Get Rich Education (general)

Learn how to keep insidious thieves from stealing your wealth - taxes and inflation.

Higher taxes = lower inflation. I tell you why.

The IRS does not recognize inflation in regard to capital gains.

I discuss property tax, income tax, and sales tax state-by-state. Many coastal states have high property tax and income tax; southern states have high sales tax. 

A recent Harris poll showed that work-from-home types value saving money on lunch and gas more than being with their family or having extra time! (Geez.)

Subscribe to our Don’t Quit Your Daydream Letter here

Tom Wheelwright joins me. Tax brackets are marginal, so use your childrens’ lower tax brackets.

The last dollar you earn is taxed at your highest taxable rate.

The first dollar of a tax deduction comes off your highest taxable rate.

Tax credits beat tax deductions.

Reducing your property tax can be fairly easy. 

Resources mentioned:

Connect with Tom:

www.Wealthability.com

Show Notes:

www.GetRichEducation.com/320

Mortgage Loans:

RidgeLendingGroup.com

EQRPs: text “EQRP” in ALL CAPS to 72000 or:

eQRP.co

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 Construction Turnkey Property:

CashFlowAndGrowth.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode320_.mp3
Category:general -- posted at: 4:00am EST

Before you buy foreign property, consider: access in rainy season, infrastructure, water pressure, safety, community, and developer track record.

Learn about a real estate performance bond and why it’s important. 

Own tropical tiny homes, including over-the-water property, as low as $92K. Start here: www.getricheducation.com/tinyhomes

Subscribe to our Don’t Quit Your Daydream Letter here

These exotic, affordable homes in vacation destinations are in Belize, Nicaragua, and Panama - both beaches and mountains.

As a foreigner, you can own full title to these Central American properties.

These homes are truly “tiny”, often 300 - 400 square feet, a little larger than an RV.

You can live in the property, or rent it out.

The developer has been in business 20+ years. I personally met them nearly 5 years ago.  

You can get 50 - 80% financing. Use self-directed IRAs, gold, or crypto for purchase.

To get started, get the Tropical Tiny Homes Report and contact the provider through: www.getricheducation.com/tinyhomes

Resources mentioned:

Tropical Tiny Homes Report & Provider Contact:

www.GetRichEducation.com/TinyHomes

Show Notes:

www.GetRichEducation.com/319

Mortgage Loans:

RidgeLendingGroup.com

EQRPs: text “EQRP” in ALL CAPS to 72000 or:

eQRP.co

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 Construction Turnkey Property:

CashFlowAndGrowth.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode319_.mp3
Category:general -- posted at: 4:00am EST

In this recession, people still ask me how housing prices and demand are surging. I explain.

Then, I discuss the highest cash-flowing hands-off investment I’ve ever heard of. Learn more here.

Subscribe to our Don’t Quit Your Daydream Letter here

Cash use is increasing, not declining. In fact, the CEOs of PayPal and Venmo even say that cash will be in use for decades.

An individual investor like you can own a lot of 6 ATMs.

ATMs are profitable because some users pay a $2-$3 surcharge to access a $20 bill.

$2,184 is your monthly cash flow. The operator has never missed a monthly payment nor their pro forma projection. ~19% ROI plus tax benefits like bonus depreciation.

In the pandemic, some ATM locations have fared worse, like airports; some better, like a Walgreens. Many people want to withdraw & store money in the pandemic.

If you’re an accredited investor, learn more about ATM investing and contact the provider through: www.GetRichEducation.com/ATM

Resources mentioned:

For ATM Report & Provider Contact:

www.GetRichEducation.com/ATM

Show Notes:

www.GetRichEducation.com/318

Mortgage Loans:

RidgeLendingGroup.com

EQRPs: text “EQRP” in ALL CAPS to 72000 or:

eQRP.co

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 Construction Turnkey Property:

CashFlowAndGrowth.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode318_.mp3
Category:general -- posted at: 4:00am EST

“Miracle Morning” author Hal Elrod tells us that to turn the impossible into the inevitable, you need unwavering faith and extraordinary effort.

Subscribe to our newsletter here

“The Miracle Morning” has been translated into 37 languages and sold more than two million books. More than 500,000 people actively practice his work daily. 

Hal overcame a car accident where he was clinically dead, then a rare form of cancer. This made him genuinely grateful for every moment thereafter.

In your life, you will pursue what you feel is probable, not possible.

The purpose of your goal is not to reach a goal.

It’s to attain the qualities and characteristics of becoming the best version of yourself on your way there.

Hal’s new book is called “The Miracle Equation”. 

Resources mentioned:

Show Notes:

www.GetRichEducation.com/317

Hal Elrod’s website & books:

The Miracle Morning

Book recommended by Hal:

Man’s Search For Meaning - Victor Frankl

Mortgage Loans:

RidgeLendingGroup.com

EQRPs: text “EQRP” in ALL CAPS to 72000 or:

eQRP.co

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 Construction Turnkey Property:

CashFlowAndGrowth.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode317_.mp3
Category:general -- posted at: 4:00am EST

Will home prices stop rising soon? No. I tell you why. It’s my prediction.

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Four reasons home prices will keep rising in the short and intermediate-term are:

  1. Undersupply. America is already undersupplied 2.5 - 3.3 million housing units.
  2. Pent-up demand. More 18-29 year-olds live with their parents now at any time since The 1930s Great Depression. When they get jobs & move out, pent-up housing demand will be released.
  3. Homebuilder roadblocks. The top factor is wildly elevated lumber costs that has made some builders stop building.
  4. Population growth. America grows at 4,800 people every day, nearly 2 million annually.

Many Americans have been suffering from a lapse in federal pandemic stimulus relief. Hear a Nancy Pelosi clip about this.

I discuss hands-on ways to improve your properties’ appeal: paint, flooring blemishes, light fixtures, cabinets, vanities, front door.

GRE’s own Aundrea Newbern joins us. Learn about finding properties and tenants with guaranteed rent income.

You can find these properties and tenants at: GetRichEducation.com/Section8

Concerns about the HUD Section 8 Program are: you must screen tenants harder, property inspections from the HUD case manager. 

Section 8 tenants have more motivation to pay rent because they don’t want to lose their housing voucher. They have longer tenancies and are less demanding during tenancies.

If you’re pre-qualified for a mortgage loan and want investment property with guaranteed rent income, start at: GetRichEducation.com/Section8

Resources mentioned:

Show Notes:

www.GetRichEducation.com/316

Find Section 8 properties & tenants:

www.GetRichEducation.com/Section8

Get the Don’t Quit Your Daydream Letter:

www.getricheducation.com/letter

CNN: Blitzer, Pelosi on stimulus:

https://www.cnn.com/videos/politics/2020/10/13/nancy-pelosi-intv-stimulus-bill-trump-offer-coronavirus-tsr-vpx.cnn

Post free to find Section 8 tenants:

GoSection8.com

U.S. and World Population Clock:

www.census.gov/popclock

Mortgage Loans:

RidgeLendingGroup.com

EQRPs: text “EQRP” in ALL CAPS to 72000 or:

eQRP.co

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 Construction Turnkey Property:

CashFlowAndGrowth.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode316_.mp3
Category:general -- posted at: 4:00am EST

Learn how to avoid getting ripped off from a: 

Vacant land scam

Foreclosure relief scam

Loan flipping scam 

Escrow diversion scam

Rental ad scam

Common consumer scams

More

Subscribe to our newsletter here

Asset Protection Attorney Garrett Sutton joins us for the fourth time on the show.

His new Rich Dad Advisor book, Scam-Proof Your Assets, releases this month.  

Scammers sell other scammers lists of names of gullible people.

Tell scammers that you want to share their deal with your attorney or CPA. They’ll run away.

Those that get scammed tend to be: less educated, vain, both young & old, crave a good deal, feel isolated, and are more impressionable.

Scammers are often someone you already know; they’re close to you.

Resources mentioned:

Garrett Sutton’s New Book: 

Scam-Proof Your Assets

Corporate Direct for LLC Formation:

1-800-600-1760

CorporateDirect.com

Report and track scams at:

ftccomplaintassistant.gov

Mortgage Loans:

RidgeLendingGroup.com

EQRPs: text “EQRP” in ALL CAPS to 72000 or:

eQRP.co

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 Construction Turnkey Property:

CashFlowAndGrowth.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode315_.mp3
Category:general -- posted at: 4:00am EST

Your goal might be $15K of monthly real estate income and a $3M net worth within twenty years.

To achieve this, I explain why getting trapped in the future is as bad as getting trapped in the past. 

Start early, understand there will be bumps in the road, don’t overanalyze, the worst case scenario almost never occurs, and don’t “time the market”.

Today’s guest offers both rehabbed and new construction rental homes in a thriving market where the numbers work - west Florida. 

If you’re pre-qualified for a mortgage (or paying all-cash), get started buying investment property at: GetRichEducation.com/WestFlorida.

Buying one property, one time won’t change your life.

When you’re young, you’re more likely to want a low-priced rental property with higher cash flow and higher maintenance = existing construction.

When you’re older, you’re more likely to afford a higher-priced rental property with lower cash flow and less maintenance = new construction.

House flippers have spending money; buy-and-hold investors build real wealth.

At its core, it’s simple - rent houses to people.

Resources mentioned:

West Florida Income Property:

GetRichEducation.com/WestFlorida

Mortgage Loans:

RidgeLendingGroup.com

EQRPs: text “EQRP” in ALL CAPS to 72000 or:

eQRP.co

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 Construction Turnkey Property:

CashFlowAndGrowth.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode314_.mp3
Category:general -- posted at: 4:00am EST

Learn how income tax rates, capital gains tax rates, the 1031 Exchange, the estate tax and more will change - or not. 

The outcome depends upon whether Donald Trump gets a second presidential second term or Joe Biden is elected as the new president.

Subscribe to our weekly newsletter here.

Tom Wheelwright, the most recurrent guest in show history, joins Keith.

He’s the world’s foremost expert at reducing your taxes permanently. He can help you at Wealthability.com

Resources mentioned:

Tom’s company:

Wealthability.com

The Tax Foundation:

www.taxfoundation.org

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode313_b.mp3
Category:general -- posted at: 4:00am EST

You can only have one job. But you can own as many rental properties or vending machines as you want.

Trillions flow through the economy. Build a device to divert this flow to you; you'll see that money is an abundant resource.

Dr. Michael Ehrlich from NJIT’s Martin Tuchman School Of Management joins us to discuss asset bubbles and real estate technology.

We discuss financial bubbles, narrowing credit spreads, debt, overleveraging, NYC overbuilding and financial technology.  

Dr. Ehrlich is a general advocate of borrowing for cash-flowing residential real estate today.

Solutions to avoid bubble damage include: residential real estate, water, agriculture, even connectivity.

I discuss real estate technology: 3-D printed homes, autonomous cars, iBuying, indoor drones, virtual tours & staging, remote online notarizations.

Subscribe to our weekly newsletter here

Resources mentioned:

NJIT’s Martin Tuchman School Of Mgmt.:

https://management.njit.edu/

Dr. Michael Ehrlich e-mail:

ehrlich@njit.edu

iBuyer:

Opendoor.com

Virtual staging:

Rooomy.com

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode312_.mp3
Category:general -- posted at: 4:00am EST

What does the CDC eviction ban really mean to you?

Learn how to win home price bidding wars in today's hot market.

GRE's own Aundrea Newbern joins us!

Besides working with GRE, Aundrea is an active RE agent in Brunswick, GA. She owns 28 rental doors and has her MBA in Finance.

She owns long-term rental SFHs and apartments, including some Section 8 tenants. She self-manages.

Rock & Roll Hall Of Famer Flavor Flav “drops in” to congratulate the show on 3 million listener downloads.

Aundrea tells you nine ways to avoid being outbid in today’s hot real estate market:

1 - Pick a buyer agent that’s courteous to the selling agent.

2 - Write a letter or send a video to the seller.

3 - Agree to use the seller’s preferred title agent, lender.

4 - Offer more than the asking price. 

5 - Offer more earnest money than the customary 1-2%.

6 - Add an escalation clause.

7 - Simply ask what it takes to get your offer accepted same-day.

8 - State that you’ll pay out of pocket in case there’s a low appraisal.

9 - Consider waiving the inspection. (This is risky.)

Subscribe to our weekly newsletter here

Resources mentioned:

CDC Eviction Moratorium:

https://www.nytimes.com/2020/09/16/business/eviction-moratorium-renters-landlords.html

Aundrea Newbern email:

Aundrea@GetRichEducation.com

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold



Direct download: GREepisode311_b.mp3
Category:general -- posted at: 4:00am EST

The pandemic has fueled remote work.

A New Yorker paying $4,000 rent in a 1 BR apartment can now work from Florida, paying $1,500 rent in a 3 BR & 2 BA single-family home.

Central Florida benefits from this in-migration. 

Florida has law that favors landlords, zero state income tax, a low cost of living, beach proximity and of course, warm weather.

Get the report and learn more at: www.GetRichEducation.com/Orlando

These Central Florida Build-To-Rent properties are brand new. 

They often appraise for $5,000 to $10,000+ more than your purchase price. That’s built-in equity.

Your rent-to-price ratio is often 0.8% to 0.9% for single-family rentals. The average tenant stay is 3+ years in this new construction.

Get the report and learn more at: www.GetRichEducation.com/Orlando

The growth and economic diversity in the region is astounding.

The time is likely “now”: brand new construction, high rent occupancy, cash flow, low interest rates, low insurance premiums, low $160K - $220K property cost.

Resources mentioned:

Central Florida Build-To-Rent:

GetRichEducation.com/Orlando

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode310_.mp3
Category:general -- posted at: 4:00am EST

Should you rent or own your home? 

Host Keith Weinhold reveals the biggest homeowner myths.

Complete episode transcript below. Read along.

Subscribe to our weekly newsletter here

Resources mentioned:

Business Insider: Rent vs. Own:

https://www.businessinsider.com/buying-a-home-instead-of-renting-isnt-always-better-for-your-savings-2017-11

Housing Wire: Homeowners Wish They Were Renting:

https://www.housingwire.com/articles/49743-quarter-of-us-homeowners-wish-they-were-renting-instead/

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Welcome to Get Rich Education. I’m your host, Keith Weinhold. Is homeownership a sham? Is it a rip-off? 

 

When it comes to the home that you live in yourself, is it better for you to pay rent to a landlord, or own that home yourself? 

 

For your primary residence, what should you do in your specific life situation? You’ll learn today … on Get Rich Education.

 

——————-

 

Welcome to GRE! From Syracuse, Sicily, Italy to Syracuse, New York and across 188 nations worldwide. I’m Keith Weinhold, this is Get Rich Education.

 

Usually on this show, you learn about how buy-and-hold rental property, when bought strategically - produces wealth. We’ll return to that next week, but today ...

 

… it’s about your primary residence. And, when we talk about, should you own your home or is it better for you to pay rent to a landlord - think about how important this is. 

 

Because whether I’ve had the chance to meet you yet or not, there’s one thing that I definitely know about you, and that is, you are always going to live … somewhere.

 

Your housing expense is one of the biggest financial expenses in your life.   

 

Despite that it’s such a substantial financial decision for you, some people revert to orthodoxy - this FLAWED orthodoxy where they think that owning is always better. That’s not true.

 

I really want you to watch your mind as I tell you this today, because there are very likely a few tripwires installed there … and I am about to hit some of them. So do your best to remain calm … if you must.

 

Though more people are waking up to the fact that renting is sometimes better, I still think that popular culture has long reinforced this misplaced notion that owning is always better.   

 

“Are you a homeowner, Greg? No. I rent. Oh.” 

 

Haha! That’s from the classic comedy movie “Meet The Parents”. Owen Wilson & Ben Stiller - while Robert De Niro - the future father-in-law was party to that chat where he’s thinking that the homeowner is the more apropos suitor for his daughter than the renter is. 

 

Look, if you can OWN a home and your monthly housing payment is $2,500, but you could instead PAY RENT on an equivalent home for $1,500 - now your cash flow has increased by $1,000. That’s money in your pocket today that could be re-invested at a rate of return.

 

Now with your $2,500 housing payment in this example - that’s more than just a mortgage payment remember. 

 

When you own, your HOUSING payment consists of mortgage principal & interest, property tax, property insurance, maintenance, repairs, utilities and more. You’ve got to add all that up to get to $2,500. 

 

What about that TIME it took you on HOW to repair the leaky faucet when you owned the home? Factor that in.

 

Now, the homeowner might reply, but at least part of my $2,500 payment is building equity for me. Yes, it is. A minority of that payment is building equity. You’d rather have equity - you’d rather have principal paydown than lose it to interest. 

 

And you’d rather have equity than nothing.

 

But, as I’ve discussed extensively elsewhere - so I won’t do that again here - home equity is unsafe, illiquid, and it’s rate of return is always zero.

 

You can probably repeat that to me at this point - ha! 

 

Also, what’s more important in your life? Cash flow or equity? Cash flow is what creates financial freedom. As an investor in the pursuit of freedom, in fact, you want to CONVERT your equity to cash flow. 

 

Remember, in this $1,500 rent payment vs. $2,500 housing payment scenario on your primary residence … it’s the renter that has the additional $1,000 cash flow and the homeowner that builds the equity.

 

Let me remind you. If you would like to READ along as you listen to the show today or you know someone that’s hearing impaired, you can read the complete transcript to this episode at GetRichEducation.com/309. 

 

That’s GetRichEducation.com/309 to see all the Show Notes and the entire written transcript for this episode. 

 

Well, some people think that buying & owning their primary residence is: "LIke paying rent. Except you get to keep it." Well,that has caused millions of people to buy houses that they later regret. 

 

I know a young, married couple - Jerome and Jessica - they’ve got two kids. They wanted to move from snowy Anchorage, Alaska to Las Vegas, Nevada. They had lived their entire lives in Anchorage and were tired of the snow and wanted some heat. 

 

You think that they might discover an overcorrection problem, btw? Vegas is in the middle of the Mojave Desert. But anyway ...

 

They had owned their Anchorage home for five years before they put it up for sale. That was the first home that they ever owned - starter home.

 

Had they been renting that home - they could have moved where they wanted to in as little as a month. 

 

But as homeowners, by the time they made all the make-ready repairs to the home, got it listed for sale, had to repeatedly prepare their home for showings - meaning they had to intermittently get their home in pristine condition to make it look good for showings - uprooting their lives every time … they finally sold it in 4-½ months by the time their buying got their financing in order & inspections & appraisal & the deal actually closed.

 

If Jerome and Jessica had been renters instead, they could have been on their way in a month.

 

Plus, over the five years, their home appreciated a little, but not enough to offset the 4% closing costs when they had bought five years earlier, all the maintenance & repairs that they had put into place DURING the five years they lived there, plus then they then had to pay a real estate agent a 5% commission when they sold.

 

They not only lost money by owning, they lost time, they lost mobility. They didn’t have liquidity.

 

For Jerome and Jessica, they got a lesson. “Paying rent is not the same as throwing money away.”

 

Well, I can tell you, Jerome and Jessica moved to Vegas one year ago now. They have been renting from Day One there, they’re still renting, and they have no plans to buy in Vegas anytime soon.

 

“Paying rent is not throwing money away” because you get the BENEFIT as using that space as a home, a place to sleep, prepare food, eat, shower, study, entertain - how in the world is that throwing money away? It isn’t. 

 

You know that I’ve told you on this show before that paying rent is not throwing money away just like the five hour flight that you took from Boston to Phoenix last year wasn’t throwing money away.

 

No one called it throwing money away when you paid $500 to “rent” that airline seat for five hours. Why, because you had the BENEFIT of travelling somewhere.

 

Sheesh, how far are people going to take it with this nonsense that “Paying rent is like throwing money away?”

 

Your gym membership is $50 a month. But you didn’t get to take a set of the 40-pound hex dumbbells home after six months of membership did you?

 

Gosh, how far would you take this nonsense line of reasoning?

 

You like to go mini-golfing? I’ll bet that you paid some portion of your fee to rent the put-put club and a little orange golf ball for two hours.

 

How are you going to think - that you now expect to own equity in a put-put golf club that’s all nicked-up and was used by 80 different people? Sheesh, that’s ridiculous. 

 

You had the benefit of a gym membership because you’re healthier. You had the benefit of mini-golfing because you like some recreation. You didn’t throw money away.

 

What about renting an RV for a week? You didn’t throw money away. You had the benefit of using it.

 

This whole misguided notion that paying rent for a place to live is throwing money away is a … replete farce. 

 

But that also doesn’t mean that renting your primary residence is always better than owning either. 

 

Well, let me give you some numbers here. This will help you debunk that notion that - ad infin-I-tum, homeownership is better.

 

Look, in a place like Manhattan’s Tribeca neighborhood, a small apartment has, just for simplicity, say a rent-to-value ratio of three-tenths of one-percent.

 

That’s a lousy deal if you’re the landlord and an awesome deal if you’re the renter. 

 

So, what that means is that market rent is only $300 per $100K worth of property. That’s that three-tenths of 1%.

 

That ratio might then be $3,000 of rent on a $1M apartment in Tribeca, Manhattan.

 

But look, in a place like Memphis, Tennessee or Little Rock Arkansas, the rent-to-value ratio might be a full 1%. 

 

Now see, if you’re a renter here, you’d have to pay $1,000 for every $100K worth of property. (Not $300 like Manhattan)  

 

Well, in that case, it makes more sense for you to own your home. 

 

BTW, it also then, makes sense for you to own Memphis real estate & rent it to others - because for every $100K of Memphis property you own, you’d RECEIVE $1,000 in rent. You’d RECEIVE a full 1%.

 

Generally, on the coasts, it’s better to pay rent for your primary residence - and in the heartland, it’s better to own that real estate - whether you’re renting it to others OR living there yourself.

 

But there are so many more considerations here than just numbers and geography. So, what else makes sense to your specific situation?

 

And before I go on, please don’t think that I’m “against” the real estate AGENT industry. That’s not true. Gosh, I’ll stand up for a GOOD real estate agent when it makes sense.

 

For example, when it comes to selling your home, you might not want to pay a 5 or 6% sales commission to an agent. Some people would rather sell it themselves and pay 1 or 2%.

 

But what some sellers fail to consider is that an agent might help you get 4% more for it because they know how to reach more buyers, and do it fast, and save you a lot of hassle and uncertainty.

 

So, there’s just one example of how I’ll stick up for agents when it makes sense.  

 

But, getting back to should you own or rent your primary residence, I’m here to help you decide what’s best for you. You’ve ultimately got to decide. 

 

I WILL tell you when it’s better to be a homeowner than rent shortly. But first ...

A recent survey from Freedom Debt Relief shows that homeowners have many regrets when it comes to the purchase of a new home, mostly because they are largely unprepared for the initial cost and the ongoing financial responsibility that comes with homeownership. 

Of the 1,028 people surveyed, 29% said homeownership makes them feel anxious and stressed, while 26% said the cost of owning a home is a burden and they wished they were renting instead.

When it comes to affording house payments, it was Millennials and Gen Z homeowners who said they are struggling the most. Half of these homeowners said property taxes turned out to be higher than they expected, while 52% said their monthly mortgage payments are too high. 

With renting comes an always-available maintenance team and the ability to call the landlord when there is a problem.

Conversely, homeowners have to mow their own lawn, paint their own walls and fix their own leaky faucets. 

And some of these tasks have homeowners shelling out more cash than they planned, with 59% saying maintenance and repairs are more costly and require more effort than expected, and 60% saying they cannot afford needed upgrades. 

That said, it seems the idea of owning a home is still attached to the concept of what it means to succeed in this country, with 59% of homeowners saying they believe that owning a home is still part of the American dream. 

I’d like to add that the survey was conducted “pre-pandemic”.

 

Most people think that owning a home is a financial asset.

 

That's debatable.

 

The Rich Dad school of thought is known for saying that, "A home is a liability, not an asset". 

 

An asset puts money into your pocket every month. A home is a liability because it takes money out of your pocket every month.

 

Of course, in the conventional sense, a home is in your asset column and it’s mortgage is in your liability column.

 

Though owning a home is often a poor financial investment, you still tie up a lot of money in your humble abode. 

 

You really have more than two choices in how you live - it’s actually more than just rent or own. 

 

You have four choices in how you live: you can own your home, pay rent to a landlord, be homeless, or live with your parents – ha!

 

We’re only discussing two here: Rent vs. Own.

 

Fannie Mae associates “Home ownership with the American Dream.” in their marketing slogan. 

 

In America, how many people own their homes vs. rent their homes anyway? About 2/3rds own and ⅓ rent. The homeownership rate is currently about 68%. 

 

Well, I’ve probably got your wheels turning now on “rent vs. own”. 

 

Let’s break things down further. I’ve got 16 factors that I came up with here for you to consider, many of which you’ve never thought about before - on this.

 

Often it’s an exercise in pros vs. cons for you. Often, it’s rationalizing a series of trade-offs for you. 

 

The first of these 16 factors is ...

  • Mobility. Many people move more often than they expect. Renting keeps you nimble. With a new job opportunity or life change like marriage and kids, your mobility is an asset. A homeowner that moves a lot gets eaten up and beaten up with closing costs, make-ready expenses, and sales commissions. Kinda like where I told you about Jerome, Jessica, and their two kids.

 

  • Choice. There are more homes for sale than there are rentals, especially at the higher end. See if you want to rent a high-end place, they’re often really hard-to-find, especially in a more rural area. Renting of high-end homes limits your choice. You might feel like you HAVE to buy to get what you want.

 

  • Equity Buildup. Equity is the difference between what your home is worth and how much you owe on a mortgage. Homeowners build equity; renters don’t. Equity is like a forced savings plan. But equity is an awful investment with zero return. Your return is zero because the presence or absence of home equity has nothing to do with whether or not your home appreciates. (Yet you would rather have equity than nothing.) Houses make terrible “banks” - they’re bad places to store cash.

 

  • Liquidity. Though most homeowners build equity, it’s difficult to access. To tap your home equity, you must prove to a bank that you qualify again, wait months, incur costs, and you still might be denied access to the equity.
  • Opportunity Cost. Many tie up a 20% down payment or more in home equity. As I’ve stated, those equity dollars are low-use, zero return dollars. Instead, your chunk of money can be earning a return for you elsewhere.

 

  • Sunk Cost. This is an overlooked killer for homeowners. I mentioned some of them already. Mortgage loan closing costs, constant home maintenance and repairs, property taxes, utilities, landscaping, snow removal, leaf raking, rototilling, replacing obsolete fixtures and appliances, roofing, and painting costs are never fully recouped when you go to sell it. Renters bear almost none of these sunk costs. Renters aren’t losing time at Lowe’s & Home Depot either.

 

  • Control. Homeowners have a big advantage here. The peace of mind of knowing that a landlord can’t tell you to move is priceless. You have a feeling of belonging, an anchor. As a homeowner, you can knock out a wall, renovate your kitchen, or add a fence. Make it yours. Control is a big homeowner “plus”. 

 

  • Appreciation. Renters don’t experience price appreciation. They commonly even have to endure rent price increases. Homeowners with loans benefit from financial leverage, which can amplify your wealth in an appreciating environment (though you’re lucky if this offsets ongoing opportunity cost and sunk cost). Inflation becomes your friend for homeowners - and when you’ve only got a tiny down payment into a home that you own - leverage AND inflation are both your friend.

Now, a homeowner may also get an unusually outsized equity benefit if they buy in the right place at the right time. For example, if they had bought 10 or more years ago in a place that’s appreciated a lot - for example in Charlotte, Nashville, Austin, or Boise. That could be a homeowner boon there.

But if you buy a home and it’s value doesn’t appreciate - or even goes down - plus each month you paid more than you would have as a renter - plus you’ve lost time doing repairs & maintenance, then you’re REALLY lost out as a homeowner.

  • Tax Advantages. Homeowners often get the mortgage interest deduction. But this is just one small consideration. As our most recurrent guest in GRE history, Rich Dad Advisor Tom Wheelwright says, “Don’t let the tax tail wag the dog.” To say that “I’m buying instead of renting for tax reasons.” That’s a really weak argument.

 

  • Low mortgage rates. Homeowners can tie up long-term fixed interest rate debt at these historically low rates. Economists believe they’ll stay low for a long time into the future. This is a homeowner advantage.

 

  • Price and Rent-To-Value Ratio. If a home costs less than $250,000, own it. If it costs more, pay rent. If the monthly rent is under $700 per $100,000 of home, rent it. If rent costs more, own it. That’s that approximate seven-tenths of one percent rent-to-value ratio - or rent-to-price ratio. This formulaic approach indicates how much “home” you have the benefit of living in per dollar paid. Regional and other factors can skew these numbers. Of course, when we get that general with the numbers, there are going to be more exceptions.

 

  • Community formation. Owning your home provides both you and your neighbors a feeling of “belonging.” Homeowners are more likely to look out for the common good of the neighborhood. That helps everyone. People feel more fulfilled when they’re part of something greater than themselves.

 

  • Travel. This is so simple yet everyone overlooks this. Have you been to New York City? New Hampshire? Iowa? Arizona? Florida? Alaska? Ecuador? If you haven’t even gotten out to see the very world that you live in, be a renter until you’ve found the place that fits your interests. 

Some people find themselves owning a home for a few years, then later realize that they don’t even live in a region that fits their interests.

Maybe you don’t want to move far away because you want to be close to family. That’s legit. Family can be a good reason for NOT making a distant move. It’s about what’s important … to you.

 

  • Personal cash flow. If it costs substantially more to own a place rather than rent that place, then rent it…and vice versa. Homeowners that divert too much of their income into housing payments are what’s known as “House Poor.” This stifles your opportunity to travel, invest, and provide opportunity for your family.

 

  • Natural disasters. Areas subject to frequent earthquakes, hurricanes, and floods clearly tilt to the renter’s advantage. Even if you’re adequately insured as a homeowner, these catastrophes are worse for homeowners. No one thinks about that stuff until it happens.

 

  • Consumer advantages. Owning rather than renting can give you higher credit card limits and more favorable insurance rates.

Those are the 16 factors that I compiled to help you figure out what makes sense for you.

 

A decided stigma still exists with renting. But you don’t live your life for the Joneses, you live it for you.

 

I’ve got more for you on: “Should you rent your home or own your home.?

 

Hey, have you had something on your mind that’s made you want to write into the show, but you just haven’t done it yet?

 

Well, I think that it’s been a while since I mentioned our Contact Page here on the air. 

 

You can get ahold of us at GetRichEducation.com/Contact.

 

What you can do there is either send us a WRITTEN message - or you have the option of leaving some audio - basically leaving a voicemail. 

 

I really like it when you leave us a voicemail personally, because it’s something that I might be able to play & answer on the air for you.

 

I like to hear your voice.

 

We get a ton of messages - and we’re grateful for them. But understand that we sure can’t give personal replies to every one of them.

 

You can either write in OR leave a voicemail, again, at GetRichEducation.com/Contact.

 

More on rent vs. own, next. I want to try to help you make the best decision that you possibly can. I’m Keith Weinhold. This is Get Rich Education.

____________________

 

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

 

Homeowners have a higher net worth than renters. 

 

The average homeowner net worth is $195,000.

The average renter net worth is only $5,000. 

 

That is a substantial gap. The means that homeowner net worth is nearly 40 times what renter net worth is.

 

Does that alone mean that owning is better? No. I think that it does TILT toward owning.

 

But see, to even BE a homeowner and qualify for a mortgage, you would have already needed to have assets and income … in order to cross that threshold.

 

I don’t think these figures are a good reflection of WHERE the homeowners wealth actually came from - was it equity building through leveraged appreciation & principal paydown or how much income they earn from their job?

 

That’s information that I’d like to see. 

 

Of course, in the greater context of Get Rich Education - net worth matters. Not as much as cash flow, but it matters, because net worth can be converted into cash flow.

 

Nonetheless, that net worth stat still tilts to the homeowner favor, just not as much as one thinks.

"People often say that buying a home was the best investment they ever made," that’s what Ne ela Hummel said - the chief planning officer at financial planning firm Abacus Wealth Partners. 

"The problem is that their return as investors is often worse than they think. 

When calculating how much they made on a home, most people do not include the out-of-pocket costs they incurred through things like replacing pipes, repairing roofs, or numerous other unexpected expenses that come up. As a tenant, your costs are fixed, but as a homeowner, you are on the hook for any repair that comes up."

That’s the end of what they said.

Those needed repairs to your home may involve you doing a lot of research online - and watching YouTube videos - to find a solution or simply paying a repairman to remedy the issue. 

Either way, you’re on the hook for investing more time and money into your home when something breaks.

Now, I’ve got another test on renting vs. owning your home.

 

Is a home an “investment”? Do you see your primary residence as an “investment”.

 

Well, what is an “investment” anyway? What is the definition of “investment”.

 

We are an investing show - and we take deep consideration of both the value of your time and your money here, so …

 

The definition of “investment”, per the Oxford dictionary is … “the action or process of investing money for profit or material result.” That’s it.

 

So is your home an investment? I think some people see it that way. 

 

Like I’ve said, if you’re rather lucky and buy the home in the right place and at the right time - you could profit from it. Though that’s more the exception than the norm … probably.

 

What I like to say is that in general, your primary residence is a poor FINANCIAL investment. But it is a good LIFESTYLE investment. 

 

See, in this way, your primary residence is like a vacation.

 

That is because, think about the money you spent on your last vacation. Whether you went to the beach or the ski slopes or French vineyards, it was not a good strict FINANCIAL investment, but it was a good LIFESTYLE investment. 

 

You improved your quality of life. You improved your standard of living.

 

A home is typically a good lifestyle investment and a poor financial investment.

 

Now, look, we’re all somewhat biased based upon our own set of experiences. That goes for me too. I am an 18-year real estate investor. 

 

I grew up in a home that my parents … owned. They even had the mortgage completely paid-off early. 

 

In fact, I think I shared with you before that my parents still live in the same Pennsylvania house that they’ve owned continuously since 1974.

 

But when I grew up in upstate Pennsylvania, all my friends’ families OWNED their homes. No one rented.

 

Later, I’d go on to learn about socioeconomic stratification and how I’d just be less likely to associate and even meet kids from renter households.

 

There was one notable outlier. When I was about 14 years old and the Petroski family moved to town - they were some pretty nice, relatable friends that were into sports & baseball cards - and I learned that they rented. 

 

And that was the first time that I ever remember hearing the word “landlord” in my life … when the Petroskis talked about their landlord, Mr. Hosley.

 

I’ll tell you, my parents owning their home might have help stabilize my childhood. I’m not really sure, because I can’t compare what it’s like to move as a kid, because we never moved.

 

If you’ve got kids, is uprooting them to move damaging to them? 

 

Or does it help them become more adaptable later in life? I truly don’t know the answer. I haven’t read about that at all.

 

But all the kids knew where I lived & could count on me for getting together. 

 

I had an awesome childhood, raised with two married parents, playing wiffle ball in the yard, catching crayfish in the creek, going camping, and collecting Star Wars action figures. All that great kid stuff. And part of that is … well ...

 

Home felt like home. If it’s important for you to build a legacy for your family and have your home incorporated into that - then perhaps only homeownership will give you those … nostalgic feelings. 

 

For me, it was knowing how my brother & I’s Christmas stockings were going to be hung from the mantle in the living room next to our wood-burning stove. 

 

The love from my parents is the most important thing for sure. But knowing that everything was going to be in the same place every year too?

 

You need to understand something. That right there brought me a FEELING, an emotion, that concern for a rent-to-value ratio NEVER could. That’s stuff’s got NOTHING to do with math.

 

If you can’t feel at home, at home, then where you can feel “at home”?

 

Remembering that spot on the living room floor where I was watching the television when the Phillies won the World Series. Yeah, I can still go there and show you that in my parents’ home.

 

See, if I go much further down this track, I’ll soon get teary-eyed here with you. 

 

So, with rent vs. own, is there a hybrid approach? No, there’s not really. There’s something called a lease-purchase. But those agreements are uncommon. 

 

One somewhat hybridized approach is … one that I’ve taken. 

 

I own the home that I live in. I’ve lived in that home for 8 years. But see, what I did is, knowing what we know about equity, is that I decided to own my home but have a low equity position.

 

I made a 5% down payment with a conventional loan. 

 

See, now I’ve got 20:1 leverage, very little skin in the game, and still have control, plus I got a 3.5% interest rate back in 2012.

 

See, instead of putting 20%, with 5% down, now I have that difference of 15% of the value of the home … out working for me as equity levers in other income properties in other states.

 

And no, I pay ZERO monthly PMI despite putting 5% down with a conventional loan. I’ve given you detail on how I pulled that off on previous shows, and you can too. 

 

The short story is, make a strong offer on your buy price and put it into the contract that your seller pay upfront PMI for you.

 

Now, there are some other distinct things happening in my geography where - if someone wanted to come buy my primary residence from me, but yet I could keep living here as their renter …

 

… and it was written into the contract that they couldn’t make me move, and I know I would pay them a lower rent amount than I’m currently paying in my mortgage & all those other homeowner expenses, I WOULD consider doing that.

 

Those situations are hard to find.

 

Yep, I would convert my mortgage payments to rent payments if I could get that arrangement. 

 

And why do this? Because the lower rent payment would increase my personal monthly cash flow, plus it would free up any dead equity that I have in the home.

 

Part of the rationale there is that my home market has few prospects for substantial appreciation in the next few years.

 

Well, in rent vs. own, what’s the bottom line with what makes the most sense for you financially? (Just … talking financial only here)

 

Be a renter in a high-end home and then buy low-cost income properties in investor-advantaged markets in the Midwest and South - that you rent out to others.

 

See, if you’re a renter in a high-end home, now you’ve got zero dead equity tied up in your home - and instead, it’s leveraging property in sensible markets.

 

In fact, I know a few other people - savvy people - that understand rent-to-price ratios and do exactly that. 

 

They’re FAIRLY wealthy people that are renters by choice - and own lots of rental property in low-priced markets.

 

But there’s no one definitive OVERALL factor in your Rent vs. Own decision because this is where finances and feelings intersect.

 

So here’s hoping that you’re finding a few considerations that you’ve never thought about before!

 

To be clear here and to summarize overall ...

 

  • Is homeownership a sham? Is it a rip-off? No.

 

  • Is homeownership overrated? Yes, it still is.

 

  • Many people that are renting should own. These people seem to know that.

 

  • Conversely, many that are owning would actually be better off renting. Few seem to know that and they’re even willing to take up an argument with you. 

They’ve heard the same “Paying rent is like throwing money away.” thing for so long, that they’d rather argue than really think it through.

 

Well, the reason that I did this show today - though it’ll be just as relevant if you’re listening 5 to 10 years from now, is pandemic-related. 

 

It’s because the COVID-19 pandemic is appearing to increase the migration rate as people look for less dense housing. 

 

Whether you’re migrating or not, now you better know whether renting or owning your home makes the most sense for you.

 

Next week here on the show, we’ll discuss what we usually do - INCOME property - property that you don’t live in, but instead, rent to others - and just exactly why the investment makes more ordinary people wealthy than anything else. 

 

If there’s one thing that I know about you, it’s that you are always going to live somewhere. 

 

And you know what else, so is everyone that you know. 

 

Every person that you know - may or may not own rental property - but everyone that you know is always going to live somewhere too. 

 

Do you think that this show would benefit them? 

 

This episode in particular might save your family and friends SO much time and money.

 

I love it when you share the show with others. So I’d be grateful if you took a screenshot of this episode and shared it on your Facebook, Instagram, Twitter, LinkedIn, or even through an email or text with those that you care about. 

 

I always endeavor to make things clear to understand here on the show. I’m Keith Weinhold.

 

Don’t Quit Your Daydream!



Direct download: GREepisode309_.mp3
Category:general -- posted at: 4:00am EST

Where are the big investment risks today? Economic forecaster Harry Dent tells us.

Despite pandemic-driven unemployment, tenants are largely paying the rent.

The price of an existing American home is now $304,100, surging 8.5%.

Lumber prices for a new home are up $16K since April. This increases the value of your property’s replacement cost.

The new 0.5% adverse market condition fee for refinances is annoying. Learn how to avoid it.

In the pandemic, real estate keeps shining.

Harry Dent is fired up. He joins me to tell us why he thinks most assets are in a bubble: economics and demographics. 

His latest book is “Zero Hour”.

Baby Boomers find renting to be more acceptable today.

Harry predicts when stocks will fall 80-85%, a crash occurs, and about the profligacy of the Fed printing trillions in the pandemic.

Resources mentioned:

Harry Dent’s website:

HSDent.com

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold



Direct download: GREepisode308_b.mp3
Category:general -- posted at: 4:00am EST

The wealthy are enjoying federal monetary stimulus. Meanwhile, unemployed tenants can now be evicted nationally (check your local law).

Own assets? Great. Mortgage interest rates are at historic lows; the S&P 500 is at an all-time high.

(Entire episode transcript is below. Read as you listen.)

In the pandemic, tenants want single-family homes more than communal apartments.

Fannie Mae & Freddie Mac want to add a 0.5% refinancing fee. 

Homebuilder sentiment is high? Why? High demand, low inventory, low rates.

Stagflation is explained. It is a stagnant economy with high inflation.

There are signs that inflation is poised to increase.

Resources mentioned:

Inflation Triple Crown video:

https://youtu.be/dZojl686fU0

Section 8 turnkey property:

www.GetRichEducation.com/Section8

Stagflation video:

https://www.youtube.com/watch?v=YaC_PNKu_Cg&feature=youtu.be

Elevator Anxiety:

https://www.axios.com/elevator-anxiety-reopenings-9a474985-4786-43a3-8b64-5119ff7f2267.html

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Complete Episode Transcript:

 

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

 

The rich are getting richer and the poor are getting poorer. I can’t think of any one time in my life where that’s been happening more than it has been than right now.

 

I’ll tell you why - and what you need to do to get on the right side of that. 

 

What is going on in the real estate market and what are the real estate economics that matter? Then, a discussion about inflation. Today, on Get Rich Education.

____________

 

Hey, you’re inside GRE. From Manila, Philippines to Managua, Nicaragua and across 188 nations worldwide, I’m Keith Weinhold. This is Get Rich Education.

 

The rich are getting richer, the poor are getting poorer - and I can’t think of any one time in my life where that’s been happening more than it has been than right now.

 

Because Americans living paycheck-to-paycheck might now be ... paycheck-less. Some of them are laid off - because of the pandemic - and now they're concerned that there's no national eviction ban.

 

That’s right. In most states, non-paying tenants CAN be evicted at this time. Now, you’ve got to check your local law.

 

Well, when is Congress going to do something to relieve those that the pandemic has left unemployed?

 

Well, they don’t even reconvene until after Labor Day.

 

Some people are wondering - “Where is the CARES Act 2?” Where are those updated forbearance options, eviction moratorium, the PayCheck Protection Program, and the $1,200 stimulus checks and the stepped-up weekly unemployment compensation?

 

In fact, Richmond Fed President Thomas Barkin had  good metaphor. He said: “Months ago, when we did the first stimulus, we thought the economy faced a pothole and the stimulus put a plate over it so we could navigate. 

 

Now escalation of the virus may be making that pothole into a sinkhole and creating a need for a longer plate.” That’s the end of what the Fed President said.

 

Now, look, I think there’s a lot to be said for just letting the free market do it’s job. 

 

But it’s a little hard to be in this laissez-faire, Austrian economics school of thought when some people could be suffering.  

 

So that you know what I’m talking about, “lay-say-fare” basically means no government intervention into the free market.

 

Meanwhile, the rich are bingeing off Federal Reserve policy and liquidity injections that keep mortgage interest rates at historic lows and the S&P 500 at an all-time high.

 

Mortgage rates recently dipped below 3%, which is just amazing.

 

You don’t even have to be THAT rich … to benefit. If you’ve got substantial exposure to the real estate market or the stock market, chances are, that those assets are doing alright.

 

One thing that you need to keep in mind as an investor, is that, when the Fed puts rates on the floor, it affects more than just MORTGAGE rates - it affects other rates too - like savings account rates.

 

Just look at the rates at bank savings accounts. 

 

Even if you’re in one of these online banks that give better yields than traditional brick-and-mortar banks - we’re talking about online-first banks like Ally Bank and Popular Bank - they were paying two-and-a-half percent on savings accounts not all that long ago. 

 

Even those banks are now down to about three-quarters of one percent - probably less than the real rate of inflation.

 

So because savers get punished worse than ever right now, that, in turn, forces more people INTO things like real estate, because you’re in search of that yield.

 

Even retirees can’t rely on the paltry income from three-quarters of one percent yield so they have to go to the markets to chase yields too - sometimes unwillingly.

 

Well, when all these people that got negative REAL yield on savings accounts and CDs - and aren’t going to stand for it anymore, it forces more demand … and money into markets and consequently, floats the price of everything up. 

 

That’s what’s going on now.

 

Now, I personally don't really like this deepening canyon between the "rich” and the “poor". But I know which side I'd rather be on.

 

Besides the investment properties, a lot of people want to move and shake-up their living situation like never before - their primary residence - and filter their new home-buying criteria on pandemic ways of life.

 

Bidding wars are rampant for single-family homes. How rampant are they? Well, 

Zillow just reported their highest daily active user count ... ever. 

 

Now, though property data can move even slower than your last 1031 Exchange did, Real Estate Economist Daren Blomquist just compiled THESE year-over-year price changes through quarter two.

 

You’ve heard Daren Blomquist on the show here. He broke this down this way: 

 

City real estate is up +4% - again, this is all year-over-year through the second quarter.

Town +4%

Suburban +5%

Rural +11%

 

The two sources are ATTOM Data Solutions and the U.S. Census Bureau.

 

So rural is appreciating the best. City and town is appreciating the least. 

 

With time, I expect urban areas and apartments to slump. Of course, urban areas and apartments kind of go together. 

 

In the pandemic, living in a lot of large apartment buildings has become about as fashionable as Jazzercise and The Atkins Diet.

 

Of course, at GRE, we've long focused on rental single-family homes. We’ve talked a little about apartments and you know that I started out with a four-plex & got my start in real estate that way.

 

This week, NAR Chief Economist Lawrence Yun noted:

 

" ... (There's) an oversupply of apartment buildings, especially in city centers given the evident recent shift in consumer preference for single-family homes in the suburbs

 

Lawrence Yun continued: "Apartment rent growth could therefore be tough going ahead.

 

The rise of single-family units is welcome, as overall inventory of homes for sale are down 19% from one year ago and there is intense buyer competition in the market as a result." That’s the end of what Lawrence Yun said.

 

As long as your tenant can pay the rent, this is welcome news for your existing single-family rental homes - like the ones that you’ve acquired through GREturnkey.com. 

 

It puts upward pressure on the price. So congratulations there.

 

The appetite for real assets, especially desirable rental single-family homes, now propelled by low inventory and low interest rates has put you in good shape if you’ve acted.

 

But of course, the COVID pandemic isn’t over. We don’t really know how all of this is going to turn out. And even when a vaccine is developed, remember that it will probably take … at least a few months to distribute it.

 

In my OWN portfolio, all of my single-family rental homes are occupied - 100%. But my apartment building vacancies are unusually high right now.

 

When we talk about apartment buildings and office buildings as well - Axios recently reported about how residents and workers are experiencing what they call “elevator anxiety”. I’ll put that in the Show Notes for you. 

 

An elevator is one of the most physically, uncomfortable awkward places to be in the pandemic.

 

If you’re wondering about how that real estate looks - we’re generally talking about buildings that are four or more stories in height.

 

In fact, the ADA - the Americans with Disabilities Act - stipulates that properties with four or more stories generally are going to need to have an elevator. 

 

I’ll tell ya - if apartment buildings are as unfashionable as the Adkins Diet these days, then being inside an elevator is about as hip as Jane Fonda workout videos, NordicTrack, and Sweatin' To The Oldies with Richard Simmons.

 

https://youtu.be/na9ZZ4ZjVa8?t=28  

 

Oh geez. Did that really just happen? I guess it did. So … while we’re all processing that, getting back to real estate here.

 

Now, Fannie Mae and Freddie Mac recently said that they will start charging a 0.5% “adverse market fee” on all refinances, including both cash-out and non-cash-out refis. They were trying to put that new fee into effect for next month.

What a drag that would be. So for every $200,000 you refinance, you’d have to pay an additional $1,000 fee - or maybe your lender would pay it.

What Freddie Mac said is: “As a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty, we are introducing a new … what they call ... Market Condition Credit Fee in Price”. Freddie sent in their notice to lenders.

Wouldn’t that be an annoying fee?

Well, almost immediately, the National Association of Mortgage Brokers struck back. They launched a campaign to reverse that newly announced one-half of one percent refinancing fee. We’ll see where that goes.

 

Now, things are really good for homebuilders these day. An index measuring homebuilder sentiment matched its highest level ever yesterday. Why? I mean, it’s simple. There is a healthy amount of DEMAND from buyers and not enough homes to meet it. 

Also, the 30-year fixed mortgage rate bottomed out at 2.88% in August, the lowest point on record. Those low borrowing rates are boosting homebuyers' appetites … obviously.

There really are a few recent stories that are de facto microcosms - reflections of this appetite for a work-from-home arrangement and less dense housing.

For example, it’s really telling to look at what the outdoor clothing and gear company, REI just did.

Do you like REI? I like shopping there. Even if you aren’t into outdoor stuff, you can always find a cool water bottle or something at REI.

Well, they just announced plans to sell the lavish corporate campus that they had just finished building near Seattle. 

REI executives concluded that employees were able to collaborate remotely better than the company originally THOUGHT ...so a massive physical HQ just wasn’t worth the cost any longer. So REI is selling what they had just built.

Other real estate segments falling out of favor - are those high-density places, like you might expect - New York City and San Francisco. 

  • StreetEasy reported that Manhattan home values dropped 4.2% since last year and homes are lingering on the market more two months longer … than they had just last year.
  • San Francisco list prices are down 5% annually, while inventory is up 96%. Yes, a near doubling of available inventory in San Francisco.

NYC and San Francisco were already the most expensive housing markets in the country BEFORE the pandemic. And life under lockdown has given people that nudge they had already been considering for years.

And then, single-family homes in outlying areas are the real beneficiaries here. There have been a number of notable milestones.

COLORADO SFH sales rose 21% July-over-July. The median price statewide in Colorado is now $444,000. Just looking at Denver, Denver just broke the $600K mark for the first time ever.

 

So, a few months into the pandemic, we’re getting a clearer sense of who the winners and losers are - a lot of them are what we expected.

 

If I had to slim it down to just a 3-word answer for you on why the rich are getting richer, those 3 words are: Federal Monetary Stimulus.

 

And the stimulus is disproportionately benefitting … asset owners.

 

Well, the pandemic hasn’t affected some real estate investors at all. Others, feel more reliant on the next government stimulus program to give their tenants the wherewithal to pay the rent. 

 

Well, if you, as an investor want to have the majority of your rent income payment guaranteed to be made by the government to you over the long-term, well, that’s what landlords of tenants with HUD-funded “Section 8” housing have enjoyed for decades.

 

You have guaranteed rent income. 

 

I think you remember that I had a turnkey provider that specializes in Section 8 housing here on the show on Get Rich Education Episode 297. So just ten show ago, which was 10 weeks ago.

 

Like any investment, Section 8 Housing is best viewed through a prism of pros and cons. 

 

Section 8 is not for everybody. Some love it, some don’t … but this provider manages the Section 8 administration FOR you. They’ve got a great relationship with the housing authority. 

 

That’s something that most landlords of this government-subsidized housing never had. 

 

“Guaranteed rent income” has a nicer ring to it than it did just a year ago.

 

Get the provider report and learn more at GetRichEducation.com/Section8

 

That’s our Richmond, Virginia provider. In fact, CNBC named Virginia as the most business-friendly state in the entire nation.

 

I’m Keith Weinhold and I’m coming back to talk to you about inflation. 

 

Again, learn more at GetRichEducation.com/Section8. This is Get Rich Education!

 

_________________

 

Hey, you’re back inside Get Rich Education. I’m your host, Keith Weinhold.

 

Both the pandemic-driven CARES Act, and whatever other monetary stimulus acts that follow … are injections of trillions of dollars into the economy. 

 

In fact, it’s now driven our national debt to nearly $27 trillion dollars.

 

Of course, this has the effect of … money printing. It’s not literal money printing. The more you learn about it, it’s often U.S. government bond issuance. 

 

A bond really just means that the government issues an I.O.U. that someone else, like China buys. 

 

Those are some of the semantics behind, what we you can really more closely think of as “currency creation” rather than money printing.

 

Will this result in inflation? That’s the big question. Well, longer-term, many think, “yes”. Short-term, “no”. We are in a low demand environment.

 

Of course, as a real estate investor, you want inflation. You might have seen on the Get Rich Education YouTube Channel where, I have visually mapped out how you win “The Inflation Triple Crown”.

 

In fact, if you just Google the three words, “Inflation Triple Crown”, you can probably see me - as the first hit on Google - and you can watch me doing the whiteboard video.

 

As you’ll remember, real estate investors win the Inflation Triple Crown because inflation provides you with: #1 Asset Price Inflation, #2 Debt Debasement and #3 Cash Flow Enhancement - that all works terrifically when you’re leveraged.

 

There are more signs of inflation out there in the economy right now than we’ve seen in the recent past. Though I still expect it to be mild as long as we’re in this pandemic-driven low demand environment …

 

The consumer price index rose six-tenths of one percent last month. That beat the two-tenths expectation that economists had had. 

 

Food are prices up substantially, and then, a substantial input to homebuilder pricing and therefore the future value of homes - is lumber - and lumber prices have been soaring higher.

 

Treasury Secretary Steven Mnuchin said that the administration is unfazed with these historically obscenely high levels of government spending … thanks to the nation’s very low interest rates.

 

See, the Fed is less concerned about mounting debt when the interest rate that THEY pay on their debt is low … much like you’re less concerned about your debt when the interest rate is so low - you might be looking to take on more debt now.

 

Of course, YOU’VE got a better deal on your real estate debt than the Federal Government does, because the Federal Government doesn’t have tenants to service their debt for them like you do in an occupied rental property. 

 

Could America reach a STAGflationary state again like it did in the 1970s? We haven’t discussed the economic phenomena of stagflation before.

 

Do you know what that is? Stagflation is a stagnant economy with inflation. That’s what it means.

 

OK, usually a more stagnant economy - like we’re in now - is characterized by low inflation due to lower demand not running up the prices of consumer goods and household staples.

 

But again, stagflation means that there’s a stagnant economy WITH high inflation. Could THAT happen this decade? 

 

To reinforce your learning here, let’s listen to the audio from this explainer video from One Minute Economics about stagflation. 

 

This is less than a minute & a half in length. 

 

https://youtu.be/YaC_PNKu_Cg

 

Yes, well, if we get stagflation, meaning again, a stagnant economy that we have high inflation, I don’t know that we’d have another Fed Chief like Paul Voelcker - who, 40 years ago, brazenly raised interest rates so aggressively to combat inflation that mortgage rates were 18% forty years ago.

 

I don’t know that anyone would prevent inflation from running away at that point.

 

But again, that’s STAGFLATION. 

 

Now, I know what you might be thinking. Maybe you’re thinking that all of the Fed currency creation to pull us out of 2009’s Great Recession didn’t produce high inflation, so why would it be any different this time, with all these CURRENT cycles of massive dollar creation once again?

 

That would be a valid thing for you to think.

 

At least based on the official government numbers, we’ve only had about 2% monetary inflation in recent years. 

 

Well, see. Though high inflation wasn’t the RESULT ten years ago, it might have actually been CREATED and you just didn’t know it. So, here’s what I mean. 

 

Say that the expansion of globalization and technological advancement REALLY meant that we had NEGATIVE 5% inflation - another way to say that is that what if we WOULD HAVE had 5 points of deflation if they’re WEREN’T any excess dollar creation?.

 

But yet, all of the dollar creation after the Great Recession caused 7% inflation.

 

Well then, 5 points of DEflation offset by 7% INflation resulted in ... 2% inflation.

 

Think about it that way. Maybe something like that is what really happened … and that is why all of today’s currency creation COULD result in high inflation. We don’t know that it will. But that’s just one reason why it COULD.

 

Now, overall, to pull back and look at the state of housing in this pandemic-driven recession. 

 

Housing has been - and continues to be - substantially better off in this recession THAN it was in the 2008 Great Recession - that event - twelve years ago, had a housing COLLAPSE as a driver. People left the keys and walked away from their homes back then.

 

Now, instead, we’ve got bidding wars for housing. 

 

I want to temper that with a reminder that the pandemic is not over yet, and it could still take an unforeseen turn.

 

The bad part about this recession is that we’ve got higher unemployment than we did back then.

 

Now, the reasons that real estate is BETTER OFF in this recession compared to the last one is:

 

  • Housing Demand Exceeds Supply - that was in the OPPOSITE state last recession.
  • Responsible Lending Prevailed - again, that was OPPOSITE of last time.
  • We’ve Got Low Mortgage Rates - lower than they’ve ever been. 
  • And We had No “Bubbly” Price Run-up before this recession, unlike what happened in the 2008 Great Recession. 

 

They are … the key differences. 

 

Coming up on a future episode here - we’re primarily a show about how buy-and-hold residential INVESTMENT property produces wealth for you - and how to avoid mistakes.

 

But so many people are re-evaluating their primary residence situation lately, that, coming up on the show, I’m going to go deep on - “Should You Rent Your Home Or Should You Own Your Home?”

 

There is some counterintuition and paradox here. 

 

I’m going to give you a new twist on the fact that - if you pay rent, that is NOT The Same As Throwing Money Away  

 

Also, some people seem to think that homeownership is like: "Renting. Except you get to keep it." That is false and that has caused millions of people to buy houses that they later regret.

 

Is your primary residence an investment? Do YOU consider it an investment? Well, in almost EVERY case it is a poor financial investment, but it could be a good lifestyle investment. 

 

So, “Should You Rent Your Own Home Or Own Your Own Home that you live in.” That’s coming up on a future show.

 

Well, regardless of your living situation, pandemic-driven unemployment might have made you realize that … you need a durable, long-term 2nd source of income - if you don’t already have one.

 

Even if you aren’t losing your job, circumstances have hit close to home for a lot of people. 

 

You can either let other people make money off your money, like the bank paying you 1% on your savings. 

 

Or you can make money off OPM (like borrowing at a 5% mortgage to invest at 11% - or hopefully, a lot more than 11% with the (up to) five profit centers that real estate has.) 

 

RE is that instrument of arbitrage.

 

As they say, you can either teach a man to fish or give a man a fish. Well, why not do both? That IS the abundance mindset afterall. 

 

At GetRichEducation.com, we teach you how to fish.

 

At GREturnkey.com, we give you a fish too.

 

What is going on at GREturnkey?

 

Well, first, get your mortgage pre-approval at a reputable lender that specializes in investment property like Ridge Lending Group.

 

You’ll see at GREturnkey.com that Birmingham and Huntsville, AL have investor-advantaged numbers that work.

 

Pockets of Huntsville may have better appreciation if they’re tied to employment in the space industry. 

 

Gosh, love him or hate him, Elon Musk gave us something to actually celebrate in an otherwise tough 2020 as he led the first private company to launch astronauts to space - emblematic of the burgeoning space industry - both Huntsville, AL and Orlando, Florida there at GREturnkey pick up on some of that.

 

We just discussed Chicago here last week. Chicago and Dayton, Ohio are two markets that keep sourcing existing inventory that they beautifully renovate, and both markets have rent-to-price ratios that are typically OVER 1%.

 

When you’re over 1% and mortgage interest rates are this low, it makes your affordability as an investor REALLY advantageous. That’s Chicago and Dayton.

 

Des Moines, Iowa is sourcing a little inventory lately - not as much as some of the other providers. That’s a stable place.

 

Florida is a bright spot for new construction turnkey property - Jacksonville, Tampa, and the aforementioned Orlando all sourcing brand new construction property. 

 

When it’s NEW construction, your insurance cost is often really low too.

 

Memphis, Tennessee and Little Rock, Arkansas are both the SAME provider there at GREturnkey - and that provider name is MidSouthHomeBuyers. There you have lower price points and MidSouth Home Buyers is so good with beginners.

 

And then, Oklahoma City - the numbers work and some media outlets have named Oklahoma City as the most recession-resistant market in America. You’re getting a 1% rent-to-price ratio there too.

 

Finally, Richmond, Virginia - I mentioned them earlier. They specialize in knowing the ways and means of how to optimize Section 8 tenancies because they have a great relationship with the housing authority there. 

 

Most, or really all of these markets that I mentioned are in the United States Midwest & South. 

 

Florida - oddly enough - is not culturally the South - though it’s the most southeastern state there is - their history of net-in migration makes them culturally disparate from what we think of as the south, but …

 

… all these markets I mentioned are in investor-advantaged metros where you generally have more stable prices, and landlord-tenant law that favors your rights moreso than the tenant’s rights. 

 

So these markets are hand-chosen pretty carefully for you. 

 

Once you’re pre-qualified for a loan, find all those providers & a few more at GREturnkey.com.

 

I am honored because you have given me something … and that is that I have had the privilege of having your time today. 

 

Until next week, I’m your host, Keith Weinhold. Don’t Quit Your Daydream!




Direct download: GREepisode307_.mp3
Category:general -- posted at: 4:00am EST

You contribute to homelessness. I do too. The problem goes right through real estate.

Factors include: NIMBYism, minimum wage, salamanders, smoke detectors, and rent control.

(Complete transcript on homelessness segment below.)

Then, Chicago is a world class city with lots of economic diversification. Chicagoland’s numbers make sense for real estate investors.

In northwestern Indiana (suburban Chicago), you avoid the high cost of Illinois property. 

A typical SFH has $1,350 rent and a $125,000 purchase price.

If you’re serious about building your cash-flowing portfolio, learn more and see property at: www.GetRichEducation.com/Chicago

Resources mentioned:

Chicagoland turnkey property:

www.GetRichEducation.com/Chicago

Environmental regulations & housing:

https://www.huduser.gov/periodicals/cityscpe/vol8num1/ch5.pdf

NIMBYism:

Reason.com

Mortgage Loans:

RidgeLendingGroup.com

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By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

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@keithweinhold

 

Welcome to Get Rich Education! I’m your host, Keith Weinhold, with a two-part show.

Real estate is a substantial input into homelessness. Why are people homeless - and why might you & I be partly RESPONSIBLE for it, in fact?

 

The second part - in general, world class cities don’t make any sense to invest in for cash flow - New York, LA, DC, London, Singapore … but we’re going to discuss one “world class” city that actually DOES. Today, on Get Rich Education.

__________________

 

Here it is - hey! You’re inside GRE. From Sarasota, Florida to Sarajevo - in Bosnia and Herzegovina - and across 188 nations worldwide. 

 

I’m Keith Weinhold, this is Get Rich Education.

 

Even in the affluent United States, there is a large and growing population of vagrants - homeless people … more than half a million of them … and you & I … unknowingly play a role in keeping them homeless.

 

Why are people homeless? Well, the #1 reason is real estate-related. So that’s why I’m talking about it in the first of two show segments here.

 

Let’s look at the Top 5 cited reasons that people are homeless.

 

5th most common - Substance abuse - drugs.

4th - Mental illness.

3rd - Poverty ...OK, that’s sort of an obvious one.

2nd - Unemployment

1st - Lack of affordable housing

 

Lack of affordable housing is the #1 reason that people are homeless. Well, one mission here at GRE is that we PROVIDE society with affordable housing.

 

But, it’s generally not the same kind of Class D, lowest-end housing that there is - and that homeless people are looking to get into. 

 

We focus on properties just below the median housing price in some of the lower-cost U.S. metros - B-class and C-Class. That’s a notch or two above where those on the brink of homelessness would be.

 

The homeless population is more visible in my own home city since the pandemic - and perhaps yours too … now that the unemployment rate is 10%. 

 

I’m going to tell you what contributes to homelessness - and a lot of this has to do with real estate: contributors are carbon monoxide detectors, minimum wage, salamanders, NIMBYism, and over the long term: rent control.

 

Now, before we unpack that. Let’s define homelessness.

 

One of the better accepted definitions is - a condition where people lack "a fixed, regular, and adequate nighttime residence". That’s “homelessness defined”. 

 

I think you & I can agree that “homeless” is not the best technical term - right? Because even if someone lives under a bridge, that IS their home.

 

Houselessness would actually be more accurate.

 

Vagrancy is an even better way to say it. A vagrant is a person without a settled home or regular work who wanders from place to place and lives by begging.

 

That’s what we’re really talking about here. But homelessness is the widely understood term, so I’m going to it.

 

Now, HUD - the U.S. Department of Housing and Urban Development has a lot of statistics on the homeless, and ...

 

… as of 2018, they reported there were roughly 553,000 homeless people in the United States on a given night,[2] or nearly two-tenths of 1% of the population. 

 

That’s about 1 in 500 Americans then. Well, many people - me included - believe that the real number of homeless is greater than this 553,000.

 

In fact, private & local reports tell you that the homelessness have increased 40% per annum in recent years - yeah, 40% per year!

 

A big mistake is that people think about the homeless as all one type. But there are so many different types of homeless. 

 

There are the temporary homeless -  passing through that 553,000 number.

 

Some are voluntarily homeless. Others are really couch-surfing because perhaps they were in a divorce or domestic violence situation.

 

Then you need to realize that about 2/3rd of their population is sheltered, and ⅓ unsheltered. 

 

Consider too, that there are at least 40,000 homeless veterans. To think that a person could have served this country - and maybe even risked their life for this country - but don’t have a home in this country … can be heartbreaking to think about.

 

Now, though I’m not sure, I don’t believe that a digital nomad would be considered among the homeless - the laptop entrepreneur that stays at a different AirBnB location, say monthly.   

 

Before we bring in the real estate angle, let’s get some historical context. Just talking about the U.S. here ...

 

Homelessness emerged as a national issue in the 1870s.[6] Early homeless people lived in emerging urban cities, like New York City

 

Into the 20th century, the Great Depression of the 1930s caused a substantial rise in unemployment and related social issues and distress and homelessness. 

 

In the 21st century the financial crisis of 2008 and resulting economic stagnation and downturn has been a major driving factor and contributor to rising homelessness rates.

 

That is probably happening again, right now, in the COVID pandemic.

 

A Zillow report found that people in communities where the average renter spends more than 30 percent of their income on rent — meaning that they can be described as being “rent-burdened” — are particularly vulnerable to rapid increases in homelessness rates.

 

Eviction obviously creates homelessness.

 

Now, some naively think - can’t we just raise taxes to build permanent housing for them & move them all in there? I really doubt that that’s a viable long-term solution. 

 

Because at some point, if taxpayer funded housing is just “provided” for people, then people don’t have incentive to work & pay the rent.

 

That’s in general. Right, maybe someone has a disability that prevents them from making a living. 

 

Some think - maybe we SHOULD impose rent control. Rent control means capping the amount of rent that a landlord can charge.

 

I’ll tell ya - that could reduce the number of homeless people in some areas that HAVE enough housing. But long-term, rent control is a terrible plan.

 

Because now an income property owner like you has zero incentive to improve the property any longer. 

 

Long-term, rent controlled areas fall into serious dilapidation. 

 

And because homelessness is concentrated in inner cities. It’s those exact same big cities - like New York - that have tried rent control. 

 

It doesn’t work. So many areas that have tried to impose it, have to repeal it, because it eventually turns areas into ghettos.

 

What if you own property in an area where rent control were imposed? Even if you did improve your property - not only would you NOT get more rent for it - but you had better believe that property owners all around you wouldn’t be improving their property … and the entire condition of the neighborhood would be on a loooong downhill slide.

 

You might remember that I devoted an episode to the rent control topic. You can look that up on Get Rich Education Episode 192 if you’re further interested there. 

 

One factor that contributes to higher housing costs - which prices people out of having any shelter and creates more homeless people are … environmental regulations that limit development in certain areas.

 

Sometimes you need to leave a development buffer for streams or you can’t build in areas that are wetlands in order to protect flora and fauna.

 

A rare orchid, or a spotted salamander or a threatened egret or an endangered heron. They say, you can’t build in their critical habitat areas. You’ve got to protect them.

 

But yet, often, the same type of people that want more environmental regulations are the same people that say that they want more affordable housing options.

 

Well, when you limit where you can build, now you’ve reduced the housing supply. Real estate pricing is highly susceptible to supply/demand factors, of course.

 

All these wildlife protections limit supply. That makes prices go up. That prices people out.

 

Now, maybe you’re thinking I’m anti-environmentalist? No, I’m not taking a side either way. 

 

It’s just that one needs to understand the cost and the longer-term ramifications of decisions that limit development in protecting the spotted salamander. 

 

I think it’s easy to make a case that more biodiversity is better than less biodiversity. But the better question is: “At what cost should we protect species? How far do we take it?” 

 

Environmental regulations in the United States are intended to improve the quality of the environment; preserve ecosystems - that includes wildlife; and protect human health too.

 

But these regulations are often written without considering how much they will cost.

 

Another contributor to homelessness is excessive safety regulations.

 

Again, some safety regulations are good. But how far do we take it? 

 

My gosh, when an area needs to build more affordable housing for people - which is something that would reduce the homeless rate … and ...

 

Sheesh, a new home today might need fourteen smoke detectors and five carbon monoxide detectors … then the detectors need to be connected to each other so that they can communicate with each other … and all these devices and this added complexity increases the cost of housing.

 

That makes mortgage payments higher, rent payments higher, and it just prices more people out of the real estate market. The lower end of the income spectrum gets priced out of affordable shelter.

 

I’m not anti-safety. But at some point, one has got to ask the question, “How much safety do we really need?” 

 

Even - “What is the cost of a human life?” There actually is an answer to that question. In fact, the EPA pegs the cost of a human life at $10M - one of the highest of any federal agency.  

 

And then, there’s the entire question of how can you ever monetize the value of a human life. You can make the case … that it’s priceless. That’s a different discussion.   

 

But the point is, all these safety regulations increase the cost of housing and increase homelessness.

 

Minimum wage does, in many instances, increase homelessness long-term. 

 

This might come as a surprise to you. You would think that raising the minimum wage would have to DE-crease homelessness - because a higher wage would mean that low-income workers could now afford housing.

 

Well, long-term, besides higher wages in an area creating inflation & soon making the cost of everything go UP - including housing …

 

Think about it from the perspective of if you’re an employer & you have to pay your workers a higher wage - now that minimum wage is higher.

 

If someone that works for you makes $9 an hour - but they only produce $12 an hour worth of productivity for you...  

 

And a new minimum wage of $15 an hour is implemented, you’re losing money if you retain that worker. So you would lay them off.

 

You would find ways to automate - or make a machine do the work that that employee used to do for you. That layoff increases homelessness.

 

Just look at the number of self-serve checkout kiosks in grocery stores. Those lanes used to be staffed by humans that earned a wage.

 

With a hike in the minimum wage up to $15 an hour, you’d begin to see a trend where more fast-food restaurants have self-serve kiosks. You’ll have fewer humans there.

 

That’s because some employers can’t afford to pay people $15 an hour. Every self-serve digital kiosk that you see represents a laid-off worker.

 

Talk to your parents or grandparents and they’ll tell you that gas stations used to be attended by humans that would pump your gas for you, check your tire pressure, check your fluid levels - that’s been gone for a couple generations.

 

Now, an increase in the minimum wage would help get some people out of homelessness short-term … yes. 

 

I’m giving you insight so that you can see both sides & see the long-term consequences of government intervention into the free market.

 

Let’s say that you’re an employer at a warehouse, the minimum wage is $15 an hour and you want to hire someone to help you sweep floors & do odd maintenance jobs around this warehouse that you own.  

 

Well, now it’s illegal for you to hire them at $12 an hour. You’d love to give a kid a job and help him learn - and you can’t make the numbers work at $15 an hour. 

 

So now he’s unemployed because the government said, “No. You can’t hire him at $12 an hour.” That’s what a $15 minimum wage says. Try looking at it from that angle.

 

Another phenomenon that keeps people homeless is NIMBY - Not In My Backyard.

 

NIMBYists are the ones that say, “No, I don’t want you to build low-cost housing in my neighborhood, because I’m afraid that it’s going to ruin the character of my neighborhood and it’ll stifle the rate of home appreciation here.”

 

Lafayette, California is a wealthy San Francisco suburb. It is nestled in Contra Costa County, where its residents fight to stop what they call a "very urban," "unsightly" 315-unit housing development 

 

It was recently profiled by The New York Times.

 

Over in the suburban community of Cupertino, California—we’re talking Silicon Valley now—local activists spent years trying to stop the development of an abandoned mall into apartments, half of which would be rented out to lower-income tenants at below-market rates.

In  Berkeley, California, activists often argue against new housing on the grounds that it will threaten their community's sustainable character.

Well, what is another example of NIMBYism? 

At a recent Zoning Adjustment Board Meeting in Berkeley, I think one resident summarized NIMBYism really well - and this was published in the New York Times - they said "Berkeley needs to prioritize a livable, sustainable environment for people who already live here” …

… when they were opposing a 57-unit development of student housing. They went on to say: "We are not obligated to sacrifice what is best about Berkeley to build dorm rooms." That’s the end of what they said.

NIMBY - this “Not in My Backyard” opposition to new housing development - centers on concerns of property values and crime and gentrification and environmental sustainability. 

Even though it’s often not their intent, the result of NIMBYism is that less housing gets built, housing costs go up and homelessness … rises.

So, let’s draw some conclusions here and look at some actionable ways that you can make things better.

 

Though it isn’t immediately apparent - carbon monoxide detectors, minimum wage, salamanders & egrets, rent control, and NIMBYism - all go right through the heart of real estate investing and contribute to the long-term cycle of homelessness.

 

A giant takeaway for you here, is that, what is the common denominator in ALL of these factors. There is one common theme. 

 

You know what that is - it is Government intervention.

 

Government intervention and interference in the free market - is the contributor here - excessive safety, minimum wage, protecting salamanders & egrets, rent control, and NIMBYism. 

 

Every single one of them. 

 

And now, maybe if you’re a new Get Rich Education listener - especially - you might be wondering, am I some anti-government guy where I think that the answer to EVERYTHING is free market economics.

 

Well, though I think that less government would be better. 

 

I’ll tell you that SOME government regulation is good - just less than what we have now. 

 

For example, look at all the smoky, hazy pollution in Pittsburgh, PA in the 1970s. It was a hazard to your health just to walk Pittsburgh then.

 

You might have heard about this: famously, in the summer of 1969 - An oil slick in Ohio’s Cuyuhoga River caught on fire.

 

Companies were committing rampant pollution such that it was a hazard to human health.

Well, government regulations like the Federal Clean Water Act Of 1972 helped to clean that up.

 

So, that regulation helped. Government has a role, but it’s often overly intrusive.

 

When it comes to you helping the homeless directly, I like the campaign slogan that says, “Give real change, not small change.” 

 

That means, don’t give money directly to panhandlers on the street. Where do you think that your goes then? Probably straight to cheap monarch vodka in those plastic bottles.

 

Also, if you don’t want to see homeless people in your neighbourhood, don’t give to them if they’re on your city’s street corner - like they are mine - because you’ve just given them an incentive to show up there again & do the same thing.

 

So instead of small change, give real change. When you donate to your local homeless shelter or soup kitchen, your money is going to do MORE REAL GOOD for the homeless.

 

It’s going to provide them with shelter, or educational resources, or a computer so that they might be able to apply for a job. That’s real change.

 

You want to help the homeless? I think that’s great. That’s kind. Give real change, not small change.

 

When it comes to NIMBYism and the environment, there’s a great saying out there.

 

What do you call a developer –  someone who wants to build a house.  Well, what do you call an environmentalist – someone who already owns the house, [LAUGHING] because they don’t want anyone else to build there, right?

 

Well, we avoid investing in coastal areas here at Get Rich Education. They’re what I call the volatile markets - they have a history of more regulation, more rent control, and more laws that are disadvantageous to property owners.

 

Just more reason … as to why we invest in the U.S. Midwest & South. They’re what I call the stable markets.

 

You’re listening to Get Rich Education, Episode 306.

 

We are your source for independent groundbreaking, original content on really three main topics: real estate investing is what we major in - with minors in both wealth mindset, and real estate economics. 

 

Get Rich Education is not affiliated with any large media conglomerate. 

 

And we’re here to enrich you - and sometimes even rescue you & help you survive in this widening difference between the “haves” and “have nots” - that continues to broaden in pandemic times.

 

This show is also when you can find all your finance heroes - that have come onto the show to run alongside me for an episode.

 

Check our shows published over the years to find me here with the best-seller finance author of all-time Robert Kiyosaki, the world’s leading sales trainer Grant Cardone, global wealth mindset magnate T. Harv Eker, and other economic minds and thought leaders Jim Rogers, Jim Rickards, Sharon Lechter - all your favorite thought leaders are here on this show.

 

We have more of them coming onto the show in the future, including the upcoming Get Rich Education debut of success thought leader Hal Elrod and others.

 

There is so much real estate & economics news that the pandemic is providing to us ... more & faster than before.

 

We bring you that here. Also, be sure to subscribe to the DQYDD Letter. That’s our wealth-building email letter that you can get at GetRichEducation.com

 

A lot of times, I can write you something in the letter faster than I can get it out here on our weekly show. Yes, I do write the letter myself - and email it directly to you.

 

Never any spam - never sharing your email address with others, of course.

 

Also, would you like to join me on a live webinar? We’re looking at doing some of those soon. Look for those announcements - in the Don’t Quit Your Daydream Letter as well.

 

Information, actionable resources, and education -  

 

Get ahold of that completely free - at GetRichEducation.com

 

Again, What do you call a developer –  someone who wants to build a house.  What do you call an environmentalist – someone who already owns the house.

 

Kind of exciting next - A world class city where the real estate numbers actually make sense for you … straight ahead.

 

I’m Keith Weinhold. This is Get Rich Education.



Direct download: GREepisode306_.mp3
Category:general -- posted at: 4:00am EST

GDP fell 33% annually, the unemployment rate is high, and even the Tokyo Olympics have been postponed, all pandemic-driven.

Housing continues to hold up well. Nearly all assets are - gold, stocks, crypto, and some commodities. This is partly due to a weaker dollar.

The gap between “haves” and “have nots” widens in the pandemic.

15-year mortgage rates fell below 2%.

VP of Grocapitus, Anna Myers joins us to discuss real estate trends, market analysis, and where to invest for economic survival.

Neither she nor I see a “V-shaped recovery”. I’ve been saying this for five months.

Anna & I discuss real estate’s winners and losers in the pandemic.

With more people having shakier job situations, fewer qualify for loans. This increases the renter pool.

Winners: smaller cities, suburbs, e-commerce, tech, warehouses, places like Salt Lake City, Raleigh-Durham, Memphis

Losers: high density places, hospitality, medical, oil, long-term college.

Resources mentioned:

Grocapitus.com

MultifamilyU.com

https://www-housingwire-com.cdn.ampproject.org/c/s/www.housingwire.com/articles/uwm-now-offering-15-year-fixed-mortgage-rate-as-low-as-1-875/amp/

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold



Direct download: GREepisode305_.mp3
Category:general -- posted at: 4:00am EST

Income over $75K-$95K does not increase happiness. 

Earning over $105K actually decreases happiness.

This is based on studies from Princeton and Purdue universities.

Then what’s the point of building wealth? You get answers.

These surveys do not consider replacing your active income with passive income. 

Matt Bowles of Maverick Investor Group joins us to discuss: market due diligence, pandemic changes, and how to use real estate to build lifestyle design.

We also discuss changes to the rental market from 2007 to today. Ten years ago, you could buy properties for less than replacement cost. No longer.

Markets like Phoenix, Dallas, and Atlanta have largely lost their investor-advantaged status.

Check out Matt’s podcast, called: “The Maverick Show”.  

Resources mentioned:

How Money Really Affects Your Happiness:

https://www.cnbc.com/2020/05/26/how-your-salary-and-the-way-you-spend-money-affect-your-happiness.html

Maverick Investor Group

The Maverick Show:

Podcast on Apple Podcasts, Spotify, etc.

Remote due diligence:

WeGoLook.com

NeighborhoodScout.com

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode304_.mp3
Category:general -- posted at: 4:00am EST

We compare do-it-yourself vs. professional property management.

New home price annual sales volume spiked in June. There’s a scarce inventory of suburban SFHs.

The co-founder of Avail, Laurence Jankelow joins us. Avail.co streamlines life for DIY property managers.

Avail is free. It enables you to centralize your: rental listings & applications, tenant screening, credit / criminal / eviction reports, rent collection, maintenance tracking, and even rent price analysis.

Becoming a landlord is like becoming a parent. There’s no certification course or degree required.

You cannot violate Fair Housing Laws. Giving one tenant a break - and not another - could violate Fair Housing Law.   

Smart home technology often still does not exist for the most profitable long-term rentals.

Rent collections during the pandemic continue to be greater than most people anticipated.

Avail is best for landlords with 1-9 rental units.

There is a general minimum standard for what landlords must furnish to tenants. It’s called an “Implied Warranty Of Habitability”. 

This includes: access to clean water, heat, electricity, sanitation, rodent-free, fire-safe, and meets local building codes.

Resources mentioned:

DIY Property Mgmt. Software:

Avail.co

New construction Florida income property:

GetRichEducation.com/Orlando

GetRichEducation.com/Jax

GetRichEducation.com/Tampa

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode303_.mp3
Category:general -- posted at: 4:00am EST

Learn how real estate pays you up to five ways simultaneously.

Should you be playing offense or defense as an investor now?

Learn how a return of less than 20 to 25% is disappointing.

We’ll add up all five ways you’re paid and see what your Year One return is from: Appreciation, Cash Flow, Return On Amortization, Tax Benefits, Inflation-Profiting.

See brand new construction SFRs and duplexes in central Florida at: www.GetRichEducation.com/Orlando

Central Florida rent-to-price ratios are about 0.8%. Interest rates are at historic lows.

What does late rapper Notorious B.I.G. have to do with real estate investing? You’ll see today. Kind of. 

**Complete episode transcript below. Read along as you listen.**

Resources mentioned:

New construction Orlando income property:

GetRichEducation.com/Orlando

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Welcome to Get Rich Education. I’m your host, Keith Weinhold. There are seasons in your investor life where you either play offense or defense. What should you be doing now? … as we refresh the “Up To 5 Ways That Real Estate Simultaneously Pays You.”

 

Anything less than a 20 to 25% rate of return in buy-and-hold real estate investing is disappointing. How can that be? Today, on Get Rich Education.

______________________

 

Welcome to GRE! From Asmara, (Air-UH-tree-UH) Eritrea to Ashtabula, OH and across 188 nations worldwide. I’m Keith Weinhold. This is Get Rich Education.

 

Thanks for being here, but you’re not here for me. You’re here for you.

 

In your investor life, are you playing offense? Or are you playing defense right now?

 

Or, in general, longer-term, are you a more offensively-oriented investor, which correlates with more risk-taking for higher returns.

 

Or are you more defensively-minded - where you’d rather have less risk and lower return?

 

Are your mindset and actions aligned toward offense or defense?

 

Well, I’ve got an answer for you here, and you’re going to have a really valuable takeaway.

 

Anything less than a 20 to 25% annual rate of return in real estate is really … actually … disappointing. 

 

“What choo talkin’ ‘about, Willis?”

 

What I’m talking about … Will - is ... 

 

Really, this all comes back to how - when you buy income property the right way - you are paid up to five ways simultaneously.

 

A stock typically only pays you one way, perhaps two.

 

I think that the easiest way for you to understand the five ways you’re paid - and even celebrate these five ways you’re paid - because … this ... is ... pretty compelling - is to use an example.

 

I’ve discussed this before. So if you’re a longtime listener, I’m going to put “The 5 Ways” through a new filter for you.

 

And if you’re a newer listener, say in the last year, this could completely change your investing thought paradigm for the rest of your entire life. 

 

In fact, compound interest is lame and rarely, if ever builds real wealth in real life. I’ll tell ya what does here. 

 

And yes, I know that this is abject heresy. It is replete blasphemy to criticize “compound interest” in the finance world. 

 

I am surely guilty of committing financial profanity right there.

 

This is really fundamental stuff I’m about to share with you here - and yet the real paradox is that most real estate investors don’t even understand this.

 

This is pretty fun to do. We’re going to add up the five ways you’re paid and determine your total rate of return here.

 

Let’s say that you purchase a $100,000 property - $100K. And, no worries, if that’s too “small time for you”, this is all based on ratios, so it scales up to a $1M or $10M property.

 

(Ha!) And sometimes I wonder how much longer a $100K property will even be a feasible example as inflation makes $100K properties less common all the time. 



But with your newly-bought $100K rental single-family home, you buy it with a tenant already residing there, where the monthly rent income exceeds the monthly expenses - that’s a big part of “buying right”. 

 

With your 20% down payment, you have $20K out of pocket then, and an $80K loan.

 

The first of five ways you’re often paid is ... 

1 - Appreciation Let’s just say that your property appreciates from $100,000 to $106,000. That is just commensurate with real estate’s historic appreciation rate of 6%. But here’s the big “a-ha” moment. 

 

Your $6,000 gain is based on only your $20,000 down payment. 

Well, that’s your ROI formula - your gain divided by how much you have invested. Well, your $6K divided by $20K is a 30% return to you. Really? How did that happen exactly?

 

How do you have a 30% return from just this first of five ways you’re paid? 

 

This is because you achieved a 6% return on both your $20K of skin-in-the-game and the $80K borrowed from the bank. This is what is known as financial leverage. Financial leverage means that your return is 30%. 

 

No wonder that I’m known for saying that compound interest is lame and leverage builds real wealth. More on that soon.

 

2 - The second way you’re simultaneously paid is with Cash Flow It’s your monthly rent income minus all the expenses (like mortgage, vacancy, insurance, maintenance, taxes, utilities, management). We’ll be conservative and say that leaves you with only $100 of residual income in this case.

 

Annually, that’s $1,200 more for you, divided by your $20,000 down payment. 

 

Yes, it’s $1,200 still divided by that same $20K of skin you have in the game. 

 

This another 6% return for you. This portion is what is known as the Cash-On-Cash Return

 

So, so far you’ve got a 30% return from leveraged appreciation PLUS a 6% cash-on-cash return from that monthly cash flow & we’re still going.

 

3 - Loan Paydown Unlike your own home where you pay down your principal mortgage balance with money that you had to earn, well, here, your tenant pays the monthly principal portion of your $80,000 loan on this property! 

 

At a 6% interest rate (and you know you can do better than that today, but we’re being conservative here) on a 30-year mortgage, that’s about $1,000 that the tenant pays down your loan for you annually. 

 

Divided by your (still the same) $20K of “skin-in-the-game” means that’s ANOTHER return for you of: 5%. This portion is known as your ROA - your return on amortization. We are still going - still adding up all the ways you're often paid in real estate.

 

4 - Tax Benefit You can have a mortgage interest deduction, an ability to pay zero capital gains tax with a 1031 Exchange, and tax depreciation - which can tax-shelter part of your rent income. 

 

This is hard to measure. We’ll conservatively call your investment tailwind another 5%. There’s something else called “bonus depreciation” that can certainly make this 5% tax tailwind higher, but let’s just leave it there.

 

And the fifth and final way is what I call Inflation-Profiting. Few people understand this. 

 

Like inflation erodes the value of your lump of savings, it also degrades your mortgage debt balance. 

 

How is that? It’s because your $80,000 loan today gets easier to “pay back” as wages and prices escalate over time. Your bank only asks to be repaid in nominal dollars (while your tenant pays the interest), not real, inflation-adjusted dollars. 

 

So just say that over a few years, you had 10% cumulative inflation. Well, then rather than paying back the bank $80K, you really only need to pay them back $72K in inflation-adjusted terms.

 

Inflation has been low lately. We’ll call this benefit a return of another … just 2% to you.

 

Well, there were all five ways. Let’s add them up to see what your total rate of return is. You got a return of:

 

30% from leveraged appreciation, then…

6% from cash flow - which is that portion known as your cash-on-cash return, plus another

5% from your ROA - that Return On Amortization, where you tenant pays down your loan for you. Then another …

5% from tax benefits …

2% from inflation-profiting ...

 

And your first year total Return On Investment from this income property is 48%

 

You just achieved a 48% return - and without taking any INORDINATE risk. Now, your real-life return probably won’t be exactly that - it’ll be higher or lower.

 

A few other caveats here. I think you probably realize this example is simplified. 

 

If we had 18 spreadsheets, then we could probably get an exact number, like rather than a 48% total rate of return for you - then it might be 46.16% or something like that. …

 

… but eighteen spreadsheets doesn’t work in audio format as we’ve just broken it down here on Get Rich Education Episode 302. 

 

1) Note that in the example, we did not factor in your buyer mortgage loan closing costs (the seller can often help you pay these). 

 

Of course, risk still exists. If you buy property in a losing job market, or hire a disreputable property manager, for example, your return can erode. 

 

3) You will still have SOME inevitable problems along the way. It just happens in real estate.

 

Also, note that your property insurance premium WAS considered in the example. That hedges you from a lot of major loss types.

 

And that your management cost was considered here, meaning your income is largely passive. 

 

Also, be mindful that after your 48% return in Year One of this hypothetical example, your return typically DROPS in future years. 

 

Maybe it’s down to 38% in the second year and 29% in the third year. 

 

Why is this? Well, primarily due to the fact that equity accumulates in the property, and equity has zero rate of return.

 

Compound interest? Well, you’re typically not leveraging other people’s money with compound interest. 

 

In the example we used - you’re not just growing from the return on your own money.

 

You achieved that return because you got to use BOTH your own money plus three other parties’ money at the same time:

 

the bank’s for the leverage

 

the tenants for the income and the return on amortization … and 

 

… the govt’s for the tax incentives - plus, really the government’s policies for the inflation-profiting benefit too … if ya think about it.

 

With just a 20% down payment, you got access to getting the return on OTHER people’s money all over the place. 

 

Another risk is to be mindful of overleveraging. Overleveraging means that you’ve borrowed so aggressively that, say you get in a situation where the tenants rent income no longer meets or exceeds the monthly property expenses. 

 

That’s negative cash flow from overleveraging.

 

With these five ways ...

 

Now you understand how real estate makes ordinary people wealthy!

 

Now you know how to actually “keep score” with real estate investing.

 

Now you understand how less than a 20-25% Total Rate Of Return is disappointing.

 

This is LEVERAGE rather than compound interest.

 

Long-term, one’s hopes for compound interest get eroded and worn down to nothing after applying - something that longtime listeners can almost repeat after me - applying those deleterious effects of inflation and emotion and taxes and fees and volatility. 

 

If you understand what I just described, you understand something that Billionaire RE investors do NOT understand.

 

Billionaire real estate investors don’t understand what you now know.

 

So, when it comes down to, are you playing offense or defense as the theme for your own investing strategy? 

 

The answer is, when you’re paid five ways, you have the ability to constantly do BOTH - you’re playing both offense and defense - at the same time, all the time.

 

By the way, they say that offense wins games but defense wins championships. It was legendary Alabama football coach Paul “Bear” Bryant that’s credited with saying some version of that. 

 

I don’t know whether that’s so true or not, but here you have multiple offenses and defenses.

 

But what I’m talking about here, is, with the 5 ways you’re paid:

 

Appreciation - That’s playing offense

Cash Flow - That’s more predictable than appreciation, and that’s playing offense too

Return On Amortization - That’s defense. It’s slow, predictable, and it builds illiquid equity

The fourth way, taxes - that’s defense too. It’s kind of built-in, predictable, and really just recurs when you do your annual taxes.

And the fifth way, inflation-profiting - That’s defense too.

 

So, there you go, with one single-family rental home or apartment building, you’ve played offense two ways and defense three ways … all at the same time. 

 

And when you’re paid five ways, if one or two stop providing you with yield, well, then you’ve still got three or four ways that are.

 

But, yeah, these return sources aren’t apparent to a lot of people. 

 

You know, I was recently doing a review of one of my larger apartment buildings with an experienced investor, because the cash flow basically dried up.

 

And, for example, this apartment building has $2,100 of tenant-made mortgage principal paydown every month. That’s $25K per year in equity buildup.

 

$25K divided by my $475K in equity is a Return On Amortization of about 5% on this particular apartment building.

 

So I think that the real takeaway here is - invest in something where you’re paid multiple ways, where you can invest in offense & defense at the same time, and it pays you income so that you can begin enjoying your life now, not “maybe someday” - which correlates with more of a compound interest approach.

 

If you think about it, a central theme of this show is how to optimize the 5 Ways You’re Paid - and avoid mistakes.

 

This is really a huge part of the compelling “why” for real estate that is so often missed.

 

You want to own the real property yourself to make sure all five of these benefits aren’t diluted.

 

You also want to be sure to have a good loan on your property to amplify your ROI over the long-term.

 

As you know, I am “pro-good debt”. I have no interest in paying down low interest rate debt, that the tenant pays down for me and inflation even further debases.

 

Instead of using that dollar to pay down debt, you could use that dollar as a down payment on another property - expanding your empire.

 

Gosh, with interest rates this low, it puts an exclamation point on the fact that you don’t want to be paying down your debt … here in the early 2020s decade. 

 

Paying down good debt is one of the last things that I would do with my money. You lose leverage every time you do that.

 

Turning a liquid dollar into equity just transferred cash into equity.

 

Financial freedom achieved when you do the opposite - when you transfer equity into cash flow.

 

The probability that I’m going to wake up tomorrow and start accelerating paydown on low-rate, fixed mortgage debt tied to this cash-flowing property - is about nothing.

 

It’s about the same as the chance is that my Dad wakes up tomorrow and starts listening to the Notorious BIG with Junior MAFIA.

 

“I chill … “ to “ … you know”.

 

Haha! Yeah, not happening!

 

Not for my Dad, anyway. Not his style. Sounds alright to me. I might drop that in during a workout or something.

 

You’re listening to a more detailed discussion about the Five Ways That Real Estate Pays You and we’re talking about it through a fresh lens of “offense vs. defensive” investing here on Get Rich Education Episode 302.

I strongly believe: It is very difficult to get wealthy without debt. Often won’t achieve freedom without debt. It’s going to be alright ... when your debt is reliably outsourced to others.

 

You know, at one point in my life, when I still worked for an employer. (The last day job I ever had was working in the QA section for a state DOT, by the way).

 

At one point, I realized that every dollar I lock in a stock or 401(k) is a dollar that I can’t use to leverage OPM. That epiphany was a real turning point.

 

Checking the RobinHood app every 15 minutes isn’t going to build real, durable wealth for you.

 

And, sometime before that, it was the realization that for me - and for you - to get more out of life, you can’t live below your means, you’ve got to expand your means.

 

To achieve financial freedom, it sure isn’t going to happen by cancelling Netflix $10 for month.

 

That’s not going to happen if you save $80 on air tickets by adding an extra layover on your trip itinerary. You just added three hours of low-quality time to your life - and you’ll never get that time back.

 

That’s cheesy. That’s unattractive.

 

It’s not about saving money on your Butterball turkeys or car gasoline.

 

I’m not saying you can NEVER do those things. Sometimes you gotta do what you gotta do.

 

But people need to stop being congratulated for being cheap or even focusing on frugality. Gosh, that stuff can make people miserable.

 

People that say, “I want to live frugally.”, they don’t REALLY want to live frugally. They actually want to say, “I want to live well.” 

 

But they don’t know how to do that. They don’t have a vehicle to move forward with. 

 

It’s kind of like, when we had T. Harv Eker here on the show here a few years ago - it’s about setting your mental thermostat higher, so that you can get greater wealth & freedom for yourself …

 

And with the “five ways you’re paid” like I described earlier, hopefully, I’ve charted a substantially clearer path forward for you so that you can do that.

 

Well, with “The Up To 5 Way That Real Estate Often Pays You”, that’s something that I first started talking about more than five years ago. I’ve never heard anyone else talk about it before. So, as far as I know, I guess I’ve “coined this” or whatever.

 

But since I began talking about it, I hear other people talking about it too - even other educational platforms.

 

Now, I do own three real estate trademarks, so what do I think about OTHERS now teaching the “5 Ways You’re Paid”. I’ll discuss that in just a few minutes here.

 

I’m also going to discuss who influenced ME - and give them some credit. And this includes a couple people that you’ve surely never heard about before.

 

If you would like to see the “5 Ways You’re Paid” in one easy-to-read infographic - that all fits on one sheet - so that it’s REALLY cear to understand - I’ll send you a colorful electronic “5 Ways Infographic” all you’ve got to do is go to GetRichEducation.com/Book.

 

That’s got to be one of the greatest deals anywhere. That’s where you can opt-in to get the electronic version of my int’l bestselling book, free, emailed right to you.

 

Then a few weeks later, the “5 Ways You’re Paid Infographic” is automatically sent to you too.

 

That’s at GetRichEducation.com/Book

 

More next. I’m Keith Weinhold. This is Get Rich Education.

________________________

 

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

 

Hope you like our humorous moments to lighten up the show here. Hey, you run a little math on audio and … it begs for some embellishment to spice things up. 

 

When it comes to the up to five ways you’re paid in real estate investing. Yeah, since I first discussed this more than five years ago, I’ve noticed that other REI educators now teach the same thing.

 

I don’t know whether they credit that to me or not - and you know what - I don’t really care whether they do or not. I mean, it’s cool if they do, but …

 

… the more important thing to me is that conscientious people get the information. Share it. That is so much more important than anyone getting the credit.

 

So just … share it.

 

“Helping the people” is more important than “getting the credit”. 

 

I think that the world would be a better place - imagine if everyone put “helping the people” before “getting the credit”. 

 

I don’t own trademarks so that I can go after people that say the same stuff that I do. That’s just not in my nature. I’d rather do productive things with my time.

 

The trademarks are thre just because I wouldn’t want someone else to swoop in and tell me that I can’t use something that I might have come up with in the first place.

 

When it comes to “helping the people” and “getting the credit”, now, everyone has influences - things they learn from others. You & I are no different that way. 

 

Even those that influence you were influenced by someone else before them.

 

Well, I DO like to give credit to those that I learned from, so ... 

 

Though I know he’s a polarizing figure to some people, credit is due to Robert Kiyosaki and the Rich Dad Company. Learn more about them at RichDad.com

 

The most important lesson that I learned there is “Don’t live below means. Expand your means.”

 

It’s more important to increase your income than cut your expenses. 

 

Don’t make a budget. You’re just tearing things down. 

 

Instead, build a cash flow statement. Now you’re constructing. Now you’re making more of yourself, not less. These are really Rich Dad principles and helped develop my mindset.

 

Now, as for who helped turn this mindset into something actionable? I’ve got to give props to “The Real Estate Guys” - Robert Helms and Russell Gray. Learn more about them at RealEstateGuysRadio.com 

 

That’s the first place that I learned, for example, that in real estate, the market is more important than the property.

 

Look, you can’t very well be in your crib with your trading app and just order up real estate - even though people are building online marketplaces. 

 

But one mistake people make is that they buy property because the numbers look good based on some YT video they watched on how to crunch the numbers - but they know nothing about the market or the team. 

 

Then they buy it. Then only after they go buy it, NEXT they go looking for a PM and hope there’s a good one that can handle it. 

 

Then next, they try to figure out the market that they already bought in.

 

That does not work. They’ve got it backwards. If the market and your property manager check out, then & only then do you get the property in that market.

 

It’s sad when people get that wrong. That’s why people walk away from RE & they say that RE doesn’t work.

 

Well, no, that investor wasn’t very strategic. But you CAN understand how that happens to people.

 

And it was great to have both authors of the “Rich Dad, Poor Dad” book Robert Kiyosaki and Sharon Lechter - and The Real Estate Guys all here on Get Rich Education with us multiple times. 

 

Another set of influencers are two guys that you’ve never heard of before. 

 

Their names are Chris and Raj. They are simply two longtime friends of mine that bought four-plex buildings.

 

That got me to make my first-ever property that seminal four-plex building where, with a 3.5% down payment I lived in one unit, rented out the other three, and that started it all for me.

 

These otherwise “regular guys” reinforce the quote from the late Jim Rohn, “You Are The Average Of The Five People That You Spend The Most Time With”.

 

Today, I’m a collector of real estate - most of it in the United States. Being the geography guy that I am, did you know that I have a world map on the wall of our garage …

 

… and I have a little red sticker - little red dots on top of those areas where I own property. Yeah, it makes this real estate collecting kind of visual. Maybe you want to try that too.  

 

Well, one part of the world that I’ve been adding more red dots to lately is where I’ve been buying - across Florida. 

 

Areas around Tampa, Orlando, and Jacksonville all make sense from a cash yield perspective.

 

A lot of BRAND NEW construction properties have numbers that work there, especially where our Orlando provider - that’s Greater Central Florida really - have been actively sourcing brand new construction property in Sebring, Florida, among other nearby places. 

 

Sebring is pretty much smack dab in the center of peninsular Florida, south of Orlando.

 

These single-family homes that make great rentals have a metal roof, they’re 3 bed, 2 bath, and the prices really are remarkable - $179,900 and $159,900. 

 

Yes, that’s for new construction in Sebring, Florida.

 

The rent-to-price ratios are a very attractive eight-tenths of one percent or so. Quite good for new construction, plus you’ve got the tailwind of extremely low interest rates as well.

 

And when it’s new construction, the PROPERTY INSURANCE premiums are so reasonable too.

 

If you’d like to learn more about those, you can do so at GetRichEducation.com/Orlando

 

It isn’t just single-family rental homes. New construction duplexes are available too. 

 

That’s GetRichEducation.com/Orlando

 

You know that I often like to leave you with something actionable like this at the end of an episode.

 

And knowing and doing are two very different things.

 

How do we already know that? Well ...

 

Many people aren’t at their ideal body weight … and it isn’t because they don’t know what to do, they just aren’t doing it.

 

You also need time to figure out what you want to do. I like eating pizza, for example,  but it took me eating different foods in order to find that out. I had to try and do.

 

Learning is best done by trial-and-error but it doesn’t have to be YOUR trial-and-error. 

 

Learn from me. I’ll even eat your pizza for you!

 

I help give you the information you need to make an informed decision.

 

I connect you with property teams with proven track records - many of whom I invest with myself.

 

You ultimately choose your investments.

 

There’s risk with anything … anything in life. 

 

You either take the risk or lose the chance.

I think it’s helpful too, that you follow someone that’s been through a recession. 

 

I’ve been investing for … nearly 18 years … it’ll be 18 years next month … since I bought that landmark four-plex building.

 

Teach you how to fish or GIVE you a fish? Well, why not do both? You can get the fish at GetRichEducation.com/Orlando

 

Have you ever wondered where your money is? Well, the world already has your money. You just need to go out and claim it.

 

I’m Keith Weinhold - grateful, as always for your listenership. I look forward to chatting with you again next week.

 

Don’t Quit Your Daydream!



Direct download: GREepisode302__.mp3
Category:general -- posted at: 4:00am EST

Stocks, real estate, gold, oil, inflation rate, and interest rate valuations are all updated after the first half of the year.

Housing Wire tells us rents are up in: Memphis, St. Louis, Greensboro, Jacksonville, Columbus, Tampa, Cleveland, Kansas City, and Virginia Beach. I discuss where they fell.

San Francisco rents just plunged 12%.

Macroeconomist Richard Duncan of MacroWatch joins us to discuss depression chances, and inflation vs. deflation.

For a 50% subscription discount on Richard’s MacroWatch video newsletter, use Discount Code “GRE” at: RichardDuncanEconomics.com.

Fed intervention has prevented a COVID-induced economic depression (so far). We will need more to prevent depression.

Hordes of dollars can be created by the U.S. because dollars are not tied to gold. Many Americans still don’t understand this.

Recent currency creation has not caused high inflation. The Fed usually hit below their 2% inflation target.

Could consumer price deflation create asset inflation? Yes.

I describe deflation vs. inflation as a “tug of war”. 

Deflationary tugs: globalization, technology. 

Inflationary tugs: currency creation.

Bottom line: Be invested in something that pays you five ways like real estate.

Resources mentioned:

Richard Duncan’s MacroWatch newsletter:

RichardDuncanEconomics.com

Use Discount Code “GRE” for a 50% discount.

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode301_.mp3
Category:general -- posted at: 4:00am EST

Homes with many small bedrooms are hotly desired today.

Why? In an economic rough patch, people need roommates. Secondly, home offices are more popular than ever.

Residents increasingly want yards today too. Gardening is popular as a hedge against disruptions in the food supply chain.

This all makes single-family homes more popular than apartments.

*The entire episode transcript is below.*

The debt-to-income ratio requirement is positioned to be removed from qualified mortgages.

Three listener questions are answered: 

1) What about CapEx expenses? 

2) What about all these property notices I get in the mail? 

3) What happened to the coffee and cacao providers?

I give you four reasons about why money is a taboo topic. 

Learn the least likely money topic that people are willing to discuss.

The most I ever made at my day job was $108,000.

People must stop equating net worth with self-worth. 

Resources mentioned:

April Home Prices Grew 5.5%:

https://www.housingwire.com/articles/u-s-home-prices-grew-5-5-in-april-despite-pandemic/

Why Money Is A Taboo Topic - Ally Bank survey:

https://media.ally.com/2015-11-24-Holiday-Tip-Most-Americans-Say-Social-Conversations-About-Money-are-Taboo-According-to-Ally-Banks-Money-Talks-Study

The Atlantic:

Why Americans Don’t Talk About Money

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Top Properties & Providers:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

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

 

Talking about today’s hottest rental type, then my favorite guest is here on milestone Episode 300 - because that guest is you - as I help with your listener questions about your rental property operations, then “Why Money Is A Taboo Topic” (why DO people hide their salary?), and finally a little Episode 300 bonus. All today, on Get Rich Education.

_____________________

Hey, you’re inside GRE. From Phoenix, AZ to Phoenixville, PA and across 188 nations worldwide. I’m Keith Weinhold. 

 

This IS that show that’s created more financial freedom than nearly any show in the world.

 

You’re listening to milestone Episode 300 of Get Rich Education. More on that later.

 

The hottest INCOME PROPERTY housing type today could very well be single-family rental (SFR) homes that have many small bedrooms

 

Four bedrooms is often better than three. Three is better than two.

 

Yeah, today, a high number of small bedrooms is being favored over fewer large bedrooms.

 

For one thing, this is because as the economy is in a rough patch, more people seek roommates to share housing costs.

 

Also, with more people working from home now, they want the extra bedroom for quiet office privacy.

 

You probably already understand that more residents prefer SFRs over apartments to avoid common areas like laundry rooms and hallways and even elevators.

 

Another reason boosting SFR demand today is something that you might be overlooking when it comes to rental property … because often, you’re thinking about things INSIDE the property like amenities, and square footage, and layout. 

 

But another reason renters increasingly want single-family rentals are yards. Now sometimes, duplexes might have a fenced yard for each side too, of course.

 

But … why are yards more desired today?

 

Well, there are a few reasons. In the pandemic, people have discovered gardening like the hunter-gatherers did.

 

Yeah, gardening as a hedge against these disruptions in the food supply chain.

 

In fact, Burpee Seed Company recently had the highest sales in its 144-year history.

 

People are gardening. In fact, the homeowner’s association in my own neighborhood recently put it to a vote among residents about “OK’ing” having a second detached building in your backyard (only 1 maximum is allowed now) and that’s because more people want to have a greenhouse today.

 

Gardens and greenhouses - these are most conducive to single-family rentals.

 

People are even buying egg-laying chickens like never before. It’s kind of a back-to-basics subculture that’s emerging.

 

Yes, humans are mammals and mammals need sustenance! Haha.

 

You need food and you need real estate.

 

In the midst of The Great Shutdown, people want to do more with their lawns. 

 

Lowe’s & Home Depot are doing really well - and they’re selling home-dwellers a lot of things like Inflatable pools, patio furniture, and trampolines.

 

Then back indoors, yeah, you may very well want to tilt your new property buys into SFRs with more small bedrooms.

 

Sometimes, older SFHs can have four or even five bedrooms. One reason for that is that families had more children generations ago.

 

Family sizes are smaller now. So if you still have a 4-5 bedroom place, it can work well for either roommates or home offices.

 

If you're the "hands-on" type, building a wall to divide a large bedroom has rarely been more lucrative than it’s been lately.

 

Now, one 300 sf bedroom is pretty big. Dividing it into two bedrooms of 150sf each is paying off more than it has in the past.

 

They are some housing trends in the pandemic - demand for SFR with more small bedrooms and a yard for a garden.

 

In the pandemic, the broader economy is getting "bailed out" more often than a bank behaving badly.

 

It's not just quantitative easing, dropping interest rates on every loan type, or loosening bank reserve requirements or putting free checks into unemployed people’s hands.

 

Many real estate investors are getting support … almost like they had opened their own GoFundMe account.   

 

Low supply keeps housing prices buoyant. Low mortgage rates keep demand high. Forbearance keeps borrowers from defaulting - so that further supports prices.

 

Now, the debt-to-income ratio (DTI) requirement is positioned to be removed from qualified mortgages.

 

This means borrowers that have higher existing monthly debt payments on everyday things like their car or their credit cards could now qualify for new mortgage loans - when they couldn't previously.

 

Well, what this does is that it creates a larger buyer pool. More people have the capacity to qualify and buy property.

 

This larger buyer pool serves to further push up real estate prices - and that’s both investment property and primary residences. 

 

Well, eliminating the DTI is great news if you want to lock up more property at these historically low interest rates.

 

But there can be too much of a good thing. It's a call-to-vigilance to be sure we don't return to those loosey-goosey days of, say, 2005.

 

That's when virtually anyone with a name and a signature could get a loan. Borrowers lied about their income on loan applications and the income wasn't checked - it wasn’t even confirmed in underwriting.

 

So then, people with historically low-paying jobs like movie theater ushers & dishwashers & pedicurists could sometimes own a fairly lavish home back then.

 

When appreciation stopped in 2007, liar-borrowers had no equity to remove for servicing the payments … and that whole thing didn't end well. 

 

We're nowhere near that point. But watch that pendulum swing. 

 

If you’re buying for resilient cash flow, you’re not so price sensitive anyway.

 

-----

 

The first one of your listener questions today comes from Chad in Saline, Michigan.

 

Keith, I like your easy-to-remember VIMTUM explanation of expenses but why are you excluding CapEx expenses from the cash flow calculation?

 

OK, thanks, Chad.

 

Let me translate if you, the listener, are uninitiated on this. 

 

The easy way to remember how to calculate your monthly cash flow is to take your rental income and subtract out your mortgage (that’s principal & interest) and your operating expenses, which I call your VIMTUM. V-I-M-T-U-M. 

 

That’s just an acronym I use for your regularly, recurring operating expenses and VIMTUM stands for Vacancy, Insurance, Maint., Taxes, Utilities, and Mgmt. V-I-M-T-U-M

 

What Chad is asking about are CapEx - which a shorthand way of saying Capital Expenditures.

 

CapEx means large, IRregular expenses that an investor or even a homeowner - often incurs with their property over longer periods of time.

 

An example is, what happens when your roof needs to be replaced? A lot of roofs have a 25-year life expectancy.

 

Now, your property’s water heater has more like a 10-year life expectancy.

 

Chad is basically asking me how I’m accounting for that when figuring cash flow. I think I addressed this on a prior episode, but it’s been a long time so I’ll bring a fresh angle to the answer.

 

First of all, I’ve mentioned previously that it's prudent to keep 3-5% of the TOTAL value of your property portfolio in a liquid side fund. 

 

So if all your properties are worth $1M, you’d have $30K - $50K in cash or cash equivalents.

 

If you’ve just got your, say first turnkey at $100K - have $3 to $5K set aside.

 

Note that when you qualify for a mortgage in the first place, mortgage loan underwriting typically requires that you have reserves already.

 

And, by the way, this liquid side fund should be in addition to any overall liquid emergency fund that you have in your life.

 

But, Chad, on your CapEx question, you might still be thinking ...

 

Yes, I want to take some of those dollars that you’ve felt compelled to put in a liquid side fund account monthly and factor THAT in to your property ROI. I get that. Here’s the thing.

 

If you follow … really … the entire wealth formula espoused here on the show, your CapEx expense should be limited. You’re going to pay less in CapEx expenses than other investors.

 

Why is that?


It’s because at the 8-to-10 year mark, which is before a lot of major CapEx items need attention, you’re going to sell your property and 1031 Exchange it into the next one - or hopefully into two at that point.

 

That is all driven by the fact that, after most any 10-year slice in the housing market, you’re going to have appreciation, hence accumulated equity.

 

As you know, home equity is unsafe, illiquid, and its rate of return is always zero.

 

So it’s really due to math and the loss of leverage that makes you move your property along before CapEx expenses kick in.

 

And with SFRs, you can sell to an owner-occupant buyer that typically get emotions behind the home and isn’t at all concerned that you were the one that enjoyed the new roof in its first ten years of use or whatever. 

 

Now, if you have substantial enquiry accumulation after 10 years on a property that performs really well and you want to hold onto it, then you might do a cash-out refi and have CapEx expenses like a new water heater.

 

So, thanks for your excellent question, Chad.  

 

One other thing I’d like to mention that a lot of real estate people don’t like to talk about are to, in general, run your cash flow projections fairly conservatively.

 

That is because, in real estate, unexpected expenses are more common than unexpected income.

 

Thanks, Chad.

 

The next question comes from Lori in Pasadena, CA. 

 

Lori says, “Keith, love listening to you. You’ve got the most relevant real estate show out there. Wow, thanks for that.  Things are going fairly well with the properties that I buy through GRETurnkey.com but with each buy, I get more & more of these various letters in the mai that I have to deal with.

 

The latest one is an annual property rental fee statement from Florida. Things like this continue to cut into my time … umm … and then Lori goes on to give another example.

 

OK, Lori. Yeah, what she’s talking about here … is that the Florida municipality - the town - where her rental SFH is located has this annoying little administrative charge.

 

They charge a whole $50 per year to Lori for this property because she’s an out-of-area investor that has the “privilege” of owning Florida rental property in their town.

 

This is basically like a tax excised by the town where she owns her property.

 

What something like this really is Lori is … a nuisance. Just reading the form, and figuring it out what it is, and seeing how that Florida town accepts the payment. It IS annoying. It cuts into your time.

 

In fact, I got a piece of nuisance mail for one of my apartment buildings just yesterday.   

 

This is from a utility provider - the natural gas provider to the building. Basically, the natural gas company is working on a high-pressure gas transmission pipeline, and the R-O-W for the pipeline is apparently within ⅛ of a mile of this apartment building of mine.

 

The letter said that the property residents should be informed.

 

Well, Lori, with the piece of nuisance mail that you received and the one that I got, here’s what you do. Get it out of your life. Get that nuisance mail out of your life.

 

Now, I don’t mean “throw it away”. This all comes down to one word - and that word is “manager”. 

 

What I did was get out my phone, I took a photo of this letter, sent the letter image to my Property Manager right away. 

 

I asked them to handle it - and also asked the manager to make sure to tell the letter sender that any future correspondence like this be sent to the manager, not me.

 

You know what we just did, Lori. We both just increased our ROTI. Yes, we just increased that all-important investor metric that’s even more important than ROI.

 

ROTI is your Return on Time Invested.

 

I’m a big proponent after having a professional Property Manager. Remember, it’s their job to handle communications with your residents like this - and it doesn’t cost you anything extra.

 

Remember to outsource these little nuisances to your PM.

 

Lori, I don’t know how many properties you have, but just say you have a total of ten rental doors. 

 

With a portfolio that size, some months, you might have what investors call “a perfect month” - that is, a month with zero repairs or maintenance in your portfolio.

 

But whenever you do, sometimes you might wonder - well, what did I pay the manager for? 

 

Well, you still paid your manager to collect the rent and pay your bills and itemize your statements, and just have the peace of mind that your tenants can’t get ahold of your DIRECTLY at an inconvenient time.

 

But ensuring that your manager handles all your nuisance notices such that you don’t even know that you got one … that increases your Return on Time Invested. 

 

Be that responsible owner. Do good in the world. You want a nuisance tax notice to get paid, you want your tenants to be informed about nearby utility work - but be sure to outsource it and keep your quality of life. 

 

Like I’m fond of saying, “Be sure your quality of life exceeds your cost of living”. 

 

Bottom line is - Use your manager. Thanks for the question, Lori!  

 

The next question is from Brian in Austin, TX. Brian says: 

 

Hi Keith,

I am an investor with $7 million in value across 32 properties. (Nice job there, Brian). I noticed you are not promoting coffee and cocoa any longer and was curious if there was concern or a reason behind it? Thanks, Brian.

 

Alright, Brian. What he’s referring to is that at GREturnkey.com - where our list of cash-flowing property providers is, there used to be a page for coffee investing there and a page for cacao investing there - and they’re both currently gone.

 

Brian, what happened is that, with the provider there - and its the same provider for both types of agricultural investment - that is, where you, the investor, get cash flow from the ANNUAL harvest of coffee and cacao is that that provider is having trouble with the deeding process where those parcels are located - namely, in Panama.

 

The provider is still delivering the land deeds to all the investors. But working with the municipality there is taking so long that this long, drawn-out deeding process was frustrating to some investors. 

 

In fact, it might have taken me … something like two years to get my deeds for my coffee farm parcels. I don’t really remember - but it took awhile.

 

Anyway, those offerings aren’t currently on GREturnkey.com because the provider is changing their model, in part because of the slow deeding process. They’re listening to your input and responding. They’re doing, really, what you would want them to do.

 

So they are moving toward a Private Placement model. That way, they can issue the share certificates in a matter of weeks, not years like it is with the deeds, and they can focus their time and effort on actually developing, growing and operating the business.

 

Another is that under the deeded model, they couldn’t accept IRA funds any longer.

 

So, expect coffee and cacao to be back on GREturnkey.com at a later time. That’s why they’re not there now. There aren’t any more deeded parcels available - and they’re changing their model. 

 

But, of course, they’re still working on getting the deeds for those that have bought those farm parcels in the last few years & still don’t have their deeds.

 

The main reason that you’ll see a provider be removed from GREturnkey.com is that they’ve run out of INVENTORY in that market. 

 

If a provider doesn’t have inventory & doesn’t actively source it, then there’s no reason to waste your time & have it there at GREturnkey.com.

 

That is all for our listener questions today.

 

Homes prices for April grew 5-and-a-half percent year-over-year despite the pandemic. Yes, real estate is slow moving and we’re still looking at April data here near mid-summer.

 

That article is in the Show Notes for you. 

 

My guess is that I wouldn’t really expect an appreciation rate that high over the NEXT year.

 

But one thing that is supporting prices are those “erstwhile” mentioned low, low mortgage interest rates that are even lower than the ocean floor at this point. 

 

Let’s look at mortgage interest rates decade-by-decade. Gosh, this is just remarkable. 

 

It gives you perspective sort of like a while ago when I played those cornball television commercial ads from the 1980s where you could finance a car for an 11% APR - and that was touted as a great deal.

 

Well, let’s look at the average 30-year fixed OO mortgage rate that was issued in the 1970s.

 

It was 8.9% then. That was the average rate. Inflation was increasing.

 

By the 1980s decade, inflation had reached a crescendo. This was the Voelcker Era - where Fed Chair Paul Voelcker famously raised interest rates to try to stomp out runaway inflation.

 

And Voelcker’s bold move WAS successful. But this helped result in a 1980s decade mortgage rate of 12.7%. Gosh, 12.7%.

 

By the 1990s, they settled down to 8.1%.

 

By the 2000s decade, down to 6.3%. Yeah, that sounds about right - I bought my first ever property in 2002 at right about that rate - it was 6-⅜%.

 

By the 2010s decade, we had low interest rates to pull us out of The Great Recession and they stayed low. In fact, the average for the 2010s decade was … 4.1%.

 

That felt unprecedented at the time. Well, today, take another full percentage point off that yet. Mortgage interest rates are 3.1% today … as we’re here early in the 2020s decade.

 

Just astonishing. 3.1%.

 

Now, interest rates correlate with inflation. So today we’re in a low inflation environment and hence, a low interest rate environment.

 

Well, coming up here on the show next week, one of the world’s most prominent economists will be on the show with me and we’re going to discuss Inflation vs. Deflation. 

 

Which side is winning … and what is going to happen next. Of course, we’ll discuss the state of the broader real estate economy and so much more as well. That’s next week.

 

I hope that you are doing well. We’ve been largely sheltering-in-place here at our home in Anchorage, Alaska. I’m coming to you from Anchorage today.

 

Next week, if all goes as planned - it’s an awkward time for cross-continental travel, but I’ll be flying into Buffalo, New York, and then spending a good chunk of this month in both western New York State and mostly Pennsylvania … as I’m visiting family.

I think I’ve told you before that I feel like I won the “parent lottery”.

 

My terrific parents have lived in the same upstate Pennsylvania home since 1974. They've also had the same phone number for all 46 years. 

 

And when I visit them, I still sleep in my same bedroom that I slept in as a baby. I love Curt & Penny Weinhold - and I am so grateful and inspired by their example of goodness and stability.

 

As far as events - if you want to meet in-person. I had hoped to do meetups in New York City and Philadelphia this summer, as well as a Harrisburg, Pennsylvania real estate field trip. But COVID has wiped out all of that.

 

Of course, as always, you can keep up-to-date on all of that GetRichEducation.com/Events

 

Some other live speaking events have gone virtual. For example, I’ll no longer be speaking in Birmingham, Alabama at the Spartan Summit this coming October. 

 

But I will be speaking at their “event gone virtual”. In fact, I’ll be the speaker KICKING OFF The Spartan Summit. Again, learn more at GetRichEducation.com/Events.

 

I hope to do some or all of the live New York City, Philly and Harrisburg events next year. 

 

For milestone Episode 300 here, do you like the Get Rich Education … theme music? Or did you at least, wonder where the now-familiar-to-you music comes from.  

 

Well, we don’t purport to be any type of music channel. This is an investing show.

 

But this one time, for Episode 300, we’re going to play all of it - it’s two minutes long - at the end of the show today. 

 

We own the royalty-free track. This show launched in 2014, and this track has been our theme music since late 2017. It’s from a DJ named Wicksford and it’s called “Cannot Be Stopped”. 

 

But first - why don’t people talk about money? Why are other people so secretive about their salary? Why is money considered a taboo topic, then anyway? That’s next. 

 

I’m Keith Weinhold. You’re listening to the wealth-building Get Rich Education. 

___________________

 

Welcome back to Get Rich Education. You are listening to milestone Episode 300.

 

We’ve been talking about some of your harder real estate investing skills today.

 

Well, what about mindset?

 

Why Don’t People Talk About Money? Why is money a taboo topic - one of those things that you just don’t talk about? It’s taboo stuff - right up there with politics, sex, and religion?

Well, if people would stop equating self-worth with net worth, then talking about money would not be this big taboo thing.

 

According to a survey conducted by Ally Bank, 70% of Americans think that it’s rude to talk about money. 

Just, get this - Research shows people would rather talk with a stranger about an STD than their salary. Oh geez.

You’d rather tell someone you have an STD than tell them how much you make?

People would rather admit to contracting gonorrhea than fessing up that they only make $54,000 a year. Sheesh!! 

Oh, gosh … and did I really just use that word on the show. Especially here on Milestone Episode 300?

So … well why this … society-wide gag rule?

Why does this taboo exist? I think that it all boils down to about four big reasons.

People don’t talk about money because, most people don’t have much money. So there’s this negative association.

Talking about money is proportionate to talking about problems. If you’ve had more financial success in life, then it can be easy to forget that so many people think this way. 

The second reason that “money talk” and especially “salary talk” is taboo is that because if you have a lot of money … you know what can happen to you? 

Someone might ask you to borrow it. Well, lending money to family or friends is a great way to strain relationships.

If they’re late to pay you back, then it’s rude for you to even ask someone when they’re going to repay you.

Another reason that there’s a prohibition of “money talk” … at least in America here … is because many Americans put a higher value on PRIVACY than other societies do.

Now, I think that there are gradations of what money TOPICS are acceptable to discuss and what are not.

I’m pretty sure that I’ve told you on a previous show - though at this point, 300 episodes, sometimes I can forget - but I’m pretty sure that I told you that the most that I ever made at my day job before quitting it more than five years ago was $108K.

At times, I had to work more than forty hours a week for that. 

Now, that might be $125K in today’s inflation-adjusted dollars, but that salary was no longer that interesting to me when my real estate provides value to people with very little of my involvement.

Now, I’m kind of a rare person for me to even mention - a past salary like that - even though it was kind of in a former life of mine.

In America, if something costs even more than a few hundred dollars, MAYBE you shouldn’t mention it. If your friend bought a canoe for the lake - you might want to know how much it cost, but you’re hesitant to ask them the question.

 

When we talk about gradations of cultural acceptance, I think that if you inquire about the cost of your friend’s lunch yesterday—that’s a transaction with pretty limited connections to the past and future—and that generally isn’t off-limits.

 

Now, in Israel, people OPENLY discuss salary. Why is that? Well, there are a couple reasons. It’s because a place like Israel historically places a lower cultural premium on privacy. 

Another reason … is that a place like Israel and other places in the world have higher levels of labor unionization. You see, “once it’s collective bargaining, it’s not as personal”.

When you’re a member of a labor union, you often know each other’s job classification and that job title is rigidly tied to a fixed and publicly-viewable salary or wage. 

And then, really another reason for the cultural “Money talk taboo” in America, is because asking someone what they earn means that you are indirectly questioning their personal worth.” 

“By contrast, in China personal worth is not primarily indexed to financial worth, but rather one’s ‘quality’ or what they call “SUZZ-eee” (suzhi). 

Your moral and ethical values cannot be reduced to economic value.” Yeah, I really respect that.

Getting back to the Ally Bank survey - what they found is that when people DO discuss finances socially, nearly one half of the survey respondents said they prefer to keep it neutral - for example, talking about price comparisons on goods and services like granola bars or a manicure, or where to find a better interest rate on a savings account."

It also found that younger people are more open about discussing money

More than any other age group, millennials (59 percent of them) acknowledged talking with others about their income, savings and debt, even though nearly two-thirds agreed it is rude or inappropriate to talk about money in a social setting. 

 

In fact, almost half say they disclose their income to others, and 62 percent say it is important for them to surround themselves with people who they feel are financially secure.

So, even kind of the second-youngest generation today, Millennials, would rather be around people that are financially-secure. Hmmm … that’s really “telling”. 

 

Now, what I found interesting is that the survey revealed that:

  • The majority of respondents said they discuss sensitive money matters with family is 69 percent, with financial professionals is 26 percent, and with friends is only 22%, while only 8% percent said they discuss sensitive money matters with work colleagues. 

That shows more there that when you to talk about it - it’s deemed to be a real breach of professionalism to discuss this stuff at work.

 

  • People are most likely to disclose their income (39 percent) over savings (30 percent) or debt (29 percent) to family and friends. That tells you that disclosing debt is the most embarrassing for people.

Of course, that’s mainstream society. 

Here at Get Rich Education, displaying the amount of good debt that you have probably says something rather positive about your real estate portfolio size.

 

Now, in WORKING-CLASS communities, the money taboo can be weaker there. 

Jennifer Silva is a sociologist at Indiana University and she researched the coal-producing region of Pennsylvania.

The bottom line is that the working-class families she’s interviewed didn’t hesitate to disclose specifics about their income, rent amount, or expenditures. 

“People would say, ‘I’m an open book,’ and they’d be straightforward, open, not ashamed.” 

They freely discussed “the challenges or even impossibilities of supporting a family on minimum-wage work” and almost acted a little proud of their resourcefulness, like “how they would make their budget stretch, such as buying ground meat in bulk and freezing portions to make it last.”

You know, from my personal vantage point, sometimes you will BE around people that you know make substantially less money than you, And you know what, you DO find yourself tilting the conversation so that person isn’t made uncomfortable.

What about when you go get your hair cut?

I mean, the 15-minute conversation that takes place between me & the person that cuts my hair … it’s like, if they ask me what I did this weekend - and I stayed in a resort and they already told me that they played basketball with their kids or something else - even though basketball with your kids might be a GREATER activity in a sense than staying at a resort … I don’t mention staying at a resort because it sounds hoity-toity … a little snobbish. Kinda unrelatable to them.

So then maybe I’ll tilt that chat to NBA Basketball or something.

Chat about something that’s not so socioeconomically stratified. You can always find that common ground somewhere. 

You know, another personal anecdote, in my life, I do a lot of these 5K running races & other events like that.

The race event makes my time publicly available. The local news outlets might even pick up those races times and publish them. 

Anyone can see it. Well, that is a measure of my fitness on that day.

There are clearly plenty of runners that rank both above me and below me.

So, that’s made public? But yet salaries are not? 

Somehow, American society does not equate physical fitness nearly to the degree that we evaluate and stratify how much money you make. I don’t know that it should be that way, but it is. I think that’s rather weird.

Revealing how much money you make, to many people,  “exposes how you’re valued by your employer and how your contribution is valued even more broadly, by the community.”

That makes an ounce of sense, sure, but why such a high value? I don’t get that part.

Few people would think “You are worthless because you haven't broken the 20-minute mark in a 5K yet.” 

But for some reason, WAAAY more people would equate you with having a lower worth if, say they learned that you only made $54,000. 

Now, Eli Cook - he’s a history professor at the University of (HIGH-fuh) Haifa and the author of a book on the topic, says that this money taboo has been going on for about 150 years in America.

 

In the late 1800s and early 1900s, he says that many Americans internalized the lessons of mainstream neoclassical economics, which suggested, through [the economist] John Bates Clark’s theory of marginal productivity, that everyone earns what they in fact produced.” 

 

So … that’s one opinion on about HOW LONG this has been taking place.

 

Really, what a lot of this comes down to is that the everyday conversations that you have with others are filled with questions about what people buy, what they do for a living, or how long they’ve been investing in real estate, and where they went to school. 

And once you know all of those things about someone else, the salary or net worth or cash flow are less important … because all of this is CONTEXT that you have about others - and these are all really proxies for class position anyway.

 

When we can stop equating net worth with self-worth, money has a chance of no longer being a taboo topic … and that really is, the big takeaway.

 

I trust that you’ve been enjoying MILESTONE Episode 300 of Get Rich Education.

 

As always, to get the Show Notes, you can go to GetRichEducation.com/300 - since that’s the episode number. 

 

In fact, this week, you’ll find the entire transcript to the episode if you would like to read along … or you tell someone else about the show and tell them about the option to read as they listen.

 

Above all, I have got to thank you for listening. I hear from so many people that tell me when they discover this show, they want to go back & listen to all 300 episodes …

 

… usually because I hear one of two things. They say it makes actionable real estate investing more CLEAR than anywhere else … or that it's changed their investor MINDSET more than anything else. 

 

Remember, if you’re interested, hang around until the very end of the show today to hear the entire uncut theme music … as a little Episode 300 bonus. 

 

More importantly, if you’re one of those people that STILL has not bought your first property. 

 

You can’t TIME the market, and you can’t make any money from the property that you don’t own. 

 

As long as you’ve been educating yourself for a while, then, if you think that inexperience is the only thing holding you back, well, then the only way to GET that needed experience and learning is to act.

 

Some people wait for ALL blue sky and everything to be perfect before they begin. Well … that really never happens.

 

You’ll either change what you’re doing … or you’ll keep what you’ve got.

 

Teach a man to fish … or give a man a fish?

 

Well, here, we do both. At Get Rich Education, we TEACH you how to fish. 

 

GREturnkey.com is our sister website where we GIVE you a fish too - with top national turnkey providers.

 

Get your mortgage pre-approval and download a provider report. We give you all 8 main steps at the top of the page there.

 

View available properties, make an offer, please get a third-party property inspection, then comes the appraisal, then sign a Property Management Agreement …

 

… have your property closing, and finally, own the property and enjoy the collected RENT that your PM auto-deposits into your bank account. Get started at GREturnkey.com

 

I’m your host, Keith Weinhold and I’ll be back next week and every week to help you build your wealth. Don’t Quit Your Daydream!

Direct download: GREepisode300_.mp3
Category:general -- posted at: 4:00am EST

Turnkey RE providers must acquire distressed property at a discount in order to stay in business.

We go behind-the-scenes and see how these companies really operate.

They take risks, maintain relationships with myriad parties, coordinate contractors, bear holding costs, buy & store materials, screen & place tenants, and operate a management division.

It’s a ton of work that investors can outsource to turnkey providers. They are professional fix & flippers. 

The “consumer-profit chain” helps you understand this.

Dani Lynn Robison of Freedom Real Estate Group near Dayton, Ohio offers private lenders like you 8-10% cash-on-cash returns at www.GetRichEducation.com/Lending

The funds are used to purchase and rehabilitate distressed property. They’re transformed into turnkey property.

Your loan collateral is tied to a specific address. A note and mortgage is produced. You have first lien position.

This provider has performed 300+ fix-and-flips since 2015.

Get the report and connect with the provider for predictable 8-10% cash returns for four to twelve month terms at: www.GetRichEducation.com/Lending  

Minimum investment amount is $50K. You DON’T need to be an accredited investor.

Resources mentioned:

Private Lending with 8-10% cash return:

 www.GetRichEducation.com/Lending

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode299_.mp3
Category:general -- posted at: 4:00am EST

Learn how to “get rich for sure” versus “get rich quick”. 

You must diverge from the herd to get more out of life.

Today’s guest, 24-year-old Hayden Crabtree, found that he owned more property than his college real estate professor.

After college, he worked to learn rather than earn. He worked for free for over a year! That’s how he attracted a real estate mentor - by providing immediate free value, not “taking”. 

Hayden also values relationships, and structuring “win-win” deals.

He authored the new book, “Skip The Flip”. 

House flipping is not real estate investing. 

Hayden, based in Athens, GA, focuses on self-storage units.

Some family and friends will critique you for being different. Few understand financial freedom.

He uses debt (leverage) to create wealth.

Hayden is giving away his e-book free at: HaydenCrabtree.com/freebook

Resources mentioned:

Hayden’s book is free:

HaydenCrabtree.com/freebook

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode298_.mp3
Category:general -- posted at: 4:00am EST

Pros and cons of getting paid a permanent government housing subsidy are explored.

But first, I discuss your future in light of the current pandemic crisis - housing supply, 2020 vs. 2008 recession differences, economic “vaccine”, current 13.3% unemployment rate.

“Section 8” is the primary federal government program that subsidizes three groups: low income, elderly, and disabled. It is HUD-sponsored.

Cons: Tenant screening is vital, inspections.  

Pros: Longer tenancies, higher rent amount, lower vacancy rate, tenant wants to keep voucher.

Learn more about owning renovated Section 8 housing with a manager that deal with the housing authority at: www.GetRichEducation.com/Richmond

The housing authority typically pays most, not all, of the tenants’ rent.

CNBC named Virginia of the #1 business state. Richmond is the capital of the 12th-most populous state. 

In Richmond, $1,300 rent and $145,000 purchase price (0.9% RV) is typical for SFRs suited to Section 8.

Connect with the provider for “guaranteed rent” property at: GetRichEducation.com/Richmond

Resources mentioned:

Property with “guaranteed rent”:

GetRichEducation.com/Richmond

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode297_.mp3
Category:general -- posted at: 4:00am EST

College real estate is in deep trouble. 

Commercial leases of all types are in trouble because they often have 10-year terms. Who wants to make 10-year decisions today?

Residential B and C-class SFHs up to four-plexes in the suburbs make a lot of sense today.

We’ve had 33 recessions since 1860. They’re common.

Mortgage rates hit all-time lows again, forbearance loosens, and entry-level housing supply is tight.  

Fed Chair Jerome Powell says negative interest rates aren’t being considered.

He admits to printing money out of nothing (wow!) - and we listen to the audio.

Redfin CEO Glenn Kelman tells us about urban-to-suburban migration.

I discuss “The Geography of Real Estate”, clearing up many misconceptions about U.S. geography.

Learn: Why the West Coast is warmer than the East Coast, the geography of property taxes and credit scores, NYC geography & air rights, Mississippi River importance, sinking cities, Texas facts, Pacific NW’s sparse population, California and Alaska myths.  

Trivia question: What is the world’s most populated island?

Resources mentioned:

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode296_b.mp3
Category:general -- posted at: 4:00am EST

Making a lasting impact is rare. Get comfortable with being uncomfortable.

You get more focus time by opting-out of life's needless direct message notifications.

You get more cash flow by minimizing the amount of real estate principal that you pay down.

The author of the popular new book, The Wealthy Gardener, John Soforic joins us. It is about lessons for prosperity between father and son. The book could make a great Father's Day gift. 

John has $20K of monthly real estate cash flow.

Don’t strive for happiness. Strive for satisfaction; more happiness will result as a by-product, and you’ll be significant. 

John’s grandfather worked his body into the ground in a coal mine, 60 hours a week for 40 years, dying of black lung disease. John vowed to live a more meaningful life.

John reveals: a 5-year crusade for wealth, why working a 40-hour job is not a sacrifice, how to stop selling your time for dollars. 

The top excuse why people don’t do more is: fear, not laziness.

Resources mentioned:

The Wealthy Gardener book:

Amazon link

Wealthy Gardener Website:

https://wealthygardener.com/get-rich-education-with-keith-weinhold/

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode295_.mp3
Category:general -- posted at: 4:00am EST

Deflation is occurring before long-term inflation is expected. 

When people stop buying things, manufacturers can’t charge enough, so they stop making products. This results in more layoffs. 

Our national debt is $26 trillion. It’s doubtful that it will ever be repaid. This is why The Fed must inflate.

MidSouthHomeBuyers.com has provided our listeners with more cash-flowing property than anyone.

They’ve renovated 2,600+ homes in Memphis, TN and Little Rock, AR. They then place a tenant and manage the property for you.

In the pandemic, renters prefer single-family homes over apartments.

What makes Memphis so resilient? Shipping, distribution, transportation, medical.

Memphis’ rental sweet spot is $660 - $990 for this class of property. Sale price: $60K - $95K. These are decent homes. I’ve been inside them with both guests.

In 2009, Memphis saw no rent drops or occupancy drops.

Last year, they expanded into Little Rock, Arkansas.

You can start with a Memphis home for just $14K-$19K with down payment and closing costs. Expect a wait list. This reputable, longtime provider is popular. 

Resources mentioned:

MidSouthHomeBuyers.com

USDebtClock.org

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode294_.mp3
Category:general -- posted at: 4:00am EST

You really can gain intelligence in order to achieve wealth and success. Guest John Assaraf guides us in learning how.

John is an expert in helping people achieve more. He grew RE/Max of Indiana to nearly $5 billion in sales.

Success often comes from making “non-conforming” choices.

I give you three examples of my own non-conforming decisions: moving from PA to AK, buying a four-plex, and even launching this show.

“We must all suffer from one of two pains: the pain of discipline or the pain of regret. The difference is discipline weighs ounces while regret weighs tons.” -Jim Rohn

Commitment drives beliefs, which drive habits, which drives behaviors.

How “you see yourself” matters.  

Strengthen your strengths and manage your weaknesses. 

You own the most powerful biocomputer in the world - your brain. Few exercise it enough.

Learn how to manage fear. It’s one of your strongest emotions. Financial and emotional safety are being preserved.

When you control your fear, you can respond rather than react. 

Resources mentioned:

John Assaraf Websites:

JohnAssaraf.com

MyNeuroGym.com

John’s book “Innercise”:

Amazon link

Check out John’s:

Twitter: @johnassaraf

IG: @johnassaraf

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode293_.mp3
Category:general -- posted at: 4:00am EST

Learn the history of interest rates, 1971-2020. Mortgage rates just hit all-time lows.

Tenants are generally reliably paying the rent during the pandemic. Why? Government pays their income; expenses are lower because they can’t travel anywhere to spend. They have more to spend on the rent.  

Unnecessary businesses are collapsing: spas, salons, theatres.

More than half of mall department stores could be closed by next year, like Macy’s, JC Penney, Lord & Taylor.

If you don’t have multiple income streams, the pandemic is harder on you.

Chase and Wells Fargo have shut off new HELOCs. Learn about first and second lien positions, subordination.

Will car sales tank? No.

I play three cornball TV commercial ads from the 1980s about interest rates - GMAC financing, a car dealer in Winnipeg, Manitoba. 

Chicago is the rare world-class city where investor numbers make sense. 

I provide street addresses of two available turnkey properties in NW Indiana (Chicagoland).

Damion Lupo joins us. With the CARES Act, you can access 401(k) funds more easily, and direct them into an eQRP.

eQRPs can invest in: real estate with or without debt, syndications, rentals, flips, domestic land, foreign land, mobile homes parks, precious metals, mortgage notes, oil & gas, private money lending, options, franchises and more.

Resources mentioned:

QRPs: text “QRP” in ALL CAPS to 72000 or:

eQRP.co

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

‎Financial Underdogs on Apple Podcasts

Two Chicagoland Turnkey Properties:

GetRichEducation.com/Chicago

Throwback TV automobile ads:

https://youtu.be/nlSNeQtN208

https://youtu.be/Eo6znwMWSac

https://youtu.be/aBX0rjKAJ-Q

Mortgage Loans:

RidgeLendingGroup.com

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode292_.mp3
Category:general -- posted at: 4:00am EST

Can you count on rent collection in the pandemic?

Could home prices drop?

Is it better to buy property today, or say, six months from now?

If you think that the pandemic will drag on for years and badly affect the economy, stay on the sidelines.

Most think it'll bounce back this summer.

I talk with guest Gregg Cohen, who helps manage 3,500 rental units in Jacksonville, FL for insight.

Forbearance stabilizes housing values. Without it, some would have to sell their home.

Many Florida residents are paid more from unemployment compensation than if they worked. This assists in rent collection.

Gregg & his company offer you new construction Jacksonville, FL property. If your tenant cannot rent, they will pay your mortgage for you up to six months. This is only for GRE listeners that use this link: https://www.getricheducation.com/jax/ 

Resources mentioned:

Jacksonville new construction property:

GetRichEducation.com/JAX

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode291_b.mp3
Category:general -- posted at: 4:00am EST

You can postpone mortgage payments with forbearance. 

If you collect rent payments from your tenants, can you pocket it all and not pay your mortgage? What a windfall!

(Complete episode transcript is below. Read along as you listen.)

In crisis times, your cash flow is your cushion.

Last year, the publication “Emerging Trends In Real Estate” forecast that the chances of a pandemic roiling the economy were low.

The CARES Act’s effect is discussed.

Payments follow five links in a chain: employer - renter - investor - mortgage servicer - mortgage-backed security holder.

What’s the difference between a lender and a mortgage servicer?

Ethics and greed.

Are there deleterious consequences of forbearance?

Resources mentioned:

Read episode transcript at:

www.GetRichEducation.com/290

CFPB Video on CARES Act:

https://www.consumerfinance.gov/coronavirus/

cares-act-mortgage-forbearance-what-you-need-know/

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

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Welcome to Get Rich Education. I’m your host, Keith Weinhold. You can potentially collect your rent income from tenants and then, turn around and NOT pay the mortgage loans on those properties for a few months, pocketing a nice profit. But should you? 

 

In the pandemic-induced world of eviction moratoriums and mortgage loan forbearance, there will be winners and losers. I’m helping you sort that out so that you can be one of the winners - and more - today on Get Rich Education.

____________________

 

Welcome to GRE. From Olympia, Greece to Olympia, Washington and across 188 nations worldwide. I’m Keith Weinhold, this is Get Rich Education, and we are all living in strange times. 

 

The squeeze for some of us, I think is encapsulated in Jerry Constantino of Queens, New York’s situation.

 

He’s talking with owners of the roughly 500 units that he manages, who are worried what’s going to happen if the rent checks stop coming in. 

 

As part of his Property Management duties, Jerry is talking with tenants, many of whom he assumes will be delinquent this month because they either lost their jobs or they’re just choosing not to pay. 

 

Jerry’s a hard-working guy and he knows that the tenant in Unit 31-A has paid his yet, and it’s a few days past due. 

 

But yet Jerry knows that this tenant hasn’t lost his job and ought to be able to pay rent on time like he always did before the pandemic.

 

Jerry sees this tenant from Unit 31-A in the hallway and says, “Don’t mess with me dude, where is the rent?”

 

And by the way, Jerry got a little gruff and his words weren’t exactly “Don’t MESS with me…” but that’s the version that you get here on this unapologetically squeaky-clean lyrics show.

 

And besides MANAGING property for others, Jerry is also in discussions with banks, trying to figure out how he’ll make mortgage payments because he’s got properties that HE owns HIMSELF during this worsening global health crisis.

 

And, a lot of people find themselves in a situation similar to what Jerry is in.

Some large property owners have already rolled out payment plans for their tenants - and halted evictions - because they legally have to - as the coronavirus outbreak roils the economy. 

Many apartments in the U.S. are essentially small businesses that tend to have less financial flexibility and will need some help ... in the coming months.

Now, there are some choices for the millions of Americans who lost their jobs and have no clear prospects for when they’ll get them back. 

Three things that are aiding TENANTS right now, helping them pay the rent are: eviction moratoriums, unemployment benefits and cash payments - like those $1,200 stimulus checks - from the federal government that can help many keep a roof over their heads.

Nearly half of the nation’s 44 million renter households were already stretched financially: before the pandemic.

The University of Chicago found that ONE-THIRD of adults can’t cover necessities after missing just … one ... single paycheck. 

 

One in four tenant families pay over half of their income just to make the rent payment.

 

We’re basically going to break down Jerry Constantino - the King Of Queens’ - situation here, being mindful that ....

 

In general, the average Get Rich Education listener is better off than the average real estate investor for a number of reasons.

 

For starters, one of our core principles here is that we invest predominantly in residential real estate. That is due to its durable utility.

 

Coronavirus has changed a lot in society, but it has NOT changed the fact that people still need a place to live.

 

You’ve got to be grateful that we focus on residential because it’s recession resilient.

 

Most landlords are still getting 80 to 90% of the rent income, even 100% if you’ve got a small portfolio. 

 

Just think about how many businesses aren’t getting nearly 80-90% of their income now? The restaurants, and bars and gyms, airlines, cruise ships, hotels, on & on … are they even getting 30%?

 

Though it’s the exception, some businesses, like large retailers might be getting 105% of their usual income now. 

 

We also focus on investor-advantaged markets here at Get Rich Education - with the principle that the market is more important than the property. 

 

And so many people get that backwards.

 

We discuss the advantages of being invested in multiple markets so that your tenant income streams are from diverse employers. Anyone that doesn’t adhere to that is in more trouble.

 

Also, we focus on buying property that cash flows on the day that you buy it - where the monthly income exceeds the monthly expenses on your settlement day - on the day that you buy - not “maybe it’ll cash flow sometime in the future”.

 

Look, in times of crisis, your cash flow ... is your cushion.

 

Here’s what I mean. To keep it simple, if every one of your properties rents for $1,000 and has $800 in monthly expenses, you’ve got a $200 monthly cash flow on each one.

 

You’d have to lose - just outright lose - and never recover wholly 20% of your income and then you’d still break even on a monthly basis.

 

This is what I mean that in crisis time, your cash flow becomes your cushion.

 

If you have a 10% rent loss, your cushion is half-eaten, and your cash flow becomes $100 per door. You can’t kick tenants out for a while because there’s an eviction moratorium.

 

But, you can also be granted loan forbearance and not have to pay your mortgage. So you might be able to profit wildly at this time. 

 

Each of these things - an eviction moratorium and mortgage loan forbearance are part of the recently-passed CARES Act. I’ve got way more on that later … whether you’re in Jerry’s situation or you’re better off.

 

Let’s pull back and look at how unlikely this Black Swan Event known as the coronavirus pandemic really is, first. 

 

Here’s some perspective. Last year, the publication called “Emerging Trends In Real Estate” launched a survey that’s just so, so interesting now that we have the benefit of hindsight.

 

They launched a survey last year called “The Importance of ISSUES for real estate in 2020”. They were FORECASTING the following year - this year.

 

A pandemic was NOT forecast to be an important issue at all for real estate this year.  

 

In fact, the #1 survey answer was predicted to be the political landscape. That could make sense as this is an election year, and divisive partisanship sure is not abating.

 

The #2 predicted factor was … government & budget issues.

 

The issue forecast to be the 3rd-most important real estate issue for this year was .... immigration. OK, makes sense. That was a hot topic for a while. And greater immigration creates more housing demand, sure.

 

#4 was Global conflict. OK, makes some sense. We had growing trade tensions with China, political tensions with Iran and North Korea.

 

The real estate issue predicted … last year … to be the fifth most important for this year was … Income inequality.

 

How long do you think that it will take us to get to a pandemic … or epidemic. No one foresaw this.

 

Sixth was Rising education costs. That definitely intersects with housing as giant student loan debts increasingly prevent people from forming a first-time homebuyer downpayment, which keeps them in the renter pool.

 

The seventh most-important real estate issue for this year was predicted to be Social inequality.

 

Eighth was terrorism. That’s going lower on the list as major terrorist acts in America continue to recede into memory, gratefully.

 

And number nine - yes, last year, what was predicted in “The Emerging Trends In Real Estate” survey for THIS year is … Epidemics.

 

All those other factors were deemed to be more important. 

 

And that’s from a pretty respected publication. That source, Emerging Trends in real estate, is partly compiled by the Urban Land Institute.

 

So, it just goes to show you that, no one, not me, not you, not the expert economists that come here on the show with us - no one really knows.

 

Now, there was one Get Rich Education episode where I had a “glass half-empty” segment, maybe one year ago, where I was talking about all the things that could go WRONG in real estate investing.

 

I did mention a plague. I used the word “plague”. And what I was thinking about was, what if an awful bubonic-like plague wiped out, say 20 million Americans - which would be more than 5% of our population.

 

Well, that sad event would reduce housing demand, of course, if there are substantially fewer … live humans. 

 

And as sad as COVID-19 is, no one is predicting that it will be fatal to even one-half of one-percent of our population.

 

And I certainly wouldn’t have predicted that by this year we’d be practicing things like sheltering-at-home or social-distancing. It still all seems like some sort of bad dream. 

 

We’re talking about, “Do you get free money? Should you take mortgage loan forbearance?” here on Get Rich Education Episode 290.

 

In fact, if you’d like to read along while you're listening, the entire written transcript for today’s episode is in the Show Notes. You can access those at GetRichEducation.com/290 and follow along that way if you like.

 

In order for you to understand mortgage loan forbearance - and forbearance means that you can postpone making payments, understand the big picture.

 

You can best understand this as part of the five links of a chain. 

 

Yes, forbearance allows you to BREAK a chain.

 

The five links in the chain follow the money. They follow the payments through:

Payment goes from Employer … to Renter... to Property Owner... to Loan Servicer... to finally, the MBS Investor. They are the five links.

 

Now, let's look at what happens here.

 

The first and second chain links involve that payment from Employer (first link) and the Renter (the second link). 

 

Economically … how bad is it? We don’t yet really know how high the unemployment rate will get, though we expect it to be substantially higher than that of the Great Recession of 2008, when it was 10%. 

 

Chain Link 2 to 3 is the Renter’s payment to the Property Owner. This is a link that you’re clearly quite concerned with. This is your rental income. This is the income that Jerry from Queens is trying to scrape together. 

 

We don’t yet know what the eventual rent payment DEFAULT RATE will be, of course that’s going to vary among geography and asset type and many other things. 

 

But be aware that at this point, about 75% of Americans have lost at least 25% of their income. About ¾ of Americans have lost ¼ or more of their income.

 

As you know, during coronavirus, most areas have an eviction moratorium. Meaning that if the tenant can’t pay the rent, you can’t kick them out for a while.

 

Now, what if you - the income property owner - Link 3 - don’t have enough rent income to pay the mortgage to Link 4, which is your bank or your loan servicer?

 

If this is your situation, you want to call the company that you pay the mortgages to. You pay your mortgages a mortgage servicer.

 

Now, what is a “mortgage servicing company”, anyway? 

 

A mortgage servicer is the company that handles the day-to-day administrative tasks of your loan. 

 

They send you your monthly statement, they receive your payment, and they manage your escrow accounts. 

 

This is different from your mortgage lender. Your lender is the financial institution that gave you the property loan in the first place - back on your closing day.

 

So that is the difference between a mortgage LENDER - and the servicer whom you’re dealing with now.

 

Now, a mortgage servicer could either be a bank or a non-bank.

 

A bank “mortgage servicer” would be names that you’ve heard of like Chase or Wells Fargo.

 

A non-bank “mortgage servicer” could be a name like Suntrust Mortgage or AmeriHome. They’re names that you’re less likely to have heard of. 

 

So, to review, money flows from your tenant’s employer, to your tenant, to you (the investor), to the fourth chain link, which is this mortgage servicer.

 

Now, if your mortgage is backed by the government (those would Fannie Mae, Freddie Mac, VA, FHA, or USDA -  and it often is) - if you tell your mortgage servicer you're having financial trouble because of the pandemic, your mortgage servicer has to let you stop paying your mortgage for up to 180 days - that’s six months - with the possibility of another six month extension after that - and you will not have to pay late fees, and there will not be any foreclosure on your property, and there will not be a ding on your credit score either.

 

It gets even better than that. Because at last check, there isn’t any additional interest beyond your scheduled amounts accruing on your missed payments while you’re in forbearance either.

 

Now, you WON’T magically see a portion of your principal balance disappear though.

 

This all pertains to both primary residences and your rental properties for government-backed loans.

 

If your loan isn’t government-backed, you still might receive some similar-type of relief.

 

This is what is being granted to you during these exceptional times. And the mortgage servicer isn’t going to ask you for a bunch of paperwork or documentation of your hardship either.

 

But they might just ask you some questions over the phone - details about your income, expenses and other assets, like cash in the bank.

 

They’re just granting you the forbearance - letting you postpone your mortgage payments. 

 

Now, that must sound great. And it is a good start. 

 

Look, if you CANNOT make your payment due to economic hardship, then you should ask for the forbearance. 

 

And don’t just stop making payments if you CAN’T make payments. Alright, you can’t do that. You DO have to ask for forbearance. But it will be granted.

 

Now, what if you CAN make your mortgage payments and you call up your loan servicer and ask for forbearance. 

 

In this case, say that your total monthly rent income is $10,000 but you only got paid $9,000 of rent this month due to pandemic layoffs.

 

And your total mortgage payments are only ... $8,000. 

 

Well, you could make the payment but you don’t have to.

 

So … could you pocket your $9,000 of rent  this month and skip out on paying your mortgages completely & then have a $9,000 cash flow month instead of your normal $2,000 cash flow month?

 

Yes, you probably could! And this could totally feel like a windfall to you!

 

But … that would be dishonest - and it could come with consequences.  

 

I’ve talked to two mortgage lenders this last week to find out what’s REALLY going on out there. 

 

I learned about one case where, a borrower asked for forbearance, they were granted it, it didn’t ding that borrower’s credit SCORE. 

 

However, on their credit REPORT, it is marked “Forbearance” on that report. 

 

Hmmm … you wonder if this will impact that borrower’s creditworthiness in the future.

 

Here’s the other potential negative consequence if you are granted forbearance. 

 

Again, forbearance means the ability to postpone payments.

 

What’s going to happen in the future? Well, no one really knows with any of this. This is uncharted territory and I can’t underscore that enough as we deal with the economic fallout of the pandemic. The situation changes quickly here.

 

When are you going to have to MAKE UP those payments? If you get six months of forbearance, would you owe six months of payments all at once - only six months from now?

 

If so, that probably won’t help you out. Because if your tenant - God forbid - missed six months of rent payments, they’re not going to make one lump sum rent payment for six months worth of rent.

 

However, for you, if you get forbearance, it appears more likely that your payments - will just get tacked on to the end of your loan - without any interest on top of what’s scheduled.

 

Now, that outcome would be … pretty awesome.

 

Alright, so we’ve established that you can take a pause from paying your mortgage loan servicers.

 

But here’s the crazy thing. The fifth and final link in the chain is the Mortgage-backed security holder. They get their money from the mortgage servicer. 

 

Well, where is the servicer supposed to get the money if people like you - the property owner - declare forbearance.

 

No one knows that answer. That hasn’t been worked out yet. 

 

Right now, the total share of loans in forbearance is 6%. 

 

But, that number is going to go higher so the mortgage servicing industry has been crying out for help - your SunTrusts and AmeriHomes of the world.

 

Last week, a plan had come together such that mortgage loan servicers would only have to forward four months of missed payments to MBS investors. 

 

But a lot of servicers don’t have that kind of money lying around. 

 

Now, Wells Fargo, obviously, is a big bank and they do some servicing as well. 

There's still lots of big banks servicing mortgages. And the big banks are actually in pretty good shape right now. They have enough money that they can deal with this situation for a while. They're stronger now than they were in the 2008 financial crisis.

And since the financial crisis, nonbanks have been taking a bigger and bigger share of the mortgage servicing business. 

And these nonbanks - like SunTrust and AmeriHome - have much less money on hand than banks do, and they're not allowed to borrow from the Fed like a bank. 

And even in the good times of the past few years, there were all these reports coming out saying, you know, if the economy were to ever turn down and people stopped paying their mortgages, these nonbank servicers are going to be in trouble.

This is what needs to be fixed right now - this connection between chain links 4 and 5 - from servicer to MBS Investor. The aid for servicers will probably be there. 

The government is typically there to save most anything to do with homeownership.

Well, those are the five links in the follow-the-money chain - from employer to tenant to you, the investor, - to the mortgage loan servicer - and finally, to mortgage-backed security holder. 

There’s more that I can explain there, but I won’t, because it could be speculation - so we’ll see what happens next there.

Let’s get back to you. I said that I suggested mortgage loan forbearance if you need it. Should you get a mortgage forbearance if you don’t need it? 

No. If you don’t need it, don’t take it. 

Now, why would I say that? Well, there could be some upsides to taking it. 

But it puts you at some risk, like I mentioned and there is more that is absolutely vital for you to consider. I’m going to talk about that in a few minutes. 

We’re talking about following the money along five chain links, and mortgage loan forbearance here on Get Rich Education, Episode 290 … as the world gradually has more & more bad haircuts as the coronavirus pandemic inches on … and you’re wondering if you’ll have “actual weekend plans” in your life ever again.   

Coming up in the next few weeks here on the show, we’ve got a lot of great material. New York Times bestselling author John Assaraf will be here with me on Get Rich Education as we take a deep dive into abundance mindset during tough times …

… and a lot of other integral shows here as I focus on providing you with actionable guidance that you can use on economics and real estate amidst the pandemic.

I primarily reach you in two ways. There’s our audio show here, which as you know is released every Monday. You’ve probably been listening for years. 

The other way is through The DQYDD Letter, which is e-mailed out about weekly. And lately the valuable letter is being sent to you on either a Wednesday or Thursday.

There is so much fast-changing news amidst the pandemic that the “Don’t Quit Your Daydream” Letter really supplements this show here well. 

That’s why it’s never been more important for you to subscribe.

The letter is free, and all you’ve got to do is sign-up now at GetRichEducation.com

I’m coming back with more. I’m Keith Weinhold. THIS is Get Rich Education.

(RESOURCE PROVIDER SLOTS)



Hey, you’re back inside the show that’s created more financial freedom for busy people just like you than nearly any show in the world. 

This is Get Rich Education. I’m your host, Keith Weinhold.

Should you get a mortgage loan forbearance if you don’t need it? 

No. If you don’t need it, don’t take it. That is my opinion.

Now, why would I say that? Well, there could be some upsides from you taking it if you don’t need it. 

But it’s not quite like it’s free money.

It puts you at some risks, like I mentioned and … some of this comes down to a question of ethics & greed.

Now, I don’t know what Jerry, the property manager & investor from Queens, New York that I talked about at the top of the show -  is going to do with his situation.

Me, I have … gosh … it guess it’s not quite one hundred thousand dollars worth of mortgage payments that I make monthly …

… but it’s well into the tens of thousands every month. I still have a good monthly rent collection. But I have some tenants that can’t pay due to losing their job from coronavirus.

But … I CAN make all of my mortgage payments, so I don’t have any plans to get forbearance now or anytime in the foreseeable future. 

If I have agreed to pay someone, and I can afford to pay someone, then I pay THAT someone. That’s just treating other people well.

What is greed, anyway?

Wanting more money is not greed. You want financial betterment just like I do and most anyone does. 

But padding your own cash reserves by pocketing your tenants’ rent and then not paying your mortgage loan servicer - that’s greed.

Because I’d be profiting from hurting others.

If I don’t make a payment, there are people counting on that payment - in either that fourth or fifth chain link - that servicer or that mortgage-backed security investor. 

Do you know what’s really happened recently?

I know about an investor that closed a mortgage loan (and mortgage loans are still closing here in the pandemic, of course, but under tighter lending guidelines) - but this investor closed, then declared forbearance almost immediately - as soon as he practically could.

So he missed his very first payment, and then the bank put him in a status of what’s called “first payment default”. 

Well, then the lender can’t sell that loan to a servicer & and then that bank has got to keep that losing loan on THEIR books.

Also, that “first payment default” status is tied to that borrower … and will that come back to bite them? I don’t actually know, but it’s probably not going to help them.

Could that borrower have made payments if they were able to qualify for the loan at the closing table just a few weeks ago? Yeah, probably. 

If that impacts that borrower’s creditworthiness down the road, it’s pretty hard to feel sympathy for them.

It’s times of adversity like this when one’s ethics show through. Cheating the system tarnishes your character and it screws up the system for the honest people … where the taxpayer might have to end up paying for it.

So, either I can be part of the problem or part of the solution. I know what side I’d rather be on … and you can decide for yourself.

You can call it what you want, “karma”, or whether you’re religious or not, from Christianity, “The Golden Rule” is “treat people how you would want to be treated.” 

It’s a maxim in other religions too. But it’s really just being a decent human being.

We don’t want to take advantage of a crisis by disadvantaging others. That’s what looters do.

Fortunately, we have an audience here that does want to do the right thing. Like I say, do the right thing before you do things right.

To summarize part of what you’ve learned today. There are five chain links in the follow-the-money path that the pandemic is pressuring - they are employer … to renter ... to property owner … to loan servicer ... to finally the MBS Investor. 

 

Loan forbearance means that you have the ability to postpone your mortgage payments - and that’s on both your primary residence and your rentals.

 

Forbearance is being easily granted on most loan types - with some clear guidelines for gov’t-backed loans.

But you must ask.

If you need it, please DO ask.

If you don’t need it, please DON’T ask.

 

As a reminder, news changes fast and one mortgage loan servicer might outline different terms for you than another servicer does.



In fact, there is so much fast-changing news amidst the pandemic and strange economic aberrations like oil prices going negative last week. There’s such a glut of oil supply, that oil is being treated like junk. 

Just like you would have to pay another person to take your junk, oil producers are having to pay people to take their oil. 

About ten days ago, Chase stopped accepting new Home Equity Line Of Credit applications. Customers with existing HELOCs will be able to continue to draw funds on those lines of credit, but the bank is not accepting applications for new HELOCs.

Of course, the stock market has been more volatile than usual. Housing is way more stable, but it’s still too early to look at pandemic effects on housing PRICES. 

Early indications show that there is even less housing SUPPLY on a market that was already undersupplied, so that’s substantial.  

There is so much changing more quickly now, that the “Don’t Quit Your Daydream” Letter really supplements this audio show here. I don’t think it’s ever been more important for you to subscribe.

For example, in some good news, a recent letter informed you that any 1031 Exchange that you do with a deadline between April 1st and July 15th of this year is now moved to July 15th, and other things like that. 

Get the “Don’t Quit Your Daydream Letter" free, at GetRichEducation.com

I’m Keith Weinhold and I’ll be back next week to help you build your wealth. Don’t Quit Your Daydream!

Direct download: GREepisode290_b.mp3
Category:general -- posted at: 4:00am EST

Real estate investors should know something about Florida. Why? Migration.

Navigating today’s property market takes more care than it did last year due to the pandemic.

Primary residence buyers are being shut out. Investment property buyers are better off because “wannabe” homeowners must become renters due to higher mortgage qualification standards.

To profit today, focus on your tenants income source and positive migration trends.

Florida leads the U.S. in positive migration; it’s likely that the trend will continue.

Why do people keep moving to Florida? Low cost of living, no state income tax, sun & warmth, job diversification & growth.

New construction homes for investors are on infill lots, 4 bed, 2 bath homes are $250K.   

Greater Orlando & Central Florida attracts nearly 10,000 new residents every week - from The Space Coast in the east to Polk County in the west.

Learn more at: www.GetRichEducation.com/Orlando

New const. SFH prices start at $139,900 3/2/1 on ¼ acre. Duplexes and townhomes are also offered.

__________________________

Resources mentioned:

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Ray Dalio on coronavirus economy:

Video link

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niche.com

Mortgage Loans:

RidgeLendingGroup.com

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Direct download: GREepisode289_.mp3
Category:general -- posted at: 4:00am EST

You get a clear answer to that question from both me and the Chief Economist of the oldest investment firm of its type in America, as he joins me today.

Recession and depression differences are defined.

Learn what created the 1930s Great Depression and 2000s Great Recession. 

You’re now living in what I call: “The Great Shutdown Of 2020”, induced by the coronavirus. This is an economic crisis on top of a health crisis on top of an oil shock.

The Spanish Flu Pandemic of 1918 created a 7-month U.S. recession.

Real estate flippers and developers are more at-risk than buy-and-hold investors.

A doubling of the U.S. currency supply is possible in the next year or two, stoking inflation.

I introduce the “Inflation Triple Crown” concept that benefits leveraged real estate investors.

Brian Beaulieu, CEO and Chief Economist at ITR Economics since 1987, joins us to forecast your economic future amidst the current coronavirus pandemic.

He says we’re in a recession now, thinks the economy begins growing again by 2020 Q4 with a “V” shaped recovery, and inflation accelerates in 2023.

Brian forecasts interest rates’ direction, and tells us if we’ll have negative interest rates.

He is bullish on buying real estate.

I think that since America keeps writing checks for everything, then they should fund an initiative to rebuild our infrastructure. We need that anyway, and it puts people to work.

Then, you would want to own real estate near those public works projects - new bridge, interchange, or port.

__________________________

Resources mentioned:

ITR Economics:

https://itreconomics.com/itr-economics-podcasts

ITR Economics’ Free 90-Day Forecasts:

Text TR_TRIAL to 33777

Insurance For Rent Payment Default:

Rhino: https://www.sayrhino.com/ 

Steady: https://www.steadymarketplace.com/

Core: https://corehomeinsurance.com/

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

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Follow us on Instagram:

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Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode288_.mp3
Category:general -- posted at: 4:00am EST

It grows through recessions. No tenants. No loans.

Own trees and the land beneath it, titled how you choose.

Experience growth in both the timber size, and often, value of your investment.

A long-revered timber type is teak. Its natural oils make it unusually resistant to fire and termites.

Demand - Today, teak is used in flooring, countertops, veneer, furniture. It’s been used in boatbuilding 2,000+ years. It was used on The Titanic.

Supply - Teak is being harvested at 10x its replanting rate.

I first learned about lumber in my youth when I spent a summer doing forestry and timber-marking work in upstate Pennsylvania.

You can own teak trees and the land beneath it, ¼ acre at a time. Get started with your free Teak Resource Guide at: www.GetRichEducation.com/Teak 

Trees grow through recessions, wars, stock market crashes, and real estate market crashes.

Teak expert and friend Rachel Jensen joins me in discussion.

Plantation teak grows well in Panama and Nicaragua. Teak is native to southeast Asia and India.

You can own teak at age: 0, 14, or even 20-year-old teak. Cash, bitcoin, IRA funds may be eligible for funding. There are discounts for GRE listeners.

Teak field tours are offered.

Investors have the option of gaining second residency in Panama or Nicaragua. It is a nice “Plan B”. 

__________________________

Resources mentioned:

Free Teak Resource Guide:

GetRichEducation.com/Teak

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

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Direct download: GREepisode287__.mp3
Category:general -- posted at: 4:00am EST

A 10-step plan to ensure that your tenant pays the rent is revealed.

In order, they are: proactivity, commitment, empathy, requirement, options, late fee, installments, security deposit, assistance, documentation. 

Real estate investors have time to react to the pandemic. Stock investors often didn’t. They lost 10%, 20%, 30% within weeks.

Learn how volatility hurts stock investors.

If the pandemic were as visible a threat as a fire-breathing Godzilla, more would adhere to shelter-in-place orders.

For active real estate offers, pay more attention to where the tenants’ income originates. Large retailers are hiring, small retailers are firing.

Caeli Ridge, President of Ridge Lending Group joins me to tell us about how coronavirus has changed the mortgage lending landscape.

Jumbo loans and non-QM loans are no longer offered.

Credit score, DTI requirements could soon become more stringent.

Verification of employment now occurs right before loan funding.

Mortgage rates still hover near historic lows.

Loan forbearance, loan modification discussed.

__________________________

Resources mentioned:

Mortgage Loans:

RidgeLendingGroup.com

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By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

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Direct download: GREepisode286_.mp3
Category:general -- posted at: 4:00am EST

Unemployment is rising. Mortgage rates hit record lows two weeks ago. Stocks have fallen 32% from recent highs. Oil has fallen with a thud. 

Your life has changed in order to control the spread of the novel coronavirus.

(**The entire episode transcript is below. You can read along as you listen.)

Fannie Mae, Freddie Mac, and HUD have suspended foreclosures and evictions for at least 60 days. This could soon be extended to a year. 

The IRS tax filing deadline moved from April 15th to July 15th.

There are opportunities for you today that you’ve never considered before.

Recessions are normal. They occur every 7 years on average.

In three of the last five recessions, real estate values appreciated.

Consider drawing against your HELOC before it’s frozen.

Bill Gates’ epidemic prediction audio clip played.

Stocks: the bull market died of coronavirus.

I discuss my recent chats with national Mortgage Loan Officers.

Good news? Shelter-in-place means you might have the time with your family that you’ve always wanted.

__________________________

Resources mentioned:

Coronavirus forbearance is here:

Housing Wire article

RE appreciated in 3 of last 5 recessions:

Article & Graph

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

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Complete episode transcript:

 

Welcome to Get Rich Education, I’m your host, Keith Weinhold. As the pandemic unfolds, how do you best position yourself as an investor to be profitable and mitigate loss? 

 

We’re talking about the real estate market, the stock market, and specific, actionable things that you can do for your family and your real estate. Today, on Get Rich Education.

_________________________

Welcome to Get Rich Education, I’m your host, Keith Weinhold and no matter where you’re listening to us - any of the 188 nations - your life has changed … due to the pandemic. 

 

Just when you learned to replace your handshake with an elbow bump, now you can't do either one.

 

Yes, your life looks different now. We are here in the social distancing era.

 

With major events all cancelled and the closure of businesses & schools, & entertainment venues; it is clear that the global efforts to slow the spread of the coronavirus is an unprecedented experience for you and I.

 

With people needing to stay home, it creates some new ways of socialization. 

 

For my haircut this week, I don’t think I’m going to go out to get it. I’m hoping that my wife can cut my hair at home.  

 

I can’t go to the gym. Thank goodness that I have a home gym - modest as it is. This is literally life-changing - altering the patterns and habits of you & I’s daily life.

 

You might see more of your spouse now. You might be homeschooling your kid now.

 

This is an emotional process for you and I - your relationships with people & things have changed.

 

You’re now more likely to be listening to me from home rather than out & about - not from work. 

 

But wait. Now, for you, maybe work ... is ... home. Kinda.

 

If you’re working from home, you’re now ...

 

... about to find out which meetings really could have instead been ... an email.

 

Yes, it's simply a strange time to be a human being.

 

The pandemic has stirred up more uncertainty than just social faux pas and awkwardness.

 

It's created a breathtaking 32% stock market drop - more on that later. The slowing economy means that oil prices have fallen with a resounding thud. Mortgage rates hit record lows two weeks ago.

 

The combination of those things might make you, the REAL ESTATE investor, giddy with your predicament.

 

You might even have - what feels like - an extended adult Spring Break at home with your family.

 

But the larger economic slowdown can ensnare everyone - yes, the real estate investor too. Some help is on the way.

 

Just last week, Fannie Mae and Freddie Mac announced that they are suspending foreclosures and evictions for at least 60 days - so we’re talking about a lot of conventional loans there. 

 

HUD is doing the same thing. HUD basically means FHA loans.

 

So I guess that property owners don’t have to pay their mortgages and tenants don’t have to pay their rent for a little while either.

 

That was followed by the state of New York declaring that certain borrowers in the state could forgo their mortgage payments for up to 90 days.

 

And there’s just so much NEWS about payment forgiveness and everything else related to the economy and the pandemic that it can be difficult to keep up. 

 

I’ll tell you, I’ve had to scramble - more than normal this week - to pull together the more relevant stories that affect you - because so much is changing so fast.

 

Treasury Secretary Steve Mnuchin said just last Friday - three days ago - that the deadline for Americans to file their taxes would be pushed back from April 15 to July 15. 

 

That’s got to be welcome news!

 

In fact, Mnuchin tweeted: "All taxpayers and businesses will have this additional time to file and make payments without interest or penalties.” 

 

That’s what he said. That’s a 90-day extension. Some relief from the IRS for you.

 

Now, how long will this kind of alternate society that we’ve now reluctantly formed linger on? 

 

How long will it last? 

 

Self-isolation and playing the ol’ Risk board game or Battleship with your kids might be kinda cool at first - but it gets a little old after a while. 

 

It really gets old once you find that your kid is improving at chess faster than you and he’s starting to beat you. 

 

Well, no one really knows. No one in the world knows how long it’ll last. 

 

So therefore, it’s hard to know whether people are overreacting or underreacting to the news. It’s really hard to know. 

 

Will this last one month? Six months? Or even longer? 

 

The best, most trusted source, I know of thinks that this will probably be with us … through June. Yeah, that’s three more months.

 

Now, it might peak before that time, but who knows? And a lot of forecasts change … because, again … there are a lot of unknowns here. 

 

But there are a few things that I do know. So let’s think about what we do know.

 

There will always BE an economy - even if things got far worse. 

 

There will always be an economy as long as there’s a civilization. 

 

Sheesh, there’s an economy in Leavenworth - a maximum security prison. 

 

When this thing ends, if you’ve got a friend or a tenant or yourself that’s been laid off - you’re probably going to return to your job. 

 

But some people might never return to their job. You might see this - as an opportunity.

 

If you have - or have had - a job that you’re not in love with - this could give you time to find out what you’re good at & what you like doing rather than working for a paycheck.

 

Use this time to ultimately find out what you want. Then learn some new skills at the Khan Academy online - or somewhere else. See this as an opportunity.

 

There’s an old saying. If your neighbor loses his job, it’s a recession. If you lose your job, it’s a depression. 

 

And more people are probably thinking about that today ...

 

But recessions are indeed - a frequent occurrence in the modern economy. This 11 year economic expansion, was an all-time American record.

 

In response to the pandemic, The Fed is effectively printing tens of billions of dollars - and more - to help keep banks liquid.

 

This is a process … that devalues the dollar. This is inflationary - which is good for borrowers long-term, and this dollar printing makes investors scurry for real assets that can hold their value. 

 

Yes, real things that can’t be inflated away with profligate monetary policy. I’m talking about assets like water, and timber, and real estate - especially residential real estate.

 

Now, if for any reason, your income is disrupted, either because you’re out of work or your tenant is having trouble making rent payments ...

 

If you're losing income and must play defense, and you’re a homeowner, you might have something to work with.

Relief can come from your Home Equity Line Of Credit (HELOC). You can make withdrawals for emergencies. 

Sure - I’ve been talking for years here about how if you’ve got excess equity in your home, you can originate a HELOC.

Since home equity is unsafe, and illiquid, and it’s rate of return is always zero, you can use that excess equity in your home. MAKE it liquid.

The HELOC can come in the form of a second mortgage. At last check, on a primary residence, you could get an 80% combined loan-to-value ratio HELOC.

How that works is if you have a $500K home, you could have $400K of debt against it. That’s the 80%.

So then if currently, your home has a $300K loan balance, you can potentially get a HELOC second mortgage for another $100K. 

OK … your $300K first mortgage plus $100K HELOC has a sum of $400K - which is 80% of your home’s value.

So now, you’ve got $100K out of your home. 

The way that this $100K HELOC works is that your interest rate generally follows the Federal Funds Rate - which the Fed has essentially dropped to 0%. 

Now, you’ll pay a margin on top of the Fed Funds Rate - but HELOC rates are really low now. 

Their interest is often tax deductible - and you can spend the HELOC funds on anything at all. 

You also have the flexibility of making interest-only payments on the HELOC - or paying back extra toward the principal if you prefer. Nice option there. 

And I’ve gone deep on how HELOCs work on prior shows, so I won’t do that here. 

But here’s the message if you think that you need some - or want some - liquidity. 

Originate your HELOC and consider drawing against it - which means pulling the money out - before the bank FREEZES withdrawals from your HELOC funds. 

Look, here’s what happened during the 2007-2009 Great Recession. Homes were losing value then, and banks flash-froze HELOCs. It happened to me. 

I still remember getting the letter - it was from a major bank that you’ve heard of. 

I do remember getting that letter from the bank because I was frustrated that they froze my funds - which was equity in my home that I had previously had access to.

So, I’ve told you on past shows, that I can’t think of any reason not to have a HELOC second mortgage on your home, as long as you have adequate equity in it. That way you can choose to either use it by drawing against it - or not. 

My point today is - consider making a withdrawal on that HELOC before its frozen.

Now, say you do that and you’re paying a 5% interest rate on that money. 

Maybe wherever you put those borrowed funds, now you’re making more than 5% on them because you’re taking those funds and putting them on offense

If so, that’s great. That positive arbitrage. Gotta love that.   

But what if you take those HELOC funds that you’re paying 5% interest for and you’re playing DEFENSE, and you have them invested in a vehicle that’s MAKING less than 5% interest for you.

You know what I would say? What you’re doing is like … you’re paying an insurance premium.

You’ve got access to the funds, you’re keeping them liquid, you could be hemorrhaging a bit each month, but it’s like paying an insurance premium in order to have access to your funds.

I don’t like to tell people what to do. I like to tell people what I do, and I provide ideas and information here.

Now, if you don’t need funds or want funds, well, then there’s less reason to tap your HELOC.

Remember too, a high mortgage balance is a great asset protection tool against a bank foreclosure.

In an adverse circumstance, the bank doesn’t want to come after you if you still owe $400K on the loan.

But they’ll come after the family that only owes $40K on their loan - because the bank could get the property as collateral, and only lose out on the $40K that they would have had coming to them.

See, the bank doesn’t want to foreclose on your property where you, the homeowner, would have still owed them 4-HUNDRED K.

My point is - if you need to play defense, have a HELOC and consider using it before it gets frozen - IF it gets frozen. 

 

It might not get frozen. See, a big reason that HELOC draws were frozen during the Great Recession 12 years ago is that housing was at the CENTER of the 2007-2009 Great Recession. 

 

From the time that those HELOCs were originated, properties had lost value. As they lost value, that means loan-to-value ratios went up, often in excess of 100%. 

 

So banks froze HELOCs so that they didn’t get exposed to that risk. If you’ve got zero equity in the home or skin in the game, you’re more likely to walk away - as a homeowner.

 

But see, if we have a pandemic-induced recession, it’s NOT housing-centered like the Great Recession was - with their irresponsible lending practices and overbuilding that occurred then.

 

Today, we’ve got RESPONSIBLE lending practices and an UNDERsupply of homes. We’re UNDERbuilt.

 

So, the Great Recession was different - and special.

 

Now, I don’t know whether we’re set up for a pandemic-induced recession or not. But I’d say that there’s a good chance that we’ll have one. I’d say, a more than 80% chance that we’re in one now.

 

We don’t actually know that we’re in one until in the future, we look back and see two consecutive quarters of year-over-year GDP contraction. That’s the definition.

 

But we’re definitely due for a slowdown. We’re in one now.

 

It’s worth remembering that recessions are actually a normal part of the economy. We have one every 7 years or so.

 

Our previous five recessions began in 1980, another one in 1981, then 1990, 2001, and finally the aforementioned Great Recession beginning in 2007. 

 

In three of those five recessions - three of the last five, do you know what happened to home prices.

 

Home prices went up. They INcreased in 3 of the last 5 recessions. 

 

Home prices increased in value anywhere from 1.9 percent to 4.8 percent. I’ll link that in the Show Notes for you.

 

So, a recession definitely doesn’t mean a drop in property value. Residential real estate is a recession-resilient asset class.

 

The thing that you need to keep your eye on is, is your tenant keeping their job during this crisis so that they can pay the rent. 

 

By the way, do you know the difference between an epidemic and a pandemic?

 

As Oxford defines it:

An epidemic is a widespread occurrence of an infectious disease in a community at a particular time.

 

A pandemic is a disease prevalent over an entire nation or the world.

 

They mean about the same thing, but the pandemic is on a larger scale.

 

Now, MicroSoft co-founder Bill Gates has received attention recently in predicting that a pandemic was potentially humankind’s greatest understated threat.

 

In fact, let’s listen to this short clip - this is Bill Gates, more than three years ago in Davos, Switzerland:

 

Bill Gates clip: “An epidemic - either naturally-caused or intentionally-caused - is the most likely thing to cause, say, 10 million excess deaths. It’s pretty surprising how little preparedness there is for it.” 

 

Yeah, Bill Gates said a lot more than that about it. But he’s appearing to be rather correct here.

 

Well, what has administration in the United States done for a response? Our political leaders?

 

Well, initially, Trump and company seemed to throw more money & fewer regulations at the problem. 

 

That’s changing somewhat, as we’ve got more social controls and border closings now.

 

With the list of these administrative & … policy news stories longer than a Walgreen's receipt, the least you should know is that President Trump and Congress are aiding homeowners and renters alike.

 

Free testing, and an expansion of unemployment insurance. 

A stimulus package of one trillion - with a “T” - one trillion dollars or more that looks to involve direct payments to American households … is really going to help provide relief to people. 

There is lots of precedent for government bailouts in times of crisis. 

 

The U.S. government provided $15 billion to airlines after 9/11, $700 billion to banks to army-crawl through the 2008 financial crisis, and $17 billion to automakers just after that.

 

Whether you see bailouts as the right way to do things or not, there is that precedent.

 

Fortunately - some of that help should include your tenant. We might see multiple injections of $1,000 each or more - directly into consumers’ hands.

That’s the plan that’s formulating - just write virtually everyone a check. And $1,000 means more to your tenant than it does to you.

This can really help Trump and Congress “fill the gaps” between cushions like paid leave and unemployment insurance.

 

Though that’s gonna cause more long-term taxpayer DEBT - yes, I think a lot of people need the relief in the meantime.

 

Think about it this way: 

 

To save their economies over the long run, countries around the world are actively putting themselves into recessions.

 

Productive nations are actively plunging themselves into recession left and right.

 

Can you imagine that? But even though I’m a finance guy and a real estate investor, I think that it’s the right thing to do.

 

As odd as it sounds, the best way to heal the likely recession, is not to try to fix the recession. It’s to get into a recession by killing activity in order to control the virus.

 

The best way to heal the economy is to get people to stay home, stop the spread, and end this sooner.

 

Look, if you’re riding a bicycle and get a flat tire because there are nails on the road, well then, you don’t get to your destination … by patching the hole in the tire over & over again.

 

You get to where you’re going by cleaning up the nails on the road - which means that you & your bicycle go nowhere for a while - and then when the nails are picked up, you quickly roll along to wherever you’re going just like the economy should quickly roll along nicely - like it was - before the pandemic hit.

 

The fastest way to fix the economy is to stop the virus. 

 

As we’ve now learned, even though you might feel like you’re in a digital age with TikTok videos, and an app that digitizes your dinner receipts, and everything else ...

Humans still generate trillions in economic activity by coming into close, physical contact with one another—sitting at restaurants, assembling auto parts, traveling on planes, getting haircuts. 

But public health officials stress that to slow the spread of the coronavirus, we must all maintain a safe distance from each other, even if we’re healthy. 

But that still doesn’t square with our economy’s structure. 

Be mindful that recessions and surprises happen constantly. But this one feels a little more surprising for a few reasons - a virus is sort of intangible - you can’t see it - and there’s the fact that we just had a great loooooong run of 11 years.

 

That was the longest economic expansion in American history.

 

I think that this pandemic is the biggest news story since 9/11 - where you’re just kind of like, “I can’t believe this is happening.” But this WILL pass. It always does.

 

Look at what we’ve had in the last - not even 20 years:  9/11, Hurricane Katrina. The great recession. Superstorm Sandy. And now, you might call this the great shutdown. 

 

With the economic slowdown, I’d expect sudden, deep, and brief. 

 

I hope and expect that it will be sudden - it already has been sudden, that it will be deep - with massive layoffs, - and that it will be brief.

 

There are two prior Get Rich Education episodes that are getting a lot of attention right now.

 

One of them is named “A Recession Is Coming”. I released that in November of 2018.

 

One year later, I released an episode named “Planning For A Recession”. That was released in November of 2019, just four months ago.

 

“A Recession Is Coming” is Episode 215, and

“Planning For A Recession” is Episode 265 if that makes it easier for you to find them.

 

I’m coming back with more here - with “Your Pandemic Investing Strategy & Mindset”. This is “Get Rich Education”.

____________________________

 

Hey, you’re back inside Get Rich Education. And welcome, you’re squarely in the #WFH Era. 

 

The “Work From Home” Era. 

 

Yes, this alternate world where working from home is NOT frowned up - and going into the office IS frowned upon. I’m your host, Keith Weinhold. 

 

I’d like to emphasize that no one really knows about the next turn that society and the economy will take during this pandemic. That’s because we are in uncharted territory.

 

Because I don’t think very many people were alive to remember the Spanish Flu of 1918.

 

As far as the most recent territory that HAS been charted ...

 

Last Friday, stocks, as measured by the S & P 500, fell more than 4%. So as of today, Monday, March 23rd, 2020, stocks have now fallen more than 32% from their recent high.

 

How many people with 401(k)s have lost 32% of their account’s value? Some of them, even more, oh … and that’s just in the last month or two.

 

And last week, stocks posted their worst week since the height of the financial crisis.

 

The bull market died of coronavirus. 

 

That’s what happened. 

 

Now, why am I talking about stocks more than usual both this week & last - since I’ve talked about the pandemic quite a bit on both of these shows?

 

It’s because stocks are often a LEADING indicator of what investors expect is coming. 

 

(And note that I’m being kind by calling stock buyers true “investors”. A lot of them are just speculators.)

 

Now, a stock bear market is when stocks fall 20% or more from a recent high. 

 

Do you have any idea how good of a predictor a bear market is of a recession? Well, I can tell you.

 

73% of stock bear markets have been accompanied by a recession. 

 

As a forward-looking mechanism, the stock market usually sends warnings about the economy before shrinking growth shows up in the data.

 

So yes, in the 11 stock bear markets we’ve had since WWII, 8 of the 11 have resulted in a recession. That’s that 73%.

 

While it remains to be seen, real estate may be insulated to some extent - and that is because of tight residential inventory, high buyer demand, low mortgage rates, and lower prices for lumber and oil.

 

Recessions are not officially declared until the economy is already deep into them, or until after they’ve passed. We could look back later and say the recession started this month.

 

That’s because so much of our economy has to do with consumer spending - you buying a frappucino, you filling up your car with gas, you buying a boat. 

 

Consumer spending accounts for about 70% of GDP.

 

Now, here on the show, we’ve spent the last few years focused on rental SFHs and properties up to four-plexes in size.

 

Though it’s still a developing story, there’s been some evidence that the ventilation system in larger apartment buildings - can transmit the virus. I … sure hope that’s not true.

 

I talked to two prominent national MLOs last week.

 

  • One of them is Caeli Ridge, where they are just doing a TON of mortgage origination business for both income property purchases and refinances. 

 

  • The other mortgage loan officer is prioritizing new property purchases ahead of refinances there in THEIR office.

 

Low rates will outlast coronavirus. 

 

Markets are anticipatory - so once the virus is past it’s peak, prices of real estate should be rather buoyant.

 

Be mindful too, that because we focus on investing in the United States Midwest & South - what i call the stable markets - instead of the volatile, coastal markets.

 

Just generally here, coastal properties and stocks here near the start of the decade - are very much alike. 

 

They’re both overpriced, they’re both low yielding, and they're both susceptible to fall in value.

 

In these times, RE could be like the cleanest dirty shirt in the investment world - where you get the best risk-adjusted return. 

 

Better than bond yields, and better than 2% dividends from the S & P 500.

 

With factories closed, supply chain kinks can LIMIT housing supply - and housing was already in short supply.

 

I think that some people either won’t have the confidence or capacity to buy a home. 

 

Well, good. Then what they’ll do, is rent. You want them renting from you. More people in the renter pool … is to your advantage.

 

But they’ve got to have an income.

 

It’s important to remember that a pandemic is different from a financial crisis—bargain-basement interest rates can help keep businesses afloat, but the “social distancing” measures recommended by health officials mean canceling events and avoiding crowded places, which will curb spending. 

 

Interest rates can’t fix that, though low interest rates are great for borrowers.

 

Think about how this has affected society - maybe in some other ways you haven’t thought about. 

 

I know friends that spent months training for marathons that were cancelled. 

 

MLB, the NHL, NBA seasons suspended. 

 

Think about college & HS seniors that might have played their last game - without even knowing it. The pandemic ended their career - did you ever think about that?

 

Of course, this is minor. Some people have lost their lives, others have lung damage.

 

How’s your grandma doing - hopefully you get some time to video chat with her.

 

Maybe, just maybe, there is a huge silver lining to all of this with people staying home. 

 

Maybe more time as a family is what we need. Maybe we’ve gotten so caught up in following the madness of busy-ness, and that this is a reset - and you can have some health benefits - and exercise more. 

 

Maybe, after the short term economic losses have faded, some might place a much higher value on what is most important in their lives. Maybe.

 

We should salute and express our gratitude to the millions of frontline workers who are making tremendous efforts to help us all. 

 

That includes our world class medical staff and others that you’re not thinking about too many others too - the calm grocery store & pharmacy workers and the tireless drivers bringing important supplies to hospitals & warehouses & stores & our own doorsteps.

 

Think about the spouses of some of those people too. My wife is a medical worker and I’m a little fearful that she’ll bring the virus home.

 

Realize that fear of the Coronavirus may keep people away from restaurants and small businesses who usually operate on small margins. 

 

So here’s something you can do!!

 

From your favorite local business or restaurant, you can buy a gift card. 

 

Buy it directly from that favorite place so they get the use of your money for the next few weeks or months. 

 

Then ....when things have settled down, treat your sweetie to an evening out or buy something for someone and use your gift card‼ That’s something simple and actionable you can do to help the economy and your community.

 

Thank you delivery workers.

Thank you doctors, nurses & medical staff.

Thank you grocery workers.

Thank you truck drivers.

 

If you like to see the headshots of the guests we have here on the show and see the show notes, it’s easy. 

 

For this episode, #285, simply go to GetRichEducation.com/285

 

Now, we might only have the complete lyrics for the episode transcribed for maybe ten percent of episodes. 

 

But for both today’s show and last week’s show, you can see the entire transcription there.

 

That way, you can read along as you listen, or share that transcription with someone else who, perhaps, wants this content but isn’t able to hear. So you can check out:

 

GetRichEducation.com/284 for last week’s show notes with complete transcription or 

GetRichEducation.com/285 - for this week’s.

 

I’ll be back with you next week. If you want to help the economy, then, you might be best off, just staying home! 

 

It’s part of doing the right thing before you do things right. 

 

I’m Keith Weinhold. Don’t Quit Your Daydream!

Direct download: GREepisode285_.mp3
Category:general -- posted at: 4:00am EST

The novel coronavirus threatens life, business, and the economy.

11 years of U.S. economic expansion could end soon.

(**The entire episode transcript is below. You can read along as you listen.)

Closed businesses mean that supply chains are disrupted. This could make it difficult for flippers and value-add apartment projects.

Travel, hospitality, and leisure business troubles mean that short-term rentals like AirBnB will have high vacancies. 

Short-term rentals cater to business travelers and vacationers - both vulnerable in this downturn.

Long-term rentals are better positioned. As long as people are alive, they need a home.

Mortgage interest rates have hit their lowest rate EVER since they’ve been tracked in 1971.

The Fed made a 0.5% emergency rate cut. Expect more cuts. This punishes savers and rewards borrowers.

Stocks recently fell more than 20% from their recent high; that's the definition of a bear market.

Coronavirus’ effects are fast-moving and no one really knows the future. This is uncharted territory.

With this in mind, I’d expect real estate to fare better than other asset classes. Also expect:

Stronger: dollar, bonds, gold. 

Weaker: many stocks & businesses, short-term rentals, oil, silver.   

The unemployment rate will likely rise; I discuss what this means for your tenants.

Low mortgage interest rates can be locked in for 30 years, outlasting the coronavirus pandemic.

Check out our two new property providers in Orlando and Des Moines: getricheducation.com/orlando and getricheducation.com/iowa

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RidgeLendingGroup.com

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Complete episode transcript:

 

Welcome to Get Rich Education. I’m your host, Keith Weinhold. The coronavirus, COVID-nineteen, has infected humans and financial markets too.

 

This creates both problems and opportunities for you, the investor. Today, on Get Rich Education.

 

Welcome to GRE. From Uruguay to the Ukraine to the UAE to the USA and across 188 nations worldwide, this is Get Rich Education. I’m your host, Keith Weinhold. 

 

Yeah, you’re back in that abundant place, where your QUALITY OF LIFE exceeds your cost of living.

 

The novel coronavirus (COVID-nineteen) that began in Wuhan, China in November of last year when it transferred from animal to human is poised to affect the economy of every world nation and every U.S. state.

 

It's not SARS or Zika.

 

This transmits easily and it is perhaps 20x more deadly than the common flu.

 

Some experts believe it's the worst outbreak in America since the Spanish flu of 1918.

 

That was the worst pandemic of the 20th century.

 

And you know what, it didn’t have to be this way ... with coronavirus. 

 

As my chief informant on the matter, Dr. Chris Martenson says, it didn’t have to be this way.

 

Often placing the economy ahead of human life, health organizations and governments have often done a DEPLORABLE job of handling this, often understating the threat.

 

The World Health Organization was even reluctant to acknowledge that the coronavirus is a global pandemic … which it surely has been for a long time. Well, they only acknowledged that five days ago.

 

Well now that agencies weren’t preparing people sooner - coronavirus is poised to threaten even more people - which in turn, will make the economy even worse than if the threat had just been accurately represented in the first place.

 

I’m going to focus on coronavirus’ likely effects on real estate and the other financial markets shortly.

 

But let’s - you and I - outline this together first.

 

The virus causes only mild or moderate symptoms for most people, like a fever and cough …

 

… but it can progress to serious illness including pneumonia, especially in older adults and people with existing health problems. 

 

The World Health Organization says mild cases last about two weeks, while most patients with serious illness recover in about three to six weeks. Based on what I said earlier, consider the source there.

 

My heart goes out to the victims of this - past, present, and future.

 

The most credible source that I follow thinks that the virus will reach its peak in the U.S. 1 to 3 months from now.

 

I've followed this story closely since January and if you receive our Get Rich Education newsletter, you’ve known for a while that my favorite source of TRUSTWORTHY coronavirus information was and still is: the Peak Prosperity YouTube Channel, which Chris Martenson hosts.

 

In fact, I’ve mentioned that resource in our GRE newsletter for you twice - the first time was back on February 6th.

 

So if you get the Get Rich Education Newsletter, you’ve had plenty of time to get in front of this.

 

You know, it’s interesting. I had Chris Martenson on the show here earlier this year and we talked about “The Fed” printing money. That was right before coronavirus literally went viral.

 

Before I tell you about the affects on your real estate - both good and bad - let’s establish a baseline here.

 

Coronavirus is threatening because it has a substantially higher R-naught value than the flu. 

 

If the R-naught value is greater than 1, that means that one infected person will spread the virus to MORE THAN one person then the disease can spread.

 

The way a virus dies out is for it’s R-naught value to be less than 1. Then, one infected person, on average spreads it to fewer than one person.

 

Well, the common flu has an R-naught value of about 1.3.

 

Coronavirus (COVID-nineteen) is believed to have an R-naught value of more than 3 and maybe even more than 6. So it spreads easily.

 

It spreads asymptomatically - and that’s bad. 

 

There’s no vaccine available - and most believe it’ll take a while to develop one.

 

And, you can find resources elsewhere on how to prevent the spread like social distancing, avoiding gatherings, and lots of handwashing.

 

But because this is an investing platform and I don't have a degree in pathology or epidemiology, and much of what I just told you there, I learned myself in the past month or two …

 

Let me now get into my lane: how do I think coronavirus will affect your money and your real estate?

 

Well, it probably already has.

 

Businesses are closing. Colleges have suspended classes. Many events are being cancelled or postponed. 

 

SXSW in Austin, Texas was one of the first major EVENTS to be cancelled in the U.S. March Madness basketball won’t have any crowd there.

 

We’ve got an entire country - Italy - that’s essentially shut down.

 

When businesses close and more people work from home, this disrupts supply chains. 

 

That COULD include less supply of sheet rock or faucet handles or whatever - and affect value-add properties because so much building material comes from China.

 

It could be a tougher time to be a flipper then if you’re about to start a rehab or if you’re in the middle of a rehab.

 

If you're upgrading an apartment building, that could slow things down. You need materials. 

 

This may or may not create disruptions for turnkey property providers. We’ll see. 

 

You’re in a better position if you’re a prospective turnkey buyer waiting on a rehab - maybe that’ll create a delay until your property is ready. Maybe it won’t.

 

China accounts for nearly 30% of world manufacturing.

 

But importantly, they also make component goods for finished products.

 

An American car can't be finished if it doesn't have the battery and exhaust system from China.

 

Virtually every major car company has a component made in China. 

 

Now, I see conflicting reports of whether some previously closed Chinese businesses have really come back online or not. We need to learn more there.

 

Travel, hospitality, and leisure businesses are already hurting. 

 

Now, where hospitality meets real estate, we’ve got hotel rooms, Bed & Breakfasts and short-term rental platforms like AirBnB and VRBO.

 

Like I’ve said before, and not too long ago on the show at all - is that these short-term rentals are not very recession-resistant.

 

That’s because short-term rentals cater to two main groups of people - business travelers and vacationers. That’s who occupies those properties.

 

Well, what are business travelers and vacationers doing right now? They are postponing travel or cancelling travel left-and-right due to coronavirus concerns.

 

How great would you feel about owning AirBnBs right now?

 

Short-term rentals like AirBnBs are not as recession-resistant as long-term rentals.

 

Just a couple, three months ago, it probably sounded different to you when I mentioned that short-term rentals aren’t very recession-resistant. 

 

Because perhaps you were still feeling good about our 11-year-long economic expansion.

 

But those same words probably sound and feel different to you now that some think that a coronavirus-induced recession could even be imminent - though that remains to be seen.

 

Also, expect big hits to: chemicals, pharmaceuticals, and electronics.

 

Apple Corporation is so dependent on Chinese manufacturing for their iPhone. That’s the bad news.

 

Now, let’s talk about the good news.

 

Mortgage interest rates have hit all-time lows - yes, lower than their lows that they hit in 2012, shortly after coming off of the Great Recession.

 

All-time lows - as long as Freddie Mac has been tracking them - which is since 1971. They’ve never been lower than they are now. 

 

Today, you can get a rate in the low 3s for primary residences, I’ve even heard of a few people closing 30-year fixed amortizing loans for less than 3%. Just astoundingly good.

 

And of course, investor loans are often about ¾% higher than those.

 

The Fed has been pumping tens of billions, even hundreds of billions into the system lately … for bank liquidity.

 

The Fed's emergency interest rate cut of 0.5% two weeks ago is first time we've seen such a move since 2008. 

 

That 2008 cut was in the wake of The Great Recession - that was the Lehman Brothers emergency one-half-of-one-percent cut.

 

Just a quick economics primer if you’re a new listener - lower interest rates for loans stoke the economy because they make you more willing to borrow & spend.

 

Interest rate cuts help the investor class like you, and not poor people. That’s just the truth behind who cuts actually help. It’s you!

 

It helps the Get Rich Education listener - you again - even more because we’re such strong proponents of responsible and sensible borrowing here.

 

Now, note that lower rates don’t help contain the diseas. If your grandparent gets sick, Jerome Powell’s decisions aren’t going to help that.

 

Right, how low would rates have to be to get you to travel to China or Italy tomorrow?

 

By the way, after the rate cut, President Trump was not satisfied with the amount of easing and cutting.

 

“More easing and cutting!” is what he tweeted following the central bank’s announcement.

 

But realize, of course, that long-term mortgage rates don’t move on that Fed Funds rate. The Fed controls the short-term rate - though there’s generally still a correlation there. 

 

Long-term mortgage rates - like the ones that you really care about for real estate - they move with bond yields.

 

Now, bonds are like the boring can of beans or soup in the finance world - they’re safe and they’re stable.

 

Vigorous bond-buying makes bond prices go up and makes bond yields go down.

 

So this strong bond-buying … this safe have ... has dropped the 10-Year Treasury Note yield below 1% for the first time ever … and it’s fallen substantially below 1% in just a fantastic fall off the table.

 

OK, so they’re below 1% - and that’s a rate that was unthinkable just a few months ago. 

 

Do you know what the average spread is between this bond yield and the 30-year mortgage rate?

 

On average, mortgage interest rates hover 1.8% above this rate, so you can see how low we could be going.

 

I think that the historic spread will widen, but despite the fact that we now have record - I mean all-time record low mortgage rates, there’s a good chance that they’ll go a little lower yet.

 

This is great for your new real estate buys. Refinance activity is surging right now.

 

But back to short-term rates that the Fed influences - more cuts there seem imminent too.

 

The next one could happen at the Fed's regularly scheduled meeting, which happens tomorrow and the next day.

 

So you’ll hear an announcement from The Fed this Wednesday about their rate cut decision.

 

The Fed loaded up with dry powder in 2018 when they raised rates, so that they can lower them at a time like this.

 

Every time they cut the rate like this, it punishes savers and rewards borrowers.

 

No one knows if rates will go negative - and only a few places in the world have those right now: places like Japan, Denmark, and Switzerland. We’ve never had them in America.

 

U.S. stock market investors are getting killed with all this uncertainty. Indices are whipsawing with volatility.

 

Fear pushes stocks around, but not RE. The U.S. stock market dropped 3% in just minutes when a report came out that in CA, a large number of people were exposed to coronavirus, but weren’t. 

 

Last week was the first time that major stock indices dipped into bear market territory. That’s defined as a 20% loss from a recent high.

 

There was one recent trading day - just one day - where the S&P dropped 7%, triggering a circuit breaker, which paused trading for everyone for 15 minutes. 

Yeah, now we’re talking about all these automatic fail-safes. When the stock market loses so much, so soon, there’s a pause in trading.

By the way, the way it works is that if the S&P had declined 13% in a day, trading would’ve paused another 15 minutes. 

20% in a day, and everyone would have gone home for the day. That’s how it works.

Yeah, they put those circuit breakers in place after 1987’s Black Monday, when the market fell between 22 and 23%. 

Stock drops are always sickening,l and if you’re within 5 years of retirement, stock drops are really scary.

I’ve told you before that I haven’t owned any stock, mutual fund, or ETF since 2014 and that’s still true today.

Being in something stable like real estate has rarely felt as good as it has lately.

 

And you know something, “volatility” is a funny word. 

 

It seems like “volatility” used to mean something that changes rapidly, and anymore, it’s morphed into something that only means a change for the worse.

 

Warren Buffett says, "The stock market is a device for transferring money from the impatient to the patient." 

 

I believe that. I’d even say that - not just the stock market - but just that, “MARKETS OVERALL are devices for transferring money from the impatient to the patient.” 

 

Real estate investors like us are more patient. There’s no flash-selling in real estate. It might take you 30, 60 days or more to sell a property … or to buy a property.

 

I’d expect to see a stronger U.S. dollar because the world views it as a safe haven asset. 

 

I expect this to be a nice tailwind for real estate too, because the world views U.S. real estate as a safe haven asset in times of uncertainty.

 

Gold should be strong with coronavirus concerns. That’s easy to say, since gold is the classic safe haven asset.

 

But remember that gold might not APPEAR stronger to Americans if the dollar strengthens. 

 

That’s how it works. Because if gold goes up 10% and the dollar also gets 10% stronger, well then it takes just as many dollars to buy the gold.

 

The dollar-denominated gold price would look the same then.

 

I’ve read that a number of experts predict silver prices to rise on coronavirus concerns, but then I don’t see any sound rationale for them thinking this. 

 

I disagree. I would NOT expect silver to rise.

 

That’s because silver has more industrial use than gold and more industrial slowdown is expected.

 

Let's talk more about your income properties in this coronavirus environment.

 

Though I'm speculating now, what if your tenant is required to self-quarantine at home and they lose their income?

 

This is not far-fetched.

 

Washington state officials were really some of the first in the U.S. to recommend that workers stay at home when they suggested that Seattle-area residents work from home.

 

More & more people can work from home today than anytime in modern history. 

 

But when we’re talking about your tenants, it's unlikely that all of your tenants will lose substantial income.

 

Now, there are some positions where people can’t work from home so well, like mechanics, janitors, chefs and wait staff, sure. Let’s consider that ... 

 

The current unemployment rate is 3.5%. 

 

I’m really speculating here, but if 1 in 10 of your tenants is both laid off & without income, that’s a 10% increase in unemployment. That would be huge.

 

That would be like the unemployment rate going from 3.5% all the way up to 13.5% - which seems unfathomable!

 

And yes, realize that if 1 in 10 people were laid off it wouldn’t exactly make the 3.5% unemployment rate shoot up to 13.5%. It doesn’t exactly work that way with how it’s calculated. 

 

But, I think you get my point.

 

If 1 in 10 of your tenants were both laid off and without employment, that would be massive. So keep that in perspective. Even 1 in 10 would be a lot.

 

Last week, Trump floated the idea of a payroll tax cut, which I don’t think would do much of anything to help - and also, extending paid leave which seems more helpful.

 

Companies, especially those in the service sector, are under pressure to provide paid sick leave to workers who may not be in a financial position to take time off. 

 

Wal-Mart and McDonald’s put in safeguards for their employees.

 

Congress might step in. A bill has been introduced that would require companies of all sizes to provide paid sick leave.

 

Could your overall rental income go down? Maybe, though you have to speculate quite a bit to even think that 1 in 10 would go without an income. So that’s a maybe.

 

But does your mortgage interest rate go down? Definitely. It already has.

 

What about you?

 

If you lose your job, you need multiple income streams ... from places like your rentals.

 

And if 9 out of 10 … or 10 out of 10 of your tenants still have jobs, you probably still have that income stream because you set up your life for multiple income streams if you’ve been listening to this show & acting.

 

What about you - what about your job? Well ...

 

The lower your financial freedom, the higher the risk.

 

The more income streams you’ve built, the better off you are.

 

What about your job? The lower your financial freedom, the higher the risk.

 

Another benefit of a paid sick leave movement gaining momentum, is that “When people gain access to paid sick leave, the spread of the flu decreases.” 

 

Because they’re more likely to stay home then. So that makes paid sick leave seem like more of reality.

 

It’s important in this situation that when you have people who have symptoms and don’t feel well, that they do not go to work and spread diseases to slow the infection rate and buy time for public health officials to develop a vaccine.

 

Let’s look at oil prices - because that’s a substantial input to inflation and oil is a real proxy for what’s going on in the economy.

Oil prices have crumbled faster than a Nature Valley Granola bar.

And that’s even before a coronavirus-induced slowdown. 

What’s happened, is that with President Trump in the White House and the Republican Party controlling the Senate, environmental activists have shifted their focus from pressuring the government to pressuring the private sector instead. 

Since JPMorgan is such a big financier of the fossil fuel industry, activists have really turned up the heat on them and other big banks to stop financing oil projects.

That’s significant - on top of a slowdown in the economy - if fewer goods need to be produced and shipped, it uses less energy and then there’s less demand for oil.

Low oil prices are generally good for consumers but bad for producer countries. 

 

In the U.S., low oil prices are not good for real estate in areas like west Texas, parts of Louisiana, and Alaska.

 

But, of course, there’s the flip side of all this. At some point, low stock and oil prices mean that bargain hunters come in to float the market again at some point.

 

In fact, billionaire investor Sam Zell recently made remarks that oil looks like a “buy low” opportunity.

So let’s look at the bottom line - real estate is still quite well-positioned as long as you’re in residential, long-term rentals that you bought for cash flow.

Elsewhere: Bonds win, gold wins, the US dollar wins, many business sectors - like the ones I mentioned - lose, stocks lose, oil loses, and silver loses.

 

Of course, let me qualify all that by telling you that that’s my outlook and that we don’t have any recent precedent for anything else like the coronavirus. No one REALLY knows. That’s my take.

--------

 

If you happen to be a new listener to the show, you may not know much about me. I’ve authored many written articles for both Forbes and the Rich Dad Advisors.

 

Business Insider recently wrote two stories about me and Get Rich Education - and how I’ve helped everyday people create financial freedom through real estate investing. 

 

That’s what I do here!

 

I’m a current member of the Forbes Real Estate Council. 

 

But maybe the more important things I can tell you are that I’ve been the host of this show every week - and I mean EVERY week continuously since 2014 - you can count on me to keep showing up here.

 

I own three real estate trademarks. In 2017, I authored an international best-selling book on how real estate makes ordinary people wealthy.

 

And perhaps the most important thing I can tell you is that I invest right alongside you, from the exact same providers that we talk about here.

 

Though I travel pretty well, I’ve lived my entire life in the United States, dividing this life of mine between two states - Pennsylvania and Alaska.

 

I have spent the last 2-and-a-half weeks visiting four countries - the United Arab Emirates, Oman, India, and Sri Lanka. Though I’m a real estate guy, I have a degree in geography so I like to travel.

 

One of the coolest things I did is sandboarding on a sand dune in the Arabian Desert there in the United Arab Emirates. 

I couldn't find another interested person, so I did that activity all by myself. Going high in the world's tallest building, the Burj Khalifa in Dubai, was a “must” while we were there.

Muscat, Oman has some surprisingly beautiful sights, and buildings, and mosques that we toured. Really clean-looking there in the nation of Oman.

Immersing myself in Indian culture is something that was really novel to me - the food, the way that - the women especially in some of these outlying provinces like Goa and Kerala, India - the way the women dress in such colorful outfits ... just if they’re walking to the market to buy some guava. Such an exotic feeling there.

The coolest thing that I did is visiting the world's largest slum. It’s called Dharavi and it’s in Mumbai, India. It's just sooo different from my world. 

There are actually bustling little businesses inside the slums there - from plastic recycling to pottery. And the Indian people were so welcoming - even in the slums - which was just amazing to me.

As I like to say, seeing poverty enriched me.  :o)

I’ve got more on coronavirus and your money straight ahead.

A fair bit of what I’ve discussed here about coronavirus and your money and your real estate, is material that I sent in our wealth-building Get Rich Education newsletter about 12 days ago.

The newsletter is a nice, written supplement to the podcast. Of course, you can unsubscribe at any time - but very few do.

My wealth-building newsletter is something that you can subscribe to … for free … at GetRichEducation.com   You’ll be glad you did.

You’re listening to Get Rich Education.

_____________________________________

 

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

 

It’s unknown whether coronavirus will tilt the economy into a recession or not. It’s too soon to know. I’ll keep you updated on that here, of course.

 

For you, I think it helps to listen to a perspective that’s invested through a recession before.

 

I’ve been investing directly in real estate since 2002 - which was before the Great Recession.

 

I made a major income property purchase in 2007 - which was just within that recession (in fact, I mentioned that four-plex purchase last week on the show).

 

And I kept buying in 2010, as the recession wound down - and in 2012.

 

Well, what’s the common thread there? It’s that I continued to prosper because I bought for cash flow first.

 

It’s that I bought in multiple geographic markets for diversification - a recession-resilient strategy.

 

Residential rentals that were leased to long-term tenants.

 

People need a place to live. And as long as they're alive, a virus is not going to change that.

 

But see, a virus might mean people stop using vacation rentals and stop taking business trips and stop going to the mall and stop going to the office to work.

 

We’re talking about HOMES. Well, we could soon have more people working from … home. 

 

Not office, not retail, not short-term rentals. They all look vulnerable now.

 

And by the way, that doesn’t mean I’m a permabear on those asset types. There’s always opportunity. But recession-resistence just isn’t one of their qualities.

 

I’m not saying short-term rentals never make an ounce of sense or anything like that.

 

Some companies are basically using the coronavirus as an experiment for that moment when “working remotely could broadly replace working in-person.”

 

Some people think that time is coming.

 

This can ACCELERATE THE - you’re seeing the acronym “WFM” around a lot more now - 

 

  • the “work from home” movement. As people get more used to using workflow software and using platforms like Slack or Trello from home because they HAVE to, you know, when coronavirus passes - and it will - some might ask, now why return to an office all?

 

With each passing day, the camp of people believing that this is all fear-mongering loses troops.

 

We’ll see if the peak for coronavirus will be that 1-3 months from now like some experts predict. That’s the latest I’ve heard from credible sources. But again, we really don’t know.

 

That’s why I like to focus on things that we do know. So let’s focus on what we do know now:

 

The coronavirus threat will pass sometime. We just don’t know when. But it will pass.

 

A second thing we know is that people will continue to need a home - a place to live.

 

And thirdly, mortgage interest rates have hit their lowest level in American history.

 

So with those being the things that we DO know - this can be QUITE an opportunity to not only lock up investment property buys at historically low rates, but potentially, do that cash-out refinance of your existing home if you think that that’s in your best interest.

 

Procrastinators often aren’t rewarded. But, hey, maybe you are this time with rates being this low - or maybe you really weren’t because you had dead equity accumulated in one place for too long.

 

With borrowing rates underneath the basement, a lot of homeowners are racing to lock in cheaper loans. 

I think we could see low to mid 3% rates on investment properties, and below 3% on primary residences.

Mortgage refinancing applications have more than doubled in volume from the same time last year - that’s according to the Mortgage Bankers Association.

And industry records are being shattered. Bloomberg reported that : 

The country’s No. 1 mortgage lender, Quicken Loans, recently had its busiest day for mortgage applications in its 35-year history.

United Wholesale Mortgage approved a single-day record of $2.5 billion in loans. 

These stories are all over the place.

The thing is, to process this flood of applications you’re going to need a lot of people. So the mortgage industry is on a hiring spree to take advantage of the gold rush.

Our preferred mortgage provider is doing a lot of volume now as well - RidgeLendingGroup.com - that’s R-I-D-G-E.

Just calculate your ROI just from principal reduction alone at these low rates. It’s pretty remarkable. 

I think that the thing that you need to remember is … that long-term thinking.

"Investing should not be about a MOMENT; it should be about a PROCESS OVER TIME.”

Some of the classic problems with GETTING STARTED in real estate are ones that I’ve helped solve for you here.

 

I think that Problem 1 for people is that they feel like it costs a small fortune to GET started. 

 

Problem 2 is FINDING the property. Often times, it’s because properties in your area don’t make sense with your 20% down payment and 80% loan.

 

I’ve really helped solve both of those problems. 

 

By selecting investor-advantaged markets, with down payment & closing costs you can get started with as low as … about $18K - and they’re in areas where the numbers make sense … all at the website … GREturnkey.com

 

In fact, at the top of the page there, there’s that 8-step flowchart where I walk you through the process.

 

You start by getting pre-approved for a mortgage - I even suggest where - and then reading an investor due diligence report …

 

… all the way through to viewing properties, making an offer, getting your third-party inspection, appraisal, signing your Management Agreement, Closing on the Property … and then the really good part - years of owning and collecting the rent. 

 

It’s rarely been easier - though the process still takes time & you need to supply your mortgage loan underwriter with plenty of documentation.

 

That’s all outlined at the same place where I buy my property: GREturnkey.com

 

What about some current highlights over there?

 

Well, it’s a great time to invest in Florida for a lot of reasons - you’ll find providers in Tampa, Orlando, and Jacksonville.

 

Our Orlando provider was recently added - they’re now - and they have NEW CONSTRUCTION - yes, newly-built, never-before occupied - single-family homes and duplexes … and they’re in locations from the Space Coast to The Villages, through Orlando, and nearly out to Tampa. 

 

We’ve got another new provider on the page if you’re looking for more cash flow and less appreciation than what you’d typically get on new construction, and that is in … Iowa.

 

Yeah, I’m proud to introduce the Des Moines, Iowa market to you today. 

 

It’s a model of midwestern stability and Des Moines has an MSA population of 600 to 700,000 people.

 

Des Moines has seen an average 3.6% appreciation over the last twenty years. I think of it as a cash flow market.

 

A lot of times, you might be buying for, say a 4 or 6 or 8 or 10% cash-on-cash return today. 

 

If you have a little more patience and you want to potentially double your CCR, then, rather than the turnkey model - where you buy a property that’s already renovated - you might prefer the BRRRR model.

 

That stands for Buy – Renovate – Rent – Refinance – and Recycle Model - recycling your money to re-use right away. 

 

That BRRRR model is suited to Baltimore, Maryland - within commuter distance to Washington, D.C. at just a fraction of the price.

 

All those markets - including the new turnkey markets with inventory TODAY in Orlando and Des Moines, plus the Baltimore BRRRR market, plus that 8-step flowchart that helps serve as a roadmap for you are all in one convenient place - all on one page - at GREturnkey.com

 

Market uncertainty is a short-term phenomena.

 

But when you lock up these lowest mortgage interest rates in American history - they can last you 30 years.

 

When the dust settles from any current news, you know what, you’ve still going to have your mortgage rate.

 

Stay safe. Enjoy these historically low mortgage interest rates … I sure am. Take action at GREturnkey.com

 

I’m Keith Weinhold and I’ll be back next week to help you build your wealth. Don’t quit your daydream!  



Direct download: GREepisode284___.mp3
Category:general -- posted at: 4:00am EST

You’ll struggle unnecessarily in life if you “maximize” conventional retirement plans.

How can this be?

Historically, rather than deferring your income into the future with a 401(k), 403(b), 457 Plan, TSP, IRA …

… you could invest in a real, cash-flowing asset that improves your life BOTH now and later.

I make a case that a “dollar per dollar” employer match in your 401(k) could be worth it. But only up to that level.

Today’s guest, Daniel Ameduri, author of “Don’t Save For Retirement”, discusses this with me.

Future federal income tax rates will likely be higher. That’s one risk of deferring your tax.

The biggest risk of conventional retirement saving is that you sell your todays for tomorrows. Would deferring your compensation ever “pay off” for you?

Children & money tips are also discussed.

The top role of most financial advisors? To keep the naive person from losing all of their money.

In retirement, many retirees pay their financial advisors 25% to 50% of what the retiree withdraws! I explain.

Summary: Don’t invest your income for savings; invest your income for more durable income.

__________________

Resources mentioned:

Future Money Trends:

www.FutureMoneyTrends.com/save

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Find Properties:

GREturnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

 

Direct download: GREepisode283__.mp3
Category:general -- posted at: 4:00am EST

The next recession, and your next 3-10 economic years are predicted by our guest today.

He is Brian Beaulieu, CEO of America’s oldest privately-held continuously operated economic research and consulting firm, ITR Economics.  

Prediction: Interest rates should stay low through 2023.

By 2025, they could rise 3% to 3.5%.

Inflation should increase in the second half of the 2020s decade. Why? De-globalization.

We discuss how long this longest-ever economic expansion will last.

Declinism is people’s predisposition to view the past favorably and fear the future.

Brian tells us why the economy is likely to accelerate before it falls into decline.

Millennials and Gen Zers are large generations. As they age, their affluence increases.

Brian tells us that the widening gap between stock valuation and corporate profitability is concerning.

I tell you the difference between fiscal policy and monetary policy, and why the 30-Year Fixed Rate Mortgage might be the most undervalued “asset” today.

Of course, your economic future is based more on your individual decisions than the broader economy.

If you want an economic forecast for your business or personal investing, visit: ITReconomics.com

__________________

Resources mentioned:

ITR Economics:

https://itreconomics.com/itr-economics-podcasts

Book:

Prosperity In The Age Of Decline

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Find Properties:

GREturnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode282__.mp3
Category:general -- posted at: 4:00am EST

One of America’s most underappreciated markets is right in the heart of cash flow country.

Rent-to-price ratios are often 1%. 

Americans are moving from high-cost, high-tax places to low-cost, low-tax places.

Look, the biggest mistake most real estate investors make is emphasizing “the deal” rather than “the market”. 

You are making an investment into an area’s underlying economy before the property. 

Follow the data, not the money.

I discuss why health care employment is an important gauge of economic vibrancy.

Learn why sellers prefer investor-buyers like you, not owner-occupant buyers. 

To buy cash-flowing properties in this underappreciated, “secret” market, start here at: www.GetRichEducation.com/Dayton

__________________

Resources mentioned:

Dayton Cash Flow Properties:

GetRichEducation.com/Dayton

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Find Properties:

GREturnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode281__.mp3
Category:general -- posted at: 4:00am EST

Before you buy a property, I discuss something crucial that you’re probably missing.

Five of your listener questions are answered. 

(The entire episode’s lyrics are in the Show Notes below!)

1 - How should I reward my child for their good school report card?

2 - How reliable is a real estate income stream?

3 - Are we in a housing bubble?

4 - Should you pay off $200K in student loans or invest?

5 - Should I get an inspection for a new construction property?

“Packaged commodities investing” is a way to think of real estate.

You have a buying opportunity for income property in Florida, Alabama, Indiana, Maryland, Tennessee, Arkansas and more all at www.GREturnkey.com.  

__________________

Resources mentioned:

Inflation Lesson:

Sears & Roebuck DIY Homes

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Find Properties:

GREturnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

 

Welcome to Get Rich Education. I’m your host, Keith Weinhold - answering your listener questions today. How do you reward your child for a good school Report Card? What about the long-term DURABILITY of a real estate income stream? 

Are we in a Housing Bubble? What should I do - pay off student loan debt - or invest? Should I get a Home Inspection? And what’s the one thing you should do before you buy ANY property that you’re probably not doing? 

All today - and more … on Get Rich Education. 

___________________________

Welcome to GRE. I’m your host, Keith Weinhold. From Colombo, Sri Lanka to Columbia, South Carolina to Columbus, Ohio and across 188 nations worldwide. 

This is Get Rich Education. 

We’re having my favorite guest on the show today. That guest is you! Because I’m here with your listener questions today!

The first one concerns a kid’s school report card and then the rest are about real estate investing. 

Rebecca from Los Angeles, California asks, Keith:

What reward should I give to my 11-year-old son, Mason, for having a good report card at school - all As and Bs? I love your show, keep up the great work.

Well, thanks, Rebecca. I love this question. Even though we’re largely a real estate investing show, I think there can be so many lessons about life for your 11-year-old son, Mason here.

The reward you can give them for their good report card is cash. Tell Mason that he’s getting $100 - or maybe it’s $40. But in any case, let’s just stick with the $100 example.

Divide it in half. 

Tell him that he’s getting $50 in cash.

And tell Mason that, as a bonus for later, another $50 is going to be invested for him.

Over time, Mason will probably see that the invested $50 grew and the $50 that he spent on video games or whatever didn’t.

But see, he still gets rewarded with “short-term” fun. That way, it’s not ALL delayed gratification.

As you know, the abundance mentality isn’t about either / ors, it’s about “ands”. 

 

This way, he can have his cake and eat it too. What good is cake if you can’t eat it?

 

Now, I didn’t say that he had to SPEND the $50 cash part of this. $50 gets invested - and you’ll have the fun of keeping Mason updated on his investment over time. 

 

He can do whatever he wants with the $50 cash part. And over time, if he sees the invested portion gained value, he might choose to actually invest some or all of the $50 cash reward too.

 

But for now, let’s be realistic - he wants to spend his $50 cash on Minecraft or Fortnite or the latest release of Grand Theft Auto. A video game like that.

 

That’s fine. You need to let him be rewarded now - because that might incentivize more near-term good school performance - which is what you value seeing in Mason.

 

Thanks for the question, Rebecca.

 

Now, before I move onto the next question. There’s … I think … a real extrapolation here for you, the adult listener, with the way I recommended that Mason’s report card could be rewarded.

 

Really, there’s a real estate investing lesson there. Mason gets rewarded both now & later.

 

A employer-sponsored retirement plan punishes you now by reducing your salary and make you delay gratification.

 

Real estate investing reduces your salary now - in way - when you make your down payment. But it begins returning that to you in the form of cash flow now - and gives you the asset appreciation for later.

 

As you know, I’m not in love with the term “delayed gratification”. Now, I do think there’s a little something to be said for it.

 

When I made my first-ever property that four-plex building where I lived in one unit and rented out the other three, I could have bought a nicer SFH. So I delayed some gratification there.

 

I see some investors buy-in to “delayed gratification” so much that I wonder how long their postponing happiness and if they’ll EVER find it.

 

Sometimes, people get shocking reminders of this, but they soon forget it. I know this hits close to home for an Angelino like you, but you think about 41-year-old Kobe Bryant and his daughter Gianna being taken away from the world a few weeks ago.

 

There are really all kinds of analogies for life here. Sometimes “later” becomes “never”.

 

Would you say that IF 11-year-old Mason spent half his report card reward - the cash half - if he spent it all on video games, would you say that he “blew that money” - that he “wasted that money”. I don’t know.

 

What about you - the adult listener. Sometimes I hear people say that you should save all your moeny and not “blow it on a vacation” - as if you squandered money if you went on a vacation.

 

I don’t know that that’s necessary true.

 

Look, what is money for? What if you’ve wanted to travel to tour the beautiful Croatian coast or see glaciers in Greenland.

 

How can a person say that you’re necessarily “blowing your money” if you go out and to that.

 

You’re getting out and seeing the very world that you live in. You’re living the life you’ve dreamed of. What would you want to do any less?

 

Most people just don’t have a vehicle - they don’t know about a durable vehicle like real estate that pays them so many ways - both today & tomorrow.

 

See, a lot of investment promoters WANT you to delay gratification. 

 

They oversell that stance. They’re selfish. They want you to invest your money with them so they get the sale first and that they get the commission first and that they get the referral fee first.

 

They’ve convinced you that paying yourself first … means investing with them first … so that you can accumulate dollars in an account with your name on it so that you can only then consume it in years or decades.

 

Use your dollars in years or decades? That’s not paying yourself first. How did that get to be paying yourself first? It’s because that promoter of salesperson is only thinking of themselves first.

 

There’s something to be said for delayed gratification, yes.

 

But delayed gratification should not be a permanent condition.

 

When are you really going to start living the life you’ve always wanted? The year 2052? Or do you have a plan to compound your cash flows so that you can do that in three years.

 

You know that that’s the big reason - the #1 reason for me, in fact - that I don’t care for conventional retirement plans. 

 

They only invest for later instead of both now & later like cash-flowing real assets do.

 

Now, I don’t think you’re going to find it self-redeeming if you go broke trying to LOOK rich with ostentatious displays and classic CAR status symbols like the Lambo - unless that’s sustainable for you. Then … that’s great.

 

So be gratified both now & later. Give Mason cash - half now, half turned into an investment that you make for him.

 

And to 11-year-old Mason, if you listen to this now, I know you might want all $100 bucks right now. Most 11-year-olds would.

 

If you listen to this in 2030 when you’re age 21, you still might not understand.

If you listen to this in 2040 when you’re age 31, it’ll probably all make sense.

 

Thanks for the question about your son Mason, Rebecca.

 

------------------

 

The next question comes from Gerald in - Oxnard, CA - that’s just up The 405 and 101 - west from L.A. where our last listener inquiry was from.

 

I went through Oxnard on my last drive from L.A. to Santa Barbara.

 

Gerald writes. “Keith, thanks for your show. Nobody anywhere makes real estate investing more clear. It’s my favorite 40 minutes of the week.” 

 

Now, see, with a comment like this, it really increases your chances that I’m going to read your question on-air here, Gerald from Calabasas.  :o)

 

He asks, you discuss the importance of multiple income streams. 

How PROVEN do you think that real estate income streams are long-term. How do I know it will still perform as an asset class for me in 30 years?

Thanks for the question, Gerald. I know I’ve discussed elsewhere that people are going to keep needing a place to live, like they have for centuries or millennia now - and that inflation is the long-term trend and your long-term friend for a leveraged real estate investor. 

It’s also what makes your cash flow rise faster than inflation since rents move up with inflation but your principal & interest cost doesn’t - it stays fixed.

So, I’m going to take this in a different direction, Gerald. You’re asking about the durability of real estate an asset class and I think it’s a good question. 

I recently had another listener write in to me about a concept that … I’ve thought about it before but I never heard it articulated in such an elegant way. And, I’m sorry that I don’t remember this listener’s name.

But she referred to real estate investing as “Packaged commodities investing”.

I love the … ingenious thought of packaged commodities investing.

When you buy a rental home, yes, you’re buying the cost of the utility and the construction labor. 

But think about those materials in the home, those commodities - you now own brick, lumber, glass, copper wire, styrofoam insulation, granite, ceramic, paint, oil in the roof shingles, masonry, concrete, rebar, you own an HVAC system - every one of these individual commodity components are hedges against inflation. 

Gerald, a while ago, Reddit had a trending article over these Do-It-Yourself Houses that Sears used to sell over a hundred years ago.

Look, this is fascinating -

I’ve got this one-page ad in front of me - it looks like a newspaper ad. It’s for Sears Roebuck and company from the year 1913. 

This ad - that’s more than 100 years old - is interesting to any investor or economist - or marketer even. 

This ad is for - like a kit you can buy where you help construct the home. Let me read it to you.

It says, “By allowing a fair price for labor, cement, brick and plaster, which we, Sears, do not furnish, this house can be built for about $1,530 - including all material and labor!

Now, this looks like a small, single family home plan that Sears was offering you here, back in 1913. I can’t quickly find the square footage on it - say it was 1,500 sf.

So, you’re buying this house over a hundred years ago, for say a dollar per square foot then.

They show you the flooring layout plan. This is a livable-looking place, complete with a nice, wide porch. It’s not a tiny home.

Ha - this is so quaint!

The Sears ad goes onto say, for $872 (which is more than half of your all-in cost of $1,500 that I just mentioned) - we will furnish ALL of the material to build this 6-Room bungalow …

… consisting of mill work, siding, flooring, ceiling, finishing lumber, building paper, pipe, gutter, sash weights, hardware, painting material, lumber, lath, and shingles.

NO EXTRAS - is in all caps. We guarantee enough material at this $872 price to build this house according to our plans.

So that was $872 for the material - and then, remember, your all-in price with labor and everything else is the $1,530. 

This home, that’s giving us some historical commodity and real estate PRICING perspective here - doesn’t look like a piece of junk.

Reading on - the large porch is sheltered by the projection of the upper story and supported with massive built-up square columns. 

A unique triple-window in the attic and fancy leaded art glass windows add much to this pleasing design. Ha! That’s all I’ll read from the ad. 

So … I think this is representative of this concept of “packaged commodities investing” that a listener introduced me to. 

It tells us a lot about monetary inflation, and at the same time - it speaks to the durability of residential real estate as an investment.  

This IS less sexy than the “five ways you’re paid” stuff here. We’re just looking at an element of durability here.

When you have direct ownership of rental property, you simultaneously own all of these vital commodities. You own a basket of products.

You’ll see this Sears ad linked in the Show Notes. It’s fascinating to see.

And a lot of home construction here in the 2020s decade is still done largely the same way that it was decades ago.

3-D printed homes are not being adopted into the mainstream. Now, if they do, that could lower labor costs. 

You’d still need to add a lot of things to make a 3-D printed residence livable - components and penetrations and mechanicals and the  - all those commodities we mentioned, plus, you’ve got the cost of the land. 

Decently-located land, is a commodity in itself - and IT’S of a limited supply.

By the way, this is a learning show, and the first definition of the word “commodity” when I Google it, is: “A raw material or primary agricultural product that can be bought and sold, such as copper or coffee.” That definition is from Oxford.

Ha - they even have copper as the first example - and you expect to own copper with each home that you buy.

I think yet another angle to your question, Gerald, about the durability of where your income stream comes from - is that we focus on RESIDENTIAL properties here.

As the office and retail real estate sectors KEEP feeling pain - residential has become even more important at the same time - and you already know all the reasons -  more people can work from home, order products from home, and do more from home than they ever have before. 

AirBnB properties might work in the short run, but we haven’t yet seen what happens to them in a recession yet - and as we know, the short-term rental market cater to business travelers and vacationers - and durability is what you need your income stream to have.

That’s why, for durability reasons, I favor long-term residential investing above all else … and love to consider the elegance of this “packaged commodities investing”. 

Thanks for the great question, Gerald from Oxnard, CA.

----------

The next question comes from Andrew in Ridgefield, Connecticut.

 

Keith,

 

I have been listening to your podcast for a while. Your mindset resonates with mine.

 

I am a small animal Veterinarian, I own - and run - my own small animal hospital.

 

On the investment side...….I have a balanced Wall street portfolio (Stock, Bond, Mutual Funds). On the Real estate side I have a $280 cash flowing SFR, and am involved in some multifamily Syndications.

 

I wrestle with Buying more SFR properties vs. more syndications. 

 

I feel that since money is so cheap in today's economic climate there is not much room for appreciation when buying RE. Should I sit on the sidelines and wait? (wait for Blood in the Streets?)

 

I like the Tampa area...but go back and forth with my thought process.

 

I look forward to hearing from you.

 

Signed, Andrew (his last name), DVM - DVM is Doctor Of Veterinary Medicine, BTW

 

Yeah, it is interesting that I’ve noticed a good deal of doctors & dentists listen to Get Rich Education. But I doubt that it’s #1.

 

Anecdotally, I’ve noticed that for some reason, we seem to have a really high proportion of listeners that are in LAW enforcement - like police officers & such.

 

Thanks for the question, Andrew, veterinarian from Connecticut.

 

On the first part of your question, buying more SFR vs. real estate syndications - that has a lot to do with both your risk tolerance and your desire for passivity.

 

Direct investing, like turnkey investing, does require a little remote administration - even when you’re not the property manager, but you’ve typically got higher returns and you’ve got control - versus a syndication.

 

In many cases, direct investing and that great control actually means you’re more liquid with your funds. 

 

You could sell in a few months if you had to … and with syndications, if you’re in Year 2 of an apartment syndication where it’s 7 years until that deal matures … then good luck getting your money out. You can’t access it.

 

So, those are some more of the trade-offs between direct investing & syndications.

 

Ah, I know you wrote that money is still cheap - meaning that interest rates are low and that you think that might be an indicator that appreciation has run its course.

 

Well, I’m still buying direct property, where I own the deed. 

 

See, interest rates have basically been low for over a decade and we’ve had appreciation the entire time.

 

Let’s look more recently. In 2018, interest rates really began a march higher and there were some people predicting that it would make housing prices go down. It didn’t. In 2018, national appreciation rates were about 7%.

 

In 2019, mortgage interest rates went lower and appreciation went lower, down to about a 5% annual gain. 

 

Now, yes, there’s a lag effect between mortgage interest rates and pricing too. 

 

But mortgage interest rates are one of - at least 10 different macro factors that effect the price of housing, so one doesn’t lead to the others.

 

There might be more substantial factors skewing the numbers than interest rates affect housing prices.

 

Housing prices can be more affected by things like chronically low supply like we’ve got today, wage growth, job growth, in-migration, birth rates, death rates - and did lending requirements get more stringer or more lax - did credit score requirements get more stringent or more lax and on and on.

 

But you do ask a good question, Andrew. Ah - if I didn’t think it were good, I wouldn’t be answering it here.

 

Now, I know that you didn’t bring up the word bubble.

 

But a few weeks ago, I described why I don’t think we’re in a real estate bubble. Prices are sustainable for a lot of reasons.

 

But on the flip side, I don’t see any scenario in which real estate, nationally, hits any high-flying annual appreciation rates of 10 or 12% anytime soon - like we saw back in 2005 either.

 

Low supply can only push prices so high. Affordability is the component that governs and tempers the upward price escalation. 

 

Affordability is what’s moderating the rate of appreciation rate right now.

 

Of course, whenever we talk about the future, no one REALLY knows what’s going to happen. These are just my thoughts - and the basis and the reasoning for why I have them.

 

You mention that you like Tampa - I do too. I really like so much of Florida - of course, you have to get your submarket right. 

 

And I need to say that’s generally Florida north of Miami - because the numbers don’t work so well in south Florida. 

Around Miami, you just don’t get a higher rent income proportionally to the much higher purchase prices there.

 

Think about this!

When you look at net migration by state for this past year, Texas was 2nd in the U.S., and they had a net in-migration of 190,000 people.

Florida, even though they have a smaller population than Texas, is #1 with 322,000 people. 

Yeah, net 322,000 moving into a smaller state - Florida. And 190,000 into a larger population state - Texas.

Florida has rent-to-value ratios that are favorable.

And as an investor, your property tax rate is substantially lower in Florida than it is in Texas too.  

There are a lot of reasons to like Tampa and Florida. Of course, that’s why we had our real estate field trip there last October in Tampa … as well.

Thanks for the question, Andrew!

If you want to hear your voice on the show, ask your question at GetRichEducation.com/Contact

I realized that on earlier listener question episodes, I had only left you with our mail address so that’s why I have mostly e-mail questions today and only one voicemail question.

I’d really prefer to hear your voice on the show. So by visiting GetRichEducation.com/Contact, that way, you’ll have the option of either leaving a voicemail or an e-mail, whatever you prefer there.

Two more listener questions today. What should you do first, pay off your student loan debt or invest …

… and I need to tell you why you should always get a property inspection before you buy a property - and do one other crucial thing - before you buy property - that you may not have ever thought about before. 

That’s next. You’re listening to Get Rich Education.

----------

 

Hey, you’re back inside Get Rich Education. I’m your host, Keith Weinhold, answering your listener questions today.

 

The next question comes from Dillon in Nebraska - I’m not sure which Nebraska place he’s from. Let’s play the audio: https://www.speakpipe.com/msg/p/120531/30/p15zsoamb252hyob35bvfc8d6uwrqv3ml1yh3h1suwgf6

 

Yeah, thanks, Dillon. And I do consider student loan debt as bad debt because YOU have to pay it back yourself … 

 

… that is, you can’t directly outsource those payments to someone else, like tenants in a rental property where they pay all your mortgage loan interest, all your mortgage loan principal, and hopefully, another couple hundred dollars on top of that called cash flow.

 

Not to mention, Congress passed an act in 2005 which made student loans quite difficult to discharge in bankruptcy.

 

With your question, being basically, “Should I pay off $200K in student loan debt as quickly as possible before starting real estate investing?”

 

Well, the answer ... as it often is, is “It depends.” But I’ll tell ya what it depends on. 

 

The short answer is - if your real estate cash-on-cash return could beat the interest rate on your student loan debt - only then would you invest in real estate and make the minimum student loan debt payment.

 

Now, that was really good insight on the inflation-hedging or even inflation-profiting that long-term debt can provide you. I can tell that you’re a careful listener to the show, Dillon.

 

Of course, that's just one tailwind. Just one consideration.

 

And the reason why inflation-profiting is lower in priority than your cash-on-cash return is that you need liquidity. You need cash to service your student loan debt.

 

I don’t know what your student loan debt INTEREST RATE is. But let’s just say you’re paying a 6% interest rate on that debt.

Now, I understand that it’s really easy to look at all 5 ways that real estate pays you and think - aw, I can get 20, 30, 40, maybe even a 50% ROI when I buy right. 

So I’m just gonna pay the minimum on the student loan debt and plow all the extra into real estate.

I would say, not so fast. Even though that might work out for you, we need to be more conservative …

… because real estate appreciation isn’t liquid, tenant-made loan amortization isn’t liquid, and neither are real estate’s tax benefits or the aforementioned inflation-profiting.

So, to use the simplest example, if your rental gives you $100 of monthly cash flow, which is $1,200 annually - and you’ve got $20K of skin-in-the-game on your rental as down payment and closing costs.

Well, that $1,200 annual cash flow divided by your $20K down is 6%. That’s your Cash-On-Cash Return portion and if you can get THAT at 6% or above, then reduce your student loan paydown dollar-for-dollar for every dollar that you put into real estate.

That’s really the upshot here.

Yes, there are some smaller things to consider. Last time I checked, student loan interest in the United States is a tax deduction up to $2,500 annually. 

So, your 6% interest rate might effectively be 5, 5-and-a-half or whatever it is.

Understand the risk. You don’t want to be left cash poor.

Your TOTAL Rate Of Return on real estate will almost certainly beat your student loan interest rate. But that's not enough. 

Let's be conservative.

To summarize, because you service your loan debt with cash, not equity, the key question you must ask yourself is: "Am I confident that my cash-on-cash return from real estate will exceed the interest rate on the student loan debt?"

If your answer to this key question is "yes" - invest in real estate and stretch out the student loan and only pay the minimum on the student loan. 

 

Otherwise, you're walking away from an arbitrage opportunity.

 

If it's "no", retire the student loan debt balance sooner. Otherwise, then you're hemorrhaging cash.

 

What did I personally do? After college, I retired my student loan debt fairly promptly. 

 

But this was before I knew about REI. I still thought budgets were good and that the best way to financial betterment was cutting expenses and all the wrong stuff.

 

That was an awesome question, Dillon in Nebraska. Because I know that so many people have that question - how do I best allocate a dollar toward debt retirement versus expanding my upside.

 

----------

 

The next question is from Monique in Quebec City, Quebec. Monique says,

 

Keith, I love your show. I’ve listened to every new episode since 2018, and now I’m also going back and listening to them from the beginning. Thanks, Monique. I’m grateful for your listenership. 

 

Monique goes on to say, “I’ve bought four cash-flowing properties from the providers at GREturnkey.com. (Good job there, Monique) They were all EXISTING construction properties.

 

Though I expect the cash flow to be less on my fifth one, because it’s going to be a brand new construction property.”

 

Is the HOME INSPECTION a required expense for me when the property is completely new?

 

Thanks for all your help. Signed, Monique.

 

Monique, the answer is “yes”, you should. Always have a pre-purchase inspection done, even for new construction property.

 

Sometimes people think of a NEW CONSTRUCTION property as “perfect”. Well, I don’t think of any property as “perfect”.

 

But an example of a mistake made in a new construction property is that, maybe the air conditioner is too small and doesn’t have the capacity to cool all, 1,800 sf of the home or whatever it is.

 

Maybe some new flooring wasn’t installed correctly and it’s showing signs of de-lamination. 

 

An inspection provided by a local, independent, third-party inspector is a cheap insurance policy for you, the buyer and you need to factor it in as one of your closing and due diligence costs.

 

Now, an inspection on a SFR, is probably going to cost you somewhere in the neighborhood of $400 - of course that’ll vary based on the area.

 

You have the inspection performed shortly AFTER you & the provider agree on a purchase and sale contract. 

 

The reason that you want to get the inspection scheduled shortly after you’re under contract is because sometimes it can take a while - weeks - for your provider’s contractor to fix the deficiencies that your inspector finds.

 

Now, how do you find an inspector for your property, anyway? There are a few ways of going about it. You can ask your provider to recommend one. 

 

If you’re leery of that or think that your provider might be in “cahoots” somehow with the inspector, you can Google your own, or thirdly, get an opinion from friends or if you don’t have friends that have invested there before, then use an online real estate forum.

 

Seek an inspector that’s ASHI-certified. A-S-H-I stands for American Society Of Home Inspectors. Those certificants are educated, tested, verified, and certified.

 

The inspections that they do are really quite thorough. They go everywhere in the home you’re planning to purchase, even looking in the closets and pantries, making sure all the doors & windows open & close.

 

If there’s a crawl space, they’ll climb down into the crawl space looking for deficiencies, taking notes, and taking photos that they compile in a report and send to you.  

 

Before you buy the property, the inspector might even go up on the roof - or at least zoom in and take some photos of the roof. And of course, they go all through the home and check everything in between.

 

They do the entire inspection same-day. It takes a couple of hours.

 

Some common findings that your property inspector might have are:

 

  • The outdoor rainwater downspout discharges water at the foundation. Add extensions. That’s a super cheap, easy fix for your seller to do for you.

 

  • The kitchen window doesn’t close all the way because it has a broken crank.

 

  • The exhaust fan in the bathroom doesn’t have any power and it’s not pulling any air.

 

  • The outdoor water spigot is missing its valve.

 

  • The backdoor is bent at the bottom.

 

  • A porch this high off the ground needs to have a railing added.

 

So, Monique, as you can see, some of these are deficiencies that could occur in a new construction home.

 

Now, let me touch on a couple of these. The backdoor is bent - that could be pretty minor. If you don’t think it’s aesthetically detracting and the door still closes - then maybe you do ask the provider to fix it - and maybe you don’t. 

 

If I were you, I’d usually just ask.

 

But if there’s a minor dent in the door instead, and it functions well, then asking for something like replacing the entire door might make you appear unreasonable to deal with. 

 

There’s some judgment there.

 

But if the backdoor won’t close, you’ve at least got to see that it closes and latches properly.

 

The last example that I mentioned - if the inspector cites a finding that a porch this high off the ground needs to have a railing for safety, you’ve got to be sure that’s done.

 

In fact, a reputable provider will be sure that’s done for you.

 

This is part of you being a good operator. Remember how I’ve discussed that having an LLC is only your fourth line of protection, at best.

 

Make sure any health or safety findings are addressed from the inspection. Do that good in the world.

 

If an accident ever did occur at the property - you can always point to the inspection that you had done - and it was an option that you paid for. 

 

The inspection is an option. 

 

So, these are all the findings that the inspector reports to you - and he’ll send you a report of a few dozen pages in a .pdf format.

 

Some things might be noted in the report, but the inspector won’t list them as deficiencies that NEED to be remedied - like small cracks in the sidewalk.

 

Often, in the report, the inspector makes a clear delineation as to when a condition is poor enough … such that it falls to a deficient level - and he puts them all in one punchlist at the end of the report. 

 

That way, you’re not having to split hairs and do too much interpretation.

 

You look the report over, and then you ask the provider to fix them for you before you’ll close on the property.

 

The provider might take, say a week or so to have their contractor fix those punchlisted items. 

 

When they’ve finished them, then you’re on your way to having your appraisal and moving closer to the closing table.

 

But, I’ve got to tell you something kind of disappointing here. I’ve been directly investing in real estate actively and continuously since 2002 - and I’ve got to tell you …

 

… many times, even when the contractor says that they’ve completed fixing everything - even when they send you pictures … something really wasn’t quite fixed right.

 

So what I suggest, is that - existing construction or new construction - when you hire your inspector, tell him right then & there, that you are also going to want a follow-up re-inspection that occurs after the initial inspection.

 

The purpose of a re-inspection is confirming that all of the deficienies noted in the original inspection were indeed done. 

 

And by the way, there will ALWAYS be original inspection findings. 

 

An inspector will always find at least one deficiency and I’ve dealt with properties from Pennsylvania to Florida to Alaska to Texas and in-between - and outside the U.S. too. 

 

Inspectors always find stuff that’s wrong. Always. It’s like a universal law.

 

But, getting back to re-inspections. Upon scheduling your original home inspection, if you point out AT THAT TIME that you’ll also be getting a re-inspection - tell both the inspector & the seller this, I tend to think it helps keep parties on their toes and that they try harder to get the original inspection findings handled - the first time.

 

And look, re-inspections are super cheap. If a SFR ORIGINAL INSPECTION costs $400, a re-inspection is going to be less than $100. 

 

I’ve even paid $50, $60 in some markets for the re-inspection. It’s hard to believe that you can even get a trained, qualified professional to make a field visit somewhere that inexpensively.   

 

Now - and I have this happen too - what if after your RE-inspection - which would really be a second inspection, that the provider or their contractor STILL didn’t get things repaired properly?

 

Then the responsibility shifts to your seller - to schedule and pay for a second RE-inspection - which would be a THIRD inspection then - to prove that it’s right. 

 

That’s correct, in every state and nation I’ve ever invested in, the seller-side pays for your second re-inspection … if it comes to that.

 

That’s fair. Because after the original inspection findings, your seller said they’d make the repairs. 

 

If the re-inspection that you paid for to confirm that it was done, instead shows that it wasn’t done. Your seller had their chance and messed it up. That’s why it’s customary that they pay for the SECOND re-inspection.

 

So, Monique, to summarize for you here. 

  • Always pay for a property inspection, even on new construction.

 

  • Expect there to be findings every time.

 

  • And my own personal experience shows that at the time that you book an inspection, it helps to indicate that you’ll be getting a RE-inspection too.

 

Now, getting a re-inspection makes so much more sense than getting a re-appraisal - if you get a low appraisal, which doesn’t happen often, maybe I’ll discuss that another day.

 

Re-appraisals are a waste of time … more than 95% of the time, they just come back with the same valuation you got the first time.

 

An appraisal protects the bank. An Inspection protects you - so be sure to have one done. Excellent question, Monique from Quebec City, Canada.

Next week on the show, I’m going to discuss Real Estate’s Secret Market - a geography where the numbers really work for investors that might have been off your radar.

After that, we’re going to talk with a prominent economist that’s never been on the show before that’s going to help you see your economic future over the next 1-3 years.

We’ve hosted a lot of economists here on the show that give you those long-term investing insights like Richard Duncan, Harry Dent, Jim Rickards, Jim Rogers - and also,  though they might not be economists, Robert Kiyosaki and Chris Martenson are here with us to give us those types of insights.

Then there’s “Yours Truly” - I’m your armchair economist without an economics degree. 

But this new guest is the leader of the oldest continuously operating economics prediction company in the entire United States, so I’m excited to chat with him and bring you that show soon.

As you know, nationally, housing inventory is scarce, especially with these types of single-family homes that make the best rentals.

You can’t make any money from the property that you don’t own. So whether you prefer to call it “packaged commodities investing” or the “get paid up to 5 Ways” vehicle, next time you’re looking to connect with a provider at GREturnkey.com …

As we spoke of Florida earlier, you’ll see that Jacksonville has brand new construction property, where you’re probably more of a fan of appreciation than cash flow on those. 

Rents are $1,350 on a $180K purchase price. That’s a 0.75 rent-to-value ratio.

Tampa has existing construction property where you have a 0.8 or .85 ratio and might get, say $150 of monthly cash flow.

 

Alabama has numbers that work - like rent-to-value ratios near a full 1% and really low property taxes in either Birmingham or Huntsville.

 

If you’re looking for low cost property - as low as $80K in decent neighborhoods that really cash flow well, Memphis and Little Rock could be the places for you.

 

The Indiana State side of Chicagoland is advantageous too.

 

All those places - Memphis, Little Rock, Chicagoland - you can get a full 1% RV ratio or even more than that sometimes.

 

If you’ve got more patience and want to benefit and capture some forced equity along with your cash flow, the BRRRR model in Baltimore could work best for you.

 

Check out all of those markets and more - at GREturnkey.com

 

Thanks! I’m grateful for all of your excellent listener questions today! I’m your host, Keith Weinhold. Don’t Quit Your Daydream! 

 

-------------

Direct download: GREepisode280_.mp3
Category:general -- posted at: 4:00am EST

Donald Trump’s re-election could end Fannie Mae and Freddie Mac conservatorship of mortgage loans.

This could mean that fixed rate mortgage loans disappear! 

It could also lead to higher mortgage interest rates and more changes.

Ridge Lending Group President Caeli Ridge and I discuss why.

We compare Fixed vs. Adjustable Rate Mortgages (ARMs). 

Your personal DTI - debt-to-income ratio - is thoroughly discussed in qualifying for rental property loans.

I made my last two mortgage loans personally at www.RidgeLendingGroup.com

__________________

Resources mentioned:

Mortgage Loans:

RidgeLendingGroup.com

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Find Properties:

GREturnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode279_.mp3
Category:general -- posted at: 4:00am EST

You’re affected by interest rates and inflation as both a consumer and real estate investor.

A 50% return is not necessarily risky:  I review the 5 Ways Real Estate Pays You and pass it through a new filter.

Dr. Chris Martenson joins us to discuss how The Fed manipulates monetary policy and interest rates by running up staggering debt levels.

To solve our problems, can we just keep printing money and paving over the world with dollars?

Interest rates are artificially low.

Why you’re in a Fed-induced bubble.

Chris tells us why Fed Chair Jerome Powell is a liar.

When the credit cycle bursts, everyday people will be harmed. 

Chris thinks the next crisis will be twice as bad 2008. 

Solutions: have multiple income streams, cash, and real assets.

Join Chris and PeakProsperity.com for their annual seminar May 1st to 3rd, 2020 in Sebastopol, CA. 

For the best event pricing, use Discount Code: GRE2020

__________________

Resources mentioned:

Find Properties:

GREturnkey.com

Meet Dr. Martenson & his tribe:

2020 Peak Prosperity Seminar

QRPs: text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

Mortgage Loans:

RidgeLendingGroup.com

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode278_.mp3
Category:general -- posted at: 4:00am EST

You only need to be 1% better ... to go from good to great.

This is due to accumulative advantage, which is the engine that drives "The Pareto Principle" (80 / 20 rule). 

Lessons from nature extrapolated to business and real estate investing provide cues on how you can grow your wealth faster.

Damion Lupo tells us about important new changes that make the eQRP - Enhanced Qualified Retirement Plan - even more beneficial to you.

To learn more, text “QRP” in ALL CAPS to “72000”. 

With the eQRP, you pay no UBIT tax on leveraged real estate. Self-Directed IRAs sting you this way.

eQRPs can provide tax credits of $15,000 for starting a plan, and a tax deduction on your income by paying your kids.

Open your eQRP before you file your taxes, and you can make the benefits retroactive.  

To learn more, text “QRP” in ALL CAPS to “72000”.

__________________

Resources mentioned:

Text “QRP” in ALL CAPS to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

Book:

The Slight Edge by Jeff Olson

Pareto Principle:

Business Insider article

Mortgage Loans:

RidgeLendingGroup.com

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode277_.mp3
Category:general -- posted at: 4:00am EST

Even a dollar-per-dollar match from your employer might not make 401(k) participation worthwhile.

"Timing" could be the most underrated word in investing.

Retirement plans only pay you when you’re old. 

401(k)s rob you of the opportunity to fully live life while you’re young enough to enjoy it.

401(k)s used to be named “Salary Reduction Plans”. They had to get rid of the name to foster participation!

Instead, opt-in for your “Salary Increase Plan” with cash-flowing real assets.

Tom Wheelwright joins us, and we hear the voice of 401(k) inventor Ted Benna from GRE Episode 197.

In fact, 401(k)s incur tax rates double than if you had simply invested outside of the plan.  

If you’re young & building wealth, specialize.

If you’re old & maintaining wealth, diversify.

Tom & I go deep on how you can qualify for the coveted Real Estate Professional tax designation while you still have a day job.

You don’t need to be a real estate agent to be an RE Pro, but it helps. Marriage can help.

__________________

Resources mentioned:

Tom Wheelwright:

Wealthability.com

Ted Benna & I’s full chat:

GetRichEducation.com/197

Mortgage Loans:

RidgeLendingGroup.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

New Construction Turnkey Property:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode276_.mp3
Category:general -- posted at: 4:00am EST

Most people sell their time for dollars.

Were you really meant to do what you’re doing right now?

Mark Twain said, “Why not go out on a limb? That’s where the fruit is.”

Culture conditions most people to live an average, stale life.

Don’t trade away your authenticity for approval.

In over 6,000 years of human history, being a conformer is not a success recipe.

40 rental doors x $150 cash flow = $6,000 per month. This buys you time.

Don’t fear failure; fear not trying. 

Powerful assignment: write your own obituary.

No one achieves anything extraordinary by playing it safe.

People that say, “I want to live frugally.” actually want to say, “I want to live well.” 

But they don’t know how.

Get residual real estate income at: www.GREturnkey.com 

I update you on asset class prices over the past year.

Americans paid $4.5T in rent this past decade.

The median homebuyer age is up to 47.

Corelogic expects a 5.4% housing price jump in 2020.

Housing shortages should continue at the low end of the market.

Nearly every news outlet reports a stable housing environment.

Why? Demand exceeds supply, appreciation rates are sustainable, stringent loan requirements, inflation-adjusted home prices are often still below 2005 levels.

**The entire episode's lyrics are at the bottom.**

__________________

Resources mentioned:

Turnkey income properties:

GREturnkey.com

Americans Paid $4.5T Rent Last Decade:

Zillow article

Median Age Of Homebuyers Up To 47:

HousingWire article

Fannie Boosts 2020 Housing Forecast:

CNBC article

Lenders, Builders More Conservative:

CNBC article

Home Prices To Rise In 2020:

Yahoo Finance article

Homes Under $250K Near Extinction:

HousingWire article

Mortgage Loans:

RidgeLendingGroup.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Welcome to Get Rich Education, I’m your host, Keith Weinhold. Mark Twain said,“Why not go out on a limb? That’s where the fruit is!” 

I tell you how YOU can go out on that limb to get that fruit - that prosperity in your life.

And, and update on markets and housing here in the new decade. Today, on Get Rich Education.

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

This is Episode 275 ... and you know something?

It has always fascinated me that people will trade time for dollars. You have traded your time for dollars … and I have sold my time for money in the past, as well.

Yeah, amazes me that people will work, often doing something that they don’t EVEN LIKE - and spend that time away from their family or for things that they don’t enjoy doing … just for money.

It’s actually even worse than that. The long-term plan - the OUTCOME for this sacrifice - isn’t even satisfying. It’s for you to retire old, and THEN only begin to really live … maybe.

Well, ironically, the answer to your potential freedom is something that you actually slept inside last night - a piece of real estate. 

But you need to invest in real estate in a strategic way. You don’t need to be a landlord and you don’t need to know how to fix things - but few know the way.

Here on this show, I simply tell you the things that I would have wanted to know before I started down this road to freedom back in 2002, which is when I bought that seminal four-plex building.

 

You are where you are today because of you.

 

Your life isn’t a fluke and it isn’t an accident either. You are where you are because of your choices.

 

Well, let me ask you - were you meant to be doing what you’re doing now?

 

Were you put on this earth to do … that?

 

You probably know definitively without me even having to get specific - you already know - yes or no - if you were MEANT to be doing what you do for money now.

 

See, the #1 limiting reason that people give for why they can’t do something that they really want to do in their life … is … money.

 

So, time vs. Money is something that we discuss a lot on the show. It’s something that’s infinitely interesting to me … and what you need to do is “Go Out On A Limb”.

 

I’m going to discuss that with you a lot more later today.

 

But first, since we’re a few weeks into this new decade, let’s talk about some more broad and contemporaneous news items - this investor environment that you live inside every day.

 

Whipping around the asset classes like we do from here time-to-time here - in the year that was, last year, what really happened?

 

S&P 500 was up nearly 29% - it’s best performance in years. Of course, it’s volatile. In fact, it was just DOWN 6% the previous year.

 

Year-over-year, many commodities were up. Gold was up 18%, Silver up 15%. Oil - Light Sweet Crude - was up 22%.

 

Recession fears peaked back in September - four months ago. Columnists and economists and everyday people don’t really talk about recession as much as they did late last year.

 

Last year, the 10-year Treasury Note yield fell seven-tenths of one percent down to 1.9%. Now, why do you care about what you’ll hear people just shorten and call “the 10-Year T-Note?”

 

Economists say it that way with their slang.

 

That is because it’s the rate most closely tied to long-term mortgage interest rates.

 

I just told you that the note yield fell SEVEN-TENTHS of one percent last year.

 

Well, see, the most popular mortgage in America, the fell EIGHT-TENTHS of one percent last year down to 3.7%. That’s the 30-year loan.

 

So, pretty closely correlated. And of course, that’s the mortgage interest rate for primary residences. For investment property, it’s often nearly one percent higher.

 

Last year, the Freddie Mac House Price Index was up 3.6%.

 

I like to look at the Freddie Mac Index because it includes pricing for all 50 states and Washington, D.C.

 

The Case-Shiller Housing Price Index only measures 10 to 20 large cities.

 

One news story that we experienced in the past year is one that almost no one talks about. 

 

Now, you generally want there to be higher wages out there. That means your tenants can afford to pay you more rent.

 

Higher wages mean higher inflation which means higher asset prices and also, faster debasement of debt that you owe.

 

Now, whether you agree that there should be a minimum wage or not ...

 

The minimum wage keeps getting higher across the country. 

 

More than 20 states are bumping up pay for minimum wage workers this year, here in 2020, while Seattle’s large employers will now pay a nationwide-high of at least $16.39/hr to employees. 

 

Meanwhile, the FEDERAL minimum wage has remained parked at $7.25. But these higher state wages - are a positive for real estate investors.

 

Now, I’ve aggregated a number of news stories that matter to you - all that have published over the past few weeks. Just about everything is positive for a stable housing environment.

 

Zillow report an astonishing figure.

 

Over the last decade, do you have any idea how much Americans paid in rent - in total?

 

Americans paid $4.5 TRILLION - with a “T” - dollars in rent in the last decade - the decade that just ended a couple weeks ago - the 2010s.

 

Well, that’s a gigantic number. It’s so giant, that it’s more of a fun figure to contemplate and hard to put it into context.

 

What CAN you compare this to? Well, this is greater than the GDP of Germany - which is the world’s 4th-largest economy.

 

Yes, it’s been a rather lucrative decade for landlords - partly due to the fact that the homeownership rate fell through the decade and - consequently - there are more renters now.

 

So, yes, you only need a small slice of this $4.5T dollar pie to win a substantial degree of financial freedom yourself.

 

Housing Wire has reported on what the median age of a homebuyer is in America today. Do you have any idea what that age is?

 

Well, I’ll tell you, to give you some context here, that in 1981, the year that Ronald Reagan first became President, the median age of a homebuyer then was … 31. 

 

Age 31 back in 1981.

 

The median age of a homebuyer today is … higher than that. Just dramatically higher. Almost unbelievably higher … it is age 47. 47!

 

So … how did this happen?

 

There are VARIOUS reasons for this delay, including a dramatic increase in student loan debt - like we’ve discussed before - and a general shifting of attitudes towards the traditional homebuyer cycle. 

 

People are waiting longer to marry, have kids, and buy houses. Household formation is postponed now.

 

These are some things that you’ve already realized. But you may be surprised to learn that the RESULT of this is now a 47-year-old median age homebuyer.

 

That’s like … old enough to be a grandparent perhaps.

 

Just remarkable - and again, great news if you’re renting property to others. People are renting longer - or just renting forever.

 

Now understand something else - and look, you can’t discriminate against a tenant based on age or for any other reason. 

 

But just think about what else this means - there’s a renter pool today with more, say, 35 and 40-year-olds in it than there used to be …

 

… and therefore, a smaller proportion of 25-year-olds. 

 

You have this aging of tenants … and older tenants tend to live more quietly in your property and be more gentle on your housing unit.

 

Long-term demographic trends exactly like these are why we talk about what we talk about here - how everyday, busy people and working professionals can create residual income with these investment properties.

 

CoreLogic expects a 5.4% home price jump in 2020. Yes, this would be a greater appreciation rate than that 3.6% we saw last year.

 

Fannie Mae has significantly boosted ITS 2020 housing forecast. 

 

Overall housing DEMAND, they say, is incredibly high, especially at the lower end of the market, which is exactly the end of the market where builders are least active. 

 

Prices are rising fastest on the low end, sidelining some first-time buyers.

 

Fannie Mae’s Chief Economist Doug Duncan says: “Housing appears poised to take a leading role in real GDP growth over the forecast horizon for the first time in years, further bolstering our modest-but-solid growth forecasts through 2021.”

 

Now, CNBC recently reported that: 

 

U.S. homebuilders and lenders are to blame for the country’s housing shortage, Marcus & Millichap CEO Hessam Nadji said.

Home construction companies have reduced speculation and lowered risk-taking in an effort to prevent “the lessons — if you will, the hard lessons — learned in the  2008-2009 Housing Crisis & Great Recession - from happening again,” is what he said.

“All of that is frustrating from a consumer perspective, but it’s actually very healthy from an investment and economic perspective for the U.S. as a whole,” he said.

Yahoo Finance - really all these news outlets are reporting various sources that home prices are expected to rise modestly and that housing shortages are expected to continue.

Rather than reporting on another similar story about this … I’ve been saying for years on this show that if you’re waiting for housing prices to drop substantially … well, anything is possible. 

 

But I don’t see what could possibly make that happen.

 

And that’s primarily due to three or four reasons that housing stays firm:

 

  • The #1 reason - the chief one is that housing demand exceeds supply. That’s just basic economics. And the housing crash of … now 13 years ago ... was due to the opposite condition. Back then, there was overbuilding - back then supply exceeded demand.

 

  • The second of three reasons is that appreciation rates ARE sustainable: Less than 4% per annum lately. Leading up to the housing crash, they were TEN TIMES that in some markets - totally unsustainable.

 

  • The third reason that supports housing is that lending practices are responsible. To get a loan, you DO need to supply a somewhat-annoyingly high amount of documentation. You need to have income, reserves, and some decent credit. That didn’t happen in the Great Recession buildup either - ANYONE qualified - and then that ARTIFICIAL demand helped push up home prices unsustainably.

 

  • Really a fourth reason - or a bonus - is that once you adjust for inflation - which so many people and even reporting outlets forget to do - many housing markets still haven’t even reached their pre-recession peak from way back in 2005.

 

So, these 4 reasons to be bullish about housing are all MY takes.

 

Links to all of the articles that I cited are in the show notes.

 

Next week, Tom Wheelwright returns to the show with me. Yes, it’s the long-awaited show where it’ll be Weinhold and Wheelwright on 401(k)s and going deep on how you can obtain the desired “RE Professional Designation” and the GREAT tax advantages that that gives you.

 

Are 401(k)s worth contributing to - even if you get an employer match? We’ll take that one head-on next week. And I think you’re going to get some really surprising answers.

 

During the holidays a while back, we had all FRESH shows. San Diego-based Get Rich Education listener Andrew Stanton - and his layoff story reminded us of the importance of having multiple income streams. 

 

Should you - as they say “Rent out your backyard” with an ADU - accessory or auxiliary dwelling unit. Well, in places like California where they’re popular ...

 

Why don’t you instead enjoy your backyard and invest in markets in the Midwest & South where the numbers make better sense anyway.

 

Two weeks ago, CFP Brent Sutherland & I discussed why conventional financial advisors don’t discuss RE with you.

 

Last week, we had the “hands-on” perspective with Kevin Cross, asking, “Should you self-manage your rental property and your tenants?” 

 

For him, the answer is “yes” - with some help - and that’s fine. 

 

For me, the answer is “no”.

 

I want control without having day-to-day responsibility. 

 

Let’s do good in the world and provide people with clean, safe, affordable, functional housing. But I make sure my manager does that.

 

I want to directly invest in real estate, with property titled in my own name - that way I get paid up to 5 different ways.

 

But, I don’t want it - I’ll say in my grip - as in - I don’t want to hold real estate right in my hand - otherwise it’s on my plate & on the front burner. 

 

But I do want it within my arm’s reach so that I have CONTROL, and yet a FAIR measure of passivity.

 

If you want more out of your life, you’ve got to go out on a limb. I’m going to talk about that with you today … next … I’m Keith Weinhold.

 

This is Get Rich Education. 

________________________

 

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

 

When it comes to your day job ... or how you spend most of your waking day, were you meant to be doing what you’re doing now?

 

I think that a lot of people get culturally conditioned that you have one path that you just MUST take throughout life, and if you deviate from it too much, that’s bad … because now you’re a non-conformer.

 

Yes, one path.

 

This narrative through the Industrial Revolution that you should go to school, get this amount of formal education, this amount of college debt, a good job, work for one company, marriage, kids, buy a big house …

 

… get a new car every 5 years, just 2 or 3 weeks of vacation per year (my goodness - are you kidding me?), work for 40 years, then retire & play golf … or something like that. 

 

That’s what’s supposed to quote-unquote “guarantee” the masses happiness, fulfillment, and meaning. But it often doesn’t. 

 

So why settle for what the masses do?

 

People are willing to trade away their authenticity for approval. Rather than being authentic, they instead settle for society’s stamp of approval.

 

Don’t trade away your authenticity for approval.

 

Parents, community, friends - they all taught you - here’s the one way you have to live.

 

Why don’t you, instead, custom design your best life.

 

What does success look like to you?

 

Is success being a doctor, lawyer, dentist. If you drive “this” nice of a car, or if you live in this neighborhood, or this nice of a house, if your kids go to this school.

 

Instead, your definition of success may very well be - are you doing the things that you dreamed about? Are you impacting others in a meaningful way?

 

You can either live a life of safety or a life of creativity.

 

Go out on a limb - where that tree branch might yield a little, 30 feet above the ground, scaring you. 

 

Go out on a limb … because that’s where the fruit is.

 

Understand that the consequence might be that fewer people will PERCEIVE you as a success.






How you make your money is more important than how much money you make. 

 

We’re “Get Rich Education - and “Get Rich” means living a rich life - whatever that means to you.

 

When you’re young & people ask you “What do you want to be?” when you grow up, they’re not REALLY asking what you want to be at all. 

 

They’re asking, “What do you want to do professionally, to earn money?” 

 

It feels risky to say what you REALLY want to be.

 

It feels risky to use an online platform to try to crowdfund your kitchen device invention. You’re afraid you’ll be seen as a failure when you share that on Facebook and get ridiculed from your friends.

 

That’s going out on a limb.

 

Trying to get your workout app featured on Shark Tank - that’s not being a conformer. But that’s where the great stuff happens.

 

Or, it’s doing what we focus on here - getting residual income from rental property to buy the time to do what you want to do ... or be who you really want to be.

 

It’s more generationally-proven than those strict entrepreneurial endeavors. 

 

It’s neither quick nor easy, but real estate is a stronger tree branch - and your fruit IS out there.

 

If you get 40 rental doors that even cash flow just $150 a month each = That’s $6,000 month in rental income for you. Or double that or 10X that if you need to.

 

Most people live inside circle of certainty with their job and life. And in that small circle, we’ll call it 100% safety & security.

 

Now, if you enlarge your circle so that it surrounds the first one, you might be living where you only have 80% certainty in your life’s outcome. 

 

If you make an even larger circle, around the first two, and really go for it, now your sense of certainly might be down to 60%.

 

But the one thing that you CAN be certain of then, it’s that you won’t have any regrets. 

 

The #1 regret of elderly people that are in a nursing home is that “Gosh, I never tried _____”.

 

They didn’t go out on that limb and they never tasted that sweet, succulent fruit.

 

I can help tell you whether you’re going out on a limb or not, right now.

 

Do you know what the most powerful assignment is - with regard to this - it’s to write your own obituary. Put pen to paper.

 

If you must write your own obituary, right now … you’re going to have great clarity on if your accomplishments are or your contributions … or your current trajectory … are putting you where you need to be.

 

I think writing your own obituary can strike some fear into you. It puts some fear into me. What would people say about what you did? What would you write down about yourself? 

 

In over 6000 years of recorded human history, no one has ever achieved anything outstanding by playing it safe. No one. The message is clear. You need to either accept the necessity for calculated risk, or settle for way, way less than you deserve.

 

Look, I’ve got this friend from childhood from when I lived back in Pennsylvania. Nice guy, nice family. 

 

He became a public school teacher - math teacher. And today, I see his posts on Facebook more often than I see him. 

 

One of the things that he commonly posts about are that he complains about how public school teachers aren’t treated well because he has disappointingly low pay.

 

And I see a lot of his teacher friends commenting on his posts, lamenting about the fact that they have low incomes, and have to take second jobs in the summer or whatever.

 

Well, after seeing a lot of these posts, I commented with an actual SOLUTION to the problem one time. My comment was something like - and here’s what I wrote:

 

“Many teachers that I know make $500K to $1M per year and they have great control of their time.” That’s what I wrote.

 

You should have seen their reaction. My friend and the other teachers on that thread were asking me how this could be - some of them even direct messaging me.

 

And I said, these well-paid teachers are online teachers. Yeah, they wake up each morning and see how many video course subscriptions they sold overnight.

 

You should have seen their reaction to that - they were quickly uninterested. 

 

That sounded scary. That didn’t meet conformity.

 

Now, I’ve got nothing against public school teachers. In fact, I appreciate what they do. 

 

But you can see how much fear there is … with going out on a limb.

 

See, when you try to provide a SOLUTION to people’s problems, they’d usually rather stay small, stay secure, and keep settling - staying inside that 100% certainty smaller life circle.

 

Do you think that a public school teacher would agree that their 12-year-old student should be a lifelong learner? Yeah, they probably would.

 

But is that public school teacher being a lifelong learner themselves if they won’t provide a better life for themself by learning some new online teaching and internet marketing skills?

 

Everyone wants change. But no one wants TO change.

 

This is not about condemning people for being employees. It’s about removing that wall between you and what you want. 

 

Because look, you might be a highly compensated employee that WANTS to teach public school math or English to 12-year-olds.

 

But you can’t afford to make the, say $55,000 a year that a teacher makes.

 

Building a second income with something proven like real estate softens that financial blow, and it lubricates that transition to doing what energizes you - teaching English to 12-year-olds.

 

This way, you’re a teacher, but you’re not dissatisfied that your salary is low - because teaching isn’t where you started - and now you’re probably more valuable to 12-year-old students because you are where you really want to be.

 

The riskiest thing you can possibly do is stay safe and take zero risks because then, you virtually guarantee that you’ll never get the life that you could have had.

 

Residual income gives you the ability to leverage time - and also provide some physical possessions. I don’t think there’s anything wrong with some materials stuff.

 

Even if physical stuff isn’t what life is about, it can help you facilitate your best life. Even a simple hiker would like a nice, comfortable backpack, tent, and a sleeping bag.

 

Some people say they want to “live frugally” but, they only say that because they’ve been conditioned and they don’t know HOW to live better.

 

When people say, “I want to live frugally”, often, what they really want to say is: “I’d like to live well”.

 

Like I’ve said elsewhere, the great conundrum of modern society is that …

 

… people spend all this time learning about how work works … and zero time learning about how money works. 

 

Yet money is the main reason that they even go to work. Hmm. Can you believe that.

 

Even if you’re one of the fortunate few that doesn’t want a substantial life change, adding a monthly stream of real estate income on top of your current situation sure won’t hurt you. 

 

Investing in real estate myself - ihelped ease my transition from a day job - to doing things like this show - creating value for people in the way that I want to do it.

 

I invest in - especially this WORKFORCE type of housing - myself.

 

Earlier today, I talked about some of the economic and demographic “whys” about these modest but decent rental single-family rental homes and small apartment buildings that we so often favor here.

 

As the American family size continues to shrink and birth rates fall, people want smaller SFHs. 

 

Think about how people live. Smaller family sizes are a trend away from McMansions. 

 

Millennials and Gen Zers are also environmentally conscious. That’s the future, where there’s been this spurning of extravagance.

 

That’s why these low-cost rental single-family homes are in such demand.

In fact, a recent report by economic research consultancy Capital Economics shared a stunning statistic: The number of vacant single-family homes … for sale … priced under $250,000 has halved since 2012.

Yes, there are only half as many available now as then.

In fact, according to the report, there are only 550,000 vacant homes on the market priced under $250,000. That’s half as many as there were just eight years ago. That’s astounding.

When there’s a downturn, people will move from the $2K-$3K rent homes into yours where they pay $1,000-$1,500.

 

In fact, I just bought two more of these single-family rental homes last month myself. One was $150K and the other about $130K. 

 

And I bought them from GREturnkey.

 

And you know, if you’re on the edge with your next move, and you don’t know if you should invest in a property or more education … and you’re trying to decide between the two ... 

 

As long as you’ve got a little education, I’d err toward you putting another “property” in your portfolio - or your first property.

 

Why is that?

 

That’s because when you buy a property, you get a substantial education about it from the inside. 

 

Buying and owning is the REAL world education that any classroom simulation can’t replicate.

 

Owning property gives you education …

 

… but more education alone doesn’t give you more property.

 

So here, we both teach a man - or woman - to fish AND give you a fish. We do both.

 

GREturnkey.com is where I’ve done my own property buying for years - including where I purchased these most recent two.

 

Go there, read a couple reports in some markets that interest you, and get some property under contract.

 

Over there, right now, I can tell you that:

 

In Alabama - Birmingham and Huntsville has been furnishing income property pretty actively.

 

In Ohio, Dayton has been bringing inventory to the market that exceeds a 1% rent-to-value ratio, meaning that you get more rent income per invested dollar there than nearly anywhere else.

 

Further south, Memphis and Little Rock have similar profitability to Dayton - and there are some really low price points in Memphis if you’re just looking to get started.

 

Then, Jacksonville has brand NEW construction turnkey property and actually have investor houses available now. Lower cash flow there but brand new.

 

Then, in Tampa, Florida, you can get a little cash flow and the Tampa-St. Pete metro was the 2nd-highest appreciation market in the nation at 5%. 

 

Yes, year-over-year, Tampa was 2nd … and you can get cash flow in the submarkets north of there.

 

Tampa has been furnishing, oh, maybe 4 or 5 turnkey properties onto the market each month. 

 

And, see, as noted, inventory is tight nearly everywhere. 

 

In Tampa, you’re looking at something like $1,200 of rent income for a $150,000 property.

 

At GREturnkey, Chicagoland has an interesting dynamic. Where you’re investing in Chicago’s suburbs of northwestern Indiana.

 

That way, you get the proximity and economic diversification of a world-class city like Chicago, yet being on the Indiana-side of the state line gives you property taxes that are less than half of that than if you were on the Illinois-side.

 

Everything I’m discussing here is designed for OUT-of-the-area investors … like me and probably like you too. 

 

It’s turnkey … meaning that the property is fully renovated, under a property manager’s management, and often even occupied with a tenant on the day that you buy…

 

… so that you’re enjoying that mailbox money … or ACH bank draft money as it might be.

 

You can find all those providers and more at GREturnkey.com

 

A big thanks to, well Mark Twain for some inspiration today. 

 

“Why not go out on a limb? That’s where the fruit is.” 

 

I’m back next week with Tom Wheelwright.

 

Until next week, get started at GREturnkey.com

 

I’m your host, Keith Weinhold. Don’t Quit Your Daydream!

 

Direct download: GREepisode275_.mp3
Category:general -- posted at: 4:00am EST

Get 15 - 30% more rent income for your existing property.

Learn how to attract a better “Class B” tenant to a lesser “Class C” property.

We’re getting “hands-on” today.

Kevin Cross tells us about this and how to buy a bargain property (hint: find poorly-managed property).  

Small tweaks make a big difference in your property’s rent income: clean grounds, orderly common areas.

Add amenities inside units yourself like: Wi-fi, TVs, curtains, artwork.  

Your success is highly tied to tenant quality. 

Learn how to talk to a tenant engaged in illegal activity.

A house cleaner can put eyes on your property.

To learn about Virtual Property Pro owner assistance service, e-mail Kevin at: kevin@alaskarex.com This is an intermediate step if you’re not ready for pro mgmt.

Often eliminate: garage door openers, garbage disposals, 2-bay sinks.

Incorporate your hobby into your rentals; now your hobby is profitable.

Though I personally use professional management, self-management fits our guest’s lifestyle.

__________________

Resources mentioned:

Kevin Cross contact:

Email: kevin@alaskarex.com

Mortgage Loans:

RidgeLendingGroup.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode274_.mp3
Category:general -- posted at: 4:00am EST

Financial advisors don’t talk about real estate for three reasons:

  • They'd receive no compensation.
  • Lack of education.
  • Regulatory oversight.

Among educated investors:

  • Real estate has higher returns. 
  • There are more hidden fees with stocks than real estate.

I discuss dividend-paying stocks. 

Ntellivest’s Brent Sutherland tells us why stocks won’t make you wealthy.

This CFP-turned-real estate investor is a financial coach.

Most financial clients ask all the wrong questions. That’s why they get all the wrong answers. 

Few realize that you can increase your income now.  

Brent walks the talk. He owns 9 income properties, averaging $250 cash flow each and more.

We discuss common REI mistakes: financial protection, estate planning and LLCs. 

__________________

Resources mentioned:

Brent Sutherland:

Ntellivest.com

Visual Capitalist:

Composition Of Wealth

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode273_.mp3
Category:general -- posted at: 4:00am EST

Put more cash flow in your pocket by refinancing now.

Refinance conditions are ripe: equity up, interest rates down.

If you own property and interest rates rise, then hold.

But if you own property and rates fall, you can refinance.

This way, you’re playing both sides.

Sometimes you can negotiate a lower interest without refinancing.

Negative interest rates mean borrowers & spenders win, savers lose.

GRE listener Andrew Stanton (Email: apstanto@gmail.com) joins me to tell us how this show has changed his life.

This San Diego-based GRE follower works as a computer engineer and he’s building his investment real estate portfolio.

Losing his job helped Andrew realize how important it is to have multiple income streams.

The concepts of ROTI, your return from home equity is always zero, and “Don’t Quit Your Daydream” resonate with him.

__________________

Resources mentioned:

Andrew Stanton’s Email:

apstanto@gmail.com

GRE YouTube Channel:

GetRichEducation.com/YouTube

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode272_.mp3
Category:general -- posted at: 4:00am EST

Your biggest expense in life is taxes - income tax, sales tax, property tax, capital gains tax, inheritance tax.

Taxation is not adjusted for inflation. I explain.

Wealthability’s Tom Wheelwright joins us about how to optimize Trump’s 2017 Tax Cuts And Jobs Act to your advantage.

A tax deduction is the amount by which your taxable income is reduced.

Income tax is on net income.

Sales tax is on gross income.

The $10,000 SALT deduction limit mainly hurts coastal residents.

Bonus depreciation substantially aids real estate investors - new and used property, and residential and commercial.

Learn how the 20% pass-through deduction benefits you.

Why you never own real estate in a “C” Corporation.

Learn about Section 179 tax advantages.

Opportunity Zones benefit those that invest in the renovation of distressed assets.  

I bring you today’s show from Anchorage, AK. 

__________________

Resources mentioned:

Tom’s website:

Wealthability.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting “QRP” to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode271_.mp3
Category:general -- posted at: 4:00am EST

You don’t have to get your hands dirty or own a tractor to have your own agricultural real estate.

Humans need food to eat. Even futurists know that people will continue to need calories.

The world population of 7¾ billion will rise to 11 billion by 2100.

Coffee is the second most-traded commodity in the world.

You can buy half-acre coffee or cacao (chocolate) for under $20K - $25K, turnkey-managed. It produces cash flow from the annual coffee cherry and cacao pod harvest. 

You own the land in Panama and Belize. You can drink coffee or eat chocolate from your own far. I invest in this myself.

Operation with three pillars of sustainability: social, economic, and environmental.

Cash returns are 10-14% annually, averaged over twenty years. This doesn’t include land appreciation.

Learn more about investing, where they’re having an “End Of The Decade Special” at: 

www.GetRichEducation.com/Coffee

www.GetRichEducation.com/Chocolate

This special saves you thousands per parcel:

1 coffee parcel = $18,000 each

3 parcels = $16,650 each

6 parcels = $16,000 each

For the Belize cacao (chocolate) parcels:

1 parcel = $24,500 each

3 parcels = $22,650 each

6 parcels = $22,000 each

Cash or IRA funds are eligible. You won't see these prices again.

For these rates, confirm your order by Dec. 16, 2019, with time to fund.

There’s never been a better time to start in agricultural real estate.

__________________

Resources mentioned:

Learn about coffee investing:

GetRichEducation.com/Coffee

Learn about cacao investing:

GetRichEducation.com/Chocolate

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode270_.mp3
Category:general -- posted at: 4:00am EST

Money matters. It buys you freedom, options, and even the best medical care.

You have the same 168 hours per week as Jeff Bezos or Bill Gates.

Getting an MBA or Ph. D. is a slow way to wealth.

How many of your 8 great grandparents can you name? See. Making an impact is rare.

You can either live below your means or expand your means.

By the time you’re age 30, you should know how to produce income without trading your time for it.

Employees are motivated by fear.

Wealthy people are motivated by ideas and value creation.

You can only be truly free … with wealth.

Middle class people want enough money to retire; rich people want enough money to impact the world.

You can either be a conformer or build wealth. Your choice.

__________________

Resources mentioned:

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode269_.mp3
Category:general -- posted at: 4:00am EST

Rent amounts are more stable than real estate prices.

The rent amount you can charge is based on incomes in an area.

In real estate: rents behave rigidly; prices are more elastic. 

Employment sectors dictate what type of worker buys and what type rents.

Mortgage loan qualification is difficult; I’m qualifying myself. This is inconvenient, but it means borrowers are solvent. 

This creates a barrier to entry and stabilizes prices. Tips:

  • Be organized.
  • Buy multiple properties from the same provider at the same time, if possible.
  • Use the same mortgage company.

The BRRRR real estate investing strategy is: Buy - Renovate - Rent - Refinance - Repeat.

You can double or triple your cash-on-cash return with BRRRR.

Learn about Baltimore BRRRR and Philadelphia turnkey property at: GetRichEducation.com/Baltimore

Turnkey vs. BRRRR compared.

__________________

Resources mentioned:

Baltimore BRRRR & Phila. turnkey:

GetRichEducation.com/Baltimore

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode268_.mp3
Category:general -- posted at: 4:00am EST

Today, money is being printed on a massive scale. Interest rates have plunged. 

This is a Fed “U-turn” from last year when money was being destroyed and rates were rising.

What’s going on? 

Richard Duncan of MacroWatch tells us. 

We discuss how far the U.S. can “kick the can” down the road with their $23 trillion in debt.

Richard tells us about the future direction of interest rates and inflation.

Learn how deep the U.S. can go into debt.

Get 50% off Richard’s MacroWatch video newsletter. Use the Discount Code “GRE” at: www.RichardDuncanEconomics.com

I bring you today's show from Vancouver, British Columbia, Canada.

1) Get my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

MacroWatch:

RichardDuncanEconomics.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode267_.mp3
Category:general -- posted at: 4:00am EST

A four-unit building is how I began in real estate.

Fourplexes can provide you with great financing terms and economies of scale.

Steve Olson of the Fourplex Investment Group (FIG) joins us. Website: www.fig.us

FIG builds new construction townhouse-style fourplexes for investors. 

They operate in four high-growth U.S. states: Utah, Idaho, Texas - and Steve reveals their new market in this episode.

FIG properties often have excellent resident amenities. 

“Investor-savvy” HOAs help protect your investment.

Their model best suits the investor that’s also a busy professional.

FIG also offers duplexes and larger multi-family properties.

1) My FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

FIG Website:

fig.us

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode266_.mp3
Category:general -- posted at: 4:00am EST

Get a market update. Next, I answer your listener questions:

1: How do I start if I know nothing about real estate?

2: What’s better: existing or new construction property?

3: How do I identify an “up-and-coming” neighborhood?

4: How do I raise the rent without losing the tenant?

5: What if there’s a recession? 

I bring you today’s show from Anchorage, AK.

Next week, we discuss four-plexes. The following week, declining interest rates and more Fed money-printing.

1) My FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

 

Resources mentioned:

Credit Score help:

MyFico.com

Neighborhood Research:

NeighborhoodScout.com

City-Data.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

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

 

It’s YOUR listener questions today; What’s The Best Guidance For Beginners, Comparing New Construction vs. Existing Construction Property, How To Identify An Up-And-Coming Neighborhood, How To Raise The Rent Without Losing Your Tenant, and How To Position Yourself In The Event Of A Recession. 

 

All today, on Get Rich Education. 

______________________

 

Welcome to Get Rich Education! I’m your host, Keith Weinhold with Episode 265 and I’m answering your listener questions today. 

 

First, let’s get you up-to-speed with our asset Class Whiparound. 

 

The Fed lowered rates last Wednesday by a quarter-point again.

 

It IS their third quarter-point rate cut this year, bringing the upper bound of the Federal Funds rate down to 1.75%

 

Just before air time here:

 

Year-to-date, real estate is up 3.5% per the Freddie Mac Housing Price Index. The Case-Shiller National Home Price Index is at right about that same 3.5% appreciation rate.

 

Next, the Freddie Mac numbers show us 30-year and 15-year mortgage interest rates are just a touch more than 1% lower than they were one year ago.

 

Yes, your COST of money is cheaper now than it was either one year ago OR two years ago.

 

The stock market has been thriving. The S&P 500 Index is up more than 21% YTD. It’s flirting with all-time highs, as its over 3,000 points now.

 

Oil prices have not done so well, Down 17% year-over-year 

 

Oppositely, Gold has thrived as it’s up 17% just since the beginning of the year.

 

Last week, the Commerce Department told us that GDP expanded at an annual rate of 1.9% through the 3rd quarter, falling slightly from 2% a quarter earlier.

 

The rate of dollar inflation is currently 1.7% YOY as measured by the Consumer Price Index, which is tracked and published by the government’s Bureau Of Labor Statistics.

 

With the way that they calculate inflation, I think it’s a little hard to believe that the true, diminished purchasing power of the dollar is only 1.7% per annum. 

 

I think that makes about as much sense as turning back the clocks back an hour like we all did the other night, personally.

 

That’s our Asset Class Whiparound like we do here just once in a while.

 

Let’s start with the first listener question … and I usually start off with a more beginner-type question - like this first one - and advance from there.  

 

This question comes from Jackie in Esko, Minnesota.

 

Keith, I love your show. I’m 25 years old, just a year out of college with $22,000 in student loan debt, and I just began listening to you three weeks ago.

 

Now I’m going back to listen from the very beginning, Episode 1. 

 

What is the best way for me to begin if I know absolutely nothing about RE? 

 

Thanks for the question, Jackie.

 

Well, you’re on the right track with your learning by starting with Episode 1 of the Get Rich Education podcast. 

 

Bigger Pockets has some very well-populated FORUM that’s good for your learning.

 

I’d also say, work on your credit score WHILE you’re learning about real estate investing. That’s important in a credit-based asset like real estate.

 

Learn about what it takes to improve your FICO score at myfico.com

 

Now, for a beginner, yes, it’s probably not the long-term answer that you want. 

 

But it can be helpful to have a W-2 job … at least in the short-term … before you go onto to dominate your own real estate empire.

 

I mean … I had a day job for years. Not only does this income help you qualify for loans, but let’s look at some ideal day jobs that can help you advance your real estate CAREER at the same time.

 

Now Jackie, I don’t know what your college degree was in … but if you’re a true devotee to real estate, consider that, even if you have to accept less income ... there are day jobs that can actually align with your path toward being a real estate investor.

 

You could become a Property Manager for a management company. Now, that is a tough job but you will learn remarkable things about how real estate works from the inside. 

Property Management is perhaps the LEAST-RESPECTED job in all of real estate, but it’s perhaps the most important … at the same time and the manager is probably the investor’s #1 team member. 

Other day jobs that can help a real estate investor are: 

Being an Asset Manager, Financial Analyst, Real Estate Agent (of course), or a Mortgage Loan Officer.

With any of those related jobs, you’re going to learn about things like sales, marketing, pricing, maintenance & repair, capital improvements, and bookkeeping.

There are other benefits to making your day job … real estate-related. 

  • You’re going to get to know other people in the business - these could be your future collaborators.
  • You’ll get to attend industry tradeshows.
  • And of course, you’ll get substantial education and training. 

So, that’s just one course to consider for a beginning real estate investor. If you’ve got to work a day job before you build your empire anyway, it might as well align with what you’re truly MORE interested in long-term … yes, perhaps … even if you need to take a short-term pay hit.

It’s just another angle for you to consider, Jackie.

If you want one all-encompassing podcast episode that tells a beginner like you as much as you need to know as possible … all in less than one hour - check out GRE Episode 249, published just a few months ago. 

 

That episode is titled, “The Beginner’s Real Estate Investing Audio Guide” and it’s our most popular episode that I’ve done ALL year. Again, it’s Episode 249. 

 

Thanks for the question, Jackie.

 

The next question comes from Tate in Providence, Rhode Island.

 

Tate says, “Keith, I notice that today, more providers offer new construction investment property, but it usually doesn’t cash flow like existing properties do.

 

Is it worth buying new construction for the lower maintenance costs involved?” Thanks, Tate.

 

Alright Tate, let’s compare the pros & cons of buying Brand New Construction Rental Property vs. Existing Construction. 

 

And, this is a top-of-mind subject for me because I just wrote about this in Get Rich Education’s e-mail newsletter two weeks ago. 

 

What’s better: existing or new construction rental property?

 

Like with most real estate answers: “It depends.”

 

But because a “2-word answer” like “It depents” is really dissatisfying, let’s expand on this. 

 

There are at least 8 different criteria for each type.

 

Before we look at your trade-offs with each type, understand that new construction turnkey property was almost non-existent until recently.

 

That’s because during the housing crisis of 2007 – 2010, home prices fell far below replacement cost.

 

Therefore, builders couldn’t make new developments feasible until existing property prices rose in this decade that we’ve had since the Great Recession.

 

There was also an oversupply of housing back then. Absorption of existing housing took time before new construction made sense again.

 

And supply has definitely been absorbed.

 

In SO MANY markets today, the housing that makes the best rentals is undersupplied.

 

That’s why new construction makes sense again - and why you’ve gradually seen more new construction income property be offered by providers these past few years.

 

Let’s look at the advantages of both existing and new construction … and these are certainly broad generalizations ...

 

First, with EXISTING Construction property - we’re talking seasoned properties here:

 

  1. Lower purchase price.

 

  1. Better cash flow. This is especially true in the early years. The early dollars are your most important as an investor.

 

  1. Established property. You’re pretty assured that the foundation won’t settle. You know that the topsoil grows grass.

 

  1. With EXISTING property, you’re in an established neighborhood. You already know who the neighbors are.

 

  1. More safety in your investment with existing property. You see, because residents have lived in established neighborhoods longer, they’re more likely to have substantial equity in their property.

 

Now, why would you care if your neighbors next to your income property hold higher equity positions?

 

If there’s a recession, this means that residents are less likely to walk away from their home. This hedges against foreclosures and a valuation downdrain - and this domino effect like we saw in the housing crisis 10 years ago.

 

  1. With EXISTING PROPERTY, you also have lower property taxes. Though there are also plenty of cases where this isn’t true, because an existing property could also mean it’s closer to the city center.

 

  1. Location. Because you’re often closer to parks and city centers … residents have shorter commute times. This aids in both attracting & retaining your tenant.

 

  1. Availability. In turnkey investment property, there are more existing structures available than new construction property.

 

  1. You can keep your timeline. Construction delays are less likely with existing property.

 

Now that we’ve looked at what tilts in the favor of existing property - and it is a lot … let’s look at the advantages of Brand New Construction property.

 

New Construction:

 

  1. You tend to get Better appreciation.

 

  1. Higher tenant quality. New features attract a larger tenant pool for you to choose from.

 

  1. Longer duration tenancies. It’s hard for a tenant to find a better situation, unless they leave to become a homeowner.

 

  1. You tend to have fewer maintenance costs with new construction property.

 

  1. Modern amenities. Layouts with open floor plans and a higher bathroom count.

 

  1. With new construction you often have lower property insurance costs.

 

  1. Better vendor warranties.

 

  1. Utilities. New homes are more energy efficient, lowering utility bills. However, the tenant often pays this for you, especially in single-family homes and duplexes.

 

So, there they are - the advantages of existing property vs. new construction rental property.

 

Of course, this is general guidance.

 

Based on regional and other factors, you can surely find some “exceptions” to these criteria.

 

But these trade-offs can help you decide what’s more important to you as a real estate investor.

 

Excellent question from you there, Tate.

 

The next question comes from Alex in Lyndhurst, New Jersey.

 

Alex asks, “What’s the best resource for determining if a property that I want is in an up-and-coming neighborhood?”

 

“The market is more important than the property - and a thriving metro doesn’t necessarily mean that every property is in the right neighborhood.

 

Where do you do your own research?”

 

Well, thanks for the question, Alex.

 

In short, NeighborhoodScout.com is my favorite paid resource …

 

… and City-Data is my favorite free resource. It’s spelled “City-hyphen-Data”.com

 

Now, what makes Neighborhood Scout potentially worth paying for is that they’ve got investor-grade analytics and tools.

 

Where the free resource, CityData is more for a “general public” user.

 

But both resources tell you about things like crime rate, per capita income, vacancy rates, and virtually everything else for cities, zip codes, and even subdivisions.

 

Of course, there are countless other resources in addition to those two. 

 

Be mindful that you aren’t just looking for neighborhoods that are safe, you’re looking for neighborhoods that are IMPROVING and both of these resources have backward-looking data so that you can track trends.

 

Remember, in income property, you don’t really want to seek out “beautiful” because beautiful often doesn’t correlate with profitable for cash flow.

 

But, of course, boarded-up, burnt-out buildings aren’t what you want to see either.

 

So, as you’ll remember, it’s clean, safe, affordable, and functional. Are people out walking their pets at night? That might be a sign of neighborhood safety.

 

The things that you can see through Google Street view are things like: are the streets relatively clean, are people mowing their lawns. 

 

If the neighborhood - at least looks - respectable … then tenants are likely respecting your property too.

 

Too many “For Rent” or “For Sale” signs on a block might be bad sign. 

 

Of course, seeing a lot of signals of remodeling or new construction in a neighborhood - is one of the best signs that could possibly see for an improving neighbhorhood.

 

The problem there - is that you’ve got to get in before a neighborhood is TOO improved. Otherwise, you’re going to be paying more for the property and the numbers won’t work. 

 

So, there you go, Alex - both some hard data resources for research - and softer signals for what might make for an up-and-coming neighborhood and a safe neighborhood.

 

If you’ve got a question for me, go ahead and write in at info@getricheducation.com

 

How do you raise the rent without losing your tenant, and then, what happens if there’s a real estate recession?

 

That’s after this. I’m Keith Weinhold. You’re listening to Get Rich Education.

 _________________________   **COMMERCIALS** ___________________________

 

You’re listening to the show where you don’t follow money, you make money follow you. 

 

This is Get Rich Education. I’m your host Keith Weinhold.

 

Ben from Osnabrook, Germany asks:

 

“When it comes to raising the rent on a tenant, isn’t it better to just keep the rent the same & just … not raise it?

 

Because the cost of losing that tenant with its greater vacancy time is usually more of a loss than if I’m not receiving that potentially higher rent amount each month.”

 

And then Ben goes into a number of calculations that show his point.

 

Yeah, thanks for this great question, Ben.

 

This is the classic landlord’s conundrum. 

 

Do I raise the rent to “market rent” & risk losing the tenant - or do I forgo that greater rent amount and just remain complacent with occupancy at a BELOW-market rent amount?

Let’s use an example here. Say you are renting a unit for $1,000. The tenant signs a one year lease for $1,000 … and after a year, when renewal time comes, you give notice that rent will be increasing from $1,000 to $1,040.

A couple days later, your resident responds and tells you that they aren’t willing to pay more than $1,000, and if they must, they will go find another place to live. So you risk losing them.

Yes, some tenants really will leave over just a $40 a month rent increase.

Now you have a dilemma. You think that you CAN rent the unit to someone ELSE for $1,040

But on the other hand, you realize that it’ll take a month to turnover and re-rent the unit. You’ll also need to see that the carpets are cleaned, the blinds are replaced, and perhaps do some wall texturing and painting. 

So RE-renting this unit will cost you something … plus while this work is done & a new tenant would have to be sought … it might be one month of vacancy that you’d endure. 

The question you’re now asking yourself is, will it cost me MORE to turn this unit over & EVENTUALLY get $1,040 than it would to keep this tenant’s rent at $1,000 … and just keep them in place - ?

Yes, it usually would. 

Numbers-wise, short-term, it’s better to just keep that existing tenant in-place and give them their way and keep the rent at $1,000.

In this case, a LOST month of rent while you try to find a new tenant then … effectively costs you ... $1,040. 

Plus repairs, you might lose $1,600 on the turnover. 

On the other hand, NOT raising rents by this $40/month will only cost $480 for the year.

Which loss would your rather take — $1,600 by turning the unit over - or $480 by keeping the same tenant there? 

You’d rather keep the tenant in there & only lose that $40 a month or $480 a year … rather than the $1,600 for the turnover & month of vacancy.

Well, there’s a solution to this classic conundrum - and it won’t work every time, but the best thing that you can probably do - the way that you can have your cake and eat it too - which means both increase the rent and keep your tenant … is to make an improvement to your resident’s unit a month or two BEFORE you raise the rent.

For example, if they don’t have a dishwasher, you can add a dishwasher or add a ceiling fan in the master bedroom if they don’t have one. Or make a minor remodel that makes that tenant’s life better - before the notice of rent increase.

That makes the tenant more likely to stay because you’ve just improved their quality of life - and you’ve also shown them that you care - and they’re more likely to pay the rent increase.

Not only have you then kept the tenant and now receive a greater rent amount, often times, you can get a tax deduction for the repair or improvement - and above that, even if they do decide to vacate, you just improved your unit that you own.

So … that’s the best solution to the dilemma, Ben from Germany. Again the short answer is to make an improvement to the unit, optimally a month or two before the rent increase. 

Craig from San Diego, California writes, “Keith, you are the first person that ever opened me up to the world of cash flow.

I’ve bought two single-family properties from one of your providers about 8 months ago and I’ve had a good experience so far, other than one tenant that paid the rent about 20 days late month.”

OK, so far, so f-a-i-r-l-y good there, Craig from San Diego.

Craig goes on to ask, “There are a lot of warning signs about a recession and I’m considering putting a freeze on new purchases until I at least have some certainly in this uncertain environment. What are your thoughts about a recession?” 

OK, that’s certainly a valid question, Craig. 

You bring up “uncertainty”. I’d say that markets are always, just always, uncertain … and prognosticators and forecasters have been calling for a downturn for 3 years, 4 years, including a prominent economist or two right here on this very show.

And that’s alright. That’s alright if there’s someone that’s wrong. A prominent economist’s decision is just one point of many that you have to take into consideration … 

… whether it’s an inverted yield curve or slowing GDP growth or inflated stock market price-to-earnings ratios that might point to a recession.

Well, especially as it relates to real estate - let’s just talk about how a recession might look as it relates to real estate and what the probabilities are of a recession taking place soon.   

First of all, a recession is broadly defined as having two or more quarters in a row of contracting Gross Domestic Product - said another way, a declining GDP for at least six months. That’s what a recession is.

Let’s relate a recession to real estate - broadly.

10 years ago, we were mired in the worst recession in a few generations. 

Real estate was:

#1 - Overbuilt & oversupplied.

#2 - Real estate was being bought with irresponsible lending practices where borrowers didn’t have the capacity to pay their mortgages if anything went wrong. Everyone was qualifying for a loan.

And #3 - Ten years ago in the Great Recession, we saw ridiculously unsustainable appreciation rates. 20%, 40%, 50%, 60% per year in some markets on this speculative appreciation since anyone could qualify for a loan.

Today, I don’t think we’re in position for a real estate recession & if we do have one, it would be substantially milder than what we saw 10 years ago.

Why is that? Because today, we’re in EXACTLY the opposite condition than we were 10 years ago.

Today, we have an UNDERsupply of housing, lending practices ARE responsible, and appreciation rates are sustainable. 

I talked at the top of the show that real estate has appreciated nationally at about 3-and-a-half percent.

So, we’re in the opposite place that we were 10 years ago for three main reasons: supply, lending responsibility, and sustainable appreciation rates.

In fact, if you’re buying for cash flow in good markets - like you should be - the question I’d ask you - uh, Craig from San Diego - is - do you WANT there to be a mild recession?

Yeah, if housing values began trending down for a little while, people are discouraged from buying and then there’s more rental demand. 

 

This is what I experienced when I owned property for cash flow, like I did 10 years ago - when rental demand increased - my cash flow increased greater than the rate of inflation.

 

So, you might WANT there to be a mild recession when you’re a cash flow buyer. 

 

In fact, this - kind of - workforce housing that we talk about buying here - long-term rentals that are just below the median purchase price for an area (but not too far below) - is some of the most recession-resilient housing type that you can find. 

 

Now, other housing types - take the SHORT-term rental market - like AirBnB properties, HomeAway, VRBOs - they aren’t nearly as recession-resistant as these long-term rentals are.

 

Now, that doesn’t mean that you can’t own a few STRs - but they probably should be the bread-and-butter mainstay of your portfolio like these long-term rentals are.

 

AirBnB properties cater to two primary types of people - businesspeople and vacationers.

 

Now, it seems that most AirBnB owners prefer businesspeople to vacationers … because businesspeople tend to be more quiet, they don’t have parties, and businesspeople are more likely to have REPEAT stays than vacationers.

 

But in a recession, both business travel and vacation travel gets cut. You saw that happen in the Great Recession - and business travel is one of the first places that businesses cut when they had to get lean.

 

So … this doesn’t always mean that short-term rentals are dreadful. But long-term rentals are what are recession-resistant.

 

Again, in long-term rentals, you might actually WANT a recession depending on how you’re positioned. 

 

So, thanks for the question there, Craig.

 

Next week on the show, we’re going to focus on four-plexes - four-unit buildings and what makes them so special. 

 

The week after that, speaking of a recession, the incomparable Economist Richard Duncan is going to join us and tell us about this QE4-type of activity that the Fed has initiated …

 

… where the Fed is printing all kinds of money and pumping it into the system … and what that means for the economy.

 

Richard can make complex concepts sound devastatingly simple sometimes.

 

In fact, when he was here with us, about a year-and-a-half-ago, just listen into part of that, my question and his answer:

 

Yeah, could anyone else possibly describe the relationship between inflation and interest rates that succinctly … that concisely? 

 

In fact, when he’s back with us soon, I think that Richard will tell you that nearly the entire globe is ALREADY in a substantial economic slowdown.

 

Well, what’s one way that I’m acting - and this is something that I regularly do whether I think that a recession is on the way or not - is that I just bought two more properties this past week myself.

 

Yes, they’re these cash-flowing, long-term rentals like we talk about here … eating my own cooking.

 

When I was almost ready to buy, I qualified for two more single-family income property loans with Ridge Lending Group.

 

And then to find the 2 new properties, I did just what you do. 

 

I went to GREturnkey.com, downloaded reports on a couple markets that I was interested in, connected with the provider, and decided to buy two properties in the same day.

 

Really, walking the walk here. So, if you’re looking for cash-flowing income property in investor-advantaged markets - usually in the Midwest and South, you’ve got to act. 

 

That starts at GREturnkey.com

 

Until next week, when I’ll be back to help you build your wealth, I’m Keith Weinhold. 

 

Don’t Quit Your Daydream!

 

Direct download: GREepisode265_.mp3
Category:general -- posted at: 4:00am EST

Grant Cardone is our guest today. He’s the world’s #1 sales trainer, 10X Movement Leader, and prominent real estate investor with $1.4B AUM.

We discuss wealth mindset, and the importance of “getting known”. 

We tell you why you must embrace good debt in order to build wealth.

You start by asking yourself better questions.

What is “10X”?

I liken how your tenant pays you their income from the first 10 days of every month.

Get Grant’s take on why a house is not an asset.

I ask Grant about his physical fitness.

Bottom line: You must give your money multiple jobs. 

1) My FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Cardone Capital:

CardoneCapital.com

Cardone Capital Free Book:

CardoneCapital.com/Book

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode264_.mp3
Category:general -- posted at: 4:00am EST

Fannie Mae and Freddie Mac privatization could mean that the 30-year fixed amortizing loan - America’s favorite - disappears.

Ridge Lending Group President Caeli Ridge & I discuss this and more.

I describe the difference between primary and secondary mortgage markets.

Mortgage interest rates have dropped more than 1% year-over-year.

Learn what it takes for you to qualify for an income property loan today: down payment, credit score, reserves, and debt-to-income ratio.

You can put 15%, 20%, or 25% down payment on an income SFH. We discuss the differences.

1) My FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Mortgage Loans:

RidgeLendingGroup.com

Wall Street Journal:

How Fannie & Freddie Work

MarketWatch:

FICO Scores Higher

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode263_.mp3
Category:general -- posted at: 4:00am EST

Alabama might be the top real estate investment state in the U.S. 

Why?

Low cost properties, low tax, landlord-friendly, growth, warm weather, and advantageous rent-to-value ratios.

For cash flowing property, start at: GetRichEducation.com/Birmingham and GetRichEducation.com/Huntsville.

Birmingham is Alabama’s largest urban area, Huntsville is 2nd. 

SFH prices: $85K - $125K.

Fees and volatility degrade your stock and mutual fund returns more than most think. 

Want more wealth?

1) My FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Birmingham Turnkey Property: 

GetRichEducation.com/Birmingham

Huntsville Turnkey Property:

GetRichEducation.com/Huntsville

Tony Robbins’ book:

Unshakable

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode262_.mp3
Category:general -- posted at: 4:00am EST

The first episode of one of America’s most influential investing shows began October 10th, 2014. 

Here it is - uncut with gaffes, breathing and bumping the microphone.

Host Keith Weinhold gives present-day commentary on this show that launched five years ago from his home’s dining room table.

Want more wealth?

1) My FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode261_.mp3
Category:general -- posted at: 4:00am EST

$10 million in debt could BENEFIT you. I describe how.

There are more “free-and-clear” homes today than in 2006. I tell you why. 

A major platform published that 30-year mortgages are better than 15-year. It appears terribly oversimplified.

Home equity always has zero ROI.

The debt decamillionaire can have a $300K annual tailwind from inflation-profiting alone.

How to get informed, not affirmed.

Then, Daren Blomquist joins us to discuss U.S. housing trends.

The homeownership rate has declined, especially among those under age 35.

The rental vacancy rate has plummeted to 6.8%.  

Market appreciation is cooling in a sustainable way, returning to long-term norms.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

30-Year vs. 15-Year Mortgages:

Business Insider

My Forbes article:

Why Home Equity Has Zero Return

Auction.com

GRE’s Tampa Field Trip:

RealEstateFieldTrip.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

The NFL on CBS:

www.cbs.com

Direct download: GREepisode260_.mp3
Category:general -- posted at: 4:00am EST

Turnkey real estate vs. syndication compared.

Cannabis production is like today’s gold rush in agricultural real estate and retail.

CBD is medical cannabis. THC is recreational, mind-altering cannabis. CBD is discussed today.

CBD sales growth is projected at 107% every year through 2023.

Get a predictable 15% Cash-On-Cash Return by making a loan on equipment that turns raw hemp into CBD oil. Learn more here. 

You must be an accredited investor, 12-month loan term.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

CBD Lending Opportunity For You:

GetRichEducation.com/Lending

CBD To Grow 107% Annually

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode259_.mp3
Category:general -- posted at: 4:00am EST

Single-family rentals have 16 advantages over apartments: 

Tenant quality, appreciation, neighborhood, school district, retention, no common areas, utilities, divisibility, fire, disturbances, financing terms, vacancy rate, management, supply & demand, risk, exit strategy.  

There's nothing wrong with apartment investing. They have their own advantages.

Noel Christopher, Senior VP of Portfolio Services at Renters Warehouse, joins Keith to discuss today’s single-family rental (SFR) market. 

Renters Warehouse manages 22,000+ homes in 25 states. They could be a good backup property manager for you. See their marketplace too. 

The midsize investor (owns 25 - 2,000 rental units) is becoming more involved in buying SFRs.

Many say “mom-and-pop” landlords are competing with first-time homebuyers for single-families. Noel disagrees.

Long-distance investing is more common today.

Demographics of SFR tenants - both Baby Boomers and Millennials. 

Also discussed: beginner tips, build-to-rent communities.

Keith brings you today’s show from Anchorage, AK. 

Next week: Canton, OH. 

The following week: Philadelphia, PA. 

The week after: St. Petersburg, FL. 

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

RentersWarehouse.com

GRE’s Tampa Field Trip:

RealEstateFieldTrip.com

Warren Buffett on CNBC

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode258_.mp3
Category:general -- posted at: 4:00am EST

Five benefits of spending your money are discussed.

(What? Is this irresponsible?)

Keith Weinhold tackles the rarely-discussed benefits of money-spending:

  • You beat inflation.
  • You don’t “lose” money; you spent it how you desired.
  • Ensure a better quality of life.
  • You help the economy exactly where you want to.
  • Spending is more fun than saving.

 

Many are afraid to discuss the topic of spending.

Also discussed - what goes into home price appreciation, how inflation persists despite decades of technology, Millennials waiting for home prices to drop.

Back to spending:

  • Are “cheap” people annoying? 
  • School is irrelevant to wealth.
  • Don’t cut expenses; increase income.
  • The only place you get money is from other people.
  • Buy top vacations, wellness & exercise, mattress, vision, shoes, dental, home renovation, unprocessed food, phone.
  • Spending is an investment in yourself.
  • Experiences vs. Stuff.
  • Money is fuel; it’s only potential.
  • The $25,000 taco.
  • Giving to charity.

 

Benjamin Franklin: “Wealth is not his that has it, but his that enjoys it.” 

Then, a discussion with our Tampa provider about finding the right rental property neighborhood. 

Join us on our upcoming Tampa Real Field Trip, Oct. 10th to 12th. Start at RealEstateFieldTrip.com

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

GRE’s Tampa Field Trip:

RealEstateFieldTrip.com

CNBC:

The $25,000 Taco

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode257__.mp3
Category:general -- posted at: 4:00am EST

Real estate math is simple: add, subtract, multiply, divide.

There’s no complex math like trigonometry, algebra or exponents.

Frank Gallinelli, Ivy League Professor of Real Estate Development at Columbia University in New York City, joins me to talk real estate numbers.

Net Operating Income (NOI) estimates current market value of a property.

NOI is rent minus VIMTUM. It does not include Principal and Interest.

Your Debt Coverage Ratio (DCR) had better be greater than 1. You typically need a minimum of 1.2 to 1.25 to qualify for a property.

Loan-To-Value ratio discussed.

Seller “asking price” is almost irrelevant. A property’s current market value is = Annual NOI / Cap Rate.

Cap Rate = Annual NOI / Property Price or Value.

Internal Rate Of Return (IRR) is more of a total return. Part of it is discounting your future cash flows. This considers your opportunity cost.

I give an example of buying a new $20,000 heating system for an apartment building. 

  • This resulted in lower heating bills. 
  • This increased cash flow (and NOI) by $4,800 annually. 
  • Divide this by a 7% Cap Rate = $68,500 value increase.

Therefore, a $20K investment both improved cash flow and increased building value by $68,500.  

I dislike GRM - Gross Rent Multiplier.

Franks dislikes CCR - Cash-On-Cash Return. 

Return On Equity vs. Return From Equity.

Don’t get too lost in numbers. No property exists in a vacuum. The vibrancy of the market is more important than the property.

Get a 30% discount on Frank Gallinelli’s “Introduction To Real Estate Analysis” video course at learn.realdata.com with Discount Code: SAVE30

__________________

 

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Frank Gallinelli’s “Introduction To Real Estate Analysis” video course:

learn.realdata.com  Use Promo Code SAVE30 for 30% off.

GRE’s Tampa Field Trip:

RealEstateFieldTrip.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode256_.mp3
Category:general -- posted at: 4:00am EST

Keith Weinhold says the word of this real estate era may be: “supply”. Why?

The U.S. just hit its lowest rental vacancy rate in 35 years: 6.8%. 

Also, the U.S. just hit its lowest homeowner vacancy rate in 40 years: 1.3%.

Mortgage interest rates just fell to near three-year lows.

U.S. existing median SFHs now a record $279,600. 

Year-over-year appreciation is 4.3%.

Regulation and environmentalism increase real estate prices.

Join our Tampa Real Estate Field Trip at RealEstateFieldTrip.com

Next, Daren Blomquist of Auction.com joins Keith to discuss current U.S. trends in:

  • Foreclosure activity.
  • Home price appreciation.
  • Migration trends.

Foreclosure activity is down due to high employment, more exotic loans now “rooted out of the system”.

91-92% of metros Daren studied are appreciating in value.

Net migration winners include: Florida, Texas, Tennessee, The Carolinas, Georgia, Washington, Arizona, Nevada, Colorado. 

Net migration losers include: New York, California, Illinois, Louisiana.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Daren Blomquist:

Auction.com

Heat Map:

Home Appreciation 

Heat Map:

Net Population Migration

GRE’s Tampa Field Trip:

RealEstateFieldTrip.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Direct download: GREepisode255_.mp3
Category:general -- posted at: 4:00am EST

If I pay you $114 an hour to mow my lawn, could you get wealthy that way?

No. You’d have to work all 8,760 hours in a year just to make your first million.

Invest.

The definition of investing is: “To expend money with the expectation of achieving a profit.”

Then, are stocks, bonds, gold, your home, vacations, or income properties … investments? I discuss.

Damion Lupo, expert eQRP Administrator, joins us. Learn more by texting “QRP” in ALL CAPS to 72000.

You can have five simultaneous profit centers with income property:

  • Leveraged Appreciation.
  • Cash Flow.
  • Return On Amortization.
  • Tax Benefit.
  • Inflation-Profiting.

To get ahead, you must give your money multiple jobs. That’s five in this case.

If you’re new to this: risk and frustration still exist in real estate. Your best-laid plans will be derailed sometimes.

It’s not “get rich quick”. But most people never acquire wealth at all.

Why switch your retirement plan to an eQRP?

  • $55,000 annual contribution limit for single, $110,000 for married couples.
  • Invest in real estate, hard assets, nearly anything.
  • Creditor protection.
  • eQRP setup has less red tape setup than SDIRAs.
  • $50,000 line of credit.
  • Avoid UBIT tax. 

Learn more about the eQRP from Total Control Financial by texting “QRP” in ALL CAPS to 72000.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

eQRP: Text “QRP” to 72000 or:

TotalControlFinancial.com

By texting QRP to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply “STOP” to cancel.

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode254_.mp3
Category:general -- posted at: 4:00am EST

Jim Rickards is our guest today.

Debt is growing faster than the economy. 

In an eventual financial crisis, we discuss how a real estate investor will fare. 

A prolific author, Aftermath is Jim Rickards’ new book.

Debt, inflation, and interest rates are macroeconomic forces that affect you daily. 

The U.S. has $23 trillion in debt. Why can’t we just keep kicking the “debt can” down the road?

Alexander Hamilton effectively created the debt 230 years ago.

When the debt-to-GDP ratio exceeds 90%, problems occur. It’s 103% in the U.S. today.

We discuss debt solutions, and why negative interest rates and Trump tax cuts won’t work.

Rickards says inflation has nothing to do with money supply; it’s about psychology.

Learn how a new international monetary system looks - outside the U.S. dollar.

In a new system, hard assets retain value. Stocks and bonds lose substantial value.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Book - Amazon:

Aftermath by Jim Rickards

National Debt Clock

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode253_.mp3
Category:general -- posted at: 4:00am EST

Imagine that you’re paid $8.5 million - your entire life’s earnings - all on the last day of your life.

But you received nothing until then.

That income really wouldn’t serve you well anymore.

It’s an extreme example about “The Power Of Now”. 

Delayed gratification should not be a long-term condition. You get one life.

I also discuss housing affordability: which is your income, housing prices, and mortgage interest rates.

Historically, affordable homes have a price-to-income ratio of 2.6 or less.

In just three minutes time, I tell you how the Federal Reserve works. Their ¼% interest rate cut announced last week is the first cut since 2008. 

Join me in-person on our Tampa Real Estate Field Trip. Register at www.RealEstateFieldTrip.com

The Phillips Curve signifies that employment and inflation are highly correlated.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

GRE’s Tampa Real Estate Field Trip:

RealEstateFieldTrip.com

Article & Video by Keith Weinhold:

How “The Fed Works” In 3 Minutes

Book:

Eckhart Tolle “The Power Of Now”

Affordability article:

Housing Wire

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode252_.mp3
Category:general -- posted at: 4:00am EST

Floating ocean nations can provide solutions to rising sea levels, overpopulation, and poor governance. 

It’s known as “seasteading”.  

Joe Quirk of The Seasteading Institute describes their plans and structure.

The institute was co-founded by well-known venture capitalist Peter Theil.

This differs from living on a boat or oil platform, or cruise ship life.

200 miles offshore is the exclusive economic zone.

Hurricanes, tsunamis.

A new environment for enterprise and innovation.

Seeking freedom and liberty.

Aquaculture - seaweed, algae farming.

Regulation by the free market rather than government.

Could security evolve into an army? 

Today’s seasteading population.

Cryptocurrency.

How far we are from a seastead nation?

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

The Seasteading Institute:

Seasteading.org

Blue 21 Floating Homes:

www.blue21.nl/

GRE’s Tampa Real Estate Field Trip:

RealEstateFieldTrip.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode251_.mp3
Category:general -- posted at: 4:00am EST

Tenant retention begins before move-in: 

  • Use a move-in checklist with the tenant.
  • Move-in gift and packet.
  • Communication.

 

Ongoing tenant retention during occupancy:

  • Inspections every six months.
  • Be attentive with service calls.

 

How to achieve a rent increase:

  • 45 days’ notice.
  • Use phone.
  • Substantive reason: increase in property tax or maintenance costs. 
  • Remind tenant of moving costs.
  • Offer an upgrade - carpet cleaning, ceiling fan, etc.
  • 2 - 5% annual increase typical.

 

We discuss why not every tenant is worth retaining. 

Dayton, OH has 1% rent-to-price ratios and an MSA population of 800,000. Also:

  • Proximous to Cincinnati and Columbus. 
  • Health care.
  • Military.
  • Manufacturing.
  • 3 Amazon fulfillment centers within 45 minutes.

 

Learn more about the Dayton turnkey provider here

  • In-house property management.
  • Use luxury vinyl plank, white kitchen cabinets, newer HVAC & water heaters.
  • 1-year and 3-year warranties.
  • 97% occupancy rate.
  • Leases up to 18 months.
  • 3/1 SFHs: Rents $750 - $1,300 | Purchase prices $75K - $120K. Detached garage. 800 - 2,000 sf. Usable basement is additional sf.
  • Property tax 1.8 - 2.1% annually as a percent of property value.
  • Rent promise: Provider starts paying rent to you if your property is vacant 30+ days.

__________________

 Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Dayton Turnkey Property:

GetRichEducation.com/Dayton

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Our Tampa Real Estate Field Trip:

RealEstateFieldTrip.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode250_.mp3
Category:general -- posted at: 4:00am EST

Two big mistakes are: 1) Renting out your former primary residence. 2) Only being invested in one market. 

This Beginner’s Real Estate Investing Audio Guide also helps you step-by-step with buying an income property:

  • Credit Scoring
  • Mortgage Pre-Approval
  • Writing An Offer
  • Inspection
  • Vetting A Property Manager
  • Appraisal
  • Insurance
  • Closing
  • LLCs

 **The entire audio from this episode is transcribed into words and can be found at the end.**

People set up LLCs for asset protection, anonymity, or tax purposes. But there is a lot of administrative work. Is it even worth setting up?

Your FICO credit score has five ingredients. Down payment, debt-to-income ratio covered.

Mortgage pre-approval is better than pre-qualification.

Select income property in: job-growth economies, high rent in proportion to low purchase price.

Cash flow = Rent Income minus “VIMTUM”.

Why would someone sell you a cash-flowing property?

“Turnkey” defined. Should you make a lowball offer to a turnkey provider?

Also discussed: Negotiation Strategy, Earnest Money, Purchase Contracts, Management Fees, Management Agreements, Mobile Notary, Title Company, Rent-To-Value Ratio, Collecting Cash Flow.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Mortgage Loans:

RidgeLendingGroup.com

Find Properties:

GREturnkey.com

Memphis & Little Rock Property:

MidSouthHomeBuyers.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Our Tampa Real Estate Field Trip:

RealEstateFieldTrip.com

Best Financial Education:

GetRichEducation.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

 

Complete Audio Transcript:

 

Welcome to Get Rich Education. I’m your host Keith Weinhold and I’m 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. This is Get Rich Education Episode 249 - 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 THEY 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 $500 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-value 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-value ratio (or RV ratio) is 0.6%, meaning that for every $100K in value it has, you’re only getting $600 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 .6% RV ratio. Say that you can get $1,800 rent out of that $300K property that you used to live in. 

But instead, three $100K homes bought strategically as rentals can have a combined rent income of $3,000. Yes, you can still find that full 1% rent-to-value ratio.

So it’s either one $300K property at $1,800 of rent income.

Or three $100K properties at $3,000 of rent income. 

So you’re losing $1,200 dollars of cash flow every month - you’re only getting $1,800 rather than $3,000 - 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 own it, is because you defaulted and “fell” into it. Don’t fall into things. Be intentional. 

You are a better investor when you’re intentional rather than emotional.

It’s even better for you now. Beyond your $1,200 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 $1,200, AND you’re in multiple markets. One property isn’t divisible.

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, inspection and vetting your Property Manager which is known as due diligence, 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 single-family turnkey homes, especially homes outside your home market - as most of the best deals are not found where you live.

Like they say, the best investors live where they want to live, invest where the numbers make sense.

Get Rich Education is heard in 188 world nations. 

Today’s content is primarily geared toward United States real estate investors - but those that live outside the United States will benefit here too.

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 three 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 three episode numbers will appear so that you can listen.

But the reason that the question is, “Should I even SET up an LLC?” is because:

  • Setup of LLCs complicates your life. Maintaining a registered agent, Articles Of Incorporation, having separate accounts, tracking expenses with separate credit cards, paying annual fees for everything - depending on how many LLCs you have and how you structure your life - it can wear you out.

 

  • The second reason you should ask yourself, “Should I even set up an LLC?” is because you might not have many assets for a litigant to go after. Retirement accounts have certain protections already. Equity in a property could be low-hanging fruit for a plaintiff attorney if someone gets a judgement against you. But since the Return From Equity is always zero, what would you have much equity in a property anyway?

 

  • The third reason you should ask yourself, “Why should I even set up an LLC?” is that frivolous or slip-and-fall type of lawsuits are rare. Not only have I never been a party to one, I’ve never even heard of any investor friend or associate having one - and I talk to a lot of people. You probably haven’t heard of one either.

 

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 $60,000 property …

24% of that then is about $14,000 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.

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 14,000 people that’s 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.

You also don’t want to buy slummy property. Those tenants often don’t pay the rent. You also don’t want to buy the median-priced home or higher, 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 GREturnkey.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 rent income exceeds all 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 Get Rich Education.

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 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.

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.

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 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.

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 Get Rich Education.

________________

 

Welcome back to Get Rich Education. This is your Beginner’s Guide to Real Estate Investing. I’m your host, Keith Weinhold and we’re talking about buying an income-producing property.

 

That may or may not be 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 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. 

 

Once construction/renovation is completed on your property, I suggest that you order a professional 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 for a single-family turnkey income property.

 

A four-plex inspection might cost up toward $800.

 

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 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 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 “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.

 

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 to its final condition. 

 

Then you and the seller agree on what will be fixed (at the sellers 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. 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. 

 

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.

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 - that $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 up to 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.

 

Now, before you select your Property Manager, I’d really like for you to talk with them on the phone or use a free video chat service like Zoom - it’s Zoom.us - it works a lot like Skype but Zoom is easier to use.

 

I mean, I don’t make many phone calls in my life anymore - much like a lot of people. But I want you to have a phone or video call with your PM because ...

 

I want you to have a good vibe - a good feeling about your property manager and to vet that manager just like you would vet out a manager for a non-turnkey company.

 

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 company, a good manager should also connect you with whom 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.

 

You must sign a written Management Agreement with your Property Manager. 

 

This gives the manager written authority to manage your property for you, it 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 and / 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. I just want to live my life.

 

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 have 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.

 

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 you are buying.

 

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. 

 

And with each new turnkey property you buy, you might have just increased your mostly passive cash flow by $311 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.

 

A rent-to-value ratio of 1% is generally quite desirable, meaning one month’s rent is 1% or more of the purchase price.

 

For example, a $120,000 property and a rent income of $1,200. 

 

$1,000 rent income on a $120,000 property would probably work fairly well too.

 

You typically want to avoid properties with RV ratios of less than 7/10ths of 1%, or 0.75. 

 

Let’s keep in mind that the RV ratio is only a rule of thumb. It doesn’t account for a major recurring expense like property taxes.

 

In high property tax jurisdictions like many Texas markets, you probably want that RV ratio up higher.

 

Now, as a beginning real estate investor, or even an advanced one, don’t worry about not know it ALL. No one’s ever going to know it all with real estate.

 

In fact, 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 hadn’t been thinking about previously - 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?

 

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.

 

Again, a recommended, specific INCOME property lender is Ridge Lending Group.

Our network of income property providers is at GREturnkey.com

 

And one particular property provider to highlight over there is Memphis, Tennessee’s Mid South Home Buyers. Not only are they great with beginners, but they have profitable properties at lower price points, which some beginners would rather start with.

 

MidSouth Home Buyers has been rather popular for all those reasons and that’s created a longer wait list. Well, the news is that MidSouth Home Buyers has just expanded into another great investment market - Little Rock, Arkansas.

 

So that should help shorten their wait list.

 

If you can’t remember those three resources - Ridge Lending Group for the loan, GREturnkey and MidSouthHomeBuyers for the properties, I’ll be sure that they’re the first three links in the “Resources Mentioned” portion of the Show Notes accompany this episode.

 

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.  

 

It’s been my pleasure to bring you your Beginner’s Real Estate Investing Audio Guide today. If you got value from today’s show, I’d be grateful if you took a screenshot of the podcast player image here on your podcatcher …

 

...and posted it to your Social Media account - your Facebook, Twitter, Instagram, or LinkedIn - and let your social friends know that if they’re ever interested in real estate investing, this episode is a great place to start. 

 

Next week, I’ll talk about how you Retain your tenants at the same time you RAISE the rent. 

 

I’m your host, Keith Weinhold. Don’t Quit Your Daydream! 

 

Direct download: GREepisode249_.mp3
Category:general -- posted at: 4:00am EST

Property management is the glue that makes your investment stick together. But it’s a tough job.

GRE’s own John Collins has done management consulting on a project of 159 single-family rental homes.

Problems he encountered:

  • 30% pay rent late or not at all
  • Arson
  • Unassigned parking spaces
  • Domestic violence 
  • Abandoned car
  • Condensation
  • Pets and pests
  • “Jerry Springer Show” in leasing office
  • Unwanted boyfriend that wouldn’t leave
  • Syringes found in home
  • Daylight coming in through baseboard

 

Upgrading tenants from C-Class to B-Class.

Raising the rent attracted better tenants.

With just a $3 monthly rent increase per unit at a 6% cap rate, the project value increases $100,000. We break down the math.

What gets measured gets improved.

Maintenance issues occur with a property about quarterly.

Practicing “tactical empathy”. 

To contact John, e-mail info@getricheducation.com with “For John Collins” in the subject line.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Contact John Collins via e-mail:

info@getricheducation.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Our Tampa Real Estate Field Trip:

RealEstateFieldTrip.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode248_.mp3
Category:general -- posted at: 4:00am EST

Long-term rentals beat AirBnb and other short-term rentals (STRs) in a recession. 

STRs depend on vacationers.

Stocks typically have a Cash-On-Cash Return of zero.

Investor-advantaged property typically sells for $70 to $150 per square foot.

Gregg Cohen joins me to discuss the importance of market appreciation for cash flow investors.

Get started with new construction investment property at: GetRichEducation.com/Jax.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Jacksonville Turnkey Property:

GetRichEducation.com/jax

Tampa Real Estate Field Trip:

RealEstateFieldTrip.com

Mortgage Loans:

RidgeLendingGroup.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode247_.mp3
Category:general -- posted at: 4:00am EST

If a Depression occurs, you’ll feel pain as a real estate investor.

RE values and rents will both decrease. Awful.

But stock and mutual fund investors will likely feel greater pain. Learn why today.

Real estate investors maintain control.

Interest rates would tend to go lower in a Depression. You could refinance.

It’s also a better time to improve your property because people will be out of work.

Join our Tampa Real Estate Field Trip October 10th to 12th, 2019 in St. Petersburg, FL.

__________________

I answer four listener questions today:

What happens to RE investors in a Depression?

Should I invest in a college area?

Do I need a home inspection?

Can you explain Scarcity vs. Abundance?

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Tampa Real Estate Field Trip:

RealEstateFieldTrip.com

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode246_.mp3
Category:general -- posted at: 4:00am EST

Will your property lose value now that Amazon is selling homes for under $20K?

Pre-fabricated homes and 3-D printed homes often have major limitations and livability problems.

All homes have materials cost, labor cost, and the cost of the underlying land.

Mortgage interest rates just hit a 21-month low. Home prices are expected to rise 4% over the next year.

________________

Guest Dave Zook discusses the opportunity to invest in ATMs.

U.S. cash use is increasing at 5% annually.

Many ATM users pay $2 - $3 to access $20 or $40. There’s a profitable opportunity for you to invest in ATMs. Learn more here.

24.5% is your projected CCR on a lot of seven ATMs.

Terms discussed: pre-fabricated home, 3-D home, cash call, accredited investor.

If you’re an accredited investor, learn more about ATM investing at www.GetRichEducation.com/ATM

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

ATM Investing:

GetRichEducation.com/ATM

MarketWatch:

Amazon’s $20K Houses

CoreLogic:

Home Prices To Increase 4.7%

RE Portfolio Software:

Stessa.com

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode245_.mp3
Category:general -- posted at: 4:00am EST

You’ve never thought about this “new way” to beat inflation.

Three ways to beat inflation:

1) Tie long-term fixed interest rate debt to a cash flowing property.

2) Own gold.

3) Spend your money.

Yes, I advocate spending your money. Die with memories, not dreams.

Housing Data Analyst Logan Mohtashami joins us.

Logan provides mortgage interest rate predictions to BankRate.com. National Mortgage News calls him a “social media star.” He’s published in Business Insider, Bloomberg Financial.

He believes:

  • Interest rates will stay low
  • There’s no housing collapse imminent
  • Housing price growth will slowly continue
  • Rent demand will stay strong
  • Homeownership rate up to 66% in a decade
  • Inventory will stay low because people live in their homes longer
  • Birth rates will rise
  • Our high national debt doesn’t matter

Logan is known as “The Chart Guy”. Learn more about him at LoganMohtashami.com.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Logan’s Website:

LoganMohtashami.com

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode244_.mp3
Category:general -- posted at: 4:00am EST

Single-family homes are today’s hottest rental type - both Realtor.com and John Burns RE Consulting agree.

Boomers don’t want the responsibility of homeownership, and also don’t want to live in an apartment. This makes SFHs the hottest rental.

Rental demand has shifted to basics: affordable, fewer amenities, better school districts.

Suburban markets should see the concentration in future growth.

Seth Williams of REtipster.com joins us to discuss the best real estate investing websites and apps. We also discuss self-storage facilities.

Apps and websites:

  • DealMachine helps you find deals.
  • DealCheck helps you analyze deals.
  • TenantCloud helps you self-manage rentals.
  • BombBomb is a video e-mail service.
  • Trello and Slack for workflow.
  • Blinkist condenses books.
  • RentOMeter estimates rents.
  • Dropbox and Google Drive manage files.
  • Evernote stores notes.
  • DocuSign for digital contracts and signatures.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Seth Williams:

www.REtipster.com

seth@retipster.com

Article:

Hottest Rentals Are SFHs

Website & Apps Discussed:

DealMachine

DealCheck

TenantCloud

BombBomb

Trello

Blinkist

RentOMeter

Dropbox

Google Drive

Evernote

DocuSign

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode243_.mp3
Category:general -- posted at: 4:00am EST

Compound interest doesn't work in real life.

5% is the average mutual fund investor return, though the S&P returned 10%.

This is for the twenty years ending in 2015 (Source: Dalbar). This is even before taxes and inflation!

Why are 401(k)s failing people? Inflation, emotion, taxes, fees, and volatility.

Emotions make humans sell high and buy low - a recipe for disaster. I discuss how cash flow helps you remove emotion.

Garrett Gunderson of Wealth Factory joins us.

Financially-free people prioritize this way: value, cost, then price.

Economic independence has five levers:

  • Recover cash
  • Engineer wealth
  • Accelerate investment income
  • Scale business revenue
  • Treat yourself as the greatest asset

Behavioral finance is where investing meets emotion.

Facts don’t change people’s minds. I discuss what does.

“Facts are stubborn things. But our minds are even more stubborn.” -John Adams

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned:

Garrett Gunderson:

WealthFactory.com

CashFlowBanking.com

Articles referenced:

Why Investors Get Below Average Stock Returns

Facts Don’t Change People’s Minds. This Does.

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode242_.mp3
Category:general -- posted at: 4:00am EST

Your equity is re-positioned when you make a 1031 Tax-Deferred Exchange.

All at once, you can:

  • Increase your cash flow
  • Increase your leverage ratio
  • Create arbitrage
  • Increase your velocity of money
  • Expand the value of your RE portfolio
  • Do it all with zero tax on the gains
  • Gain geographic diversity

Real estate capital gains tax is higher than many think: 15% - 23.8% Federal, plus State of up to 13.3%, plus Depreciation Recapture.

Californians could pay 37%+ in capital gains tax.

Fortunately for real estate investors, you can defer all of these taxes with a 1031 Tax-Deferred Exchange.

We discuss your 45-day and 180-day timelines, “like-kind”, your Qualified Intermediary, and 1031 traps to avoid.

Columbus, Ohio could potentially be a wise place to exchange your equity into.

Why Columbus?

  • Ohio’s largest city and capital
  • Fortune 500 companies
  • High rents & low purchase prices
  • Growing city
  • Family-friendly suburbs
  • Low cost of living with good incomes
  • 14th-largest U.S. city
  • SFR Rents $800 - $1,300, Prices $80K - $150K

This provider has turnkey rehab operations integrated with management so that you can buy an “all-done-for-you” single-family rental property

Connect with the provider and get their Columbus Investor Report here: www.getricheducation.com/columbus.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned

Columbus Income Property:

GetRichEducation.com/Columbus

Forbes:

Californians Move, Then Sell

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode241_.mp3
Category:general -- posted at: 4:00am EST

More people are renting. The homeownership rate has declined to 64%, from 69% in 2005. 

Credit score “inflation” has occurred due scoring model changes and a strong economy.

The average FICO score is now 704, a record high.

GDP in Q1 grew 3.2% year-over-year, exceeding expectations.

A new program called the Home Select Loan (All-In-One Loan) operates similar to a 1st Lien HELOC.

Ridge Lending Group President Caeli Ridge & I discuss the details:

  • Line Of Credit for 30 years
  • 80% LTV on home, 70-75% LTV on investment property
  • No principal payments due for ten years
  • Potential interest savings
  • Better liquidity
  • Interest rate based on LIBOR + a margin

Use the simulator to see how much interest you save vs. your current mortgage.

I bring you today’s show from Dallas, TX.

__________________

Want more wealth? 

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Direct download: GREepisode240_.mp3
Category:general -- posted at: 4:00am EST

If you make $110K per year unfulfilled, would you leave that job to make $78K fulfilled? Commentary.

Learn how to put only a 5% down payment on your home, get a great interest rate with conventional financing and pay zero monthly Private Mortgage Insurance (PMI).

GRE Listener Anna Ferntheil joins us. She is a former co-worker of mine at the State Department Of Transportation.

Still at her day job, Ferntheil has bought her first two turnkey properties in Ohio at GREturnkey.com, totalling about $400 of total monthly cash flow.

Rather than “trading her time for dollars” for decades, she’s building passive income streams through real estate.

She now “thinks different”.

Ferntheil stresses the influence of associating with like-minded people.

She’s also investing in our referred Private Money Lending program, cash-flowing agricultural real estate, and moving her retirement to an eQRP (Enhanced Qualified Retirement Plan).

You don’t want “job security”; you want freedom. Security is the opposite of freedom.

Today’s show is coming to you from Anchorage, AK. Next week, I’ll be in Dallas and Houston, TX. The following week, Guatemala City, Guatemala. After that, Portland, OR.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned

Anna’s E-Mail Address:

amferntheil@gmail.com

Best Financial Education:

GetRichEducation.com

Find Properties:

GREturnkey.com

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

Program contains a sample of The Notorious B.I.G.’s

“The What” by Bad Boy and Arista Records.



Direct download: GREepisode239_.mp3
Category:general -- posted at: 4:00am EST

Keep your debt. Get financially-free instead.

We’re talking about good debt. Retiring your debt often means you can’t retire yourself.

Home equity is:

  1. Unsafe.
  2. Illiquid.
  3. Has zero rate of return.

 

So then, why have so much equity in any one property?

Back in The Great Depression Era, banks could call your loan due-in-full anytime. They can’t do that today.

Don’t fear mortgages. Embrace them; even collect them!

Every dollar that goes into mortgage principal paydown is a dollar that you didn’t invest.

Separating equity from your home gives you more dollars to invest, not save.

Paying down your mortgage INCREASES your foreclosure risk. Most think the opposite is true.

Have a lot of home equity? Treat it as you like. But you probably have more dollars to invest than you think.

So what’s the formula? Consider keeping low equity positions in many cash-flowing investment properties.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned

Find Properties:

GREturnkey.com

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithweinhold

 

Direct download: GREepisode238_.mp3
Category:general -- posted at: 4:00am EST

Chicago and Philly are doomed.

Today’s guest, Peter Zeihan of Zeihan.com, tells us why.

U.S. housing will change with shifts in immigration. Future immigrants will have more skills than current immigrants.

Peter & I discuss city-by-city economic fortunes:

New York City - Top U.S. destination for capital. But capital is beginning to flow to secondary cities like Charleston, Dallas-Fort Worth, Denver. NYC is not business-friendly.

Philadelphia - Should be an economic powerhouse, but make poor business decisions. Not a world-class city. Will hollow out.

Washington, D.C. - Could face problems with contractions in government demand.

Cleveland, Pittsburgh - Both trending well with tech-based reinventions.

Chicago - Rife with deep economic problems. May take national emergency to save them.

Florida metros - Tampa, Orlando, Jacksonville areas will keep booming.

Memphis - Looks positive. Transportation center.

Texas metros - Business-friendly, thriving, decisions made at local level. Big regional differentials in property tax.

California - Most economically “unequal” state in U.S.

Seattle - What pushes up housing prices? Geographic isthmus, new business.

Hawaii - Real estate prices are high and resilient. Much of this is due to geography.

With NAFTA’s restructure, Texas and the Great Plains are poised to prosper.

Want more of Peter Zeihan? He was on Get Rich Education episodes: 101, 114, 236, 237.

__________________

Want more wealth?

1) Grab my FREE E-book and Newsletter at: GetRichEducation.com/Book

2) Your actionable turnkey real estate investing opportunity: GREturnkey.com

3) Read my best-selling paperback: getbook.at/7moneymyths

__________________

Resources mentioned

Peter Zeihan’s website:

Zeihan.com

Peter Zeihan on Twitter:

@PeterZeihan

Mortgage Loans:

RidgeLendingGroup.com

Cash Flow Banking:

ProducersWealth.com

Turnkey Real Estate:

NoradaRealEstate.com

QRP:

TotalControlFinancial.com

JWB New Construction Turnkey:

NewConstructionTurnkey.com

Find Properties:

GREturnkey.com

Follow us on Instagram:

@getricheducation

Keith’s personal Instagram:

@keithw