Is the Economy Falling Apart? The The Alarming Signs About Unemployment

[00:00:00] Right now, the Economy seems to be falling apart. Things feel uneasy and we keep being told things are good

[00:00:06] But it's interesting right now, you know, because what we do know is unemployment is going up

[00:00:12] How much it's going up and what it's at? That's to be able depending on what you're doing

[00:00:17] It's really funny so

[00:00:19] I discovered the somrule SAHM, who's an economist for the Fed but before we go on the chart, Jerry

[00:00:26] I text George Gamin, I mean, hey George, do you follow the somrule? He texted me back

[00:00:32] Do you track rents like it's so obvious to him right but I start following this. I think it's important

[00:00:39] Jerry if you could pull that up real quick. Now this is not necessarily

[00:00:46] You know, it's just an indicator. I think it's what I'm trying to say here

[00:00:50] But the basically the somrule is around the unemployment rate which we're going to talk a lot about

[00:00:55] And it's the three month moving average of the U.S. employment is half a percentage point or more

[00:01:02] above the lowest three month average percentage period for last 12 months. So that's what it is now. I just want you guys to take a look at that

[00:01:09] far right now

[00:01:12] What I really want you to look at is when it started going up let's go back to 1970

[00:01:18] You know call it 73 80s the 90s in in the late 2000s of course in 2008

[00:01:26] Obviously the big spike is the pandemic which we all know and

[00:01:30] So I don't know if you want to call that in an an anomaly or whatever but it's probably not indicative

[00:01:35] It was a kind of a man made thing. It wasn't really economic

[00:01:39] But this is an indicator and what what this means is that people are more people out of work right and of course

[00:01:48] The BLS can only they can only hide for so long right like where they they post something and then they

[00:01:55] Rejusted later but this somrule again just an indicator but some that you guys need to watch

[00:02:01] is pretty interesting because when you have people out of work

[00:02:07] Then you have savings down you have their spending less you have debt going up which is already bad credit card debt

[00:02:13] You got you know food stamps up you got welfare

[00:02:17] You got people's morale and just their you know their spirit their middle health all that stuff gets rattled

[00:02:23] Let's don't forget we've had as low period of time. Look at that guys look at from let's call it

[00:02:28] What do you want to say?

[00:02:30] Oh nine maybe 2010

[00:02:32] Wait you guys have not really experienced we've had 14 years of pretty stable unemployment except for the

[00:02:38] Pandem well yeah let's take a look at some of those numbers from 2019 on Jerry if you want to pull those yeah, let's go back

[00:02:46] The chart that you made yep

[00:02:50] If you go back oh there we go yeah so basically um you know we didn't put it in here but unemployment kind of peaked at

[00:02:58] 2010 you know one up to I think nine percent yeah

[00:03:02] But since then it's been slowly coming down and in 2019 it hit 3.6 percent

[00:03:08] Yeah and it was 20 so where is today was November 2017

[00:03:13] So that's important to know that we haven't we haven't had an unemployment rate since about you know late 2017

[00:03:20] That's where we are yeah and I think you have to really disregard 2020

[00:03:23] I mean everyone was unemployed the government paid everybody whatever so when you're looking

[00:03:28] You know basically you are seeing the steady sweep from 2022 to 2024 where the unemployment rate

[00:03:35] is going up and since 2010 unemployment rate every year has went down so basically you kind of started

[00:03:42] high at 2010 when we had the great you know recession they call it and then it way it kept going down

[00:03:48] every year it got a little better now it's starting to tick up so while we're in the same spot

[00:03:53] we were in 2017 it's really not the same spot because 2017 every year it had started to come down

[00:04:00] Now in 2024 we're starting to tick up and this is what's important guys

[00:04:05] When you look at these numbers they might not seem like a lot but when you go from 3.5 which is

[00:04:12] just a couple years ago to 4.4 almost a full point we're talking about millions of people so so

[00:04:18] you know when you look at it it doesn't seem significant when you go from 3.5 to 3.6 to 3.7 let's say

[00:04:25] it doesn't seem significant but it is these are real people losing real jobs or can't find jobs

[00:04:32] You've got as you guys know savings went down and credit card debt went up and so

[00:04:39] we're talking about millions and millions of people and this is something to watch

[00:04:42] And I think some other data points that are interesting is you know 2007 is obviously right before

[00:04:49] everything started to collapse and the unemployment rate then was about 5%. But then it 2009 it maxed out

[00:04:56] to almost 10%. So it went up 5% in like the worst period of time and the worst recession we've

[00:05:04] like ever had in our recent lifetime so the fact that it just went up to percent in a couple

[00:05:10] years is significant. Great and that's you know we've all been blessed with low unemployment

[00:05:18] then to be honest that that's one of the feds mandates is unemployment and but they've also said

[00:05:25] that it's been too low I mean they've come out publicly just look and so what's happening is we're

[00:05:32] driving that we're driving more people to the unemployed and what that's going to do it's going

[00:05:39] to put pressure on anything any of the businesses and this is kind of the point of the video.

[00:05:45] The reason we're talking about all this is because when there's less people spending

[00:05:52] and less people getting into debt and and interest rates are still high and maybe they go down this week

[00:05:58] you know that that's been yet to be seen but the consumption is such a big piece of

[00:06:04] propping up the economy and that is going to go the opposite way as unemployment grows.

[00:06:10] Yeah and I think we need to look at all areas right so these were just an employment number so if we

[00:06:19] can you pull the challenger grain Christmas interest title one second but anyways challenger grain

[00:06:27] Christmas reported that layoff surge in August and hiring has had its slowest year to date pace

[00:06:33] going back to at least 2000 and five. Is that this a chart we're looking at here? No that's just a headline

[00:06:39] I don't know if Jerry has it. So they picked out again so layoff surge in August and hiring

[00:06:46] hit the slowest year to date pace going back to at least 2000 and five. Okay so but let's go back

[00:06:53] to that job chart Jerry if we can because I think that's important and also as you guys know

[00:06:59] obviously you got to kind of throw out you know the 2022 you know time frame because

[00:07:06] it's really cool that most of those people kind of came back and you know the economy I guess

[00:07:12] stabilized for unemployment standpoint but from that point what we're starting to see is job creation

[00:07:21] go down look at that. Yeah but here's the thing is these job reports you know people are all

[00:07:25] over these they're not including people that got two part time jobs for their full-time job so

[00:07:30] really that's why you're seeing them up and the down and up and the down is like it's just not

[00:07:34] right. Also if you really look at this there's a good upset some people and maybe not others but

[00:07:40] the majority of the job increases on a percentage basis the number one employer the government.

[00:07:47] Right. That's that's more government that's that's the fact just go look guys so you know

[00:07:53] you can't mess with the facts. So Jerry if you want to pull up the I don't think I actually give

[00:07:59] this to you but the Atlanta Fed report came out and then wages are up 15% overall from the

[00:08:10] soften but they're up 15%. Overall inflation according to them is up 18% from 2021 to 2024.

[00:08:18] So you have a 3% gap in people just statistically based on you know their numbers are 3%

[00:08:27] less spending power than they had before the pandemic. And it's going to get worse because what

[00:08:32] happens is when there's more people on the market like right now we're you know we're looking for

[00:08:37] various positions at any time our company is looking for you know 10 to 20 positions at all times.

[00:08:43] We have a full time in-house employer recruiter essentially because when you get to a certain

[00:08:49] size you just have natural turnover people are moving people are leaving whatever the reason is

[00:08:54] we've got new people come in and and at all times. And so what we're starting to see is and this

[00:09:00] is not just me is you're starting to see hundreds of resumes pouring in for positions.

[00:09:08] This was not the case two years ago and so obviously this is a very small

[00:09:13] sampling of course but this is what's going on with our company we're starting to see and so

[00:09:17] what that does obviously like anything guys when there's let's say 20 people try to become a bookkeeper

[00:09:26] let's say there's there as an employer you have more options when it comes to salary because

[00:09:34] you have 20 choices versus if there's two or five. So you know because now you're kind of

[00:09:41] beholding a little bit to the employee as you're negotiating and they're negotiating because

[00:09:46] it's let's say a job market focus more on the employee but when it's more now it's going to flip.

[00:09:53] So the employer is going to have more to be able to negotiate because there's more options just

[00:10:00] like anything it's just applying to man thing so that's another thing that's going to happen

[00:10:04] with unemployment and don't forget about the people that are working you know when this is important

[00:10:11] and this isn't discussed very much but but when an unemployment rate goes up and you now people

[00:10:19] that work for us let's say they know people that are looking for a job and all of a sudden

[00:10:24] they're wondering and they're concerned about their job so you know so even you know there's

[00:10:29] there's a there's a mental health piece and a morale piece that the employers are

[00:10:35] are going to have to tackle because as unemployment goes up people are they're going to be wondering

[00:10:41] well I wonder how our company is doing and one how financially you know where we're you know

[00:10:47] everybody's unfortunately getting crushed by inflation and savings are down and credit card

[00:10:54] debts up and it's a horrible horrible spot. Well in spending this is going to affect spending right

[00:11:00] obviously people losing their jobs affects spending but to your point so judge other people is

[00:11:05] in their jobs because it's like what should we do that vacation to Florida I don't know maybe we shouldn't

[00:11:11] do it this year because we don't know if we're going to lose our jobs you know I know people in

[00:11:16] that situation right now where there's talks of them losing their job or their companies doing

[00:11:20] some layoffs and they're you know pulling back out of all their correct right and that's kind

[00:11:25] of the point like like you know the signs are all around us right like you know like I know people

[00:11:32] I don't companies that are laying off and you know when you start to when you have an employee

[00:11:38] that's still there you're like oh am I next right that's a that's a real thing so you know

[00:11:46] so what they're doing is they're hedging and they're saying you know I'm going to just pull back

[00:11:51] and and build my savings and build my reserves. So interesting Michael Shane said unrelated but I

[00:11:57] think it's very related he said Andy Jassy from Amazon just issued a five day a week or turned off

[00:12:02] this memo today to Amazon workers and that is interesting because you know we do talk about this

[00:12:08] but the employees have had a lot of the power the last few years to dictate their salary they've

[00:12:13] been jumping from company to company you know they've been having remote work and flexibility

[00:12:18] and now that there's more people I mean that's what these owners are saying they're seeing

[00:12:22] people applying and they have tons of candidates willing to come in five days a week they're like

[00:12:26] well why don't we just do that yeah and you guys I mean some of your business owners and some of

[00:12:31] you are not but do you just need to understand the situation it's the hand that's being dealt

[00:12:35] today like I said when I have hundreds of resumes coming in you know it's you're gonna it's

[00:12:44] going to be easier and negotiate well and to Michael's point he just sent here you know return

[00:12:49] to office is an easy way to cut staff correct you know they will return to office perfect

[00:12:54] all right that they're on the list politically they don't have to deal with that yeah

[00:12:58] they're I mean they don't have to deal with layoffs they can just say we're returning

[00:13:01] to office the thing is that the people that are people that understand that the if they want

[00:13:10] to make a good move they should just say okay yeah and then decide like if you if you're just

[00:13:15] like screw you like the carmy's not the same as it was even a year ago or two years ago

[00:13:20] it's just not there's more people looking for your job today there's more people trying to

[00:13:28] just hire inflation these higher living costs you know we we looked at a couple other

[00:13:33] folks they're actually tracking real things I mean I think we did like a week or two ago

[00:13:37] and we started looking at you know individual things that that we all consume and use

[00:13:42] and I think I think inflation significantly higher than what's being reported it is and you

[00:13:48] know pal said something interesting he said we're on the path inflation is on the path to 2%

[00:13:56] so that's his well so it's on the path what he's not saying when they

[00:14:02] hotter than it's just starting to start cutting rate it's going to go up so so it's easier to say

[00:14:08] like okay we didn't hit our 2% target but now we need to focus on the workforce because unemployment

[00:14:14] is starting to get higher and we don't want a recession but instead of saying that said okay

[00:14:19] it's on the way to 2% so now we're gonna focus on inflation not mentioning that cutting rates

[00:14:23] is probably gonna make inflation go back up but he you know that's kind of their new little tagline

[00:14:29] on that way to 2 you guys he just got a little dig a little deeper here like um one of the things

[00:14:35] that you all know now is when rates go down people start buying and consuming again that is going

[00:14:44] to happen you know everything is gonna all boats left right so you're gonna see people start buying

[00:14:53] consumer products you're gonna see finance that I should say they're gonna get into debt they're

[00:14:57] going to buy cars they use car dealers are going to be all over and the new car dealers by the way

[00:15:02] they're in trouble I don't know if you guys have really dug into that but um I watch your video last

[00:15:07] week about um the the guy was picking on the the four dealerships you know the four to 150 trucks which

[00:15:14] couldn't get um are you know you got a massive inventory because they produce them so fast so you know

[00:15:20] and it's all has to do with that so as debt goes down things like that go up also well we'll also help

[00:15:26] the refinances hopefully let's cross our fingers because that's what we want but that stuff also drives

[00:15:33] pricing up again that's kind of the point but I also think it's important to note that prices are

[00:15:39] softening on things people don't need right so prices are softening on you know some kind of like

[00:15:47] Airbnb's prices are softening on I think toys was the category that they just came back in

[00:15:53] that things were softening use cars are softening but things that people need like food like energy like

[00:16:00] how does toys how is it like like toys is a cat or anything else but but how is it anything like

[00:16:06] that it's not really softening it's flatlining are going up and so it's nice to say sure you know

[00:16:13] the increase in inflation was XML but really the things that people need were going up well

[00:16:20] the things that people don't necessarily need or softening even a use car people don't necessarily

[00:16:24] need a use car not like they need food you know people have to eat every week be a use car

[00:16:29] you can kind of stay in your old one or you can take public transportation but these things that

[00:16:33] people absolutely need food and housing continue to go out yeah let's talk about how what people can

[00:16:39] because I think that's important well okay but I mean I just want to I think the point of this video

[00:16:47] and the point of this live is the unemployment rate is real these are real people not being able

[00:16:54] to work that are actually going to go into the system and that there's going to be money spent

[00:16:59] there okay so what does all that mean or what are you know if you're in the system or you're trying

[00:17:04] to find a job or you have a job and you're asked to go back to work you know what are some

[00:17:09] of the things and I'd like to hear from some of the folks that are been away in here because

[00:17:14] there are moves that you can make to minimize the sting and I think I think it's important

[00:17:20] to address well I think for one you need to be a good employee and you need to get rid of

[00:17:25] the Loss A Play I'll get it Loss A Fair I'll get it to job you don't like it you want me in

[00:17:32] office I'll just go get a new job whatever find me like that kind of attitudes probably

[00:17:36] I'm good right now right I think guys like you know the employer is going to have an upper hand

[00:17:42] here at least for the next couple of years it sure looks like it so that's number one so be

[00:17:48] you know it's all like rent you know like right now red soft and you're not going to see a big

[00:18:02] butt as a as a tenant what you should be doing is looking around right now it's the opposite

[00:18:07] for for jobs right it's you're you're starting to see more people looking for jobs and so it's

[00:18:15] you know so you have to kind of look at what what's happening and and you know one thing is for sure

[00:18:23] is there's going to be a much better rate on rental housing for sure we're seeing soft

[00:18:29] things we're starting to see concessions there's like 500,000 units hitting the market right now

[00:18:35] 500,000 have a million adding supply now might not be in your area but I can assure you those

[00:18:42] are real things being revealed by real people and so this is a temporary little window so you've got

[00:18:47] you've got make sure you shore up that now and you look for the best deal you can't yeah and I think

[00:18:52] we need to touch on debt right because that's the other piece of this puzzle is the debt market

[00:18:59] savings goes down and that goes up when unemployment goes the new name the Ken Maco or I show

[00:19:04] podcast make sure you guys check this out this is going to be a little more high level we're going

[00:19:09] to deep dive into what MC companies is doing what Ken's reading what he's looking at and it's on

[00:19:15] every Thursday it's on anything any of your podcast apps so just go ahead and scan that and by the

[00:19:21] way I would love to hear from you guys like what do you want to hear because what we've decided is

[00:19:27] we're going to get way more in depth about some of the moves we're making as the fed rises

[00:19:33] their lowers rates as and placing goes up and down a lot more detail we're going to do it a

[00:19:38] little bit more long form and we're going to talk about what we're doing in the company what we're

[00:19:42] doing both personally so anyway we'd really love to hear you guys yep all right so let's

[00:19:49] happen to debt so debt is interesting because the Fed is going to be focusing on these interest rates

[00:19:57] starting probably here in a week or so right if you'd love it man like yeah you guys all know

[00:20:02] we're the real estate business like we just got the hell beat out of us the last two years

[00:20:06] since these rates have got up and you know a lot of my friends are in big trouble right and we even

[00:20:13] have some properties that you know we've had to show a rock on a construction and stuff that we bought

[00:20:18] where the rates have gone you know thankfully we have the dry powder to do so but that the

[00:20:22] well there's plenty of people we just saw this at limeless they're in massive trouble so lower rates

[00:20:30] help they help everybody you know they help they help people that are in debt they help people with

[00:20:37] credit card debt they help people on use car loans they help people on school debt that's not said

[00:20:42] they help people with mortgages to refinance they help you know real estate indicators to get

[00:20:49] lower rates on their apartment I don't company say don't chop it all up everything everything

[00:20:56] acceptance inflation yes that's when it's not going to help so it's not going to help in

[00:21:00] inflation it's probably going to set inflation back on fire as they lower rate so we could be

[00:21:06] a bit of a yo-yo then going back at fourth rate so be interesting don't forget there's a lag period

[00:21:13] so you know historically when rates have gone up and inflation has gone up there's there's a lag

[00:21:21] they've even said it takes could take up to a year before you really see the effects of an

[00:21:28] interest rate increase or decrease so just Google that you'll see so there it's it's not a media

[00:21:34] like a lot of people think it takes the time to kind of make its make its way through the economy

[00:21:39] so the in a positive note you know one of the things this election is going to do

[00:21:45] it's going to put they're going to want that economy and it's most stable position right

[00:21:51] just think of that of course they are like that's a matter of what administration you like it's just

[00:21:56] the fact is the economy they want the economy to be an order you know coming to a member and

[00:22:03] so they're going to do anything and everything they can so be careful in October and November

[00:22:08] guys specifically probably October really dig a little bit deeper on the numbers you know really

[00:22:14] really do your research because I think you're going to see a lot of hedging and you know even

[00:22:23] with these unemployment rates like you know the BLS would come out with these numbers and then they

[00:22:27] would do massive adjustments later there's an 1818 thousand person like this is 818 thousand people

[00:22:35] adjustment just go Google it and look you know over the last one is a year period I think it was

[00:22:42] so it's crazy like guys like so so when they come out with it on unemployment rate you should

[00:22:48] always think is this real inaccurate you'll read something and then you might read something else later

[00:22:54] so this is a time for you to really dig in and start to take a look at you know some of the other

[00:23:01] so I think that it's important here because the Fed is probably going to start focusing on unemployment

[00:23:06] instead of insulation and this is why you know we've always pumped you know you need to be in

[00:23:12] assets and move with inflation like heavy metal like gold like real estate you know those kind of

[00:23:18] things I mean even even the stock market 10 even though it's not a hard asset at 10 so move with

[00:23:23] inflation so you know the worst thing you could be doing right now is saving money in your bank account

[00:23:28] so so guys this this will make sense when I say it when there's more people looking for work

[00:23:34] there's more people on the system that cost money right there's more people getting unemployment

[00:23:41] now that's the whole point of it right it's supposed to be temporary it's supposed to be you know

[00:23:47] a hand you know to to move you from from a to b that's the point of it but there there's going to

[00:23:53] be more costs there's going to be more food stamps there's going to be more all this stuff in the

[00:23:58] middle of this homeless this issue which is spending a lot of fun alone money there in the middle

[00:24:04] of this immigration vouchers and you know all the money being spent there in the middle of

[00:24:11] already high inflation and in the middle of high credit card debt in the middle of you know student

[00:24:17] loan debt so all of this is happening now and this is why we this is why Deniel and I were talking

[00:24:23] this weekend is it is the economy about the fall apart there's a lot of stuff actually

[00:24:28] going around direction right now yeah and in the governments really trying to skew all this until

[00:24:34] the election obviously they're trying to you know not count unemployment numbers correctly

[00:24:39] they're trying to count two part-time jobs as two jobs even though somebody lost their one job

[00:24:43] and had to get two part-time jobs and they're trying and they're doing all these job revisions

[00:24:47] you know on the back end because nobody pays attention to that but the biggest thing is just

[00:24:52] look around right like who do you know that's lost their job is your company laying off do you

[00:24:56] know if companies laying off you know go and jump on indeed or whatever you know look at what jobs

[00:25:02] are available how much they're paying you know look at all this stuff because it is really

[00:25:06] impacting the economy is really getting impacted here and the politicians don't want us to know

[00:25:13] about it but you know but we're not stupid we can you know you can kind of get that gut feeling

[00:25:18] you can see different things um I have a friend you know she always takes a part-time

[00:25:22] waitressing job on top of her other jobs she can't even find a waitressing job right now like the

[00:25:27] restaurants aren't hiring people aren't hiring I mean it's not like it was a few years ago

[00:25:32] everything's down guys and so the interesting thing is whoever the next president is it's going to

[00:25:39] have their hands full you know well you even had a new bedrider the other day they was a

[00:25:43] instructor right oh my god he was a microbiologist right I went into town and had a business

[00:25:49] dinner with a bunch of folks and I had a couple cocktails, Uber home and sky was all buttoned up

[00:25:55] I mean it's put her coat on in a nice way and I'm like what do you do he's like oh I'm a microbiologist

[00:26:01] and we lost our contract and I'm like oh my gosh and he's like I moved my family here and I don't

[00:26:06] move and anyway you know it's a small example but an example and I just think like well good on

[00:26:16] you man he's like yeah I'm gonna I'm gonna figure this out what I never guessed but that's what happened

[00:26:22] and so I think you're gonna start to see we're already seeing it guys like you know when you

[00:26:28] think of the unemployed I don't think you think of somebody like that I don't think you think of

[00:26:33] you know somebody that's super degree and was making a lot of money and then is it right so

[00:26:41] you know you know you know what actually is gonna be the safest the tradesman like

[00:26:50] like it's it's actually awesome like well the plumbers, the electricians you know all those

[00:26:57] those those folks man like people that are really doing stuff like the people that you need

[00:27:01] they have to come over and they actually do real stuff the white collar they're the ones

[00:27:08] that are in jeopardy in my opinion because with AI and everything is happening you can do less

[00:27:15] with you can you can do more with less people and but you know if you if you need a dishwasher

[00:27:22] you still need a dishwasher right like that's my point absolutely so let's jump into our premium

[00:27:27] questions if you guys want to join premium you just go to chemacorory.com for slash join dash now

[00:27:34] you can ask us questions and we answer them on email or on here so chat is asking and also

[00:27:42] when you two please ask any questions you have I'll get you a couple chat that's been how important

[00:27:47] is it to diversify markets I currently have 95% of my single family home portfolio in one

[00:27:52] single market. Good question so here's the way I look at things I actually go back to management

[00:27:59] so I don't and hear me out if you're in a town and you have all your properties in a town

[00:28:08] my guess is you're in six or eight or ten different submarkets right unless you're all in one

[00:28:13] little submarket so let me give you an example you know we've had I had a property that was near

[00:28:20] military base and when the military base deployed the town was decimated all these people like

[00:28:27] okay that is risk now now you could be in a town like Phoenix where there's hundreds of

[00:28:34] employers all around and you're probably not going to be at risk so a lot of it has to do with that

[00:28:41] but the other thing is management itself so so if if you have a vacancy in an area and you know

[00:28:50] at and you can't fill it that's probably the biggest issue so so I if you're in a really

[00:28:57] really strong submarket that has really strong demographics long term and of course I know that

[00:29:03] each side of street can be different that's fine but you don't have to be in Cleveland and Portland

[00:29:08] and Seattle and Boise and Phoenix and you don't have to do that because you probably have that

[00:29:14] kind of diversity inside of Cleveland inside of Columbus inside of Phoenix you know Phoenix

[00:29:20] Phoenix has hundreds of submarkets and some of them are I mean you can drive across the street

[00:29:25] and be million dollar homes and ride across the street can be 200,000 dollar homes so you know

[00:29:31] and with different school systems and stuff like that so so when you say that you know you don't necessarily

[00:29:36] have to be all over the country for a diversification but I am a big fan of diversification because

[00:29:41] I do believe there's you know there's different economics we're we're talking about this

[00:29:47] weekend it deals like oh I want to go buy this house you show in a friend of ours

[00:29:51] out a home in an area she's like I love this area and I said well let's do the math what is

[00:29:56] the cost of the home and then the rent well if you if you look you can buy something remember

[00:30:03] for where the rent is significantly more for about the same price of a home just a couple miles

[00:30:09] away yeah by the way once Phoenix one Scottsdale so you know so you have to look at it

[00:30:14] from that standpoint you have to look at the very basics and then you can decide

[00:30:20] you know is a better diversify but I still think that the diversification the answer is yes

[00:30:26] you like diversification but you also like neighborhoods that work you know because I have a

[00:30:31] condo and thing about selling and rolling it somewhere else because my two ACs have gotten out of hand

[00:30:36] and you were like I was like well maybe I'll look at this house in Phoenix and you're like

[00:30:40] the one neighborhood you invest in Scottsdale does really well so I just view just invest there again

[00:30:45] and I said the same thing I'm like well then I have three of my properties and one neighborhood

[00:30:50] but you're like yeah but that's like you can't go wrong with that neighborhood so if you are

[00:30:54] in a situation where your stuff's cash flowing and you feel like you've hit this niche and it's a

[00:30:59] long standing market that's not relying on one industry then I might just be good to stay where you're at

[00:31:05] but here's let's look at some risks so let's say you own eight or ten properties right

[00:31:10] near a university okay that's risky in my opinion because now your your your reliant on

[00:31:18] let's say the the enrollment of the university the health of the university all those kinds

[00:31:23] things and of course people then experience COVID like my kids they all got set home you know

[00:31:29] they're like well I you know I can do you know I could do school and finish school from

[00:31:33] where they grew up so you know that's risk or you know the the when I was talking about with the

[00:31:41] with the military base deploying so those are risks but when you're in a market that is

[00:31:47] super diverse for an employee met standpoint like there's lots of choices and you know people can

[00:31:54] you know move out of one industry and move to another then I think you're a little bit better you know

[00:31:59] Scott'sdale is one of those markets where there's thousands of employers here and there's

[00:32:05] some that are doing great and some that are doing great at all times and but you're not relying

[00:32:11] on you know let's say a small basket of employers kind of prop it up economy like oil and gas

[00:32:16] would be you know like you know if the oil and gas business industry goes down and you know oil prices

[00:32:24] go down it's not going to affect Phoenix but it will affect Tulsa Oklahoma it will affect

[00:32:30] Houston taxes it will affect you know some places like that so you have to look at the bigger picture

[00:32:36] absolutely so Julia had a good question on YouTube she says hi Ken should we have cash on

[00:32:41] he and so we can buy when a recession hit 100% yeah by the way we're adding into a dry

[00:32:48] powder period of time like you're gonna want do you think though because I know multi-fantilies

[00:32:53] do you think single-family is too where you're gonna want dry powder well let's put it this way

[00:32:58] do I think prices are going to be down I do not in most markets but do I think it's just

[00:33:03] rates are going to go down in the in the short term I do so well what maybe didn't cash flow

[00:33:09] today or or six months ago might cash flow in the future so so having cash build a you

[00:33:15] were just talking about this the meals like I want to buy another rental but the numbers are

[00:33:20] working well one point one and a half points you know we're already seeing rates in the five

[00:33:25] guys this is good news you know even if you're cost of housing is a lot you know because

[00:33:32] in the areas we're looking at the prices have a they've gotten soft they kind of flatline

[00:33:37] but if rates go down it makes things a little bit better and so yes I always think you

[00:33:42] have dry powder also for emergency purposes always have dry powder at all times you know and

[00:33:49] that's actually remember that young man we're playing golf with this weekend he's like I got one

[00:33:54] year of dry powder like he knew like exactly he was 20 what is he 22 23 years old yeah I love this

[00:34:00] kid anyway playing golf with my son yesterday and he's got all kinds of cool stuff going he's

[00:34:07] buying rentals and stuff like that but the point is he knew exactly how much money he had he had

[00:34:12] one years of reserves and I think it's important to understand that at that level yeah absolutely

[00:34:21] and then finish the asking can you share any of your metrics that you use at MC target our

[00:34:27] away are we yeah actually for a minute yeah so I tell you what those are those acronyms

[00:34:34] and that maybe never in his own stand but I will tell you this we have a tried and true what

[00:34:38] for me it's always a safe and safe with my partner you know I my partner the wise sage Ross

[00:34:44] we go back to the very basics like what is your cash on cash

[00:34:50] like period that's our biggest one believe it or not if I'm gonna take money out of a four

[00:34:56] and a half percent one-month t-bill and move it into real estate and what is my cash on cash because

[00:35:03] I know I can make four and a half percent the government's gonna pay me that okay so I go back to

[00:35:09] the very basic so for me I always buy for cash flow non-capital game now how do I get there and

[00:35:18] that because it's serious of metrics and key p.i.s and things like that you know from from our people

[00:35:23] moving there what's the school system like what's your affordability what are the single family home

[00:35:28] prices in that area you know I want a big jump from rent mortgage for example like the property we just bought in Vegas

[00:35:36] you know there are the average rents are in the 15, 1600 range well though homes in the area are

[00:35:41] 1 to 6 million in that particular area so now it's a really nice affluent area a beautiful project

[00:35:48] and it's highly occupied you know because people want to be in the air it's that's the whole foods

[00:35:53] so those are all metrics you know and um to do you know I when we did this van trip that she loved

[00:36:00] we used to look for airbnb's around whole foods or look for like these really boutique high-end

[00:36:07] things guys look for those because those have some really smart people deciding where do we want to

[00:36:13] put a whole foods you know where do we want to put a looloo lemon where do we want to put

[00:36:18] high-end shopping areas as an example it's not always accurate but you should look for those

[00:36:25] and then you want to buy in around those areas you want to buy affordable in those areas and and that's what we

[00:36:30] look for those are some of the metrics we look for because you know I was a years ago I was playing

[00:36:36] golf with a guy that he had the greatest job this is back in the 70s and 80s his job is to go find

[00:36:43] the right corners from McDonald's and I like oh my gosh what a great job like he lived in Chicago

[00:36:49] which is where McDonald's was flump used to fly all over the country and he would literally because

[00:36:54] they had all these people they were trying to open old McDonald's and he would look at the corners

[00:36:58] and he had all these metrics so you start to see these really smart folks are out there doing this already

[00:37:04] whether it's Whole Foods or whatever it is follow that you don't always have to pay this

[00:37:09] hardest you know just look at the sides yeah absolutely all right guys thanks for checking and

[00:37:15] that we'll see you next week cheers guys