Welcome to the Zuber Letter

I’m excited to welcome you to the first-ever edition of the Zuber Letter!

I created One Rental at a Time after living it for 20+ years and earning my financial freedom by building a portfolio of buy and hold rental properties.

Now, I’m launching a newsletter called the Zuber Letter in order to help empower and educate others on how to do the same.

As someone who has studied the economy for over 30 years and real estate for over 20, I promise to bring you my unfiltered and unbiased take each week. My focus will be on you, the readers, as I want each of you to take action, do the work, and make positive progress on your personal financial goals. Additionally, I aim to use this newsletter to highlight individuals who are on the One Rental at a Time journey.

Why you need to retire early

When we talk about retirement, the question shouldn’t be about how much time we have left in our life, but rather how much life we have in our time.

Recently, I went on an admittedly expensive European river cruise with my family. While mingling with the other voyagers, it quickly became obvious that we were among the youngest travelers on the cruise, often by three or four decades. Most of the other people were in their 70s and 80s, and they had a lot of regrets. Many were financially well-off; however, they were often too old to enjoy many of the trip’s activities and excursions. This experience stuck with me

One of the benefits of building a portfolio of buy and hold rentals, is that it can help you get off the rat race and enjoy life before it’s too late!

Last week, I spoke with Chad “Coach” Carson about this experience, and why early retirement should be on the table.

The biggest misconception about retiring early is you have to defer your happiness for 15 or 20 years until you can reap the rewards of your hard work, savings, and sacrifice. Coach looks at it like climbing a mountain. The peak of the mountain is complete financial freedom, but there are a bunch of plateaus along the way. For him, that means a few years of really pushing hard and then a month or two off. 

His first “plateau” was the best investment he’s ever made, he says. After some success as a home flipper and real estate entrepreneur, he and his wife traveled to Spain and South America with about $20,000. About six weeks into their travels, he realized just how stressed he had been. He saw how vital taking breaks and taking time to enjoy his life and family would be to his financial freedom journey.

The 40/40 plan (40 hours a week for 40 years), which is the status quo, doesn’t allow for breaks this long. And by the time your season of hard work is over, it may be too late to enjoy it fully. 

It's possible to retire early. Many of us just need to know it’s possible. But, there’s no sugarcoating it—it takes a lot of hard work. Everyone’s situation is unique, but Coach and I have seen hundreds of people who have found their way into financial freedom despite immense obstacles. The fact is, for everyone who retires early, at least the first five years of work are very tough, but it all ends up being worth it.

I also spoke with Anna “REI Mom” Kelley, Dion Talk, and “Lumberjack Landlord” last week about our early retirement journeys and why early retirement should be your goal. In our chat, Anna lays out how she and her husband climbed out of $700,000 in debt and built a multi-million dollar business in 10 years.

Why hot inflation readings are great news for the housing market

The Bureau of Labor Statistics recently released the March Consumer Price Index report, revealing CPI readings that came in hotter than economists expected.

I think hot inflation rates are great news for the housing market. Let me explain why:

1. This means the average 30-year fixed mortgage rate will likely stay over 7.0% for months to come.

2. Higher mortgage rates will see national active listings grow. But just because we will see inventory tick up doesn’t mean all things are equal. We are in a bifurcated housing market, after all. I believe these active listings will grow disproportionately above the median. Additionally, active listings for non-perfect properties below the median will be sitting longer because buyers have to pay cash for them. That being said, overall, there’s still low inventory and plenty of demand, properties below the median that are dialed perfectly will still sell fast. The housing market can’t be fixed with 500,000 single-family active listings—we need something closer to a million. But we won’t get there overnight, inventory must grow week-by-week for the market to improve in a healthy way. Keeping mortgage rates above 7.0% is one way we can allow inventory to slowly build.

3. If inventory can grow, there will be better opportunities for real estate investors. The best way to find a good deal is to find a motivated seller. Rates above 7% will cause non-perfect properties to linger on the market. This will give more leverage to investors as sellers become more eager to get the property off their hands.

4. Lastly, enduring 7% rates will be the final nail in the coffin for many commercial real estate investors tied up in bad deals. Some multifamily and office property owners have been holding out for significant rate cuts in 2024. As of Wednesday, that hope has left the building. It has been my belief for weeks that commercial real estate needs the threat of rates going higher to push owners into giving up their properties. Frankly, when investors make bad decisions and rush into a market with short-term debt and bad assumptions, they are supposed to lose. With this, we will now see commercial property transactions pick up.

ResiClub chart of the week

ResiClub’s Lance Lambert recently highlighted one U.S. homebuilder response to mounting housing affordability pressure: resurrecting 80s-era mortgage rate buydown offers. 

Just like in the early 1980s, mortgage rate buydowns are once again the preferred affordability adjustment among many prominent builders.

The chart above [interactive version at this link] shows the quarterly gross profit margins of 10 major homebuilders over the last decade. Big builders reduced their profit margins a bit over the past two years in order to deploy incentives like buydown offers. However, while builder margins have fallen from the highs of the Pandemic Housing Boom, most are still above pre-pandemic levels.

Number of the week: 7.50%

On Tuesday, the average 30-year fixed mortgage rate jumped up to 7.50%—the highest rate reading since November. To me, this number means the U.S. housing market has a shot at healing itself.

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