BiggerNews: What Happens to The Housing Market if Mortgage Rates Stay High?

Dave:
Hey everyone, and welcome to the BiggerPockets Real Estate Podcast. On today’s episode, we are actually gonna do a little bit of a crossover event. We’re bringing you a show that aired back in April on our sister podcast On The Market. It’s one of our most popular shows we’ve ever done on that show. And in it we discussed what happens if mortgage rates stay high, and given everything that’s going on that is becoming more and more of a reality or at least a possibility. Since that show aired, we’ve heard a little bit more. So I just wanna fill you in on what’s happened just to make everything in this episode makes sense. On June 12th, the Fed signaled we would be seeing only a single rate cut this year, which is a deviation from the fourth. The market had predicted and hoped for at the beginning of the year.
Inflation is still pretty high, it’s above 3%, and it’s feeling like it’s gonna be a long time till we get towards that 2% goal. And last update here is that as of today, according to Mortgage News Daily, the rate on a 30 year fixed mortgage is just above 7%. Other than those couple updates, the conversation and contents of this episode are just as relevant right now as they were back in April, and they might even be more relevant because interest rates have stayed high and we have no idea if and when they’ll fall. So I think there’s gonna be plenty of good information and tactical advice that you can use in your investing portfolio from this episode. Our bigger news episode today is brought to you by Rent app. This is a free and easy way to collect rent. And if you wanna learn more, go to rent.app/landlord.
Let’s jump into it. At the beginning of the year, there was a lot of optimism that we would see mortgage rates decline over the course of the year. So far, that hasn’t happened. So the question we’re gonna dive into today is, what happens if interest rates stay high? What does this mean for housing inventory first time home buyers, investors today, we’re gonna be digging into it all. What’s up everyone? I’m your host, Dave Meyer, and today I have Kathy, Henry and James with me to discuss where we think the market will go if interest rates stay elevated for longer. Now, I know we were all feeling optimistic and it hasn’t really happened the way most people were expecting. Henry, have you lost hope? Are you still, uh, confident in that you can navigate this situation? Uh,

Henry:
No. I, I feel like we can definitely navigate the current climate. I am optimistic at some point rates will come down, but I’m more optimistic in my ability to find opportunities in any market, and there have definitely been great opportunities to buy great deals. Right. Now,

Dave:
Speaking of any climate, Kathy, can you just fill in our audience a little bit about what the climate actually is and where mortgage rates are right now?

Kathy:
Well, it’s not a climate that a lot of us were expecting or like at this time. Uh, the job market has just been so strong. It has shocked so many, and wage growth has been strong. It’s slowing down a little bit now. Um, but just this last week’s, uh, jobs report was it, it beat expectations again. And, um, what that generally means is the economy’s doing well and when the economy’s doing well, interest rates tend to stay high and inflation is still high. So this is unexpected. This means that the, the, you know, a lot of fed presidents have been saying, uh, we’re not gonna cut rates anytime soon. Maybe not even this year. And a few of them have even said, Hey, we might be raising rates. So there’s a lot of uncertainty. However, I do have an opinion on where that might go in the next few months.

Dave:
Ooh, I like that. Okay, well we’re gonna ask you that in a minute. But first, James, I need to ask you, are you just sick of this whole conversation or are you ready to, uh, dive in and talk about the Fed a little bit more?

James:
I’m sick of the hype around the conversation. Uh, kind of similar to Henry rates are what they are. Go find the deal that makes sense with the rates. Uh, and I think, I think sometimes when you overthink a deal and this is what’s happening, people are overthinking things, there’s all this fear, you stay on the sidelines and you miss out on good opportunities. And that’s what’s happened the last 12 months. People have missed some really good deals just narrowing in on this rate and trying to predict it. But as we all know, we predict wrong a lot. So it’s a .

Dave:
Well, that is definitely true.

Kathy:
And we’re not alone. Some of the biggest teams with Yeah, they’re they’re wrong too. because it’s surprised everybody. Yeah,

Dave:
It has been very surprising. Uh, but I do, you know, I have this run of show that we use to ask questions. It’s sort of our outline for the show. And the number one question is making you guys predict where rates are gonna go. So , even though you just said that you’re wrong, I’m gonna ask you, Kathy, do you think that we’re st let, let me just ask a more general question rather than something specific, but sort of the idea at the beginning of the year was that rates were gonna trend down. A lot of people were saying they were gonna get into the high fives. I’m happy to say I never, uh, actually expected that, but the idea that they would trend down made a lot of sense to me. Do you still think that general concept holds true even though the first quarter of the year hasn’t, uh, seen that actually start to happen?

Kathy:
Yeah, I can say with all certainty rates are going to come down someday. , , we just dunno where that day

Dave:
Is. Our predictions are just gonna get more and more general. They just take all specificity out of them and we might be right.

Kathy:
Well, what the Fed is really looking at is jobs and, and, uh, one thing that I, I I follow housing wire a lot and Logan, Moe basically pointed out that if there had been no covid, um, the number of jobs that they would have today would be between 157 and 159 million. Uh, so right now we’re at 158 million. So a lot of this massive job growth is just really jobs coming back from a crazy pandemic, but it looks, it’s skewed. Everything is different because of a time that we’ve never experienced where suddenly no one was working and then jobs came back. So if we’re at 158 million today, and we would be right around here if there was no pandemic, I am predicting along with Logan that it’s gonna start to slow down and we’re already seeing wage growth slow down. So when the Fed has some confirmation that we’re not gonna be just on this train ride of, you know, the, the economic train that’s been moving so fast and so speedy and creating inflation, um, once they see that slowing down, then we’ll get back on that rate cutting plan and, and mortgage, you know, mortgages will likely come down too.
So that’s my prediction is that they will come down and it, if it’s not this year, it’ll be next year. And no one can predict exactly when that will be. So your plan just needs to have that in mind that yeah, they’re probably gonna come down, we don’t know when. So what you buy needs to make sense today and it’s gonna make even more sense later when you canfin to something lower.

Dave:
Well that, that’s a great point, and thank you for providing that context. Kathy. I, I actually saw something recently that said that the Fed is going to be paying less attention to jobs than they had been saying that because even though hiring has been really strong and inflation is still higher than they want it to be, inflation hasn’t like reac accelerated and it hasn’t started growing with better Jobs reports, it’s sort of just staying at this low threes, they want to get into the twos, but uh, they are seemingly willing to tolerate a stronger than they had anticipated labor market. James, what about you? Do you still like expect rates to come down or are you basing your business decisions right now on the fact that rates may stay flat or perhaps even go

James:
Up? You know, I still think rates are gonna start ticking down towards the end of the year. You know, I, I’m seeing the housing market get really tight right now. And that is, you know, one thing that I’m also looking at, there’s there, obviously there’s tons of factors that go into the Fed’s decision, what is gonna happen to interest rates. Um, and part of it is housing and the housing costs, which does drive up inflation as well. You know, what I’m seeing in the market right now is people are bidding stuff up, affordability on their, their pricing is getting really tight and they’re gonna need to do something to fix that. Um, besides try to figure out where new inventory for come from. But you know, as investors, if I think that rates are gonna be lower in six to nine months, that’s just upside to me in the deal.
I don’t look at any deal today based on, I don’t, we don’t speculate. It’s, if we like the deal on today’s numbers, we will buy. And if the rates do go down in nine months, that’s just upside. Um, and what I can feel a little bit more confident is if rates even do tick up a little bit, what we’re seeing is rates are high, inventory’s low. And even to my own disbelief, I thought pricing was gonna have to come down and is going up. And so I can feel fairly confident in my buys today because I’m seeing properties get bit up 10% over list at rates where they’re at now, and we’re pumping past before when the rates were at 3.5%. And so maybe it won’t matter as much. But, um, you know, I I think the concern about the interest rates that’s gonna crash the economy or the the housing market really isn’t coming to fruition. If something, if it does go down, it’s gonna be from something that we’re not even talking about on the show.

Dave:
That’s a really good point. Like the things that we know are really pointing in a, a fairly clear direction about the housing market, like it would take what people would call a black swan event to probably alter the course in, in a dramatic way, if you’ve never heard that term back swan event is basically an event that happens sort of outside the normal variables that impact, uh, any industry. So like this would be something like nine 11 or the Russian invasion of Ukraine or the COVID-19 pandemic where all the forecasting, all the data analysis you wanna do, you can’t predict those types of things. And I think, you know, just going with traditional, uh, data analysis here, I agree with you James. It doesn’t look like rates are going to bring any sort of significant nationwide crash into housing prices. Henry, let’s just, you know, I gotta, I put James and Kathy on the hook, so I gotta ask you as well, do you think rates are gonna come down through the end of this year?

Henry:
Uh, in, in all honesty, Dave, I I don’t care. ,

James:
,

Dave:
Your questions bore me, ask me something else,

Henry:
But here, but here’s why. It’s exactly what James said. So what, what happens when you have the environment like we have now where rates are what people consider higher is yes, I’m going to still buy deals that make me money now and James is right, we’re only underwriting deals maybe 90 days back max. Like it’s what’s happening today, maybe 60 days ago. Like that’s how we’re evaluating what’s going on and how we should value our properties. So what that really does from an investment standpoint is it might slow down our growth. You know, when I was, when I was buying properties at a lower interest rate, they were cash flowing more, they were making more, making me more money so I could afford to do more. Since interest rates are higher, cost of money is higher, those things, the cashflow isn’t as high, which means I can’t buy as many properties. So it may slow me down a little bit. ’cause you still have to be able to sustain the things that you are buying, but we’re not stopping buying because of those rates. And, and it’s exactly right. I am going to get icing on the cake when rates come down because weights will come down. It may be five years from now, but they’ll come down eventually.

Dave:
All right, well I, first of all, I just wanna say what James, uh, and reiterate sort of what James and Henry said is I strongly, strongly believe that you need to be underrated based on today’s rates because as we’ve seen over the last few years, no one really knows what’s gonna happen with rates. And as I’ve said many times in the show, I love putting myself in a situation where I benefit from being wrong. It’s the best of both worlds, right? , like if you find a deal where rates stay the same and it works and then you’re wrong about rent growth, you’re wrong about rates going down and you make even more money, that’s a great situation. I love that kind of situation and you can definitely underwrite that way to make sure that your, your deals work out in, in such a way.
I will just jump in and, and say and just sort of provide my own thoughts. I will be a little bit more specific. I do think that rates are gonna come down a little bit from where they are. They’re right now as of this recording, which is like, what are we at here? We’re on April 8th, we are recording this. Um, they are at around 7% today. I do think by the end of the year we’ll be somewhere between, let’s say 6.25 and 6.75 so that they’re gonna come down a little bit but not into the fives. And I’ve sort of been believing this for a while because this is a, a complicated topic and rates just always come down slower than they go up. And I think that that’s number one. Number two, even if the Fed does lower rates, bond yields have climbed a lot over the last couple of weeks and they could stay high even if the fed cuts rates.
So there’s all sorts of things that are suggesting that we are not going to see as much movement in rates as people predicted. And so because no one knows maybe to, to sort of flesh out our conversation here, let’s use this as a straw man. Let’s just use this, you know, assumption and talk about what might happen throughout this year. If I’m right, I’ll probably be wrong, but I think it’s, you know, a reasonable guess that we’re gonna be somewhere around six and a half at the end of this year. Now that you’ve heard our predictions about the market or maybe us skirting around making predictions, we are going to talk about the state of the housing market if rates do stay high, stick around. Welcome back to the show. Kathy, what do you see happening with housing inventory? Because that’s sort of been the big story here this year, other than rates is like we’re seeing a little bit of an increase in inventory, but not that much. And if rates don’t come down, we may not see the lock in effect breaks. So do you think we’ll see that trend reverse or more of the same? What do you, what do you think will happen? Well,

Kathy:
You know, over time people do start to get used to the status quo. So maybe that will, maybe people will just start to realize this is where we are, we’re in the sixes and sevens. It’s not that unusual. Um, you’ve gotta find property that that works for that. And because wages have gone up more and more people will be able to afford even at those higher rates, the affordable, you know, more, more affordable housing will be less affected by these higher rates. Um, yet you’ve got the high end market where people just have money and they don’t care about rates. Um, so the super high end, maybe it’s just not as affected. And, uh, affordable housing not so much because when you really look at the difference in payment, it’s not massive. You know, um, I I’m talking about a hundred or $200,000 house, so it seems like kind of the middle class might be more affected the what is the median home price now and the the 400.
So you, you’re getting into five and sixes. You can, you can, in terms of price, you can feel that. But if I were to guess, I would say we’re going to continue to have this inventory problem for a while. And if you just, if you just look at the number of people in the US there’s 330 million people in the US I, I haven’t checked recently, but there’s a lot of Americans and now I think over 3 million more immigrants just in the last few years. And typically a good housing year of sales is about 4 million houses, three to three to 5 million houses trading hands, but usually about 4 million. So you don’t need to have that many home sales compared to the amount of household formations to keep housing stabilized. So I just, I don’t think, you know, I think what’s gonna be continue to be the supply versus demand story, there’s more demand than supply and there’s enough people who can’t afford even at these high rates that housing will stay strong. And we’re seeing that, right guys, you’re still seeing buyers all over the place. Absolutely.

Dave:
Yeah. So James, I mean Kathy mentioned sort of people with money, uh, that’s I would describe Seattle, um, as, as a wealthy city, there’s a lot of high earners in that area, one of the highest median incomes in the country. Tell us what’s happening in your market are, you know, we do see little upticks in new listings, but are they just getting gobbled up? Like are they just coming off the market quickly?

James:
They’re gone. I’ve seen the, the data about uptake in new listings, but the absorption rate is so fast right now. Uh, there’s so much pen up demand in our market where you can go out two, three miles and not find one house for sale in areas, especially if it’s if a more affordable price point. And then even if you want to talk about even more expensive market, Newport Beach, where I am, that market moves and it moves with cash and these homes are appreciating at 5%, 10% and it has became one of the most expensive markets in the whole us. And I saw something come out this at the average price per square foot is now at $2,000 a foot. Oh, in Newport Beach. Oh my gosh. So I’m really happy that I just bought a house for 1100 a foot. Whoa. Wow. And that’s the biggest thing right now is you have to buy on the now and figure out where the demand is.
And if there is no inventory and there’s high absorption rates, then people are affording it. And it is, to my own surprise, 12 months ago I thought there was gonna definitely be a pullback, which there was, but it rebounded back that pullback was based on fear. It wasn’t based on actual affordability and that that fear caused this like blip in the market. But we are seeing it race back, um, and it’s really hard to find deal flow and you know, and I think what people have to do is they have to look at the new investment strategy. Everyone goes back to these old rules. The 1% rule, you can do it this way, the house hack, you can do a BRRRR. Those are strategies you can implement, but the math is going to change. How we were buying back in 2008 was a lot different than we were buying in 2015.
And, and how we looked at deals was a lot differently. And now how we’re looking at ’em today has to be different. And it’s about how you cut the deals up, not, and if you get stuck in that old way of underwriting properties, you’re going to make old returns. They’re not gonna be that great. And so you have to shift with that market and rates are probably here to stay. Inventory’s locked up. I didn’t think it was gonna be this locked up at all. I thought there was gonna be more inventory coming to market and it is compressed.

Dave:
Henry, are you seeing changes in the type of demand that you’re seeing? Like is it the same kind of transaction? Is it mostly at the higher end of the market?

Henry:
Yeah, no, we’re seeing demand, uh, really across the board. So the, the, the types of properties that go quickly here are your typical first time home buyer properties. So your three bed, two bath, 1200 to 2200 square foot home, if it’s done right, it’s gone. We also have a influx of people that are looking to buy that next tier home, right? The the three to five bedroom, you know, three to four bathroom, 2000 to 3000 plus square foot house because of the corporations that are here bringing in the high earners. And so they’re either building those houses or they’re snapping the good ones up off the market, the luxury flips are taking longer. Hmm, right? The things that are above those price points. But if you’ve got something in a desirable neighborhood nearby one of these employers that’s in that mid tier and it’s done right, gone. If it’s under $250,000, it’s getting looked at and it’s probably getting snapped up

Dave:
That that’s not what I was expecting you to say to be honest. I thought you were gonna say like luxury things are doing well, sort of what James was alluding to, but that just shows how regional differences do make sense. And it sounds like what’s fueling your market is people who are either coming in or landing some good jobs given the really strong job growth and high wages that are coming to your market. Correct. Kathy, what do you think this all means for sort of the younger generation, maybe the people who don’t already have enough money to spend $2,000 per square foot, which is like all 12 of James’s neighbors and no one else in the whole country or the people who are getting jobs like in Henry’s market. Like what does this mean for the average young person who just wants to buy their first home?

Kathy:
Oh, that’s been an age old question. It’s never been easy really to buy your first home, honestly. Uh, you know, again, I go back through the decades that’s always been an issue. The one time that we had rates so low and it was so easy for anyone to get in the housing market, that sort of blew up as we know. So you would just have to educate yourself. That’s the best thing I could say. People are doing it, people are doing it every day. Uh, just an anecdotal example, uh, I was speaking to a babysitter, she’s 24 years old, she’s gonna buy her first house, she’s doing it with other people and um, and you know, she makes $24 an hour. So, um, you know, there’s ways and you have to get creative and understand the power of it that let go of all the other things you’re spending your money on that the things that you can let go of and put it into assets that are going to inflate, um, over time and are gonna make you wealthy over time.
It does take sacrifice, you know, many of us sacrificed to get to where we are. We, we shared our house with three or four other families. The first house we bought, we carved it up, uh, different rooms and had friends move in and that’s how we made it work. So, uh, you know, not everyone is gonna get outta college and get a hundred thousand dollars salary and those who are are probably in expensive markets where they can’t afford in that market, even with a hundred thousand dollars salary. So again, you just have to get creative, you know, and there’s ways we, we all know there’s a, there’s so many different ways to do it. You just have to learn how,

Dave:
I think an important thing you said is that it’s always been difficult and, and that is true, especially, you know, I hear this term like people always say like, oh, we’re becoming a renter nation. The data does not support that idea. Actually you can Google it. I encourage you to, if you just look at the homeowner percentage in the United States back into the sixties, it’s always been between 63, 60 9%. Right now we’re at 66%, so right in the middle there. But obviously that can change. And with the affordability issue here, Henry, I’m curious, do you think there’s gonna be, it’s gonna be harder for people than it has historically to afford a starter home? And does that mean that there’s gonna be more demand for rentals or what are some of the implications for this challenged affordability? It’s

Henry:
Hard not to think it’s gonna be more difficult because we just keep seeing prices climb. We keep seeing rents climb and yes, there are more jobs out there and people are getting more high paying jobs and that’s gonna help some of the affordability. But I think there is, there’s going to be a subset of people who continue to be priced out of being able to to buy a home. And I think, um, not only is that gonna play into that, but you’ve also got the additional cost potentially, uh, for some people with having to, you know, pay for a realtor, uh, out of their own pocket to come and buy some of those homes, right? And so I think it is going to be challenging and I think you’re gonna start to see, or hopefully start to see some ways for people to be able to jump on the affordability train.
I think education has to be key here. There’s never been, or there’s not really a lot of formalized education for people in terms of helping them understand where can they go and look for first time home buyer programs that can help them offset some of these costs, right? In almost every state there’s typically program, but unless you know someone who knows this information, not a lot of people have access to it. So education is key and, and helping people put together plans and budgets for being able to buy a home. I think a lot of people don’t truly understand how much they need to have set aside and how much they need to be making to be able to afford it. A lot of people don’t really even start thinking about that until they’re ready to start making offers. And so, uh, I just, I just think education and access to resources and programs to help them understand will go a little bit of the way, but there are going to be several people just priced out.

Dave:
Yeah, I, I unfortunately agree. I wish it, I wish it was easier for people to afford and there wasn’t this affordability problem, but it does seem like it’s here for at least the foreseeable future and, and hopefully something will come along to, to make it a bit easier. We have more on this conversation right after this quick break. Welcome back to on the Market. James, I wanna ask you sort of the flip side of this question, which is, do you anticipate fewer investors being in the market? Because as you said, you sort of have to change tack, you need to look for different strategies, you need to underwrite deals differently. Do you think the average investor is willing to do that or people are gonna bail and put their money somewhere else?

James:
Um, you know, we definitely saw investors bail out a lot in 2023, but I feel like the gold brushes came back because again, the fear has loosened up. We broke our record last month for lending hard money and we were down on volume for a while. We lent nearly two x what we had lent in the last five months per month, and there’s this mass surge going on. Um, I think investors will continue to buy. I think they’re gonna have to buy differently. And if they want to put in the time and work, then the activity will go on. But you have to cut again. You gotta cut up your deal differently. You gotta look at it different. How is it, it’s more about how you look at it right now. Like if I’m looking at a rental property, I’m not looking at my cash flow, I’m looking at my return on equity, what can I create? There’s my true return and I still can’t find anything that’s gonna give me a hundred percent return on my money in 12 months with equity. You know, maybe Bitcoin if you just get lucky. I don’t know , uh,

Dave:
It’s a, yeah, like why is, why is a hundred percent return the the benchmark that’s, if you find it a hundred percent return, sign me up. But like, I think yeah, the, the normal benchmark would be 8%, which is the stock market.

James:
Well, and that’s the thing, you can still make those returns in today’s market, right? Like if you can flip a house, you can create 20, 25% equity. That’s what you need to be profitable on a flip. And if you’re putting in 50,000 and you create 50,000 in equity, that’s a hundred percent return in in value right there. And I think if people switch their mindsets, they’re gonna continue to buy. And at the end of the day, investing in real estate, if we, you think it’s going into high inflation that like Kathy said, it will go up and so I I I think if investor activity it goes in surges, we, the fear has gone away, we’re seeing a surge again, if there’s anything else that happens to the economy which could happen, right? There’s a lot of weird things ruined in the background, then you’ll see an exodus again. And so that’s what I have really learned is buy when people are freaked out because that is when you get the best deals.

Henry:
Yeah, I mean 100%. I agree with you James. I I think what this economy is doing is for investors anyway is it is creating stronger investors because of the economic climate and it’s forcing investors who are staying in the game, who got in when things were so much, you know, easier, it’s forcing them to uh, learn how to pivot and it’s forcing them to be fundamentally sound investors, right? Nowhere have we ever said that this is a business where you’re gonna make a whole bunch of money in, you know, the first 60 days of you owning a property or the first year of you owning a property like being, being a landlord anyway, right? So being a landlord has always been a long term game. We’ve just been really spoiled over the past three to five years because we’ve had great rates, we’ve had, uh, prices going up, we’ve had rents going up and you’ve been able to make great returns.
But now in a more, I don’t wanna call it normal market, but a probably more realistic market, the fundamentals are more important. You have to, when you’re underwriting a property, you actually have to scroll down to the bottom of the calculator and look at the 30 year cashflow prediction, not just the year one, am I making the money today? But what’s this gonna look like in three years, five years, seven years, 10 years, right? Because it is a long-term play. And can you sustain owning that property until you get the payoff that you want? And if you can’t, then that’s probably not a deal you need to do, right? These are the things that we have to do now when we’re underwriting our deals that maybe a lot of people didn’t do over the past five years. ’cause they’re like, oh, well it’s not paying me $7,000 a month cash flow on day one. Get it outta here, I’ll go get another one. Right? It’s just not that game anymore.

Kathy:
I wanna say that in some ways I think it’s easier than it’s been because there’s always forces at play. Whatever is happening in the market. And during COVID there was so much competition because rates were so low. It was, you know, remember you guys, it was like multiple offers on everything and that’s, that’s hard. That’s a hard, that’s different skills than today where today now there’s a lot less competition and in some cases none. And, and you also have certain people in distress under this certain, under the, um, current situation. So in my opinion, it’s easier today than it was a few years ago. Um, just because interest rates were lower than doesn’t mean it was necessarily easier to find the deal.

Dave:
I I think we, we all just need this sort of like industry resetting of expectations and like the reason I asked you James about like the a hundred percent return is I was talking to someone, uh, over the we last week and they were talking about, you know, deal cash flow is harder to find, this is harder. I was like yeah and it’s still a way better investment than anything else that you can do with your money. And I went to the point of just like doing all of this math and analysis and I decided to just take an on market deal in, in a, in a market that I invested in the Midwest and just find a ran on market duplex. I just pulled it down, I ran the analysis for it and what it showed, this is buying full, asking price on market deal and it returned, if you add up the amortization, the value add, the cash flow, which was only like three or 4%, uh, and the tax benefits, it’s still yielded eight 12% annualized return.
The stock market offers an 8% annualized return. And if you know anything about compounding, the difference between 8% and 12% is actually enormous. If you invested, I, sorry, I’m gonna go on a rant here ’cause I did this all this week. This is what I spent my weekend doing is if you invested a hundred thousand dollars in at 8% the stock market after 30 years you’d have a a a million dollars pretty good, right? If you invested that a hundred thousand dollars into my on market random deal instead of a million, you’d have $3 million. You would have triple the amount that the stock market return. And that’s my boring regular on market deal. So I think people just need to start forget. Yeah. Was it easier to find cash flow 10 years ago? Yes. Does that matter? Absolutely not. Because it’s about where you need to put your resources right now and it’s still the best asset class to put resources in. So there’s my rant. Sorry, I had to say that

Henry:
Soapbox, Dave is my favorite Dave

Dave:
ever . I just, I I, I understand why people are frustrated. We all wish it was, you know, if it was super easy but it’s still a really good way to build wealth and I just think we all need to remember that and sort of normalize these types of returns ’cause they’re still really good. Amen.

Kathy:
Yeah, let’s just remind everybody that where else can you have somebody else paying down your debt for you? The government subsidizes this investment for you, gives you tax breaks, and if you just let someone else pay off your debt in 30 years, you own the property free and clear. Now I know 30 years sounds like a long time from now, you can do it faster by taking a lot of the cash flow and paying down the loan faster, but there’s nothing that compares. So, and then if you decide, you know, I want access to this money, you can just refinance that property and take cash out, tax free people. So again, yeah, nothing compares.

Dave:
All right, well it sounds like at least the four of us are hoping with the idea that interest rates might stay higher and at least admitting to the fact that we don’t know what’s gonna happen but are still investing anyway. So thank you all for sharing your information and your feelings about what’s going on right now. And thank you all for listening. If you also like soapbox Dave or some of the answers that everyone else gave, we do always appreciate when you get on your soapbox and tell either a friend about this show that you really like this podcast or tell the whole world by writing a review for us either on Apple or Spotify. I’m Dave Meyer for BiggerPockets and on behalf of James, Kathy, and Henry, we appreciate each and every one of you and we’ll see you for the next episode of On The Market.