Navigating Today's Mortgage Rates | With Tom Hallock

Tom Hallock of Loan People joins the show.  We discuss our starts in the mortgage industry, where we see interests rates headed for 2023 and if you should try to time the market.

 

Troy: Today we've got Tom Hallock with loan people here to discuss, real estate mortgages all things that you could ever want to talk to. I realize for some people, maybe not everything you'd wanna talk to, but when you're in mortgage and when you've been in real estate it's everything you wanna talk about.

How's it going today?

Tom: Great. Thanks for having me on Troy. And yeah, everybody's dream right to

Troy: I know I don't understand how, this is going to be the biggest podcast in the world because who does not wanna talk about real estate and mortgage. That's what I, or who doesn't wanna listen to it? Obviously we get to talk about it. Maybe some point in time I'll have like random guests that can come on and we'll be like, live and you know you can do that and have random people come on.

But right now, who doesn't wanna listen? If nothing else. If nothing else, this is the perfect podcast to put on right before you go to sleep, cuz you will fall asleep very suddenly.

Tom: Gently into the night

Troy: Yes. So you're, you've been a loan officer you're currently a loan officer at loan people. Obviously you and I know each other because we were both rockstar loan officers at Bank of America back in the day.

How did you get into the business?

Tom: Yeah, I know. I was thinking about that before we started, is that you and I were cutting our teeth in the wake of the mortgage meltdown and really just cleaning knowledge from that. But yeah, I started just before that. I was actually entitle insurance jumped over to lending when the mortgage meltdown was happening.

Great timing. I know. And then I've been in it ever since. I went from a big bank to a regional bank and now I work at loan people, which is a correspondent lender, which just means we. Multiple different outlets for where we get our, the money that we're lending which is great just to have some diversification there.

Troy: Something that we always dreamed of while we were at Bank of America is like having

Tom: course, oh my gosh, any amount of, yeah, any amount of that would've been nice. But you've been in a couple different things in the industry as well.

Troy: Yeah, I was I was at Bank of America prior to being in the mortgage side of things, which I also jumped in right about the time that everything all the shit was hitting the fan. And I was in the banking side for a while, for whatever reason. Decided to go to mortgage when everything crashed cuz yeah.

Why wouldn't you get into it? At the worst, per at the worst time? Absolutely possible.

Tom: Run towards the fire.

Troy: Yeah exactly. It did, it was there for a number of years. And then I know when you guys, you and a few others had maybe moved to another mortgage company, I was still there for a little bit longer and decided that I wanted to get out of the mortgage side of things.

And so went into the real estate side. And so now I've had my real estate license and then now my broker's license for, it's been just over eight years. It's ipo. Hard to believe that it's been that long, but yeah it's been a interesting ride. That's for.

Tom: Yeah, time flies and I feel like it's so weird. Eight years feels like the longest time. And then also

Troy: It, It is a very yeah. Juxtapose of, it's wow, it's been so long ago that we've done it, and it's also flown by it's a, it's an interesting time. It can be an interesting conundrum from time to time. So to start the year, obviously everyone's probably biggest. Question when it comes to real estate these days is what on earth is up with mortgage rates and what is going to happen with mortgage rates down the road?

Yeah. What is your, as someone who I'm sure has direct ties into the Fed Reserve and the stock market, what's your what do you do? What levers are you pulling to make changes here in the.

Tom: Yeah. I just pick up the bat phone, get Jerome on the phone. No, it's, it is definitely the topic that. Not only ma, I mean it matters to a lot of people because affordability can be an issue as rates are higher, things like that. Luckily mostly experts that I listen to say that rates peaked probably in October, 2022.

Hopefully, knock on wood. And that as inflation numbers start to decrease a little bit rates will start to trend down. With that one of the measures. That we look at is the 10 year bond. That kind of tracks rates are generally about two points, 2% higher than that generally. And over the last few months, they've been more than 2% higher than that because investors are so worried about where is inflation going, what's happening in the greater economy.

And so that spread should come down a little bit more to normal as. Hopefully move past this inflation spike that has happened over the last year and luckily the fundamental numbers behind it. So like Barry Habib is a big guy in the mortgage world. He talked at length about how these measures that we look at are like a roller coaster and the first car is already over the hump while the last car is, not quite there yet.

And like we measure looking at the last. whereas the economy is already moving forward, past that hump. That's, it seems optimistic right now. Obviously things happen and things change and, but as long as those inflation numbers start to go down, that's the biggest driver right

Troy: The problem is the numbers like inflation stuff are always looking at what happened. And say a lot of that stuff happens and then from there the decisions get made. And so I would agree a hundred percent on the interest rates Because these big institutional investors, who are the ones that buy most of these mortgage backed securities, because they felt like rates were gonna continue to rise.

They didn't want to get caught lending money at a little bit lower rates. So that's why that spread was higher than it normally is. But now that they feel like rates have gotten too a bit of a high water level, I think that the, they'll let that spread come back down closer to that 2% you're talking about, which will, which does help mortgage rates.

Is again, more is what is the kind of the key indicator that's generally tied to where rates are at for me as a realtor, and probably I'm sure for you as a loan officer though too, cuz we get paid when people do activity in the market. It's one of those where you just want rates to get to where they need to go.

I've said this before, I'd be. . I don't want rates to go to 9%, but honestly, I'd rather they just get to 9% or 7% or 6%, hopefully five and a half to six and a half percent and just get there and stay there so we can just get that water level and people can adjust to wherever that new level is and then figure out, if and when they can afford a house, if it makes sense to it.

Obviously the higher interest rates are gonna take a lot of investors probably out of the market because it doesn't make near as much financial sense to buy a home when you have to, would've to rent it out for a lot more cuz that payment's so much higher.

Tom: No, exactly right. Yeah. It makes the metrics for a lot of those investors not make as much sense as the years before. But you made a good point, which is a lot of our jobs is just setting expectations and when there's market volatility, it's hard to set expectations, . And so if buyers are worried or scared or sellers are worried or scared, then it's, it just makes it a tougher conversation.

Especially if we're not in a hundred per more, we'll never be a hundred percent sure, but at least

Troy: you just want stability. You just want that stability so that people can

Tom: Yeah. Stability or predictability. Exactly. . Yeah. So as at least predictability starts to come into it, where, the most recent inflation numbers came out and they hit the target that everybody thought they were gonna hit, that's great , because if they come in way lower, then people start asking other questions about recessions and things like that.

They come in way higher, then we're back to inflation.

Troy: yeah. Yeah, exactly. Like you can have things go too far either direction and have it be concerning to people for sure.

Tom: And that's, so we talk about inflation being the metric right now. A few years ago it was jobs, whenever the jobs numbers would come out, that was the big thing because it was, are we gonna be in a longer term recession? So it's not always the same metric that's gonna matter. In fact, the inflation numbers didn't matter for a. A long time, like the C P I report, which is the consumer price index, it would come out I wouldn't even, it would barely be an announcement . And now it's like everybody's day, week, and month hinges on it. So yeah, it's interesting to see what metrics kind of drive longer term debt like mortgages,

Troy: Wow. Are you? So for me, I've always noticed especially on the real estate side of things, that the start of the year tends to bring an influx of at least interest in the real estate market. I've always attributed it to the fact that the new year, kind of new goals, new resolutions, new planning, and so then a lot of people will.

At least. Take under consideration is now the right is this year, not necessarily right now, but is this year the right time to buy or sell a home? And so there's always has been in the eight years that I've been in the business, been a peak of at least interest of people reaching out of people, asking questions to see what's going on.

It. It's not necessarily against bringing some are definitely the peak. Times for people to actually do buy, buying and selling. But between coming out of the slower time of the holidays and with that kind of new year, new mentality of what's happening, there's usually a peak in that interest. I've definitely have seen that to a degree.

This year you seen something similar at all, or you have a little bit different ebbs and flows that you've seen over the last couple of years.

Tom: No, you hit the nail on the head. And it's true every year, but I would say that this year in particular, the, like December was, I like, I thought my phone was broken , like it was, there was just nothing going on, and I think a lot of people were just it was a weird, crazy year.

The market shifted so dynamically, so quickly. and they were just kinda saying like, all right, let's get into January. Let's set our goals for the year. Like exactly like you said, and that those numbers are definitely up. Like we're seeing. application wise. And it's like a, an iceberg applications are the under part where there's a lot of applications and then you start to peak and then you start to see transactions closing.

You start to see people going under contracts. So we're definitely in the still underwater, but it's about to get to the point where people are gonna start making more offers. And I think we've talked about this before, just you and I, but there's winners and losers in every market and. you can look at slightly higher rates right now and say I'm gonna have less competition.

I'm gonna feel better about getting into it at a price I want, then you can look at rates as a consideration longer term as rates come down as well. So it's you kind you get to choose what side of the market you're focusing on, because if rates go down at below five into the force, something like that's gonna get a lot of people off the fence.

But that also means. , that's gonna be a lot more people offering on the same property that you are in love with. It is like a good sweet spot right now. I think .

Troy: Again, it's always impossible to make predictions, definitive statements by any stretch and . I've also always noticed that you have a chunk of those people who show interest at the beginning of the year who not don't follow through the same way that they do with every resolution. And the same way I do with a lot of resolutions too, right?

It doesn't necessarily, just because there's interests really in there doesn't necessarily mean that they're going to, but the fact that. The fact that there is still, there wa was still that peak shows signs that the real estate market is I think in relatively still good shape. Cuz unfortunately you do hear a lot of times that you know or.

you hear? I think a lot of times it's maybe a little bit more people's opinions. I don't feel like I've seen a lot of data that would suggest this, which is why I don't believe it. But you hear people's opinions about, oh, how the market's gonna crash. It's gonna come down, we're gonna have another housing crash like we did in oh six through oh eight.

And for a lot of different reasons. I don't see that being the case. And I do think that people being again, that renewed interest in, in, in mortgage loan applications and just the real estate market in general is one of those. Less concrete sign that's the case. But I don't know for you there's a handful of concrete ones that I have too, but I'll kinda let you talk, get your thoughts

Tom: No. Yeah to add to what you're saying, I think there is data to support that. It just gets a little bit more nitty gritty of what you're looking at and a lot of a big difference between when the market turns in the age that we are in now versus when the market turned in 2008, is that. The lending has been totally different.

Most people have a lot more equity . Most people are in programs that they could at least reasonably afford. And that really does put the entire foundation in a better position, a more stable position, so that, yeah, the market may, there's always ebbs and flows to a market. There's ups and downs here and there.

but it's not gonna be one of those things, or not as much, knock on wood, if that ever does happen, it's not gonna be one of those big crashes. Or at least it would take a lot more factors to make it a bigger crash.

Troy: I'm assuming over the last couple of years, all of the loans that you did required to actually go to underwriting and require documents, which

Which wasn't happening in oh 6 0 8. That's a relatively significant difference between the two in that case oh yeah, we're requiring, you have actually

have, uh,

Tom: minuscule difference of proving that you can actually afford what we're, yeah, what you're taking out

Troy: That, that, and the other component to me is and I don't know the specific statistics on the num percentage say of homes that were bought in the last two years, but if you bought at the very beginning part of 2021, or if you bought any time before then you had, you now have so much equity in your home that even if home prices did.

10%. I don't think that it's gonna happen, but if they did, almost everyone in the country is gonna still be have equity in their home because either they bought early in before this spike, so that, so a 10% drop after your home went up 30, 40% is still up. or if you bought in the last two years, for the most part, other than maybe the end of last year, you had to put down a minimum of 20%.

If not 50% are all cash to win all these multiple offer deals. And yes, I'm sure some people refinance some of the cash back out, but if you put down 50% cash on a property, well great. If the property dropped 10%, yes, you might have, you might, it might be worth less now than when you bought it.

But you still have so much equity in the property that you're not just gonna let it go to foreclosure, which is what actually. The spiral of the housing market crash, like most people are not, even if they lost their job, even if home prices dropped 5%, like you're not gonna see that continued downward spiral, in my opinion, to the, at least to the same degree, because you're not gonna have this way foreclosures hit the market because people would just be like shoot, I can't make my mortgage payment.

I better actually just list my house for normal and and sell it that way. And yeah, I've gotta sell it for less, but it's still worth keeping that equity as much equity as I.

Tom: no, great point. Distress sales will exist in the market, but the sheer volume of them previously was something that we're just most likely, it's not gonna ha if there are people waiting on the sidelines thinking they're gonna get a steal, because there's gonna be a wave of defaults.

There's also companies and individuals, but a lot of companies that are on the sidelines with a ton of cash waiting to do that too. And so when the, when those things come onto the market, you're gonna be competing again. A lot of it that I'm talking with people about right now is competition. There's way more inventory in the market.

It's still, if you look at the total metrics,

Troy: Still by historical standards, it's still. A lot. It's just compared to the last two years, you're like, oh my gosh, there's homes everywhere. And it's no. The last two years jaded your idea of what the market should look like as far as a normal market. Looks like it's still, relatively limited inventory.

Tom: yeah, no, exactly right. Where it's, if you're used to dealing in weeks of inventory, then months of inventory is terrifying when really six months is equilibrium, considered equilibrium. So yeah, it's. It's all about perspective and that's what like especially with rates, how quickly they went up.

A lot of what I talked about with people through the end of 2022 is just perspective. Yes, rates are higher than those absolute lows, , but historically, like these are things that we will probably like, this may be a range that we see normally, and this may be rates jump up to where they have been.

They go back to where they were in October, 2022 and. That'll be the high side of them, and then they'll come back down and there's always that ebb and flow. And so it's just like I mentioned earlier, and like we've talked about before, how do you position yourself to be a winner in that market? And then longer term, you can always reestablish your position with a refinance or, looking to sell or hold longer, whatever it is.

Troy: No. One of the things you brought up just a second ago, I read an article. Just the other day about apparently so Blackstone is probably the most well known large single family home buyer in the country, and them and some other different Wall Street companies supposedly have about 110 billion of cash reserves ready to buy single family homes, which it again, that's a huge number, but it's still only would buy.

400,000 homes, which is not that many in the whole country kind of thing. There's probably some specific markets cuz they'll get market specific. And so in those markets it'll, you'll really, it'll really be felt. But like it's, again, it's a, but it's another point to prices aren't gonna get too drugged down if, cuz these companies aren't gonna necessarily wait for the bottom.

They're not gonna own the bottom hits. They just know that if we can buy it at a good price, let's buy it and let's make money off it. And so that's another factor that we'll prices at a relatively, from dropping to significantly.

Tom: Yeah, absolutely. And and you referenced this a moment ago, which is a really good point, is if you gained a ton of equity, you bought, prior to 2020, you gained a bunch of equity, you're not willing to just let that equity go. Like it becomes something that you count on as an asset.

So people are more willing to wait things out to on the same

Troy: Sure, yeah. In oh six, a lot of people let a home go to foreclosure. Not cuz they couldn't make the payment, but because they were underwater, they were like, why would I make the payment? Where when you have a hundred or $200,000 of equity in a home, you're like, I'll keep making this payment.

This is a good, this is in my financial best. It's interest to make this payment.

Tom: this matters a little bit more to me,

Troy: Yeah. The other thing do, so do you, in your business, do you deal with many investors at all or is it more single family or, families that are buying and selling that way?

Tom: Yeah, and I deal with both. And, the investors there are it's very interesting. There are some investors who were really good at shifting their focus from, how much am I gonna cash flow on this to, can I get a good deal on the purchase price right now? Because, through 20 20, 20 21 you couldn't basically the list price didn't mean much. a lot of the houses you're going way over and is it, are you going 10 over or are you going a hundred thousand over? And so they weren't focusing on the price as much, whereas now they're looking at price and they say, all right I'm probably gonna break even on cash flow, or maybe I'll even lose them on the cash flow.

But when, if, and when rates come down, I'll refinance something lower, I'll still be in a great position. Maybe just turn that cash flow into positive and know that I got. top line deal on a property. So yeah it, I'm noticing that with investors is that the conversations have changed a little bit.

But no, there's, they're still as active, maybe not as active. There's a lot of especially in Texas, there was a lot of outside interest , and that's waned, I would say. But it has not disappeared, but like when

Troy: If you're, but if you're an investor like that from not, if you're not a local investor, then you're, then you aren't just looking at Austin as a market. So like I was looking at from a short term rental perspective I had to put out a video recently about. The kind of top places that this one short-term rental place talks about.

And they were all much smaller places where people could get away from the city, but they could still do like outdoor types of activities. And so if you're an investor, your money can go to a lot of different states, like maybe Nashville's the place to be, maybe Charlotte's the place to be, and that in that case, if things are softening, Austin's always, in my opinion, been in a tough market, a tougher market from a true investor standpoint because property taxes are so high. And so that cuts into so much of the profitability that if you can find a property that is going to get you roughly that same ROI if you can in another state.

But that state has a. 0.5% property tax rate instead of 2.5%, like that's a whole 2% additional position you can make in that cap rate. That's a significant amount.

Tom: and that, and property taxes don't go away. And yeah, I've definitely. I've noticed that as well is Austin was the investor, like investors were interested here for appreciation, but not necessarily cash flow. Whereas like you said, Tennessee is a big one that we lend in. That's a cash flow market.

Arkansas is a big one that's a cash flow market. So there's definitely those sweet spots and the, like I said, the conversations with investors change pretty a little more dynamically than with somebody who's gonna occupy it as their primary residents because, Generally people who are occupying as their primary residents, it like they need to be in a certain area, they need to be in a certain school district.

And so there's not that flexibility to change those conversations necessarily. But then it's just about focusing on where the benefits are.

Troy: Yeah, ev e every the old, the oldest axiom in real estate is location. And that's, again, a huge thing still today. Hey, am I in a location that I want either because it's, again, if you're, not an investor. Is it a location that I want to raise my family in?

Do I love the schools? Do I love the activities that are around there? Am I close to downtown or close to the domain or close to the lake if you're here in Austin and stuff. And

Tom: Yeah, it's trite because it's true.

Troy: yeah, exactly right. They the, a lot of times cliches stand the test of time because they're have a lot of truth to them.

Tom: Very true. Yeah.

Troy: The other interesting thing that I'll get, in the conversations. Is about the market crashing is like trying to time the market, which I would never recommend anybody trying to really time anything because like you're not likely to be, most people aren't when they try to time real estate markets or stock markets, anything like that at all.

And like you were talking about now, hey, do you, is if you are, if it's the right time for you to look at buying a home, should you do it now, like you do have the advantage. Not having as many people in the market and being able to potentially get more from the seller than you would've either from concessions on the price or help getting a little bit lower interest rate.

I do still wonder a little bit though if sellers, like sellers know the market's not quite the same, but it takes a homes, a homeowner, usually a little bit more. Of a slap in the face, bucket of cold water to really realize how much it's potentially changed sometimes, right? Because one, it's your largest asset, so you're thinking, shoot, I'm about to sell the, something that's, half of my net worth, if not more in a lot of cases.

And. Two. There's also a lot of emotional attachment cuz if it's a place you've been living in, you may have raised the family there, all these other types of things. And so to not think that because of all those memories it should get top dollar. That's just a natural kind of human emotion. So I do wonder if we'll see sellers understand where the market's at a little bit more this year.

Because I do think that's been a little bit of a pass with buyers and sellers as well. The last couple months is like, Hey, the market has shifted a little bit. You can't. Expect to get top, to get what you got two or three months ago. The market's not quite the same, and so that'll be an interesting dynamic going forward as well

Tom: Yeah. And you, More directly with sellers. So a lot of the stuff that I say is just anecdotal, secondhand that I hear from, other

Troy: from people that are looking or people looking to do both the buy and sell simultaneously

Tom: No, exactly. And there was this moment in 2022 where all of a sudden it went from you put your property on and it sells that weekend to Oh, it takes a couple weeks. Oh, it takes a month. Oh, it takes a couple months. And I think like you mentioned, when it's your biggest asset and that rug's kind of getting slowly pulled out from under.

It's not a great feeling , but there are . There are some lending tools that it, like I used to think temporary rate buy downs were gimmicky, but in that type of environment, that is exactly what they're designed for, which is a seller who's staring down a 25 or a $50,000 price cut can instead say, Hey, how about I temporarily buy this buyer's interest rate down, help their cash flow by a couple hundred dollars and it's only costing me eight to 10 or 11,000. From a realtor's perspective, you're helping that , that seller get more money. And from a buyer's perspective, you're getting them into a home that they can actually afford right now, as opposed to let me rent for another year , or let me rent for another two years and see where it is Then and , this is like a one, another one of those things, but sure rates may be a little high, but rent is a hundred percent interest,

Troy: Yeah. And again, as, so as people in the profession, right? We get paid when people buy and sell homes. But just because that's the case, that doesn't mean like you're trying to push an agenda. If you wanna rent your entire life, great rent your entire life. But for most Americans, I.

A huge percentage of their net worth will be tied to owning a home. And so there are definitely some people who, and one, there's some people that can't afford to, so that's, just how it is. But there's also some people who really, if you're, if you are truly. Maximizing every last dollar that you save by not buying a home and renting.

Yeah, sure. Great. If you can really, day trade your way to more money, okay, do that. But for most people like having that, Hey, I'm gonna need a place to live anyway. It can be the right way to do, right Way to go about it is, Hey, let me own a place because my mortgage is only slightly more expensive because of HOA fees than it was 10 years ago.

But rents have increased quite a bit in the last 10 years, and I'm pretty happy. I cannot, I could not. I could not rent a place for the amount that I'm paying as a, on a for this as a mortgage. And that's something that, you don't get the control over when you're a renter for.

Tom: No, totally. That's a great point in that like shorter term renting can make sense in a ton of situations. Just because transactional costs that exist for buying and selling. Multiple times can add up. But the longer term play, and there's some stat, I'm gonna mess it up, but it's, a hundred percent of all wealthy people have gained at least some of their wealth

Troy: sure.

Tom: through real estate ownership.

Troy: the, so they're. And I'll probably, again, one of those we probably should prepare with stats. I don't really know, but like I throwing out random stats, but if you look at the, if you just go and Google like stats for net worth of people who are homeowners and who are not, like it's literally goes from $20,000 net worth to $300,000 net worth or something.

Tom: Oh, totally. Yeah.

Troy: a significant difference. So again definitely definitely it's definitely a personal decision for each individual. , but you also can overthink it as well too. Another thing that's interesting right now too is, , right? Like people, if you're having to buy or sell, buy and sell, you're never gonna be in a market where it's optimal to do both.

Oh, it's the best time that I can sell my home and also the best time to go buy a home, right? There were a lot of people that, for the last couple years I know didn't sell their home cuz they're like, shoot, I don't want to have to try to buy a home in this market. And so now it might be, right now might be the time, like where it's a little bit of a sweet spot where hey, Put my home up, I can at least, yeah, I can't get as much as I could in May of 2022, but I can still get a lot more than I could have in May of 2020, and I can now actually have some flexibility when looking at homes and having some negotiation power on that side of things too.

Tom: Yeah, absolutely. And if you look at it's the, another old accent, which we're

Troy: I know. I feel like we should be, I know we're, we talked about being in the business for, almost a decade now for each of us okay. Maybe we are old, but I feel like we should be a lot old if someone just listens to this podcast instead of potentially watching the video of it. I think they're gonna feel like we're way older than we actually are because we just keep bringing out like, cliche sayings and ho harm.

Tom: Like all these cliches and back in the day when

Troy: day. Back in my day. Yeah.

Tom: I don't even

Troy: Sorry. Made you forget that. Good. We don't have to worry about that. That saying

Tom: getting old. There you go. There's another part

Troy: Proof that you're getting. Exactly. So I'm trying to think of different stories that might make stuff interesting so that if someone has not still fallen asleep, that it actually made it worth it to them.

To reach the end of the podcast here, what, do you have any say potentially crazy stories about. Something that's happened in the mortgage process or the underwriting process or something like that, that, obviously you have to change the names for to protect the innocent kind of situation.

But something any interesting stories from the mortgage world that you could share?

Tom: Does, this is a great question and probably it's one of the top, like three reasons that people end up getting declined from mortgage loan is and this, I feel like it'll start happening more and more as if we go into a little bit of a recession where companies are downsizing, companies are looking at creative ways to decrease their staff without necessarily losing the expertise that goes along with that. If if an employer asks somebody to go from a, their W2 salary job to a 10 99 position, like a contract position, a lot of times what employers do is say, Hey, we can keep paying you $60,000, or you can go contract and we can pay you 90. And people look at that and go, oh, I'm gonna be making more money.

That's a raise, right? , but the way, in mortgage qualifying going to a 10 99 or a contract employee that's considered self-employment because you can deduct expenses. There are things that you might have had paid for by the, your salary job they are not gonna have paid for anymore. And those are gonna come out of your top line income.

And so generally lenders need at least one year of tax returns showing that, most of the time, two years of tax returns showing that so somebody can get a raise. and end up acing themselves out of qualifying for a mortgage if they do that while they're looking or during the transaction so that.

Troy: no, it's, it it bring me two things. One, right? Like it's if you are someone who's, thinking that in the next. , whether it's the next three days, which is when most people start to reach out to realtors or loan officers or more, what they should do is in the next three years you think it might be something that you're interested in doing.

Like building those relationships are important because then before, not that switching to a, to being a 10 99 contractor and making a 90,000 might not still be the right situation, but you then know someone that you can trust and say, Hey, I'm thinking about doing this, but I know I was also thinking about buying a home.

This. , how's that gonna work out? And like you can say you can take the job, but you won't be able to buy the home. That's something that you can, and then that person can make the educated decision of shoot, let's buy the home now and then go to 10 99 in the when I can do that.

But without without building those relationships, then, it's, a lot of times it's a question that someone doesn't even. Wouldn't even necessarily think to ask, but by having experts that you can just talk to about stuff it can make a big difference. Like we were talking before, we actually started recording about a client of mine who will talk about a property that they rent out and should they sell it.

And we talk probably every six months just about their situation to help them make the right decision for them. And it hasn't resulted in them needing or wanting to sell. , it's I love having those calls with them because I know that we're helping them make the right decision for them. So it's valuable to build that network of people in different areas of expertise across a wide variety of disciplines.

For sure.

Tom: And that's, that's something that I've noticed about you and your business over the years is that like approachability is so helpful because those people know they can reach out to you. and they may not sell a property or buy a property this year, but they know they can talk to you about it and they know that they can get a pulse on what's going on, not only in the bigger nationwide market, but in their specific market and know okay, for us right now, this may not make sense.

Even though the headlines say , it does make sense. Sell

Troy: yeah, exactly yeah

Tom: yeah,

Troy: the headlines have the fear, the worst type of situation. It's But if you really look at it, you're still making a bunch of money on the property. So why would sell, not that you couldn't sell it, why not keep making that rent monthly income?

Tom: And that's something, so Barry Habi I've mentioned him before, but he's like a big name in the mortgage lending world. He on his most recent presentation, just presented all these headlines from 2015 about how it doesn't make as much sense to buy a home. It's not gonna, you don't get as much equity as you think.

And then 2016, same thing. Thousand 17, same thing. And he basically was just adding up what people, what equity people would've gained each year if they would've bought then. It's one of those things, yeah. The headlines rarely

Troy: Again, it go right, it goes back to timing the market, right? Like I, I deal occasionally with investors, but more so I enjoy helping families. And so if you are if you're an investor, you do have to be a little bit more. Market sensitive of where's the market going and does this make true ROI numbers sense in the next 12 months per se?

But if you're a family, not that you want, not that you want to buy at a time and then have your home price go down at all, let alone five or 10%. But if you're really buying for the next 10, 10 years or so, great. If it goes down a little bit now, you're almost assuredly in 10 years going to be up in value because there is not even with as bad as.

Housing CR crash was, there's not been a 10 year window that you can go to that I believe where home prices haven't appreciated

Tom: Exactly. I was gonna add that to what, to, what you're saying is that even if you look at the biggest crash we've ever had in the mortgage market, those homes had recovered their value in just a few years, just a handful of years. It is, it's a longer term decision, but it's one of those things that here, oh, here's the what I was gonna say,

The best time to plant a tree was 20 years ago. The best time or the second best time is today. Like you just said it, if you have some skin in the game over the longer arc, you will win on some side of it. But if you don't, then you're at the whim of whatever's gonna happen next. So

Troy: Very true. Seems like some sage advice to, to end this episode on. So appreciate you jumping on and and doing this one and look forward to many more.

Tom: yeah. Thanks Troy. Appreciate it.