Mon, 22 May 2023
Get a 4.75% mortgage rate or 100% financing on new-build Florida income property. Start here. If I gave you $10M, learn why that probably wouldn’t even help you. We revisit how “Real Estate Pays 5 Ways”, a concept that I coined right here on the show in May 2015. Some think real estate pays three, four, or six ways. I revisit why there are exactly five. Real estate has many paradoxical relationships. I explore. Americans are living in homes longer than ever, now a duration of 10 years, 8 months. The active supply of available housing dropped again. Get an update on the gambling industry. A major sports gambling platform has offered to advertise with us. Take my free real estate video course right here. Zillow expects US home values to rise 4.8% from April 2023 to April 2024. Months of available housing supply is currently 2.7 per Redfin. Resources mentioned: Show Notes: Active Supply of Available Homes: https://fred.stlouisfed.org/series/ACTLISCOUUS Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY’ to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Complete transcript:
Welcome to GRE! I’m your host, Keith Weinhold. If you were gifted $10M right now, why that very well wouldn’t help you at all.
Learn a fresh take on how Real Estate Pays 5 Ways at the same time. A housing market update with perennially sagging inventory supply amounts and more outlooks for stronger home price appreciation than many expected. Today, on Get Rich Education.
Welcome to GRE!
From Montevideo, Uruguay to Montecito, CA and across 188 nations worldwide, you’re listening to one of the longest-running and most listened-to shows on real estate… the voice of real estate investing since 2014. I’m your host and my name is Keith Weinhold.
How would you like it if I gave you $1M?
You know what? That’s not enough to make my point. Make it $10M. I adjusted for inflation - ha! How much would you like it if I gave you $10M? How would that feel?
But what if it comes with this one condition.
What if I told you that I’ll give you the $10M, but you are not waking up tomorrow?
Not waking up tomorrow? No way!
Now you know that waking up tomorrow is worth more than $10M.
This is how you know that your time and your life are worth infinitely more than any dollar amount.
Hmmm… if your time is so valuable. Then why did you check Instagram 15 times yesterday to see who viewed your Stories? Ha!
Why are you spending time with your AI girlfriend? Ha!
Get Rich Education is ultimately about living a rich LIFE - whatever that means to you.
And we do approach that from the financial perspective here. Money does matter… because leverage, cash flow, and inflation-profiting enable you to BUY time.
We’re really one of the few investing platforms… this show is one of the few places with the audacity to tell you that - sure, a little delayed gratification is good… but the risk of too much delayed gratification is DENIED gratification.
Denied gratification is a terrible investing risk that most people either don’t give enough weight to - or don’t factor in at all.
And getting a $10M windfall is not as great as it sounds either.
History shows that the $25M Lottery winner quickly loses their money. Why does that happen? Because it seemed like it was effortless to get the windfall, and because they don't know how to handle an amount like that. It’s really similar to a capital gains-centric investor that gets a windfall. See, cash flow investors like you & I - we can be more measured because your income stream is metered out over time. That’s why you are less likely to be irrational with your gains.
Now, I touched on some of those ways that you’re paid in real estate investing.
Real Estate Pays you 5 Ways™ simultaneously. That’s a concept that I coined right here on the GRE podcast. We since went on to have it trademarked.
Do you know when I first introduced that concept right here on the show - the month & year?
And I’ve since gone on to do a lot with “Real Estate Pays 5 Ways” to help other audiences understand real estate’s five distinct profit sources.
Well, I had someone on Team GRE here do some digging into some of our legacy shows - our past episodes… because I wanted to know when I first said it… and it was apparently in May of 2015, so 8 years ago that I introduced it.
Since then, many other thought leaders have gone on to cite the phrase. Someone other than me even wrote a book on it. And that doesn’t bother me at all. I’d rather that other people and readers get good ideas. That’s more important than getting the credit.
Of course, c’mon, you can recite these 5 now like they’re the Pledge Of Allegiance or something.
This is as automatic as the Lord’s Prayer is for Christians. The five are:
But now, let’s dissect this frog here a little. Why five ways? Why not another number, like real estate pays four ways or six ways?
It is five. There are no more or less. Each of the five are a distinct benefit.
A common flawed case that Real Estate Pays 4 Ways is that most real estate teachers omit the Inflation-Profiting benefit on the long-term fixed interest rate debt.
Any GRE devotee knows that with 5% inflation on $1M in debt, you only owe the bank $950K of inflation-adjusted debt after year one, $900K after year two, etc. (And in the meantime, the tenant pays all of your mortgage interest.)
Some that make the 4 Ways case question the Tax Benefit. Could the tax benefit really be considered a profit source, or is it just a deal sweetener?
It's a profit source.
Outside the real estate world, to obtain a tax write-off, you must have a real expense backed up with receipts, like building a new computer equipment or buying a new farm tractor.
Instead, the magic of real estate tax depreciation says that you can just write off 3.6% of the improved property value each year just for doing... nothing all year. No improvements necessary.
It's a phantom write-off, yet legitimate to the IRS.
Then the 1031 Exchange means you can endlessly defer all of your federal capital gains tax for your... entire life.
Yes, it's one of the few places in life where procrastination actually pays.
I've even heard some say that they're a fan of GRE's Real Estate Pays 5 Ways™, but they've discovered a sixth.
This often involves an event that's either unlikely or falls into one of the existing 5 Ways.
For example, "My appraisal value exceeded the contract price. I’m buying it for $320K, but the appraisal is $340K. I got $20K in instant equity. See, I was paid a 6th way."
No.
I mean, good for you, $20K of instant equity is a nice sweetener - that’s a $20K credit in your net worth column that you received the moment you opened up that appraisal e-mail from your lender and saw it. Nice!
But an appraised value that exceeds the purchase price is not COMMON enough to be expected… and the 5 Ways are.
Also, you can make the case that "instant equity" is covered in the first way you're paid, Appreciation.
The reason that we invest in real estate is because there's virtually no other vehicle in the world where you can expect to be paid five ways at the same time.
That’s a foundational principle - it’s a core concept here at GRE.
It’s why we do what we do. It answers the compelling “why” for real estate better than any answer there is…
…and that’s why anything less than a 20 to 25% combined return when you add up all five ways is actually disappointing - and that’s done with low risk - which is paradoxical almost anywhere else in the entire investing world.
If you haven’t yet, take my free “Real Estate Pays 5 Ways” course in order to really understand each of your five distinct profit sources, where they come from, and how that all fits together.
It’s at GetRichEducation.com/Course. The free “Real Estate Pays 5 Ways” short course is free at GetRichEducation.com/Course
Let’s talk about real estate trends.
You know, real estate investing has a lot of relationships that you just wouldn’t expect.
Part of that is because it intersects with the economy. Economies are complex and you get these relationships that are counterintuitive.
For example, in a recession, mortgage rates and all interest rates tend to fall, not rise.
Another exhibit is how debt BUILDS wealth with prudent leverage.
Another one that I’ve explained extensively here and the show and elsewhere is that higher mortgage rates correlate with higher home prices - not lower ones. That throws nearly everyone off.
Some physical real estate trends have been counterintuitive.
About 30 years ago in America - the 1990s - a new trend was fueled that everyone wanted to have a big kitchen.
New homes were often built with a big, fancy kitchen in the center of the home. Open floor concept - no galley kitchens anymore. That began back then.
And this was really the advent of - at the time - what we considered luxury amenities like granite and quartz kitchen countertops.
Anymore, that’s become standard. Even our build-to-rent providers at GRE Marketplace often have new granite countertops in rentals.
But the paradox here is the assumption that a big emphasis on kitchens would mean that more people would start cooking at home.
Oh, no. Just the opposite, in the last 30 years, despite the big kitchens, more people eat out at restaurants and fewer people eat at home. Another real estate paradox.
Another counterintuition was the pandemic. Society locked down, people lost their jobs and you think that there are going to be mass foreclosures because with no job, no one can afford their mortgage payment.
People thought the pandemic will cripple the housing market. Oh, it was just the opposite. That created a housing boom. Everyone wanted their space. Another paradox.
Remember here on the show, shortly after Biden was elected, I told you that this administration - for better or for worse - will not let people lose their homes.
Then we had high inflation on the heels of the pandemic. That was bad for consumers and good for real estate.
But high inflation is supposed to mean that bitcoin and gold would surge. Well, another paradox, that brought crypto winter, and gold did nothing in high inflation, until more recently here.
Rather than high delinquency rates we’ve got low delinquency rates. In fact, the mortgage delinquency rate has been steadily falling for almost 3 years now. That’s because of strong borrowers and tough lending standards.
Now, another real estate investing trend, though there’s nothing paradoxical here, is mortgage rate resets.
Here in the US, on 1-4 unit rental properties, you’re in great shape, whether you locked in your interest rate at 3% or 7% - the thing is that you have a steady payment… and on an inflation-adjusted basis, your same monthly payment amount goes DOWN over time - it’s a tailwind to your personal finances.
Inflation cannot touch your steady, locked-in P & I payment.
But many Canadians are up for renewal with their 5-year fixed rate, 25-year amorts.
Yeah, just across the border in Canada, they don’t have these 30-year fixed rate amortizing loans.
Their rate resets every five years.
One Canadian homeowner that I talked to, he doesn’t live in that posh of a home in Ontario, it’s just a little above the median housing price.
His family’s loan terms are about to reset on the primary residence and it’s expected to increase their monthly payment by $1,280 / mo.
How would you feel if that happened to you overnight? It’s a nuisance at best. It might even crimp your quality of life - or worse.
That can’t really happen to you in the US.
Having a 30-year FRM is like you having rent control as a tenant.
In coastal areas, some tenants that have a rent control deal - New York, California, Oregon - they want to live in their home for decades under rent control because there’s a ceiling on their rent. Move out of their unit - lose the deal and they’d have to reset somewhere else.
It’s the same with you as an American homeowner or REI in the 1-to-4 unit space. Your P&I price cannot rise.
And, I’ve talked about the interest rate lock-in effect before, constraining the housing supply.
Get this. Just last week, First American Title Company informed us that the average resident duration in a home hit a record high.
Amongst this lower intrinsic mobility rate, interest rate lock-in effect, and other societal trends, the average resident duration in a primary home in now 10 years, 8 months.
Lower mobility. Studies show that people are holding onto their cars longer than ever, and people aren’t parting with their real estate either.
So, then, with fewer properties coming to market, let's update the available supply of homes.
This is pulling from the same set of stats that I’ve been citing for years, in order to be consistent. Check this out. This is the FRED Housing Inventory - the Active Listing Count of Available US homes.
Remember, historically, it's 1-and-a-half to 2 million units available. In 2016 it was still 1-and-a-half million.
Then in April of 2020 it dipped below 1 million and fell sharply from there - which I’ve famously called this era’s housing crash.
It was a housing SUPPLY crash - which hedges against a price crash.
It fell to as low as 435,000 a year later in mid-2021. Gosh, under a half million.
It’s rebounded as builders know that they need to build more homes. Six months ago it got up to 750,000 available homes - which is still less than half of what America needs.
And now, today, did the supply get up toward at least 1 million yet? No.
It has dropped back the other way to just 563,000. This astounding dearth of housing supply - it’s a condition that we could very well be in for over a decade.
This scarce supply is a long-term American condition. Yes, it’s good for your real estate values - both present and future. But it is a problem too. It’s a contributor to homelessness!
The Covid home improvement boom is officially over. So says Home Depot. They posted a revenue drop in the first quarter and warned that annual sales would decline in 2023 for the first time in 14 years.
Home Depot said that shoppers are now holding off on the big-ticket purchases they made during the pandemic and are choosing to break up larger projects—like remodeling a bathroom—into smaller, bite-sized pieces.
There’s a fascinating new study from a bipartisan think tank shows that everyone wants to LIVE ALONE.
That’s what Business Insider just reported on. Now, of course, the term “everyone” is an exaggeration.
But Statista and Our World In Data tells us that - get this - this is the number of SINGLE-PERSON households in the US - people living alone.
Back in 1960, that figure was just a paltry 13%.
By 1970, 17% of households were people were living alone.
Every ten years, that percent crept up to 23, 25, then 26%. By 2010 it hit 27% and by 2022 it hit 29%.
Now, you can’t think that’s good for society - to have all these single-person households. Almost 3 in 10 living alone. C’mon. Find a good spouse.
But in any case, that’s good for you as a REI, when, say, 10 people live amongst 5 homes rather than 3 homes - absorbing all that housing supply and keeping it scarce.
Even if the US population stayed the same, there’s more home demand - with that trend.
Of course, the US population is growing, though really slowly, probably just a few tenths of 1% this year.
But because of all the Millennials and the embedded “Work From Anywhere” trend, housing demand is pretty strong.
The recent rental housing demand and rent boom came almost entirely due to a surge in household formation -- young adults leaving the nest and roommates decoupling to get their own space... especially in urban areas.
People working from home want more space (without a roommate) AND are willing to pay more for it -- and able -- to pay more for it.
So if you're bullish on work-from-home remaining the norm for at least a chunk of the population (and I am), you should be bullish on the rental demand outlook.
And this has really revitalized America’s SUBURBS - that’s the area where you find that space.
The WFH-fueled rise of the suburbs is a wake-up call to cities, where, in the case of NYC, 26 Empire State Buildings’ worth of office space now sits empty. The typical office worker is spending $2,000–$4,600 less annually in city centers. Because even if they GO to the city to work, they might only do that 2 days a week now - not 5. I’ve got more for you straight ahead, including a new forecast on how much home prices are expected to rise this year.
Again, check out my free video course if you haven’t “Real Estate Pays 5 Ways”. Get it at GetRichEducation.com/Course
I’m Keith Weinhold. You’re listening to Get Rich Education.
Yeah, big thanks to this week’s show sponsors. I’m only bringing you those places that will bring real value to your life.
Now, here at GRE, I recently read an offer that one of these major sports gambling platforms sent us. They want to advertise on the show here.
Do you want to hear sports gambling ads on GRE? I’ve got an opinion about that, that I’ll share with you shortly. Gambling is not the same as investing.
If you’re wondering why you’re hearing more about gambling, especially sports gambling than you had just a few years ago, well…
Now, just last week, it was FIVE years ago that the Supreme Court lifted a federal ban on sports gambling in the US.
That spawned a multibillion-dollar industry that’s transformed how Americans watch, talk about, and experience sports.
Americans bet $95B on sports in legal jurisdictions with consumer protections last year. That’s more money than the amount spent on ride sharing, coffee, or streaming… and you can bet that the off-the-books gambling number, if added in, would make that WAY higher. Two sports betting companies, DraftKings and FanDuel, control 71% of the US market, per gambling analytics firm Eilers & Krejcik. Gosh, that’s almost a duopoly right there. But despite that, these companies have struggled to turn a profit. FanDuel recorded its first quarterly profit just last year, and DraftKings has YET to report a profitable quarter. Well, I’ll just tell ya, it’s one of those two big companies that inquired about advertising on GRE. Of the 50 states, the number is 33 that allow it. That’s 2/3rd of the nation that has legal sports betting (Washington, DC, has it too). Another four states have legalized sports wagering, but don’t have any sportsbooks operating yet. Interestingly, the three most-populous US states—California, Texas, and Florida—have not legalized sports gambling. And they account for 26% of all teams in the major North American pro leagues. The number of women joining sportsbook apps jumped 45% last year, marking the third straight year that new women users exceeded men. Hmmm. I guess that’s the growth market there. My inclination to have gambling advertising and associating with these companies is NOT to do it… not to accept that advertising income. I don’t see how that’s serving you. This feels like a conflict in my gut and in my heart. Gambling is sort of the opposite of investing for a stable rental income stream. I mean, either way, I guess you’re putting your money at stake. But that’s about the closest common ground I can find. At least at this time… and probably all-time, it’s a “no” for gambling content here. That’s not any sort of moral judgment on the activity at all. I mean, gosh, as a teenager, I was really into sports gambling, but it was the informal kind. My friend & I each lay a $10 bill next to the TV - Phillies vs. Mets. Winner gets the $20 bucks. So, my inclination is a pretty easy “no”. Hook up with our sponsors - they support GRE. That’s Ridge Lending Group, offering income property loans nationwide. JWB Real Estate Capital - if you want performing income property, JWB really has Jacksonville, FL sewn up & locked down. They do one thing and do it well. Then, Freedom Family Investments. Get started with them for real estate funds that are ultra-low hassle. Text “FAMILY” to 66866. Where will the next ten years take you & I on the show here? I would love to be along for the ride with you. I hope that you’ll be here with me.
Let me just take a moment to remind you that I’m grateful to have such a large, loyal audience to… well, listen to the words that I say every week. Thank you for your support.
This show has almost reached the 5 million download mark. I’ve been shown that it’s between 4.8 and 4.9 million downloads now. I’m genuinely honored and a little humbled about that even.
Let’s listen in to this 3+ minute CNBC clip. This is Lawrence Yun, Chief Economist at the NAR - the National Association of Realtors talking about the housing market just last week.
Now, a little context here - historically, the NAR has tended to give these dominantly sunny side-up, glowing, everything is always good & getting better kind of remarks on the housing market.
But I’ve been listening to the NAR’s Lawrence Yun for quite a while and think he’s been rather balanced.
Here, he discusses how real estate sales volume is down - which has a lot to do with low supply, that mortgage rates are steady, and that prices are slowly rising in most parts of the nation.
[OK, Vedran. Here’s where we play the insert.]
0:09-3:42 First words to keep are: “Lawrence Yun…” Last words to keep are: “... half of the country.”
Now, Lawrence Yun did go on to say that he thinks that the Fed should lower interest rates by a half point, and more.
Let us know if you’d like us to invite Lawrence Yun onto the show. As always, you can leave your suggestions, questions, or any comments about the Get Rich Education podcast or any of our other platforms at our Contact center at: GetRichEducation.com/Contact
When it comes to national HPA, just last week, we learned that Zillow revised its home price outlook upward.
Between April 2023 and April 2024, Zillow expects home US home values to rise 4.8%.
You’ve got more signs that more & more American markets are being considered a seller’s market rather than a buyer’s market, which tilts toward price appreciation, though I still think pretty moderate price appreciation this year.
CNN recently published an article where they even posited the question: “Are Bidding Wars Back?” Yes, they are in a few markets.
Another measure of housing supply is the MONTHS of available supply. I think you know that 6 to 7 months of inventory is considered a balanced supply & demand market.
If it gets up to 10 months of supply, you tend to see little or no HPA.
Well, indicative of the low housing supply, we hit a winter high of 4-and-a-half months of supply.
And today, it’s down to just 2.7 months per Redfin. 2.7 months. That’s just another sign that demand is outpacing supply.
Then, among those entry-level homes, like the NAR’s Lawrence Yun eluded to, they’re even harder to find… and they’re the ones that make the best rentals.
How hard are these to find? I mean, in some markets this can be even more rare than finding a true friend? Ha!
Is it as rare as the Hope Diamond? Or perhaps a Honus Wagner baseball card? Ha!
Well, the good news is that we actually have the inventory that you want at GRE Marketplace.
Besides that, we actually have something that you really like and that is - mortgage rate relief to help you with your cash flow.
Purchase rates have been hovering around 6 1/2% lately. That’s the OO rate, so for rentals, it could be 7%+.
Well, how about rolling back the hands of time? Through our great relationships here and our free investment coaching, you have access to 4.75% interest rates on investment property - and many of these are new-builds in path-of-progress Florida.
Yes, our free coaching will get you the 4.75% mortgage interest rate, they’ll even help write the sales contract for you if you’re new to this, walk you through the property inspection, the property condition, the appraisal.
Yes, a 4.75% interest rate… today, from these homebuilder buydowns. I don’t know how much longer that can last.
To be clear, you’re not buying an income property FROM us. You’re buying it with our help and our connections. It is all free to you. This is educational support for you.
In fact, our coaching support like this through our sole investment coach, Naresh is becoming so popular, that I can announce that we soon plan to add a second investment coach. Yes! A new one.
And interestingly, you have heard of this soon-to-be second investment coach because they’ve been a guest on the show here a number of times. Yeah, we’ll make that introduction on a future show. You’ll find THAT interesting.
But, our Investment Coach, Naresh, does have some slots open to talk with you and help you out. A lot of the best deals currently with these 4.75% rates are with new-build Florida duplexes and fourplexes.
You can use them for rental SFHs too. Last I checked, the deals were a little better on the duplexes and fourplexes.
You probably thought that Sub-6 and sub-5 mortgage rates are about as unlikely to make a sudden comeback as AOL or Myspace, but we’ve got them here now.
Now, that 4.75% is just one of two options that we have with some Build-To-Rent builders that are fairly motivated. So to review the first one fully… you can get a
That’s one. Or, option 2 is:
They are the two options. It’s rarely more attractive than this. If you hear this in a few weeks, or perhaps months, I doubt that these options will be there any longer.
So I’ll close with something actionable that can really help you now.
If you want to do it yourself, that’s fine, like thousands of others have, get a selection of income property - despite this national dearth of supply at GREmarketplace.com
Or, like I said, right now, it’s really helpful to connect with an experienced GRE Investment Coach - it’s free - our coach’s name is Naresh - for those 4.75% interest rates or zero down program - whatever’s best for you… you can do all that at once at GREmarketplace.com/Coach
Until next week, I’m your host, Keith Weinhold. DQYD!
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Mon, 15 May 2023
Are you living the life that you were created to live? I explore. People have harbored unfounded real estate fears for years. Here they were: 2012: Shadow inventory 2013: Boomers downsizing 2014: Rates spike 2015: PMI recession 2016: Vacant units 2017: Home prices above pre-GFC peak 2018: 5% mortgage rates 2019: Recession? 2020: Pandemic 2021: Forbearance crisis 2022: Rising rates 2023: Recession US houses prices are heading up this spring. The latest FHFA’s Monthly Housing Report shows 4% national home price appreciation. We explore apartment reputation scores. This is a great proxy for what’s happened in housing the past three years. As an investor, you have a low “loss to purchase” with your tenants. It’s difficult for them to buy their first home. I discuss 12 Ways that you can raise the rent and increase the value of your property. Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY’ to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: Credit to BiggerPockets.com
Welcome to GRE! I’m your host, Keith Weinhold. We get clear together - Are you truly living the life that you were created to live?
A housing market update with some perspective that can totally shift your real estate thought paradigm.
Then, 12 Actionable Ways that you can raise the rent and add value to your property. Today, on Get Rich Education.
Welcome to GRE! From Johannesburg, South Africa to Harrisburg, Pennsylvania and across 188 nations worldwide, I’m Keith Weinhold and this is Get Rich Education.
Last night, people were losing sleep over money. At the same time, last night, you made money… as you slept.
Are you living the life that you were created to live?
Your big ideas, your grandiose hopes and ambitions that you promised yourself that you would follow through on someday… have they turned into fears?
Even ones that you had as a child - like to be an astronaut or a firefighter. Today, it might simply be that you would have quit your soul-sucking job by now.
Maslow’s Hierarchy of Needs - how many are you fulfilling? All five? There are five levels. The base level are your… What are you doing to be the most that you can be?
With financial freedom, you can control your time and have a chance at living the life that you were created to live.
How do most people think of financial betterment? In a faulty way, like…
Alright, how do you know that all those things right there don’t move the meter in your life? It’s because, ask:
How many times would you have to do that activity - like add an unnecessary flight layover - in order to acquire wealth?
None. It doesn’t apply. You could practically do that an INFINITE number of times and you wouldn’t acquire wealth to create the time to live the life you want.
But how many times would you need to add a flight layover in order to make you MISERABLE? There IS a number. There is a certain number.
Doing those trivial things only helps ensure that you stay at a soul-sucking job.
Because rather than taking your time - a zero-sum game - rather than HAVING your time engaged in expansionary activities, you were focused on contracting.
You were focused on where there’s a low upside rather than activities that have an upside with no ceiling.
Another way to ask if the activity is expansionary and moving you toward financial freedom is: Did you overcome FEAR in fulfilling that task?
Yes, it’s an inconvenient truth that facing & overcoming fear is what makes you grow.
Did you overcome fear when you brewed coffee at home or got some stupid discount on grocery store bacon?
What are the activities you do that move you toward financial freedom - not debt-freedom - but financial freedom & overcome fear & grow.
That’s an activity like:
Making your first home a fourplex with an FHA loan… or repositioning your dead equity, like Caeli Ridge & I discussed here two weeks ago… or buying an income property across state lines… or learning how to become a savvy private lender… or finding out how to become an accredited investor.
Are you living the life that you were created to live?
Now you’ve got some examples, some milestones, and some checkpoints so that you’ll know if you’re either on the right trajectory - or hopefully - if you’ve been listening here long enough… you’re living that life… now.
Why would you live one more day of your life “below your means” than what’s absolutely necessary. That should only be a short-term life mode.
Don’t live below your means, grow your means.
Live the life that you were created to live.
But the major media channels stir up so much fear - and even niche ones - that it can often paralyze, even some clear thinkers.
Despite the fact that today’s real estate appreciation rates are quite normalized and modestly growing, some people still have unfounded fear over real estate.
And non-doers are always trying to time the market… and timing the market doesn’t work.
Here’s what fearful permabears are concerned about. It’s always something in real estate.
In 2012, it was “Shadow inventory”. Remember that? Never came to pass, just like most of this stuff.
In 2013, the fear was Boomers are downsizing
In 2014: Rates spike
In 2015, it was a PMI recession
In 2016, it was vacant units. Ha! A terrible miss.
In 2017, it was, look, nominal home prices are above the pre-GFC peak. Yeah, so what? They should be.
In 2018, it was 5% mortgage rates. That was the fear.
In 2019, I actually don’t remember what the fear was that year. That was a fairly uniform year but people stirred up fear about something in order to get clicks. Call it a recession.
In 2020, it was the pandemic
In 2021, it was fear of a forbearance crisis.
In 2022, the fear was rising mortgage rates will cause a housing price crash and there’s a collapse in sales volume.
In 2023, what’s the fear? Are we back to recession fears again?
Gosh, people have been steadily forecasting that for 12-18 months now, it still isn’t here, and it still isn’t on the horizon either, as job growth numbers keep beating expectations.
If you’re waiting to invest in the most proven investment of all-time - real estate, or even something else like gold or bitcoin or stocks - if you’re waiting until the uncertainty dissipates, then you’ll never be investing again for the rest of your life.
About the only certain thing in the investing world is persistent inflation and the fact that people are going to need a good place to live.
I invest in the certainties, not get paralyzed with uncertainty.
This way, we don’t get too caught up in the latest investing fad, often like stock investors do.
In 2017, it was anything around “blockchain.” In 2021, it was the “metaverse.” In 2023, “AI” is the term that’s instigated a Pavlovian response from investors salivating over the potential hundreds of billions in value that could be unlocked by the new technology… until that gets oversold. There IS some opportunity in some of those things, but as soon as people lose money in them, they revert back to principles. In a lot of ways, we stick to principles here, even if some of them are countercultural principles - like FF beats DF. Keep your debt & get more of it. More debt means you own more RE.
US house prices have stabilized and are heading up. They've gone from modest declines or steady prices… to modest growth in most regions.
That's the summary from my latest "light reading" duty—FHFA's Monthly Housing Report. It’s released every month.
Some highlights from the latest one, all stats through February, and with nominal pricing…
Spring numbers will be factored in soon. Since it's property-buying season, appreciation rates will likely rise.
Like I've stated before and am becoming really somewhat known for talking about in the industry. In fact, just last week, I was in Arizona and shared this on Ken McElroy’s show - the housing crash is a 100% certainty. That's because it already happened.
It was a housing supply crash three years ago, which prevented a price crash.
So then, let’s look at some of the best appreciating markets in the US here, just the quick, Top 10.
And notice how widespread the national HPA is. It really just excludes the western third or western quarter of US states.
The market with the 10th most appreciation - and this is all YOY, through Q1 per the NAR:
Santa Fe, NM up 12% 9th is Hickory-Morganton, NC up 12% 8th is Appleton, WI up 12-and-a-half per cent 7th? Milwaukee-Waukesha-West Allis, WI. Up 14%. I’m doing some rounding here. 6th is Oklahoma City, up 15% Elmira, NY - hey I grew up near there - is up 15%. That’s 5th.
4th is Burlington, NC up 15% YOY 3rd is Warner-Robins, GA, up 16% 2nd is Oshkosh-Neenah, WI at 17% #1 in the nation is… the Kingsport-Bristol area, which spans Virginia & Tennessee. Up 19%
I’m going to discuss apartments in a minute. But they are the 10 US areas with the largest single-family home price increase annually.
In the Information Age, a bad reputation will follow you around like your cat, internet tracking cookies, and a song that you can't get out of your head.
Apartment reputation scores are a broad measure of renter satisfaction.
It's amazing to see how closely they track the macro trends that impact tenants and property managers (PMs).
What I’m referencing here is J Turner Research's Online Reputation Assessment scores from today, and going back to March 2020.
This is a very telling pattern here.
Spring - Summer 2020: COVID descends. Lockdowns are here. Reputation scores plummet. PMs struggle to rapidly adjust to a new era where renters live and work inside their units 24/7. Everyone started using Zoom. Maintenance techs could rarely even go inside units for repairs.
Entropy ran rampant. Parents didn't know what to do with their children. Fear reigned. Common spaces closed. Neither tenants nor PMs were happy.
Then, in the…
Fall 2020 - Summer 2021: This was the boom period for apartments. PMs have solved for the new era, adopting new technologies and new strategies. They also re-open amenity spaces and in-unit maintenance.
Hey, foosball in the clubhouse is back. Apartment demand surges, and reputation scores go back up.
Late 2021: Apartment occupancy rates hit record highs. PMs again wrestle with on-site staffing shortages. Could ultra-low vacancy and still-robust leasing traffic put so much strain on property managers that reputation scores start to drop again?
Nope! Because in…
Early 2022: Reputation scores climb back up to new highs again. PMs once again adjust to the rapidly evolving climate, many leaning on early-to-mid phase adoption of centralization tech and management practices.
Mid - Late 2022: Apartment reputation scores inch back again. That’s when consumers saw peak inflation—including renewal rent increases.
At the same time, demand (for all housing types, not just apartments) slowed down and you didn’t see the high rent growth that you had. This puts more strain on PMs.
Inflation hit everyone, with big price hikes in property insurance, taxes, maintenance, turnover, labor, and utilities.
Early 2023: Apartment reputation scores are on the rise again, hitting new highs. Consumer inflation is cooling, while vacancy rates and leasing traffic return to more normal levels.
Some semblance of normalcy has finally returned.
At the same time, new tech adopted in the pandemic era proves to have long-term benefits to both tenants and managers.
In recent years, PMs have focused on resident satisfaction, so it's no coincidence that reputation scores keep improving.
Now today, as an investor, changes are that you have a low LOSS TO PURCHASE.
What’s a “loss to purchase”. Your tenants are leaving to go buy something very often.
You, as an investor in either single-family rentals or condos or apartments - you can retain residents right now because it’s so hard for them to go off and buy their own starter home.
Why’s that? Well, it’s not just the higher mortgage rates. It’s that fact coupled with the fact that credit availability is still tough.
As you know, you need to have a lot of good documentation & income & assets to get a loan. That keeps your rent-paying tenant in place.
In 2005, we were in the opposite condition. Back then, tenants fled my units. I had a hard time retaining tenants in 2005. Why?
Because it was so easy to get a loan, you could just lie about everything on a mortgage application and no one even checked the accuracy. Bloated appraisal values even came flying in.
That’s why my rental property tenants kept leaving. It seems like it was always to buy a first-time condo back in 2005.
Today, you can retain tenants. That’s your upside of today’s harder housing affordability and stringent lending requirements.
So, in this normalizing housing era where tenants have to live in your rental unit longer - because they have no alternative - you can find the properties most conducive to this strategy where thousands of other have created a quick account - at our marketplace: GREmarketplace.com
It’s not like a big box store. It’s more like an organic farmer’s market. That’s where the good stuff is. So, check back often for new inventory at GREmarketplace.com
You’re listening to Episode 449 of the GRE Podcast… and of those 449, I think that two of them were quite good!
Haha!
Coming up shortly, 12 ways for you to raise rent and add value to your property.
If you get value from the show, please tell a friend about the show. I’d really appreciate it. Share it on your social media.
More straight ahead. I’m Keith Weinhold. You’re listening to Get Rich Education.
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Mon, 8 May 2023
The average millionaire has 7 income streams. We discuss 2 income streams today—ATMs and Car Washes. They’re low touch, more passive than turnkey real estate investing. With ATMs, is cash use on the decline? Not among the demographic they serve. We discuss the future of cash use. Some ATM users pay a $3 surcharge to access a $20 bill. That’s why it's profitable. You can buy a unit of five ATMs. They’ve provided a 26.1% cash-on-cash return and high tax advantages. It’s returned $2,262 per month. Learn more about ATMs at: GREmarketplace.com/ATM Car wash profits are enhanced with a subscription model. Few on-site employees are needed. You can invest alongside a tech-forward car wash franchise, Tommy’s Express Car Wash. The WSJ stated that no business other than car washes can create this much profit on a one acre lot. As society changes, EV, gas-powered, and diesel cars must all go through the car wash. ATMs and car washes demonstrate high operating margins and many tax advantages. You must be an accredited investor. Learn more about car washes at: GREmarketplace.com/CarWash Resources mentioned: Show Notes: Learn more about ATMs: Learn more about Car Wash investing: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Speaker 0 (00:00:01) - Welcome to GRE! I'm your host, Keith Weinhold. It's been said that the average millionaire has seven different income streams. We're going to discuss two distinct income streams that you can add to your life today that lie on the periphery of real estate investing. They are low touch for you because they require little or no management. Today on Episode 448 of Get Rich Education.
Speaker 2 (00:00:29) - You are listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.
Speaker 0 (00:00:52) - Welcome to G R E from Altoona, PA to Saskatoon, Saskatchewan, and across 188 nations worldwide. I'm Keith Weinhold. This is Get Rich Education. Well, you can't have just one income stream because that's entirely too close to zero. We're talking about two distinct income streams today. People really like the operator and his track record. In fact, he's a longtime friend of mine. We'll talk with him shortly next week. Here on the show, I'm gonna talk about the ways that you can raise the rent and add value to your property. But for today, besides the upside that gets many interested in these two income streams, most investments usually have pros and cons. So I'm gonna ask about the downside. In both, we're talking about the ability to add a couple thousand dollars to your residual income each month with the first of two income streams.
Speaker 0 (00:01:51) - ATMs, yes, automated teller machines. Remarkably, the operator has never missed the monthly distribution or the pro forma return target. What about the future use patterns of cash? Yes. Green dollar bills. We will discuss that. It seems as though ATMs just don't care when there's disruption and chaos in the marketplace. They just sit there, do their business and provide you with consistent monthly cash flow. We'll discuss exactly how much inflation, not a big deal to ATMs recession, they can deal with that. Pandemic ATMs breezed right through it. Is the use of cash in decline? Well, not with the demographic that ATMs serve. How about the political party in power? That just doesn't matter in fact, and perhaps is a little sad. The demographic that ATMs serve is one of the fastest growing in the United States to this group, cash is still the currency of choice. Some of them are unbanked or underbanked. First, we'll talk about ATMs then after that, another diverse income stream for you.
Speaker 0 (00:03:07) - What's it like to invest in ATMs and car washes and what's the direction of their future use patterns, for example, wouldn't cash use with ATMs B declining perhaps? Well, today's guest expert recently spoke about ATM and carwash investing at the Best Ever conference as alternative asset classes that can perform well over the next decade. And when he was finished speaking, there was a line formed at the back door waiting for him so that people could learn more. So settle in. Let's learn about what's happening. I'd like to welcome back onto the show, g r e, regular and super syndicator, Dave Zuck.
Speaker 3 (00:03:43) - Keith, thanks for having me back on your show. It's good to be back and I'm looking forward to having this discussion. I love it.
Speaker 0 (00:03:50) - Well, Dave, you know you've been here to discuss ATMs and car washes before, so we wanna get updates today, including what investor returns are like starting with ATMs. Really, that is a predominant thought about ATM investing today. It's that the use of this new technology like Apple Pay or coming cbd, CS, or even cryptocurrencies, are gonna cause cash use to decline. And I know that when you were here previously, we talked about year over year cash use and how that looks. So is that a question that you often get about just the use of cash that an at m spits out?
Speaker 3 (00:04:24) - Yeah, so one of the challenges to the ATM space in investor's minds in accredited investor's minds is, well, I don't use cash anymore. I'm guessing you don't use much cash anymore. I don't hardly ever use cash, right? And so that must mean that other people aren't using cash. That is the same as an investor thinking, well, I don't live in a C-class apartment building, so I guess nobody invests in C-class apartment buildings, right? So one of the things yes, is cash use in decline. The answer is yes to our peer group. But when you consider the fact that our demographic, who we serve, what I'm saying, saying our peer group, I'm talking about you and I, Keith and probably everybody who's listening to this show, we use last cash and we did three years, five years, 10 years, 20 years ago. Sure. Okay. But that demographic of people that we serve is one of the largest, one of the fastest growing groups in this country.
Speaker 3 (00:05:22) - It's when you really look at the facts. Look back in the early nineties, the Wall Street Journal, there's already a Wall Street Journal that talk about the death of cash. By the end of the nineties, cash wasn't gonna be around anymore. When I started, when I got in the ATM space 12 years ago, the kind of the talk on the street was, yeah, but you got Apple Pay and the Google Wallet and you got all these, this stuff coming on, cash is gonna be dead in two to three years from now. And the fact is, there's more than doubled the amount of currency and circulation today than there was 12 years ago. There's more currency in circulation today than any time in human history. And the peer group who we serve, the demographic who we serve, uses cash and almost transacts entirely in cash. And that's not going away. We've seen that increase. We've done a lot of market research, we see what's going on, but then we also see what's going on inside our own funds and how people are behaving. It's still a vibrant market.
Speaker 0 (00:06:14) - Yes. And you and I have discussed before how some businesses and jurisdictions have tried to ban cash use, but those bans were repealed and it was brought back that you're able to use cash. And you brought up such a brilliant analogy. You as an investor out there, you might be interested in investing in a C-class apartment building, even though if you would do that, you'd probably be less likely to live in one. So yes, a lot of times you're with your circle of friends, you're in your peer group and you tend to think like they do and everyone lives just like you do. But when we talk about different demographic groups from people that you usually hang out with, one reason I've learned through dealing with you over the years, Dave, is that ATMs are so lucrative for ATM investors because this is going to seem incomprehensible to you, the educated listener, but many ATM users pay two to $3 just to get access to a $20 bill. Imagine paying $3 to get access to a $20 bill. And you're thinking, well, who would do that? No one that I hang out with would do that. That's 15% of 15% surcharge to go ahead and access your own money. But yeah, I mean that's one reason why these people are financially disadvantaged, but that's why it's lucrative.
Speaker 3 (00:07:29) - Yeah. And for those people it's a way of life. And when you look at how a person's wage or ACH today, somebody works at a factory, their paycheck gets ACH right into their account. They transact in a lot of cash. You know, it saves them for two or $3. It saves them from getting in a car. Some of 'em don't even have a car or getting in into public transit and going down the road to a, the neighborhood bank where they bank at and then stand in line at a in front of a teller on a Friday night and to try and get, you know, 20, $5,000 in cash. You know that two or $3 to go down to the corner of convenience store. That's pretty inexpensive. But you're right. I mean, there's people who will pay two or $3 to get a $10 bill or $20 bill. It's just crazy.
Speaker 0 (00:08:18) - Now Dave just gave an excellent example because some people might think, are you taking advantage of these people? You're actually helping serve these people and give them an option? And one thing that I know that you really prioritize doing, Dave, with these a t m investments you've been helping people with for years where they can come invest alongside of you, is that for your physical at m locations, you choose high foot traffic areas.
Speaker 3 (00:08:44) - You've heard the saying, what's the three most important things about real estate and its location, location, location. Even more so in this investment because at its core this is a real estate investment. You're monetizing a two foot by two foot piece of real estate and you may be taken at two foot by two foot piece of real estate to its highest and best use. So you're monetizing that piece of real estate. But no, you're adding real value in a community and and serving a community, but it's a real estate play.
Speaker 0 (00:09:15) - Now if you are the listener and the viewer out there, if you think cash is going to disappear completely in say seven years, well then you probably wouldn't be interested in investing in something like this. But the more you read and the more you learn, the more you're gonna be informed on that. So talk to us a little bit more about the future of payments. Dave,
Speaker 3 (00:09:35) - You mentioned a seven year contract and that's what this is. It's a seven year deal. But when you consider the tax impact plus the first 12 months of cash flow and that first 12 months, you're getting about 60 to 70% of your principle back in that first 12 months from the time your cash flow starts, you're getting that first year's tax deduction, 80% right on the front end. You're getting about 60 to 70% of your principal back in that first 12 months. And then you've got an extra six years of cash flow behind that. So although it's a seven year deal, it's not like you have your money at risk for seven years. You get your money at risk count, the tax impact, you got your money at address for less than three years. It becomes a, not only is it a a really good cashflow and income stream play and you can start really beefing up your monthly cash flow, but it's also a tax plan. It's one of the ways that I keep myself tax efficient. You know, it's, you use that big chunk of depreciation in year one and you start getting yourself to the point where you're living the tax efficient life you start gaining on your wealth building journey. You can get momentum quick when you start applying some of those principles and using that depreciation offset, the tax liability and some other income.
Speaker 0 (00:10:52) - We're talking about how investors get 80% bonus depreciation right there at the beginning of a seven year hold time. And Dave, is there a specific number of ATMs that a specific investor owns?
Speaker 3 (00:11:08) - One unit is considered five or six ATMs and it matter, you know, it depends on what kind and sort of location. There's some ATMs that have dual monitors and there's two people using 'em at the same time. So it really depends on, on what ATM that is. But you're talking five or six ATMs for one unit. One unit is $104,000. We do sell half units now. So you can come in as low as $52,000, but that's how it works. You buy a unit of ATMs, you put 'em in our fund, we manage the fund for you, and you get a portion of that surcharge revenue. This is sort of a three-way split. You got the investor getting about a third of the income or 30% of the income. You get the store owner or the the location owner about roughly 30% of the income. And then you got the management company, which is where all the costs flow through. You get the management company getting about 40% of that income. So it's sort of a three-way split, but you're getting as close to the asset as you possibly can get without owning at yourself. And so you're just buying the units, you're paying us to manage them for you and making it totally passive.
Speaker 0 (00:12:18) - As Dave and I have talked about on a previous show, people use ATMs for more than just accessing cash. There are more use cases than just accessing cash. But Dave, when we get back to the numbers and we talk about why you have so many repeat investors that have invested in a lot of ATMs with you years ago and wanna come back and do this more. And that is because this is a cash flow centric investment besides being tax advantaged. However, you as an investor, you shouldn't expect much appreciation on your six or so ATMs that you hold for this seven year or so hold period. Those things are almost fully depreciated in value by the end of your hold period. But this is a tax efficient, cash flow centric investment. So Dave, tell us more about how that looks for the investor, because I know this is actually a highly predictable income stream for investors.
Speaker 3 (00:13:08) - It is highly predictable. We've never missed our monthly distribution payments. Yeah. And we've never missed our proforma and so highly predictable. And the depreciation, the way the depreciation works is it, it really you invest, you get that depreciation, you can use it to offset some other income and you got two choices. You can keep your income stream coming from your ATMs. You can keep that tax free for the first couple years or you can use that even more aggressively. You can use that depreciation, go off and and use it to offset the tax liability on some other income. At the end of the day, it's about living the tax efficient life down and getting out of those high tax brackets, getting out of that 37% tax bracket, moving yourself down into the twenties and the teen
Speaker 0 (00:13:58) - Reducing your marginal income tax bracket with offsets from this investment. People really celebrate your track record. Tell us about those cash on cash returns and just about that income stream that one has historically gotten.
Speaker 3 (00:14:14) - The cash on cash return is uh, right around 26. I think it's 26.1% cash on cash return. Yeah, the IRR is a bit lower. It's uh, right around a 20% i r r. And so you mentioned it earlier about how an at t m machine really actually does depreciate, like, and I'll give you sort of the analogy when you do, when you take depreciation against, let's say a multi-family apartment building and let's say 10 years down the road, you sell that multi-family apartment building for a gain, you not only pay tax on the gain, you also recapture all of that depreciation that you've used and, and now you get taxed on that as well. So it's very different in an at t m investment. In an at m investment, you don't recapture the depreciation, you get a tax break and that depreciation, you never recapture that. So you really need to almost count that into your total return because that affects your bottom line, that affects your tax impact and you never recapture it. And so you'll notice unlike brick and mortar where normally your cash and cash return is lower and your IRR is higher because you get that residue from sale here, it's flip flopped just totally different. And then you get a higher cash on cash return, a lower i r, but it's because of the loss of value of your equipment over that seven year period
Speaker 0 (00:15:36) - In real estate, when you relinquish a property and sell it, unless you do a 10 31 tax deferred exchange, yes you have to pay back the depreciation that you were writing off all of those years. You don't have that obstacle, you don't have that problem with ATMs. And yes, you typically hear about IRRs, which all call synonymously total rate of returns in your real estate as being higher than what your cash on cash return is. But here, this is inverted. This is a cash flow centric investment. And part of the reason why is because your machines, they do go down in value over time. Why your cash flow stays at a steady high rate, 26.1% in this case,
Speaker 3 (00:16:16) - It's been a fun asset class. And it's interesting, you know, you talk about how the depreciation works and you try to introduce somebody who's not real savvy on the tax side. You talk about how it works and how it will affect them, and then they see it on their tax return. It's like, oh my goodness, yeah that works. Like you said, I'm like, oh, well yeah, it becomes part of many of my investors' tax planning on an annual basis. It is part of my annual tax planning. And so it becomes one of those things where it's just easy to start kind of collecting 'em and, and making it sort of an annual thing where you just collect more at t ATM machines, keep yourself tax efficient and and really start building those massive income streams.
Speaker 0 (00:16:57) - Well, you can learn more and get ahold of the proforma and learn more about ATM performance and the projected future use patterns and how to get started as investor if this interests you at gre marketplace.com/atm. Dave, thanks for the great update on ATMs.
Speaker 3 (00:17:15) - All right, thanks Keith.
Speaker 0 (00:17:17) - You listening to get rich education. We've got more with Dave when we come back on car washes. Why they're so lucrative, especially when you add a subscription model. I'm your host Keith Wein. Hold with JWB real Estate Capital. Jacksonville Real Estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor. Since 2013, JWB is ready to help your money make money, and to make it easy for everyday investors, get started@jwbrealestate.com slash g rre. That's JWB real estate.com/g rre GRE listeners can't stop talking about their service from Ridge Lending Group and MLS 40 2056. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plexes. So start your pre-qualification and you can chat with President Chaley Ridge personally though even deliver your custom plan for growing your real estate portfolio. start@ridgelendinggroup.com.
Speaker 4 (00:18:44) - This is the Real Wealth Networks Kathy, Becky, and you are listening to the Always Valuable Get Rich Education with Keith Wine Hole.
Speaker 1 (00:19:04) - Welcome
Speaker 0 (00:19:04) - Back to Get Risk Education. Car washers are a remarkably lucrative real estate business. It's enhanced with a franchise model and selling subscriptions to car wash customers. That's how you get that recurring revenue. So a rainy week doesn't wash out your profits. In fact, in the Wall Street Journal it recently said, and I quote what they wrote here, there is no other operation on a one acre site that can do one to two and a half million dollars in sales and pocket half of that. So our guest expert, Dave, is back because he helps you get investment returns without having to actually operate the car wash yourself. So Dave, tell us more. I know for example, much like other real estate location of a car wash is vital
Speaker 3 (00:19:53) - Even more so with this type of car wash because the whole system is set up to get you a quality wash in two to three minutes. It's designed to get you off the road and back on the road in less than three minutes. So if you can put a really good product like this carwash, everybody that I've ever talked to, whether it's a franchisee, an owner, a a subscription customer or a one-time user, everybody gives Tommy's express carwash a giant thumbs up. It's about volume and you put that on a busy street corner or you know, there's all kinds of metrics that we like and you know, it's, you gotta be where people are already going. You're not creating a an environment where you're drawing people to somewhere you want to. It's all about creating habits. On a Monday morning, my wife gets in her car and she, about eight 15 in the morning, she goes down to Wegmans about a 15 minute drive.
Speaker 3 (00:20:50) - And I promise you if you would introduce her to Tommy's and she would get a car wash when she goes to Wegmans on that Monday morning, she would do that two or three times. She'd be a customer for life. Like she now created a habit kind of like a Starbucks creating a habit. So what we're doing is we're putting this asset in a really good location. Recreating an environment where you don't have to wait in line for 10, 15 minutes, five minutes, get your car wash. It's not one of those white glove people wiping your, it's automated. You get a really good quality wash in two to three minutes. You can get in and out quick.
Speaker 0 (00:21:26) - You help partner investor money with a model that's proving itself with the Tommy's Carwash Express franchise like you just mentioned. So technology really adds the efficiency of getting cars through the carwash quickly in order to make this more lucrative. And Tommy's is very tech forward. For example, I know that customers buy subscriptions and they typically use a phone app
Speaker 3 (00:21:52) - To the point of technology and efficiency. You know, you're talking, especially over the last three years now, what was one of the top concerns or one of the top challenges for employers was getting good quality people. I mean look no further when you go to busy restaurant and you know, I mean there there was some real challenges in finding good employees. One of the things, you know, and then this is due to some of the technology that you just mentioned. You know, we got, because of the systems and technology, we can run two to 300 cars per hour through the scar wash to get washed and maybe even better you can do that with two to three people on site. So very limited overhead in terms of wages employees, you can pay those employees much better because you don't have like 30 of 'em, you got three of 'em. And so really the whole business model, and it also comes back to what you shared earlier about the operating margins. You got 45 to 50% operating margins in this business. It's in terms of percentage, it's one of the most lucrative businesses that I know of and it's just fun business to be involved in.
Speaker 0 (00:23:00) - Yeah. Now when you talk about moving two to 300 cars per hour through a car wash, are you talking about, you know, physically we think of a car wash Now are we talking about one long tunnel with the rate like that? Or are we talking about multiple bays?
Speaker 3 (00:23:16) - Normally it's one long tunnel and the longer the tunnel, the more you can, you know, there's different speeds that you know the track will take you through. And there's different things inside the carwash you can activate depending on how busy, I mean it, it really is. They're real car wash nerves. I mean they're techies and it, they really did perfect this product to the point where let's say you have a 100 car wash hour where you're putting a hundred cars through in an hour and now now you get into the busy time where it's, you know, people are getting off of work where it, now you're ramping up to two to 300 cars per hour. The speed varies on the track and it's, you know, different features of inside the tunnel kind of kick in because of the volume. So there's a lot of automation, a lot of technology going on inside the wash
Speaker 0 (00:24:02) - As society changes, you know, whether it's a gasoline powered car or it's an EV or it's diesel, they all need to go through the car wash. We're talking about that rate at which cars get washed, which is actually pretty important because if I'm a car wash customer, you're talking about your wife's habits earlier with washing her car. If I think about getting my car washed, but I see a long line over there, why might not even go in and use that car wash. And then I'll start to think, oh well what good is my subscription? So keeping that wash tunnel moving also keeps the line short besides increasing your rate of income.
Speaker 3 (00:24:37) - Yeah, for sure. And there is, you know, talking about subscriptions, we're not all about subscriptions, but there's kind of a sweet spot and we figured out that sweet spot's somewhere into 55, somewhere between 50 and 60%. It's where you really want your subscription numbers to be. You don't want 100% subscription model. If you were at 90%, that means your subscription model, you're not priced right. Almost like charging $500 a month for your apartment building and you're always a hundred percent occupancy. It's not good.
Speaker 0 (00:25:09) - It's a problem. Not
Speaker 3 (00:25:10) - Joking. Yeah, that is a problem. Yeah. So that's sort of the things we're watching. We do want a nice mix of retail customers. We think kind of that sweet spots in that 50 to 60% subscription model range.
Speaker 0 (00:25:22) - Oh that's a great point. And that's really interesting when you think about business models and a lot like apartment buildings, car washes are based on their income stream amount, but you're gonna have a different set of expenses with a car wash than you will. And apartment building of course, like you're going to have expenses for example, for water and detergent. Dave spoke a bit about how they keep the labor costs down by having fewer people on site, largely through the use of technology. So we're talking about an innovative car wash type here that's proven itself. Tommy's expressed car wash, their footprint geographically just keeps expanding and expanding and expanding. And in fact Dave, I know when we talked about this last year at least, that that time only Panera Bread in Chick-fil-A, they were the only two franchises that had higher sales revenue per location. Wow.
Speaker 3 (00:26:11) - We're at number three and we're hoping to get to number two here in short order. But, uh, chick-fil-A, that's a hard one to beat , but uh, yeah, no, it's uh, one of the top performing franchises in the anti our country,
Speaker 0 (00:26:24) - Chick-fil-A. Those two crucial pickles on that chicken sandwich. You know, it's, it's really hard to, to compete with there. You need a really efficient car wash to outdo that as far as it is on the investment end and how that actually looks like for one that wants to come alongside you and participate. Before we talk about what the returns look like, talk a a bit about how that is looking for current investors that are already in this investment. Since we first discussed this last year,
Speaker 3 (00:26:52) - We launched this fund as a debt fund. We got into it fairly slowly. We were building a couple washes and we knew that it was gonna ramp up, but we had a lot of work to do on the front end. We were, we had lots that were under contract that we were working on permitting. So we started as a debt fund. We launched phase two as sort of a semi equity, I mean it was an equity fund but it, it sort of captain investor 1.75. You got all the depreciation. The depreciation was not, you didn't have to recapture the depreciation cuz you're dealing with a lot of equipment. In fact, car washes are very unique in that you can take bonus depreciation on the building as if it were equipment. Like you don't need cost sake studies, you don't need you just bonus depreciation the thing out like, you know, the entire building, like it was a piece of equipment right up front.
Speaker 3 (00:27:39) - First year, that's rare. Yeah. And then we sort of ran through that model and we have eight operational sites today. We have seven more coming outta the ground right now. We expect to be somewhere around 20, uh, fully operational by the end of the year. And here's the exciting part, here's the fun part. We're we're looking to build a hundred of these in five years. Wow. And so to really ramp up and take us, get us into phase three and phase two worked great. Investors got all the depreciation, they got all of the cash flow. I'm working free by the way. They got all of the cash flow until they get to their 1.75 and then they exit, then the GP partners start making money. But that model why it worked very good and it's gonna get us to about 30 ish car washes. We're ramping up.
Speaker 3 (00:28:33) - We wanna go under and we're retooling our model. Now that we've uh, got a little bit of experience under our belt, we see how our operations team is operating and see how these car washes are really taken off and really how our team has made these things perform. We want to go to a hundred and to get to a hundred, we're retooling the model. Our investors have spoken. They said, man, we really wanna be, you know, a little bit, kind of give some of that backside you talked about the Wall Street Journal article on Wall Street Journal came out and said that there's PE firms paying 18 to 20 x multiples on EBITDAs and it's just super aggressive. So our investors like to hear that, but they wanted a piece of the upsides. We listened to our investors, okay, we're rolling out an equity model.
Speaker 0 (00:29:19) - And just to back up to jump in. So Dave had been talking about the debt side about how previously this was a raise on the debt side and now in the future going forward, this is how you can get in on the equity side investment of car washes.
Speaker 3 (00:29:32) - It is an equity model and it's gonna allow the investors, it's gonna allow all of our investors to not only be a part of the backend, but there's gonna be a 10% preferred return. There's gonna be aggressive cash flow throughout the hold and the exit. Um, investors gonna be with us all the way through and be a part of that upside, be a part of the exit.
Speaker 0 (00:29:54) - Talk to us about any of the threats that might be out there, whether that's threats to just the overall model of car washes five, 10 or 20 years down the road, and then what the competition is like Tommy's expressed car wash versus other car washes. What are some of the threats
Speaker 3 (00:30:10) - We've seen, much like our investors have spoken and expressed their desires to be a part of the upside and we're getting ready to rule that out to 'em. The general public has given their opinion, uh, with their wallets. And so when you get to understand this model and, and how it works, and then you start paying attention to a lot of the other car washes out there and the look and appearance and how they work. And it takes longer and there's lines and you know, some of 'em are full service and you know, it's pretty inconsistent, but consumers have spoken and they want this product and Tommy's kind of the innovative leader in the car space. And so they're really all about just listening to the consumer and get them what they want. Consumers want a good quality wash for a fair price and they want to get it quickly and efficiently. And that's what we're delivering. So there's competition in the space. There's only one or two competitors of ours who we would say, okay, they are there so we're not building across the street. There's not really a need for us to be there if there's that competitor is there. But most of our competitors, if we were to put a Tommy's Express in a neighborhood, we would steal the show and we have what consumers want and they'll come to us.
Speaker 0 (00:31:30) - When I think about long-term use patterns, Dave, just anecdotally I think of my own lifespan, I only seem to notice more car washes in cities as time goes on per capita. Not fewer. In fact, growing up my dad used to wash his car by hand in or right next to the garage or old Subaru legacy station wagon. Sometimes I would help him out. Well, he doesn't wash it anymore. It's more efficient to go drive through a car wash. That almost seems to be a vestige of yester year where you would regularly wash your own car in your driveway.
Speaker 3 (00:32:02) - Well there's two things there. One is there's a lot more people live in an apartment buildings and, and less out in the country in suburbia. So the, even having the ability to wash your car in some places doesn't make sense. But there's another thing too. You know that by the time I started regularly using a car wash where I actually had to pay some organization to wash my car, I could have bought the car wash . Now, I mean you see it all the time. You got teenagers who's got a nice vehicle and they don't even think twice. They're going through and spending eight or 10 or 15 bucks to wash their car. And I was like, oh my goodness. Okay. But times are changing and it's becoming a standard thing to get your car wash, your car wash and forget the garden hose and the bucket and the soap,
Speaker 0 (00:32:43) - The carwash I use most regularly, the highest tier one now costs $18. That's where they use, you know, rain X on the windshield and everything else. But as far as when it comes to the investor perspective, this is one of those investments, Dave, where you recently spoke at the conference that people are lining up at the back of the room to want to learn more because they're so interested in this investment. I know oftentimes car washes have high cash flow and high tax efficiency for the investors. So tell us about how that's expected to look here On the equity side,
Speaker 3 (00:33:13) - You get a hundred percent bonus appreciation over five years. You get a big chunk of that in the first year because of the amount of development that we have in the fund, you're getting less than half of it the first year, around half of it, maybe just a little bit less than half of it the first year. So you get a big chunk of your depreciation in year one and then you get the rest of the depreciation and it's four years following that. It's a pretty aggressive on the depreciation side. But then on the cash flow side, 10% preferred returns. You've got multiples that are in the two and a half to three x in five to seven years, you're talking aggressive returns and you're talking aggressive, uh, bonus depreciation for tax impact,
Speaker 0 (00:33:57) - You need to be an accredited investor. And what's the minimum investment?
Speaker 3 (00:34:02) - So minimum investment is a hundred thousand dollars and you do need to be an accredited investor.
Speaker 0 (00:34:07) - Tell us about the expected hold time.
Speaker 3 (00:34:09) - We're modeling it five to seven years. So while a private equity firm and with Sam some pretty lucrative offers already, but we've seen, let me back up a second. So this industry is so fragmented that the biggest player in the room has accounts for about 5% of the global revenue. Wow. So that's how fragmented this space is. So there's real opportunity and institutions are desperately trying to get their foot in the door because they see that it's a recession resistant business. They see that it's a, it's got strong operating margin. The Wall Street Journal talked about that where, you know, just crazy operating margin. So they're desperately trying to get their foot in the door and get a foothold in the space and get a little traction in the space. They're not hardly any people who they can write a hundred million checks to. We're building a portfolio that somebody would be able to write a billion dollar check for in a couple years. And so when that happens, we feel like the more mature this space, the more mature this portfolio is, the more cream we can squeeze out for our investors. And so that's where we're going with it. We don't believe that we exit in two to three years, but it could happen. But we're modeling out for five to seven years
Speaker 0 (00:35:30) - In case it takes that long to Sure. Get returns on the conservative side, five to seven years. And yeah, I, I learned a little something there. Okay. The biggest player in the space only has about a 5% share. Very fractured, much like real estate itself is well day's, one of our G R E marketplace providers, you probably already know that. So if you wanna learn more, I'd encourage it and see what makes this business so lucrative. You could do that at gre marketplace.com/carwash. Dave, it's really been stimulating to think about some of these alternative real estate investments. Thanks so much for coming back onto the show.
Speaker 3 (00:36:07) - Thanks Rob me Keith. It was fun
Speaker 0 (00:36:15) - On the ATMs with 100 4K invested that has recently generated $2,262 per month, 2262. And they've never missed the monthly distribution or their proforma return target. And if you go invest quite a bit more than that amount, there is something new to announce. And that is the existence of financing with ATM investments that has the potential to amplify your return some more. So with ATMs, it's a strong cash on cash returns and the I R R along with the quick return of capital, that's what's making it so popular. They have been delivering them to this group for more than a decade now. Now the operator, Dave, he's really proud of what they're doing and that's why he wants to give the opportunity for you to get on the ground in person and see just what they're doing. In fact, in only 10 days, there's a car wash and self storage investor tour.
Speaker 0 (00:37:19) - Yes, it is a one day investor tour on May 18th in Columbia, South Carolina. And you are invited. You'll see a Tommy's Express carwash and Moore meet the team, ask questions about the business plan. There is no cost to attend. You can meet Dave there as well. You'll learn more about that and with hotel accommodations and everything else after you get the free investor report. At G R E Marketplace, we're talking about world class operators in the car wash space here. When you have multiple diverse income streams in your life, what you've done is you've made your income resilient. So to connect more and learn more and see proformas on adding an income stream to your life in the at m space, if that interests you, start@gremarketplace.com slash atm. For car washes, visit gre marketplace.com/wash. Until next week, I'm your host Keith Wein. Hold. Don't quit your daydream.
Speaker 5 (00:38:27) - 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 L L C exclusively.
Speaker 6 (00:38:55) - The preceding program was brought to you by your home for wealth building. Get rich education.com. |
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Mon, 1 May 2023
Learn how to harvest equity without giving up your low, fixed-rate mortgage. Today, I discuss: conventional loans for single-family rentals, DTI, refinancing, accessing equity, student loan debt, and down payment requirements for income properties with Ridge Lending Group President, Caeli Ridge. Learn what’s better for a second mortgage—the pros and cons of a HELOC vs. Home Equity Loan. You also get a mortgage market overview. We discuss changes in cash-out refinance seasoning requirements. Caeli also describes where she believes mortgage rates are headed later this year. Resources mentioned: Show Notes: Ridge Lending Group: info@ridgelendinggroup.com Join us for tomorrow’s free GRE Florida properties webinar: Ridge’s All-In-One Loan Simulator: https://ridgelendinggroup.com/aio-simulator/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Speaker 0 (00:00:00) - Welcome to GRE! I'm your host Keith Weinhold. You can get a conventional loan for a single family rental with less than a 20% down payment. Learn why you might want to refinance today. Even though mortgage rates aren't as low as they were a couple years ago, how do you qualify for loans if you've already got student loan debt? All things mortgages and financing today on Get Rich Education,
Speaker 2 (00:00:29) - You are listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.
Speaker 0 (00:00:52) - Welcome to GRE from K Patis North Carolina to Hattiesburg, Mississippi and across 188 nations worldwide. I'm Keith Weinhold. This is Get Rich Education, the voice of real estate investing since 2014. Before we get into a great education on all things mortgages today, there is still a little bit of time left for you to join us on tomorrow night's G R E Live event. You can join us from the comfort of your own home. This is for new build single family rentals, opt to four plexes in Jacksonville, Ocala, and elsewhere in Florida. Purchase prices are still below 300 K on the single families. Yes, still in the two hundreds in some cases. I don't know how long that can last. Yeah, these are the property types that are quickly vanishing. Our investment coach Naresh Stars in that event tomorrow, he finds you the good deals with the national providers that are actually giving incentives despite the fact that the product that you're buying is in really short supplies.
Speaker 0 (00:01:59) - You're gonna get a good, solid, fundamental education on what makes a durable income property market and a arrest in the Florida provider are going to share with us just for webinar attendees. Those even better than two and two incentives. Yes, for you, the incentives on the webinar are even better than that 2% of your purchase price paid do you in closing costs cash and 2% of free property management. It is going to be even better than that. That's gonna be rolled out tomorrow night, May 2nd at 8:30 PM Eastern, 5:30 PM Pacific. It is free to attend. You can ask questions live, get your questions answered and get access to the actual properties should you so choose. That is the final reminder. So if that's of any interest to you, be sure to sign up now@grewebinars.com. I'm coming to you from the Mojave Desert today here in metro Las Vegas.
Speaker 0 (00:03:04) - It's Henderson Nevada. To be technical next week I'll bring you the show from Phoenix, Arizona. And you know what? It's kind of funny. Sometimes you hear people refer to this general area of the nation this southwest and they say they are going to the desert if they were doing what I'm doing. Well this unrepentant geography nerd will clarify that it is the deserts plural. Yes, Las Vegas is in the Mojave Desert in Phoenix is in the Sonora Desert. There are differences in vegetation type and others that distinguish the two. And the most obvious difference perhaps is the presence of the big iconic Saguaro cactus down in the Sonora that you don't find up here in the more northerly Mojave and perhaps the Joshua tree is the more distinct plant type here in the Mojave. Yes, we're talking about two gigantic pieces of real estate here. Much of it is baron. Two disparate deserts with their own distinctive flora and fauna. As you're about to learn about financing real estate today, let's remember that there is a cash out refinance and then generally if you're performing a refinance without pulling cash out, that is known as a rate and term refinance. Let's get into it.
Speaker 0 (00:04:30) - Well hey, well how do you qualify for more mortgage loans at the lowest interest rate available, Americans have near record equity levels in their homes. What's the best way to access that equity yet keep your low mortgage rate in place? And what about your student loan debt and how that factors into you getting a mortgage or getting a refinance? We're answering all that today with a GRE regular guest and though it's her first appearance back on the show this year, it's the return of the company president that's created more financial freedom through real estate than any other lender in the entire nation, Ridge Lending Group. It's time for a big welcome back to Caeli Ridge.
Speaker 3 (00:05:08) - Keith Wein. Hold. Thank you. You flatter me sir. I appreciate it. Love being here with you and for your listeners.
Speaker 0 (00:05:14) - Well yes, the president is back and everyone loves this type of president because it's not about being a Democrat or Republican. So hail to the chief, great to have you here. And Jaylee mortgage rates, they have settled down a good bit from their recent highs now they peaked back in the fall of last year. So with that and some of the other things in mind, why don't you talk to us about the big picture first, sort of your mortgage market overview.
Speaker 3 (00:05:40) - Interest rates is always top of mind for everybody. I think they're doing pretty well. I do believe I've been sharing with our listeners and and my clients on a day-to-day. I do believe that rates will continue to kind of increase here and there. There's gonna be some ups and downs. Of course the Fed has been very clear with us. Jerome Powell is gonna continue to raise the Fed fund rate just for anybody that doesn't know the two between a mortgage rate and a Fed fund rate while connected, not the same thing. So when they raise that does not automatically mean that we see the increase on the the 30 year mortgage bonds. I think that that's gonna continue to happen, but I think the pace in which it happens or continues to happen is gonna be a lot less aggressive. So I think that's gonna bode well overall.
Speaker 3 (00:06:21) - For interest rates. I know everybody is very, very interested in in are they going up, are they going down, when are they going up, when are they going down? I think that we'll continue to see a little bit of upward movement. I think it's gonna be sometime next year that we start to see interest rates come back down in any meaningful way. And remember gang rates go up much, much faster than they come back down unfortunately. So I think we've got a little bit of way to go. But I'm always the one saying, Keith, you and I have talked about this, um, many, many times you must be doing the math and that the rate as a function of the return of the investment isn't the most important thing. So I'll leave it there for rates. Otherwise, I think that the industry is doing really, really well.
Speaker 3 (00:06:58) - One big announcement that we had this year was that Fannie and Freddie both have extended the seasoning period of time to where a cash out refinance when leverage was used to acquire is applicable. So now you have to wait 12 months to pull, to pull cash out of a property using the A R V that after repair value if you use leverage to acquire the property. Quick distinction because this has been confused. If you paid cash for the property, your source and season funds, that still falls under what's called the delayed cash out refi and no seasoning is required. It's only when leverage was used to acquire the property and then they're trying to use an after repair value to pull cash out in hand. Is that 12 month seasoning rate and term is different. So that doesn't apply either.
Speaker 0 (00:07:45) - Okay. So if you make a purchase and then say it less than 12 months down the road, you want to do a refi but not pull cash out, is that still all right?
Speaker 3 (00:07:55) - That's absolutely fine. No seasoning is required and we can use the arv. It's only when you want cash in your hand that that 12 months is is applicable.
Speaker 0 (00:08:04) - Got it. Okay. That's really helpful to know. Just big picture before we winnow down, are there any other big substantial mortgage stories out there that some should know about? Um, it was only a couple weeks ago, there was a lot of misinformation going around on TikTok and elsewhere about 40 year loans from F H A without people understanding that's just for loan modifications and really other stories like that. Any other big picture things where you can help us see what's happening?
Speaker 3 (00:08:30) - It seems to be par for for the course? I have not. There's nothing that's come across my desk that I would say was newsworthy or noteworthy to share. I think we've got more to unpack here than any of that.
Speaker 0 (00:08:40) - Yeah and things sure are picking up here around G R e. People wanna buy more properties this year. It really slowed down toward the end of last year, right about when the mortgage rates were at their peak. So when we talk about getting loans, we think about leverage. Leverage is created with debt. Has anything changed with the down payment requirements for an income property? And we're largely here in today's discussion talking about one to four unit income properties. Properties that you don't live in yourself,
Speaker 3 (00:09:08) - Correct down payments have have remained the same. There isn't been anything that has changed there. Just to reiterate, for those that may not be aware on a single family residence, conventionally 85% loan to value is applicable. You can leverage all the way up to 85, you're putting 15% down. Keep in mind everybody that that will have pmi, private mortgage insurance attached to it, I would have you look at them side by side. The PMI factors actually pretty low and depending on the loan size it may only be 20, 30 bucks a month. So if you're able to leverage extra, it may make sense. You're gonna have to look at the numbers so that single family and then two to four unit on a purchase transaction different on a refinance transaction but purchase is 25% down or 75% leverage is required for those duplex, triplex, fourplexes.
Speaker 0 (00:09:54) - Okay, so as little as 15% down on a rental single family home. So you're getting up to six to one, seven to one leverage in that case. Sheila, do you find very many people doing that or would they rather pay the 20% down for a rental single family home and not have the pmi?
Speaker 3 (00:10:10) - I find that right now I think that it's less common than maybe it was because interest rates are up from where they were, uh, a year, year and a half ago. So more often than not we see the 20% down. But I still think it's worth looking at. I mean you're never gonna know unless you run the numbers right side by side.
Speaker 0 (00:10:25) - Okay, so we're thinking about how much cash we have to have put aside for a down payment in closing costs. And one thing that we need to do in order to qualify for that loan in the first place of course is some people get hung up on the dti, their debt to income ratio is too high to qualify for property and chaley. Over the past few months I've had a few listeners write in with questions and I thought, well I'll say that question until we have chale on again. And one of them really has to do with student loan debt. Student loan debt often contributes to one having too high of a debt to income ratio so that they didn't have to repay their loan. I know that Biden said that you wouldn't have to pay back student loan debt for a while, but can you talk to us specifically about student loan debt with D T I?
Speaker 3 (00:11:06) - There's gonna be a few pieces to share with everybody depending on whether we're talking about Fannie Mae or Freddie Mac and we won't know who we're gonna end up selling to after the loan funds. And they have slightly different guidelines between the two of them. Similar. But there are some differences as it relates to student loan debt regardless of whether you're in deferment or you've been told that you don't have to repay. If it shows up on an individual's credit report, the calculation will be as follows. They're going to take the outstanding balance times 1%, that's Fannie Mae's rule or the outstanding balance times half a percent. That's Freddie Mac rule and that will be the payment that we include in the debt to income ratio. Uh, I'll mention that the all-in one, which is a very popular loan right now. First Lean HeLOCK, maybe we'll talk about that here today. They will defer to Fannie rules so it'll be 1% of the outstanding debt pulling on the credit report even if it shows a zero payment listed. Now there is one caveat, if the individual has a letter, this happened maybe in the last six months and I'm trying to think about, there was a title, it's pretty rare. But if they're able to gain access to documentation that specifies that they are not going to have to repay that debt and we can take that documentation, then we can zero out that payment in the D T I.
Speaker 0 (00:12:22) - Alright, there's some strategies for how you can approach D T I with respect to any student loan debt that you have and what is the maximum D T I that a borrower can have?
Speaker 3 (00:12:34) - Conventionally and non qm, you're gonna get to 50% debt to income ratio for the all-in-one since we just touched on it, 43% is the absolute max.
Speaker 0 (00:12:43) - Okay. And on prior shows, Chile and I have discussed specifically with examples just how that D T I is calculated. If you're wondering, you can hear that in some past episodes Chile one one goes ahead and they continue to add income properties to their portfolio. Often I recommend that one does that with high leverage but not over leverage. How does one keep their D T I ratio down over time as they continue to add properties so that they can qualify for more properties in the future? Is there a good strategy for that?
Speaker 3 (00:13:14) - There is, and it's such a good question because as investors, right, our qualification primers are not static. They're going to change over time as we buy and sell and refinance. So it's very, very important, especially with the debt to income ratio that we're keeping an eye on it. And there's a few ways in which you can kind of strategize or optimize that D T I. The first is going to be the Schedule E, okay? The Schedule E is where all the rental properties are going to live once you've filed the annual tax return. The easiest way for the time that we have here today, Keith, is gonna be to tell the listeners, send us your draft returns. So on an ongoing basis we tell our active clients do not file federal tax returns until you send us the draft. We're going to run that draft through the pre-formulated calculation that comes straight from Fannie, Freddie and then we're gonna provide you with some feedback, one of which may be Mr.
Speaker 3 (00:14:03) - Jones, you forgot to include your insurance as a deduction and that's actually an add back that's gonna be to your disadvantage. Make sure that you put that in there. You didn't claim the full number of days of income for the property, you forgot to put depreciation on there. That's also an add back. There's a whole slew of things that we can look at and look for and give the individual that feedback so that they are filing at that optimal way while maintaining what the maximized tax credits are, right? There's a nice balance there. The more aggressive you are with the tax deductions, the more it can impact the D T I. So we wanna have eyes on that and work closely with the client and or their CPA is a very common part of what we do. So schedule E a little more complicated, that would be one of the the ways in which we wanna maximize debt to income ratio.
Speaker 3 (00:14:45) - Obviously not obtaining new debt, new consumer debt is is not gonna be to our advantage, right? We don't want more liability than we have income. Another thing is, is that when we talk about credit and a lot of clients that we talk to, they pay their credit cards off monthly, right? Maybe they charge up five grand, eight grand, 10 grand, they get a miles or whatever it is. It's very important to communicate with us to find out when in the month we wanna strategically pull the credit. Because what will happen is is that the day in which we take that snapshot, if there's a minimum payment due, a balance with a minimum payment, that minimum payment will be used in the individual's debt to income ratio regardless of whether they're gonna pay it off at the end of the month. That doesn't matter to us.
Speaker 3 (00:15:26) - There's a payment here, we gotta hit you for it. So strategizing on the day in which we wanna run credit might be another helpful way for D T I. And then finally, and there's probably a few other things, but I think high use would be, I don't like the shorter term amortizations. I think this is something else you and I have talked about many times, Keith, where people wanna pay off quicker, which is great if that's really what they wanna do, that's perfectly fine. I'm not sure that that would be my strategy, but whatever. Don't get yourself into a 15 year fixed mortgage because it's only gonna jack that payment. It's gonna really increase that payment. It's ultimately going to, for long-term optimization, hurt your D T I. You can do the same thing with a 30 year mortgage and not pay extra interest by accelerating the debt if that's what you chose. So those would be the the few things I'd comment on
Speaker 0 (00:16:10) - 100%. And for you the listener and viewer right now with what you just heard from chaley, you can begin to understand the value of working with a lender that works specific with income property investors rather than those lenders that are more geared toward primary residents, borrowers. Nothing wrong with them but they're in their lane during their thing. And you can understand why Chaley over there at Ridge is really a specialist to help you qualifying for as many income property loans as you possibly can and optimizing those loans as well. Chaley, when we talk about interest rates, oftentimes it's of interest to people to look at what are refinance interest rates like versus new purchase interest rates.
Speaker 3 (00:16:54) - I would say on average there's a variety of of variables that dictate what the rate is gonna be. Okay? I talk about this a lot. They're called LPAs loan level price adjustments. And a loan level price adjustment is a positive or negative number that attaches to the characteristic of the loan transaction. So purchase or refi, hash out refi rate and term refi credit score has its own L L P A loan to value, loan size occupancy. All of these come with a positive or negative number attached to them as it relates to purchase versus refinance. Generally speaking, let's take a rate and term refi where you're not getting cash out, you're just maybe taking an arm and making it affix. You're taking a higher rate and making it lower, whatever, maybe about a half a point difference. So if a purchase was at six and a half, the re rate and term refinance might be at 6 75 or 7%, cash out's gonna be a little bit different. I would add a quarter point to that and then if, if it's a two to four unit, add another quarter point on top of that. So those variables do make a difference.
Speaker 0 (00:17:53) - And maybe the listener might think, well why are you talking about refinancing at a time like this? If I wanted to refinance, I would've been more likely to do that about two years ago when mortgage rates read historic lows. But today Americans are sitting on near record equity, oftentimes it might be tied up in a low mortgage rate loan with that equity chaley. I talked to some people out there just lay people, people that aren't even investors and they have a big equity position with a really low mortgage interest rate loan and they seem to think that to refinance it, they would need to go ahead and refinance their entire mortgage and lose that maybe three or 4% loan, but they don't necessarily have to if they can do a second mortgage. So I guess really what I'm getting at and the question chaley is what is the best way to do a rate and term refi versus a cash out refi? And I know there are a lot of scenarios there.
Speaker 3 (00:18:44) - Yeah, lots of scenarios. So to your point, it is not necessary to give up a very low fixed rate mortgage if you want to harvest some of that equity. The ways in which, and I'm gonna have a plug after this for the all in one, but I'll get to that cuz I'm just such a big fan. But the ways in which you can do that both for your primary residents, a second home and an investment will be through a second lien mortgage, whether it be a heloc, home equity line of credit or a he loan, the HE loan is applicable for the rental properties. I do not believe, I hope somebody can give me alternative information, but I do not believe you're able to find second lean HELOCs for rentals today. I feel like those have really dried up if they're out there, the ones that I know of that used to do them are not doing them anymore.
Speaker 3 (00:19:27) - If they're out there and anyone's listening to this, somebody please let me know. Keylock for rental probably not an option. He loan for rental absolutely is an option. And this is guys a fixed rate mortgage in second lean position, just like your 30 year fixed first, this will be a 30 year fixed second interest rates are gonna be higher. And since we were talking about interest rates, I'm gonna say that they're probably anywhere from 10 to 13%, but they're smaller amounts. C L T V combined loan to value for a he loan on a rental would be 85% is what we have access to. So as quick math guys, if you have a value of a home of a hundred thousand and you owe on your first mortgage 50,000, the CLTV would be 85% of a hundred. So 85,000 minus the 50001st, which stays in place, you'd have access to about 35,000 in that example. And that would be access to rental properties that you just do not want to mess with that first lien mortgage different for owner-occupied. And I'll take your queue on when you want me to get into that.
Speaker 0 (00:20:26) - Yeah. Okay. So we are just talking about income property second mortgages there. Tell us about primary residences.
Speaker 3 (00:20:32) - So primary and secondary should be in the same bucket. You can leverage just 90% C L T B, same math as before but up to 90% And these are gonna be, you have HeLOCK and he loan. I'm gonna assume most people are gonna go for the HeLOCK, right? The open-ended revolving is definitely more attractive than a closed-ended fixed I believe in a second lien. And you know Prime is at eight I believe right now. Gosh, I should have checked before we go on, but I think Prime is sitting, it's an index. An indices like the Fed fund rate, that's an index two prime is at about eight. And then depending on the characteristics, those l LPAs that I mentioned, loan level price adjustments are gonna come up with a margin. Maybe it's 2% over prime or one or whatever it is depending on those things. So I would anticipate a HELOC and second lie position on a primary residence will be anywhere from eight to maybe 10%. More often than not is what you should expect. Interest only open-ended.
Speaker 0 (00:21:24) - And on the second mortgages, whether that takes the form of a HELOC or a HE loan, how long is the initial fixed rate period? Typically
Speaker 3 (00:21:32) - There are hybrids where you can fix in for a year or three years, et cetera. Those are available. I'm not sure that you wanna do that in a high rate environment. You probably wanna avoid any fixed rate right now if you had the option to get into it a couple of years ago, you're looking really good right now because you fixed in at at some ridiculously low rate for a period of two, three, maybe five years. I would tell people listening, fixing in on a HELOC right now is not gonna be your advantage when we believe that rates are gonna start coming down over the next year, et cetera. But for the HE loan, it's fixed for 30 years. Just like a 30 year fixed first lie mortgage, it's fixed, you have it four 30 years, it's amortized, it's closed ended. You're making your regular payments until you pay it off after the 30 year period of time.
Speaker 0 (00:22:13) - We're talking about how you can more efficiently borrow in this environment where people and investors have high equity positions and we have hopefully come off the mortgage rate highs from late last year. You're listening to Get Risk Education. Our guest is Ridge Lending Group President Chaley Ridge Morton, we come back. I'm your host Keith White Hole with JWB Real Estate Capital. Jacksonville Real Estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor. Since 2013, JWB is ready to help your money make money, and to make it easy for everyday investors, get started at jw b real estate.com/g rre. That's JWB real estate.com/g R E GRE listeners can't stop talking about their service from Ridge Lending Group and MLS 40 2056. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plexes. So start your pre-qualification and you can chat with President Chaley Ridge personally. They'll even deliver your custom plan for growing your real estate portfolio. start@ridgelendinggroup.com.
Speaker 4 (00:23:45) - This is Rich Dad sales advisor, Blair Singer, listen to Get Rich Education with Keith Wine Hold and above all don't quit your daydream.
Speaker 1 (00:24:03) - Welcome
Speaker 0 (00:24:04) - Back to Get Rich Education. We're learning about how to be a savvy borrower with President of Ridge Lending Group, Chaley Ridge and Chaley. One product you have there that's really flexible and has helped out so many people and helped save borrowers tens of thousands of dollars in interest or more is what's called your all in one loan. Tell us about it.
Speaker 3 (00:24:25) - This is a first Lean HeLOCK everyone. I'm such a big fan, it's not for everybody, but for the right individual, I don't know that there is a loan product to rival it. It's got all the flexibility in the world and as Keith said, the mechanics of this and the concept of this arbitrage, it's called Velocity Banking, infinity Banking. If anybody's familiar with those terms, that's what this does. It allows you all the open flexibility to sort of become your own bank where you have this line of credit. It is a first lien line of credit. So let's take a a step back and talk about those low interest rates that everybody has secured over the last couple of years. We were very lucky to have to two and a half, 3% interest rates. And I'm constantly having this conversation and I'm really trying hard to dispel the psychology of you can never do better than that when it's just not the truth.
Speaker 3 (00:25:14) - And mathematically you will be able to figure this out. I'm gonna plug our website here. There is an interactive simulator that will take you to the all-in-one simulator where you can compare your existing fixed first lien mortgage to the All in one and and the input data is very, very simple. No vials of blood here guys, but if the input is accurate, the results page will tell you very clearly if the all-in one will save interest and Trump over the 30 year fixed at two and a half or whatever it is, or if you're fixed rate mortgage is more to your advantage, it will be very clear there'll be no mistaking it from that. I think further conversations will be necessary for those that see some real value in the All In One. I won't go too far down that rabbit hole, it's a little bit more complicated than we probably have time for here. But the first Lean All In one is such a fantastic tool. I really encourage your listeners to go ahead and and check out at the very least the simulator and see how it applies to you.
Speaker 0 (00:26:08) - The all-in one loan operates much like a first lien heloc. I don't think we have time to describe it all. Like you said, you do have the simulator there on your website@ridgelendinggroup.com where one could see if their existing mortgage it compares favorably or unfavorably to the all-in one loan. But as we know with the first lien heloc, therefore one feature of the All in one loan is the option, not obligation, but option of making interest-only payments to keep your payment down.
Speaker 3 (00:26:34) - Yeah, this is where it gets a little bit tricky for some people when we start talking about payments FirstLine Open-ended HeLOCK, where it's called the All In one because you're replacing not only your mortgage with this revolving open-ended heloc, but also a checking and savings account and combining those two elements whereby simple depository income is being used at dollar for dollar driving down principle balance to save in daily interest accrual. I'm gonna give a quick example and then we can move on and, and I encourage everybody to do the simulator email us, let's talk through it. We'll take you by the hand. It's the learning curve's a little intense, it was even for me. But here's an example of velocity of money and kind of how the all-in-one works. So take a 30 year fixed mortgage and a 15 year fixed mortgage. Both of them started at $400,000 each.
Speaker 3 (00:27:22) - You lock the 30 year at 4% and the 15 year was locked at 7%. Without exception, everybody runs to the 30 year at 4%. I would've done the same if I didn't know the math when in fact the reality is is that you will pay $40,000 more on that 4% 30 year than you would on the 7% 15 year because the amount of time that you're paying on that mortgage is greatly reduced. And that's, I guess a, an easy concept. It's a, the first step of trying to define this for most people, they can kind of see it in those terms because they understand the amortized mortgage. It's the amount of time that you are paying interest. So if you're utilizing your depository checking savings and your mortgage and all of that money is going in there month after month before it's going back out the door for whatever your living expenses are. And then whatever's left over is, is stays in there. 24 7 access. Nothing changes about your current banking techniques or or strategies. It's all the same. But now you're in control. You've become your own bank. It's amazing. I can't say enough about it
Speaker 0 (00:28:24) - Talking about the all in one loan there. You sure can learn more from Ridge on that. Jaylee, is there really like anything else that I guess is noteworthy specifically in helping a borrower qualify for income property loans, maybe a common problem or a borrower hurdle that you see in there at Ridge?
Speaker 3 (00:28:43) - I would just boil it down to education. Just lack of information. It's not dear Google stuff. The guidelines and what's available. All of these things are changing on a consistent basis that real-time information's not available to them. So if I had to pick one thing, I would just say education. And I'm very proud to say that we really focus on that. If there's a value add about Ridge, I think there's quite a few. But the one that I think sticks out for most people is the education that we provide to our investors and shining a light and giving them a look under the hood and what they need to know, teaching 'em how to optimize their qualifications and all of the stuff that we've been talking about here today.
Speaker 0 (00:29:19) - Well that's a good point because when we talk about real estate investing, you're really, they're in one of the more dynamic and fast-changing parts of the industry as opposed to something like home construction where a lot of the methods haven't changed for 50 or more years, if you will. So yeah, it's really staying up and staying informed on that and engaging with a lot of the educational resources increasingly that Ridge has for you to help you stay on top of that as an income property bar yourself. And Shaley can tell us a bit more about that shortly. But why don't you tell us about all of the loan types, the mortgage products if you will, that you offer in there.
Speaker 3 (00:29:52) - That's another great value add about us. We have a very diverse menu, if you will, of loan products that don't just start and stop with the conventional. We're not a one size fits all. So we've got the Fannie Freddy's, we talk about that a lot. Our all in one, my favorite. We have a very diverse non QM product line and for those that aren't familiar with that term, QM stands for Qualified Mortgage. Fannie Mae and Freddie Mac are the, uh, epitome the definition of what a qualified mortgage is. There's a whole definition we don't need to go into today, but, so everything outside of that QM is now non qm. And within non qm, like I said, extremely diverse. There's things called the debt service coverage ratio product where we're not showing borrower income, we're just looking at the properties income offset by the new mortgage payment. There's bank statement products. If you can't show tax returns, we're gonna take deposits and average them asset depletion. If you've got large self-directed ira, we can come up with an income calculation for that. The list goes on. We've got commercial products for commercial properties, but also for residential properties. Cross collateralization. It's pretty diverse. We have a lot for everybody.
Speaker 0 (00:30:54) - When you excel in there, you've been such industry leaders at originating income property loans for investors were proportion of your businesses income property loans and what proportion is primary residence loans?
Speaker 3 (00:31:06) - A lot of people don't realize we can do both and we do both very well. But I would say that it's probably 70 30 not owner-occupied. To owner-occupied. A large part of what we do is the investor loans. But most of our investor clients come to us for their primary needs too because we already have their life on file and, and can get that done very competitively
Speaker 0 (00:31:24) - Too. , right? And you keep growing. You're in almost all 50 states now.
Speaker 3 (00:31:27) - I know. Can you believe it? We're in 47 states. We're not in North Dakota, New York, or Vermont, otherwise we're everywhere.
Speaker 0 (00:31:34) - Letter audience know how they can learn about your resources.
Speaker 3 (00:31:37) - There's a couple ways to find us our website, ridge lending group.com. They can email us, info ridge linen group.com. Our toll free is 8 5 5 74 Ridge 8 5 5 7 4 7 4 3 4 3. And while you're on our website gang, uh, check us out on our community. I have a live event every Tuesday, one 30 Pacific, uh, four 30 Eastern. Uh, lots of good information register and it's free. Lots of good information and, and education like we've been talking about here. Hope to see you.
Speaker 0 (00:32:05) - Oh, it's been a terrific and crucial mortgage market update. Chaley Ridge, thanks so much for coming back into the
Speaker 3 (00:32:11) - Show. Thank you. Appreciate it.
Speaker 0 (00:32:18) - Oh yeah, lots of good concise information there from Chaley. It's a type of content that can have you hitting the rewind button on your pod catcher at times. All right, so we learned that in a lot of scenarios there. Second, mortgages come with rather high interest rates that is prohibitive. But then on the other side, it's encouraging to learn, learn that on primary residences, for example, you can get up to 90% loaned value. That means you only need to keep 10% equity in your home. And as far as that all in one loan simulator, we'll put a link directly to that in the show notes for you. But like Chaley said, you might wanna reach out to them@ridgegroup.com and then they can help walk you through it. Thank you to Caeli for the generous contribution to your learning today. Until next week, I'm your host, Keith Weinhold. Don't quit your daydream.
Speaker 5 (00:33:15) - 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 on 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 L l C exclusively.
Speaker 6 (00:33:43) - The preceding program was brought to you by your home for Wealth building. Get rich education.com. |
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Mon, 24 April 2023
Grandpa told me to save money and buy a fixer-upper. What about paying off my mortgage ASAP? Learn why I rejected it all. Changing attitudes towards debt and savings began with high inflation in the 1970s. I compare global home prices and their changes since 2010. Projects for $300K starter homes are going extinct in America. Keith Weinhold and Naresh Vissa describe the upcoming webinar for new-build properties in Florida—single-family homes up to fourplexes. It will offer incentives that are even better than the 2% closing cost cash and two years of free property management. Join next week’s Florida properties live event at: GREwebinars.com Resources mentioned: Show Notes: Sign up for our Florida webinar next week: World Housing Prices Since 2010: https://www.visualcapitalist.com/cp/mapped-global-housing-prices-since-2010/ $300K Starter Homes Going Extinct: https://finance-yahoo-com.cdn.ampproject.org/c/s/finance.yahoo.com/amphtml/news/300-000-starter-home-going-151338810.html Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
**Speaker 1** (00:00:01) - Welcome to GRE! I'm your host, Keith Weinhold, learn why I rejected my grandpa's advice about debt and real estate. Global home prices have surged not just since 2020, but really for the last decade plus. How does America compare to the world there? Then the real estate market heats up in Florida. All today on Get Rich Education,
**Speaker 2** (00:00:28) - You are listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.
**Speaker 1** (00:00:51) - Hey, welcome to GRE from England's White Cliffs of Dover to Dover, Delaware, and across 188 nations worldwide. I'm Keith Wein. Hold. This is Get Rich Education. The fact that you want to get lots of good real estate debt, even now that real estate interest rates are off their all time lows from a couple years ago and really most all interest rates. You know, I think to the lay person, it is one of those things that is easy to understand and yet hard to accept to get more debt. Since Americans have near record equity levels. Now, not enough people even ask where that equity came from. I mean, look, you probably don't have a big equity chunk in your home because you paid it down. You have fat equity in your home because it increased in value. Yeah, that's leverage, which was brought into existence by debt. Now lay people can understand that, but yet it's hard to accept that truth.
**Speaker 3** (00:01:59) - What you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response, were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points. And may God have mercy on your soul.
**Speaker 1** (00:02:26) - <laugh>. Yeah, yeah, yeah. That's from an old school movie, Billy Madison from 1995. But did you ever get a reaction or a look like that when you shared abundantly minded G R E principles with them? <laugh>, debt free doesn't make sense. The wealthiest people have the most debt. The wealthiest and most powerful nation in the world has the most debt. But some people will still clinging to old ways of thinking. They'll rationalize that debt is bad now because we'll say interest rates aren't as low as they used to be. All right, true. Well, also on the flip side, debt is better when inflation is high because it debases that debt. Inflation and interest rates tend to move in lockstep. So therefore, weather interest rates are high or low. That line of thinking cancels out. And of course, 10 is keep debasing your debt by paying down your principle for you no matter how inflation and interest rates are moving.
**Speaker 1** (00:03:27) - And this all plays into how I was taught to think about money myself growing up, including the influence of my own grandfather. And I would go on to reject my grandpa's advice as a kid. Grandpa told me to save money. You certainly heard that growing up when I was about 20, I was visiting my grandparents on college break. And I still remember when grandpa told me that when it's time for me to buy my first house, I should buy a fixer upper. And though he never told me this next thing, he probably would've encouraged me to pay off your mortgage fast. I bet he would've said that one. Well, he meant well. And though I didn't deliberately spur him, I have gone on to disregard all of my late grandpa's financial guidance. He was a great guy. Grandpa served in a war. He and grandma raised my mom and uncle in a small, simple farmhouse on a 13 acre farm in rural Berks County, Pennsylvania.
**Speaker 1** (00:04:31) - And besides raising livestock and growing crops, he was an electrician by trade. He was an even tempered guy with a wiry frame. And grandpa taught me how to fish for bass in their small farm pond, all with his usual thin smile. And he had a wooden trademark kind of toothpick, pursed between his lips a lot of times. But see, grandpa was born and raised in a pre 1971 world. His concept of money was shaped before Nixon deg the dollar from the gold standard. And as we know, inflation ran rampant after Nixon D pegged the dollar from gold. And then in the 1980s, the Bureau of Labor Statistics, they began to sharply manipulate the way that the consumer price index that had line inflation figure is calculated. They used waiting tricks and other tricks to make the soaring inflation figure appear smaller than reality. Well, I was born and raised in a post 1971 world, so rather than focus on saving money, I want to get out of dollars before they're debased by inflation.
**Speaker 1** (00:05:42) - I never bought a fixer upper home though I truly admire grandpa for it. I didn't have the D iy, an electrical skillset that he did that just didn't come naturally to me. And now admittedly, and at its worst, maybe you can say that I'm part of the reason that Americans are less resourceful, or rather, perhaps American life is better. Or maybe it's that with progress, we're all specialists. Now I'd rather pay more for a home that's already new or renovated This way I spend my time, that zero sum game resource of time. I can spend that on my best and highest use and not texturing drywall and not hanging cabinets and not laying tile. I borrow dollars, not save them on rentals, both tenants and inflation payback the debt. So inflation flips dollars upside down, and grandpa might not believe how iconoclastic I sound. Now, the heresy today, I borrow invest and own assets that create residual cash flow.
**Speaker 1** (00:06:53) - And I would even spend dollars in some cases before they're debased. And along the way, I provide contractors and service providers with work. I employ an ongoing property manager and I provide families with good housing. I doubt the grandpa knew about how debt compounds the power of financial leverage. There's something good to be said for hard work, you know? And my grandfather showed me that on the farm, maintaining the tractor, loading the coal bin, harvesting crops and feeding the chickens. I mean, dude was amazing. He was like the showy otani of skillset diversification. But the world changed over the long term. Today's abundance mindset beats grandpa's grind. I love him for wanting the best for me. Grandpa never wavered on that. Ultimately, really, he equipped me to learn what's best for me and what's best for others. And I know I'm preaching to the choir here because our Instagram stories poll about paid off properties.
**Speaker 1** (00:07:58) - It asked you this question, which one do you prefer to pay off your home A S A P, or to leverage up and don't pay it off? Okay? How do you think that result went? Well, the percent that said pay off your home ASAP P was only 16. And those that said leverage up and don't pay it off is 84%. Yeah, you get it. 84% would rather leverage up and keep borrowing against it rather than pay it off your own home is some of the best debt you can get low rates, fixed rates along payback period, and you can legally kind of reneg and go get a lower rate when they fall as well. And mortgage terms are not quite as good on your rental properties, but they are still advantageous when you go compare that. And you know, really another way to think about it is, if you've got a 500 K home, why would you tie up 500 K in your home?
**Speaker 1** (00:09:05) - You could perhaps have just 100 K tied up in that home or in that rental property. Now, I've talked to you before about how many advanced world economies, foreign nations, they have house prices that vastly exceed prices in the United States. Canada's home prices are almost fully doubled that of us home prices right now. Well, I've got some great stats here. They are sourced by the bank for international settlements on not the international house prices this time, but how those prices have changed since 2010. Okay? So what we're looking at here is 2010 all the way up through Q2 of last year. So 2010 all the way up to the middle of last year. And these are all inflation adjusted. So we're talking about a change in real prices. US property was up 63% in that time, basically about the last 12 years. But the United States is not one of the top 10 countries for home price growth over that period.
**Speaker 1** (00:10:10) - And here those countries are number one for growth is Iceland at 103%. Second is Estonia at 97%. Third for world home price growth is New Zealand at 97% as well. Chill at 95% Turkey, 91% Canada up 90%, the top 10 for home price growth are rounded out by Luxembourg, Hong Kong, Hungary, and Israel. They're all between 80 and 85% inflation adjusted price growth over those about 12 years. So they're all greater than the United States, which again was up just 63% over that long period. That makes American home value seem somewhat cheaper when you think of it through that perspective. America is the envy of the real estate world. It's not just our rule of law and high property ownership rights and strong diverse economy. It's that it's one of the few places in the world where you can lever up this much and still get cash flow and at these terrifically advantaged debt term terms.
**Speaker 1** (00:11:19) - And on the flip side, now we look at the worst nations for price appreciation over the last 12 years. It is a story of price contraction. Prices have dropped in these nations. Okay, so these are the worst five. And let's see if you can guess at what all five of these have in common. Those five worst are Spain, Romania, Italy, Greece and Russia. Russia being the worst at minus 33% inflation adjusted house prices. And yeah, do you know what all five of these nations have in common? All five are losing population and losing the real estate prices with them. All right, well what about the United States? How does our population growth look for the future? What we are just about surpassing the one third of a billion people mark. Now we'll have 336 million people by the end of this year. And over the next 30 years, we're expected to have a population increase from 336 million this year up to 373 million Zen 30 years from now.
**Speaker 1** (00:12:34) - And the proportion from immigration is expected to increase while the proportion from the birth rate wanes. And of course, this contributes to the growing renter society in America because people have a harder time affording the entry level home. And you know, really the entry level home threshold that is now largely considered to be right about $300,000. Yeah, that's about two thirds of the value of today's median priced home and housing market research firms Zda. They tracked home prices and home projects across the country and they found, as you might expect, that the share of new projects for homes under $3,000 is declining rapidly all across the country. From Texas to California to Colorado to Ohio, they are vanishing everywhere. 300 K homes aren't just being diminished in creation, they're just completely gone from a lot of markets. Now this share of projects under 300 K are just completely non-existent.
**Speaker 1** (00:13:46) - Yeah. Now coming in at 0% of the market for Riverside and San Bernardino, California. Now of course coastal California, new 300 K homes, they are long gone. But Riverside and San Bernardino, they're about 50 miles inland. They're less expensive markets. Those properties are gone there in Sacramento, they are gone in Denver, 300 k properties are gone. So the swath of non-existent new build 300 k single family homes is growing and increasingly just nowhere to be found. But we have found a place where these properties do still exist in. It's in an American in migration. Hotbed straight ahead, listen to our in-house chat about this and the overall warming temperature of the real estate market and a cool upcoming Jerry event to tell you about where I'd love to see you there. I'm Keith Reinhold. This is G R e with jwb Real Estate Capital. Jacksonville Real Estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor since 2013. J W B is ready to help your money make money, and to make it easy for everyday investors, get started@jwbrealestate.com slash gre. That's jwb real estate.com/gre.
**Speaker 1** (00:15:23) - GRE listeners can't stop talking about their service from Ridge Lending Group and MLS 4 2 0 56. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plexes. So start your pre-qualification and you can chat with President Chaley Ridge personally. They'll even deliver your custom plan for growing your real estate portfolio. start@ridgelendinggroup.com.
**Speaker 4** (00:15:56) - This is Rich Dad advisor, Ken McElroy. Listen to Get Rich Education with Keith Wine Hold and don't quit your daydream.
**Speaker 1** (00:16:14) - Hey, well I'd like to welcome in GRE's in-house investment coach in Naresh. Now maybe you've never bought a property out of state before and for almost a year and a half, he has personally one-on-one been helping you with that and with your overall investment strategy. And then he gets you matched up with the right financing and direction in actual property addresses through G rre marketplace. And he does that for you free. Hey Naresh, welcome back outta the show.
**Speaker 6** (00:16:41) - Hey, thanks Keith. It's been a while, but looking forward to talking about this great real estate market.
**Speaker 1** (00:16:46) - You are often dealing directly with the providers and you also know what buyers are looking for too, our audience. So just talk to us about the overall state of the income property market today.
**Speaker 6** (00:16:56) - Yeah, well I want to go back a few months and talk about how the market was a few months ago and how it is today. Because I think you can really talk about how things are going, but when it's compared to something else. So if we go back a few months to let's say November, 2022, so this was pretty recent, we're talking about five months ago or so. Yes. The activity in the real estate buying process, just real estate in general building the activity was slim. There were very few people contacting me. There were, if you look at the publicly listed data, there was definitely a slowdown. If people were to look at their own properties and look at a chart of their property values, they'll see that there was uh, a plummeting of asset values. And that was November, 2022. And what's happened since then, because the Federal Reserve, as you've talked about, has slowly hiked up interest rates and interest rates have gone up, mortgage rates have gone up.
**Speaker 6** (00:17:59) - What happened is sellers, agents, wholesalers, brokers, builders, they didn't wanna see a crash. And what they did was they started honing up some of their own capital to incentivize buyers to make up for that higher interest rate. So now we fast forward from November where there was no activity. I mean literally we had zero activity at G R E, not even a single inquiry on a property. So we've gone from that to providers providing incentives like, Hey, the price is negotiable. This is just sticker price. Let's negotiate like we're at a car dealership to free property management for one year or even two years, or free home insurance for one year or two years or 2% closing cost credits or X amount of X thousand dollars off closing costs. The incentives go on and on and on. These were not available in 2022 because we saw a super hot real estate market with a ton of buyers all of a sudden turn into a dead real estate with no buyers.
**Speaker 6** (00:19:11) - So people who are concerned with the state of the real estate market right now, they might say, oh, you know, the interest rates are so high, these incentives cut down on that interest rate. So your lender may quote you for a 25% down payment. And that's the other thing, because of the market we're in, 25% is the best you're gonna get paying no points. If you pay 20% down, now you're gonna have to pay points to buy down that rate and, and those points don't go towards your equity, you're just buying down the rate. So anyway, with that being said, for 25% down with these incentives, we're now looking at the mid to high five. So five and a five to 5.9% interest rate, which is, I mean we're at 20 18, 20 19 levels at that point. So the state of the real estate market is still very strong.
**Speaker 6** (00:20:03) - It's healthy. There's a lot of activity now with buyers, with investors, home builders. We work with a ton of builders. They're essentially trying to sell off all the builds that they were permitted for three years ago, two years ago. So builders aren't building as much as they were like after the lockdowns were lifted in 2020 and they started building like crazy. And this has again, increased the demand of housing where they built a lot and now they're not building, they're just looking to sell what they currently have that hasn't been sold yet. So with an influx of people, we're seeing a baby boom. We have politicians talking about a bigger baby boom within the coming years and more immigration that only increases a demand for housing. So yes, right now is still an excellent, excellent time to buy. November of last year, not so much. But right now, yes,
**Speaker 1** (00:20:57) - It's a paradox with this nationwide dearth of housing supply and knowing that that problem is even more chronic in the entry level space that make the best rentals. Considering those factors, you would think that builders and providers wouldn't need to offer any incentive at all. But they have been recently. Some of them are continuing because of what's gone on in the mortgage market and with mortgage rates. So really that's nationally. And then talk to us about the geographies that we work in that tend to be in the Southeast and Midwest and in the inland northeast.
**Speaker 6** (00:21:35) - Yeah. Well first off, I, I wanna say that we work with a ton. Not all of our partners or providers are offering incentives, but I would say we just happen to work with a majority of them. So if you're listening and you're like, huh, he said a rent guarantee or a two years free property management or free closing costs, if these strike a fancy, then definitely reach out to me because I can share with you the best properties offering such and senates. And these are older properties, these are new construction. There are no more pre-construction that we're dealing with. Cuz like I said, pre-construction is, so two years ago, three years ago, those pre-construction properties are now available for sale and for closing within 30 days. So reach out to me, NAI, and A R E S h I get rich education.com if these interests you.
**Speaker 6** (00:22:28) - Now, as far as who we work with, like who's offering such great deals, what markets we, Keith are still seeing, I would identify two particular markets in southeast South, if you wanna say the south eastern part of the United States. So number one, all of Florida, Florida is still the hottest market that we're dealing with. Our providers are all offering big incentives and we're seeing homes rented really quickly because as you've covered, Florida has become a hotspot along with Texas as a destination over the past three years. And that continues to be the trend. In fact, Ocala, Florida, which we have tons of properties available in Ocala, Florida, brand new constructions, even quads, many of our buyers are so hungry for quads because it's the closest thing to multi-family. And we finally have quads available in a market like Jacksonville, Florida, Ocala, Florida, San Antonio, Texas.
**Speaker 6** (00:23:29) - We have a quad available there. That's a really hot market as well. But I want to bring up Ocala, Florida because U-Haul, the famous trucking transportation company U-Haul has a very good pulse on where people are moving, where their rentals are being rented, right? And the number one destination they found for the year 2022 was Ocala, Florida. So that's an area, it's the world has equestrian headquarters, the largest retirement community in the world is a half an hour away from there. So you have a ton of people servicing these very wealthy elderly people to 55 and up community. So a lot of healthcare, a lot of service industry. You have a lot of it jobs, engineering jobs, because Gainesville, which is home to the University of Florida is only 40 minutes away. And Ocala is more affordable than living in that retirement community is called the Villages very pricey because it's like its own world over there.
**Speaker 6** (00:24:32) - I've been there a couple of times. And then Gainesville also is quite pricey with the university and with the tech community there. So Ocala has become the next biggest city that's not completely rural farmland that has any sense of modernity. And so yes, I'm identifying all of Florida, specifically Ocala, but then also Memphis, Tennessee for older rehabbed properties, both Memphis, Tennessee and Little Rock, Arkansas. We're seeing a lot of activity there because they are lower priced entry level homes. They're rehab properties, fully rehab, turnkey, gutted. So these are properties anywhere from a hundred to $150,000 in Memphis and about 120 to 170,000 in Little Rock. So we work with a provider there who has a lot of inventory and they are also offering some pretty incredible incentives that our other partners in Memphis are not offering. That includes two years closing cost credit. That includes free property management for two years. And it also includes a mortgage guarantee. So if they're not able to rent out your property, they will pay your mortgage for you until they find a tenant who will uh, tenant that property.
**Speaker 1** (00:25:51) - Ah, somewhat different than the rent guarantee that sometimes we hear about where they will pay the market rent for you if you don't have a tenant in the property, but it's paying your mortgage for you.
**Speaker 6** (00:26:00) - Exactly. So you just send them your mortgage bill and, and they will pay it. But I will say the reason why they offer this is because they're putting their money where their mouth is. They're so confident that they will, that both Little Rock and Memphis, just like Florida, have become very strong places for people to move to because they're affordable. And you want to be buying real estate in affordable places because A, it's affordable for you and B, it's gonna be affordable for your tenants, which means you're gonna have a greater tenant pool to fill that property.
**Speaker 1** (00:26:31) - Yeah, so Memphis and Little Rock, some of the most affordably priced cash flowing markets in the nation. And yes, these prices, 100 to 150 K for you Californians and New Jerseyans and New Yorkers. We're not talking about the down payment, we're talking about the total purchase price of a home in a safe neighborhood that can attract a respectable tenant in places like Memphis and Little Rock. And then when it comes to Texas and Florida, you mentioned U-Haul, they put out annual reports where they actually give some really good migration data to the real estate market, but with all the in migration to places like Florida and Texas and the rest, sometimes I wonder how does U-Haul handle, like all their trucks end up in Jacksonville after a few months or all their trucks end up in a place like Ocala or Central Florida where so many people are moving. It's just interesting to think about what they do with that problem. They need to get all their trucks back out of places like that after all of the in migration. And because Florida, it really is so predictable that the in migration will continue. It's been such a long trend it picked up during the health crisis and we have an upcoming webinar in Florida. Tell us about that.
**Speaker 6** (00:27:44) - Yeah, well this is with one of our hottest Florida providers. They've been hot because of a special, you've mentioned it on your podcast, you've mentioned it in your newsletter. I've mentioned it in my communications with students and clients. They had a two plus two program of two years free property management plus 2% closing costs. But we're doing a webinar with them next week. It's going to be next Tuesday evening. If you go to g r e webinars.com, g r e webinars.com, you can find out about the webinar and also register for it. They've gotten rid of that two plus two program because they are unveiling a brand new promotion, a brand new program that is even better than the two plus two. So if you missed out on the two plus two, we're right now in this two and a half week period where there's no promotion and you have to pay retail price.
**Speaker 6** (00:28:44) - But if you stick through it, join us on the webinar next week. They are, like I said, they'll be announcing a brand new promotion that is the two plus two was an incredible, incredible program. I think this is way better than even the two plus two. So this is certainly exciting. They're gonna be coming on the webinar talking about Ocala like we just talked about. They have built the quads in Ocala that we have available. They've built duplexes, single families, and not just in Ocala but all around Florida. And they are offering incentives and discounts to sell these properties. So highly recommend people. Check out G r e webinars.com to register for that webinar next Tuesday evening.
**Speaker 1** (00:29:29) - All right. And for our group attendees on our webinar there, you're gonna have incentives for these new Build Florida properties, oftentimes single family homes up to four plexes and larger that are even better than the 2% closing cost cash at the table for you. And even better than that two years free property management. They are gonna roll that out to you at the webinar next week that you want to be sure to attend. We'd really like to see you there. That is our live event on Tuesday, May 2nd at 8:30 PM Eastern, 5:30 PM Pacific. And the rest is starring in that one. It is completely free for you to attend and the benefit of you attending it in person is it is live. And you'll have a chance to ask questions and maybe we have another attendee that asks a question that you didn't think about asking. That's a really good question. So you can kind of crowdsource all the questions and ask a question yourself there at the live event@grewebinars.com. Do you have any last thoughts, Lorre?
**Speaker 6** (00:30:33) - Well, I will say this, one of the best parts about the webinar for serious buyers who are looking for that next deal is our provider will be providing the best deals they have available. So they're coming with two to three of their best deals. So this isn't one of those things where it's like, oh, you know, NAIA is just gonna send me an email after and I'll see everything. Or I'll watch the webinar replay. Yes, there will be a webinar replay, but the chances of those two deals being sold out during the webinar are extremely high because of the incentives and the deals that the provider is providing. So I highly recommend try to make it live. You want to get in on these deals. Uh, if you miss the webinar, hey, not to worry, we're going to have the replay. Maybe, uh, they'll have some other properties that are comparable, available for sale too. But you wanna be there live, get your questions out of the way and move quickly. Because our last webinar that we did, Keith for Baltimore, it was probably our best webinar yet. And we moved properties, we moved properties very quickly live on air. So that's why I just wanna let our listeners know, hey, things are really picking up in the real estate market. Again, things are picking up at G R E, so you don't wanna be left behind.
**Speaker 1** (00:31:51) - These are attractive incentives for path of Progress Florida, usually new build properties for you next week. Again, at G R E webinars.com. This is exciting stuff. Thanks for sharing this with us and the rest.
**Speaker 6** (00:32:05) - Thank you, Keith. Always a pleasure.
**Speaker 1** (00:32:12) - Yeah, well, 25% down in buying your mortgage rate down into the fives creates some cash flow. But as you'll see a next week's live virtual event, it is going to get better than that purchase prices on these brand new single family homes. They're still below 300 k, still in the 200 s in some cases. Yes. These are the property types that are quickly vanishing. Naresh can find both the good deals for you with the national providers that are actually giving incentives like the ones that we talked about. And this is all despite the fact that the product that you're buying is in really short supply sets for income properties, single family rentals, up to four plexes in Jacksonville and Ocala and elsewhere in Florida. And now if you wanna get ahold of Naresh for the latest on GRE Marketplace Nationwide Properties and who has the best incentives, you can go to G rre marketplace.com/coach and you can get free direction and coaching.
**Speaker 1** (00:33:17) - He would like to see you for next week's live event, though, besides just getting a solid fundamental education on what makes a durable income property market, Naresh and the Florida provider are gonna share with us just for webinar attendees, those even better than two and two in incentives for you. The incentives on the webinar. Yes sir. Even better than the 2% of your closing costs paid to you in cash and two years of free property management. Again, this is next Tuesday. It's May 2nd at 8:30 PM Eastern, 5:30 PM Pacific Naresh Stars. In this one. It is free to attend, get your questions answered, and get access to properties should you so choose. Be sure to sign up now while it's on your mind@grewebinars.com. I'm your host, Keith Wein. Hold. Don't quit your daydream.
**Speaker 0** (00:34:15) - Nothing
**Speaker 7** (00:34:16) - 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 on 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 L L C exclusively.
**Speaker 1** (00:34:44) - The preceding program was brought to you by your home for Wealth building. Get rich education.com. |
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Mon, 17 April 2023
Keith Weinhold answers listener questions about real estate investing. He advises listeners on how many properties they need to own to become a millionaire, how to invest $40,000 to reach a $100,000 down payment for a rental property, and how to find the best future real estate markets. Keith emphasizes the importance of positive cash flow, avoiding over-leveraging, and owning properties in multiple job growth markets and states. He also discusses the potential for hyperinflation and the benefits of owning real assets to combat inflation. Keith encourages listeners to leave a rating and review for the podcast and consult with professionals for individualized advice. **Taylor's question [00:01:07]** How many properties must I own to become a millionaire? Keith explains that it depends on the profitability of the properties, how much they go up in value, and how much rent is charged. **Mitrel's question [00:05:04]** Should I invest my $40,000 in the stock market to reach my $100,000 down payment goal for a rental property? Keith advises on risk tolerance and suggests alternative options such as I bonds. **Kevin's question [00:09:08]** What are the forward-looking indicators to find the best future real estate markets? Keith talks about the prospect of hyperinflation and provides insights on finding the best real estate markets. **Forward Looking Indicators for Real Estate Markets [00:09:16]** Keith answers Kevin's question about selecting MSAs with forward-looking indicators, including population growth, employment, and upcoming government infrastructure projects. **Sponsor Ads [00:15:45]** Keith thanks Ridge Lending Group, JWB Real Estate Capital, and Mid-South Home Buyers for sponsoring the show. **House Hacking in Southern California [00:18:03]** Keith advises Connor on whether to invest in an out-of-state rental or house hack in Southern California, considering high real estate prices, tax rates, and tenant protection laws. **Real Estate Financing Options [00:19:03]** Keith discusses financing options for single-family homes and fourplexes, including FHA and VA loans, and the advantages and disadvantages of house hacking in Southern California versus investing out-of-state. **Hyperinflation and the US Economy [00:21:40]** Keith addresses a listener's question about the possibility of hyperinflation in the US economy, defining hyperinflation and discussing the factors that contribute to it, including a nation's debt and foreign demand for its currency. **Leverage in Real Estate Investing [00:25:00]** Keith answers a listener's question about being over-leveraged in real estate investing, explaining the risks of taking on too much debt and emphasizing the importance of buying properties that are cash flow positive. **Real Estate Investing Strategies [00:28:00]** Keith explains how to avoid over-leveraging and how to project positive cash flow from day one. **Benefits of High Leverage [00:29:09]** Keith explains how high leverage can help you build wealth faster and why it's best to finance your properties. **Encouragement to Leave a Podcast Review [00:30:07]** Keith encourages listeners to leave a podcast review and explains how it helps the show reach more people. **Disclaimer [00:31:32]** A disclaimer is given that nothing on the show should be considered specific personal or professional advice. Resources mentioned: Show Notes: I-Bonds: https://www.treasurydirect.gov/savings-bonds/i-bonds/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Welcome to GRE! I’m your host, Keith Weinhold. I answer your listener questions today.
A 12-year-old listener asks, how many properties must I own to become a millionaire? Another asks, “Should my first property be a house hack or an out-of-state rental”?
One question is about the imminent prospect of HYPERinflation.
Also, “What are FORWARD-looking indicators to find the best future RE markets?” Those questions and more questions all answered, today, on Get Rich Education! ___________
Hey, welcome in to GRE. I’m your host and Founder, in fact, of this very show… and all Get Rich Education platforms, a 20-year REI and Active Member of the Forbes Real Estate Council. My name is Keith Weinhold. Ya probably know that by now.
This is Episode 445 of Get Rich Education.
When I do these listener question episodes, I generally begin with some of the more basic questions.
Today’s first question comes from Taylor in Wooster, Ohio. Taylor is age 12 and he simply asks:
How many properties must I own to become a millionaire?
Well, thanks for that, Taylor. I don’t often get questions from a 12-year-old.
I love that you’re listening and the fact that you ARE greatly increases the chances of you building wealth when you’re an adult, yet young enough to enjoy it.
Like a lot of questions in real estate, the answer to how many properties you must own to become a millionaire “depends”.
It depends on how profitable your properties are - how much they go up in value and how much you’re getting from the rents that you charge the tenants, how long you do a good job of keeping them as tenants, as well as how capable you are of controlling your property’s expenses.
So, you could own as little as just ONE property and be a millionaire, Taylor.
Owning MORE properties is better than owning fewer properties. That way, if you have one that isn’t profitable, you’ll have profits from your others.
And you can own more properties when you can use part of your OWN money & part the bank’s money… in owning the property.
Now, Taylor, if you have one million dollars, say, you had a million bucks in stacks stuffed in your closet, you need to understand that that is not enough.
You’re 12 years old now. You might live another 80 years. Then you’d need that million to last you 80 years.
Even a 50-year-old with a million dollar stack of dollars bills in their closet would not have enough money to live on for the rest of their life.
You might need closer to 10 million dollars. That’s called a decamillionaire. So think about setting your net worth target higher. Think, “How can I be a decamillionaire?”
But actually, you don’t just want to think about the height of your stack of dollar bills reaching any certain number of millions ONLY. It matters. But what matters more is how fast your stacks are GROWING.
That’s called cash flow. If your stacks are growing at a rate every year that exceeds all of your expenses, you are financially-free. That’s why it beats being debt-free.
Another thing, Taylor, I know that your hometown of Wooster, Ohio is between Columbus and Akron so - though I’m not familiar with Wooster - but I do know its the county seat of Wayne County -
…you do tend to have markets nearby that can create CF really well - that’s that ability to GROW your cash stacks, hopefully to a height of 10 million someday.
Thanks for your question, Taylor.
You know, it warms my heart to know that kids listen to the show. I remember shortly after launching the show in 2014 that a Dad & son from New Jersey wrote in and told us that they look forward to listening to the show together every week.
I like to do that family-friendly show, from Day 1. A clean lyrics show since inception.
I like to keep it classy. I like to make that show that would make my late Grandma Weinhold proud - though I don’t think she ever knew how to listen to this show.
That’s part of my brand… and it warms my heart to see children in the audience. ______________
The next question comes from Mitrel. I don’t know where Mitrel is from, because some questions come in on our YouTube Channel, but he says…
I have a good job and $40,000 in savings, expect an upcoming BOOM in real estate and need $100,000 for a down payment.
Does it make sense to gamble my $40K in the high risk stock market to get up to the $100K sooner and capitalize on the RE purchase?
If I lose the $40K, I’ll recover it in time with my job anyway over time.
If I win & get it to $100K, I’ll have my income property and be off to the races with leverage and Real Estate Pays 5 Ways.
If I simply tried to preserve the $40K in a savings account, I’d lose to inflation anyway.
That’s his question. Alright, Mitrel. You’ve got $40K, want to get to $100K for your down payment on some rental property.
Now, we have properties at GRE Marketplace where $30 or $35K is enough to get started… but with your $100K down payment goal, I sense that you might have a specific purchase in mind.
Of course, it’s about getting a 20-25% down payment + 4% CCs - as a percent of your purchase price - and you’ll want to hold some reserves.
Well, to get your cash stash from $40K up to $100K, it has to do with your risk tolerance.
It sounds like you’re open to risk with putting it in the stock market short-term to try to reach your goal faster.
So, yeah. You would probably want to do that OUTSIDE of a retirement account since they generally have early withdrawal penalties.
In a savings account, yes, you’re aware that with true inflation, that would just debase your savings’ purchasing power.
If you’re open to risk, I guess one could get in & out of crypto at just the right time - if you do that, I’d choose bitcoin.
But you know, whether you go with risky stocks or risky bitcoin, the problem with that is that you have to get your timing right twice.
Ideally, whether it’s a Russell 2000 Index Fund or Apple Stock or Ethereum, you want to buy close to a near-term low and then sell close to a near-term high.
That is more difficult to do than it sounds, and it’s just one reason that stock, ETF, and mutual fund investors don’t build wealth.
One other thing I’ll mention as you’re trying to patch together your first RE down payment is I-bonds. They currently pay a guaranteed 7%.
The way they work is that the interest rate they pay you is the CPI Inflation rate plus a fixed rate on top of that.
You can get I-bonds at TreasuryDirect.gov
But there is a $10,000 annual limit that you can put into I-bonds.
Another disadvantage is that I bonds can't be purchased and held in a traditional or Roth IRA, Mitrel. The I- bonds have to be held in a taxable account.
But that might work for you in this case, Mitrel, since it’s a shorter-term hold, hopefully it’s shorter-term anyway, until you’ve built up your $100K cash to get your RE and get off to the races, hopefully getting paid 5 ways.
Another disadvantage of I bonds is there is an interest penalty if they’re redeemed for cash in the first five years. They knock off 3 months of your earned interest.
I hope that you found at last one insight on those options that helps you out, Mitrel. ________________
The next question comes from Kevin. He asked this one quite a while ago.
[Listener question played]
3) What are the forward-looking indicators to select MSAs? He typically looks at population growth and employment.
That is a rather astute question, Kevin. Yes, you’re looking at some of the right measures for the tide that floats a RE market up.
First, we want to think about landlord-friendly states. Yes, the MW & South has a preponderance of them. But there are some outliers. You’ll also find pretty favorable eviction processes for LLs in PA, TX and AZ.
When it comes to forward-looking RE indicators and their sources, first, let me give you two resources that most everyone knows about, then we’ll drill deeper. The NAR publishes forecasts for home sales, prices, and other market trends. Their reports give you future RE market insight at both the national and local level. Zillow offers forecasts too on the housing market, including home values, rents, and other market indicators. Now, one indicator and one place that a lot of people don’t know where to look, Kevin, is your ability to discover upcoming government infrastructure programs. Think about learning where the next new highway intersection or highway interchange will be built. Or perhaps it’s a new seaport expansion project or a new bridge that is going to be built in 5 years. There are a lot of places where you can find out that information ahead of time, and unlike stock investing, it’s completely legal - totally alright - to learn about this ahead of time. Get a heads up on where the next bridge is going to be built and how that can make nearby property values rise - that’s not considered illegal insider information. You can check the websites of government agencies responsible for upcoming infrastructure development in your target state or region. That area’s, say, Department Of Transportation makes this public so that contractors can engage in the bidding process for major infrastructure projects. These are known as government PROCUREMENT websites. For example, in Illinois, that’s under an Illinois.gov website. Those sources can be kinda wonky & dry, but putting in the work over there can help you see the future. Now, major news outlets, and just regular, old school, legacy media television channels like good ol’ WPHL in Philadelphia or KMSP Minneapolis or anywhere, they often report on upcoming projects and government initiatives, like an airport expansion. Now, if you happen to LIVE in an investor-advantaged area, Kevin, well and you do, Dayton, Ohio. Joining an “in real life” industry association that focuses on infrastructure development can really give you direction & foresight and you’ll grow your network too. That’ll give you access to upcoming projects - as will attending public meetings like town hall meetings. And then finally, the US Census Bureau and other sources make all kinds of population projections. That helps you see the future.
And hey, you might as well use the Census’ resources since your tax dollars are paying for it.
And those industry associations and public meetings often use & apply those population projections to upcoming major projects.
So, there’s more, but that’s a good bit there. I hope that helps you, Kevin.
Today, I am bringing you the show from Anchorage, Alaska.
Next week, it’ll be from Las Vegas, Nevada.
And in two weeks, I’ll be bringing you the show from Phoenix, Arizona.
So, Anchorage, Las Vegas, and Phoenix. That is the largest city in the 49th, 36th, and 48th states admitted to the union respectively.
Only a remorseless geography nerd like me would break it down that way, wouldn’t I?
Yes, we’ll be constructing makeshift, mobile GRE recording studios coming up.
If you’ve got a question that you’d like me to answer, go to GetRichEducation.com/Contact. That’s where you can either write a message, or leave a voice message listener question - like Kevin did.
I answer more of your listener questions next. I’m KW. You’re listening to Episode 445 of Get Rich Education. ____________
Welcome back to Get Rich Education. I’m your host, Keith Weinhold, grateful to have you here.
Before we return to your listener questions… thanks to this week’s sponsors. They support us so, please, consider supporting them.
That is Ridge Lending Group. Consider YOUR next mortgage loan for income property there and see the difference that a lender that works specifically with investors like you… can make.
They serve almost all 50 states. That’s President Caeli Ridge & all the good-looking people over there at RidgeLendingGroup.com
Then there’s JWB Real Estate Capital. Income property specialists that provide you with the actual investor-advantaged real estate that you can buy in bustling, fast-growing Jacksonville. That’s all-around good guy Gregg Cohen & the team at JWB. They always have good hair days over there.
They really make it easy for you. Find your next cash flow property at JWBRealEstate.com/GRE
Finally, there’s Mid South Home Buyers, providing you some of the best rent ratios in the entire South in Memphis and Little Rock.
They’ve got the service that you’ve been raving about for years now.
That’s Terry Kerr, Liz Brody and all the fine peeps over there at MidSouth that shake your hand, look you in the eye, have a symmetrical smile, and even regularly recite your first name mid-sentence for ya. (Ha!)
Get started at MidSouthHomeBuyers.com
I have been inside the physical offices of all 3 of those sponsors that I just mentioned.
If your company is interested in advertising on GRE, let us know. We’d like to check you out first. Just like listener questions, you can also indicate that on the same page. Let us know at GetRichEducation.com/Contact You’ll see the “Advertising Inquiry” area there.
Conner asked me a question. “Keith, absolutely love your videos. I live in expensive Southern California (Orange County). Would you recommend my first property be a primary that I house hack or invest in an out-of-state rental?” Thanks, Connor.
OK, Connor. Well, there’s a lot to consider.
Let’s look at the Socal househack.
As you’re surely already aware, real estate prices and tax rates are both very high in California.
California also has a Tenant Protection Act enacted in 2019 that puts strict eviction laws into place. You might have rent control there too.
Now, as a SoCal househacker, that could, of course, take the form of buying one big SFH where you live in one of the rooms and rent out the other rooms.
The younger you are, the more likely it is that you’re tolerant of living with roommates. If you want to stay alone or with your spouse or whatever & want privacy, then you’ll househack a duplex, triplex, or fourplex.
Any one of those, SFH up to 4-plex, you can use an FHA loan on and pay just 3.5% down, or VA loan if you have VA benefits and pay 0% down. With either of those low down payment programs, you must live ON-SITE, usually for at least a year.
FHA recently approved 40-year mortgage loans and they will roll out next month. Yes!
In Orange County, CA, with really high prices, it might take a fixer-upper type home to make it affordable. If you aren’t handy, that’s a disadvantage on the house hack.
Socal is simply one of the most DISadvantaged places in the nation for long-term rental property, though there are still ways to make it work.
Then, if you go out of state, you can make it really passive. It won’t be a more active business like it would there for ya in Orange County.
Now, the downside of buying an out-of-state rental, like through GRE Marketplace, is that it’s going to take a 20 to 25% down payment.
But you can still find respectable properties in safe neighborhoods, in say, Memphis for as little as $100K to $120K. That means you might not have to come out of pocket for much more than you would a SoCal rental with it’s lower PERCENT down payment.
And, of course, the big advantages of the out-of-state rental are low purchase prices, high rents, advantageous LL-tenant law, your property is already renovated or brand new, and it is turnkey PMed if you so choose.
That’s exactly why a lot of people are choosing out-of-state properties at GREMarketplace.
Those are some of the major trade-offs, Connor. Thanks for the question.
The next question comes from Jesse in Reno, Nevada.
“With high inflation for two years and cyclical trends entrenched, more nations making foreign trade deals outside of the dollar, and the Treasury printing dollars like mad, I cannot believe the price for a shopping cart full of groceries at Safeway any more. Are we headed for a hyperinflationary period within the next decade?”
Well, that’s an interesting question, Jesse. Inflation is an awful malady that disproportionately affects the lower classes more than the upper classes.
But do I believe that there’s any significant chance of hyperinflation in the next decade, Jesse? Let me answer that.
Now, first of all, a lot of people - not necessarily you, Jesse - but a lot of people throw around the term “hyperinflation” without really knowing what it means at all.
A consensus of economists define HYPERinflation as an inflation rate of 50% or more every month. Yes, month.
With compounding, that would be inflation of more than 600% per year, not the… closer to 6% CPI inflation that we’ve had lately.
We could very well have longer-term waves of RECURRING inflation.
In America, our debt-to-GDP ratio is high. It’s about 120% right now. Back in 1990, it was just 55%.
Now our debt-to-GDP ratio also hit 120% back in the 1940s, but that was as a result of us having to pay for WWII. And the productivity of the 1950s quickly brought the ratio down.
Here’s the problem. Today’s 120% is not due to war; it’s due to all these politicians’ various accumulated promises over time.
That includes CONTINUOUS military spending.
And you know, historically, every fiat currency ends with the END of that currency. Every single one goes to die. The British pound is the world’s OLDEST currency in use today.
But to get hyperinflation, it generally takes two key factors:
First, a nation needs to have debts denominated in a currency that that nation can’t print.
Now, for emerging markets, its often dollar-based debt that they have and those nations can’t print dollars.
100 years ago, Weimar Germany had gold-based war reparations. That was their problem.
You cannot print gold, so they printed MASSIVE amounts of their currency. In more modern times, Venezuela and Zimbabwe experienced hyperinflation.
The second key reason hyperinflation occurs is when there’s no foreign demand for your currency… so you hyperinflate it.
So, to create hyperinflation, it takes a tremendous amount of printing… plus no demand for that currency.
The US still has foreign demand for our dollar and there’s a lot of debt denominated in the dollar globally. That represents demand for it.
Since the US can print its own currency, we’re not very likely to default on our total of $32T debt at all.
We’re motivated to let inflation keep running, at whatever fluctuating rate, Jesse.
So to answer your question, Jesse, no. No hyperinflation in the US in the next decade.
And as far as the prolonged elevated inflation that we’re having, as a listener, I think you know how to beat that by now. Own real assets. If you own a house, have a 30-year mortgage. Don’t have it “paid off”. You need a mortgage to benefit most. Thanks for the question, Jesse.
Our last question comes from Zack in Claremore, Oklahoma. Zack asks:
Keith, is there such a thing as being “OVER leveraged?” Would you finance everything you can as long as you can create arbitrage?
Great question, Zack. The short answer is, “Yes, I would. I would finance everything up as much as I could without being overleveraged.”
Now, what “overleveraged” means IN GENERAL - out in the larger business world is that you’ve borrowed too much money in relation to your ability to pay it back.
In real estate, being overleveraged means that you take on so much debt that you can’t make your monthly payments on your principal, interest, and operating expenses.
As long as my properties are cash flow positive, even by a little margin, I have found no limit as to how much I would finance, Zack.
Let me use an example. Say that you buy a rental duplex with $4,000 of monthly rent income. Your mortgage and all of your long-term operating expenses are $5,000, leaving you with a NEGATIVE cash flow hole of $1,000 every month.
A $1,000 per month hole is a $12,000 each year hole that you’ve dug.
If you’re financially precarious elsewhere, that can be a difficult hole to fill in and you could descend into delinquency when you miss your first payment, then deeper into foreclosure when you’re several months behind, then the bank takes over your property.
You lose your property, lose your credit score, and lose the ability to get new loans for years. You were overleveraged.
You’ve borrowed too much money in relation to your ability to pay it back since your rent income was $4,000 and expenses were $5,000.
Well, when you buy right, that’s not likely to happen. First of all, your mortgage loan underwriter is going to check that you have enough income and enough reserves to meet their qualification standards before you can get the mortgage in the first place.
That’s a check against becoming overleveraged, yet things could still go wrong.
For one thing, with FHA loans, your debt-to-income ratio can be an eye-popping maximum of 57% and you can still qualify for the loan.
But you’re usually going to be buying your out-of-state rental property with a CONVENTIONAL loan.
Now, INSTEAD of becoming overleveraged, you would buy in the opposite scenario, projecting positive cash flow from day one.
On your duplex instead, if you had just $4,200 of rent income and $4,000 of expenses, you’ve got just $200 of cash flow, but that is a cushion.
And like I’ve described on previous episodes, historically your rent income rises faster than your expenses since your mortgage P & I payment stays fixed.
That’s why, over time, you often widen that delta from +$200 cash flow so that it just keeps widening to a greater & greater cushion.
So, to review, you’re unlikely to find yourself overleveraged if your income exceeds your expenses on day 1, when you have predominantly FIXED RATE LOANS…
… and then another measure of protection is when you own properties in multiple job growth markets - in multiple STATES even - you’re better protected against any changes in the law or regulations or changes in that region’s economy or even any detrimental disruption to your PM in each of your chosen investment areas.
I dislike overleverage. But I do like HIGH leverage. Because leverage makes compound interest feel really slow.
It is best to FINANCE your properties, even though mortgage rates aren’t as low as they were two years ago.
Look at it this way. With 20% down, you could buy five financed properties instead of one all-cash. Over time, five properties appreciating will build you more wealth than one appreciating.
If the properties don’t cash flow with 20% down, then get three with 33% down on each. That’ll accelerate your wealth-building & help you control the mortgage.
Then… if rates go down, you can still refinance. If rates don’t go down, you’ll be glad that you bought multiple properties instead of one.
Thanks for the question, Zack.
I hope you enjoyed listener questions today. I hadn’t done them for a while. If you did, please, go ahead and tell a friend about the show.
Also, if you’ve ever wanted to tell me what you think about the show… there’s a great way for you to do that & I will see it and read it myself.
You know, I recently learned that in Apple Podcasts Germany, we only have 3 podcast reviews in that entire nation on that platform.
And that prompted me to ask you - whatever nation you're in, to please, you don’t have to, but if you’d be so kind, leave a podcast review.
When you do that, it not only helps our show reach more people, but, I do actually read your review of the show, so I get that feedback.
So if you like what I’m doing here, I’d be grateful if you went ahead, and whatever your podcast platform is…
…Google “how to leave an Apple podcasts review” or “how to leave a Spotify review” and go ahead an do that - leave a rating & review for the Get Rich Education podcast and I’d be grateful.
I hope you found one or more listener questions today that really relate to you or your interests, or YOUR unlimited wealth-building potential. Thanks in advance for telling a friend about the show, and for your rating & review.
Until next week, I’m your host, Keith Weinhold. Don’t Quit Your Daydream.
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Mon, 10 April 2023
In this podcast episode, Keith Weinhold discusses the benefits of investing in stable property markets, the risks and benefits of taking out a second mortgage on a property, and the potential impact of remote work on the real estate market. Weinhold also touches on the performance of stocks and other asset classes in the first quarter of the year, highlighting the drawbacks of savings accounts, CDs, and money market funds, and suggesting that investing in real estate can be a better option. Overall, Weinhold emphasizes the importance of investing in stable markets with high rent ratios and strong landlord tenant laws. **Real Estate Prices [00:03:39]** Discussion of the current and future direction of real estate prices, with a recap of the benefits of investing in real estate. **Tapping Equity [00:04:50]** Explanation of the problem with tapping equity and the risks of taking out a second mortgage on a property. **Second Mortgage [00:05:43]** Explanation of how to add a second mortgage onto a property and access cash without refinancing the entire loan, with details on the 80% combined loan value ratio. **Risks of Second Mortgage [00:07:49]** Discussion of the risks of taking out a second mortgage, including interest rate fluctuations and the potential pitfall of borrowing short to go long. **Second Mortgage Benefits and Risks [00:09:51]** Discussion of the benefits and risks of taking out a second mortgage on a property for investment purposes. **Current Direction of Home Prices [00:12:09]** Analysis of the current direction of home prices in the resale market, including a survey of resale agents and national existing home prices. **Regional Real Estate Market Performance [00:18:00]** Discussion of the stability of regional real estate markets, with a focus on the southeast and midwest, and the importance of stable prices, high rent ratios, and strong landlord tenant laws. **WFH Trends and Regional Real Estate Markets [00:20:24]** Analysis of the potential impact of work from home trends on regional real estate markets, including an increase in flexible job postings in major cities. **Virtual Real Estate Investing [00:25:02]** Discussion of the recent failures of metaverse projects and the risks of virtual real estate investing. **Factors Affecting National Home Prices [00:26:15]** Explanation of the headwinds and tailwinds affecting national home prices in 2021, including bank failures, job loss recession, labor and supply inflation, spring home buyer demand, and the supply crash. **Mortgage Rates [00:30:20]** Explanation of the difficulty in predicting mortgage rates and the lack of forecast for their direction. **Various Asset Classes Performance [00:32:17]** Discussion of the performance of different asset classes in Q1 of the year, including precious metals, savings accounts, and real estate. **Benefits of Investing in Real Estate [00:35:14]** Real estate investing as a way to beat inflation and transfer prosperity from dollars to property, with the added benefit of control and potential for five ways of profit. **Reasons to Invest in Residential Real Estate [00:36:27]** Advantages of investing in new or renovated residential real estate, including low maintenance expenses and potential for no capex expenses during ownership. **Expectations for Real Estate Market [00:37:33]** Expectations for the real estate market in the next five years, with a caution that the historically high price run-up may not be repeated. Resources mentioned: Show Notes: National existing median home price: https://fred.stlouisfed.org/series/HOSMEDUSM052N National median home price (existing & new): https://fred.stlouisfed.org/series/MSPUS Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Memphis & Little Rock property that cash flows from Day One: Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Welcome to GRE! I’m your host, Keith Weinhold.
Would you rather be age 18 and poor or 80 and wealthy?
Learn about how a second mortgage could benefit you.
Historically, what REGIONS of the nation have the most stable and volatile real estate prices?
Then, there are two ominous threats to FUTURE property prices. All that and more, today, on Episode 444 of Get Rich Education.
Welcome to GRE! From Orange County, Florida to Orange County, CA and across 188 nations worldwide, I’m Keith Weinhold, this is Get Rich Education.
Last week marked 50 years since the first-ever cellphone call was placed. The call from the 2.5-pound brick-sized cellphone was placed in NYC - Manhattan.
That phone could NOT fit inside a standard pocket.
Sheesh! Look, I won’t even use a case on my iPhone today because I’m concerned about the weight and friction and it would add!
I want it light and I want to be able to quickly slide it in & out of my pocket. Ha!
Well, I’ve got a more significant trade-off for you to consider.
Would you rather be age 18 and poor or age 80 and wealthy?
I think you and most everyone would rather be 18 years old and poor rather than 80 years old and wealthy.
I am pretty confident that you & I agree on that.
Well, if you’d rather be 18 and poor, then why would you go to a job to trade your time for dollars?
Because that’s exactly how you move away from 18 and poor straight toward 80 & wealthier but probably 80 & still less than wealthy.
Why would you make that trade?
Even if you love your job - if it’s not the activity you’d MOST want to be doing out of anything else in the wide spectrum of life, move away from 18 & poor?
Well, time is going to pass one way or the other, but you can win back your time & end up wealthy rather than “somewhat less than wealthy”...
…when you provide value for society by giving them housing, getting paid 5 ways at the same time, one of which includes a MOSTLY passive income stream, trading relatively little of your life time all the while. That’s why we do here.
That way, you’re not quite going to be 18 & wealthy, but wealthy when you’re young enough to enjoy it.
Over the last three years, property prices are up 30 to 40% in a lot of markets.
We’re going to look at the current & future direction of real estate prices in a moment.
But let’s talk about what you can do with this… what you can do with that dead equity in your properties.
America has near record-high equity levels right now so this is really timely here.
But there’s a bit of a problem with tapping your equity today. Before I get into that, just a recap minute here…
Of course, as any longtime listener knows, since the rate of return from home equity is always zero, you have a chance to harvest your equity.
Having, even an extra $1,000 of equity in any property, including your own home, is like making an extra principal payment of $1,000.
Doing that is like you saying, “Hey, Mr. Banker. Here’s an extra $1,000 principal payment. Don’t pay me any interest on it. If I need it back, I’ll pay you fees, and I’ll try to prove to you that I qualify again.”
That’s the short story on why home equity is unsafe, Illiquid, and its ROI is Zero.
OK, but if you have a mortgage loan that’s set at just 3 or 4% interest, are you really going to refinance that whole loan just to pull some money out - just to convert some equity to cash?
Because if you did, your mortgage rate could go up to 6 or 7%. So accessing equity isn’t as great as it used to be.
Ah, but there’s a way around this.
One your, say, property at, say, Huckleberry Lane, you could keep your existing mortgage in-place at that low 3% or 4% rate, and potentially add a second mortgage onto Huckleberry Lane - and only that second mortgage is at the higher rate. The first loan stays in place and so does its amortization schedule.
Now, if your Huckleberry Lane property is worth $500K, you can often have 80% of that, or $400K borrowed, that’s that 80% combined-loan-to-value ratio.
That means that the amount of cash that you can get your hands on is $400K minus your mortgage balance.
That’s why a lot of property owners are able to access, often, $100K or more cash, without touching their low first mortgage at all.
Get $100K cash out - or whatever you have access to - it’s not providing you with any rate of return anyway.
Though you can often borrow out up to 80% of your primary residence’s property value, the deal isn’t as good as far as getting second mortgages on your rental property.
Second mortgages on a rental are, sometimes available, sometimes not. When they are, it’s recently been just up to 70% that you can borrow out.
Now, as good as this might sound, it doesn’t mean that you SHOULD do it. What are the risks with taking a second mortgage on your home or rental properties?
Well, some second mortgages take the form of a Home Equity Line of Credit - or HELOC.
The interest rate on your HELOC can fluctuate, so there’s interest rate risk. Most HELOCs have a fixed rate period for the first 5 or more years though.
Before I talk more about the risk of a second mortgage, it’s just amazing - the number of people that I run into out there - most of them aren’t REIs - but homeowners that are elated that they got a low mortgage rate 2, 3 years ago (and they should be - congratulations)... but they want to tap their bloated home equity and don’t know about adding a second mortgage.
Now, a risk with a second mortgage is the potential pitfall of borrowing short to go long, meaning your HELOC rate resets in a little as five years - it could go down when it resets and it goes up, and at that time, you’re not liquid enough to deal with the second mortgages higher payments.
Now, I know, it’s exciting about getting into more income property, using dead equity from your own home or your own rentals - because it’s “Real Estate Pays 5 Ways” stuff.
You might tell yourself, that when you add up a 5 rates of return from investment property - appreciation, cash flow, amortization, tax benefits and inflation-profiting, that you can surely see a total rate of return on your new rentals of 20% or 30% or more.
So if your second mortgage has an interest rate of 7 or 8%, you’d do that deal and pocket the spread.
Yes, it sure might work out that way, in fact, there’s even a probability that it could work out that way.
But the risk is that you’ve got to stay liquid enough to service the debt if your second mortgage rate rises or any other reason.
And you might be just fine. You might have enough cash flow or cash stored that you’re padded, you’re fine… and your underwriter might help you look at that during your second mortgage qualification.
You might ask Ridge Lending Group or your favorite lender about second mortgage options.
So, now you know. A second mortgage can keep up your velocity of money. There are benefits and there are risks.
Utilizing it successfully looks something like this.
You start off with 50% equity in one property, which is 2:1 leverage, you move some of that into a second property.
Now you’ve got 25% equity in both.
You’ve done MORE than double your wealth-amplifying ability here. You’ve virtually 4Xed.
Because rather than having 2:1 leverage in one property, you’ve got 4:1 leverage in two properties.
That’s how wealth is BUILT.
Let’s talk about those ERSTWHILE home prices.
There are at least two ominous threats to future home prices. And now that it’s Spring and market activity picks up, what's the CURRENT direction of home prices?
Real estate can move slower than glaciers, so March numbers are still scarce.
Home prices in the resale market - alright, that means existing homes, not new-build - those resale prices have stayed remarkably resilient, even when mortgage rates jumped up back in February.
John Burns REC compiles a chart for the latest survey of resale agents. The question that was asked is: “What direction have resale home prices moved in the last month?”
The national survey respondents can pick that prices are either MOST INCREASING, MOSTLY DECREASING, or MOSTLY FLAT.
This February, for the first time since May of 2022, more said that home prices are "mostly increasing" rather than "mostly decreasing":
Note though, that most of the agents in the latest survey show that prices are merely steady at 51%. 26% said “increasing” and 23% decreasing.
Credit to JBREC. This is a national survey of ~2,600 resale agents.
Now just from this chart and THESE stats, note something interesting. October 2022—appears to be housing’s low point. That was then, six months ago—marking housing's recent low point.
So, that’s a different angle on looking at home prices than usual - asking agents what they’re seeing.
National existing home prices, per the FRED stats, month-over-month are up just a little, from about $361K to $363K. Again, that’s through February.
Seasonally, that could go up more. That typically happens each year when spring transitions to summer.
There’s a good chance that national homes prices will be rising these next few months.
If you think that those prices sound a little low, be mindful, this entire discussion, so far, is about EXISTING homes aka resale homes, which tend to be priced lower than new construction homes.
If you combine both existing & new, same source, $468,000 is the national median home price. That was the same quarter-over-quarter. Same source too.
It’s always important to cite the source when it comes to statistics.
You know, some say the 1990s are when America moved into the Information Age. But, at some point, in the 2010s, did we move into the DisInformation Age?
I don’t know. There’s a lot of both out there - a plethora, a profusion of both information and disinformation.
Some of these niche finance social media pages don’t cite their sources, and more often than not, I don’t follow them or I unfollow them if I find that they regularly don’t cite source.
The other type of story that I unfollow or just stay away from, are article headlines or images with the word “Rumor” in it.
I don’t want to follow Rumors. Now, I guess, in the best case, a rumor could turn out to be true and maybe could give you a heads up on something that actually turns out to come true later.
But, the world is full of real information. I don’t want to spend this one finite life I have on earth catching up on rumors. It’s more sports sites that use that word rather than finance sites.
Rumor is just an annoying word, I guess. It’s a synonym for “gossip”.
Hey, the real estate investing and personal finance world has its own quirks and odd spins on words.
One thing I haven’t been able to figure out is how a guru is bad and an obsession is good.
Some people disparage thought leaders and influencers as gurus.
Guru means an influential teacher or an expert. That sounds like someone worth listening to to me.
How are obsessions good. Some say, to succeed, you’ve go to be obsessed.
No, you don’t. That sounds unhealthy.
The definition of obsess is to preoccupy or fill the mind of someone continually, intrusively, and to a troubling extent.
Don’t fall into the trap of an obsession.
Well, to recap what you’ve learned today on Get Rich Education Episode 444 (ha!) rumors and obsessions are bad, and gurus are good.
Enough digression. Getting back to real estate investing.
Like I said at the beginning of the year, I don’t expect much national HPA or price declines this year.
But regionally, the markets that we focus on here - the ones in the Southeast and Midwest and a little in the Northeast, have all performed well.
Many - even most - in our target markets appreciated in 2018 & 2019 & 2020 & 2021 & 2022 & they’re continuing to do so now.
Many Florida markets are still seeing 10%+ appreciation. We’re talking about those stable markets, avoiding the volatile, largely coastal markets where prices are sinking, especially on the West Coast.
As I've long discussed, one reason that we invest where we do are for their stable prices, even during downturns.
Backed by historical data, American housing's long-term regional price volatility is broken down like this: The most stable markets are in the Midwest and the Inland Northeast. The medium volatility markets are in South And the highly volatile markets, which we avoid are in the West, and the Coastal Northeast - like NYC and Boston. I’m going to guess that you’ve never heard regional home price VOLATILITY described before. Now, you might wonder, if the Inland Northeast tends to have more stable, long-term pricing than the South, why don’t we favor it more than the South. Well, stable prices are important. But having high rent ratios and having strong LL-tenant laws and high in-migration make the Southeast a strong investment area. Of course, when I describe regions this broad there tend to be some outliers and exceptions. Now, it’s going to be interesting to see how America’s regional pricing level AND its level of stability changes over time. That is set up to change at a faster pace, and you might know why that is - why these geographic regions could see, really more of an amalgamation of characteristics and that is due to… you MIGHT know what I’m going to say. WFH. That actually is not an initialism or acronym for some kind of thinly veiled profanity. It is work-from-home. The rise in Work From Home Trends could really start to blur these lines over time. Now, it would be a trend that moves slowly. But consider, that, in January of 2023 six times more work was happening remotely than it was in January of 2019, that’s according to a company called WFH Research. In fact, in major cities like New York and Chicago there are now more job postings for flexible arrangements than at any point during the last three years, according to the NBER & Bloomberg. Now, that’s of less concern to you, the residential property investor. It might just be an interesting trend and create more demand for your product - HOMES! But it could very well put downward pressure price pressure on higher-priced areas like Manhattan, Brooklyn, and San Jose… and more upward price pressure on those lower cost areas where you & I tend to buy property. But with more Americans working from their homes, it is bad, bad, bad for downtown commercial landlords and some central business district companies who survived the 2020 lockdowns… but STILL haven’t fully bounced back three years later. Gosh! GetRichEducation.com is where you can learn more about how to invest in real estate the right way, the profitable way - with articles that I write myself, and our videos and more. It is all free. If you would like to contact us, with a question about the show, you can do so at GetRichEducation.com/Contact More straight head, including two ominous signs for the future of the housing market. I’m Keith Weinhold. You’re listening to Episode 444 of Get Rich Education. ______________________ Welcome back to Get Rich Education. I’m your host, Keith Weinhold.
We are keepin' it real here at GRE. Building real wealth in the real world with real estate.
See the, uh, emphasis on the world “real”. Back in December, on Episode 427, you’ll remember that we did a show devoted to Metaverse Real Estate Investing… and the consensus of the guest & I were that it is risky and in most cases, ill-advised to get involved.
Well, it was recently announced that both Disney and Microsoft have shuttered their metaverse projects.
Popular virtual worlds have seen steep drops in interest, with the median sale price of real estate in Decentraland plummeting 90% YoY. You know, with the real thing, even if your real estate lost value, which isn’t common, it can’t go down too far. You’ve still got the value of the land underneath it and the value of all the materials that your property is built with. What about national home prices for the rest of this year? Of course, it’s always a little odd to discuss national home prices with the tens of thousands of US markets.
It’s kind of like coming up with a national weather average.
Here are the MAIN factors governing national home price direction this year.
The headwinds to price growth - the threats are #1: 1 - We had banks fail early this spring. More regional bank fallout could contribute to tightening lending standards. Tightening lending standards would mean that fewer borrowers could qualify, and that could reduce demand. Reduced home demand is NOT good for prices. So that’s ominous housing threat number #1. But even if that happens, regional banks are often making COMMERCIAL real loans. The government-backed loans you’re getting for residential are more desirable - we’re talking VA, FHA, rural housing mortgage, and conforming loans that are sold to Fannie Mae and Freddie Mac - which are often those types that you’re getting for 1-4 unit income properties at GRE Marketplace. All government-guaranteed stuff. The second substantial threat to some good home price appreciation this year is that there is a small chance of a big "job loss" recession. With it being over a year since the Fed started raising rates, there is a lag effect and we should some at least a few more job losses as we head toward a likely recession. They are the two ominous threats. The tailwinds to price growth - these are the strengths for rising home prices, there are 3. The first one is that labor & supply inflation remains elevated, and well, that obviously keeps upward pressure on home prices. The second positive, or strength for home prices is - like I touched on earlier - increasing spring homebuyer demand hasn’t been factored into the numbers yet - and that always boosts prices. And then the third strength and underlying factor to boost home prices this year is really, what I’ve called “the crash” which has caught some people off guard. Yes, this generation’s housing crash ALREADY happened. It is that SUPPLY CRASH of about 60% in available American homes to buy. We have such a low housing supply, like we’ve discussed in-depth elsewhere on the show so I won’t elaborate on that, but that changes nearly everything and it is one reason that home prices are still so resilient today. Still more demand than supply. National home prices have begun heading up a little, and there are a few more opportunities than there are threats that prices should keep rising, but I don’t expect any huge gain, like no 10% gain nationally this year. I don’t see how that can happen at all. Now, you’ll notice that, mortgage rates, - I didn’t put them into either category - either the upcoming housing threats or strength and that’s simply because we don’t know where mortgage rates are headed. They’re so hard to predict so that’s why I’m not forecasting where I think that mortgage rates will go. You know how when you’re under contract to buy a property and you & your mortgage loan officer are having that strategy session on WHEN you want to lock in your rate. At least one time in your life - and I sure have in mine - you’re tempted to ask your MLO where they think rates are going… well, like I said, they’re just really difficult to forecast. Your MLO often doesn’t know where they’re going to go. Do you remember, last year, or I sure do because I follow this stuff closely, the number of people and professionals that said mortgage rates would be 8 to 10% by Spring of 2023? Yeah, quite a few people said that emphatically. They’re about 6.3% today. Before I get back to real estate, the quarter recently ended so let’s whip around the asset classes like we do sometimes at quarter-end. Tech stocks got a boost in the first quarter, that helped the S&P be up 7%.
Stocks of the tech giants that are leading the charge in AI-powered search, Microsoft and Alphabet, outpaced that.
Meanwhile, the second- and third-largest bank collapses in US history happening within 48 hours hurt bank stocks.
Bitcoin was up 72% in Q1. Do we say that crypto winter is over when bitcoin hits $30K?
Oil prices were flat, beginning & ending the quarter at around $80.
Gold was up 7%, partly due to the bank failures.
Silver rose 4% for the quarter.
You know what’s been a really bad investment for the last decade, despite all the good things that you hear about its promise - investing in physical silver. You read that there’s now more silver above ground than below ground.
10 years ago, silver was worth $25 dollars an ounce and it’s still worth… $25 an ounce.
That’s even worse than it sounds to laypeople. If you’ve held any investment for 10 years like that and it’s worth merely the same amount of dollars, inflation just chomped about half of it away.
We might have had 40 or 50% or more real inflation in the last decade… and silver bars didn’t pay you an income stream during that time either. What a poor performer!
Though I think that SOME precious metals can still be a good STORE of value.
That was whipping around the other asset classes in Q1 of this year.
One place to park your money that is NOT a good store of value is… savings accounts and CDs and MMFs.
Their interest rate, though it might feel good getting paid up to 4% or 5% on those, it ensures that you’re losing prosperity every day… because CPI inflation is higher than that, and then the real rate of inflation is higher than that yet. True inflation might be double your savings account rate.
Instead, the smart money BEATS inflation and all the time, a little more of the smart money is GETTING OUT OF DOLLARS too with these rising concerns about foreign nations doing more of their business in yuan or another currency outside of the petro dollar.
The dollar is currently under a lot of stress, besides just the inflation. Dollars in savings accounts & the like… don’t just lose to inflation… they’re actually keeping your prosperity denominated in dollars, which a growing chorus feels precarious about right now.
Is the dollar about to lose its world reserve currency status? I don’t know. I think people having been calling for that since shortly after Richard Nixon took us off the gold standard in 1971.
Instead, what about a fully renovated or brand new investment property, with a rent-paying tenant placed and its all under professional management for you.
That way it’s low hassle for you, yet because you own the asset directly, you have the CONTROL without the hassle, and you’re often paid those five ways.
This way, not only are you getting out of dollars with your down payment - another way to say it is that you’re converting your dollars into real estate…
Then on top of that, when you borrow the dollars for 75 or 80% of the purchase price… you’re getting out of dollars so much that you’ve essentially fund a way to go negative with your dollar position on that property.
When you buy through our network, since the property is new or renovated, you should often expect little or no ongoing repair or maintenance expense in the early years.
And here’s the thing that some investors overlook. You may not have an CapEx expense at all. Those big capital expenditures like a new roof or windows or a furnace.
That’s because when you buy new or rehabbed and you consider that your hold time often isn’t more than 7-10 years due to equity accumulation and leverage ratios, as you lever up into another property, you can leave the Capital Expenditures to the next buyer when you sell.
So, these are some reasons why buying residential real estate makes a ton of sense in this environment.
Will these next five years be as lucrative as the last five years? No, I really wouldn’t expect that - that’s because of the historically high price runup these past few years.
But I still cannot think of a better place to be than that strategically-chosen real estate.
You can go ahead and get started looking at some properties in markets and connect with our free investment coaching there if you so choose.
That’s all at GREmarketplace.com
Hey, I really had a great time chatting real estate and everything else with you today.
Until next week, I’m your host, KW. DQYD!
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Mon, 3 April 2023
HGTV Star, Tarek El Moussa joins me today. Incredibly, he got into TV with no experience and no contacts. What a story! Apartment and multifamily construction is staying heightened. Conversely, few new single-family homes are being built. We’re now hiring at GRE. Tarek hustles. His life took a turn when he attended a motivational Tom Ferry real estate seminar. To flip a property, he began to identify distressed properties with expired listings. Today, he tells us why he actually targets pending listings for acquisitions. When he got a show with HGTV, Tarek was only doing his first-ever flip. He also didn’t have the money to acquire distressed property for flips. Tarek didn’t even know how to flip! But HGTV immediately wanted him to flip 13 houses in 10 months. Tarek is best at finding and negotiating deals. He outsources other tasks. He chose contractors that specialize in fix & flip renovations. Tarek discovers them by looking at rehabbed property listings, calling the sales agent, and asking for the contractor’s name. Long-term, we discuss being an active flipper vs. passive real estate investor. Today, Tarek and his wife star in HGTV’s “The Flipping El Moussas”. He also has a: real estate syndication, solar company, flipping summit, flipping course, and more. Resources mentioned: Show Notes: HGTV’s “The Flipping El Moussas”: www.hgtv.com/shows/the-flipping-el-moussas Homeschooled by Tarek: www.HomeSchooledByTarek.com TEM Capital: https://temcapital.co The Flipping Summit: www.theflippingsummit.com/home-page-1 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Memphis & Little Rock property that cash flows from Day One: Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 27 March 2023
Get started with new-build Florida duplexes, triplexes, and quads right here. Conventional personal finance says that you should be able to put in your time, effort, and energy when you're young. When you're older, you can live a great life knocking back drinks served in coconuts. That's being severely threatened. Throughout history, some humans have perpetrated malicious time theft on other humans. Murder and slavery are extreme versions. You're likely the victim of more subtle versions. If you're working at a job, then you're selling your time, effort, and energy into the marketplace. The proxy (currency) that you're receiving in exchange for the finite resources that you expended tangibly represents what you've sacrificed. With dollar inflation blatantly debasing your currency from beneath you, your human life capital is being stolen. Invest in what’s scarce and take real world resources to produce—real estate, gold bitcoin. Avoid what’s abundant and easy to produce—dollars and stocks. I play an audio clip of Fed Chair Jerome Powell’s attack from Elizabeth Warren on raising interest rates. Last week, the Fed hiked rates for the 9th straight time. A Florida builder of rent-to-own properties joins me - SFRs in the mid-$250Ks up to fourplexes. Their build times have been reduced. They’re still paying a higher price for concrete. They’re building smaller, entry-level rental properties that you can buy and have them manage. The builder currently provides income property in: 7 southwest Florida markets, Jacksonville, Ocala, Palm Coast, Inverness, and Citrus Springs. Square footages are falling. Their site selection and stringent building codes are hurricane-resistant. Until at least April 15th, 2023, they’re offering investor buyers 2% of the purchase price at closing (buy down your rate to ~5.75% today) and two years of free PM. Get started here. Our in-house Investment Coach, Naresh, can help get you started. At times, he is paid a referral fee. This is in order to keep it free for you. Resources mentioned: Show Notes: Get started with new-build Florida duplexes, triplexes, and quads right here. Fed Chair Powell vs. Senator Warren video: https://youtu.be/Y-IK0xdcRW4 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Memphis & Little Rock property that cash flows from Day One: Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Partial transcript:
Welcome to GRE! I’m your host, Keith Weinhold. Inflation is not only stealing your prosperity - it’s worse than you think… IT’S even stealing your time.
I’ve got some new perspective on how you can stop that from happening. Then, a fresh opportunity for incentives on path-of-progress income property in a great market. Today, on Get Rich Education.
Welcome to GRE! From State College, PA to College Station, TX and across 188 nations worldwide, the VOICE of real estate investing since 2014. I’m Keith Weinhold and this is Get Rich Education.
Inflation is a TIME thief. It’s stealing your time.
You know, here’s the problem. CW says that you should be able to put in your time, effort and energy when you’re young and live a great life when you’re older - maybe even live the life of your dreams someday.
But postponing things until a nebulous someday isn’t actually so great - and even THAT is being seriously threatened for you.
Look, throughout history, some human beings have perpetrated time theft on other human beings.
Now, extreme versions of time theft are murder and slavery. YEAH, that’s stealing your time.
But you’re likely the victim of more SUBTLE versions of time theft. If you’re working at a job and you’re selling your time, energy and effort into the marketplace…
Then the proxy - the money - that you’re receiving back for your human life expended - that money tangibly represents the time that you gave up.
That irreplaceable, unreplenishable highest order resource of time, that you gave away.
Well, with dollar inflation blatantly debasing your money away from beneath you, your human life capital is being stolen. This is evil.
Now, look. “Good money” is something that doesn’t degrade over time. Let’s look at this historically together & then I’ll bring it up to the present day for you.
Centuries ago, Europeans landed in west Africa. First, it was the Portuguese in the 1400s. The Europeans found that west Africans use beads for money.
Well, Europeans soon found that the beads are really cheap to produce in Europe but expensive to produce in Africa.
Well soon, they brought enormous quantities of beads into Africa and they purchased EVERYTHING valuable there.
There was NO WAY for beads to remain as money in Africa, no matter what the feelings of the bead holders were.
Anyone that kept insisting to use the beads as money completely lost their purchasing power. In effect, the beads ceased functioning as money.
Does that sound like any currency that you’re familiar with - any dollars or euros that you’ve got in your wallet today? Are you drawing any parallels here?
Now, rather than beads, gold became a popular currency for millennia - because gold is beautiful, durable, and it’s expensive to mine & produce across cultures - and it still is.
But as we reached modernity and we’re no longer in a world where everyone lives within 25 miles of where they grew up, gold fell out of favor as a currency - though it’s still a good STORE of value. Now you transact interstate and internationally more often.
Jet travel became common. Paper money allowed you to more easily move your value across space.
Today, you can electronically move dollars across space faster. But you can’t move dollars or really any sovereign currency very well across TIME… and that’s because of INFLATION.
Compared to 100 years ago, today’s dollar has about 3% of it’s value from a century ago.
So if you held dollars under a mattress for 100 years, you’ve lost the vast majority of your wealth.
If you held dollars under a mattress for 10 years, you’ve lost substantial wealth.
Lately, if you held your dollars under a mattress for 3 years, you’ve lost substantial wealth - or even if you held them in a CD or what they call a high-yield savings account.
What makes a good money is a good proxy for human time. You’ve got to be sure that your money doesn’t degrade over time & that you can store it and use it.
You need your medium of exchange in order to track your expended time.
When we talk about perpetrating time theft, your government - whatever nation you live in - they can push a button, print billions or trillions more in currency to pay for social programs and pay for infrastructure programs or another stimulus package or QE or to send dollars & weapons to Ukraine, and the Fed buys trillions in treasury securities and mortgage-backed securities, the $2.2 trillion CARES Act.
All those processes are inflationary. All this currency creation dilutes the currency that YOU hold.
That’s why that $20 bill that’s in your wallet right now was worth a tiny bit more yesterday than it is today.
And if your $20 bill stays in your wallet overnight tonight, it’s going to be worth a little bit less tomorrow.
What the easiest way to pay for a new $1.2 trillion government program? Just print $1.2 trillion dollars. They keep doing it. It’s why America has $32T in debt today.
Well, what often happens when your government pushes buttons to electronically create tons of dollars or pounds or euros or real or yen? More dollars get circulating.
You and the money that you have traded your precious life time for - you just got diluted.
A dollar is a low fidelity way for you to store your finite time and your finite life effort.
You might pledge allegiance by creating value for others in the workplace everyday.
But don’t pledge allegiance to the dollar. Your fealty should be toward accepting your INCOME in dollars but then, quickly getting out of them.
Are you upset? You should be totally upset. Every single day, pieces of your life, energy, and ambition are being stolen away from you. That’s immoral.
Now you’re being forced into investing. That’s what happens to people that are conscious of dollar dilution and how insidious, and persistent and severe and surreptitious it all is.
Now you need to go chase wealth preservation… with a sense of urgency! You’re being pushed out on the risk curve.
The S&P 500 is not the answer. With say, a 10% return over time, subtract out 5% inflation, subtract out emotion, volatility, subtract out taxes, subtract out fees, and your real return is less than zero in stocks.
See, dollars and stocks can be easily created and diluted. They can just print more - debasing what you’ve already got there.
Conversely, real estate, gold, and bitcoin cannot be easily created or diluted. All three take proof of work. All three take real world resources to create - real estate, gold, and bitcoin.
If you’re not familiar with bitcoin, it takes mining hardware, software, and electricity to create it - real world resources, and there will only ever be 21 million bitcoin.
Alright, so what can we learn from this? Unlike west African beads in the 1400s and 1500s which could be diluted and unlike dollars and stocks today which can be easily diluted, real estate, gold, and bitcoin cannot.
Gold is really just a wealth preservation instrument, only tracking inflation. It’s not proven to be accretive or additive to your wealth.
Bitcoin has some promise. But it’s still a nascent technology. It’s only been around 15 years. I like it but there’s still a lot of questions about it.
You’ve got to find a way to stop the time theft! What are you gonna do?
If you aren’t upset enough about it, think about how the theft of your time through currency inflation took away more life experiences with loved ones that you could have.
You could spend more of your one finite life on this earth with your mother, father, spouse, kids, church, hobbies, on the boat, at the lake, whitewater rafting, playing pickleball anything.
Certainly be offended and even a little outraged at the surreptitious time theft through inflation.
This is why… we are… real estate investors - and we get loans for property that produces income.
Now, you aren’t just HEDGING inflation. You’re profiting from it. With income property, you’re performing something ADDITIVE TO YOUR life time.
That’s the Inflation Triple Crown. The asset holds it’s own with price inflation. Your debt is being debased by inflation & paid back by the tenant… and thirdly, your income - that property cash flow outpaces inflation because the biggest payment - the mortgage principal & interest, stays fixed & inflation makes it easier to pay back as more & more dollars keep coming into circulation as over the years & decades, everything spirals higher - prices of all types, wages, salaries, expenses, taxes, everything.
This all penalizes the saver and favors the debtor. Be a strategic debtor with real estate. Win the Inflation Triple Crown. Win your time back - and then profit on top of that.
Now you know that inflation is stealing not just your prosperity… but your time… and now you know what you can do about it.
Most people don’t do anything about it. You have got to. It would have sounded like a bit of an exaggeration until you heard my explanation today - but you’re actually saving your own life.
Well, inflation, interest rates, and employment have been huge issues in the economy for about two years now.
Jerome Powell & the Fed began raising interest rates to control inflation a little over a year ago.
Let’s listen in on how heated and contentious this is all getting, compounded by bank failures.
This is about 4 minutes long, and then I’ll be right back. Listen to this confrontation.
This really summarizes the crux and intersection of a lot of these issues. It’s Fed Chair Jerome Powell testifying in front of the Senate Banking Committee’s Elizabeth Warren of Massachusetts. It’s a real clash over inflation:
[Play Powell-Warren clip]
Yeah, there we go. Elizabeth Warren would rather keep more people employed and have inflation spread across everyone rather than the other way around.
I think that the important lesson for you is that, inflation is going to keep happening. That’s a really safe bet, whether the level is the 2% Fed target or the 6% CPI that we’ve had lately.
Invest in what’s scarce and avoid investing in what’s abundant and multiplying.
Invest in what’s scarce and takes real-world resources to produce - that is predominantly real estate, maybe with a touch of gold or bitcoin.
Avoid what can be easily printed and diluted - dollars and stock shares.
What are homebuilders seeing today, is builder sentiment up off the bottom, and how is rental demand now that we’re deeper into 2023?
Let’s talk to our builder-provider guests about that. They have a strong incentive to offer you, the GRE listener. They are still building new construction rental homes in the mid-200s price point in Florida.
Let’s get caught up on builder sentiment and look for opportunity in in-migration hotbed Florida. _________________
Yeah, can you tell that they know what investors need? If you think that it sounds like the right “Real Estate Pays 5 Ways” opportunity for you amidst high inflation, I’ve got some more good news for you.
After our southeastern US provider was on the show here, I spoke with them again, and they’ve extended those generous incentives for your 2% closing cost incentive & 2 years of free PM until April 15th of 2023.
So you do have to act soon. Will it be extended beyond April 15th? We’ll see. You could ask, but they’ve been pretty generous already.
And also, this is an opportunity to work with our free, in-house Investment Coach, Naresh here at GRE to easily walk you through getting started with finding just which Florida market might be write for you, helping your write up the purchase contract, inspection, appraisal and all of that.
Now, you might have been an income property buyer that’s worked with Naresh already and maybe you feel a little bad that he’s spending his time helping you for free, well, you shouldn’t.
I have endeavored to really reduce the friction for you by always finding a way to make things free and helping you add more rental property to your portfolio and in the spirit of creating less friction for you, often, though not always, the property provider helps Naresh with recompense in the form of a referral fee.
So, Naresh does volunteer some of his time and resources for you, but he often is made whole that way, keeping it free for you.
So, we are really making it easy for you here with low property prices, strong builder incentives and free investment coaching.
Your opportunity to get the new-build, durable Florida product with management & incentives & free coaching. If it were any easier, someone would even make your down payment for you.
Well, no one’s going quite that far here.
If it sounds interesting to you, this is the window of opportunity. You can get started at GREmarketplace.com/Southeast.
Until next week, I’m Keith Weinhold. Don’t Quit Your Daydream!
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Mon, 20 March 2023
You can afford an $8M apartment building. Perhaps you just haven’t really asked: “How?” The answer: syndication. Today’s guests are The Real Estate Guys, Robert Helms and Russell Gray. They’ve had a profound influence on me. If you’re an active real estate investor with some experience, caught the real estate bug, and want to go full-time, Robert and Russ are masters at helping you go bigger, faster with syndication. You can aggregate other investors’ money to buy a deal that you could not afford on your own, like a large apartment building, self-storage unit, or car wash. You must find both deals and investors. Syndicators must follow SEC rules. When you find a deal, the numbers must work for investors. But it helps that your project has a deeper story and meaning. Russell Gray provides an example. The Real Estate Guys Radio Show - Real Estate Investing Education for Effective Action Twice annually, they host the live, in-person Secrets Of Successful Syndication event. Resources mentioned: Show Notes: Join the next Secrets of Successful Syndication seminar: https://ap216.isrefer.com/go/soss/A0011/ Listen to The Real Estate Guys Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Memphis & Little Rock property that cash flows from Day One: Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 13 March 2023
Housing intelligence analyst Rick Sharga joins us. Learn about: plummeting home sales, delinquency and foreclosure rates, future home prices, interest rate direction, housing demographics, builder incentives to buyers, lender repossessions, and homeowner equity levels. I ask Rick: “Is a home price crash imminent?” 70% of mortgage borrowers have an interest rate of 4% or lower. They’re rarely motivated sellers. America should have a housing shortage for at least 5 to 10 more years. FHA borrowers are exhibiting financial distress. Overall, delinquency and foreclosure rates are low. We discuss recession prospects, and what will happen when student loans must be repaid. Home prices are stable or should increase modestly in many areas of the Midwest and Southeast. Home price declines should continue in: many western US areas, high-end homes, and Zoomtowns. They could correct 10% in California. Today, you can get mortgage rates in the 5s on new-build income property. How? With builder incentives for buyers, especially in Florida, at GREmarketplace.com. Want free coaching? GREmarketplace.com/Coach Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Memphis & Little Rock property that cash flows from Day One: Find cash-flowing Jacksonville property at: Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 6 March 2023
High inflation has a downside for real estate investors too. Property insurance costs are up 17% year-over-year. Turnover costs have surged 15%. Utility costs up 10%, property taxes up 4%. The obvious way to deal with higher property costs is to raise the rent. I see more lease agreements where tenants must pay for $200 worth of repairs per occurrence. ChatGPT wrote real estate rap lyrics for me and even a podcast script. But I tell you why I won’t use either one. M.C. Laubscher, the Cashflow Ninja joins us. He tells us how to avoid big financial mistakes, earn tax-free returns with liquidity, and the defensive investing strategy mindset. He tells us why future tax rates will probably be higher. High cash value life insurance can help, sometimes known as the “Infinite Banking Strategy”. Learn why liquidity is so important for today’s RE investor. We discuss how much cash you should hold onto. Is 6 months’ worth of expenses enough anymore? Resources mentioned: Show Notes: Be your own bank: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Memphis & Little Rock property that cash flows from Day One: Find cash-flowing Jacksonville property at: Will you leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 27 February 2023
Why can’t you do it all yourself? That is, identify, acquire, manage a rehab, place a qualified tenant, and manage a rental property long-term. We talk with the Founder and Investment Coordinator of who may be the oldest turnkey provider in America today, Mid South Home Buyers. They make ugly houses pretty. They only acquire houses that the Founder would be proud to own himself. Mid South Home Buyers’ Terry Kerr and Liz Brody have repeat GRE buyers for their 2nd, 5th, and 9th investment houses in Memphis and Little Rock. They’re passionate about how they’re not snatching away homes from prospective first-time home buyers. They transform and improve neighborhoods. 4 years is the average tenant duration here. MSHB’s rehabs are extensive: new roof, new HVAC, updated electrical and plumbing, all-new flooring and new cabinetry. With national supply chain issues and inflation, they’ve doubled their inventory of supplies. Memphis International Airport is an astounding distribution hub for the types of jobs that make great long-term tenants. It’s often the highest volume cargo airport in the world. They also offer new-build properties in Little Rock. What about prices and rents? Memphis Rehab SFRs: Rent $780-$1,400 | Price $95K-$160K Memphis Rehab Duplexes: Price $180K-$220K Little Rock Rehab SFRs: Rent $850-$1,500 | Price $110K-$170K Little Rock New SFRs: Rent $1,300-$1,400 | Price $190K 80% of their buyers finance. 20% pay all-cash. They’re so proud of what they do that they offer monthly bus tours. Learn more. Get started at: GREmarketplace.com/Memphis Our GRE Instagram Poll results show that 65% of you have your tenants pay you through the legacy banking system. I reveal all the results on today’s show. Resources mentioned: Show Notes: Memphis & Little Rock property that cash flows from Day One: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: Will you leave a review for the show? I’d be grateful if you search “how to leave an Apple Podcasts review” and help me this way. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 20 February 2023
New York City real estate has distinctions and quirks that you’ll find almost nowhere else in the world. Is it unreal estate? This includes: super skyscrapers, air rights, apartments with doormen, co-ops, pencil buildings, and rent control. Can you actually make money in NYC real estate? Incredibly, the national or world capital of all these are in NYC: banking, finance, communication, advertising, law, accountancy, fashion, arts, architecture, media, and more. 1 in 18 Americans live in the NYC metro area. The population is growing. Guest Beth Clifford joins us. She has an impressive set of experiences, including on Wall Street, with startups, and as an international real estate developer. Beth is a former NYC resident. Beth describes: how “air rights” are really development rights, pencil buildings, which apartments have doormen, and more. There’s a short-term rental arbitrage strategy in NYC where you could make money. But is it legal? Join Thursday, Feb. 23rd’s GRE Live Event for Philadelphia, Pittsburgh and Baltimore properties. Ask me questions live. It’s free. Register now at: GREwebinars.com. Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Memphis property that cash flows from Day 1: Find cash-flowing Jacksonville property at: Book recommendation: Find NYC apartments: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Welcome to GRE! I’m your host, Keith Weinhold. New York City real estate is just absurd. It’s also really interesting and has distinctions and quirks that you’ll find almost nowhere else in the world.
We’re talking about air rights, skyscrapers, apartments with doormen, co-ops, rent control, and how do you actually make money in NYC real estate? Today, on Get Rich Education.
Welcome to GRE! From Jamaica, Queens to Lower Manhattan. Across New York City and 188 world nations, this is Get Rich Education. I’m your host, Keith Weinhold.
As we’re talking about NYC real estate today, I think it can be regarded as exotic and Manhattan is the CENTER of American urban excitement from Times Square to the Statue of Liberty to the address “One World Trade Center” and more.
It wasn’t always this way.
As the story goes, in 1626 - about 400 years ago - Indigenous inhabitants sold off the entire island of Manhattan to the Dutch for a tiny sum: just $24 worth of beads and "trinkets."
At that time, it wasn’t known as New York. It was called “New Amsterdam”.
Today, NYC is the national or the WORLD capital of: banking, finance, communication, advertising, law, accountancy, fashion, arts, architecture, media, and more.
How could so much be in one place? Well, all this attracts a lot of people.
In fact, the NYC metro area population last year was almost 19 million, that’s up just about one-quarter of 1% from the previous year. So COVID hasn’t killed it.
This means that more than 1 in 18 Americans live in the NYC Metro.
Now, of the 5 boroughs, we’re really focusing on Manhattan today, since that’s where space is at a premium, hence that’s why the tall skyscrapers are there.
In fact, I have counted 17 skyscrapers that are all more than 1,000 feet tall - that’s almost one-fifth of a mile tall.
Now, Manhattan is crammed with such high density - and it isn’t just commercial space. Of course, residents live on Manhattan too.
But it is so crammed for space in Manhattan - and even in places of the four outlying boroughs, that it can kind of obscure your vision such that you don’t have the - I guess - wherewithal that you would elsewhere.
Here’s what I mean. Just last month I met a guy that has lived all of his life in NYC - part of his life in Brooklyn and part of his life in the Bronx.
He did not realize that when he lived in Brooklyn, he was living on an island. I don’t know how long he lived in Brooklyn, but I found a gentle way to tell him, without making him feel unintelligent - that yes, Brooklyn and Queens are both on LI.
That’s why you have all those bridges in NYC, like Brooklyn Bridge. They connect the islands.
Now, when it comes to rental property there, New York State has had the longest history of rent control in the United States, since 1943. The majority of those units are in NYC.
I have never seen one piece of evidence that rent control works long-term. If you have, please share that resource with us at GetRichEducation.com/Contact
When you put a ceiling on the amount of rent that can be charged like this, what tends to happen is that landlords have zero incentive to improve the property when they can’t charge more rent… or else soon, LLs would be losing money.
In many cases, soon properties and entire areas can become dilapidated because they haven’t been improved, and in bad cases, tenants don’t want to move out. They’d like to keep the cheap rent even if they need to tolerate increasingly squalid conditions in these neglected properties.
A classic economics book really outlines the rent control problem wonderfully. Though the author isn’t that well-known, Henry Hazlitt’s “Economics in One Lesson” really breaks down the problems with rent control terrifically.
That entire book basically outlines how programs like rent control only benefit a small group of people for a short period of time… like, oh, let’s give these people a break & be nice so that they can afford to pay the rent.
At the same time, you’re NOT playing nice to the property owner. And how benefits to a small group of people in the short-term harms everybody long-term. Many will tell you that’s the case with… rent control.
Shortly, I’ll talk with an experienced developer, knowledgable about NYC development, she also used to live in NYC.
Wait until you discover some of the complexities of getting things build there. I expect her to share that.
She’ll tell us about things that you would never think of, like how… whether or not there are windows on the side of the a building indicates whether or not there’s a development opportunity there.
I’ll have her describe what “Air rights” are. Property “air rights” are not what you think they are. You’ll need to listen closely to that part as I expect explaining “air rights” involves somet math.
You’ll learn about what “skinny skyscrapers” are and why they don’t they build those wider.
NYC has coops - cooperatives. They’re different from a condo. In a co-op, you buy shares in a corporation that gives you certain occupancy rights.
So rather than having fee simple title, you’re the shareholder of a corporation rather than having a title like you do with condos.
And you’ve got to give the co-op board your income & taxes… because the corp wants to be sure you’ll be able to pay. And if the co-op board doesn’t like you dog or like you for whatever other reason, maybe they won’t let you join.
If you’re perusing apartments to rent in NYC - esp. Manhattan - some have a doorman and some don’t have a doorman. Why might it be desirable to have a doorman, when that’s not even offering in a place like, say Minneapolis or Houston?
I’ll ask our guest, “Is there any way you can make some real estate cash flow here.”
So, I’m often the one doing the teaching here on the show. But in just a few minutes, I expect to get some learning myself as we discuss the unique and unusual nuances of NYC real estate.
First, how long have you been listening to the GRE Podcast?
Well, that was a recent question in our Instagram Poll.
Now, the sample size wasn’t that huge and the our average Instagram follower might be a more avid podcast fan that the average.
But with the question asked, “How long have you been listening to the GRE Podcast?” The results were:
Under 1 Year = 11% of respondents have been listening for that length of time. 1-3 Years = 32% of you 3+ Years = 43% of you have been listening for that length of time. And EVERY SINGLE episode since 2014, yes, that is all 437 episodes. That comprises 14% of you.
So that’s about 1 in 7 listeners - at least in this poll - have listened to every single show. I’m really grateful for that. To shout out a sampling of those that have listened to every episode, that includes Kirby, Jacob, and Stacio.
I’m deeply grateful for that. I still of new people that find the show here today & then want to go back and listen to every single episode.
That is humbling indeed.
NYC Real Estate is absurd. That’s next. I’m Keith Weinhold. This is Get Rich Education. ______________
Yeah, great stuff from Beth there… and hey, a good investment to the global elite might be different than what you perceive as a good investment.
If you’ve got $250M to place and you don’t need the cash flow, you just want RE for the proven inflation hedge that it is, then drop it all into a Manhattan skinny skyscraper and leave it vacant. Some people can afford to do that. It was good to learn that the term “air rights” is misleading. It’s really about “development rights”. That’s probably a better way to remember it. Now, when it comes to real estate in the northeast, Boston, NYC, and Washington DC real estate and their outlying areas really aren’t known as what we’d call “cash flow” markets. But three other cities in the region are - Philadelphia, Pittsburgh, and Baltimore. Our Mid-Atlantic provider even sees properties where the price is around 100 months' rent. Yes, the property price is just 100X the monthly rent amount. That is impressive. That means that with just a 20% down payment, you can expect your monthly rent income to often exceed all the monthly expenses, even your mortgage payment. Well, I’m going to discuss this at a live event on Thursday night, just 3 days from now. That is Thursday, February 23rd at 9 PM Eastern, 5 PM Pacific. Yes, this live event is your opportunity to ask us questions live, and that it will be the first time ever that our in-house Investment Coach, Naresh, & I are both there, together, to help you, along with the provider in these mid-Atlantic markets. Again, it will be in just three days, Thursday, February 23rd at 9:00 PM Eastern. It is completely free. Sign up now at GREwebinars.com
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Mon, 13 February 2023
I get political today. But first, I discuss jobs. How far will home prices fall? Innovation creates jobs. It does not destroy jobs. American innovation is one reason that we added over a half million new jobs just last month. All this new job growth and a robust GDP reading will keep us out of a recession for the next few months, maybe much longer. Both the US median home price (Case-Shiller) and inflation peaked last June. The US median home price fell 2.5% from its peak. Where are they falling? Where are the rising? We explore experts’ outlook for home prices. Five expert opinions all range from 2023 home prices rising 5% to falling 4%. Volatile, coastal markets are correcting down a little. Many stable markets in the Midwest and South are stable or rising a little. Beware of those that say, “It’s never been a better time to buy real estate.” That’s wrong. 2012 was better. 2021 was the worst time to buy real estate recently. Even these past few years, and today, it’s hard to find a better place to put your investment dollar than carefully-bought income property. This won’t last long. At GREmarketplace.com now, providers are often giving buyers 2% of the purchase price as cash at the closing table and free Property Management for two years. Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Memphis property that cash flows from Day 1: Find cash-flowing Jacksonville property at: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Welcome to GRE! From ANNapolis, MD to Santa ANA, CA and across 188 nations worldwide. I’m Keith Weinhold, Forbes REC member and founder of this very platform here… and this is Episode 436 of the Get Rich Education audio podcast.
If you’d like to watch me on video, check out the Get Rich Education YouTube Channel.
But our audio show, right here, is our most popular platform.
Is the world trying to tell me that my voice is better than my face, then? That’s what I’m starting to think. Ha!
ARE American home prices are falling. How bad is it? When did it start? And when will it stop? I’m going to answer all of that in just a bit.
Last week, I mentioned that a strong GDP report has told so many permabears and gloomer-and-doomers that they were wrong about being in a recession by now.
And gosh… the latest Jobs Report came in after that and it just added insult to injury for all these permabears - meaning those that are permanently bearish - permanently making dire predictions about the economy & housing.
And, even if you’re listening to this show years from now, this is how you know that a recession is NOT at all imminent.
The whopping 517,000 new jobs added last month nearly tripled expectations.
Still... I wonder if constant rumors about a coming recession will drag on longer than the fake meat fad.
These recession rumors keep getting stirred up.
Now, when it comes to jobs. You care about that a lot as a REI. You need your tenant to have a job in order to pay you the rent.
The number of American jobs saw their recent low in 2020. In fact, they fell into a deep trough - a BIG dip back then.
That was the pandemic shutdown. People had to stay home. The government paid workers to stay home. Maybe you were paid to say home then - about three years ago.
Well, that means that a lot of goods weren't being produced in 2020. Many services weren’t being produced either.
Well, when MORE stimulus-fueled dollars began chasing FEWER goods, that's exactly what began stoking the inflation fire for the next few years, right up to & including now.
That’s where the monetary inflation came from.
That’s why I’ve regularly been paying $8 for a bottle of good quality salad dressing.
Aren’t you doing some of these things?
Yeah! Hey, what’s wrong with you? In today’s polite society, you aren’t adding a 25% tip for your $6 bottle water?
No, I hope you’re not. I’m not doing THAT yet. Ha!
Well, that was when jobs cratered, in 2020. By today, with all of these American jobs roaring back, total jobs are now 2.7 million above pre-pandemic levels. There's now just a 3.4% unemployment rate.
That is just really hard for the doom-and-gloomers to deal with.
That’s the GOOD news.
Though more jobs are good news, it's not all good.
The bad news here is that strong employment means more inflationary pressure.
To that point, Jerome Powell recently said that Americans should expect a couple more interest rate hikes to keep combating inflation.
Not everything is all good in the good ol’ USA. I mentioned some of the economy’s other problems last week.
But what's the reason for all this job creation? Why is this happening in America?
In a word, it is American innovation.
Innovation creates jobs.
Now, there might have been one point in your life when you thought that innovation DESTROYS jobs - like, for example, with the fact that today’s bank tellers and grocery store cashiers are disappearing.
Innovation does not destroy jobs. Innovation creates jobs. We’ll like at why shortly.
But first, the Global Innovation Index was released and it shows that America is the 2nd-most innovative nation in the entire world.
Yep, of 193 UN-recognized world nations, the US is only second to Switzerland.
People have falsely believed that innovation destroys jobs since before the tractor replaced horses and mules.
Yep, last century, one new tractor replaced five horses or five mules and that meant that it soon took fewer farmers to feed the animals, because fewer animals were needed.
For the ultimate result & outcome, look no further than where you are today. We are more technologically advanced than at any time in human history.
The result is that we have 11 million more jobs than available workers. It’s kind of the opposite of unemployment.
Innovation is what got us here.
Twenty years ago, no one could have foreseen ALL of today's new job opportunities as a: drone operator, quantum machine learning analyst, YouTube creator, a podcaster, social media director, app developer, information security analyst.
New jobs that didn’t exist before, like a digital marketer, TikToker, metaverse wearables developer, and on and on.
Well, that right there is evidence that in twenty years, it’s hard to foresee what new jobs WILL exist that don’t exist today. But they WILL be created.
Even eBay, which some regard as a “digital yard sale” company - though they’re more than that. But eBay just announced new hires for Web3 and NFTs—those fields barely existed two years ago.
In a few years, when self-driving cars replace Uber drivers, those driver jobs will simply migrate to better-and-higher uses, just like it did for jobs of a bygone era like telephone switch operators & travel agents & bowling pin boys & and elevator lift attendants.
But people will still fear for the "loss of jobs". Don’t fear for a loss of jobs. Fear for a loss in innovation.
American innovation drives all this job growth.
So the fact that we aren’t having a recession anytime soon is really frustrating for all the permabears.
Politics is another sad reason that people create gloom & doom-type of media.
Some people wanted to WISH a recession into existence since last year, especially leading up to last year’s mid-term elections because they wanted to sow seeds of fear because they didn’t like the political party in power.
People think that if they can just convince enough people that there’s a recession, then they can topple the current administration.
Then if that incumbent administration gets toppled and THEIR people are now in power, even if it doesn’t change anything in the economy, that same recession-promoter will stop promoting a recession because they got their political wish. It’s politically-driven.
I don’t do that here. I don’t do left-right politics. Instead, I do up-down. Up is integrity. Let’s go up.
I first heard that up-down framework from Dr. Chris Martenson - someone I really respect. We had him on the show a couple times here.
How do you do up-down instead of left-right? Follow people that you disagree with on social media for some new perspectives.
Trying watching some YT channels that you don’t agree with. Even delete your YT history & start over if that does the trick.
Today’s suggested video and social feeds can often keep people in one narrow “think” silo.
So two big reasons that crash bros have been wrong are discounting American innovation and being blinded by politics.
OK. Well... so what? I mean… really… like… who cares?
What if gloomer-and-doomers plow ahead with more fear-mongering headlines like: "giant crash ahead", "total market collapse" or "massive depression coming"?
How does that really hurt anyone?
Like I briefly mentioned last week, it matters because it keeps us living in fear.
Your brain's amygdala is wired to be stimulated by danger, alerting your nervous system.
Has all that dreary material from some other sources talking about crashes and depressions and collapses even made you want to... quit your daydream?
You'll never get that lost time back.
Permabears rarely admit that their dire predictions were wrong. They'll just go on making more intransigent apocalyptic forecasts in order to get clicks.
People have been predicting the end of the world exactly since... the beginning of the world.
Let’s bring some balance here. Let’s talk about both the bad news and the good news.
If you & I believed all the bad news, a meteor would have plummeted from the sky and struck us both dead by now.
That’s why some people with their constantly dire predictions want you to think.
It’s the old school media notion of “If it bleeds, it leads.”
Don’t believe for one second that I think that America’s powers that be are all 100% responsible & looking out for your best interest.
Janet Yellen recently said: “You don’t have a recession when you have 500,000 jobs and the lowest unemployment rate in more than 50 years.” Yes, that’s what Treasury Secretary Janet Yellen said, who, as longtime listeners know, I have called “Grandma Yellen” because she looks like my late Grandma Weinhold. C’mon - she just looks like a Grandma. Nothing wrong with that - she looks like a sweet ol’ grandma. I’ve definitely disagreed with her in the past. That is, I’ve disagreed with Yellen, not my Grandma. Ha! But Yellen is right on this one. And yes, Yellen works for the president. But she’s not the only one who’s starting to see the possibility of a recession becoming less likely. Economists at Goldman Sachs lowered their estimate on the possibility of a recession in the next year from 35% down to 25%, and that is thanks to the strong labor market. A 25% chance of a recession this year, though some forecast it higher than that. Speaking of the President, I was hoping that one Joseph Robinette Biden, Jr. would have talked about housing more in last week's SOTU address that he delivered. In any case, the strong labor market is keeping us out of a recession. And MY take is that job strength is underscored by a legacy of continued American innovation.
But we won’t play the Star-Spangled Banner again this week like we did last week… emmm because some of those jobs are part-time jobs.
Coming up straight ahead - some bad real estate news - what about those falling American home prices?
Learn more about GRE and how our mission helps you achieve financial freedom - not debt freedom - but something more important - financial freedom - at our educational website, GetRichEducation.com
Follow Get Rich Education on your favorite social media platforms - Instagram, TikTok, Facebook, LinkedIn, Twitter and YouTube.
On most every social platform, our name is Get Rich Education. Pretty easy to remember! We are easy to find on social.
Might I first suggest our YouTube Channel.
That’s where you’ll get some great, free in-depth learning, including where we’re about to release a video of me shopping in grocery stores in various US states - yes pushing a shopping cart through the aisles - for evidence of inflation and what that means to you. Look out for that on our Get Rich Education YouTube Channel.
More straight ahead. I’m KW. This is GRE. _________________
Last week, I told you why I don’t expect our core markets to see much price movement in the near term.
By our core market, that’s residential properties that are lower-middle class up the median in the US Midwest & South - which I call the stable markets - as opposed to the volatile, coastal markets.
As a real estate investor, you may very well care about the state of rent growth and occupancy rates so prices might not be the #1 thing, but they still matter to you.
Well, both US home prices and inflation BOTH peaked in June of last year.
The fact that last June was the peak of US home prices is per the widely-cited Case Shiller National Home Price Index.
And since then, national home prices have corrected back… 2.5%. Yes, down two-and-a-half percent from their price zenith, eight months ago.
Yes, a rare period where home prices have NOT appreciated.
Redfin recently told us that of the 50 most populous cities in the nation, the 10-11 that have fallen the most over the past year (so this is annualized here) - and I’m just rounding to the nearest whole percent here are:
San Francisco - home values are down 10% YOY
Sacramento, California: down 6% San Jose, California: down 6% Los Angeles, California: -5% Oakland, California: -4% Seattle, Washington: -4% Pittsburgh, Pennsylvania: -4%. I’m a little surprised at Pittsburgh. I just visited Pittsburgh a few months back and I don’t know why they’re down 4%. I might research this. Austin, Texas: down 3%. Not a coastal market, but a market that overheated in the pandemic runup. New York City -3%. Phoenix, Arizona: -2% Let’s get an 11th city in there with Boston, Massachusetts: -2% Alright, so, it’s chiefly volatile coastal markets that have experienced the price correction to this point. Most of those are mild. The only one down more than 6% is SF at 10%. But how far do they fall… in those high-priced, volatile, mostly coastal markets. And, hey. You can go back to this show from its beginnings in 2014 and 2015 and this is why I told you that we avoid the high-priced, volatile markets here - most of them coastal. They don’t cash flow. Their values aren’t stable, and their LL-Tenant laws don’t favor REIs at all. This is just what I’ve been talking about for over 8 years now - all on record - right here on this show. Alright, well that’s backward-looking. For some forward guidance, I told you about MY price forecast last week.
Here’s what some OTHER influential figures have to say about the future direction of the national median home price for this year:
CoreLogic expects a 2.8% increase.
Deputy Chief Economist at Redfin, Taylor Marr is forecasting a 4% drop in the median home price compared to 2022.
Chief Economist at Zillow, Skylar Olsen expects a more modest 0.5% decline.
NAR Chief Economist Lawrence Yun thinks prices will stay even, with no appreciable gain or loss.
And finally, Danielle Hale, Chief Economist at Realtor.com expects a 5% INcrease in home prices.
So, right there, with that panel of five economists, there’s a national HPA expected range for this year of -4% to +5%.
Now, I talked about the worst appreciating major markets & the national numbers.
How about the big-city real estate markets that have continued to appreciate & expect to continue to this year?
The Top 10 are just about all in the eastern half of the United States, expected to appreciate anywhere from 2% to 8%. In no particular order, they are:
Though mortgage rates have hit a five month low, now near 6%, you know, I think that MORTGAGE RATE direction is more difficult to forecast than home prices are.
But I’ll tell you, at this point, I will advise you that mortgage rates have more upward pressure on them than downward pressure since there’s high job growth.
High job growth can keep inflation buoyant so that makes the Fed want to keep hiking rates.
So, in summary. Home prices expect to stay stable or perhaps rise just a touch in many stable Midwest & South markets, and they probably have further to fall in high-priced markets, many of which are coastal markets.
Jacksonville, FL is one notable exception. That is one major coastal market that usually behaves like a stable market and has good cash flow.
Jacksonville is one coastal place that I like for investors.
Real estate has been more attractive to buyers this year, compared to last year as evidenced by the increase in purchase applications.
But for anyone that says that it’s never been a better time to buy real estate. I don’t believe that for a moment.
NEVER been a better time?
2012 was a pretty awesome time to buy real estate. That was about when prices hit some sweet lows. But those prices are never coming back.
I’ll tell ya, when do I think was the WORST time to buy real estate in the recent past? It was 2021. That’s when the housing inventory was so low and everyone was competing for houses and you had to drop so many contingencies that sometimes you had to feel like you better waive your home inspection (which is not something that I recommend). 2021 is when you often had to pay all-cash to compete against a horde of bidders. That’s bad. That means you’ve got no leverage. And 2021 is when you often had to offer over asking price. 2021 had choppy seas for buyers. But it was a good year for sellers. And you know, even in 2021, with it’s challenges, you would be hard-pressed to find a better investment than real estate when it’s carefully-bought income property. That’s still where you would have a strong risk-adjusted return, buying in the stable, cash-flowing markets where we do. We’re talking about “Real Estate Pays 5 Ways” type of properties - yeah. A San Francisco row house in 2021 that you had to pay all-cash & $100K over offer price for? No, not a good strict financial investment. But today’s market - now you’ve got more inventory and you have these incentives that more & more income property providers are offering you like I mentioned last week. I want to mention them again because they are so special, they don’t often exist in the marketplace.
There are three ways you can save thousands of dollars in today’s real estate market.
These three incentives - you can’t get them from every provider at GRE Marketplace. But this is now common. Ask about them.
1 - Many sellers are crediting buyers like you 2% of the purchase price at the closing table. You can use this to buy down your interest rate if you want to.
So on a $250K income property purchase, that’s $5,000 cash to you at the closing table.
I don’t know how long this incentive will last. Because though mortgage rates have fallen a full 1% from their peak, you’re still getting cash at the closing table to buy your rate down.
The second incentive is free property management for up to 2 years.
If you don’t have to pay a PM fee, that can increase your cash flow by about $150 each month - or more - on every one of your properties.
I don’t know how long that one will last.
3 - Rent guarantee. This means that if your property is vacant, the seller pays rent to you until the property is occupied.
That third one - the rent guarantee is the only one that I would expect will last long-term.
On your next income property purchase at GRE Marketplace, be sure to ask about these incentives.
If you’re listening to this episode in the distant future, they’re probably not going to be there anymore… then just, take this as a point of historical context.
Understand that GRE Marketplace is not like a big box store. It’s more like an organic farmer’s market where we help match you with experienced property providers.
And much like an organic farmer’s market, check back regularly for new offerings. It’s a vibrant market. And you see all those markets in the Midwest & South there. Check back every few weeks.
To help you out, we actually video-interview the PMs in most markets on that page.
Yes, with today’s incentives, your PM could be like your unpaid servant for two years - ha! We interview them right there on Marketplace to give you a good feel for them.
Wealthy people’s money either starts out in RE - or ends up in RE. And I really wish that a resource like GRE Marketplace existed when I began investing in RE. I had to figure out so much by myself then.
It is still free. There is still zero subscription fee. GREmarketplace.com is still a completely free service to you. Create one login and get access to all providers at GREmarketplace.com.
Next week, a show unlike any we’ve ever had before. I’m Keith Weinhold. DQYD!
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Mon, 6 February 2023
Learn my new outlook for 2023 and 2024 home prices. First, I follow up on my real estate prediction of 9%-10% appreciation for last year. You learn exactly how I performed. Why aren’t real estate prices expected to rise or fall substantially in the near future? Affordability is an upside constraint to home price growth. Low supply protects against a substantial price downside. So many have wrongly predicted a recession by now. (I have never said any such thing.) The latest GDP and jobs numbers beat expectations, frustrating gloom-and-doomers. It’s even possible that the Fed engineers a “soft landing”. Not all is well. 64% of Americans live paycheck-to-paycheck. America has galactic-sized debt. We have a labor shortage. Inflation is still high. Mortgage rates have hit a five month low, now near 6%. There are three ways you can save thousands of dollars in today’s real estate market. 1 - Many sellers are crediting income property buyers 2% of the purchase price at the closing table. You can use this to buy down your interest rate. 2 - Free property management for up to 2 years. 3 - Rent guarantee. This means that if your property is vacant, the seller pays rent until the property is occupied. The third one above is the only one expected to last long-term. On your next income property purchase, our free in-house Investment Coach can help you get these incentives. Start with Naresh at: GREmarketplace.com/Coach Hayden Crabtree, founder of My Property Stats joins me. His real estate deal analysis software helps you organize your existing real estate portfolio and analyze future deals. He’s also a successful author and specializes in RV & boat storage properties. GRE listeners get a 10% discount on his real estate analysis software at MyPropertyStats.com/GRE. Use Discount Code ‘GRE’ for 10% off your first year. Resources mentioned: Show Notes: GRE listeners get a 10% discount My Property Stats real estate analysis software: Get started with our free coaching on your next GRE Marketplace income property purchase at: RE values rose 10.2% in 2022: https://www.cnn.com/2023/01/20/homes/existing-home-sales-december/index.html Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 30 January 2023
Really… Detroit? It’s in America’s cash-flowing Midwest. But is there a stigma involved? Does it matter? In the 1950s, Detroit was the wealthiest city in the entire world, led by the manufacturing and automotive industry. But it endured a horrific economic and population downfall late last century due to aging manufacturing plants, high taxes, overregulation, poor services, corruption, and lack of public administration. Detroit even filed for bankruptcy. Between 2010 and 2020, the population of the Detroit Metro grew 2%+, per the US Census Bureau. Time magazine named Detroit one of the World’s 50 Best Places To Live—one of just five US cities. Our own COO, Aundrea Newbern, MBA, recently chose to move to the Detroit Metro. The average Detroit income property from today’s guest provider rents for $1,100 to $1,200 and costs about $120K. These are renovated single-family homes, often brick. The Big 3 auto manufacturers are all headquartered in Michigan today. Detroit’s substantial employment sectors today include: manufacturing, automotive, engineering, IT, medical, trade & transportation, technology, and finance. The income property provider is aware that Detroit has a stigma. They encourage you on an in-person tour. Get started at: GREmarketplace.com/Detroit Often, you’re buying property at less than replacement cost. This provider encourages buyers to do independent third-party property inspections first. (I love this!) If you’d like to learn more, start at: GREmarketplace.com/Detroit Resources mentioned: Show Notes: Explore Detroit income property: Detroit makes TIME’s ‘World’s Greatest Places’ list, 1 of only 5 US cities: https://time.com/collection/worlds-greatest-places-2022 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 23 January 2023
Learn the beginner's mistakes to avoid. Is setting up a real estate LLC even worth it? Learn how to build the right credit score for a mortgage loan, including why you actually don’t want a score over 800. If a cash flowing property is so great, why would anyone sell it to you? I outline a myriad of reasons. Should you make a lowball offer to a real estate seller? Learn negotiation techniques. Earnest money procedures are covered. The real estate buying process is slow. From the time that you make the offer, it can often take over 30 days to close the deal. Once your offer is accepted, I recommend a professional third party inspection. It can cost you $300 to $500 for a single-family income property up to $1,000 for a fourplex inspection. I cover property appraisals and how they verify the quality of the bank’s collateral. Learn how to get a good feel for your property manager and what their duties are. I discuss the Management Agreement between you and your manager. Be sure to tell your insurance provider that this is a rental property, not your primary residence. A mobile notary meets you at your home, workplace, airport, or even a restaurant in order to complete the paper-and-ink closing process. This wraps up the deal. Get started with income property at: GREmarketplace.com. For free coaching to help get you started, contact our free Investment Coach, Naresh, at: GREmarketplace.com/Coach Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Welcome to GRE! I’m your host Keith Weinhold, here to help BEGINNING Real Estate Investors Today.
The biggest beginner mistakes to avoid, when you make an offer - can you lowball a turnkey provider, and all those buyer steps like LLCs, mortgage pre-approval, inspection, appraisal, and closing. Today, on Get Rich Education. _____________________
Welcome to GRE. From Athens, Greece to Athens, Georgia and across 188 nations worldwide. The voice of REI since 2014.
This is Get Rich Education Podcast episode 433 - and this is your Beginner’s Real Estate Investing Audio Guide. Hi, I’m your host Keith Weinhold.
We’re talking about how to get into long-term buy & hold RE investing - and that’s because it’s the most generationally-proven way to build wealth.
First, let’s talk about a couple of the biggest mistakes that real estate investors make - it’s being invested in only one geographic market. Often, that’s the market that they just happen to live in.
There is more risk with being in only one market than most realize, because you’re now tied to the fortunes or misfortunes of just one area’s economy.
Another substantial, common real estate investor mistake is that they continue to hold onto one - I’ll call it - special - property in their portfolio that they usually need to get rid of - but they have either sentimental ties to it - or they just hold onto it for convenience, and do you know what that property is?
I’m actually talking about a specific property here.
It’s the home that YOU YOU USED TO LIVE IN yourself. Well, what’s wrong with renting out the home that you used to live in yourself?
You might still have the preferable owner-occupied financing locked in on that one - and afterall, that’s a better rate than you could get on a non-owner-occupied rental.
The problem is that the property probably doesn’t perform BEST as a rental.
But you might be clearing, say $600 per month by using your former primary residence as a rental today.
Look, for you, it’s often about the cash flow - and yes, it is about the cash flow.
But there’s something even more important than cash flow - that’s because nearly any property will cash flow if the loan were paid off.
That’s why it’s really more specifically about the rent-to-price ratio of a property.
If you’re renting out the home that you used to live in, and it wasn’t strategically bought as a rental, if your rent-to-price ratio is 0.4%, meaning that for every $100K in value it has, you’re only getting $400 of monthly rent income, then you’re losing cash flow dollars every year - and every month.
Look, let’s give a real life example of the .4% RV ratio. Say that you can get $2,000 rent out of that $500K property that you used to live in.
But instead, three $150K homes bought strategically as rentals can have a combined rent income of $3,000.
So it’s either one $500K property at $2,000 of rent income. Or three $150K properties at $3,000 of rent income.
So you’re losing $1,000 dollars of cash flow every month - by not buying and owning strategically in markets in the Midwest and South where the properties make sense as a RENTAL on the day that you buy it.
Your primary residence only made sense as a primary residence on the day that you bought it.
Now you can see that the only reason that you still own it, is because you defaulted and “fell” into it. Don’t fall into things. Often, you want to be intentional.
You are a better investor when you’re intentional rather than emotional.
It’s even better for you now. Beyond your $1,000 of additional cash flow with some repositioning, now, with three properties instead of one - now you’ve also taken care of the first real estate investor mistake that I mentioned.
WITH three rentals rather than one, now you can be diversified across multiple markets.
Two birds are killed with one stone. Now with some re-positioning, you’ve increased your cash flow by $1,000, AND you’re in multiple markets. One property isn’t divisible.
And this $1,000 of monthly cash flow example is small. Of course, the differences can be greater than this.
We’re talking about real estate investing for beginners today, so let me clearly guide you through step-by-step on just how you go about buying your first property - writing an offer, getting an independent third-party property inspection and vetting your Property Manager which is known as due diligence, then the appraisal, and onto closing and receiving cash flow from the tenant.
As you’ll see, much of today’s show pertains to any investment property at all.
But we’re talking mostly about how to buy what are known as turnkey homes, especially homes outside your home market - as most of the best deals are not found where you live.
Turnkey means three basic things. #1- You buy a property that’s either brand new construction or fully renovated. #2- A tenant is placed for you - and you get to approve them. And #3- the property is held under management for you from Day 1 - if you so choose.
Like they say, the best investors live where they want to live, invest where the numbers make sense.
Today’s content is primarily geared toward United States real estate investors - but those that live outside the United States will benefit here too. You might want to buy a property in the US.
Here’s a question that you might have - “How do I go about setting up an LLC - a Limited Liability Company - to hold my investment property in?”
I’ll tell you - I don’t think “How do I set up an LLC?” is the best question to ask.
The best question to ask is, “Should I set up an LLC?”
The three main reasons people set up an LLC are for either anonymity, tax purposes, or asset protection.
Now, if you know that you WANT to set up an LLC - I’ve done four episodes on that topic with Rich Dad Legal Advisor Garrett Sutton.
You can go to GetRichEducation.com, type “Garrett Sutton” in the search bar, and those four episode numbers will appear so that you can listen. He was just on the show with us 9 weeks ago on Episode 424.
But the reason that the question is, “Should I even SET up an LLC?” is because:
Now, note that I’m not saying you can’t get an LLC or shouldn’t get one. I’m saying, prioritize those questions to yourself.
First, it’s “Should I get one?”. If that’s a definitive “yes”, only THEN ask: “How do I set one up?”
Why do you think you have to? Did some attorney use fear tactics to get you to?
If the result of the LLC’s administrative overburden provides a greater reward in the form of asset protection, anonymity, or tax benefit - which is typically a flow-through taxation type anyway, you might then … get an LLC.
So, as a beginning real estate investor, understand that real estate is a credit-based asset - meaning it’s usually bought with a loan.
So let’s talk about getting your finances in order before you contact a lender or select an income property.
That begins with you having enough cash liquidated for a 20% down payment on the property - add about 4% for closing costs, depending on the state that you’re buying your property in - and on the lowest-priced property that’s still in a decent area of a low-cost city - which might be a $100,000 property …
24% of that then is about $24,000 that you’ll need. You should have some extra on top of that as reserves.
Now, let’s look at another part of your finances - your DTI - your debt-to-income ratio. It cannot exceed 43% to 45% - maybe up to 50% in some circumstances.
So if your monthly minimum debt payments - everywhere in your life - housing payment, minimum credit card payments, minimum car payment - if that sum is $5,000 and your gross monthly income is $10,000 - that’s a 50% DTI. You can’t exceed that.
Of course, before a bank is willing to loan you money, they want to have a reasonable assurance that you aren’t weighed down with debt elsewhere because their fear factor goes up that they won’t get paid back.
Next, let’s talk about your credit score. We dedicated an entire episode to this back in Episode 54. If you can remember back that far, Philip Tirone was here with us and you learned more about credit scores that you probably ever thought you would …
… and he even went on to call the credit scoring system a total scam. He was quite opinionated - it was interesting and eye-opening, but ...
Playing within the scam here - as it might be.
There are many different credit scoring models, but the FICO Score - F-I-C-O - is a respected one that you’re probably going to see your mortgage lender use.
It stands for Fair Isaac Company.
Their credit scoring range is 300 - the worst, up to 850. 850 is essentially a perfect score.
Importantly, 740 is the highest score that helps you here.
If you have a 782 or an 836, it doesn’t help you qualify for the loan or get you a lower mortgage interest rate or anything else.
740 is where you’re optimized.
Now, just a quick overview of FICO credit scoring ...
There are five primary ingredients that make up your credit score. In order of importance, they are your payment history, amounts owed, length of your credit history, new credit, and finally credit mix. That first one, Payment History, is the most heavily weighted one. It’s 35% of your score. As you might expect, the repayment of past debt is a major factor in the calculation of credit scores. It helps determine your future long-term payment behavior. Both revolving credit (i.e. credit cards) and installment loans (i.e. mortgage) are included in payment history calculations. Although installment loans like mortgages take a bit more precedence over revolving credit - like credit cards. This is why one of the best ways to improve or maintain a good score is to make consistent, on-time payments. The next way, your Amounts Owed – 30% This category is basically credit utilization or the percentage of available credit being used - or borrowed against. Credit score formulas “see” borrowers who constantly reach or exceed their credit limit as a potential risk. That is why it’s a good idea to keep low credit card balances and not overextend your credit utilization ratio. So if you’ve got just a $1,000 balance on a credit card with a $10,000 credit limit, that’s seen as a good ratio. You’re staying well within your limits then. The third FICO credit score ingredient is the Length of your Credit History – 15% This factor is based on the length of time all credit accounts have been open. It also includes the timeframe since an account’s most recent transaction. Newer credit users could have a more difficult time achieving a high score than those who have a long credit history. That’s because if you have a longer credit history, FICO has more data on which to base their payment history. The fourth of five FICO ingredients is your “Credit Mix” – Now we’re down to an ingredient only comprising 10% of your score. Credit mix just means that it helps your score if you have a combination of credit cards, retail accounts, installment loans, finance company accounts and mortgage loans. Finally, “New Credit” makes up the last 10% of your FICO score. Don’t open too many new credit accounts in a short period of time. That signifies a greater risk to lenders – and that’s especially true for you if you’re a borrower with a short credit history. And you sure don’t want to open up any new lines of credit, down the road when you’re in the qualification process for buying a new property unless you check with your Mortgage Loan officer first. Now, those five factors have been weighted the same for quite a few years. Knowing what factors make up your FICO® Credit Score can help you qualify for more loans and get better mortgage interest rates. That’s the bottom line. This helps you get pre-qualifed or pre-approved with your Mortgage Lender. To get prequalified, you just need to provide some financial information to your mortgage lender, such as your income and the amount of savings and investments you have. Your lender will review this information and tell you how much they can lend you.
After pre-qualification, you can seek the higher-level status and that is getting pre-APPROVAL for credit. Pre-approval is better than pre-qualification.
If you think about it, it makes sense. Qualifying for anything in life is not as good as getting approved for something - I suppose.
Pre-approval involves providing your more detailed financial documents - like W-2 statements, paycheck stubs, bank account statements, and your previous two years tax returns. This way, your lender can VERIFY your financial status and credit.
Now that you’re pre-approved with a lender, you can focus on the market and property that you’re interested in.
RidgeLendingGroup.com is the mortgage lender that we recommend most often because they SPECIALIZE in income property. They don’t have any seasoning requirements.
Seasoning means that the person selling YOU the property needs to have held onto it for a certain length of time - or the lender won’t finance the property for you.
While you’re in the pre-approval process, you can be learning about a cash-flowing investment market.
You want to pick a geographic metro market that typically has low-cost properties, and high rent incomes in proportion to those low costs.
In fact, the market is more important than the property. Because your income comes from your tenant, and your tenant’s income comes from a job.
So you typically don’t want to own much property in a town with 12,000 people that’s in an outlying area - not part of a greater metro - where 1/3rd of the employment is tied to one tungsten factory or even one semiconductor manufacturer.
Because now, too much of your income stream is tied to just one industry.
If the tungsten industry goes down, so goes your tenant base.
You also don’t want to buy slummy property. Those tenants often don’t pay the rent. You also don’t want to buy much above an area’s median-priced home, because the numbers don’t work out.
So you want that working class housing that’s just below the median price point for the area.
If you’re not already confident about that and familiar with the right provider ...
We have information on the right market, with the right provider, with properties - and they’re typically in the MidWest and South - at GREmarketplace.com
So read a market report there. That’s good, pointed information.
Most investors are interested in a property for the production of cash flow. That’s the margin by which your monthly rent income exceeds all monthly expenses.
Rent income minus expenses should be a positive number.
So that’s your monthly rent minus VIMTUM. V-I-M-T-U-M.
Vacancy, Insurance, Maintenance, Taxes, Utilities, and Management.
I like easy ways to remember things and VIMTUM is an easy way to remember.
So, you’re listening to the Beginner’s Real Estate Investing Audio Guide here as a regular episode of the GRE Podcast.
If you’re not a beginner & you’re still listening, it’s either a good review and you might even be learning some new things along the way yourself.
Including, should you ever lowball a turnkey provider and a negotiation approach that I have for that - in a few minutes.
But first, one reasonable beginner question is ...
“Now why would someone would want to sell me a cash-flowing property in the first place?
Why would someone - like a turnkey provider - why would they sell me a good thing that pays them every month that they could continue to hold onto for cash flow?
If a property pays someone every month while they hold onto it - why in the heck would they sell it to me?
OK, some seller out there has a golden goose that lays a golden egg every month, so why in the world would they give me an opportunity to buy the goose?
Well, there are just so many reasons for selling cash-flowing property - yes, a ton of reasons for selling even a young, healthy goose that lays golden eggs every month & is expected to so for years.
Well, a turnkey provider runs out of money too. They can’t buy all the properties themselves.
They’d prefer a lump sum payout when they sell this property, because their business model is to go pay all cash for another distressed property that they can fix up.
And if you think that they snatched up the good ones themselves a while ago - yeah, they probably did do some of that.
In fact - I WANT them to have snatched up some good properties from their own market earlier. It shows me that they believe in what they sell. If they didn’t buy what they were selling themselves, I’d actually be MORE concerned.
Now, other reasons that the - I guess general public seller might want to sell you a property is ...
One reason is moving. Say that a family in City A owns a few mom-and-pop rental homes that they self-manage and they’re moving to City B in another state, they’ll often sell their income properties.
Some people want to self-manage their property (often because they never explored their best-and-highest use, but anyway) & if they have to move to City B, they’ll sell the property rather than try to find a Property Manager in City A.
Another reason people sell cash-flowing property is that - even if someone is not moving, that person might be tired of the self-management hassle - but yet they don’t try professional management - because that person has the DIYer mentality - that soooo common do-it-yourself mindset.
OK, most people just don’t take a strategic approach to real estate investing like you are by listening to this.
Other reasons for people selling cash-flowing property are death, marriage, divorce, and all kinds of either joyous or tragic life milestones.
If a husband-and-wife own rental properties but running & managing them was kind of the husband’s thing & the husband dies … the wife doesn’t know how to run the properties & she’s likely to sell rather than hire a Property Manager.
People may sell their cash-flowing property in case of all kinds of emergencies - medical and otherwise - because they may need a quick lump of cash - instead of the steady stream of cash flow over time that just won’t work for them in their new situation.
OK, most of those situations involve some sort of external life change for property sellers - a lot of them tragic.
Well - here’s a personal one for you...
A few years ago, I sold two cash-flowing apartment buildings at the same time - well, those sales actually closed on consecutive days - so nearly the same time.
Both of those cash-flowing apartment buildings that I sold were 100% occupied with tenants, I had competent management in place, and there were no deferred maintenance issues with the buildings.
You want to know my reason for selling two nice golden apartment gooses that were seasoned and steadily laying some nice golden eggs?
OK...can you guess why?
Alright, fortunately I didn't have any distress or emergency in my life.
...oh, and also, I wanted to sell them fast too, I couldn’t let these two cash-flowing apartment buildings linger on the market for a while. I really wanted to get rid of them.
I had no distress like those situations I mentioned earlier.
So can you guess why I wanted to sell these long-producing golden gooses in a good job growth market that produced nice cash flow, nice golden eggs?
I’ll tell you why.
That's because I knew I could 1031 Exchange those two gooses for two even larger gooses. Now I won’t get into the 1031 here on a beginner episode.
But I replaced the two smaller apartment buildings with two larger apartment buildings that would produce even larger eggs if I did it with a quick timeline - and I could defer any tax on my profitable gain.
I found - I guess - two very fertile egg producers that were going to produce even more cash flow over time.
So...I think you get the message here. To the buyers of my smaller apartment buildings, I appeared as a very motivated seller of cash-flowing property, even though I had no external stress in my life.
It was due to internal reasons that I wanted to sell...and it’s the internal drive to expand my income.
No shrinking thinking here at Get Rich Education. We are growing our means.
Now, when you’ve found a cash-flowing property that you want to buy, should you make a lowball offer to a turnkey provider? My definition of lowball here, is, a 10% discount.
We’ll say, that a provider is offering a property for $120,000 - then you’d make the offer for 10% less, which is $108,000. That’s a lowball.
My answer is ...
No. That’s not going to work. In almost every instance, that’s too much of a discount and it’s going to eat their margin too much.
Depending on how it’s presented, a seller might even be less motivated to work with you if they get a lowball offer.
This company has a business to run and with a turnkey property, you’re typically paying for the convenience. You leveraged their systems of them delivering this product to you that’s already renovated, rehabilitated, tenanted, and under management.
Now, can you can knock off $1K-$2K? And say, offer the seller then - $118K or $119K for the $120,000 property. Yeah, that might work.
It sure wouldn’t be deemed some unreasonable request. But it’s good to at least provide a reason - some rationale - in asking for the discount.
Let me give you some perspective on this negotiation too.
For every $1,000 less in a mortgage loan that you take out, how much do you think that saves you in a monthly payment? Did you ever figure out how much that saves you?
Well, at a 5% interest rate on a 30-year loan, reducing your mortgage loan amount by $1,000 saves you … $5. Five bucks in a reduced payment.
For more perspective, keep in mind too, that once the seller accepts your offer - it’s only the first part of the negotiation.
Later, it’s a negotiation with the inspection. We’ll discuss how to navigate THAT shortly.
I’m Keith Weinhold. You’re listening to the Audio Beginner’s Guide to Real Estate Investing, here on Get Rich Education. ________________ ***AD RESOURCES***
________________ Welcome back to GRE Podcast 433. This is your Audio Beginner’s Guide to Real Estate Investing. I’m your host, Keith Weinhold and we’re talking about buying an income-producing property, especially…
…a TURNKEY property - which just means that it’s already renovated, tenanted, and under management with a tenant on the day that you buy it.
Now, once your offer is accepted by the seller, I want to give you - really just a brief outline of what to expect next.
This isn’t intended to give you every step in exhaustive detail, but this is generally what comes next for United States real estate purchases, and custom varies somewhat from state-to-state.
So with that in mind, once the turnkey provider or seller accepts your purchase offer...
You need to send in your earnest money. Earnest money is not the down payment. It’s a smaller amount that shows good faith that you’re serious about your offer.
It’s often an amount of $5,000 or less and it shows the seller that you’re serious enough about buying the property that the seller has the confidence to take their property OFF the market and not show it to anyone else.
The seller should give you instructions on how to place your Earnest Money.
Now remember, your earnest money deposit is not going directly TO the seller, it is going to a third-party escrow account, and it is refundable to you in accordance with the terms of the contract that you signed.
Your contract should have an estimated closing date in there. I want to emphasize that the key word there is “estimated”.
While it is important that all parties work towards closing by this date, between you and me - let’s just be realistic - the reality is that many transactions get delayed beyond the closing date in the contract for a variety of reasons on the seller side, sometimes having to do with construction or renovation delays.
If this happens, it is nothing to be worried about, just remain in touch with the seller and you can simply sign a contract extension if needed when the time comes.
As you are financing your property, be sure to keep getting your lender anything that they ask you for up so that they can keep processing your loan.
As your closing gets near, they will probably ask you for some updated information and have some final stipulations from the underwriter, so just remain in close touch with your lender and try to provide them what they need as swiftly as you can.
During most of this time where you’re under contract & even before you’re in-contract to buy the property, most of your relationship with your lender and seller is just sitting around, waiting for the next stage.
Some days, frankly you’re thinking, “When will they reply to my e-mail?” OK, sometimes, RE moves slower than glaciers.
Once construction/renovation is completed on your property, I suggest that you order a professional third-party home inspection before closing.
As the buyer, this is at your expense, but the home inspection is cheap insurance for you and it is an important part of your due diligence. It might cost you about $300-$500 for a single-family turnkey income property.
A four-plex inspection might cost up toward $800 or $1,000.
When seeking an inspector - seek ASHI certification - that is American Society of Home Inspectors.
You’re looking for an inspector with a good reputation, licensed and bonded. It is good to look for a level of experience as well. The choice is really yours as the Buyer.
Your inspector points out deficiencies in what I’ll break into a few categories.
#1 is Major concerns – these are significantly defective, safety issues that require immediate repair. Often times, those things absolutely MUST be done in order for your lender to even finance the property so the seller is going to do those things for you. That might be something like adding a railing to a porch.
The second category are recommended repairs – So they’re recommended but not required. That might be adding some extra insulation in the attic.
The third category is “well, it would be NICE if it were done” - like a kitchen cabinet door that’s a little loose and doesn’t close snugly.
When you get your home inspection report back because the inspector has compiled their findings, the key to remember is that the inspector will ALWAYS return a (usually long) list of items that they recommend be corrected prior to closing.
Now, this even happens on new construction, so expect some findings.
I swear, even on a perfect, unblemished home it seems like the inspector would say that the bushes have to be trimmed or something. Ha!
And remember, you are not closing on the property in the condition it was inspected. Rather, the inspection is just part of the process on the path to getting the property up to its final condition.
Then you and the seller agree on what will be fixed (at the SELLER’S expense (not your expense), and verified to your satisfaction), prior to closing.
The seller is anticipating that they will need to make some final repairs (at their own expense) after they get the inspection repair request from you - that your inspector just compiled for you. This is all part of the normal process.
Of course, you can get in a car or hop on a plane and visit the turnkey property yourself and walk the property with your inspector, but I’d say fewer than 10% of turnkey buyers do this. I have never done this on an out-of-state property.
But going to see the property in person is never a BAD idea.
Today, it’s easier than ever for an inspector or provider to e-mail you a property video. The report that you get from your Home Inspector after he visited the home will have lots of photos and details.
Typically, purchase offers are contingent on a home inspection of the property to check for signs of structural damage or things that may need fixing. This contingency protects you by giving you a chance to renegotiate your offer or withdraw it without penalty if the inspection reveals significant material damage. You are protected. Once the seller makes any needed repairs that the third-party inspector found, I suggest having a re-inspection done by that same inspector. This gives you the chance to confirm that any agreed-upon repairs have indeed been made. You might spend another $100+ on this re-inspection. Now, if the original inspection showed that a leaky faucet needed to be replaced, and the seller said they’d do it, and the re-inspection finds that that work wasn’t done as promised, then any FURTHER re-inspection costs are often a cost borne by the seller. Which seems pretty fair - they said they’d do work - and the re-inspection that you paid for confirmed that it hadn’t been done in this case. Now, back to the negotiation. If you asked for a reduced Purchase Price, that could lean away from you asking for too much in the inspection.
How do I like to play it? Often times, I make a full price offer for the property - and I might even let the seller know at that time that I’d like to give you your price - it’s a full $120,000 in this case - and since you got your price, I’d like my terms.
My terms are - that I’m more bold in what I request the seller to do from the inspection findings. Maybe I will ask them to add that extra insulation in the attic as one of those “Recommended buy not Required For Financing” items - or replace a window pane that had condensation inside it.
Then, what’s my justification for asking the seller for that. It’s that I’m paying your full price. Again, financing an extra $1,000 only costs me $5 per month.
Now, let’s talk about the property appraisal.
The appraisal is a tool that the bank uses to verify the quality of their collateral.
Because in your loan paperwork, at closing, the bank will basically tell you that if you don’t make your monthly payments, you’ll be foreclosed upon and the bank will take back the property - that’s their collateral.
So they want to make sure that the property seems to be worth as much or more than you’re in contract for - this $120,000 in our example.
Your lender is the one that orders the property appraisal, not you. In about 90% of U.S. states, you as the buyer pay for the appraisal. It costs about $500.
The appraiser is a member of a third-party company and is not directly associated with the lender. It wasn’t always that way.
In fact, one factor that led to the housing downturn of 2007 in the Great Recession is that some lenders & appraisers were “in cahoots”. Haha! That can’t happen anymore.
BTW, the appraisal and some of these other steps are all part of your closing costs. All part of that … about 4% of the property purchase price.
The appraisal is typically done by a certified appraiser physically visiting the home - and these people always seemingly have a tape measure with them.
The appraiser checks out the premises and their job is to use market comparables to make sure that the lender has adequate collateral in case you, the borrower, default.
OK, the bank doesn’t want to lend out more than the property is worth or else they could find themselves underwater if the borrower defaults. The appraisal protects against this.
And don’t confuse this appraisal with an assessment. An assessment is something that a county or municipality uses the measure the amount of property taxes that are paid. It’s really unrelated to this appraisal.
One interesting thing that’s related to the appraisal and the bank giving you the loan for 80% of the property is that the lender NEVER requires that you see the property in person.
Think about what that means. The bank never requires you to see the property in-person, yet they’re willing to loan you up to 80% of the value.
Even the bank knows that it’s not important for you to personally see the property - something that they’re willing to put their money behind.
Now, when it comes to finding properties and markets and teams, our listeners & followers encouraged us to set up a marketplace for them for finding the properties.
We’ve done that for you at GREmarketplace.com. And knowing that Property Management is the glue that makes your property stick together, we - and it’s Aundrea here at GRE that does it - where you find your properties at GRE Marketplace, Aundrea also interviews the property manage in each market for you so that you can get a good feel and vibe about them.
Most any provider is happy to do a PM Zoom chat or phone call with you too.
Now, just because a property is branded “turnkey” by a company, doesn’t mean that you can dismiss doing your due diligence. Turnkey can be a great system, but there’s nothing magical about that word alone.
Don’t overlook developing a good feeling about your Property Manager, because this is the one long-term relationship that you expect to have. I just can’t emphasize that enough. Your Manager is one of your key team members.
They’ll tell you the character of the current tenant that’s currently in the home. Find out how the manager is going to pay you. Feel them out, know what your communication flow is going to be like.
If they’re part of the same turnkey company, a good manager should also connect you with whoever renovated your turnkey property in case you have some questions for them.
Now, notice that I haven’t mentioned a real estate agent. Most turnkey providers work in a direct model so that you don’t have to go through agents. That’s one way that GRE Marketplace providers keep the price down for you.
You must sign a written Management Agreement with your Property Manager.
What the MA does is that it gives the manager the authority to manage your property for you, manage tenant relations for you, the MA will state their fees, and you’ll have your contact information in that agreement.
There are typically two fees - a leasing fee and a management fee.
A leasing fee is where you’ll spend ½ month’s rent to one month’s rent amount when the Manager screens a new tenant. So hopefully that only happens every 1 or 2 or even 5 years if you’re lucky.
Yes, you can typically approve or reject their selected prospective tenant. You are going to be the owner of the property afterall.
A management fee is often 8-10% of one month’s rent income - and that’s what you pay monthly - ongoing.
You can sign a Management Agreement with the property provider if they have management integrated in-house. If not, you can lean on your provider for some management recommendations.
Now, there’s one blank to fill in on your Management Agreement - it’s a dollar amount up to which the manager can pay for expenses that come up - against your account - without contacting you.
For example, if the number $500 is written in there, that means that if a maintenance or repair expense on your property exceeds $500, they must contact you prior to incurring that expense.
You get to choose that dollar limit. As a beginning real estate investor, go with a lower figure.
Then as you get comfortable or you don’t want to be bothered about the property as much, you can increase that dollar limit in which they need to contract you about approving maintenance or repairs.
Basically, if there’s something that has to do with the property & you don’t want to deal with it, then make sure it’s written in the Management Agreement that the manager will perform it.
Typically, it’s going to say that the manager will collect rent, handle tenant relations, respond to repair requests, send you the rent, keep your ledger of income & expenses on the property, post legal notices if a tenant is paying the rent late, and sooo many other associated duties that I personally don’t want to deal with.
Hey, I just want to live my life & keep this investment nearly passive.
Get that Management Agreement done - fully executed - signed by both you & the Manager BEFORE you close on the property.
Before you close, you can buy property insurance from any provider you choose.
Your turnkey provider is often happy to recommend some providers that their other clients have used in this market, or you can just Google and find your own.
Be sure to let the insurance provider know that this is a rental property (not a primary residence where you live and not a second home).
Most turnkey buyers purchase both hazard and liability insurance as part of their policy. Like any other insurance policy, you will have choices about deductibles & monthly payments, and coverage amounts.
If you are financing your property, your lender will most likely be able to combine your property taxes and insurance into your monthly payment, so you have one monthly payment for principal, interest, taxes and insurance (PITI) … much like you would on your primary residence.
The financing process typically takes about 30 days from the time you submit your EM.
Remember that YOU are a factor in how fast your property closes. If that lender needs another document, give it to them pretty promptly.
When you’ve finalized your due diligence, and verified that the seller has made all the agreed upon repairs from the home inspection report, you will be ready to close.
You likely live in a different state than the property and will close remotely. The title company (or its a closing attorney in some states) will prepare your closing documents - including your loan docs...
...and can arrange for a mobile notary to meet you with the docs wherever you choose (your home, your office, your local coffee shop, etc.) so you can sign the docs in front of a notary who will then overnight the docs back to the Title Company so the transaction can fund.
Yep, you can do the ink-and-paper thing with a mobile notary at your local Starbucks.
Your lender will arrange for a title company to handle all of the paperwork and make sure that the seller is the rightful owner of the house that you are buying. That’s part of what they do for you.
It may seem like the closing process is a lot of work, but you’ll really spend most of the time waiting. Most of the time, you'll just be sitting on your hands, waiting for someone else involved in the transaction to come through.
So find something enjoyable to occupy your time and distract you while you wait, and feel secure in the knowledge that you've done your research and know how to make your closing process go smoothly.
When you complete that closing with the mobile notary - I’ve done these closings at my home’s dining room table, or even in my employer’s conference room back when I used to have a day job - then, hey!
You need to congratulate yourself on adding another income property to your portfolio.
You know, the good news is that of all of these stages we’ve discussed - the longest stage of them all is your ownership of the property. You Own & Collect the cash flow.
And hey, this isn’t reason enough alone - but it’s kinda cool that you own property in TN and FL and IN. You own part of each one of those states. You’re like a property collector!
And with each new turnkey property you buy, you might have just increased your mostly passive cash flow by $211 per month or $118 per month or whatever it is.
If you can swing it, it can be more efficient timewise for you to buy more than one property at a time.
As you buy more income properties, it not only gets easier because you know the process, but you often get quantity discounts.
For example, a management company might charge you a 9% management fee on your first three properties, but once you own four or more, they might charge you 8% on all four rather than 9%.
Insurance companies often have similar discounts for you….so you may very well get a little more profitable as you buy more property.
I’ve been actively investing in real estate since 2002 and just within the steps of ACQUIRING a property, like I carefully discussed today, some incremental half-step will come up in the process that I haven’t mentioned here - like signing a Lead Paint Disclosure Form.
So, you don’t need to commit all of this stuff to memory.
Now, something that novice real estate investors say sometimes is something like: “I would only buy an income property that I would live in myself.”
I contend that that is an awful criterion upon which to found strategic fundamentals on purchasing an income property.
Once one filters property that way, they have let their emotions trump facts.
If the fact that a clean, safe, affordable, and functional property has a good occupancy rate in a sound employment market, decent ENOUGH neighborhood, and the numbers make sense - that’s more important.
OK, you aren’t living there yourself so it’s not a sound criterion.
Shoot, if I moved into any income property that I own, my lifestyle would take a substantial hit. Yet I’m not a slumlord - I provide housing that’s clean, safe, affordable and functional.
But they’re not replete with fantastic amenities, it does not have Corinthian architecture with alabaster columns - OK - but I know there’s a demographic for my rental property type that demands this responsible-but-no-frills housing over time.
It’s about asking yourself a better question, like, “Will this property secure an income stream?”
Alright, would you rather have your property look “cute as a button” - or secure an income stream? I went deep on that topic just three weeks ago here on the show.
OK, we’re investors here.
Some think that in today’s electronic age, you should be able to complete a property purchase from the time you write an offer until you close on a property in the same-day.
Well, that’s certainly not true. As you witnessed, physical things need to take place because you’re buying a real, physical asset.
We’ve been talking today about how you buy an income property - just simply that - especially as it pertains to buying an out-of-state turnkey income property - from the time that you get a property under contract and submit the earnest money to escrow all the way to closing.
...because that’s how to generate passive income, which in turn, creates a rich life for you.
Again, this isn’t an all-encompassing guide today with EVERY little detail. But we’ve hit the major milestones in the process & more.
You’ve got a good general guide on the income property-buying structure.
You might have learned something about prioritization - perhaps LLCs matter less than you thought and a communicative Property Manager matters more than you thought.
Today’s show has the type of content that will be about as relevant 5 years from now as it does today.
Now, today is also evidence that real estate does not have the liquidity that some other investments do. It takes longer to get in & get out.
However, that low liquidity actually contributes to relative price stability in real estate. OK, there’s no panic selling in real estate.
Maybe the most important thing for you to keep in mind is that...
You cannot make any money from the property that you don’t own.
Your future depends on what you do today.
To “know” something and not “do” something is to really not know something.
The most important thing you can do is act...because you cannot make any money from the property that you don’t own.
But if you’re new to real estate investing & know that you need to “Start small but think big”, otherwise, all this knowledge really won’t move the meter in helping you live an amazing life like RE can, in the past 1-2 years, we hired an in-house coach, who is completely free for you to use.
If you’re still a little unsure or want some guidance, lean on our trusted source, Naresh at GREmarketplace.com/Coach
He is an expert at helping you along - totally free to you - again at GetRichEducation.com/Coach
It’s almost hard to express how much value this gives you & makes it easy. I wish something like this existed when I started out.
There would be nothing worse than for me to share today’s knowledge with you - then not let you know where to go to act upon that knowledge.
So if you’re ready to get started - connect directly with market & properties at our Marketplace - at GREmarketplace.com
For a little more help, personal and one-on-one with our experienced in-house coach, start at GREmarketplace.com/Coach
Both resources are free
It’s been my pleasure to bring you your Beginner’s Real Estate Investing Audio Guide today.
Next week, I we’ll discuss one particular geographic market that we never have before - and you probably never thought we would.
For properties, start at GREmarketplace.com For coaching, GREmarketplace.com/Coach
Until next week, I’m your host, Keith Weinhold. Don’t Quit Your Daydream!
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Mon, 16 January 2023
Everyone is moving here. Where is “here”? You get an answer that you never expected. Among those that move, it’s not for job-related reasons. It’s housing-related. The American mobility rate has declined from 20% in the middle of the last century to 8.4% today. Learn three reasons why more Americans are staying in-place. Lower domestic migration can have positive results like: less stress, more community formation, longer tenancies, and a boon for the remodeling industry. The negative impacts include headwinds for real estate agents and mortgage loan companies. Should you rent or own the home that you live in? Learn 18 rent vs. own trade-offs. Paying rent is NOT the same as throwing money away. Join me live on tomorrow’s webinar about car wash cash flow. You can ask me questions. Register free now at: www.GREwebinars.com Resources mentioned: Show Notes: Join me live on tomorrow’s car wash webinar: Most Americans Couldn’t Afford To Buy Their Own Home Today: https://thehill.com/policy/finance/3791139-most-americans-couldnt-afford-to-buy-their-own-home-today-survey/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 9 January 2023
What happens when a real estate investment goes sideways? An international business was impacted—Panama coffee farms. The pandemic disrupted coffee supply chains and labor. Erratic weather affected crop yields. It’s been about four years since we’ve discussed this on the show. The Panamanian government shut down many businesses. There was little or no government assistance for idled workers. The co-founder explains Panama coffee problems and opportunities. Learn why the coffee parcel deed issuance has been slow for investors. There’s a new distribution partner going forward, named Typica. They help sell the coffee. This is all high-end, specialty coffee, like the geisha variety. Coffee farm parcels are in the volcanic soil highlands of western Panama, near Boquete. It’s shade-grown. The provider has acquired their 12th coffee farm. If you’d like to learn more about the investment, start at GREmarketplace.com/Coffee There are upcoming group tours in March and May. Resources mentioned: Show Notes: Learn more about Panama coffee farm investing: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 2 January 2023
Answer this one question and you won’t have money concerns for the rest of your life. The Dow Jones once fell so hard that it didn’t recover for 25 years Japan’s NIKKEI peaked in 1989 and still has not recovered. I discuss the differences between an economic recession and depression. During the 2008 housing crisis, national housing values only fell 19%. Originally, 401(k)s were called “Salary Reduction Plans”. They had to scrap the name to foster participation. Some investing questions are: How do I max out my 401(k)? How can I attend my dream college? How can I become a millionaire? After building context, I reveal the most important question in the investing world. Learn how to keep emotions separate from investing. The vital question is: “Will this property secure an income stream?” Resources mentioned: Show Notes: National Median Home Prices: https://fred.stlouisfed.org/series/MSPUS Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Top Properties & Providers: Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: Keith’s personal Instagram:
Full transcript:
Welcome to GRE! I’m your host, Keith Weinhold. Happy New Year! What is the most important question in the entire investing world? It is a vital one - and this coming year makes it as relevant as ever.
Asking yourself this question & answering it can make you wealthy - and you’ve probably never even heard this question before. That & loads of financial education, today on Get Rich Education! _____________
Welcome to GRE! From Lake Champlain, NY to Lake Charles, Louisiana and across 188 nations worldwide, you’re listening to one of America’s longest-running and most listened-to investing shows.
I’m your host. My name’s Keith Weinhold. I’m grateful to be here myself. Thank you FOR being here… and you aren’t here for me. You’re here for you… so let’s build your wealth today.
What’s the most important, vital, essential, and almost MANDATORY question in the investing world today?
While you’re thinking about that, let me build some context so that it makes sense.
Now, why don’t we discuss stocks more on the show here?
When most people hear the word “investing”, they might think of stocks first. Their mind might shoot there immediately.
When someone refers to the market, they just simply say, “the market”, they typically mean the stock market, like the DJIA or the S&P 500.
Look, with persistently higher interest rates, it’s likely that economic headwinds are still coming.
Now, what if things got worse than a recession and we entered a depression? I’m not saying that it’s likely, but let’s look at what CAN happen because this actually HAS happened.
What can happen in a depression?! The stock market falls and doesn’t recover for 25 years. That’s not a guess. That really happened in the United States!
Yes, the DJIA peaked in 1929. The market crash hit. These were the times of “The Great Depression”.
Stocks lost nearly 90% of their value. Yes, 90%. That means that after a loss like that, stocks would have to rebound 9X, 900% just to get back to even.
Well, I told you that the US stock market crashed in 1929. The Dow didn't fully recover until late 1954. Yes, 1929 to 1954. That is fully 25 years… just to get back to even.
25 years of zero gain. It HAS happened, right here in the USA, the most powerful nation in the world.
Well, you might wonder… ah, c’mon, could that really happen to any major stock market in an ADVANCED economy today, in more modern times, even if things got really bad?
Oh, yes, things don’t even have to get really bad. Understand that the third-largest economy on earth, still to this day is Japan.
Japan’s NIKKEI peaked in 1989. It still hasn’t recovered from its high 34 years ago. Yes, that’s the MAIN stock market index for Japan - the Tokyo Stock Exchange.
That’s still going on right now, today. It still hasn’t recovered back to its 1989 level. It’s not even close today.
So it doesn’t even TAKE a depression for those stock market calamities to occur in major world nations’ stock markets.
Well, what’s the difference between an economic recession and a depression?
The short story is that a recession is a substantial downturn in ONE nation’s economy, and an economic DEPRESSION is widespread across many nations.
And there are some other distinctions.
Right? And the old joke is that a recession is when your neighbor loses their job and depression is when you lose YOUR job.
Well, what about real estate? Real estate values don't always go up.
What happened to real estate in its ugly downturn about 15 years ago where we had a mortgage meltdown from liar mortgage loans and a glut of housing supply? (neither of which are happening now, BTW)
During the ugly Global Financial Crisis in & around 2008 & 2009. Well, during that time, real estate went down 19% nationally.
Yes, on a nominal basis, the national median home price was down 19% from $257K down to $208K.
That’s it? Maybe you’re thinking, “that’s it”? 19%. This is when everything was going wrong for housing and it didn’t even reach 20% bear market territory fifteen years ago.
And btw, I will put the link to the chart that shows this in the Show Notes for you.
Yes, we really do put links in the Show Notes for you when I tell you that we will. Haha!
You can see that at GetRichEducation.com/430
This is episode 430 of the GRE Podcast, so just go to GetRichEducation.com/430 to see today’s resources and today’s show notes also, you have access to an entire transcript - all of the lyrics… like we do for some of our episodes here.
So that if you have a deaf or hard of hearing person in your life, they can, I suppose “read” today’s show rather than listen to it.
Or maybe you want to read along as you listen… or read after you listen in order to reinforce your learning.
Now, at the start of the recession in 2008, the national median housing value was $234K… and it took all of but four years to recover and exceed that level.
Yes, from the start of the GFC, housing values only took four years to recover.
The source of that information is the Census Bureau & HUD.
That data is also available for you in the Show Notes at GetRichEducation.com/430
So the point is that real estate or stocks can lose value. But real estate is substantially more stable.
If you buy RE in a good market and you have an average or better PM (meaning they’re “just OK” with screening tenants), then you can sleep well. It’s hard to lose big.
You might not even be in real estate for the values. You might be in it for the cash flow.
This is helping you build context and provide you with a clue about The Most Important Question in the entire Investing World.
While you’re still pondering what that question might be, because I’ll build some more context for you so that this question makes complete sense… and let’s start to isolate it here.
Real estate builds wealth.
Stocks though, can maintain wealth after you’ve built it. But you’ve got to build it first.
So that’s why this most important investing question today… isn’t about stocks.
Well, what about stocks or mutual funds in a retirement plan? Is that more relevant?
Enjoy the compounding growth on PRE-tax dollars & all that.
Take stocks’ 10% return and like I detailed two episodes ago, adjust that down for inflation, emotion, taxes, fees, and volatility… and what do you have left?
I’ll tell you what the key question is not. How can I max out my retirement plan? Oh geez. The new annual contribution limit to 401(k)s this year is $22,500 BTW.
I’ll admit, I used to have a day job and I maxxed out my retirement for a few years before I realized that maxing out my retirement…
… was minimizing my present. And minimizing next year, and minimizing next decade, and minimizing my life for decades until I hopefully was still not just alive… but actually healthy enough to truly enjoy DEFERRING my quality of life all those decades.
Maximizing your retirement contribution means that you’re living a SMALLER life for decades.
The risk of delayed gratification is denied gratification.
Now there IS something to be said though, for the psychological benefit of you having something saved for the future, even if it certainly diminishes your life in the near-term.
Instead, with income property, I discovered that I can invest in something that pays me an income stream TODAY… without jeopardizing my future one bit.
In fact, I’m paid an income stream TODAY AND I will get a better return than my 401(k) long-term and the tax benefits too.
Today’s mainstream media tells you that it’s a bad time to buy real estate because prices & interest rates are up in the past year. But they’re talking about primary residences.
Instead, with rental property, your tenant pays all of your mortgage principal & interest for you & all of the operating expenses & a little on top of that called cash flow.
So “How do I max out my retirement?” That is not a great investing question. You’re contemplating how to defer your quality of life, delay your standard of living, and live a life of less.
Now, here’s another bad question. I heard a teenager say this the other day, “I want to attend my dream college.” “How can I attend my dream college?”
Dream college? What? College is still necessary for some skilled professions. But like we touched on last week here on the show, the value of a college degree is down yet the price of a college degree is up.
That’s why enrollment has been steadily declining since 2012.
But, even worse, “How do I attend my dream college?” Who would even ask that question?
It COULD matter whether you have a degree or not. But no one cares what school you went to. No one cares what your college grades are either.
The last time that you went to go see the doctor, do you feel like you got a good quality of care from them or not? That’s what you REALLY care about.
Did you want to know what college or medical school your doctor graduated from before you saw them?
Do you even know what college they went to? It doesn’t matter.
Did you ask your medical doctor about what their college GRADES were? See. It doesn’t matter.
Now, I actually don’t think college is a complete waste. I got a 4-year-degree. I learned some things. But it wasn’t the most efficient use of my four years.
But “dream college”? Who cares? Not a good question.
“Attend My Dream School”. It makes no sense.
Here’s a third question that is NOT the best question that you can ask yourself in investing today:
“How Can I Become A Millionaire?"
Ugggh. Awful question. I think that longtime listeners know where I’m going with this one. But let me update it because we’ve had some substantial inflation for almost two years now.
Let me tell you - you don’t want to be a millionaire.
The definition of a millionaire is not someone that makes a million dollars a year.
It’s having a million dollar net worth.
So if you add up the value of all of your assets and it totals 1-and-a-half million dollars and then add up the sum of your debts and that a HALF million dollars.
Well, your net worth is 1.5 million in assets minus a half million in debts which equals 1 million.
That is not where you want to be. Now, maybe if your 75 years old and you think you’ve got ten years left to live, you could live a somewhat modest life on a million dollars.
But, as you can see, that’s not where most people want to be.
Inflation has rendered the term “millionaire” nearly to middle class now.
The middle class is getting eaten by wages that don’t keep up with inflation.
A single millionaire will probably be a POVERTY marker within my lifetime.
Now, if you’re a millionaire that has $200K of CASH FLOW each year, that’s different. That’s better.
Net worth is not as important a measure as your residual income stream.
But just a millionaire? Wrong trajectory. Avoid. Avoid. Avoid.
So maxxing out retirement plans, attending a dream college, or setting out to be a millionaire are all losing financial plans… and they are all losing life plans.
We are building some context and eliminating some paradigms as I’ll soon posit “The Most Important Question in the entire Investing World”.
There is one question that can make you wealthy - and you’ve probably never heard this question before.
And if you act on the ANSWER to this premium best investment question to ask yourself… you probably won’t have money concerns for the rest of your life.
I think it’ll all make sense when I reveal it later today. While you’re been thinking about it, I’ve been building some context and a foundation about why this question matters, and why those other ones don’t.
If you’re new to the show, again, I’m Keith Weinhold. I’m a 20-year REI in the US. I am an active member of the Forbes RE Council. I write all of our articles on GetRichEducation.com too. I’m also a financial columnist for the Epoch Times.
I host this weekly Get Rich Education podcast every single Monday - this show right here. We don’t miss shows. I have never missed a week. And we also don’t replay old shows. Fresh material here for you every single week.
Most every financial influencer has been here with me as a guest on the show, running alongside me, including Robert Kiyosaki, Grant Cardone, Jim Rickards, Chris Martenson, T. Harv Eker, most anyone that you’ve heard of.
Besides writing for GetRichEducation.com, Forbes and Epoch Times, I also write our weekly “Don’t Quit Your Daydream” newsletter that I send directly to you.
Then, I am the “talent” - if you can call it that - that’s what it’s called in the industry “the talent”. It makes a slackjaw like me feel uncomfortable saying it.
I am the “talent” on the Get Rich Education YouTube Channel as well - building your wealth over there.
I also host webinars to help you get started with real estate. That’s where we look at actual addresses together and more. That’s something that we just began a few months ago.
I am also your instructor for a fastcourse that I made specifically for you at: GetRichEducation.com/Course
Those five course videos that average just 12 minutes each could comprise the most powerful and impactful 1 hour of investing instruction that you will ever see.
That’s free, again, at GetRichEducation.com/Course
When you know what you’re doing in real estate, you’re often getting paid five ways. And when you’re profiting like this, you’re not tempted to cut corners.
When you’re not cutting corners, you are providing others with good housing.
Let’s do good in the world. Provide good housing and let’s abolish the term “slumlord” in this nation.
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Subscribing to Get Rich Education on your podcatcher is the only way you’re certain to NOT miss one wealth-building show.
More next. I’m KW. This is Get Rich Education. __________
Welcome back to GRE Podcast 430. I’m your host, Keith Weinhold. We are in our 9th year of coming at you every single week, 52 weeks a year.
There is one question that can make you wealthy - and you’ve probably never asked yourself this question before, or perhaps even HEARD this question before.
And if you act on the ANSWER to this premium best investment question to ask yourself… you probably won’t have money concerns for the rest of your life.
It begins with keeping your emotions separate from investing.
When it comes to buying a LT rental property, some of the worst advice that I’ve ever heard is: “Only buy a rental property if you would live in it yourself.”
Oh! That really limits your ability to put the most profitable income properties into your portfolio.
Now, of course, you had better only buy a primary residence that you would want to live in yourself.
But it’s definitely NOT that way with income property. It is not that way with rentals. Yet you need some standard here, however.
Look, years ago, I had a friend that saw me as a successful REI, so he wanted me to tag along with him to go out and tour rental properties on the weekends so that my experience might inform him on which property to buy and which ones to avoid.
Most of them were unsuitable. Unsuitable SFR, unsuitable condos, unsuitable duplexes and triplexes and fourplexes.
But we found one together - a fourplex - that I thought was suitable and he didn’t.
The reason that he didn’t like this, oh, about 1980-built fourplex building is because - though it was well-kept, some of its finishes looked dated.
One of the four units had a pink color-themed bathroom that had this sorta weird-looking pink wall tile and pink sink and pink bathtub. It all matched though. But yeah, it looked dated.
And another one of the fourplex unit bathrooms had those same bathroom fixtures but in a dated-looking olive green.
And the third a light blue, and then the fourth was a totally renovated new bathroom.
Well, it didn’t matter that the bathrooms didn’t match each other. Each family in the fourplex had their own unit in these 2 bed, 1 bath units.
And here’s the thing. The building was well-kept, it was fully-occupied, and it had a good history of occupancy.
That’s why the fourplex checked my “buy box” but my friend didn’t want to buy it. He just couldn’t get over the emotions that he felt in, say, a pink bathroom.
See, he couldn’t see living there himself. But he was not GOING to live in the fourplex himself. He would be an investor that lived offsite.
That didn’t make any sense to me. He gave in to emotions, and lost out on a profitable property.
So when an investor says that they wouldn’t live in an income property themselves, my response is often, “Oh, I didn’t know that you planned to live there.” Because often times, the investor does not.
Emotions got the best of my friend… and he didn’t buy this property that would have been a winner.
Here’s a different case. Now, being sentimental is an emotion. I’ve known someone that strongly considered buying a rental property in their own neighborhood chiefly because they used to play basketball at that house back when they were a teenager.
Sheesh, that’s an awful strategy. Investing is about facts, not feelings.
And certainly not the feelings that are evoked because you slam-dunked a basketball for the first time on an 8’ rim when you were 13. Ugggh. Dreadful investing strategy!
Would that property’s income exceed its expenses?
Sentimental feelings are an emotion. Instead, investing is about the facts.
Now, we’re building some backstory and context. We are hitting closer to home for what I soon want to reveal as the best investment question that you can possibly ask yourself.
Now it’s pretty likely that you want to avoid buying property in a badly blighted, crime-ridden neighborhood that’s also trending in the wrong direction, even if the property is CHEAP.
Because in those areas, it’s hard to find a respectful, rent-paying tenant… and the property could depreciate in value at the same time - in a tough neighborhood.
Actually, you typically want to avoid BEAUTIFUL neighborhoods too. Yes, “avoid beautiful”. That can sound unusual to newer REIs, but for LTRs, beautiful isn’t profitable. The rents aren’t high enough there.
So, depending on your target market, to go from a working class neighborhood (where the numbers often make sense) to an upper crust neighborhood, rents might triple but purchase prices could 10X.
That’s a losing formula for you.
So because you want to avoid rough neighborhoods and avoid beautiful ones, what you want to be attracted to are working class, SAFE enough neighborhoods that are just a little below the median home price.
You don’t want to go so low that you’re beneath the safe bar.
What are the condition of the cars like in the neighborhood? If someone would park a decent car outdoors overnight, that’s one sign that the neighborhood is safe, in addition to crime and school district data that you can find online.
So again, don’t let emotions prevail.
Also, don’t let PERSONAL PREFERENCES dictate what you do too much. Ah, you’ll learn some funny quirks about me here.
I’ve spent my life living in places that have a real change in seasons, including a substantial winter - that’s mostly in Pennsylvania and also in Alaska, BTW.
But distinct seasons are my personal preference. A lot of people don’t care about seasons. They just want year-round warmth. So that’s why I invest in the Sun Belt states - because I know that it’s what OTHERS want.
It’s not about where I want to live. It’s not about me. It’s not about my emotions.
I also know that even people who dislike cold will still live in a cold place if they have a job. Money is very attractive to people and money trumps climate for some people… so it can be good to invest in growing pockets of, say the Midwest.
Personally, I don’t prefer to live on HW floor. It’s harder, colder, and noisier than carpeting. I prefer plush, padded carpeting… and I’ve got some reasons for that. But I know that I’m in the minority on that one.
We actually did a poll on that on our Get Rich Education Instagram Stories and 83% preferred to live on a hard surface, only 17% on carpet.
But see, in my rentals, I use either vinyl plank flooring or hardwood laminate flooring - even in the bedrooms sometimes.
Not only is it more durable, but tenants actually seem to prefer it - even if I can’t figure out why. Ha!
So I keep emotions out of investing, I’m keeping sentimental reasons out of investing, and I’m even keeping my own personal preferences - like plush wall-to-wall carpet out of investing.
Stick with facts and demographics and infrastructure and migration trends, and jurisdictions that have strong protections for landlords.
So, with all of this in mind, what is the best REI question that you can ask yourself during the course of your entire investing career?
It is:
Will this property secure an income stream?
Yeah, that’s the big question. And it is unemotional.
When you ask yourself, “Will this property secure an income stream” for yourself, now you’re accounting for the quality of tenant that you can attract there.
Now you’re accounting for the long-term building maintenance question, and now you’re accounting on if you’re in a good market with enough job and population vibrancy for a long-term tenant base.
That’s the stuff that matters.
“Will this property secure an income stream?”
And what makes that question multi-dimensional is that even though the word “property” is in that question, the question is really asking more about what SUPPORTS the property - like the metro economic market and the neighborhood that it’s in.
See, a modest, 1950-built, 500 sf studio apartment can support an income stream for you if it’s in a thriving job market with a future.
Well, as far as your investing for the year ahead, we are still in high inflation - though it’s come down, and many feel that a recession is ahead.
Where do you invest in high inflation & a recession?
Well, gold is the classic inflation hedge. But long-term, it’s price merely tracks inflation, so though it could be good to have a little, it won’t grow your prosperity.
Bitcoin has been beleaguered in this brutal crypto winter as they call it. Bitcoin has a few redeeming attributes in my opinion.
But it’s risky. In fact, during the GFC of 2008, the pseudonymous creator, Satoshi Nakamoto was just publishing his white paper. We really don’t have any history of what bitcoin does in a prolonged recession.
Here’s the thing. If there’s a bad recession and you lose your job… what are you really going to need in your life badly? You’re going to need more income streams - like a RE income stream.
And you’re not going to be able to get a loan for a property anymore once you lose your job.
If high inflation persists, as any longtime listener knows, RE crushes it - income property with a loan.
Yes, by now, you know that you win the Inflation Triple Crown - winning with RE 3 ways at the same time - c’mon - recite them with me - Asset Price Inflation, Debt Debasement, and Cash Flow enhancement.
That’s the ITC.
This is why rental property with a loan is the singular best investment in high inflation and a potential recession.
History over hunches. RE has proven itself historically. You can have a hunch. But it’s typically best to look at what happens historically over & over & over again.
My question for you today is: “Will this property secure an income stream?” That’s the key investment question.
But over the years, I’ve learned that you’ve also had a question for me. It’s something like: “Where do I find the properties conducive to securing an income stream?”
These are exactly the types of income property at GRE Marketplace. That’s a resource that our team & I put together for you where I share the same exact property providers with you… that I buy from myself.
Gosh, I wish that this would have existed 20 years ago when I bought my first rental property through a RE agent that didn’t know what they were talking about & I wasn’t even aware of it.
It is free to signup just like thousands of investors already have. There’s no subscription fee and just one login gives you access to all of the property providers - and they’re typically in the profitable Midwest and South.
You don’t have to invest in your own local market. The best deals usually are not there.
When you open up your investing possibilities to the entire nation & beyond, you’re no longer limiting yourself.
And see, when you aren’t limiting yourself & you buy in a market with a strong rent income into a low purchase price, what have you done?
You’ve made your investment profitable.
How are you more incentivized to think when you’re profitable - you don’t cut corners. Those that aren’t making money on their rentals can be tempted to cut corners and for example, not replace faulty electrical outlets and not replace rickety porch stairs.
When you invest out-of-market and you’re profitable, you’re less likely to do those slumlord type of things… and that’s how this is congruent with our mission to do some GOOD in the world.
It’s not complete altruism. You want to be a profiteer like me. So I buy from these providers myself at GRE Marketplace.
Prices over there are often discounted because it’s a DIRECT model. There’s no real estate agent to pay at all.
We even video-interview the PMs in the markets there for you… since that PM can manage the property for you on Day 1… if you so choose… making this largely passive for you.
So, armed with this best-ever question of “Will this property secure an income stream?”
Understand that GRE Marketplace is not like a big box store. It is more like an organic farmer’s market where we help match you with experienced property providers.
Much like an organic farmer’s market, you check back regularly for new offerings. It’s a vibrant market. Check back every few weeks.
Make this the year when you take action & think big with income property. Hey, I’ll see you over there. I’ve got a video for you over there too to help walk you through GREmarketplace.com
Until next week, I’m your host, Keith Weinhold. Don’t Quit Your Daydream! |
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Mon, 26 December 2022
Greed is defined as an “intense and selfish desire for something, especially wealth, power, or food”. Should wealth be redistributed so that everyone is equal? “I have never understood why it is “greed” to want to keep the money you have earned but not greed to want to take somebody else’s money.” -Thomas Sowell When I was a fresh college graduate, I resented the rich. I discuss the catharsis that made me change my mind. Our guest, Doug Casey, believes that college reinforces the wrong wealth mindsets. Today, one often hears that one should “pay their fair share” of tax. What does this really mean? If one obtains wealth with integrity, that wealthy person makes everyone else wealthy. I give the example of Jeff Bezos and Amazon. Learn why Doug believes that Social Security is a redistribution scam. Resources mentioned: Show Notes: Learn more about Doug Casey: His YouTube show is: Doug Casey’s Take Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
Partial transcript:
Welcome to GRE! I’m your host, Keith Weinhold. Should we “eat the rich”? Are wealthy people greedy? And where does that belief come from? Should everyone be financially equal and taxed equally too. I answer, “Are rich people greedy?” Today, on episode 429 of the GRE Podcast.
Welcome to GRE! From Hartford, CT to Weatherford, TX and across 188 nations worldwide. You’re back where FF beats DF. I’m Keith Weinhold. This is Get Rich Education. Welcome to the last show of the year.
Are rich people greedy?
First, what’s the definition of greed? Well, the world’s best known search engine puts the Oxford dictionary definition at the top.
Yeah, I think this is a good definition. It says greed is:
An intense and selfish desire for something, especially wealth, power, or food. That’s the definition. And then the example of the use of the word in a sentence is “mercenaries who had allowed greed to overtake their principles”.
You know, the example really hints that greed is a corruption of sound morals or principles in order to get more for oneself.
Greed is not good.
Now, for some reason, actors and entertainers can make gigantic salaries and high-flying paydays but people don’t seem to resent them as much as entrepreneurs or CEOs that make a lot of money.
For some reason, the actors and entertainers as seen as lovable and the entrepreneur or CEO is deemed greedy.
Recently, soccer star Cristiano Ronaldo became the highest-paid athlete ever at $200M per year.
Yankees slugger Aaron Judge $360M over nine years.
Those athletes entertain others. I like watching sports. But I don’t know that they’re advancing society like the innovation that Steve Jobs brought to Apple.
Yet it seems like an entrepreneur could get more criticism.
Now, there are bad examples too. I specifically remember when Shark Tank’s Kevin O’Leary criticized crypto. Then he seemed to do a 180.
Later, we learned that Kevin O’ Leary accepted $15M to promote the crypto company, FTX, that had horrible financial records and was committing fraud.
Was O’Leary greedy?
Then you & I need to ask ourselves, if YOU were offered $15M to do crypto commercials, then would you be incentivized to put your $15M on-hold while you did due diligence on a company that even had pro sports arenas named for them.
So, when we think about what is & what isn’t greed, you also need to think about what YOU would do in these situations & hope that YOU would do the right thing. I do too.
Do the right thing before you do things right.
And, as you know from being a listener to the show here, I don’t take money from just ANY sponsor. They must be aligned with GRE’s mission here of financial freedom over debt freedom and prioritizing ideals like cash flow and prudent use of leverage.
Most of my income does not come from the sponsorship of this show, not even close, so I can BE selective.
But what if that were one’s primary income source. You can begin to understand how they would be less selective. Could THAT degrade into greed?
Now, when it comes to wealth, poverty & greed, think through the prism of “redistributions of wealth”.
And, in just a minute here, this is going to lead us to the greatest quote about greed that you’ve ever heard in your life.
How about something like college student loan forgiveness, which, depending on the borrower’s status is up to either $10K or $20K. It looked like that was going through and then it got held up in the courts.
Well, what about those that didn’t go to college because they didn’t want debt.
But now, if every American effectively gets taxed at a higher rate to pay for student loan forgiveness, then the people that decided not to go to college in order to avoid the debt have to pay for those that did decide to go to college & take on the debt.
Now, as you hold that thought, here is what American economist and academic Thomas Sowell said about greed. Sowell said:
I have never understood why it is greed to keep the money you have earned but not greed to want to take somebody else’s money.
Yeah, gosh that’s good. And the first time I heard that years ago, I found it remarkably thought-provoking.
Therefore, you can at least ask the question then, just posit the question, is it greed for someone to EXPECT student loan forgiveness?
Well, International Man Doug Casey is waiting in the wings here. Later on the show, he & I are going to volley this “eat the rich” topic back & forth.
BTW, have you ever realized that no one wants to be called rich or poor. If you call someone “rich”, they’re uncomfortable and they like to spurn what you just said.
If you call someone poor, that’s seen as a pejorative & quite hurtful.
Everyone wants to be known as middle class. No one want to be called rich or poor - but almost anyone would rather have more money than less.
The song says, “Mo money, mo problems.” But I think most people would accept $10M if you offered it to them right now. Yeah, I’ll try living with that problem.
Well, when Doug comes on with my shortly, I’ll tell you about my cathartic experience with “Are wealthy people greedy” - and how my turning point was about that light bulb moment with regard to “opportunity”.
Virtually all 8 billion people on this earth have the opportunity to make their life better.
But I think it’s important to acknowledge that some people have more opportunities than others.
The United States is one world nation with more robust opportunities than average.
Look, if you were born in the US, or even if you emigrated to the United States, globally, you won the “opportunity lottery”.
That’s because the US only has 4% of the world’s population.
It’s not much different in Canada, which has less than 1% of the world’s population.
Then, within the US, I won what I call the “parent lottery”. No, it is not because I was born wealthy. I was not. Not even CLOSE.
It’s because I was born to two parents that provided a stable home, were married & committed to each other before they had me, and nurtured the environment where I could thrive & fail & succeed & learn and not have to deal with dysfunction of any kind.
I’m really grateful for that.
Now, what about real estate investors today? Do you deserve to prosper?
Think about how made time to listen this show because you care about your future.
Your future is worth caring about… because you’re going to spend the rest of your life there.
Then you established good credit in order to get a mortgage loan.
Then you took on the risk of repaying a mortgage loan.
Then you took on property owner risk during COVID and inflation and a possible recession… all to do good and provide housing for others.
So… do you deserve to prosper and build wealth for doing all of that for others? For strangers even?
Hey, if you did, you overcame many people’s almost inherent laziness. Got up early, worked hard at times, took risk, how about confronting your PM? Or confronting your tenant?
If you learned how to make the world a better place & helped others, is that greed to prosper? No. Not at all.
Our guest, prolific author & thought influencer, International Man Doug Casey, I saw in an article where he quoted his contemporary Rick Rule. Rule said: “Eat the rich. Prepare to starve.”
That gives you a clue as to where Doug Casey is coming from. That’s straight ahead.
I’m Keith Weinhold. There will only ever be one GRE Episode 429… and you’re listening to it.
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Mon, 19 December 2022
Higher returns and lower risk are expected with carefully-chosen real estate. Two hosts put me on the hot seat about rental property. I’m the guest. You get to listen to one of my recent interviews in the media today. Real estate deals are not as attractive today as they were 5-10 years ago. But it’s still the best place to invest your dollars today. The property is only the fourth-most important thing in real estate investing. I discuss the three bigger ones. I detail why real estate returns are multiples higher than those from the S&P 500. Learn why a total return of anything less than 20% in real estate is actually disappointing. Housing inventory is up year-over-year, down over the past five years. From 1 (worst quality) to 10 (best quality), a 4 yields the best cash flow in long-term rentals. I describe why. Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 12 December 2022
Metaverse real estate is virtual. Can you make money with it? First, I discuss updates to 3-D printed homes and Boxabl homes. Next, our guest, Steve Hoffman, describes that metaverse is a virtual space where you can interact with virtual objects. There is no single metaverse. There are apps in the metaverse, like Second Life and Decentraland. Learn what makes a piece of metaverse real estate valuable or worthless. You often buy NFTs on the blockchain. With Upland, you can buy NFTs of real properties, like the Statue Of Liberty or Dodger Stadium. Our guest feels that metaverse real estate investing is highly speculative. It is risky and often akin to gambling. Metaverse economies are subject to monetary inflation. Does metaverse RE have any value? Steve runs the global innovation hub, Founders Space. Resources mentioned: Show Notes: Learn more about Steve Hoffman: A current popular metaverse app: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
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Mon, 5 December 2022
At times, 3-D printed homes, modular, and shipping container homes are not the answer for both single-family home and apartment construction. The promise of new truss and framing technology can substantially speed up conventional construction. This can solve many problems at once: housing shortage, labor shortage, and stubbornly persistent materials supply shortages. FrameTec is a technology that builds the roof truss, floor truss, and walls all in a forthcoming Arizona factory. Guests Damion Lupo and David Morris tell us about it today. The FrameTec process uses solar technology and reduces material waste. Learn more at FrameTec.com. It’s possible that there is still room for accredited investors. This is Made In America technology. Resources mentioned: Show Notes: Learn more about FrameTec: Join me live on Thursday’s Florida properties webinar: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
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Mon, 28 November 2022
Get an update on how the work-from-home trend is good for residential RE and bad for office RE. Office space values are down 17.5% from their recent peak. Americans must now earn at least $107,281 to afford the monthly mortgage payment on a median-priced home. The NAR expects 10% home price appreciation this year, 1% in 2023, and 5% in 2024. The tiny home movement is both architectural and structural. It’s defined as a home of 400 sf or less. Tiny homes are hard to find. In the US today, just 0.3% of listed homes are tiny homes. You can own a new-build tropical tiny home near the beach in Nicaragua for under $200K. Our own COO, Aundrea, bought one. She tells us about it. It’s on Nicaragua’s west coast. It’s not just an isolated tiny home experience. There’s a community with a: restaurant, bar, bird watching area, butterfly garden, viewing tower, yoga area, and communal garden. Often, loans aren’t available for foreigners. Here, you can get 50% or 80% loans. You can live in this tropical tiny home year-round, or keep it as a short-term rental. The provider can manage your rental. Resources mentioned: Show Notes: Get started with tropical tiny homes at: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 21 November 2022
The ideal inflation rate is zero just like the ideal theft rate is zero. When lower inflation (7.7%) was recently reported, mortgage rates experienced a record daily drop. I detail the implosion of crypto exchange, FTX. It was a Ponzi scheme. 2022 is the 2008 of crypto. Garrett Sutton and his son, Ted Sutton, announce the father-son succession plan. They are attorneys that help protect your real estate from lawsuits at Corporate Direct. Ted’s experience at a Chilean copper mine helped make him pivot from a mining engineering track and into law. RE investors have three main lines of defense: 1) Ethical operations. 2) Insurance. 3) LLC. Learn how to properly form and maintain an LLC. Don’t try to win a lawsuit. Avoid it in the first place. Learn why landlords get sued today. Corporate Direct provides free 15-minute consultations. Resources mentioned: Show Notes: Corporate Direct protects your biz & real estate from lawsuits: Garrett Sutton’s newest book: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do this for the show. Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 14 November 2022
A housing crash is upon us. But it may not be the kind of crash that you think. I explain what this sales crash means to the future of the housing market. Caeli Ridge, President of Ridge Lending Group joins us. She gives an exact prediction about where and when mortgage interest rates will peak. 37% of homeowners have no mortgage at all. Among those with a mortgage, 85% have an interest rate under 5% per Redfin. They don’t want to sell and give up their rate, constraining supply. It’s a nationwide lock-in effect. A housing PRICE crash is not expected. Existing homeowners can afford their mortgages and have record equity. This is reflected in the low delinquency rate. The average age of first-time home buyers hit a record 36. Caeli Ridge tells you how to get a lower mortgage interest rate with different loan types. Investors keep their loan an average of 5-6 years. Ridge offers mortgage loans specifically for investors: plain fixed rates, non-recourse, DSCR, asset depletion, bridge loans, commercial loans, cross-collateralization of residential properties, and the All-In-One Loan which operates like a first lien HELOC. See how much interest you save with the All-In-One Loan interactive simulator here: https://ridgelendinggroup.com/aio-loans/ Caeli sees lots of appraisals. They’ve all been coming in “on-value”. When it comes to higher mortgage rates, get used to it. The long-term average is 7.7%. Ridge Lending is where I get loans for my own properties. You can use them too. Start at RidgeLendingGroup.com or (855) 747-4343. Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do that for the show. Best Financial Education: Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 7 November 2022
Get our wealth-building newsletter free—text ‘GRE’ to 66866. Money is an abundant resource, not a scarce one. If you believe that money is so scarce that it’s more valuable than time, I provide the solution to that quandary today. Today’s guest, Victor Menasce, believes that today’s macroeconomic environment dominates local stories. We discuss how to navigate today’s higher mortgage interest rate environment. Banks could be on the brink of a concerning liquidity crisis today. Should central banks set interest rates or can free markets perform that role better? Learn what financial actions you can take in this era of global instability. Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do that for the show. Listen to Victor’s Real Estate Espresso podcast. Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
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Mon, 31 October 2022
Get our wealth-building newsletter free. Text ‘GRE’ to 66866. You can help abolish the term “slumlord”. Profit by providing housing that’s clean, safe, affordable, and functional. Compared to the world, US mortgage terms are so advantageous that they almost feel illegal. I compare this with: Canada, UK, Ireland, Spain, Australia, South Korea, Germany, France, Switzerland, and Japan. Are we in a recession? There continues to be dissonance in the economy. College enrollment keeps declining. But now, 46% of parents even hope that their child does not pursue a four-year degree after high school. A woman faced with eviction released a bee swarm on law enforcement. It costs $1.7M to build a small public lavatory in San Francisco. Resources mentioned: Show Notes: $1.7M public toilet in San Francisco: https://www.theguardian.com/us-news/2022/oct/24/san-francisco-1-million-public-toilet Woman being evicted releases bee swarm: https://www.usatoday.com/story/news/nation/2022/10/20/woman-releases-bees-police-massachusetts/10549905002/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do that for the show. Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
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Mon, 24 October 2022
In times of high inflation, don’t rents have to collapse? Tenants are getting squeezed, paying more for food, gas, medical care, and everything else. Won't rents have to fall? Will this create a crisis for landlords too? If tenants can’t pay the rent, landlords must still pay property expenses. Historically, what happens is opposite of what most think. So I explore what happened in high inflation 40+ years ago to forecast what will likely happen in the future. There are three reasons why rents soar in high inflation: 1) tenants move down a class, 2) doubling up as roommates, and 3) today’s low housing supply and high demand. Rents are up 12% year-over-year today for both SFRs and apartments. Real Estate Pays 5 Ways™, not four or six. Get started with income property in Baltimore, Philadelphia, and Pittsburgh at: www.GREmarketplace.com/Coach Our in-house coach, Naresh, will help you. His services are free. Both urban and suburban properties are available. Urban areas often have a high Walk Score. The rent-to-price ratios in these three mid-Atlantic markets often exceed 0.9% and even 1%. Before you buy, you already have an inspection report, desktop appraisal, and placed tenant’s payment history in-hand. These rowhouses are often priced at a 20% discount. 3 bed / 1 bath is common. Resources mentioned: Show Notes: Get started with income property in Baltimore, Philadelphia, and Pittsburgh at: www.GREmarketplace.com/Coach Rents In High Inflation: https://www.realpage.com/analytics/rents-move-high-inflation-market-look-1970s/ Current US housing supply: https://fred.stlouisfed.org/series/ACTLISCOUUS Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do that for the show. Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
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Mon, 17 October 2022
Are you a quitter? Today’s show can make that feel aspirational. Quit a job you hate for the work you love. Author of “The Quitter’s Manifesto” and GoBundance Founder, Tim Rhode, joins me today. For context on quitting your job, start with the I/O Quotient. The Soul Sucking Meter: Are you being paid enough? Are you respected? Are you a good cultural fit at your workplace? How does it feel when you wake up to go to work? Could you do your job for decades? I quit my job for two main reasons: 1) Try it. 2) Be irreplaceable. Tim describes that quitting your job is like catching the next trapeze. Want growth? Try something new and scary. You did this as a kid. For example, when you were 11 years old, you swam in water over your head. Take out a home equity loan before quitting your job. Put those funds into another bank. This builds your financial cushion during a lifestyle change. Resources mentioned: Show Notes: Tim Rhode’s book, The Quitter’s Manifesto: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Memphis property that cash flows from Day 1: I’d be grateful if you search “how to leave an Apple Podcasts review” and do that for this show. Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 10 October 2022
Homebuilder confidence is low. I talk to one today. Then, learn how a home is built. Join our Jacksonville properties webinar Oct. 20th. Sign up free at: GREwebinars.com. Text “GRE” to 66866 for our free “Don’t Quit Your Daydream” e-mail letter. After discussing the best place to invest today, learn how a home is actually built. Learn how a home is built: zoning, land acquisition, permitting, engineering, drainage, clearing & grubbing, adding earth fill, soil compaction, trenching, adding sanitary systems, stormwater system, lift station, conduit, electrical, foundation, slab-on-grade, plumbing, framing, block, roof truss. Homebuilder confidence is low among those that sell to owner-occupants. That’s due to higher mortgage interest rates. Among homebuilders that sell to investors, it’s better. Why? Higher rates mean higher rents. Tenant demand for fourplexes is strong. In inflation and a possible recession, more people must live frugally. Get started with new-build Florida income property (SFR to fourplex) with today’s guest at: GREmarketplace.com/Southeast. Resources mentioned: Show Notes: Today’s guest provider offers new-build Florida property at: www.GREmarketplace.com/Southeast Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): I’d be grateful if you search “how to leave an Apple Podcasts review” and do that for this show. Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
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Mon, 3 October 2022
You want to increase your expenses. I reiterate why. All five ways that real estate pays are rarely surging at the same time. In the past year, appreciation has slowed, cash flow rose, principal paydown slowed, tax benefits are roughly the same, and inflation-profiting rose. How do you become a “laptop landlord” and know that you’re buying a good property? I share my favorite resources for real estate due diligence (laptop landlording). They’re all in the “Resources Mentioned” below. One mistake people make is that they tend to overgeneralize. They paint an entire city one color, saying something like: “I read that Memphis has high crime.” Well, where within Memphis? You can contract with an out-of-state stranger to check out a property for you at WeGoLook.com Aundrea Newbern, COO of GRE, MBA, NAR member (the woman with all the letters behind her name) joins me. She discusses her top real estate successes and failures. We discuss floods, old cast iron pipes, partnerships, single-family vs. multifamily, LTRs vs. STRs, and the opportunity cost of waiting to buy property. At times, if third-party inspectors see an issue, they refer you to specialists like foundation or mechanical inspectors. Resources mentioned: Show Notes: Due diligence resources: ATTOM Data Solutions, Redfin, CoreLogic, Zumper, Altos Research, John Burns RE Consulting, Neighborhood Scout, Google Street View, WeGoLook.com, bls.gov, US Census, FRED, GREmarketplace.com I’d be grateful if you search “how to leave an Apple Podcasts review” and do that for this show. Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 26 September 2022
Residential real estate has greater usefulness and is easier to understand than: agricultural, office, retail, industrial, and warehouse real estate sectors. Tenants are staying in both SFRs and apartments longer than before. I discuss three reasons for today’s longer tenant retention trend. Higher mortgage rates correlate with higher home prices. In fact, in the nine times mortgage rates increased 1%+ since 1994, home prices rose seven of those nine. During recessions, mortgage rates typically fall. Both are opposite of what most people think. Resort communities are almost declaring war against short-term rentals. I explore the depth of the problem and discuss solutions. Are the wealthy at fault? People that grew up in an area cannot afford housing in these STR hotbeds. Resources mentioned: Show Notes: How to Raise The Rent and Keep Tenants Happy (Video): 40-Year Mortgages: https://www.housingwire.com/articles/newrez- debuts-40-year-non-qm-mortgage-product/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
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Mon, 19 September 2022
Car washes can be remarkably lucrative. This is enhanced with a franchise model and selling subscriptions to car wash customers. “There is no other operation on a 1-acre site that can do 1 million to 2.5 million in sales and pocket half of that.” -WSJ story Like other real estate, a car wash location is vital. Much like apartment buildings, car washes are valued based on their income stream amount. You can participate yourself. Start here: https://gremarketplace.com/carwash. Must be accredited, minimum $100K investment. Tommy’s Car Wash is an innovative franchise. Customers use a mobile app. Only Panera Bread and Chick-fil-A have higher sales revenue per location. (Wow!) Car washes have high cash flow and tax efficiency. Pro forma returns for individual investors like you have a 1.75x return on investment in five years or less. There is 100% bonus depreciation in year one. Learn more and get started at: https://gremarketplace.com/carwash Resources mentioned: Show Notes: Get started with car washes: www.GREmarketplace.com/carwash WSJ on car washes: WSJ on laptop landlords: https://www.wsj.com/articles/everyones-a-landlordsmall-time-investors-snap-up-out-of-state-properties-11661705278 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
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Mon, 12 September 2022
Join me live on our St. Louis properties webinar this Wednesday at: GREwebinars.com The Fed is out to crush lingering inflation. Coming rate hikes will likely lead us into a recession, if we’re not there already. Home price gains have stalled. This is worse for sellers and better for buyers. Landlords are winning in today’s market; renters are losing. CoreLogic’s Single-Family Rent Index shows a 13.4% YOY national rent gain. Single-family rents are up $500+ over the past six years. For a long time, investing in hardwood trees was primarily for big money hedge funds and family offices. You can own the title to quarter-acre parcels with teak trees that grow on top of them for just $6,880. Timber prices are often counter-cyclical to markets. They keep growing through recessions, market collapses, and fluctuating interest rates. Teak hardwood has natural oils that make it fire and rot resistant. In Panama, they thrive where there is about six months of rain and then six months of dryness. The operator that I interview today has been involved with teak plantations since 1999. I first met him in-person six years ago. Learn more. Get the investor report at: www.GREmarketplace.com/Teak It costs $6,880 to own one new teak parcel. Optionally, you can own 16-year-old teak parcels for ~$20K. $6,880 is projected to grow into $94,000 over twenty-five years. Teak appreciates at 5.5% per year, 11% IRR. This is a remarkable way to own timber real estate and invest in another nation with a low cost of entry. They offer in-person teak tours in Panama. You can see your own trees. Resources mentioned: Get started with teak: Show Notes: New—Join GRE Webinars: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 5 September 2022
A GRE listener since 2015, Christian Montalvo and her family are growing their real estate portfolio in the Dallas-Fort Worth area. She has been a food microbiologist. Christian works for a company that cleans food processing plants. Her husband is a W-2 employee too, a financial analyst. After being a renter for about $1,000 / month in a tiny DFW apartment, they began with buying a $200K owner-occupied duplex with a 3.5% down payment. Next, they bought a fourplex. At this point, they have five rent incomes. They kept growing. Today, she and her husband still work their W-2 jobs. But as a young, married couple, they now have the flexibility such that they don’t both have to work. We discuss if they invest in 401(k)s and conventional retirement plans. I give many examples of “growing your means” instead of “living below your means”. Last year, Christian became a real estate agent. She works with investor clients. Resources mentioned: Show Notes: Christian Montalvo’s e-mail address: christian@fraserrealty.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at (use code “GRE” for 10% off): Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 29 August 2022
“How long are you going to wait until you demand the best from yourself?” -Epictetus I share 18 lessons with my 18-year-old self. #2 is: Don’t fear being different. That’s your advantage. #4 is: No one cares about your college grades. #14 is: Finding the truth is more important than being right. #17 is: What does life want from you? National median home prices eased from June to July—from $414K to $404K. Homebuilders are in a recession. However, available housing supply is still low and demand is high. Almost every human is forgotten in four generations. Is a housing price crash imminent? You get a clear “yes” or “no” answer. The NAR says that today’s first-time homebuyer is: 33 years old (oldest ever), $86,500 household income, $252K median purchase price, 7% down payment, and 37% carry student debt. Average size is 1,640 sf. If you’d like to advertise with us, visit: GetRichEducation.com/Contact Resources mentioned: Show Notes: Median sale price eases: https://www.wsj.com/articles/existing-home-sales-prices-housing-market-july-2022-11660774574 Median US house price historic chart: https://fred.stlouisfed.org/series/MSPUS Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at: (use code “GRE”): Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
Today’s episode transcript:
Welcome to GRE! I’m your host, Keith Weinhold. Learn 18 profound life lessons I’ve learned that I wish I could share with my 18-year-old self… and… has the time come?
After the looong & sometimes steep housing price runup, is a housing price crash finally imminent? And what’s the future direction of the housing market? Today, on Get Rich Education. ___________________
Welcome to GRE! From Red Deer, Alberta to Red Rock State Park, AZ and across 188 nations worldwide… I’m Keith Weinhold. THIS is Get Rich Education.
The voice of real estate investing… 412 weeks in a row… since 2014.
I hope that you’re having a great week!
You know, I have seemingly been a late bloomer in almost every way in life that you can conceive.
But as some say, “many people never bloom at all”. Alright, well enough. But look…
I was almost 18 years old when I graduated high school, just like - perhaps you - and many people are. But I looked like I was 13 then.
I was among the very last in my class to experience puberty there at Coudersport High School, Pennsylvania.
This is one reason that I could not attract a high school girlfriend or get a prom date. Even though… I asked a girl to prom and she said “no”.
As underdeveloped and impressionable as I was then, here are 18 lessons that I want to share with my 18-year-old self.
I wish that I could share these lessons that I’ve learned now with my 18-year-old self:
What about you? Can’t you sense when someone acts like a know-it-all? It’s not something that you want to be around. Back to advising my 18-year-old self.
And the 18th and final lesson that I’d like to go back and share with my 18-year-old self is… Build. Anthropologists suggest that almost every person is forgotten after three generations. At your trajectory, what will your legacy be? Why and how will you be remembered?
They are the 18 lessons.
The stoic Epictetus said one of the most profound motivational things ever… and it’s in the form of a question. Epictetus said: "How long are you going to wait before you demand the best for yourself?" Yeah, that is his question.
At least here on this Earth, this is your last life ever.
Now, as much as some of those 18 might resonate with you… and maybe you want to share those with someone in your life… I’ve seriously got to ask…
(Laugh) If I had read those as an 18-year-old, knowing that I wrote them a couple decades later, would I have ever listened to those as an 18-year-old?
I don’t know. I probably wouldn’t have changed my behavior on some of them… but a few.
I’ve also got to wonder, in another 20 years, will these change? 20 years from now, would I be advising my 18-year-old self any differently?
Now, I discussed in there how anthropologists suggest that most every human is forgotten in 3 to 4 generations.
Sadly, quite a few people are forgotten 3 to 4 minutes after their death. And many more, within 3 to 4 hours, 3 to 4 days, or 3 to 4 weeks after their death. Of course, your children will remember you longer, and your spouse of, say, 50 years will remember you longer. Realistically, LOTS of people are soon forgotten because they never did anything worth remembering. Good people are forgotten. People that never caused any trouble or uproar. They kept their lawns mowed. They kept their cars clean. But nothing notable worth remembering, like caring for lost animals or handicapped children or always remembering their friends’ birthdays. For a thoughtful person, it is wise to consider from time to time “what have I done recently, that people will want to remember?”. Of course, we should all do every day all those things necessary to be a good neighbor, a good landlord, and a good citizen. If you don’t do that, you may be remembered because you were such a slob, or took care of your house so badly, or didn’t bother to shave and shower regularly. But assuming you are doing everything so that absolutely no one will be offended or annoyed, then you have to do something special if you are going to be remembered for longer than a few days or a few weeks. Let’s recognize something. Abraham Lincoln died six or seven generations ago. He is remembered with respect and honor. John Wilkes Booth died just a few days after Lincoln. He is remembered with scorn and despising. So it is a mixed blessing, for you to be remembered. For most people, they would prefer to be forgotten rather than remembered as a deviant or a monster or a social parasite. My own guess is that VERY FEW people are remembered well, for as long as four generations. They may be listed in a family genealogy, but beyond being a statistical item, the individuals and who they are have been long forgotten. It’s been said that "The greatest waste in the world is the difference between who you are and who you could become." Now, be real with me. Is what I’m telling you making you pensive and even melancholy about your own mortality? How do you feel… in your heart… right now? How do you feel… in your stomach… right now? What’s your mind telling you here?
Cheer up a little. I want you to take some solace in the fact that… I believe there are more important things than for you to be REMEMBERED for decades and for generations. But doing those more important things — helping other people, making a better world, advancing the store of useful knowledge — will usually lead to YOU being remembered, long after you have passed into your next life. That is probably the person that you strive to be here on Earth… after all. If you’re still feeling like you’re not enough… well… I don’t have all of the answers. But you just got 18 lessons so that you can listen to those again and see which ones fit into your life. I’ll be back with some GRE core content about real estate and a housing price crash. I’m Keith Weinhold. You are listening to Get… Rich… Education. _________________
You’re listening to one of America’s longest-running and most listened-to real estate shows. Welcome back to GRE. I’m your host and my name is Keith Weinhold. I am genuinely grateful for your listenership.
There will only ever be one Episode 412 of Get Rich Education… and you’re listening to it.
If you’d like today’s Show Notes, simply go to GetRichEducation.com/412. It includes not just today’s supplemental resources, but the entire transcript of today’s episode.
Some people like to say: "Housing prices. They don't matter to cash flow investors."
To that, I say. C'mon now.
Price might not be the principal consideration. But price matters. If it didn't, why not just pay triple the asking price on your next property purchase?
Why does every classified ad have a price in it?
Of course, real estate price matters-even to cash flow-centric investors- when you’re buying, you’re selling, or for you to have an adequate equity cushion for refinancings.
US home sales dropped last month. That's nothing new. That just means sales volume.
Housing supply is part of the reason for volume drop. Available supply is still just half - or less - of what's needed and it will be a multi-year problem.
I’ve discussed that before. The dearth of supply is an inelastic condition - it’s difficult to change.
What’s the way out of that undersupplied condition? It’s homebuilding.
Well, many believe that homebuilders are in a recession. Some are building less while they wait for affordability to improve.
This is only going to prolong America’s housing supply problem.
Let’s LOOK at prices.
Since July 2019, which was back before you knew the definition of "pandemic" and the only time that you wore masks were for Halloween, home prices have risen 44.5%.
Yes, 44-and-a-half percent in just 3 years.
Now, if we shorten that up to year-over-year median house price growth in America, it is still 10.8%.
But the median sale price from June to July eased from about $414,000 to $404,000. 414 to 404.
Now, some might say this is hardly a change at all.
No, I think it’s meaningful… because all we’ve seen are both YOY and MOM housing price increases for years now.
Is it an aberration or is it a trend to come? Of course, no one really knows. But I think it's worth paying attention to.
Has the time come? Did real estate prices run up too far, too fast, meaning they must come crashing down to earth in a streaking fireball… that’s going to leave an indelible crater? Puhhh.
Let’s explore that. Well, first of all…
…the definition of the word "crash" is somewhat UH-morphous. But if it's equated to a bear market, it means a 20% price decline.
Well, that's highly unlikely that a decline like this is imminent. Housing values are famously stable. Today's homeowners have oodles of protective equity and their loans are well underwritten. And the supply is staying low.
You’re a smart listener, you listen here every week, and you’re probably apprised of all that.
But did you know that even during the astoundingly irresponsible and toxic Global Financial Crisis and Mortgage Meltdown of 2007-2010, that back then during that cataclysmic event, house prices fell less than 20% nationally?
Yeah, they didn’t even crash 20% then!
Fifteen years ago - those were the days of "liar loans", 105% LTVs, loose appraisals because appraisers were in cahoots with lenders, and we had glut of national housing supply and a foreclosure crisis… and nearly every housing market malady that you can quickly think of.
Housing values didn’t fall 20% amidst THAT apocalyptic environment.
I made sure that chart was put in the show notes for you so that you can see that. That’s the median sale price of houses sold in the United States, sourced by the F.R.E.D. through the US Census and HUD.
Today, homes are still being snapped up quickly. That’s what a lack of supply makes happen. And we’ll still have a lack of supply in 2023 and 2024.
In fact, last month, the NAR tells us that the median home sold in just 14 days in July. It's never been faster than that on record.
That is not something that you would expect amidst stalled PRICE growth. Well, higher mortgage rates will do that.
The American housing market reached a turning point this summer. Price increases haven't just slowed—they've stalled.
Of course, local factors often supersede national ones. So then…
Where are home values least resilient? Areas that were trendy and higher-priced homes.
Where are home values most resilient? Lower-priced and entry-level properties. They're the ones least affected by further losses in affordability. That’s what we’ve talked about on this show from Day 1 - investing in entry-level homes for cash flow in the Midwest and South.
Who do stalled price increases harm:
Who do stalled price increases help:
This recent outsized RENT growth has clearly been a boon to us real estate investors - even a windfall if you’re well leveraged. Now… in the workplace, the pandemic spawned “The Great Resignation”.
People either started working from home or quit and stayed at home. They were on their Peleton bike… and on Zoom.
But tons of companies… from Peleton to Zoom - have seen consumers end their pandemic buying patterns.
Now… so has housing.
The pandemic-era frenzy where buyers hotly demanded more space and a Zoom room is what I have called "The Great Reshuffling". It has settled down.
At the point of being overly obvious, compared to just a few months ago, this housing market has become worse for sellers and better for buyers.
Sellers, you might even have to STAGE properties again.
Buyers, let's run a vibe check on how well you’re doing for new purchases. Now you can usually:
You know, a friend just shared something with me. He said: "We are officially back into the 2018 real estate market. I made an offer today on a brand-new flip. I got $10K of seller help and a half page of contingencies." That’s what he said.
Yeah, that really sums up a lot.
The market has normalized - not become totally normal by any stretch, but negotiations between buyers and sellers are more balanced now.
There’s one group that loves higher mortgage rates - and that’s single-family rental owners.
That crimps affordability - pricing out that first-time homebuyer… making them rent from you. That’s continuing to push up rents at faster increases than historic norms.
Fannie Mae expects that home sales will decrease in the next year. That’s nothing new. The volume of existing-home sales has been decreasing for months.
So where does that leave today’s first-time homebuyer, the person - that is becoming more of a rare breed - that DIDN’T have to pay rent to you in your property?
Well, the NAR revealed a profile of today’s first-time homebuyer… and I think it’s particularly interesting. Today’s FTHB is…
Now, I’ve largely been discussing either total housing supply or single-family housing supply thus far.
One bright spot is for apartment-dwellers.
420,000 new apartments are forecast to be built in the US this year - that’s according to RentCafe. Coming on top of 2021 - when there was historically high apartment construction, it would mark the first time since 1972 that more than 400k new apartments were completed in each of two straight years. The top spot for new apartments in 2022 is the New York metro area.
Elsewhere, out there in the world…
Netflix is about to launch a “Shark-Tank” like real estate show called “Buy My House”. It’s structured much like Shark Tank… except homeowners pitch their house sale deal to four “sharks”.
That could be interesting to watch.
Here, coming up at GRE, hear from not just me, but, as usual some of the most influential personalities in the real estate and finance space commonly come along for an episode and run alongside me.
Ramit Sethi from “I Will Teach You To Be Rich” is one of those notable names that will join you & I here on an upcoming show.
If you have any questions, comments or concerns about the show, you can always reach out at GetRichEducation.com/Contact. That’s how to get ahold of our team.
One question that we’re really not in need of hearing over there on our Contact Page, is: “How do I become a guest on the show?”
You know, a couple years ago, we had about 20x as many requests to be a feature guest here on the show as there are available appearances.
Well, anymore, it’s about 50X as many requests as weekly shows.
We’re sorry to have to apologize to so many wonderfully bright and credentialed people. I really appreciate them. But we only have one, big weekly show… and that supply is not increasing.
GRE show supply could be even more inelastic than American housing supply then.
I’d like to welcome our newest show sponsor, MyPropertyStats.com. It was developed by Hayden Crabtree. Hayden has been a show guest here before and we expect to have him back here to tell us more about My Property Stats.
It’s a deal analysis tool developed by an active investor - Hayden - to cut the time it takes you to analyze ANY deal by over 90%. -Calculate the EXACT price to pay to hit your cash flow and ROI goals -Build a WORLD CLASS pro forma
In fact, you can go to MyPropertyStats.com/GRE right now and use coupon code GRE to get 10% off your first year. It’s remarkably inexpensive. That’s just $90 A YEAR for a tool that can save 10 hours PER DEAL. No more spreadsheets. No more juggling multiple files. You can use coupon code "GRE" to get 10% off at MyPropertyStats.com/GRE.
Much like the gratefulness I feel for all of the bright guests that are here, we’ve seen quite an influx of advertising inquiries.
This is despite that, we haven’t really pitched for advertisers here - much like guests, fortunately, there are plenty of wonderful resources out there that want to reach you, the listener here.
These are resources that I don’t just endorse, but I often use myself.
If you’d like to make an advertising inquiry here at GRE, you can also reach out at the Contact Page at GetRichEducation.com/Contact
I’m Keith Weinhold. I’ll catch you next Monday, Labor Day. You’ve been listening to Get Rich Education.
Don’t quit your daydream! |
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Mon, 22 August 2022
You told yourself you’d change the world, then you let the world change you. Rather than asking yourself, “What do I want out of life?”, a more powerful question is: “What does life want from me?” Almost everyone wants to be “job optional”. People often use their words to denigrate the importance of money, yet their actions validate its importance. High-flying real estate appreciation rates are mostly over with. The market is normalizing. Through Q2, national median home price appreciation is 14%. But it's quickly slowing. American apartment rent-to-income ratio is 23% for tenants. Zumper tells us there’s about 10.2% national rent appreciation. Highest are TN and NC. We have available properties in the Midwest and South. Naresh & I spotlight Poinciana, FL; Ocklawaha, FL; and Memphis. For available properties and free coaching, contact Naresh at: naresh@getricheducation.com Resources mentioned: Show Notes: E-mail Naresh about cash-flowing properties: naresh@getricheducation.com Zumper’s Rent Report: https://www.zumper.com/blog/rental-price-data/ Rent Is The New Gas: https://www.usatoday.com/story/money/economy/2022/08/09/rents-topping-gas-prices-inflation/10279406002/?gnt-cfr=1 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at: (use code “GRE”): Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 15 August 2022
Is the economy healthy or unhealthy? We’ve had two consecutive quarters of GDP contraction. High inflation and supply problems persist. On the other hand, we have a strong jobs market, low unemployment, and high rent increases. Ultimately, the NBER decides whether or not we’re in a recession. Today’s guest, Tom Wheelwright of Wealthability, tells us why he thinks we’re in a recession. I share with you the exact rent increase numbers I’ve had on my rental single-family homes. Historically, a recession occurs every five years, on average. Whether we’re there yet or not, I believe there’s a likelihood of a recession soon. Tom thinks whether or not a recession is declared is important; it affects consumer sentiment. He breaks down the new “Inflation Reduction Act”. It does not appear to help reduce inflation. Rather, it appears that it will: increase union wages, enact climate change policy, add taxes to pharmaceuticals, hurt small business, and increase IRS enforcement. “People who have never seen an IRS audit will see IRS audits.” -Tom Wheelwright Resources mentioned: Show Notes: Get started on lowering your taxes with Tom Wheelwright: All U.S. Employed Persons: https://fred.stlouisfed.org/series/PAYEMS 30-Year Mortgage Rate History (gray bars are recessions): https://fred.stlouisfed.org/series/MORTGAGE30US Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Analyze your RE portfolio at: (use code “GRE”): Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 8 August 2022
Is today’s housing market healthy? “Yes” for rental property owners, existing homeowners, and sellers. “No” for renters, wannabe first-time home buyers. “Unbalanced” is a better word to describe today’s housing market. I bought my first income property 20 years ago today. In negotiation, emotions trump facts. Chris Voss, former FBI hostage negotiator, joins us for real estate negotiation tips. If you need a decision from someone, get it in the morning before they have decision fatigue. In a negotiation, try to get agreement. Don’t try to get the other party to say “yes”. Chris likes to let the other side talk first. Let “no” out slowly. A great way to say it is, “How am I supposed to do that?” Self-deprecating humor can work in negotiation. Learn how to motivate people to finish projects in a timely fashion for you. Resources mentioned: Show Notes: Black Swan Group: Mike Gundy rant “I’m a man. I’m 40.”: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 1 August 2022
We compare the safety of all these investments: cash, savings accounts, treasuries, CDs, gold, cryptocurrency, stocks, mutual funds, ETFs, raw land, a primary residence, and income properties. Listen to a mainstream media video clip about inflation from NBC Nightly News. We get a Florida market update from GREmarketplace.com/Orlando. Overall housing supply is low. It’s even lower for entry-level properties. For renovated properties, Florida insurance premiums have risen dramatically in the past few years. However, for new-builds, premiums are about 70% lower. These particular available properties in Palm Bay, FL are typically: 4 BR, 2 BA, 2-car garage, concrete block, single-family rentals, new-build, vinyl flooring, granite counters, and infill quarter-acre lots. $319,000 is what buyers pay. Today, these properties appear to appraise for $370,000+. You have $51K+ of built-in equity. For those that select property at GREmarketplace.com/Orlando, your insurance is paid for the first year. Resources mentioned: New-build Florida income property for $319,000: Show Notes: NBC Nightly News on Inflation: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: www.jwbrealestate.com/gre or (904) 677-6777 To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 25 July 2022
When mortgage rates rise, home builders slow down on building. This constrains supply and supports housing prices. A record share of Americans say inflation is their No. 1 concern. The CPI is 9.1%. Property operating expenses are rising with inflation, like insurance and property tax. What helps you pay for it? Rising rent. Philosophically, why should you raise the rent on your tenants? Besides adjusting it to the market amount, you took time learning, you built your credit, you accumulated a 20% down payment, you originated an 80% loan, your operating expenses are rising, you weathered pandemic uncertainty. If an auto mechanic makes $60 an hour, in ten years, they might make $90 an hour. Where’s the growth in this? Kathy Fettke from Real Wealth joins us. We disagree on the housing market being “healthy”. I believe a good description of the housing market is: "unbalanced": Healthy for: rental property owners, existing homeowners, sellers. Unhealthy for: renters, homebuyers. She believes that the Fed has overstimulated the economy, prices are high, and housing is undersupplied. We discuss real estate’s demographic advantage. We agree that it’s a bad market for prospective first-time buyers and renters, and good for those that have rental properties. A housing price crash anytime soon is highly unlikely. She & I each believe that today, it makes sense to add carefully-bought rental properties to rent to others. Resources mentioned: Show Notes: Real Wealth with Kathy Fettke: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 18 July 2022
National home prices are up 275% since 1991. I break it down state-by-state for you. Slowest? Connecticut with 137%. Fastest? Utah with 599%. Two misleading RE statistics are: real estate sales volume, home price cuts. I tell you where I’m spending my summer. Next, Tom Wheelwright joins us. He authored the new book, “The Win-Win Wealth Strategy”. He tells us about the 7 investments that the government will pay you to make. You don’t pay up to 12.3% Social Security Tax on rental income like you do with your day job. Tax depreciation is explained. Bonus depreciation is being gradually phased out after this year. Resources mentioned: Show Notes: Tom’s New Book: State-By-State Home Appreciation Since 1991: https://advisor.visualcapitalist.com/growth-in-u-s-house-prices-by-state/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: Available Central Florida new-build income properties: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 11 July 2022
Real estate funds invest in multiple properties. Real estate syndications often invest in just one property. “What is the worst deal that you’ve ever done?” Ask your fund provider that question. I’m willing to share that I invest my personal real estate fund dollars with Flip & Dani Lynn Robison of Freedom Capital Investments. Fund pros: More passive than turnkey, stable returns. Fund cons: Vet your operator. Learn more or get started at: GREmarketplace.com/funds There are short-term funds for liquidity, and longer-term funds for higher returns. The difference between simple and compound interest weighs in here. Learn what a “preferred return” is. Fund returns of up to 10-12% are offered. Learn where your return comes from. Fund objectives: safety, certainty, reliability, and growth. We’re talking about high-yield, fixed income fund. Dani Lynn has been a part of more than 600 multifamily deals. Learn how funds have two audit layers. There are funds for both accredited and non-accredited investors. Learn more or get started at: GREmarketplace.com/funds Resources mentioned: Show Notes: Get started with real estate funds. It’s the same place I invest: Dani Lynn Robison’s team contact: Phone | (937) 551-2282 Email | invest@freedomcapitalinvestments.com Flip & Dani Lynn Robison’s daily podcast: Freedom Through Passive Income Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Available Central Florida new-build income properties: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 4 July 2022
Your Financial Independence Day happens when your residual income stream amount exceeds your basic monthly expenses. Rental demand is high for three big reasons: rates are rising, stringent mortgage qualification standards, housing undersupply. I answer three listener questions: Should I make a big down payment? Is borrowing at lower than inflation profitable? What about prepayment penalties? Ridge Lending Group President Caeli Ridge joins us to discuss today’s mortgage lending landscape. Today, are ARMs beginning to make more sense than fixed-rate mortgages? We explore. Learn about the cash-out refinance climate. Second mortgages on income properties are still limited. Does it ever make sense to refinance to a higher mortgage interest rate? We discuss. Caeli Ridge thinks mortgage rates will keep rising. Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE or e-mail: info@RidgeLendingGroup.com Freddie Mac Includes On-Time Rent Payments Into Underwriting: https://www.housingwire.com/articles/freddie-mac-to-include-on-time-rent-payments-into-underwriting/ Airbnb Enacts Permanent Party Bans: https://www.cnbc.com/2022/06/28/airbnb-makes-its-party-ban-permanent.html JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: Partial transcript: Welcome to GRE! I’m your host, Keith Weinhold. Happy Financial Independence Day on American Independence Day.
I answer some of your most burning listener questions today.
Shifts in the mortgage market could now change your strategy.
Does a cashout refinance to a higher mortgage rate make sense or not?
Is an adjustable rate mortgage actually feasible for you now and lots more… on Get Rich Education. _____________________
Hey, welcome in to GRE. From San Luis Obispo, CA to Saint Louis, Missouri and across 188 nations worldwide, you’re back in that abundant place.
And you’ve got to lead with an abundance mentality around here. How many places can you do that when the scarcity mentality is abundant and the abundance mentality is scarce.
I’m Keith Weinhold. This is Get Rich Education. Though it’s American Independence Day… is it your financial independence day.
Are you drawing closer to that day… as you add income streams in your life.
With 8.6% government-admitted inflation and stagnant wages and a higher cost of living… has there EVER been a more important time in your entire life to add an income stream through real estate?
You can make the case that this is the most important time for you to do that.
I am about to answer your listener questions here on July 4th. It’s also Episode 404. There’s no chance that this becomes an error 404. Some dorky humor there.
First…
Freddie Mac is going to include on-time rent payments into underwriting. Yes! This starts next week.
This is a good thing for you. This incentivizes renters to make on-time payments to you if they ever want to become homeowners.
…and…
Airbnb enacts a permanent ban on parties. They & VRBO have long struggled with what to do about parties.
I just shared those stories with you in Friday’s newsletter. If you didn’t see them, they’re in the Show Notes of today’s episode.
Be sure to get our free “Don’t Quit Your Daydream” newsletter.
We’ve been really informing you about so much in the real estate world there. We’ve also been telling you about our webinars. I know that some of you enjoyed last week’s Texas properties webinar.
Stay up-to-date with our newsletter at: GetRichEducation.com/Letter
Now, let me tell you. Back in the year 2004, eighteen years ago. Yes, I was an active REI then. My tenants were increasingly leaving. They were vacating my property and I had to find a new renter.
This was increasingly happening for a few reasons:
#1 is that mortgage rates were falling then.
But secondly, and really the big reason is that anyone could qualify for a loan. Mortgage underwriting standards were so lax that nearly any human could get a loan, even if they had zero income. So… loans were too easy to get.
Then the third reason that my tenants seemed to be vacating is that there was ample supply - and an oversupply of properties - first-time homes - for them to move into.
Well, today, all THREE of those criteria are flip-flopped.
First, mortgage rates are rising.
Second, mortgage qualification standards are tough. Tougher than Kevlar.
And thirdly, there’s an undersupply of homes, especially these entry-level homes that make the best FTHB places.
That’s precisely why rental demand is sky high today, tenants are not fleeing to become homeowners, rental occupancy is close to 100% in many markets, and rents are rising multiples faster than historic norms.
These phenomena can move you closer to you financial independence day.
I had a group of financing-themed listener questions come in recently, so I want to get to three of those before we talk more about today’s lending landscape later. ________________
The first question comes from Dave in Bellingham, Washington.
“Keith, I thought it was good to make a big down payment on a property. That way, I’d have not only less debt, but I’d have the benefit of having a smaller mortgage payment over time.
This means I’d pay less interest over the life of the loan too. Can you tell me more about how FF beats DF?”
That’s from Dave.
Good question, Dave. Common question. In fact, there was a time in my life, before I ever owned any real estate where that same line of thinking made complete sense to me.
I even thought, “If I could be mortgage-free and own a property, I’d have it made.”
Dave, let me answer this in a somewhat different way than I’ve answered it before for other listeners’ benefit.
One probably can.
The riskiest thing that a lot of people do by making a big down payment is now they don’t have much liquidity. If the cash is already in the home, then that borrower might worry about not having much cash for other disruptions or expenses that come up in life.
The worst one could be, “What if you lose your job and your job was, say, 70 to 100% of your income?”
Now that cash is trapped in the home as equity… and you can better believe that today, banks aren’t going to let you access your equity if you don’t have a job.
The best way to keep equity separated from your home is to make sure it never goes in there.
The other reality too, is that the more than you borrow, the more you make use of OPM.
So the great question to ask yourself, Dave, is “How big of a real estate portfolio could I ever build if I limit myself to only using my own money… and NOT other people’s money?”
We’re going to discuss this more later in the show today… but that should provide some sufficient context and food for thought to your question, Dave. Thanks for writing in.
You, the listener, can always contact us with any questions at GetRichEducation.com/Contact ________________
Andrew from New York state had a question through our Contact Page.
Andrew’s been an avid listener for quite a while. I remember your name, Andrew. You’re a veterinarian from New York state. I hope that we can meet sometime in the future. Andrew asks:
“Is it a true statement to think that even in today's High "er" interest rate environment any mortgage rate under the rate of inflation roughly 8% is a bargain??
Today ..I am not getting great cash flow...$100/month or break even..on new builds...but still see the upside in RE investing due to its inflationary hedge.” Alright, thanks for that Andrew.
With the first question, is any mortgage rate under the 8% inflation rate a bargain. Well, it could be. Many think that the real rate of inflation - the true diminished PP of the dollar is 15%.
But let’s just stick with 8%. Yes, if you get a mortgage at 6 or 7% today, you are effectively being paid to borrow.
That is because with the money that you’ve borrowed from the bank, over time, you get to repay the bank with dollars that debase on the bank faster than THEIR interest can accrue on you.
That’s how it can stealthily build wealth.
The risk associated with that is - besides being most attentive to your personal cash flows, Andrew - is that at some point over your loan term, there’s a good chance that inflation will duck back below mortgage interest rates.
We’re in this inversion now where the opposite is true. So, enjoy it while it lasts. I’d think of your interest rate being lower than inflation as a short-to-medium term tailwind.
Your second question was about how today, you’re not getting great cash flow when you buy a new-build rental property. It might be positive $100 or just a break even. But you still like investing in RE for the inflation hedge.
First, I think of RE as more of an inflation-profiting center than a mere inflation-hedging vehicle. I take you point though… and then…
Yeah, a lower $100 positive cash flow or less on new-builds is lower than what we’ve all been used to in recent years.
There’s a chance that this will widen - certainly no guarantee.
It like how I described a couple weeks ago that we think of the housing market in two waves. First the housing price increase wave hit hard, then there’s a trough, then later the rent increase wave hits. The trough between waves is when cash flow is lowest.
Though you can’t absolutely count on it, rents are increasing torridly. Andrew, I can tell that you’re a close listener just by the words and concepts that you’re thinking over in your questions. I love that. Thanks for you longtime following. ________________
The third question comes from JW. This question came from our YouTube Channel so I don’t know where you’re from JW. But you ask:
Keith, what are your views on PPPs on commercial loans?
On my current 8-unit property I am pursuing, I am getting financing offers that all have PPPs.
OK, thanks for the question JW. I think one reason that I chose your question is because I, myself, have owned an 8-unit apartment building that had a 5-year PPP attached to it.
First of all, let me tell you what a PPP is. And it’s funny. I have been at RE meeting in the past and some people that have never heard of them seem incredulous that a PPP even exists.
A prepayment penalty is a fee that some lenders charge if you pay off all or part of your mortgage early. If you have a prepayment penalty, you would have agreed to this when you closed on your home.
Now, in my experience, you don’t often see these on loans for 1-4 unit properties.
I commonly see PPPs on 5+ unit apartment buildings and other commercial loan types.
The way that it often works is that your penalty is less severe as each of the five years transpires. It fades.
For example, you’d have a higher penalty if you pay it off in 2 years than the lower penalty would be if you pay it off in 4 years.
Then with a 5-year PPP, that means that your penalty disappears completely if you pay it off AFTER five years.
PPP loans can obviously be a poor choice if you, say, want to add value to a distressed apartment building and do a cash-out refinance in, say two years.
So, therefore, for long-term buy-and-hold strategies, 5-year PPPs often fit.
I’ve had 5-year PPPs on numerous occasions on my own apartment buildings, and I have never paid any penalty because I have only accepted those penalty conditions when I plan to hold for more than 5 years.
Now that you know about cases when you do and don’t want these as part of your loan, maybe you’re wondering why banks have PPPs at all.
Lenders charge prepayment penalties to provide a borrower with a disincentive for paying off a loan ahead of time… because that causes lenders to lose out on interest income. Lenders have to commit considerable time to evaluate a borrower and underwrite the loan in the first place.
That’s how PPPs work. Thanks for the question, JW.
Stay up-to-date with our newsletter. You can sign up free at: GetRichEducation.com/Letter
We also make sure that you get the 5-part video course where I’m your instructor. It’s one video on each of the 5 Ways Real Estate Pays.
What would it look like if I wrote a short letter about weekly… written by me… sent directly to you… that supplemented this show about real estate and personal finance trends and opportunities.
It can help bring you closer to your financial independence day.
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Yeah, concise, updated intell from Caeli, as always.
All these markets are constantly changing:
Working within them can help get you closer to your Financial Independence Day - that day that your real estate income meets or exceeds all of your basic living expenses.
Underwriting guidelines are staying tight, just like they have for more than 10 years now. Dodd-Frank and consumers proving that they have the ability to repay a loan has really helped with that. That’s a big reason that the mortgage delinquency rate has fallen to ALL-TIME lows.
In fact, that update on second mortgages on rental properties demonstrates that the market still has a pretty limited appetite for that product.
You might want it but it still comes with low LTVs if you can get them at all.
Some brighter new is that ARMs - Adjustable Rate Mortgages - are making more sense than they used to - when compared to your more typical long-term FRM.
There are both risks and rewards to compare there. I like that the good people over there at Ridge help you with decisions like those.
So many great & important shows coming up here on GRE - the return of Tax Advisor Tom Wheelwright, a 2-person housing market panel comprised of Kathy Fettke and I… and… oh geez, the return of Chris Voss - the hostage negotiator from Masterclass.
Remember when I mock negotiated him for a fourplex building last year right here on the show & I lost… to perhaps the world’s top negotiator?
Well, here we go, Chris Voss is returning here to discuss how to negotiate in a housing market when the odds are against you.
What do you think? Should I mock negotiate him again… I don’t know. That’s awfully entertaining for you but I don’t know how many losses I can take publicly like that.
Big thanks to Caeli Ridge today. It’s where I go for my own income property loans. You can too, I’m happy to share that with you at RidgeLendingGroup.com
Until next week, I’m your host, Keith Weinhold. Happy Financial Independence Day! Though you might quit your day job, don’t quit your day dream! |
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Mon, 27 June 2022
“You DO care about what others think of you. That’s your reputation.” -Keith Weinhold People care about your brand when you create value for them. Next, you must reach people. A construction worker in London decided that he wasn’t where he was meant to be in life. He’s our guest, Steve D. Sims. He started asking others why they were wealthy but he wasn’t. A personal branding expert, Steve tells us why the right brand for you is the “authentic you”. When you meet someone, ask them about themselves. They are their own favorite subject. “A brand is what people say about you when you’ve left the room.” -Steve Sims Brands are either solution-based or aspirational. Every person has a brand. Donald Trump was well-branded because he had clear slogans like “Make America Great Again” and “Build A Wall”. The lesson? Be clear about who you are or what you stand for. It’s OK to know what you’re “not”. For example, I didn’t know how to hire a COO for GRE and still don’t have experience managing people. Resources mentioned: Show Notes: Steve Sims’ website: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
Partial transcript:Welcome to GRE! I’m your host, Keith Weinhold. There’s so much to pack into one show today - inflation at its highest rate in over 40 years, the Fed raising interest rates the most in 28 years, rents are going up fast, then GRE’s COO Aundrea Newbern & I on our favorite REI resources. Today, on Get Rich Education.
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Welcome to GRE! I’m your host, Keith Weinhold.
When it comes to developing your personal brand to it’s highest potential, what are those traps you might be falling into that have prevented you from doing so. And…
There was once a construction worker in London and one day he realized that this just wasn’t where he was meant to be in life.
He contributes to the personal brand discussion today too… on this week’s episode of Get Rich Education. ______________
Welcome to GRE! From Franklin, MA to Franklin, TN and across 188 nations worldwide… I’m Keith Weinhold.
With more than 4 million listens, though you’re tuned into one of America’s longest-running and most listened-to real estate shows, today, it’s about how to develop your personal brand which applies most anywhere.
There are a few definitions of a brand. A more strict one is that a brand is an intangible marketing or business concept that helps people identify a company, product, or individual.
OK, I guess that’s pretty good. Another definition of a brand I’ve heard that I like is: “Your unique promise kept over time.” That’s what a brand is.
A big part of keeping promises is doing what you say you’re going to do. Therefore, it’s a commitment.
In my mind, a big part of that is keeping your appointments.
If I’m going to collaborate with someone and we have a pre-determined date & time, I put that on my calendar and I would not change that commitment unless some inordinate or unusual circumstance came up.
That person trusted me with their time and I trusted them with my time. If someone tells me later that they’d like to re-schedule with me, well, often I don’t do it.
With all the choices I have for spending my time, their wavering commitment doesn’t really reflect so well on their personal brand.
Also, other people would have liked to have that time with me & they couldn’t get it because I already committed it to that person that wanted to cancel or postpone.
People that have their act together, well-branded people, commit and show up on time.
I’ll give you an example of a well-branded person that keeps commitments - whether you like him or not, in my experience, that is, yep, Rich Dad, Poor Dad author Robert Kiyosaki.
Robert & I have done a bunch of collaborations in the past, I used to be a writer for the Rich Dad Advisors, he’s been a guest right here with us on the GRE Podcast four times.
Not once have we tried to re-schedule or cancel an appointment on each other.
Even if we plan something a month in advance, we keep it. We don’t have to send each other reminders. It was put on our calendar at the time we made the appointment, so what more do you need?
And you wonder why that guy is so successful. Well, one reason could be that he keeps commitments.
Now, when it comes to your personal brand - which includes your belief systems, your values, commitment levels, there’s one thing that some people need to “get over” - and I think that Hal Elrod & I touched on this here on the show 3 weeks ago.
It’s this myth. There are people that brashly say, “Hey, I don’t care about what other people think of me.”
Oh, that’s wrong. You do too care about what other people think. Because that’s your reputation.
It can be interesting to see the person that says they didn’t care about what other people think, say, have a fake social media account made up impersonating their likeness and embarrassing them.
You had better believe that person that said they don’t care about what other people think… frantically tries to point out that, “Hey, I don’t want you thinking that was me over there spamming you.” Someone is impersonating my account.
“Oh, well didn’t you just say that you don’t care about what other people think?” See you did care… and you should. That’s your reputation.
What if you own a restaurant & people leave negative reviews about your business & you as a businessperson, you care.
DO CARE… about what others think. That’s honesty. But yeah, don’t care too much.
People will care about your brand when they know that you can bring them value. When you start with creating value first, second is how are you going to reach people, and then thirdly, it’s how are you going to create income.
It’s value, reach, then income. 1-2-3
I’m reaching you right now with this show. In fact, there was a time, between 5 & 10 years ago, that even by having a show like this, one could create value, reach, and income.
For new entrants, those days are gone. The podcast landscape became saturated a few years ago and it’s almost impossible to get substantial reach today.
For startups today, a podcast is a lot like a website was 20 years ago.
Neither one stands out just by virtue of having one.
You can have a website just like you can have a podcast, but anymore, how would you ever get enough website visitors to make a difference or how would you attract enough podcast listeners to make a difference.
Even celebrities that have name brand recognition that have crossed over and started podcasts usually don’t get much traction anymore. They are drowned out in a saturated field.
So if you want your brand to reach people today, well, that’s a really long discussion and this isn’t a marketing show. So I’d start with just two pieces of guidance:
#1 - Look for that new media source that isn’t crowded today. It might be that “next” media type. For a while, people thought that it might be voice-activated media like Alexa or Siri. I don’t really know that that’s getting traction like some thought. But that’s the way to be thinking. “What’s next?”
Secondly, if you know of a thought leader that wants to get their message out with a podcast today, rather than starting their own show and entering a crowded field… gosh, starting your own show, you could spin your wheels with many episodes and unlike a website that doesn’t need to be constantly updated…
… a podcast takes regular releases, and production, advertising, sound engineering and marketing, transcription, and a support network of complimentary resources from video to social media and more.
Well, I’ve got a great shortcut to that… in the podcasting world that will save you a lot of time, money, and frustration.
If you know someone that wants to get their message out through a podcast today, the big shortcut is to be a guest on another show that already has a big following.
That way, you’ve outsourced all of the production and marketing and everything else to a proven channel. That can save you hundreds or thousands of hours in your life.
Rather than starting a podcast, be a guest on a few big name shows.
Now that you know how you’re going to provide value to the world, you’ve got your reach too.
Hey, I’ve got more thoughts like this for you on building your personal brand. Before I share those, let’s talk to today’s remarkable guest on how to build your personal brand. ___________
Oh, yeah, a really interesting interview with Steve Sims today.
One thing we discussed is that you can’t snap your fingers and instantly make yourself someone that you’re not. It’s about gradually being who you are becoming.
Now, here at GRE, our show keeps growing and about two years ago, I needed to make a new key hire to run the internal operations here so that I could have enough time clear to make the best content for you every week.
But, gosh, I really didn’t know how to make a quality hire here - like, to bring in an experienced pro.
Realizing I didn’t even know how to hire someone, I looked around my network of people… and I knew that Ken McElroy had employed a Hiring Manager, Jennifer, to help him and I tapped her so that Jennifer could find a COO for GRE.
Jennifer & I worked on the position advertisement, she interviewed the top candidates, narrowed it down to three, and Aundrea was selected.
Then I got Garrett Sutton to help me write the work contract.
So, I had acknowledged that hiring a top pro was beyond my skillset.
And Aundrea is such a professional here - she has her MBA too - that when GRE added more staff later, she’s the one that does the interviewing - not me.
And then… continuing in this vein of, “Don’t pretend to be someone you’re not.”
When we make a new hire here at GRE, I don’t pretend like I have some lofty corporate experience at knowing how to run things around here.
When I first talk to that new hire here, I simply tell them the truth. I say something like:
“I found myself with a show here that a lot of people seem to like to listen to… but don’t have any experience managing people. So I really want you to feel comfortable in speaking up when you think I could be doing something better.” Yeah, I tell everyone something like that.
Alright, well, what did that just do when I told them this?
Steve made a terrific point at the end about brand clarity - being clear on what your brand stands for - whether that’s your personal brand or your company’s brand.
I told you near the start of the show that commitment & respecting other people’s time is a big part of my personal brand. Certainly, attention to detail too.
GRE’s brand clarity is in four words: Real Estate Financial Freedom. Those four words tell you where you & I are going together & how you’re getting there too.
Once you’re in the GRE world and tribe, then we can get more nuanced, for example, with our strategy and brand of “FF beats DF”. And with that, you see how “RE FF” is achieved faster.
I sign off each show with “Don’t Quit Your Daydream” and it’s a trademark that we own here at GRE.
So the point is, be clear and memorable in order to have a successful brand for yourself.
This doesn’t have to be that well-developed and you don’t have to have terms trademarked to have a strong brand.
Juan, my landscaper wacks all the weeds along my fence and doesn’t leave any clippings behind. I can see that his brand was there - imprinted in my backyard.
Speaking of some other well-branded real estate figures, if you want to listen to Grant Cardone & I together here on the show, where we 10X your wealth together, he was with us on Episode 264.
Robert Kiyosaki’s latest appearance here on GRE was last year. You will find he & I together most recently on Episode 358.
As far as today’s chat, you might be interested in SEEING Steve Sims & I’s chat from today other than just listening to the audio here. It might help reinforce some of these branding concept for you.
He’s also just a really interesting figure to see and listen to. You can do that on your YouTube Channel… which is really easy to find and remember… because we’re - I suppose - consistently-branded - ha!
That’s because our YouTube Channel is called “Get Rich Education”. I’d expect that video to be published there by about now.
Personal branding means that there is… perhaps… a better investment than leveraged income property.
That investment… is YOU.
Until next week, I’m your host, Keith Weinhold. Don’t Quit Your Daydream!
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Mon, 20 June 2022
For many, it’s become a scary world with $5-$6 gas, soaring food prices, spiking rents, the medical system is still a mess, and wages aren’t keeping up with inflation. Inflation is at a 40-year high of 8.6%. The Fed raised rates ¾%, the biggest jump in 28 years. For every $1M in real estate debt that you have, you’re benefiting $86,000 each year due to your debt debasement. Affordability has become so bad for wannabe first-time home buyers that increasingly, they’re becoming your renter. Many project rent growth to exceed home price growth this year. Rent.com’s Rent Report shows a 26% annual rent increase nationally. Every 1% in a mortgage rate increase decreases a buyer’s purchasing power by 12%. GRE’s COO Aundrea Newbern, MBA joins me. We discuss our favorite RE information sources. Aundrea expects to diversify her RE portfolio into more markets. She’s been focused on southeast Georgia. Some RE resources we use: www.city-data.com, US Census Bureau data, CNBC.com, HousingWire.com, FRED data, the MLS, AirDNA.co, GREmarketplace.com. When considering adding to your RE portfolio, simply talking to a Property Manager can be more valuable than the best website. Aundrea sees a balanced market at prices $250K+, and a sellers’ market at prices below $250K in southeast Georgia. Days On Market (DOM), Sale-To-List Price Ratio discussed. LTRs are in high demand and low supply. STRs are saturated in many markets. Resources mentioned: Show Notes: Rent.com’s Rent Report: https://www.rent.com/research/average-rent-price-report/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
Partial transcript: Welcome to GRE! I’m your host, Keith Weinhold. There’s so much to pack into one show today - inflation at its highest rate in over 40 years, the Fed raising interest rates the most in 28 years, rents are going up fast, then GRE’s COO Aundrea Newbern & I on our favorite REI resources. Today, on Get Rich Education.
_______________________
Welcome to GRE! From Auckland, NZ to Oakland, CA and across 188 nations worldwide. This is Get Rich Education. I’m your host, Keith Weinhold.
Before I discuss real estate, what’s happening with inflation & interest rates is so exceptional that I want to cover this first.
When the latest inflation reading came in at 8.6%, it dashed hopes that it's peaked. We have no evidence that it’s peaked.
And as I like to say, that 8.6% is just the level that the government is willing to admit to. It's really higher.
It's the third month in a row that it has exceeded 8%.
Treasury Secretary Janet "Grandma" Yellen has already warned of what she calls "unacceptable levels of inflation".
And Yellen looks like my late Grandma Weinhold. Yeah, they look a lot alike. One difference though, is that Grandma was not wrong about inflation.
Another difference between my grandmother and Yellen is that… Janet Yellen never gave me Star Wars action figures on Christmas like my Grandma did.
Well, for many people, especially in the lower middle class, it's become a scary world with devastating $5-6 gas, soaring food prices and spiking rents. (I’ll get to that shortly). The medical system is still a mess. Wages are up perhaps only 5%.
Their quality of life is really suffering now.
Libertarians point out that fiat inflation is theft of one's private property. You earned a dollar. Now your prosperity has been stolen.
Sneaky shrinkflation is stealing from you too. Yeah, you're not imagining it,
Gatorade has trimmed its 32 ounce bottles down to 28 ounces. A small box of Kleenex has shrunk from 65 tissues down to 60.
Package sizes are shrinking faster than Lake Mead, all while producers charge the same price or more. That’s what shrinkflation means.
It's become an awful economic malady for consumers.
So, let’s talk about higher interest rates since that’s what can keep inflation from soaring.
Many interest rate types are based off of the Federal Funds Rate.
Now, I like to look at history to see what typically happens in like scenarios. History doesn’t tell you everything, but many people don’t look at it.
Rewinding three years, this rate was hiked up to 2.5% by early 2019… and the stock market was freaking out by then. Trump even demanded a rate cut. He got it and that, turned stocks around.
Yes, Presidents are supposed to stay independent of the Fed, but, in any case…
Just last week, the Fed Funds Rate was raised up to 1.75%... and the stock and crypto markets have already taken a swan dive off the high board.
Everyone thinks that rates are going to be raised again at the next Fed meeting next month.
So how do you think that equity markets are going to like that? History shows us that they don’t.
But see, history shows us that even when the Fed Funds Rate is raised to 10%, it can take years to quell inflation.
Commodities like housing, food, and energy, often excel in either inflationary times or recessionary times.
That’s where you want to be. Buy & own what people need, not what they want.
These things have a finite supply. Bringing them into existence takes "proof of work".
Proof of work means that it takes real world resources to extract or produce something—like framing roof trusses, growing timber for lumber, mining gold, extracting oil, or growing wheat.
If you held any of these commodities individually, you might merely hedge inflation.
But if you can control an entire commodity by only putting one-quarter or one-fifth of your "skin in the same", then you get to short the dollar too.
"Shorting" means that you're betting that something is going to fall in value—the dollar in this case.
Now you're creating leverage and arbitrage. You're really profiteering from inflation ehre.
Real estate is like a basket of commodities. It is made of: lumber and copper and glass and all kinds of commodities.
So, if you have $1M in real estate debt, it's now being debased at a rate of 8.6%. Great.
This effect alone has increased your prosperity by $86,000 this year—$86,000 this year alone, and that’s besides appreciation, income, tax benefits, and amortization.
Yeah, you’ve got an $86K tailwind.
Do you remember back in 2019 when I did the podcast episode called The Debt Decamillionaire? It was Episode 260. You might remember that episode.
That's when I touted the counterintuitive merits of taking out $10M in real estate debt... with the payments outsourced to tenants.
Now, I know that not everyone has the wherewithal to do that. But if you were able to implement that plan, it has now created an extra $860,000 of annual wealth for you.
Yes, as one of just five ways you’re paid.
If you think that sounds scary - or unconventional - it’s definitely unconventional. Because being conventional gets one nowhere.
So, though you might have not been able to amass that much good debt, I was ahead of the inflation, helping you get out in front of it to take advantage of it. Of course, I talked about it well before 2019 too.
And, no, I sure didn’t know that a pandemic was coming in 2020 and it was going to bring all this inflation this quickly… but that is how things worked out.
Now, if you’re uninitiated on this, if you originate $10M in loans, understand something. Your net worth didn’t just decrease by $10M on the day that you got the loan.
The day that you originate the loan, what happens is that you’ve now got $10M in your asset column and $10M in your debt column.
Leverage amplifies the $10M in your asset column… and then your debt column erodes through both tenant-made principal paydown - and this higher inflation.
Maybe I’m stretching your thinking just merely by discussing 8-figure debt like that.
So why is someone really compelled to be a real estate investor today?
One big reason is that soaring inflation is going to be around for a while.
So last Wednesday, when the Fed raised interest rates three-quarters of 1% - their highest daily increase since 1994.
Understand that higher interest rates decrease demand. There's another name for substantially decreased demand. That is called a recession. I don’t know if we’ll get that far.
Now, capitalism is not inherently inflationary.
Sure, as employers' demand for labor rises, that's inflationary.
But as businesses compete to offer goods and services at the lowest price - which is capitalism - that's deflationary.
Libertarians are quick to point out that America has too much government intervention to be considered a truly capitalist economy anymore. That’s a different conversation.
But some have speculated that politicians are plotting another stimulus check drop on American citizens so that they can deal with inflation.
I really hope that they do not do that. Sheesh, this would be a policy blunder. This would be like shooting a man that's already dead.
This absurd approach of "printing up currency" would be to help people deal with the consequences of... "printing up currency".
If you think that’s preposterous, well…
Quebec is actually doing this. They're issuing $500 stimulus checks to help the Canadian province's residents deal with inflation.
Yeah, that’s really happening.
Soaring gas prices aren’t just painful for summer road-trippers. Because fuel is a critical input for so many goods and services, higher costs are causing havoc across the economy in a lot of places that you wouldn’t expect it… Aviation: Airfares in the US skyrocketed 19% in April from a month earlier, an increase that is almost exclusively driven by a jump in jet fuel prices, United CEO Scott Kirby said. Now, you might have expected that one. But get this… Law enforcement: A sheriff’s department in Michigan instructed its deputies to cut back on visits for non-urgent calls because it had blasted through its fuel budget with months remaining until a new one kicks in. (Yeah, inflation affecting law enforcement!) Emergency services: An ambulance crew in Pittsburgh said it was limiting its service outside of 911 calls after facing a similar budget crunch. Its fuel expense for the full year is typically $50,000, and it’s already got close to that entering June. Landscaping: Lawnmowers and trimmers use gas to make your front yard the envy of the neighborhood. But after absorbing all of the cost increases they can, some landscapers have slapped a surcharge on customers, and others are even looking into electric mowers and propane as an alternative fuel. In any case, a look at history tells us that we could be in for high inflation for a full decade.
So make financial decisions accordingly.
Risk assets are typically really sensitive to big moves in inflation and interest rates.
Major stock indices are down, down, down.
And cryptocurrencies are in an all-out historic meltdown. They’re more volatile than stocks, and many have lost 50%-60%+ of their value just this year. Crypto trading platforms have halted withdrawals Companies cut jobs Panicked investors dumped their holdings The public is finally dismissing promoters' claims of "Hey, I made $50k on doodoo coin. So you can you!". You don’t really hear that lately.
Let's Go Brandon Coin, now worth $0.00. And “Let’s Go Brandon” coin makes Dogecoin look like some sort of respectable family heirloom.
I actually still think bitcoin could have some potential, but…
So then where to look? Where do you go for yield today?
Some feel that the "true rate of inflation" is 15% today. Then that's how much prosperity you lose by storing cash.
(I believe it's wise to hold at least 3-5% of your real estate portfolio's value in cash.)
One place could be oil if you think there’s still a runup to be had there. But oil has performed well so far this year. Gold still hasn’t really awakened despite inflation.
What you can do… is…
Follow the money. Big institutional buyers like American Homes 4 Rent keep plowing money into real estate, especially single-family rental homes.
That’s historically the place to be in times of either high inflation or a recession.
Though the institutional share is increasing, the overwhelming majority of homes are still bought by individuals just like you.
In the fourth quarter of 2021, institutional buyers only comprised 18% of home purchases.
As affordability clamps down on wannabe first-time homebuyers, unfortunately, many of these fine people never make it to the closing table.
Every 1% in a mortgage rate increase decreases a buyer’s PP by 12%.
Mortgage interest rates are now 6%+ on OOs, about 7% on rentals. I believe that the only way houses are going to get more affordable anytime soon is if mortgage rates come down. That’s because home prices aren’t coming down anytime soon.
So what do these priced-out people do? Increasingly, they become your renter.
Rent price growth is predicted to outpace home price growth this year.
Though some measures are lower, Rent.com's Rent Report shows an astounding 26% annual national rent increase.
While a lot of major markets are struggling with a streak of Fed rate hikes that could drag on longer than the final two minutes of an NBA game...
...for real estate investors, the rent just keeps flowing in.
And here’s what it comes down to. Picture this. Like I’ve discussed before, first home prices rise, and then rents follow later.
Picture two waves. Say that these two waves are 18 months apart. The first wave is home prices. Today, prices are still climbing but the wave has likely crested.
That second wave that’s coming in now are the torrid rent price increases.
The trough between the two waves is where the cash flow is worst on new purchases.
And now the second wave - that rent increase wave - is building.
That’s the ah… seafaring here in the rental housing market ocean if you will.
Hey, In the past, I’ve discussed where I’ve invested and what RE types I like to own. Why don’t we hear from GRE’s own COO Aundrea Newbern, MBA about how she’s positioning her portfolio in this environment of normalizing prices & spiking rents. Also, she & I will discuss some of our favorite resources & websites for real estate info. That’s straight ahead. I’m Keith Weinhold. You’re listening to Episode 402 of Get Rich Education! __________________ Yeah, great stuff from Aundrea, as always. We discussed markets. Of course, it’s about the submarket too. As an example, maybe you don’t feel like Erie, PA or Toledo, OH or Grand Rapids, MI are fast-growing markets. Actually, I think Grand Rapids, for one, is growing, but the point is, that even if a metro has a stable population but it’s, say, medical district is booming - like a lot of cities’ medical districts are… you may very well be better off in an OK metro with a booming medical SUBmarket than you are elsewhere. It’s often about that SUBmarket within a metro that really matters to you. There aren’t too many places that you can invest & get yield today. But high inflation is the motivator to do so. Create one login, one time, it’s free & get access to all of our provider at GREmarketplace.com For everyone here… COO Aundrea Newbern, MBA, Content Manager Matthew Blunt, Producer - me &, Sound Engineer, Investment Coach Naresh Vissa, Website Marvin Diaz Jr, Advertising Jake Madoff, I’m your host Keith Weinhold. Don’t Quit Your Daydream!
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Mon, 13 June 2022
The housing market has calmed, but it’s still strong.
The homeownership rate of 65% is poised to fall these next few years. People must live somewhere. This should make for more renters. Mortgage delinquencies have fallen for seven straight quarters. The forbearance program kept people in their homes. “The Great Reshuffling” describes the US housing market since 2020. Inflation flips money upside-down. Focus on prudent borrowing, not saving. International Man Doug Casey joins us. He calls for a “Greater Depression” ahead. For consumers, the costs of energy, food, and housing have become crippling. Doug thinks that the decline of world economies will continue. World cities have more people living on the streets. He thinks that the Fed can’t hike rates very high. It will result in too many debt defaults. Then how will inflation be curbed? Doug thinks you should save, but don’t save in dollars. Are price controls coming? That’s when the government tells companies that there’s a ceiling on the price they can charge for their goods and services. We discuss what you can do to prevent being wiped out in a crisis. I discuss living well vs. austerity. Resources mentioned: Show Notes: More on Doug Casey: Current US debt level is over $30T: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
Partial transcript:
Welcome to GRE! I’m your host, Keith Weinhold. While much of America & the world keeps getting crushed by inflation, you’re profiting from it.
I provide you with a housing market update… then, as higher inflation reduces the quality of life for so many WORLD residents, today’s guest gives both us a global and national perspective on the prospects for a DEpression, today on Get Rich Education. __________________
Welcome to GRE! From NYC’s Brooklyn Bridge to Bainbridge Island, WA and across 188 nations worldwide, I’m Keith Weinhold. This is GRE!
And it’s Episode 401. Now, no, it’s definitely not episode 401(k). No life deferral plans here! Uh, oh excuse me… they’e called… uh, tax deferral plans. Though life-deferral plans would be a more apropos moniker.
I’m grateful that you’re here for another wealth-building week.
Now… asking an angry spouse to calm down is not exactly a tactic that's... effective.
By now, Jerome Powell has been effective at raising interest rates to help America's housing market calm down.
Though mortgage rates have inched lower in recent weeks, they're still 2% higher now than they were a year ago today.
In fact, the rate rise from early March to early May was the swiftest that I've seen in my entire life.
Rates scaled a wall. Clearly, this impacts affordability.
The rate of property sales is a little lower now… off its peak.
It's getting more Darwinian out there. The NAR estimates that 15% of wannabe first-time homebuyers will be priced out of the market this year.
People have to live somewhere. If they can't own, they'll have to rent... or keep living in their parents' basement… that’s an option for some people too.
Right now, the homeownership rate is 65%... and that is pretty close to the average of the past few American generations.
I’ll tell you… that 65% homeownership rate is poised to fall faster than dogecoin.
Well, what this likely falling home ownership rate means is that the renter pool should swell, putting more upward pressure on rents.
That’s what happens. If home ownership goes from 65% to 60%, then America’s renter proportion basically goes from 35% up to 40%.
You know how I've talked about how home prices rise first, then rent increases lag behind? Well, this is it. This is the place and time where rents catch up.
With housing prices, are we set up for a recipe of "housing crash" or is it more like "housing calm"?
Looking at purchase applications, demand is probably past its peak. But housing demand still drastically exceeds supply.
Normal housing supply is about 1.5 million units. We've come up from a jaw-dropping paucity of 376,000 homes back in February. And it's still just 516,000 now (chart).
We're only up a tad from famine-like levels.
America still needs about 300% more inventory just to bring the market back into supply-demand balance.
Housing supply is inelastic; it cannot be increased quickly. It'll take several years to reach balance.
How else can we measure this balance? One way is with days on market (DOM).
Pre-pandemic it was 45 days. Now, despite higher interest rates, it's under 30 days & under 20 days in a lot of markets.
Mortgage delinquencies have fallen for seven straight quarters. The forbearance program worked. One can critique its morality. But it kept people from losing their homes.
As the market entropy - with wild bidding wars & a “free for all”, couldn't last forever - nor was it good that that condition persist - it's still a strong housing market.
Expect a gradual return to a calmer, more normalized condition. Yes, “calmer” market conditions are poised to emerge here.
Hey, pretty soon, you might not have to offer more than the list price for a property.
Expect less competition from all-cash buyers. Sheesh, “all-cash buyers”. What are those zero-leverage psychos doing anyway?
Hey, property inspections are coming back. Imagine that you can ask a seller to fix some things for you and not fear that they'll reject your offer.
So what is the bottom line with today’s housing market?
Rents should keep rising faster than historic norms.
Supply is so low that housing price crash prospects are near zero, probably even through 2023.
20%+ annual price increases still exist in many markets. Nationally, this is calming now.
By the end of the year, home price appreciation should still be higher than the historic norm of 5%.
And you know…
Back on December 1st of last year, I published GRE's 2022 National Median Housing Price Forecast and I also announced it on this show at that time that I expected a 9% to 10% rate of home price appreciation this year.
We’re nearly at mid-year here, and I still like how that forecast looks.
In America, you’ve heard of the Great Resignation or the Great Migration but I think that the term that best encapsulates what’s gone on in American housing since the start of this decade is “The Great Reshuffling”.
Working from home was a significant driver of this "Great Reshuffling" and accounted for more than half of the steep increases in home prices seen during the pandemic. That’s what new research has found by the Nat’l Bureau Of Economic Research.
By now, you’ve got more Americans that are shuffled into place. That found that long-term home with the realities of their new life.
That’s the bottom line. There is a Great Reshuffling, and now people are settling into place so we’re kind of seeing this welcome “calming” of the housing market as we move toward eventually settling into more normal conditions.
Well, hey. Thank you for the “Instant Reaction” from so many of you after last week’s milestone Episode 400 where Hal Elrod & I discuss how to improve relationships and be a person of value.
Greg from the United States remarked: “Two of my favorite people were together in one episode. I’ve been following Keith since the beginning of his podcast and journey… and I love “The Miracle Morning” and practice it habitually.
Roxana from Romania said, This was just phenomenal! A terrific talk that I listened to three times already. Thank you for all the good that you do through GRE! Congratulations for 400 episodes.”
I appreciate the remarks there, thanks.
You know, I want to hear from you, the listener.
If you’ve been following along here and you’ve acted by putting income property into your portfolio and you’re now the beneficiary of inflation & you’re profiting from this inflation… with the Inflation Triple Crown… from time-to-time, we like to have a listener on the show.
If that interests you, reach out to us through: GetRichEducation.com/Contact
There’s no guarantee that we can get you on the show here. We have 50x as many requests to appear on the show as available slots.
But if you’ve had your life impacted, we want to hear from you. You don’t need to be a big name.
In fact, if you’re just sort of salary or wage-earning person that’s had their life impacted by taking GRE principles and putting them into action, I want to hear from you.
Again, get started there at: GetRichEducation.com/Contact
Inflation flips money upside-down.
Though inflation isn’t a new story, most experts believe that inflation is going to stay elevated for a longer period of time here.
I think that some people - everyday people - let themselves be coerced by inflation. So they cut back on grocery spending & complain about car gasoline prices & lament that their 401(k) is plummeting & live small and maybe even live miserable.
Then there’s this increasingly popular narrative that seems to enforce that - you’ll do with less & you’ll be happy about it.
And you hear more about buzzy terms, like, well “Reducing your standard of living is what “sustainable” looks like. Don’t you want to live sustainably?”
And people will try to conserve gasoline consumption by biking in the rain and having a muddy streak up their back.
Now, all things equal. I think that doing this for the environment can be good. That’s fine.
Rather than sustainability, some try to mask the quality of life degradation (from inflation)... justifying it with… well, I’m practicing “minimalism”.
Minimalism. Yeah, I don’t need to go on vacations. Translation = I’m too fearful of my financial security to even get out and see the very world that I live in.
Whoever said that less is more never had more… and why have more when you can “have it all”? I kid a little bit here…
But… if you keep your quality of life because you invested in real assets with good debt… then go ahead and recycle some more consumable items in your household if you want to help the environment.
You don’t get to recycle your life. You’ve only got one of those… at least here on this earth.
Today’s guest believes that the prospect of a Greater Depression lies ahead. Let’s explore this together, today. _________________
Yeah, it’s good to get the bigger-picture perspective sometimes.
Doug feels that future RE price increases could be in question. Well, even if appreciation completely stopped in the future, today you can still lock in low mortgage interest rates & rent that property to others… with persistently high inflation debasing your debt all along.
I brought up price controls in our chat today, which is when the government steps in & says something like, no, gas station, you absolutely cannot charge more than $6 per gallon for gasoline, or no, leaf lettuce grower, you cannot charge more than $4 for a one pound bunch of leaf lettuce.
That ceiling - that price control - has often led to disastrous consequences for economies.
Prices often got high in the first place because there’s a relative scarcity of those goods.
Then if you put a price control on, say, leaf lettuce, then producers are less incentivized to produce. They won’t produce at a loss.
When producers stop producing, then there’s even less reason for anyone to produce the item, making it more scarce, making your consumer choices more narrow & making your life worse.
Price controls can turn out to be a form of austerity.
Then there’s more direct austerity - which is analogous to saying that you cannot run your air conditioner below 80 degrees in order to conserve electricity.
Well, that DIRECT austerity measure also reduces your quality of life… and it’s politically unpopular. A President doesn’t want to institute a direct austerity measure like electricity conservation.
So a price control has more political expediency than austerity but it can have the same drastic result - reducing your consumer choice and quality of life.
If you picked up on what Doug was saying, he said that you can save. But don’t save in dollars. Saving in dollars guarantees a diminishment of your purchasing power.
My take is that saving in dollars guarantees a loss in you & your family’s standard of living. So the best way to avoid a “Greater Depression” at home, is to be vigilant that…
Inflation flips money upside-down. Get out of dollars. Get into real assets & debt.
We’ve built a resource here to help you do exactly that. Get out of dollars, get into real assets & good debt at GREmarketplace.com
You’ve got the best markets & proven providers of income property. Create one login one time and connect with providers right there at GREmarketplace.com
Until next week, I’m your host, Keith Weinhold. DQYD!
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Mon, 6 June 2022
You often relate to other people when you show yourself as vulnerable and fallible. In many contexts, this is even better than acting professionally. Today’s guest, “Miracle Morning” author Hal Elrod, tells us that people spend too much effort trying to impress others. When you give the most, it’s liberating. “You SHOULD care about what others think of you. That’s your reputation.” -Keith Weinhold Once, Hal e-mailed friends, ex-girlfriends and colleagues to seek criticism about himself. That feedback hurt. Everyone wants change, but no one wants to change. Generosity, selflessness, and contribution foster meaningful relationships. I share that viewers were recently critical of my YouTube video. Hal admits that he believes that he’s not a great listener. Hal strives to add value to every single person that he meets. Aundrea Newbern, GRE Operations Lead, joins us for milestone Episode 400. Resources mentioned: Show Notes: Hal Elrod’s books and movie: Hal’s friend John Ruhlin’s book “Giftology”: https://www.amazon.com/Giftology-Increase-Referrals-Strengthen-Retention/dp/1732095604 Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram:
Partial transcript: Welcome to GRE! I’m your host, Keith Weinhold. Being a person of value and building lasting relationships often comes down to self disinterest, empathy, and connection. You’re going to build not just your wealth mindset, but your skillset.
It’s milestone Episode 400, today, on Get Rich Education!
Welcome to GRE! From Cherry Hill, NJ to Cherry Springs Dark Skies Park, PA and across 188 nations worldwide, you’re listening to one of America’s longest-running and most-listened to shows on real estate investing.
That’s our major so to speak… with minors in economics and wealth mindset. I’m your host, Keith Weinhold. You probably know that after 400 episodes.
Today’s guest doesn’t often do podcast conversations like this. But GRE’s Operations Lead, Aundrea introduced me to “Miracle Morning” author Hal Elrod last year.
So Hal is standing by, and then, a bonus, as Aundrea joins me near the end of the show today as well.
Yeah, so here on milestone Episode 400, there aren’t any balloons falling out of the sky or anything. It’s an opportunity to expand your thoughts & mindset & skillset in a different direction that should benefit you both within real estate investing & your broader life outside of it - from relationships with your real estate agent to your spouse.
In human relations, more than ever, people relate more to you as a vulnerable and even fallible person than they do as one that acts strictly like a professional in a lot of circumstances.
The best way to show others in a business relationship (that you don’t know very well) that you’re a real human being & that loosens up both of you & make you laugh is when you go out of your way to point out that when you left home this morning… you’ve got mismatched socks on… and you make some joke about it… something innocuous yet relatable like that.
Then there’s handling ego and criticism in a way that makes you endearing and empathetic.
And by the way, the definition of empathy is “the ability to understand and share the feelings of another person.”
Now, we get overwhelmingly positive feedback and comments about the show here… and I am grateful to you for that, whether it’s through Apple Podcasts reviews, or where you can always reach out if you’ve got a question or concern or suggestion at GetRichEducation.com/Contact… or increasingly, we get more & more comments from you on our Get Rich Education YouTube Channel.
There is a rather robust comments section there…
… and there’s one popular video that we have over there. It has more than 100,000 views and a lot of “Likes” and “Comments”. And I was rather criticized for how I handled this video - it was an interview.
Now, it was the type of video that crossed over, it didn’t bring in our usual real estate investor crowd. It was kind of a hybrid crowd of geography & real estate.
And, again, we get overwhelmingly positive feedback here. But the nice remarks aren’t where you get the lessons, so… I got dozens of critical comments on this video… and these commenters were clearly critical of the way that I handled the interview. It wasn’t the guest.
Comments were rather disparate. Some said that I brought no value to that interview - I was the host with a fairly prominent guest. Others said that I talked too much, some said I talked too little, it just seemed like I couldn’t do anything right with that crowd.
Now, one way that I could have handled it is set a policy here that any negative comments have to be deleted. We could have just deleted them all.
Well, I don’t want to do that. You can disagree. In fact, some say that a disagreement is actually the start of a great conversation.
We could go in there & reply and tell the commenter that they’re being dumb or say something else disparaging.
Here’s how I handled it once I learned about this. I went into the YouTube comments myself, read a bunch of the criticism, and made individual responses to a bunch of them. My response was something like:
Hey, thanks for the feedback. Others seem to take exception to this material too. It is probably in my best interest to read all of these comments, see what I can learn from this, and I’ve got to do better next time. I have clearly disappointed a lot of people.
That was my response. Something like that.
Well, what did that do… it appeared to engender… empathy, really. Some of the detracting commenters then came back to me & said, “Aw, you know, that wasn’t so bad. I don’t think there’s much that you need to change. I still learned a lot from your video.”
See, when I showed the world that I’m listening and that I’m a fallible human being, just like we all are, sometimes it makes the critic come back and sort of repent or even reconsider.
Next week, here on the show, “International Man” Doug Casey & I are going to discuss economics and what he thinks the prospects of entering what he calls “The Greater Depression” are.
Today, Hal Elrod & I on how you can be a person of value and build meaningful relationships… |
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Mon, 30 May 2022
Have you ever met anyone that created wealth with stocks? I haven’t. Why not? Inflation, emotion, taxes, fees and volatility are the reasons. I break this down. The Rule of 72 is what traditional advisers cite as a wealth-builder. I describe why this does not work. Learn why returns from stock and mutual funds are often less than zero. What really creates wealth? Leverage. Learn trade-offs between long-term rentals and short-term rentals. Zach Lemaster joins us. A licensed optometrist and captain for the US Air Force, he’s become financially-free through real estate. We discuss the pros and cons of owning “Build-To-Rent” new construction income properties. It takes patience during the build process. Find Build-To-Rent income properties by e-mailing GRE’s Investment Coach: Resources mentioned: Show Notes: Get income properties by e-mailing GRE’s Investment Coach: When I interviewed the 401(k) inventor: https://www.getricheducation.com/episode/197-inventor-of-401k-ted-benna-joins-us/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: Partial transcript:
Welcome to GRE! Why Don’t Stocks Create Wealth? After answering that, learn about some tradeoffs between LTRs and STRs, and the pros & cons of getting a construction loan and new-build rental properties. Today, on Get Rich Education. ____________________
Welcome to GRE! From Hialeah, FL to Haleakala, HI and across 188 nations worldwide - that’s almost all of them - I’m Keith Weinhold. This is Get Rich Education.
I find it interesting that there are still smart people out there who think that stocks create wealth.
Everyday people could create wealth just by investing in stocks or mutual funds or ETFs?
I’ll tell ya. I have never met anyone in my entire life that has become wealthy from investing in these vehicles.
Now, that’s something that shouldn’t offend stock adherents. That has been my personal experience.
Just asking around here at GRE a bit, I found that our Content Manager, Matthew… he said that he once knew just one person that did get wealthy with stocks… and that is because that person’s company IPO’ed.
OK, well that’s worth knowing. But as for everyday investors, what one might call a retail investor that buys and owns Apple stock or Amazon stock or bought the S&P 500 Index fund from a big mutual fund company… I mean… do you know anyone that ever created wealth from stocks? Or do you even know anyone that ever knew someone that created wealth with stocks.
I'm talking about creating wealth. For example, someone that started at a level of either "just getting by" or starting at a level of "middle class" and then transitioned to "wealthy", simply through shrewd and savvy stock investing.
I think a lot of people invest in stocks just because that’s what the herd does.
But they never ask themselves at all… "Have I actually met anyone that's ever created wealth from stocks?"
And if you run with the herd, you don’t get ahead.
So why is this? How come virtually no one gets wealthy with stocks?
Well, look. We all learn and understand the world through different lenses. I'm about to share the thought paradigm that shifted my own personal journey… and why I have not personally - or through an LLC - or in any way, owned any stock, or mutual fund, or ETF since the year 2014.
Right now, major stock indices are flirting with bear market territory. This means a value loss of 20% from a recent peak.
Recently, the Dow Jones posted its eighth straight weekly loss. That's its longest weekly losing streak since 1923.
Could we say that misery loves companies? Big Tech has shrunk to Medium Tech. Even staid reliables like Apple, Target, and Walmart are tanking.
Other than a one-month virus "flash crash" in March of 2020, many Millennials and Gen Zers have zero experience with a sustained bear market.
None have occurred for thirteen years, which is an unusually long time frame.
Perhaps these investors will "sell low"; maybe they'll stay the course.
Now, investing in the stock market is so common - and so herdlike - that if you’re talking in a general conversation and say: “the market” - people just assume that you mean the stock market.
Well, shouldn’t “the market” be creating wealth for people.
After all, the S&P 500 has averaged a 10% annual return over time. In order to emphasize compounded returns, something that traditional, old school advisers often cite is "The Rule of 72".
You've probably heard of it.
What you do is take the number 72, divide it by your annual percent return (10), and that's how many years it takes your money to double.
Therefore, an S&P 500 investor should double their money every 7.2 years. Well, that sounds pretty good to most people..
Then over the decades, several doublings should ensure a fantastic retirement and perhaps even a taste of wealth.
But why doesn't it?
Why doesn’t it provide a fantastic retirement most times? And why doesn’t it put people on that wealthy echelon… ever?
This is due to five chief drags—inflation, emotion, taxes, fees, and volatility. I’ve glossed over that before. But lets see how this all negates what so many investors think is some kind of good return.
Let's subtract each one from this 10% unadjusted stock return.
Inflation Many experts agree that the CPI, currently 8%+, understates the true rate of inflation. It could be 15% now.
But let’s just say that long-term, true inflation averages 5%.
Yes, you could make the case that it’s more. But let’s just use 5% inflation. Well then...
…your long-term 10% stock return minus 5% inflation = 5% inflation-adjusted return.
Emotion Everyone knows you're supposed to "buy low" and "sell high". But many do the opposite.
Why?
One has difficulty buying low because prices have often fallen for a long period of time before the dip. The predominant emotion is discouragement.
When stock prices have gone down, down, down, like they have this year, so many people get emotional and sell low… and they justify that by saying… I’m sick of losing money… and if I sell, I guarantee that I’ll stop losing money. So many sell low.
But on the flip side, why isn't everyone selling high? It's because prices have grown. It's hard to sell out of upward momentum. Up, up, up, up, up, friends are making money. You’ve got FOMO. This emotion is euphoria. This makes people buy - maybe not at the peak - buy they often buy higher that what they sold for.
But despite all this, most people believe that they're above-average investors—despite the statistical impossibility. This effect is called illusory superiority.
It's like how 7 out of 10 people believe that they are above-average drivers.
People often sell lower & buy higher.
We'll just say this takes one's 5% inflation-adjusted stock return down to 4%. That's being kind.
Taxes & Fees Long-term capital gains taxes start at 15%. The highest ordinary income tax rate is 37%, which is the short-term capital gains tax equivalent.
Those percentages are what get taken out of your profit - that’s what eats into the entire 10% return that we started out with here.
Even if your funds are sheltered in a 401(k) or many retirement account types, yes, you could get tax-deferred growth. But you must begin paying taxes in retirement.
Fees are something that vary quite widely.
So… an S&P 500 investor's return adjusted for: inflation, emotion, taxes, and fees is often below 2%. Maybe far below 2%.
We're not done.
Volatility So many people miss this.
The Rule of 72 and other projections are based on a fixed annual rate of interest.
It's called the compound annual growth rate (CAGR).
Our example… with this Rule Of 72 assumed a smooth, exact 10% return every single year.
This is irresponsibly quixotic. The real world doesn't work this way.
Let's say that a price falls 20%—which again is a bear market. Now, you must gain 25% to get back to "even". That's just math.
Now, if it falls 40%, it must gain 66.7% just to return to sea level.
Using a smoothed CAGR diminishes the damaging effect of return volatility.
So let's take our 2% return that's already been adjusted for: inflation, emotion, taxes, fees. Now subtract out this volatility.
And now, you can see why real rates of return are often less than 0% for stock, mutual fund, and ETF investors. Maybe they’re minus 3%. Maybe they’re minus 12%.
Real stock returns often crumble faster than a Nature Valley granola bar. They're not good for you either—full of sugar and canola oil.
Note that I even used what many consider "good times" in my example—where we started with a 10% unadjusted return.
This is an audio format here on GRE Podcast Episode #399 so my analysis wasn't deeply technical nor replete with formulas for pinpoint accuracy.
You might remember when we had Garrett Gunderson here on the show a few times. He really goes deep on how stock & mutual fund investors typically lose prosperity year-after-year and Garrett thinks that I’m being kind when I say that a stock investor’s real return is “0”.
It helps you begin to understand why you rarely—if ever—met anyone that acquired wealth with these vehicles.
About ten years ago, while working at the state Department of Transportation in an 8' x 10' blue cubicle, I began to realize some things:
Later, I interviewed the actual man that invented the 401(k) plan, Ted Benna.
Benna told me directly that the plans don't serve people the way they were intended. This helped complete my catharsis.
And my interview with Ted Benna is recorded. You might remember that episode. That was GRE Podcast Episode 197… if you haven’t heard it.
Yeah, the guy that actually invented the 401(k) in the late 1970s. That’s here on Episode 197.
So, now you understand much of why I haven't owned any stock, mutual fund, or ETF-based investment at all since 2014.
This show is called “Get Rich Education”. So I could talk about anything related to wealth-building and stay on-point.
But now you understand why I don’t discuss stocks.
Real estate has some drags too. For example, investors often underestimate their maintenance and repair costs.
Ultimately, the fact that Real Estate Pays 5 Ways™ is why it's superior. It's how anything less than a 20% to 25% fully-adjusted rate of return is disappointing (learn more).
Because real estate is an illiquid asset, this acts as a healthy barrier against "panic" buying or selling. Illiquidity diminishes the deleterious effects of emotion and volatility.
I do know investors who have created financial freedom through real estate, a lot of them, and I'm one.
If I can distill it down into one word for you, the short story about why I've met countless people that have graduated from middle class to wealthy through real estate is leverage.
Some of this is natural bias because I hang out in real estate circles, so I just tend to meet more of these people.
To stock investors, leverage is only available to more sophisticated types. Even then, it often comes with margin call risk. It's in a more limited measure than its wide availability in real estate.
Bear markets… like we have right now in stocks make people re-evaluate things.
To a younger investor that's potentially experiencing their first sustained stock bear market now, it's important to understand that...
...generally, stocks are not a game designed to build wealth for everyday people anyway.
Times like these make people revert to fundamentals.
Ultimately, your success as an investor hinges upon your ability to provide others with value. Be a person of value in the world.
There have been few times in modern history when owning real estate demonstrates more intrinsic value than it does today.
You're providing others with what has increased in usefulness and is historically scarce in supply… at the same time.
Wealth comes down to your ability to be valuable.
When it comes to residential real estate, there are so many ways that we can segment it. Later on today, we’ll discuss new-build properties vs. existing properties and what’s going on in those markets today.
We can also parse the space with LTRs vs. STRs.
When we define that, of course, as the name would allude to, it is based on the duration of resident stay.
Depending on the jurisdiction and more, a rental period of under 30 days could be considered a STR (some people refer to these as AirBNBs or VRBOs)… or even up to lease periods of less than 6 months could be considered STR.
LTRs have more predictable long-term income… because a tenant often signs on for a lease period of one year or more… and LTRs are also more recession-resilient.
STRs have lower occupancy - but because the daily rate is so much higher, they can be more profitable than LTRs.
When you look at any investment, it’s so fundamental to understand who you serve. Back to my point about stocks, it helps you understand how you can be a person of value.
In LTRs, you serve families, roommates, and everyday mom & pops.
Until just five years ago, STRs principally served two groups of people - Vacationers & business travelers. With what happened in the world starting in 2020 with the virus, the STR community was concerned that the business traveler would go away & not come back.
But it didn’t seem to matter, because increasingly, over the last 5+ year, you have more & more digital nomads and WFA-types that rent STRs.
LTRs - Midwest & South, away from city center STR Location - resorts, beach communities, ski resorts
HOA limits are something that you have more of with STRs. STR lodging or rental tax to the resident, you also get to charge the resident with the cleaning fee
Property Mgmt. costs tend to be 8-10% of each month’s for the owner of LTRs. For STRs, you’ll often pay 20% or more since there are more resident turns & more advertising & listings to manage.
When it comes to financing, you’ll often find LTRs to have more availability than STRs. This is huge… since leverage is what really creates wealth.
Damages: STRs tenants pay upfront and usually place a CC on file to cover any damages. So there is some more protection that way.
One great piece of REI guidance is that the best STRs are the property types where if that market dried up, you could fall back onto them and use that same property as a viable LTRs.
To summarize what you’ve learned so far today…
Coming up, a guest & I are going to discuss today’s opportunity on brand new construction rental property.
That’s straight ahead. I’m Keith Weinhold. This is Get Rich Education. ______________________
Oh, yeah. Some good content from our guest on the pros and cons of using a construction loan with these new-build rental properties. You sure don’t have to go that route if you don’t want to.
For this batch of properties, and it is an ongoing batch of constantly refreshing properties, if you want to get to the front of the line, go ahead and e-mail our investment coach Naresh.
You not only get access to available properties - SFHs up to four-plex & sometimes larger, existing build & new-build, some properties conducive to STRs at times - though most are LTRs… some really inexpensive properties, at times less than $150K - they would tend to be existing, renovated properties, not new ones.
For access to all those property types and free coaching, contact Naresh here.
You can do that at: naresh@getricheducation.com
Coming up here on the show… next week, for milestone episode 400 - it is Miracle Morning author Hal Elrod & I, discussing investor mindset and relationship-building in real estate. Yes, it look longer than I expected to get Hal & I together at the same time. That finally happens next week. Our Operations Lead here at GRE, Aundrea, is expected to be here with you & I for that show next week too.
The week after Hal Elrod, the “International Man”, Doug Casey joins us. Last time he was here, we discussed ideals like liberty & freedom. This time, it’s going to be about economics & it’s usually pretty gloomy commentary with Doug… but he keeps it real.
Then, down the road, Rich Dad Tax Advisor Tom Wheelwright is back on the show with us yet again to help you cut your taxes toward zero.
So with Hal Elrod, Doug Casey, and Tom Wheelwright coming up… I’d say that one inspires you, one depresses you, and one informs you.
Hal being the inspiration Doug being the source of the depression - he knows that I kid, I was joking with Doug Casey about that last time And then, Tom Wheelwright being informative with… seemingly… some new tax plan that he has to tell you about.
Then after that, negotiation expert Chris Voss returns to the show. You might have seen his masterclass course.
So… GRE is so stacked with great shows in the near future here.
In inflationary times, there is no better place to invest than in real estate.
I mean, even if you bought a property with no loan & with no tenant in it, real estate would be an inflation hedge just based on that alone… just based on it’s capital price tracking inflation.
But then you get the leverage where you can 4X or 5X inflation… while also having your debt debased… while also having your cash flow OUTPACE inflation since your biggest expense - the mortgage - stays fixed.
This is just one of so many reasons why real estate is what’s made more ordinary people wealthy than anything else.
I really encourage you to get started… not only do we have this new coaching service steeped in GRE principles… but it’s also free… and we also have available properties.
I encourage you to reach out to our friendly GRE Investment Coach, Naresh at
Until next week for Episode 400, I’m your host, Keith Weinhold. DQYD! |
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Mon, 23 May 2022
Are “coffin homes” coming to the United States? This is concerning. Housing is so expensive that people live in cocoons. A new Biden plan makes efforts to increase American housing supply. Finally! We need help on the supply side, not the demand side. I explore recession prospects with you. During 7 of America’s 8 recessions (over the last sixty years), home prices only fell once. What Really Matters: “If you had invested $1,000 in JP Morgan in 1882, you’d be dead today.” You can borrow against your RE portfolio’s value with a cash-out refinance, tax-free. It’s like “lump sum cash flow”. Add properties to your portfolio through our international network at GREmarketplace.com Resources mentioned: Show Notes: GRE Video: What Really Matters https://youtu.be/Yhkvjg-gj9Q California’s Cocoon-Like Pods: https://www.cbsnews.com/news/sleeping-pods-startup-800-a-month-brownstone-shared-housing/ Biden’s plan to increase American housing supply: American Median Home Price Since 1963: https://fred.stlouisfed.org/series/MSPUS Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 16 May 2022
Will you be banned as a real estate investor? Some jurisdictions consider adopting this stance to keep soaring prices in check.
Some workers cannot afford to return to the office. If they leave home, they would have new expenses for gasoline, meals, parking and the big one—child care. Of the “5 Ways Real Estate Pays”, historically: three are now high, one is low, and one is the same. Caeli Ridge joins us. She’s the President of Ridge Lending Group. They specialize in income property loans. Despite higher mortgage interest rates, investor-centric mortgage companies like Ridge haven’t seen much decline in business. Learn why. Their “All-In-One Loan” can reduce the amount of property interest that you pay over time. It’s a 30-year line of credit with high flexibility. Use Ridge’s All-In-One Loan Simulator to see if you save: https://ridgelendinggroup.com/aio-loans/ We discuss interest-only loans (which I like) and negatively amortizing loans. The latter got borrowers in trouble during the Global Financial Crisis; LTVs were as high as 115%. Interest rate lock periods are up to 90 days at Ridge. Investing out-of-state is easy. A mobile notary comes to your home, office, or even on vacation at a resort. Ridge helps you sequence your investor loans, taking a long-term, holistic approach to your financial freedom. Resources mentioned: Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE All-In-One Loan Simulator to see if you save: https://ridgelendinggroup.com/aio-loans/ Dallas’ proposal to limit REIs: JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 9 May 2022
The mad scientist of multifamily is here today. Neal Bawa is a data scientist. He keeps emotion out of real estate for investors in his $947M portfolio. He believes that higher mortgage interest rates are a smaller obstacle than the Fed’s currency creation and destruction. He says: “Accept the risk.” We discuss investor confirmation bias. Neal thinks American cash flow will keep diminishing. Of all emerging trends, Neal believes that the work from home trend is among the most substantial. Learn more about Neal at www.MultifamilyU.com or by searching “Neal Bawa”. The blockchain is a digital ledger. It allows everyone to access information publicly and securely. It allows for the democratization of information. Blockchain looks to disrupt the real estate title industry. Exorbitant title insurance fees could go extinct. Tokenization is easier with blockchain. This means that you can sell real estate shares without friction. Institutional investors are poised to own more of the real estate market, taking share from mom-and-pop operators. Resources mentioned: Show Notes: Neal Bawa’s resources: Google search “Neal Bawa” Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 2 May 2022
Rents are spiking 13-15% annually in America today. When they rise, they rarely ever fall again. This is why rent amounts are called “sticky”. Learn why.
Even when I was a landlord during the GFC fifteen years ago, my rents didn’t fall. Rents are skyrocketing due to:
Next, I talk with an Alabama / Florida builder about how he overcomes today’s material supply chain and labor shortage difficulties. They have a 93-day build time. How? They store windows so that they cannot run out. Cabinets have been a problem so bad that they’ve had to leave homes 99% complete until cabinets were ready. Lumber and petroleum product price volatility has been a challenge. They have their own division for titling vacant land for future building. Alabama has America’s 2nd-lowest property taxes. As an out-of-state investor, you get to pay property tax in the state where you own property, not where you live. To get started with Alabama income property, start at: www.GREmarketplace.com/Alabama This build-to-rent provider uses fixtures like: LVP, granite or quartz countertops, stainless steel appliances. LTRs and STRs will be available shortly. Start at: www.GREmarketplace.com/Alabama Resources mentioned: Show Notes: Get started with new-build AL & FL long and short-term rentals: www.GREmarketplace.com/Alabama Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 25 April 2022
The housing crash is 100% certain. That’s because it’s a supply crash, not a price crash.
I define a price crash as a loss in valuation of 20% or more. Here are the bubble factors that I consider in today’s show: Price, inflation-adjusted price, interest rates, affordability, bond yields, personal incomes, foreign buyers, equity position, housing supply and more. From 2018 to 2022, I tell you about my recent housing forecast history. Redfin shows us signs of a housing market slowdown. For Jacksonville investment property, start here: www.GREmarketplace.com/JAX Properties that don’t cash flow with a 20% down payment often do with a 40% down payment. But your leverage falls from 5-to-1 down to 2.5-to-1. Jacksonville has low cost properties, favorable climate, strong population growth, and growing industries like the Port Of Jacksonville. Get started with Jacksonville property at: www.GREmarketplace.com/JAX Resources mentioned: Show Notes: Get started with Jacksonville property: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Our YouTube Channel: www.youtube.com/c/GetRichEducation Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 18 April 2022
One niche that people are passionate about is investing in self-storage facilities (SSF). SSFs are recession-resilient and there’s less to maintain. Your “tenants” are often cardboard boxes, not humans. This makes it easy to manage. Tenants often expect to stay for 6 months, but stay for 3 years. A 10 x 10 storage space might rent for $200. You could increase the rent by 10% to $220. They won’t move out due to a $20 increase, but you got a 10% rent hike across all your units. The best SSF locations are accessible, for example, near an expressway interchange. SSFs are little more than 4 pieces of sheet metal, a floor, and a door. You can invest alongside today’s SSF expert guest, Dave, at: www.gremarketplace.com/selfstorage This business model: Buy property from a mom-and-pop operator, add size and scale, and sell to a REIT, all in a 3 to 6-year span. One must be accredited and invest at least $50K. Investors receive reports quarterly. SSF cash flow is modest, typically 3-7%. This is an equity play, where you could 2-3X your funds on the sale at exit time. Learn more and get started at: www.gremarketplace.com/selfstorage Resources mentioned: Show Notes: Get started. Learn more about self-storage investing: www.GREmarketplace.com/selfstorage Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 11 April 2022
Why are home prices surging? I’ve got 10 big reasons and break down every one. Some reasons are not obvious. America’s residential loan-to-value ratio is just 31%. Interest-only loans are my favorite loan type. You don’t need to make any principal payments. Most people think interest-only loans awful. I explain why they’re often so advantageous. You meet GRE’s Investment Counselor, Naresh Vissa. For off market property, e-mail him at naresh@getricheducation.com. Naresh’s service is free to you. He guides you through the purchase process. He owns 8 properties in 4 states himself. Contact Naresh. GRE has 50+ properties available today - SFR up to 5-plex, LTR, STR, and more. Resources mentioned: Show Notes: E-mail GRE’s Naresh Vissa for off-market property: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “GRE” to 307-213-3475 or: By texting “GRE” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Make passive income with apartment and other syndications: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 4 April 2022
Uncertainty is high. Inflation is spiking, supply chains are unreliable, and COVID keeps hanging around.
Russia’s invasion of Ukraine threatens to make inflation and supply chain reliability worse. Amidst this backdrop, today’s guest, Richard Duncan, discusses prospects for a US recession. Richard reiterates that the US needs credit growth of at least 2% annually (inflation-adjusted) to avoid a recession. In a recession, nearly every asset class would be affected. The wealth-to-income ratio’s importance is discussed. The Fed has begun hiking interest rates. They soon plan to begin destroying dollars with quantitative tightening. Richard wrote a new book, The Money Revolution. It includes a history of the Fed, and points out that China is positioned to become more powerful than the US. But the US can stay in power if it creates tons of money in order to finance infrastructure, green energy, biotech, nanotech, and more innovation. Richard maintains that capitalism no longer drives the economy. It’s “creditism” and “consumerism”. I ask Richard about the risk of creating more dollars than production and innovation. Contrary to seemingly everybody, Richard believes that the Fed is a force for good. Resources mentioned: Show Notes: Get MacroWatch for a 50% discount with the code “GRE”: www.RichardDuncanEconomics.com Richard’s new book: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “RICH” to 307-213-3475 or: By texting “RICH” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 28 March 2022
Now you have to earn your money twice. The first time is when you work for it, the second time is when you must invest it to beat inflation. My explainer on why higher interest rates slow inflation.
“Inflation is legalized counterfeiting. Counterfeiting is criminalized inflation.” -Robert Breedlove When wages don’t keep pace with inflation, I explain why it destroys families. We compare short-term (STR) and long-term rental (LTR) property in southwest Florida. Get started with buying properties yourself at: https://gremarketplace.com/SouthwestFlorida Of course, Florida is an in-migration hotbed. Home price appreciation and rents are both 10%-20%+ year-over-year. Today’s LTR tenants seek: infill lots, more square footage, an extra bedroom / den, and grocery store proximity. STR tenants want a pool. You really make your money November through April. LTRs have more recession resistance than STRs. LTRs have more predictable, year-round income. STRs often have $4,000-$5,000 a week of rent income. They have a 20% management fee. You can charge the tenants a cleaning fee. You owe utility costs and ~$100 monthly yard maintenance. Single-family rental properties are 1,500-1,900 sf on a ¼ acre lot, LVP flooring, granite countertops, stainless steel appliances, 9’4” ceilings, and concrete block exterior walls. Pricing is in the low $300Ks to low $400Ks. Long-term rents are $2,000-$2,400 / month. To get started with buying single-family homes and duplexes (long-term and short-term rentals) in southwest Florida, start at: https://GREmarketplace.com/SouthwestFlorida Resources mentioned: Get started with SW Florida long-term and short-term rentals: https://GREmarketplace.com/SouthwestFlorida Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “RICH” to 307-213-3475 or: By texting “RICH” to 307-213-3475 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 21 March 2022
Bitcoin Beach is a real world place. It’s in the tropics and has zero property tax. It’s on the Pacific Ocean. It reminds many of coastal California, but without the sky-high prices. Both bitcoin and the US dollar are legal tender here. Unlike the US, there is zero capital gains tax on bitcoin. A beautiful 40-acre property is being developed on a hill overlooking Bitcoin Beach. Besides luxury homes, condos, and tiny homes, the property plan includes Pacific views from every unit. Home sizes can range from 300 sf up to 10,000 sf. Novel concepts are planned in the community: a gym that powers energy for bitcoin mining, earth embed homes, aquaponics eco-farm, orchards, gardens. More common amenities like a pool, restaurant, and bar are planned. Get started with Bitcoin Beach real estate at: https://gremarketplace.com/BitcoinBeach There’s an option for residency in a second nation for you. Resources mentioned: Get started with Bitcoin Beach real estate: https://gremarketplace.com/BitcoinBeach Show Notes: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 14 March 2022
Today’s high inflation rate is poised to go higher. The latest CPI was up 7.9%. Home prices hit an all time high of $364,000 per Redfin, up 16% annually. Safety factors, building restrictions and the environmental movement all contribute to higher home prices and more homelessness. Larry Reed, the longtime former President of FEE - the Foundation for Economic Education - joins us. He believes that free market principles incentive the best of human behavior - prudent risk-taking, hard work, innovation, and ethics. Larry is an expert on the Great Depression. He relates those lessons to today’s economy. We discuss real estate, economics, inflation, interest rates, and taxes. Learn about the danger of the government “giving away free stuff”. One fault with government intervention is favorable short-term action that results in long-term destruction. Resources mentioned: Show Notes: Foundation for Economic Education: Lawrence W. Reed’s website: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 7 March 2022
The greatest tax gift that your government gives real estate investors could be the 1031 Like Kind Exchange. This allows you to defer your capital gains tax and depreciation recapture.
There is no limit to the number of times that you can do this during your lifetime. You can make millions more with 1031 Exchanges. But there are some specific rules to follow, like the 45-day identification period and 180-day timeframe in which to close upon replacement property. You must use a Qualified Intermediary (QI) to facilitate your exchange. Learn the pitfalls that nullify one from doing an exchange. This is a highly educational show. Resources mentioned: Show Notes: Get started with a 1031 Exchanges: Sign up for our free “Don’t Quit Your Daydream” newsletter: www.GetRichEducation.com/Letter Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE JWB’s available Florida income property: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 28 February 2022
Residential and warehouse real estate have been two hot sectors. With spiking house prices, investors are pushing out first-time home buyers. This increases the size of the renter pool. Historically, when mortgage rates rise, so do home prices. It’s the opposite of what most people think. For income property loans, get started at: RidgeLendingGroup.com Learn what it takes to qualify for a conventional loan on investment property: down payment, credit score, debt-to-income ratio, etc. There’s an update on today’s refinance climate. Appraisals are generally keeping up with today’s hotter appreciation rates. Learn about the easiest loan to qualify for that you’ve potentially ever experienced - the “DSCR”. Resources mentioned: Get mortgage loans for investment property: RidgeLendingGroup.com or call 877-74-RIDGE Sign up for our free “Don’t Quit Your Daydream” newsletter: www.GetRichEducation.com/Letter Show Notes: www.GetRichEducation.com/episode/386 JWB’s available Florida income property: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 21 February 2022
Inflation hit its highest since 1982. The government admits that the CPI is now 7.5%.
Even if your wages don’t keep up proportionally with inflation, learn about how to profit from inflation with real estate. What happens when your tenant can’t afford today’s higher rents? You get answers. Get my prediction on what will happen in a higher interest rate environment. Our COO Aundrea Newbern, MBA, joins us. She tells us about the snowball effect of scaling up your real estate portfolio. In a tight market with low real estate inventory, rather than the buyer waiving their inspection, it’s often better to shorten your due diligence period. Aundrea tells us how to pay yourself a W-2 salary through your LLC. This helps you qualify for more mortgage loans. E-mail Aundrea about finding Georgia income property at: info@getricheducation.com Resources mentioned: Sign up for our free “Don’t Quit Your Daydream” newsletter: www.GetRichEducation.com/Letter Show Notes: www.GetRichEducation.com/episode/385 Get mortgage loans for investment property: JWB’s available Florida income property: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 14 February 2022
A laid-back lifestyle in a tropical climate typifies “Margaritaville”. Margaritaville is a popular and flourishing real estate brand. There’s also short-term rental income stream for you here. A new location is opening in Belize. It is closer to more of the US than Hawaii, and with warmer water. It has the largest reef in the hemisphere, good for snorkeling, diving, and fishing. This under-construction project has Caribbean beachfront. The partners with the development are the largest private employer in Belize and the nation’s largest law firm. Learn more about owning a Margaritaville villa in Belize at: www.GREmarketplace.com/belize My guest & I discuss the lifespan of tourist locales. They emerge with visits from young backpackers. Later in the cycle, once “discovered”, it matures into visits from affluent tourists. This is a rare opportunity for an everyday investor to partner with a strong brand - Margaritaville. You can own a villa, use it for a few weeks a year, and rent it out for the remainder of the year. You can leverage Margaritaville’s STR management partner. Prices start in the low $200Ks. Real estate contracts are brief and written in English. In Belize, you don’t need title insurance. The government backs all titles. In-person tours are available and encouraged. Our show guest really wants to show you Belize. Learn more and get started at: www.GREmarketplace.com/Belize Resources mentioned: Get started with this opportunity at: Show Notes: www.GetRichEducation.com/episode/384 Get mortgage loans for investment property: JWB’s available Florida income property: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 7 February 2022
Housing prices surged 20% annually. Rents have now caught up, rising 19.3%. New homebuilding hit a 45-year high. There are three ways to measure housing market vibrancy: months of available inventory, sale-to-list price ratio, and days on market (DOM). The level of available housing is now just one-fifth of what it needs to be. A new poll shows that “work from home” trends benefit both bosses and employees. I tell you about my Ecuador trip. Our Operations Lead, Aundrea Newbern, MBA interviews me about real estate and my personal life. Resources mentioned: Show Notes: Today’s American housing supply: https://fred.stlouisfed.org/series/ACTLISCOUUS Video: Fitness & Financial Freedom, Age: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Get mortgage loans for investment property: JWB’s available Florida income property: New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 31 January 2022
A high school teacher reveals the sad state of financial education today. Most students still think the path is: go to school, get good grades, go to college, get a job, work until you’re 65, and then start enjoying life.
Dan Sheeks is a Denver, Colorado-based high school teacher and real estate investor. He enjoys working with teenagers. He also volunteers for the Colorado Attorney General to advance financial education. Just last month, Dan released a book with Bigger Pockets: “First to a Million: A Teenager’s Guide to Achieving Early Financial Independence”. See it here. He discusses solutions for teenage financial independence: 1) When you turn 18, get your first credit card 2) “House hack” real estate by age 21 3) Good debt vs. bad debt - do teens understand? 4) Mindset 5) Avoiding mistakes like “meme coins” 6) Saving Dan tells us the two main reasons why there’s a pathetic lack of financial education in school today - funding and politics. Resources mentioned: Show Notes: If you have a child, get Dan’s book: First to a Million: A Teenager’s Guide to Achieving Early Financial Independence Dan Sheeks’ online community for young people: Dan Sheeks’ e-mail (It’s OK to message him): dan@sheeksfreaks.com To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Get mortgage loans for investment property: JWB’s available Florida income property: New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 24 January 2022
There are two main ways to create wealth. Debt-free is not one of them. If you only use your own money, you’ll stay small. Learn why most investments are like baseball cards. One market in America has such astounding resilience that prices were hardly dented in the 2008 financial crisis. Median home prices are still below $300K here today. Dallas-Fort Worth now spans 11 counties, with 7.6M people. This real estate provider focuses on the DFW suburbs. That’s where the growth is happening. Importantly, they use a plan for mitigating their higher Texas property taxes. Housing here appears undervalued and underpriced. People are often underhoused. Due to supply shortages, next day appliance delivery has disappeared. This real estate provider has plenty of available inventory right now. They offer you in-house property management at 6.5%. SFR prices are $160K-$225K. This is an actionable resource where you could buy property and benefit from the five ways you’re paid at: www.GREmarketplace.com/Texas Resources mentioned: Show Notes: Get started with Texas property: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Get mortgage loans for investment property: JWB’s available Florida income property: New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 17 January 2022
You’ve been making $438 each night in your sleep. That’s one result if you’ve been following my plan. I compare real estate’s annual performance to: stocks, gold, silver, bitcoin, bonds, and oil. This state ranked 3rd in Moody’s Housing Affordability Index, has the 7th-largest domestic economy, and is a two-hour flight from 75% of the US & Canada. This state is also home to offices for Google, Facebook, Carvana, and more. In 2020, it ranked 4th of 50 states in U-Haul’s net in-migration. You can still achieve a full 1% rent-to-value ratio here. Get started at: gremarketplace.com. Today’s guests own a turnkey company with three models: Signature Series - fully renovated Instant CashFlow Series - occupied, not rehabbed Equity Advantage Series - vacant, not rehabbed This provider has stopped charging leasing fees for property management. Remarkable. Resources mentioned: Show Notes: Get started with Ohio property: www.GREmarketplace.com/Cincinnati Check out Flip & Dani Lynn’s new podcast: Freedom Through Passive Income To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Get mortgage loans for investment property: JWB’s available Florida income property: New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 10 January 2022
A homeowner’s average equity position is now $294K. That’s what the median home value was not long ago - now it’s one’s equity. I give a quick recap of major economic and real estate events this past year. Last year, there was an average $56,700 of equity growth per property. Our new website, GREmarketplace.com is rolling out. Register and get access to all of our: turnkey providers, pro formas, and sample properties. See videos of us interviewing property managers too. Jeff Deist, President of the Mises Institute joins me. The Mises Institute champions liberty and free market principles. Learn more about them at www.Mises.org Jeff & I discuss: real estate and rental markets, inflation, work from home, cash, low interest rates, debt. I ask Jeff how long he thinks we’ll see real price inflation through the 2020s decade, and prospects for a double dip recession. Get our free wealth-building “Don’t Quit Your Daydream” Letter. I write it myself: www.GetRichEducation.com/Letter Resources mentioned: Show Notes: Mises Institute website: To learn more about eQRPs: text “EQRP” in ALL CAPS to 72000 or: By texting “EQRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel. Get mortgage loans for investment property: JWB’s available Florida income property: New Const. Florida SFHs & multifamilies: Best Financial Education: Get our free, wealth-building “Don’t Quit Your Daydream Letter”: www.GetRichEducation.com/Letter Top Properties & Providers: Follow us on Instagram: Keith’s personal Instagram: |
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Mon, 3 January 2022
With higher property prices, what rent-to-value ratio makes sense today? I answer this thoroughly. Lower RVs make sense today due to: lower interest rates, new-build properties, the timing of equity harvesting and more. GRE Marketplace is coming soon. Tom Wheelwright joins us to help you reduce your property tax and cryptocurrency tax. Learn why some states have hig |
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