EP #10 - House Hacking Just Got a Lot Easier

In this episode, Jacob and Mike delve into the strategy of house hacking, emphasizing its potential with the 5 percent down payment option from Fannie Mae. They discuss the Federal Reserve's potential interest rate cuts and its impact on the housing market. The hosts also address the role of private equity in single-family homes, debunking misleading statistics. They advocate for incentivizing builders to create more affordable housing instead of restricting private equity. Throughout, Jacob and Mike stress the power of real estate for achieving financial goals.

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Transcript

Nancy: 0:00

This is the Financial Freedom Fighters Podcast

jacob: 0:13

Welcome everybody to the financial freedom fighters podcast. We have a very special episode today. It is episode 10, a nice milestone for the financial freedom fighters here. I'm your host, Jacob. I have my cohost, Mike Magno. How's it going, Mike?

mike: 0:30

Oh, Jacob is going great, man. it's our 10th episode. So congratulations on that. you know, we're coming along, right? We're figuring it out a little bit, but yeah, things are, things are good.

jacob: 0:38

yeah, definitely. So thank you for everyone who's been tuning in. If you guys have enjoyed any of the previous nine episodes, Mike and I would greatly appreciate, you know, a little. Show us a little love, give us a five star review, wherever you listen to podcasts that mean the world to us and helps us reach more people. So thank you for that. I'll give a quick rundown of what we plan to do today. We're switching it up a little bit, trying something out. We have three news articles that Mike and I are going to bring to you guys and kind of touch on and highlight all things happening within the real estate industry right now. So we're going to do a current events style episode where we kind of go back and forth on these articles that are servicing the real estate industry right now. so that's the plan for today. And we'll kind of jump in with the first topic today. I'll introduce the article and then Michael, I'll hand it off to you to kind of speak about the article and, and kind of the implications for real estate investors. So this came out of a little while ago, but Fannie Mae introduces 5 percent down payment option. For multifamily homes, Mike, why don't you speak on this

mike: 1:44

so those of our listeners that want to do the house hack, this is why this is important, right? previously. If you wanted a low down payment option for a multifamily owner occupied property, FHA was your only option where you could do three and a half percent down. Some of the downfalls with FHA is one, you have PMI for the life of the loan. If you do a three and a half percent down. So the only way to get rid of the, uh, the mortgage insurance would be to refinance the loan. also in an ultra competitive environment. Many sellers don't want to deal with FHA loans I'm not going to go into much more detail than that, but just understanding that there are some, some issues there. that being said, Affordability has become a huge issue in this country. housing affordability, obviously, at the forefront with inflation, you know, as high as you and I have ever seen it probably in our lifetimes. as you mentioned, Fannie Mae, I think it was back in like September announced that starting in November, I think it was the 18th they said that they're going to allow. They're gonna change the guidelines again because it used to be this way many years ago. So they changed the guidelines back to Buyers that were able to now put 5 percent down on a 2 3 or 4 unit property That's owner occupied. Obviously, it's a huge Opportunity for people to get into properties with a lot less money out of pocket and do the conventional guidelines, which obviously will be a lot more attractive to potential sellers. If you're. representing a conventional buyer, or as a buyer, you're going the conventional route.

jacob: 3:15

Yeah. Yeah. So thanks for giving us a rundown on that article, Mike. So for me, house hacking is easily the most dynamic and the lowest risk strategy. And it's a big regret of mine that I have not been able to house hack, or I haven't been able to figure that out, or I don't live in a market where that's like the most straightforward, but if you're young, early twenties, I'm talking, you have to think about how you can make a house hack happen. And for all the listeners out there, a house hack is when you purchase a property that you are living in, but you are also using that property to generate income. And you can do that in a variety of different ways. So you're taking your property and in whatever manner you can renting it out as well. Whether that's the rooms, whether that's a separate units, maybe you have an ADU in the back and you could do all variations of renting out as well. You could do short term rentals, you can do midterm rentals, you can do longterm rentals as well. But the idea is by renting out portions of your property, You are reducing the largest, largest expense that anyone typically has, which is housing. Right? So you are trying to live for free. And just to put some numbers on this, if your rent is 1, 500, let's just say 1, 500. And somehow through house hacking, renting out the rooms or renting out some units, you're able to reduce that to zero. Because the rent that you're collecting from your tenants is offsetting that 1, 500 expense that you normally would have. That's the same thing as cash flowing, 1500 bucks on an investment property, which is really, really good, right? So you have to think about it as that you're not, maybe you're not going to cashflow with time, but if you can eliminate your big biggest expense, that's the same as cash flowing that the amount of that expense. And what that's going to do is it's going to absolutely supercharge. Your path to purchasing more investment properties. And the thing that's dynamic as well about the house hacking strategy is you live in it, renting out the rooms, you're getting an introduction to investment introduction to being a landlord introduction to just every aspect of real estate investing. And you're actually there so you can live it, breathe it. And, and, and problem solves. And then as soon as you get a handle on that, you can move out and do it again. And you'll rent out the unit that you previously were living in. And then you're going to be cash flowing even more. Right. And so. I think they, they talk a lot about this in the bigger pockets podcast, but such an underrated strategy, Mike is to just house hack for a year, move out house hack again, and just continue to house hack and build your portfolio that way while living in the property this entire time. And so that to me is such a powerful strategy. And the one downside of house hacking is If you're married or, you know, you have kids, if you are in a stage of your life where It's not very convenient to do that. That's completely fair. You know, i'm married my dog is a little bit Of a he's kind of a wild card, you know, he'll bite some people So it's just like I can't I can't do I can't like I can't do that. You know, like I that convenience At this stage of my life is not something I can easily give back. So that's just one thing to take in consideration. Now that doesn't mean I can't buy a house where I can put an ADU in the back, you know, or have a basement unit and things like that. There's still ways to do it. I'm still thinking about doing it. But if you are in a stage of your life where you can make that trade off of convenience and comfort, if you can rent out the rooms, And I'm talking, if you're fresh out of college or, you know, you're in your early twenties and you can sacrifice that convenience, because let's be real. Most of us in our early twenties. Don't have a lot of convenience or comfortability anyway, just give that up and live for free or close to live for free. And that's just so powerful. So Mike, I don't know, do you, do you have any other kind of thoughts on, on the power

mike: 7:17

yeah, no, I do. I mean, I think it's the most powerful tool for people, the young people to get. A into real estate investing and B to build their longterm wealth. And the reason being you touched on it, it's the opportunity for you to either greatly reduce or potentially completely eliminate your housing expense, which we all know, unless you're, unless you're buying and, you know, an escalate on a, on a payment, it's going to be your most expensive expense every month. you know, and it's not, I mean, it's not even just for young people. I mean, I've had, I've had clients that are, my age that have. Now I've got into house hacking and bought a multifamily. I, I did it and I didn't even know what I was doing it. You know, I think I've shared, I've shared my story. but back in like oh nine and 10, following the recession and a job loss, had a guy that I worked with who was going through kind of a rough, rough patch too. I had an extra bedroom. I was like, dude, just move into my place. I almost eliminated my housing expenses at that point. enabled me to save money, one of the reasons I was actually able to get out of, out of debt So it can be very, very, very powerful. if you can make those sacrifices just for, just for a few years, I tell young people all the time, like all you need to do is do it. Six or eight times over a 12 or 15 year period. Like you don't have to do it every year. You can do it every other year, you know, and the really powerful thing too, is you know, you can only use the FHA loan once, but, you know, you can continually use these conventional loans. So you can continue doing that over and over and over again,

jacob: 8:44

Yeah, yeah, absolutely. And if you are somebody that's house hacking, you have a distinct advantage over somebody. Let's say for example, right, Mike, I really want to buy fourplex in Cleveland, But I still need to get a return. Those numbers still need to make sense for me as an out of state investor, trying to buy a fourplex in Cleveland. And I'm trying to stick to my numbers and stick to those returns. If you're a house hacker, you're analyzing that fourplex a lot differently, a lot differently. And you have a lot more flexibility in what you're willing to pay and the quote unquote returns you're looking to get. Cause you're really just focused on a different metric. At that point, you're focused on how much is this going to. Eliminate my personal expense, whereas a pure investor is analyzing it from a completely different perspective. And so you can easily probably put in a much more aggressive offer with those parameters. So that's another thing I'll highlight. If you are house hacking, just make sure you're, you're analyzing it from that perspective and understanding, because. It's different than just operating it as an out of state investor. And you will have the expenses of a property manager and typical expenses like that. So that's another thing I'll highlight. You are, you have an advantage because your quote unquote exit strategy is a little bit different, right? Or how you're going to operate. The property is a little bit different. So that's another thing I'd highlight about house hacking

mike: 10:02

Yeah, absolutely. You know, and I had a, I had a client earlier this year They bought a triplex, in Lakewood and they used a conventional loan. I had a, they were able to do a 10 percent down loan. I have a, uh, have a portfolio lender here locally that offers that, for owner occupants, Which was really popular before this whole change, obviously in the Fannie Mae guidelines, but you know, prior and this was before they made those changes. I think they were living in Willoughby, which is a nice east side, uh, suburb of Cleveland and they're paying like 14, 14, 50 a month in rent and by moving into that triplex in Lakewood, which they'll be able to almost eliminate their housing expense altogether. Yeah, I think the 2, the 2 units that they are not going to live in because the other thing too, that was really powerful for them is this this particular triplex was, it was a duplex. It was 2 buildings on the same parcel. So, up front was a duplex and up and down, and then there was a single family home in the rear of the property. And they were actually going to live in the upstairs unit of the duplex. And the upstairs unit of the duplex is actually the unit of the three that also needed the most work. So, the downstairs was pretty much rent ready. They were going to boom, put a tenant in there. They'd probably get 800, 900 a month for it, probably pretty easily in Lakewood. The rear home was also a two bedroom home, so it wasn't that big of a single family home, but it's a single family home. And they were able probably easily get 900 or 1, 000 a month for that. And then they were going to live upstairs and fix up the other unit while they lived in it. So, you know, you're talking probably, you know, without busting out a calculator, their mortgage expense on that property is probably 2, 000 a month, maybe 2, 100 a month, and they're going to get 1, 700 to 1, 900 a month in rent. So, I mean, they're going to get their housing expense from 1, 400 all the way down to probably 400 to 300 to 400.

jacob: 11:48

while they're building equity, right? Getting that loan pay down, getting that appreciation. And that, that's, that's the kicker here too, is that don't forget, real estate is not just about cashflow, it's about that equity buildup as well, equity buildup through the loan pay down and through that appreciation and so that all of the benefits of real estate investing while eliminating your housing expense, it's just, it's, it's such a slam dunk in terms of a strategy. The other thing we'll touch on, Mike, from a house hacking perspective is, The approach to it is very market dependent and we'll highlight Cleveland, an amazing market to house hack in amazing market to house hack in just because the numbers lend itself well to doing that. Well, Cleveland in general is a great kind of cashflow market. If you're just thinking about pure rent to price ratio, Cleveland's a great market for that, but that also means it's a great house hack market as well, Because the same rent to price ratios kind of apply there. And so amazing market. The Bay area, California, not as straightforward, right? You're talking about million dollar properties and the rents just don't justify the price tag on those properties. So you're probably not going to eliminate your housing expense, but if you are able to, let's say match it, let's say we have to pay 3000 a month in rent. Can you buy a property that maybe has an ADU or a basement unit or both? And can you get your, Your actual living expense to be in that 3, 000 range or a little bit lower than that. And so you're paying what you would pay in rent, but still getting that equity buildup, especially the appreciation in California, which can be really, really powerful over a long term as well. So not completely ruling out, uh, the ability to house sack in California. but it is market dependent. Like you should approach it in that way, depending on which market you live in, it might be a great house hack market. With this new guidelines from Fannie Mae, just like the amount of money you have to put down, it just really reduces the barrier to entry in all markets. Right? You can buy a fourplex in San Diego, which is going to be really expensive. But if you only have to put 5 percent down and those numbers still work out, that might just be a really good play for you. And so House hacking is a great strategy, research it, look into it, take advantage of the financing that's available to you in this realm. Um, but I think we've kind of wrapped up on, on that one, Mike. So we'll roll to the next kind of news topic. And so the fed, this is a business insider article, but there's plenty of articles that have come out to kind of, uh, echo this sentiment. The fed is going to cut interest rates anywhere from five to seven times next year. So if you're listening to this podcast, you're obviously interested in real estate investing, and you're probably very aware of the crazy interest rate environment that we are in today. And in episode four, we broke down the current state of the housing market, where we really talked about this, but interest rates during the pandemic, all time lows, you could get a interest rate in the twos, 2%. You know, I talked to someone at my company holiday party. The interest rate on their home is 2. 75%. That's owner occupied, but 2. 75 percent free money, free money. Right? So they, they sat there for a really long time, really low. And what did that do to the housing price? The housing market, Mike, it just made it go gangbusters. A bunch of refis, a bunch of people pouring into the market. It's free money, buy everything that you can get as much debt as you can. It was nuts. It was nuts. Then we all know inflation got out of control. And the fed didn't react to that as quickly as they should have, because they said uh, the inflation was transitory and, um, it wasn't, it wasn't, it wasn't transitory. And so what did they have to do to respond to that? They started raising rates incredibly fast at break neck speed, taking us to where we are today. The federal funds rate is I think 5. 5%. And obviously that is the rate that influences a lot of different other rates. But the one that we care about as real estate investors is obviously the rates that you'll get on your mortgage, which today, sit in the high sevens, I believe, close to 8 percent for investing loans. And so that's where we're at today. But with the economy, with inflation getting a little bit more under control, the job market cooling a little bit, the Fed. Kind of looking like they might achieve this soft landing that they're hoping to achieve now. The narrative is that they're going to start cutting next year, which I think we all kind of expected, but more and more articles are coming out to say that they are going to cut. And I think the question you have to ask yourself as an investor is what do we think is going to happen to the housing market? What do you think, Mike, what do you think is going to happen?

mike: 16:37

Well, it's a, it's, it gets back to a very, very simple economics principle of supply and demand, right? We still have a huge demand, even with the high interest rates. we have a, we have a very stressed supply and, you know, you're just going to get more people back in the market, which is going to drive the demands up again. And it's just, I don't know, we definitely, it's still an inventory problem here. I mean, there's not. Like some huge backlog of just properties sitting out there. and, and, and the properties, I can't, I can't beat this, drum enough properties priced appropriately in the right areas still sell within hours or days with multiple offers. you know, we were in multiple, a multiple offer situation just this week with a buyer client of ours. There was six or seven offers on the property and it's sold for it's under contract for over 10 percent over list. So, I mean, I, I hope we don't get back to where we're at 27 offers on a property. Remember that one, Jacob.

jacob: 17:40

yeah, that was, uh, that was a tough one. here's the thing. Here's the thing. I'm just going to say what needs to be said. The people that are waiting on the sidelines right now, because the interest rates are too high, are the same people that That complained that the market was too competitive and the prices were too high. When the rates were low, you need to stop. You need to stop because it's never going to be a perfect market. It's never going to be a perfect market. The rates are low and prices and competition is up. If rates are high, the numbers are tougher to pencil because you know, your financing costs has increased. You're never going to have a completely balanced market. But if you're aware of the environment that you're operating in, and, Hey, we have a little bit of indication right now that the rates are going to come down over the course of the next year, uh, 12 to 24 months. And we know that all of the demand that's sitting on the sidelines is going to flood back into the market, which is going to put the goal of getting a house and investment property is going to be much harder because you're just going to have so much more demand that's flooding the market. But that hasn't happened yet. That hasn't happened yet. So we have a little bit, what feels like a little bit of a sweet spot from now until those rates actually do come down, that you can get into an investment property with less competition than you would when the rates start to do come down and then what you get that property and the rates come down and you eventually are able to refi, but you've got that property at the time that the rates were high and the price that you acquired it at is going to be reflective of that. If you're waiting for the rates to come down, the price, you're going to get the acquisition price of that property is going to be reflective of the rate environment, Which is going to affect your payment anyway, And so that's what I'll say is don't wait on the sidelines for the rates to come down because that's what everyone is doing. That's what everyone is doing. And I'm not saying buy anything right now. Still run your numbers, still do your analysis, still stick to your buy box. But just know that investors are taking advantage of the environment that we're in right now because they move differently than the rest of the market, right? Investors zig when everyone else is zagging, and that's like Mike and I are trying to instill in you is that there's a sweet spot, but we don't know how long that sweet spot is going to last because as soon as the rates come down, it's going to be a tough market all over again.

mike: 20:15

Yeah, no, you make, you make some awesome points there. Um, this is what I tell people all the time. You just got to buy. I mean, you just got, you know, you got to figure out where you can buy it, where it makes sense for the goals that you want to have. I, like I was telling you before we started recording today, you know, I'm, I'm refinancing that property that we talked about in the last episode about the burr, you know, the, the property that I turned into a burr. I'm refinancing that thing at like nine percent. You know, I'm using a DSCR loan. It's a cash out refinance So those rates are higher to begin with That property is still gonna cash flow even at nine percent. So You know, that's where people have to understand like the rate is not Yeah, the rate matters but in the grand scheme of things they They don't matter as much as you think they do

jacob: 20:56

the chances that the rate that you get at acquisition is going to be the rate that you have long term is just so low.

mike: 21:02

Yeah, it's a, it's typically a pretty short period of time that you're going to have that actual mortgage, right? You're going to sell the property, you're going to refinance it, you're going to, you know, there's all kinds of a movement typically in the, in when you have a property. so that's where I'm at with it. Like, hey, I needed to tap into the, I needed to tap into the equity that I created in that property. You know, yeah, is it, is it stink? It's 9%. Well, yeah, I mean, it is, you know, it's whatever, but at the end of the day, I still have that. I still have a property. It's completely renovated. It should be low maintenance for the next 5 to 10 years. Anyway, if I even own it that long, I'm going to get it. I've gotten a ton of interest in the property from a tenant perspective and I'll still cashflow. Once again, my numbers are a little, a little skewed because I self managed, but you know, that property is going to cashflow three to 400 a month, even at 9 percent interest.

jacob: 21:53

Even at 9%, even at 9%. And so, and another thing you told me offline, Mike, was that you chose that particular loan product because there was no prepayment penalty

mike: 22:05

Yeah. So

jacob: 22:06

and that gives you, that gives you flexibility, right? So go

mike: 22:09

yeah, no, that's a, no, you're making a good point. I'm sorry. I didn't mean to. Interrupt you there, but yeah, so for the listeners, you know, when you're doing these types of loans, especially the investor type of loans, you know, you're going to have options. Now I could have got a lower rate. But I would have been locked into a, some type of staggered prepayment penalty on that loan. And in the DSCR world, you know, the debt service coverage ratio loans that we've talked about several times on previous episodes, in that world, you're typically going to see a prepayment if you pay off the loan within the first five years. And it's typically staggered. So like, In year one, there's a bigger penalty than in year two than year three than year four than year five, or you can do a three. There's three one options out there where it's three year prepayment, but I wanted a zero prepayment. I wanted ultimate flexibility because what if I want to just what if, you know, what if the rates come way down this summer and we see a spike in prices and then I just want to flip that property, Or I want to refinance it in, in, you know, four or five months. If we see a huge decrease in the rates, you know, if I, if I can, you know, even in six months, if I can reduce that rate by 2 percent or two and a half percent, then it'd probably be worth it to me to do it, even though I would have obviously some, some closing expenses, but if I can increase my cashflow by another 200 a month, it'd, it'd pay for itself pretty quickly.

jacob: 23:30

Yup. And again, we touched on this last episode, but the exit strategy is so critical, know what your exit strategy or exit strategies are. And always be thinking about that. And Mike is giving a lot of great examples this episode and last episode of how he's thinking about the exit strategy and increasing his chances of success on this particular deal by thinking about the exit strategies. Cool. So I think that wraps it up again. Rates are coming down next year, but that means competition will increase as well. So get educated, get ready, and Like Mike said, just buy, just buy, we'll move on to this last article, Mike, couple of different articles, but they all kind of are around the same topic, which is the role that private equity is playing in the single family home space. And so I'll introduce the first article, which has been kind of dispelled as fake news, but my sister in law actually sent me this. And it said 44 percent of all single family homes purchased or purchases in 2023. So all 44 percent of all single family home purchases in 2023 were by private equity firms. And that is just fake news. A hundred percent fake news. If you kind of dig into the article, they're citing a bunch of things that don't really line up. And if you actually do your research, which we've done private equity owns about three to 5%. Of the single family home stock in the United States, right? So these are big investment firms that are pulling money and purchasing the single family homes and holding them as investments. And then obviously distributing those returns to their private equity clients, high net worth individuals, et cetera, et cetera. That is the reality is that the private equity firms are kind of a scapegoat for what is a bigger problem in the single family home space, which is inventory. And so that's just one thing. 44 percent is a crazy number. And that article is, is just completely bogus, but another article came out, which my wife sent me. It's a vice article hedge funds have invaded the housing market. A new bill would ban them. So kind of in the same vein or the same sentiment against private equity firms, Congress actually introduced a bill. I think this was a couple of days ago that would ban private equity firms from holding single family rentals and that they have to actually sell off all their single family home home stock over the course of the next 10 years. And then would be banned from buying them outright. which I'll get your thoughts on this in a second, Mike, but that's, that's, it's pretty wild. And look, let's, let's be clear. Mike and I are both big proponents of anything that is going to increase the amount of affordable housing in this country, because like we touched on in previous episodes, we are anywhere 7 million homes short in this country of just inventory that we need to have all the homes. That we need for people that want them, right? There's such an imbalance. And so anything that's going to help put a dent in that we are proponents of. I'm a proponent of, right? This to me just doesn't feel like it's going to move the needle and how realistic this is. Congress is going to tell private equity firms like, Hey, you can't do this. Like it just, it feels farfetched and it also feels like it's misplaced in terms of not addressing what the real problem is. But Michael, I'll pass it to you. What are your thoughts on all this private equity and, and the role they play in this

mike: 27:08

So, I mean, I, you know, you and I talked off off air a little bit. I mean, it's, you know, first of all, that fake news article that came out with the, you know, the 44 percent of purchases in 2023 made by private equity. That's like, just think, I mean, for those out there listening, when you read these things, like, just take a minute to like, think and comprehend what that sentence just said. 44 percent of all sales in 2023. Well, we're only going to sell up just under 4 million homes this year. So 40 percent of 4 million. I mean, come on, It didn't happen. It didn't happen. It's so, it's so ridiculous. Um, so that, that first one, I was just, uh, you know, just left me shaking my head. and as far as Congress getting involved with the hedge, you know, the hedge funds. I mean, I think it's just terribly misplaced. It's just terribly misplaced. Um, we need to incentivize builders to construct some more affordable housing. and I'll just use Cleveland, obviously, because I live here. But in the Cleveland market, right, we need more of, we need more housing like a Parma, Ohio, which is Cleveland's largest suburb where there's You know, neighborhood. I mean, just blocks of three bedroom homes and very modest, you know, 1000, 1200, 1300 square foot homes. That's what we're sorely lacking in this country, you know, unfortunately, and I'm not going to, you know, I'm not going to pick on these guys because once again, they're, they're operating a business, but the large home builders of the world, the Ryans, the Pulteys, the Lenars, in our area, Schumacher is a big one. Um, You know, these guys just build monster homes, right? and they do it because it's a profitability thing, right? They're building larger two story homes. The cost of construction is cheaper because they're building them up instead of out. And they're trying to maximize their ROI for their shareholders. And I, and I understand that from a business perspective. And that's why I think this, this is terribly misplaced with Congress getting involved. Or Congress should be doing some incentivizing of these companies to build more affordable, smaller housing. That's just my take on it, I'm just one guy, but you know, I think that's where we need to That's an issue that needs to be addressed because that's what happened in 2009, 2010, you know, all of these, so many of the builders went out of business and then so many of them stopped building homes. Right? And that's where we've just, we've, and then we've struggled to even ever get back to where we were. You know, we had a, You know, a decade long, you know, they say we need like a one, depending on what article you read, you know, you need one, one, one to 1. 2 million new home starts per year to keep up with the increased demand and on, uh, from 2009 to 2020, there was only like one year where the new home starts were above a million. And, you know, some of those, some of those really lean years, like 2010, 2011, 2012, there was only like 500, 000, 600, 000 home starts. So, you know, each year you're just compounding the deficit, you know, so that's where, you know, it's really, it's really difficult. And that's why I think the whole house hacking thing is, and I know that's why we wanted to tie all this together today, was because that's the way for people to really. You know, when they complain about afford an unaffordable housing, that's the way for the young people to get into the housing. Get into the housing by buying a duplex or by buying a triplex or a quad or like you mentioned You know, we don't really do ADUs here But you know we do, you know Sometimes you'll see in a basement apartment or maybe maybe a property that's got a walkout basement where you know It's a in law suite, you know that they can convert into a one bedroom or studio apartment something like that Um, so that's where I think, you know, that's where people can take advantage of these lower, you know, lower down payment options and to get into housing, and here's the kicker too, right? Like even if you don't want to build some. Massive rental empire, right? Like even if you don't want to own 10 or 20 properties, what's wrong with buying one and living in it for five or 10 years until you're ready to din, you know, have a family, and then maybe you want to move to that single family home in the suburbs, you know, and you've built up all this equity in that property and you can do a home equity line of credit on it to maybe offset some of your down payment money on the next part. You know, there's, there's just so many different. Ways to go about it. Uh, but I think that's going to be the most powerful tool for people going forward just to get into affordable housing.

jacob: 31:27

Yeah. You hit on such an important point, Mike, and I want to double down on that one. Mike and I are real estate investors and we obviously have a lot of ambition, to have these portfolios and kind of deploy these different strategies. But that doesn't necessarily need to be your aim, right? Just like Mike said, having one, two, three, Investment properties, just to diversify out of the 401k, just to diversify out of the stock market. And let's say you don't quit your job. You know, you, you still, you like your job, you continue to work, but you just have. Two or three rental properties that to diversify your wealth, to diversify your kind of income streams at the end of 20, 30 years. Those things are paid off. Ton of equity buildup. And like Mike said, you're going to have a lot of optionality, whether you sell them. Whether you refinance them, whether you just continue to collect the, the rental income and that just helps ease retirement whenever you do decide to retire, that's, that's the more important thing. You don't have to be Grant Cardone or Brandon Turner or these people that are, you know, syndicating these large deals. You don't have to be a mogul. You just have these investments. That are making the aim of retiring more achievable and a little bit sooner, right? A little bit sooner. And I think ultimately that's what we're all after. Now, how soon you want to accomplish that is going to dictate the moves that you make. You know, I have aspirations to do it in five years or less at this stage. That's kind of where I'm at right now, but that doesn't have to be you. Right. And so understand the power of real estate investing. Regardless of what your kind of goals are, real estate probably is going to help you achieve them, right? Whatever those goals are, real estate is going to be one of those aspects. That's going to bring you closer to them. And that's why Mike and I believe so strongly in real estate as an investment. And the 5 percent Fannie Mae conventional loan just really reduces the barrier to entry for people, which is the biggest hangup, right? So Mike, I think that pretty much rounds out our current events for the day. Um, so I'm going to take us home. we're, we're coming up on, on the end of the year, 2024 is right around the corner, start to think about your goals, everything you want to accomplish in real estate investing and outside of real estate investing. and yeah, let's, let's, let's hit 2024 hard and let's make everything happen. You can find me on all socials at Cashflow Saga. He is Mike Magno. You can find him on all socials at Realtor, Michael Magno. Give us a follow. Shoot us a message. If you listen to the show, tell us how we're doing. Tell us if there are other topics you want us to touch on. We're happy to do future episodes. on any topics you guys want to hear about. So this is episode 10. We are the financial freedom fighters podcast. We'll catch you in the next episode. Peace.

mike: 34:26

ya.