Buying a Home in 2024 as a Real Estate Pro: When It Actually Makes Sense

0:00Sometimes the Internet call and whatever happens is you being a young hip guy. But for me, sometimes the Internet is work and it's not obviously never my skills, never once. That's been the problem. I fundamentally do not believe that your primary residence is an investment. They're charging you two or $300 a month indefinitely because you didn't have the 20% down. Welcome to episode 0006. This is the BLT podcast with Brett Tanner, and I'm excited to be here with you today and talk about should you buy a home in 2024. Over the last three weeks, I've been asked that question more than any other time, and I think it's because we've had this crazy run up after COVID. Money was free, Everyone was buying. We had rates go crazy, rates in the sevens, and now rates have come down pretty significantly. As we're filming this here today. Rates are high sixes, mid-sixties, and you could probably buy something down maybe with a high five in front of it if you bought a bunch and put a bunch of money down and and bought points, paid money to get a lower rate. And you're you're asking that question, right? You're seeing inventory. The markets in Phenix as we're filming this, our market is somewhat balanced. We have a score here out of 100. It's the Cromford index. And we have this this gentleman that does all this data. He tracks Maricopa County. And if you ever want to know why is more data looked at in Maricopa County anywhere else, it's because it's the it's the county where more transactions occur than anywhere else.

1:28In a normal year, we have about 100,000 transactions occur. Typically we have about 75,000 agents to do that, which means it's the most competitive market in the country. Doesn't mean it's cool, but because of that transaction count, there's lots of really, really great data. And so I look at this cromford index and it all it goes a score between zero and it's been as high as 500, but a hundred in the score. It's balanced, it's equal negotiating power between buyer and seller. When that if you go post-COVID, you had things like the score got as high as 500 and that's where we're getting 85 offers. Well, it's not fair, right? It's all the the seller has all the cards. And so as a buyer, you're either really paying cash or going significantly over ask price if you're financed and probably if your cash. And so we had all that craziness. And so now we're at today prices are relatively high. Affordability is a challenge. We know that we have a lack of housing supply in over the last three weeks, I've had probably, I don't know, five or ten people call ask me, should I buy a home in 2020? For one of the people that asked me not in the last few weeks, but asking about a year ago was you and said, Should I buy a home? Right. It's hey, I'm thinking about buying a home. And so as we sit here, we'll look at we're going to really go through what's the framework, what's the methodology that you should be using to answer that question? Right. Should you buy a home right now? And I want to give you the answer that allows you to build a model that tells you whether you should buy a home and how you should be thinking about buying a home regardless of the market.

2:56Right? So we're writing this for 2024, but we want to give you insight and a way to check in because financially, when you think about wealth, it's really hard to take a lot of mental capacity and try to make decisions, right? We do it all the time like, Hey, should I buy this car or should I buy this car? Right? Should I buy, you know, should I buy this vacation or this vacation? And so what if a lot of the financial decisions we make, there's really, really smart people out there that have really, really smart things. And we could take their model, tweak it slightly to our own circumstance, and build our own model around financial decisions or making it a home purchase is definitely one of those. And so I want to go and I want to start by talking about Sam Dogen, and he's the financial samurai. We'll put a link in the show notes, and he wrote a really incredible book called Buy This, Not That. And one of my takeaways over a few that I'll share at the end of the show, but one of the takeaways I had was the methodology around buying a home. And so before you buy, he says, Look, here's how to invest your money and gonna be thinking about other things before before you actually go buy the home. Number one. The closer you are to buying a house, the less risk you should take. What he's saying here is financially, if you've got your investments, if you've got investible dollars out there and you're in some stock that's super volatile, well, that could maybe eliminate your down payment or have an impact. And it might you might need to show reserves or this is a part of your financial world. You want to take less risk squeezing you know, lower your risk, take less risk, the better your investing acumen, the more risk you're able to take. He talks in here about the higher your existing cash balance, the more risk you can take.

4:35This is a big one, right? So you want to go figure out, start thinking through when you're buying a home. What down payment am I going to go with? And the biggest thing here is to run the cost of PMI, private mortgage insurance. And you want to look at the difference in putting, say, if you're going FHA three and a half or 5% down versus ten or 20%. I am a big fan of putting 20% down. So as Sam Dogen does a couple of things. Number one, you're lowering your payment with the additional down payment, but you're also getting out of this tricky PMI, which can end up being coal, you know, several hundred dollars a month in a tax. It really if you think about this way, they're charging you two or $300 a month indefinitely because you didn't have the 20% down. So call it now imagine this. It's like you're paying this $3 a month that doesn't really do anything. It's one thing to pay a higher payment that's driving down principal. It's another thing to put money into something that's an investment. It's another to just light it on fire because you didn't save money, you didn't plan. And I don't want anyone out here doing that. So I want to run those different options. So everyone out here before you get a home, even if you're six months or a year out, the first thing you should do is go get pre-qualified. I'm not single. Buy a home. I'm saying we'll do two things. Number one, we want to go pull your credit and want to make sure there's no issues or that some weird maybe judgment, not yours, but you really want to know what's on your credit. And I would go to the lender and ask the question, Hey, if I wanted to buy a home right now, number one, would I qualify for. Right? Number two, is there anything on here if I want to buy a home right now, is there anything stopping me from doing that and whether that that could be on the investment side and that could be on the on the primary residence side?

6:09And today we're going to be talking mostly about you owner occupying that home. So now we've got some numbers, right? The next thing we want to do is want to go look at I want to look at those three different options. What's your payment going to be if you go FHA, if you went that route, if you're within that limits FHA, there are caps on on purchase price in at every county in the country is going to be different. But if you just throw it in Google FHA limit in my area, it'll tell you how much that is. If that lines up with the home are thinking about buying, you could potentially go FHA, which is three and a half percent down. The other options conventional which is a minimum of 5% down and then you go to 20% down. So I want you to run those three different options and see the different payment amounts based on those options. The other thing before you buy a home, you should be very careful about taking on additional debt. Right? Your debt to income ratio is a factor in which banks use to approve REITs. They're going to add up all the different debts, the monthly payments you have combined divided by your income, including this new mortgage payment. And they're going to see what that debt to income ratio is and they're going to prove you based on that. And we'll drop some some notes and there are some links in the show notes because I would go on a whole different tangent, but we'll drop in. There are some different debt to income ratio that are based on what banks are looking at right now. So now we're ready to buy. So what should we be thinking about? Sam Dogen put together his 3033 rule, and I'd love for to see in the comments here, how does did you violate the 3033 rule? Did you do it yes or no? And so I'll walk you through what it is. So the first part of it is, number one, save 30% of the purchase price, say 30% the purchase price, you're not going to put 30% down.

7:48So let's assume in Phenix, Arizona, we'll do an example here in a minute. Probably the house you're going to buy, entry level housing, which seems crazy to say this is probably around $500,000 for a single family home in most of our markets. It is completely insane to me because when I got in real estate, even in 2005, I mean, you would had entry level housing call would have been I mean, you could have got stuff even at the peak 4 to $300000. It's crazy today. That's 5000, but that's where we're at. So 30% of that number is we need to save 150,000. He's recommended putting, recommending, putting 20% down. So for buying a 500,000, our house would be putting $100,000 down and we would save the additional 50,000. If we're saving it, we're saving it for the AC, the roof, anything that could go wrong with you owning the home because you been renting, right. Your you call your landlord, but the AC goes out, you have a plumbing issue, you call your landlord in. So that extra 50,000 saving what it is the cushion so you never have to take out debt in terms of a credit card or an unsecured loan or something to fix the house. You've got money set aside. A lot of things we talk about on the Be Wealthy podcast are not to be restrictive, but it's the best way to do it that gives you the greatest chance to create wealth and get where you want to go. So we're going to give you models and then you can tweak them. So he believes and I totally agree with this 30% down number, I think it makes a tremendous amount of sense the next part of it. So 30, 30% down, the next 30% is spend no more than 30% of your monthly income on the house payment, spend no more than 30%.

9:22Now, the reason he gives you a guideline, and I think it's so brilliant what he says is because you're likely when you go get pre-qualified with your lender, going to go way, be able to go way past the number that you're thinking. You will often go get approved. You're like, Hey, I I'm thinking about buying a 500,000 art house. Like I'll call you could buy a 750,000 art house. But see, if you don't have a working model to think backwards, say, Yeah, but that's more than 30% of my income. The payment on that seven or 50,000, Our house put me at 38% of my income as an example. Now, why do we want to stay within 30% of our income by doing so is going to free up additional capital that you can go use to invest to create passive income, which is we covered in previous episodes. Shows you that great were passive income and ultimately get you at the destination that you wanted when you started working in your career. If you haven't watched our first episode 0001, we walk you through kind of our methodology where we go way out in the future and then we work backwards to a route. Today we create check in points to know if we're on or off track, so go check out that episode. And so now we want we want to make sure that when we're buying something, a payment that we're going to have, we want to make sure we still got enough money left over to go do the investments for the things that really get us free. And you've got to really think about your primary residence. I fundamentally do not believe that your primary residence as an investment.

10:43You know, I do come from the Robert Kiyosaki School of Thought, which is like, you've got to look who's balance sheet sets on. Unless you're paying cash, that home is a liability. And even if you are paying cash, I would still argue the home is a liability because you're going to number one, you're going to do things cold to your home that don't make economic sense. I'll give you a great example. In my life right now, I'm building a pickleball court in the back of my house. And I got to tell you, I couldn't be more excited about is going to provide amazing experiences. I love it. My wife is turning into the most devout, crazy pickleball person in the best way possible. However cool. I don't know the next person that buys my home loves pickleball. There's there's just a chance that in the all the buyers out there, the family, the ones my mom says hey I don't. So all the money I spent in putting that pickleball court that's not going to come back to me in terms of return on investment. And if you look at your home that way, it's not going to make sense. I think when I go by an investment property, I like, I want to be in a certain zip code in a certain neighborhood and I will write an offer or I will mail every single three bedroom, two bath house in that neighborhood. I'm looking for the best numbers and I'll buy it. Well, when I have a primary residence, I have things I want to pick. I want a certain backyard. I want a north facing. I want to have only two neighbors like my boy, Matty, my boy, Matty. He will only buy a home is dream. He doesn't do it now, but all the things equal, he would have only two neighbors. Now. I prefer to have no neighbors. Right. All things being equal, I'm very private person at home.

12:15But the point is, you've got to keep your. That 30% number allows you have more freedom. The last part of his criteria. So save 30% down spend. No the more than 30% of your income. And this is part of the hardest part limit the purchase price. You've got to limit the purchase price to three times three times. Call your annual income. So another way to do that, right? If we divide the 500,000 divided by three call and get to go see what that actually is going to do that I can't do, that is totally in my eggs. I'll spit out a number and then in the comments I'll just get lit on fire. This guy's teaching wealth and he can't even do basic math. All right. You need to be making about $166,000 a year to buy that $500,000 home. So all three of those, if you line that up, two combined, Right. This would be the criteria to buy your home. That gives you the best chance of having lots of money left over so you could go invest in other things. I this is a baseline criteria. And so the way I'm going to answer this question today is I'm going to answer it the way I answer it to my niece. So I got these people ask me about, should I buy a home right now? My niece comes to me and says, Uncle Brett, should I go buy a home right now? In 2024, I just got a great job.

13:32I'm out of college, I'm doing all the right things. I ought to buy a home. And I said, Here's my framework that I think that you should think through. Number one. First thing I did, I mailed a copy of the diligence book, Buy this. Not that I said, read this book and I want you to read his methodologies. It doesn't come from me. And then I'm going to expand on it. And I expanded on that with her. And so the first thing I asked her was how long will you live in it? So they were going to ask her how long we live in. When you buy a home, the shorter the period of time you're going to live in. It could mean that you actually sell the property or not in equity. So let's say you buy a property and it goes up 5% over two years as an example. Historically, real estate's gone up 5 to 6%. If you averaged like a 100 year period. But you might buy in a in a softening market. So the longer year horizon over the long haul, if you're going on it five plus years, you should go buy a home. The reason why you own a home and I would love to hear the thoughts in the comments four years apart. So you hit pause, tape your comment. The reason why you want a home on a home is you lock in your long term housing costs. Rents over the long haul are going to go up 2 to 3% per year on average indefinitely. You may have years where it stays the same, but on all the rental property I own, I'm raising the rent 3% per year. So if you figure today the average rents probably on a three bedroom, two bath home in Maricopa County is probably somewhere around I going to call it 1750 dollars. So call that means every year your rents going up 52 bucks.

14:55Right. It'll increase in the future obviously because 3% of a higher number. But every year you're paying more. So when you own a home, what have you done? You've locked in your housing costs for 30 years. And then if you just if you don't refinance at the end of 30 years, you now don't have a payment, you're only paying for the taxes and insurance. So most folks. Right, that's 30 years is when they retire. So now their income may go down and now they don't have a house payment. And while a lot of things are better, so the longer you're in the home, the better. So my first thing her was you need to go figure out how long your home second need to do, you need to go figure out your actual payments on the home. You want to buy another one you say you're willing to buy like, oh, I could kind of live here. Now. The actual home that you're really going to buy, the real one when it's like emotional and all those things, right? Because as human beings were highly emotional, we make emotional decisions and then we run it backwards and we justify them with logic and we all do it. And I'll give you an example in your own life, and when you're watching this, I guarantee there has been at some point you had a car repair, you went out, your car had a brake issue, something some flux capacitor is out on your car. And then what do you say you go in there, it's going to be like 1800 dollars to repair this flux capacitor. And then what do you say? Ah, this thing's going to keep breaking. It's going to break constantly. You know what I'm gonna do? Just buy a brand new car. But I could get a 40,000 or $50,000 car because I know what to pay. $200. Right. That's a totally emotional decision that you're justifying with logic. That's just not real.

16:22Right. It's going to be very carefully noted of the housing. So, number one, are we going to live there five plus years? Number two, what is the real payment going to be? Number three, I want to know what is the current rent you're paying right now? What's the delta? So subtract your payment and then I want you to subtract the current rent realized in the home. You're going to be responsible for these other things. So I would take the house payment and I would add $300 a month beyond the taxes and the pity payment, principal interest, taxes, insurance. If you have an H1, add that to it total payment plus $300 minus your current rent gives you the delta between what you're likely going to be spending. This is the additional cash you're going to put out every single month to own a home. Right. The difference between renting and owning number four, I want to know because I'm hoping your first home, you're going to live there for 2 to 5 years, but I want you to keep it. So the only number two years I want you to keep it turning a rental property and go buy something else. One of the models that I've talked so often to young folks about is when I call house, house, house, home, I want you go buy a home. And if you're going to use a 5% down payment, if you're going to go that route, get in there. And hopefully when 2 to 3 years, you could break even or make a few dollars in cash flow. On renting that property out, realizing in the future rents go up, but you're going to get to the cash flow numbers you need. All right. This is a way you can get into owning property that's safe and you continue to buy more and more houses. Now, there is risk because you're not cash flow entirely, but it's a way for you to get in the game.

17:52We just got to have savings, right? The more savings we have, we can mitigate some of the initial cash flow risks. Today, when I go by an investment property, I want to make $500 plus. I'm willing to put 20 or 30 or 40% down to do it. But I'm going I'm going at this from the primary residence angle. So what is market rents? The number four things? What is the market rent on that house today? And I want to know at 3% increases, how long is it going to take? How many years do I need between today and then before it's going to hit my monthly payment? Like, in other words, when am I able to if I moved out of here, can I rent it and break even? I've still got some costs that understand those things. But what I'm able to break even just on a gross cash flow basis. So once we've got that math together, now we look and see how it compares. And I want to go look at different markets in the country and see how this might work out. So I'm going to go and I'm just using the classic Realtor.com, being a card carrying realtor myself call. Believe it or not, realtors don't go to Realtor.com. This is where someone might go. So I'm going to go to Gilbert, Arizona, suburb of Phenix, and I'm going to pick a single family house. I'm going to pick one that is three beds, two baths, two baths, and I'm going to leave it. One, I'm going to sort by lowest price, right? So if I'm looking here, you're going to see some things. And we've got and I kind of just know this market better. But you see, we got these really small lots I don't even know. Cool. This is a fascinating one here. I don't even know how you can have a 1969 square foot lot on a I mean, that literally means the drive and what that backyard call.

19:28If you were to flick in a racer, you're already in your neighbors, you're in the neighbor's living room right here in their pool. So let's go let's get down to what might be what I'm going to call entry level housing today that that I think someone buy here, which I like here in normal size. I mean, not a huge lot. We got a 74 square foot lot It's on Patrick for 2 to 7. It's Patrick Street, the majestic name it's it's this is your classic starter home It's got the title from 15 years ago. It's got the cabinets that you know you just paint over those that kind of a nice property causes that's a nice house. Do we get more photos of this exterior? Let's go there, kind of show this thing off. Really dresses up. Got a backyard. Oh, cool. So here's our property. We've got we've got a four 4005 $455,900. And I'm going to do I'm going to run this two different ways. So I'm going to run this. I'm actually going to run this endogenous model I think makes the most sense. So 455,000, I'm going to assume today that I can get a slight discount. I buy it from a call for 440 and I'm going to put 20% down. So my loan amount on this is $352,000 and I'm going to plug this in a ten B I calculator. So I've got a loan amount of $352,000, which you can see right here and is number of payments interest rate.

20:57I put six and a half percent. That might be a little too low for today. I got to go 6.75 Art and there's my principal value values. My loan amounts, $352,000 gives me a payment of 20 $283.07. That is principal and interest only. So the taxes on this are probably going to be I'm going to call it 150 bucks a month. Insurance is going to be another hundred me got roughly $50. In each case we got $3. So you're all in coal. I'm going around this up 20 $600. You got a house payment. So now the question I want to know is what would this same property rent for today? So you if you're watching this, you're going to take your current rent and subtract it. So we're going go 20 $600, we're going to add $300 for just random maintenance and things that are going to come up throughout the year that, again, you wouldn't have you'd call your landlord to fix the garbage disposal. Instead, you're fixing the garbage disposal. And there are things when you buy a home that can mitigate a lot of this, right? You can get a home warranty, too, where you just pay a service call and they come out and fix most things. Do they fix everything? Like if you buy a home warranty for $450 at closing and your AC breaks the next day, they're not going to give you a brand new AC. You know, I know they might say that that's not going to happen, but they're going to go out and they're going to fix your AC so that it blows cold air and you're gonna pay about 75 bucks for that service call so we can mitigate this $3 per month. And it's very conservative. It's a number. We can operate with it. So we got a 20 $900 a month all in payment versus renting. Now let's go see coal. I'm going to grab 85295 and I'm going to go for rent in 85295, pulling up the houses here and I'm able to sort a little bit was in our new listings.

22:36I don't want that they're real property type. I come on internet now the rental search is slightly different said it's got to yes I'll sort by low to high kind of like I did on the houses. Can I not get rid of. There we go Single family now it's let me do a call. Just sometimes the internet call and whatever happens, you being a young hip guy. But for me, sometimes Internet is work and it's not obviously never my skills, never once. That's been the problem. It's always the computer need. So I need a new computer. So I'm going to call this guy is pretty close. So 2350. So if you're running over 2350, you're an owner for 2900. So 2900 minus our 2350 gives us 550 bucks. Now we know that real estate of the long haul will appreciate, right? We know that it's going to go up and so if we over time, if we're going to five years, we're going to let's just do average depreciation. So we bought it for $440,000. It's going up. We're going to call it 5% per year. So you're getting 22,000 and you're only paying 2900 -23, 50 times 12. So look, you've got 60 $600 per year in additional cost to own the home in Gilbert, Arizona, versus renting it. But you're getting appreciation of all things go well of $22,000. Now, if you went to sell it, you're going to cost, right, Going to be a listing agent or be a buyer buyer's agent. You've got title closing costs.

24:08So on average, I would budget around 8% of your sales price when you go to sell it, which is the one of the core reasons why you need to hold it longer. Right? Your cost to move in at a property can be part can be expensive over the short term, over the long haul, over the long haul with massive appreciation. It totally works out. So when I'm looking at this, that would be my criteria. Am I comfortable? Do I have in my budget and do I hit this? Do I hit the remaining parts of the 33 year old? Does that payment of the 20 $600, is that 30% of my monthly income? And did I limit the price? Right. So again, this $440,000 house in order to buy that endogenous rule, I need to be making 440 divided by three I do making $146,000 a year to operate within that. Now he does talk in that book, Hey, if you're if it is your first home and you know, maybe you've got a family coming or some could you stretch the rules slightly? Sure. Right. So could you go if you're making $125,000, could you go buy this home that it could have make sense? And I do agree. I think there's a time to stretch. But you just have to look at your budget if you're not able to save money right now, if you look at your savings and you go in there, you're not saving money right now. Adding 800 or $600 a month to your monthly outflow will not help you get to where you want to go faster. It will make it worse. So the other option would be how could you do it? If you're tight on the numbers, another option would be, hey, you've got a you've got a friend that wants to rent a room where you're all inclusive, you're including the utility bills and you're including the Internet and you're including something really cool.

25:45Call like Sling or Netflix or Hulu. Not all those once called one of those. And so you're doing that. Would someone pay you maybe a hundred thousand bucks to rent a bedroom? Possibly. And that could help bring your numbers in line. I'd like to get into a house. And there are other advantages of owning a home, right? You get to write off the interest up to seven or thousand dollars. There's all these benefits. One of the biggest benefits of owning a home other than what we talked about already is, is as long as you own the home and you sell it. But if you own it and you live in it two out of the last five years, you don't pay tax on up to $250,000 of the gain as an individual, up to half a million dollars of the gain. If you're married REITs of this house, you buy it for 440, you live there five years and you sell it. You make 280,000 bucks, you're not going to pay tax. It's one of the greatest games ever played. I see there is a strategy out there. I'm not saying I agree with it, where I've seen people keep every three or four years or five years, especially the home appreciates they're in a great cycle, will sell the home and buy another one, sell the home by another one because there's very few opportunities in life where you could sell something and pay no tax. And that's just the basic part of the IRS tax code. There's nothing that's not even creative cool, that's not even getting cute with like a cost segregation or tax strategy that we'll get into in a future episode. Or just talking about today, should you buy a home? So I went with this man with my niece, and I'm excited to see where she lands.

27:08And I want to go to one a different market in the country to give you some feel for how would this play out. So I gave you Gilbert, Arizona. I'm going to give you Austin, Texas. Austin, Texas. Who's the prices in Austin have run up pretty dramatically. So let's go to the same thing here. So Austin, Texas, we've got a house. We're going to go three bed seeing criteria sorted by lowest price. We may have to tighten up Austin because it goes forever, because you're going to see stuff like this that's out in far, do something in the city. So let's go here. Let's just get in a little outside to crazy cool, but we'll get in a little tighter more like here ish. There we go. All right, so back to the list. Let's find the and I and I kind of know us a little bit because, like, my it's my second home call. A little surprise. The numbers aren't radically different. Well, I'm going to I'm going to pick a higher number here called just so we get a different set of circumstances. Obviously the lower the purchase price I was going to do Huntsville, Alabama. Spoiler alert. If you're thinking about buying home in Huntsville, I own a lot of homes there. The math works right there. The lower the price, the easy. Right, because you're tripling your income and has to be beneath that. Right. For the 33 rule makes a lot easier.

28:36So I'm going to pick call an amazing $750,000 house for all the kids out there. It does seem crazy thinking about this is a starter home but in some markets in the country this is reality. So I've got to adjust price to be a minimum of 700,000. So this goes faster. And so we're going to pick a home. We're going to pick this one on Blair. What This thing looks super cool. And if you don't have you have a seafoam garage door. I mean, that's somebody inside about, first of all, greatest color ever created seafoam two main colors out there that I love. Seafoam and salmon, Big fan and lucky they did the garage door and front door to Matt and the numbers I got a story for another day we had we were doing a lot of flips and my uh, the guy that was running the floors for me said we had to have a certain font on the house numbers. It was crazy expensive, which made no sense. But look, this is a great house. Your three bed, two bad, 19 and 50 square feet on a quarter acre lot. Right. This would be it. This house is awesome. Okay, perfect. So $715,000, We're going to assume we get it for 700 grand. We're going to a 20% down $140,000. So we're going to be financing 560,000 bucks. So 560 gives us a payment of 30 $600. Now, in Texas, the property taxes are much, much higher because they don't have state income tax. So the property taxes are actually higher. So your property taxes are going to be 300 bucks a month, I would guess here, maybe more, 430,000 insurance. We got five and we're gonna add that 300 to it for the ongoing repairs out there.

30:14So 800 bucks, we're around 44 for about 40 $500 is going be our payment on this house. So 40 $500 Now we get to look, if we were, would it make sense? Now, this will be interesting to see because rents in Austin are not inexpensive. So we go here, we get the you need to get to Realtor.com. You can go look at a hotel call that's not going to get you We're not going to stay in hotels. And who are we kidding? Seven, eight, seven, four, five. I'm there on rent. I want to rent a home that is a three bedroom, two bath. All right, So you're seeing rents in there. And I'm going to scroll up a little bit to get some more. Like I wonder there's something really cute. This guy's going see foam on the door, but that's on our same guy. It's not our guy. When a quarter acre lot. Let's just go find some comparables kind of similar. We're getting warmer. Um, again, this won't be exact comps guys. So if anyone wants to be a part of the comments, just kind of stick with me for a minute that I sort by alone want to make sure I do this correctly. So sorry guys, low to high. Are we to scroll up a bit there. Which one of these. It's like a game. Which one of these is most like the one we've got? I would say we're getting warm. I kind of like this one writes 30 to go One more feel like our place is pretty nice. It's got a garage.

31:45I like this. All right. I'm a cop. 30, 30, 300 a month versus 4500. Right. So cool. You've got a 12 on a dollar delta there. Now, again, the other math we're running, is it a 3% increase? How long is it going to take for this if we ever wanted to make it a rental? Right. So 32, 95 times 3% got about $100 per year. So it's going to take us cold a year to adjust our payment at 100 bucks a year. We need to get from 30 to 95 to actually, it's not that bad, Bernie, to get to what did I say, 541 We're going to have about what does an eight year, 33 to 48 years of increases before rents would equal to where we could rent it out? Right. That's why, again, we're close to that five year mark and I would run that math out. Now go apply that to any market. The country, if you're looking at buying like, well, you go to Huntsville, you can get a really great house. We saw for two $300,000. So in those properties they almost the rents in the payments are in line. So ultimately run that math, figure out, go through the process, read, buy this, not that, and it gives you frameworks for other things. So we wanted to give you that framework to go through and buy your house. I would love to see how did how does this relate to your current situation, especially if you bought a home a while back or you put quite a bit of money down?

33:11I'd love to know how the 3033 rule applies to you. There's lots of other things in buy this. Not that. One of the things in his book that he talks about, he relates to cars, right? This is not about cars, but it's give me different examples that came out the book on models. He says that you shouldn't buy a car that's more than 10% of your annual income. So if you're making $150,000 an example, use he believes that your car purchase price all in should not be more than $15,000. I agree with the logic. I love the math behind it because it keeps a lot of money in your pocket to go do cool things. However, today I think that's really, really hard to find a quality vehicle for for $15,000. I do think you could get to 20%, so spend no more than 20% of your income on a car. I can agree with that. And I think if you do so, you just get to keep your car longer. But go out there. I want you to take a look. Compare that if you're thinking about buying a home, I'd love to see how this relates to you. Let's hear your thoughts in the comments. We did have a couple of questions from our Facebook group. I'll actually click a link. It's both the agent with Brett Tanner. You can join our Facebook group. It's totally free and it's where a lot of our listeners interact and you get our tribe of people. The people are all on the same mission asking your questions. A couple more questions from there. Was so does age affect how you think about this? I don't think it does. I mean, it's provided you're still looking at this as a long term investment. It's five plus years. You're using the criteria. You probably want to reduce your risk further. So you might want to be well inside of those numbers.

34:39So I think age drives those numbers, meaning they're more conservative. Maybe you only buy a home, it's you want to put 40 or 50% down and you want that payment to be way, way less than 30% of your income. So that might be how I think about it. I try to reduce my risk further. The other question, what should you do if you decide to wait Disney wait on the silent for a few years. If if you decide to wait, if you say the numbers don't line up, maybe I'm short on one part of the 33 rule. I don't have enough down payment saved. So if I decided to wait, I would figure out number one, what was the cause of me waiting was that I didn't have the down payment. Then I would make sure that the actions I'm taking are allowing me to save money. Right? I want to save the money so I have the 30% instead of owning a smaller down payment, because that will help you in all ways reduce your risk. As always, we love to hear your questions in the comments here. Join our Facebook group. Go out, be wealthy, see soon.