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Mindset & Money | Take a Deep Look at Your Financial Position and Strategy

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Today on Investing for Freedom, Mike Ayala discusses the situation that has been brewing in the mortgage industry which most likely is already on your radar. There seems to be challenges ahead as some are projecting a housing crash in the coming year. With mortgage delinquencies at record highs and the installment of adverse market refinance fees, Mike shares some of his thoughts on what you should be considering in your own personal finance and investment ventures. Now more than ever is it important to be analyzing your investments, getting your mindset straight, and asking yourself, is it a good time to sell or is it a good time to buy?

“If you look at the writing on the wall, when Fannie [Mae] and Freddie [Mac] are adding an Adverse Market Refinance Fee, it makes you really want to step back and question everything that we’re looking at.”



  • [0:13] Start of the Podcast
  • [0:54] The Challenges Ahead
  • [2:34] Adverse Market Refinance Fee
  • [5:19] What Can We Do?
  • [6:07] Analyze What You Are Invested In
  • [8:01] Is It a Good Time to Sell?
  • [12:53] Is It a Good Time to Buy?
  • [14:07] Investing Passively
  • [16:02] Maybe A Great Time to Buy A Business
  • [18:58] Closing Thoughts




Ken McElroy | The 2021 Housing Crash


Four Peaks Partners | How to Be A Great Passive Investor


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Thank you for joining me on the investing for freedom podcast. Today we’re going to talk about a situation that’s brewing in the mortgage industry, which I’m sure is probably on a lot of your radars, and we’ve touched on it a little bit. But there’s some challenges coming. And I’ve mentioned this in previous podcasts, but I feel like I need to continue to point to this good friend and mentor Ken McElroy on his YouTube channel, just go to you should be able to find the link. We’ll put it in the show notes too, but he’s got a video up called the 2021 housing crash and I think he really nailed it. So you know, I highly, highly recommend if you haven’t seen that yet, go take a peek at it.

But there’s definitely some challenges brewing in the housing industry mortgages. Specifically, I’m looking at a Bloomberg article here from August 17th and it says that FHA mortgage delinquencies reach a record led by the state of New Jersey. The Federal Housing Administration mortgages the affordable path to homeownership for many first-time buyers, minorities, and low-income Americans now have hit the highest delinquency rate in the last four decades. The share of the late FHA loans rose to almost 16%. The share of late FHA loans rose to almost 16% in the second quarter up from about 9.7 in the previous three months, and the highest level in records dating back to 1979. The Mortgage Bankers Association said on Monday. the delinquency rate for conventional loans by comparison was 6.7%. Millions of Americans stopped paying their mortgages after losing their jobs in the Coronavirus crisis. Those on lower end of the income scale are most likely to have FHA loans, which allow borrowers with shaky credit to buy homes with a small down payment. For now, most of them are protected from foreclosure by the Federal forbearance program in which borrowers with pandemic related hardships can delay payments for as much as a year without penalty. As of August 9, about 3.6 million homeowners were in forbearance, representing 7.2% of loans. The NBA said in the separate report the shares decreased for nine straight weeks.

Another article to, and this is kind of interesting, In Money Magazine It was on August 13, it says a middle finger to struggling families, how a new fee is about to make refinancing your mortgage a lot more expensive. And this is kind of interesting. Let’s see on Wednesday night mortgage purchasers, Fannie Mae and Freddie Mac informed lenders that starting in about two weeks, they will be adding a .05% fee when buying refinance mortgages, known as an adverse market refinance fee. An adverse market refinance fee. So you know, we’re trucking along here and obviously we got an election coming up and all this stuff. And I think, you know, we’re trying to keep the economy from imploding I think we’re trying to keep people from freaking out. But if you look at the writing on the wall, when Fannie and Freddie are adding an adverse market refinance fee, it makes you really want to step back and question everything that we’re looking at.

Now, here’s what I’m not doing. I’m not here to cause you to freak out or, you know, to have us all, you know, just hide out and, and just, I guess, run. That’s not what I’m here, I just want to, I just want to make sure that we’re paying attention to this. And I also want to talk about, you know, some of the things that I think you can do, and this is not going to be really any different than what we’re constantly talking about. It just comes back to the same little things. But when you start seeing these mortgage issues, starting to happen, you know, really everywhere. I read a statistic the other day that like 32% of all mortgages, had some sort of missed payment in July. That’s a big number. Whether it was you know, late on a portion of it, they were in forbearance, any of that kind of stuff, 32%. When Fannie and Freddie are if they’re adding a .05% refinance fee. The reason why they’re doing this, by the way, there’s so many people right now, because interest rates are so low, there’s so many people that are running in and refinancing their homes right now, which makes a lot of sense. And by the way, I’m an advocate of it, because I don’t think that there’s probably going to be much cheaper debt than what we can see right now. And also, if you can get your loans locked in long term, if you’ve got any kind of shaky loan, you’ve got any kind of variable rate loan, any of that kind of stuff, get it locked in now, because we don’t know. You know, after whatever happens in the next six to 18 months, let’s call it, we don’t know what the financing markets gonna look like after that. So it’s a great time to get your stuff locked in as low as possible. But also, I think that’s part of why this adverse market refinance fee is there is because there’s so many people rushing into refinance and the government needs to obviously cover some of their bases there, so. A half a percent fee, as you know nothing really, that should take your loan or ruin your loan or anything else. But it just is interesting to watch when they start mandating these these fees. I think they’re trying to slow down the refinances, what they’re doing.

So here’s a couple things that I just want to throw out to you. Even though, again, I think the government’s doing everything it can to, you know, keep us confident and keep us feeling like everything’s hunky dory and safe. There’s still record unemployment, you drive down the streets of any us town, and things are not the same as they were. Tourism’s dead, every second or third restaurant is closed right now, even though we’re able to open a 50% capacity, almost none of them are at 50% capacity. Where are these jobs? Where are these people at? What’s this going to look like? It’s gonna potentially be some challenging times. So you know, what can we do?

Here’s a couple things that I just wanted to talk through. So the first thing that I would say to you is analyze what you’re invested in. If you have some sort of investment out there, take a deep look at it. If you’re in the market, what are you exposed to? I understand that the markets at an all-time high. We should be paying attention to that because I heard a statistic actually today on a podcast that I was listening to. We printed $850 billion in the month of July. That was more money than what was printed, I think it was, in the first 200 years of our country. So when we start talking about those kinds of numbers, and again, I understand that the s&p 500 just hit an all time high. Everything seems to be hunky dory. You should really take a look at what you’re invested at, in the market, what you’re invested in where your money’s at. You might be telling me well, Mike, I’m stealing employed and I’ve got all my money in, you know my 401k with my company. Well, as I’ve shared so many times, and if you need some help on this, just just reach out to me, I’ve got a buddy that could help you through this process. Right now with the cares act, you can still pull, you can borrow against your 401k like penalty free up to 100,000. And right now you can pull 100 grand out of your 401k and move it into like a QRP or a self directed IRA. Penalty free interest free to where you can take that money and manage it yourself. And this is a bigger conversation for a different day. But if you want some information, just shoot me an email at Just drop me a little line and say Hey, Mike, I’m interested in learning more about a self directed IRA and pulling 100 grand out penalty free and I’ll help you through that process. I’ll point you to somebody that can. So you should really be taking a look at you know what you’re invested in in the market and then on your real estate. I’m obviously a huge fan of real estate, but we’re doing this exact thing. What does your real estate portfolio look like? Is it set up to weather A storm? And the first thing that I would say in your real estate portfolio is do you have fixed loans? Same thing on your personal property? Are your loans in a good position? Do you have good interest rates? Are they good long term loans? Or are these three year balloons, five year balloons, those kind of situations? Now’s a really good time to be trying to get that stuff fixed in because again, I don’t think we’re ever going to see better, well I shouldn’t say better. I don’t think we’re going to see rates like this for a long, long time. And in six months, 18 months, 24 months, you might not be able to get financing period. So if you’re a real estate investor, you know, be looking at those loans, are they fixed loans? Take a deep dive right now on your portfolio is your portfolio cash flowing? What properties are not? and again, I’m doing this exact thing right now. I literally just closed our attorney in for me today we closed on a rental that I’ve owned for probably five years I just sold it anything. That’s not pretty Reducing and you’re not confident can weather you know a downturn, it’s time to start thinking about offloading it. And to be honest with you, potentially looking at even things that are cash flowing, because there’s been so much appreciation in the market. It might be time to offload that. You got to take capital gains into consideration and all that stuff, but it’s a great time to 1031 exchange into something else, even, you know, maybe take some chips off the table and, and instead of being an active investor, maybe it’s time to 1031 into something passively. So then risk, you know, what type of tenant profile Do you have, when we look at all these mortgages that are going to be in default? Obviously, those residents are going to need to go somewhere. So you know, we’re heavily invested in the affordable housing space, the manufactured home communities, that kind of stuff. It’s going to be in high demand. I mean, already, we’ve seen more demand in the last few months and we’ve seen for a long time. So just analyze your risk, what kind of tenants do If you’re in high end rentals, you’ve got a ton of appreciation there. Really analyze whether you think that your residents are going to be able to weather an upcoming storm, and whether your demographic tenant is going to have the cash that you need or that they need in order, you know, to see through this. So, again, just analyze that risk, probably a good time to offload some of your properties if they’re not in kind of a A category. And when this all happened with COVID, we drop we put all of our properties into a portfolio, B portfolio and C portfolio and the A’s were like solid, they’re gonna whether it we’d have to have like a 50% drop in collections or occupancy or whatever. B’s we’re kind of iffy. Like, it could be if this scenario happened, it could take a hit. If this scenario happened, it could take a hit and so we kind of analyzed it based on risk different A’s, B’s and C’s. C’s were like, Hey, we really need to take a look at this. They’re in markets that are heavy, these And I’m not here to get political, but these are in highly democratic states that are, you know, not very landlord friendly, we’re starting to see a lot of that really make a big difference right now. So you might want to analyze all that.

So is the second thing you know, first thing was analyze what you’re invested in. The second thing is, is it a good time to sell? Take money off the table? So the question with that is, what are you going to do with that capital? You really need to spend some time thinking about that because if you take money off the table, you know what are you going to do with that cash? Well, I would say sit on it for a little bit. Most of us are so used to you know, focusing on velocity of money and how do we get a return, etc, etc. It might be a good time to just sit on some money, maybe put it into some gold and silver stocks. If you need some advice on where to go to find some of that I’ve got a mentor that puts out some great stuff, highly, highly trust and recommend him. Just reach out if you need some help with that. So maybe you put it into some physical gold and silver, maybe put it into some mining stocks that you think are going to perform well, maybe you just sit in cash for a little bit, have some cash on the sidelines waiting for the deal. Maybe, you know, invest it passively with an operator that knows what they’re doing. There’s plenty of them out there, we’re restructuring a bunch of funds. Right now we’ve got a couple deals, opening up. direct deals, where you can get directly involved in a manufactured home syndication, we’re getting ready to launch a fund around buying some HVAC businesses that you could put some capital into. And we’re obviously not the only ones out there. There’s places to put money passively. If you’re concerned about everything, and you’re not really an expert, maybe it’s time to put some money with the experts. So is it a good time to take some money off the table? Well, it all starts with analyzing, you know, what do you invested in and do you think it’s going to weather that? And if you do take the money off? What are you going to do with it? That’s a question you really need to spend some time asking yourself. So question number three, is it a good time to buy? I heard somebody say the other day, it’s always a good time to buy Which I agree with. But it is difficult to find deals right now. Unless I’m seeing a 40 to 50% discount from market rate, I probably wouldn’t be buying much of anything right now, that’s not a hard and fast rule across all assets. But you know, I’ve talked to so many real estate investors in the last month, month and a half that are still like, Oh, you know, our asset classes are going to do fine. They’re going to weather the storm. People are going to need housing. Yes, yes, and yes, I agree with that. But that doesn’t mean you should be paying current market value, current today’s market value for these assets. Because just because people are going to need housing doesn’t mean that those assets are going to stay at that current price. I’m not here to get into a big debate about that. That’s something you should really analyze. But yes, it’s a good time to buy if you can find good deals, but it’s pretty challenging and difficult. And we’ve taken our acquisition strategy down by about we’re probably about 15% of what we were projecting for this year. We’re still optimist. We might find a deal or two or three, but we’re actually exiting and restructuring more deals than we’re looking to buy right now. And then, you know, the fourth option is invest passively which I’ve started to touch on. And by the way, I wrote a blog recently on our website at I think it was the August 17 blog So the title is how to be a great passive investor. So now’s the time. You know, there’s still a lot of people interested in getting into real estate and by the way, I think it’s a great time for you to educate yourself, you know, join a course join a program, now’s the time, now’s the time to spend 1000 or 2000 or $5,000. Just really getting your mindset straight, getting your knowledge ready for what I think is the coming opportunity, I think there is going to be some opportunity in real estate and investing. But if you’ve never bought a house before, if you’ve never bought a rental property, I’m not sure that right now is the best time to be playing around with it. So you might want to consider educating yourself and possibly investing passively if you have the capital. And by the way, taking some real estate courses and that kind of stuff, even if you just want to be a passive investor, that is not going to hurt you in any way, shape or form. It’s going to make you a better passive investor. So I think it’s a great time to start looking at, you know, what are the opportunities out there in the passive investing world and I brought up the blog because I don’t want to spend a lot of time going into this. But again, the title is, what does it take to be a great passive investor, I kind of just lay out all the things that you You really need to be thinking about. So the other thing too, that I’ll just continue to hit on, maybe a great time to buy a business. There’s a young man, his name’s Sean, who’s a listener to the podcast, and I met him through GoBundance. He shows up faithfully, to all the GoBundance events. He’s always on the work crew. This guy serves and serves and serves, and I’ve gotten to know him pretty well over the last year or two. In fact, I think I might bring him on a podcast and we’ll just talk about how he recently just got a business under contract. And he reached out to me today and he said, Hey, I just signed the paperwork. I think this kid’s like 22-23 years old, something like that. reached out to me, I don’t know three or four weeks ago said hey, there’s a great opportunity. He put it out on Facebook said Hey guys, I’m looking to buy a business in in this arena. And somebody reached out on Facebook and said, Hey, this one happens to be for sale. He met with the owner talked to a couple guys. You know the Bible talks about this in Proverbs. There’s wisdom and a multitude of councils he reached out to us Several different people just went to the seller and worked out a win win. We’ve been talking about this for a few weeks now, but it’s a great time to buy businesses bankruptcies are on the incline. sellers are owners that weren’t sellers, you know, six months ago or sellers now, they’ve just gone through their third or fourth decline crash issue. I know we’re not through it yet, but it’s coming. People are tired, and cashflow has been halted. The one thing I will say be very, very careful about the types of businesses that you’re buying. But it was became very apparent very quickly across the nation. What types of business businesses are recession resistant. They’re critical businesses that weren’t closed down. service based businesses, businesses in the home service, industry, home improvement, pest control, you know, any of that kind of stuff that you could think and see that people needed through this toilet paper. That’s just a joke. But, you know, it became pretty apparent and clear what types of businesses you should be looking at. So that’s the other option.

You know, I started this out with the the mortgage industry thing. And really the reason why I wanted to tie that all together is because the lending market, the finance market, the value of our homes, unemployment, all that stuff kind of ties together. And the number one thing that I think we need to be thinking about right now is how do we decrease our expenses? How do we fortify our ship if you already have, well, even if you don’t own a home, I mean, just tighten up your expenses, get some of your non performing debt paid down.  I’m not an anti debt guy. I think that good debt is actually a good thing, going into debt for cash flow, cash flowing assets, income producing properties, etc. But Now’s not the time to you know, be having 25% credit card debt, that kind of stuff. So

just Take a look at everything that you got going on in your life. Look at where you’re invested, look at where you’re spending your money, look at your expenses, with unemployment, where it is with businesses not coming back. I heard a statistic the other day on Yelp, I think like 19% of all restaurants have permanently closed. Some number like that. It’s just crazy. We are in for some challenging times. It doesn’t mean I’m not saying any of this to scare you. I’m saying this, You know, if you just go out there and and really get clear on the five things that we’re constantly talking about, what do you really want? Why do you want it? What are you going to do to get it measure results and adjust? figure that out right now, there’s never been a better time to take some time and figure out what it is you really want. Just go back through these things that I told you analyze what you’re invested in. Is it a good time to, you know, sell some of the investments that you have, whether it’s in the stock market or real estate or businesses or whatever? Is it a good time to buy? Is it possibly a time to start thinking about investing passively? Is it time to start considering maybe investing in a business? And the bottom line, even if you don’t want to do any of that, how can you get your income up right now? Maybe How could you, you know, make an extra thousand dollars a month or $2,000 a month. Sounds like a lot of work but really, if you just set your mind to it, you can really compound that pretty quickly. And what we’re going to need on the other side of this is more income, more cash, some liquidity to be able to take advantage of opportunities, etc. So hopefully that helped. I’m here for you guys. I’m gonna start doing a bunch more stuff in the investing for freedom Facebook community. So if you want to get in there, I might actually have this youngster Shawn aid in there come talk to us about how he just locked up this business because, you know, he set his mind to and he just went out there and made it happen. So if, again, if I can help you in any way, shape or form, just reach out to me send me an email or jump in the investing for freedom Facebook community here to help and serve. Yes, it’s challenging times, but you know if we keep our head cool and and we get focused and Just really figured out the path that you want to take. I think we’ll get through this together. So go out there and prosper. Have a good one.

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