Warren Buffet says a REAL ESTATE STORM is COMING

waren Buffett says a real estate storm is coming over $2. 6 trillion dollar of debt looming over the US real estate market and by the way Warren Buffet is dumping stock as we speak he's dumped most of his bank America stock should tell you that he knows something that you need to know so what does Warren Buffett know about the marketplace the stock market and the real estate market that you need to know look guys there is a real estate cataclysmic correction happening today there's $2. 7 trillion and I'm going to share with you how you can take advantage of it what you need to do about it but when guys like uh Warren Buffett and Charlie Munger and Bill Amman and people are starting to watch this Marketplace and say something is going on in the marketplace that's problematic for instance we have more unrealized losses in Banks today than we did in 20089 and 10 which was the global economic crisis caused Again by real estate which was really a banking crisis not a real estate crisis same thing's happening right now in 2024 2025 and moving forward $2.

7 trillion just understand how big this number is will expire between now and the dates I just gave you today and the dates I just gave you $2. 7 trillion where the debt is maturing due right now it needs to be paid off somewhere between now and the next somewhere 20 months from now okay that means a maturation or an expiration date on that debt is due now check this out when this debt literally went into place when it was originated it was somewhere between two and 3% okay stay with me here because I'm going to show you the the the magnitude of this problem is so enormous and will create such an opportunity for you and your family to actually invest in real estate and I'm going to show you based on this what you should be offering to pay because of that okay this this loan was done at 2 or 3% today let's say this loan matured today and now is due at 7% interest so just imagine I'm going to keep it simple let's say it was 3 and a half% interest uh on any amount okay understand this this is going to be thousands tens of thousands of different loans on properties it could be an office building a hotel it could be Apartments like we buy at Cardone Capital it's not single family homes I'm not talking about single family homes and the reason I'm not talking about single family homes in this equation is because 70% of all single family homes in America have aan under 4% less than 4% less than 4% every one of them okay 30% almost 30% of all the homes in America are paid for in cash so you're not going to have a collapse in the single family where you're going to have a collapse in a correction is is this $2. 7 trillion worth of commercial debt and I believe that's why Warren Buffett is dumping his Bank of America stock he has more treasury bills today Warren Buffett owns more treasury bills today than the federal government owns treasury bills I'll tell you why that is today in a second as well okay so watch let's say this loan was at 3.

5% and let's say this was a 10 let's say this was a100 Million Hotel loan uh in New York City or Chicago and the loans do great property great location nothing to do with the property by the way the whole problem is the loan matured when the interest rates went up okay if the interest rates go up the loan amount is going to go down so they go this way they basically move inversely to one another okay if rates go down okay the loan amount goes up if the loan amount I'm sorry if the rates go up guess what it goes the other way okay the rates go down so in this case what happened was the rates went from the rates went from 3% to seven and what happens to the debt the debt is going to go down by how much well by Four Points okay in this case three and a half points okay it's going to go down by almost half so watch I'm going to go back and show you the implication on this let's say this loan was approved by the bank just how all loans are approved by all banks it is not approved because commercial real estate is not approved because the guy next door sold for a certain amount of money like a house does that's called a comparable called a comp okay another house sold for 400 Grand so your house is worth 400 that's not how commercial works commercial Works based on the amount of cash flow generated from that property so when this loan was done at 3. 5% the bank said this this loan can support $3. 5 Million worth of interest on the loan so the interest must have been less than the total income on the property I'm going to make this up because I'm making the deal up let's let's assume then that the income the free income free cash flow from the property was $5 million this would be about what it was for them to approve this $100 million loan at three and half per interest this $3.

5 million a year in just the interest okay we would need about that much to support i' need about $5 million to support that well the loan's due now and the loan went to 7% and guess what that's $7 million what's the problem here the 7 million comes off the noi of the property and they're losing $2 million see the problem okay now what is the property worth today well based on on the debt okay if the debt 7 million I'm just using interest this does not include the principal so the situation is actually going to get bigger but I'm going to be very conservative here if the new interest is $7 million typically the bank will only lend uh 75% or about 125 they need 125% of the debt to be income free income in order for them to give a loan that would cost $7 million a year this is called the dscr debt coverage ratio or debt serage coverage ratio and it says that basically if I have $7 million worth of principal and interest be a little more than that here I need 1. 25 or 100 25% of this number supported by the income in order to approve that loan as we a bunch of Bankers sit in a room and they're like does it hit the D dscr does it hit the DCR it's going to be underwritten approved by a board that says does it hit this metric okay now again we're using Simplicity here if you're a really smart real estate investor right now you know that this $7 million is interest only and this loan would actually be probably cost more like $8. 5 million uh with principal and interest pay down okay but I'm just trying to show you right now the Simplicity of this the bank's going to want 125% depending on the deal depending on the location depending on the management the buyer and the moment this number could go as high as 145% maybe even 155 because people are scared an office building today an office building today is going to be punished because office is out of favor an apartment deal we could get down to 125 or 115 the more likely the lender likes the deal the more likely the lender will lend to the deal and the more they they're moving kind of money to those deals that DCR goes down okay now stay with me here okay remember this 8.

75 is what I need but I don't have that okay interest rates went up the property's value the property's value has gone down not because the properties wor Sol because the income didn't change okay when the cost of money went up the income stayed the same I'm still only making $5 million a year that's why you're seeing some of these Office Buildings and apartment buildings we stealing them okay so watch I only have $5 million worth the income that didn't change what did change $7 million wor the debt okay nobody's going to give me $7 million wor the interest only debt on this deal why because it doesn't produce money it loses 2 million a year nobody in their right mind will ever give a loan on this nobody's going to get it approved Elon Musk couldn't buy this deal wouldn't happen no bank will approve the deal so watch this can't happen Okay this can't happen so what I'm going to do is I'm going to say well how much money could they give me and for those of you who want to know how to steal real estate in this cycle make sure you hit the subscribe buttton so you get notified of other videos I'll be sharing with you and hit the notification so you get beaned as soon as I drop one we drop one once twice a month so that you guys can have access to the same information I have access to so watch because this is going to show you how to steal this piece of real estate this $5 million I want you to take 80% of that 80% it's a little hack I use 80% * $5 million equals $4 million and the $4 million equals the principal and interest maximum amount of principal and interest the bank any bank by the way Fanny Freddy HUD is going to lend you on this deal and I want you to take that number the $4 million $4 million and you're going to divide by 0. 825 and it's going to tell you that the lender is going to give you a loan for $ 48,4 180,000 on this deal okay it that they have a loan right now of what $100 million that means somebody is going to take a haircut on this deal of $52 million A bank's going to lose 52 million the seller's probably going to lose 52 plus 30 or 40 that they put down on the first deal because they put money down to buy that deal this when you do this it determines what you can pay for the real estate and that is how you guys are going to take advantage and probably why Warren Buffett by the way is stacking up all this cash okay see see because we have 2 point I just took a $100 million out of this that's 100 million out of these numbers right here I still have 2. 6 trillion 90 billion worth of debt if I just take one hotel out of the out of the food chain that's what's coming to do right now this is going to be the greatest real estate correction in my lifetime this is the opportunity for you and your family to go out when you understand these numbers when you simplify these numbers when you understand not just what you want to pay but what the bank is going to lend on when you go to that bank and say look man I can't get a loan for more than $48 million that's all the lender is going to loan on this deal why not because of me because the property only produces $5 million not me that's the property but bottom line is what's happened here somebody paid $130 million that's probably what they paid for that piece of real estate they probably put 20 or 30 % down when they bought it they paid 130 million and the next time it trades guess what it won't be 130 million it's going to go from 130 million to $49 Million by the way that's going to happen 27,000 times in this cycle 27,000 times if I only buy 1% why why I'm so excited all the time everybody's like why's GRE Cardone so excited why does he got so much energy if I only get one% of this I'm gonna buy 270 deals is that right yeah 270 deals 270 deals I own 51 deals right now and have $5 billion worth of real estate if I end up with 270 deals 51 divided by 270 oh my God I'm going to get so rich it's going to be crazy I'm getting excited you see what's happening to me uh uh times 5 5.