Equity Insurance & Invitation Homes Inventory Shortage With Joe Melendez, ValueInsured

Jason Hartman begins the show reminding listeners to follow the ten commandments of real estate investing. He specifically talks about investments that have tax benefits and why that might not always be the best approach to investing. In the interview segment of the show, he hosts Joe Melendez, Founder & CEO of Value Insured. Joe has a product that features reimbursements to homeowners up to their full down payment if the market went down when they sell their house. The discussion goes into the low housing inventory especially at the entry-level home which is great for investors.

Investor 0:00
Hey Jason, its Mark, living here in Europe, the Czech Republic. I’m down at my Airbnb in Austria right now. And I just wanted to congratulate you on the thousand show. Congratulations on all the shows, you probably don’t hear from only a fraction probably don’t hear for most people. Just how much of the shows have helped, how much we listen to them, how much we appreciate them, and just all the best Congrats. Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in thousands of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day. You really can do it on Now, here’s your host, Jason Hartman with the complete solution for real estate investors.

Jason Hartman 1:15
Welcome to Episode 1073 1073. This is your host, Jason Hartman. And you are going to enjoy our guests discussion today, here in a moment as we talk about the economy, the economy, and some important things in the real estate market. So we’ll get to that in just a moment. But I don’t know about you, but I tell you, you know what I’m thinking about I’m thinking about beautiful Hawaii. I can’t wait to get there. It’s coming up quick. profits in paradise. We just got another couple of people just registered. It is getting late. So if you are coming, let us know. We will have our annual meet the Masters event of course our 21st meet the Masters coming up. Probably a little late February, early March, as you know, that’s a regular event for us and we space them out a little bit. So if you don’t come to why it’ll be a few more months before you get to come to one of our fantastic conferences, yes, they are fantastic. And I don’t say so. You say so? Because that’s the feedback, we always get on them. So I appreciate that very much. Appreciate that very much. So a couple of things. I got a question recently, actually, I’ve had several questions about opportunity zones, and here at Jason Hartman calm as Ernest and Giulio Gallo used to say, we will sell no wine before it’s time. Yes. Do you remember that commercial? You know, we’re pretty conservative over here. And we’ve been, of course, looking at the opportunity’s own thing. And so far, we haven’t been very impressed with the areas a lot of there’s a lot of rather sleazy promoters out there promoting junk and we’re just not interested in promoting junk. We’re in this for the long haul. We’re not looking for the quick buck like so many people are. And you know what I say? A good economy is bad for human character, because all of the Weasley type people, slippery, slimy people come out of the woodwork. You know, it’s easy to make a quick buck when the economy is booming, right? But the boom in the economy is not going to last forever. So we know that and we’re in this for the long haul. You know, I’ve been doing this for like 1700 and 30 weeks or so. It’s a long time. I can’t believe it myself. Every time I renew my real estate license every four years I’m like, have I really been doing this that many years? well over a quarter century? Yes, time flies when you’re having fun. We are continuing to look at the opportunity’s own thing but thus far, we remain unimpressed. unimpressed, so stay tuned for more on that. We may have a couple of good areas that we will recommend. But right now, we just have not found and decided on them yet. Also, I want to caution you remember the 10 commandments of successful investing say, thou shalt only invest in tax favored assets, right? And income property is the most tax favored asset class in America. We all know that by now, right? Because you’ve been listening to the show for over 1000 episodes and you know that very well. However, do not choose investment. Just because of taxes. Do not let the tax deal drive the investment. This will cause you lots of heartache, lots of problems, you will lose lots of money. Look at folks, we saw this back in the days of the go zone, remember the go zone? Yeah, it was good. Initially, it was really good and we recommended it to a lot of our clients. I bought a whole bunch of properties in the go zone myself. If you don’t know what the goal zone is. Go to Jason hartman.com and type go zone, geo zone goes zone. This was an incredible tax opportunity. It was really good. And in the beginning in the beginning of it, there was some decent opportunity out there. But very, very quickly the market became totally distorted, just like Cash for Clunkers or any any of these tax schemes. And I don’t say scheme in a negative way necessarily, but maybe I don’t know, you know, remains to be seen. Like any of these tax schemes out there. They should not drive the investment. The tail should not wag the dog. Hey, Coco. I’m talking to my dog here, folks. Now she’s looking at me I wish you could see this picture. It’s pretty good. Coco. Does your tail wag you or do you wag your tail? She says I wag the tail. And that’s the way it should be. Do not put the cart before the horse Do not let the tail wag the dog taxes are the icing on the cake. The tax deal, they are not the cake, they are not the cake. So do not let tax benefits drive in otherwise marginal or literally bad investment. Now, you might, at times be able to combine the two where you get a good investment and a good tax opportunity. And when we find that, and we think that makes sense, we will be recommending it to you. Immediately. Yes, immediately. Oh, I think you’re supposed to say immediately. Well, yeah, my mom used to say that immediately, just for fun, you know. So that’s that. So look forward to more on that. Remember my famous quote, invest in places that make sense. So you can afford to live in places that don’t make sense. And that’s what we’re all about here. As we look at the higher rate environment and the the change in the high end housing market, not the lower rental property market yet, but it will eventually trickle down, it will eventually trickle down. And we look at the republican or the Trump tax plan that is causing people to make a lot of decisions. The market is reacting. And we are seeing real estate sales fall. And by the way, I did predict this in high tax states, and we’re seeing them increase in low tax states. So times they are changing folks times they are changing, and we’ve got to keep track of all this.

Jason Hartman 7:34
But without further ado, let’s listen to a little quick thing about Hawaii. And let’s go to our guest.

Jason Hartman 7:50
I’m Jason Hartman, and I’d like to invite you to our very first two day conference in beautiful Hawaii. Many of our attendees are making a vacation out of this event. You will learn the most innovative strategies for real estate investing available today. We have helped thousands of people invest in properties around the US, and we can help you do it too. So I hope you’ll join us and happy investing.

Jason Hartman 8:25
It’s my pleasure to welcome Joe Melendez. He is CEO of value ensured. Today we’re going to talk a little bit about where the market is going. The question everybody is always asking, but also about a pretty unique product that his company offers to actually well the way I said it is provide mortgage insurance, not for the mortgage, really. But for the equity. The homeowner has in the property equity insurance. So we’ll talk about that. Joe, welcome. How are you?

Joe Melendez 8:57
Good. Thank you so much for having me. I look forward to chatting with

Jason Hartman 8:59
you. It’s good to have you on the show. So you’ve got a pretty unique product. We’ll talk about that in a moment. But Joe, the $64,000 question everybody always wants to know is, where is the market going? You know, what’s going on with this inventory shortage in the lower priced, rental property market that all our clients want to buy. And they struggle, because there’s just so little inventory.

Joe Melendez 9:21
I think that we have a disruption and what has been the normal process of home buying over time, we’ve seen entry level homes, move up homes, downsize homes. And what we’re seeing right now is that that entry level market is completely shut out. There’s no new home construction, out of the previous market decline. Institutional Investors came in and bought up a large segment of that housing stock that’s not coming back. So there is a true shortage in that entry level point. And then to top it off, people who are in entry level homes either paid too much for them and now are stuck in them. Or they’re fearful of buying that trade up home because of the price increases that have occurred in the affordability of that trade up.

Jason Hartman 10:09
One note on that, Joe, and I’d love for you to expand on this idea. I think there’s one other element that’s pretty unseen by a lot of people. And that is the concept that now that we have rates going up off such a low rate environment. I think it’s almost like the way rent control distorts markets. And what I mean by that is this, you know, people have it too good. A lot of people, they have these mortgages that are just nothing short of phenomenal. And they find it hard to rationalize trading up because even if they have the same price home, the new mortgage is going to be significantly more expensive than the the artificially low mortgages we had for so many years. So that low rate mortgage keeps people in kind of like a rent controlled place. apartment nobody wants to move out of right?

Joe Melendez 11:02
I think you’re exactly right. Jason. I mean, you know, I’m old enough to be able to share my first mortgage was at 14 and seven eighths and I was happy to get it. I think what we have today is somebody who’s looking at a monthly payment of X dollars and then looking at x plus, because of the higher interest rates, they’re saying, you know what, we’ll figure out how to expand the home that we’re in or put the bunk beds in so that we can fit the other kids in. So I agree with you. I think it is a collar that keeps people in place. But again, in the bigger picture, it’s all about affordability. So while we may have higher or lower rates, it’s really at a given point in time, what is the affordability of a particular home and if you can address the affordability, then the only other component that comes into place is the fear. am I buying too high? Am I putting my assets at risk, and if you can remove that risk out of the equation, then you’re able to move ahead with the moment And financial decision to buy a home. Okay, so

Jason Hartman 12:03
let’s talk about the institutional component for a moment that you mentioned. And that’s another market distortion. It’s something we’ve never really had before. This time, you know, post Great Recession, institutional investors like invitation homes, you know, the biggies have purchased up and just gobbled up thousands 10s of thousands of these entry level, rental property type homes all around the country. And they have taken a big chunk of that inventory away from the marketplace, right. They’re obviously very bullish on long term buy and hold rentals as we know, just expand your thoughts on the impact of that if you would,

Joe Melendez 12:47
as you said, those homes are gone. They’re not coming back into the market and if they do come back into the market, they’re being repackaged again as single family investor homes, so they’re not coming back in for the average homeowner to buy I think the larger issue is how do we incentivize builders to build those entry level homes. And it for me, I happen to have spent 10 years as a builder myself, I can tell you, it’s all about regulation. If I’m buying a lot, and my cost of improving that lot before I put the house on is so high, then I can’t possibly build a an entry level priced home because I’m not going to be able to cover my cost of improvement on real world land. So a big chunk of this can be solved through regulatory relief from community building departments, where they can relax regulation to encourage builders to come in and build. Okay, so

Jason Hartman 13:40
that’s interesting, by the way, about our HUD Secretary Ben Carson, who, by the way, has been on the show before when he was running for president. And, you know, the philosophy of the Trump administration versus the Obama administration very different when it comes to, I don’t want to say fair housing because it’s not exactly fair housing, but just housing availability, if you will, and Obama administration wanted to, like mandate, you know, let people of all races and affordability levels and associated economic levels move into, you know, higher end neighborhoods. Like let’s legislate that by Fiat that which I think is a crazy idea. But Ben Carson says, Well, we just want to encourage more development to make homes more affordable. We’re not gonna legislate it. We’re just going to encourage it. And I think that’s an interesting approach. I think that’s pretty good approach. Actually.

Joe Melendez 14:32
It’s the core of what governs our economy, right? It’s a supply and demand economy. So we know that we have a demand, we know that we have family formations, that were not occurring during the recession, that are now occurring at a rapid rate, and we need to house these new families. So I agree that if we can add more supply, you’re going to have more of an equilibrium in price than we have today. Because what’s been forcing up price is the fact that we have this disequilibrium. That’s going on with respect to inventory at all categories. And if we can bring more supply to market, we will return to equilibrium. And that equilibrium will be more in line with the affordability index of where interest rates and wage growth are at any particular time in the cycle.

Jason Hartman 15:21
Yeah, it’s amazing to me and I was talking to one of my venture Alliance mastermind members the other day about this is how so many things in our economy have just deflated in price. You know, whether it consumer products, automobiles, they’re really, you’d get a lot for your money nowadays, and that’s due to technology, right? But certain things have only inflated health care, college tuition, housing. And you know, there’s a few more on the list, obviously. And it’s incredibly, really amazing how expensive construction is. It’s truly amazing, especially in the highly regulated areas. No, like my former home, the Socialist Republic of California, it’s just incredibly expensive to build anything, you know, Socialist Republic of New York is the same. I always have to take a little jab. Okay, and when are we going to see if ever the cost of construction come down? You know, Amazon is a major investor in you know, like these prefab houses. It’s just amazing how slow that seems to be to reach the real world marketplace. You know, we see this stuff on social media, we read articles, 3d printed houses, etc. But where are they? Like, you know, the manufactured housing isn’t it doesn’t really seem to have any real like impact on the marketplace, at least not yet. It’s very slow.

Joe Melendez 16:44
Again, putting on my builder hat. I agree. I do have I still keep in touch with the industry and there are a lot of new building methods out there that have significantly reduced construction costs. I mean, we’re not using a lot of wood products anymore. Where we used to use wood products, we’re using all different types of products today that do reduce the overall construction cost of the project. The two variables that are still influence and cost in a negative way, are labor and regulation. So labor we can deal with because we can make incentivize these visas for people that have, you know, trade skills to come in and help, you know, satisfy the shortage of talent to build homes. You know, during the last crisis, we saw a major exodus of talent that went back to Eastern Europe that went back to Mexico. These were folks that were talented tradespeople, people that were the backbone of the building industry that have left and they didn’t lose those skills. They’re just not applying them here. So I think there’s again a combination of regulatory reform or relaxation of regulation, coupled with some incentives for immigrant labor to come in and help fill that shortfall with that. void in the labor pool would be very helpful in in solving the problem of being able to construct more affordable housing.

Jason Hartman 18:09
And then of course, there’s the land cost, but getting cheaper labor, you know, that’s sort of an incremental gain. It’s not gonna be hugely significant. I mean, houses are just expensive things, aren’t they?

Joe Melendez 18:18
There’s a lot of materials that go into a house. Yeah. You know, I can remember telling people that I was building homes for, are you ready to make 40,000 decisions? Because there were 40,000 parts that go into a home?

Jason Hartman 18:29
Wow, 40 decisions. That’s, yeah.

Joe Melendez 18:33
So and that’s true. That’s not an exaggeration. You know, you take something simple as a faucet, and they may have 20 decisions just to pick out one for sure. So again, I think at the entry level, what we have to do is we have to employ new building techniques, we have to look at labor, we have to look at regulatory relaxation. And I do agree with Ben Carson, which is let’s bring as much as Apply into the marketplace as we can, which will keep prices in check, versus where we have, you know, a huge number of people chasing a very small supply of homes.

Jason Hartman 19:11
Yeah, no question about it, no question about it. Let’s switch gears for a moment. Maybe we’ll circle back to a little bit of the future. You’ve got some interesting stuff on your blog. But tell us about ensuring equity in one’s home. You know, look, lenders get mortgage insurance many times whether it be PMI or MMI. private mortgage insurance. What about the owner? Can the owner insure their equity?

Joe Melendez 19:35
Well, they can now I mean, after the crisis I set out as a builder. I’ve been in the insurance business most of my life, I spent 10 years as a builder and after the crisis, I had sold my last home, people who are investing their life savings in the form of a downpayment into a home need to have the same type of protections that a lender has. They need to be able to insure that money against risk of loss if they buy a home today and through no fault of their own, they have to move in 2345 years and the market is down. Why should they have to lose their entire life savings that they put in their home? Let’s provide them an insurance policy that works. And that’s what we set out to do. And we’ve been offering that product in the market for the last two years has been extremely successful.

Jason Hartman 20:23
Care to share how many people you’ve ensured equity for?

Joe Melendez 20:27
Well, let’s put it this way. today. We have over 23 lenders over 4000 loan officers who are now offering loans that have downpayment protection as a feature of those loan programs, whether they’re Fannie Mae loans, Freddie Mac loans, FHA loans, Ginnie Mae loans, we’re agnostic to the loan type. All we care about is somebody who’s buying a home. We want to show them how to take the risk out of homeownership, how to own a home, and take on that risk the same way the banks do when they’re lending you the money and recognizing that they have it again. exposure and ensuring their exposure against loss. Now the homeowner can insure their exposure against loss, basically the best investment in the world house and part of the American dream because eight out of 10 Americans want to own a home, you’ve now been able to basically say, Look, you’ve had this leverage capability of using a mortgage to get 100% of the appreciation, and the only money you had at risk was your downpayment. Now that you can insure that downpayment against risk of loss, you are virtually getting 100% of the appreciation on that property with very little risk because you are insuring your risk exposure

Jason Hartman 21:38
against loss. Okay, so let’s unpack how this all works. It’s pretty interesting. This is a seven year term, right? And then yeah, it only ensures the actual downpayment, not the equity. For example, if you know they pay down the mortgage faster, or, well, there’s a little bit of mortgage pay down no matter what or the property you increases in value. You’re not ensuring that I assume you’re just ensuring the the downpayment they originally made, right?

Joe Melendez 22:06
That’s correct. We’re taking that money that they took from wherever it came from the bank or whatever and writing a check, and it shows up on the closing disclosure statement as the down payment. That’s the amount that we’re ensuring.

Jason Hartman 22:19
Okay, and I’m guessing this is just for home owner occupied homes, not investors, right.

Joe Melendez 22:24
Currently, it is only for single family on dominium owner occupied properties. We’re actually just going to be introducing an investor’s program very shortly, because the investor segment of the market is growing rapidly also.

Jason Hartman 22:39
Yeah, okay, interesting. Now, let’s take a $300,000 home as an example, someone is moving into this home, it’s owner occupied, and they put 20% down so they’ve got a $60,000 exposure or a $60,000 downpayment in that property. The lender has taken 80% exposure. How does it work? How do we ensure our $60,000

Joe Melendez 23:01
so you would select a loan product from your lender that has downpayment protection as a feature. And in that particular instance, the premium for that coverage is going to be 1500. dollars, it’s basically 50 basis points of the purchase price of the home, because that is an 80 LTV loan. So in other words, you put 20% down, the bank has 80%. And so the price is 1500. dollars, that 1500 dollars is going to be built into the APR of the loan, which means you’re going to pay a slightly higher interest rate. And in the case of if you take 1500 dollars in Yeah, amortize it over 360 months, it’s not very much money. So looking at that, you know, at about $5 a month, you’re insuring the value of your $60,000 against risk of loss in the event that you have to sell in the next seven years. Mm hmm.

Jason Hartman 23:52
So only certain loans offer this. I mean, you can’t put the insurance on it. loan,

Joe Melendez 24:00
the insurance can go on any loan provided that there is a down payment. So typically VA loans USDA loans, they don’t normally have down payments. So in that instance, there’s nothing to insure, but we’re agnostic to the loan type. It just depends on each individual lender that we work with. They select the loan programs that they want to offer the downpayment protection on.

Jason Hartman 24:23
Okay, so are those loan programs like less competitive or sort of special in any way? I mean, when I say special, I kind of naturally think negatively, like, Oh, this is the the crummy loan, but we’ll offer the protection on it. Am I wrong about that? No.

Joe Melendez 24:37
Okay, no, it’s not as a matter of fact, you know, they’re using this as their lead product because they want to differentiate themselves against the competitors that are all competing on points and rate, and they may be at the same exact rate as somebody else. But they’re saying, look, we provide this benefit to you that you can’t get down the street we offer. Yeah. So it is has been something that both the realtors have gotten behind because again, it makes it very easy for a realtor to talk to their buyers about you know, moving ahead and signing a contract because the now the risk of that money that’s going into the home is protected, right? So realtors have been, you know, tremendously supportive. Same story with builders, you know, typically our builders say, look, I build a great home, you love it, I’m going to give you a great warranty on the home. And now I’m going to give you financial protection, I’m checking all the boxes for you to move ahead and buy this home. Right. So our builder channel, our realtors, and certainly our loan officers who work hand in hand with the professionals, whether they’re realtors or builders in making that dream of homeownership. True are critical, okay, okay,

Jason Hartman 25:49
so they don’t really pay a higher interest rate per se, then they just pay for the insurance policy. So give us that example work through the math and then let’s talk about making it claim on this insurance. So we’ve got $60,000 downpayment, we want to insure it’s over the course of seven years, you divide it up, just go through that math real quick.

Joe Melendez 26:10
It’s 50 basis points on the purchase price of the home. Okay? So if we look at 50 basis points on the purchase price of the home at $300,000, that’s 1500 dollars. If we divide 1500 dollars over the life of the loan, which is 360 payments, then we’re basically going to wind up with about $5 a month.

Jason Hartman 26:31
Hmm. So five bucks a month to insure 60 grand that seems like a pretty good deal. What happens next? So we pay this for seven years, right?

Joe Melendez 26:41
So let’s just say in year three, you have to move you decide that you want to go sailing or you got a new job, the other side of the country, and you now have to move and the market is down and the most you can sell that house for that you bought for 300,000 is 280,000 As long as you sell the house, which is a requirement, right, you must sell the house. As long as you sell the house. Once you sell the house, you have a one page claim form. It says fill out the information, you provide a copy of the closing disclosure statement from the sale. And we pay the claim in 30 days and what we’ve looked at, we go back in the record and we say how much did you buy the house for? What did you sell it for? How much was your down payment. And we’ve looked at one other element because we don’t go out and inspect the house or look at appraisals or anything like that we use the Federal Housing Finance agencies home price index, we look at that index value on the day you bought a home and the day you sold the home. And let’s say the index was down 10% so that means that the market went down 10% So in the example that I just said $300,000 house, the market says that house should only be worth 270 you will lucky you sold it for 280 you’re going to recover your entire $20,000

Jason Hartman 28:01
Okay, all right. So you must sell the house. So you can’t foreclose on the house. You can’t let it go into foreclosure. You can’t walk away, you can’t do a strategic default. You can do a short sale, though, right?

Joe Melendez 28:14
Yes, you can. Okay, you can use it do a short sale. And again, if you recall, I just said we need a copy of the closing disclosure statement to close the claim. In the instance, where it’s a short sale avoidance. In other words, you need the proceeds so that you can pay off the underlying mortgage, we have a different form. And we actually will send a check before the house actually closes. Except it’s going to be made out to two parties, it’s going to be made out to the league. Yeah, that’s correct.

Jason Hartman 28:40
All right. Interesting guests, the lenders must love

Joe Melendez 28:43
this. And again, it’s the decision is all in the control of the borrower. The lender has no control over filing a claim on this policy. The policy belongs to the borrower.

Jason Hartman 28:55
Yeah, very interesting. I just said that the lender must really like this, but don’t know weigh? I don’t know, maybe not because, you know, the lender wants the borrower to be at stake, right? They want them to have as much stake as possible, as much skin in the game, if you will, as possible. But when there’s an insurance policy, I mean, you don’t pay if they walk away if they allowed to go into foreclosure. So the lender would like it from that perspective. But in a short sale, I don’t know about the motivation, it could be sort of hard to ferret that out, right?

Joe Melendez 29:29
Let’s take that same scenario customer who has a $300,000 home, they have a $270,000 mortgage because they put down 10%. Right, so let’s say $270,000 loan, instead of selling the house for 280. They can only sell it for 260. Mm hmm. So they need $10,000 to be able to pay off the loan. they’re entitled to recover the whole 30,000. So in that instance, yes, they’re going to use part of the proceeds to pay off the balance of the loan, but they still going to get $20,000 that if they didn’t have the downpayment protection they wouldn’t get when they sell the home even in a short sale scenario.

Jason Hartman 30:07
Yeah, yeah. So they’ve got another? Well, really it’s kind of like litigation, you know, they’ve got another settlement party, if you will. That’s you guys.

Joe Melendez 30:16
Yeah, interest, right. And if you think about the bigger picture, right at the end of the day, if we can keep a consumer or borrower from going into foreclosure, who would the net beneficiaries of that obviously the borrower, and the lender, the mortgage insurer, if it’s a Fannie Mae or Freddie Mac or FHA loan, it ultimately goes down to the taxpayer who’s not paying a claim because that house went into foreclosure. So it’s good for the entire ecosystem of credit in the mortgage channel.

Jason Hartman 30:48
For $60 a year, five bucks a month in this example you gave Joe, you can insure a $60,000 down payment.

Joe Melendez 30:56
That seems like pretty cheap insurance

Jason Hartman 30:59
compared to Other things that are $60,000 worth of insurance, certainly auto insurance, homeowners insurance, if you want to insure 60 grand, it’s going to cost you more than 60 bucks a year for sure. So you must think that there’s not going to be very many claims or very high claims on this right? Does that indicate that you’re bullish on the market,

Joe Melendez 31:19
we’re not trying to look and call the market either way, whether we’re up or down. What we’re looking at and what we look at as insurance people is the historical price movement of homes. How have homes performed over the last 3035 years, and during peaks and valleys of home prices? What has been the severity of price movements, so all we’re looking at is to say if history is a dictate of the future, we expect a certain number of homes to be underwater. We expect those homes will have claims of X dollars, and we price the risk to reflect that loss. So overall, we are going to pay claims. I can tell you today We have insured’s with us today who have their home values had declined. Now they haven’t sold so they haven’t filed claims. But we know just by keeping track of the homes, that home prices have come down in certain markets now,

Jason Hartman 32:15
are those the higher price? cyclical markets, the high flying markets? I mean, we certainly have seen things soften in those markets.

Joe Melendez 32:22
Actually, a large number of these homes happen to be in the Mid South.

Jason Hartman 32:26
I’m surprised. Yeah.

Joe Melendez 32:28
Okay. So these are homes that are $200,000 in less Mm

Jason Hartman 32:32
hmm. Interesting. Interesting. So nobody’s filed the claim yet, though. But you are just looking that there is a decline in value, right? Correct. Yeah. Okay. So so you’re, you’re obviously monitoring your portfolio for risk. Right. Yeah. Good. Interesting.

Joe Melendez 32:47
Absolutely. You know, Robert Shiller was on yesterday, talking about home values and he was talking about that there is a deceleration in home prices and in certain markets We’re actually seeing more inventory Come on market. And we’re also seeing price reductions, which we hadn’t seen before. And those, as you point out have tended to be in the higher value markets, Seattle or Oregon, San Diego, these markets that have really been on fire are now starting to experiencing summary retrenchment. Yeah, very interesting.

Jason Hartman 33:24
Okay, good, good stuff. Any more thoughts on the market? In general, you know what we were talking about earlier, and let’s wrap it up, give out your website, and where they can follow.

Joe Melendez 33:33
I think the most important thing is that homeownership is part of the American fabric, it’s part of the American dream. I want my children to own their own homes. I think what we have to do is be smart about how we buy homes. I think having a product like downpayment insurance from value insured is a step in the right direction. It’s taking that risk out of the equation, and I would encourage all of your listeners to visit our web At www dot value insurance calm. There’s tons of information there. And we also have a list of all of our preferred lenders, and you can reach out to any one of those lenders, if you’re thinking about buying a home, they can help you.

Jason Hartman 34:13
When is the investment property product coming out?

Joe Melendez 34:16
I think that it’ll be out in December.

Jason Hartman 34:19
Interesting. I’m guessing you’re gonna price that a little higher, you know, the common. It’s kind of funny, and this is always I almost think the lenders ought to think counter intuitively about this. But they generally think oh, investment property, you know, the interest rates going to be a little higher, the downpayment requirements are going to be a little higher, because it’s more likely in a crisis, someone will walk away from an investment property and try to keep their own home. But you know, the investment property produces income, well, it hopefully, the home is just a cost. So it’s sort of

Joe Melendez 34:53
you’re exactly right and investment property that’s owned by a true investor. Yeah, they’re buying it together. Have a certain cap rate, and as long as they’re getting that return on their capital, they’re probably not going to walk away from the investment because if the market is down, they have to sell it at a better cap rate, which means Why would I do that? Because I can’t reinvest the money at that rate. I’ll just stay where I am. And I’m in the same place. So you are 100% correct. The attributes of an investor are more about cash flow than they are as a shelter, right, the walkaway potential for the lender and the downpayment, ensure that’s you guys. Yeah. And you made the important distinction there, though. You said a true investor,

Jason Hartman 35:38
right, not a route a hobbyist. I think the likelihood of them walking away is actually lower. It’s kind of counterintuitive, but it’s a true investor. That’s the distinction so we can ferret that one out on a future episode. we’ll have you back on.

Joe Melendez 35:52
Good stuff. I would love to. I would love to thank you so much for having me.

Jason Hartman 35:56
Yeah. My pleasure. It’s been very interesting. Joe, thank you for joining us. Thank you. Thank you so much for listening. Please be sure to subscribe so that you don’t miss any episodes. Be sure to check out the show’s specific website and our general website heart and Mediacom for appropriate disclaimers and Terms of Service. Remember that guest opinions are their own. And if you require specific legal or tax advice, or advice and any other specialized area, please consult an appropriate professional. And we also very much appreciate you reviewing the show. Please go to iTunes or Stitcher Radio or whatever platform you’re using and write a review for the show we would very much appreciate that. And be sure to make it official and subscribe so you do not miss any episodes. We look forward to seeing you on the next episode.

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