Embrace change, or you will get left behind. In this episode, Jason Bible and Robert Orfino discuss the future of the automotive industry and how Elon Musk is leading the race with Tesla’s electric vehicles. They talk about Tesla’s efficiency and how it’s raising automotive manufacturing in the United States. Robert and Jason then dig deeper into Tesla’s revolutionary approach to manufacturing that will change the game for most auto manufacturers and the number of factories built by Tesla around the world.
Listen to the podcast here:
Embrace Electric Vehicles With Co-Host Robert Orfino
I’m glad we have this old school Medium since Jason is in Facebook jail.
I need to fire my Twitter up if I’m going to start getting banned again.
That’s a battlefield out there.
Isn’t that what Elon said? It’s like, “It’s war.”
If you’re going to do it be prepared. We’re going to war.
If you’re going to war with Elon, your sorely under matched at 140 characters.
Let’s talk a little about Elon. Two people do an excellent YouTube show on Elon Musk and Tesla. One of the things that they did was talked about how the ICE, Internal Combustion Engine manufacturers are caught. Since none of them embraced it years ago like they should have, they’re like a wolf that’s caught its leg in a bear trap. They don’t have many good decisions to make. Eventually, they’re either going to have to chew off their leg or they’re going to die. We all know the Osborne effect, the Osborne computers back in the late ‘70s, early ‘80s. A guy comes out with a great computer. The Osborne Executive got a floppy disc, it can do word processing, and it’s great.
As that was released, Adam Osborne gets on one of these computer shows and says, “I’ve got an even better one coming next year.” What happens that year? Nobody buys that computer and the guy goes bankrupt. If you’re going to produce an all-electric Chevy Silverado, would you even announce it? You’re then going to stop your number one product. People are going to say, “I love my Silverado. I’m just going to wait.” You then take a big hit, or you don’t embrace electric vehicles and you keep pushing this machine.
That’s a very good point. I was trying to figure this out because Jeep is introducing a plug-in electric Wrangler. It’s a hybrid. Toyota has got a new RAV4 that’s a plug-in hybrid. I’m like, “Why are they doing this? No one wants a plug-in.” Then I’m like, “This makes perfect sense. They’re using this a stepping stone for the development of a full electric vehicle, but they also don’t want to tell everybody they’re working on a full electric RAV4.”
The question is, are they? We know it’s $2 billion for Gigafactory.
Toyota will do it.
Volkswagen and Audi are doing it. That means you take a hit in the short-term. If you’re not strong enough to take the hit, you die.
Which most American auto manufacturers are not.
You don’t even go for it and you’re just going to die.
This gets into politics because it gets interesting. The United States is unwilling to let American manufacturing die. They’re willing to throw Tesla to the wolves. When it comes to Ford and GM, those are just social programs at this point. It’s to support the Union. Now you have a Buggy Whip manufacturer with government subsidies and there are no more buggies.
As well as having all the Buggy Whip makers being loyal to another party.
When you look at some of the things that Andrew Yang has said when he talks about the real technological revolution that’s coming to the workforce, that’s it. The government has artificially propped up these companies for so long and now they’re going to get smoked.
I’ll tell you one of the things from my home state of New Jersey. You’re not allowed to pump your own gas.
It’s too dangerous.
You got to be a trained petroleum technician. While the real reason is, we don’t want to lose those jobs. We would take a massive hit in the job market. They keep the jobs of the gas pumpers inside that economy. Everything says we’re moving forward.
Let’s back up one second, Rob. What are those guys are going to do when it’s just supercharger stations?
That’s a big problem. Do the supercharger stations have attendants? Probably not. I bet it’s only about petroleum gas products.
The state of New Jersey is going to say, “We’re not going to change the law. We’re just going to let this thing finally die.”Tesla is just a big phone. Click To Tweet
It is another Elon Musk thing. Somebody says, “What are the government on Mars look like?” He said, “We’ll create laws, but they all have an expiration date. They’re all sunset.”
If you guys have not watched the Mars series on Netflix. It is good. It put 30, 40 years into the future but it also cuts of Neil deGrasse Tyson, Elon Musk, and all these high-powered scientists. They go back and forth between what Mars is going to look like in the future and their predictions and it is good.
What is happening in our marketplace is we’re about to open up a Terafactory here in Texas, which is a thousand times bigger than the Gigafactory.
Can you filter that with a mask? Is that like a nanoparticle but the opposite?
They’re talking about Cybertruck and they’re also talking about the Semis there. There are two things that people do not understand about the depth of Tesla’s mission. One is the advancement of batteries and two is the advancement of manufacturing. He is the reincarnation of Ford. The assembly line process now for Tesla has gotten better and better. They still have problems with the paint and the finish but that gets better. One of the things that he’s done is he’s built a second line up in Northern California to produce the Model Y that’s in a giant tent.
He has used the giant tents before.
It’s like the casino tents. They still have the paint room where that has to be sealed all the stuff but it rolls off. They’re assembling outside because it’s quicker to put this tent line up and eventually, they’ll build a building around it.
Do you know how funny those production meetings with him have got to be? They’re like, “We need another building. Can we just get a big tent?”
“What do we need a building for? Why don’t we put a tent up?” It’s California, it never rains.
It’s not like there’s all these sand storms or anything.
We are big fans of efficiency which is why we like Elon.
There are two things that have put them on the map. The NASA administrator talked about it at the launch. He said, “NASA tests each component rigorously.” It’s insane. I ran into a health and safety girl that worked down at NASA. We had some ties between the Health Science Center at NASA. I was like, “What kind of projects you’re working on?” She’s like, “For the last six months, I’ve been working on this new coffee pot.” She would get into the intricacies of the design and all this other stuff. It’s a crazy amount of science and it’s got to be safe here and all these considerations like, can it handle 3-Gs? SpaceX does the exact opposite where they just put it on launchpad and blow it up. It’s fast failures. It’s like, “We blew another one up. Let’s figure out why it blew up.” That process is so much faster. It’s a lot cheaper. It’s a lot more efficient.
The second thing is when you look at Tesla, there is no, “This is the 2019 Model Y, this is the 2020, and this is the 2021.” There are no yearly improvements. It’s all in real-time. They’re going through development process and building things better in real time. They’re collecting all this data from the cars. In terms of traditional auto manufacturers, the only one I think that can step up and do what they’re doing is Lexus and Toyota. The joke on one of the Tesla message boards I’m on is, “Elon just hire a couple of QC guys from Toyota.” Those guys are going to have a fit. They’re not going to like the tents. It’s like, “We’re building $80,000 cars in tents? We’re not doing it.” It’s that continuous improvement model on the engineering side.
There’s this great story there where some Ford and GM executives were touring a Toyota plant. I don’t think it was the one here. There’s one in Oklahoma. They’re walking through and at the end of every car assembly line, when the car is completely built, they take out on a little test drive. They shake them up and make sure everything’s solid. There’s an additional set of bays where they go and fix the stuff that wasn’t done right in production. When these executives were walking through the Toyota plant, they said, “Wait a minute. Usually, there are a couple of dozen of these bays.” At Toyota, there are two. The Toyota plant is gigantic.
They’re like, “Where do you take all the cars that weren’t built right?” They said, “You don’t even understand. We don’t do that here.” They’re like, “What do you mean? Surely you build cars that sometimes are not built right.” They said, “Yes, but we stopped the whole plant. We stopped the line and we’d go back. We’re going to fix this at the point of where this happened and then we’re not going to have this problem again.” Tesla is taking a step further where it’s like, “We’re not going to wait for the engineer and the public to catch up with this feature and they want this, and we’re going to roll it out to marketing. We’re going to fix it right here in the design process. We’re going to keep doing it and keep upgrading it.” That is turning that whole industry on its head.
A great example of that is the Model 3. The body and the frame of the Model 3, when it first came out, it was 70 individual parts. When the Model Y came out, they got it down to 30 parts. Now what they’re talking about is the Model Y that will be produced out of Berlin will be the first one to have a body with two parts. It saves on so much labor time, money, all those stuff to the point where we keep talking about these tents. The tents are put up because the demand is so high. We don’t have time to build a building. We just got to build the cars. They’ve also said that “Because the demand for the Model 3 and the Y is constantly going up, Texas might also have a line for the Model 3 and the Model Y,” which is interesting. There’s someone who’s saying there might be a Tesla factory in the Northeast.
That makes sense. I don’t know where they put it.
I don’t know if there’s any union. Maybe Pennsylvania would be the closest to a friendly state for them.
Do you put it in the Carolinas because it’s close enough?
The Carolinas would be good, but that’s where the lithium mines are.
They still got to go to manufacturing and come back.
If at some point Tesla creates one more factory in the United States and let’s say there are seven auto manufacturing lines, Elon have done what nobody has done in the last 30 years which is raised American auto manufacturing here in the United States. That’s because he’s figured out how to manufacture better in the automotive industry. People discount that. They keep looking at sales. It’s the same thing that we go through. It’s that revelation that we came to where the opportunity, he came to Texas and got a $60 million deduction. He’s going to hire the best and the brightest out of UT and A&M and all these engineers. They’re going to come from everywhere. It’s going to be a whole bunch of people there.
Don’t get me wrong, there are a lot of engineering talents in California but it is a shadow of the people that come out of Texas A&M and the University of Texas. The number of engineers that come out of those two schools is ridiculous. Do you hear that sucking sound, oil companies? It’s all your young talent just went to Tesla.
If you build something in the Northeast, you’ve got MIT, you’ve got all these other great colleges, all the Ivy Leagues up there. You have Berlin and China. They’re already talking about a second factory in China. The knock becomes, Tesla doesn’t make any money.
That’s okay. They don’t have to now.
I feel bad and almost cheated that at some point, the executives at Tesla did a little bit of a shift and said, “Let’s show $100 million every year. Let’s show some profits so everyone would get off our back about this while we’re opening up ten factories worldwide.”
With the dollar volume they run through, $100 million is nothing.
If you have ten factories with eighteen lines and each line is producing 10,000 vehicles a month, that’s 180 vehicles a month. All of a sudden, you’re sitting out there at 2.5 million vehicles a year. That’s when people realize and look at it and say, “He can do it. He can open up a plant anywhere in the world. He can do this other stuff. He’s got the battery technology. He’s putting in solar.” He’s one of the cheapest solar products out there in the marketplace. Tesla solar came down to $1. 49 a watt retail.
Let’s go back to building manufacturing plants in other countries. I don’t think most Americans understand how hard it is to build a plant in Europe. It’s ridiculous, the regulatory environment and all that stuff. What I don’t think people understand is of all of his bombastic nonsense on Twitter, he walks into Germany and says, “We want to do X, Y, and Z.” They go, “That sounds like a good idea.” He goes, “This is how we’re going to do it.” They go, “Okay.”
Tesla, Berlin has gone vertical within three months. It’ll be amazing to watch how fast we can build here in Texas. By the end of 2021, we have Cybertrucks rolling off the line in Austin.
They haven’t even broken ground.
I would say in the next 60 days, they’ll break ground.
Last call for freedom of speech.
Aaron Clarey wrote a book Enjoy The Decline and it’s pretty good.
I am absolutely enjoying the decline. I’m sentient to the decline of our empire. It’s happening. It’s fine. It cannot last forever.
It’s amazing to me to read about our founding fathers and vaccines. I had no idea that vaccines were that old. George Washington, Madison, and Jefferson have got to be watching this excrement show and going, “Are you idiot seriously debating?” You got to be thinking those three guys are sitting there and they’re like, “Are you guys kidding me? We knew this almost 200 years ago.”
Do you know what I can get? I can get a pound of Peel N’ Eat Shrimp for half price from 3:30 to 7:00 at my favorite bar down at Corpus Christi.
One of the great things about living in America is that you can live your life how you want.
I go to Christian’s and get $0.50 oysters.
Mario showed us this. He’s like, “Just order the twenty pieces.” I was like, “They have a twenty-piece chicken strip thing?” We ordered it and it was ridiculously good over Christian’s tailgate there off of White Oak.
This is the top of the food chain ever. Our gastronomic intake is peak. You can even get pounds and pounds of chicken. You can eat more chicken in one city with you and your son than a family ate in a week 100 years ago. This is the peak people. This is it. Enjoy it. This is great. It’s not going to happen to my generation. It’s not going to happen in your children’s generation. It will happen though.
Zero hedges theme since they started years ago. The survival rate is zero, which is true on a long enough timeline, mathematically speaking.
This takes us to SpaceX and the whole point of SpaceX is to move the human race to a different planet to double the chances of our survival. That is his whole goal. Elon wants to take us to Mars so that we double down on our survival.
When you get in those secret little rooms, he’s got with all of his other friends and they’re all looking around, they’re going, “We’ve got to get our children, our children’s children out of this clown circus as fast as possible because there are some real morons running stuff. They’ve got real dangerous weapons. We need to go ahead and get moving to the next spot. Can somebody get on that 3D printing for the housing development there in Mars.”
Another observation in all this is that the competitor to Tesla is not Ford or GM or Volkswagen or even Toyota. They’ve missed it. They’re a decade behind. They’re probably $10 billion behind. That’s a wolf they would have to cut off though. Toyota would have to go to all their shareholders saying, “We recognize there’s going to be a loss for the next two years. We’re going to reduce production because we have to change all our factory lines over to EV.” No shareholders going to stick with them, even though you should.
As much as I enjoy Tesla, when Toyota does get their stuff together, what they’re going to make is going to be ridiculous.The change in technology in electric vehicles is similar to when people got electricity into homes. Click To Tweet
I don’t believe that they will. I believe that the real threats, the real competitors to Tesla are Amazon, Apple, large tech companies that look at it and realize it’s not about automotive. It’s not the explosion machine on wheels. It’s the tech machine on wheels.
The joke I’ve always had about Tesla is they’re just big phones. If you’re already building the batteries and the motors are not, I don’t want to say they’re not that complex because they are in an automotive sense. They created the engineering but the technology has been there for the last two decades. The brushless electric motor. It’s not a ground piece of technology.
They build it well so it lasts a million miles. When you’re done using that, they put it on other things, on elevators and things like that. They constantly were using it. The real threat is Apple. They have been talking about an iCar for almost a decade. Amazon needs to figure out transportation We talked about this. Amazon is not a retailer. Amazon is a transportation company. It’s like waste management.
The waste management at one point said, “We’re not a garbage company. We’re a trucking company. The product that we moved just happens to be waste and other materials.” They internally look at themselves as a trucking company. Therefore, our improvements are going to be on transportation, not on buying silverware at midnight and having it at your house by 6:00. It’s not the sliver that’s the product. The product is the delivery. Amazon has figured out how to get your stuff quick. You don’t pay the premium. The manufacturer pays a premium. The manufacturer is now giving up some of their shares because they don’t now know how long I have to run it out to Sears. We’re seeing the Amazon deaths all around us, Sears and J.C. Penney and all this other stuff.
Amazon has figured out a way how to make you a suit. You take your measurements and send your measurements in Amazon. They’ll custom make a suit for you. If it doesn’t fit, you tell them where and you send it back. Just like you did anyway. You’d have to go to the tailor. I remember going to the tailor and its pain in the butt to get fitted for this stuff. Amazon has become this logistics company. I think that becomes a competition to Tesla because Elon has figured out transportation costs, whether it’s from here to Mars or from here to the Woodlands.
Although I do enjoy how Elon trolls Jeff. It is hilarious.
This 1,000-point rise in the stocks. All of a sudden, Elon is the top seven richest guy in the world. Elon Musk has more wealth than Warren Buffett.
That doesn’t include his holdings in all the other companies. That’s just Tesla.
We’re talking Tesla and maybe a little SpaceX. Those are the two most popular things. There’s this thing called The Boring Company. I don’t know if you saw that, but there are done internal boring competitions. There are teams in Chicago, Vegas, California, and other places. I think Atlanta sign these contracts to build these tunnels. Usually, it’s from the airport to downtown, which is brilliant. They’ve done an internal competition based on these teams. They said, “If you could build it the fastest, the most efficient with the least amount of defects are going to get rewarded.”
They’re all going at each other.
They’re all driving up in the spirit of competition. It’s a beautiful thing. Nobody else is even competing in that market yet.
SpaceX is $1 billion company.
We’ll get to Neuralink because that’s scary. The Boring Company is building a tunnel to avoid an hour and a half worth of traffic. Going from LAX to Sherman Oaks, any time of the day is an hour to an hour and a half. If you could do it in twelve minutes, everyone would do it. That’s not even a publicly-traded company.
You’re talking about New York.
Speak of the devil, Ford unleashes electric Mustang Mach-E race car with 1,400 horsepower. I’m like, “It’s not going to be fast enough.”
They’ve been talking about that and it probably won’t beat the Model S from years ago.
It’s like, “Check out this bad Mustang. It’s $200,000.” You’re like, “You could buy a used Model S for $40,000.”
The base model Porsche Taycan can’t beat the Model 3 performance.
That’s true, but I will tell you this. Around the track, it’s so ridiculous.
What do you think the Roadster’s going to be like with the rocket technology?
When I first graduated from college, I’m like, “I don’t know if I’ll ever have a Lambo or Ferrari or anything.” I could buy maybe a used one. Now that we’re doing this real estate thing, I started looking at buying something nice because I’m a car guy. When they announced the Roadster, I was like, “Even when we hit that billionaire status, I can’t see spending $3 million on a Bugatti Veyron.” Here’s the other problem. If you guys have ever watched SuperSpeedersRob, Rob Ferretti on YouTube. He used to own Gotham City Motorsports. These cars are giant pieces of junk.
The Bugatti Veyron is a W16 motor. It’s two W8 built by Volkswagen welded together with four turbochargers on it, 1600 horsepower. It’s ridiculously fast. The tires are glued to the rims. They’re $40,000 just for the tires. Not anybody can do it. No one can work on that car. Elon comes out and says, “I’m building a new Roadster. It’s going to be the fastest production car ever built, and it’s $200,000.” I was like, “Sign me up for that.” What’s the maintenance schedule going to be? Nothing. They are 100 whatever batteries smashed together in a Roadster, and it’s just got some Model 3 motors in it. It’s a tri-motor and that’s it. It weighs nothing.
It’s going to be tires and brakes. On that one, it’s probably $50,000, $60,000.
It’s tires and brakes. That’s it.
You take that thing in once every 50,000 miles.
Let’s say a decent Ferrari’s is $250,000 or even that Porsche GT3 I was driving in Vegas.
You got to have a mechanic on staff or don’t even park at your house. Just bring it over to the mechanic and say, “Get ready for the next time.”
All of the new Lamborghinis are not automatics. It’s that dual-clutch transmission that you have to drive like a manual. You can’t feather the throttle on a hill. It burns. The clutch is $10,000. You got to take the motor out to get to the clutch. I could get in my Tesla that’s faster than a Lambo, half the price. It’s faster than a $3 million Bugatti. I drive home and plug it in. I’ve said this before. If you guys are watching the automotive space, the change in technology is similar to when we got electricity into homes. That’s how groundbreaking this is. It’s not like going from a landline to a cell phone. This is literally going from oil and candles in your house to flipping a switch and turning on a light. It’s so insane.
However, it did take two generations, even two and a half to go from gas and oil over to electric. It took a long time. We make it seem looking back in history like, “1928 came around and Edison had created Con Edison in New York City, and everyone’s electric.” There were people into the World War II, into the early ‘40s that’s still were running gas out of there. You could still go to houses here in Houston and there are gas nipples all along the floor. It’s like, “This house is running on gas and it looks like it ran a long time on gas.” Back to Elon, he owns a number of companies that aren’t even public that could rival or be bigger than Tesla. SpaceX is one of them.
I think Neuralink is the other.
He said he would never take SpaceX public because of all the hassles with Tesla, but he will spin off the Starlink. If you haven’t realized this, Elon Musk has put somewhere like 600 satellites into orbit over the last year and a half. He is building the fastest WiFi network ever.
He can harass people on Twitter, wherever he’s at on planet earth.
He can run his own social media platform on there, and never have to worry about getting blocked. He is running this thing that will be faster than the fiber optics. It’s super-fast and it’ll be super cheap. We’ve talked about this thing about WiFi. The whole world needs internet. He’s doing it. We’ve talked about Al Gore and everyone up there, “Everyone needs the learning center.” He said, “I’ll just do this,” and he did it in three years. He gave everyone on the planet the opportunity to hook up to the internet in three years. It’s unbelievable. It’s faster than anyone and cheaper than anyone as a side hustle.
Our side hustle is eXp, and his is connecting the entire world with internet.
He realizes the things that he needs and he doesn’t want anyone else standing between him and what he needs. “I need internet. I need satellite internet for my cars and my self-driving network and all that stuff. I’m just going to build the network. I’m not relying on AT&T or any of that stuff.” Starlink already has a $4 billion, $5 billion valuations, and it’s not even built yet. He’s talked about taking that public.
That makes sense doing the spin-off. Here’s the other problem. I had a couple of friends who have been wildly successful. One of the things that they told me is they said, “Jason, trust me on this one. Never take a company public. Sell it then let them take it public.” Here’s the problem. You get the SEC involved in everything in your business, which for a car company is one thing, but for rocket companies, no thank you. The SEC just has to send you one piece of correspondence that says, “We understand that this and this is going on. Is that considered material to your investor’s wellbeing?”
“You keep blowing up rockets so we want you to stop that.”
What is one rocket explosion? Is that material versus something that’s not? I know Elon has got absolute disdain for attorney or any SEC. He’s like, “We’re not doing that. We’re not going to take it public,” but it makes sense for the spinoff technologies. I think Neuralink is the one that will be the big one.
That’s the scary one. What Elon has said is his number one fear was artificial intelligence. He thought the threat to humanity was artificial intelligence. What he said was, “If you can’t beat them, join them.” Effectively, he is creating the technology to make people cyborgs, to create human and cybernetics and technology embedded in your brain. They are already doing human clinical trials. The first thing they’re doing is taking epilepsy. We know where epilepsy happens in the brain and a lot of stuff. “If I can go in there and just fix the way the neurons are firing off, I could probably reduce if not cure epilepsy.” That’s one of those first things that he’s going for.
Also, strokes. We could fire Joe Biden back up with Elon Musk’s technology. We get Joe Biden up to Neuralink. Maybe we ought to be testing on all Joe first. We get him rebooted and he’ll be back to the old Joe.
However, it goes even farther when you start thinking about taking it to the next step and the next step. Ten steps away, you can walk in and say, “Teach me Kung Fu,” and within 30 seconds you say, “I know Kung Fu.”
I am now officially out of Facebook jail. I don’t know what I did. I hated too many people. My guess is it’s because of all the comments. I’ll make a post and literally there will be 100 comments with all bad information. What’s happening is Facebook does have some community standards when it comes to this public health stuff. The information that is being relayed is bad. It’s so bad that people are arguing within my post. One guy has taken upon himself where when someone posts an article, he’ll say, “They issued a retraction three days later.” These guys just keep hammering these other guys like, “What about this?” He’s like, “They retracted that four days later.” I think Facebook is shutting down my account.
Twitter shut down 150,000 accounts.
That makes sense. Twitter’s got a real problem. They had a little security problem. There are many people that are posting these anti-mask things that are funny. All these “science-related” articles are absolute gibberish. There are some people posting absolute gibberish. It doesn’t even look like English. I think Facebook is shutting that down. It’s not completely shutting me down, but it’s not allowing me to do things like Facebook Live. They’re worried like, “These guys are posting this. What is this guy going to say?” I’m back on Facebook Live, so it looks like that’s all working like it should. It’s interesting to see how the social media algorithms are dealing with healthcare information in this time of pandemic.
The State’s getting better. Here’s the thing. You’re just dealing with the fringe. Almost every single investor I talk to or potential investor, I do usually an hour conversation. I have talked to probably six passive investors for at least 30 minutes or more going over stuff. Another four active investors who bought some wholesale deals from us. In every conversation I ask, “Just curious, no judgment, are you wearing a mask?” Without a doubt, they’re like, “Yes, of course, I’m wearing a mask. I make my kids wearing masks. My wife wears a mask. We wear masks. We don’t go out to eat anymore.” I’m like, “I get it.” Most of the general public, all their sheep are in the pen. That’s fine because they’re going to live in lions die. I’m not a Facebook troll. I’m not interested in that stuff, but it does peak me. I’m like, “Could there be a majority of people that we know and respect not wearing a mask?” It turns out no.
What is surprising to me is that a lot of these people that are against some basic public health policies are on stages. These aren’t just randos. This isn’t your crazy uncle on Facebook. Some of these people speak about real estate for a living. They’re influencers. When you see this sort of thing, it’s like, “This is insanity guys, what are you talking about?” It’s not like the people that are posting my Facebook page are randos from Cincinnati. Some of these guys, they speak to a couple of randos from Michigan. By and large, it’s a lot of people who are on stages across the country. Do you have to just lose your brain? I don’t know what the deal is.The biggest threat to humanity is artificial intelligence. Click To Tweet
All our investors and our active investors, everyone has told me, “Yes, Rob. We wear a mask. It gets hot. I get sweaty. I have a beard. It sucks. I don’t like it but I put it on.”
No one’s screaming about their freedoms.
They’re all too busy making money.
That’s a good point. I’m literally in between one thing or another, and I’ve just posted something on Facebook and then bounce. In fact, if you guys see, I have gotten some text messages from some friends of mine where they said, “It seems like you just post on Facebook, and then we don’t hear from you.” I’m like, “That’s exactly what I’m doing.” I posted that on Facebook and I’m going to the next thing. I’m not going to sit there and argue back and forth with some of this nonsense.
We had a real estate meeting. I went over our deal meeting. We have thirteen active deals. Almost $4.5 million worth of real estate. I don’t have time to do it. It’s bothering me that you have some free time to put some stuff on Facebook, as long as I’m not giving enough work.
You wanted eyeballs and comments. I’m like, “Here we go.”
We’ve fallen into the same trap as the fake news media. We just report on the fringe. We take that camera angle where it looks like there are 1,000 people all rioting, but when you pull back there are twelve white suburban kids.
When I was watching that Trump interview, he said, “You do realize we closed the Chaz. We told them we were sending in our federal agents the next day.” That’s literally when the Chaz said, “This social experiment is over, everybody go home.”
Three or four dead, $40 million worth of damage and a lot of people got beat. It’s fringe. We fall into that same trap as everyone because we’re looking for people’s attention. The reality is most people are home going about their business as best they can inside this horrible time, hoping and praying that their loved ones and their friends don’t catch Corona. That’s what we’re dealing with. We can make it a little fun. We can show you how to make a little money. Let’s make a little money. At the end of the day, we’re going to troll the fringe and support the middle.
Speaking of make a little money. I was having a conversation and I asked this person, I’m like, “What is your interest rate on your personal house?” He was like, “It’s 4.1%, 4.2% something like that.” I was like, “Do you know it’s 2.5% right now for a 30-year.” They’re like, “You got to be kidding me.” He did some quick math save almost $240, $250, something like that a month. I’m like, “We are going to make so much money just for the interest rate.”
A couple of years ago, I’m playing golf at Trump National at Rancho Palos Verdes. We’re playing a beautiful course and it’s ridiculous. You stand on a tee box and you’re like, “Where’s the fairway.” You literally can’t see it on almost every hole. This was before he was president. He’s like, “Everything is gold.” If you go into the clubhouse, it’s ridiculous. It’s paisley wallpaper and it’s like, “There’s gold everywhere because it’s the best.” I’ll never forget. You’re out there on the course and we got bottles of water and some beers and some other stuff. They hand you these bottles of water and it’s all his brand. It’s Trump’s Ice. It’s got a picture of Trump and he’s doing a thumbs up and there’s a glacier behind him. I’m like, “This is ridiculous.” Not the Trump logo, but this face on it. It’s like, “Trump Ice, the coldest best water ever.”
I talked to my friend, who’s in the publicity business for the film studios. He’s attached to a lot of movies like The Martian with Matt Damon.
The only way I remember Matt Damon is I was like, “He’s in team America.”
They are all up and running again. They’re moving. Now they get around this shutdown, everyone tests where you come in and you take the temperature.
I saw the NFL procedure, it’s crazy.
We’re doing these procedures to get it in. He was saying so we all can understand it because we’re doing our first California Real Estate Covina Crisis Update. He is renting a mid-600 square foot, one-bedroom apartment in Santa Monica for $2,300 a month.
The size of your garage, $2,300 a month. Does he have a view of the ocean?
No. He’s got a view of the parking lot of the apartment in front of them that has a view of the ocean.
Those are probably like $3,500 a month or something. $2,300 a month to see a parking garage in a 600 square-foot crib in Santa Monica.
He said, “I was looking to buy a house,” because he landed a contract with a major studio, which will pay him a nice monthly retainer. It was 500 square-feet, tiny little cottage like the cottages we have in Corpus.
It’s smaller than a two-car garage.
Probably as nice as the ones I’ve built in Corpus. They wanted $800,000, $1,600, a square-foot.
That’s insane and not on the beach. That’s like a couple of rows back or something.
I can remember going back. All of a sudden that triggered all my thoughts. I had an opportunity to buy a 1,800 square-foot California craftsman. It was $900,000, but I’m thinking, “I could have easily gotten $1,500 a square foot on that.” Now you’re sitting there and you’re like, “Oh my God.” You lost all this money. I also had an opportunity right there at Pacific Palisades to buy a house for under $500,000. I looked and they’re all $2 million. Everything around Trump course down there, $2 million, $3 million, $4 million.
It’s super hilly right there.
It shifts. There are big cracks in there. You drive by one day and the road will be shut because there’s a big four-foot hole in the road.
You could see it on the hillside. They fence their backyard. I’m like, “Who goes in that backyard? You’ll just roll down the hill.”
It’s like one day you would drive-by and a portion of the fence is 5 feet below because it shifted. That’s where a lot of those mudslides happen and we’ve gotten better at it. You got to dig deeper and put the pylons deeper. That was a quick little shocker. I started doing California. I would say it’s almost impossible to be a wholesaler there.
Just be a real estate agent.
However, if you can add on those accessory dwelling units, you’re going to kill it. I was looking at it and the average square-foot like a Sherman Oaks or Encino was $1,200, $1,400. If you can add on 400 square-feet, you’re doing this at $200 a square-foot. You know you’re going to get $1,000 a square- foot for that. It’s a huge boon.
Let’s talk about what an accessory dwelling is.
In California the governor, this was before Governor Jerry Brown said, “We don’t have enough nursing homes in our state. We keep shipping our elderly to Arizona, New Mexico, and even Florida.”
Florida and Arizona are doing the jobs that California can’t with regards to their parents
Because it’s too expensive, you just couldn’t do it. He was approached by the At Home Care people. I’m not talking about this crap at the real estate. I’m talking about the real nursing home community. They’re like, “We can do this. We can come. We can give someone three hours a day. There’s an opportunity.” What they decided was they’re going to allow a granny suite or a granny flat to popped up in your backyard so that you can put grandma in the backyard and have a visiting nurse a couple of hours a day and that will suffice. That will keep the family together. It’s a brilliant idea, but you can’t discriminate. You can’t just say, “You can only build it to put old people in.”
You can’t discriminate so you have to open up the lawn to everyone. Of course, when real estate investors come in, we immediately come in and say, “We’re going to build these 400 square-feet and you Airbnb it. It’s going to be worth this and that.” That is what has happened in Southern California. For the flippers, the big move is the accessory dwelling unit. I know at least 2 or 3 guys down there who are doing well with it, but it’s still not a pleasant experience getting through all the red tape because California’s tough. There are two places worse to try and do construction, New York City and Chicago. It takes a year to get permits. They’re not a good place to do work. It’s not just that, as soon as you file a permit, someone from the office, “Mr. Union, do you know, there’s a job going up over here? You better go take a look.” The union comes over and he’s like, “You better have union plasterers and painters.” All of a sudden, the problem with working in those blue areas is your cost per labor is $65, $75 an hour.
I read this somewhere and I can’t remember what the city is. Maybe you and I were talking about it. Was this in Southern California?
The minimum hourly range was $42 to be in that building to be doing construction.
It was the city I thought where they said, “It’s $42 an hour.” That’s the minimum. If you go across the street, then it’s market rate.
People in Southern California, we want to let you know that we’re coming out there. I can’t wait to get back. I miss it but don’t let anyone at Texas know that. What we’re coming back to do is we know that there are a lot of real estate investors in the Southern California market that have looked very hard at Texas and have made investments into Texas. Some into apartments around Dallas when that was exploding years ago. Some into low-income housing down here along the Gulf Coast. Some into Austin, which is a very familiar to the Southern California market. We’re letting you know that we’re going to bring our Mastermind to Southern California. We think we’re going to get some things. We’ll get through the COVID crisis and we’ll get back to somewhat normal. We’ll do some of it on Zoom, some of it in person, some of it out here, and some of it out there. We want to let you guys know that we are going to be talking directly to a lot of California investors.
If you want to find out more about how you can invest in Texas, shoot us a text at (281) 401-9008 and put MASTERMINDCA. I know you’re from California. We’ll get back to you and we’ll talk to you about what we’re looking for. The returns are still fantastic. We still believe the market will be strong. We still focus on that low-income housing, low price under $150,000 price point. You can find them right here in the City of Houston. We already have some people from California to come out about 3, 4 times a year and they’re building out their portfolio here.
This is still a very strong market. We want to put a little Mastermind together, both online and in-person once we can get in the same room. We’re going to look to do that very quickly here. Who we’re looking for? We’re looking for individuals that make over six figures a year, have a 700 or better FICO, and have capital to deploy. If that’s you, which is mostly everyone in Southern California, and you’re interested in deploying some of that capital here into Texas to buy some properties, you will want to work with Mr. Texas Real Estate, (281) 401-9008, text MASTERMINDCA and we’ll get back to you.