WARNING: Another 2008 Housing Crash Or WORSE? (Housing Bubble Explained) | Jaspreet Singh

Jaspreet Singh 0:00 We assume that the reason why we're not successful is because we don't have the right tool set, when in reality for most people it's we don't have the right mindset.

Lewis Howes 0:06 Mm.

Jaspreet Singh 0:07 It's not a tool set issue, it's a mindset issue that so many people have where if you have the right mindset, you'll realize that the tool set is right in front of you.

Lewis Howes 0:14 Yeah.

Jaspreet Singh 0:15 And you just gotta-

Lewis Howes 0:16 I think you gotta have a dream.

Jaspreet Singh 0:17 The School of Greatness.

Lewis Howes 0:18 [laughs] Really? Yeah.

Jaspreet Singh 0:19 Please welcome Lewis Howes.

Lewis Howes 0:21 So do you think there will be another kind of housing crash like there was in 2008? What do you think is happening right now? Where do you think it's gonna be heading in the next year? I wanna talk about the housing stuff-

Jaspreet Singh 0:33 Yeah

Lewis Howes 0:33 ... for a little bit with you.

Jaspreet Singh 0:34 So that's a very good question, and the reason why is because there's a lot of scary stuff happening out there. Inflation is still near record highs. Our-

Lewis Howes 0:43 What's it at right now?

Jaspreet Singh 0:44 It, our last report was 8.5%.

Lewis Howes 0:46 Do we think it's gonna keep going up?

Jaspreet Singh 0:48 Well-

Lewis Howes 0:48 Is it stable or-

Jaspreet Singh 0:48 We'll get into inflation in a little bit

Lewis Howes 0:50 Okay.

Jaspreet Singh 0:50 Uh, we have our GDP, our economy, which is slowing down. We've seen two quarters of economic slowdown. Our market, stock market, is way off of its highs. Now real estate is starting to slow down. Interest rates are starting to go up. And this has a lot of people wondering now, what's gonna happen to the housing market? Like you said, are we gonna see a repeat of 2008? And the reason why that question is asked so much is because 2008 has really left a huge impact on so many people's lives because you have a lot of people that are still paying the price of the 2008 aftermaths today.

Lewis Howes 1:19 Still

Jaspreet Singh 1:20 Today.

Lewis Howes 1:20 Really?

Jaspreet Singh 1:21 Yeah.

Lewis Howes 1:21 'Cause a lot of people took out loans-

Jaspreet Singh 1:23 Huge loans

Lewis Howes 1:24 ... and they, and they had to, you know, they had to give up their home. They bought all these homes, right? They had to foreclose on them and the banks.

Jaspreet Singh 1:31 Losing your home is not an easy thing to do, and that, I mean, it's tr- it's traumatic for a lot of people. And that's something that's very difficult. It stays on your credit score for seven years-

Lewis Howes 1:39 Really

Jaspreet Singh 1:40 ... so this is what people are really worried about, is something like that gonna happen again? And the first thing that I wanna say, because there's a lot of headlines, a lot of news stuff in there, that this is not a repeat of 2008. So let's understand that first.

Lewis Howes 1:53 It's not.

Jaspreet Singh 1:53 It is not.

Lewis Howes 1:53 Because it's not a housing bubble crisis like it was then.

Jaspreet Singh 1:57 Yes. It is not the same as 2008 because 2008 was a financial crisis started by the real estate market.

Lewis Howes 2:04 Right.

Jaspreet Singh 2:05 So-

Lewis Howes 2:05 It's funny 'cause I just watched The Big Short-

Jaspreet Singh 2:07 Did you?

Lewis Howes 2:07 ... a few weeks ago again.

Jaspreet Singh 2:08 Oh my God.

Lewis Howes 2:08 I loved that.

Jaspreet Singh 2:09 Beautiful movie.

Lewis Howes 2:09 And to see, like the analysis of people forecasting and no one believing 'cause they're like, "Oh, the banks are gonna, like bail it out," but then-

Jaspreet Singh 2:16 Right

Lewis Howes 2:16 ... it's crazy.

Jaspreet Singh 2:17 So 2008 was the real estate market that trickled down to the rest of the economy. This is more of an economic issue that could then trickle down into real estate. So it's very different-

Lewis Howes 2:27 Interesting

Jaspreet Singh 2:28 ... which is why you should-

Lewis Howes 2:29 That was a real estate problem. This is an economics problem.

Jaspreet Singh 2:32 Yeah.

Lewis Howes 2:33 The economy problem which could affect real estate-

Jaspreet Singh 2:36 Real estate

Lewis Howes 2:36 ... in a big way.

Jaspreet Singh 2:37 Right.

Lewis Howes 2:37 Gotcha.

Jaspreet Singh 2:37 So, you know, I think [laughs] your readers, your viewers already know this, but I like to go backwards to understand where we're going forward. [laughs]

Lewis Howes 2:44 Yes, yes. Look at the history-

Jaspreet Singh 2:45 Yeah

Lewis Howes 2:45 ... and see where the future's gonna go.

Jaspreet Singh 2:46 Because history doesn't repeat itself, but it does rhyme. So-

Lewis Howes 2:49 I like that.

Jaspreet Singh 2:50 [laughs]

Lewis Howes 2:50 You said that last time. I, history doesn't repeat itself, but it rhymes.

Jaspreet Singh 2:53 So in 2008, or before 2008, what happened? Well, there was four major factors that led to the 2008 housing bubble bursting.

Lewis Howes 3:02 Okay.

Jaspreet Singh 3:02 The first was something called ninja loans.

Lewis Howes 3:05 Mm.

Jaspreet Singh 3:05 No income, no job, no asset loans. So you don't got an income, you don't got a job, you don't have any investments. You walk into the bank and you say, "Hey, I wanna buy this $200,000 home. Can you help me?" And they'll say, "Sure. You don't need a job. All homes keep going up, so we will give you the money." Then the next thing you say is, "But I don't have money for a 20% down payment."

Lewis Howes 3:30 Give you 10%.

Jaspreet Singh 3:31 Well, no, they said 0%.

Lewis Howes 3:33 0%. Oh, in your first home it was like a 0%, right.

Jaspreet Singh 3:34 It was, you could go 0% mortgages. So it was this-

Lewis Howes 3:37 That's crazy

Jaspreet Singh 3:38 ... huge boom of 0% mortgages. But even beyond that, there was this push for actually 110% LTV loans. Meaning if you wanted to buy, rough numbers, $100,000 home, not only would the bank give you the $100,000 so you need zero down, they'd also cover your closing costs, they'd also give you some move-in costs, and then give you a free TV so you can move in because home prices never go down. See, the banks are in the business of making money, and their mind was, "The more money we lend out, the bigger commissions we get. And if home prices keep going up, well, we'll just give you a little bit extra cash, and then a couple years down, home prices will go up and we'll be okay." So now you have no income, no job, no asset loans, ninja loans, 0% down. But what happens then if you don't have a good credit score? Well, that was where we had this huge subprime lending issue-

Lewis Howes 4:26 Uh-huh

Jaspreet Singh 4:26 ... where banks created programs to help people who had bad credit scores, subprime credit scores, that you could now qualify to get a home. So your subprime, your no income loans, no income, no job, no asset loans, the 0% down. But then you say, "Oof, that's a big monthly payment. I don't wanna pay," whatever, "$1,500 a month." And that was the fourth factor, which was adjustable rate mortgages.

Lewis Howes 4:51 Mm.

Jaspreet Singh 4:52 There was a big push for ARMs, adjustable rate mortgages, which meant that, let's just say typically that this home would cost $1,500 a month for you to purchase. You might not be able to afford that or maybe you don't wanna pay that. The bank might say, "Well, how about we give you a low teaser rate for the first few years so you only have to pay $900 a month?" So you get a low interest rate-

Lewis Howes 5:14 Man

Jaspreet Singh 5:14 ... for the first few years.

Lewis Howes 5:16 So you can afford the house.

Jaspreet Singh 5:17 So you can afford the home, and now once you're in the home, it's your problem. It's no longer the banker's problem, right?

Lewis Howes 5:21 Yeah.

Jaspreet Singh 5:21 Because the mortgage agent, they just get paid as soon as you sign the paperwork, and then they walk away. So now you get this low teaser rate, and there's two aspects to this because now you, who is buying the home, you don't have that financial education 'cause it's a tool without the financial education where now you don't understand how an adjustable rate mortgage works. You don't understand that in a few years-

Lewis Howes 5:40 Mortgage is doubling

Jaspreet Singh 5:40 ... it's going to readjust. And so if mortgage rates go up, or e- even if they don't go up and they stay the same, your payments are going to increase. And so all these things happened together, and everybody was making a ton of money. Homeowners were making money because now you bought a home for $200,000 and now it's worth $250,000. You feel great. Bankers are making money because they're lending out loans. They're, they're m- handing out loans like crazy. Wall Street is making money because then the extra factor was then Wall Street would take these loans, chop them up, package them up into their own investments, and then sell them off, and then-

Lewis Howes 6:15 Yes

Jaspreet Singh 6:15 ... all, you know, you saw The Big Short

Lewis Howes 6:16 Like The Big Short.

Jaspreet Singh 6:16 So-

Lewis Howes 6:16 They're talking about packaging all these-

Jaspreet Singh 6:18 Exactly

Lewis Howes 6:18 ... B lo- B loans, making them A loans or whatever. Yeah, yeah.

Jaspreet Singh 6:20 Exactly. And then the insurance companies got involved, so it just kept getting bigger, and bigger, and bigger. So everybody's making a ton of money off of the real estate market, and it's no big deal. And then comes the year 2005. 2005 came. This was the first year that there was concerns about the housing market. Ben Bernanke, who was then the chairman of the Federal Reserve Bank, came out openly and said, "What real estate bubble? There is no real estate bubble to burst." Meaning, how can there be a real estate bubble bursting because there is no real estate bubble? That was what he said in 2005. Well,

Jaspreet Singh 6:51 2006 we started to see home prices start to go down a little bit more, and now people are starting to get underwater on their homes. So the pitch was, if you took this adjustable rate mortgage, well, if in a few years you can't afford the payments, no big deal. You can just sell the home, walk away with some cash, or you can refinance, and we'll try to give you on something else. That way you can manage your payments. But the caveat, which many people did not understand or they didn't know, was that it requires your home to be worth more in the future or at least the same.

Lewis Howes 7:21 Right.

Jaspreet Singh 7:22 That way you can refinance. If you bought a home for $200,000, then comes a few years later and you're trying to refinance, and now you owe 190,000 but it's only worth $180,000, you go to the bank and you say, "Hey, banker, I can't afford the payments. They've readjusted. You told me that I could refinance or sell. What do you think I should do?" Well, then they say, "Oh, man, uh, so I just pulled up the numbers. Your home is not gonna sell for more than $180,000, so we're not going to refinance you because you're underwater. So you're gonna have to figure something out on your own." Now, you can't sell it either because if you wanted to sell your home for $180,000 and you owe 190,000, you need to bring $10,000 to the closing table, which most people in this situation did not have. So what are you left with? You can walk away or get foreclosed on. So this then became a much bigger issue because then we started to see some foreclosures, and this built a huge house of cards, which people didn't realize because now we're just talking about the housing market. But this then became an everything issue because Wall Street was then gambling on the housing market, mortgage-backed securities. There was all these things that we were talking about where now Wall Street was double-dipping, creating all these-

Lewis Howes 8:35 Right

Jaspreet Singh 8:35 ... new investments based off of people's mortgages, creating all these... I mean, I can't emphasize enough how many different investment scenarios and things that they created. And so now when the base layer, which is the housing market, started to collapse, the whole house of cards started to fall down. And I'm gonna say this now because I think we're gonna talk about this later on, but this is where you have to be financially educated and be aware because sometimes the media and people in power will lie to you in your face to keep you calm.

Lewis Howes 9:06 Mm.

Jaspreet Singh 9:06 Because, um, if I remember the date correctly, I believe it was May 17th, 2007. Big date because Ben Bernanke, the then chairman of the Federal Reserve Bank, who remember in 2005 said-

Lewis Howes 9:18 Two years pri- prior

Jaspreet Singh 9:19 ... two years prior said, "There's no housing bubble that could burst," came out and said that the subprime housing issue will not trickle down to any other parts of the economy. It is contained to the housing market, so you don't need to worry about the economy. He said that openly in 2007.

Lewis Howes 9:35 And then a, and then a year later...

Jaspreet Singh 9:37 And then a year later, the whole thing imploded.

Lewis Howes 9:40 Crumbled.

Jaspreet Singh 9:40 The whole house of cards came crumbling down. So now that was what caused 2008. It was a real estate issue that trickled down into the rest of the economy. Today, our real estate market is very different. People have equity in their homes. Very few people are buying homes with 0% down, nothing like 2008. Adjustable rate mortgages are not as popular, although they are growing in popularity now. Because mortgage rates are going up-

Lewis Howes 10:03 Right

Jaspreet Singh 10:03 ... adjustable rate mortgages are making a big comeback. Uh, but they're not out there to the extent that they were before 2008. We don't have the same subprime lending, and so it's a very different housing market. People have equity in their homes. People have skin in the game, and many people have a 30-year fixed rate mortgage. Meaning if interest rates go up and you have a 30-year fixed rate mortgage, it doesn't affect you as long as you still have a job because your job can continue paying, paying off that-

Lewis Howes 10:29 The mortgage

Jaspreet Singh 10:29 ... mortgage.

Lewis Howes 10:30 Yeah.

Jaspreet Singh 10:30 So different situation. However, this is where now we have to look at the economic issues because if you lose your job because the economy's going down, now you can't pay your mortgage. And if that happens on a broad scale where people don't have the ability to pay their mortgages, now you can see how that would then trickle down into the housing market. So that is the concern, and this is where you have to dissect what's actually happening in the economy. Now, of course, nobody can predict what's gonna happen, and I do not recommend anybody trying to trade what could potentially happen. Be an investor. Look for opportunities. Be a long-term investor.

Lewis Howes 11:05 Mm-hmm.

Jaspreet Singh 11:06 If you find a good opportunity, buy it and hold for the long term. Don't try to trade or try to predict what's gonna happen in the market. What I want to talk about is what is possible. That way you can make sounder and better decisions for you and your money.

Lewis Howes 11:16 What do you think is the worst case scenario and the best case scenario?

Jaspreet Singh 11:20 So let's go right into-

Lewis Howes 11:21 For, for the housing market over the next couple years.

Jaspreet Singh 11:24 So let's, I think if we go into the economy, if I answer that question the economy-

Lewis Howes 11:27 Yes

Jaspreet Singh 11:27 ... it will by default answer the question-

Lewis Howes 11:29 Okay

Jaspreet Singh 11:29 ... in the housing market. So in the economy w- it's a weird situation where our economy is slowing down because of high inflation. So 2020, 2021, the Federal Reserve Bank and the government-

Lewis Howes 11:43 Pump all the money into the economy

Jaspreet Singh 11:45 ... we print a lot of money. This devalues our dollar, causing the price of things to go up. So now your rent is more expensive. Your groceries are more expensive. Your gas is more expensive. Your airfare is more expensive.

Lewis Howes 11:55 Why do they do that knowing the pri- everything's gonna go up in price?

Jaspreet Singh 11:58 See, you said knowing they will go up in price.

Lewis Howes 12:01 Right.

Jaspreet Singh 12:02 In 2020, they said the opposite. When they were printing trillions of dollars through things like the PPP lending program, through the stimulus program, the concern was not inflation. It was actually deflation.

Lewis Howes 12:15 Hmm.

Jaspreet Singh 12:15 Uh, because in 2020 when the economy shut down- The concern was the prices of things are gonna drop. We don't want that to happen-

Lewis Howes 12:22 'Cause no one's spending enough. Is that why, or?

Jaspreet Singh 12:24 No one was spending, and so deflation is a very bad thing for the government. It's great for people-

Lewis Howes 12:29 Right

Jaspreet Singh 12:30 ... because now your savings-

Lewis Howes 12:30 Like everything in savings, yeah

Jaspreet Singh 12:31 ... become valuable. If you make 50 grand a year and you have deflation, your 50 grand can buy you a whole lot more because the price of things drop. But it's bad for the government because today our government has something like $31 trillion worth of national debt. And so if deflation were to happen, that means their debt, their 31 or so trillion dollars, is now more expensive, and so the payments become more expensive. So it's-

Lewis Howes 12:53 So we're paying for their mistakes?

Jaspreet Singh 12:56 Yes.

Lewis Howes 12:57 The American people are paying, then, for the debts of the government?

Jaspreet Singh 13:00 Yes.

Lewis Howes 13:00 Yeah.

Jaspreet Singh 13:01 The United States government does not make money. They generate revenue by taxing you-

Lewis Howes 13:06 Right

Jaspreet Singh 13:06 ... when you work hard.

Lewis Howes 13:07 And they print money.

Jaspreet Singh 13:09 They print money, and then you pay the price for that-

Lewis Howes 13:10 And we pay the price

Jaspreet Singh 13:11 ... through inflation.

Lewis Howes 13:12 That sucks.

Jaspreet Singh 13:12 So the government, there's no such thing as free money. The most expensive kind of money is free money-

Lewis Howes 13:17 Mm-hmm

Jaspreet Singh 13:17 ... because now when it's free-

Lewis Howes 13:19 Look at the cost now

Jaspreet Singh 13:20 ... it is everybody that-

Lewis Howes 13:21 The price we're paying, yeah

Jaspreet Singh 13:22 ... pays through inflation. So free money is the most expensive kind of money. And so in 2020 when the concern was deflation, they started printing money through stimulus programs, through bailout programs, through money-printing programs to fund out, you know, whatever they wanted to do. That was when the money printer opened up, and you said they knew inflation was gonna happen. No, they did not. They-

Lewis Howes 13:44 How can they not predict that, though? Knowing that you're gonna give all this free money out, isn't inflation gonna go up?

Jaspreet Singh 13:48 Well, okay. Let, let, let me, let me rephrase that. Either they willingly lied-

Lewis Howes 13:54 Uh-huh

Jaspreet Singh 13:54 ... to the American people, or they're just completely ignorant. But these are some of the smartest people in the world. I mean, they're Ivy League economic school graduates.

Lewis Howes 14:03 Masters.

Jaspreet Singh 14:04 Right?

Lewis Howes 14:04 Yeah.

Jaspreet Singh 14:04 I mean, these are very supposedly smart people who said that this was gonna happen. Now, what's interesting is a lot of people predicted this. Like, I talked about this very openly-

Lewis Howes 14:14 Hmm

Jaspreet Singh 14:15 ... on YouTube. I said, "Look, this is what's gonna happen." 2021 came. Inflation is transitory was the, like, the phrase where inflation started to go up, and I kept saying, "Hey, don't expect it to be transitory because the Federal Reserve Bank doesn't have some fairy dust to make inflation magically come down."

Lewis Howes 14:31 [laughs] Right.

Jaspreet Singh 14:32 How are they gonna do that? They're still printing money. Inflation is gonna get worse. And when inflation hit ar- around 6% in August of 2021, it, it was slightly lower than where it was previously, and that was when they said, "Inflation has peaked. We're all good now."

Lewis Howes 14:48 But now it's at-

Jaspreet Singh 14:48 "Inflation's on its way down."

Lewis Howes 14:49 Now it's at...

Jaspreet Singh 14:50 It's at 8.5%.

Lewis Howes 14:52 Mm-hmm.

Jaspreet Singh 14:52 And so it was, it was, uh, quite... I mean, it, it was a long process, but this is where you have to understand that either they're lying or they're completely ignorant. And now we don't want to assume, or we shouldn't want to assume that they're lying to you, and that's, that would create a lot of chaos.

Lewis Howes 15:09 Yeah.

Jaspreet Singh 15:09 They're ignorant. So again, w- we want to be financially educated. Why is it that in two thou... Actually, let me mention this 'cause this is interesting. In 2007 when Ben Bernanke said the subprime market will not affect any other part of the economy, did he not know any better? I mean, I think most people who were aware, financially aware at that time could have looked at a spreadsheet and said, "Hey, this is a big issue." Ben Bernanke actually spoke about that after he was done being a Federal Reserve chairman.

Lewis Howes 15:36 What did he say?

Jaspreet Singh 15:37 And he said that, "I was asked not to say anything because I could not incite panic. I didn't want to incite fear." So-

Lewis Howes 15:43 That's what he said?

Jaspreet Singh 15:43 This is what he said.

Lewis Howes 15:44 So he essentially lied.

Jaspreet Singh 15:45 Essentially, because they don't want to create panic.

Lewis Howes 15:48 Wow.

Jaspreet Singh 15:48 Now, we're finally-

Lewis Howes 15:49 Keep spending the way you're spending. Keep living your lives. Don't worry. Everything's gonna be okay.

Jaspreet Singh 15:53 They're asked... I mean, like, look-

Lewis Howes 15:54 Don't save a little bit more. Don't, you know. They're just like, "Ah, just keep spending."

Jaspreet Singh 15:58 I'm not, I don't... You know, you gotta be careful 'cause I'm not trying to be a conspiracy theorist.

Lewis Howes 16:01 Right.

Jaspreet Singh 16:01 But, like, look, the Federal Reserve Bank are made up of highly educated people. To think that money printing, printing trillions and trillions and trillions of dollars, I mean, on the low end with the Federal Reserve Bank, the government spending on the extreme low end is $6 trillion. To think that that's not gonna create lasting inflation is insane. And so either someone's lying or they're completely ignorant as to the way that money works.

Lewis Howes 16:24 Yeah.

Jaspreet Singh 16:24 And so, you know, these are the things that I've been trying to talk about on YouTube to get people educated, but this is where... Now, the question is what's next?

Lewis Howes 16:31 What's, so what's the worst-case scenario, then?

Jaspreet Singh 16:32 So the worst-case scenario, I mean, this is the worst, worst, worst-case scenario, is you face some sort of a currency crisis, hyperinflation. I mean, that, that is not-

Lewis Howes 16:41 Rare

Jaspreet Singh 16:42 ... very likely.

Lewis Howes 16:43 No, no, yeah, yeah.

Jaspreet Singh 16:44 But let, let's focus in on now what is the worst-case kind of possible scenario-

Lewis Howes 16:48 Likely. Yeah, likely scenario

Jaspreet Singh 16:50 ... yeah, in, in terms of the economy. So the inflation problem is still very high, and this high inflation is contributing to a slowing economy. Now, the Federal Reserve Bank is working to fight inflation. They're doing that through raising interest rates, and they're doing something called quantitative tightening where they are pretty much giving back some of the money that they printed over the last few years. So they bought up a whole bunch of bonds, mortgage-backed securities.

Lewis Howes 17:18 Hmm.

Jaspreet Singh 17:18 They bought up a bunch of, uh, treasury bonds as a way to stimulate the economy. And so the Federal Reserve Bank has built up this balance sheet of almost $9 trillion of assets.

Lewis Howes 17:30 Hmm.

Jaspreet Singh 17:31 So the Federal Reserve Bank doesn't have cash. Like, they don't have a pile of cash anywhere. They had to print $9 trillion to buy up these assets over the last number of years, and now what they're doing is they're finally starting to sell them off. Now, they're not selling them off very quickly. They are selling them off a little bit slower than what they expected, but they are starting to sell them off now to help free up some of this inflation. The second thing that they're doing is raising interest rates because when you raise interest rates, it makes borrowing money less attractive, which creates less inflation to help cool down the economy. Like, the Federal Reserve Bank wants a stock market crash.

Lewis Howes 18:09 Really?

Jaspreet Singh 18:09 The Federal Reserve Bank wants real estate prices to go down, and-

Lewis Howes 18:12 Has the stock market crashed yet fully?

Jaspreet Singh 18:14 Well, it depends what you mean by crash. So if we go just by, uh, now, it's funny, I'm gonna say technical definitions because nowadays technical definitions-

Lewis Howes 18:22 Right

Jaspreet Singh 18:22 ... seems like they can change.

Lewis Howes 18:23 Don't mat- yeah, yeah, don't matter

Jaspreet Singh 18:23 ... but, uh, traditionally the definition of a quote-unquote-

Lewis Howes 18:27 Right

Jaspreet Singh 18:27 ... crash would be something going into a bear market, meaning that the stock market has fallen 20% off of their highs. We saw that happen. And then we have also seen stock market rise since then. So the stock market is very volatile. It has gone down, and the Federal Reserve Bank wants stock prices to go down, they want real estate prices to go down, and they also want unemployment to go up. They want some people to lose their jobs.

Lewis Howes 18:51 Why?

Jaspreet Singh 18:52 They want wages to go down.

Lewis Howes 18:53 Why?

Jaspreet Singh 18:54 And this is going to sound very bad, but they've also made this very public. So the reason that why they want these things to go down is because it's a way to cool down the economy. That's why they're raising interest rates. So when the Federal Reserve Bank raises interest rates, there's two things that they're looking at.

Lewis Howes 19:11 And when they're raising interest rates, they're doing that on the housing market, or where are they raising it?

Jaspreet Singh 19:14 So they're raising something called the federal funds rate, which is overnight lending. So essentially think of it as, uh, when you go and get a mortgage from the bank, you're buying something from the store. You're getting the retail price. The store, in this case the bank, gets a wholesale price. They get a discounted price, right?

Lewis Howes 19:33 Right.

Jaspreet Singh 19:33 They're buying it in bulk. So the banks can borrow money at a cheaper rate, and then they lend it out to you. So when banks have to pay a higher rate, then they're gonna have to charge you a higher rate. Just like when stores have to pay a higher rate from their-

Lewis Howes 19:45 Right

Jaspreet Singh 19:45 ... wholesaler, manufacturer, they have to-

Lewis Howes 19:46 Retail's gonna go up, yeah

Jaspreet Singh 19:47 ... pay it more down to you. So when you buy from the bank, when you get a loan from the bank, it is the retail price. So the Federal Reserve Bank does not affect-

Lewis Howes 19:54 How do you get the wholesale price?

Jaspreet Singh 19:55 That's the Federal Reserve Bank. So this is now the Federal Reserve, federal funds rate that the Federal Reserve Bank controls.

Lewis Howes 20:00 Can an individual get it at wholesale?

Jaspreet Singh 20:02 [laughs] No.

Lewis Howes 20:02 That's what I'm trying to figure out here. [laughs]

Jaspreet Singh 20:04 No, we cannot. Uh, so we, we get it from the bank.

Lewis Howes 20:06 Okay.

Jaspreet Singh 20:06 Unless you are a bank, you're not gonna be able to do that.

Lewis Howes 20:08 Right. Right.

Jaspreet Singh 20:09 So the Federal Reserve Bank gets to control these things, and then they impact mortgage rates, which then impact spending. So when the Federal Reserve Bank raises interest rates-

Lewis Howes 20:19 Yes

Jaspreet Singh 20:19 ... so when the Federal Reserve Bank raises interest rates, now you're gonna have to pay a higher price to get a mortgage. Now, that affects inflation, which can also affect the housing market. So the Federal Reserve Bank is looking at two things when they're determining what to do with interest rates. They're looking at inflation, and then they're looking at the general economy. When inflation is high, that's more fuel for the Federal Reserve Bank to continue raising interest rates to fight inflation. But in order for that to happen, there's a second factor that they look at. They're looking at the economy. They're looking at things like unemployment rates. They're looking at the strength of the economy. Because if people have jobs, well, that means then we have a strong economy, so it's ammunition that the Federal Reserve Bank is okay to go and keep raising interest rates. Because if it was flipped where we have a super high unemployment rate, people don't have jobs, the economy's crashing-

Lewis Howes 21:11 You said the, the, the government wants that.

Jaspreet Singh 21:13 So the Federal Reserve Bank.

Lewis Howes 21:14 The Federal Reserve-

Jaspreet Singh 21:15 Right? Because-

Lewis Howes 21:15 ... wants people to lose their jobs

Jaspreet Singh 21:16 ... they want, they want people, they want a lower unemployment rate. Sorry, they want a higher unemployment rate, meaning they want some people to lose their jobs, and they want wages to come down because that will help cool down inflation.

Lewis Howes 21:27 Ah.

Jaspreet Singh 21:27 And it's a very weird thing. You're gonna... Go search it on Google because they've said this. Because you're gonna think, "Jaspreet, what the heck are you talking about?" No. Jerome Powell has openly said this, where the labor market is too tight. It's too strong, meaning too many people have jobs. They want wages to cool down. They've said this very openly where they-

Lewis Howes 21:43 They want people to be getting paid less

Jaspreet Singh 21:44 ... they, exactly. They don't want wages to keep rising at this rate because they're worried about something called the wage-price spiral. I'll talk about that in just a second. So they don't want wages to keep rising, and on top of that, they're looking at this economic data, comparing it against inflation, and that's gonna help drive the decision about interest rates. And so if-

Lewis Howes 22:02 Wow

Jaspreet Singh 22:02 ... people have jobs, wages keep rising, that means if-

Lewis Howes 22:06 Interest rates are gonna keep going up

Jaspreet Singh 22:07 ... interest rates are just gonna keep going up, and they're gonna keep doing that until more people lose their jobs, until-

Lewis Howes 22:12 Wow. Wages go down

Jaspreet Singh 22:12 ... wages start going up.

Lewis Howes 22:13 Interesting.

Jaspreet Singh 22:13 And then that will hopefully bring down inflation because... Now, we'll ta- let's talk about this wage-price spiral very briefly because this was a big thing that happened in the 1970s into the early 1980s, where you made money but you struggled to survive because inflation was high. So now you went to your boss and you said, "Hey, boss, I need more money." And your boss said, "Well, I don't wanna lose you," so their boss paid you more. Even though you're not doing more, you're not producing more value, the boss is paying you more just because it's more expensive to survive. So now you're getting paid more money, the boss-

Lewis Howes 22:46 So the business has to go earn more somehow.

Jaspreet Singh 22:48 The business has higher costs.

Lewis Howes 22:49 Or they're losing, or they're losing margin.

Jaspreet Singh 22:51 Right. So now you have the money to go out and spend, but then the business then has to start charging more money because-

Lewis Howes 22:58 To their customers

Jaspreet Singh 22:58 ... they have higher costs.

Lewis Howes 22:59 Yeah.

Jaspreet Singh 22:59 So now the price of things go up. Now the price of things go up, you go back to your boss and say, "Hey, look, that raise wasn't enough."

Lewis Howes 23:04 [laughs]

Jaspreet Singh 23:04 "I, I need another raise." Now it's, it starts to create this spiral, and this is what the Federal Reserve Bank wants to avoid by breaking that, by saying, "We don't want wages to keep going up. We want to break this inflation thing. We, because we want to raise interest rates to stop this whole inflation mess." And so one of the things they wanna do is they wanna see more people, uh, have lesser wages. They wanna see a little bit higher unemployment. They want to see the stock market come down. They want to see real estate prices cool down because that cools down inflation-

Lewis Howes 23:35 Mm

Jaspreet Singh 23:35 ... because that's their number one issue right now. So-

Lewis Howes 23:37 I guess the people will... I mean, it'll eventually happen because if employees are like, "I need more and more money," and the company's like, "We don't have any more money to give you," they're eventually gonna leave, or they're not gonna be able to pay them, and they have to shut the business down.

Jaspreet Singh 23:50 Something has to break.

Lewis Howes 23:51 Something has to-

Jaspreet Singh 23:51 The question is-

Lewis Howes 23:51 ... the business has shut down. They fire them

Jaspreet Singh 23:52 ... what's gonna break first?

Lewis Howes 23:53 Yeah.

Jaspreet Singh 23:54 So what's gonna break first? Is it gonna be the housing market-

Lewis Howes 23:56 Interesting

Jaspreet Singh 23:56 ... or is it gonna be inflation? Is it gonna be the stock market? Is it gonna be inflation? Because the Federal Reserve Bank is gonna keep jacking up interest rates based off of the economy and inflation until inflation comes down or until the economy goes up. Or, so do you see what I'm saying? Like, inflation's gonna come down, or the housing market's gonna break, where now it's the Federal Reserve Bank. You have to look at their intentions. I know I'm kind of scattering around here-

Lewis Howes 24:18 Yes

Jaspreet Singh 24:19 ... because there's so many different aspects here. But the Federal Reserve Bank today, and this can change, today says that their number one goal is to bring inflation down to 2%.

Lewis Howes 24:31 And it's at eight and a half.

Jaspreet Singh 24:32 It's at eight point some percent right now.

Lewis Howes 24:33 They wanna bring it down to 2.70.

Jaspreet Singh 24:35 They want it-

Lewis Howes 24:35 By when?

Jaspreet Singh 24:36 They haven't said that. [laughs] They want it as soon as possible

Lewis Howes 24:38 And how high do you think it could go? What's the, the likely worst case scenario of how high it could go-

Jaspreet Singh 24:44 So-

Lewis Howes 24:45 ... before it drops?

Jaspreet Singh 24:45 Let, let, let's talk about history, right? Because in the early 1980s, if you wanted to go and get a mortgage, you were paying upwards of 18 to 19% to get a mortgage.

Lewis Howes 24:55 Oh my gosh.

Jaspreet Singh 24:56 Today, we're talking about 5.5 to 6% on a fixed rate 30 year.

Lewis Howes 25:00 So still the lowest in-

Jaspreet Singh 25:01 We're still historically extremely low. There's a lot of room to grow. Now, if mortgage rates went from 6% to 10% next month, the housing market's gonna crash.

Lewis Howes 25:11 But-

Jaspreet Singh 25:11 It's gonna go down

Lewis Howes 25:12 ... I mean, costs are gonna go way down.

Jaspreet Singh 25:13 It, it... there's, there's, there's no alternative because no one's gonna be able to afford those homes because home prices are so high. And the reason why they're so high is because people have been able to borrow more money at a lower interest rate. And so this is where it now goes back to the question, what is going to break first? Is it gonna be inflation or is it gonna be the housing market? And you can replace housing market with stock market, with crypto market, with the economy, it doesn't matter. And this is the, the dilemma that the Federal Reserve Bank is facing, and this is where their goal and what they say is, "We're gonna have a quote unquote soft landing, where we're gonna raise interest rates gradually enough where we can cool down inflation without crashing the housing market, without crashing the stock market, without creating too much of a problem." Like, they do think the housing market is gonna go down. They do think that-

Lewis Howes 25:55 Mm

Jaspreet Singh 25:55 ... we need to have, see stock prices go down. They do think that we need to see unemployment go up slightly.

Lewis Howes 26:00 Wow.

Jaspreet Singh 26:00 That wage growth has to slow down. However-

Lewis Howes 26:03 They-

Jaspreet Singh 26:03 ... they don't think it's gonna create a massive crash.

Lewis Howes 26:06 Right.

Jaspreet Singh 26:06 So that is what they're saying. Now, the question is what is going to actually happen, right? Because this is where wh- wh-

Lewis Howes 26:12 What, what rhymes?

Jaspreet Singh 26:13 History.

Lewis Howes 26:13 Uh, what, what rhymes?

Jaspreet Singh 26:14 Exactly.

Lewis Howes 26:14 Let's go.

Jaspreet Singh 26:14 History rhymes. So this is where you wanna pay attention now, obviously, to what's happened in the past, but what's actually going on. And this is where now you can dive a little bit deeper into the data because now if you're looking at the housing market, you're gonna say, "Okay, interest rates look like they're gonna keep going up," unless the Federal Reserve Bank completely does a 180, which is also possible.

Lewis Howes 26:32 Right.

Jaspreet Singh 26:32 That's why it's so hard to predict and why I do not recommend trading, because six months from now, the Federal Reserve Bank could say, "You know what? Inflation is no longer number one priority. It is the slowing economy. We're gonna cut interest rates. We're gonna pump money into the economy."

Lewis Howes 26:46 Oh my gosh.

Jaspreet Singh 26:46 You could see the stock market and real-

Lewis Howes 26:48 Boom

Jaspreet Singh 26:48 ... estate prices crash upwards. I mean, just think about this.

Lewis Howes 26:50 Right, right, right, right.

Jaspreet Singh 26:51 If tomorrow mortgage rates-

Lewis Howes 26:52 It's what happened to the stock market in 2020.

Jaspreet Singh 26:54 Exactly.

Lewis Howes 26:54 When they started printing, it's like everyone started buying and-

Jaspreet Singh 26:57 It went up

Lewis Howes 26:57 ... real estate went, went through the roof, especially in LA.

Jaspreet Singh 27:00 If you think about if tomorrow mortgage rates went down to 2.5%, what would happen? Everyone and their moms are gonna wanna buy their home.

Lewis Howes 27:07 Yeah.

Jaspreet Singh 27:07 They're gonna say, "Oh, we were waiting. Now we're gonna go take advantage of this opportunity. We're not gonna wait." And now home prices will go up.

Lewis Howes 27:12 And there's gonna be no inventory or it's gonna be-

Jaspreet Singh 27:14 The same issue, right? And so this is where you have to understand that you cannot try to perfectly time-

Lewis Howes 27:20 Mm

Jaspreet Singh 27:20 ... or predict what's gonna happen, but you can understand the different scenarios where the Federal Reserve Bank today says that they wanna bring in- interest rates up to bring inflation down. What is gonna help them make that decision? Well, they're looking at inflation rates, they're looking at the economy, the economy meaning our economic slowdown, and they're looking at unemployment rates. So the fact that today unemployment rates are quote unquote extremely low or the lowest ever in 50 years, and the fact that our economy is not slowing down that much, based on that, well, they have more ammunition to keep raising interest rates. Well, the more you raise interest rates, what's gonna happen? The more the housing market gets hurt, the more the stock market gets hurt, the more the economy gets hurt. It's very obvious how it works in the real estate market because now you have to pay more money to buy a home. Well, it works the same way in the stock market and in business. You're a business and you wanna go borrow money to finance operations, to finance growth, to buy some new machinery. You have to pay more money to do that. Well, if you're gonna have to pay more money to do that, you need bigger returns. If you need bigger returns, you need to be able to sell more stuff. If you need to sell more stuff, you need more people that have money. The situation right now is people don't have the discretionary money because they're spending so much extra money on things like rent-

Lewis Howes 28:31 Gas

Jaspreet Singh 28:31 ... groceries.

Lewis Howes 28:32 Yeah.

Jaspreet Singh 28:32 Gas.

Lewis Howes 28:32 Eggs.

Jaspreet Singh 28:33 Gas prices have come down-

Lewis Howes 28:33 Whatever

Jaspreet Singh 28:34 ... but it's still significantly higher.

Lewis Howes 28:35 Right.

Jaspreet Singh 28:36 So this is the situation where the root-

Lewis Howes 28:39 And rent pr-

Jaspreet Singh 28:39 ... of inflation-

Lewis Howes 28:39 Rent, rent seems like it's going up, too, right?

Jaspreet Singh 28:41 Rents are about 20 to 22% higher now than where they were a year ago. Housing costs-

Lewis Howes 28:47 Wow. Around the USA?

Jaspreet Singh 28:48 Around the USA.

Lewis Howes 28:48 Kind of average then.

Jaspreet Singh 28:49 Just on average, right?

Lewis Howes 28:49 Yeah.

Jaspreet Singh 28:49 In some instances, some cities it's more, some cities it's less. And this is where you just have to, I mean, understand these are the options, and this is where people start to panic, they start to freak out, and they assume that I need to make a rash decision today because, oh my God, this is gonna happen. I need to, need to sell my home, I need to buy a home, I need to do this, I need to do that because this and this might happen. But something else could happen, so you don't wanna make rash decisions. This is where you want to understand what's going on, take a deep breath, calm down, and first understand that

Jaspreet Singh 29:20 the real estate market, if you're focusing on that, moves much slower than the stock market.

Lewis Howes 29:24 Moves slower.

Jaspreet Singh 29:25 It moves slower, and that nothing happens overnight, right? So you want to be aware of what's happening. And to give you an example of that, when the 2008 crash happened, stock prices collapsed in 2008 and then bottomed in 2009. So in 2009, the stock market started to go back up. Real estate prices really started to get hard in 2008. They continued to go down in 2009. It continued to go down to 2010.

Lewis Howes 29:53 Really?

Jaspreet Singh 29:53 It continued to go down to 2011, and then they bottomed in 2012.

Lewis Howes 29:57 Took four years.

Jaspreet Singh 29:58 Four years.

Lewis Howes 29:59 Wow.

Jaspreet Singh 29:59 So real estate prices bottomed in 2012, and in 2012, the stock market started hitting new highs. So the real estate market moves significantly slower than the stock market-

Lewis Howes 30:09 Wow

Jaspreet Singh 30:10 ... because you can't buy and sell a home the way you can buy and sell a stock.

Lewis Howes 30:12 Takes more time, yeah.

Jaspreet Singh 30:13 You can buy and sell a stock in a second. So people get emotional, they get excited, they get scared, they panic. Whatever the emotion is, you can do that in a second, and that can cause massive swings up and down in the stock market, versus the real estate market, it could take months to sell a home, maybe even a year.

Lewis Howes 30:28 Yeah.

Jaspreet Singh 30:28 And so it moves significantly slower, and that's what you have to understand about the real estate market.

Lewis Howes 30:33 So we're starting to see, it seems like prices are going down, you know, in the real estate market. At least I'm seeing, if I go on Zillow in LA, 'cause I'm just curious about the market- You'll see homes that were up there for a few months and now they're cutting prices

Jaspreet Singh 30:48 Yeah

Lewis Howes 30:48 You see homes that have been there for three, six, seven months now-

Jaspreet Singh 30:51 Yeah

Lewis Howes 30:51 ... that aren't moving, so then now they're dropping the price 'cause they don't wanna keep paying the mortgage on something-

Jaspreet Singh 30:55 Right

Lewis Howes 30:55 ... that they're not gonna live in it. And we're starting to see it happen a little bit. So if we're, if history is rhyming-

Jaspreet Singh 31:03 [laughs]

Lewis Howes 31:04 ... and, you know, the stock market's been kind of crashing it seems like for the last, whatever, six to something months now, is this now, okay, we're seeing this a little bit and it's gonna keep going as we go into the next year? Or what could history teach us about potentially what could happen now?

Jaspreet Singh 31:21 So you wanna keep your eye on the Federal Reserve Bank, and you wanna keep your eye on the economy.

Lewis Howes 31:25 If inflation keeps going up-

Jaspreet Singh 31:27 If inflation keeps going up, or rather, if the Federal Reserve Bank keeps raising interest rates, that is the better indicator that you wanna keep-

Lewis Howes 31:33 Yeah

Jaspreet Singh 31:33 ... your eye on. Because if they keep raising interest rates, that means mortgage rates are gonna keep going up, which will make housing more expensive. So I'll give you a quick example. If in the end of 2021 you wanted to buy a half a million dollar home, you could put down 20%, which is $100,000, meaning you would borrow $400,000. Now, you could borrow that $400,000 at 2.8% for a 30-year fixed rate mortgage-

Lewis Howes 31:57 Wow

Jaspreet Singh 31:57 ... in 2021, and so your monthly payments would be, like, 1650 a month for that half a million dollar home. If now today you wanted to buy that exact same home but no modifications, no upgrade, it's not gonna cost you $500,000, it's gonna cost you about 20% more, which is about $600,000. So now if you put down the same 20%, you're not putting down 100 grand, you're putting down $120,000, which means you're no longer financing 400,000, you're financing $480,000.

Lewis Howes 32:24 Mm.

Jaspreet Singh 32:25 Now, back then you were able to finance the 400,000 at 2.8%. Today you're gonna finance that $480,000 close to 6%-

Lewis Howes 32:34 Eeh

Jaspreet Singh 32:34 ... on a fixed rate 30-year mortgage. So you're borrowing more dollars at a higher interest rate. Back then it cost you 1650 a month. Today it's gonna cost you about 2850 a month-

Lewis Howes 32:46 Mm

Jaspreet Singh 32:46 ... to borrow the $480,000 for the exact same home. So you went from paying 1650 a month to 2850 a month, which is about a 70% increase in monthly cost on the exact same home, assuming no modifications, no upgrades. That's kind of unsustainable unless, you know, there's more money coming into the markets, unless you keep having, you know, a way for people to keep affording that. And this is driving the issue now is how much higher can it g- go? Because if you keep raising interest rates, what's gonna happen? Your cost to buy the home are gonna keep going up. So unless you have a 70% raise in your monthly salary, it's gonna be much harder for you to afford that higher cost-

Lewis Howes 33:25 Wow

Jaspreet Singh 33:25 ... to buy that home. So that's the situation that we're in right now. And like you were saving, saying, it's driving this kind of shift in the housing market where you have a lot of people who wanna buy a home saying, "I can't really afford the same home anymore. I don't wanna live smaller, so I'll just keep the same house that I'm in right now. I'll keep renting. I'll keep... I won't sell, I won't move because I don't wanna pay this higher price." And this is where, you know, the question is, again, what's gonna happen next? If we keep raising interest rates and the monthly cost keeps going up, well, [laughs] it's gonna become more expensive. And that 2850 that I mentioned, it also does not factor in the higher property taxes you have to pay and the higher insurance.

Lewis Howes 34:04 Jeez.

Jaspreet Singh 34:04 Because your property taxes are based on the value of your home.

Lewis Howes 34:08 Mm-hmm.

Jaspreet Singh 34:09 So when you're buying a $600,000 home versus a $500,000 home-

Lewis Howes 34:11 Paying more yearly property tax, yeah

Jaspreet Singh 34:13 ... you have higher property taxes. You're insuring a more expensive property. So your cost to own this home are significantly, I mean, almost double what they were a year ago, month to month. And that's where it becomes... I mean, it's, it's, it's not rocket science to see why less people can buy homes today than they could a year ago, just because the cost to buy a home has gone up so much.

Lewis Howes 34:34 So who is it the right time to buy a home for?

Jaspreet Singh 34:37 [laughs] Well-

Lewis Howes 34:39 Is it the right time for anyone?

Jaspreet Singh 34:40 Yes. Look, uh, okay, if you want... No. We gotta understand, now, are you buying the home as an investment or are you buying the home to live in? Because those are two different things.

Lewis Howes 34:47 Right.

Jaspreet Singh 34:48 And a lot of people get this confused, and I'm gonna explain why. I really wanna get into that because that's one of the biggest misconceptions in America, I would say. When you buy a home for yourself to live in, we're told it's the biggest investment of your life-

Lewis Howes 35:00 Mm

Jaspreet Singh 35:00 ... so go big.

Lewis Howes 35:01 It's not a good investment for a lot of people.

Jaspreet Singh 35:02 It is not. You should buy a home because you wanna create memories there.

Lewis Howes 35:07 Lifestyle, environment, yeah.

Jaspreet Singh 35:08 Exactly. And because you can afford it. You should not be trying to time the market with the home that you wanna create memories in.

Lewis Howes 35:15 Right.

Jaspreet Singh 35:16 The m- biggest thing is gonna be can you afford the home, and do you want to live there? Now, to answer that question of can you afford it, there's three different things you wanna ask yourself. Can you afford the down payment, can you afford the monthly payment, and can you afford [laughs] the move-in cost? Because that gets overlooked a lot, because now when you wanna move into this home, you have-

Lewis Howes 35:35 Furniture, moving, all this stuff

Jaspreet Singh 35:36 ... exactly. First you have the closing cost, and then it's the cost of furniture, the cost to move in, and then when you want to move in, you gotta upgrade, right? Because now you wanna have a nicer kitchen, you wanna finish the basement, you wanna have the new appliances. And furniture is not cheap. And so you wanna make sure you factor that in before you can move. Now, if you can afford the down payment, you can afford the monthly payment, and you can afford the move-in cost, and you find a home that fits your needs, go out, buy it, get a 30-year fixed rate mortgage. Don't worry about it because now you can afford it. If interest rates go down, just refinance, get the lower monthly payments. Don't stress about it.

Lewis Howes 36:11 Right, right, 'cause you can refinance in a couple years.

Jaspreet Singh 36:13 You c- if interest rates go down-

Lewis Howes 36:14 Mm

Jaspreet Singh 36:14 ... you can always refinance because, you know, if you're trying to time the interest rate market, you never know what's gonna happen.

Lewis Howes 36:20 Yeah.

Jaspreet Singh 36:20 Just refinance if they go down. So that's the main thing you need to know, that if you wanna buy a home, don't try to time the market. If you can afford it, hey, go out and buy it. You know, everyone's saying, "Well, what if home prices crash? Then I can buy then." Sure, but what if they don't? What if they go up by 20%? You know?

Lewis Howes 36:33 Waiting and timing, yeah.

Jaspreet Singh 36:35 So, you know, it's, it's-

Lewis Howes 36:36 It's tough

Jaspreet Singh 36:37 ... it's the same thing, right? When you talk about investing your money in any asset, stocks, the best advice is time in the market beats timing the market.

Lewis Howes 36:45 Mm-hmm.

Jaspreet Singh 36:45 This is what every fundamental investor says. So now if you're trying to buy a home, why are you trying to time the market? It's not even an investment. Are you gonna, uh, you know, wait to buy your shirt until you see cotton prices come down?

Lewis Howes 36:55 [laughs]

Jaspreet Singh 36:56 [laughs] You're not looking at that. Y- you, if you like the shirt that you buy and you can afford it, go out and buy it.

Lewis Howes 37:01 Yeah. Now, what's your thoughts on, uh, you know, Grant Cardone always has this famous line. It's, he says, "Live where you rent, and rent what you own."

Jaspreet Singh 37:12 You know, it's a great s- that line's a great pitch. If you want to own a home, there's nothing wrong with that. Just understand that it's not an investment. For a lot of people-

Lewis Howes 37:19 Yeah

Jaspreet Singh 37:20 ... for a lot of people, the freedom of owning a home and paying off your mortgage is all that you want. You just wanna have that stress-free life. And this is where it comes down to your lifestyle, right? Do you wanna live big? Do you wanna live large? You wanna have all the luxuries and the nice stuff, and you wanna go for it all, and you're willing to take that risk? Then yeah, don't put all the cash down into a down payment and tie yourself down into the home. Rent. Take the down payment, invest it in your business.

Lewis Howes 37:43 Mm-hmm.

Jaspreet Singh 37:43 Invest it somewhere else. That way it can grow bigger. But if your lifestyle goal is, "Hey, you know what?"

Lewis Howes 37:48 I want a great space. I wanna have family.

Jaspreet Singh 37:50 Yes.

Lewis Howes 37:50 I want memories. Yeah.

Jaspreet Singh 37:51 I don't care about all that fancy stuff, then go out and buy a home.

Lewis Howes 37:54 Yeah.

Jaspreet Singh 37:54 There's nothing wrong with that, and this is where you just have to understand. Like, I'll give you a personal example. We have an office for Minority Mindset companies, Market Briefs, and all that. I rent it. We could easily buy the office, but-

Lewis Howes 38:06 You don't own the office space, yeah

Jaspreet Singh 38:07 ... I don't, I don't own the office space. I'm paying $4,400 a month, plus utilities and all that.

Lewis Howes 38:12 Michigan's cheap, man.

Jaspreet Singh 38:13 It is cheap. [laughs]

Lewis Howes 38:13 You got cheap rent in Michigan. [laughs]

Jaspreet Singh 38:15 It's, you know, it's still a lot of money, 4,400.

Lewis Howes 38:17 Yeah, yeah, yeah.

Jaspreet Singh 38:17 So we're paying, what, 50 grand or so a year in rent.

Lewis Howes 38:19 Sure, sure, sure.

Jaspreet Singh 38:20 And, uh, I could go out and buy the property.

Lewis Howes 38:22 Yeah.

Jaspreet Singh 38:23 But why don't I? Well, if I wanted to, I, it's probably, I don't know. Let's just say it's a million dollar building. If I wanted to buy the building, I gotta take $200,000 from the business-

Lewis Howes 38:31 Mm-hmm

Jaspreet Singh 38:31 ... and go out and buy the property. Then I can own the building, and then see some return. The average real estate return, somewhere between 7 to 10% a year, okay? If I took that $200,000 and reinvested it back into Market Briefs, my financial newsletter-

Lewis Howes 38:45 It could grow

Jaspreet Singh 38:45 ... I'm trying to get a better return than 10% a year. And so for me, in the business sense, that's why I'm renting. Because I know that I can get a better return by investing that money back into the business to grow the business. And this is where you just have to understand the goals and your lifestyle, and make sure your actions are aligning with your goals and your lifestyle goals. Because if you say, "Hey, I wanna live large, I wanna have the nice things, I wanna have a big investment portfolio," but at the same time you have Gucci, Louis Vuitton-

Lewis Howes 39:12 Right

Jaspreet Singh 39:12 ... you have a Beamer, but you have no investments, your priority's in the wrong place.

Lewis Howes 39:15 Yeah.

Jaspreet Singh 39:15 Sell the Louis Vuitton, sell the Gucci, sell the Beamer. Go out and start investing your money. Start building your investment portfolio if you really wanna be wealthy. So you can't speak out of both sides of your mouth. You gotta figure out what you want, and just make sure your lifestyle aligns with that. Because a lot of people try to push this, "This is the right way to do something." But that's not the case. I mean, it, if we just take a step away from finance for a second and look at, for example, health. Many people say, "This is the diet you need to have."

Lewis Howes 39:41 Right.

Jaspreet Singh 39:41 "These are the exercises you need to do." Well, there's so many different things they can do, and at the end of the day, it's eat healthy and exercise, right? And now you can dig down deep and find what's right for you, but at the core, it's eat healthy and exercise. In finance, it's very similar. You could say, "Invest all your money into real estate. Uh, don't own your home. Invest it all into real estate. Buy as many rental properties as possible." Some people would say, you know, "Buy it in stocks, do this, or build a business." At the end of the day, it comes down to live below your means, invest the difference.

Lewis Howes 40:12 Right, right. Yeah, yeah, yeah.

Jaspreet Singh 40:12 [laughs] You know, it's eat healthy and exercise. Live below your means, invest the difference. That is at the core, and then you can get down to the n- nitty-gritty. Like, I, that's what I talk about, right? Because I'm interested in that, and that's where I try to learn more. But I also don't try to say that this is the only thing that you can do, because your goals are different than mine. Your background is different than mine.

Lewis Howes 40:31 Mm-hmm.

Jaspreet Singh 40:32 Your risk tolerance is different than mine, and so you're gonna wanna make different investment decisions than me.

Lewis Howes 40:35 Yes.

Jaspreet Singh 40:35 Which is why I don't try to say, "This is what you need to do." I'll say, "Hey, this is what I do."

Lewis Howes 40:39 Uh-huh.

Jaspreet Singh 40:39 "This is how I invest in real estate. This is how I invest in my business. This is how I invest in stocks." But what you do is gonna now depend on what is interesting to you, which is why the financial education is so important. Because I'm not trying to, I don't wanna lead a herd of sheep.

Lewis Howes 40:53 Right.

Jaspreet Singh 40:54 Right? I want you to be educated. That way you can make smarter-

Lewis Howes 40:56 Make your own decisions

Jaspreet Singh 40:57 ... investment decisions for yourself.

Lewis Howes 40:58 Yeah.

Jaspreet Singh 40:58 But make an educated decision.

Lewis Howes 41:00 Mm-hmm.

Jaspreet Singh 41:00 Because the issue that so many people have is we assume that the reason why we're not successful is because we don't have the right tool set, when in reality, for most people, it's we don't have the right mindset.

Lewis Howes 41:11 Mm.

Jaspreet Singh 41:11 It's not a tool set issue, it's a mindset issue that so many people have, where if you have the right mindset, you'll realize that the tool set is right in front of you.

Lewis Howes 41:18 Yeah.

Jaspreet Singh 41:19 And you just gotta be able to harness the power of that.

Lewis Howes 41:21 So what's the best case scenario, then, for the housing market in your mind over the next 12 to 24 months?

Jaspreet Singh 41:27 Well, [laughs] the best case scenario really depends on who you ask. Because if you ask somebody who wants to invest in real estate or buy a home, you're gonna say the best case is real estate prices crash-

Lewis Howes 41:34 Yeah

Jaspreet Singh 41:34 ... because now I can come in and buy at a discount. Uh, but I think what you're trying to get at for the economic, right, if you're looking at it from we want a strong economy, we want a strong real estate market, the best case scenario is the Federal Reserve Bank can continue to raise interest rates, uh, slowly. Interest rate, or sorry, inflation comes down drastically, and the economy doesn't get hurt. That's the best case situation.

Lewis Howes 41:55 Say it one more time.

Jaspreet Singh 41:56 So interest rates go up slightly.

Lewis Howes 41:59 So from eight and a half to, wasn't that-

Jaspreet Singh 42:00 No, interest rates. Interest rates.

Lewis Howes 42:01 Oh, sorry. Interest rates from a five and a half to...

Jaspreet Singh 42:04 So mortgage rates, uh, those are mortgage rates-

Lewis Howes 42:06 Okay

Jaspreet Singh 42:06 ... different than the Federal Reserve Bank federal funds rates. So five and a half to maybe six, six and a half.

Lewis Howes 42:11 Slowly.

Jaspreet Singh 42:11 We don't really go up on mortgage rates. Well-

Lewis Howes 42:14 But interest rates is different than the mortgage rates.

Jaspreet Singh 42:16 Right, because the Fed, remember, that's, mortgage rate is retail. The interest rate is-

Lewis Howes 42:21 What's the interest rate right now?

Jaspreet Singh 42:22 ... wholesale. So interest rates, we're hovering around the 2 to 2.5% range right now.

Lewis Howes 42:26 So it goes up to 3%.

Jaspreet Singh 42:28 Ideally, ideally no more. That would be best case.

Lewis Howes 42:30 Right, right. Right, right.

Jaspreet Singh 42:31 So mortgage rates, interest rates don't really change. And we see inflation come down magically, and we see the economy not slow down.

Lewis Howes 42:40 If you-

Jaspreet Singh 42:40 So that, that's the best case scenario if you look at it from an economic perspective.

Lewis Howes 42:43 What do you think could happen? If you're like, "You know what? If I had to make a great prediction."

Jaspreet Singh 42:50 Well, Lewis, look at this, man. You print the most amount of money in the history of time in 2020 and 2021. We're talking about, you know, at least $6 trillion, at the very low end. You print this money, inject it into the economy. Now you're trying to take this money out. You're trying to burst the bubble that you created without crashing the markets, without trying to crash the economy. There is a cost to free money. We are paying the price for that through inflation. So now if the price of everything has gone up so high people are struggling to pay their bills, they can't buy more stuff because inflation is so high- And we're already seeing the economy slow down. We've seen six months of an economic slowdown, which technically, traditionally, before 2022 would be considered a recession because before 2022-

Lewis Howes 43:32 Two quarters, yeah, yeah

Jaspreet Singh 43:32 ... before 2022, if you saw two quarters of GDP, meaning economic decline, that was defined as a recession. This year, uh, we're deciding that-

Lewis Howes 43:42 That's not true

Jaspreet Singh 43:43 ... we're gonna look at other factors, broader factors.

Lewis Howes 43:45 So if we go one more quarter, do you feel like they would say, "Okay, now we're in a recession"?

Jaspreet Singh 43:50 I don't know. Uh-

Lewis Howes 43:51 They might try to keep-

Jaspreet Singh 43:51 You could, you could just-

Lewis Howes 43:52 ... kicking the can down the road and say, "Yeah, no, it's not true."

Jaspreet Singh 43:54 It's one of those things where, you know, when did we start saying that inflation is not transitory? It was very late. So it was November of 2021 that we said inflation is transitory. It was around March or April of 2021 that we said it is transitory. So-

Lewis Howes 44:08 What's transitory mean?

Jaspreet Singh 44:10 Transitory means a short period of time, right? It's gonna come, and it's gonna go. 'Cause the original thought was we'll see a little bit of inflation in 2021.

Lewis Howes 44:17 It'll go away.

Jaspreet Singh 44:17 It'll go away by the end of 2021. Well, that clearly did not happen. Then they said it'll go away by the middle part of 2022. That clearly did not happen. We're breaking new highs in the middle part of 2022. Now they're saying that it'll be gone by the end of 2022 to the beginning part of 2023. So that's one side, on the inflation side. Now, on the economic side, it's we don't wanna say anything. We don't wanna create fear or panic because people have jobs.

Lewis Howes 44:44 Mm.

Jaspreet Singh 44:44 The economy is strong. However, if you dig deep, you can start to see all these, like, red flashing warning signs that, yeah, potentially they could just blow by. But you have a lot of warning signs on, saying, "Hey, look," like the, uh, inflation is still extremely high. Gas prices are still high. We have an economy that is slowing. We've been seeing unemployment numbers start to go up.

Lewis Howes 45:07 Mm.

Jaspreet Singh 45:07 And these are the things that you wanna pay attention to. And even on unemployment, if I can mention that for a second, there's a difference between unemployment which is reported and what's, quote-unquote, "real unemployment." So I don't wanna get too technical, but when you see these headlines for what em- unemployment is, this is something called U-3 unemployment. And what that means is it looks at a specific set of unemployment numbers, and this is what they're reporting. Because now, if you say, "What does somebody unemployed mean?" you might say somebody who doesn't have a job. But what about somebody now who's an engineer, you used to work at a great engineering company, but you got laid off, and now you're working at McDonald's-

Lewis Howes 45:50 Mm-hmm

Jaspreet Singh 45:50 ... because you can't find another job. That doesn't qualify under that. Or what about now if you are a full-time worker, you're working at, I don't know, you're working at, uh, a factory. You had a great job, and then your factory, uh, is doing layoffs, and now they've cut your hours to part-time even though you wanna work full-time because the factory's struggling. That doesn't count in this data.

Lewis Howes 46:11 As unemployed. Yeah.

Jaspreet Singh 46:12 That doesn't count, yeah. So none of that data is recorded here. So-

Lewis Howes 46:14 But those aren't the h- the stablest jobs is what you're saying.

Jaspreet Singh 46:19 It doesn't have to be stable. I mean-

Lewis Howes 46:20 Right

Jaspreet Singh 46:20 ... you, we could talk about doctors. We could talk about engineers. It's just a matter of-

Lewis Howes 46:23 Uh-huh

Jaspreet Singh 46:23 ... what is the definition of unemployment. So the U-3 is not looking at that. U-3, all it's looking at is-

Lewis Howes 46:30 Fully unemployed

Jaspreet Singh 46:31 ... well, let's define it. It, what it's looking at is you don't have a job, and you haven't actively been looking for a job for the last four years.

Lewis Howes 46:41 Mm.

Jaspreet Singh 46:41 Sorry, four weeks.

Lewis Howes 46:42 Wow.

Jaspreet Singh 46:42 So what that means is let's just say that you lost your job, and you decided that after four weeks that you no longer wanna continue looking for a job. Maybe you wanna stay home with your kid. Maybe you're taking care of a parent, a relative, whatever. So after four weeks, you stop looking for a job. You're no longer considered unemployed under U-3.

Lewis Howes 47:00 Mm.

Jaspreet Singh 47:01 So you're no longer in that data. So there's another thing called U-6 which does look at this. It looks at things like, uh, if you are underemployed, you're an engineer working at McDonald's, but you wanna be an engineer. You are a factory worker or any type of worker. You're a doctor who used to have a full-time salary, but now you're working part-time. It doesn't really matter what the career is. It's looking at somebody who's not getting the full employment that they want. You are somebody who is more than four weeks out of looking for a job. All these things are looked at in U-6, and if you look at U-6, it tells you a little bit of a different story than U-3. So this is where you have to be, again, right, it's being able to understand data a little bit better. Now, I'm gonna-

Lewis Howes 47:42 Mm

Jaspreet Singh 47:42 ... do a little bit of a pitch here because this is one of the things that we try to talk about in Market Briefs, is this financial news and understanding-

Lewis Howes 47:48 Mm

Jaspreet Singh 47:49 ... what's actually happening because this gets a little bit complex. You know, I don't wanna go too into depth because I don't got a whiteboard to diagram it all out, but it gets a little confusing. And this is where headlines don't tell the full story, and you wanna be able to dig deeper. But it requires that financial education and that willingness to learn, and if you don't wanna spend all the time doing that, that's where Market Briefs, which is my financial newsletter, completely free, breaks it down into a fun, witty, and easy-to-read email. That way, now, even if you don't understand this, we explain it. That way anybody, anybody can understand, even if you don't have any sort of financial education because these are the things that most of us are never taught. We're never told this. Like, you read the headline saying unemployment is this, and you assume that that's right. But what is unemployment?

Lewis Howes 48:31 Yeah.

Jaspreet Singh 48:31 You have to understand these things, and this is where, you know, understanding this level of finances becomes so much more complex because we're never told this.

Lewis Howes 48:38 So if you could predict-

Jaspreet Singh 48:39 [laughs]

Lewis Howes 48:39 ... the next 12 to 24 months of what you think's gonna happen to the housing market and the economy-

Jaspreet Singh 48:46 Sure. Look-

Lewis Howes 48:47 Your best case or-

Jaspreet Singh 48:49 I, I think-

Lewis Howes 48:49 ... what you think is gonna happen

Jaspreet Singh 48:50 ... I definitely think that our economy-

Lewis Howes 48:51 Based on all this information

Jaspreet Singh 48:52 ... I do th- look, our, our economy has a lot of trouble ahead. We are not out of the water, and the question is when are we gonna see the price of that? There, I mean, look-

Lewis Howes 49:02 Have we paid the biggest price yet?

Jaspreet Singh 49:03 No, absolutely not.

Lewis Howes 49:04 Really? It's gonna get worse?

Jaspreet Singh 49:05 Our infla- our inflation issue is not going away, and either we're gonna kick it down the road further because-

Lewis Howes 49:10 We might just pause it for a little bit, but then it's, yeah

Jaspreet Singh 49:13 ... either the Federal Reserve Bank is gonna kick the can down the road because they're gonna say, "You know what? Unemployment is rising. It's a bigger concern than inflation, so we're gonna stimulate. We're gonna pump, and that's gonna create a bigger bubble."

Lewis Howes 49:23 Jeez.

Jaspreet Singh 49:23 Or they're gonna start fighting it now, and we're gonna start paying a bigger price right now because this inflation problem is not going away The economic slowdown will probably continue because of this inflation issue, and the person who's gonna decide what's gonna happen is the Federal Reserve Bank. So the question is, are we gonna pay the price now, or are we gonna do it later? If we do it later, it's gonna be a bigger price that we have to pay then. If we pay it now, it's gonna be painful, but not as painful as later. So this is the situation that we're in, where the economic slowdown is a real concern, inflation is a real concern. You don't wanna panic, because nobody makes good decisions out of panic or fear, but you wanna understand this, that we're not shocked 12 months down the line, where if the Federal Reserve Bank-

Lewis Howes 50:03 Right

Jaspreet Singh 50:03 ... stays true and they keep raising interest rates, they keep doing quantitative tightening, and they push the economy into a deeper recession, that you're not like, "Nobody saw it coming." Because that's what they said about inflation. That's what they're gonna say about the economy too.

Lewis Howes 50:16 Because they don't wanna put fear into the world.

Jaspreet Singh 50:18 They don't want-

Lewis Howes 50:19 Just like they said in 2005-

Jaspreet Singh 50:20 Exactly

Lewis Howes 50:20 ... about 2007.

Jaspreet Singh 50:21 Exactly.

Lewis Howes 50:22 So what are you personally doing to prepare for the next... for when that happens-

Jaspreet Singh 50:26 Yeah

Lewis Howes 50:27 ... with your own money and assets, and are you saving money, cash? Are you investing now?

Jaspreet Singh 50:32 Yeah.

Lewis Howes 50:32 Real estate, all that stuff. And what do you recommend someone, um, to do, whether they're an employee or maybe they have some extra cash?

Jaspreet Singh 50:42 Sure. So I would say, you know, this is a lot gonna depend on you, 'cause I'll be very personal with what I'm doing, because I'm an entrepreneur, so I look for different types of opportunities than somebody else might. So if you are an employee, there's gonna be different opportunities for you. If you're a business owner, there's gonna be different opportunities for you. If you're an entrepreneur, there's different opportunities for you. So I invest my money in five places. I invest my money into my own business. I talked about Market Briefs. I invest some money into real estate. I invest my money into stocks. I invest my money into crypto. Then I invest my money into physical gold. This is the order that I invest my money into. This is my type of diversification. Now, I understand what's going on, and I do have some cash. I always have some cash put aside for, like, you know, things going wrong, investments. I always have some cash putting aside there. And what I've been doing is I passively invest my money, meaning no matter what's happening in the markets, whether the market is up, whether the market's down, it's automatically passively-

Lewis Howes 51:40 Every month you have a certain amount going in, yeah

Jaspreet Singh 51:41 ... consistently automatic. And this is happening into stocks, into crypto, and into physical gold. That does not change. That never changes. So I get paid, money is automatically invested no matter what. Then in the past, I've had my more active strategy where I would take money and actively go out and buy real estate. I'd actively go out and buy stocks. And in this situation, I am looking for good deals, meaning a good price. So I haven't been doing that as much recently, not because of what's happening in the market, but because I see more opportunities for me in the entrepreneurial business side. So I've been investing money into Market Briefs, like I talked about, and-

Lewis Howes 52:18 Hiring more people on your team and investing, yeah

Jaspreet Singh 52:19 ... hiring more people, building infrastructure, and then I'm also working on, um, a tax firm. So I'm gonna talk about tax for one second if that's okay.

Lewis Howes 52:26 Sure.

Jaspreet Singh 52:26 Because there's a very interesting thing happening right now because going off of inflation, President Biden just signed something called the Inflation Reduction Act.

Lewis Howes 52:35 Is that 80 billion or something or like-

Jaspreet Singh 52:36 It is a huge... It, it is a huge, huge... I think it's even bigger than that. 80 billion is just the IRS side.

Lewis Howes 52:41 The IRS.

Jaspreet Singh 52:42 So the tax side.

Lewis Howes 52:44 Now, so they're hiring... They're, they're investing 80 billion in the IRS to start auditing more people, essentially, right?

Jaspreet Singh 52:49 Exactly.

Lewis Howes 52:50 To start trying to get more money from people.

Jaspreet Singh 52:51 And that's only one part of the Inflation Reduction Act. So let's go big to go small.

Lewis Howes 52:55 Man.

Jaspreet Singh 52:55 Because the Inflation Reduction Act is supposed to reduce inflation. That's what the name says. [laughs] I'm fond is... I'm laughing 'cause it's kind of silly because-

Lewis Howes 53:03 Right

Jaspreet Singh 53:03 ... how do you reduce inflation? You spend less money, uh, because the government has spent so much money they didn't have, which caused money printing-

Lewis Howes 53:10 And you, and you tax more people, bro

Jaspreet Singh 53:11 ... which created inflation. You tax more people.

Lewis Howes 53:11 You, you collect more.

Jaspreet Singh 53:13 Exactly. So that's, how do you now pay off all this debt? Remember, the government doesn't make money. They tax you. They tax me. They, they collect taxes, and then that's what they use to pay off their expenses. Now, it's not surprising that the government is running into an issue because they have 31 almost trillion dollars of national debt that they need to pay off. This is not fixed rate debt, so as interest rates go up-

Lewis Howes 53:35 Geez

Jaspreet Singh 53:35 ... their payments on this debt go up as well. So we talked about what happened in the housing market. Imagine that on a $30 trillion level now. So the payments are getting bigger. So what does that mean? Well, if they have this pool of money, either they're gonna need to inject more money into the government, the Fed has to print more money, but they can't do that anymore because of inflation.

Lewis Howes 53:53 Mm.

Jaspreet Singh 53:53 Or they're gonna need more tax dollars. So that's one of the reasons why through this Inflation Reduction Act, one of the things they wanna do, which is one of the most, like, financially interesting topics, is they want to invest very heavily, billions of dollars, into the IRS to help them beef up and collect more tax dollars and past tax dollars. Now, I do wanna clear up some of the false information out there because the act is working to hire 87,000 more IRS workers.

Lewis Howes 54:22 That's crazy.

Jaspreet Singh 54:23 It is crazy, especially considering that today there are about 80,000 IRS workers.

Lewis Howes 54:27 So they're gonna double.

Jaspreet Singh 54:29 Yes, and no. So the 87,000 people that they're hiring are not all IRS agents, and they're not all being hired today. They're gonna be hired over the course of 10 years.

Lewis Howes 54:39 Mm.

Jaspreet Singh 54:39 And the whole idea is... This is what they say. Again, this is what they're saying. What might happen is it could be a little bit different.

Lewis Howes 54:44 Right.

Jaspreet Singh 54:44 So I, I wanna be just completely transparent because I don't wanna mislead people. I want to make sure everyone's fully understanding what's happening. You have about, what's scheduled is about 50,000 or so people in the IRS are scheduled to retire over the next 10 years.

Lewis Howes 54:59 Ah.

Jaspreet Singh 55:00 So these 87,000 people are supposed to replace them and beef up the agents that are actually gonna be doing-

Lewis Howes 55:05 Sure

Jaspreet Singh 55:06 ... the auditing to go and collect more money. Now, even if 8, 50,000 people retire, that's still adding almost 50% more people to the IRS. Who are they going after? Well, they say the wealthy.

Lewis Howes 55:19 Mm.

Jaspreet Singh 55:19 The super rich. And, uh, there's about a thousand billionaires in the United States.

Lewis Howes 55:26 Yes.

Jaspreet Singh 55:26 Do you need tens of thousands of people-

Lewis Howes 55:28 No

Jaspreet Singh 55:28 ... to go after them?

Lewis Howes 55:29 No.

Jaspreet Singh 55:29 So you go a little bit deeper. Now again, what do we look at? History. I, I look at history to answer the question. Because they keep saying that we're not going... Saying, it's not in the bill, it's not written anywhere, this is what they say, that we're not gonna go after, uh, middle income people or anything like that. Well, in 2021, 50% of IRS audits were on people earning less than $75,000 a year.

Lewis Howes 55:52 Come on.

Jaspreet Singh 55:53 50%.

Lewis Howes 55:54 50%?

Jaspreet Singh 55:54 50%. And so-

Lewis Howes 55:55 Wow. How do they, how do they know- how do they, uh, is that public information?

Jaspreet Singh 55:58 Go search it on Google. [laughs]

Lewis Howes 56:00 Wow.

Jaspreet Singh 56:00 Google has a lot of information.

Lewis Howes 56:01 50% of the audits were on people that were making less than $75,000.

Jaspreet Singh 56:04 Under $75,000 a year.

Lewis Howes 56:05 Wow.

Jaspreet Singh 56:06 And-

Lewis Howes 56:07 Why are they doing that?

Jaspreet Singh 56:08 Well, probably because if you're making less money, you're not gonna have the resources to hire a good accountant and hire a good, uh, attorney to represent you, so it's a little bit easier.

Lewis Howes 56:18 Mm.

Jaspreet Singh 56:18 Less cost. I mean, it's just, it's just easier, right? I mean, you're l- maybe less financially savvy than somebody who's making half a million dollars a year or $2 million a year.

Lewis Howes 56:26 Mm-hmm.

Jaspreet Singh 56:26 Because now you probably have more resources to defend yourself, so that's a bigger fight for the IRS, and you're probably more protected because you have good advisors who've told you what to do.

Lewis Howes 56:37 Right, right, right.

Jaspreet Singh 56:38 Because now let's say you're making 50-

Lewis Howes 56:39 You're filing your taxes, you're doing all the right steps, and maybe you-

Jaspreet Singh 56:41 If you make a mill- y- once you start making a lot of money, like if you're making over a million dollars a year, you're not trying to play the game of trying to hide $10,000 because now you're already under scrutiny.

Lewis Howes 56:51 Yes.

Jaspreet Singh 56:51 The IRS is trying to see you do something wrong. And so if you try to get $10,000 under the table, it's a bad idea-

Lewis Howes 56:58 Yeah

Jaspreet Singh 56:58 ... because you already know you're being watched.

Lewis Howes 56:59 You're trying to, you do everything by the book.

Jaspreet Singh 57:00 You're trying to.

Lewis Howes 57:01 You're trying to do the best, yeah.

Jaspreet Singh 57:01 And you have good advisors to guide you to do everything legal so you can pay the least amount of taxes possible legally. Now, if you're making 50 grand a year and you have a side hustle making you $1,000 a year, you might take that in cash because you might say, "Psh, this is a grand a year."

Lewis Howes 57:15 Yeah.

Jaspreet Singh 57:15 You know, it's just the reality, right? You're, you're taking pictures at people's weddings, you're, you're doing whatever, you're making some cash and you're, you're just doing it under the table. And m-

Lewis Howes 57:24 The IRS wants that 1,000 bucks

Jaspreet Singh 57:26 ... and this is one of those things where it's not surprising because if you look at what's been happening over the last couple of years, it's, this has almost like been a foreshadow of things to come because, you remember over the last couple of years we've seen this new rule on Venmo, right? On Venmo transactions where they want all Venmo transactions over $600 or something like that, where now if you're... You know, let's say you're, you're a photographer and you're taking pictures at your friend's wedding and he pays you $700 and Venmo has to report that, they want to know that. They, they never said why, but now you're starting to see all these things start to add up where if you're doing these small things, you know, it's just like things starting to fall into place where, oh, no wonder they started wanting all these details for this. No wonder they started really going after cryptocurrency brokerages. No wonder they really started doing all of this stuff, maybe creating a digital dollar, because they want to be able to see every transaction, which means they want to be able to tax every transaction. Now, of course, I can't validate this, but the, I mean, it's just like puzzle pieces starting to come together. And so this is where-

Lewis Howes 58:23 Yeah

Jaspreet Singh 58:23 ... the tax thing, why is it so important? Because of inflation, because of the national debt. The government needs more tax dollars to be able to go and fund their payments, and so what are they gonna do? Well, they're gonna try to find the easiest hanging fruit. Is it going after a billionaire? Probably not because the billionaire is gonna say, "Come after me. I have my resources-

Lewis Howes 58:43 Right

Jaspreet Singh 58:43 ... I have my army behind me."

Lewis Howes 58:44 Got all my accountants.

Jaspreet Singh 58:45 We have-

Lewis Howes 58:45 They've done everything, yeah

Jaspreet Singh 58:45 ... we have, we have, uh, everything there, everything is documented because we want to play by the books because we know you're already watching.

Lewis Howes 58:51 Right.

Jaspreet Singh 58:51 Now, I'm not saying that everything always is right, right? There's, of course, exceptions to this, but this is where you just have to understand, you know, they say that they're not gonna go after anyone making middle, uh, income whatever-

Lewis Howes 59:04 But after you go, well, after you look at the thousand or so billionaires, okay, you gotta look at everyone else.

Jaspreet Singh 59:10 Y- I mean, so this is again, right? It, that's what we would have to predict.

Lewis Howes 59:13 And you got 80,000 people working on it, it's like, all right.

Jaspreet Singh 59:15 It's just looking at history, right? I mean, this... History is the best indicator for what's coming. I keep saying that, and I'm sure your audience is getting very bored [laughs] out the way of me saying this, but I mean, it's one, the best indicator.

Lewis Howes 59:25 Yeah.

Jaspreet Singh 59:25 Because I can't look into the future to see what's gonna happen, but I can look in the past and see what has happened, and I see that, hey, this is what happened in 2021. This is what's been happening because this is just the situation. And so for me, I've also seen a big difference between good tax advisors and bad tax advisors.

Lewis Howes 59:44 Mm-hmm.

Jaspreet Singh 59:45 Because-

Lewis Howes 59:45 Is that why you're starting a tax-

Jaspreet Singh 59:46 That's why, because I, you know, it's the entrepreneurial mind, uh, where when I get scammed, I get screwed over, I get, you know, these things happen, it makes me wanna find-

Lewis Howes 59:55 Mm

Jaspreet Singh 59:55 ... a new solution. That's how I started Minority Mindset.

Lewis Howes 59:58 Yes.

Jaspreet Singh 59:58 I got scammed and I started Minority Mindset. I got screwed over when I started my event planning company. I got completely screwed over my first real estate investment deal. Pretty much every part of me had to do with something really bad happening.

Lewis Howes 1:00:08 Yes.

Jaspreet Singh 1:00:09 So I had a really bad tax advisor. He was really just an accountant who filed my taxes and was never on time, and I got this call.

Lewis Howes 1:00:15 [laughs]

Jaspreet Singh 1:00:16 It was horrible. It was just a mess.

Lewis Howes 1:00:17 Yes.

Jaspreet Singh 1:00:18 I got a call from my accountant one day. I'm in the office. This is right before my morning huddle. So we have a 9:30 AM morning huddle. Calls me, I think it was like 8:45 in the morning. I'm in the office. He says, "Hey, Jaspreet, how are you?" I said, "Good. How you doing?" He said, "Hey, listen, I need you to do me something. Uh, can you wire or send the IRS $100,000 by the end of the day today, and can you also send about $15,000 to the state government by the end of the day today?" I was like, "What?" He says, "Sorry, we had some miscalculations. We did something wrong-

Lewis Howes 1:00:45 Holy cow

Jaspreet Singh 1:00:45 ... and we missed this, and you need to send this by tonight." And I was like-

Lewis Howes 1:00:49 Jeez

Jaspreet Singh 1:00:49 ... "Are you serious?"

Lewis Howes 1:00:50 Fucked up.

Jaspreet Singh 1:00:50 He's like, "Oh, yeah, one more thing. You're probably gonna have to pay a penalty on this as well."

Lewis Howes 1:00:54 Oh, my gosh.

Jaspreet Singh 1:00:55 And this is a completely true story. Like-

Lewis Howes 1:00:57 When was this?

Jaspreet Singh 1:00:58 This is not... I mean, this is less than a year ago.

Lewis Howes 1:01:00 Oh, my gosh.

Jaspreet Singh 1:01:01 Okay? And so it's, I mean, it's-

Lewis Howes 1:01:02 That's painful

Jaspreet Singh 1:01:02 ... it's very painful. And so I'm like, "Okay," like, I was very frustrated because I'm like, "What did I do wrong? Like, what are you talking about?" He's like, "You didn't do anything wrong." And I was like, "Well, if I'm the one that has to pay this and I'm the one who has to pay the penalty, something's not right here." And so I paid it, and then I fired him [laughs] pretty, pretty quickly.

Lewis Howes 1:01:22 Right, right.

Jaspreet Singh 1:01:23 Because I, you know, that's, that's not the way I like to do business. I like... I want, I want everything to be clean, but I also want people who care about what they do, and he was a, a cheaper accountant.

Lewis Howes 1:01:32 Yeah.

Jaspreet Singh 1:01:33 I got what I paid for. And so I went on the hunt- ... to find a good-

Lewis Howes 1:01:37 A top accountant

Jaspreet Singh 1:01:38 ... top of the line accountant, and I pay a lot more than what I used to. However, the situation, scenario is extremely different because he has a very different personality, a very different persona, and the way it works now is, one, he manages all my books on time and ahead of schedule. So every month he meets with me and he shows me, "Hey, Jaspreet, here's your profit." Or sorry, we'll start from the top. "Here's your revenue. Here's your expenses. Here's what your expenses look like. Here's how they changed. Here's your profit. Here's your tax liability, and here are the things that you can do to limit your tax liability."

Lewis Howes 1:02:09 That's cool.

Jaspreet Singh 1:02:09 "Here are, you know, three recommendations or whatever that we believe based off of what's happening right now to legally-

Lewis Howes 1:02:15 Wow

Jaspreet Singh 1:02:15 ... limit your tax liability."

Lewis Howes 1:02:16 That's insane.

Jaspreet Singh 1:02:16 And he has given me so many interesting ideas because the tax code is over 2,000 pages long, and you need... I, I'm an attorney. I studied a lot of tax. It takes a lot of knowledge and education to understand and read the tax code, but then things keep changing all the time. Like, even this inflation reduction act is changing corporate tax structure, so you need somebody who literally eats, breathes, and all they care about is tax, and this is this guy, right? And I'm like, "Dude, like, this is amazing." Like, I love this because I don't have the time and I don't want to spend my time-

Lewis Howes 1:02:49 Wow

Jaspreet Singh 1:02:49 ... thinking about taxes and all the cash flow stuff. I want to build my business. And so I got to know him, got to build, see how we worked, and really liked it, and after a number of months of working with him and seeing him in action, I was like, "Hey, man, like, you have nothing on social media. Like, can we-

Lewis Howes 1:03:06 Right, right

Jaspreet Singh 1:03:06 ... work together? Like, let's..." Like, he's very good at what he does, but I was like-

Lewis Howes 1:03:10 Wow

Jaspreet Singh 1:03:10 ... "Let me work with you. Like, I think we can create a lot of things here because there's a lot of small businesses that need what you have to offer because there's a lot of small businesses who have bad accountants who all they do is file their taxes. And you need a tax advisor, especially now as we're gonna see a big change. Like, you need an advisor who's gonna guide you on what to do with your money, how to document what you do, like, just to make it completely seamless. That way you don't have to stress about it."

Lewis Howes 1:03:32 Right.

Jaspreet Singh 1:03:33 And he was like, "I'm down." So over the last couple of months we've been working to build this together. It's not launched yet. Uh, we're just talking about it because it came in conversation, but, uh, that's something that I've been really working on. Uh-

Lewis Howes 1:03:43 That's cool

Jaspreet Singh 1:03:44 ... so, you know, if you're listening to this and you want a good tax advisor, just email me.

Lewis Howes 1:03:48 There you go.

Jaspreet Singh 1:03:48 Team@theminoritymindset.com or send me a DM on Instagram, Minority Mindset, and I will connect you. But these are... I mean, this is where, what am I doing? I'm... I like entrepreneurship. I like this stuff because it gets me excited. It's the way that my brain works.

Lewis Howes 1:04:05 Yeah.

Jaspreet Singh 1:04:05 It's the way that gets... It gives me my purpose, right? And so I do that. I like investing in real estate. I like investing in stocks. I'm passively doing it in stocks. But right now I just see more opportunity for me to invest in things like market briefs, to invest in things like this tax firm because, like, I see the opportunity. It's fun. I have a blast doing it. I get to meet really cool people.

Lewis Howes 1:04:24 Mm-hmm.

Jaspreet Singh 1:04:25 So, you know, it's just, it's a matter of now what is a lifestyle. Now, if I didn't, if I wasn't an entrepreneur, what would I be doing? Yeah, I'd be stacking up cash to find good investments, either in the stock market or the real estate market, or to buy a startup because it's very accessible now thanks to the internet, thanks to all the crowdfunding sites out there, and I'd be passively investing. Like, I would not change that.

Lewis Howes 1:04:47 Mm-hmm.

Jaspreet Singh 1:04:47 So, I mean, I think everybody should be doing this.

Lewis Howes 1:04:49 You can put 100 bucks a month away into stocks or into, into an automated account that is investing for you.

Jaspreet Singh 1:04:55 Did you know if, if you're 21 and you start investing $100 a month and you never change that, and you just get a 10% return on your money, which is the average stock market return, and you do that until you're 65, you will retire a millionaire.

Lewis Howes 1:05:09 Come on.

Jaspreet Singh 1:05:10 We're talking about less than $4 a day.

Lewis Howes 1:05:12 100 bucks a month.

Jaspreet Singh 1:05:13 100 bucks a month.

Lewis Howes 1:05:13 Automatic.

Jaspreet Singh 1:05:14 Automatic.

Lewis Howes 1:05:14 Going into a, a index fund.

Jaspreet Singh 1:05:17 And you just keep trying to match the market, right? Doesn't mean you're gonna get 10% returns every year-

Lewis Howes 1:05:21 But over decades-

Jaspreet Singh 1:05:21 ... but over the long term

Lewis Howes 1:05:22 ... you will. Yeah.

Jaspreet Singh 1:05:23 That's what the historical stock market return is. Now, you can just plug this into a calculator and you'll see that that $100 a month for from 21 to 65, 66, you will be a millionaire. But if you don't start that until, let's say, in your 20s, you don't care about money. You're out partying. You're not having a good time. In your 30s you're trying to get a good job, trying to figure things out, and now in your 40s you're like, "Phew."

Lewis Howes 1:05:44 Now you gotta put-

Jaspreet Singh 1:05:45 I gotta put-

Lewis Howes 1:05:45 ... 1,000 bucks. Couple thousand bucks.

Jaspreet Singh 1:05:47 It's, it's very different. If you, if you're 45 and you're putting, uh, 100 bucks aside at that same 10% return, when you retire you're gonna have $100,000.

Lewis Howes 1:05:56 Mm-hmm.

Jaspreet Singh 1:05:57 Not a million. Not even half a million. We're talking about 100 grand.

Lewis Howes 1:05:59 Yeah.

Jaspreet Singh 1:05:59 It makes that big of a difference because time is such an important factor.

Lewis Howes 1:06:03 I'm such a big fan of doing this. I started doing this from my late 20s. Um, I actually gotten a whole life insurance in my late 20s.

Jaspreet Singh 1:06:11 Mm-hmm.

Lewis Howes 1:06:12 And my dad was in life insurance, and so I learned about it a lot as a kid. Um, but I started, I bought my own policy I think when I was, like, late 27, and I keep buying more whole life insurance. Um, but I started doing the automatic payments from my checking account right into an index fund-

Jaspreet Singh 1:06:29 Yeah

Lewis Howes 1:06:29 ... you know, every month.

Jaspreet Singh 1:06:31 It's so simple.

Lewis Howes 1:06:31 Now when I was in my late 20s or my, like, early 30s, and it's, you know, in seven or eight years it's been just compounding and growing, and it really starts to grow. And as you earn more money you can say, "I'm gonna put 200 bucks a month in-

Jaspreet Singh 1:06:42 Yeah

Lewis Howes 1:06:42 ... or 300 bucks," and really put that extra money in automatically so you don't even see it. You don't have to think about it.

Jaspreet Singh 1:06:48 Mm-hmm.

Lewis Howes 1:06:48 And you know you're gonna be making money for the long haul.

Jaspreet Singh 1:06:51 Exactly.

Lewis Howes 1:06:52 100 bucks a month.

Jaspreet Singh 1:06:53 It's sim- it, it is so simple, and there are so many apps out there that make it so-

Lewis Howes 1:06:57 Yeah

Jaspreet Singh 1:06:57 ... easy that don't even charge you a fee, that there's really no excuse not to do this. And you just set that up and that never changes.

Lewis Howes 1:07:06 Yeah.

Jaspreet Singh 1:07:06 Now-

Lewis Howes 1:07:06 What are those top apps for people?

Jaspreet Singh 1:07:08 I use M1 Finance.

Lewis Howes 1:07:10 M1 Finance?

Jaspreet Singh 1:07:10 M1 Finance. It's easy to use. You know, there's tons of them out there. Do your own research. They are a sponsor and affiliate for Minority Mindset, full disclaimer. I'm not getting paid to say this here. But do your research.

Lewis Howes 1:07:20 Right, right.

Jaspreet Singh 1:07:20 There's just ton of apps out there. Uh-

Lewis Howes 1:07:22 What are the other a- what are there a few others that you, you would compare?

Jaspreet Singh 1:07:25 For dollar cost averaging, honestly, like, you can use something like FTX does that. Uh-

Lewis Howes 1:07:30 So, like, Acorns I've heard. They got one.

Jaspreet Singh 1:07:31 Acorns does something where you can start with a dollar. So they, like, round up your change.

Lewis Howes 1:07:35 Yeah.

Jaspreet Singh 1:07:35 Um-

Lewis Howes 1:07:36 You invest that

Jaspreet Singh 1:07:36 ... Stash does it.

Lewis Howes 1:07:37 Yeah.

Jaspreet Singh 1:07:37 Yeah, I mean, there's- I mean, if you go to theminoritymindset.com, because my team is literally doing reviews of this-

Lewis Howes 1:07:42 Gotta list out all that stuff

Jaspreet Singh 1:07:42 ... yeah, th- they, I don't know all of them off the top of my head because I use what I use. But if you want, like, reviews, just go to theminoritymindset.com. We have-

Lewis Howes 1:07:49 Okay

Jaspreet Singh 1:07:49 ... dozens of articles over there on that.

Lewis Howes 1:07:51 Awesome.

Jaspreet Singh 1:07:52 But that never changes.

Lewis Howes 1:07:54 Yeah.

Jaspreet Singh 1:07:55 It has to be invested forever, okay? And then on the active side, now this is where you can understand you a little bit, where maybe you wanna invest in real estate. Maybe you say, "I hate that idea." Maybe you wanna invest in individual companies. Maybe you say, "I hate that idea." But this is where now you can also start putting some extra cash aside to be invested.

Lewis Howes 1:08:13 Mm-hmm.

Jaspreet Singh 1:08:13 So this is money where you're looking for a good opportunity, and, you know, the percentage of how much you're gonna do is gonna really just depend on you. Some of you are gonna say, "I don't even care about that. Sh- I don't w- I just want it passive and never have to worry about it." Fine. Some people are gonna say, "I want passive, but I, I wanna, I wanna be in the game. I wanna be more involved."

Lewis Howes 1:08:29 Right, right.

Jaspreet Singh 1:08:29 Right?

Lewis Howes 1:08:29 Ah, what's happening? Yeah.

Jaspreet Singh 1:08:30 Some people like that.

Lewis Howes 1:08:31 Yeah, yeah.

Jaspreet Singh 1:08:31 And I, I like that. And so now you're putting some cash aside into, you know, maybe it's a bank account or whatever, and, and you have some cash sitting here waiting to be invested. Maybe it's waiting to be a down payment for a home, or you're waiting for just a good buying point in the stock market, but this is where you're doing your research right now, and you're trying to find the right opportunity where now you just wanna take this cash and go out and actually buy something.

Lewis Howes 1:08:52 Mm-hmm.

Jaspreet Singh 1:08:53 And again, right, this is assuming you're not an entrepreneur. And there's different opportunities for different people in different stages of their life, and this is just understanding you, where you are in your life. If you wanna be in the entrepreneurial side, building your own business, if you wanna be in the I-wanna-invest-in-real-estate side, or if I wanna be in the stock market side, like, it's just, it's a matter of personal preference-

Lewis Howes 1:09:15 Mm-hmm

Jaspreet Singh 1:09:15 ... because at the end of the day, we try to make investing so complicated, but it's live below your means, invest the difference.

Lewis Howes 1:09:22 Yeah.

Jaspreet Singh 1:09:22 And that's the ultimately the solution to becoming wealthy. No matter what market you're in, no matter what economy you're in, no matter where in the world you're in, that is the simple solution. Now, you can get as nitty-gritty as you want, but you, once you understand that, you have the formula to become wealthy.

Lewis Howes 1:09:36 If you guys are loving this, make sure to leave a comment yes below. If you want more with Jaspreet and myself, comment below. Make sure to follow Jaspreet on his YouTube. We'll have it all linked up. Leave a comment if you wanna learn more about becoming financially free in the future with Jaspreet. My man.

Jaspreet Singh 1:09:53 My man. Thank you for having me on, Lewis.

Lewis Howes 1:09:54 If you got value from that, then go ahead and stick around for more coming up right now. What do you wish we taught everyone from the ages of 10 to 20-

Jaspreet Singh 1:10:05 Sure

Lewis Howes 1:10:05 ... five different things around money?

Jaspreet Singh 1:10:07 First thing would be, what is money?

Lewis Howes 1:10:10 Mm.

Jaspreet Singh 1:10:10 Because money as we know it is fake. Our dollars are just pieces of paper. I grew up thinking that our paper dollars are like the Holy Grail. You wanna save this money because it is the most valuable thing there is. As I became older, I started to realize that that's not the case. Our paper dollars are just pieces of paper. It's fiat con- currency, which means it's issued by the government, and the value is backed through the strength of the government. Now, we're lucky here that the United States is the world's superpower. We have the world's strongest military. We have the world's strongest economy, but we can't stay on top forever. And, you know, inflation is when the value of a dollar goes down. So these dollars, which many of us think that if we hoard this, we'll become wealthy, saving money to wealth, is actually keeping you poor-

Lewis Howes 1:10:57 Wow

Jaspreet Singh 1:10:57 ... and it's making you poorer each and every day. So the first thing you have to understand is, what is money? Second thing you gotta understand is, what do wealthy people work for? And most of us, the majority of us, are taught to work to get a job and climb that corporate ladder, but wealthy people are doing something completely different. They're working to own the corporate ladder. They're working for something called equity, and this thing really blew my mind because wealthy people are not working for that paycheck. They're working to own a piece of the company. That way, they can get a piece of the profits. So the best way to understand this is, you know, a lot of times people complain about how much money I'm making. "I wish my boss paid me more." And this is where if you start to understand the system, you'll start to ask the right questions. See, a big company, y- you have to ask the question, who are they working for? Are they working to take care of their employees? Are they working to take care of their customers? Neither. They're working to take care of one person, their shareholders. It's this concept called fiduciary duty.

Lewis Howes 1:12:04 Right.

Jaspreet Singh 1:12:04 I learned this in law school. The executives of a company have a fiduciary duty, not towards the employees, not towards the customers, but towards the shareholders, the owners of the company. Now, what that means, an easy example of this is you're going out to dinner with your girlfriend or your wife, and, uh, you're on a date, and you get a text from one of your good friends saying, "Hey, let's go play Fortnite right now." Your fiduciary duty at the moment is to be with your girlfriend, to be with your wife-

Lewis Howes 1:12:30 [laughs]

Jaspreet Singh 1:12:30 ... to be with your partner, to spend time with him or her. If you go out and leave, you're gonna get in trouble, right?

Lewis Howes 1:12:36 Yeah, yeah.

Jaspreet Singh 1:12:36 So it's who is your alliance to?

Lewis Howes 1:12:38 Mm.

Jaspreet Singh 1:12:38 And the shareholders, uh, the, the executives, the CEO and the executives' company, their fiduciary duty is to the shareholders, the owners of the company. So what are they trying to do? They're working to drive up the valuation of the company. So once you start to understand that, you'll realize why this, this big discrepancy between what people are paid and what people want to be paid. And when you start to understand that, you're gonna change what you do with your money. That's why I said a minute ago, or a little bit ago, wealthy people are working to climb, not climb the corporate ladder, but own the corporate ladder. So how do you get the equity, the ownership? You have to own a piece of the corporate ladder.

Lewis Howes 1:13:15 Mm.

Jaspreet Singh 1:13:16 Now, if you work for a public company, that means now you can take some of your income, and you can buy stock in the company. Maybe they pay you with equity. Maybe they give you some sort of revenue share. That's what we do in my companies. Or if your company doesn't do that, then you have to start taking this money that you're earning, and you have to start investing it into a place where you're getting equity. Maybe that means stocks. Maybe that means real estate. It could be, you know-

Lewis Howes 1:13:37 Yeah

Jaspreet Singh 1:13:37 ... there's a number of different investments, but you have to work towards that equity.

Lewis Howes 1:13:41 Yeah.

Jaspreet Singh 1:13:41 The third thing is that you have to think bigger. I know I grew up thinking that somebody who looks like me, somebody who's brown, somebody who wears a turban, somebody who didn't have entrepreneur investor parents could go out and do this because, now you think that somebody like me can't do this. My parents also told me that I couldn't do it. I didn't know anybody doing it.

Lewis Howes 1:14:07 Wow.

Jaspreet Singh 1:14:07 I didn't know any investors. But you have to be the one to take that first step.

Lewis Howes 1:14:13 Mm-hmm.

Jaspreet Singh 1:14:13 And once you start to take that first step, you're gonna learn and see the second step. Then you take the second step and you're like, "Oh, I can start $100 investment here." You don't have to start with, you know, hundreds of thousands or millions of dollars. Start with $100. Apps on the internet make it so much more accessible.

Lewis Howes 1:14:28 Right.

Jaspreet Singh 1:14:28 But anything is possible. If you live in America, you speak English, you have more opportunities than really anybody else in the world. People will literally risk their lives, risk their lives to come to this country because there's opportunity here. And so if you're here, you have the ability to understand what you and I are saying, and you have that technology to do it, you're blessed.

Lewis Howes 1:14:49 Yeah.

Jaspreet Singh 1:14:49 Now, what do you do with this? Right? You s- you have to go out and start learning. You have to go out and start doing. And then the next thing that you have to do-

Lewis Howes 1:14:57 Number four

Jaspreet Singh 1:14:58 ... number four, is you have to understand the concept of debt. Because we live in this consumer culture, and it, it's interesting where, you know, we want to live this flex lifestyle, right? I wanna show off on Instagram. I wanna show off my new car, my new Chanel Gucci purse. And we, we kinda get caught up where I need to live a certain lifestyle that where people can think that I'm rich, but what you're doing now is you're living broke-

Lewis Howes 1:15:29 Right

Jaspreet Singh 1:15:30 ... making everybody else rich so people think you're rich.

Lewis Howes 1:15:32 [laughs] Right.

Jaspreet Singh 1:15:33 You're, you're product rich. You have a lot of nice stuff, but you're, you're broke. And so when you live that type of lifestyle, you are the reason why Gucci, Louis Vuitton, Chanel are making so much money, but it's keeping you broke. The s- richest person in the world, sometimes he's the second, sometimes he's the third, is the CEO of Louis Vuitton.

Lewis Howes 1:15:55 No way. Really?

Jaspreet Singh 1:15:56 Yeah, Bernard Arnault. And why? How did he get there? Because everybody wants to look rich. Everybody wants the Louis Vuitton. And, you know, you, I saw this in the s- the pandemic especially. We were in a recession in 2021, but luxury sale of products were breaking new records.

Lewis Howes 1:16:16 Come on. Really?

Jaspreet Singh 1:16:17 They were breaking records in 2021.

Lewis Howes 1:16:18 Why is that?

Jaspreet Singh 1:16:19 Stimulus checks went out. People had cash.

Lewis Howes 1:16:21 Hmm.

Jaspreet Singh 1:16:21 And some people used that money to save, some people used that money to pay down debt, some people invested that money, but a big chunk of people took that money to places like Gucci, Louis Vuitton, and now you go and spend it.

Lewis Howes 1:16:31 You would think when the economy is... Well, I guess when people are losing their jobs and there's financial uncertainty of the future, you'd think people would be saving or investing, not spending on luxury goods, especially if you can't even go outside to flex it. You can only do it on social media if the company you're on-

Jaspreet Singh 1:16:49 You, you, you don't need to. You don't need to go outside anymore. You can just do it on social media.

Lewis Howes 1:16:51 I know.

Jaspreet Singh 1:16:52 And so if you don't have the cash, do it. People are going into debt to buy, and it's becoming easier and easier because of now things like buy now, pay later.

Lewis Howes 1:17:01 Right.

Jaspreet Singh 1:17:01 It is one of the fastest growing industries in FinTech. I love financial technology, but it, it breaks my heart. I mean, it just, it, it, it rips my heartstrings when I see the growth of this buy now, pay later because what does that mean? I can go out and buy anything I want, not pay for it today, pay it off over three months, and then if I don't, I get slapped with 25% interest.

Lewis Howes 1:17:24 Hmm.

Jaspreet Singh 1:17:25 And if you are 18 or let's just say 21, I give you $6,500. You never invested another penny, but you invested those $6,500 and you could get an 18% return on that money, and you retire at 65, and you look at this investment portfolio, you would have over $11 million.

Lewis Howes 1:17:43 Wow.

Jaspreet Singh 1:17:44 Now, everyone watching this is saying, "Where the heck am I gonna get 18% on my money?"

Lewis Howes 1:17:48 Exactly.

Jaspreet Singh 1:17:48 But your credit card company is doing it every single day.

Lewis Howes 1:17:51 Hmm.

Jaspreet Singh 1:17:52 $6,500 is what the average American household has in credit card debt right now, and you're turning around paying these companies 18, 20-

Lewis Howes 1:18:00 Oh

Jaspreet Singh 1:18:00 ... 25% a year, and they're the ones that are getting rich, not you. So what's happening? You're going into debt to buy liabilities, which are things that lose you money, and then you're paying interest on top of that, which is making everybody else rich, which leaves no money in your pocket to make yourself rich.

Lewis Howes 1:18:16 Hmm.

Jaspreet Singh 1:18:17 And you have to break out of that mindset.

Lewis Howes 1:18:20 So what do we need to know about debt then? How do people get comfortable understanding about debt, either using it in the right ways-

Jaspreet Singh 1:18:27 Sure

Lewis Howes 1:18:27 ... and eliminating the debts that don't support our financial growth?

Jaspreet Singh 1:18:31 Yeah. So the first thing is never finance anything that isn't gonna pay you. Okay? So-

Lewis Howes 1:18:37 Give me an example.

Jaspreet Singh 1:18:39 Gucci, your vacations-

Lewis Howes 1:18:41 [laughs]

Jaspreet Singh 1:18:41 ... your car. Stop financing these things that aren't paying you. And, and people are gonna get upset when I say your car because they're gonna say, "Wait, how am I supposed to buy a car without a car payment?"

Lewis Howes 1:18:51 Don't buy a $100,000 car-

Jaspreet Singh 1:18:53 Don't buy a $100,000 car

Lewis Howes 1:18:53 ... unless you got the money in the bank to buy it.

Jaspreet Singh 1:18:55 Go-

Lewis Howes 1:18:55 And plus more. Buy a used car-

Jaspreet Singh 1:18:57 Exactly

Lewis Howes 1:18:57 ... for six grand.

Jaspreet Singh 1:18:58 Exactly. Go buy a used car, good working condition car-

Lewis Howes 1:19:01 Yeah

Jaspreet Singh 1:19:01 ... with cash.

Lewis Howes 1:19:01 Ride it for 10 years.

Jaspreet Singh 1:19:03 Exactly. The first time I made a million dollars in a year, my car was 500 bucks.

Lewis Howes 1:19:09 Dude.

Jaspreet Singh 1:19:09 My employees had better cars than I did.

Lewis Howes 1:19:11 I had a $4,000 car for the first five years living in Los Angeles. $4,000 car, used car, 1997-

Jaspreet Singh 1:19:20 I love it

Lewis Howes 1:19:20 ... was the car-

Jaspreet Singh 1:19:21 Yeah. [laughs]

Lewis Howes 1:19:21 ... uh, when it's, when it was made, and, uh, that thing was great.

Jaspreet Singh 1:19:24 Yeah.

Lewis Howes 1:19:24 You know, it was comfortable, got me from A to B.

Jaspreet Singh 1:19:26 Yeah.

Lewis Howes 1:19:27 It didn't break down.

Jaspreet Singh 1:19:28 Exactly.

Lewis Howes 1:19:29 I didn't need to be flashy.

Jaspreet Singh 1:19:30 Exactly. I still have my $500 car.

Lewis Howes 1:19:32 That's great.

Jaspreet Singh 1:19:32 I still drive... You know, and, and it's, it's one of those things where, you know, I, 'cause I fell into this trap where the first time I started making money, uh... You know, in, in my culture Cars are a big thing-

Lewis Howes 1:19:44 Mm-hmm

Jaspreet Singh 1:19:44 ... uh, the Punjabi culture. People really wanna put money in their cars, they wanna look cool, right? So when I was 17, 16, 17, I started making a little bit of money because I was doing my side hustles. The first thing I did was I put new rims on my car, then I put tints on my car.

Lewis Howes 1:19:58 Mm-hmm.

Jaspreet Singh 1:19:58 Then I put subwoofers.

Lewis Howes 1:19:59 You put the H1 first. Yeah. [laughs]

Jaspreet Singh 1:20:00 Oh, I had two 12-inch subwoofers in my trunk, right? I put the tints on, I put a new sound system in there.

Lewis Howes 1:20:05 Lights around, glow in the dark. Yeah.

Jaspreet Singh 1:20:07 Yeah. I had a Toyota, right? And, and, uh, then the next thing I was gonna do is I called up a cousin. I said, "Guess what? I b- I got three grand in the bank. I'm about to put two, uh, Lamborghini doors on my Toyota."

Lewis Howes 1:20:16 You're crazy, man.

Jaspreet Singh 1:20:16 And he ca- [laughs] He's like, "Jaspreet, you're stupid. [laughs] Don't do that." And so he s- sat on the phone with me for, like, 20 minutes convincing me not to do it. Luckily, I didn't. I'm really glad [laughs] that I didn't, but that's where all my money was going.

Lewis Howes 1:20:28 Uh-huh.

Jaspreet Singh 1:20:28 I looked cool, my car was cool, and that's where all my money was going.

Lewis Howes 1:20:32 Right.

Jaspreet Singh 1:20:32 I had $1,000 in my bank and I went out and I bought a $1,000 watch. I was, like, 18 years old, right?

Lewis Howes 1:20:37 Mm.

Jaspreet Singh 1:20:37 Because it was like I was in that industry, the entertainment industry. I wanted to look cool. And then, you know, I start to read these money books, and my mindset starts to shift. And now, all of a sudden, it's the comp... Like, I went from one polar extreme to the other polar extreme. I don't wanna spend a penny.

Lewis Howes 1:20:52 On anything.

Jaspreet Singh 1:20:53 On anything. I, I wanna-

Lewis Howes 1:20:53 Unless it's making me money.

Jaspreet Singh 1:20:55 Exactly. I don't wanna spend anything unless it's making me money. So now I'm saving as much money as I can. I'm investing my money as much as I can. I'm trying to build my business. And, and I'm, I mean, I'm talking, like, I'm running my shoes into the ground. They have holes in them. I put a piece of tape, wrap it up. I'm going to school. I got rental properties, but I got my shoes that are taped up.

Lewis Howes 1:21:14 [laughs]

Jaspreet Singh 1:21:14 Right? And, and it's like I, I, I realize that I'm gonna go, like, I'm not gonna make those same mistakes again.

Lewis Howes 1:21:20 Mm-hmm.

Jaspreet Singh 1:21:20 And you have to break out of that mindset. The first time I made 100 grand a year, I was in school, and I was living in a, a apartment paying $400 a month, including my, my, um, my water, my electricity, my cable, my gas, my internet, everything.

Lewis Howes 1:21:34 Wow.

Jaspreet Singh 1:21:35 And the reason was, is because I, I didn't have a room. I slept on the living room floor. I had a little mattress. I used to pull that into the living room, put that down, go to sleep at night, wake up, fold up the sheets, put them away.

Lewis Howes 1:21:46 [laughs]

Jaspreet Singh 1:21:46 Drag the mattress back into the hallway because I'm like... You know, I realized that the power of compounding your money.

Lewis Howes 1:21:52 Yeah.

Jaspreet Singh 1:21:52 I realized the power of putting your money into the right assets, and I'm like, "This is my time to build. I've been blowing this money that I'm earning on things that are making everybody else rich."

Lewis Howes 1:22:01 Right.

Jaspreet Singh 1:22:01 I'll spend money on that stuff a little bit later. Right now, I wanna make myself rich.

Lewis Howes 1:22:05 Yeah.

Jaspreet Singh 1:22:06 And so, you know, you g- you have to just first understand what it is that's worth spending money on and what's not. And then, you know, if, if you do have that debt, you've gotta come up with a strategy to pay it down as fast as possible. First thing you can do, if you have a lot of credit card debt, call up the companies. See if they're gonna be willing to just give you a lower amount.

Lewis Howes 1:22:27 Mm.

Jaspreet Singh 1:22:28 See if they're willing to work with you. Say, "Look, I got $10,000 worth of debt. I'm never gonna pay this off. It's not gonna happen. How about you work with me and give me $5,000, and I will work to pay that off?" Right? You, you start to work with them, see if you can do something. Then you can consider moving some of that money to a 0% APR, uh, card if you have 12 to 18 months-

Lewis Howes 1:22:43 Wow

Jaspreet Singh 1:22:43 ... to do that. That way, now you can aggressively... You, you gotta do this smart, 'cause if you're just gonna keep doing the same things you were before, don't do it. But you have to start aggressively paying it down. You stop spending money. That way, now you can pay down this debt as fast as possible, and then you work to earn more money. And the money has to go somewhere as you're earning more money. You live the same lifestyle, if not smaller, and you take all this extra money and you use it to pay down your debt. That way, now you can start building, right? You gotta lay that foundation. You gotta start working to grow upwards, but you have to get aggressive.

Lewis Howes 1:23:12 Is there ever a time where people should go into debt, the right type of debt?

Jaspreet Singh 1:23:18 I-

Lewis Howes 1:23:18 Where you, where you... The credit card debt-

Jaspreet Singh 1:23:19 Yeah. [laughs]

Lewis Howes 1:23:20 ... student loan debt, you know, buying a car and going in debt on that.

Jaspreet Singh 1:23:24 Sure.

Lewis Howes 1:23:24 Those things, I'm understanding, is not helping your financial future.

Jaspreet Singh 1:23:28 Yeah.

Lewis Howes 1:23:29 When is it the right time, or is there a right time, in your mind, to take money out and spend interest on that money?

Jaspreet Singh 1:23:36 Depends, right? I- I- if it's something that's gonna make you income and you can manage the debt, then yes. But it's not for everybody.

Lewis Howes 1:23:42 Right.

Jaspreet Singh 1:23:43 Some people don't have it in them to manage the debt. Some people don't have it in them to manage investments. Some people don't have it in them to run a business. If you're not the entrepreneurial investor type and you don't like looking at numbers, you don't like managing money, you don't like trying to grow this, stay away from it. Now, you go up, maybe you can get debt to buy a home, but that's it. But if you are more the entrepreneurial type, you, you have it in you that you wanna grow, now, if you're using debt, you should only be using debt to buy something that's paying you with income, something that's going to make you more money.

Lewis Howes 1:24:13 And what do you... Do you have any debt out right now?

Jaspreet Singh 1:24:15 Right now, I do not. I have people paying me loans, but I personally don't have any debt right now. And, and, uh, I, I kind of went through this phase where I have all this real estate, but I have no debt on it, and the reason is, is because I'm waiting for the right opportunity. I will. I will have more debt.

Lewis Howes 1:24:32 Really?

Jaspreet Singh 1:24:32 Yeah. I- I'm just waiting for the right opportunity because right now, all my real estate is paid off.

Lewis Howes 1:24:36 You've paid off all the real estate?

Jaspreet Singh 1:24:37 All the real estate is paid off.

Lewis Howes 1:24:37 How many properties do you have?

Jaspreet Singh 1:24:38 Uh, units in the dozens, the number of units, but now I'm just waiting for the right opportunity, and-

Lewis Howes 1:24:44 And it's all paid off.

Jaspreet Singh 1:24:45 All paid off.

Lewis Howes 1:24:45 So now it's just cash coming in.

Jaspreet Singh 1:24:46 It's cash coming in. And, you know, for debt-

Lewis Howes 1:24:48 Do you still have that s-

Jaspreet Singh 1:24:49 I still got that one

Lewis Howes 1:24:50 ... $6,000 or-

Jaspreet Singh 1:24:50 That's rented for $850 a month now

Lewis Howes 1:24:52 ... that $8,000 place?

Jaspreet Singh 1:24:53 $8,000 place.

Lewis Howes 1:24:54 That's just bringing in 800 bucks a month.

Jaspreet Singh 1:24:55 $850 a month.

Lewis Howes 1:24:57 Clear and free, just-

Jaspreet Singh 1:24:58 Yeah. You got to pay your expenses, your property taxes-

Lewis Howes 1:25:00 Yeah, yeah

Jaspreet Singh 1:25:00 ... your insurance, your maintenance, your management fees. Uh, but right now I have no debt on it, and so now what I'm waiting for is-

Lewis Howes 1:25:05 And how much could you sell that for now?

Jaspreet Singh 1:25:08 Uh, probably 100,000, 120. I mean, I don't know the exact-

Lewis Howes 1:25:11 That's pretty cool

Jaspreet Singh 1:25:11 ... but something in that range.

Lewis Howes 1:25:12 Yeah, yeah. That's all right. That's not bad.

Jaspreet Singh 1:25:12 Yeah. I mean, it's, it's crazy because I never... I, when I buy real estate, I never look at, what can I sell this property for? I'm looking for one thing, cash flow.

Lewis Howes 1:25:22 Cash flow, yeah.

Jaspreet Singh 1:25:22 And, and so this is a big mistake that leads people into a lot of problems in real estate because when you start buying real estate hoping that you'll be able to sell it for a higher price in the future, and things don't go as planned, then what?

Lewis Howes 1:25:34 Yeah, you're screwed.

Jaspreet Singh 1:25:35 Now you're screwed. So, you know, for me, I, I look at, uh, one thing, cash flow, and will I be able to see more growth in this area, so I look where businesses are moving. Where is money moving to? And then that's where I wanna invest because I know if property prices go up, hey, it's icing. Property prices go down, it's okay. At least I got my rent-

Lewis Howes 1:25:53 Yeah

Jaspreet Singh 1:25:53 ... which is, which is covering my costs.

Lewis Howes 1:25:55 So what's your goal, right, with the, the dozens of units for the opportunity for something bigger, or what's the plan?

Jaspreet Singh 1:26:00 Something, some- Yeah, it could be anything, something bigger in real estate, and I'm looking for the right opportunity. But again, my focus now isn't in real estate like it was before. A few years ago, I was heavy in real estate.

Lewis Howes 1:26:10 Really?

Jaspreet Singh 1:26:10 And I was doing everything that I can there, and a lot more opportunities were there. I bought a property in 2021. I haven't bought anything in 2022 yet, but my focus now is building my business because I, I see a bigger opportunity there for me, uh, than real estate. That's why I've been kind of... I'm still involved in real estate-

Lewis Howes 1:26:25 Right

Jaspreet Singh 1:26:25 ... but not the way that I was a few years ago.

Lewis Howes 1:26:27 'Cause you can, 'cause you can earn more with your business-

Jaspreet Singh 1:26:29 I can earn more with this

Lewis Howes 1:26:29 ... if you put the attention and the energy and the money into building the team and the resources-

Jaspreet Singh 1:26:34 Exactly

Lewis Howes 1:26:34 ... and the technology and those things.

Jaspreet Singh 1:26:35 And, and it's more, it's more fun because it's a lot more active for me.

Lewis Howes 1:26:37 Yeah.

Jaspreet Singh 1:26:38 And then, you know, once this gets bigger, then I'll go back to real estate. But right now, like for the last few years, I've been kind of phasing slowly away from real estate as I can transition more into the business because, you know, it's just, it's just more fun for me.

Lewis Howes 1:26:51 Yeah. Okay, so understanding debt was the fourth thing. What was the fifth thing you wish people learned, uh, from 10 to 20 years old about money?

Jaspreet Singh 1:27:00 You have to be willing to make mistakes, take risks, and start. And th- this one is hard, and it sounds simple, but a lot of people that I know, a lot of people, they are so hesitant to making their first investment because what if I do something wrong? What if I make a mistake? What if my investment goes down? And so the simple thing that I learned-

Lewis Howes 1:27:17 That's happened to me multiple times.

Jaspreet Singh 1:27:18 Yeah, but you learn every time, right?

Lewis Howes 1:27:20 Yeah.

Jaspreet Singh 1:27:20 It's, it's your, your tuition.

Lewis Howes 1:27:21 Yes.

Jaspreet Singh 1:27:21 It's your real tuition. Uh, and you have to be willing-

Lewis Howes 1:27:25 [laughs] Yeah

Jaspreet Singh 1:27:25 ... to try things because if you don't, you're gonna get stuck in the game of what if.

Lewis Howes 1:27:29 Mm-hmm.

Jaspreet Singh 1:27:29 What if I lose money?

Lewis Howes 1:27:30 Mm-hmm.

Jaspreet Singh 1:27:30 What if it doesn't work out? Well, what if it goes up? What if you learn? I have made a lot of mistakes. I made a video on my YouTube channel go- where I went through my worst real estate deal ever. It was my third property that I ever bought. It was a home in the City of Detroit, and I made every mistake possible. Now, I, I'm still in college, right? I don't know what's going on exactly with real estate investing. And I mean, I bought the property, and I bought it because my contractor at the time told me that we can make a lot of money on this deal. We'd be able to, uh, rent it out. We could flip it if I wanted to. And he was like, "Don't even worry about getting a home inspection." Now, when, when I buy a property now, the first thing I do is I get a property inspection where somebody walks through the deal and makes sure, a third party, an independent person, and they tell me anything wrong with the property, in the foundation, in the plumbing, in really anything with the property so I know what I'm getting myself into. And so he told me, "Don't do that." He said, "Don't worry, I already walked through." He's a contractor, so I figured he knows what he's talking about. Uh, "All you have to do is spend $5,500, and I will make sure this property's ready to go."

Lewis Howes 1:28:32 Wow.

Jaspreet Singh 1:28:33 So I said, "Okay, let's do it." So I bought the home. I gave him a check for half, or maybe 2,500 or 3,000, something around there, 3,000. And a week goes by, nothing starts. Two weeks go by, nothing starts. And I, I call him, I said, "Hey, man, what's going on? Like, I thought we were gonna have this done in two weeks. Here we are two weeks later, and you haven't even brought your materials here." "So I got caught up with something. Something's went wrong." And so now two more weeks go by. He brought some materials there. He started painting one wall, and that was it. And so, you know, I'm getting upset because now it's like, you know, every day that this property's not leased out is, it's costing money.

Lewis Howes 1:29:09 Losing money, yeah.

Jaspreet Singh 1:29:09 And still nothing's getting done. Another two weeks go by, and now I'm like, "Okay, look, what, what's g- what, what's going on? We gotta get this taken care of 'cause now we're six weeks into this deal. You haven't done a single thing. You keep putting me off. You, you took my money, and, and nothing's happened." And so long story short on that, he ran away. He was having financial difficulties. That's why he wanted me to close on this deal, because he needed some cash, and now he's gone. So now I have another property that, um, uh, somebody was working on, a manager, and he was having some issues at, at my property. He was causing some problems. So I figured, he's causing problems there. How about you come work at this property, and you need a home, you can live in this home for free.

Lewis Howes 1:29:51 Fix it up.

Jaspreet Singh 1:29:52 Just fix it up.

Lewis Howes 1:29:52 Yeah.

Jaspreet Singh 1:29:53 And so he, he said, "Okay." So now I thought, all right, you know, I, I, I found a, a good deal here. I've got somebody who'll fix it up. He'll live there, take care of it, and it's gonna cost me less money. And so now he's living in this property, and he's like, "How about this? How about you just open up a charge account at Home Depot, and I'll just go buy stuff-

Lewis Howes 1:30:11 Ooh

Jaspreet Singh 1:30:11 ... and take care of it at the home?"

Lewis Howes 1:30:12 Ooh.

Jaspreet Singh 1:30:12 I said, "Okay." So I go open up this charge account. He starts buying materials, not to work on my home-

Lewis Howes 1:30:18 Oh, my gosh

Jaspreet Singh 1:30:18 ... but to work on other people's properties.

Lewis Howes 1:30:20 Oh, my gosh.

Jaspreet Singh 1:30:21 So now I'm like, "Dude, like, you're spending my money to go work on other people's properties so you can make double profits over there. You haven't started any work on my home. You're not paying me rent. You have a dog that you're not taking care of who's pooping everywhere on the property."

Lewis Howes 1:30:35 Oh, man.

Jaspreet Singh 1:30:35 "And you, it's not being taken care of." And so now how do I get somebody out of this home? I gotta evict him out of my own property. There's no lease in place. So now it's regarding-

Lewis Howes 1:30:44 Oh, yeah

Jaspreet Singh 1:30:44 ... to all these, uh, legal issues of how do we get this person out of the home. We get him out of the home. It took me months to get him out. The property now is destroyed.

Lewis Howes 1:30:54 Trash. Oh, man.

Jaspreet Singh 1:30:54 It... There's crap, literal crap all over the home. He damaged the place, did not take care of it, and now it's like we have to start all over-

Lewis Howes 1:31:03 Ugh

Jaspreet Singh 1:31:03 ... from negative to start fixing this property up. So now we start fixing it. I get a licensed and insured contractor. We're months into the deal, and he wants, I don't know, like a lot more money, at least 10 grand, if not more, to start doing the renovations. And we start digging deep, and we start to see problem after problem after problem. So now it, it, you know, every cost keeps adding up. Now the home is ready to go. And, uh, I'm like, "All right, fine." And everybody told me, "Jaspreet, don't license this home with the City of Detroit as a rental because nobody does it." And this is, you know, again, after the 2008 crash, the Detroit went through its bankruptcy. They were having their own issues. But I don't like to play games. I, I wanna play by the rules. So I said, "I'm gonna get it rent- I'm gonna get it licensed for rental." When you get a license for rental, they're going to send their own property inspectors out to the property, and they're going to inspect it and make sure that it's okay. So now the property inspectors come out, and they say, "I need to lift up the home." I was like, "What do you mean lift up the home?" They're like, "Uh, yeah, we need to raise the home." I, I didn't even know that you could do that. Apparently, you can, and it's very expensive.

1:32:06 Wow.

1:32:07 So I lift up the home, and then we start running the water in the property, and it turns out that the water is not draining to the main city line. Apparently, somebody previously living in this property had poured cement-

1:32:20 Ugh

1:32:20 ... down the main drain. Now, in order to get this property working, we have to bust out the cement in the basement, take out this pipe-

1:32:29 Oh, man

1:32:29 ... put in a new pipe, re-pour the cement, and then these property inspectors start disagreeing with one another. One person says that you need a 10-foot electrical riser. So we make it 10 feet. The next one comes, says, "Why is it 10 feet? It needs to be 13 feet." I'm like, "Your first person said 10." And now they start fighting with each other, and we have to keep paying-

1:32:45 Ugh

1:32:45 ... for these inspectors to come back. They keep charging me permit fees for everything. If I want to paint the window sills, it's a $100 permit fee. Change the smoke detectors, $75 permit fee. So this goes on and on and on and on for months. Finally, now we're approved for a rental. I was like, "Oh my God," like, "this is the biggest headache of my life." We get a tenant in the property. We get licensed.

1:33:07 [laughs]

1:33:08 A t- a tenant's in the property, and now we have the license, and the property inspectors just decides to go back to the property. They don't tell us. They just go back there. Even though we're fully licensed, they had no reason to go there. They knock on the door, and apparently, we didn't know this, the tenant was, uh, having a babysitting operation in our property. So now the inspector sees this-

1:33:27 Oh, man

1:33:27 ... that this tenant is running an illegal babysitting operation. He tells us. He fines us, tells us we need to evict the tenant, and now we have to start this process all over again.

1:33:36 Oh, man.

1:33:36 So at that point, I was like, "You know what? Just sell this property-

1:33:38 Wow

1:33:39 ... because this is the biggest headache." A- and, and that was the only deal I ever lost money on, but I lo- I learned a lot. It was my tuition. So you have to-

1:33:45 Yeah

1:33:45 ... be willing to learn, be willing to make mistakes, and then be willing to grow from those mistakes, go on, and, and, you know, keep willing to go.

1:33:52 So oftentimes, especially, like, businesses, they think that their price is the most expensive thing that they have in the cost, and it's not. So think about this.

1:34:00 Hmm.

1:34:00 If you've ever asked someone-

1:34:02 Interesting

1:34:02 ... "Hey, I'll give you my service for free," and they said no, it's because there are other costs that you're not taking into consideration, which also means, a lot of times, your price has far more wiggle room in it than you think it does