Podcast Episode 165 Transcript

Episode 165: Resilience In Real Estate: A Journey Of Triumph w/ Ricky Carruth

folks on the pre-roll podcast this week we have Ricky Carruth it was an absolute pleasure to have Ricky on um a great honest candid conversation about his career from you know zero to millionaire back to zero to millionaire again and now has put uh an incredible brand together uh a billion dollars a year in sales they're doing out of the agency side seven figures a year on the coaching side uh this guy really understands the markets deeply and profoundly tremendous amounts of information Ricky Carruth on the podcast this week this is a really great episode folks lots of value are you ready to bring your real estate game to the next level my name is James prendamano I'm the CEO and founder of prereal and over the past 25 years I've closed over a billion dollars in transactional real estate each week a meeting with outstanding investors high performance individuals and Visionaries operating in the real estate space these are the people that are actually out there in the real estate game right now getting it done this podcast aims at bringing anyone's game to the next level this is the pre-re podcast welcome to the PreReal podcast so folks you know I'd like to to bring value you know I'm I'm a pretty straightforward deal maker I I love to to connect with folks we've got Ricky Carruth today it is an absolute treat to be able to have Ricky on the show um talk about someone that's actually doing it has done it and is doing it at the highest level year after year after year he brings an incredible level of intention and focus to real estate uh but he he didn't hit it out of the park straight straight away folks he's a real guy with a real story with that Ricky thank you so much for joining us today oh man my pleasure bro let's uh let's bring some value today let's do it baby um the world is is going through another one of its turns it feels like and and I know there's a lot of folks out there on the investment side and on on the agent side that are are looking for a footing trying to get a handle on what's Happening and I I think it's it's super important for people to understand this is a cycle people get lost in that right this is a cycle yeah and you're going to have ups and downs and and for a guy that has had just off the charts success uh eight years in a row I think you were the top agent in the state you know you you're you've built a massive coaching business now uh you have a significant Investment Portfolio to me your number one accomplishment you travel with your wife and and your your kid everywhere you go like what a blessing like you're you're nailing it but it wasn't always like that right and I figured if you could talk to the audience a little bit about your beginning and your kind of Hiccup along the way because a lot of us have experienced that and and it's real well I mean you know it goes like this it's um there's normally like a really big cycle every 10 years or so um you know the last one was kind of a long one um it really lasted like real estate started coming down in about 5 and didn't really um bottom out till about 2011 or 12 or so and started kind of rebounding as far as price goes um transactions still were pretty high 2006 and S and then they really crashed in 2008 um so what year do you actually say this was the crash I guess 2008 that was the worst year of transactions so if you go by that it's been a good 15 years this time um and really if you count let's see this will be this will probably be go go down as the crash year for this you know uh 10 cycle which is actually 15 years from 2008 so you don't really know exactly when these really big um crashes are going to happen but they're going to happen and a lot of people are um worried about like prices you know like where prices are going to go and everything and they feel like for there to be a crash there has to be a price crash but you know it's just not true there's tons of recessions and recessionary periods where home prices you know did well actually went up during a lot of them flattened out  during a lot of them and maybe tweaks down a tad and a couple uh you know 2008 was the only one that really had like a price crash but we're really in the crash I mean we're going to have about as many transactions as 2008 this year I mean that's a crash um the reason why prices haven't really followed it you know when you look back and people try to compare this to 2008 um you know by the time transactions did hit that 4 million you know that you know low four million range um prices had already come down um prices had already come down quite a bit you know before we had that and we still hitting all-time highs um uh anyway it's it's just completely different but what I'm getting at is that you know if you get into the business as an investor or an agent or whatever and you know you you're in the middle of you know you didn't you don't go through you don't you didn't start during the 10year cycle you kind of started after the last one and you haven't really encountered one of these big shifts in the market then it kind of catches you off guard I think everybody has to go through one of those big shifts to realize that they have kind of have to structure their business where it doesn't matter if a shift happens or not um you know you're kind of mentally prepared for it you kind of know how it's going to go and uh even though there's a lot of uncertainty with exactly how it's going to go you have a good idea you know like this crash for example you know we we knew that there was going to be a period where transactions fell you know but we really didn't know if prices would follow you know it could have been another 2008 or it might have been uh late 70s you know where prices didn't have a significant crash you know back then we had inflation that was comparable to what we saw this year and then we saw interest rates go to the Moon just like we saw back then so this very similar to the late 70s um this this crash seems to me very similar to the to the s to the late 70s early 80s crash you know with the way inflation went and mortgage rates went up and the fact that prices are holding firm it the same problem back then people wouldn't sell their homes cuz you know interest rates doubled and people were sitting on really low rates compared to what they were I mean they went up to 19% and people were sitting on seven and 8% they're like well I'm not going to sell and then buy something that's a 16 177% mortgage rate so it's real similar there was really low inventory it was just it's really really similar but back to my point if you've never been involved in one of these shifts and you kind of like you're kind of discombobulated during the shift and you kind of don't know which way is up maybe it takes you out of the business completely which is what happened to me during the 2008 shift but then after you go through that and you kind of learn your lessons and take your lumps from you know experiencing it then you kind of formulate a new business model you know that puts you in a position where it doesn't matter if it crashes or not you know and some people kind of especially in today's world with all the podcasts and you know just like this one for example you know maybe somebody listens to this and says oh okay that's you know not a big deal we just have to kind of structure our business then they start thinking about and visualizing you can do it a lot better nowadays because how much information is shared but back then there wasn't any podcasts and you know you just kind of had to go through a lot of experience you know there's books you can read and different things like that but you know listening to podcast and things like that it's totally different world now you know people are far more far more educated I would say um in like real life common sensible type uh situations but yeah man I got it in 2002 and made a bunch of money mostly as an agent and I flipped a bunch of houses and got caught when the market crashed didn't realize it was going to happen and I thought I was on top of the world and you kind of have that you know Mis-sense of uh reality and then boom you know rug got you snatched out from under me and lost it all you know really quickly and uh that was fine I went back to Roofing houses I was still in my mid 20s I was thinking thank God because you know I was going to learn all these lessons in my mid 20s instead of 40s 50s and 60s like some of my buddies who were right next to me doing the same thing and uh you know just kind of like took a couple years roofed houses worked on rig served some tables got laid off from the oil rig and kind of forced back into real estate by then I'd kind of figured out where I went wrong and um started to uh kind of build my business the right way and then once you kind of get that down where it's more of a snowball I was kind of a stick and move you know agent uh wasn't really building any relationships and but once you realize it's more of a snowball um you know you build your business model more on you know uh accumulation of people who know who you are and never forget who you are and once you do that nothing can really take you out it can your business can fluctuate through these large Cycles but really then you kind of start to realize you need the Cycles you need the market to retract um to really see that massive growth on the backside of a retraction because it always explodes and then you kind of set yourself up for the ebbs and flows of the yearly cycles that happen and also the 10year cycles and that's kind of how you stair step your income and then these really big Market shifts kind of set you up if you realize all this and too many people are um short-term minded and they're just you know like a lot of Agents right now they're thinking about their 2023 and it's like man this is such an amazing opportunity to Triple your business in 2026 and 2027 because the Ripple effects of which to do this year if you can just keep your head above water right now and watch your database continue to grow uh I mean it's just a no-brainer that your business is going to you know triple 5x 10x whatever over the next three to five years and without the market retraction you wouldn't really see that I mean your your business will you know it it can fluctuate down with the market retracting a little bit you know it can come down 20% let's say but your business can literally triple quadruple 5x in in a in a Resurgence and a market Resurgence you know um so you just have to understand this and and use it to your ability and most people like myself have to kind of learn that from experience and go through it before you really understand how to take advantage of the the Cycles but if You' never been in a cycle and you feel mulated right now great you know learn your lessons of this one and get ready for the next one um you know uh keep your head above water you know there's there's a lot of uh things happening in the market now and I I I tend to agree with you this is a lot more uh akin to the 70s crash then the 2008 crash you know I've been doing this for yeah I don't know 25 30 years at this point and since 2000 it was 2000 Summer of 2006 I'll never forget at it when my me and my business partner uh had we looked at each other as we you know we would get together and kind of round out what happened during the week in one of our meetings and we both looked at each other and said it's over like this is it it's changed we see it we feel it we know it one of the great advantages of being a dealmaker and an agent is if you're involved and you've got boots on the ground you really do have your finger on the pulse and it does allow you to position yourself um to be ahead of these things you're the first person since it's happened that said 2005 2006 by the way everybody always goes to 2008 but that's not when the music stopped music stopped a full two at least we felt it a full two years earlier all you have to do is look at data you know I mean the last property I sold was January or February of 2005 you know and then it just it was just crashed I mean I it was it really kind of happened towards the end of 2004 and things started changing and then by early 2005 my business kind of dwindled I had a couple of little things that kind of just closed out and my last one was like February or so of 05 I didn't sell a single thing between 05 January February 05 to May of 2008 and um yeah 2005 you know really at the end of 2004 think September of 2004 was really when things really in my local market of course back then I wasn't studying or analyzing National Data or really even cared um I can really speak on my local market which my local market was uh mostly secondary homes vacation properties beach front you know investment type stuff which is really interesting Market but it's um you know we were feeling in this single family home Market here as well South Alabama but yeah I mean all you have to do is look at data you can see prices kind of topped out and uh started coming down and um you know but you're right A lot of people say oh just you know the 2008 crash and that's when the stock market crashed and that's when we had the least amount of transactions uh in real estate so yeah there's some legitimacy to to saying that um you know and but prices started coming down in ' 05 and didn't stop coming down till like 2011 so the I think the principles stay the same and uh I think what you're talking about is when you're you're in these difficult markets a few things are going to happen there's going to be attrition with the competition folks are just not going to do this anymore right we'll probably see in our local market 20% plus of the agents won't come through the other side of it so that's one segment of the market that just no longer is there from a pure numbers perspective in competition and when you're slow There's an opportunity to build on the the prospecting I think probably the single thing that agents could be doing and don't do correctly that would have the biggest impact on their business is prospecting now that could mean a million different things yeah but uh the game has really changed man when I started you had to be a great dealmaker and and then in the early to mid 2000s you had to be a a great deal M maker and know how to use some technology now you've got to be a great dealmaker and a straight digital marketer or have professionals that you rely on that are digital marketers are you seeing that kind of and it kind of the the dealmakers and the digital marketers typically the ones at least that are most seasoned it doesn't align they're the most resistant to change they're really not adopting technology at the rate that the industry is saying they should uh I think this next generation of Agents if they can be intentional and focused they literally have the world in the palm of their hands they could be super agents uh but we're seeing that the the the agents currently are having a tough time with it has that been your experience having a tough time with uh adapting to social media and stuff you mean yeah all of the tools Geo fencing social media sem there's so many different things that you have to mean like the the older agents and the more season agents more seasoned ones yeah yeah I mean a lot of those seasoned agents they kind of have their systems in place they kind of have their database they kind of have their clientele their loyal people um they're going to be fine um you know even moving forward you you can skin a c that's that's the thing about this business is there's so many different ways to do it and every single way wins it's just kind of comes down to what what wins for you um I think there's a lot to be said for uh people who go into a listing appointment with uh data on their profiles you know hey I get this many Impressions a day or a week or a month you know and I'm going to be you know pushing your property on my platforms you you know this is something no other agent has this is my profile I think that goes a long way I've got a couple different agents that um that do that and they crush it you know so I think that if you two things like if you become really great at just vocal just voice too communication um you know asking the right questions understand what the real intentions are the objective is around conversation because you're going to have to talk to them either way you can get you can get the lead online but then you still got to talk to them and so I think the really great conversationalists around you know celles skills asking the right questions are really understanding the objective and what process to really you know take and the direction of the conversation needs to go I think those kind of Agents can really crush it really under any circum they don't have to do social media per se however if they take that skill and add social media on top of it now they're the most dangerous agent out there right so that's kind of what I'm you know I've been preaching you know make calls on morning regardless of who you're calling cold call warm call social media leads you know whatever um but if you're not talking to anybody no deals are going to happen you can't just post videos and then deals magically happen you you know when you get the lead you got to talk to them and figure out what it is they want to do and go through the process but if you can if you can you know Focus the mornings on making your calls and then Focus afternoon on creating content then you're going to be dangerous um so it just depends on what's working for you uh I think some of the social media guys will lose deals to the guys that are really great at communicating uh that the social media people aren't I think vice versa but I think as time goes on it's just going to lean more and more into okay who's got the most views you know who who's going to be able to get my property in front of the most people and that's the differentiator because everybody can put the property on MLS right um so yeah the world's changing the world's changing you know awfully fast and uh the cool thing is you don't have to be in front of the video there's a lot of these videos where it's just the house um you know it's just clips of the house with really great music that's getting millions of views yeah uh you know there's a lot of stuff like that you know there's a a ton of different ways to utilize social media too you know written you know just podcasting you know writing blogs uh you know pictures like there's a lot of different things you can do yeah so your your passion now having gone through a few cycles and I I tend to and I think what you were saying is is you have to kind of go through it to understand it and and you do this is now my third third cycle going on my fourth cycle um there's no swapping out that experience although today as you said you're able to access information like instantly you can see what's happening with other people you can rely on tips tricks information you're getting from other folks in real time in the past we didn't have that the the business has changed so much from when I started we had the books and the prospecting cards there was there was not even any modems there was nothing um to where we are today it is it's it's mindblowing yeah are you is your passion now with the speaking engagements the Consulting um investing where's your heart now uh it's still with agents um you know just trying to help them succeed reduce that failure rate um I'm just focused on you know making great content and trying to get better there uh you know writing speaking all plays into that you know traveling is speaking makes great content it also I get to see people in person and let them feel the energy and all that stuff uh you know writing you know books and blogs and uh emails and just content creation right it's an entire Media Company you know like I'm I'm a one man I'm a oneman media company you know pushing out on every platform every day and uh things of that nature so through that I have a lot of Affiliated deals you know with companies you know that I make a lot of money um and so it's great because I my passion is to help agents succeed and to reduce that failure rate and it's cool like it's it's the most beautiful thing in the world when you find something that you're passionate about that you make a ton of money doing um but I kind of realized it pretty early on that you know the personal brand was kind of the vehicle you know and so just putting everything I can to try to build the brand um you know and just look at opportunities that pop up um I'm I'm buying I'm buying as many rental properties as I can I'm buying something every month um I just did this morning a blue tape walkthrough on two of five new construction homes I'm buying I've already closed on three these two were closing in the next couple weeks um I just bought a commercial building uh I've got a really older two-bedroom house that I'm going to buy uh it's actually a Fix and Flip and I'm just going to buy my partners out on it and keep it because it kind of fits my willhouse and my criteria but I'm like you know I'm sitting back and looking at this rental property opportunity and you know I'm really kind of in position I can buy one a month or so on average if I do that for five years I'll have about a 100 properties you know if they're worth 500 a piece that's 50 mil if I take 20 years to pay them all off it's and they dou they more than double on that 20 years it's 100 to 200 million worth of properties free and clear you know Lord knows how much rental money per month I'll have coming in so I I feel like that's a Surefire way to to you know grow my net worth to 100 200 mil you know uh kind of on the side not counting any business ventures or you know Equity or anything like that over here just kind of like a sure fire away on the side to kind of try to build that so I'm really focused on that finding really great properties just in my local market you know it doesn't have to be all over the place you know I mean this is my willhouse I grew up here I know every little inch of this County you know so it's easier for me to to to Really look and evaluate properties here we're really close to the beach like I live about five miles from the beach so U like the five new constructions are literally like one mile that way so um they're building a new school so yeah I mean focusing on the brand you know building business on top of the brand taking the income from the businesses and buying rental properties you know that's kind of the the layout of my current you know game plan so I I I tend to agree and we're we're buying everything we can get our hands on at West we've we've shifted almost all of the the Holdings we have out west um there's there's certain things that we we like to keep an eye on and you know when State Street and and Vanguard and black rock are buying up massive percentages of the single family market and uh I think there's more money more money was raised in this last quarter for the build to rent model yeah the big fun FS are raising these Bill to rent models you just bought three new construction right than than any other Market sector and there's a presidential cycle next year and there is uh 40-year mortgages now that little nugget dropped in a couple of months ago um I believe that when when rates drop and it's not an if it's yeah not an if at all okay I mean I mean inflation went from nine to three yeah okay and it dropped Like a Rock so I mean it's not a matter of if we've topped out as far as mortgages Go I mean unless we see another wave of inflation which a lot of people think that's going to happen but unless we see another wave of inflation I don't see that because if that starts to get away like the fed's not scared to raise interest rates so you know I just feel like they'll raise it until um till we get a handle on but uh but yeah it's there's no doubt for the moment from from the data we are there's no way it can go higher um in my in my opinion uh yeah I see it dropping from here yeah I we we had pinned it uh when we did our forecasting two three years ago we had pinned it for next year um is when we will we'll see rates start to drop now um the you never know that right I mean a lot of people said a lot of people said that and I was one of them I I looked at the data and I tended to agree that we would be around five right now and this was you know six eight 10 months ago a lot of people said you know we'll be down because what they were doing was they were looking at inflation and they knew inflation would come down with as aggressive as they've been on raising rates and uh they just people assumed that mortgage rates would follow um but they didn't right and there's this spread that uh between the tenor Treasury and mortgage rates it's just abnormally High um but they have to base that on the future outlook of what the feds are going to do and um right now you don't know what they're going to do like you literally don't know if they're going to hang firm or raise it's just like in the balance um so that's why rates I think are staying higher because until the FED actually stays even for a couple months I don't think we'll see rates really move much and if we see a cut then uh then I think we'll see a dramatic drop with the morgage rates because then they're like okay it's heading different dire it's heading in the other direction so not only can we you know come down but we can also kind of loosen up on this spread between the 10year treasury and the yep the 30y fixed um but yeah no I'm with you either way right we're talking micro for a minute now but either way rates are coming down and the Cycle's going to turn over and the big small even if it takes like two or three years who cares you know like somebody locked in a 7.2 or something on their house and they're Ricky you know do you really think rates are going to come down next year and I was like I don't know but even if it takes two or three years and you refinance it at five in two or three years who cares because the way I'm looking at rental properties right now is if I find something that cash flows now with rates being so high then that's a huge winner because over time rents will go up you know maybe they only go up two or three% instead of you know 10 but rents are going to increase maybe they level out for a second they went up so fast maybe they out maybe they go down just a tad right but they're going to level out somewhere where they are and then they'll continue to go up just a little bit 2 3% that's what I think and if rent increases and rates decrease right over the next three years say rents go up say five six s% over the three years and then rates come down even a point is a lot of money I refinanced for a point less which I wouldn't do I'd wait till it got a little lower to make the I worth it but even a point less you know so if it's cash flowing now later you're just going to have a lower payment and higher rent and that cash flow is just going to get better and better so not of course not every C every property's cash flowing right now and you really got to work hard to find the cash flowing properties but they are out there and uh you know if you put the work in to find them then they're just true winners you know so that's that's kind of my Outlook is that even if it takes two or three years okay you know I'm cash flowing until then and then the cash flow is just going to get better yeah so I preach I just tweeted about it earlier you buy value you don't buy payment and good Lord is just an unbelievable time to stack value when when you say you're buying a deal a month plus or minus can can you share with the audience uh a little bit of about what is Ricky looking for as far as either a cash on cash or let's keep it simple you know uh based on your payment uh or what metric is it that that says yeah that's that's a deal for me let's pull the trigger oh no 10% cash on cash is great for me right now um I'm probably getting eight to 10% on these new construction homes just cash on cash um I think I think one of them is five cuz we put a little bit less down and it wasn't the best house on the road but the other ones are 8 to 10 cash on cash and um that's just going to get better now what's cool about the new constructions are and the reason I'm actually I went that route because I'd rather buy something fix it up and then keep it and refy it and then keep it um but which is what I'm doing on that two-bedroom but uh uh these new constructions I'm financing through the builders I'm getting 5.9 interest on an investment loan they pay 5,000 closing costs there's no maintenance for five years they're really nice homes they're right across the street from a brand new school that they're building um they're just winners and the cash flow on those are 7800 a month cash flow on top of my payment um it's ridiculous you know so on two of them actually sold I bought a condo for 68 back in 2011 it was worth 200 I sold it 1031 that into two of these homes and put 100 down on both of them the homes were like 3 to 350 depending on what where they were and stuff like that so cheap right so like when I looked at the median home price in my County it was actually higher than I'm buying these home homes for so I'm just like man and their four bedroom right and that's what everybody's kind of leaning towards really great layouts [Music] um there was a duplex that I put under contract for 348 it was a one-bedroom on one side three-bedroom on the other I was going to make about three grand a month on that total the payment all in was going to be like 23 2400 um I was excited about that duplex it was in a great spot in my wheelhouse I've got other properties close by and uh the foundation was was messed up it was a 60s that had been remodeled and the foundation was kind of it wasn't on a slab it was on peers and it was rotten and stuff so I had to walk but man I love those numbers big time because I knew that rent would increase payments would come down over the next three years I was like man that was a winner right there but I think a lot of people look at rental properties and they think it's going to make me 200 a month you know whoop-de-do but the thing is is number one it's paying itself off right it's going to appreciate um and rents increase the like one of my best ones I bought it it was 100,000 duplex um in 20 2 or so for 100 grand and it was rent for like 500 or something a month on each side and the payment was like 530 or something like that and so one side basically paid the mortgage and I'm like this is great and like I tried to sell it to a guy and he was like I don't want that or whatever and I was like well I'll buy it right and so I bought it and uh since then like now I get 1,200 aside it's bringing 2400 a month in I've paid it down I owe like 30 on it and it's worth like 350 now you know and I'm like dude it's 2400 a month coming in worth 350 you know that little investment back then was killer oh yeah um another was a fourplex my lender tried to talk me out of it you know it was 200 Grand it was real dump 200 Grand was bringing in like 500 per unit and he was like what are you doing man why are you buying this you know and I'm like I don't he's like what are you going to try to make 50 Grand over the next 30 years and I'm thinking bro you don't even know and now that was just three years ago maybe three no it was like four years ago I think I bought that it it's worth like 500 now number one right bought it for 200 put about 120 and it's worth like 500 but I've got those units up to 12250 a piece it's five grand a month coming in five G's a month you know what I mean it's like it's like man that was a killer and so like a lot of these that aren't real sexy Investments it's like give us some like buy it and give it a little time take care of the property you know raise the rents like you're supposed to a lot of people don't raise the rents and then the market for rents is s there's such a gap between what they're charging and what it's actually worth in the market and then it's like well you can't just raise it up that much you know you've got to kind of do it in increments and you can't get behind on that you know um and it's also a false sense of security for the tenant because say you're renting it for 750 and now it's 1,300 and you've been letting them stay there at 750 for like eight years and you just never raised it well now if you kick them out or if they leave they're they're going to have have a shell shock that they can't find anything under 1300 they've been paying 750 it's kind of a false sense of security you know you're hitting on on a real critical point Ricky I want to drill down on a little bit more in this this world we're in uh it seems like everyone is focused on adding doors adding doors adding doors and some of the sharpest investors I've come across talk about what you just talked about you you grow your port folio from within first always you take care of your housekeeping first the best way to add to your bottom line and to drive revenue is not to add a door it's to run your properties the right way and we do fall into these patterns especially uh for for us at least it was when we were first starting you have a personal connection you're kind of doing everything on your own you know the tenant you know you feel bad about raising rents and and it it next thing you know you're seven years down the road like you said the city passes some wacky new law that you know uh the rent that it is is now protected under good cause eviction or whatever nonsense they pass and now you're locked in and all that Goodwill goes out the window and then when that t does leave like you said they're slapped in the face with this oh my gosh you know I didn't realize rents were now up at 11 or 12 or 1300 yeah so important folks to to the the first place you should look to add to your cash flow and add to your value is within your management practices how tight are you really running that ship and yeah you know not not that that you're getting to a point of aggression in your portfolio where you're you're creating vacancies and and losses on that side but there's a balance and if you find that balance you could really smash it you talked Ricky about this uh 8 to 10% cash on cash and and the new construction seller financing 5.9% Nob brainer the the ones that are not new construction are are they also seller finance or are you going and getting traditional financing or what what do those deals I just look at each deal you know I may do I've still got a couple of conventionals I can take out you can have 10 total I think um I still have a couple of those I can use um I can actually pay off those I got a couple properties that owe like 30 on I could just pay off and just open up another mortgage if I wanted a conventional 30e fixed I don't like the fiveyear you know balloons personally uh I just don't like that but you know if if I have to I will I just kind of look at all options um when I find the property you know do I want to do a you know a a no do loan do I want to do a commercial type loan do I want to do a you know seller finance it just depends you know I don't really have a go-to it just kind of depends on the deal and you know what the payment's going to be what the cash flow is going to be what I feel like the uh what I feel like the value could be it's um a lot of people see look real linear when they look at these values you know I I look at them like I look at them you know just based on experience I just I look at them more on like the Dollar's not going to be as worth much later you know um you know like these new construction homes you know I'm buying one with a partner and I'm like I think this is worth like 600,000 you know in the next say 10 years and he's like what are you talking about and I was like well the thing is is inflation bro yeah I mean 600 is not going to be like 600's going to be like what 450 is today in 10 years you know I said do you think it'll appreciate the 450 sure because he's thinking linear he's thinking today yep and I'm like you know and if you keep your money in the bank you know if we kept that 100,000 in the bank it's worth like 70 in 10 years versus we put in the house and now it turned into 200 or 300 you know because you own assets instead of cash so I think cash is good to have on hand so you can buy assets you know and and have that cushion whatever makes you feel comfortable but you know owning the assets that's going to appreciate with inflation as opposed to depreciate you know it's kind of how all these people got rich no doubt and and I think that that's the one factor that brings us in line with the 70s Market as opposed to the 2008 Market while we went through this cycle just by extension because we had such inflation prices held and and I believe that you know tertiary markets became secondary secondary became primary there's a decentralization of the big cities everywhere there's uh literal treasure troves in in uh some of these tertiary and secondary markets and and when this next shoe drops and and the market takes its next step uh I believe that you're not going to see those massive deltas and price drops and that new paradigm that's been created within a certain reasonable percentage is the new paradigm and then we go into these 40-year mortgages and a a you know low inventory climate plus dropping rates and so I I love the strategy and that's just another um fear you know is that there's so much demand underlying and there's so little inventory there's really nowhere there's no path to more inventory right it's just going to kind of be a gradual thing that happens over the over you know a lot of time and so prices really have nowhere to go but up unless we get into like some really big rate increases right unless it goes to you know eight nine and 10% mortgage rates um you know that that's kind of like it's all going to depend on rates but nobody really sees that happening right now nothing in the data shows that mortgage rates are going to go that high could they sure who knows but the fear is is that as rates ease down this just this Beast of inventory hits the market I mean I mean of demand hits the market Y and prices shoot up well that's like the definition of inflation you know um I mean if you've got just people buying houses left and right more than asking price and then more than asking price means everybody has more Equity now they're taking out equity lines of credit um especially the people who are buying at these higher interest rates they're going to refinance at lower rates and take some Equity out if prices are shooting up um then they're going to have more money to spend so they're going to be buying more stuff more goods and services you know all this is is the definition of inflation right which you know we're kind of teetering in this conversation you know that we're basically saying in so many words inflation's going to come back you're gonna come back but but at that point in the cycle it's called the bull market right they don't call it inflation it's it's some of the same yeah but it the thing is is you know if it comes back and you know it's hanging around three or four whatever right whatever but if we see another 2021 type year which is what I think is going to happen we've got more demand in my opinion more Demand right now for people that want to buy homes than we had in 2021 way more demand yeah we've got all these people that want to move but can't because they feel locked into their home homes they want to you got all these first-time home buyers that we didn't have in 2021 and they' just been they're just they're just accumulating they're just piling up piling up piling up and when the lever you know flips and rates come down a little and all this demand just hits the market I just it's going to look similar in my opinion to 2021 what's going to happen is is the trade up seller they're going to put their home on the market but they're also going to buy one and take one one off so it's going to be a net even for active listings then the first time home buyers going to come in with no home to put on the market they're just going to go and take one off the market which is going to be a net negative for active listings so we're going to see this jump in new listings we're going to see this decrease in active listings but we're going to see a real spike in overall transactions so we're going to see active listings drop new listings Spike and transaction Spike Y and it's going to be a hell of a year but the problem is is is that also the question is okay does that mean inflation does that mean inflation right and do we go back to an a scary a scary inflation number of I mean let's face it if we go went from nine to two back to six that's scary yeah the feds are going to come out and do some stuff so you know we're getting into the weeds here of what might happen this that and the other and when I say scary I don't mean scary in a bad way I just say that we could go through this all over again which wouldn't be a bad thing it doesn't matter what happens right and I mean the message in that scenario prices went up if you're buying properties now you're a winner yep right um and that means rent going to be higher too yep you know that's why I'm trying to tell people buy properties now you know don't wait for rates to come down because that's when prices are going to shoot up that's right you know that's right so I think to your point um we we could see inflation or talk of inflation sooner in the cycle than we would like to but I think we would have to account for this last rip here so much of the inflation was caused in part to these uh Logistics issues and legitimate shortage of goods and you know hopefully they stay away from the coid talk and hopefully you know we we can keep this on the level here and we stay away from the shutdowns because the Damage Done there is it's tough to quantify but that's a that's a big part of I think why we we jumped into such an inflationary cycle this time if we're giving folks the ability to stretch out the value and take these 40-year mortgages which you know that's a whole I could talk for two hours on that uh 40-year mortgage thing is just going to be another lever that could be pulled to make prices go higher if you're just making the payment lower you know then people can pay more and uh I think the I think what they're trying to do is make things affordable for people can't afford it and I can appreciate that but what you're also doing is you're making the people who can already afford it be able to afford more y right yeah and and when you see the big the big funds I touched on earlier State Street Vanguard uh Black Rock uh there's a number of them scooping up these one family homes like this it it you know follow me those guys own about 300,000 homes right yeah collectively I think it's more at this point but yeah yeah I mean say they own a half a million homes you know I think there's 15 million rental properties in the US there's over 100 million households so right now they don't own a significant amount at all um you know we see the writing on the wall do you think that the do what do you think the possibility is that the government steps in and says hey here's a new tax code here's a new here's a new rule you know for businesses that own x amount of homes or whatnot that makes it dis disadvantageous for them to go and do this I think you'll see that but the die is cast when when we started to see the amount of money going into uh single family home construction being multif family is the thing of the past already in that world to me that locked in this is the run and after these big funds cash out at the the rip that we're talking about then you'll see that type of legislation and then it'll be on to the next product but I think that man if you can stack Assets Now it it boy oh boy you're in for a really great run there's just too much smart money and there's too many factors that are lined up that tell us uh the folks that have been through this two three four times that uh the other side of this thing is going to be a a historic run and we're doing everything we can to get this kind of information out uh to folks that you know makes a big difference you know hopefully we're inspiring people to get off their couches and yeah and go pull those triggers man for sure why do you think uh they switch from multif family to single family um I think the the multif Family Market got way way oversaturated you know when when the syndications went from some sound metrics to uh you know in a market where the syndicator had no experience we were seeing this every day we were seeing that they were going to come in and and cut management expenses by 30% in an inflationary period they were going to raise rents by 20% there was lost to lease because if you added a a washer dryer you know some sort of amenity there was another 10% there it it got so wonky and and so crazy that they ran to the short-term Bridge debt and you're you're you're starting to see the beginning of that collapse but the the bottom is going to fall out on that market these banks that provided the bridge lending the investors didn't give themselves time to get to the other side of the rainbow because the Delta between a three and a five or a five and a seven and a seven and a 10 broke the deal and if if you're making there smart without you know I get it you know that's why I say I don't like the fiveyear balloons yep you know um so you got to get to the other side of the rainbow with your debt that's the trick you know so much of what you preach about in in your books in your uh videos on your platforms is about not thinking about today or tomorrow or next year right it's about two years three years down the road that's how you make it in this business in every aspect and I think that when you know the that market in particular they just got a little goooo Gaga and when you're looking at those things and and a quarter of a percent is what breaks the deal you shouldn't be doing those deals at least in our minds you shouldn't have been doing those deals yeah so can you spend a couple of minutes talking about to zero to Diamond and your CRM I know you guys are working on a CRM did that drop yeah so um we're it's in beta right now um we've picked up a bunch of clients and we're just working now to work out all the bugs and make everybody super happy um it's so cool because today you can build businesses you don't actually have to like build all the back in you know um it's it's uh like I don't know not even like 5 10 years ago you had to actually hire like developers and stuff like that you don't have to do that anymore to create a product and stuff um so that's what's really cool but no Zer to Diamond is still going strong it's uh was the first completely free real estate coaching program and um we're still still going hard the best place to find everything about it next trainings like I'm doing a three-hour prospecting Workshop this Thursday of course this podcast will be out before you know after that but um the best place to keep up with all the trainings and Scripts and what I'm doing and you know events like I'm going to be in Sarasota next week and then Miami late October Vegas early October I'm doing three a month just traveling around speaking and stuff a little less this time of year but just Instagram my Instagram account the link in my bio that's really kind of takes you everywhere and anywhere you need to go you know to get the training um you know connect with me whatever so so the again it's it's in preparation of this one of the things I had tweeted the other day was that there are so many experts out there that are charging for the education piece and if they were really as good as they say they are at that piece they wouldn't have to charge for it right because we understand the value on the real estate side and coaching is a separate thing alog together and providing a service is a separate thing altoe because we do the same thing but you're imparting knowledge for free and it's the only platform I've seen where the actual knowhow it's all there and if people just take the time to do the work like you lay it all out man it's pretty remarkable I think there's something to be said you know I see both sides of it um you know the guy I know a lot of these guys that charge and have these coaching programs and are really super successful I mean I know I know a guy that makes a million a month I know a guy that makes five million a month selling courses and stuff and um they're actually great guys and you know their their thing is they believe so much and and like I get it that they believe that if somebody's not paying for something they're just not really going to take it serious yep um you know and I've seen the power of that I've seen the power of that through some of these uh some of these coaches when they do events you know the type of people that show up to these events um are serious and uh so there's a lot of validity to that you know and it just so happens that their philosophy makes them a lot of money coaching is different though right coaching I think is a different level I I have a number of coaches I believe in it wholeheartedly but the the core basic information I think is something like I say there's a lot of different philosophies on it and I've looked at all of them and I totally like I get all of them but I I have a different business model you know my business model is everybody know who I am right and then build businesses on the back of that you know um try to create the most influence and like some of these guys that charge for coaching they have massive influences too you know um but I wasn't born with the ability to do that for whatever reason um so you kind of have to figure out where you fit in the world you know like I thought for a long time let me do a course let me build a company let me do a different bunch of different things and it drove me crazy because I'm like I'm leaving all this money on the table but then I just realized one day wait a minute my place in the world is not to like build the company and run the employees and do all that but more so to be partners with companies that do that you know and use their and so it's interesting because you know I my place in the world of influence is being a great partner being a great affiliate and it's cool because I get a cut right off the top of Revenue and I have zero expenses zero liability well not zero liability but very little I'm not the company um I'm not running the employees I don't have payroll I don't have insurance I don't have any of that stuff I'm just a guy right here at my house that's it I don't have a company full of people it's just me um I've got a full-time assistant that mostly runs the real estate sales business which my dad runs the day-to-day of um she's been with us for a decade but she more like just runs the the like local real estate sales business part of it um and so it's really cool because like I'm literally running this multi-million dollar um business with no employees but yet I'm partners with these companies that I use their employee like there's companies that have salespeople right and like they're my salespeople you know their customer service they marketing departments and stuff like that they they treat me just as if I'm their boss you know a lot of these companies but I'm not paying their wages I'm not training them I'm not having meetings with them you know what I mean I'm just utilizing what the company build and some people might say well you don't get any Equity that way well the thing is some of these companies give me Equity right for this there's a lot of different ways you can do this plus I take the money that I make and buy assets building Equity you know what I mean and I I knock off at 5:00 I'm off on the weekends I travel and do what I want want to do all this money coming in it's passive you know it's just a snowball I continue to build because it's fun but yeah I've do it a little non-traditional because some people say make your first hire then build on your team and have your organization and build out a company and I'm like nah I'd rather just chill make 25% off the top of any top line revenue without any of that stuff you know what I mean but the power the reason that have that option is because I decided to do free coaching and build a brand you know and it took me you know a good couple years to build it up to a point and now I've been doing it for six years there's a lot of Blood Sweat and Tears I mean I lost 100,000 for two years in a row you know that I invested into building the brand then I finally made some money you know then I made a half a million then I made a million you know and I just kind of keep building it out so yeah I I understand both sides of it though like I used to really hate on the paid coaches like I used to just go hard um and I still kind of go hard on a lot of them uh you know I look at a lot of them I'm like that is one of the guys that you know I was talking about in the beginning when I used to hate on paid coaches you know I'm like there's one of them right there but then I've come to find I've come to know some of these other guys and not even in the real estate space other spaces as well yep and I'm like you know what they really have something you know but it doesn't change my opinion on like wanting to continue to be a free coach because I mean did you see what Alex Heros just did did you see the book launch oh my God that was just that that validated everything that I'm doing you know Gary ve kind of was the original OG of validating the free coaching thing for me yep but now Alex rosi has come in and like tripled down on it you know and I'm like okay I'm not I'm not crazy you know I'm not nuts here for what I'm doing oh you're certainly not nuts and and I think you know you're you're right to be fair there's it's not a one-size fits-all I guess what the the that bothers me is when you see more and more and more and more people talking about you don't own you don't own multifamilies buy my course and I'm G to show you how in five steps you're gonna and it's like five steps to owning multifamilies like yeah there's there's 5,000 things you need to be aware of especially if you're GNA Syndicate and take people's money I've been looking at multif family for probably two years now really hard studying that market and studying the business and syndication and all and I was pretty set on doing syndications there for a little while um but then like through through the through the smoke I was like I can just go buy little properties around here and build a couple hundred million dollars worth of worth just buying little houses around where I live yeah I'm like why do I want to go take other people's money not to say that I won't ever do it because I probably will do a few deals where I go out and raise some money there's no doubt I I just I just made an offer this morning on three acres um right down the road for me really great corner piece great corner piece but you can build Apartments there and you could probably get 30 or 40 and um you know it's it would be a great piece and so if I do that deal I'll have to go out and raise some money you know to to to do it and it'll be a great deal for everyone you know but that's it but but that there's nothing wrong with raising money nothing wrong with it at all it's it's when you're you you don't have the experience and you're trying to to pitch this is something that it's not this is not a fstep deal and now you can go run a 300 unit building seven states away that's the stuff that gets under my skin I mean this one that I'm going to build is literally like two miles away from yeah like and and like you've been doing this for for a very long time you know the game you obviously have a profound understanding of the Market's internal and external factors it's that stuff that bothers me I know a lot of people over the years that have gotten hurt putting money in into these deals and I think for the most part people are well- intended and people get caught up in the hype and in the cycle uh but real estate it's a tricky game man like this isn't a joke this is it really can be yeah if if you're not buying with a long-term game plan you know it's like these duplexes I I bought them with intention to keep them forever or like that condo I sold and flip it into two DR Horton Homes my intention was to keep it forever but then now here we are you know 11 years later or whatever and I sold it and flipped it into two houses the the the point I'm making is is my game plan was very longterm it the plan may change but as long as you your your your game plan protects you over the long term then you can do whatever you want to do in the endrum like if something comes up or you know it shoots up in price and you want to sell it and buy some other things or whatever um but for me I'm like let me buy stuff with the longterm in mind you know know and then we'll see what happens it's like these new construction homes I'm like I'll just keep them forever but in five or seven years they may be worth 500 and I want to flip them into two other properties somewhere you know that's I love 1031 I mean you you know you know buying hole for five five to seven years you know that little two-bedroom I'm buying you know for like 190 it's probably going to be worth like 350 you know in eight years I'm not buying that to keep it forever I'm buying that I will keep it forever because rent's going to be crazy good on it but if it goes up to 350 I can sell it and flip all that money into two other properties you know now I'm making appreciation on two properties instead of one no doubt the 1031 exchange the QBs there's a lot of great ways to to defer the the tax and and be super smart in your approach and scale you know Ricky this has been an absolute pleasure I I I really do appreciate the cander the and uh I it's it's I've been doing this for a while and it's seldom you come across someone that has your level of experience and this is just honest and open and willing to kind of free flow chat you dropped some amazing bits of information that I'm excited to share with the audience um folks if you want to learn more as Ricky had said his Instagram is a great place to look but all of the links will be below Ricky Carruth this has been an absolute pleasure man thank you so much for the time today appreciate it bro as always having me yeah man this was great everyone out there please as always stay [Music] safe