 If you want to buy a house, but you've been priced out of the market due to interest rates, home prices, all the stuff that's going on right now. This is going to be the video for you because I'm going to give you hope. I want to help you understand the new rules to the game that we are playing. And this game is not going away. This game is here to stay. The entire situation of owning a home in America has been changing right before our very eyes. This has been going on since 2008 and we didn't even know it. It was just right under our noses. So today I want to share with you the American dream is alive and well. It's just changing. And so you have to adapt to what is going on. If you want to go out there and on a home at the end of the video, I'm going to show you how to go out and buy a home at a much lower interest rate. And those, these opportunities are right in front of your nose. I mean, let me tell you something owning a home, regardless of what anyone's going to tell you is one of the best investments that you could ever make. It should be your first investment in life. I bought my first house when I was 20 years old. It was one of the best investments that I ever made. You've got people like Grant Cardone, who I just interviewed. I'll put a link in the description if you missed that interview. He says buying a home is the worst investment you could ever do yet. He has bought houses. He said it on the interview and made millions. He actually bought houses, made millions, took those millions, and bought apartment buildings and investment properties, right? So he leveraged the house and he went and he bought and made really good investment moves. You got to start somewhere. If you're a younger generation, Gen Z, a millennial, if you're in the younger generations and generations to come, listen to me. You know, if you want to go out there and rent and that's how you want to live, that is great. That's fine by me. But what I'm saying is, is go out there and make great investments and owning real estate will protect you against the dollar, right? The dollar and inflation and all the other things that we're worried about, real estate protects you and all these cash flow, having, you know, the income coming in regardless of what's going on in the world. If we run into a recession, guess what? If there's a lot of foreclosures, if a lot of people are displaced, what are they going to do? They're going to go rents. You have protection with owning real estate. I also believe you should be very well diversified, you know, own some stocks, own stocks, own commercial, own residential, own multifamily, own a lot of different things, own companies. So a recent survey by Lendingtree shows that 94% of Americans say owning a home is still part of the American dream. But 51% who don't own a home, and this is the scary part, 51% who don't own a home fear that they never will, right? Housing affordability is at an all-time low. You've got medium mortgage payments here, 2,600 back in July. So they're higher now. Rent is at $2,000 a month right this second. And in the midst of all of this, and this is what's changing the game right this second, this is the big game changer. Institutional investors may control 40% of US single-family rental homes by 2030. That is insane. Now, it's not 40% of all US homes. It's 40% of the rental homes, which make up about 10 million, 10 plus million, 10, 50 million. I've tried to find numbers on that. They kind of mixed those numbers in with the apartments and duplexes and fourplexes and different things like that. But the fact of the matter is if they own 40%, OK, still a small number, I just want you to know that's like 40%. Based on my estimation is still under around 5 million homes out of the 100 million homes in the US. However, these institutional and non-institutional buyers are influencing the market. And this is what I've had to come to terms with. I ignored this. I've fought against this for a while, but now I'm coming to realize, especially since the fact that I'm buying homes every single month, I'm understanding why I'm buying the homes. I'm understanding why I'm paying high prices, even with higher mortgage rates. And it's starting to make me realize these institutional buyers and how everything is kind of playing together. Yes, it's a small percentage of the market. However, it's creating new rules to the game. So that's what I want to dive into today. If you're a real estate agent, this is where the opportunity is going to be over the next five, 10, 15 years. I'm very passionate about this for especially the younger generation who want to become homeowners, because you may be sitting around saying this isn't fair. You know, mortgage rates are so high, you know, down payments are high and all the different things that make it really tough for you to go out there and buy a home. So on and so forth. But I want you to understand the mentality here. You're not just replacing your rent. You're making an investment. And that's the way you've got to think. You see, here's the fact. And this is why the rules of the game have changed so much. The ROI on a home is worth way more to an investor, whether institutional or non-institutional than a, you know, regular home buyer who's trying to figure if they can afford it with their debt to income ratio. They're just looking for a place to live. They want a home so that they enjoy appreciation so that they have a fixed payment. They don't deal with rent increases. However, they still have, you know, maintenance, upkeep, insurance, property taxes, so on and so forth. Right. So there's some pros and cons. But the fact remains that it's worth more to an investor who's buying into the income, the potential income of the property than it is just your everyday buyer. And that's why I believe that we're seeing prices continue to stay high because you've got to mix. You've got to mix. Now, the amount of investors who bought a home, say, in the past, you know, 90 days has been around six, seven percent of all home sales. So it's not a big number, but you have to realize that in residential appraisers go by comps. Okay. So when appraiser goes by a comp, they don't go by the income of the property like they do commercial. When they appraise a commercial property, they go by the income of the property and, you know, they calculate the value based on the income because they know the buyer is buying that passive income. In residential, they don't do that because the buyer most of the time is not buying because of the income. They're buying it for a place to live and it has to be based on the comps and the mortgage payment has to be based on the fact that they can afford it as a certain percentage of their income. Well, now you have, you know, in certain neighborhoods, investors buying the home to rent it out. So they're buying it for the income. They're based on the purchase price in their mind on the income, which may be higher than what somebody else would pay for just to live there that aren't, but that isn't buying it for the income. And now that comp is what you're competing against. You may not be competing with an investor when you buy the home, but the comp is based on more than likely an investor comp and somebody who bought it as an investor. These are the new games that the new rules that you have to play by. Now, by 2030, you know, they say institutional investors may own 40% of the US rental homes. Okay. Let's go back a little bit, right? How did this all start? Well, after the crash of 2008, Blackstone, which is the largest institutional home buyer out there, began buying up large number of single family homes that banks had foreclosed on. So they started this when the foreclosure wave happened back in 2008. And then they turned them into rentals. Okay. Other Wall Street firms followed suit and investors big and small continue to scoop up an increasing number of homes across the country. Now, being in a capitalist country and, you know, this company, Blackstone, saw this opportunity and said, here is the opportunity. Let's buy as many of these as possible. You know what? They came out and said that more than half 55% of their $69 billion portfolio is tied up in US rental units. You believe that? Over half of their entire company is US rental units. So according to Redfin, the number of homes bought by investors reached a high of more than 20% in late 2021. So in 2021, 20% of the sales in late 2021 were investors, not just institutional, institutional and non-institutional. That's up from about 10% a decade ago. Okay. Since then, that percentage has fallen. What has it fallen to? Well, when was it? The second quarter of 2023, it was 6.1, which was actually up from the 5.7 in the first quarter, but it's still down from 7.4% in the second quarter of 2022. So what do we see here? We see that it was 10% of total sales were investors a decade ago, and then that ramped up to 20% in 2021. And then back down under 10% over the last year. Now we're hoving around that five, that five to, you know, five, six percent mark, something like that. Now, if you look at, and this goes along with what I was saying, this is actually on the, this is, this is right off of Blackstone's website directly. Blackstone owns approximately 0.03% of single family homes in the US. Okay. More broadly, institutional owners of single family rentals own a 0.4%. So not even a half a percent is what they own. Okay. More broadly, the number of single family rental units is declining. So they're saying there's less rental units out there anyway, and that's declining down 7% over the last 10 years. So they're saying if they go out and they own 40% of the total rental single family homes in the US, well, the number of total single family homes in the US is, is declining anyway. So not only is 40% of the rental properties in the US a low number anyway, it's going to be even lower if things continue to decline across the top 18 markets where Blackstone acquired single family rental homes in 2022, Blackstone's acquisitions on average represented less than 1% of all housing cells. Therefore, it's virtually impossible for Blackstone to move the market. And this is where I disagree with Blackstone because I don't think it's a matter of Blackstone. I don't think it's a matter of market share in terms of how many homes you're buying in the area. I think it has to do with, A, all the investors, all the investors, you know, non-institutional, institutional, all of them put together because, you know, as we said there in the Redford article, you know, there was like 6% of all sales were investors. Okay. Blackstone says that in 2022 when there was 20%, they were less than 1% of the sales, right? So Blackstone, they own the most, but, you know, when it comes, but there's more smaller investors buying, you know, now and in 2021, they may have slowed down a little bit in 2021. I need to look at those numbers. They might have said, oh, it's blowing up, you know, we need to kind of slow down. The markets get a little crazy. They might have done that because remember, they've been buying since 2008, you know, those homes are up 300%, rent has more than doubled since then. I mean, they have made a killing and that's what a lot of these other institutions see. And a lot of these just small-time investors like myself see. So what you have to understand as a home buyer is that the rules have changed. You have to look at these properties differently now. Okay. It's not based on what you can afford anymore. I hate to tell you that. It's not based on that. It's based on what is this investment worth? What is this home worth as an investment? What is this home worth in terms of future appreciation? What is this home worth in terms of the amount of rental income that can be created? And not only that, what can the rental income increase to over the next five to 10 years, to 20 years? That's what these homes are trading on. That's why. And again, you might not be competing. Sorry, directly with an investor on a deal. Like you may not have an investor like Blackstone or a local investor making an offer and you're bidding against. That may not be happening, but you're still dealing with the investor world in terms of comps because to guarantee you an investor has bought a house in the neighborhood and they've paid a lot for it. Why? Because rent is so high and they're willing to pay that much for that much income. So what do you have to do? Again, you have to think like an investor. You have to look at these properties like commercial properties and an investment. You can't just look at them like you're just you're trading your rent for this house and hoping to make some money in the long run. No. And I think a really smart thing to do. You know, I'm coming back to this this idea of house hacking where you buy a duplex, you live in one side, you rent the other. I think it's genius for a first time home buyer. You can buy something with four units or less on a 30 year fixed mortgage, conventional mortgage. That is golden. Get a fourplex, go out and get a fourplex. That that's what I would, if I were, if I had it all over to do again, I would buy a duplex or fourplex, I would live in one unit, rent the other four out. I would eventually move out of that fourth one or second one, put a runner in there. I would go buy another duplex, you know, and then I would do it again. And another thing we're seeing is an uptick in these five year adjustable rate mortgages. We're seeing people get, you know, I believe where I believe we're seeing people get like 5.1 and 5.5, but it's an adjustable rate, which means in five years, they're going to adjust the rate to whatever, whatever's going on with rates in five years, which, you know, most everybody says rates are going to be lower in five years, but you don't know. You have no earthly clue. You could get stuck with having to pay a much higher rate. I mean, if rates are 9% in five years, that's what you're going to be up against. And that's why some of these other countries are experiencing some serious problems right now with their housing market, because they don't do 30 year fixed. Most countries don't do 30 year fixed rates on mortgages. We don't even realize that here in the U.S. that we're very fortunate that we have the 30 year fixed. And, you know, there's pros and cons to both. Some people with other countries say, well, that's why you have no inventory because, you know, everybody's sitting on 3% and 4% rates right now. So that's why prices are going up so much. And we're like, well, that's why your markets are rising because you're seeing foreclosures because, you know, now you've got higher rates and people having to pay more than what they can afford because the adjustable rates that you guys offer because you don't have a 30 year fixed. So listen, there's pros and cons to both, which what I would like, I would like a 30 year fixed where we have a more stable market. If prices go up higher, that's OK, because we're not seeing a bunch of foreclosures though. So it's like, do you want higher prices or do you want to see people get forced out of their homes? OK, I would rather see higher prices of people locked in the lower rates. You know, if you have to go rent because that's what you can afford, at least you're in a situation where that's what you can afford versus, oh, I'm living in a house that I own. And oh, by the way, my rate just doubled overnight and I'm going to lose my house. I don't know. I don't know that I like that scenario. But listen, it's all personal preference. You know, who knows? But we offer a 30 year fixed here in America. And so that's what we have to deal with. The fact is you can get a five year adjustable rate for a much lower rate. Here's another tidbit, new construction, new construction. I got 5.9 percent on investment property. OK, you can get lower than that, depending on, you know, who the builder is, what they're buying down, what their mortgage, you know, DR Horton has their own mortgage, you know, arm. And I went through that. That's how I got such a good rate. There was a builder. I'm going to look up the name of this builder. I saw the article. There's a builder that's offering in the fours, right? It's like down to 4.7, I believe that they're offering. They're buying that right down all the way to 4.7 on a 30 year fixed. So new construction is going to be a good way to go to get a lower rate, to get a quality product and really not even that bad of a price. Honestly, the houses I bought were below the median price of a house in my area. So I got it lower than the median price in my area and a lower rate. Plus we're doing all kind of incentives, right? They're doing blinds and appliances and closing costs and all this stuff. OK, so here's some options for you. House hacking is an option, a five year adjustable rate. If you're OK with the risk, you've got new construction that's offering all kinds of incentives to move in. I think the biggest thing is to put a plan in place to save up for the down payment. All right, put a plan in place financially to get to the place where you can go buy a home, think about it from an investor standpoint. If you're a real estate agent, this is where all the opportunity is going to be to understand that we're in an investor market. Now, this is the new world we're living in. OK, and we need to adapt and keep moving forward because this isn't going to go anywhere. All right, let me know in the comments what you think about this, if the American dream is dead and any other questions that you might have about home ownership, real estate, building your business, whatever the case may be, and we'll see you on the next video. And remember, click, subscribe, hit the bell. See you guys soon.