031625- Home Solutions Podcast

Episode Transcript

Speaker 1 (00:00):
Good morning, and welcome to the Home Solutions Show. This
is your host Andy Keel with Epic Realty, and I'm
joined today with a couple of special guests, Jerry Sunt
with Cross Country Mortgage and Faren's Talk with your Personalbank
dot Com and Farence Uh. You allowed me on your

(00:24):
radio show recently, so I thought i'd return the favor
and have you come on our show and tell us
in our audience a little bit more about what you do,
tell us about your radio show, and tell us about
your personal bank dot Com.

Speaker 2 (00:38):
Hey Andy, thanks, thank you for having me on your show.
So the first question I get asked all the time
is what is your personal bank? And it's really a
very simple financial concept. It's a two step process. We
set up a high cash value policy. Now this isn't
like a typical insurance policy. Andy, you'll know what I'm
talking about. Where most people are the buying insurance, they

(00:58):
want to pay the least amount of money for the
biggest death benefit. Right, Well, we do the opposite. So
if you think think of a teeter totter, Andy, put
cash on one side, death benefit on the other. Again,
a traditional insurance policy has little or no death benefit.
A term policy has none, for example, and you're maximizing
death benefit protection. Now I'm not against that. Many of us,

(01:18):
like myself, have family businesses, we have death benefit protection needs.
But that's not what I'm talking about today. Take that
teeter totter, that cash on one side, death been on
the other, and shift it and not shifted a little bit.
We're talking about fifteen, like two thirds, seventy, eighty, even
ninety percent to the cash side. So you're maximizing the cash,

(01:39):
minimizing the death benefit. Okay. The purpose of this, of course,
is to grow your money insured, guaranteed, tax free and
highly liquid. And it's that highly liquid part that my
real estate investor clients love the most. Does many investors,
real estate investors and particularly have need access capital right.

(01:59):
So by maximizing the cash right, you're growing your money.
Like I said earlier, insure, guaranteed, tax free, highly liquid.
Now that's the first part of the step. The second part, Andy,
is when you want to access the funds, you can
either access a tip, you can take withdrawals, but we
don't recommend that because that reduces the amount of money
I've left over. Like any investment, we all know if

(02:21):
you have a stock bond, mutual fund, or anything else.
If you take money out of it, the growth on
it's less in the future because there's less money there, right,
So we don't recommend that. Usually the best way to
take money is from these is through either policy loans
or bank lines of credit. And that's where the bank
lines where I bring in specialized lenders that use the
cash and the policy is collateral. That's where we really

(02:44):
separate ourselves from say the insurance banking concept or bank
on yourself or any of those things you may have
run across before. That's why we call your personal sort
of you know, insurance banking concept turbocharged. And I'm going
to the go ahead.

Speaker 3 (03:00):
Let me ask you a question.

Speaker 4 (03:01):
So how is the rate you know, if someone wants
to take a loan out, how is that rate calculated?

Speaker 2 (03:07):
So, yeah, the great question, Jerry. So there's again there's
you can borrow from the insurance policy itself, take a
policy loan. Insurance companies act like banks too, by the way,
insurance companies own banks. Banks don't own insurance companies. Okay,
they have a lot more money. They offer rates and
they set those annually. Right now, most of our banks

(03:28):
are offering I'm sorry, insurance companies, we're offering about five
to five and a half percent currently for twenty twenty five.
Bank lines are based on the prime rate, and I'm
sure many of your listeners listeners are familiar with prime,
and the borrowing rates on those are either prime, the
prime minus one percent yep. So, so bottom line is,

(03:49):
oftentimes this is typically the cheapest money you can borrow anywhere,
period because it's highly liquid, it's instured, it's guaranteed. These
banks understand that, and they'll loan you up to ninety
five percent of the cash value Jerry in the policy,
which is much higher, say than a helock or something
else like that.

Speaker 4 (04:09):
Percentage Absolutely, and they uh, and so they're and they're
lending on.

Speaker 3 (04:15):
The the I guess what is it?

Speaker 4 (04:17):
The uh when it comes to the insurance policy is
that I'm trying to remember the name of it.

Speaker 2 (04:22):
Uh.

Speaker 3 (04:23):
The cash Yeah, the cash value of the.

Speaker 2 (04:25):
Cash value correct O. Yeah. So let me use an example.
Let's say AD one hundred thousand in a policy cash
value now again at a zero takeaway as THEREO. The
principles the same. I'm just using this as an example.
You know, you have one hundred thousand cash in a policy.
A bank line will act lets you access up to
ninety five k thousand of that, and it's available is

(04:46):
another thing A lot of people don't realize. It's literally
available day one after the check clears, so you can
put monies into these have the vast majority of your
money available to use for whatever purpose. Unlike investment tools
we all know most investments, set it and forget it right,
let it grow. Here you can put money in and

(05:07):
literally the day after the check clears, you're going to
have access to the vast majority of the money. I'm
going to say to be conservative, two thirds or more, okay,
day one and again, my real estate investors in particular
love that feature.

Speaker 3 (05:21):
Yeah, no, of course, yeah.

Speaker 1 (05:23):
Actually, could we even back up for just a moment
and take care even more simplistic view for the audience
that I've always had some trouble wrapping my mind around
this concept, and when I met Farence it was the
first time I actually had it explained to me in
such a way where I understood it with I've heard

(05:46):
the infinite banking concept or I've I've heard these different
programs that are out there, and it always felt like
that that it was a salesperson pushing something that shouldn't
shouldn't exist. It was like I'm getting something for nothing
kind of feeling. Yeah, yeah, yeah, And when Farence explained
it to me, it's like, ah, now I get it.

(06:08):
And I'm not so astute that I can explain it
myself very well to the audience. But let's just say,
as a as a real estate investor, and using your
hundred thousand dollars number, that I have an extra hundred
thousand dollars that I can work with and using your program,

(06:29):
how could I how would that work? How do I
put it in? How do I take it back out?
And why does the math actually work in this case?
What's the magic?

Speaker 2 (06:38):
Okay? So I think there's really two major questions you
asked me there. Like the first one, I hear a
lot almost I'd like something too good to be true,
that kind of thing. And one of the statements I
make all the time is excuse me, is when you
have a situation it's too good to be true on
one party is benefiting and the other is being disadvantaged. Right, Well,

(07:00):
think about it here. If you give money to insurance company,
what are they're doing with it. Well, they invest and
they invest that. Yeah, they invest it and make more.
The average successful insurance company out there, by the way,
profits about ten percent annual profits. They buy bonds. By
the way, they're the number one funder of venture capital
in the country. You've got a Silicon Valley startup, you

(07:21):
need a billion dollars, where do you go? You don't
go to a bank, they don't have that kind of money.
You go to an insurance company, okay, And that's how
they use their returns. They also sell products and get fees.
They have multiple income streams and that's why your typical
successful insurance company has average a ten percent profit for
literally not decades. Many of these have been doing this
for since before the Civil War. Okay, so this is

(07:42):
not new. So they're making money. Obviously, if you borrow
usual the bank line, as we started to touch on again,
that's a big difference that we offer that you might
you don't find with the insurance banking concepts elsewhere. What
does what do banks do? Well? They loan money, cars, homes,
whatever they want interest. So if you borrow, use a

(08:03):
bank line of credit using the cash and the policies
collateral of course, the bank's going to charge you interest, right,
that's how the bank makes their money. Now, what's the
benefit to you? Well again, and I've got the historical
numbers I can show you for the last forty two years,
the dividends that you earn on average are about two
percent higher than the cost of borrowing from the banks.

(08:26):
You keep the difference, that's the gap or the difference
is known as positive arbitrage. Now that positive arbitrage can
vary typically from about one percent to three percent range,
but it does average too. I'll give you an example.
A couple of years ago or two three years ago.
You know, we had people learning about six percent dividend
five seven, five six, and borrowing rates were about three

(08:50):
Prime was about three percent. Well, if you're making five
to seven five or dived in and it costs you
three to three and a quarter to borrow, that's the
magic you getting. And why is it good for you?
Think about this? You could take your money and say
go invest in a real estate project. Obviously, and this
is a by the way, this is a financial literacy concept.

(09:11):
Actually taught a a college certified financial literacy course for
a while. Let's comes from this. You can take your money.
It is a mistake most most people make with their money.
You take your money and you invest in whatever it is,
a house, a stock, I don't care what the asset is, gold, crypto,
you name it. Okay, you buy that asset and hopefully

(09:31):
that asset increases in value, and that's all well and good.
But the dollars you do use to purchase the asset
are now gone forever. Right. Are you ever going to
get any benefit from those dollars you use to purchase
that asset, not.

Speaker 3 (09:44):
Unless you sell it. You got to sell it to be.

Speaker 2 (09:46):
Able to correct. Yeah, but the dollars let's say you bought,
you spend one hundred thousand. I'm buying a property or
a stock or whatever. The dollars, the physical dollars that
you use, are gone. Right. You traded those dollars for
the asset, or if you paid a bill or bought
a car or whatever. You traded those dollars for whatever
that item or that asset. That's called lost opportunity costs. Okay,

(10:09):
So here you or is what most of my real
estate in vesters do. Why not put the money in
the policy first? So we just had one step. Then
you borrow against the policy the cash and the policy
is collateral for the loan. Right, and go buy that
asset or buy that item, or pay that bill. And
let's again, historically two percent of the average positive arbitrage. Well,

(10:29):
if you spend one hundred thousand dollars in buying an asset,
you're now making a couple percent more on whatever that
asset returns. Let's assume you get a ten percent ROI
return on investment, but you pick up another two percent
on average with the positive arbitrage between the divid and
your earning and the cost of borrowing. Well, now your
ROI is twelve percent, isn't it. Yeah, No, right, that's

(10:52):
a huge increase. That's a twenty percent increase of your ROI.
Add that every year for the rest of your life.
If you understand compound interest, you have a ton more
money in a few years than if you don't use
this tool. Because that is another common misconception I here
with people. Well, I'm making extra one or two or
three percent. That's not very much. No, that's icing on

(11:14):
the cake of whatever else you're already earning, right right, right,
And you give me any business out there. I'm an
entrepreneur at heart. I've owned four different companies. I've owned
a retail business. I've owned thirty two properties myself personally,
I've owned a I own the same financial agency, of course,
and I was the chairman of board of an FDIC
insured a bank for a while. I owned a bank

(11:35):
for a while. Okay, so I'm an entrepreneur at heart.
I understand business. And you give me any business out there,
you improve their top line profit by twenty percent. They're
dancing in the street man, and that's what this does.

Speaker 4 (11:50):
Yeah, and Greg, my one question for you is that
that's yeah, hit on that about when you said about
FDIC insured. Then a lot of people it's funny in
the mortgage world. I get a lot of calls about banks.
People are worried right now, you know, yes, the unknown
with tariffs and so forth, and so everyone's worried about FDIC.
Is it is the money FDIC insured.

Speaker 2 (12:13):
I'll tell you what we're coming up on a hard break.
I can't answer in ten seconds. We get on the
point come back yes please all.

Speaker 1 (12:21):
Right, Well, well get to that question when we come
back from the break. This is Andy Keel with the
Home Solutions Show on knst and we'll be right back.
Good morning, and welcome back to the Home Solutions Show.
This is your host Andy Keel with Epic Realty and
I can be reached at five two zero five three

(12:43):
nine nine nine one. I am joined again by Farrence
tof with your Personal Bank dot Com and Jerry sunt
with Cross Country Mortgage. Jerry, would you show share your
phone number for the audience please.

Speaker 4 (12:58):
Chair of course by three seven zero nine five seven
six the inference.

Speaker 1 (13:04):
Would you share your contact information if anyone from the
audience would like to get a hold of you.

Speaker 2 (13:09):
Absolutely, Andy, thank you for having me on the show.
It's your Personal Bank dot com or eight sixty six
two six eight or four two to two.

Speaker 1 (13:18):
Thanks. And before the break we Jerry had a question
about FDIC insurance. If you could circle back to.

Speaker 2 (13:26):
That please sure, happily absolutely so. Yet so the money
in the insurance polic so if you fund the policy,
the money of course is back by the you know,
the faith of the insurance. The insurance company ensures it.
And again we're talking about A plus rated companies we
deal with companies have been around for over one hundred
years plus, never missed a dividend, and literally over one

(13:47):
hundred years. I had three companies that have never missed
a dividend since before the Civil War, Jerry. So, so
they pay through the Great Depression, you know, you name it.
So that's pretty powerful. Tons of reserves. They're not going anywhere.
But there is a second level of protection. It's called
state guarantee funds. Since you asked questions, very interesting. The

(14:09):
state guarantee funds were created by the insurance industry in
the nineteen twenties and it operates much like FDIC. In fact,
FDIC copied their model. That's where the FDIC model comes from.
So the state guarantee funds ensures the investors of the
insurance company on any fixed or guaranteed assets, not variable products.

(14:30):
But some insurance companies sell some variable products. We're not
talking about that. But any fixed or guaranteed investment is
backed by the state guarantee fund. So if the company fails,
the state guarantee fund would make them whole, much like
FDIC makes a bank hole. Now many people consider the
insurance companies far safer than banks. Even and again I
stated earlier, Jerry, I was term of the board of

(14:51):
an FDIC as her bank. So I have some inside
skinny on this earth. Companies can out leverage banks do
and that's what makes banks so much more volatile. Okay,
And now there is a typical bank can go to
the FED window. Let's say they have a million dollars
of deposits, Well, they can go to the FED window.
Depending on their state rags, they can borrow between eight

(15:12):
and ten million dollars from the FED and then loan
that out for car loans, home loans, whatever. The average
bank in the United States, healthy bank, has eight dollars
of assets for every one hundred dollars of liability. In
other words, if there's a bank run, everybody want their
money back, they can only give you eight bucks of
every hundred you have invested in that bank. That's a
healthy bank. When they get down to six dollars for

(15:35):
every hundred, they go on the FDIC watch list, just
so you know, all right. In contrast, an insurance company,
the average insurance company healthy one, has one hundred and
six dollars of assets for every hundred dollars of liability
because they can't leverage. Now there could be a quote
unquote run on the insurance company. They can pay everybody
out one hundred percent of their money and still have

(15:56):
six bucks left over from per hundred of every dollar
that's invested with that company. That's the difference, right, right,
So should you be concerned about some banks, especially smaller
regional banks, with the interest rates that.

Speaker 3 (16:11):
The conval Yeah, the list can go on.

Speaker 2 (16:14):
Yep. Absolutely, Now FDIC insurance is probably going to make
you whole unless you have too much money in that bank.
And that's why a lot of people go to the
bigger banks because they're too big to fail. There's valid
concern there because of the leveraging that the banking industry
does doesn't exist anywhere else. Cleaning the insurance industry the
great question.

Speaker 3 (16:35):
Now, you know my one.

Speaker 4 (16:37):
Personal you know, the involvement with insurance is just that
whenever you're getting you know, any type of life insurance
policy comes with a lot of fees, whether it's whole
or whatever it is, and that's where they're making their money.

Speaker 2 (16:50):
Yes and no. Actually, so again, if I'm going to
go back, I remember the first time I was sharing
that Peter Totter Again, a very common experience herea that
people have you putsh on one side of the Teeter
Todd or death benefit on the other And what I
find ninety nine percent of the time literally is even
if the agent sold it to the customer as a
investment tool, they put far, far too much of the

(17:13):
money that you're contributing into the death benefit side, where
that's where all the fees are, because where's the risk
of the insurance company. Jerry, you get head by an
ice cream truck. They got a stroke, a check to somebody,
right they beneficiary? All right, So do you think there's
a cost, fees risk involved with that? Yeah, of course,
of course there are. Okay, So if we think about
that Teeter totter, it gets pushed way up, way too

(17:36):
high relative to the amount of money that's been contributed.
If you remember earlier I shared we pushed that teeter totter.
We pushed the cast up by sixty seventy eighty ninety percent,
pushed the death benefit down. Depending on the circumstance and
the goals of the client, right, by pushing the death
benefit down by seventy eighty seventy eighty ninety percent is
arranged normally, we just reduced the amount of sure it's

(17:58):
by seventy eighty ninety percent. The cost of insurance, the
fees all that get dropped by seventy eighty ninety percent. Wow,
and now we're competitive. Yeah, now we're competitive with mutual
funds or even some EFTs and things like that in
terms of the fees. So yes, that's the number one
knock if somebody does any research on insurance. So say
that's high fees. Wells, because you have too much death benefit.

(18:20):
And I'll use a quick example as a case I
did this week. A guy purchased this thinking he had
an investment tool about four years ago, and in his case,
he had a million dollar death benefit on the amount
of money he was contributing to this policy. We reran
the numbers for him and dropped that death benefit to
two hundred and fifty. We cut it down. It was
two hundred. I'm sorry, we cut it eighty percent. We

(18:42):
cut his cost of insurance and fees by eighty percent.
His cat growth went proved by fourfold. It was a
massive difference.

Speaker 3 (18:52):
Very cool, And are.

Speaker 4 (18:53):
You allowed to share, like how much ASCID you have
under umbrella?

Speaker 2 (18:58):
Is that? Oh? While this is my twenty fifth year
in the financial industry, we have over five thousand clients personally,
I've worked with over a thousand of those with my
that are clients of mind. And some people say that's
all that seems like a lot. Well, understand, I'm not
having to talk to all my clients every time the
stock market has a hiccup like it is right now, right.

(19:20):
Everything I do is insure, guaranteed, tax free, highly liquid.
It ain't going nowhere, there's no My joke is with clients,
I don't answer my phone on weekends and meetings because
there's no emergencies. It's going to grow every year, no
matter what. And years ago this is something that my
clients find interesting. Years ago, I used to do annual
reviews with all our clients, like most financial people do.

(19:43):
But I found that was an incredible waste of time
most of the time because nothing had changed. So what
I've done is I say to my clients, you're an adult.
You know when there's a situation you have, or question,
or a major financial decision that needs to be made,
contact me. We'll schedule a time to call or a
phone call or what ever, or zoom meeting, whatever we
need to do to address it. Most of my clients

(20:05):
they'd run on autopilot, and I won't hear from them
for years and then something comes up, they'll contact me
and we'll chat and we'll figure it out. Yeah. Yeah,
So now where every meeting we have with those clients
is productive because we have something to talk about.

Speaker 3 (20:19):
I love it.

Speaker 2 (20:20):
Yep.

Speaker 3 (20:21):
Hey, I got to switch gear.

Speaker 4 (20:22):
So I you know, obviously you're someone very astute with
the markets and and so forth, and you know, I uh,
I've been a big fan of our of our our
Treasury secretary that you know is now in place, Scott Best.

Speaker 3 (20:35):
Yes, yeah, and I just you know, we're one of.

Speaker 4 (20:38):
The things we were talking about before the show was
about well, you know, the amount of debt that that
that we have as a country and and how we're
going to fund this and so forth and the and
I have a lot of faith that he has the
ability to you know, you can't solve you can't fix.

Speaker 3 (20:53):
For Rome in a day. You can't solve all the problems,
but he definitely can. We'll we'll put us on.

Speaker 4 (20:57):
The right track and with the tray, general account and
other things that he does have direct control over that
will hopefully bring down our nation's debt and in the
in by doing so also you know, also bringing down
long term treasury yields, which, of course bringing you back
to real estate will help the real estate world.

Speaker 2 (21:18):
Right. Yes, So I think what we're dealing with, and
I discussed this in my radio show that airs that's
going to air this week, short term pain for long
term gain. I think that's what we really need to
look at. And what's that short term pain probably going
to look like, folks, probably next year or two. I
use the analogy of the US economy is like a

(21:40):
supertanker oil tanker. It's a huge chip. Yeah, you can't
turn it. It's not a speedboat, right, It's not going
to turn on a dime. It's going to take time. Now. Overall, again,
am I in favor of the long term gain, the
gains that I believe we're going to get. Absolutely And
if you listen to President Trump or or are Commerce
Secretary or Treasury Secretary, any of them, they're saying the

(22:03):
same thing. They're all on the same page the challenge
that they're facing, and it's a huge one. And kudos
to you, Jerry for bringing this up, because I have
not seen hardly anybody talk about this. We all know
there's about thirty six little over thirty six trillion of
debt on the books. Now, even if they cut spending
like tomorrow, it won't change this because that's debt that's

(22:25):
already there, and the government doesn't pay down its debt.
And what is a debt, Well, they sell bonds and
bonds they sell from what four weeks to thirty year timeframes.
Think of a bond as a CD is what I
tell people all the time. It's you buy a bond
is the government is you buy a two year bond,
they're guaranteed they're going to pay a certain interest rate

(22:45):
for the next two years. Now, when that bond matures,
much like a CD, what was the government do they
resell the bond Because they don't pay down the debt,
they resell the bond to at whatever the current interest
rate is, which right now is much higher than it
was of the previous decade. That is one of the
major reasons why our interest on our debt is going
up so much. Yes, the total debt is increasing, obviously

(23:07):
that increases your interest, but the interest rate on it,
the cost is also going up. The big problem, and
we'll probably have to touch on this more in the
next segment, is they have to refinance nine point two
trillion dollars of debt in twenty twenty five. To give
you an idea, that is a stupendous number. The previous

(23:29):
record was twenty twenty four and they refinanced about three trillion,
and that was an all time record, cripple, the all
time record ever and at much higher interest rates. Three
years ago, they were selling thirty year treasuries at two percent. Today,
what are they four and a half. That's over two

(23:50):
that's overdouble the interest rate. That's killing the US government.
No one, I mean no one needs a rate cut
more than the US government because that's the biggest debt
or in the world, Okay, And that's why they are
They have determined. I'm convinced that the current administration is
determined that the quickest and best way to reduce interest
rates is to push us into a recession. And I

(24:14):
believe that's what's actually going to happen. And they don't
want to say that because that's not I don't want
to say it.

Speaker 3 (24:18):
You don't want to verbally say that, right.

Speaker 2 (24:20):
But they're saying, hey, remember Trump term one, he watched
the stock market every day. What does he saying today?
And the stock market doesn't matter. I don't pay attention. Right.
Secretary Benett is saying the same thing. Our decisions aren't
based on the stock market.

Speaker 4 (24:33):
Yeah.

Speaker 2 (24:34):
Yeah, I have a few more things to share about that.
Maybe we can touch on the next segment. I think
we'll find interesting.

Speaker 3 (24:39):
I love it.

Speaker 1 (24:40):
Yeah, let's let's continue this when we're back from the break.
This is Andy Heel with the Home Solutions Show, and
we will be right back. Hi, and welcome back to
the Home Solutions Show. This is your host, Andy Keel,
and I'm joined again by Jerry sent with Cross Country
Mortgage and Farren's Talk with your Personal Bank dot Com.

(25:00):
Before the break, we were talking about the current state
of the US debt and having to refinance over nine
trillion in treasuries coming up fence. Let's talk about that
a little bit more. I'm actually fascinated by this subject,
and I'm thinking this is a really big reason why
the economy is in the state that it is and

(25:22):
why interest rates are doing what they're doing today is
because of this debt. Please continue your.

Speaker 2 (25:29):
Thoughts absolutely, Eddie, and thank you for having me on
the show. Yeah, this is something that almost nobody is
talking about, but is a massive problem. And if you
miss it in the last segment, the bottom line is
federal government has over thirty six trillion of debt. They
don't pay their debt down. They sell bonds. Once bonds mature,
they have to resell the bondit whatever the current interest

(25:49):
rate is. Well, last year they sold about three they
had to refinance I should say, about three trillion of bonds,
and that was an all time record. In twenty twenty five,
there's nine point two trillion dollars of bonds that are
coming due mature, triple the all time record, at a
much higher interest rate, most of it because most of
the previous decade interest rates just far far lower. No

(26:12):
one needs an interest rate cut more than the US government.
They're the largest debtor in the world period, in fact
to the largest debt in human history. I think put
things in perspective, so they need a rate cut quick.
Otherwise if they have to refinance all this debt, we're
talking about this negatively impacting the US government or literally decades.

(26:32):
So this is a big, big problem. And they could
cut all funding. I mean, they could cut funding to zero.
It wouldn't change than anything. This is debt that's already
on the books previously spent. Right, So I am completely convinced.
And if you listen to the Trump administration, their cabinet secretaries,
what they're saying and the actions they're taking. Even Elon

(26:53):
Musk when asked recently, you know Tesla stock cut in
half from the highest, his response was, it'll be good
long term short term pain for long term gain is
what they're looking at. What's the quickest way to reduce
interest rates? Recession? Recession our administration.

Speaker 3 (27:13):
You know, yeah, sorry to cut you out, but it's you.

Speaker 4 (27:16):
You know, you're seeing that in you know, Bloomberg and Baron,
some all the different financial periodicals, Wall Street General. The
R word is definitely returning, which again was totally vaporized
for the last two years.

Speaker 2 (27:28):
Correct, And not only is our administration on our cabinet secretaries.
They won't come out and say it, let's face it,
but they're expecting it. They're talking about well, you know,
I think Howard Bessett recently stated that it's coming from
you know, the recent drop in the stock market. Well,
it's coming from you know, years of being funny money.
You know, printed money is coming back to normal levels.

(27:50):
No big deal, They have no concern about it. In fact,
they not only are they not concerned, they are expecting
it and actually want it to happen, and they needed
to happen. So I believe we're going to see a
recession in the very near future, if we're not already there, easy,
because that's all this refinances is occurring as we speak

(28:11):
on all this debt. Now. One of the things I
always share with people is recession is not a dirty word.
It's not a bad thing. It's part of the normal
economic cycle. It's like the weather. You've got four seasons, right, Well,
if recession is winter, you have to have winter before
you can have spring and a rebirth. Right Is there

(28:32):
any doubt in anybody's mind that most tassets are overvalued
right now? It's crazy. They have to come back to normal.
They have gravity, They got to come back to some
level of normal at least. Unfortunately, people get emotional fear
and greed motivates the markets. Right, it went over They
overshot the mark with the AI hype and everything else

(28:55):
on the stock market. No doubt, what's likely going to
happen the other way. They're going to over doot the
mark to the downside because of panicked.

Speaker 3 (29:03):
But this again, you know.

Speaker 4 (29:04):
And bringing this back home, this does mean opportunities.

Speaker 3 (29:08):
And we took talking about real estate.

Speaker 4 (29:10):
There are they This means mortgage rates will be coming down, correct,
and for anyone that bought a house the last three years,
they're going to be able to refinance that debt at
a lower rate. And there's a lot of positive things
that will come, you know, come from this. You know,
either more inventory on the market, so first time buyers

(29:31):
that have been shut out may have an opportunity to
finally get in. So there are benefits to the economy slowing.

Speaker 2 (29:38):
Yeah, a lot of people are complaining because you know,
if you own stocks, you own your home and all that,
the values of those are likely going down. Yeah, that
kind of stinks, But if you want to buy, there's opportunity. Again,
stocks and real estate and all those things are probably
going to have values are going to come down. It's
going to give people opportunity to buy. If you're an investor,
you're probably going to be looking at better opportunities with
better interest rates going forward. The numbers are probably going

(30:01):
to work better for you than maybe they did in
the last couple of years.

Speaker 4 (30:04):
And you know, the funny thing about it is is
that when we talk about a recession, because I agree
with you, I think we're going to happen, and I
think it may happen as soon as may. It just
things are slowing at a very fast clip.

Speaker 3 (30:15):
Correct, People getting nervous, you.

Speaker 4 (30:16):
Know the wealth effect which works you know, in opposite directions.
When people see the stock market dropping, they do they
tighten their belts immediately.

Speaker 2 (30:24):
That's just the Jerry. Here's my statement, and I'm a
financial guide. Is the stock market the economy? No, Nope.
And a lot of people talking about tariffs and all
this stuff. That's another thing I've been bringing up lately.
You know, the tariff's on, it's off, it's adjusted. Isn't
going to happen. Here's what I want people to understand.
This is all part of the distance, the negotiation process

(30:44):
and the chaos. Uncertain The markets hate uncertainty, yes, and
there's a lot of uncertainty right now. There's going to
be a lot of uncertaining, a lot of volatility. Again,
short term pain for long term gain. What are they
trying to accomplish? The Trump administration doesn't want free trade,
they want fair trade, right right, there's a difference the
reciprocal tariffs that are are going to go into effect

(31:07):
April second, we haven't even seen that yet, right. Basically means, hey,
you charge us a certain tariff. And I'll use Canada
as an example, because I've been talking about a lot
you know, do you know most of two don't realize this,
Like milk, keys, chicken, things like that. Canada terrafs the
US anywhere from two to three hundred percent on those products.

(31:28):
So if you're a producer of chicken in Canada and
you want to sell the US market, you have little
or no terra If you're a US producer of chicken
you want to sell in the Canadian market, you're looking
at a two to three hundred percent terraff, which means
that that market's closed to you effectively. All Right, well,
guess what's going to happen April second? If Canada decides
to continue. And by the way, there are neighbors are

(31:48):
supposed to be our friends and our allies, and I
believe they are. Why are they charging this two and
three hundred percent for that stuff? Okay, that's not fair,
and we're not charging them, I agree. So and this
is this goes across board of nearly every product you
can think of. My point is this April second, if
Canada doesn't come to the table and negotiate a fair
trade teriff agreement, they're going to their chicken. Dark country

(32:13):
is gonna get tariff two three hundred percent. Now, how
is that.

Speaker 4 (32:17):
Gonna The goal is level of playing field.

Speaker 2 (32:21):
Level of playing field. Now, it's going to affect them
way more than us. Our economy is something like fourteen
times bigger than theirs from about Canada, and about twenty
five percent of their economy is sold into the United States,
like one or two percent of our economy sells into Canada.
This is not a fair fight. This is not an
even fight there. I don't believe that they're not gonna

(32:41):
They're not gonna last very long, is my point. There's
gonna be there's gonna be volatility in that. And the
volatility is not coming from the Trump administration because they've
met set their goals and made it very clear. The
volatility is coming from the other countries refusing to accept
the new reality that you can't take advantage of the
US anymore. And two hundred percent for your chicken. Now

(33:02):
you're gonna have to come to the table and negotiate,
and a lot of them like screaming babies, are you know,
throwing temper tantrums. When they finally settle down and stop that,
then the volatility and all this stuff will stop. My
suggestion for people who are investing, because I get asked
this every day, what do I do right now? Reduce
market risk. Reduce your downside because the next year or

(33:23):
two could be really volatile, it could be really tough.
So if you have money in the markets or subject
to risk, you need to reduce it. Consider looking at
safe assets. This is a golden era of fixed assets
because of the bonds and stuff we were talking about before.
I've got you know, six percent and sure guaranteed tax
free with the personal bank policies. I've got a newties

(33:44):
that will pay twenty and thirty percent bonuses up front,
guaranteed lifetime income. Writers you can you want to set
up a pension check, Holy cow, you can increase if
you want to defer it, you can increase a ten
percent per year every year you defer. Some almost pay
us a thirty percent side. It's crazy. We've never seen
numbers like this in over forty years.

Speaker 3 (34:05):
Interesting now it's good stuff.

Speaker 4 (34:07):
And you know, the one worry that I think a
lot of people have is just will unemployment rise?

Speaker 3 (34:14):
And I think that, you know, we're going to get
to probably.

Speaker 4 (34:16):
Four and a half percent, that's the estimates that I hear,
which you know, spooks to market. That's still an amazingly
low unemployment rate.

Speaker 2 (34:26):
Absolutely, you know, and part of yeah, part of recessions
are unemployment, God does go up. Absolutely, Again, there's change
if you're there's a common saying, if your neighbor loses
a job, it's a recession. If you lose yours, it's
a depression. Yes, okay, all right, all right, So yes,
is this going to affect some people negatively? Absolutely? Will

(34:47):
some properties become available because somebody lost their job? Yes, yes,
that's part of the normal, healthy economic cycle. It weeds
out the week and or and businesses and all. And
I'm sorry if you're one of those, it sucks to
be you. I understand that. But it also flushes out
the waste and the bloat, right and makes everything lean

(35:11):
and mean and efficient. You come out and go through
the winter, what comes next spring rebirth opportunity? Yeah, if
you recognize it going in and you see what's going on,
and you adjust. Look, if you keep doing what you're
doing the past decade in your investment portfolio, for example,
you're probably going to get creamed. Frankly, if you adjust,

(35:33):
you're probably gonna thrive. That's true for real estate investing,
stock market investing, cryptos, precious man, I don't care what
you invest in. It's the same principle.

Speaker 4 (35:43):
Yeah, I would love to get and I know we're
coming up on a break. I would love to get
your take on some forecasts, right. You know, we always
like to forecast or give our impression where we see
because I do think there's going to be an opportunity
for real estate investors and people to buy as that
we may not see it, and this may be a
golden opportunity in the next year.

Speaker 2 (36:03):
I believe that next year too.

Speaker 5 (36:04):
I completely agree, and I'd like to text more on
that because if you know, it depends upon where yields
go and you know how far the tenure will drop,
and as compared to mortgage rates, hopefully those spreads.

Speaker 4 (36:17):
Will continue to come in and we'll see maybe mortgage.

Speaker 2 (36:20):
Rates back in the five President Trump himself in his
administration stated they're not so much worried about the Federal
Reserve interest rates. They want to reduce the bond yield
tenure treasuries, which will benefit mortgage rates. That's absolutely, absolutely.

Speaker 1 (36:39):
Yeah, And that's what we tend to look at is
you know, first thing ten youre te note is so
closely tied to the mortgage rates. That's that's the lynchpin
to all this. So we are coming up on a break.
This is Andy Keel with the Home Solutions Show, and
we will be right back. Hello, and welcome back to
the Home Solutions Show. This is your host, Andy Keel,

(37:00):
and I'm joined again with Jerry sent Across Country Mortgage
and Farren's talk with your Personal Bank dot Com. I'd
like to just do a mortgage update here. We're in
the middle of talking about the economy and some predictions,
and we'll get back to that in just a moment,
but give us an update if you would, Jerry, where
are mortgage rates this week and what can we expect

(37:21):
in the near future.

Speaker 4 (37:22):
Yeah, so mortgage rates are still sitting right below seven percent.
It's nice that we've been saying sixes for you know,
the last month or two, and so the rates are
sitting you know, thirty year fixed mortgage for a primary
residents sitting right around six point seventy five, six point
eight seven five, fifteen years are getting down to actually
you can be in the fives, the very high fives,

(37:44):
which is is really nice to see government back loans
VA FHA USDA are sitting in the low sixes and
so rates are coming down now, they're not coming down
as fast as a lot would like. But the spring
buying season, I've seen a lot of activity, you know,
for I measure things on all levels and like leads

(38:07):
and how many people were new people that we're talking
to every day that are looking to purchase in the
next few months, and that barometer has gone way up,
which it does every year because we are in the
spring buying season. So I think it is going to
be a very positive spring buying season as compared to
January and February which were which were very we're below average.
It was a slow It was not it was a
slow time of year, but it was. It was an

(38:29):
abnormally slow beginning of the year. But I think March
April May is going to You're going to see a
lot more activity and be better than the current forecast.
Part of this will be because of mortgage rates continually
to come down. Now that doesn't mean they're going to
five percent tomorrow, but could we see six and a
half percent in the next few months. I believe we might,

(38:51):
and that goes back into our forecast.

Speaker 3 (38:53):
So I'd love to get your opinion on that.

Speaker 2 (38:55):
Well, thanks, Ery. So yes, I've been covering a lot
of this in the economy in general, in the different areas,
and I'm going to touch on all of it. The
first one. You know, you're talking about the mortgages in
real estate, which I'll get to in a minute, But
let's talk about the stock market for a second, because
that's a big factor. Do you know the JP Morgan,
Golden and Sacks, black Rock, Vanguard, all analysts, all of

(39:17):
them Basically they come out and said their projections for
the s top five hundred for the next decade is
going to average about three to five percent. And there's
a reason behind that, Parst. One of the reasons is
the previous two years when the market went up so
far so fast. We had two back to back years
of over twenty percent increases in the SP five hundred.
That's happened like seven times in the last hundred plus years.

(39:38):
That's extremely rare, and it's gone up so far so fast,
it just needs a breather, if nothing else. And typically
when you see do see those timeframes, the next decade
is you're usually pretty lackluster, oftentimes a recession. As we
talked about before. One of my points is this is
why it's the Golden era fixed assets. You have a
guaranteed six percent tax free return sixty seven percent. You're

(40:02):
probably gonnau perform the SP five hundred for the next decade.
That's what's amazing. And by the way, it's not that
rare that has actually happened. Six decades were the last
twenty one hundred and twenty years? What was that? A lot?

Speaker 4 (40:13):
And started to interrupt the last last time, you know
with the smp I think it was early two thousands.

Speaker 2 (40:18):
We had the last one thousand and twenty five for
ten years. Well, it went down and then went back
up because we had a great recession, right And by
the way, there was a period of time, that's why
they called it the last decade. If you had invested
in two thousand, it took you roughly a decade to
get back to even and by the way. That has
happened six decades out of the last twelve. In other word,
over the last hundred twenty years, so half the time

(40:38):
the stock market does poorly, another half time it does great.
Previous decade was no question, a phenomenal decade. What's in
that forward decade going to look like? Probably not so hot,
And that's what all these analysts are saying. So putting
shifting to more fixed, guaranteed kind of stuff is probably
going to be in your best interest and will probably outperform.
Now the real estate market and interest rate and all

(41:00):
that stuff we were talking about that earlier, the current
administration wants and needs a recession to reduce interest rates
because of all this bond refinancing we've been talking about.
Projections right now are two to three interest rate cuts
this year with the Federal Reserve. That will definitely help.
But it's not so much the interest rates with the Fed,
it's what are the bond rates going to be? And

(41:22):
the turn administration is really pushing hard on getting those
bond rates down, and again, the fastest way to do
that the recession. If we have that happen, then your
interest rates on your mortgages could drop actually more than
you were even just saying even quicker than you were saying.
It's all dependent on if we go into a recession
and the FED starts to reduce rates and the bond

(41:44):
rates start going down. So there's certainly some markets where
asset prices Texas, Florida great example where the real estate
markets are the values are going down because of the
inventory and that kind of stuff, right because they built
and then and I believe we're going to see mortgage rates,
interest rates drop throughout the latter part of this year,

(42:06):
particularly so latter part of this year. If you, if I,
if I was going to put money on it, latter
part of this year, early next year could look pretty
favorable on interest rates, which I know is a key
factor for real estate.

Speaker 3 (42:17):
Yeah, and it will be.

Speaker 4 (42:19):
But this shows that there's always opportunities in any market.

Speaker 3 (42:23):
And you know, I think so many.

Speaker 4 (42:26):
Buyers, especially the first time home buyer market, they just
feel closed out, like they can't do it. They feel defeated.
There's no inventory in their price range unless they have
they couple together with someone else for more to be
able to buy a house.

Speaker 3 (42:41):
Just things are too expensive for them.

Speaker 4 (42:44):
This will give them the opportunity to get in and
what an opportunity.

Speaker 3 (42:48):
That will be.

Speaker 2 (42:49):
And I'm telling people like that, just be patient, and
what should you do with your money right now? Market
some are safe and stockpile. That's why your personal bank
and things like it's so great being highly liquid because
I have a lot of my clients who are doing
that or investors. By the way, a lot of the
big money in Wall Street and real estate investors all
is right now sitting on the sidelines waiting for the

(43:10):
next opportunity because things have been overpriced. Now a lot
of people talking about like gold, precious metals, crypto, cryptos. Crypto,
by the way, follows the stock market, So crypto is
going to if the markets because a lot of same
people invest in the same thing. By the way, that's
the reason, if you know, is you watch the charts,
crypto and the stock market tend to follow each other

(43:31):
because it's the same investors. So if the stock market's
going to struggle, solio crypto, what about precious metals it's
gone no question, that's gone up tremendously high with three thousand, right,
what do we project? I do not believe it's going
to continue. Why if the Trump administration is successful in
slowing down economic activity, reducing interest rates, and reducing inflation,

(43:55):
what what is gold going to do? Going to go down? Yes,
And if you look at the pre vious Trump administration,
the first one, gold prices were lower at the end
than they weren't at the beginning of his administration because
inflation was so low. So I don't believe that, in
my opinion, that precious metals are probably going to because

(44:15):
inflation's going likely on its way down, which means those
are going to struggle again. It's the golden era of
fixed assets. Park your money somewhere safe while we're going
through this transition period is volatility period, Wait for the
opportunity for win rates and or prices. Get into your
if your first time home buyer, Jerry, like you said,

(44:37):
to get into your realm where you can afford. And
if you've been parking money over here safely and sure guaranteed,
tactually highly liquid. You're growing while you're waiting, so you're
not just sitting in cash, and then you can pull
the trigger when the opportunity presents itself. My last thought
is investors, real estate investors, you just got to make
the numbers work. A good real estate investor that understands

(44:59):
the numbers can work in almost any market. But you
got to crunch the numbers. When asset prices interest rates
are higher, you got to really sharpen your pencil because
you've got It's tougher, but it can be done. Probably
going to get easier as we go forward with interest
rates and asset prices, probably both on the downside. That's right,
that's my that's my personal projections.

Speaker 1 (45:21):
Yeah, and i'd actually like to speak to that a
little bit since this is a real estate show and
we are real estate centric here. Just personally speaking, what
do I think the real estate prices are going to
do for the next three to twelve months? And actually
I was just talking to Bob Zachmeyer about this yesterday.

(45:42):
What our opinions are. We both tend to think we're
going to be pretty stagnant and flat for at least
the foreseeable future. We might get a small decrease, we
might get a small increase, but I think we're going
to be relatively flat here coming up. I'm not expecting
any kind of gloom or doom. I'm not expecting any
kind of huge grow both. I'm just kind of expecting

(46:02):
more of the same, and if rates come down that
will certainly help. But I'm asked quite a bit are
you still buying? And my answer is yes. But to
use your term, Farens, We've really got to sharpen our
pencil on anything that we buy because I can't help
but look at anything from an investment point of view.
I'm not talking about buying a personal residence. I'm talking

(46:22):
about making an investment decision and buying a property for
investment purposes. And the criteria I use for that is
a it's got to make money, and it's got to
be a particular margin to make it worthwhile, because well, frankly,
it's not an investment if you're buying it to lose money.

(46:45):
So me personally, if I'm going to buy a single
family house, for example, I want to see at least
that it's going to have a fair rate of return,
and in this market, in this era, I really want
to see at least about a four or five hundred
dollar a month positive cash flow to make it worthwhile
to pull the trigger and do the investment. It's kind

(47:07):
of we jokingly say in our investment business that you know,
we do this based on fifth grade math. If the
numbers work and I can make four or five hundred
bucks a month, we say yes. If the numbers don't
work and all of a sudden we're only going to
make one or two hundred dollars, we'll probably pass on
the investment. So interest rates play into that. The purchase
price plays into that. If we can buy it at

(47:28):
a deep enough discount, that plays into it. But rents
play into that very deeply as well. And as the
real estate market tends to be a little softer, so
does the rental market.

Speaker 3 (47:39):
They tend to make a lot step. Yeah.

Speaker 1 (47:42):
And I mean if we look back in the in
the history of the last few years and what the
real estate prices did in spring of twenty two, it's
like the economy just kind of slammed on the brakes
as the interest rates started shooting up. But so did
our rental market in Tucson. I mean, it was literally
like someone turned off a spigot. I mean, we had

(48:03):
people just lining up to rent properties in in spring,
and by summertime we were dropping prices and it just
I mean, it didn't dry up completely, but it slowed
down significantly. So anyway, with that, we are coming up
on the end of the show, farrens if you'd like

(48:23):
to share your information with our audience one more time.

Speaker 2 (48:27):
Yes, Andy, thank you for having me. You can reach
me at your personal bank dot com or eight sixty
six two six eight four four two two that's your
personal bank dot com.

Speaker 1 (48:37):
And with that, thank you for spending your Sunday morning
with us. This is Andy Keel with the Home Solutions Show,
and thank you for joining us.