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I lost EVERYTHING At 29 years old when Paul Volcker raised Rates.
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- เผยแพร่เมื่อ 7 ก.ค. 2024
- If you like my videos, please like and subscribe. I also love your comments.
No one told me that we live in an Economically Changing Environment. In 1979 my RE Business collapsed and I was forced to sell. I promised my wife that would never happen again, By 1991, we were Financially Free.
You have that same opportunity coming in 9-12 months.
It is time to build reserves, get out of debt, protect your credit, protect your Incomes Streams and your job.
I have been forecasting that Commercial Real Estate would be collapsing and it will drag Housing DOWN with it, Commercial Real Estate is completing. All that fun we had when homes were appreciating 3-4% a month, we were congratulating ourselves at how smart we were...those days are over and the opposite will happen as home prices DECLINE 3-4%
I still am forecasting property prices to decline. I think Home Prices are not going to rise any further.
This is my warning to you!
This is just a signpost along the way confirming where we are in the Real Estate Cycle Completion. Fortunes are yet to be made.
If you would like to consult, contact West USA 602-942-4200 and ask for Michael Douville
Patience is now required. If you purchase now, you risk losing 30% or more that may take 5-10 years to recover.
However, if you are patient for the next 12-18 months, you might be able to have a Life Changing Opportunity.
I am encouraging Investors in Endangered Cities to move their investments to better markets via an IRC 1031 Tax deferred exchange. This is very inexpensive and does not trigger a tax implication.
Schedule an appointment to review your situation.
Let's get ready to invest when the time is right. Contact me to schedule an appointment.
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Wow its great to hear someone who was in the economy as an adult back then. These types of annecdotes are priceless cuz you rarely have anyone telling you this
Thank you for the comment. I have been 50 years in the Real Estate business; it has been very rewarding. I have been fortunate to meet fascinating people and experience hardships and good times. As in any Asset Class, there are cycles, and an extreme is coming; those that prepare will do very well.
Michael Douville
I’m in Canada, house prices in Toronto went up 70-100% in 4-5 years. I sold everything and sitting on some cash. Hopefully will get buying opportunity here.
Still early, more upside to go for a few more years
great video - can you comment on the relationship of wages & home prices? in the 70s & 80s wages grew relative to home prices making them more affordable whereas today exactly the opposite has happened. eg in the 70s a home was 3X salary whereas today it’s 6X.
Thank you for the comment. Yes, those were the days! Correct in the 70's, homes were valued at approximately 3x salary. Mom was home with the kids and 1 salary supported the household. Houses are a phenomenal Inflation hedge; Real Estate has not only kept up with the Inflation Rate, but the Appreciation has also almost doubled it! In some localities, values are 10x salaries.
My work shows a correction, then rents and values should start the rise again.
Rents may double from here in in migration States.
Michael Douville
I cleaned up in 1980. I was 18 years old and deposited my student loan check in a money market account paying me 18%. Playing the float!
Thank you for the comment. Nice! Good thinking outside the box!
Michael Douville
you were wrong back then and you’re still wrong now, Powell is not Volker, this is not enough rate hike. We’re in the first cycle where we think we solved the problem and inflation comes right back at earliest easing
Thank you for the comment. I was obviously wrong, and I paid the price. It was pretty humbling. Could I be wrong now? Of course! I am glad you are willing to challenge others and form your own opinions. I have plenty of time to deploy the Capital entrusted to me, I am returning 5%+ while I am warehousing the funds and taking very little risk. I am waiting for my models to flash the "Buy" signal.
So far as inflation goes, if you follow my work, I also believe 2 more Inflation Waves are coming and the only Policy response that will stop them is a Severe Recession brought about by restrictive Liquidity. Fiscal Policy is wildly stimulative and Monetary is restrictive.........I am betting on the restrictive to tip us into Recession.
Best of luck if you choose to deploy your funds now!
Michael Douville
Thanks for your perspective. I've been preparing for exactly what your taking about for the past four years.
Thank you for the kind words. You are very perceptive! Something is not right since 2020. Statistically, the data is off, the Government agencies have been revising downward for almost a year; at least what I have noticed. The Cycles, however, continue their journey and now it is just Time for them to Complete. Your caution is admirable.
It will get worse before it gets better, but it will get better and then you will have your opportunity.
Michael Douville
@@michaeldouville690 i watched a few of your videos this morning and subscribed. I really appreciate your content. Would it be possible to email you with questions that i have?
Good work.
Thank you for the positive response. It was a very low point in my life; very humbling. However, it led to an incredible life. The factors are aligning again; very dismal times will lead to Life Changing Opportunities. Even if I can help change 1 life, it is well worth the effort.
Michael Douville
You would be right except that isn't what is going to happen this time. Its an entirely different time, Volker could do that because we didn't have 30 trillion in debt, if someone attempted to do what Volker did today, well its the end of the dollar imo, we WOULD NOT be able to service the debt and we would default. It is also a different country now, being a "landlord" isnt what it used to be. There is not going to be deflation for at least a decade
As a new realtor myself. Im trying for that second rental and correction of the market. Wanna follow that method.
Thank you for your comment. The Real Estate Industry has been very good to me and many others. Good luck in your new career. There are only a few times in the Cycle where extreme caution is recommended. We are in one of those now. Usually, a good property is a good property. If you use the investment parameters suggested and be sure you have a stable cash flow, you probably have an investment that will produce ROI for years.
I would caution you that all properties will rent, but most properties are not good rentals! Most brokerages have someone that can guide you; if yours does not, you are welcome to contact my group for a second opinion. Best.
Michael Douville
@@michaeldouville690 Thank you for that offer. Very appreciated. And again Thank you for responding.
What year the inflation started and what year the real state start going down?
Thank you for the question. That might need a check with the record book. Inflation started in the mid-70's and continued until 1980. Volcker lowered rates and Inflation came back...there were three waves. I believe another wave of Inflation is coming, probably 2 more waves. It took a bit for the demand destruction from much higher rates to take hold. Just like now!
There is an uncanny resemblance, however, this is not a Mid-Course Correction; this is a full-blown Cycle Completion and it can get ugly!
Michael Douville
That finger though..
Thank you for the comment. It really hurt! I closed a door on it!
Michael Douville
did you have variable rate debt on the rentals?
Thank you for the great question. In the 70's, everyone went to the local Savings and Loan. Hardly any FHA or VA loans were written. Adjustable loans were not yet in existence and all loans were fixed at 25 or 30 years. 20% down was the norm. The down payment was a priority for FAMILIES, Mom and Dad and the In-laws would help with part of the down payment, but the first-time home buyer was expected to provide the bulk of the 20%.
Defaults were an incredible embarrassment, and a foreclosure was unthinkable. It would have been a stain on the Families Honor.
Michael Douville
@michaeldouville690 interesting times that we live in as many people consider being on welfare as something not to be ashamed of, mean while a few decades ago men had so much pride that if they went through bankcruptcy they'd rather sleep on the streets than go back to their mom's basement.
As an immigrant the latter was what i heard about regarding americans before arriving here. We are living in weird times
@@trybeatingthis There is a saying that it takes 3 generations in America to become Wealthy; there is also a saying that Grandpa makes the fortune, the son maintains it, and the Grandson spends every dime!
Perhaps we have the Grandson Generation!
Michael Douville
@@michaeldouville690 very interesting. I have friends who had family help with their down payments. My grandparents and my parents on one side didn't save up anything for future generations. My mom's parents at least came to the US for a better future for their kids, an opportunity they didn't exactly make the best of. They're the only ones in my family who knew how to handle money besides me. I keep looking at their lives to help guide my future. I'm grateful they actually planned their lives rather than just went with the flow, aimlessly just getting by.
@@michaeldouville690 If you had fixed-rate loans on all your properties then why did it matter that the rates went up? Why would that cause you to "lose everything"?
How do you feel that California will come out in the current situation? How do you feel that the Justice for Renter's Act will influence the price of housing?
Thank you for the insightful question. California is one of the greatest marvels of the World in regard to beauty, natural harbors and transportation, amazing workforce, phenomenal climate, and natural resources. I love California! At the moment, California has in my way of thinking a mis-guided governance and a bureaucratic government that is perhaps arrogant. The anti-business environment is pushing existing companies out and discouraging new companies. Here in Maricopa County, a very business friendly community, is enjoying the flow from California. The Easy Valley is receiving many new tech start-ups that would have gone to California. Here the workers can own a home of their own, send their kids to good schools, live in crime free neighborhoods, and enjoy a low-cost lifestyle in a great climate...... a pretty good place.
I know nothing of the Justice for Renters Act. I can tell you that here in Phoenix, tenants are expected to pay the agreed upon rent, on time, and if they fail to do so, the eviction laws are very clear and within the month, a non-paying tenant is out of the rental!
Michael Douville
@@michaeldouville690 In California, tenants can get around the lease and stay in the unit. They can be destroying your property and they can stay in the unit. They can stay in the unit and NOT pay back covid rent. I'm tired of it. I really enjoyed your video. It was well put together. I also agree with what you say about California.
@@rsu1367 Thank you for the response. Yes, I have heard that from other Investors. That would be terrible. I am not familiar with California law, but I am very familiar with Arizona law. The statutes are very clear. The: Arizona Landlord-Tenant Act is available online. It clearly designates responsibilities and obligations. Even during the craziness with Covid, within my own personal portfolio, no one opted to not pay their rent and in the Portfolio, I represent, there was only one tenant that claimed Covid Complications and that for only a short while.
The policy I recommend here is as follows: due the 1st, late the 2nd when late charges start, process serve on the 2nd and in court the 7th or 8th with a court date the 22nd to the 26th......out before the end of the month.
The tenant can cure the breach up until the gavel comes down.
I must admit, my tenants have been excellent leasing typically for 3+ years and often 15 years. Eviction has been a rare event.
If the Economy declines, evictions may start to rise.
Michael Douville
after prices bottom , will they remain there for a while or will it be a v bottom type situation?
Thank you for the insightful comment. I am expecting a retracement that mirrors the runup. As prices increased by 3-4% in some months, I expect the downturn to have some months of 3-4% declines. The process should require 4-5 years from peak to trough at which time, appreciation should be very nominal for the following few years. The Cash Flow should be worthwhile as the demand is extremely strong; affordability is the problem.
Michael Douville
law should be 1 house per adult per state
Why ? The only way to get to retirement for some people is to have rentals. Limiting growth potential doesn't not help in a free market
Unfortunately, it can't be as simple as that. Such a law would massively disincentivize renovation and construction.
@@magnusbrzenk447 which is a good thing, too many houses out there with too little occupants because they have turned into nothing but investment objects, not peoples homes. They are out of reach now for most people, so now we are a land of renters and you cant even have a dog because your landlord is such a jackass he thinks your home is his investment and sadly he is somehwat right and wrong
If you wanna make it right? New law. No financial institution may purchase single family homes. Allocating more that 2% of its total portfolio. Let them invest in materials that assist and spur economy of homes.
whats up witd the background. Its like your hair has a grey halo moving as you talk. keeeeeeeeeeeeepit reeel yawllll !!
Thank you for the comment! I try to not show my Halo! Sometimes it just overwhelms the camera! LOL!
Michael Douville