8% Mortgage Rates Are the Start of a Real Estate Gold Rush?

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Michael Zuber (0:31)

All righty, folks, the Fed has raised rates. The 10-year note is up. Mortgage rates are at seven and a quarter. Could investor loans get to 8 percent? The answer, quite frankly, is yes. But what if I told you 8 percent investor loans could be the signal or the sign that we are going to enter a real estate gold rush?

Let's have this conversation with the one and only Dion because I would like to be a part of another real estate gold rush, what say you, Dion?

Dion (1:01)

I think for you and I, the real gold rush would start at 10 percent, but 8 is a good move for us. And anytime somebody starts talking about a gold rush, I actually just want to find out who is trying to sell me a shovel.

Michael Zuber (1:16)

I love that. Folks, if you don't know the story of the gold rush, actually gold miners did not make it rich. In fact, the people that sold the pans, the shovels, the jeans, the tents, the food, housed them, those are the folks that got rich during the gold rush. But I think today is different, certainly in real estate or housing, because I do think there is a way that you can increase the certainty of striking it rich. And that's what we're going to try to do here in the next 20 minutes, is tell you how to increase your odds of striking it rich in this gold mine era.

Dion, how do you want to start this? Which side of the coin do you want to start on?

Dion (1:55)

Let's go with the pros first, I think. So I think there's some things that would be good with a gold rush, and then there's some definitely some downsides to a gold rush happening.

For me, the first one is, the way I like to look at it is today's pain is tomorrow's opportunity.

So when you see a rental and it looks dumpy, and it looks trashy, but if you're an investor and you can look at it and see, most of that's cosmetic, right? The wiring's good, the plumbing's good, the foundation's good, the roof is good, but maybe it needs siding, maybe it needs paint, maybe the bathrooms need to turn, something like that, we see opportunity. But today, dealing with that sucks. I like to buy tenant-occupied properties, tenants in place, and most investors avoid that. They want the clean place they can market as the new shiny new rental on the market. I want the tenant there, but that does involve the risk of possibly having a tenant that needs evicted, and that's why they were selling it in the first place. Having to educate tenants on how I do things, and doing a landlord introduction, like there is actual steps involved with the opportunity that comes through living through today's pain. So if we see rates go up, it's painful today. Finding the deal, there might be bigger levers we can pull to find it easier, but it's going to take more work, which is where tomorrow's opportunity comes from.

Michael Zuber (3:13)

Yeah, I'm going to let you go through your full list of positives, because I have some positives as well, and I don't want to step on you. So I think you said you had a list of three to five, something like that?

Dion (3:22)

All right, so keep going. Yeah, the next one is, less enthusiasm means less competition, and I'm only competing with the investors willing to do the work.

Michael Zuber (3:35)

Amen. Yeah, right there with you. All right, what else?

Dion (3:39)

The next one is, in a real estate gold rush, when everybody is, because I have a rant video coming out soon, because the most common comment that I get, with all the supportive ones, this is the one that stands out. You can only do it because you did it in XYZ year.

Michael Zuber (3:53)

Right.

Dion (3:53)

And we can go through from 1970 till now, on why every year was a bad year to buy real estate. But in a gold rush, when rates are high, prices are high, rents haven't caught up, wages haven't got up, we can negotiate more things than price. Exactly. Seller credits, rate buy down, repairs, closing costs.