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502: The BRRRR Investing Strategy: Your Path to Infinite Returns

Complete episode transcript:

Welcome to GRE! I’m your host, Keith Weinhold. Learn how the misery of INFLATION is altering BOTH your quality of life and the return on ALL of your investments…

… also, many people are now having their mortgage payments DOUBLE overnight and IT’S creating pain, then, what are the factors affecting the future direction of RENTS - all that, and more, today on Get Rich Education!

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Welcome to GRE! You’re listening to one of the longest-running and most listened-to shows on real estate investing. This is Get Rich Education. I’m your host, Keith Weinhold - the voice of RE since 2014.

I don’t know if you fully realize how much inflation is steering all of your investments - and it’s emphatic at a time like this when the dollar is down 25% cumulatively just in the last four years. Gosh!

And I’ve got some jaw-dropping inflation fact to share with you soon.

We’ll get to inflation’s RE affects shortly. But here’s what I mean.

In stocks, they keep riding up on a wave of optimism, anticipating a Fed interest rate cut - largely due to future INFLATION expectations. Yes, there’s jobs & GDP and some other factors.

But the stock market - which is a FORWARD-looking market - it moves based on what’s expected to happen 6 to 12 months from now.

STOCK investors know that rate cuts open the floodgates to get us closer to the “easy money” days again.

That’s why - as backwards as it is, the worse the economy looks, the lower that inflation tends to be, and then, in turn, the lower that interest rates can go, which the stock market likes.

So a worsening economy often pumps up the stock market. Soooo backwards.

Just look at what happens historically. Recessions sound bad. Yet what happens is that rates get cut in a recession - because the economy needs the help.

But nearer-term, it’s this ongoing expectation of the rate cut - that’s been looming out there for months but hasn’t happened - which CAN keep propelling the stock market to higher highs. It’s already hit all-time highs here recently. You can make the CASE that stocks should keep floating higher from here… based on that premise.

Before we look at real estate & inflation. Understand this.

Inflation has already widened the divide between the affluent and the deprived. That divide has gone from a gully to a canyon.

But... my gosh! Here’s the stat that I want to share with you. And you’re really going to get a sense for the gravity of what you’re living through this decade.

We've already seen more inflation in the first 51 months of the 2020s decade than in the ENTIRE decade of the 2010s. Already.

This gets really interesting. Let’s look at about the last four decades here.

Alright, in the 1990s decade, America had 34% cumulative inflation. Let’s go ahead and… we’ll associate this decade with President Bill Clinton.

We won’t tie any President to the inflation number because there are lag effects and other factors. A President really can’t take the credit or blame, in most cases. Just marking the era here.

So, 34% inflation in the 1990s.

The 2000s decade saw the GFC and… 29% inflation. Most of those were George W. Bush years.

The 2010s decade saw lower inflation → Just 19%. So that’s under 2% a year. These were mostly the Obama years here in the 2010s.

Little flex there from the former Commander in Chief.

Then the 2020s decade → have seen, like I alluded to, and under Joseph Robinette Biden, Jr. - yes, as the oldest sitting president ever, it’s easy to forget that he’s a “junior. In this young 2020s decade, we have, 21% cumulative inflation. Already.

So this figure is after just the first 51 months of this decade, if we’re counting from 2020… and this is largely due to supply shortages from the COVID pandemic.

So 21% ALREADY this decade… and just 19% ALLLL of last decade which was a full decade. That’s the impact.

That’s reflective of what you see in home prices and rent prices and utilities, transportation, labor, and almost every facet of your life.… and what you see in your weekly Costco bill and Trader Joe’s bill.

Who have we left out here? A one-term president, so far? Does somebody feel left out.

Yes, that is the actual person of one Donald John Trump.

Psssshhh!

All of those figures I cited are from the BLS, and I’ve been rounding to nearest whole percent.

But get this! Inflation over the next forty years could make the LAST 40 years seem like a picnic.

That's partly because we're $35T in debt and that figure now grows by $1T every single quarter… every 90 to 100 days. So we MUST keep dollar-printing to help pay it back.

But just, if the last forty years repeats itself, by the year 2064, which is the next forty years, we'll see these prices. Prepare for a future that looks like this:

Gas at $13.38 per gallon

The home price at $1.88 million

Average rent at $59,000 per year

And the average salary at $104,000

That is if inflation over the next 40 years, looks like that last 40 years.

Also, note how salaries don't keep pace with prices. That $104K average salary in the year 2064 doesn’t sound as high-flying as those other figures.

Well, this is all really frustrating for consumers… and even debilitating to one’s standard of living. Remember, this latest wave of inflation brought us the biggest YOY increase in homelessness - based on HUD figures.

and why you need to invest in something that reliably BENEFITS from inflation and pays you an income at the same time.

Look, here’s really, the deal. Dollars are abundant. So then isn’t it a paradox that a major spike in the supply of dollars would create more homelessness?

Well, you know that dollars are there for your taking - because so many more have been brought into existence. Dollars are abundant. So as they cycle through the economy, rather than going through the consumer motions, you can build your diverter. That’s where the world of abundance exists, so get into that flow.

Ultimately, REAL capital is scarce. Your time and energy are scarce. Natural resources are scarce. Labor is scarce.

What’s frustrating is that money ought to reflect that scarcity if it is going to accurately convey the value that enables people to make capital accumulation decisions.

And alas, we’re doing our measuring in dollars and the dollar is not remotely scarce.

The middle class and poor often have wages that don't track inflation, yet they disproportionately suffer the higher consumer prices.

The investor class owns assets that float up with inflation. And GRE listeners will do even better than that.

As income property owners with mortgages, we're winning three ways at the same time with the Inflation Triple Crown. That’s your dollar diverter.

Alright, so that’s longer-term inflation. I’ve been talking in terms of decades - both the past and with an extrapolation into the future to 2064 there - and it’s really rather sobering.

Well, what's the more CURRENT inflation situation? The situationship? Ha! What’s the situationship now?

In trying to quiet it down to their 2% target, the Fed has run into so many hurdles that you'd think they were training for this summer's Olympics in Paris.

After it peaked over 9% two full years ago now, inflation’s been bouncing near 3-and-a-half-percent for a year and they just keep having trouble getting it lower than that.

Hmmm... would we say that this could turn into Jerome Powell's three-quarters life crisis? We’ll see.

Rising inflation is one of the key factors that brought down the Roman Empire. They famously experienced hyperinflation after a series of emperors lowered the silver content of their currency, called the denarius.

Today, some lament that the dollar isn't backed by gold, silver, or anything else.

But it is.

It's backed by the world's most powerful military, strongest economy, reserve currency status, international trade agreements, and you also… must pay your taxes in dollars.

Dollars are still liquid and useful… but perpetually debased, so get them and then transition out of them.

Yet, at the same time, we're also the greatest debtor nation in world history. The easiest way to pay it all back is to simply print more and inflate more.

So that’s why it's almost inevitable that dollars will keep being worth less... and BTW, the two words “worth less” sound awfully close to the word “worthless”. Ha!

That’s where we keep heading.

Until you can send a Venmo request to the Fed to compensate you for your loss in purchasing power, we need to actually do something about this.

And the dollar that you had when you started listening to me today could very well now only be worth 99 cents. Ha!

We can either have our standard of living degraded by inflation or we will decide to profit from it.

So, if you haven't yet, check out GetRichEducation.com/TripleCrown.

Rather than impoverish you, learn how you can make inflation CREATE wealth for you three ways at the same time with that free, 3-part Inflation Triple Crown video series. Good learning there.

It’s free & easy to watch, again, at GetRichEducation.com/TripleCrown

Inflation seemingly seeps into everything.

Inflation took down the commercial sector - Apt buildings & offices. Apts are down 30-40% in the last two years. It’s all because inflation made the Fed panic and jack up those rates.

If that’s not jaw-dropping enough. Office values are down 80%+ in the last two years. 80%+, 90%+ in some cases.

Of course, office RE got the double-whammy of the inflation-induced interest rate hikes AND the Work-From-Anywhere movement.

That leaves residential 1-4 unit properties in good standing - and still impacted by inflation, but LESS impacted by inflation.

Yeah, your 1-4 unit RENTS are up - and I’ll talk more about rent later in the show today.

inflation also jacked up your expenses like insurance, utilities, maintenance & repair cost and more.

But as we move away from the inflation conversation now, of course, one big reason that 1-4s have stayed resilient is the American privilege of LTFIRD - and the fact that it’s 30 years for most US properties.

In fact, in 2022, 89% of homebuyers applied for the 30-year.

I think that you’re about to get more appreciation for this… perhaps than you’ve ever had.

The 30-year FRM is a UNIQUELY American construct.

And, BTW, some people don’t seem to know what the word “unique” means. You’ve probably heard people misusing this word all the time.

Unique does not mean something that’s sort of different.

Unique means “ONE of a kind”. Unique means something that does not exist ANYWHERE else.

What do I do here on this show? Besides giving you the occasional geography lesson as a side dish to your real estate, I do this with vocabulary, grammar, and syntax as well, don’t I?

Even though my own is surely imperfect.

Anyway, the reason that the 30-year mortgage can exist is due to our deep financial markets - especially our secondary market for mortgage-backed securities, where your loan gets packaged up and purchased by a bond investor - a bit like Ridge Lending Group President Caeli Ridge & I touched on last week.

The reason that mortgage-backed securities are attractive to investors in the U.S. and across the globe is because their government sponsorship makes them safe investments over long periods of time. They also provide a fixed payout to the MBS holder.

And see, the rate on the 30-year fixed-rate mortgage tracks closely to 10-year Treasurys because “U.S. real estate is almost as good an investment as a U.S. Treasury bond.”

They’ve got Fannie & Freddie insurance.

And that entire MBS process now has more guardrails in it than we had before the Global Financial Crisis.

We’re talking about the foundation here - really - of where you get your big lumps of money from - the 30-year FRM and its uniqueness.

Compared to the world, the US has very little variable rate debt.

Less than 4% of American mortgage borrowers have debt that’s on rate terms of a year or less. Over 96% of US debt is LTFRD, defined as 10 years or more.

That is virtually unparalleled worldwide. To compare us to some other developed nations, mortgage borrowers in Germany - just 47% of them have long-term fixed debt - and none of them can get 30-year debt.

Long-term debt, again, defined as ten years or more,

Is little to ZILCH for mortgage borrowers in Canada, the UK, Ireland, Italy, Sweden, Finland, Australia, and other developed nations like them.

In Canada, the most common mortgage terms reset to the prevailing market interest rate every five years.

In Finland, their mortgages reset annually or faster. Gosh, can you imagine if your mortgage rate reset every year like it does for the Finns?

Sheesh, that's more often than some people lose the remote control or rearrange their furniture.

OK. So what's this really mean?

Ya gotta… pour one out for most mortgage borrowers in the rest of the world.

They can’t lock in their mortgage interest rate for the long-term. So with rates doubling or tripling, starting from 3 years ago, it's totally ruined a lot of foreign homeowners.

Look, what if you're middle class and your monthly mortgage payment soars from $1,893 on Tuesday up to $3,415 on Wednesday?

That's what's happening elsewhere. It can go up 50% overnight and nearly double overnight in Australia, Europe and elsewhere.

But in the mortgage-advantaged US, we're safe.

If we buy at an 8% mortgage rate on a 30-year fixed amortizing loan today—just the plain, vanilla loan:

If rates rise to 10% later, you're happy to be locked-in at 8%

If rates fall to 6% later, you'll refinance

Note that I refrain from saying "just refinance". I don't like the word "just". You'll still need hours to provide documentation and your credit score will be checked. But it's worth it.

You won’t “just refinance”. Ha! You’ll refinance.

So think of it this way then, you can alter your deal with the bank whenever you want—and usually with no prepayment penalty. Yet the bank can't alter it on you.

What did Darth Vader say to Lando Calrissian in the “Empire Strikes Back?”. I am altering the deal, pray that I don’t alter it any further.

Ha! We better not play that clip here. I don’t know the copyright laws with LucasFilm or Disney there. Ha!

But you’re not a dark lord of the Sith for doing it… for altering the deal on the bank. You’re playing within the rules.

This is almost an unfair advantage for Americans.

The bottom line here - with this unique American advantage, is that, as rates change, you get to play both sides of the game. And that’s why we add smart properties with loans.

We turn that into wealth, with compound LEVERAGE.

Now, mere compound interest, that’s a vehicle for you to rely on more for your shorter-term funds, your cash or what you’re keeping more liquid.

Long-term wealth is build through compound LEVERAGE.

Short-term funds - that’s for compound INTEREST.

And… your bank is getting rich off of YOU. The national average bank account pays less than 1% on your savings.

If your money isn’t making about 4-5% today, you’re losing your hard-earned cash to inflation.

What I do, is keep my dollars in a private LIQUIDITY FUND. You can do this too.

Your cash generates up to an 8% return with—COMPOUND INTEREST—year in and year out instead of earning less than 1% sitting in your bank account - or even 4-5% elsewhere.

The minimum investment is just $25K.

You keep getting paid until you decide you want your money back. This private LIQUIDITY FUND has a decade-plus track record - and they’ve always paid their investors 100% in full and on time. I would know… because, I'm an investor with them myself.

See what it feels like to earn 8%. A lot of other GRE listeners are. To learn more, just text the word FAMILY to 66866 to learn more about Freedom Family Investments' LIQUIDITY FUND. Get 8% interest! Just do it right now, while you’re thinking about it. Text FAMILY to 66866.

More straight ahead, including what’s happening with rents. I’m Keith Weinhold. You’re listening to Get Rich Education.

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Welcome back… you’re listening to Episode 503 of Get Rich Education. I’m your host, Keith Weinhold.

We’ve got a poll result, from our Get Rich Education Instagram Page.

The poll question was simple. “When buying property, what’s more important?”

The purchase price or the mortgage rate.

71% of you said the purchase price. 29% of you said the mortgage rate.

Of course, both are important, but I think that the PURCHASE PRICE is the best answer - because your purchase price stays fixed for the life of your ownership period, and you can CHANGE your fixed mortgage rate and make it malleable… whenever it suits your needs.

As we talk about where the OPPORTUNITY is today, though multifamily apartments are going to bottom out sometime and therefore, at some point, they’ll make a wise investment - who REALLY knows - maybe the time for larger apartments is now…

… one opportunity is… giving good people OPTIONS during a housing affordability crisis.

And what’s going on right now is that… let me put it this way… when people have a hard time affording their own home today, basically (ha!) people are having a hard time transitioning from resenting their landlord to bickering with an HOA.

Ha! That’s kind of how the world works.

Seemingly everyone would rather be bickering with an HOA rather than resenting their landlord.

A lot of renters want to be buyers… they can’t… and that isn’t expected to change anytime soon… as prices will likely stay elevated… and mortgage rates are staying higher, longer too.

These things are ALMOST “knowns”. It’s often wise… to invest in trends that are known. Nothing’s completely predictable, but when you’re looking for a place to park your investment dollars, a few other things… are known… right now.

And AI is not expected to change what I’m about to tell you… anytime soon.

VR - virtual reality is not about to change what I’m about to tell you anytime soon.

AR - augmented reality isn’t either. Machine learning won’t imminently disrupt this.

And that is, that… everyone expects more long-term inflation. At what rate, no one knows.

People will need to live somewhere… and there are not enough places to live.

Those three facts, right there, are so simple. I love simple. Ha! One reason I love simple things is that I can remember it.

So many investors - investors in all types of things, say, from tech EFTs to junior mining stocks to crypto - you can make money there.

But, at times, investors will unnecessarily go out on the risk curve and GUESS and speculate… at a future trend.

Some are right. They’re often wrong, and adopting too much of that approach… that’s exactly when your risk-adjusted return goes down throughout your investor life.

Instead, you can get great returns - real estate pays 5 ways-type of returns - in these trends that I just described that are near certainties.

Why guess? When instead, you can almost be certain.

Often times, the certain thing is right… there.

It’s often easier, like I think I brought up on the show once before, inspired by Jeff Bezos - don’t ask what will change in 10 years.

The more insightful question and profitable question that fewer people think to ask is actually - “What will be the SAME in ten years?”

Well, when we talk about rents and the fact that tenants WILL keep paying you to live somewhere ten years from now, the trend that’s taking place here in the mid-20s decade - here in the mid 2020s, is that…

Rents are increasing the most where there hasn’t been enough new supply added - up 5-6% in parts of the Northeast including New York and Boston - Seattle too… and parts of the Midwest. Detroit and Honolulu rents are each up about 5%.

Rents are decreasing the least, and even declined - where they’ve added lots of new supply recently, like Austin, Texas and Miami, where they’re down 3% or more in each. New Orleans is another major city that’s down - at minus 1%.

But among the larger cities, Austin, Texas is the WORST performer in the nation right now.

If you’re listening to this either this week or you’re listening to this ten years from today, if you want to know future rent trends, look at where they’re adding supply.

Especially in apartments. But all these new apartments will fill up and nationally, they’re building fewer apartments this year than last year’s apartment-building boom.

When we talk about rents and who owns SINGLE-FAMILY HOMES, there are a few myths that I want to help bust for you here.

There seems to be this misconception or misinformation that GIANT Wall Street firms are buying up all the SFRs. That’s just not true.

Now, there is more participation from the big firms than there has been historically, but those that own 1 to 9 SFRs… which is our definition of mom & pop investors here… constitute 80% of the SFR market.

80% own one to nine units. Now, you might own more than 9.

In fact, 14% are in that next tier up, owning 10 to 99 SFRs. Then 3% - known as small national investors own between a hundred and a thousand.

And, what’s left, the big institutional investors - those that own 1,000+ SFRs - and you’ve heard of some of these companies - Invitation Homes, and another is American Homes 4 Rent.

Progress Residential, Blackstone, First Key Homes - all those big players own just 3% of the market.

So again, 80% are the small ones - the mom & pops… a highly fractured market.

There are a total of 82 million SFHs in the United States. Out of all of them, do you have any idea what percent are OOed and how many are rentals?

It’s 83% OOed and 17% of the single-families are rentals. So about one-sixth of SFHs are rented out.

Now, here’s the thing. Some people tend to think of mom and pop single-family rental operators as unsophisticated charity case workers who never raise rents.

That’s part of the perception out there.

But that narrative has never really been true, and, in fact, the COO of American Homes 4 Rent - his name’s Bryan Smith - recently brought up this key point on their recent earnings call.

He said that while historically mom and pops hadn't always priced directly to market because of a lack of market data, "they've migrated into a strategy that's closer to ours."

How is this and why is this? Anymore, why ARE mom & pops raising rents just about as aggressively as the big institutional players.

It’s really increased transparency on the rents that landlords are asking… through internet listing sites like Zillow.

It's not that mom and pops didn't increase rents before. (I mean… just look at what happened with rising rents in the 1970s and 80s before institutions were in the sector.)

But when there's a lack of rent amount transparency, it takes longer for operators to discover and adjust to market pricing-- especially for smaller players in a deeply fragmented market.

That's the part that’s changing.

But see, increased transparency works both ways. It’s good for you and bad for you as a property investor.

This information helps tenants too. In upswing markets, operators may push rents faster than they would otherwise.

But in a downswing market, operators may cut or keep rents flat faster in order to lease the unit.

Because tenants can easily see what other LLs are charging and compare features. When you price too high, units sit vacant and generate no income.

Since renters benefit from increased transparency too, if they see two similar homes, they're usually picking the better deal.

And increased transparency is why NEW lease rent growth is cooling off.

In fact, CoreLogic just released their latest SF Rent Index report last week. It showed that, nationally rents are up 3.4%, which coincidentally, happens to be the same as the latest CPI inflation number.

Detached properties are seeing more rent growth than ATTACHED ones - like townhomes. If you think about it, that makes sense. Townhomes are in less demand now.

Because the homeownership dream, is when one moves out of the apartment & buys a detached house.

And since that’s so unaffordable to buy here in the 2020s decade, that’s why more people are willing to pay more for to rent the detached type.

Note that SFR rent growth has moderated since mortgage rates spiked-- further dispelling the sticky myth that rents boom when home sales fall.

Remember - when homes price growth is really hot - like it was in 2021 and 2022 - near 15% - rent growth tends to be hot too. It was ALSO near 15%.

And when home price growth is moderate, like it is now, well, rent price growth is moderate too.

Prices and rents move together. They’re POSITIVELY correlated. Some people think they move inversely… and we’re looking at history over hunches again - what REALLY happens here.

So though you’re almost certainly going to get nominal rent growth over time, it’s not a good thing for you to count on it in the short-term - it NEVER is, in any era.

The time for you to push rents is, of course, in any market, when you go for NEW leases. A new lease with a new tenant is going to be higher than a renewal lease.

It’s the ol’ - this has been a good tenant for three years, so I don’t want to push the rent too hard & lose them.

To review what you’ve learned today, inflation is affecting ALL of your investments, 30-year FRMs are a UNIQUE American advantage…

…it’s wise to invest in future trends that are KNOWN, if you want to know what is going to happen with rents in the near future, look where they’ve added supply.

Less new supply correlates with more rent growth… and large institutional investors own just 3% of SFRs.

If you enjoy the show, please, tell a friend about it.

Isaiah on LI had the most flattering comment. Over there, he wrote and called GRE “The best podcast on the planet.”

I… really don’t think that I can take credit for that, though… I’d like to think we’re a good resource for building your wealth through REI and regularly informing you, giving you ideas that you’ve never thought about before that add real value to your life.

You’ve heard of Bidenomics. The first portmanteau type that I ever heard about a President’s economic policies is REAGANomics, though it was a little before my time.

Here on the show next week, with us, will be none other than “The Father of Reaganomics”.

Yes, late President RONALD REAGAN’S Budget Director will be here next week. Basically, he was Reagan’s “Money Guy”.

His name is David Stockman and he often met with the President in the Oval Office, advising Reagan on economic affairs.

I have asked David Stockman, if besides talking about the condition of today’s economy next week, he’ll also discuss real estate - and he agreed to do so.

That’s “The Father of Reaganomics”. You can look forward to he & I together next week here on the show.

You might be one of the listeners that’s been here every single week since 2014 - just like I’ve been here for you.

A new podcast is published every Monday. If you want more our DQYD E-mail Letter is published and sent about weekly, that’s typically been on Thursdays lately. Then, there are many new videos published each month over on our Get Rich Education YouTube Channel. Those are the main three places that you can find us.

Until next week, if you enjoy listening, I really appreciate if you would told a friend about the Get Rich Education Podcast.

Until then, I’m your host, KW. Don’t Quit Your Daydream!

Direct download: GREepisode503_b.mp3
Category:general -- posted at: 4:00am EST

Mon, 20 May 2024

You can get financially free twice as fast with the BRRRR Strategy instead of buy-and-hold.

But it’s less passive.

BRRRR stands for: Buy, Rehabilitate, Rent, Refinance, and Repeat.

You can get an infinite return this way, by generating yield with none of your own money left in the deal.

Learn how to obtain BRRRR financing from Caeli Ridge, President of Ridge Lending Group.

The LTVs are 70%, 75%, or 80% depending on the property and financing type.

RidgeLendingGroup.com specializes in helping investors buy income property.

Resources mentioned:

For access to properties or free help with a

GRE Investment Coach, start here:

Get mortgage loans for investment property:

RidgeLendingGroup.com or call 855-74-RIDGE

or e-mail: info@RidgeLendingGroup.com

Invest with Freedom Family Investments.

You get paid first: Text FAMILY to 66866

For advertising inquiries, visit:

Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”

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501: Home Prices Aren't Really Up. Here's Why.

Complete episode transcript:

Keith Weinhold (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. The real estate BRRRR strategy is a shortcut to growing your wealth. But it's less passive than buy and hold with a property manager. Learn what is the Burr strategy and then about some of its pros and cons, mistakes you must avoid and financing programs available, and how it can generate infinite returns for you today and get rich. Education.

Robert Syslo (00:00:28) - Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Reinhold writes for both Forbes and Rich Dad Advisors, and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener.

Robert Syslo (00:01:02) - Phone apps build wealth on the go with the get Rich education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.

Corey Coates (00:01:13) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold (00:01:30) - Welcome from Bridgeport, Connecticut, to Bridgeport, Texas, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get Rich education. Let's Do Good in the world and abolish the term slumlord profiting at the same time by providing housing to others. It's clean, safe, affordable and functional. This is where, you know, on this show, we often tell you how to become financially free through real estate investing in the next 5 to 10 years without having to be a landlord or flipper. We're going to talk about how to shorten that timeline in a moment, but I have a couple resources to share with you. First, one, late breaking development at GRI marketplace that's been popular is in Florida with new builds, brand new construction for plex's duplexes and single family rentals with points paid a 4.25% mortgage rate.

Keith Weinhold (00:02:28) - Yes, 4.25%. You can pay fewer points and still get a 4.75% rate. Also, some good low interest rate deals for foreign nationals. Go ahead and connect with a great investment coach and learn about those at great marketplace.com. For a 4.25% mortgage rate. If you're a Spanish speaker or have Spanish speaking friends, check out get Rich education.com/espanol to see my free video course on how real estate pays five ways in Spanish. It's pretty interesting how our team here has applied AI to show me speak it in Spanish. Again, you can see that at get Rich education. Com slash espanol. Now the BR real estate investing strategy is popular because it can reduce your out-of-pocket expense for property substantially. Let's break it down here. That is the b are are are are. There are four hours after the B which stands for the first B is buy. You buy a distressed property that needs to be fixed up. Then the R's stand for rehab, then rent, then refinance at that higher value, then repeat. More of you have been buying BR property through GRE marketplace.

Keith Weinhold (00:03:52) - Yes, we help you find not just buy and hold properties here, but properties optimized for the BR as well. There are properties that need some work and they are not turnkey, not ready to go with little or no money. In less than three years, you can have a portfolio of 10 to 20 properties with the BR strategy. That's a shortcut, but that does take some work. It's less passive. You're buying distressed property that needs to be fixed up, and you have to be sure that the contractor is getting the work done on time, on budget, and of adequate quality standards. And vetting contractors and dealing with contractors is not easy. I'm going to have a few tips to help you deal with that today, but if you get it dialed in, BR lets you pursue an infinite return strategy where you buy property at a low price, renovated, get it rented, and then refinance it at the higher value. And at times you can get all of your invested cash out on that refinance.

Keith Weinhold (00:05:04) - Well, because a return on investment formula is simply your dollars returned divided by the cash that you have invested in the deal. Well, therefore, if you have no money left in the deal anymore, your return is infinite. Listen carefully. If our guest doesn't do it, then what I'll do is introduce an example here in our conversation for you to get you to help understand the BR. And if this is new to you, this will stretch your thinking somewhat. And then after our break, I'm going to come back and we'll discuss more about any changes to conventional loans for buy and hold investment property. And there's one place that's created more financial freedom through real estate than any other lender in the entire nation. It's time for a big welcome back to their leader, Charlie Rich.

Caeli Ridge (00:06:02) - Hey, Keith. Thank you for having me. It's always a pleasure to be here.

Keith Weinhold (00:06:05) - Well, you know who she is by now. She leads Ridge Lending Group. They're an investor centric lender, and she does such a good, concise job of explaining what real estate investors need to know in optimizing your loan positions.

Keith Weinhold (00:06:18) - And that's why she's here with us again. And, Charlie, rather than just learn about conventional buy and hold loans or refinance loans like we've covered in the past, let's talk about lending for the BR real estate investing method. BR is a method for buying distressed property at a discount. So not turnkey, not fixed up property. Here in BR stands for buy, rehab, rent, refinance and repeat. Now for these loans. Is the lender looking more I guess Charlie maybe we should start with are they looking at the property strength or more at the borrower strength for BR loans?

Caeli Ridge (00:06:54) - Well, first of all, I would say that BR is one of my favorite strategies for real estate investors, especially if they're getting into diversifying their portfolio. I think BR is a very lucrative way to achieve the returns that people are after, not only in appreciation but also in cash flow. You can get some really great leverage in these ROI and ends up being better if you find the right properties. So I'm a big fan of the BR, but to your question, Keith, it depends on what product they're going to elicit for the end loan, for that refinance loan, if we're talking about a conventional loan, Fannie, Freddie and the qualifications are still about the individual and their debt to income ratios, etc. if we're going to put this on a debt service coverage ratio, which it can apply to both, or can, I mean, the strategy does not obligate them to one or the other.

Caeli Ridge (00:07:39) - So we can go conventional where it's still going to be about the individual. Or we can look at more of a debt service coverage ratio, where it's about the income of the property in relation to the mortgage payment.

Keith Weinhold (00:07:48) - And before we go on, of course, identifying a deal is a key here in the BR strategy. Is there any guidance you'd give with identification of that property. Because you might know more from the lender perspective on what's going to be lendable.

Caeli Ridge (00:08:03) - Well, as long as it's habitable, we can lend on it. I would say that you really want to pay close attention to a couple of things. From a lender's perspective, the ARV, right? The after rehab after repair value is the linchpin to all of this. And if you're out there getting your comps from whatever sources, the agent or Zillow or Redfin or whatever it is, the more data that you can gather, the better. But just keep in mind that the ones and zeros that you're probably gaining access to don't necessarily have the components that show all the rehab work that you're putting into it.

Caeli Ridge (00:08:34) - So if you're getting a value of a property like kind property in the area or vicinity that the property is located, it's not always going to attest to what extras you put in, whether it be the hardwoods or square footage or whatever it may be. Just keep in mind that you may not be on point there, and real estate agents, I would want you to have or be working with one that really understands the BR method, aka investor models, to make sure that you don't get caught in a scenario where you're expecting a value of x that comes in at Y, that can be very devastating to the BR methodology, especially for new investors.

Keith Weinhold (00:09:09) - It was more about coming up with the ARV because with a conventional loan on a conforming property, that value that you're lending against is typically the appraisal.

Caeli Ridge (00:09:21) - Correct. And the appraisal is going to take into consideration those rehab pieces. But it's not dollar for dollar. And while I don't know that we want to go down the appraisal rabbit hole, I will tell you that if you've got $50,000 of rehab into the property, that doesn't necessarily mean you're going to get a full 50,000 in extra value.

Caeli Ridge (00:09:38) - A lot of it has to do with what you paid for it. Like Keith, you said at the top of the podcast here, distressed property. A lot of times when people are getting into BR, they're finding under market value property to begin with, that's already worth more. They're putting in some real value adds, maybe cosmetic, maybe a little bit more, and then expecting quite a bit more in value. So there's definitely a science to it. But just make sure that for all intents and purposes, you're gathering as much data as you can. And the agent, if you're using a real estate agent to help with MLS listings, etc., that they have some basis of background within this, this particular philosophy.

Keith Weinhold (00:10:12) - Okay, so we are projecting an RV in after repair value here, and then we need to lend against a percentage of a certain value. So clearly since in this case the property is distressed, well then if the property is the lender's collateral and that collateral is a little, you know, why don't we call it damaged, if you will? Well, then I'm going to speculate that is that lender probably not going to give you as favorable loan terms as they would on a conforming property.

Keith Weinhold (00:10:39) - So tell us more about how those bur loan terms look.

Caeli Ridge (00:10:42) - So you might be surprised. Again, as long as the property is habitable the LTV is going to be the same. The value of the property. It is probably what you're going to notice more than what the lending side is going to allow for in the loan to value. So on a single family residence, if it's habitable, we're going to give the individual up to 75% of that ARV. Now, I don't know if we're ready to go down this road. I think we should talk about it at some point. The ARV and how we want to maximize and not leave any money on the table. We want to discuss the purchase price and the acquisition. I think we'll come to that. But to answer your question, habitable 75% single family or 70% on a 2 to 4 unit is going to be the maximum loan to value using the appraisal. When we talk about a cash out refinance of an investment property, which may be different if we get into a rate and term refinance as a purpose of Bur, which will probably touch on as well.

Keith Weinhold (00:11:36) - What I think for the listener benefit here, maybe it's good to jump into an example if you want to apply some real numbers here to a bird deal, and then let's walk through that with the financing and more.

Caeli Ridge (00:11:48) - Let's start with cash out, because it is different than a rate and term. So cash out simply to clarify means that the individual is going to get cash in hand. We are not simply paying off an existing hard money loan. That is a rate and term refinance. So we want to start with cash out where the cash to acquire the property was the individual sourced and seasoned funds. And let's assume that the scenario looks like this. They paid $100,000 for the property. And then there's $50,000 in renovation with the expectation. Or let's just say that we get an appraisal for 200,000. So at 200,000 and it's a single family residence, 75% of that is 150,000. Okay. So that pretty much covers their total acquisition costs. But then we've got a recommendation.

Keith Weinhold (00:12:28) - Cost is quite.

Caeli Ridge (00:12:29) - Covered. But we have to account for closing costs tax and insurance.

Caeli Ridge (00:12:31) - Let's just make it around ten grand. So the individual is going to end up with 140,000 from their 150 total acquisition cost. If you divide those two numbers, you're probably going to be at what? So 140 divided by 150,000. Yeah, 93% overall leverage. You've got ten grand skin in the game. And when you look at it from that perspective, 93% over all loan to value or leverage of this property is very, very high. If you can get a deal to work like that, you're doing very well.

Keith Weinhold (00:12:59) - And you can see why people like this and why people are attracted to this. So go ahead and tell us more about this. Because really, when we talk about lending for a bigger property, we're probably talking about two different loans, right? We're talking about the purchase price upfront and then the refinancing later on.

Caeli Ridge (00:13:17) - Right. So let's going back to my example. If you paid cash for the property, if that 150,000 was your sourced in season funds. And if you want Keith tell me later and I'll go into what source and season it is.

Caeli Ridge (00:13:28) - But you have 150,000 in on this property. The key to getting up to the maximum of 150 back. Or in our example, you ended up with 140 back because we accounted for ten grand. And in closing, cost is to make sure this is wildly important. And a lot of people get this wrong the first time they go down the Burr road. Make sure both the purchase price and the acquisition costs are listed on your final CD, aka Closing Disclosure. A closing disclosure comes to you at closing, where it's a document, a form that illustrates all of the line item pluses and minuses of the buyer and the seller and what everybody netted at the end. The CD must have the total 150 listed on there, and just one number is fine. It can be broken up into two numbers, whatever. But as long as both numbers are listed on the CD, you as the borrower, our client, her guidelines are eligible to get up to that much back. So the guideline states that the individual cash in hand cannot exceed a maximum of what the total acquisition costs listed on that CD is.

Caeli Ridge (00:14:28) - So what the common mistake is, let's just keep using our 100,000 purchase in our $50,000 renovation. The common mistake that people make is, is that they pay the 100,000, the seller is made whole. And then the day after closing, they are officially now the owner of this property. They send the 50,000 out to the contractor. Seems obvious, right? Well, in doing it that way, you've left 50,000 on the table and now you're going to have to wait 12 months per new guideline to have 12 months of ownership, seasoned ownership for Fannie Freddie to get the total 150. So make sure that the total 150 is on that CD. And the way to do this, just one more little detail. You want to be working with an escrow company that provides something called an escrow hold back. Because a lot of times when I give this advice, people say, well, I don't really want to release $50,000 to the contractor before they even started any of the work, right? That makes sense to me.

Caeli Ridge (00:15:16) - And most escrow companies do this in escrow. Hold back says that the hundred grand goes to the seller. The 50,000 is earmarked for the general contract, you've gotten your bids, etc., but the escrow company will then deliver the 50,000 upon your approval as draws to the contractor as work is being completed. And that kind of absolves that extra layer of risk. But now you've done the appropriate thing for the financing to get maximize your cash out, and you're not leaving yourself in a weird position to frontload 50 grand before you know they've even started on whatever repairs there are.

Keith Weinhold (00:15:49) - Yes. How much motivation does every contractor have if they've already got their 50 K for 50 K worth of work before they do their work? And it works this way a lot in the contracting world, where progress payments are made intermittently as the contractor performs their work. So tell us more about what we need to know here. Clearly, especially when it comes to the Bir and loans, because you just gave us a great mistake to avoid there.

Caeli Ridge (00:16:13) - Kind of keeping on that theme. And then let's talk about a rate and term refinance. You know, some of the pushback that I'll get when I have these conversations. Well, you get your bids. Okay. We'll start talking about the 50,000 renovation per hour example. And you probably get a low and a high and middle. Maybe you go with the middle. It's been my experience personally and just through conversations that the bid is 50,000. If you don't have the upfront conversation to say, I'm not going to pay a cent over the 50,000 and or you negotiate to say, okay, what is our variance here? Because a lot of times the contractor is not going to be pigeonholed to 50,000. They're going back and say, no, I'm not going to sign anything that says that it will not exceed 50,000. There are costs and things that are out of my control, blah, blah, blah. Then coming up with, okay, fine, 55,000, 50, 2000, whatever that margin might be, including that in there and then having the conversation that says, okay, fine, because you don't want to leave that money on the table.

Caeli Ridge (00:17:03) - So let me take a step back. 50,000 becomes 55,000. And if you didn't have it on the CD, that $5,000 is not eligible to get back. So if you increase the amount that's on that CD, per the conversation with your contractor, make sure one of two things that if it isn't spent, that it's coming back to you and assuming if it is, then everybody is on the same page and it's just going to be part of the expense and part of what you have potential to get back. So just food for thought there. Then moving into the rate and term refinance. Now this is something totally different. This means that you went out and got a hard money lump, some kind of a private bridge loan, which by the way, Ridge does. We have bridge loans that can help fund the purchase and the renovation. We can talk about that if you like. But if you went out and got a hard money loan, this is no longer a cash out refinance unless the value is so high that based on a 75% LTV for cash out, that there's enough money on the table that you don't want to wait the 12 months.

Caeli Ridge (00:18:00) - I'm going to pause on that for a second and just say that the numbers work for a rate and term refinance, where we have an existing loan. Let's say you've got a hard money loan for 150,000. A rate and term refinance lets us go to 80% loan to value on a single family, 75 on a 2 to 4. If you recall a minute ago it was 75 and 70. That's cash out. Refinance rate and term refinance rules when you're not getting any money in hand, were simply paying off existing liens plus closing costs. They increase the LTV allowances. So 75 2 to 480% on a single family residence. So if we can go 80% on the 200,000, what is that one? I can't do mental math, Keith. So 80% of 200,000 is 160. So in that case think about this. So let's just keep going back to our example. You've got 150 into it. We've got 10,000 of closing costs okay. 150 is a hard money loan that we have to pay off. And the 10,000 is what the new refinance closing costs are going to be.

Caeli Ridge (00:19:00) - The value came in at 200,000. 80% of that is 160,000. That's no skin in the game. You have completely covered the hard money loan paid for the closing costs. I mean, you can't get better than that. That's 100% leverage, right? You're not getting cash back. Now let's take that and say that the value came in at 250. And that's a lot of money. In that case, you may want to wait for the 12 months to get that cash back, because you're going to be limited if you use leverage to acquire the property versus your own cash, that's when you're going to have to wait that 12 months. Or if you're cash acquisition, the numbers work out where you'd get an exponentially more amount than what you put into it. You may want to wait there, too. It really just depends on what that RV is going to be. That's why it's the linchpin that'll make you decide whether you're going to wait the 12 months, or if you're ready to rock in in the immediate terms with a rate and term refi.

Caeli Ridge (00:19:53) - No seasoning. If you're not getting cash back, I don't care. We can do it immediately or a cash out refinance. As long as you're not getting more back than what you paid for it. And we can show that the dollars to acquire all in the CD and they came from, you know, seasoning.

Keith Weinhold (00:20:07) - All right. So it's the BR strategy with the cash out refinance and then the burr strategy with the rate and term terms there, if you will. Is there anything else that we need to know about either one of those.

Caeli Ridge (00:20:19) - Really a lot of people always want to say what are the rate differences? And I would say that, you know, overall they're going to be roughly the same when we start talking about those LP's. Again, Keith, low level price adjustments there, pluses and minuses that have to do with risk. A cash out is a higher risk than a rate and term, a rate and term at 80% versus a cash out at 75% might offset that. So relatively speaking, they're probably going to be within an eighth to a quarter percentage point if all the other variables are equal.

Keith Weinhold (00:20:44) - Now, clearly, I think of a hard money loan is something that allows. You to put both the purchase price of a property and the projected rehab cost, and roll those all into the loan at closing. That's what I think of as a hard money loan. Is there any difference between a hard money loan and the other things that you're describing to us?

Caeli Ridge (00:21:04) - Not really. I mean, it's probably a cat of a different name, right? I mean, a hard money loan, a private money loan, a portfolio loan, a bridge loan. I mean, you could use the same thing, depending on the context of the sentence, to mean the same thing, maybe something different. You're probably right in this context. It's going to be the same, I think.

Keith Weinhold (00:21:21) - Well, I want to talk to you more about conventional loans and any mortgage industry trends that have been taking place lately. But before we do, do you have any last thing to tell us about the Burr strategy, where really someone can accumulate maybe 10 or 20 properties in just three years with little or no money, but more work?

Caeli Ridge (00:21:39) - Yeah, a little bit more work.

Caeli Ridge (00:21:40) - I would say get to know your market, have your team. That contractor. Man, I think you alluded to this. I think that that's the piece that most people struggle with is finding the right contractor for one of the things that tends to work well, if you have established a relationship, is kind of getting in with some kind of a JV with the contractor, right? They've got skin in the game. Maybe if your numbers work out, they get a 5% bonus on the end, whatever. Just to kind of not keep them honest but keep them honest, if you know what I mean. So making sure you've got a good contractor that you can trust if you're going to be doing this out of state from where you live, even more so, doubly so you really want to have the right team. And that includes the general contractor, the escrow company, your lender. Everybody's got to kind of be on the same page if you're going to continue to do this as a rinse and repeat.

Caeli Ridge (00:22:23) - And then finally I would say bring it to Ridge. Let's just make sure if you're new to doing this, I want to make sure you're not leaving that money on the table, that we're structuring it appropriately so that we're maximizing the loan to value, we're maximizing your dollar, and that you're not leaving money or leaving money for some period of time longer than what you would have wanted to, because this is a rinse and repeat, right? If you don't do it right the first time, you could be stuck tying up 30 grand for 12 months that you would have otherwise been able to capitalize on. If we looked at it in advance of you pulling a trigger.

Keith Weinhold (00:22:52) - Yeah, that's correct. In fact, that last R in the BR strategy is to repeat it. And yet, to your point about contractors, I like to think about what contractor motivations are and what my motivations are. And in times I have incentivized contractors with giving them a 5% bonus if they finish things ahead of schedule or a 5% penalty if they finish things behind schedule and putting that in the contract as well.

Keith Weinhold (00:23:14) - You're listening to get versus a case. We're talking with Ridge Landing President Charlie Ridge about getting loans for the BR strategy more when we come back. I'm your host, Keith Windhoek. Role. Under this specific expert with income property, you need. Ridge lending Group Nmls 42056. In gray history from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your prequalification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love.

Keith Weinhold (00:24:29) - How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six.

Speaker 5 (00:25:06) - This is our Rich dad, Poor dad author Robert Kiyosaki. Listen to get Rich education with Keith Wayne. All scripture data.

Keith Weinhold (00:25:25) - Hey. Welcome back. You're inside. Episode 502 of gray. I'm your host, Keith. Y'know, we're talking with the president of Ridge Lending Group, Charlie Ridge. She talked to us before the break about her financing strategies and the things that you need to keep in mind in order to optimize your returns there. It's only now back here on the conventional side, we talk more about conforming loans for properties that are already fixed up.

Keith Weinhold (00:25:48) - Or maybe people call those turnkey. What about some of those hurdles that investors often have in there? For example, I know that the DTI one exceeding their debt to income ratio threshold when they try to qualify is sometimes a problem. So can you talk to us about some strategies with that? For example, sometimes a person might have a $500 a month car payment, but they only have four or more payments to make for their $2,000 principal balance. And it just makes more sense to pay that off. And then that drops off the DTI calculation. Are there any other thoughts you have with regard to that?

Caeli Ridge (00:26:18) - There's so many in this. I mean, we probably have our own episode for all different ways on debt to income ratio and to move that needle. Just to go back to your example, just FYI, if the car loan is financed, not leased, and there are ten months or left reporting on the credit report automatically per guideline we had, we can exclude that if it was at least with ten months or less, we have to keep it in the ratio.

Caeli Ridge (00:26:39) - But if it's a finance car, ten months are left are showing on the report. It's automatically reduced from the liability section of DTI. The other things that we're to look at just obvious things. Can we gross up any kind of income. Right. Are there bonuses or commissions or Social Security or veterans benefits or whatever that allow us to gross those up, making sure that we've got all of the applicable income that they gather? Sometimes people will forget to say, oh, I get this. You know, child support or alimony or whatever it may be that I didn't think to disclose. We want to make sure that we have that in there. And then we talk about liabilities we want to look at here's kind of a good one. Student loans let's say that either cosigned or you have your own student loans. Fannie and Freddie have different. And maybe they're in deferment. Okay. So when we pull the credit it shows zero as the monthly payment. While Fannie and Freddie have different rules about what we have to hit them for.

Caeli Ridge (00:27:25) - And I could be getting these backwards, but I think that Fannie is 1% of the outstanding balance, whereas Freddie is a half a percent. So depending on some other variables, we may elect to say, okay, DTI is really tight, we're going to take this and make this one of Freddie, assuming that they fit all the other boxes so that we're only having to hit them for that half a percent. Otherwise we look at maybe paying off revolving debt, get those payments down if they're small enough, maybe there's a $3,000 balance that has a $300 payment that's really screwing things up, and they can afford to pay that off. So certainly we can look at those kinds of things, adding in a co-borrower, putting more money down, buying the interest rate down, maybe finding slightly cheaper insurance, right. At least for the purpose of the loan. And then if you wanted to get higher insurance or lower deductibles or higher deductibles later, you could certainly do that. So there's so many different variables that we can look at to really it's not a one size fits all.

Caeli Ridge (00:28:13) - And DTI is kind of a slippery slope. And there's lots of different ways in which we can get that down into check. And if it doesn't happen today, we can help them plant the seeds for what to do tomorrow and making sure that we get them there.

Keith Weinhold (00:28:24) - Wow, that was fantastic. I hope you, the listener, are listening closely because Charlie just gave so much packed, nutrient dense information about what you can do with your DTI. And for starters, I think a lot of people think about reducing their debt to improve their DTI. But is all your income being credited as well? Hopefully you caught that part which said that. But when it does come to reducing the debt portion, of course student loans have very much been in the news with all these plans for forgiveness. Is that impacting DTI substantially?

Caeli Ridge (00:28:53) - If they had the right documentation? Sure. Yeah. If they're on there and we have the right documentation that shows that they are forgiven, but they just haven't caught up with the system, then absolutely.

Caeli Ridge (00:29:00) - Otherwise, if they don't have the supporting doc, the letter that says and it's on the credit report, we're going to have to hit them for it, whether there's a payment there or a zero deferred. And then we have to figure out the 5.5 or the 1%. It'll have to be in there. Just depends on what they can deliver in terms of that forgiveness in paper trail.

Keith Weinhold (00:29:18) - You do with mortgages every day in there. That's what you specialize in for investors. Are there any just overall mortgage industry trends that really specifically impact real estate investors that have occurred? Or amid.

Caeli Ridge (00:29:31) - The rates? Everything is going to come back to the rates. As much as I impress upon people, it really shouldn't be about the rate. And I understand the psychology. Listen. But if they're not doing the math, they're really doing themselves and their future investment a disservice. The shelf life, you guys of an investment property mortgage is five years. Whatever the rates are today, you're not going to have that interest rate almost certainly in 5 to 7 years.

Caeli Ridge (00:29:54) - So kind of looking down the forecast of where rates we think they're going to go, the appreciation of the property, harvesting equity, pulling cash out. Keep those things in mind when you fixate on the interest rates. I would say that that's usually what it's top of people's minds. The most recent inflationary data came out. It was hotter than we expected. However, shortly thereafter, if you're watching closely the unemployment rate and the jobs report, I think it offered 175,000 new jobs and the projection was to something. So that's good news. And listen, you guys, you can't have it both ways. We're in a hot economy. I guess it depends on who you're talking to and who you're asking. I understand, but for all intents and purposes we've got inflation is is down. It's not down where the Fed's wanted that 2%. The unemployment rate is very, very low. So in that regard we're doing very well. So interest rates are going to be higher. Unfortunately it balances this way. The worse the economy does the better the interest rates do.

Caeli Ridge (00:30:48) - Finding that equal balance I think is the key. And don't ask me, I'm not going to try and predict how to do that. But do your mouth be prepared for refinancing when it comes. Sitting on the fence is usually not going to be to your advantage if you're waiting for interest rates to come down, and that coupled with house values, come down a little bit too. And you may have played yourself out of the refinance anyway for the purposes that you wanted to pull cash out. So just be educated. Call us. We can kind of walk you through some of that stuff. Interest rates, I think, are going to be higher for longer unless we see some real significant data trends, because there's a lag. And what we get from the Fed's and I think they try to put that in there, but who knows what's going to happen. What are they going to see us again June, July. We'll see what happens. If jobs reports keep being light, then maybe we start to see a little bit more reprieve in the interest rates.

Caeli Ridge (00:31:32) - But we're still we're what, seven and a quarter, seven and a half for investment property I think in most cases. So if that's too high to cash flow, find a short term rental. Find a mid term rental. There's other ways in which to accomplish your variety of variables. Even in the seven and 7.5% interest rate environment.

Keith Weinhold (00:31:49) - Well, there's so much I can say about the fed and the interest rates, but I think you said something very important earlier that the average shelf life of a mortgage loan product is about five years. It's exceedingly few people. Well, less than 1%. They're making their 360th monthly payment ever at a 30 year fixed rate loan. Charlie, I want to ask you what. Maybe it's becoming sort of known as the Charlie Ridge question. I like to ask you this almost every time that you're on the show, because it gives us a temperature of the market, because you see so many loans and so many appraisals come in there, what percent of appraisals are coming in above value? What percent are coming in on value, and what percent of appraisals are coming in below value?

Caeli Ridge (00:32:26) - We don't see as many low values.

Caeli Ridge (00:32:28) - I think that there was a period of time where that was rampant. It was really frustrating for a lot of people, especially on the Non-owner occupied side. The vast majority are coming in on point, and I think a lot of that has to do with 0809 regulation. Appraisers are kind of scared of their own shadow and overvaluing properties. So I think that they do very everything they can to hit the mark. And I don't see too much over an occasion. We'll see a little bit over. It's more likely to see it over than under these days. I would say, okay, percentages under 10% on the mark 8075 and then over. We'll give it.

Keith Weinhold (00:33:03) - 1515. Okay, a few more over than under, but pretty close to right on value there. You do loans in almost all 50 states. And these are the states where the property is located, not where the borrower lives. Right. So it's every state except a few.

Caeli Ridge (00:33:20) - Right? We're not in North Dakota and we are not in New York.

Caeli Ridge (00:33:22) - Otherwise we are lending in all 48 states where the property is. That is correct.

Keith Weinhold (00:33:27) - Yeah. And you specialize in loans for investors. Like I said earlier, what other loan types do you offer investors and others in there because you do a few primary residence loans too.

Caeli Ridge (00:33:38) - We do lots of primary. I would say, you know, it's 7030 probably. We're very capable, full service direct lender. What that means is we fund on our warehouse line, we underwrite in house, but we don't service these loans. So we bundle them up in mortgage backed securities and we resell them on the secondary market to aggregators. You guys will know this as servicers. Any Mac, Wells Fargo, whoever is going to be the end servicer of the loan. And I've worked really, really hard to create an environment specifically for investors, not exclusively, but largely so that we're not a one size fits all. So I really appreciate the question and being able to articulate to your listeners, we really do everything. It's very uncommon that we don't have a loan product to feed the actual need.

Caeli Ridge (00:34:17) - The one thing that I would say we don't have or don't offer is going to be a lot bear lot loans we don't fund on just bare land, but we can do the Fannie Freddie's bridge loans. So for the fix and flip or fix and hold the BR, we do non QM. This is just non QM is kind of everything outside the Fannie Freddie box. If you can't quite fit into the rigors of Fannie Freddie you're going to be in non QM probably where debt service coverage ratio lives. Bank statement loans live, asset depletion loans live. We have commercial loan products for commercial properties. For residential properties we have. Ground up construction. First line Helocs for relationship clients we have second line Helocs. We had second line for everybody when we pulled back just for relationship clients for reasons that we'll discuss on one on one if anybody's interested in that. What am I forgetting, Keith? You get the point. There's a lot. If you think that you're trying to get financing for residential or commercial properties, please email us and we'll take some information to let you know what we can do.

Keith Weinhold (00:35:10) - Well, yeah, to my point, you provide such a great service in a wide palette of options. It's somewhat easier to describe what you don't do. Yeah. And what you do offer to people. And of course, I've done my own loans in there at Ridge and my own refinancings in there. And yes, I usually end up getting a servicer. That's one of the big banks that you've always heard of over the long term that I make payments to. Where does one get started to get things rolling with Ridge or just to ask some questions.

Caeli Ridge (00:35:36) - Call us 855747434385574. Ridge, you'll get someone immediately. We don't have any call trees. You'll speak to me if I'm available at the time. Our website's got a lot of great information. Ridge lending group.com email info at Ridge Lending group.com. All of those ways will get you on the books with me, if that's what you like. Or assign you to a loan officer in the company. And we look forward to serving you.

Keith Weinhold (00:36:00) - You have given our longtime listeners more good, timely mortgage information than anyone in the history of the show here, and we're all better for it.

Keith Weinhold (00:36:09) - Charlie Ridge, thanks so much for coming back on to the show.

Caeli Ridge (00:36:11) - Thank you Keith.

Keith Weinhold (00:36:18) - Let's review some of what you learned about Bir and their loans today. Once your property is renovated and rented, which are the first and second are the third are. Is refinance for a cash out refinance type? It is a maximum of 75% loan to value on single family and 70% on a 2 to 4 unit, and then for a rate and term refinance, which means when you don't get any money in hand after closing and you're simply paying off existing liens plus closing costs, it's 80% loan to value on single family and 75% on a 2 to 4 unit. And you learn to be sure that both the purchase price and the acquisition cost are listed on your final closing disclosure. You know what I think is interesting with originating mortgage loans today? Overall, it's one question that I've been thinking about, and maybe we'll do a poll on this question. If we do, I'll share the results with you. And that is, do people care more about the mortgage interest rate than the purchase price of the property itself? Sometimes it seems that way to me.

Keith Weinhold (00:37:29) - Now your mortgage rate definitely matters, but not as much as the purchase price. I mean, later months or years down the road. After you purchase a property, you can often renegotiate the mortgage interest rate, like if rates fall, but your purchase price stays fixed, that part never gets renegotiated. And like I mentioned last week, low mortgage rates don't create wealth. Leverage does. And to put a finer point on that, consider that in 1971, the mortgage interest rate was 7.3%. Back there in 1971, if you had waited for interest rates to go down, you wouldn't have purchased a home or an income property until 1993. You would have waited 22 years for rates to go down. And meanwhile the price of real estate quadrupled, and many people expect mortgage rates to stay higher, longer. Whether you're interested in the BR strategy or already renovated income, property or even primary residence loans, I invite you. You can get loans at the same place that I have myself for years. That's it.

Keith Weinhold (00:38:41) - Ridge lending group.com. Until next week. I'm your host, Keith Winfield. Don't quit your day dream.

Speaker 6 (00:38:52) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.

Keith Weinhold (00:39:20) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Direct download: GREepisode502_.mp3
Category:general -- posted at: 4:00am EST

Mon, 13 May 2024

In this episode of the Get Rich Education podcast, host Keith Weinhold explores the current state of home pricing and the housing market.

He examines whether homes are overpriced or underpriced by comparing them to historical values, gold, and bitcoin, and discusses the influence of inflation and financing on affordability.

The episode features insights from Danielle Hale, chief economist at realtor.com, on the challenges for young homebuyers, housing supply issues, and mortgage rate effects.

The conversation also covers the build-to-rent trend, investment strategies, and the importance of increasing housing construction.

Weinhold concludes by offering free coaching for building real estate portfolios.

Resources mentioned:

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500: All You Ever Have is Now—Always

Complete episode transcript:

Welcome to GRE! I’m your host, Keith Weinhold. Home Prices Aren’t Really Up! Brace yourself. A mic drop moment on real estate costs is coming.

It’s an unmasking - a reality check on property prices. Are homes actually still priced too LOW today? How could that POSSIBLY be true at all? On Get Rich Education.

_____________

Welcome to GRE! From Belgrade, Serbia to Belleville, Illinois and across 188 nations worldwide. I’m Keith Weinhold and you’re listening to Episode 501 of Get Rich Education.

We’ll get to “Are homes overpriced or underpriced today?” shortly.

But understand this…

I successfully acquired something at a young age. And you can too. That thing that I successfully got ahold of was not millions of dollars… because I came from average means.

What I intentionally and successfully acquired was millions of dollars in debt.

Yes, obtaining millions in debt from a young age… is what led to me quitting my day job while I was young enough to enjoy it.

You, the longtime listener, COMPLETELY understand and appreciate what I just said. If you’re a newer listener, that sounds unusual or even irresponsible. Well, come along for the ride.

Also, a layperson - or a newer listener - would respond with, “No one talks that way, thinks that way, or does that.” - taking out millions in debt and calling THAT aspirational.

But using that debt as leverage is how you ethically take funds from the big banks - take Chase Bank’s money, take Bank of America’s money, take Wells Fargo’s money - learn how to use it, be a responsible steward of the funds, provide good housing for people and prosper.

That means you get the return on both your down payment - and the entire amount that you borrowed from those banks. That all goes to you. And both your tenants and inflation pay the debt back - not you.

Look, I know one person. I personally know a guy - Greg. Greg makes $80K a year from his day job. Good guy, married guy, one kid.

And his NW increased by $2M just in the COVID run-up. He has a modest salary but his NW is up $2M just since 2020.

First of all, do you think that any of Greg’s co-workers experienced that effect? No, he’s really going down my path. You soon get unrelatable to co-workers and even some of your peers.

Well, what makes it possible for a good family guy - or anybody - to go from a middling salary to obtaining life-changing wealth?

It takes leverage. He borrowed for bank loans. That way, he could acquire 5x as much property than if he paid all cash for his rental properties.

That way, he had 5x as MANY properties… and properties all appreciate at the same rate regardless of how much equity you have in them.

See, if he had paid all cash, he’d only have a $400K capital gain. Not bad, but $2M is life-changing. Thanks to leverage.

Everyday people obtain life-changing wealth this way. It’s so substantial… that it won’t only affect Greg’s life. If he continues on this way, it’ll take care of his children, grandchildren, and great grandchildren.

And you know, maybe this is why, one of the most recurrent guests we’ve had here in the history of this GRE, Ken McElroy, he says:

“The best investment in RE is the one that appreciates the most, not the one that cash flows the most.” That’s Ken McElroy. And now you can see why he says that.

Leveraged appreciation creates wealth the fastest. Cash flow is important and it CAN boost wealth but that happens more slowly. Principal paydown doesn’t create it - it enhances it… and it’s the same with tax benefits.

Deferring your tax on a 1031 means that you can re-leverage a greater amount.

Low interest rates also don’t create wealth. In fact, I bought my first ever income property with a 6⅜% mortgage rate and my second income property with a 7⅝% rate - that second one had interest-only payments.

But I borrowed the maximum amount that I could without OVERleveraging. Overleverage means losing control of the mortgage and operating expenses.

The lesson here is… get the leverage.

And… case in point. Here we go…

Speaking of appreciation, the LATEST Case-Shiller Home Price Index figure came in. The US currently has… 6.4% YOY home price appreciation. Now, their index is only based on 20 cities but that gives you a pretty good idea.

In fact, that is the fastest rate of increase since 2022.

Now, if you’ve let equity build up in your properties to the point that they’re half paid off, you had 2x leverage, meaning the 6.4% appreciation just gave you a 12.8% leveraged return on your skin in the game.

And, of course, if you leveraged with a 20% down payment a year ago, that 6.4% means that you just got a 32% return.

And as we know, these returns I just told you about are from one of just one of FIVE ways that you’re expected to be paid simultaneously.

But yeah, a 6.4% higher is merely a DOLLAR-DENOMINATED price. That’s what that is. Why do I say that carefully?

Well, there are a few reasons that home prices are 6.4% higher - inflation from dollar printing could be why, the value - not price - but some properties have a greater VALUE, distinctly separate from inflation.

What’s the distinction there - how does this happen? What’s one difference between an INFLATED price and a greater value?

Well, say that a local economy is hot because there are more high-paying jobs there now than there were last year - say an influx of medical jobs or AI jobs or chipmaking jobs.

Well, even absent inflation, a property that now has PROXIMITY to better-paying jobs - that’s now a property that’s more desirable.

Someone is more willing to PAY MORE FOR - and simply CAN pay more for. Again - that phenomenon is ABSENT inflation.

What’s another reason that home prices rise - and rose 6.4% YOY in this case?

If better PHYSICAL AMENITIES are in new homes than there used to be - say bigger garages or new communities with pickleball courts, well, people are more willing to pay more for that.

To review, there are three reasons that home prices go higher: inflation, appreciation from value creation - like how the same home is now located closer to more high-paying jobs, and thirdly, better built-in amenities.

All three of those increase dollar-denominated price or value. They all increase the nominal price.

Now, let’s pivot into the fact that “Home Prices Aren’t Really Up”.

I’ve covered this a little before, but I’m going to go deeper today in giving you the most comprehensive look at home prices today - compared to the past - perhaps than you’ve ever had in your life.

Some might say, “C’mon. How can this be? Homes cost, perhaps 40% more than they did just four years ago.”

Well, I’ve got a mic… drop… moment… coming.

- Home Prices Aren’t Really Up.

We need a good measuring stick to see what home prices are doing. So we’ve got to stop pricing homes in dollars for a minute. It's a poor long-term value measure.

Ludicrous inflation means the dollar has lost over 25% of its value just since 2020, and 97% of its value since 1920.

Let’s use a commodity and money that has been valued for five millennia - and its physical properties have not changed one bit in allll that time, and its valued across continents and cultures - that’s 50 centuries of value! That’s gold.

We’ll get to a more modern measure soon. But first, gold is the best one.

Now, I don’t know who to credit, but for a while, there was an image floating around out there that GRE got ahold of.

It showed that 10 kilos of gold would buy you an average home back in 1920… and also, that 10 kilos of gold would still buy you an average home today… total… mic… drop… moment. Wow! Is there any better evidence that home prices are NOT up - but higher prices reflect that the dollar is down?

Actually, yes, there is a little better evidence. We ran the numbers here and learned that - it’s even more astounding than that!

You run how many dollars per ounce gold is worth, that 35ish ounces are in a kilo and you look at home prices then and now and we discovered that - it’s even more of a jaw-dropper…

… because in 1920 - which I’ll just call a century ago - you could buy an average home for 8 kilos of gold and today, you can buy an average home for just 6 kilos of gold.

So if you want to know how much home prices have changed in the last century, they are down 25%.

They’re 25% cheaper today in terms of gold - clearly a more stable value indicator than horrendously diluted dollars are.

And also, GRE made a new image that shows this - 8 kilos for an average home a century ago, 6 today. I sent you that image in our newsletter about ten days ago and that image got shared a LOT of times.

Your first reaction to this whole thing could be: "Wow! That's wild. The dollar really is sooo diluted."

Alright. What about home prices in terms of a popular, nascent asset that only arrived fifteen years ago, bitcoin?

2016: Average home cost $288K, or 664 bitcoins.
2020: Average home cost $329K, or 45 bitcoins.
2024: Average home cost $435K, or 7 bitcoins.

So, eight years ago, a home cost 664 bitcoins and today it costs 7.

That means that home prices are down 25% in terms of gold in the last century.

But they’re down 99% in bitcoin over just the last 8 years.

And the dropped mic keeps reverberating through the stadium.

Today's homes are cheaper in gold and drastically cheaper in bitcoin.

See, it takes real world resources and proof of work to create real estate, gold, and bitcoin. None of these things are required to produce a dollar - none of them. That's why its value is approaching zero.

But let’s go deeper. You need more answers - you are part of a really intelligent audience.

Because you might be thinking: "Wait a second. Some other things have changed too." For real people - everyday people - aren't home prices actually more out of reach than this?

That's because since 1920, home prices have risen faster than incomes. That puts them OUT OF REACH for more people.

Something else has changed. A home's lot size is smaller today too - the land that comes with the property has a smaller area.

Let’s understand too - homes also use some cheaper materials today. For example, heavy, milled raw wood doors - the interior doors - of yesteryear have given way to molded particle board today.

This is beginning to build the case - evidence - that homes SHOULD be cheaper than they are today.

Let’s keep going, because there’s more to consider.

Mortgage rates themselves - just rates in isolation - they don't put homes out of reach at all. The long-term average is 7.7%, per Freddie Mac, on the 30-year FRM. That average goes back to 1971, when they first began tracking them.

Oppositely, you can make the case that U.S. homes should cost even more than they do today.

In many advanced nations, homes are way more pricey. Even next door in Canada, they cost about 20% more than U.S. homes. Canadian salaries are lower than US salaries too - yet their home prices are markedly higher.

On some levels, you're getting more "home" today in the US.

A 1920 home would feel savagely uninhabitable to you if you tried to live in one now.

Here’s what I mean…

In 1920: 1% of homes had electricity and full plumbing.
Today: 99% of homes have electricity and full plumbing.

What I mean then, by savagely uninhabitable, is enjoy walking to the outhouse in the middle of the night when it's 35 degrees.

Then there's size:

1920: The average home had 242 sf per person.
Today: The average home has 721 sf per person.

Because today, family sizes are smaller and homes are way larger too.

Today's amenities would be unthinkable in 1920—walk-in closets, roofs with R38 insulation, double-paned thermal windows, smart thermostats, voice-controlled lighting, quartz countertops, and Kitchen Aid appliances. Maybe even a security system. They’re all things that homes have today.

Gosh, even the fact that you have a garage - a HEATED garage even, finished basement, air conditioner and modern washer-dryer would leave 1920 homeowners dumbstruck with their mouth agape—maybe even flabbergasted. Those old folks from yesteryear wouldn’t believe all that you get with a home today.

Yet that 1920 home would have cost you more in gold, than today’s more sizable homes with all their plush amenities.

Now, when it comes to - though home prices aren’t up, are they more “out of reach” for the average American?” Over the past five years, they ARE - because home prices have now risen faster than incomes over THAT stretch.

But another BIG reason that homes are SUBSTANTIALLY more affordable today than they were in 1920 is… financing terms.

Today, you can make a down payment for between 3% and 20% on a home. Do you know what loan terms were like in 1920? You had to make a 50% down payment and then had to pay off your mortgage in 5 years.

Can you IMAGINE if that were the case today? How many people could put 50% down on a home today and then pay off the balance within 5 years. Virtually nobody. That’s why homes are more within one’s grasp today.

Overall, you can see that there are a lot of countervailing factors here… tempering that it took 8 kilos of gold to buy a home a century ago, and it just takes 6 kilos today.

The bottom line here is that, long-term, real home prices aren't up. Dollars are down because they've been printed like crazy.

From today, nominal home prices could keep rising for years.

Dustin on social had a funny comment about this - “How many baconators from Wendy’s would it take to buy a home today?” Ha!

I don’t know. I guess that’s a hamburger - I don’t go to Wendy’s. Maybe then, a home costs 60,000 baconators today.

Coming up straight ahead - what will happen first - a $750K median-price home, $100K bitcoin, or $5K gold.

Also, what’s perhaps the biggest trend in real estate investing that not enough people are talking about - and how you can make money from it… and more… all next - I’m KW. You’re listening to Get Rich Education.

______________

Welcome back, to Get Rich Education. I’m your host, Keith Weinhold.

On our latest GRE Social Media Poll, we ran this question.

What will happen first?

The median home value hits $750K.

Bitcoin hits a $100K price. Or…

Gold hits $5K.

I’ll give you the result, but what do you think? Again, which one of these three things will happen first?

The median home value hits $750K.

Bitcoin to $100K. Or…

Gold hits $5K.

The results across both LI and IG were pretty similar - sometimes you get differences there, as LI is a more professional audience.

One voter in the poll also commented - it’s syndication attorney Mauricio Rauld, who we’ve had here on the show before.

Mauricio said: I think assuming Bitcoin doesn't collapse, it probably makes a run to $100K in the next few years (who knows, could be next few months). But with the median home, at 10% a year, it would take 6 years to hit $750K so that is a decade away. That’s his thought - sounds reasonable.

The poll RESULT is:

Bitcoin will hit $100K first. That was most likely, with 57% of you answering that. That makes sense since its volatile and close to striking distance.

The median home value will hit $750K finished 2nd. 26% of you said that.

And gold up to a $5K price got just 17% of the vote. That makes sense since gold prices would have to about double from here.

You can always join along in the conversation and polls. We are really easy to find - because on virtually every social platform - Facebook, Instagram, LI, YouTube - we ARE: “Get Rich Education”.

Over on the Get Rich Education YouTube Channel, I recently covered how the Fed is overseeing a “Tug of War” between inflation and a recession. They don’t want the game to end. The Fed is trying to keep the game going.

They don’t want participants on either side falling into a pit in the middle of the Tug of War game between inflation and a recession. They don’t want either side to win. If one side wins, the Fed loses.

This “Tug of War” game is really a great way to understand how the Fed works, how they control your money, and what their motivations are. A video about that is on our YouTube channel - where you get the visual of the Tug of War game between inflation and a recession.

That’s just one example of how that content is often different from what you’re hearing now. Get more… on our YouTube Channel… called “Get Rich Education”.

The homeownership rate just fell again a little, quarter-over-quarter, increasing the number of renters and rental demand, which I expect will only continue. From CNBC, Realtor.com’s Chief Economist Danielle Hale tells us more. Let’s listen in. It’s about why the housing market is pretty dire for young Americans, then I’ll be right back with some key commentary on this.

Yeah, there in Economist Danielle Hale’s interview - if mortgage rates go higher, inventory pulls back and we tend to see modest HPA. Most agree that if mortgage rates go lower, we’ll see RAPID HPA.

She also just keeps exposing what we all know. “We need to build more housing”.

A brand-new home constructed with a renter in mind, sold to an investor, is known as build-to-rent housing. You’ll see it abbreviated BTR. It's usually single-family.

Some abbreviate it B2R. These must be the same people that say H2O instead of water.

It's become massively popular.

Despite an overall housing shortage, last year, a record 27,495 BTR homes were completed.

That's up 75% from the prior year and up an astounding 307% since pre-pandemic deliveries back in 2019.

So what's driving the build-to-rent trend?

Locked into low mortgage rates, existing homeowners won't sell. So, instead, new inventory must be constructed.
More overall housing demand than supply.
Wannabe first-time homebuyers cannot afford homes today. Renting a BTR is next best. National BTR occupancy is over 96%.

BTR operates similarly to apartment buildings under property management, yet offer a single-family living experience.

Some of these communities have: leasing offices, pools, and fitness centers.

The homes themselves often have: luxurious modern finishes, garages, and fenced backyards.

What's in it for investors? How do you make money with BTRs?

5% mortgage rates* (I’ll get back to that in a minute)
A long-term ownership focus, generating revenue over time rather than immediately
Tenants have a house-like feel. Expect 3+ years avg. tenancy duration.
Mgmt. fees are low because all houses are the same and all in the same area too
BTR purchase prices are HIGHER than resale property. You will pay more.
Expect better appreciation than resale property
The rent range is often $1,500 to $3,500
You can expect low maintenance. It's new.
Builder home warranty

So there are a ton of factors that give build-to-rent investor appeal.

Really, 5% mortgage rates? Yes. Here at GRE, we can introduce you to some BTR homebuilders that will buy down your rate for you. One is lowering it to 4.75%.

I encourage you to get that incentive now, because when mortgage rates fall substantially, I don’t expect these national and regional homebuilders to keep giving you the rate buydown.

Sorry J-Pow. This kinda makes your next Fed rate decision… seem pretty irrelevant.

It's a great rental model to pursue and an amazing time to do it with the rate buydowns. I wish BTR would have existed when I began as an investor.

You really didn’t start hearing about BTR at all until about ten years ago.

Now, I appear as a guest on other business and investing shows. Quite a few times, the host asks me where the REI opp is today.

The answer that I’ve been giving is that it’s with build-to-rent properties and these rate buydowns.

An income-producing asset is like your employee that’s working for you—but without the personality problems. The property is also working for you 24/7.

Besides just helping you find the best BTR deals today, we can help set up an entire real estate investment portfolio plan for you.

-We can help build an income-producing RE portfolio for you with our free coaching. Truly free.

Now, if you’re new here, you might think that we’re trying to sell you something - and we aren’t.

The way it works elsewhere is that some people get attracted to the free thing and then once you’re on the phone or Zoom or free live, in-person event, they’re going to try to sell you their better PAID coaching or some online course for a fee.

We don’t even sell coaching or sell a course. This is free no-strings, no upsell, no catch coaching.

OK, it’s sort of the opposite of your auto dealer calling you about your extended warranty - an overpriced item that you don’t want. Ha! If you want to buy something from GRE, you can’t because we don’t even have anything to sell you. We are here to help!

Also, I have no problem with companies selling paid courses or paid coaching - not at all. Some courses are worth paying for. It’s just not what we do or have EVER done here.

But see, buying real estate that you own directly is still not as simple as just finding a keyboard and pressing: Ctrl, alt, Deal.

So that’s why our Investment Coaches help you learn your goals, and navigate the process. Then you’ll want to keep in touch with your coach because the best deals are often changing.

For example, you might think that you want to buy income property in, just say, Alabama, because its prices haven’t run up as much as they have in Florida.

But we keep regular lines of communication open with build-to-rent homebuilders nationwide… and say there’s a new community, in, Florida, where the real deals are going to be for the next few months…

…and though you still like Alabama, you like how Florida is growing faster so you end up going there.

Or there’s better cash flow with some BRRRR strategy properties in say, Ohio, that we have that your coach informs you about.

So, I encourage you. Get & maintain a line of communication with your GRE Investment Coach.

To review what you learned today:

Leverage is THE most powerful wealth creator.

You can make the case that homes are NOT overpriced today. Home prices aren’t up; the dollar is down.

No one knows the future. But there is ample room for more home price growth.

Build-to-Rent property keeps increasing in popularity… and investors can get mortgage rates on them as low as about 5%.

To contact an investment coach, it’s free, start at GREmarketplace.com.

Until next week, I’m your host, KW. DQYD!

Direct download: GREepisode501_c.mp3
Category:general -- posted at: 4:00am EST

Mon, 6 May 2024

Become a time billionaire.

In this episode of the Get Rich Education podcast, host Keith Weinhold explores the significance of living an extraordinary life, emphasizing the importance of time management and the value of time.

You are here today, gone tomorrow.

Gain new perspective on life and death.

The show promotes strategies for achieving financial freedom through real estate investing.

A hypothetical scenario examines the potential impact of eternal life on Earth's resources, prompting listeners to consider the implications of unlimited population growth.

The episode offers a blend of motivational content and practical wealth-building advice, with a side of philosophical musing on the nature of time and life's finitude.

We listen in to Neil deGrasse Tyson’s “Life and Death: A Cosmic Perspective”.

Resources mentioned:

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RidgeLendingGroup.com or call 855-74-RIDGE

or e-mail: info@RidgeLendingGroup.com

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