Hello my friends. Welcome to another episode of Passive Real Estate Investing. I'm your host, Marco Santarelli. You know, a question that comes up from time to time is the question of will there be a market crash or at least a major correction? And I've been hearing this for about, geez, probably almost two years now, and I thought I would address this in an episode. And speaking of, of the podcast and episodes, I wanna just make a comment here. I've been toying with this idea recently of doing shorter episodes like somewhere in the neighborhood of 12 to 15 minutes each, and maybe doing them a little more frequently, like definitely have one per week, but maybe have two per week. So this is just an idea that I've been toying with for a while where I can produce the content quicker, maybe more content, but have it in shorter form, more rapidly digestible content.

So let me know what you think. I'm going to try this for a while and just have these 12, 15, maybe 20 minute episodes just shorter. It'll be easier and faster to consume. That typically means I won't have a guest on, but that doesn't mean I won't have guests going on in the future. I will, but they'll just be here and there. And when I do an episode interview, of course it's gonna be a longer episode. It'll be 30, 35 minutes, maybe 40 depending on the content and how much they have to talk about. So I hope you enjoy the shorter form. You can send me the feedback and let me know what you think. And you can do that by just going to passiverealestateinvesting.com. Or you can email me askmarco@passiverealestateinvesting.com.

FREE copy of The Ultimate Guide to Passive Real Estate Investing.

If you missed our last episode, be sure to listen to How Does the Corporate Transparency Act Affect Real Estate Investors?


Okay, well, let's get to the episode topic for the day.

And that is, will there be a market crash? Well, there are two or three fundamental things we need to look at when we consider this question. The first is, what is the quality of the borrower? And that might be obvious to some of you at times, but it's not always that obvious. You see, the quality of the mortgage borrower taking on that mortgage loan has a lot to do with the sustainability and capability or the capacity for them to maintain that loan. Meaning that they can make the monthly mortgage payments on an ongoing basis. So the question is, is are they qualified, well qualified or not at all? You see, back in 2008, I'm gonna refer to this from time to time, before the great recession of 2008, when we had that market crash that started in 2006. And I remember this very vividly. I, I watched it unfold, almost like watching the movie The Big Short, which is one of my favorite movies.

But it basically paints a very accurate picture of what happened back then. And the fact is, is that a lot of the people who were borrowing mortgage loans back then were not qualified. They shouldn't have been given a loan. They just didn't have the capability or the capacity, whether in terms of credit and or income. You know, there's all these running jokes there, there are jokes where if you could fog a mirror, you could qualify for a mortgage loan. There were no income loans, stated Income loans, ninja loans, the no income, no asset, no job loans, also referred to as the Ninja Loan. You know, people were able to qualify with credit scores as low as 620 and sometimes even lower into the five hundreds, which is almost at rock bottom. 'cause The score doesn't go to zero. The scores started about three 50 depending on which, you know which bureau you're looking at.

So it's important to consider the capacity and the qualification of the borrower. So back then, everybody, almost everybody could qualify for mortgage financing today. And for years now, credit scores have been much more robust. They have been stronger. So today we're looking at credit scores, a median credit score of 768.