Episode 160 – Derek Lobo – The Self Funding House, Rebuilding the Dream of Home Ownership

“To own a home today, if you’re an average millennial with parents of average income, you have to become a landlord.”– Derek Lobo

  • [0:42] Patrick introduces his returning TEDM guest, Derek Lobo.
  • [02:20] Derek and Patrick take three! With a great purpose, Derek returns to the TEDM airwaves to share his new book “The Self Funding House.”
  • [03:01] Derek explains in short order, how the dream of home ownership can be achieved.
  • [03:58] For context, Patrick shares an example of how two young REIN Members (who didn’t know each other) are working together to make home ownership real in exactly the way Derek describes.
  • [04:46] Derek explains the mindset shift that needs to occur around getting in the housing game. That is the premise of this book, the first in a series of three, which supports the strategy discussed in the upcoming second book “The Blueprint for the Self Funding House.”
  • [07:43] For background to this conversation, Derek explains what he does in the space of real estate, but more broadly, what legacy he wanted to leave and what problem he could help solve; what would his “moonshot” be.
  • [10:35] Patrick defines “soft costs” which are a huge part of the prohibitive cost of new construction, along with government bureaucracy on all levels. Essentially, they are all of the costs before the shovel hits the ground.
  • [12:00] “The people who create the problem, will never create the solution.” – Albert Einstein. On that basis Derek explains his radical solution of government backing away from the problem of affordable housing and letting the average person solve the problem with technology that already exists.
  • [15:26] At the age of 23 Derek used this very strategy with his first property, a triplex. Derek weaves his own story into the book and talks about the #1 concern and often a roadblock for people becoming a rental housing provider.
  • [18:32] Shift of mindset. Patrick and Derek surmise that home ownership can indeed be an investment and while some people may sincerely not wish to own a home, there is a large percentage of people for whom pride of ownership is important. These people, and in particular younger people are Derek’s target audience for this book.
  • [22:06] Derek shares another way of looking at the long-term advantage of owning a house with suites, in that the idea of “trading up” as we go is built in. He uses his triplex story as a perfect example.
  • [23:24] Knowing that this strategy works, having the first book about the mindset to get us there, and now the excitement around taking those steps, we want to know – when is the second book coming out Derek?!
  • [27:06] Patrick and Derek talk about the municipal and provincial (in some cases) changes in zoning that are already being proposed and frankly need to evolve to address not only lack of housing but lack of affordable housing.
  • [28:54] Derek advises where the book can be found online (also in the links above) and discusses the change of consciousness necessary to shift from I’ll never be able to afford this, to how can I, and wow look at all of the built in advantages.
  • [32:36] Derek offers his perspective on and a couple of analogies for the economic reality we live in and building resiliency for the future.
  • [37:13] Reflections on the long game of real estate. Derek and Patrick discuss immigration, interest rates and the relativity of affordability plus Patrick adds a story to illustrate the long-term impact of real estate ($20, a gold bar, and the title to a house).
  • [42:55] Your first home, is your first business. Derek explains the extraordinary skills we learn from home ownership and development.
  • [45:07] Derek describes his take on self-liquidating debt vs. non-liquidating debt and guidance on self reflection for long-term vision.
  • [48:17] Derek and Patrick riff about supporting and teaching the younger generation about building their net worth in ways such as Derek’s book but also having the conversations around spending and their values. They continue on to dig into envy, friendships and mentorship.
  • [54:40] Derek shares a story of how the self funding house can build a great community for us. It starts with a thought, that leads to a plan. We then reach out, forming positive networks and connections which can lead to mentorship and continued development and growth.
  • [57:52] Through his research Patrick has observed that rising rents correlate with rising interest rates. Derek notes that rising rents also drive more multi-family development, rising interest rates may force people from home ownership to the rental market which then results in a broader, high-quality tenant for you self funding house.
  • [61:11] Self funding houses also give us resiliency and breathing room because we have that additional rental income to help support our cost of living.
  • [62:31] Derek ends by encouraging those of us who have enjoyed and align with this conversation, to share the book with others, and share the links and information on social media.

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