
most people on youtube
scream price
and believe me i want them to be right i
would love a 50 crash i just don’t see
it and i can’t be intellectually
dishonest
just to earn a penny with crash videos
others can others will sell their soul
for a penny i won’t
um
so price is one
next is rate
i actually think rates are going to go
up at least in the short term meaning
the next year or so which means
affordability gets worse
and then there’s number three wages
i believe over the next decade
wages will be above trend right trend
inflation is one percent real right
going up
i think it’s going to be above that i
think we are going to bring
manufa i just i want to believe we’re
going to bring manufacturing home we
have more jobs than people which means
you have to pay them i think we’re going
to have a good year i think unions
unions are picking up right starbucks
and amazon
all these other places and unions will
drive wages higher
so i think wages go up i think
i think real estate generally speaking
is flat
uh for five years and wages increase
which will mean affordability slowly
gets better and then if wages if prices
are flat
wages go up and then rates eventually
come down
magically affordability looks better
everybody wants to talk price crash and
dude believe me i would be such a much i
would be so much bigger of a channel if
i
could intellectually see that
i just don’t and won’t won’t sell out
for a penny
right right well one more question on
wage growth this one’s from jeff m and
he kind of touches on some of the topics
you mentioned he says hey i thought of
something you said that housing will
probably stay flat for around five years
until wages catch up
oh uh over those five years at a rate of
five point five percent a year wage
growth or you said maybe six percent
wage growth year over year um but he
goes
you said that that would make housing
affordable but why would wages continue
to go up if we’re about to hit a
recession do you think that’s going to
possibly counteract any of your theory
if we start to see layoffs
so again it’ll be the question so
the question really is where will the
layoffs occur
right again i think i think
i believe what we’re heading into is a
white collar recession not a blue collar
recession
i believe if you go back and you really
peel back the numbers where
where really the jobs are
they’re more blue-collar service
job-oriented and that’s where the wage
inflation is actually most meaningful
and well is accelerating the fastest
so
i see a recession that’s very much
white-collar
recession
uh not blue-collar uh i don’t think i
don’t think a recession
at least by the one that i see coming is
big enough
to really pull back right we’re at three
and a half percent unemployment right
for most of my adult career economists
were trained at six percent with full
employment
think about that we could almost double
and be at the historical full employment
so
i do think a recession is coming i think
recessions are natural i think one is
required i think this should be deeper
and longer than most
but that doesn’t mean wages have to go
down in fact i think i think wages go up
from here so
i don’t i there’s not a one-to-one
relationship i think i think it’s it’ll
be a white-collar recession and i i
think there’s
wage inflation in blue-collar in trades
and
uh for years to come i think
yeah and on unemployment it peaked at 10
during the great recession so we would
have to triple where we are at right now
to get to where we were back then
okay so here’s a scenario based question
about how to properly scale i thought
this was a good one but it’s a little
bit longer but um you’re one of your
subscribers denzel falcon he says
i’m currently in a duplex house hacking
with my wife fantastic great start um
we’re currently saving for our next
rental we have opportunities to either
house hack a triplex or
purchase a single family and slowly
build up and buy a new single family
every year for around a hundred thousand
dollars a single family home the triplex
is over three hundred and fifty thousand
000
but the rents will pay the mortgage and
we can cash flow the unit we’re
currently living in
so his question is
we are hesitant to take on so much debt
so quickly to the point where we can’t
be flexible what do you think is the
best way to scale buy the triplex now
for 350 or single family houses one at a
time for a hundred thousand a year
so i think i replied to that comment
do you have my reply i didn’t keep the
reply was long so sorry about that
that’s okay no i i did yeah
every once in a while i go i gotta
answer this one better
um so i think my net answer was
i buy the best yield
yep right that is what it was i remember
yeah because again
the debt level doesn’t bother me it’s
it’s it’s return on capital
that that’s that’s what the game is as
an investor
you know if i’m gonna put out
30 000 am i getting
10 back
that’s 3 000 bucks it might if but if i
put out 15 000 and i only get 500 back
that’s a percent return
you might feel better
buying the house but your return is way
less
so historically speaking and i don’t
know this example or their market or any
of those things
i don’t think the answer is buying a
house or triplex i think the answer is
go buy a fourplex every every time i’ve
done the math
a fourplex house hack you get paid to
live there
that’s that’s the best return so again
with those two comparisons without
knowing them or their situation or their
market or anything
if the debt level doesn’t bother me it’s
what is the best return on capital i
call it yield cash on cash
that’s all i drive
it’s
that’s that’s my driving factor but you
know in closing
i never want an investment to stress you
out
so if you are dave ramsey-esque
and having a 270 000 mortgage will freak
you out on a triplex but you feel better
at 80k
well then it doesn’t matter what i say
it doesn’t matter i don’t want you to
not sleep at night because you got this
270 grand even if it has a better yield
i don’t care about the debt level but if
you do then you do you
yeah i think as someone myself who’s a
lot closer to the beginning of their
real estate investment journey than you
are you have built up the muscle
to to
not be afraid of
taking on too much but when you’re just
starting out as i was in my first duplex
house act it’s intimidating yeah to
start to stretch yourself and well what
if something happened you know but you
get to a point where you recognize that
the rents cover the mortgages you’ve
done the work up front you’ve done the
due diligence the property’s gonna cash
flow it’s just hard to take that next
step so like mike said
if you’re too stressed out and too
nervous then don’t do it absolutely
but if you want the mathematical on it
dude the four plex is going to be the
better investment go find a fourplex
alrighty next question
quick one on retirement accounts
from e south he says do you recommend
investing into a 401k with employer
matching six percent or
should i use that money to purchase a
home
so again i can i don’t give financial
advice i can only tell you my experience
in this situation i always wanted the
company match
my companies did allow me once you’ve
worked there a year to borrow 50 or up
to 50k
so i did that i i used my 401k probably
six times to buy properties i
contributed they matched i borrowed 50
tax-free i paid myself back interest it
was magical i thought it was free money
um
so that’s what i did uh i you know i
would i have done that if i couldn’t
take a loan out probably
taking a loan out made it a no-brainer
for me
um but i probably still would have taken
the company match
yeah i probably yeah you know that’s 100
game just
but because i could get the gain and
borrow it was a no-brainer that’s what i
did
right right yeah um
so
there’s a lot of different things roth
iras 401ks you know some people have
deferred comp through a government
pension plan like i do ultimately you
know you kind of need to be an expert on
your own options out there it does seem
a little foolish to leave 100 gain money
on the table but that being said with
what i’ve got with my retirement program
i could put a lot of money in and i know
that my money will better be served if i
save it keep it and put it into real
estate so that’s one of the things that
i’ve chosen to do nice
okay predictions predictions karthik heb
where do you think interest rates will
be in a two to five year time frame if
feds keep raising above three and a half
fed fund rates so mike crystal ball what
do you think yeah my crystal ball is
broken everyone else i do love taking
these guesses because i like frankly why
do i do this all the time because i like
to beat the experts right all these
talking heads on tvs i like to beat them
beat them so
i’ll kind of give a couple of answers so
i think i think we end the year close to
six or six one
uh which is up from where we are
uh i think we probably peak somewhere
next year in the high sixes
and then i think we naturally end up
three to five years in the fives
that’s kind of where i’m at
okay so i got a follow-up question from
me about those ones please so if you’re
if your prediction is we’re going to be
six and a half you know maybe five and a
half to six and a half as we move
forward
for those individuals who are
considering sitting on the sideline not
buying or maybe they took advice to sit
on the sidelines and not buy real estate
how will the inc the doubling of
interest rates from last year to your
prediction of what it’s going to be over
the next five years affect their
affordability and monthly payment when
it comes to overpaying for real estate
well let’s just let’s just play it out
right let’s say a four let’s say rates
are five percent
um
i don’t know three years from now
and
prices aren’t crashing right maybe
they’re maybe if you’re in boise or some
other markets are going to be down in in
reality um
it’s just going to be more expensive it
just is uh unfortunately people who are
calling for a crash last year don’t
understand math it was the best year
ever to buy
mathematically saying um
the year before that was the second best
year to buy
these people owe you money for telling
you a crash was coming
um
trying to time the market is rough make
sure you get 30-year fixed rate debt
make sure it’s locked in make sure cash
flows day one
make sure you can afford the payment no
stretching
um don’t don’t you know back to the
earlier question don’t stress yourself
out
and um
yeah
it’s it’s
housing it’s it’s we’re not going back
to 2010 i’m i’m sorry it’s not gonna
come not gonna happen even though i wish
it did it’s just not gonna happen
i did a little bit of math
which is a scary concept as a police
officer but i did a little bit just a
skosh
and a 500 000 house at a three and a
half percent interest rate is a twenty
four hundred dollar a month payment
a four hundred thousand dollar house
at a six and a half percent interest
rate is a twenty five hundred dollar a
month payment
so even if prices crash twenty percent
which is what most people define a crash
500k to 400k crashed 20
because interest rates went from three
and a half to six and a half which is an
actual factual thing that has happened
unlike the crash of prices the monthly
payment went up so who’s really
overpaying
yeah i agree
okay um couple questions left this one’s
just a
pretty easy rapid fire from monica
goldemaz she goes how
can i grow my circle you talk about
networking all the time
yeah the beauty about real estate folks
in the game
we all like to talk and share and
experience so the biggest thing i would
do is is uh put yourself out there if
you if you can go to local meetups go to
local meetups join facebook groups uh
join bigger pockets groups in the areas
be a someone who contributes
and then just ask for referrals don’t be
a taker first
uh give what you can even if you’re a
novice you can answer questions at least
with your opinion and then ask for
referrals that’s that’s the biggest
thing that i tell people i think it’s
number four number five of my seven
rules is you gotta meet two new people a
week and the easiest thing to do is ask
for referrals if you’re in gary indiana
and you bump into millennial mic in a
facebook group ask them for a referral
hey who do you recommend for this or
that
people in real estate generally will
help others
so just ask be a good person don’t just
take give first
simple
totally agree
all right uh another question from jeff
m and this is a good one okay for those
of us out there mike who uh
were just kids during the last crash
right i was 17 in 2008. so jeff m asks
he goes mike you talk about consumer
sentiment how was the atmosphere in 2006
i was too young i know realtors were
saying oh it’s a great time to buy but
were there people at that time saying
that the market was overvalued then like
we’re currently saying today
uh i would say so if we if we put in my
2005-2006 hat it was the it was
it was bananas there was money
everywhere
um
[Music]
i’m trying it it was it’s it kind of had
a game stop
amc
meme it kind of had a meme stock feel
everybody thought it would go up forever
they were lending you didn’t actually
have to have a loan i mean you could
almost i remember filling out not
filling out signing a blank loan
application
that’s how stupid the lending was
um
yeah it was it was it was unhealthy it
was really bad and
it had to it had to explode
it just had to the movie the big short
people look at that like that didn’t
happen it happened
you know fight you know strippers exotic
dancers gardeners having five six seven
homes all on these stupid teaser loans
it was it was bad it was really bad and
there was only a few voices
bruce norris saved us i wrote about it
my first book i go to a meetup all
excited we have eight houses michael
and um we’re trying to buy number nine
and can’t cause again 30-year fixed cash
flow so i never did one of those exotic
loans
and um
[Music]
yeah bruce norris saved us
he was one of the few voices screaming
caution caution caution
he actually created a report i think you
can go google it called the california
crash
people should research this
um california crash he did it i think he
did it like 2006. and then he did
another one in like 2010 called the
california comeback
bruce norris is the o.g
and um
yeah he he saved us he saved us for sure
he was crazy in 06.
yeah i was going to say the only one i
could think of was peter because
he’s been calling for a crash for the
last 40 years yeah yeah i don’t know if
he gets credit
broken clocks broken clocks
uh okay rapid fire uh mario a asks
michael where can i find your 52-year
history chart you keep referencing i
appreciate the help
yeah so i had to put it somewhere where
everybody can get it and i’m not a
techie so teachable is where the
who hosts my courses
so i have a free course anybody can get
and it’s right there in the bonus
section so don’t pay me a dime you do
have to log into teachable and get it’s
my in my free course it’s in the paid
courses too but
go to the free course it’s right there
right right okay very last question this
is a good one this is what would young
mike say
so holly’s buddy
asks you’re speaking to over 200 people
at the event that you went to this last
week and your favorite course in college
was public speaking how would the
freshman in college young michael zuber
think if he knew this is where you would
end up and this is what you would be
doing so what would younger you think of
where you’re at right now
yeah
he wouldn’t believe you
i was an introvert i mean people may not
realize that i i i could i could be in a
room of 200 people and not say a word
and be totally okay all right i was the
fly on the wall not very social didn’t
have a lot of friends
or just
you know the only time i would ever get
engaged if there was a ball involved
right soccer basketball football
baseball
that was kind of my jam
but even that’s really a solitary thing
right you’re not really interacting
so i was this i was i would not have
believed you you were if you were told
me i’d have been up in front of 200
people and and and talk
i had no power i had no powerpoint i was
just talking
i would have not believed i would have i
would have bet thousands of dollars that
i didn’t frankly have at the time that
that wouldn’t be true
well those are all the questions that we
have for this week there weren’t any any
that were too particularly spicy so to
those folks down in the comments section
leave us something controversial or just
keep the good questions coming that’s
all we got mike so
sign us off i appreciate it mike again
thank you for doing this uh i look
forward to this session i know the
audience does uh where can people find
you
yeah if you just uh google or instagram
or youtube millennial mike oh and thank
you because thanks to you this morning
business insider just published an
article about me
little old me i made it ah we will make
that topic number two thanks buddy
sounds good