The Exchanges, every show

Q I'd like to make some extra money. What's an idea that most people have not heard about?

A For homeowners looking to make extra money and, wait for it, tax-free in many cases, I have an idea teed up for you. You can rent your own home tax-free if you follow these guidelines. The rule is referred to as the fourteen-day rule. It's sectioned, two-eighty-A of the federal tax code. You can use your home with all the tax breaks associated with home ownership And you can rent it out free of federal taxes if you rent it for fewer than 15 days in a calendar year. The rental income is generally excluded from your federal income tax, but check with your tax advisor. I think you may not even have to report it. People call it the Augusta rule because homeowners in Augusta, Georgia for many years have rented their homes To masters golf fans and kept every single penny, but the rule works anywhere in America and works especially well where a town throws a big event, but doesn't have the hotel rooms for everyone. So for example, Coachella, the Kentucky Derby, the Superbowl, the F one race, which is coming up in Las Vegas. If you own a nice home near that track, you can clear out for race week. Rent something inexpensive in the desert nearby, and lease your house for some serious money, and generally owe the IRS nothing on it. Same house, same week, the difference is knowing the rule. Now let's get into the fine print, because this rule has a sharp cliff, and the cliff, the hard limi…

AI assessment note: “You can rent your own home tax-free if you follow these guidelines.”

Q Should I hold my rental and an LLC?

A I do get this one constantly, and people expect the attorney to say always, and the honest answer is, it depends. And here's my idea of the framework. What an LLC actually does, it separates the rental's liabilities from your personal assets. That's important, but it works only when it's set up right and run right. And that includes a separate bank account, Real records, and no commingling. If you treat it like your own bank account, you lose the separation. So for example, if the rent checks go into your own personal checking account, not the LLCs, if the repairs go on your personal credit card, these are the issues that if somebody sues, the lawyer holds them up and says, look, this person, this isn't a real company. This is what they call an alter ego. That's a legal term for treating it like yourself.

AI assessment note: “the honest answer is, it depends. And here's my idea of the framework.”

Q Question one. The news says the economy just lost jobs. Should that scare me away from real estate, or does it actually help me as a buyer?

A So the straight answer to that is both a caution light for the economy, and as I mentioned before, it may take pressure off of rates. 23,000 jobs in July sounds good, but that was against an expected rate of 80,000 or more. May and June revised down a combined 103,000, and so the chain here is weaker jobs equals less inflation pressure, less reason for the Fed to raise rates, and The market repriced overnight. Here's sort of the odds changing dramatically. One week ago, there was more than 72% chance, according to the odds makers, of a September hike, and this morning, the odds are down to 60%, and that is 60% of a hold, so that's really a flip. So, More than 70% were expecting a rate hike. These job numbers come out. They're softer. So now 60% of the odds makers are saying hold, and that is a very big switch. So here's why this is important to an investor. Real estate really does run on jobs. Fewer paychecks equal fewer renters who can pay rent, and certainly fewer buyers who qualify. And those are important stats. Remember, rely on the data, not the headlines. Now, the other side of that is one month is just one month. Private employers are up 30,000. The losses mostly are government job losses and also seasonal job losses. So, Inflation still at 3.5% versus the Fed's two percent target, and height talk returns if August bounces. So this is really month to month stuff. Now, a…

AI assessment note: “the straight answer to that is both a caution light for the economy”

Q Question two. I found a seller whose mortgage is at three percent. Can I just take over their loan?

A Can you take over a seller's three percent mortgage? Sometimes yes. It's called an assumable mortgage, a loan that the lender allows a new buyer to take over at the original rate and terms. Why is a lender going to want to do that? So it would have had to have been baked into that loan originally, because with rates being so much higher, it's far better for the lender to retire that, that mortgage at three percent, and, and the next buyer's gonna have to come in and pay quite a bit more. So, but let's look at the roadmap for that. Most government-backed loans, those are FHA loans, VA loans, USDA loans, many of them Can be assumed by a buyer who qualifies, but most conventional loans cannot because they carry what's known as a due on sale clause, and that just means that the loan has to be paid off. That particular loan has to be paid off when the house gets sold. That's why when a buyer comes in, they need to bring their own financing. And here's the catch that kills a lot of these deals. You take over the loan balance Not the price. So if the house is 600,000 dollars and the seller owns 400,000 dollars at three percent, you still have to cover the seller's 200,000 dollars in equity in cash or with a second loan. So in other words, you've got this great assumable loan at a 400,000 dollar loan on a 600,000 dollar house. You pay 600,000 dollars to the house. If you're lucky enoug…

AI assessment note: “Can you take over a seller's three percent mortgage? Sometimes yes.”

Q Should I buy now or wait for rates to come down?

A Here is the most often searched question in real estate investing today. Should you buy now or wait for rates to drop? And here's my answer, but first the facts. Rates are at a one-year high, and after last week's Fed meeting, the market puts better odds on the next move being a hike than a cut. In one national survey, more than a third of lenders Said that their buyers are waiting for a 5.75 or lower interest rate. That's a lot of people betting their plans on a number that nobody controls, and it's one that I don't see coming in the very near future. So here's my actual view on this, and that is by when the asset, the price, the financing, your reserves, and your time horizon all work at today's rate. Don't buy because rates might rise. Don't wait because rates might fall. If the deal works today, rates falling later is a bonus. Refinancing may be an option, though it has costs and you have to qualify. And if the deal works only at some future lower rate, you don't have a rate problem. You have a deal problem and waiting won't fix it. One thing worth knowing about this exact moment, and that is pending sales. That is the properties going under contract just fell 5.4% nationally, but not, not every pocket. So you still have to look locally, but every region has been impacted by the number of homes that are going under contract. So buyers are standing aside, and that means less…

AI assessment note: “buy when the asset, the price, the financing, your reserves, and your time horizon all work”

Q And we should have that interest where we're saying, Hey, listen, you know, don't you want a healthy patient population? Wouldn't you want to study some of these things at least, you know?

A So, yeah, so for example, to put that into, into, like, real terms, um, naltrexone, of course, at one point in time, so it passed the high bar of safety, and then it passed the bar of efficacy for, for treatment of, of addiction, and so, you know, I imagine they had a patent, uh, they don't have it anymore, so now the cost of the drug has gone down so dramatically, That it's the, these drugs that aren't on patents are, are cost pennies, and, and when it was approved at a hundred milligrams a day in terms of safety, You don't have to be able to do much math to realize that at four and a half milligrams, it's going to be extraordinary. It was extraordinarily safe at a hundred milligrams. So like, it's going to be safe at, at four and a half milligrams. But the problem is there's no, there's no, there's no money to test it for these other really very important causes.

AI assessment note: “the problem is there's no money to test it for these other really very important causes.”

Q What, uh, what were, uh, what was a mistake and how did you solve that mistake?

A So one of the, one of the things I mentioned was, you know, when I first got into, uh, when I first got into the short term rentals, uh, you know, I went to Joshua tree is very saturated. Um, I know the rules can change. Uh, it took me a while to find the right team. Um, it, it would have been, and in essence, without knowing it was the top of the market. It was the top of the market and I was still buying at the top of the market. The one thing I did that saved me really was that I stuck with my, with my, it has to be value add. So I remember seeing a house, I was buying houses at, you know, 400,000 dollars that required maybe 200 or 250,000 dollars of improvements taking me up to six 50. And then those houses at that time We're trading for about a million dollars. And then in a million dollars, they were trading for a million dollars because the massive amount of short term rental justified that. And I watched people go out and buy that same house. You know, I looked at the house and go, wow, this is what ours is going to be. Ours is going to be nicer. It's in a better location. Somebody just paid a 1,000,050 for that. Like we're, we're We're crushing this. And then, you know, the rules changed a little bit, the market changed a lot, and the person that bought that house for a 1,000,050 lost their shirt. Now, I didn't lose my shirt because I bought for 400, put two 50 into it…

AI assessment note: “I was still buying at the top of the market. The one thing I did that saved me”

Q No, my, no, my question is, is there a proportional strategy to investor own money? Like, do you want to maintain a certain amount of, uh, Skin in the game. Skin in the game. Uh, and what does that provide you?

A Well, first of all, uh, savvy investors, um, will not invest in a deal unless the principles have, uh, Really a rule of thumb is 10% of their own money. That's what I'm asking. Yeah. So let's just go like a very basic deal, and let's say we're not going to over leverage, which I wouldn't want to over leverage, cost two million dollars to purchase a deal, and we're going to put a million dollars down, and we're going to get a million dollars in financing. That should be pretty easy to do, especially on a performing asset. Ok, great. The principal being me, or my group of principals, should put in a minimum of 10% of that equity. So if it needs a million dollars cash, we should really only be raising 900,000 dollars in cash. And we should be putting a 100,000 of our own money in, which gets treated the same as the investor money. And that way, they know that you have skin in the game. Because really smart investors, um, and wealthy people that have made money in other industries, One of the first things they ask me when I talk to them about a piece of property is they're like, okay, hey, sounds great. So how much skin do you have in the game? And if it's a million dollars, if I'm raising 900,000, I go, well, I have a 100,000 of my own, which is never the case, by the way. I tend to have a lot more than that in. So, you know, if I need a million dollars cash, I'll probably have 40…

AI assessment note: “Really a rule of thumb is 10% of their own money.”

Q the case may be, you made your own decision there. You're in charge, you're in charge there. I think that's one thing. Uh, and I think that's attractive to a lot of people to being able to Manage their own money in a way, right? And be directly connected to the outcome of how much money they make, which you probably don't really have it in the stock market, really.

A You know, again, I'm, you know, I'm, I'm a little behind the news cycle. Okay. But to your point, um, you know, Elon Musk offered, uh, the CEO of Apple, uh, a deal to, to do a deal with Starlink so that, that there'd be satellite You know, satellite coverage on, on iPhones and, and CEO of Apple decided to go another route. And I think because of that, you know, iPhone didn't jump further ahead of everybody with like real satellite coverage. Now I don't know the ins or outs of that deal. And maybe Tim Cook was doing exactly the right thing. I have no judgment on it because I don't know enough about it, but that is what I think you're talking about in the sense that now this CEO, Over whom you have zero control, because no matter how much money we have, it's never going to put any kind of a dent in a vote on anything. And that CEO makes a decision, like, do we go Starlink or not Starlink? It makes a big difference. Now, when you own your own property, you're like, well, you know, do I put in the, the granite countertops or do I put in the marble countertops? And then I'm going to ask my, my professional and my professional to say, well, you know what, the cost of marble versus granite in this particular neighborhood, you're, you're, you're, you're not going to get the ROI. So that's, that's go ahead and we'll go with granite. They're, they're just the things we can, the things we…

AI assessment note: “that CEO, Over whom you have zero control... Now, when you own your own property”

Q chosen to rent. I'm going to, I'm going to assume that there's sort of an opportunity cost of, of, of their capital, that they choose to buy properties that they, quite frankly, would be great investment properties, but they don't want to live in them perhaps. So like, how, how do you reconcile that? Are there ever times, I guess, where it makes sense to rent as opposed to buy?

A I actually owned probably about 20 units before I owned my own house. And one, there are a couple of reasons for that. One is that the real estate I invested in was in Pittsburgh, which is where I'm originally from. It's a market. I knew I feel strongly and believe in, in, in buying where, you know, and then I moved around quite a bit, but I was living in Washington, DC, which was much more expensive than Pittsburgh. So I owned 20 rental units, 20 or so rental units, and I was renting in, in Washington, DC. And there was really two reasons for that. And one was that I viewed at the time housing was so expensive in Washington DC, um, that I felt like I couldn't afford it really. Um, and also, um, I, I felt like I was transient. So I, I do think that home ownership is, uh, it's, it's never a risk in the longterm. But it can be a risk in the short term. So if you know, I have a client, uh, that has, that has plenty of money, um, and they're renting, and one of the, and, and I sort of advise them in a way, um, you know, maybe keep renting because the client asked me, you know, if I buy this house, you know, where's it gonna be in three years from now? Because I, I think I might want to live somewhere else in three years from now. And I don't have a good answer for that because the market was very hot at the time. And I'm like, hmm, three years from now, you know, you're going to co…

AI assessment note: “I actually owned probably about 20 units before I owned my own house.”

Q Builders are advertising rates in the fours and fives while everybody else pays almost seven. What's the catch?

A Builders are advertising mortgage rates in the fours and fives while everyone else is paying in the sevens, high sixes to sevens. Is that real? That's the question I'm getting. And usually, yes, that rate is real. The question is, What you're paying for, and it's called a rate buy down. The builder pays money up front to lower your interest rate, either for the first year or two, or even for the life of the loan. So you've got to make sure, is this an entry, you know, sort of, maybe even gimmicky entry level, get you in there for the first year, you can pay four percent, and then after that it goes to market rates because the builder has bought down that first year. Is it one year? Is it two year? Or is it for the whole length of the loan? These things are very, very important. And if you think about it, it's just the same sort of thing that, that in, in tough markets, when you look at rentals, they're like, oh, the first month is free. Um, sure. Uh, when I look at a business deal, I'm looking at what is the rent for the entire year, and I take the 11 months payment, let's say the, uh, the 11 months payment is A thousand dollars a month. You know, you're really paying 11,000 dollars for that whole year. So your monthly rent is really, you don't get the first month for free really, right? You're, you're getting, you're paying 11,000 dollars for the 12 months, whatever that math …

AI assessment note: “it's called a rate buy down. The builder pays money up front”

Q do you mean it's not an asset, right? All we're saying is that when you own a home, you are paying the mortgage, you are paying the expenses. When you have an investment property, you are not. That is the difference, right? One brings money into your pocket every month. The other takes it out. Doesn't mean you can't make money on both. It's just, it is a different thing.

A And, and ultimately, you know, you have to live somewhere. So you're either going to own a home or you're going to pay rent. So, so there's going to be some, there's going to be some cash outflow, uh, for, for where you're living. And, and I don't blame people, my business partner, um, smart guy, you know, we, we invest together. And I, I, when I buy a house, I buy a value add house for myself. Correct. Um, and he just went, look at, you know, I work hard all day, you know, I've got a wife and a kid. I want to, you know, and he bought a house that was done, done, done, beautiful. There's no value add possible. Of course it did go up in value.

AI assessment note: “So there's going to be some cash outflow for where you're living”

Q It gets layered, you know what I mean? But I guess your point is whether you can beat the, what would you say, 10%? S&P 500 on average as an active real estate investor? Yeah, a hundred percent. A hundred percent.

A So with the opportunity of some research, I, and you know, I'm not a stock guy, right? So I found this, this, uh, index called SPIVA. And what SPIVA stands for is Uh, it's an, it's an index. It's the S and P index versus active investor. So that's what SPIVA is S and P index versus active investor. And what that means very simply is if you have a passive fund, you buy, you buy, you know, if you buy a 100,000 dollars of the S and P index fund, nobody is saying, put your money here or there or wherever they're saying, you know, you've got a little piece of it all. An active investor is going to try and cherry pick. They're going to use all the knowledge information, uh, that they have to cherry pick those numbers. So Nicole's numbers are correct, you know, and that is when you look on a national average for whatever timeframe, uh, she looked at and I, I did check it out. It's not a bad timeframe. Um, you know, last 15 years, you know, real estate as a whole has gone up four and a half percent. So it's just like, That's true. And the S&P index as a whole, historically, has gone up 10%. That's also a true fact.

AI assessment note: “real estate as a whole has gone up four and a half percent”

Q So you, you wrote up there, great realtor. Are you, are you focused on one realtor? Are you a shopping realtors or what are you, what are you looking for in that great realtor?

A You know, in full disclosure, okay. Joey and I both, Own and run brokerages. So, you know, it's, we have a financial, we're vested financially in saying like, don't go for sale by owner, don't go represent yourself. So let's lay that out there. But I know enough about real estate. That I definitely could, you would think could do it without a realtor and I wouldn't do it. So the first thing I do is I tell a realtor, Hey, I'm in the business. I own a brokerage and I'm paying for your expertise. I want you to find me a buy. That's so great that I want to negotiate my, I want to negotiate your commission in the other direction. It's just like the home inspector. Oh, he's charging five 50. I'm going to negotiate with him. It's higher than normal. I'm going to pay him six 50 instead. That's who I want.

AI assessment note: “I'm paying for your expertise. I want you to find me a buy.”

Q Can I live with it for a period of time?

A Yeah. Well, you know, just, yeah, to the standard of that house. Um, the number I got back was, you know, we can make everything work. We can make everything right for 200 grand. And then, and then, I called, even though I'm, um, I'm a seasoned investor, uh, I know the area. I called, I called a phenomenal realtor who sells all the time in that area. And, and I asked him about the house. He's like, oh, I know the house. I go, okay, well, you know, he said, well, what, what's the price you're getting in at? And I told him the price and, and I said, but there's a lot wrong with it. He goes, well, what's it going to cost? And I said, 200,000 dollars. He goes, okay, well, you get the price that you're getting at plus 200,000 dollars. You're, you are, You now have a house that's done that has a massive upside. And so for that 200,000 dollars, I was getting a million dollars of upside. Now the crazy thing is, is I took somebody else's advice, which is great advice. You think after 25 years, why do I need advice? And, and, and the, the, the first thing That bugged me was, you know, it's got this giant, it's a giant, beautiful master bedroom. It's got great views, giant master closet. And if you, if you outfitted it with Ikea closets, which is not fitting for that house, the Ikea, the Ikea quality closets would be like a 75% better than what was there. So I'm like, well, As soon as I m…

AI assessment note: “As soon as I move in, the first thing I'm going to do”

Q Also, you know, you have the, you host the Radical Wealth Podcast, right? Which we're a part of here. What's the point of Radical Wealth Plan?

A One of the things that I found, and I really fell into this from being part of the brokerage business, is that realtors know a lot about real estate, for sure. Very successful realtors make a lot of money. And when I first got into the business almost 25 years ago, almost everyone knew more about real estate sales than I did. So I wasn't going to stand up and, and teach them how to sell real estate at that time. I do it now. But, uh, but one thing I also noticed is that there was not a correlation between how much money they made and how much wealth they built. Sometimes it went in opposite directions, which means, you know, the more somebody made, maybe the more debt they had, uh, being independent contractors, taxes are generally not taken out. So people spend based on, you know, checkbook spending, they're, they're spending more, uh, they're spending what's in their checkbook. They haven't allotted for some of their business expenses.

AI assessment note: “there was not a correlation between how much money they made and how much wealth”

Q things. Um, but I think I'm going to wait for it to get a little more easy to use and not have to do the coding side of things. But even in the past year, a couple of people in the office have said it's become a lot better. It's like, in terms of how do you want to do this? What level do you want to do it at?

A I use it a lot and I do find that its greatest weakness is actually following very specific, uh, instructions. So a lot, it's like wonderful at iterating ideas or coming up with like broad concepts or, you know, mix these three types of architecture together and create this palette or, or something like that. But When you really need it to follow a set of rules because AI thinks differently than, than, you know, numerical logic, you know, you're, you're, you're the constraints of the constraints of computers were the, you know, they weren't thinking they were, you know, following, you know, one plus one equals two, as opposed to really iterating and going all over the place. So the, The iteration of the big ideas, and then, and then I find it personally difficult to take a big idea like that and say, have it follow these rules. Yes.

AI assessment note: “its greatest weakness is actually following very specific, uh, instructions”

Q However, also some of those pieces that are in that collection or the first or second collection, um, those are one of those, some of those that have gone to auction and have blown it out of the water and done, you know, five or six times what they thought it would do, right? They're expecting a 30% rate of return or 30,000 dollars and it's gone for One 2200.

A That is a real way to, to value it, because, you know, one of the things, and I think, I think David Osborne, my business partner, co-author, you know, had more right to stick it to me than I do to you, because, you know, you could, you could get a very equivalent piece that you have, and then that sells, oh, so we bought this for, you know, 75,000 dollars and it just sold, you know, a very similar piece just sold at auction for a 125,000. So you, you really can get great comps. Now our domain, our domain guy, unlike David and me, right? Unlike, unlike the two of us, the domain guy really has that too. He's like, all right, well, this is a three letter domain name and this sold at this price. And he, you know, you ask him any domain name and he's like, well, this is what This is the wholesale price. We put it up for auction right now. This is the price of somebody who really wanted it. Um, and so you, that is the sort of very specific knowledge that, that, uh, that you need. What is the, uh, in the collection now, what's the most expensive piece in terms of purchase price and what's the least expensive piece?

AI assessment note: “That is a real way to, to value it... you really can get great comps.”

Q Where on the arc do you want to find it?

A Right. Okay, so that's a great question. Uh, the, the early mistake that I made was when I was still investing in Pittsburgh, uh, there's an area called Oakland or the Civic Center, which is, uh, the home of University of Pittsburgh, which by the way has UPMC, which is a massive, uh, medical center, and it's a massive school. You've got Carnegie Mellon, massive school, um, you know, massive developments around there. And then And then there's downtown Pittsburgh, which was still a very vibrant area. And the, and the distance between the two was so small. And the properties that you could buy in between the two were dirt cheap. And I, and I saw some other people doing it too. There were some other smart investors that were grabbing these properties that were dirt cheap. And I'm like, let me get in the gap. And I do think that's a good strategy. And 10 years later, The gap hadn't filled, you know, now I didn't lose money on the properties because I actually ended up selling them to the other guy that was buying all those pieces of property. And now, you know, another 15 years later, he's made a fortune on them and good for him. And I'm not sorry I didn't hold on to them. And the mistake that I made was I wasn't measuring the acceleration of growth. And the acceleration of growth is A fancy way to say something that can be determined very easily. And what happens is when you've go…

AI assessment note: “you wait till like 20 or 25% of it is already developed”

Q And what I mean by that is if you've got like a city epicenter and it can't expand outwards, um, it's a very different environment than a city epicenter. It spreads out maybe kind of like a, An asymmetrical circle or sphere and new epicenters develop, right? And that takes the overall future demand of the travel industry to move into that space. Um, if that makes sense.

A Absolutely. And perfect examples. I'll, I'll, I'll dig into that a little bit. Perfect examples are, for example, you know, you, you have a great city, pick a city, doesn't matter. Great city. And, you know, you can always, you can always expand. Um, Manhattan's on an island. You know, it's like you, yeah, you can go to Queens, you can go to Staten Island, you can go to the Bronx, or whatever, and people do, but the, but the island is not getting any bigger, and I, I was in Manhattan and experienced, um, and, and I was smart enough even that long ago, I didn't have the resources, or I should have just probably stopped everything and done it, you know, found the resources, but But I, I knew like we were sitting here, uh, that You know, there was, there was a place called alphabet city and in, uh, in, in New York and, and it's just, you know, if you were being mugged in alphabet city and you called the New York city police department, they'd be like, no, we're not, we're not coming. You know, it was just like, yeah, it was like, that's how bad it was. Um, and, and now, you know, it's, and I saw it starting to turn already because you could see You know, I wrote a whole thing on it, you know, in my book, it's like, you know, I saw the guy coming out of the building with the cello, you know, and I'm like, the guy comes out of the building with the cello, it's turning, you know, and…

AI assessment note: “Manhattan's on an island... but the island is not getting any bigger”

Q So what sub-markets appear to be generating outsized returns and then down to the property level. So What is the estimated yield for each property that's available for sale? So like, let's say you start high level, see, okay, Colorado looks good. Then go one level deeper and like, all right, Telluride looks really good. Now here are the. 20 homes available in Telluride that might make a good investment.

A That analysis mirrors the advice that I give all the time because people read headlines and headlines are, I think it's important to know, like, you know, what What's the interest rate? What's the interest rate outlook? What's the, you know, average, the average home price is, you know, up, uh, is up to its highest point, uh, in history, and yet, You know, that average we know doesn't mean anything, because you look at the, when I compare the best market to the worst market, you know, since the peak of the market, Austin is down more than 20%, and Hartford, Connecticut is up more than 20%. So, you know, the averages don't mean anything to us, and that's why the real data analytics taken down to, uh, taken down to, to the sub-market, uh, you know, city sub-market Um, you know, all the way down to the property makes a big difference.

AI assessment note: “That analysis mirrors the advice that I give all the time because people read headlines”

Q You hire him as a consultant, as well as an installer, right? I mean, your project manager should set the standard for the whole house, right? If that's the way you're going to go, right? He should be, he's the guardian of the stand. He, he communicates with you. He finds out the way you want to live your life and he creates that for you.

A And look at, it's not to say that there, there's not some heartburn because You know, like I said, the HVAC turns out to be a fix. It's way easier than I anticipated. And now here's one that's not. I, I have such a great network of realtors and developers. I go, give me your best plumber. Best plumber comes out. He goes, yeah, no problem. I know why you got to just do this thing and that thing. And I'm not listening. Like you're the plumber. I'm not a plumber. Like whatever was wrong. To get it right. Do that thing. Yeah. And how much does that thing cost? And they're like, it's five grand. I go, great. Let's do it. Five grand. I have hot water throughout the hall. Yeah. Because, you know, you've got the industrial size instant on, and then you've got the regular size.

AI assessment note: “give me your best plumber. Best plumber comes out.”

Q But, but if you had a long-term rental in that market and you're like, you know what? I've got a tenant leaving. Uh, maybe I can convert this to a short-term rental and capture the demand while the demand's hot and get a few years of outsized returns.

A Sure. Sure. Absolutely. Uh, another thing that impacts, uh, so you talked about, you know, obviously there's supply and demand, right? And then there's cost of the property. These are the, these are the fundamentals. One of the other things that That I believe greatly impacts, uh, the short-term rental business is, uh, is regulations. Um, and so, you know, and I've got, I've got my own theory, you know, so I'll tell it to you, and you can, you know, that's why, that's why we have smart people on, like you on the podcast, is that just me talking to myself, because you, I invite, I invite you to call BS. Um, You know, locally a market, for example, like Palm Springs, and I am winging it a bit, because I don't, I don't own a short-term rental in Palm Springs, it is nearby, but they suddenly got very, ah, very restrictive on short-term rentals. In LA, again, not something I follow, but I am here, and I think there are parts of LA that just, you know, say no short-term rentals at all. So, if I bought based on short-term rental demand, and Uh, and revenue and cost. I did all that great data research, but then the regulations change. Um, how, how can you, do you build that into your model at all, or you just put like a caution flag? How does that work?

AI assessment note: “One of the other things that That I believe greatly impacts, uh... is regulations.”

Q anything like that overnight that, that maybe COVID, but even with COVID, it was a lot of uncertainty in the beginning. We didn't know how it was going to play out. Now, thank God for the interest rates, you know, the interest rates dropped, so that helped us out there. But, but other than that, I don't think you can see another event. Can you? Oh, wait, took time too.

A Yeah. Well, also, as bad as oh eight was, um, You know, it's still recovered pretty quickly. And again, uh, when you look at a market as a whole versus, versus buying smart. So, you know, and I'll give you, I'll give you an example. The average, the average investor is walking into, you know, the average shop and getting the average financial advisor and they're buying whatever. And if it's not an index fund, That's, has less friction because you could go to a discount shop. So here I am and, and I'm, I'm not, certainly not qualified to give, uh, stock advice for sure. But, you know, from the stuff I'm reading, it seems like it would make most sense to stay away from the, you know, active investors, you know, go to, go to the least expensive shop Where the buys and sells cost the least and, you know, buy the, buy the index fund and hold on, and that way you will at least very close to perform with the index.

AI assessment note: “as bad as oh eight was, um, You know, it's still recovered pretty quickly.”

Q Why would their algorithm not do that? One asset's going to make them money. They're only on one platform. They're always booked. The other asset has a bunch of days blocked off because of owner blocks or another booking website. Why would they not prioritize that one?

A Yeah. I never thought of that. I also was thinking that you said the two, the, the Airbnb has, you know, two, two prongs they really need. And I was also wondering if there was a third, which is to Uh, keep you from stealing the guests, but that sort of does it already, what you're talking about. That's built in. Built in. Built in way to, because I was thinking, like, you know, how's Airbnb gonna hide the guest information from you, and they can't really do that because you're gonna have interaction with them, so you grab their information. Anybody that's smart is gonna grab their information. And so how are they gonna protect that? But the answer is...

AI assessment note: “Yeah. I never thought of that. I also was thinking”

Q the dinner, I started looking them up. I'm like, Holy shit. Fuck this guy. Like he's built a real business. Cause he was like an actor and he's like really entertaining. Uh, so if you're an accountant and you're selling your, Hey, I mean, AI may be after you, but, but if you're like just a small business, how do you tell your story? How do you get out there?

A Um, And I love it when, ah, I love it when I have guests because I, that, that I really, um, I want to learn from. So I'm going to ask your advice, ah, on, on a couple of things. Um, but one of the things, you know, we, we have a mutual friend, Nicole Lappin. Um, that's how we got connected, who has a tremendous show, Money Rehab, and, and she, I didn't realize until I went on her show that she can be, she can be tough. You know, I forgot that I didn't, I didn't realize that of her, you know, six bestsellers, you know, three of them had the word bitch in the title. Um, she's super nice. We, we know that, but, but she's, she's not going to throw softballs, uh, you know, the whole time. So what she came at me with was, um, you know, real estate. You know, during this period of time, and she's got the stats, I don't have the stats, you know, the real estate during this period of time, you know, long period of time, decade, 15 years, whatever it was, has, you know, appreciated on average four percent, uh, per year, and, you know, S&P 500, uh, uh, you know, is 11 and a half percent during that same period of time, so why in the world would I invest in real estate and, you know, why would I even own a home that's rent? And, you know, put that money into, into, uh, the stock market. And the, the answer that I have for that is that, um, so first of all, in that four percent, there's pe…

AI assessment note: “we have a mutual friend, Nicole Lappin... So what she came at me with”

Q other artworks because told them the truth, gave them really good service, stayed on it with them, even though sometimes you can be discouraged when they pass on one or two or three artworks. Do you, do you think their legitimacy that they really want to buy that artwork or are they afraid of the price point or whatever it may be? And, you know, now they're a great client.

A Do you have clients that, like, if you have, if you have a piece of art that is really undervalued, so somebody needs to sell something. I know, I, I know from conversations we've had and opportunities that you've told me about, it's like, hey, somebody really, you know, they, they want to sell this. They don't, they, they could put it up for auction. They don't want to do that. They don't want the public, you know, they just want to, You know, sell it to somebody and they'll, they'll take a discount. Do you have clients that are looking for those opportunities as a business opportunity and therefore don't care what the art looks like? Um, or, or is it like, you know, I really gotta like it and hopefully it's a decent or good deal.

AI assessment note: “Do you have clients that are looking for those opportunities as a business opportunity”