Real Estate Explained

The Rent-Back, The Bridge Loan, and The Real Way to Move Up with Eric Davidson

• Nick Bush

Share episode

Send us a text

In this episode of Real Estate Explained, Nick Bush sits down with Eric C. Davis, CEO and Mortgage Advisor at Mission Mortgage, to break down the hard truths about homeownership, interest rates, and wealth building in today’s market.

From why your “forever home” mindset is keeping you stuck, to the repeatable strategy Eric uses to help clients buy a home every single year, this conversation is packed with bold insights that challenge everything you think you know about real estate.

💣 Spoiler: Your low rate might be your biggest obstacle to building wealth.

We dive into:

🏡 The 3%-4% mortgage “handcuff” and why it’s stopping people from scaling

🏡How to buy 5 homes in 5 years without 20% down

🏡 What first-time buyers actually need to know (that TikTok won’t tell you)

🏡 Why waiting for lower interest rates could cost you more in the long run

🏡 The real definition of the DMV (and why Baltimore is not included)

🏡 How to use your 401(k), HELOC, or rent-back strategy to grow your portfolio

Whether you’re buying your first home, upgrading to your forever one, or trying to figure out how to invest smart, this episode will shift your mindset—and your money moves.

📩 Ready to build wealth instead of just owning a house? Tune in now.

Podcast Intro 

Follow us

Leave a review 

Speaker 1:

Now I'm just looking at him. That's how I felt about Travis. I'm like man, I'm giant steak.

Speaker 2:

I'm just looking at him. I'm like whatever you know. So Eric, you know is fresh, you know he's suit got the pocket square, you know he do it up, he does it up. So I had to. I was like let me at least throw a pole.

Speaker 1:

I appreciate it.

Speaker 2:

I appreciate it.

Speaker 1:

You up. You know what I'm saying. I didn't want to come in here with a suit, so I just had to settle for a little suit, jacket and some jeans.

Speaker 2:

No, I knew I said he coming in here, he going to put it together, so I said let me just throw a polo on so I look like I belong in the room. You know, bronson are we recording.

Speaker 2:

Yeah, we're live Alright. So I had to get a little dress, because you always do that. I knew it too, because I remember we were smoking cigars that day and they asked you about your. I think you were going to propose and I think somebody said, like what you going to do to that and all you responded was you said you know, I always step.

Speaker 1:

I said oh, If you see me, you know I'm a step.

Speaker 2:

Like that's good. Thanks for coming on the pie, bro. Of course, girl, we live right now.

Speaker 1:

I appreciate, I appreciate you having me man. I see you doing a lot of dope dope work. Thank you, appreciate you reaching out and, you know, just jumped out the opportunity to connect and and get on here, bro, thank you, bro, before we uh, and your name is really good out in the streets too, so okay, so that's awesome.

Speaker 2:

Before we uh get in. So before we we press record. Um, eric, you live out in baltimore, I do, and so you said something like baltimore, the dmv area, and I was like baltimore is not the dmv, so before we jump into that.

Speaker 1:

Yeah, let's, let's unpack that, because what, what's, what's the beef, what's the what's the true beef between baltimore not being in a dmv and it, you know, it's kind of being on its own island. What's what's back story?

Speaker 2:

on that.

Speaker 1:

So first introduce yourself to the people All right, and then we're going to go back, all right, cool. So for those who don't know me, I'm Eric Davis, ceo and Mortgage Advisor at Mission Mortgage. I've been in the business almost a decade now, had the honor and privilege of serving close to about 500 families, with a focus on helping first-time homebuyers build, as well as investors. So that's kind of my thing, man, okay okay, welcome to the pod.

Speaker 2:

Let's get into this topic.

Speaker 1:

Let's get it.

Speaker 2:

All right. So there's a lot of people trying to co-op this DMV thing a lot of other cities right Okay yeah, I even saw that Pharrell one time try to say that Virginia Beach because you know he's from the Virginia Beach area is a part of the DMV. It is not Okay.

Speaker 1:

It is not.

Speaker 2:

It's not even close, bro. All right, baltimore is definitely not part of the DMV. Baltimore is its own Island. Okay, right, even the people in Baltimore they don't feel like they're from the DMV. Maybe you ask a 21 year old's, 30, like a millennial, like 30, 40, thinks that Baltimore is the DMV. So, to my knowledge, so if you think about it right, baltimore has. They have their own little slang, like everybody, like the DMV, we kind of all talk the same, use the same lingo, same slang. It's the same vibe, dress, the same. Baltimore has its whole own situation. There's nobody in the DMV talking about what Yos said. This word, demi like.

Speaker 1:

that's like Baltimore, only they're their own island.

Speaker 2:

To my knowledge also, Baltimore and DC had like a beef for a long time, like some street beef, but I think that's just because you know whatever. So the DMV is. This is the dmv like dc. Obviously, first of all, people need to really understand like the dmv is very territorial, okay all right, so like I grew, up in northern virginia. Okay, I never tell people I'm from dc, okay if I go out of town.

Speaker 2:

I'm like. I'm like, uh, they're like where you from, I'm like virginia. I would never like, I would never say dc just because, like there, they're like where are you from? I'm like Virginia. I would never say DC Just because there's just a territorial thing happening.

Speaker 1:

You feel like you'll be false flagging. Yeah, I'm false flagging. I'm not from DC, you know I'm not from DC, you're from the Bronx.

Speaker 2:

It might as well be Manhattan, you know no. I'm not from like you would never just be like I'm from Manhattan, I'm from Brooklyn, no, no, no, you're from the Bronx.

Speaker 2:

So like it's like that right, people in DC, they have a lot of pride and mostly they don't like people in Virginia, like they're like oh, virginia's corny, you know what I mean? Because they don't like. The police from back in the day, right for real, goes like I would say, like up to woodbridge. Okay, it's like the original, like all right, that's the dmv. Now it's extended a little bit out to like stafford, right, and then if you go west it's really like, really like like mclean sterling area should end it, but now it's built up. So now it's like ashburn, gainesville, where Bronson lives. Bro, I didn't know what Gainesville was when I was growing up. That was like the country. Warrington was the country.

Speaker 1:

I remember I did a loan for somebody in Gainesville. I'm like, wait, is this in Florida? I'm like you sure this is not Florida.

Speaker 2:

Like yeah, it's VA, I'm DMV when I grew up. Like Loudoun County is not the DMV and PG County is obviously the DMV A lot of people from DC go live there and then Montgomery County. So I would say if I'm going counties, I'm going PG County, montgomery County and Maryland. It's the only DMV counties In Virginia. It's like Arlington, alexandria, fairfax County and then you got DC and that's the DMV. Now it has extended out to like Loudoun County, oh, and then like Loudoun County, some of Prince William County, but that's like new DMV, okay.

Speaker 1:

You know what I mean. But Baltimore is definitely.

Speaker 2:

We don't associate with them like that.

Speaker 1:

Listen, I get it. I feel like it might be kind of on the same lines of how people from New York look at when people talk about the barrels, right, yeah.

Speaker 2:

Y'all don't include, like Staten Island right.

Speaker 1:

Yeah, you're not really from the city.

Speaker 2:

Exactly so, grace. I want a clean clip of this where I'm telling you where the DMV is right. So I'm doing it again. If it's already in there, don't edit it out. I'm talking to Greg. So we got PG County, montgomery County, fairfax County, alexandria, arlington, which kind of have their own counties, and DC is their original DMV. Now it's extended to Loudoun County and Prince William County and nothing else is the DMV. Okay, there it is, yeah. So why doesn't New York respect Staten Island and Yonkers and like all those places?

Speaker 1:

Because people coming out of there I mean no, no People come out of there, but it's just, it's kind of like isolated, it's on its own, you know what I'm saying Whereas like when you're in the city City, you think about Manhattan, the Bronx, Brooklyn, queens, and then kind of Staten Island is like the afterthought, you know what I'm saying. So I guess that's why, when you was kind of breaking it down, I'm like well, maybe they look at Baltimore kind of how we look at Staten Island.

Speaker 2:

We don't even consider Baltimore a game.

Speaker 1:

It's not even a cousin, it's just not even.

Speaker 2:

Okay, it might as well be. I associate Baltimore actually more with Philly. They're like more like Philly people. Okay, you know, but anyways, we could talk about that all day. So you say you niche down with first-time homebuyers and investors. So how did you end up like niching down in that space, you know, with first-time homebuyers?

Speaker 1:

Yeah. So I think naturally you get into business, right, most of your clientele, when you first kind of start cutting your teeth, is going to be first-time homebuyers, right, those are people that's transacting more, right, people are more inclined with programs et cetera. So I always had a passion for first-time homebuyers, right, I actually got into the business because I experienced my family not have the best experience when they purchase, uh, so first-time homebuyers always gonna be near and dear, yeah, uh. But more I got into the business I realized like, all right, it just don't stop here. Right, like if I could do it right and I can educate and empower these first-time homebuyers to not only look at this as a purchase for shelter right, but look at this as an investment, which it is right, then I can kind of set them up for the next step.

Speaker 1:

Right, because you know I tell people all the time Monopoly is not a game, that's real life. You know what I'm saying. So, like if you could apply the principles from Monopoly to life, that's how you really win a game. That's real life, you know I'm saying so. Like if you could apply the principles from monopoly to life, that's how you really win the game. You know, like you don't just work to make as much money as you can but never own anything, because the more money you make, if you're not owning anything, it's more money that's going out. You know I'm saying so.

Speaker 1:

Um, as I started to to grow in in my business and grow with my client, it just naturally just started gravitating to more investors and also me being an investor. Yeah, you know, I just kind of used the opportunity like yo listen, you know, do this right Kind of look at this from like a two to three year window standpoint, and then let's revisit and then start building, you know, as far as like the investment side. So that's, that's kind of how I got into those two niches.

Speaker 2:

So I feel like that's that's interesting, right, because when I first got into the business, I was doing a lot of first time homebuyer stuff. I was 26. So it was just natural that I was, you know, working with first time homebuyers. That was my network and at that time I was doing a lot of VHDA, dc, open Doors, fha. But I think I was telling people I was promoting those programs all the time. And now when someone is trying to buy a house, they're like, hey, how much money do I need down? I'm like you need 6%, right.

Speaker 2:

Yeah, that's right, I'm like 3% for down payment, because you can go conventional home ready, whatever, or FHA three and a half, and I'm like you need to have three percent for closing costs, just so you, just so we can be out in the market and have the most, you know, the most leverage, right. But then and then, and then I say there are programs where you can bring no money down, or one percent, and then we can get your, your closing costs taken care of by the seller. So you know you leave those as options. But I tell everyone they should be ready with six percent taken care of by the seller. So you know you leave those as options. But I tell everyone they should be ready with 6%.

Speaker 2:

And I feel like my first-time homebuyer client is different now than it was back in the day. Right, it was like a lot of 620, 640 credit score barely making it right, like are we going to get through underwriting? Now it's like a 700 credit score person who makes $100,000 and has just been renting for a while. Did you deal with that? Like do you have?

Speaker 1:

yeah, no, I think I think that's. It's similar, right like when I first got in the game. You know, I kind of made my name in the business by being able to take on hard deals and make hard deals long.

Speaker 1:

You know what I'm saying. You're like, oh, linda say it can't do something, all right, well, let me take a look at it, right, so you start to figure out. But then, as you go in your business, you're like, oh, there's more, there's more than than this type of business, right, but I think the the evolution that we've seen in regards to, like, the qualifications of how qualified people are now, is simply just, I mean, the generation shifts, right, like millennials are now, you know, I'm saying everybody's in their 30s for the most part. So we were one of the most educated. So, along with education, knowledge, higher earnings, higher paying jobs, so all of that, just kind of shifts. So the credit scores rise. So I think that's kind of why you've seen a shift, a shift in the business. Um, you know, I just think overall we just more qualified, more educated, better paid. I think.

Speaker 2:

I think millennials, we have the information right. So I remember growing up. If I asked my mom, like how much money do you make, she'd be like don't ask me no question.

Speaker 1:

Like that right but?

Speaker 2:

but I'm probably going to initiate that conversation with my kids. I might not tell them this, how much money I make, but I'm gonna they're gonna learn about money and I'm like, how much money is coming in, this is what this costs, saying the structure. I have a 14 year old and when he's he's going into ninth grade and when he gets to junior year, 16, it's like here's rich dad, poor dad, figure out who you want to be. Here's the richest man in Babylon. So you could like get an understanding, a foundation of like budget yourself, right. And I think millennials, we have the like we were. You know, I graduated high school in 2008. So that was, you know, the recession, right, like we went to college and they were like, yeah, we don't know if you're going to get jobs when you come out, but you should go to college. I think millennials are very entrepreneurial but like we know, we like we like know the game and we study it. So we understand, oh, you got to invest, you need a good credit score, right, you should rent and you should own versus rent. Like we just kind of have that knowledge and I think a lot of people are taking advantage of that.

Speaker 2:

I have clients. So how receptive are, how receptive are people to the, to the investing conversation? Because I have clients. Uh, I have probably four or five people in my database and I tell Bronson this every time I'm here. I'm like Bronson, you need to be buying a bunch of houses. You need to buy a condo, buy a townhouse, living it for a year and a day. As long as you make a lateral remove or or a move up, you can do that right. Like and just like. Buy 10 houses, do that 10 times right. Is that how you're approaching the conversation?

Speaker 1:

with people. That's 1,000% right, 1,000%. But I also think, because you know I'm a little biased, right because I'm a millennial as well, but I feel like we're the best generation because we stuck between two major like generations right, like we seen the working class, right, like our parents, they work, they, like you know, go to school, get a good education, work hard right. But then we was like we stuck right between everything being technology you know what I'm saying the evolution of how technology is moving. So we're like, all right, we see the work, so we got that work ethic. But we also see how fast technology can accelerate right, so we can combine the two to really supercharge this thing right. So I think that's why, in my opinion, a general like, as a generation, we're so far better than most.

Speaker 1:

But to circle back on the investment-like approach and coaching that I kind of advise clients on, that's exactly what it is a solid financial foundation. Buy properties and buy as much as you can, because everything that's written in America from tax code, everything is always for people that own things right, that's pouring into the economy, right. So it's like it's more expensive to start a business right and buy a business or get a business loan than it is to buy a house. Like yo, just save up your money or leverage your retirement, like that's another thing. Like, if we ain't learned nothing like the last couple months with how retirement has been fluctuating, man, pimp that retirement out.

Speaker 1:

Because what people fail to realize is where the money comes from, how money gets to a consumer. As far as buying a house, right, the banks get the money from. You know, finney, freddie, jenny, right, that's getting the money from investors. Right, these are the same investors that's in the stock market that's then taking their money out of the stock market, putting it in mortgage-backed securities you know what I'm saying. To be able to fund that, right, where they're getting that money is your retirement, your 401ks. You know what?

Speaker 1:

I'm saying Like the things you're investing in. So it's like it's always baffling to me when I talk to people and they're like, oh, I don't want to dip in my 401k, that's like my long plan. I'm like no, you're missing it. Buying a house, this is your retirement, right here. You know what I'm saying. If anything goes sideways, you have an asset you can leverage. You could sell it. You know what I'm saying.

Speaker 2:

You could refinance, pull the money out and you need a ton of money in your 401k to really live comfortably in retirement, Like if you have a million in your 401k. It's going to translate to $40,000 a year in 20, 30 years and you're going to be broke being, you know, working a job that you don't want to work. So you really need like three, four or $5 million in your 401k for it to be worthwhile. Um, instead you can just buy real estate. That cash flows, right. So something.

Speaker 2:

I'm looking at is like markets like Baltimore. Is this market right where you can find something for $100,000 or less and cash flow $700, $800. Or you can find another type of property for, you know, $200,000 and still create some cash flow by putting that 20% down and stack those on top of each other. That 20% down and stack those on top of each other. I, you know, obviously I'm biased because I'm a real estate agent, but I'm like I could take $100,000 and turn that into thousands of dollars of cash flow. Or I could put that in the market and you know, you know you get 7% is great if you put it in the stock market. But one is going to improve your life faster and it's going to compound faster and it's you're going to be able to use it faster and you're going to be able to use it. I look at it like, okay, I'm buying income If I know. Okay, well, I need to put 20% down on this $100,000 investment property, it's going to cash flow me $700. Well, $20,000 buys me $700 of income today and then in 20, 30 years, when that's paid off, that might end up being $2,000, $3,000.

Speaker 2:

We have our property in DC and I always say like if I'm netting $20,000 a month, like I feel like I could do whatever I want, like that's like, yeah, that's not enough, I'm doing whatever I want, right. And so we have our property in DC that we bought with our primary FHA 3.5% down. We now rent it out. It rents out like $3,200. So we're get a little bit of cashflow. We can increase the rent if we want to, um, but I'm like, okay, that's 3,200, right there. Maybe in 20 years it goes to 4,000. In a perfect scenario. That's our first $4,000 of of income in retirement, you know, and that's how I look at it too. And uh, I don't know, I don't know why, and and and it also like the 401k is, the social security is gone. 401k, I don't know if it's gonna be there, you know.

Speaker 1:

And so it doesn't feel safe to me, none of it. I think we gotta get out of this, this false security of, like, retirements or the things that we deem to be safe. Right, it's, it's is it's false. It's a false reality. Right like um, I think I read a statistic by the time, like, we're eligible for social security, it might be used up, right. So it's like you planning or you baking on that kind of being your fallback that's not even guaranteed to be there, right, whereas, like, if you could just be mindful of the opportunities you have now, right, leverage your retirement, save some money, and then you know, I'll tell people, if you want to buy, get into investing, you don't got to jump out and do 20% right out of the back. Right, get into investing, you don't got to jump out and do 20% right out of the back. Right, if you do it smart and you just like how you said, right, you buy your first property. So, yeah, I teach you about it.

Speaker 2:

How do you navigate?

Speaker 1:

that. So I always sell and I'll share one of my best client testimonies. So you could easily do like a buy your first property using FHA, right. If you're fortunate to get like a multi-unit, then you golden right. So you put 3.5% down on that property. You occupy it for six months to a year right. Then you can change your primary residence, go buy another one. Right, and you put 5% down right. Then you put a tenant in place to offset your mortgage on the first property. Right. Now you have your first investment and there's no rules that say you can't change your primary residence every year. So you have your first investment and there's no rules to say you can't change your primary residence every year. So you can. You know, if you do it the right way, which I have a client.

Speaker 1:

She bought her first property. She bought in baltimore, near um the oreo stadium, like over there, by pig town. Right. She bought this house for like 120k, like I want to say, maybe like six, seven years ago. She wasn't making a lot of money, she was making under like $40K a year. She bought it all right. It's now an investment property. She rented out on Airbnb. We did like we were working the numbers for another property she was trying to buy last year. She's making like $40 grand profit, yeah, From a house that she bought $120,000 like six years ago. That's great.

Speaker 2:

That's your million dollars in your 401k, right, yeah, right.

Speaker 1:

Like what are we talking about? So we put together a plan and like, from the first time she bought that one over the next five years, she just bought another property. She just made it primary right, Living in for a year, put a lease in place. Now she got five cribs.

Speaker 2:

She good. If she don't do nothing else, she golden, Exactly Golden. It's really the wave, I think that. So how do you prepare somebody for that conversation? The first time Is that like after they close. You're like hey, by the way.

Speaker 1:

No, no, that, like after they close, you're like, hey, by the way, no, no, I think I think, like, for me, I'm real transparent, right, and I try to. I like to think I do a really good job at like playing seeds, like I love to be able to plan to see, to have somebody think about something in a different perspective. You get. I'm saying because I think it's so easy, especially with like tiktok and all these influences popping up now, right, I think it's so easy, especially with like TikTok and all these influences popping up now, right, I think it's so easy for people to hop on these platforms, follow all these people and take what they say for gold, and I'm like, this person don't even own anything, right? Like this person, all of this is written Like this car, like this lifestyle. This is not even true, right. This car, like this lifestyle, this is not even true, right.

Speaker 1:

So I love to just be able to start like chipping away and just building and helping reshape the mindset, because that's really all it is. It's like once you change, you know, once you change how you look at something, how you look at things change, right, it changes your perception, right, and perception is reality. You know what I'm saying. So it's like when I'm doing my consultation on clients, I like to have an understanding of all. Right. Well, you know how much or how little do you know about the process? Right, like, are you the first person in your family buying? Like, have you experienced?

Speaker 1:

seeing other people purchase right, because that tells a lot. Right. Like if me having a conversation with someone that they fam, they, they come from a family full of homeowners, they, they privy to some knowledge, they know a little bit, you get, I'm saying so they, they already have a mindset like, yeah, I'm looking at it as far as an investment, right. Or if their parents invested, they already kind of got that in their mind. Where, if you're dealing with like a first generational like homeowner, they green, they don't know anything, right, so they're like I just I just keep hearing that this is what I'm supposed to do, you know and I'm doing well, I just want to buy something.

Speaker 2:

I've had that conversation. I think I should buy a house, you know. So I want, I want to. You know, we talked yesterday. You had that move a buyer. Yeah, that move a buyer. Um, yeah, bridge loan product. I want to talk about that, but let's get the evergreen content out the way. Also, since you do work with first-time homebuyers, yeah, so, just so people know, um, what do first-time homebuyers need to know? What documents do they have to have prepared, sure? What kind of position do they need to be in, credit score wise, etc yeah.

Speaker 1:

so I would say credit score wise, right, 640 above right, if you're looking to really give yourself some options. Now, that's not to say that if you have anything below a 640, right, we can service clients at 580. But I always tell clients it's like a seesaw right, you either got to have assets or you have to have the credit so you don't have to have the. If you don't have the credit, right, do you have to have more assets? So it's kind of like you know we can, we can you, but you got to be able to help yourself too. Yeah, where 640,? Most of the programs that's kind of where they start right, most of the down payment assistance, closing cost assistance programs, they require you to at least have a 640. So I would say 640, right. If you're looking for a goal as far as you know the time, I always tell people, the moment you know that you want to buy, just start at least getting a plan together. Yeah, because too often I see clients wait until they're like 30 or 60 days out from their lease being up and then now they're trying to undo 20 and 30 years of bad money behavior while racing against the clock. That's what makes the process so stressful, right?

Speaker 1:

I think that the difference between someone having a good experience, you know, of course, working with the right team right, being advised properly, having a plan, is giving yourself time. You know, a lot of times people they overestimate, like, how much time they have, right, and underestimate how much stuff they really need to work on. You know, I'm saying so. It's kind of like yo, the moment. You, you know you want to bop, just have a conversation that don't cost you anything, right, because you can have a conversation with me and I can say, all right, well, based off of where your profile is today, this is what you qualify for, right?

Speaker 1:

If you don't like that number, then I can say, all right, well, either pay this down, or you, you know, once you get a promotion, or you know, I'm saying, once you get your certificate, you make more income, then it can push you to all four in the house like this, right, so that this way you have a plan and you, you're able to work the plan. Yeah, um, as far as documentation, we normally just look at the basics, right? So w-2s if you're a W-2 earner, pay subs, bank statements Normally the only time we look at like tax returns is if you have a business right, you're self-employed or if you have rental properties that we're trying to use the income from. So those are normally times we pull like tax returns.

Speaker 2:

Yeah, trust the lender that tells you like the real information, that, hey, you should get a 640. I've sat down with lenders sometime and they're like we got a 580 product, I'm like sure, but the person has to bring 20%. And so I'm glad that you're giving them the real information. And I always tell people six months out at the latest you know, like six months out at the latest, because it gives you like a quarter to like figure out what you need to do, if you need to do anything. And then you have a few, few more months to like shop once you get qualified. And then I also tell people whether they have 800 credit scores or 600 credit scores you know we have.

Speaker 2:

I would say I would never do any business if I didn't know loans, because nobody cares about the home inspection contingency, right. And people you know sometimes people with the lower credit scores they're nervous to do an application because they feel like they're going to get denied and they're like, well, I have this credit card, I need to pay off, or I'm planning to pay my car off and I'm like, yeah, you can do all those things, that's probably great, but you should actually talk to the lender to make sure that those are the right things to do, because you could be spending money somewhere where you don't have to spend the money, or we should spend it somewhere better.

Speaker 2:

And instead of you know, you and me, the realtor and the client running a hypothetical situation, I'm like let's just ask the person that's going to give you the money One thousand percent.

Speaker 1:

Right.

Speaker 2:

So let's talk to the lender. So I think you guys are really valuable. What?

Speaker 1:

do you think? Do you think that for the average person, having the realtor, like talking to a realtor, is better than talking to the lender first, or lender than realtor? I mean, if you think about it, right, the show really don't start until you talk to the lender. But I think, because the average consumer associate buying a house with a realtor right, because y'all are on the forefront, y'all showing properties, right, y'all negotiating, you know, I like to think about the realtor being like the quarterback of a team. Right, everybody knows a quarterback, right, but it really don't start until you talk to a lender. So I mean, I think it all, you know, regardless if they talk to you or talk to me first, they still got to talk to me before you could even show them anything you know.

Speaker 1:

So, um, I mean I think more more times than none. Now we're having people to reach out to us directly, right? I think you know people are getting more educated on like really how the process works. So you have people even reaching out to lenders before they even talk to agents, right? Just to say, hey, I just want to see where I am, I just want to understand what my options are before I even talk to an agent or start looking.

Speaker 2:

Selfishly, I want to say the realtor, because I would hate for the business to be flipped upside down and I have to get referrals from you and take you to lunch and coffee. But you're right, the show doesn't start until you talk to the lender. And I think the only benefit I think the main benefit of having that conversation with the realtor first is because a good realtor is going to understand the loan options and credit scores and debt-to-income ratio. We're going to be able to talk about that a little bit and then we've vetted lenders already.

Speaker 2:

So you want to have a good experience both ways. So I think it's like have the initial conversation with the realtor so you can talk a little bit about loans and about the market, what you're going to, where you're going to buy, what I think, I think, I think, I think that's a a good, a good assessment.

Speaker 1:

Uh, because, again, y'all are in the trenches, y'all on the streets more so, yeah, I know, like, if a question comes up about areas right or, um, you know, new development, that's, that's coming on, y'all have more knowledge and can speak to that. Yeah, so I'll agree with every homebuying seminar I've ever done.

Speaker 2:

I look at the lender beforehand. I'm like you know, no one's here to hear me talk, right, they're here for you, bro. They do not care about the appraisal, they want to know how to buy a house with nobody down. So in my database right now I have a lot of move-up buyers. Move-up buyers are someone who owns their house and most people are moving up to a bigger spot because they have kids now, or they just want more space or they're like okay, we need the school district. It's kind of like I would say a move up buyer is someone who's pretty much getting in their forever home right.

Speaker 2:

That 10, 15, 20 year home where they're going to raise their family. Now I leverage the rent back scenario all the time.

Speaker 1:

Okay, good to go. All right. So we have an awesome buy before you sell product right. Okay, because I mean, if you're paying attention, there's a lot of people strapped for cash, right? So, even if you own homes, a lot of times you can't really make a move until you sell your home because you need to access the equity in there to be able to put down a down payment or pay for your closing costs on the next one. So we got access to a buy before you sell program right, which will allow the client to tap up to up to 85% of the equity in the home. That's great, right, and the way it works is you list your property, right.

Speaker 1:

Normally, the program will allow you to tap up to the equity before any contracts are drawn up. Right, to tap up to the equity before any contracts are drawn up right, once you close the proceeds that you get from the seller of your property, you just pay off the bridge, if you would, okay. But the cool part is, when you think about traditional bridge loans, a lot of times they require you to carry both mortgages, so you have to qualify for both mortgages, which again is another pain point for people With this. Yeah, so you have to qualify for both mortgages, which again is another pain for people. With this product, you don't have to.

Speaker 2:

Okay, yeah. Are there any fees associated with the?

Speaker 1:

product. Yeah, yeah. So there's no money on the equity that you're leveraging. It's just a percentage of what you have to pay back on once you sell the house. Okay, which is 2.4%.

Speaker 2:

Oh, that's not bad. Yeah, so 2.2%. I have clients that like want to move up, but they have to sell first. Yeah, and the rent back seems a little bit risky. They're like are we going to find a house because inventory is so low? Um, that's something like that. That is, that is. Uh, you know, I think people just need to get more information, man, instead of just planning themselves. It's like what can I do, you know, because we have this? There's so many different.

Speaker 1:

There's so many products and different products and people you know don't decide to go. Get there, I think. I think that's kind of what handicaps a lot of people is just the lack of knowledge in the lack of vulnerability of saying, hey, I need, I need to, I'm raising my hand, I need help. Right, I want to understand this better. Right, I think we have we do a terrible job at like faking it till you make it, if you will. Like everybody wants to always feel like they have stuff you know, in order to put together, but it's like you know, this is what we do every day, right, like there's changes in the business happening every day. Lean, a business happening every day. Lean on us for that advice, right, lean on us for, you know, the guidance, because that's what we're here for. Yeah, but I think, especially over the next five years, there's going to be a huge wealth transfer. Oh, elaborate on that, and I think so. You got to think about it, right.

Speaker 1:

The biggest players or the biggest owners when it comes to home ownership are the boomers, right? So it's like what happens once they start passing away or they want to start downsizing or offloading stuff? There's more inventory. That's going to be on the market, right? So I would say and this is advice that I'm giving to all my friends and people that are close to me is, like you know, just figure out ways for you to just keep grabbing properties, no matter how big or small. Right If it's a hundred thousand dollar, home 2000,. Right If you making your primary and investment you're going to buy another primary. Just keep buying until you can't, right, because eventually homeownership I mean we're kind of seeing it now it's getting to a point where it's getting really expensive. You know what I'm saying? Like that's why we see the homeowner, the average homeowner age increase.

Speaker 2:

It's like 38. Yeah, you know what I'm saying, but you know some of that also, sorry to cut you off. Some of that is baby boomers buying their downsizers Okay, their house. So I noticed so it was. I remember a couple of years ago it was 33 and I was like that's reasonable and then I saw that it was 38 and I was like why is this happening? I was like, oh, because the baby boomers are also Downsizing.

Speaker 2:

But you know it's interesting because they do say and then the other part of that is you. You know, somebody listening to this would be like well, we're talking about the average age of first owning a home and technically, a baby boomer might be already. They probably are downsizing and buying another home, so maybe it is for real 38. I just had that whole thought in my head. But 38 is crazy when you think about it.

Speaker 2:

Right, that's late in the game to buy a house. I think that you should get out of college. I mean that first house you buy should be the one you frat house. You know the group.

Speaker 1:

I mean, I think, I think, if we do, if we set our family up right, the first home should be when they're in college, like you said like you know what I'm saying. Like you figure, like the, the, the parent can go on the loan right, borrower right, the primary owner, and then they can fund everything. They can use their assets, their credits to buy it and then allow their kid to be able to get some passive income.

Speaker 2:

Rent it to his boys.

Speaker 1:

Get some passive income and then, once he gets out of school four years of building equity now he got a little bit of money he can figure out what he want to do. So I think that would be the best and most smartest way to kind of to get going. And you know, once you get out, depending on your job location, you can just start buying your new primary so I know rates have been, you know, seven, six and a half percent for two years now three years now, and so I think the interest rate conversation is a little old and stale.

Speaker 2:

It's just like it is what it is. But I know that people still want them to go to five and are hopeful and the market's going to go crazy when they go there and maybe they won't stay at seven forever. But are people still have people accepted that as the new normal or just kind of business?

Speaker 1:

as usual. Yeah, I mean, I think people, since February, mortgage applications has been up Okay. So I think people are just facing the fact. Like you know, regardless of what your political views are, this is who's in office, right. This is the administration right. This is where rates are right. We understand that everything is high. This is what it is. So I think people were just accepting that fact.

Speaker 1:

And then we also have overwhelming amount of pent-up demand. So, like the people that miss the opportunity to buy a home in 2021 and 2022, all they did over the years was stack money, improve their financial situation. So people are busting out the seams. They have to make a move now and that's why I think, once rates drop, even by 1%, it's going to be crazy. It's going to be crazy because of the amount of pent-up demand. When you add into where we are as far as, like, housing formation right, like as a generation, all the millennials are now in their 30s this is when people start getting serious about buying homes. I think, when you add all those factors into it, you know the end of because I believe closer to the end of 25 is when we'll start seeing some relief it won't be crazy, but 2026,. I think it's going to be crazy. We've been waiting for it for a long time, man.

Speaker 2:

So I have an idea for a real estate take I'm going to record about Grant Cardone and Robert Kiyosaki. You keep saying that your primary residence isn't an asset. I think it's a ridiculous take, but what do you think about that? Do you feel like your primary residence is an asset or a liability?

Speaker 1:

I think it depends on how you use it, Right. Like so, when I first bought my first crib, um bought it as a primary house, hacked. Yeah, I made it a investment immediately, Right. So it was an asset, Right, and it allowed me to cover my mortgage at the time and I wasn't making, you know, a lot of money at the time, but I was able to save all that money because all my living expenses was covered. So I think it's everything is about perspective. You know what I'm saying, Like, because even if you buy a home as your primary and it's, it's not cash flowing you right now, but you you're buying in a neighborhood where you know the equity is is gone, is gone, rally. I mean you you're just investing in something. You know what I'm saying for the later, right. So I think it's just all how you look at it, yeah.

Speaker 2:

I have two clients that I did CMAs for last week and they're both up. One is up 22%. Okay, and they bought in 2021. Okay, one is up 22%. The other one's up 29% and if they sold today, after you know realtor compensation fees, closing costs, et cetera, they both walk away with $70,000 in like four years. And I'm like so why is this not a thing, not an asset, right? Like, where are you getting 70,000 in four years?

Speaker 1:

you know yeah, you got to think about it too Like people don't even get I mean, most people don't even get like a 3% raise every year. Exactly, you know what I'm saying. You're talking about you buying an asset and at the minimum it's going to appreciate like 3% to 4%.

Speaker 2:

And you put 3% down. They both put 3% down when they bought. So both of those people bought, you know, a $300,000 and a $320,000 house and it's like all right. So you brought $9,000 to the deal, right, and you're up $70,000. Like where is that happening? So I feel like it's Crypto that's it.

Speaker 1:

Crypto I'm heavily.

Speaker 2:

I'm on the crypto wave right now. I thought to myself. I said I'm buying a lot of XRP right now. Same, I need to, I need to, I need. This is the. This is the granddaddy. All right, before I get you out of here, man, what is, what is? What is some actionable advice that you can give to home buyers and home sellers right now?

Speaker 1:

I would say talk to you, know people that's in the industry. Talk to the professionals. Talk to real estate agents. Talk, like yourself, talk to financial advisors or mortgage advisors like myself. Right, see where you are. Understand your numbers, right, because I think again, if you regardless if you own one or you don't own any at this time, the opportunity for you to really position yourself and your family and really transcend your wealth over the next five, ten years is here. So if you're not being proactive with understanding where your numbers are and what's possible, what's capable for you, you're going to get left in the dust. So I would say just have a conversation. See where you are.

Speaker 1:

If you own, figure out how you can. You know leverage. You know a product like the, the buy before you sell right or leverage a heloc and to be able to buy. You know, even if you love your primary, you don't want to move. Figure out how you can leverage the equity to go get something else, because you can never own enough properties like you can never own enough you can never own enough.

Speaker 2:

john o'brien has 700 trying to get like him, so listen, you know 700,. Yeah, yeah, the crazy thing was when I first got it sidebar.

Speaker 1:

When I first got into business, I did a deal and I think this was the seed that kind of changed how I looked at real estate and really like, bought into the investment side of it. I had a client and out of it I had a client and he was an older gentleman. He was probably in the 70s, but he owned over like 40 properties throughout Baltimore. Right, and every time somebody in his family achieved a milestone, he gave them a property. Oh, that's cool. Like, okay, cool, you got married, here's a property. Right, it's rented out. You could keep it, take the cash flow, or you could sell it and then take whatever if that's $90,000, $100,000 as a down payment and just do something else. Right, I think a lot of people talk about generational wealth and considering their last name right before they sell it. That's how you change generations. You know what I'm saying Be able to hoard and accumulate a lot of properties, you know, have other people pay them down and then be able to put your people in position to win.

Speaker 2:

I'm totally on board with the college buy your first house in college thing. And I've seen and I'm sure you have, I've just seen so many people are like, oh yeah, my parents are going to give me a gift to buy and they give them 20 percent down and I'm like, what? Like, what a gift, like, oh, you're going to get $80,000 right now and I almost feel like it's my responsibility to be able to do that 1000% and it's not hard to do. You could do it with 3% down, 5% down and just accumulate over time, keep them, hold them, make sure your numbers are solid and all the investors you know like there's people out here doing that for real, and so I think some people think that it's just like not in their bandwidth, right, but it's actually like pretty easy if you create a plan and make it happen and Bronson.

Speaker 2:

Grand Cardone has 12,000 doors, so that dude's crushing All right, man. Thanks for joining me bro. Of course, man. I hope you don't have to go right back to Baltimore. Three hours.

Speaker 1:

No, no, no, bro, of course I hope you don't have to go right back to Baltimore three hours. No, no, no, I'm gonna shoot.

Speaker 2:

Uh, shoot over to office in DC. Okay, out of there for okay. How can the people find you get in contact?

Speaker 1:

with you. Um, they can find me on social ig, uh, at ericcdavis. Simple, right and no, no tricks, just ericcdavis. Um, if they want to connect with me via email, just eric at mymissionloanscom phone number 410-240-8226. Whatever I could do to help, I'm here.

Speaker 2:

Don't be shouting out the DMV if you're out in Baltimore.

Speaker 1:

I'll be sure Don't be shouting out he thinks he's in the DMV.

Speaker 2:

He's not, though.

People on this episode

Head Shot

Nick Bush

Host