Matthew Maschler:
Welcome to the Real Estate Finder podcast. I’m Matthew Maschler, the Real estate finder.
Staci Garcia:
And I’m Staci Garcia, also a real estate finder.
Matthew Maschler:
How you doing Stacy?
Staci Garcia:
I’m good.
Matthew Maschler:
Alright. All right. So I was really happy with the last two episodes. We got a lot of great feedback from the audience. They enjoyed our information about getting offers accepted or the inside story of what other agents do to get our goat or piss us off. And that was interesting and I don’t really know how to top it. I couldn’t come up with a great idea for how to top it. So what I wanted to do is I wanted to go back to the basics a little bit. I was very blessed to grow up with, my father was on Wall Street and he knew a lot about finance and investing and kind of learned through osmosis. And I realized out in the world that not everybody got the education from their parents that I got. And not everyone knows just some basic fundamentals about investing and money management and predatory investing.
And so sometimes when we talk to renters and I try to think to myself, well why is this person still renting? Why didn’t they buy, they’ve been renting for three years or four years or five years, and eventually they should have bought something, but they don’t have the finances and the wherewithal to buy. And that’s either because they failed to invest or they invested poorly or they got ripped off somehow. And I see people at every income level getting what I think is ripped off. And part of that rip off, it might be an exaggeration because my father was very aware of sales commissions and not letting people make money because of, he’d rather keep the money than give it to a salesman. So for instance, you have a mutual fund and some mutual funds charge a load of 1% or 2% to buy into the mutual fund.
And the power of compound interest, my father always believed and he taught me to believe, is like gravity, one of the most powerful forces in the world. And if you have time and time to invest and time to grow your money. And what compound interest means is let’s say you have a hundred dollars invested and you’re making 1%. Well, after a year you have $101 to invest. And then in year two, your $101 is invested and makes 101.1. And then in year three, your oh 1.1 is invested. So the interest upon interest upon interest and upon interest. And when you have even small amounts, like people say growing up $2,000 a year, you could put into an IRA. Well, after 50 years you don’t have a hundred thousand dollars invested in your IRA because of the interest in the compound interest. You might have a quarter million dollars invested. So a simple thing, maybe it seems simple, who has an extra $2,000 a year to invest? But with things like an IRA where you get a tax advantage from putting the money into an IRA, it might only cost you $1,600 to put $2,000 into an IRA. And so that’s very important to do when you can get that tax advantage.
It’s like free money. And if you had another goal of vacation or a car or another payment, you’d work hard to achieve that goal. So making that IRA investment because you have tax advantage money, which is cheap, cheaper money, making that a priority to invest, you have a benefit of the money being cheap and then growing tax-free with compound interest. And that $2,000 a year can really make a huge difference in your lifetime in your retirement. If you started in your twenties, you will benefit in your sixties and seventies and it can be to the tune, to the tune of millions of dollars if done wisely and consistently in your life. I’m talking to people that are in their fifties and I’m explaining it now and they lost 30 years of opportunity of doing things like this.
Staci Garcia:
There a cry button here, cry. Cry,
Matthew Maschler:
Yeah. So it’s important to save and it’s important to invest wisely and I don’t think people were taught how to do it. So the first thing I want to talk about is budgeting. And I’ve spent some time on budgeting. There are four pieces of information that everybody needs in order to take control of their finances. Alright? There’s four pieces of information they need to know how much they have, how much they owe, how much they make, and how much they spend. And if you have those four pieces of information, if you know those four pieces of information you’re going to do, okay? Financial wise, a lot of people don’t know this information and they can’t seem to move forward. So you start with how much do you have? That’s usually called a statement of net worth. How much do you have in savings, retirement, cars, real estate, how much do you have?
It’s your balance sheet or your statement of net worth. How much do you have owe? Now on the same thing with cars, you have car loans, how much do you owe to your credit cards for your college loans? Other debt If you have real estate, if you have a $500,000 house and you owe $300,000 on it, your statement of net worth would be 200,000. You have 200,000 in equity, how much do you have you owe? Then there’s how much do you make? You have your salary from your job, other side hustles, interest, income, et cetera. And then the most important, how much do you spend? And that’s your budget. So when you know how much you spend, and you can look at, well, you make 50,000 a year, but you spend $75,000 a year, that’s a problem. So how much do you spend? Right? Car payments, car insurance, gas, rent or mortgage, cable, haircuts, social activities, going out to eat, going to restaurants, entertaining, et cetera. So if you have a good understanding of your budget, how much you spend and how much you make, then you can line them up properly.
So in one of the projects that we’re doing, we want to know, I know how much I made as a real estate agent last year, right? Last year I made commissions $375,000, but I don’t know what I spent to make that. How much did I spend on my website? How much did I spend on my employees? How much did I spend on advertising and marketing, right? 375,000 sounds like a lot of money to make on real estate commissions, but if I spent $800,000 doing it, then I lost money. Now, if 700,000 of the 800,000 I would’ve done anyway, then maybe it’s okay. So keeping control of how much you make, how much you spend, how much you have, and how much you owe in your personal life or in your business life is a vital, vital importance. When Craig first came to me and he was broke and evicted from his apartment, he didn’t know how much he spent.
So we sat down on a piece of paper, what do you spend? What’s you rent your cable, all of your expenses. He has a wife and two daughters. Well each, that’s three birthdays every year, three holidays, Hanukah, Christmas every year. So if he needs $50 for each birthday, that’s $150 and dollars for each holidays, that’s $300. And back to school clothing each year for each kid that’s maybe $200 each. Then he needs $600 a year for all of these things. And we had him on a super, super tight micro budget where he was saving, let’s say $10 a month, $10 a week in his paycheck for each of these items. And we would actually break it down to $2 and $3. Car insurance, right? Car insurance, if you pay in full over six months, it’s one price. But if you go on a payment plan and you pay every month for six months, it’s a higher price.
So poor people pay more for the same products than rich people because rich people confront the whole six months. Poor people have to go on a payment plan. So you know, and what we had, Craig was what I had with Craig is full detail of how much money he owed, how much money he wanted to spend. So every week for his paycheck, I would pay him in singles and he would put a few dollars in each box. And I told him, everything’s possible as long as you plan. So he wanted to run a Spartan race, so he needed sneakers, $35 in registration fees, transportation, he needed $120 for his Spartan race. So we put $2 a week away for his budget for his Spartan race. How much do you have? Right? Sometimes people don’t realize what they have in retirement accounts, in real estate holdings.
How much do they have? How much do you owe? How much do you spend and how much do you make sense? Okay? So that’s how your basic budget should work and that’s how you should think about your finances in those categories, how much you make, how much you spend, how much you have, how much you owe when you owe a lot of money. If you’re in your thirties and forties when you owe a lot of money, it’s probably more important to pay that down than to invest money because if you owe money at 12% and you’re making money at 4%, it doesn’t make sense to grow your money at 4%. Obviously a year or two ago when mortgages were down to 2%, a lot of people I knew borrowed against their homes at 2% because they had the ability to make 8% somewhere else and they were able to make that spread.
Personally in my life, I was blessed. I’ll tell you a story. Part of me wants to make a third podcast just to talk about some more personal stuff, but maybe I’ll incorporate some of that here. When I was in law school, my father paid for law school, but there was federal student loans interest free for six months until six months after graduation. So my first year of law school, if I could have taken the money my father gave me, paid for school, but by taking out the loan to pay for school, I had three and a half years worth of interest free loans. So I took out those loans and then I invested the money my father gave me. And then six months after law school, I paid it back and I kept the difference and investing that money for three and a half years and then second semester for three years, and then second year and third year, I was able to make a significant amount of money. That’s really why I was able to buy my first house with the money that I invested. And it was basically on the spread. I was borrowing at zero and lending at 12. Interest rates are obviously significantly lowered now. So when it comes to investing, there’s a book that I like to buy like my cousins or my nieces and nephews when they graduate college. It’s called The Only Investment Guide You’ll Ever Need, and it’s available on Amazon and I have nothing to do with it. I have no benefit.
I didn’t write the book, I didn’t publish the book or anything like that. The only investment guide you’ll ever need, I’m going to find out real quick, I forgot who the author was, the only, and there’s been a few additions. It’s by Andrew Tobias. And it’s a really good summary. If someone says to me, Matt, I inherited or I won $50,000 in the lottery, what should I do? And I’d say, you got to read the only investment guide you’ll ever need because there’s people out there, there’s financial planners and people out there that would charge you money to invest your money for the privilege of investing your money.
But there’s a quote in the book, there are no brokers who can beat the market consistently and by enough of a margin to make up for their brokerage fees. You don’t need a broker manage your own money. And that’s hard for people to understand because people are scared of managing their own money. Going back to my history a little bit, my father started Day Tech online and allowing people to invest their money without paying exorbitant fees to a broker. So there are no brokers who can beat the market consistently and make up for their fees. And once you pay those fees, now that’s your money that’s going to be out of the market and not be invested for you with the benefit of compound interest for the rest of your life. So Andrew Tobias, the only investment guide you’ll ever need. There’s another in that category.
There’s another suggested reading that I like to give to my cousins and nieces and nephews. It’s a Warren Buffett article. He writes every year in his letter to shareholders, and there’s an article he wrote about the Got Rocks family. And he basically imagined, he said, and if you Google got Rock’s family, you’ll be able to read this and it’s everywhere on the internet. And basically the point is, if you imagine that the entire US economy is owned by one family, the entire US people, they’re called the got rocks. And then as the economy does better, they get their dividends and they get paid. So basically if you’re invested in the US economy, you’re going to do well because if you look at any period, any five year period, 10 year period of the US economy, we’ve always increased and always done better.
And then he talks about a salesman class that grows and kind of explains to some of the got rocks over here, Hey, if you let me manage your money, we’ll buy some of this and sell some of that and we’ll outperform the members of your family. Well, in order for one person to outperform another, someone else is going to have to lose money. So you’re paying these investors, these helpers to outperform the other people and maybe you will outperform them. Maybe you won’t outperform them. And that’s the financial advisor or the stockbroker. And I guess stockbrokers or financial advisors listening to my program aren’t going to like what I have to say here because as members of the Scott Rock family try to out further outperform than the hyper helpers come in, those are the hedge funds of the world, but basically buy and hold of the US economy, you’re going to do okay.
And that’s the theory of mutual funds that started companies like Vanguard or Fidelity. John Bogle, who’s the founder of Vanguard, the Vanguard Mutual Funds have very, very low expense ratios. So you are going to keep more of your money and that will be invested on your behalf. So I start with Eric, M’s only investment guide you’ll ever need Warren Buffett’s theory on the Got Rocks family. You don’t have to read John Bogle to understand that you should invest with Vanguard or Fidelity for the low fees and the low expense ratios. I highly recommend the Vanguard 500 Index fund. You’re basically buying the US economy, and as the market does well, you’ll get that growth. And in your lifetime, if that is your IRA or $2,000 a year, it might be more now that you invest every year until your retirement for 50 years, you’ll see a large amount of growth at very, very low fees.
The other piece of reading that I like to recommend is a magazine called Kiplinger Personal Finance. And I may be a dinosaur, but I like when it comes in the mail and I like flipping through the pages. There’s plenty of stuff I read on the internet with TikTok and Instagram and emails and everything. Sometimes my email’s overloaded, sometimes I’m saturated when I’m reading all this information. So by getting the paper copy of the magazine, it kind of puts a focus on it that I couldn’t get by reading the digital copy. Maybe my kids in the next generation would want to read this digital copy. But what I like about Kiplinger Personal Finance Magazine is even the way the name is Personal Finance, it’s not the Wall Street Journal. It’s not written for hedge fund managers or people invested for in hedge funds. It’s written for everyday people who either want to save up to own a house or pay for college or pay for retirement.
So every issue has good articles and investment advice and real everyday issues that affect everyday people. And you don’t need to be an MBA, I would say a rocket scientist, but an MBA, I didn’t know what a business major was growing up, but you don’t need to be a business major to understand what’s in Kiplinger Personal Finance. And I read it every month and I think it, it’s a very important reading for people to understand their personal finances and saving for goals and saving for college and saving for the tax bill because it is March and taxes are due next month. And any real estate agents out there, I’m curious what real estate agents do because we get paid our commissions and there’s no withholdings, right? If you work a job, your employer takes that withholdings, but your real estate broker doesn’t take that withholdings.
So you get your commissions and then the following year you owe tax bill. And a lot of people don’t have the cash to pay that tax bill if they didn’t start saving a percentage or a set amount. Take 20% out of every commission check and save it in a separate account or at least a separate line for tax time. And I am curious if any real estate agents out there that are listening, if they have any tips on what to do to prepare for your taxes, obviously you can deduct, there’s a lot of expenses you can deduct as far as marketing and travel and business deductions to try to lower that tax burden. But if you sold $3,000, no, if you made 300,000 worth of real estate commissions in 2021, that tax bill is due next month. And I’m curious how my colleagues in the real estate industry save for taxes.
But basically what I’m trying to say is going back to the budgeting, you can accomplish anything if you set a budget for it. When you get your commission check set aside, you could have separate accounts or just use an Excel spreadsheet to track what’s in your account. How much are you saving for taxes? How much are you saving for retirement? How much are you saving for a wedding? How much are you saving for the kids’ college and diligently add to those budgets every time you get a check, if you get a tax refund, one of my employees I know is expecting a $1,200 tax refund. A lot of people look at that tax refund as free money and they go out and spend it. But if you could divide that up and put that into your savings in the appropriate spots and save up for an eventual down payment on a house, that way you can stop renting.
Because if you’re living and you’re going to be living in a particular area for a long time. I’ve been warning people for years and years and years as property values have gone up. Obviously they’ve gone up a lot in the last year or two, but they’ve been going up and up and up. So it’s the rental trap. People think they’re smart by waiting out the market and no one has ever made money by not being invested in the market, whether it’s the stock market or the real estate market or the crypto market. No one’s ever made money by sitting back and not investing and waiting for the market to go down. It’s very anti-American, very anticapitalistic to believe that there’s something somehow wrong with the market. Now the market does go up and down. It does fluctuate, but over time, and I’m not a big believer in crypto, so don’t quote me on that one, but over time the stock markets and the real estate markets do tend to rise and it’s better to be in it and be rising than to watch it sail away.
So I’ve had a lot of these thoughts lately, and I’ve had a lot of open windows on my computer with emails about Kiplinger’s and Buffet, Scott Rocks and Vanguard Mutual Fund investing. And I’ve been trying to figure out where to put all that information, where to send all that information. So I thought I could talk about it for hours, but it’s only been about 20, 25 minutes. And I know it’s a lot, but it’s been something that I’ve been wanting to say. I’ve been wanting to say it to my children, to David and Lindsay. I’ve been wanting to say it to my agents, the ones that are listening, and especially the ones that aren’t. And I’ve been wanting to say it to my employees and I’m glad I got it out there because it’s just basic information that I think to summarize, saving money and budgeting for all of your goals. It was interesting when I met my wife, when I met, she actually did this.
She had a budget for Broadway shows. She had a budget for travel and she didn’t let not having money stop her, she would just save. And we decided to take a road trip across across Tennessee. And early on when we were dating, she set the budget for the road trip, how much we were going to spend on guests and how much we were going to spend on hotels and food and entertaining. And then she created a weekly budget to achieve that so that she’d save up enough money for the trip. And she’s always been like that. And it’s very definitely to be respected and to be taught. And I don’t know if we taught our children, I’m trying to get a handle on their budgets, how much David has for his cell phone and for his Xbox and for gas. I can’t charge him for gas because he drives to school in Fort Lauderdale, so we pay for his gas.
Staci Garcia:
But he has a business.
Matthew Maschler:
He does. He’s been flipping cards and it’s a hobby and a business. Actually asked him last night if he considers it more of a hobby or more of a job. And he definitely considers it a hobby, but he likes it. And so sometimes he’ll buy a football card, he wants the card, it’s one of his favorite players or whatnot. But sometimes he’ll see a card for $350 that he knows he could sell for 400 and he’ll buy the card and he’ll flip it. And it’s quite similar to when I was a kid, I was flipping concert tickets.
Staci Garcia:
I still do that.
Matthew Maschler:
You do that?
Staci Garcia:
Yeah. I try not to tell anybody because it’s not very popular these days. But yeah,
Matthew Maschler:
Well, when I did it, there wasn’t an efficient market, right? There wasn’t StubHub or Craigslist or eBay. So it was difficult for people to get tickets to sold out concerts. So I did very well people. So in high school I didn’t tell anybody. You said you don’t tell people.
Staci Garcia:
I try not to tell people because first of all, you could alienate your good friends that want to pay regular prices, but I also could just dump the tickets at Face value and give them to people I know.
Matthew Maschler:
So I told people in high school, I told people I knew a scalper. I didn’t
Staci Garcia:
Tell people I
Matthew Maschler:
Was a scalper. So they would tell me like, Hey, Matt, could your guys get us tickets to Rush? It was sold out. But then I’d just go and Ticketmaster find out it wasn’t sold out. I buy the tickets and I’d sell it to them for a higher amount. But if I was a Scalper, I’d feel if they knew I was a scalper, they knew I paid $40 for the ticket.
Staci Garcia:
They
Matthew Maschler:
Wouldn’t want to pay me $75 for the ticket. So Matt knew was Scalper,
But in the high school was 86 to 90. Holy moly, it wasn’t even the nineties, it was the eighties, and there was no other way of getting tickets. So Billy Joel, new Kids on the Block and Bon, oh my goodness, I made so much money on Bon Jovi and New Kids on the block. And I remember one particular time someone asked me about a concert that wasn’t sold out, and I told them, okay, we could put half on the credit card and half in cash. And I used their credit card to order the tickets from Ticket Pester
Staci Garcia:
Full price, and you just kept the cash.
Matthew Maschler:
And I told them, you have to give me the exact amount that’s on the credit card. That’s obvious. You have to give me a cash. Oh my gosh. And I had this doctor out of Iowa or Nebraska, and he called me every year for us open tickets.
Staci Garcia:
Nice.
Matthew Maschler:
And I didn’t know what the US Open was,
Staci Garcia:
But you bought the tickets.
Matthew Maschler:
But I bought the tickets and I sold it to him every year when the US Open would go on sell, I’d buy him in advance. I knew the guy was calling and four tickets to the US Open every year. I probably made $400 on that, which was a lot
Staci Garcia:
In 1987.
Matthew Maschler:
So yeah, so he’s buying cards and he benefits from the fact that he has a great line of credit,
Staci Garcia:
Right? That’s great. I’m sure you don’t have credit right until you go to college.
Matthew Maschler:
His line of credit’s, my ATM card, so he could buy anything. He could buy a $1,500 card and sell it for 2000, but if he didn’t have the access to the line of credit to be able to buy 1500, 1500 is a lot of money. So if he buys a $1,500 card, but he bought the card because he knew it was a 3000 card. So it was kind of insane that he bought a 1500 card because that’s a big bet for a 17 year old kid.
Staci Garcia:
It is.
Matthew Maschler:
And not even to say, Hey dad, what do you think? And he just did it. But that’s okay. So he has an interesting value of money, whereas he’s flipping cards and my daughter was working for an hourly salary. He can’t imagine working a job for an hourly salary work eight hours for $15 an hour, whereas this is just a hobby to him. He loves the cards. But what I explained to him, oh, this is interesting, this I learned from my father also, there’s three things that you need to make money. You need a knowledge, knowledge specific, knowledge, risk and work, and any of those will make you money. What my daughter was doing for working at Michael’s or Party City for hourly was work. She was willing to do the work, not much risk, not much specific knowledge. She didn’t have to learn anything or know anything, get an advanced degree, go to plumbing school. They were able to train her to do the job. And it was actually very impressive after working there for a few months that when she had a day off, when people would call her, how do I, and she’d tell ’em what to do on the register. It was actually very impressive. Now that person who has that knowledge, they get a promotion, they get paid a little bit more,
So they have a specific knowledge. The manager might have a specific knowledge because of their experience working there. So you need specific knowledge, risk and work. And we talk about digging ditches. I was walking in New York City with a friend of mine and there was a construction pit, 2050 feet underground, all these guys with wheelbarrows and stuff. And I was like, man, thank God that I’m blessed that I don’t have to do that for a living. But that’s work. There’s not a lot of risk. There’s risk in doing physical work, but there’s job security. So there’s not a lot of risk. There’s not a lot of specific knowledge. They’re just doing work with David. He has specific knowledge. He knows the industry. He knows what the cards are worth. He knows how to sell them. He knows who to sell them to. He knows where to get them.
He knows where to sell them too. He knows he has his own buyers in the ticket business. I had my book of buyers, he has his repeat buyers, so he has certain amount of specific knowledge, and he does take a risk, right? You buy a card for three 50 that you think is worth 500, and what if it’s not what you lose money? Or what if the card is damaged in transit? Somebody was complaining to him that the card wasn’t as described and the person was trying to get a partial refund. I told David, just tell the guy to send the card back because I don’t even want to deal with the guy. I don’t want to negotiate a lower price. I get the money back, get the card back, you’ll send him back his money. But if he’s complaining that there’s a bent to edge, the guy could always just make a bent edge. So there’s risk involved, risk specific knowledge and work. And those are the keys. Something that my father always said about making money that’s needed. And in real estate, obviously I feel like I have a pretty lengthy knowledge that I’m trying to share with you on the Real Estate Finder podcast. There’s not that much risk being a real estate agent. It’s a hundred percent commission.
Staci Garcia:
That’s a big risk.
Matthew Maschler:
That is a big risk, especially if you have liabilities. If you have rent or a mortgage and a family relying on you and you have a hundred percent commission job, that is a big risk. You can have good years and bad years. There’s very much a gambler’s mentality being a hundred percent commission. I know that this year I’m not going to do the volume that I’ve done in the past because there’s a lack of inventory. So while I have other sources of income, I have rental units, it’s still in real estate, but I’ve rental units. And theoretically, if I’m tied for money, if I can’t make my mortgage, maybe I would sell one of my rental units or one of my investment units that I’ve been planning on renting. Here’s an interesting thought or problem. When you sell a capital asset, you have to pay a gains tax.
And remember before I said about my father taught me, he’s not much of a seller, right? Let’s say I bought a house, bought a house, fix it up, I can flip it, but then I have to pay a gains tax. So if I bought a house for let’s say two 50 and put 75,000 into it, now I’m into it for 3 25. If I can sell it for 4 25 and make a hundred thousand dollars, well, I’ve got to pay income tax, and if it’s short term, it might be a third, or I can own the house at 4 25, rent it out at a value of 4 25, I’ll still pay tax on that rental income, but the capital gain, if I realize that capital gain, and then go to invest that in Vanguard or according to Buffet or Vanguard or Andrew Tobias, and use one of those theories, well, now I’ve taken after tax money that a hundred thousand dollars reduced by taxes, it won’t grow as fast, but if I’m fully invested, if I keep it in that property and collect the rents and I get the property appreciation, I have that whole a hundred thousand dollars invested for me and not be reduced by taxes.
And that can be a consideration. Luckily, in real estate, we have what’s called a 10 31 exchange. So you can protect those capital gains, move it to the next project. I am not as familiar with 10 31 exchanges as I should be. I know a lot about them. I just never actually done one before. I’m actually looking for someone with knowledge on 10 31 exchanges to come on the show and interview. So if you’ve ever done a 10 31 exchange, or if you work in the 10 31 exchange industry and you’d like to appear on the Real Estate Finder podcast, please reach out to me@realestatefinder.com. matt@realestatefinder.com, (561) 208-3334. But that’s, they call it a loophole, right? Anything that people can use to defer or not pay taxes, it’s called a loophole. I think it’s something that the government’s encouraging us to do. It’s not that a loophole is, it’s not a bad thing.
You found something, you found a mistake in the tax code. You’re actually doing something that the government wants you to do. When the government creates a rule like that, why does the government want real estate investors and not stock investors or other investors or car flippers or any other investment industry solely real estate investors? Why does the government want real estate investors to be able to sell real estate, not pay tax? And the answer is it’s to make the real estate industry more liquid. If it wasn’t for this rule, many people would just hold onto their real estate for extended periods of times for lifetimes, and there wouldn’t be an efficient market of buying or selling. And a lot of real estate may deteriorate. You may have older properties on the market for rentals and stuff. And as neighborhoods change and the needs in the neighborhoods change, the investment properties that are being held by a seller like my father who doesn’t want to realize the tax won’t be able to change with the neighborhood by creating this loophole, they give an investor the ability to sell and move and provide liquidity in the real estate market so that neighborhoods can change and be redeveloped and be redistricted.
So otherwise, if you own stock in Ford, you can’t sell it and then use the proceeds to buy GM tax-free. That doesn’t help anyone but the corner store, the corner holdout in a whole development that needs to be redeveloped, redeveloped. They need that mechanism to let the investor sell the property and let development and progress continue. So that’s why we have loopholes, and there’s always a threat not to get into politics, democrat or Republican, but it’s always the Democrat candidate every year in the campaign who says that they’re going to close the 10 31 loophole. Obama said it, Clinton said it, Biden said it. They never actually do. I don’t know why. I don’t know. I don’t know why it’s so important during the campaign and so unimportant while you’re governing. And I guess there’s only so many things that the president can do and put on their agenda if he has to spearhead it, he or she.
If the president has to spearhead it, it may not be the first thing that they want to spearhead, but if there’s a movement in Congress or something like that, I guess it’s a nod when they say something in the campaign, I guess my whole life would always upset me when they said something in the campaign and they don’t do it, but it’s just a nod. It’s just, Hey, hey, senators and congressmen, if you do this, if you want to work on it and spend your time, here’s my position. Here’s what I will or won’t approve, but I’m not going to go out and actively work on it because there’s only so much I can do. So I guess
Staci Garcia:
I look at it like they’re appealing to a certain Venn diagram of Americans, a multiple Venn diagram. They’re overlapping all over the place, and they’re going to find one little tiny 10 31 group that likes 10 31. And if they mention it, even if they do nothing, they’ve appealed to that tiny, tiny overlap between them and the political party. And then they can say, oh, okay. Hey, 10 31 people, here’s what’s up.
Matthew Maschler:
Or anti 31
Staci Garcia:
Or the opposite.
Matthew Maschler:
I just never understood why they don’t actually do it when they become president, and it’s just because they can’t do everything. I guess it’s only so much on their plate. It helps to talk things out loud, right? It makes sense. Why would he make that the first thing he did or the most important thing he did is there’s so much else going on. But what he’s saying, if some senator or congressman wants to introduce legislation to repeal or change, he’s indicating which way he would go on that. So I’ve always seen it as a good thing, and it’s not because I’m a real estate investor, I just understand why it’s there. But those are a lot of words for saying, if you are familiar with 10 31 exchanges, we’d love to have you on the Real Estate Finder podcast. And if you have questions about personal finances, someone asked me recently when I was planning on doing a show about personal finance, how does personal finance have to do with real estate? And if you don’t have your personal finances in order, you can’t buy that first home
And you can’t buy that investment home. You can’t buy that second home that you’re using as an investment. And so much wealth in America is created by real estate. But if you can’t even buy a piece of real estate, if you’re a perpetual renter, there’s nothing wrong with renting. But as we see the property values are going up, and unlike the last bubble where people say, is this a bubble or not? The last time property values went up, rents didn’t go up the same way. And that was why that was a bubble. And this may not be a bubble because property values are going up and rents are going up, but you have to have your finances in order. You have to save for your goals. You have to save for your down payment on that first house. I have heard that the banks are getting more creative and flexible and accepting smaller down payments.
Well, the sellers aren’t. That being said, here’s something I wanted to talk about. If you are a buyer, there are. If you’re a buyer and you’re competing with cash offers and you’re getting a mortgage, I’ve said it before, you can make your offer cash and you’re still allowed to get a mortgage. And what I realized is a lot of buyers just don’t understand that. And a lot of sellers, they get upset when they think there’s a cash buyer and all of a sudden they find out that the buyer has a mortgage, it’s getting an appraisal, getting a survey, and this or that. So if you do some work in advance and make sure that you get all your pre-approvals done in advance, you can generally get your mortgage commitment done quickly and you can rush the appraisal. So what I’ve been saying recently is let’s say you’re doing a five day inspection, put down a five day mortgage, a mortgage contingency period.
Now, you’ll never get your mortgage commitment and your appraisal done in the five days, but the seller shouldn’t care, right? If it’s a three day inspection or a five day inspection, you can cancel for any reason. So if you match your mortgage contingency to the same three days or five days, then the seller can accept your mortgage. Your offer with a mortgage, you can cancel in the three days or five days, same as the inspection where you can cancel for any reason. So this is part of any reason, but the period will expire and you’re still going to get a mortgage. You’ll get your commitment later. You’ll get your appraisal later. You don’t have the benefit of being able to cancel if you don’t get the commitment, but at least the contract’s written. So it looks like, and everybody knows you’re getting the mortgage, it’s a question of who should be at risk if you don’t get a mortgage?
The seller or the buyer and the sellers don’t want to be at risk here. So now the buyer’s at risk, the buyer’s in default if they don’t buy the contract. But if you know your credit and you know your credit score, if you’re working with a reputable mortgage company that tells you everything’s done, then you’re just waiting for the appraisal and you can get your mortgage commitment, your mortgage settled in between the mortgage commitment period and the time for closing, you take that risk. The seller doesn’t have to take that risk. And I think it may appease the seller and make more sense. Making a cash offer with the intention of getting a mortgage, feeling like you’re being deceitful, the seller thinking you’re being deceitful, at least put the mortgage contingency in, make it match the inspection contingency, and then it expires. They expire together. But going forward, you are getting a mortgage. I haven’t tried it yet. I had that idea. It kind of just popped into my head the other day. I said, why should the buyer lie and say they’re not getting a mortgage? Why don’t they just say they’re getting a mortgage and let the mortgage contingency expire with the inspection contingency? And that’s something
Staci Garcia:
Sometimes. Now, I guess there is no inspection of contingency.
Matthew Maschler:
Well, if you’re doing a no inspection contingency then
Staci Garcia:
Or a small a three day,
Matthew Maschler:
Yeah, that’s what I’m saying, even three day, even one day, one day inspection contingency, one day mortgage contingency, at the very least, you’re putting the mortgage terms on the contract. You’re being upfront with the seller that you’re getting a mortgage, but the seller’s not at risk. And all your real estate agents out there, please explain it to your sellers. Sellers. I don’t want to say sellers are stupid, but sometimes the sellers need to be taught. I had recently dealt with a landlord who was upset that the tenant’s credit wasn’t necessarily high enough. So I said, well, what if the tenant prepays the last four months of the lease? That way, if they ever don’t pay, you evict them. It takes six weeks to get someone out for nonpayment, but you have the last four months in your pocket, so you’re not at risk. It comes from me because I’m a sophisticated landlord.
It just confused the shit out of the landlord. The landlord just didn’t understand it. So I’m trying to be creative and I’m trying to protect the landlord, and I ended up scaring the landlord off. So that happens. So if you are a real estate agent, please try to teach your customers and make sure they understand what’s going on, because sometimes they just don’t. And we move so fast, even before this crazy market. But with internet and emails and less face-to-face meetings, we’re moving faster than ever before. And now in this market, we’re moving faster than ever before and people are being confused. And your job as a real estate agent is to teach your customer. Otherwise, they could just do everything online and use Zillow and ibu, and they don’t need you. So please try to teach your customers, I don’t want to say control them, but make them understand the process and when things benefit them and it scares them because they’re not sophisticated, we create a problem for everybody. Alright, the Real Estate Finder podcast is so we’re open to suggestions. We’re open for guests if you’d like to appear on the show, if you have suggestions for a show, if you have questions that you want answered, please email me@mattrealestatefinder.com or email
Staci Garcia:
Stacy@realestatefinder.com,
Matthew Maschler:
S-T-A-C-I. And we would love to discuss your issues, your answer, your questions on the show, or have you on the show or do an episode. We are accepting sponsors. We just signed a deal with the Gardens of Boca Raton. It’s a cemetery and a funeral home on military trail. So in the coming weeks, we’ll try to drop a commercial once it’s recorded for the Gardens of Raton. Very important to pre-plan your cemetery needs. And also an interesting fact, if you are coming down from New York and New Jersey and you want to establish residency, not that buying a cemetery plot establishes residency per se, but it’s part of the test. It shows those New York and New Jersey and Connecticut taxing authorities that you really don’t intend to come back to their state. So if you’re trying to establish
Staci Garcia:
Your body,
Matthew Maschler:
Yeah, so if you’re trying to establish residency in Florida, see our friends over at the Garden Cemetery make your funeral plans. They’re judgment proof and they’re bankruptcy proof. So you can pre-plan, lock in the great prices today, judgment proof, bankruptcy proof, so you’ll never lose them. And those New York or those northern taxing authorities will see your intent to remain in Florida forever. So it’s all good. You don’t want to be calling them at the gardens in your hour of need. When you’re sad, when it’s difficult to make decisions, it’s not the right time, and that really goes for anything, right? When I go to a car dealer or when I used to go shopping, I used to not bring a credit card with me because I had a set price in my mind and over that price, I needed the night to think about it. So I used to prevent myself from buying because I wanted to force myself over a certain dollar amount to sleep on it. Yeah. So you don’t want to be buying a washing machine when your washing machine breaks because then you’re desperate for a washing machine.
Staci Garcia:
That’s how I feel when I go out in my car. I’m really hungry at some point, and I used to hide cash money in my car to get gas just in case. And now I can’t because I know that if there’s no money in my car, I won’t stop to pick up anything to eat. So I take the money out of my car when I’m on a diet, I could run out of gas, but at least I won’t stop at a drive-through.
Matthew Maschler:
Having that money is temptation. But also what’s interesting is spending with cash money makes it real. Spending with your credit cards almost seem different. And now spending with just your iPhone app, you don’t feel that pain at the pump is what they used to call it. When you actually have to pay the money, and we’re living in a world that’s increasingly, increasingly cashless, I don’t think we’ll ever go totally cashless, but not seeing the price. I used to think when the EZPass and SunPass was first came out, I used to know all the tolls in New Jersey and on Florida turn, I used to know how much it costs to go to Orlando or to go anywhere on the turnpike. And I used to go out of my way to maybe drive on 95 and crowd across an the E Hall junction to
Staci Garcia:
Avoid
Matthew Maschler:
The turnpike. Obviously, you can’t do that now with the price of gas so high. It’s much better to pay the toll than the price of gas. But I used to know the tolls. And then after SunPass and Epass, I don’t know how much tolls are anymore. You don’t even stop for them. So it’s a weird disconnect that we’re having between our money, and that’s why it’s even more important than ever to budget and take control of our finances before they take control of us. All right, that’s our show. Hope you enjoy it. The future looks bright and the storms pass by the sky’s dog. Blue.
Speaker 3:
When it’s almost that time, light shows cameras flash when I pass living in the moment, forget about the past. They saved the best for last. Matthew Mania. We about to make a splash. Life is a marathon full of sharp turns. Got to keep pace on the clock. Stakes five star. I run a show. You can tell the center plate electricity energy if vibrate. I’m always on time. Even if I’m making, I make dreams come true. Living my life. Hope the same for you. My sights got a real clear view. If you don’t know the time I give, what time it is? What time? It’s who’s time? What time? It’s man. You know What time. You know time. You know what time, man? Yeah. Got him shook, scared. Can’t look. We’re not afraid of the big bad wolf.
