September 6, 2023 • 25 mins
Ever wondered how the fluctuation of interest rates affects the real estate market? Join us in a captivating conversation with Justin Bogard and Richard Thornton as we delve into this intriguing topic. We dissect Barbara Corcoran's prediction of a potential buyer frenzy if rates drop significantly. However, the picture is not all rosy and we consider the possible headwinds. Plus, we spice things up with a fun chat about movies and the challenge of finding the perfect show on streaming platforms.
About the Host:
Justin Bogard – Note Investor specializing in performing Residential Real Estate Debt. He finds deals and acquires them for his own portfolio as well as educates investors while walking them through the process of owning a Real Estate Note!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Narrator (00:02):
Interested in real estate.
How about wealth?
Well, they go hand in hand, andhere you'll learn all about it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, Justin Bogard,shares insights into investing
in real estate to create realwealth and passive income for
(00:22):
you and your family.
He'll share stories of realestate investments done right,
Take you through the process ofowning a real estate note and,
most importantly, educate you soyou can be the bank.
This is Be the Bank, brought toyou by American Notepad.
Now here's your host, JustinBogard.
Justin Bogard (00:45):
Well, hello there .
Welcome to the Be the Bankpodcast.
This is episode number 18 onseason five.
I am Justin Bogard.
Today we are going to betalking about I'll be talking
with Richard Thornton again andwe're going to be discussing I
write an article and it talkedabout what happens with, what
might happen or what couldhappen with when the rates
(01:06):
finally drop down, or if they'reever going to drop down.
So it should be an interestingtopic for today.
So stay tuned, richard, this isthe best looking outfit I've
(01:28):
ever seen you wear.
Richard Thornton (01:29):
Yeah, it's called no outfit at all.
Streamyard, for some reason, isjust painting me black in my
little avatar today, so I'mstuck with this.
This is all I can do.
Justin Bogard (01:42):
Well, that's too bad, because you're probably
wearing some outfit that I couldpoke fun at and I'm not going
to be able to now.
So this is actually worse newsfor me.
Richard Thornton (01:54):
I look at everything that I wear as an
outfit.
I'm also going to go see thenew Barbie movie, so I can test
out that theory.
Justin Bogard (02:04):
Oh so, brian, I have two daughters, as you know,
and I still have not seen theBarbie movie.
I'm not worried that I haven'tseen it yet, I'm just surprised
that I haven't.
Richard Thornton (02:13):
I'm actually told because I haven't seen it
yet that it's actually a littlebit more for adults than you
would think.
It's got a strong feministovertone to it and it's not the
bubble gum thing you would think.
Justin Bogard (02:30):
Okay.
Well, my daughters did see it.
I think they saw it two times,once with their mom and once
with my mom.
They mentioned that they likedit, so I said okay, hey.
Richard Thornton (02:41):
But you did see the more important movie.
Justin Bogard (02:44):
What's that?
Richard Thornton (02:45):
That was the new Indiana Jones movie.
Oh yeah, I did.
Justin Bogard (02:49):
Yeah, they liked that one.
We had actually watched all ofthe Indiana Jones movies before
that one and all three of usthought it was the best one out
of all of them.
I don't know if you had anopinion on it.
Richard Thornton (03:01):
I mean to see Harrison Ford once again doing
daring dues is quite something.
So are you going to?
Justin Bogard (03:11):
Yeah, it was pretty cool.
I definitely thought it was avery good movie.
So there you go, there's your,from Rotten Tomatoes to your
Home.
Richard and Justin, I've justtold you what movies to watch
next.
Richard Thornton (03:26):
So this may be what I'm going to see right now
, might be the best tidbit thatthe listeners and viewers are
going to get out of this.
But I did not realize.
Maybe, maybe and has nothing todo with notes.
I did not realize that youcould actually go to the Rotten
Tomatoes websites and justcruise through all sorts of
movies and TV shows and thingslike that, because the library
(03:51):
systems that Netflix and Amazonhave are not really great.
I mean, you see the 10 thatthey're promoting, but if you
wanted to put in some reallycool 1980s sci-fi movie, you
wouldn't be able to find it.
But you can find all that stuffon Rotten Tomatoes.
You can just put it in undersomething like that, pull it up
and then you can go go onlineand find out where it's playing
(04:13):
and get new ideas, and sothere's your little tidbit for
the day.
Justin Bogard (04:19):
You know what I'm going to put it up.
Maybe we might go down a darkhole with this.
Sure, yeah, what I watch is no,turning back now what I've been
watching stuff.
I agree with you.
When you go to the differentstreaming services, everybody
listening and watching probablyhas more than one or two
streaming services that they payfor.
We all thought we were going tocut the cable and we end up
(04:42):
probably paying more than we didwhen we had cable.
I agree, but I find that Ican't ever find the movie that I
want to have.
One in my head be like, oh yeah, remember that movie and I'll
go try to find on Netflix or gotry, and I'm just like this is
so annoying.
Why can't I just, you know, I'mjust like.
I'm just like.
I'm just like I'm just likeType it in somewhere and it tell
me what service it on, aservice it's playing on when I
have the service available to me.
(05:03):
That's the feature that I want.
I don't have you.
Richard Thornton (05:06):
You can do that.
I on IMDB.
So if you go to IMDB, calm andput in the name of that movie,
it'll tell you what platformsit's on.
Justin Bogard (05:16):
Well, I'm one step lazier, Richard.
Oh, I'm talking about whenyou're on your TV.
Yeah, you're a controller inyour hand and you want to.
You know, I'll get on themicrophone for the controller
and say I want to watch IndianaJones and if it comes up, it'll
just give me the ability to rentit on Whatever platform to rent
it on, but it doesn't show melike what service is, like
(05:37):
trying to stream it for free.
Richard Thornton (05:39):
That's what I'm trying to get across.
That's too late, man.
You're sitting there with yourjammy's on popcorn beside you,
you know beer in the other hand.
That's too late, dude.
You can't do your research thenjeez.
Justin Bogard (05:50):
Come on it's.
I need that instantaneousstreaming knowledge of where the
dang movie or TV shows playing.
Richard Thornton (05:58):
So your kids haven't told you that there's no
microphone in your, in yourremote?
You're just talking to the wind.
Justin Bogard (06:04):
Probably am.
This shows a picture frommicrophone, but I probably
Doesn't work this thing workingyeah no microphone.
Yeah, I digress.
Well, richard, we are.
We are gonna get to the beat ofour conversation podcast.
No one.
Everyone's tuned out so far thefirst minutes of this podcast.
(06:26):
I'm sorry, folks.
Anyways, do you guys know thename?
Barbara Corcoran?
No, as Richard says, rebecca.
Richard Thornton (06:35):
Yeah, yeah, that's close as close.
Justin Bogard (06:40):
Barbara Corcoran.
Corcoran is a well known forbeing a shark on just TV, abc TV
show, shark tank, and so I hadread a quick little Snip it on
one of the social media feeds II want to say it was yahoo or or
Facebook that I saw this on andand she had done maybe it was
(07:01):
an interview with yahoo news oryahoo real estate and anyway,
she was talking about realestate and she was saying you
know, watch what happens whenthe interest rate Currently it's
at over 7%, watch what it dropsback down to five like low
fives or even below five Saidit's gonna be a buyer frenzy and
she can see that real estatemarket jump up like 15, 20%, as
(07:24):
far as you know appreciation onon pricing, and I thought that
was kind of interesting.
So I read it and I respectBarbara and I, like Barbara and
I was thinking you know whatthis lady is is seeing something
that at least I didn't focus onwhen I Was trying to research,
you know and get a feel forwhat's gonna happen next with
our trends and stuff andresidents real estate.
But yeah, she's right, I could,I could definitely see, after
(07:47):
having the rates jump up soquickly and then if they start
to take back down and they evenget back down to the high fours,
low fives, like we hope thatthey do, I Can definitely see
everyone that's been on thesidelines waiting for those
rates to come down Just jumpingship, selling the house and then
getting a new mortgage in a newhouse.
So, richard, what do you?
Richard Thornton (08:09):
think.
Well, I think I think Part ofthat I agree with part of that.
One is I think there's a littlebit of headwind here.
First of all, I mean In a broadsense I totally agree with her,
because After every time thatthe Fed has raised rents and
lowered rents, guess what?
There's been, you know, aRussian housing, so that's not
(08:32):
all that big a deal.
To claim whether it's going tobe 15% or not is kind of Okay,
but there are a couple headwinds.
I was kind of digging around ina bunch of different reports and
I looked at the Harvard 2023housing study and some other
(08:53):
stuff and Now they're sayingthat 49% of Renters in the
market today Can't afford tomove.
They can't, can't even become.
They're hardly be meeting theirrents today, much less pulling
together enough equity to buy ahouse.
So that's a real headwind.
(09:13):
Materials prices and landsprices are going through the
roof, and so we've got to getthat part of it under control.
And production is still down.
Production is 30% lower than2019, which was the lowest
(09:34):
Production year in an on record.
Homebuilding yeah, homebuilding, right, I'm sorry for the last
15 or 20 years.
So you got to have a, you haveto have people get more income,
you've got to get and and thethe biggest demand is going to
be on the lower end of themarket, right?
I mean, it kind of always isfirst-time home buyers and how
they're going to get in and blah, blah, blah.
(09:56):
Well, if a large pool of themcome from the renters and they
can't even afford their rent,how they're going to buy a house
?
So I agree part of what she'ssaying, but there's a lot going
on in this market.
Justin Bogard (10:10):
It's confusing because I I appreciate your,
your dialogue with this and youryour side of of how you
interpret that story and whatyou see happening.
So I thought the 15% to 20%increase in real estate was
surprising to me as well.
(10:31):
Of course, she doesn't have acrystal ball.
She's not saying that she's,you know, betting her life on
this or anything.
She's just saying I can seethis happening and I can just.
So I believe the trend would bethat real estate will go back
up again.
I don't know how much, but thisreal estate game has been so
different since after the GreatRecession Right, it was in 2009,
(10:53):
2010 and all this stuff doesn'tmake sense.
The economics doesn't makesense sometimes, why this is
going on.
I think just people are makingdecisions and then we're feeling
the ramifications of them andthe effects of them after that's
done, meaning like, okay, therates went way down, right, and
now COVID happened and the rateswent way up and housing went
(11:13):
way up, and it's like everythingis just just proportional and
it doesn't logically make sensewhy it's happening.
Richard Thornton (11:19):
Right.
And now you know there's stillwe're still going through a
macro change, which is that theysay I think I can't remember
what the projected year was,2080 or something like that that
98% of the population,country's population, will live
on 2% of the land mass.
So you still got that overallmigration.
(11:42):
Look at all the people who aremoving to Florida and Texas and
you know Carmel, indiana and allthose.
Justin Bogard (11:50):
Carmel.
Stop saying Carmel, carmel, asyou say.
Come on, man, you're killing me.
Richard Thornton (11:55):
I got to get it right, so that's still going
on, but so the demand is there.
Clearly there's no more land.
If you're in Texas or someplacelike that, there's a lot more
land.
But a couple of the cities outhere are starting to do
something, which I applaud,because Norway has been doing it
(12:17):
for years and I have thoughtthat we need to do it, and that
is you know.
There's also all these rentcontrol initiatives and my
thought is well, why should wepenalize the private sector
owners with rent control?
They can't raise their rents,they can't.
Basically, it sort of leads toslum lord type of properties.
(12:41):
That's the edge, old, if you goto some places like Norway and
a lot of the other Scandinaviancountries, the government builds
housing.
I mean, they build largeapartment buildings and houses
and things like that.
They buy them and they sellthem to people and or they rent
them, but they put a cap on it.
(13:02):
So if you buy it, they say,look the cap that you can, the
most appreciation you can get islike 5% per year or whatever
that is, and that really, reallyreally increases the affordable
housing pool and doesn'tpenalize the private sector, and
so you're starting to see moreof that happen here in
(13:25):
California and I support thattype of initiative because that
would help a lot of the problemsthat we're talking about today.
Justin Bogard (13:34):
Yeah, it definitely seems like
affordability and I'm just goingto key on that word that you
said.
It definitely is a problemright now and you're right, rent
is the only way to go.
If you can't buy a house,that's really the only option
Live, move in with somebody elseor just rent on your own your
own house or condo or apartment.
And rents aren't going down.
No, they're not.
(13:55):
They are going up and they keepgoing up.
And I'm going to argue onething that you said back earlier
, where if they can't afford arent they can't afford a house.
I think they can afford a houseif they have a private mortgage
.
I think it's cheaper forsomeone to have a private, to
(14:15):
get a private mortgage on ahouse, than it is for them to
rent the house.
And I'm only speaking because Ilive in Indiana.
I don't live in any of thestate, I'm not, you know, seeing
what's going on but in Indianabecause it's where Midwestern
state rents are typically alittle bit higher than what you
can get on a mortgage on a house.
That's a little bit bigger thanwhat you're renting.
So I can see that being more ofa strong real estate selling
(14:42):
cycle is seller financing here,like in the Midwest.
I obviously I don't live inCalifornia.
I don't know what you see.
Maybe it's the completeopposite in California, where
mortgages are 16 times higherthan rents, I don't know.
But in Indiana at least I cansee on lower value properties
it's actually easier for someoneto get to pay for a monthly
(15:03):
mortgage payment than it is arent payment, just because the
numbers are a little bit smaller.
On a mortgage as opposed torents right now.
Richard Thornton (15:10):
So the trick, though, is to save up the equity
.
I mean, that's how I got.
I was very fortunate.
My mom and dad, when I boughtmy first house, had enough money
to lend me the down payment.
They charged me interest on it,but it got me into the market.
How dare they?
How dare they, can you imagine?
Justin Bogard (15:31):
But it got me Kind of lenders, are they?
Richard Thornton (15:33):
Yeah, that's right, and I paid them off.
But you know, in the first Ijust I was living in DC at that
time and got very lucky, and Iprobably made a half million
dollars on the first two housesI bought.
Wow, but that got me started,you know, in the race and I
would have had a terrible timegetting in.
(15:54):
So just to go back to one ofthe factors, though, that I read
about, and that said that themedian homeowner cost rose 20%
from last year to this year, andit's now $117,000.
So the average family has to bemaking $117,000, or the median
(16:15):
family, not the average.
Well, last time I looked,median income was only $70,000.
Oh, wow, so you got a huge gapthere and saying that those
people still can't afford to getinto a house.
Justin Bogard (16:28):
I guess, richard, I'm going to walk myself back
on my previous statement, thatis, rent payments versus
mortgage payment.
So if you just compare thosetwo line items, right in Indiana
the rents are going to behigher than mortgage payments.
To try to be in a comparablehouse of home ownership, meaning
like if you have a 1200 squarefoot apartment and then you get
(16:49):
a 1200 square foot house, likethe rent on the apartment is
going to be higher than themortgage payment on that set
house.
Okay, that's what I'm trying tocompare to and obviously the
locale is dependent upon that aswell.
But you just brought upsomething that I didn't really
take into consideration when Ifirst made that statement and
that was all the things that gointo home ownership.
(17:10):
Okay, and I think what you'realluding to in that figure is
saying like, okay, it's not justthe mortgage payment, it's the
insurance, it's the taxes, it'sfurnishing the house, it's
cleaning the house.
It's, you know, keeping theoutside with.
You know the yard scaping orthe hard scaping around you know
, by the house.
(17:31):
It's, you know, doingmaintenance on the yard, doing
maintenance on the house.
It's, you know, repairing andkeeping up with the mechanicals
in the house, like all thatstuff needs to go into
consideration, and I candefinitely see why the cost of
home ownership is definitely yetto consider that, more than
just the mortgage payment itself, because you can't just live in
(17:52):
a house and not do anything toit or else it's going to turn
into, you know, one of thebreaking bad houses where they
build methods.
Richard Thornton (18:00):
Right.
Justin Bogard (18:00):
That's going to be all overgrown, and just you
know.
Richard Thornton (18:03):
Yeah.
So it's very interesting.
I to me, I mean if you'reliving.
So some people just say, hey,look, some of my investors said
this is the best.
They rent, you know, they rentvery, very nice apartments, but
they rent because they said,just for the same reasons,
everything you said they said bythe time I pay taxes, and blah,
blah, blah, blah.
I'd much rather have my moneyin in in different investments.
(18:24):
Unless you're in a majormetropolitan area uh, in a lot
of instances New York, SanFrancisco, wherever and you get
a great deal of appreciation, Um, it could not be worth it to be
a homeowner because you're justnot getting that much
appreciation or anything out ofit.
So what's the big deal?
Justin Bogard (18:46):
There is that banter going back and forth, and
one in one of my local realestate clubs, uh, that we're
we're talking with, and there'sthere's two, two people that are
more well known for doing highvolume and house, uh,
wholesaling and flipping andstuff.
Richard Thornton (19:02):
Right.
Justin Bogard (19:03):
And they are bringing up the same point and
they're saying um, why do you?
Why do we own houses?
And you know, obviously, if youown a duplex, you know your
house hacking you can havesomeone else pay your mortgage
because it's really not a cashflowing asset.
Yeah, you can borrow moneyagainst it in the future once
you get some equity into it.
But, um, you know, there'sthere's always a good argument
on.
You know what's your lifestyle,right?
(19:25):
So should you own a house orshould you rent?
So right now, we currently rentit's.
It's because we're in between,figuring out where we want to go
, what, what part of town do wewant to live in?
Do we want to build?
Do we want to buy and rehab?
I only have about, let's see,eight years left until my oldest
gets into college and thenmaybe I want to move down where
my parents are to be closer tothem.
(19:46):
Like you know, there's allthese these things.
So I'm I'm like in the shortterm muddy water situation of
like, do I just rent?
Do I buy condo?
Like I need more amenities tohave somebody take care of stuff
than I do, trying to buildequity or appreciation in the
house, cause, you're right,richard, like it doesn't really
appreciate in the grand massesas it does, like in those major
(20:07):
metropolitan areas.
Now I say that, richard, and Ido have some updates for you.
Okay, so I had and this bothersme because I happened to look at
it today and I shouldn't havelooked at it cause I knew it was
going to bother me but I hadbought a house in 2017, 2018, I
believe and I put some moneyinto it to to flip it.
I ended up living in it for awhile and then I ended up
(20:29):
flipping it.
So I look at that house and Idon't know what I paid for it.
Let's just let's just call itUm, I don't know.
I know what I sold it for.
I sold it for around 240.
So that's a.
That's a pretty average pricedhome in a nice, uh, nicer city
where I live.
It was a, I think, richard.
It was a 1700 square foot home,so I had three full bedrooms
(20:55):
and two and a half bathrooms,and it was two levels, just a
main floor and an upstairs.
Uh, so no basement, um, but itwas a.
It was a brick front home with,with you know, vinyl around all
the other sides of it the notthe non street sides.
And so then I sold that home, Ithink in 2019.
(21:15):
So I think I got it in 2017.
I sold it 2009.
So only lives in about twoyears, and when I sold it, I
sold it for around 240.
So I I didn't make a lot ofmoney, but I made enough to wear
, you know, okay, it seemed likea decent, a decent profit, but
it wasn't a large profit.
And then fast forward to a seat.
Whoever I sold it to, they soldit in 2022.
(21:37):
And so what they bought it forwas, you know, around 240.
And what they sold it for was350.
So they hit the marketperfectly and I could not be
more irritated because, richard,I went through and rehab that
thing real and I did most of itmyself.
I only I spent about 30 or 35 onit, but that was like all brand
(21:57):
new cabinets, all brand newcountertops, all the bathrooms
were redone, all the floors wereredone upstairs and downstairs,
all the brand new paint, youknow, landscaping.
I did myself to save some money, but I did.
I did all these things except,you know, update the mechanicals
, and that's the only thing theydid.
They they replaced a couple ofthe mechanicals and they resold
it and they made all that moneyon it and I'm just like going
(22:18):
that's all that work.
I don't want to make that muchmoney on it.
But it's all about timing.
So someone was brilliant whenthey, when they bought the house
and they thought maybe theypaid a little bit too much for
it.
But then after COVID happened,and then what happened all
around these, these randompockets and I want to say it was
in the early summer of 22, whenit was the biggest busts and a
(22:40):
boom.
I'm sorry here in the Nepposarea, but yeah they, they came
out making, making a lot morethan I did, yeah.
Richard Thornton (22:47):
That's how exactly, and that's an anomaly.
Justin Bogard (22:48):
That doesn't.
That's not typical.
Richard Thornton (22:50):
Well, it can be that I mean you're right, you
have to, not for where we live.
Justin Bogard (22:55):
Yeah, this isn't.
This isn't.
That was a San Francisco typeof appreciation, Right.
Richard Thornton (22:58):
You have to look at your, your, your timing
in the market, because that'show to go back to my previous
statement how we made so muchmoney on houses our first couple
of houses in that we wereliving in an apartment building
they turned it to condo, theygave a residence a discount to
buy and by the time they hadgone through the four phases of
(23:21):
selling them all out, we made$70,000 before we even you know,
before we, even they evenfinished the last phase.
And knowing that was going tohappen, we bought into the first
phase of a of a single familyhousing development that was
going to be several hundredunits, and they jacked the
(23:43):
prices five times on thosebefore they sold out two years
later on the on the next phase.
So you, you're, you're surfing,you know, I mean your price
surfing is what it is and it'sthat that's exactly what your,
your buyers, did.
Justin Bogard (23:56):
Yeah, panned out for them pretty well, so kudos
to them.
Richard Thornton (24:00):
Yeah, but not everybody could do that.
I mean no you know, as we.
As I said earlier, according tothe stats, 49% of all, all
renters can't even come up with,can't even they're, they're
living beyond their means, justto make the rent much less.
Do that and save up equity also.
Yeah.
Justin Bogard (24:21):
Well, richard, this was a fun conversation
today.
It let us down some odd paths.
So, to the listening person andthe viewing person, we
apologize if this was too muchfor you, but hey, guess what?
You can probably watch this intwo X and just speed it up and
get it done.
You know so 25 minutes.
It'll only be like you know, 12.
Richard Thornton (24:37):
Yeah, what if we do that?
I talk very fast.
I want to talk very fast.
You can never know.
Let's see.
Justin Bogard (24:42):
Let's see the transcript script.
Keep up with that.
That's right.
All right, I'm Justin Bogart.
This is Richard Thornton withAmerican Note Buyers.
This is who sponsors and who.
This episode is brought to youby episode number 18 on season
five of the Be the Bank podcast.
Don't forget to check out ourYouTube channel, american Note
Buyers YouTube channel, and ourwebsite is a and b fundscom.
(25:06):
Until the next time, guys, wewill see you later and maybe
I'll fix my video by then.
Yeah, maybe we'll have picturesof you Not just a picture of
you, but a video of you.
You know they may like it betterwithout pictures of me.
Richard Thornton (25:16):
This could be an AI.
Justin Bogard (25:18):
Can we talk in AI right now?
We don't know.
That's right, see you.
Richard Thornton (25:22):
Bye.
Narrator (25:26):
Thanks for listening to Be the Bank.
We hope you learned somethingfrom today's show.
If you enjoyed this episode,please rate and review us.
Plus, check out our channel onYouTube and follow us on Twitter
Be the Bank and on Instagram atBe the Bank podcast.
Be the Bank is sponsored byAmerican Note Buyers.
Thanks again for listening.
Interested in real estate.
How about wealth?
Well, they go hand in hand, andhere you'll learn all about it.
Welcome to Be the Bank, apodcast where we discuss and
debate the topics centeredaround real estate investing.
Your host, Justin Bogard,shares insights into investing
in real estate to create realwealth and passive income for
(00:22):
you and your family.
He'll share stories of realestate investments done right,
Take you through the process ofowning a real estate note and,
most importantly, educate you soyou can be the bank.
This is Be the Bank, brought toyou by American Notepad.
Now here's your host, JustinBogard.
Justin Bogard (00:45):
Well, hello there .
Welcome to the Be the Bankpodcast.
This is episode number 18 onseason five.
I am Justin Bogard.
Today we are going to betalking about I'll be talking
with Richard Thornton again andwe're going to be discussing I
write an article and it talkedabout what happens with, what
might happen or what couldhappen with when the rates
(01:06):
finally drop down, or if they'reever going to drop down.
So it should be an interestingtopic for today.
So stay tuned, richard, this isthe best looking outfit I've
(01:28):
ever seen you wear.
Richard Thornton (01:29):
Yeah, it's called no outfit at all.
Streamyard, for some reason, isjust painting me black in my
little avatar today, so I'mstuck with this.
This is all I can do.
Justin Bogard (01:42):
Well, that's too bad, because you're probably
wearing some outfit that I couldpoke fun at and I'm not going
to be able to now.
So this is actually worse newsfor me.
Richard Thornton (01:54):
I look at everything that I wear as an
outfit.
I'm also going to go see thenew Barbie movie, so I can test
out that theory.
Justin Bogard (02:04):
Oh so, brian, I have two daughters, as you know,
and I still have not seen theBarbie movie.
I'm not worried that I haven'tseen it yet, I'm just surprised
that I haven't.
Richard Thornton (02:13):
I'm actually told because I haven't seen it
yet that it's actually a littlebit more for adults than you
would think.
It's got a strong feministovertone to it and it's not the
bubble gum thing you would think.
Justin Bogard (02:30):
Okay.
Well, my daughters did see it.
I think they saw it two times,once with their mom and once
with my mom.
They mentioned that they likedit, so I said okay, hey.
Richard Thornton (02:41):
But you did see the more important movie.
Justin Bogard (02:44):
What's that?
Richard Thornton (02:45):
That was the new Indiana Jones movie.
Oh yeah, I did.
Justin Bogard (02:49):
Yeah, they liked that one.
We had actually watched all ofthe Indiana Jones movies before
that one and all three of usthought it was the best one out
of all of them.
I don't know if you had anopinion on it.
Richard Thornton (03:01):
I mean to see Harrison Ford once again doing
daring dues is quite something.
So are you going to?
Justin Bogard (03:11):
Yeah, it was pretty cool.
I definitely thought it was avery good movie.
So there you go, there's your,from Rotten Tomatoes to your
Home.
Richard and Justin, I've justtold you what movies to watch
next.
Richard Thornton (03:26):
So this may be what I'm going to see right now
, might be the best tidbit thatthe listeners and viewers are
going to get out of this.
But I did not realize.
Maybe, maybe and has nothing todo with notes.
I did not realize that youcould actually go to the Rotten
Tomatoes websites and justcruise through all sorts of
movies and TV shows and thingslike that, because the library
(03:51):
systems that Netflix and Amazonhave are not really great.
I mean, you see the 10 thatthey're promoting, but if you
wanted to put in some reallycool 1980s sci-fi movie, you
wouldn't be able to find it.
But you can find all that stuffon Rotten Tomatoes.
You can just put it in undersomething like that, pull it up
and then you can go go onlineand find out where it's playing
(04:13):
and get new ideas, and sothere's your little tidbit for
the day.
Justin Bogard (04:19):
You know what I'm going to put it up.
Maybe we might go down a darkhole with this.
Sure, yeah, what I watch is no,turning back now what I've been
watching stuff.
I agree with you.
When you go to the differentstreaming services, everybody
listening and watching probablyhas more than one or two
streaming services that they payfor.
We all thought we were going tocut the cable and we end up
(04:42):
probably paying more than we didwhen we had cable.
I agree, but I find that Ican't ever find the movie that I
want to have.
One in my head be like, oh yeah, remember that movie and I'll
go try to find on Netflix or gotry, and I'm just like this is
so annoying.
Why can't I just, you know, I'mjust like.
I'm just like.
I'm just like I'm just likeType it in somewhere and it tell
me what service it on, aservice it's playing on when I
have the service available to me.
(05:03):
That's the feature that I want.
I don't have you.
Richard Thornton (05:06):
You can do that.
I on IMDB.
So if you go to IMDB, calm andput in the name of that movie,
it'll tell you what platformsit's on.
Justin Bogard (05:16):
Well, I'm one step lazier, Richard.
Oh, I'm talking about whenyou're on your TV.
Yeah, you're a controller inyour hand and you want to.
You know, I'll get on themicrophone for the controller
and say I want to watch IndianaJones and if it comes up, it'll
just give me the ability to rentit on Whatever platform to rent
it on, but it doesn't show melike what service is, like
(05:37):
trying to stream it for free.
Richard Thornton (05:39):
That's what I'm trying to get across.
That's too late, man.
You're sitting there with yourjammy's on popcorn beside you,
you know beer in the other hand.
That's too late, dude.
You can't do your research thenjeez.
Justin Bogard (05:50):
Come on it's.
I need that instantaneousstreaming knowledge of where the
dang movie or TV shows playing.
Richard Thornton (05:58):
So your kids haven't told you that there's no
microphone in your, in yourremote?
You're just talking to the wind.
Justin Bogard (06:04):
Probably am.
This shows a picture frommicrophone, but I probably
Doesn't work this thing workingyeah no microphone.
Yeah, I digress.
Well, richard, we are.
We are gonna get to the beat ofour conversation podcast.
No one.
Everyone's tuned out so far thefirst minutes of this podcast.
(06:26):
I'm sorry, folks.
Anyways, do you guys know thename?
Barbara Corcoran?
No, as Richard says, rebecca.
Richard Thornton (06:35):
Yeah, yeah, that's close as close.
Justin Bogard (06:40):
Barbara Corcoran.
Corcoran is a well known forbeing a shark on just TV, abc TV
show, shark tank, and so I hadread a quick little Snip it on
one of the social media feeds II want to say it was yahoo or or
Facebook that I saw this on andand she had done maybe it was
(07:01):
an interview with yahoo news oryahoo real estate and anyway,
she was talking about realestate and she was saying you
know, watch what happens whenthe interest rate Currently it's
at over 7%, watch what it dropsback down to five like low
fives or even below five Saidit's gonna be a buyer frenzy and
she can see that real estatemarket jump up like 15, 20%, as
(07:24):
far as you know appreciation onon pricing, and I thought that
was kind of interesting.
So I read it and I respectBarbara and I, like Barbara and
I was thinking you know whatthis lady is is seeing something
that at least I didn't focus onwhen I Was trying to research,
you know and get a feel forwhat's gonna happen next with
our trends and stuff andresidents real estate.
But yeah, she's right, I could,I could definitely see, after
(07:47):
having the rates jump up soquickly and then if they start
to take back down and they evenget back down to the high fours,
low fives, like we hope thatthey do, I Can definitely see
everyone that's been on thesidelines waiting for those
rates to come down Just jumpingship, selling the house and then
getting a new mortgage in a newhouse.
So, richard, what do you?
Richard Thornton (08:09):
think.
Well, I think I think Part ofthat I agree with part of that.
One is I think there's a littlebit of headwind here.
First of all, I mean In a broadsense I totally agree with her,
because After every time thatthe Fed has raised rents and
lowered rents, guess what?
There's been, you know, aRussian housing, so that's not
(08:32):
all that big a deal.
To claim whether it's going tobe 15% or not is kind of Okay,
but there are a couple headwinds.
I was kind of digging around ina bunch of different reports and
I looked at the Harvard 2023housing study and some other
(08:53):
stuff and Now they're sayingthat 49% of Renters in the
market today Can't afford tomove.
They can't, can't even become.
They're hardly be meeting theirrents today, much less pulling
together enough equity to buy ahouse.
So that's a real headwind.
(09:13):
Materials prices and landsprices are going through the
roof, and so we've got to getthat part of it under control.
And production is still down.
Production is 30% lower than2019, which was the lowest
(09:34):
Production year in an on record.
Homebuilding yeah, homebuilding, right, I'm sorry for the last
15 or 20 years.
So you got to have a, you haveto have people get more income,
you've got to get and and thethe biggest demand is going to
be on the lower end of themarket, right?
I mean, it kind of always isfirst-time home buyers and how
they're going to get in and blah, blah, blah.
(09:56):
Well, if a large pool of themcome from the renters and they
can't even afford their rent,how they're going to buy a house
?
So I agree part of what she'ssaying, but there's a lot going
on in this market.
Justin Bogard (10:10):
It's confusing because I I appreciate your,
your dialogue with this and youryour side of of how you
interpret that story and whatyou see happening.
So I thought the 15% to 20%increase in real estate was
surprising to me as well.
(10:31):
Of course, she doesn't have acrystal ball.
She's not saying that she's,you know, betting her life on
this or anything.
She's just saying I can seethis happening and I can just.
So I believe the trend would bethat real estate will go back
up again.
I don't know how much, but thisreal estate game has been so
different since after the GreatRecession Right, it was in 2009,
(10:53):
2010 and all this stuff doesn'tmake sense.
The economics doesn't makesense sometimes, why this is
going on.
I think just people are makingdecisions and then we're feeling
the ramifications of them andthe effects of them after that's
done, meaning like, okay, therates went way down, right, and
now COVID happened and the rateswent way up and housing went
(11:13):
way up, and it's like everythingis just just proportional and
it doesn't logically make sensewhy it's happening.
Richard Thornton (11:19):
Right.
And now you know there's stillwe're still going through a
macro change, which is that theysay I think I can't remember
what the projected year was,2080 or something like that that
98% of the population,country's population, will live
on 2% of the land mass.
So you still got that overallmigration.
(11:42):
Look at all the people who aremoving to Florida and Texas and
you know Carmel, indiana and allthose.
Justin Bogard (11:50):
Carmel.
Stop saying Carmel, carmel, asyou say.
Come on, man, you're killing me.
Richard Thornton (11:55):
I got to get it right, so that's still going
on, but so the demand is there.
Clearly there's no more land.
If you're in Texas or someplacelike that, there's a lot more
land.
But a couple of the cities outhere are starting to do
something, which I applaud,because Norway has been doing it
(12:17):
for years and I have thoughtthat we need to do it, and that
is you know.
There's also all these rentcontrol initiatives and my
thought is well, why should wepenalize the private sector
owners with rent control?
They can't raise their rents,they can't.
Basically, it sort of leads toslum lord type of properties.
(12:41):
That's the edge, old, if you goto some places like Norway and
a lot of the other Scandinaviancountries, the government builds
housing.
I mean, they build largeapartment buildings and houses
and things like that.
They buy them and they sellthem to people and or they rent
them, but they put a cap on it.
(13:02):
So if you buy it, they say,look the cap that you can, the
most appreciation you can get islike 5% per year or whatever
that is, and that really, reallyreally increases the affordable
housing pool and doesn'tpenalize the private sector, and
so you're starting to see moreof that happen here in
(13:25):
California and I support thattype of initiative because that
would help a lot of the problemsthat we're talking about today.
Justin Bogard (13:34):
Yeah, it definitely seems like
affordability and I'm just goingto key on that word that you
said.
It definitely is a problemright now and you're right, rent
is the only way to go.
If you can't buy a house,that's really the only option
Live, move in with somebody elseor just rent on your own your
own house or condo or apartment.
And rents aren't going down.
No, they're not.
(13:55):
They are going up and they keepgoing up.
And I'm going to argue onething that you said back earlier
, where if they can't afford arent they can't afford a house.
I think they can afford a houseif they have a private mortgage
.
I think it's cheaper forsomeone to have a private, to
(14:15):
get a private mortgage on ahouse, than it is for them to
rent the house.
And I'm only speaking because Ilive in Indiana.
I don't live in any of thestate, I'm not, you know, seeing
what's going on but in Indianabecause it's where Midwestern
state rents are typically alittle bit higher than what you
can get on a mortgage on a house.
That's a little bit bigger thanwhat you're renting.
So I can see that being more ofa strong real estate selling
(14:42):
cycle is seller financing here,like in the Midwest.
I obviously I don't live inCalifornia.
I don't know what you see.
Maybe it's the completeopposite in California, where
mortgages are 16 times higherthan rents, I don't know.
But in Indiana at least I cansee on lower value properties
it's actually easier for someoneto get to pay for a monthly
(15:03):
mortgage payment than it is arent payment, just because the
numbers are a little bit smaller.
On a mortgage as opposed torents right now.
Richard Thornton (15:10):
So the trick, though, is to save up the equity
.
I mean, that's how I got.
I was very fortunate.
My mom and dad, when I boughtmy first house, had enough money
to lend me the down payment.
They charged me interest on it,but it got me into the market.
How dare they?
How dare they, can you imagine?
Justin Bogard (15:31):
But it got me Kind of lenders, are they?
Richard Thornton (15:33):
Yeah, that's right, and I paid them off.
But you know, in the first Ijust I was living in DC at that
time and got very lucky, and Iprobably made a half million
dollars on the first two housesI bought.
Wow, but that got me started,you know, in the race and I
would have had a terrible timegetting in.
(15:54):
So just to go back to one ofthe factors, though, that I read
about, and that said that themedian homeowner cost rose 20%
from last year to this year, andit's now $117,000.
So the average family has to bemaking $117,000, or the median
(16:15):
family, not the average.
Well, last time I looked,median income was only $70,000.
Oh, wow, so you got a huge gapthere and saying that those
people still can't afford to getinto a house.
Justin Bogard (16:28):
I guess, richard, I'm going to walk myself back
on my previous statement, thatis, rent payments versus
mortgage payment.
So if you just compare thosetwo line items, right in Indiana
the rents are going to behigher than mortgage payments.
To try to be in a comparablehouse of home ownership, meaning
like if you have a 1200 squarefoot apartment and then you get
(16:49):
a 1200 square foot house, likethe rent on the apartment is
going to be higher than themortgage payment on that set
house.
Okay, that's what I'm trying tocompare to and obviously the
locale is dependent upon that aswell.
But you just brought upsomething that I didn't really
take into consideration when Ifirst made that statement and
that was all the things that gointo home ownership.
(17:10):
Okay, and I think what you'realluding to in that figure is
saying like, okay, it's not justthe mortgage payment, it's the
insurance, it's the taxes, it'sfurnishing the house, it's
cleaning the house.
It's, you know, keeping theoutside with.
You know the yard scaping orthe hard scaping around you know
, by the house.
(17:31):
It's, you know, doingmaintenance on the yard, doing
maintenance on the house.
It's, you know, repairing andkeeping up with the mechanicals
in the house, like all thatstuff needs to go into
consideration, and I candefinitely see why the cost of
home ownership is definitely yetto consider that, more than
just the mortgage payment itself, because you can't just live in
(17:52):
a house and not do anything toit or else it's going to turn
into, you know, one of thebreaking bad houses where they
build methods.
Richard Thornton (18:00):
Right.
Justin Bogard (18:00):
That's going to be all overgrown, and just you
know.
Richard Thornton (18:03):
Yeah.
So it's very interesting.
I to me, I mean if you'reliving.
So some people just say, hey,look, some of my investors said
this is the best.
They rent, you know, they rentvery, very nice apartments, but
they rent because they said,just for the same reasons,
everything you said they said bythe time I pay taxes, and blah,
blah, blah, blah.
I'd much rather have my moneyin in in different investments.
(18:24):
Unless you're in a majormetropolitan area uh, in a lot
of instances New York, SanFrancisco, wherever and you get
a great deal of appreciation, Um, it could not be worth it to be
a homeowner because you're justnot getting that much
appreciation or anything out ofit.
So what's the big deal?
Justin Bogard (18:46):
There is that banter going back and forth, and
one in one of my local realestate clubs, uh, that we're
we're talking with, and there'sthere's two, two people that are
more well known for doing highvolume and house, uh,
wholesaling and flipping andstuff.
Richard Thornton (19:02):
Right.
Justin Bogard (19:03):
And they are bringing up the same point and
they're saying um, why do you?
Why do we own houses?
And you know, obviously, if youown a duplex, you know your
house hacking you can havesomeone else pay your mortgage
because it's really not a cashflowing asset.
Yeah, you can borrow moneyagainst it in the future once
you get some equity into it.
But, um, you know, there'sthere's always a good argument
on.
You know what's your lifestyle,right?
(19:25):
So should you own a house orshould you rent?
So right now, we currently rentit's.
It's because we're in between,figuring out where we want to go
, what, what part of town do wewant to live in?
Do we want to build?
Do we want to buy and rehab?
I only have about, let's see,eight years left until my oldest
gets into college and thenmaybe I want to move down where
my parents are to be closer tothem.
(19:46):
Like you know, there's allthese these things.
So I'm I'm like in the shortterm muddy water situation of
like, do I just rent?
Do I buy condo?
Like I need more amenities tohave somebody take care of stuff
than I do, trying to buildequity or appreciation in the
house, cause, you're right,richard, like it doesn't really
appreciate in the grand massesas it does, like in those major
(20:07):
metropolitan areas.
Now I say that, richard, and Ido have some updates for you.
Okay, so I had and this bothersme because I happened to look at
it today and I shouldn't havelooked at it cause I knew it was
going to bother me but I hadbought a house in 2017, 2018, I
believe and I put some moneyinto it to to flip it.
I ended up living in it for awhile and then I ended up
(20:29):
flipping it.
So I look at that house and Idon't know what I paid for it.
Let's just let's just call itUm, I don't know.
I know what I sold it for.
I sold it for around 240.
So that's a.
That's a pretty average pricedhome in a nice, uh, nicer city
where I live.
It was a, I think, richard.
It was a 1700 square foot home,so I had three full bedrooms
(20:55):
and two and a half bathrooms,and it was two levels, just a
main floor and an upstairs.
Uh, so no basement, um, but itwas a.
It was a brick front home with,with you know, vinyl around all
the other sides of it the notthe non street sides.
And so then I sold that home, Ithink in 2019.
(21:15):
So I think I got it in 2017.
I sold it 2009.
So only lives in about twoyears, and when I sold it, I
sold it for around 240.
So I I didn't make a lot ofmoney, but I made enough to wear
, you know, okay, it seemed likea decent, a decent profit, but
it wasn't a large profit.
And then fast forward to a seat.
Whoever I sold it to, they soldit in 2022.
(21:37):
And so what they bought it forwas, you know, around 240.
And what they sold it for was350.
So they hit the marketperfectly and I could not be
more irritated because, richard,I went through and rehab that
thing real and I did most of itmyself.
I only I spent about 30 or 35 onit, but that was like all brand
(21:57):
new cabinets, all brand newcountertops, all the bathrooms
were redone, all the floors wereredone upstairs and downstairs,
all the brand new paint, youknow, landscaping.
I did myself to save some money, but I did.
I did all these things except,you know, update the mechanicals
, and that's the only thing theydid.
They they replaced a couple ofthe mechanicals and they resold
it and they made all that moneyon it and I'm just like going
(22:18):
that's all that work.
I don't want to make that muchmoney on it.
But it's all about timing.
So someone was brilliant whenthey, when they bought the house
and they thought maybe theypaid a little bit too much for
it.
But then after COVID happened,and then what happened all
around these, these randompockets and I want to say it was
in the early summer of 22, whenit was the biggest busts and a
(22:40):
boom.
I'm sorry here in the Nepposarea, but yeah they, they came
out making, making a lot morethan I did, yeah.
Richard Thornton (22:47):
That's how exactly, and that's an anomaly.
Justin Bogard (22:48):
That doesn't.
That's not typical.
Richard Thornton (22:50):
Well, it can be that I mean you're right, you
have to, not for where we live.
Justin Bogard (22:55):
Yeah, this isn't.
This isn't.
That was a San Francisco typeof appreciation, Right.
Richard Thornton (22:58):
You have to look at your, your, your timing
in the market, because that'show to go back to my previous
statement how we made so muchmoney on houses our first couple
of houses in that we wereliving in an apartment building
they turned it to condo, theygave a residence a discount to
buy and by the time they hadgone through the four phases of
(23:21):
selling them all out, we made$70,000 before we even you know,
before we, even they evenfinished the last phase.
And knowing that was going tohappen, we bought into the first
phase of a of a single familyhousing development that was
going to be several hundredunits, and they jacked the
(23:43):
prices five times on thosebefore they sold out two years
later on the on the next phase.
So you, you're, you're surfing,you know, I mean your price
surfing is what it is and it'sthat that's exactly what your,
your buyers, did.
Justin Bogard (23:56):
Yeah, panned out for them pretty well, so kudos
to them.
Richard Thornton (24:00):
Yeah, but not everybody could do that.
I mean no you know, as we.
As I said earlier, according tothe stats, 49% of all, all
renters can't even come up with,can't even they're, they're
living beyond their means, justto make the rent much less.
Do that and save up equity also.
Yeah.
Justin Bogard (24:21):
Well, richard, this was a fun conversation
today.
It let us down some odd paths.
So, to the listening person andthe viewing person, we
apologize if this was too muchfor you, but hey, guess what?
You can probably watch this intwo X and just speed it up and
get it done.
You know so 25 minutes.
It'll only be like you know, 12.
Richard Thornton (24:37):
Yeah, what if we do that?
I talk very fast.
I want to talk very fast.
You can never know.
Let's see.
Justin Bogard (24:42):
Let's see the transcript script.
Keep up with that.
That's right.
All right, I'm Justin Bogart.
This is Richard Thornton withAmerican Note Buyers.
This is who sponsors and who.
This episode is brought to youby episode number 18 on season
five of the Be the Bank podcast.
Don't forget to check out ourYouTube channel, american Note
Buyers YouTube channel, and ourwebsite is a and b fundscom.
(25:06):
Until the next time, guys, wewill see you later and maybe
I'll fix my video by then.
Yeah, maybe we'll have picturesof you Not just a picture of
you, but a video of you.
You know they may like it betterwithout pictures of me.
Richard Thornton (25:16):
This could be an AI.
Justin Bogard (25:18):
Can we talk in AI right now?
We don't know.
That's right, see you.
Richard Thornton (25:22):
Bye.
Narrator (25:26):
Thanks for listening to Be the Bank.
We hope you learned somethingfrom today's show.
If you enjoyed this episode,please rate and review us.
Plus, check out our channel onYouTube and follow us on Twitter
Be the Bank and on Instagram atBe the Bank podcast.
Be the Bank is sponsored byAmerican Note Buyers.
Thanks again for listening.
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