040625- Home Solutions Podcast

Episode Transcript

Speaker 1 (00:01):
Good morning, and welcome to the Home Solutions Show. This
is your host Andy Keel with Epic Realty, and I'm
joined today with Jerry Sun cross Country Mortgage. And we
have a special guest on the show, Matthew Koontz with
also Epic real team, and we'll be talking to him
a little bit about they were able to just put

(00:24):
their first investment property under contract today and we wanted
to dissect a little bit about what the decision was
there and we'll go into that in a little bit
later episode. So with that, we've had a pretty crazy
week this week, Jerry, haven't we We have?

Speaker 2 (00:41):
And it's funny is I had some calls and we're like, well,
is this a surprise. It's like, you know, no, it
we've kind of steen it brewing. The wave was out
in the distance and you could see it coming into
crash and it is. You know. The simple rule is
bad news for the economy usually means good news for

(01:01):
mortgage rates and good news for real estate as far
as affordability. And what's happened is mortgage rates have come
down and we're seeing the best mortgage rates since October
of twenty twenty four. And so if you remember last year,
and there was a window of time it was in

(01:21):
September and right before the election, where mortgage rates dropped
and they bottomed out about six point one two five.
Now we're not quite there yet, but we're definitely you know,
in the mid sixes and rates are moving lower. Hopefully
we will get down to that level again sometime over
the next few weeks.

Speaker 1 (01:40):
Yeah, I just I was kind of taken back when
I looked over on Friday and saw that the ten
year bond was actually below four percent for the first
time in what good year and a half two years.
It's been a while, it.

Speaker 2 (01:54):
Was, it was in September of twenty four, it was
down at three three point six. Yes, so, and all
the forecasters and the technicians that I listened to are
saying that it's going to bottom out about three point
eight this time around, which means that we'll put mortgage
rates probably about an eighth lower than where they are

(02:15):
currently now. Again, there's a lot of you know, factors
that go into this, and no one can nail this directly,
but you know, mortgage rates are are they're good, and
for anyone who purchased over the last couple of years,
this is the time to refinance, because it is you know,
I don't know whether this trend is going to last

(02:36):
for a week, that's going to last a day, or
if it's going to last for six months. It really
is dependent upon the reaction of the international market with
respect to tariffs.

Speaker 1 (02:46):
Yeah, there's there's so much chaos and uncertainty going on
out there. It's a bit of a head scratcher as
far as what's coming next. But to your point, a
bad news for the economy is usually good good news
for interest rates, and we certainly got a little bit
of that.

Speaker 2 (02:59):
Well, and you know, it's funny. The other thing that
came out, you know, on Friday morning was the BLS
Jobs report was released and it was a really strong number.
And if tariffs were not a part of our world
per se, this would have actually made mortgage rates increase
because the jobs report came out basically much higher than expectations.

(03:21):
It was right around two hundred and twenty thousand jobs
were created, and it was round and the estimates for
about one hundred and forty thousand jobs would be created.
So normally a blowout number like that would be Wow,
the economy is so strong and employment is so strong
and would have made mortgage rates smooth higher, And that
was actually just you know, gloss right over because of tariffs.

Speaker 1 (03:44):
Yeah. I was actually watching an interview with I don't
know who was doing the interview, but Jay Powell was
being interviewed, and I was taken back because the question
was kind of funny to me because the first question
they asked him is why do you tend to wear
a per tie? Ah? And as funny as that is,

(04:05):
I'm thinking, gosh, if I had a chance to talk
with the Chairman of the Federal Reserve and ask a question,
I don't think I'd be asking him the color of
his tie.

Speaker 2 (04:13):
You know. The reason why is simply this handy Alan
Greenspan would and they've done studies on this, if he
was going to lower or change interest rates higher or lower,
he would carry his briefcase his left hand. And if
he wasn't change going into the meeting and going he

(04:34):
wasn't changing interest rates, it would be in his right hand.
And so they correlated that with you know, hey, if
you're wearing a purple tire, you you're gonna you know,
does this mean rates that you're going to be lowering?
The fed buns right here at the next meeting. I
think that's what they were. They're kind of trying to
find that if there's some trend that goes along with it,

(04:54):
I don't know.

Speaker 1 (04:55):
Yeah, And that's why I think it's kind of funny
because you remember that story too, because yeah, when and
that's exactly what I was thinking about when they asked
him that question, because the market would actually have a
reaction based on Alan Greenspan's briefcase. They would actually like
watch him walking into the meeting, and I remember, like
which briefcase. It was not necessarily what hand, but it

(05:17):
was the same kind of story. It's like the market
would literally react based on Alan Greenspan's briefcase. And I
think that's what prompted the question. Yeah. The answer, what
I found was rather interesting is he came back and
basically said, well, the Federal Reserve is non partisan. We're

(05:37):
not bipartisan. We're nonpartisan, so we don't want to start
giving any impressions or ideas if I was to grab
a blue tie or grab a red tie. So purple
just seemed to be fitting because it's it's just in
the middle.

Speaker 2 (05:52):
I know it is. It is quite funny what people
kind of key on to look for trends and market
and sometimes it doesn't need to be all the technical
and it's just the color of a time.

Speaker 1 (06:05):
Yeah, it's like we tend to read way too much
into things. There's one article here I wanted to talk
about which kind of leads into one of the topics
I'd like to go take a deeper dive. It is
a Yahoo Finance article, Uh huh that says, forget sixty
forty black Rocks Larry Fink wants investors to embrace fifty

(06:26):
thirty twenty. And when I first glanced at that, I'm thinking, oh, gosh,
I hope they're not pushing crypto to the general public.
And I was actually taken back and I was a
little pleasantly surprised by this, saying, as I'm reading into this,
it says Blackrock chief executive Officer Larry Fink is proposing
a new tweak to an age old investing formula. Instead

(06:49):
of a traditional sixty forty split between stacks and bonds,
manager wants everyday investors to branch out and diversify into
private market assets, specifically referring to real estate. So they're
they're actually promoting real estate investment. It's pretty rare for
Wall Street to be doing that. Less they're talking about

(07:10):
a red right.

Speaker 2 (07:11):
Right, No, it's very true. Well, I think everyone's you know,
we're in a changing it's it's changing all the time
right now. You know, no one's got the playbook of
the answers yet. It is real time information, and it's
what's going to happen with these tariffs. You know, China
came out and said they're going to retaliate. Other countries

(07:32):
are saying they're not going to retaliate. You know, if
I think there's just so many unknowns. This is why
the stock market's been down over a thousand points the
last few days. But this will stabilize soon and when
it does, mortgage rates will then bottom out and until
another unknown comes along. So this is why this is

(07:54):
such an opportunity is for for people if you are
if you be purchase sometime between the second half of
twenty two and the beginning of twenty twenty four or
so sorry, the beginning of twenty twenty five. Now is
a great time to refinance. And if you're out looking
for a home, you just you know, affordability is definitely
working in your favor.

Speaker 1 (08:15):
Yeah, And I think I heard you before we started
the show, Jerry. I think you mentioned something about a
VA loan that actually had a really nice starting number
of that.

Speaker 2 (08:27):
Oh fivees right, it had a five on it.

Speaker 1 (08:29):
It had a five on it.

Speaker 2 (08:30):
Well, we haven't said that in a couple of years.

Speaker 1 (08:34):
I'm sure a lot of the listeners out there really
took it on the chin with the stock market last week.
I certainly wasn't happy to look at what we had
in portfolio on Saturday morning, but it's there is some
there is some good that comes out of this with
with these lower rates. So that's what I tend to
be dwelling on. And what we'll talk about in the

(08:57):
next segment is a little bit about what does that
mean to diversify into real estate and how do we
analyze one of these investments and when is it a
good investment decision? And I think we'll have some fun
with that. So before we get there, I was kind
of surprised with I don't know if you know much
about this, Jerry, but Redfinn had a couple of a

(09:21):
rocket mortgage had a couple of interesting announcements where they
made a tender offer for Redfinn recently, and I think
they're in the process of buying another company. Curious if
you've paid any attention to what's going on in the
market there.

Speaker 2 (09:38):
Yeah, so no, they bought up mister Cooper, which is yeah,
and you know, ironically, mister Cooper's services a lot of
arm up mortgages. That's what mister Cooper does or just
a big servicer. And you know what does that do.
It just gives uh, Rocket a bigger net. And I
think they're looking at that. I look at the this

(10:00):
is a look into the future of refinance opportunity because obviously,
if you're servicing a mortgage, you have access to get
to those clients sooner than anyone else would. And so
I think that's why they did it, right, is that
it just gives them a bigger net. And I think
now that's going to make them the biggest lender in
the country.

Speaker 1 (10:21):
Interesting. Interesting, So yeah, they think the combination there of
getting a hold of redfin and and then mister Cooper,
it's it's an interesting play.

Speaker 2 (10:33):
It is. And you know, again, the thing I've heard
with Rocket is again I'm not beating up on them,
it's just they're not. They don't have a retail model.
There's not boots on the ground and locally where people
can come in. And when you're talking about financial tools,
the people want to understand and meet with someone and

(10:56):
to discuss the plan and why how do mortgages work,
what's the difference between you know, an fah loan versus
conventional one, and so much of that is you need
to be do that in person. And that's where what
they don't they've not you know, they've not made that
a key priority for them. And again, so many people

(11:18):
that I work with the reason why they work with
us is that they can come into the office and
we can sit down and have a conversation and explain
the options and how things work.

Speaker 1 (11:27):
Yeah, and again I'm not trying to make a dig
on Rocket mortgage, but as a real estate agent, if
I have a client that is saying this is who
they're they're planning on using, I just kind of quietly
just do a faced palm and go, oh boy, they're
fine when everything goes well. But as we know in
this industry, things don't always go well. And just having

(11:49):
someone locally that you can call up and you're just
not a number in the system when there is a
problem that it makes all the difference in the world.

Speaker 2 (11:59):
You got to be able to meet someone, You've got
to be able to get a hold of people on
the weekends. It's just that's we're in. This industry needs
that flexibility and attention to things when you know, and
sometimes it's off hours and that's where you don't get
with an online lender.

Speaker 1 (12:18):
Agreed. So with that, we are coming up on a break.
This is Andy Keel with Epic Realty and this is
the Home Solution Show. We'll be right back. Good morning,
Welcome back to the show. This is Andy Keel with
Epic Realty and I can be reached at five two
zero five three nine nine five nine one. I'm joined

(12:43):
again by Jerry Sunt with Cross Country Mortgage and Matthew
Cooin's with Epic Realty as well. And we're going to
talk to Matthew about making a decision on buying the
first investment property with he and his lovely wife Colleen
and some of the decisions that went into that that factor.

(13:04):
But before we get into that, Jerry, would you share
your number for the audience of.

Speaker 2 (13:08):
Course, five two zero three seven zero nine six.

Speaker 1 (13:13):
And Matthew again, you're with Epic Realty, you're a licensed
agent and you also work with buyers and sellers and
investment properties. Would you like to share your information for
the audience as well?

Speaker 3 (13:24):
Yes, Andy, thank you for having me on. My number
is five two zero eight two zero four four ninety six.

Speaker 1 (13:34):
So I thought it would be kind of fun to
do a deeper dive into both the numbers, the analytical
side of the investment decision, but also to talk a
little bit about the psychological decision of making a big
investment into a single family rental property. So with that, Matthew,

(13:55):
I'd like to talk a little bit about We'll start
with the numbers on this. So you've been looking for
a investment property for a while.

Speaker 3 (14:03):
Correct, Yes, that is correct.

Speaker 1 (14:06):
And we found one this week that was a property
over on the east side of Tucson, a single family house,
a three bedroom, two bath home that we found it
through a wholesale cellar, which means they they're working with
the seller. And the reason the seller is working with
the wholesaler in this case is it's actually a fine house,

(14:30):
but there's one serious problem. There is a very deep
pool in the backyard. And I'm guessing what fourteen feet
deep on the one end, or it's pretty deep pooled,
but it's it's not filled and it's not covered. So wow,
does that mean for a lender jersey.

Speaker 2 (14:48):
That means it's a pretty deep hole that's a hazard.

Speaker 1 (14:51):
Yeah. So the problem of course with that is it
pretty much takes away most It takes a way conventional lending.
It absolutely takes FHA and VA off the table. It
actually takes to my knowledge, pretty much every DSc our
product off the table. And for those that don't understand,

(15:12):
don't know the abbreviation there, that's a debt service coverage ratio,
which is an investment type of product that we use
quite frequently. And even even that product is not really
useful in this case because we need to either cover
up the pool by building some kind of platform over

(15:33):
the top that would allow it we obviously can't have
anybody falling into a hole in the ground, or fix
the pool. And ironically, we've been in that situation before
and in many cases it's cheaper to plaster the pool
and get it back up and running than it is
to build the cover.

Speaker 2 (15:51):
I've done that before when we were financing for a
barrower and they had an empty pool, and we had
to build a frame around the the empty pool and
made out of you know, plywood, and put it together
so that it was a big box. And the contactor
did it for me, made it, you know, obviously pride

(16:11):
in his work made it strong. I'm like, you could
have a party on top of this thing. And you know,
at the time, this was ten years ago, it costs
probably five hundred bucks to do that, or six hundred bucks.
Now that would probably be two grand.

Speaker 1 (16:25):
Yeah. The last time I actually got a quote on that,
I mean I didn't really go searching around. I was
quoted six grand to build a platform on one of
our houses, and it was actually less than that to
fix the pool. So either way, it has to be
fixed because that's clearly a safety hazard. But my point
is this is actually the opportunity that we were looking

(16:46):
for because we can solve that problem and we can
get it financed by fixing the pool issue. And that's
the opportunity where we're getting a fine house at a discount.
Because that pool being a safety issue, most buyers are
just taken out of the equation. Yeah, let's talk a

(17:09):
little bit about that. Matthew. So we decided that after
you and I walked walked this property last week in
originally this we found this on the market for what
two hundred and nineteen nine I believe.

Speaker 2 (17:23):
Yes, very close.

Speaker 3 (17:24):
Two yeah, two twenty ish.

Speaker 1 (17:27):
Okay, And at that at that we ran the numbers
and we figured that a fair rental value on that
house would be seventeen ninety five or thereabouts.

Speaker 3 (17:36):
Right, Yes, that is that is correct, okay.

Speaker 1 (17:40):
So we started then by doing an analysis of putting
this into annualized terms. So we'll take the seventeen ninety
five times twelve months and that would be our income
for the year. And then what we of course did
is we we ran the numbers based on and we
had to do this actually in two steps, so the

(18:02):
math actually does get a little complicated. It's not quite
as simple as going out and getting this new loan
at whatever percentage because we have to do this in
two steps. We don't have the time to fix the problem.
We have to own the house first, so we're going
to have to use a line of credit to buy
the property, then refinance it after the problem is fixed

(18:23):
with a DSCR loan. So I know that was a
bit of a mouthful there. But so at the end
of this, after we refinance it out, we are predicting
that our payment is going to be what was it?

Speaker 3 (18:43):
So it's about it's about let's call it give or
take thirteen fifty or fourteen hundred dollars.

Speaker 1 (18:51):
I think based on the notes here, we came up
with thirteen eighty I think was our magic number. And
I'm not going to go into the deep dive into that,
but that's basically based on what we figured out our
refinance would be at. I think around six point seven
was our interest rate. So we're being a little bit

(19:11):
conservative and on the numbers. So at the end of
the day, we were looking at a thirteen and eighty
dollars a month payment with a seventeen hundred and ninety
five dollars a month income, and we our next calculation,
of course, was to figure out what does that look
like from a cash on cash rate of return and

(19:35):
what what did what did the numbers come back and
say to us.

Speaker 3 (19:38):
So we're we're right around the four fifty to five
hundred mark if we get the seventeen ninety five per month,
and so that's you know that that was our our calculations.
After all this, there is another caveat that Andy didn't
disclose quite yet. I'm sure he was going to get

(19:59):
in to that. But I took out a helock to
take this down. And so there's that's where the math
gets even more interesting. As we were doing the numbers.

Speaker 1 (20:12):
Yeah, and that's where I thought it would be kind
of fun to talk about that because is it a
good idea to utilize a helock to make an investment?
And that that gets to be a very personal question,
and it can be really scary. I'm not I'm not
the biggest fan of doing this because if you're using
full leverage, it can be it can be a little scary.

(20:35):
We determined the what the cash on cash rate of
return for this property was about nineteen percent?

Speaker 3 (20:40):
Correct, Yes, that is correct?

Speaker 1 (20:43):
And what was the You had an intro rate on
your home equity line.

Speaker 3 (20:48):
Of credit of what six point nine to nine?

Speaker 1 (20:53):
Okay, so just using a little just rough math there,
so for borrowing the money at six ninety nine and
getting a return of nineteen were using the arbitraged number
to use the fancy word, is still about a twelve
percent rate of return?

Speaker 3 (21:08):
Yes, yes, that's what we you know, came up with
from you know, the breakdown and the numbers that we ran.

Speaker 1 (21:16):
Yes, yeah, have any thoughts on those numbers? Jering No.

Speaker 2 (21:21):
I mean my concern about using an equity line of
credit for a down payment. I think it's a brilliant idea,
you know, but typically they're short term answers. People are
doing an equity line of credit on their departing residents
to buy a new primary or something like that. This
you're doing, you're pulling the money out for a long
term investment. Now, if you're going to flip the property

(21:43):
and turn around and sell it immediately, great, but it
is if you're keeping this as a long term hold.
My concern is what does that rate on that equity line? Look,
you know, the teaser rate of seven percent is great,
but what is it after it's obviously going to be
above prime rate? And uh, you know that that that

(22:03):
unknown concerns me a little bit. Yeah, And and that
becomes risk appetite.

Speaker 1 (22:08):
Yeah. And and leverage, especially using down leverage down payments
that that really is a pretty scary thing in my
opinion too. And I'm not completely against it, but you
you need to be very, very very careful when you're
when you're leveraging a property like this. So the question becomes,
is is it safe to have an alternative means to

(22:31):
getting that he lot paid off? Uh if the property
does hiccup a little bit and say it takes three
months to fill it instead of a month or something
to that effect. So what were what were some of
the other factors Matthew, that that made you decide to

(22:55):
move forward with this particular house? What was it that
that worked?

Speaker 3 (22:59):
So obviously Andy r spread was decent enough to go forward.
It's you know, you guys, you gentlemen, made very good
points of all. You know, put using it a heelock
for the down payment the long term, and you know
is can there be hiccups? Of course there can? You know,

(23:22):
is the gamble worth the risk on this one? And I,
you know, after great deliberation and mulling it over and
obviously kind of getting Andy's consent because he's been doing
this for so long, you know, my wife and I
eventually pulled the trigger. It didn't take me too long
because the house was in good condition other than the

(23:45):
pool that is very neglected. The promising point on this
is I owned a pool company for almost ten years.
So I'm going in blind on this pool. So I
don't want to say I may call a favor in
on this, but I do have plasters, and but you know,
the equipment looked good, so it was only the plasters
so I had. It's not like I was going in

(24:07):
blindly of what it's going to take to get this
pool going. So the rest of the house was fair,
the roof was fair, the air conditioner was fairly new,
so the bones of the house were good. It was
just the factor of the pool that, you know, kind
of threw the wrench into the mix, if you will.

(24:28):
But as I stated before, I have a vast knowledge
in that area.

Speaker 1 (24:34):
And well we'll talk about this a little bit more
after the break, but we are coming up on a break.
This is Andy Keel with Epic Realty and we'll be
right back. Hi, and welcome back to the Home Solution Show.
This is your host, Andy Keel with Epic Realty. I'm
joined with Matthew Koontz also with Epic Realty, and Jerry
Sunt with Cross Country Mortgage. And when the previous segment,

(24:58):
we were just starting to analyze Matthew's first investment home
purchase and why we're making a decision to move forward
with that. So at the end of the last segment,
we were talking about one of the big problems with
this property was this pool issue. And I think you

(25:18):
make a good point where it's less risky for you
because you come from that industry, the pool business, so
you know exactly how to fix this problem, probably more
inexpensively and professionally than your average person. And I think
that's kind of planks to your strength.

Speaker 3 (25:35):
That is correct, Yes, that was going It was not
a blind variable where I had no idea. I've actually got,
you know, a great plaster company that will be my
first resource and the only resource that I'll reach out to.
So this wasn't so much a fear factor in my eyes.

(25:59):
You know, there obviously could be other variables with the
pool once we put water in it, but most will
be knocked out once once we get it replastered. So
it's it's not that not that scary for me.

Speaker 1 (26:14):
Yeah, And I guess I'll just go off a little
bit of a tangent here. I see a lot of
investors that come in and want to buy an investment property,
especially they get the idea that they want to go
and do a flip, and that scares me so much
because flipping is such an incredibly dangerous thing, especially if

(26:35):
you don't have the knowledge and experience to do such
a thing, if you're not in the trades. For example.
I'm always scratching my head about that is, Oh, you know,
I don't know if they saw a show on TV
or or they think it's easy, so they want to
go in and oh, let's just do a flip. It
should be easy to make, you know, forty or fifty thousand,

(26:56):
and it's well, what experience do you have? Well, usually
the answer is not much. But again, going to play
to your strengths when you make these types of investments.
And what's the other factor that was probably pretty important
on this in coming up with the numbers, Matthew, you're
going to manage this property yourself.

Speaker 3 (27:16):
Correct, Yes, this will be a long term hold in
the lease option model, so you know that takes out
the management fees as as as well as some of
the contractor fees that the management companies impose. So that
increases our numbers dramatically over the long term of this property.

Speaker 1 (27:39):
So one of the other things that I'm always fascinated
with kind of the psychology of making an investment like
this too, And I wanted to chat a little bit
about this because it's an unknown it's your very first
investment property, and it's a lot of money. Let's not
kid ourselves with that. How were some of the just

(28:01):
emotions you were feeling, both you and your wife because
it's a joint decision and there's a lot of fear
involved there. So talk to us a little bit more
about what was going through your mind and how did
you kind of resolve that and make the decision to
move forward.

Speaker 3 (28:17):
So, you know, I've been studying this model for a
while and been very graciously mentored by Andy, and I
very much appreciate it. And this house I started off
at offering one eighty five that was below their means
because it just became you know, they started at two

(28:39):
twenty and I understand that. So I went up once
and then they came back at me with another number,
and I wasn't really fond of that of going back up,
and I wanted to hold firm but that we ran
the numbers. But you know, my psychology was I've been
I was ready, and this house is in really good shape. Now,

(29:03):
my wife's psychology, that was a tough, a tougher barrier
to break. And you know, just she she does the
books for this model, and so she sees the good
and the bad and the ugly of you know, some
bacont houses because not all the houses are filled at
all the times. Let's just be realistic. But I the

(29:24):
numbers worked and the spread was high enough, and once
again going back to Andy's expertise, he gave the consent
and basically told me, if you don't buy it, I will.
So that's that's reassuring enough for me to get across
the you know, the finish line in my psychobabble and

(29:46):
and my own mind and you know, the what if.
So that was kind of the ultimate decision factor. So
that's that's where I was. You know, it's still still scary.
There could be we could get in there, and there
could be something else wrong that we didn't factor into
the numbers.

Speaker 1 (30:05):
So yeah, and we we had a bit of a
debate when we were going back and forth and deciding
because to your point, you had offered one ninety and
they came back and they insinuated that one ninety five

(30:25):
would probably do it, and we really had to talk
through that. So if you're talking about doing a flip,
every not to say that every penny doesn't count if
you're not doing a flip. But in this case, we're
looking at things a little bit differently because we're looking

(30:46):
at the spread between how much we can receive in
monthly income from rent versus how much we're paying out
in the mortgage payment. So we tend to start thinking
in terms of of thousands of dollars difference and what
is the property worth? In the wholesaler world, they always
use the term ARV or after repair value. And do

(31:11):
we really care what the after repair value is? Well,
yes we do, but it's not the most important factor.
So psychologically, do we where do we draw the line?
Do we go from that one ninety to one ninety five?
Do we try to split the difference at one ninety
two five? But at the end of the day, Jerry,
what what does five thousand dollars mean on a mortgage payment?

Speaker 2 (31:34):
You know it's going to be about thirty bucks a month.

Speaker 1 (31:37):
Yeah, So if we're doing the calculations, which we did,
we were looking at this and going for thirty bucks
a month, it really doesn't change our rate of return
enough to be significant enough to care. It's like, is
is nineteen percent good enough?

Speaker 3 (31:51):
And yes, that was that was fair. I know many
people that would like nineteen percent all day long, and that,
you know, that crossed my mind. And you know, I
talked to a lot of business owners and a lot
of affluent people and they would be ecstatic about nineteen percent.
And that was one of the things that got me

(32:11):
across the finish line in my mind.

Speaker 1 (32:14):
Yeah, and again I want to point out that, you know,
it's not like we can just go out and get
nineteen percent rates of return. There is a lot of
time and effort and in this case, sweat equity that's
going to need to go into that to get that
kind of return, right.

Speaker 3 (32:29):
Yes, yes, So I'm going to you know, do like
I said, the management work and you know, some of
the cleaning up and anything else necessary to keep my
numbers right around that mark.

Speaker 1 (32:41):
So what do you generally when you're working with a
with a buyer, Jerry, whether it be an investment property
or for a single family home, And you see that
a lot where the buyers get a little bit hung
up on just a few thousand dollars in price and
not necessarily translating that into the you know, what does
that mean and the difference in monthly payment?

Speaker 2 (33:02):
Yeah, I mean people do get hung up on the
you know, we all get hung up on the details
and sometimes don't look at the macro picture. You know,
we just have to break it down as best you can,
and this is the numbers. And if it doesn't work,
then you know, are there ways to save money elsewhere?
I mean, you know, you look at all angles, but again,

(33:25):
the numbers are the numbers, and how much is a
few thousand dollars worth? You know, Let's say there is
you got two different mortgage letters and one is two
thousand dollars higher and fees and the other. And it's like, well,
do you have a trusted relationship with the one where
the fees are higher? Do you just go that route
out of assurance that it's going to get done or
do you go through the what is the opportunity costs

(33:48):
of having to get you know, quotes from other companies?
The time and effort, it takes it away from your
day to day business. You have to analyze that of what,
what where Your time is well spent? And you just
have to, you know, educate people and then they make
their choice.

Speaker 1 (34:05):
Yeah, And I was sharing a story with Matthew that
it's I have to remind myself of this if I
look back in my investing career, I try not to
have regrets, but if I could have changed anything looking back,
I would have just probably not been so particular about

(34:28):
drawing a line in the sand with the purchase price.
And Bob and I right as COVID was starting, Bob
Zachmeyer where we had a property that we were looking
at that it was a bank foreclosure at the time.
This was right at the beginning. This was February of
twenty twenty, and it was a real true friend of

(34:50):
mine that I knew he was working with the bank
and had the listing on this bank foreclosure property and
right wrong or otherwise, I'm assuming he had, but it
was listed for one point fifty and he called me
up and he said, they will take one thirty eight
if you if you can give me a one thirty
eight offer, it's yours. And I'm looking at this property

(35:12):
and said it's a fine property. It seems like we
should probably move forward with this. But me being me,
I came in and I came in at one thirty
and he came back and said, one thirty eight will
buy this property. Ah, so we came back at one
thirty five and same thing. You know, a day or
two negotiates. One thirty eight will buy this property. So

(35:36):
I started puffing up, but oh, we want to buy
what we want to pay one thirty five. And finally
I realized it's like, you fool, you're really going to
lose this house over three thousand dollars. It's a fair deal.
Move forward with it and buy the darn house. And
we did, thankfully. And looking back, now that's a property
that it's a it's a three hundred thousand dollars house

(35:58):
today Now it's kind of laughable. Looking back, it's like,
we're really going to lose this perfect opportunity over literally
like fourteen dollars a month.

Speaker 2 (36:08):
Yeah yeah, yeah, well but sometimes egos get involved and
it blinds us, right, that is such a thing that happens.
I think it's a rare talent to have it not
bind us because our because that ego just can can it.
It makes us make.

Speaker 1 (36:26):
Hi and Welcome back to the Home Solutions Show. This
is your host Andy Keel with Epic Realty. I can
be reached at five two zero five three nine nine
five nine one, and I'm joined again with Jerry Sunt
Cross Country Mortgage and Matthew Coons with Epic Realty as well. Jerry,

(36:48):
one more time, if you'd share your phone number?

Speaker 2 (36:50):
Sure, five two zero three seven zero nine six.

Speaker 1 (36:55):
And Matt would you mind sharing your phone number one
more time?

Speaker 3 (36:57):
I'd be happy to It's five two zero eight to
zero four four ninety six.

Speaker 1 (37:04):
So the last couple of segments we were analyzing an
investment and talking a little bit about the psychology behind
it and what made this particular property work for us.
So I think one of the points I'd also like
to make is for anyone in the audience who would
like to perhaps learn about whether a real estate investment

(37:26):
would be a good idea. I'm more than happy to
talk about. This is the stuff I do every day
and absolutely love. Jerry, You're more than happy to talk
to anyone in the audience that would like to see
what they could qualify for and talk about numbers, anything
you'd like to just share about investing interest rates in

(37:47):
general and just kind of like an overview.

Speaker 2 (37:52):
Yeah, no, I mean, I think we educate every day
when you're talking to people on the phone or meeting
with them in person. We that's all we do, is
we educate day in and day out, because that is
the key to success, is you know, is not try
to hold in the information to think, oh, I'm gonna
get a better deal if I, if I, if they

(38:12):
if you know, if if I don't share all my information.
It's better to do it the other way. And we
both learned that from Bob. It's better to be one
transparent and give give all the information away and because
it helps build trust and that's the key thing.

Speaker 1 (38:29):
Yeah, exactly, I'm gonna switch gears just a little bit here,
talk about just this just falls in line with it.
We can't make this this stuff up. So we uh.
We had bought a lot in Tucson about three years

(38:51):
ago and at the time we bought it. And for
those of you that have dealt with any kind of
land or building homes, there's a special place in my
heart for the city officials that make these decisions because
they're let's just say, they're not particularly fun to work with,
and it's really hard to get anybody to put anything

(39:12):
in writing When we bought this lot three years ago,
we ended up selling it with it on an agreement
for sale, so we basically offered it with owner financing,
and the folks that picked up that property never did
end up building on it and they ended up defaulting,
so we sadly had to take it back. But when

(39:36):
we took it back, suddenly the county kind of changed
their tomb So what was a buildable lot at least
what they were telling everybody Now the wind changed and
they're now saying it's not a buildable lot. Unbelievable and again,
get anybody to put this in writing. So they didn't

(39:56):
say it was unbuildable. They would say we need a
proper engineering report. So we had the property listed, had
it under contract. They came back and said the same thing.
Had another buyer come through. They had a particular house
they wanted to build on the footprint. They brought it
the county, they shot it down. Third buyer came in,

(40:19):
different footprint, they shot it down. Finally we decided enough
is enough. The taxes on this particular lot were not
good and we're like, what in the world are we
going to do that with this thing? So we're basically
stuck with this lot that we purchased, and we thought
it was buildable, but it's not. So who's got some

(40:43):
would be interested in this particular property. Well, not many folks,
but in this case, we thought, well, there's a couple
of neighbors, so let's look into that. And this is
where it's kind of it's a small world and you
can't make this stuff up. So one of my hobbies
I love collecting coins, and I'm a bit of a

(41:04):
silver and gold bug, so I like to buy some
silver and gold and platinum from time to time. So
I'm going to do a special shout out here Ben
with Old Pueblo Coin right here in Tucson. I've known
for a number of years and I've done business with
him for a long time. I just happened to go
into his shop a while back and he mentioned that
he was buying a property over on the same street

(41:27):
that we had this lot, and I go, that's funny,
where's it at? And he pulls it up and I'm like, oh,
my gosh, you're like literally our neighbor.

Speaker 2 (41:37):
Oh that's great.

Speaker 1 (41:38):
So we got to talking a little bit and the
lot we owned it was a little bit odd because
there was this like little ten foot finger that the
neighbor had that dissected our parcel and his parcel. But
it was no use to anybody whatsoever. It was just
a weird lot split. So we got to talking and

(42:01):
he said, gosh, I would really love that land, but
I'd have to work something out with the neighbor. Maybe
I could trade him some of this. So I said, Ben, literally,
how about I just give you this land. We literally
gave it to him, and our joke was he gave
me back a nineteen seventy one Lincoln penny. It's not
worth much more than a penny, but the joke was

(42:24):
I sold a lot for a penny. I'm having fun
with this story because at this point, what are we
going to do with this thing. We don't want to
hold it and pay taxes on it, so let's just
give it away to a friend. And fast forward. This
was about a year ago, and we gave him the
lot and he just managed to get a surveyor out there.

(42:46):
They made a deal with the neighbor, so they now
were able to just complete this transaction where he just
gained an extra half acre on his land, his on
his home. After it was all said and down.

Speaker 2 (43:03):
It's very valuable, right, I mean, you know.

Speaker 1 (43:07):
So anyway, just kind of a weird story, but I
thought i'd share that because sometimes it's just what do
you do when when you know, do we make lemonade
out of the lemon? Well, we did the best we
could with a bad situation. At the very least we
have we created some good will out there.

Speaker 2 (43:23):
So that's fantastic. Where do we go from here over
the next few weeks. I mean, there's so many people
that are they're they're confident to get frozen with the
unknown of tariffs, and you know, does this mean we're
going into recession? When you look at the hard data,
it actually we you know, the economy is doing fine. However,

(43:46):
so much about the economy is built on confidence, and
if confidence wanes, we could actually see a slow down
in the economy due to this, not because of you know, hey,
inflation is going to go up dramatically due to the US.
I think a lot of that is economics. Economists forecasting
what will happen, and whether it's real or not. It's

(44:09):
the worry of what will happen, and it makes people
freeze in place. And so when they freeze in place.
Businesses don't hire people, you know, Consumers don't spend money.
Businesses don't spend money. You know. You look at the
number of companies that were slotted to go public this
year and they've all been wiped out in the last

(44:30):
two days. Like there's gonna be zero public offerings going out,
you know, later this year. So it's it's just funny
how this when when confidence gets shook, it can it
becomes the new reality. So I think, you know, we
just all have to take a deep breath and see
where this goes over the next few days. But again,
mortgage rates are good. This is one of the things

(44:52):
that happens when when when the economy gets rocky, mortgage
rates come down. And that is the one true, true
to benefit and for buyers and for investors that always
think kind of counteringtably, this is the time to buy, right.
Maybe sellers get a bit nervous because the number of
buyers starts to slow down. Well maybe that brings opportunity.

(45:16):
You have to look at it that way.

Speaker 1 (45:18):
Yeah, And we mentioned an earlier segment, I was listening
to that J. Powell interview and a little later in
the interview, there was mention about the housing supply shortage
and how that is still a problem, and I really
still believe that is the key driving factor to the
overall real estate market out there, and I just until

(45:41):
we fix our supply problem, I don't have this kind
of gloom and doom. We're going to get some big
correction out there, because we at the end of the day,
what makes a market, it's supply and demand, and we
do have a demand or a supply issue. Pardon me.

Speaker 2 (45:59):
There's only one one way for housing prices to come down,
in my belief, and that is if unemployment jumps dramatically
from here, and I'm not talking that four and a
half percent. I'm talking about if unemployment goes to five
and a half, six, six and a half, somewhere in
that range. Then you're going to see values down because
you will see a number of people who can no

(46:20):
longer afford their home and are going to put them
on the market, and that will increase supply. Until short
of that happening, which is such a far cry from
where we are today, I don't hear that prediction out
there anywhere. Even the most bearish of economists on Wall Street.
No one predicts that happening unless something, Unless unemployment really

(46:42):
jumps doubles or triples from where we are now, real
estate is going to stay strong. Thanks.

Speaker 1 (46:50):
And I just this might be a little bit of
a biased view, but what just still surprises me, ever
since the fact actively COVID, in my opinion, we have
just such an incredible short supply of contractors out there,
just just general service folks, I mean the HVACT contractors,

(47:13):
the plumbers, the electricians. It's just it's been so much
more difficult to find reliable help and affordable help out there.
I just, at least in that segment of the marketplace,
I feel like we have just this dire need for
more for more hires. When I talk to other business owners,
that seems like the biggest truck problem is getting qualified employees.

(47:36):
It seems like that's just the big factor out there.

Speaker 2 (47:39):
Yeah, now, you know, I mean it's with employment. I
think it's employment is still very strong, and from the
data from Friday clearly shows that. I you know, it
does seem like if someone loses their job and goes
back in the workforce, they're having difficulty finding a new job.
That is one thing that I think we are are

(48:00):
starting to see a trenda but as far as layoffs,
they're not going through the roof.

Speaker 1 (48:05):
They're just not at any rate. Well, we really appreciate
your spending your Sunday with us. This is Andy Keel
with Epic Realty and we will see you next week.
Thank you.