WARNING: People Are Struggling More Than EVER

Ken McElroy and Danille McElroy discuss the financial landscape facing Millennials and Gen Z, who are often portrayed as poor money managers but face significantly less purchasing power than previous generations. They explore why they tend to rent indefinitely, the allure of immediate gratification over long-term savings, and actionable strategies like house hacking to navigate these challenges.

You can listen to an audio replay of this live stream on Ken and Danille’s podcast! Follow your favorite platform with the links below!
Apple Podcasts: https://apple.co/3jDqftx
Spotify: https://spoti.fi/31GUDwW

Check out the Limitless conference and sign up: https://limitlessexpo.com Use KEN10 to get 10% off your registration.

Follow Ken on social media at: https://x.com/kenmcelroy

• • •

Be sure to click the bell to be notified when the next informational video is posted!

Visit Ken’s Bookstore: https://kenmcelroy.com/books/

•
ABOUT KEN:
Ken is the author of the bestselling books The ABCs of Real Estate Investing, The Advanced Guide to Real Estate Investing, The ABCs of Property Management, and has an upcoming book: “ABCs of Buying Rental Property: How You Can Achieve Financial Freedom in Five Years.” Ken is a Rich Dad Advisor.

Ken offers a wealth of personal experiences, practical advice, success stories, and even some informative setbacks, all presented here to educate and inspire. Whether you’re a new or seasoned investor, the information and resources on this channel will set you on a path where you and your investments can thrive.

Ken’s company: https://mccompanies.com/

•

DISCLAIMERS: Any information or advice available on this channel is intended for educational and general guidance only. Ken McElroy and KenMcElroy.com, LLC shall not be liable for any direct, incidental, consequential, indirect, or punitive damages arising out of access to or use of any of the content available on this channel. Consult a financial advisor or other wealth management professional before you make investments of any kind.

Although Ken McElroy and his affiliates take all reasonable care to ensure that the contents of this channel are accurate and up-to-date, all information contained on it is provided ‘as is.’

Ken McElroy makes no warranties or representations of any kind concerning the accuracy or suitability of the information contained on this channel.

Any links to other websites are provided only as a convenience and KenMcElroy.com, LLC encourages you to read the privacy statements of any third-party websites.

All comments will be reviewed by the KenMcElroy.com staff and may be deleted if deemed inappropriate. Comments that are off-topic, offensive, or promotional will not be posted. The comments/posts are from members of the public and do not necessarily reflect the views of Ken McElroy and his affiliates.

2024 KenMcElroy.com, LLC. All Rights Reserved.

#KenMcElroy #RealEstate #RealEstateInvesting

who needs a home when you can buy a
purse I know and that’s basically the
motto of Jen Z but in all seriousness
you know we’re looking at Starbucks
McDonald’s Target Ikea and many stores
are showing us that people are running
out of money the economy is drastically
slowing down and young people are poorer
than ever so we’re going to talk about
today why and then what you can do about
it as well Yep they’re blowing right
through their savings and now credit
card debts the highest
ever yeah and it’s not just really a
savings issue so you know people were
saying pandemic spending was the reason
that you know all these kids were the
younger Generations were going out and
spending a lot of money but what we’re
now seeing is clearly they don’t have
that money and they’re still spending
and consumer spending is a huge part of
the US economy so the government really
does want them to spend um but you know
we’re going to kind of dive into why
they’re spending more and what their
minds I would tell you though at that
age like like you don’t really have a
lot of financial literacy that’s the
whole point of this channel but it’s
true like it’s fun spending money and
all that kind of stuff and you always
think there’ll be another time there’ll
be another time but to your point it’s
starting to show up now uh everywhere
well and it’s not just genz Millennials
are spending uh you know a lot as well
in fact 73% of Millennials right now are
living paycheck to paycheck compared to
66% of gen zers that are living paycheck
to paycheck partially probably because
some gen zers are still living at home
would be my guess so gen Z is 12 to 27
um Millennials are 28 to about 43 Gen X
is 44 plus and then of course baby
boomers but I really wanted to break
this down because I think that you know
my generation which is a millennial and
also Generation Z they do get a bad WP
as far as not saving money and not doing
all these things but um our purchasing
power is much different than that of the
Boomers and when I was looking into it
like gen Z has 86% less purchasing power
than the Boomers did at their age based
on the dollar based just on the amount
of the average salary and then
expenses yeah I it’s true you know it’s
the dollar you guys if you really go
back to let’s say the 70s when the
dollar decoupled from gold and you just
just Google this how has the dollar
depreciated and you can see the
purchasing power of the Dollar’s gone
down which is really a form of inflation
and I think what’s happening right now
is it people are starting to experience
at that pretty pretty rapidly so you
know when when inflation hit uh what is
it 99.1% uh gosh it’s been been a well
over a year now how long has it been
Jerry something like that um and the FED
went crazy in raise rates that just was
a double whammy it lowered inflation but
it just it it took the took the foot off
the gas uh for consumer spending and
it’s starting to show up now it’s a lag
effect it is but you also have you know
tuition you know tuition back you know
when the Boomers were going to school
was
$5,000 their average salary was
$27,000 so realistically you could
probably pay off your college tuition in
a couple years you know based on your
expenses and and getting that paid down
uh but now you know with Generation Z
you have their average college tuition
is
$104,000 is that right is that what
college tuition if they graduate like
there’s people you know like if you did
the full four years like a lot of people
do a year and then they drop out Grand
100 Grand if they get a degree and their
average salary when they’re leaving
school is around 50 Grand so that’s
going to take them you know 20 years to
pay back assuming they’re putting you
know five grand a month towards it but
then also you have interest on that as
well well just got to keep Biden it
office and then that’ll go away right
exactly so you know so that you know
it’s a big difference and I think that
so I based on the research you know
basically gen Z doesn’t have the same
long-term and I think this is the
biggest thing long-term savings goals
that the Boomers had the Gen X had and
even that part of the Millennials had
like the older Millennials like myself
of I want to get a home I need to save
for this because everything they’re so
in debt between col College they don’t
even qualify for a house the houses are
way too expensive so their thought is
why have long-term savings goals I’m
never going to be able to afford a house
I’m never going to be able to pay off my
college tuition why don’t I just have
fun now yeah well that’s actually
happening so it’s it’s we talk a lot
about this you know if real estate is
supposed to be affordable it’s
impossible for somebody to build
affordably right now that’s just the
cost of
construction um the actual physical cost
so like we’re talking about Lumber
concrete roof tiles appliances that kind
of stuff is so expensive the land is
expensive and now the cost of Interest
the construction loan is also high so
you it’s just impossible to build
affordably so the only way to build
right now is not affordably that and
that’s why I think uh in a good way a
lot of lot of people are starting to
look for at these private Public
Partnerships with governments so that
they can relax zoning and they can do
they can do certain things to to to
provide affordable
housing but that affordable housing is
rentals that affordable housing is not
you know for people to live in y or to
I’m sorry to buy we talk about renter
Nation you know as you guys may
know 66% of home ownership right now
that’s the number it’s been as high as
69 and and it’s actually moving the
opposite way it’s actually going down so
that would be 34%
renters um last I looked there was about
131 million household formations so 34%
of that is about 44 million renters so
as renters actually start to go up um
which is happening because people are
moving from single family into rentals
um it’s going to actually put more
pressure on the rentals and it’s going
to drive it’s going to than likely Drive
some of those rents up and that of
course is inflationary so it’s um it it
it doesn’t it doesn’t look good the
other thing that uh I will just point
out if you you know a lot of these job
numbers are um you know they’re thrown
all over the place and the job numbers
that just came out were actually bad if
you take a look at full-time employment
that’s down what’s up is part-time so so
people are having to go out and get a
bunch of part-time jobs and so that’s
included in the jobs numbers but they’re
not really longterm well if you just
look at the math not all of them but uh
if you look at the math full-time um is
is down significantly so it it’s it’s
starting to show up and and these these
kids that have this these credit cards I
mean how do you how do you really pay
off something that’s at TW over 20% well
and I think too that it’s like when
they’s so much in debt they just don’t
care about going more in debt cuz
there’s no F they’re already not
financially responsible not because they
weren’t trying to be but when you have
$100,000 in school loans and you’re
making 50 Grand a year there you’re
never you’re never going to be out of
debt so what’s the point I remember my
turning point you know when I became
financially responsible is when I paid
off my credit cards the little credit
card debt that I had because you don’t
want to go back into it but if you’re
already in debt who cares well luckily
you got to move home yeah and I did
because you could not everybody has that
by the way so you got to move to a place
where you were able to do that it was a
calculated move it felt like a move
backwards right exactly and that’s
actually kind of the thing a lot of
these folks are in this position where
in order to get ahead they’re going to
actually have to take a step backwards
and they’re going to really have to
change their what they’re doing they’re
going to have to change their behavior
and here’s the here’s the irony it’s
really not that outlandish of a behavior
I mean I know we started off by saying
who needs a home when you can buy a
purse but the reality is um there are
people that are much tighter that that
don’t have U the ability to pull back
well absolutely and also too just you
know this whole renter Nation it’s
almost like they’re feeding into that
you know based I mean they’ve just
accepted it I guess you should say
they’re never going to own a home
they’re always going to be renting that
very well could be the case because the
one thing that’s going to make homes
affordable is are more homes I mean it
just is a fact whenever if you guys ever
ever been to a concert that uh not a lot
of people are going to those concert
tickets are cheap it’s the same thing
with homes an over supply of anything
doesn’t really matter what it is rental
housing single family housing concert
tickets cars when there’s too many of
something the price adjusts and that’s
what actually is needed is you believe
it or not what’s needed is more homes
are more homes that’s what’s needed and
some of this like Matt is saying I
graduated with two Bachelor degrees in
08 and had 120,000 school debt and only
made 17 an hour upon graduation uh Brie
said I’m a younger Millennial with a
bachelor’s degree I make 70 grand a year
and I have 40,000 in student loan debt
and I don’t think I’ll ever own a home
yeah that’s terrible yeah that I mean it
really is and I do think part of the
problem is these student loans you know
you you get all this debt when you’re
like 18 years old and you’re definitely
not financially L happen to me I mean me
I I remember I I I get all these credit
card statements all these people banging
them my my mailbox uh at my dorm room
where I when I lived and uh you know
it’s like this is great you just you’re
about ready to graduate uh please sign
up I got I got car you know gas cards I
got credit cards I remember I had a
Nordstrom card I’m from Seattle so that
was a big one uh you know and I think at
a Visa and a MasterCard all of a sudden
you feel rich and all it is is a lineup
a credit at a big number absolutely you
know and if you start to look at these
numbers too so you know that um how many
years it takes to buy a house outright
is very indicative into you know if
you’re going to be a renter or you know
or homeowner right
so back in the Boomer’s day that a house
was around $110,000 which is crazy or
every house amazing and I said the
income was around 27,000 so it would
take you four years of your income to
pay that house outright if yeah if you
could and four is a good uh strategy but
when you’re looking at that house to
income ratio at four most people are
homeowners when you start to give above
six it starts to be most people are
Runners and right now uh the US in
general just hit six years on average so
uh the household income is
$412,000 and the average income is 70 so
and this is for
um obviously college educated needs to
be about 100 right well no I mean it can
be five but right now we just hit six so
six is very indicative that people will
not own homes you know for whatever
reason that’s kind of the number and
Europe’s been dealing with this for a
long time and Europe is a runner Nation
right so right now you know the house to
income ratio in the UK is 1 to n so it
takes somebody nine years of their
income to pay it off Italy is uh 10 1 to
10 so your income will take 10 years to
paay off so those are people that are
going going to be Runners and Jerry do
you have the chart of all the different
states with the
different okay so um well we don’t have
that information but typically if you
look at like California and New York
you’re seeing very high uh income to
rental ratios so that um you know people
cannot afford and if you look at States
like in the midwest like Ohio Indiana
those are very still very low income to
home ratios where you’re still going to
have a lot of homeowners but but as we
start to Trend the the house to income
ratio is a number you want to really
follow because as we’re trending up you
know as states are trending up and areas
are trending up over six you’re not
going to have a lot of people that are
owning homes yeah and I think you’re
starting to see that with the migration
patterns you know that’s the work from
home actually allowed people to kind of
move around a little bit and there’s a
fair amount of people that have done
that for that exact reason right I mean
having a home is if you’re going to pay
somebody you might as well pay yourself
pay your own mortgage instead of pay
your landlord and I’m in the landlord
business but I do believe that that’s
what gets people ahead essentially we
have renters paying off our our loans
but if you could pay off your own loan
then you should and so there’s I would
imagine there’s going to be a lot of
programs out there for down payment
assistance and and those kinds of things
and they we even talking about a 40-year
mortgage uh there’s there’s going to
have to be all kinds of creative
products
I even heard that some of the agencies I
think it was Fanny May is looking at
helocs which would be very interesting
which think about this people that
actually have Equity can actually tap
into it potentially based on um you know
being able to take some of that out yes
you do get more in debt but um there’s
all kinds of people going after that
Equity right now um but the real
challenges you know how does that how
does that young person how does that
jenzi or Millennial actually save enough
money right now especially in this
economy with the high inflation the high
interest rates and and stagnant wage
growth um it’s going to be it’s going to
be a rough couple of years yeah
absolutely and and I think it’s just
more a turning point in our society
really a mindset like I just think that
genz is not focused on owning a home
it’s too Out Of Reach and and instead
you know they’re focusing on those life
experiences jar if you can pull up some
of the charts that we
have so basically um can you break it
down for us
though any of them is fine so basically
jenz is willing you know to go into debt
for dining out so is Millennials compare
that to jenzy and Boomers significantly
less right and then if you start to look
at our next
category is live entertainment you hear
about these $800 Taylor Swift concert
tickets like that’s jenzy and Millen
Millennials um and then the last one
Jerry yeah this is pretty indicative of
uh and then for travel you know so 35%
of Millennials are willing to take out
debt for travel 30% of gen Z and I was
looking too in a lot of uh Millennials
are you know cashing out their 401 401ks
for this stuff too they’re just not
really focused on the future they just
want to live in the moment because they
don’t have the money to do any they
don’t want to just work and that’s it
they want to have fun but they don’t
have the money to do so well set it
another way they’re they’re not putting
money aside for a rainy day you know
they’re not they’re not saving for
something like an asset purchase
whatever that might be and they’re just
using that cash to enjoy life but the
problem with this is that you know we
talk about it on this channel is that if
you don’t save money now the the next
chapter is harder right like it’s harder
to retire it’s harder to you know travel
when you’re older it’s harder to to do
all of those things
well you think about right now like I
just take it all the way
out everybody knows that Social Security
is toast right so Social Security um if
if the boomers are really in good
positions they’re primarily the ones
that funded a lot of Social Security um
and that is going to be uh in trouble
imagine what happens when this group
comes in right behind them absolutely
you know if you really want to take it
out and by the way Millennials are 43 3
years old so that’s not that long that’s
15 20 25 years away and um you know if
if they’re not in a position to where
they have any equity on any home or
which is where most people’s wealth is
if you take a look at most people that
um their wealth is in their primary
residence right and it’s hard to get
ahead and that’s why we you know preach
so much on this channel about owning a
home I mean whether or not you own
rentals that’s your decision but you
really should try to own a home cuz if
not you’re going to be in the rental Rat
Race and that is going to be hard
because rents move with inflation so the
reason that your grandparents or your
parents are able to retire and able to
travel is they either have paid their
home off or they have this fixed payment
when they bought their home for you know
250,000 you know 20 years ago and they
have this really low fixed rate and then
you know fixed payment well think about
my parents actually it’s quite they when
they paid off their home I remember that
means zero payment that means they’re
living in a home and the only thing they
really have insurance utilities and
property taxes so that is significant so
they were they bought the home for a lot
less obviously paid it off and then they
just didn’t keep refinancing it they
didn’t harvest the cash out you know
what I mean um and I think uh you know
that is a sound financial strategy
because at some point you’re going to
have living costs and if your if your if
your living costs um don’t include rent
or don’t include a mortgage you you
basically just got a cost of living
increase right all the way into your 60s
70ss 80s you know and that’s the problem
right and U Matt said the worst part is
we can’t qualify for a home you know so
that’s part of it one the loan is the
issue too and a lot of times those
student loans now whether you’re Pro or
against College it’s up to you but those
student loans you know can even if
you’re making enough and saving enough
you’re just not qualified to buy the
home well we have some friends that are
doctors and they um their debt is so
high that uh they they actually rent a
home and they’re doctors right I was
like how is that even possible but you
know they have like 400,000 in student
loans right right I you you know so
that’s one thing but then on the other
side even if you don’t have that the a
$450,000 house is not about the number
right now at say
7% um you have to qualify for that
expensive I know that my loan is 480 on
my place and I think my payment’s like
3,200 a month and I think I’m at like
6.9 it’s a lot of money it’s a lot of
money to come out of pocket especially
if you’re single especially if you don’t
have anyone to help share that oh one of
your rentals yeah yeah yeah you know but
also you have to have the cash to match
point you you have to be able to qualify
for that loan and um which means you
have to have the income to be able to
qualify for that loan for that 3200 that
means you you probably need to make
north of 10 per month right uh in order
to because you have the you have the
mortgage but then you have your
insurance and you have your utilities
and you have your stuff all your other
stuff also if you want to live a little
bit and have a little extra spending
money no Taylor Swift tickets in in that
scenario but but I think
so let’s chat about what people can do
right like what can and it’s not just
young people but it is a lot of young
people so what can they be doing in
order to maybe afford a home yeah so
obviously I love the house hack idea I I
love this idea it’s a great way to get
in guys like you could find an investor
and um you know have them help you buy
something and then and then um you know
get get you know like uh more people in
it I know a a young man who did that he
bought a four-bedroom house house and
then he was in the uh Air Force and had
three of his buddies come in and he got
a he got a loan bought the house and
then had his three buddies uh pay off
obviously with rent that he knew um and
uh and it actually cash FL a little bit
so um and uh in that particular case it
could it could be an uncle you know
family friend or whatever or or not you
know you could just find somebody like
that yeah and Jerry said you can’t house
hack if you don’t have a wife and kids
and and that’s not true so that’s not
what we’re talking about so we know a
kid that bought like a three bedroom
house and then he lived in the one room
and rented out the other too yeah Justin
yeah yep and that and that can and you
could even you know if rents are too
high you could have two people to a room
you know if you want if it’s too
expensive for your friends or whatever
but there are ways to help with that
payment versus you taking it all on I
think the days of you as a young person
that’s not married taking it all on on
your own you’re not going to have home
own ship that way in a lot of cases um
but if you were able to get people to
live with you if if you were able to
find a private investor that maybe you
pay a little higher rate so that you can
qualify you know versus going through a
bank and and that’s a good point too is
you you want to get away from the
traditional Banks if they’re not
qualifying you because your smaller loan
companies have more flexible
terms all kinds of really good credit
unions just loan companies in general
you know our friend um Matt that comes
on here he’s very he’s got a lot of
options you know cuz they understand
it’s great if you fit in the box and you
make the right amount of money and you
have the right amount of you know
savings and the right of debt and then
you can go qualify like Chase or
something but there’s a lot of us myself
included that don’t whether it’s because
you’re a business owner or you have a
lot of student loan debt where you may
be able to work with these smaller loan
companies and they may be able to get
you something that or you are qualified
y I had a young man that bought a
Triplex you everybody knows what that is
it’s now it’s not your single family
home like you your traditional one but
but a Triplex lived in one and rented
the other twoo you know that’s a form of
house hacking you know and then he was
of course there managing the other two
so those other two covered all the
expenses and and and provide a little
cash FL the real issue is that he was
able to to live there rentree that’s
actually the real issue so you know you
he went from um having living costs
whatever they were to no living costs uh
and and being paid by the other two
that’s your traditional house hack and
it doesn’t have to be that kind of a
star it could be all kinds of stuff A
lot of people are saying that the house
hacking is unreasonable for families
yeah it could be it could be but also
cannot be I mean you know my girlfriend
uh she was down in Austin and you know
she was interviewing because she needed
a roommate and there was a family that
had an open room and they basically they
made a exit on the bedroom so they had
their own little area entrances yeah
yeah I I can totally understand where
you guys are coming from you know the
old traditional you know this is my
family home um I’m just trying to
suggest there are other ways you know to
you there might be some compromise here
but what you’re trying to do is get
somebody to pay for part of something
and uh it can be a little invasive to
have somebody walking in the front door
you know down the hall you have to be
open-minded and comfortable with things
right and if you have super small kids
maybe that’s not but at the end of the
day you know we’re trying to help give
you ideas and you can take the ideas or
you cannot take them but the traditional
idea that you’re just going to be able
to afford a home for a lot of people is
off the table yep I KN I knew one I knew
a couple families that did this they
bought a together they bought a
two-story home one lived at the top one
lived at the bottom that worked so you
know there are I’m we’re just saying
merely just look you know there are some
creative ways Ash says I’m in Scottdale
in just 10 minutes from your office uh
duplex for house hacking in this area
are rare and it’s hard scale yeah like
there’s not a lot of dup they’re not
really building duplexes to my knowledge
anymore so it’s finding ones like
they’re more common in the midwest uh
they’re not super common here but
obviously a duplex is the perfect house
hacking scenario because you have one
family on one side or one person and the
other person on the other side but you
know you don’t always get that there’s
adus there’s guest houses there’s other
things like that as well well Ash also
you might know that Scott salees
actually passed ing the accessible
dwelling unit uh right now actually it’s
U it’s it’s moving through so um again
allowing you know some relaxed zoning to
be able to have you know something else
now that’s different of course that
means you got to build something and
then rent it uh but uh the point is is
that these cities these municipalities
are looking they they understand there’s
affordability problems yeah and some
people are sitting on a lot of land like
my brother has a home and he has a huge
backyard it’s probably a triple lot
would be my guess if you could build
back and I’ve told him before you know
when when you go to sell this you should
build an a back Adu on it because you
can rent out that additional dwelling
unit and that’s a way my brother’s house
is not you know very expensive because
it’s in the Midwest and that’s a way
that you could generate an extra you
know $1,200 a month in Revenue yeah yeah
and and there’s a lot of areas that have
the long narrow lot so we we were when
we were traveling around in our van this
summer we we stopped at one in Denver
and and beautiful brick home on the
front your traditional Street with the
big trees long narrow lot in the back
was the garage just like always you come
up the alley and you pull in you guys
have probably seen those a thousand
times and the guy converted it into an
Adu and um you know all of a sudden
there were you know two places and so um
and one was for rent Cynthia said that
as a single mom I bought a house that
had a separate entrance to the finished
basement I put a solid door between uh
the entrance and the upstairs of the
house and I was able to run it out yeah
so you know and that’s a good point you
know when you are in the midwest in
certain areas unlike Phoenix you have
basements right and walk out basement
there would be a great rental and you
could make that so it’s locked and the
person can’t access your regular house
we did that in Seattle when I went up to
see my mom remember there was a they
they had a separate U they had a
basement and they they had a separate
entrance and and so one home turned into
two homes and this owner was killing it
because they had two airbnbs in there
yep absolutely so these are just ideas
you know you guys and you you know
Airbnb is another idea it’s not doing
great right now but if you didn’t want
somebody permanently living there and
you just needed a little extra money you
know you could try to run it out as an
Airbnb and things like that um barely
trying to figure out ways that you can
subsidize your living expenses U to to
get yours uh for almost zero but I do
think that everyone should understand
because I think a lot of people throw
their hands up in the air and they’re
like I can’t afford anything like you
know I’m done with this right where we
talk about on this channel as a
first-time home buyer you only really
need to come up with like five or so
percent five to eight% out of pocket to
buy your first house now granted then
you have mortgage insurance and
everything else but at least you’re in
the game you know and it might make
sense depending on what you’re doing and
actually you can be even less if if
you’re like a veteran and there there’s
all kinds of really good programs out
there yeah that that can be even less
well and I I think people look at um
talking to a loan adviser as the last
step you know once you’re ready to buy
you’re like okay I’m going to go talk to
a loan advisor now really it’s like the
first step right because they can let
you know if you’re qualified or not and
if you’re not qualified how much down do
you need to be qualified because you you
can be qualified you know if you put so
much down will qualify you but for maybe
for you it’s not your standard five or
10% maybe you have to put down 20% to be
qualified because you need to solve to
that payment but if a good loan adviser
like Matt or you you know anyone they
can strategize with you and you know
maybe it’s getting a second job for 6
months to have that additional income on
your records to then go and buy a house
but you shouldn’t just throw your hands
up in the air and just say we can’t
afford it talk to somebody and figure
out how you can afford it and the thing
is every time we sit down with Matt for
a beer let’s say the knowledge that
comes out of this guy you know because
the loan products continually change you
think about it right
now he only makes money when people
people loan right you know when when
they’re getting uh loans and obviously
there’s a lot of ways that he does but
the point is so the the loan industry is
always trying to figure out ways to
accommodate right how do we accommodate
during these times High interest rates
it’s unaffordable and the loan values
and all that kind of stuff and there are
loan products out there that can get you
in um and we’re starting to see right
now people are starting to do seller
financing um Builders are starting to do
seller financing ing um and and we were
looking at houses uh this weekend just C
we like to do that sometimes just see
what’s available um I always on on
Zillow I always put you know what’s the
LA what are the listings for the last
seven days and I just like to see and uh
you’re starting to see seller financing
right because that you know a seller can
Finance it you know 3 four 5% um and u a
bank can’t so U you know You’ be
surprised at the stuff that’s going on
out there Sarah said in order to get
ahead you absolutely can’t do what
everyone else does especially in this
and something else I want to bring up is
rent to own so rent to own is a big one
so for those of you that are renters if
you could try to find a smaller landlord
that’s willing to do rent to own and you
might ask yourself well why would my
landlord do rent to own when either they
could keep it or they can sell it and
the answer to that is a lot of people
have a lot of equity in their homes
right now sometimes paid off and
sometimes paid off so if they do and
let’s say their home went up you know
$400,000 they have to pay capital gains
on that money right and that’s included
in their tax and so if you can find a
rent to own situation where you’re
paying off a little bit every single
year an inst it’s almost like an
installment sale you know think think
lay away right you know think lay away
think lay away and then they don’t have
to pay that big tax bill at the end
because instead of getting you know x
amount of equity all in one year they’re
just getting a little bit every year
which keeps their tax burden a lot lower
so so the the key is a lot of landlords
don’t know about this so it’s one of
those things where you have to appro
there’s work to it like there’s work to
everything you have to hit up you know a
hundred landlords and you have to figure
out which ones would be interested in
rent to own and then you have to explain
to them the tax benefits of that and
have them talk to their accountant about
it being an expert in this guys let me
tell you something you guys probably
know there’s 10,000 baby boo Boomers
retiring a day 10,000 a day so what does
that mean that means there’s a
tremendous amount of people that own
their home free and clear you know
period and you know a lot of those
people um you know they they don’t want
to pay maybe they want to move somewhere
maybe they want to you know maybe they
want to retire somewhere well uh they
have a tax hit they have a a capital
gain problem and so this is a way to
spread that over also um helps them you
know kind of a guarantee fixed income
over a period of time so think of it um
not just as the buyer but think of it as
the seller what what’s the seller’s
issue the sell’s issue is that they have
a lot of equity in a home and maybe they
want to go retire somewhere um and uh
and also here’s the other thing I found
like remember that young man that was
doing our audio visual this is what he
did you him and his him and his wife and
they were starting a family um and um uh
he found somebody that wanted to help
him like that was kind of cool he’s like
yeah they just wanted to help a young
couple right so it was a win-win um now
obviously that has to work perfectly not
every’s going to be that kind of a
mindset but many are you’d be surprised
uh Bill wants to know do Jen ears even
know what layaway is good point I just
hated myself so um go to Kmart get that
layway lay Blue Light Special see here’s
the difference though between layway
layway you you couldn’t have it until it
was paid off now they can have it and
then they have to layway is you’re the
Shopper well basically you would put
things on layaway so then you would come
make installments to the store and then
once it was paid off they would give you
the item this is like guys this is free
credit card going back free credit card
but you know what it’s interesting like
it’s think about that like you couldn’t
actually have it until it was paid off
like nobody thinks that way anymore yeah
exactly um so uh Amy said she loved play
away so uh anyways I did want to bring
up um that uh somebody had mentioned on
here I’m gonna oh star path had said can
I hope you read this thank you for
making that video a while back when you
said pencil’s down no more purchases you
saved me from some bad decisions thank
yeah I got a lot of heat for that tell
when was that that was a couple years
ago was a year ago probably oh man I got
a lot of heat from that you guys should
go go back and look at the comments on
that video a pencils Down video I was at
the gym uh working out and somebody’s
like pencils down bro I like looking
around I’m like I better get out of here
you know because uh you know when
everybody’s making a lot of money that’s
the last thing they want to hear exactly
so I want to get into our questions um
make sure that you guys sign up for Ken
Pro
membership um the Ken
me.com
dnow uh Skyler is asking asking is
Property Management something I should
add to expense to calculate the noi or
net operating if you’re going to do it
um yes Property Management if you’re
paying it as a fee of course yeah it’s
an operating expense now um if you’re
going to do it yourself like denal does
it’s not right so uh it just depends you
know if you don’t have the time or it’s
out of state or or whatever it might be
then it definitely is part of an
operating expense as always it’s it’s up
in the noi C side of things Asset
Management fees which is a little more
complicated would be when you’re
syndicating you know and there’s there’s
there’s a cost to to manage the investor
that would actually be below the line so
Property Management fees is above the
line uh Asset Management fees after yep
um and then Danny or D is asking the
price of real estate here in Belgium is
going up and interest rates uh went up
until the end of
2023 where do you put that in your four
stages of the curve we’re going to
Belgium uh in August yep so we’re going
to the Olympics and then we’re going to
shoot over there after um so first of
all well let’s talk about the four
phases um as you guys know your standard
bell curve uh the first one is the
recovery uh call that 08 to about 012 or
I guess um and then um you have the
expansion phase which we just went
through and that could be in this
particular case it it went quite long
but then the expansion phase turns into
the third phase which is hypers Supply
and so in the US I’m not sure about
Belgium the hypers supply phase was
created here as a result of low interest
rates and uh like anything it created an
asset bubble so oh there you go thank
you guys um so I would say that we’re um
on the way down Belgium is probably on
the way down somewhere in between the uh
new construction phase and the
increasing vacancy phase um based on you
know what what you were saying interest
rates up and prices starting to go down
but prices are still high so you know it
just hasn’t caught up there’s a leg
there’s always a leg effect so when if
you go online um any Central Bank when
they raise interest rates they say that
the leg effect could be 18 months to two
years before it actually starts to make
its way through the economy so um and
that’s uh basically what’s happening to
us right now so uh a lot of it’s going
to depend on um when rates went up uh in
in uh in 2023 but I I think that it’s
it’s probably making its way through
you’re probably a little bit behind us
would be my guess based on that and then
of course the last one is
recession of the fourth fourth phase so
how I mean we can’t really say where
Belgium isn’t it because we’re just not
familiar you know that’s not somewhere
we invest in but uh if they were going
into that what would be some that up
Jerry if you could put that chart up
again real quick and we’ll we’ll talk
about it because I think it was um you
know it it’s pretty explanatory when you
know take a look at you got um the
long-term
occupany uh average over there to the
left the where you’ve got declining
vacancy um and then it goes all the way
up to the supply equilibrium and that’s
the new construction piece and that’s
what we just are experiencing so for the
us we’re starting all this construction
you know think about any construction
project that’s hitting today started in
2021 so it just did you break ground in
2021 it’s a year to build year and a
half to build depending on what it is
and then it takes a while to fill it up
so you’re talking about two to three
years of time to actually deliver
something so so if something here we are
in May of
2024 you really got to go back to 2021
uh before the interest rate hikes so but
anyway all that stuff um it it just
starts continues to move through and
then it gets over supplied and then of
course you’ve got your increasing
vacancy and it starts to starts to go
down again and starts to go into
recession and then back to recovery so
um here in the United States you know
we’re we we’re past the peak probably
somewhere mid
Midstream um would be my guess but in
order for us to really have a recession
we’re going to need more inventory to
come up yeah now
correct so you you you there’s a case to
be made that said that could say that
office buildings are quite quite quite a
ways down the curve um you know a lot of
retail uh multif family is certainly
further down the curve not as much as
Office Buildings but uh the single
family as as we all know is actually in
still pretty good shape because of it
doesn’t have the supply problem like at
the top it’s demand and Supply
equilibrium point that we’re not at the
demand and Supply equilibrium point for
a single family right now precisely
because who wants to move to the exact
same house next door only to pay more
because a lot more yeah a lot more and
you know when you you got a 3% rate
denil was just asking you know we we
she’s got one of her units that she
bought that’s done really well that’s a
rental and you have like
2.85% like 2.6 I think 2.6 interest rate
fixed right and uh
and she’s like H there’s a lot of equity
in this place and she’s like I want to
go get it but she can’t because the
traded out at seven so well I want to
roll like it’s a condo that I want to
roll into a single family house but it’s
like my payment’s going to be a lot more
even rolling all that money into the
single family because I’m at 2. I think
six and I’m probably going to be at like
seven something so I was tell her she’s
rich on paper but that’s it guys like
there’s nothing she can’t she can’t even
she can’t access it but a lot of people
are in that scenario and so that’s why
we don’t have the supply well they’re in
that scenario in their house right so
like they’re basically living in their
house I my brother’s in this situation
you want to get a bigger house but your
payment would be so much more it’s like
how bad do you want a bigger house do
you want a bigger house to pay an extra
$1,200 a month or $2,000 a month on your
payment it’s not worth it right you
can’t even move to the house it’s
similar next door right at this point
because so it’s it’s all this trapped
Equity is sitting there and so we don’t
have the supply in the single family
like we do in the multif family exactly
so let’s chat about
Limitless yes Limitless is coming up
August 29th through 31st you can get 10%
off your tickets at Kent 10 so guys this
is so exciting we already have over 50
sponsors uh sponsors are sold out the
booth are almost sold out um we have
sold a lot of tickets already U we’re
with ahe we we sold out our first two
years and we’re way ahead of where we
were the first two years at this point
in time which is interesting to me just
means there’s a lot of people trying to
figure out what the heck is happening
I’m trying to figure this out too so you
got to trust me when I say I am really
trying to get the speakers that will
tell us the truth um we got um some
incredible people um I’ll mention a few
one is uh Jeff Snider if you don’t
follow Jeff Snider you need to you
probably don’t know who that is a lot of
you you but he is he’s the guru that
everyone goes to um he’s our Economist
this year I cannot wait first of all
when whenever he talks I have to write
everything down it’s it’s really really
hard to understand um but it’s um this
is the guy that Peter schift follows
this is the guy that George gamon
follows this is the guy that uh Brent
Johnson follows if you know who those
guys are very excited to have um very
excited to have Jeff um and um of course
we got Chris Martinson we got kosaki we
got uh um a lot of really good folks I
think this year so again once again
awesome well we hope to see you guys
there and we’ll see you guys next week
we’ll see you soon