 it's a hot topic. Everybody's talking about it. Interest rates. The Federal Reserve has recently said they're going to keep interest rates steady. We've got an inverted interest rate curve, inverted curve yield curve. I'm sorry, that's inverted yield curve. Meaning short-term interest rates are going to be high, long-term interest rates are possibly going to be low. It means it's going to look something like that per se. So everybody's talking about it. I mean houses around the country has gotten more expensive. We've seen the prices of houses kind of cool off and come down a little bit. But that's how to do with interest rates. Some people say they're getting six, seven, eight percent. You know, it's like Pandora's box. You wake up every day and you don't know what's going to happen. On top of that, we're seeing we work just by bankruptcy from his glorious days of $47 billion that it was, you know, IPO that right. So now you're looking at we work today just almost just disappeared as more and more people are not staying at home, starting to add to home business. Like me for example, you know, I run my firm from my house. That was kind of unheard of 20, 30 years ago. The first thing people did was find a place. Now we see that all change. But also we got to look at it. Our interest rates have been really that high. When we look back 20, 30 years, everybody now we've gotten so used to that one, two, three percent interest rate that now when we see six and seven, everybody's about to have a heart attack. But in this market, so much has happened. You know, we've heard so many cliches. Some people say marry the price and date the interest rates. I heard all type of people say things. But today I brought in loan officer. He's out of Hawaii himself, but he's in Georgia currently. And we're going to talk about this today. So ladies and gentlemen, if you haven't done so already, please go ahead and make sure you hit that like, subscribe, comment, share button and tune in and stay tuned here to The Prince of Investment. Let me bring in my guest, Mr. Sean Sutton. How are you doing today, sir? I'm doing great, Prince. How are you doing today? I'm doing better than Atlanta Falcons. But you know, we're not going to bring up that conversation. So I gotta ask you this question here, right? When you look at this real estate market now, do you think it's more, are we still in the buyers market or we're in the sellers market with these current interest rates? Well, I think right now it's still a little mixture of both. When I say that, I mean, it's obviously advantageous if you're a seller right now because what makes this market very unique is the simple fact that you got the interest rates are climbing just as much as equity in the homes. From a buyer's perspective, you're actually able to leverage a little bit because once you're out there on the market, once you get ready to put into your offer and things of that nature, if there is a seller who just happens to be asking for a little bit more than what the market demands or again, high interest rates, high prices, sometimes these for your home to be a little stagnant. And again, they're already accumulated a lot of equity more than it ever would have thought in the last couple of years. You're able to kind of incentivize and kind of ask things of them, far sellers, creditors and things of that nature. So you can want to get yourself a pretty decent deal, even though you're paying a little bit more. But at the same time, you're able to perhaps buy the interest rate down and take advantage of certain products that are out there such as two one buy downs and so forth. Two one buy downs. Can you explain what you mean by that? So far as a two one buy down, I think it's a pretty good product out there to help assist that only the seller sell their home, but also for a buyer to pretty much achieve that home ownership dream and make it a little bit more affordable, especially in this market. So essentially, let's say, for instance, an individual comes to me and they're looking for a loan, right? So I offered this product a two one buy downs, temporary buy down. So what they'll do is that they will apply for a loan and based off the current market, they will be approved at the current rate, right? So let's say it's 6%. So what that two one buy down does is actually pretty neat. So for those next two years there, so you got your first year is going to decrease by 2% and then by the second year decreased again by 1%. So you'll look at your first year you're going into it. It'll be 4% then followed by a 5% and then from year three through 30, it'll go back to the 6%. So a product like that makes home ownership a little bit more affordable. Now the caveat to that will be again, qualifying again at the at the high point, you know where you're going to be at. So there's no surprise in that. But the money that you're saving per month is going to be tally the total together and that's going to be part of the concession that needs to be paid by the seller. So it's an agreement on both halves. So when you look at that in totality, it's advantageous for a seller whose home is probably stuck on the market for a little bit. And that's a way to kind of entice it folks in from a buyer's perspective, if you know of it, and you have a loan officer who's talking to you about that and kind of making you aware of it, it's something you can bring up to say like, hey, have a proposition for you. I've heard about this 2-1 buy down product that helps me out, helps boost your house. Let's look at this avenue here so it's affordable for me and it gets you to where you can enjoy all the equity that you just gained and you can move on to wherever you're going to go. So pretty good product that's out there. Okay, now the seller, a seller on a 2-1 buy down, it has nothing to do with them, right? They don't have to give up anything, anything like that. Is that correct on land? So with the seller, the seller's going to pay concessions on that. So if you look at what you're saving per year, the difference in the payment, right? So at 6%, your payment is, let's say it's 4,000. And you're going to go down to the 4%, which is saving you to say it's 3,000. So that $1,000, you're going to save that throughout the year or whatnot. You're going to tally that up. So that's what they're going to be paying in the concession. So whatever the difference that you're going to be saving is what they're going to add together for the first year and second year. And they're going to combine those two totals and that's what they're going to pay in a seller's concession for you to be able to use that product. Also a seller pretty much has to pay that difference in interest rates in order to get rid of their property. Correct. They're going to pay the difference in what you're going to be saving potentially by using that product, which in the grand scheme of things, especially in the Hawaiian market, you're getting so much in equity. That's a small drop in the bucket compared to, let's say just flat out giving someone, say $30,000 in seller's credit or $20,000 in seller's credit. If you have a $650,000, $680,000 home or $700,000 home, you're probably already, your concession would be on that for two and by now, maybe in a neighborhood of like $16,000, $17,000. So it could actually want to save you money when you think about it if you know what the numbers look like. And that's something that whoever you're selling your home to or if you're just inquisitive and you ask a loan officer, you can find out what that number is. Your seller's agent can be able to assist you with that, your real estate agent and kind of give you a little avenue. So that's something to kind of sweeten the pot there a little bit and get your property off the market. Okay. So you're essentially saying that, hey, instead of coming down the price, instead of coming, let's say my house is for $700,000, instead of coming down the price by $50,000, I can just use, hey, I'm going to give you $30,000 to cover the two one by down to, I guess, keep some of that equity and to motivate someone to want to move in to say, hey, my first two years, I have the house at a discount. Am I correct on that? You are correct on that. It's a great way to not have to bring down the price of your home if you're looking for a target goal of what you want to sell your home for and what you want your proceeds to be. It's a great way to maintain that asking price. Okay. Now, when you look at these arms, these adjustable rate mortgages, right? Where interest rates can, I think it adjusts every year or whatever, right? So we're looking at right now, since we're getting the interest rates are inverted right now, and you're seeing people say short-term interest rates will be high, but long-term interest rates will be low. So could it be a way to like, hey, I could take these high interest rates now, then cut them down? How do you feel about going into this market now with arms, adjustable rate mortgages? Well, I think when it comes down to arms, as long as the buyer is educated on exactly what that arm is and what it's capable of and what it's going to do in the future. So for instance, the set of people kind of being adjusted to just working was fixed rates, 30-year fixed rates and so forth. If you're going to go into the arm, just know that at some point, like if I have a 3-1 arm and so forth, if I'm going into that third, fourth year, like, hey, I'm anticipating that change coming up to where I know in between, if I have not refinanced into a fixed product, it's going to adjust. So that's where a lot of folks get into trouble with that. You want to make sure that, let's say for myself, I'm talking with a client that they're aware of that adjustment is going to take place. That way, you don't run into a payment shock, so to speak. I mean, they should be aware of it by the time before they even go into that product. But again, just a reinnerization of it and then talking with them, even throughout it, checking on your client, like, hey, you know what, your arms coming up, it's going to be changing soon. The market has not adjusted to the lower rates yet. And then here's what you're looking at. So again, it's just the education about the product itself and then the anticipation of like, hey, if we have not refinanced out of it and the market has not gone the way we hoped it would have gone when we first took this on in order to achieve a lower payment, you know, are we going to be okay with the higher payment that could be coming? So that's something whenever it comes down to adjustable rates and adjustable loans like that makes those very advantageous, but also a little bit, you know, just be cautious when you do those as well. Okay. Now, how long does that arm stay on? Is it only good for three? Is it every three months you get a new interest rate? Every year you get an interest rate? How does that thing go? So no, I mean, they come into a very variety of ways there. So you have like a 3-1 arm, a 5-1 arm and so forth. So what it is is that when you get down to that final year, to like your, let's say you got the first three years to which you're adjusted for a 3-1 arm on that fourth year, you're going to be open to a market adjustment. So that's what you have to be, the anticipation is going to be set for. So once you get to that point and you're looking around, you're like, well, I've been watching the market and nothing has changed, then you're going to anticipate like, hey, I'm going to be at the mercy of where the current market is. Now in between that, let's say like right now, you take on an arm and your interest rate is let's say 6%. And hey, you know what? Market does switch and turn out to be, you know, it's going down and now interest rates are at four. Let's go ahead and move you out of that and put you in a fix so that way you'll be good to go and you don't have to worry about that impending adjustment that's going to be coming up in the next year or so. Oh, why would somebody want an arm anyway? Why is it going to fix? Okay, just affordability. A lot of times you want to go ahead and achieve the goal, right? So if I want to go ahead and buy that particular property, this is the home that I like and I love, if you can find a way to make it affordable and you manage your money well and you know what you're doing with it and you're very condescitive like you're spending and so forth, the arm makes sense if you're able to budget and manage yourself accordingly and you know you want to get that particular property. So there's nothing wrong with that. It's just the thought of just being mindful, moving forward and just knowing that hey, it's not fixed. It is adjustable and that we're subject to having it adjust at the end of that time period. Okay, now looking across the real estate market now, what do you think is some opportunities? You know, you think there's more opportunities on the seller side or the buyer side, you know, would everybody's kind of feel like everybody's at a stalemate where everybody's looking at each other. What do you see some opportunities right now in the real estate market? Well, I think there's opportunities on both sides of it. I mean, especially coming from the seller side of your previous homeowner who's had your property for some time and you know that this is like internal planning. So if you know you're looking to retire somewhere or maybe you're looking to invest, you just gained a lot of equity. So maybe you're looking at doing a cash out refinance. Maybe you're looking at selling your home and being able to make that move and go to the mainland. That's going to be advantageous for you. If you're a buyer that's out there, because the market is the way it is, if I'm someone who's like, hey, I have a home, I'm sold by a home, I'm sitting on some cash or whatever the case may be, because higher interest rates have made some buyers a little squeamish in their staying off the market, you're able to kind of go out there and make purchasing on homes without too much competition. So that's where it becomes more advantageous on the buyer side, I believe. Okay. Now, look, I've previously just want to get your take on this. We work once prominent, $47 billion. It was like this virtual moving, floating workplace of a company, five bankruptcy, and you're seeing more walls go into the commercial real estate market. As you're seeing office space and things like that happen, how do you feel about that commercial real estate market? You think it's an opportunity? What do you think is going to happen to all these big office buildings? It's going to be a real sketchy touch and go, because what do we learn coming out of the pandemic is that people can work from home. You have a combination of higher interest rates coming into effect for those who are looking to get those commercial space and big office buildings and so forth, even for those who already previously had them. I mean, a lot of your workforce went home, you want those folks to return because, hey, I've rented out this huge building and then there's no one in it. So that's kind of run into that issue. And then what also took place. I mean, we had a lot of people who left the workforce and didn't come back to the workforce. So that's also affecting it too. So if you start to go out here and look at possibly getting these big work spaces, you're going to have people to fill it. It has to be, what are we getting out of this? Can we save money? Do we really need to brick and mortar? I just think that when COVID took place, when we went through the pandemic, I think there was a shift in the change of ideologies. You have some companies that, hey, we already pay for this space. We need people to come back, but a lot of folks, as you can see, are you experiencing now or staying at home? So a lot of companies now are trying to shed that stuff and like, hey, you know what, we're saving money anyway by not having that space operational or not renewing that lease. So they're kind of out of it. So it could be expansion there. Ideas for those who are looking to grow a little bit, but as far as the large companies who got those big large spaces, you might see those kind of die down and be sitting out there for a little while. What do you think is going to happen to these spaces, these big office buildings and these big once prominent, I mean, that was the thing, you know, everybody wanted to corner office in the sky. And that was like the thing to do. Now you're seeing a change. You're seeing people on my work Zoom calls, people doing what we're doing. What's going to happen to these spaces? What can you see them turn into? Who could take advantage of those? Well, I think when you have spaces like that, I guess the first thing kind of comes to my mind is this utilization of the building. So I mean, what could have been your mark for commercial? Maybe you make it into something that's residential. Maybe you turning into something that's more recreational. It just depends on your thought, your dream and how you want to change the space. Because people, it happens all the time where you see commercial spaces or old buildings or things like that get retrofitted, get turned into a residential space or some sort of different business that might be geared towards entertainment and so forth. Or it might just get spliced up to where it's, you know what, maybe this whole section here from floor, I don't know, one through 30 might have been all business. Maybe that gets cut in half and it gets spliced into something else. So just have to be real creative on how they want to utilize that entire space for whatever business they want to attract to go in there. But it definitely has to think outside of the box to get those spaces real. Yeah, I think it's only open for residential, maybe apart old hotels turning into maybe some apartment complexes or a leisure, you know, maybe bowling alleys or something like that that I could see people may possible may happen, but something would happen with them. I don't know, but somebody that come along the economy will fix, you know, fix itself. So I don't really know. I know it's kind of like the probably the lowest point that I see in the real estate market itself. So now going forward, as you look into the residential spaces, is this a time for like, how do you feel about the renter market going up to you got renters, rain prices going up along with mortgage prices? How do you feel about that? Because people are saying, hey, we are having, you know, you see some people, hey, I want to get into a house because even though the mortgage rates are going up, you're seeing people who rent their properties, they can get more for their rent now. So in return, because let's say the average mortgage is $3,000, and the renters market is $2,000. Those renters, they could raise some raise the price on them because they really can't afford to have a mortgage, but they're barely afforded rent. These I'm kind of seeing noticing that. How do you feel about that whole, what would that lead to? I figured something's going to happen, but I don't know what it is. Well, when it comes down to the rental space, it's very unique in that you are starting to see the running prices go up to where they're either, well, I'll say like this, when it first started out, it looked pretty good on paper, especially when the mortgage rates first went up and those rental prices had not yet adjusted. So you had that market of folks out there who was like, hey, you know, it's just easier to go out here and rent. Also too, it depends on lifestyle. There's some Americans out there who just don't want to be homeowners. You got some that prefer that kind of, you know, touch and go type of lifestyle where it's like, hey, I'll just go rent. And then when it's time to move or it's time to go someplace, I can just close out and then there I go. But as things start to adjust and you start to see the renters market kind of react to everything or they're going off the market value like, hey, if this person over here is, you know, we were renting $2,500 last year, but now we're going to $3,000 or $3,200, your current occupant there, that they might have been already maxed out. So now they're looking at that going like, wow, now what do I do? So it's becoming to where you're almost kind of renting out the, I want to say the American dream, right? Like the dream is to buy home and home, have home ownership, but until things can kind of get set back right in terms of what we're spending out in terms of what people are making. If that can make a little bit more of an adjustment to where our incomes are catching up to where rents are, it's kind of growing into direction where you can't, there's no affordability there. Like that individual who's renting will probably stuck renting. And then until houses come down, it becomes more of like, hey, you know what, I want to be able to buy a home and I just can't do it right now. And with the rent going up, how can they save? So you're kind of running into that issue. Okay. Now, is there anything out there that we're missing? Like, you know, something that's going on in the real estate market that you've seen some opportunities that people are not talking about. Is there anything you see out there in that residential space in the real estate industry? I think the biggest thing is just the education, like reaching out. If you're curious about homes and, well, I mean, not just homes, but wanting to purchase a home, calling an individual like myself, speaking to your loan officer, speaking to local loan officers learning what products are out there that can assist. So when things go bad, as we perceive, like its rates go up and things of that nature, the banks and lenders, yes, you do tighten up in terms of certain requirements, but they also loosen up at times too. So it's just a matter of staying on top of things and asking those pertinent questions, see what programs are out there. I mentioned about a two one buy down at some cases, even in the conventional, they go to 1% as far as down payments. I mean, they adjust things to make it to where we're going to do what we can and try to get people into those homes and so forth. They may even drop FICO score. They may allow certain things from a self-employed standpoint, depending on what your situation is, there's probably a product out there has either been introduced or been modified to where it's allowing more people to be able to use bank's money to go out and purchase a home. So it's just always trying to stay abreast of what's going on out there in terms of from a lending aspect or a loan that you can attain. Now I saw something out there that the FHA put out there, don't quote me on this, but I think it was like a 5% or whatever, where you could buy multi-families that were out there. When you look at Fannie Mac, I think they was giving out loans, but I'm also seeing that people are saying that the renter's market is a little saturate that is, from the investor standpoint, hey, I want to buy a rental property, rent a property, rent it out, whatever. How do you feel about that whole construct as an investor standpoint? I want to buy a property and rent it out right now with this current renter's market. I think it's getting a little saturated at the time. Well, it could be. I mean, and that's only due to the fact of, again, you don't have that many home buyers out there, and then what did they do to try to, that kind of fit into that is the fact that inventory is a little low too, right? New bills are not as frequent as they were 10 years ago. So that's kind of when the things are kind of feeding into this too, is the fact that you've got high interest rates along with rising equity in homes and prices and so forth, because you don't have a lot of new bills out there. You've got more Americans that need houses and there are houses to go into, right? In terms of the saturated renter's market, just some other factors that kind of play into that. I know you've probably heard of this where you have now corporations that go out, they're buying up homes and they're kind of getting into that space where it's like, well, hey, if no one's buying this neighborhood, they've already built like, let's say, 20 new homes in here, why don't we buy it? We take it, we make it into rental properties and now you have these residential companies who are going out and they're kind of in their own little way, not going to say control in the market, because they're not relatively the largest percentage of like the folks that own the rentals, but in some cases, they could be a driving factor of like, hey, why the rents are going up, if that makes sense. Now, far and large, it's going to be more private owners that own properties around America that own more of the rental space and they're all tripling to why rents are going up. But yes, in a sense, it's being more saturated because the rents, they look cheaper, you know, right? And that's where people are going to. So as they get into that space from an investment standpoint, I mean, it looks pretty good right now because the demand is there, it's definitely there, that's why you see these corporations and stuff going into it, along with folks who are going out and buying different properties and wanting to rent those out because no one's wanting to buy the new homes either. So very interesting in terms of that. Right now, is there anything that we forget about that we left off that you want to get on? I think weathering the storm, if anything, just know that if you were to ask, is it a good time to buy homes? I say when you're ready to buy a home, buy a home. But even in this market here, of course, he's like, well, of course, he's gonna say that he's a lender, right? He's trying to get people in the homes. My job is not to sell them. I want to be able to get you into a home, but I'm always a big believer. And again, that American dream and home ownership and what he can do for an individual's family and wealth and so forth and prosperity, you want everyone to be able to achieve that dream. So with that being said, just a preparation for it. Just make sure that you have yourself together in terms of knowing what your credit is like, having it in a good space. And then if you have not done that, then keep working towards that, working on just putting back a little bit, terms of savings and so forth and being ready if you are in fact waiting for those interest rates to go down or some prices of homes that go down, depending on what market that you're in. So that way you can move into that because a lot of people who are renting, that's necessarily meant to go to rent forever. They're probably just waiting sitting there and holding pattern and they don't want to go out and be able to purchase a home. So I think that's one of the biggest things as far as touching on is just preparation. Just be ready, still keep that mindset of wanting to buy a home. I think that's key. And then we're back here and we wait anxiously for interest rates to go down and home values to go down. The home prices to go down, I should say. Now, Mark, you said that I'm assuming that whole refinance market has kind of dried up. Is that refinance market is cold now or how's it looking right now? Well, if you're just looking for let's say you have a government loan, like a VA loan. Yeah, you're not going to see too many interest rate reduction refinance loans. This is a straight interest rate drop. But for folks who have equity and they're wanting to do special projects, renovations, things of that nature, they're still cash out refinances that are taking place. But you have to keep in mind a lot of that equity. Yes, they have it. It's sitting there and it looks so enticing. But they were able to refinance two, three years ago and that's looking really nice too when you're looking at interest rate that's maybe high twos. I mean, high twos, low threes. And in order to take that money out, now my cash out refinance may, yes, I'll get my 100 grand or 200 grand, but my interest rate is going to go up to maybe four and a half or five percent. I quote those because typically if you're taking that much money, you should buy your rate down, right? So you're not going to take like a six or seven percent. But yes, that's definitely is cooled off a bit. And then it's pretty much like cherry picking on what you have going on. If you're already a homeowner and I think those cash out refinances for people who are just looking to take money out or do renovations is what you're most likely what you're seeing. Okay. Well, how can people get in contact with you to hear more, see more? You can always go to my website, SeanSubsmortgages.com and then you can always direct call, right? Here you go, 229-630-5429. Okay. All right. There you have it. SeanSubs, thank you for coming on. All right. Thank you for having me. All right, ladies and gentlemen, to the next video podcast, cartoon book or whatever else craze you see me do around the globe. My name is Prince Dykes. This is The Prince of Investment. Until the next time, peace, be safe. I'm out and thank you.