So again.
And I became friends after we met in 2019.
Yeah.
So we were both at a private equity conference in Laguna Beach
Well, we figured that if we could bring everybody in that a non sales
in a non sales way and just talk candidly about gold and about wealth management
and about crypto, Last year we had crypto oil and gas, real estate.
What's really going on So I'm curious about Ken's perspective.
What are these going on with the economy?
I think that interest rates are going to be going to be high
for when I say high, I think they're going to be
in the 5 to 6 and a half range for the next 18 months.
I don't see them going down much.
The Fed, they basically stable.
They said they were going to raise rates, of course, but they also said
that they were going to raise at least two more times before the end of the year.
So like if you look historically, these rates are average.
They're just not average to people who just started.
So, you know, so those are the ones that are kind of shocked.
So what's what the what has to happen is the prices have to come down.
And as certainly they are on commercial real estate
and they're starting to a little bit on single family
here and there, depending on where people are moving out of mostly.
talk about that a little bit about unemployment.
So a little bit more further on that
because that's something that I don't think everybody I know.
I didn't for a while
about how unemployment has to go up and in order at all about the economy.
Yeah. So
I actually just looked this up this morning.
Can I you were going to ask me this question
as there's a couple different views on this.
But the Fed has publicly said that they want
the unemployment rate to be around five.
So just Google that.
You'll see there's been multiple people that have said
we think that it should be around five and around five.
Four and a half to five is what they believe is stable.
So whether they're right or they're wrong,
that's what they believe and that's what they're saying.
So right now, I think yesterday, this week said 3.7.
I think I think it was 3.5, maybe 3.7.
Right now, 1%, it represents 1.6 million people.
So there's 162 million workers right now.
And you can go to different websites and you might find less and more.
But the one I looked at was 162 million.
So 1% is 1.6 billion.
So if they do that, what that means is that
they're going to force
unemployment more because more unemployment,
more people out of work takes pressure off of wages.
So it's kind of the opposite of what you would think the Fed would do.
But that's actually what I believe they're going to do.
So it even something we've talked about before when it comes to, you know,
supply demand, chain issues and stuff, when it comes to builders,
there's a lot of a lot of speculation.
Pay market you're in for single family supply still is a total issue right there.
There's not enough supply there.
So despite the fact that even though unemployment
might still be going up, people might lose their jobs,
there might be some people that have to sell their homes
in certain markets of the U.S.
supply still is a big challenge.
And that doesn't mean that prices are going to drop so much.
There's if some of you guys depend
on which part of the country you're in already know
that you haven't seen much drop in certain markets, maybe that upper
echelon homes have been seeing some prices drop for sure.
I know some homes here in Scottsdale have seen half a million dollars cuts
and so forth, but they believe it depends on where you are specifically.
Buyers right now, in our opinion and single family are nervous.
So they're a little bit scared. Like investors love you guys.
Invest in single family.
And this is all I do is single family.
The investors are kind of nervous because interest rates are so high
that they're like, how does this cash flow might?
I just lost a bunch of money on a flare, right?
Alison Earn $50,000 on flips last year, right?
And that's not fun.
But that's just from I had some high it all was I dipped
this is what it was good thing we do more than just a couple of homes
but that said that can cause a lot of fear on an investor side.
Whether or not they double down. I keep going forward.
But what about that seller?
Is that seller scared right now?
what about multifamily?
You seem to be good at that
and there's a lot of people here that are interested in multifamily.
There's a number of vendors here that do it. Yeah,
I know there's a number of people that are currently doing multifamily
deals out there in the middle of it that might be in trouble right now
with the way that cap rates have gone, as well as the way
interest rates have gone and what that's doing for them.
But what about the future of multifamily?
Well, the one thing that's going to be clear about multifamily
and one year from now is that the properties will still be there.
Yeah, the properties isn't there.
Maybe not the owner. Yeah, Yeah.
I think a lot of it's going to depend on the capitalization of the partnership.
You know what they've done in the meantime.
Well, while we've had ten rate increases and whether they have rate caps
and they can cover it, So it's kind of all over the map.
What I mean is, is I've looked at properties
But there's no question that cap rates have gone up When
when you have ten rate increases and the cost of borrowing has gone
up, you're going to have to pay less for that exact same property.
So so what's happened?
So cap rate are the interest rates aren't an art, are not a direct
lever to increase cap rates, but indirectly they are
because the buyers are looking still for cash flow.
Like everyone here is still going to look for cash flow and they're going to say,
I'm going to put a million bucks into a property and I want a 7% return.
You know, I want 70 grand a year in cash flow.
And that's how it works.
And if that debt goes up and then all of a sudden
that cash flow goes down to 30 or 40, now
they're looking at a three or 4% return and they'll probably pass.
And then the seller is going to be in a position
where they're going to have to lower
their price to be able to accommodate the higher cost of debt.
that has how cap rates actually have gone up.
So that's happening.
I we're seeing 20, 30% repricing on on commercial real estate.
All right. So what's that mean for us?
what it really what it means is if they have to exit for some reason,
What that's going to do, it's going to clean house.
It's going to those are those will make their way through the system
and they'll trade to someone else
there's definitely opportunities in all these things.
Like some of us got started where there's a massive amount
of foreclosures that every real estate out of it. Right?
Some of those got started pre 20 829 class.
Some people just got started in the last few years.
And this is all new to them.
Either way, no matter what you're starting,
I believe there's always opportunity, just like you believe that as well.
That's why we're seeing gloom and doom in so many ways.
if I'm sitting there and I want to be able to figure out
how do I hedge with my family, how do I protect my own household,
how do I make sure that I can find a way to become
more financially independent in the next few years,
if not, maybe a few years out and knows, is there something else
I could be focusing on besides just real estate?
Yeah, well, first of all, I think there's, you know,
you got to have two or three side hustles, whatever they might be.
But the key to this next period of time,
I, I just tell everybody you got to survive to 25.
That's what we have to do.
You have to figure out a way to hedge any losses that you might have.
Take, you know, if rates are going to go up.
The Fed saying there are and they could go up higher, who knows?
You should heads up or get out of the property,
take your losses and you know, you know, like you did.
Yeah, right. You did that, right?
Yeah. Yeah. So you got rid of a couple of bills.
Yeah, we got so we got some bad buildings is more.
That's why I like single family a little bit is that
you can get rid of a couple of units out all your units like multifamily.
That's something I like to do.
We also hedge did a bit where we have a couple more companies
now, so we have our hard money company, We have a big city capital,
our fund that we do for single family, and we have exceeded that.
So yeah, so doesn't things change, right?
The events industry, whether or not is actually slowing
down on the real estate side of things, but it's picking up in other aspects.
But hard money is picking up.
And then we also have real estate.
I believe single family is still definitely a great place for us,
but not in every market.
And but fighting side hustles is always, always a good thing.
Anything else? Yeah.
No, that's good.
I appreciate you all. Thank you so much. Thank you, everybody.