ChatGPT Predicts the top Real Estate Warnings for 2025

[00:00:03] So today on our show, we have Robert Helms from The Real Estate Guys. Yeah, he obviously is a wealth of knowledge. He's been on the radio for so many years and he interviews so many people. And right now we're in this weird time where the waters are brewing, right? And everybody's kind of concerned about what's happening. So this is a phenomenal discussion today. Yeah. And it's interesting because both you and him have been through many real estate cycles.

[00:00:31] So this isn't new to either of you. And I think a lot of you newer investors or people newer to the market can gain a lot of knowledge from what you and Robert have to say. That's right. Yeah. And of course, we're going to see each other on the cruise in June too. So great podcast, but also I can't wait to continue this conversation in person in just a month. Yep. Enjoy.

[00:00:59] So Robert, I think you're going to like what we're going to talk about today because I put it right into Chad GPT. I said, what are the top real estate concerns for out everybody's mind? And boom, boom, boom. It kicked me out five things. Are you ready? Okay. Boy, there's a lot of people are thinking about these days. I know. Well, it's interesting because obviously, you know, we sometimes we struggle for topics and stuff like that. And we don't, we also want to do kind of stuff that's new. So I actually did run

[00:01:24] this through Chad GPT and oddly enough, there's a few of them I really like. Right. And so anyway, I thought I would try it. What do you think? Yeah. I love that idea. All right. So number one, interest rates and the cost of capital. So let's talk about that. Right. Cause those are the first ones. So, you know, we know that interest rates are up. We know that the cost of capital is up and we know that we have a new president. So, uh, what, how, what are you

[00:01:53] seeing right now? How's that change your world? You know, in the last year, year and a half. Yeah. So obviously the higher rates started long before the new president. And I remember you and I talking a couple of years ago about the fact that we've been investing about the same amount of time and you had calculated that the interest rates that we'd paid during our tenure as real estate investors on average were higher than the rates at that time, which were seven, seven and a half

[00:02:22] percent. So it is a big, it's not just that rates went up. It's that they went up quickly. And so that created the sticker shock for people to like, what? Like I was going to move from my three bedroom house to a new four bedroom house because I'm making a little more money. But when I run the math, it doesn't make any sense anymore to give up my 3% mortgage to get a 7% mortgage. So I think, uh, on the homeowner marketplace, that was the big pivot. People were just like, I'm just going to lock in and

[00:02:51] stay where I'm at. But I think, and you've seen this in, in terms of investment, investments at different decision. I'm not moving because my family's getting bigger because I've, you know, been, been, uh, relocated from by my company. I buy a property as an investor. If the numbers make sense. And if the numbers make sense at the higher interest rate, well then that's perfectly fine. The challenge of course, is most of the numbers haven't made sense at the higher interest rate.

[00:03:18] Right. Right. And I think it's important for people to understand when we talk about cost of capital, we don't care if it's in the form of debt, which is, or a mortgage, or it's in the form of equity. So if, if, if I'm raising money from Robert, let's say Robert, give me a hundred grand. I'm going to invest it in the thing. He's looking at what it's coming out of. He's like, well, it's sitting in a 5% T bill. Why would I give it to you? Um, so whatever, uh, whatever I'm going

[00:03:47] to take that money and, and, and put it into is going to have to be compelling for you to be able to give me that when you're making 5%, right? So the cost of capital isn't always that. And I'll think a lot of people focus on debt, right? Yeah. And I think that's a great point to bring up. We talk about the capital stack, all the money that you need to do a deal and debt is often the largest piece. And we love that because leverage is awesome. Other people's money, but the equity

[00:04:15] piece, right? Those folks that put the equity up, whether that's you or investment group that comes in, they're looking for a return. And to your point, their cost of capital isn't just where it's coming from. It's what else could they invest it in? If you use the T bill example, okay. So people assume that T bills are not zero risk, but they're as close to zero as you can get. So if I assume I'm

[00:04:40] going to have a mostly risk-free four or 5% return, well, then the return you're offering needs to be enough for me to take that risk reward difference. And it can be, I can go, well, I much rather be in a cashflow situation with Ken where I'm making six or 7%, but there's potential upside. The asset's going to go up over value. The plan might be to refinance, pull it out, get an infinite return.

[00:05:06] Those things figure into my thinking. But when we think about the whole capital stack, it can be, as you know, different classes of equity, different classes of debt. So not to make it confusing, but you just have to understand where the money is coming from. And the coming from part is what you hit on Ken, which is so important. People don't have stacks of a hundred dollar bills in their mattress, at least not too many. The money's somewhere doing something. And many times when we raise capital,

[00:05:35] we say, well, you know, our deal's amazing and it's going to do this and it's going to do that. And we run the risk of almost insulting the investor as to where the money is now. Like, what are you doing in T bills? Well, you have to remember they made that decision and they get it for a reason, probably safety and security over gain and tax benefits. So you just have to consider all of that. And it gets more complicated when the rates change like they have. Just also want to point out that when you're taking a look at money, again, it doesn't matter

[00:06:04] if it's the form of debt or it doesn't matter if it's the form of equity. Equity is always riskier. And let me just say that again. Equity is riskier. The reason it's riskier is because if you're going to get a loan from a bank, the bank is actually going to secure your property as collateral. So the collateral that they have against your property is the loan. And so if you default,

[00:06:33] they can take the property and pay back their loan. So on the equity side, you don't have that. Right. And so equity is always higher. So let me give you a scenario. If let's say you're buying a million dollar investment property, $500,000 is in the form of debt at let's say 6%. $500,000 is in the form

[00:07:00] of equity at let's say 10%. So the blended cost of capital is 8%. That's your cost of capital. So you take the 6% of debt, you take the 10% of equity, you blend it together and the cost of capital for a hundred percent is eight. So you better darn well make sure that whatever that property is doing, it better do north of eight. Right.

[00:07:25] Right. That's how we solve the cost of capital issue. And so, so that's why this cost of capital is so important because a lot of times people might buy something like if, like if you're doing a fix or flip, let's say your cost of capital is eight. If you're doing a cashflow deal, the cashflow is three or 4%, your cost of capital is eight. Right. If you're doing one that is 10% cash on cash, then you're covering the cost of capital and you're

[00:07:55] making an extra 2%. So the thing that needs to, that most, a lot of people don't really pay attention to is that cost of capital. And that all went up in the last couple of years, not necessarily as a result of Trump, but as a result of the inflation that we've had. And so that cost of capital is actually precluding a lot of people from doing investment deals. Right. Yeah, for sure. And that's the big picture. And the other thing about it is from an investor

[00:08:22] point of view, we don't get emotional about it. If the numbers don't pencil, we say, okay, pass. We're not, we're not going to do this deal. This doesn't make sense right now, but it doesn't mean that there aren't any deals that make sense right now. And we always say, you know, if the deal works on the day you buy it with the cost of capital that you have, then you're good. Right. And if things change and rates come down and maybe you can refinance, and that depends on the type of property and the collateral and all that, uh, then perhaps you get a second, that second bite at the

[00:08:52] apple. But I think you have to be prudent today. Uh, everything is in disarray, right? Consumer sentiment is down and people are concerned. And that whole uncertainty thing is rearing its head. And so a confused mind won't act. People decide not to do something instead of to the air on the side of caution, which is a perfectly wonderful human nature, a way to behave. But as investors,

[00:09:18] we're like the bank, the bank only gets paid if it puts its money to work in the marketplace. As investors, we only get paid if we have our money put to work in the marketplace. If we hold on to capital, then there is a cost of capital people don't talk about. And that's that deterioration of the dollar due to inflation. Every dollar on my wallet is worth less every day. And so as an investor, you got to get your mind around both sides. You don't want to take too

[00:09:44] much risk and you you're right. You better have that threshold return. But at the same time, if I elect not to make an investment, there's a cost to that as well. So I want to highlight Danielle. Danielle closed out a deal today. Yeah. All right. I think this is another really good lesson on cost of capital, because you should tell Robert, you know, she she moved the money from something that she owned and did a 1031. But I think

[00:10:12] you should walk him through the process of how you were looking at your cost of capital based on what it was returning. Yeah, it was interesting. Right. And I actually wouldn't have done this if Ken wouldn't have brought it to my attention. But, you know, you have these properties that you've had for a long time and they're cash flowing what they are. And in fact, this property was fully paid off. So as far as cash flow goes, no issue. Right. It made money. I had a guy in there for three years. He moved out. I'm trying to rerun it. I'm now about three hundred dollars less a month. So from

[00:10:42] nineteen hundred to sixteen hundred before I even start to get applicants. My HOAs went from two hundred to three fifty. So now I'm starting to look at, man, like this thing's fully paid off and I'm only making like a thousand bucks a month on it, you know, or six six hundred bucks a month on it. Right. Fully paid off. And anyways, so Ken is like, how much money do you really have tied up in there? And I'm like, well, I think I could sell this for north of three hundred thousand. He's like, so you're really

[00:11:10] making six hundred bucks a month on five or three hundred thousand a year. So I start doing the math. I start looking at other properties that I actually have debt on that I don't make as much money on, but I make more based on how much I have invested in those. Right. Some of them only have a hundred thousand. So I, you know, took a little bit of money I had and I rolled it into a 1031 into a single

[00:11:34] family home where now I'm making about another thousand dollars a month on on my money. And I only had to put in another, you know, a hundred thousand dollars in order to do that. So it really makes sense, you know, when you start looking at that, but I think so much of our single family, you know, small landlords, we don't really look at that. We just look at that. We're making money every month and it's going to appreciate. And this is kind of our retirement, but you really do have to look at the ROI and what you're actually making on that money. Yeah. It's well, that story,

[00:12:05] it's a heck of a good story. It'd be a great one for the summit. Really? Yeah. I think people are hearing the, and it's, it's not, it's the mindset behind it too, right? This is a big, important part. I think the fact that you're, it's, it's performing just fine. You own it. It's outright, no mortgage payment. It's all good. The guy's paying me and it's, it's great. And if you hadn't have woken up to go, wait a minute, the rents are down and the HOA is up, right? It's very common. What we call lazy landlord syndrome. Yes. Well, but also not even lazy

[00:12:33] landlord, but you know, there's a part of me that's still a Dave Ramsey person at heart, right? I'm not quite on the whole barley like debt. You know, I don't like debt. So in order to buy this next property, I had to take on a hundred thousand dollars in debt, which I, you know, I'm like, Oh, you know what I mean? But that being said, it cash flows so much more. And you know, my mortgage, you know, I'm not paying that much for my mortgage. Right. And so it was just a mindset shift to have to take on debt versus something paid off, but realize to yourself, I'm actually

[00:13:03] making more money on my money, even though I have debt than I did before with it paid off. So that's the epiphany. A lot of people. So this is the flaw in the Dave Ramsey mindset is in this particular instance, uh, Danielle's got multiple, she has multiple investments. So she was able to look at other ones that believe it or not, she's trying to pay down. Yeah. It's like, she's like, I don't want any debt or what any debt. I want to market down. She follows in the

[00:13:31] David Ramsey mindset. But I said, why don't you take a look at another one? That's not very far from you. And that has debt, how much you making is she was making almost twice as much cashflow with half the equity. Because I have a 2.6 mortgage on that one. Yeah. 2.6 interest rate. So I said, that's gold. You don't want to get rid of that. And why would you pay that down early when you're,

[00:13:56] you're beating inflation. So you're basically borrowing at less than inflation. And so the last thing you'd want to do is pay that off, even though a lot of us kind of started with that. You know, I remember my parents, right? Let's get out of debt, get out of debt, get out of that. That's all they ever pounded there. Uh, what they were really talking about was credit card debt. Yeah. Yeah. Right. And so there's the good debt and the bad debt, but in this particular case, it really opened

[00:14:21] her eyes and she realized that, well, maybe a blended cost of capital with lower cost debt is better for me. Um, and, and by the way, it might not work and sometimes it will work, but the question or the, the thought process is you should always take a look. Yeah. I've got to let weigh your options and it's the compared to what, if I'm just moving along and everything's fine. I, you know,

[00:14:47] it's the whole thing about vacancy. When you have a tenant who stays in the property three years, you know, 18 months in, you're not really concerned about what the vacancy factor is in the marketplace. Well, you should be paying attention, but you're not concerned because you have a tenant. A house is either a hundred percent occupied or zero percent occupied. There's no 5% occupied or 5% vacant houses, but we have to look at that. And now the market has changed. And so the rents aren't where they were

[00:15:14] when you rented the property. So that's a consideration. Everything affects our bottom line and it's zero-based thinking, knowing what I now know, would I make this investment again? And knowing what I now know, what's the best way to take advantage of what I have to work with. So obviously the 1031 is a great tool. And for folks that don't understand that they should take that as their homework item because it's the second best tax favored, uh, treatment there is in

[00:15:43] real estate. Uh, but it also has you thinking about, does it make sense to take on debt in today's atmosphere with the rates higher? And it might, but the other thing is that when you have a loan at 2.6%, the loan is an asset at that point. Yeah. Yeah. It is. I mean, you can't get a better return. I mean, you know, I, I have probably half paid off on this other condo and my return is so much better

[00:16:08] because that debt is leveraged so low. Right. So, so, and part of me actually wants to sell that condo too. And the reason I have it is because of that stupid loan. Well, I, I thumbs up into a free check across the board, right? That's exactly a lot of people are hanging on to real estate. They wouldn't otherwise cause they got an awesome loan. Yeah. I think this, well, first of all, I can't wait to join you on the cruise this year. That's going to be so fun. Uh, Danila, I'll be there. Her parents will be there, but I think this could

[00:16:38] be a really good topic for this cruise. Um, are you open to that? Yeah, sir. I mean, we can, we can, we can put the math up on a PowerPoint and let people kind of understand it and make it super easy, but you know, let's talk about the cruise real quick if, if we can, because, uh, you know, I'm excited. It's right around the corner. It's next month. You know, uh, what do you got going this year? Well, thanks for that. It's our 23rd annual investors summit at sea is I'll be,

[00:17:06] I think 13 for you. So you know what it's all about. Uh, I think the biggest thing is that with everything happening right now with the economic turmoil and what's happened in the stock market and bonds and gold and silver and cryptocurrency and all of that real estate too, what better time to get together with a whole bunch of smart people, not just the faculty. We have an amazing faculty, but all the folks that come from all over the place. We have people from seven or eight countries

[00:17:34] coming. We've got an incredible faculty joining us again, uh, this year, George Gammon. Plus of course we have Peter Schiff and Peter Schiff doesn't think like anybody else. And then our mutual friend, Robert Kiyosaki back with us. Always fun to have Robert on the summit. He's not been for, I think five years. Yeah. It is a heck of a all-star cast, but, uh, honestly, one of the things that's been a blessing are, are the people that show up. It's,

[00:17:59] it's not an inexpensive event and it's not an inexpensive from time. It's a commitment, you know, and, but a lot of people, they bring their kids to bring their families. And it's very strategic because they're trying to make a move financially somehow. And maybe it's an exit. Maybe it, maybe they're trying to leverage something bigger. Uh, but, uh, it's, it, it's one of those, uh, I would call it a very high level group. I always leave with ideas. You know, I

[00:18:26] always leave with learning something or ideas on how I can improve my investment, maybe an investment that I didn't know about that's really doing well right now. And you're just connected and you make these like lifelong friendships of people that, you know, invest just like you do. Hey, by the way, how do people, uh, find that where, where's the best way to, for them to go to click on a link and check it out? Yeah, it's easy. Just investor summit at sea. So we do two

[00:18:52] days in a hotel room followed by seven days on a cruise ship. So it is an investment of time, but that also lets us go deep. So let's, uh, let's jump to the next. I'm going to jump over one. Let's jump to the next one. Uh, chat GPT market uncertainty and geopolitical risk. Hmm. So do you know anything about that? Well, I'll, I'll let you start. I mean, you, you, you interviewed Trump, uh, several times on your radio show. Um, you know, what is that man doing?

[00:19:20] Yeah. Yeah. So this is such, he's so polarizing, right? Love him or hate him. Uh, he, you can't ignore him. And that's the thing. He's very bold, you know, and obviously not what we're used to. And I think the biggest thing is the uncertainty. When you have somebody who's making bold and innovative moves, they might work. It might not. But when that happens, whether it's in a

[00:19:46] company, whether it's in your family, then everyone's on pins and needles. We're not sure what's going to happen. Now it is funny to watch, you know, all the talking heads because he was pretty clear about, Hey, we're going to do this. Uh, but when it, when the rubber meets the road, you know, there's just a lot of folks who are scared. They don't know what's going to happen. They see, you know, some of the big picture stuff, and then it's all interpreted by all the talking heads. So I'm at least confident that the guy understands business as a business guy.

[00:20:16] He understands the way money moves. He understands putting money to work at a profit. And it's not that the government should be profitable, but moving forward, what you have is people grasping for what can I count on? And I think if we can continue to shave off costs that were not being effectively used, and we can focus on things that maybe not everyone agrees on, but that enough people have,

[00:20:45] have said, yes, this is what we want. Then slowly, but surely the market reaction works its way out. So it's just the most change we've seen politically in a long, long time. And the geopolitical part is the fact that world leaders and citizens from other places are reacting to it as well. It's not just, Oh, that's just the U S and that's what they do. We're talking about global trade. And by its

[00:21:14] very definition, every trading partner involves two different countries. And now you overlap that with nearly 200 countries and it becomes really, really messy. So as you know, the time to make money is when things are going crazy. So I think it's good stuff. It is. I'll tell you what, Danielle discovered a nice little nugget that she's going to share with you, um, on $9.2 trillion this year. So I want to

[00:21:43] tell Robert what you discovered. This is pretty interesting. Well, you know, the federal government has like $27 trillion in debt that we now owe. And about nine of that is coming due this year. And most of it is at one to 2% because it goes all the way back to 2010 when rates were really low. And then some of it was refinanced in 2020 rates are, you know, if the government has to refinance

[00:22:09] this debt at 5% in about nine years, we're completely insolvent. Like it's, it's not good. And that's if the debt just stays the same and doesn't go up, which, you know, we're adding a couple of trillion a year in debt. So it, but if the rates go down to closer to 3%, we're fine. We're cruising right along. So that's got to play some kind of influence on Powell's decisions moving forward, whether or not he's saying it does or not. So it's no different than Danielle's that,

[00:22:36] you know, her, we were talking earlier about her, her condo loan. Yep. You know, if it was maturing, it would mature at more than double. Right. So she would now be facing a different decision, you know, in her case, she'd probably sell it or whatever. Right. But so the, the, the, when, when, when you have debt maturing, which is exactly what the U S has, and it's going to mature at two,

[00:23:02] three, even 4% more, cause it's all different debt and it's all being refinanced at different times. Some of it at 15 years ago, you know, you now have a significant higher debt cost. And so you're, you know, we are predicting, and I think this is probably not far from the truth. This is precisely why Trump is going after Powell publicly. Right. Because he's,

[00:23:27] this debt is mature. It's, it's going to be a cost and it's going to roll forward. I cannot wait to have this very discussion on the summit because we're going to have Brent Johnson there. Who's super smart and George Gammon and Peter Schiff as sparks are going to fly because the fact that we have the chairman of the federal reserve, you know, running the, the ship,

[00:23:52] he's, he's looking at a whole bunch of factors, none of which have to do with the rate paid on the debt. And yet three or 30%, 35, whatever that number is, 9 trillion out of 27 trillion, a third is coming due. And those are at low rate loans. It's exactly like, Daniil, your property, except it's 9 trillion dollars. And that's also more debt than I can. My debt snowball from Dave Ramsey.

[00:24:22] That's a lot of debt. You can't 1031. You can't 1031. Well, the term you want to look up for those listening and you wrote is fiscal dominance because what that is, and we've seen that in other countries, we've never seen it here where basically the fed can't continue to worry about inflation because it instead has to focus on the financial security of the country. So, because, you know, if things go too haywire over here, you're going to have way more problems than just

[00:24:49] inflation. And that's why Ken and I like the hard assets like real estate, like gold, because those things move with inflation. And we just think we're going to, the fed's going to have to accept inflation higher than 2%. Yep. So, so if they have to move into that fiscal dominance role, uh, to, to mitigate the higher debt costs, uh, we potentially could see a run on inflation. And you know, inflation is a two-edged sword, right? Real estate investors benefit from inflation

[00:25:17] in the long run as asset values go up and even from rents, but too much inflation. And now you see it in all of the other costs involved with real estate. And then you add on that. I don't know if this is in chat, GBT's top five or not, but insurance and what's happening there. Right. So it's a lot to manage and get your, your mind around. And I think that as we look forward, this is going to become a front and center issue because the rates are again, drastically so

[00:25:46] different. If it was, you know, they were at 2%. Now they're going to be at 2.25. Eh, all right. When you go from two to seven, ouch. Yeah. Well, uh, oddly enough, we'll roll into the third. Uh, we'll make us the final point and I'll bring the other two on the cruise. How's that sound? But I will tell you the, the third one is, uh, the shifts in housing demand. And by the way, um, before we go too far there, you know,

[00:26:14] you can make an argument that insurance is baked into this because one of the things that, um, uh, I, I looked at, there was a report that came out. I think it was Redfin that said the cost to own a single family home, the cost, not including mortgage is 1500 a month. Yeah. So this is non-mortgage. So just the maintenance, the insurance of the property taxes,

[00:26:41] the capital, you know, any of the, any of the stuff, the utilities and all those kinds of things, obviously that might be baked in there that's 1500 a month. So, so, you know, so call it 18 grand is essentially the number all as a result of these rising costs. Right. So, um, and so that in amongst other things, we are seeing a shift in housing demand, but really what's happening is

[00:27:07] home prices have not really adjusted much in Scottsdale or the greater Phoenix area. It's only seven grand, right? Yeah. I think it's a couple of percent. Yeah. Not even right. So that's something don't get me wrong. It's something, but when rates are still six and 7%, it's, it's still unaffordable as, as you relay it to the, to the rental side of the equation. So, so on one hand, you got rentals kind of getting whacked right now because all the new construction that happened a

[00:27:36] couple of years ago. So you have softness in the rental market, which is really, really good for the consumer. And then you have the, the affordability side of a single family home, which is not good for the consumer. And so we are seeing shifts in housing demand. The housing demand is shifting from home ownership to rental right now before our eyes as a result of the lack of affordability. And I think that's going to be a huge, huge issue moving forward.

[00:28:02] Oh, for sure. If you were to buy the median home in America three years ago at the average interest rate, your payment would be about $1,300 a month, principal interest taxes and insurance. If you were to buy that exact same house right now for today's average interest rate, your payment PITI

[00:28:24] payment is double, double, not 10% more or 5% more. So now the folks that could have paid $1,300 a month, plus the other costs that you mentioned to own a home and live in it can't own a home and live in it, not at twice as much. So what are their options? They can rent, they can rent an apartment, they can rent a home, but they're not buying. And we are in the midst of this transition to being a

[00:28:52] renter nation for sure. And there's a lot of other variables to it, but the big picture is exactly what you hit on. When folks can't afford based on the interest rates and the rising costs, they have no choice. They have to back to housing demand, lower their expectations a little bit. They don't live in quite as nice of a neighborhood. They don't live in quite as big of a house. They're making those kinds of decisions, which is a huge shift in demand. It's not even that the number of people changes

[00:29:20] that much, although that happens, it's what they can afford. And the other big picture is we are underbuilt. We're still as a nation underbuilt because for years, we just did not have enough new housing starts based on a lot of different variables. But even when we saw and are seeing right now, these big apartment complexes that are coming to market in terms of being on the rental inventory,

[00:29:45] they've been being built for three years. So four years, whoever pulled the trigger on that property wasn't aware of interest rates where they are today, didn't see what was happening in terms of the affordability. And also it did flood the market. So temporarily it looks like, hey, demand isn't as strong, but I do believe that is just temporary. We have more and more people and they're going to

[00:30:11] have more demand and we have less and less inventory. So ultimately real estate investors that can hold the course are going to be sitting pretty. So I think that the demand is just pent up, right? I think everyone's waiting on the sidelines. And I think this is a really sweet spot to buy because, you know, I just bought a house. I was able to negotiate a great deal because things are sitting a little bit longer than they were before. But like we just had interest rates drop probably

[00:30:37] a month and a half ago. It was really weird. The interest rates drop quite significantly to like right around 6.1% for, you know, a weekend. Right. And we saw all this inventory move that weekend. And I think that, you know, people are just waiting. And I think that once interest rates do start to drop and Ken and I believe the interest rates are going to, that you're going to see this pickup in demand and this spike in prices. And I think some people, to your point, are going to miss out because they were waiting on the sidelines. And as soon as investors,

[00:31:06] as soon as they can cashflow again on a regular basis, that demand is super pent up and things are going to start flying off the market then as well. I would completely agree. Yep. People have said no to deals because the numbers just didn't pencil. And a big part of the penciling is that interest rate and the payments that they're making. And yet they want to buy, right? So in, so there's supply and demand and inside demand is something called capacity to pay. And that is your ability to actually, I demand, I want to have the place, but my capacity to pay

[00:31:35] is diminished. As soon as that changes and it will, when interest rates come down, we're going to see that pent up demand. And I think that's on the commercial side too, you know, less so there perhaps. And rates again, about the best place you can find rates is in your space, Kenny and apartments, but still there's room for them to come down. And I think when they do, we will see. And then you also have completely independent of investors. You've got homeowners that are waiting to make that move. They need a bigger house. We had another kid. We really need

[00:32:03] another bedroom, but we don't want to give up our 3.2% loan. Well, as soon as loan rates come down to a more reasonable amount, boom, they sell a house and they buy a house and they create two loan transactions. And now the economy is moving like it hasn't been. Yeah. And one other thing to note there is, um, that we haven't discussed yet is not to mention the fact that those people that might

[00:32:27] actually move, they got a lot of equity. So, you know, there's a tremendous amount of money sitting in these homes right now. Just like you had in your condo, except these, these people are sitting there. They do have a low rate, but they also, because like in your example, Robert, the home price went up, the mortgage price went up, but the home price went up, created this,

[00:32:51] this, um, just on paper at the moment, this equity that they've got. And so their, their ability to stretch into something bigger, uh, better in a new area is, is, is really, um, much higher as a result of them having a hundred, 200, 300, 400,000 more in equity in their home, just because they bought

[00:33:14] in 2021, 2022, even right. Equity has happened and it will continue to. So you're exactly right. And there it's everywhere. And how do you get to it? If I can't access it through a loan, I can sell. If you don't want to sell with me, you got to wait, but when the rates come down and now you don't have to wait, we are going to see activity for sure. Yeah. Yeah. Nobody's really distressed. I mean, the numbers were out like 66% of homeowners have over 50% of equity. So if not paid off 50%

[00:33:43] equity in their home, so nobody, this is not 2008. Nobody's stressing, nobody's fire sailing their house. It's a very rare occasion for that to be happening. No, not a lot of foreclosures, not a lot of people underwater. It's a diff. It's I always say it's different this time around. It is. Yeah. Yeah, it definitely is. Well, Robert, this has been a fabulous convo. We'll pick up these other two messages. Uh, these other two questions from chat GPT. When I see you again

[00:34:09] on the cruise, uh, how do people get ahold of you? How do they find the cruise? Uh, Danielle and I will be on that cruise and we hope to see you guys. What's the best way to reach you? It's going to be awesome. You can check out what we do at realestateguysradio.com and you'll see a button that says summit. That's what we call our annual investor cruise, the summit at sea, or you can just go to investors, summit at sea.com. Love talking to you guys. I can't wait to spend more than a week together next month. It's going to be fun. And, um, uh,

[00:34:39] if you guys want to spend a week with us, we'll see you on the cruise.