So the inventory is very low right now, but that is primarily driven by
the high interest right environment. And the connection between the two is as follows.
If I built my house three years ago, five years ago, and
I have a three percent interest mortgage, then I can't afoord to move.
So if I make a lateral move, the cost is going to be astronomic.
I'm gonna go. I'm paying three percent to playing eight percent. So
people just saying, look, you're listening to Carrie Let's Financial Survival Network,
where you get valuable information you just can't find anywhere else to thrive in today's
trying times. You need the Financial Survival Network now more than ever. Go
to Financial Survival and Network dot com and get your free newsletter and gift.
Financial Survival Network now more than ever. And welcome you are listening to watching
the finance will Survival Network. I'm your host, Carrie Lutts. Well,
hey, we're going to talk to somebody about Florida real estate, but more
importantly about technology how it has changed the business. Ze fredis He's a neighbor
of mine down in a Boca Raton, Florida, and the background of his
picture is actually I want to call a shopping set entertainment center. It's kind
of evolved into shopping center to an office complex called Meisner Park. If any
of you were familiar with it, and Zev, you have a background in
technology, you once upon a time worked for a GEU pretty much marketing software,
and then you got into real estate. Kind of an interesting story.
How did that happen? Right? So? I relocated from New York to
Florida in the late nineties, and I had a goal of investing in real
estate, residential real estate, just buying multiple and etch properties and renting them.
So I bought a couple and I ran out of down payment money.
So I took a day job in the field that I was trained in.
So I kind a job with a local company. They ended up getting acquired
by ge I climbed the ladder. I ended up being a product marketing manager
for quite a successful launch enterprise software product. As I did that for a
number of years, I traveled all around the world for them, and I
realized that in doing so, I had put my real estate goals on back
burner, and a number of years had gone by I had not bought another
investment property. All the while my co workers were always picking my brain for
I'm not going there. I was still trying to buy my first house.
I heard Joe on three How'd you do it? Two thousand and five.
I just decided to quit my day job and just focus on our real estate.
So I kind of just fell into it, like most realtors do.
I figured, if people ask me advice, if I can collect a commission,
then I can deter or of ament my job search. So I did
that a few times, and then I ran out of people to sell houses
too. So I realized that I need to reach the masses. So I
turned to what I know, which is technology. I put together a website,
I did some search engine optimization that I started generating some leads, and
the rest, as they say, is history. I built a huge business
around that, all right. And so at one point you said, using
technology, you were able to generate more leads than you could even deal with.
Yeah. Sure, yeah, most people are trying to rely on the
history of influence. But regard, no matter how big of a networker you
are, no matter how big your social circles are, there still only so
many people that you know personally, and after they all are settled into their
new homes. You still need to make a living, but if you can
reach some asses and the Internet is the way to do that, and then
the sky's the limit. Really, So I just got people off the Internet
wanting to see Holmes. I would go make them show them homes off the
MLS, sell it to them like the commission, and then I would turn
around and recruit the listing agent whose home I just sold with the promise of
I'll give you leads because I have more than I can handle. And that's
why I built the business. Fifty percent of all the deals in that company
were company generated at these versus if you're looking in the brokeradge, it's ninety
nine point nine nine percent agent generated. So most people, most agents,
like we were talking pre call, like your average realtor didn't when he was
three years old, you know, and kids are saying, I want to
be a cop, but I want to be a fireman. He didn't say,
gee, I want to be a a realtor, you know, a
real estate right. So so you deal with a lot of and I'm not
being to sparranging at all here, but you really deal with with like a
lot of misfits, don't you you mean the realtors. Yeah, the realtors
themselves. Yeah, yeah, yes, and yes. But you know,
I'll tell you there's always, there's always you just have to look at it
differently. So I come from New York. The work ethic in New York
is much different than than yeah, here in Florida. He's gonna be New
Yorker. As a fellow New Yorker, I'm laughing, Well, how long
have you been down here? Well, I've been coming down since I was
six. But but you know, it's always been my second home. My
family lived here. My grandparents moved down in the sixties, my mother and
sister moved here in the early eighties, and you know, it was always
a lot like land of the slackers, right right, Dan. I think
you know it's changing now, especially in the last three years with so many
people migrating here from New York. I think that, you know, we've
stepped up a lot. But but for many years, I agree, and
younger people too, because it was always hey, God's waiting room, right
correct. So the thing is, you know, coming down here from New
York with my work ethic and everybody here's wearing flip flops and shorts. The
short you know, there's a lot of misfits to deal with. But the
flip side of that is it made it so much easier to be better than
that. I simply put it, the real church community year was like the
real church community in New York City. I think it would have been a
lot harder for me to break into this business. Yeah, yeah, well,
without saying anything disparaging. Look, Florida is a leisure based lifestyle,
right, I mean I used to spend eighty percent of my time figuring out
how to better my career, improve my career, make more money, and
twenty percent on leisure activities. Now I spend eighty percent of my time planning
my next fun outing and I spend twenty percent of my time on career.
But I'm a lot better at this career than I used to be, So
I don't need to spend the amount of time and I don't want to,
you know, in different days of life. So I've been really successful.
Competition is lacking, But nowadays, can you still use the same formula that
you used back in twenty fourteen and achieve the same results. Is it more
costly or do you have to change things? Right? So I believe that
you can. I believe it's not as easy as it was back then.
Competition certainly is more furious, but the reward is still there. And I
know that because last time around I built my business, it was completely built
on generating real estate leads online. The way you do that is through search
engine optimization. So you try to rank on particular keywords related to the to
the areas we're working. And there's something called keyword research, which we do
when we're trying to identify the correct keywords. And the bottom line is,
if you take the predominant keywords in this area for real estate and you do
the keyword research, there's still the approximately the same amount of volume every month
as there was twenty years ago. So the same amount of people pretty much
go to Google every month and search for real estate, boat or a tone
of or in any other made club as they did in two thousand and five.
And there is still real estate companies like mine that are ranking. Yes,
there's some big portal sites like the Real gen are common zero in those
sites that dominate the first page of Google, but there's always a few local
companies also on the first page of Google. So if if there are small,
independent, local companies that are able to make it to the first page,
and there's the surge volume is still there. The only stands to region
the reason that if you can get yourself a seat at that table, you're
on the same the same results and we did last Do you have to spend
more money though to get the same results you used to? Yeah, more,
more time, more money, and you got to be better, all
right, So so more time, more money, but it's still profitable.
Yeah, I mean, because think about it. Search engine optimization is all
relative, right, There is not a magic formula that gets you the number
one spot in Google. You just to be the number one spot. You
just have to be better than the number two spot. It's relative relative,
so every someone is trying to outrank someone else. So the so the stakes
are ready awesome. How much could just give us? For instance, you
don't get to the nitty gritty, we don't want to trade secrets, but
how much could a lead costs nowadays? So I mean, look, the
best way to put a number on that is to look at the big portal
site to sell eads and see what they charge. It could easily be one
hundred dollars a lead, like the this is the loads of the world,
and and they all have the distance models. Either they charge you, you
know, monthly fee for x amount you know range of leads, or they
charge you per lead, or they charge you sometimes a percentage of the commission
that you make from that. They did a lot of different ways to demonetize
it, but one way or another, Elite is worth easy one hundred dollars.
And I mean a lot of these places who sell you leads for giver
take that amount. They'll sell the same leads and multiple people. Yeah,
Like the second you click that you're interested in a mortgage, your phone starts
ringing off the hook. That's what they do right now. The flip side
of that, if you can from the realtor perspective, because I talked to
real churs every day. I hire realtors and they say, oh, I
signed up for this on that one and I get leads, but I could
never get them on the phone. The line is always busy. The reason
the line is busy is because that person, like you said, they clicked
the button and then the company that captured the lead, they sent it out
automatically to I don't know four or five different agents, so by the time
you can dial the phone, you know somebody beat you to it. Okay,
And and let's not forget that also people don't answer their phones like they
once did. That is true, But I think the bigger challenge is that
the that they give the same lead to multiple agents. And I know for
a fact that there are some brokerages that buy these leads and have automated systems
to dial all the customer as soon as the lead comes in. Yeah,
predictive dialers, right, like like some software that the email or text message
that comes from the lead provider and then dials the bone and then connects it
to a live person pull center. So if you're if you're just an agent
riding around town with customers in your car, and you want to buy leads
from one of these providers, and they're also selling it to one of those
companies with call center and an autodialer, you're never going to get an You're
at a real so you got an auto dialer there and you've got people sitting
at the phone. So h me, I don't because I just build a
few things. I don't buy leads from these providers because I'm not interesting leads
I go to other people. I generally lease myself. And my promise to
my agents is I will not give If I give you a lead, I
give it to you all the head. I'm not going to get a ten
dios right, Okay. So so your agents get a better deal because you're
generating the leads, and you get more value for your dollars spent. By
generating leads from my agents, I do two things. I create a value
proposition from my agents. Right, if half of their business is coming from
they're broker, they're not, they wouldn't even think about switching broker because they
leave their business behind. So that's number one, it's great for hiring and
retaining agents. And number two, I just grow the bottom line because if
my agents sell, lare I make more? Right? Yeah, So it's
a cosanguinity of interest there. And because we know that brokers otherwise, we'll
just go to the highest bidder where they get the highest commission rate. Right,
I mean you right, agents, So the terminologies they have one cls
agents right, right, So the agents will just go, We'll just go
and there's there's brokers that do it for one hundred percent. You know,
and so if you know the old the old saying in this business, when
you become the broker, right, when you first you're an agent working under
broker, then if you become the broker, the joke is that you become
broke or the client became broker, like stock market broke, right, right.
But that's it. But that's because most brokers are competing on price,
and when you compete on price, it's just a race to the bottom because
there's always somebody willing to work for less than you. So if you ask
value, it's different. So let's look at a different business model. When
you're talking about discount brokers. Here in real estate, we think of redfin,
right, Oh, has that model proven successful for them? So the
redfin model is actually a little different. The redfin model is very dependent on
lead generation. But then how they monetize it as different. So they take
the lead, they hire agents, and they pay them not a salary,
but they pay them, say per showing let's say anything orders to go open
the door. So they generate a lead off the internet and they then send
it to an agent to go open the door and let them see the house.
And they don't have to pay the agent because they paid the agent as
they went, you know, to open the door. So the house gets
the broker, I guess keep the whole commission. Now, Yeah, could
be a discounting commission because they give back some of the commissions to the client
and that's just their incentive on how to get the clients to work with them.
But ultimately it's very profitable for the broker because they don't have to pay
out the commissions to the agients. Right. Okay, So so you don't
sound super enthusiastic about it, is that the it's very profitable for dvand Redgens,
a very good company. I think that the I mean, look,
it's a trade off if you as an agent, if you want a more
sure, steady income, you can do that, but they're not going to
make the upside that a commission based agent. Right, So less risk,
less reward right, a lot of guaranteed income. Buzz you Your income is
your guarantee is less? Right? Yeah, like most things, right,
risk versus rewarding. Yeah, it's fascinating. So, hey, what I
really wanted to get John was talk about the state of Florida real estate,
because all we hear about is higher interest rates, and you know, basically
Florida real estate is going to go down. Florida sales are down year over
year. I'm not sure if that's more an issue of inventory or if it's
just an issue of interest rates. What's your take there, So it's both
and they're connected to each other. So inventory is very low right now,
but that is primarily driven by the high interest rate environment. And the connection
between the two is as follows. If I bought my house three years ago,
five years ago, and I have a three percent interest mortgage, then
I can't afford to move. So if I make a lateral move, the
cost is going to be astronomical. I'm gonna I'm playing three percent to playing
eight percent. So people just saying, but anyone who has a low interesting
mortgage would be foolish to sell their house. That's abolutely for sure. Yeah,
like, why would you do it? Right? Three percent mortgage you
can't get them. The mortgage rates are over seven percent now, So that's
artificially constricting sales. And it's a question of right, how much you need
to move right? Right? Well? And then and then you have the
the hall owners who do not have mortgages right who paid cash on their most
spring. They don't want to move either, and that's simply because of how
Mutch prices have gone up in Florida. If you move again, take them
mortgage out out of the picture. But if I sell my house, I'm
going to have a huge COUNTITAL again. I'm gonna pay the i RS a
big chunk of that, and my real estate taxes are gonna quadruple if I
make a lateral mood. I never even thought of that. So yeah,
because you're going to buy a new home at current market value, and when
you move in, the tax appraiser basically equalizes your rate to current market value
or below it, but still maxes go up substantially pretty much. But it
all basically comes back to the homestead laws in Florida, which are a good
thing. So homestead laws are when you when you have your primary residence in
Florida, right, they cannot raise the assessed back value more than three percent
a year. Correct. I say, you know, twenty years ago,
if a million dollars, they can only bump it up three percent a year.
But now it's worth and million dollars and I'm hanging on one point by
one point three. Some some much much, you know, a fraction of
what it's really worth if I move next door to the to the identical house.
Now, now they have portability, so you can take some of that
protection with you, but it's only half a million dollars, just like the
half get on the capital gains. But in this market here where houses are
you know, five million, ten million, twenty million dollars, that half
a million does nothing for you. So it's just it's just the cost they
to move right now. M okay, so uh so that's yet another reason.
And then the insurance insurance, yes, insurances or is bad news here.
That's a big problem here. And that one I don't really know what's
a solution. The other ones there are solutions, like the homestead situation.
I believe there's a simple thing that that the government can do that will really
help the market and help the people, which is there should be no cap
to portability right now, the thing from home to home. You will be
able to take this right And now there are even guessed if they need the
revenue, but the reality the revenue they had a twenty billion dollar surplus last
year. I mean, like you need more money and I need more money.
But not like they're going to go broke without it true. But even
besides that, I think that logic is wrong because they're not going to get
the revenue anyway, because no one's going to move under those conditions. And
when people don't love, they lose a lot more revenue than the hypothetical tremendous
tax bill that they're never going to get anyway. They lose all of the
will or somebody else will come in from New York or from one of the
failing over tax states and buy it anyway, so we don't have to do
anything. But it's not always like that. This probably is temporary phenomena,
don't you think, Well, whether timber or not depends on what they do
going forward. But me adjust that that scenario of someone wealthy coming from New
York and buying it anyway, I'll tell you why that logic doesn't work.
Someone from New York might be willing to come here and buy ten million dollars
house and pay a two percent annual real estate tax, pay two hundred thousand
dollars a year. Someone might be willing to do that, but what house
is he going to buy? For every buyer, you need to sell her,
and the guy living in that house who's paying fifty thousand a year now
is not going to sell it to the guy in New York is willing to
pay. So they're not going to get that anyway. Yeah, unless they
want to downsize for whatever reason. But downsizing doesn't make any sense because if
you op, you know you're just going to pay more in taxes, and
you wind up paying more in taxes for a house that's double or triple the
size. So why bother right right now? If they had unlimited portability,
then people who are here will move and that will make more inventory for new
money to come in, which ultimately will help actually having him. I see
your point, totally agree. So my grandparents moved here in nineteen sixty seven
or sixty eight, and I think they moved for the weather, mostly because
back then New Jersey wasn't really a high tax state. It was a low
tax state. We didn't have a state income tax in New Jersey. But
certainly the weather. But my point is, we go back to nineteen sixty
there were five million people in the state in nineteen fifty. I think there
were two million or one point seven million in twenty twenty three. It's getting
close to twenty three million. So this trend really of people fleeing is only
increasing taxes in the high tax states. No one could tell me that people
a major factor in your decision to move to Florida isn't because the high taxes,
all Right, the difference why you move to Florida as opposed to why
you moved to Alaska, which has no state income tax either it's clear,
or to North Dakota, say, which is still in the fifty the lower
forty eight. Uh, you're going to move to Florida unless you love you
have this love of snow and unlimited amounts of it. Right, Oh yeah,
And there's there's a few states for sure in the country that have favorable
attacks. But but but most of the other state sepo in that category don't
have our weather. But but the thing is affordability in the state. Even
before interest rates went up, you know, due to the pandemic and the
people fleeing more restrictive pandemic regulations controls, that number only went up. But
is there a limit to how many people can live in Florida? Heres of
so, I think that it is certainly overpopulated, at least in South Florida.
It's certainly frustrating for someone at first, someone like myself that lives here.
I moved here in the nineteen nineties from New York looking for a more
quieter, slower lifestyle, and now everything I left has followed me here.
I'm not for business, you know, there's a lot of good that came
from all the migration, but it's certainly it's certainly getting crowded here. But
price wise, you know, ices are so much harder than they used to
be here. But I don't I don't see them coming, you know,
crashing like like some people think. And I'll tell you what a few reasons.
First of all, if you compare Florida prices with the rest of the
country, it's it's still far more horrible than maybe other major cities. So
anyone kin you know from New York, delish any of these places. They've
also gone out, so well, we're still a better deal. You still
get more house here for your my name do in those places. And also
something that you have to adjust your you're thinking too, is the value of
the dollar. It's just not what it used to be. So you know,
I like to joke that a million dollars. It's just not worth a
million dollars anymore. Now it's worth it's worth a tenth set of the twenty
thirty year thirty forty years ago. Maybe forty years ago, it's worth about
ten percent perhaps, Okay, right, So take the value of your house
and take a zero zero. Yeah, and then I ask yourself as it
over, pray, Hey, and taxes are less here, for sure,
real estate taxes. When I left the Westchester County, New York, we
were blessed with the highest real estate taxes in the country. That was our
claim to fame. And they were still paying forty percent of what I paid
there a lesser house. Well maybe the house isn't really lesser, but maybe
it's twenty percent less house than I had in Westchester. So I'm paying a
fraction of what I paid there, and no staying income tax. And I
realize that that says are not considered to be low. I'm not by any
of the percent of the eye of the home. It's not it's not,
you know, it's not that low. Where we really make up for it
is the lack of income tax. Yeah, lack of income tax. And
yeah, food is pretty much the same cost as it is their guests probably
about the same. Yeah, pretty much income tax and you know, well
I was going to say lower tolls, but we're getting lots of tolls now,
so yeah, but not like me, not like twenty bucks to go
over a bridge. Actually, yeah, I remember. I feel like the
old timer. I remember when it was twenty five cents to go each way
through the Lincoln or Holland Tunnel or over the GW bridge, and now it's
it's forty times that say, so much for inflation. You know, tolls,
road tolls have gone up as fast as healthcare expenses and college educations,
you know, and both of those things also went up a lot more than
they should. Yeah, hey, so prognosis. There's got to be a
limit though, because look, go what happened last two winters ago, where
or I should say summers ago where people stayed here after the winter because they
didn't go back to lockdowns, right, you know, it really disrupted the
supply chain of your supermarkets. And the supply chain was already disrupted, but
you saw it in the stores. So the question is how much longer can
the party go on? Zev are you asking our price is going to crash.
No, I'm saying, what are you're asking? How long can more
people get motivating? Yeah? Yeah, that's what can the population go?
Can we go to thirty million like Texas? Yeah? So here's what I
think will happen. I think other other parts of Florida have yet to see
the best of it yet. There are parts of Florida that are still much
more affordable than where we are sure and still have all the benefits that we're
talking about again, Still Florida lot, it's large Texas, it's Florida weather
on places like Tampa, Orlando, Jacksonville. These areas have plenty of room
to grow, and they're not as overpopulated as South Florida. I think those
will be the areas that will see huge upside in the next few years.
Okay, so new home builders they seem to have slowed down a bit here
though, where they're cutting stuff and trying to make it more affordable by cutting
out stuff and I guess adding more extras. Right. Home builders are kind
of a trickier business because of the lean time it takes from from when you
buy the land till you get approvals, till you put the shineers build the
development ten years, right, So so what they try to do is and
you know, it's all done with financing, right that it's these builders aren't
buying land for cash and building everything out of their own pocket. It's all
construction loans and all kinds of financing. So so there's a time cost of
money. So they try to and then they have to predict, you know,
what prices will be at the completion of the project. So, I
mean they've all done very good over the past few years because whatever their business
plans, well they did better, so you know, there was no surprises
to the downside. But they still need to think about what's going to be
a few years out and what's going to cost to get from here to there.
So I think they're just being extra cautious. They will. If you
couldn't make money as a home builder in Florida over the past say five years,
four or five years, then you had some serious serious issues going on
in your business plan and your quality and everything else. Even with bad quality,
you could sell anything the past few years. Maybe now it's a little
more difficult. So hey, Zev, really appreciate you coming on. How
do we find you on the web? How do we connect with you.
Sure. So Ze freedis ZFC real Estate. Our website is at ZSC dot
com and the links in the show notes this interview on Financial Survival Network dot
com. If you got a question for Zev or myself, just shoot me
an email k L at Krelutz dot com. I happen to be a realtor,
but I am nonpracticing. But hey, I can give you some advice
if you want. I'm not saying everybody should live in Florida. It's not
for everybody. I find myself. I can't retire, Zev because most of
my activities take place at night, my leisure activities. I'm not a golfer
and not much of a tennis player. I do like to walk, so
I got to keep working during the day otherwise I will have nothing to do
and I'm not sitting around watching TV or playing with the internet. You know,
Yeah, yeah, idea, Yeah, all right, Hey, thanks
a lot, and again, Zev's u r L is in these show notes
to this interview. Got a question kl at carry Lets dot com. On
the one hand, I don't want you to move down because it's getting too
crowded. On the other hand, look, everybody's entitled to pursue your happiness,
however that may be. And Zev, I'm sure you agree. When
it comes to from October to like the beginning of May, there's no place
in the country better to be than Florida. Agreed. Thanks for listening to
carry Lets's Financial Survival Network, your solution to today's trying times. For the
latest, go to Financial Survival Network dot com. Financial Survival Network now more
than ever,