It's become very expensive to own a home.

 

Sure, it's always been expensive to BUY a home. But it used to feel like once you moved in and got over the sticker shock of the mortgage payment (after a year or two), it wasn't that pricey.

 

But costs are shooting up. And they're not just inching up - they are doubling and tripling.

 

 

Take insurance. It used to be like a water bill - a few thousand a year and you never thought about it.

 

Well, insurance costs now look more like the property tax - a very large expense you have to budget for.

 

Personally, our home insurance recently tripled to $10K a year, but that's not all. The insurance company very helpfully sends a guy by my house, who then hits me with a repair list - trees cut back, roof fixed, electric panel replaced (!).

And the costs of those repairs (both labor and material) have also doubled and tripled post-Covid. Thank you inflation.

 

And those are about to go up even more as piles of money start getting spent rebuilding the fire zones. There will be huge demand and a shortage of labor/materials.

Do the math. Just in Altadena, the LA Times mapped 6,100 destroyed homes. Each one will cost, conservatively, around $1mil to rebuild, including landscaping, pools, etc.

That’s $6.1 billion to be spent in Altadena over the next decade or two. 

 

Six. Billion. Dollars. Dropping on Altadena. Insane, right? I had to recount the zeroes twice on my calculator. Add another zero for the Palisades.

 

And the money is there. Insurance companies are cutting checks left and right, and people are borrowing the rest.

 

Say what you will about the US government, but they sure know how to do a bailout. There is so much disaster money kicking around. Any business displaced or disrupted by the fire, or any homeowner, can borrow a small fortune at 2.36%, fixed for 30 years. Even a displaced tenant can get a quick $50K loan.

My advice is, if you can borrow, borrow. 

 

My wife tells would-be investors that my entire portfolio is built on my comfort and know-how in navigating loans. It's true: I’m a nut for borrowing money. 

 

I was lucky to start buying real estate when borrowing was much, much easier. I would utilize zero-money down loans and get no-interest credit cards to do the rehabs. Lather, rinse, repeat. Those specific programs are gone, but being up-to-date on the latest lending produce is how you get rich.

 

And these days, the windfalls are almost always in the form of government relief (COVID business loans, and now these SBA disaster relief loans). If you qualify, take advantage.

 

It’s almost impossible to transition from being an earner to being an owner without borrowing money. It’s just too hard to save.

 

There are three solutions to not having enough money: you can spend less and be miserable (Dave Ramsey et al.), you can earn more (Ramit Sethi et al.), or you can borrow (Brock Harris).

 

I’m not saying max out your credit cards and live above your means. If debt stresses you out, forget it. But every rich person I know has mountains of debt. 

 

Even when Lori and I started selling houses together, we borrowed $300k to launch our business. It's true: you have to spend money to make money. 

 

And when it’s raining, grab a bucket. Go to lending.sba.gov.

 

Remember, if you can borrow money below the inflation rate, you’re making money doing nothing.

 

By the way…borrow, but don’t lend. In every story I’ve heard about someone losing a pile of money, they gave it to someone else.

       -Brock

 

📉 🌴 Palisades Braces for a 30% Drop in Land Values.

🔥🤫 Debunking the Myth: Los Angeles Wildfires and Rent Gouging Claims Lack Evidence.

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