Transcript
So the name of my company is Grocapitus which is a play on growing your capital. So capitalist is a Latin word. So the purpose of Grocapitus is to use data to find opportunities. In late 2019, a city in Idaho called Idaho Falls started moving up my charts. And there was a regional effect.
There were even smaller cities near it called Pocatello, Logan, and Twin Falls that were also moving up the chart at the same time. I was curious to figure out what was happening in Idaho Falls because typically I don't look at cities that small. The metro is only 154,000 people. So I, you know, get on a plane. Um, I go there and I learned that Idaho Falls has Idaho Falls National Laboratories.
And this is basically a research lab for anything related to nuclear energy. Whether you're building a nuclear engine on a aircraft carrier or you're building a nuclear plant for electricity or you're building nukes to blow stuff up, you have to go to INL. And INL is funded all the way to 2064. So it's it's really well funded. And what was happening is that as our world starts to become more dangerous, the government starts to pump more money into all kinds of things.
We need more aircraft carriers. We need more destroyers. Well, all of those use nuclear energy. And what had happened is starting about 15 20 years ago, the United States started shutting down our nuclear plants. And we shut down these nukes because of the climate lobby thinking that nuclear energy is bad.
They're wrong. It's nuclear energy is great and we should have kept all those plants. But as we shut the plants down, all of the companies that were keeping all of these plants operating started going out of business because there was no new business available. So we started losing all of the competency. So we had to build an island of competency because the Navy needed nuclear, you know, plants for their ships and the the air force needed them for their bombs.
So an island of competency was built in Idaho Falls around Idaho National Labs and a large number of uh of um you know people with PhDs in these kinds of areas were imported from other areas and convinced somehow to go live in Idaho Falls. So the income kept rising. So these people were had incomes but Idaho you know falls hadn't built a lot of housing out and so I I became convinced that this is an incredible place and it will grow. In 2019 I published articles saying I believe Idaho Falls is the next Provo and I published that in 2019 and of course I go out there and I buy land and it's very difficult to buy land. It's a very insulated community and so we built this property which was a small property.
I've built properties that are eight times larger in size than this property in terms of dollars. So, it was a small property because it was a small town, but it turned to be the most important property in my career because my life mission, which I call Mission 10K, a mission to build 10,000 rental town homes, came out of this little project. So, I I found this 5 acre piece of land and it's right in the middle of the city. And I'm like, "Oh my god, on one side I have Starbucks. On the other side, I have the largest church in Idaho Falls.
Both are equally important. This is a Mormon community." And I'm like, "Why doesn't anybody build anything on this?" Well, I find out that as it happens, uh, the there's a bunch of homes backing up to this piece of land. And the former mayor lives there, and he's very vocal about not having any apartments being built next to his home. And so for since 1994, developers have tried to build something and every single one of them has failed. So I'm an apartment developer and I realize it's a fool's errand to build try to build an apartment here.
This guy knows everybody. He's he's never going to let my property pass through. So I start doing research on building town homes because town homes look like single family homes. If you think about a town home, it's basically four single family homes clubed together. There's still a garage.
They're still a backyard. They don't look anything like apartments and they're not high. They're not high, right? They're two floors. So, I create a plan for town homes.
And I go back to this gentleman and directly address it with him. And I say, "Look, your city is exploding. Your home prices are going crazy. We have to find build more housing. Rebecca Casper, the mayor, loves what we're doing with town homes.
Could you let us through?" And he was very grumpy because he had been for 20 years his ego, his identity was try tied to making sure this piece of land never got anything built on it. But eventually I was able to convince him and he came to the city council meeting and said this is the best use of this land in the last 25 years. Why? Because I don't want the people of Idaho Falls to live in apartments. I want the people of Idaho Falls to live in homes.
And Ilawa is giving them a home. They're not able to afford homes because Idaho Falls homes were going insane. And this is the next best thing. You still get to live in a home and have a backyard, a front yard, a place for your dog to poop, but it's a little bit smaller and and it's it's cheaper and the rents are only about 1,600 according to this guy, Neal Bawa. Maybe they'll be more, but that's what he says and I believe him.
And he came to city council. I got approval. I bought the land. And as I start construction, COVID hits, supply chains go crazy. But I'm so fixated on this because the more I learn, the more I realize that town homes are different from apartments.
I'm an apartment guy. I build them. I buy them. So what I do is as I'm building Idaho Falls, I decided to do a survey of the people that I had in my apartments. And I did a survey, not with all of the apartments, just a small subset.
And I asked them two questions that changed my life. The first question was, "Are you happy?" Just, "Are you happy in my apartments?" And about 75% of the people said, "Yes, we're reasonably happy." And I was okay with that. And then the second question was, "Is this your home?" And very few people living in my apartment said yes. To all of them, they were waiting one day to make enough money or to gather enough money to buy a home. My apartment was just simply a place for them to live while they were waiting for their life to start.
And that hit me hard because I'm an immigrant and I wanted to do something good for America. And I thought that by building apartments I was doing doing something good. I am. But it wasn't bringing happiness to the people that were living there. It was just a convenience, a a way station to their goal.
So I finished building up Idaho Falls and it leased up in record time. And I asked the same two questions from those tenants in this small little town home community. Almost everybody I asked said, "This is my home." And to them, they knew they had lost the battle to be able to buy a home because their incomes were 60 to 85K. And you needed incomes of 95 to 120K to buy a starter home in Idaho Falls. And not only had they lost that battle, the moment interest rates started going up and mortgages started going up, that number of the the income required spiked because mortgages doubled.
So now you needed much higher incomes and people were only getting four or 5% salary increases. And so what I realized is that from the start of co March 2020 to now four years have passed and those four years have been the worst four years ever for the dream of American home ownership because during those four years home prices went ballistic 44% up and at the same time mortgages more than doubled. So the net effect was that your mortgage didn't go up by 44% because the homes went up by that but because the the interest rates also went up today the average mor the the median mortgage is up by 111%. But in the last four years Americans their salaries have only gone up by 19. This is the biggest gap in American history.
There have been gaps before where home prices went up faster than incomes, but they the the difference was here, a little gap. Now there's a massive gap. Home prices went up six times more or mortgages went up six times more than your incomes. 18 million American families got marooned before COVID. They would have finally managed to get a starter home and started their journey of home ownership.
But the chances that any of these 18 million will buy a home is extraordinarily low. Maybe somebody will get a big salary hike and will make it. But the most of these families between 60 and 85k are now forever renters. They hate it. They don't want to be forever renters.
They have kids and dogs and they want to live in a home. They want to have a garage to to to put their kayak, right? They want to have a a backyard where the dog can poop. and you can't get that from my apartments. So, I realized that my life mission was wrong.
And so, I changed my mission and that mission is Mission 10K, a mission to build 10,000 rental town homes. So, Idaho Falls ended up being extraordinarily profitable, very, very profitable. But what was cool about Idaho Falls is I put 66 tenants into my community. They don't want to leave. The community is full.
like my apartments, but they're not rent burdened. If you like this datadriven approach, check out the video above. That's where I go full mad scientist and I show you how to turn numbers into cash flow. Data to dirt to doors.