Former NFL player, Broadway playwright, best-selling author and in-demand public speaker, Bo Eason, joins us to discuss the power of storytelling and achieving greatness. Bo emphasizes the importance of setting high standards, such as aiming to be the best, and seeking out mentors. He shares his upbringing, where his father instilled confidence by telling him he was the best, which influenced his success. Bo highlights the significance of personal, physical, and unapologetic storytelling to build trust and connect with others. Adopt the mindset of striving to be the best, not just settling for mediocrity. Make the Gold Medal the standard, not the end goal.  Develop and share your personal, compelling story to build trust and attract opportunities. Resources: Text "PERSONALSTORY" to 323-310-5504 to receive a free video course from Bo on uncovering your powerful personal story. Show Notes: GetRichEducation.com/529 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com GRE Free Investment Coaching:GREmarketplace.com/Coach Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai    Keith Weinhold  0:02   Welcome to GRE. I'm your host. Keith Weinhold, how do you become the best in the world at anything that you want to do in your life? Today's remarkable guest will tell you how so you can become the best version of yourself. He's become the best in more than one endeavor, including playing in the NFL. We'll also learn about the persuasive power of story and how you can find your very best personal story that you do have inside of you. It's a show rated PG for personal growth today on get rich education   Speaker 1  0:41   since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com   Corey Coates  1:27   You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education. You Keith,   Keith Weinhold  1:43   welcome to GRE from Europe's Iberian peninsula to New Iberia, Louisiana and across 188 nations worldwide. I'm Keith Weinhold. As always, I'm grateful to have you along this week. This is get rich education. Most investing is left brained, but most decision making for your investment, choice is right brain. If you don't know the difference, left brain is about the numbers. It's analytical and logical. So left brain people, they're good at math and critical thinking and language as well. If you're more right brained, then you are more creative and emotional, and you tend to be good at recognizing faces and the attribute of diplomacy that's right brained. And it's a right brained kind of episode. Today you're going to learn how to be a performer and be the best at whatever you want to be. I mean, the best, whether that's as a real estate investor, business person, apartment building syndicator, or a real estate agent that's trying to sell homes, it'll even help you become the best parent, child, best spouse, best at basketball, best at table tennis. And you know, you are part of a really well educated and influential audience that we have here. Maybe you're trying to be the best physician or politician or even social media influencer or the best church minister that you can be. And in fact, as it turns out, people that are trying to raise money end up consulting today's guest quite a bit. And as you'll see, this guest really can tell a story. You'll learn that he has achieved elite success, even best in the world, success in a number of different areas. He's had like, three or four successful people's lives, yet he's the same guy. He's sort of like, in a sense, President Elect Donald Trump. Love him or hate him. Trump found success in real estate and then in media, with his show The Apprentice and then as the 45th and 47th president. Well, those disciplines there for Trump, they're somewhat related. Well, today's guest became the best in areas that aren't even related to each other at all, which is even more amazing. So therefore, maybe today it's really more of an Arnold Schwarzenegger parallel. I mean, Schwarzenegger, he was first the successful bodybuilder, winning Mr. Olympia, then he went on to become a successful actor. He married into the Kennedy family, and he became the California governor. Well, before I introduce you to today's guest, well, we are a wealth building show here, and as we talk about being the best in something, you know, I really want to ask you a question, Are you content with being middle class? You know, despite the way that inflation has ravaged it us, middle class life isn't all that bad. In fact, it's pretty good in a lot of ways, from the iPhone to the luxury of having a gym membership. I mean, that's just middle class stuff. Sheesh. Life is so good that when it's time to reset a password, people treat that as some sort of existential crisis. And you know, this is the time of year that even the middle class indulge in, say, pretty elaborate Christmas decorations. In fact, I increasingly notice that it's more and more common to hire a Christmas decorating contractor to decorate your real estate for you. They'll get ladders and a lift truck to hang lights in your tallest trees. That's something that the middle class does. Here's a new one. There's at least one mainstream, I guess, paper products company that now makes toilet paper with perforations that are wavy instead of being straight across, because it's easier to tear that way. So I think that you could make the case that American middle class life really isn't too bad, but in your life, if you want to be all that you can be, or anywhere close, you're not going to settle for something that's just better than not too bad. You can want more, and you should want more because you're capable of more, if for nothing else create the type of value for the world so that you can have more free time for yourself. I expect to have a terrific time and learn some things here where I am today in New Orleans for the 50th anniversary of the New Orleans Investment Conference, we've got speakers and exhibits covering real estate investing, economics, a lot of gold investing material at this conference Bitcoin and even stocks. And of course, I invited you, the listener here the past couple months, to come to the conference and meet in real life. As this is about to kick off, I wonder if I will find someone to go running with me. I always go running along the Mississippi River. Here in New Orleans, there is a trail paralleling the river right here, close to the event site. Yeah, I think I'm recovered from a mild back injury by now. Gosh, it was so weird. I hurt my back at the gym last month. And here's the thing. Somehow I heard it while doing my warm up exercises, of all things, sheesh. In fact, this is a triumvirate of fitness paradoxes here in doing this. Number one, warm ups are activities that you do before you work out to prevent hurting yourself, but I hurt myself in the warm up. Secondly, I never seem to injure myself while running steep, rocky trails or skiing down slopes outdoors, but indoors where the floor is level, that's the place where I seem to get injured. And then thirdly, the gym is where you go to improve your fitness, not lose fitness. So yes, that is the triumvirate of paradoxes there. Well, our guest, you know, he really knows the power of story, and just listen to him. I bet he'll tell a better story than hurting my back at the gym. Let's meet him.    Today, we have a guy with massive ambitions who I know is going to bring out the best in you during his lifetime, he's chased what it means to be world class, not just in one discipline, but in five different disciplines, and he's achieved a true level of greatness in all of them. He has played in the NFL for four seasons with Houston, then went on to become a San Francisco 49er, next, a super successful Broadway playwright, then an in demand public speaker, most recently, an eight time best selling author, and he has gone on to write screenplays for movie stars, so get ready to hear him talk about the one factor that's been the driving force behind his success in all of these disciplines. Hey, welcome to get rich education. Bo Eason.   Bo Eason  9:13   Keith, thanks for having me.   Keith Weinhold  9:14   Well, it's the first time that we have a former NFL player on the show, and Bo played the same position that my favorite football player of all time did, Ryan Dawkins, that is the safety position. But we're not here to discuss football so much as how you can build the architecture of success like Bo has and Bo your success is astounding, and our listeners hope that some of their virtual proximity to you rubs off on them today, I do too, and it's remarkable because you've reached the pinnacle of success in some of these disciplines that don't even seem to be related to each other at all. So what can you reveal here? Is there one common driver that led to them all?   Bo Eason  9:58   Man, you know what? That's. A great question, going back the way my dad woke us up as kids. So I'm the youngest of six kids, so I grew up on a ranch, on a farm in northern California. My dad was a cattle rancher, and I four older sisters and a brother who's a year older than me, so every morning he woke up all six of us to go do our chores, you know, on this ranch at five in the morning, and he would wake us up by rubbing our backs. He pulled back the covers. He'd rub our backs really hard, like, not easy, not like gentle, like dads of today, like this was a cowboy, you know, with dirty hands and rough hands. And he would rub our back and he would whisper in our ear and tell us that we were the best. And so for the first 18 years of my life, every morning he'd come into me in my brother's room. He'd wake up my brother in the same way he woke me up by rubbing his back and whispering his ear, you're the best. Get up, you're the best. And after you hear that for 18 years, my brother went off to college. I went off to college. My sisters all went off to college. And I always think back to those eight first 18 years, because when I would come home and visit our parents. So my brother got drafted. He was the first round pick of the New England Patriots. He was the quarterback for the New England Patriots took them to their first Super Bowl. So that best term worked out for him. And then I was a second round pick for the Houston Oilers, and got to play with them for several years. And this term, I always thought back to it, like, Why was my dad saying that? Because when we were growing up, when we were playing Little League, and we're playing sports, when we were kids, we actually weren't the best. But he wouldn't say that we were like, I would strike out every time in Little League, I was so bad at baseball, and every time he would yell at me through the chain link fence that I was the best, and my teammates are like, You got to be kidding me, Bo What is your dad even saying You're the worst? And he's telling you you're the best for most of our lives, the first half of our lives, it was a source of embarrassment to me and my brother and I remember going on a date one time, a double date with my brother. In fact, I couldn't even drive my brother could, and we went on a this double date with the thomasini sisters. So we were going, and my dad walks out to the car with us, and we're like, What the heck is my What's dad doing? Why is he coming out to the car with us? He came out there to tell us that we were leaders and that we were the best before a date. And I'm like, Dad, go in the house, right? And then finally, you know me and my brother, we weren't recruited as football players coming out of high school. Not one person, not one college recruited us, but we had these dreams of being pro football players, and at that time, 350 colleges played college football, but no one wrote us a letter. No one recruited us. So my brother went to a junior college, and then he ended up, after that, got a scholarship to the University of Illinois, and then became a first round pick. Well, I went to a school called UC Davis in Northern California, which was division two football and no scholarships. So basically, no one was on scholarship. There. You just walked on and you played football for fun. Well, that's where I went. And then, you know, cut to four years later, my brother's a first round pick. I'm a second round pick, and we always looked back from that point on, deciding, like Dad always embarrassed us, friends in front of our dates, in front of everybody. But then at that point, 21, 22 years old, we looked back, we said, Man, you know what? We just kind of surrendered to, what he saw in us, and we were the best. We were the best at our positions, and the only reason we were is because we had somebody who saw our greatness and pretty much spoke it into existence. Now, when you grow up like that, Keith, you think you assume that every other kid has grown up like that too, right? But that wasn't true, right? We thought it was true. You know, it turns out that the other guys we were playing with, the other guys who are our teammates, they did not grow up like that. So I would say that that principle was huge for me and my brother, just somebody who saw something in us that we couldn't see for ourselves, and he did it up to a point where we began to see it for ourselves. He just was very patient. And, you know, I find myself doing this with my kids. I have three kids, and they're all going to be d1 athletes, two of them are already, wow. Yeah, and it's because that's how I woke him up, too, like so I know that's kind of a simple story, but it really set the foundation for us, and here's how it did, Keith, it told me what was expected of us, even when we weren't the best. He was expecting us to live into what he saw, and we did, and I found my kids to do the same, like I was looking at my kids, and I was like, Man, are they going to be athletes like me and my brother are at that level, because that was their dreams, right? But I didn't know if they had what it took. As I woke them up every morning, I could see them starting to live into their potential or live into their birthright. So I think to start off with Keith, that was a principle that is a mainstay. It taught me not only what was expected of me, but what I could set the standard for other people, and then they would live on into that standard, been able to do that. So those couple of things were huge in my upbringing.   Keith Weinhold  16:02   Well, this is remarkable, and I think you're already giving the parents in our audience quite a few ideas. Bo, this phrase, you're the best kind of got indelibly baked into your being and who you are, your dad even chasing you around on a double date, reinforcing you're the best and you know, Bo, I think that a person can be simultaneously grateful for what they have yet at the same time strive for more, as often say here on the show and adopting an abundance mindset with wealth building. Don't live below your means, grow your means. Now, I was watching an NFL football game just this past weekend, and a commercial came on for the IBEW, the labor union, and Bo it struck me as so odd that a trainee at the IBEW smiled, and they were all gratified that they were part of the IBEW. And they said, this is like now I have my golden ticket to the middle class, which I mean, because being middle class isn't like altogether awful in the United States, but it just sounded like this was the be all and end all, and hey, now I have a guarantee of mediocrity in my life that struck me as so odd. I don't think their father was telling them you're the best like yours did.   Bo Eason  17:21   No, they definitely did not. I'm always shook by that too, where people will sometimes come to me and they go, Bo, I want to push back on being the best. I just want to, you know, be kind of a good player, kind of medium wealth. And I'm like, Well, if you want to push back on me, you should take that up with Mother Nature, because if you just go back to the day that we were conceived, you know, if we want to have a little refresh of course on the day we were conceived, you were going to find out that there was the odds of us even being born were 300 million to one, and we were the champion of that first race that we entered right like 300 million to one odds, you're the champion, and yet here we are, you and me number one. You know, the gold medalists of those odds, and now we're supposed to be born into a world and be mediocre. I don't think Mother Nature set it out like that. I don't think that's how it happened. I think the standard is the gold medal, not the silver medal. You know, it's the gold medal. Now, some people win silver medals. If they lose the gold that's fine, that's great, but the gold medal is the thing. And I think the minute we lower ourselves from that. We're just trying to give ourselves a soft landing, I think, and then we don't ask enough of our potential, which is, if you're following Mother Nature, your potential is 300 million to one odds, and you already won that gold medal. So what are you doing? You know? What are you doing? So, as I progressed, Keith, so I went from football, I played in the lake for five years, and I didn't know what I was going to do, right? So I just started again. I just said, so instead of being the best safety in the world, because that was my first declaration, I just said, I want to be the best safety in the world. That's it. So I was able to achieve that. And then when football was over, I did the same thing for playwriting and performing. I just said, I don't care. I know I don't have any experience in this, but I'm going to declare right now, and I draw it up, that I'm going to be the best stage performer of my time. So that principle has worked every time, but I had to use the term the best. And I don't know why. I guess it was just locked in my brain. But here's the next thing, the next principle that I think is important for the audience. And this goes for wealth building. This goes for whatever you want to build, whether it's your family or, you know, an apartment complex. It doesn't matter we're building stuff. And here's what I did the second. All around I said, I want to be the best stage performer, the best playwright of my time. So I didn't know how to do that. So I moved to New York City because I knew everybody did plays there. They did Broadway, they did off Broadway. And I asked everybody in my class, who's the best at this this was in 1990 who is the best at this stage performance. And every kid in my class, and there were kids I was a little older because I was playing football, I said, Where is the best stage performer of our time? Who is it? And they all said, Al Pacino. And I said, Cool. Where is he? And they said, Well, I don't know where he is. He's on a movie set somewhere, or, you know, rehearsing for a theater show. And I said, I want to know him. I want to meet him, because only the best can tell me how to be the best. Only the best can tell me how to take his mantle of being the best stage performer. Wow, most people don't think that, or say that. You said Brian Dawkins, me too. I'm like, who's the best safety in the world? Let me go talk to that dude, because that dude knows what, like Ronnie. Lott, was that for me? Jack Tatum, Ronnie. Lott, those kind of guys I ended up playing with. Ronnie. Lott, you know you end up playing with these guys. You know the guys you're looking up to? Well, within a week of me asking these kids in my class, where is Al Pacino? I'm having dinner with Al Pacino, in New York City and I go, Dude, what do I do? What do I do? You tell me, I'll do it. And he goes, Okay, Bo, I'll draw it up for you. We'll draw it up. You know what that's going to take, but that's going to take you 15 years, and I go, perfect. That's my kind of timeline. I'm good like that, you know? And he goes, Okay, so he drew it up and I did what he said. He told me who to work with. Basically, he's telling me to put my butt on a stage. More than any other person can put their butt on a stage. So I go, I can control that, that I know how to control, because that's what I did. As far as training to be the best safety. I wasn't the best safety, but as the years went by, guess what? I passed up everybody who was ahead of me. You know, you're the top safety in the league. Well, same thing for being on Broadway, he told me what to do. I did exactly what he told me to do. And 15 years later, I am opening a play in New York City that I wrote that I'm the only guy in and I swear I was so nervous before opening night to run out and look Keith I had played against the biggest and baddest dudes on the planet. You know, I wasn't as scared as going out on a stage to face those dudes. I would rather face refrigerator Perry or Walter Payton than going out on a Broadway stage. And I went out on starting the play, I am having an out of body experience because I'm the only one. I'm talking to the audience. The New York critics are in the house. Everybody's in there. And I make eye contact with a guy right on the row. He's sitting right on the aisle. It's Al Pacino. I had seen him in 15 years. He told me what to do. I did what he said. He's in my play, I wrote, and I'm the only guy, Al Pacino, the best stage performer of all time, is sitting right there on the aisle. That's so cool. And he's nodding his head. He's like, Yeah, I'm doing you did it. And so a you have to have a declaration, and that declaration has to be the best. So the declaration of being the best safety, being the best playwright, being the best stage performer, those things actually come true because you have a declaration which you're living into existence instead of following some to do list, right? I did the same thing for playwriting. I did the same thing with Al Pacino, and that career really set me off because I performed that play 17 years. One play 17 years it immediately gets bought by Castle Rock pictures as a movie. Frank Darabont bought the play as a movie. And I don't know if you know who Frank Darabont is, but he's the guy who wrote and directed the Shawshank Redemption, The Green Mile Saving Private Ryan collateral. He's the guy who his team's TV show he created is The Walking Dead. So this dude was nominated for 12 Academy Awards for writing and directing. He bought my play to produce it for him, and so he hired me, who's never written a screenplay, to write the screenplay for him. This dude has been nominated for 12 Academy Awards for lighting, and he hires me. I go, Dude, don't hire me because I've never written a screenplay. I don't understand it. I don't get it. I'm not a great speller. In fact, I do. Don't even have a computer. And he goes, I don't care about that. I think you can tell the story. Yeah. And I go, okay, so he was hiring me basically based on my guts or my heart, and we did that. So he bought that. I wrote the screenplay for him. Then Leonardi DiCaprio and Toby McGuire come to the play. They come running backstage, they say, Bo, we want you to write a movie for us. And I go, You know what, you guys, I don't write movies. They go, we pay a lot of money for our screenwriters. We think you can do it. And I go, Yeah, based on that money, I think I can do it too. And so the crazy part about this whole thing is it all falls back to this ability to share myself, to tell a story, to tell a story that has physicality to it, that has heart to it, the ability to do that has really given me all these occupations. And then people came to me like business owners from Wall Street. They would come to the play like with their wife, because their wife wanted to go to the theater and they were watching my play. Well, they would come backstage, Keith, and they would say, Hey, man, I want you to bring this to my fortune 500 company. And I'm like, wait, what do you mean? What do you I don't this is a play. I don't take this to Fortune 500 companies. This play, you got to come to the theater. They go, No, we don't want to. I want our sales force. I want our leadership executives to learn to do what you do on stage. I was like, what? I couldn't believe it. Me and my wife, we're like, going, I don't understand what you read. They said it's the funniest thing, because typically, when you're on Broadway, the people who come backstage to see you, they shake your hand, or they get you autograph and they say, Wow, you're a terrific performer. Or what great writing. That's what they usually say, right? Not my play. They come backstage and they don't say, I'm great. This is what they say, Can you teach my people to do what you just did? Yeah, on stage, we're like, of course, because I was taught I could retrace my steps. And I can teach business people, leaders, doesn't matter the business coaches, whatever I can teach them to express themselves in front of other people, which then makes them wealthy, because in the end, I learned Keith that whoever tells the best story wins.   Keith Weinhold  27:33   Yeah, I want to get to the power of story after the break before we do that when one knows that the best that word is out there for them, I think oftentimes they're stricken with fear. Fear is a great obstacle. How do you overcome the fear from listening to you? It seems to me that your mechanism for coping with fear and becoming the best is facing it, getting in there and getting the reps.   Speaker 2  28:00   Yeah, 100% there's a great quote, the world was not created by great men, the world was created by a demanding situation where great men then rose. So we don't know our greatness until we're faced with a demanding situation. So if you're nine, you have no obstacles in your life, you're like, Wow, this is really fun. I'm living on a farm. There's pals, there's horses. What a nice life. And then Bo created his own problem. He created a declaration that said, I want to be the best safety in the world. Well, right then, right when I got creative. Now, Bo's life became a demanding situation where I had to grow strong and I had to eat right, I had to exercise, I had to run faster than anybody else. So I created all these demanding situations for my life. But that's the only way to reveal character. No NFL team is drafting anybody who doesn't have a characteristic that makes you a successful NFL player, and the only way to get those characteristics is to lose is to get your butt kicked, is to face your opposing players that's putting yourself in a demanding situation. So us, you know, as successful guys and successful gals, we kind of get satisfied and so that we forget to keep putting ourselves in demanding situations. That's where the fear comes in. Because once you're in a demanding situation, you get scared. You're like, oh, do I have what it takes to do this? And then you discover by going forward that you actually do. You do have what it takes, and fear is like a made up thing, and you start to realize that you're the creator of your own fear. So look, when I wrote the play in New York, I had never written anything in my life. Like I said, I couldn't spell good. I didn't have a computer, but here's what I did have. I had the ability, because I already did this in my life. I knew how to put myself in a demanding situation and then take a step forward. I knew how to do that based on my football career. I knew it so the principles of being the best safety in the world and being the best playwright in the world are the exact same principles. You have to have the declaration. It has to be at a standard that's way out of your comfort zone that puts you in that demanding situation. Then you have to start running the miles. Then you have to hire an expert coach that sees you clearly, and it is a critical thinker like can see you and go, Bo, stop that. Do that. Stop doing that. And do that just like a nutritionist. Hey, I want to live longer. I want to be there for my daughters when they walk down the aisle. Okay, then you better stop eating this and start eating that. You have to have these experts in your life to fulfill on your birthright of being the best. So now you just break your life down. I just broke my life down like five different times because I enter a new era, like screenplays. How am I going to write a screenplay? I don't know how. I don't understand, but here's what I do. Know how to do. I know how to work. I know how to be the best. Those principles are pretty much the same as safety and playwright. So the guy who buys my play to hire me as a screenplay writer is the greatest screenwriter in Hollywood. So he's the guy paying me, he's the guy coaching me, he's the guy looking over my shoulder going, Bo Don't say that. Say this, say less, do this. Those are just first three principles. We're talking about the best. The standard has to be sky high. Otherwise it's not going to be demanding. It's not going to require enough of your humanity to fulfill on yourself. So it's got to be there. Then you've got to take the time to run the miles to do this thing, and you cut your time in half, or less than a half, by having somebody who is an expert mentor or an expert coach. A guy like Al Pacino, a guy like Frank Darabont who just goes, Bo do this. Don't do that. A guy like Ronnie Lott, both don't do that, do this. And I just do what they say, because, guess what, they're the best in the world at what they do. You guys, those principles, I found I just keep repeating them over and over again. Now a lot of you might be saying, Bo, that's a little much for me, because I don't know Al Pacino or I don't know Ronnie Lott, and I don't know Frank darabonda. You guys, I didn't know him either. I didn't know him either, but I do know this the best in their field, whoever that is, don't say you want to be the wealthiest person on the planet. Well, the wealthiest person on the planet is more available than you think. Guess why? Because everyone thinks they're too busy and they don't ask of their time. You ask of their time. No one's asking of Al Pacino's time. Guess why? Because they don't want what he has. They want to be famous. I wasn't interested in fame. They want to get an agent in Hollywood. I wasn't interested in that. I was interested in what Al Pacino had, which was he was the best stage performer of his time. That they're willing to tell you, because they know if you're asking that question, they want to be involved with you.   Keith Weinhold  33:44   right, because you dared to ask. And they can probably perceive your ambition, and people can sense that, and they love that, and it sure can be scary to say, but fear should be your guide. You should follow your fear. We all know that that's where the growth is. It's like the gap in the game. It's been said that the gap between where we are and where we want to be lies our greatest opportunity for growth. We're talking with former NFL player Bo Eason about being the best. We're going to come back and talk about the power of story. Next. I'm Keith Weinhold. You're listening to get rich education.    Oh, geez, the initial average bank account pays less than 1% on your savings, so your bank is getting rich off of you. You've got to earn way more, or else you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to a 10% return and compounds year in and year out. Instead of earning less than 1% in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their. Investors 100% in full and on time. And you know how I'd know, because I'm an investor in this myself, earn 10% like me and GRE listeners are. Text FAMILY to 66866, to learn about freedom. Family investments, liquidity fund on your journey to financial freedom through passive income. Text, FAMILY to 66866.    hey, you can get your mortgage loans at the same place where I get mine at Ridge lending group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties, they help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridge lendinggroup.com that's Ridge lendinggroup.com   Matt Bowles  36:08   Hey everybody. This is Matt Bowles from Maverick investor group you're listening to get rich education with Keith Weinhold and don't quit your Daydream.   Keith Weinhold  36:27   Welcome back to get rich education. We're on a mindset journey today to help you level up, be a better person and even be the best.Talking with former NFL football player Bo Eason, and Bo, you're such a powerful storyteller, and I think it's a really important time to be a powerful storyteller. Trust in institutions seems to be at an all time low, from the government to the media. This is partly why the rise of influencer culture has become a thing. So tell us about how a powerful personal story can build instant trust and connection in seconds. Even when it seems like trust is at an all time low.   Bo Eason  37:07   it is at an all time low. That's what Gallup does a poll every year on trust. The question they ask is, do you trust your neighbor? And it's at its lowest it's ever been. They started this in 1972 but it's down to single digits. This is your neighbor. This isn't somebody across the street. This is this isn't somebody in the next town or the next state you know, or the next country. This person you share a backyard fence with.   Keith Weinhold  37:34   right? Like you're afraid to ask them to check for packages on your front porch when you're on a vacation or something. Yeah, the trust   Bo Eason  37:41   below. But everybody gets depressed by the statistic. I get excited about it because there is one group of us that can restore trust. It is the storyteller. It's not just the storyteller, you guys, it's the person who can share themselves personal story, not just a story, although stories, you know, work, and they've always worked for 1000s of years, but personal stories move the dial the most. Give you the most Trust, the most credibility. Personal stories like if I say to you a sentence like this, when I was nine years old, I had this dream, so I decided to draw up a 20 year plan to achieve my dream. If I tell you a sentence like that, you and me, even though it's a simple sentence, right? It's personal to me. Well, personal equals universal. Whenever you're telling a personal story, it affects your audience that much more, because your audience locates themselves inside of your story. That is the science of storytelling, and that's why you earn trust by sharing yourself personally. Now most people don't want to do that. They push back, especially business people, especially left brain, analytical type people, they say to me, Bo I'm not going to share myself, because who cares about my story? And I say everybody, you're just telling the wrong story. You have to tell it very personal and very specific to you, and it has to be a pain point. It has to be a low point in your life. That's where you start the story, because if you start at the top, there's no place to go with story. It's like, think of rocky everybody. Sylvester Stallone was a very smart guy. He was an unemployed actor, and he said, I'm going to employ myself for the rest of my life. Guess how he plays the role of Rocky? He writes the role of Rocky. Who does he put in front of him, Apollo Creed, the greatest heavyweight champion in the world, a character named after a god that's called great storytelling. He put Mount Everest in front of him. And if you notice, that's what he's always done every movie he writes. He's given himself a career because he puts himself at the base of Mount Everest every time. Well, that's where I want you to put yourself. What is your story? Where did you get rejected? It's always at a younger age. You know, Michael Jordan's story is the same as Tom Brady's story is the same story that I have, which is, we all were rejected in high school. We all were told we weren't good enough to play a high school sport. So what did we become the best in our fields? That's what always happens. That's always the story of an elite athlete. So I want you guys sharing yourselves with these stories, and these stories are kind of the ones you kind of don't want to tell because they reveal certain things about you that are kind of humiliating. But humility is the best connective tissue that us human beings have. Isn't that weird? Embarrassment is a great connective tissue success. Isn't that connective? Isn't that weird?   Keith Weinhold  40:58   Yeah, I mean, embarrassment is self deprecating. Most people like that, and everyone can relate to failing.   Bo Eason  41:05   Yep, there's three rules I live by when it comes to storytelling. You guys knew. Number one, it's got to be personal. It's got to be personal. The more personal, the richer you are. It's got to be personal. Guys, I've talked you into this, if I haven't already. Number two, you guys, if you're thinking about wealth, I would think about it in those terms right now. Secondly, it's got to be physical. Stories are physical living things, living, breathing, human things. You can't tell a story like a boring people tell stories they Well, when I grew up, I was poor, and then I walked over to the store, they wouldn't let me have a candy bar. It's boring, it's stupid. It is not physical. You have to embody the story with your physicality. You have to become your story, you guys. I know this might sound crazy to you, but the more physical you are in your life. Now, listen to me, the more physical you are in your life, the more money you make. People don't trust what comes out of anybody else's mouth anymore. They don't trust it. They trust your body 100% of the time. I wish you could see my body right now, because it is alive, and you could probably feel it even though I'm you can just hear my voice. You can hear the physicality of the residents of my voice. Now, the more physical you are in your life, the richer you are, and that's across the board. I don't care if you're a ballet dancer, I don't care if your speaker. I don't care what your occupation is. If you are physical and unapologetic about your physicality, then you're going to make a lot of money. But if you're walking around on eggshells, people know it. If you're walking around apologizing for your masculinity or your femininity, and you're like, you know, you're just half stepping everything. You see people like this all the time. What do you do with them? You dismiss them. But when somebody walks in and you turn your head, you know to look. You heard somebody come in behind you, you turn and look, why? Because they have a presence and they're unapologetic. That is a learned trait, or I should say it's relearning human trait. I've been trained by the greatest movement coach in the world, you guys. The only reason I was trained by him 17 years I was trained by him because every time I saw somebody acknowledge when they won the Academy Award an actor, they would acknowledge this guy. And I go, who the hell this guy that everyone keeps acknowledging keeps thanking for their Academy Award for some performance. I want to know what this guy's doing. I want to know what he's doing with these performers. And he told me where I went and met him. He goes, No one has ever won an award for what they said. No one it's what they did physically. That's how you win. And he's the guy who taught me well. So you guys, number one, the story has got to be personal. Number two, the story has got to be physical, unapologetic. It's so attractive when this happens. That's what I train people to do, because that's what I was trained to do. And then when all these CEOs and stuff started coming to the play, that's what they wanted, that now, you guys, they didn't know to ask me that. They just said, Can you teach my people to do what you do on stage? I go, of course, because I was taught the thing they wanted most was they wanted people to trust their sales people or their leadership team. They wanted all their employees, including them, to be physical in the world, because that is powerful. And you're going to watch this. You can watch this in elections. You can watch this in politicians. The reason they hide behind those podiums is their body betrays them. Their body betrays them. If I ever got hired to coach them, which I've always turned them down, I would put them out in the open like an animal so we can see their whole body, because that we can trust but we don't trust somebody standing behind a podium. Very critical.   Keith Weinhold  45:23   Well, there's a lot there. Yes, so much is conveyed through body language. People like decisiveness and commitment. You talk about how to make a story personal. When you had mentioned when you were nine years old, you laid out a 20 year plan for your life. When you said that me as a listener, that just makes me naturally want to lean in and ask a question about that and let you go on, for example. But when you talk about how stories need to be made personal, why don't we wrap up on how does storytelling work in business? Then say that a real estate investor is trying to attract co investors to his apartment building deal. For example, how would you use story there?   Bo Eason  46:07   Oh, yeah, great question. So many of my clients are people that raise money, whether it's for profit or non profit. They are in the business of building a company, and so they're always asking for money. Well, there's a guy used to run a studio in Hollywood, I think it was Warner Brothers, and he did an experiment. He was building a studio. So he needed millions and millions of dollars, so he went to all his rich friends, and he put a contract out in front of them. One contract only had numbers and percentages and columns written on it. Here's how much you'll invest. Tell us how much you'll make after five years all that stuff. The other contract was the same deal, no numbers, no monies, no percentages, only story, a story of belonging, a story of making a difference. He says, 100% choose the story contract, not the numbers, purpose. There's nothing. There's nothing to connect to. Yeah, I work in the finance world a lot. You guys, people, you know, high wealth, they always want to talk about numbers. And I'm like, rich people are all right brain. You know that? So every billionaire, every millionaire in the world, is right brain, not left right their right brain. But the people managing their money or raising their money are left brain. So they want to talk about numbers. And I'm saying, you guys, you can't talk about numbers, because rich people don't know what you're talking about. Rich people want to belong. They want to see themselves inside the business that you're building. So you better have a hell of a story, and that best story wins no matter what, Best Story wins. If you and me are both building a skyscraper in New York City. If I got a better story than you, guess what skyscrapers gonna get built? Mine. That's got nothing to do with money, because money is everywhere. Money's like air. It's more abundant than air and water. There's money everywhere. But what are rich people attracted to story? Why do you think they call it show business? Show, I'm the show, you're the show. You're the storyteller. The Business People bring the money to the show so rich people don't know how to make movies, they don't know how to tell stories, but they want to give you the money so that you can tell yours. Of course, that's how this thing works. That's why show and business always go together. There's a great saying rich men, when they sit down to dinner, they speak of art. When artists sit down to dinner, they speak of money. Artists sit down to dinner, they speak of money. When finance people sit down to dinner, they speak of art. So they're completing one another. You've got to be an artist. You've got to be able to tell your story, because their dreams and their big bank accounts relying on your vision of what you're going to build that makes you an artist, that makes you here go build what you've got to build here. I want to be a part of it.   Keith Weinhold  49:28   Yeah, I've never heard that before that's remarkable in using story to connect with others, something that seems to be bleeding and so badly needed for connectivity today. Well, Bo this has been great, talking about the best, talking about the power of story. You do so many things to help people in their own growth journey and to expand their own mindset. Tell us about your resource for that.   Bo Eason  49:56   You know what? Because the first thing that when I say, look. Got to find your personal story. Most people go, I don't have one. Well, that's just not true. Everybody has a story. I've worked with 1000s of people, and everyone's got a great, dramatic story. They just don't know it. So I'll send you a free story guide. It's a video course. It's going to give you some prompts, and we're going to find your powerful, personal signature story, so you can begin to use it today. So all you got to do is text me. So text PERSONAL STORY, the word PERSONAL STORY, one word personal story. Text that to this number, 323-310-5504. that's text. Personal story. One word, personal story, to 323-310-5504, text me that, and I will automatically send you a story guide. To start to uncover this thing,you'll start to realize, Wow, I do have a cool story that I can begin to tell whether I'm in the Oval Office or whether I'm in front of 1500 people at us in a speech, you can open with your personal story. It works and it attracts people to you. If I was in your guys shoes, you're interested in building wealth. Me too. If I'm building wealth, guess what? I'm beginning with personal story, and then I just get to go right to the top, because people are only interested in other people who have a vision bigger than the people have for themselves. And that's you. That's you. And your personal story, you have a vision that is bigger than the people have for themselves. If you can do that, guess what? People got to buy into that, they got to invest in, that they got to be around that. They got to marry that.   Keith Weinhold  51:47   Oh, you're so right. I really think this is going to help a lot of our listeners. You the listener, you probably have several good stories inside you, and Bo can really help bring them out, who have the benefit of seeing him on video, he's a really powerful speaker. I've had that same benefit of seeing him on video. You've only listened to him so far. Check out his resource if you think you can benefit from it. Bo, he said, It's surely been valuable. Thanks so much for coming on to the show.   Bo Eason  52:15   Keith, thanks for having me.   Keith Weinhold  52:23   Oh, such sharp insights from a motivating guy, Bo Eason, this week. And hey, if you have kids, are you going to wake them up by hard, rubbing their back in the morning and telling them you're the best? Well, it seemed to work for a little review about what you learned. Bo talked about how the standard is the gold medal, not the end goal, but that the gold medal is actually the standard. That's his mindset. So Bo made sure he met Al Pacino. When they got dinner, he found out that Pacino was the best, so he sought out the best and made sure to get around him. And a lot of people are scared to do that or even ask about the best. And, you know, I just can't help but think that that's like my life experience with women. In high school, I was just so shy and deathly afraid to ask anyone out. But in college and beyond, you know, sometimes I would ask out the most attractive woman, and they would usually say no, but, you know, I can't believe some of them actually would say yes. And see, the more that you do this, the more confident you get. And women like confidence, and can feel that coming from you. And then, so therefore your fear dissipates and it becomes easier to overcome. You have a unique fingerprint in this world, and you yourself. You do have an interesting story. I just know that you have it in you, but the chances are you've never even told your highest and best story to one other human being on this earth, not even once, and perhaps I haven't either. Bo said his stories need to be personal, physical and unapologetic, and his video, course, helps you find your personal story. And if you didn't catch that again, you can get it by texting one word PERSONALSTORY to 323-310-5504.    Coming up in future weeks here on the show, it's probably Yeah, more left brain strategic real estate investing content than right brained emotional content like today's show. But one right brain topic coming up on the show that I want to share with you. I want to tell you why, as a society, we hate Amazon founder Jeff Bezos, because he's wealthy. But yet, society does not dislike wealthy singers like Olivia Rodrigo, Taylor Swift and Dua Lipa. We love them even though they're wealthy. We. Don't resent an actor like Robert Downey, Jr for making $600 million as an actor in the Marvel Cinematic Universe. So it's all about why we vilify successful entrepreneurs for their wealth, including landlords, yet somehow we glorify successful actors, athletes and entertainers for being wealthy. It's a case study that I've been working on. I shared some of it with our newsletter readers last week, and I'll have more on that here on the show. Signing off from the Grand New Orleans investment conference, the nation's longest running investing conference. I'm your host. Keith Weinhold, don't quit your Daydream.   Speaker 3  55:43   Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively   Keith Weinhold  56:03   The preceding program was brought to you by your home for wealth building get rich education.com.  

Keith discusses trends in the housing market, including the rising average age of first-time homebuyers and the mix of markets seeing price increases versus declines. He analyzes the potential impact of the incoming presidential administration's policies on real estate, particularly around inflation and interest rates. He is joined by Investor, Co-Founder and CEO of Family Freedom Investments, Dani Lynn Robison to highlight high-yield investment opportunities available, including up to 10% returns. Home prices have fallen in six US cities. The average age of a first time homebuyer rose to an astounding 38 years old. Discover the top 10 states with the highest home price appreciation over the last 40 years. The Trump Effect. To learn more about Freedom Family Investments.  You get paid first: Text FAMILY to 66866. Show Notes: GetRichEducation.com/528 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com GRE Free Investment Coaching:GREmarketplace.com/Coach Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review” Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai  Keith Weinhold  0:01   Welcome to GRE I'm your host. Keith Weinhold, home prices have fallen in six US cities. The average age of a first time home buyer soars to an astounding 38 years old. Then we take the long view breaking down how real estate is up a jaw dropping 490% since 1984 the Trump effect on real estate, then how you can earn an eight to 10% cash on cash return, hassle free. All today on Get Rich Education.   Speaker 1  0:36   since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com   Corey Coates  1:21   You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  1:38   Welcome to GRE from St Louis, Missouri, to say Luis, Obispo, California, and across 188 nations worldwide, even Uzbekistan. I'm Keith Weinhold, and you are inside. Get rich education every week. It's the show where I pretend that I'm not wearing pajama pants while here on the microphone. Hey, if you want to get rich, then focus on one thing. If you're already there and want to stay rich, then that's the point in which you want to diversify, because then you're already living your Daydream and you don't want to lose it. We'll talk about President elect Trump later in this week's show, and what it means for the future of the real estate market.   Donald Trump  2:20   Thank you verymuch. So this outfit you know is when they when he called us all garbage. How stupid. What a stupid word. That blows deplorable away. Don't you think.   Keith Weinhold  2:21   well, our content will surely be more substantive than that funny piece I expect to host Donald Trump here on the show for you in the future. After all, let's not forget, before politics, he was most known as a real estate investor, but he's going to be busy for the next four years, so it could be a while until you see him here, before we get to the Trump effect. Last week, the NAR released their annual report. It's called the profile of buyers and sellers. My gosh, what a surprise when it revealed that the average age of a first time homebuyer rose to an astounding 38 years old. 38 I mean, we're not talking about a person that's like, severely underemployed or something. We're talking about the average here. So for many, I mean, they are still a renter into their 40s. That is common now. I mean, at this rate, pretty soon, are Americans going to become homeowners once they hit retirement? I mean, my gosh, is that where we're headed? Or when one looks at their rites of passage, the milestones in their lives, will one achieve grand parenthood before buying a first home? Where are we going here? Not only is 38 years old, the all time high, as you might have expected, but that is up from age 35 just last year, amazing. And like I've discussed before, of course, the major reason that that age is up is due to lower affordability, and that's from higher prices and higher interest rates. The housing shortage is another factor here too. And all right, if that's not enough, the average age of us homebuyers, okay, this is just overall homebuyers, first timers and everyone else. That was 49 last year, and this spiked up to 56 this year. 56 and now back to first time homebuyers, the average income has also hit an all time high, $97,000 that is the average income of a first time homebuyer now. So what's important to keep in mind here is people are going to have to rent longer they're already. Renting longer. And some will choose to rent longer as a preference, and for others, they must rent longer. You can be the one to provide them with this rental housing, not the big hedge funds doing it, not private equity doing it. Invest in real estate. These trends mean higher occupancy rates and upward pressure on the rent amounts that you're going to be able to charge over time. I mean, this is demand, demand, demand for rental housing. They wish that they could buy that $300,000 starter home in the Midwest in southeast, but they have a hard time affording the down payments and qualifying for the loan they're after so you can rent it to them and be a profiteer longer. However, right now, there are six US cities where home prices are falling and now these are pretty mild corrections, but let's see if you can guess what the top reason for this is the number one reason about why these prices are falling among the nation's 50 largest metros. These are the six cities that have seen price corrections. New Orleans leads the way down the most down 4% Austin, Texas is also down almost 4% San Antonio down 2.7%, Tampa, Florida down one half of 1% Jacksonville down three tenths of 1% and then finally, Dallas, Texas, also down three tenths of 1% and in fact, I am visiting three of those six cities during a 10 day stretch that I'm on right here, right now. Over the weekend, I was in San Antonio, Texas. Today, the mobile GRE studio is in effect again, as I'm bringing you today's show from here in Austin, Texas, where I'm spending four days, and then I'll be in New Orleans in two days here. Well, the top reason for these falling home prices is in a word, supply. In fact, it's an oversupply in a lot of these six cities. And again, those six are New Orleans, Austin, San Antonio, Tampa, Jacksonville and Dallas. In fact, here in Austin, they are a, basically a national leader in over supply, they simply overbuilt, and it's going to take some time to absorb all that they've built. In fact, due to overbuilding, you've even got rents falling here in Austin, and I may look at some vacant apartments while I'm here to get the temperature of the market. Now, for some context, understand, though, that I spotlighted six falling markets out of the 50. All right, well, what about the other ones? Yes, that indeed means that 44, of America's 50 largest metros have seen year over year price increases, and one big reason for that is that many metros have housing shortages. Shortages are the norm, and by the way, all these figures are per the Zillow home index. In fact, a number of markets are up over 4% 5% 6% year over year, and the leaders all have seven to 8% year over year. Home price appreciation, they are San Jose, Hartford, New York City and Providence and a lot of the appreciation leaders are, yep, under supply, the opposite of what I'm seeing here in Austin.    Now, before I get to the headline of this week's episode, how national home prices were up a breathtaking 490% over the last 40 years. Let's talk about the Trump effect. It's still two months before Donald John Trump will be sworn in as a 47th president of the United States, and like macroeconomist Richard Duncan and I touched on on last week's show, Trump loves tariffs. Everyone knows that, and a tariff is like a tax on imported goods. Now follow along here. Higher tariffs mean then higher consumer prices, because the company or manufacturer has to pass that cost along to you. Higher prices means inflation. Higher inflation means that the Fed tends to keep interest rates higher longer in order to combat that inflation. So a Trump presidency means higher inflation in interest rates. Again, yes, at least those two things are correlated. And now think this through. Do you sense some cognitive dissonance here, under Trump's first term, back from 2017 to 2021 he wanted lower interest rates, and Trump was like highly vocal about how he wanted Jerome Powell to keep rates low in order to keep the economy healthy so the higher rates that Trump Tariffs are expected to bring then versus the lower rates that Trump wants is dissonant, incongruent, not in harmony. Bitcoin surged on the news of a second Trump presidency, because Trump is pro crypto. No see treasury yields, they also spiked upon the Trump presidency news just two weeks ago, I explained here on the show why higher inflation means higher treasury yields, which means higher mortgage rates. And it turned out that that was quite a timely explanation. The Trump election can mean a lower tax environment. We are hopeful that Trump will extend bonus depreciation, a really nice tax break for real estate investors. We could see some federal lands repurposed for housing construction. Trump said that he wanted to do that in order to add more housing supply. And no, don't worry. I don't think they're going to shut down and pave over Yellowstone and plug Old Faithful Geyser or anything like that. Okay, there's a lot of federal land that's, I guess, less remarkable, land that's being grazed on, and land suitable for more housing. Look for more move to loosen up zoning and regulation, and that's something where you'll find bipartisan agreement we've got to build to address the housing crisis. I mean, Trump has actually called zoning a killer, like he used that phrase you might see Trump extend the opportunity Zone program as well. The result could be more apartment construction in some of these blighted or low income urban areas, no matter what, and no matter who our president would have been. I mean, you're still gonna see housing supplies struggle to keep up with demand, because you just can't build fast enough. And you know something here, you never really know the future. People always want to speculate about the future that can be worth talking about. And you know that makes people think that they have the answer, but they're often wrong about one thing leading to the other, like how tariffs will end up meaning higher mortgage rates. I mean, you just don't know that for sure. Policies can change. Promises might not get followed up on, Black Swans can interject, and interest rates are one thing that are just wildly difficult to predict. And if you ever want to make another person look wrong, like if you desire to do that, here's all you need to do, ask them where interest rates are going to go in the future, and make them put that in writing. Okay, that is a guaranteed way to make somebody wrong. So everyone wants to know the future, but you've got to think through this in terms of probabilities and not certainties.    Now here's something encouraging, California voters, they shot down rent control expansion, though you might live in California, we are not exactly passionate about investing in California property for pretty well documented reasons, but sometimes things that start in New York and California in those particular states, they can expand to the nation. So it's worth paying attention to some of these things, and California voters resoundly rejected what is known as Proposition 33 rent control expansion. Almost 62% voted no on that. So you've got bipartisan alignment on how rent control backfires on renters in this was the third time in six years that California voters shot down rent control expansion. Great. That is great because rent control, it's not good for you, the investor, long term. It's not even good for the tenant, and it's certainly not good for the community either. I mean, they are collectivist state price controls.    Well, let's look at another place where prices are not being controlled for sure, and that is the fact that overall, US home prices have appreciated a whopping 490% since 1984 Yes, 490% over the last 40 years, therefore almost a 5x price increase. Let's break this down, and then I'll tell you what it means for the future too. This is the shift in US home prices from August 1984 to August 2024 so therefore it starts from mid Reagan presidency, when the median home price was $81,000 at that time. Okay, so this is our starting point, 1984 that's the year Ghostbusters hit movie theaters. Kareem Abdul Jabbar broke the all time NBA scoring record. And shows that debuted on television that year were Miami, Vice night, court, punky, Brewster. Are Charles in Charge? Have you heard of these shows? Another TV oh boy, another TV show that debuted in 1984 Well, Chase, are you ready for this? Let me give you a hint, Temple University. And how about jello? Pudding pops? Yes, I'm talking about the Cosby Show, which just feels kind of different to talk about anymore, ever since Bill Cosby's illicit misconduct there. And no, we are not going to play a snippet of the Cosby Show theme music. Please don't play it. You know, we totally do something like that here, but we're not this time. Okay? Well, with home prices surging and astounding 490% since that year, 1984 Okay, let's break down the areas that have appreciated the most and least and see what that means. And you might remember that in our newsletter, I sent you this map that shows the level of each individual state's 40 year price search. Oh, this is great. It's just the best real estate map I've seen in a while. What it shows is that coastal states are where home prices have risen the most. In general, the top 10 in appreciation in order are Washington State up 810% yes, that's more than 8x in the last 40 years. The next highest home appreciation over the last four decades in order is Oregon, Rhode Island, California, and then it's Hawaii, Montana, Massachusetts, Maine, Idaho. And 10th is Utah, all right. Well, why have coastal states had this higher real estate run up over time? Well, it's where building constraints exist that limits the housing supply. That's both geographic constraints, like, for example, the ocean's edge literally limits build space there. Well, the coasts are also where you tend to have more building regulation. Coasts are where incomes have risen the most those residents can afford more for housing. So home prices are then higher. I mean, just look at the leader Washington state. That's where you've got the headquarters for Amazon, Microsoft, Costco, Boeing, Starbucks, Expedia and more. They're all there now, taxes, though, they do tend to be highest in coastal states as well, so you're paying more for property, and you're also paying more in all types of taxes in a lot of cases. And as we know, rental properties usually don't work as well on the coasts, coastal rents haven't risen as much as home prices, and these places, they tend to have those laws and regulations that often favor tenants over landlords. And if you're looking at the map here like I am, you're going to note that some Rocky Mountain states have flexed their appreciation muscles as well. Now, Tennessee and the Texas triangle, they kind of decided to join the appreciation party fashionably late, as you look over 40 years. Yes, Tennessee and Texas, they really only started their big appreciation climb about a decade ago. All right, so those are some of the big winners every year since Punky Brewster debuted on television. Well, with today's rise of remote work and lower home affordability, the nation's interior, that's what looks increasingly desirable for property ownership the Midwest, the Great Plains, parts of the south and parts of the inland northeast. That makes these areas look like comparative deals where prices haven't wildly run up over the decades. And though you hear about return to Office policies, because a few major companies announce these return to Office policies. I mean, remote work is still up fully 15% year over year, and housing preferences are shifting as employees look to suburban Metro outskirts for more affordable homes so they're freed from the need to factor in these lengthy commutes in their lives like they had to previously. Now, among states that don't have strong in migration, one that could really shine is a place like Ohio. Ohio has appreciated less than most states still at 334% over the past four decades. Again, 490% is The National number. Ohio boasts tons of diverse industry, a low cost of living. They've got the seventh highest population in the nation. They have a stable population count for rental property owners. It has strong laws favoring landlords and Ohio. Is just a day's drive from half of North America's population. All right, so a smart listener like you is probably asking yourself a question right now, like, Okay, how does this 40 year stretches 490% rise in national home prices compare to inflation, and how does it compare to incomes? Over this time there's been 201% overall inflation and us, median household incomes have risen 260% and yeah, that 201% inflation number is suspect, just like most any inflation figure is inflation could certainly be higher than that, because most inflation measures likely understate the true diminished purchasing power of your dollar, and see the 490% rise. Although it sounds like a staggering number, and it still kind of is. It's also like, well, of course, it takes almost five times as many dollars to buy a home today, because each dollar's value is way down. What else has changed in the last 40 years? Well, houses are larger now than they were then. The median home size has grown 150% since 1980 and at the same time, the family size is smaller, fewer people live in each home, so everyone has more space. And I discussed those types of things in detail with you before, so I won't get into all of that again. Today's homes have better amenities too. So really, the point is, if you are paying more on an inflation adjusted basis, you are getting more and it's also more likely that two parents are working today rather than one, in order to make those payments more affordable. And that fact right there that is not a great lifestyle outcome. Another way to say it is that it takes two to afford a home today rather than one. But yet, hey, that is society. All right. So with that understanding, let's look at the future. I completely believe that real estate values can soar another 490% over the next 40 years. I mean, even 600 or 700% is not out of the question, and there are a lot of reasons for this. I mean, chiefly, we're starting from a base here of a low housing supply, and we've got strong demographic demand, and we can almost certainly expect more monetary inflation the next four decades. The inflation rate is the one thing that nobody knows. 40 years ago, mortgage rates were 14% today, they're only at about half of that level. And see today's median home price of over 400k like that figure would have seemed unfathomable to people back in 1984 but indeed, the price nearly 5x So similarly, another 490% or about 5x again, means that it is completely fathomable for the median us home to cost $2 million in another 40 years. That's about 5x of today's prices. And although that might sound unrealistic Now, that sounds just as unrealistic as today's price did to anyone from 1984 so really a super interesting way to think about home price appreciation. There, you might even make the case that home values, not prices, home values, they're not up that much at all. I mean, most of that is just that prices have adjusted for inflation, the value is about the same, although I'd still say that the value is up somewhat. So really, that's my thought there, and I duly regret bringing Bill Cosby into this whole thing. I ruined it.    I've been coming to you here from Austin, Texas, where I've been checking out the real estate market. I've got more for you straight ahead. It is a really profitable idea. I'm Keith Weinhold. There will only ever be one episode, 528, of the GRE podcast, and you're listening to it,    oh, geez, the national average bank account pays less than 1% on your savings, so your bank is getting rich off of you. You've got to earn way more, or else you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to a 10% return and compounds year in and year out. Instead of earning less than 1% in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full or. And on time. And you know how I'd know, because I'm an investor in this myself, earn 10% like me and GRE listeners are. Text FAMILY to 66866, to learn about freedom. Family investments, liquidity fund on your journey to financial freedom through passive income. Text FAMILY to 66866    Hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group  NMLS. 42056, they've provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridgelendinggroup.com, that's Ridgelendinggroup.com.   Robert Kiyosaki  26:05   this Rich Dad, Poor Dad. Author Robert Kiyosaki, listen to get rich education with Keith Weinhold,and there is I respect Keith, He's a very strong, smart, bright young man.   Keith Weinhold  26:25   Welcome back to GRE. We are grateful to have on the show today, the co founder and CEO of the whole operation, Freedom family Investments. They are seven, soon to be eight. I just learned real estate centric companies based in Centerville, Ohio. The other co founder is her husband, Flip, whom you've heard on the show before. Hey, it's terrific to have back. Danni-Lynn Robinson,   Dani-Lynn Robison  26:50   thank you so much, Keith. I love talking to you.    Keith Weinhold  26:54   It's the same here. You've been in real estate since 2008 and one of the things that you do is you have this perfect track record of always returning capital to your individual private investors, loans that they make to you, and paying 100% of the returns as promised, even if you yourselves end up losing money on a particular deal. And in fact, you the listener, you probably heard me talk about how I personally participate for a high yield return with them myself, with Danny Lynn's company backing me. You've heard that ad near the middle of GRE episodes, and you yourself can do this too. Individual investors can get a high yielding return, and it's paid to you as cash. So Danny Lynn, tell us about how it works. Generally.   Dani-Lynn Robison  27:40   I love that you started off with that particular statement, because I will tell you that every time I've been on a podcast of yours, the number one thing I hear when people get on the phone was you said on that podcast that even if you lose money, that I still get my return. And I have never heard of that before, so tell me more. So that was a perfect lead in because I think that what we're trying to do is just do a very good job of serving the people who help us build so as you said, we're on company number seven. We're building company number eight. And the reason that we've gotten to the stage that we are today is because we've had private lenders and people who invest in our syndication, our Master notes and our funds program, that investment has allowed us to buy properties, flip properties, buy apartments, flip apartments, and allowed them to get a return at the same time. And I've talked about the fact that we do volume as we've grown, we'll do 10 deals in any given month, and maybe one or two of them are like we find something, you know, in the wall that we didn't expect. Maybe we walk in and the past tenant left it in shambles and caused more damage to the property than we anticipated when we first went in. That's the nature of real estate, and that's the risk you take when you're an active real estate investor. So we knew when we were building our businesses that if we just did volume, that was going to happen, and we weren't going to run away from that fact, or take risk upon us or our investors by not mitigating it, by not doing volume. So you'll see situations where somebody does one flip a month, and that happens to them, and it's catastrophic when you're doing 10, and it happens which it will then you know that the other eight are going to bring the profit in. And so that it is easy for us to say, Thank you, Keith, for investing in us. This particular deal. We didn't lose any money on, but these eight we made a lot of money on, and that ensures that we can always pay you back in full on time, even if we lost money on a deal. And I think when that is explained to people on the phone, they start understanding why we can pay back everything as promised, even if we lose money, because we are still profitable as a company. And so that process of doing volume and having people. People trust us with their funds. As we've grown, has allowed us to get to Company Number eight, because, as we talked about right before we press record, one of the best things for us, Flip says, I love being Santa Claus. And Santa Claus is when you get that email or that check in the bank account that says, I just made money and I didn't have to do anything. I just partnered with Flip, Danny and the freedom team to do what they do already. I provided the money. They did the work. We all won together.   Keith Weinhold  30:29   Why does no real estate rehabber ever find gold bars behind a wallwhen they go in in order to turn over a property? Right? It's usually, you know, evidence of a leak or something bad, usually not something good going on back there. But yes, you do this volume across all these companies. So therefore, when you do find a leak behind a wall, and that particular deal didn't work out for a 100k rehab home, it sure can't bring down the entire operation. Danny Lynn, I've invested with you in your private money lending program for years now, and just been very open with my audience. I've let them know that I've been receiving an 8% return from you paid in cash. But one reason I'm having you back now to help our audience is because you now offer yields up to 10% so even better than when I got in. So tell us about that.   Dani-Lynn Robison  31:24   So we are always having conversations with our investors about what's going on in their investing journey, what are they looking for, and we want to create those win wins. And right now, with everything that's going on in the market, what we learned is liquidity is one of the most important pieces, because there's here, there's some uncertainty, and people want to invest. They don't want their money sitting idle and losing, having an eroding to inflation. They want to put it to work, but they want to have access to it. And so we have been changing and tweaking our programs to meet the needs of our investors, and making sure that we are buying properties that can then have that arbitrage to get us the profit we need to pay back our investors, but while we're still making a profit many times right now in this market, that does mean we're buying multi family properties, because there's so many different advantages to multi family properties, it does take a lot of underwriting to get there, but that's where, for the last, I would say, six to 12 months, we've been really focused in on that in order to increase the returns and have everybody just creating that win win.   Keith Weinhold  32:32   I'm really glad that you talked about multifamily properties, because I've talked with the audience about how the sector is beaten down. In a lot of places, you can get 30% discounts on multifamily apartment buildings, and we know that the long term demand is going to be there for occupancy in apartment buildings. Demographics is destiny, and we talk about this timing of having you on and now you're offering up to 8% discussing this, say, two and a half years ago, I don't think the timing was as good. That's when CPI inflation peaked at 9.1% so you really weren't getting a real yield. You need to subtract inflation from your yield in order to get a real return. And now you're getting a substantial real return. Since inflation is near 2% top online savings accounts, those top interest rates, they are falling with each successive federal funds rate cut, and most expect that those yields are going to continue to fall. People invest in bonds all the time, but the yield on the 10 year T note has been around 4% or quite a while. You don't have to settle for yields like that. And Danny Lynn, I love that you brought up the word arbitrage. This should be an arbitrage play for you the listener. But of course, for Danny Lynn, it needs to be an arbitrage play as well, because if she and her family of companies over there are paying you a yield of up to 10% they need to make arbitrage ontop of that themselves. And if you're a new listener, you might be skeptical of how you could reliably do that in real estate, but when you understand that real estate pays up to five ways at the same time and 30 to 40% total rate of returns without inordinate risk, are not dream land, the reality you can begin to understand the arbitrage. But Danny Lynn, can you tell us a bit more about how you do create that arbitrage to reliably pay a return of up to 10% How do you yourselves beat that in there?   Dani-Lynn Robison  34:26   That's where it comes down to multifamily. For us, the single family market has slowed down a little bit, and so multifamily is enabling us to do bigger things. But on a long term basis, we've built our companies up enough to a point where we are businesses are producing the cash flow that we need so we can pay our investors a higher return using the cash flow of the properties, and our long term wealth as a company is coming from down the line of the appreciation, especially in multifamily, the forced appreciation, and that refinance and that when. Fall. So everything that we structure is preferred returns, meaning we always pay our investors first and we come last when it comes to multifamily, those five ways start to compound over time, and that's what we really win, is because we know we're waiting, but we're waiting for a big return in 3,5,7, years. Sometimes we're waiting 1020, years, and our investors in the meantime are getting a really nice return better than they can in most other places, because we're willing to forfeit our current returns in this scenario, because our other businesses are producing the cash flow that we need.   Keith Weinhold  35:38   That's terrific. Tell us a bit about the program details. Then how is this note? Right? Because the investor, as soon as they make an investment with you, they do hold on to a note. Just tell us about how that's secured before we get into the details.   Dani-Lynn Robison  35:53    So it depends on the investment opportunity. Some investments are going to be secured by a note by the property. Some investments are going to be secured by a note by the business. Some investments are going to be secured by the fund itself. You're an actual owner, like or the syndication, an actual owner of what that fund is participating in. So every piece of security is a little bit different. So when you jump on the phone with us. We're asking a lot of questions, and the number one question that we ask is, what are your goals? Because if you do want liquidity, we know exactly where you're going to go. And some people are wanting liquidity for peace of mind, so that they can earn a higher return, but have access to the cash if they want it. Some investors are saying, Hey, I know there's about to be a lot of opportunities. So I want my money earning for me, but I want to be able to grab it, to be able to invest in these future opportunities that are going to come my way when I want access to the capital for that reason. Then there's other investors that are set it and forget it. Look. I like you guys. I trust you guys. I've vetted you guys. I've done my due diligence on you guys. I want to sit my money in there for three, five years. Some want tax benefits. And so what we do is we have, like, this table of investments with like, little check boxes. And as people tell us their goals, we're like, okay, they're there. They're by the end of the conversation, we're saying, here's the two investment opportunities we think fits what you like and what is going to meet your needs? What do you think? And then we start going with question and answers back and forth so they can fully understand it.   Keith Weinhold  37:27   We're talking about how to get a high yield paid to you regularly in cash with Danny Lynn Robi son, co founder of freedom family investments. Yeah. Danny Lynn, why don't you tell us then about this up to 10% return. But you do have some option based on people's needs for the duration of the investment, which gets into the liquidity and the minimum investment amount and being accredited versus not accredited. So tell us about some of those distinctions, differences and trade offs.   Dani-Lynn Robison  37:55   There's the accredited and non accredited piece, which is really the first piece that you should be talking about when you jump on the phone, because the answer to that question depends on where, like we first check the box of which investment opportunity is going to be right for you. Accredited investors can invest in both. Non accredited investors can only invest in non accredited options. So accredited, I'm sure you've explained many times on the podcast, is a million dollars net worth, minus your primary residence, or earning $200,000 for the last two years, and you expect to earn it again. Or if you're a married couple, earning $300,000 a year for the last two years and you expect to do it again, that would be an accredited investor. So if you qualify there, we've got multiple opportunities. Then if you're wanting liquidity, then, again, that's a checkbox for us that says liquidity fund. That's where you want to be learning more about you want to learn about those interest rates the liquidity fund is seven, eight and 10% based on how long you want to put your money to work. So some people say, hey, one year is good. That gives me exactly the liquidity I need, and that's going to give me a higher rate of return, which is 8% some people think three years is liquid. It's interesting to me, what people perceive as liquid, because anybody who's invested in a syndication knows sometimes that's five, seven and 10 years. So they view a three year investment at 10% Hey, that's liquid to me. I didn't have to lock it up for five, seven and 10 years. And then some people, 90 days is liquid. And so we have the liquidity fund seven, eight and 10% depending on which class you want to go in, 7% is 90 days, 8% is one year. 10% is three years. That's for accredited investors. We have our masternote program, which is for non accredited investors, that is 8% for two years, and 10% I think, for three years, and then we have Lincoln village, and that one is closing soon. I think we're at the final $1 million to raise. That is 12, 13, and 14% but that also includes tax benefits. The end, it is a five or probably seven year timeline, because it's a 48 unit apartment in Columbus, Ohio, if we refinance in three years, yay. Everybody wins. But I always set expectations it could be a longer timeline. And so those are the main opportunities that are available based on accredited, non accredited and your returns.   Keith Weinhold  40:20   Well, the yield on the 10 year T note is 4% but here, the yield on the one year private note is substantially higher. Well, Danny Lynn, do you have any last things to tell us before you let us know how we can learn more?   Dani-Lynn Robison  40:34   I think what's important is a trust. When I'm on the phone, I get three questions. Where do I start? Which path is right for me and who do I trust? And one of my biggest investors says Danny, I think number three question of Who do I trust is the most important one. So I think it's really important to get on the phone to ask questions, to ask, Hey, what didn't I ask that I should have asked? What should I know that I don't know? Because sometimes you don't know the right questions to ask, and so we have this graph of all the things you could be looking for in an investment that people don't even realize might be very important to them. So I think what is most important is just taking the first step of starting the conversation. Once you start the conversation, you start to learn, you start to get educated, you start to understand what your true goals really are, and then you can make an A confident decision, as opposed to what many of us do is, you know, sit on our hands for a little bit because we're just nervous. We're so nervous about losing money or we don't know who to trust, and we're so busy that a year passes by and we just didn't take action. So I just encourage people a 15 minute phone call might change the game for you and allow you to get started   Keith Weinhold  41:45    right indecision really is a decision in itself, a decision to not do anything and have some of your cash be atrophied to inflation. Tell the audience how they can learn more   Dani-Lynn Robison  41:58   They can text the word FAMILY to 66866 and that is going to connect you with our team, and we're going to reach out, hopefully, set up a call and get that conversation started.   Keith Weinhold  42:09   Oh. Danny Lynn, this is going to help a lot of people. Thanks so much for coming back onto the show.   Dani-Lynn Robison  42:13   Thank you, Keith,   Keith Weinhold  42:14   yeah, well, I think you know that I'm more of a borrower than I am  lender, but I'm a lender in this case. So for liquid funds, this has been a reliable source for an 8% liquid return without any hassle. I mean, it's about as passive as it gets. Of course, when you store money in a bank. You're giving the bank a loan as well, even though you might not have thought about it that way. Well, if you're looking for something a little less liquid, like a three year investment duration, you are going to get a higher return than 8% here. There are good options here if you're accredited or not accredited, and you don't have to invest in one specific apartment project either, like Lincoln village that Danny Lynn mentioned, and over there at her company, like she said, yeah, those are the three questions you can ask. Where do I start? Which path is right for me, and who do I trust? And on the phone really part of that second question, which path is right for me can be to ask Danny Lynn's team about how to get this highly passive return in the most tax efficient way for you.    There's so much vital content coming up here on the show in the future. Next week, it's the first time we'll have a former NFL player on the show is we'll discuss success principles that you can use in business and life, highly motivational stuff coming there in future weeks. So much more economics and real estate investing. Content is coming, including I've got an analysis of online search results, and you'll see what amenities tenants are really searching for today when they look for rental housing. And of course, as the year gets closer to the end, next month, I am going to reveal GRE 's home price growth forecast for 2025 and just as importantly, I will follow up with last year's prediction too. We'll look back at it and then see how it really turned out for high yield returns on your savings. You don't have to settle for disappointing interest rates where you spin your wheels because you're barely beating inflation. Learn more. Set up a call. Just text FAMILY to 66866 I'm your host. Keith Weinhold, don't quit your Daydream   Speaker 2  44:45   nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential. For profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.   Keith Weinhold  45:13   The preceding program was brought to you by your home for wealth building. Get rich education.com you

Keith discusses the current state of the US economy, noting that while it is considered strong by conventional measures, there are four major threats on the horizon that the country is not doing enough to address. He’s joined by our guest, macroeconomic expert, Richard Duncan to discuss these topics. Richard proposes a solution that could strengthen the US's competitive position against China. Shifting from Capitalism to Creditism. Also, hear about the risks facing the real estate and stock markets in the near-term, such as the historically high wealth-to-income ratio and the ongoing quantitative tightening by the Federal Reserve. Learn more about Richard’s work through his video newsletter, Macro Watch. Use discount code GRE for 50% off at: RichardDuncanEconomics.com Show Notes: GetRichEducation.com/527 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com GRE Free Investment Coaching:GREmarketplace.com/Coach Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai  Keith Weinhold  0:01   Keith, welcome to GRE. I'm your host. Keith Weinhold, per conventional measures, today's us. Economy is strong, but there are four vicious threats on the horizon, and we're not doing enough about them. Our macroeconomist guests will discuss that with us today. How alarming is it, and what's the solution to our crises, this week on get rich education,   Speaker 1  0:27   since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, who delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com   Corey Coates  1:12   You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  1:28   Welcome to GRE from Fort Wayne, Indiana to Fort Lee New Jersey and across 188 nations worldwide. I'm Keith Weinhold, and you are back inside get rich education. We've been here for you, every single week since 2014 coming off of an election last week, this spurs more macroeconomic thought, monetary and fiscal policy, and more than that. And you know, one thing that I'm always looking for are signs of inflation versus deflation, because we live in a long term inflationary world. Well, you wouldn't keep a million bucks under a mattress because it would only be worth 300k in a few decades. But in deflation, you would flip your strategy and actually be a saver. You might keep millions out of the mattress, because deflation would actually increase the purchasing power of every single one of your dollars. Now, I've got a pretty unpopular take for you here at some point, probably now you've got to give the Fed credit for a soft landing. And what does a soft landing mean? Exactly. It means bringing down inflation without putting the economy into a recession. Well, inflation is down to about 2% now, unemployment is still low, near 4% and GDP growth for last quarter came in at 2.8% okay, yes, I sure understand that those benefits are distributed unevenly, but at this point, how much more of a soft landing Do you really want? And by the way, this sure doesn't mean that I love the Federal Reserve. I mean, they get no credit from me for not jumping on inflation sooner, when it peaked two and a half years ago, or even before that point, well, those high consumer prices as a result of that are still with us, and that's a problem, and they got that part wrong. We're about to talk with our global macroeconomic expert, really. He is one of the foremost authorities in the entire world today. We're going to talk about four major catastrophes the US economic future faces. One of those four is our ballooning national debt and deficit. And to review that for you, first, the debt is our overall accumulation of debt over the years now at 36 trillion. And when it comes to these awful, dreadful debt and deficit issues, I will ask our guests the question, when is it game over? Where is that tipping point? What would need to happen and the deficit? Okay, that refers to the annual shortfall, the annual thing, that shortfall that our bloated government keeps coming up with at the end of every year, all right, so therefore revenue minus spending equals deficit. Another way to say that is income minus expenses equals a deficit when the expenses are greater than the income. Well, that figure is near $2 trillion we're spending 2 trillion more than we raise in revenue each year. And here's an example. I'll use real world numbers rounded off to the nearest trillion. So if the government's annual revenue is only 5 trillion and you have to subtract out spending, which is 7 trillion, that could. Gives us an annual deficit of 2 trillion, pretty simple stuff, and that more or less gets added onto our overall debt of 36 trillion. Another major problem is this growing competition from China. Yes, I know that people like to discuss their demographic problems, but still, their population is more than four times the US population, and you learn about what other advantages they have over us and what we direly need to do to catch up. In our guests opinion, these issues incur some rather detailed explanations. So I'm really going to let our guest expert takeover for a while today, this weekend, I will be in San Antonio, Texas. San Antonio is an uptrending real estate market because they are really a beneficiary in distribution with their proximity to Mexico in the near shoring movement that's taking place. And then I will be in Austin, Texas, for a few days, Austin is one of the few major US metros that have seen rents substantially decline recently. I'll bring you next week's show from Austin, where I might talk more about that. Then, from the 20th to the 24th of this month, I'll be in New Orleans at the famed New Orleans investment conference, where they're pulling out all the stops at the 50th anniversary of the event, and that is the longest running investment event in America and perhaps the world. I hope to meet some of you there in New Orleans, just like I do each time I'm at the event. Let's talk about the bigger picture economy that your real estate and investments float within next.   This week's guest is the author of four books analyzing the crises that brought the global economy to the brink of collapse in recent decades. One of the books forecast the 2008 global financial crisis with great accuracy. We're going to discuss future crises here today, before we're done, he has worked as an equities and Investment Analyst, and then he went on to hold some rather esteemed roles at the World Bank in DC and as a consultant to the IMF in Asia. He joins us from Thailand today. He now publishes a video newsletter called macro watch, and long time listeners know that today's guest was also this show's very first guest that was back on GRE podcast episode seven, only 10 years ago now, in November 2014, and he's really become quite the friend of the show, and we've looked out for each other ever since. It's terrific to have back global macro economist Richard Duncan   Richard Duncan  7:46   Keith, hey, thank you for having me back. It's great to speak with you again.   Keith Weinhold  7:50   Oh, it's so good to have you here an entire decade of our lives. And as times change, economies are surely dynamic, and you're so good at spotlighting crises and explaining them in a way to people that they can understand. So Richard, why don't you talk to us now about risks facing the nation? Yes, I'm talking about the United States.   Richard Duncan  8:15   A lot of podcasts focus on all the problems the United States is facing, and it is certainly true that the United States is facing very serious risk. So I'd like to start off this conversation telling you what I think the greatest risk facing our country are. There are four main things I'd like to hit on. The first is something you mentioned to me before in our exchange of emails, is that the US government does have a very high level of government debt relative to GDP, and the budget deficits are large. So that's problem number one. Problem number two, in my opinion, looking at this from where I live in Asia, is that the United States is at risk of being conquered by China in the not too distant future. Risk Number Two. Risk Number three, we have very serious domestic political divisions within the United States. Risk Number four is that our post capitalist economic system, which I call creditism, must have credit growth to survive. If credit contracts, then our economy will spiral into a Great Depression that will be probably worse than the one of the 1930s so those are the big four problems that we have, and it doesn't do anyone any good just to talk about our country's problems if you don't offer a solution to them. So in my opinion, all of these problems can be overcome by accelerating economic growth in the United States, while all of these problems would be made very much worse by anything that causes us economic growth to slow down. The way to make the US economy grow much faster is to have the US Government finance a very, very large investment in the industries and technologies of the future over the next 10 years, starting immediately. The alternative austerity would cause the economy to spiral down into deflation. We'd like your listeners to think of austerity when they hear the word austerity. I'd like them to think of the word death. It's austerity is equal to death. Yeah, the US doesn't have to be a declining power. The first American Century doesn't have to be the last. It can be the first of many. The solution for driving the US economy to grow much more rapidly and solving all four of the problems that I mentioned above is a US sovereign wealth fund. Thank heavens. Both parties now support the establishment of a US sovereign wealth fund. On September 5, former President Trump came out in support of establishing a US sovereign wealth fund, and on the following day, the Biden administration said, then working on this for months and had a plan that they were developing. So this is fantastic news for the United States. It offers great hope for solving all of our greatest problems. And I'd like to spend, you know, a few minutes explaining to your listeners what a US sovereign wealth fund is, yes, urgently necessary, and why both parties have now come to understand why this is important to establish.   Keith Weinhold  11:27   Yeah, please tell us why you think the US sovereign wealth fund is so urgently needed, and what it is because for even longer than the 10 years since you were first here, for about 15 years now, you have championed and promoted this US sovereign wealth fund. You discussed it on CNBC Squawk Box and all over the place. Last year, you presented about it in a speech in DC to 15 members of the House, Ways and Means Committee. So tell us about the US sovereign wealth fund and why you think it's urgently needed.   Richard Duncan  11:56    Let's begin with, what is a sovereign wealth fund? Well, effectively, a sovereign wealth fund is where a country invest in individual companies or even in startups. There are sovereign wealth funds all around the world. Norway has the largest, Singapore has two very effective ones called gdic and Temasek, which had been enormously profitable and successful, and it made the people in Singapore much richer. So a sovereign wealth fund in the United States would be an investment bond financed by the United States government with the US. This investment fund would take stakes in existing companies and also in startup companies, hopefully on a very large scale. Now, some people have asked, Why is this framework necessary? Why do we need a sovereign wealth fund to do that when the government is already making investments in the military, for instance, and funding some R and D research? Well, the difference between what the government is doing now and a sovereign wealth fund is with a sovereign wealth fund, the government would actually keep equity stakes in these companies that they invest in, meaning that when these companies they invest in become enormously profitable, the profits would be owned by every American. The Americans would have the equity stakes in all of the investments that this sovereign wealth fund makes. And it would be a situation where the government provides the financing, but the private sector manages the companies. The government just finances these companies in new industries and new technologies, and the government has the ability to invest on a very much larger scale than the private sector does. For example, The United States has a lot of great companies in the private sector that have accomplished really, truly great things in recent years and long past as well. But these private sector companies cannot invest on the same scale that the Chinese government can. The Chinese government is investing on a much larger scale than any of the American companies could ever dream to invest on. And that's explains why China is overtaking us now technologically, and if they continue to invest at a rapid rate that they're doing currently, then before long, there are going to be far ahead of us technologically and therefore economically, and more worryingly, militarily, the US government has the ability to invest truly on a multi trillion dollar scale over the next decade in new industries and technologies, things like artificial intelligence, quantum computing, nanotech, biotech, genetic engineering and developing energy sources like fusion, and it has the ability to do this on such a large scale that it would be certain to succeed. And once these companies start creating cancer vaccines or fusion, for instance, they would be enormously profitable, and they could be listed on. NASDAQ at multi trillion dollar valuations, and the American public would own equity stakes in these companies, and would then would directly reap the rewards of these profits that these companies would generate. That is what a sovereign wealth fund is, why it's desperately needed, is, well, first of all, we should do it, because we can easily afford to do it. And the results, the breakthroughs, the technological breakthroughs and medical miracles that these sorts of companies would produce, would we really have the shot of curing all the diseases and radically extending life expectancy, developing sources of limitless energy that would bring down the cost of energy radically. Just across the board, it would induce a technological revolution that would turbo charge us economic growth, create UNDRIP wealth, and at the same time, shore up US national security in the face of this growing threat from China. So for all of those reasons, it is urgently necessary. In my opinion.   Keith Weinhold  16:04   both Norway and Singapore have had similar models to this. US sovereign wealth fund, and we certainly think of those two nations as prosperous places, tell me more about why it's a success so the government finances it does that incentivize companies to therefore take more risk?   Richard Duncan  16:25   It allows them to invest more. It allows them to invest on a much larger scale than that. Could if they have to rely on their own funding sources. Rather than investing millions of dollars, they could invest billions of dollars or 10s of billions of dollars. For instance, at the moment, the National Cancer Institute in the United States, this annual budget is $6 billion a year. $6 billion a year is not curing cancer. If we look back a few years ago, the Fed was creating $120 billion a month through quantitative easing per month. So with just 5% of one month of QE, you could double the National Cancer Institute's budget. Now that's not what this sovereign wealth fund would do. That just illustrates the scale. How much greater the scale would be that the government could invest on relative to what is currently being invested at the moment by the government and by the private sector combined.   Keith Weinhold  17:28   Do any critics ever ask about Wait? Is this too much government intervention into the free market? Is this a move away from capitalism? What do you say to those sort of critics?   Richard Duncan  17:38    I say to them that capitalism died in World War One. It certainly didn't survive the 20th century. Now the government. In the 19th century, we had capitalism. The government had very little involvement in the economy then and gold was money. But now gold is no longer money. The Fed creates some money. Government spending is something like nearly $7 trillion out of a GDP. That is around just not quite $30 trillion yet. So the government has been directing the economy going back at least since World War Two. This hasn't been capitalism for a very long time. Under capitalism, the private sector made investments, and some businessmen would make profits from their investments, and they would save that profit as capital and reinvest that capital. That's how capitalism grew. That's why they called it capitalism. It was based on capital accumulation and investment. But that's not how our economic system has worked for decades. Our system now is not driven by investment and saving by the private sector. It's driven by credit creation and consumption and more credit creation and more consumption and our economies has now been transformed from capitalism. It has evolved into creditism, with the government playing the directing role. So total credit in the United States, just last quarter blew through $100 trillion for the first time. By what I mean by total credit is the same thing as total debt. Total credit is equal to total debt. So this is all the debt of all sectors of the economy, the government sector, the household sector, the corporate sector, the financial sector, Fannie Mae and Freddie Mac all the sectors of the economy, it just went through $100 trillion and Breda ism has created very rapid growth, especially all around the world, not only in the United States, because it has allowed the US economy to grow so rapidly and to import so much from other countries that this is why The Asian miracle occurred. I've lived through the Asian miracle because the US has been running massively large trade deficits since the early 1980s and all these countries in Asia have been running massively large trade surpluses, and all this spending that the Americans have been doing has been fueled by this rapidly. Radically expansion of credit. Total credit first went through $1 trillion in 1964 now it's $100,000,000,000,000. 60 years later. Now our system is not capitalism. The government is very involved. Anytime there's any problem with the economy, the government steps in. In 2008 the government prevented a new Great Depression when the private sector the households defaulted on their debts and caused all the banks to fail, and Freddie Mac did fail and had to be taken over by the government. So at that time, we narrowly avoided a Great Depression, because the government increased its budget deficits by more than a trillion dollars a year for four years in a row, and the Fed expanded. The Fed created three and a half trillion dollars between the end of 2007 and 2014, expanding its balance sheet by about five times. So that's not capitalism. We don't have capitalism. So people who are worried about us abandoning capitalism. They're behind the times that happened a long time ago. That shouldn't be a concern. They should be aware now that we are competing against players who don't play by the capitalist rules of little government intervention in the markets we're now competing against China, and China is one giant sovereign wealth fund intent on dominating the world by investing very aggressively in new industries and technologies. In the year 2000 the United States invested, I think, 10 times as much in research and development as China did. But now China is actually investing more in research and development and the US is and that explains why China is ahead in so many areas of technology. They had 5g years before we did. They are the leaders in electric vehicles and batteries. We have to put up 100% tariffs to keep out electric vehicles from China because they're so much better than our electric vehicles. They dominate solar panels. And are worse, they have hypersonic missiles and we don't, and I'm sure they have other military advantages that we don't, because they invest much more aggressively in new industries and technologies than our government does. And if we don't rectify this quickly, then we are soon going to be overtaken by China militarily, and our national security is at risk, much more than most Americans understand. But this realization has slowly grown on policymakers in Washington, and now both parties are worried about this, and this is why we have this growing fear of China, and why we have proposals to limit technology transfers to China, and this is why we've done things like the chips and science act, where the government has agreed to finance a $280 billion investment in new industries and technologies a couple of years ago, with 50 billion of that going into setting up manufacturing facilities within the in the US to create semiconductors, rather than relying solely on Taiwan to obtain all of our semiconductors, because China could take Taiwan at any moment, and then then he would end up with all the semiconductor chips that go into powering artificial intelligence. And whoever develops Artificial General Intelligence first is going to rule the world, and therefore it had better be the United States rather than China, because we don't want to live in a world dominated by China, believe me.    Keith Weinhold  23:26   Well, a lot of macro voices agree with you. About two months ago, we had the president of the Mises Institute here, and the way he characterized things are in the United States. 100 years ago, we had islands of socialism in a sea of capitalism, and today we merely have islands of capitalism in a sea of socialism. Do you see the US sovereign wealth fund being able to solve all four of the United States big problems that you outlined, debt and deficit conquering by China, political division and creditism. Can it solve all four of those?   Richard Duncan  24:04   Yes, it can. So as you know, Keith, a couple of years ago, I published my fourth book. It was called the money revolution. Yeah? How to find the book? Sure, yeah. How to finance the next American century. It was a subtitle. Now I argue that it would be very easy for the US to invest on a multi trillion dollar scale, new industries and new technologies over the next decade, and if we do that through a sovereign wealth fund, then would generate so much growth and be so profitable that instead of causing the government debt to increase, it would actually make the economy so much larger and generate so many more tax revenues, and the government would make so many profits from these companies that it has equity stakes in that it would reduce the government debt in absolute terms, and radically reduce the government debt relative to GDP, which would grow far faster than it has been growing in recent decades. This problem, number one, solved the high level of government debt. A high level of debt to GDP just make the GDP grow a lot faster, and the ratio of debt to GDP will go down. Problem number two is the US is at risk of being conquered by China. We can out invest China. We can invest more than China can afford to invest. We still have the best universities and the best entrepreneurs and scientists. So if we invest on a large enough scale, we will win, and China will not conquer us. Third, if the economy is growing at 7% a year instead of 1% a year, that is going to alleviate a lot of the domestic tensions that exist currently, much of the reason there's the origins of this domestic political divide that we're now suffering from in the US is because such a large part of the population has been left behind when all the factories moved overseas, countries like China and Vietnam, we de industrialized, and the people who Used to have good factory jobs, good, unionized, high paying factory jobs. All those people were left out in the cold, and they're not happy about it. And so if our economy were growing much more rapidly, these people would have much better jobs and much higher salaries, and they would be much happier than they are at the moment. And the final one was our post capitalist system of creditism requires credit growth to survive. So if the government is financing these investments on a multi trillion dollar scale, it's going to make credit expand, and that's going to keep the economy expanding. So yes, it would solve all four of those problems.   Keith Weinhold  26:35   One of those four problems is the debt and the deficit. I want to dive into that more with Richard as it becomes more and more problematic in the United States, and just how far we can kick this can down the road. You're listening to get rich education. We're talking with macro economist Richard Duncan. More, we come back. I'm your host. Keith Weinhold.    Oh, geez. The national average bank account pays less than 1% on your savings. 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Text family to 66866    Hey, you can get your mortgage loans at the same place where I get mine at Ridge lending group, NMLS, 420056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridgelendinggroup.com that's Ridgelendinggroup.com   Jim Rickards  28:40   this is Author Jim Rickards. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.   Keith Weinhold  28:55   Welcome back to get rich education. We are going big this week, talking about the global economy, although mostly centered on the United States, with macroeconomist Richard Duncan. You can learn more about him at RichardDuncaneconomics.com and Richard I want to talk about the debt in the deficit. The debt is the United States overall debt as it accumulates year after year, and the deficit is just the annual thing, and it's so interesting and concerning. When I look at this, when you look at the line items in the United States government's annual spending, we now see that interest payments are taking the second largest chunk, only to Social Security. Social Security's number one interest is the second biggest expense, even more than defense spending and on Medicare. So I just wonder, as I see the interest payments going up and up and up and projected to be our greatest expense every year. You know, one thing I think about Richard is when our interest payments alone exceed our. Revenue somewhere down the road, is that when it's game over, or is that when we're on the way to game over? So can you talk to us about really, where the concern crops up with the deficit, like I talked about, and with the debt that's now at about $36 trillion   Richard Duncan  30:17   deficit and debt is a real problem. It was the first problem that I mentioned when we kicked off the conversation. There are two components of that. One is the fact that government debt has been increasing very rapidly. At the end of 2007 total government debt was around $9 trillion by 2014 it had doubled to $18 trillion because the government had to respond to the collapse of the private sector in 2008 and prevent us from having a great depression at that time, and then after 2014 it has doubled again, from 18 trillion to $36 trillion now, much of that was due to the need for the government to keep us from having another Great Depression during COVID When government stimulus amounted to about $5 trillion and the Fed created a similar amount over just a two year period. So now we have a much higher level of government debt. But the second component of that is that interest rates are very much higher than they used to be. The federal funds rate went up from 0% a few years back to a high of five and a quarter, actually a range between five and a quarter and five and a half. And recently, the Fed cut the federal funds rate by 50 basis points. But you can still say it is 4.9% let's call it 4.9% so interest rates are far higher than they used to be, but they don't have to remain high. The reason interest rates went up is because the Fed increased the federal funds rate. And the reason the Fed increased the federal funds rate is because we had high rates of inflation. Inflation peaked at 9% or so in 2022 but most recently, the CPI has come back down to 2.4% and the Fed's favorite measure of inflation, that PCE Price Index, has come down to 2.2% and that means that the federal funds rate, which is 4.9% is more than twice as high as the inflation rate is. That shows us that we have very tight monetary policy, and the Fed should be able to reduce interest rates very rapidly going forward. They've told us in their dot plot projections that they expect that interest rates will end this year the federal funds rate at 4.4% and then in next year, at 3.4% and 2026 at 2.9% so that reduction in interest rates will bring down the cost of the total interest expense that you mentioned as being so high currently, the risk, however, is that we get a rebound in inflation. We're inflation to surge again, then interest rates won't come down. In fact, they could go higher. So all of my career, more or less, has been spent in Asia. And the main theme that is run through the global economy, the development of the global economy over the last three and a half decades has been globalization, globalization in the form of us running very large trade deficits with other countries. Literally, the US current account deficit since the early 1980s has been $15 trillion meaning countries with the trade surpluses have had a $15 trillion trade surplus, and that's why they've all been transformed economically as a result of their trade surplus with the US, but what the US got out of this was the ability to buy things made with very low cost labor, and that was extremely disinflationary, that drove down the inflation rate in the US, and that allowed interest rates in the US to come down to very low levels that we've seen during most of this century, Up until the time COVID started. The real danger is now, if we do impose very high trade tariffs on China and our other trading partners, then that will cause a very serious spike in inflation. And it won't just be one off, because, of course, when the tariffs are put in place, that will immediately cause everything to be that much more expensive. The US companies importing goods from abroad would have to pay that tariff, then those US companies would pass those higher expenses on to the consumers, so we'd get an immediate spike in inflation. But that would also mean that the companies abroad it wouldn't be so profitable for them to have their manufacturing facilities abroad, they would try to bring those back home. And given that the unemployment rate in the US is so low already, only 4.1% there's not enough labor to allow these manufacturing facilities to come back to the US and start producing goods in the US. So that would cause an upward spiral. In wages and the wage push inflation spiral of the type that we had in the late 1960s and early 1970s so that is a In other words, tariffs would put an end to globalization, and that would cause a such a severe spike in inflation and interest rates, it would essentially be the death nail for creditism, which requires credit growth to survive. The end of globalization would mean this end of this 30 year global economic boom that the world has enjoyed, and therefore it is a very severe threat, and it would push up the interest expense of the US government, which you let off with, instead of lower interest rates, bringing down the interest expense the government has to pay every year, we would have instead higher interest rates, which would make the amount that the government has to pay on its interest even higher than it is at the moment, and make the budget deficit even larger than it is at the moment, and Make the government debt grow even faster than it's growing at the moment. So let's hope that doesn't happen. Instead, the better approach is to invest, to have the government finance large scale investments in new industries and technologies make the economy grow much more rapidly and we can grow our way out of this debt problem that we're currently in,   Keith Weinhold  36:21   yes more inflation, whether that comes from higher tarrifs or any other sources, will lead to higher interest rates to counteract that higher inflation, which will Yes, pump up the deficit in the debt that much more. And you know, one thing that I like about Richard is, you know, a lot of people complain about things, or say, what are we going to do? Or Things look bad, and Richard is saying some of that, but he offers a way forward with the US sovereign wealth fund, like he talked about before, investing our way out of it. So Richard, if we don't invest in this debt and deficit situation gets worse. It could be a hard question to answer, but I'd like your best guess at how far can we kick the can down the road? When is it game over? How big do our interest payments on the debt and deficit have to get?    Richard Duncan  37:10   the game is never over. No matter how bad things become, humanity will survive and carry on. So even in the Great Depression, people made it through, even through World War Two that resulted, largely as a result of the Great Depression. A lot of people died. 60 million people died, but the game didn't end. So regardless of how bad the economic system system were to become, humanity will survive and there will be a solution. Now, a lot of people put forward that, the idea that they point out that we have this high level of government debt, and their solution is to reduce government spending. The government spends something like $6.8 trillion last year. That was the amount the government spent. The budget deficit last year was 1.8 trillion so in order to eliminate the budget deficit, the government would have to spend $1.8 trillion less. In other words, it would have to cut its spending by 27% but the government cut its spending by 27% they're going to happen. The economy would immediately spiral into a depression. So even that reduction in spending wouldn't balance the budget, because the government revenues would collapse, and they would have even fewer tax revenues, so the deficit would still be there, the economy would collapse, and the unemployment rate would be 20 plus percent, and would just fall further behind China and be at greater risk from a national security perspective, and much more miserable As a society overall. That's why it's always say people should consider think of the words austerity and death at the same time, because austerity would bring about the collapse of our economic system and the Great Depression unless your civilization would survive it.  trying to answer your question more directly, how high could this go? Well, governments don't default on their debt when push comes to shove. If the government's having a hard time paying interest on its debt, the Fed will just print more money. And in a case where between 2008 and 2014 when the Fed created three and a half trillion dollars, they printed a lot of money at that short space of time, and they got away with it without having high rates of inflation. The highest rate of inflation we had during that period was 3.8% in 2011 and by the early months of 2015 we had deflation again for a few months. Prices actually fell negative CPI for a few months in 2015 so if we have a global economy, as we do at the moment, full of we have nearly 8 billion people, I would guess 2 billion of them at least live on less than $5 a day. So the US could get away with having a lot of paper money printing without having higher, very high rates of inflation and the government could finance itself that way for quite a long time. Of course, if we have a closed domestic economy brought about by extremely high tariff barriers, then we would end up with hyperinflation in the United States. But even with hyperinflation, it would be very painful for people who have all their cash in the bank or under their mattress, but people with assets, those asset prices would appreciate more or less in line with the inflation, and it would erode the government debt relative to the size of the economy, because the GDP would grow in nominal terms very rapidly because of the hyperinflation, and the debt, which is not inflation adjusted, would be evaporated away by the inflation.   Keith Weinhold  40:43    right? that's why here at GRE we are all invested and aimed toward prudent use of leverage with assets like real estate and we sure have been the beneficiaries of that wave of inflation that followed COVID there. Richard, well, we're talking about the debt and the deficit somewhat, which, interestingly, has actually doubled since the first time you were here on the show. When you were here, 10 years ago, it was at 18 trillion, and today it's at 36 trillion. We talked about, how far can you kick the can down the road back then? Well, here we are, 10 years later, and it's doubled. Talk to us. You know, you talked previously about the greatest risk to the United States economy. Tell us now, as we are investors here on this show, about the greatest risk to the real estate and stock market, I would just say within the next year. What are some of those risks to those particular markets?   Richard Duncan  41:38   We've already discussed the main risk that high tariffs would potentially cause a new spike of inflation and force the Fed to hike interest rates rather than cutting interest rates. But there are some other risk as well. One is the fact that we already have a very high level of wealth relative to income. Let me back up a second. You were talking about debt doubling since we first spoke 10 years ago. Here's another statistic for you. Just in the last four and a half years, the total wealth of the Americans, all of their assets minus all of their liabilities. In other words, household sector net worth. Since the end of 2019 it has increased by $47 trillion in four and a half years. That's about a 40% increase. Now, $47 trillion is enough to pay off the entire US government tip, which we've been worrying about with $11 trillion left over. So not everything is as bleak as it sounds on the surface. We've had a huge explosion of wealth in the last four and a half years that's been driven by property and also by stocks. The problem now is, is that the level of income the asset prices, are very inflated relative to their historic norms. And one of the ratios that I always keep an eye on is called the wealth to income ratio. It takes the household sector net worth. In other words, the wealth that we were just discussing, which, by the way, is now $164 trillion of wealth owned by the Americans. The wealth divided by income, disposable personal income, this wealth to income ratio is now an extraordinarily high level. The ratio is 785% whereas the average of that ratio going back to 1950 has been 550% the previous two peaks were in the year 2000 when it hit 620 during the NASDAQ bubble, and then that bubble popped, and the stock market crashed, and we had a recession, and it went back to 550 and then it surged to a new peak of 680 during the property bubble. And then that bubble popped, and we almost went into a depression, and that a lot of wealth was destroyed. We had a severe recession. The government had to bail us out from and that ratio went back to 550 again. Now it is just off the charts relative to its previous peaks, because people 680 now it's 785 so people used to suggest that higher asset prices were justified because interest rates were near 0% but even after the Fed hiked interest rates from near 0% to about 5% The asset prices have stayed inflated. That does suggest that asset prices are very inflated and therefore very vulnerable to any sort of shock that could occur, whether geopolitical or economic or domestic political problems. So that's a concern. Another concern is quantitative tightening is still occurring. Quantitative tightening is the opposite of quantitative easing. When, with quantitative easing, the Fed creates money and pumps it into the financial markets, and that tends to make asset prices go up, and it also tends to make interest rates on government debt stay low, because if it pushes up bond prices, it pushes down. Bond yields. Well, now the opposite is occurring. Over the last two years, the Fed has destroyed roughly $2 trillion it created $5 trillion from the end of 2019 till about 2022 during the COVID pandemic, and the policy response to that, the Fed created $5 trillion but now it's destroyed 2 trillion of that five that it created, and is still destroying dollars at the rate of about $60 billion a month, or $700 billion a year. And as it does, as it destroys dollars, it takes dollars out of the financial system, which all other things being the same, tends to make financial conditions tighter, putting upward pressure on bond yields and downward pressure on asset prices. So as this continues, this is a concern, because reduce the liquidity in the system by another $700 billion if it continues for another year, having said that there is still an enormous amount of excess liquidity in the system as a result of all of the money that the Fed has created, going back to 2008 I estimate that the excess liquidity is somewhere around three and a half trillion dollars. If you look at bank reserves and the reverse repos at the Fed is about three and a half trillion dollars of excess liquidity, and the Fed actually has to pay interest to the banks on their bank reserves to hold interest rates up. That's how the Fed controls the federal funds rate now. It pays the banks roughly right now, 4.8% interest on all of the banks bank reserves, and so the banks will not lend money to anyone at less than 4.8% interest, because the Fed will pay them 4.8% interest. Why would they lend to anyone else for less if it suddenly stopped paying interest on these bank reserves, these banks would look around and where would they invest their three and a half trillion dollars in? No one's going to pay them 4.8% or even 3.8% or 2.8% interest rates would plunge because of all the excess liquidity that exists. So this excess liquidity has been a thing that's been driving the economy since COVID started, and it's why we've managed to avoid recession, which everyone is expected to arrive any moment now for the last two and a half years. So there are concerns, but there are also, as always, other reasons for optimism.   Keith Weinhold  47:24   Well, that wealth to income ratio that Richard talked about, that's a calculation that you yourself can do. One's net worth is almost eight times their income now, which is at a historic high, which is one concerning point that Richard brought up. Well, Richard, I want you to tell us about your terrific video newsletter, macro watch unless you have any other last thoughts first.   Richard Duncan  47:51   well, just one last word on the US sovereign wealth fund. Thank you very much for giving me a chance to discuss that and to explain why both Democrats and Republicans are now in favor of establishing a US sovereign wealth fund, one of the few issues that has bipartisan support. And this must come as a surprise to many of your listeners and most Americans, in fact, why have both parties agreed on really setting up a US sovereign wealth fund? So I'm glad I've had a chance to explain it and why it's so urgently necessary. I'd just like to emphasize the extraordinary benefits that this delivers to the American people, both individually and at a national level, individually, in terms of medical breakthroughs and better health and much more rapid economic growth for the economy, so much more wealth and much more national security as well. So I hope the Americans will get on board with this idea and give it their full support, because it's exactly what our country needs to solve all the four issues, the major issues that I laid out at the beginning of this conversation. But with that said, if your listeners would like to learn more about my work, Macrowatch. Microwatch is a video newsletter. Every couple of weeks, I upload a new video discussing something important happening in the global economy and how that's likely to affect the stock market, property, currencies and commodities. They can find macro watch on my website, which is RichardDuncanEconomics.com that's RichardDuncanEconomics.com Macro Watch has been going on now for 11 years, they'll find more than 100 hours of videos in the microwatch archives. They can begin watching immediately, and they'll receive a new video every couple of weeks. And I'd like to offer your listeners a subscription discount. If they go to Richard Duncan economics.com and hit the subscribe button, they'll be prompted to put in a discount coupon code, if they put it in G, R, E, they can subscribe to macro watch at a 50% discount. That's great. That's GRE so I hope they'll check that out, and at the very least, they can sign up there for my free blog and follow my work that way.   Keith Weinhold  49:56   And I have benefited from consuming macro watch content myself over the years, allowing me to sort of stretch my thought process and go macro, which we don't always do as real estate investors. Oh, Richard, it's been valuable as always, and you really offered a solution, a way forward here, something that's really refreshing. It's been great as always, having you back on the show.   Richard Duncan  50:18   Yeah. Thank you very much. I look forward to the next time   Keith Weinhold  50:21   me too. when it comes to the term capitalism, if that's truly a system that we're no longer in, you know, it seems to get replaced with the word meritocracy, and that is a word that I like, meritocracy, where producers get rewards for being productive, but even that is under attack, and the government just always seems to be stepping in with a safety net. Seemingly everywhere you look, it won't let banks fail. We saw them jump in early last year with Silicon Valley Bank and other bank failures, the government won't let homeowners fail either. I mean, you don't have to think back very far with mortgage loan forbearance in the COVID era, on issues of the debt and deficit. Even Fed Chair Jerome Powell himself has called it unsustainable. That's the word that he used. Like Richard said today, we won't default. We'll just print more. So when it comes to the inflation versus deflation tug of war, the future keeps looking inflationary, but at what rate of inflation? That's what I don't know, and no one really knows. If you like Richard Duncan's content, and you sort of wished he and I's conversation would go on. Well, he is a regular guest here, so I expect him back. But if you're telling yourself, I want more of his content and I want to make it visual at the same time to help really bring this to life, well, visit RichardDuncanEconomics.com hit the subscribe button and get 50% off. That's five zero, 50% off with the discount code. GRE. Happy Veterans Day. Until next week, I'm your host, Keith Weinhold, don't quit your Daydream.   Speaker 2  52:17   Nothing on this show should be considered specific, personal or professional advice, please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively you   Keith Weinhold  52:46   The preceding program was brought to you by your home for wealth, building, getricheducation.com

Keith discusses the inefficiency of compound interest in wealth building, advocating for compound leverage through real estate investments. He illustrates how a $100,000 investment in a $500,000 property at a 6% annual return can yield much higher returns due to leverage (see the math below). He also explains how mortgage rates are influenced by long-term bond yields and discusses the benefits of real estate over stocks. A coaching call with GRE Investment Coach Naresh highlights the process of investing in real estate, including financing considerations and the role of a coach in guiding investors.  Here’s the math on a 5:1 leveraged RE return at a 6% appreciation rate:  Year One: $500,000 x 1.06 = $530,000. Subtract $400K debt = $130,000 equity Year Two: $530,000 x 1.06 = $561,800. Subtract $400K debt = $161,800 equity Year Three: $561,800 x 1.06 = $595,508. Subtract $400K debt = $195,508 equity. GRE Free Investment Coaching: GREmarketplace.com/Coach Show Notes: GetRichEducation.com/526 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai   Keith Weinhold  0:00   Keith, welcome to GRE I'm your host. Keith Weinhold, make America rich again in play numbers. You'll get a fresh take today on how compound interest does not build wealth and compound leverage does. Then you'll learn about how bond market moves affect mortgage rates. Finally, you get to listening to a call between one of our investment coaches and a GRE follower today on Get Rich Education.   Speaker 1  0:33   Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com   Corey Coates  1:19   You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  1:35   Welcome to GRE from Altoona, Pennsylvania to Saskatoon, Saskatchewan, and across 188 nations worldwide. I'm Keith Weinhold, and this is get rich education, the voice of real estate investing Since 2014 you're going to hear some things that you've never heard before today, and some listeners tell us that GRE is unlike any real estate information they've ever heard. And with what I want to tell you today, well, again, it's information that I've never heard anywhere else, either. So what I endeavor to regularly do for you here on this show is to tell you what I wish I had known sooner make America rich again, nope, that is not my presidential campaign platform for my run in the year 2032, or anything like that. It is this, don't get your money to work for you. In fact, if you want real wealth, don't work for money or get your money to work for you. Don't make either of those things the focus anyway, avoid growing your money through compound interest, because that's not the formula either. Now you and I have covered that ground before, if you're new here, and that material makes you say what you might have thought things like that were the holy grail of wealth building, nope, and today, for the first time on the show, in over 500 episodes, I'm gonna put some real numbers to that to show you exactly what I mean. Let me explain to you how to invest to truly win in a way that you've never seen in your life. You're not gonna improve only your life, but generationally, your entire family's life. At your job, you are like a dock worker. You're trying to pull your boat up to the dock so that you can then make a short, easy hop onto the boat and get away. And you'll learn how I did that and how I would begin investing today if I could start all over again. Now, after I had graduated college and had a job, I used to think, Well, yeah, I'll invest through a 401K in mutual funds, because it's easy and it's just deducted right from my paycheck. Well, when you do the easy thing in life, there's usually not much reward. And back then, I thought, Well, why would I invest in real estate anyway? I mean, a stock and mutual fund return on investment is about 10% over time. Real Estate is more like five or 6% plus real estate has all these maintenance hassles, and in the stock market, your 10% return enjoys compound interest. I don't really know how that works over on the real estate side, all right. Well, let's look at some numbers with how this would all work anyway. Here we go with $100,000 invested in stocks at 10% after year one, it's grown to $110,000 in year two, you don't just have 120k you've got more, because the 10% compounds on the 110 10k so now in year two, you've got $121,000 and I bet that you don't see any problem in this yet, right? Hey, things are going great. And after year three, you're up to $133,100 All right, so there we are. You begin with 100k and after three years, you've got then $33,100 in profit, your gain, on top of your 100k All right, that's what compound interest does. Well, let's take a closer look at that. $33,100 first, okay, I could attack it a slew of reasonable ways, if I wanted to, we could subtract out the constant drags on that of inflation, emotion, taxes, fees and volatility. But let's just take one volatility. We smoothed out our 10% return saying that you achieved it every year in that example there, we know that does not happen in the real world. Stocks are volatile, and the more volatile the return, the lower the return. Because instead, if you were up 20% one year and then down 20% the next year, which stocks are known to do you're not even you're down your 100k would instead go up to 120k in year one and down to 96k in year two, a loss, like I've told you before, that right there is the difference between what's called the compounded annual growth rate and the average annual return. But we'll just leave stocks number right there. We'll say that despite all five drags, volatility, of which is just one, the compound interest still somehow gave you this $33,100 gain. That number is about to look really disappointing, and this is about to get really interesting.    Let's compare that to real estate, and we'll say that despite that, it only returns, say, 6% per year here. Well, how do most people buy real estate? They do it with other people's money. OPM, remember earlier that I talked to you about how you don't create wealth from getting only your money to work for you, like you did in the stock example. Yeah, here's how you ethically use other people's money to buy real estate. When you invest 100k in a rental property. That's your 20% down. You get to borrow 80% from the bank, 400k so now you control a $500,000 property. And here's the thing, its entire value appreciates a 6% all 500k not only your 100k invested, yes, so you're now about to get the return on both your 100k and all of the bank's money. 400k that you get to leverage returns from both are about to go to you. Oh, yes, let's run these numbers, instead of compound interest, you're about to get compound leverage, using those borrowed funds to amplify your own return. So with your 100k invested on a 500k property at 6% after year one, you've got 130k after year two, $161,800 and after year three, $195,508 why? Because, again, your 6% return was accumulating on the 500k property. All right, so after year three, with this $195,508 you're gonna subtract out your 100k down payment, and your gain is $95,508 All right, that is compared to your compound interest based stock and mutual fund return of just $33,100 if you'd like to see the math for that leverage. Return that is in the show notes. Look for it there. See, by employing other people's money, it's like when you were a kid and in the evening, your body cast a shadow five times taller than you actually were. That's how leverage allows you to magnify returns and appear to be a bigger, taller investor than you actually are. Yes, your 20% down payment on real estate gave you five to one leverage amplifying your returns. If you listen to the show for a while, you understand that, but you never saw that numeric dollar per dollar comparison like we just did. So after three years, how about 33k profit on stocks and 95k on real estate? Real estate returns almost three times as much. But in reality, it's probably more than a 3x win for real estate because you're 95 Gain over three years in real estate, equity is actually going to be higher, because your tenant is also paying down your principal balance on your 400k loan every single month for 36 months in this three year example, if your property is vacant, 10% of the time they paid it down for you 33 out of 36 months, and as we know, at the same time, inflation pays down your loan even faster than the tenant does. Real Estate is also more tax advantaged than your stock gain, because you never have to pay capital gains tax on your 95k profit with a 1031 tax deferred exchange. And on the downside for real estate, upon owning the property, you will need to pay closing costs of maybe four to 5% of the purchase price. All right now, in this 95k gain for real estate versus 33k gain for stocks, I did some rounding there. Yes, even if your stock return was in a 401 K type fund, well, you would still have to either pay the tax now with a Roth or later with a traditional retirement plan. So you're still paying the tax. The higher real estate return is also more likely because real estate is less volatile than stocks, and I've got more vitally important things to tell you about how you just grew wealth about three times faster with leverage than with compound interest. And yes, this is exactly the kind of stuff I wish I knew when I had just started out. Now if you think you don't have the money for a down payment. I'll get into that. But first, a big review here, and I've woven threads of this review through previous episodes. First, don't focus on getting only your money to work for you. And second, stress compound leverage, not compound interest. Optimize using other people's money. And when you take out a loan for rental property, you get to use other people's money three ways at the same time, three different entities, you're using their money. Number one, it's for the bank's loan, like we discussed. Number two, you're using the government's money for generous tax incentives. I only touched on one of the tax incentives. And then, thirdly, you are using the tenants money to pay down your mortgage loan and pay all of your properties operating expenses, like maintenance repairs, insurance, property taxes and pay your property manager to make this all mostly passive for you. I don't manage any of my own properties. I think you already know that. And on top of that, hopefully you'll have a little residual income after expenses every month, your monthly profit of rent income minus expenses, that is called cash flow. And when I talk about doing this ethically, use an experienced property manager. Never get called a slumlord. Provide housing that's clean, safe, affordable and functional, okay, some really core, enduring, GRE mantras in there. But what if real estate goes down in value? It's not common, but I did have it happen to me around 2008 we won't even talk about what happens when stocks go down in value, but when real estate values went down in 2008 it just didn't matter that my rental property's values were temporarily suppressed because my rents were higher than my expenses, I was still making income each month off the property. That's a good way to own property, if you can. I'm not motivated to sell an asset. I mean, are you motivated to sell an asset that's paying you income every month during a time when it's capital value dip, so probably not. And by the way, there is nothing new or esoteric here. You just haven't had it explained to you in this way before. This 33k from stocks and mutual funds versus 95k from real estate you haven't seen that before. This is simply buying houses with plain vanilla 30 year fixed rate loans, and it's just simply long term buy and hold. This is not flipping, as I like to say. This is not day trading. This is decade trading, as you continue along in your real estate journey, keep stacking more properties, and it's gonna go faster than you think, because you've got this power of compound leverage, and your tenant also pays you income that you can use toward buying the next property, and then as a backup, you have that trapped equity that keeps accumulating in your property. And the reason this goes faster than you think is that you can also release that equity by removing it with a completely tax free event, a cash out refinance, all while you still hold onto the asset and you. Use the untrapped equity to put down payments on more property. Now, what if you think you don't have the money to start or get as big as you want, as fast as you want? Well, I've met a lot of people that when they understand this compound leverage concept, they withdraw their 401 K funds, pay a penalty and pay the taxes, and they put those funds toward real estate. I mean, you would owe taxes on it anyway. Now that part may or may not be ready for you, but you know, once I understood this, what I did is I stopped contributing to my 401K and I instead got into compound leverage. Yeah, this is how to make America rich again. Now, what if you think you don't have 100k to invest in property like we did in our example? Well, there are perfectly good $200,000 properties at GREmarketplace.com where you could make a $40,000 down payment. But you still might be thinking, I'll just say that the real estate market is just really competitive now, and that your small down payment maybe it can't compete with a deep pockets all cash offer, because all cash buyers can close really fast, but no your small down payment can still compete with all cash offers, because Some sellers don't want a quick sale for either tax reasons or myriad lifestyle reasons that they might have, I like to say that using debt is like using fire if it's misallocated, like with 23% credit card debt, that's what the average credit card interest rate is right now, 23% well that can burn down your financial house. But if you know how to use the debt in a controlled manner, like from income property that others paid down for you, oh, that fire is contained in a stove, and that fire or fireplace will heat your home. If I could start all over again with what I know now, it would be to embrace good debt, because tenants pay down this debt for me, so use it as leverage to build a real estate empire. Think of it this way, besides the employer match, every dollar that you lock inside a 401K is $1 that you cannot use to leverage other people's money. Back when I started investing, I should not have contributed to a conventional retirement plan beyond the employer match myself. So I used leverage to pull my boat up to the dock more than three times faster and escape the day job when I was still young enough to enjoy it. And once you know the difference, why would you want to do life any other way? You might have heard that real estate has made more people wealthy than any other investment today.    You've learned how now, sometimes it is hard to stop and turn off a mindset if the same thing has been believed for a long time. I think we've all experienced that. If you believe something for a long time, well then it's hard to change your mind on that, and you might even fight and defend that core belief. That could be the case here with me, denigrating the wealth building capability of compound interest. And if you're still wrestling with that yourself, a great compliment where I discuss this more in depth and in a different way, can be found on an episode that I did earlier this year that is on GRE Podcast, episode 507 episode 507 is called compound interest is weak. I'm here to talk to you about things that are really gonna move the meter in your financial life, like what I've covered with you so far, and what I'm gonna help you learn next. You know, there's just some information out there, even real estate information, it's just not that useful. Say, for example, mortgage purchase applications were down from last week, but yet they were up month over month. Well, that might matter to certain sub industries, but it doesn't move the meter in your life with how you're going to actionably build wealth.    Hey, before we move on, I want to give a major shout out to this show's long time, steady, capable sound engineer, Vedran. He just hit the 10 year mark of filling that important role for us here. Yet 10 years almost since the inception of this show. He's been with us since November of 2014 so since about episode five, and he's edited every single episode since then, and he recently told me that he looks forward to the next 10. Congratulations, Vedran. Also, thanks to you, the listener, the follower. Here, we held three GRE live virtual events this year, webinars. You. You are really taking action. Back in June, we broke a record with 307 registrants for that event. And then our latest event that was held about 10 days ago saw another record broken, 528 of you registering, and I say thanks, because you make me feel good. You're showing that I'm helping make a difference in your life. And now maybe you're thinking these events or this platform, it's getting too well known, and if you show up to a future event that you might not get to ask a question, no, that's not the case. Not everyone that registers shows up for the event live, and then you can ask a lot of your own questions with a personal free coaching call as well. I'll let you listen into a coaching call later on, today's show. In fact, now I've shared with you a few times before that changes to mortgage rates don't follow changes in the federal funds rate that Jerome Powell and the FOMC said. I've also told you that mortgage rates closely track long term bond yields, but let me tell you about what all that really means, and this is going to help you understand and perhaps even predict the future direction of mortgage rates. In fact, it's unusual. You know, the largest market in the world is not the real estate market, it's not the stock market, it's the bond market. And What's unusual is here we are on episode 526, and we've really never discussed the bond market. Well, you're probably aware that a month and a half ago, the Fed dropped interest rates by a half point. Their next decision is in just three days. Now I don't think they should drop rates again, though they could. That's because since the rate cut, GDP and job growth have been strong. That's why I don't think they should do it. I mean, rates usually get cut to help a wounded economy, so why lower them now? I mean, recessions usually see rate cuts. But here's what even fewer people understand when the Fed cut rates a month and a half ago by a half point, why have mortgage rates soared since then? They were about 6.1% and then the Fed made their cut, and mortgage rates recently spiked up to 6.9% well, many still feel that the long term trend for all types of interest rates is lower. But you know for one thing, rates are really hard to predict. The Fed only controls short term rates. Long term rates, like the 30 year and 15 year mortgage are tied most closely to the yield on the 10 year treasury note, and here after I'll just call that the 10 year All right, so what is this and what controls it? Well, don't let that name intimidate you. This is get rich education. So let's break down each word yield on the 10 year treasury note. Yield just means interest rate. 10 years is the period of time that this loan is made for the duration the US Treasury issues them so they receive the loan and a note is an IOU. It was also known as a bond. That is what's held by the person or the entity that loaned the money, the person that loaned this money to the Treasury. It could be you yourself, or it could be a foreign nation. So you hold on to this note because you made the loan to the Treasury. That's the breakdown of every word of the phrase the yield on the 10 year treasury note. Okay, so to say it a different way, if you hold a 10 year treasury note, that is basically your receipt, your proof that you made a 10 year long IOU to our federal government and it is going to pay you an interest rate known as a yield. All right, that is the simplest explanation I can give. Well, a month and a half ago when Jerome Powell cut short term rates, the 10 year was 3.7% at that time, and at the beginning of last week, it was up to 4.2% that's the highest since July. And again, 30 year mortgage rates most closely track the 10 year all right, as you and I sort of hold hands through this together next, let's ask what made them rise. And you know, some think this is harder to understand than trying to understand why YouTube viewers constantly fall for ludicrous housing price crash videos. Okay, but relax. This is easy. When the economy gets hot, all these things tend to rise in value, real estate, stocks and also productivity rises. Employment rises. Is an inflation that tends to rise as well. Because a 10 year investor needs a real return above the rate of inflation, this yield must rise as well. That's it. You got it. You got it. So therefore, when a rosy jobs report comes out, the 10 year tends to go up. When a strong retail sales report comes out, the 10 year yield tends to go up or a high flying CPI is released, the 10 year tends to go up. And therefore, because it rose in the past month, investors have expectations for a strong economy and more persistent inflation. So conversely, expect both the yield on the 10 year treasury note and the 30 year mortgage rate to fall when the economic outlook gets more dim. It's important to understand that, like a lot of things in the stock market, yields on the 10 year they tend to be more of a reflection of future economic expectations than the current economy. And this should be pretty easy for you to remember, because when you think about it, that makes sense. Since you've lent out your money to the federal government for 10 years. I mean, you're really interested in what that 10 year future is going to look like. So yes, though this is somewhat less exciting than watching a motorcycle jump over the Grand Canyon now that you listen closely for the last few minutes. Congratulations. Now you know that the 10 year can tell you both what investors expect to happen in the future, and can tell you the direction of 30 year mortgage rates. And, yeah, I mean, this is just more the type of material that I wish someone had explained to me sooner, in a way, just like that. And you know, are you interested in doing things that at the end, they make you say, You know what, I just got 1% better this week. I mean, think about the kind of person you'll be if you make yourself just 1% better each week. Now you better understand how leverage beats compound interest and what makes mortgage rates move. Go out and vote tomorrow as far as next, listen into one of our GRE investment coaching calls. I'm Keith Weinhold. You're listening to get rich education.   Hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridgelendinggroup.com that's Ridgelendinggroup.com.   your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest, year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too, earn 8% hundreds of others are. Text FAMILY to 66866, learn more about freedom. Family investments, liquidity fund on your journey to financial freedom through passive income. Text Family to66866.   Zack Lemaster  29:08   this is rent to retirement. Zach Lemaster, listen to get rich education with Keith Weinhold, and don't quit your Daydream.   Keith Weinhold  29:22   Welcome. Back to get rich Education. I'm your host. Keith Weinhold, there will only ever be one GRE podcast episode five under 26 and you're listening to it. Let's let you listen into a coaching call between GRE investment coach Naresh and GRE follower, Brenda, and then I'll be back to wrap it up at the end.   Naresh Vissa  29:41   hey, Brenda, good to Good to see you after emailing back and forth. Thanks for setting up this call.   Brenda  29:47   Yeah, thanks, Naresh, thanks for setting up time to talk to me.    Naresh Vissa  29:49   Yeah. Well, tell me what made you schedule this call, like, Why did you hit that button saying I want to talk to the real estate investment coach?   Brenda  29:59   Yeah, well, I've seen some of the newsletters that come from GRE I'm familiar with some of the podcasts, but then I had gotten into the newsletters, and then I saw that there was an option for a free consultation to talk to you. And I thought, Well, I'm not sure what this really means, or what we talk about, or how you can help me, as far as, like, the vision, or how do I set my goals? Or what is it exactly that I would do with you with GRE, like, what kind of consultation Do you provide?   Naresh Vissa  30:29   Yeah, well, so that's you came to the right place. So let me tell you a little bit about GRE, a little bit about me, who we are, how we operate. So get rich. Education is an education company. As you know, you listen to the podcast, you read the newsletter. It's free. The podcast is free. The newsletter is free. You can go to our website, read our blog, go through past podcasts. You can subscribe to our YouTube channel, subscribe to our social media, Tiktok, Instagram, Facebook, X, you name it. That's all free content available for you, and this service, the real estate investment coaching, is completely free of charge. I know that sounds kind of crazy, but you'll never pay as a dime. I'm here to help you throughout and along your real estate investment journey. Think of me as a super connector, someone who can introduce you to all the right people, whether it's specific markets you want to invest in. Providers. There, wholesalers, flippers, lenders, appraisers, although your lender will take care of the appraiser part, if you need a second lender, financing, CPAs, attorneys, anything at all, just come to me and I can introduce you to the right people, or at least point you in the right direction. I'll try my best to do it 100% of the time. I don't, or I should say, I don't, have answers 100% of the time, but I do have answers most of the time, and I can forward you and refer you, point you in the right direction. So think of me as a super connector. Think of me as your silent partner in deals, because I get any equity in the deals who you don't have to pay anything to think of me as an advisor, a consultant. Again, this is a completely free service. There's you're not going to get like, a bill in the mail saying, Hey, you talked to Naresh five times, so you owe us $1,000 for that. Now, there's none of that. So the most common question I get after telling people this or, like, well, then, I mean, you can't be doing this for free. Like, why are you doing great? Like, like, yeah, what's the catch here? And they also have, I mean, I'm sure you're wondering, how do you make money? Well, if you listen to the podcast, if you go to our website, you'll see advertisements, sponsorships. We are paid marketing fees, advertising fees from partners. So you listen to the podcast, I'm sure you hear many of those commercials. We make our money on the back end, so we can keep services like this and our newsletter and our podcast free on the front note, like I said, GRE is not is an education company. We are not a broker or a wholesaler or a flipper or a builder or an agency or a realtor service or any of that a brokerage, where we're not of that, we're purely education, education based through our educational content or free educational coaching, which I offer too. So that's what you are. Got it .we work with all those other companies. So we can refer you to all those other types of companies that can help you on your real estate investment journey. But we are not any of those. Now me, personally, I am an investor myself. I own eight properties in southeastern United States. I got started in 2017 I bought my first property in a single family home. That was rehab. Back then, rehabs are very hot. That was what you should get in, that what made sense to get into. And I scaled pretty quickly. I went from one to eight in a matter of it's been seven years since I bought that first property, but I actually went from one to eight in a matter of more, like two and a half years, I just kind of went so I bought, like I said, southeastern United States, bought my last property in 2020 I'm saving up for my next property because I personally now only, like new construction, I rehabs have their place, certainly For certain investors. And at the time, I got six rehabs, rehab properties from 2017 to 2019 so I personally, though, am now saving up because new construction is more expensive than than rehab. So I'm saving up for my next real estate property, which is most likely going to be a new construction. So that's a little bit about my investing background. I've been a real estate coach Since 2019 came in 2021 to GRE and have run the coaching side ever since. So that's a little bit about me on the real estate side, on the coaching side. Now, my background is not in real. Real Estate. I like, I said, I got in 2017 before that, and I still do work in tech. So I worked in tech from 2000 really, from 2005 and still do work in tech. So it was through my tech work that I got involved in real estate, because I would do back end tech work for real estate companies. And doing that work, I was like, Oh, I started learning about real estate, and then I said, huh, if this doesn't seem hard or difficult. And I also got an investment coach who helped me, like I said, with that competitor, they also had investment coaches or investment counselors. So I had a coach who helped me a little bit, but that's what the coaches are for there to help investors like me, especially newbie investors, or even veteran investors. They're there to help investors with the networking part, with the who are offering the best deals, special deals, special interest rates, who's honest, who's dishonest? That's what I'm here to do. So that's a little bit about GRE About me, about my background, how our coaching program works. So now, Brenda, it's all about you. I want to hear I'm sure you have tons of questions based on what I just said, but before you ask those questions, I'm just going to start out with, how much cash do you have ready to invest? Because really, I could be of most service if you're looking to invest, otherwise, I can't really be of much service. So how much cash do you have ready to go to invest? And then I'll answer, I'll say something about that, and then I'll let you ask whatever questions you want.    Brenda 36:35   Sounds good. Just a cash ready for deployment is 100,000 but I'm assuming that doesn't all have to go to one property, right? Or depending on the property?   Naresh Vissa  36:46   Yeah, so, so is that lick? So what I should have clarified my question as how much liquid cash do you have on not like a 401, K, or properties that you have to cash out refinance, or it's just if you today, if you were to take a property and and you had cash ready to do so be $100,000 Yeah, correct. Okay, so, so a few things that's very good, because with 100,000 that gives you optionality. You can either go for a rehab property, and we have rehab property right now. Our hottest provider is in Memphis, Tennessee, and you can get a rehab property. Worst case scenario, let's just say the property, the average property, is about $100,000 and so you just put down a 25% down payment. So let's just give or take, let's say $30,000 I tell our investors. I say, Look, if you want to buy your first property, or Yeah, your first rehab property, you need at least $50,000 cash, liquid in the bank, ready to go. That's just because you want that cushion. You don't want to put all your eggs in one basket. So I say, if you want a rehab property, you need 50,000 if you want a new construction, single family 100,000 because the new constructions are going to cost you at least $240,000 at least. So if you take 25% of that, plus closing costs and cushion and everything, just if you want to be a good investor, you have to be disciplined. And you have to be disciplined enough to be able to save the 50,000 or the $100,000 if you want to make it as a real estate investor. So 50,000 for a rehab property, 100,000 for a new construction. If you want a duplex, you need, I say, a new construction duplex, which is probably our hottest new construction asset class right now in Florida, 150,000 for a new construction. Down payment or not. Down Payment task, ready to go for a new construction duplex, because those are selling for about 490,000 give or pay. So it's 50,000 for rehab that you should have in the bank. 100,001 in the bank for a new construction, single family. 150,000 for a duplex. Anything beyond that, then we can talk. You know, later you wanted a squad or something else, but that's generally what I say. And I tell, I tell investors. I say, Look, if you only have $30,000 in the thing, let's connect after you get up, because I don't want you putting all that 30,000 into a rehabbed property, whereas, who knows, maybe the economy might go into a recession and it stays vacant for six months. I don't want you to have to go through that. So let's stick to those numbers. So you said you have 100,000 so you have options. You can you can get either a rehab property or you can get a new construction. So it's completely up to you. It's about your new construction. Single family, it's completely up to you. I personally, I, like I said, I started out with the rehabs, and then I've kind of graduated up to new construction. God, they the lowest risk you can take with 100,000 is by starting with a. Be just a low price rehab where you put in $30,000 and full, you know, down payment burden, costs, everything else you put that, you know, 30 grand, if it first property, you put that 25 to 30 grand in, and you treat that as a learning experience. And you go through the experience, and if everything goes smoothly, then you can buy the second property, and you can decide whether, hey, do I want to continue with this rehab, or I'd still have enough capital for the new construction single payer. But I would start small. If you're new, if you're an advanced veteran investor who has six figure, well into the six figures in the bank, ready to go. I tell those people. I say, hey, let's just go for new construction. Let's go for the new construction. Single family. Let's go for the duplexes. Some of them have 700 $800,000 in some cases, a million dollars plus. I say, hey, let's let's just go for the quad to the construction four Plex. The incentives are great, etc, etc. So in your case, 100,000 you certainly have choices. And what I'll do after this call is, well, first I want to hear, based on what I said, What are your thoughts on anything, whether it's renew, construction versus rehab, and then what I brought up earlier about coaching?    Brenda  41:12   Yeah, I actually thank you, Naresh, I really like what you said about starting small. I have purchased two single family homes in the past, their rentals, but I never went through a coach. I just kind of did it on my own, and luckily, things worked out. But certainly having a coach and starting out small, just to kind of go through the process, it's really helpful. Here's the situation that I think is just a little bit different, and I know that this would probably be something that I talked to like a lender about. But in your experience, I actually just came from an 18 year career. Actually, I was in tech myself, but I'm now transitioned from a corporate w2 into more, but 1099, what's classified as like a independent company, you know, type of income, what has been your experience with other clients that transitioned from that type? Is it easier? Is it harder to obtain loans? Is there going to be different requirements? 25% does that still stand?    Naresh Vissa  42:13   Yeah. So I could give you a full, you know, lecture on this, or something called the housing expense ratio and something called the total obligation ratio. I'm not going to get into those details, because the lenders, I can refer you to lenders, and they can explain all that, and those ratios mean a lot to getting you pre qualified. But what I will say is, unfortunately, if you are 1099, you are at a disadvantage, because it's not steady, consistent income, unless you can show two years of steady, consistent income. I mean, really is the last for your last two years of tax return. So if it's a new 1099, gig, yep, you're gonna have to wait until you have two years of consistent high income. If you've been doing it for a while, then send your last two years. And if it's, you know, if it's looking good, then, then you'll get approved. The other option, and this is, this is not a personal question or anything, but it married couples can go together on one loan. So if this actually helped me out a lot, because my wife is a high income earner, and I have my own business, and my business does pretty well, but if you're 1099 as as you know, there are all sorts of things you can do with your tax return that are completely legal and to where you pay yourself as little as possible, so that you can cut your income tax. So in any case, that's like 1099 workers are a disadvantage for mortgage because all they care about is your pay stub, your you know, how much income did you have? So there were times when I put my wife on the mortgage and she's got a high income, and so you can put a spouse on there, and you can both do it together. Now you're allowed 10 loans per person, so if you want a spouse go on a mortgage that counts, even if it's for one mortgage, one property, that counts as one for each of you. So for two working husband and wife. For a couple where both spouses are working with good income, I say look, you'll want one spouse to do 10 properties and another spouse to do a completely different 10 mortgages. That way you can do 20 combined. Now, if you do it together, then you'll only be able to buy 10 combined because you're older than so 1099, workers. We get that question a lot, and it actually it is a problem, because the standards changed after 2008 so either wait the two years and have your consistent records to show high income, or if you already have it right now, then you can get approved.   Brenda  44:54   Got it. Got it. This would be for just conventional loans. What about other loan products? Like, I think I've heard of the DSCR loan where maybe just the rental property would cover, you know, part of the I'm not sure, like, I guess you're guaranteeing that the property will make enough money to cover the payment of the loan.   Naresh Vissa  45:12   Yeah, DSCR and loans are hard to get approved. Really, what I should do is introduce you to some of our lending partners. If you're interested. DSCR is meant more so for people who have utilized you want to use those 10 loans first, so because if you go you're going to have a higher interest rate if you go with the deal. So those DSCR loans, or Portfolio loans, are meant for people who have used their 10. Their spouse has used their 10. They've got capital low rolling in their ultra high net worth. So they're fine, okay, just get me another loan. I need the tax benefit. I need the tax break. I'm fine paying a 10% interest. So they'll go for a portfolio loan or a vsdr loan. In your case, first property, your first investment property, first turnkey we want to go for a loan.   Brenda  45:58   Got it makes sense. And then another question, so this was about the financing. But another question that I meant to ask earlier is, I know you mentioned, like, you know, I am not like a realtor or anything like that, but how does it work? Like, I'm think about when I'm purchasing a home, personally, I kind of say, hey, I want to three bedrooms, four bedrooms, this many baths. Like, how does that work with you? Like, do I give you criteria of what I'm looking for, or, you know, based on my goals? Do you kind of craft a plan? How does that work?   Naresh Vissa  46:29    Yeah, so I actually sent you an email just right before this call it. I think you got the email, and it includes a link to about 20% of our inventory. It's not all of our inventory. That inventory is just there. To get you started to see the types of properties that we have available. We have some constructions and the markets that we cover, again, it's only about 20% of the inventory. If you go to our GRE marketplace, you can see all of the markets that we cover. Your biggest source will be, I send out emails. So your biggest source will be, if I email you, I'll email you like a property. It'll be, Hey, I just came across this deal. It's like, it's my VIP email list. So you'll get my, you know, VIP emails, and that's going to be your, your best source. You also get Keith white holds newsletter, which promotes properties from time to time and and we only promote the best. We there are hundreds of properties we can promote. We only distill it down to the best of the best. So don't think, oh, like, there might be another property that narration knows about. Now we promote through our social media, through my email list, through Keith's newsletter, through the podcast, through the webinars, the best of the best. So that's the best way to to find out,   Brenda  47:49   got it your inventory or what you currently right,   Naresh Vissa  47:52    and with your permission, I can add you to my VIP email list. If it's okay, yeah, that would be cool. I'll go ahead and add you, and you'll start getting those emails in real time. I only send out an email maybe once every three weeks, so I really only want to send the best of the best. I want to waste people's time.   Brenda  48:07   Great. So what if you do send me an email and I'm like, Yeah, I love it. I think this is fits exactly what I'm looking for. Do I email you back? Do I contact you? Like, how do we stay in contact?    Naresh Vissa  48:18   So email is the best form of communication, because in real estate and business in general, we want documentation of everything. We don't want any miscommunications. So if you see something you like, email me. I'm available. You have my phone number. You can text me, you can call me, you can email me. I'm very accessible, but email is preferred, because that way it's in writing, and I'll know exactly what you want, the address, everything. So let's say you see a property that you like from an email that you get from Keith or from me, and you email me to say, hey, I'm interested. What are next steps? I will get you in touch with the actual like I said, we're just an education company. I'll get you in touch with the actual builder or the broker or the agent on the property, and they'll be able to answer way more questions than I can answer way more and that that's for anything. If your question is about financing, I can get you in touch with several good, low rate lenders, and they can answer all your questions about financing. Your question is CPA Tax stuff. I can get we have, uh, several good contacts who can help you out there as well.    Brenda  49:20   Got it, got it. So then what, what does our communication look like from there? Like, do if I say yes, I want it, then you get me in contact with them, and then I kind of work with whoever it is that has this property. And then hopefully we just close on the property. And that's it, right? Am I understanding that correctly?   Naresh Vissa  49:40   Sure? So, so all correctly? Yeah, I'll refer you over to them, and they will, they will take care of you. Should copy me on all emails that way. Okay, what's going on? Copy, you remember, I'm your coach. I'm here to help you, like it's free, so copy to an email so I know what's going on. If there's a problem, I can jump in. In many cases, I hold a leverage over a lot of these. People, if a problem happens, I can step in and say, Hey, treat her better. Or, you know, you should waive this cost, or whatnot. So copy, because the people who get into trouble are the people who didn't copy me on the emails. And many, many time, time just goes by, and then they come with their problem as they Hey, if you came to me a year ago, I could have actually helped you with this. Now, the statutes expired, and it's, it's a complete mess. So always, even after you're done posing on the property and you have a tenant in there and just copy me on me.    Brenda  50:30   Got it. Okay,  So kind of bring you along the journey. Okay, so let's say I'm at the end, like, do these providers help me? I'm assuming in some of these cases, you've mentioned places that are far from where I live. So do they help provide additional resources, like, who's going to manage my property, or who's going to find me a tenant? Like, could they help me with that?   Naresh Vissa  50:51   Absolutely. So the entire point of GRE of this investment coaching program, the entire point is so that you can become what's called a laptop landlord. You can literally live free and have just take a step back and have your properties run on their own. So the idea is not for you to invest down the street and become a property manager and a landlord down the street. It's you can be anywhere in the world. Buy properties anywhere. Like I said, I live in Florida, but by Prop, I've never visited any of my properties. I've never met a tenant. So that's what you want to do, and that's what we help people do. If you want to buy a property across the street and become you can do that yourself. Go through all the loops yourself. We are here to help you invest in Ohio, in Tennessee, in Florida and Texas and all these places that you may not have even visited every other life, but you can still have a very fruitful investment journey. So we set all that up for you, the property management, every all that it's going to be taken care of, so that your hands off. That's why it's called turnkey real estateReal real estate investing.   Brenda  51:56   Got it. Okay, sounds good. And typically, how long does this process take? I mean, I'm sure it's different for everybody, but what can I expect, like from beginning, from when I talk to you, to when hopefully I have a property that I'm signing off on?   Naresh Vissa  52:12    In some cases, it's literally taken two days. In other cases, it's taken there's not even an answer, because people did end up buying Okay, yeah, so, so, yeah, in in the case of, like, our Memphis burr properties, which are rehab properties in Memphis, I recommend that you watch our burr webinar. I can send that to you after this call, if you'd like. But I had people who watched the webinar talk to me. I introduced them that same day to the provider in Memphis. They talk to their provider in Memphis, and then the next day, they pick the property, and the day after that, they sign a contract. Oh, okay, so it's all about the investor. If you're a serious investor, it can be very quick, like me, I was very serious. That's why I scaled. I bought eight and two and a half years, eight properties in two and a half years. Other people, if you want to take your time, it could, you could literally take your time and never buy any and a lot of people are doing that, because in 2019 they said, Oh, you know what, I'm gonna wait. There's gonna be a crash and this and that. And so they waited, they waited, and prices skyrocketed, and now they said, You know what, I'm I'm priced out of the market, so I'm just not gonna invest in real estate anymore.   Brenda  53:16   Yeah, it's that analysis paralysis. I've experienced that. Yeah, yeah, got it. Okay, cool.   Naresh Vissa  53:23   All right. So any other questions?    Brenda  53:25   No, this is really helpful. It's kind of good to know, like, kind of where you step in and kind of where you hand off, and again, the timeline is different for everybody, but it's kind of good to know that I could literally be standing here two days later and have a property if I want. So good.   Naresh Vissa  53:42   Yeah. So as we end this call, next step, so I told you about new construction versus rehab. Are you? Are you interested in both, or leaning towards one or the other? Right now? Just    Brenda  53:54   probably the rehabs, because I think, like what you said, I like the idea of the E step into like, let me see how this process goes first before kind of committing a bigger chunk of capital to something larger. Yeah, I agree.   Naresh Vissa  54:06   Okay, so here's what I'm going to do as next steps. I'm going to send you a link to the webinar we did for our hottest rehab asset class right now, hottest rehab provider out of Memphis. It's the Memphis Burkey webinar. I went ahead and just emailed that to you. So watch that webinar. It will answer like every question imaginable regarding the provider, how they do their process, the properties, everything. So watch that webinar and then shoot me an email after you're done with the webinar on what you're thinking just you can watch webinar today and you want to shoot me an email right after, just let me know what you're thinking, and we can go from there. I think that's would be the next step. Just watch that webinar, and then we'll, we'll reconnect.   Brenda  54:54   Sounds good? Okay, I like that.   Naresh Vissa  54:57   Okay, very good. Well, I sent that link to you, and. And that's about it. If you have no more questions like I said, you can add my phone number to your phone book and feel free to reach out whatever you want.    Brenda  55:07   will do. Thank you so much.    Naresh Vissa  55:09   All right, thank you. It was great.   Keith Weinhold  55:11   Yeah,  I hope that you found that helpful in making America rich again. Namely, you. Of course, no two coaching calls are the same. Some GRE followers will perhaps have more questions than Brenda did. There. We are here to learn your situation. We know the mistakes you've got to avoid, and we can connect you with the best income property for you across the nation. We really filter it down to the best of the best, and besides being a truly free coaching call, we don't try to upsell you to a paid course or anything like that, because we don't even have any product to sell really. So even if you wanted to buy something from GRE, I don't know if you could, maybe unless you buy a GRE logo t shirt from our website or something like that. So keep all of your funds for the property down payment. As far as now, you can book a coaching call at GREmarketplace.com and select the free investment coaching area. Until next week, I'm your host. Keith Weinhold, don't quit your Daydream.    Speaker 3  56:21   Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively,   Keith Weinhold  56:41   The preceding program was brought to you by your home for wealth, building, get rich, education.com  

Keith highlights the unprecedented surge in immigration and its impact on housing demand. The conversation also covers state income tax policies, noting that nine states have no income tax, and the impact of international tax laws on US citizens abroad.  Immigrants now make up more than 14% of the US population, the highest proportion since 1910. The US is facing a significant housing shortage, with an estimated 4.5 million housing units needed. Housing shortages are expected to continue, with homelessness rates rising by 12% year over year. Learn about the challenges of being a US citizen living abroad and the potential for double taxation. Resources: Connect with Tom's team at WealthAbility for a free consultation on permanently reducing taxes. Show Notes: GetRichEducation.com/525 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai   Keith Weinhold  0:01   welcome to GRE I'm your host. Keith Weinhold, both an immigrant surge and a big wave of US born residents is tightening housing demand near unprecedented levels. Then we're joined by show regular Tom terrific again, but it's not Tom Brady on how to legally avoid paying state income tax and the fact that if you're from the US, if you move out, you must still pay tax on your worldwide income, plus more tax strategies that you can benefit from today on Get Rich Education.   Speaker 1  0:34   since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show, guess who? Top Selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit getricheducation.com   Corey Coates  1:20   You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  1:36   Welcome to GRE from Athens Georgia to Athens, Greece and across 488 nations worldwide. I'm your host. Keith Weinhold, get rich education. Founder, Forbes real estate council member, best selling. Author, long time real estate investor and holder of a humble bachelor's degree in geography from a college in Pennsylvania that nobody's ever heard of. It's that time of year where you now have Halloween decorations in your front yard competing hard for space with political campaign signs. What's your HOA gonna do now? Welcome in this slack shot operation right here is the get rich education podcast. I think you know that by now it's episode 525   Brace yourself, immigration has absolutely exploded. I've got the latest numbers on that, and there's a chart recently published in The Wall Street Journal that shows it all legal and illegal. We're a real estate platform, so the question I'm asking is, Where in the heck are we going to house all of these people? In addition to soaring immigration, we'll look at our own domestic US born surging population that are forming households now, and that part might have flown under your radar. This is an urgent issue. All of this isn't just coming. It is already here, this explosion of housing demand, it will indelibly shape both broader society and real estate's supply demand component for decades, it is really approaching the unprecedented we look at net immigration to the US since 2000 it's really these past four years where the numbers have shot up like a rocket through 2020 immigration averaged around 1.2 million people per year, but since 2021 it has more than doubled to around two and a half million net immigrants per year. But the number of illegals arriving among them has gone up as much as 10x starting in 2021 and the overall figures they keep rising. Last year, there were over 3 million immigrants, about three times the total number that we averaged in the first 20 years of this century. So a 3x total net inflow, legal and illegal. And these figures in the Wall Street Journal chart, they are sourced by the CBO. Now you might think that the immigrants that did not enter legally could eventually get deported, but some of them that are already living and working here, gained something called Temporary Protected Status that keeps them here. Well, our central question remains, Where in the heck are we going to house all of these immigrants in a nation of almost three 40 million people? Do you have any idea what our foreign born population is up to now, okay, so not the descendants of those people, just the foreign born population here now, out of the 340 million total US population, any guess? Venture a guess. Last year, the US foreign born population reached 47.8 million. And that figure 47 point 8 million, that is five times more than in 19 75x Do you even realize that's almost double the population of the entire continent of Australia, now crammed into the states. That's how many immigrants, 47.8 million is. It's also the same as the population of all of Spain. That's another way of saying it all in the US today. And by the way, that is my geography degree at work, right there. Hey, the geography muscle is one that I just don't get to flex enough. Immigrants now make up more than 14% of the population. That is one in seven Americans. And that proportion, right there is the most since 1910, per Pew Research. Well, where are the immigrants from? Alright? Before I get into that, if we go back about 60 years, immigrant growth accelerated after Congress made changes to US immigration laws in 1965 that was a key year before 1965 the law favored immigrants from Northern and Western Europe, and it mostly barred immigration from Asia, all right, Well, so here in modern times, where are immigrants from? Mexico is the top country in 2022, 10.6, million immigrants living in the US were born there. That is almost a quarter of all immigrants. And then the next largest origin groups in order are those from India, China, the Philippines, and then El Salvador. All right, so there are a lot of new immigrants here, like a demographic shock wave that's going to drive the demand for housing. But there's way more to this housing crunch story. Combine this nascent immigration influx along with America's own high birth rate years. And this is something that you might not be aware of, though, what I just talked about that might have been somewhat informative to you. You probably had some idea that immigration is higher now, because it's been in the news cycle for a few years here, but something that you probably don't know. And yes, fertility rates are down today, but there was a boom of US born residents from the years 1990 to 2010 and then you might say, well, so what 1990 to 2010 that was in the past? But no, actually, it is just the beginning, because when it comes to housing, it has less to do with the birth year. Currently, what you have to do is add perhaps 25 or 35 years to that birth year, because that's the age of when that person tends to start their own household. And the average age of today's first time homebuyer is 35 to 36 years old. Well, the US is peak birth year occurred in 2007 then adds 35 or so to it. And that means that, on average, they will buy their first home in the early 2040s and a lot of them were going to start renting in the 2020s and 2030s So suffice to say, a lot more Americans will need homes. Well, what else will those high birth years from 1990 to 2010 mean now and into the future? Realize that over 13,000 Americans are turning 35 every single day, both now and years in to the future, record highs. Yes, every single day, just another demographic figure that's on the rise, and there are deaths to account for as well. But the population aging into home ownership is projected to exceed the population aging out like with deaths for a long time, this will pump housing demand. The US has about 144 million housing units today, and we are going to need more housing of all types. Well, between all the fresh immigration I discussed and this US born surge, you've indubitably got the recipe for a ridiculous amount of demographic driven housing demand. And you know, maybe over the past few years, at times, you or some of your friends or family, they've wondered why housing prices have risen fast, why rents have risen fast, and why? Even a tripling of mortgage rates couldn't stop it. It could only slow it down. It's because of this demand that is just coming, and it's going to keep on coming from both the US born demographic surge and an immigrant surge. And here's the thing, as we know this is all amidst a still lackluster US housing supply today, so greater demand, yet still a meager supply. Zillow estimates that we're still four and a half million housing units short, and the housing deficit is growing, although other outlets have estimates that, you know, they really are all over the place. These estimates as to how great the shortage is, 3 million is probably closer to a good amalgamation of how severe the housing shortage is, all right. Well, how do we reduce the housing deficit? We need to start more construction, but it had its recent peak in 2022 and it's fallen since then, in single family homes, because builders faced higher interest rates then and new apartment building starts, they have fallen too. And two years ago we had a lot of apartment building starts, actually. And as you drive through major cities today, you might still see cranes in the air. You still see a lot of active apartment building construction, actually, but more of those projects began two years ago. They began to freeze as interest rates rose, and now they've just got to complete what they've already begun. It can be two years from an apartment construction start to a completion. So as some of these complete, there will be some absorption time there on apartments. But the starts are way down on apartments. This year, we should have at least double the number of apartment starts being started than what we have now. So this sets us up for more future shortages, regulation and zoning. We know that that slows down building for most any housing type, single family, homes, apartments, condos, whatever it is. And nimbyism is a condition that's especially pervasive in the construction of new apartment buildings. Neighbors don't perceive new single family homes as a threat in their neighborhood like they do apartments, whether that's warranted or not. That's how people feel. That's the sentiment. That's the type of neighbor that shows up at a public meeting and speaks out against new apartment buildings. So to summarize what you've learned so far, it's really the confluence of four housing factors coming together here, two of them for higher demand and two for lower supply. The two for higher demand are more immigrants and a surge of US born people from 1990 to 2010 that are just starting to get old enough to need their own place. That's the higher demand side. And then the two factors on the paltry supply side are both a lack of current supply and not enough building for the future. Either it is an increasingly dire situation, and it can even be in your face. Actually. How is it in your face? Well, it's one reason that you see more homeless people on the street in your nearest city, although you might see more US born homeless than you do immigrant homeless. HUD tells us that the homelessness rate has jumped 12% year over year. That's the fastest homelessness increase rate they've ever reported. I talked to you about that before, and I'm waiting for HUD to release their new number in December. They released that annually. You know, amidst this demand, supply imbalance, in fact, anymore, let's look at it this way. Let's flip the script. Consider what could possibly stop insatiable US housing demand from exceeding supply for decades. And when you do, when you think about what could stop that, it starts to get absurd a sudden, new construction technology that pumps out homes like a popcorn machine, climate change that roasts us into human popcorn, not the good kind, and AI or VR, so advanced that We're all going to live inside some sort of force field. How about an even worse pandemic, or even a world war that would have to kill at least 10s of millions of people, or something like that, or aliens or asteroids destroying Earth? Or how about a depression level economic contraction. But see all these scenarios that would derail the housing demand trend. They range from the pretty unlikely to the downright ludicrous. Starts to sound like a Sci-fi flick, and amidst a lot of those afflictions, your life's biggest concern wouldn't be your real estate investment portfolio. It would be primordial human survival. Now, before I summarize your big takeaway here, let me tell you immigration, it has near term downsides, like a lack of housing and a demand for public assistance. And yes, I know a huge pack of new immigrants can appear sort of like a Walmart at first glance, huge, chaotic and full of people that seem like they've given up on life.   But that is certainly not always the case. A lot of immigrants are ambitious long term new young people drive an economy. Immigrants have long been a backbone of innovation. A lot of our tech giants were started by immigrants or their children, and also a lot of immigrants find those construction jobs that can help us build our way out of the housing shortage crisis, but that is going to take a long time. The bottom line here is that if you're looking for your own home, waiting probably won't help. As an investor, own more properties now, own lots of rental housing, you're going to have something that everybody needs. Housing demand is expected to exceed supply well into the future. Both this US born surge of people and the immigrants, what they do is they tend to be renters for years before they become buyers, if they ever become buyers, from here today, it's a realistic scenario to expect then soaring real estate prices, higher rents and lofty occupancy rates for years.    Well, Tom terrific is back in the house, and we are talking taxes. Brady's in the gun bulletin to his left. He's got the hoo man on the right wing with Dobson to the right Collie and Tomkins left. Brady throws it to the end zone for kenbrell Tompkins. Leaping. Kenbrell Tompkins, Brady's back.   That's your quarterback. Show ponies, where's the beat? All right, that's enough. Scott zolak, Bob Sochi on the call there 95 the sports hub in Boston. No Tom. Brady is not the Tom terrific that we often have here. Brady simply doesn't know enough about taxes. We've got the tax expert with us, the extraordinary Tom. We're right. What about that spirited play call at the end there? Did he say unicorns show ponies? Where's the beef? I don't really get all that. So getting back to real estate and taxes here, look, here's the thing, when you see what your government spends money on, and you're disgusted by some of these spending programs, doesn't that give you a supreme motivation to want to reduce your taxes? Well, we're going to talk about state income taxes where they're high where they're low. There are currently nine income tax free states. Are more states looking to drop their income tax to zero and join them? Or is it going the other direction, where they're looking to raise them if you live in one state and invest in another. We'll get into how that looks too. Canadian listeners, sorry, we don't plan to have provincial income tax discussion today. Now, I seem to have become here no more for my real estate investing voice than anything else. Last month, I was in Pennsylvania for a while, and I ran into one of my high school teachers. He was the art teacher, but he also taught a class called journalism in publications. That was an elective class, and I took that class as a high school student. I think I was a senior then, well, our job was to lay out the yearbook, writing, positioning and centering this text here in that image over there. Well, I told my old journalism and publications teacher that he's been a substantial influence on me because, as you know, I write our Don't quit your Daydream letter to you about every week. And I just love doing that, I've always thought of myself as more of a writer than a talker, and I myself really enjoy writing and laying out the body and images of our newsletter and sending it to you about weekly on crucial information that you must know About, real estate investing, economics and wealth mindset. It's got a dash of humor, and every single letter can be read in less than five minutes, often less than three minutes. I would love to have you as one of our 1000s of weekly readers, and it is free. You can get it simply by texting GRE  to 6866. come along and join us for real estate investing information and fun. Just take a moment and do it right now while it's on your mind. Text, GRE to 6686 lots more. Straight ahead. I'm Keith Weinhold. You're listening to get Rich education.   Hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage, you can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridgelendinggroup.com, that's ridgelendinggroup.com.   Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work. With minimum risk, your cash generates up to an 8% return with compound interest, year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too. Earn 8% hundreds of others are. Text FAMILY  to 66866, learn more about Freedom Family Investments, liquidity fund on your journey to financial freedom through passive income. Text FAMILY to 66866.   Chris Martenson  21:42   this is peak prosperity's Chris Martinson. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.   Keith Weinhold  21:58   This week's guest is, to me, the world's foremost tax pro. He is an international authority on how you can permanently reduce your taxes, and he really makes taxes easy, fun and understandable, like no one else that I've ever met does. He runs a terrific educational platform too. It's called wealth ability. Welcome back to get rich education. Tom, we're right.    Tom Wheelwright  22:21   Thanks, Keith, always good to be here.    Keith Weinhold  22:23   Yeah, it's so good to have you back, because taxes are such a dynamic topic. And one place where I wonder if it's going to be dynamic, Tom, is we have a number of states that don't have any state income tax, which is something that people have to pay on top of their federal income tax. Federal alone can be up to 37% some of the states with the fastest population growth, like Tennessee, Florida and Texas, don't have any state income tax. So what I'm wondering, Tom is, are more states considering abolishing the income tax like those states have done.    Tom Wheelwright  22:59   We've actually seen a lot of states in the last couple of years reduced their income tax rates. So Arizona, where I live, is one of them. We went from over a potential tax rate of like eight and a half percent potential to an actual tax rate of 5% there was actually a proposal passed that would have increased it down to a tax rate of two and a half percent. Our former governor, Doug Ducey, his goal was to abolish the income tax in Arizona, and we did get down to two and a half percent. There are a number of states, typically in the middle of the country. You don't see any states on the coasts doing this, outside of Florida, that are reducing their tax rates. So you do see states doing that. You see other states that are increasing their tax rates. Recently, I was reading about Bill Belichick, and he said, Massachusetts is always hard getting the top earners, the top free agents, into New England. Because he says, This is taxachusetts, because they have a surtax on millionaires. Well, of course, all football players are millionaires. That is an issue. People are leaving states like California, Massachusetts, New York, New Jersey, and they're moving to low tax states such as Arizona, Texas, Florida and, you know, the whole southern belt.    Keith Weinhold  24:15   with Belichick having Tom Brady. It didn't matter if he couldn't bring in the best players, because Tom Brady made stars out of nobodies. It seems like he could complete a pass to any no name wide receiver or tight end for two decades there in New England. But can you tell us more about maybe interesting dynamics with state income tax? For example, I know that California has punitively high state income taxes, and then you have other states that have tax rate tables and some that have flat taxes, like, I think Pennsylvania has about a 3% flat income tax. Colorados is 4.4 so can you tell us more?   Tom Wheelwright  24:51   Yeah, there are, you know, the federal income tax has graduated rates. We go, actually, from a zero rate to currently a 37% rate, which is not really 37% rate. It's really 41% because there's a 4% add on tax that pretty much you're gonna pay. So it's really over 40% California has a graduated tax rate, but it goes up to 13% Minnesota has a high income tax. New York has a high income tax. So Massachusetts, we're seeing high income taxes. The states that provide have big governments and provide lots of services have high tax rates. That's why we see it on the coasts. Interesting enough. Minnesota. Minnesota is the liberal state in the middle of the country, and so they have liberal states tend to have very high tax rates, and conservative states tend to have very low tax rates.    Keith Weinhold  25:45   Now we have a lot of real estate investors here that have learned that the best deals are outside their home state. So that investor might be domiciled in a Minnesota, but investing in, say, Arkansas, tell us about how the state income tax affects them.   Tom Wheelwright  25:59    So it's kind of like being a US citizen, right? You live in the US. You're taxed on your worldwide income. You live in Minnesota. You're taxed on your worldwide income in Minnesota. So by virtue of where your residency is, you are taxed on all of your income. Now you'll get a credit, typically, for taxes paid to another state. Well, let's say that your tax rate in your state is 10% and then you invest in a state with a tax rate of 3% well you're going to get tax credit of 3% so you're still going to pay 7% in your state, plus 3% that state. You're still going to pay your 10% it's just going to be some of that's going to go to another state. Some of it's going to go to your state. But in total, your tax rate is likely to be wherever you live. That's youroverall state tax rate. I'll give you another example. Let's say that you invest in Texas, you live in in Minnesota, you're going to pay Minnesota tax rates on your income, you get no credit because you have no tax in Texas. What's worse is, though, you have property tax in Texas, but you don't get a credit in Minnesota for your property tax paid in Texas. So you have much higher property taxes in Texas than you do in most states. Right? Because every state has to raise revenue, right? In Texas has decided to it largely on sales tax and property tax. So that means that you don't get that offset. Property taxes are pretty serious in Texas. If you're an investor in Texas, you know that property taxes are pretty serious, but you don't get any kind of benefit in Minnesota, but you still pick up the income in Minnesota.    Keith Weinhold  27:38   In some Texas jurisdictions, property taxes can be 3% annually based on the property's value, pretty punitive. There in Texas, Texas is a good example. That's where we have often high property tax rates, but zero state income tax. So with these other states that have zero state income tax, are they subsidizing that with property taxes or sales taxes, or in what other way are they making up that?    Tom Wheelwright  28:03   Of course, for example, we were talking earlier about Tennessee. Tennessee doesn't have a personal income tax, but if you have your real estate owned through a limited liability company, you do have a 6% tax on the income of the LLC. So even though it's a pass through entity for Tennessee purposes, it's taxed. They have all sorts of mechanisms to raise revenue. All states need revenue. Now, some states raise less revenue per capita than other states. Those are the states that people tend to move to. But don't forget those other taxes. I mean, sales taxes. Sales taxes can be very high, right? And you pay sales taxes typically don't pay them on food or prescription drugs, but you typically pay them on pretty much everything else, and including leasing a car, they're going to get their money. It's just how they get their money.    Keith Weinhold  28:50   Well, we've been talking about ways that you could potentially legally escape taxation, depending on what state that you live in. So in a domestic sense, and Tom we pull back and we think about that in an international sense. A lot of Americans don't seem to realize that if they're, I guess, born and raised and get citizenship in the United States when they become an adult and get older and they go abroad, they have to continue to pay US taxes if they move to Norway or Dubai. Can you tell us about that?    Tom Wheelwright  29:21   Yeah, so US citizens are taxed on worldwide income as long as they're a US citizen. Here's what's really interesting in the US let's say you give up your US citizenship, you're still subject to taxes on your worldwide income for 10 years. Wow, after you give up your citizenship so you no one get any of the benefits of being a citizen. You've given that up, and you still have taxes for 10 years. Earlier this year, we did an episode, and we talked a little bit about this unrealized capital gains tax, right? People don't think, well, I'll just leave. Doesn't work that way. You're still going to have the capital gains tax for at least 10 years, and the only way to get rid of it is to give up your citizenship and wait 10 years. It's a pretty restrictive law, because most countries only tax if you live there, if you're a citizen of France, but you move to Belgium, you're taxed in Belgium, you're not taxed in France. Not true with us.    Keith Weinhold  30:19   Yeah, that's remarkable. I didn't know about that 10 year thing. Even if you renounce your citizenship, those taxes will follow you for 10 years regardless of where else in the world you live. Um, I'm just maybe this is a little bit of devil's advocate. I mean, this sounds preposterous when we first think about how Americans are taxed abroad for the rest of their life, but maybe thinking of it philosophically, if it does make sense in any way, which is really hard for me to say, but maybe it's because, okay, well, you were born and raised in the United States, where we have this very mature infrastructure and stable currency and good educational system, so you got to be a beneficiary of that. So when you're 30, you can't move away and never give us any tax money to support that. Again, what are your thoughts with that?    Tom Wheelwright  31:02   different countries have different tax systems? What I will say is, just like the state discussion, you do get a credit for taxes paid to another country. So if you have income taxes, let's say you're living in Portugal and you pay Portuguese income taxes, you're not going to pay taxes twice. You're going to pay the higher of the two rates, either the Portuguese tax rate or the US tax rate, but you should not be paying tax twice. Now, if you're going to do that, you need a really good team of tax professionals. You need a good US tax professional, and you need a good tax professional where you live, and those two tax professionals need to talk to each other on a regular basis, because otherwise you can end up paying double tax, and that is the worst of all worlds. You do not want to end up paying double tax. So make sure that just know that if you're going to invest in another country, or you're going to live in another country, you need double the tax advice.    Keith Weinhold  31:05   I am just going to speculate that there are an awful lot of people that don't consider taxes before they move, whether that's domestic or international, not that that should be the top consideration, but a lot of people probably aren't even thinking about it.    Tom Wheelwright  32:13   A lot of people aren't. That's true. Now, are there ways to reduce your taxes internationally, particularly if you're in business? Yes, there are ways that you can reduce your taxes. So know that there is still tax planning available. But I hear about people saying, I'm going to invest in the Dominican Republican, or I'm going to invest in Dubai, or I'm going to invest somewhere else. Just know that you've got now two sets of laws that you're working with you're working with US laws, and you're working with that country's laws. And so make sure that you've got good advisory on both sides. When we're talking about moving for tax considerations, we should cover Puerto Rico. Tell us about the advantageous tax laws for Puerto Rico, and if they're going to sunset, they're there for the foreseeable future. So Puerto Rico, depending on how you earn your income, you can potentially reduce your income tax rate from the current 37% rate in the US to 4% yeah, that's basically an agreement with Puerto Rico. Puerto Rico is still the US, but it's got special laws that it's almost like a treaty, right? Even though it's a territory of the US. And what happens is, is that if you set it up properly, you got to live there, by the way, you can't just pretend. You got to live there six months in a day out of the year, over six months a year. And if you do, then you get a 4% tax rate on the income you earn while you're in Puerto Rico. If you earn income while you're in the mainland, you're going to pay tax on the mainland, but the income you earn in Puerto Rico, you're going to pay 4% tax. And there are certain types of income that that works for certain types of income, it doesn't just make sure that this is one where you need a Puerto Rican tax advisor as well as your US tax advisor. Capital Gains also have they have a potential tax rate of zero. So there are obviously details you have to follow again, make sure, before you get into that, know that there are huge tax benefits for living in Puerto Rico. No question. You know, it's the Puerto Rican discount. What can I say? We say in Arizona that California has a beach tax and we have a desert discount. The same was true in Puerto Rico. Puerto Rico has a Puerto Rican discount. That's what it is.    Keith Weinhold  34:24   Yeah, you're going to be getting on a plane a lot in order to go anywhere. I know an awful lot of entrepreneurs that have relocated to Puerto Rico. You do too. Tom, you the listener, probably do as well. It's really important to have the right team before you make such considerations. And before we're done today, Tom and I will talk about how you can connect with him and learn more. But Tom, since we last had you here, you updated your terrific book, which I have on my bookshelf called Tax Free Wealth. Tell us about the updates and changes you made to the book.   Tom Wheelwright  34:56   We do a new edition of tax free wealth every time there's a major change in the tax law. So the second edition was the 2017 tax law, because that was a major change. Since 2017 though we've had six major changes to the tax law, we had a bunch of major tax law changes during COVID And so what we did was we actually took the 2017 and all the new ones, werolled them all into a new edition. By far. This is the best edition of tax free wealth by a long shot. I mean, I think tax free wealth, you know, got good bones to it. It's a good book. Got almost 4005 star reviews on Amazon. This is the one I like the best, by far.   Keith Weinhold  35:18   Tax Free wealth, I read the original edition, and it's not like watching motorcycles jump off ramps, but for a tax book, it's actually really a good read there. He really brings life and some good examples to how you can permanently reduce your taxes. Tom, you and your terrific firm wealth ability have been helping people do that for years. If you the listener, want to Tom's team and Tom's referral network to help you permanently reduce your taxes. We have a resource for you atget rich education.com/taxwe can actually set up a free consultation to confirm if indeed they can help you in your situation. And Tom, why don't you talk to us some more about the importance of having the right tax pro on your team, and how they're not actually an expense, but really they're an incentive to you, because the fastest way to get an ROI is actually by reducing your taxes, because it can be done almost instantly.    Tom Wheelwright  35:36   Yeah, for sure. And what's important is that you have a relationship with a tax advisor that does give you tax advice. That's why it's called a tax advisor. They actually give you tax advice, and they willing to give it to you. And they're not waffling. They're not saying, Well, I don't know, or they're not backing off. They're saying, Well, look, if you do this, this is what you get. You have to choose whether you want to make those changes to your situation, but they're going to give you, you know, what changes you can make to your facts in order to reduce your taxes. I think the most important thing, though, is that you have a partnership with your CPA, that this is a true relationship. And we've actually changed the way we work with clients. We used to charge for projects. We used to charge for tax returns. What we want is a relationship, so we basically charge a monthly fee for the relationship. So that's a recent change in our model, you're going to see more and more CPAs go to that model, because it is a much more comfortable model for both the CPA and for the client. But what we want to do is we want to emphasize the relationship. We don't want you to feel like every time you pick up the phone, you're going to get charged. We don't want you to feel like, well, all that tax return fee is just killing me. No, it's not a tax return fee, it's a monthly fee. It's an annual fee, billed monthly, is what it is. And that way you have something come up, you don't have to worry about them and get a bill for it. You have even an IRS audit come up. Once you're a client with us for a year. After the first year, we'll then allow you to pay a small monthly fee so that when you get audited, you won't pay us for handling the audit. We call that an audit defense plan. I talk about that in tax free wealth. To me, we've been operating this way. So my firm, which I worked with people like Robert Kiyosaki, we've been operating this way for several years, and it is the best way to work with a tax advisor, because you always have that relationship, and you never have to worry. I'm not going to get this big tax bill, this big fee, like you do for an attorney, right? You don't call your attorney, because you can get a big fee, right? Every minute it's going to be a big fee. This is a great way to work with a tax advisor and make sure that you can be proactive, and they can be proactive. It's really a great way to help build the relationship over time, which is something that you're going to want to have over time again. If you want to learn more and have that free consultation, you can start at get rich education.com/tax.   Keith Weinhold  38:56   Tom, it's been valuable as always. Thanks so much for coming back onto the show.    Tom Wheelwright  38:59   Thanks, Keith.   Keith Weinhold  39:06   Nine states don't have an earned income tax. Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. And the way to avoid state income tax is clearly to start by living in one of those states. I don't believe that moving to one just for tax reasons, is a good idea, though, like I was saying earlier, do you agree with how your government is spending your tax dollars? If you don't, then you owe it to yourself to reduce your tax burden, otherwise, you are just helping to fuel reckless spending. And when you lower your tax burden, not only do you stop fueling reckless spending, of course, you increase your own personal return on investment. You know in fact. This paying any more tax than you have to fuel a kleptocracy. I think it's at least worth asking the question then, because this is get rich education, little learning moments, some vocab rehab. Here, you can think of a kleptocracy as being synonymous with a fevocracy. The strict definition of a kleptocracy is a government whose corrupt leaders use political power to expropriate the wealth of the people and land they govern, typically by embezzling or expropriating government funds at the expense of the wider population. All right, well, is that a little too strong for the behavior of our elected leaders or not? I'll let you decide that. But see, most of the 1000s of pages of the US tax code does not outline the taxes that you have to pay. Did you realize that the vast majority of the IRS Code is a guidebook to help you reduce your taxes that are in those tax tables. Well, now my own tax return is hundreds of pages long, and a lot of it outlines how my taxes have been reduced for that tax year. Well, Tom's excellent book called tax free wealth is sort of a digestible way to make the reading more fun than any psycho that would read the entire IRS tax code, but to make it even easier than that, it's really a good opportunity to connect with Tom's team and see exactly how they can help you reduce your tax In your specific situation, and is especially helpful for real estate investors and business owners. You know that I often like to leave you with something actionable. You can book a free consult at getrich education.com/tax that's get richeducation.com/tax.   Until next week, I'm your host. Keith Weinhold, don't quit your Daydream.   Speaker 2  42:06   Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.   Keith Weinhold  42:34   The preceding program was brought to you by your home for wealth building. Get rich education.com you

Join our upcoming GRE live event right here! - ‘New Turnkey Properties with ZERO Money Down’ on Thursday 10/24. Keith discusses the financial health of tenants, noting that 75% of new renters earn over $75,000 annually. He is joined by GRE Investment Coach Naresh Vissa to highlight the incentives offered by new build property providers, including interest rates in the 4's and up to $30,000 in immediate equity. New build homes now cost only 1% more than resale homes. Rent-to-income ratios remain stable at 31%, despite wage growth outpacing rent growth. Current market conditions offer a unique opportunity to build wealth through real estate. Attend the live online event on Thursday, October 24 at 8pm Eastern to learn more about the new build property incentives. Show Notes: GetRichEducation.com/524 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai    Keith Weinhold  0:01   Welcome to GRE. I'm your host. Keith Weinhold, we check in on the health of your tenant. How are they doing financially? Learn why new build homes now cost about the same as existing homes. Then learn about creative financing and how to put zero money down on an income property today on Get Rich Education.   Speaker 1  0:26   Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold, writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show. Guess who keep top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com   Corey Coates  1:11   You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  1:27   Welcome to GRE from Lewiston, Maine to Lewiston, Idaho and across 488 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education. Don't live below your means. Grow Your means, you need a proven wealth building vehicle that pays you multiple ways, like real estate or a business, because in order to build legacy wealth, otherwise, how many Papa John's coupons are you going to have to collect that's living below your means, something that's not sustainable long term, not where you want to be. And you know something your first million that takes a while for you to reach a net worth of a million dollars, that can take over 30 years, like the first 30 plus years of your life. Let's say then you are age 32 until you reach the million dollar mark. Well, your next million Okay, so a $2 million net worth, that's not going to take you another 32 years, but maybe, if your sole source of income is trading your time for dollars at a job, you won't hit the $2 million net worth Mark until age 40 to 45 but instead, if you've got leveraged rental property, ah, now you've got other people's money working for you, and a 5x multiplier on your skin in the game, and that's something that a 401K is never going to give you. And instead of hitting 2 million at age 40 or 45 like the day job worker, well, you can hit a four or $5 million net worth mark at that age, setting you up for an early retirement, or at least that option to do so your life is going to feel different when working is An option, not an obligation, and all that sure can happen even sooner. If you think you are behind, from what I was just talking about, there, you find yourself behind those net worth figures. Well, the vehicle of real estate pays five ways. Is what's going to allow you to catch up, and you might be simultaneously measuring your wealth in cash flow as much or more than in net worth terms. Anyway, chances are you do, though, have more wealth today than you have ever had in your entire life, and that's because here in late 2024 we're at a time when just about every asset imaginable is at or near all time highs, real estate, stocks, gold, Bitcoin, and perhaps the number one traded commodity in the world, oil, is one of the few substantial outliers where that is not true. Well, now that we've checked in on how your wealth building is progressing. How about the financial health of your tenant? That's important because you want them to have the ability to pay your mortgages and your operating expenses for you. Well, there seems to be a weird narrative that tenants, you know, like they're always these jilted wannabe homeowners, or like they're auditioning for a season of Survivor, barely living above the poverty line, destitute and eating macaroni and cheese three times a day. Now, there are some of those cases, for sure, but 75% of new rent. Have incomes above $75,000 well, then maybe they eat at the Cheesecake Factory monthly. Even the wealthiest Americans are turning into forever renters. We have seen the rise of the millionaire renter. More than 11% of renters have an annual income over $750,000 that is pretty Wall Street Journal. Gosh, I guess that caviar and truffles are in the home. And what are they doing for cheese? Forget Kraft Singles. My guess for them is that only artisanal cheeses are eaten off of little wooden boards. The census itself recently published research declaring this headline, incomes are keeping up with rent increases. Now you might find it really surprising that tenant rent to income ratios haven't materially changed over the last dozen years. Last year, US renters shelled out a 31% share of their income on rent, and that is actually much like they have for a long time. In fact, between 30 and 32% every year since 2011 that's what the figure's been and to be clear, what we're talking about here again is the rent to income ratio. It's simple. It's just the proportion of your tenants income that goes toward rent. 31% or you might think, Well, wait, how can this be? Because there sure are a lot of headlines around rent burdened households. And for a while there previously, we had wage growth lagging rent growth, although wage growth is ahead of CPI now, and it has been for quite a few months. All right. Well, here's what's happening. Really, it's three things, renter incomes are growing faster than homeowner incomes. Secondly, the struggle is real for low income renters. And thirdly, new construction units. In recent years, they tend to be created for middle and upper income households. All right, so let's break this down. The first phenomenon occurring, renter incomes are growing faster than homeowner incomes. Yes, younger Americans, they're more often renters, and they have more income growth than older generations do. Secondly, like I was saying, the struggle really is a thing for low income renters, they tend to rent apartments more often than single family homes, and census stats show the rent burden household growth in those is occurring with those that make under 75k a year. That's where their distress is, and of course, it's especially bad among those making under 50k a year, and many of them don't receive rental assistance, and inflation has affected that group worse. And then the third reason for these stable rent to income ratios are that new construction units in recent years, they tended to be created for middle and upper income households, so we haven't built nearly enough affordable housing driving demand and rent prices, and again, that crushes those lower income households. And hey, I do want to credit terrific rental housing economist Jay Parsons for bringing some of this to light. The bottom line here and what you've learned about the financial health of renters today, actually, you didn't learn anything. All I did was talk about cheese, really, though, the lesson is that Rental Affordability has become more bifurcated. It's worsened for the lowest income households, but overall, rent to income ratios are still steady near 31% I mean, really, who knew that stability could be so predictable? Now there's another sort of misconception, or I guess anomaly really, in today's real estate market, and that is the fact that new build homes don't cost much more than older resale homes. In fact, today, the median new bill home sells for 421k That's not much more than that of an existing home at 417k that's only about a 1% difference. It's really an unusually small disparity, just a 1% premium for a new home today over a resale home. All right. Well, what is going on here? One reason for this is the very well documented interest rate lock in effect existing homeowners aren't giving up their property. Another is that the new build properties are smaller than they were in years past. Helping keep their prices in check. And a third reason for why new build homes cost almost the same as existing homes today, weirdly, is that home builders they are giving buyers incentives to purchase new build homes today because buyers often need down payment and closing cost help in order to get in. And we're going to talk about one especially good new build incentive program for these brand new properties later in the show today, and what you can do with creative financing there. The real lesson here is, if you can, you want to give more consideration to owning more new build income property today than you might have in years past, because they're down to about the same price as resale properties, only costing 1% more, on average, and this is all based on data from the census, HUD and the NAR. So again, just about 421k for new builds and 417k for resale single family homes today, they are the median prices   you can follow get rich education at all the usual places on social, Facebook, Instagram, Tiktok X and YouTube. To highlight one of those, you will find particular value in the get rich education YouTube channel that is me over there, video of me speaking directly to you and showing you things there visually on YouTube that I cannot do here on an audio podcast. Also, if you have a particular thought, comment, question or concern, understand, we can't personally respond to them all, but you can go ahead and write in or leave voice communication at getricheducation.com/contact we do read and listen to them all that's getricheducation.com/contact in order to reach us. And thank you so much for all of the sincere congratulations and wishes that you left over there for us on the GRE podcast, hitting 10 years of contribution to real estate investors, serving you every single week without fail and never playing any repeat episodes, always serving you with a fresh episode. Much more. Next, I'm Keith Weinhold. You're listening to get rich education.   Hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President changley Ridge personally. Start now while it's on your mind at ridgelendinggroup.com That's ridgelendinggroup.com.   Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest year in and year out, instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too, earn 8% hundreds of others are text FAMILY to 66866, learn more about freedom. Family Investments Liquidity fund on your journey to financial freedom through passive income. Text FAMILY to 66866.   Robert Helms  13:57   Hey everybody, it's Robert Helms of the real estate guys radio program. So glad you found Keith Weinhold in get rich education. Don't quit your Daydream.   Keith Weinhold  14:19   Well, I'd like to welcome in a GRE investment coach. He's got both the formal credentials, and he's doing the real thing too, holding a master's degree from Duke's business school, and then, before coming to GRE in 2021 he worked at both banks and financial publishing companies, but importantly, for years now, he's been an active real estate investor, just like you and I. Hey, welcome back onto the show. Naresh Vissa.   Naresh Vissa  14:45   Thanks so much for having me back on looking forward to talking real estate. There's a lot going on for sure.   Keith Weinhold  14:51   You know, I always give you an illustrious bio to live up to before you speak, but then you do always live up to it. Well, Naresh. Before we narrow down, let's pull back and take a wide angle view. Give us your take on the direction or trends. What's important in today's market for real estate investors?   Naresh Vissa  15:11   Keith, the market has changed a lot, and it's very much investor friendly right now. The reason is because, and we've talked about this, I think, in my last two or three episodes where we previous saw rising interest rates and stagnant interest rates that were relatively high for let's say a millennial. That's been a hot topic called millennials aren't able to afford home buying what we're seeing now because the Federal Reserve cut interest rates tremendously, significantly and almost unexpected. The First Cut they did was 50 basis points, which I think was a mistake, just like I think it was a mistake for them not to raise rates one more time last year, in 2023 one or two more times to help bring inflation down further, I think they're making a mistake by jumping the gun, and instead of a 25 BPS cut as the first cut, doing a 50 BPS cut. The reason why I bring this up is because mortgage rates are plummeting. They have plummeted, and they continue to plummet. So as a home buyer, where the economy still isn't we're not at peak employment. In fact, the unemployment rate is still in the fours, so the economy isn't the greatest which means home values aren't at peak levels. Per se, some people are making the case that we could see home values could be coming down while interest rates come down. So right now, what that means is, when you have falling interest rates and either stagnant home values or maybe even some declining real estate values in some areas of the country, that markets that we focus on other markets we don't focus on, when you combine all that, this is that inflection point where it's actually a really, really good time to jump in. There is a little bit of political uncertainty in that we don't know who's going to win the election. We don't know who's going to win Congress. What's even more important than who becomes president is Congress. Which party wins the house, which party wins the Senate? Because you've written about it in your newsletter, Keith, the Democrats and the Republicans have very different housing policies, and we could do an entire episode on each party and what their housing policy is. I will keep it simple. Here's the cliff note version. If we have the same party in all the chambers of the government the same political party, then we'll see a tremendous impact in the real estate market. I think if the Democrats sweep then you're going to see real estate home values go back up, inflation go back up. Because Kamala Harris is, she is a main proponent of giving basically a $25,000 off coupon to first time homebuyers. So that's across the board all 50 states. Basically you got $25,000 off. What I've learned with coupons, I'm sure you know this, Keith, most coupons actually are a terrible deal. You get something in the mail that's a coupon. You either spend it or you call the service provider and they jack up the price. So you think you're getting a good deal, but they end up jacking up the price even more than what market value is, and that's what's going to happen to housing where you're going to have so many young like I said, millennials, Gen Zers, who are looking to buy their first home, they think they're getting such a great deal because of this $25,000 off coupon, when, in reality, after about three months of this program, you're going to see we're going to be back to 2021, end of 2021, beginning of 2022, all over again, where homes will enter into bidding wars. Now, if there's a split, President is one party and Congress has split, then there's actually going to be almost no change, which could be a good thing. We're not going to see much change at all. It's just going to be the mostly the status quo. Really the only change is going to be on tariffs, If Trump were to win, or foreign policy, those are going to be the two main issues, regardless of which party wins, if there's a split. So the bottom line is that right now, despite this uncertainty, I've heard from a lot of GRE clients, oh, I don't want to do anything because of this election. I've asked for the logic and like, the election, should it really change? Because right now is still an excellent time, like I said, with stagnant home values with plummeting interest rates, really through the end of the year, and as the Fed keeps cutting rates, which I think they're going to engage in a prolonged rate cut cycle for quite a while, and rates are only going to keep going down. So that's my general view of the current state of mortgage rates, the Federal risk. Reserve the election housing markets?   Keith Weinhold  20:03   Yes, Naresh is talking about a newsletter that I sent to you last month where I basically show that, historically, presidential elections really don't affect the real estate market price appreciation much at all. They might affect stocks in the short term, though, which are more volatile and Naresh, do you want to tell me a bit more about why you seem to be rather bullish this year for real estate investors, of course, things change. Last year you were more bearish. You had more negative sentiment about the investor environment. So are there any other reasons why you see more positivity today, other than lower interest rates?   Naresh Vissa  20:37   Yeah. Well, last year, like I said, where I touched on, we saw peak interest rates. So the Fed stopped raising around the end of last summer. I want to say maybe July of 2023 it was, yes, the interest rates stayed high. There was almost no movement until relatively recently, let's say over the last three months, when it was factored into the market that the Fed was going to begin its rate cutting cycle. So the reason why I don't want to say I was bearish on real estate last year, because we have some providers, for example, partners of ours, who offered really, really good and they still are offering really, really good incentives, which help offset the high interest rates this time around, like I said, with the unemployment situation, we're in the force in more layoffs. Archive, the media isn't talking enough about layoffs, large companies, large tech companies, manufacturing jobs. Layoffs have been rampant for the past two years. This is not a recent phenomena, and it's finally showing up in the unemployment data. And if you look at real unemployment data at a website like shadow stats, it's really more than 4% and the number of people are working multiple jobs. That's not really factored into the unemployed. You know, one person working three jobs, for example, you gotta have a way to factor that in, which government hasn't figured out lately. So the point that I'm making here is that if you have a job right now, if you're making cash flow, if you have a job, then you're going to find this as an opportunity with the lower interest rates, with knowing that home values have somewhat declined recently, this is a good opportunity to jump in and get good cash flowing real estate. Now, I did touch on the previous question about Kamala Harris's real estate plan, $25,000 coupon, which will certainly lead to real estate. You can call it real estate appreciation. You can call it inflation. But one thing that I should talk about the other side, which is if Trump and the Republicans were to sweep, then we're going to see mass deportations of undocumented immigrants, illegal immigrants, and that's going to affect the housing market tremendously. And how is it going to do that? Because it's estimated that at least 8 million people are going to be deported over the four year period. Those 8 million people right now are all renters. Close to 100% of them are renters. I think that would actually be somewhat deflationary, at least in the rental market, maybe not in the housing market per se, because a lot of these people aren't necessarily home buyers, but in the rental market, we could likely see a stagnation of rental growth mixed in that's making the assumption that building picks up, and Trump has already said. Both Trump and Harris have said that they're going to incentivize home builders to build more multifamily, build more apartments, build more. In Trump's case, he did these opportunity zones, which he wants to do more of, build more single family housing. It's definitely a supply side issue more so than a demand issue, but both supply and demand always contribute to the equation as a whole. So what does all this mean? Again? Forget about the election. Forget about November 5, which is election day. Right now is a really good time, because interest rates are plummeting. Home values have remained stagnant. In some cases, home values have come down. And the best part, we work with providers who are still offering really amazing incentives. And on october 24 at 8pm we are hosting a webinar to share what I think is our best incentive program yet. That's Thursday, October 24 where you can get class, a new build of properties with interest rates in the 4's that's with that you're not even buying down the interest rate, the interest with special deals, special incentives, special financing, interest rates in the fours, up to $30,000 in immediate equity because of these incentives. And the best part, we even have an option that's zero money down, zero money down there are incentives that are giving back cash at closing. So it's, you buy a property, you as a buyer, get cash back at closing. There are just too many incentives to name here. I've named, I think, five different ones. And this is not a case of you pick one out of the five. In some cases, you might qualify for all five. So october 24 it's before the election. It's live. I'm going to be on live with a special guest who is a very well known, seasoned real estate investor and licensed real estate broker, one of the most well known real estate personalities in the country. So I highly recommend our file go to GREwebinars.com GREwebinars.com to register for that free special event.   Keith Weinhold  25:46   Now you, as a real estate investor, are probably encouraged by this environment of lower and lower interest rates as well you should be, but sometimes it can help to ask yourself the question, okay, how do lower interest rates affect who I'm purchasing a property from. In this case, with the event narration I are talking about, it's new build properties and home builders. They see more competition now coming from the resale market due to the fact that interest rates have fallen so interest rates are thawing out the locked up resale market thawing out this lock in effect, and that's because existing home sellers, well, they're a little bit more willing to sell because the replacement home no longer has an interest rate that's as high over there in the resale market, and lower rates also, of course, mean that more buyers qualify to buy resale homes. So see new home builders, they now have more competition from the resale market, so consequently they're more willing to give you a strong incentive to buy from them. So take advantage of what Naresh and I are talking about coming up in just three days here on Thursday.   Naresh Vissa  26:53   Yes, and I want to reiterate, GREwebinars.com GREwebinars.com this is a online special event. We've done several of these in the past. I've done, I think this is maybe my fifth online special event. Again, I've never seen incentives like what our provider is going to be sharing on this webinar. And you can only get these incentives by attending the webinar, or registering for the webinar, watching the replay after we're talking the rates in the 4's, they will buy down the rate for you. So it's a great deal to have somebody else buy down your rate. You'll get money back at closing if you opt for that. So that's basically a rebate that you'll be getting as the home buyer. Just really, really good overall incentives being offered. And like I said, we set this up because this is a perfect time. We are in a situation, the first time since 2020 since the pandemic, where we're seeing plummeting interest rates, stagnation of home values, kind of uncertainty, because we're in this time of purgatory, just like we were in 2020 before the election. Just think about how many investors, most real estate investors, say right now, they say, Oh, I wish I bought everything in 2020, right? Well, we're in a similar situation now, where, again, home values, interest rates, and this state of purgatory of what's going to happen. We're in a very similar situation. And just think about that emotion, because I hear it almost every day, or when I tell people, Hey, I own real estate myself, and I bought most of my properties before 2021 the last property I bought was in 2020 and they say, Oh, wow. Like, you're a genius. You're so smart. Like, how did you know to buy man and again, similar environment, even 2009 2010 2011 even 2012 similar environment where interest rates were very low. 2009 was when they were plummeting. And you think back of I was too young back then, but I know, Keith, you were an investor back then, but you bought in 2009 you did even better than buying in 2020   Keith Weinhold  29:00   That's right. And in fact, in all the years that I've been buying real estate, I have never bought a property with incentives as good as what you and your co host are going to be talking about at GRE's live event coming up on Thursday night, just starting with a full 10% of the purchase price in credit back to the buyer, and there's more to it. You'll learn all about it again on GRE 's live event for new build, turnkey income properties with zero money down potentially. It is co hosted by Naresh in the guest that I had here last week, Zach. Again, it is on Thursday, October 24 at 8pm Eastern. You can register now at GREwebinars.com and you will be hearing more from Naresh then. Naresh has been great having you back on the show.    Naresh Vissa  29:49   Thank you, Keith and I'll see everyone on october 24 GRE webinars.com to register. Thanks.   Keith Weinhold  30:01   yes, you'll hear more from Naresh and co host Zach on Thursday's live event each year, homebuyers often take a step back in the fall, this time of year. Understand though, that year over year, they are up about 4% per the NAR as of this time. And when it comes to the political effect on housing. You already know what I think. I don't put much emphasis there. Today, I am better off than I was four years ago, and it has nothing to do with who the President was or was in Congress, and in the preceding four years, I became better off during that time period too, because what happens in my house and what happens in your house is more important than what happens in the White House. As Naresh and I are talking about new build property here, and you're hearing about extremely attractive incentives. Hey, let's not let the point be lost. New build properties can be profitable for you over time due to lower maintenance costs. New builds have lower insurance premiums, and that's on top of how we discussed you could get low interest rates in in southeastern high growth path of progress markets in our upcoming live online event, and at the least, you will learn about creative deal structuring, and you know, when it comes to zero money down like that very concept, there was a time in my life where I thought, yeah, that sounds about as real as athletic brand beer, or about as real as lab grown meat, but all three actually exist. Here's what's exciting, we have partnered with major builders that are sitting on excess new build inventory right now, like Lennar and DR Horton, to help bring you institutional level pricing. Your name does not have to be BlackRock. And this is something we've never done before here at GRE these new build properties in those fast growing areas of the southeast, they're often single family rentals. And yes, you know what I like to say about single family rentals. Stainless steel appliances are great, as long as you or your tenant never touch them. But to be clear, there are two levels of incentives we've been promised. So we've got to have this event now before they vanish. You can potentially use both, first, up to a 10% credit at closing, so yes, on a 250k market value property, as much as a 25k credit and then secondly, a 5% down payment we've paired with credit unions in local markets that make Portfolio loans to investors, and that is up to five properties max. And to get that 5% down, you must qualify, just like you would for most any mortgage loan. And by the way, do you know what a portfolio loan means? That means when the bank or credit union makes the loan, it'll go sell that off to a secondary market and have it packaged into a mortgage backed security. What the bank or the credit union does is they keep that in their own portfolio. A portfolio loan does not mean that the lender makes a loan against your existing properties in your portfolio. That's what I used to think when I was a new investor, but that is a misnomer. That's not what a portfolio loan is. Well, with these incentives, if you get a 10% credit and only spend a 5% down payment plus four to 5% on closing costs, hey, there you are. You are in with zero down payment. It's a chance for you to get your fit together. Yes, what fits you is zero down right for you. I mean, you know that I am a staunch leverage proponent, but if that's not right for you, you can use your 10% cash back discount elsewhere, like buying down your mortgage rate to about 4% maybe even three point something percent. And see right here, this is exactly where the deal structuring gets fun incentives like this don't last. When the inventory is gone, it's gone show up live, and that way you can also have any of your questions answered if you have them, yes, our online event is an even bigger deal in fantasy football. Well, I trust that you learned something useful today on this week's episode of the get rich education podcast, to review, it's how tenant rent to income ratios are actually stable near 31% on why new build properties only cost about 1% more than existing properties today. And all about creative deal structuring, where you can own brand new new build income properties potentially with as little as 5% down and perhaps zero down payment. It's a really good opportunity. We sure have mentioned it before, but one last time, all the action takes place Thursday, October 24 at 8pm eastern at GREwebinars.com. Until next week, I'm your host, Keith weinhold, don't quit with your Daydream   Speaker 2  35:27   Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.   Keith Weinhold  35:55   The preceding program was brought to you by your home for wealth building Getricheducation.com.  

Join our upcoming GRE live event right here! - ‘New Turnkey Properties with ZERO Money Down’ on Thursday 10/24. On this week's episode, Keith shares how to vet and onboard a property manager, emphasizing the importance of their role in tenant relations and net operating income. He is also joined by our guest, seasoned investor and turnkey expert, to highlight the benefits of new construction properties with zero money down, leveraging builder incentives and portfolio loans. Learn the key qualifications to look for in a property manager, typical management fee structures and questions to ask. Hear about the benefits of new construction homes, including consistent income, quality tenants, and growth potential. We discuss the potential for 10% builder credits and 5% down portfolio loans. Show Notes: GetRichEducation.com/523 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai    Keith Weinhold  00:01 Welcome to GRE. I'm your host. Keith Weinhold, how do you vet a property manager and maintain an onboarding relationship with them over time? I just hired one, and I'll tell you how I did it. Then there's a trend to exploit in today's real estate market, with the opportunity to place zero money down on brand new build property today on Get Rich Education.   00:27 Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show, guess who? Top Selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com   Corey Coates  01:12 You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  01:29 Welcome to GRE Yeah. This is get rich education, the voice of real estate investing for more than 10 years now. This is episode 523, and I'm your host, Keith Weinhold, let's talk about how to vet a property manager. After all, they are what make your real estate investment mostly passive. I recently hired a new property manager. Of course, I have one in each geographic area where I own property. Now, instead, you can self manage from a distance, but sooner or later, you probably won't feel that's the highest and best use of your time. As friend of GRE and host of the real estate guys radio show, Robert Helms says, Life is too short for property management. And you know, when it comes to managing your property, still today, you can't just have an AI do that, and to be your property manager is the most important piece of your team, because they're the ones that handle all the tenant relations, collect your rent, and They control your occupancy rate too. I think you can make the case that a property manager is even more important in larger apartment buildings than they are in, say, single family rentals up to fourplexes, and that's for a few reasons. Number one, because managers drive your net operating income your noi in apartments. Okay, so that doesn't just drive your income. That drives the very valuation of the property, since apartments are the NOI divided by the cap rate. And secondly, one bad or noisy tenant can make other apartment tenants miserable. Yet if there's one noisy single family home tenant, well others might not even know about it or hear them. So a manager is more important in large apartments than smaller units. But let's not let the point be missed. They are crucial, just vital either way. And when it comes to qualifying a property manager, you know, before you reach out to that manager, do some research on your own. First, like first, I like to see if I have any friends that use that management company, and I like to get feedback from them. Also like to read reviews and see what current investors that use that property manager say about them in forums. And you know from real world experience, if you've been an investor for any period of time, it's a little sad to say, but getting reviews that are merely adequate or average, that might be good enough. There are many places in life where I accept mediocrity, although property management is probably one of them, because it's just a tough job where that manager has to adjudicate, use their judgment and walk a line between two antagonistic parties, and those parties are you and Your tenants. So adequate is good enough. Management is just one of those industries. It's kind of like airlines always seem to get bad reviews too. If there's a rating system out there for umpires and referees, it would probably be the same users only comment when there's a problem. Well. So when vetting a property manager next, I like to know how long they've been in business. I also like to know how many properties that manager currently manages, how many units they have in their management portfolio. And with this latest manager that I just recently hired, it happened to be 325 properties. That's a good number. And this manager also happens to be one in a network of a nationwide management franchise. So there are some systems and some economies of scale that I'm getting, and there are a lot of mom and pop managers too, and they can often do a good job as well of scaling and automation. A lot of managers, for example, they leverage a software like app folio, where you as an investor, you can log in and see your investor activity and your owner draws there. So this particular new manager that I hire, they have those 325, properties that they manage. But speaking to geography, I learned that their brick and mortar presence, their main office, it's a full 45 minutes away from where I have my properties all clustered. That's not ideal to have my properties far flung from their hub, because you want your properties to get adequate attention. And you can imagine, if your properties are too far for where most of their operations are. Well, then your properties might not get enough attention, but I learned that they already have 20 properties in the immediate area of mine, and that their maintenance man also happens to live near my property, so in this case, 45 minutes from the satellite office. Although it's not ideal, it did work for me. This new manager that I hired has the tenants rent be due on the first of the month, but they have a grace period to pay until the fifth and then the owner draws. They're made around the 10th of the month and the owner draws. That means when the manager makes their payment, to me, the investor, which is after they collected all the rents, minus their management fees and maintenance expenses. All right. Well, all that stuff is pretty typical, and let me tell you now about their management fee structure. And again, this is pretty typical. And by the way, I don't try to negotiate fees with managers in most cases, maybe, unless I have an awful lot of properties with them, they have a monthly management fee of 8% now 10% that's a pretty common fee out there as well, meaning that if rent is $2,000 they take $160 each month in a management fee. That's that 8% and then additionally their leasing fee is one half month, meaning that when they screen and place a new tenant for me, they get $1,000 at that time again, on this example of a $2,000 rent, and I pay a $150 re leasing fee, meaning If they release the unit to that same tenant after, say, their first year or two lease expires, ask your manager if they do markups on maintenance bills. For example, if they subcontract a plumber, and those plumber charges are $500 over to the manager. Does a manager tack on, say, 10% to that charge and then charge you $550 or not? Preferably, the answer is no markups like that can be another profit center for property management companies. However, what this manager does is instead, they have a trip charge of $55 for when their maintenance guy visits the property, and I was okay with that. That's reasonable. Also ask your property manager, if they do regular inspections of your properties, that means that they physically go inside the unit from time to time to confirm that everything is on right, that your tenant is trading a property with respect and that there aren't any deferred maintenance items cropping up, like delaminated flooring or some kind of water leak that needs attention. And this particular manager that I just decided to hire, they charge $75 a year for two of these annual inspections, so they physically go inside the unit every six months for a comprehensive check, which is a really good idea. And I love that they do that. Another tactic that I take when vetting a property manager is to ask them, you know, just a detailed question or two, really feel out their operations. It can be a good idea for you to do something like this. For example, I told this new manager that you know, in the past with other management companies or ones I still use, you know, I've seen managers they try to charge me for clearing a clogged sink drain. Well, I've let managers know I shouldn't. Not be seeing charges like that at all. In almost every instance, clearing clogs that should be charged to the tenant, not me. I mean, obstructions don't float up from water and septic systems. So in most cases, that is what's happening. So you know, the tenant is at fault for getting something clogged in there in almost every case. Now, one exception might be that, I don't know, tree roots encroach on plumbing or something like that. Okay? But the point is, when you ask about something like that, you're showing your property manager that you're savvy and you can't be taken advantage of. Okay? They have got to be the ones that pushes back on the tenant, sometimes not pushing on you every time, just because they feel like you're the one that can afford the expense more than the tenant. So that sets some expectations for the ongoing relationship. Also talk to your property manager about your communication preferences over time. Now, for me personally, I don't want an intrusive text message unless it's something that's pretty urgent. I prefer email communication, and the manager does not need to email me every time they need approval of expenses less than, say, $300 now, when you get more faith in your manager later, you might want to bump that number up to $500 or whatever your number is. Now, at times I do like to call my property manager on the phone. Sometimes you'll just get more information from them. This way, a better feel when I called a different property manager that I currently have, you know, one thing that they mentioned to be on the phone, they were like, oh, Keith, I've been meaning to call you. You've had a vacant unit for weeks, and we should probably lower the asking rent 50 to $100 All right. Well, I agree that we should do that, but I feel like the vacancy would have lingered longer at the higher asking rent had I not called. So really, this is the sort of light touch that you should give your properties over time, and it's the reason that why, even with professional property management, it's not completely passive. Instead, it's a little contact. And I also like to tell my property manager that I have mortgages on my properties. I have every property mortgaged, and always have. You can choose to have your manager pay your mortgage for you, or you can pay it yourself, and that's a bit about vetting and managing your property manager. And I hope some of those ideas go a long way toward helping you, really, they're the frameworks about what's important and establishing expectations with them. Up front this week a great guest and I will discuss trends in today's real estate investment market, and then we'll tell you about an event that you can join and how to specifically exploit an especially promising real estate opportunity that I have never seen before. That's next. I'm Keith Weinhold. You're listening to get rich education.  Hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group  NMLS, 420056, they provided our listeners with more loans than any provider in the entire nation, because they specialize in income properties, they help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridgelendinggroup.com that's Ridgelendinggroup.com. Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund to help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest, year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too. Earn 8% hundreds of others are text FAMILY to 66866, learn more about freedom. Family investments, liquidity fund on your journey to financial freedom through passive income. Text FAMILY to 66866.   Rick Sharga  14:46 this is Rick Sharga, a housing market intelligence analyst. Listen to get rich education with Keith Weinhold and don't quit your Daydream.   Keith Weinhold  15:11 This week, we've got the privilege of hearing from a seasoned real estate investor. He himself is in single family, multifamily and commercial. He's also a licensed optometrist, and he practices on a volunteer basis, giving away his time and expertise there. In fact, he started investing in real estate while working as an optometrist and captain for the US Air Force, and that on the side, real estate investing allowed him to retire early from medicine, and today, he's an industry expert in real estate market analytics and how to use real estate as a means to create the lifestyle that you, the listener, desire for your family. Hey, welcome to GRE Zach Lemaster.   Zack Lemaster  15:54 Thanks so much for having me on again. It's good to be back, and always a pleasure to you know, talk real estate, I learn a lot from you in the content you put out. So I'm a big fan, and I appreciate you having me on.   Keith Weinhold  16:06 Well, thanks for saying that will. I'm sure we're going to learn from you today too. You've got such a great take and feel for the pulse of the residential real estate market. Tell us about your take, whether that's price, direction, rents, occupancy rates, supply, interest rates, demographics, whatever you think is important, tell us about what a real estate investor really needs to know in this era, Zach.   Zack Lemaster  16:30 man, and this could probably be a whole day conversation, Keith, I think you've done an excellent job covering this every time you put out information, so we won't belabor the point. But I guess my general take is that, you know, we're moving into a section in the the market cycle, I believe, where we'll probably start to see a little bit more of a normalization of a real estate market. I mean, it's just been so strange, right, to pull data points over the past two years, and actually, really four or five years of like, there's really some unique things happening, and there's a lot of people that have projections around how housing prices are changing and things like that. The only really thing, I think the big takeaway from the past two years is that home sales have plundered it. People talk about real estate crashes, real estate prices really didn't change that so much. And actually in a lot of the markets, like where we focused on they went up because, you know, supply and demand. These are areas where there's a huge discrepancy and there's an undersupply of housing, and those are kind of the areas you want to be in the path of progress. But one thing that we did see over the past few years is that there's a plummet in home sales, and that's both with less buyers because of the interest rates and less sellers holding on to their low interest rates. People are less likely to move in those scenarios. So I think we're going to see more of that as we start to see interest rates coming down over time, and we'll probably see more inventory hit the market, but also a new influx of buyers. So I don't know if there's going to be much of a change in terms of pricing, but generally speaking, I think there's from the investor side. A lot of what we talk about is retail, but with the investor mindset, which is your audience, I think what we will likely see is that there's probably a lot of people that were sitting on the sidelines that will jump into the market. There's going to be more buyer competition, of course, that drives prices. And one thing we know for a fact that we'll dive in deeper today about Keith, is that there are builders, because a lot of what we do is in the new construction, build to rent industry. And we could talk about why that is, but that's just a solid asset class to maintain consistent income, quality, tenants, growth and potential in both home appreciation and rents. But I think what we're likely to see is that over the past year, there's been a lot of builders giving out these crazy incentives because they've had excess inventory and they've had a slowdown on the retail sales, and it's been a really unique opportunity for investors to come in acquire good assets at with these crazy incentives of below market pricing, which we'll talk about, that is likely going to disappear over time, as they move more into the retail sales, and those channels start to open up more because there's more buyers and so in the niche that we work in, that's kind of the takeaway that I think is developing, really over the next, you know, A few months here.   Keith Weinhold  19:00 yes, this reduction in sales volume that we've had like you touched on which lower interest rates could help thaw. Almost everyone agrees that interest rates are going to fall more slowly than they spiked in rows in 2022 and you know what's funny, Zach, I can be in the front of a room talking about the condition of the economy in the real estate market, and I can say to the audience act, I can say, if you think there's uncertainty right now, a substantial amount of uncertainty, raise your hand. Adversely. Everyone raises their hand. But you know what? They did the same thing two years ago, and they did the same thing five years ago. So my point is, yeah, investors invest through the uncertainty. Because uncertainty always exists. It just shifts around as to where the uncertainty is. The listener might be trying to validate sort of one thing in their mind and get it to balance out right now. Zach, when we talk about this lowering of sales volume, and you mentioned builders that are sitting on some inventory yet we have a lack. Of supply. Can you balance that out for us and tell us how that is that some builders have inventory that they're sitting on that's supply, and yet we have an overall lack of supply.   Zack Lemaster  20:10 yeah, and I think the other key piece into that is lack of affordability, right? And so all those things kind of play together, just to tie up your last point. There's always uncertainty in real estate, but there's also the fundamentals of real estate. Keith, you know, this is a long time investor, investing all across the country, as long as you stay focused on the fundamentals, which, at the end of the day, is really investing in good locations with good teams, where you have positive cash flow, right? And you likely have a positive outlook from an economic standpoint for that market, to keep the house rent in to keep rents going up. Like that's really all there is to this to be successful long term that can exist in any market cycle. So I just encourage people to stay focused on that. But ultimately, your question about inventory supply, we talked about big things of like lack of inventory. I mean, we have a deficit of I think the last stat I saw was seven and a half million houses, you know, deficit or something like that, but that's really on the global economic picture for the US, right when we break it down to the kind of the micro economic scale with each individual regional market, because we work with regional builders as well as national builders, and we're also builder. We also put up our own houses as well to a somewhat small scale, but a lot of those builders started the houses that are now completed, you know, at this point, sometimes six months ago, more likely 12 to 18 months ago. And they had anticipation as the Fed was talking about interest rates lowering, you know, they maybe were planning an X amount of sales for those exact houses. However, from the retail standpoint, there really hasn't been that movement. So we still have a lack of homes that we need, but we also have a lack of people that can buy those houses, because there's a lack of affordability, right? And all these builders also have X amount of houses that they sell to institutional buyers, the blackrocks and some of these buyers that will come in in and we'll talk about why that's relevant to us and how we've pioneered our way into operating like one of those for the individual investor and bringing those same buying incentives to the everyday investor. But there's also been a large decrease on investor activity from an institutional level buying. So just because we have a reduction in inventory and we have a low supply does not necessarily mean that we're just gonna, you know, builders can just sell all their homes because of that. There's a lot that plays into that, and you need to look at each geographic market. But ultimately, if you're looking at the fundamentals of investing in real estate, where you can still be, and we try to be below the meeting house price point, below that $400,000 price point, again, that's where we have the largest demographic big affordability issues right now. I think that's a safe place to be, right? Because you don't see the fluctuations that you do on the more expensive homes, the more expensive markets. I think you have the large, large demographics for both renters and retail buyers, and you also have more runway, right? More runway for prices to go up. So that's kind of our the niche area that we're when I'm talking about excess supply. That's the area that we're really focusing on.   Keith Weinhold  23:03 Oh, that was beautifully explained in how to tie that supply story together there. Zach, of course, there are so many ways to divide up the real estate market, one of those being that price tier. And typically for us as cash flow real estate investors, we look at a single family home. Yeah, it's going to be under 400k in order to generate income, I have an announcement to make here to you the listener on Thursday, October 24 one of our GRE investment coaches, along with Zach here, are co hosting GRE 's live event for new build turnkey income properties with zero money down. Yes, I'm stealing some of your thunder there. Zach, zero money down. Registration is now open at GREwebinars.com and the momentum has been building for this event that you can attend from the comfort of your own home. Tell us about what you'll be covering at our live event. Zach.   Zack Lemaster  23:58 yeah, and I'm very excited to do that. Keith, I appreciate you having me. Han, again, I think all the investors, if you're interested in new construction or just creative finance and some ways to make some unique deals happen, like you have to attend this webinar just to at least learn. First, we'll talk about different markets right now where we see the best opportunity. So if nothing else, you learn about some of the best markets to invest in. But really what we're going to unveil is how someone, regardless of where you live, geographically or your investing experience, how you can make a creative deal happen on a turnkey deal that you can get below market value and possibly buy with zero money down, or at least have a good portion of your down payment cover to really skyrocket your ROI. So this is a scenario, Keith, we really get to have your cake and eat it too, because you get a brand new constructed house. It's turnkey, where everything is done for you in a great market that has appreciation book on rents and prices. But you can also buy it with low to no money down and really be a creative investor. And I know that we're going to talk about all the details with that.   Keith Weinhold  24:58 Yes, let's talk more about. Out the potential for zero money down here. I mean, I think that's the most compelling value proposition with what we're doing next Thursday.   Zack Lemaster  25:08 sure. So we'll just go through a numeric example so people can kind of wrap their head around like what this entails. We already set the stage for you know why builders may have excess inventory. And what we do with our business is we partner with both regional and national builders, some of the largest national builders as well as as I mentioned, we build our own homes as well, but we partner with some of these national builders that have excess inventory in markets that we know are productive investment opportunities. A lot of these happen to be in the southeast, because that's where the population is growing, and we're seeing that's where favorable landlord legislation is and federal taxes and growth potential, all the things right, positive cash flow, but we focus on those areas. And we can go to these national builders, because as a group, you know, we buy hundreds of houses every single year, and we can basically approach them like an institutional buyer and say, we want the same access to those wholesale deals that you would sell to BlackRock, but we want that for ourselves, and we can pass that on to the individual investor. That's kind of the value add. But specifically, what we're talking about is a scenario where some of these builders will offer up to a 10% credit at closing. That is huge. And just to I mean, for someone that is just new, the real estate game is kind of learning about this is I've been investing personally for 15 years now, I've never seen things like this in any market cycle that's through multiple different market cycles, but I've never seen anything this attractive. So this is not normal. I want to say that's to start. But essentially, you can get up to 10% of a credit on a house that you can use however you want to. And so there's a few different ways that you can use this key. So if you're buying a $300,000 turnkey new construction home, you could, in theory, get $30,000 off and buy that at 270 of $30,000 of immediate equity. That might be a good strategy if you're looking to lower the mortgage payment on that or if you're looking to, say, refinance that property or sell it quicker, you have that immediate equity in that house, right? The other thing you could do with that 10% is you could use it to buy your interest rate down we have and that will get you below 4% you could literally buy your rates down into 3% with that much, if you want to put that much money into it, it'll cover your closing costs and buy the rate down significantly. So no matter what the Fed lowers, the rate to you are back actually down to one, 821, rates by buying your way there with that huge credit that obviously causes, you know, cash flow to skyrocket near ROI, to go way up. The third option that you can do is you can actually take that money, just get it back as a credit at closing. So if you're buying a house, say a $300,000 house, you're putting 20% down, which would be $60,000 on that house, you get $30,000 immediately back. That means you're into the house for 10% or half your down payment. That also skyrockets your ROI. So the point is, is there's a lot of creative things that you can do with these type of exciting credits, and they vary between five to 10% based on inventory, but they go up to 10% on some of these new construction inventory options. One last thing here, Keith, and this is hopefully I haven't lost anyone, but this is where things get really creative. As a company, we also work with different lenders throughout the country to bring the best financing options to investors. And we have a group of credit unions. They're all local to that geographic area that have Portfolio loans. Meaning these are not Fannie, Mae, Freddie Mac loans. These are loans they hold in house. These are true investor loans. You still have to qualify for them, but if you qualify, you can put as little as 5% down, meaning the they will finance up to 95% of your property. We have tons of investors doing this consistently, and you can do this on up to five properties, five investment properties, if you qualify. And so that means, in theory, you could buy a brand new construction house with a 5% down loan. You get a 10% credit back at closing that covers your down payment, your closing costs, and likely puts money back in your pocket. So that's not only buying a new construction, turnkey house with no money down it's actually getting paid to do so now there's a lot of economics to understand and cash flow, you know, with a high leverage and things like that, but that's a concept, and it's very exciting.   Keith Weinhold  29:09 Yes,  that last option that you mentioned seems to be the most compelling. I know. You've got investors that are learning about this and have already taken advantage of that, and again, that last option is getting the 10% credit that you're getting from the builder, coupling that with a 5% down portfolio loan from a local lender, which effectively would give you 5% cash back at the closing table. However, your closing cost of prepaids might be something like 4% so really, in a best case scenario, not only are you zero money down, you're getting about 1% of the purchase price, or $3,000 in this example back at the closing table. Now, of course that's going to affect your cash flow, but you got to think about what's important to you. So when one thinks about what's important to them, as an investor, with some of those options that you laid out there, Zach, I really highlighted the last one. What are some of the trade offs, the pros and cons of choosing these different incentives that the builders are getting right now?   Zack Lemaster  30:05 I'm so glad you asked this, Keith, because someone could be very excited about the idea of no money down, but that may not actually be the most strategic benefit to them. The nice thing is that there's so much incentive to buy right now with these type of, you know, kickbacks, these these incentives that, like you can structure a deal that's specific to you in your goals. But I would really encourage the audience to understand what is your exit strategy, or what is the next three to five years? Why are you buying this property, and how to strategically apply that? And if you don't know, if you need some guidance through that, let us help you kind of understand the different scenarios, but I want to work backwards first and mention one more thing, the no money down option would be really attractive because cash flow is going to be limited. In that scenario, you still have a loan that's covering 95% of the house, right? You would expect it, and you don't have to only put 5% down, right? You can put six, 7% down. So it's, you know, maybe break even cash flow. It's up to you. But the investors that really like that option, including myself, is the people that want to grow and scale their portfolio and stretch their capital the furthest. They maybe don't care so much about cash flow right now at this moment, they know that cash flow will increase over time. But if you're someone who really takes advantage of the tax benefits of real estate, this is way to, like, honestly, without any money out of your pocket, just taking some action, you can create this huge tax benefit, right? Because if you're buying five properties with virtually no money down, and let's say those are each $200,000 properties, you could essentially buy a million dollars worth of real estate that you own and control 100% of and you get the huge, immense tax benefit. So if you're doing things like Cost Segregation studies, like we do, you can create hundreds of 1000s of dollars of tax deductions without any money out of your pocket, just being strategic this way. But let's talk about some of these other options, because that was a real question. Where would it make sense for people? So again, if you say that 10% on a $300,000 house, that's 30k if you wanted to take that as a price reduction right out of the gates, that would obviously lower your mortgage, that's going to lower the mortgage payment amount to allow you to cash flow more. But I think the real the strategy, or the play there, is that you have built in equity in a house. This means that if your plan is to maybe put a HELOC on the house, do a cash out refinance in a few short years, as that House continues to appreciate again, because it's in a growth market, you're just going to cut that time in half because you have built in equity or if you plan to sell it. I mean, there are some scenarios where you could turn around and almost like, flip this in theory. You could do it. If you really run the economics, they want to be hugely profitable. But theory could be profitable if you sold the house with, you know, even immediately, because these builders are still selling these houses at retail, setting comps at full market value. So if you have 10% and you're paying a realtor 5% commission, they're still closing costs. But you could, you know, net some capital, but better scenarios, probably, if you're holding it for two or three years again, letting it continue to appreciate, your option is to sell it, then you're into capital gains, or again, 1031 exchange it. You know that might be good option to have built in equity. Or if this is going to be a long term hold for you, and you're just like, I love this area where I'm investing, I want to maximize cash flow. I want to have a long term loan that has a really low interest rate, then actually applying the majority of that capital to buy your rate down. That's going to obviously maximize cash flow, and that's also going to lock you in on a 30 year fixed loan at a really low rate, maybe you want to buy the rate down. So that's really the two options. We see most investors either taking the capital back and using the zero money down option, or buying the rate down, because that's going to allow them to really cash flow well, and they're just going to hold that property for a long period of time and let real estate do what it does. Those are kind of the different scenarios. I think that makes sense for different investors and understanding where to apply this incentive.  Sure, if you go for a high loan, to value loan at 95% or even 100% you really then pursue the infinite return strategy, have maximum leverage, or complete leverage in the property, have all the inflation profiting benefits magnified because you're borrowing more, but that scenario is going to reduce your cash flow. So it's all about what's important to you as a real estate investor, was that before you go, just tell us a little bit more. I think the listener is going to learn more on next Thursday's webinar, but just give us a bit more on property types, whatever else one might want to know. certainly. So this is mainly in the southeast, okay, so these would be markets like Texas, Alabama, Carolinas, Florida. We have some stuff in Tennessee, but, I mean, this is really the growth markets right where we have landlord friendly legislation, low taxes, we have affordability, but we have huge population trends moving to these areas. Those are the areas we want to be. Those are the areas where builders are building in because supply and demand. Those are areas where we're positioned for strong growth over time. Overall, our average rental increase is 6% year per year, and that's going back on data over the past decade. He's really good then, yeah, usually double national average there. So those are because we're specifically positioning ourselves in areas where. Where there's increase in rental demand and in population and economic growth, average home prices. I mean, we have new construction homes as low as 200,000 by the way. Side caveat, we also have some rehab homes that are in that 131 50 range that you can still use the low money down. Those don't have as high up incentives as the new construction do. But average price for new construction, two to 300,000 give or take. I mean, just buying them, if we're buying them with a conventional loan, with 20% down, you know, you're still looking at eight to 12% cash on cash returns. Let's just talk about the cash flow. So they're really good properties that cash flow well, which is hard to find today, and they're in good locations. I think that's really the main point I want to drive home as we finish up here is, these are single family residencies in good locations. You guys, I've invested, as you mentioned, in the nice century gave me, I mean, real estate allowed my wife and I to retire from our career paths as optometrist through investing. That did not happen overnight, but it did happen over a period of time, and it did take a lifetime, either, though, that's the thing I want to mention, over a short few years of intentional, dedicated investing, we learned that really focusing on growth markets and new construction houses allow for the best quality tenants, the most predictable returns and the best growth and rents and appreciation of the houses over time. To build equity, those are the kind of assets that we want to hold long term and will help you build wealth in a short period of time. So that's kind of been the direction of our business model. Is focusing on quality inventory in good locations with good teams that still have cash, good cash flow. But you mix in some of these incentives, Keith, and it's just like, it's a no brainer. And I do think this is the biggest thing, is sense of urgency here. This is unlimited inventory. This is not something that's normal, as I mentioned, and this buying opportunity that we're so excited about is not going to last forever, as we started this conversation, talking about the market shifting as interest rates continue to come down over time, that will continue to bring more buyers into the market and just less motivation from builders to offer these incentives. So guys, now is the time to take action and make really good investments now that will set you up for success for many years.   Keith Weinhold  37:03 The time is now. This is one of the best deals I've really learned about here in the recent past at all this could be of any benefit to it all. You really want to jump in on this, because, like Zach said, this won't last forever. Well, Zach, before I ask you for your closing thoughts again, for you to listen or be sure to sign up for GRE 's live event. This is for new build, turnkey income properties, potentially with zero money down. It is Thursday, October 24 at 8pm Eastern. Register at GREwebinars.com any last thoughts? Zach   Zack Lemaster  37:03 Keith, I just appreciate all the information you're putting out there, we are all thrilled about real estate as an asset class. It's been an interesting past few years. But again, just going back to the fundamentals, guys invest in good properties and good locations with good teams. And I promise you, if you do that consistently over time, you will reach financial independence or whatever financial goals you are striving to achieve. There's more millionaires or main real estate than the other asset class, and it's the most predictable Path to Wealth. There's no secret about that, but it does take consistency in any market cycle. So Keith, thanks so much again for having me on.   Keith Weinhold  38:12 Oh, those are great parting words, and you the listener, are going to get to talk more with Zach and one of our investment coaches. Next Thursday, it is live at the end, you will have a chance to have your questions answered in real time, in case you want to talk to Zach more. Hey, it's been great having you here. There's something in the market cycle there that we can really take advantage of. Builders have some excess inventory and see the money that they have tied up in them is something that they're paying a fairly high interest rate on to. And we have now partnered with some of the biggest builders, Lennar DR Horton and others, to get you this institutional grade buying power buying at scale for lower prices and better incentives, like Zach and I said, new builds in the southeastern US for purchase prices of 200 to 300k offering you up to a 10% credit at closing. So in a 300k rental single family home, you can then use as much as 30k and choose what you want to do with that. You could buy your interest rate down to 3% that's probably better if you're going to hold it long term or use on your closing costs and have some to use toward your interest rate. Or alternatively, you could just take it as a price reduction. A 300k property is now 270k maybe you can even enjoy the discount and sell it in the next, say, two to three years for a profit. You're likely not going to be immensely profitable that way, but you don't know what the market will do over time. All right, so it'll typically be a five to 10% credit, and that depends on the property that you seek here. All right, so that is the builder credit bucket there. And then, in addition to that, if you qualify, you have some good, say, credit and assets where you can get a financing option through local credit unions, and that is local to the area that your property is in that will extend you a portfolio loan. If you qualify, you'll learn about how to do this. And this means you could put as little as 5% down, and you can do that on up to five investment properties. Okay, so with those buckets, or those two incentives combined, you could then get a 5% down loan with a 10% builder credit so that 5% bank could cover your closing costs and even just put a little money in your pocket. You should sort of think of all of that as a best case scenario. You might be pretty excited about no money down, and you probably should, but, you know, attend the event and weigh the pros and cons and see if that is the right avenue for you. A lot of it comes down to what do you want to optimize your cash flow or your leveraged equity? This is an action taking time for you to get a good chance at being set up for financial success for years. I mean, it is opportunities just like this. I mean, you learn about these concepts on the benefits of real estate investing here on the show. And now here's something really tangible where you can get ahead. I mean, personally, for me as an investor, I've never had an opportunity like what we're talking about here. Before. If you so desire, you can own new build property and learn how to get it tied up at the event. Make sure to sign up and put it on your calendar. That is next Thursday, the 24th from the comfort of your own home, GRE 's live online event for new build properties in growth markets, potentially with zero money down. It is free to register, and as of now, there are spots available at GREwebinars.com Until next week, I'm your host. Keith Weinhold, don't quit your Daydream.   42:10 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.   Keith Weinhold  42:38 The preceding program was brought to you by your home for wealth, building, get richeducation.com.

Firebrand speaker and author of “Killing Sacred Cows”, Garrett Gunderson, joins us to discuss wealth mindset and value creation. Also, Keith touches on the impact of falling interest rates on various loans and the economy noting that lower rates can benefit savers and investors. Historical data shows that home prices have only fallen 6 times in the last 83 years, signaling the rarity of significant price declines.  Learn about the Rockefeller method, which involves using trusts and whole life insurance to preserve and grow wealth. Garrett advocates for investing in real estate, businesses, and intellectual property rather than mutual funds or ETFs. DM Garrett on Instagram to receive a free copy of his book on the Rockefeller method. Resources: GarrettGunderson.com or  Alon Instagram @garrettbgunderson Join our upcoming GRE live event right here! - ‘New Turnkey Properties with ZERO Money Down’ on Thursday 10/24. Show Notes: GetRichEducation.com/522 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai     Keith Weinhold  00:01 Welcome to GRE. I'm your host. Keith Weinhold, talking about what falling interest rates really mean to you. 10 years of the GRE podcast, politics are overrated. How often do home prices fall? The latest in AI generated podcasting and then wealth mindset and wealth preservation all today on get rich education.   00:27 Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com   Corey Coates  01:12 You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  01:28 Welcome to GRE from Evansville, Indiana to Victorville, California and across 488 nations worldwide for an entire decade of your life now, this is Get Rich Education. I'm your host. Keith Weinhold, what does it mean that we're in an era of falling interest rates from the recent peaks, rates of all types have fallen. Mortgage rates have fallen. The Fed funds rate has fallen, and that prime rate has fallen too. I mean the prime rate that you pay, that's basically the Fed funds rate plus 3% and why the prime rate matters to you is that can affect credit cards, home equity loans, automobile loans and small business loans, every one of them down, down, down. So to any savvy investor that knows what's going on in the 21st century? This can mean celebration for your wallet, for your finances. And look in old days, lower rates, that would be bad news, not good news. And why is this? Well, in olden days, and some people still have an outdated mindset, lower rates are bad because savings accounts used to make sense back in the day, and lower interest rates means lower rates for savers on their bank, savings accounts. Yeah, those 5% online only savings accounts are going to four and a half with the Fed's half point rate cut last month. Well, 100 years ago, you could be a saver. That made some sense, because their interest rates could reliably beat inflation over time, but not today. Today, since inflation transfers wealth from lenders to borrowers and inflation redistributes wealth from savers to debtors. For those like us that understand this and act accordingly, we are indeed the beneficiaries of lower interest rates. Now, there are other effects out there in the economy. Cheaper loans could lead to more m&a activity, more mergers and acquisitions that can benefit investment banks like your Goldman Sachs that facilitates those transactions. Well, what happens to real estate prices amidst lower interest rates? What happens is that they tend to rise now here on the show, you remember that since 2022 I have discussed what has surprised a lot of people. Amidst rising interest rates, the environment that we used to have, home prices tend to rise. And it has happened again. When mortgage rates tripled, prices kept right on rising. So you might wonder, well, wait a second, which is it or I'm confused, amidst rising interest rates, home prices rise and amidst falling interest rates, home prices rise too. And the answer is yes, look at history over hunches. To our newsletter readers, I recently sent you that great chart, a table, I guess it showed the national home price, rate of appreciation or depreciation for every single year, going back to World War Two and from 1942 until today, those 83 years, how many times do you think that home prices fell over the last 83 years? There were exactly six, six of the last 83 years, only six where home prices fell. Paradoxically, interest rates don't have much to do with home prices, and this is all per Case Shiller statistics. Over the last 83 years, there were only six down years. 72 were up. Five were even. And of those six down years in the last 83 five of the six down years were tied up in a once. I mean, it took a once in several generations confluence, a cataclysm of events to occur during the global financial crisis, 2007 to 2011 all at once. Back then, it was a housing supply, surplus, disgustingly lawless mortgage market, cheap credit and a preponderance of debt in the banking system since World War 2, 83 years ago, there was only one other year when home prices fell, that was 1990 when they fell by 1%. If you're waiting for Home prices to fall substantially, it is super unlikely that that is going to happen. Just look at history, and today's market has more than the housing shortage in loads of protective homeowner equity, which means low delinquency rates, and we have permanently inflated higher prices baked into replacement costs of all kinds, land, architecture, engineering, permitting, regulation, labor, building, equipment, construction materials all over the place, but us, you know, as real estate investors, we might be more interested in rent appreciation than prices just four years ago, you know, just then to pay $2,000 to rent a single family home. I mean, that was quite a nice place in the Midwest and South. And today I have modest single family rentals built 50 years ago that are about 1200 square feet, and now they rent for $2,000 $2,000 a month's rent that is common today, and we are rooting for rents to appreciate faster than home prices. And if you want to get our newsletter, you're probably on that list by now, and reading it, I just send some of the best charts in real estate maps to you. You can sign up free right now. Just do it while it's on your mind. Text GRE to 66866, that's text GRE to 66866, for our Don't quit your Daydream Letter. Political season is heating up. We are at a time where we are one month from a general election, and that means we're electing a new president, vice president, 1/3 of the Senate, the entire house of representatives and various state and local officials. Yes, politics matter. Politics affect real estate. So why don't I discuss this more here on the show. Well, I explained that to you a while ago. It gets divisive, and it rarely affects people as much as they think. And as you know, I avoid even using words like Democrat, Republican, left, right, conservative and liberal. And why do I do that? Because they are divisive terms. The problem isn't so much politics. It's when people get infected with the partisan mind virus. Yes, they put party over country. For example, a partisan political instigator will swear to god that the economy is great now, but as soon as, say, a different party wins an election, even if the economy is the same, although now say that that same economy is awful. In fact, a couple years ago, I quit my job as a writer for a publication that you've heard of before. I no longer contribute to them. They put party before country, in my opinion, I wrote an article for them about two years ago, and my article made it sound like an eminent recession was a question, not a foregone conclusion. Well, the editor let me know that their consensus of writers feels like a recession is eminent and that I need to change my article to reflect that that's because they don't like the administration that's in power, so I quit rather than edit my article. I mean, if you just ask an American the question, this question, do you wish that America were less divided? Well. Any sane person would answer that question, yes. Well, then why would you go attach divisive labels to the other side and attack them? It makes no sense. That's where the division comes from. So really, it ought to be about solutions and ideologies and not political parties. So this is another reason why, during political season, I don't play those games, and we stick to investing the economy and wealth mindset. I mean, virtually no other country in the world drags out their presidential election cycle this long. I mean, it's like a year and a half. Remember all those debates last year and names like Nikki Haley and Vivek Ramaswamy that were in the news all the time. I mean, other countries get this entire process over with in six weeks. Let's take a page from them, and that way we can have more constructive things in our news cycle.  Well, I am coming to you from the makeshift mobile GRE studio today, like I do some weeks, because this morning, I woke up in reading Pennsylvania. Reading is, in fact, my birthplace, and besides being the pretzel capital of the United States, one way that you know about reading is from the Reading Railroad property in the board game Monopoly. Yeah, it's one of the properties that you can buy and, I guess, collect rent on. And, you know, here we are a real estate show. So maybe it's appropriate that the namesake of my birthplace is immortalized as a property on America's best known real estate game. And it also might be appropriate that I'm back here because the 10th anniversary of the launch of this show is nigh this coming Thursday, on October 10, 1010, it will be 10 years since episode one of this show. And yes, the math, I suppose, checks out, because there are about 52 weeks in a year, and you are listening to episode 522, right now. Well, listen to this. This could blow your mind. Have you heard an AI generated podcast? And I don't just mean sort of where a robot reads a blog in monotone and then you listen to that audio file that's embedded in the article. No, that's not what I'm talking about. Here's what I mean. A few weeks ago, I learned that macroeconomist Richard Duncan, who was the first ever guest on this show back in 2014 Gosh, all these tie ins to GRE 's origins today? Well, Richard published some PDF charts, and he uploaded them to notebooklm.google.com, that's how you find this. And he clicked generate audio overview, and within three minutes, it had created a podcast with two virtual people having this pretty intelligent, engaging and even humorous conversation about his presentation on interest rates. I mean, wow, just listen to the first minute or minute and a half of this AI generated podcast here. And again, this is from about a month ago. So they're talking about the upcoming Fed rate cut that did indeed happen.   13:23 All right, ready to dive in. Today, we're tackling the big question everyone wants to know, will the Fed actually cut rates on September 18? It's the question on everyone's mind, for sure, and more importantly, for our listeners, what's it going to mean for them to help us unpack this whole thing. We're looking at this report. It's by economist Richard Duncan, called why the Fed will cut September 12, 2024. Duncan always brings unique perspective. He cuts right to the chase, which I appreciate. right! So let's jump right in. Duncan starts by talking about inflation, which, let's face it, we've all been feeling the heat from this past year. Yeah, it's been a wild ride. Inflation hit a pretty brutal 9% last year. I think my grocery bills are still recovering. Oh yeah, tell me about it. But the latest number shows down to 2.5% that's both by the CPI and importantly, the PCE Price Index, right? And that PCE is the one the Fed really keeps their eye on, exactly, which is why I wanted to ask you about that. Why is the PCE like the golden child for the Fed, why not just stick with the CPI? Everyone knows that one. well, It's all about getting the most accurate picture of inflation. Think of it like this. The CPI is like taking a quick glance at prices. You know, just a snapshot in time. Okay with you, but the PCE, that's more like a movie. It captures how our spending habits change as prices change, and that gives the fed a better look at those underlying trends driving inflation. So it's like the CPI with a little bit of a crystal ball. It's trying to anticipate what's going to happen. It's got it okay? So inflation seems to be cooling down, which is good news, right?   Keith Weinhold  14:56 Gosh, that's just really good, a totally realistic sounding AI generated podcast just from some PDF files. The macro economist Richard Duncan uploaded remarkable and you know that the quality of that is only going to get better. That's probably about as bad as it's ever going to be right there. And in fact, in another 10 years, listeners could find it rather cute or quaint that we find this remarkable today. A big thanks to Richard Duncan for allowing us to play that and also expect Richard to be back here with us on the show again before the year ends, and here on the 10th anniversary week of the GRE podcast, you know, it makes me wonder how expendable my job as podcast host is going to be. I hope that I'm here with you in another 10 years, and I completely plan to be.  Well  episode number one of the get rich education podcast back from 2014 is called your abundance mindset. So it's apropos to visit a mindset topic today I'm going to do that with firebrand Speaker This week's guest, Garrett Gunderson. Here shortly, do you want to live a life that is small and safe and sheltered? I doubt that you really do, but you know, safe decision after safe decision, that's what most people end up doing. Do you want your kids to live a small, safe, sheltered life? I mean, most parents want safety for their children, but they're going to have an outsized impact on others when they study and then take the right risks. We're discussing those types of wealth creation mindsets with Garrett. He's a really talented guy. He was last with us six years ago. He's done some stand up comedy. Many have remarked that Garrett looks like Jesus Christ. He's the author of some popular books, including killing sacred cows. Let's talk to Garrett. This week's guest is a pretty well known author and speaker. He helps you make, keep and grow your money to help you live your best life. He's an especially dynamic speaker, public speaker, and I'm confident that you'll be able to hear that on the show today, because he has a great knowledge base, and he speaks with this conviction on topics that make him so compelling. Hey, it's been a few years. Welcome back to GRE Garrett Gunderson.   Garrett Gunderson  17:38 good to be back. I thought that was a very honest, like, pretty well known, like, I'm not really well known pretty well. That's just enough to annoy my wife. Like, I'll be going through an airport and someone come over and talk to me, and she's like, ah, but I love it, dude. I love conversations with people that I don't know, and I just get to meet because if they engage in my work, it gives us a chance to connect. And sometimes it makes me look cool to my kids, which is always a good thing. You know what I'm saying, like my son will be with me and someone say, hey, love killing sacred cows, or, Hey, are you that guy on YouTube? I'm like, it could be me, or you might be thinking, I'm Jesus. You know what I'm saying. I look familiar, though.   Keith Weinhold  18:14 Yeah. Now you can tell your kids that I said you are pretty well known. And you know, Garrett, you're also a really keen and perceptive person. You can tell if somebody's poor within 60 seconds of what they say. Tell us about that.   Garrett Gunderson  18:31 Oh, man, that video has so much hate. Man. I put that out like it was my son's filming, and I'm just sitting in our kitchen, and I was just thinking about a conversation I had earlier that day, and in the conversation, it was like, more about complaining about the world, saying that they couldn't afford things, saying they didn't have the time, blaming everyone for their situation. And I was like, man, it's pretty easy to tell. And 60 seconds, I mean, I guess maybe is a rash statement, because maybe it takes three minutes or 300 seconds, like five minutes, and get deep enough, but you just find that there's a certain language to poverty, and whether that's just poor in spirit, whether it's poor in mind, or whether it's poor in the bank account, typically it's devoid of personal responsibility. It's leading the levels of inspiration. And this isn't to say that if you're wealthy, that you only speak inspiring conversations. I mean, I complain sometimes that happens. I get frustrated. I get disappointed in myself for not being nicer to a customer service person and like, have to really manage that sometimes. But ultimately, it's this language that is almost like a Marxist type of language, you know, that comes from a place of like, I want this. I'm owed that we deserve this. And I'm like, wait, wait, wait, like, who's going to produce that? And so it's something that's a fairly easy thing to detect with just a few questions. Like, if I'm given one question, I can tell in 60 seconds for sure.   Keith Weinhold  19:57 Yeah. I think a lot of times people start complaining. About something. People find money a scarce resource when they start, you know, complaining about gas prices or something like that, I think that's just really a classic one. It tells me where they're coming from. I mean, it tells me what their mind is occupying.   Garrett Gunderson  20:12 Right.  And if we're not excited about our future, if we're not developing our skill sets, if we're not really engaged in the world of value creation, it's easy to get frustrated about tax it's easier to get frustrated about inflation. It's easier to get complaining about interest rates or loan rates and all those kind of things. But what I find is the best way to outpace inflation is through skill set, and if we truly invest in ourselves and invest in other people so that we increase our quality of life and our enjoyment of it along the way, we increase all the skill sets that matter. You've mentioned that I'm a decent public speaker and that I'm articulate. That comes from going through writing courses and hiring speaking coaches and just getting the reps and doing comedy and the things that will help me to become a more effective communicator. And then it's really about becoming a better cash flow investor. I know that you teach people a lot around, you know, real estate and investing, and that's one of the big three assets in my mind, that helps people generate and create cash flow. But most people are trapped in this indoctrination where they set money aside and forget it. They wait for 30 years and hope for the best. They're very one dimensional of just paying off a loan and then hoping the retirement plan is going to get them there. And that's why they end up in this mindset where they're like, oh, I don't feel in control, because the outcome of my income is something that's dictated by the economy and not my own willpower, not my own skill set, not my own value creation. And I think that's why retirement is such a bad and faulty notion. My main statement in life is create the life you don't want to retire from. Now, I get it. In the industrial age, people need to retire because they were being worked to death and they weren't living for very long. It was an immensely valuable concept back then, a blue to collar world back then? Yeah, right. But in today's world, what if people just invested more time in selecting your career that mattered or had enough faith and took a leap on themselves to start becoming a better investor or start a business or be an entrepreneur where they get upside potential, instead of just begging for safety and security, instead of just wanting the entitlement of benefits, instead of just trading time for money, like that's an industrial age concept that we watched, whether it's our parents or grandparents, go through trading time for money, but we're in a world where that's not required any longer, because we do have technology, we do have artificial intelligence, we do have these things that are starting to displace The jobs that no one really wants to do because it beats down the body, and there's a lot of opportunity for those that are willing to grasp it and go for it, but it comes down to one key thing, value creation. And if we're going to be devoid of value creation, it's easy to tell in 60 seconds whether someone's poor because value creation was not part of their concept or their purview.   Keith Weinhold  22:40 And value creation is about expanding that upside. And a lot of poverty mindsets just complain about the downside their expenses. And you can't really do that much about your expenses. You can only lower them so much. Anytime you do, you're probably diminishing your quality of life anyway. And really, I think a lot of this mindset of lack Garrett comes back to the fact that, simply, most believe that money itself is a scarce resource. I probably believe that at one time, when I was younger, maybe you did too. And as I like to say, although I wasn't the first person that said it, the only place that you get money is from other people. So most people, which tend to be employees, think their way to increase their income is only if their employer gives them a raise, or maybe if they find a new employer that pays them maybe 10% more, or something like that. So they're limiting their upside over there because they think money's a scarce resource, because it's got to come from an employer. Somehow they're not thinking about, why don't you really expand your upside and start an Amazon business, or rent cars through Turo or Airbnb rentals, or what we do here at get risk education, help people with long term housing rentals. So it just kind of comes back to the fact that, you know, people's mind is closed off, and they just simply want to believe that money is a scarce resource.   Garrett Gunderson  23:57 They're adding to computer screens as we talk about this, you know, I mean, there's never been more money in the world than there is today. It's the most money there's ever been. We keep adding it. There's, you know, so much of it out there. But even if they stopped printing it, or they stopped adding it to balance sheets, there's an infinite number of times they can exchange hands. So if we use it to buy computers and clothes or food and shelter or entertainment like comedy and concerts, the more times money exchanges hands, the more values created. It's exchange that facilitates and creates wealth in the way that we create exchanges, serving others, solving problems and adding value. And here's the deal, we can have two parties do exchange with one another and both end up wealthier. It doesn't need to be a win, lose transaction. As a matter of fact, when people transact, they agree that what they bought was worth more than their money, or if they sold it, they agree that the money was more than what they sold. Otherwise they would have kept it. We don't do equal exchange. I wouldn't give you $1 for $1 right? There's no reason to exchange. It's unequal, which means, if you can provide something more efficiently than. I can for myself. I can pay you, which frees up my time to do what I most efficiently and effectively can do. I did triathlons because I was an idiot back in the day. Sorry for those triathletes, which is like a lot of work, man. And I don't love swimming, but I remember going to buy a triathlon bike. I just bought, like, a road bike. It was a big upgrade from having a huffy from Walmart, you know, like, oh, this $4,700 this is a while back, but it was carbon fiber. It was, like, amazing. And I thought, you know, I could never build this. So this $4,700 is actually really cheap, because I'm giving him $4,700 to build something that I can then go build something like write a book or do some consulting or do a speech that can inspire someone. And so that exchange was valuable. It's like if you bought killing cigarette cows. For me, you're saying that it was worth more than $20 I'm saying it was worth less because I already have the knowledge in my head, and so we both can end up wealthier. Unequal exchange is what facilitates wealth. What it lets us do is tap into our best abilities and tap into other people's best abilities. And that exchange ends up growing over time, and the more times money circulates because of Good Services and experiences, the more output there is. So look at today. Hundreds of years ago, if you wanted to listen to music, you had to hire a quartet. Now it's free for almost anyone, if you have any device of any sort, if you're willing to listen to a commercial here or there, you can listen to anything that you want. For the most part, you don't even have to pay for it. So think about that advancement. If you want to be anywhere in the world, you could be there in almost 24 hours or less, back in the day, that would have taken, you know, years for that matter. I mean, we have so much more wealth because we keep building upon previous wealth, previous ideas, and those blueprints we continue to grow from with new innovation and ingenuity. Therefore, the quality of life for someone that's middle class today is infinitely more than the middle class of hundreds of years ago, the amount of people that are hungry today versus years ago, even though we have more than 8 billion people on the planet, has gone down as a percentage, not up as a percentage. That's because of velocity and exchange. It's because of this notion that money's not scarce and resources have the way to be replenished, as long as we're stewards. Now, if the bison, if we kill too many of them, then they can't replenish, right? But if we manage that properly, you could actually eat the bison, use the skins, do all that kind of stuff, and still have that exist in the future. These people that don't believe in that believe that there's like a finite pie, that if one thing's gone, it's gone forever, not understanding value exchange, reproduction, apparently, and basic science either. And again, we can overdo those things and damage an ecosystem. So there is a balance.   Keith Weinhold  27:36 Yeah, that's right, when you talk about value creation, then you're really not talking about a person going out and trying to get their piece of the pie. Really more accurately what you're talking about. Here are ideas for expanding the entire pie.   Garrett Gunderson  27:51 Spam the pie. Expand your means you can budget and reduce. You said it eloquently. You said, Hey, there's only so much you can do in reduction of expenses before it just starts infringing and taking away from things that you value in life. There's a finite game there, but the expansion gain through co creation, through collaboration, instead of through competition, is absolutely an infinite pie that continues to grow as we add more value, as we serve more people, as we solve bigger problems, as we more deeply impact the people that we impact as we reach more people, these are things that can lead to more dollars. So I have this thing called the value equation. It's our mental capital, ideas, knowledge, wisdom, insights, strategies and tools multiplied by our relationship capital, people, networks, organizations, communities, friends, family, mentors, equals our financial capital. So financial capital is a byproduct of our stewardship of our mental and relationship capital. And the bridge between mental relationship capital is what we call business, or we call investing. So ultimately, Money Follows value. How do we add more value? Have a better idea. Impact more people. More more deeply. Impact the people you currently serve. Collaborate and offer more like it's an infinite pie and an infinite game. If we play it that way.  We're talking with speaker and author Garrett Gunderson, about the mindset of wealth creation. More. We come back with Garrett. I'm your host. Keith Weinhold.   Keith Weinhold  29:01 hey, you can get your mortgage loans at the same place where I get mine at Ridge lending group NMLS, 42056, they've provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at ridgelendinggroup.com That's ridgelendinggroup.com. Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings if your money isn't making 4% Percent, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work. With minimum risk, your cash generates up to an 8% return with compound interest, year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too. Earn 8% hundreds of others are text family 266, 866, learn more about freedom. Family investments, liquidity fund, on your journey to financial freedom through passive income. Text, family 266, 866,   Hal Elrod  30:54 this is Hal Elrod author of The Miracle Morning and listen to get it rich. Education with Keith Weinhold, and don't quit your Daydream.     Keith Weinhold  31:10 welcome back to get rich education. We're talking with firebrand speaker and author Garrett Gunderson. You can learn more about him at Garrettgunderson.com. Garrett before the break, we were talking about the mindset in opening up one in order to create more wealth over time. Here, a lot of times, one way we talk about that is, don't just get your money to work for you. Get other people's money to work for you. You could actually use other people's money ethically three ways at the same time, in real estate, using the tenant's money for the income stream the government's money for generous tax incentives, and then the bank's money for the leverage, which is actually a greater wealth building force than compound interest. That's one example of how we do that here. But when one has become successful, oftentimes they want to make sure that that's lasting. They want to build a legacy, something that they can carry on. And I know you articulate that through the Rockefeller method. So do you want to tell us more about that?   Garrett Gunderson  32:05 I wrote this book. What would the Rockefellers do back in 2016 this study between really wealthy families versus their wealth lasted, versus wealthy families that decimated it, and the best study was really the Vanderbilt because they had more money than the US Treasury. One the railroad family, yeah, transportation. And you know what? They destroyed that Cornelius died, and then his eldest son doubled the estate nine years and then he died, and that was the last time their estate grew. It started to decrease after that. And 54 years later, the first Vanderbilt died broke, and so the last Vanderbilt family union didn't have any millionaires at it. I know everybody knows about like Vanderbilt University. They donated like, a million dollars to get that started. But, you know, that was pretty inconsequential compared to their overall net worth. But they didn't have a formula or format to create sustainable wealth. They own 10 mansions in in Manhattan. They don't own those anymore. They own the breakers in Rhode Island. The state of Rhode Island owns that now. So they lost this massive amount of wealth where the Rockefellers are just entering their seventh generation of passing on, well, seven generations, wow. And people that worked for the rock bellers, like the executives, they're still passing on, well, for this generation after generation. And most people don't make it past the third generation. And we could look at, you know, people like Walt Disney. We could look at people like JCPenney. We could look at people, you know, like the the Kennedy family and so many others that have used these two things to really create sustainable wealth. Number one is they use trust. The Rockefellers coined the term own nothing and control everything, whether that's a revocable living trust for people who are just starting out and don't have a substantial amount of wealth, or a domestic asset protection trust for those that have a decent amount of wealth, those are the two main popular ones. There are some offshore trusts. It gets onerous and complicated once you go offshore, but it does protect your assets. The second piece is using whole life insurance, so they have this death benefit that's on the insured, and they put that on their heirs, so that every time an heir dies, it replenishes the trust, and potentially even grows it, because there's these threats to the family wealth, there's taxes, there's inflation, there's interest rate fluctuations or market, you know, economic turmoil. So what they're doing is they're creating that level of stability, and they give them preferred interest rates to borrow from the trust versus a bank. So now your family can actually earn interest instead of paying interest. And yes, if your family is paying interest, they're paying it back to their future generation at Preferred rates. And so you could be one generation away from never needing a bank again and actually being able to capitalize on deals a whole lot faster. Specifically, we use whole life, because it transfers the risk to the insurance company. There's six or seven companies that are participating, mutual companies that have been around for over 150 years, always paid dividends. It protects your cash value from taxes. It protects it from liability and bankruptcy in over 40 states, fully and partially in every state. So what happens is, for an asset allocation decision. You can start moving some of your fixed income portfolio to this and have a better, more robust benefits type of situation, and then actually start to implement this Rockefeller method so that you can create generational wealth.   Keith Weinhold  35:12 All right, so the Rockefeller method using trusts and whole life insurance to preserve and grow your wealth, so as one's building their portfolio, amassing wealth, increasing income streams as they go along in their investor journey. Is there anything that they should keep in mind as they try to integrate some of these things from the Rockefellers?   Garrett Gunderson  35:12 Yeah, a lot of other insurance people try to sell these index universal life policies, but those won't work because they have too many levers of risk, and especially when you're building cash value, you might use that cash value to buy real estate. Then you might use the rental income to put the money back into the policy so you can buy more real estate in the future. So it becomes like a medium storage shed or unit for your cash that's protected, but now it comes with the death benefit, which, here's one example, for a real estate investor, instead of just, you know, rolling it over to the next property and rolling it over to the next property when you eventually sell, you can use a charitable trust. And a charitable trust, you can donate that highly appreciated piece of real estate, get a partial tax deduction, sell it and fund the trust and pay zero tax on your gains. No matter what your basis is, there's no tax on the gains. You're the first beneficiary of the trust, meaning you can take an income between 5% and 50% from the trust while you're alive, depending on the underlying assets, and then when you die, the charity keeps whatever's left over. But if you have a life insurance policy that will replenish what that donation was, therefore giving you 20 30% or more increased cash flow with an asset by making a synergistic allocation. Now, that's a lot of information in a short period of time, but it's more about planting seeds. And don't worry, I'll give everybody a copy of the book at no charge, so they can kind of read it at their own pace, or you can listen to it at their own pace, versus me condensing it into just a couple minutes.   Keith Weinhold  36:56 Oh, thanks. All right, well, we'll learn more about that resource at the end that sounds like that can be really helpful to a lot of people. And I guess Garrett, even though you're not as real estate ish as me, as we wind down here, you know, I think the place that you and I find the most common ground is we often say and help people with the things that sort of fly in the face of conventional guidance. I mean, you really just don't have to think about it that much more than if you just do normal stuff, average, mediocre stuff, you're only going to have a normal, average, mediocre outcome. So can you tell us about any last things that can help get people thinking differently and debunk some of this conventional guidance that really will never help get you much above lower middle class?   Garrett Gunderson  37:40 Yeah, if you're putting your money in mutual funds and ETFs, you're making a bunch of other people money. I mean, the big three is you want to focus on generating cash flow so you can create financial independence. Because if you have enough cash flow from assets to cover your expenses, every active dollar can build more assets. That's an exponential benefit to you. So now that you don't have to be forced to work, you've got a lot more freedom. And the big three for me are real estate businesses or intellectual property, which is kind of, you know, something that is part of business to a degree, but I consider a different asset class. Those are the big three. I have no money in the stock market. I have money in my businesses. I invest in myself. I invest in my vision. I invest in a team, instead of investing in things that I have no control over and I don't get cash flow from and that the economy can change, or that Wall Street's making money on whether I make money or not. So that's just one notion that I think we could probably, you know, agree, flies in the face of what everybody's teaching. That's the masses. But when you look at the wealthiest people, it's how they're implementing and what they're doing.   Keith Weinhold  38:39 And I think another place that conventional guidance really tells people to prioritize is paying down debt or paying off debt. I mean, making your debt free scream at age 34 you know, maybe that's not so bad, but maybe not. I mean, did paying down low to moderate interest rate debt and making that priority sacrifice your lifestyle and your family's lifestyle the entire time while you were doing it, and did it have a steeper opportunity cost, because you were not investing those dollars in things that can earn a greater return than their interest rates were they're using some of the vehicles that you talked about. So, you know, I guess what I'm getting at Garrett philosophically, one way I said it, is that the risk of delayed gratification is denied gratification?   Garrett Gunderson  39:23 Yeah, I mean, if we become sacrifice, how do we ever overcome that habit? I'm I'm scrimping, I'm sacrificing, yeah, I'm deferring. And then one day, what you're supposed to flip the switch be like, Okay, now I'm abundant. I'm gonna enjoy this money that doesn't happen. So that habitual notion of reduce, cut, eliminate, no one shrinks their way to wealth. It's a game of expansion and production. Yes, be efficient, be intelligent, be a steward, but don't become a miser, because misers, no matter how much money they have, never get to feel what it's like to live their richest life. It's always about elimination. Instead of enjoyment and utilization.   Keith Weinhold  40:02 Oh, that is just beautifully stated. I really can't say it any better than that, and that really brings it back full circle as to the best personal finance is probably growing your means rather than practicing living below your means for decades, and then you'll never get that time back. Well, Garrett, you've generated so many good educational resources. Why you've been the successful author and speaker. Tell us more about that.   Garrett Gunderson  40:26 Garrettgunderson.com is where a lot of those resources are. I write a blog like it's 2006 because I love to write and just get information out there. I've created a money persona quiz. So if you go forward slash tools on Garrettgunderson.com you can figure out what's the success or sabotage that happens subconsciously with how you deal with money. It's very informative and useful. I've written 10 books. I offered that if people DM me on Instagram, Garrett B, Gunderson, two R's, two T's, middle initial B and just say, Keith, get rich. Keith get rich. So I know it was on this program, I'll hook you up with the audio and a PDF of the book on me, so that you can hopefully just understand this Rockefeller method and improve your life and start building a legacy right now. Because if you're already doing real estate, that's great, let's make sure to preserve, protect and even perpetuate that wealth with some of the structures that could be integrated.   Keith Weinhold  41:17 Well Garrett, yeah, you have a lot of great resources and just a really wide spectrum of understanding of concepts all across a personal finance field. Is there any last thing you'd like to let our audience know about?   Garrett Gunderson  41:28 Just create the life you don't want to retire from. Design a life that you love. Create enough cash flow from assets to have that economic independence so you have choice and freedom daily of what you do and swing for the fences in that purpose, you know, that's probably the best advice that I could give.   Keith Weinhold  41:43 Why would you want to live your life any other way? Garrett Gunderson, it's been valuable as expected. Thanks so much for coming on to the show.   Garrett Gunderson  41:51 Thanks for having me.   Keith Weinhold  41:58 Yeah, a lot on both mindset and long term wealth preservation with Garrett Gunderson today, now, 15 weeks ago, on episode 507 you'll remember that episode called compound interest is weak, where I made a takedown about how compound Interest actually is not serving people. Leverage does serve people. Garrett also makes a takedown and critiques this myth about how people think compound interest builds wealth. A little review. There some comprehension from 15 weeks ago, compound interest has most people counting on the average annual return when they should be focused on the compound annual growth rate. A little review. Remember the average annual return means if you're up 10% one year and then down 10% next year that you broke even. That's the arithmetic thing. But that is a lie. The reality is in this CAGR, the compound annual growth rate, it reflects, if you're up 10% one year and then down 10% the next year, you're at minus 1% the geometric thing. And that's the reality, and that makes a retirement lifestyles worth of difference, and a retirement ages worth of difference like I thoroughly broke down for you in episode 507 coming up on the show here in future weeks, a familiar name like Tom wheelwright returns, and then new guests, like a former NFL player here on the show, if you want to reach out to Garrett Gunderson on Instagram for his best free resources, even the audio and pdf of his Rockefeller method of generational wealth preservation, again on Instagram, you can DM him at Garrett B Gunderson, he let me know later, all you have to do is send him my first name, Keith, and he will hook you up there. I'm your host, Keith Weinhold, and I am supremely grateful and even in awe of your devoted listenership for an entire decade of your life and mine, here's to another 10 years. Don't quit your Daydream.   44:21 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively,   Keith Weinhold  44:49 The preceding program was brought to you by your home for wealth. Building, get rich, education.com, you.

President of the Mises Institute and author of “How Capitalism Saved America”, Dr. Thomas DiLorenzo joins us to uncover the current state of capitalism and if it still exists in America. Earlier in the episode, Keith discusses the inaccuracy of economic predictions, citing examples like the 2023 recession that never happened, the negative impact of misinformed predictions on investment decisions and business growth.  Persistent housing price crash predictions have been consistently wrong despite global pandemics and higher mortgage rates. Dr. DiLorenzo advocates for #EndTheFed to reduce inflation and restore free market principles. Learn how voluntary exchange between buyer and seller through market prices communicates information and influences production. Resources: Learn more about Austrian economics and Ludwig von Mises through visiting mises.org  Show Notes: GetRichEducation.com/521 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai     Keith Weinhold  00:00 Keith, welcome to GRE. I'm your host. Keith Weinhold, reviewing some terrible economic predictions and why it matters to you. Then the President of the Mises Institute joins us. Does capitalism still exist in the US and what would happen if we ended the Fed, today on get rich education.   00:24 Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, who delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show. Guess who? Top Selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit getricheducation.com   Corey Coates  01:09 You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  01:25 welcome to GRE from Syracuse, Sicily to Syracuse, New York, and across 188 nations worldwide, you're listening to one of the longest running and most listened to shows on real estate investing. This is Get Rich Education. I'm your host, Keith Weinhold, now a lot of media companies and pundits and influencers like to make predictions. Listeners like learning about predictions and by engaging just a little of that each of the past few years on one of the last episodes of the year. Here, I forecast the national home price appreciation rate for the following year, many media outlets, pundits and influencers have made terrible, just absolutely terrible, predictions about interest rates and other financial forecasts. Last year, a majority of Pro prognosticators firmly forecast six or eight Fed rate cuts this year, for example, well, we're going to have far fewer, and that's because high inflation kept hanging around. Then there's the 2023 recession that never happened, yet both Bloomberg and the economist actually published some rather ignominious headlines, as it turned out, they published these in the fall of 2022 Bloomberg, big headline was forecast for us, recession within year hits 100% in blow to Biden, well, That was false. That didn't come true. I mean, 100% that doesn't leave you any room for an out. And then also published in the fall of 2022 The Economist ran this headline why a global recession is inevitable in 2023 All right, well, they both believed in a recession, and they believed in it so deeply that it got fossilized. Well, an economic archeologist like me dug it up.   Dr Thomas DiLorenzo  03:31 We are going to die   Keith Weinhold  03:35 well, but I didn't risk my life like Indiana Jones did there. This archeology, it only involves some Google searches. Well, here's the thing. What's remarkable about America staving off a mammoth recession and leaving all the other g7 nations in the economic dust is the fact that merely predicting a recession often makes it come true. Just predicting one often turns a recession into a self fulfilling prophecy. Yeah, recession forecast headlines alone, they can spook employers from making new hires and slow down manufacturing, and it can also disillusion real estate investors from expanding their portfolios. Well, the US economy grew anyway, besides the farcical prognostications about myriad interest rate cuts in a quote, unquote definite 2023 recession that never happened. You know, there's also a third forecast that so many got wrong. And you probably know what I'm gonna say. I've brought it up before, because this hits our world, those erstwhile and well still ever present housing price crash predictions. I mean this facet of the gloom boom really ramped up from 2020 One until today, even a global pandemic, new wars and a triplicate mortgage rates couldn't stop the housing price surge and the rent surge. A lot of doomsdayers just couldn't see, or they didn't even want to see that a housing shortage would keep prices afloat. They didn't want to see it because they get more clicks when they talk about the gloom government stimulus programs also buoyed prices, and deep homeowner equity cushions will still keep prices afloat. Ever since 2021 here on the show, I've used that rationale and more to explain that home prices would keep appreciating, but that the rate of appreciation would slow down, and it has slowed down since 2021 see YouTubers tick tockers. They notoriously use woe begone housing crash headlines, because that gets more clicks and then some of the rationale behind this. The reasoning is just dreadful, like, what goes up must come down, all right? Well, this is like, why does it matter? Who cares about wrong predictions anyway? What's the point? Well, people become misinformed. People waste their time on these things and see no one loses money on dismal economic predictions. But the damage is done, because when investors don't act well, then they didn't get the gain that they should have had. Businesses didn't get the gain that they should have had when they could have made new investment and hired new employees sooner. And of course, a recession is going to happen sometime. They occur, on average, every five to six years. It is just a normal part of the business cycle will collectively these three faulty economic predictions, rate cuts, a recession and a housing price crash. I think if you bundle them all up combined, it could be as bad as one doomsday prediction about worldwide starvation or the Mayan apocalypse. Remember that the wide to K bug, the acid rain, even that the internet is just a fad that ran a buck 30 years ago. World War Three is eminent, robots overtaking humans, or how about running out of crude oil. I mean, we're definitely all supposed to have jet packs in flying cars by now, right? But yet, did anyone have the clairvoyance to predict the stock market crash of 1929 or September 11 terrorist attacks, or Trump's surprise, 2016 presidency or Bitcoin hitting 70k A while back, or the coronavirus. So really, overall, the bottom line here with predictions is that no one knows the future. Control what you can maintain equanimity, add good properties, gradually raise rent, reduce expenses, create leverage and expect inflation truly the best way to predict the future is to create it in just that way. Well is the USA capitalistic nation today. That's what we'll discuss later with this week's guest. When Chuck Todd hosted the show Meet the Press, he interviewed AOC about this. Yes, I'm talking about us. House Rep from New York, Alexandria Ocasio Cortez, what she say? You   08:34 have said you are democratic socialist. Can you be a Democratic socialist and a capitalist? Well, I think it depends on your interpretation. So there are some Democratic socialists that would say, Absolutely not. There are other people that are democratic socialists that would say, I think it's possible. What are you? I think it's possible. I think you say to yourself, I'm a capitalist, but I don't say that. You know, if anything, I would say, I'm I believe in a democratic economy, but.   Keith Weinhold  09:03 okay, well, I'm not sure if that clears it up at all. And I've listened to more of that clip, and it just makes things more confusing. But I think that most people have trouble drawing a line between capitalism and neighboring economic systems. Where exactly do you draw that line? I don't know exactly where to draw it. When I think of capitalism, I think of things though, like removal of interventionist central planning and allowing the free market to run with few guardrails. And then there's an issue like labor unionization. I don't really know about something like that. This is a real estate show. I'm still forming an opinion on a topic like that. In you know, some of this gets political, and that's beyond the scope of get rich education. The Fed was created in 1913 that central planning, its central banking from 1987 to. 2006 Alan Greenspan reigned as Fed chair. Those were his years, and he became even more interventionist. And then his successor, Ben Bernanke, maybe even more so with quantitative easing and such. Let's talk about, should they end the Fed and capitalism with this week's expert guest. You very well may have heard of the late, famed Austrian American economist Ludwig von Mises today, the Mises Institute carries on his legacy, and this week's guest is none other than the President of the Mises Institute. He's also the number one best selling author of how capitalism saved America and his newer book with a title that I love, The Politically Incorrect Guide to Economics. Hey, it's great to have you here. It is. Dr Thomas DiLorenzo.   Dr Thomas DiLorenzo  11:00 pleased to be with you. Thanks for having me.Th   Keith Weinhold  11:02 Well, Dr DiLorenzo, for those that don't know, just tell us a bit in an overview about Austrian economics and what Ludwig von Mises stood for.   Dr Thomas DiLorenzo  11:02 Well, Ludwig von Mises was the preeminent critic of socialism and fascism in Europe, and in his day, he fled the Nazis literally hours before the Gestapo broke into his apartment in Geneva, because he was the preeminent critic of fascism and socialism, and he was also Jewish, and so he had to get out of town. And he miraculously ended up after wandering through Europe with his wife in New York City, and he taught at New York University for many years, until he died in 1973 and but the Austrian School of Economics is a school of thought. It has nothing to do with, necessarily, with the Government of Austria, the country of Austria, just this the founder of a man named Carl Menger happened to be from Austria, but probably the most famous or well known among Americans would be Friedrich Hayek, who won the Nobel Prize in 1970s he was a student of Ludwig von Mises and critics of interventionism, critics of socialism. We teach about free markets, of how markets actually work and how governments don't work. And that's in a nutshell, that's what it's about. And you could check out our website, mises.org, M, I, S, E, S.org, you can get a great economic education. We have a lot of free books to download. Some of them are downloaded 30 or 40,000 times a month. Still, it's even Mises old books like human action, first published in the 1960s and so you can get a great education just by reading our website.   Keith Weinhold  12:42 Well, congratulations, that's proof that you're doing an excellent job of carrying on the Mises legacy into the present day, a lot of which is championing capitalism. Do we have capitalism in the United States today?   Dr Thomas DiLorenzo  12:59 I was an economics professor from 40 years before I got this job as President of the Mises Institute. And I used to say we had islands of socialism in a sea of capitalism at the beginning of my career. But now I'd say it's the opposite, that we have islands of capitalism in a sea of socialism. And socialism, this data is not defined anymore as government ownership. That was, you know, about 100 years ago, the socialism. It's basically government control of industry and in addition to government ownership. So the instruments of the welfare state, the income tax and the regulatory state, is our version of socialism, or central planning, if you will. And it's the Federal Reserve the Fed, which is a government agency that orchestrates the whole thing, really, it's a big, massive central planning industry that controls, regulates basically every aspect of any kind of financial transaction imaginable. They list in their publications over 100 different functions of the Federal Reserve. It's not just monetary policy. It's a big regulatory behemoth, and so that's that's what the Fed is. That's what I think we have today. A friend of mine, Robert Higgs, a well known economic historian, says our system is what he calls participatory fascism. And fascism was a system where private enterprise was permitted, but it was so heavily regulated and regimented by the government that industry had to do what government wanted to do, not what its customers wanted it to do, so much, and a large part of our economic system is just like that, and we get to vote still, so that's where the participatory and comes in, and the pin of Robert Hinz.   Keith Weinhold  14:41 yeah, maybe at best, I can think of today's system as capitalism with guardrails on but the guardrails keep getting taller. And I think of guardrails as being, for example, regulatory agencies like the Fed in FINRA. In the FDA.   Dr Thomas DiLorenzo  15:01 It is the beginning of my career. You know, I studied economics and a PhD in economics, and there was a big literature on what's called regulatory capture. And it was sort of a big secret among US economic academics. There was all this research going on and how the big regulatory agencies created by the federal government in the late 19th, early 20th centuries, were captured by the industries that they were supposed to be regulating. Right? The theory was they would regulate these industries in the public's best interests. But what has happened from the very beginning is they were captured by the industries, and they benefit the industry at the expense of the public. But today, that's caught on thanks to people like Robert Kennedy Jr, frankly, has been a very popular author. He sold a gazillion copies of his book on Anthony Fauci, and in it, he explains in tremendous detail how the Food and Drug Administration was long ago captured by the pharmaceutical companies. And he's not the only one. I think that that is being more and more recognized by people outside of academic economics, like me, and that's a good thing, and that's sort of the worst example of crony capitalism. It's not real capitalism, but crony capitalism making money through government connections, rather than producing better products, cheaper products and so forth.   Keith Weinhold  16:21 I watched RFK Jr speak in person recently, and I was actually disappointed when he effectively dropped out of the upcoming presidential race. And I do want to talk more with you about the Fed shortly, but with all these regulatory agencies and how I liken them to guard rails. You know, I sort of think of it as a watchdog system that's failing. You mentioned the FDA. I know RFK Jr brought them up an awful lot, the Food and Drug Administration that are supposed to help regulate what we put inside our own bodies in our diet. But these systems are failing. We have regulatory agencies in industry, industry in regulatory agencies. I mean, look at the obesity rate. Look at all the ultra processed food that's allowed. Look at all the seed oils that are allowed in food that people actually think are healthy for them. So this system of capitalism with guardrails is failing almost everywhere you look.   Dr Thomas DiLorenzo  16:22 I wouldn't call it capitalism. I wouldn't use the word capitalism at all, other than crony capitalism, people can relate to that. You know, a lot of these regulatory agencies were lobbied for in the first place by industry. That while the very first one was the Interstate Commerce Commission, it was in the 1880s it was meant to regulate the railroad companies. The first president was the president of a Railroad Corporation, the head of the Interstate Commerce Commission. So talk about the fox guarding the hen house. That was from the very beginning. And so in a sense, this word capture theory of regulation, which Kennedy has used, they weren't really captured. They always were created by the government. The same is true of all the so called Public Utilities. It was the corporations, the electric power companies, the water supply companies, that lobbied for governments to give them a monopoly, a legal monopoly, in electricity, water supply and all these things that were called natural monopolies, but there was nothing natural about them. There was vigorous competition in the early 20th century in telephone, electricity, water supply, and that was all set aside by government regulation, creating monopolies. For example, in electric power, there's an economist named Walter primo who wrote a book some years ago showing that always have been several dozen cities in America that never went this way, that always allowed direct competition between electric power companies. And what do you know, better service and lower prices. As a result, they did dozens of statistical studies to demonstrate this in his book.   Keith Weinhold  18:58 Okay, well, that's a great case study. Why don't we talk about what things would look like if we took down one of these agencies? We're a real estate investing in finance show. Sometimes it's a popular meme or hashtag to say, end the Fed. What would it look like if we ended the Fed?   Dr Thomas DiLorenzo  19:18 Well, the Fed was created in 1913 in the same era, with all these other regulatory captured agencies were created, right? And it was created basically to cartelize and create a cartel for the banking industry to make it almost impossible to go bankrupt. They've been bailing out foolish bankers for 111 years. And of course, the biggest example was that as the crash of 08 after they they handed Goldman Sachs and other big investment banks billions of dollars. That was a direct assault on capitalism itself, because capitalism, as you know, is a profit and loss system. It's not a I keep the profits. You pay for my losses system. You're the taxpayer. But that's what happened with that. So the Fed would. Fall into that the Fed is actually the fourth central bank in America. We had three other ones. First one was called Bank of North America. Its currency was so unreliable, nobody trusted it went out of business in a year and a half. And then we created something called the Bank of the United States in 1791 same thing. It created boom and bust cycles, high unemployment, price inflation, corrupted politics. It was defunded after 20 years, and then it was brought back to fund the debt from the war of 1812 and so we had a Second Bank of the United States. It did the same thing, boom and bust cycles, price inflation, corrupted politics. Benefited special interest, but not the general interest, and President Andrew Jackson defunded it, and so we went without a central bank from roughly 1840 until 1913 so we've had experience of that. And what we had been was competing currencies, and that would be sort of a stepping stone. If we got rid of the fed, we wouldn't have to abolish the Fed altogether. We could amend the charter to the Fed to say you're no longer permitted to buy bonds. Can't buy government bonds anymore. That's how they inflate the money supply, right? By buying bonds. That's totally unnecessary. And we could just just that would be a great step forward, and we would sort of whittle away our $80 trillion debt, if you count again upon count the unfunded liabilities of the federal government,   Keith Weinhold  21:26 if we did end the Fed, what would the price of money? Which are interest rates really look like? Would a new market rate be sent by individuals and companies on the free market like Bank of America, with a customer or borrower settling on an interest rate that they both agree to.   Dr Thomas DiLorenzo  21:44 You know, the Fed uses sort of Soviet style economics, price control. The economists and are all getting all over Kamala Harris for recommendations for price controls on rent and other things. Well, the Fed price control. They control the price of money. That's what they do. And so there's a big, kind of a comical thing that here you have all these economists, if they were to teach economics in the week one, they would teach about the bad effects of price controls, and then they get a job at the Fed, and they spend their whole career enforcing price controls on money, and the interest rate would be determined by supply and demand for credit and inflationary expectations. That's what the market does. And you wouldn't have these bureaucrats at the Fed tinkering around with interest rates, creating tremendous arbitrage opportunities for Wall Street investors. With all the movements and interest rates, you'd have much more stable interest rates, and and you wouldn't have this ridiculous system where the Fed says we need to always have forever at least 2% inflation. And of course, they never meet that, and they lie about it. I don't believe for one minute that the price inflation right now is 3% or under 3% that's ridiculous, right? And so things should be getting cheaper. Everything should be getting cheaper because of all the technology we have. My first PC I bought in the early 80s for $4,000 and it was a piece of prehistoric junk compared to my cell phone today, that almost for free. Almost everything should be like that agriculture, but the reason it isn't is the Fed keeps pumping so much money in circulation, that it pumps up the demand for goods and services, and that's what creates price inflation. And by its own admission, that's what it does, even though it's charter, it's original charter said they're supposed to fight inflation. All of a sudden, about 10 years ago or so, they announced, south of blue, we always have to have at least 2% inflation. Congress had nothing to do with that. President had nothing to do with that, and the people of America had nothing to do with that. It was dictators like Alan Greenspan and Ben Bernanke that just make these announcements. And where does that come from when we live under the dictatorship of the Fed? And of course, the people who are hurt the most by the Fed are elderly people are living on relatively fixed incomes and are forced to become Wall Street speculators they want to make any more money other than their fixed income, where, you know, during the days of Greenspan, when they're pursuing zero interest rates, maybe the mortgage industry like that, but the people on retirement income were starving as a result of that. So it's been sort of an economic war on the retired population.   Keith Weinhold  24:24 Things should get faster and cheaper to produce, like you said. However, there's definitely one thing that's not getting faster to produce, that's housing build times. Housing build times have actually gone up, which is sort of another discussion unto itself. But we talk about the Fed and then setting prices. People wouldn't stand for setting the price or having price controls on oil or lumber or bananas, but yet we set the price of money itself. People have just become accustomed to that. Yet it's that money itself that we use to buy oil and lumber and bananas the fed with that dual mandate of stable prices and maximum employment. If we did abolish the Fed, what would happen to the rate of inflation?   Dr Thomas DiLorenzo  25:12 Well, we would have less inflation. It's supposed to what we replace it with. There's some system would be a replacement, but we wouldn't have the boom and bust cycles that we have now. There's been research in the past 100 years or so of the Fed, and what the academic researchers have concluded is that the Fed has made the economy in general more unstable than it was before we had the Fed and price inflation. That's a joke. The dollar is worth maybe three cents of what it was in the year 1913 right when the Fed was created. So it has failed on all accounts. And so if we got rid of it, we would reverse that. The idea would be to start out with a competing money system. And I'll tell you a quick story is, you know the word Dixie from the south, you know land of Dixie that was named after a currency by a New Orleans bank called the Dix D, I x 10 in French, and it was 100% gold reserve. It was backed by something real and valuable, and it was so popular as even used in Minnesota. But that's why the whole south, the states in the South, were using this currency, because it was so reliable. But during the Civil War, the national currency acts imposed taxes on the competing currencies and taxed them out of business and established the greenback dollar, as it was called, as the Monopoly money of the country. We didn't get a central bank during the Civil War, but we got that. And so that's the kind of system that we would have. Friedrich Hayek wrote a whole book about this, about competing currencies, called the denationalization of money. He poses that as a good stepping stone to a freer market in money. And like you said, Money is the most important thing. Is most more important than bananas or shoes or any of these other things that we might have price controls on.   Keith Weinhold  27:01 All right, so we're talking about the case for ending the Fed. What is the counter argument? I mean, other than the government wanting control, is there a valid, or any academic counter argument for keeping the Fed in place?   Dr Thomas DiLorenzo  27:16 The Fed has an army. I call it the Fed's Praetorian Guard of academics. There was a research article published by an economist named Larry White at George Mason University several years ago, and he found that 75% of all the articles in the academic journals regarding money, monetary policy and so forth, are by people who are basically paid by the Fed, one way or the other. Either they're fed economists, or they've been invited to a conference by the Fed, or they're an intern some relationship with the Fed. The late Milton Friedman once said, If you want a career as a monetary economist, it's not a good idea to criticize the biggest employer in your field. So there's a lot of nonsense about that. And so yes, you'll have all sorts of rationales, but it basically comes down to this, that we think we can do central planning better than the Russians did under communism, because the Fed is basically an economic central planning agency, and there's no reason to believe Americans are better at it than the Russians or anybody else. And it basically comes down to that, you know, studying the past 111 years that's showing Well, yeah, they've been trying that for 111 years. They've made the economy more unstable, and they have failed miserably to control inflation. And why should we give them another chance? Why should we continue along this road? We shouldn't So, yeah, there'll be all kind of excuses the late Murray Rothbard, who was one of the founders of the Mises, who once answered this question by saying, It's as though people said, Well, say the government always made shoes. 100 years ago they took over the shoe industry. People would be saying, who will make shoes if the government doesn't make shoes? The government has always made shoes, right? But the government has not always monopolized the money supply. It's only like I said, we abolished three Feds in our history. In American history, they weren't called the Fed, but they were central banks. And the Fed is called a central bank, and we've done that three times. We've abolished more central banks than we have kept in American history.   Keith Weinhold  29:17  We're talking with Dr Thomas D Lorenzo. He is the president of the Mises Institute. About, is there really any capitalism left more when we come back, this is Get Rich Education. I'm your host. Keith Weinhold,  hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group and MLS 42056, they provided our listeners with more loans than any provider in the entire nation, because they specialize in income properties, they help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start now while it's on your mind at RidgeLendingGroup.com, that's Ridgelendinggroup.com. Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too. Earn 8% hundreds of others are text family to 66866, learn more about freedom. Family investments, liquidity fund on your journey to financial freedom through passive income. Text, family to 66866.   Kristen Tate  31:11 This is author Kristen Tate. Listen to Get Rich Education with Keith Weinhold, and Don't quit Your Daydream.   Keith Weinhold  31:27 welcome back to get rich education. We're talking with Dr Thomas DiLorenzo. He is the president of the Mises Institute. You can learn more about them @mises.org and Dr DiLorenzo. Frederick Hayek, an economist that you mentioned very well known and a student of Ludwig von Mises, he believed that prices are a communication mechanism between a buyer and a seller. Say, for example, there's a new style of single family rental home that everyone wants to rent. So therefore the rent price goes up when other builders see that the rent price goes up, that brings in more builder competition, and with more competition, that brings rent prices down, and then the world is filled with abundant housing, rather than a scarcity of housing. So that's how I think of a free market system within capitalism as working, as defined through Hayek.   Dr Thomas DiLorenzo  32:22 You know, the consumer is king. Von Mises once wrote about the same point where he said that people mistakenly believe that it's the bankers and the CEOs and the businesses that control what gets produced and so forth, but it's really the consumer. You build a housing development then people don't want those houses. You'll find out real fast who's in charge. It's not the mortgage brokers. It's not the bankers. It's not you, it's the consumer. That's the free market system, and if you do without it, and not using the free market system, whether it's for money or anything else, is kind of like trying to find your way around a strange city with no street signs, and the prices are the street signs that tell us what to do, exactly like you said, if there's strong demand for a certain type of housing, that'll drive the price up, and that'll tell the home builders, we can make money building more of these. And they will do that. Nobody tells them. The Chairman of the Fed doesn't have to tell them that the President doesn't have to tell them that Congress doesn't have to issue a declaration telling them to do that. That was the Soviet Union where they tried that. And that's the great thing about the market, is that the consumer can tell the richest man in the world like Elon Musk, go play in the traffic. Elon Musk, if they don't like his cars or whatever he's producing, even though he's the richest man in the world. And he understands that he's a pretty successful businessman, I would say, and so so he understands that the consumer is his boss.   Keith Weinhold  33:53 Well, what else do we need to know? You have published a lot of celebrated books, from how capitalism saved America to the politically incorrect guide to economics. What else might a real estate investor or an economic enthusiast need to know today? Oh,   Dr Thomas DiLorenzo  34:10 well, I think everybody needs to be their own economist. You can listen to the talking heads on TV and on podcasts and all that, but educate yourself and become your own economist. Because a lot of the people on TV, as you might see on the news, they have an ax to grind, or they have a sort of a hidden financial interest beyond what they're saying, Be your own economist. And that's why I'm selling my website, which is everything on it, it's for free, mises.org, and there are quite a few others too. You don't have to go to school, you don't have to get a degree. You can get a good economic education, for example, on money. We're in the middle of giving away 100,000 copies of a book called What has government done to our money. I'm Murray rothbar. You go to our website, scroll down to the bottom, and you can fill out a form online, and we'll send you free books and. You can educate yourself that way. And so just in general, I think that's what people need to do. I taught MBA students for many years who are people in their 30s or maybe even early 40s, who didn't have economics degrees, but they were really into it, and for the first time in their careers, they decided maybe I should understand how the economic world that I live in and work in every day operates rather than going through your life and your career without you. Might know all about real estate sales, but it's also useful to know about the economy in general and how things work.   Keith Weinhold  35:35 And when one becomes their own economic student and they take that on, I think it's important for them, like you touched on to not just consume the economic news that's on CNBC or other major media, because that doesn't really tell you how to create wealth. It might inform you, but it doesn't necessarily tell you how to take action. For example, on this show an educational channel, you might learn about a story about rising inflation like we had starting three or four years ago. And here we talk about how, okay, if inflation is going to be a long term economic force, you may or may not like what the Fed is doing, but rather than save money, borrow money, outsource that debt service to the tenant on a cash flowing asset like a single family home or an apartment building. And that inflation that you're learning about on CNBC will actually benefit you and debase your debt with prudent leverage on a property, for example, so not just consuming the news, but learning and educating yourself and acting.   Dr Thomas DiLorenzo  36:34 Oh, sure, well It just so happens that last night, I was talking to a friend of mine who's a real estate professional. They're all talking about, Oh, are we going to have a slight drop in interest rates? And I reminded them that there will be a part of the market if they see it, if we do have a slight drop in interest rates, we'll look at that and say, well, maybe this is a new trend. And so I'll sit back and I'll wait. I'm not going to buy now, because I think the interest rates are going to go down even further in the next six months there were, there would be some segment of the market that thinks that way. And so that's just one little thing. Another thing I would mention is that one of the basic tenets of free market economics is that voluntary trade is mutually beneficial. People buy and sell from each other, because both sides benefit. And that's very important for any business person to keep in mind as you structure business deals, because you know about business deal that is successful is basically, I will give you what you want, and you give me what I want, and we're both happy. And that's that's one of the main tenets of how the market works. Voluntary exchange is mutually beneficial. So think about how to make it mutually beneficial, and you'll succeed in making a deal.   Keith Weinhold  37:45 Well, it's been an excellent discussion on Is there any capitalism left, and how would it look like if we turned the course and created more capitalism here in the United States? It's been great having you on the show.   Dr Thomas DiLorenzo  37:58 Thank you.   Keith Weinhold  38:05 Yeah , again, Learn more @mises.org or look up books by Dr Thomas DiLorenzo. His viewpoint is that there are now merely islands of capitalism in a sea of socialism where those conditions were inverted last century. We've got to end the complex between the government and corporations that these watchdogs are basically powerless when the fox is guarding the henhouse. Dr dilorezzo says we could change the Fed charter so that they couldn't buy bonds, which should reduce inflation. So he does offer a way forward there, a solution.  In capitalism, he consumer is king. This is a good thing. You yourself are empowered because you get to vote with your dollars. So therefore what you buy more of society will see and make more of but a prosperous, progressive economy that should be able to produce goods and services that are constantly cheaper because they get more and more efficient to make with innovation, but centrally planned inflation makes them more expensive, at least in dollar denominated terms. So progress should make things cheaper? Well, then everything should take fewer dollars to buy, homes, oil, bananas, grapes, but it doesn't, and it won't anytime soon, like I mentioned in the interview, there single family build times are taking even longer. That's not more efficient, and they're sure not getting cheaper. In fact, the National Association of Home Builders tells us that from permit to completion in 2015 it took 7.2 months to build a single family home. By 2019 it was up to 8.1 months and then. Last year, the time required to build a single family home from permit to completion was 10.1 months. That's not the side of an efficient economy. So basically, therefore, in the last eight, nine years, the time to build a home has gone from 7.2 months up to 10.1 months. That is a drastic increase in a short period of time. Just amazing. And we now have data after covid as well, broken down by region. The longest build time, by the way, is in New England, where it is 13.9 months to build a home from permit to completion. Gosh, such inefficiency. But despite all that stuff that you might find discouraging like that, I want to go out on a good news note here some encouraging sentiment for you, if you champion free markets, then invest in us rental property down the road, there is no centrally controlled ceiling on what you can sell your property for. Most places don't have rent control. In fact, there's been no federal rent control on private property since World War Two. And somewhat ironically, you benefit. You actually benefit from government backed loans at these low fixed rates, and now they're moderate fixed rates. You often get these through Fannie Freddie or the FHA. See you benefit from that particular government backing as a savvy borrower for rental property. And on top of this, you use the GRE inflation triple crown to flip over that not so capitalistic inflationary force. You flip it upside down and use it to your benefit, profiting fantastically from inflation. So you know how to take the situation you're given and use it to your advantage rather than your detriment. Big thanks to Dr Thomas DiLorenzo today, longtime econ professor and current Mises Institute president, more ways to build Real Estate Wealth coming up here for you on the show in future weeks, as always, with the dash of economics and wealth mindset. Until then, I'm your host. Keith Weinhold, Don't Quit Your Daydream.   42:28 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively,   Keith Weinhold  42:56 The preceding program was brought to you by your home for wealth, building, getricheducation.com.  

Keith discusses his journey from an entitlement mentality to realizing the importance of wealth creation through real estate investing and shares the real estate shockwave that nobody is talking about. We are also joined by Caeli Ridge, President of Ridge Lending Group, as she explains the differences between owner-occupied and investor mortgage loans. Hear about the ease of entering real estate investing with no formal qualifications or high income required. Learn the concept of demographic shockwaves and how the aging population will influence housing demand in the future. How to ethically use other people's money to build wealth for yourself before you even own a property. Learn about the key differences between owner-occupied mortgage loans and investor mortgage loans, particularly the use of rental income in qualification. Resources: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Show Notes: GetRichEducation.com/520 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai      Keith Weinhold  00:01 Keith, welcome to GRE. I'm your host. Keith Weinhold, I'll discuss when I was an employee with a scarcity mindset, the real estate shock wave coming that no one's talking about, then, how you can ethically use other people's money to build wealth for yourself before you even own a property today, on get rich education.   00:24 Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold rights for both Forbes and Rich Dad advisors, who delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com   Corey Coates  01:09 You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.    Keith Weinhold  01:25 welcome to GRE from Springfield Ohio to Springfield, Missouri and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education. It's great to have you back for another week, and I genuinely appreciate your listenership, and I am grateful to have such a large audience. I've got to tell you, admittedly, coming out of college and in my first couple full time jobs, I wasn't always a good employee. I guess I had somewhat of an entitlement mentality. I'm not sure where that came from. I don't know that I can blame anyone else on planning it inside me. I don't know where I got this notion. It sure wasn't from my parents, but I kind of felt like somebody owed me a job just because I have a college degree and I'm good at showing up on time, yeah, like, I'm just a good representative for your company. I mean, now I can see that no one owed me a doggone thing. In fact, I owed my employer value. An employer actually takes a big risk on you when they hire you, paying you to train you until you're productive there. I mean, the hiring process itself is even expensive. Well, though I felt like someone owed me a job just out of college, somewhat Oppositely, I never expected any sort of high income at all, and I had quite a modest income in my first couple years out of college, just like a lot of recent college grads do, until it grew into something more. But my humble geography degree, it conditioned me to think lower income. I knew that going to college in Pennsylvania for geography in what interested me, I mean, that's what I went with, what interested me not what I could make money in well, then I couldn't find a job in my geography field at all. No one would really pay me to describe Asia's mountain ranges to them. So what I ended up doing is working under engineers at a construction and engineering firm, a few of them, one engineering firm really liked me and designated me as their new marketing person. Of all things, they wanted me to call prospective clients on the phone and meet them cold in person, because they just thought somehow, when they met me, that I could win new business for the engineering firm, just I guess, based on how I communicated with other people at other engineering companies, even though I couldn't even talk the language of engineering. Well, anyway, these disciplines engineering, and really it was construction inspection that I did for a while. You know, that stuff, even the marketing stuff, it just didn't fill my soul. And you must have felt this way at your job before. If you don't feel it perpetually, you aren't aligned with your purpose on this earth, and you're spending so many of your faculties and so much of your waking conscious life at that job. Well, motivation to escape that is what got me reading about wealth mindset and real estate investing. Since anyone can do it, no degree needed, no certification, zero formal qualification. And now I think I mentioned this to you before, but it's worth bringing up here again, a turning point is when I read one life changing sentence, just one little what is it? A. Five word sentence in a rich dad book, that pivotal paradigm shifting, course correcting sentence was, being wealthy is a choice. And when I first read being wealthy is a choice, I just didn't believe it. I thought that Robert Kiyosaki, the author, was wrong. Well now I know that he was right. I had thought that being rich is unobtainable. You had to be born into it, so unless you won the lottery, you can't achieve more than middle class. Well, I was wrong about that. Now I can't really say something like, oh, well, a college professor said that rich people are bad or, you know, I don't have that story. I can't blame anyone else for growing up with a limited, scarcity mindset, really, other than myself in the context that was created around me. I mean, growing up in Pennsylvania, I just knew that the carts family and the domileskeys, they had more than us. And that's just the way it would always be. It's sort of preordained, and other families had less than us, and these family trajectories were just cast in stone as to how it had to be. But the good news is that it's not, and this is still what makes America great, the fact that it takes zero formal training, zero risk parents, and not even a high salary for you to do something like get a three and a half percent down payment loan for owner occupied FHA fourplex or 20% down for a single family rental that produces income from day one in The Southeast or Midwest, you can plant that seed that get other people's money working for you seed in just that way, even if you're interested in something as unprofitable as geography. Now, a huge reason that people disparage the wealthy is rooted in jealousy and envy, and that is not good. There's no goodness in those emotions, and that is because people don't think it's obtainable for them. It's obtainable for almost anybody. Learning that it is within your reach that completely breaks down your resentment of the rich. Yes, indeed, being wealthy is a choice. Well, people are obtaining wealth in today's real estate market. Here, Redfin reported that through the latest quarter ended real estate investors bought fully one in four of the nation's most affordable homes. That's up 3% year over year. And as Redfin puts it, it's a sign that investor activity is stabilizing, and as homeownership remains out of reach for many Americans, real estate investors are coming out of hibernation to take advantage of robust demand from renters. So investors are buying a greater proportion of affordable homes, some of them through our marketplace, GRE marketplace. Now over the long term, let's think about how US housing is going to be positioned for sustainable demand. Demography is destiny. That's a quote attributed to 19th century philosopher Auguste coon Tay, it means that the size and structure of a population will influence its future. So then all we need to do is track the age of a population over time to sharpen and give clarity to a forecast. It is axiomatic that in 10 years, a 25 year old will be 35 No kidding. Well, what's important about the age of 35 is that is the average age of today's first time homebuyer. It's between 35 and 36 All right. Well, the US is peak birth year occurred in 2007 we know that just look at demographics. Well, then add 35 to it. Add 35 years to 2007 This means that, on average, they will buy their first home in the early 2040s a lot of people are going to be forming their first household, whether it's rent or buy around the year 2040, I mean, the peak in all of American history, a lot more people will need homes. In fact, more than 13,000 Americans are turning age 35 every single day for the foreseeable future for more than a decade. This year is the first year where we've ever had over 13,000 Americans turning 35 every single day. And that is projected to continue to happen every single year through 2035 and that's as late as the Census Bureau projection that I have goes on. On that stat this baked in demographic housing demand. Hey, if we don't get serious about building more housing fast, and it's likely that we won't, this will be analogous to a demographic shock wave that hits the housing market. The population aging into homeownership is projected to exceed the population aging out, as in the death rate for a long time. This will pump housing demand, and that's not all. I've only talked domestically so far. This doesn't even account for additional demand from immigration. And immigrants tend to be younger and are renters for a long duration, or just forever. On top of immigration, the average number of people per household is falling as well. In 1960 3.3, people live per household in 1990 it was down to 2.6 by 2023 it was down to 2.5 this means that more housing is required just in order to shelter the same population. But of course, the population won't stay static. So to keep piling on with the housing demand here, the overall US population is projected to grow as well, from 342 million today to 383 million in 30 years. That's per the CBO. The demographics for senior housing are even more bullish. And of course, when I use the word bullish like this, this bullish sentiment that's from the investor side. If you're looking to buy your first home or find a place to rent, this is all more discouraging than perhaps all of our perpetual struggles to live a balanced life or lose weight. This baked into the cake. Demand is almost perfectly predictable, and it's of seismic importance to the real estate market. And yet, despite that fact, you know, more investors curiously fixate for month after month on something like the Fed's interest rate decision or the next jobs report. I mean, this is both harder to predict and way less significant than the sustainable demographic demand for rental housing that you got right there. So really, to sum up, this segment demographics reveal that housing demand should stay high for decades, long term, then you should expect higher home prices, higher occupancy rates and higher rents. And you can benefit by owning many rental properties. And our guest and I are about to discuss how you can do exactly that own many rental properties, and how to do it efficiently with less cash out of your pocket, including how you can start using other people's money before you even own a property when you're trying to qualify for a loan on a rental property, in some cases, you can Use a portion of the tenant's rent income toward your qualification income. Let's talk with this week's guest. There's one place that's created more financial freedom through real estate than any other lender in the entire nation that's time for a big welcome back to their president, Caeli Ridge.   Caeli Ridge  13:23 Keith Weinhold, my friend, thank you for having me happy to be here, sir.   Keith Weinhold  13:26 Oh, it's so good to have you here. You're a longtime friend of the show and so many of our listeners that you've helped originate investor mortgage loans. Caeli leads Ridge lending group. They're an investor centric lender. She does such a good concise job of explaining specifically what real estate investors need to know in optimizing your loan positions. In fact, on a previous episode, she once broke down every single line of a closing disclosure form for us one by one, detailing each individual closing cost and prepaid item and in there, besides being specific income property loan experts, they're really thorough and helpful that way. Well, Caeli, tell us about the key differences between owner occupied mortgage loans for buying a primary residence and investor mortgage loans for a rental property.   Caeli Ridge  14:17 The key things are that on a rental property, probably the biggest difference is going to be that for a rental property, there's additional incomes that potentially we get to use to help offset that new monthly liability, aka the mortgage payment, p, i, t i, principal, interest, tax and insurance, we have access to income potentially to help offset that. So in the debt to income ratio category, it can be a huge boon or a huge benefit, depending on what the individual's qualifications are. Additionally, in that same theme, we're not just confined to a conventional Fannie Freddie loan for investors. We have things like the DSCR debt service coverage ratio that you would not be able to apply to a primary residence, but also allows for income to help identify whether the property qualifies for financing.   Keith Weinhold  15:04 So for prospective investor borrower is wondering whether we'll have enough income to qualify for that property or not. Is it a certain percentage of the tenants rent income that is used in the investor borrowers qualification income?   Caeli Ridge  15:19 absolutely, so conventional full doc mortgages they are going to receive in the acquisition year formula, because there's two formulas that will be used in underwriting. One is called the acquisition year. The other one is called the Schedule E I'll focus on the acquisition year. This is applicable from the date that they acquire the property and until that tax year's Federal tax return is filed. I needed to find up to in a minute they get up to 75% of the gross rents minus the proposed p, i, t, I, principal, interest, tax and insurance. Now I say up to because it depends on two primary criteria that the borrower must possess in order to get the full 75% so think about it this way. There's three buckets. Okay, the first bucket gets the full 75% of whatever the gross rents are. The easy math example that I give, let's say that the gross rents are $1,000 a month. The PI ti proposed payment is 500 a month. If they're in bucket number one, and they get the full 75% of 1000 they have 750 bucks, right? And from that they're going to subtract out the $500 of mortgage payment. In that example, it would leave them with a gain positive 250 so that individual came to us with a debt to income ratio of x as a result of purchasing this investment property, their DTI is going to go down because they're $250 richer monthly. So 75% is the maximum you can use in the acquisition year. That individual in that bucket has to demonstrate two things. One, they have a primary housing expense, whether that's a mortgage or they rent, either is fine. And then second, they need to be able to demonstrate that they can they've had 12 months of history in owning investment property. So if they have both of those two things, they get the full 75 if they have one or the other, they're in bucket number two, which gives us an offset. They cannot have the full 75% they don't get the full gain, but I can offset. So going back to my example, using $1,000 of income and $500 of mortgage payment, they can't have the 250 gain, but I can give them up to 500 making that a zero, right? It's covered completely the mortgage payment. It's not increased any debt or anything in the example. So DTI would stay exactly the same as where they began, when we started. And then finally, bucket number three would mean that individuals that have neither of those two things, no primary they live rent free, no primary house expense, and they do not have 12 months demonstrated history currently, of being an investor. They get zero of the rental income, so they've got to support the full new payment within their DTI and keep it within that 50% threshold. So that was a long explanation to the question, but I think that that pretty much covers it.   Keith Weinhold  17:56 Now, That's really helpful. Okay, that can help the borrower's debt to income ratio. I guess a lot of cases is going to be helping it out by a small amount. What if, say that investors buying a new build rental property and there is no tenant, hence no rent income there yet.   Caeli Ridge  18:11 I'm so glad you asked. So on a subject property basis, that is the property in which they're purchasing at the moment in time. It's called the subject property. Those properties do not need to be tenant occupied. We can use assumptive rental income from the appraisal on a rental property that will come with some additional forms. It's called a 1007, it's just the number on the page. Those are rental income comps. The appraiser has given us an average of what those rents are going to be, and that's what we're going to use the 75% calculation on.   Keith Weinhold  18:41 Okay, that's really good to know new build or resale rental property, that's going to work the same with either one there. Now I know oftentimes that one wants to qualify. When we look at non order occupied properties, rental properties with conventional conforming loans from Fannie or Freddie, typically, one puts 20% down on those properties we've talked before. I think one can put as little as 15% down, although they would have PMI in that case, or alternatively, rather than putting 20% down, last time I checked, they could put 25% down and get a lower interest rate. So can you talk to us about the interplay of the percent down payment for rental property.   Caeli Ridge  19:21 I'll start by saying, more often than not, when you do the math the capital expenditure, or in this case, the difference between 5% down 80 versus 75% divided by the monthly payment difference, you're going to find that the leverage is going to outperform the higher 80% will outperform the lower 75% but absolutely, to your point, the payment is going to be less for two reasons. At the 75% level, the interest rate will be lower because you've got more skin in the game. The interest rate, loan level, price adjustment for 75% is going to be more attractive than it will be at 20% down. So the rate will be lower. And of course. The loan amount is lower, so both of those combined characteristics are going to create better cash flow, it's true, and a lower monthly payment. However, the math that I always want to promote, that people are doing is looking at it side by side, all you have to do, and it's actually much easier than people, I think, assume. So you figure out the capital expenditure difference. Let's just use 100 grand, okay, because his math is simple. So you've got $5,000 in additional capital that you'd be bringing to the table for the 75% option, right? Versus retaining the five grand, the payment difference is 50 bucks a month. Okay? Whatever the number is, all you're going to do is take the five grand and divide that by the payment difference, and that will give the individual the number of months it takes them to recapture that capital for the savings. Generally, my opinion, per an investment property is that if that number is in excess of 36 months, it's going to take you over 30 or three years to recapture that capital versus the savings. I'd keep my money because I can do one of a few things with it. If I chose to, I could cash flow the 50 bucks myself every month for 100 months, if that was the math. Or I could apply that five grand and use it with some other monies, perhaps, and buy another investment property, or put it in different investment asset class that would provide a return so more often than not, when they do that math, my belief is, when I do it, I'd say even 95% of the time, the higher the leverage is going to be, the better return numbers.   Keith Weinhold  21:27 We're philosophically aligned that way. We're leveraged proponents here, typically the smaller down payment, 20% is going to be better for you long term than 25% even though you'll get a somewhat lower interest rate on a rental property, putting 25% down rather than 20% when we pull back, we look at the interest rate difference between an owner occupied property and a rental property. What is the spread between the interest rate? Of course, you're going to pay higher interest rate on a rental property because it's a lot less likely that the borrower is going to walk away from their own home than they would a rental property.   Caeli Ridge  22:02 exactly and this is a great segue into those LLPAs that I always like that we spend some time talking about. So llpa, loan level, price adjustment. So for the GRE listeners, this is a more complicated concept, so I'm going to try and quickly break it down. Keith loves it when I get so wordy. So llpa is a positive or a negative number that associates with the individual characteristics of the loan transaction. So one of those characteristics, obviously, is occupancy. The loan level price adjustment for a primary residence versus an investment property is quite different, and for the reasons exactly that you described, there's a lot less risk in a primary then there will be in a rental. Because if an individual needs to choose between defaulting on where they live and an investment property, if it came down to that, obviously they're going to maintain, yeah, so they got to choose. So skin in the game, risk, etc, generally speaking. And there's all those other variables too, credit score, loan size, loan to value, property type, purchase versus refi, those are all unique llpas That will have their own unique number. But in general terms, an owner occupied where you live is typically going to price out an interest rate about one percentage point lower than you would find on an investment property, generally, if we're comparing apples to apples.   Keith Weinhold  23:15 talking about that risk difference for the lender, just like in the 20% versus 25% down. Example, there's less risk for the lender when you put 25% skin in the game. Hence the lower interest rate there too. Caeli, tell us about fitting the right mortgage type to the borrower. And of course, there are so many types. There's 30 year versus 15 year, fixed rate mortgages versus Adjustable Rate Mortgages, interest only, DSCR loans like you touched on. So tell us about getting that right fit for that individual borrower.   Caeli Ridge  23:49 This is a bit of a rabbit hole. So what I would start by saying is we do at Ridge take a lot of time on the front end and identifying not only what their needs are, their goals are, but obviously what their qualifications are, and marrying all of those things together and coming up with a roadmap that I like to call it, depending on where the individual is in their journey of real estate investing, as the tax returns may continue to be filed, and how aggressive they want to be with their deductions, maybe some cost segregation. I know I'm getting a little bit technical here, but because we maintain and have all of those products, it's very, very uncommon, or very rare, that we find an investor, potential client, that we do not have some sort of loan product to satisfy what their end game or end goal is. And you know, maybe we continue to graduate them. Let's say that they start in a DSCR because they can't qualify for Fannie Freddie today, but that is their ultimate goal. We're going to provide them with the insight and the background or the feedback that plants the seeds and gets them to that place in six months or a year, or whatever. So I hope I answered the question, depending on their individual needs and goals and qualifications, of course, really will dictate which one of those is going to be applicable.   Keith Weinhold  25:00 We've got a lot more to discuss, including, is it easier to approve w2 incomes from a day job versus 1099 from contract or gig work? And more, we're talking with the nation's foremost expert on income property. She is the president of ridge lending group, Caeli ridge. More, we come back. I'm your host. Keith Weinhold.  hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group and MLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage, you can start your pre qualification and chat with President Chaley Ridge personally. Start now while it's on your mind at Ridge lendinggroup.com. That's ridgelendinggroup.com. Your bank is getting rich off of you, the national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor two, earn 8% hundreds of others are text family, 266, 866, learn more about freedom. Family investments, liquidity fund on your journey to financial freedom through passive income. Text family, 266, 866   Robert Kiyosaki  27:00 This is Rich Dad, Poor Dad Author Robert Kiyosaki, listen to get rich education with Keith Weinhold, Don't Quit Your Daydream.   Keith Weinhold  27:18 Welcome back to get rich education. We're talking with Ridge lending Group President Chaley ridge. These discussions are great, because debt, through leverage, builds wealth even faster than compound interest, as I've discussed, and Caeli is really the linchpin in her company, and help makes that happen with reliable income property loans and Caeli today, there are a lot more people with sharing economy income, gig economy income, or doing contract work, and they're paid with a 1099 form that shows their income for that year, versus a w2 employee wage job. So can you tell us about whether it's easier to approve those that have a w2 income and that versus the 1099   Caeli Ridge  28:03 I don't know that I would classify it as easier as harder. It's just different. So on the 1099 first and foremost, if you don't have a 24 month history of having that kind of income, you're not going to get a conventional loan. And assuming that we're going to kind of keep on that path of Fannie Freddie's. Because remember, guys, if you can't fit into those boxes. We've got 10 others that we can look to to get the financing for. But if we're in the Fannie Freddie, that's really where this is applicable, the 1099 and the w2 I mean, they're really equal in terms of the overall process. The difference would be that with 1099 you must have that 24 month history. The calculation is that we're going to take an average, it gets a little bit convoluted, like anything else that is leverage or financing related, but a 24 month average of 1099 unless we can show that that individual, let's say that they're self employed and maybe a Schedule C, and they've got their 1099 coming in through that way. If they can show five year history of having license or being self employed that way, that instead of having to use a 24 month average, we'll use a 12 month average, and that may be to their advantage. Let's say that the most recent year filed is in a bit of a decline from the prior year. Let's just use 2022 and 23 let's say 23 is a little bit lower than 22 a 24 month average is not going to be as big a number than if I were to just to be able to take the 12 month average of the most recent year. So if that individual can demonstrate they have five years of being or receiving that kind of income, then instead of being a 24 month average, I get to choose and just do the 12 month average. So that would be one thing about the 1099 that I would say otherwise, yeah, they're just different. I don't know that one is harder than the other. As long as the qualifications are there, they're there.   Keith Weinhold  29:43 When I think about this, I guess it does make sense from the lender perspective. If you're paid and shown income there on your 1099 from sharing economy work, gig economy work, or being self employed, that's more volatile work than having a day job. Um, as an employee.   Caeli Ridge  30:01 Sure, absolutely. And if you can demonstrate that you have that history and you've been able to consistently earn and have those numbers, it's okay, yeah, but without the 24 months, you're not going to get a conventional loan. You're gonna have to look at DSCR or something else.   Keith Weinhold  30:15 We're talking about what it takes to qualify for income property loans today with Ridge lending Group President Caeli Ridge, when we talk about that qualification bar that needs to be met. Caeli, you see so many loan applications in there. You have a team. You look at and deal with so many situations when you're free, you even pick up the phone, sometimes yourself, and you will talk to individual borrowers. So what do you see in there as the top reasons for not qualifying for an income property loan.   Caeli Ridge  30:42 The top reasons for not qualifying for a conventional loan probably is debt to income ratio, yeah, more often than not of the three basic criteria, which are assets, enough cash to close or reserves, credit and then DTI, I would say it's the DTI category that more often than not, is the culprit for qualifying or not. And it may be as simple as how they filed their last year's tax return and saying, Okay, before you file 2024 don't do that until you send Ridge a draft, so that we can get ahead of what you may not have known to look for last time. They could be very simple, little easy fixes. And you know, sometimes maybe it's they don't want to pay the extra taxes, which sometimes that might be required. In which case we say, okay, let's pivot over to the DSCR options. In which case, by the way, just as a quick sidebar, I'm finding that gap is starting to narrow a little bit to the point that it's a lot more affordable in terms of the investment property and what cash flow is expected than it used to be. The differences between a Fannie Freddie rate and a DSCR rate is starting to narrow a little bit. So if you have to be DSCR, I would not shy away from that just because you assume I think it's going to be more reasonable for cash flow properties.   Keith Weinhold  31:52 Yeah, I'll tell you, when I was an employee as a day job worker grinding in my eight by 10 cubicle, as it was back in the day, and I was buying income properties. Yeah, the main thing I would get held up on is that my debt to income ratio, my DTI, was too high, and my salary was pretty strong, although not fantastic, not astronomically high, but I felt like I was a guy that was pretty good, pretty prudent with my finances. And yeah, it didn't feel good to be told hey, Keith, to lower your DTI. You need to pay off your 3% automobile loan that's at a nice fixed interest rate. I didn't want to have to do that, but I was willing to do that to retire the small loan in order to qualify for the big loan.   Caeli Ridge  32:36 That makes sense. I might just offer a comment in that regard. What you may have experienced at that time could have been what we call an overlay in the industry. So, yes, like anything, right? Lenders aren't created equal. Because we're so investor friendly and focused, we are going to go by the purest form of those Fannie Freddie guidelines. It's called a seller's guide. And as an example, let's just say that Fannie Freddie gives you 75% of the subject properties, gross rents, whereas B of A or I'm just picking on B of I don't know why, but some other lender may impose an overlay. It's like layers of risk and saying, No, we're not going to give you any rental income credit whatsoever, even though the guideline says that we can do it, our overlay says, No, we can't. So depending on who you're working with, credit unions are a little notorious for that being a little bit more restrictive in their box of guideline. So it may not always be what you think. So if you've had a lender, tell you DTI wise, you don't qualify, but you feel like this is not quite right. You should double check that, because it may be an overlay.   Keith Weinhold  33:34 Everyone is interested in interest rates. It's been so interesting with what's happened the past few years, ever really, since the covid Emergency cut took place in 2020 and the volatility that we've seen in interest rates, then we saw interest rates max out in this cycle at about 8% almost a year ago. What does this declining interest rate environment mean at a mortgage loan company? And what do you see for the future of rates there?   Caeli Ridge  34:02 Well, rates have been coming down. If you guys are watching the headlines, you're seeing those sound bites. We have started to see some more refinance activity than we were seeing before, certainly additional purchases as we start to see interest rates come down, I am of the opinion that we're going to continue to see some improvement in the rate department, dependent on some of the jobs reports that we'll be getting soon, so we'll see. But My money is on that, we'll continue to see some nice tailwind in the rate department throughout the rest of the year, and who knows what's going to happen? I mean, this is our election year, etc. We'll see how the rest of it plays out.   Keith Weinhold  34:33 How does a prospective borrower get their financial house in order themselves before getting a hold of you and your team there, what are some of those checklist items that they should do themselves at home first?   Caeli Ridge  34:47 like I said a bit ago, so you've got those three primary criteria. If you're wanting to qualify for those conventional full doc loans, think about your credit Do you know what that credit score is? Now, depending on some other variables, it doesn't have to be 800 Credit scores to qualify. I mean, we've got clients as low as 650 that are able to get financing conventionally, because they've got compensating factors, similarly for assets on the investment property side, the down payment and the closing costs and the reserves, none of those things can be borrowed or gifted. And that's very different than if it was an owner occupied, gifted and borrowed funds are okay for an owner occupied, for an investment property, they have to be sourced and seasoned, meaning your own funds over the last 60 days. So think about that. What your down payment is going to be an estimate of closing costs and make sure that you have the appropriate amount of capital. And then finally, that debt to income ratio. That's a slippery or one to try and calculate that for yourselves. But if you think about your minimum payments on your credit report. That's really all that goes into it. Minimum payments, not the debt load. The minimum payments on the credit report divided by the monthly income, gross income, you should be able to come up with a number, and 50% is that threshold. So if you can kind of just take that kind of mental back of the napkin of your own, you should have a pretty good gage on whether or not you think you're going to be in this box, or if getting into the game, or continuing to be in the game, is going to require some alternative loan types.   Keith Weinhold  36:05 Inflation has been such a story for the past three or four years, but some people aren't aware that there's actually been credit score inflation. Last time I checked, the average credit score had been slowly rising in the United States. What's the highest credit score that gets one the lowest rate.   Caeli Ridge  36:22 We're staying in the Fannie Freddie department, 760 and above is all the same bucket, if the individual qualifications are identical, if this one has an 850 credit and this one has a 760 credit, exactly the same in the interest rate department.   Keith Weinhold  36:35 And then, once they've engaged with you, what about locking in their interest rate. What duration did they have prior to closing? Tell us about that timeline.   Caeli Ridge  36:45 So an interest rate can be locked on a 15 day lock, a 30 day lock, a 45 day lock, even a 60 or 90 day lock, typically it's a 30 day lock that's the average. The shorter the period of lock, the better the rate and or points that you would pay. And the longer is the adverse right? The higher the rate of the higher the points. I like to look at locking an interest rate, usually when we get the appraisal back, because an appraisal can be the piece that might delay or there may be some issues. So I generally like to see the appraisal first. We've been in such a volatile area with interest rates and what might be happening in the ups and downs, etc. I've broken that rule quite a few times over the last couple of years, I would say today, floating may be to our advantage, just because we feel like rates are on the run and that they may continue to improve. Keeping in mind, once you lock in your interest rate, it is locked. Ridge does have a policy that if interest rates were to fall five, eight of a percentage point or point 625, you would have a one time automatic float down option. It's highly unlikely, and that's why we can kind of put that in there. But if it happened, we would honor that. Otherwise, when you're locked, you're stuck with that rate. You can't expect that if an eight through a quarter point comes off of or rates come down that much, that you're going to get a different rate. The only way to do that would be to let the existing one expire for 30 days and then relock market, which is not advisable.   Keith Weinhold  37:59 Yeah, you the investor, has to think about how important a lock really is to you in this declining interest rate environment, almost everyone expects mortgage rates to fall more slowly than they rose. They spiked up so fast in 2022 Caeli, how does our audience engage with you? Get Started and go on their path to getting investment property loans.   Caeli Ridge  38:24 Three ways to reach us. Obviously, we've got our website. Please check us out there. There's a lot of good information, ridgelendinggroup.com you can email us at [email protected], and then finally, toll free is 855-747-4343 855-74RIDGE is that easy way to remember, and we'll be here on standby. Thanks, Keith.   Keith Weinhold  38:43 Ridge is the same place where I get my income property loans. It's been great having you back on the show. Thank you. Yeah, strong. Well laid out material from cheyley here, as always, let me give us a perspective on creating value by having a good loan rather than not having the debt. Remember that just four weeks ago, here on Episode 516 it was the episode about is every debt worth paying off? And the short answer is no. I got a couple questions from listeners of that episode basically asking the same thing. Well, just say that interest rates are 6% and basically they're asking, well, if I pay all cash for a property or for a car, it doesn't matter what it is, then I avoid paying 6% interest. So right there is my six points of arbitrage. Well, to that, I say, okay, but look what if you think you can achieve a 12% investment return? Borrowing at six to invested 12 is a 6% spread. That's 6% arbitrage as well. But here's the thing, you've got a big advantage of doing this with the loan rather than the paid off condition. This is because. With the loan, you still have the use of your money. You haven't given it away. You still have your money, plus the six points of arbitrage in the paid off condition. You've got six points of arbitrage and you don't have the use of the money any longer. That's the big difference, and that's the value of having a loan, as long as you can service the payments. Getting back to mortgage loans, in today's episode, there are so many loan types for property, conventional, Fannie, Freddie's, dscrs, Portfolio loans, bridge loans, rehab loans, recourse and non recourse loan types, balloon loans, arms and a lot more. Caeli and I didn't discuss their all in one loan, which is like a big, flexible HELOC that you can put on your property. It's such a good product that can help you. You can ask about their all in one loan. When it comes down to what are the factors you need to be most attentive to? They are your assets, reserves, credit, income and debt to income ratio, unless dependent on the loan type that you want. So much attention is paid to interest rates, and some attention is warranted. They surely matter. Be mindful, though, that a quarter of a percent interest rate change on a 30 year loan per 100k borrowed that is just a difference of about $15 in monthly payment, $15 if you go from, say, 6% down to five and three quarters percent, so it takes a rate drop of a full 1% for a savings of about $60 then once you have some of Your finances in order, you can go ahead and do just what I've done for my own properties. For your next income property loan, you can give them a call or start at Ridgelendinggroup.com Until next week, I'm your host. Keith Weinhold, Don't Quit Your Daydream.   41:58 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.   Keith Weinhold  42:18 The preceding program was brought to you by your home for wealth building, getricheducation.com.

Tom Wheelwright is back by popular demand, our most recurring guest in GRE show history. He’s a CPA, an International Authority on Tax, and Best Selling Author of “Tax-Free Wealth” amongst many other titles. We focus on the potential unrealized capital gains tax, which would tax the increase in property value even before sale. Tom explains the implications of this proposal and the broader impact on tax policy.  We cover the Democrats' proposal for capital gains tax at ordinary income rates, capital gains on gifts, and capital gains when you die. The proposal for a billionaires tax, which would tax unrealized gains at $100 million, could potentially extend to lower net worth individuals over time. Real estate income can result in a negative tax rate, increasing cash flow after taxes. Learn about the benefits of working with a knowledgeable tax advisor. Resources: GetRichEducation.com/tax Show Notes: GetRichEducation.com/519 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai      Keith Weinhold  00:01 Welcome to GRE. I'm your host. Keith Weinhold, this week we're talking about the value of the raw land that comes along with your property, the importance of an as built survey in real estate. Then it's tax topics with pro Tom wheelwright, the specter of an unrealized capital gains tax, higher capital gains tax rates, how gambling is taxed, and how to permanently reduce your overall tax burden. Today on get rich education,     00:33 since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com   Corey Coates  01:18 You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold  01:34 Welcome to GRE from Essex County England to Essex, Massachusetts and across 188 nations worldwide. I'm Keith Weinhold. You're listening to get rich education before we talk taxes, let's talk about the land, the raw land, the lot that comes along with your property. Investors don't spend much time thinking about it. Yet the land is sometimes worth more than the home or structure that's on it, per the FHFA, land constitutes 32.2% of the value of the average US single family property in a metro area. Now the inexpensive land prices nationally, they are predominantly in what I'm classifying it as three US areas, the Midwest, the southeast and Appalachia well, where you have inexpensive land. Oh, that also happens to be where the cash flow for long term rentals resides. Land costs more by the water because people want water activities, water proximity and water view. So the lower costs are inland, and land also costs more by the water, because coasts and shorelines constrain development, sprawl that limits supply and a limited supply of buoys up prices. Consequently, the highest land values are mostly in the Northeast Corridor, from Boston to DC, Miami, coastal California and Honolulu. Yes, Manhattan values are flat out extortionate for raw land now, Seattle, Madison, Wisconsin and Boulder, Colorado. They are three places with really high land values as well. Seattle and Madison are on geographic isthmus. And isthmus is a narrow strip of land with water on both sides. It's interesting how Nashville's nascent population influx made its land values surge inside a cheap sea of southeastern US land values now costly land areas like these ones that I've been talking about on the coasts, they could work well for short term vacation rentals like Airbnb and VRBO, your classic waterfront and beachfront weekly rentals, but they do not work for long term rental cash flow. Texas Land values are sort of low to medium. Land near the Mississippi River and its major tributaries have low costs because rivers are efficient transportation networks, prohibitively high land costs. That's one reason, actually, why alternative building methods just really aren't as cost effective as some people think. I'm talking about things like 3d printed homes, prefabbed homes, tiny homes and shipping container homes, well, all of them have got to sit on land, just like conventionally build homes do. And there is a land cost. Talk to a tear down specialist, and they'll tell you that in some older homes, 100% of the total value is in the l and. And in practicality, it's actually even more lopsided than that. The structure can have negative value because demolition is not free. So for you to get an idea yourself, your property tax bill, it's going to show you your split. That's where you'll see the assessed values broken out for both your structure and the land. So the bottom line here is that cash flowing properties have low land values, typically 25% or less of the total property value. That's generally what you want to look for. And I swear the only thing that's more barren than raw land is the creative naming process for new developments. There is such a lack of creativity in these development names. I'm talking about names like Willow Creek Estates, stone bridge crossing, or what else do they name a new housing development? How about VISTA, view heights? They all have these idyllic sounding names that somehow just all sound like each other. Well, we're talking about raw land when you get in contract to buy a property, the seller side is expected to provide you with an as built, it often still comes in the form of an old fashioned piece of paper and as built survey, what it is is a plan view, a bird's eye or aerial view of your property. It's not a photograph, but a drawing, and it shows you the dimensions and the placement of structures on your property, and it includes things like fences and other features like easements. Now, lenders don't always require an as built before granting a loan, but it's a good idea to ask to see one before you wrap up your next deal. If you want to in your offer, you can even require that a recent as built be done by a surveying company. All right. Well, what exactly do you look for on an as built once you have one in hand, first see that the house or apartment building that you're buying is properly set back from the property lines to meet zoning requirements. If the six foot side setback is only five feet 10 inches, then you'll have to address that before you buy even if it's five feet 11 inches. Now it's possible that the jurisdiction that you're buying in will grant a letter of non conforming status, but if not, the structure is going to have to be adjusted. Another item to look for on an as built are encroachments. This is where part of a neighbor structure protrudes over the lot line and onto your property. And encroachment is really only acceptable if you're willing to grant the neighbor an easement in perpetuity for their encroachment onto your land. But why would you want to do that? The third thing that I want to mention that you should look for an as built is the existence of easements. An easement that just means that another party has a legal right to come over onto your land and use it. Yeah, and easements are actually quite common. It's not as threatening as it might sound. A common one is that as your as built would show, say, a five foot wide by 60 foot long easement. Is there that a utility company has access to. Well, that's something that makes sense. It's for the common good, but just be mindful that an easement cannot have a structure with a permanent foundation built on top of it, alright, because an electric company or a water company might have to excavate there. Most people think of easements on the raw land, but there are also aerial easements, for example, an overhead power line where the roof eaves are not allowed to intrude on that airspace. So to review what you learned so far today, the best cash flow properties typically have low land values, often about 25% or less of the tolerable property value. And an as built survey is an aerial view drawing of your property and its dimensions on an as built look to see that it meets zoning requirements like setbacks and look for encroachments and easements. It is resale properties where it's more important to look at as builts than it is for new construction properties.  As we're about to bring in tax pro Tom Wheelwright shortly, business owners and real estate investors really get so many of the best tax breaks in the US Code. But you've got to know. How to find them, or else work then with a CPA that does know how to find them, that really knows how to navigate their way around the tax code, people that make high salaries pay high taxes, as much as 50% you remember I did that episode a few months ago, high salaries don't create wealth. Taxes are one big reason why, say, for example, a chiropractor makes $1.2 million a year in salary. But if that chiropractor becomes an investor by buying and selling other Chiropractic Clinics or investing in real estate, their tax rate will drop by half or more, and that's because capital gains tax rates are about half of ordinary income tax rates. So see, you don't want to be a super earner. You want to earn enough money to invest and become a super owner, but tax policy could change Tom and I will discuss that first. Then we'll talk about reducing the amount of tax that you pay. Today is a new punishing unrealized capital gains tax coming that you will have to pay. What this means is that if you have a $500,000 home, and it rises in value to $550,000 well, you would have to pay tax on your $50,000 of profit, but you haven't sold your home. So this feels so wrong, because you haven't realized any profit at all. This is what unrealized capital gains tax is. And also, where are you going to get the cash to pay the tax on your 50k of profit just because your home rose in value yet you didn't realize it? I mean, might you have to sell your home in order to get the cash to pay the tax. And then what if you though could pay the tax on your unrealized capital gain so you do pay it, but then the following year, the home goes down in value. Well, would you get a refund then? So the unrealized capital gains tax proposal is a mess. Let's learn about it and more. This week's guest is a best selling author, CPA and an international authority on tax. He's brilliant because he actually makes taxes fun, easy and understandable. He's familiar to you because he's the most recurrent guest in show history. Welcome back to GRE Tom Wheelwright.   Tom Wheelwright  12:48 thanks always good to be on your show.   Keith Weinhold  12:50 Tom probably with more than 30 show appearances here now you are 6% of GRE episodes.   Tom Wheelwright  13:00 That's a little scary. But you know, taxes are your single biggest expense, so why not?   Keith Weinhold  13:05 It's appropriate. And yeah, I guess all these appearances are certainly an endorsement of how much you help our audience. It's also a reflection of how tax and legal are not my strong suit. So it really helps to have you here absolutely the all time, assists leader in GRE history then and Tyler. An awful lot of timely tax topics going on that are probably first and foremost in more people's news feeds than they usually are. As we're here during presidential campaign season, the one that it really seems to revolve around the most is this potential tax proposal on unrealized gains. I've been around long enough where I seem to see this proposal come up more often, but it never seems to go anywhere. So first, why don't you tell us what unrealized gains are?   Tom Wheelwright  13:51 it actually goes beyond that. Interestingly enough, what the Democrats are proposing is, first of all, they're proposing capital gains rates at ordinary income rates. So they're proposing doubling the capital gains rate. That's actually as important as anything else. The second thing is, they're proposing capital gains on gifts. So if you give it, if you give your business to your child, you have a capital gains ordinary income rates. They're proposing capital gains when you die. So not only an estate tax, but also a capital gains tax. So then you get taxed twice when you die. So about 80 to 90% of your estate goes to the government when you die. If you're a business owner, as an example, then they're proposing eliminating the 1031 exchange, which would mean that on a trade of real estate, you'd have a capital gains tax at ordinary income rates. Then they're talking about this unrealized capital gains so if you do nothing but build your business or your real estate, the increase in value is subject to capital gains taxes at ordinary income rates. Now you know their proposal is, we have this tax. Tax when you're over $100 million that is not seem to be in the news feeds right now, but that's what it is. They call it the billionaires tax, and they're calling it an alternative minimum tax on billionaires. But clearly, 100 million is not a billion. That's only a 10th of a billion. And the biggest issue, of course, is if you tax unrealized gains at 100 million, soon you're going to tax them at 10 million, then it's going to be 1 million. Because history. That's the history of our tax law. The history of our tax law. Remember, in 1913 when we passed the 16th Amendment, it was passed because it was only a tax on the rich, right? It would never have passed if it was going to be a tax on the average person. And yet it passed. Because great, we're okay taxing somebody else, as long as it's not our tax. We're okay taxing somebody else. That's pretty much what's going on with this unrealized gains tax is, oh, well, it's on somebody else and they have enough money. It's no big deal. Therefore, I'm okay with that, because why shouldn't they pay more tax? That is what this is about. The challenge is, is, as we saw with the income tax, eventually it will reach the average person, or at least the average entrepreneur, real estate investor. Because think also, let's say that you build your wealth in real estate, and then when you retire, you say, Well, look, I don't want to be doing active real estate anymore. I'm going to trade my single family homes or my apartment building. I'm going to trade for a Walgreens a triple net lease, well under their proposal, that would be taxed because, again, no 1031 exchanges over $500,000 so that means that if you accumulate your wealth through business or real estate, you pay a much higher tax rate than if you accumulate your wealth by investing in Wall Street through a 401k because if you invest in Wall Street through a 401K, you only have to pay tax as you pull that out, you're not going to be paying tax on the value. Now that's assuming that they don't tax the increase in value of your 401K, which is also obviously a possibility. Interesting enough people talk a lot about the constitutionality of this. The challenge with that is that we already have taxes unrealized gains. If you're a dealer in stocks, in securities you do mark to market, that is meaning that you're going to pay tax on unrealized gains. And so there is actually precedent for this, and that's the scary thing, is that they could point to that precedent and say, Well, wait a minute, it's just an income tax, it's not a wealth tax, that's what they're going to say. They're going to say it's an income tax, not a wealth tax, because it's on appreciation, and appreciation is income. That's how they're going to go down this road. Will it start at $100 million Absolutely, that's where it will start. Will it then drift down? Who knows? But likely that's the history of our tax system. Yeah. I mean, we've talked before about the phenomenon of the camel getting its nose under the tent. However, in this case, I didn't realize there's already precedent for unrealized gains, in a sense, as potentially, if this is approved for those with $100 million net worth, and in next it's 10 million net worth, $1 million net worth and so on, like you described there, when you talk about capital gains tax rates being stepped up so that they're at ordinary income tax rates. It's actually somewhat of an interesting philosophical discussion, in a way. It sort of makes sense that a person's gains from investment could or should be taxed at the same rate as one's income when they go to their day job. However, why don't we do that by lowering income taxes rather than doubling capital gains? Wait a minute, no, because it's a double tax. Let's say that you're a business owner. Why does your business increase in value? Well, because you're making income, but you're already being taxed on that income. It's called income tax. What we do in this country, which a lot of countries don't do, by the way, is we tax it a second time. We call that a capital gains tax or a dividends tax. We tax it twice now. Now we're going to have that second tax at the same rate of the original tax. So if you think about it, you're being taxed on the same income twice because it's your income that determines your value, so you're being taxed twice. It's really not the same. It's fine if you're invested in the stock market, and that's where your capital gains are. That's a hard one to argue too much, although it does take liquidity out of the market, because the problem with capital gains tax is being taxed over 28% it's about 28% is that you actually lower the contribution to the Treasury because there will be fewer capital gains. There will be so many fewer capital gains that you actually lose money. The Tax Foundation, taxfoundation.org, I'd refer people to, has done lots of studies on this, and it's very clear. Here that high capital gains rates actually reduce the amount of money that comes to the government. So this is purely political. This has nothing to do with let's generate more revenue, one of the challenges so you have to score this, right? So that means that you're scoring what's the revenue that's going to be produced? You have two types of scoring. One is called static scoring. The other is called dynamic scoring. Static scoring means that we're going to look at the capital gains we already have, and we're just going to, if we double the rate, we're going to double the revenue. So that's assuming that we're going to have the same number and amounts of capital gains as we add at the lower rates, right? Dynamic scoring means that we're going to take into account how people behave motivationally when you double the tax rate. Yeah. Well, let me give you an example. So I'm a business owner. My wealth is in my business primarily. Do you think, really, I'm going to sell that business and take the capital gains immediately and be done with it? But if I have a high capital gains rate, I'm going to sell this over 20 years. So I'm actually going to defer my capital gains as long as I can, because I don't want to pay those high capital gains rates. So that means less money to the government. That's what it means. So it actually reduces on a dynamic scoring if you look at truly how people behave and have behaved in the past. So this isn't a new thing, right? We've had high capital gains rates before. It's not like we don't know. It's not like we haven't seen this before. It's that, for whatever reason, politically, they've decided that, wait a minute, the rich are out of favor. We need to tax the rich more. That's a very popular line, and therefore this is a way to do that, even though it by all calculations that are dynamic, it would actually reduce the amount of funds that come to the Treasury.   Keith Weinhold  22:00 That does make sense about the double taxation. Case in point, with an apartment building, if you increase its noi, you have more income than pay tax that if you increase the noi, therefore you've increased the value of the building. Consequently, the capital gains tax that you might have to pay down the road Tom, maybe current capital gains tax are higher than I thought, is the 28% capital gains tax. Number You mentioned, current or proposed. What is that?   Tom Wheelwright  22:24 Well, right now we have a 24% capital gains tax, okay, we have 20% pure capital gains tax, plus we have a 3.8% net investment income tax. Doesn't apply right now if you're a real estate professional, but applies to everybody else under the Harris proposal formally adopted Biden's plan under the Harris proposal, then you would get a actually 39.6% rate, plus 5% net investment income tax, regardless of whether you're your real estate Professional. So that is 44.6% that's the 45% the 28% number I threw out is that's the number the Tax Foundation says is the maximum you can raise it to without losing revenue.   Keith Weinhold  23:11 That puts things into perspective, as real estate investors, for a long time, we've appreciated substantial tax shelters. What are they being the 1031, tax deferred exchange, like you mentioned, that's been around for more than 100 years. Does that have any realistic shot of being shot down? Of course, Trump shot down substantial parts of the 1031 outside of strict real estate investing.   Tom Wheelwright  23:32 He did, and he actually set the precedent for eliminating it. So by doing that, because he eliminated it on everything except real property, right? I mean, actually, and even before that, there was a time, and there's still ways you can do it with paper assets. But it's not a 1031 exchange. So 1031 exchange has it evolved. It's gotten it's shrunk. It keeps shrinking. Even three or four years ago, no realistic possibility of eliminating 1031 exchange. The challenge, of course, is it would have an impact on the liquidity of the market. However, big deals never do 1031 exchange. Ever you don't see big multifamily developments sold in 1031s. The only time you see that happen is when they've used the Delaware statutory trust. And then you've got some of the investors who use it. And some of them who don't, you can do that in the Delaware statutory trust, but the regular developers, I haven't seen a 1031 done by a syndicator in years. So could they eliminate? Yeah, they could.   Keith Weinhold  24:33 yeah, that would be concerning. Are there any other presidential hopeful proposals that have to do with taxes that are germane, and our audience should know about?   Tom Wheelwright  24:41 my heavens. So the Democrats want to raise taxes by $5 trillion they want those taxes to all be on investors. And the reason I say that is because typically, people who make less than $400,000 which is their threshold, are not major investors. Most of their money goes to spending. Money. If you're making under $400,000 you can easily spend $400,000 a year. Oh, yeah, okay, that's not that hard, especially in today's world. It's a transfer from high net worth individuals who invest their money in long term projects like real estate, like energy, like business, and it's going to be a transfer to people who spend the money and they're going to spend it, my prediction is that if the Democrats get their way, we enter into a long term period of stagflation, high unemployment and high inflation. Because if you transfer $5 trillion from people who aren't spending it in the first place to be able who do spend it. You've got $5 trillion of new money going into the marketplace. Now it could depress asset values. So that could be good for investors, okay? Because you don't have as much cash available to the I'll call it the investor class, to go into real estate. If that's the case, then you have $5 trillion less, right? I mean, it's not a huge portion of the market, but it's big enough. If you take $5 trillion out of investment capital, then that would put a downward pressure on asset prices, which would include real estate.   Keith Weinhold  25:29 we're talking about potential changes to the tax code. It's always a germane discussion, because taxes are the biggest expense in your life. We're talking with Tom wheelwright. We come back, we're going to talk about the real estate tax laws as they are now, for example, how your rent income is taxed differently than your job income, and also, what are taxes like on sports, gambling. You're listening to get rich Education. I'm your host. Keith Weinhold.   Keith Weinhold  26:45 hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group NMLS 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridgelendinggroup.com that's Ridgelendinggroup.com   Keith Weinhold  27:16 you your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest, year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too. Earn 8% hundreds of others are. Text FAMILY  to 66866, learn more about Freedom Family investments Liquidity Fund on your journey to financial freedom through passive income. Text FAMILY to 66866.     Blair Singer  28:29 this is Rich Dad, sales advisor, Blair singer. Listen to get rich education with Keith Weinhold. And above all, Don't Quit Your Daydream.   Keith Weinhold  28:48 welcome back to get rich education. We're talking with tax pro Tom wheelwright. He's been talking to us about some of the proposals that presidential candidates have here in a campaign season, and whether these things become true or not. Sometimes it seems like just the fact that they're proposing. They're proposed, or if they get instituted at a small level years down the road, it can blow up into something bigger. So Tom tell us more about some of the proposals that are on the table.   Tom Wheelwright  29:12 So we talked about the democratic proposals, which also include things like a $6,000 tax credit for babies. It also includes an enhanced Child Tax Credit. Also includes some other there's lots of provisions in there, right? So it's a transfer. It's just a transfer of money from one group of people to another group of people. On the Republican side, we haven't talked about that now they want to extend the 2017 act. They've been very clear, that's what they want to do, which is an estimate $4 trillion so the other direction. So basically, you're talking about a $9 trillion swing between the two parties. We've never seen this before, ever in a presidential election. Now, that big of a difference, one major tax increase, one party proposing major. Tax increases, the other proposing major tax decreases in the same election. It's something that I'm glad people are paying attention to, because it's a little overdue in this election cycle. Because really, when you talk about policy, that's probably the biggest policy difference between the two parties.   Keith Weinhold  30:18 Now one thing we've learned over time from talking with you is these presidential wish lists, if you want to call them that. Well, these tax changes are things that require congressional approval, and we have a divided Congress currently. So what do you think the prospects are of really any of these things becoming new law?   Tom Wheelwright  30:36 First of all, remember, most of the 2017 act expires at the end of 2025 so something will have to be done next year. They don't have a choice, either that or is just expires, and then we're back to what we had. We have smaller standard deductions, we have alternative minimum tax again. We get a deduction for state income taxes, right? That comes back the one. We lose our 20% Small Business deduction, the only thing that stays permanent is the corporate income tax rate that was permanent in the original bill. So there is going to be something, you're right, if there is a divided Congress, and I say that if, because if one party sweeps, then, especially on the Democratic side, the Republicans don't seem to be as cohesive as the Democrats are on these things. And if the Democrats sweep, I would say, remember, we don't have Kyrsten Sinema, we don't have Joe Manchin from happening. And so would the Democrats sweep all these through, not all of them, but you're going to see a major tax increase for sure, on the Republican side, would you see the 2017 act extended? You'll probably see it, but you're right that otherwise, if it's a divided Congress, we're going to have something in between. We thought we would get a divided Congress in 2020 though, remember and we didn't. So I would not count on a divided Congress   Keith Weinhold  31:59 erstwhile 2017 Trump tax cuts in JOBS Act brought the highest marginal income tax bracket from 39.6% under Obama down to 37% as I remember it. Some thought Biden would take it back up to 39.6 but he hasn't and it's just stated 37 All right, so if Republicans stayed in power, presumably that 37% would go ahead and carry on. That's what we think about as our w2 income. Tom, why don't we talk about the taxes that actually exist today? I think a lot of real estate investors just don't understand the difference between how your w2 job income is taxed versus your taxes on real estate rent. Can you talk to us about that?   Tom Wheelwright  32:42 The reason it's confusing is because they're both considered ordinary income, right? The difference is, is that one is business income and one is non business income. Your wages are non business income. You don't get deductions against non business income, but you do get deductions against business income. So your rental income is considered business income for purposes of the Internal Revenue Code. What that means is you get deductions for taxes. You get deductions for interest, you get deductions for maintenance, you get deductions for depreciation. That's why, when you have your income from your rentals. Typically taxed much lower than your income from your salary, because you get no deductions against your salary like you do against the rentals.   Keith Weinhold  33:30 Maybe it would help to introduce an example here. I don't know if this will complicate things too much or not. If a real estate investor has, say, a single family rental property with $2,000 of rent, income, $1,000 mortgage, $800 in operating expenses. How is that tax that leaves them with $200 of cash flow?   Tom Wheelwright  33:50 You have $200 of cash flow, but then you probably have depreciation on top of that, which is a non cash deduction. And so let's say your depreciation is $500 that means you actually have a $300 loss that, in many cases, you can use to offset income from your w2 so you actually have a negative tax rate. In other words, you're making money from taxes. So actually, is that an increase to your cash flow? So it's a way to think of it is, I have $200 of cash flow from my tenant, if I have a $300 loss for tax purposes, let's say I'm in a 33% tax bracket. I have $100 of income from the government. So that means my cash flow is really after tax. Cash flow is $300 not $200 whereas if you have the same $200 of income from your wages. Let's say you have just the net, right? Let's start with the net. You have $200 well, you're going to be taxed. And let's say that again, your 33% tax rate, that means you're after tax, right, is going to be roughly $125,000 okay, under $30 so $130 we're. $300 so it's like twice as much. In fact, all of that difference is because of the tax law.   Keith Weinhold  35:06 Gosh, that was a great breakdown. I'm really glad that I introduced that example, $2,000 in rent, minus $1,000 for the mortgage, at $800 in operating expenses, again, leaving you with $200 in cash flow with that example. There's probably more going on here with taxes. Because, of course, with that $1,000 mortgage amount, some is going to be principal, some is going to be interest. In part of that interest can be tax deductible.   Tom Wheelwright  35:31 I'm assuming it's all interest, because if it were not, we'd have a higher taxable income. Remember, your principal payment is not deductible. So in your example, I was assuming that the $1,000 mortgage payment was all interest. If it was only $800 then you'd have $400 of income before depreciation. You don't have $100 loss, because, remember, your principal's not deductible, so therefore you have to add that back into your taxable income.   Keith Weinhold  35:58 Will you talk to us about how to apply depreciation to this income versus expenses. Example, is there anything else you can speak to when it comes to that $800 of operating expenses in this example, and those expenses include things like property insurance, property tax itself, maintenance repairs and utilities.   Tom Wheelwright  36:19 Right but also, for example, you might run your rental real estate business out of a home office in your home so you could have a home office deduction. You might have your use your car for the rental purposes, and then you get a deduction for your car. So there are additional expenses that aren't even in that $800 that you could pick up that would not otherwise you'd never get a deduction, and you're really not spending any more money. You're just using it for business, and therefore getting a business deduction. So it's really all about what do I get to deduct? Remember that if you own a home for yourself, you don't get to really deduct the taxes. You have a limit on how much you can deduct. So taxes are limited in deduction. Mortgage Interest may or may not be limited. Remember also that if you have a mortgage, you're limited to how much a $750,000 mortgage being deductible, whereas if you it's a rental property, it could be a seven and a half million dollar and mortgage, and you still get the deduction, so you're not limited like you are. On top of that, again, it's a business, so let's say that you put solar panels on your personal home, you'd get a 30% tax credit, but you'd get no depreciation deduction. If you put solar panels on your rental house, you get the same 30% tax credit, but now you also get a depreciation deduction of probably another 30 $40,000 in the first year. So there's always more deductions in a business setting than a personal setting.   Keith Weinhold  37:56 Well, real estate has been around a really long time. Often laugh when people talk about non conventional investments and put real estate investing in their real estate's about the most conventional investment that we can possibly think of. It's been around a long time. We think about a newer thing that people do with their money, but I sure don't call it investing. That's sports gambling, and it's something that you and I haven't talked about before. Here Tom in 2018 the Supreme Court opened the way for states to legalize sports gambling, and at last check, 38 states, plus DC and Puerto Rico have legalized at least some form of sports gambling. So now it's a more germane conversation for you and I to have than it was a few years ago. Can you tell us about sports gambling, taxes and how it's treated.   Tom Wheelwright  38:41 So remember, all income is taxable. So that includes gambling winnings. They are taxable. In fact, you'll get a 1099 just like you would if you rendered services, you'd get a 1099 or you have interest income, you get 1099 you get 1099 from gambling. What you actually have to show is that you actually have gambling losses. So you have to track those gambling losses to show the IRS that you got gambling losses. But your gambling losses can never be more than your gambling winnings. You never get to generate a tax loss on gambling. What that means is, is that if you win $10,000 during the year, and you can prove that you lost $8,000 during the year, you're going to be taxed on $2,000 but if you can't prove the 8000 you're going to be taxed on 10,000   Keith Weinhold  39:33 so you the gambler, have the burden of tracking this, and I guess tracking your losses. I'm not a gambler. How would one track their losses?   Tom Wheelwright  39:42 I would keep detail ledger. Personally, I probably have a separate bank account just for gambling. Gosh, I'm not a gambler either, so that's what I would do. I would have a bank account just for gambling, by the way. It's also a good way to budget your gambling so they, you know, get in trouble, right? So just set up a separate bank account. Don't put whatever money you say, I'm comfortable with this money, I'm going to gamble with this money put in that bank account, and then you have a ledger that shows the money that went in and the money you lost, the money you won, and don't do anything but gambling in that bank account.   Keith Weinhold  40:15 Hey, that separate account's a great way to hide it from your spouse, not that I'm suggesting. Not bad.   Tom Wheelwright  40:22 Interesting. You went there.   Keith Weinhold  40:23 I'm not a gambler at all. Can't even believe I was thinking that far ahead. What are the gambling tax rates like?   Tom Wheelwright  40:31 They're ordinary income tax rate. So gambling winnings are just ordinary income. They're the same as your wages. They don't have social security taxes their income, just like any other kind of income, nothing special. And this all applies to whether it's sports gambling or general gambling, like lotteries and sweepstakes?  Just remember, all incomes taxable unless the government says it isn't all income, okay? And then there's some types of income that are taxed at special rates, like capital gains, but gambling has no special rates. By the way, gold also has special rate for when you sell gold, it has its own tax rate. Gambling has no special tax rate, so it's just your ordinary income rates.   Keith Weinhold  41:11 To me, it seems like it's hard to break even with gambling over time, and then when you take the tax adjusted earnings that you get from it, you know, over the long term. I just don't think Harris and Bally's Casino is really incentivized to inform gamblers on how punitive this can be with ordinary income tax rates applied to gambling winnings.   Tom Wheelwright  41:30 No, but they will send you your 10909g I guarantee that, that's for sure.   Keith Weinhold  41:34 Well, Tom has helped business owners and real estate investors permanently reduce their taxes. He does it like virtually no one else in the world does by keeping it simple, by helping you find deductions that other CPAs can't do. You can learn more about how Tom and his team can actually help you. You can get a free consultation. You can do that at getricheducation.com/tax. And Tom tell us more about the importance of a business owner or a real estate investor or anybody else really being connected with the right kind of tax professional that can permanently reduce your taxes.   Tom Wheelwright  42:12 So remember that if you want to change your tax, you have to change your facts. It's that simple. What you have to do is you need to know what facts you need to change. That's where a good tax advisor comes in. Is what facts do you need to change in order to change your tax now good news is, wrote tax through wealth. So you got an idea of what that is, but the tax law is very detailed. You must dot your i's cross your t's, so to speak, so that you make sure that you meet all of the rules, such as documentation, for example, for your business expenses. When you do that, you're going to get a better tax result, especially if your tax advisor is also preparing your tax return. Because really, your tax return is just part just how you implement your tax strategy, right? That's how you do it. So we launched, just recently, a franchise of tax advisors, and now we actually have much, really good control, quality control with our tax advisors, and they use our software system. It's very important that you have somebody, if not us, find somebody who you know you can actually give tax free wealth too, and say what cares make sure that we're doing it this way. But if the easy button is really the getricheducation.com/tax.   Keith Weinhold  43:27 Tom Wheelwright,  It's been valuable as always. Thanks so much for coming back onto the show.   Tom Wheelwright  43:33 Thanks, Keith.   Keith Weinhold  43:40 Yeah, key insights from Tom as always, taxes are complicated. Tom's Network helps sort it out for you. We've already covered a lot of ground on this week's episode with raw land values as built, proposed tax plans and how to reduce your tax burden within the existing tax system. Tom and I talked, and he will be back yet again with us later this year for more tax wizardry. Now, just recently here, Kamala Harris proposed a smaller capital gains tax hike than Biden. She's starting to put sort of her own policy spin on things, breaking with the President on the size of a proposed increase on the capital gains tax rate that is a 28% top tax rate when investments are sold for those that make a million dollars plus. So that's more than the current 23.8% top rate, but less than the 39.6% rate that Biden had supported all income is taxable. Therefore it is axiomatic that the fastest way to increase your ROI is to work with a tax advisor that can find you all of the biggest deductions right away. You can read Tom's book Tax Free Wealth, get a good system of documentation going and get connected with Tom's team. At the end of an episode at times, I like to leave you with the most actionable resource on the topic that we covered. You can schedule a free call to see how Tom's team can help you out. At getricheducation.com/tax. That's getricheducation.com/tax. Until next week. I'm your host. Keith Weinhold, Don't Quit Your Daydream. 45:33 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Get Rich Education LLC, exclusively. Keith Weinhold  46:01 The preceding program was brought to you by your home for wealth, building, getricheducation.com.  

A prominent Florida Builder and #1 Wall Street Journal Best-Selling Author joins us to discuss the benefits of build-to-rent properties, including affordable housing and attractive mortgage rates. He has already done all the work for investors, offering new build income properties that are sometimes rented. We discuss the importance of median value and affordability index in choosing profitable areas for long-term real estate investments. Learn about new build income properties with rate buydowns as low as 3.75%. Important market dynamics and investor strategies, including the trade-offs between cash flow and equity growth. Show Notes: GetRichEducation.com/518 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation   Complete episode transcript:   Automatically Transcribed With Otter.ai    Keith Weinhold  00:01 Welcome to GRE. I'm your host. Keith Weinhold, a great way to forecast the future of the real estate market is to look at the level of new building. I've got a surprise to reveal there then a focus on one of the hottest in migration states. That's popular because it promises cash flow for real estate investors today on Get Rich Education.   00:24 Since 2014 the powerful Get Rich Education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guest top selling personal finance author Robert Kiyosaki. Get Rich Education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the Get Rich Education podcast. Sign up now for the Get Rich Education podcast, or visit getricheducation.com     Corey Coates  01:09 You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Keith Weinhold  01:25 Welcome to GRE from Plains Georgia to White Plains New York and across 188 nations worldwide, you are listening to Get Rich Education. I'm your host. Keith Weinhold, we are an educational platform. And if you haven't yet, I really suggest that you spend 100 hours learning how to invest in real estate. The average person works 2000 hours a year for 40 years. That's 80,000 hours of working for money. I implore you to spend 100 hours learning how to keep it and grow it and leverage it and create income and tax advantages from it. 80,000 hours of lifetime work, 100 hours learning real estate investing. Now, when someone like a presidential candidate produces, still vague talk about building 3 million starter homes in four years. That actually appears just about impossible. Within the existing structure. We would need 2 million housing starts per year from 2025 to 2028, in order to overcome our existing shortfall. And we haven't exceeded 1.8 million in any year in the moderate era, and that's even when demand was extraordinary and interest rates were low. Just you know, look at the reality of what home builders need to actually do, and this is even if they don't have any excessive not in my backyard. Pushback, builders have to procure land, meaning they need to lay out cash far before building, and then they need to jump through zoning and building hoops in counties and cities, in towns, in communities, and sometimes those hoops can reach preposterous levels with substantial delays. Builders need to secure financing, and for most, interest rates are still in the 9% plus range. And then builders need to acquire a whole local network of contractors and subcontractors, and then they need to keep those contractors and subcontractors busy, or else they're gonna lose those workers. So builders have to work to maintain their teams once they found them. And if that's not enough, this is all amidst a historically bad skilled labor shortage, meaning those workers can be enticed to go work for somebody else. As you know, skilled worker demand far exceeds skilled worker supply. So for builders, it takes years of planning and development. In a lot of cases, they sit on land for many years before the market conditions are right for the actual build. Well, look, at least there is finally acknowledgement among our highest elected officials that we do need to address the core problem, but our elected officials proposals aren't really so good, and our country's housing problem is largely a regulatory issue. Later today, we'll talk to a builder that's already done all of this for you, so it's not preconstruction that has new build income properties complete, available sometimes even rented already, and they help you buy down your mortgage rate to a level that's really low. You'll soon learn about it. But first, let's talk more about adding new housing supply in the larger apartment segment. It's something that can help you see the future here, but it isn't getting enough tension outside of multifamily industry circles, and that is the fact that apartment starts are plummeting to 11 year lows. And this is a real surprise to some people, multifamily completions are outpacing starts by the widest margin since 1975 and I mention this because, you know, you probably keep hearing and reading about how apartment construction is at all time highs, but really, that is a story from two years ago. It takes about two years to go from an apartment construction start to a completion. Well, today we're seeing that huge surge of apartment starts two years ago morph into completions. That's the piece to be aware of here. And to give you some idea about the new apartment building, slow down through July, we have completed 314,000 multifamily units, and we started just 193,000 units. That's all according to census stats that year to date. Start total is the nation's lowest since 2013 when we were just building our way out of the global financial crisis. Also a larger share of apartment supply. In this next cycle, it's likely to be affordable housing, because that's where the tax incentives are in the last wave of apartment construction a few years ago, it was more higher end stuff, and the result is today, apartments are oversupplied in a lot of markets, leading to falling apartment rents, or just somewhat stable and frozen apartment rents in heavily overbuilt places like Austin, Texas and a lot of others. But this slowdown in New Starts of larger apartments is why some have bullishness on the multifamily outlook for 2026 and beyond supply is the biggest headwind for apartment investors today. While it is an enormous tailwind for renters, it's good for them, but those dynamics appear likely to shift again. It took an almost perfect storm of variables to push apartment construction to 50 year highs, and it's difficult to see a scenario where construction could re-accelerate back to those peaks. Today's apartment completion levels could mark a high. It's generational. You may never see it again. So to summarize, in the world of large apartments, supply is still up, even outpacing demand in a lot of markets. It all came from a big building wave that began when interest rates were low two years ago. They're mostly upper end places. Apartment syndicators also got hit with higher rates that reset on them, and you've seen the value of some apartment buildings fall 30%. It is bad. But long term, I expect that apartments are going to be fine. New lease ups are absorbing what's out there. The demographics show that renters will continue occupying apartments. Interest rates have already fallen and they're expected to keep falling, and you don't have very many new apartment starts, it's that last piece that a lot of people aren't aware of. So that's the forecast over the next few years for five plus unit apartments. When it comes to the market dynamics for one to four unit properties. I'm going to discuss this with one of the voices of GRE marketplace today. They are a build to rent provider building new construction, single family homes, duplexes and fourplexes for tenants that they sell to investors. Hey, I'd like to welcome in a home builder and property provider serving Florida, basically statewide, known as North America's leading build to rent property developer, and he believes in what he builds and offers others, because he's been a real estate investor himself for more than two decades. Hey, Jim, welcome back onto the show.   Jim Sheils  09:45 Keith, good to be here. Thanks for having me.   Keith Weinhold  09:47 Jim, we have a lot of exciting things to talk about. What you're doing in Florida. You've really helped out a lot of our investors and followers so far. You have some really interesting things to tell us about. Rate buydowns and just how low those rate buydowns are on some new build properties. And I sure want to get to that. But first, why don't we just pull back big picture, and from the 30,000 foot national view, before we talk about Florida, what are some of the important dynamics you see in the real estate market here in late 2024   Jim Sheils  10:16 Yeah, it's been interesting. The media is always late to the party, as you know, Keith, I've seen some interesting stats. You know, affordability nationwide has gone from 480,000 about eight months ago, and now it's down to about 405, so we've already seen the affordability index come down nationwide, and it's hit really well here in Florida. One of the reasons why is there's definitely been some price adjustments on higher priced property in Maine markets, Miami, Orlando, Tampa, areas that we don't build because the numbers didn't work. So that's been really good to see that affordability also, rates are just starting to drop. But here's an interesting thing. A year ago, Keith, the average mortgage payment for the average person buying a home, was 57% of their total income. Now that has dropped to about 44% of their total income. So I'm always looking at affordability and overall median pricing, and that's been a really, really good thing for us. As I had said, second tier markets where you can get affordability, but also great amenities, great lifestyle is where we've always focused on building, and it seems like that is really continuing to have a solid pulse. I love visiting some of those bigger markets, you know, taking my kids to Disney, but I'm glad we stayed out of there, because it seemed a little more temperamental, and we're glad we're in the more second tier markets.   Keith Weinhold  11:39 You cited an affordability index there earlier. Now, affordability still, historically, is not that good, but it's not as bad as it used to be. Tell us more about that index.   Jim Sheils  11:49 Yeah, I always have looked at, you know, the affordability index. Let's just use an example, Orange County, California. I think the median value of a home there is $1.1 million. In Jacksonville it's 305, and so you get a score for based on what is the average family income per price of the home. And it's kind of like your report card. And there's certain areas that have an A, and there's certain areas that have an F. You know, we have lots of investors come to us with you guys too, from New York or Seattle or Orange County. And this is something I look at, what is the affordability index, and just know how they figure out the score on your affordability index. What's the average price of the home in that area, and what is the average family income for that area? And the correlation of those two numbers shows whether you have a good score or bad score.   Keith Weinhold  12:39 And now that we've looked at the national picture somewhat, you mentioned some of the major metro markets in Florida, some of which you specifically stay out of, and that's simply because the numbers don't work for long term rentals. They don't provide cash flow. Tell us more, just in general, about some of the areas that you've chosen and why is there profitable for long term real estate investors?   Jim Sheils  13:03 Yeah, this median value, this affordability index, is so key when we're able to get into home still, you know, Jacksonville is barely over 300,000 as the media now, we're able to cash flow right off the bat. So like Jacksonville is still as the population growth, the economic growth is occurring. It's desirable coastal community, and supply and demand is in our favor. We don't have enough housing, so that's where we focus all of those factors, not only here, but on a smaller scale, in Palm Coast, in Ocala, where we've done a ton with the GRE community. And then southwest Florida. We don't go to Southeast Florida, too expensive, too overbuilt, too high on insurance, but that Greater Fort Myers area, which did experience the highest growth anywhere in the country during the pandemic, which was interesting to watch, we're still seeing a lot of good fundamentals down there. And again, at that affordable range, it makes a big difference when you're buying at a medium priced home is, let's say 320,000 opposed to 580,000 makes a huge difference to whether it will cash flow off the bat or have a negative cash flow. And as you know, Keith, even though we're doing new construction high growth areas, we want to see app cash flow right away.   Keith Weinhold  14:13 Now, you are a builder, you are adding much needed inventory to the national housing supply, where we've had a shortage of millions of units per years, depending on what source you cite in quote there, a lot of the estimates as to the housing shortage really are all over the place. But many sources state that Florida inventory levels just statewide. Here they are back about to pre pandemic levels. So they have recovered. They are back to about 2019 levels. And I think one important thing for people to remember is, well, 2019 was a pretty good, balanced housing market.   Jim Sheils  14:50 It was a normal market. We liked 2019 you know, that was a good market. There was growth, but it was sustainable, more predictable, steady. So I'm happy to be back in 2019. You know, 2020 21 levels there were, there was less than a month's worth of inventory on the MLS that it was dire. Yeah, it was just such a skewed thing. And you've studied this for a long time. So everyone if you say, Oh well, it went from this to this. I love how you talk about 2019 because by all statistics that was a very normal market here in Florida. So we're happy to get back to that, because you have to have a certain amount of inventory level to balance the playing field. We want to see growth, but I'm more of a long term player, as you know, we don't need to see huge spikes, because that can get a little volatile.   Keith Weinhold  15:36 Now, as a builder, talk to us about builder sentiment since, like we talked about before, we are in a falling interest rate environment, mortgage rates are already down about one and a half percent from the recent highs, and the Fed hasn't even begun lowering rates yet. So talk to us more about what those lower rates do to build their sentiment. And we're not just talking about rates for buyers here, which matter, but it's the rate that builders like you that have to pay the typically factory in here too.   Jim Sheils  16:06 Yeah, it's an interesting market right now, Keith, and here's something I want to give great encouragement from as you know, we do build some for the institutions and the larger groups. The little guy, the small investor, has the guerrilla warfare advantage over them right now, because, as you know, we right now have announced financing. We're able to have this builder forward commitment where we're buying large tranches of money for residential mortgages. That means, you know, individuals like we work with all the time, Keith, that buy a few properties, we can get them this incredible financing right now, at 3.75 we're beating the market. You know, you go into a B of A and try to get a duplex finance, you're probably looking at six and three quarters. And we're able to do that because it's residential real estate. Some of our bigger guys, they would buy all of our inventory. But we can't get a institution qualified for these individual investor loans for residential real estate. They have to go to the commercial world. And as you know right now, Keith, the commercial world is screwy. People aren't lending. The rates are really high, and even these big guys have to sharpen their pencils and do their numbers and they go, Gosh, it's not panning out until rates drop. So that means these bigger groups are on the sidelines. And we all hear the complaints, all the big guys are buying all the properties they own 40% well, they're on the sidelines, and our little troopers and investors are building their portfolios in ways they cannot so it's exciting to see now for us too. What's lucky and unlucky is a lot of good builders out there that we're friends with. They can't get financing. The banks have gotten so stringent. So they might even have a good balance sheet and a good track record, but the banks are getting really stringent where Chris and I are. As you know, we were partially acquired by Sumitomo forestry about a year and a half ago. They're a 331 year old company, and when we decided to team up with them, they said, We love Florida and we love build to rent, go, and so now we have zero bank debt, and they've given us a green light to build out all of our inventory. We have five, over 5000 lots in Florida, and we don't have the bank slowdowns. So to find a good builder, you have to make sure they have financing in place, because they're going to be a great builder out there that just can't get the funding to do the job for you. So that's another thing you want to look for.   Keith Weinhold  18:16 Right. And last time I checked, you've got more than 925 current independent income property investors, many of those whom are GRE listeners. Well, we're going to talk more about just how low those rates are. Who participates in the buy down? I already know that most of it's the builder, and just part of it is you, the investor. You're listening to get residuation. We're talking about Florida, build to rent property more when we come back, I'm your host. Keith Weinhold Hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group  NMLS 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at ridgelendinggroup.com That's ridgelendinggroup.com  Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest, year in and year out, instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their. Investors 100% in full and on time. And I would know, because I'm an investor too, earn 8% hundreds of others are text FAMILY to 66866, learn more about Freedom Family investments Liquidity Fund on your journey to financial freedom through passive income. Text, FAMILY to 66866.     Garrett Sutton  20:28 This is Rich Dad advisor, Garret Sutton, to grow your wealth. Listen to the always valuable. Get Rich Education.   Keith Weinhold  20:45 Welcome back to Get Rich Education we're talking about half of progress real estate investing in high growth Florida, with a renowned build to rent provider there. And I think a lot of this really comes down to trust with the fluctuating interest rate environment that we've had, some people don't trust certain builders or that investor to go ahead and put down a deposit on a vacant lot and wait 12 months or more for it to be built. But we're not talking about pre construction here.   Jim Sheils  21:16 No, no. Since we steamed up with Sumitomo, you know a lot of good builders again, they can't even start the project until they have a a buyer with a deposit down. That's the requirement for the bank to give them the money to start building. We don't have bank requirements, so we're building on our own dime, and so we are having properties completed before you even have to make an offer on them. So these are finished properties, sometimes a tenant already in place. I know just this month, there's been a few GRE people very happily stepping into pre rented homes. So you don't have to wait that period. If you're ready to move your money or have a 1031 exchange, we can fulfill those no problem, and close within 30 days Our in house financing, Keith, which I know we're about to go over, I want to make sure people know this is for not only our single families, but our duplexes and our quads as well.   Keith Weinhold  22:02 Tell us more about that in house financing that's something of great interest to people, and especially with these mortgage rate buyouts.   Jim Sheils  22:09 Yeah, everyone says, Oh, I wish I had locked into a mortgage before June of 2022 right? I mean, for every time we heard that, Keith, well, now you can and what we're able to do since we have the balance sheet we have now, with teaming up with this bigger company, banks will allow us to do what's called a builder forward commitment and buy large tranches of money. We're in the money buying business, I guess, now, and we have to commit to large amounts of money, but by doing that, we're able to pay fees upfront to buy down the mortgages. So right now, our most popular rate is 3.75. You as the buyer, and these are called discount points, which I've heard Keith talk about. You're bringing in a little under two discount points to get the 3.75 rate. And you say, Okay, well, Jim, we're bringing in a little less than two points. What are you bringing in? We're not really supposed to talk about that, but here's what I can tell you, do this test, go to one of your mortgage friends, or your B of A or Wells Fargo, and ask it what it will take for you to pay to buy down a rate for 3.75. Now, first of all, they will not allow you to do that much. We are on a more high volume schedule that will allow us to do that, but let's say, if they would, here's what the feedback we've got. If you were to try to do this on your own, Keith, you or I just walking into our bank, you would have to pay anywhere from 12 to 15 points to make this happen. Gosh, and that was the advantage of working as a collective group like we do together, you and I in our investor community, because now that we're able to do volume, it benefits us   Keith Weinhold  23:39 all. No one really knows where interest rates are going to go. I think it's pretty foolish to try to predict them, but very few people think they're ever going to drop to the levels that we saw during the depths of the pandemic, 3.75% if you get locked in there, it's pretty unlikely that the future market is going to meet that down the road at all and tell us more about that product type, the single family homes, duplexes and fourplexes that this is available on. And of course, they're all new build.   Jim Sheils  24:09 Yeah, we do a combination of new build on all of these. We found, Keith, a lot of build to rent. Companies really only focused on the single family home, but we found, you know, to increase rental yield and overall returns. There was really a lack in the market for duplexes in residential areas and quads, again, and those are close to commercial deals, without the commercial financing, they allow more affordable rent in more residential areas that people can afford and want to be in. And we found through the pandemic, these had a greater calling to them than, let's say, a large apartment complex. You know, people want to be a little more spread out, have their own yard, like in a duplex, and they get that there, but they get it at a fraction of the price that a complete single family home would be at. So we found, as you know, most of our investors, our average client, buys three to eight properties with us, and no surprise, they. Buy a mixture of single family duplex and quads. I know we agree on this. Keith, the single family home has had the best history of all of great equity appreciation, and the duplex might lag behind that a little bit, but it's got a better cash flow. So I will always do little trade offs and combo my own portfolio to make up for two of those. And that's what our counselors usually coach our people. I know yours do as well.   Keith Weinhold  25:23 Yeah, the economies of scale for the real estate investor really can be there long term with duplexes and fourplexes, and you're really helping fill a need. Some months ago, I talked about the mmm multi families, missing middle, about how so few duplexes, triplexes and fourplexes are being built today, as compared to when you had about three times as much construction in those property types that you did in the 1980s a lot of that's really gone away. You're really bringing it back. We talk about some of the areas where these are built. You know, Jim years ago? Well, really about 10 years ago, when I began this show, I was often talking about how I want to be invested in Metro statistical areas that have a population of at least 500,000 to 1 million people, in order to get a diversity of economic situations there, because you do need rent paying tenants. But so much has changed since then, starting four to five years ago, with the work from home movement, I'm more open to more outlying areas than I had been previously. So tell us about some of these areas that you choose to build in. In Florida.   Jim Sheils  26:29 yeah, you know our hub market where we started doing rehabs many, many, many years ago was Jacksonville, Florida. Yeah, and we still are headquartered here, but Jacksonville, again, is the most affordable coastal city, I believe, still on the East Coast, which brings great fundamentals. It hits both of your things, Keith, where it is larger, but it has more of a sprawl and that larger population and the fundamentals look really well again, that overall median price is still very low. And we branch down to Palm Coast, which is a little more of a higher end area, but a bedroom community, to Jacksonville, the silent soldier, the one that really surprised us the most. I think you remember, this was Ocala. In fact, when Christopher said, Do you want to go start building Ocala, and this is about a decade ago, I said, Wow, Ocala, isn't there only, like, some horses out there? Yeah, now he's a horse guy. So he laughed, and he said, Oh, sure enough, I put my foot in my mouth. But Ocala, the amount of growth that we've seen out there has been incredible. And Ocala is really well placed because it's just below Gainesville, where the, you know, there's the medical centers, the university, and it's just north of the villages, which is the second largest retirement community and growing. Not only that, it has its own economic infrastructure, but it's really well placed in the difference of a price of a home for a starter family in Ocala compared to like Northern Tampa. There is no comparison. You're talking half. So we like that. And also with rents, it's got a great lifestyle. And then southwest Florida again, Southwest Florida, Keith, we're very lucky that we took some risk there. A lot of builders would like to be building down there, but as you remember, we took some big risks in 2020 we talked to some of our friends and said, this can be really good or really bad for real estate. We went with the really good and we loaded up on, well, a lot, over $20 million worth of land at the pre jump prices. Now we're into land right down there so we can get them built right for you guys still make a margin for ourselves that other people that they're trying to get land today, they just can't do and Southwest Florida has been a really good market for us. Had that hurricane there a few years ago, and all of our new construction properties did well. In fact, of almost 300 properties that were under construction, we had four that needed insurance claims, and those four, Keith, well, we had just put up the freestanding walls. We hadn't been able to tie the roof on before the winds and the winds knocked the walls over, and that's it. But there was no flooding, and that's why you get an insurance break. And all the markets that we're in, we always hear, Oh, you can't get insurance in Florida. And I kind of giggle and say, on which properties? Because there is a very different treatment for a new construction property built 2004 or newer, compared to a property built 1957 on lower ground.   Keith Weinhold  29:02 Yeah this is such an important thing to bring up. Property insurance premiums have been hiked substantially on Florida, existing, older build properties, not the post 2004 ones like Jim is talking about here and yeah, for those that don't know, Ocala, there in Central Florida is known as an equestrian area for horses and your business partner, Chris, that's his big hobby. So yeah, when you first went there, you were with Chris. You were like, are you just trying to get there because you want to be around horses more and what? But now there's actually a good fundamental reason for this, where it makes sense to build there. Well, Jim, why don't you talk about how you've specifically helped one of our listeners, or the typical buyer there in how that process looks, including an approximate timeline to get them from the time where they submit an offer all the way through to closing.   Jim Sheils  29:52 Yeah. Well, you know, our team and your team work together. We want to make sure we set people's goals and expectations. Up front. What are you looking for? What are you trying to get into? If someone says to me, Look, I'm looking to get into a great starter home with the lowest basis and highest cash flow, I'm gonna say, Okay, let's look at Ocala. They say, Look, we're looking more long term. I'm more of an equity growth player. Yeah, I want cash flow. I'm gonna say, Okay, let's look at Palm Coast, or southwest Florida. Together with our teams and our property counselors, we try to assess what are your needs and where are you wanting to go. Now, all of our vehicles will get through there, but some a little better than others, depending on the plan you want to put together. And so once we do do that, what we like to do is go through properties that seem to match what they're most wanting. We'll go through the performance. We'll look up the site maps, we'll go through the different fundamentals of that direct area, and then, if it seems to make sense, first thing we got to do is get you pre qualified with our in house lender. All is that a go? Well, then we can make an offer, get it in. We have a whole onboarding process. You know that we've done hundreds and hundreds and hundreds of time, and now we're over. I know I laugh because we talked recently and you said, I think you're at a 925. Investors, we're over 1000 now, so we're continuing to grow. But again, we've tried to make it fluid, where our people are part of the process, but never alone. We answer the questions on the financing help get you the directionals on the insurance now, you can use whatever insurance company you want. 99% of them use the company that we recommend. We have no financial affiliation with them. But everyone asked years ago when Chris and I started this, well, who do you use for insurance? Who do you use? So we just gave them who we used, and this person usually undercuts and better coverage than most. So all those pieces Keith with going through that and again, this is about a 30 day process of getting qualified, once you pick the property, submitting the contract with your 10% deposit, doing your onboarding for Property Management and Insurance pieces. And then, obviously you don't have to come here to see us for closing. We do all of our traveling closings for you. And most important thing I like to set up with PM is, where do you want the money wired?   Keith Weinhold  31:59 That's a great question. Well, yeah, I mean, this is a great answer for so many of our listeners, those super attractive rate buy downs. And then the big thing is, is, in many cases, you're not waiting and waiting and waiting months for the build to take place. Well, Jim, before I tell our listeners how they can connect with you over there, do you have any last thoughts overall with anything that we did touch on or did not.   Jim Sheils  32:22 I want to encourage people, if they're not looking to get in the next to real estate in the next two to three years, not a big deal. But if you're looking to get in sometime over the next year, then I would really look at what's happening, things you talk about with the rates and the interest, because I do believe that institutional money within the next six months, it'll be interesting when we reconnect, Keith, that are going to start coming in and buying up more residential real estate. However, their hands are tied right now. They cannot get the financing that the smaller guy can. So whether it's with us or someone else, take advantage. Take advantage. David and Goliath, this is a great opportunity where the big guys cannot keep up with you, because they can't get the financing and insurance rates that you can so take advantage.   Keith Weinhold  33:03 Well, I specifically wanted to have you on today because it is an opportunistic time. They serve Florida with new builds. Learn more about their properties and even get some under contract. If you so wish, you can do so by contacting your GRE investment coach. If you don't have one yet, you can do so at GREmarketplace.com it is free or at GREmarketplace.com/florida. Jim, it's been great having you back on the show.   Jim Sheils  33:32 Thanks having me. Keith, good seeing you.   Keith Weinhold  33:39 Yeah, an excellent update on Florida build to rent properties. A lot of our listeners are asking about these new build properties with 3.75% mortgage interest rates, and you are not the majority participant in the rate buy down either. Next week, who I consider the foremost tax authority in the entire world will be back here with us. Tom Wheelwright is going to discuss presidential candidates, tax plans, whether you should be scared about a tax on unrealized gains and a lot more. Also on a future episode, I'm going to talk about the land that is the vacant land that comes along with your rental property, what to look out for and what to avoid. It's really a little discussed subject that we haven't talked about here before. To learn more about Florida, build to rent property with those attractive rate buydowns, start at GRE marketplace.com Until next week, every host, Keith Weinhold, Don't Quit Your Daydream.   34:45 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have. Potential for profit or loss. The host is operating on behalf of Get Rich Education LLC, exclusively.   Keith Weinhold  35:13 The preceding program was brought to you by your home for wealth building. Getricheducation.com

Futurist, Technologist and Author of many titles including the classic “Wealth and Poverty”, George Gilder joins us to discuss supply side economics and the transformative potential of using graphene material in various industries including real estate. We discuss economic growth measured by time prices, showing that private sector progress is faster than GDP estimates. Learn about graphene's properties, including its strength and conductivity, and its potential to transform various industries. Graphene is a single layer of carbon atoms that is 200 times stronger than steel, 1000 times more conductive than copper and the world’s thinnest material. Resources: getgilder.com Show Notes: GetRichEducation.com/517 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai    Keith Weinhold  00:01 Welcome to GRE. I'm your host. Keith Weinhold. I'm talking about the various economic scare tactics out there, like the BRICS, the FDIC and the housing crash. What lower interest rates mean? How our nation's $35 trillion debt has gone galactic. Then today's guest is a legend. He's a technologist and futurist. It tells us about today's promise of graphene in real estate all today on get rich education.  when you want the best real estate and finance info, the modern Internet experience limits your free articles access, and it's replete with paywalls and you've got pop ups and push notifications and cookies disclaimers. Oh, at no other time in history has it been more vital to place nice, clean, free content in your hands that actually adds no hype value to your life. See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor, and it's to the point to get the letter. It couldn't be more simple text, GRE to 66866, and when you start the free newsletter, you'll also get my one hour fast real estate course, completely free. It's called the Don't quit your Daydream letter, and it wires your mind for wealth. Make sure you read it. Text GRE to 66866, text GRE to 66866.   Corey Coates  01:40 you're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Keith Weinhold  01:56 Welcome to GRE from Dunedin, Florida to Dunedin, New Zealand and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education, where real estate investing is our major. That's what we're here for, with minors in real estate economics and wealth mindset. You know, as a consumer of this media type as you are, it's remarkable how often you've probably encountered these de facto scare tactics, like the BRICS are uniting and it will take out the dollar and it's just going to be chaos in the United States. You might know that BRICS, B, R, I, C, S is the acronym for Brazil, Russia, India, China and South Africa. Do you know how hard it is to get off the petro dollar and how hard it is for the BRICS, which is basically more than just those five countries, it's dozens of countries. How hard it is for them to agree on anything with things as various as their different economies, and they'll have different customs and currencies. I mean, sheesh, just for you to get yourself and three friends all to agree to meet at the same coffee shop at the same time, takes, like a Herculean effort, plus a stroke of luck, and all full of you are like minded, so I wouldn't hold your breath on the dollar hyper inflating to worthlessness, although it should slowly debase. What about the scare tactic of the FDIC is going to implode, and this could lead to bank closures and widespread societal panic. Well, the FDIC, which stands for Federal Deposit Insurance Corporation, they're the body that backs all of the US bank deposits, including yours, and it's steered by their systemic resolution Advisory Committee. Well, there are $9 trillion in bank deposits, and is backed by only a few 100 billion in FDIC cash, so there aren't nearly enough dollars to back the deposits. So can you trust your money in the bank? That's a prevalence scare tactic, but my gosh, if nothing else, history has shown that the government will step in to backstop almost any crisis, especially a banking related one, where one failure can have a cascading effect and make other institutions fall. I'm not saying that this is right, but time has proven that the government does and will step in, or the common scare tactic in our core of the world that is the eminent housing price crash. And I define a crash as a loss in value of 20% or more. Do you know how difficult this would be to do anytime soon? Housing demand still outstrips supply. Today's homeowners have loads of protective equity, an all time high of about 300k so they're not walking away from their homes. Inflation has baked higher replacement costs into the real estate cake, and now mortgage rates have fallen one and a half percent from this cycle's highs, and they are poised to fall further, so a housing price crash is super unlikely, and a new scare tactic for media attention seems to be this proposal by a future presidential hopeful about a tax on unrealized gains. Now Tom wheelwright is the tax expert. He's returning to the show with us again soon here, so maybe I'll ask him about it. But a tax on unrealized gains is politically pretty unpopular. It would be a mess to impose, and a lot of others have proposed it in the past as well, and it has not gone anywhere. Plus tax changes need congressional approval, and we have a divided Congress, there's a small chance that attacks on unrealized gains could come to fruition, but it would be tough. It's probably in the category of just another media scare tactic, much like the BRICS and the shaky FDIC banking structure had a housing price crash. I like to keep you informed about these things, and at times we do have guests with a disparate opinion from mine on these things. Good to get a diversity of opinions, but it's best not to go too deep into these scare tactics that are really unlikely to happen any time soon. Well, there was a party going on 10 days ago at what all affectionately dub club fed in Jacksonhole Wyoming, I don't know what the club fed cover charge was, but fortunately, we did not have to watch Janet "Grandma" Yellen dance at Club fed and and share. Jerome Powell, yes, he finally caught a rate cut buzz. He announced that the time has come for interest rate cuts, and as usual, he didn't offer specifics. Total rager. what a party. later this month, he's going to render the long awaited decision, which now seems to be, how much will cut rates by a quarter point or a half point? Did you know that it's been four and a half years since the Fed lowered rates? Yeah, that was March of 2020, at the start of the pandemic. And then we know what happened back in 2022 and 2023 they hiked rates so much that they needed trail mix, a sleeping bag and some Mountain House freeze dried meals to go along with their steady hiking cycle. Interest rates now, though have been untouched for over a year, it's been an interesting year for the Fed and rates many erroneously thought there would be six or more rate cuts this year. And what about Maganomics? Trump recently said that if he becomes president, he should be able to weigh in on fed decisions that would depart from a long time tradition of Fed independence from executive influence. Historically, they've been separated.   Donald Trump  08:26 The Federal Reserve's a very interesting thing, and it's sort of gotten it wrong a lot. And he's tending to be a little bit later on things. He gets a little bit too early and a little bit too late. And, you know, that's very largely a it's a gut feeling. I believe it's really a gut feeling. And I used to have it out with him. I had it out with him a couple of times, very strongly. I fought him very hard. And, you know, we get along fine. We get along fine. But I feel that, I feel the president should have at least say in there. Yeah, I feel that strongly. I think that, in my case, I made a lot of money. Iwas very successful, and I think I have a better instinct than in many cases, people that would be on the Federal Reserve or the chairman.   Keith Weinhold  09:10 Those Trump remarks were just a few weeks ago, and then shortly afterward, he seemed to walk those comments back, but he did say that he would not reappoint. DJ J-pal, to the economic turntables. It's a long standing economic argument as well about whether an outside force like the Fed should set interest rates at all, which is the price of money, rather than allowing the rate to float with the free market as lenders and borrowers negotiate with each other. I mean, no one's out there setting the price of oil or refrigerators or grapes, but it is pretty remarkable that the Fed has signaled that rate cuts are eminent when inflation is still 2.9% well above their 2% target. But let's be mindful about the Fed's twofold mission, what they call their dual mandate. It is stable prices and maximum employment. Well, the Fed's concern is that second one, it's that the labor market has slowed and see the way it works is pretty simple. Lower interest rates boost employment because it's cheaper for businesses to borrow money that encourages them to expand and hire, which is exactly how lower interest rates help the labor market. That's how more people get hired, and this matters because you need a tenant that can pay the rent. So the bottom line here is to expect lower interest rates on savings accounts, HELOCs, credit cards and automobile loans. What this means to real estate investors is that lower mortgage rates are eminent, although the change should be slow. Two years ago, mortgage rates rose faster than they're going to fall. Now, one thing that lower interest rates can do is lower America's own debt. Servicing costs and America's public debt is drastic. Now, between 35 and $36 trillion in fact, to put our debt into perspective, it has gone galactic. And I mean that in an almost literal sense, because look, if you line up dollars, dollar bills, which are about six inches long, if you line those up end to end from Earth, how far do you think that they would reach? How about to the moon? Oh, no, if you line up dollars end to end, they would stretch beyond the moon. Okay, let's see how far we can follow them out through the solar system. They would breeze past Mars, which is 140 million miles away, the next planet out Jupiter. Oh, our trail of dollar bills would extend beyond that. Next up is Saturn and its ring. The dollar bills would reach beyond that. We're getting to the outer planets now, Uranus still going. Neptune, okay, Neptune is about $30 trillion bills away, and we would have to go beyond that then. So our 35 to $36 trillion of national debt would almost reach Pluto that's galactic. That's amazing. That's bad, and it probably means we have to print more dollars in order to pay back the debt, which is, of course, long term inflationary. And I don't know what's stopping us from going from $36 trillion up to say, 100 trillion, gosh. next week here on the show, we're talking about real estate investing in one of the long time best and still hottest real estate investor states, and then later on, we've got brilliant tax wizard Tom wheelwright returning, as we know here at GRE real estate pays five ways, and if you have any Spanish speaking family or friends, I've got a great way for them to consume all five video modules. It's an AI converting my voice to Spanish in these videos, we have a Spanish speaker here on staff at Get Rich Education, and she said the dub is pretty good. Well, the entire package, real estate pays five ways in Espanol is condensed into a powerful one hour total, all five videos a course, all in one wealth building hour. It's free to watch. There's no email address to enter or anything you can tell your Spanish speaking family and friends, or maybe your multilingual and your primary language is Spanish. That is it getricheducation.com/espanolricheducation.com/espanol or a shorter way to get to the same pageis getricheducation.com/espricheducation.com/esp, that's getricheducation.com/esp.richeducation.com/esp.  This week's guest is one of the first people I ever heard discussing the blockchain and cryptocurrency 15 years ago, and then he was early on AI. What got my attention is his education about a promising construction material for building new real estate, though, I expect that our discussion will delve outside of real estate today as well. Let's meet the incomparable George Gilder. This week's guest is the co founder at the Discovery Institute, discovery.org original pillar of supply side economics, former speechwriter to both Presidents Reagan and Nixon. And he's the author of the classic book on economics called Wealth and Poverty. Today he's at the forefront of technological breakthroughs. He's a Harvard grad. He wears a lot of stripes. I've only mentioned a few. Hey, welcome to GRE George Gilder.   George Gilder  15:09 right there better here.   Keith Weinhold  15:11 It's so good to host you, George, in both your writings and your influences on people like President Reagan, you champion supply side economics. And I think of supply side economics as things like lower taxes, less regulation and free trade. We had someone in the Reagan administration here with us a few months ago, David Stockman. He championed a lot of those same things. But go ahead and tell us more about supply side economics and what that means and how that's put into practice.   George Gilder  15:43 Well, it really begins with human creativity in the image of your Creator, essence of supply side economics now super abundant. I mean supply side economics triumphs. We had the whole information technology revolution ignited during the Reagan years and now dominates the world economy and gives the United States seven out of the top 10 companies in market cap. 70% of global corporate market cap is American companies because of supply side economics amazing, and that's why it's distressing to see supply side economics, with its promise of super abundance and prosperity and opportunity, Give way to narrow nationalistic calculations and four tenths of war. I mean, all these Jews are at the forefront. Today, in time, we're going to see human creativity once again prevail in my books, Life After Capitalism is my latest book, my new paradigm is graphene. Graphene is a single layer of carbon atoms, two dimensional layer of carbon atoms that is 200 times stronger than steel, 1000 times more conductive than copper. It switches and the terahertz trillions of times a second, rather than the billions of times a second that our current silicon chips which and you mix it with concrete, the concrete comes 35% stronger, just parts per million of graphene mixed with concrete yields some material that's 35% stronger than ordinary concrete. You mix a parts per million of graphene with asphalt, the roads don't get potholes in the winter. It's radically Abate, but it conducts signals so accurately. If you go on YouTube, you can find a mouse and said it's spinal cord severed completely, injected with graphene, the spinal signals transmitted so accurately that the you see the mouse doing cartwheels by the end of the YouTube measure. I mean, it's material that's going to transform all industries, from real estate to medicine to surgery to electronics. Electronics been kind of the spearhead of our economy, of the transformation and electronics may be more significant than any other domain.   Keith Weinhold  18:49 Well, this is a terrific overview of all the contributions you're making to both the economic world and the technology world with what you told us about right there. And I do want to ask you some more about the graphene and the technology later. But you know, if we bring it back to the economics, it was in your classic book, Wealth and Poverty, which sold over a million copies, where you espouse a lot of the same things that you still espouse today in your more recent books, that is, capitalism begins with giving, we can often think of it that way. As a real estate investor is where we need to give tenants a clean, safe, affordable, functional property before we profit. Capitalism begins with giving.   George Gilder  19:32 Absolutely. That's a crucial debate I had with Ayn Rand The Fountainhead and Atlas Shrugged and I say, capitalism is subsist on altruism. I'm concerned for the interests of others, imaginative anticipation of the needs of others. It's an altruistic, generous system, and from that generosity. Stems the amazing manifestations of super abundance that which I've been writing about recently. And super abundance shows, measured by time prices, how many hours a typical worker has to spend to earn the goods and services that sustain its life. Yeah, that's where the real cost has time. Yeah, time is money. Money is time, tokenized time, and measured by time, economic growth has been 50 to just enormously faster than is estimated by any of the GDP numbers. However, measured by time government services or ordinary GDP assumes that every dollar of government spending is worth what it costs. Prices both show that progress in the private sector has been four or five times faster than is estimated by GDP well government time, price of government dominated goods, including, increasingly, healthcare and education, is way less valuable than the cost. It's value subtracted, and certainly trillions of dollars for windmills and solar panels, trillions of dollars of subsidies is a net subtraction of value in the world economy. So I am with Gale Pooley and Tupy, both who wrote a book called Superabundance that I wrote the introduction to, and William Nordhaus, the Nobel laureate from Yale, who really conceived and developed time prices and showed that economic growth is 1000s of times greater than has been estimated by ordinary economic data. This is a time of abundance. It's not a time of scarcity. It's not a time of the dismal science. It's the time of super abundance.   Keith Weinhold  22:17 Yes, 100% a lot of that is just the government getting out of the way and really let people be givers, be that go giver and lead with giving, because I have never heard of a society that's taxed its way to prosperity.   George Gilder  22:34 Yeah. Well, that's absolutely the case. And I've been talking previously about graphene, which is the great new material that has been discovered of the last a couple decades. It originated, a lot of the science originated in Jim Tour's laboratory. James Tour of Rice University, and he's had scores of companies have emerged from his laboratory, and 18 of them got started in Israel. Israel is really become a leading force in the world economy. And when Israel is in jeopardy, our economy is in jeopardy. We have 100,000 Israeli citizens working in companies in Silicon Valley, 100,000 all the leading American tech companies have outposts in Israel, and now we face what I call the Israel test, which is how you respond to people who are really superior in creativity and accomplishment and intellect, and the appropriate thing to do is emulate them and learn from them. But too many people in the world see success and they want to tear it down, or they think it was stolen from someone else, or it was part of a zero sum game where the riches of one person necessarily come at the expense of someone else, which is the opposite of the truth, the riches proliferate opportunities for others. That's how the economy grows through the creativity and the image of your Creator.   Keith Weinhold  24:25 And when you bring up Israel, they're one of many nations that's made strong contributions to society and the economy, and we think about other nations that's been an increasingly relevant conversation these past few years, a lot of that centers on immigration. I'm not an expert on how many people we should let into this country or any of those sort of policy sorts of things, but here is a real estate investing show. I often think about where and how we're going to house all these immigrants, whether they come from Central America or South America or Israel or. Anywhere else. And I know oftentimes you've touted immigrations economic benefits, so I think it's pretty easy for one to see how in the short term, immigrants could be of economic detriment, but tell us more about those long term economic benefits of immigrants coming to the United States.   George Gilder  25:17 Immigrants come to the United States and become Americans and contribute American opportunity and wealth. We won the second world war because of immigration of Jewish scientists from Europe to the United States, who led by people like John von Neumann and Oppenheimer who forged the Manhattan Project, and that's really how we won the Second World War, was by accepting brilliant immigrants who wanted to serve America. Now there is a threat today where immigrants come to the United States not to contribute to the United States, but to exploit the United States, or even destroy it, not to go givers. They are givers, and so we want immigrants who are inclined to commit to America and create opportunities for the world, but immigrants who want to tear down America and who believe that America owes them something tend to be less productive and less valuable immigrants and immigrants who really want to destroy western civilization, and the jihadists that we know about are actually a threat to America. So the immigration problem isn't simple, but when we had a system where legal immigrants could apply and enter our country and revitalize it, that was a wonderful system, but having boards of illegal immigrants just pour over the border is not an intelligent way to deal with the desire of people around the world to share an American prosperity.   Keith Weinhold  27:13 We've seen several cases in the past year or two where immigrants are given free housing. There are really great case studies about this in Massachusetts and some other places, how they're giving housing before oftentimes, our own Americans, including sometimes retired veterans, are provided with housing. This all comes down to the housing crunch and already having a low housing supply. So what are some more your thoughts about just how much of a layup or a handout should we give new immigrants?   George Gilder  27:42 Housing technology is going to be transformed by the material science revolution that is epitomized by graphene, this miracle material I was describing. I think part of the problem is real estate enterprise is over regulated, and there are too many obstacles to the building of innovative new forms of housing. In 20 years, it'll be hard to recognize many of the structures that emerge as a result of real revolution in material science that is epitomized by this graphene age that I've been describing, and that also will transform electronics as well, and part housing can become a kind of computer platform as Elon Musk is transforming the auto business by seeing Tesla is really a new form of computer platform. I believe there's going to be an Elon Musk of real estate who is going to re envisage housing as a new form of building a computer platform that makes intelligent houses of the future that will be both cheaper and more commodious for human life.   Keith Weinhold  29:12 Real estate is rather old and slow moving when we think about technology in real estate, maybe what comes to mind are smart thermostats, smart doorbells, or 3d printed homes. When we come back, we're going to learn more about graphene and what it can do in real estate in the nanocosm revolution. Our guest is George Gilder. We talked about economics. We're coming back to talk about technology. I'm your host. Keith Weinhold. Keith Weinhold  Hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with less. Ridge you can start your pre qualification and chat with President Caeli Ridge personally. Start now while it's on your mind at ridgelendinggroup.com That's ridgelendinggroup.com. Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest year in and year out, instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too, earn 8% hundreds of others are text FAMILY to 66866, learn more about freedom. Family Investments Liquidity Fund on your journey to financial freedom through passive income. Text FAMILY to 66866.   Dolf Deroos  31:19 This is the king of commercial real estate. Dolph de Roos, listen to get rich education with Keith Weinhold, and don't quit your Daydream.   Keith Weinhold  31:32 Welcome back to Get Rich Education. We're joined by an illustrious, legendary guest, George Gilder, among being other things, including a prolific writer. He's also the former speechwriter to presidents Reagan and Nixon. He's got a really illustrious and influential career. George, you've been talking about graphene, something that I don't think our audience is very familiar with, and I'm not either. Tell us about graphene promise in real estate.   George Gilder  31:59 Well, back in Manchester, England, in 2004 graphene was first discovered and formulated. It actually was submerged before then, but the Nobel Prizes were awarded to Geim and Novoselov in2010.  So this is a new material that all of us know when we use a lead pencil, a lead is graphite, and graphene is a single layer of graphite. And it turns out, many people imagined if you had a single layer of graphite, it would just break up. It would not be useful.   Keith Weinhold  32:42 We're talking super thin, like an atom.   George Gilder  32:45 Yeah, it's an atom thick, but still, it turns out that it has miraculous properties, that it's 200 times stronger than steel. If you put it in a trampoline, you couldn't see the trampoline, but you could bounce on it without go following through it. It can stop bullets. It means you can have invisible and almost impalpable bulletproof vests, and you mix it with concrete, and the concrete is becomes 35% stronger, even parts per million of graphene can transform the tensile strength of concrete, greatly reduce the amount you need, and enable all sorts of new architectural shapes and capabilities. We really are in the beginning of a new technological age, and all depressionary talk you hear is really going to be eclipsed over coming decades by the emergence of whole an array of new technologies, graphene, for instance, as a perfect film on wafer of silicon carbide and enable what's called terahertz electronics, which is trillions of cycles a second like light rather than billions of cycles a second like or Nvidia or L silicon chips, and it really obviates chips, because you what it allows is what's called wafer scale integration of electronics, and today, it the semiconductor industry, and I've written 10 books on semiconductors over the years, but the semiconductor industry functions by 12 inch wafers that get inscribed with all sorts of complex patterns that are a billionth of a meter in diameter. These big wafers and then the way. First get cut up into 1000s of little pieces that each one gets encapsulated in plastic packages and by some remote Asian islands, and then get implanted on printed circuit boards that arrayed in giant data centers that now can on track to consume half the world's energy over the next 20 years, and these new and all this technology is ultimately going to be displaced by wafer scale integration on The wafer itself. You can have a whole data center on a 12 inch wafer with no chips. It's on the wafer itself. And this has been recently announced in a paper from Georgia Tech by a great scientist named Walter de Heere. And it's thrilling revolution that that render as much as Silicon Valley obsolescent and opens up just huge opportunities in in construction and real estate and architecture and medicine and virtually across the range of contemporary industry.   Keith Weinhold  36:20 You wrote a book about blockchain and how we're moving into the post Google world is what you've called it. So is this graphene technology that you're discussing with us here? Is that part of the next thing, which you're calling the nanocosm revolution?   George Gilder  36:36 The microcosm was an earlier book the quantum revolution and economics and technology. I thought I wrote years ago called microcosm.   Keith Weinhold  36:46 Okay, we're getting smaller than microcosm now in nanocosm.   36:49 that was microns, that was millionths of a meter dimensions of the transistors and devices and silicon chips, the nanocosm is a billionth of the meter. It's 1000 times smaller the features and electronics of the future, and we're moving from the microcosm into the nanocosm. New materials like graphene epitomize this transformation. You know, people think that these giant data centers all around the world, which are amazing structures, but half the energy in these data centers are devoted to removing the heat rather than fueling the computation. And I believe these data centers are represent a kind of IBM mainframe of the current era. When I was coming up, people imagined that a few 100 IBM mainframe computers, each weighing about a ton, would satisfy all the world's needs for computation, and that new artificial minds could be created with these new IBM mainframes. And it's the same thing today, only we're talking about data centers, and I believe that the coming era will allow data centers in your pocket and based on graphene electronics, and wait for scale integration, a whole new paradigm that will make the current data centers look like obsolete, old structures that need to be revitalized.   Keith Weinhold  38:37 Around 2007 Americans and much of the world, they got used to how it feels to have the power of a computer in their pocket with devices like the iPhone. How would it change one's everyday life to have effectively a data center in their pocket?   38:54 This means that we no longer would be governments of a few giant companies hearing a singular model of intelligence. That's what's currently envisaged, that Google Brain or Facebook or these giant data setters would sum up all human intelligence and in a particular definition, but there are now 8 billion human beings on earth, and each of our minds is as densely connected as the entire global internet. And while the global Internet consumes error watts, trillions of watts of power, or brains. Each of these 8 billion human minds functions on 12 to 14 watts, or it's billions of times less than these data center systems. On the internet. I believe that technology works to the extent that it expands human capabilities, not to the extent that it displaces human capabilities. The emergence of distributed databases in all our pockets, distributed knowledge and distributed creativity can revitalize the whole world economy and open new horizons that are hard to imagine today, as long as we don't, all of a sudden decide that we live in a material universe where everything is scarce and successes by one person come at the expense of somebody else, as long as that zero sum model doesn't prevail, right? Human opportunities are really unlimited. Most of economics has been based on a false model of scarcity, the only thing that's really scarce is time. Imagination and creativity are really infinite.   Keith Weinhold  41:10 Yes, well, if someone wants to learn more about graphene in the nanocosm revolution, how can you help them? What should they do?   41:18 They can read my newsletters. I have a company with four newsletters. I write the Gilder Technology Report. Much of the time I write, John Schroeder writes moonshots, which is and I have a Gilder Private Reserve that reaches out with our crowd and Israel, and a lot of those graph gene companies in Israel are part of our Private Reserve. And I do Gilders Guide posts, and those are all available getgilder.com.   Keith Weinhold  41:56 if you'd like to learn more about George and his popular newsletter called the Gilder Technology Report. You can learn more about that at get gilder.com George, it's been an enlightening conversation about economics and where society is moving next. Thanks so much for coming on to the show.   George Gilder  42:16 Thank you, Keith. I really appreciate it.   Keith Weinhold  42:24 yeah, a forward looking discussion with the great George Gilder. Forbes said graphene may be the next multi trillion dollar material. George will tell you that you want to get into graphene now, while the biggest gains are still ahead. If it interests you in at least learning more, check out his video resource. It's free. There's also an opportunity for you to be an investor. You can do all of that and more at getgilder.com again getguilder.com until next week. I'm your host. Keith Weinhold. Don't Quit Your Daydream.   43:04 nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Get Rich Education LLC, exclusively.   Keith Weinhold  43:32 The preceding program was brought to you by your home for wealth building. GetRichEducation.com

In this episode Keith shares the survey results on what the highest rising cost for landlords is and what to do about it. He challenges the conventional wisdom that all debts should be paid off.  He talks about how the rising costs of homeowners insurance and property taxes are the most significant expenses for single family landlords 76% of single-family landlords plan to raise rents over the next 12 months, with 35% expecting increases over 4%. Learn about the concept of debt as leverage and its role in wealth building. The importance of liquidity, interest rate arbitrage, and the ability to outsource debt payments. How inflation impacts debt. Understand the benefits of debt in real estate investment, including the ability to own more properties and create arbitrage opportunities. Show Notes: GetRichEducation.com/516 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai    Keith Weinhold  00:00 Welcome to GRE. I'm your host. Keith Weinhold. The economy is affecting real estate in some interesting ways. Now, vital trends revealed from a survey of single family landlords. Then the heart of today's show is every debt that you have worth paying off. The answer is no, with some surprising reasons all today on Get Rich Education. When you want the best real estate and finance info, the modern Internet experience limits your free articles access, and it's replete with paywalls and you've got pop ups and push notifications and cookies, disclaimers. Oh, had no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself, it's got a dash of humor, and it's to the point to get the letter. It couldn't be more simple. Text, GRE 66866 and when you start the free newsletter, you'll also get my one hour fast real estate course, completely free. It's called The Don't quit your Daydream letter and it wires your mind for wealth. Make sure you read it. Text GRE to 66866, text GRE to 66866.   Corey Coates  01:34 You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Keith Weinhold  01:51 Welcome to GRE you are listening to the voice of real estate investing since 2014 I'm your host, Keith Weinhold back to help you build your wealth for another week. This is Get Rich Education. That's just one of many things that makes this show different from other shows, or just consuming news stories. Here, you stay updated on important real estate investing trends, but you learn specific strategies to actionably build your wealth. That's the difference, and it's with the most generationally proven medium of real estate, all without you having to be a flipper and often not a landlord either. Now, presidential candidates make lots of promises during their campaigns, that includes with real estate here recently, even if you're listening 10 years from now, I'll tell you how to put something like this into perspective. Kamala Harris unveiled her plan to spur the construction of 3 million more housing units. That's a good thing. America needs more housing. She also wants to give federal assistance, and by the way, that means your money. She wants to give federal assistance in the form of a $25,000 down payment help for first time home buyers. I see that as a bad thing, and see there's no partisan bias here at GRE a lot of media outlets, they will filter something like this is all good or all bad, because they get better ratings when they rile people up, and that results in a divided America. But the problem is that the 25k of down payment help that can be delivered faster than new homes can be built, and that risks pushing up home prices faster, sooner, which arose the very affordability that's trying to be helped here now a presidential candidate, be it Kamala Harris or anyone when they have this enthusiasm to also limit price gouging at grocery stores here, like this candidate does. I mean, that's the beginning of price controls, and when there are price controls, no farmer is going to want to produce cherry tomatoes or Fisher is going to want to produce wild caught salmon if they have a significant price ceiling limiting the supply of those things. Therefore, I mean, when we had price controls in the high inflation 70s, that created shortages. And it's important to keep in mind that presidential campaign promises, they often don't become policies that are enacted even if that person is elected president, and even if they are, much of this still requires congressional approval, and we still have a divided Congress, and any tax changes require the approval of Congress. So really, this stuff is just a presidential wish list, giving you some perspective here. Now on the topic of shortages, there still is not enough available supply of US homes, active listings, those seeking a starter home often get more worn out than your grandpa after two games of checkers. But inventory levels are not as bad as they used to be, we still got a ways to go to claw back close to a more normal, balanced pre pandemic housing supply level nationally, we are still 29% lower. There are now still 29% fewer active listings than there were in pre pandemic times and most individual states still have inventory levels lower than that, too, compared to five years ago, when we break it down by state, some have a more paltry supply than others, though, places with the scarcest inventory, they seem To be those states where maple syrup gets produced, as it turns out, and I sure hope that this doesn't mean people need to sleep in the sugar shack. Connecticut is down 75% that means they have 75% less inventory than five years ago, pre pandemic, Illinois down 66%,  New Jersey down 57%, Virginia down 53%, Pennsylvania, Massachusetts and Michigan all with 51% less inventory than they had pre pandemic. Ohio down 43%, California and Missouri each down 31%. The main problem here is that the Northeast and Midwest have not had enough home building in order to keep up with housing demand. I guess what? There were too many snow days in the Northeast and Midwest, or were builders constantly distracted by potholes and cicadas? Conversely, there are three popular investor states where for sale inventory is just a tad higher now than it was five years ago. Texas is up 6%, Florida up 5%, Tennessee up 2% and this doesn't mean that these states are oversupplied with housing, it just means that they have a touch more than they did in 2019 so they're closer to balance. The important overall thing to remember here is, of course, that nationally, buyers still outnumber sellers. So between the lower mortgage rates that we've had in the past year and the low supply, this keeps the environment ripe. There will be more offers and more potential for home prices to increase faster than its current rate of 4.1%. That 4.1% year over year, as per the NAR, it's important for you to understand that there's virtually no way that prices can revert to their pre pandemic levels. Home prices are not going back to where they used to be five years ago. In fact, there is more pressure on them to rise from here not fall, and there are a few reasons why prices cannot go back to where they were. The rate of inflation has slowed. You've seen the price of lumber come down, but wider inflation has been indelibly baked into the pricing cake. Homes now have higher, permanently embedded costs of labor, materials and land that all have more stick-to-itiveness to them than Simone Biles on the balance beam. Prices are not coming down anytime in the near future. You might remember that right here on this show in in our newsletter, back in late December, eight months ago, I forecast that national home prices would rise 4% this year, and I still really like how that looks.  I'll get back to the investment side here shortly, but real quick, in light of the new rules about how real estate agents are compensated if you're about to buy a primary residence, you may not have any experience negotiating with a broker. In last week's newsletter, I sent you a template you can use and that can help you simplify the process as a buyer and help you avoid being taken advantage of. I sent you that template last Thursday. Back here on the real estate investor side, after a high tide of inflation, you know, you and I, we have all surely enjoyed the splash of both higher property prices and rents. That looks to continue. But what about your higher property expenses, too? Let's talk about what you've got to do to avoid getting crunched by expenses. A survey of single family landlords was recently conducted by lending one in resi club, and they asked this question, what is your expense that increased the most the past 12 months? The number one answer is fast rising insurance premiums, with half of respondents citing that as their biggest expense increase item. And that's hardly a new development, not surprising. The next biggest expense was property tax,  27% of respondents cited that. That's mostly a reflection of higher property values and their consequent tax assessments. 235 single family landlords completed this survey, by the way. So they were the proportion of landlords that answered about what was their fastest increasing expense. Half of them said insurance, easily the most well, the rate of increase in homeowners insurance costs was roughly 10 to 12% nationally last year. That's according to the Insurance Information Institute, and the top two reasons for this are more severe storms and higher replacement costs. The good news is that further rate increases are cooling off, though, all right, but still, what are you to do as a rental property owner that's stuck with a higher property insurance bill? I've got a great answer for you, and it's so incredibly simple. You pass the expense along to your tenant with a rent increase, and then others can deal with what happens downstream from there. And I'll tell you how to go about doing this shortly, which is also so incredibly simple. But if you're reluctant to pass along the increased insurance expense to your tenant, understand that you and your tenant are just like two ports along a river. As this wave of inflation flows along, it flows from the reinsurer to the insurer, to you, the property owner, to the increased rent, to the hike in the tenant wage, to the employer, and then the employer hikes prices on the consumer. That's how the river flows. No watered down returns for you. Now, of course, this River's headwaters are sourced with the government, because that's where inflation comes from. Inflation means an expansion of the money supply. You and your tenant are really two ports along the river. Don't let the expense water dam up and flood you, and the written reason that you give your tenant for the rent increase is drum roll here, higher insurance costs. Yeah, that's it. It's super simple. There's no need to be inventive here. Honesty is therefore the best river raft. Hey, come on now this remorseless geography degree holder has got to let loose with something like river references from time to time. So that's the greatest expense increase item, what to do about it and how you should go about doing it. Now this same survey of single family landlords, they showed that 76% expect to reach high watermarks and raise the rent over the next 12 months, including 35% of landlords who say the rent increase will be over 4% and planned rent increases of one to 7% are most common. That's the planned rent increase range one to 7%. Look, you didn't get into real estate to subsidize others living expenses. There is nothing unethical about adjusting to market level rent. Rent hikes are like a lock lifting your ship through the Panama Canal. All right, so what do we make of this. I mean, gaging, overall investor sentiment is we head later into the 2020s, decade. What is the landlord temperature? As I see it, expenses are up. Higher. Rents follow. And last quarter, home values increased in almost 90% of us, Metro markets, yes, property values are up in 89% of Metro markets. But how do single family landlords in this same survey feel? Well, 60% of them say they will buy at least one investment property over the next 12 months. So most single family landlords they want to buy more. And when that's broken down by region, the most single family real estate investor optimism is in the Midwest, Northeast and South. And really single family landlords are optimistic in every region except the West. And this makes sense. Cash Flows are less lucrative in the West because prices have long outpaced rents there, the survey really shows that most aren't wildly bullish or excessively bearish on the real estate market. They expect it to stay balanced. Many plan to buy properties raise rents, and the survey shows that they, too, expect a 4% home price appreciation rate. That's what it showed, and they anticipate falling interest rates.  Now, personally, I often disagree with what the masses think. I mean, contrarians to the mainstream, they are often the profiteers. But in this case, I guess I'm more agreeable with the survey respondents than a perfectly brewed cup of coffee in the morning. And well, maybe that's because single family landlords, the very people that were surveyed are not mainstream. The housing market is actually pretty normal in most every significant way, except, of course, the ongoing lack of housing inventory and affordability challenges for first time homebuyers. And if you're a newer GRE listener, even normal times can be thrilling for a real estate investor when you achieve a 40% plus total rate of return from how real estate pays you five ways. Yes, if you're new here, I know that sounds like an unachievable return, but 40% plus is actually realistic without high risk when you understand your five simultaneous profit sources with income producing property. In fact, when someone asks why you invest in real estate, you can just hold up five fingers. The broader economy shows a lot of signs of normalcy as well, GDP, growth, consumer spending, unemployment, the inflation rate, but the sad exception here is this widening gap between the wealthy and the poor, so I guess that more people charter yachts and yet others increasingly pour mountain dew on their fruit loops in the morning for breakfast. Now, complete uncertainty never disappears, but after disruptions from covid, high inflation and new wars, a lot of people see calmer times ahead. Elections matter, but some people seem more concerned about who the next President will be than the parent of a Sephora obsessed teen. Presidential elections aren't known to rock the real estate market, and actually, history shows that the more sensitive stock market is only temporarily affected by an election. Sometimes I just ponder and quietly think to myself, hmm, when the liquid death drink brand thrives from Hawking wildly overpriced water in a can, I posit just how bad can the economy really be? The bottom line is that most single family investors are meeting higher insurance expenses with rent increases and they want to buy more income property over the next 12 months.  Hey, if you like this show here, and you get value from it every week, I love it when you just simply tell a friend about the show, it's as easy as having them download our dedicated Get Rich Education mobile app for both iOS and Android. If you think you have any friends that would benefit from the vital episode here, I'd be grateful if you shared the show with them, use the Share button on your podcaster, or even take a screenshot and post it to your social. Straight ahead is any debt worth paying off? I'm Keith Weinhold. You're listening to Get Rich Education.  Hey, you can get your mortgage loans at the same place where I get mine, at Ridge Lending Group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation, because they specialize in income properties, they help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start now while it's on your mind at Ridgelendinggroup.com that's Ridgelendinggroup.com.   Keith Weinhold  19:47 Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4% you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk, your cash generates up to an 8% return with compound interest, year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25k, you keep getting paid until you decide you want your money back. Their decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor too, earn 8% hundreds of others are text FAMILY  to 66866, learn more about Freedom Family Investments, Liquidity Fund, on your journey to financial freedom through passive income. Text, FAMILY to 66866.   Dani-Lynn Robison  20:49 This is Freedom Family Investments Co-founder, Dani-Lynn Robison, listen to Get Rich Education with Keith Weinhold, and Don't Quit Your Daydream.   Keith Weinhold  20:57 Welcome back to Get Rich Education. I'm your host, Keith Weinhold, you're listening to Episode 516 is every debt that you have worth paying off? The short answer is no. I have held millions of dollars in debt from a young age, and I just keep holding on to more and more. Look what happens to your net worth when you pay down one of your debts, absolutely nothing happens to your net worth. It stays the same. All right. Say that the total value of all of your assets gives you a sum of one and a half million dollars. That's the combined value of any of your real estate, cars, retirement accounts, gold, Bitcoin, all of it, anything of value one and a half million and totaling up all of your debts equals just a half million. That's your mortgages, automobile debt, credit card debt, everything. All right, so you've got one and a half million in assets and 500k in debt. So you've got a million dollar net worth, okay, well, next, say that you decide to pay down 100k of your debt. All right. Well, what's the result? You've got only $1.4 million in assets and just 400k in debt. Well, the result is that your net worth is still a million bucks. You've now got fewer assets and less debt, so you just broke even. But it could be worse than just a break even, because what if, one month after you made this debt pay down. You now need that 100k back for living expenses, but you can no longer get it returned to you because you lost your job, so no one will qualify you for a loan again, or you still have your job. But lending standards have tightened and changed now your 100k is on the other side of a wall that you can't access. So debt pay down isn't just a question of net worth, it's liquidity. And there are some more layers here that we're going to get into paying down mortgage debt. It also builds home equity. Well, that is usually a bad thing, because, as I'm known for saying, home equity is unsafe, illiquid, and its rate of return is always zero. Do you know the crowd that sometimes forgets this and really gets penalized? It is seniors, retirees. All right, what happens when a person is older and they've had a paid off home for a while. People get a reverse mortgage. They need funds for living expenses. Well, reverse mortgages, they have high fees, and also you can't get nearly all of your equity out. You'll often only get up to 60 to 65% loan to value, meaning that 35 to 40% of that hard earned equity that you worked decades for. First it became trapped with no return, and now it's essentially gone. Poof. For all those years, your home is paid off, even if it began as early as your 30s, like it does for some people all that time your equity wasn't earning any rate of return. And the earlier in life you learned that the ROI from home equity is always zero, the better. You didn't see any bill for this loss. You just never saw the gain that you should have had. And that's part of the reason why this myth that home equity is such a great thing perpetuates and carries on for generations. All right, well, we are just getting warmed up here at a key financial question in your life. That question is, is every debt that you have worth paying off?   24:58 Did you know millions of Americans live with debt they cannot control. That's why I developed this unique new program for managing your debt. It's called Don't buy stuff you cannot afford. Let me see that. If you don't have any money, you should not buy anything. hmm sounds interesting, sounds confusing.   Keith Weinhold  25:24 Well, there's a little something to be said for that. But what about interest rate? If that 100k that you paid down was for credit card debt? All right? Well, that was probably a good thing. 44% of American credit card holders carry debt month to month. Now I'm going to guess for you the GRE listener, it's even less likely than that that you carry debt month per month, where you would be subject to credit card finance charges. The average credit card interest rate in America is about 25% today, and it is unsecured debt, meaning that it's a debt type that's not backed by collateral. Now, yes, you can beat a 25% return if you're leveraged in real estate, but your liquid cash flow drain is drastic on credit cards. The other problem with credit cards is that you have to pay your own debt. Later, I'll talk about when others pay your debt for you. And if you have decided that you have some debts worth paying down because its interest rate is too high for goodness sake, pay the one with the highest interest rate first. I know there's a school of thought that says, pay the debt with the lowest balance. First, that is nonsense. Now, sometimes, if you know specifically what you're doing with credit cards, you can play some little games with them. I mean, personally, after I finished college, I kept transferring credit card balances with 0% APR, Intro offers, introductory offers that were for a limited time at 0% and then I kept track of that so that intro rate didn't expire. But this isn't any sort of long term wealth building strategy. Higher balance transfer fees have made that strategy less lucrative. Now too, banks have tightened that up. When it comes to interest rates, it's about that arbitrage. Ask yourself really two questions when it comes to arbitrage, which is just a fancy sounding way of making a profit or a spread. First, you need to ask yourself, how good of an investor Are you? What percent return can you reliably earn from your investments? Say you think it's 15% then if you're plus 15 but the interest rate on your debt is 8, well, then you've got 7 points of arbitrage or profit. So keep the 8% debt. And then secondly on arbitrage plays. Ask yourself, can I afford the cash flow if I keep this debt around? Because if you're 15% return, just say that it's all tied up in the appreciation of a property. Well, that's not very liquid, so you're going to need to have the free cash to make the payments on your 8% interest rate loan. Let's talk about other times not to pay down the debt. Say you're trying to build up an emergency fund of at least three months, or you want to contribute to your employer match in your company's retirement plan, you may very well want to fund those things before you pay down debt too. Now some say, hey, you know something. Just forget about all these numbers like rates of return and interest rates. You know, debt just makes me feel anxiety and feel stress and sleeplessness. There is emotion here, so let me just get it paid off. Or I'm afraid that if I've got some money and I don't pay off my debt, that I'll just lose all of the money to sports gambling, and to that, I say, come on, be an adult. Set some boundaries. Dog ears, some cash for entertainment, and have a firm line. Learn how to use that to your advantage. Debt is like fire. It can burn you if you don't know how to use it, and it can heat your home if you do know how to use it. And if debt gives you sleeplessness. Here, this will help you sleep your debts, principal balance is being debased for you as you sleep, every single one of your debts is being eroded by inflation. Right now, as you listen to me, your principal balance is quietly, debasing and passively, eroding with your say 500k of total debt. We have 10% inflation over a couple years. Well, that erodes its weight down to 450k all without you having to get involved and make any pay downs at all. As wages go higher, and so do prices and rents and salaries, as they all spiral higher, it gets easier to pay back those principal balances. And debt is the most powerful wealth building force that I know of, because debt is leverage. Compound interest is weak. Leverage is powerful. Debt allows you to own and control five times as many properties as you could if they were all paid off. And if you don't understand this, or if your jaw hit the floor, what I just said a minute ago, that compound interest is weak. I just discussed this for you in clear detail nine weeks ago, on Get Rich Education podcast episode 507. So go and check that out. One attribute of real estate debt is that as you get properties where the rent income meets or exceeds the expenses, congratulations, you have reliably outsourced all of your debt payments to tenants. See, most of my debt, personally, virtually all of it, it isn't really going to be paid back by me. It's my tenants, and that is another reason to keep debt in place and only make the minimum payment. Let's talk about another reason to pay down your debt when a payoff or pay down actually does make sense, even if it's at a low interest rate, it's when an outside force kind of makes you pay down your debt. And here's what I'm talking about. Say you're trying to buy a property, whether that's a primary residence or rental, and that you've got say, Oh, just $11,000 left to pay on your car loan at a 5% interest rate, even though you can't outsource the payments. That's a pretty nice low 5% interest rate, you're confident that you can beat that and earn more elsewhere, so you'd rather enjoy the positive arbitrage instead of paying that off. And I'd feel the same way. But here's the twist, your mortgage loan officer says you've got to pay the $11,000 down to zero because your debt to income ratio is too high. So if you want the mortgage, the big loan amount, you've got to pay off the car loan, the little loan amount. Well, that's a case when it makes sense to pay off that automobile loan debt then, and also, when it comes to your credit score, you might need to improve it to qualify for another loan so you can get a low interest rate and 30% of your FICO score is made up of your amounts owed. I'm answering a vital question for you today, and that is, is every one of your debts worth paying off? I'm sharing information, perspective and experience with you here, and this experience was built, just like all experiences, and I didn't always have the experience, of course. Now my parents and I split my college loan costs, 5050, I still had student loan debts for a few years after graduating, and you know, I can't remember what my student loan interest rates were maybe 6% blended because I had a few different student loans, some of which I did transfer onto those 0% intro, APR credit cards, by the way. But after my student loans were paid off, and I started investing in real estate and understanding terms like leverage and arbitrage, you know, I started to wonder if it would be desirable to have those student loans back rather than paying them off so fast I could have owned another property or two sooner, and I'll never know the opportunity cost of not benefiting from the returns on owning more Property sooner. And of course, student loan debt is one of the few debt types that cannot be written off in bankruptcy that tilts back a little toward paying them off sooner than later.  What you just heard me talk about here for the last 15 or so minutes is a message that hundreds of millions of people need to hear it's that not every debt is worth paying off or even paying down. So to help give you a summary answer to our question, is every debt worth paying off? The answer is no, and the key considerations are liquidity, interest rate arbitrage inyour ability to outsource the debt. Debt is good when it helps you buy a cash flowing asset or create arbitrage. Debt is probably even good when it helps you buy a home for your family and have a sense of permanency and a mantle to place baseballs and hang Christmas stockings from and build memories. And now this is all because every single one of us either uses debt or we forego the opportunity to use debt. Well, when we forego using debt, we are now subject to a resultant opportunity cost, and this is why a central and enduring mantra here at GRE is that financially free beats debt free. Financially free means that you have enough residual income streams to meet all of your expenses and live just how you want to live. Debt Free means that you don't owe anyone anything, but if you put debt free before financially free, you are going to grind and live below your means and eat dirt and miss opportunities for decades.   And speaking of leveraging your way to financial freedom with assets, the way that we actionably help you here is by recommending income producing providers and properties for you. And you probably noticed over time that GRE marketplace properties here are less expensive than elsewhere. And you might wonder why exactly is this? Well, there's a few reasons. Investor advantage markets have low prices. Also, there is no agent you get to buy directly. Thirdly, providers provide homes in bulk, keeping your costs down. And then finally, there are no owner occupied emotions involved here with buying and owning rental properties, so you don't have sellers that are making unreasonable requests. So this helps answer why GRE marketplace properties are often good deals. Now it seems like states with the best cash flow in real estate are the same ones where people are more likely to wear bib overalls. That's just how it is. In fact. Hey, case in point, I just learned about some brand new, new build single family rentals in southwest Missouri at GRE marketplace. They're available for you to own regardless of where you live. They make ideal rentals, and they come with free property management for the first year. And because they're freshly built. Expect the likelihood of a quality tenant, light maintenance and low repair costs for years. Let me just quickly mention two of them to give you a feel. The first one is in Carthage, Missouri. The single family rental is three bed, two bath. Rent 1550 the price is 206k it's 1200 square feet, built this year. You get a $1,200 rent credit with it. So it's going to take a 51k down payment, and it produces cash flow. The second one is in Carl Junction, Missouri, four bed two bath in this single family rental. The rents $1,875 the price $250,500 1683 square feet built this year. 62k down and produces cash flow. And like I said, both come with free property management for the first year, and we can help set up an entire real estate investment plan for you, whether it's with these properties or others in multiple states, where we help you make it easy on yourself and contact a GRE investment coach. It is truly free always. There aren't going to be any hidden coaching bills that pop up in the mail. We don't have some paid coaching program. We're trying to upsell you. We don't have anything to sell, and our coaches are like advisors, consultants, super connectors and like silent partners on your deals, and they get zero equity in the deal. And our coaches don't wear Bib Overalls either. So they keep it really relatable for you, make it actionable and make a real difference in your life, start at gremarketplace.com. That's where you can contact a GRE investment coach, and we'll see how we can help you out from gremarketplace.com just click on the free investment coaching button.  Until next week, I'm your host, Keith Weinhold, and I'll be back to help you build your wealth, Don't Quit Your Daydream.   39:46 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed or investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.   Keith Weinhold  40:06 The preceding program was brought to you by your home for wealth building. GetRichEducation.com.

Independent documentary filmmaker and policy analyst at Reason Foundation, Jen Sidorova, joins us to discuss how rent control impacts tenants, landlords and the housing market. Her latest short film project, “Shabbification: The Story of Rent Control”, reflects how rent control has a direct effect on housing quality. Almost half of rentals in NYC are rent-stabilized. We highlight the challenges faced by small property owners and the potential consequences of these regulations on the housing market. Bathtub in your kitchen, anyone? Yes, you read that correctly. In some cases maintenance has been deferred for so long that units have not been updated to code. Learn about the history of rent control and stabilization laws in New York. Resources mentioned: Show Notes: GetRichEducation.com/515 You can follow Jen on Instagram @jen_sidorova or check out her writing at reason.org For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai   Keith Weinhold  0:01   Welcome to GRE. I discuss the effect that now lower mortgage rates can have how to get a strong return with private lending. Then, for this week's guest, she is a public policy expert with reason.com maker of a new film called Shabbification that spotlights the perils and even horrors of rent control in New York City, and she's a young Russian immigrant that lives in one unit of a Buffalo fourPlex and rents out the other three today on Get Rich Education.    When you want the best real estate and finance info, the modern Internet experience limits your free articles access, and it's replete with paywalls and you've got pop ups and push notifications and cookies disclaimers. Oh, at no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life. See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor, and it's to the point to get the letter. It couldn't be more simple text, GRE to 66866, and when you start the free newsletter, you'll also get my one hour fast real estate course, completely free. It's called the Don't quit your Daydream letter, and it wires your mind for wealth. Make sure you read it. Text GRE to 66866, text GRE to 66866. Corey Coates  1:40   you're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Keith Weinhold  1:56   Welcome to GRE from Ankara,Turkey to Anchorage, Alaska and across 488 nations worldwide. I'm Keith Weinhold, and you're listening to Get Rich Education. Today's guest was one of four panelists at a conference that I attended recently. The panel was named innovative solutions to the housing crisis, and her story struck me as interesting, so I invited her to be on the show today, we'll learn that with rent control in New York City, when landlords cannot go inside their own properties and aren't allowed to sell their own properties, seven states have price ceilings on rents, and I'll tell you here At GRE we avoid investing in these places. Listen closely, California, New York, New Jersey, Maryland, Maine, Oregon, Minnesota and then DC too. Now sometimes rent control isn't too restrictive. For example, you can raise the rent no more than the rate of inflation plus 3% per year, or the rate of inflation plus 5% per year. And also, it's not all parts of those states where it applies. In fact, you typically do not find the policies statewide in those states that I mentioned, although you do in Oregon, it's statewide in Oregon, and there you can still raise the rent 7% plus the rate of inflation each year. And the good news is that 37 states actually have laws against rent control, specifically saying that you cannot enact it. So not only do 37 states not have it, they just wouldn't even allow a law for it. And there is a strong consensus, like I mentioned here on the show before, among economists that rent control, it reduces the quantity and quality of housing. Today, we'll focus on just how dilapidated rental units become under rent stabilization, which is a lot like rent control in New York City. And we'll discuss New York State and Buffalo. And by the way, I find something amazing. I mean, just say you would ask a question of any citizen of the world, no matter where they live, from Indonesia to Japan, to Bangladesh, to Nigeria to the United States. If you would just ask any citizen of the world, what is the capital of the world? I think that the best answer that you could come up with is New York City. I'm in the United States, and there are people right here in this country that have such little understanding of New York City, and what goes on there, and where it even is, it just amazes me. Maybe it's my own bias, because I'm a geography guy, but now, for example, to get from New York City out to Buffalo, that's an almost seven hour drive to the northwest two different parts of New York State. These are two very different places. We'll get into that shortly. But first in the wider real estate world, I did a little research since first mentioning this to you last week here, where mortgage rates have fallen fully one and a half points from the recent high. All right. Well, with every half point drop in mortgage rates, like I learned from First American, that's my source. With every half point drop in mortgage rates, about 1.1 million additional American households can qualify to buy an entry level home that's defined as the bottom 25% priced here. That's the number, and I checked their math. So with a full point drop in mortgage rates, then 2.2 million more American households can qualify to buy an entry level home. So we could very well have more buyers here soon, but yeah, when all these homeowners are still locked into three and 4% mortgage rates, I don't know that you're gonna have that many more sellers. So with demand exceeding supply, look for more upward pressure on home prices, especially higher values for those entry level homes that make the best rentals. Now, I'm talking about borrowing right there. And what happens when rates go down for mortgages, when they go down for borrowing? Well, rates on savings accounts, they typically fall as well. And this is a scenario that a lot of people expect. Now, most of my real estate activity is a borrower. I'm always here touting the virtues of how leverage builds wealth, and I know that I don't want to be a saver. So for my more liquid funds, I am a lender, and I'm reliably paid a stable 8% interest rate. And I think I've told you before that for years now, I make loans to real estate companies, and they use my funds to rehab properties and for other operations. Yes, an 8% return that I'm getting, and it's almost like getting an 8% yield on a savings account, and it's not expected to fall when interest rates fall. Well, the primary difference is that I often have to wait a few months if I want my full principal return, but not years. So it's not as rigid as a bank CD, but it's not as liquid as an old fashioned bank savings account. So the private real estate company that I've long made loans to works pretty diligently to maintain asset value and assure optimal returns. They'll tell you that they've never missed making a payment for their private money lending programs. And I did a little research, and I found that their fund utilization is 99.6% that really means that they deploy almost all of the capital if you want, you can potentially get a high yield at the same place I do. Sometimes you can get more than 8% or less than an 8% return, depending on what liquidity terms you want and what other terms you like. The company is Freedom Family Investments. They are real estate centric. If you want, go right ahead and learn more. You can do that by texting FAMILY to 66866. Remember, you're the lender, they're the borrower. And again, for most investment types, I want to be the borrower, but for liquid funds, and the fact that the rate of inflation is now down, an 8% return has a higher real yield now than it did two years ago and one year ago. And again, I'm happy to share it with you. It's Freedom Family Investments. If you want to learn more, do it now while it's on your mind and text FAMILY to 66866.    This week, our guest is a public policy expert that's also involved with a film called Shabbification, the story of rent control. Hey, welcome to GRE Jen Sidorova.   Jen Sidorova  9:16   Good to be here. Thank you for having me.    Keith Weinhold  9:18   Yeah and congrats. Shabbification screening in a lot of places, like the Anthem Film Festival at Freedom Fest last month and this month in New York City, tell us about the film.   Jen Sidorova  9:31    Yeah, so in Shabbification, I follow small property owners like myself who are subject to regulation, and most of them are owners of rent stabilized properties in the city of New York. Right, I follow three specific landlords. I They take me to their homes, they take me to their properties, and they show me around, and you can visually see what regulation has done to their property. Yeah, one of these properties was occupied by a tenant. From 1969 up until 2021 wow. And the landlord was never allowed to be in the property, so obviously no repairs were made. And you could see visually that the apartment was like from the 60s. It's like a museum, but not in a good way, because it's really falling apart, right? So it's like, almost like a Tenement Museum, or, you know, another museum New York City, where we they actually preserve those dates. But in this case, a private landlord actually owns that space, and they're having a difficult time. And so what my specific Shabbification With my film is about is a very specific regulation in New York City that happened in 2019 that applied to rent stabilized properties. What it did that is that it won't allow landlords to put them properties on the market even if they rent stabilized tenant vacates them. They're no longer allowed to put their properties on the market at all. And more than that, they are also not allowed to raise rent, even if they do repairs. So sometimes the cost of repairs in New York City for one bedroom unit can be 200,000 and they're only allowed to raise the rent by like roughly $90 a month, and only for 15 years. So it will take them, like, 200 years to recoup their investment. And obviously that doesn't make any sense, so stories like that is what my short film is about. I myself am a small property owner, so it was very special for me to go and kind of tell the story of people like me.   Keith Weinhold  11:36   That's amazing. So rent stabilization something that New York City has a history of. I sort of think of that as a genteel term or rent control. And a lot of times when your rent can't be raised above a certain amount, you get these long term tenants, in some cases, for decades, and in this case, over 50 years, with this particular tenant in New York City and landlords don't have much of any incentive to improve property when rent control is in place, because they know they cannot get a commensurate bump in rent.   Speaker 1  12:11   rent control and rent stabilization are a form of government enforced limit on the rents. And in New York we have two laws that govern that we have more but the most prominent ones are the rent control law of 1969 and the Rent Stabilization Act of 1974 so back in the day, there were issues with availability of affordable housing, and the government was trying to fix it, and that fix was supposed to be temporary. It was supposed to eventually run out once the tenants who were currently in place at the time in late 60s and 70s, once they move out, landlords were able to put those properties back on the market. And eventually, that's kind of what was going on up until 2019 when housing stability and Tenant Protection Act made it so that the landlords could no longer put their rent stabilized properties on the market anymore. So essentially, all rent stabilization became permanent in the state of New York, and actually, in the just a couple of weeks after my film, in April of 2024 we had another law. It's called Good Cause Eviction, and that one regulates every landlord or enterprise who owns more than 11 units. So once you own 11 units or more, you're subject to regulation. You can no longer evict your tenant without a good cause. And there's a bunch of other rules that apply, including the limit on how much rent you can raise year to year. So yeah, that's certainly what's going on. That's roughly the landscape all regulation in New York.   Keith Weinhold  13:44    Yeah, some of this is really punitive, because if rent control comes into a market, that's one thing sometimes that landlords want to do. They want to sell their property, and in some cases, there's a roadblock against that. You know, Jen, I looked up the definition of Shabbification. I just simply googled the term. Urban Dictionary had one of the first hits, and fortunately, it was a G rated definition there in urban dictionary, it was defined as the opposite of gentrification. So therefore with Shabbification, it's where a neighborhood goes through deterioration and despair. So tell us about some more of those bad cases of deterioration, in despair, in Shabbification. Just how bad does it get?   Speaker 1  14:30   Well, one of the properties that we went to was basically from 1910 it was in Chinatown, and we saw was that the bathtub was in the kitchen in that property, oh my gosh. And I believe that was a way for them to do renovations fast and cheap, like 100 years ago. And because that property falls under rent stabilization, and there's obviously limits on how much rent you can charge. So. Landlords of those properties never really make renovations. Sometimes you could see cases like the director of photography, who was in the film, he lives in a rent sabilized property, and in his case, he has a shower unit in his kitchen as well. Instead of a tub, he has a shower unit. And it kind of is, as he described as one of those telephone booths, like, you know, red telephone booths from London, and then kind of just sits in the kitchen, and you obviously cannot really have company or friends visiting or dinner or anything if you have something like that. But those are the setups that we frequently see. Also a lot of things like uneven floors or just, you know, the property, if it's not being taken care of, there might be, like, a hole in the wall, a hole in the ceiling, or the ceiling is falling out. And those are really graphic images. And we do, we do capture them on camera a lot in Shabbification, and that comes from, kind of, my attraction to urban decay. I do enjoy, you know, touring older buildings, or maybe buildings that are preserved as a ruin, maybe like an old prison and or like an old mental asylum. I do do that a lot. It's just a hobby when I travel. So I was always attracted to that esthetic, and that does show in my film as well. I think I love studying the tragedy because I love studying how the hope died, because it's fascinating to me. It's very specific to usually a town or a city, and then just is so telling, and it's such a teaching moment for us as a society to kind of revisit those stories and figure out why did that hope die. And you can see a lot of that in the film.    Keith Weinhold  16:41   it's a great way to scratch one's itch for I suppose, seeing real life haunted houses, if you will, in Jen's film Shabbification here. Well, Jen, we've been talking about the conditions of the tenants. Why don't we talk more about how the landlord is portrayed in Shabbification.    Speaker 1  17:00   since this is the story, primary of the landlords, not so much on the tenant. You know, normally in this sort of films and these sort of documentaries, the story falls in tenant, because the tenant is the one who is seen as likable and sympathetic person, and that's how, and that's usually a more preferable framing angle. But in my story, my story is a story of a merchant class, or like a more, like a war on the merchant class, the war on landlords. Because in the state of New York, no matter how small or large of a landlord you are, whether you own one unit or 1000 by a lot of people in New York State Legislature as a landlord, you're seen as evil. They think you've done something wrong and you have to be punished. So that's the attitude to a lot of landlords, and although they're not that many small property owners, and sometimes we're not seen as a sympathetic I think this is the story that we need to tell, because some of them are like me. I am an immigrant to this country. Once I got an opportunity, I got my first rental property in Buffalo, New York, and right away, I've been renting out three units and lived in one, and I still do own it. Five years later, I live alongside with my tenants. When I go on vacations, they feed my cat, and when they go travel for work, I do take care of their properties. I water their plants, do things like that. So we do live as a small community, and this is something that a lot of people do in Buffalo, because it's a working class city. It's very hard to be able to afford a single family home. Right away, what you can do is acquire one of these properties, either a two unit, three or four unit, because when you're four units less, then you can do an FHA loan, which I did, and you can put minimum amount down, which I did, and then day one, right away, the income from the tenants was paying off my mortgage, right? That's kind of how I can build generational wealth. But not only that, that's how I can start my journey of home ownership and hopefully building generational wealth in the future, as I've said. And I also have my own passion for buildings, and we did a lot of renovations with my family on that property. So there's a lot of heart and soul in that space. And laws like rent control and Good Cause Eviction, they put a cap on people like me and how much we can grow. Because, as I've mentioned, the Good Cause Eviction in New York, it puts a cap on how far and how big people like me can grow. Because once you have 11 units, that's my cap. Once I have 11 units, I have subject to regulation, and somebody like me cannot afford having a tenant who would just never move out. So yeah, I think these laws, they intended to protect the needy. They intended to protect the families, but they do just the opposite. They. Just limit how much we can grow, and they also just make an environment within our properties very toxic, because tenants now basically have more rights than we do.   Keith Weinhold  20:09   Yeah, well, you're really humanizing the plight of the landlord here, Jen with your four Plex over there. For those that aren't familiar with the geography in western New York in Buffalo, sort of the opposite end of the state where New York City is. And, yeah, I mean, landlords are usually portrayed in media is these people that are sort of greedy and bumbling and they won't fix the broken air conditioner. And, you know, it's, it's unusual to me, Jen, that a lot of people tend to resent landlords, whom are often small business owners, but yet they champion other small business owners. And talk about how, you know, small business ownership is the very heart of America. I'm trying to figure out why that is, you know, maybe some tenants that just don't really understand how things work. Just think, well, why should I have to pay this landlord. All I'm doing is sort of renting air or renting space. But you know, one group of tenants that does not seem to resent landlords, Jen, in my experience, that is people that were previously homeowners and are now tenants. They don't seem to resent landlords, and that's probably because that tenant that has experience being a homeowner. They've seen bills for property tax and property insurance and mortgage principal and mortgage interest and maintenance and repairs. I think that's what makes the difference.    Jen Sidorova  21:33   Yeah, definitely. It's almost like, you know, when I lived with my parents, I didn't pay attention to the bills, like election bills or water bills or anything. But once you start living on your own, you now see how it gets deducted from your account, and then it changes you, adds you towards consumption, changes right? You now turn off the light when you leave and do just small things like that. And that's a similar psychology that works with people who previously owned their own homes. I think what the dynamic that's happening here with tenants is there's always going to be more tenants than landlords, so tenants have a lot more political power, and we see a lot of that in New York. We have a lot of tenant groups, tenant unions, who are very hold a little, a lot of political power. And it's one side of it, another side of it is that a lot of these policies do benefit large landlords, in a sense that once the small property owner is no longer able to keep up the property and they just foreclose on it, a larger landlord can always pick it up. And for large landlords, these costs of litigating with the tenant, or the cost of fixing a unit, or even the cost of having somebody live without paying for a few months, these are just the costs of running business, whereas for somebody like me, it's a significant chunk of my income, right? So at the moment, I think it's like 25% of my income is coming from the rentals, so it's significant. So I guess what I'm trying to say is, on the other side of political power, I just legislators who do not want to see private rentals. You know, small property owners having rentals and Damn, motivations are something else. It's almost like, if there's one conspiracy theory that I believe in, is that one you know, is that there is a war on the merchant class among some legislators, especially in the state of New York, who really just do not want to see small property owners providing housing to the community, and they would rather see it in in the hands of larger developers, and that's just the nature of how political process works, sometimes.   Keith Weinhold  23:45   in the broad business world, large institutional corporations, they're often pro regulation for just the reason you talked about it helps put smaller operators out of business that can't bear the expense of dealing with the regulation. But yeah, your film Shabbification, it helps underscore the fact that rent control, it stifles the free market in the process of price discovery. I mean really that price discoveries, that is the process of supply versus demand, with the referee being the price and finding that right rent amount, and amidst this low housing supply we have, it's just really bad timing for any jurisdiction to enact rent control. Existing landlords stop improving property. Builders stop building new property, and it can make landlords want to sell, like we touched on earlier. But also I'd like to talk about making the other case, the case for rent control. When we come back, we're talking with public policy expert Jan siderova, the maker of a film called shabbatation, where we come back. I'm your host. Keith Weinhold, hey, you can get your mortgage loans at the same place where I get mine at. Ridge lending group  NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties, they help you build a long term plan for growing your real estate empire with leverage. 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Family investments, liquidity fund on your journey to financial freedom through passive income. Text, family 266, 866,   Caeli Ridge  26:32   This is Ridge Lending Group's president, Caeli Ridge. Listen to get rich education with Keith Weinhold, and remember, don't quit your Daydream.   Keith Weinhold  26:52   Welcome back to Get Rich Education. We're talking with a really interesting guest, Jen Sidorova. She's the maker of a new film called Shabbification. This centers on rent control and dilapidated housing conditions. And Jen, you know, I've talked about here on both this episode and another episode a few weeks ago about the deleterious downstream consequences of rent control. It benefits a small group of people in the short term and ends up with deteriorated neighborhoods in a lot of municipalities, but I like to look at things from the other side. What is the case for rent control?   Jen Sidorova  27:27   So I think the the original story behind the rent control in New York City was that in the 70s, it was just really dire situation, kind of what we're going through right now. Right now in New York we have the housing crisis that's the worst in the last 50 years, so basically right around the 70s again. So the current vacancy rate is like 2% and at the same time, we have between 20 to 60,000 rent stabilized rent control units that are vacant because landlords just do not want to put them in more on the market, because talking just in New York City here, yeah, just New York City. And New York City has roughly 1 million of rent stabilized or rent control properties altogether. But yeah, so what is the case for rent control, right? So in my opinion, what is the most problematic saying about rent control or rent stabilization right now, the way the current laws are in New York City is that the property itself is being stabilized or controlled. It's not the person. It doesn't matter how much money you're making. If you're making half a million dollars, you can still live in an apartment that's like 500 $600 a month, right?   Keith Weinhold  28:38   You can have your second lavish vacation home out in the Hamptons, and it doesn't matter.    Jen Sidorova  28:42   Yeah, you can live in Texas for like, nine months out of a year, and come back to New York City for the summer, and then people do that. That's like, not, I'm not making it up. It's a real thing. People are basically hoarding these rent stabilized rent control units, and they just never let them go. And that definitely pushes out young people out of the city. It pushes immigrants out of the city, because people, yeah, all the newcomers. So that's what's going on. So instead of having a property itself being controlled, what could be done? Maybe like a voucher program, maybe like a housing voucher program, but we can only do this if we let the rent control and rent stabilization laws sunset. So once the current tenants move out, that has to be put back on the market, right? So what we could do is the housing voucher program maybe, so that we will always have people in the society that need a little bit of help, but it shouldn't be in such a way that they it's the landlord who is paying for it, right? So if there's a housing voucher, they can live wherever and however that program works in the sense that whoever picks up the rest of the bill, as long as it's not a landlord directly. Yeah, so that's how I see it. And I think just other things that can be done is better zoning regulation that allow more buildings to be built a lot of New York City. Is like a museum, right? We have a lot of historic buildings, a lot of preservation of all the buildings, but we have to reevaluate that, because we don't necessarily have to have the East Village look like a museum if we don't have enough housing, right? So we have to reassess of how much of those policies we still want to hold on to, and then maybe also building codes. Sometimes it's really hard to expand or have more units within the same building. If I have a four unit property and I want to convert it into five units, I am subject to whole different regulation and a whole different bunch of coding, whereas my square footage remains the same. So I think we have to revisit that, because a lot of these new materials that we work with when building are safe right now. So maybe we could let people do more with their properties, and that way we provide more house.   Keith Weinhold  30:50   Yeah. Well, some of this comes down to, how do you get politicians to say no to rent control, which I believe is part of the motivation of your film?    Jen Sidorova  31:01   Right, So the motivation behind myself was that I bought my property in 2019 I went under contract in 2019 and I fully acquired the rights in March of 2020 and between the August of 2019 and 2020 we had a new law passed that was housing stability and Tenant Protection Act 2019 in New York State, and that kind of put a cap on how much I can raise the rent if the tenant remains the same. And at the time when I found that out, I was like, well, that's kind of quirky, but whatever, what can I do? But then a year from that, like in 2021 we had a new mayoral candidate who was a socialist, openly socialist person, and they were advocating for rent control. And at the time, I had an opportunity to go to do a film workshop, and I was thinking, so what is that I really wanted to write film about? And I was this, definitely rent control, because it's relevant for me. It's the story of my people among small property owners, and that's how I did it. And I really want policy action. The idea behind this film, the goal is policy change, right? But this short film is only the beginning of my project, which is exploration of the topic prevent control in the state of New York and everywhere else in the country, and we keep interviewing more people, more experts, and to convert into a larger film, and then hopefully, like a full feature documentary, in order to educate both policymakers and the public about what rent control can do. And eventually, we do hope for policy change in New York, and hopefully, with this film, no more new rent control can happen, or at least when politicians start those bills, they take a look and talk to me and make some changes.    Keith Weinhold  32:52   Well, you're really doing some good work there. I appreciate that. I mean, rent control is analogous to price controls, and we see what happens when there's price controls per se foods like you've seen in other nations in previous decades, and that's how you end up with bread lines, because producers don't want to produce bread when they would have to take a loss and they can't profit on selling that bread. You see a shortage of housing come up just the same, like you do with bread. Well, tell us some more about Buffalo and its market. You had touched on it previously. I think they have lots of older two to four unit buildings there. It sounds like you found one of the four plexes where you could do the owner occupied thing. FHA, three and a half percent down 12 month owner occupancy period. Minimum credit score only needs to be 580 at last check, which is the same way I began with the four Plex building. But yeah, let's learn more about the buffalo housing market. Just a little bit there with rental properties and then the rising tide against Airbnb, like you touched on last month when we met in person.   Jen Sidorova  33:56   Right, so a lot of those properties, a lot of those older homes, were built around the late 1800s beginning or 1900 and that's how they used to build back in the day. Because what would happen is that a large Victorian home with two primarily stories, with two large floors and then maybe an attic and a basement, but one family would live on one floor and another on the second floor. So they were originally built for two homes, but at that time, both families would own that space, right? So there would be co owned by two families. Mine was also an originally a two family home that was converted into a four unit because the previous owners made an addition a lot of young families, that's how they start when they cannot afford a single family home. That's how they start with home ownership and the money that they make for with the rentals. That's how they pay mortgage partially, or maybe that's how they pay the taxes, depending on where you live in the city, sometimes tax burden can alone be very high. So as I've mentioned, we had some mayoral candidates talking about rent control, but recently we started having Airbnbs being regulated in Buffalo. And so there's a few districts in the city where Airbnb is regulated, and my district does not fall into that, and I actually am on four of my units. One is occupied by me. Two are long term tenants, and one which is the newest and the nicest one. I decided to make Airbnb interesting because I did not want to risk, you know, giving it to a long term tenant, because it's just such a nice unit. It's a lot of investment that went in there, so I didn't want it to be provided by somebody who would never leave, because the, you know, environment is just so toxic. You just don't want to take chances, unless you like, really believe in the time. But I don't know people are out here. So I decided to keep it Airbnb. And so because some of the other parts of the city are regulated, and mine is not. I am the beneficiary of that regulation because I get a lot, all of those clients, right, all those Airbnb client so in that sense, funny enough, I am benefiting from some parts of the city being regulated because my my part is not. So all the clients go to me. I do have an Airbnb right now, but we're definitely at the risk of all of the city being regulated. And I think a lot of people complain, right? People who lived in the city for a long time, allegedly, they started complaining to the city council about not recognizing their neighborhood because of Airbnb. But I think what legislators need to understand is that my generation, millennials and Gen Z. That's how we live our lives. We share our assets, right? It's like a big millennial and Gen Z thing that the Airbnb itself is a millennial thing, that this is just will be recognized, that assets like cars and houses, they can be shared, you don't have to have that many of them, even from the unit in the unit that I live in. When I I went out on a trip to Long Island last week, and I airbnbied my own unit. And so that's just how it is. That's just a little lifestyle. And when I see new people who stay in Airbnb on my street, it doesn't bother me. I kind of enjoy a little bit of a variety. But, you know, sometimes it's almost like a culture clash or a generational shift when it comes to thinking about properties and housing ownership. Yeah, that's just my experience.   Keith Weinhold  37:33   Younger generations embrace the sharing economy, and that is quite the mixed use building that you have there with your four Plex in Buffalo, you've got one unit that's a primary residence, a second unit that's a short term rental, and then two long term rental units. There's some diversification of income and utility, for sure. Well, Jen, tell us more about how our audience can connect with you, and especially how they can watch Shabbification.   Jen Sidorova  38:00   So Shabbification, right now is in the film festival circuit, so it's not available to watch yet. Although, if anyone reaches out directly to me through Instagram, my handle is @Jen_Sidorova, which is my first underscore, my last name, anyone can just reach out directly to me and I will send them a screener, and they can watch the full film. And also on my Instagram page, I do put a lot of like other content about buildings, and a lot of like videos so and some, you know, B roll footage that we haven't used in the film, but you can watch it in my Instagram. So yeah, definitely check it out. I also do write for Reason Foundation, and you can find it on my profile, my policy writing work. You can find it at reason.com and it's just under my name, pretty much Instagram and reason website.   Keith Weinhold  38:51   Jen, thanks so much for your Shabbification project. I really think it's going to help people see an important part of American society in a different light. It's been great having you here on the show.   Jen Sidorova  39:02   Thank you so much.   Keith Weinhold  39:09   I talked to Jen some more outside of our interview. Her buffalo four Plex has a high flying 1.04% rent to price ratio. I crunched it out that is super strong for a four unit building, but it is older, and like she said in the interview, she did make some substantial renovation to it, yeah, rent control is a bad plan. You know, on an episode a few weeks ago, I mentioned to you about last month's White House proposal for a sort of rent control light, that was such a bad plan. I told you that it only applies to property owners of 50 plus units, and rent increases were capped at 5% a year. Well, I dug into that release from the White House briefing room, and it's almost like they know it won't work, because. Oh my gosh, this is almost humorous. Economists and any long term thinkers will tell you that rent control doesn't work because you won't get any new builds. Well, the White House release Wood said it won't apply to new builds. It's almost like someone told them, like, hey, this won't work for that reason. So then they wrote that sentence in there, which just undermines so much of it. And economists will also tell you that what doesn't work because owners don't want to improve property well, yet, the White House release actually said it would not apply to substantially renovated property. I mean, my gosh, with these carve outs and all the other caveats that are in it that I described a few weeks ago, this White House rent control planet has no shot of going anywhere. It is lip service virtue signaling, and also would not get past a divided Congress. Really bad plan. In fact, how doomed to failure is wide scale rent control. Well, don't worry, the federal government hasn't regulated rent on private buildings since World War Two. Yeah, it's been 80 years, and it took World War Two scale conditions to bring it. Thanks again to today's guest, Jen Sidorova, with reason.com. Again, like I mentioned earlier, if you want to deploy some of your more liquid funds for a potential 8% return at the same place where I've been getting an 8% return for years, you can make a loan to a long standing real estate company for their property rehabs and other operations. This might really help you out. You can learn more by texting FAMILY to 66866, lots of great shows coming up here at GRE to actionably build your Real Estate Wealth until next week, I'm your host. Keith Weinhold, don't quit your daydream.   Unknown Speaker  41:53   Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.   Keith Weinhold  42:21   The preceding program was brought to you by your home for wealth building, GetRichEducation.com

Research Director for California YIMBY, professional city planner and author of Arbitrary Lines, Nolan Gray, joins us to discuss how zoning impacts our communities, affordability of retail and commercial real estate. Zoning laws contributing to the affordable housing crisis and what we can do about it. Shifting from NIMBY to YIMBY mindset requires understanding benefits of growth. How zoning laws prevent new development, causing housing shortages and limiting entrepreneurship. California's statewide legalization of accessory dwelling units can be seen as a successful zoning reform example. We discuss how cities like Austin and Minneapolis have seen price stabilization by allowing for more mid-rise multi-family housing near transit and job-rich areas. Learn how to connect with local policymakers and planners to advocate for policy changes that encourage more housing supply. Resources mentioned: Show Notes: GetRichEducation.com/514 You can follow Nolan on X @mnolangray For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript:   Automatically Transcribed With Otter.ai   Keith Weinhold  00:00 Welcome to GRE. I'm your host. Keith Weinhold, if you don't take the right action, inflation will make you poorer. Then the affordable housing crisis keeps your tenant as your tenant is zoning. What's ruining American cities in keeping starter homes unaffordable or just plain extinct in some areas, how do we get more apartments and more density built today on Get Rich Education. When you want the best real estate and finance info, the modern Internet experience limits your free articles access, and it's replete with paywalls and you've got pop ups and push notifications and cookies disclaimers. Ugh. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life. See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor, and it's to the point to get the letter. It couldn't be more simple text, GRE to 66866, and when you start the free newsletter, you'll also get my one hour fast real estate course, completely free. It's called the Don't Quit Your Daydream Letter, and it wires your mind for wealth. Make sure you read it. Text GRE to 66866, text GRE to 66866.   Corey Coates  01:38 You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Keith Weinhold  01:54 Welcome to GRE from Calgary, Alberta to Tirana Albania and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education. When most investors think about inflation, they get it mostly wrong. Their strategy is inflation hedging. And you know, even if you successfully hedge inflation, you are really missing out. You've really got to get fired up about beating inflation. When did you get your first job? Like your first real job in your life? Let's say you did that when you were age 18. Well, that work that you did when you were 18, that created value for somebody else. And you could have done anything with your valuable youth, but instead, you chose to provide value by focusing your time and your energy to sweep floors or enter data into a spreadsheet for somebody else. You were paid for that work that you did. You were paid in dollars, well, if you just tried to store your finite energy that you expended for that employer into dollars, you will lose. Your value will be coerced away from you by your government that just incessantly and relentlessly debases the dollar that you earned at age 18, because they just keep printing more of them. Well, that money printer, which creates the inflation is then an extraction of your resources. Yeah, they extracted your resources, of your time, energy and ingenuity away from you when you were 18, and even the work that you do today, its value will get extracted away from you too. If you say, store dollars under your mattress, if you instead invest it so that its growth rate keeps up with inflation, well, then all you've done is hedge inflation. My point is, get upset about how the system extracts resources from you. And my other point is, don't hedge. Hedge just means that you're treading water. Position yourself to win instead, because you can when you buy income producing property with a loan, you don't just hedge against the inflation. You win three ways at the same time. You probably know that's called the inflation Triple Crown, a concept that I coined. You can watch the three part video series on net, free. It's now easier than ever to access, learn how to actually profit from inflation, not just hedge yourself against it. You can watch that, and it's friction free. There's no email address to leave or anything. Simply watch learn and maybe even be amazed at how you can do this. Those three videos are available. At getricheducation.com/inflationtriplecrown, that's sort of long, so you can also get there with getricheducation.com/itc. Again, that's getricheducation.com/itc. Before we talk with our guests about how zoning is making the affordable housing crisis, even worse, housing values and rents are really looking stable in today's environment. CoreLogic tells us that single family rents are up 3.2% annually. That's the highest rate in a year. And when it comes to prices, the NAR tells us that existing single family home prices hit a record high of $426,900 and that is an all time high. And note that that's existing homes, not new. So median existing homes are basically 427k now. And what does that really mean? Well, that is up 4.1% year over year, the real estate market continues to be it's sort of this tale of the equity rich versus the affordability challenged. Are you equity rich or are you affordability challenged? Well, the more property that you own, the more equity rich you are feeling, that you're going to feel, and oftentimes you're renting out property to the affordably challenged. Of course, the big buzz and a potential really turning point in the economy here or not, it really began about 10 days ago. That's when America reported weak jobs numbers, and that set the unemployment rate from 4.1% up to 4.3%. Citigroup and JP Morgan are now predicting half point Fed rate cuts in both September and November, not just quarter point cuts anymore. I mean, gosh, if there's one thing that we really know, it's that nobody really knows anything. Starting about two years ago, everyone thought a recession was eminent. Bloomberg even said there was a 100% chance that we'd have one by last year. Wrong, wrong, wrong. Everyone thought there would be six or seven Fed rate cuts this year. Wrong, wrong, wrong. You can't even completely count out of rate cut at the next meeting. I mean, sheesh, before that time, we still have two new CPI reports to come out and another jobs report. So, you know, over the long term, this is just how people act. They tend to get ahead of themselves and overreact, and that's really more of a stock market investor sort of thing. And yeah, despite the volatility, you know, us real estate investors are here more chill than Snoop Dogg was at the Olympics. All this fear, what it does is it pushes money into bonds. And when money goes into bonds, it makes mortgage rates go down, and they recently hit 16 month lows near 6.4% and if rates stay low, millions of additional Americans will be able to qualify to buy property that couldn't before, and that could really put more upward pressure on property prices, more than this 4.1% year over year appreciation that we're currently seeing. We know that lots of investors are buying properties like you, getting equity rich and serving the affordability challenge. In fact, 60% of Home Builders indicated that they sold homes to investors from February through April, while 40% reported that they didn't sell to investors. And investors now represent wholly 25% of both new and resale residential transactions and among builders that sold to investors in the past 90 days, 69% of them sold to mom and pop investors. Mom and pop investors, they're loosely defined as those that own one to 10 rental units. They may very well be you. Institutional investors, those that own 10 plus investment properties in this home builders definition here. Well, those institutional investors, they accounted for just 4% of investor sales nationally. So again, more home builders are selling to small real estate investors, those that own one to 10 units. Well, now in almost 10 years of doing the show here, we've never had a full discussion about zoning, and really this is the time. Okay, this ends today because we describe how it's contributing to the affordable housing crisis and what we can do about it. I mean, anymore you really can't find a brand new build 250k starter home anymore, unless maybe it's a tiny home, which then really isn't a full home, and you sacrifice your lifestyle. Well, zoning is a big reason why the Supreme Court decision that deemed zoning constitutional that occurred in 1926. Yes, that's going to turn 100 in the year 2026 that Supreme Court decision that infamously referred to apartments as parasites. Wow. But yet is some zoning good? I mean, say that you and your family have your nice, quiet, single family home on an idyllic half acre lot. Well, if that's the case, should it be allowed that Bitcoin mining facility with its loud cooling fans is built right next to you I'll ask our guest expert about that, and what about say less offensive transgressions, like a condo board that says that you can't rent your unit out. How much zoning is too much or too little? I mean, is someone just being overly sensitive if a duplex is built next to their single family home and they complain about that? So we'll get into all of that. And it really comes down to limiting this McMansionization risk type of nimbyism, not in my backyardism. That's what it is. Again, you can watch the three free videos on how you can substantially and actionably profit from inflation, not hedge, but profit from inflation. It's the inflation triple crown. Be sure to check out those three videos at getricheducation.com/itc. I learned about this week's guest through reason.com we met in person at last month's Freedom Fest in Las Vegas. He is the research director for California Yimby, yes. Yimby, not NIMBY, that is yes in my backyard. And he's a professional city planner. He's the author of the book Arbitrary Lines, how zoning broke the American city and how to fix it. Welcome to GRE. Nolan Gray,   Nolan Gray  12:24 thanks so much, Keith. It's a pleasure to be with you, Nolan,   Keith Weinhold  12:26 you wrote one article for reason.com with such an interesting title, five words, Abolish Zoning-All of it, you're pretty emphatic there at what you'd like to have happen before we discuss that, why don't you tell us in your words what zoning is?   Nolan Gray  12:44 So for the past 100 years, America's cities have been running a grand experiment and how they're governed. Essentially, what we've done, beginning in the 1920s is we said for every single parcel in the city, we're going to assign an allowed use. So most people, if you've played Sim City, you know this might be residential, commercial, industrial, but it goes into so much more detail than that. Different types of residential might be allowed in different parts of the city, commercial, etc, and the vast majority of most American cities, the only form of residential that's allowed is a detached, single family home, right? So that's one half of it, the second half of what zoning is doing, it's placing arbitrary density limits. So the amount of actual housing or amount of floor area that you can build on any particular lot. And it's important to distinguish this from other forms of land use regulation, because in many cases, these rules aren't actually based on any health or safety concerns, but instead a sort of social project of engineering what a correct city should look like. And as I argue in the book and we can discuss over the course of this conversation, is I argue that these rules have actually had incredible harms for our cities and are at the root of our current housing affordability crisis.   Keith Weinhold  13:45 I think zoning initially, it began in New York City about 100 years ago.   Nolan Gray  13:50 Yeah, so New York City adopted one of the first modern zoning ordinances in 1916 a handful of other cities did so as well. So I'm coming to you from California, Berkeley, California also adopted zoning in this year. And essentially, what happened after New York City adopted it was the federal government put together what's called the standard zoning Enabling Act. They mailed that out to every single state in the country and started putting a lot of pressure on states to adopt zoning and allow local governments to adopt zoning. And then, with the rise of the Federal financial system, as part of the New Deal, housing programs. In many cases, local governments were required or strongly, strongly incentivized to adopt the zoning codes to be eligible for certain federal benefits.   Keith Weinhold  14:29 You know, maybe philosophically, one might think, Nolan, well, America stands for freedom, and I should get to do what I want with my plot of land. But if everyone can do whatever they want with their plot of land. I mean, does that mean that my neighbor then could start a sloppy hog farm, or the neighbor on the other side of me could start a battery factory with smoke stacks? So do those sort of things help make the case for zoning?   Nolan Gray  14:57  Yeah, that's a great question, you know. So before the rise of zoning. And we actually had a lot of rules for these classic nuisances, these classic externalities, things like smoke, smells, noise, or even just lots and lots of traffic generation. We had rules to say, Hey, if you want to operate certain types of uses, you need to be in a certain designated area where we're going to tolerate a much higher level of externalities. Zoning does that, but it also does so much more. And it's those other aspects that I think are ill conceived. So for example, of course, we don't want a slaughterhouse next to a single family home, but zoning might also say, Oh, by the way, you're not allowed to have a duplex next to a single family home. You're not allowed to start a home based business. You're not allowed to operate certain commercial uses out of certain strip malls in certain parts of the city. You're not allowed to build anything unless you have a certain amount of number of off street number of off street parking spaces, which can make adaptive reuse of historic properties very difficult. So I think absolutely there's a core of land use regulation that makes sense, that's focused on neighbors, not imposing costs on each other, but our current system goes so much further than that, in many ways, imposes new and unconceived costs, including increasing housing prices, limiting housing options in many of our neighborhoods, making it harder to start a business or to have neighborhoods serving retail in many of our neighborhoods.   Keith Weinhold  16:09 So perhaps zoning has just simply gone too far, and you touched on it earlier. It seems to me that about three quarters of the area of most cities have zoning restricted only to single family home building, for example, and they ban apartments completely. So maybe, as we try to find the right balance of how much zoning is right, tell us more about really the thesis of your book and why we should ban zoning completely.   Nolan Gray  16:38 Of course, we need certain regulations for externalities and nuisances, and to certain extent that can be resolved through litigation, but ideally you look for it and you say, okay, look, there are certain areas where we're going to tolerate certain nuisances and other places where we will not. But beyond that, I think so much of what our land use regulations do is actually causing harm. It's preventing property owners from using their property in ways that are not in any meaningful sense, harmful to their neighbors. It's created this context where now if you want to build just about anything in the typical American city, you have to go through multiple public hearings, you have to do an environmental report in some states, you have to get the permission of local elected officials, you have to undertake all these actions that heavily politicize every new development. And so what we get is so many of our neighborhoods and so many of our cities are locked in amber. And this is partly why, over the last few years, where we've seen a huge amount of demand flow into housing, we've simply had these extreme shortages because markets could not respond with the supply that many of our communities needed. So for example, a starter home in many US cities today might be a townhouse, it might be a two bedroom condo, it might be a single family home on a 2500 square foot lot, but those are precisely the forms of housing that in many cases, our zoning codes make illegal to build. So we're essentially saying if you can't afford at least a certain level of housing, you're not allowed to live in many parts of the community, if in the community altogether, or the same with businesses, if you want to start a small business that might not necessarily have any impact on your neighbors, you might require a special permit. You might require a hearing. You might require to attend a hearing where your competitors are going to show up and oppose your project, purely on a cynical basis. So what it's done is it's created this incredibly disruptive system that's prevented our cities from being entrepreneurial and adaptive, and I think this is the root of a lot of the problems that we're facing today.   Keith Weinhold  18:17 Oh, you really surface some good points there Nolan, when I think of over zoning, and we talk about how a lot of times you can't build anything more than a single family home, that certainly creates a lot of problems. Gentrification is sort of a bad word, kind of sprucing up community so much, raising the value so much, that one problem is that familial bonds decay when children that grew up in, say, Southern California, can no longer afford to live there, so they have to move to lower cost Las Vegas, a four to five hour drive away. Excessive gentrification. You touch that, it also harms mobility. If you want to move from Atlanta to Boston for a tech job but you can't find housing, you're not going to move there, so therefore, talent doesn't get matched up with opportunity.   Nolan Gray  19:07 That's exactly right. I mean, this is a at the national scale. This is an important piece of the puzzle, which is we've made it hardest to actually move to some of our most productive places. So as you mentioned, places like Los Angeles, San Francisco, Boston, New York City, for all their problems, these are incredibly productive places where folks can move to and get high paying jobs and other good educational opportunities, but in many cases, these are the most expensive cities in our country, and it's in no small part because of the many rules and regulations that make it so hard to build housing in those contexts. So you're exactly right. Folks actually turn down higher paying jobs or better opportunities and move to places simply because the housing is more affordable, and you pick up on a really important piece of this, which is in many cases, this is breaking apart families. So a lot of folks who are born and raised in a place like California, their parents might have been able to buy their home in the 70s or 80s or 90s, but they can't afford a home. They have no long term path to actually staying in the community. And so what you're actually seeing is neighborhoods and communities being ripped apart. If the situation in places like California has actually got to be so bad that many of the people who are in a certain sense, beneficiaries of the status quo, maybe they own their home and they're seeing the value go up and up and up. They're also saying, Oh, my children can't afford to live near me. I don't ever get to see my grandkids. The person who serves me at the hospital or at the supermarket can't afford to live here, and we're having trouble keeping folks on. The crisis got to be so bad in certain places like California that we're starting to see tremors of reform. But one of the things I like to say is, if you want to fall into a California style housing crisis, most parts of the country don't need to do anything the rules you have on the books have you moving in that trajectory, right? But if you want to remain a place where we can build more housing, where folks can buy their own home or buy small apartment buildings and start to build wealth, you have to allow for more supply to come online.   Keith Weinhold  20:42 Sure, zoning so that you can't build anything other than single family homes compounds the affordability crisis. There really just isn't any such thing as a 250k starter home anymore, anywhere.  You represent California, yimby and you live there in the state where people think of ground zero for excessive regulation and taxation and zoning too. I do read more about some zoning being relaxed in California, allowing for the building of an adu on a property, for example, to help build the density. But before you talk about some of the cracks that are actually starting to help break this down. Can you give any bad examples that are especially problematic there in your home state, Nolan?   Nolan Gray  21:27 For the past 50 or 60 years, California, has been stuck under a NIMBY paradigm, not in my backyard, right? Every single new project is politically contentious, has to undertake an environmental report, has to undergo multiple public reviews, it takes years and years to get a permit, and that's if the housing is legal to build at all. As you know, in so many parts of California, there's very little to no new construction happening, and that's because of the rules on the books that make it so hard to build. To the extent that we allow new housing to be built, we have a whole bunch of mandates that force the housing to be a lot more expensive, and even if all that pencils again, it can take two years to get fully entitled in a permit. And so of course, the only housing that actually ends up getting built is quite expensive. And some folks say, Well, if we allow new housing to be built in California, it's all expensive. Well, yes, if you only allow a trickle of new housing in a very expensive context, of course the new housing is going to be expensive. But if you look to places like Texas and Florida, for example, that build lots and lots of new housing and don't have all of these costly mandates, they actually can build a lot of new housing, and actually can keep prices relatively under control and create that new supply of what we call missing middle, low rise housing. So as you mentioned, the tide, I think, is turning in California. The silver lining of things getting so bad is that the culture is shifting. And what we've seen is the emergence of this new yimby movement, or yes, in my backyard. And these are folks are saying, hey, not only is not building more, not this horrible threat to my community, but it's actually this enriching opportunity. It's good to have a growing, healthy, affordable community where folks are building, folks are able to move to high opportunity jobs, and folks are able to have choice in the neighborhood they live in.   Keith Weinhold  22:55 We're talking about zoning and how that's made the affordable housing crisis worse in the United States with California, yimbys, Nolan, gray Nolan. Tell us more about just the exact sorts of codes that are problematic. We touched on apartment building bans, but I think we're also looking at things like off street parking requirements. You need to have so many off street parking spaces before you can build. Otherwise you can't build. You need to have a minimum lot size of a half acre or a quarter acre in order to build here. So can you talk more specifically about just some of those exact problems on the tactical level that are compounding here?   Nolan Gray  23:34 Yeah, that's exactly right. So where are the housings illegal to build altogether. In many cases, there are a whole bunch of rules that increase the price of that housing. So in urban context, for example, where you might want to be building apartments, many cases, you might have parking requirements that say, Well, you have to have two parking spaces per unit or one parking space per bedroom. In many cases, that's what consumers might demand, and you would have to build that to lease out those units or to sell those condos. But if you're building in a context where you might be near a transit line, or you might be near a university campus, or you might be near a major job center, many of your renters might say, hey, actually, I would prefer to have a more affordable rental or a more affordable condo, because we know that there's no such thing as free parking. You know, if it requires a structure or excavation work, parking can easily add $50,000 to the price of a new unit, and so some consumers might want to pay for that, eat that cost, have a parking space. But many consumers, when we relax these rules and say, Hey, developers, you have the incentives and the local knowledge needed to decide how much parking to build. In many cases, we find that they share parking with other uses, so commercial during the day and residential at night, or they allow renters to opt into parking and to pay for parking, but what you get for many households is a cheaper unit. Now another rule that you mentioned, which is very important, is minimum loss size rules. This is certainly a lot more relevant. More relevant and suburban and rural context. But what we say is, if you want to be able to have a single family home, you have to be able to afford at least a certain amount of land. Now, when if you have a context where you don't have water and sewer installed, and you're operating on septic and well water, you do need larger lots as a matter of public health, but in most suburban context, these rules essentially serve no function except to increase the price of housing and the ability to determine what type of housing can be built where is the ability to determine who gets to live where. So if we say, well, you're not allowed to live in this neighborhood unless you can afford a 10,000 square foot lot or a 20,000 square foot lot, what we're essentially doing in 2024 where land is a major factor in affordability, is we're saying that a whole bunch of middle working class households are not allowed to live in these neighborhoods, or they're not allowed to ever become homeowners and start building wealth in the same way that past generations did. And you look at places like Houston, for example, where they don't have zoning, but they have a lot of zoning-like rules. In 1998 they reduced their minimum lot sizes from 5000 square feet citywide to 1400 square feet citywide. And what this did was this kicked off a townhouse and small lot single family home building boom that has helped to keep cities like Houston affordable a whole new supply of starter homes that again, offered that first step on the ladder of home ownership and wealth building.   Keith Weinhold  25:52 Over the decades, home prices have outpaced incomes. There are a few reasons for that. One of them is inflation, with wages not keeping up with the real rate of inflation, but the other are barriers to development. We're talking more about that with Nolan gray. When we come back, you're listening to Get Rich Education. I'm your host, Keith Weinhold. Hey, you can get your mortgage loans at the same place where I get mine at Ridge Lending Group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. 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Earn 8% hundreds of others are text FAMILY to 66866, learn more about Freedom Family Investments, Liquidity Fund, on your journey to financial freedom through passive income. Text, FAMILY to 66866.     Robert Kiyosaki  27:50 This is our Rich Dad, Poor Dad author, Robert Kiyosaki. Listen to Get Rich Education with Keith Weinhold, and the reason I respect Keith, he's a very strong, smart, bright young man.   Keith Weinhold  28:14 Welcome back to Get Rich Education . We're talking with California, yimbys Nolan gray about zoning and how these barriers to development are compounding the affordable housing crisis, and there sure are a number of barriers to multi family production. I really think that's what wild it comes down to. You touched on it earlier, and it's something that I spoke about with our audience a month or two ago. Nolan, and that is, mmm, multi families, missing middle these two to four unit properties, duplexes to fourplexes, where they're only constructing about 40% as many of those here in recent years than they did 20 to 30 years ago. The way I think of it is when you lift barriers to multifamily production, of course, you incentivize builders. If a developer buys an acre of land for, say, $90,000 and they had planned to build one unit on that All right? Well, there's one set of inputs in income that a developer can look at. But instead, if you allow them to go from building one unit on this plot of land to two units on it, it increases their profit potential, and it incentivizes developers from that side as well.   Nolan Gray  29:23 Yeah, absolutely. I mean, so there's been some great work by some friends over at the American Enterprise Institute. What they've done is they've created a nationwide map of mcmassionization risk. So when we have these conversations, we say, hey, let's allow for a range of housing typologies in more neighborhoods, duplexes, triplexes, small, low rise, multi family buildings, townhouses, the types of things that were commonly built in a range of neighborhoods before the rise of zoning. Every city in America has a neighborhood like this. That's a mixture of housing typologies. It would be illegal to build that today, but in many cases, we subject it to preservation requirements because we value it so much that we want to keep it. In any case, what happens when you don't allow that type of gradual incremental infill that keeps our communities affordable. What you get instead is the existing single family homes are converted into much larger, much more expensive single family homes. Now, again, there's nothing wrong with that. Many people might want to buy a smaller 19 fizzies bungalow and turn it into a much larger, 2500 square foot single family home, and God bless them if they want to do it. But what we have is rules on the books that say housing can only get more expensive, it can never get more affordable, or you can never unlock the wealth that's tied up in your land by building an adu or by building a duplex, or by creating more housing options for a range of households. And so that's really, really key. You know, the choice is not between, do we want our communities to change or not? The question is, do we want our communities to remain affordable and maybe change and have some more buildings built and more growth and more development. Or do we want our communities to change in the sense of they become more expensive? Folks retire and they move away, the neighborhood gradually becomes significantly more exclusionary, and young folks who moved grew up in the community can no longer afford to stay. That's the option facing many of our communities. And I think the yimby response to this is more housing construction is good and it's healthy and it's part of a thriving community.   Keith Weinhold  31:02 Yeah, Nolan, when we come at this from the familial perspective, like I brought up earlier, it seems like the more zoning there is, the more it benefits seniors and incumbents, the more it benefits the silent generation, the baby boomer generation, and maybe Gen Xers, and it disadvantages millennials and Gen Zers that really don't have their place yet.   Nolan Gray  31:24 Yeah, you know, it's tough. I would say it even hurts seniors, right? I mean, if they want their young adult children to be able to live near them, or, many cases, seniors like the option to be able to build an accessory dwelling unit in their backyard and maybe rent that out to friends or family, or maybe even you move into the adu and allow young adult children to move into the primary residence, or even just rent it out and have an additional source of income to supplement fixed incomes. There's reasons why folks, I think, at all different stages of their life, benefit for more flexibility in the rules that govern what can be built.   Keith Weinhold  31:52  Psychologically,  how do we turn one's mindset from a NIMBY mindset to a yimby mindset? I mean, if someone's got their single family ranch home that they want to live in in their senior years, and they want to see its value appreciate, so they don't want duplexes and fourplexes built next to them, rather than them saying no to turn them into saying yes. I mean, how do you get those people to understand that? Well, like this is the way for the next generation, for you to be able to live near your children and grandchildren?   Nolan Gray  32:21 Yeah, that's a great point. You know, I think when you go to these public hearings around projects, you hear relentlessly about the cost of new development, right? Folks speculating about traffic and runoff and other factors parking. We get that perspective. We get bombarded with that perspective. But what we don't get is the alternative perspective of the benefits of a community, remaining relatively affordable, remaining a place where teachers and nurses and firefighters can still afford to be able to own a home and live places, allowing for the kids who grew up in a neighborhood or a city to remain there. And in fact, even just the selfish appeal to the homeowner, there's not actually any evidence that new development happening around you necessarily reduces the price of your single family home, and in some cases, it could actually signal to the market, hey, there's actually development potential on this so when you do decide to maybe sell and move on, your land is potentially going to be more valuable because it has more development potential than it might under a strict exclusionary zoning scenario. So you know, of course, you try to make the altruistic case to people. Hey, think about future generations. Think about folks who maybe want to move to this community or stay in this community, but aren't going to be able to if we don't build housing. But even so, I think there's selfish reasons. If you want to have somebody who's going to check you out at the supermarket or serve you at a restaurant or be a home care nurse, eventually you got to have housing for folks like that. In many cases, new development happening around you is going to increase your land value. Now I would just try the rage of appeals and work people through it. And in many cases, you know, I think people will understand, yeah, okay, I understand we got to have some growth. They might have a perspective on what it should look like, and that's okay. But as long as we can get some consensus that we got to have some growth to accommodate demand the form it takes, we can have a healthy discussion over.   Keith Weinhold  33:57 Yeah, real community is the integration of all different types of people, and not school teachers living an hour away where they need to make a two hour round trip drive every day. Well, Nolan, as we're winding down here, can you give us any more successful zoning reform examples that maybe other communities can look to you touched on the success stories in Houston a bit. Are there some other ones?   Nolan Gray  34:21 Absolutely. Yeah. So one of the most successful things we've done in California has been statewide legalization of accessory dwelling units. Yeah, that's been key. That started in 2017 and that took a lot of legislation to get us to a place where we are today, but that's resulted in something like 80,00 ADU's permitted, since 2017. That's powerful stuff, right? That's 80,000 households that might have a home, or might be able to rent out a unit to young adult child or an aging parent. Really, really powerful. So I would suggest that folks look into that. That's the lowest of the low hanging fruit. Empower homeowners to add additional units to their properties, and by the way, we also allow you use to be added to multifamily properties, and we're seeing a lot of that happen as well. At other contexts, many cities, dozens of cities across the country. Have removed their minimum parking requirements, acknowledging that, hey, this is a huge cost that we're imposing on projects, developers who are close to consumers, who have, they have the incentives and local knowledge to get this question right. Let them decide. So that's been, I think, a big success. You know, certain cities like Austin and Minneapolis, for example, they've actually sort of kept their markets back under control amid all the chaos of the pandemic real estate market fluctuations by allowing for a lot more mid rise multi family on their commercial corridors and in Job rich areas and in places near transit, that's where we have a huge shortage, is these studios and one bedrooms. So young professionals who, if they can't find that unit, they're going to go bid up the price of a two or three bedroom unit, they're going to roommate up and be living in potentially overcrowded conditions. So Austin, Minneapolis, we, relative to peers, they built a lot of housing and have seen prices stabilize as a result. So there's a lot of different success stories, you know, I would say, if you're at all interested in this, talk to your neighbors about this issue. See what sorts of solutions might make sense for your community. You know, in a suburban or a rural community, ADUs or minimum loss size reform might make sense. And an urban community, removing your parking mandates, allowing for more multifamily, allowing for missing middle, make more sense.   Keith Weinhold  36:06 There sure are some encouraging signs. There was there any last thing that a person should know, especially a real estate investor type audience that's interested in buying a property and renting it out to a tenant for the production of income? Is there anything that our group really ought to know about zoning and the direction that things are moving, what to look for and what to be careful of?   Nolan Gray  36:28 Well, as your audience probably knows, you know that first essential step for your mom and pop local real estate investor is often a duplex, a triplex, a four Plex, historically, that was an absolutely essential source of middle class wealth building. Yeah, right. And you can see these in so many historic neighborhoods. And to the extent that we've made those exact typologies so incredibly hard to build, we've cut off this very valuable source of democratic, decentralized wealth building that we need to actually encourage as real estate investors and professionals, in many cases, you're an authority figure with your local policymakers and your local planners, and you can say to them, Hey, here's my perspective on what's happening in the market. You know, we have a shortage of a certain type of small scale multifamily or making this case. You know, I talked to a lot of elected officials, and when I say starter home, I think they still think of the bungalow on the 5000 square foot lot with the two car garage. But a starter home in 2024 might be a townhouse, two bedroom condo, a small lot, single family home. These are the types of stories that real estate investors and professionals are trusted advocates on, and you can make that case and explain to local policymakers. Hey, here's the change that we need or explaining. Hey, I wanted to add an additional unit to a property that I own, or I wanted to redevelop a property I own to add a lot more housing. And these were the barriers that I faced that's incredibly valuable information for your local policymakers and planners. And I would say, you know, look around many US, cities and states now have very active yimby or, Yes, in my backyard groups. Go connect up with them. You could be a valuable, trusted expert for them, somebody that they can learn more about the situation with real estate markets, and they can be more effective advocates for policy that I think a lot of us would like to see.   Keith Weinhold  37:58 And when it comes to changing NIMBY people to yimby people, and we look at esthetics and adu in the back, that really doesn't change aesthetics on the street front. And I've seen very smart, careful designs of duplexes, triplexes and fourplexes that really look just like single family homes from the Street View level. So there really are some ways around this. You've given us some really good ideas today. Nolan, hey, well, someone wants to learn more about you and your work and zoning. What's the best way for them to do that?   Nolan Gray  38:30 Well, I'm on the platform formerly known as Twitter. I'm @mnolangray, M, N, O, L, E, N, G, R, A, y, so feel free to find me there and reach out. And I have a book Arbitrary Lines, how zoning broke the American city and how to fix it. Check that out. If you're at all interested in this, always reach out. Love to hear from folks. Thanks so much for having me, by the way.   Keith Weinhold  38:50 All right, well, I hope our audience didn't zone out. It's been great. Chat with you. Nolan, thanks so much for coming on to the show. Yeah, a thought provoking discussion with California yimbys Nolan Gray there it's essentially illegal to build affordable housing in a lot of areas with the way that these zoning laws are written, allowing for more dense building that can limit this ugly urban sprawl, and this makes me think about an Instagram account that I follow. It's called how cars ruined our cities, or some names similar to that. It shows, for example, a picture of how a highway interchange in sprawling Houston has an area so large that you could fit an entire Italian town inside of it. And these sprawl problems compound when a lot size must be, say, at least a quarter acre or a half acre. The tide is turning toward allowing more dense building in some places like we touched on, but it's too bad that it took a. Visible housing crisis to make this happen. I mean, visible like more homeless people out on the street. It took that almost for municipalities to start doing something about all of this. Our guest has quite a following on X. Again, you can find his handle there @mnolangray on X and the image on his account cover it shows someone holding up a sign that reads, zoning kills dreams. Hmm, big thanks to the terrific Nolan gray today until next Monday, when I'll be back here to help you actionably build your Real Estate Wealth. I'm Keith Weinhold. Don't quit your Daydream.   Unknown Speaker  40:44 Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for  profit or loss. The host is operating on behalf of Get Rich Education LLC, exclusively.   Keith Weinhold  41:12 The preceding program was brought to you by your home for wealth building,  GetRichEducation.com.  

The King of Commercial Real Estate joins us to discuss office, hotels, apartments, retail, industrial and warehouse real estate. Many office building values are down 80%+. Is it headed straight to purgatory? According to Moody’s, the national office vacancy rate is 20%.  Offices have the double-whammy of higher interest rates and lower demand. Learn how feasible office to residential conversions are. For two years now, momentum has swung from Airbnbs to hotels. More apartment syndications will blow up from forthcoming interest rate resets. Commercial real estate often has higher prices than residential. Learn from our guest, Dolf de Roos, on creative ways to make low down payments.  Learn how to vet commercial tenants. We discuss adding carports to residential RE. Rich people are often vilified. They’re called “filthy rich” or “stinking rich”. Resources mentioned: Attend Dolf’s free live training: www.DolfLive.com For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation   Complete episode transcript:   Automatically Transcribed With Podsqueeze   Keith Weinhold 00:00:01  Welcome to GRE! I'm your host, Keith Weinhold. There are many commercial real estate sectors. Large apartments, office, hotel, hospitality, retail, warehouse, industrial. Well, what's thriving? What's been beaten up so bad and is never coming back? And what's in a dip that's ripe for opportunity? Also creative deal structuring if you don't have a lot of money. It's the debut of the King of Commercial real estate here today and get rich education. When you want the best real estate and finance info, the modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are at no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple.   Keith Weinhold 00:01:13  Text gray to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free. It's called the Don't Quit Your Daydream letter and it wires your mind for wealth. Make sure you read it. Text gray to 66866. Text gray 266866.   Corey Coates 00:01:41  You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold 00:01:58  What does your read? From Tuscarora, Pennsylvania, to Tuscaloosa, Alabama, and across 188 nations worldwide. I'm Keith Whitehill, and you're listening to get Rich education. Today's guest, the king of commercial real estate, is talented, dynamic, global, articulate, has both a wide range of knowledge and an expansive palette of creative strategies in both commercial and residential, where you can buy with little out of pocket. And he's going to share that with us today. That's coming up here shortly. Now, when we think about residential real estate, of course, that is a really wide world in itself.   Keith Weinhold 00:02:38  From condos to single family homes to tiny studio apartments. You could also divide it into short term and mid-term and long term rentals. And then you could also parse it by all of the geographic markets. Well, of course, the commercial real estate world has a ton of segments too, one of which is office, which I want to talk about because it's probably been the most downtrodden and beleaguered since 2020. But there are still some things that are misunderstood within office and even dividing things up that much. Let's take care not to broad brush stroke office real estate itself some smaller segments of office might be in decent shape today. Other office segments are in real trouble. Like we're talking about tall concrete and glass, office towers and a lot of business parks, too. Yeah, business park, sort of a campus like areas, like maybe what the comedy The Office had. He had Dunder Mifflin was in a business park.   Steve Carell 00:03:43  I'm just helping you invest in your future, my friend.   Oscar Nunez 00:03:46  It sounds like a get rich quick scheme.   Steve Carell 00:03:48  Yes. Thank you. You will get rich quick. We all will.   Keith Weinhold 00:03:52  yeah. I guess that's what Steve Carell's character. What Michael Scott from The Office says about prudent investing. Let's talk about office real estate and how that intersects with the housing market. And really a lot of this comes down to the office vacancy rate. Moody's tells us that 1 in 5 office spaces in this economy are empty. And that is the highest ever. And a lot of people think that it's going to go higher right now. Dayton, Ohio is the highest in the nation at 28%. These are office vacancy rates. Charleston, West Virginia's 27. Tulsa, Oklahoma 26. And Houston, Dallas and Austin are all in the top ten for the worst office vacancy rates. Now, a lot of city officials, they want to turn that into housing, and they want government funding in order to make that transition happen from office to residential. This is most attractive to cities if you can partially convert a building to have housing on upper floors, and then you just maintain some offices on lower floors and see that mix right there, that makes for a vibrant, lively downtown community, because that way you don't have downtowns that go quiet at 5:00.   Keith Weinhold 00:05:10  But a lot of these renovations, they just aren't that feasible. They call them ritzy conversions. That's kind of what this is known as. So office to residential. I mean that means you often got to deal with huge floor plates, overhaul mechanical systems, and you've even got to consider things like the fact that windows don't open in office buildings. And they've often got to for resin conversions. Well, with this prolonged high vacancy in offices. Well, where do these people that would have been in offices spend their time instead? Well, of course at home in their residential real estate. And oftentimes it is a one for one. You have one less person occupying an office for lots of that waking day, and that means one more person occupying their home. Well, that's one reason that people are increasingly willing to spend and pay more for homes because they're spending more time than ever there. And ever since the work from home movement and zoom from home movement, if you will, since that became commonplace for urban workers coming off the pandemic, you soon saw the hashtag auto.   Keith Weinhold 00:06:27  The return to office movement that began is where you've got to come into the office 2 to 3 days a week, and then a lot of companies try to ramp it up to 4 to 5 days per week. Some companies even said, yeah, come on in here. You've got to in order to be eligible for promotions. Well, a lot of people don't want to come into the office. We found that out now, especially younger workers. In fact. Did you ever hear of the term coffee bagging? Yes. Some workers are trying to game the system. Coffee bagging. That is the art of returning to the office to a quick hit. Just have a quick hit. You only badge in, get coffee, chat and peace out of there. Well, more people are doing this or they're staying at home than what you're often led to believe. So despite the RTL movement that you hear about the share of employed persons that work their average day from home, last year it rose to 35%, up from 34%, and that's per the BLS.   Keith Weinhold 00:07:31  Well, that's a little interesting to know, but it all comes down to that office vacancy rate, which is, like I said, a stubbornly high all time record 20% nationally, and it could go higher. If you're going to invest in office real estate today, I mean, you've really got to have some insider knowledge and invest smart.   Donald Trump 00:07:55  Did you use the word smart? so you said you went to Delaware State, but you forgot the name of your college. You didn't go to Delaware State. You graduated either the lowest or almost the lowest in your class. Don't ever use the word smart with me. Don't ever use that word. Oh, give me a break. Because you know what? There's nothing smart about you, Joe.   Keith Weinhold 00:08:16  oh, dear. Oh, one of those two men is our current president, and the other could be our next president. Oh, well, love him or hate him, I guess the Trump. Hey, he is the Art of the deal author. And when you think about the Trump name, you should think about seeing those letters on tall office buildings in hotels coming up on the show here in future weeks.   Keith Weinhold 00:08:39  We are stacked with great guests an NFL All-Pro, the president of the Mississippi Institute, the return of the tax free wealth author Tom Wheelwright, and also the incomparable financial firepower of Garrett Gunderson. That's all coming up here in future shows. Let's talk to the king of commercial real estate. This week's guest is a former high tech engineer turned real estate mogul and New York Times best selling author of the book Real Estate Riches. He is globally renowned for his ginormous real estate ventures and his mentorship. But his approach to real estate isn't just transactional, it's about strategic creativity and leveraging property investment for financial independence. Known as the King of commercial real estate. Hey, welcome here for your great debut. Joining us from Malta today. It stopped the roost.   Dolf de Roos 00:09:38  Thank you very much. It's my absolute pleasure to be here.   Keith Weinhold 00:09:41  Oh it's great to finally speak here on the show. And I know that a good segment of our international audience has been anticipating this episode. And often we think about commercial real estate today. Problems come to mind immediately, like the large apartment space with interest rates blowing things up over there, and then the office sector, which just seems to be dying and never coming back.   Keith Weinhold 00:10:03  So first of all, why don't you give us an overview on how various commercial sectors are doing today?   Dolf de Roos 00:10:09  There's always the things that you see on the surface, what you read in the newspapers and what you lead yourself to believe just on the sheer balance of probability. And then there's the reality of what is truly going on. And I'm always amused at the chasm between them. There's a big difference. And in fact, your ability to do well in real estate is largely dependent on the arbitrage between the markets perception of where things are at and the reality. Now, if we all follow the trends, you know, real estate doesn't go up linearly as mathematicians would say. It goes up in fits and starts with each peak a bit higher than the previous peak and each trough a bit higher than the previous trough. But in addition to that, real estate markets always overshoot so that when things are going well, when the public perception is that things are going well, Interest rates are low. There's good capital growth.   Dolf de Roos 00:10:59  People think it's going to go on forever. It will never end and they pay way too much for properties. We have the greater fool theory where no matter how big a fool you are to pay too much for a property, it doesn't matter, because next year they'll be an even bigger fool to pay even more for it. So everyone jumps into the market, overshoots, and then there's a strong correction. A bit like the 2008 GFC. It was on the cards. It was. The writing was on the wall, as they say, and then it corrects. But instead of correcting back to where it should be, it overshoots on the downside as well. And in Phoenix, where I'm based, at one stage we had 90,000 homes into foreclosure simultaneously, and they were selling them on the courthouse steps at the rate of one every 56 seconds for initially 20,020 5000, and people thought, why are these fools buying these properties? The market's crashed. It will never recover. And yet when you live long enough, which unfortunately I have to say, I've done now like I've been around a while, I've seen a few cycles.   Dolf de Roos 00:11:59  No, I'm serious though, Keith, because when you experience your first downturn, you think it's the end of the world. But when you've been through three and you've seen that despite all the bad press and saying it's doomsday to never recover, it not only recovers, but it actually far exceeds where it was before it crashed last time, then you know that the time to take action is when everyone else is panicking. You have to be countercyclical when everyone else is jumping on the bandwagon and paying too much for properties. That's when you should get on a plane and read some good books on a beach somewhere, preferably in a foreign location. Why a foreign location and being disloyal to the home country? Note just explore something. Expand your mind. And you know, I know I'm waving around a bit from topic to topic, but one of the great things about reading books on foreign beaches is that you get to see different ideas of real estate that you can bring back home. So when you bring back these ideas that can help correct the market, then you almost you don't wish for a crash, but you think when it happens, well, there's got to be some good aspect to this and you can actually find some stunning deals from people who are too scared to think it might recover well.   Keith Weinhold 00:13:05  So those places where you might find stunning deals are in some of those commercial real estate sectors that are suffering today. Tell us a bit more about some of those sectors in their health. We're talking about five plus in the department's office, hotel, hospitality, retail, warehouse, industrial. Let us know what's going on with some of those sectors.   Dolf de Roos 00:13:27  In a state of flux. And it's a very good question. Let's talk about hotels for a moment. When the pandemic set in, we were all told to do this thing called to be socially distant. We've almost blissfully forgotten that expression. But social distancing was the thing. So hotels fell out of favor because you're in a foyer with a concierge and a reception area and hundreds of other hotel guests checking in and checking out. So Airbnbs became very popular and the value of hotels plummeted. Many couldn't meet their mortgage obligations because their revenue from room sales did not cover their own loan commitments, so they were being sold off at ridiculously cheap prices. I know of one hotel in the Atlanta area, admittedly a very old hotel.   Dolf de Roos 00:14:09  It was converted into a storage facility. When you think about it, hotels are all compartmentalized and have good little cubicles for story. Yeah, and Airbnbs took off. And we all know people, and people wrote books about it and had courses on it. I know in Phoenix, one statistic in a 12 month period from July 22nd to July 23rd, the availability of Airbnb's went up by 23% and all would have been good and well if demand had kept on escalating. But as the pandemic sort of wound down and people realized they did need to be socially distant anymore. And what's more, when you went to an Airbnb, what you found is that there was a long laundry list of items you had to do, but the sheets through the washing machine no more than one bed at a time. Well, four beds worth of sheets is going to take you three hours and do this and do that. People thought hotels are much easier, so there was a massive swing by tenants of rooms back to hotels, and the value of hotels went back up.   Dolf de Roos 00:15:04  And in the meantime, the value of houses used as Airbnb's, it sort of peaked a bit and it's going down rapidly. How far it will go down? I'm not so sure. So my point is, with hotels in a very short period of time, like three years, the values plummeted and then they came back up again. Office space is suffering a bit of a longer cycle downturn. It's fair to say, I think, that offices are in a very dire straits. Something like $785 billion of mortgages secured against commercial office space that is coming up for renewal, and there's not enough revenue to cover them. There is a pair of hotels on Union Square in San Francisco, for instance, the park Renaissance and the Renaissance itself. They had $745 million of mortgage funding, and the operators of those hotels handed the keys back to the bank and said, we can't make this cash flow. There's a lot of commercial space that is being sold off a ridiculously cheap prices. So there are two ways of looking at this, Keith.   Dolf de Roos 00:16:02  One is if you happen to own office space right now, unless it's boutique space, I've got quite a bit of office space, but it's a very much a boutique classification, and they'll always be demand for boutique office space from unique operators like interior decorators and people like that. But for the general concrete and glass office towers, demand for that has plummeted. The values have gone down and I know of one building in Chicago. It's sold for 315 million. It's on the market at 60 and dropping, and there's not a buyer in sight. And you might say, well, it's got to be a bargain. But no. Here's the challenge. With commercial real estate. Unlike residential, residential is valued on the basis of comps. We all know that if you have a four bedroom, three bathroom home, certain age, certain size, certain condition in a certain suburb, then and if it's sold for, say, $480,000, then a similar sized and aged house up the road, down the street around the corner is going to sell for about the same amount.   Dolf de Roos 00:17:02  Whether it's tenanted or not, that doesn't even matter. But when it comes to commercial real estate, the value of a commercial property is literally a multiple of its rental income. Technically, is the rental income divided by the cap rate? Which cap rate is short for capitalization rate? It literally means the rate at which you capitalize the rental to arrive at the value. So if we can figure out a way of doubling the rental, then we've doubled the value. And by the same token, of course, if you lose the tenant and you have your rental, then you have the value. And that's why the value of so many of these commercial office buildings has plummeted, because there are no tenants for them.   Keith Weinhold 00:17:40  Yeah, well, there's a lot there. And back to the Airbnb thing. Yeah. About two years ago, there seemed to be this well well-documented Airbnb bust. And my gosh, I personally had awful Airbnb experiences recently, including checking into an Airbnb where it hadn't been turned over, it hadn't been cleaned yet, and that I can never unsee what I saw.   Keith Weinhold 00:18:00  Then I had to stay there. That was really rough. I think what you're getting at here is once you hit a bottom, that's where the opportunity is. So there are going to be some of those opportunities somewhere in the commercial real estate sector, commercial real estate syndicators, many of them imploded from high rates. So when we talk about finding the bottom link with these large apartment buildings, how many more apartment syndicator implosions do we expect from the higher mortgage rates?   Dolf de Roos 00:18:27  Many. I'm indifferent to it. I'm not saying I don't have sympathy for the people who own them, and I'm not gleeful for those who buy a bargain. But here's why I'm indifferent. I think it's fair to say that I've made most of my money in real estate by finding either vacant or semi vacant buildings, and that goes against the grain. Most people think they need to look for a building with a good tenant, because it's the tenant that pays the rent, and that's not incorrect. That's accurate. And then if you've got a building that you buy and say 8% return and your mortgage interest is 7%, hopefully that 1% margin covers your property taxes and your insurance and your maintenance.   Dolf de Roos 00:19:05  And then you just wait for time to do this thing where slowly, over time, the rents creep up and the property value creeps up. I don't have the luxury of waiting that long, and I never had the cash to buy properties like that, so I literally sought out semi vacant or even vacant buildings. Now, I didn't buy them because if I bought a vacant building, I still have to pay property tax and insurance. But what I would do before buying it is see if I can find a tenant, and I can give you a specific example. I came across a vacant building that was a funeral parlor, and most people don't like to think of what goes on in a funeral parlor. But they have these stainless steel trays where they put the product of their business on, and they insert these hollow stainless steel tubes and suck up the blood and replace it with formaldehyde and all kinds of things we don't want to think about.   Keith Weinhold 00:19:52  That's even worse than my Airbnb experience.   Dolf de Roos 00:19:55  No one knew what to do with it.   Dolf de Roos 00:19:57  So I found it. And it was being sold for a song because it was vacant. And what I did is I employed someone at the then going hourly rate of $8 an hour to phone every funeral director, going further and further from this place until she found someone who said, oh my gosh, I've always wanted to operate there. And I was just open and honest. And I said, well, there's a funeral parlour premise for sale. Go and check it out if you want to buy it, buy it. Why would I offer it to him, Keith, when I really wanted to buy it? Because the last thing I want is a tenant to be gracious. The fact that the only reason he's paying me rent is that I'd beat him to it. But I knew that in all probability, he didn't want to buy real estate. That's not his gig. And he said, no, I don't have the money or the inclination he had to look at. He said, listen, I love it.   Dolf de Roos 00:20:40  I want to operate there. What would it take? And I said, well, if you're willing to sign up a heads of agreement, an alloy, we're subject to me buying it. You will become the tenant, then I'll have a crack at buying it. And his response was, were not so fast, I need you. I'll only do it if you give me a long term lease. Well, that's exactly what I want. So I'd found a tenant by adding the tenant to this otherwise vacant building. The value of it doubled. And when I went to the bank to apply for a mortgage, they said, well, we're only going to give you 50%. Well, guess what? 50% of double the value was the purchase price. They lent me all but the last $10,000 to buy that property. So the magic sauce here is finding the tenant. Could anyone else have gone through at the time? This is before the internet, the Yellow pages and phoned every funeral director going for. Of course they could, but no one thought of doing it.   Dolf de Roos 00:21:33  And that comes to part of what you had in your title, that this is all about creative real estate. The thing I love about real estate is it's about the only investment vehicle where you can actually use your creativity. I mean, if you're a really creative person and you buy a portfolio of stock, IBM stock and Microsoft and biotech, what.   Keith Weinhold 00:21:53  Can you do to improve it?   Dolf de Roos 00:21:54  Can you deploy your creativity? How can you deploy what you've seen in your travels to make your stock portfolio worth more? Zero. Absolutely nothing. Not with stocks, not with bonds, not with futures. Options, certificates of deposit, Treasury bills, nothing. But with real estate, the sky's the limit, I love that.   Keith Weinhold 00:22:13  Well, you talked about getting into commercial real estate sectors with little or none of your own money. That's part of the creativity. A lot of our audience is interested in investing in residential property, a single family home. You might still be able to get one for 150 K now, 20 to 25% down payment on that 30 K plus.   Keith Weinhold 00:22:34  I mean, that's still pretty manageable for a lot of people, but many are somewhat intimidated by commercial real estate. I think one of the first things they think about is how do I come up with the money? So we talk about creativity in funding that down payment. Tell us more about some good strategies for doing that, and kind of overcoming that daunting feeling of higher commercial real estate prices.   Dolf de Roos 00:22:52  You're absolutely right. Most people think commercial real estate is more expensive, where you might be able to buy a home in a cheaper market, a cheaper price point at one 20,000, say the commercial property is going to be half a million, or if homes are $1 million and a fancy suburb and the commercial properties at 3 million. That's true, but not all properties are like that. My smallest commercial building was a little corner shop. It was a wet fish supply shop, so they sold fish but not cooked fish. And it was a horrible looking thing. But I paid all of $79,000 for it and it's been rented on a full commercial lease from the day I bought it, so it needn't be liked.   Dolf de Roos 00:23:31  In fact, we tend to only notice the big ones for the For Sale sign. You're in the downtown of some city and you see a big one of the big firms, CB Richard Ellis or Jones Lang LaSalle or something for lease or for sale sign, that's for sure. And you don't tend to notice the small ones. The trick in finding good value real estate. Be it commercial or residential, again, has to do with the fact that it's not an automated market like the stock market. You buy stocks through computers on a share market. Everyone pays the same price. But when it comes to real estate, the seller may choose to go through a real estate agency. It might be a national one, and then it's vetted by many agents. But we have a thing known as fizzbuzz or for sale by owner. And why would a seller choose to circumvent a real estate agent? Well, probably because he's hoping to save on the 6% commission. By the way, that's the highest in the world.   Dolf de Roos 00:24:21  And the rest of the orders? 2 or 1 and a half or 3%, it soon to be lowered in the States. But even so, they want to save on that commission and more sinisterly. Perhaps some of them think, why should I entrust my property, the sale of my property to some snooty, nosed 22 year old kid just out of school who doesn't even live in the suburb. I have lived here for 59 years or whatever, he says. And I know what it's worth. And in pricing it, he's either way too high or way too low. Now, if he's way too high, you and I aren't going to buy it because it's just way too high. We know that. But what if it's 100,000 below market value? It happens every day of the week, and if we stumble across one of those, then we might just make 100,000 that day. Not in terms of cash, not in terms of folding hard cash, but in terms of equity. And we could sell it the next day for a hundred thousand more.   Dolf de Roos 00:25:08  But we don't because we want to invest in it. And these things are real key. These happen. That's why I encourage people don't take the same route home from work every day. If you've finished work, get in your car, take a different route, keep your eyes peeled, look for visible signs of a sale by owner, or look for abandoned properties, ones where the grass is a bit high in this litter blown up against the fence and the windows are a bit grimy, and then do some research to find out who owns it.   Keith Weinhold 00:25:34  Sometimes the greater the crisis, the greater the opportunity. But often we talk about, say, if one has overcome the money in the down payment thing, you know, in effect, when we go ahead and get a loan, whatever sector we're investing in, the bank underwrites either us or the bank underwrites the property. But in a sense, us as the investor is we're sort of underwriting the tenant that's in there. Now, when we buy a residential building, you know, we can look at the tennis credit scores and their work history.   Keith Weinhold 00:26:00  You know, we know that the residential tenant is going to pay us to live there. We have a good sense of faith about that. But when it comes to commercial real estate investing, say, I want to buy a plaza with eight businesses in it. I think a lot of investors feel overwhelmed because they're like, oh my gosh, like, how do I study the validity of these eight businesses? And how do I know that they're going to be solvent and sustainable going forward? And do I need to understand all this, or can you speak to that and help break that down for us a bit? Basically the investor underwriting the tenant.   Dolf de Roos 00:26:31  That's all true. And yet there isn't that much to learn. Because if we take your imaginary shopping plaza with eight tenants. Yeah, I think we'd all agree that if one of those tenants was a Gloria Bean coffee and tea or whatever it's called, or Seattle's Best or Peet's Coffee, not to mention Starbucks, that's a global change, but one of those lesser brands.   Dolf de Roos 00:26:51  I think we would be pretty comfortable that they can pay the rent every month. And similarly, the bank underwriting that loan was like, well, a Peet's Coffee or Gloria, that they're a good tenant And, you know, just to name others at random rosters for less, that's a nationwide chain store. I think if we had them as a tenant, that would all go well. And you might get a couple of independents, but they would have a track record. They've leased those same premises for the previous eight years, and they moved there from other premises, which ended up being too small for them. That means they're expanding where they were for 12 years, things like that. Give a picture to any novice in this game to say, wow, they're probably going to be here for the long haul. And beyond that, what happens when you develop the skills to attract new tenants? You don't worry about that even because you know that when you lose a tenant, it's easy to get one lesson.   Dolf de Roos 00:27:42  I've got 101 ways of getting tenants for buildings, and I'm blown away that people don't deploy even one of them. And I'll give you an example from last week. I was with a client in the UK in Bournemouth, which is way in the south of the country, and we were looking at a commercial office building there and it had been vacant for 18 months. And I said to the agent what seems to be the trouble with getting a tenant? And he shrugged his shoulders and said, well, I don't know. It's been on the market for 18 months. And I said, has it ever occurred to you to put a sign outside the property? A big canvas sign hanging on the side of the building signs, and the grass verge saying, this building is for lease. Enquire within or go to this website. And he was stupefied by that thought. He said, what an amazingly good idea. You have to let people know. They think that they're going to go to their office because they're looking for office space.   Dolf de Roos 00:28:34  So now, would they be guaranteed to get a tenant within a week by putting a canvas sign on the building? Of course not. But I know we won't reduce the chances. And that's why if I can find a tenant before committing to buy the building, I'm pretty confident we'll get there. And I've got all these other techniques, Keith, of doing it like one that I really love is, let's say you've got a vacant warehouse and it's an ugly, horrible warehouse in a sea of similarly ugly and vacant warehouses. If you and I bought that, I would hesitate to suggest that we would have a tenant within a month. And here's how we'd do it. We would spend no more than $10,000, and we would go to the manager's office, because ultimately, the person who decides whether to lease our warehouse as opposed to another one, is not the CEO and the head office in New York or LA or wherever. It's not the cleaning lady or man who's going to sweep the floor. It's going to be the manager is going to manage it.   Dolf de Roos 00:29:28  So I get rid of the linoleum and I put in commercial grade carpet. I put in triple glazed or dual glazed windows. Keeps the noise out and the warmth in. I replace the fluorescent tubes with LED lights and replace the locks with electronic locks so he can never forget his keys. I put on an 80 inch LCD screen and tell him it's good for corporate training videos. We know he's never going to watch corporate training videos on it, but those TVs you can buy for $500 now, I put on a little coffee machine and make sure it's brewing when it looks, and have a fridge for end of week drinks, celebrations, and our unsuspecting manager, who's looked at seven ugly warehouses so far that day when he comes to our ugly warehouse and he opens that door to the manager's office subconsciously, or maybe consciously, he thinks, oh my gosh, if I lease this one, this is where I'm going to be packed for 40 hours a week for Lord knows how many years. He says I'll take it.   Dolf de Roos 00:30:17  And he hasn't even asked the rental. You might say that's bribery and corruption, but I think it's just offering a better product than the competition. No one else does this.   Keith Weinhold 00:30:27  Oh well. This is another brilliant example of using creativity in real estate investing. We're talking with the king of commercial real estate, Dolph Thomas More. We come back including some of his psychology and insights from the rich. This is general education. I'm your host, Keith Whitehall. Hey, you can get your mortgage loans at the same place where I get mine at Ridge Lending Group Nmls 42056. They provided our listeners with more loans than any provider in the entire nation. Because they specialize in income properties, they help you build a long term plan for growing your real estate empire. With leverage, you can start your prequalification and chat with President Ridge personally. Start now while it's on your mind at Ridge Lending group.com. That's Ridge Lending group.com. And your bank is getting rich off of you. The national average bank account pays less than 1% on your savings.   Keith Weinhold 00:31:31  If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk. Your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just $25. You keep getting paid until you decide you want your money back there. Decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor, to earn 8%. Hundreds of others are. Text. Family 266866. Learn more about Freedom Family Investments Liquidity Fund. On your journey to financial freedom through passive income. Text family to 66866. What's up everyone? This is HGTV Star Kombucha. Listen to get Rich education with Keith Wine hold and don't quit your day dream. Welcome back to Get Syndication. You're listening to episode 513 of the show that's created more passive income for busy people just like you than nearly any show in the world.   Keith Weinhold 00:32:55  I'm your host, Keith Whitehall. We're at the king of commercial real estate, Dolph Durst. Just like he has a lot of creative, proven types of things that you can do to improve commercial real estate. He also has a lot of those ideas for residential because he's been around the game for so long. So tell us about some more of those creative ways to add value to residential real estate.   Dolf de Roos 00:33:17  Well, probably. Like most people who end up focusing on commercial real estate, I got started in residential and that's where I first deployed some of my creativity. And I noticed, for instance, that I'd have a rental property that had no garage and no carport. And when you think about it, a tenant's biggest asset because it's not their home, it tends to be their car. One could argue that because they waste money on expensive cars every two years, that's why they can't afford to buy a home. But we won't go there. So if it's their car, if there's no carport and no garage, that means their biggest asset is in the rain.   Dolf de Roos 00:33:49  The sleet, the sun, the shine, the hail, you name it. So by building a carport, we can protect their biggest asset and it's worth a lot more to them by any means. If you have a carport on a house, that house will rent for about $80 a month extra. An 80 a month times 12 is 960. Call it $1,000 extra, a rent in a year. And Keith, I can build a carport for $1,000 easily. It's simply for one in each corner and then a roof with a bit of a slope. Why the slope? Well, if it rains, the rain falls off. If you're really cheap, you can get away with three posts. It still stands, you know. But no. And I'm being silly, but we sometimes make them with two posts and cantilever them. They're a bit more expensive, but then there are no posts out front so I can build a carport for $1,000, and then I get $1,000 extra a year coming in. And when you think about it again, which other investment can you think of that once you've consummated the deal, once you own it, you can spend an extra thousand dollars and then get 100% return on that money.   Dolf de Roos 00:34:49  And as they say in the infomercials. But wait, it gets even better. Because think about it. Let's say we have that carport built, but we haven't paid for it yet. And so we've got our thousand dollars a year extra of rental coming in. We go back to the appraiser and say, we want a new appraisal With an extra $1,000 coming in, he's likely to appraise it at $10,000 more. With that increased appraisal of 10,000, we go back to the bank and say, Mr. Bank manager, remember I got a 70 or 80% more. I've got now got an appraisal for 10,000 more. Will you give me a modest 70% loan on that? Well, banks are in the game of lending money and making a profit. So they say yes. So you get 7000 from the bank. Let's use 1000 of that 7000 to pay for the carport. It's now paid for. That leaves us with $6,000 cash. And the question is, is it earned income? And the answer is no, it's not earned income.   Dolf de Roos 00:35:42  There's no income tax on it. Is that the sale of something? Nope. Didn't sell it. No sales tax, no capital gains. It's tax free money. And you might say but hang on, you've now borrowed $7,000 that you have to be interested. Even at a ridiculously high 10%, that would only cost 700 a year. But we're collecting an extra thousand a year. So when you build this carport, you have two choices. One is pay cash for it and get 100% return on your money. Or the second one is don't pay any money for it, but $6,000 of tax free money in your pocket and get $300 a year surplus cash flow index for inflation for the rest of your life. Like, why would you not do that?   Keith Weinhold 00:36:25  Well, and it's a terrific example of how to accidentally improve the property. And it's so interesting that you bring this up, Dolph, because just a few weeks ago here on the show, I talked about garage real estate. I mentioned how adding a carport can often be more cost effective for a landlord from an ROI standpoint, than constructing a garage.   Keith Weinhold 00:36:43  I also talked about the future with autonomous cars. If people are going to need garages as much as they will, but that's into the future, and that's another subject in itself. All for one really important thing. I know that probably even more important than the actual investing is getting people in the right mindset to do this in the first place. You've studied this in really unexpected psychology behind wealth creation. I think a lot of it is counterintuitive, but it kind of makes sense because if you come from a scarcity and conventional mindset and you just do mediocre stuff, you're only going to get a mediocre outcome. So why don't you talk to us more about breaking down that psychology that most Americans and most residents of everywhere in the world really struggle with?   Dolf de Roos 00:37:28  Well, my pleasure. I had been teaching real estate for about 15 years and I decided why? I don't know, but I decided to run a survey to find out how many of my students became a millionaire within 18 months. That was my expected time frame of reasonableness.   Keith Weinhold 00:37:43  Is that I was actually wealthy.   Dolf de Roos 00:37:45  Right? And I was pretty confident. But when the results came in, I was devastated because it was fewer than 4%. And in my mind, 4% wasn't even statistically significant. Meaning if you take a thousand people, a random 4% are going to become millionaires. One's going to marry into money, one's going to win the lottery, one's going to win at a casino, and the fourth one's going to fall over a paper bag and looks inside. And we just believe that there's a million bucks there. So I vowed to stop teaching until I'd cracked the nut, because my dilemma was, how is it that when you give people all the tools you think they need to become fabulously wealthy, they still don't do it right? And what I found is that it had nothing to do with my rate of speech or my accent. Not that I have one, of course, or the content of my information or the sequencing of it. It had everything to do with the subconscious mind of the student, the fear.   Dolf de Roos 00:38:38  And he has that stance. You're a young kid and you say, hey, mom or dad, I want a bicycle. And they say, well, what do you think, kiddo? That money grows on trees and I know where the parents coming from. Hey, money's not that easy to come by. Temper your expectations of what you'll get for your bet. But this kid is. Our money doesn't grow on trees. Meaning money's hard to come by. And how often have we been told money can't buy you happiness. And money is the root of all evil. And when I say that, someone always points out no, the full saying in the Bible is for the love of money is the root of all evil. There's a big difference. And I'll say, yes, there is a big difference. But to the subconscious mind, it's still here's money and evil in the same sentence, and it's unconsciously makes that association. And the religious even say that it is easier to get a camel through the eye of a needle than for a rich man to get to heaven.   Dolf de Roos 00:39:24  In other words, if you're rich, you're condemned to hell. And that's a nice, strong belief system to take on board, even subconsciously. And by the way, most people don't know what the eye of the needle is. The eye of the needle was the entrance to East Jerusalem and even camels. And I've been there. I've said the camel said to get down on their knees as a sign of respect before they could enter. So there's a reason behind all these things, but the subconscious mind takes aboard. Money can buy you happiness. Money's hard to come by if you work hard for it. You don't deserve that money's root of lever. You won't get to heaven. You condemned to hell. And how do we describe the rich kids? We say they are so rich. That filthy rich. They're so rich. That stinking rich we associate being rich with filth and stench. So that is why in the United States and every Western nation, when someone wins the lottery and we no longer win 10 or $20,000, it's 300 million or 800 million or 1.2 billion when people win the lottery within five years of winning, 80% of the winners are back to where they were before they won.   Dolf de Roos 00:40:25  Right? And why is that? I discovered that it's because subconsciously, even though they're happy they won it and they going to tell their boss they're going to quit and they're going to buy their parents a nice home and they're going to get a new car. But subconsciously they feel they don't deserve it because they haven't worked hard for it. They're not going to be happy. They're now evil people. They're not going to go to heaven, and they're filthy and they stink. And the only way to overcome that is to get rid of the source of the problem, which is the money. And you'll see it happen again and again and again. So what we do is we dissolve what's in the subconscious mind, all these things that we've been saying without realizing it over and over and over again and replace them with more empowering beliefs. And the great thing about the subconscious mind is, initially, you don't even have to believe the thing that you're going to say over and over again to replace those old ones, but it could be something as simple as money is good or a bit more sophisticated.   Dolf de Roos 00:41:18  My poverty helps no one, but my wealth can help a lot of people.   Keith Weinhold 00:41:22  The more you have, the more you can give.   Dolf de Roos 00:41:24  Exactly as the reverend says, I'm a magnet for money. And so when we get into this mode of thinking differently, then all of a sudden people find that the money starts flowing and we give people specific exercises to do. And it's you think by how is that going to make difference? But it does. And so what I found when I introduced these concepts into my real estate teaching, the success went from under 4% to over 80%. And if that's not evidence enough that this works, I don't know what is.   Keith Weinhold 00:41:56  Yes, it really takes changing that mindset to break down these old stereotypes and have the confidence to say and act upon things like financially free beats debt free. But if you raise to think that money is a scarce resource, you think that retiring debt is a good thing, or don't focus on getting your money to work for you. Focus on getting other people's money to work for you.   Keith Weinhold 00:42:17  A lot of people don't even know what that means. But yeah, it takes breaking down some of these simple things that we all began to learn when we were age five or something like that. Golf is we're winding down here. You operate globally. You play globally. That intimidates a lot of people. They don't really know how to do that. But it's giving you this wherewithal to say that real estate is the only profession that can truly be played globally. Tell us about that.   Dolf de Roos 00:42:44  Well, when you think about it, if you study to become, say, an attorney, you can't just up and leave the US and go to Germany or Peru or Kuala Lumpur, Malaysia to practice, you've got to study their local laws and set the bar exam. If you're a physician, you can't just go to another country and conduct frontal lobotomies on patients. You've got to study and hit the bar exam. I had a friend who was a dermatologist, a skin doctor from Austria. He moved to Australia after eight years of study to get his qualifications.   Dolf de Roos 00:43:13  They wouldn't accept them here to start all over again. And he said that's ridiculous. And he became a farmer and was very happy doing that. But when you think about it, not only our real estate investors welcomed all over the world, but they think that you're going to bring money with you. You don't have to, of course. In fact, if you're going to invest as a US citizen in another country, I would not recommend bringing U.S. dollars with you. I'd recommend borrowing locally, because if you bring U.S. dollars with you, then you're subject to exchange rate fluctuations. So just borrow locally and then you've got no risk from that at all. But despite the fact that the other countries, the host countries think that you're an investor, you're going to bring money. So they welcome you with open arms. I think it's the only profession where you are never discriminated against. Your welcomed. You're made to feel welcome. They want more of you. They encourage you to come with delegations of other investors.   Dolf de Roos 00:44:05  It's kind of good gig to be on.   Keith Weinhold 00:44:08  Make the World Yours. The UN recognizes 193 world nations. Get out and see them and invest outside your own home country if you have the ability to. Well, Duff, you've got this interesting combination of commercial real estate focus, a great grasp of the mindset and how to help people with the wealth mindset. And then thirdly, you also operate globally. So it's been really interesting to speak with you. You help people in so many ways with a lot of your teaching resources. So why don't you let our audience know how they can engage with that?   Dolf de Roos 00:44:41  We have a lot of programs that we run from time to time. I mentioned I saw a client in the UK. He was an example of someone we did a fly out for. I'd spend three days just with that one client to help him with his portfolio. But the thing I've got coming up is a live training and people can get a free seat to attend and learn more at my website called Dolf Live.   Dolf de Roos 00:45:03  So Dorfman and Dolf and then live Live.com golf Dolph Live.com. You can see what we've got coming up there. It's entirely free to attend. And then, you know, once that event's gone, I'm sure we'll post other things there, but that's the best way of staying informed with what I've got going. Part of my passion, Keith, is sharing it. You know, it's pretty boring doing it on your own. And one of the biggest thrills I get is when you get feedback by email or however, from someone who said, well, when I heard this or saw that or read this, I wasn't even sure if it would work and I certainly wasn't sure if it would work for me. But look at what I've done since then, and that gives you a feeling that you can't describe in words. That's pretty cool. You change someone's life and you don't even really know who they are, then that's kind of that's fun stuff.   Keith Weinhold 00:45:48  The ruse has been helpful to me in our audience today. The King of Commercial Real Estate, thanks so much for coming on to the show.   Dolf de Roos 00:45:55  Hey, thank you so much for the opportunity. I really enjoyed it.   Keith Weinhold 00:46:04  Check out Dolph Live.com. It looks like he's got a live event coming up this Thursday night, and if you missed that more afterward, like I was saying earlier, a ton of great episodes coming up here on the get Rich education podcast, just stacked. As always, you'll get lessons from me when I'm going to break down. Is any debt worth paying off? Which debts are which are not and why? That's going to help you know what to do with every debt for the rest of your life. And that's besides what I mentioned earlier, both new guests and very popular returning guests. I hope that you learned something today. I'll run it back next week when we meet again. Until then, I'm your host, Keith Weintraub. Don't quit your daydream.   Speaker 8 00:46:54  Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own.   Speaker 8 00:47:05  Information is not guaranteed. All investment strategies have the potential for profit or loss the host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold 00:47:22  The preceding program was brought to you by your home for wealth building. Get Rich education.com.

Wealthy business owners and landlords are vilified. Yet, wealthy actors, athletes, and singers are praised. This makes zero sense. Businesses and landlords provide essential services; entertainers don’t. The White House recently published a “rent control light” plan. It’s a bad idea and has almost zero chance of passing a divided Congress. I critique it. Hear my in-person sit-down interview the Liberland President, Vit Jedlicka. Liberland is a micronation in Eastern Europe, between Serbia and Croatia. It calls itself: “The freest sovereign state in the world, powered by the blockchain.” Learn about Liberland’s: reason for existing, population, infrastructure, real estate, currency, geography, language, culture, problems, and more. You can purchase merits and become a citizen at Liberland.org. Resources mentioned: Learn more about the freest nation in the world, Liberland: Liberland.org For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Complete episode transcript: Keith Weinhold 00:00:01  Welcome to GRE. I'm your host, Keith Weinhold. Why do people vilify wealthy business owners and landlords but praise wealthy actors and athletes? Rent control plans must be killed where the real opportunity is in today's real estate market. Then my in-person sit down interview with the president of the micro nation of Levelland today and get rich education. Robert Syslo 00:00:27  Since 2014, the powerful Get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Reinhold writes for both Forbes and Rich Dad Advisors, and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus has had its own dedicated Apple and Android listener. Phone apps build wealth on the go with the get Rich education podcast.   Robert Syslo 00:01:05  Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates 00:01:13  You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold 00:01:29  Welcome to Greece. From Dubrovnik, Croatia, to Dublin, Ohio, and across 188 nations worldwide. I'm Keith Weinhold than you are inside episode 512 of get Rich education. You can set up your life so that you stop using your time to make money. Use the bank's money to make money. People come from scarcity families, just like I did with a scarcity mindset to think all debt is bad. Hang off debt won't make you wealthy. You don't build wealth. So by the time you reach age 62, you think, hey, I just paid off my last debt and now I can retire. It doesn't work that way. Well, why couldn't you retire sooner? Sheesh. So what do people mistakenly do? They end up working their whole life for people that have debt. Successful business owners and real estate investors carry debt.   Keith Weinhold 00:02:29  That's how they can own so much productivity and so many assets. And you know what's interesting here? Business owners and real estate moguls, they're the ones that often seem to be vilified, criticized, ridiculed for obtaining wealth when they took risks, took out loans and provided jobs or housing for others, yet Yet at the same time, somehow actors, athletes and singers are all praised for obtaining wealth as a performing artist. That makes zero sense. Why would you criticize a successful business owner like Amazon founder Jeff Bezos? Bezos probably made your life distinctly better by offering you convenient shopping for anything. Protein bars with a few clicks, free shipping, and pioneering drone delivery. A landlord is often vilified. Most landlords are mom and pop types that aren't even that wealthy. But even if they were, as long as they're not a slumlord, I mean, they took on risk debt, operating expenses, and being on call 24 over seven in order to provide others with housing. So with Bezos types and landlords, we're talking about taking risk to provide society with essentials like food and housing.   Keith Weinhold 00:03:58  And while the business owners get vilified baselessly performing artists like actors, athletes and singers do not. Yet they merely provide entertainment to society. Now I like entertainment and I follow sports to the NFL. Major League Baseball, the NBA. But their services are not essential. Take a movie actor. They get paid well for pretending to be somebody else. Consider how absurd that sounds. And yet they're praised for obtaining wealth from doing that. So this is really backwards. And, you know, I think that a lot of this resentment for business owners is that you can't really see what they do for you. Like, you can a performer that's on the front stage, like Beyonce or Lizzo or Taylor Swift, Business owners, real estate investors, they're on the back stage. And what an entertainer does front stage that is highly visible. I mean, that's my best guess about why this is. And a lot of the time it just comes back to these primordial human emotions like resentment and jealousy and envy. There is no reason to criticize the rich just solely for being wealthy Because deep down, it's all where we want to be.   Keith Weinhold 00:05:21  Anyway, how is Bezos bad and Lizzo good? I don't get it, but it's been that way for a while now. When you look at surveys of institutions that are most trusted over time, and it's been pretty much the same these past few decades, what's at the top of the polls are small businesses. People say that they're trusting of small businesses in your rental property. Business surely counts here. Small businesses trusted more than institutions like the media or politicians. So I encourage you on social media and wherever else to support small businesses. And it's kind of funny how friends they often might not put a like on your small business, though they say that they trust them and that they resent large businesses, you know? Then that friend turns right around and supports Apple, Coca-Cola, and Starbucks. people say they trust small business, but so often then they go patronize large businesses. Nothing wrong with patronizing large businesses, but you're just not doing what you're saying. So my point is, don't resent anyone just for financial success and consider outwardly supporting small businesses.   Keith Weinhold 00:06:40  If you indeed put a lot of trust in them yourself, just like much of America says that they do. Now, is there a movement afoot to disenfranchise big wealthy business owners or big landlords. I mean, we're talking about these very people that are resented. Well, one way is with rent control, that is capping the amount of rent that landlords can charge. Now, since Covid hit in March of 2020. Apartment rents are up 18% and single family rents are up 25%. Okay. Those are cumulative figures over this four plus year stretch. And that's actually not that much. It's about 5% a year. And now sure, political news has been like galactic big this month with the Trump shooting and the Biden drop out and the Kamala Harris endorsement as a Democratic frontrunner. And we rarely talk politics here for a few reasons. Number one, it's divisive. People lose their minds. Secondly, speculation is cheap. So much of politics is speculating on what might happen in the future. Well, there's one known here.   Keith Weinhold 00:08:01  Whether you like it or not, expect six more months of President Biden. And thirdly, politics is overblown. Its importance is inflated. A president rarely changes your life. But the good news in this is that you can your autonomy, your freedom, your decisions. You can change your life. So to put the politics aside, let's stick to a one issue subject. The white House revealed published what I call a rent control lite plan earlier this month. And to give some credit first, this the same plan it also repurposes publicly and to build more affordable housing. I sent you a link to the whole thing in our newsletter last week. Well, this rent control lite thing has almost zero chance of becoming law. VP Kamala Harris endorsed it on ex. President Trump would kill it even if it's revived under the next president. It has no realistic shot of passing a divided Congress. But let's look at this anyway. What was proposed is that if a property owner increases rent more than 5% annually, it would reduce tax incentives for large landlords.   Keith Weinhold 00:09:23  I'll tell you what large landlords are in a moment. Now, you could still increase rent by more than 5%. It would just reduce the federal tax breaks and it would have lasted for only two years. And the reason the white House put this proposal together for just two years is as a bridge to a time when more homes are expected to be built. I mean, that's the real intent here. And importantly, this all would have only applied to owners of 50 plus units. So that's mostly for apartment owners. Single family rental owners would be largely untouched, but consider how apartment owners could have lost their accelerated depreciation benefit, also known as their cost segregation. And note that I'm already talking about this rent control light proposal in the past tense, not the present tense, because this whole thing, it's just a bunch of virtue signaling to try to show that something is being done to rein in housing inflation. Well, this is really odd and awkward since the inflation came from the government in the first place.   Keith Weinhold 00:10:30  I mean, sheesh, this is like shooting someone in the foot and then trying to get praise for bandaging the victim that you just shot. Well, the federal government, they just don't do rent control on this level at all. They haven't. In fact, the feds haven't regulated rents on private buildings since World War two. So this really isn't a thing, but it just brings to light that rent control is a bad idea. It puts a cap on risk. Time after time after time. History shows us that it makes developers stop building. Now, the white House plan did have a carve out for new builds. Also, what this does is that landlords have no incentive to improve property. That's why it reduces housing supply, which is already low, and it creates long term dilapidated living conditions, like I touched on here just a couple episodes ago. But how weird to even make such an ill advised proposal. I mean, look, if government puts a price cap of $2 on a gallon of milk, then dairies will stop producing milk.   Keith Weinhold 00:11:41  Milk shelves are going to be empty. It's like in communist countries. This is why you saw photos of bread lines. When there are price controls, then manufacturers don't produce. And just the same, landlords would stop providing housing. If I didn't put a fine enough point on this yet. President Obama's top economist, Jason Furman. He probably said it best in the Washington Post. Furman says, quote, rent control has been about as disgraced as any economic policy in the toolkit. The idea that we'd be reviving and expanding it will ultimately make our housing supply problems worse, not better. End quote from President Obama's top economist 94% of economists agreed that rent control reduces quality and quantity of housing available. It is the most effective way to destroy a city. Aside from bombing it, what an ill conceived plan to regulate rents. That's rent control, but the most dangerous drinking game of 2024 that is still sipping at every mention of the interest rate lock in effect on a real estate or economics podcast. Though it's been two plus years since they made their dramatic rise.   Keith Weinhold 00:13:05  Many are still transfixed on mortgage rates. They recently hit a five month low below 7%, and a lot of people still expect mortgage rates to fall between today and next year, since inflation has now plunged from a high of 9.1% two years ago, down to 3% now, the Federal Reserve has held rates steady for more than a year now, and most don't expect any change either when they meet in two days. But be ready. Be prepared when mortgage rates fall substantially. Millions more buyers will qualify to buy a home, and this could substantially stoke housing demand and lift housing prices further. Now last week on the show, you heard gray investment coach narration. I discuss Libre land libre, land libre land. Earlier this month, I visited the exhibit hall at an event called FreedomFest. I saw the library and booth and I recognized their name, and I congratulated the people there in the booth. On that, the fact that I have heard of Liberland before, that's somewhat of a compliment to them. It shows me that they're doing something right, liberal, and is a small piece of land between Serbia and Croatia in Eastern Europe, and it apparently hasn't been claimed by any other nation for decades.   Keith Weinhold 00:14:32  The name Liberland, and I think it's easy to remember because it sounds like liberty. So that's how you pronounce it. Well, I got to talking to some of their representatives at the exhibit hall. They're all smart people, but there was no one person that had all the answers I was looking for. So I requested to speak with the president of Liberland. And about two hours later we made that happen. So today, shortly you will hear Liberland President Vit Jedlicka and I together. Now, the United Nations doesn't yet recognize Libya and all. Ask the president if other nations recognize it. Wikipedia calls liberal and a micro nation. It is seven square kilometers. That's almost three square miles. It's mostly forested. I don't believe there are any mountains there that I can see in the photos. It has Danube river frontage and just a few people there. The Danube river frontage is key because it contains an island that belongs to Leon, and also the Danube is key because it also connects to the Black Sea.   Keith Weinhold 00:15:40  And we'll see if it can be a tax free haven, which is apparently the intent. You might be able to see this working when you compare it to micro nations like Monaco and Liechtenstein. Some journalists have been skeptical about libre land. You'll see how I approach it with the president shortly. He champions laissez faire capitalism. Laissez faire means a minimal government. They're also making the new nation's laws transparent on the blockchain and an economy based on cryptocurrency. As for liberalized population, by March of this year, liberalism had 1200 registered citizens who had paid up to $10,000 for labor and passports, but fewer actually living in the nation now, working on it and building it. Neighbouring Croatia has at times been hostile and blocked off access to libre land. These past few years, you will hear some background noise in President Witte and his upcoming interview. So I ask for your attention and patience there and for all. We are in an exhibit hall at a conference. I'll just call him whit in the interview. And what does his day to day look like? He travels globally a lot, often trying to get into international diplomatic and friendship agreements.   Keith Weinhold 00:17:01  But how do you just adopt statehood out of nothing? That's what's interesting here. Now, when he describes libre land to me, you can't see it here in the audio only. But he often points to Liberty Island, an island on the Danube river that's part of Liberty. And does having a free nation mean that you have the freedom to do whatever you want on your land, or they're soon going to be hos there? I'll ask him that very question, literally. President and I coming up here shortly. First, as for more, I suppose, a familiar land here in the US. You can't make any money from the rental property that you don't own. We are here to help get you started being profitable that way. And it's free. Get some of those. Real estate pays five ways properties. Then we have access to a good number of them here at great a good variety, different property types, different geographies. But at times I'm asked where is the real estate opportunity today in this real estate market, with higher prices, higher rents normalize interest rates, higher operating expenses and low housing supply? Really the opportunity is in affordable housing.   Keith Weinhold 00:18:25  If I could just put two words to it. That's the short answer of affordable housing. Like I often say, provide housing that's clean, safe, affordable and functional in today's market really emphasizes the affordable. That's where the sustainable demand is. Since so many want to be first time homebuyers are priced out of the market currently, it's like a dam that's waiting to break once interest rates go lower compared to a year ago, America has a lower proportion of homeowners and more renters, and the renter numbers just look to keep increasing due to that low affordability. And also this surge of immigrants from the past year or so. That is why you want to own affordable rental housing now. Affordable housing really that can mean a few things in a physical form. That could mean mobile home parks, single family homes, duplexes to fourplex or larger apartment buildings, but in any case, an income producing asset. Do you know what that does for you? That's like an employee that's working for you 24 over seven and without the personality problems, and they never call in sick.   Keith Weinhold 00:19:40  And when you're looking for a property, it's easier to screen properties that it is higher in screen employees. We can help set up an entire real estate investment plan for you with properties like a couple properties. I'll detail for you here shortly. And I also sent you these property details in the second section of last week's newsletter. You also got to see a photo of one of them. And by the way, you can get our wealth building newsletter by texting GR 266866. Just do it right now. What's on your mind for our free? Don't quit your daydream letter. Text GR 266866. And what's been in our newsletter lately? I showed you exactly where I think home prices are going to go by the year 2028. I loved writing about that and researching that for you in the Don't quit Your Daydream letter. Also, in recent letters, you got need to know details about our banks in real trouble now. The Wolf of Airbnb sentenced to prison y new homes will keep getting smaller. Why you can't blame investors for pricier housing.   Keith Weinhold 00:20:54  Why prioritizing property is a huge mistake, and the ten cities where you will regret buying property. And if those stories don't interest you, if getting the first crack at profitable income property does not interest you, then you won't want to subscribe. But if it sounds like those details interest you again, you can get the don't quit your day dream letter by texting gray to 266866 available properties we've had at Gray Marketplace lately that our investment coach can help me with are these two brand new single family homes that make great rentals. The first one is in Prairie Grove, Arkansas. These are the places where the numbers work, and Arkansas has been named the most landlord friendly of all 50 states. It is four bed, two bath purchase price of 288 K and a rent of $2,200. Good numbers for a new build there. It's 1500 and 50ft². The second property, also a new build, is in Pinson, Alabama that's just northeast of Birmingham. And this single family rental is three bed, two bath. The purchase price is 303 K, the rent is $2,000, it's 1400 and eight square feet.   Keith Weinhold 00:22:14  And that rent to price ratio that's not as good as the first one in Arkansas. But of course, Alabama's got those ultra low property tax rates that you get to pay. Yet you can own it and reside in any state or nation. We can help set up an entire real estate investment plan for you, whether it's with properties like these or others, with our investment coaching and it is free for you. Yes, it is just this free as sun, fresh air and hugs. If you think you're ready to buy some real estate pays five ways property. Book a time to chat at Gray marketplace.com/coach to help connect you with a marketplace of income properties. That's grey marketplace.com/coach liberal and president what you'd like and I straight ahead you're listening to get rich education. Hey you can get your mortgage loans at the same place where I get mine at Ridge lending group Nmls 42056. They provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire.   Keith Weinhold 00:23:32  With leverage, you can start your prequalification and chat with President Ridge personally. Start now while it's on your mind at Ridge Lending group.com, that's Ridge Lending group.com. And your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk Your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25 K. You keep getting paid until you decide you want your money back there. Decade plus track record proves they've always paid their investors 100% in full and on time. And I would know because I'm an investor, to earn 8%. Hundreds of others are text family 266866. Learn more about Freedom Family Investments Liquidity Fund on your journey to financial freedom through passive income. Text family to 66866.   Robert Helms 00:24:54  Everybody it's Robert Elms with the Real Estate Guys radio program.   Robert Helms 00:24:57  So glad you found Keith wine old and get rich education. Don't quit your day dream.   Keith Weinhold 00:25:11  Hey. Welcome back to get rich action. We're talking with someone that's going to explain a different subject to us. We're talking about starting up and the potential new nation. I was the president of that nation called Libre, Leon, I was there. President Witt, welcome in. Good to meet you. It's so good to have you here. And, you know, interestingly, we met at an event called Freedom Fest. So this is potentially so parallel with that as you're looking to develop your own nation now at a place like Freedom Fest, I think we have a lot of people that have a certain set of opinions, and a lot of people at a place like Freedom Fest, where you champion ideals, would probably love to tell you how they would like changes to be made in the United States. But I think if you ask that same person, okay, what if you begin with a clean slate? How would you begin a nation anew, but you're actually trying to do that? So tell us about Libber Land.   Keith Weinhold 00:26:04  It's pretty.   Vit Jedlicka 00:26:05  Exciting to.   Robert Helms 00:26:06  Hear Kennedy.   Vit Jedlicka 00:26:07  The candidate for president, talking about his plans to utilize blockchain to make the country transparent and or functioning. Libra is, I would say, at least 5 to 10 years ahead of any other nation states. And utilizing that, we are combining the best technology that is out there with the best ideas, ideology that is out there, which is, of course, libertarianism, making sure that the society as free as possible within some framework of basic rules. So this is exactly what we're doing. And we were looking for a piece of land to manifest that in physical world. And here we go. It's so liberal and it's a beautiful piece of land between Russia and Serbia that was not claimed by any other country for more than 35 years. We came there, we struggled with like we actually took nine years to even get inside of it properly. And now we're building and living there for more than a year.   Keith Weinhold 00:26:58  So this seven square kilometer plot of land between Croatia and Serbia, that is on the Danube floodplain, you've got frontage on the Danube river, even an island and the Danube river here in this Start-Up nation, if you will, of libre land.   Keith Weinhold 00:27:14  Really, as I've come to understand it, one real goal of liberalism is just to have any nation in the world recognize it as its own sovereign nation.   Vit Jedlicka 00:27:25  We actually got a couple countries to write or sign a regular deals, like with other states. We started with Somaliland, which was at the time unrecognized country. It's fully functional. Interesting story. It's actually former Peace of Somalia, which got independence like 25 years ago. And they're fairly finally prosperous and functioning, even without any recognition by any other country in the world. Now, they got recently recognized by Ethiopia. We followed up with Haiti agreement. We were signing a couple more agreements. Right now, I'm actually heading to one of the African countries to sign some friendship agreement. So it's not that the other countries don't recognize us now. We're working hard on diplomacy. You know, we have diplomatic relations with places like El Salvador, where we were on official diplomatic visits. So, of course, traditional form of recognition is one of our priorities.   Vit Jedlicka 00:28:13  But it's not the number one priority, really. Our number one priority is to finish a very close, a whole model of statehood and utilize the 745,000 people that applied for citizenship, for really real building of the country itself and the nation.   Keith Weinhold 00:28:31  Some recognition is coming slowly, but pulling back a bigger picture. Why do this? Why take this on? Why start your own nation?   Vit Jedlicka 00:28:39  Why not? I think leading by a good example is the best way to do things like talking about liberty. I did a lot of educational work on explaining people why liberty works, but it's much better to do things in the practical terms.   Keith Weinhold 00:28:53  Now, what's interesting is, you know, we've talked about freedom and the ideals of freedom earlier. This freedom mean freedom to do whatever you want.   Vit Jedlicka 00:29:03  You know, within some boundaries, of course, as long as you don't breach other people's freedoms and you have to find the right set up. And but right now, the problem with the current society is that there are so many regulations, you don't even know what you're reaching, and you're usually not reaching anybody's property or anybody.   Vit Jedlicka 00:29:20  It's just a bunch of stupid regulations that make your life tough. You cannot do business. You cannot even help your community. It's funny what kind of stuff we are dealing with in Croatia right now. There is a mosquito calamity in the neighborhood around Libre land and the local municipality don't have money to fix it. And they also don't let us to fix it because you have to have special license for fixing it. So everybody is suffering under the mosquito calamity, which is California.   Keith Weinhold 00:29:47  Okay, so that's an example of overregulation, potentially too many laws. You just brought up one of the limits of freedom, potentially. Well, we don't want people to be able to do anything or therefore they might be.   Vit Jedlicka 00:29:57  Able to hurt or to.   Keith Weinhold 00:29:58  Harm another person, but therefore that would be some sort of of law. And then there would be some need to sort of enforce that. So how does a start up country that wants to be a free nation, you know, how do you meet needs like laws and enforcement and perhaps a judicial process.   Vit Jedlicka 00:30:16  Or do you have a standard framework for the country? There is now a newly elected Congress. It's still a test election, but it has been already elected according to all the principles that the blockchain is bringing full transparency, immutability. It happens within the split of second of the very minimal cost. So all these things are actually already happening, and the Congress will now take all the laws that were prepared by the Preparatory Committee. And only if we have the whole framework of the laws necessary to run a state. I have 250 pages of regulations, very simple framework, which already allows a society to function quite well. And I would like to keep it that way. You know, keep the Constitution at the, let's say, the 20 pages and another 230 pages of different laws that define the the ways that the society should work. And anybody basically allowed to read all the regulations in the country within one day. It's not like here, right in the US.   Keith Weinhold 00:31:10  Yes. But its population grows, is the infrastructure grows, is more complicated, needs must be met.   Keith Weinhold 00:31:16  The size of government invariably and inevitably seems to expand with all existing nations in the world. I think the UN recognizes 193 sovereign nations currently. How do you keep the size of government from expanding over the long term in Libya?   Vit Jedlicka 00:31:32  It's a challenge. Of course, but the way we keep it is the way that there is only one institution that can make new laws, and it's kind of a corporate governance of liberalism. But that governance is in check by three other institutions that can get rid of the laws. The first and most important one is public veto. So majority of citizens can veto any law or regulations that they don't like. Second one is the Constitutional Court. So the Constitutional Court looks into the law if it basically is only focused on security and justice or diplomacy, so that the state shouldn't legislate on other things, really let other things to the private sector. So the Constitutional Court strictly looks if it adheres to that. That's another important institution. Then there is something like House of Lords of liberal minded, who can also veto the laws that the corporate governance the Congress actually creates.   Vit Jedlicka 00:32:23  So one institution to make laws and three institutions to get rid of it.   Keith Weinhold 00:32:28  Else about what's there now, the natural resources, the population and the infrastructure.   Vit Jedlicka 00:32:33  Well, that's the beautiful territory with the island next to liberal land. This is part of liberal land. It's called Liberty Island. It's a long, beautiful sandy beach. Right now, the under construction, there is 24, three houses in this area. So it will be one of the third thing will be the tourism. And we need to be able to host the visitors. We are planning two major music festivals and conferences in the summer, which will take place in August and in September. Of course, you're very well invited. We want to promote the tourism in Berlin, but also in the whole region. The biggest resorts. And it's like that with any country that is prosperous around the world. Be it Hong Kong or Singapore, is not the natural resources. It's the capacity of people to freely make, trade and do business.   Keith Weinhold 00:33:20  You're right.   Keith Weinhold 00:33:20  In fact, a place like yes, Hong Kong or Singapore or even Japan itself have been exemplary of that. A place can be prosperous without having many natural resources. It's truly about the ingenuity of the people we talk about. The people tell us more about the population.   Vit Jedlicka 00:33:35  The population. Right now we've got 800,000 people, almost that sign up for citizenship, which is a huge pipeline. I think the reasonable like ideal population of Liberal would be around 140,000. So we cannot even accept everybody to physically live in liberal land because we would be so overpopulated. Right now we've got some thousand citizens and 6500 residents that basically went through the pipeline, and there is a couple dozens of people living on the territory of liberal lands and working and building stuff. So it's kind of fun to see that initial development. very early into the development. There is still a quite a bit of obstacles to really speed up the development of the brand, mainly installed by Croatia, but we're very happy that after all these years we're able to actually be there physically and develop stuff.   Vit Jedlicka 00:34:23  So we're building a small hospital. There are seven construction workers that take care of it. We're also building the Treehouse resort. There is another ten guys working on that, and that there is a bunch of people that came to settle and they're helping with some stuff for the site. And then there is around 150 people that live around Liberal and that are connected and are supporting the movement. Well.   Keith Weinhold 00:34:44  Now we're a real estate platform. We're going to have both public land and privately.   Vit Jedlicka 00:34:50  Every land is private, in a sense. In labor land. The deal is that right now, people can actually come to the land and claim piece of land if they have enough merit. There is are the the shares of liberal land and can actually not even exchange them if they just have them. They have the right to settle things for fun, which is kind of exciting even though there are all these obstacles. But we're helping people to get over them and get the development of the country going as fast as possible.   Keith Weinhold 00:35:16  Can a person purchase merits or purchase land in labor land right now?   Vit Jedlicka 00:35:21  Anybody that donates to Libre land on the website gets the merits.   Keith Weinhold 00:35:26  Are there going to be things like Hoa's in Libre land? Is that something that you foresee? What is actually homeowners associations where you have neighborhoods and boards in those neighborhoods where you know they need to approve of things like, hey, you can only paint your home for different colors, and you need to mow your grass within every two weeks.   Vit Jedlicka 00:35:46  Well, that surely there will be different types of associations and liberal. We're not going to force one or the other type. This property development here on Liberty Island, the three houses and this area will be kind of association of sort. We want to have 24 people that that invest into the tree house, and they would act as a community. They will help each other, but they will also have the place to visitors. To really make sure that we have a good initial settlement for the permanent population. And I would like every single one of these guys to like some nice story behind how they came to live and then why they're building a house there. We want to make a reality TV show out of it as soon as possible as well.   Keith Weinhold 00:36:28  What about currency? The euro is used in the area. But you mentioned blockchain earlier, and I don't think you plan on using the euro in liberally. Tell us about that. We don't do.   Vit Jedlicka 00:36:38  That. We use liberal and dolar. We use liberal and merit. Those are the main currencies that are tied with our blockchain. And the pound dollar was launched on exchanges three months ago, reading quite nicely, steadily at 2 USD per $1 billion. So this is like also demanded currency by our suppliers.   Keith Weinhold 00:36:56  Is it a cryptocurrency? Yes.   Vit Jedlicka 00:36:58  It's just my own currency of our blockchain. Our blockchain is standalone. It's not depending on any other blockchain. Our citizens are the one ones that securely network and run the network. They run the servers. Every single citizen in Lebanon has the right to run the run the network. That's kind of all we know. We're not really being dependent on any other network like Ethereum or Polkadot. We are simply running our own thing with its own main token. The main token is liberal dollar, but the main political token is liberal and varied, and that also comes with the political voting rights.   Keith Weinhold 00:37:32  Do you foresee there being a future rental property market on libre land?   Vit Jedlicka 00:37:39  Oh, of course, of all these, all these three houses are meant to be for rental for bigger events or team building. So this is something that is happening right now, and I wish we could have at least, you know, 50 bedrooms there by the end of summer.   Keith Weinhold 00:37:54  You know, we talked about how society might work on liberally, and why don't we pull back a bit more and talk about that physical geography, because you chose an area that's basically on the Danube floodplain. So it's probably pretty fertile and it's near some other populated nations. But of course, there are some areas of the world that no one else is claiming. Tell us about how you chose this area over. All the others in the.   Vit Jedlicka 00:38:16  Area was in the most reasonable place, I would say, between the two countries that had war, and they learned to sort out things in a peaceful way. And, you know, Antarctica is also on claim, but you don't want to stay there.   Vit Jedlicka 00:38:27  It's for freezing, right? This particular place is heart shaped. It's seven square kilometers. It was a culturally similar environment to where I was born, so I was considering it as a perfect place to start. And you can fit.   Keith Weinhold 00:38:39  You can get all four seasons in Libre land. What else should one know about Libre land that they come approach you with questions about what do people really want to hear about?   Vit Jedlicka 00:38:50  They of course are interested in the sport. They want to see how what kind of utility does it have? They're a bunch of countries where you can use it to get in and out, which is kind of cool. But the main utility for Americans, for example, is that they use it on crypto exchanges, or they use it with different financial institutions as a second passport. If the US passport is not good for that, it's a great membership club, you know, in the country that is just being born. And and it's a great social gathering. Think about this. 35,000 Americans that sign up for citizenship as well.   Vit Jedlicka 00:39:22  We've got a small consulate in every bigger state, or at least a representative person. The branch, for example, here is representing liberals in Washington, D.C. so we've got a nice network of nice guys all around the place, and then a potential big supportive network with all of these people that sign up for citizenship.   Keith Weinhold 00:39:41  Now, how do you get the word out about libertarians so that people can get interested? Of course, we are an example of this right now, as our audience is learning about liberal land and the pros and cons of this concept of a potential condition. How do others learn about it?   Vit Jedlicka 00:39:55  There were articles written in Liberal, and I believe in more than 40,000 different medias actually, so we were pretty heavily covered in past. I believe more than 1 or 2 billion people learned about it through the media outreach, but the word is also spreading from person to person. Like people like it. They get on board their friends, their families. It's kind of exciting to see that.   Keith Weinhold 00:40:18  What about the language in the culture that you see developing here? Will it feel European just based on its geographic proximity? Is that what you foresee, or does it have more to do with where the inhabitants come from?   Vit Jedlicka 00:40:31  The English, of course, is number one language, but we are also developing liberal English out of all the mistakes that we make in English, that makes the language a little bit difficult to learn and understand.   Keith Weinhold 00:40:41  Americans have to learn English.   Vit Jedlicka 00:40:43  We've got a quite nice culture there, which is, of course mixture of the local Slavic culture with this international make sense nowadays, people, a lot of people from Scandinavia that are moving in. I think we've got a very good German group now coming. There is quite a few Americans that are being involved. It's quite difficult, for example, for Americans to stay liberal. And right now we have to improve our relationship with Croatia because Americans are being banned from actually, for some strange reason.   Keith Weinhold 00:41:15  Okay, still some antagonism with your neighbor Croatia. That's kind of.   Vit Jedlicka 00:41:20  The situation.   Keith Weinhold 00:41:20  In Croatia has created some access problems as well. Tell us about that.   Vit Jedlicka 00:41:25  Well, there's been solved. Last year we when we we we came in to liberalize with more than 60 people at the same time. So they had no means of preventing that access. And since that time actually have free entry in an hour of liberalized. We have a small border crossing there with the with the Croatian police and kind of agreement that we can pass in and out, which is nice.   Keith Weinhold 00:41:46  Try to keep things smooth with Croatia there on the one side of Liberal and here this new Start-Up nation. And we're talking with president Vit here of Liberal. And are there any last things that people need to know about liberalism before I ask how they can go to your website and learn more? Are there any just other last things I think we should know?   Vit Jedlicka 00:42:05  It's a great opportunity to visit now with these two festivals. Those are nice social gatherings. It's the floating metal festival in August. That's the way.   Keith Weinhold 00:42:14  Man. Like the Burning Man.   Vit Jedlicka 00:42:15  Yeah, about the float. That's floating, man. Because we're on Danube. And then there is the Liverpool Echo, which is a major international festival that has moved on this year, which is based on an article, a famous Mexican festival that will be a probably the biggest cultural event this year.   Keith Weinhold 00:42:33  Well, literally. And be a success if it is a net exporter rather than a net importer, because it's difficult to have sectors for everything from industry to agriculture in Beyblade.   Vit Jedlicka 00:42:46  Well, our biggest export is freedom. Ideas like it's like Chile spreading like wildfire. think about it. Like for two months we had the biggest immigration in the world. We go to the United States, where there was more people applying for citizenship of liberal. And then there were applicants for green cards in the United States. The idea itself, it's something that the time has come. There is amazing interest in building new countries, building free countries. And right now I can see that we are on the right track when people like Canada are pushing for transparency through blockchain, because we know what they are talking about. We have already done it and we are applying it in the real world.   Keith Weinhold 00:43:24  Well, it's an interesting experiment in this way. You, the listener of the viewer, you can follow it as an experiment, as an example of what to not do or what to do as live land develops. Why don't you let our audience know how they can learn more about it?   Vit Jedlicka 00:43:42  Fairly easy to apply for citizenship.   Vit Jedlicka 00:43:44  You can first become your resident and then come and help some different means. Or you just directly go for the citizenship. It's an investment of $10,000 or donation of $10,000. And you become a member of of our community with the passport and with the right contacts to the right people. That will really help you to get the best out of the community.   Keith Weinhold 00:44:04  Well, I don't have a great chat with a national president every day, but I sure did today. Thanks so much for your time. It's been interesting learning about liberalism. Thank you very much.   Vit Jedlicka 00:44:15  Made me think UK and I hope to see you a liberal one.   Keith Weinhold 00:44:17  Maybe you will. It sounds like a donation of ten K gets you a liberal and passport. Like I said earlier, as of March 1200 people had paid up to that amount for the passport. Music festivals and conferences in Libya. In the next few months, that could be a way to check it out. Now, it's certainly something I'd need to know more about before I could either endorse it or reject it.   Keith Weinhold 00:44:48  Citizenship in Libya planned to get more of the skeptic side. The criticism I would visit the Libyan Wikipedia page and get ready for some dismissal of its diplomatic recognition there. Then you can visit Libre Land Oregon, learn more about citizenship status, the passport actually helping with the construction of the territory and earning libre land merits, which is a cryptocurrency. If you find it interesting, it's a matter for you to do some deep due diligence on next week. The King of Commercial Real Estate will be here with us. Until then, host Keith Wendell. Don't quit your day, Adrian.   Speaker 6 00:45:31  Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of yet Rich education LLC exclusively.   Keith Weinhold 00:45:59  The preceding program was brought to you by your home for wealth building. Get rich education.com.

Coming to you from FreedomFest in Las Vegas, I talk with Founder Mark Skousen. He’s been named one of the World’s Top 20 Living Economists. Also, an event summary with GRE Investment Coach, Naresh. Learn about the deleterious consequences of rent control. President Joe Biden supports it (somewhat). If four tenants live in identical fourplex units, it actually makes sense for them to pay different rent amounts. I explain. We can construct more housing by relaxing zoning requirements in the right way—reduce off-street parking requirements, increase ADUs, no rent control, reduce minimum lawn sizes. There’s higher homelessness in L.A., San Francisco, and Austin than Houston. Houston has a lower-cost market, few zoning requirements, and less NIMBY mindset. Politicians run on platforms like immigration, abortion, and inflation. But they don’t run on reducing the debt because they don’t see it as a problem that they created. At FreedomFest, I attended a presidential debate between the current candidates of the Libertarian Party, Green Party, and Constitution Party. Most or all agreed that the Fed should be abolished. The common theme at FreedomFest was: “Government, get out of the way.” Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation   Complete episode transcript:   Keith Weinhold** ((00:00:01)) - - Welcome to GRE. I'm Keith Weinhold. I'm here at the world's largest gathering of free minds. It's a conference called Freedom Fest where I talk to the conference founder. He's been named one of the top 20 living economists in the world today, as well as a talk with one of our great investment coaches to learn what my conference takeaways are and more. Freedom, life, liberty and the pursuit of real estate and investing today. And get rich education.   Robert Syslo** ((00:00:36)) - -  Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Weinhold writes for both Forbes and Rich Dad Advisors advisors and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus has had its own dedicated Apple and Android listener.   Robert Syslo** ((00:01:10)) - -  Phone apps build wealth on the go with the get Rich education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates** ((00:01:21)) - -  You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold** ((00:01:37)) - -  We're gonna go from Oswego, New York to Lake Oswego, Oregon, and across 188 nations worldwide. I'm Keith, while you are inside, get rich education. I'm attending a free office live and in person in Las Vegas today. One key economic freedom and what makes a free market free is that ability for producers and suppliers and landlords to set prices based on what the market will bear, whether that's a high price or a low price. Now, what's wrong with rent control, which is a law that puts a ceiling on the amount of rent that you're allowed to charge? Well, that sounds like a nice thing to do for one set of people in the short term. Well, rent control has the same effect as price controls on consumer goods.   Keith Weinhold** ((00:02:30)) - -  If the government thinks that cars are becoming too expensive, and they set up a new law that says that you can't charge more than $20,000 if you want to sell a new car, well, then those manufacturers will stop producing cars and soon enough, you, the consumer, cannot buy a car. You'd no longer have an automobile market at all. And the consumer suffers under no choice and even austerity. Put price controls on beef jerky and companies will stop making beef jerky. Put price controls on rent called rent control, and landlords have zero incentive to provide property, no motivation to improve property. And there is a raft just reams of evidence and studies out there that show that rent control, that is a surefire way to then reduce the supply of functional housing, just like the supply of cars or beef jerky would get cut. That's especially not a good solution in today's real estate supply constrained world. And, you know, here's what's interesting. The government created the inflation in the first place. That led to the high price problem that they think they can cure through rent control.   Keith Weinhold** ((00:03:52)) - -  I mean, government keeps trying to solve a problem that they created. Well, just take a new course, a new direction and stop the inflation. In that way, you'll cure the higher prices long term and then near term. What you can do is relax zoning requirements in order to create more housing. I mean, in three cases here, less government cures the problems, no inflation, no rent control, and thirdly, no stringent zoning. Knock down all three of those walls and instead, now what have you done? You've encouraged a bunch of builders to come into a market. You've encouraged competition. And what does competition do? It increases quality and it yeah, lowers prices. So cure the problem by knocking down the walls. You know, you as a landlord, I don't even think that there should be laws that say that you have got to charge every ten at the same rent amount. Yeah, and that is even if each one of your tenants has seemingly an identical unit, say, in a fourplex building.   Keith Weinhold** ((00:05:04)) - -  Now I'm on different fourplex buildings and I have most everyone like throughout history, I've had just about every tenant paid different rent amounts in the same building, even though all of the units were built at the same time and had the same square footage. Now a real estate investing newcomer, you know, they might think that that sounds unfair, that these tenants with basically identical units paying different rent amounts. But we all know how it works in practice, in real life. I mean, one of those four tenants might have the front unit with the best views, while the tenant with the best view. Well, of course they're going to be willing to pay more for that unit. Well, that right there, that's free market supply and demand. The fourplex unit with the best view will rent out faster and for more. But instead of that arrangement, if it's mandated, say, by the government that everyone in the building must pay the same rent, say that each of the four units must pay exactly $2,000.   Keith Weinhold** ((00:06:07)) - -  Oh, well, then the tenant with the worst view, which then has less benefit to living there, has to subsidize the tenant with the best view that already has the best benefit of living there, because they must all pay exactly $2,000. And then what about things like several months from now? Say you have a vacancy at Christmas. Well, it's hard to get a tenant to move at Christmas to get them in there. So you'll charge a low rent just to get someone in there then. Versus how you charge more now in summertime, because tenants demand units, a lot of them want to get settled in during the summer before the school year starts. What about a tenants living in your fourplex or rental single family home for five years, and their unit hasn't been painted or renovated in a while, and the tenant has seen you already. Well, they're probably going to pay less then a new tenant will in there say freshly painted unit. So my point is that even making every tenant of one individual fourplex building have to pay the same rent amount.   Keith Weinhold** ((00:07:10)) - -  Well, that is a form of rent control and that is actually unfair if they all have to pay the same rent amount. The free market is what's fair and enables a system of rent price discovery, instead of being confined and oppressed under rent control. Now here, the Freedom Fest in Las Vegas and we'll discuss the conference more. Today I attended one panel discussion. It was called How the Government Created the Housing Crisis and what we can do to Fix it, And it really gave specific solutions to provide more housing. This includes things like stop mandating a minimum square area for parking spaces. Stop mandating such large lawns. Instead, people can share a public park and relax the requirements that have so many easements out of property. Well, all that stuff is zoning in its stifles development and it leads to higher housing prices. Now, I maintain that not all zoning is bad. I don't think that you want a housing development surrounded by factories with smokestacks. So it's about relaxing zoning in the right way and promoting the right policies, like the benefits of a yimby movement.   Keith Weinhold** ((00:08:27)) - -  Yes, in my backyard. Removing off street parking mandates altogether and allowing more ADUs allow Single-Family homes on smaller lot sizes. And we've already seen some of that. We're seeing home builders do more of that. They're building single family homes closer together, smaller lot sizes. But a lot of the wrong strategies exist out there. And once people get the benefits, like the beneficiaries of these wrong strategies, I mean, they don't want to give them up. Like New York's rent stabilization program that gives rent breaks to wealthy New Yorkers that also have a pricey home out in the Hamptons. Well, that's not the right policy. That's not helping the people that need it most. And you know, when the wrong policies infiltrate a market, the reaction can be amazingly rapid. I mean, how rapid? Like, do you think you would see a construction project literally halt mid construction? Yeah. You actually can like construction cranes just stop swinging. In Saint Paul, Minnesota, you saw construction cranes stop mid-air mid construction.   Keith Weinhold** ((00:09:38)) - -  When Saint Paul moved toward a rent control of no more than 3% annual rent increases. Well, that's a form of rent control. When that happens, building stops because the developer knows that people don't want to buy those units or invest in those units or rent those units. And I've got more to discuss on housing shortly, but let's bring in the very founder, host and producer of Freedom Fest here. He has been named as one of the top 20 living economists in the world. Doctor Mark Skosan and you will hear some background noise in these conference interviews. We are at a conference at times. We're in the exhibit hall now. Interestingly, here with Mark, I bring up with him how much I dislike these political labels that just divide the nation. I mean, don't you agree that it would be great if the nation were less divided? Yes, we all would. Well, we can do our part by avoiding saying words like red and blue and oh, you know, I can't stand those maps.   Keith Weinhold** ((00:10:44)) - -  Then you see, I've mentioned this to you before. You see these maps in political season that show where the red states are and where the blue states are. I mean, how divisive and polarizing that is not unifying in the United States of America. The fact that this conference has a non divisive founder like Mark Skosan is what attracted me here. Sure enough, here you'll hear me tell him how much I appreciate this. This was prescient because the very next day after this interview that you're about to hear, that was the assassination attempt on former President Donald Trump. Hey, it's Keith Reinhold here. I'm at Freedom Fest with Freedom Fest host and founder Mark Scott. And thanks for having us here. Yeah. My pleasure, my pleasure. Thank you for coming. Well, I've got to tell you one reason that attracted me to this conference. I was concerned that it was going to be too politically partisan. And I respect you so much, because I know you have said that in most of all the books you've read, you've avoided these labels like liberal, conservative, left, right, red, blue, yes, progressive, conservative and all that.   Keith Weinhold** ((00:11:58)) - -  So that's what I'd like hearing when we talk about this conference championing principles of freedom and liberty. What does an American really need to know about freedom and liberty that's under attack today?   Mark Skousen** ((00:12:09)) - -  I think what we've tried to preach is the Adam Smith model, which you call the system of natural liberty. And what that meant was under the rule of law and justice and a robust competitive model. You've maximized the freedom of choice, freedom to choose your own work, your own business, how much salary you're going to charge or wages you're going to pay, whether you can hire or fire people. So within those rules, within those guidelines, you have maximum security. But in today's world, more and more everything, it's either being prohibited or mandated. So we're being squeezed from both sides. The idea of freedom of best to maximize freedom is for us to come together and find out what are the best solutions to improve our lives is the idea. So we talk philosophy, history, science and technology, healthy living, economics, politics.   Mark Skousen** ((00:13:05)) - -  It's all part of the program here. But it's not just a political conference.   Keith Weinhold** ((00:13:08)) - -  Part of this is lowering the guardrails and promoting free markets. The only thing that we've all seen happen in free markets is inflation, oftentimes ironically, created by some of those forces that put guardrails in place. So what does an investor there are a lot of investors here. Oh yeah. What does an investor need to know with regard to inflation today. How can the everyday person respond.   Mark Skousen** ((00:13:33)) - -  So one thing is we have a whole section on financial freedom because without financial freedom you're limited in what you can do and your influence that you can have. So this is very important. We live in an era of permanent inflation. Since World War two we've had permanent inflation. We didn't used to, but now we do because we're off the gold standard. We've adopted Keynesian economics, which means deficit spending all the time. We have adopted the dollar rather than gold. So we've lost that discipline. The fed is the engine of inflation. And they even have a policy of a minimum of at least 2% inflation rate.   Mark Skousen** ((00:14:10)) - -  We had a whole session. Actually Steve Forbes wasn't there, but Nathan Lewis is co-author of in the book inflation. We had a big session on what are the best inflation hedges. So we talk about gold and silver. The stock market, Bitcoin rallies, high bonds, real estate. We had all of those discussion. And that was the great thing about Freedom Fest is that you really do get answers and best solutions. At our conference, I attended that particular. Oh you did? Yeah.   Keith Weinhold** ((00:14:38)) - -  From Freedom Fest.   Mark Skousen** ((00:14:39)) - -  I've really.   Keith Weinhold** ((00:14:40)) - -  Enjoyed this.   Mark Skousen** ((00:14:41)) - -  So far. We have an exhibit hall.   Keith Weinhold** ((00:14:42)) - -  Which happens to be right. Oh yeah, we have breakout sessions that attendees can go to for the sessions that particularly interest. There are then a big general session where I've enjoyed presentations from Robert Kiyosaki to Ice-T. What is the future potential for getting Fest attendees? What would you like to tell them about what this conference entails? What they can.   Mark Skousen** ((00:15:03)) - -  Expect in the.   Keith Weinhold** ((00:15:03)) - -  Bank that they can.   Mark Skousen** ((00:15:04)) - -  Get? Well, one of the things is just the wonderful camaraderie that you feel, the buzz that you feel the meeting of like minded people who are all trying to seek best solutions rather than labels and attacking people.   Mark Skousen** ((00:15:18)) - -  And, we have the presidential debate here, for example. Well, we have all the third parties come together libertarians, the Constitution Party, the Green Party. We have RFK coming. The two major parties decided not to come. So, so much for their belief in democracy. But the idea is there's a there's something for everybody here. You want to improve your lifestyle, you want to prove your financial situation. You want to have better clarity on what is the proper role of government. Read about this A conference for you. This is an annual event that we usually have in the summer in Las Vegas and then other cities, and it's only 3 or 4. You know, we live busy lives, so can we come together once a year to learn to network, to socialize and celebrate liberty? I think we can if we plan ahead. When we.   Keith Weinhold** ((00:16:06)) - -  Drop these labels, we can get a clear download of sorts, remove filters.   Mark Skousen** ((00:16:11)) - -  And think.   Keith Weinhold** ((00:16:12)) - -  Clearly. And this is a largest gathering.   Mark Skousen** ((00:16:15)) - -  Of.   Keith Weinhold** ((00:16:15)) - -  Free minds. So for Mark Skelton I'm Keith Weigel. You heard Mark Skelton mentioned the presidential debate at Freedom Fest. I watched quite a bit of that. More on it later. Gray Investment coach narration is here in person with me at Freedom Fest. Coming up, he and I give you a download of some policy and real estate investing highlights that you can learn from. That's straight ahead. I'm Keith Reinhold, you're listening to get Rich education. Hey, you can get your mortgage loans at the same place where I get mine at Ridge Lending Group Nmls 42056. They provided our listeners with more loans than any provider in the entire nation because they specialize in income properties, they help you build a long term plan for growing your real estate empire with leverage. You can start your prequalification and chat with President Ridge personally. Start now while it's on your mind at Ridge Lending Group. Com that's Ridge Lending group.com. And Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings.   Keith Weinhold** ((00:17:28)) - -  If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk. Your cash generates up to an 8% return with compound interest year in and year out, instead of earning less than 1% sitting in your bank account, the minimum investment is just 25 K. You keep getting paid until you decide you want your money back there. Decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor, to earn 8%. Hundreds of others are. Text. Family to 66866. Learn more about Freedom Family Investments Liquidity Fund on your journey to financial freedom through passive income. Text family to 66866.   T. Harv Eker** ((00:18:23)) - -  This is the millionaire mind trick. You're listening to the powerful get Rich education with Keith Weingarten.   Speaker UU** ((00:18:29)) - -  Don't quit your day dream.   Keith Weinhold** ((00:18:39)) - -  Hey, we're here talking about Freedom Fest, and I'm doing that alongside gray investment coach. The race. Hey, welcome in the race. Hey, Keith.   Keith Weinhold** ((00:18:47)) - -  We are here in real life at Freedom Fest in Las Vegas, Nevada. And what Freedom Fest does is it promotes and champions the ideals of freedom in the United States, and it includes a bunch of guest speakers that have made appearances here that you got to see in person, from Ice-T to Robert Kiyosaki to a bunch of presidential candidates as well, sometimes not championing principles of things like freedom and tolerance and liberty and tyranny. And I think anyone can agree to freedom on a this basis. But when you think it through and where the discussion really begins is, oh, well, if you have freedom, does that mean you should be free to do anything at all that you want? Probably not. And that's quite a discussion or tolerance. That's an ideal. That sounds good, but oh does that mean you should tolerate absolutely anything? No probably not. So that's where a lot of the interesting policy decisions and a lot of the interesting debates come in here in the race. And I attended some of these presentations together and other ones separately.   Keith Weinhold** ((00:19:53)) - -  So we have some different perspectives on what we've learned here at Freedom Fest. Grace, why don't you tell us about some of the good takeaways that you had? I had a lot of good takeaways, Keith.   Mark Skousen** ((00:20:03)) - -  This is not just about freedom in the United States. It's about freedom around the world. And you even interviewed and I believe we're playing that interview soon. If you haven't already played it yet, you interviewed probably the freest nation in the world. It's a brand new nation and it's called liberalism, like liberty, land libre land in Europe. And it touts itself as the freest nation in the world. So there have been all sorts of topics happening or talked about from business, finance, economics, real estate, crypto, bitcoin, gold to non-business and financial topics, which I actually found more interesting simply because.   Keith Weinhold** ((00:20:46)) - -  Most of what I listen to and what.   Mark Skousen** ((00:20:48)) - -  Is business finance econ. I wanted something a little bit different, especially as a father of two young boys. There were topics on gender and sexuality.   Keith Weinhold** ((00:21:01)) - -  And.   Mark Skousen** ((00:21:02)) - -  Vaccinations being the vaccinated versus unvaccinated. Robert F Kennedy was the keynote speaker at this conference, and he's a major presidential candidate.   Keith Weinhold** ((00:21:12)) - -  RL Jr RFK.   Mark Skousen** ((00:21:14)) - -  Jr. Even though he's not part of a major party, he's probably the most popular third party candidate over the last 30 years, so he's a candidate. There were lectures on healthcare.   Keith Weinhold** ((00:21:28)) - -  And.   Mark Skousen** ((00:21:29)) - -  How to be a better patient. And hold your doctor and hold the healthcare system accountable. The other aspect of this conference is there are some heavy hitters just walking around freely. Like I met Matt Ridley easily, I met Robert Kiyosaki, just he was dressed in very casual clothing to where people didn't even recognize them. And I did and told him how much I appreciated him. You know, you and the great podcast and huge inspiration for me. Yeah, people like Kiyosaki walking around freely, presidential candidates walking around freely, many third party candidates, not just RFK. He wasn't walking around as freely. He was in and out pretty quickly with really heavy security.   Mark Skousen** ((00:22:09)) - -  But you had other third party candidates, like the Libertarian Party candidate and the Green Party candidate walking around freely. I ran into Vivek Ramaswamy, his campaign manager, while getting pizza. We are both standing in line getting pizza. We ended up having about almost a two hour lunch. One day talking finance business Vivek's policies his future. So overall this conference very educational, inside the classroom, very beneficial outside the classroom. We're going to bring some guests on the great podcast. We met at this conference, publicists who we met at this conference who represent good guests, some business development opportunities, maybe some not just good guests, but people who we would recommend their newsletters, maybe even outside of the real estate industry, people, contacts within the real estate industry. So it's not all about what you learn in the classroom. It's also about who you meet, the networking, the business development. Overall, just a really, really successful experience. There were a few.   Keith Weinhold** ((00:23:11)) - -  Shows that snagged me as a guest while here as well.   Keith Weinhold** ((00:23:15)) - -  I'm talking about American freedom here chiefly. But you did mention Lebanon, a startup nation between Croatia and Serbia. That's seven square kilometers in area. You know, I think there are a lot of people at a conference like this and just anywhere in society where if you ask them, well, hey, if you think you could run the nation better if you were starting it all over again, how would you start a nation from a clean slate and actually got an opportunity to do that? Well, I'll be interviewing the president of Lebanon here, where this country is trying to seek recognition from any nation. They want to start their own country, and they want to do freedom and really begin a country of their rights.   Mark Skousen** ((00:23:55)) - -  And see is, is is.   Keith Weinhold** ((00:23:57)) - -  Is is.   Mark Skousen** ((00:23:57)) - -  Bitcoin I think not just crypto but it's bitcoin. And it's interesting because you hear a lot of times you don't like the country that you live in, go somewhere else. These people took it to a whole new level and said, well, we're just going to start our own country.   Mark Skousen** ((00:24:10)) - -  And and it's about three square miles. So it's about the size of the area that I lived in. Tampa, not even Tampa, just almost the neighborhood that I live in, Tampa. So it's not a huge country, but it's interesting talking to them. And as you'll hear in the interview, hearing about what it's like to start a new country and there's a lot that you have to go, you know, there's a lot of fundraising if you want to call it that, that you have to do. It's it's a lot it's bigger than the business.   Keith Weinhold** ((00:24:37)) - -  You'll learn more about that on an upcoming episode of the show with the nation of Berlin. I attended a presentation called A Forgotten Solution to the Housing Crunch. Most people think of real estate development is either single family homes or multifamily properties. This espoused the building of light touch density of 2 to 4 unit properties, and how that increases the density. But it maintains character. And they showed an awful lot of photos in the presentation where from a street, a four unit building can actually like a single family home when it has the right design and therefore you don't get this NIMBYism pushback.   Keith Weinhold** ((00:25:16)) - -  I saw a number of smart design examples of that. And you know what this does? Will this help keep the cost of housing down in an area? What it allows for in a society is it allows the children who grew up in an area to afford the housing there without being priced out. Also called this multifamily missing middle 2 to 4 unit housing. You don't have the NIMBYism pushback that you do with multifamily housing. There are an awful lot of opinions here about people that want to avoid rent control, about how that's typically the bad policy. And many likened rent control to bombing American cities over time because landlords don't have an incentive to improve anything. So rent control is not a good solution to increasing the housing supply. And a lot of the discussion was how you get politicians to say no to rent control, sharing with them. Cato Institute studies on how the free market really makes for a higher housing supply, because that makes developers want to come into the market. And it was noted in one of the panel discussions about rent control and about providing more affordable housing.   Keith Weinhold** ((00:26:27)) - -  But if there's a four unit building of owners of all four units of that building, how that's deemed as less threatening than if there's a four unit building of renters.   Mark Skousen** ((00:26:38)) - -  So question for you, the housing panels that you attended were these people, were they private investors or they worked for private equity companies? I think maybe a documentary filmmaker who does real estate documentary, what was their background?   Keith Weinhold** ((00:26:50)) - -  Think tanks and yes, a documentary filmmaker of a film called Shabbat Vacation. And I did not get to see the film about the perils and ills of rent control on Shabbat vacation. But I talked with one of the people that worked on the project and basically that movie. It does glorify the landlord that was brought up. And typically in popular culture, you don't glorify the landlord. I mean, the landlord is kind of the beleaguered party in this, and it was critical of rent control there. And so it's helping to spread an awareness of how that really doesn't help the housing supply. Quantity work quality over time. I attended another presentation.   Keith Weinhold** ((00:27:33)) - -  It was called Homelessness California versus Texas and Homelessness. Of course, it's a multifaceted problem. There are a number of reasons that it occurs, but they really brought up that it often results from the loss of family connection a lot more often than what some people think. And it really brought to light that Houston has a lower proportion of homelessness in L.A. and San Francisco does. What are the reason this that that is the case. And that is because Houston has a lower proportion of homelessness, because it's a lower cost to build there, and Houston has way fewer zoning requirements, you see, almost like a hodgepodge of building across Houston. You have substantially less NIMBYism in Houston. You just have a culture there that doesn't push back on buildings. So those are really some of the key parallels between why the homelessness crisis is worse in California than it is in Texas. In most places, Austin actually has policies that are so agricultural to the rest of Texas, giving Austin a somewhat higher homelessness rate.   Mark Skousen** ((00:28:38)) - -  Wow, that's a lot of real estate content that you got there.   Mark Skousen** ((00:28:42)) - -  Anything else? Keith?   Keith Weinhold** ((00:28:44)) - -  Another presentation I attended was called Permanent Rising Prices. What are the best inflation hedges? And, you know, for a while they didn't even put real estate up there as one of them. And I was almost foaming at the mouth getting ready to ask a question. But they did bring in real estate at the end. When it comes to inflation. Many of them brought up the fact that we have multi-trillion dollar deficits even when we're in good times. I had never thought of it that way before. If most people would look at the history of the world and what's happening with the nation while they're running multi-trillion dollar deficits, they probably think that they're trending toward poverty and austerity. But that's not the case. This is what's happening in good times. And politicians, they really don't run on a platform of reducing our debt. You notice that none of the politicians do that. Instead, you see politicians run on platforms like immigration or the housing shortage or abortion. But, you know, politicians, they don't run on a platform of reducing our debt.   Keith Weinhold** ((00:29:42)) - -  And that's because they all see it as a problem that they didn't create, and they don't really want to work their way out of it either. So that's why it doesn't come up. Also, with the best inflation hedges, they showed the rank of asset performance for the last 200 years of five items stocks, bonds, treasury bills, gold and the dollar. And really it was coming down to two guys debating on whether stocks or gold were better. They both made their case either way. And they didn't bring in real estate until the end. But when they brought in real estate, they broad brushstroke and do what so many do, and they just looked at it as an asset class in what is its capital appreciation over time. Yeah. And you know, they didn't separate out income property as its own class like we would. But some of the panelists, they did not like real estate. They talked about how it's not liquid, about how you have to borrow funds, about how there's a maintenance burden and a repair burden with real estate, and you have tenants and management and some things like that.   Mark Skousen** ((00:30:40)) - -  Fair, all fair.   Keith Weinhold** ((00:30:41)) - -  All fair points. And one panelist brought up that gold has outperformed the gold mining stocks just historically over time. So those are some of the inflation hedges and some of the other issues with inflation that you don't think about very much as you have policy advocates and politicians addressing.   Mark Skousen** ((00:30:57)) - -  Well, I'll say gold mining stocks and most traders will tell you traders by gold mining stocks, not investors. So gold mining stocks are meant to be held over the short term. They are not meant to be held over a long period of time like physical tangible gold is. So for people to say, oh yeah, gold outperforms gold stocks over a 30 year period. That's true. But most people are buying gold stocks Like gold mining, stocks are only holding over a short period of time.   Keith Weinhold** ((00:31:29)) - -  Well, housing and inflation were such widespread themes here since it has been such a problem, much of it wrought by the pandemic. As we wind down here summarizing what we've experienced at our first Freedom Fest, for each of us, have any last thoughts with respect to housing and inflation since they were such overarching themes?   Mark Skousen** ((00:31:49)) - -  Well, the common theme here at Freedom Fest was government got out of the way because if you let the free market work itself out, if you let people be, people work themselves out.   Mark Skousen** ((00:32:01)) - -  But the onus on people to take personal responsibility, that in and of itself solves the inflation problem because you don't have government restrictions, government mandates, and And this was a major topic and that was the lockdowns of 2020. The mandatory vaccine mandates of 2021, those were all inflationary because when you have people fired from their jobs or dropping out, quitting their jobs because they didn't want to take this job, that means prices are higher and lower. Workforce means you have to pay the whoever is there higher wages. And that's what ended up happening. So it's not just about dollars and cents. It's something as simple as getting a job caused inflation. And ultimately when inflation goes up, of course that's going to affect rents, that's going to affect housing. There was a major savings rate, which I'm sure you covered in 2020, where people were saving money, being locked down at home. And once things started opening up, that money was spent and that created inflation. And people, as soon as they could get out of their house said, hey, I want to move to Florida, or I want to move to Texas or Utah or where we are here in Nevada.   Mark Skousen** ((00:33:10)) - -  And that's why housing values exploded. So the inflation was caused by government. It wasn't just the government spending. It was actual psychological and physical things that the government or the policies of the government did that created an inflation. The government spending, the low Federal Reserve interest rates are just a piece of the pie, or they're just a couple of pieces to the pie. And so it was interesting to learn that all these other areas, all these other, like I said, policies that the government enacted. And that's what Robert F Kennedy Jr, RFK, talked about in his keynote speech. All of these policies affected the purchasing power of our dollar.   Keith Weinhold** ((00:33:53)) - -  We have all had more dollars chasing fewer goods and services, one of those being housing itself. Hey, it's been great to meet up here in real life at Freedom Fest this year in a race. I appreciate you sharing your thoughts. Thank you Keith. I'm great. Yeah. Narration I enjoying freedom Fest here. Oh, there's such a wide variety of vendors and viewpoints all around this concept of free thinking, typically with getting government out of the way.   Keith Weinhold** ((00:34:29)) - -  In fact, in the exhibit hall, which is right across from where the speaker discussions are, there are booths for gold, real estate, cryptocurrency stocks, a dating app for unvaccinated people, self-directed IRAs, a program for teaching capitalism to school children. There is even a book that espouses biblical capitalist virtues. And then elsewhere in the exhibit hall, atheist virtues. There was also a promoter of a currency called the Nevada Gold Back, and what it is is 1/1000 of an ounce of 24 karat gold. And it is physical like gold back. It looks sort of like a dollar bill, just much, much more in the exhibit hall. Now, one concept that I did not hear any criticism about was Trump tariffs. Tariffs are not free market. In fact, it's akin to erecting a trade wall. And maybe there is a session about it. But there are many sessions going on concurrently and I can't attend them all. And in other sessions I was asked to be a speaker and was interviewed. Like you heard.   Keith Weinhold** ((00:35:45)) - -  Doctor Scholes had mentioned there was a presidential debate here. Now the two major party candidates didn't attend. I watched RFK Jr speak here, an independent candidate, and he was not in the presidential debate, though he spoke separately in the security for RFK Jr was formidable, even though he spoke the day before the Trump shooting. The presidential debate was among three different parties. It was Jill Stein at the Green Party, Randall Terry of the Constitution Party, and Libertarian Party candidate Chase Oliver, who is a particularly bright, articulate guy, and most or all of those candidates, they agree that we should end the Federal Reserve. And the presidential debate, interestingly, was moderated by Congressman Thomas Massie, who has more formally proposed ending the fed outside of the presidential debate. I also attended a different session. It was a Bitcoin debate called Will the Bitcoin bubble ever burst? And you had two guys promoting and talking about the virtues of Bitcoin. And then you had two guys criticizing Bitcoin. And one of the two bitcoin critics was Whole Foods founder John Mackey.   Keith Weinhold** ((00:36:58)) - -  So this really got interesting. Now I like a lot of the benefits of Bitcoin personally, but I must say in this particular debate the Bitcoin critics decide that Maggie was on. Oh they won this. The proponents best points were the people back in the day said electricity in the internet word feasible. They weren't going to last, but electricity and the internet won and Bitcoin will to the pro camp also espouses that Bitcoin is the first time we've had absolute digital scarcity. You cannot copy and paste bitcoin, but yeah, the critics did a better job. They said that Bitcoin is always made future promises, but it falls short like its awful acceptance rate as a currency. Still today its price levels are dreadfully volatile, just miserably volatile. You can't count on it then as a store of value. John Mackey said that Bitcoin produces no goods, no services and no cash flow. The Bitcoin critics also asked more than once this question how has Bitcoin made anyone's life simpler, easier or better? There really weren't any good answers to that question, and they even critiqued that with its fixed supply at 21 million will, then it cannot grow with the economy.   Keith Weinhold** ((00:38:21)) - -  And then what this can do is create deflation and depression. And I would like to adhere myself that each Bitcoin is already divided into 100 million tiny pieces called satoshis. And it might be able to be divided smaller than that eventually. But yeah, the Bitcoin critics won. It is quite a win for bitcoin, in my opinion, that this nascent digital asset that was only worth a few pennies 15 years ago when it came out, I mean, it was something that only cryptographers and digital geeks understood. Well, today you've got presidents discussing bitcoin. So it's certainly had some success just in branding and name recognition alone. That is just about a wrap from Freedom Fest this year here in Las Vegas, there were record breaking temperatures outside in the Mojave Desert in the middle of summer. Inside, it was a celebration of ideals like life, liberty, prosperity, and of course, freedom. Until next week, I'm your host, Keith Wendel. Don't quit your day, dream.   Speaker 6** ((00:39:35)) - -  Nothing on this show should be considered specific, personal or professional advice.   Speaker 6** ((00:39:39)) - -  Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss the host is operating on behalf of yet Rich education LLC exclusively.   Keith Weinhold** ((00:40:03)) - -  The preceding program was brought to you by your home for wealth building. Get rich education.com.

Learn how garages and parking areas add value to property. Find out how to earn more rent for your garage space. Adding a garage to a rental doesn’t fetch much more rent income. But you will rent your place faster and tenants stay longer. To get more rent for a detached garage, rent it to an off-site tenant. The future of parking and garages is positioned to be shaken by autonomous cars. Fewer people will need to own or park cars. Meet me in-person at the next New Orleans Investment Conference. It’s November 20th - 23rd, 2024. Register here. Brien Lundin joins us. He is the host of the world’s longest-running investment conference, the New Orleans Investment Conference. He’s also editor of Gold Newsletter. He & I discuss inflation, interest rates, real estate, and gold.  Gold is up 20%+ annually. This is because foreign nations, like China, are beginning to prefer to own gold rather than US debt. There’s a case for interest rates to go higher, another case for them to go lower. Brien tells us why he believes the gold price will keep rising. Increasingly, asset values are positively correlated—real estate, stocks, gold, crypto, oil, and even collectibles. Personally, though I don’t see evidence that gold builds wealth, history shows that it’s a good place to store wealth. Meet me in-person at the next New Orleans Investment Conference. It’s November 20th - 23rd, 2024. Register here. Resources mentioned: Meet me in-person at the next New Orleans Investment Conference. It’s November 20th - 23rd, 2024.  Register here. For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation   Complete episode transcript:   Keith Weinhold (00:00:01) -  Welcome to GRE! I'm your host, Keith Weinhold. Learn about garage real estate, how garages and parking add value to your property, and how to get more rent for the garage. Then we go from micro to macro. As we talk about the enduring value of a real asset that's minted, not printed, and another chance to meet me in person today and Get Rich Education.   Robert Syslo (00:00:27) -  Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Weinhold, who writes for both Forbes and Rich Dad Advisors and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener.   Robert Syslo (00:01:01) -  Phone apps build wealth on the go with the get Rich education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.   Keith Weinhold (00:01:29) -  Welcome to GRE! From Saint Augustine, Florida, to Saint Paul, Minnesota, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get Rich education as we cover a component of property that's a little talked about, garages and we're a real estate investing show. You learn about ways to optimize the rent income that a garage can produce for you, too. Now, if the home that you currently live in has a garage, it could be the entrance to the home that you use even more often than your own front door. That's how important and useful it's become. And understand that garages on homes, they didn't even exist until about 100 years ago, because that's when cars began to become popular. The emergence of the garage in American real estate is one reason for the downfall of the big front porch. You rarely see big porches on modern homes.   Keith Weinhold (00:02:26) -  Interestingly, some of America's most successful companies began in garages, places where you have workbenches and can tinker around with things. Google and Nike were launched in garages, and it's also where people store lots of things, sometimes so many things that they can't even get their car in there anymore. In fact, the word garage comes from the French garage. Spell that g a r e r meaning to store. But yeah, when cars became more popular in the 1920s and 1930s, that's when you begin to see garages. And then as cars got larger, garages got larger. And by the 1960s, as families began to own not just one car but 2 or 3 cars, garages became larger again, and a three car garage is pretty common today in a single family home, though it's rarely that big in a property that you're going to rent out. Now, if you've got a single family home and it does not have a garage and you want to make a garage addition. Well, you can only expect to recoup 65 to 80% of what you've spent.   Keith Weinhold (00:03:40) -  So it is a money loser. Then it really doesn't make sense to add one to a rental, perhaps only your primary residence, since you get the benefit of using it yourself that way. And if you add a garage to a rental, you know you just really can't get that much more in rent for it. It's usually not worth it, although the financials can look better for a carport addition instead. Now, if you've got a rental with the garage rather than without one, it actually can help you get your place rented out faster. But a tenants really not going to pay you even as much as 10% more in overall rent in most every case. Yet see, what happens is that a tenant, they tend to fill up the garage with stuff, and therefore they tend to stay longer than if there were no garage. A garage is one reason that single family rentals see longer tenant durations then apartments. Now, if your property though, if it's in a built up area and there's little on street parking, oh well then the addition of a garage that could have more of an impact on the value of your property than it would out in the suburbs.   Keith Weinhold (00:04:53) -  The garage does not count toward the square footage of a property because that's considered unfinished space. And your prospective tenant? They might not know that fact about the square footage. So that's something for you to keep in mind when you're advertising a home with a garage for rent. Now, older houses, they're more likely to have a detached garage is its own separate standalone structure that's built near the house. But you would have to walk outdoors in order to get from the house to the detached garage. In fact, the home that I grew up in and that my parents still live in in Pennsylvania has a detached garage. Their home was built around the year 1915, so more than 100 years ago, and my parent's garage also didn't have an automatic garage door opener for most of my life. I remember the big yank up that you'd have to make on the heavy door. So when my mom was about to back out of the garage when she was going to take me somewhere, what I would do is I would stand outdoors until she backed out so that I could open and then close the door by hand and then get in the car.   Keith Weinhold (00:06:06) -  Gotta get those legs under it and enjoy one deep squat there, Well, one reason that old houses have garages often detached from the rest of the home is for risk of gasoline explosion. That's because back 100 years ago, gas was stored in the garage because gas stations were yet to be invented. So you've got this trail of detached garages left behind in older neighborhoods, and some people still prefer a detached garage. Now there's a way for you to get more rent income if you're renting out a single family home with a detached garage, and this isn't always going to be feasible based on how the property's set up. But the way to do it is for you to get an off site tenant to rent your garage. Oftentimes, the renter of your single family home, you know, they just don't have as high of an income as someone does that lives in an upper crust neighborhood that might have a lot of toys to store their, be it a boat or an antique car, or even an RV, perhaps.   Keith Weinhold (00:07:13) -  Well, that off site renter in the better neighborhood, you know they're going to pay you to store their cars or their other stuff in your detached garage In that case, your rental home and garage would have two separate tenants, and you will enjoy more overall rent income than if one tenant was renting both the home and the detached garage. So what you really want to learn is you do your research though, is what laws cover the renting of a garage or a storage space because they typically fall outside the jurisdiction of landlord and tenant laws. But you need to verify that depending on your state or your area. Sometimes running a garage is the equivalent of renting a warehouse space, and the rules can be different when it comes to payment issues or other problems. And when you realize that some garages can even have dirt floors, you can see how different it is than a living space. Now, even if you're thinking about renting your garage to an offsite tenant. Most of the time making garage upgrades, it's just really not worth it.   Keith Weinhold (00:08:19) -  But note that I said most of the time. On the other hand, if you can make it marketable, maybe you need to do something smaller, like add an automatic garage door opener if it doesn't have one, and then you'll have to run the numbers to see if that is worth it. Now, one mistake that I made out of property, it wasn't that first ever seminal fourplex that I owned, but the second fourplex that I owned there in that building, each tenant had a small, simple one car attached garage, and then as each four plex unit went vacant, I went in and painted the inside the walls and ceiling of all four garages with a fresh coat of paint, and I would learn later that was not a good use of my time. It didn't help me get any more in rent. No tenant is really even going to stay longer for fresh garage paint, but frankly, I'm just not a handyman. I don't know how to fix anything. So one of the few ways that I knew how to add value, I thought was rolling a paintbrush over the inside of garage walls like I know how to paint and not much else replacing a faucet.   Keith Weinhold (00:09:29) -  Whoa, that right there. We're getting into, like, intimidating territory. Okay for me. In any case, duplexes in fourplex, they can often have garages, especially newer ones. And I think I mentioned to you here on the show before that I once owned an eight plex. It was a little quirky. It had a small single attached garage that was kind of on the end of the building. So eight units and just a one car garage. And actually this is a good example because those tenants, they paid about $1,500 for their unit, so none of them could really swing it. None of them could afford to pay an extra $400 for the garage. So again, the way to solve that is rent to a more affluent off site tenant. That's what I did. And I got 400 bucks. Now, understand something. When you're driving a neighborhood or you're looking on Google Maps, at times it can look like a home has a two car garage because you're only looking at the widths of the garage door.   Keith Weinhold (00:10:29) -  But that can really be a three car garage because on one side, the garage bay goes two cars deep, so you can't always tell how many cars a garage can hold just by looking at the width of the garage door. One reason that developers in Hoa's actually like garages that are too deep is that way. The driveway is more narrow. When driveways are more narrow, that means there's less asphalt and more green space in neighborhoods. Now, in some places, it doesn't matter too much if the garage is full of stuff and you have to park in the driveway, but in a cold, snowy place, it really helps to park cars inside the garage. So garages are typically more valuable to residents in areas that have real winters. In an apartment building, it can help to have assigned spaces for tenants. When I bought apartments, I've always loved it to my property manager to figure out the space assignments and rental property. Upgrading and resurfacing parking areas is another money loser. Now, we don't want to be slumlords, but the truth is repaving and re striping a parking lot that might look nice.   Keith Weinhold (00:11:44) -  You might do that. but the reality is that it will get you practically zero extra rent. Not a good ROI. Well, that's a take on garage's past and present. What about the future of garages and parking areas when it comes to the future? And this harkens back to episode 13 of this show. Yes, that's when I discussed driverless cars, also known as autonomous cars. Back in January of 2015, nine and a half years ago. Well, when autonomous cars become popular, which many expect will still happen, it's likely that fewer people are going to own cars at all. They will just have a car subscription. The autonomous car will pick you up and drop you off, and more people will convert their garages into living space like another bedroom. If that does indeed eventually happen. But autonomous car adoption has hit roadblocks since episode 13 of this show back in 2015, and that's generally because autonomous cars keep having accidents. Although Waymo is perhaps the one company that's made more headway lately, you're seeing their autonomous taxis in use in some cities right now.   Keith Weinhold (00:13:03) -  Currently, a car spends 95% of its life being parked, but garages, parking lots, and parking garages are all poised to be less useful when fewer people own a car. Instead, these autonomous cars are just going to drop you off, pick you up, and then constantly stay moving. Stay out on the road rather than park at all. EVs are a factor here to electric vehicles. They can be thousands of pounds heavier than the average gas powered vehicle, and experts out there are warning that the extra weight from EVs that could cause older parking garages to collapse unless steps are taken to buttress those structures. I mean, that's a problem. If geotechnical and structural engineers didn't design EVs on older parking garages decades and decades ago parking lots, they have definitely fallen out of favor among some, but they are still building lots of them. Critics say that to have to build minimum parking spaces on new projects, well, that hinders new housing construction, and also encourages people to drive rather than take public transit parking lot.   Keith Weinhold (00:14:18) -  Critics. They also argue that parking lots and garages, they fill up precious urban real estate with these sort of soulless, concrete eyesores, making cities more sprawling and less convenient. And you tend to see this more in cities west of the Mississippi River. In the east, you have more cities on gridded street patterns that are more dense because they were laid out and developed before cars took over and sprawled so many cities, but with as many changes that autonomous vehicles could bring to the parking world and make things like car ownership less important and car parking less important, I sure would ask a lot of questions before I invested in any sort of parking related real estate. Today we've been talking about real estate in the micro so far today. Garages and parking surely will pivot to the macro as we discuss an asset that's minted not printed. That's next. I'm Keith Weinhold, you're listening to episode 510 of get Rich education. Listen to this. Hey, you can get your mortgage loans at the same place where I get mine at Ridge Lending Group Nmls 42056.   Keith Weinhold (00:15:36) -  They provided our listeners with more loans than any provider in the entire nation. Because they specialize in income properties, they help you build a long term plan for growing your real estate empire. With leverage, you can start your prequalification and chat with President Ridge personally. Start now while it's on your mind at Ridge Lending group.com. That's Ridge Lending group.com. And your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk. Your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25 K. You keep getting paid until you decide you want your money back there. Decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor, to earn 8%.   Keith Weinhold (00:16:50) -  Hundreds of others are text family to 66866. Learn more about Freedom Family Investments Liquidity Fund on your journey to financial freedom through passive income. Text family to 66866.   Robert Kiyosaki (00:17:08) -  This is our rich dad, poor dad author Robert Kiyosaki. Listen to get Rich education with Keith wine old and there is I respect Kate is a very strong, smart, bright young man.   Keith Weinhold (00:17:26) -  It's terrific to welcome into the show a man with decades of investment analysis experience that we can learn from. He's the executive editor of Gold Newsletter, and you might know him as host of America's longest running investment conference, the famed New Orleans Investment Conference. Hey, we haven't shedded in a minute. Welcome in Brien Lundin.   Brien Lundin (00:17:48) -  Right? To be able to keep it has been a while too long.   Keith Weinhold (00:17:51) -  That's right. And now you and I each span the real asset world. I'm a real estate guy. You spend a lot of your work in teaching over there on the gold side. And we both intersect with the general economy. And, you know, Brian, I think of the general economy is having a number of abnormalities.   Keith Weinhold (00:18:11) -  Is it always does, but actually many normality to I mean, I've commented that there's actually relative normalcy in the fed funds rate and even mortgage rate levels. If you look at it historically, also home price appreciation rates, in rent appreciation rates, they're all close to historic norms, although the aberrations are probably more interesting to talk about. What are your thoughts on the economy's general direction?   Brien Lundin (00:18:37) -  Yeah, you know, it really is weird. We think about today's interest rates and how high they are. And throughout human history, the natural level of interest rates have hovered around 6%. That's kind of what it's always been for thousands of years. So what we went through over the last 16 years or so was a really abnormal period, and even going back a decade or so before that. So yeah, it looks seems like interest rates are at normal levels. What is at abnormal levels, however, is the level of debt that we have today. And and that's been created after over four decades of ever easier money, ever since Volcker killed off inflation in the 1970s and started lowering rates, we see that whenever there was a recession, the Federal Reserve had the same prescription every time it lowered interest rates, and then it would try to raise them back, but could never get past the midpoint of the previous range before another recession would come back, or the markets would throw some kind of a fit in.   Brien Lundin (00:19:40) -  The fed would then start easing again. And if you look over time, if you plot or draw a line at the bottom of every one of those interest cutting cycles, see that those bottoms of the cycles get progressively lower and lower. Till 2008, they hit zero. And then they tried to normalize it got up to 2.5% on the Fed's funds fund rate, and then had to go right back to zero at Covid. So the lesson to me is that things might seem normal if you look at the grand sweep of history, but they're anything but normal right now, and the debt loads that we have are so high they preclude anything resembling a normal interest rate. And in fact, my contention is that interest rates have to be below the rate of inflation. In other words, the currency has to depreciate at a faster rate than you're paying interest on these debts, or the whole house of cards collapses. So that's actually, while not good for the fiscal health of the US or other developed economies, it's actually good for the kind of tangible assets, real assets we are talking about real estate, gold, silver, monetary metals, even commodities.   Brien Lundin (00:20:52) -  And, you know, everything across the board as far as tangible assets.   Keith Weinhold (00:20:56) -  Yeah, we look at the long term history of interest rates 5 to 6% if If you go back hundreds of years or even thousands of years is a historic norm. The fed funds rate is now at about 5.3%. But yeah, I think what you're talking about is we seem to have a decreasing tolerance for what are really normal rates. Nothing abnormal about the rate. All that was abnormal was the rate of increase. And you know, one thing that I think about with the economy, Brian, that maybe people don't talk about enough. Is this labor shortage that we have? I mean, it is difficult to do get anyone to do my landscaping. Last year I stayed in a hotel where when I checked in, there was no human being at the check in desk. It was automated checking. Then last month, I stayed at a hotel where there was a human at the front desk, but they told me that there was not going to be any housekeeping during my state.   Keith Weinhold (00:21:46) -  So the reason that I bring this up is that a chronic labor shortage that spells entrenched upward pressure on inflation, because you have to offer higher wages to lure in workers and higher wages paid mean higher consumer prices, higher rents, more inflation and persistently high rates to combat that.   Brien Lundin (00:22:07) -  Yeah, absolutely. And you bring up a whole nother factor that very few people consider as demographics. You know, the fertility rate in the US is below the replacement rate. It's about 1.7 now, and it would have to be like 2.1. And as they say, demographics is destiny. We're not the only ones by any means. Japan went over the demographic cliff long ago. We're following all the other developed nations are as well. And in 20 or 30 years the global population will be falling. That brings about a lot of other pressures and real estate. Obviously you have, you know, the baby boomers are going to be downsizing if they can find something to move into. Besides a retirement home, had a decent mortgage rate.   Brien Lundin (00:22:50) -  You know, we have so much overhang in real estate that's sitting out there and locked up by the current interest rate. So yeah, it's an interesting dynamic we're in right now. And personally I think it's all just a result of the Federal Reserve and all these other monetary mavens whose PhDs I want to pull all these levers on the economy. And they have unintended consequences in every one of the policies that they undertake. And we're in one right now.   Keith Weinhold (00:23:20) -  We've got both inflation and a scarce supply of property that just keeps floating property values higher despite higher mortgage rates. And one place that the high inflation is often reflected is in the price of gold. Gold is up more than 20% year over year. And one thing I want to ask you about here, with regard to gold and the fact that we have this debt that you brought up earlier, Brian, is a real problem. When we look outside the US, the world's biggest economy is by far China. China has been dumping US treasuries, meaning basically that they're no longer buying our US IOUs so they no longer want our debt.   Keith Weinhold (00:23:59) -  And instead, China and other nations are increasingly parking it in gold. Now, is that one of the reasons that gold has surged?   Brien Lundin (00:24:07) -  Yeah, it is the primary reason. Or, you know, one of the primary factors why gold has surged this year in particular. And it's a weird mix of buying. This year. We saw the gold price start taking off like the 1st of March. And it was for the first six weeks or so. It was literally a relentless rise, not a down day. Setting new price records every day. And it took us a while to try and figure out or to figure out where the buying was coming from. And as it turns out, it was the result of continued buying by central banks renewed buying to an even greater degree by the people's Bank of China, and also some domestic demand from China. And that's something we had never seen before. We'd never seen Chinese investors and savers buying gold on the way up in a price trend. They usually bought on a price downtrend trying to get a bargain, but now they were following the price up.   Brien Lundin (00:25:06) -  So that contributed to everything and the factor that we had expected that did not come about in the first half of the year was a fed pivot. You know, if you look back in December, yeah, the markets are pricing in 5 or 6 fed rate cuts in 2024. And that kept getting postponed. And that was expected. I expected in most of the other analysts expected the beginning of fed rate cuts to really drive the price up higher, but it kept getting postponed. That big factor is still ahead of us. I think the markets are going to start pricing that in in a couple of months. And so what all that central bank buying and Chinese buying is done is while we were waiting for the fed to pivot in that big factor, it went ahead and added $300 to the gold price and got us into a new trading range so that when the fed pivot does hit, we're lifting off from a much higher level. So it's a good time, I think, to be an investor in gold and related assets.   Brien Lundin (00:26:07) -  I think it's also a good time to be involved in real estate and a lot of other tangible and real assets, as.   Keith Weinhold (00:26:13) -  Well as real estate investors we are interested in that interest rate direction. And, you know, if the US is continually finding themselves in a position where they're wondering, well, hey, if not China and others will, then who in the heck is going to buy our debt? And now you? I think the listener you can ask yourself in the same way, if you're trying to get your friends to give you a loan, How do you entice your friends to give you a loan? You would offer them a higher interest rate in order for them to give you a loan. So with that in mind, Brian, is that what the US has to do in order to entice foreign bondholders in the same way, meaning then debt rates would tend to be held high?   Brien Lundin (00:27:01) -  Very interesting point there, Keith, because getting back what I was saying, how these PhD economists are pulling all the levers on the economy, the lever they're about to pull is to start lowering rates again, because they recognize these debt loads, they recognize the possibility of a recession, and that if there is a recession and tax receipts fall, then the debt load is going to accelerate even further.   Brien Lundin (00:27:26) -  So they feel that policy right now is very restrictive. And they're going to start lowering rates at some point. They have to. But the debt loads being what they are, however you have on the other hand, the bondholders are, which you would hope would be the buyers of the Treasury securities, and they will look and see the potential economic slowdowns. They had the potential for higher inflation and start demanding higher returns on their yields. So there is a tension there. We saw that develop last October, November timeframe and a few months ago when we saw Treasury yields rise at the same time that the dollar index rose versus other currencies and gold was rising, which was a weird kind of strange bedfellows there that typically gold does not rise when interest rates are rising and the dollar is strengthening. But they were all going up together, and that happened a bit last fall as well. To my mind, that is a reflection of safe haven buying. You know, typically we think Treasury yields fall when they're safe haven buying because everybody's going into treasuries.   Brien Lundin (00:28:36) -  To me that was reflective of safe haven buying because the markets were really concerned about the fiscal future for the US and other developed countries. So they were going to the safety of the dollar, the safety of gold and demanding higher yields on treasuries. That would be more commensurate with the kind of inflation rate that they saw ahead. But it's been a weird mix of buying a weird mix of economic developments, and I think it all argues toward big money getting more and more into gold because of the uncertainty that lies ahead, and the really the extraordinary nature of the current economic situation to the world we find ourselves in now.   Keith Weinhold (00:29:21) -  I did not realize that there is less sensitivity to higher gold prices until I just learned that from you a few minutes ago. So that's really interesting about potential momentum in the future price of gold. And we talk about the future price of gold. We think of that through a supply and demand lens, much like we think about what's moving real estate prices today. Have we hit peak gold, meaning that there's less and less of it to pull out of the ground?   Brien Lundin (00:29:49) -  All of the trends in that respect actually favor gold and that we have reached peak gold production as around 32,300 tonnes a year.   Brien Lundin (00:30:00) -  Interestingly, a third of that level is being purchased now by China between the people's Bank of China and Chinese citizens. So a good bit of that is taken off. But I'm not a big proponent for the validity or the impact of supply and demand for gold, because it is monetary demand that really drives the price of gold. It has no utility, virtually no utility and industry. It is purely a monetary metal. So when people are concerned about the future purchasing power of the currency, they buy gold and they drive the price up, and that buying on the margin really sets the price of gold. And I think we're about to enter one of those periods where gold really plays catch up for long sweeps of time. You'll see the gold price doesn't do much until something happens. Things get bad to a certain degree where people really start to worry about their purchasing power, and then gold makes a huge catch up move. Really, in the early stages of that kind of a catch up ketchup move, I believe.   Brien Lundin (00:31:06) -  I think we're entering a period that would be akin to the 1970s and the 2000, where the price of gold has historically gone up anywhere between five and a half and eight and a half times over during these kinds of secular bull markets. And I think we're in one of those periods right now.   Keith Weinhold (00:31:25) -  Five and a half to eight x.   Brien Lundin (00:31:27) -  Yeah. If you look at the fact that there's only been three bull markets in gold since 1971, when it actually became, you know, an investable asset or commodity and not money. So 1970 to 75 was a bull market of 76 to 1980 with a bull market. And really, 2000 to 2011 was another bull market run. And each of those instances, each of those three bull markets, gold went up from 25.6 to 8.2 times from the lows. And this market we're in now, the low is about $1,040. So if the price of gold goes up trading 5.6 and 8.2 times, you're talking about 6 to $8000 gold price at the end of this cycle, wherever and whenever that takes us.   Brien Lundin (00:32:17) -  And of course, you know, we're up around 2300 and change right now. So that's a good move ahead. Lots of potential. And it's not just where the price of gold goes, but all the associated assets worth it, like mining stocks and the like are going to do, I think, very well over the next few years.   Keith Weinhold (00:32:36) -  Yeah. People know gold is the classic inflation hedge. But to your point, it has a lot to do with catching a wave. If you think the real long term diminished purchasing power of the dollar is 3 or 4% over time. Well, you don't see gold go up gradually at 3 or 4% per year for several years. You tend to see it do little or nothing, and then it has this big catch up phase, like those periods of time that you talked about. When we talk about physically holding on to gold, you know, it's cool. It's one of those type of investments where if you do hold it yourself, there's no login or password to access your goal that is physical, intangible.   Keith Weinhold (00:33:10) -  And you know, Brad, one thing that a lot of gold people often talk about is a positive attribute to holding gold is that it has zero counterparty risk when it's yours. No one can take it from you. But does it really have no counterparty risk? Because I think about if a person wants to hold physical gold, well, if they outsource it to a third party vault or a bank safe deposit box, then the counterparty risk is there. But if they hold it onto themselves and store it in their own home, which I don't know if that's a good idea, but if they choose to do so, well then the counterparty risk is the thief. So I think gold is a great way to store wealth, but is there really zero counterparty risk associated with gold?   Brien Lundin (00:33:48) -  Well, from that standpoint, there's never a zero risk. There's never a zero risk. When you step out of your door in the morning, either, you know, there's always some risk. You can mitigate the risk. And it reminds me of of what I tell people when they're really new to the sector is there are two reasons to buy gold.   Brien Lundin (00:34:04) -  One is as insurance and one is as an investment. And insurance is what you need to worry about right away because you're insuring against something you know is going to happen. If you feel like 3 to 5 years, the dollar's purchasing power, it's going to be much less than it is today. I think we can all agree in most likely is then by buying gold today, you lock in today's value of the dollar because gold will make that up, and perhaps even more so, it will protect you against that depreciation. So you can ensure your wealth by holding some physical metals. And I think that's the most important thing you can do, at least initially, is get silver and gold. Now, as far as storing it, a lot of people can store enough gold in their house to gain a good bit of insurance against whatever their wealth is. And by that, you know you will have to invest in a safe. Don't tell anybody about where it is and a good alarm system. And if you haven't and a location where you have a good police force, then you're talking about 20 minutes that somebody's going to get in your home before the police come and knocking, and hopefully they can't find the safe, much less get into it in that amount of time so you can do it in your house to some degree.   Brien Lundin (00:35:16) -  You can store it elsewhere, but there are important considerations there. They're very respected storage facilities and the like. You don't want to store it in a bank because one of the things you're insuring against is a bank holiday, thanks to like you to store it there either, but you can find respected institutions to store it. I recommend people don't put all the eggs in one basket and store it with a number of institutions, or as many as they can practically do. But yeah, it is important to own the metals, you know. Otherwise you're going to lose from here. On the day that you decide not to buy gold and silver to protect your wealth from that day on, you're accepting a rate of purchasing power depreciation that we know is considerably more than what the government says it is, and is historically high to begin with.   Keith Weinhold (00:36:09) -  I generally think it's a good idea to own at least a little gold if you have trepidation about buying gold. Think of it this way in a way you're not buying gold, You're transferring some of your prosperity over into gold, which has had lasting value for millennia, across cultures and across generations.   Keith Weinhold (00:36:28) -  And for some reason, I think a lot of people my age and younger that they don't own any gold. I would imagine that 90% plus of people, I think the statistics are out there. 97% of Americans don't own any gold. And maybe you feel like you don't understand gold and you don't want to own what you don't understand. But you could purchase this a 10th of an ounce of gold for under $300. And you know, by buying just a little bit, you begin to get a vested interest in this stuff. So with that in mind, Brian, how much do you think one should allocate and in what form should they make their purchase?   Brien Lundin (00:37:02) -  It's interesting. There have been studies for many years showing that the highest risk adjusted return you can get in a diversified portfolio with about 5% of your wealth, or your investing portfolio allocated to go to heaven. Those same studies done that are indicating more like 10% or more. It's to the point that you sleep well at night, whatever makes you comfortable.   Brien Lundin (00:37:27) -  But you know all of those studies back test it and they look back and see how gold and a portfolio meshes with the six, the classic 6040 mix of stocks and bonds etc.. But what we've seen over the last 12, 14 years is that post the 2008 great financial crisis is that all of these asset classes have become more and more positively correlated because everything's dependent on the Federal Reserve and monetary policy. So all of the correlations have started to trend toward one, where they all rise and fall together in unison. Because everything, again, is just depends on monetary policy and the flow of liquidity from the Federal Reserve and other central banks. So that fact alone argues for even a greater holding in gold, because all of that portends greater and greater inflation, greater monetary accommodation, and the kind of thing that gold insures against. So the way to look at gold as insurance is not quite like home insurance. You know, you buy home insurance, you pay the premium every year in case your house catches on fire.   Brien Lundin (00:38:38) -  But you really don't expect your house to catch on fire. With gold. You're buying insurance. You're paying the premium, perhaps just once, and you're insuring against something that you know is going to happen, that the purchasing power of your dollars are going to depreciate. So if you have a significant cash balance in accounts, you might as well put it into precious metals and lock in the current rate before it gets the purchasing power of the dollar depreciates even further.   Keith Weinhold (00:39:06) -  That is a good point with gold as money insurance from the standpoint that with your homeowner's insurance and your landlord's insurance policy, you need to pay a premium annually. You potentially only need to pay that once upfront when you purchase your gold, and there's typically a spot price differential to overcome. Well, Brian, you are the host of America's longest running investment conference, which is founded on championing American's right to own gold. The New Orleans Investment Conference. It really feels like there is a touch of prestige when you're there. I can speak to that personally because I've attended it at least three times in the past.   Keith Weinhold (00:39:47) -  It's coming up in November. I hope to attend again this year. You've got some illustrious speakers there. Tell us about this year's New Orleans Investment Conference.   Brien Lundin (00:39:58) -  Yeah, it is our 50th anniversary. You know, I think it's the oldest investment conference in the world today and longest running. And we do have that legacy, that prestige of being somewhat gold oriented. We're actually covering a good bit more real estate lately, but we really cover a lot of the macro picture macroeconomics. We have some of the leading thinkers come to our vet every year and a great audience as well. Very highly qualified, very successful investors. This year is up 50th. So we have another wonderful roster of speakers. We have Jim Grant coming, George Gammon, James Lavish, Danielle DiMartino Booth, Britt Johnson, Abby Gilbert, Adam Taggart, the list goes on and on. Rick Rule, Peter Boockvar, dozens and dozens of top minds. And, you know, we kind of alluded to it in this talk, but these are really strange and interesting and dangerous, extraordinary times that we're living through right now.   Brien Lundin (00:41:02) -  And it is amazing to me, having been in the business for 9 to 40 years now, seeing these kinds of periods come and go. And it seems that when they do happen, we get this kind of underground media that arises, and people who really bring in losses come to the fore to comment on what's going on and provide really valuable insights. And after all the years I've been in this business, I know who really contributes value, who the best thinkers are, and I'm getting them all to come to New Orleans. As I have to say, I'm a big fan of all of our speakers. I think they are absolutely extraordinary, and we are so confident that you will find our event to be worth many times the cost of attending, that we have a money back guarantee. If you don't think it does, if you don't think it's worth many times what you paid for, we'll give you registration feedback. So it's very few events that can offer a guarantee like that. And I think you would agree with me that you have to be there to really experience it.   Brien Lundin (00:42:07) -  And it really is just an extraordinary experience.   Keith Weinhold (00:42:11) -  Yeah, I can't imagine anyone not getting a multiple on their investment with attending the conference. You know, one thing that you do really well there at the conference, Brian, besides just listening to all those speakers that you just mentioned, you also have panel format discussions where sometimes you can learn more when you're listening to a conversation than you can when you're listening to a presentation. You have both choices there. Then if you prefer you want to break, you can go across the hallway to where the exhibit hall is and do some learning and meeting people over there. And then you also have these breakout sessions where you go upstairs into small rooms and learn from presenters in just the niche that you think most interests you or that you want to learn more about. So there's really good variety there.   Brien Lundin (00:42:54) -  Yeah, it's kind of a time tested format. It's different than most conferences you'll find out there, but it's worked well for us for 49 years, and our attendees seem to appreciate the unique format that we have and the ability to learn.   Brien Lundin (00:43:09) -  And it really is information almost overload. There's so much of value from these speakers. If you are intellectually curious, if you are a serious investor, if you enjoy an intellectually stimulating environment in a destination location, this is really the place for you. And you know, I can go on over and over again for as long as we have time for and more to say talking about it. But the best advertising we do are people who word of mouth from people who have come. And I would encourage anyone who is considering coming to the New Orleans Investment Conference. Number one, this is our 50th anniversary. It's going to be a very special year. But number two, find somebody who's been before. Talk to them about it. And I think you'll get excited about attending this year.   Keith Weinhold (00:43:56) -  Each year it is at an excellent location. It's at the New Orleans, Riverside Hilton and Bryan Terrace, those November dates for the event and then how one can attend.   Brien Lundin (00:44:07) -  Yeah, it's November 20th to 23rd this year, so it's the week before us Thanksgiving week.   Brien Lundin (00:44:14) -  So it's it doesn't interfere with that holiday. It's kind of a good little slot there. And people can learn more by going to one New Orleans conference.com. Very simply New Orleans conference.com.   Keith Weinhold (00:44:29) -  All right. It's been great catching up on the state of the economy, real estate inflation, interest rates, gold. And thank you so much for putting on this terrific conference for the benefit of every interested investor. It's been great having you back on the show.   Brien Lundin (00:44:43) -  Wonderful to talk to you again, Keith, as always.   Keith Weinhold (00:44:52) -  Oh, yeah. Bright, inarticulate thoughts from Brian, as always, when he and I discussed those related factors of inflation and interest rates. I mean, this is such a germane discussion because, like he brought up, there seems to be this increasing propensity for all asset classes to rise or fall together. Like nearly every asset class is near an all time high right now. I'll need to research the incidence of this some more so that it's not just anecdotal, but the Fed's decisions. They seem to increasingly float up or knock down just about every investment class almost simultaneously.   Keith Weinhold (00:45:35) -  Real estate stocks, gold, crypto commodities, collectible toys, even nearly everything. And when you're a real estate investor, you are already investing in commodities and metals, and you have direct ownership of those. Now, not so much precious metals in your real estate, but we're talking about items that are built into it, like aluminum and steel and copper. They probably exist in your properties. Well, their prices go into the replacement cost of your property, and they are a reflection of your real estate portfolio's overall value, too. Coming up here on future episodes of the show, it will be the inaugural appearance of the King of Commercial Real Estate here on the show. Also, there seems to be still a mainstream aversion to all debt types, and I suppose it finds me in the position of being real estate's debt proselytizing. Well, coming up on the show, I am going to ask and answer the question for you is any debt worth paying off? Which debts are good to pay down? Which stitch should be paid off, and which debt types do you want to keep, and which debt types do you actually want to get more of? What are the exact distinctions so that you know right where to draw that line on all the debt types that you hold on to.   Keith Weinhold (00:47:00) -  So coming up here on the show, is any debt worth paying off? And I am pleased to tell you that if you would like to meet in person, yes, you're going to have a chance to do that at the special 50th anniversary of the New Orleans Investment Conference. Now, I'm not sure that meeting me in person really brings any benefit to you or the event, but yes, I am attending in person in New Orleans. I haven't been there since 2021 and I want to return. Brian London really knows how to put on an event. There is a lot of macroeconomic talk there and you will hear more about both that and gold than you will about real estate, although I expect plenty of real estate investing information there as usual. Again, it's November 20th to 23rd, four plus months away. And the registration link that you can use for this is in today's show notes. I will also get it into the next newsletter for you. Big thanks to the wise and wonderful Brien Lundin today. Until next week, I'm your host, Keith Weinhold.   Keith Weinhold (00:48:03) -  Don't quit your daydream.   Speaker 5 (00:48:09) -  Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:48:37) -  The preceding program was brought to you by your home for wealth building. Get Rich education.com.

Asset prices are near all-time highs for almost everything: real estate, stocks, gold, bitcoin, and more. This is because in a wave of high inflation, investors chase yields. Legendary investor Jim Rogers joins us. Jim gives dire warnings about US debt levels. Meet me and one of our Investment Coaches in-person at FreedomFest in Las Vegas, July 10th to 13th.  I put $1T into perspective. A trillion seconds ago was 31,700 years ago. That’s when neanderthals roamed the plains of Europe.  The dollar is a monopoly. The US government has no competition for their product, the dollar. Jim Rogers believes that higher inflation and interest rates are here to stay.  He says: “Before this is over, interest rates in the US are going to go much, much higher.” Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) -  Welcome to GRE. I'm your host, Keith Weinhold. I'll tell you about a chance to meet me in person. Then we're joined by a renowned and legendary investor for his sage like wisdom on how you should respond to record US debt levels for forecast the future direction of inflation and interest rates, plus a taste of the Singapore real estate market today and get rich education.   Robert Syslo (00:00:27) -  Since 2014, the powerful Get Rich Education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Weinhold writes for both Forbes and Rich Dad Advisors, and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich Education can be heard on every podcast platform, plus has had its own dedicated Apple and Android listener. Phone apps.   Robert Syslo (00:01:02) -  Build wealth on the go with the Get Rich Education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates (00:01:13) -  You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:29) -  Welcome to GRE. From Sydney, Australia, to Sydney, Nova Scotia, Canada, and across 188 nations worldwide. I'm Keith Weinhold and you're listening to Get Rich Education. Why are our values of almost every asset so high? Well, one reason is because we've had that high wave of inflation. When that happens, savvy investors, people just like you, they ensure that money must flow into assets. And that's because you seek a real return above and beyond inflation. If inflation were low, investors wouldn't have to chase yields this way. I've got more on asset values in a moment. But first, on today's guest, legendary investor Jim Rogers, who will hear from as a returning guest here soon in early 2019. So more than five years ago, he told us right here on the show that interest rates are going to go much, much, much higher over the next few decades and that is going to ruin a lot of people.   Keith Weinhold (00:02:32) -  In fact, let's listen into that. Here it is. This is from get Rich education podcast episode 224, which you heard here in January 2019. This is Jim Rogers.   Jim Rogers (00:02:43) -  And interest rates are going to go go much, much, much higher over the next few decades. And it's going to ruin a lot of people.   Keith Weinhold (00:02:50) -  And then from there, he went on to tell us at that time, rising interest rates will set in for a long time. And this was back when the fed funds rate was just half of what it is today in mortgage rates were 4.5% back there in early 2019. So Jim Rogers made that firm prediction even before we knew about Covid. Then. And on that episode, we talked about getting your debt and locking it in. And then two years later in 2021, he was back here on the show to warn us to expect high inflation. Well, we sure got that too. And as you listen to Jim Rogers on today's episode, consider that, you know, he just often speaks with this sort of, I suppose, nonchalance that I think can make it easy to dismiss what he says.   Keith Weinhold (00:03:46) -  But don't do that because countless people have benefited from his guidance for decades. Just like I hope that you do today in the real estate world. Now, agencies agree that the national year over year home price appreciation rate is 6%. That's today per the FHFA, the NAR and Case-Shiller 6% home price appreciation. What about rents? Today, Single-Family rents are up 5%. Nationally, multifamily rents up 2.7%. So why are Single-Family rents growing faster than multifamily rents? Well, it's partly because 2023 saw the biggest surge in new apartment supply since 1987. Yes, that's back when Madonna was the hottest music artist and Reagan met with Gorbachev. But there's less apartment construction this year, so expect a lot of that to get absorbed. Available inventory of Single-Family Rentals is going to stay more scarce than apartments for quite some time, but long term they both expect to be in really great shape. Residential rental demand is sustainable now. Back in 2022, available single family home inventory that was an astoundingly paltry one quarter of what was needed.   Keith Weinhold (00:05:20) -  Well, now it's up to half. Some inventory has definitely been added. In fact, I was recently on television being asked about that. But this still means that demand handily exceeds supply. There's not nearly enough housing, especially on the single family end. And what about those perpetually just around the corner, always, constantly just around the corner, fed interest rate cuts. They keep getting delayed beyond a lot of people's expectations. Well, per the CME's Fed Watch tool, here is the chance given of when the first rate cut will occur by the end of July. 10% September 60th 4%. November 70th 7% December 90th 3%. You know, personally, I think the chances are lower than all of those currently inflation's at 3.3%. But here's the thing. Even when it hits the Fed's target of 2%, that doesn't mean that rates must be cut. All right. That's a reality that a lot of people seem to forget. Now here on the show, not after every quarter, but sometimes when a quarter ends, just like one did a week ago, we take a quick look at other asset class moves outside of real estate in order to get a relative perspective.   Keith Weinhold (00:06:43) -  Some comparison here. If you're listening to this episode ten years from now, this is really going to help mark this era for you to is we do have many listeners that listen to every single episode. The 30 year mortgage rate is near 7%. Now, all these next figures are year to date through the first half of the year. So this is just the performance of the first half. Stocks have soared. The S&P is up 15%. One way that US stocks changed last quarter is the trades are now going to settle faster. Investors will see their purchases and sales finalized in just one day instead of two. Gold is up 13% to over 2300 bucks. Bitcoin up 44%, oil up 16% to $82. And again, that's performance for just the first half of this year. The world's three largest companies Apple, Microsoft and Nvidia have a combined value of over $9 trillion. Now, a company's total value is known as its market cap, and that is simply found by multiplying share price and shares outstanding. By comparison, all the gold in the world is worth 15 trillion.   Keith Weinhold (00:07:54) -  Hey, if you're familiar with an event called Freedom Fest, I have some cool news for you. It's an annual conference that. How would I describe it? Well, I haven't attended it before, but there you can learn to expect more about free thinking and ideas about the size of government. Well, it starts in two days. It's July 10th to 13th in Las Vegas. You can meet one of Gre's investment coaches in person there and you can also meet me. Yes, we'll both be there. If you see us, be sure to say hi. We'd both like to meet you. Hashtag IRL in real life, some of the Freedom Fest speakers include our frequent great guest, Robert Kiyosaki, as well as some other guests that you've heard with me here on the show. Also, Steve Forbes, Iced Tea, the comedian Rob Schneider, Nevada Governor Joe Lombardo, Whole Foods founder John Mackey and the congressman that wants to end the fed, Thomas Massie and more. They're all speaking. So yes, not a lot of notice, but if you're going, it's a way to meet me in real life, perhaps just in a casual way, in two days at Freedom Fest.   Keith Weinhold (00:09:08) -  Well, it is public information that the net worth of this week's guest is $300 million. He's been influential for a long time. Let's talk to legendary investor Jim Rogers. This week's guest needs a little introduction. He is a legendary business and investing mogul of our time. He's a Yale educated, prolific author. He co-founded the Quantum Fund, and he even has his own commodities index and ETF. He's also a prolific traveler. He wrote a very well known book about his world travels, visiting some 116 nations. Hey, welcome back to gray. It's Jim Rogers.   Jim Rogers (00:09:51) -  I'm delighted to be here. Okay, let's get rich. I need to get rich. I want to get rich.   Keith Weinhold (00:09:56) -  Hey. Well, your guidance helps us do that. That's why you're here. And Jim is joining us remotely from his home nation city of Singapore today. And it's always interesting syncing up our times of day here. Jim, where to begin? You've been with us here. I think this is the fourth time you're here and about the last five years, and we're at a time when asset prices of seemingly everything are near their all time highs, maybe even in their inflation adjusted all time highs in some cases.   Keith Weinhold (00:10:25) -  What are your thoughts with asset price levels?   Jim Rogers (00:10:29) -  Keith. You it's very perceptive of you and insightful. Yes. This is one of the few times in world history that I know about where nearly everything is making new eyes. I think China is probably the only country. It's not making new eyes, but nearly everything else is. Now it's wonderful. It's great. A lot of people are having a lot of fun, but unfortunately, I've been around long enough to know that when things get this good, when everybody's having so much fun, we're getting closer to the end. I am not selling short or anything yet, but I see the signs that this is going to come to an end, as it always does, and it's going to be a mess. And the reason this is going to be a big mess this time. You remember what happened in 2008 because of too much debt each. That's 2009. The debt everywhere has skyrocketed. I mean, even China has a lot of debt now. China bailed us out before, but everybody has a lot of debt now.   Jim Rogers (00:11:31) -  Maybe not North Korea, but everybody else does.   Keith Weinhold (00:11:34) -  And that sure includes us. I mean, we have these asset prices at all time highs. Yet here we are, still the largest detonation in the history of the world in the United States now at 35 trillion. And we're spending dollars on others wars, something that we couldn't say when you and I talked a few years ago. The biggest line item of our national budget anymore is about $1 trillion in annual interest payments alone in. Jim, we're really on this course now where soon the US annual tax receipts won't even cover the interest payments on our debt, and we may have to borrow just to pay the interest. So where do we reach the breaking point here? With this world in debt led by the United States?   Jim Rogers (00:12:20) -  You one makes some very good points. Unfortunately. I wish you didn't. I wish you couldn't make those points right. It's simple arithmetic. Just look at the numbers. And the numbers you recite are just what they admit, what they write.   Jim Rogers (00:12:34) -  There's a lot of off balance sheet debt that they don't even talk about. I mean, the numbers, if you try to get out of pencil on a piece of paper, you will realize that the market can never pay this debt. Never. Countries that have gotten into this situation in the past have had big problems. Now it's a good time to be an old American. I don't have to worry about all this for too many years, but I have young children. Oh my gosh. The problem is that their country is going to face in their lifetime. I was staggering. You look back at previous countries that have done this kind of thing. In the 19 to 100 years ago, Britain was the richest, most powerful country in the world. 50 years later, it was bankrupt. IMF had to fly to London and pay their bills. It wasn't fun. It was terrible what Britain went through. But other countries have done the same thing. Maybe we don't like what I'm saying or what's happening, but just read the history and you will see how it winds up.   Jim Rogers (00:13:38) -  I certainly don't like it, but I have to deal with facts. If I don't deal with facts, I'll go bankrupt. To which I don't want to do.   Keith Weinhold (00:13:48) -  Yeah, sometimes let's laugh to keep from crying. Right? When you talk about how certain government figures are just what the government is willing to admit to, I think that's the right lens to look through. When you look at any government figures. Well, at least that's the part that they're willing to admit to. It's interesting that they're willing to admit to this is interesting that they're willing to admit to 9% inflation like we peaked at two years ago. But when you talk about the future and this huge debt load and children or grandchildren, could austerity be part of it, something that's very politically unpopular. But if we lived in an austere state, wouldn't that really be sort of like the downfall of the American empire at that point?   Jim Rogers (00:14:30) -  Well, that's what happened to the British. As I said 100 years ago, they were the richest, most powerful country in the world.   Jim Rogers (00:14:36) -  There was no number two. Then if two years later, completely bankrupt, I happened to be in England during part of that time and it was a mess. Wretched. So I don't like saying any of this, but I have to deal with the reality and the numbers you cite or what they admit. You know, the numbers are much worse. I don't know if anybody in Washington really knows. I don't even know if they care enough to check to see how bad things are. But every time a someone from Washington, a politician or a bureaucrat says something, they say, don't worry, everything's okay. We have a Janet Yellen who's a secretary of the Treasury. Are you or two ago said, don't worry, we have everything under control.   Keith Weinhold (00:15:20) -  Reassuring isn't it? Not really.   Jim Rogers (00:15:22) -  Oh my gosh. He's got a couple of fancy Ivy League degrees, but she still says, don't worry, it's okay. Well, I worry, I'm probably not as smart as she is, but I worry.   Keith Weinhold (00:15:36) -  Well, it's interesting that you bring up the fact about the things that we don't know and these numbers, these debt levels and even the deficit gets so big, we're just throwing around this word trillion anymore.   Keith Weinhold (00:15:48) -  For some perspective, I happen to know that 1,000,000,000,000 seconds is 31,700 years. In order to help put this into perspective, well, 31,700 years ago, that's just about as far back as when the planes of Europe were being roamed by Neanderthals. That's 1,000,000,000,000 seconds ago. And again, we are $35 trillion in debt, and we have a deficit of at least $1 trillion. The annual thing.   Jim Rogers (00:16:21) -  I'm glad you're putting some perspective on this, but I don't need it. I know it's a staggering whatever number you want to look at, whether it's the one they report or the one that's they hide whatever it is, I know, because I can add and subtract. I know that America has a gigantic problem that is going to end up like every other country that's done this sort of thing. It's going to end up badly. America is going to lose its status, not this month. Don't worry. July is okay. But no, I can read, I can add, I can subtract. I know how it's going to wind up.   Jim Rogers (00:17:02) -  It's not good for young Americans.   Keith Weinhold (00:17:06) -  I mean, we think of the fall of the Roman Empire. You bring up the UK. The UK is still part of the G7, but they're no longer the one predominant power in the world. Jim, when I look at history and I think about sort of the powers that be and how they create and debase the currency, and how those problems percolate into so many parts of the society. I think if the United States is basically they have a monopoly on creating currency, and I just wonder if that's part of the problem. Lennar builds houses, but they have competition from KB homes. John Deere makes tractors and they have competition from New Holland. Heinz makes ketchup and they have competition from hunts. See, when there's competition, there's sort of this incentive to produce quality and provide others with value. But since the U.S. has no substantial competition to the dollar, I wonder if we can think of this as a de facto monopoly from its dilution of the purchasing power of the dollar.   Keith Weinhold (00:18:06) -  Its quality is suffering because the dollar doesn't have any substantial competition. So I guess what I'm leading up to, what I'm getting at, is we think about currency creation as a de facto US monopoly. I mean, does the government have to be the exclusive money printer where all this just ends up in the debt column here?   Jim Rogers (00:18:24) -  You raise some very good points. But back to the first main point. The main point is there is no way that America can ever pay these debts except by default, Which is one horrible way. Or by printing gigantic amounts of money, which is another horrible way. This is not the first time countries have done this. If you just go back and look, it is never ended well. Never ended well. Yes, England is still there, but nobody thinks about England the way they did 100 years ago. And nobody in England lives like they did 100 years ago, and many people left. I don't know what's going to happen to the US, except I know it's not going to end well because I can add and you can add and subtract.   Jim Rogers (00:19:15) -  I wish we could subtract. There's nothing to subtract because the debt just keeps high and higher and higher. And the numbers are very simple. If you get out the amount of debt we have and see the possible income, it just doesn't work. If you have fifth grade education, fifth grade arithmetic, you know it doesn't work.   Keith Weinhold (00:19:39) -  Jim, I don't know if you remember this, but the first time you were with us, it was January of 2019. That was more than five years ago. And at that time you said interest rates are going to go much, much, much higher. That was your direct quote, three matches. And you said that it's going to ruin a lot of people. And here we are with a lot of people ruined in the commercial real estate world and the apartment syndication world and so on. So if you continue to think there's going to be more currency creation to make it easier to pay back our debt, does that mean you believe that higher interest rates and higher inflation are going to be a persistent condition, say, just till the end of this decade, which is about another five years? What do you think about inflation and interest rates for these next five years?   Jim Rogers (00:20:27) -  I know that in Washington they will print money.   Jim Rogers (00:20:31) -  That's all they know. They want to keep their jobs. They don't care about you. I don't care about any of us. They care about keeping their job. And they will do whatever they have to to keep their job the easy way. Now, the proper way, of course, is to buckle up, buckle down, and start doing something about the rendus situation we were in. They don't care. They think they'll be gone by the time those times come, if they're ever coming, and they will say, but we're America. We cannot have problems like that. Well, that's what the British said, too. Once upon a time. And as I say, there was no number two to the British. They were that power. They were that much on top. It's not that I don't like saying. I don't like thinking it. I don't like living with it. But I do hope I can prepare so that I don't go down the tubes like some other people will. But I may just do the arithmetic.   Jim Rogers (00:21:32) -  It's very simple. The numbers just cannot work. I didn't say the numbers do not work. I said they cannot work because the situation is that dire. They can hold it off for a while by printing money. Great. But then not for you and me. Certainly not for our children.   Keith Weinhold (00:21:51) -  I think that's all they're going to keep doing. That's the most expedient way to do it, to keep printing any politician that proposes austerity. And you having soup for breakfast, lunch and dinner is not very likely to get re-elected. Does that mean in the next five years you foresee historically elevated interest rates and inflation, which is basically where we actually still are now?   Jim Rogers (00:22:14) -  Well, of course I do. I mean, there's the market. The problem is right now the central banks still think they're in control, and they pretty much are. But there will come a time. And there always has in history when the market says, wait a minute, we know you're lying. We know this cannot work. And then when the market takes over and the market starts setting interest rates and other conditions, that's called disaster.   Jim Rogers (00:22:41) -  That's a real, real serious problem. The market will know how bad things are, and the Treasury secretary can sit there and say all day long, don't worry, don't worry. We have it under control. And the Marquis will say, thanks, but we know better.   Keith Weinhold (00:22:59) -  Well, we've got more coming up with Jim, including. He spent some 60 plus years abroad. I want to learn more about what he thinks with living and traveling so much about the United States. You're listening to get Rich education. Our guest is legendary investor Jim Rogers. When we come back, I'm your host, Keith White. Hope your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk. Your cash generates up to an 8% return with compound interest year in and year out. 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Start at Ridge Lending group.com Ridge lending group.com.   Speaker 5 (00:25:08) -  This is The Real World Network's Kathy Petke, and you are listening to the always valuable get Rich education with Keith Reinhold.   Keith Weinhold (00:25:26) -  Welcome back to get Rich. university. So we're talking with investing mogul legendary Jim Rogers.   Keith Weinhold (00:25:32) -  He's joining us from Singapore today. He's joined us a few times over the past five years. And with what he said in what's coming, he's really been remarkably accurate. Sometimes he just gives a pretty casual delivery, but you really want to listen in to what he's saying. A lot of people have hung on his every word for decades here. And Jim, part of that is all your worldly experience. From so many of your travels and visiting over 100 nations. I've only visited about 35 so far myself. What do you think that we can learn about the United States from living and traveling abroad?   Jim Rogers (00:26:07) -  First of all, I used to tell you I have made many mistakes in my life. I don't think I don't know how to get things wrong. I have many times. But yes, living abroad, I certainly even traveling abroad is an eye opening experience. It's a fabulous education. Rudyard Kipling, who won the Nobel Prize for literature, once had a line and a poem. The name of the poem was The English flag and the lion was.   Jim Rogers (00:26:36) -  What can he know of England? Who only England knows. One is you'll know a lot about your own country if you know about the rest of the world. And you will you. If you go to country X and you see they eat different food or wear different clothes, it'll make you realize a lot about America. So my point is it's a fabulous education to see other places. I don't know if it's helped me. I in my view, it has helped me a lot to understand the world and to understand other people.   Keith Weinhold (00:27:11) -  Now, in my international travels, which are a fraction of yours, a lot of times I get a reminder that life in the United States is still pretty clean and efficient. We have an abundance of potable water all the way to an amenity like fast Wi-Fi. And you know if someone abroad is traveling in the United States, they get to experience those things, and they probably don't even realize or understand that we're the greatest detonation in the history of the world. It's actually pretty difficult to know.   Jim Rogers (00:27:40) -  There are signs that even those travelers will see. If you go to JFK airport, you will see the huge difference in JFK and say, the Japanese Narita Airport. You know your intuitive world when you visit some international airports outside of the US. But it's not just that America. Five star hotels do not compare with five star hotels in other countries. Listen, I don't like any of this because I have to live it. But the facts are. Yes. And you make a very good point that most people do not notice or does not affect them much at all if it affects them at all. But that just makes the eventual problem worse, because it hits us out of the blue and we don't know what happened. At least if we're worried, we can prepare. But you know, if you ride down the highway, most people think everything. It's okay. This is a nice interstate layout of potholes. They think everything is great. I hope that this all changes. I hope I'm wrong, but I have seen enough to dough that it's not going to end well.   Keith Weinhold (00:28:55) -  Tell us about where you've lived for a long time. I mean, you come from the United States, but you've lived abroad for a long time. You've been there in Singapore for a while. Singapore, which is a place I haven't traveled to, has a reputation for being prosperous and enterprising in a really clean place. So will you tell us a little bit more about why Singapore is prosperous, including what its real estate markets like?   Jim Rogers (00:29:20) -  Singapore is a tiny country. There are only 5 or 6 million people here. So yes, it has been a remarkable success story. It's probably been one of the greatest success stories in the world in the past 40 or 50 years. It still amazes me to see how efficient and how well everything works here. And they don't have yet the getting debt now, but they don't have the staggering debts that some other countries do. I mean, Japan, America. You look at some of the great success stories that come to people's minds. Japan did it by borrowing staggering amounts of money.   Jim Rogers (00:29:57) -  Every day, the Bank of Japan borrows huge amounts of money it's going to have a problem to someday. I mean, it's just very simple. I don't want it to sound like some crazy fear monger, but I can read. And I know how this is always wound up. Now there's some very exciting and successful places in the world. And if you go to some parts of the United States, you say, oh my gosh, what a wonderful place. And it is. But underneath seems to me that there are problems developing. If you come to Singapore, you'll say, oh my gosh, and I'm not the only one who knows it all. The international surveys show that Singapore is one of the very top.   Keith Weinhold (00:30:42) -  Now in Singapore, is it more of an owner society where most of the residents own the home they live in or like you find in a lot of urban areas? Is there a disproportionately high amount of renters there in Singapore?   Jim Rogers (00:30:55) -  Over 80% of the people at Singapore own their own home.   Jim Rogers (00:31:00) -  The guy who set out to build Singapore new and he especially because in his lifetime there had been a lot of riots in Asia. And he somehow knew that if people own their own home, they had a huge stake in the country, right? Had a reason to make sure, to try to make sure everything went well. So in this country, over 80% of the people own their own home. Yeah, he may have a mortgage, but still they own their own home. That's part of the reason for the success. I mean, for what it's worth, I'll also tell you he was a huge believer in education. He made sure that everybody spoke at least two languages. I mean, he knew what it took to be successful and he did it. Yeah.   Keith Weinhold (00:31:49) -  Homeownership is generally good for communities like you touched on. You just have more of a stake in making sure your neighborhood stays quiet. Or you might show more interested enthusiasm in new clean mass transit coming into your area. You're more likely to be a voter when you own your home, and so on.   Keith Weinhold (00:32:06) -  So sure, that gives the residents a more vested stake in their own community, which is good for everybody. Does Singapore have one problem that we have here with United States housing? Do you have any idea if there's a substantial housing shortage there in Singapore, like we're seeing in so many places?   Jim Rogers (00:32:21) -  Do not shortage in the sense that you probably mean it? Yes. At times prices go high because there's not an abundance of housing and people keep moving to Singapore because it has been a successful place. So no, it's not like many places that we both know, but there are more immigrants coming here. The population is rising and they got a little somewhere. Yes, people are building homes and so it's not a gigantic problem at the moment. Can it be? Yes, of course it can be. And maybe it will be someday, but not at the moment. One thing I'll quickly say. Many societies, many countries, have a saying that families go from rags to rags and three generations. And there are many reasons for that.   Jim Rogers (00:33:11) -  So social reasons. I will point out that Singapore is now on its fourth new government. So maybe if human wisdom is correct, maybe Singapore is going to have some problems in the future. You don't see them now. They might though.   Keith Weinhold (00:33:28) -  Well, that's an interesting way to think about it. We've talked about problems in a few nations, Jim. I wonder, do you see there being a bright next up, incoming nation because you have this relative perspective from all your travels.   Jim Rogers (00:33:43) -  There are places that are trying to change and do better. Yet, Nam is a perfect example. I mean, what a nightmare it was 40 or 50 years ago. Right now it's on the rise. South Korea is one of the most successful, prosperous nations in the world. And in 1970, North Korea was richer than South Korea. That, of course, is not true anymore. So countries can change and can develop. And it has worked. I'm interested in Uzbekistan now, in Central Asia. It was ruined by the communists.   Jim Rogers (00:34:20) -  over 600 years ago. Uzbekistan conquered a lot of the world. I mean, then the communists came along and ruined it. But now they're changing again. So there's always somebody on the rise, and I'll be somebody on the decline. That's key, of course, is to be in the place where things are getting better, not getting worse.   Keith Weinhold (00:34:42) -  With that in mind is we're about to wrap up here. Jim, you know, I like an actionable takeaway for the audience. And before I ask you that, if I can share with you what we do here in a nation and a world of expanding debt, Grey's take on debt here is the way that we can borrow large amounts prudently and get our own debt is to buy income producing real estate. If you borrow more, you can only control more and both inflation and tenants passively debase your mortgage debt for you, which enriches that borrower as long as they can control their cash flow. So really, that's one thing that we're doing to play things here in a world of inflation.   Keith Weinhold (00:35:25) -  What are your thoughts with that? Or if you think that there's something else that the everyday person can really do to protect themselves in the future.   Jim Rogers (00:35:33) -  It's pretty clear that there have been, if you understand that and if you manage it properly, oh my gosh, you can become unbelievably successful and unbelievably rich. The proper words are though, if you handle it properly. History also showed that many people have been ruined by debt, so I hope that everybody understands that debt is not as simple as it looks, but if you handle it properly, oh my gosh, the returns and the rewards are huge. And yes, there are many, many throughout history, throughout the world, many people that made gigantic fortunes from property, from real estate. So I hope you're doing it right. I hope all of your viewers are doing it right. It's not as easy as it looks, but it can lead to great success and great disaster. So yes. Don't stop. Make sure that everybody understands the potential problems and the potential rewards and they don't get overextended.   Jim Rogers (00:36:37) -  Oh my gosh, you'll be very, very rich.   Keith Weinhold (00:36:40) -  Yeah, that's a little bit like fire. If used inappropriately, could burn down your house. But if you know how to use fire, you can cook meals for the rest of your life. Do you have any last thoughts overall, anything you'd like to share? Anything we really want to know?   Jim Rogers (00:36:54) -  I will tell you again that before this is over, interest rates in the US are going to go much, much higher. The debt is staggering. It is just whenever I look at the numbers and think about them, it shocks me, stuns me because I know it's going to lead to huge, huge, huge problems. But the people who are aware and understand what's happening and thrive. So this is not some kind of disaster for everybody, but some people will do extremely well. I hope that everybody you know does extremely well.   Keith Weinhold (00:37:31) -  Well, Jim Rogers, it's been a pleasure hearing from you again. As always. Thanks so much for coming out of the show.   Jim Rogers (00:37:37) -  My pleasure. I hope we can do it again sometime.   Keith Weinhold (00:37:45) -  Oh yes. It's good to get the bigger picture. Sage like wisdom. I'm not sure if you caught it early in the interview, but Jim is not selling short. That means he's not betting that stocks are about to take a big fall. He expects even higher interest rates when it comes to America's swelling debt. Most agree that they're just going to keep inflating their way out of it, rather than default on it. I do, too, but consider that the US actually does have a history of defaulting, like in 1971 when we told the world that you can no longer redeem our debt, IOUs for your gold, that there was defaulting on a promise, we weren't going to give them the gold anymore. Singapore is still growing fast. In fact, it's averaged about 2% annual growth over the last decade. If you discard pandemic aberrations, the value of the median Singapore condo is $1.7 million, and it is 1000ft² in size. That sort of makes you think about New York City real estate.   Keith Weinhold (00:38:52) -  And in fact, I had a trip planned to Singapore in February 2020. It was a cruise, but I didn't go. That part of the itinerary got cancelled. If you remember, Covid heated up in Southeast Asia early on, so I ended up spending more of that trip in India and Dubai. As it turned out, with our accelerated expansion of the supply of dollars that have been created since 2020. Here's one result today, more than 43% of Americans have been forced to cut back over the past year, and nearly 20% have had to borrow from family or friends in order to make ends meet. And you know when politicians brag about government funding. Just remember this. They're actually expecting you to give them credit for spending your money. That's what that means. And unfortunately, no one is immune from Congress's spending, which can be reckless at times. If you don't pay for something with taxes, then you pay for it with inflation. And that's exactly the type of issue that we expect to study on at Freedom Fest, where I might be fortunate enough to meet you in two days.   Keith Weinhold (00:40:10) -  Big thanks to the iconic Jim Rogers today. His website is Jim rogers.com. Coming up on the show here in future episodes soon, we're going to discuss a few components that add value to your residential real estate that really don't get discussed very often. Garages and also the vacant land that your property sits on. Also, the King of Commercial real estate is set to make his Get Rich Education debut. We'll learn about commercial real estate turmoil and the commercial sectors that higher interest rates have blown up. Well, hey, do you have family or friends that are into investing or real estate? I love it when you hit the share button on your podcasting device or whatever platform you're listening on. Everything that we do here is free, and the share button really helps the show. And be sure to follow or subscribe to the get Rich educational podcast yourself if you haven't already. Until next week, I'm your host, Keith Reinhold. Don't quit your daydream.   Speaker 6 (00:41:19) -  Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice.   Speaker 6 (00:41:29) -  Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss the host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:41:47) -  The preceding program was brought to you by your home for wealth building. Get Rich education.com.

Explore influential quotes and maxims from the investing and business world. This includes from: Warren Buffett, Mark Twain, Robert Kiyosaki, Albert Einstein, Dan Sullivan, Thomas Edison, Benjamin Franklin, Suze Orman, and yours truly, Keith Weinhold. “Why not go out on a limb? That’s where the fruit is.” -Mark Twain “Given a 10% chance of a 100x payoff, you should take that bet every time.” -Jeff Bezos “The stock market is a device for transferring money from the impatient to the patient.” -Warren Buffett “Don’t live below your means; expand your means.” -Rich Dad “The wise young man or wage earner of today invests his money in real estate.” -Andrew Carnegie “Savers are losers. Debtors are winners.” -Robert Kiyosaki Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. Real estate and other investing involves people from the disappointing to the mesmerizing. People have contributed countless quotes, maxims and aphorisms on investing today. All recite and then we'll discuss dozens of influential ones and what you could learn from this timeless wisdom today on get Rich education.   Robert Syslo (00:00:29) - Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Reinhold writes for both Forbes and Rich Dad Advisors and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus has had its own dedicated Apple and Android listener. Phone apps build wealth on the go with the get Rich education podcast.   Robert Syslo (00:01:06) - Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates (00:01:14) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:30) - Welcome to diary from Ellis Island, New York, to Ellensburg, Washington, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get Rich education for the 508th consecutive week. Happy July. It's the first day of the quarter, and it's now the second half of the year. So late last year when you got takeaways from our goals episode here, I hope that you're still applying them today. We're doing something different on this show. For most episodes. I divulge a lot of my best guidance. Some even quote that material. But why don't I acknowledge others great quotes maxims in aphorisms along with some of my own? And then I'll tell you what you can learn from them. So yes, today it's about axioms, adages, mantras and quotes, maxims and aphorisms. Some of these you've heard, others you probably haven't.   Keith Weinhold (00:02:28) - The first one is the only place you get money is from other people. Yeah. Isn't that so solidly true? You've never received any money in your life from yourself, unless you try to counterfeit it and give it to yourself. It's always been from other people. When you realize that the only place that you do get money is from others, you realize the value of relationships and connectivity. The next one comes from the brilliant entrepreneurial coach Dan Sullivan. You are 100% disciplined to your set of habits. Gosh, this is a terrific reminder about the importance of how you have to often uncomfortably apply something new in order to up your skill set up your game. If you keep getting distracted, well, then that's a habit, and then you'll soon become disciplined to the habit of distraction. The next two go together, and they're about market investing. Nobody is more bearish than a sold out bull. And the other is bears make headlines. Bulls make money. Really the lesson there is that they're both reminders that it's better to stay invested rather than on the sidelines.   Keith Weinhold (00:03:53) - The next two are related to each other as well. Albert Einstein said, strive not to be a person of success, but rather to be a person of value. And then similarly, a more modern day spin on that. Tony Hsieh, the late CEO of Zappos. He said, Chase the vision, not the money and the money will end up following you. And the lesson here is, well, we'd all like more money, but if you focus on the money first, well then it doesn't want to follow you. You need to provide value and build the vision first, and then the money will follow and you know, to me, it's kind of like getting the girl if you act too interested in her and you get too aggressive, it's a turnoff. But if you quietly demonstrate that you're a person of value, or subtly suggest somehow in a way that their life could be improved by having a relationship with you or being around you, then they're more likely to follow. And yes, I'm fully aware that this is a heterosexual male analogy, and I use it because that is what I am.   Keith Weinhold (00:04:58) - So if you're something else, I'm sure you can follow along with that. The next quote is from Susie Kasam. Doubt kills more dreams than failure ever will. Gosh, isn't this so on point? It's about overcoming the fear in just trying. And then if you know that you've lived a life of trying, you're going to have fewer regrets. Thomas Edison yes, the light bulb guy in the co-founder of General Electric, he said the value of an idea lies in the using of it. Oh, yeah, that's a great reminder that knowledge isn't really power. It's knowledge plus action that creates power because an idea that remains idle doesn't do anyone any good. Hey, we're just getting started talking about investing in real estate quotes today here on episode 508 of get Rich education. And, you know, remarkably, these maxims and catchphrases, they're usually just 1 or 2 sentences, but yet they are so often packed with the wisdom such that these takeaways and lessons are like your three favorite ones today. They can change the trajectory of your entire life.   Keith Weinhold (00:06:20) - The next quote is one that I have said carefully bought real estate has the best risk adjusted return in. The world. And I don't need to explain that because we talk about that in some form or another on the show many weeks. Albert Schweitzer said success is not the key to happiness. Happiness is the key to success. If you love what you're doing, you will be successful. Yeah, I'd say that one is mostly true. Just mostly, though, there's no attribution here. On this next one, you might have heard the aphorism money is a terrible master, but an excellent servant. Yeah. Now, I've heard that one for a long time, and it took me a while to figure out what it really meant. And here's my take on that. If you make money, the master will. Then you'll, like, do almost anything. You'll trade your time for money. You'll sell your time for dollars instead. If you invest passively and it creates leveraged equity and income streams, oh, then money serves you.   Keith Weinhold (00:07:28) - It's no longer the master. That's what that means to me here in a real estate investor context. And, you know, it really underscores the importance of making money work for you. And is a follow up to last week's show. Whose money are we talking about here? Whose is it? It's focusing on getting other people's money to work for you, not just your own. Now, the next one is a quote that I've said on the show before, quite a while ago, though. And come on now, what would an episode about quotes, maxims and aphorisms be without some contribution from Mark Twain? Here Twain said, why not go out on a limb? That's where the fruit is. that's just so, so good in business and in so many facets of your life, constantly playing it safe is the riskiest thing that you can actually do. Because a risk averse investor places a ceiling on his or her potential in a risk averse person imposes an upper limit on their very legacy. In fact, episode 275 of the get Rich education podcast is named Go Out on Limb precisely because of this Twain quote.   Keith Weinhold (00:08:45) - So listen to that episode if you want to hear a whole lot more about that. It's actually one of Twain's lesser known quotes, but perhaps his best one. The next one comes from famous value investor Benjamin Graham. He said the individual investor should act consistently as an investor and not as a speculator. Okay, so what's the difference there? A speculator takes big risks in hopes of making large quick gains. Conversely, an investor focuses on risk appropriate strategies to pursue longer term goals, which is really consistent with being a prudent, disciplined real estate investor. Presidential advisor Bernard Baruch contributed this to the investing world. Don't try to buy at the bottom and sell at the top. It can't be done except by liars. yes. Tried to time the market. It might be tempting, but it rarely works because no one really knows when the market has reached its top or its bottom. All you can really hope to do is buy lower and sell higher. But you're never going to buy at the trough and sell at the peak.   Keith Weinhold (00:10:00) - And even buying lower and selling higher is harder to do than it sounds, even though everyone knows that's what they're supposed to do. Albert Einstein is back here, he said. Compound interest is the eighth wonder of the world. He who understands it earns it. He who doesn't pays it. And as you've learned here on the show on previous episodes, compound interest. It does work arithmetically, but not in real life would apply to the stock market. Of course. My quote contribution to the investing world on this is compound interest is weak. Compound leverage is powerful. I broke that down just last week on the show, so I won't explain that again. Now, really, a central mantra in GR principle is don't live below your means, grow your means. But I must tell you, I can't really take credit for coining that particular one because from the rich dad world, the quote is don't live below your means, expand your means. But I did hear that from them first, and though it can't be certain, I think it was Sharon letter that coined that one.   Keith Weinhold (00:11:13) - A lot of people don't know this, but she was the original co-author of the book. Rich dad, Poor Dad with Robert Kiyosaki. And Sharon has been here on the show before, and if I have her back, I will ask her if she is the one that coined that. Don't live below your means. Expand. Your means. But yeah, I mean, what this quote really means is, in this one finite life that you have here on Earth, why in the world would you not only choose to live below your means, but actually take time and effort learning how to do a better job of living below your means when it just makes you miserable after a while, when instead you could use those same efforts to grow your means and you can only cut down so far. And there's an unlimited ceiling on the upside. And now there is one caveat here. I understand that if you're just getting on your feet, well, then living below your means might be a necessity for you in the short term.   Keith Weinhold (00:12:08) - And what's an example of living below your means? It's eating junk food because it's cheap and filling, expanding your means. That might be doing something like learning how to do a cost segregation to accelerate your depreciation. Write off on your 20 unit apartment building. But you know, even if you're in hardship, I still like live within your means more than the scarcity minded guidance of live below your means. Next is a terrific one, and it really reinforces the last quote a rich man digs for gold. A poor man is concerned with the cost of a shovel. Oh yeah, that's so good. And I don't know who to attribute that to. It's about growing your means and taking on and actually embracing calculated risks. Not every risk, calculated risk. And you can also live that regret free life this way. In fact, episode 91 of this show is called A Rich Man Digs for gold. So you can get more inspiration for that from that episode. Okay, this one comes from the commodities world where there are notoriously volatile prices.   Keith Weinhold (00:13:18) - How do you make a million? You start with 2 million. now, this next one is one that I don't really agree with that much. You really heard this a lot the last few years. It applies when you have a mortgage on a property, and that is the house is the liability and the debt is the asset. I know people are trying to be crafty. People kind of use this pithy quote when they're discussing how those that locked in at those artificially low mortgage rates years ago considered the debt so good that it's an asset. It's like, yeah, I know what you're saying. And I love good real estate debt and leverage and all that, of course. But really, for you, truly, then if the House is a liability and the debt is an asset like you're saying, then give away the house to someone else. If it's such a liability, and keep the debt to pay off yourself if it's really such an asset. A little humorous here. Next, Forbes magazine said, how do you make a million marry a millionaire? Or better yet, divorce one then more? Real estate ish is Jack Miller's quote how do you become a millionaire? Well, you borrow $1 million and you pay it off.   Keith Weinhold (00:14:31) - And I think we can all relate to that here at GRE. Better yet, borrow $1 million and don't pay it off yourself. Have tenants and inflation pay it down for you. And you know, inflation is getting to be a problem for any of these, like century old classic quotes that have the word millionaire in them. Because having a net worth of a million that actually used to mean you were wealthy, and now it just means you're not poor, but you might even be below middle class. Now, you probably heard of some of these next ones, but let's talk about what they mean. Warren Buffett said the stock market is a device for transferring money from the impatient to the patient. And then Benjamin Franklin said an investment in knowledge pays the best interest. I mean, yeah, that's pretty on point stuff there when it comes to investing. Nothing will pay off more than educating yourself. So do some research before you jump in. And you've almost certainly heard this next one from Warren Buffett.   Speaker 4 (00:15:28) - You want to be greedy when others are fearful, and you want to be fearful when others are greedy.   Keith Weinhold (00:15:32) - That is, be prepared to invest in a down market and to get out in a soaring market. As per the philosophy of Warren Buffett, it's far too easy for investors to lose perspective when something big goes wrong. A lot of people panic and sell their investments. And looking at history. The markets recovered from the 2008 financial crisis. They recover from the dotcom crash. They even recover from the Great Depression, although it took a long time. So they're probably going to get through whatever comes next as well, if you really follow that through what Buffett said there. Well, then at a time like this now, I mean, you could be looking at shedding stocks as they continue to approach and break all time highs. Carlos Slim, hello said with a good perspective on history, we can have a better understanding of the past and present and thus a clear vision of the future. Sure. Okay, that quote like that probably didn't sound very snappy and it's really simple, but he's telling us that if you want to know the future, check on the past.   Keith Weinhold (00:16:39) - Not always, but often. It will tell you the future directory, or at least that trajectories range. And this is similar to how I often say take history over hunches, like when you're applying economics to real estate investing. Now this next guy has been a controversial figure, but George Soros said it's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong. Okay, I think that quote means that too many investors become almost obsessed with being right, even when the gains are small, winning big, and cutting your losses when you're wrong. They are more important than being right. Amazon founder Jeff Bezos said given a 10% chance of a 100 times payoff, you should take that bet every time. All right. Now, that's rather applicable to the high flying risk of, say, investing in startup companies. We'll see. Bezos himself, he took a lot of those bets, a 10% chance at a 100 X payoff. And that is exactly why he's one of the richest people in the world.   Keith Weinhold (00:17:49) - Now, if you haven't heard of John Bogle before, you should know who he is. He co-founded the Vanguard Group, and he's credited with popularizing the very concept of the index fund. I mean, Bogle transformed the entire investment management industry. John Bogle said, don't look for the needle in the haystack. Just buy the haystack. Okay? If it seems too hard to say, find the next Amazon. Well, John Bogle came up with the only sure way to get in on the action. By buying an index fund, investors can put a little bit of money into every stock, and that way they never miss out on the stock market's biggest winners. They're only going to have a small part. And what that means to a real estate investor is, say, rather than buying a single property in a really shabby neighborhood, that neighborhood will drag down your one property. So to apply boggles by the whole haystack quote. What you would do then is raise money to buy the entire block, or even the entire neighborhood and fix it up, therefore raising the values of all of the properties.   Keith Weinhold (00:18:55) - Back to Warren Buffett. He had this analogy about the high jump event from track and field. He said, I don't look to jump over seven foot bars. I look around for one foot bars that I can step over. Yeah. All right. I mean, investors often do make things too hard on themselves. The value stocks that Buffett prefers, they frequently outperform the market, making success easier. Supposedly sophisticated strategies like short selling. A lot of times they lose money in the long run. So profiting from those is more difficult. Now, you might have heard the quote, and it's from Philip Fisher. He said the stock market is filled with individuals who know the price of everything but the value of nothing. Yeah. I mean, that's really another testament to the fact that investing without an education and research that's ultimately going to lead to pretty regrettable investment decisions. Research is a lot more than just listening to the popular opinion out there, because people often just then invest on hype or momentum without understanding things like a company's fundamentals or what value they create for society, or being attentive to price to earnings ratios.   Keith Weinhold (00:20:08) - Even Robert Arnott said in investing, what is comfortable is rarely profitable. You know, that's pretty on point at times. You have to step out of your comfort zone to realize any big gains. Know the boundaries of your comfort zone. Practice stepping out of it in small doses. As much as you need to know the market, you need to know yourself too. Can you handle staying in when everyone else is jumping out, or do you have the guts to get out during the biggest rally of the century? You've got to have the stomach to be contrarian and see it through. Robert Allen said. How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case. That's the end of what Robert G. Allen said. Yeah, though inflation could cut out the millionaires part. Yeah I mean point well taken. No one builds wealth through a savings account. Now a savings account might be the right place for your emergency fund. It has a role, but it's not a wealth builder.   Keith Weinhold (00:21:10) - I mean, since we left the gold standard back in 1971, so many dollars get printed most years that savers become losers. Which, hey, that does bring us to Robert Kiyosaki. He's been a guest on the show here with us for times now, one of our most frequent guests ever. Here he is. The risks at Port Arthur. And you probably know what I'm going to say. He is, he said. Savers or losers? Debtors or winners of something that your parents probably would never want to know that you subscribed to your grandparents, especially. Yes, he is one of the kings of iconoclastic finance quotes. And as you know, I've got some contributions to that realm myself. But what Kiyosaki is saying is if you save 100 K under a mattress and inflation is 5%, well, now after a year you've only got 95 K in purchasing power. So therefore get out of dollars and get them invested. Even better than if you can get debt tied to a cash flowing leveraged asset. In fact, episode 212 of this very show is named Savers are Losers.   Keith Weinhold (00:22:18) - Debtors are winners. So I go deep on that theme there. We've got more as we look at it and break down some of the great real estate investing quotes, maxims and aphorisms. They generally get more real estate ish as we go here, including ones that you haven't heard before and dropping, quote, bombs here that absolutely have to be enunciated and brought to light ahead. A group of Real Estate quotes episode. Hey, learn more about what we do here to get rich education comm get rich education.com. And do you have friends or family that are into investing or real estate? I love it when you hit the share button on your pod catching device or whatever platform you're listening on. Everything that we do here is free and the share button really helps the show. Be sure to follow or subscribe yourself if you haven't done that more. Straight ahead. I'm Keith Reinhold, you're listening to get Rich education. Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings.   Keith Weinhold (00:23:27) - If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk. Your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just $25. You keep getting paid until you decide you want your money back there. Decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor, to earn 8%. Hundreds of others are text family 266866. Learn more about Freedom Family Investments Liquidity Fund on your journey to financial freedom through passive income. Text family to 66866. Role under this specific expert with income property, you need. Ridge lending Group Nmls 42056. In gray history from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally.   Keith Weinhold (00:24:46) - They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com.   Speaker 5 (00:25:02) - This is Rich dad advisor Ken McElroy. Listen to get Rich education with Keith Reinhold and don't quit your daydream.   Keith Weinhold (00:25:20) - Welcome back to Get Your Education. I'm your host, Keith Weiner. We're having some fun today, looking at and breaking down some of the great investing quotes, maxims, and aphorisms. Andrew Carnegie said, the wise young man or wage earner of today invests his money in real estate. Another one for Mark Twain here by land. They're not making it any more. You probably heard one or both of those. And yeah, Twain's time predated that of those islands that are built in Dubai. But Twain's point is still well taken. There is an inherent scarcity in land. Louis Glickman drove the point home about real estate investing when he simply said, the best investment on Earth is Earth. A Hebrew proverb goes as far as saying he is not a fool man who does not own a piece of land.   Keith Weinhold (00:26:18) - Wow, that's pretty profound right there. And if you're a female listener, yes, many of these timeless quotes from yesteryear harken back to a period when all of the landowners were men. President Franklin D Roosevelt, he has a real estate quote that you probably heard, but let's see what I think about it. Let's talk about it. Here it is. Real estate cannot be lost or stolen, nor can it be carried away, purchased with common sense, paid for in full and managed with reasonable care. It is about the safest investment in the world. That's from FDR. That's pretty good. I just don't know about the paid in full part because you lost your leverage. FDR, Johnny Isakson, a US senator, said, in the real estate business, you learn more about people and you learn more about community issues. You learn more about life. You learn more about the impact of government, probably more than any other profession that I know of. And that's good, really on point stuff there.   Keith Weinhold (00:27:23) - If you're a direct real estate investor like we are here, you really learn those things. If you're in, say, a REIT, well, you're not going to be exposed to that type of knowledge in experiences. Hazrat Ali Khan is a spiritualist and he said, some people look for a beautiful place, others make a place beautiful. Yeah, that's some mystical motivation for the house flipper or the value add real estate syndicator right there, Political economist John Stuart Mill, he said something you've probably heard before. Landlords grow rich in their sleep without working, risking or economizing. Oh, yes, you can have a real estate quotes episode without that classic one. Although rather than landlords growing rich in their sleep, the phrase real estate investors is likely more accurate. Don't wait to buy real estate. Buy real estate and wait. You've surely heard that one. You might not know that it was actor Will Rogers with that particular attribution, entrepreneur Marshall Field said buying real estate is not only the best way, the quickest way, the safest way, but the only way to become wealthy, billionaire John Paulson said.   Keith Weinhold (00:28:45) - I think buying a home is the best investment any individual can make. That's what Paulson said. let's give Paulson the benefit of the doubt here. Although Robert Kiyosaki famously said that a house is not an asset because an asset puts money in your pocket and your home takes money out of your pocket, well, a home is something that you get to live in, build family memories in, and you do get some leverage if you keep debt on your own home. So maybe that's more of what's behind John Paulson's maxim there. Notable entrepreneur Jesse Jones. He said I have always liked real estate, farmland, pasture land, timberland and city property. I have had experience with all of them. I guess I just naturally like the good Earth, which is the foundation of all our wealth. Business mogul Tamir Sapir said if you're not going to put your money in real estate, where else? Yeah, I guess that's a good question. Anthony hit real estate professional. He said to be successful in real estate, you must always inconsistently put your client's best interests first.   Keith Weinhold (00:30:00) - When you do, your personal needs will be realized beyond your greatest expectations. Yeah, I think he's talking about being a team player there. And if you're a real estate agent, it's about putting your client's needs over yours. If it's a landlord, perhaps then you're thinking about putting your tenants first and meeting their needs so that they stay in your property longer. Here's a quote that I've got to say I don't understand. It's from real estate mogul and shark tank shark Barbara Corcoran. She says a funny thing happens in real estate. When it comes back, it comes back like gangbusters. I don't really know what that means, and I don't know what a gangbuster is yet. I see that quote all over the place. I can't explain why that would be popular. I don't get it at all now, novelist Anthony Trollope said it is a comfortable feeling to know that you stand on your own ground. Land is about the only thing that can't fly away. Entrepreneur Armstrong Williams is here with this gem. Now one thing I tell everyone is to learn about real estate.   Keith Weinhold (00:31:12) - Repeat after me. Real estate provides the highest returns, the greatest values in the least risk. Yeah, that's a real motivator of a quote. As long as one knows what they're doing and buys, right? All of that could very well be true from Armstrong Williams. It was none other than John de Rockefeller that said the major fortunes in America have been made in land. Yeah, it's just really plain and simple there. John Jacob Astor, he got specific and more strategic here. This is Astor. He said, buy on the fringe and wait by land near a growing city. Buy real estate when other people want to sell and hold what you buy. I mean, yeah, that's pretty much an all timer right there from Astor. Winston Churchill said land monopoly is not only monopoly, it is by far the greatest of monopolies. It is a perpetual monopoly, and it is the mother of all other forms of monopoly. Yeah, interesting from Churchill. And there's a good chance that you haven't heard that one before.   Keith Weinhold (00:32:26) - Perhaps. So say, for example, if one owns real estate on all four corners of a busy street intersection, then that quote applies. It's like you've got a monopoly on a popular intersection. Russell Sage said. This real estate is an imperishable asset, ever increasing in value. It is the most solid security that human ingenuity has devised. It is the basis of all security and about the only indestructible security. That's from Russell Sage. And, you know, you know, something here is we've got lots of real estate specific quotes in this segment is that it is rare to nonexistent to see any negative quotes about real estate, about anyone saying anything bad about it. It's all positive stuff. Waxing eloquent about real estate. And there are a lot of reasons to do that. But not every real estate moment is great. Maybe this is all because nothing quotable is said when you find out that one of your tenants is a drug dealer. Well. Finance expert Susie Orman says this owning a home is a keystone of wealth, both financial affluence and emotional security.   Keith Weinhold (00:33:46) - Yeah, a lot like an earlier quote. A home is the only investment that you get the benefit of living in. Peter Lynch said. No, what you own and why you own it. I mean, that is short, sweet and it's just a really good reminder to you. Do you now own any properties that you would not buy again? And if you wouldn't buy it again, then should you consider selling it now? Not FDR, but Theodore Roosevelt. He said every person who invests. In well selected real estate in a growing section of a prosperous community, adopts the surest and safest method of becoming independent for real estate is the basis of wealth. That's Theodore Roosevelt. Yeah. He reiterates that you want to own most of your property in growing places, something that really hasn't changed over all this time. Coke Odyssey contributes to this. The house he looked at today and wanted to think about until tomorrow, maybe the same house someone looked at yesterday and will buy today. Oh, gosh, that's true.   Keith Weinhold (00:34:58) - I think that everyone has the story of the one that got away. Margaret Mitchell said the land is the only thing worth working for. Worth fighting for, worth dying for. Because it's the only thing that lasts. Yeah. Wow. Some real passion there from Margaret. Sir John Templeton said the four most dangerous words in investing are. It's different this time. Yeah. I think what Templeton is advising is to follow market trends in history. Don't speculate that this particular time will be any different. Warren Buffett said wide diversification is only required when investors do not understand what they are doing. Yeah, that insight from Buffett. That's pretty applicable when you understand that you've got to get good in a niche and then get rich in that niche, meaning being narrow. Why diversification? That's likely better when you're just beginning and you don't know much, but then you want to get niche in your big earning years. And then perhaps when you're older, you get diversified once again because you're more interested in just protecting what you have.   Keith Weinhold (00:36:15) - Robert Kiyosaki said it's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it for. Now there's something with tax efficiencies and more in that Kiyosaki quote. My friend Dave Zook, billionaire dollar syndicator and frequent guest on this show, he said, you can be conventional or you can be wealthy. Pick one. Oh yeah, I love that from Dave. Because if you do what everyone else does, you'll only get what everyone else got. And I've contributed some material here over 508 episodes of this show. Although I won't claim the eminence of some of the other luminaries of the past few centuries discussed today. I've been known to say these. You do care about what others think. That's your reputation. I've been known to say the scarcity mentality is abundant and the abundance mentality is scarce. And some say that in real estate, I was the first one to point out back in 2015 that real estate pays five ways. Another that I have is a critique of delayed gratification.   Keith Weinhold (00:37:31) - Now, some delayed gratification is okay early on in your life, but I've said too much delayed gratification becomes denied gratification. Here on Earth, you live just one life. Hey. And the other day, an entrepreneurial friend. I don't know. He seemed to think that I have the right life balance. I'm not sure if that's true or not, but here's what I told him. And I think he said this because he often sees me out to exercising and things. I told him I give my best to exercise. Business only gets left over time. That's because exercise is hard and making money is easy. Yeah, there it is. That's my take on that. And that's it for today. I hope that you got some learning, some perspective, a few laughs and that some thought was spurred inside your mind in order to give you at least one big, rich novel takeaway here. And it's probably best for you to refer back to this episode of quotes, maxims, and aphorisms. At times when you're feeling shaky about your investment decision making, or just other times of uncertainty.   Keith Weinhold (00:38:49) - Until next week, I'm your host, Keith Reinhold, and there's something else that I've been known to say. Don't quit your day. Drink.   Speaker 6 (00:39:00) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:39:28) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Compound interest in stocks gets worn down to less than nothing due to: inflation, emotion, taxes, fees, and volatility. I focus on the little-understood deleterious effects of volatility. DON’T focus on getting your money to work for you. Learn what to focus on instead. Compound leverage and OPM are the wealth-building flexes. We discuss how to use a lower down payment to achieve a potential 20% cash-on-cash return with the BRRRR Strategy. Join our live, virtual event for this at: GREmarketplace.com/webinar Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to GRE. I'm your host, Keith Weinhold. Compound interest is weak. What kind of iconoclastic heresy is that? Oh, I've got even more. Including. Don't get your money to work for you. This is a wealth building show. So why don't we discuss 401 days in IRAs here? It's precisely because they're not designed to build wealth. We'll get into that then. A way you can achieve higher property, cash and cash returns than you can with buy and hold real estate today and get rich education.   Robert Syslo (00:00:38) - Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Wine, who writes for both Forbes and Rich Dad Advisors and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki.   Robert Syslo (00:01:06) - Get Rich education can be heard on every podcast platform. Plus it has its own dedicated Apple and Android listener. Phone apps build wealth on the go with the get Rich education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates (00:01:23) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:39) - We're going to go from Saint Helena Island to Helena, Montana and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get Rich education. Compound interest is weak. Compound leverage is powerful. And with both available to most anyone, why don't you have more leverage in your financial life? That was a long time listener. You probably understand that if you're a newer listener, your reaction to that is like, wait, what? I mean, your inner self is telling you something like that challenges my existing longtime belief about how compound interest builds wealth. In fact, I will fight to protect this core belief. Even Albert Einstein purportedly called compound interest the eighth wonder of the world.   Keith Weinhold (00:02:36) - All right, well, let's break down compound interest until it looks as impotent as it is, as pathetic as it is, and as fallacious as compound interest is in the sense that it applies to your life as an investor. Now understand, I once thought the same limiting way that perhaps you once did, and that most others still do. When I was out of college and at my first job, I thought that there could be nothing better than getting my money to work for me with compound interest. Oh, and then maybe even the layer on top of that with the tax efficiencies of, say, a 401 K, 400 3B4 57 plan or an IRA. Then I took a real interest in this stuff, and I soon learned that I don't want any of those things because they don't build wealth. I don't want compound interest. I don't want to focus on getting my money to work for me. And I don't want any of those government sponsored retirement plans either. And that's why today I don't have any of them now, I remember when I had this one particular appointment, a financial planning appointment a few years ago, and I had it with what I'll call a conventional financial planning firm.   Keith Weinhold (00:03:56) - Maybe I remember it so well because it was an in-person meeting. It was in a tall office building that I went to and visited in downtown Anchorage, Alaska. And when I was in this money manager's office where basically what he was trying to do is win me as a new client. That's fine. That's his business model. Well, he had this big paper and cardboard sort of laminated charts thing resting on an easel, and this chart was prominently placed in his office so that I or anyone could see it. It showed the rate of return over time of. And I forget which index it plotted. It was either the Dow or the S&P, but no matter. It showed the return line going up and to the right for over 100 years. Your classic chart go up. It gave the impression to a prospective new client like me that, oh well, I had the opportunity to buy into this. And if I just invest my capital with this money manager and pay him fees for managing it for me now, I was at the point where I was starting to become better educated on these sorts of things compared to a layperson, for sure.   Keith Weinhold (00:05:06) - And I had been a real estate investor for a while at this point. Well, that physical chart in his office resting on an easel, it showed something like an 8 or 10% stock market return over time. Let's just be kind and call it 10% annually. And that's the first time in my life that I ever remember asking the question when I asked that money manager something like the chart shows a 10% market return, but what would my return be after inflation? Emotion taxes, your fees and volatility. Mic drop. You could hear a pin drop. I'll tell you what. That money manager almost froze. He didn't know what to say. I just remember, he began his reply, starting with talking about how inflation was low at the time. And yes, CPI inflation was low at that time, but he just didn't have a good answer for me. He was overwhelmed. He may have not ever had anyone ask him a question like that in his life. That sure is how he acted. And needless to say, I left his office that day without ever becoming one of his investors.   Keith Weinhold (00:06:17) - All right, so then let's dig into it. I've scratched the surface a little. What is the problem with, say, a 10% average annual return compounded over time? I mean, that sounds rather attractive when it's presented that way. Well, first, what do you think that the real rate of. Long term inflation is some make the case that it's still 15% today, even though the current CPI is 3 or 3.5%, and anyone that's looked at it feels that measure, the CPI is understated. So what do you think you want to use 6%. How about 6% as the long term true diminished purchasing power of the dollar? Okay then will your 10% stock market return -6% or you're already down to a 4% inflation adjusted return? Then there's the emotional component to buy and sell at exactly the wrong time, because no matter what people say they're going to do, most people want to sell when stocks are low because they're discouraged and they're just tired of taking their losses and they want to cut their loss. And then conversely, people want to buy when stocks rise because they're encouraged and they say they're a momentum investor and they experience FOMO if they're not in and riding the stocks up, well, what did you just do then? You just sold low and bought high.   Keith Weinhold (00:07:42) - How much does that emotional effect drag down your 4% inflation adjusted stock return that were already down to now? I mean, are you already at less than zero? Then there's taxes. Even in a 401 or IRA, you either pay the tax now or you pay the tax later. It's not tax free. How far below zero is your real return? Now that it's taxed? The IRS won't adjust your tax for inflation on a capital gain. Then tack on the investment fees, which can be 2% or higher. If you've got a professional money manager like the guy I met with in downtown Anchorage, or the fees can be really low if you are in an index fund. But how far below zero are you now? And that brings us to the last drag on compound interest in the stock market. We're not even done yet, remember? Okay, all we've done now is deduct out inflation, emotion, taxes and fees. What about adjusting it down further for volatility. Let's look at how deleterious volatility is to this floored compound.   Keith Weinhold (00:08:48) - Interest builds wealth thesis right here. Because you know on a lot of episodes we've just glossed over that. It just comes down to math. If you're up 10% one year and down 10% the next year, you're not back to even run the math and you'll see that you've lost 1%. That's just simply math. And now I'm going to get wonky here for a moment, and I'll use a more extreme example to demonstrate my volatility point for you. But I must get that way in order to debunk this myth about how compound interest builds wealth, or the getting your money to work for you builds wealth. Time spent making up lost returns is not the same as positively compounding your return. Any time you're looking at the annual average performance of an investment, it is vital to check how that performance has been calculated. And bear with me here for a minute, because this is substantive. Say your collection of stocks or whatever it is, just your overall portfolio value. It doesn't matter. Say it's up 50% one year, down 40% the next, then 50 up 40, down 50, up 40 down again.   Keith Weinhold (00:10:05) - All right. That right there was a 5% average annual return. But your average annual return. That is a lie because a 5% return through arithmetic performance. That sounds better than what really just happened to your money. So in a mutual fund prospectus, you might see that as a headline number, the 5% average annual return. But that's a lie in the small print. That's where you're more likely to see this CAGR, the compounded annual growth rate, and the CAGR. That's usually going to be worse than what the average annual number is. That headline number. And in our example, the CAGR is -5.1%. In this case that's the geometric figure. That's what you really want to look at not the arithmetic one. It looked like the market was up 5%, but your real return on your money was down 5.1%, a delta of 10.1% then. And the more volatile your returns are, the wider and wider this difference becomes. Now, if there were zero volatility, your average annual return, the arithmetic thing and the CAGR, the geometric thing, they would be the same and there wouldn't be any need to have this discussion.   Keith Weinhold (00:11:35) - This discussion is. Germane because volatility exists in the stock market and its related derivatives. So small differences over time compound and see really the problem is over the decades in your conventional retirement account, if you think that you're going to be quadrupling your money over time, but you only double your money over time, now you can see how this becomes a major problem. Come time for your retirement when it's too late. All right. Now, if you didn't follow that part because there were a few numbers flying around, just remember this time spent making up for lost returns is not the same as positively compounding your return inflation, emotion, taxes, fees, and volatility that just broke down any conventionally invested nest egg to less than nothing. This is why volatility is worse for investments than most people think. Well, we had someone write in to our general mailbox a while ago. And by the way, we like to hear from you. You can always communicate with us here at GR either through email or voice at get Rich education.   Keith Weinhold (00:12:52) - Com slash contact that's get rich education comment. I'd love to hear from you and really appreciate having you as a listener. Well, a listener wrote in on our inbox. They're asking why, if we're a wealth building show, why don't we talk about the benefits of 401 or IRAs? Well, it's squarely because those things don't create wealth. They aren't even designed to build wealth, but they create the illusion of doing so, partly due to the myth of compound interest that I just explained. But there's more outside of any employer match for IRAs and just generally investing cash in mutual funds or stocks or ETFs, they all have another gigantic problem. It could be a problem even bigger than the compound interest fallacy, which I just addressed. And that is all you're trying to do is get your money to work for you. Getting your money to work for you does not build wealth. Show me some evidence that it does. All right. Well, what's the problem here with these 41K and IRAs? I think you know, where I'm going is that you don't get any leverage.   Keith Weinhold (00:14:06) - Where is your leverage? Every single dollar that you lock away there means that you don't get the opportunity to ethically use three x or four x of what you've invested in OPM, other people's money, which you can build wealth off of. Where is your compound leverage with those conventional vehicles? It's gone. It never existed in the first place. Plus there's typically zero monthly cash flow. Plus you could have it invested where you don't legally have to pay any tax. Instead any tax, because retirement fund investors either pay tax today or pay tax later. Real estate can permanently mitigate income tax like you can get with real estate depreciation and absolutely zero capital gains tax on your real estate with the 1031 exchange. But let's not let the compound interest versus compound leverage case go to rest here just yet okay. How does then compound leverage build wealth instead? Well, the most available means for you to get access to leverage OPM is with real estate. Well, let's just look at what's going on today. Today, per the Fhfa, national home prices, they're up 6.6% year over year.   Keith Weinhold (00:15:26) - That's the latest figure that's not too different than historic norms. All right then. Well, if one year ago you had made a 20% down payment on a property that's 5 to 1 leverage, so you just take your 6.6% home price appreciation rate multiplied by five, and there's 33% for you. You went from a 6.6% return on the asset to a 33% return on your money, because you got the return on both your money and the bank's money. The majority is from the bank, OPM. So if you got a 33% return in year one, maybe it's 26% the next year and 21% the following year. It will go down over time as equity accumulates. And that's compound leverage. That's the wealth builder. And notice what else? Now that you know how destructive volatility is to returns, there is less volatility in real estate asset values. So now you're really on the path because you have a durable wealth builder. And then of course in real estate those high leverage returns are one of just. Five ways you can expect to be paid, but that one is the biggest leveraged appreciation.   Keith Weinhold (00:16:41) - That is the biggest return source of the five over time. And now you better understand why you don't want to set up your investor life to optimize getting your money to work for you. You don't want that. It's to get other people's money to work for you. And my gosh, mathematics makes compound interest in getting your money to work for you look amazing. But the real world proves that compound interest in getting your money to work for you is a farce, and it will keep you working at a job, maybe a soulless job until you're old. But the sheep believe it. You're listening to this show, so you're not a sheep. You're not among the masses. If you do what everyone else does, you'll only get what everyone else got. If you want wealth for yourself. All right, well, then, do you see that? You would have to think differently. And do you think that you would have to learn new things and then act differently than the masses? Well, yes, of course you do.   Keith Weinhold (00:17:41) - You can either go through life as a home run hitter or as a bunter. Most people are afraid to do anything other than learn how to be a bunter. And that's why the most popular personal finance platforms give the worst advice that limit you and keep you small. It's because they're talking to people with average or below average mindsets, not below average intelligence, but an audience of average or below average mindsets, which are the masses and they're just striving to get to a level of mediocrity, okay. They cater to financially irresponsible people that are just trying to get up to a mediocre level. And you know what? I was recently listening to one of these shows, I'll call it, a get rid of your debt and invest for compound interest and get your money to work for you shows. One caller called in. He and his wife got a $60,000 windfall from an heir. And they're wondering what they should do with the money. And they owned a home valued at 500 K, with 320 K left on the mortgage, which was a 3.25% interest.   Keith Weinhold (00:18:53) - And the guidance that the host had for this caller. I'm not kidding. Here was to use the 60 K to pay the 320 K mortgage down, so then they'd only owe 260 on the mortgage. I'm not kidding. That was the recommended course of action. And this is not an aberration. I've heard this same guidance with other callers on this conventional show. I mean, the opportunity cost of such a misguided move, what has he done when he pays down his mortgage? 60 K like that. He lost liquidity, he lost leverage. And it didn't even help with his cash flow. Because with a fixed amortizing loan, your monthly payment is the same the following month. Anyway, that 60 K, instead of being used to pay down a mortgage that could have been leveraged again by purchasing, say, a 250 to 300 K rental property. So my point is that conventional guidance does not build wealth in financial freedom. When you're actually young enough to enjoy it, you do things like learn how to get out of debt and then solely grind for decades, doing so, all while paying the opportunity cost of being leveraged less for the opportunity cost of targeting something like debt free, which is the wrong target rather than being financially free.   Keith Weinhold (00:20:18) - It's just like, if you want a wealth coach, well, then you don't hire and listen to guidance from a mediocrity coach. It's the same is if you want to learn how to skydive, then don't ask a basketball coach because you're going to die. We practice what we preach here at GRA. Now me what would I do if I had a paid off rental property or paid off home? Well, first, I've never had any residential rental property paid off in my life. Not one. Although I could, I'd recognize the opportunity cost of zero leverage. But just say, hypothetically, a paid off home fell in my lap. What's the next thing I do? I would go get the maximum loan against it, and then I'd have access to cash that I could invest in other properties. But what about these new loans that I'm taking out? What happens with them? I'm not concerned because both tenants and inflation pay it down passively, without my involvement at all, without my grinding for it at all, without me trading my time for dollars at all.   Keith Weinhold (00:21:27) - Well, I am really glad that we got into this here in the first segment of today's show. If you're near the show, it probably gave you a starting point for. Some new topics to search. Maybe you should start with learning the difference and reading more about average annual return versus compounded annual growth rate. It's really eye opening. And yes, you've heard me say on the show before that stock returns are dragged into negative territory with inflation, emotion, taxes, fees and volatility. And what's new here today is that I took the volatility component and broke it all the way down for you. There is a real paradox out there in America and elsewhere. You know, people spend all this time learning about how work works, zero time learning about how money works. And yet money is the main reason that people go to work. So congratulations so far on educating yourself some more today. Suffice to say, compound interest does not build wealth. If you're focused on getting only your money to work for you, you are really missing out on leverage through OPM.   Keith Weinhold (00:22:38) - And the good news here is that you actually don't have to believe everything that you think. Even if you thought the same way for years or decades. Chances are you're by yourself when you're listening to me right now. So that way you can change your mind all on your own without anyone thinking that you're wishy washy. Is it iconoclastic? Yeah, sure it is. If you're going to live an outsized life, if you're going to have an outsized impact in this world and on others, then you don't want to get labeled as normal. I mean, me, myself. I want nothing to do with normal. You can learn more on topics like this with our Don't Quit Your Day Dream email letter that makes it visual for you. Get it free at get Rich education com slash letter I write every word of the letter myself again. Get it at get Rich education.com/letter or it's quicker while it's on your mind right now. Text gray to 66866 to get the letter. Text gray to 66866. More straight ahead on how to potentially achieve cash on cash returns of 20% plus with real estate today.   Keith Weinhold (00:23:58) - That's next. I'm Keith Reinhold. You're listening to get Rich education. Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk. Your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25 K. You keep getting paid until you decide you want your money back there. Decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor, to earn 8%. Hundreds of others are text family 266866. Learn more about Freedom Family Investments Liquidity Fund on your journey to financial freedom through passive income. Text family to 66866. Role under the specific expert with income property you need. Ridge lending Group Nmls 42056. In gray history from beginners to veterans, they provided our listeners with more mortgages than anyone.   Keith Weinhold (00:25:21) - It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com.   Ken (00:25:48) - This is Rich dad advisor Ken McElroy. Listen to get Rich education with Keith Reinhold and don't quit your daydream.   Keith Weinhold (00:26:06) - We're talking about how to profit more and faster than with buy and hold property with the BR real estate investing strategy will tell you more about a live virtual event tomorrow night, with more about it where you can attend from the comfort of your own home and have any of your questions answered in real time. And can is with me today to talk about it. Welcome in. Hello, Kate. Thank you. Thank you for the invitation to be.   Ken (00:26:32) - A part of the get Rich education podcast.   Keith Weinhold (00:26:34) - Oh, we're honored to have you. Tell us a little more about yourself. First, you're Memphis based and you're part of a real estate family. Your wife is a realtor.   Keith Weinhold (00:26:44) - Yes, that is true. I have been in.   Ken (00:26:46) - The real estate industry in Memphis, Tennessee since 1992. I believe I was born to be in real estate. If real estate's in my DNA. If you cut me open little houses, duplexes, commercial buildings and multifamily apartments will drip out. I am pure real estate.   Keith Weinhold (00:27:05) - And you definitely came up in the right place for that. For us major metros, you're in perhaps the best cap rate market. Now. A lot of people are familiar with fix and flip real estate, maybe something that they've seen on HGTV where you buy low, you fix it up and you sell it for more. In fact, a lot of people think that's what real estate investing means. And others, they think of real estate investing more passively by identifying a good property that's already fixed up for you with a tenant in it, and ready property management. That's sort of the turnkey way. Tell us more about the BR, where I think of it as using elements of both the fix and flip world and the buy and hold world, putting them together to produce high returns and even infinite returns.   Ken (00:27:54) - That is correct. So what we're doing and what we offer, it's a hybrid, turnkey and BR, we call it BR key a nice. So basically that acronym as you know it stands for buy, renovate, rent, refinance and repeat. And we've added the key to it because we do all of the turnkey worked for our investor clients. We do all of the heavy lifting. So we turn BR into a passive investment where we find properties through our sourcing, we vet the properties and then the properties are offered to investors in as is condition. We provide a desktop appraisal which provides a future estimated after repair value after the property has been renovated. We seek out appraisers who are certified, who are licensed in the areas in the markets that we provide properties in, so that we're not just shooting at the door on a future value, basing the values on what Trulia says or Zillow or Redfin and what have you. So it's a real certified value from a licensed appraiser. Then we have licensed contractors to provide the scope of work and an estimate on how much the renovations are going to cost.   Ken (00:29:24) - And then we do we have a relationship with an in-house property manager. The property manager markets the property, leases the property out, and our target market is partially section A, government subsidized tenants, because we found that in the Memphis, Tennessee area is that section eight pays more than market rate in most instances. And I like to say that section eight rent payments, the recession proof, they're Covid proof, they're pandemic proof. I have not received a call yet. And section eight says, hey, we could not get your section eight payment out because of Joe Biden not being able to sign the check, or he didn't work last week, or Donald Trump could not sign the check or what have you. But time and time again, those section eight payments, even during the pandemic, they always showed up at the beginning of the month without fail.   Keith Weinhold (00:30:25) - I have rented to section eight tenants myself, and I can attest to that. That check just keeps coming in. You have to have a case manager come in and take a look at the property.   Keith Weinhold (00:30:38) - Prior to that section eight tenant being placed. Section eight a government subsidized housing program for those that qualify. But now that we've talked about the tenant, some what which is the rent are if we look back at the first are in the borough that is the rehab. You could also call that first are renovation. And really what you're doing there is you're eliminating friction for a lot of people because one thing that turns. People away from the Bir or concerns them about the BR. Is that first r the rehab because they find it daunting or intimidating to manage contractors? A lot of people don't want to have to manage contractors, and those that do, they don't want to do it again. But the thing is, is that you formed a team of contractors, property managers, project managers to manage those contractors and lenders to assist with that entire BR key process, making it pretty hands off for the investor.   Ken (00:31:37) - That's absolutely correct. So we have the relationships with contractors your locally that we've vetted that have proven themselves.   Ken (00:31:46) - They're true blue and these contractors have withstood the test of time. We develop relationships with electricians, plumbers, heating and air conditioning guys, roofers, painters, flooring experts, guys that can do kitchen cabinets, countertops, everything from the router to the tuner. And we also have excellent relationships that we've developed not only with the big boxes, Home Depots, Lowe's, but there are actually many locally owned mom and pop family owned supply houses that we are able to get better prices on some items versus the big boxes. So if those savings are passed on to the investor clients that our project managers and contractors are renovating those properties for.   Keith Weinhold (00:32:41) - I want to talk more about how that's actually going the actual track record with that team. But before we do, if we talk bigger picture, let's look at some real numbers on an example property so that one can understand the overall process. On why BR is attractive to investors, and why they can put substantially less money into the deal than they can with what we would call a deal that's already completely done for you.   Keith Weinhold (00:33:08) - Turnkey.   Ken (00:33:09) - Yes, and I like to use a $100,000. It's a nice round number, right.   Keith Weinhold (00:33:16) - Inflation is basically it, but you can still find some.   Ken (00:33:19) - Yes. So an example said hypothetically, if we had a vetted property that was available to be purchased by an investor client, and that appraised value after repairs is estimated to be $100,000, we simply take 75% of that after repair value of $100,000, and we arrive at 75,000. So we work in reverse, in a sense. And if the contractor has estimated that the renovations, labor and material cost is going to be $25,000, 75,000, 75% of the 100,000, -$25,000 in renovation expenses that would leave $50,000. So the actual purchase price of the property would be $50,000 plus $25,000 in renovations. So the investors approximate all in is $75,000. That doesn't take into consideration title company fees, homeowners insurance. We encourage all of the investor clients to get a six months builder's risk policy from one of our sources that we use here locally, but of course, all of the investor clients are free to use or choose whomever they'd like to.   Ken (00:34:53) - So the property is purchased for 50,000. The renovations, which are high quality, are done for 25,000. So now the investor is all in for $75,000. Now we're at that second stage, and many times the renovations are completed before the property is rented. So though that second and third are kind of interchangeable, sometimes we the property's refinanced before it's rented, sometimes it's rented before it's refinance. So in a perfect world, the property has been rented to a client. So if the client's all in for $75,000 and we have what we created, our own 1% rule of thumb. So if the investor is all in for 75,000 and the numbers are still based on renting it for maybe 1% of the value. So we find that our rent versus price return is more than 1%. So in many cases we blow that 1% out of the water. We're talking about the.   Keith Weinhold (00:36:01) - Monthly rent being 1% or greater of the overall value or purchase. Price of the property.   Ken (00:36:06) - Yes, sir. That's true. That's correct. So after the property is rented for, let's say, $1,000 per month.   Ken (00:36:15) - Now it's time to get the property appraised. We do have lending partners that are very experienced with investment refinancing, whether it's conventional or whether it's DSC or refinancing. So now the appraiser comes out to the property after the investor client has made loan application. The investors appraiser comes out and voila, the property is totally renovated. It's rented out. The appraiser appraises the property for $100,000 plus or minus. It may appraise for 95, it may appraised for one T, and so on, so forth. So what happens with the investment refinancing the loan to value or LTV is usually 75%. It's not typical for the lender to refinance at 80% or 85% of the refinance. But with investment financing, refinancing nowadays is typically 75%, so the praise is for 100,000. The lender lends 75% of the 100,000, which is 75,000 on the refinance. So now the investor who has paid cash or possibly obtained a hard money loan or private financing in order to purchase the property, their coffers are replenished with it. 75,000 were either the hard money or the private.   Ken (00:37:42) - Long is paid off, and the investor now has a property that they've refinanced for 75,000. That's worth 100,000. But the key is now they've refinanced and they're at that final, or now they're able to repeat the process, rinse and repeat, re-up whatever you want that are to me. But it basically means you can reuse that $75,000 again to purchase your second property. Third property, you're able to scale quickly or pay off the hard money lender. And the hard money lender says, hey, I don't need this $75,000. Do you own it again to buy property number two? We're property number three. And it just goes on. And I'd like that word that to use key efficient.   Keith Weinhold (00:38:28) - Right. Because in at least one of the scenarios you described there, you would have no money left in the deal and 25% equity in the property.   Ken (00:38:37) - That is correct because even though the investor is all in for 75,000, that new roof, the new windows, the new luxury vinyl plank flooring, the new HVAC system and so on, so forth.   Ken (00:38:53) - Those improvements cause to happen is called force appreciation. It's worth more than $75,000 because of all of the improvements that have been made to $25,000 to new light fixtures, the pretty paint color, the new mailbox, the landscaping. So we found that many of the houses that we offer, they once were the ugly ducklings of the neighborhood. Now they're the beautiful swans of the neighborhood, and they're the homes and houses that people flock to that they prefer to living.   Keith Weinhold (00:39:30) - Yeah. So we're talking about some of those rehabs you might LVP the floor do a kitchen fluff up. By that I mean maybe you're saving and painting the cabinets, but replacing the countertops, new light fixtures, perhaps keeping bath tile in place, but glazing it and then bringing everything to code?   Ken (00:39:47) - Yes, sir. That's absolutely correct. And we do have a really nice design for our properties. We use really nice neutral colors when it comes to the tile, to the paint, the flooring, the vent hood color, so on, so forth.   Ken (00:40:02) - And you mentioned code enforcement, which we had excellent relationships with the Memphis Shelby County Code Enforcement officers, whether it comes to the electrical inspection, plumbing inspections, what have you, we have really good relationships with those government officials.   Keith Weinhold (00:40:20) - You might want exotic colors for your own home, but in a rental property you want to go neutral. It can take a while to rent a purple kitchen. Now talk to us about the the timeline to rehab and refinance a property. How many months or days does that take? And I'm looking for an not an optimistic scenario, but a realistic scenario and a real life track record of what you've done. Because I've known that our followers have bought a number of properties from you.   Ken (00:40:49) - Yes, our average turnaround time right now is approximately 90 days. The quickest turn that we've ever done from acquisition all the way to the final stage of refinancing was 32 days. But that particular property there was the scope of work of $15,000. It was really clean. Okay, already had a new roof, the AC system was already top knots, so there was just very few things that had to be delivered.   Ken (00:41:21) - But on average it's about 90 days from start to finish. And in this part of the country the weather's quite nice, especially during the summertime. It's very hot, but we are hit occasionally in the wintertime with snow and ice, and it paralyzed the city of Memphis because we're just not equipped the way the northeast is and some other parts of the country when it comes to snow and ice. So we push back our estimated time frame to complete a Berkey property during the winter months to about 120 days. But our average is 90 days, and we tend to we like to under-promise with the 90 days, but we may hit our target in 75 days or 80 days, and we just recently had some properties that we should be able to smash the all time record of 32 days, where we may be able to get from a buy to refinance done, and maybe 21 days.   Keith Weinhold (00:42:21) - Wow. That's the result of a well refined system. And I would submit to most any listener to try to do that across state lines or even in your own home market, as you're trying to manage contractors and codes and inspectors and appraisers and lenders and everything else, you're going to join us with our investment coach narration, co-hosting Gre's live virtual event.   Keith Weinhold (00:42:47) - Alex, a little bit more about what one can expect there. Attending the live virtual event to learn more about what.   Ken (00:42:54) - One can expect is that we will have, I guess, actual numbers on properties that are available, scopes of work, rental amounts that are based on our studies with the data that section eight provides, as well as the local market rents for cash paying tenants. So I do want to make it clear we do have cash paying tenants as well. But we do offer to the investor clients a choice. If we have a four bedroom property, for example, that section 8th May possibly pay 1700 a month for, and then all of a sudden we get a cash paying tenant that's willing to pay 1600. We present the information to the investor to say, hey, would you rather hold out for the $1,700 section eight tenant? Or would you rather go with the $1,600 cash flowing ticket that works at Blue Oval City, the electric vehicle plant that's on the outskirts of Memphis, about 30 miles outside of Memphis at the end.   Ken (00:44:01) - Who knows? Real soon. It was just announced yesterday that X, I and Elon Musk, they've chosen the city of Memphis to be the headquarters for the world's largest supercomputer. So we're looking forward to the benefits and economic boom that that's going to add to the Memphis market.   Keith Weinhold (00:44:23) - All right. So we've got some economic drivers behind this. Learn more about vetting tenants. Berkey and importantly, the value added here. By bringing that team, especially those contractors that are being managed for you with the Berkey join Jerry's live virtual event. It's where you can attend live in real time. You can ask questions if you wish that way, and you can do it all from your own home. Gree investment coach extraordinaire Naresh is going to co-host it along with my guest Ken. Here it is free to attend free learning and if you wish, expect a buying opportunity for property conducive to the BR. Often single family homes two, three and four bedroom properties in Investor Advantage Memphis, you'll learn which properties are right for this and which ones are not.   Keith Weinhold (00:45:10) - Attend tomorrow night it is Tuesday the 25th at 8:30 p.m. eastern, 530 Pacific. Attend tomorrow and sign up now at GR webinars.com. You can do it right now while it's top of mind for our live event that is at Gray webinars.com. Hey, it's been great having your insight. Thanks so much for coming on the show today.   Ken (00:45:33) - Thank you. You're welcome.   Keith Weinhold (00:45:40) - Between last year and this year, more followers have bought from this provider in this system than any other in the entire nation. Strong deals with less out of pocket for the investor. And maybe you don't prefer a section eight tenant. You can ask about that during the virtual event. And again, what was I saying here last week? This is the event that's a bigger deal than Olympic handball. Really though I would like for you to attend. This is entry level housing. So you're going to own a scarce asset that everyone wants. Expect to be in for a little of your own skin in the game, and you'll own a leveraged asset of tangible value that down the road.   Keith Weinhold (00:46:27) - Demographics say that people will desire to first rent from you and then later buy from you. If you think that it can benefit you and you like to learn, then I'd really like you to attend tomorrow night. I invite you Tuesday the 25th at 8:30 p.m. eastern, 530 Pacific. Register free now at Gray webinars.com. Until next week. I'm your host, Keith Wild. Don't quit your day dream.   Speaker 5 (00:46:58) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:47:26) - The preceding program was brought to you by your home for wealth building. Get rich education.com.  

The homeownership rate has fallen due to low affordability. This means that there are more renters. There are still just one-half as many housing units as America needs. But it had been one-quarter. New duplexes, triplexes, and fourplexes are vanishing. I describe six reasons why. Two entire US counties now have a median home price of $2M+. Learn where they are. It’s better to be an investor than a landlord or flipper. GRE Investment Coach, Naresh, and I discuss how to use a lower down payment to achieve a potential 20% cash-on-cash return with the BRRRR Strategy. Join our live, virtual event for this at: GREmarketplace.com/webinar. Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to GRE. I'm your host, Keith Weinhold. Hold properties are vanishing, and sadly, they represent some really good property types that are hardly being built anymore. American housing is changing for good. Two entire U.S. counties now have median home values of $2 million or more. You'll learn where those are and learn about a specific real estate investing strategy, where investors are getting especially high yield returns in today's low affordability market. All today on get rich education.   Robert Syslo (00:00:37) - Since 2014, the powerful Get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Weinhold writes for both Forbes and Rich Dad Advisors, and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform.   Robert Syslo (00:01:09) - Plus it has its own dedicated Apple and Android listener. Phone apps build wealth on the go with the get Rich education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates (00:01:23) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:39) - What we heard in 188 nations worldwide. I'm your host, Keith Weinhold, and you're listening to get Rich education. Last week, I covered a lot of bad news here as you and I uncovered some real estate problems. Of course, overall, when you're invested in real estate and obtain productive working income for yourself through tenants in their employment, you can almost always play another side of the coin and be profitable because, well, it really comes right back to the fact that real estate pays five ways simultaneously, for example, souring housing affordability. Well, that's bad for homeowners. That's bad news for people that are primarily want to be homeowners and not you. You're an investor. In fact, here's exactly what that means when you're the investor, the homeownership rate has fallen in in the past year.   Keith Weinhold (00:02:38) - It's gone from 66% down to 65.6% due to that low affordability. Okay. Well, that's just a 4/10 of a percent drop in the homeownership rate. And it is poised to fall further. Or what does that 4/10 really mean. Well, that's the proportion of Americans that don't own their homes. So then they have to rent. And this means that there are hundreds of thousands more American renters today than there were just a year ago. And that pushes up rental demand, rental occupancy and the price of rent itself. And that's what you get to capture off from a low affordability problem, which outsiders only think of as bad real estate news, because it is bad news through the lens of that one of your first time homebuyer. Now I want to tell you about the property types that are disappearing. Just vanishing today, and it's the degree to which it's happening that you probably aren't aware of. I'll also tell you why it's personally concerning to me, why this is all going on at all, and I don't even see any reason that it's going to turn around.   Keith Weinhold (00:03:52) - It's probably going to get worse. What's going on is basically that too many builders have thrown their duplex, triplex, and fourplex development plans out the car window like it's an Apple Corps on a summer road trip. They are vanishing. Yes, 2 to 4 unit properties vanishing. In fact, if you're a newsletter subscriber here, you got to see a jarring chart that shows this. And what you'll basically see is that in 2007, the number of 2 to 4 unit properties built just fell off a cliff. It flatlined, and it still hasn't gotten up. The amount constructed now is still just one half to one third of what it had been in pre global financial crisis years. Really they're only closer to a third. All right. So what we're talking about here is only about one third as many duplex triplex and fourplex starts today as there were 20 years ago. And this is sourced by the National Association of Homebuilders. And some call this entire phenomenon M triple M multi families missing middle. And whatever you call this disappearing act.   Keith Weinhold (00:05:10) - Before I get to the reasons for why this is happening, I've got to tell you that this disappearance, it hurts me a little. It's sort of heartfelt because as you know, I began this way with a fourplex that was my first ever property of any kind. You know, the story where I lived in one unit and rented out the other three. It was just an amazing way to start with a bang. Well, now, when we compare this paltry construction, this dearth of. construction today, when we compare that to both smaller property types and larger property types, that being single family homes and five plus unit apartment buildings, will construction of all three of these types fell hard around 2008. But here's the thing. Single family homes and five plus apartment buildings. They got back up around 2010 and they started resuming more building. But duplexes and fourplex, they never did. They never had that happen. The number coming out of the market that just kept flatlining. Those new starts. All right.   Keith Weinhold (00:06:16) - So why exactly is this going on with these vanishing 2 or 3 and four unit property construction types? Why this trend? Well, first, it's NIMBYism, not in my backyard ism primarily of those single family homeowners, because once people are comfy in owning their single family home. Well, then they don't want higher density duplexes in fourplex built in their area. They fear that it can lower their property values. It'll almost certainly increase the traffic around that area. And the second reason is that there simply just been less building overall of most all housing types. And I have discussed this elsewhere, so I won't get into it again. Yes, it is that erstwhile housing supply crash. A third reason for these vanishing 2 to 4 unit properties is the need for zoning reform and the adoption of what's called light touch density. Light touch density. That means a zoning strategy for more dense housing. And what are we up to now for? The fourth reason is that builders, they find more scale efficiencies when they build larger apartments.   Keith Weinhold (00:07:25) - Fifth is limits in international building codes, in international residential codes. And the sixth reason is that this trend began around 2008. These more recent work from home lifestyle starting in 2020. That means that residents can live in single family homes, and they tend to be further from the urban core, rather than 2 to 4 unit properties. And this lifestyle trend right here, that can mean that this disappearing trend for this property type continues. And there you go. They are the six reasons for why. If you were 2 to 4 unit properties are being built today, drastically fewer. And I lament this fact because see duplex the four plex neighborhoods, they can have good walkability where you don't always need a car to get everywhere. And yet at the same time, they still have ample green space. Now, conversely, some fourplex neighborhoods, you know, they can get to look and really junky. Well, they all have different owners. And then there are dumpsters all over the place, like my first fourplex was, and like my second fourplex was as well.   Keith Weinhold (00:08:33) - I really hope that builders become more attracted to the 2 to 4 unit space. See, with giant large apartment complexes, say 300 units. Well, the builder has to wait until the construction of all of those 300 units are done until they can start filling it with rent paying tenants. So therefore builders have to wait longer to start getting that rent income. But instead, construction of this missing middle housing that can be broken into phases. And that way units can be open when they're completed. And that provides early rent revenue to the builder and 2 to 4 unit properties. I mean, they really are an investor sweet spot, but due to builder and lifestyle trends like I'm describing, fewer are being built new. But please remember there were many missing middle properties built decades ago and they can still make good investment properties into the future. In fact, the first two fourplex that I bought were both built in the mid 80s, so there's still plenty that are already out there. The takeaway here for you is that you're going to be seeing fewer new ones, and that means that duplexes to fourplex is now take up a smaller proportion of America's housing stock, and that portion is positioned to become smaller and smaller going forward.   Keith Weinhold (00:09:56) - So it's not that death of these properties. We even have home builders at Gray Marketplace right now with new build 2 to 4 plex. So it isn't their death, but they are dying, waning in number. Now, Jerry recently got Ahold of some jaw dropping info here. I my gosh, now remember a few years ago, maybe even ten or more years ago when you probably heard something like certain small towns in California, Silicon Valley. They now had median priced homes that hit the million dollar mark. And you know, when you first heard that, you might have thought, oh, wow, it's not just neighborhoods, but entire towns in aggregate have hit the million dollar mark in some high priced American places. Well, then get ready for this. As housing affordability makes headlines in California in its wealthiest cities, continue to fight building more housing. We have two Bay area counties, not towns, but entire counties that have hit a milestone. The median price for sold homes there has climbed to $2 million or more.   Keith Weinhold (00:11:15) - We're not just talking 1 million anymore, and we're not just talking about one upper crust town, but two entire California counties now have median home prices of $2 million or more. And notice these are not asking prices. No speculation here. These are the values, the amounts that they have actually sold for. And this is according to a recent California Association of Realtors report. Median homes are now $2 million plus in which two Bay area counties, you might wonder? Well, first, Santa Clara County, which includes San Jose, they notched an even $2 million back in April. And yes, this is more than San Francisco County's $1.8 million. And the second county, it spirals even higher than that. The second California county, with median home prices of 2 million plus is San Mateo County. It's basically a county that lies between San Francisco and San Jose. And that's where the median home price sold for in San Mateo County, California, $2.17 million. Not just one upper crust town, but an entire county.   Keith Weinhold (00:12:38) - Not just $1 million, not even $2 million anymore, but $2.17 million. And this is not for a fancy, lavish home. This is just the median priced home in the middle and San Mateo County that is home to the nation's most expensive zip code, by the way. Atherton, California, where the median home price tops the charts nationally at $7.1 million. That's that is according to Compass Real Estate. And if that's not enough, homes are still flying off the shelves there. They're days on market is now at the lowest since 2022. And though all this sounds pretty astonishing right now, you know what? If you are listening to this episode ten years from now, well into the 2030s, you might think these were the good old days here. How quaint. Because over the next ten years, we all expect more inflation, and we've still got more housing shortage years between now and say, ten years into the future. And of course, here at URI, we don't tend to focus on the high priced markets, which tend to be on the coasts, things like this.   Keith Weinhold (00:13:55) - Really, it's just a harbinger of what's to come to more parts of the nation later on. What we do here is we help you win in real estate without being a landlord and without being a flipper. As a savvy investor that tends to buy either new or fixed up properties and might have a manager manage them for you, hands off is the place to be. Hands off is being an investor, and you get the best tax advantages this way to when your hands off and you know something. Some people that get into real estate investing, they think that they have to be a flipper, or that they have to be a landlord in order to make it profitable. Now, there's nothing wrong with those two disciplines. So much flipping or landlord. I was a landlord for a little while on my own properties. Most of my investment career. I use a property manager and I never flipped. It's just that these things flipping and landlord, they're not any sort of prerequisite to you being a successful investor. You can shortcut all of that with turnkey real estate investing or like with a different strategy that we're going to talk about later today.   Keith Weinhold (00:15:04) - What most people really want is the financial freedom that real estate investing brings. But in order to get there, it's often not the route that you think it is. It's typically not flipping or landlords. And, you know, really it's this way with a lot of things. For example, say that you want to own in ice cream business. Well, most people think that they have to start their own ice cream business from scratch. And like you need to find a space and you need to buy all the equipment and develop systems and go through the excruciating process of hiring all of your staff. No, a lot of times you can shortcut all of that by not starting your own ice cream business, but instead studying, vetting, and buying an existing ice cream business without having to start your own from scratch. Be strategic, study a little, shortcut the process and get in where it's profitable. You want the benefit of owning real estate without having to use a nail gun yourself, or being a manager where you're 25 tenants can text you.   Keith Weinhold (00:16:17) - What kind of life are you building for yourself? Then you want the benefit of owning an ice cream business. The way to get to the end goal. The path there is often different than you think. And here's another example that I can relate to, but I think that you will too. Do you have a favorite real estate? Influencer out there and they think about starting a podcast. Well, I personally know three real estate podcasters out there that have all quit. They produce some episodes and all three quit doing their podcast. And these are just among people I know and just real estate thought leaders. Just that space and all. Recent hosting your own podcast platform is a ton of work from. You need to have a huge bank of your own original content, to having the ability to book big name guests and then making sure they're prepared to. Making sure you have the right marketing team so that a podcast actually reaches the right people. It is work, work, work, and seemingly no one in this world knows that better than me.   Keith Weinhold (00:17:21) - With 500 plus episodes reliably released every single week since 2014, and we don't replay old shows either, there is nothing passive about this. There are so many shows today that if your favorite real estate influencer starts one, they're going to be competing with a lot that are already out there. I mean, anymore, even celebrities that start podcasts, they usually don't get any substantial reach or traction. All these people that start and quit their podcasts, they were too slow to realize that actually they didn't want to host a podcast. What they really wanted is for their voice to be heard. Well, the way to shortcut that, like with turnkey real estate investing or with buying an existing ice cream business, is that that influencer should have developed a strategy for being a guest on other shows that are already popular and established, probably by hiring an experienced and connected booking agent. That way, you've outsourced all of that marketing and research activity to another show that already did that for you. So the point is, be clear on getting what you want.   Keith Weinhold (00:18:34) - What is the goal that you want first, it's probably a large real estate portfolio built for leverage and income, and then work your way back to try to find the most efficient route to get there. And there are often shorter paths to get there than what you first thought. Now, when we talk about where are the best real estate deals today, you have to look harder than you did, say, 8 to 10 years ago. Coming up shortly, you'll have the pleasure of hearing an in-house chat with I in one of Gre's own investment coaches. We're going to talk about a strategy that specific and proven but underutilized in order to recapture those higher cash on cash returns like you could have gotten back in, say, 2015 and 2016. And for a time, I had been talking about how Newbuild properties and their builder interest rate buy downs, that they're really the place to be. And that's still true, but not to the extent that it was just a year ago, because today some builders, they're not paying down your interest rate for you as much as they did last year.   Keith Weinhold (00:19:39) - They're asking you to pay more toward it. Now. A few minutes ago, I told you about America's vanishing duplexes to fourplex. And if you're one of our newsletter readers, you got to see a jarring chart or two that demonstrates exactly what I was talking about there. And also in our newsletter, I show you great maps, real estate maps that beautifully demonstrate housing market trends and where the opportunities are for you. Also, in a recent letter, I showed you exactly where I'm getting 8% interest paid to me and what's basically a savings account. If you don't already subscribe, it is free. Our email letter is called the Don't Quit Your Day Dream letter. It's concise, valuable info that's just good, clean content that I put directly into your hands. It is easier to use than a website. Today's websites have paywalls and cookies, disclaimers or pop up ads. This is just the good stuff directly from me, straight to you. And you can get the letter now at get Rich education com slash letter that's get rich education com slash letter.   Keith Weinhold (00:20:50) - In a world of AI and bots, I actually write every word of the don't quit your daydream letter myself, just like I have from day one. And another easy way to start the free letter is text gray to 66866. Just do it right now while it's on your mind. Text gray to 6686616. I'm Keith Reinhold. You're listening to get Rich education. Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk. Your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just 25 K. You keep getting paid until you decide you want your money back there. Decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor, to earn 8%.   Keith Weinhold (00:22:02) - Hundreds of others are text family 266866. Learn more about Freedom Family Investments Liquidity Fund on your journey to financial freedom through passive income. Text family to 66866. Role under the specific expert with income property, you need Ridge lending group and MLS for 2056 injury history from beginners to veterans. They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your prequalification and chat with President Charlie Ridge. Personally, they'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. This is peak prosperity.   Robert Syslo (00:23:00) - Chris Martinson, listen to get Rich education with Keith Arnold and don't quit your daydream.   Keith Weinhold (00:23:15) - Hey, would like to welcome in Gray's extraordinary investment coach. He's booksmart because he's got his MBA. He street smart because he's an active direct real estate investor, just like I am. Before joining gray back in 2021, he worked for financial publishing companies and in the banking sector, too and elsewhere. And today is an investment coach here.   Keith Weinhold (00:23:36) - He helps beginning real estate investors understand the process of acquiring rental property, and he helps veteran investors optimize their strategies to save on taxes and more. Hey, it's terrific to welcome back Naresh Vizard. Thanks a lot Keith. It's been a while, but I'm looking forward to talking real estate before we're done. Today, we're going to tell you about an upcoming live GRE virtual event, where you learn how to get 20 to 25% of immediate built in equity through real estate. And before we do the race, let's talk about what's really going on. Besides giving GRE devotees free education and guidance like you do, you also help them find the best deals on income properties nationwide and for a time, brand new build to rent properties they look good in. Many still do with a lot of rate buy downs into the fives and even the fours on those new build properties. But this year, I learned that builders aren't contributing to buying down the race for the investor like they had last year, and that the onus seems to be more on the investor to buy the rate down with some of these builders.   Keith Weinhold (00:24:44) - So tell us more about what's happening in America's build to rent sector. Well, Keith, build to rent. For those who don't know, it's been around here at GRA. Bill to rent asset classes, build to rent real estate. But it's the concept of builders building real estate properties with the intention of selling them to investors so they can rent it out. So right now I live in a house that was built, and I bought it because the builder intended for somebody to buy it and live in it. That's not built to rent. Build to rent is the idea of.   Naresh Vissa (00:25:16) - Specifically selling it to investors like our listeners, like our loyal followers who live out of state and who want to rent the properties out to tenants. Now, Build to Rent was very hot and it's still popular. I don't want to call it hot, but it's still popular for those who want new construction properties. However, the rehabs are making a furious comeback because there was about a four year period from 2019 to 23 or so where you just couldn't find good cash flowing rehabs.   Naresh Vissa (00:25:50) - Right. And when I say rehabs, I mean these older properties that were built 50 years ago, maybe as long as 120 years ago there we have some properties in our inventory that were built in the late 1800s, and they've just kept being rehabbed and rehabbed and renovated. Buildings are making a furious comeback because they're cash flowing better. Previously, they were just cash flowing marginally better than new construction built to rent properties. Now, especially with a strategy called ver, which we'll talk about some more, you can have the opportunity to get cash on cash returns back to what you remember in 2016, 2015 where we're talking 15, 16% cash on cash returns. I mean, some of our BR clients or listeners who ended up buying BRS, they're doing 2021 all the way up to 30% cash on cash returns. So BR simply means buy, rehab, rent, refinance, repeat the cycle. So that's B followed by for Rs b r r r r buy, rehab, rent, refinance. Repeat the process again.   Naresh Vissa (00:27:10) - And it's during that refinance where investors are getting a good chunk of their down payment back. Because what happens in that refinance is after you rehab it and you read it, you rent it out at the target rent, which almost all of these are renting out at very aggressive high target rents. When you refinance it, the property appraises at a value that's much, much greater post rehab than when you initially bought it. And that's where you get essentially your money back. You can choose to keep it in with the mortgage company so you have more equity in the property, or you can take the cash back and use it to buy more BR properties. It's become a very popular. Form of real estate investing. People think when they hear this. Well, it sounds like flipping, right. This is not flipping. Flipping is kind of like day trading. You're looking to make a quick buck, whereas in this case you're not selling the property. You're keeping the property with the intention of renting it out and collecting the cash flow from your tenant.   Naresh Vissa (00:28:19) - So that's in a nutshell, what BRR is. And we are having a live event on Tuesday, June 25th at 8:30 p.m. Eastern Time. That's Tuesday, June 25th at 8:30 p.m. eastern. Time to talk about and go over this BR process. The bird key process or listeners are familiar with turnkey. Well we have BR key which is similar except it's using the BR method. And Keith, you probably know this and you've talked about it a little bit on your podcast. BR has become the most popular strategy that our investors are utilizing this year, 2024.   Keith Weinhold (00:29:01) - Yeah. Now back to the build to render the new build properties is attractive as they can be because they attract a certain quality of tannin and they're not going to have any maintenance or repair issues, most likely for quite a while. The thing with those is, oh, you might pay 300 K or more for a new build. Single family home in the builder rent style with 20% down payment, 5% for closing costs, you're out of pocket. 75 K.   Keith Weinhold (00:29:30) - One reason that this has become the most popular strategy for gray followers we're talking about here. The BR strategy is that you could come out of pocket with a lot less to begin with.   Naresh Vissa (00:29:42) - That's number one. Number one is we have some GRE followers who went into this Berkey and they put no money down. They got lucky. They initially bought the property, and the property appraised so much that they got their money back and their down payment was actually zero. They didn't make money on it, but what they allocated, what they thought that they would allocate 25% down, they ended up using that money since they got it back to buy a second property and then a third property and then a fourth party. We have one guy who bought six properties, all birds, because he didn't get I don't want to say, look, we're not making promises that you're going to put 0% down. That's not the promises that we're making. The worst case scenario is that you put 25% down and that's your standard real estate investment.   Naresh Vissa (00:30:27) - But there is a chance that you could put 15% down or 10% down if the rehab turns out really well. And if you get a good appraiser, there's a chance it can happen. But the goal here, again, is not to make a quick buck or to house hack. We're not taking shortcuts here. The goal here is simply to buy a property renovated or rehab it and drive up the rent price, drive up the value of the property, put a good tenant in there and call it a day. Collect those cash flows. Now I do want to say a few things about that process. So like I said, the first thing that you do is you buy. So first you buy, then you rehab. You do not have to do we call it Berkey because everything is done for you. So when people hear this, they're like, oh, this sounds like I live in Florida. I don't want to go to Memphis. And by the way, this specific market is in Memphis, Tennessee that we're focusing on.   Naresh Vissa (00:31:26) - We have burrs in Baltimore, Maryland and Philadelphia, Pennsylvania and Pittsburgh, Pennsylvania. But we've identified Memphis as not just the hottest, but it just makes the most sense numbers wise. And so I want to go back to the point of, hey, you don't have to physically go or even go on Google and find handymen or rehab ers to do this for you, our Berkey provider. The best part is they do it all for you. It's completely taken care of. You literally just sign some papers. Once you decide that you like a property and the specs of the property, you sign some papers. They take care of it. The rehab takes about 90 days. Then from rehab to closing, it takes another 40 days or so. And then from closing to someone signing a lease that takes another 30 days to find somebody, stick them in there and takes another 30 days after that for the tenant to move in. So overall, this process can actually take just for one property. You can take six months.   Keith Weinhold (00:32:26) - Now. Naresh has touched on it somewhat. One conventional problem with the Burr strategy by rehab rent, refinance, repeat is that first are the rehab because it involves vetting and managing contractors, which is a real nightmare for many. So instead, we're talking about tapping into a system with a proven team of contractors and lenders and project managers to make it easy. It's known as Berkey, and it's in profitable Memphis.   Naresh Vissa (00:32:54) - Profitable Memphis. And I'll say this about Memphis, we're going to talk. Way more about this on the webinar. Highly recommend people go to GRI webinars. Com gri webinars.com. You can sign up for the webinar there. It's actually live. So this is not like something that you just can show up to whenever you want. It's a live event on Tuesday, June 25th at 8:30 p.m. Eastern Time. That's Tuesday, June 25th at 8:30 p.m. Eastern Time. Great webinars.com is how you can register. And like you said, we could have focused on Baltimore, Maryland or Pittsburgh. Memphis has really and I myself by the way, own five properties and four in Memphis proper.   Naresh Vissa (00:33:42) - And one is in the Memphis area and Mississippi, a suburb of of Memphis. And this I don't want to call it a town, because Memphis used to be one of the most popular towns in the south back in the day. But this city has really come up as a result of pandemic, of population growth, of even inflation. We've seen rents go up, we've seen the population go up. Memphis is not what you think of from eight years ago. Seven years ago when I first bought my properties. I'll admit, when I bought my first property seven years ago in Memphis, I had a lot of problems with tenants. I had a lot of problems with the city. I didn't like what I was reading about the police department, just all sorts of things. Not the police department, just crime in general. And Memphis has really turned itself around. Not completely turned itself around, but it's gotten better. And we're seeing it just on the investment side because that's where we're seeing appreciation growth. My personal properties, they're up since 2020, since January 2020, I was when I closed all my last Memphis property.   Naresh Vissa (00:34:49) - They're all up at least 50% in value. So it's a market that's still appreciating. But the most important thing because we are cash flow investors, not necessarily appreciation investors. It's great to get the appreciation, but the rents keep going up. And I actually today I've talked to a Berkey client, great loyal Jerry listener and follower who ended up buying three properties, and she's on her fourth one, or about to do a fourth one with this Memphis market provider. And when she told me her rents, I was blown away at how much these properties were renting for before the rehab. So it's not just the appreciation again, that goes up after the rehab, how much they were renting for before the rehab. We're talking less than $800 a month and post rehab. Her rents went up by nearly 50%, about 45% on average. House rehab is like three bedroom, one and a half bathroom. Homes initially she bought them. This is how a lot of the properties are. They only had two bedrooms and they converted one of the spaces.   Naresh Vissa (00:36:05) - The rehab were converted at no extra. You know, it's all inclusive of the rehab charges. They were able to find space in a lot of these properties that were two bedrooms to create a third bedroom and turn them into three bedroom properties instead of two bedroom properties, which also improves the value of the home. And you can get another body in there and increase the rent. So, Jerry, listeners have been really, really happy with this burpee process because at the end of the day, you really do get more bang for your buck. Yes, new construction overall. It's just safer. We have tons of great new construction providers, especially in Florida, whom we recommend, but this is an alternative for those people who don't have $100,000 sitting in the bank ready to invest in a new construction, single family, or a new construction duplex. The Berkey, I mean, really all you need is about 20, $25,000 to do it. And like I said, if you get lucky, you could get a decent portion of that back after the rehab.   Keith Weinhold (00:37:08) - Well, you bring up so many good points there in the race. For one thing, with real estate, you can intentionally improve the value. That's something that you cannot do if you own a stock or if you own cryptocurrency, or if you own gold, you can help control what your investment is worth. And a lot of that happens here in the rehab process. Well, the race would love to tell you more, including walking you through an example with numbers, but that's the best place for him to do it. That is on the live event next week because it is co-hosted by narration. You can join the live virtual event from the comfort of your own home. You can ask questions and have them answered in real time. It is all free and we'll also be sharing special off market Berkey inventory. In Memphis for two, three and four bedroom properties, so go ahead and attend on June 25th. Which again is next Tuesday. Be sure to register now at GR webinars.com. Just been great to walk through the Berkey.   Keith Weinhold (00:38:12) - Thanks so much for coming back on the show.   Naresh Vissa (00:38:14) - Thank you. It's been a pleasure.   Keith Weinhold (00:38:21) - Oh good info from Gree investment coach Naresh as always. Next week's live event. That could be a bigger deal than the Paris Olympics this summer and this year's presidential election combined. Oh yes. Well, at least it expects to be more profitable for you than those other events. It will also be more entertaining when you join as an attendee live next week. Certainly more entertaining and informative than Olympic handball and Olympic race walking, no doubt about that. I don't think I've offended any race walking fans because there are only perhaps five in the world. In any case, BR is a process by which, after you buy months later, you can expect to refinance at a higher valuation since the property has been rehabbed from your initial purchase, and then you get a big chunk of your own down payment back, meaning you have less invested in the deal. And that's why you get a higher cash on cash return. Because cash and cash return all that is, is your annual cash flow divided by your initial investment or your starting equity position.   Keith Weinhold (00:39:37) - The last R in BR is repeat. You can repeat sooner because you did get some of your invested cash back. And that's part of what makes the strategy so effective. Now is part of your refi. You might get a post appraisal rehab that's so high you essentially get all of your down payment money returned to you, at which point it would be an infinite return because you don't have anything invested in the deal. But you should not count on having all of it returned, just a lot of it or most of it. Next week's live event is where the BR real estate investing strategy gets introduced to a wider swath of America one last time. Attend live next Tuesday. The 25th. I really encourage you to check it out. Be sure to sign up for the virtual GRE live event now! It's pretty quick and easy to do at GR webinars.com. Until next week, I'm your host, Keith Weintraub. Don't quit your day dream.   Speaker 5 (00:40:41) - Nothing on this show should be considered specific, personal or professional advice.   Speaker 5 (00:40:45) - Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of yet Rich education LLC exclusively.   Robert Syslo (00:41:09) - The preceding program was brought.   Keith Weinhold (00:41:10) - To you by your home for wealth building. Get Rich Education.com.

Big capital gains tax bills are hitting more home sellers. Exemptions exist for up to $250K single, $500K married. Bad housing affordability means a low home ownership rate, hence, more renters. The homeownership rate has dropped from 66.0% to 65.6% in the last year. I have a hole in the roof of a rental single-family home, with about $10K in damage. Learn how I handle it. Two of the first three income properties that I bought performed poorly. VP of Market Economics at Auction.com, Daren Blomquist joins me. We learn why foreclosure activity is 10% to 20% below pre-pandemic levels. Learn about judicial and non-judicial foreclosure states.   From homeowners surveyed, the top concern about falling into delinquency are rising insurance and property taxes. Auction bidders are confident about the real estate market. They’re willing to pay more, which is 60% of ARV nationally. You can bid on distressed properties with your phone via Auction.com. Opportunity Zones are generally working. Resources mentioned: Nation’s Largest Online RE Auction Marketplace: Auction.com For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Speaker Weinhold** ((00:00:00)) - - Welcome to GRE! I'm your host, Keith Weinhold, talking about a lot of housing market problems today. Capital gains taxes hitting more home sellers. Home affordability is still bad. The American homeownership rate is falling. I've got roof damage on one of my own properties. Then an update on American mortgage delinquencies and foreclosures. It's mostly bad real estate news today on Get Rich Education.   Speaker Syslo** ((00:00:29)) - - Since 2014, the powerful Get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Reinhold writes for both Forbes and Rich Dad Advisors, and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform. Plus it has its own dedicated Apple and Android listener. Phone apps build wealth on the go with the get Rich education podcast.   Speaker Syslo** ((00:01:06)) - - Sign up now for the Get Rich education podcast or visit GetRichEducation.com.   Speaker Coates** ((00:01:14)) - - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Speaker Weinhold** ((00:01:30)) - - We're gonna go from Bavaria, Germany, to Batavia, New York, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to Get Rich education. There is a large online source of foreclosure and bank owned properties that you won't find on the MLS. In fact, they are the largest in the nation, and their VP of Market Economics will be here with us later today. Home price appreciation. That has been wonderful for the last several years. But one negative consequence is the fact that more home sellers now are getting hit with big capital gains tax bills. Now we'll discuss income property shortly, but when it comes to primary residences, you probably know that if you are single, you won't pay any capital gains tax on the first 250 K profit of your sale. That 250 K exemption. That is only half of what married couples enjoy.   Speaker Weinhold** ((00:02:29)) - - They don't have to pay tax on the first 500 K of profit. Yes, a $500,000 exemption on capital gains for married couples. So basically, single people in high priced markets like you often find on the coasts, they get hit the hardest. Married couples in lower priced markets more toward the heartland and in the South. Those married couples, they're more likely to get away without paying any tax on the profit from their home sale. All right, well, just what proportion of homes are we talking about here? Well, last year, 8% of sales had capital gains of over 500 K. All right, well that potentially makes them exposed to the tax hit. Compare that to a couple decades ago. That share was just over 1%. So it's gone from 1% to 8%. These are exorbitant capital gains tax events. And you know what this does. People trying to avoid that it keeps even more homes off the market. Now it's not as pronounced as the well-documented interest rate lock in effect okay. Call this the capital gains tax lock.   Speaker Weinhold** ((00:03:46)) - - In effect people avoid the tax by not selling. And it makes some older people age in place. That's part of what's going on here. Because if the homeowner keeps it until they die, then the heirs, they might be able to sell it tax free due to the tax laws and capital gains taxes. Like, what rate do you actually pay that can be as high as around 20% on you for selling your primary residence if the gain exceeds those thresholds? And yeah, those thresholds, they haven't moved with inflation in quite a long time. Now, understand that right now you are living in an era where many Americans, they can't afford to live in the home that they live in right now if they tried to repurchase it at today's prices. So again, it's not the mortgage rate lag in effect here. It's the purchase price paid lock in effect. Now look, yes, overall I am a real estate market optimist. You are too, when you understand how real estate pays you five ways. But as far as anyone saying something like, oh, there is never been a better time to buy, that doesn't make any sense.   Speaker Weinhold** ((00:05:02)) - - Now. At the same time, I don't see any evidence that waiting is going to do you any favors, but there have obviously been some better times to buy. In fact, do you know the best year in modern history that I can think of for buying real estate? Any idea it was the year 2013? Yeah, 2013. That's when prices were low because they still hadn't bounced much off of the GFC lows and mortgage rates. They actually were in the absurdly low threes back in 2013. Now starting in 2021 you know I have been on record on this show. I've been on record on television and on our own YouTube channel here and in Forbes and elsewhere. Since then, I've said that home prices, they're not poised to fall, they're going to stay stable or they're going to keep going up. I was perhaps one of the earlier people to point that 3 or 4 years ago that the low housing supply and the government safety nets that won't let people lose their homes, those things keep the markets buoyant.   Speaker Weinhold** ((00:06:16)) - - Now, today, I see more signs that prolonged bad affordability will slow down. Home price growth in that part is bad for investors, of course. Prolonged. Bad affordability. That means something good for income centric investors at the same time, sort of like David Stockman and I touched on last week here. Yes. Souring affordability. What that means is a falling homeownership rate that would make sense in the homeownership rate. That means that just what it sounds like, that is the proportion of American homes that are occupied by their owner in the past year. Yeah, the homeownership rate has fallen, but not too much yet because there are some lag effects and other factors to account for. Like, imagine if there are new zero money down loan programs that are made available. You can see how that would make homes more affordable, even if rates and prices and wages stayed the same. So there are X factors out there and lag effects out there. In the past year, the homeownership rate has fallen from 66% down to 65.6%.   Speaker Weinhold** ((00:07:33)) - - Not too much of a slide, just 4/10 of 1%. That is a Fred stat sourced through the Census Bureau. All right. So what's that really mean if you're looking for income. Well, what that means is that there are now hundreds of thousands of additional renters today than there were just one year ago. And the number of renters, those that aren't homeowners, that looks to increase in both absolute and relative terms. There's a lot of people expect the homeownership rate to continue to drop from here. Now, no investor conditions are absolutely ideal everywhere you look. In fact, of the first three investment properties that I personally bought in my life, only one of those three went really well. It was that first ever fourplex I bought because it appreciated from 295 K to 425 K in just three and a half years, and it provided some cash flow and even a place for me to live. But the second property I bought, which was also a fourplex, it hardly cash flow because I bought it at 90% loan to value, and I also bought it in 2007.   Speaker Weinhold** ((00:08:46)) - - Not great timing, so its value dropped. I was a pretty new real estate investor then, and when its value dropped, it didn't return to the 530 K value that I bought it for for about six years. And then I got wiser and I started buying across state lines, since that's where the best deals often are. Well, this was then my third investment property, a brick single family home that cost 153 K in the Dallas-Fort worth area. And the main reason I bought it is because it was cheap, which was a mistake. It was also in a growing area, but I couldn't keep it occupied, so I soon sold it for about the same price that I bought it for. All right. But even in those far less than ideal beginnings for me, two of my first three properties, they weren't disasters, but they weren't a great experience either. Yet I still got some leverage, a little cash flow. I got tenant made principal pay down all the while, tax benefits all the while, and that inflation profiting benefit.   Speaker Weinhold** ((00:09:52)) - - And I did then find myself better off overall. Despite that the appreciation and the cash flow weren't all that great. If you blend those first three properties together and today, perhaps a lot like you or what you want to do. I own properties in multiple markets, and I remotely made as the property managers in those markets. And you know, just yesterday I got an email from one of my property managers about roof damage to one of my properties. It's a rental single family home. It's going to be about $10,000 worth of repair work. Some bad news and the way I'm hailing it is a way that you might think of handling a real estate problem. I sure don't just send off a $10,000 check right away and chalk it up as a loss, and ask myself how many months it's going to take me to make that up. The first thing that you can do in this situation is check to see if you have a home warranty that covers it in full or in part. Whether you bought your property new or renovated, a warranty might apply.   Speaker Weinhold** ((00:10:58)) - - It actually does not in my case here. Well, if the warranty doesn't cover your issue, of course, check with your insurance provider and see what your deductible is there. Consider that when insurance premiums have risen sharply in a lot of markets, you need to get something back for that premium that you're paying in a lot of cases. All right. And if those things don't work, then don't just take the first quote that your property manager gives you that they got from the first contractor, which is. Ten K in my case. For a substantial work item, ask your property manager to obtain at least three quotes for you. That's reasonable. And then look at the most competitive of those three quotes. So to review here three ways to avoid paying. For example a full 10-K. In my case it's your warranty, it's your insurance. And if you feel like you must come out of pocket, then get three quotes in order to reduce your cost. And here's the thing you don't do these things yourself.   Speaker Weinhold** ((00:12:03)) - - What you do is you ask your manager to do these things and make it easy for you. Your manager should check with your insurance policy and they should check on your warranty. And then you can back it up and take a look at it. If you don't like the answer, they should obtain the roofing contractor quotes for you to. You are paying your manager for this stuff, maybe 8 or 10% in a management fee, and that should not be for nothing. Have them do this stuff that's their job and ask them to do it. Because if you don't just watch, they'd be happy to have you do it for them. Don't. You don't have to. So we're talking about mitigating your out-of-pocket cost in your time expended when you have a real estate issue, like a hole in a roof of one of my single family rentals. Now sometimes you're going to get caught in some snafu. But again, our strategy here is that you're usually not even holding any one rental property for more than 7 to 10 years, because by that time, it's accumulated sufficient equity so that you can make a tax deferred exchange up to another property, keep leveraging that equity, because the rate of return from equity is always zero.   Speaker Weinhold** ((00:13:16)) - - Now, that process, that 7 or 10 years, that might be on the slower end. Now though, since the property that you consider relinquishing is going to have a lower mortgage rate than your replacement property, it will. And one other thing to keep in mind here it's about providing America with that clean, safe, affordable, functional housing. What that means is that while roof quotes are being obtained here if needed, and it takes a few works until those roof repairs can begin, what you can do is have a cheap temporary repair done until the permanent roof fix starts. That's pretty common with roofing repairs, and that way not only is any interim damage avoided, but the tenant is not being negatively impacted here either. No slumlords around here. As we're discussing real estate problems today, we're about to delve into what happens when homeowners in real estate investors, when they can't make the mortgage payments on their property, and is that proportion of people going up or is that going down in this low affordability market? We'll also get some takeaways by looking at the bidder activity on foreclosure properties.   Speaker Weinhold** ((00:14:33)) - - That can tell us quite a bit about the market and about buyer expectations for the future of the market. And I'll also tell you how you too, if you're interested, you can find opportunities and get a deep discount on a foreclosed upon property. That's all. Next with a great guest, I'm Keith Reinhold. You're listening to get Rich education. Your bank is getting rich off of you. The national average bank account pays less than 1% on your savings. If your money isn't making 4%, you're losing your hard earned cash to inflation. Let the liquidity fund help you put your money to work with minimum risk. Your cash generates up to an 8% return with compound interest year in and year out. Instead of earning less than 1% sitting in your bank account, the minimum investment is just $25. You keep getting paid until you decide you want your money back there. Decade plus track record proves they've always paid their investors 100% in full and on time. And I would know, because I'm an investor, to earn 8%.   Speaker Weinhold** ((00:15:41)) - - Hundreds of others are. Text. Family 266866. Learn more about Freedom Family Investments Liquidity Fund on your journey to financial freedom through passive income. Text family to 66866. Role under the specific expert with income property you need Ridge Lending Group and MLS 42056 in grey history, from beginners to veterans. They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. This is Rich dad advisor Tom Wheelwright. Listen to get Rich education with Keith Reinhold and don't quit your daydream. This week's guest is the VP of Market Economics at auction. Com they are the largest online source of foreclosure and bank owned properties that you won't find on the MLS. You can bid on properties from anywhere with your mobile device. We'll learn more about that later. First, we're covering a general real estate market update today, and then we're mostly going to discuss what's happening in the foreclosure market, including just what a foreclosure market even is.   Speaker Weinhold** ((00:17:25)) - - Hey, it's been over a year since we've had you here. So a big gray welcome back to Darren Lundquist. Thank you so much. It's great to be back and.   Speaker Blomquist** ((00:17:34)) - - Glad to see you, Keith.   Speaker Weinhold** ((00:17:35)) - - For listeners in the audio only Blomquist is spelled with just one oh, despite being pronounced. Blomquist and Daren, as we talk about the state of these markets today, it also helps to mix in lessons for the follower and listener that's watching or consuming this. In ten years. And before we discuss foreclosures. Now, Darren, when I look at the residential real estate market today, there are a few ways that it appears rather normalized actually. For example, all price appreciation rates are normal rent growth levels. They're pretty close to historic norms. Interest rates are even near historic norms, which is a surprise to laypersons. But that's three huge measures that are actually normal, and no one else anywhere talks about that. But there are some aberrations in today's market, the most chronic and saddening of which is the lack of housing supply.   Speaker Weinhold** ((00:18:28)) - - So with that backdrop, what are your thoughts on today's overall American housing market?   Speaker Blomquist** ((00:18:34)) - - It's really interesting. We have these normal metrics that we look at when we look at how home price appreciation. Now home sales I would say are abnormally low. Right. But home price appreciation is doing well. Some of the other metrics that we look at. But it's coming off of this abnormal what I would say an abnormal period over the last three years or so, mostly during the pandemic when the housing market went a little bit crazy and you saw home prices rise abnormally fast. I would argue too fast for such a short period of time. And so you'd almost expect after a period like that to see a correction in home prices. And we saw a slight correction in late 2022, early 23. Right. But now home prices are, as you mentioned, kind of back to normal actually maybe a little bit on the high side of normal, 5 to 7% home price appreciation that we're seeing annually. And so there is this sense that things look normal.   Speaker Wheelwright** ((00:19:32)) - - But below the surface there are, I believe I would argue and you may not agree with this, some underlying problems that I think could come back to bite us if, you know, depending on how things go over the next few years. But certainly the underlying fundamental biggest storyline, that's not necessarily maybe as accessible to a lot of people is this housing supply that you mentioned, Keith. And over the last the decade that ended in 2020, we saw, I would guess, based on my analysis, about 4 to 5 million housing units that were not built, that in a sense should have been built. But we were short 4 to 5 million housing units relative to the number of households that were being formed during that same time period. And so that is set us up for this market that we're in now in the 2020s, where we're seeing, despite the fact that home prices are going up and are out of whack with fundamental price to income ratios. In other words, affordability is a problem. Despite that fact, home prices continue to go up because you have this underlying lack of supply and so you have enough demand to fuel rising home prices, given the lack of supply, if that makes sense.   Speaker Weinhold** ((00:20:48)) - - Yes. You mentioned the paltry volume of sales, which is really one consequence of this constrained supply. And there are so many ways to measure it. You threw some numbers out there just using Fred's active listing count. They have one and a half to 2 million homes normally available. Inventory bottomed out near a jaw dropping, just fantastically paltry 350,000 units in 2022. And then the latest figure is about 730 K. So really doubling off the bottom, but yet still far below what is needed there in in 2021 and 2022, I started informing our audience that the housing crash of this generation, it's already occurred. It was a supply crash, which hedges against a price crash even amidst a tripling of interest rates. I guess there. And from your vantage point, when will this low housing supply abate?   Speaker Wheelwright** ((00:21:46)) - - But I think on the multifamily side, you're seeing signs that we've, in a sense, caught up with housing supply. You're seeing the multifamily sectors start in terms of the builders start to pull back. I think because of that.   Speaker Wheelwright** ((00:21:58)) - - And one piece of evidence of that is the slowdown in rent appreciation. But then on the Single-Family side, we're still seeing pretty robust increases in housing starts and builders starting housing units. And I was just looking at the latest numbers for April up 18% year over year. And we're at over a million housing starts in April on an annualized basis. You know, it's hard to predict what household formation will be doing over the next decade, but I believe that million number is enough to supply the new households that are being formed and are projected to be formed over the next few years. And so we're kind of at a place where at least we're treading water in terms of housing supply. And I do think there are some demographic trends that could by the year 2030, which may seem like a long ways off still, but by that time we would see this kind of reverse a little bit. And the demographic trends I'm talking about are slower population growth, the birth rates. There's a big article in the Wall Street Journal.   Speaker Wheelwright** ((00:22:58)) - - If you write, birth rates are surprisingly not really coming back. They dropped during the pandemic have not really come back. And in many areas, including the US or below replacement level in terms of replacing the population at 2.1. Yes. So not to get too deep into the demographics, I'm not a demographer, but I think that combined with these increases in housing starts that we're seeing, we will see that supply in the next five years. Maybe when I'm on next, I'm with you to see that it is a slow moving train. I think we're headed in a good direction in terms of that, that housing supply. And those are already, I would argue, some early signs at 2024 at least. It's still a low supply environment, but it's at least somewhat better, incrementally better than 2023 was in terms of inventory. And we're seeing some more inventory. Come on. One tip I would just say that's I think a long term thing to look for, no matter what environment you're in, is if you look at the inventory, inventory is a great and a barometer of market health.   Speaker Wheelwright** ((00:24:00)) - - And if you look at inventory numbers by market, which we do, you do see some markets all of a sudden inventory is starting to spike. And that to me is a signal that those markets could be softening in terms of prices and even in terms of sales. So you see some markets in Florida popping up like that. But whether or not we're talking about now or anytime, it's a great metric to look at. For anybody investing in real estate, especially at a market level, is that inventory of homes. You can look at month supply of inventory for sale. Six months supply is a great milestone. If there's six months supply, that's a balanced market. If it's below six months supply, it's a seller's market. And if it's above six months supply, it's a buyer's market. So just a general kind of rule of thumb to look for there.   Speaker Weinhold** ((00:24:46)) - - Sure. We've seen months of supply three months or less in an awful lot of places. However, you alluded to coming potential problems for the housing market earlier.   Speaker Weinhold** ((00:24:55)) - - Can you tell us more about that? Have you already done that with talking about a potential softening with some inventory coming on faster in some markets?   Speaker Wheelwright** ((00:25:04)) - - I think you're a thesis about this. The housing crash has already happened and it was a supply crash is very interesting. When I look at price to income ratios over time, you know, home prices versus incomes, we've diverged from that long term mean of that price to income ratio right. In the last couple of years. We saw that during the the bubble of 2004 five six. But it's even more dramatic in the last couple of years where we saw at the peak of this, the actual home prices. We. Nationwide, we're about 30% above what we would expect the price to be based on incomes and that historic price to income ratio. And so I do expect a reversion to the mean at some point. Now, whether that could occur as a pretty sharp correction, although I can't point to a specific trigger that would cause that correction necessarily may could occur more of a stagnation over time, where home prices kind of flatten out and increase less than the median long term average.   Speaker Wheelwright** ((00:26:07)) - - I do believe that we will see a reversion to that mean eventually, especially as we see more supply coming onto the market. I think it's actually healthy for the housing market, but it could be experienced by many people as weakness in the housing market, because you could see home prices decline a little bit, especially in certain markets.   Speaker Weinhold** ((00:26:25)) - - From your vantage point. Darren, you are an expert there in helping people find deals because you really keep a pulse on what's happening in the foreclosure market. Maybe some of our audience doesn't completely understand what the foreclosure market means. Now, Darren, I think of delinquency is that condition means that mortgage borrowers have been making some late payments. Tell us about how delinquency differs from foreclosure. And that will help if you go ahead and define just what the foreclosure market is.   Speaker Wheelwright** ((00:26:57)) - - Starting with the foreclosure market. I mean, when you can call it the distressed market or the foreclosure market. And that's really where auctions. Com operates. And is this foreclosure market, it's loans that the borrower cannot continue to make payments for a variety of reasons.   Speaker Wheelwright** ((00:27:12)) - - When you have a home that's financed and the borrower cannot continue to make payments, the recourse for the lender is foreclosure to take back that property by taking back that property and then selling it, recouping or trying to recoup as much of the losses on that property that they can in terms of the loan that was given on that property. Okay.   Speaker Weinhold** ((00:27:34)) - - So let's talk about delinquencies here. We're looking at certain levels of severity being 30 days late on your payments, being 60 days late and being 90 days late. And interestingly, we see a big spike in FHA loan types that have had more delinquencies than conventional loan types.   Speaker Blomquist** ((00:27:50)) - - That's right. Yeah. So delinquency is kind of the top of the funnel if you think of the distressed market or for leisure market as a funnel, the top of that funnel is someone can't make their payment one month. They miss their payment, mortgage payment one month. That's what this 30 or 30 day delinquency. And when you look at the chart that we're looking at, you do see those 30 day delinquencies rising over the especially on FHA loans, which are, I would argue, the most kind of risky loans in our current marketplace.   Speaker Blomquist** ((00:28:19)) - - Yeah, the last ten years, over the last decade. And we see those even from 2021, rising steadily up back to really 2019 highs on the 30 day delinquencies, you also see a slight gradual increase in conventional loans, which are loans backed by Fannie Mae and Freddie Mac as well as VA loans. But those are the 30 day delinquencies. They're are not back to pre-pandemic levels even on that front. So that's the 30 day. Usually if someone misses a monthly payment, it's not super serious at that point. What really gets more into our marketplace is when we see a 90 day delinquency, or what's known as a seriously delinquent loan alone, that is past due by 90 plus days. And we have that chart here. What stands out to me on this chart is you actually see those 90 day delinquencies continuing for the most part to trend lower, even though the 30 day delinquencies are going up, 90 days are coming down, and there's a lot of reasons for that. But at the end of the day, that means people maybe are getting into trouble, but they're able to get out of trouble before they lose the home to foreclosure in many instances.   Speaker Weinhold** ((00:29:29)) - - All right. So in summary, 30 and 60 day delinquencies have risen over the past two years. But over the past two years, serious delinquencies, 90 day delinquencies therefore, are lower over the past two years.   Speaker Blomquist** ((00:29:43)) - - That's right. And then if we look at foreclosure starts, which is kind of the next step. So you missed three months worth of payments. That's when the bank starts to think about starting the official foreclosure process. And if you look at foreclosure starts, we are seeing those rise as well. And part of the reason that you see these rising, even though seriously delinquent loans are falling, is because there was a bit of a backlog from the pandemic still. Yeah, loans that were delinquent when the pandemic started that were delayed from going to foreclosure, that are now coming back. So we see this sharp drop off in 2020 when there was a foreclosure moratorium. Those numbers have reverted back, have bounced back. But there's we're still seeing about 60 to 70,000 foreclosure starts, a quarter nationwide just to put some numbers on this.   Speaker Blomquist** ((00:30:31)) - - But back in the first quarter of 2020, before the foreclosure moratoriums, we were at 81,000. So we're still at about 80% of the pre-pandemic levels. But foreclosure starts have come back. We're just getting back to what I would consider kind of normal levels of foreclosure, and especially if you look at in the context of what we saw during in 2009, 2010, we were seeing over 500,000 foreclosure starts a quarter back then. Now we're seeing 68,000. So we're paling in comparison to those numbers.   Speaker Weinhold** ((00:31:04)) - - As you, the investor, is thinking this through, we're talking about how many opportunities there will be for you here, basically to scoop up a distressed deal, a fixed and flip property. If you're looking to fix and flip one just in the general context, that's what we're talking about here.   Speaker Blomquist** ((00:31:21)) - - Opportunities really foreclosure starts are for. Opportunities. If we look at where the opportunities are emerging in terms of those foreclosure starts, we do see a lot of increases in looking at March of 2024. Year over year, a lot of increases in Florida, and foreclosure starts and also Texas in California.   Speaker Blomquist** ((00:31:42)) - - So it's interesting. I mean, these are markets that are doing pretty well, pretty healthy. But we are seeing some of those foreclosure starts come back in pretty big percentage wise in those areas. If we look at auction com data, specifically the state level, in the interest of time. But just to look through the lens of looking for opportunities. Auction com resides a step after the foreclosure start. Then eventually it goes to a foreclosure auction where the property either sells to an investor or it goes back to the bank is what's known as an REO. And where we're seeing on our platform the biggest kind of return to normal levels of foreclosure auction volume, where there's that property actually is sold, is mostly in the Rust Belt, Upper Midwest. That's where we're seeing volumes return to normal. And a place like Florida, we're only seeing foreclosure volumes are over 70% below normal, and Texas were 55% below normal. And when I say normal, I'm saying I'm comparing that to pre-pandemic levels. And then in California, we're at about 45% below those pre-pandemic levels.   Speaker Blomquist** ((00:32:54)) - - So some of the big volume states, we're still waiting for the foreclosure volume to return. But if you look like at states like Indiana, Iowa, Minnesota, places like that, Oklahoma, we are seeing that foreclosure auction volumes have returned to those pre-pandemic levels. So there are more opportunities in those areas, at least relative to their population and their their size of in terms of housing units.   Speaker Weinhold** ((00:33:20)) - - So in general, in a lot of these upper Midwestern states, in northern Great Plains states, we see a greater foreclosure volume than we did pre-pandemic, because those levels are at over 100%, 100 being the pre-pandemic level. There is one aberration on your map, for one thing, Darren, and that is in Connecticut, where we have 306% of the foreclosure volume that we did pre-pandemic. That's over three x what's going on in Connecticut?   Speaker Wheelwright** ((00:33:50)) - - I'm glad you pointed that out. I mean, that is part of the the issue with Connecticut is you do have relatively low foreclosure volumes there. So the 306% is coming off even pre-pandemic, some pretty low volumes of foreclosure.   Speaker Wheelwright** ((00:34:03)) - - We are seeing and I can't point to exactly what's happening there in terms of the economy, any other extra weakness in the economy or in the housing market there? But we are seeing definitely that's the top state in terms of where foreclosure volume is back way above, in fact, pre-pandemic levels. That was one of the areas, at least parts of Connecticut where the work from home trend maybe got a little bit out of control, and people were buying homes and willing to pay very high prices for homes that were who worked in New York City. And now we're thinking, well, I can work from Connecticut. In the country. There was probably more of a pandemic housing boom in Connecticut than some other areas of the country, and that may be part of the story that's going on there.   Speaker Weinhold** ((00:34:54)) - - We're talking about the most densely populated part of the United States here, the tri state area, which is New York, Connecticut and New Jersey. And what's unusual is that one of those three states, new Jersey, is the antithesis of what's happening in Connecticut.   Speaker Weinhold** ((00:35:09)) - - Connecticut has about three x the foreclosure volume than they did before the pandemic, and new Jersey is just 25%. They only have one quarter the foreclosure volume that they did before the pandemic. Are there any other tri state dynamics going on there with foreclosures there?   Speaker Wheelwright** ((00:35:25)) - - That's a great observation. And one thing that becomes very important with foreclosures is the foreclosure process is governed by state law. It's not a federal national law that governs how the foreclosures work. And so you do see a lot of variation in the states based on how that foreclosure process works. And then also even how the the legislatures in those states have stepped in in some cases. And that's the case in new Jersey and created new laws even in the last couple of years to, for lack of a better word, stymie the foreclosure process and may put extra barriers in getting to foreclosure. And so, number one, new Jersey is what's called a judicial foreclosure state, where the foreclosure process is inherently longer than many states, including Connecticut. And then on top of that, the new Jersey legislature has enacted at least one law that took effect in January that even creates more barriers to foreclosure.   Speaker Wheelwright** ((00:36:22)) - - And we probably don't have time to get into the details of that law. But that's really, I think, what's it's less about that new Jersey is a much more healthy housing market than Connecticut. As to what you see there is the effects of the state governed foreclosure process with those numbers.   Speaker Weinhold** ((00:36:40)) - - So just some great context for the listener and viewer here. The state jurisdiction in the judicial process has an awful lot to do with foreclosure volume. That's not necessarily indicative of the condition of its housing market.   Speaker Wheelwright** ((00:36:55)) - - That's right. And it does vary quite a bit. When we look at going forward at risk. We actually asked, so our clients are the banks, the mortgage servicers, the lenders who are foreclosing on these properties. And we ask them what they think is the highest risk of increasing foreclosures in the future. And the the top of their list was rising insurance and property taxes.   Speaker Weinhold** ((00:37:22)) - - That's super interesting.   Speaker Wheelwright** ((00:37:23)) - - Yeah, and that's been a hot topic recently. I would put that at the top of my list of risks.   Speaker Wheelwright** ((00:37:29)) - - Going back to your question about why could the housing market experience weakness in the somewhat near future? I think this is the top of my list of as a catalyst that could potentially trigger weakness in the housing market, specifically home prices. Because of these variable costs of homeownership. You know, your mortgage is a fixed cost. You know what it's going to be every month, but your insurance and property taxes are variable costs. And there are in some states, those have skyrocketed. For some homeowners. This insurers are pulling out of states.   Speaker Weinhold** ((00:38:02)) - - This is all such a great finding. Again, Darren's firm asked the survey question how much would you assign each of the following in terms of risk for higher delinquencies between now and the end of this year? And the number one answer is rising insurance and property taxes to Darren's point. That's because these are variable costs that everyone is subjected to. And we need to be mindful that more than 4 in 10 American homeowners are free and clear of their mortgage, so they don't have any payment.   Speaker Weinhold** ((00:38:27)) - - So on a percentage basis, when you look at homeowners expenses, when they have rising insurance and property tax problems, you can see how this can increase foreclosures.   Speaker Wheelwright** ((00:38:38)) - - That's right. That's a great point. A couple other risks that ranked fairly high with our clients. We're rising consumer debt delinquencies so that we do see things like credit card debt and auto loan debt, specifically those two delinquencies on those types of more or loans, not mortgages, are rising quite quickly over the last few quarters. And so that's an area of risk that we're seeing. And then they put rising unemployment is third. But you know right. We're not seeing unemployment rise right now. And unemployment is very low. They put that a little bit lower on the list. Those two things to look out for are those rising insurance and property taxes. If we continue to see that be a problem, that could be a trigger that causes some fallout in the housing market, as well as if we continue to see those rising delinquencies on credit card and auto loan debt that could ripple out as well to the housing market.   Speaker Weinhold** ((00:39:35)) - - It's really interesting. Higher property taxes are often a result of a homeowner's property having gone up in value. But if you own a paid off home and you're just going to continue to live there for the rest of your life, that rising property value that really doesn't help you so much, it actually might hurt you in a way, because you will have a commensurate increase in your property. Taxes, making it harder for you to live.   Speaker Wheelwright** ((00:39:57)) - - Yeah, that's right. It's a double edged sword there with the rising values. And usually it's, you know, property taxes is not an unbearable cost for most people. But when you're on the margins and you're just barely able to make your mortgage payment each month, and if you're in that situation, a fairly small rise in property taxes can make a big difference in whether you're able to continue to make those payments.   Speaker Weinhold** ((00:40:21)) - - Yes. And then the rising insurance premiums, they've gone to X to three X on some homeowners in just a few years. It won't go up that much on a property taxes.   Speaker Wheelwright** ((00:40:30)) - - The insurance is there's been more of the problem recently, but property taxes are kind of layered on top of that. Moving on. I just wanted to land, I think really on getting back to that question of opportunity for investors out there and auction com buyers are typically fix and flip or you know, fix and rent investors. And so what they're doing is they're looking to buy these properties. And it usually takes maybe six months, 90 days to six months to renovate these properties and turn them around and sell them. And so one of the things we look at very carefully is, are the bidding behavior on our platform as an indicator of what's coming in the retail market, because our buyers are they're pretty good usually at anticipating what's going to be happening in their market over the next 3 to 6 months. Our buyers did pull back in their bidding behavior, they got more conservative and were willing to pay less. Back in 2022, when mortgage rates spiked. But it appears now that our buyers have gotten comfortable with this kind of higher for longer concept of interest rates.   Speaker Wheelwright** ((00:41:36)) - - Yeah, and our bidding behavior on our platform is mostly trending higher, meaning that our buyers are pretty confident that the housing market, despite, you know, I might have sounded a little doom and gloom, but our buyers are pretty confident that in their local market, they will continue to be able to buy these distressed homes at a discount. The metric we look at is what they're paying at auction, relative to the after repair value of the home, the estimated after repair value, and as of March of this year, that was at 59.8%. So they're buying at 60% of after repair value at 40. You could turn that around and call that a 40% discount. That number is, believe it or not, been trending up over the last few months. So they're willing to pay more, which indicates confidence in the housing market going forward. Historically, that's our bidders have been a good harbinger or indicator of what's to come in the retail market when they're more confident the retail market typically does well and vice versa.   Speaker Wheelwright** ((00:42:39)) - - You know, if we look at that by market, it's really interesting to see where our bidders are most confident about home prices going up in different markets. And we see a lot of confidence actually, the places where we see it's probably coincidental, but some of the places where we see higher foreclosure volume, as we talked about earlier, some of the upper Midwest Rust Belt areas are where we're seeing our buyers willing to pay more than they did a year ago relative to after repair value. So that's where they have a lot of confidence, actually, even out in California and most parts of Florida, they're still pretty confident. And Texas, there are some areas where our buyers are pulling back and and are paying less relative to after repair value. And there's kind of a cluster of markets in on the Gulf Coast, right? You know, in Mississippi, Alabama. And I don't know if that relates to insurance costs. I haven't made that connection solidly. That's an area where there has been rising insurance costs.   Speaker Wheelwright** ((00:43:39)) - - It varies quite a bit. There are some other markets mixed in across the country. Even though most of Florida, our buyers are pretty confident there is one area where they're they've become cautious, which is Cape Coral, Florida. They've pulled back in terms of what they're willing to bid.   Speaker Weinhold** ((00:43:55)) - - Buyers for foreclosure properties still look overall quite confident in Florida. But yeah, like you touched on Darren, it's the lack of confidence to pay more for foreclosure properties in and around southern Louisiana. I know there's been some population loss there. And yes, like you touched on, they are more sensitive to insurance premium rises in Louisiana too.   Speaker Wheelwright** ((00:44:17)) - - That's right. So the takeaway is there's still the beauty of buying at that auction and distressed properties you are buying at a discount below after repair value. There's still a lot of risk involved because you may not know all that that's needed to renovate these properties, but you do have that. Rather than just counting on the housing market. Home price appreciation to increase to drive your profits, you have this component of added value.   Speaker Wheelwright** ((00:44:45)) - - So you're buying the property at a discount. And even at the housing, home prices don't go up in the next six months. By adding value to that property, you can still turn a profit because you're selling it for more than you bought it for. We have two types of auction on auction. Com there's the foreclosure auction, which we've talked a lot about, which comes at the end of the foreclosure process. And that's typically on the local courthouse steps. Although auction com in many counties allows you to bid remotely on your phone, we're we're pretty excited about that technology that we've introduced in the last couple of years. And then the second type of auction is if it doesn't sell at the courthouse steps foreclosure auction, it goes back to the bank as an REO. And we do the Ro auctions, which are mostly all online, and you can bid from anywhere. And it's pretty consistent between those two types of auctions. On average, at least over time, buyers are typically paying about 60% of after repair value, so about a 40% discount between after repair value.   Speaker Wheelwright** ((00:45:46)) - - Now, a lot of these homes need are in need of a lot of repair. But you have that type of discount available. And even though foreclosure volume has not come back to pre-pandemic levels, we're still seeing a consistent flow of that happening. There are certainly many markets, especially if you're willing to go off the beaten path a little bit in terms of markets where you can find inventory and also good discounts on these properties, especially if you're going to markets where maybe other investors aren't as aware of or aren't as interested in.   Speaker Weinhold** ((00:46:18)) - - Therein. I wonder about local flavor. For those that bid through your platform on these distressed, foreclosed properties. Here we have a lot of investors that buy properties pretty passively where the property is already fixed up for you, maybe already held under management. And a lot of those investors, they go ahead and buy across state lines, because the best teals tend to be in the Midwest and Southeast and a few other pockets in places. So there are an awful lot of out of state investors.   Speaker Weinhold** ((00:46:49)) - - On the passive side, what do you see for a breakdown of local investors in state investors and out-of-state investors through your platform for these distressed properties? I imagine it might be somewhat more localized than what I just described.   Speaker Wheelwright** ((00:47:01)) - - We do have some investors who are buying out of state, but actually the majority are buying in their backyard. Again, because these properties require their high touch, they require a lot of renovation. And so it's good to be local. It's definitely possible, especially with the REO properties where you can buy online. There is some more flexibility there if you have a crew, if you have boots on the ground in the market where you're buying, where you can do that, actually, the average distance between our buyers and the properties they buy is about 20 miles. I should say that's a median distance. So they're very local. There's definitely some exceptions to that you can buy across the country. But it is harder with these properties. These folks are very local. They know the markets they're operating in, and they know they have the resources in those markets to do the renovations.   Speaker Wheelwright** ((00:47:53)) - - Our buyers are probably a great resource for your students, Keith, to be able to tap into these types of local investors who have a supply of homes that they're creating, and sometimes they're selling back to owner occupants, you know, they're putting those properties on the market as renovated properties, and those might be good turnkey rental opportunities as well.   Speaker Weinhold** ((00:48:17)) - - You know, that makes a lot of sense. And how your platform can help people not just find properties, but maybe network and find some like minded people that have tread where you're trying to go. Well, Darren, is there any last thing that you would like to tell us along with your online platform? Is there also perhaps an auction mobile app?   Speaker Wheelwright** ((00:48:37)) - - Absolutely. We have an auction. Com app, and that's a great way to just either on on the website or on the app. You can go on and start searching. There's no subscription fee or anything like that to start looking and seeing where the opportunities are in the markets that you're interested in. You go to auction.com/in the news.   Speaker Wheelwright** ((00:48:57)) - - I actually end up talking to quite a few buyers of our buyers, and we've done some videos where we've gone and visited some of these buyers on location to see what they're doing, how they are operating on a human level. It's very interesting because these buyers are actually doing a lot of good in their communities. Many times by willing to take these down and out properties and down and out neighborhoods and renovate them, but also just on the level of understanding how this all works. That's a great resource. So that's auction.com/in the news and look for those videos featuring some of our buyers. I think that would be a great resource.   Speaker Weinhold** ((00:49:33)) - - Well this has been great information to get an update on what's happening in the foreclosure market and where some of the local areas of opportunity might be as well, especially compared to pre-pandemic conditions. It's been valuable and it's been a pleasure having you here on the show. Thank you so much, Keith. Yeah. Good knowledge for foreclosure expert Darren Bloomquist today. It's when borrowers miss three months of mortgage payments.   Speaker Weinhold** ((00:50:05)) - - That's that mark, where banks often begin foreclosure proceedings. Another thing that you learn is compared to pre-pandemic levels, national foreclosure levels are 10 to 20% lower today than they were then. And see with those that have a late mortgage payment or two, oftentimes that's not going all the way to foreclosure. They're getting caught up on their payments before it goes to foreclosure. And what's really going on here with that dynamic is that, see, today's homeowners, they are more motivated to stay caught up on their payments if they fall behind. And that's because they usually have a substantial positive equity position to protect. And the other factor is that if you lose your home today and you're locked in at a low pre 2022 mortgage rate, it's often going to cost you more per month to go out and rent somewhere else. So it's cheaper on a monthly basis to live in the home that you own. One piece that you might have learned is that high foreclosure activity in a state or city that is not necessarily indicative of that area's economic fortunes.   Speaker Weinhold** ((00:51:10)) - - Instead, it might be tied to its judicial foreclosure process. Nationally, buyers are paying about 60% of after repair value for a foreclosure property. I just talked to Darren some more outside of today's interview, he discussed that foreclosure properties are often in opportunity zones, and if you don't know what they are, are designated distressed areas. That's where there are benefits given to you. If you invest specifically in that zone, you might remember that Opportunity Zones were part of Trump's 2017 Tax Cuts and Jobs Act. They have those zones in all 50 states. And Darren said that overall Opportunity zones are working next week here on the show. Properties are vanishing. Yeah, it is a real tweak to your investor mindset. Disappearing properties. Tune in next week as I cover. Properties are vanishing here on the show. If you haven't yet on your favorite pod catching app, be sure to subscribe or follow the show on your favorite app. Until next week, I'm your host, Keith Windle. Don't quit your daydream.   Speaker Blomquist** ((00:52:23)) - - Nothing on this show should be considered specific, personal or professional advice.   Speaker Voice** ((00:52:27)) - - Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of yet Rich education LLC exclusively.   Speaker Weinhold** ((00:52:51)) - - The preceding program was brought to you by your home for wealth building. Get rich education.com.

We’re joined by President Ronald Reagan’s Budget Director, David Stockman. He tells us what real estate investors and everyday people need to know. Stockman served as Reagan’s Director of Office, Management and Budget from 1981 to 1985. He tells us to expect higher inflation and interest rates for longer, maybe even the rest of the decade. Don’t expect rate cuts for a long time. The US is moving toward an unsustainable debt situation, with $100T in public debt expected within twenty-five years. We have embedded deficits. Learn why the recession has been postponed. David also reveals what will inevitably pull the trigger to potentially start the recession. Hint: Household budgets. Pandemic stimulus programs gave citizens $3T. Half of it has now been spent. He was also one of the founding partners of Blackstone. David Stockman tells a story about President Reagan’s personal touch with him. You can subscribe to David Stockman’s Contra Corner for free here. Resources mentioned: David Stockman’s Contra Corner For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to our Ivory Coast, Keith Whitehill. There are some dire warning signs for the future of our economy. We're joined by none other than the father of Reaganomics. To break it down with us. Today is late. President Ronald Reagan's budget director joins us. When is this perpetually postponed recession coming? Why? Inflation and high interest rates could carry on for the rest of the decade. And what it all means to your finances and real estate today on get Rich education.   Robert Syslo (00:00:34) - Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from past real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Wine, who writes for both Forbes and Rich Dad Advisors and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener.   Robert Syslo (00:01:08) - Phone apps build wealth on the go with the get Rich education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates (00:01:19) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:35) - We're going to drive from Glen Burnie, Maryland, to Glen County, California and across 188 nations worldwide. I'm Keith Reinhold, and you're listening to get Rich education. We're going bigger picture this week before we talk to President Reagan's money guy in the white House. Understand that today's guest was also one of the founding partners of Blackstone, and they are in the real estate business. You're going to get a lot of deep, uniquely qualified insights today. And I'll tell you what's going on around here. Lately, things have been feeling awfully presidential between last week's program and now this week's program. Hey. Stars and stripes forever. Semper fi. Rah! Now, as the greatest detonation in the history of the world, how in the heck are we, as the United States, going to keep financing our debt now, you can think of a treasury, also known as a bond, as an IOU, as we take on debt to fund our government spending programs.   Keith Weinhold (00:02:42) - Really, what we do is issue then these IOUs to the rest of the world and then down the road. We need to pay back these IOU holders, treasuries, holders, whatever we've borrowed with interest on top of that. That's a really simple way to describe how it works. Think of a Treasury as an IOU. Well, we have $9 trillion in treasuries that need to be rolled over at higher interest rates just this year alone. Okay. Well, how does the market look for that sort of thing? Well, a lot like before you decide to sell a piece of real estate, you would want to know how that buyer's market looks. How is the buyer's market for us selling more treasuries, which is basically us issuing more IOUs? How is that world interest level in our treasuries? Well, this is a time when the world is selling treasuries. We're trying to get rid of them. Well, why would they buy more when we keep printing like crazy, debasing the dollars that they will eventually get their treasuries repaid in down the road? Case in point, China is down to just over 700 billion of treasuries that they're holding.   Keith Weinhold (00:04:01) - Well, they were 3 trillion not too long ago, more than four times that Russia and Iran sold all of their treasuries. Other countries are shedding them too, like Japan. It gets even worse than that because the number one holder of our own debt is our own fed. And then it gets even worse than that. Yet, because even our own fed is rolling treasuries off of their balance sheet. So who is going to finance this often irresponsible US spending the 10 trillion or $11 trillion every single year for the next ten years that we have obligations toward already, and it looks like all those are going to be at higher interest rates, too. Now, I am not telling you how to think about us as the United States, for example, sending foreign aid to multiple nations. That's up to you to decide whether it's Ukraine or the Middle East or Taiwan that gets political. And that is beyond the scope of GR. We are an investing show. What I'm saying is that backdrop that I just gave you, that's something that you need to take into consideration, is you weigh those foreign aid decision types.   Keith Weinhold (00:05:20) - Speaking of getting worse, do we at least have competent decision makers today? Now, as we'll talk to the father of Reaganomics here shortly, someone that served in an earlier era. Here's a clip from this era that really went viral lately, but it's apropos to play it here. This is Jared Bernstein today. He chairs President Joe Biden's Council of Economic Advisers. How much confidence does this instill? And remember, this guy chairs the economic advisers to today's president.   Jared Bernstein (00:05:56) - The US government can't go bankrupt because we can print our own money.   Voice (00:06:00) - Like you said, they print the dollar. So why? Why does the government even borrow?   Jared Bernstein (00:06:04) - Well, the, so the I mean, again, some of this stuff gets some of the language that the, some of the language and concepts are just confusing. I mean, the government definitely prints money and it definitely lends that money, which is why the government definitely prints money. And then it lends that money by, by selling bonds. Is that what they do? They they, the.   Jared Bernstein (00:06:34) - Yeah. They, they they sell bonds. Yeah. They sell bonds. Right. Because they sell bonds and people buy the bonds and lend them the money. Yeah. So a lot of times, a lot of times at least to my year with MMT, the, the language and the concepts can be kind of unnecessarily confusing. But there is no question that the government prints money and then it uses that money to so, yeah, I guess I'm just I don't, I can't really, I don't, I don't get it. I don't know what they're talking about.   Keith Weinhold (00:07:08) - Well geez. How's that for clarity and confidence from today's major decision makers on our economy? Gosh. Now, in my opinion, back in 2020, our government, they set up the wrong incentive structure to deal with the pandemic. Remember things like the PGP, the Paycheck Protection Program, remember mortgage loan forbearance and the eviction moratorium. See when that type of aid is given, well, then the result is that citizens don't learn that they need to keep some cash handy, and then that behavior that gets rewarded gets repeated in that behavior is handouts.   Keith Weinhold (00:07:53) - And then the expectation for more handouts. 56% of Americans don't even have $1,000 for an emergency expense. Well, see, they're not really incentivized to in the future. If in a crisis, everyone just gets another taxpayer funded handout, but then see those same people that got that handout get hurt in the long run. Anyway, with the longer run inflation that the handout created, don't let there be one day of austerity for the least prepared American, I guess. Instead, bail them out and add on to everyone's debt load, which you know that right there. That seems to be the playbook. Like that is the protocol of the day that is not responsible, in my view. Now, the minutes of the latest fed meeting, they said that some fed officials would be open to raising interest rates if inflation doesn't let up. I mean, that news alone that sent stocks plunging like they were riding the Tower of Terror, giving the Dow its worst day in a while. I'll discuss that more with the father of Reaganomics, David Stockman, today.   Keith Weinhold (00:09:01) - It's the kind of episode that can stretch your thinking here. Now, what is Reaganomics? Well, one thing that you should know is that it's committed to the doctrine of supply side economics. You probably heard that term before. And really what that's all about is lowering taxes, decreasing regulation, and allowing free trade and what was called the Reagan budget. That's something that his budget director Stockman expected would help curtail the welfare state. And he gained a reputation as a tough negotiator for that. He lives on the Upper East Side of Manhattan today, and it's kind of funny with macroeconomic discussions. You'll notice something here, the word million, that doesn't even come up that much anymore. It's simply a number that is too small. It is more like billion and trillion. And hey, let's see if the term three orders of magnitude above trillion comes up today. Quadrillion, or even the one after that quintillion. Is that where we're going next? We'll see. before we meet David Simon, I've gotten more questions about something, because the national average bank account pays less than 1% on your savings.   Keith Weinhold (00:10:18) - And where do you really get a decent yield on your savings, even beyond the 5% in an online only savings account or a CD, which that does not outpace true inflation? For years now, I've reliably been getting 8%. What I do is keep my dollars in a private liquidity fund. You can do this to your cash generates up to an 8% return. The minimum investment amount is just 25 K, and you keep getting paid until you decide that you want your money back. And the private liquidity fund has a decade plus track record, and they've always paid their investors 100% in full and on time. And I would know this because I am an investor with them myself. So see what it feels like to earn 8%. A lot of other great listeners are any investing involves risk, even dollars at a brick and mortar bank. So to learn more, just text the word family to 66866. Learn more about the liquidity fund. Get 8% interest. Just do it right now while you're thinking about it.   Keith Weinhold (00:11:23) - Text family to 66866. Let's meet David Stockman. A Wall Street and Washington insider and Harvard grad. Today's guest is a former two time congressman from Michigan, a prolific author, and he is none other than the man known as the father of Reaganomics. He was indeed President Ronald Reagan's budget advisor. Welcome to the show, David Stockman.   David Stockman (00:11:54) - Great to be with you. And, that was a while back. But I think there's some lessons from that time that we would be well advised to try to apply today, that's for sure.   Keith Weinhold (00:12:05) - Well, it's an illustrious title that you'll never shake. It's a pleasure to have you here. And David is a real estate investing show. At times we need to step back and look at the bigger picture. And now on the economy, one seems to get a different answer depending on who they speak with. You have a highly qualified opinion. What do both investors and citizens need to know today about the condition of the American economy?   David Stockman (00:12:29) - I don't think the outlook is very promising, but I think it's important to understand what that means for real estate investors, because the fact is, if you're in real estate and I know many of your listeners or viewers are very knowledgeable and sophisticated, there's really two ways to look at real estate.   David Stockman (00:12:49) - One is as a property that generates a flow of cash or income that is highly reliable, and that you can count on and produces a rate of return on the invested capital that's attractive. That's one way. The second way is that if you invest at the right time, when perhaps interest rates are falling and therefore multiples or cap rates are becoming more attractive and property values are rising rapidly, mainly because of easy money and lower interest rates, then there's a huge opportunity for capital gains. As another way of generating return on capital. But those are two obviously very different tracks. The capital gains route by old invest, improve flip flop the gain and move on or the, you know, income based rent and earnings based, approach to property. Now, I think the reason I went through this is pretty elementary, of course, is that the macro environment is very different between the first strategy and the second strategy. And therefore, the important thing to understand about the macro environment is which environment are you in and is it conducive to strategy a the income strategy or b the capital gains strategy? I would say right now we're totally in an incomes strategy environment, the first route.   David Stockman (00:14:34) - And that's because as we've gone through several decades of easy money, of rapidly rising asset values, of ultra low interest rates, very high multiples, in terms of property values to income that has generated trillions and trillions of capital gains for smart real estate investors. But I think we're out of that environment, and we're in an environment now where we're stuck with massive public debt and deficits. We're stuck with a, central bank that is, basically painted itself into a corner, created so much fiat credit, generated so much liquidity into the economy that now it will be struggling with inflation for years to come. Which means, notwithstanding Wall Street's constant belief that rate cuts are coming tomorrow, there won't be rate cuts for a long time to come. And what we're facing, therefore, there is likely higher rates for longer. A environment in which property values are flat if not declining, and therefore the capital gains route is not going to work very well. But if you have good properties with good tenants and good cash flows and, rental flows, real estate mine works out pretty well.   David Stockman (00:16:05) - But you have to understand the macro environment. And that's one of the things that I work on daily when I, publish my daily newsletter, which is called, David Stockman's Contra Corner.   Keith Weinhold (00:16:19) - You can learn more about Contra Corner, David's blog, before we're done today. David, you have a lot of interesting things to say. There we are in this environment where rates have been higher, longer. It sounds like you believe that is going to continue to be the. Case is rate cuts will be postponed is a little more difficult question. It's some crystal ball stuff. But can you tell us more about that? What can we expect for inflation in interest rates for the rest of this 2020s decade, which has about six years to go?   David Stockman (00:16:48) - There's going to be high rates for most of this decade because we have so much inflation and excess demand built into the economy. We really went overboard, especially after 2020 with the pandemic lockdowns and then these massive stimulus program, something like $6 trillion of added stimulus, was injected into the economy in less than 12 months.   David Stockman (00:17:16) - That created a undertow of inflation that is still with us. And despite all the hopeful commentary that comes from Wall Street, if you look at it year to date, I don't look at just the CPI because the headline number is somewhat volatile and can be pushed and pulled a lot from a month to month based on nonrecurring conditions. But if you look at something called the 16% trimmed mean CPI, it's just the same CPI, but it takes out the lowest 8%, the highest 8% of price observations each month out of the thousands in the market basket. What it does is basically takes the extreme volatility out of the top and the bottom, and gives you a trend that is more reliable if you're looking like on a quarter by quarter or year by year or even multi year basis, well, I mentioned this is important because the trim means CPI is still running at about 4.3% during the first four months of this year to date. That's not a victory over inflation. That's double what the fed says his target is. And frankly, the Fed's target is a little bit phony.   David Stockman (00:18:35) - I mean, what's so great about 2% inflation if you're a saver and your savings are, you know, shrinking by 30% over the course of a decade, so they're going to have a tremendous wrestling match with inflation, not just for a few more months, but I think for several more years in this decade, I don't see the federal funds rate, which is kind of the benchmark rate for overnight money coming down below 5% very soon, or if at all. And that's because with inflation running at 4% or better, if you have a 5% money market rate, you're barely getting a return on capital, especially if you factor in taxes. You know, it's like it's a rounding error and that doesn't work over time. I mean, you're not going to get long term savings. You're not going to get long term capital investment. If the return is after inflation and taxes are either non-existent or negative, as they've been for quite a while. So even though everybody would like to hope we're going back to the good old days of 0% over 90 money or 1% money, which they got so used to over the last couple of decades.   David Stockman (00:19:55) - It was bad policy. It wasn't sustainable. It caused a huge amount of bubbles and distortions in our economy. But once we finally got to the end of that in March 2022, when the fed had to finally pivot and say, yeah, inflation isn't transitory, it's, embedded, we got to do something about it. People think we're going right back to where we were, and that's the key thing to understand. We are not going right back to where we were, in part because of all this inflation business I've talked about, but also in part because they got so used to borrowing money on Capitol Hill and practically zero interest rates that they are now, you know, they have built in deficits of 2 trillion or more a year. And, we are going to be pushing into the bond pits, massive amounts of new government debt. There's no consensus to do anything about it. You know, if the Republicans talk about reforming the entitlements, the Democrats say you're throwing grandma out the snow. If the Democrats talk about raising revenue, the Republicans talked about, you're going to get slaughtered with higher taxes.   David Stockman (00:21:12) - And then everybody's for more wars and more defense and the bigger and bigger national security budget. And that's all she wrote. If you don't do with revenue, you don't do it national defense and entitlements. The rest of it is rounding errors. And so we're stuck with these massive additions to the debt. Now, everybody knows the public debt. Is 34 trillion. Ready? Yeah. What I'd say they don't understand is that by the end of this decade, you ask about the decade, right? Will we close to 60 trillion of debt. And, if you look at the last CBO, projection they do every year at long term projection, and CBO actually is more optimistic than it is warranted in any way. In other words, their long term assumptions I call rosy scenario. There's no more recessions for the next couple of decades. Inflation is well-behaved, interest rates stay low. Full employment lasts indefinitely and forever. Well, this doesn't happen. Look at the real world. Over the last 20 or 30 years, we've been all over the lot.   David Stockman (00:22:18) - So if you look at the CBO forecast, which is I'm just saying here is exceedingly optimistic. They never are the less are projecting that the public debt and they don't even write this number down in their report because it's too scary, will be $100 trillion before the middle of this century.   Keith Weinhold (00:22:41) - That's a.   David Stockman (00:22:42) - Trillion. Yeah. Now, if you ask people today who are market savvy, I like a lot of your viewers. Where are the Treasury bills, notes and bonds today? Well, if you average it all out, it's about 5%. I don't think it's going to come down much. It'll vary a little bit up and down over time, but let's just say it stays at 5%. That means the carry cost of the public debt of a couple decades will be 5 trillion a year. The interest okay. It's staggering. That's almost as much as the whole federal budget is spending this today at, you know, about 6.6 6.7 trillion. So that's where we're heading, a massive debt crisis because they built in a structural deficit that the politicians and I call it the unite party.   David Stockman (00:23:33) - They fight about silly things, but they agree on the big things which are leading to this outcome. The unit party has no ability to do anything about this structural deficit or the march from the 34 trillion that we're at today to 60 trillion by the end of the decade, and 100 trillion of public debt by mid-century. Now, for a real estate investor, that's probably the most important number you're going to hear. You know, at least this week or maybe this month or even this year, because what it means is that the amount of new government debt flowing into the bond pits, that'll have to be financed and that can't be monetized by the fed anymore because there's too much inflation, is going to put constant, enormous pressure upward on interest rates. And of course, higher interest rates mean lower property values. That's just basic real estate math. That's the environment we're heading into, which means good properties with good income and good rental flows are really the only way to go.   Keith Weinhold (00:24:55) - Yeah, well, there's an awful lot there.   Keith Weinhold (00:24:57) - And with this persistent higher inflation that you expect, the way I think about it is the higher the rate of inflation, the more that moves a person's dollars out of a savings account and instead out onto the risk curve. Well, David alluded to a problematic economy. We're going to come back and talk about more of those warning signs and what you can do about it. You're listening to Get Resuscitation, the father of Reaganomics and Ronald Reagan's budget director, David Stockman, I'm your host, Keith Reinhold. Role under this specific expert with income property, you need Ridge Lending Group and MLS for 256 injury history from beginners to veterans. They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge. Personally, they'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com.   Speaker 7 (00:26:06) - This is author Jim Rickards. Listen to get Rich education with Keith Reinhold and don't quit your day dream.   Keith Weinhold (00:26:23) - Welcome back to Get Ready. So we're talking with the father of Reaganomics. His name is David Stockman, President Reagan's budget advisor. David, you've been talking about a problematic economy and places we can look and the outcomes that that can create. Why don't we talk about some more of those where we're here in a period where we feel like it's an official recession postponed, for example, are there other places that we should be looking? Is it the sustained inverted yield curve that we had for almost two years, the longest one ever, and a Great Recession predictor? Or is it that we're on the precipice of implosion from a debt to GDP ratio that's at 122%. It actually spiked to 133% when Covid first hit. Or for example, is it something and you've already touched on it a bit, is it more of that federal spending on our debts, interest payments alone each year, which had almost $900 billion for that interest line item that now even exceeds the massive $800 billion that we spend each year on national defense, or should we be looking at somewhere else? So what's out there that's really problematic and what's overblown?   David Stockman (00:27:28) - Okay.   David Stockman (00:27:29) - That's great. And all of those things you mentioned you should be looking at, it depends on your time frame. But I think on the initial question, where is this postponed recession? Why hasn't that happened? The place to look is somewhere that I think most Wall Street analysts aren't focused on, but they should be. And that's a series published by the Federal Reserve that tracks household balance sheets, in other words, liabilities and assets. But there's a particular series that I think is critically important to look at, and it's basically bank deposits, checking account savings accounts plus money market funds. This is all the liquid cash accounts of the household sector, not long term investments in real estate or stocks or bonds, but the short term money. It's the spendable money that households have now, what happened during the pandemic and lockdowns. And then the 6 trillion Is stems that were injected into the economy, like some kind of fiscal madness was going on in Washington, created a total aberration in the amount of cash in the economy, in the household sector, in these accounts that I just mentioned, normally right before the lockdown started and the stimulus was injected, you know, the level of cash accounts was about 12 trillion.   David Stockman (00:29:00) - Within two years it was up to 18 trillion. And normally that cash balance grows about the same rate as the economy. In other words, as incomes go up, people save a small share of their income that goes into various bank accounts. There tends to be a lock step relationship. But what happened during that two year period was there was so much extra cash sent out to the households with the $2,000 checks in the $600 a week extra stimulus money, and then the, trillions that went, you know, for things like the Small Business Administration loan program, which was all forgivable, was about almost upwards of $1 trillion. You know, we could itemize all the others. But this enormous government, unusual cash flow into the economy added to these bank accounts enormously. And then something else happened. The geniuses in Washington, led by Doctor Fauci, decided to shut down half of the service sector, the economy. I'm talking with restaurants and bars and gyms, malls and movies and and all the rest of it.   David Stockman (00:30:09) - So all of a sudden, the normal money that people would have been spending on the service venues, which is a big part of total spending, was stopped. It was kind of forced into artificial savings, sort of government mandated savings. Now, if you put the two together, there was about 2 trillion, extra transfer payments sent out to the public during that two year period. And there was a little over a trillion of normal service spending, restaurants in, etc. that didn't happen because there was a closed sign on the door, compliments of Doctor Fauci, or people were scared to death to go out because, you know, they created all this fear that Covid was some form of black death, which it really wasn't for 95% of the population. In any event, if you put the extra free stuff from the government, 2 trillion and the for savings because of these lockdowns, trillion, you have 3 trillion of unusual cash that flowed into the economy on top of the normal production. Income and profits and spending that would have otherwise gone on.   David Stockman (00:31:26) - Now that 3 trillion temporarily ended up in this account, that I'm just talking about the cash balances of the household sector and its peak, there was about 2.8 trillion extra compared to what would been be the normal case in a regular economy. In a normal economy, that money has been slowly spent down by the household sector, even as the fed has tried to put the screws to the economy. In other words, there was so much extra cash in the system that even as the fed raised interest rates from 0 to 5% and did their darndest to slow things down, all of that excess that was built up during the pandemic period was available to spend. It was spent. And here's the key point. About half of it is now been spent. In other words, there's only about a trillion and a half of the nearest 3 trillion left. Now that is what's delayed the recession. If that big, massive 3 trillion nest egg had been there and the fed began to push rates up as it normally did in a normal cycle, we would have been in recession months ago.   David Stockman (00:32:41) - But what has delayed or deferred the recession is this, cushion, this huge macro piggybank of cash that the government inadvertently or adversely is the case may be generated, during the pandemic period. So that's new. See that? Nobody looks at that because normally it's not a factor. You know, the cash balances are a pretty, prosaic, neutral part of the economy. They're not where you look for the leading edge of where the cycle was going or where new developments may turn up tomorrow. But this time, because of this total aberration of what happened to government transfer payments plus the lockdowns, we have a, X factor, let's call it in the macro picture that is confusing people. It's leading a lot of people to abdicate this no landing scenario. In other words, you know, there's not going to be a recession. We're just going to go on to bigger and better things. And, the fed will get inflation under control and then we can be back to happy times again. No, they're missing.   David Stockman (00:33:56) - The elephant in the room is this massive aberrational unusual one time cash balance that was, generated by these policies. And that still has a little ways to go now. I think at the rate it's being run down, you can almost calculate it a couple hundred billion dollars, a quarter sometime next year, all of that extra cash will be out of the system. And then people will be back to spending only what they're earning. And frankly, earnings they're not. I'm talking about wage and salary earnings, are advancing barely at the inflation rate at the present time. So when we get back to about zero real growth in earnings, we're going to finally see the recession.   Keith Weinhold (00:34:45) - I think one of the big takeaways here is that all these artificial economic injections really take time to unwind.   David Stockman (00:34:56) - Exactly. You have to look at, you know, they always say, well, when the government changes policy, fiscal policy, you tighten or you loosen or monetary policy they raise or lower interest rates. They got QE or they got cute putting money in or taking money out that there's lag and lead times in all of this.   David Stockman (00:35:18) - The problem is, none of the great economic gurus who talk about this really know whether the lag time is 12 months, 25 months, 50 or 5, and it varies. I mean, the circumstance has changed so much in a world GDP of 104 trillion, a domestic economy with 28 trillion of GDP, and all the complex factors that are moving back and forth in today's world, especially as it's enabled by technology and global trade and the internet and all the rest of it, nobody knows the lag times. And as a result, it's very hard to predict when the, brown stuff is going to hit the fan, so to speak. On the other hand, you don't have to know the exact date. You really need to understand the direction, the flow of things. And if you're in an environment that isn't sustainable because you're borrowing like crazy or interest rates or artificially. Low or stock price multiples are way the L2 ie or cap rates on real estate or you know, abnormally low. Then what you have to say is we're going to a different state.   David Stockman (00:36:35) - It's not going to be as conducive as the current state, and we have to be prepared for it, even if we are not sure whether that's 12 months from now or 24 months. But it's going to change. So one thing you can be sure of, there is a famous economist back in my day when I worked on Capitol Hill earlier on, he was Nixon's chief economic adviser in the early 70s. And he famously formulated an aphorism, I guess, which said anything that is unsustainable tends to stop. Okay, that's what I know about the lag times. We're in unsustainable financial, fiscal and monetary environment. And the trends that it has given rise to are going to stop and and not in a good way.   Keith Weinhold (00:37:24) - He even fed Chair Jerome Powell has confessed as much as that. This situation is indeed unsustainable, the exact word that he used. Well, David, this has been great in winding down as Ronald Reagan's budget director. Can you share any anecdote, story or quote from you spending time personally with Ronald Reagan? And the reason I ask is because he is perhaps the most revered president of the past few generations.   Keith Weinhold (00:37:52) - That might mean a lot to our listeners here.   David Stockman (00:37:54) - He should be revered, and not only because he was a great president and a great communicator, and did a lot of important things in policy. Some of them got implemented, and a lot of them were frustrated by Washington and the politicians and the Democrats and everybody else. But also, he was a great human being. And my story about that was when I was budget director, in the fifth year of the Reagan administration, we had our first child, and my wife was in the hospital. At that point in time, President Reagan was in Europe on a very important big international, series of meetings. But, somebody in the white House told him that our daughter had been born. And so he took the time out of his schedule for a call from Germany, the hospital where my wife was, and said he would like to talk to her and, congratulate us on our new arrival. But my wife was in a room with another, a new mother.   David Stockman (00:38:53) - She the other person answered the phone and she said to my wife, there's some joker on the phone with President Reagan. And sure enough, he was there. and he took the time to congratulate my wife. And, so that's the kind of, person he was. He really was a great human being.   Keith Weinhold (00:39:13) - Wow. Yeah. That really shows that he can still be warm and heartfelt, even while doing some key international negotiations there. Potentially. Well, we mentioned it earlier. I can tell you, the audience, that David is a regular author and contributor to his Contra Corner blog and letter, and you can get access to that for free. This is information coming from the father of Reaganomics to you. If you think you would find it a value. David, tell us how our audience can connect with you there.   David Stockman (00:39:44) - Just Google David Stockman Contra corner I publish, I have a website, issues a newsletter every day. It comes automatically in the email. I also have a Substack version. You can sign up for either one, the email from my site or from Substack.   David Stockman (00:40:02) - And every day we try to publish something on these issues that we've been talking about. One day it might be Wall Street, another day it might be Capitol Hill, another day it might be, you know, the war in Ukraine. All of these things matter. All of these things influence the environment that investors have to function in. So we try to comment on a variety of those issues based on, you know, the long experience that I've had, both not only in Washington, but also I was on Wall Street, for about 20 years. I was one of the founding partners of Blackstone, for instance. And we were in the real estate business in a major way, even then.   Keith Weinhold (00:40:44) - Well, we absolutely love that. And I sure am appreciative of your time. It was great connecting with you. And thanks for being on the program today, David.   David Stockman (00:40:53) - Very good. Enjoyed it.   Keith Weinhold (00:41:01) - Yeah. Deep insights from the father of Reaganomics. Stockman thinks we'll be struggling with inflation for years to come.   Keith Weinhold (00:41:08) - There won't be rate cuts for a long time. He sees real estate values as flat or declining, so have good tenants with steady income streams. Of course, in our favoured real estate segment here, residential 1 to 4 units where you can get 30 year fixed rate debt. Higher mortgage rates tend to correlate with higher prices, just like it has for the last three years and almost every period before that too. But there could be more pain for the commercial sector then, and assets that are tied to floating rate debt. And if you're aligned with David Stockman on that, you might want to look at your helocs, because after a fixed rate period, their rates tend to float along with the fed funds rate. So be cautious with Helocs and ask David for specifics. He doesn't see the federal funds rate coming down below 5% anytime soon, and you probably know that is the interest rate that a whole bunch of other interest rates are based off of. And that rate is currently at about 5.3%. By the way, there is projected to be more than 100 t more than $100 trillion of public debt before the middle of this century.   Keith Weinhold (00:42:22) - That's less than 25 years away. I mean, these figures just become unfathomable sometimes. Pandemic wrought inflation that really occurred due to this greater supply of dollars that was introduced chasing a reduced supply of goods. And there were fewer goods because people got paid to stay at home not producing anything. Plus, what had been produced often could not be shipped either. David discussed the 16% trimmed mean CPI, and I've got to say, as much as I am a student devotee in studying inflation, I had never heard of that from his vantage point to find recession signs, look at household balance sheets and what's delayed the recession is that those pandemic measures put an extra 3 trillion bucks into households, and households still have about 1.5 trillion left to spend, which could further delay a recession. He projects that it's sometime next year that all of that extra cash will be out of the system. When you talk to how many people got this recession predictions so horribly wrong? Back in October 2022, Bloomberg Economics forecast a 100% chance of a recession by the following fall, which is almost a year ago now.   Keith Weinhold (00:43:48) - Well, a 100% chance that left no room for anything else to happen. And they really whiffed on that one. Now, you know, I've got to add something here. A personal note if I can, but I'll give you a lesson along with it. And that is that at times like today, where I found myself one degree of separation from one of the most revered presidents in all of American history, I sometimes have some difficulty understanding how I keep having the opportunity to share time with people like today's guest. Now, I'm certainly not a PhD economist. And in fact, on the flip side, I've also never been a person that's been so poor and destitute that I was dying of hunger. But I do come from a modest place. When I flew the coop and left my parents home, I rented my first pathetic place to live a $325 a month pool house in the back of my landlord's property at 852 Spruce Avenue in Westchester, Pennsylvania. Yeah, a pathetic little pool house right next to the landlord's swimming pool.   Keith Weinhold (00:45:04) - I mean, I was living really pathetically there for a while as I was struggling just to do things like find gainful employment and figure out the world and find a steady income. Yeah, it was 325 a month plus electric and the one small heater that was there, it was electric and it was really expensive to run. And on the coldest days, it wouldn't even adequately heat my pathetic little pool house that I ended up living in for 18 months. And just because I couldn't figure a way out of that situation for a while, I mean, I was too ashamed to ever bring a girl back there to that sad pool house. It was just one sink for the whole place. Combined kitchen and bathroom sink in the bathroom. I mean, most of my friends, they got their driver's license at age 16 and they soon had their own car. I didn't own a car until I was aged 22 or 23, and it's not because I lived in an urban area and walked. Everywhere use public transit there in Pennsylvania.   Keith Weinhold (00:46:02) - It just took me a long time to afford a beater car and pay for insurance. I really needed a car and couldn't afford one. So really my point here is that sometimes I have to wonder how I got here from there. And I think what it is is taking an interest in real estate and investing. And despite just having a humble bachelor's degree in geography, it's really about becoming an autodidact, meaning self-taught. And it's easy to teach yourself when you find what interests you. And let me point to two other things besides adopting an auto didactic ethic to help me turn the corner into being in a place where I can have conversations like the one that I've had today. It was getting around aspirational friends. Like I've mentioned before, that showed me how I can start with a bang buy with little money. On my first home, I could put a 3.5% down payment on a fourplex, live in one unit and rent out the other three. And I will give myself some credit for doing those things. And then really, the third thing is that stroke of luck element, like just 4% of world inhabitants have been.   Keith Weinhold (00:47:15) - I was one of that 4% that was born in the United States. And then I had two great, married, stable, supportive parents to cultivate the right environment for me. And well, today was just one of those days where I sort of nudged myself and I'm glad that it happened. Most importantly, I trust that you got value from today's show and that you do every single week here. Check out David Stockman's Contra Corner. Next week, we'll look for signs of distress in real estate as we delve inside the foreclosure market and how you can find discounted deals there. Until then, Idaho's Keith Wayne hold don't quit your day trip.   Speaker 8 (00:48:02) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively. The.   Keith Weinhold (00:48:30) - The preceding program was brought to you by your home for wealth building.   Keith Weinhold (00:48:34) - Get rich education.com.

We’ve already had more inflation in this young 2020s decade than the entire 2010s. If the next forty years have as much inflation as the last forty, gas will cost $13.38 per gallon, the average home $1.88 million, and the average rent $59,000 annually.  Inflation impoverishes most people. You can profit from it 3 ways at the same time. Watch the free 3-part video series: GetRichEducation.com/TripleCrown.  The 30-year fixed rate mortgage is a uniquely American construct. It virtually exists nowhere else in the world. I compare this to mortgage terms in Europe, Canada and Australia.  In much of the world, homeowners have had their mortgage payments double overnight! Trends that won’t soon be disrupted: more inflation, people need to live somewhere, there aren’t enough places to live. That’s so simple! Invest in it. Rents are increasing the most where little new supply has been added. There’s a myth that gigantic institutional investors are gobbling up all the single-family rental homes. But they only own 3% of the market. Mom & pops own 80%. Single-family rents are up 3.4% per CoreLogic. Detached SFHs are up more than attached types. Property prices and rents are positively correlated. Some people falsely think that they move inversely. Resources mentioned: Profit from inflation 3 ways: GetRichEducation.com/TripleCrown For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Welcome to GRE! I’m your host, Keith Weinhold. Learn how the misery of INFLATION is altering BOTH your quality of life and the return on ALL of your investments… … also, many people are now having their mortgage payments DOUBLE overnight and IT’S creating pain, then, what are the factors affecting the future direction of RENTS - all that, and more, today on Get Rich Education!  ______________   Welcome to GRE! You’re listening to one of the longest-running and most listened-to shows on real estate investing. This is Get Rich Education. I’m your host, Keith Weinhold - the voice of RE since 2014.   I don’t know if you fully realize how much inflation is steering all of your investments - and it’s emphatic at a time like this when the dollar is down 25% cumulatively just in the last four years. Gosh!   And I’ve got some jaw-dropping inflation fact to share with you soon.    We’ll get to inflation’s RE affects shortly. But here’s what I mean.    In stocks, they keep riding up on a wave of optimism, anticipating a Fed interest rate cut - largely due to future INFLATION expectations. Yes, there’s jobs & GDP and some other factors.   But the stock market - which is a FORWARD-looking market - it moves based on what’s expected to happen 6 to 12 months from now.    STOCK investors know that rate cuts open the floodgates to get us closer to the “easy money” days again.    That’s why - as backwards as it is, the worse the economy looks, the lower that inflation tends to be, and then, in turn, the lower that interest rates can go, which the stock market likes.   So a worsening economy often pumps up the stock market. Soooo backwards.    Just look at what happens historically. Recessions sound bad. Yet what happens is that rates get cut in a recession - because the economy needs the help.    But nearer-term, it’s this ongoing expectation of the rate cut - that’s been looming out there for months but hasn’t happened - which CAN keep propelling the stock market to higher highs. It’s already hit all-time highs here recently. You can make the CASE that stocks should keep floating higher from here… based on that premise.   Before we look at real estate & inflation. Understand this.    Inflation has already widened the divide between the affluent and the deprived. That divide has gone from a gully to a canyon.   But... my gosh! Here’s the stat that I want to share with you. And you’re really going to get a sense for the gravity of what you’re living through this decade.   We've already seen more inflation in the first 51 months of the 2020s decade than in the ENTIRE decade of the 2010s. Already.   This gets really interesting. Let’s look at about the last four decades here.    Alright, in the 1990s decade, America had 34% cumulative inflation. Let’s go ahead and… we’ll associate this decade with President Bill Clinton.    We won’t tie any President to the inflation number because there are lag effects and other factors. A President really can’t take the credit or blame, in most cases. Just marking the era here.   So, 34% inflation in the 1990s.    The 2000s decade saw the GFC and… 29% inflation. Most of those were George W. Bush years.   The 2010s decade saw lower inflation → Just 19%. So that’s under 2% a year. These were mostly the Obama years here in the 2010s.    Little flex there from the former Commander in Chief.   Then the 2020s decade → have seen, like I alluded to, and under Joseph Robinette Biden, Jr. - yes, as the oldest sitting president ever, it’s easy to forget that he’s a “junior. In this young 2020s decade, we have, 21% cumulative inflation. Already.   So this figure is after just the first 51 months of this decade, if we’re counting from 2020… and this is largely due to supply shortages from the COVID pandemic.    So 21% ALREADY this decade… and just 19% ALLLL of last decade which was a full decade. That’s the impact.    That’s reflective of what you see in home prices and rent prices and utilities, transportation, labor, and almost every facet of your life.… and what you see in your weekly Costco bill and Trader Joe’s bill.    Who have we left out here? A one-term president, so far? Does somebody feel left out.    Yes, that is the actual person of one Donald John Trump.   Psssshhh!   All of those figures I cited are from the BLS, and I’ve been rounding to nearest whole percent.   But get this! Inflation over the next forty years could make the LAST 40 years seem like a picnic.    That's partly because we're $35T in debt and that figure now grows by $1T every single quarter… every 90 to 100 days. So we MUST keep dollar-printing to help pay it back.   But just, if the last forty years repeats itself, by the year 2064, which is the next forty years, we'll see these prices. Prepare for a future that looks like this: Gas at $13.38 per gallon The home price at $1.88 million Average rent at $59,000 per year And the average salary at $104,000 That is if inflation over the next 40 years, looks like that last 40 years. Also, note how salaries don't keep pace with prices. That $104K average salary in the year 2064 doesn’t sound as high-flying as those other figures.   Well, this is all really frustrating for consumers… and even debilitating to one’s standard of living. Remember, this latest wave of inflation brought us the biggest YOY increase in homelessness - based on HUD figures.   and why you need to invest in something that reliably BENEFITS from inflation and pays you an income at the same time.    Look, here’s really, the deal. Dollars are abundant. So then isn’t it a paradox that a major spike in the supply of dollars would create more homelessness?   Well, you know that dollars are there for your taking - because so many more have been brought into existence. Dollars are abundant. So as they cycle through the economy, rather than going through the consumer motions, you can build your diverter. That’s where the world of abundance exists, so get into that flow.   Ultimately, REAL capital is scarce. Your time and energy are scarce. Natural resources are scarce. Labor is scarce.   What’s frustrating is that money ought to reflect that scarcity if it is going to accurately convey the value that enables people to make capital accumulation decisions.    And alas, we’re doing our measuring in dollars and the dollar is not remotely scarce.   The middle class and poor often have wages that don't track inflation, yet they disproportionately suffer the higher consumer prices.   The investor class owns assets that float up with inflation. And GRE listeners will do even better than that.   As income property owners with mortgages, we're winning three ways at the same time with the Inflation Triple Crown. That’s your dollar diverter.   Alright, so that’s longer-term inflation. I’ve been talking in terms of decades - both the past and with an extrapolation into the future to 2064 there - and it’s really rather sobering.   Well, what's the more CURRENT inflation situation? The situationship? Ha! What’s the situationship now?   In trying to quiet it down to their 2% target, the Fed has run into so many hurdles that you'd think they were training for this summer's Olympics in Paris.   After it peaked over 9% two full years ago now, inflation’s been bouncing near 3-and-a-half-percent for a year and they just keep having trouble getting it lower than that.   Hmmm... would we say that this could turn into Jerome Powell's three-quarters life crisis? We’ll see.   Rising inflation is one of the key factors that brought down the Roman Empire. They famously experienced hyperinflation after a series of emperors lowered the silver content of their currency, called the denarius.    Today, some lament that the dollar isn't backed by gold, silver, or anything else.   But it is.   It's backed by the world's most powerful military, strongest economy, reserve currency status, international trade agreements, and you also… must pay your taxes in dollars.    Dollars are still liquid and useful… but perpetually debased, so get them and then transition out of them.    Yet, at the same time, we're also the greatest debtor nation in world history. The easiest way to pay it all back is to simply print more and inflate more.   So that’s why it's almost inevitable that dollars will keep being worth less... and BTW, the two words “worth less” sound awfully close to the word “worthless”. Ha!    That’s where we keep heading.   Until you can send a Venmo request to the Fed to compensate you for your loss in purchasing power, we need to actually do something about this.    And the dollar that you had when you started listening to me today could very well now only be worth 99 cents. Ha!   We can either have our standard of living degraded by inflation or we will decide to profit from it.   So, if you haven't yet, check out GetRichEducation.com/TripleCrown.   Rather than impoverish you, learn how you can make inflation CREATE wealth for you three ways at the same time with that free, 3-part Inflation Triple Crown video series. Good learning there.   It’s free & easy to watch, again, at GetRichEducation.com/TripleCrown   Inflation seemingly seeps into everything.   Inflation took down the commercial sector - Apt buildings & offices. Apts are down 30-40% in the last two years. It’s all because inflation made the Fed panic and jack up those rates.   If that’s not jaw-dropping enough. Office values are down 80%+ in the last two years. 80%+, 90%+ in some cases.    Of course, office RE got the double-whammy of the inflation-induced interest rate hikes AND the Work-From-Anywhere movement.   That leaves residential 1-4 unit properties in good standing - and still impacted by inflation, but LESS impacted by inflation.    Yeah, your 1-4 unit RENTS are up - and I’ll talk more about rent later in the show today.    inflation also jacked up your expenses like insurance, utilities, maintenance & repair cost and more.   But as we move away from the inflation conversation now, of course, one big reason that 1-4s have stayed resilient is the American privilege of LTFIRD - and the fact that it’s 30 years for most US properties.   In fact, in 2022, 89% of homebuyers applied for the 30-year.   I think that you’re about to get more appreciation for this… perhaps than you’ve ever had.   The 30-year FRM is a UNIQUELY American construct.    And, BTW, some people don’t seem to know what the word “unique” means. You’ve probably heard people misusing this word all the time.   Unique does not mean something that’s sort of different.    Unique means “ONE of a kind”. Unique means something that does not exist ANYWHERE else.    What do I do here on this show? Besides giving you the occasional geography lesson as a side dish to your real estate, I do this with vocabulary, grammar, and syntax as well, don’t I?    Even though my own is surely imperfect.   Anyway, the reason that the 30-year mortgage can exist is due to our deep financial markets - especially our secondary market for mortgage-backed securities, where your loan gets packaged up and purchased by a bond investor - a bit like Ridge Lending Group President Caeli Ridge & I touched on last week.   The reason that mortgage-backed securities are attractive to investors in the U.S. and across the globe is because their government sponsorship makes them safe investments over long periods of time. They also provide a fixed payout to the MBS holder.   And see, the rate on the 30-year fixed-rate mortgage tracks closely to 10-year Treasurys because “U.S. real estate is almost as good an investment as a U.S. Treasury bond.”   They’ve got Fannie & Freddie insurance.   And that entire MBS process now has more guardrails in it than we had before the Global Financial Crisis.   We’re talking about the foundation here - really - of where you get your big lumps of money from - the 30-year FRM and its uniqueness.   Compared to the world, the US has very little variable rate debt.    Less than 4% of American mortgage borrowers have debt that’s on rate terms of a year or less. Over 96% of US debt is LTFRD, defined as 10 years or more.   That is virtually unparalleled worldwide. To compare us to some other developed nations, mortgage borrowers in Germany - just 47% of them have long-term fixed debt - and none of them can get 30-year debt.   Long-term debt, again, defined as ten years or more,  Is little to ZILCH for mortgage borrowers in Canada, the UK, Ireland, Italy, Sweden, Finland, Australia, and other developed nations like them.   In Canada, the most common mortgage terms reset to the prevailing market interest rate every five years.    In Finland, their mortgages reset annually or faster. Gosh, can you imagine if your mortgage rate reset every year like it does for the Finns?   Sheesh, that's more often than some people lose the remote control or rearrange their furniture.   OK. So what's this really mean?   Ya gotta… pour one out for most mortgage borrowers in the rest of the world.   They can’t lock in their mortgage interest rate for the long-term. So with rates doubling or tripling, starting from 3 years ago, it's totally ruined a lot of foreign homeowners.   Look, what if you're middle class and your monthly mortgage payment soars from $1,893 on Tuesday up to $3,415 on Wednesday?   That's what's happening elsewhere. It can go up 50% overnight and nearly double overnight in Australia, Europe and elsewhere.   But in the mortgage-advantaged US, we're safe.   If we buy at an 8% mortgage rate on a 30-year fixed amortizing loan today—just the plain, vanilla loan: If rates rise to 10% later, you're happy to be locked-in at 8% If rates fall to 6% later, you'll refinance Note that I refrain from saying "just refinance". I don't like the word "just". You'll still need hours to provide documentation and your credit score will be checked. But it's worth it.   You won’t “just refinance”. Ha! You’ll refinance.   So think of it this way then, you can alter your deal with the bank whenever you want—and usually with no prepayment penalty. Yet the bank can't alter it on you.   What did Darth Vader say to Lando Calrissian in the “Empire Strikes Back?”. I am altering the deal, pray that I don’t alter it any further.    Ha! We better not play that clip here. I don’t know the copyright laws with LucasFilm or Disney there. Ha!   But you’re not a dark lord of the Sith for doing it… for altering the deal on the bank. You’re playing within the rules.    This is almost an unfair advantage for Americans.   The bottom line here - with this unique American advantage, is that, as rates change, you get to play both sides of the game. And that’s why we add smart properties with loans.    We turn that into wealth, with compound LEVERAGE.    Now, mere compound interest, that’s a vehicle for you to rely on more for your shorter-term funds, your cash or what you’re keeping more liquid.   Long-term wealth is build through compound LEVERAGE.   Short-term funds - that’s for compound INTEREST.   And… your bank is getting rich off of YOU. The national average bank account pays less than 1% on your savings. If your money isn’t making about 4-5% today, you’re losing your hard-earned cash to inflation.  What I do, is keep my dollars in a private LIQUIDITY FUND. You can do this too. Your cash generates up to an 8% return with—COMPOUND INTEREST—year in and year out instead of earning less than 1% sitting in your bank account - or even 4-5% elsewhere. The minimum investment is just $25K. You keep getting paid until you decide you want your money back. This private LIQUIDITY FUND has a decade-plus track record - and they’ve always paid their investors 100% in full and on time. I would know… because, I'm an investor with them myself. See what it feels like to earn 8%. A lot of other GRE listeners are. To learn more, just text the word FAMILY to 66866 to learn more about Freedom Family Investments' LIQUIDITY FUND. Get 8% interest! Just do it right now, while you’re thinking about it. Text FAMILY to 66866.   More straight ahead, including what’s happening with rents. I’m Keith Weinhold. You’re listening to Get Rich Education. _____________   Welcome back… you’re listening to Episode 503 of Get Rich Education. I’m your host, Keith Weinhold.   We’ve got a poll result, from our Get Rich Education Instagram Page.    The poll question was simple. “When buying property, what’s more important?”    The purchase price or the mortgage rate.   71% of you said the purchase price. 29% of you said the mortgage rate.    Of course, both are important, but I think that the PURCHASE PRICE is the best answer - because your purchase price stays fixed for the life of your ownership period, and you can CHANGE your fixed mortgage rate and make it malleable… whenever it suits your needs.   As we talk about where the OPPORTUNITY is today, though multifamily apartments are going to bottom out sometime and therefore, at some point, they’ll make a wise investment - who REALLY knows - maybe the time for larger apartments is now…   … one opportunity is… giving good people OPTIONS during a housing affordability crisis.   And what’s going on right now is that… let me put it this way… when people have a hard time affording their own home today, basically (ha!) people are having a hard time transitioning from resenting their landlord to bickering with an HOA.    Ha! That’s kind of how the world works.   Seemingly everyone would rather be bickering with an HOA rather than resenting their landlord.    A lot of renters want to be buyers… they can’t… and that isn’t expected to change anytime soon… as prices will likely stay elevated… and mortgage rates are staying higher, longer too.   These things are ALMOST “knowns”. It’s often wise… to invest in trends that are known. Nothing’s completely predictable, but when you’re looking for a place to park your investment dollars, a few other things… are known… right now.   And AI is not expected to change what I’m about to tell you… anytime soon.   VR - virtual reality is not about to change what I’m about to tell you anytime soon.   AR - augmented reality isn’t either. Machine learning won’t imminently disrupt this.   And that is, that… everyone expects more long-term inflation. At what rate, no one knows.   People will need to live somewhere… and there are not enough places to live.   Those three facts, right there, are so simple. I love simple. Ha! One reason I love simple things is that I can remember it.    So many investors - investors in all types of things, say, from tech EFTs to junior mining stocks to crypto - you can make money there.   But, at times, investors will unnecessarily go out on the risk curve and GUESS and speculate… at a future trend.    Some are right. They’re often wrong, and adopting too much of that approach… that’s exactly when your risk-adjusted return goes down throughout your investor life.   Instead, you can get great returns - real estate pays 5 ways-type of returns - in these trends that I just described that are near certainties.   Why guess? When instead, you can almost be certain.   Often times, the certain thing is right… there.    It’s often easier, like I think I brought up on the show once before, inspired by Jeff Bezos - don’t ask what will change in 10 years.    The more insightful question and profitable question that fewer people think to ask is actually - “What will be the SAME in ten years?”   Well, when we talk about rents and the fact that tenants WILL keep paying you to live somewhere ten years from now, the trend that’s taking place here in the mid-20s decade - here in the mid 2020s, is that… Rents are increasing the most where there hasn’t been enough new supply added - up 5-6% in parts of the Northeast including New York and Boston - Seattle too… and parts of the Midwest. Detroit and Honolulu rents are each up about 5%.   Rents are decreasing the least, and even declined - where they’ve added lots of new supply recently, like Austin, Texas and Miami, where they’re down 3% or more in each. New Orleans is another major city that’s down - at minus 1%.    But among the larger cities, Austin, Texas is the WORST performer in the nation right now.   If you’re listening to this either this week or you’re listening to this ten years from today, if you want to know future rent trends, look at where they’re adding supply.   Especially in apartments. But all these new apartments will fill up and nationally, they’re building fewer apartments this year than last year’s apartment-building boom.   When we talk about rents and who owns SINGLE-FAMILY HOMES, there are a few myths that I want to help bust for you here.   There seems to be this misconception or misinformation that GIANT Wall Street firms are buying up all the SFRs. That’s just not true.    Now, there is more participation from the big firms than there has been historically, but those that own 1 to 9 SFRs… which is our definition of mom & pop investors here… constitute 80% of the SFR market.   80% own one to nine units. Now, you might own more than 9.    In fact, 14% are in that next tier up, owning 10 to 99 SFRs. Then 3% - known as small national investors own between a hundred and a thousand.   And, what’s left, the big institutional investors - those that own 1,000+ SFRs - and you’ve heard of some of these companies - Invitation Homes, and another is American Homes 4 Rent.    Progress Residential, Blackstone, First Key Homes  - all those big players own just 3% of the market.   So again, 80% are the small ones - the mom & pops… a highly fractured market.   There are a total of 82 million SFHs in the United States. Out of all of them, do you have any idea what percent are OOed and how many are rentals?   It’s 83% OOed and 17% of the single-families are rentals. So about one-sixth of SFHs are rented out.   Now, here’s the thing. Some people tend to think of mom and pop single-family rental operators as unsophisticated charity case workers who never raise rents.    That’s part of the perception out there.    But that narrative has never really been true, and, in fact, the COO of American Homes 4 Rent - his name’s Bryan Smith - recently brought up this key point on their recent earnings call.   He said that while historically mom and pops hadn't always priced directly to market because of a lack of market data, "they've migrated into a strategy that's closer to ours."   How is this and why is this? Anymore, why ARE mom & pops raising rents just about as aggressively as the big institutional players.    It’s really increased transparency on the rents that landlords are asking… through internet listing sites like Zillow.    It's not that mom and pops didn't increase rents before. (I mean… just look at what happened with rising rents in the 1970s and 80s before institutions were in the sector.)    But when there's a lack of rent amount transparency, it takes longer for operators to discover and adjust to market pricing-- especially for smaller players in a deeply fragmented market.    That's the part that’s changing.   But see, increased transparency works both ways. It’s good for you and bad for you as a property investor.   This information helps tenants too. In upswing markets, operators may push rents faster than they would otherwise.    But in a downswing market, operators may cut or keep rents flat faster in order to lease the unit.    Because tenants can easily see what other LLs are charging and compare features. When you price too high, units sit vacant and generate no income.   Since renters benefit from increased transparency too, if they see two similar homes, they're usually picking the better deal.   And increased transparency is why NEW lease rent growth is cooling off.    In fact, CoreLogic just released their latest SF Rent Index report last week. It showed that, nationally rents are up 3.4%, which coincidentally, happens to be the same as the latest CPI inflation number.   Detached properties are seeing more rent growth than ATTACHED ones - like townhomes. If you think about it, that makes sense. Townhomes are in less demand now.   Because the homeownership dream, is when one moves out of the apartment & buys a detached house.    And since that’s so unaffordable to buy here in the 2020s decade, that’s why more people are willing to pay more for to rent the detached type.   Note that SFR rent growth has moderated since mortgage rates spiked-- further dispelling the sticky myth that rents boom when home sales fall.   Remember - when homes price growth is really hot - like it was in 2021 and 2022 - near 15% - rent growth tends to be hot too. It was ALSO near 15%.   And when home price growth is moderate, like it is now, well, rent price growth is moderate too.   Prices and rents move together. They’re POSITIVELY correlated. Some people think they move inversely… and we’re looking at history over hunches again - what REALLY happens here.   So though you’re almost certainly going to get nominal rent growth over time, it’s not a good thing for you to count on it in the short-term - it NEVER is, in any era.   The time for you to push rents is, of course, in any market, when you go for NEW leases. A new lease with a new tenant is going to be higher than a renewal lease.   It’s the ol’ - this has been a good tenant for three years, so I don’t want to push the rent too hard & lose them.    To review what you’ve learned today, inflation is affecting ALL of your investments, 30-year FRMs are a UNIQUE American advantage…   …it’s wise to invest in future trends that are KNOWN, if you want to know what is going to happen with rents in the near future, look where they’ve added supply.    Less new supply correlates with more rent growth… and large institutional investors own just 3% of SFRs.    If you enjoy the show, please, tell a friend about it.   Isaiah on LI had the most flattering comment. Over there, he wrote and called GRE “The best podcast on the planet.”    I… really don’t think that I can take credit for that, though… I’d like to think we’re a good resource for building your wealth through REI and regularly informing you, giving you ideas that you’ve never thought about before that add real value to your life.   You’ve heard of Bidenomics. The first portmanteau type that I ever heard about a President’s economic policies is REAGANomics, though it was a little before my time.    Here on the show next week, with us, will be none other than “The Father of Reaganomics”.    Yes, late President RONALD REAGAN’S Budget Director will be here next week. Basically, he was Reagan’s “Money Guy”.    His name is David Stockman and he often met with the President in the Oval Office, advising Reagan on economic affairs.   I have asked David Stockman, if besides talking about the condition of today’s economy next week, he’ll also discuss real estate - and he agreed to do so.    That’s “The Father of Reaganomics”. You can look forward to he & I together next week here on the show.   You might be one of the listeners that’s been here every single week since 2014 - just like I’ve been here for you.     A new podcast is published every Monday. If you want more our DQYD E-mail Letter is published and sent about weekly, that’s typically been on Thursdays lately. Then, there are many new videos published each month over on our Get Rich Education YouTube Channel. Those are the main three places that you can find us.   Until next week, if you enjoy listening, I really appreciate if you would told a friend about the Get Rich Education Podcast.    Until then, I’m your host, KW. Don’t Quit Your Daydream!

You can get financially free twice as fast with the BRRRR Strategy instead of buy-and-hold. But it’s less passive. BRRRR stands for: Buy, Rehabilitate, Rent, Refinance, and Repeat.  You can get an infinite return this way, by generating yield with none of your own money left in the deal. Learn how to obtain BRRRR financing from Caeli Ridge, President of Ridge Lending Group. The LTVs are 70%, 75%, or 80% depending on the property and financing type. RidgeLendingGroup.com specializes in helping investors buy income property. Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. The real estate BRRRR strategy is a shortcut to growing your wealth. But it's less passive than buy and hold with a property manager. Learn what is the Burr strategy and then about some of its pros and cons, mistakes you must avoid and financing programs available, and how it can generate infinite returns for you today and get rich. Education.   Robert Syslo (00:00:28) - Since 2014, the powerful get Rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Reinhold writes for both Forbes and Rich Dad Advisors, and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener.   Robert Syslo (00:01:02) - Phone apps build wealth on the go with the get Rich education podcast. Sign up now for the get Rich education podcast or visit get Rich education.com.   Corey Coates (00:01:13) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:30) - Welcome from Bridgeport, Connecticut, to Bridgeport, Texas, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get Rich education. Let's Do Good in the world and abolish the term slumlord profiting at the same time by providing housing to others. It's clean, safe, affordable and functional. This is where, you know, on this show, we often tell you how to become financially free through real estate investing in the next 5 to 10 years without having to be a landlord or flipper. We're going to talk about how to shorten that timeline in a moment, but I have a couple resources to share with you. First, one, late breaking development at GRI marketplace that's been popular is in Florida with new builds, brand new construction for plex's duplexes and single family rentals with points paid a 4.25% mortgage rate.   Keith Weinhold (00:02:28) - Yes, 4.25%. You can pay fewer points and still get a 4.75% rate. Also, some good low interest rate deals for foreign nationals. Go ahead and connect with a great investment coach and learn about those at great marketplace.com. For a 4.25% mortgage rate. If you're a Spanish speaker or have Spanish speaking friends, check out get Rich education.com/espanol to see my free video course on how real estate pays five ways in Spanish. It's pretty interesting how our team here has applied AI to show me speak it in Spanish. Again, you can see that at get Rich education. Com slash espanol. Now the BR real estate investing strategy is popular because it can reduce your out-of-pocket expense for property substantially. Let's break it down here. That is the b are are are are. There are four hours after the B which stands for the first B is buy. You buy a distressed property that needs to be fixed up. Then the R's stand for rehab, then rent, then refinance at that higher value, then repeat. More of you have been buying BR property through GRE marketplace.   Keith Weinhold (00:03:52) - Yes, we help you find not just buy and hold properties here, but properties optimized for the BR as well. There are properties that need some work and they are not turnkey, not ready to go with little or no money. In less than three years, you can have a portfolio of 10 to 20 properties with the BR strategy. That's a shortcut, but that does take some work. It's less passive. You're buying distressed property that needs to be fixed up, and you have to be sure that the contractor is getting the work done on time, on budget, and of adequate quality standards. And vetting contractors and dealing with contractors is not easy. I'm going to have a few tips to help you deal with that today, but if you get it dialed in, BR lets you pursue an infinite return strategy where you buy property at a low price, renovated, get it rented, and then refinance it at the higher value. And at times you can get all of your invested cash out on that refinance.   Keith Weinhold (00:05:04) - Well, because a return on investment formula is simply your dollars returned divided by the cash that you have invested in the deal. Well, therefore, if you have no money left in the deal anymore, your return is infinite. Listen carefully. If our guest doesn't do it, then what I'll do is introduce an example here in our conversation for you to get you to help understand the BR. And if this is new to you, this will stretch your thinking somewhat. And then after our break, I'm going to come back and we'll discuss more about any changes to conventional loans for buy and hold investment property. And there's one place that's created more financial freedom through real estate than any other lender in the entire nation. It's time for a big welcome back to their leader, Charlie Rich.   Caeli Ridge (00:06:02) - Hey, Keith. Thank you for having me. It's always a pleasure to be here.   Keith Weinhold (00:06:05) - Well, you know who she is by now. She leads Ridge Lending Group. They're an investor centric lender, and she does such a good, concise job of explaining what real estate investors need to know in optimizing your loan positions.   Keith Weinhold (00:06:18) - And that's why she's here with us again. And, Charlie, rather than just learn about conventional buy and hold loans or refinance loans like we've covered in the past, let's talk about lending for the BR real estate investing method. BR is a method for buying distressed property at a discount. So not turnkey, not fixed up property. Here in BR stands for buy, rehab, rent, refinance and repeat. Now for these loans. Is the lender looking more I guess Charlie maybe we should start with are they looking at the property strength or more at the borrower strength for BR loans?   Caeli Ridge (00:06:54) - Well, first of all, I would say that BR is one of my favorite strategies for real estate investors, especially if they're getting into diversifying their portfolio. I think BR is a very lucrative way to achieve the returns that people are after, not only in appreciation but also in cash flow. You can get some really great leverage in these ROI and ends up being better if you find the right properties. So I'm a big fan of the BR, but to your question, Keith, it depends on what product they're going to elicit for the end loan, for that refinance loan, if we're talking about a conventional loan, Fannie, Freddie and the qualifications are still about the individual and their debt to income ratios, etc. if we're going to put this on a debt service coverage ratio, which it can apply to both, or can, I mean, the strategy does not obligate them to one or the other.   Caeli Ridge (00:07:39) - So we can go conventional where it's still going to be about the individual. Or we can look at more of a debt service coverage ratio, where it's about the income of the property in relation to the mortgage payment.   Keith Weinhold (00:07:48) - And before we go on, of course, identifying a deal is a key here in the BR strategy. Is there any guidance you'd give with identification of that property. Because you might know more from the lender perspective on what's going to be lendable.   Caeli Ridge (00:08:03) - Well, as long as it's habitable, we can lend on it. I would say that you really want to pay close attention to a couple of things. From a lender's perspective, the ARV, right? The after rehab after repair value is the linchpin to all of this. And if you're out there getting your comps from whatever sources, the agent or Zillow or Redfin or whatever it is, the more data that you can gather, the better. But just keep in mind that the ones and zeros that you're probably gaining access to don't necessarily have the components that show all the rehab work that you're putting into it.   Caeli Ridge (00:08:34) - So if you're getting a value of a property like kind property in the area or vicinity that the property is located, it's not always going to attest to what extras you put in, whether it be the hardwoods or square footage or whatever it may be. Just keep in mind that you may not be on point there, and real estate agents, I would want you to have or be working with one that really understands the BR method, aka investor models, to make sure that you don't get caught in a scenario where you're expecting a value of x that comes in at Y, that can be very devastating to the BR methodology, especially for new investors.   Keith Weinhold (00:09:09) - It was more about coming up with the ARV because with a conventional loan on a conforming property, that value that you're lending against is typically the appraisal.   Caeli Ridge (00:09:21) - Correct. And the appraisal is going to take into consideration those rehab pieces. But it's not dollar for dollar. And while I don't know that we want to go down the appraisal rabbit hole, I will tell you that if you've got $50,000 of rehab into the property, that doesn't necessarily mean you're going to get a full 50,000 in extra value.   Caeli Ridge (00:09:38) - A lot of it has to do with what you paid for it. Like Keith, you said at the top of the podcast here, distressed property. A lot of times when people are getting into BR, they're finding under market value property to begin with, that's already worth more. They're putting in some real value adds, maybe cosmetic, maybe a little bit more, and then expecting quite a bit more in value. So there's definitely a science to it. But just make sure that for all intents and purposes, you're gathering as much data as you can. And the agent, if you're using a real estate agent to help with MLS listings, etc., that they have some basis of background within this, this particular philosophy.   Keith Weinhold (00:10:12) - Okay, so we are projecting an RV in after repair value here, and then we need to lend against a percentage of a certain value. So clearly since in this case the property is distressed, well then if the property is the lender's collateral and that collateral is a little, you know, why don't we call it damaged, if you will? Well, then I'm going to speculate that is that lender probably not going to give you as favorable loan terms as they would on a conforming property.   Keith Weinhold (00:10:39) - So tell us more about how those bur loan terms look.   Caeli Ridge (00:10:42) - So you might be surprised. Again, as long as the property is habitable the LTV is going to be the same. The value of the property. It is probably what you're going to notice more than what the lending side is going to allow for in the loan to value. So on a single family residence, if it's habitable, we're going to give the individual up to 75% of that ARV. Now, I don't know if we're ready to go down this road. I think we should talk about it at some point. The ARV and how we want to maximize and not leave any money on the table. We want to discuss the purchase price and the acquisition. I think we'll come to that. But to answer your question, habitable 75% single family or 70% on a 2 to 4 unit is going to be the maximum loan to value using the appraisal. When we talk about a cash out refinance of an investment property, which may be different if we get into a rate and term refinance as a purpose of Bur, which will probably touch on as well.   Keith Weinhold (00:11:36) - What I think for the listener benefit here, maybe it's good to jump into an example if you want to apply some real numbers here to a bird deal, and then let's walk through that with the financing and more.   Caeli Ridge (00:11:48) - Let's start with cash out, because it is different than a rate and term. So cash out simply to clarify means that the individual is going to get cash in hand. We are not simply paying off an existing hard money loan. That is a rate and term refinance. So we want to start with cash out where the cash to acquire the property was the individual sourced and seasoned funds. And let's assume that the scenario looks like this. They paid $100,000 for the property. And then there's $50,000 in renovation with the expectation. Or let's just say that we get an appraisal for 200,000. So at 200,000 and it's a single family residence, 75% of that is 150,000. Okay. So that pretty much covers their total acquisition costs. But then we've got a recommendation.   Keith Weinhold (00:12:28) - Cost is quite.   Caeli Ridge (00:12:29) - Covered. But we have to account for closing costs tax and insurance.   Caeli Ridge (00:12:31) - Let's just make it around ten grand. So the individual is going to end up with 140,000 from their 150 total acquisition cost. If you divide those two numbers, you're probably going to be at what? So 140 divided by 150,000. Yeah, 93% overall leverage. You've got ten grand skin in the game. And when you look at it from that perspective, 93% over all loan to value or leverage of this property is very, very high. If you can get a deal to work like that, you're doing very well.   Keith Weinhold (00:12:59) - And you can see why people like this and why people are attracted to this. So go ahead and tell us more about this. Because really, when we talk about lending for a bigger property, we're probably talking about two different loans, right? We're talking about the purchase price upfront and then the refinancing later on.   Caeli Ridge (00:13:17) - Right. So let's going back to my example. If you paid cash for the property, if that 150,000 was your sourced in season funds. And if you want Keith tell me later and I'll go into what source and season it is.   Caeli Ridge (00:13:28) - But you have 150,000 in on this property. The key to getting up to the maximum of 150 back. Or in our example, you ended up with 140 back because we accounted for ten grand. And in closing, cost is to make sure this is wildly important. And a lot of people get this wrong the first time they go down the Burr road. Make sure both the purchase price and the acquisition costs are listed on your final CD, aka Closing Disclosure. A closing disclosure comes to you at closing, where it's a document, a form that illustrates all of the line item pluses and minuses of the buyer and the seller and what everybody netted at the end. The CD must have the total 150 listed on there, and just one number is fine. It can be broken up into two numbers, whatever. But as long as both numbers are listed on the CD, you as the borrower, our client, her guidelines are eligible to get up to that much back. So the guideline states that the individual cash in hand cannot exceed a maximum of what the total acquisition costs listed on that CD is.   Caeli Ridge (00:14:28) - So what the common mistake is, let's just keep using our 100,000 purchase in our $50,000 renovation. The common mistake that people make is, is that they pay the 100,000, the seller is made whole. And then the day after closing, they are officially now the owner of this property. They send the 50,000 out to the contractor. Seems obvious, right? Well, in doing it that way, you've left 50,000 on the table and now you're going to have to wait 12 months per new guideline to have 12 months of ownership, seasoned ownership for Fannie Freddie to get the total 150. So make sure that the total 150 is on that CD. And the way to do this, just one more little detail. You want to be working with an escrow company that provides something called an escrow hold back. Because a lot of times when I give this advice, people say, well, I don't really want to release $50,000 to the contractor before they even started any of the work, right? That makes sense to me.   Caeli Ridge (00:15:16) - And most escrow companies do this in escrow. Hold back says that the hundred grand goes to the seller. The 50,000 is earmarked for the general contract, you've gotten your bids, etc., but the escrow company will then deliver the 50,000 upon your approval as draws to the contractor as work is being completed. And that kind of absolves that extra layer of risk. But now you've done the appropriate thing for the financing to get maximize your cash out, and you're not leaving yourself in a weird position to frontload 50 grand before you know they've even started on whatever repairs there are.   Keith Weinhold (00:15:49) - Yes. How much motivation does every contractor have if they've already got their 50 K for 50 K worth of work before they do their work? And it works this way a lot in the contracting world, where progress payments are made intermittently as the contractor performs their work. So tell us more about what we need to know here. Clearly, especially when it comes to the Bir and loans, because you just gave us a great mistake to avoid there.   Caeli Ridge (00:16:13) - Kind of keeping on that theme. And then let's talk about a rate and term refinance. You know, some of the pushback that I'll get when I have these conversations. Well, you get your bids. Okay. We'll start talking about the 50,000 renovation per hour example. And you probably get a low and a high and middle. Maybe you go with the middle. It's been my experience personally and just through conversations that the bid is 50,000. If you don't have the upfront conversation to say, I'm not going to pay a cent over the 50,000 and or you negotiate to say, okay, what is our variance here? Because a lot of times the contractor is not going to be pigeonholed to 50,000. They're going back and say, no, I'm not going to sign anything that says that it will not exceed 50,000. There are costs and things that are out of my control, blah, blah, blah. Then coming up with, okay, fine, 55,000, 50, 2000, whatever that margin might be, including that in there and then having the conversation that says, okay, fine, because you don't want to leave that money on the table.   Caeli Ridge (00:17:03) - So let me take a step back. 50,000 becomes 55,000. And if you didn't have it on the CD, that $5,000 is not eligible to get back. So if you increase the amount that's on that CD, per the conversation with your contractor, make sure one of two things that if it isn't spent, that it's coming back to you and assuming if it is, then everybody is on the same page and it's just going to be part of the expense and part of what you have potential to get back. So just food for thought there. Then moving into the rate and term refinance. Now this is something totally different. This means that you went out and got a hard money lump, some kind of a private bridge loan, which by the way, Ridge does. We have bridge loans that can help fund the purchase and the renovation. We can talk about that if you like. But if you went out and got a hard money loan, this is no longer a cash out refinance unless the value is so high that based on a 75% LTV for cash out, that there's enough money on the table that you don't want to wait the 12 months.   Caeli Ridge (00:18:00) - I'm going to pause on that for a second and just say that the numbers work for a rate and term refinance, where we have an existing loan. Let's say you've got a hard money loan for 150,000. A rate and term refinance lets us go to 80% loan to value on a single family, 75 on a 2 to 4. If you recall a minute ago it was 75 and 70. That's cash out. Refinance rate and term refinance rules when you're not getting any money in hand, were simply paying off existing liens plus closing costs. They increase the LTV allowances. So 75 2 to 480% on a single family residence. So if we can go 80% on the 200,000, what is that one? I can't do mental math, Keith. So 80% of 200,000 is 160. So in that case think about this. So let's just keep going back to our example. You've got 150 into it. We've got 10,000 of closing costs okay. 150 is a hard money loan that we have to pay off. And the 10,000 is what the new refinance closing costs are going to be.   Caeli Ridge (00:19:00) - The value came in at 200,000. 80% of that is 160,000. That's no skin in the game. You have completely covered the hard money loan paid for the closing costs. I mean, you can't get better than that. That's 100% leverage, right? You're not getting cash back. Now let's take that and say that the value came in at 250. And that's a lot of money. In that case, you may want to wait for the 12 months to get that cash back, because you're going to be limited if you use leverage to acquire the property versus your own cash, that's when you're going to have to wait that 12 months. Or if you're cash acquisition, the numbers work out where you'd get an exponentially more amount than what you put into it. You may want to wait there, too. It really just depends on what that RV is going to be. That's why it's the linchpin that'll make you decide whether you're going to wait the 12 months, or if you're ready to rock in in the immediate terms with a rate and term refi.   Caeli Ridge (00:19:53) - No seasoning. If you're not getting cash back, I don't care. We can do it immediately or a cash out refinance. As long as you're not getting more back than what you paid for it. And we can show that the dollars to acquire all in the CD and they came from, you know, seasoning.   Keith Weinhold (00:20:07) - All right. So it's the BR strategy with the cash out refinance and then the burr strategy with the rate and term terms there, if you will. Is there anything else that we need to know about either one of those.   Caeli Ridge (00:20:19) - Really a lot of people always want to say what are the rate differences? And I would say that, you know, overall they're going to be roughly the same when we start talking about those LP's. Again, Keith, low level price adjustments there, pluses and minuses that have to do with risk. A cash out is a higher risk than a rate and term, a rate and term at 80% versus a cash out at 75% might offset that. So relatively speaking, they're probably going to be within an eighth to a quarter percentage point if all the other variables are equal.   Keith Weinhold (00:20:44) - Now, clearly, I think of a hard money loan is something that allows. You to put both the purchase price of a property and the projected rehab cost, and roll those all into the loan at closing. That's what I think of as a hard money loan. Is there any difference between a hard money loan and the other things that you're describing to us?   Caeli Ridge (00:21:04) - Not really. I mean, it's probably a cat of a different name, right? I mean, a hard money loan, a private money loan, a portfolio loan, a bridge loan. I mean, you could use the same thing, depending on the context of the sentence, to mean the same thing, maybe something different. You're probably right in this context. It's going to be the same, I think.   Keith Weinhold (00:21:21) - Well, I want to talk to you more about conventional loans and any mortgage industry trends that have been taking place lately. But before we do, do you have any last thing to tell us about the Burr strategy, where really someone can accumulate maybe 10 or 20 properties in just three years with little or no money, but more work?   Caeli Ridge (00:21:39) - Yeah, a little bit more work.   Caeli Ridge (00:21:40) - I would say get to know your market, have your team. That contractor. Man, I think you alluded to this. I think that that's the piece that most people struggle with is finding the right contractor for one of the things that tends to work well, if you have established a relationship, is kind of getting in with some kind of a JV with the contractor, right? They've got skin in the game. Maybe if your numbers work out, they get a 5% bonus on the end, whatever. Just to kind of not keep them honest but keep them honest, if you know what I mean. So making sure you've got a good contractor that you can trust if you're going to be doing this out of state from where you live, even more so, doubly so you really want to have the right team. And that includes the general contractor, the escrow company, your lender. Everybody's got to kind of be on the same page if you're going to continue to do this as a rinse and repeat.   Caeli Ridge (00:22:23) - And then finally I would say bring it to Ridge. Let's just make sure if you're new to doing this, I want to make sure you're not leaving that money on the table, that we're structuring it appropriately so that we're maximizing the loan to value, we're maximizing your dollar, and that you're not leaving money or leaving money for some period of time longer than what you would have wanted to, because this is a rinse and repeat, right? If you don't do it right the first time, you could be stuck tying up 30 grand for 12 months that you would have otherwise been able to capitalize on. If we looked at it in advance of you pulling a trigger.   Keith Weinhold (00:22:52) - Yeah, that's correct. In fact, that last R in the BR strategy is to repeat it. And yet, to your point about contractors, I like to think about what contractor motivations are and what my motivations are. And in times I have incentivized contractors with giving them a 5% bonus if they finish things ahead of schedule or a 5% penalty if they finish things behind schedule and putting that in the contract as well.   Keith Weinhold (00:23:14) - You're listening to get versus a case. We're talking with Ridge Landing President Charlie Ridge about getting loans for the BR strategy more when we come back. I'm your host, Keith Windhoek. Role. Under this specific expert with income property, you need. Ridge lending Group Nmls 42056. In gray history from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your prequalification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love.   Keith Weinhold (00:24:29) - How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six.   Speaker 5 (00:25:06) - This is our Rich dad, Poor dad author Robert Kiyosaki. Listen to get Rich education with Keith Wayne. All scripture data.   Keith Weinhold (00:25:25) - Hey. Welcome back. You're inside. Episode 502 of gray. I'm your host, Keith. Y'know, we're talking with the president of Ridge Lending Group, Charlie Ridge. She talked to us before the break about her financing strategies and the things that you need to keep in mind in order to optimize your returns there. It's only now back here on the conventional side, we talk more about conforming loans for properties that are already fixed up.   Keith Weinhold (00:25:48) - Or maybe people call those turnkey. What about some of those hurdles that investors often have in there? For example, I know that the DTI one exceeding their debt to income ratio threshold when they try to qualify is sometimes a problem. So can you talk to us about some strategies with that? For example, sometimes a person might have a $500 a month car payment, but they only have four or more payments to make for their $2,000 principal balance. And it just makes more sense to pay that off. And then that drops off the DTI calculation. Are there any other thoughts you have with regard to that?   Caeli Ridge (00:26:18) - There's so many in this. I mean, we probably have our own episode for all different ways on debt to income ratio and to move that needle. Just to go back to your example, just FYI, if the car loan is financed, not leased, and there are ten months or left reporting on the credit report automatically per guideline we had, we can exclude that if it was at least with ten months or less, we have to keep it in the ratio.   Caeli Ridge (00:26:39) - But if it's a finance car, ten months are left are showing on the report. It's automatically reduced from the liability section of DTI. The other things that we're to look at just obvious things. Can we gross up any kind of income. Right. Are there bonuses or commissions or Social Security or veterans benefits or whatever that allow us to gross those up, making sure that we've got all of the applicable income that they gather? Sometimes people will forget to say, oh, I get this. You know, child support or alimony or whatever it may be that I didn't think to disclose. We want to make sure that we have that in there. And then we talk about liabilities we want to look at here's kind of a good one. Student loans let's say that either cosigned or you have your own student loans. Fannie and Freddie have different. And maybe they're in deferment. Okay. So when we pull the credit it shows zero as the monthly payment. While Fannie and Freddie have different rules about what we have to hit them for.   Caeli Ridge (00:27:25) - And I could be getting these backwards, but I think that Fannie is 1% of the outstanding balance, whereas Freddie is a half a percent. So depending on some other variables, we may elect to say, okay, DTI is really tight, we're going to take this and make this one of Freddie, assuming that they fit all the other boxes so that we're only having to hit them for that half a percent. Otherwise we look at maybe paying off revolving debt, get those payments down if they're small enough, maybe there's a $3,000 balance that has a $300 payment that's really screwing things up, and they can afford to pay that off. So certainly we can look at those kinds of things, adding in a co-borrower, putting more money down, buying the interest rate down, maybe finding slightly cheaper insurance, right. At least for the purpose of the loan. And then if you wanted to get higher insurance or lower deductibles or higher deductibles later, you could certainly do that. So there's so many different variables that we can look at to really it's not a one size fits all.   Caeli Ridge (00:28:13) - And DTI is kind of a slippery slope. And there's lots of different ways in which we can get that down into check. And if it doesn't happen today, we can help them plant the seeds for what to do tomorrow and making sure that we get them there.   Keith Weinhold (00:28:24) - Wow, that was fantastic. I hope you, the listener, are listening closely because Charlie just gave so much packed, nutrient dense information about what you can do with your DTI. And for starters, I think a lot of people think about reducing their debt to improve their DTI. But is all your income being credited as well? Hopefully you caught that part which said that. But when it does come to reducing the debt portion, of course student loans have very much been in the news with all these plans for forgiveness. Is that impacting DTI substantially?   Caeli Ridge (00:28:53) - If they had the right documentation? Sure. Yeah. If they're on there and we have the right documentation that shows that they are forgiven, but they just haven't caught up with the system, then absolutely.   Caeli Ridge (00:29:00) - Otherwise, if they don't have the supporting doc, the letter that says and it's on the credit report, we're going to have to hit them for it, whether there's a payment there or a zero deferred. And then we have to figure out the 5.5 or the 1%. It'll have to be in there. Just depends on what they can deliver in terms of that forgiveness in paper trail.   Keith Weinhold (00:29:18) - You do with mortgages every day in there. That's what you specialize in for investors. Are there any just overall mortgage industry trends that really specifically impact real estate investors that have occurred? Or amid.   Caeli Ridge (00:29:31) - The rates? Everything is going to come back to the rates. As much as I impress upon people, it really shouldn't be about the rate. And I understand the psychology. Listen. But if they're not doing the math, they're really doing themselves and their future investment a disservice. The shelf life, you guys of an investment property mortgage is five years. Whatever the rates are today, you're not going to have that interest rate almost certainly in 5 to 7 years.   Caeli Ridge (00:29:54) - So kind of looking down the forecast of where rates we think they're going to go, the appreciation of the property, harvesting equity, pulling cash out. Keep those things in mind when you fixate on the interest rates. I would say that that's usually what it's top of people's minds. The most recent inflationary data came out. It was hotter than we expected. However, shortly thereafter, if you're watching closely the unemployment rate and the jobs report, I think it offered 175,000 new jobs and the projection was to something. So that's good news. And listen, you guys, you can't have it both ways. We're in a hot economy. I guess it depends on who you're talking to and who you're asking. I understand, but for all intents and purposes we've got inflation is is down. It's not down where the Fed's wanted that 2%. The unemployment rate is very, very low. So in that regard we're doing very well. So interest rates are going to be higher. Unfortunately it balances this way. The worse the economy does the better the interest rates do.   Caeli Ridge (00:30:48) - Finding that equal balance I think is the key. And don't ask me, I'm not going to try and predict how to do that. But do your mouth be prepared for refinancing when it comes. Sitting on the fence is usually not going to be to your advantage if you're waiting for interest rates to come down, and that coupled with house values, come down a little bit too. And you may have played yourself out of the refinance anyway for the purposes that you wanted to pull cash out. So just be educated. Call us. We can kind of walk you through some of that stuff. Interest rates, I think, are going to be higher for longer unless we see some real significant data trends, because there's a lag. And what we get from the Fed's and I think they try to put that in there, but who knows what's going to happen. What are they going to see us again June, July. We'll see what happens. If jobs reports keep being light, then maybe we start to see a little bit more reprieve in the interest rates.   Caeli Ridge (00:31:32) - But we're still we're what, seven and a quarter, seven and a half for investment property I think in most cases. So if that's too high to cash flow, find a short term rental. Find a mid term rental. There's other ways in which to accomplish your variety of variables. Even in the seven and 7.5% interest rate environment.   Keith Weinhold (00:31:49) - Well, there's so much I can say about the fed and the interest rates, but I think you said something very important earlier that the average shelf life of a mortgage loan product is about five years. It's exceedingly few people. Well, less than 1%. They're making their 360th monthly payment ever at a 30 year fixed rate loan. Charlie, I want to ask you what. Maybe it's becoming sort of known as the Charlie Ridge question. I like to ask you this almost every time that you're on the show, because it gives us a temperature of the market, because you see so many loans and so many appraisals come in there, what percent of appraisals are coming in above value? What percent are coming in on value, and what percent of appraisals are coming in below value?   Caeli Ridge (00:32:26) - We don't see as many low values.   Caeli Ridge (00:32:28) - I think that there was a period of time where that was rampant. It was really frustrating for a lot of people, especially on the Non-owner occupied side. The vast majority are coming in on point, and I think a lot of that has to do with 0809 regulation. Appraisers are kind of scared of their own shadow and overvaluing properties. So I think that they do very everything they can to hit the mark. And I don't see too much over an occasion. We'll see a little bit over. It's more likely to see it over than under these days. I would say, okay, percentages under 10% on the mark 8075 and then over. We'll give it.   Keith Weinhold (00:33:03) - 1515. Okay, a few more over than under, but pretty close to right on value there. You do loans in almost all 50 states. And these are the states where the property is located, not where the borrower lives. Right. So it's every state except a few.   Caeli Ridge (00:33:20) - Right? We're not in North Dakota and we are not in New York.   Caeli Ridge (00:33:22) - Otherwise we are lending in all 48 states where the property is. That is correct.   Keith Weinhold (00:33:27) - Yeah. And you specialize in loans for investors. Like I said earlier, what other loan types do you offer investors and others in there because you do a few primary residence loans too.   Caeli Ridge (00:33:38) - We do lots of primary. I would say, you know, it's 7030 probably. We're very capable, full service direct lender. What that means is we fund on our warehouse line, we underwrite in house, but we don't service these loans. So we bundle them up in mortgage backed securities and we resell them on the secondary market to aggregators. You guys will know this as servicers. Any Mac, Wells Fargo, whoever is going to be the end servicer of the loan. And I've worked really, really hard to create an environment specifically for investors, not exclusively, but largely so that we're not a one size fits all. So I really appreciate the question and being able to articulate to your listeners, we really do everything. It's very uncommon that we don't have a loan product to feed the actual need.   Caeli Ridge (00:34:17) - The one thing that I would say we don't have or don't offer is going to be a lot bear lot loans we don't fund on just bare land, but we can do the Fannie Freddie's bridge loans. So for the fix and flip or fix and hold the BR, we do non QM. This is just non QM is kind of everything outside the Fannie Freddie box. If you can't quite fit into the rigors of Fannie Freddie you're going to be in non QM probably where debt service coverage ratio lives. Bank statement loans live, asset depletion loans live. We have commercial loan products for commercial properties. For residential properties we have. Ground up construction. First line Helocs for relationship clients we have second line Helocs. We had second line for everybody when we pulled back just for relationship clients for reasons that we'll discuss on one on one if anybody's interested in that. What am I forgetting, Keith? You get the point. There's a lot. If you think that you're trying to get financing for residential or commercial properties, please email us and we'll take some information to let you know what we can do.   Keith Weinhold (00:35:10) - Well, yeah, to my point, you provide such a great service in a wide palette of options. It's somewhat easier to describe what you don't do. Yeah. And what you do offer to people. And of course, I've done my own loans in there at Ridge and my own refinancings in there. And yes, I usually end up getting a servicer. That's one of the big banks that you've always heard of over the long term that I make payments to. Where does one get started to get things rolling with Ridge or just to ask some questions.   Caeli Ridge (00:35:36) - Call us 855747434385574. Ridge, you'll get someone immediately. We don't have any call trees. You'll speak to me if I'm available at the time. Our website's got a lot of great information. Ridge lending group.com email info at Ridge Lending group.com. All of those ways will get you on the books with me, if that's what you like. Or assign you to a loan officer in the company. And we look forward to serving you.   Keith Weinhold (00:36:00) - You have given our longtime listeners more good, timely mortgage information than anyone in the history of the show here, and we're all better for it.   Keith Weinhold (00:36:09) - Charlie Ridge, thanks so much for coming back on to the show.   Caeli Ridge (00:36:11) - Thank you Keith.   Keith Weinhold (00:36:18) - Let's review some of what you learned about Bir and their loans today. Once your property is renovated and rented, which are the first and second are the third are. Is refinance for a cash out refinance type? It is a maximum of 75% loan to value on single family and 70% on a 2 to 4 unit, and then for a rate and term refinance, which means when you don't get any money in hand after closing and you're simply paying off existing liens plus closing costs, it's 80% loan to value on single family and 75% on a 2 to 4 unit. And you learn to be sure that both the purchase price and the acquisition cost are listed on your final closing disclosure. You know what I think is interesting with originating mortgage loans today? Overall, it's one question that I've been thinking about, and maybe we'll do a poll on this question. If we do, I'll share the results with you. And that is, do people care more about the mortgage interest rate than the purchase price of the property itself? Sometimes it seems that way to me.   Keith Weinhold (00:37:29) - Now your mortgage rate definitely matters, but not as much as the purchase price. I mean, later months or years down the road. After you purchase a property, you can often renegotiate the mortgage interest rate, like if rates fall, but your purchase price stays fixed, that part never gets renegotiated. And like I mentioned last week, low mortgage rates don't create wealth. Leverage does. And to put a finer point on that, consider that in 1971, the mortgage interest rate was 7.3%. Back there in 1971, if you had waited for interest rates to go down, you wouldn't have purchased a home or an income property until 1993. You would have waited 22 years for rates to go down. And meanwhile the price of real estate quadrupled, and many people expect mortgage rates to stay higher, longer. Whether you're interested in the BR strategy or already renovated income, property or even primary residence loans, I invite you. You can get loans at the same place that I have myself for years. That's it.   Keith Weinhold (00:38:41) - Ridge lending group.com. Until next week. I'm your host, Keith Winfield. Don't quit your day dream.   Speaker 6 (00:38:52) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:39:20) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

In this episode of the Get Rich Education podcast, host Keith Weinhold explores the current state of home pricing and the housing market.  He examines whether homes are overpriced or underpriced by comparing them to historical values, gold, and bitcoin, and discusses the influence of inflation and financing on affordability.  The episode features insights from Danielle Hale, chief economist at realtor.com, on the challenges for young homebuyers, housing supply issues, and mortgage rate effects.  The conversation also covers the build-to-rent trend, investment strategies, and the importance of increasing housing construction.  Weinhold concludes by offering free coaching for building real estate portfolios. Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Welcome to GRE! I’m your host, Keith Weinhold. Home Prices Aren’t Really Up! Brace yourself. A mic drop moment on real estate costs is coming.  It’s an unmasking - a reality check on property prices. Are homes actually still priced too LOW today? How could that POSSIBLY be true at all? On Get Rich Education. _____________   Welcome to GRE! From Belgrade, Serbia to Belleville, Illinois and across 188 nations worldwide. I’m Keith Weinhold and you’re listening to Episode 501 of Get Rich Education.   We’ll get to “Are homes overpriced or underpriced today?” shortly.    But understand this…   I successfully acquired something at a young age. And you can too. That thing that I successfully got ahold of was not millions of dollars… because I came from average means.   What I intentionally and successfully acquired was millions of dollars in debt.   Yes, obtaining millions in debt from a young age… is what led to me quitting my day job while I was young enough to enjoy it.   You, the longtime listener, COMPLETELY understand and appreciate what I just said. If you’re a newer listener, that sounds unusual or even irresponsible. Well, come along for the ride.    Also, a layperson - or a newer listener - would respond with, “No one talks that way, thinks that way, or does that.” - taking out millions in debt and calling THAT aspirational.   But using that debt as leverage is how you ethically take funds from the big banks - take Chase Bank’s money, take Bank of America’s money, take Wells Fargo’s money - learn how to use it, be a responsible steward of the funds, provide good housing for people and prosper.    That means you get the return on both your down payment - and the entire amount that you borrowed from those banks. That all goes to you. And both your tenants and inflation pay the debt back - not you.   Look, I know one person. I personally know a guy - Greg. Greg makes $80K a year from his day job. Good guy, married guy, one kid.    And his NW increased by $2M just in the COVID run-up. He has a modest salary but his NW is up $2M just since 2020.   First of all, do you think that any of Greg’s co-workers experienced that effect? No, he’s really going down my path. You soon get unrelatable to co-workers and even some of your peers.   Well, what makes it possible for a good family guy - or anybody - to go from a middling salary to obtaining life-changing wealth?    It takes leverage. He borrowed for bank loans. That way, he could acquire 5x as much property than if he paid all cash for his rental properties.    That way, he had 5x as MANY properties… and properties all appreciate at the same rate regardless of how much equity you have in them.    See, if he had paid all cash, he’d only have a $400K capital gain. Not bad, but $2M is life-changing. Thanks to leverage.   Everyday people obtain life-changing wealth this way. It’s so substantial… that it won’t only affect Greg’s life. If he continues on this way, it’ll take care of his children, grandchildren, and great grandchildren.    And you know, maybe this is why, one of the most recurrent guests we’ve had here in the history of this GRE, Ken McElroy, he says:   “The best investment in RE is the one that appreciates the most, not the one that cash flows the most.” That’s Ken McElroy. And now you can see why he says that.   Leveraged appreciation creates wealth the fastest. Cash flow is important and it CAN boost wealth but that happens more slowly. Principal paydown doesn’t create it - it enhances it… and it’s the same with tax benefits.   Deferring your tax on a 1031 means that you can re-leverage a greater amount.   Low interest rates also don’t create wealth. In fact, I bought my first ever income property with a 6⅜% mortgage rate and my second income property with a 7⅝% rate - that second one had interest-only payments.    But I borrowed the maximum amount that I could without OVERleveraging. Overleverage means losing control of the mortgage and operating expenses.   The lesson here is… get the leverage.   And… case in point. Here we go…   Speaking of appreciation, the LATEST Case-Shiller Home Price Index figure came in. The US currently has… 6.4% YOY home price appreciation. Now, their index is only based on 20 cities but that gives you a pretty good idea.    In fact, that is the fastest rate of increase since 2022.   Now, if you’ve let equity build up in your properties to the point that they’re half paid off, you had 2x leverage, meaning the 6.4% appreciation just gave you a 12.8% leveraged return on your skin in the game.   And, of course, if you leveraged with a 20% down payment a year ago, that 6.4% means that you just got a 32% return.   And as we know, these returns I just told you about are from one of just one of FIVE ways that you’re expected to be paid simultaneously.   But yeah, a 6.4% higher is merely a DOLLAR-DENOMINATED price. That’s what that is. Why do I say that carefully?    Well, there are a few reasons that home prices are 6.4% higher - inflation from dollar printing could be why, the value - not price - but some properties have a greater VALUE, distinctly separate from inflation.   What’s the distinction there - how does this happen? What’s one difference between an INFLATED price and a greater value?    Well, say that a local economy is hot because there are more high-paying jobs there now than there were last year - say an influx of medical jobs or AI jobs or chipmaking jobs.    Well, even absent inflation, a property that now has PROXIMITY to better-paying jobs - that’s now a property that’s more desirable.    Someone is more willing to PAY MORE FOR - and simply CAN pay more for. Again - that phenomenon is ABSENT inflation.   What’s another reason that home prices rise - and rose 6.4% YOY in this case?    If better PHYSICAL AMENITIES are in new homes than there used to be - say bigger garages or new communities with pickleball courts, well, people are more willing to pay more for that.    To review, there are three reasons that home prices go higher: inflation, appreciation from value creation - like how the same home is now located closer to more high-paying jobs, and thirdly, better built-in amenities.   All three of those increase dollar-denominated price or value. They all increase the nominal price.   Now, let’s pivot into the fact that “Home Prices Aren’t Really Up”.    I’ve covered this a little before, but I’m going to go deeper today in giving you the most comprehensive look at home prices today - compared to the past - perhaps than you’ve ever had in your life.   Some might say, “C’mon. How can this be? Homes cost, perhaps 40% more than they did just four years ago.”   Well, I’ve got a mic… drop… moment… coming.   - Home Prices Aren’t Really Up.   We need a good measuring stick to see what home prices are doing. So we’ve got to stop pricing homes in dollars for a minute. It's a poor long-term value measure.   Ludicrous inflation means the dollar has lost over 25% of its value just since 2020, and 97% of its value since 1920.   Let’s use a commodity and money that has been valued for five millennia - and its physical properties have not changed one bit in allll that time, and its valued across continents and cultures - that’s 50 centuries of value! That’s gold.    We’ll get to a more modern measure soon. But first, gold is the best one.   Now, I don’t know who to credit, but for a while, there was an image floating around out there that GRE got ahold of.    It showed that 10 kilos of gold would buy you an average home back in 1920… and also, that 10 kilos of gold would still buy you an average home today… total… mic… drop… moment. Wow! Is there any better evidence that home prices are NOT up - but higher prices reflect that the dollar is down?   Actually, yes, there is a little better evidence. We ran the numbers here and learned that - it’s even more astounding than that!    You run how many dollars per ounce gold is worth, that 35ish ounces are in a kilo and you look at home prices then and now and we discovered that - it’s even more of a jaw-dropper…   … because in 1920 - which I’ll just call a century ago - you could buy an average home for 8 kilos of gold and today, you can buy an average home for just 6 kilos of gold.   So if you want to know how much home prices have changed in the last century, they are down 25%.    They’re 25% cheaper today in terms of gold - clearly a more stable value indicator than horrendously diluted dollars are.   And also, GRE made a new image that shows this - 8 kilos for an average home a century ago, 6 today. I sent you that image in our newsletter about ten days ago and that image got shared a LOT of times. Your first reaction to this whole thing could be: "Wow! That's wild. The dollar really is sooo diluted." Alright. What about home prices in terms of a popular, nascent asset that only arrived fifteen years ago, bitcoin? 2016: Average home cost $288K, or 664 bitcoins. 2020: Average home cost $329K, or 45 bitcoins. 2024: Average home cost $435K, or 7 bitcoins. So, eight years ago, a home cost 664 bitcoins and today it costs 7.  That means that home prices are down 25% in terms of gold in the last century. But they’re down 99% in bitcoin over just the last 8 years. And the dropped mic keeps reverberating through the stadium. Today's homes are cheaper in gold and drastically cheaper in bitcoin.  See, it takes real world resources and proof of work to create real estate, gold, and bitcoin. None of these things are required to produce a dollar - none of them. That's why its value is approaching zero. But let’s go deeper. You need more answers - you are part of a really intelligent audience.  Because you might be thinking: "Wait a second. Some other things have changed too." For real people - everyday people - aren't home prices actually more out of reach than this? That's because since 1920, home prices have risen faster than incomes. That puts them OUT OF REACH for more people. Something else has changed. A home's lot size is smaller today too - the land that comes with the property has a smaller area. Let’s understand too - homes also use some cheaper materials today. For example, heavy, milled raw wood doors - the interior doors - of yesteryear have given way to molded particle board today. This is beginning to build the case - evidence - that homes SHOULD be cheaper than they are today.  Let’s keep going, because there’s more to consider. Mortgage rates themselves - just rates in isolation - they don't put homes out of reach at all. The long-term average is 7.7%, per Freddie Mac, on the 30-year FRM. That average goes back to 1971, when they first began tracking them.  Oppositely, you can make the case that U.S. homes should cost even more than they do today. In many advanced nations, homes are way more pricey. Even next door in Canada, they cost about 20% more than U.S. homes. Canadian salaries are lower than US salaries too - yet their home prices are markedly higher. On some levels, you're getting more "home" today in the US.  A 1920 home would feel savagely uninhabitable to you if you tried to live in one now.  Here’s what I mean… In 1920: 1% of homes had electricity and full plumbing. Today: 99% of homes have electricity and full plumbing. What I mean then, by savagely uninhabitable, is enjoy walking to the outhouse in the middle of the night when it's 35 degrees. Then there's size: 1920: The average home had 242 sf per person. Today: The average home has 721 sf per person. Because today, family sizes are smaller and homes are way larger too. Today's amenities would be unthinkable in 1920—walk-in closets, roofs with R38 insulation, double-paned thermal windows, smart thermostats, voice-controlled lighting, quartz countertops, and Kitchen Aid appliances. Maybe even a security system. They’re all things that homes have today. Gosh, even the fact that you have a garage - a HEATED garage even, finished basement, air conditioner and modern washer-dryer would leave 1920 homeowners dumbstruck with their mouth agape—maybe even flabbergasted. Those old folks from yesteryear wouldn’t believe all that you get with a home today. Yet that 1920 home would have cost you more in gold, than today’s more sizable homes with all their plush amenities. Now, when it comes to - though home prices aren’t up, are they more “out of reach” for the average American?” Over the past five years, they ARE - because home prices have now risen faster than incomes over THAT stretch. But another BIG reason that homes are SUBSTANTIALLY more affordable today than they were in 1920 is… financing terms.  Today, you can make a down payment for between 3% and 20% on a home. Do you know what loan terms were like in 1920? You had to make a 50% down payment and then had to pay off your mortgage in 5 years.  Can you IMAGINE if that were the case today? How many people could put 50% down on a home today and then pay off the balance within 5 years. Virtually nobody. That’s why homes are more within one’s grasp today. Overall, you can see that there are a lot of countervailing factors here… tempering that it took 8 kilos of gold to buy a home a century ago, and it just takes 6 kilos today.  The bottom line here is that, long-term, real home prices aren't up. Dollars are down because they've been printed like crazy.  From today, nominal home prices could keep rising for years.     Dustin on social had a funny comment about this - “How many baconators from Wendy’s would it take to buy a home today?” Ha!    I don’t know. I guess that’s a hamburger - I don’t go to Wendy’s. Maybe then, a home costs 60,000 baconators today.    Coming up straight ahead - what will happen first - a $750K median-price home, $100K bitcoin, or $5K gold.   Also, what’s perhaps the biggest trend in real estate investing that not enough people are talking about - and how you can make money from it… and more… all next - I’m KW. You’re listening to Get Rich Education.  ______________   Welcome back, to Get Rich Education. I’m your host, Keith Weinhold.   On our latest GRE Social Media Poll, we ran this question.   What will happen first?   The median home value hits $750K. Bitcoin hits a $100K price. Or… Gold hits $5K.   I’ll give you the result, but what do you think? Again, which one of these three things will happen first?    The median home value hits $750K. Bitcoin to $100K. Or… Gold hits $5K.   The results across both LI and IG were pretty similar - sometimes you get differences there, as LI is a more professional audience.    One voter in the poll also commented - it’s syndication attorney Mauricio Rauld, who we’ve had here on the show before.    Mauricio said: I think assuming Bitcoin doesn't collapse, it probably makes a run to $100K in the next few years (who knows, could be next few months). But with the median home, at 10% a year, it would take 6 years to hit $750K so that is a decade away. That’s his thought - sounds reasonable.    The poll RESULT is: Bitcoin will hit $100K first. That was most likely, with 57% of you answering that. That makes sense since its volatile and close to striking distance.   The median home value will hit $750K finished 2nd. 26% of you said that.   And gold up to a $5K price got just 17% of the vote. That makes sense since gold prices would have to about double from here.   You can always join along in the conversation and polls. We are really easy to find - because on virtually every social platform - Facebook, Instagram, LI, YouTube - we ARE: “Get Rich Education”.   Over on the Get Rich Education YouTube Channel, I recently covered how the Fed is overseeing a “Tug of War” between inflation and a recession. They don’t want the game to end. The Fed is trying to keep the game going.    They don’t want participants on either side falling into a pit in the middle of the Tug of War game between inflation and a recession. They don’t want either side to win. If one side wins, the Fed loses.   This “Tug of War” game is really a great way to understand how the Fed works, how they control your money, and what their motivations are. A video about that is on our YouTube channel - where you get the visual of the Tug of War game between inflation and a recession.   That’s just one example of how that content is often different from what you’re hearing now. Get more… on our YouTube Channel… called “Get Rich Education”.   The homeownership rate just fell again a little, quarter-over-quarter, increasing the number of renters and rental demand, which I expect will only continue. From CNBC, Realtor.com’s Chief Economist Danielle Hale tells us more. Let’s listen in. It’s about why the housing market is pretty dire for young Americans, then I’ll be right back with some key commentary on this. Yeah, there in Economist Danielle Hale’s interview - if mortgage rates go higher, inventory pulls back and we tend to see modest HPA. Most agree that if mortgage rates go lower, we’ll see RAPID HPA.   She also just keeps exposing what we all know. “We need to build more housing”.   A brand-new home constructed with a renter in mind, sold to an investor, is known as build-to-rent housing. You’ll see it abbreviated BTR. It's usually single-family.   Some abbreviate it B2R. These must be the same people that say H2O instead of water.    It's become massively popular.   Despite an overall housing shortage, last year, a record 27,495 BTR homes were completed.    That's up 75% from the prior year and up an astounding 307% since pre-pandemic deliveries back in 2019.   So what's driving the build-to-rent trend? Locked into low mortgage rates, existing homeowners won't sell. So, instead, new inventory must be constructed. More overall housing demand than supply. Wannabe first-time homebuyers cannot afford homes today. Renting a BTR is next best. National BTR occupancy is over 96%. BTR operates similarly to apartment buildings under property management, yet offer a single-family living experience.   Some of these communities have: leasing offices, pools, and fitness centers.   The homes themselves often have: luxurious modern finishes, garages, and fenced backyards.   What's in it for investors? How do you make money with BTRs? 5% mortgage rates* (I’ll get back to that in a minute) A long-term ownership focus, generating revenue over time rather than immediately Tenants have a house-like feel. Expect 3+ years avg. tenancy duration. Mgmt. fees are low because all houses are the same and all in the same area too BTR purchase prices are HIGHER than resale property. You will pay more. Expect better appreciation than resale property The rent range is often $1,500 to $3,500 You can expect low maintenance. It's new. Builder home warranty So there are a ton of factors that give build-to-rent investor appeal. Really, 5% mortgage rates? Yes. Here at GRE, we can introduce you to some BTR homebuilders that will buy down your rate for you. One is lowering it to 4.75%.    I encourage you to get that incentive now, because when mortgage rates fall substantially, I don’t expect these national and regional homebuilders to keep giving you the rate buydown.    Sorry J-Pow. This kinda makes your next Fed rate decision… seem pretty irrelevant.   It's a great rental model to pursue and an amazing time to do it with the rate buydowns. I wish BTR would have existed when I began as an investor.   You really didn’t start hearing about BTR at all until about ten years ago.   Now, I appear as a guest on other business and investing shows. Quite a few times, the host asks me where the REI opp is today.    The answer that I’ve been giving is that it’s with build-to-rent properties and these rate buydowns.   An income-producing asset is like your employee that’s working for you—but without the personality problems. The property is also working for you 24/7.    Besides just helping you find the best BTR deals today, we can help set up an entire real estate investment portfolio plan for you.   -We can help build an income-producing RE portfolio for you with our free coaching. Truly free.    Now, if you’re new here, you might think that we’re trying to sell you something - and we aren’t.    The way it works elsewhere is that some people get attracted to the free thing and then once you’re on the phone or Zoom or free live, in-person event, they’re going to try to sell you their better PAID coaching or some online course for a fee.   We don’t even sell coaching or sell a course. This is free no-strings, no upsell, no catch coaching.    OK, it’s sort of the opposite of your auto dealer calling you about your extended warranty - an overpriced item that you don’t want. Ha! If you want to buy something from GRE, you can’t because we don’t even have anything to sell you. We are here to help!    Also, I have no problem with companies selling paid courses or paid coaching - not at all. Some courses are worth paying for. It’s just not what we do or have EVER done here.   But see, buying real estate that you own directly is still not as simple as just finding a keyboard and pressing: Ctrl, alt,  Deal.   So that’s why our Investment Coaches help you learn your goals, and navigate the process. Then you’ll want to keep in touch with your coach because the best deals are often changing.    For example, you might think that you want to buy income property in, just say, Alabama, because its prices haven’t run up as much as they have in Florida.   But we keep regular lines of communication open with build-to-rent homebuilders nationwide… and say there’s a new community, in, Florida, where the real deals are going to be for the next few months…    …and though you still like Alabama, you like how Florida is growing faster so you end up going there.   Or there’s better cash flow with some BRRRR strategy properties in say, Ohio, that we have that your coach informs you about.    So, I encourage you. Get & maintain a line of communication with your GRE Investment Coach.   To review what you learned today:   Leverage is THE most powerful wealth creator.   You can make the case that homes are NOT overpriced today. Home prices aren’t up; the dollar is down.   No one knows the future. But there is ample room for more home price growth.    Build-to-Rent property keeps increasing in popularity… and investors can get mortgage rates on them as low as about 5%.   To contact an investment coach, it’s free, start at GREmarketplace.com.   Until next week, I’m your host, KW. DQYD!

Become a time billionaire. In this episode of the Get Rich Education podcast, host Keith Weinhold explores the significance of living an extraordinary life, emphasizing the importance of time management and the value of time.  You are here today, gone tomorrow. Gain new perspective on life and death. The show promotes strategies for achieving financial freedom through real estate investing.  A hypothetical scenario examines the potential impact of eternal life on Earth's resources, prompting listeners to consider the implications of unlimited population growth.  The episode offers a blend of motivational content and practical wealth-building advice, with a side of philosophical musing on the nature of time and life's finitude. We listen in to Neil deGrasse Tyson’s “Life and Death: A Cosmic Perspective”. Resources mentioned: For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Welcome to GRE! I’m your host, Keith Weinhold. You need to become financially-free so that you have… time to be present and live in the “now”.    You are here today and gone tomorrow. There’s not much time to leave your dent in the universe. All that you ever have is now - and that’s how it will always be. Today, on Episode 500 of Get Rich Education.   Welcome in… to Get Rich Education. I’m your host, Keith Weinhold.   At times, people tell me something like: “Look at what you’re doing. You live an extraordinary life.”    Now, I might reply to that person with something like - “Thanks. I appreciate it. I like to get out and see the world.”   But do you know what’s really going on inside my head when someone tells me that I live an extraordinary life?    I’m really thinking, “Well, of course, I do. Don’t you? You design your life: So why would you choose anything… else or anything… less… than an extraordinary life?”    Esp. in this world of abundance that we all live in. That’s why you have zero reason to live any life that’s LESS than extraordinary - if that’s what you want.”   Investing for income now is a tool for freedom.   When you're no longer trading your time chiefly for dollars, that's when you can stop living a disembodied existence - when you’re living such that your mind and your body are in two different places.    Begin to own your time and truly be yourself.   You need time.   And you don’t have much time. That’s why, in my experience, it's better to err on the side of being too early over being too late.    Are you truly living… or are you only existing in space and time? I think that deep down… you know. Ask yourself. You already know the answer.   Remember, Episode 1 of this very show is called: “Your Abundance Mindset.”   But if you’re thinking in LIMITING ways, here’s the good news - the really good news for you.   You don’t have to believe everything that you think.    The good news is that… you were born rich. You were born with an abundance of choices. Society stifled that.    You don’t have to believe… everything that you think.    Since there's never a "perfect time" to build financial freedom, your conception that it's too early is often just your fear.    As long as you've got a few touchpoints, once you dive in, you'll figure it out.   Old people tend to regret the things they didn't do, or didn't do earlier—not the things they did.   The best reason for becoming financially-free is so that you can buy time and finally start to be yourself.   If you don’t want to do it for yourself, do it for someone you love… because there's someone in this world that needs you to be... you.   Since all that you’ll ever have is “now”, you need residual income to buy time so that you can spend more of your life present in the “now”.   Now, if you were to ask yourself, what made the most successful leaders in the world successful, was it the capital they had, their technology, the people they knew, or their mindset? Which one of those things was it?   It’s their mindset.   See, because if you took away the capital, technology, or friendships from Jeff Bezos or Steve Jobs or Mahatma Ghandi or MLK - whoever you want to use as your leader.   If you took away those elements but they retained their mindset, they would most likely go on to regain everything they’ve got.   That’s why you must deeply explore and consider, what mindset do you have, where did you get your mindset, and what mindset do you need for the decades ahead?   Did you get it from… your parents? If so, I’m sorry to say, that’s usually a red flag… and that’s where most of us get our mindset from.    But most people never learn differently.   Realize this - and this is a little hard to say. But the truth is hard.    Your parents don’t want your success. Isn’t that ironic? Your very own parents don’t want your success; they want your safety.    They want you to have a stable, safe, say, accounting job, in a cubicle that only gives you two weeks of vacation a year - because it’s KNOWN and average.   A ship in harbor is safe; but that’s not why ships are built. Some safety is OK. But you weren’t built to live a life CENTERED on safety either.   That’s not even approaching living your dreams or doing anything ‘extraordinary’.   Most people aren’t living their dreams. They’re living their fears.   When your parents had you at birth - in the hospital delivery room - they’d be thrilled to know that you’d grow up to live your DREAMS. But on the day-to-day, they’ve got you living your fears.    Once your parents got “newborn you” home from the hospital, all the way up to adulthood, an overly fragile safety mindset often becomes pervasive… and it stifles dreams.   If you don’t take a chance, you don’t have a chance. Take the risk or lose the chance.   Don’t live below your means; grow your means. It’s in your genes… though that probably wasn’t part of the mindset of your formative years.   I love my parents. They cultivated the right environment for me. But you’ll often find an overabundance of safety from yours - especially from your mother.   Eckhart Tolle said: “Most humans are never fully present in the now, because unconsciously they believe that the next moment must be more important than this one. But then you miss your whole life, which is never not now. That’s Tolle.   Alright. But once you’ve made time, what’s next? It’s how you arrange your priorities.    We think it’s about time management - and it STARTS THERE.    True achievers in life make large blocks of uninterrupted time - notifications off, phone one room away.   But more specifically, it’s about your priority management.   For me, I know that I’m going to be living in this same body 50 years from today - just like you will inside yours, so I make FITNESS a priority in life - often at the expense of investing & business opportunity.    That’s my take - it doesn’t have to be your take. That’s an example of priority management.   First, you’ve got to play a game worth winning. It’s been said that one question to establish focus is, ask yourself: Are you hunting antelope or field mice? This… idea is simple (but supremely powerful): A lion is capable of hunting field mice, but the prize wouldn’t be sufficient reward for the energy required to do so.  Instead, the lion must focus on the antelope, which does require considerable energy to hunt, but provide a sufficient reward. In whatever you are pursuing, are you hunting antelope or field mice? Are you focusing on the big, weighty, important tasks that will provide sufficient reward for your energy?  Or are you burning calories chasing the tiny wins that won't move the needle? Ask yourself this question from time and time and use your answer to reset as necessary. Always hunt antelope! When it comes to priority management…   … you’ve got to make time for yourself and create better “nows” for yourself beyond the mandatory loads that you’re already encumbered with.    Because you’ll still have meal planning, grocery shopping, doctor’s appointments, housekeeping, scheduling, meeting, driving…   There’s not much leftover discretionary time left over to make you the you that you need to be - whether you’re trying to be the best equestrian rider that you can be because you connect with horses…   …you’re trying to be the greatest PARENT ever, cleaning up a beloved local creek, coaching your kid’s sports team… or maybe you’ll move heaven & earth to write that book that you just KNOW that you have inside of you. Get it out there!   But instead, people rationalize away their low quality of life.   If you’re working for the weekend, examine your M-F. You’re not living in the “now”. If you call Wednesday “hump day”, you’re not living in the now.    The good guys are BRAVE enough to risk investment, commitment, marriage, being vulnerable to family members, and all those things that make the non-doers and bad guys envious. Be brave enough to study and then risk boldly.   This is sad. You’ve probably heard of stats like this before - a Pew survey from last year found that 46% of US workers who receive paid time off from their employer take less time than they’re offered. Almost half!   People rationalize away their low quality of life - actually defending living a small, scared, too-safe life.   If you need a push to fire up Google Flights, consider that you will be happier because of it.  That’s what the science says: researchers from the Netherlands found that the biggest boost in happiness around vacations came from the simple act of planning one. Then you get to anticipate it. How important is it to build a residual income rather than work more hours? Is working more and working late the answer?   Understand… that twenty years from now, the only people who’ll remember if you worked late are your kids.   Instead, become a time billionaire. Let’s lean into this and look at what some others say.   Graham Duncan proposed the concept of the Time Billionaire. If you’ve got a billion seconds worth of wealth, that’s 31 years. He said that:   "A million seconds is 11 days. A billion seconds is 31 YEARS… I feel like in our culture, we’re almost obsessed, as a culture, with money.  And we deify dollar billionaires in a way...And I was thinking of time billionaires that when I see, sometimes, 20-year-olds—the thought I had was they probably have two billion seconds left.  But they aren’t relating to themselves as time billionaires."  That’s what Graham Duncan said. The central point here… is that TIME is our most precious asset. No one ever posts pictures of napping on the sofa on social media. But if you’re a time billionaire - you might consider that an ostentatious display of time wealth. Ha! When you're young, you are RICH with time. At age 20, you probably have about two billion seconds left (assuming you live to 80). By 50, just one billion seconds remain. But as Graham Duncan pointed out, we don't relate to ourselves as the "Time Billionaires" that we really are. Most of us fail to realize the value of this asset until it is… gone. In his passage called On the Shortness of Life, the stoic philosopher, Seneca, says, "We are not given a short life but we make it short, and we are not ill-supplied but wasteful of it." That’s Seneca. To me, being a “Time Billionaire” isn’t necessarily about having the actual time, but about the awareness of the precious nature of the time you do have.  It’s about embracing the shortness of life and finding joy in ordinary daily moments of beauty. Let me introduce the “Surfer Mentality”. Yeah, the surfer mentality. When a surfer gets up on a wave, they enjoy the present moment, even though they know with certainty that the wave will eventually end.  They fully enjoy THIS wave, with the wisdom and awareness that there are always more waves coming. There are five ways that you can apply this “Surfer Mentality” and have this awareness in your life: (1) enjoy your next wave and embrace the present moment, (2) be strategic about your positioning in between waves, (3) PASS on more waves rather than jumping at the first one that comes your way, (4) always get in the water and stop sitting on the shore, and (5) roll with the punches that life deals you. That’s the “Surfer Mentality” Do not become an ostrich. An ostrich will bury its head in the sand to avoid danger. A lot of humans behave the same way when they encounter new information that challenges their existing beliefs or views.    An ostrich cares more about being right than finding the truth. Do not become an ostrich, embrace new information that forces you to change your mind. That, right there, is growth.   A great, actionable way for you to GROW with the time you’ve created and the priorities that you’ve outlined is to Do something new that scares you. This is EXACTLY what you did as a kid but that you forgot how to do.    For example, when you were age 11, you swam in water over your head for the first time. It made you rise up, grow, and gain confidence. I can’t tell you what grows inside you psychologically, but…   We’re operating 200,000 year-old mental software. That’s when the modern human brain came into existence.    Our primordial brains are evolutionarily wired to see problems - to detect threats like lions & tigers - and our body still responds to those threats like they are lions.   And today, we don’t have to look very hard to find those problems. Just turn on the news or scroll social media and there they are.   And in this environment, it can be easy to let ourselves be yanked around by our circumstances.   When it comes to OTHERS - peers, family, and friends along your life journey…   You have to be strict with yourself but tolerant of others.    That’s what the stoic Marcus Aurelius wrote about in his meditations. He has these exacting high standards.    Most people don’t have the self-discipline that you do… and it’s called SELF-discipline for a reason.    It’s not a thing that you get to project onto other people. You don’t get to go around insisting that other people follow YOUR standards and your code.    You have to be encouraging and forgiving of other people because they don’t have the gift that you have. They don’t own the drive that you have. There’s even a saying in ancient Rome.    “We can’t all be Catos.” If you remember from history, Cato was the influential leader that championed Roman virtues during THEIR empire.   We have to be tolerant, and accepting and encouraging of other people. If this realization is still frustrating to you…   Another way that you can think of this, is that others never signed up to the code and standards that you have.”    Money is a tool for freedom. The best reason to accumulate wealth is to buy yourself freedom from anything you don’t want to do, and the freedom to do the things you do want to do. Money is not an end in itself. If you sit on it and never use it, you’ve wasted your life.    Money CAN absolutely buy happiness. But only so long as you spend it on upgrading and expanding the things that make you happy or in buying time, instead of using it to play status games or on fleeting experiences.    Increase the difficulty. If you’re listening to this, then your life is (probably) already on easy mode compared to the global and historical standard. You need to strategically introduce some challenges to keep yourself motivated. Don’t ruin yourself, but don’t let yourself get too complacent, either.    Investing involves risk. You’re going to lose sometimes. The good news is that you don’t have to make money back in the same PLACE where you lost it.    If something in your business or life is losing money, you don’t have to plug the hole right there at that spot. Often it’s easier to make the money back elsewhere.    It’s never the right time. Any time you catch yourself saying “oh it’ll be a better time later,” you’re probably just scared. Or unclear on what to do. There is never a right time for the big things in life: having kids, changing jobs, breaking up, getting engaged, or buying the property.    Err on the side of too early over too late. Related to that point, since there’s never a “perfect time,” it’s almost always better to do things “too early.” Your conception that it’s too early is just your fear, and once you dive in you’ll figure it out. Old people tend to regret the things they didn’t do, or didn’t do earlier. Not the things they did. Bad things happen fast, and good things happen slowly. This is one reason why bad news seems more newsworthy - but it’s not actually more important. It’s hard-wired within you that money is a scarce resource.  Don’t be afraid to commit. You’ve got to let go of fear about tomorrow and just get on with it.    Uncertainty is a PERPETUAL condition - it’s existed in your entire past, and will in your entire future. That’s why you feel uncertainty in the present too. Uncertainty only disappears when you die.   We all want to know the future. But the truth is, it’s easier to make decisions within your certainty of NOW rather than postpone & speculate about your perpetually uncertain future.   “Life is meant to be lived, not postponed.” Don't get so caught up trying to make a living that you forget to live a life. That's not a life well-lived.   Regretting past decisions is an utter waste of energy. Does the past exist now separate from your own thoughts? Nope… it doesn’t even exist.    Coming up - you’ll hear ANOTHER voice with a more COSMIC perspective about life and the power of “now” - it includes some sound effects to anticipate.  Then I’ll come back in for today’s conclusion. I’m Keith Weinhold. It’s Episode 500 of Get Rich Education.    LISTEN: Neil Degrasse Tyson: Life and Death - A Cosmic Perspective   That’s Neil DeGrasse Tyson on the significance of life, death, and the power of “now”.   Horace Mann said, "Be ashamed to die until you have won some victory for humanity."   Life feels ordinary. But in fact, it’s incredible that you overcame tremendous odds to have your… one… precious life.   In order to be born, you needed: 2 parents 4 grandparents 8 great-grandparents 16 second great-grandparents You needed 32 third great-grandparents 64 fourth great-grandparents 128 fifth great-grandparents 256 sixth great-grandparents To be born, you needed 512 seventh great-grandparents 1,024 eighth great-grandparents and 2,048 ninth great-grandparents For you to be born today from 12 previous generations, you needed a total sum of 4,094 ancestors over the last 400 years. Think about what they overcame… to produce you – How many struggles did they have? How many battles? How many difficulties? How much sadness did THEY have?  How much happiness? How many love stories created you? How many expressions of hope for the future? – did your ancestors have to undergo for you to exist in this present moment… The past is history, the future is a mystery, and this moment is a gift. That’s why they call this gift, “the present”.   Spend your time where time disappears. Your work should feel like play… your passions should feel like flow… with people that make hours feel like minutes.    The more present you are, the quicker the present goes. That’s the paradox.    A full life goes fast. But in the end, time that flies… is time well spent. And a life that flies by… is a life well spent.    At least here on Earth, all you’ve got is one life and one shot.   You shouldn’t fear death. You should fear a life where you could have accomplished more that fulfills your potential and aligns with your soul.   You’re here today and gone tomorrow. You’ve got NOW to go leave your dent in the universe.   There’s no time to wait. You now have less time remaining in your life than when you started listening to me today.   All that you ever have is now - always. Don’t Quit Your Daydream!

Other people study one real estate group’s enormous success. Go behind the scenes to learn how they pulled off “The Memphis Miracle”. Terry Kerr and Liz Brody from terrific turnkey property provider, Mid South Home Buyers of Memphis, TN, are back on the show.  Here’s what makes them different: junk in the backyard rather than a dumpster, property addresses viewable on their website, no tenant application fees, no maintenance upcharges, no materials upcharges, no earnest money, investor cancellation allowed, specific kitchen & bath renovation, and tenants bring their own appliances. Memphis has such a robust renter culture that tenants bring their own appliances. Hundreds of GRE followers have purchased income property from Mid South Home Buyers. They’re such a popular provider that there’s an investor waitlist. For GRE followers, you can reserve up to two financed properties or three all-cash properties all at once. They offer in-person tours to see the properties. Start at MidSouthHomeBuyers.com Resources mentioned: Mid South Home Buyers' Website: www.MidSouthHomeBuyers.com Liz Brody’s e-mail: [email protected] For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Speaker Weinhold** ((00:00:00)) - - Welcome to GRE! I'm your host, Keith Weinhold. Today we're going to visit one of my favorite real estate markets. We'll talk with an operator there that is so successful and different that other companies actually study them. And our listeners have loved them for almost ten years now. Today on get Rich education.   Speaker Syslo** ((00:00:23)) - - Since 2014, the powerful Get Rich Education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate, investing in the best markets without losing your time being a flipper or landlord. Show host Keith Wine, who writes for both Forbes and Rich Dad Advisors and delivers a new show every week. Since 2014, there's been millions of listeners downloads and 188 world nations. He has A-list show guests include top selling personal finance author Robert Kiyosaki. Get Rich education can be heard on every podcast platform. Plus it has its own dedicated Apple and Android listener. Phone apps build wealth on the go with the get Rich education podcast.   Speaker Syslo** ((00:01:01)) - - Sign up now for the get Rich education podcast or visit get Rich education.com.   Speaker Coates** ((00:01:08)) - - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Speaker Weinhold** ((00:01:24)) - - Welcome to GRE! From Sandy Creek, New York to Walnut Creek, California, and across 188 nations worldwide. I'm Keith Weinhold and this is get rich education. Some call Memphis, Tennessee the best place in the entire United States for income producing homes. And in past shows, we talked about all of those reasons on why that's true the economic, the geographic and the cultural. So all that I will add to that is, did trends like the era of Covid and this nascent sea of I did that change the advantageous Memphis economics over these past? So 3 to 5 years? No, not really, because this distribution hub market, air barge, rail and truck is still really the center of the most powerful nation on Earth when it comes to distribution. If you're moving a package from New York to LA, you're going through Memphis.   Speaker Weinhold** ((00:02:24)) - - The reason that really matters is that those distribution jobs are not transient. It's tough to outsource that activity to Thailand. Lots of things make Memphis well known Memphis barbecue, Beale Street, Graceland Elvis the birthplace of both rock n roll music and blues music. The Mississippi River, the Fedex hub. What we're doing today is going deep inside an enormously successful real estate group there in Memphis. They provide properties to investors. This is going to get rather interesting, because there are just so many things that make them different things they do that no one else that I know of does in the industry. In fact, during our discussion, if you miss any of these differentiators, all summarize them for you at the end. Today, other companies study these people. For example, their properties are totally viewable by the public. You can easily see them physical address, proforma and everything right there on their website. It's just one of a number of things that makes you say, gosh, why don't more people do things the same way that these people do? Now? When I visited Memphis with today's guests, we looked at properties in all different construction stages.   Speaker Weinhold** ((00:03:48)) - - At one, there was a giant pile of junk all over the backyard, and that is exactly according to their plan because we were touring a property mid rehab and they don't put a dumpster out on the street like everyone else does. Why is that? Because renting a dumpster is costly and it makes the neighborhood look blighted for a while. They just put all the refuse in the backyard and come by and have a junk collection day for their properties later. And then, oppositely, I also saw other beautifully finished homes where the real hardwood floors shined so much that I wondered when I could move in myself. Now, when you add a property to your real estate portfolio, you can do things like get a property inspection and check out that property today, and maybe even learn about your tenant before you buy a property. But one thing that you don't know is what kind of tenant could this property attract in five years? Well, in Memphis, as you'll see, it is a complete renter culture there. In fact, with the provider that we're about to talk with today, when I visited Memphis and this was quite a while ago, I was driving around with them and they were showing me their sample properties, and I asked them about appreciation in the areas where they buy.   Speaker Weinhold** ((00:05:12)) - - I asked what about appreciation? And they began talking about rents. They thought that I meant rent appreciation. No, that's not the way that I talk. Appreciation means capital price to me. But that fact right there is just indicative of the renter culture that they have there. Let's learn more about it and take a trip to Memphis. Today. It's like the return of two longtime terrific friends. It's Terry Kerr and Liz Brody from Midsouth homebuyers in Memphis. Welcome in.   Speaker Brody** ((00:05:50)) - - Hi, Keith.   Speaker Weinhold** ((00:05:51)) - - Hey, Keith. Thanks so much for having us again.   Speaker Brody** ((00:05:53)) - - Always love to be here.   Speaker Weinhold** ((00:05:55)) - - Oh, yeah. Now, I've never heard sticks, bricks and mortar talk, but if they could, they would probably sound like you two. And that's because you really are the figurative voice of properties that so many of our followers, probably hundreds, now, have bought over the years. So I just think it's reassuring for us to hear your voice here on great every couple years. And, Terry, this really all began with you 22 years ago.   Speaker Weinhold** ((00:06:20)) - - You found that you simply enjoyed fixing up houses. Then you found that others like your ability to renovate property for them, and then you began doing it at scale, placing tenants, starting your own warehouse, which I was inside when it was new. You brought in property management and more. And now that you lead a team that's done thousands of rehab properties and you've even added new build, we'll get to that later. You're still Memphis based. But six years ago you branched out to little Rock, Arkansas, two hours to the west. But with all that, Terry, back from the start, when you began rehabbing Memphis houses, at what point did you learn the fact that, oh, now you just happened to be from an Investor Advantage City, where you get high rents in proportion to a low purchase price? Like, when did that epiphany occur? I tell you what, I'm the luckiest guy I know.   Speaker Kerr** ((00:07:12)) - - I was born in the right city at the right time, and was able to cultivate an incredible team of pros to help me run this business.   Speaker Kerr** ((00:07:22)) - - Obviously, Liz has been here for 15 years running and gunning with me, but I would say when I realized that we were super fortunate to be in Memphis, Tennessee with all the awesomeness that it provides for cash flow, it was probably right in the middle of the credit crisis when it became real obvious that even though there was, you know, blood in the street, if you will, there was a ton of opportunity. And it came from a buddy of mine who had about ten houses that he had fixed up himself and was managing, and he started buying from us. And I asked him why, and he said, because as the leverage of time, I can buy them from you already fixed up for the same price that I will have in it, if not more, when I'm spending my own time. And that's when really and truly, the idea became crystal clear that passing bargains on to bargain hunters was where we were going to focus.   Speaker Weinhold** ((00:08:20)) - - You surely found your niche, and in being from Memphis and finding that right niche and finding the right properties, most people find in that sense that buying super cheap homes looks attractive on the surface to go fix up, but it often doesn't work because you're in blighted neighborhoods.   Speaker Weinhold** ((00:08:40)) - - And then in the opposite end, you don't want to go to high end because the rents really aren't that good for the higher purchase price. And both Terry and Liz, you can feel free to chime in on this, but let's talk about the formation then of your go zone versus your no go zone. So we're really talking about sweet spot discovery here.   Speaker Brody** ((00:09:01)) - - I always kind of love your origin story a little bit. As far as maybe buying a little bit too low. Right. feeling the pain. Yep. Having to protect the materials you're putting in the renovation. Overcorrecting swinging up to the pretty stuff. That kind of sounds nice at the cocktail party, but shelling out a bunch of money for very little return. It has never made sense. I have a lot that I prefer about working class renters over a class renters, if you will, for so many reasons. They stay longer. It costs money to move a class. Renters are more litigious. They're going to go be homebuyers. It's a lot.   Speaker Brody** ((00:09:36)) - - If you're paying tip top rent, you're going to call on a work order because your door handle is loose. And at the end of the day, the lower your rent is, the more people can afford your property. You want to talk about being recession proof. Being in that working class area really, really helps. So there's a lot to it.   Speaker Kerr** ((00:09:54)) - - There is. And, as of this morning, our, occupancy rate was 99.17. It'll dip down into the mid 90 eights around the holidays. Liz, you hit the nail on the head. I mean, where you want to operate in the zone where you can have the highest occupancy rate. And, although a class properties that may look nice, but folks don't stay long because they're more transient, they end up buying a home for themselves. So in the beginning, we did things the wrong way a lot. And we, you know, scraped our toes and scuffed our knees. And we're just fortunate that we were able to figure it out and then work it to scale.   Speaker Brody** ((00:10:28)) - - And another thing I think that is really neat and powerful about our roots as a company that I always love is so, so Terry, realizing that he wanted to, you know, pass on bargains to bargain hunters, he'd been buying and creating these homes. For himself. You were building your own rental property portfolio, as people do, but there was a doctor that we had sold a number of houses to, but Taylor was not managing them, and they were out at dinner and they were comparing notes, and Terry's properties were outperforming the doctors. And they were identical. They were identical rehabs, identical everything. And the difference was Terry's management doctor said, I'm not going to buy any more houses from you unless you will manage my properties too. And you'd known the day was coming. He'd been thinking about it anyway. But we had a property management company. It just managed Terry's properties and so much about how we manage properties. And that really is feeding into that 99% occupancy rate came because Terry designed his property management company as an owner.   Speaker Brody** ((00:11:30)) - - One thing we've talked on about here before is how we don't charge application fees to renters. That's because when Terry was standing in the front yard of a house that he had spent his life savings, his nights and weekends renovating, he didn't care about $50 an adult head from an application fee. He wanted to get the best human being possible in his home. And to this day, we are the only property management company I know of coast to coast. That is a no application fee at all times. Company not up charging maintenance, not charging materials. There's so much that is unique about how our property management company operates, because if Terry didn't say, I'm going to manage your properties differently than I manage my own, I just think that's a really important foundational forming sort of a factor for how we manage.   Speaker Weinhold** ((00:12:17)) - - You do so many things differently there that you're really interesting to study, and your primary business is renovating homes and selling them to investors like me and our followers that want to hold them with a tenant in it for the long term production of income and leverage and all of that.   Speaker Weinhold** ((00:12:35)) - - The neighborhood. It wouldn't matter to you as much, probably, if you're just doing in and out fix in flips where you don't have any future ongoing relationship with that buyer of your rehabbed property. Therefore, in that case, you would have less neighborhood concern. But now, of course, the neighborhood, it really matters to you because you are managing what you sell.   Speaker Kerr** ((00:12:58)) - - Absolutely. And that's why not only is it the neighborhood that matters in managing what we sell, but it's also why we like to buy the houses that are in the worst condition. Because the worst condition of property is when you buy it, the more things you can replace, right? And so we're proud of the fact that we're taking the ugliest house on a street that was owned by a local investor who maybe bought it 30 or 40 years ago, managed it, his or herself, retired, and is then at a point in their life where they want to sell it. Typically there's tons of deferred maintenance, and we're proud to be able to buy those houses and pay a little more than the market, because we have honed our skills at taking these houses that are in super bad shape and bringing them all the way up to the best house on the street.   Speaker Brody** ((00:13:45)) - - And Keith, you hit the nail on the head. We're not just walking away. Our acquisitions team actually passes on about 25 houses. For every one that we put an offer in. You can actually look at our inventory on our website. And so when you go to the available property section of Midsouth homebuyers, those 50 or 60 houses you're seeing, each one jumped through 50 or 60 hoops to become a Mid-South homebuyers house. One thing I always tell folks is, as you know, Keith, we have a short waitlist for our properties, but my acquisitions team is not out there thinking about me and my waitlist. It is actually a mandate from Terry that we do not pass on a property to an investor that he would not probably own in his own portfolio, and we have no one wants to manage a problem property. Nobody wants to manage a property in a neighborhood that can attract a quality renter. If you get approved with our property management company, that means you would be approved anywhere in town within the limits of your income.   Speaker Brody** ((00:14:43)) - - That's the way of stating, essentially, that our renters have choices and options about where they live. People with choices and options don't put their families in unsafe neighborhoods, let alone environmental factors. Being close to a corner store that gets too much foot traffic, highway noise, just little things like that. And we're built on repeat and referred business. And frankly, our profit margins are really slim per house. So there's just no reason to buy a house that is less than and risk a repeat buyer risk or problem, something that's harder to manage.   Speaker Weinhold** ((00:15:18)) - - Yeah. So we're talking often about rehabbed single family homes here. Your price points seem to be between 95 and 160 K for that. And sometimes you have duplexes and other more expensive properties. And these are good houses in pride of ownership neighborhoods that I have been inside with each of you. So that's what we're talking about here. But you. Another differentiator. There is something that makes you guys different, and that's the fact that you do publicly put your physical addresses out there for anyone just to see easily on your website.   Speaker Weinhold** ((00:15:50)) - - That's something that a lot of companies don't do. Can you tell us why that is? Why do you make this so publicly available and that few others do?   Speaker Kerr** ((00:15:59)) - - So our philosophy has just been we want to be the easy folks to work with. Whether it's our investor partners are bankers, contractors, subcontractors, internal employees, closing attorneys, whatever it is. And and so we also wanted to make it easy for folks to learn about how to shop for a turnkey seller in any market, whether it's us or anywhere in the US. And we want to make it easy for folks to go in and check out our properties, see what we have under contract to sell and use those properties, kind of as a litmus test to kind of get used to what's going to be coming down the pipe for them if they hop on the wait list. So we don't want to make our potential investor partners jump through hoops so we can grab their email address and give them the hard sell. We pride ourselves on being able to communicate what a turnkey seller can do to provide value and operate from an educational standpoint.   Speaker Kerr** ((00:16:54)) - - And and in the same vein, it's the same reason, like Liz was mentioning, that although we do all the same background checks, credit checks, employment verification, we don't charge our residents for that. And it's the same way, like when we sell houses, we do not require earnest money. So someone puts a house under contract with us, we've never required any earnest money and someone can cancel for any time for any reason. Because if life happens to someone during the contract process, we are not going to hold their feet to the fire. And one of the other little example of us really working hard to be easy to work with is property management. Most property management companies, you sign a contract and you're locked in for this period of time. If something happens to someone for some reason and they like, have to put their parents into a nursing home or their kid doesn't gets into a college, it's really expensive and they need to sell or whatever it is. Like there's no oh, you're locked into a contract.   Speaker Kerr** ((00:17:50)) - - So we're just looking to be easy to work with and operate from an educational standpoint.   Speaker Brody** ((00:17:58)) - - I don't want you to be popping champagne at the closing table. Or confetti if you don't drink. If the wind change directions for any reason, if you want to take it to Vegas, we understand one of the fun things about our business model is the house's cash flow for us as well. They really do make money and so we're able to approach it from that. And personally, as I educate folks about us, you know, Mid-South is one of the most formulaic businesses that especially in real estate, where there's such a wide variety of things that I have ever encountered, almost going back to acquisitions and how picky we are on the houses and how they have to jump through so many hoops. One thing I like to tell investors, as many people know, I buy directly from the company. I pay full price. There's no employee discount on a house. I pay 10% management until I got to a portfolio size and so on.   Speaker Brody** ((00:18:47)) - - And what I tell folks is when I get my down payment saved up, I'm ready to buy my next Mid-South house. Keith, I've found that house in 3 to 4 weeks because there's nothing to hold out for. There's nothing to wait and see. There's not that one special deal. And so going back to the houses being all on the website. So there's kind of a two pronged thing there. So our leasing team, we often take a deposit from a renter before we're even done with the rehab. Just like we get a lot of investor referrals, we get a lot of renter referrals. We are the only turnkey that I'm aware of as an example, that does all new kitchen cabinets every single time. Nothing wrong with painted cabinets. I've lived in houses with painted cabinets, but we all know kitchens and baths rent houses and they sell houses. And that's like my leasing team is showing these renters the all new tile shower surround, the all new kitchen. I am able to show investors. Since we do have we're grateful to have more investors and houses, and we do have kind of that short, maybe 90 day wait time before they can get houses.   Speaker Brody** ((00:19:50)) - - I say jump on our website, have a pretend shopping trip, pretend every one of those houses is available today and you're going to write a check today. And the 4 or 5 that you kind of start to identify as ticking your boxes if you're like in 320 Maple Street today, I am going to have 490 Maple Street for you. Same zip code, same cash flow, same price to rent relationship. And that means it makes sense for you to join our short wait list because you're going to see that same thing. And so it's very helpful. And I think most other people's approach and there's nothing wrong with this, but you're going to have our friendly competition. There might be a five year old water heater and a 20 year old roof, and this house has a new water heater, but an even older roof. And the price and the relationships are kind of all over the map. And they'll say, well, it's because of area and this and that. And again, back to me being able to pick out my Mid-South house within about three weeks of having decided I'm going to do it.   Speaker Brody** ((00:20:46)) - - And I know this isn't very scientific. I go on like trying to curb appeal within my price range, because Mid-South has hammered out every other floor and they get so interchangeable. And so the web that having all of our properties, even though they're under contract to investors at the top of the wait list available where everyone can come and see that is so helpful.   Speaker Weinhold** ((00:21:06)) - - Yeah, because of course it's about making the right upgrades when it's going to be a rental property. Words like opulence and extravagance really don't make a lot of sense here. I mean, adding a wine cellar with mahogany finishes and marble floors to might boost the price. 40 K and not only would you over improve the neighborhood, but your target tenant, they might only pay $25 more per month for that. So it's about making those right upgrades like you touched on.   Speaker Brody** ((00:21:34)) - - I always say, every dollar we spend is either to defer maintenance or to attract another dollar in rent. And if it doesn't check those two boxes, it doesn't make sense. So an example would be if you were going to sell something retail to an owner occupant, maybe an eight foot wooden cedar privacy fence might make sense for a rental property over a chain link.   Speaker Brody** ((00:21:56)) - - It does not get you $1 and you're that was going to, you know, rot and so on. And so that's our approach on everything. But there is money you can spend that does attract another dollar in rent. And that's when we spend it.   Speaker Weinhold** ((00:22:08)) - - Now there's something really interesting going on in you guys. Is geography both in Memphis and out in little Rock. When we talk about those physical amenities inside a property, and that is with appliances rental demand in Memphis, and little Rock is so high that tenants bring their own appliances. Tell us about that.   Speaker Brody** ((00:22:27)) - - Actually, little Rock is more like the rest of the country. It's one of the things that we I kind of use that website for. So it's one of the few differences you'll see between our houses is if you're looking at the kitchens and the Memphis houses, there's no appliances. If you're looking at the kitchens in our new construction properties, because it's at a rent point or that kicks in in our little Rock properties, you're going to see brand new black or stainless steel GE whirlpool appliances in there, but about 80% of our inventory is going to be renovated properly.   Speaker Brody** ((00:22:57)) - - In Memphis, where you will not see those appliances and is Terry knows I came to him 15 years ago from a different market and about ten years in property management, and he casually and calmly told me to remind the renters to bring their own appliances. I had come in from the leasing side and I thought, I'm working for a lunatic. I am about to get laughed off the phone. Oh my gosh, am I even? I'd been there a week. I was like, oh man, what are we doing? And literally the first Mrs. Smith, if you will, that I spoke to on the phone, I kind of softly whispered with trepidation for the backlash, don't forget to bring your appliances. And she was like, oh yeah, of course. And she actually paused and said, they're not in there, right? There's nothing in there because she owned her own appliances. Our average renter is coming to us from another single family home. One of our many rules is you have to pay rent yesterday.   Speaker Brody** ((00:23:53)) - - We want a lot of folks will take two years. Landlord history, and it's okay if you've lived with your mom for a year. There's a lot of ways that our criteria is just a little bit more stringent. Our typical renter is coming to us from another single family home. They have a lawnmower. They own their stove, they own their fridge, then they own their washer dryer. And it is just a subtle perk. You don't repair them. You don't replace them.   Speaker Weinhold** ((00:24:14)) - - Yeah. That's interesting. I'm a geographer. I often think about and love maps. Maybe I need to do some research and make a range map of where tenants travel with appliances. Does that happen up in Missouri or out in Oklahoma? Or just where do the limits of that map and you're listening to it versus occasion? We're talking with the voices of Mid-South homebuyers Terry Kerr and Liz Brody. When we come back, I'm your host, Keith Windle. Role under the specific expert with income property, you need Ridge Lending Group and MLS for 256 injury history from beginners to veterans.   Speaker Weinhold** ((00:24:53)) - - They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866.   Speaker Weinhold** ((00:26:11)) - - Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six.   Speaker 6** ((00:26:23)) - - This is Rick Schrager, housing market intelligence analyst. Listen to get rich education with Keith wine old and don't quit your daydream. He.   Speaker Weinhold** ((00:26:42)) - - Welcome back to get Rich. We're talking with Terry Currie and Liz Brodie of Midsouth Homebuyers based in Memphis, Tennessee, because they do so much volume and through their operational efficiencies like they've been describing, you can see why it's attractive to both tenants and investors. If a tenant can pay the same rent or 3% less rent and get a 12% better property, that's why they have such high occupancy. And although your bread and butter, sort of where you started out as doing renovated properties in Memphis, you've joined in and really help give the nation what they need. And that is new build property to help deal with the national housing shortage. So can you tell us more about what you're doing with New Build?   Speaker Kerr** ((00:27:23)) - - We heard from our investors for a long time, and we found out very quickly that residents also like the new construction director for rental and typical fashion, you know, we stuck our toe in, we made sure our foundation was built and we were ready to handle it.   Speaker Kerr** ((00:27:37)) - - And we slowly but surely started doing new construction in little Rock with just small developments, 130 unit development, another 30 unit development with lots of scattered lot. And now in Memphis we're doing the same thing. And we have got what Liz 1215 going right now. new construction going in Memphis. And we are definitely continuing with our bread and butter rehabs, but we're really happy to be able to offer new construction director rental properties that are built specifically for rental with ten year transferable slab warranties, PEX plumbing, hip roofs, the whole nine yards just to make them just darn near maintenance free on the exterior. And they are just flying off the shelf with renters and investors alike.   Speaker Brody** ((00:28:26)) - - It's been just fantastic. You can see them on our website. They have a special new construction label. And the we have a really cool IRR calculation on the website. And we have turned up the appreciation ratio for the new construction. It's the only way any house is calculated any differently than any other house. And I think there's just a really neat value to that in that when that investor is going to go sell that house for a profit in 15, 20 years, though, plenty of folks are leaving them to their kids, and this applies as well.   Speaker Brody** ((00:28:58)) - - You're selling a 15 year old house. That's kind of cool. It's just been really neat and one of the best things. Keith, I know you know, that our wait times had gotten and we are grateful because we were doing over 400 houses a year. But at one point our wait times were over a year.   Speaker Weinhold** ((00:29:13)) - - We're talking about your investor.   Speaker Brody** ((00:29:14)) - - Waitlist investor wait time. Thank you. Yes, the amount of time if someone called me and wanted a house today that they would have to wait as I got houses to everyone ahead of them in line. We now have a faucet and it's the new construction faucet and we can turn it on. And that additional, I believe that we provide an extra 70 houses in the last 12 months from new construction has our wait times down to 90 days or so for a financed investor, and about 45 on a cash buyer side, 45 days. And so we're just thrilled we're able to work with folks doing 1030 ones in a way we never have before. And it's just great to be able to kind of meet some of that demand.   Speaker Weinhold** ((00:29:57)) - - And you really get in there and work closely with investors that have 1031 exchange timelines to meet, and you can more easily do that now with that increased faucet flow with your new build.   Speaker Brody** ((00:30:08)) - - Absolutely, I love it. And so because for so many years, and we've always been so grateful for the demand, but I got calls. I'm selling $1 million property in California, I'm selling a $2 million property in New York. And I was so much fun to disperse with you. And while it is still just one at a time for finance buyers, so I've been doing case by case exceptions for that and for get Rich education listeners. I want to make that as just a permanent exception, that they can do two financed properties at a time. Right. And then cash folks can do three at a time. But then we are now able to have a 1031 program where if you reach out to me and we're going to discuss the date of the sale of your subject property, what your needs are. That way I can make sure my wait times that I'm quoting to other investors are accurate.   Speaker Brody** ((00:30:51)) - - We're going to make sure you're meeting your 45 day timeline. As you might know, you can do you could identify actually before the subject property is sold, which I find some people don't know, we're able to, even with all the demand for our properties, help people avoid those taxes and do the 1030 ones.   Speaker Weinhold** ((00:31:09)) - - The tax deferred exchange for people with all the accumulated equity in the Covid run up. And just real quickly, of course, this is going to change if you're listening to this five years or even one year into the future. But what are the interest rates on the buy downs that you're doing on the new build properties for the investor?   Speaker Brody** ((00:31:27)) - - So that's one of the coolest things. So and I really think Fannie and Freddie that they're doing this right. As you know, Keith, and as you talk about there is a housing shortage. Nobody loves higher interest rates. But they cooled the. Market, I think, in the way that they wanted to, but they're still encouraging new construction. And so we are able to do called a forward commitment, but we pre buy down the rate for the investor.   Speaker Brody** ((00:31:51)) - - And as people deep in real estate may know, the sellers can only contribute 2% of the purchase price to a buyers closing cost. So your average buyer can only buy their rate down X amount. What we're doing is buying it down ahead of time on these new construction properties, and you still have all the range to buy it down more on top of what we've done. So that really is a big difference. And so right now on our new construction properties, folks can get as low as 5.75.   Speaker Weinhold** ((00:32:19)) - - That's really attractive.   Speaker Brody** ((00:32:20)) - - Yeah, it's really great. You walk in the door at 6.3. I see folks out there running their numbers at 8%. And it's really fun to tell them, oh no, no no that past that. So yeah, it's been wonderful.   Speaker Weinhold** ((00:32:32)) - - That's really some of the best news. Well, the two of you have always done things differently. You've been really fairly innovative in a number of ways, in my perspective. In fact, when I visited your office back in 2015, I still remember when you had the electronic status board of your properties up there.   Speaker Weinhold** ((00:32:51)) - - This is at a time when most companies were using a whiteboard and a dry erase marker and all that. So you're always engineering in efficiencies to the things that you do in winding down here at. Tell us a little bit more, including the investor tours that you offer so often because you're so proud of what you've got there.   Speaker Kerr** ((00:33:10)) - - Liz rolls around. Any investor who wants to come visit with us once a month, we have a tour. We've got a sprinter van that we roll around. lately the sprinter van that holds 12 has not been doing it, so we've had to rent another van. But Liz tours folks around, she shows them our facility, introduces them to some of our team members, and then goes and shows them a before a during rehab and a finished rehab so they can see everything during the process and just really rolls out so folks can see a visual of exactly how we do and why we do it.   Speaker Brody** ((00:33:48)) - - Yeah, it's so much fun. So about 95% of our investors have never set foot in Memphis or Little Rock.   Speaker Brody** ((00:33:53)) - - If your goal is to do it from your living room, have no fear. We are set up for you to do everything from your living room, but it will push your confidence through the roof to come out. I can't tell you what a happy, chill vibe our office has. Terry happens to be an amazing guy to work for. We have a lot of long term employees. I've been with him 15 years. But you'll meet Nia. That's been with us for ten years. Matt, our property manager. He's been with us for 12. Nia is kind of the me on the other end of closing, even your renters actually hear a smiling voice within two rings. That's a leasing agent that's been with us for eight, nine years. You're going to get to meet those folks. You're going to get to see the warehouse. I'm no CPA, but for most people, that trip's going to be a tax write off. But we're also going to give you $500 towards your closing cost on your first house as a thank you for coming out, particularly Keith.   Speaker Brody** ((00:34:44)) - - I love it because so many of our investors are from high cost of living areas where you cannot get renovated house in a peaceful neighborhood for $150,000. And I just love, you know, the birds are chirping. There's no foot traffic. No, there's no it's just quiet because that whole neighborhood's at work and there's no trash and there's no graffiti. Not to mention letting folks bang on the cabinets and kick the the tires, so to speak. And so if people are listening to this, when our new website is up, there will be a full tour list for the rest of the year available online. If they're listening to this when it comes out, they can reach out to me for the next dates, but we'd love to sign them up.   Speaker Weinhold** ((00:35:25)) - - If you'd like, you can fly in on a Thursday. The tours are Fridays and I took a look the upcoming tours on May 17th, June 28th and July 12th, but you can see how often they're doing them there. Terry. Liz. Rarely, if ever, have I heard bricks and mortar have so much personality.   Speaker Weinhold** ((00:35:43)) - - Income was such a thing. It's amazing that this happened here. Tell us any last thoughts and then how our listeners can learn more about you.   Speaker Brody** ((00:35:51)) - - For last thoughts. I think what I want to tell people is that if you feel intimidated about investing, if you feel like there is jargon, if lending is confusing to you, please don't hesitate to reach out and jump on the phone with us. We have incredibly experienced investors that own hundreds of apartment buildings, but one of my favorite things is to just help a first time investor get their feet under them. I understand the nerves and the butterflies that can come with it. I know how hard people work to save up these down payments, and we are there for you for the questions, the granular questions, and it's okay if you're really new. I have helped folks in LA and New York that are renters, and this is actually their first. Purchase, because literally buying anything in their local market is 2 million bucks. And so if you have never bought a house before, please don't feel intimidated to email or to call because we've got you and you're going to plug in to man, I've been vetting the best lenders for 15 years, ID title companies, insurance, and the way that we keep our finger on the pulse of who's giving the best service, who's giving the best cost for even just the rest of the team that's going to get you closed.   Speaker Brody** ((00:37:07)) - - Is that and then for how to find us miss South homebuyers.com and I am Lisette. Lisette for anyone that wants to give us a shout that way. Quick side note there is a video on the home page of our website and that's true whether you're seeing the one that's out right now or the one we've got coming. But it is a video version of that tour. You can see our warehouse, you can see our offices. You're going to see houses in some different stages. We actually just one of our investors was like, you should put a GoPro helmet on your head for this tour. And that's about what we did. And so for those of you that may not be able to come right now, check out that video. As we mentioned, go look at the houses, go look at the kitchens. Go look at everything and let us know.   Speaker Weinhold** ((00:37:50)) - - Well, this has been amazing to hear a new piece of Terri's origin story. And then I think you, the listener, can feel the passion in the willingness to help in Liz's voice.   Speaker Weinhold** ((00:37:59)) - - It's exactly what she expertly does. Terri and Liz, it's so great having you back on the show.   Speaker Kerr** ((00:38:05)) - - Thanks so much, Keith.   Speaker Brody** ((00:38:06)) - - Thanks, Keith.   Speaker Weinhold** ((00:38:12)) - - Yeah. Such uniqueness. Their elucidation from Terry and Liz. Now, in real estate, you hear the term buyer's market and seller's market will. Memphis is a landlord's market when it comes to tenants traveling with appliances. In talking with Liz Sommer, it's because as this vibrant tenant and renter culture has evolved, landlords really haven't had to compete with each other. That's why that is getting a little anthropogenic here, Here are some of the attributes that make Mid-South different, perhaps even unique. There's no tenant application fee, so they get a greater renter pool. They don't mark up maintenance and materials. They put addresses of their properties on their website. Like we mentioned, they don't require investor earnest money. Investors can cancel for any reason, and tenants bring their own appliances. Those are some differentiators. And there are more. I mean, the tenant has a favorite Maytag dishwasher or whirlpool refrigerator.   Speaker Weinhold** ((00:39:21)) - - Well, a tenant might very well use that in more than one home during their lifetime. We didn't talk numbers much today, but again, you can see the properties on their website. You can come on in with your rate. Currently bought down to 5.75% on their new builds. And that's really kind of about what they will do for you. Now, the gray listener, it used to be that after you made it to the top of the investor wait list, you could buy one property, and then you'd have to go back on the bottom of their wait list in order to get your next one, but no longer for you, the GRE listener. You can reserve two finance properties at a time and three at a time. Cash. You can get started at Midsouth homebuyers.com. Until next week when I'll be back with episode 500. I'm your host, Keith Wines, a little bit. Don't quit your day. Drink.   Speaker 7** ((00:40:17)) - - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice.   Speaker 7** ((00:40:27)) - - Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Speaker Weinhold** ((00:40:45)) - - The preceding program was brought to you by your home for wealth building. Get rich education.com.

If properties are empty from population decline, they’ll lose value and rent. If this happens, then what’s the timeline? Richard Vague, the PA Governor-appointed Secretary of Banking and Securities from 2020-2023, joins us.  US and world birth rates keep declining. As population declines, per capita GDP often increases. Richard believes that inequality will widen. Most models show the US population increasing for several decades. A median model is 342M today up to 383M in 2054. Opposite of what the Fed thinks, Richard believes that lower interest rates can quell today’s persistent inflation. The US has had 9 instances of high inflation. It’s often spurred by wars, which create shortages. I tell Richard about GRE’s Inflation Triple Crown and ask his opinion. Real estate values rise as debt-to-GDP rises. I point-blank ask Richard if an economic crisis is imminent. Resources mentioned: Follow Richard Vague: Join.TychosGroup.org For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to GRE! I'm your host, Keith Weinhold. The phenomenon of population decline is spreading throughout the world. Will that come to the US and obliterate real estate then? A bit of a debate on the affliction of inflation and what this all means to real estate today on get rich education. When you want the best real estate and finance info. The modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple. Text GRE to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free. It's called the Don't Quit Your Day dream letter and it wires your mind for wealth.   Keith Weinhold (00:01:18) - Make sure you read it. Text GRE to 66866. Text GRE to 66866.   Corey Coates (00:01:30) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:46) - We're going to drive from Lake Winnebago, Wisconsin to Mono Lake, California, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get Rich education. Real estate is obviously a strong, proven store of value. Now, what's interesting is that most economists agree that money should be three things a medium of exchange, a unit of account, and a store of value. Well, please don't take offense here. This can sound a little crude, but there's one thing to call those that use dollars as a store of value, and that is poor. How is a dollar a store of value when you've had 20% plus cumulative inflation over the last three years alone, the dollar is a poor store of value. We're going to get into inflation with our other esteemed guest and gubernatorial appointee today. He has some opinions on inflation, and you may very well feel that I poke him on this topic today.   Keith Weinhold (00:02:58) - I'll also get his input on our inflation Triple Crown concept, where real estate helps you win with inflation three ways at the same time. But first, he and I are going to discuss the specter of population decline. And well, it's not always a specter to people because some feel that the world is better off with fewer people, environmentalists and others. Japan's native born population is falling at a rate of almost 100 people per hour. Yeah, you heard that right. Well, is that coming to the United States and how bad would that be for real estate? Before we go on with those discussions about population decline and then inflation, here's something cool. Is your first language Spanish, or do you have any Spanish speaking family or friends? If you do, you're in luck! I'm proud to announce that our real estate Pays five ways video course is now available in Spanish and it is free. Yes, all five course videos leverage depreciation, cash flow, ROA, tax benefits and inflation profiting. All broken down by me in Spanish.   Keith Weinhold (00:04:15) - You can see those five videos. And again they're free at get rich education. Comment espanol tell to familia e amigos. That's all right there on the page at get Rich education. Com slash espanol. And hey, if you're a business owner or decision maker and would like to advertise on our platform, well, we'd like to check you out first and look at this slowly. Oftentimes I use the product or service myself. Get rich. Education is ranked in the top one half of 1% of listened to podcasts globally, per lesson notes on air every single week since 2014. Some say that we were the first show to finally, clearly explain how real estate makes ordinary people wealthy. For advertising information and inquiries, visit get Rich education.com/ad let's get rich education compered. Today it's the return of a terrific guest. This week's guest was with us last year. He's an economic futurist, keynote speaker, and popular author. He's the former secretary of banking and securities for the Great Commonwealth of Pennsylvania. Today, he runs a group that predicts financial crises called Tycho's.   Keith Weinhold (00:05:40) - That's really interesting. Joining us from Philadelphia today. Hey, it's great to welcome back Richard Vague.   Richard Vague (00:05:47) - Thank you so much for having me. It's real privilege.   Keith Weinhold (00:05:50) - Vague is spelled vague u e just like it sounds. If you're listening in the audio only. Richard also has a YouTube channel where, among other things, he discusses topics like population decline and inflation. Two things that we'll get into today. But before that, Richard, how exactly do you get tapped by the governor of Pennsylvania to have been appointed his banking secretary? Anyway? How does that really happen?   Richard Vague (00:06:16) - Well, I served under Governor Thomas Wolf, a superb governor here at Pennsylvania. We kind of were both very familiar with each other, and I had already written a number of books on banking crises, including The Next Economic Disaster and A Brief History of Doom. And he had read those, and so much to my surprise, he showed up in my office one day and asked me if I'd consider it.   Keith Weinhold (00:06:40) - Wow, that is really cool.   Keith Weinhold (00:06:42) - All right. You kind of led with your writing in your books for making that happen. Richard, here's a big question that I have for you. At 8.1 billion people today is Earth's overpopulated or underpopulated?   Richard Vague (00:06:58) - Well, there's a lot of very valid points on both sides of that. You know, there are a number of folks who decry the level of population we have because of its destructive impact on the environment. And there's a lot of folks that note that it's population growth that really has made our economic growth so vibrant. So there's a real contention on that issue. We tend not to take a position, but what we do know is as world population growth is slowing, which it clearly is, that is going to make economic growth much more challenging in a whole lot of places around the world, some of which you're actually starting to see population declines, like China.   Keith Weinhold (00:07:46) - I want to get to that slowing growth in a moment. We talk about overpopulation versus under population. Some in the overpopulation camp thinking the world has too many people they're referred to as Malthusian, was named for Thomas Malthus, who in 1798 he said the world would exceed its agricultural carrying capacity and there was going to be mass starvation.   Keith Weinhold (00:08:09) - Malthus was wrong. He didn't consider technological advancements. So I guess my point is the future can be really difficult to predict.   Richard Vague (00:08:18) - Yeah. Without question. You know, the big innovation came in the early 1900s when we figured out how to synthetically manufacture of things like fertilizer, which allowed arable land area to increase dramatically. It kind of took them out of this equation off the table.   Keith Weinhold (00:08:36) - Yes. With the mechanization of harvesting and the engineering of foods, there sure have been a lot of advancements there to help feed more people. And yeah, Richard, you talk about population decline. Of course, the world population overall is still growing, but its rate of growth is declining. So before we talk about the United States, you mentioned China. Why don't we discuss population decline more in global terms, where even nations like India are already struggling to exceed the replacement birth rate of 2.1?   Richard Vague (00:09:10) - Yeah, I mean, it's a phenomenon that, you know, we haven't faced or perhaps even thought of for a couple hundred years because population growth accelerated so dramatically with the Industrial Revolution.   Richard Vague (00:09:22) - We've really not known anything but rapid growth. And frankly, it's easier to grow businesses. And the economy is old. But now we're seeing places like China, Japan, Germany that are facing population declines in places like India, which, as you said, is comparatively a younger country. Nevertheless, facing this prospect as well, then in 1980, the average age in the US was 30. Today it's 38. In Germany I believe it's 48. So the world is getting old in a way that it had not previously in the industrial revolutionary period.   Keith Weinhold (00:10:03) - I think a lot of people are aware that many parts of Europe, Japan, South Korea are in population decline or they're set up for population decline. But yes, some of these other nations that we think of as newer nations or growing nations, including India, are not forecast to. Grow in, Richard. Are we really down? Of course. There are a number of outliers. Are we down mostly to Africa that still have the high birth rates?   Richard Vague (00:10:29) - As the world has become more urban, the need for more kids has declined.   Richard Vague (00:10:35) - It's in an urban environment, become an expense rather than a benefit. So that alone accounts for the deceleration. And then you have folks that are getting married later, having kids later, and you simply can't have as many kids when those two things are true. So it's a combination of events, and there aren't that many places left that have higher birth rates. And even in Africa it's declining or decelerating. So the world's just moving in that direction.   Keith Weinhold (00:11:06) - Yeah. It's really once we see the urbanization trend in a nation, what lags behind that are slowing birth rates, oftentimes birth rates that don't even meet death rates in some places. It kind of goes back to the Thomas Malthus thing again, if you will. When you don't have a family farm, you don't need nine kids to milk the cows and shuck the corn and everything else like that. You might live in a smaller urban apartment.   Richard Vague (00:11:33) - But we're all just has it been thinking about this issue? And it's upon us now, and it's going to change everything from governments to handling debts to infrastructure to growth itself.   Richard Vague (00:11:48) - So we need to start thinking about this issue much more deeply than we have.   Keith Weinhold (00:11:54) - Is there any way that an economy can grow with a declining population, and how bad will it get?   Richard Vague (00:12:02) - An economy will obviously struggle to grow if the population is declining, but the per capita GDP and increase as population declines. And in fact, we might see that early on in a population decline situation. I think that's actually been true in Japan over the last few years. The population is down, but GDP per capita is actually increasing slightly. So I think it's longer term. When you talk about trying to service the debt that we have amassed with the smaller population, that we're really going to have issues.   Keith Weinhold (00:12:41) - Talk to us more about that. The servicing the debt part of a declining population.   Richard Vague (00:12:48) - The debt doesn't shrink on its own, you know, so it tends to grow because, you know, it's accruing interest.   Keith Weinhold (00:12:54) - It always seems to go one direction.   Richard Vague (00:12:56) - It always pretty much only goes in one direction. So it's pretty simple.   Richard Vague (00:13:00) - If you have growing debt and I'm talking about public debt and private debt, and you have a declining base to service that, you have more people in retirement who are not paying as much in the way of taxes. It's going to increase the challenge, and it may in fact, increase it considerably. As we look at a few decades.   Keith Weinhold (00:13:21) - We need productivity to pay down debt that's more difficult to do in the declining population. We talk about technological advancements, some things that we cannot foresee. Did you sort of lead on to the fact that some of this might help us be more productive, even in a declining population, whether that's machine learning or robotics or AI? What are your thoughts there?   Richard Vague (00:13:45) - That's something that's been predicted for quite some time. You know, if we look back not too far ago, economists were wondering what we were going to do with all of our free time, right? Because, you know, automate. And this goes back to the 20s and 30s and 40s what we do with all our free time.   Richard Vague (00:14:01) - So we again have conversations along those lines. You know, it's not inconceivable that we could all be sitting there, you know, sipping our Mai tais, and the machines could be doing all the work for us. And servicing debt might be easy in that scenario, I doubt it. I don't think that's what's going to happen.   Keith Weinhold (00:14:19) - The more technology advances, the more complex society gets. That continues to create jobs in places where we cannot see them. I mean, case in point here, in the year 2024, we're more technologically advanced than we've ever been in human history, obviously. Yet here in the United States, we have more open jobs than we even do people to fill them.   Richard Vague (00:14:39) - Yeah. And I think one of the things that all of this does is increase the march of inequality. You have folks that master the technology become engineers, software engineers and the like that are going to be the huge beneficiaries of these trends. But folks that don't have the skill sets aren't going to benefit from these trends.   Richard Vague (00:15:01) - And even though in aggregate, we may continue to see per capita GDP increase, our track record over the last few decades would suggest that inequality will increase just as markedly as it has in the past, so we'll have some societal issues to face.   Keith Weinhold (00:15:19) - That's concerning as inflation. Continues to exacerbate inequality simultaneously, which we'll talk about later. But population decline is of concern to us as real estate investors because of course, we need rent paying tenants. So this could be pretty concerning to some. You've probably seen a lot of the same models that I have, Richard, let me know. In the United States, population is projected to increase for several decades by every single model that I've seen, maybe even until or after the year 2100.   Richard Vague (00:15:53) - The projection is by 2050, we'll have about 380 something million people, and today we're at 330 million people. So clearly the population is going to continue. It's just kind of the relative portion of those populations. And what I think we're seeing, and you as real estate investors would know this better than I, is a shift towards the type of real estate out there.   Richard Vague (00:16:19) - Right? So instead of new homeowner development, it's retirement development that I think is going to be the higher growth sector with the real estate industry.   Keith Weinhold (00:16:31) - And we're surely going to see fewer offices be built, something that may never come back. And then when we talk about things like birth rates and population growth rates here in the real estate world, I sort of think of there as being a lag effect. It's really not so much about today's births in the United States, because people often rent their first place in their 20s, and then the average age of a first time homebuyer is an all time record high 36. And all those people are going to need housing into old age as well. So to me, it's sort of about, oh, well, how many people were born from the 1940s to the 1990s?   Richard Vague (00:17:10) - Well, there's a very useful tool that's pretty easily available called the Population Pyramid. You can find that on the CIA World Factbook site for every country and including the United States. And it shows exactly what you're talking about, which is the number of folks, you know, between 0 and 10 years old and into 20 years old and so forth.   Richard Vague (00:17:32) - So you can kind of make reasonable projections about the near term based on the data that the CIA World Factbook is kind enough for by I believe the UN has this data as well, so you can make informed judgments about the very thing you're talking about here, which is how many folks are in their 20s to over the next ten years versus the last ten years.   Keith Weinhold (00:17:54) - Yeah, that's reassuring to real estate investors to know that we expect several decades of population growth in the United States. However, it may be slowing growth. So we talked about births, I mentioned deaths. Well, you tell us a bit more about immigration, something else that can be very difficult to project here in the real estate world that we have a popular analyst called John Byrne's research and Consulting. Their data shows that we had 3.8 million Americans added to our population last year, much of it through immigration. That's a jump of more than 1%, an all time record in our 248 year history in one year alone. So can you tell us, at least in the United States, a bit more about immigration in the calculus for population projections? Richard.   Richard Vague (00:18:42) - Immigration is a huge factor in the demographics of every country in the US, from a pure population growth standpoint as benefited by in-migration, including illegal and migration. That is a positive comparison versus a lot of countries that are either more restrictive art is desirable destinations for immigration and the life. So it has benefited us from a pure population standpoint. But what we clearly see is there are cultural ramifications that are difficult for us to deal with. We have the percent of folks that are in the United States that were born in another country. It's the highest it's been, I think, at least in a century or more and perhaps ever, that is really difficult for the general population to absorb. We see this in the headlines every day. We see it the concern, we see it in the political rhetoric. It's a real issue. So you have a very real conflict between the economic benefits of immigration versus the cultural divisions that that immigration creates. And that's not going to be easy to digest or to resolve. I think we probably end up continuing to compromise, but it continues to be a political lightning rod right into the foreseeable future.   Keith Weinhold (00:20:14) - And there are so many factors here. Where's our future immigrant diaspora? Is it in places in Latin America like Guatemala? In Honduras, in Colombia. And are those people going to come from there? So there are a lot of factors, many of which aren't very predictable, to take a look at our future population growth rate in the United States. We're talking with economic futurist, author and Pennsylvania's former secretary of banking and Securities, Richard Moore, and we come back on the affliction of inflation. This is general education. I'm your host, Keith Weintraub. Role under this specific expert with income property, you need Ridge lending Group and MLS 42056 in grey history, from beginners to veterans. They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%.   Keith Weinhold (00:21:44) - Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six.   Speaker 4 (00:22:33) - This is author Jim Rickards. Listen to get Rich education with Keith Reinhold and don't quit your day dream.   Keith Weinhold (00:22:49) - Welcome back to get Rich. So we're talking with economic futurist, author and Pennsylvania's former secretary of banking and securities. His name is Richard Vague. And Richard, before the break we talked about how many more people are there going to be on this earth.   Keith Weinhold (00:23:03) - We know for sure that there's also the growth of the number of dollars in this nation. So we're talking about inflation here. You talk an awful lot about the affliction of inflation and the history of inflation. And I think a lot of people when we talk about the history of inflation, maybe we should begin chronologically. They don't realize that inflation wasn't always with us. Since the birth of this nation.   Richard Vague (00:23:30) - We haven't had that many episodes of inflation. We look at it pretty hard. We see nine what we would consider nine instances of high inflation. Most of those have come with war. So we certainly had that. The Revolutionary War right of 1812 and the Civil War and World War one and World War two. But inflation has been brief, contained and rare in the history of Western developed nations. We had our bout in the 1970s that related to OPEC and the constraint of the oil supply. It normally relates to the decimation or constraint of the supplies and the supply chain. We saw it again with Covid.   Richard Vague (00:24:17) - A lot of folks consider it to be a monetary phenomenon. We just don't see that in the data.   Keith Weinhold (00:24:24) - So we talk about what causes these bouts of inflation. You talked about nine of them. Well, he talked to us more about why wars often create inflation. Of course we're trying to create a lot of supplies during wars, but they tend to be only certain types of supplies.   Richard Vague (00:24:40) - World War One is a great example. Probably, you know, two thirds of the farms in Europe were decimated. So for a couple of years, there simply weren't the kind of crops that are needed for nutrition being grown in Europe, we Corps and the like. So the US had to, frankly, export something on the order of 20% of its crops to Europe to prevent starvation. Well, it's pretty easy to see that if the US if the supply has been decimated in Europe, we're having to ship, you know, a huge chunk of our crops to Europe, that the price of wheat and corn would go up.   Richard Vague (00:25:21) - And that's exactly what happened. It's also pretty easy to see that as those farms came back on stream and began growing crops, that the price of wheat and corn would drop. And that's exactly what happened. So you have this relatively short lived period of 2 or 3 years where the decimation of supplies caused inflation, and that's fairly typical.   Keith Weinhold (00:25:45) - Supply falls, demand exceeds supply and prices rise much like what happened with those Covid shortages, as you mentioned, what are the other major causes of inflation other than supply shortages that have caused these nine bouts of inflation?   Richard Vague (00:26:03) - Well, let's talk about major developed countries, which I would include Western Europe, the United States predominantly. That's pretty much the only thing that has brought sustained high inflation is supply constraint. We don't see instances of high government debt growth or money supply growth ever causing inflation. Now when you get to smaller countries where they are borrowing in a foreign currency, where they have a trade deficit and where they yield to the temptation of printing too much money, and I don't mean by printing, we use that term in the United States, and it's absolutely a fictitious term.   Richard Vague (00:26:50) - We don't print money in the United States. We have it printed money since the Civil War. So in a third world country, they can actually go to a printing press and start paying with cash for government supply needs. And you can see it very clearly when it happens and it very quickly leads to high inflation. You know, this is in places like Argentina and the like. So that would be the big issue in these countries. It's they borrow at a foreign currency. They have a trade deficit. They yield to the temptation of actually printing currency. It can get out of control pretty fast.   Keith Weinhold (00:27:26) - It feels immoral. As soon as more currency is printed, it dilutes the purchasing power surreptitiously of all those people that are holding that currency. What about Richard? The government printing. And we can put printing in quote marks, say, $1 trillion to fund a new infrastructure program. A technically that is inflation if we. Go back to the root definition of inflation, inflation being an expansion of the money supply.   Keith Weinhold (00:27:54) - But talk to us about how something like that does or does not dilute the purchasing power to fund, for example, a big infrastructure program.   Richard Vague (00:28:03) - Well, it just never happens in Western developed economies. And one of the reasons it doesn't happen is the government issuance of debt does not increase the money supply by a nickel. If the government issues debt, it actually withdraws or shrinks the money supply because folks like you and me would buy the government security that reduces the number of deposits in the system. The government immediately turns around and spends exactly that amount. So the size of the money supply from government debt projects remains exactly the same. It doesn't increase.   Keith Weinhold (00:28:42) - Does that act, however, increase our total absolute amount of national debt, which is currently $35 trillion?   Richard Vague (00:28:51) - Of course it does. Absolutely. But the increase in our debt is money largely played to the households. So what normally happens is when the government's dead increases, household wealth increases by that amount or a greater amount. So take the pandemic. In a three year period, government debt increased by $8 trillion, which means its net worth declined by $1 trillion.   Richard Vague (00:29:18) - Well, households were the beneficiaries of that household net worth in that three year period increased by $30 trillion. So, you know, net net, of course it increases their debt, but it dollar for dollar typically increases household wealth.   Keith Weinhold (00:29:33) - That wealth effect can feel great for consumers and families in the short term. But doesn't increasing their income substantially in a short period of time drive up prices and create this debase purchasing power of the dollar?   Richard Vague (00:29:46) - If we got our little green eyed shades out and went to try to find examples of that, we got a database of 49 countries that constituted 91% of the world's GDP. We just wouldn't find examples of that. And in the US, it's very easy to measure that. The number you're looking for is GDP. And we don't really see big cuts in GDP. You know, a wild swing in GDP would be 3.5% versus 2.5%. That's not a factor in any observable way. And what happens in inflation.   Keith Weinhold (00:30:19) - Richard, the term that I think about with what's happened the past few years in this Covid wave of inflation is the word noticeable.   Keith Weinhold (00:30:27) - People don't really talk about it. Consumers, families, they don't talk about inflation much when it's near its fed 2% target until it becomes noticeable. And now it's so obvious with what you see at the grocery store. So it's really infiltrated the American psyche in a way that it didn't five years ago.   Richard Vague (00:30:45) - Inflation, even moderate inflation, is a highly consequential thing to the average American consumer. And two things happened to increase our inflation. Covid supply chains decimated supplies and kicked up prices. And then a second thing happened that was even more consequential. And that is Russia invaded Ukraine. And you had two countries that were, if you add them together among the largest providers or suppliers of oil and wheat, and almost instantly the price of oil and wheat and other goods skyrocketed. It was those two things, Covid, plus the invasion of Ukraine that drove our inflation up to 9% in June of 2022. Now, in July, it dropped to 3% and it stayed at 3% ever since. But we had already driven prices up in the prior year or two.   Richard Vague (00:31:49) - And those prices even though the increases have moderated, those prices haven't come down right.   Keith Weinhold (00:31:55) - Nor will.   Richard Vague (00:31:55) - They. Now we have, you know, the threat of war again. So, you know, the price of oil just touch $90. Again, I would argue that, you know, it's going to be hard to see inflation come down. Much for like that 3 to 4 range because of the geopolitical situation. And one other thing that I would suggest is holding up inflation. And that's the Federal Reserve's interest rate. You know, if inflation is a measure of how expensive things are, high interest rates make things more expensive, right?   Keith Weinhold (00:32:27) - It's an irony.   Richard Vague (00:32:28) - It's almost exactly the opposite of what the orthodoxy at the Federal Reserve studies or believed. For whatever reason, if you're at an in an apartment in the apartment owner has leveraged their purchase of the apartments by 50 or 70 or 90% and their interest bill goes up, guess what? They have to. Charge you higher rate. I think some meaningful component of the stubbornness of inflation relates directly to the Federal Reserve's persistent interest rates.   Richard Vague (00:33:00) - I think the best thing they could do would be to pull interest rates down 1 or 200 basis points.   Keith Weinhold (00:33:07) - Well, that's interesting because the fed funds rate is pretty close to their long term average, and we still got inflation higher than their target. So tell us more about what you think is the best way out of this somewhat higher inflationary environment that we're still in Richard.   Richard Vague (00:33:22) - Well two things. I think the geopolitical impact on oil prices is you. And I think the interest rate impact, particularly on real estate prices, is huge. Those are the two things holding up inflation. So if you wanted to improve inflation, you'd lower interest rates and then you'd run around the world trying to calm down these hot spots. And you'd have 2% inflation.   Keith Weinhold (00:33:47) - Coming from some people's point of view, including the Fed's. If you lower interest rates you would feel inflationary pressures. So then go ahead and debunk this because the conventional wisdom is when you lower interest rates. Oh well now for consumers, you don't incentivize them to save as much because they wouldn't be earning much interest.   Keith Weinhold (00:34:06) - And if rates to borrow become lower, then you're incentivizing more people to borrow and spend and run up prices in fuel the economy. So what's wrong with that model?   Richard Vague (00:34:16) - Well, there's no empirical support for it. In 1986, when inflation dropped to 2%, interest rates were in the highest interest rates had been coming down by, you know, almost a thousand basis points over the prior 3 or 4 years. Money supply growth was 9%. So the two things the fed says are most the biggest contributors to rising inflation were both amply present when inflation dropped to 2%. So I just can't find any data to support the Fed's theory. And by the way, that data is not esoteric. That data is really readily available. You and I can go look at it. It's not a complicated equation. But over the last 40 years, in what at the age I call the great debt explosion, aggregate debt and the economy in 1981 was 125% of GDP. Today it's 260% of GDP and almost that entire 40 something year span.   Richard Vague (00:35:21) - Inflation and interest rates went down. Somebody, somewhere is going to have to show me the evidence for me to believe what the fed is canonical, which is almost a sacred balloon.   Keith Weinhold (00:35:33) - Well, that's a good look at history. In fact, something I say on the show often is let's look at history. And what really happens over having a hunch on how we think that things should proceed. You mentioned some inflation figures there. Why don't we wrap up inflation? Richard was talking about today's inflation measures. We've got the producer price index, the PPI, the widely cited CPI, which I recognize what you were stating earlier. And then of course there's the Fed's preferred measure, the core PCE, the core personal consumption expenditures. Richard, it's also funny to me when any measure is called core, it's core when they remove the food and energy inputs because those things are said to be too volatile. And of course, not only is food and energy essential, but what's more core than that? So perhaps the core rate should be called the peripheral rate.   Keith Weinhold (00:36:22) - But in any case, do you have any comments on the measures of inflation that are used today?   Richard Vague (00:36:28) - It's like you say, it's everything you just mentioned and more, because they're not just core inflation. There's something called super core, which I think is probably even more peripheral. Right. And I like your terminology better than the Fed's, but there's a lot of things to look at right now. They're all kind of coalescing around this at a low to mid 3% range. We got a new number coming out. It'll probably, you know here in the next few days. And it'll probably be a little bit higher than the last number, but we're talking about the difference to a 3.3% and 3.5%. And to me there's no difference between those two numbers. We were at 9%, as we just said, in June of 2022. And we're at a moderate level of inflation now after having suffered a rise in prices. It's not going to disappear. It's not fun, it's not comfortable, but it's moderate rabble.   Richard Vague (00:37:22) - It's not a big drought.   Keith Weinhold (00:37:24) - What's the right level of inflation in your opinion?   Richard Vague (00:37:28) - Okay. Anything fundamentally wrong with the the 2% number that the fed saw I think, you know, at 3 to 4% were probably on the high end of, of what might be considered acceptable. But again, it's not the fact that it's 3% that's the problem. It's the fact that it was 6 to 9% for a couple of years. Yeah, that's the problem. It'll get take a while for everything to adjust to that. In the meantime, you know, with all bets are all that you know, there's if these wars get further out of control and we see 90, $200 oil prices again, we're only about we're 50% more efficient users of oil today than were were in the 1970s. We're still a little bit over dependent.   Keith Weinhold (00:38:11) - Here at gray. I espouse how in everyday investor they can do more than merely hedge themselves against inflation, much like a homeowner with no mortgage would merely hedge themselves. But you can actually profit from inflation with a term that I've trademarked as the Inflation Triple Crown.   Keith Weinhold (00:38:27) - I'd like to know what you think about it. The inflation Triple Crown means that you win with inflation three ways at the same time, and all that you need to do in order to make that happen is get a fixed rate mortgage on an income property. The asset price increase is the inflation hedge. The debt debasement on your mortgage loan, that's an inflation profiting center. Is inflation debases that down while the tenant makes the payment. And then thirdly, now rents might only track inflation, but your cash flow is actually a profit center over time too because it outpaces inflation. Since as the investor your biggest monthly expense that principal and interest stays fixed and inflation cannot touch that. That's the inflation triple Crown. It's available to almost anyone. You don't need any degree, your certification or real estate license. What are your thoughts on that? Profiting from inflation the way we do here I think you're absolutely correct.   Richard Vague (00:39:22) - And I think you put it very, very well. And that's not just a trend at the individual property level.   Richard Vague (00:39:28) - We studied macroeconomics and we look at aggregate real estate values. And frankly, real estate values rise as debt to GDP rises. The more money there is, the more my dollars are chasing real estate and the higher real estate prices will go. So it's absolutely been the gin to put it into numbers in 1980 household. Well, this a percent of GDP was about 350%. Today it's almost 600% most household wealth that in the form of just two things real estate and stocks in somewhat equal measure, that's 80 or 90% of also. Well, so if you wanted to make money over the last 40 years and presumably over the next 40 real estate, one of the two places you could go.   Keith Weinhold (00:40:24) - Well, Richard, as we wind down here, you run a group that predicts financial crises. So I'd be remiss to let you go without asking you about it. We've had a prolonged inverted yield curve, and that's been a terrific track record as a recession predictor. Is a financial crisis imminent? Tell us your thoughts.   Richard Vague (00:40:41) - No, it's not. The predictor of financial crises is a rapid rise in private sector debt in ratio to GDP. We saw it skyrocket in the mid 2000 and we got a crisis in zero eight. We saw it skyrocket in the 1980s and we got the crisis in 87. We saw it skyrocket in Japan in the late 1980s. And you got the crisis of the 90s. We saw it skyrocketed in the 1920s and we got the Great Depression. That is the predictor. You know, we've studied that across major economies over 200 years. There really are exceptions to that as it relates to financial crises. Our numbers right now on the private debt side have been very flat, and they've really been very flat since 2008. They actually got a little bit better in that period, and they've been very flat over the last few years. We're not looking at a financial crisis in the United States. Other parts can't say that China is looking at a they're well into a massive real estate crisis there. We see companies there crumbling, declaring bankruptcy.   Richard Vague (00:41:53) - That's because they've had runaway private sector debt in China for the last ten years. And there's a few other countries that are facing that as well.   Keith Weinhold (00:42:02) - A lot of Chinese overbuilding there during that run up to, well, if you, the follower, are into using history over hunches to help you predict the future, Richard Baig really is a terrific resource for that, as you can tell. So, Richard, why don't you let our audience know how they can follow you and learn more?   Richard Vague (00:42:22) - You're so kind to say those words. We hope we provide something of value. You can get our weekly video if you go to join Dot Tycho's group.org and Tycho's is spelled E, ICOs, ICOs group. Or we send out a weekly five minute video because if you're like me, you have a short attention span and brevity is the soul of wit. I also have a book that came out recently called The Paradox of Debt. Yeah. Which, you know, covers a lot of the themes we've talked about here. You know, it'd be an honor to have anyone to pick up either.   Keith Weinhold (00:42:58) - Well, Richard, it's been a terrific discussion on both population decline and inflation. It's been great having you back on the show.   Richard Vague (00:43:05) - You have a great show. It's a privilege to be part of it. Thank you very much.   Keith Weinhold (00:43:15) - Yeah, big thanks to Richard Vague. Today he hits things from a different angle. With population decline perhaps not taking place in the US until the year 2100. Of course, we need to add years to that. Real estate investors might not have falling population growth in that crucial household formation demographic age. Then until the year 2125, well, that would be 100 more years of growth from this point. And yeah, I pushed him on our inflation chart somewhat. Richard isn't the first person, though I have heard others maintain that lower interest rates also lower inflation, where most tend to believe that the opposite is true, including the fed. In any case, wars drive inflation because they create supply shortages. That was true over 100 years ago when World War one and today with Russia, Ukraine.   Keith Weinhold (00:44:17) - I mean, is there any one factor that drives price increases more than supply shortages? The short supply of real estate itself is what keeps driving prices. And Richard asks us to look where some don't. That is that real estate values rise as debt to GDP rises. In his opinion, there is no financial crisis imminent. We need to see a rapid rise in private sector debt in proportion to GDP first. And you know what's remarkable about this economic slowdown or recession that still hasn't come, but it's been erroneously predicted by so many. It's the fact that recessions are often self-fulfilling prophecies. People have called on a recession for the last year or two. And that mere forecast alone that tends to make real estate investors think, well, then I won't buy the property because my tenant might lose their job in a recession. And businesses don't hire when everyone says a recession is coming. That's exactly how a recession becomes self-fulfilling. And despite two years of that, it still hasn't happened. That's what's remarkable. Anyone sitting on the sideline keeps losing out again.   Keith Weinhold (00:45:37) - You can follow Richard. Big Tycho's is spelled Tycho's. Follow a joint Tycho's group.org. Richard and I talked some more outside of our interview here, and he had a lot of compliments about the show. In fact, more compliments than any guest has given in a while. He had not heard of our show before last year. I'm in Philadelphia somewhat regularly and I might hit him up the next time I'm there. We'll get lunch or something. Check out Gray in Spanish at Get Rich education comma. Espanyol. Thank you for tuning in today where our episode was Bigger Picture education. Next week's show will be substantially more hands on real estate. I'm Keith Wayne a little bit. Don't quit your day dream.   Speaker 5 (00:46:24) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:46:52) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

No one gets wealthy from a high salary. Wealth is acquired by owning things. But how can you own MANY things without much money? I discuss it. Learn how to use major banks (Chase, Wells Fargo) to fuel your wealth and retirement when you’re young.  Debt is like fire. Kids will burn down the house with fire. Adults will use fire (debt) to produce prudent leverage and outsized returns.  High salaries don’t create wealth due to: lost time, no leverage, few tax benefits, and entrapment due to sunk education costs. I sat down with a conventional financial advisor. Things got interesting.  Learn why Western US homes cost more than Eastern US homes. This fact confounds most real estate pros. I break down 8 reasons. Resources mentioned:  Show Page: GetRichEducation.com/497 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 For advertising inquiries, visit: GetRichEducation.com/ad Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript: Welcome to GRE! I’m your host, Keith Weinhold. Don’t make this giant wealth mistake - understand why a high salary does NOT create wealth. Learn what does instead.  See how to get deep pocketed-banks like Chase & Wells Fargo build wealth for YOU.  I recently sat down with a traditional financial advisor - this got interesting. Then, why do WESTERN US homes cost more than EASTERN us homes? All today, on Get Rich Education.   Welcome to GRE! From Port Jervis, NJ to the Port of Bellingham, WA and across 188 nations worldwide, I’m Keith Weinhold and you’re listening to Get Rich Education. Welcome in!   When I grew up, I thought that people got wealthy from high salaries. I figured that I could get wealthy if I got a high salary too.   And then adulthood has proven to me that… they don’t.    People don’t get wealthy from high salaries. They get wealthy by OWNING THINGS.   Let’s break this down.    People DON’T get wealthy from high salaries.    In fact, have you ever seen THIS happen? I haven’t. I worked as an employee in both the public sector and the private sector, and I’ve been a longtime real estate investor and entrepreneur.    In fact, how would anyone even GET wealthy from a high salary?   If you’ve got a job… you’re trading your time for dollars and selling your time for money.    I used to do that too… and I actually think that everyone might get some perspective by having a taste of that. Most get that taste.   And say you’re even entrenched in the game of climbing the corporate ladder, to a higher and higher salary.   Well, first, in my experience, many job promotions get you perhaps 10 to 30% more in salary, but 2x to 4x the responsibility - that’s 200% to 400% more responsibility.     Even if there’s an edge case here, in your situation, in climbing the corporate ladder - where does that even get you in the end?   Look at your supervisor and their lifestyle. Is that what you want to be?   Look up higher at your supervisor’s supervisor. What’s their life like? Is that the life that you REALLY want?    Is that what you aspire to be - and expend so much of your most precious resources to get THERE - time, time away from your family, energy, skill, potential. Is that really it?    The answer is right in front of you!   People don’t get wealthy from high salaries. People get wealthy from OWNING THINGS. We’ll get more on how - if you have average means - on how you can OWN MANY THINGS shortly.    But first, let me address any more hangups you might have if you still think that high salaries can create wealth.    We won’t even look at, sort of, common jobs like an IT specialist or a systems analyst or a plumber.    Let’s take an edge case - a classically, high paid profession - a doctor, a surgeon, a specialist even. Highly compensated - several hundred thousand dollars in salary each year. I know some of them.    I also know a bunch of RESIDENT doctors too and I talk with them - they’re basically, finished with their formal schooling and are doctors-in-training.    They are repaying loans deep into the six figures after undergrad pre-med and after a few more years at medical school - often it seems to be $300K to $400K in debt that they have to pay back in the case of these resident doctors.   But that’s besides the point. It’s common for these specialist physicians, once they start working, to work as a doctor for, say, 58 hours a week… or 71-and-a-half hours a week.    Now I said that high salaries don’t create wealth. How wealthy are you, if after undergrad, med school, and three years of low paid residency, you finally get out, you’re in your 30s or older, and you’re working 60+ hours a week.    60+ hours a week is not MY idea of wealth and freedom at all.    You know what else, when you’ve pursued a specialty track like that, which often comes with loads of debt, you are in so deep - you’ve invested so much time & energy & chapters of your life… and DEBT into that field you CAN’T pivot to another career, even if you wanted to.    You’re trapped. Entrapment is the very opposite of wealth and freedom.     Understand, I just went out and gave an example of perhaps the highest salary type of person that I can think of… to help prove my point. Where’s that leave you?   And you’ve probably heard… the “end game” trope… about climbing the corporate ladder by now.    Yep, you spent the best years of your life climbing the corporate ladder… only to find at the end… at the top… that the ladder was leaning up against the wrong wall the whole time.   Because high salaries don’t make people wealthy, then how do people get wealthy from OWNING THINGS?     There are two main ways:   #1 - You can launch and own a business. #2 - Real estate.   Now, launching and owning a business takes a ton of entrepreneurial ambition, risk, and you’ve got to have a novel idea - a NEW idea - that creates value for the world.   This can be a worthwhile venture… and successful entrepreneurs create value for the world with their own business. It’s terrific! It’s capitalistic! It’s turning lower use resources into higher use resources.   But unless you have your own money, you’re going to have to be scrappy and resilient for a long time. Because it’s really hard to get loans for a new business.   If you hire anyone to help you, you need to quickly produce enough income to have leftover profit - paying your overhead expenses, software subscriptions, paying your help… and having enough leftover to fuel your own lifestyle.   Household names like Apple and Facebook are one-in-a-million. You don’t have to be an Apple or Facebook. But it’s tough.    The first way is by owning a business. The second way is by owning real estate.    New businesses are unproven. Real estate is proven. Like I say, wealthy people’s money either starts out in RE or ends up in RE.   But how do you OWN much real estate? Because RE is expensive, and wealth is created by OWNING things.   With prudent loans. Because RE is proven, banks will GIVE you loans. Lots of them. Have good credit, be credit worthy.   And… being credit worthy should be an innate trait in any virtuous human being. Because it shows that you repay the debts that you owe.    I think that when it comes to debt, debt is like fire. Don’t let a little kid play with fire. They’ll burn down the house.    Leave fire to adults. They’ll use it to HEAT the house.    Leave debt to the adults. Use debt to fuel your lifestyle, fuel your ambitions, and fuel your opportunities. To the scarcity mindset of “all debt is bad”, here at GRE we say, you’re an adult. Grow up.    Learn… that debt is Leverage… and your debt isn’t paid back by you at all. Tenants and inflation both RELENTLESSLY and INCESSANTLY pay it down for you, until they pay it OFF for you… if you want.     So then, who’s really funding your wealth, enabling you to own things?    Who really funded my wealth from nothing, enabling me to own things?    Who funded my retirement? Leverage… from Chase Bank, Wells Fargo, Bank of America, and other banks. They all give you the opportunity to let THEM fund your wealth for you.    Now, I’m going to explain a core GRE principle here. But so that this isn’t repetitive for the longtime listener, I’ll use a NEW analogy for you, here.   Look, let’s say that you’re a kid. You don’t know how to responsibly use fire or debt. In fact, you’re still just 4’ tall.    But learning about leverage is like… seeing the light.   Now, with the sunlight, a 4’ tall kid can now cast a 20’ tall shadow. You look like a giant now.   5-to-1 leverage made you, not just grow up, but grow into a giant. You suddenly wield the power of a financial giant thanks to the banks.    Because with your 20% down payment, you're only putting up one-fifth of the property price.   How then, do these big banks make you a giant?   Let’s say that’s your $40K down - on a $200K income property, when the property appreciates only 4% - like RE did last year per the NAR number - you just got a 20% return.    How? Because you got a 4% return on both your $40K down… and you got a 4% return on your $160K borrowed.    Yep, the return from that $160K of borrowed bank money didn’t go to Wells Fargo, it won’t go to Chase Bank, it won’t go to Bank of America.   It ALL goes to you - because you leveraged them. That’s how you beat the banks. That’s how you build wealth.   Two years ago, when property appreciated 10% that year, you got a 50% leveraged return.   And it gets better than that. You can make income property down payments even lower than 20%, like I did when I began.   A 4’ tall kid then, that sees the light, can cast an even taller shadow than 20 feet at 5:1 leverage. A bigger giant.     Any GRE devotee knows that leveraged appreciation is one of just 5 ways you’re paid. We’re only talking about ONE here.   Sounds amazing. Some think, “There’s gotta be a catch.” There is, but it’s manageable. Leverage amplifies losses, just like gains.   Though it doesn’t happen often, RE can go down in value.    Even in a downturn, look at what happens. Between any ten-year period, nominally, you won’t find any loss of RE value in modern history… and you must manage cash flows.   So, no. This is not a 6-month plan. It’s to build wealth durably with a reliable vehicle in more like five to ten years.    It gets better. As your equity grows, harvesting it out through a cash-out refi maintains your… magnification into a financial giant, to stick with the analogy.   And every cash-out refinance that you do… is a tax-free event. Not tax-deferred. Tax-free.   You can make tax-free cash grabs, separating it out from your properties along the way, since the IRS doesn’t classify debt windfalls as taxable income, and you have a pro PM handling all the day-to-day for you, if you prefer.   Now you really know WHY, wealth is not created from high salaries. It’s created from owning things.     And you need to be more than creditworthy. You need to be strategic in building your portfolio with the right properties in the right markets.    Set up a time with one of our GRE Investment Coaches… and they help you do exactly that for free.   Either that or you can just keep believing that high SALARIES create wealth. Ha!    Now, a few weeks ago here on the show, I told you that I’ve had a sit-down meeting coming up with a conventional financial advisor - a retirement planner type of guy.    I’ve been getting their e-mails and dismissing them, for 8 or 10 years, but I always stayed subscribed.   This is from when I used to work at a State DOT - Department of Transportation.    So I finally responded & we set up a 1-hour sit-down. We did it virtually on web conferencing.    I prepared by having some things ready for him that he asked for - like my monthly cash flow statement, net worth worksheet, and he also asked I have my Soc. Sec. statement pulled up, so I had that ready.   Now, this is not the forum for espousing GRE’s proven wealth-building formula to him. No PROS-il-uh-tie-zing. proselytizing.    And, he told me that… I’m in really good shape.   He didn’t dig in with questions on my backstory, like, how were you able to retire at such a young age… or how did you amass all this?   And yes, I could retire now. I could have a while ago. I think you know that.    He was interested in knowing what the cash flow from the rental properties was. In fact, that was his first question about them. Good first question.    Interestingly, he really wanted to know how long I have to pay on my rentals. Like, when would the 30-year mortgages be paid off?    Well, gosh, they all have 20-some years to go. Most of them are clustered around 27 years to go.    He could see that I COULD pay many of them off quickly, now, if I wanted to. But he didn’t tell me that I should. Of course, I wouldn’t want to lose the leverage.   You know the most interesting question that this conventional financial advisor asked about these properties that I have all over the place, in different states and even nations?   He asked, “Do you plan to LIVE in any of these areas?”  No, I don’t plan to live in those properties or even in those areas. I pick investor-advantaged areas for investments, and live where I want to live.   Now, he encouraged me to import my financial info into their retirement portal. When I say, they, he works for a private company that administers the DOT’s retirement plan.   You know, I had previously been reluctant to do that and share all my financials with another party.    But, I’ve got to say, I’ve reconsidered and MIGHT enter it in there. It does some pretty impressive modeling and scenarios.    For the properties, you enter the address and they use Zillow estimated values.    It looks at how the graphs change when you get to the age of where any pensions and soc sec & all that enters your life.    All-in-all, maybe you thought I’d bust this guy's chops for being scarcity-minded or not about passive cash flow. But he was pretty good. It was an hour of my time well-spent, I would even say.    And again, the reason that I was able to be positioned this way comes down to… relying on compound LEVERAGE, not compound interest - casting the shadow of a 20-foot tall giant compared to when you’re a 4-foot tall child.   BTW, I do NOT consider myself retired. I remote “asset manage” my REIs and I produce this show, produce videos for our YouTube channel, write our newsletter, and write for Forbes and more… on material that is interesting to me and helps others.   Coming up straight ahead, why do homes in Western US states cost more than homes in the East?   This fact makes zero sense to most people, because areas east of the Mississippi River are more densely populated.    In fact, nearly 2/3rds live on just over 1/3rd of the land, suggesting the East should clearly be pricier.    Then how could it be opposite? It might seem weird. That’s coming up shortly.   You’re listening to Get Rich Education podcast Episode 497. That means we’re just three weeks away from a special, milestone, Episode 500.   I’ll tell ya. I sure know how to put the performance pressure on myself, don’t I? Ha!    Something here that we don’t often talk about or offer the opportunity for…   … if you’re a business owner or decision maker and would like to advertise on our platform, well, we’d like to check you out first.    Often, I use the product or service myself first.     Get Rich Education is ranked in the Top one-half of 1% of listened-to podcasts globally, per Listen Notes.    On air EVERY single week since 2014, some say that we were the first show to finally CLEARLY explain how RE makes ordinary people wealthy.    For advertising information and inquiries, visit, GetRichEducation.com/Ad. That’s GetRichEducation.com/A-D   More next. I’m KW. You’re listening to Get Rich Education.    A little tribute and melodic swan song to Russell Gray there.   Welcome back to Get Rich Education. I’m your host, KW.    Before returning to real estate, let’s do a quick first quarter asset class review.   It’s coming a little later than usual here. But it’s good to see what the rest of the world is doing.    Almost everywhere you look, asset prices are up, up, up.   In real estate, as housing intelligence analyst Rick Sharga & I discussed in detail here in each of the last two weeks, prices & sales volume are both up.   The S&P had its best start to a year since 2019, up 11%   The yield on the 10-yr T-note was up 26 basis points. Remember that mortgage rates move closely along with that.    Gold was up 8% to an ATH over $2,200. And gold even touched $2,300 here in Q2.   In the first quarter, oil was up 15% to $83.   Bitcoin was up 68% to $70K   And the biggest beneficiary of AI hype, Nvidia was up 88% in just the first quarter.   And this is even wilder - a little wild card for you here - for the first time ever, cocoa prices briefly surpassed $10,000 per metric ton, making the confectionary commodity more valuable than copper.   That’s what’s goin’ in the TOTAL investment world.   Why do homes out West cost more than homes in Eastern states?   This fact makes zero sense to most people, because the East is more densely populated.    According to the US Census Bureau, 64.4% of Americans live east of the Mississippi River. That’s on land that's barely more than one-third of the US - because the Mississippi doesn’t run right down the center, it’s a little to the east of center in the contiguous states.   So this means that nearly 2/3rds of people live on just over 1/3rd of the land, suggesting the East has GOT be pricier.    Well, it’s strange to many that it is, in fact, just the opposite. The West is pricier.   Now that pandemic migration and RE prices have settled, we’ve taken a fresh look at prices and this trend - which is curious to many - continues.   Let me demystify it for you.    And you saw a beautiful, colorful map that brilliantly demonstrates this. I sent it to you a few weeks ago if you’re a DQYD Letter subscriber.    Now, there are some notable exceptions to "the West is pricier", like New England and south Florida. Housing is expensive in densely populated northeastern cities.   New Mexico is an outlier as a cheap western state.   No, the West is not pricier because The Kardashians' lavish $200M total portfolio of California real estate skews the entire nation.   Here's my more, I suppose, scholarly breakdown.    Yes, one of my degrees was in Geography before I became a real estate investor.   The first reason is - NEW: The west has more new-build homes.   Higher costs of land and labor, then, had to be priced in. Eastern homes are older because it's closer to Europe's (die-A-spruh) diaspora, where the US' early immigration was heaviest.   Then there’s the factor of - the FEDS: No, not Jerome Powell’s Fed.    It’s that over 90% of federal land is located out West. No building is typically allowed here, and that makes developable land more scarce.   This helps explain why when you see huge swaths of undeveloped land when you fly over the West and think there’s boundless room for growth and sprawl, often times, there… is… not.   3-D: Maps are 2-D. The world is 3-D. Western housing is expensive because you have scenarios like port cities surrounded by mountains and high desert.    So developable land is more scarce than it seems, making demand exceed supply in more places out West than what one might think.    San Fran is confined by the bay and hills. Seattle is confined to an isthmus. Salt Lake City is next to the Wasatch Range. Alaska looks enormous, but nearly half it’s state’s population lives in the biggest city of Anchorage, which is sandwiched between water, mountains, and that aforementioned federal land.   The fourth reason, is CALIFORNIA DREAMIN'. Despite recent domestic OUT migration and The Kardashians aside, California REALLY DOES help tilt the balance.    People are attracted to SoCal's Mediterranean climate such that nearly 1-in-8 Americans are still coolin' in Cali, with a median home price of $737,700. That climate desirability drives up prices.   Much of CA also has… these layers - just myriad - codes and limits and regulations like, for example, solar panels on new construction that can add $25K to a home's cost alone.   The next reason western homes cost more than Eastern home is, what I’ll call…   DOWN BY THE RIVER:    [Play insert]   Ha! Famous classic comedy sketch there, with the late Chris Farley.    The East has the Great Lakes and more rivers.    It costs 1/12th as much to transport goods and housing materials over water than land.    That is a fact that has been stated on this show previously. It was first brought up a few years ago when we had geopolitical strategist Peter Zeihan here to discuss the “geography of real estate” with me.    A river city like Memphis is a GIGANTIC transportation hub, for example. This keeps down the costs for all kinds of consumer goods and building materials, making for a lower cost of living and, in turn, property prices.    QUAKIN': There's more seismicity out West. It costs more to BUILD to those construction standards.    For example, CA and WA are 20%+ more expensive to build than many Southeastern states. There are more fires in the Western US, tornadoes in the middle, and hurricanes in the East.   JOBS: It takes more high-paying jobs to attract new residents and get them to uproot and move to the faster-growing West. Higher incomes buy pricier homes.    The East has tons of jobs going for it too. In fact, the northeast might be the world’s most productive region - NYC, Boston, Philly, DC.    But out in Appalachia and elsewhere, there are some waning business sectors like various heavy industries and coal. But most of the ones that were going to move out, already HAVE moved out, decades go. Much of that downdrain is overwith.   The last reason is…   I CAN SEE CLEARLY NOW: The West has mountain and desert VIEWS. These can be seen from farther away than Eastern… forest and flatter areas and piedmont landscapes. The East has a lot of lake and river view properties though… and…    There they are—8 reasons why Western homes cost more than Eastern homes.   Now you know why West Virginia has million dollar homes so big that you can get lost indoors.    And in coastal Cali, it seems like a million bucks gets you little more than a ramshackled pool house.   Of course, at times, I've had to make gross generalizations about such a vast nation of 340 million people and so many variables.    Otherwise, this episode could be a few hours long. As I discussed those, you sure could think to yourself at times, “I believe there’s an EXCEPTION to that criterion.”   I want to tell you why this all MATTERS TO YOU shortly.    Yes, there is some irony here though. The western US has lands that are arid, inhospitable, and what some describe as wastelands, like four deserts.   Well, the invention of the air conditioner made those places more livable.    The West also has the most beautiful national parks, and hey, some find places in the East INhospitable, like Michigan’s Upper Peninsula in March.   Now, I like a change in seasons, coming from Pennsylvania like I do, but some don’t. You’ve got to serve real estate to where people want to own and rent.    Florida has not been thought of as a mosquito-infested swamp since last century. Today, it’s livable and desirable to many.    Now, there are some other factors in addition to the main 8 reasons I’ve mentioned, on why Western US homes cost more than Eastern US homes, from a slavery legacy to unionization and more. I’ve been hitting the big ones here.   Real estate has made more ordinary people wealthy than anything else.    When you're on our website, GRE Marketplace, and hover over the blue "INVEST" button, you'll notice that most long-term rental investor markets are in the East.   There's a reason.   Rents are strong relative to this LOW PURCHASE PRICE that I’ve discussed here.   And now you know more of the “whys” behind the Eastern US’ lower property prices. And maybe, today, I hope it's the BEST understanding you’ve ever had for why that’s the case.    We buy in strategically chosen GROWTH areas that tend to be more East than West.    And, that’s really part of the progression of this show. We began in 2014 with this podcast and other real estate investor education. We still lead with that.   But next, listeners wanted to know where they could FIND PROPERTIES conducive to our wealth-building strategy, and we added that at GRE Marketplace.    Yet, that still wasn’t enough because I noticed that some of you that wanted to build your wealth with real estate, needed to make it easier to have your questions answered, or find a lender, or insurer, or find just the right property in the right market that fits your goals.   So starting more than two years ago, we added Investment Coaching - it’s still free like everything else that we do here.    Our coaches are real people and real, direct, real estate investors just like you are… and just like I am. Our coaches simply have more EXPERIENCE doing it than most people do.   Because knowledge is not power, but knowledge plus action is power, I often like to leave you with something actionable… that’s really going to help you at the close of the show.    If you didn’t already know, you can find properties and a coach, at GREmarketplace.com   Until next week, I’m your host, KW. DQYD!  

Get our free real estate course and newsletter: GRE Letter Apartment construction is falling. It’s not because banks are pulling back from lending. Projects aren’t feasible for builders. Housing market intelligence analyst Rick Sharga returns to discuss the real estate market.  We discuss: real estate price movement, affordability concerns, expected mortgage rate changes, migration, price reductions, new homes vs. existing homes. Can anyone even find a new-build $225K detached SFH today? They’re nearly extinct. Homebuilders are still buying down mortgage rates for you into the 4%s and 5%s at GREmarketplace.com. America needs more SFHs, especially at the entry-level.  Apartment rents have declined a little. SFH rents are up about 3% year-over-year.  Delinquency and foreclosure activity remains low. These have a strong correlation with unemployment rates. The volume of homes sales should increase this year, but only by perhaps 10%. A recession is still quite possible later this year and expected to be mild. Every region of the nation is currently experiencing residential RE price growth.  When mortgage rates fall, more new buyers than sellers are expected, pushing up property prices. Resources mentioned: Show Page: GetRichEducation.com/496 Inquire about business with Rick: CJPatrick.com Rick Sharga on X: @ricksharga LinkedIn: Rick Sharga For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. Tons of new apartments were built last year, but that's abruptly going to change going forward. You'll learn why. Then a housing market intelligence analyst and I break down what's happening in the real estate market and the future direction of rents, prices, foreclosures, interest rates, and a lot more today on get Rich education. When you want the best real estate and finance info. The modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are at no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple. Text GRE to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free.   Keith Weinhold (00:01:16) - It's called the Don't Quit Your Day Dream letter and it wires your mind for wealth. Make sure you read it. Text GRE to 66866. Text GRE 266866.   Corey Coates (00:01:34) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:50) - Welcome to grow from Alexandria, Egypt, to Alexandria, Virginia, and across 188 nations worldwide. I'm Keith Weinhold, holding your inside get rich education. I'm grateful to have you here. A few weeks ago, I discussed all the apartment buildings that were constructed last year. One thing that you'll often hear out there today is that apartment construction is now falling because banks are pulling back on construction lending. But no, it's really not quite that simple. In fact, that's not even the top reason for construction delays now and going forward with apartments. The number one reason for the delays today is that the project is not economically feasible at this time. That's what the NMC tells us. All right. So what does that really mean? Well, it means that projects aren't penciling out.   Keith Weinhold (00:02:44) - In other words, apartment developers, they can't generate the returns that they need to justify the project to their capital partners, those that are funding the building. And this is, by the way, not about greedy developers, because contrary to some of the noise, it's the fact that developers do not self-fund their projects. They get the money from others. So yeah, it's the developer's job to convince investors and lenders to inject that capital. And that is just harder to do right now. Despite developer's best efforts and higher rates are obviously still contributing to the problem. It's not so much that the construction financing is not available, because for residential, it's often there. It's available. The thing is, is that apartment mortgage terms and rates are way less favorable than they were a couple of years ago, as we all know. So developers, I mean, they're paying a higher interest rate then. And you therefore need higher rent to cover that higher interest rate unless you can cut a lot of costs elsewhere and in apartments, you're also getting a lower loan to value ratio.   Keith Weinhold (00:03:55) - So that means developers, they therefore need to raise even more equity in order to cover that gap. And what's happened is a lot of the equity that's shifted away from brand new ground up apartment development, and instead it's gone over into chasing potential lease up distressed deals, properties that are already out there and are having some problems. So that's where the apartment money is moving right now. Not so much to new developers and builders also aren't building many apartments this year because construction costs remain a problem. Some materials got cheaper, others didn't. One bright spot is that construction labor that is getting easier to find. But yet the actual labor cost that really hasn't dropped. Property insurance is higher too, so these rising expenses, that means apartment projects are not penciling out for builders and then apartment rents. They're just not rising that much. That doesn't help. So it's hard for it to rise, since so many were built last year and the year before. They're in the apartment world. But obviously the long term demand is for just about all residential housing.   Keith Weinhold (00:05:11) - That demand. Is there loads of long term demand for apartments, condos, single family homes, co-ops, modular homes, mobile homes, duplexes, triplexes, fourplex container homes, row houses, farmhouses, penthouses, outhouses. I think you get the idea. The demand is there. Residential is the resilient spot, and it's all about where you want to get in. And speaking of homebuilders and finding a smart place to get in, it's important to share with you the good news that homebuilders are still buying down your interest. Right for you. Now the third year rate, it hit 8% last year. And Non-owner occupied property costs a little more. So it was nearly 9% on income property. It's come down off that as we know it's been around seven lately. But see here at GREwe work with builders that are still buying down your interest rate into the fives and sometimes still into the fours on new construction, single family homes, up to four plex and sometimes larger in Florida, Alabama and elsewhere. I mean, that is just the best deal going for you today to have an income producing new build property in the path of growth at 4 to 1, leverage to 5 to 1 leverage and.   Keith Weinhold (00:06:46) - Your mortgage in the fives or less, and we'll help you find the real deals within that. To connect with a great investment coach at great marketplace.com. I think you'll be glad you did. Now, today, if somehow I could use a time machine to write a letter back to my 2020 self and inform myself about what's going to happen in the housing market for the next 4 or 5 years? And I had to keep this note to myself short. I would have written that everything is going to shoot way up, rents up, prices up, interest rates up, expenses up, inflation up. Well, now that nearly all of those run ups have settled into place, we can draw a clearer picture of where we think the real estate market is going to be positioned in the future. Our guest has just freshened things up and he's got the latest in the property market all updated for us. I do two with my own research. You'll like this. It's our housing intelligence analyst guests and I. Straight ahead.   Keith Weinhold (00:07:55) - I'm Keith Weinhold. You're listening to get Rich education.    You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to 66866. Role under the specific expert with income property, you need Ridge Lending Group and MLS for 256 injury history from beginners to veterans.   Keith Weinhold (00:09:15) - They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Caeli Ridge. Personally, they'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com.   Kristin Tate (00:09:42) - This is author Kristin Tate. Listen to get Rich education with Keith Weinhold. Don't quit your day dream.   Keith Weinhold (00:09:59) - Hey what has not been a very long goodbye. Just like last week when we discussed the economy this week we have the return of the C.J. Patrick Company's Rick Sharga, an extraordinary housing intelligence analyst, as we more specifically cover the real estate market. And if you're on video, you'll have the benefit of seeing some charts as well. Rick. Welcome back. Good to be back, Keith. Long time no see. Yeah, it hasn't been so long. What are your overall thoughts with the housing market? Last week we largely talked about a resilient economy potentially with some headwinds. Yeah we did.   Keith Weinhold (00:10:32) - And I think we're one of the things we left off on was the impact that the Federal Reserve had had on the mortgage market and the housing market. We probably start there. When you look at what's gone on, and just to show you how random all of this can feel sometimes this is a snapshot of mortgage rates from March 12th. And mortgage rates were trading at about 6.92% for a 30 year fixed rate loan.   Rick Sharga (00:10:56) - The most recent number I saw was about 7.1%. And as I mentioned to you and your listeners last time, I expect until the Federal Reserve makes its first fed funds rate cut, we're going to see mortgages trade right around 7% between 6.75 and 7.25%. This has made a big difference in the market because it has limited affordability for literally millions of prospective home buyers. That's makes for a difficult situation for people looking to buy or sell homes, but it also presents millions of rental property opportunities because these people need to live somewhere and they've voted themselves off the island temporarily. They just can't afford to buy a house.   Rick Sharga (00:11:41) - And you see that in terms of the reduction in number of mortgage applications that are being made. So if the Mortgage Bankers Association tracks the number of people that apply for loans, if you went back to December when mortgage rates dipped just a little bit, we saw a run up of loan applications, and as soon as they went back up to seven, we saw that number fall off. It's a very, very rate sensitive market. We'll talk a little bit about some of the implications of that as we move ahead, Keith. But the weak affordability, the higher interest rates, the continuing high home prices led to a very, very weak year in 2023. In terms of overall home sales, we ended the year with about 3.9 million existing homes sold. That's the lowest number of homes sold in a year in a quarter century. Yeah, even lower than we saw in the Great Recession. And December was the 28th consecutive month where we sold fewer properties than we sold the year before.   Keith Weinhold (00:12:39) - So a contraction in the number of sales, although prices appreciated last year.   Rick Sharga (00:12:44) - Yeah, we'll talk about that this year. I'd been hopeful that we'd be a little bit of a better start. January and February were both up in terms of home sales on a month over month basis, but continued this trend of lower sales on a year over year basis. We're looking at 30 consecutive months where we sold fewer properties than we sold the prior year. As a result of this.   Keith Weinhold (00:13:05) - Supply crash, that really began about four years ago.   Rick Sharga (00:13:08) - It's partly supplied as partly costs, that affordability. We really can't overestimate the impact that affordability has had. But you're right in terms of inventory and in fact, a good segue, it's almost like you'd seen this before, Keith. Inventory is up significantly from last year, about 24% higher than it was a year ago, according to some data from Altos Research. But it's still only running about half of 2019 levels. So in a normal market, we would have about a six month supply of homes available for sale in our market today, we're looking at somewhere between two and a half and three months supply.   Rick Sharga (00:13:44) - That lack of supply with some pent up demand is one of the reasons we have seen prices continue to be very healthy, and we haven't seen the the price crash that all the snake oil salesmen on YouTube comments. As of mid-March, about 513,000 homes available for sale, again, about 24% higher. Than last year when the numbers were just dismal. We normally do see more inventory coming to market this time of year. We'll not get anywhere near where we were back in, you know, years like 2019, 2020. But it wouldn't be a surprise to see a little bit more inventory coming to market.   Keith Weinhold (00:14:21) - Now, Rick, for existing properties, we have the very well documented interest rate lock in effect. I think a lot of people understand that. But as far as bringing more supply onto the market, do you see anything from the builder side? You know, costs are up for builders and builders feel this lack of affordability from the buyer market as well. So therefore that motivates them to build somewhat less.   Keith Weinhold (00:14:43) - And they're also building smaller properties, some shrinkflation with new construction property to try to help out with that affordability. So what are your thoughts with builder motivations this year and next year?   Rick Sharga (00:14:54) - All that thought is we're going to get to new homes in just a couple of minutes. So keep that right forefront in mind. But let's just kind of wrap up on existing sales. I do want to point out to your listeners that the inventory growth is actually outpacing the number of new listings. So new listings are only up about 14% year over year, whereas overall inventory is up 24%. The reason for that is it's taking longer to sell homes once they get to market. So once those properties are listed, they're staying in the inventory numbers a little bit longer than they were last year or even a few months ago. So that's one of the reasons the inventory numbers look a little bit better than they did. You talked about the rate lock effect. It's still very real. About two thirds of everybody with a mortgage has a mortgage rate of 4% or less.   Rick Sharga (00:15:43) - And this is not home sellers being picky or having a psychological problem. This is math. If you sell a property today and buy a new one for exactly the same price as the one you just sold, you've now doubled your monthly mortgage payment and most people simply can't afford to do that. So the properties being listed or by by people who feel like they need to sell, there's a death in the family or a birth in the family. There's a divorce or there's a marriage. There's a job loss or job that requires a transfer, maybe some financial difficulties where the borrowers in distress so they feel like they have to sell the home, or somebody's been retired for a long time, has a lot of equity, and just says, oh the heck with it. It's time for me to downsize. But the people who would normally be making a decision that maybe I'd like to sell, maybe I'd like to look at a move up opportunity. Those people are sitting on the sidelines and rather than seeing a price crash, which is what people are breathlessly trying to sell you on YouTube, the most likely scenario, something we've seen play out in the 80s and 90s and is likely to play out again in the 2020s, which is several years of kind of lackluster sales volume and modest price growth.   Rick Sharga (00:16:54) - And it takes a few years to reset the levels so that all those people with the Sub4 mortgages gradually, slowly work their way out of inventory and are replaced by people with mortgages that are closer to today's rates. And we've seen that happen, like I said, in the 80s and 90s, and it's a very normal occurrence when you have a sudden shift in either mortgage rates or home prices, that's much more likely to happen than a 2030 40% drop in home prices to make things affordable. And I would just ask anybody who's skeptical, if somebody approached you tomorrow and you didn't have to sell, but they said, hey, sell me your house for 40% less than market value. How interested would you be in having that conversation?   Keith Weinhold (00:17:36) - Wouldn't last long.   Rick Sharga (00:17:37) - No. And then home prices are up in every region. You mentioned this, Keith. Across the country I'm sharing for people that can see it. I'm sharing data from the Fhfa, which is the entity that controls Fannie Mae and Freddie Mac. So all of those 30 year fixed rate conventional loans and a year over year basis, we saw prices go up 6.3%.   Rick Sharga (00:17:56) - They were up in every region of the country. And that's a little different than the prior year when the Pacific region was actually down. But every region of the country is seeing price growth right now. And whichever price index you look at Case-Shiller,, Freddie Mac, the Fhfa index, National Association of Realtors, everybody showed similar numbers were every region was up. But importantly for your listeners and I emphasize this enough, local results are very different than national results. So even within markets where we're seeing prices go up, there are going to be neighborhoods where prices are going down and vice versa. So it's much more important for you to understand what's going on in your local market than to listen to a lot of these national trends. I will tell you that some of the markets that overheated during the pandemic, as people were moving out of high priced, high tax or highly congested areas, are seeing a bit of a clawback. So places like Boise, Idaho and Saint George's, Utah and Austin and Phoenix and Las Vegas, we're seeing those markets with the prices clawing back a little bit, a lot of price growth continuing the southeast.   Rick Sharga (00:19:04) - So and surprisingly now in the Midwest as well. So we are still seeing a bit of a migration from high price, high tax areas into lower priced markets. I tell folks, Keith, I have two adult kids living at home. My son's getting married in September. He's a teacher. His fiance is a lawyer, and they took me aside recently and said, hey, you follow this stuff. What states should we be looking at outside of California to move so that we can own a house?   Keith Weinhold (00:19:31) - Wow, that is really, really interesting that that would dictate their decision on where they live, if they have that much of a preference to own rather than rent. Recently, a lot of us in the industry learned that the average age of the first time homebuyer is now 36, older than ever.   Rick Sharga (00:19:48) - Yep. And these are two kids with good heads on their shoulders. They know there are benefits to homeownership, and they also know that the median price of a home sold in California last month was almost $800,000, and the First National Bank of dad ain't financing that acquisition.   Rick Sharga (00:20:02) - So I'm sure these conversations are happening in New York, in Chicago, in Miami and in San Francisco, and it's just the reality of today's marketplace. We talked about prices going up. We are seeing slightly more homes having a price reduction before they're sold. That always happens somewhere along the lines of 30 to 35% of homes listed wind up with a price reduction before they're sold. We're up to about 31% now, so we're still in the normal range, but we're a little higher than we've been in recent months.   Keith Weinhold (00:20:35) - This is interesting, a statistic we don't talk about very much, the percent of homes experiencing list price reductions.   Rick Sharga (00:20:42) - And it peaked in 2022. The highest number we've seen in quite a while was over 40%. And that was right after interest rates doubled. And so it's probably not a huge surprise. People were anticipating they were pricing based on the prior market. And I think we're seeing more rational pricing today. But again, that combination of prices just being as high as they are and interest rates being as high as they are, are creating some affordability issues.   Rick Sharga (00:21:05) - And for people that have to sell, they're taking price reductions. Now, keep in mind these price reductions are often very, very minimal. In California, for example, the average price reduction is less than a percent. So it's not a huge reduction, but it's still a reduction from what the list price was. You asked about new homes. So now I'm going to make you happy. We'll talk about new homes. New home inventory levels are increasing. We normally want to see about a six month supply of existing homes for sale. The new home inventory is usually between 7 and 8 months. And we're back to that number right now. Some of those homes available for sale are still under construction, but they are nonetheless available for sale. And we've seen that inventory improve over the last year as supply chain disruptions have minimized as builders are now more able to find laborers for construction. Those are two huge holdups they had over the last couple of years, and we've seen new home sales increase. And one of the reasons for that is they're available.   Rick Sharga (00:22:05) - So if you're a builder and you put a home in the market at the right price, you're going to sell it because there just aren't that many existing homes available for sale. And to your other point, Keith, new home prices are actually down 15% from peak. Existing home prices are up, new home prices are down. And in fact, if you look at the most recent new home pricing data put up by the Census Bureau recently, new home prices are at the lowest level since June of 2021. So they've really come down pretty significantly and are not that far away from existing home prices in many markets. So that median price of an existing home and the median price of a new home for sale are closer than they've been in years, partly because the builders are building smaller homes, partly because you're using less expensive fixtures. And the other thing that the builders have been doing, and this price is a lot of people, but it's brilliant on their part, is they're coming to closing with thousands of dollars and they're paying down mortgage rates.   Rick Sharga (00:23:01) - They're buying points and dropping the mortgage rate for their buyers. I spoke to a group in Denver recently where there was a local builder advertising mortgage rates of 4.99%. So think about that.   Keith Weinhold (00:23:13) - We have providers we work with here that are doing similar things. We're still seeing the rate buy downs happening, and that's why I've often told people, Rick, like, this is potentially a good time in the cycle when you're adding more rental property to really look at new builds or build to rent while these rate buy downs last. Now, I talked to a builder in Houston yesterday, and I learned a few interesting things. You talked about the smaller square footages. They could confirm that often times this builder offers either a bedroom or a study. You can get an extra bedroom or a study like a little office space. And more and more people are opting for the study. So they're starting to build homes more with the study in mind because more people are working from home and one less bedroom because people are having fewer children.   Rick Sharga (00:23:57) - Exactly right. It's the combination of both of those two things, either having fewer children or having them later. And many more people working from home than they were prior to the pandemic. And those studies become very, very useful., rooms to have in the house. Rick, what.   Keith Weinhold (00:24:12) - Is the lowest cost, new build, single family home that you see? I mean, is anyone even building in any parts of the nation, like a 225 K new build home? I haven't seen one.   Rick Sharga (00:24:26) - I haven't seen one. But I wouldn't be surprised if you're in a market in a state like Alabama or Mississippi and some of the more outlying areas, maybe some markets in the Midwest where home prices aren't as astronomical as they are elsewhere. But look, the builders are building judiciously. They're not overbuilding., we had a cycle in 2008 where we had a 13 month supply of homes available for sale and building Irish building. They got caught with overstock. But what they are building, they tend to build as move up homes because they're more profitable.   Rick Sharga (00:24:58) - So you're just not seeing an awful lot of entry level homes being built. And the hope is that as they build that first move up level home, some of the people with entry level homes will opt to sell and bring some of that inventory back to market. We are seeing more construction. We are seeing building permits,, going up on a year over year basis., most recent numbers are around 1.5 million permits. So the builders are bullish on the future. And housing starts were up in both January and February. Most importantly they're up most strongly in single family owner occupied homes. We're seeing housing starts to decline dramatically in terms of multifamily starts, right. But that's because there's about a million new apartment units coming online between last year and this year. And we don't need a whole lot more apartments., we need,, more single family homes. So if your listeners are seeing headlines talking about housing starts being lower, it's really because we're seeing fewer multifamily starts.   Keith Weinhold (00:25:54) - Last year was a big year for multifamily construction.   Rick Sharga (00:25:57) - All time high in terms of multifamily units under construction. And a lot of those are still coming to market this year. There are going to be some markets that are actually still oversupplied. So again, you have to be paying very close attention. When we talk a little bit about the rental market in the apartment category, we have seen apartment rents decline year over year in pretty much all categories. Whether you're looking at studio apartments, one bedroom apartments, two better apartments on a year over year basis, rents are actually in negative territory, according to Realtor.com and according to some data I've recently seen from RealPage. If you're looking at the actual price of rent and I know that's a little different than percentage increases or decreases, you're still seeing that rents about it's below peak. It's about 1.6% below the peak we hit in 2022,, when vacancy rates were just about nothing. But we are still below peak, and the median rent is ranging,, somewhere in the neighborhood of $1,700 a year for apartments, single family homes, which I suspect more of your listeners are actually,, renting out than apartments.   Rick Sharga (00:27:03) - Yes. Are doing better. We're seeing year over year rents continue to grow. They're growing modestly. They have not gone into negative territory, and they haven't,, during this boom and bust cycle that we've seen in the housing market. And if you're looking at,, price gains, according to some recent data from CoreLogic, if you're at the higher end of the single family rental market, prices are up about 3% year over year. At the low end, they're up about 2.9%. So very little difference depending on your price tier and also very little difference depending on whether you're looking at an attached single family residence or,, detached family single family residence. All those are up right around 3% year over year. And that's a good sign. Again, you're dealing with a as your your listeners know, you're dealing with a slightly different tenant in a single family home than you are in a, an apartment. And a lot of these people who would have been buyers or opting to rent stands to reason that,, they'd rather rent a house, particularly if it's in a good school district or in a good neighborhood than an apartment, because they have needs.   Keith Weinhold (00:28:06) - Rents are extremely stable historically. They just sort of plod up slowly. What happened about two years ago, three years ago, with that 15% plus rent increase, that's an aberration.   Rick Sharga (00:28:19) - Yeah, that's a good point, Keith. If we're looking at 3% rental growth year over year right now in the single family rental market that tracks with historic normals, usually you're somewhere between 1 and 5% a year. So threes, you know, smack dab in the middle of all that. And the growth rates also vary wildly by markets., just kind of give you a range if you're looking at a single family rental property in Honolulu, in the city, year over year, you're up about 6%. If you're looking at a unit in Miami, Florida, you're down about 2.5%.   Keith Weinhold (00:28:50) - So rental growth rates.   Rick Sharga (00:28:52) - Rental growth rates. So really just depends on where you are. That's pretty much your range from a couple points down to I think Honolulu actually had the largest,, increase in the CoreLogic study. A lot of your listeners are probably interested in buying foreclosure properties.   Rick Sharga (00:29:07) - We're not seeing a lot of foreclosure activity. Still, we are starting to see a little weakness in consumers. When we met last week, we talked a little bit about the strength of consumer spending, but we also talked about increasing amounts of spending on credit cards. And we're seeing consumer delinquency rates increase in pretty much every aspect of consumer lending, whether it's a loan, whether it's a credit card debt, whether it's an auto loan, whether it's a home equity line of credit, whether it's a mortgage, a mortgage, delinquencies are up a little bit. The only category we're not seeing an increase in delinquencies right now is student loans. And my theory on that is that people have only recently had to start making payments again on student loans, and we don't have any data to show that they're going delinquent yet. But the delinquency numbers we need to take with a grain of salt, because many of them are most of them are early stage delinquency. So somebody missed a payment, but then they catch up before they get 60 or 90 days delinquent.   Rick Sharga (00:30:02) - But we are seeing trends that suggest more delinquencies. And if you have more delinquencies, that leads to more foreclosures. Mortgage delinquency rates, according to the Mortgage Bankers Association, went up to about 3.8% in the fourth quarter, the historic average going back to the 1970s, which is as far back as the NBA goes, is about 5.25%. So we're still way below normal levels of delinquencies. As I mentioned, most of those are early stage delinquencies, and they're being resolved before they get more serious. Because of that, we don't have a lot of foreclosure activity. So this is no longer Keith government intervention. It's no longer government forbearance programs and foreclosure moratoriums. It's the fact that the economy's been so strong. Unemployment rates have a very strong correlation to mortgage delinquency rates. We got together last time I mentioned the unemployment rate was at 3.9%. I just told you that word delinquencies are at 3.8. Can't get much closer than that. And because of that, foreclosure activity is still down almost 30% from where we were in 2019 prior to the pandemic.   Rick Sharga (00:31:07) - And I should point out, the 2019 wasn't a particularly big year for foreclosures either. So I don't see us getting back to pre-pandemic levels of foreclosure activity until sometime next year. And what's important for people in this space to understand is that even though we're seeing roughly the same number of delinquencies that we saw back in 2019, fewer of those delinquent loans are going into foreclosure. Fewer of those foreclosures are getting as far as the auction, and even fewer of those are going back to the banks as REO properties or bank owned properties.   Keith Weinhold (00:31:40) - Delinquency occurs before foreclosure. We have low levels of both, and I would imagine that one substantial reason for that are these low fixed rate payments that so many people have. Minutes ago, you showed us that 90% of those with a mortgage have a rate in the fives or less. And then oftentimes when we talk about these sorts of things, we don't even consider the fact that more than 4 in 10 homeowners are free and clear. They don't have any mortgage at all. So it's difficult for people to get in trouble.   Rick Sharga (00:32:10) - Yeah. And when they do get in trouble, what's really a saving grace for a lot of these people? And I believe the reason we're seeing fewer foreclosure auctions and bank repossessions is that there's $31 trillion in homeowner equity in the market, and 90% of borrowers in foreclosure have positive equity. A huge percentage of those have at least 20% equity. So what's happening interesting is that many, many of these borrowers are protecting their equity by selling their home before the foreclosure sale. If they get to foreclosure sale, they run the risk of losing all their equity, or at least the overwhelming majority of their equity.   Keith Weinhold (00:32:48) - That's a great point with how this really works.   Rick Sharga (00:32:50) - And so if you're looking to buy a distressed property, if you're looking to buy a foreclosure property, you really need to be working directly with the homeowner in the earliest stages of foreclosure rather than waiting for the auction. And certainly rather than waiting for the bank to repossess the home and resell it. And some recent data from a friend of [email protected] tracking some numbers from Adam Data.   Rick Sharga (00:33:15) - 55% of the distressed properties that were sold through from June through to September of last year were sold in that pre foreclosure period prior to the foreclosure auction. That's wildly different than we've been in in years past. So really important for anybody looking to buy distressed property, to consider moving upstream and working directly with that homeowner. And it's a win win. You can help that homeowner protect their equity, have some cash to make a fresh start with and, and typically buy a home in pretty good condition and a home that you need to be part of your rental portfolio. So just kind of recapping some of the stuff we talked about, Keith, both today and last week, I still think that from an economic standpoint, there's still at least a good possibility we might have a short, mild recession sometime later this year. I don't see unemployment going much higher than 5%. Even if we do have a recession, if we don't have a recession, we'll only see the economy slowed down a bit. It might be hard to tell the difference.   Rick Sharga (00:34:10) - I'm expecting the volume of home sales to go up. I think we bottomed out in 2023, but not by a lot. Maybe we see a 10% lift over last year, which would take us to roughly 4.4 million existing homes. I wouldn't be surprised to see 700,000 new homes sold, really just depends on how quickly builders bring inventory to market. But if I'm right and mortgage rates go down slowly over the second half of this year, we'll see more home buyers come to market more quickly than sellers. We don't see a lot of sellers come to market until we get interest rates down to about 5.5% or lower, which probably won't happen until 2025. So more buyers coming to market than sellers means the prices will continue to go up. We continue to see investors account for 25 to 30% of all residential purchases. So I think we'll continue to see a higher rate, partly because investors are active, partly because a lot of consumers are waiting for market conditions to improve, but that limited affordability in today's market conditions, I really do think means more demand for rental units.   Rick Sharga (00:35:14) - And I think foreclosure activity stays below normal levels for the rest of this year, and REO inventory bank repossessions are going to remain even lower for even longer. I don't think we see REO activity come back to more normal levels for at least a couple of years, so anybody looking to buy these properties really does need to be moving upstream in order to make those purchases.   Keith Weinhold (00:35:34) - Yeah, with low affordability, hence more demand for rentals. I've already noticed that the homeownership rate, which is somewhat of a trailing number here, has already fallen from 66% to 65.7%. And with low affordability, it seems that that homeownership rate could fall even more, meaning the rate of renters would be higher.   Rick Sharga (00:35:54) - A friend of mine always complains that the government's somehow beside behind all of these trends, one way or the other, and and wonders why, with all the government programs aimed at increasing homeownership, we haven't seen that homeownership rate increase much. And I think sometimes things said to the natural level and our homeownership rate, really for the last 30 years, has been somewhere between 64% and 66%.   Rick Sharga (00:36:19) - And that might just be what the natural level for homeownership is in the United States. Will it dip a little bit as people can't afford to buy a house? Probably. Probably will. When market conditions improve for buyers, will it go up a little bit? Probably. But we hit 70% homeownership back in 2006. And it turned out that was the bad number and that not everybody's ready financially for the kind of commitment that homeownership requires. And so I've always said that the key isn't getting everybody into a home. It's the sustainability of homeownership for people that that we do get into that house. One of the best days of your life is when you get the key to that house, and it has to be one of the worst days if you have to give it back. So I hope we all keep that in mind as we move forward.   Keith Weinhold (00:37:03) - That's right. Government incentives is in the past saying there's a $10,000 first time homebuyer tax credit. Oh, we're not in an era where we need help. On the demand side, all you're doing is driving up prices.   Keith Weinhold (00:37:14) - And I don't know that you're helping out anybody in that case. But I think with really overall, one big takeaway here, Rick, is that if you the listener, if you're waiting for prices to drop substantially sometime or for interest rates to drop substantially sometime, that might not be worth the wait. You could be waiting a long time.   Rick Sharga (00:37:32) - I do expect mortgage rates will decline. I don't really go back to the sub for rates we saw a few years ago, but they're going to decline slowly and they may not decline enough to offset rising home prices. I mean, you have to get your calculator out and and figure out how that math works for you. But you're absolutely right, Keith. And I tell people today, even with mortgage rates being where they are, if you find a house you love or you find a house that's a good investment and you pencil it out and the numbers work, don't wait because the opportunity costs can be severe and you could wind up missing out on a property that could either be a good cash flow unit for you on rental, or it could be a property that you wind up living in for the next 30 years.   Rick Sharga (00:38:13) - So don't be afraid of today's market. Just be very prudent and judicious in the way you approach it.   Keith Weinhold (00:38:19) - Well, Rick, get resuscitation of followers and the nation have been a beneficiary of your housing market intelligence expertise for quite a while now. If someone wants to engage with you in the CJ Patrick Company, who are those types of people and how could you help?   Rick Sharga (00:38:36) - I appreciate the opportunity. Most of the companies I work with or companies that provide services to lenders, anybody who has a business that's in the real estate or financial services markets, who would benefit from my coming in to share with them industry data, or has data themselves that they would like to get out into the marketplace? Anything data related really, I tend to specialize in. So market updates and market overviews and market. Analysis or things that I do on a pretty much daily basis for companies.   Keith Weinhold (00:39:07) - How can they engage with you?   Rick Sharga (00:39:08) - They can find our website, which is C.J. patrick.com. They can find me on Twitter. I hide there under my name, Rick, or reach out to me on LinkedIn.   Rick Sharga (00:39:17) - And if you reach out to me on on a social media channel, make sure that you mention you know me through Keith, and you're not some crazy Russian bot trying to hack into my personal information.   Keith Weinhold (00:39:27) - Well, then, Rick, it's been great having you back on the show.   Rick Sharga (00:39:30) - I'm sure we'll do it again sometime soon. Thanks for having me.   Keith Weinhold (00:39:39) - Yeah, terrific Intel there. In this episode, Rick said that to still expect a lower amount of sales going forward and expect modest property price appreciation. Every region of the nation is seeing price growth now. And by the way, you remember that late last year, I unveiled Gray's home price appreciation forecast for this year, stating that prices should rise 4% and here in Q2, I still like how that looks. There is not much distress with current homeowners, but if you're looking to scoop up a foreclosed property cheap, you better get aggressive and work directly with the homeowner in the earliest stages of foreclosure. Don't wait for that property to go to auction. Rick also said more demand for rental units is coming, and I encourage you to engage with Rick.   Keith Weinhold (00:40:30) - Let him know you heard about him through me. If you want to go deeper and engage with some of the services that he offers, perhaps you work for a real estate company or a demographic company. You can do that at C.J. patrick.com. But most of you, the listener is an individual investor. So check him out on X where his handle is Rick Sharga. He is Rick Sharga on LinkedIn. Big thanks to Rick Sharga today. Until next week I'm your host, Keith Wild. Don't quit your daydream.   Speaker 5 (00:41:04) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:41:32) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Get our free real estate course and newsletter: GRE Letter Our core formula here at GRE is simple, buy-and-hold real estate. Then where does your profit come from? I explain. Where will your next tenant come from? Essentially, market intelligence analyst Rick Sharga & I answer this today. We explore job growth, wage growth, and the condition of today’s consumer / tenant.  Rick Sharga doesn’t believe that mortgage rates will fall substantially until the Fed Funds Rate does. This isn’t likely to happen until at least June. Consumers are exhibiting some distress signals. Credit card debt has swelled. We break it down. Many economic indicators still show that they’ll still be an economic slowdown.  In most recessions, home sales and home prices both rise. Resources mentioned: Show Page: GetRichEducation.com/495 Inquire about business with Rick: CJPatrick.com Rick Sharga on X: @ricksharga LinkedIn: Rick Sharga For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:00) - Welcome to gray. I'm your host, Keith Weinhold. We aren't fooling around on April Fool's Day. How can you be assured of having rent paying tenants in the future? That's dictated by the economy, job growth and real wage growth above inflation. Well, how exactly does all that relate to the housing market? We break it down today with an expert guest on Get Rich Education. When you want the best real estate and finance info, the modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple. Text GRE to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free.   Keith Weinhold (00:01:16) - It's called the Don't Quit Your Daydream letter and it wires your mind for wealth. Make sure you read it. Text GRE to 66866. Text GRE to 66866.   Corey Coates (00:01:33) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:49) - What category? You're listening to one of America's longest running in most listened to shows on real estate investing, the Voice of Real Estate since 2014. This is get rich education. I'm your host. My name is Keith Weinhold, and you probably know that by now. But what we never truly know is the direction of the economy and how it shapes the housing market. Well, an expert and I are putting our heads together for you today to give you the best indication that we possibly can. I'll be with us shortly. And he is coming, armed with all of his best indicators and statistics. Last week here on the show, I got somewhat philosophical with you at times when I posited the question, do you want to retire? And I helped answer the question, what is retirement today anyway? I had a lot of good feedback on that show, but today we're talking about more concrete indicators with some numbers.   Keith Weinhold (00:02:50) - For example, historically in a recession, what really happens to real estate prices? We're going to answer that and more questions like it today. Now, I like to say that wealthy people's money either starts out in real estate or ends up in real estate, but there are so many ways to do it, so many ways to do real estate right? Hence so many ways to do it wrong as well. Our formula that we use here at GRE more than any other, is something we use because it is so simple that I think some people overlook it. It is buy and hold. Yeah, mostly long term buy and hold residential rentals. Now, we sure talk about some other things too, but that's really a cheap formula, something that we focused on since day one here. Now there surely can be some other good strategies as long as you execute, right? Flipping, wholesaling, Oreos, the birth strategy, self-storage units, RV parks and a lot more. But with buy and hold, I think some people know the real estate.   Keith Weinhold (00:03:58) - They might then ask, well, well where's your margin on that? Where does your profit come from if you just buy and hold? Or they might even think that that strategy is really slow and a 40 year game plan. Well, then they learn about the five ways and that changes that. It's largely about buying strategically and then managing your manager. I think most people dream of a life where they can just spend their time remotely managing their investments here and there. Now, for me, most months, I don't have anything to do with managing a property manager in a certain market. I just get the cash flow and then I do browse the monthly property statement. Some months had only been do that because from the amount of cash flow received, I can often see that nothing really went wrong for the month because from the amount of cash flow received, I can often see that nothing really went wrong for the month. Tax benefits as one of the five ways you're paid. That takes some management to and you know this tax time of year with my bookkeeper.   Keith Weinhold (00:05:11) - At times she emails me and asks me for this and that scrap of information. The mindset that helped me manage all the generous tax benefits of real estate is not taking my bookkeepers questions as an occasional annoyance, but rather taking the mindset of tax benefits or something that you can manage throughout the year. And that way when my bookkeeper goes an entire month without asking me for something, it can feel like a short break. Sort of like something was turned off for a month. And hey, first world problems, right? Downloading a document and emailing it to your bookkeeper ten minutes a month., today is also talking about where your next tenant is coming from, which really, at the end of the day, is what a real estate economics discussion is about. Well, it's also about giving tenants the housing that they want, meeting their desired lifestyle and the set of amenities that are both going to attract your renter in the first place and then retain your renter over the long term every year. Building,, the property management software company, they ask thousands of renters which amenities and property layouts would motivate them to choose one rental property over another.   Keith Weinhold (00:06:33) - That's what they're asking tenants. And what you imagine that renters might want could be different from the reality. For years now, renters are prioritizing their neighborhood quality. In the amenities that are actually inside the rental unit. Those things are more important than they are the shared community amenities like a pool, lobby, clubhouse or gym. Renters are gravitating toward neighborhoods that are safe and quiet, but yet are still convenient to stores and restaurants. And that led to half of the renters surveyed to rental properties that are located in the suburbs. Now, when it comes to the amenities within their rental unit that they're prioritizing, renters want a space with kind of all those comforts of home air conditioning and a washer and dryer to the option to own a pet. And these are the feature types of single family rentals, although some newer apartments can meet that too. And some condos community amenities. Then like a fitness center or a pool. I mean, they still hold some appeal to residents in these surveys, but lately they're seen more merely as perks instead of necessities for today's cost conscious renters.   Keith Weinhold (00:07:55) - So the bottom line here with this survey is that it's what's actually inside the unit that's become more important. And maybe that's a little too bad as people tend to get less social. They're using community areas less, they're prioritizing them less. And hey, maybe they just want to lie on the sofa and scroll their phone in a nice, comfortable place. Hey, you've got a suit and fit the world as it is, not as the way that you wanted to be, at least when you're providing others with housing. Hey, coming up here both on the show and on our YouTube channel, why do Western US homes cost more than eastern US homes on average? This seems geographically paradoxical. It feels backwards to a lot of people, because almost two thirds of the United States lives east of the Mississippi River, and yet that area comprises just over one third of all the land. You've got almost two thirds of people living on just over one third of all the land in the East. So to some more people on less area, oh, that would have to mean that eastern home prices are more costly.   Keith Weinhold (00:09:09) - No, it is exactly the opposite. In fact, coming up on a future show, I'll share eight plus reasons why. This is why Western US homes cost more than eastern ones. And this is also why many of the best cash flow markets, they tend to be in the eastern half of the US. They have those lower purchase prices also coming up in the future. I'm about to have a talk. This talk isn't going to be on the show here, but a talk with a conventional financial advisor about my own personal retirement. I've got an appointment with this person and this ought to be interesting. We'll see what he says about my situation. I'll try not to lecture him on how financially free beats debt free or anything like that. We'll see if I can hold off doing that. And if that meeting produces some interesting takeaways or just humorous ones, I'm going to share that with you in the future. And if you want to be sure to hear those upcoming episodes on subjects like that, I invite you to follow the show here on your favorite podcast.   Keith Weinhold (00:10:17) - And that way you won't miss any upcoming episodes. I only met today's guest about two years ago. We enjoyed that conversation and now we collaborate regularly. He helps provide crucial market updates that straight ahead. I'm Keith Reinhold, you're listening to episode 495 of get Rich education. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate. And I kind of love how the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866.   Keith Weinhold (00:11:31) - Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six. Role under the specific expert with income property you need. Ridge lending Group Nmls 42056. In gray history from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. This is Rich dad advisor Tom Wheelwright. Listen to get Rich education with Keith Reinhold and don't quit your daydream. You are going to get a fantastic real estate market update today, and you'll also learn lessons if you're consuming this 5 or 10 years from now. Our expert guest has been the executive VP of markets. Some of America's leading housing intelligence firms named it national lists of most influential real estate leaders. He's frequently quoted on real estate, mortgage and foreclosure markets, too.   Keith Weinhold (00:12:59) - He runs the real estate market intelligence firm, the C.J. Patrick Company. Hey, welcome back to Great Rick Saga. Always a pleasure to spend some time with you, Keith. Thank you for having me. Oh, same here, because, Rick, you've been with us here every six months for about two years now. You and I discussed the condition of the overall economy as well as the real estate market. I think of both of those as resilient today. Now, back when I was a new real estate investor, Rick, I didn't know to look at the broad economy at all. I was more concerned with if, say, on a vacant unit that I had, I had the drywall texture just right to try to attract a new tenant ASAP. Now that surely matters. But time gave me the perspective to know that what matters more is to have a local stable of tenants that are capable of paying the rent, and that's what matters more. So with that in mind, where would you like to begin? That's great counsel.   Keith Weinhold (00:14:03) - And it's really important for investors or even somebody looking to buy a house, understand what's going on economically, both across the country and in their region. So why don't we start by taking a look at what's going on in the economy? There's been a lot of conversation about potential recession. We can talk a bit about that, but if you're good to go, we'll start by just sharing some information about the US economy and some of the trends that we're seeing. Yeah, let's go ahead and do that. And yes, that dreaded our word may very well come up. That thing that we've all been waiting for but has never happened. Don't count your chickens just yet. But let's see what's going on. Because on average, recessions do happen every five years. It's just a normal part of the business cycle. Yeah, that's important to keep in context. I'm glad you brought that up. Recessions are a normal part of the business cycle and the economic cycle. We may be slightly overdue to have one at this point, although the last one that we had took very, very long to recover from, the Great Recession that started back in 2008 took a full decade to recover from, which is also very unusual.   Keith Weinhold (00:15:05) - So we'll take a look at some of these cycles and see where we are today. Keith, the basic metric that most economists look at when they're trying to figure out the strength of the US economy is is something called the gross domestic product, the GDP.   Rick Sharga (00:15:18) - We track that to see if it's growing, if it's declining. The technical definition of a recession is two consecutive quarters of negative GDP growth. And there's been a lot of talk about the GDP slowing down in the US. But really it's been mostly talk. In fact, if you look at the last quarter, we have data four, which was the fourth quarter of last year. You can see that the GDP grew by 3.2 3.3%, which was a much higher number than what most economists had forecast.   Keith Weinhold (00:15:47) - That resilient economy with a low unemployment rate, jobs being added and productive growth in the GDP.   Rick Sharga (00:15:54) - Yeah, we're going to get to all of that. And it's a great point. If you look at what makes up the GDP, about two thirds of it is comprised of consumer spending, right.   Rick Sharga (00:16:04) - So typically when you see strong GDP numbers, you're consumer is doing pretty well. And a lot of this probably has to do with consumers still having money to spend from the enormous amount of stimulus that the federal government poured into the economy to help prevent a recession or depression during Covid. About $15 trillion in all of the stimulus that was sent out to consumers and businesses alike. And that's probably helped us weather the storm of what normally might have been a slowdown in the economy. We are, however, Keith, in a globally interconnected economy, and it's important to note that not all of our peers are doing quite as well. Canada may already be in a recession. The UK is almost certainly in a recession. The eurozone barely escaped going into recessionary numbers in the last quarter, and even markets like China aren't doing as well as as expected. And I'm not saying that to gloat about how well the US is doing. I'm saying that is sort of a warning that if we do get into a situation where it looks like there's a global recession going on, it's very unlikely the US will come out of that untainted at all.   Rick Sharga (00:17:09) - So it's something to keep an eye on as we move forward.   Keith Weinhold (00:17:11) - Right. 100%.   Rick Sharga (00:17:13) - You mentioned unemployment a couple of minutes ago, Keith, and that's one of the other economic metrics we check. Unemployment went all the way up. And I say that facetiously. The 3.9% in the numbers, full employment is considered to be anywhere at 5% unemployment or lower. And we haven't been at 5% unemployment. Probably since about 2016, with the exception of the blip we had during the Covid pandemic, when the government shut things down and we had a huge increase in unemployment temporarily. But we are continuing to see very, very strong job numbers, both in terms of these low levels of unemployment and in terms of job growth. The January and February numbers again caught the economists who come up with these consensus forecasts by surprise. In January, about 350,000 jobs created. In February, about 250,000 jobs created. I should put an asterisk on some of these numbers. When you hear politicians talking about all the jobs they've created over the last few years.   Rick Sharga (00:18:15) - Keep in mind that during the Covid pandemic, we wiped out about 22 million jobs virtually overnight. A lot of the millions of jobs that have been created over the last few years were really those old jobs being refilled. We filled most of those within about two years, and we have continued to create jobs since then. We have more jobs than we have people looking for work. They're about 8.5 million jobs open, about 6 to 6.5 million people looking for work.   Keith Weinhold (00:18:43) - You can almost think that this is an over employed condition.   Rick Sharga (00:18:46) - And it almost is in most cases, not all cases, but in most cases, somebody who doesn't have a job right now just isn't looking for a job right now. And these are not all service level jobs. That's the other pushback I get when I'm out talking to groups sometimes. Oh yeah, but not everybody wants to work at Starbucks. Well, first of all, you get pretty good benefits of Starbucks free coffee healthcare. But let's not do a Starbucks commercial. These are government jobs.   Rick Sharga (00:19:10) - They're manufacturing jobs. They're construction jobs. They are some type of service level jobs. But these are jobs across the board. And because there are more jobs available than people are looking for work, we're seeing wages go up. The average hourly wage across the country last month was over $29 an hour, which is the highest it's ever been. And if you look at wage growth on a year over year basis, it's running at about 5%. And really, Keith, this is the first time in a number of years that we can say with certainty that wage growth is actually running at a higher pace than the rate of inflation, right.   Keith Weinhold (00:19:44) - And that really matters. That really helps pay the rent. One thing that detractors say with the unemployment rate, you talked about them not necessarily being consolidated in the low paid service sector area, is that a lot of people lament, well, aren't many of these part time jobs? Where are your thoughts there?   Rick Sharga (00:20:01) - There are a probably historically large number of part time jobs, but we also have an awful lot of people who have opted out of full time work for a variety of reasons, and are thrilled to be able to pick up some money working in the gig economy.   Rick Sharga (00:20:16) - So whether they're driving for Uber or Lyft, they're doing DoorDash or something else that's a part time job that they're doing just to either, in some cases, kill time or to make a little bit of extra money. This isn't an economy where the majority of part time workers are in part time jobs, because they can't find a full time job. That's simply not the case, and the data doesn't support that.   Keith Weinhold (00:20:41) - Now, if you, the listener and viewer here are wondering, well, this stuff doesn't apply directly to me. I'm good. I'm secure in my job. Maybe I don't even need a job. Keep in mind that we're talking about the financial condition of your tenant today.   Rick Sharga (00:20:57) - Yeah. When I'm talking to to real estate investors in general, I know that you were talking about drywall earlier, and sometimes you really can't see the forest for the trees. You're kind of overwhelmed or you're not sure where you should actually be looking. I tell them in many cases, to pay less attention to home prices and rental rates and more attention to some of the underlying fundamental economic conditions.   Rick Sharga (00:21:20) - Are you in a market where population is growing or declining? Are you in a market where there's job growth? Are you in a market where there's wage growth? If you're at a market where the population, jobs and wages are all growing, you're going to be in a pretty healthy market for real estate, whether it's owner occupied properties or its rental properties. On the other hand, if jobs are leaving your market, if wages are going down, if population is declining, those are warning signs. And it might be an indication that that's not a good market to start investing more in. So everything we're talking about really does get connected back to the housing market, whether it's rental housing or owner occupied housing. And it's important to see these trends for what they are.   Keith Weinhold (00:22:04) - And of course, we're talking about these factors on a national level. As we know, our real estate is local, and our audience is often interested in studying a metro market before they decide to invest there. So on that more regional level, Rick, or local level, do you have any favorite resources or websites or apps that you think are important for prospective investors to look at first within a certain region or MSA? Well, you.   Rick Sharga (00:22:33) - Can. Find a lot of local market data on some of the free housing sites that are out there. The Zillow's, the Realtor.com is the homes dot coms of the world. If you go beyond the basic home search, or if you dig deep into some of the information that they provide on local markets, within that home search, you'll find a lot of information there. There are third party companies. There's a company I'm familiar with it that works mostly with realtors, but has a lot of data that investors would probably be interested in. It's called keeping current matters. Yeah, they do an awful lot of reporting on this. But if you really want to do your own research and you don't mind doing a little bit of digging, I find that the Department of Labor and the Census Bureau and the Bureau of Labor Statistics, all government entities, have just copious amounts of local market information. You can find, you know, down to what does the local Pipefitter earn on an hourly basis in Peoria? There's all of that data out there for free on these government sites.   Rick Sharga (00:23:34) - You just have to be willing to do a little bit of research and dig through those sites.   Keith Weinhold (00:23:39) - Right. And sometimes the government websites don't exactly present their information in a beautiful, graphically rich way. But this is part of your research. Some people don't realize that, Fred, the Federal Reserve economic data has an awful lot of regional and local information, not just national information as well. Well, thanks for sharing some of those resources, Rick, and where you like to go and look, that can really help our audience. What else should a real estate investor know about today's overall economy?   Rick Sharga (00:24:08) - So we talked about consumer spending and the reliance our economy does have on consumer spending. And one of the things that I'm watching fairly carefully right now is an apparent disconnect between consumer confidence and consumer spending. So if you go back to when the pandemic hit and the lockdown occurred, consumer spending obviously fell off a cliff. There was just nothing to buy. And consumer confidence took a major hit with the announcement of the pandemic.   Rick Sharga (00:24:34) - Consumer spending as soon as the lockdown was over started to come back strongly and has never slowed down. It's hit an all time high today. Consumer confidence, on the other hand, was battered a little bit by subsequent waves of Covid, by threatened government shutdown in Washington, by the war in Ukraine, by the more recent war in the Middle East. And so the concern here is that if consumer confidence doesn't come back, we might see spending revert to the mean. And actually, as economists would say, and come back down, which would cause, at the very least an economic slowdown and at the worst, probably a recession. So it is something we're keeping an eye on. Consumer confidence has been improving a little bit lately, but historically it's gone hand in hand with consumer spending. And that simply hasn't been the case in recent months. So it is something we're keeping an eye on.   Keith Weinhold (00:25:25) - Now, one might wonder how do you measure confidence? Well, there are various surveys out there. And Rick, the way I think of it with consumers is that consumer confidence is more of a leading indicator, and then the actual consumption is more of a trailing indicator.   Rick Sharga (00:25:42) - I completely agree with you. The sentiment index that I follow most closely is one that's put out by the University of Michigan. Yeah, and it's been out there for decades. So there's an awful lot of history that goes with it. And generally speaking, on any index, you're looking for a number that's around or above 100 because that usually is your baseline. And some of the more recent months we've seen numbers down in the 50s and 60s. Now they've been trending up, as I said, in recent months. But that's something that's reported on very widely by the press. We were talking about sourcing things for investors. And I have to tell you, the just doing a basic Google search for something like, what's consumer confidence like today? You'd be surprised. The rich information that you can pull just from Google, that you can start to find some of these sources online. But that is one thing that we're watching. And, Keith, I think it's important to break out a little bit in more detail how consumers are spending or what they're spending with.   Rick Sharga (00:26:44) - And these are potential red flags for the economy, consumer credit card use. The amount of debt on credit cards surpassed $1 trillion in the third quarter of last year for the first time ever, and it got close to 1.2 trillion in the fourth quarter. That's an awful lot of credit card spending. Regardless of what you want to talk to me about, with inflation adjusted dollars, it's still $1 trillion. And that happened at a time when credit card interest rates had soared because of what the Federal Reserve was doing. So you're talking about people spending 1 to $1.2 trillion on their credit cards, when the average interest rate on a new credit card issued was between 25 and 30%. Gosh. Which, by the way, is a high enough number that it used to get you arrested for usury. And apparently now it's the new. Normal and it's okay. But this is concern. And one of the big concerns is because the cost of living has become so high and it's so difficult for so many families. The worry is that people might be starting to use their credit cards to make ends meet, to buy basic necessities, and that historically has not been a story with a happy ending.   Rick Sharga (00:27:52) - So we are watching credit card use. We're also watching personal savings rates. When the government stimulus came out, we saw a savings rates at all time highs. We then saw savings declined rapidly to all time low levels. They've recovered a little bit, but they're still on the low end of things, historically speaking. So the same worry here, Keith, which is that we're worried that families might be dipping into personal savings in order to make ends meet. And that combination, there's some research that suggests that, on average, the US household has more credit card debt than they have savings, and that's just not a healthy ratio for anybody to have.   Keith Weinhold (00:28:30) - Yeah, America has very much so they live for today mindset I think. So therefore it was a pretty predictable that after the Covid stimulus payments that savings levels probably would drop.   Rick Sharga (00:28:42) - Yeah. It's just that they drop further than what we had hoped they would. We're going to talk about inflation in the second. I have a bit of skepticism about some of the inflation numbers that we see reported from the government because of what they include or exclude, or some of the data is trailing by a long time.   Rick Sharga (00:28:56) - So I out of frustration, I created my own CPI. It's not the consumer price index, it's the Costco price index. And I look at one of my leading indicators is salmon because I buy my salmon at Costco. And a year ago that salmon cost 999 a pound. Today shopping a Costco, that salmon costs 1299 £1.30 percent. That's a 30% lift for all the talk we hear out of the administration about gas prices going down, I can tell you that where I buy my gas at Costco, it's a couple dollars more a gallon than it was just a few years ago. And I say this with a little bit of a chuckle, and I say this knowing that it's a nuisance for me. But I've been blessed. And it's not a life or death decision for me. But there are families out there who are deciding whether or not they can buy salmon this week. And I would submit that on average, your rental family's income is lower than your owner occupied houses, families, income. And so for all of your listeners who are landlords, this is something to be paying very close attention to, despite the fact that inflation is coming down.   Rick Sharga (00:30:02) - Keep in mind that these inflation rates are on top of very high prices that we have as a result of the previous cycle of inflation. So it's going to take a while, even with wages going up for those households to catch up here. And the hope is that wage growth will continue to outpace inflation growth long enough that they'll be able to do that.   Keith Weinhold (00:30:23) - Yes, that's a positive trend. Yeah. Rick, as long is in your Costco price index, Costco doesn't try to skimp, inflate and replace your wild elastic salmon with Atlantic farmed salmon. I'm sure you're going to be paying attention to that as well as you fill your own shopping basket and come up with what's really happening with inflation. Because for those that believe the CPI, it's been reported in the low threes lately and CPI peaked at 9.1% almost two years ago in June of 2022.   Rick Sharga (00:30:55) - And what the Federal Reserve has done is unprecedented. We've only ever seen rates go this high this quickly, once in the last 50 or 60 years. That was back in the 1980s, when inflation was really in runaway mode and out of control.   Rick Sharga (00:31:10) - And normally what the Federal Reserve does is very methodical, very thoughtful. They'll raise the fed funds rate a quarter of a point. They'll sit back and wait to see what happens. They'll raise another quarter point and give it some time to take effect and so forth and so on until they feel like inflation is under control. And then they'll then they'll drop that fed funds rate. In this case, they've admitted a few things that probably took a lot for them to say out loud. They admitted that they underestimated how high inflation would get. They admitted that they underestimated how quickly it would rise. And they also admitted that they underestimated how difficult it was going to be to get it under control. So what it did peak at about 9.1% a couple of years ago. They took unprecedented steps in terms of the size of of rate hikes and the rapidity with which they raised the fed funds rate. And now they're in a position where inflation is trending more or less in the right direction. It's in the low threes, as you said, it has not come down as much in the last couple reports as they would like.   Rick Sharga (00:32:10) - And that's probably going to result in them holding the fed funds rate at its current level for at least the first half of this year before they start doing rate cuts, because the last thing they want to do is cut too soon and see inflation start to come back up.   Keith Weinhold (00:32:25) - About one month ago, I did an episode titled Why the Fed should not lower rates. Rates are. Normal and the economy doesn't need the help. So if we do have this dreaded R-word, this recession, the most convenient tool for the fed to use is to cut rates. We don't want to use up that ammo while we're still in a good position like we are today.   Rick Sharga (00:32:47) - Yeah, I don't disagree with you. And there were some economists and mostly Wall Street, who had been predicting a fed rate cut as early as March and over the course of the year. And I thought they were all crazy great. And I've been saying at the earliest, May now I think it's probably not until June. The rates are a little higher than historic averages.   Rick Sharga (00:33:05) - I could see maybe three rate cuts this year, maybe four if the economy slows down significantly. We're not we're certainly not going back to the zero rates that we had for a few years. I think the fed will be very cautious and reserved in its approach to scaling back the fed funds rate. One of the the side effects of what they did is they cast a lot of uncertainty and doubt into the financial markets, which have caused mortgage rates to skyrocket, which have caused private lending rates to skyrocket. For your listeners who borrow from private lenders. And I don't think we see those rates start to come down significantly until after the fed does its first fed funds rate cut, I suspect, and so far I've been right, that until we see that rate cut, we're going to see mortgage rates on a 30 year fixed rate loan kind of bounce back and forth in a very narrow band between about 6.75 and 7.25% for the next few months. And that's really where they've been since January. And I think that will continue to be the case until we see that first rate cut, at which point the market will probably say, okay, they're serious now we can have that sigh of relief, and then we'll see a slow and gradual reduction in mortgage rates.   Rick Sharga (00:34:21) - I did want to touch on two things related to the fed actions and the current economic issues. Keith, because I often get the question about likelihood of a recession. If you go back in history all the way back to World War two, not counting this cycle, the Federal Reserve has raised the fed funds rates 11 times in order to get inflation under control. Eight of those 11 times, they've wound up over correcting as they raise the rates right. And that steered us into a recession. The three times that didn't happen, the three times they executed a soft landing, not a recession. All three of those cycles had something in common, and that was that the fed didn't have to overcorrect because they started early. They acted proactively when it looked like inflation was getting started, and they were able to keep inflation under control without a drastic increase in the fed funds rate this cycle. They've already admitted that they waited too long and inflation got higher than they expected. And because of that, they've had to raise the rates more quickly and more dramatically again than anything we've seen in the last 40 or 50 years.   Rick Sharga (00:35:25) - So historically speaking, it would seem more likely than not that we'd see at least a mild recession. The people who say, well, if we would have seen one through this cycle, we would have already seen it often overlooked the fact that it can take 24 months after the Fed's rate hikes are done, to see the full effect on the economy.   Keith Weinhold (00:35:45) - Economies are complex and cycles move slowly. They do so, historically speaking.   Rick Sharga (00:35:50) - That's one thing. I look at the other and without getting to Inside Baseball for your listeners, is something called a yield curve inversion. Yeah. And that's when when the bonds markets sense a disruption in the force and think that Darth Vader may be hitting the economy, but basically it's when the the yields on longer term investments like ten year Treasury bonds switch places with the yields on shorter term investments like two year Treasury bonds. So the yield on a two year investment is actually higher than the yield on a ten year investment. And when you have that inversion, that's what they call a yield curve inversion.   Rick Sharga (00:36:23) - And the last eight times that's happened we've had a recession follow not always a long drawn out recession, but there's always been a recession. And this particular yield curve inversion cycle is one of the deepest and longest ones we've had in a long time. And again, using history as a precedent. That doesn't seem to be really good reason for this cycle to behave differently than the last eight half. Having said all that, we may get lucky. The fed may pull a rabbit out of its hat and actually execute that rare soft landing instead of a recession. If they do, we'll still feel the economy slowdown that's almost a given. And if they don't, if we do have a recession, every economist I speak with tells me the same thing that it's likely to be a very short, very mild recession because all of the economic fundamentals underneath are still very, very strong. And, you know, employment, wages, productivity and so forth and so on. So likely to see some sort of slowdown this year, Keith, whether it turns into an actual recession or is just very, very slow growth, that's the most likely scenario for the rest of 2024.   Keith Weinhold (00:37:30) - Well, Rick, as we wind down here, the. Last thing I'd like to ask you about is in a recession, what typically happens to real estate, because you and I both study history and something that I often say here on the show is oftentimes you need to look at history over hunches, for example, I think it's easy to have a hunch that when mortgage rates rise while home prices are definitely going to fall. No, actually, if you look at history, when mortgage rates rise, home prices typically rise because rising rates typically mean the economy strong. And another one is when home prices are up. Well, a lot of people think that others want to then jump into the housing market and buy when they see that prices are up. So then when home prices are up, well, that means rents must fall since everyone's buying. But no, these two things typically move together home prices and rents. It's about history over hunches. So with that in mind, talk to us with your historical research on in recessions, what typically happens to the real estate market?   Rick Sharga (00:38:28) - Typically, home sales go up from the beginning of recession to the end of a recession.   Rick Sharga (00:38:33) - And in fact, with the notable exception of the last recession, the Great Recession, housing is very often helped the economy recuperate from a recession and recover. And that's particularly true in the new homes market. Home prices also typically go up from the beginning of recession to the end of a recession. So you could have some short term disruption. You could see home sales volume or home prices dip slightly at the beginning of a recession. But historically speaking, in every recession except the Great Recession, we've actually seen both home sales and home prices go up. And to your point, higher mortgage rates do not historically equate to lower home prices. What they do equate to is home prices going up at a slower rate. And this last cycle has been very unusual because historically, we've never seen mortgage rates double in a single calendar year until 2022. And in fact, that year rates didn't double in a calendar year. They doubled in a couple of months.   Keith Weinhold (00:39:33) - And tripled overall.   Rick Sharga (00:39:34) - And they tripled overall. So if you look at that, we did see home prices actually decline in some markets, although nationally the number never went negative.   Rick Sharga (00:39:44) - And we saw home price appreciation drop off pretty dramatically but still stay positive on a year over year basis. So it's been kind of interesting. This has been a very unusual cycle for a lot of reasons, but historically speaking, your spot on a recession does not spell doom and gloom for the housing market. Whether you're talking about owner occupied homes or rental properties.   Keith Weinhold (00:40:06) - Rick and I talked about the general economy today. Next week, Rick is going to join us again, and we're going to focus squarely on the real estate market. So no long goodbyes, Rick. We'll see you next week.   Rick Sharga (00:40:18) - See you soon, Keith.   Keith Weinhold (00:40:25) - Yeah. Strong insights from Rick, as usual. To help sum it up, recession or not, expect some sort of economic slowdown later this year. It's expected to be mild. That's what Rick shared with us. And if that happens, expect less rent growth. Then in a recession, home prices tend to go up. That's what really happens. Wage growth keeps outpacing inflation. Now the longer that trend continues, expect more rent growth in the future.   Keith Weinhold (00:40:57) - But of course the real rate of inflation is slippery to measure. I think you could still make the case that wage growth isn't really higher than inflation. So to me, that part's actually not that bullish. Rick believes mortgage rates will stay near 7% until the fed makes their first rate cut. We discussed monetary policy today. And you surely know that's what the fed does. They control the flow of money and interest rate policy. We did not discuss fiscal policy. We're not going to next week either. Fiscal policy is something that Tom Wheelwright and I often do together. And what is the difference? Well, fiscal policy is the tax and spend side. When you think of fiscal think tax and spend, and it's often congressional committees and elected officials that make those fiscal policy decisions, not the fed. They're making the monetary policy. That's the difference. This is get rich education. So after all, we do often have these learning moments. There's more of Rick Saga next week as we pivot from talking about the broader economy this week.   Keith Weinhold (00:42:05) - And then next week, we'll really drill down on the housing market, including more on property price growth prospects, which regions are growing or shrinking, rent growth prospects, and any warning signs that investors should take notice of today. Hey, what? I'd like to think that I don't ask much of you, the listener. I'd like to ask you if you can help me out with one fairly quick thing today. I'd really appreciate it if you get value from the show here. Whether that was, say, last week's episode on what is retirement anyway or from, say, a few weeks ago, why inflation is actually an immoral force, or the latest trends like the content of today's and next week's show, or my upcoming breakdown of why Western US homes cost more than eastern US homes and other content like that that you just aren't going to find anywhere else. I'm simply asking you for your feedback. This takes the show from one way communication to some two way communication. Please consider leaving me a podcast rating and review, whether that's on Apple Podcasts, Spotify, or wherever you listen to the show.   Keith Weinhold (00:43:17) - Just do a search for, for example, how to leave an Apple Podcasts review so you can see how to do it. And then I'd be grateful for that. Rating and review more next week on the future direction of the housing market I'm Keith Weinhold. Don't quit your day dream.   Speaker 4 (00:43:37) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:44:05) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Get our free real estate course and newsletter: GRE Letter Time, health, and money are three key resources in your life. Learn about their trade-offs. “It’s not at what age I want to retire, it’s at what income.” -George Foreman I discuss at least three definitions of retirement: 1-The time of life when one permanently chooses to leave the workforce. 2-To remove from service. 3-When you become job-optional. 4-When you stop doing mandatory income-producing activities. Social security, pensions, 401(k)s, and residual income from real estate and stocks are all discussed. Compound interest is faulty. Compound leverage can help you retire young. “After the first $2M-$3M, a paid off home, and a good car, there is no difference in the quality of life between you and Jeff Bezos.” We discuss.  I briefly cover the antitrust case against the NAR, making the 5-6% commission paid by the seller largely a thing of the past. Rents are up 2% annually, the biggest gain in thirteen months, per Redfin. Learn 15 reasons why single-family rentals beat apartments.  I discuss two specific addresses—one in Memphis and one in Little Rock. Our Investment Coaches help you free with these and other income properties and your strategy at GREmarketplace.com.   Resources mentioned: Show Page: GetRichEducation.com/494 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to GRE. I'm your host, Keith Weinhold. Do you want to retire? What is the definition of retirement today, anyway? In fact, with just 2 or $3 million, would you be as happy as the world's richest man, Jeff Bezos? I'll break that down. Then I discuss key trends in the rental housing market today on get Rich education. When you want the best real estate and finance info, the modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple. Text GRE to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free.   Keith Weinhold (00:01:16) - It's called the Don't Quit Your Daydream letter and it wires your mind for wealth. Make sure you read it. Text gray to 66866. Text gray 266866.   Corey Coates (00:01:33) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:49) - We're going to go from Andover, England, to Andover, Massachusetts, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to Get Rich education. Around here, we say that financially free beats debt free. And for many, financially free means retirement. Now, you might be far from retirement, but those with the most foresight are those that begin with the end in mind. And it can be rather dreamy for some to think about retirement and then others don't want to retire. I'm asking you, do you want to retire? Do you ever want to retire? In fact, we posed that very question to our general education audience. I've got those results that I'll share with you here later, and it is really interesting.   Keith Weinhold (00:02:41) - But let me give you some perspective. First, I think that some young people fall into the trap of daydreaming about retirement. Oh, you might want to retire someday, but look, you can't dream about it too much. You've got to live in the moment. Because if you retire a traditional retirement age, those people tend to look back on their younger years and regret the things that they didn't try when they were younger. Don't quit your day dream, but don't dream about older age too much when you're younger. With the wealth building concepts that we discuss here on the show every week, you don't have to be that old when you retire to me. What sets the stage for you being able to retire is when you reach the point of being job optional. At what point are you job optional? That is a key turning point and for you, as soon as you're job optional. You might want to retire at that point, but you don't want to retire so soon that things will be iffy on whether or not you run out of money before you run out of life.   Keith Weinhold (00:03:49) - The best way to avoid that situation is to build your residual outside of work income alongside you during your working years, and then you won't have to merely guess on if a certain lump sum amount is going to be accumulated and sufficient. Now, one definition that I like for retirement is that you stop doing income producing activities that you don't want to do. All right. That's one definition. What you've done there is that you stopped sacrificing today for some imaginary tomorrow. If you stop doing those mandatory income producing activities. Look, you've got three key resources in your life time, health, and money. When you're younger, you'll trade away your time and even your health for money. That's because you feel like you have an abundance of time and health and not much money yet. But as you progress through life continuing to make this trade, your time and your health become more scarce, resources no longer abundant ones, there will come a point in your life where working will cost you more than retiring. You don't want to get to that point.   Keith Weinhold (00:05:09) - Now. You probably see no sheets of paper with the squares that you can hang up. There's 52 boxes in a year and is divided into 90 sections, one for each year of your life. And it shows you graphically in your face how many weeks and years you really have left. And by the way, I cannot get myself to hang up one of those sheets. That is just too much of an in my face reminder of my own mortality. Okay, I'm not doing that, but what do you like to do? Do you like canoeing or reading books or running in five K races? Well, if you read five books a year and you're going to live 50 more years, let's just 250 books for the rest of your life. Now, that sounds like quite a few, but when you're done, you're done. Do you have some best friends that you see, say, once a year? Do you live a long ways from your parents and you only see them once or twice annually, or at this rate, then you might only see your friends, say 31 more times.   Keith Weinhold (00:06:17) - And if your parents are older, what if you only see them 18 more times? That might sound like quite a few, but when that's done, that is done. Now this can get a little depressing. But what I'm helping you do here is identify what's important to you in your life. A lot of people don't have any real hobbies outside of their jobs. People feel sad and unfulfilled and can never see themselves retiring when this is the case. Now, you might enjoy drinking with your friends. All right. Sure, but that's not a real hobby. Hopefully you have the ambition to know that there are a lot of things that you really want to do, and you need to find the time in order to do those things. Well, here's the good news you are the one that's in control of how much of your time on earth you spend doing those activities are spending time with those people. Now, I was chatting with one woman about retirement. Gosh, this was interesting. And she told me that she doesn't want to retire.   Keith Weinhold (00:07:23) - Okay, well, she justified her stance by saying, who wants to stay at home? And I'm thinking, who wants to stay at home? I found that a really curious answer. Why does retirement mean staying at home? Like if you don't go to work, you'd stay at home. So maybe this person didn't have any hobbies. I mean, I would think that retirement would include the time and ability to travel. Well. So retiring and staying at home or not at all identical to me. A few years ago we had financial expert Kim Butler here on the show. You might remember that really intelligent woman. She was a retirement detractor, not a fan of retirement. The definition of retirement to Kim, if you remember, is to remove from service. That was her definition, meaning that she'll no longer serve others. I'm not saying that's right or wrong. That's her perspective. Well, I think that you can still serve others in retirement. Take a leadership position at your church, coach kids baseball, volunteer at a homeless shelter.   Keith Weinhold (00:08:28) - And even if retirement does mean to remove from service, or you probably served others at a full time job for decades, probably even for most of your life. So it's okay to have others in turn serve you in retirement. Well, today I'm here asking you, do you want to retire and what is retirement and not giving you some food for thought, let me discuss some more formal definitions of retirement first before I continue here. Now if you go and Google what is retirement, the word age appears after that as a fourth word, suggesting that you might select what is retirement age. Well, the former boxer George Foreman, he said it well. He said it's not at what age I want to retire. It said what income. Yeah. The first retirement definition that you find though, is the time of life when one permanently chooses to leave the workforce. All right. Well, that's actually a good short definition. And it'll show you that the traditional retirement age is 65 in the US and a lot of other developed countries too.   Keith Weinhold (00:09:39) - But in the US today, full retirement age when you can collect full Social Security benefits is age 67. If you were born in 1960 or later, and the earliest that you can collect benefits is 62. But do you know what the average monthly Social Security check amount is today? It is $1,767. Now, that amount can vary a lot depending on the recipient type, but it gives you some idea that that is only a supplement to your other income that you've got to figure out. And a sad and paltry $1,767. I mean that right there. That may very well be a motivator to make you want to invest well elsewhere. The old standard is that retirees need 80% of the income that they had when they were working, but were more abundantly minded. Here at GRI, I'd like to think that your income could go up in retirement as you keep adding cash flowing assets. But in a recent survey of consumer finance, the mean retirement amount saved of all working age families, the complete family here, not just the individual, is just 269 K.   Keith Weinhold (00:10:58) - That's not per year as retirement income. That's just the lump sum to live off of. Now some workers, especially government employees, they have a pension. That's where you don't have to just draw from a lump sum at the end of your life, like you would at the end of your life, like you would with a 401 K. So a pension that's a predetermined livable amount that you're paid each year in retirement, it's often based on the percent that you earn during your working years, say 75%. That's why most people like a pension within a 401 K, because pensions are about the perpetual income, not the lump sum, where you just hope that it lasts. But pensions are expensive. So the private sector really started phasing them out beginning in the ninth. 80s. Really in the US retirement. What that used to mean is turning 65 and drawing a pension and Social Security. I mean, that's what you'll hear your grandparents talk about. Now for us in younger generations, remember, your 401 K withdrawals must begin between age 59.5 and 70, and you must begin paying tax on it at that time.   Keith Weinhold (00:12:13) - Now, there's been a flurry of research about advances in longevity. Some of the more optimistic ones even say that if you're currently under age 55 and you get to the age of 65 in good health, you're likely to live to be 125 plus, if that comes true or even partially true, that tilts toward not accumulating a lump sum in retirement, but having an income stream from something like income producing real estate or stock dividends. You really need to focus on that income stream. If you're going to live a few decades longer than the current life expectancy. Look, when you make the production of ongoing income part of your ongoing investment strategy, you don't need what many retirees think of as the 4% rule. You probably heard of it what the 4% rule is. That's a popular retirement withdrawal strategy that says that you can safely withdraw the amount equal to 4% of your savings during the year that you retire, and then you're supposed to adjust for inflation each subsequent year for, say, 20 or 30 years. Well, that imposes serious limits.   Keith Weinhold (00:13:28) - I mean, that is synonymous with the life deferral plan, like a 401 K, where you voluntarily reduce your income in your working years to participate in an employee sponsored plan that isn't even designed to produce income until you're older, trading away pieces of your 30 year old self to get pieces of your 80 year old self back, you're drawing down on your big pot that you have saved for retirement. And instead, if you've been adding income producing investments for a decade or more, what you won't have to draw down at the limiting 4%, you've got to, of course, figure out inflation. Those retirees that are tapping into one lump sum amount, like from an employer sponsored plan a 401 K or a 403 B, they just try to guess at the future inflation rate. That's all any of us can do. And a lot of times they safely assume 4%. Around here we talk about how the real world inflation long term is almost certainly higher than that. So if you've got income from real estate and say you even do want to have your real estate paid off in retirement, you may or may not want to pay it off since you're ten and services your debt.   Keith Weinhold (00:14:41) - Well, you know, when it comes to inflation, rents tend to stay indexed to inflation. So your residual cash flow is pretty well protected from erosion to inflation. I've got some good news. You might be able to retire substantially sooner than you think. That's because if you're age 20 or 30 or 40 or 50, whatever, most planners, they project your wealth from a lump sum that grows with compound interest or compound interest is faulty, as we know it's degraded down after you account for inflation, emotion, taxes, fees, and volatility. Luckily for you, you have more than weak, impotent, and deluded compound interest because in addition to your residual income, you're going to have bigger lump sums than others because you had compounding leverage, not compounding interest. Even if you had zero real estate cash flow in retirement and you've got leverage, you made lots of 20% down payments on properties that appreciated, say, 5% a year. That means you were leveraged 5 to 1 and you got a 25% return in that first year of each rental property that you owned and is any Gary devotee knows that 25% is one of just five ways you're paid.   Keith Weinhold (00:16:07) - This is why you can actually retire sooner than you're thinking. With help from leverage. What you've done is collapse time frames. Understand that when you're in your retirement years, most people they have a U shaped spending pattern. Yes, u shaped spending in retirement because you tend to spend a lot of money in your early retirement years. You're traveling, you're living it up, and then you get a decade or two older. You slow down, you stay at home and spend less the trough of the U. And then your expenses go up before end of life. Care. Yes, you shaped spending patterns in retirement are common. And I know I talked about slowing down there at the trough of the year, but of course you won't be slowing down. It's just that others have tended to. Now, a really interesting topic that has circulated among many lately, and I believe that this was first proposed and debated on Reddit or X, and that is this after the first 2 million or $3 million a paid off home in a good car, there is no difference in the quality of life between you and Jeff Bezos, the richest man in the world.   Keith Weinhold (00:17:29) - That's the topic. What do you think about that? 2 or $3 million is attainable. You might already be there or beyond it. And of course, this says nothing about an income stream. So let's presume that there isn't one. All right. Well, in response to this topic, Spencer here from Orlando says I strongly disagree. Private jets complete immunity to health care costs and the ability to donate sums that change lives are all heavy hitting things that you can't do with $3 million. Tug from New York says, I agree 100%. Things like vacationing on a private island or a superyacht they may be cool to experience, but these are not necessarily things I'm thinking of when I think of happiness and anonymous respondents says Bezos's 420,000 acres probably have several views. That would be my view. Glenn, from Florida, says I have a paid off 975 square foot home, a 2018 Honda Cr-V, and not much spare cash. But I do have a wife going on 49 years who loves me, so I am richer than most millionaires like Quay.   Keith Weinhold (00:18:43) - I don't know where he's from, Mike says. I disagree with the 2 million to $3 million thing. I have some wealthy friends and they say that the sweet spot is 10 million to 100 million. In this zone, you can live very comfortably, but you're also able to blend in easily enough with most of the middle class. When you eclipse $100 million, typically you're involved with something public invisible, and then security and other considerations become much more of a problem. All right, that was his take, Mike keys. And then we had a number of others point out that $2 million is not enough to fly private, which makes a big difference to your quality of life. And yes, they do have a point there. I have flown private once and there is a substantial difference. Finally, Tanner's got a good point here. He says, I agree there is no significant difference in quality of life. Having safety, security, education, some autonomy and growth potential is key. The difference between a regular vacation and a $50,000 vacation is negligible, and it is the same with cars, food, watches and anything materialistic.   Keith Weinhold (00:19:54) - That's what Tanner says. All right, well, to summarize that for you here, and this is also parallel with my belief is that I disagree with this Bezos thing, with the 2 to $3 million net worth in your necessities taken care of. There is a difference between that life and Jeff Bezos life. But remember, the claim is that there was no difference. However, that difference is not that vast. That's my opinion. And yes, one can say that no amount of money can bring you happiness, but with money, you can buy time that you can fill with happiness and those that you love. Now that you have some perspective in different viewpoints, maybe you're better able to answer that question that I asked you at the beginning. Do you want to retire? And here it is, our poll that was run on our Instagram Stories. It asked, do you want to retire and blow those words? It showed a happy couple on vacation holding hands and the result was yes, 58% of you want to retire and the nos were 42%.   Keith Weinhold (00:21:06) - If you've given extraordinary service to humanity, I say sure. Thank you for your great service to humanity. Congratulations. Go ahead and retire more straight ahead. As I discussed the most proven retire early vehicle of all time and key shifts in the real estate market, and how you can accidentally build wealth with it. Positive leverage. This is episode 494. You're just six weeks away from an unforgettable episode 500 I'm Keith Reinhold. You're listening to get Rich education. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time.   Keith Weinhold (00:22:19) - So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six. Role under the specific expert with income property, you need Ridge Lending Group and MLS for 256 injury history from beginners to veterans. They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four plex's. Start your prequalification and chat with President Charley Ridge. Personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. What's up everyone? This is HGTV. Tarek Moussa, listen to get Rich education with Keith Reinhold and don't.   Speaker 3 (00:23:31) - Quit your day dream.   Keith Weinhold (00:23:43) - Welcome back. To Get Rid of Education. I'm your host, Keith Weinhold. You might want to know what I think about the ruling that was made ten days ago.   Keith Weinhold (00:23:50) - With respect to the antitrust case against the Nar. I was asked to speak on television about it. I put more about that in last week's newsletter, so I don't have too much more to tell you here. The high point is that the standard 5 to 6% commissions are gone. Sellers used to pay that completely. That commission amount was split between their seller raisin in the buyer's agent. What really happened here is that the lawsuits argue that the Nar and brokerages kept buyers and sellers out of the commission negotiation process, and that led to higher overall costs. And really, the result of this is that it should make some agents lower their fees in order to stay competitive. We should end up seeing lower sales costs when one sells a property. Some estimates are that agent commissions will be down about 30%. Perhaps half of America's 2 million agents will lead the industry. We'll see about that. But see, sellers are still going to want to get the most money for their property that they can, and they're still going to be using comparable sales.   Keith Weinhold (00:24:54) - So that's why it remains to be seen if it really affects listing prices at all. Overall, the Nar continues its waning influence in the real estate industry. Before we discuss the rental property market, you know, I find this kind of upsetting. I mean, do we need to politicize everything? Redfin recently reported that the majority of U.S. homeowners and renters say that housing affordability affects their pick for president. I mean, this is getting ridiculous. That's according to a Redfin commissioned survey conducted by Qualtrics, 3000 US homeowners and renters were surveyed. Those surveyed were worried about the lack of housing inventory and affordability. I mean, how do you really know which presidential administration to blame that on for who to give credit to? I mean, Biden did recently roll out a plan to help with housing affordability. And then, on the other hand, Trump is famously known as a real estate investor, after all. Let's talk about the single family rental market. Do you know what the typical rent range is for a single family rental in America today? Well, the John Byrnes Single Family Rental Survey shows us that most respondents report monthly rents in the $1750 to $2250 range.   Keith Weinhold (00:26:18) - There are about eight ranges here, and 54% of single family reds are in that range. So really close to $2,000. And yeah, I myself have many or even most of my single family rentals in that same range near $2,000. Rents are lowest in the Midwest and Southeast, where a lot of operators report average rents 17 to $1800, and then it almost $2,700. California rent outpaces much of the nation. And you know what? If you just heard that right there, you'd actually think that California is the place to invest and that the Midwest and Southeast or not. But it's just the opposite of that, because it's not about the absolute rent amount. It's about that ratio of rent to purchase price. And that's what makes the Midwest and Southeast the best places. And a third region that's an investment sweet spot is what I like to call the inland Northeast Pittsburgh, Harrisburg, Philadelphia, even Baltimore. Although Baltimore is getting a little coastal, it's the Inland Northeast that has the numbers that work, not the coastal northeast like New York City in Boston and those really high priced markets where rents don't keep up proportionally.   Keith Weinhold (00:27:39) - And of course, there are pockets of opportunity elsewhere, like Texas and some other markets. And note that no part of Pennsylvania is on the East Coast at all, not even Philadelphia. None of it touches the coast. I am indeed a native Pennsylvanian. You get these little geography lessons from me interspersed here at gray., Redfin tells us that rents in the US now this is both apartments in single family. Now we're just talking about single family. Earlier rents are up 2% annually. That's actually the biggest gain in 13 months. Yes, a pretty modest increase there as rent amounts have just been really pretty steady for the last year. And so much new apartment construction took place last year that there is quite a bit of apartment supply to soak up in certain metros, and you might even see concessions. On some of these. I mean, if a new apartment complex is just finished, you know what's sitting there? 250 vacant units all at once. So you're seeing some apartment owners try to entice renters with one month's free rent for a 12 month lease, for example.   Keith Weinhold (00:28:51) - The single family rental market is in better shape from a demand supply perspective than apartments are. See, what's happened, though, is that with the Airbnb market becoming both oversaturated in some markets and then cities cracking down on short term rentals in other markets, it's there's some STR owners have turned their single family homes from Airbnbs over to long term rentals, and that brought a little more supply out of the long term rental market. More places have bans on short term rentals, and gosh, I just had an awful short term rental experience last month when I stayed at one. I usually go for hotels and that's what I'll be doing for a while again,? Now, Adam data, they have some great stats for us here. They reported that rental margins are increasing in about two thirds of the nation. That's some good news. But the increase is still pretty small. And they show us the top five counties for single family rental yield. And they used three bedrooms in their single family rental yield comps. And they did it in larger markets of a million plus.   Keith Weinhold (00:30:03) - All right. So these are counties of a large population where you're getting the best cash flow today basically on single families. Fifth, and I'm surprised that this is Riverside County California. That's the Inland Empire. You sure want to check landlord tenant law in a highly regulated place like California. Fourth is Cook County, Illinois. That's Chicago. Third is Coahoma County, Ohio. That's Cleveland. The second best single family rental yield is Allegheny County, Pennsylvania. That's Pittsburgh. And first number one for rent yield on single families is Wayne County, Michigan. That's Detroit. We've discussed Detroit on the show before. It has a stigma. It seems like the only way to make the stigma disappear is to visit. And you're going to find Investor Advantage properties in a lot of those counties through our gray investment coaches here at Gray marketplace.com about single family rental homes. Now, some asset types like apartment buildings or perhaps self-storage units, they have economies of scale and some other advantages over single family rentals. But single families are a favorite.   Keith Weinhold (00:31:18) - They might have the best risk adjusted return anywhere today, even after 2008 Great Recession, those that had bought for cash flow persevered and even thrived. In fact, single family rentals have at least 15 distinct advantages over a larger apartment building, some that you probably never thought about before. And as I discussed this, don't think that I dislike apartment buildings. Okay, it's likely not the most advantageous time in the market cycle for apartments. It's tenant quality. Single family rentals attract a better quality of tenant. They take better care of the premises. Then there's the neighborhood. Single families tend to be in a better neighborhood. Then there's appreciation. Properties tend to appreciate better over time. Fourthly, there's the school district. They're more likely to be in a better school district. Then there's the retention. Tenants stay longer, creating less vacancy expense. And the aforementioned neighborhood and school districts are why they stay. And you've got common areas. A lot of people don't think about this single families. They don't have these common areas to clean and maintain.   Keith Weinhold (00:32:29) - Apartments have hallways, stairs, larger rooms, and common outdoor grounds that a custodian needs to service. And this is another overlooked profit drag that apartment investors miss in their PNL in their profit and loss projections. And I miss this expense on my first ever apartment. By then, there's utilities in single family rentals. Tenants often pay all the utilities. They even care for the lawn. The larger the apartment building is, the more likely you'll, as the owner, be the one paying utility costs like heat, electricity, water, wastewater, and landscaping. Then there's divisibility. What if you've got property that's not performing the way you hoped it would? Well, if you had ten single family rentals, you can sell the 1 or 2 that are not performing. And with a ten unit apartment building, you must either keep or sell all of the units. It's not divisible. Fire and pestilence. You know, fire and pests. They are more easily controlled in single family rentals where there aren't common walls, even if you're at.   Keith Weinhold (00:33:34) - Ensured these diffuse conditions. They often affect multiple units and families in larger complexes. Financing is a big deal. Income. Single family rentals. They have both lower mortgage interest rates and lower down payment requirements than apartments. You can secure ten single family rental loans if you're single, 20 if you're married at the best rates and terms through the GSEs, the government sponsored enterprises Fannie Mae and Freddie Mac, with 20% down payments and apartments, rarely, if ever, have 30 year fixed rate terms like 1 to 4 unit properties do, and you can get more than 10 or 20 of them. But the financing terms are not going to be as good. And what about vacancy rate? That's true that if you're a single family's vacant, your vacancy rate is 100%. If your fourplex has one vacancy, then your vacancy rate is only 25%. But the same is true if you own four Single-Family rentals in one is vacant. Then there's management. If you hire professional management, your manager would likely rather deal with higher quality single family residence.   Keith Weinhold (00:34:44) - If you're self-managing, this is a demographic that you would probably rather handle yourself to supply and demand. There aren't enough low cost single family rentals that make the best income producing properties. Demand exceeds supply, and this is going to continue in both the short and the medium term. Then there's market risk. This is another overlooked criterion. Yes, criterion. Does anyone even know that the singular of criteria is criterion?, you've got to keep your properties filled with rent paying tennis. They have jobs. So if you think you're going to be able to buy ten rental units in the near future with your tenured apartment building, that's only going to be in one location, leaving you exposed to just one geographies economic fortunes instead with, say, ten single family rentals, you could have four in little Rock, three in Dallas and three in Birmingham. And then your exit strategy, that's an important consideration, especially for newer investors years down the road when it's time for you to sell your income property, hopefully, after years of handsome profits, there's a greater buyer pool for your single family then there's going to be for your apartment building.   Keith Weinhold (00:35:58) - More buyers can afford the lower price, and then, unlike apartments, you even have access to a pool of buyers that might want to occupy your property themselves. To live there as an owner occupant, there might even be your current tenant that buys it from you. So those are some of the attributes of single family rental homes. Again, I really like apartment buildings too. I could go on with more advantages for apartment buildings. If you've been meaning to grow your portfolio, you know when you have this information, don't let it be like two well-meaning friends that meet at the gym. And then they say, hey, we should grab lunch sometime. You know what? That is a nonstarter. You got to put something on the calendar to make something happen. You can't make any money from the property that you don't own. You can just copy me and buy the same types of properties in the same places where I buy. Get pre-qualified for a mortgage loan and we'll help you find property. We talked about retirement earlier.   Keith Weinhold (00:36:58) - I mean, the earlier you get into real estate, the better off you're going to be. From that perspective, the best time is today as you get leverage working for you and inflation profiting working for you. What's going on today is with this lower affordability, first time homebuyers, they have often now got to spend years saving for a down payment while they rent. And in the meantime, you can solve their housing problem. They become your renter in these freshly renovated homes or new build homes. And I'll even give you two addresses before we leave. Today. Though in today's tightly supplied market, you know, sound income properties can seem more rare than a pop up. And that's actually useful. Supply is short overall, but because of our long standing relationships, we have a good selection right now. This first of two properties is on Crane Road in Memphis, Tennessee. It's a single family rental. The purchase price is $169,500. The rent's 1253 bed, two bath, 1265ft². The year built is 1964.   Keith Weinhold (00:38:12) - Ask your investment coach about the fresh renovations there. And the other one is in little Rock, Arkansas. And I think I told you that when I made my little Rock real estate visit, I had some extra time and I visited the Bill Clinton Presidential Library, which though, although it's called a library, presidential library, is there really like museums a tribute. To the past president. What I don't think that I did share is that in the entire Bill Clinton presidential library, I could not find one mention of Monica Lewinsky. Not one shred of evidence that that ever took place. Nothing.   Speaker 4 (00:38:50) - Let me tell you something. There's going to be a whole bunch of things we don't tell Mrs. Clinton.   Keith Weinhold (00:38:58) - Nothing whitewashed. All the evidence at all.   Speaker 5 (00:39:01) - Nothing there.   Keith Weinhold (00:39:03) - This property is on Duncan Drive in Little Rock, Arkansas. The single family rental has a purchase price of 117 nine. Rent is 975. Three bed, two bath, 888ft². In the year it was built was 1967. So these are some of the lower cost properties that you find at Gray Marketplace.   Keith Weinhold (00:39:25) - If you prefer brand new builds, brand new construction, we can help you with those two. You typically can't find these deals on public facing platforms that are broad like the MLS or Zillow, and it's completely free. Contact your gray investment coach and learn about these properties. Rehab details and others like them. Learn about their occupancy status and more. And if you don't have a coach, pick one. They'll help you out at Gray marketplace.com. Until next week. I'm Keith, landlord. Don't quit your Daydream!   Speaker 6 (00:40:02) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss the host is operating on behalf of yet Rich education LLC exclusively.   Speaker 7 (00:40:30) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Get our free real estate course and newsletter: GRE Letter I state the reasons why I DON’T believe that the Federal Open Market Committee should lower interest rates. Rates are currently normalized. Watch the full Spartan Summit Presentation here. The first half is played on this episode. President Biden is trying to help the housing market’s poor affordability and undersupply. Fed Chair Jerome Powell made recent remarks on the real estate market. He emphasized the lack of supply. High rates = strong economy Low rates = weak economy Lowering interest rates to zero is artificial and introduces distortions in an economy. If we have a recession, we need “rate cut ammo” in order to make cuts at that time. Lowering rates also sets up an inflationary environment. That’s bad for society, but leveraged income property investors benefit. A “Fed pivot” means that the FOMC changes from raising rates to lowering rates, or vice versa. Resources mentioned: Show Page: GetRichEducation.com/493 Full Spartan Summit presentation video: On YouTube Freddie Mac mortgage survey: https://www.freddiemac.com/pmms Mortgage News Daily mobile app For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to Greece. I'm your host, Keith Whitfield. President Biden tries to help the housing market. Everyone wants to know when interest rates will be cut. I'm asking, why would we cut rates anytime soon? Yes. Some fed talk today and a lot more on get rich education. When you want the best real estate and finance info. The modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple. Text gray to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free. It's called the Don't Quit Your Daydream letter and it wires your mind for wealth.   Keith Weinhold (00:01:15) - Make sure you read it. Text gray to 66866. Text gray 266866.   Corey Coates (00:01:27) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:43) - Welcome, Jerry from Bowmanville, Pennsylvania, to Louisville, Kentucky, and across 188 nations worldwide. And Keith Wayne Holden, I'm grateful to have you here with me for another week. This is get rich education. I'm about to discuss the case for not lowering interest rates, and you'll hear a clip of Jerome Powell commenting on the real estate market shortly. But first, President Biden recently made a state of the Union address, and he unveiled his plan to help the Undersupplied housing market. Part of the plan was to help the buyer side the demand side with incentives, which I'm not sure that we need the support over there on that side. And now that would juice real estate prices. More on housing supply side. Biden's plan creates a $20 billion fund to build more rental housing and kill some construction restrictions. Okay.   Keith Weinhold (00:02:35) - Yeah, that's the key part of the plan. And that's more helpful. Help that supply side. Perhaps the most interesting part of the plan is a $10,000 credit that's meant to incentivize people to sell their starter homes. That's our president on housing. Let's pivot over to Club Fed. Yeah. Welcome in to Club Fed. There's no cover charge for some reason Janet Yellen still hanging around chaperoning. And she still looks like my grandma. Earlier this month, Fed Chair Jerome Powell acknowledged that the commercial real estate loan problems could cause manageable problems for regional banks, possibly for years. I find it interesting that he uses the word manageable when acknowledging problems on the commercial side. I mean, we'll see, but that kind of reminds me of one of Powell's predecessors, former Fed Chairman Ben Bernanke, in 2007, saying that the subprime loan problem was contained is the word that he used. And we all know that. I know the mortgage meltdown contagion of 2008 was anything but contained. Today, when we talk about Powell and interest rates back around 2021, he got beaten up pretty badly for not acknowledging rising inflation sooner.   Keith Weinhold (00:03:56) - But he's brought inflation down to about 3% without a recession. So some credit is due there, but not too much credit because the game's not quite over. And it took that torrid set of interest rate increases where they climbed a cliff in order to quell inflation. And that already hurt a lot of people, including those erstwhile commercial real estate people in their loans that jumped up to a higher interest rate. Now we're talking about interest rate policy. Let me give you something that's easy to remember. High rates mean a strong economy. Low rates mean a weak economy. With that in mind, let's look at where we've come from. And then we'll look at the future. A lot of people got drunk with easy money starting 15 years ago, because it was nearly free to borrow an interest rate of zero at the federal funds level. That gives you no incentive to save and more incentive to borrow and spend. Well, the federal funds rate was zero from 2009 to 2015 to get us out of the Great Recession.   Keith Weinhold (00:05:04) - And then it was zero again from 2020 to 2022 to help lift us out of Covid. That's the past since the federal funds rate, which a lot of other interest rates are based off of two since it quickly shot up starting two years ago, it's now been a full eight months since rates have moved at all. They haven't budged since July of last year. So that's where we are now and I'm fine with them staying here for a while now. Jerome Powell recently testified to the House Financial Services Committee. Let's listen in to him discuss real estate as he's questioned.   Jerome Powell (00:05:44) - The housing market is in a very challenging situation right now. You had this longer run housing shortage, but at the same time, you've got a bunch of things that have to do with the pandemic and the inflation and our response with higher rates. So you you have a shortage of homes available for sale because many people are living in homes with a very low rate mortgage that they can't afford to refinance. So they're not moving, which means the supply of regular existing homes that are for sale is historically low and very low transaction rate.   Jerome Powell (00:06:14) - That actually pushes up prices of of of other existing homes and also of new homes, because there's just not enough supply. The builders are busy, but they're running into, you know, all kinds of supply issues still around zoning and, and workers and things like that. So, so it's quite challenging. And of course, rates are high. So people who are buying a lot of the buyers are, are cash buyers or able to actually pay without a mortgage because mortgages are expensive, I will say. The first problem. The longer run problem of supply is a longer run problem. The other problems associated with low rate mortgages and high rates and all that, those will abate as the economy normalizes and as rates normalize. But we'll still be left with with the housing market nationally where where there's a housing shortage.   Keith Weinhold (00:07:02) - That's Jerome Powell on real estate. And I'm surprised that he said rates are high. Do you know what the long run federal funds rate is? It is 4.6%. That's the average. And currently it is at 5.3% where it's been for a while.   Keith Weinhold (00:07:18) - So it's not that much higher than average. The 30 year mortgage long run average is 7.7% for Freddie Mac. And that's been hovering around 7% for months now. So therefore both key rates are close to normal today. But despite that fact, seemingly everyone is waiting for the fed pivot. And what the fed pivot means is when they reverse their monetary policy stance. Meaning when they start lowering rates again after the long increase cycle that we're coming off of. Well, I'm here asking why should the fed pivot in lower rates since they're near normal now? All right. Let me give you some real perspective here. Look I'm going to describe a scenario to you and tell me what you think about this. Imagine a dreamy bygone era where there happened to be this period that saw a strong national labor market, plenty of jobs, steady GDP growth, rising wages and inflation a little above normal. All right, now that you're done imagining that cloudy slice of economic Americana. Pretty rosy scenario. Well, then you might consider raising rates in a situation like that to help cool off wage and price inflation.   Keith Weinhold (00:08:37) - Well, you know what I just did? I actually just described to you where we are today. That's what today's conditions are are. Yet there's still talk of lowering rates later this year. And now you might see why I'm questioning that because the economy doesn't need the help. Sure enough, in front of that same committee, Fed Chair Jerome Powell and other fed officials, they did say that they expect interest rates to come down later this year. I hope they're not doing that for political pressure or to try to reassure the stock market. Those would not be good reasons. And dropping rates to zero at the first sign of a crisis that shouldn't become a habit. Because, look, before the 2008 crisis, when they dropped from the zero, going all the way back to at least the 1950s, maybe longer rates were never zero. That entire time, see if the fed just steps back and doesn't touch rates for a while, then it's all the longer that more free market forces can prevail. I don't know that we need to constantly tinker with rates, like a greasy guy crawling under his classic car in his garage and tinkering around with it.   Keith Weinhold (00:09:52) - Another reason the fed should lower rates, and is because it needs to hold on to some rate cut ammunition in case there's a recession. Because in a recession, one of the best tools that the fed has to cool it off is by lowering rates in order to incentivize investment in a slow economy. But see what happens. If you use up all your ammo, you already start lowering it and you're already near zero. And then we have a recession. I don't know that America is ready for negative interest rate policy like some other nations have tried. And by the way, if you earn a negative interest rate, that means that if you park your money at the bank, you have to pay them interest rather than the bank paying you interest. They get the use of your money and you have to pay them for parking it there. That's a negative interest rate. Well, recessions have a strong correlation with lowering rates. I mean, just look back historically again, history over hunches. But you know, if you don't follow this stuff, the short story of what's happened the past several months is that interest rate cuts keep being delayed because of stubborn inflation that just won't fall down to the Fed's desired 2%.   Keith Weinhold (00:11:06) - And Powell also recently said that he needed just a bit more evidence that inflation was coming back down to normal levels before he'll reduce rates, although we're not far from it. That's exactly what he said. Now, if rates go back down and it's probably when rates go back down, look for the housing market to break loose. The interest rate lock in effect will wither away, property affordability will improve, and there's a good chance then, for a strong upward jolt on property prices on those values. Last year, the. There were some studies done and it was interesting. It showed that 5.5%, that is the magic mortgage rate level that makes the real estate market want to really transact. But this year, with rates that have stayed higher longer, surveys say that level is now up into the high fives. And there is another factor. As interest rates drop, the cost of maintaining our national debt also decreases. That is part of the calculus two. Well, if you're a fed watcher, a fed speak geek, you are in luck.   Keith Weinhold (00:12:15) - Because though it's not really much of a spectator sport, and the parties at Club Fed and all their PhD economists really aren't all that lively, if you're so inclined, one of the Fed's eight annual meetings where they announce any interest rate changes happens in just two days, and then the next two meetings conclude May 1st and June 12th. If you like to track rates, especially if you're perhaps in the mortgage loan process right now, my favorite website is Freddie Mac. The mobile app that I use is the Mortgage News Daily app, coming up here on a future episode of the show. Retirement. Some wanted, some don't. Real estate might give you an early retirement option, but I'm asking the question do you want to retire? Do you ever want to retire? We're going to go deep on that. And then what even is your definition of retirement today? You could learn something about yourself on that upcoming episode about retirement here. Speaking of spectator sports,, no, this is really one either. But you could have gotten on a jet and paid for a ticket to watch me speak.   Keith Weinhold (00:13:23) - Or you can listen free next to part of the recording of that presentation of mine at the Spartan Summit from earlier. They had me kick off their event. I was their opening speaker, and I share some things with that audience that really shake people up that they've never heard before. You will hear it both at new material as we play this and some things that you've heard before here on the show. But even those things I say differently in a format like this. So straight ahead, it'll be wealth mindset first and then the real estate investing fundamentals. If I could condense the best gray content in principles into less than an hour, you know, that's pretty close to what this presentation is. You hear about the first half of it coming up straight ahead. You're listening to get Rich education. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%.   Keith Weinhold (00:14:31) - Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six. Role under this specific expert with income property, you need Ridge lending Group and MLS 42056 in grey history, from beginners to veterans. They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio.   Keith Weinhold (00:15:45) - Start at Ridge Lending group.com Ridge lending group.com.   Speaker 4 (00:15:55) - This is Hal Elrod, author of The Miracle Morning. And listen to get Rich education with Keith Weinhold and don't Quit Your Daydream.   Speaker 5 (00:16:16) - It is with great pleasure that I get to introduce you to our first speaker for today. He is the founder of get Rich education and host of the popular get Rich education podcast. His show has nearly 3 million listener downloads from all across the world. He also actively invest in apartment buildings, single family homes and agricultural real estate. He is a member of the Forbes Real Estate Council, and his work regularly appears in Forbes, Business Insider, and Rich Dad Advisors. Today, he's taking us back to the basics to discuss why real estate is such an attractive and solid investment option for those looking to find their own financial freedom. If you've listened to the grit Rich education podcast, then you've heard him speak. But today we are so thrilled that he's kicking off our second annual Spartan Summit. Ladies and gentlemen, here's Keith Reinhold.   Keith Weinhold (00:17:13) - Hi, my name is Keith Weinhold.   Keith Weinhold (00:17:14) - I am the founder of get Rich education. My presentation is called simply Why Real Estate? Because if you don't know why you're doing something, then you really won't care about how. And I'm really pleased to be first up here at the Spartan Summit, you're going to hear some things that you've never heard before today. For example, compound interest does not build wealth. Getting your money to work for you does not build wealth in the real world. And real estate investors, one of the first things they need to do is actually stop looking at property. So what is this financial heresy that I'm talking about? Well, I think it's going to be pretty clear to you in less than an hour's time here. It all starts with you thinking differently. You really need to open yourselves up. And I think you start to have the realization that any outsized thinker or doer, over time, did think outside the box to have that outsized impact, whether that's Thomas Edison or Jeff Bezos or Sara Blakely or Warren Buffett, they all dared to think differently.   Keith Weinhold (00:18:15) - And if you're not getting the results that you want in life, you know, maybe a great question to ask yourself is, am I thinking differently enough when you come of age in the world, whether you finish high school or college or whatever it is, you probably never really had this vision for yourself, or you're intentional and you say, yeah, I can't wait to go out there and live a small life. But then you know what? That's exactly what everyone does. Everyone goes out and lives a small life. So with thinking differently, you know, Mark Twain's got some great quotes about thinking differently. Mark Twain said, as soon as you find yourself on the side of the majority, it is time to pause and reflect. Absolutely love that for Mark Twain. Mark Twain also said one of his lesser known quotes is go out on a limb. That's where the fruit is. Yeah, absolutely. Love that one. So being a conformer does not build wealth or does not have a substantial positive impact on other people.   Keith Weinhold (00:19:16) - And you know, I wouldn't suggest that you think differently or do something differently if I weren't doing that myself. I don't know that I've had the outsized impact of some of those visionaries and inventors that I mentioned earlier. I probably haven't had as many years on this earth yet as them either. But one thing I did that was different is years ago I moved from Pennsylvania, where I was born, raised, and lived much of my life to Anchorage, Alaska. Well, that was deemed by Pennsylvanians and a good part of my peer group is a strange and unusual thing to do. But I knew that a place like Anchorage fit my interests for skiing and mountaineering because I had vacationed there. That was the place for me. The first ever home that I bought of any kind. I was only a rent paying tenant up until the day I bought a fourplex building where I lived in one unit and rented out the other three. That was pretty strange. I didn't start with a single family home. I quit my job, my good paying day job with benefits for residual income from real estate.   Keith Weinhold (00:20:14) - Another strange thing to do. I launched the get Rich education podcast in the year 2014. Kind of weird talking to myself in a little room all by myself. A lot of people didn't understand what I was doing then, so those are just some examples of some different things I've done. You know, you're different things are probably going to be different, but you really don't want to be a conformer if you think about it, high school was the place where you were rewarded for fitting in. But when you become an adult, really you get rewarded when you stand out and you don't be that conformer well, we talk about my presentation called Why Real Estate? We're really taking it from philosophy all the way through to the numbers here. And years ago, I would have loved to know why real estate made ordinary people wealthy. You know, an interesting thing. I'll just tell you, when I bought that first fourplex building, I didn't even know what terms like cash flow and equity meant. I did not even know the meaning of those terms.   Keith Weinhold (00:21:13) - And here I had owned a. Substantial building a $295,000 fourplex, which is a lot for me when I was working a day job and I bought it, and I think as a layperson before I bought that building and got down this road, I kind of thought, now, how could real estate possibly make people wealthy? Because real estate only appreciates at the at about the rate of inflation over time. That's about all it does. And I found that that part's true. And then real estate, it has the elements working on it from the outside. And it has tenants like working on it and wearing it down and degrading it from the inside. So how could real estate possibly be a good investment? I didn't understand that. I tell you, it's really important for you to learn from someone that's actually doing it. That's inside and doing this thing. I'm about as active as real estate investor could possibly be. I own Single-Family rental homes, up to larger apartment buildings, even some agricultural real estate. So it's important to learn from someone that's doing it.   Keith Weinhold (00:22:16) - And this presentation is really what my ears have shown me. And we talk about how you have to think differently and be opened up. You know, interestingly, we're in what people call the information age. We have been for decades this information age. But I like to say we're really in the affirmation age because most people would rather be affirmed and comforted in what they already believe, rather than get informed with information, because it kind of shakes you up a little bit, just like you're going to be shaken up today. So I would say, don't only seek affirmation, which is what most people do, seek information as well, and then make up your own opinion. What is wealth? You know, we kind of begin with the end in mind. It's ask yourself what is? I think that there are a lot of different definitions for that. I mean, money's got to be one of the first things that come to mind. And we are talking about financial betterment here. But, you know, it seems like people that want material things more than experiences, it seems like a lot of those people that want material things get knocked and get criticized.   Keith Weinhold (00:23:21) - I don't know, like I would rather have experiences than stuff. But really the abundance mentality is why not have both experiences and stuff if they're both easily within reach? Because they really are. But I think really the best definition of wealth, it's one that I've never heard criticize once in my life is freedom. Having the ability for you to do whatever you want to do whenever you want to do it. Real wealth is having that time freedom and not having to have a job. Being job optional, you can continue to go if you want to. Wealth really is freedom. So let's talk about money and freedom and what freedom really isn't. I've actually got a really nice proposal for you. Just imagine this. Imagine you're 20 years old. I'm talking to the 20 year old version of you. I'm going to tell you that I want you to mow my lawn for me regularly, and I am going to pay you $114 an hour to mow my lawn. Pretty amazing, right? Like, doesn't that sound incredible? Yeah, that sounds like a good deal.   Keith Weinhold (00:24:29) - You'd probably be pretty excited about that. Maybe even now you'd be excited about that. Not just the 20 year old version of yourself. Sounds amazing, but could you ever really get wealthy off that? Probably not. Probably not. Because in fact, you would have to work every single hour in a year, all 8760 hours in a year just to make your first million bucks. And that ain't happening in this scenario is completely implausible. No one would really pay that much to mow the lawn, most likely. And you couldn't work every hour in a year. You couldn't eat, you couldn't sleep, nothing like that. So it's really numbers like this that I think kind of slap someone in the face if they think they can just hustle and grind their way to wealth. I really don't think that's the best way. In fact, what I would share with you is that this is the exact opposite of being wealthy. This is the opposite of growing rich in your sleep, because you have to continue to trade your time for dollars.   Keith Weinhold (00:25:32) - In order to make this work, you need to continue to sell your time for money in order to make this work. And then really, what happens when you come of age and get older and you're probably not mowing lawns for money anymore. You end up in a place that looks kind of like this. Okay? And this is the workplace. What happens in the workplace? I like to say the workplace is where you pretend to work and your employer pretends to pay you, but there's probably a pretty good chance, and I would probably call this a pre-COVID workplace. But, you know, you probably did spend most of your working years so far in a pre-COVID workplaces. People were packed in pretty tight right there that I think,, but don't worry about being in the workplace. You've got the commute to relax anyway, right? It shouldn't be so bad. You're grinding, trading your time for dollars. But also this worker here, they're doing something else that the lawn mower didn't do. Okay. We're going to say that you mowing the lawn that classified a poor person.   Keith Weinhold (00:26:31) - You had to work for money. But the middle class person here, they're also working for money. But they do have a better and higher use of their investing dollars. They're also getting some of their money to work for them in something like a 401 K or a 403 B, or a thrift savings plan, or an IRA or a 457 plan or something like that. So the middle class person here, they get some of their dollars working for them. That's significant. But look, here's the real point getting your money to work for you doesn't build wealth. And all these middle class people here, they think there couldn't possibly be anything better than me getting my money out there working for me. So I'll just leave it there. It can't get any better than having my money work for me. Well, that's not true. And I find it to be a real conundrum and paradox that people will spend tons of time learning about how work works. They spend zero time learning about how money works, but yet money is the only reason that they even go to work, which is really unusual to me.   Keith Weinhold (00:27:36) - So getting your money to work for you does not build wealth. Now, that doesn't sound too bad on the surface, but if you think about a 10% return over the long term from the S&P 500, which is about what you could expect, most people don't even consider the five deleterious drags on that 10% of inflation and emotion and taxes and fees and volatility, all five of those simultaneous drags. Now, I think some of these are easier to explain and understand than others. For example, if you have a 10% rate of return and 3% inflation, which is a long term historic term, you're already down to a 7% inflation adjusted rate of return. We haven't even subtracted out those other four things yet, and I like to look at things in really long timeline. So let's take a look at some long timelines with some returns you can expect. And therefore I also like to look at inflation in a long timeline. We'll call it 3% inflation. You've got to beat inflation substantially in order to have any real return.   Keith Weinhold (00:28:39) - And things like stocks mutual funds, ETFs just don't do it. So let's look at long timelines of let's say over 100 years here. I talked to you about the drag of inflation. Let's talk about the drag of volatility. This is little understood. Stocks are quite volatile. They go up and down. They're choppy where real estate is a substantially smoother ride. So let's look at two different lines here on this graph okay. Over the last 120 years since about the year 1900, the stock market has averaged roughly that 10% return, 6% from capital appreciation and 4% from dividends. So therefore, the Green Line, this shows capital appreciation. You're probably pretty used to seeing this. The compound return. This looks thrilling. Your mutual fund advisor loves to show you this line. This line goes like exponential. Like, who wouldn't want some of that, right? Some even believe Einstein was purported to say that compound interest is the eighth wonder of the world. So what's wrong with it? Where does it break down? Okay, well, I'm going to show you a second line.   Keith Weinhold (00:29:46) - And both of these lines show a 6% return from the year 1900, more than 120 years of returns. So the green line is what you think you got. But what did you really get with this 6%, quote unquote compounded return? You don't get this. You get this? That's what you really got. This is the deleterious effect of volatility on stock returns. You're like whoa, whoa wait. Well why why did that happen? How did that happen? The difference here is that whole effect of, let's say you have a $100 stock and it loses 50%. Now it's down to 50 bucks, but it gains back 50% the next year. Now it's only up to 75. So you've gone from $100 down to $75, even though you lost 50% in year one, say, and you gain 50% in year two. So it's really a mathematical problem. Another way to say it is that time spent making up previous losses is not the same as growing your money. It's not the same as compounding your money.   Keith Weinhold (00:30:51) - In fact, the tip of the blue line, the end of it there. Today's dollars. That's only 38% of what you get at the tip of the Green Line at what you expect to get. So a lot of investing has to do with expectations. If you expect a green line and you only get the blue line, that's when you end up like this. You know, sort of these stereotypical stock kind of photos when people can't pay the bills. And the interesting thing is we've been in a 401 K based world for 35 to 40 years now, where that's sort of the norm. People continue to end up like this, but yet they still get into 401 K's, and think getting their money to work for them is a way to build wealth. We're here and we're talking about why it isn't and that is the problem. And compound interest and compound interest does not bail people out of their income and savings problem either. Four out of five people have less than one year's worth of income, save for retirement.   Keith Weinhold (00:31:48) - This is why we have a retirement crisis today. You can't count on compound interest alone. So I would like you to imagine another pretty dreamy scenario for yourself. Okay. And this this is a pretty important exercise. This is some better news for you. I want you to think about how much money you think you're going to make, both earned and through investment returns your entire life. We'll say it's inside this vault right here. Okay. And the reason that this is some, some better news is, you know what? If you're in this room, the chances are that you're going to have a greater net worth and greater residual income than other people will. Because you've shown up here, you've shown that you're interested in this. And a lot of people, they don't think about inflation and they underestimate their life's earnings. So let's say that your entire life's net worth, accumulated assets would be the way to say it. Let's say your total accumulated assets are coming up to $8.5 million. How's that sound? $8.5 million.   Keith Weinhold (00:32:58) - That sounds pretty good, doesn't it? Wouldn't that be amazing? Now just imagine this. I'm going to give you all $8.5 million at one time. You're going to receive this all at once. How would that feel like? Wouldn't that be amazing? How fast are you going to quit your job? Hopefully you at least give the two weeks notice. Where are you going to go on vacation? Are you going to have time to care for your loved ones now, or be a volunteer at habitat for humanity? Or finally have time to be a deacon at your church? Or do whatever is important to you because you are job optional. Now with this 8.5 million delivered all at once. But wait, here's the thing I didn't tell you when the 8.5 million is being delivered to you all at once, it's all going to be delivered to you on the last day of your life. That's when you're going to get it. What do you do now? I guess you're not going to do around the world trip anymore, right? You're just saying your goodbyes to people.   Keith Weinhold (00:33:55) - It's the last day of your life. All right. What if you got 80% of this amount, then at age 80, would that be a little better or 70% at age 70? Would that be a little better? So my point is, timing matters. I don't know, what can you really do if you get 70% of it at age 70? You know, maybe when you're 73, that's the last year you can really paddleboard very well because you've had six knee surgeries by that or something. So timing really matters. So you really want to be invested in something that gives you an income stream that provides liquidity to you over time. You really ideally most want this sort of lifestyle smoothing effect where they get this income metered out to them. So liquidity really, really matters. And what helps achieve this smoothing it is those income streams. In fact, I would go as far as to say that the standard advice that you hear out there from people invest for your future, period. I'd actually say that's bad advice or incomplete advice.   Keith Weinhold (00:35:04) - Why would you only invest for your future when you can invest now for a stream of income now and not hemorrhage or sacrifice the future at all, which is really something that you can do with real estate. Build an income stream. Now, it typically appreciates faster than stocks and you didn't sacrifice the future at all., there's more bad advice out there. I think sometimes you'll hear a person say, for example, oh, pay yourself first. That means put your money in a traditional retirement plan or something like that. Pay yourself first. Wait a second. How in the world is it paying myself first if money is deducted from my paycheck when I'm, say, age 35 and I don't get that back until, say, I made 75, look what the 401 K the most popular plan in the United States. You cannot take penalty free distributions until between age 59.5 and 70.5. That's just when they begin. And you also must begin paying taxes on it at that time. So. Would you really find it a good trade if you trade away one hour of your 35 year old self? And in return, you get one hour of your 75 year old self.   Keith Weinhold (00:36:16) - Does that sound like a good trade? A lot of people that invest in these traditional retirement plans, that's really the trade that you're making. And I used to be involved in traditional retirement plans. I used to think they were the best thing until I looked at it. A lot of people talk about the benefits of delayed gratification, and I think delayed gratification. There's something implied in that being a desirable thing, that there's a positive outcome and that there's some big reward for delayed gratification. But it's definitely not guaranteed. We're not guaranteed tomorrow. So I think for one K plans, they're known as tax deferral plans. But I think you could just as easily call them life deferral plans because that's principally what they do in my opinion. So let's go back to the lawn mower. The lawn mower again, I'm classifying that as the poor or however the middle class are doing a little something different. Remember, not only were they working for money, they got some of their money to work for them, oftentimes in a retirement plan.   Keith Weinhold (00:37:14) - I guess they're symbolized by these,, what do they look like here? Construction engineers or something like that. They're middle class, the wealthy. You're doing something that the poor and the middle class aren't doing. The middle class. They get their money to work for them. What are the wealthy do? What is this guy doing right here? What does he have figured out? He knows the best and highest use of his investing. Dollar is not getting his money to work for him. It's getting other people's money to work for him. And in real estate, you can actually get other people's money to work for you three ways at the same time. And you can do it ethically. I think it's important to be ethical. You never get called a slumlord. Like, for example, my mission is to provide housing that's clean, safe, affordable and functional. You can use other people's money three ways at the same time will call this OPM Other People's money. You might have seen that abbreviation before.   Keith Weinhold (00:38:11) - You can do it three ways simultaneously with real estate. And you know, the great thing is you don't need any degree. You don't need any certification at all in order to ethically use other people's money three ways at the same time. The first way is with the bank's money. Like for example, the way I bought that first fourplex is with 3.5% of my own money, is a down payment, and I borrowed the other 96.5. So use the bank's money for the loan and leverage you use the tenant's money for that all important income stream, and for paying down your loan for you. And then the third way you use other people's money simultaneously in real estate is that you use the government's money for very generous tax incentives, like you can defer your capital gains tax endlessly. You can get a mortgage interest deduction. There's something called depreciation which shelters a portion of your rent income from ever getting taxed. Don't get your money to work for you. Or at least don't make that the focus. The focus should be on ethically getting other people's money to work for you.   Keith Weinhold (00:39:18) - And you know, I think really a concept like this harkens back to the late business philosopher Jim Rohn. Right? Jim Rohn said formal education will make you a living, but self-education will make you a fortune. So you really getting a condensed self-education right here? So let's just look at one of these three. Let's talk about that ten in income stream. That's the important one. That's the one where you build residual income. If you do want that freedom, if you do want to build enough of that residual income so that you can be job optional and do what you want to do, think about it conceptually. Think about how amazing it is that the tenant pays you what they pay you. The tenant pays completely one third of their income most of the time in rent to you one third of the time. So that is like you getting paid and that tenant going to work for you ten days every month. We'll call it the first ten days of every month just to work for you and to pay you.   Keith Weinhold (00:40:22) - Do you have any idea how amazing that is? Think about that. What other company gets one third of people's incomes and can do it at scale? Apple doesn't get one third of people's incomes. Think of all the stuff that people buy on Amazon, all those consumer products. But people still don't spend a third of their income on Amazon. So this is amazing. Like, who else gets this? Really nobody but you in real estate. So, you know, we're getting you to think differently here. This is just again one of the three ways that you can ethically employ other people's money. The others were the banks money and the government's money. We're talking about the tenants money here. All right. That was almost the first half of my presentation at the Spartan Summit. We are get rich education. So to review what you learned earlier in the show here today, keeping it real simple. High rates are for a strong economy, and low rates are for a weak economy. A fed pivot means when they reverse their monetary policy stance.   Keith Weinhold (00:41:31) - For example, going from raising rates to lowering rates. From that point where we left off on my presentation there, I go on to discuss more about the importance of cash flow, how leverage beats compound interest, inflation, property selection, properties to avoid, and more. If you'd like to watch all of that presentation, you can in entirety with the video on the get Rich education YouTube channel. Also, the link directly to that full video is in today's show notes. On the way out today, again coming up on a future episode retirement, we polled our great audience with the two you want to retire question. And we're also asking what is retirement anyway? We're discussing both of those huge questions coming up here on the show. If you'd like to hear that episode more, be sure to follow the show on your favorite podcast platform. Until next week, I'm your host, Keith Reinhold. Don't quit your day dream.   Speaker 6 (00:42:32) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice.   Speaker 6 (00:42:42) - Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively. The.   Keith Weinhold (00:43:00) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Get our free real estate course and newsletter: GRE Letter Learn why inflation helps dishonest people and harms honest ones. I use an example of a honeymaker. Both new-build SFRs and apartment units are being shrinkflated. Landlords skimpflate by: delayed maintenance, transferring the electric bill to the tenant, adding a surcharge for storage locker use, firing the doorman, charging to park beneath the carport, or not replacing an old fridge. Instead, raising the rent is the ethical thing to do. To comfortably afford the typical US home, it took $59K in 2020 and $107K today. In a sense, you’re both richer and poorer than your grandfather. Learn why investing through IRAs is a poor strategy. I compare RE market conditions from when I bought my first property in 2002 with 2024’s conditions. Timestamps: Inflation and Immorality (00:01:51) Explanation of how inflation impacts the economy and the moral dilemma it creates for producers. Housing Affordability (00:04:26) Discussion on the impact of inflation on home affordability and the consequences for renters and homeowners. Rental Affordability and Apartment Shrinkflation (00:05:47) Insights into the shrinking size of new apartment units and the implications for rental affordability. Impact on Middle Class and Homeownership (00:08:29) Analysis of how inflation affects the middle class and the changing dynamics of homeownership. Affordability by Metro Area (00:11:09) Breakdown of home affordability in different metro areas and its correlation with real estate cash flow. Impact of Inflation on Wealth and Society (00:17:11) Discussion on the implications of inflation on wealth accumulation and its societal effects. Conventional Finance and IRAs (00:24:45) Brief mention of conventional investment vehicles like 401(k) and Roth IRA in relation to real estate investing. Conventional Wisdom (00:26:36) Challenges conventional financial wisdom, emphasizing real estate investment over traditional saving and budgeting. Roth IRA vs. Traditional IRA (00:27:45) Discusses the limitations and drawbacks of Roth IRAs and traditional IRAs in relation to increasing income and real estate investment. Market Timing (00:28:59) Emphasizes the importance of having a sound investment strategy and taking advantage of market conditions, using personal experience as an example. Real Estate Market Comparison (00:30:14) Compares the real estate market conditions in 2002 to those in the mid-2020s, highlighting changes in pros, neutrals, and cons. Investment Uncertainty (00:32:53) Addresses the uncertainty of investment and the need to adapt to shifting market conditions, emphasizing the importance of taking what the market offers. Property Highlights (00:34:13) Details three available investment properties in different locations, providing information on purchase price, rent, and potential cash flow. Long-Term Investment Strategy (00:36:55) Advises on the ideal holding period for rental properties and the benefits of new build properties in the current market cycle. New Build vs. Resale Properties (00:38:02) Discusses the advantages of new build properties and the potential impact of declining home price premiums on resale properties. Investment Coach Contact (00:39:12) Encourages listeners to contact investment coaches for assistance in exploring potential income properties. Disclaimer (00:39:42) Provides a disclaimer regarding the information presented in the podcast and advises consulting professionals for personalized advice. Resources mentioned: Show Page: GetRichEducation.com/491 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Speaker 1 (00:00:01) - Welcome to GRE. I'm your host, Keith Weinhold. Sure, you might find monetary inflation annoying today. Learn why inflation is even worse than you think. It is an immoral force. How bad homebuyer affordability has become by metro region. Then why conventional finance and IRAs don't move the meter in your life and more today on get rich education. When you want the best real estate and finance info. The modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple. Text gray to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free.   Speaker 1 (00:01:18) - It's called the Don't Quit Your Daydream letter and it wires your mind for wealth. Make sure you read it. Text GRE to 66866. Text GRE 266866.   Speaker 2 (00:01:35) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Speaker 1 (00:01:51) - Welcome, Gary. From Gainesville, Florida, to Brownsville, Texas, and across 188 nations worldwide. I'm Keith Weinhold. Hold in your listening to get Rich education. I'm honored to have you here. Inflation is immoral. Now, at best, you might find what the central bank, the fed, does as annoying on the consumer level. It might even severely debase your standard of living, eroding away your one and only quality of life. But how does inflation have an immoral impact on you and the actors? In an economy? A honey maker sells his jars of honey for $20. The fed prints money like crazy. The money supply doubles well. The honey maker now has three options. Keep selling honey for $20, which is where he eats the loss and keeps providing honey for his customers at the same price.   Speaker 1 (00:02:51) - Secondly, he can water down the honey or use other inferior ingredients, which is known as skin deflation or shrink the honey jar size known as shrinkflation. The last option is to be honest and increase the honey price to $40. But if he behaves honestly, he drives away his customers and they look for honey elsewhere. So therefore, those that choose to water down the honey will outcompete the honest guy. And over time, what happens with currency debasement is the producers must now weigh their financial well-being with moral integrity. And that is the problem. This is why inflation has an immoral impact on human beings. It's also a contributor to why food quality suffered during the big wave of inflation in the 1970s and 1980s. It led to rampant obesity and prescription drugs, now comprising half of our TV commercials. All these people now walking around as near zombies that need their meds. And on top of that, somehow society has quickly come to believe that this is normalcy. Then the 2020 wave of inflation is both fueling that trend, and it's now making homes unaffordable for the middle class.   Speaker 1 (00:04:26) - As a landlord, the honest thing to do then is to raise the rent. It's not honey inflation or rent inflation because the honey maker and the landlord didn't create it. It is central bank inflation. Higher rent is simply the consequence of more dollars in circulation and simultaneously new build homes. They are indeed experiencing shrink inflation as a result of this currency inflation. I discussed the incredible shrinking size of new build single family homes with you last week, where that new home size has fallen 14% in the past decade plus or minus. Well, the average American apartment size that's falling to, yes, apartment developers in their new projects. They're cutting square footage, and they're doing that to try to contain rents. The square footage of apartment units being built has not been this small since at least last century, and maybe ever. Soaring construction cost. That means developers have got to either pass along all of those increases through into the rents, or find ways to limit rent. Or one way to do that is by building smaller units.   Speaker 1 (00:05:47) - Yes, apartment construction shrinkflation. And who can blame the builder? Because rental affordability has been of increased importance in recent years, and developers have got to be able to convince their investors and their lenders that there is going to be sufficient demand at proforma rent levels among apartment units completed in 2022. That's the most recent year available. Average unit sizes fell to 1045ft², and that is the lowest level on record for apartments. And we just got confirmation on that through the US Census Bureau figures. Yes, that is for newly built multifamily rental units that therefore apartment sizes are down 8% from just five years ago. And that number could drop a bit further when 2023 stats are released. Yes, American lifestyles are being shrink inflated. All over the place, and it is even worse for those that don't own assets. And a recent peak of apartment sized construction was 2013, when they were just over 130ft². And I told you that the latest figure here is, again, 1045ft². The Covid era really saw new build.   Speaker 1 (00:07:12) - Apartment sizes drop fast because that's when people started to split up. Like if they weren't a family. Now, when rents rise, whether that's for apartments or single family homes or self-storage units or whatever it is, most any kind of real estate, you know, when those rents rise, people try to keep from raising the rent sometimes. Now landlords, instead of raising the rent, they can instead skimp flat themselves. They can do that by delaying maintenance, transferring the electric bill to the tenant, adding a surcharge for storage locker use, firing the doorman, charging to park beneath the carport, or not replacing an old fridge. That might have given you some ideas there, but I do not advocate that. That's the best way. The bottom line is that inflation is not just a persistent economic affliction. It's an immoral force. And the ethical thing to do, like you learn with the honey maker, is raise the rent. Now, when wages don't keep up with prices, that's a problem. Let's take a look at just how bad affordability is.   Speaker 1 (00:08:29) - All right. Here is the lowest salary amount that US households need to at least earn to comfortably afford the typical priced US home. Okay, we're rounding to the nearest thousand dollars here in 2020. That figure was just 59 K. In 2024 it's 107 K. All right, 59 K in household income up to 107 K today to afford the typical US home. Astounding. That is up more than 80% in four years. But at the same time here's how bad it is. Median US household income did not keep pace. You probably figured that much. American incomes are not up 80% in the past four years, but in 2020, the household income, the median was 66 K. Today it's 81 K. Well, that's up only 23%. So the income needed to comfortably afford a home is up 80%, while the actual median income has risen just 23%. That's per Zillow. Well, who does this hurt the most? Of course, it hurts that prospective first time homebuyer, not just because they usually have entry level incomes as well, but it's because they don't have any equity to roll forward into a purchase.   Speaker 1 (00:09:58) - And when first time homebuyers never get that mortgage loan pre-approval, what happens? They have to rent. So this affordability trend is good for income property owners. And you know, this is one big reason why. For a while now, I have said that I expect the homeownership rate to fall and therefore for America to have more renters, more rental demand. Well, that has now begun to fall from 66% in Q3 last year to 65.7% in Q4 of last year, and expect a homeownership rate to keep dropping. And that share of renters in the United States to keep rising. Now, let's break down this poor affordability by city. Let's break it down by metro area. I'll start with some select lowest priced cities, and then let's work our way up to the highest price cities. And I'll tell you as we ascend, when we pass the national mark, and you're going to notice that the lowest price cities, which are the earlier ones that I mentioned here, they tend to be the better areas for real estate cash flow.   Speaker 1 (00:11:09) - Here we go. In 2020, the typical Pittsburgh home could be bought with a 35 K household income. Wow, that's low today. It takes 58 K Memphis a very popular investor city here at GRA. Maybe our top investor city that has gone from 38 K in 2020 to a 70 K household income today. And it appears that more people will have to rent in Memphis. Cleveland from 41 K up to 71 K, Birmingham 42 K up to 70 4KD. Fruit 45 up to 76. Buffalo 42 up to 77. Saint Louis 45 up to 77 Kansas City 52, up to 93 Houston 56 up to 95 San Antonio 57. Up to 95. Columbus, Ohio 52, up to 96 Chicago. Still pretty affordable for such a world class city, but the median household income required to afford the average Chicago home in 2020 was 65 K, and today it's 105 K, and then you've got that aforementioned national average, 59 K and income needed four years ago up to 107 K today Philly 61 K up to 109 Jacksonville 58 K up to 109.   Speaker 1 (00:12:46) - Minneapolis 72. Up to 114 Baltimore 70. Up to 114 Atlanta 59. Up to 115 Tampa 57. Up to 116 I mean, we're looking at more than a doubling in Tampa. Las Vegas 65 up to 120. Dallas 68. Up to 121. Phoenix 66 up to 131. We're looking at about a doubling of the household income that it takes to afford the median home in Phoenix just over the last four years. Miami 76 to 151. That's another basically a doubler there. Denver 101 up to 173. Boston 118 to 205. New York City 135 to 214. And we just got a few left here as we're getting close to the top. Seattle 120 to 214 and then the top three Los Angeles 158 K to 279 K San Francisco 220 up to 340 K today. And number one San Jose, California Silicon Valley 263 K up to 450 4k. That's how much a household needs to earn to afford the typical home in their local market. Not an extravagant home, not a home that's even above average, just the typical home in their local market, as calculated by Zillow.   Speaker 1 (00:14:31) - That's what's happened to affordability, basically since Covid began about four years ago. So some other takeaways from what I just told you about there. The correlation here is that lower priced metros often have high homeownership rates because they are more affordable. Yet, paradoxically, those places, those low cost places with high ownership rates are often the best markets for you to own rental property in due to that affordability. And this is not just true in the United States. When you look at Europe and we shared a map of this on our general education Instagram page last week, Europe also has higher homeownership rates in less expensive nations, led by Kosovo at an astounding 98% homeownership rate. Can you believe that 98% Kosovo, part of the former Yugoslavia and then Kosovo in the high ownership rate, is followed by Albania in second, Romania and third? And again, today's U.S homeownership rate is nearly 66%. And then, conversely, some of Europe's more expensive nations have the lowest homeownership rates. Switzerland is the lowest at just 42%, and that's followed by Germany in Austria, with the next lowest European homeownership rates with declining US affordability.   Speaker 1 (00:15:59) - I mean, sometimes, do you ever think that it just feels like dollars are losing all of their value? I mean, some of these figures just look like funny money anymore. If you visited U.S Debt Record recently, you'll see that our national debt keeps ticking up, nearing $35 trillion now. Now, I recently listened to two guys talking about rising prices back when they were kids and when they were kids, they thought that meant that the economy is prosperous. Have you ever thought that even as a kid, I didn't. I never thought that rising prices were some sign of economic prosperity, like when you were a kid, that pack of baseball cards going up from. $0.50 to $0.60 symbolize that economic prosperity was taking place somewhere else. I never thought that. I guess as a kid, though, I thought that if a 100 K home increased in price to 200 K, that it meant that it doubled in value, although it surely did not. I probably thought that as a kid before I understood things like inflation and leverage.   Speaker 1 (00:17:11) - But inflation is not some law of nature. Not at all. I mean, if you want to look at what happens is technology progresses. Well, of course prices should go down if we are picking apples by hand and then a machine comes along that picks apples 100 times faster, and you don't need to pay all these human harvesters anymore, well, then the price of apples should plummet. Prices should go way down as we get better at producing things. So just imagine how much higher prices would be today if there weren't these productivity gains that try to hold down the inflated prices just somewhat. My gosh. But instead, governments are incentivized to expand the money supply to pay for programs rather than tax you. What's the easiest way to pay for a $1 trillion federal infrastructure program? Just print a trillion bucks out of thin air. That way they didn't have to send you a tax bill because people don't like seeing tax bills. They didn't have to ask for your vote either. Just quietly print it. And now that they printed $1 trillion more, every single dollar that you're holding on to just got diluted.   Speaker 1 (00:18:29) - That's another reason that inflation is immoral. If you hold dollars in a savings account, fed inflation diluted it. If you hold dollars in a stockbroker as account inflation just diluted it. If you hold equity in a property, inflation just diluted it. Well what hedges you against inflation. Gold and bitcoin. They both break the government monopoly on money. That's just simply hedging yourself. And then what doesn't just hedge but help you profit from inflation. As we know that formula is income property with debt. Now the United Nations, they recognize 193 sovereign states across the world, but many with their own currency. And like I said, governments are incentivized to expand the money supply to pay for programs rather than tax you. It's not just an American thing. Everybody does it. It is just a race to the bottom with every currency, all of which eventually go to zero. Historically, they all have. Well, you and I, we actually gotten richer from our technology advancements in some ways. And at the same time, we are horror for our debased dollars by almost any standard out there.   Speaker 1 (00:19:59) - You and I are both richer than our grandfathers were. The technology is better. The iPhone in your pocket would blow away your grandfather or your great grandfather. But back in my grandfather's day. See, here's the difference. He could pay for both of his kids to go to college and do it without student loans. Grandpa could easily find a job in a factory, bought a house. His wife didn't have to work. He supported his kids. His wife was home so she could take care of the house and kids. We have lost that. That wave of high inflation in the 70s and 80s made it so that both parents had to soon work, eroding the nuclear family. Inflation destroys families because wages often don't keep up. When you have these ways of inflation, both parents work and the wife cooks last, meaning even more obesity. And now, in this era of inflation, the 2020s, the first time homebuyer has instead become the renter so that the median age of the first time homebuyer is now 36, per the Nar, which I think I mentioned on a show last year.   Speaker 1 (00:21:13) - And that number looks to be going higher. So the American dream, owning your home, it looks like that soon won't even begin until you're near 40. And it's not just a result of government inflation. Government regulation has driven up the cost of doing business, hence why the prices are so high. You're seeing more and more evidence of inflation widening this chasm between the haves and the have nots. I mean, Macy's, the department store they recently announced. Plans to reorganize their stores around this hollowing out of the middle class businesses are reacting, and inflation is the problem. In fact, it made a lot of news a few weeks ago. You might have seen this story where, gosh, can you believe that a public figure would say this out loud? Kellogg CEO Gary Pinnick commented on how Americans are dealing with high grocery prices when he was quoted as saying, cereal for dinner is something that is probably more on trend now. And he got blasted for it. From malnutrition to family erosion to unaffordable homes, inflation from the central bank is the culprit and it's reached levels of immorality.   Speaker 1 (00:22:35) - More straight ahead. I'm Keith Whitehouse and you're listening to episode 492 of get Rich education. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six.   Speaker 1 (00:23:47) - Role under the specific expert with income property you need. Ridge lending Group Nmls 42056. In gray history from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. Hi, this is Russell Gray.   Speaker 2 (00:24:27) - Co-host of the Real Estate Guys radio show, and you're listening to get Rich education with Keith Reinhold. Don't quit your day dream.   Speaker 1 (00:24:45) - Welcome back to Jewish Education where we are day trading. We are decade trading. I'm your host, Keith Reinhold. As we approach springtime before your tenant considers moving out, this is the time to remind them of the cost of moving. I've seen landlords effectively do this with a well worded letter. If you're raising the rent, this could accompany that notice. Tell them how costly moving is, because tenants often don't realize that until it's too late.   Speaker 1 (00:25:16) - And moving is also one of the most stressful things that a human can do. Vacancy and turnover are your biggest expense, so you should consider doing this before your tenant makes moving plans, because by then it's too late. Andrew Carnegie said that 90% of all millionaires become so through owning real estate. I could still believe that 90% figure today. But sadly, Carnegie's quote wasn't quite inflation proofed, and I'm sure he would admit that if he were alive today, a net worth of $1 million today does not make you rich. Millionaire. Yeah, not a wealth marker, but it probably means that you aren't poor. But yeah, a millionaire is no longer that aspirational. multi-Millionaire might not be a net worth of $2 million or more if you're under, say, 60, a $2 million net worth, that probably means that you better keep doing something to generate income. Here at gray, we probably spend less than 5% of our content, or even less than 2% of our content here, describing what most people think of conventional investment vehicles like, say, a 401 K or a Roth IRA.   Speaker 1 (00:26:36) - Instead, we follow something more like what Andrew Carnegie said, because being conventional, it just doesn't get you anywhere. And trimming your expenses, that really doesn't move the meter much in your life, unless you do enough of it to make you miserable. Saving money by getting your haircut at home is not going to build financial freedom. How many at home haircuts would you need in order for that to happen? There's no number. Neither will finding a way to get a free Thanksgiving turkey, or saving $90 on a flight itinerary by adding a layover and losing three hours of your time. That's not respecting your own time. So this is why we don't talk about conventional stuff here. Savers lose wealth, stock investors maintain wealth, and real estate investors build wealth. But now really, why else don't we discuss something like the benefits of a Roth IRA or comparing them to a traditional IRA? The main difference there being with a Roth you fund with post-tax dollars, meaning that you pay the tax today versus a traditional IRA where you pay the tax later rather than now.   Speaker 1 (00:27:45) - Well, you can't draw the funds penalty free until you're older, for one thing. And also, if you're under age 50, you can only contribute $7,000 a year to an IRA, and it's a care year if you're over 50. It doesn't move the meter in your life. And also, since we're a show about increasing your income, not cutting your expenses in a don't live below your means, grow your means vein. Well, this year's Roth IRA income limits are 161 K for single tax filers in 240 K for those married filing jointly. All right. Well, if you are not there at that income level yet, you are targeting exceeding those limits. So you won't be qualifying to participate anyway. Even if you had wanted to 401 K's in IRAs, they take money out of your pocket every month and every year. And I said with income property, you made a plan to put more money, tax advantaged money in your pocket every month and year. And this is all why I frown on budgeting, too.   Speaker 1 (00:28:59) - Now, one classic investor axiom that makes a little more sense to me is that you can't time the market. This is precisely why time in the market beats timing the market. Another phrase you've surely heard. I think that another way to say this is take what you've been given. Yeah. In general, once you've got a sound strategy, take what you've been given. The epiphany of real estate pays five ways is a motivator to adding more property. For example, when I bought my first property, yes, that modest and seminal Blue fourplex in 2002, there were pros and cons to buying 22 years ago. Just like there always are. Well, what I did is I took what I was given because I begin to understand how real estate could benefit me. And do you want to know what the market conditions were like back then? Let's look at this and compare this to today's income property market. This will be really interesting. What are the big factors that have changed in 22 years? Well, back in 2002 there were pros, neutrals and cons to buying.   Speaker 1 (00:30:14) - Then back then the pros were a good rent price ratio and I got a historically low six and 3/8 mortgage rate. Yes, I still remember that the neutral back then was an average vacancy rate, and the cons back in 2002 were low inflation, a high housing supply. The fact that I had made a $295,000 full price offer for that fourplex, which felt high at the time. I asked the owner if he'd come down and he said no. And another con is that I own in a small metro area, Anchorage, which was more vulnerable to economic change. That's something that I didn't even realize at the time. And another con to me, buying back then, as successfully as that turned out, was weak. Future demographics. Tenants quickly vacated because it was so easy for them to get first time homebuyer loans, liar loans amidst that loose lending environment. So right there were the pros, neutrals and cons in the marketplace. When I first started out taking what I was given, I took what the market gave me and became a profiteer.   Speaker 1 (00:31:32) - Once I had a strategy. Now this current environment, let's look at it. It could very well be better than when I started out. Here's what the market is giving investors here in the middle of the 2020s decade. The pros are low vacancy, higher inflation, though I would not call it high any longer. Another pro low housing supply. The polar opposite of when I begin there is strong future demographic demand. And another pro is like I've been touching on earlier here in that first part of the show, this dreadful first time homebuyer affordability. And what that does is that increases tenancy duration. Those are the pros today. The neutrals are strict loan underwriting and historically average interest rates okay. So those are both neutral conditions. And then the cons today are lower rent to price ratios and higher insurance premiums. So there they are. They're the progression of pros neutrals and cons in the real estate market. Since I bought my first property in 2002, one has got to own assets. When the middle class is hollowing out, it's caving in.   Speaker 1 (00:32:53) - No one wants to end up as desperate as Google's. I struggling to catch up with Microsoft and OpenAI. We don't want that to happen. And uncertainty. As you think about the future and growing your portfolio, you know, uncertainty that is an ever present condition with zero antidote. Uncertainty will only disappear when the world ends. These factors oppose neutrals and cons. They constantly shift. And in fact, life is about not knowing. The only safe years of your life are past years. Live in the question. Take what you've been given. That's the message here. Like I discussed last week, investor purchases are breaking records in today's environment. And speaking of today's market conditions, let me give you something tangible that you can really sink your teeth into with some real property addresses. These are ones that you find at Gray Marketplace. Let me start with the most expensive one first in San Antonio, Texas. It is a 2024 new build fourplex for a price of $1,100,000. Yeah. Hey, big spender, $1.1 million.   Speaker 1 (00:34:13) - The rent is $7,580. Class A neighborhood 5000ft², three bed, two baths per unit. Gosh, I wish this would have been my first ever fourplex. Mine was two beds, one baths, and when I bought it, it was about 20 years old. Well, the interest rate on this new build San Antonio fourplex is 4.25%. You need to use the seller preferred lender for that you're down. Will be $275. Projected monthly cash flow is $1,413. The second property is at 16 1027 Street Northeast in Canton, Ohio. Yes, canton, Ohio, the home of the Pro Football Hall of Fame, which I visited about five years ago. This is a single family rental in canton. The price is 130 K. The rent is 1125 B class neighborhood 1100 and four square feet. It was built in 1952. It has three beds in one bath. 33 K is the down payment, $279 of projected monthly cash flow. And then the last one that I'll detail here is 8700 East 79th Terrace in Kansas City, Missouri.   Speaker 1 (00:35:35) - It's also a single family rental 213 K purchase price. The rent on it is 1875. And gosh, that is a really good rent to price ratio. They're almost 9/10 of 1% here in Kansas City. B is the neighborhood class. It's 1180 eight square feet built in 1967, four beds, two baths. And it is a down payment of 53 K down with a projected monthly cash flow of $449 there in this Kansas City single family rental. Now you don't want to count on rent increases, but rents in the Midwest are now rising faster than any other region in the whole nation. And that's not hard to do, by the way, because in most U.S. regions, rents are hardly rising at all today. Now, as far as homes built in the 50s and 60s, although it's still good for you to mark more for maintenance expenses on properties of that age. You recall that I said earlier that you're likely doing more decade trading than day trading with these rehabbed or new build investor homes and 7 to 10 years.   Speaker 1 (00:36:55) - That's typically how long you want to plan on holding for, because by that time, or even earlier, it might have been as little as three years here recently. But by that time, sufficient equity has built up so that you want to sell in order to keep your return high and trade up tax free. Well, you only need new or rehabbed systems or components, therefore, to last 7 to 10 years, and you're typically selling the property before you need anything like a new roof or new Hvac. I personally don't believe I've ever held any rental property for more than ten years now, as I gave details of those three available properties there. This really is a time in the market cycle for you to consider new build properties. If you can swing the higher price, and that's for a lot of reasons you probably realize. The first one is that because builders are still buying your rate down for you to under 6%, you saw their with that San Antonio new construction fourplex, how a builder is buying down your rate to 4.25.   Speaker 1 (00:38:02) - Gosh, another trend that's been developing is the new home price. Premium over resale property seems to have declined substantially in the US, but builders just cannot keep doing these rate buy downs forever. Once rates go down, they're going to have less incentive to do them. For one thing, there won't be a need there. And also see, it depends on the builder, but a lot of builders, they bought land back in 2021 that they're only building on today, and those builders got to pay lower 2021 prices for that land that they're now building on. Will in a year or two, when builders are selling property where they had to buy the land in 2023, that is going to be reflected in higher prices in a year or two. So go new build if you can swing it. If not, you've got your 7 to 10 year hold strategy for resale properties, and that's 7 to 10 year hold. Strategy also applies to new builds on a scarce asset that everyone is going to need all 340 million Americans.   Speaker 1 (00:39:12) - And if any of these income properties or ones like those seem interesting to you, go ahead and contact your gray investment coach. If you don't have one, they'll help you for free. And our coaches really just make it easy for you. You can book a time right on their calendar, set up a friendly zoom or phone call, and strategize at Gray marketplace.com. Until next week, I'm your host, Keith Weintraub. Don't quit your day dream.   Speaker 3 (00:39:42) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Speaker 4 (00:40:11) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Others quietly fund a savings account for you with every income property that you own.  This is known as your ROA, your Return on Amortization. Primary residence owners don’t have this benefit. Tenants rent a property from you. To own the property, you got to “rent” the money from the bank. Landlord tipflation: have you ever asked your tenant for a tip? I don’t recommend it. Integrity: Now that the statistics are in, I follow up on my 2023 Home Price Appreciation (HPA) Forecast. See how it went. When measuring HPA, I explain why I use existing home prices, not new home prices. The size of a new-build home has shrunk 12-15% in just the last decade. Learn about the surprising correlation between rents and home prices. Be honest. Is it completely different that what you thought? Redfin just reported that real estate investor purchases are breaking records. Find the right income property for building your wealth. Our GRE Investment Coaches provide you with free guidance at GREmarketplace.com.  Timestamps: Welcome to Get Rich Education (00:00:01) Introduction to the episode and a brief overview of the topics covered. The Benefits of Real Estate Investing (00:01:58) Discusses the benefits of investing in real estate, including equity growth, cash flow, tax benefits, and inflation profiting. Tenant-Made Equity Growth (00:02:47) Explains how tenants contribute to the landlord's equity growth through monthly principal pay down. Landlord Tip Inflation (00:06:39) Compares the lack of tipping in the landlord-tenant relationship to other service interactions and discusses the concept of "landlord tip inflation." Review of Home Price Appreciation Forecast (00:09:06) Reviews the accuracy of previous home price appreciation forecasts and discusses the factors influencing the real estate market. Use of Existing Home Sales Numbers (00:13:01) Explains the rationale for using existing home sales numbers in home price appreciation forecasts and discusses the trend of new home construction. Impact of Population Growth on Real Estate (00:17:03) Highlights the impact of population growth on real estate prices and rental demand, emphasizing the significance of demographics in real estate investing. Special Episode Announcement (00:21:33) Announces the upcoming special episode 500 and expresses gratitude to listeners, particularly those from Colombia. Listener Guest Invitation (00:22:43) Encourages listeners to share their experiences and the impact of the show on their lives, inviting them to become guest speakers on the podcast. The surprising correlation between rents and home prices (00:26:07) The correlation between the direction of rents and home prices, and how they move together. Investor purchases breaking records (00:29:21) Insights on the increasing investor purchases, housing shortage, and the impact on the real estate market. Real estate anniversary (00:32:11) Keith Weinhold's heartfelt reflection on his parents' 50th anniversary in the same home, emphasizing the significance of providing people with a home. Commitment and growth in real estate investing (00:33:46) Encouragement to commit to real estate investing, learn, grow your portfolio, and build your empire. Conclusion and disclaimer (00:37:10) Disclaimer and conclusion of the podcast episode. Resources mentioned: Show Page: GetRichEducation.com/491 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to GRE. I'm your host, Keith Weinhold. Today, get in on a savings account that others fund for you. Landlord Tip Foundation a follow up to see how my last home price appreciation forecast actually performed. The surprising way that rents correlate with home prices. Investors are now feeling a record share of property buys and a heartwarming 50 year anniversary that I'm in awe of today. An get rich education. When you want the best real estate and finance info. The modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple. Text gray to 66866.   Keith Weinhold (00:01:17) - And when you start the free newsletter, you'll also get my one hour fast real estate course completely free. It's called the Don't Quit Your Daydream letter and it wires your mind for wealth. Make sure you read it. Text gray to 66866. Text gray 266866.   Corey Coates (00:01:42) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:58) - Welcome to GRE, from Italy's Sorrento Peninsula to America's Florida peninsula and across 188 nations worldwide. You're listening to the 491st consecutive weekly installment of the get Rich education podcast. I'm your host, Keith Weinhold. And when you invest in real estate with a strategy, which is what we've discussed here for over nine years, you can't help but be a profiteer, even a wild profiteer. It might feel like so much money is falling out of the sky that you might need an umbrella to keep yourself from being hit with it. Raining Benjamins. In fact, with one of the five ways that you expect to be simultaneously paid. All right, let's not focus on the equity growth here, which has been torrid the last four years.   Keith Weinhold (00:02:47) - Not the cash flow, which has been slowed lately, not the tax benefits or the inflation profiting benefit. What else is there that ROA you return on when we talk about so much money falling out of the sky that you catch a case of affluenza, that ROA, it's really one of your quieter profit centers. It is like a savings account that someone else is funding for you. Let's say that you check in at your table of your typical mortgage income property, and it shows that it has $400 of monthly principal pay down. All right. Well, imagine if you had a number of economic actors say you own six rental properties, and then you've got six tenants, six economic actors, perhaps people that you've never met. And all six of them are putting 400 bucks a month into a savings account with your name on it. That is $28,800 a year. That goes into your quote unquote, savings account. Yeah, nearly 30 K a year that your net worth is growing by that you hardly even think about.   Keith Weinhold (00:04:02) - And it's all just part of the profitable background noise that you hardly even hear, along with your leverage depreciation, cash flow taxes and inflation, profiting your tenant builds up your equity. This way, even if your property didn't appreciate at all. And again, in your own primary residence, your ROA is zero because you had to work to pay down your principal, your tenants not doing it for you. Now, this account that they're funding for you, it's not as liquid as a savings account, but it's perhaps more like an old bank CD, a certificate of deposit. It's your money, but you can't access it. In a couple minutes. You would need to do a sale, or you could do a cash out refinance and then it's yours. Your ROA is your tenant made annual principal pay down divided by your equity. Okay. And what if you had more and larger properties? Then this small example I gave you the quietly increases your net worth nearly 30 K every single year. Well, a lot of investors have more or a larger properties where you might have 300 K in annual principal pay down alone.   Keith Weinhold (00:05:22) - The more rental properties you own, the more tenants you have that month in, month out. Every single month they fund a low liquidity savings account with your name on it. And think about it. How did you get in this advantageous position? Well, first you educated yourself. You'll know that they will rent the property from you. And how did you get the property? You don't own an outright. That typically implies too much opportunity cost to have the entire value of your property tied up and paid off. Although they rent the property from you, you got to rent 80% of the money from the bank to buy the property with reap the reward, and you might have to use that umbrella to avoid getting rained on. With the financial windfall. And residential real estate investors have been feeling the rain pouring down for the last three four years. Many commercial real estate investors with short term mortgages don't feel the same way now when you're paid five ways, which has been enhanced by inflation since 2021, you don't really need tip inflation.   Keith Weinhold (00:06:39) - Hunt up of that. In fact, have you ever asked your tenant for a tip, or has a tenant ever paid you a tip for providing housing for them? I wouldn't expect it. It hasn't happened to me. In fact, I've never heard of it. But if. If so, tell us about it right into us at get Rich education. Com slash contact. That's our contact page. A tip for your landlord. Now, think about it this way. You've got all these people asking for tips, really, since the pandemic began. And that's when it really heated up. And then the pandemic receded. And yet the tip requests persist. Baristas, delivery people, fast food workers and the parade of other micro interaction participants that you encounter throughout the day. Those people have no shame in asking you for a tip, and that's even if the service is poor. Now, I'm not saying that you should or shouldn't tip them, but they are micro interaction participants in your life because they're just handing you a coffee, or they're handing you another drink that has too many ice cubes in it.   Keith Weinhold (00:07:55) - On the other hand, what you do is you provide tenants with the roof over their head 30 days in a row, 24 hours a day. By buying the property, you educated yourself. You sunk in a down payment. You build up your own good credit to get a loan to provide housing for a stranger. Well, I guess you'll be asking your tenant a new question each month. Would you like to tip me 18%, 20%, or 25%? Landlord tip inflation? No, I doubt that you're really going to do that. But this is the case that compared to the service level from vendors that you interact with at a lower economic level, you sure could ask for this landlord tip inflation. Let me know if it's ever happened to you now, starting at the end of 2021, near the end of each year here on the show, I have provided you with a home price appreciation forecast for the following year. Well, we have got the results now from last year, so let's check the performance.   Keith Weinhold (00:09:06) - And yeah, don't you wish everyone that made predictions or forecast they reliably review them and followed up with how they actually performed. That's what we're going to do here. Now there are some things that I don't like to predict. In fact, I was the guest on Tom Wheelwright’s show at the end of last year as his 2024 Real estate predictions expert. And if you watch that, he really had to press me to get my mortgage rate forecast. I told him back then that 6% by the end of the year was my best guess. But that's all it was not formulaic, not a forecast, and not a 100% confidence level at all. So when we talk about Gray's home price forecasts and our track record, let me share a little context with you here. First, so many other people, including some expert peers that I actually respect. They really got home price appreciation so wrong in this era, especially in 2021. That's when many forecast a home price crash 2021. That's the year we had the highest home price appreciation in a long time, nearly 20% nationally.   Keith Weinhold (00:10:23) - And of course, I have never called for any national home price downturn at all, even a mild one. I'm on record here on the show back in 2020 and 2021. That is when I shared the fact that, look, this administration, our elected officials, whether you like them or not, for better or for worse, they don't want to see people kicked out of their homes and living on the street back then. Remember, like mortgage loan forbearance. But at the end of 2021, I forecast a cooling down of home price appreciation. And I told you then that I expected 9 to 10% for 2022. And at the end of 2022, the result was indeed 10% home price appreciation. And then at the end of 2022, we had already seen mortgage rates spike two and a half times from their lows. And again, many said that was going to catch up with us so that in 2023, home prices would just have to sink. No, they didn't sink. That's when I told you that the only housing crash was going to be a supply crash, and the higher mortgage rates actually correlate with higher home prices, not lower ones.   Keith Weinhold (00:11:39) - That's what historically happens. And I said right here on the show that home prices absolutely can't crash. In fact, they won't fall at all. So 0% was my forecast for last year. No gain, no loss. We now have the number in. Only for last year. Yes, real estate statistics can move slower than an Alaskan glacier. Well, it affirmed that indeed, prices didn't fall. They came in up 3.5% last year. That's the result. We'll round it up to 4%. And we maintain a consistent data set here. The same measuring stick. And that is the Anna's national median single family existing home price. Let me just add that of course I'm neither omniscient nor clairvoyant. I'm giving you the best information my research can provide. It is surely possible that I'll get it wrong sometime. I just haven't yet. Now. And you learn something about real estate here. Why do I use only the existing single family home number? Therefore, why exclude no new build homes? Well, in short, this is how you better compare apples to apples.   Keith Weinhold (00:13:01) - New home construction changes over time. And in fact, the trend for the last decade is that new build homes are shrinking in size and are also being built closer together to each other when they're constructed. So you can see how this disrupts the apples to apples comparison. Ten years ago, the existing single family home was about 1600 square feet and is still 1600 today. But ten years ago, a new build, single family home was about 20 300ft². And it's just 2000ft² today, or 2036 to be exact. So yeah, new build sizes have shrunk 12 to 15% in just the last decade. So this is why I use existing home numbers. And by the way, this shrinking trend, this is the opposite of the early 2000 trend. When you saw a super sizing of homes about 20 years ago, that's when the term McMansion really increased in popularity there about 20 years ago. But it's the opposite now. The shrinking new home trend looks to pick up steam because, like I talked about a few weeks ago, affordability is down.   Keith Weinhold (00:14:19) - Remember, it's worse than it's been since George Jefferson was on television 40 years ago. Don't let's not play The Jeffersons theme music again. The deluxe apartment in the Sky. We played that two weeks ago. Moving on up to the East side. I think that's the music that meant Manhattan's Upper East Side. For those uninitiated on that, that has long been one of New York City's most affluent neighborhoods. Yes. Then the Jeffersons were also funding their landlords return on amortization and more. But getting back to today's new home construction, you can. Therefore, you could say that homes are experiencing shrinkflation today from about 2300ft² to 2000ft² in just a decade, and you can easily see that falling below 2000ft² within two years here. Yes, that type of shrinkflation is more impactful than you paying the same for your shrinking jar of prego spaghetti sauce. Now that you understand why existing home sales numbers are used in Jerry's Home price depreciation forecasts sourced by the Nar, you'll recall that at the end of last year, I forecast 4% home price appreciation for this year.   Keith Weinhold (00:15:43) - We'll check back on that in one year's time. Now, that's amidst the fact that I understand we've got high asset prices all over the place right now, almost everywhere you look, a record high US stock market near record highs in Bitcoin and near record highs in home values. Yes, more home price appreciation is likely. In fact, real estate investor purchases are breaking records. I've got more to tell you about that later. In fact, there is even more fuel being poured out of the housing record right now. And this was breaking news a couple of weeks ago in our Don't Quit Your Daydream newsletter. So if you're a reader, you saw it. And that is the fact that population growth drives real estate prices and rents. News broke that we just experienced the largest one year population increase in all of American history, with an astounding 3.8 million. Our population was up 3.8 million people last year, more than ever in previous census estimates of a 1.6 million person increase had underestimated immigration flows. This was reported in Newsweek and elsewhere.   Keith Weinhold (00:17:03) - Now, look, I've been directly investing in real estate since 2002, and I have rarely encountered a supply demand inflection point like this that requires such attention from you, locating an available property that is already more elusive than finding the missing car keys, and it's going to get even more scarce. This has the appearance of an astounding real estate investment window that we are now entering. See, in most asset classes, the future is largely unknown. Like in stocks, futures markets, derivatives, bonds, crypto, gold, oil, all kinds of other commodities. There are so many unknowns there. And real estate has unknowns too. But there are no three giant certainties for residential real estate in America going forward. Number one is more inflation. Number two is a prolonged scarce housing supply. And thirdly, it is astoundingly good demographics that fuel more demand. This third one is newer. And this is what I'm highlighting here. The demographics were already good, but it's just been turned up another notch. All three of these things are inevitable, and so many people try to predict the future and they fail.   Keith Weinhold (00:18:30) - But these three profitable real estate tailwinds for investors are as assured. I mean, there is a third. Is you forgetting someone's name immediately after they introduce themselves? Yeah. The way to get around that is to recite their name back out loud as soon as you meet them. But what I'm getting at is that this is not hyperbolic to call this potentially a once in a decade opportunity. Other high income countries like Japan and so much of Western Europe, they are sweating buckets, thinking about how their nation's aging populations are sending them over a demographic cliff. And besides just the magnitude of the population growth, again, the biggest one year increase in American history, understand that America's largest group of immigrants are working age producers aged 25 to 54, and they are overwhelmingly renters, not homeowners. So this is your surge in rental demand and this immigration surge. It may or may not last, depending on policy, regulation and the presidential election outcome late this year., you know, Jeff Bezos discussed this one time.   Keith Weinhold (00:19:55) - He discussed about how everyone wants to know the future and understand this. You already know more about the future than what you think, whether it's about your future business life or your investing life or your family life, or the way that you're thinking about technology in autonomous cars or flying cars, in machine learning and artificial intelligence, you know, with things that a lot of people, they ask themselves a question about the future, and they ask, what will be different in ten years? Well, there's nothing wrong with that question. In fact, it's a perfectly good question. But instead, ask yourself the opposite. What will be the same in ten years? Yeah. What will be the same in ten years? Now, black swans aside, in real estate investing, it is indeed those three things more inflation, a prolonged scarce housing supply, and astoundingly good demographics for rental demand. That's what will be the same. And now you have the basis for a sustainable wealth strategy. The bottom line is that even if it comes to a sudden stop, the addition of an all time record 3.8 million Americans in one year, that has left an indelible mark on real estate demand, the economy, and nearly all of society.   Keith Weinhold (00:21:33) - Residential real estate investors are going to own a scarce asset that everyone will need. You're listening to get resuscitation. It's episode 491, and that means that we're just nine weeks away from what is going to be a special, unforgettable episode 500. It's an episode that you probably want to listen to more than one. Coming up in two months on May 6th. And I'll tell you, I really know how to put the performance pressure on myself for May 6th, don't I?, hey, I really want to give a shout out to our great listeners in Columbia. Last month, I spent nine days in Colombia and eight days in Ecuador exploring a coffee farm, checking out urban sites and doing some Andes mountaineering, taking in the best of steak, coffee, chocolate and fruits to. And I've got to say, when Colombians learned that I was there, you Colombians were amazing at reaching out, making me feel welcome, telling me how the show has helped you. Ecuador. And it wasn't quite the same. I love you and your beautiful nation, but frankly, I didn't hear much from the Ecuadorian listeners.   Keith Weinhold (00:22:43) - I don't know why there was a big difference there, but I'm appreciative of some of the South American listenership for a show that's based on about 95% US real estate here. Speaking of listeners and the show, at times, we have listeners here on the show. If gray has impacted your life and you'd like to come on the show and tell us about it, I and our audience like hearing from you and how an abundance mindset and real estate investing has changed your life right into us. At our contact page again, get rich education. Com slash contact and tell us about yourself. We've had some really cool listener guests here on the show, like Grammy Award winning music producer Blake La Grange, the inventor of a home fitness system, Sean Finnegan, and even my former coworker that used to have a neighboring cubicle right next to me, back when I had a day job in a fertile who became a listener. If you think you're just maybe a boring accountant with a spouse and two kids, but Jerry has influenced you, well, you're exactly who we want to hear from a write in and let us know.   Keith Weinhold (00:23:53) - Coming up next, hear the surprising correlation between rents and home prices. Then investor purchases are breaking records in more. I'm Keith Weinhold, you're listening to get rich education. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation.   Keith Weinhold (00:25:01) - If you want to invest where I do, just go ahead and text family to 66866. Role under this specific expert with income property, you need. Ridge lending Group NMLS 42056. In gray history from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Caeli Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at RidgeLendingGroup.com. RidgeLendingGroup.com.   Matt Bowles (00:25:48) - Hey, everybody, this is Matt Bowles from Maverick Investor Group. You're listening to Get Rich Education with Keith Weinhold. And don't quit your daydreaming.   Keith Weinhold (00:26:07) - Welcome back to Get Rich Education. I'm your host, Keith Weinhold. As I like to say, history over hunches, it's easy to have a hunch about how something works in real estate. But take a look at history and see what really happens. History over hunches. So to that point, you might be surprised at the correlation between the direction of rents with respect to home prices.   Keith Weinhold (00:26:31) - Now, the cost of rent has grown over the last 12 years. That's not news to anybody, but many think that rents and home prices move inversely. If demand for home purchases falls, then rents rise, right? No. Instead, they move together. When rents move up, home prices tend to move up to. Rents rose gradually from 2012 to 2020, and they rose rapidly since 2020. Well, home prices, they behaved in a similar way. They also rose modestly from 2012 to 2020, and they rose rapidly since then. Rinse and home prices have therefore been positively correlated. And in fact, I've been investing long enough to remember that when the home price bubble burst from 2008 to 2010, where rents fell a little. Then to an underscore my point some more, both rents and prices bottomed together around 2011. Yes, I think most real estate investors believe that this positive correlation is less likely than that. A movie about Barbie could ever reach $1 billion in sales. Well, that happened too.   Keith Weinhold (00:28:01) - So I simply look at what really occurs when I do my research. It's history over hunches, and that's why these should not be mind blowing discoveries. Just look at what really happens. So if your tenant balks that rents are rising, well, you know what? Home prices are probably rising to the bottom line here with rents and prices being correlated, is that whether it's to rent or own, wait a million homes when the economy grows, that is the real history over any other hunch. Now, as a wealth building show here I am empowering you with the information that you need to improve yourself. You can't follow the herd. You've got two choices. Either you can be a conformer or you can build wealth. Your wealth is not coming from anyone else. Chances are a rich uncle won't be helping you. In fact, getting an inheritance remains a rarity in the US yet as of 2022, data from the Federal Reserve shows only about a fifth of American households had ever received an inheritance at all. And it gets worse.   Keith Weinhold (00:29:21) - According to NYU, the most common inheritance amount is between 10,000 and $50,000. Yeah, that's enough to fund your life for one average month, or maybe one good month, depending on how you're living. The good news is that great listeners and others are getting the message, because last month, Redfin reported that real estate investor purchases are breaking records. Yes, investors bought 26% of the country's most affordable homes in the latest quarter ended, and that is the highest share on record ever. We've got all these on record ever sort of things that we're talking about on the show today. Yes, Redfin let us know that low priced homes are increasingly attractive to investors in today's environment. Redfin agents in Florida and California report that investors are the ones hungry for homes, but they can't find properties to purchase due to an ongoing housing shortage. But we can help you with available supply here at gray. But these overall record investor purchase figures they are, according to a Redfin analysis of county home purchase records across 39 of the most populous US metro areas, not just a couple states.   Keith Weinhold (00:30:45) - There are a lot of investors out there fighting for properties, said a Redfin premier agent in Orlando, Florida. There just aren't enough properties to go around, which is putting a cap on how many homes investors can buy. In fact, single family homes represented over two thirds of investor. Purchases. So congratulations, you are acting. You are making it happen in this canyon, this chasm, this divide that's opening up between the haves and have nots, shrinking the middle class. You are getting on the right side of that. I want to tell you more about being an investor shortly. But first, I have somewhat of a heartfelt real estate anniversary for you, and it has to do with my own family. March 5th, 1974 is a special day. You might note that tomorrow will be the 50th anniversary of that special date. Now look, I can remember every single place that I've ever lived. The modest single family home that I grew up in, college dorm rooms, a pathetic pool house, efficiency apartment in Westchester, Pennsylvania, a condo, a house as an adult.   Keith Weinhold (00:32:11) - Can you can you remember every place that you've ever lived? There's a good chance that you can. It's how intimate, really and important real estate is to your life. And think about how significant you are. You're providing people with a home that they will always remember. This is key. Think about how this contrasts. If you supplied the world with software packages or patio furniture, that stuff is forgettable. You're doing something significant when you help abolish the term slumlord and provide other people with that clean, safe, affordable, functional housing. Well, tomorrow my parents, Curt and Penny Weinhold, will have lived in the same home for 50 years. 50 years in the same home for my parents in sleepy and remote Appalachia. Coudersport, Pennsylvania. I asked my dad about that recently, and he said that when the paperwork with the lawyer was finished, he recalled walking into the house and happily shouting. He was tired of renting. When I visit my parents annually in Pennsylvania, I am still sleeping in the same bedroom of the same home, on the same block in the same small town where they still live in the first home that I ever remember.   Keith Weinhold (00:33:46) - Great job Mom and dad. You committed. You married before you had my brother and I. You're still happy, you're still healthy, and you're still together. You're even in the same home I grew up in. I'm in awe. I won the parent lottery five decades in the same home. You know where the creaky spots in the floor are of that old Victorian place. And when my brother is there, the four of us know right where to sit in our same spots at that same kitchen table. And, you know, as tomorrow is an amazing 50 years there. There are some lessons in this. Find out what the great things in life are, learn about them and commit to them. Like me trying to be the highest man on earth recently, or you buying the property or getting married. So many of the most successful people get diligent and learn and then make lasting commitments. Being a real estate investing devotee is a commitment. Each property that you add is a small commitment itself. I encourage you to act if it resonates with you.   Keith Weinhold (00:35:03) - Learn and grow your portfolio. There are always going to be naysayers that try to hold you to the confines of conformity and mediocrity. So fear, uncertainty. Telling someone that times are uncertain is like telling someone that they're breathing air. Well of course, no kidding. Each condition, uncertainty and breathing air have persisted every day of your entire life. In the year 1920, ten kilos of gold would buy you an average home. Today, ten kilos of gold will buy you an average home. Home prices aren't high so much as the value of the dollar is simply down. Homes are not overvalued by the most timeless financial measure. Gold mortgage rates near 7% are still below. Their long term average. So go forth and build your empire. You can either teach a man to fish or give a man a fish. Here at Jerry, we do both. We teach them in or women to fish at get worse education. Com which this show is a part of and then a great marketplace. Com we give a man a fish.   Keith Weinhold (00:36:30) - We have the supply of housing. You have access to the national providers with the lower cost real estate that makes the best rentals. And starting about two years ago, we added free investment coaching here, giving you that fish and making it easier than ever to get started or get your next property. Play a game worth winning and commit to something worthwhile. If you haven't yet, I encourage you to look into that at GREmarketplace.com. Until next week, I'm.   Speaker 3 (00:37:03) - Your host, Keith Weinhold.   Keith Weinhold (00:37:05) - Don't quit your day dream.   Speaker 4 (00:37:10) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of yet Rich Education, LLC exclusively.   Keith Weinhold (00:37:38) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Owning raw land, timberland, and farmland is often the domain of the wealthy. This is partly because it is difficult to obtain loans for this property. Today, we discuss an income-producing timberland that also tends to increase in value. For under $7,000 you can own quarter-acre parcels of producing teak trees in Panama and Nicaragua. You can invest yourself. All at once, this provides diversification with a hard asset in a foreign nation and a different product type. Over a twenty-five year period, each $7K quarter-acre teak parcel is projected to return $94K. You get title to the property. Learn more at: www.GREmarketplace.com/Teak With ownership of two quarter-acre parcels, you can qualify for a second residency in Panama for under $22K with legal fees, etc. A SFR does not grow into a duplex. But teak trees grow in volume while its unit price typically appreciates. Teak price growth is historically 5.5% annually. I’ve met the company CEO and Chairman in-person. This provider has offered this opportunity for 24+ years. They’ve recently added a sawmill, increasing profits. What are the risks of teak tree investing? Disease, pests, fire, geopolitics and more. They are proven mitigation plans. In-person teak tours for prospective investors are offered. Trees grow through recessions, COVID, market cycles, and Fed rate decisions. Learn more about teak tree investing at: GREmarketplace.com/Teak Timestamps: Welcome to Get Rich Education (00:00:01) Keith Weinhold introduces the podcast and emphasizes the importance of real estate and financial information. The US economy and land ownership (00:01:44) Keith discusses the strength of the US economy and the importance of diverse and resilient real estate portfolios. America's top 100 landowners (00:02:29) Keith talks about the largest landowners in America and the reasons why land ownership is often associated with the wealthy. Investing like a billionaire (00:05:32) Keith introduces the topic of investing in producing land and the benefits of owning producing land. Introduction to ECI Development (00:06:21) Keith introduces Michael Cobb and discusses the company's projects in Latin America. Marriott resort project in Belize (00:07:08) Mike talks about the construction of a Marriott resort in Ambergris Key, Belize, and the challenges of financing such projects. Development and tourism in Belize (00:08:37) Michael Cobb discusses the development and popularity of Ambergris Key, Belize, and the involvement of major hotel brands. Teak tree parcels investment (00:11:30) Michael Cobb explains the investment opportunity in quarter-acre teak tree parcels and the generational wealth stewardship associated with it. Reasons for teak investing (00:14:05) Michael Cobb discusses the reasons why people are interested in teak investing, including hard asset diversification and international residency opportunities. Cash flow cycles and teak investment (00:16:42) Michael Cobb explains the 25-year cash flow cycle associated with teak investments and the generational income potential. Optimal growing conditions for teak (00:19:26) Michael Cobb discusses the optimal growing conditions for teak and the physical growth of the trees. [End of segment] Teak Plantation Locations and Growth (00:19:42) Discussion on the optimal locations for teak growth and the historical track record of teak price growth. Teak Price Growth and Business Plan (00:20:44) The historical 55% annual increase in the value of teak and the business plan's conservative approach to teak price growth. Physical Properties and Residency Opportunities (00:21:33) The value of teak and the opportunities for achieving residency in Panama by owning teak. Residency and Citizenship (00:24:33) Differentiating between residency and citizenship in Panama and the process and benefits of obtaining permanent residency. Sawmill and Value-Added Component (00:27:56) The integration of a sawmill into the investment proposition and the value-added potential of processing teak into lumber. Sawmill Investment Opportunity (00:30:07) Details of the investment opportunity in the sawmill, including the expected return and investment structure. Risks and Mitigation (00:32:41) Discussion on the risks associated with teak plantation investment abroad and the mitigation strategies in place. Property Management and Tours (00:35:25) Outsourcing property management and the availability of tours to visit the teak plantations in Panama. Long-Term Investment Perspective (00:37:43) The long-term growth potential of teak investments and the comparison to the investment strategies of wealthy families and institutions. Earth's Highest Real Estate (00:38:11) Discussion about Earth's highest point, the equatorial bulge, and the location of teak plantations in Panama and Nicaragua. Investing in Teak Parcels (00:38:11) Information about purchasing teak parcels, the absence of loans, and the potential for building wealth through teak investments. Consultation Disclaimer (00:39:34) Disclaimer about seeking professional advice and the potential for profit or loss in investment strategies. Resources mentioned: Show Page: GetRichEducation.com/490 Learn more about teak investing: GREmarketplace.com/Teak For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to gray. I'm your host, Keith Reinhold. An affordable way to simultaneously invest like a billionaire. Get diversified in multiple ways with real estate. Help the earth. And if you prefer, even achieve residency in a second nation today and get rich education. When you want the best real estate and finance info, the modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of ours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple text gray to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free. It's called the Don't Quit Your Daydream letter and it wires your mind for wealth.   Keith Weinhold (00:01:16) - Make sure you read it. Text gray to 66866. Text gray 266866.   Corey Coates (00:01:28) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:44) - What category? From Sorrento, Italy to Sacramento, California, and across 188 nations worldwide. I'm Keith Reinhold, and you're listening to get Rich education the Voice of Real Estate since 2014. As we're two months into the year now and the US economy has continued to stay strong. Let me ask, how's your portfolio doing and how resilient is your real estate? How diverse is it? How would you grade yourself on those criteria?   Donald Trump (00:02:17) - I would give myself, I would look, I hate to do it, but I will do it. I would give myself an A-plus. Is that enough? Can I go higher than that?   Keith Weinhold (00:02:29) - Well, well, whether your, I guess, straight A's or not. Consider this land report.com. They recently published a report about America's top 100 Las donors. Now, Lynn could be vacant and nonresidential, yet have active ranching or agriculture or forestry taking place.   Keith Weinhold (00:02:52) - That way the land produces something while it might increase in value at the same time. But the reason that often land is the domain of the wealthy is that it's harder to get loans for land, and therefore one must often pay all cash. Well, by the time they were done. Today, you'll learn about producing land that's actually available at such a low price point that alone typically is not required for you to buy it. In 2024, America's largest land owner is Red Emerson, and that's what the report found. Read and his family owned 2.4 million acres in California, Oregon and Washington through their Timber products company and the number since they became America's largest landowners in 2021, when they acquired 175,000 acres in Oregon from another timber company. Well, with that acquisition, the Emerson surpassed Liberty Media chairman John Malone's 2.2 million acres. And then in third place is CNN founder Ted Turner. Yeah, he's America's third largest landowner, with 2 million acres in the southeast on the Great Plains and across the West. And it was a few years ago now.   Keith Weinhold (00:04:05) - It was 2020 when news broke that Microsoft co-founder Bill gates was America's largest farm land owner, with more than 260,000 acres. So the wealthy are attracted to real assets that can produce yield in something like land, which they aren't making more of. That's the backdrop for today. Surely we'll talk about income producing land, although most years it won't pay out and it's available to any investor, big or small. But before we do, let me share that. About ten days ago, I climbed up the highest point on Earth here while we're talking about non-residential real estate. Well, where was it? Where was I? Yes, I was on Earth's highest piece of real estate. Kind of a trivia question here, and I used to think that that must mean Mount Everest, but it's not. So there's a clue for you there. Where is Earth's highest point is you ponder that. I'll give you the answer later. Let's talk about investing like a billionaire with the opportunity to own producing land did it to you? We've discussed this topic before, but it's been quite some time and there have been some important updates, including a sawmill for the production timber.   Keith Weinhold (00:05:32) - After success in the computer industry, today's guest formed ECI development in 1996. I suppose going on nearly 30 years now. He served on advisory boards for the Na as a resort community developer. They have projects in Belize, Nicaragua, Costa Rica, El Salvador, Honduras and Panama, and neighborhoods include homes, condominiums, golf courses and over five miles of beachfront. So they got some really beautiful properties. He and I first met in person in 2016. He and his family lived in Central America from 2002 to 2016. It's always fantastic to have back on grea, and I guess I must button up here because it is the chairman and CEO, Michael Cobb. It's good to be with you. Thanks for having me.   Michael Cobb (00:06:21) - Back on the show. It's fun to have these conversations. I didn't realize we met in 2016. That's a little while ago.   Keith Weinhold (00:06:27) - Yeah, it has been eight years. Yes, we met in the region then down there and Mike's about the most relatable and down to earth guy that you can find and literally down to earth is.   Keith Weinhold (00:06:41) - Besides the resort development, you've made it easy and inexpensive for investors worldwide to buy producing teak tree parcels. But before we discuss that, you've got a project that's drawn a lot of interest on Ambergris Key, Belize, which many of our listeners already know, that's Belize's largest island and its top tourist destination. I have visited and owned property there, and it's coming online next year. It's pretty exciting. Tell us about it.   Michael Cobb (00:07:08) - It is exciting. It's been in the works for goodness, eight years. I think we signed our contract with Marriott maybe 7 or 8 years ago. We started construction just about a year ago last January. So almost exactly a year. Yeah, it's a marriott resort, 202 room oceanfront resort. It's fantastic. It will be done in August of 2025. Soft opening heart opening October 25th. So yeah, about 1618 months from now have this project finally finished. You know, the big challenging thing in this part of the world is financing. But it's really hard to get financing or affordable financing.   Michael Cobb (00:07:42) - Let me say it that way. Yeah. And so we took our time and we would not start a project until it was fully funded. I think a lot of challenges are people start these projects are kind of betting on the. Com. Right. Oh well we'll figure it out later. And we don't operate that way. We've been around for yeah 28 years. And so we're very very conservative. And until we had all the money to build the hotel, the resort, we did not start. And so we kicked it off last January. It was just down there last week. Steel is arriving. The superstructure is already going up. Yeah, man. It's just so nice to see it really coming to fruition. But you know, it's prudence and patience to take our time, make sure we have all the funding and then launch so that what we start finishes. And that's really been our mantra for almost three decades now.   Keith Weinhold (00:08:27) - Make it up, make it real, make it happen. In the largest town there on Ambergris Key, Belize, just a few decades ago, it was still this sleepy fishing village.   Keith Weinhold (00:08:37) - And with the setting that that island has and all the great snorkeling and everything else, it's really become popular and is boutique hotels grew into larger hotels. Yeah, it was probably, what, ten years ago perhaps, that you saw some of these big brands start to take more of an interest, like Hilton and Marriott, in branding the buildings what is.   Michael Cobb (00:09:00) - And, you know, I give a presentation called Why Belize, Why Right Now? And you nailed it there when you talked about the timelines. Right. And how a country or a region, it's not even a country in this case. Ambergris key. It's very specific. Right. How ambergris Key Belize has moved through this timeline, this path of progress. And at some point it goes from being a niche market or a no name market to a niche market, to a boutique market. And then all of a sudden, you're right, at some point the brand start to pay attention and then you move into popular acceptance and really mainstream tourism. And so, right.   Michael Cobb (00:09:31) - The cruise ships started going to Belize about 15 years ago, which put Belize as a country into the mind of a more mainstream traveler. And then you're right, about eight, ten years ago, the brand started to pay attention. And we do. We have a Hilton, we have a curio by Hilton, we have an autograph by Marriott, our company, ECI. We picked up the best Western franchise, and so we operate a Best Western on the island for that middle class market. And then Marriott, obviously, for the very high end traveler who wants an oceanfront 4 or 5 star kind of property. So yeah, but the brands are paying attention. And by the way, we're just seeing the beginning of that happening. This popularity curve Belize has entered what I would call the fast growth period. And over the next five, maybe eight years, we're going to see incredible growth in the tourism industry. Airlift is up. JetBlue just started flying down. So we're starting to WestJet. So we've got Canadian Air.   Michael Cobb (00:10:22) - We've got a discount carrier southwest. So when those things start to happen what you see is a market dynamism that's you know really it's exciting and it's going to change. Very, very rapidly. The pace of change is going to grow rapidly as well. So great time to look at Belize. If folks are interested in sort of that positioning in the path of progress in the marketplace.   Keith Weinhold (00:10:43) - Each time I visit Ambergris Key, Belize, the level of development increase is palpable. And, you know, this is an opportunity for a US or Canadian buyer or a buyer from outside that nation to come in. And it's just a very easy step with the English language and the common law in Belize, where you can invest yourself in this Marriott project that Mike discussed. Now, Mike, a while ago, to change topics, you recognize that the world has been really deforested and losing its valuable teak hardwood forests so continuously since 1999, you've offered a program so that individual investors at a really affordable price. We'll get to that price later.   Keith Weinhold (00:11:30) - They can own quarter acre parcels with the property deeded in their name, and reap the benefits and returns from the growth of the teakwood on top of the land. And now this is pretty novel, because for hundreds of years, only the hedge funds and super wealthy had access to an investment like this. So get us up to date with what you're doing on the teak hardwoods, because I know that so many of our listeners and viewers have already gotten involved.   Michael Cobb (00:11:56) - They haven't really. Thank you for being one of the people who put the word out there. Right? Because most people don't even know you can own teak or let's just back it up and you say, own timber, right? You start there. You're right. Only the super rich land barons, hedge funds. Those are the people that have always owned timber for centuries. Right. And so I think in most people's minds it's like, oh, I can't even get there. How would I even do that? Right. Well, then you take it overseas and you take it into something very, very specific, like teak timber.   Michael Cobb (00:12:25) - That's just not on anyone's radar. So. So you have done a great job. Thank you for getting the word out to just let folks know that this is something that they can do. So quarter acre teak parcels. We are now on our third plantation in Panama. We have one in Nicaragua as well. And so we're in our third plantation in Panama. Just because of the incredible number of folks, well over a thousand folks now who have decided they want to invest in own teak. You said something really interesting, Keith. You said you get to own the land, you get title to land and you get the harvest of the trees. That's absolutely correct. But it gets better because when the trees are harvested, they get replanted. And then the next generation of people your children, your grandchildren, whoever that might be, get the next harvest. But because you still own the land and the trees are replanted, a third harvest, you know, and a fourth harvest. So what you've really created with teak ownership is generational wealth stewardship.   Michael Cobb (00:13:24) - And that is something that's just so far beyond the comprehension of so many people that it can be so easy and so affordable to do.   Keith Weinhold (00:13:32) - I'm an investor myself in producing land like this in Latin America, so I know what some of my reasons are for being interested in this. And yes, it's more than the fact that I'm just a geography guy. It's the fact that I know I'm diversifying in multiple ways at the same time, a different product type in residential real estate. And I'm getting international diversification in a different nation, for starters. So are those some of the reasons that you see for why so many people are interested in teak investing like this? What are their reasons?   Michael Cobb (00:14:05) - Yeah, I think you've nailed a big part of it, which is the hard asset. A lot of folks, your listeners, readers in the news that are right, I mean, hard assets are important. I hope more people recognize that. Right. And more and more people are, thank goodness. So hard. Asset real estate being this particular hard asset.   Michael Cobb (00:14:22) - Right. And then the international diversification, one of the challenges we have is us, especially in Canadians to some degree, is that we kind of locked into the US system like we can own, say, Toyota stock, right? Japanese company, we can own Nestlé, a Swiss company, but generally we're doing it on the New York Stock Exchange. And so even if we own an international stock, it's still the US basket are still the Canadian basket that we hold it in. Right. And so when you physically own a titled property outside your home country, you have now truly diversified internationally. And there's a lot of prudence in that. And even just tiny little percentages of your portfolio, 5% of your portfolio, 10% of your portfolio outside your home country and hard assets is prudent because you want some other baskets for those nest eggs. Antiqued because it's such a low price point of entry with a huge yield, by the way, that it has become very, very popular for folks who want that international diversification in a hard asset.   Michael Cobb (00:15:23) - But to have the true international diversification because it's a physical asset outside your home country. And then I. Just say this and we can pick up on the theme or not. The other reason that people are looking at teak in Panama and Nicaragua, by the way, both countries, is because of the availability or the qualification for a visa for a second residency. And a lot of times people look at that as a plan B, if we kind of think maybe the US is going off the rails or Canada or wherever your home country is at, or it could go off the rails. Doesn't have to be now. It could be going off the rails in the future. You sort of that Boy Scout mentality of, you know what, I want a plan B, and if we have a second residency outside our home country, we now have an option. If we don't like the way things are going or where they get to, we can actually pick up and we can move and we have the right legal right, because we have a residency to live in another country.   Michael Cobb (00:16:17) - That's another reason that a lot of people have picked up the teak because it qualifies you for that residency. But I think the bigger reason is the international hard asset diversification. I think that's the leading reason people do it.   Keith Weinhold (00:16:31) - I want to ask you more about the residency shortly, but tell us more about the investment. We're thinking about maybe capital growth as the trees grow. And then what about the income?   Michael Cobb (00:16:42) - Sure. And so I think let me back it up. A lot of people think in cash flow cycles, right? If we have a job, we get paid every two weeks. You know, you have a lot of folks that have invested in properties. We get a monthly rent check, right? Or if we have stocks, maybe we get a quarterly or annual dividend. Right. So those are the what I would call the common time frames that we think about in cash flow. But what the Uber wealthy, what the hedge funds, what the family offices, what the endowment for places like Harvard, Yale, these big institution or big institutional thinkers have known for centuries is that there are actually other cash flow cycles that are largely ignored by the what I would say, the average investor.   Michael Cobb (00:17:21) - And those cash flow cycles are much longer. Teak, for example, is a 25 year cash flow cycle, right? You plant the trees and in 25 years you harvest them. You plant them again, not them. You plant new ones, right? In 25 years you harvest those and then so on and so on. So what you're creating is this 25 year cash flow machine. Now the kinds of returns are truly outsized. I mean you're talking about double digit ers. Now a lot of people say, well Mike, that's great. But what happens if I need the money in year 15? You can't have it because there is no money in year 15. Your trees are still growing, right? So it's this weird investment timeline. It's almost flatlined until the very end. And then it jumps way up and then it drops back down to a flatline again. And so it'd be silly to put tons of money into teak unless you had thousand times tons of money, right? But for some small piece of your investment portfolio where you have enough cash flow coming in from your maybe your job, your rent, your dividends, whatever, that a small piece that moves into this 25 year cash flow cycle with the thought process that this is how I steward wealth into the future, to children, grandchildren, great grandchildren, because the 25 year cycle is almost generational, right? In fact, in the US, it probably is generational because we're having children in the ages of, you know, 25 to 30.   Michael Cobb (00:18:44) - So it kind of starts to line up with generational income as opposed to, you know, sort of that whatever biweekly, monthly, yearly income. So it's just a different cash flow cycle.   Keith Weinhold (00:18:56) - That's right. And I brought up before that, when you think about the growth of one of your investments, you now get to think about it in two ways. If you own a duplex, it might have growth in its price. However, it doesn't grow into a fourplex and have growth in its price. However, with teak, you might have an increase in the value of the wood, perhaps on a board foot unit basis, and at the same time it is growing in height and volume.   Michael Cobb (00:19:26) - Absolutely no. That's a cute way to say it. I never really thought about a duplex growing into a fourplex, right? That's good. Exactly. And so what you do, you're right. You have the physical growth of the trees. And we have located our plantations in the optimal growing conditions, fatigue. And they are very known.   Michael Cobb (00:19:42) - Right? I mean, the British started plantation growing teak 350 almost 400 years ago in Southeast Asia. And so the Brits have just meticulously kept statistical records of every plantation that they were involved with the altitude, soil type, rainfall, temperature, on and on and on. And so it's really well known exactly where teak will grow well, and both where we have our plantations, it does Nicaragua and Panama, and we'll stick on Panama today, but the locations are dead center bull's eye locations for the best optimal growing of teak. So you have this growth of a physical thing, right. But you mentioned the board foot price. And by the way, the track record on teak being grown in plantations is 350 years. So what a track record, right? But since 1970. Two. The average price of teak over 5152 years has been 5.5% a year. That's the growth in the price of teak, right? And so you know who knows the future, right? I mean, the future is the future, right.   Michael Cobb (00:20:44) - But if a 50 year track record on a 5.5% increase in the value of the teak itself is pretty powerful, right? That's the long track record of nice growth. And when we factor in our teak into our business plan, we take that 5.5 and we make it zero. We just say, what if there is no increase in the price of teak over 25 years? How much will the tree grow? And if that tree is cut down and is sold as lumber? When we'll talk about our Solomon in a minute. If that tree is sold as lumber, what's the value of that lumber today? And what will the tree be worth in that value 25 years from now? And so if things do continue to increase at 5.5% a year, that's just all gravy. And that just starts to take that rate of return and just ratcheted up even further.   Keith Weinhold (00:21:33) - Teak has a number of physical properties that make it valuable, from its beauty to its fire resistance and more. Mike has now touched on a few interesting things.   Keith Weinhold (00:21:44) - We'll come back and talk about that soon, including how you can achieve residency in Panama by owning teak, what the risks are, and more about their sawmill that he just mentioned, adding value to the operation there. And then we're going to talk about what the prices are. We're talking with ECI Development Chairman and CEO Michael Cobb more when we come back. I'm your host, Keith Wynn. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns, or better than a bank savings account, up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love.   Keith Weinhold (00:22:52) - For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six. Role under this specific expert with income property, you need Ridge Lending Group and MLS for 256 injury history from beginners to veterans. They provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com.   Speaker 5 (00:23:49) - This is the Real World Network's Cathy Fekete, and you are listening to the always valuable get Rich education with Keith Reinhold.   Keith Weinhold (00:24:06) - You're listening to the SOS created more financial freedom for busy people just like you than nearly any show in the world. This is guitarist education. I'm your host, Keith Whitehill. We're talking with ECI development chairman and CEO Mike Cobb about teak hardwood investing in Panama and Nicaragua.   Keith Weinhold (00:24:22) - Like, tell us more about how one can achieve residency, for example, in Panama if they own teak there maybe just how residency varies from citizenship?   Michael Cobb (00:24:33) - Sure. Well, why don't we start with the second part, how residency differs from citizenship. And there's a good place to start. You know, citizenship is you become a citizen of the country. You have a passport, you can vote. You have every legal right of that country. Right. The decision would have residency to use a US term is like a green card, right? It's the legal permission to live in that country for some period of time. Many of them are permanent. In fact, Panama's is permanent. So once you have a Panama permanent residency, you could literally pick up, you could move there tomorrow, and you could live for the rest of your life in Panama. And so it gives you the legal right to live there. But you don't have a passport. You can't vote. I guess that's the main difference, right? You don't have a passport, you can't vote.   Michael Cobb (00:25:18) - But for most people, in fact, the overwhelming majority of people, a residency delivers exactly what somebody wants, which is the ability to live somewhere. Right? And we don't care if we vote or not. I mean, right, we'd still be citizens of our home country, US, Canada, or wherever we can vote back home or citizen. We have our passport from those countries, but the right to live somewhere else is powerful. And so the teak in Panama qualifies you in two ways for two quarter acre parcels, and then the legal fees and stuff like that. It's just under 22,000. A little less gives you permanent residency in Panama. Right? That's such an affordable way to be able to I call it the back pocket. Right. The insurance policy or the plan B in the sense that, like, I think a lot of folks are worried about the direction things are headed. And, you know, you have the teak parcels, which are going to produce a tremendous return. And then this byproduct that you qualify for and you have to go, you have to get down there a couple times.   Michael Cobb (00:26:16) - I mean, there's a little bit of administrative stuff, some legal fees, that's all included in that 22,000. Right. So that's all included. You have to go there a couple times. So there's a little bit of friction I would say. But when you get finished with that friction, you are a permanent resident of Panama and you only have to go there one day every two years. So you fly down every other year, whatever. Go, go talk to your trees, maybe sing to your trees a little bit, whatever you want to do and fly. All right. And you have a permanent residency. So it's a very easy, fast way to get that plan B now in the future, if you ever said, well, I really love Panama, I'd like to live here. Panama is beautiful. The city itself, it's got skyscrapers, apartments on the 50th floor of use or killer. You can be out on the beach or somewhere. You can be up in the mountains. So there are a lot of different climates and geographies in Panama where you might say to yourself, yeah, I think I want to come down here and live someday.   Michael Cobb (00:27:09) - Well, you already have your residency. You already have the legal right to do that.   Keith Weinhold (00:27:14) - Yeah, I mean, 100%. Now, Panama isn't predominantly English speaking like Belize is, but Panama just has a lot of inherent familiarity and feel to a lot of Americans. Since the canal is there and there is that strong American presence, and they've even dollarization their economy there, for example, in Panama. So it might be that nice plan B for you. And tell us more about the residency and the investment into the sawmill and how that works. So it sounds like there's now a value added component is you essentially vertically integrated and now have this sawmill with the teeth. Tell us more about that.   Michael Cobb (00:27:56) - So we've always factored in the sawmill into the investment proposition. Because if we were to just take the logs for example, 25 years, you cut down the trees, you stick the logs in the container and send them off to China or India, which is where most of the logs go. The return on investments.   Michael Cobb (00:28:13) - It's not great, it's okay, but it's not great. The way you actually get a phenomenal return on investment is you take those logs and you turn them into lumber, which has about a 3 to 4 x differential, or what we call first stage end product or simple end product, which would be something like flooring, which is basically lumber that's been finished one more level rooted and bulldozed so that you can put them together right on a wood floor. So those two modifications from the log all the way to the first degree of finished product, the returns start to really jack it up into that double digit IRR right over 25 years, which again is phenomenal. So we talked about price. But just to give an idea, a $7,000 quarter acre parcel at harvest turned into lumber and first level finished. Product turns into about $94,000, right? So 7000 turns into $90,000, which is a tremendous return. But the way you get that return is to deliver to the marketplace lumber and first grade finished product. And so Soma has always been part of our business plan.   Michael Cobb (00:29:19) - Well, we are now two years away from our harvest on our first plantation, the one I planted back in 1999. Right? I mean, it's incredible thinking that, you know, 20, gosh, 24 years ago planted a teak plantation. So we're two years from harvest. We have one more set of kind of odds and end thinning of just trees that didn't quite grow. Right. We're going to use those thinning over the next couple of years to practice in our sawmill. Because you know what? We are going to make mistakes. I mean, you don't ever get it right the first time. So we're going to make mistakes. We're going to learn from them. And by the time we actually do the real harvest of that first plantation, 100 acres of teak, two years from now, we will be up to speed with our sawmill will size up, we'll capacity up to do that. But yeah, so folks can actually we have a $2 million opening in the sawmill. And it's a real simple formula.   Michael Cobb (00:30:07) - It's two times your money and then a proportionate 10% interest in the sawmill. So for example, just rough numbers off the top of my head. You put in $100,000, you get twice your money back in about a 3 to 4 year period. As a sawmill really becomes operational. We take the first harvest, like the thinning, aren't going to produce much. In fact, we hope to just basically kind of break even over the next two years while we practice. Then we cut down 100 acres of teak. We start putting that through the sawmill, right? So you get two extra money, you invest 100 to get back to 100, and then your return would be about 13 or $14,000 a year. On going after that, because you get a 10% carried interest in the sawmill into the future as well. So that's the investment opportunity that produces a shorter cash flow, much tighter on the cash flow. But then a nice trailer for many years. But the investment is 100,000. So it's a more significant investment than, say, somebody wanting a little bite sized piece of a quarter acre parcel or two quarter acre type parcels paired with the residency that gets you that.   Michael Cobb (00:31:13) - So a couple different levels of investment depending on what your goals are, but also what your timelines are.   Keith Weinhold (00:31:19) - We described the sawmill investment numbers there. And then just to clarify, on the quarter acre parcels, they cost $7,000 each with an expected value or return of $94,000 after 25 years.   Michael Cobb (00:31:37) - That's correct. 6880. I'm using round numbers, but 6880 is the quarter acre teak and right at harvest when it processes through the sawmill. A little over that, but $94,000 is returned to the investor along the way. I'll mention this. There are maintenance fees. It's about $150 a year. We just take a credit card. We just tap it once a year. That takes care of property taxes, thinning, cleaning, anything that they have to do with the plantation. So $150 a year, your maintenance fee. But yeah, 6880 turns into 94,025 years. If teak continues to go up at 5.5% a year, the return would be better than that.   Keith Weinhold (00:32:16) - You probably have investors that come in oftentimes from North America, maybe some from Europe, and they see this as a really low cost of entry, $6,880 for one quarter acre parcel.   Keith Weinhold (00:32:29) - So are there any risks that one should consider? Therefore, if they're a first time investor abroad, maybe something they're not thinking about if they buy a rental single family home in their own hometown?   Michael Cobb (00:32:41) - Yeah. Very different. I mean, in some ways it's very different. In other ways it's pretty similar. Right. You're going to get title to the property. The process of getting title will be a little different. You're going to have to send in copies of your passport, a notarized utility bill. Just some things that you wouldn't have to do if you were buying a property in the States. But at the end of the day, you will get what's called Escritorio Publica public title. So it's a registered land deed. And so that part of it's all pretty similar risk factors. Absolutely. The business plan has them in there. But the big ones are any kind of disease. It's monoculture. So I mean a disease could come through and kill all the trees. Right. The good thing there is, again, teak has a 350 year track record of being managed and grown in plantations.   Michael Cobb (00:33:24) - So it has a long track record where they've kind of figured out, well, if this happens, then do this or if this pest comes along. This is how we, you know, we mitigate that, but nothing can mitigate all risk. That fire is an interesting one. Fire is a risk in the first three years of teak. So we call it baby teak. But once the tea trees are 3 to 4 years old, they're really above any kind of fire. Because you clean the plantation and the guys are in there with the machetes chopping to keep the, you know, the brushed and grass down in the dry season, which, by the way, you mention the qualities of teak, the hardness of teak is actually the most. Prized quality. And so the hardest of the teak that we get will actually be taken and sold as marine lumber, which is an unbelievable differential in price. But only 5 to 10% of your teak would qualify as marine lumber. So it's a small percentage, but the value of that is very, very high because it's set to hardwood.   Michael Cobb (00:34:20) - But the rest of the tree is also likewise very hard. The dry season is what cures the teak. And so in the dry season teak drops its leaves. And so it's very resistant to fire. If you do good maintenance on the plantation, we do so fires only a risk really in the first three years. And we actually warranty the trees of a fire comes through. In the first three years. We replant the plantation for any parts that are burned. So there's sort of a warranty that comes with the first three years. I mean, the other risks are political risk. What if Panama goes off the rails? The good thing about Panama, it's got the canal. And that is a major, vital strategic US interest. I just don't see the US letting Panama kind of go off the rails. But it could. But those I think are the three what I would call main risk factors. And we mitigate those to the best way possible.   Keith Weinhold (00:35:13) - You heard Mike mention about the thinning and cleaning. Yes, there is ongoing management, but that is already handled and taken care of in any of the prices that you already mentioned.   Keith Weinhold (00:35:24) - Is that right, Mike?   Michael Cobb (00:35:25) - Yeah, correct. And we outsource to a company called Geo Forest. All Geo Forest, all. They've been our plantation manager from since 1999. And and they're phenomenal. What they do, their world class. They've been doing it for longer than 25 years, maybe 30 years at this point. But we outsource what we have to outsource because we're not management plantation managers. So we can find folks that are.   Keith Weinhold (00:35:47) - The same property manager for a quarter century, a property manager that actually doesn't get fired. Hey, that's a novel concept. Two times two is what some investors back here in the U.S. are thinking with their residential real estate investments. If you want to learn more about this investment, I encourage you to check it out. You can do that through Gray Marketplace at Gray marketplace.com/teak. Mike, do you still offer tours.   Michael Cobb (00:36:16) - Oh my goodness yes. And I hope that you will take us up on the opportunity to come down and see the dairy and province. But yes, we do.   Michael Cobb (00:36:24) - And I don't know the dates off the top of my head, but for folks who are interested, uh, two things. One, we actually run a tour that's fun because it's a group of people and it's just, you know, you come down and you do it. But if somebody says, hey, I can't make those dates, but I want to come see the trees. Yeah, it's very reasonable. I think it's a couple hundred bucks. They pick you up at your hotel, they'll run you out to the plantation, bring you back. But it's a whole day. I mean, it's four hours outside of Panama City and four hours back, so it's a long day. And if it's a couple, it's still 200. It's basically for the vehicle out and back. Right? The driver and the vehicle. So you can come anytime or you can come with a group. And if you come with a group there is no charge. I mean, we get the van or the bus and we pay for it all.   Michael Cobb (00:37:03) - And yeah, we make peanut butter and jelly sandwiches and we have fun.   Keith Weinhold (00:37:07) - All right. Well, I think people have probably covered for the tea more than the sandwiches, but that is a nice touch that you do for people because you do that whether someone is a great investor or not, whether they haven't invested at all yet, and they just want to go ahead and check it out. And you can learn more about those dates at GR marketplace.com/teague Mike, it's always such a fun chat to discuss something so exotic. It's been great having you back on the show.   Michael Cobb (00:37:34) - Nice to be back with you. I look forward to seeing you in Panama one of these days.   Keith Weinhold (00:37:43) - Trees grow through recessions, they grow through market cycles, they grow through Covid, and trees just keep growing through every single fed rate decision. The wealthiest families on the planet, the top 1%. They have locked up vast portions of their wealth for timeframes even longer than the 25 year peak harvest cycle. In fact, Harvard has fully 10% of its endowment, specifically in timber.   Keith Weinhold (00:38:11) - To follow up on what I asked earlier, as we're discussing non-residential real estate today, Earth's highest point above sea level is Mount Everest. The highest from base to peak is Monica. But Earth's highest piece of land, uh, the highest point is measured from the center of the Earth is Chimborazo Volcano, Ecuador. That's because Earth is not a perfect sphere. But there's an equatorial bulge. That's what I was climbing ten days ago. Earth's highest real estate, Chimborazo, was also there for the closest real estate to the sun and moon. But back down here at a lower elevation where the teak plantations are in Panama and Nicaragua, there are no loans for teak. But at prices under seven K, many GRI listeners have found that they don't need a loan and they have bought ten or more parcels. But you can buy as few as 1 or 2 a quarter acre teak parcels and then later cash it out for yourself or build that wealth legacy for your family. Kind of like the top 1%. If it sounds interesting to you, learn more.   Keith Weinhold (00:39:22) - Get started at GR marketplace.com/t. Until next week. I'm your host, Keith Wild. Don't quit your day dream.   Speaker 6 (00:39:34) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively. The.   Keith Weinhold (00:40:02) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

You’ll get an exact mortgage rate prediction from the President of the lending company that’s provided investors with more financial freedom than anyone in the nation.  Learn how to best access your equity, yet keep your low mortgage rate first loan untouched. In this Get Rich Education podcast episode, host Keith Weinhold and guest Caeli Ridge, President of Ridge Lending Group, delve into the direction of mortgage rates.  They highlight the importance of understanding today’s environment and discuss refinancing opportunities in the current market.  Caeli outlines various loan products available to investors and predicts over 50% of appraisals now come in high, indicating strong future valuations.  She also forecasts higher mortgage rates to persist, with a possible Fed Funds Rate reduction by June and a 6.125% rate for 30-year fixed mortgages, non-OO, with 25% down, by the end of 2024.  The episode emphasizes education and strategic planning in real estate investment. I get my own loans at Ridge. You can too at RidgeLendingGroup.com Timestamps: The impact of inflation on real estate investing (00:00:00) Discusses leveraging properties to increase wealth, the relationship between mortgage rates and real estate, and the impact of inflation on property values. Understanding the importance of mortgage rates (00:03:52) Explores the neutral relationship real estate investors have with mortgage rates, the impact of mortgage rates on home affordability, and the significance of current mortgage rates. Historical perspective on home price affordability (00:06:18) Provides insights into the historical trends in home affordability, comparing past and current median home prices and the impact of inflation on home values. The power of leverage in borrowing (00:10:14) Illustrates the impact of inflation on loan principal balances and monthly mortgage payments, emphasizing the benefits of optimizing borrowing. Mortgage rate prediction and refinancing trends (00:16:57) Discusses the future direction of mortgage rates, refinancing trends, and the importance of considering interest rates in the context of overall investment strategies. Explanation of high points charged on investment property loans (00:23:12) Provides an explanation for the high points charged on investment property loans, related to the servicing of mortgage-backed securities and the absence of prepayment penalties. Accessing Equity with HELOC and HE Loan (00:24:21) Discussion on accessing equity using keylock and HE loan, including LTV ratios and interest rate comparisons. Trade-offs Between HELOC and HE Loan (00:25:27) Comparison of trade-offs between keylock and HE loan, including flexibility and interest payment structures. Considerations for Second Mortgages (00:26:36) Exploration of the benefits of having a second mortgage as an option and the potential drawbacks related to minimum draw requirements. Blended Mortgage Rates (00:27:56) Explanation of how to calculate blended mortgage rates based on the balances and interest rates of first and second mortgages. Appetite for Adjustable Rate Mortgages (00:28:44) Assessment of the current environment for adjustable rate mortgages and comparison with fixed-rate mortgages. Obstacles for New and Repeat Investors (00:29:45) Common obstacles faced by new and repeat real estate investors, including understanding investment goals and managing debt-to-income ratios. Forecast for Mortgage Rates (00:33:45) Prediction for future mortgage rates based on inflation indicators and the potential impact of the Fed's decisions. Loan Types Offered by Ridge Lending Group (00:35:54) Overview of the various loan types offered by Ridge Lending Group, including Fannie and Freddie loans, non-QM loans, and commercial loans. Resources and Tools for Investors (00:38:03) Information about free resources and tools available on the Ridge Lending Group website, including simulators and educational content. Conclusion and Recommendation (00:39:38) Summary of the discussion with Caeli Ridge and a recommendation to explore the services offered by Ridge Lending Group for real estate financing needs. Resources mentioned: Show Page: GetRichEducation.com/489 Ridge Lending Group: RidgeLendingGroup.com Call 855-74-RIDGE For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. A new take on how to profit from inflation. The best strategies for accessing equity from your property while leaving your low rate loan in place. A surprising trend with real estate appraisals. Then the president of one of the most prominent national mortgage companies joins me to give a firm mortgage rate prediction today on get rich education. If you like the Get Rich Education podcast, you're going to love our Don't Quit Your Daydream newsletter. No, a eye here I write every word of the letter myself. It wires your mind for wealth. It helps you make money in your sleep and updates you on vital real estate investing trends. It's free sign up egg get rich education.com/letter. It's real content that makes a real difference in your life. Spice with a dash of humor rather than living below your means, learn how to grow your means right now. You can also easily get the letter by texting GRE to 66866. Text GRE to 66866.   Speaker 2 (00:01:11) - You're listening to the show that has created more financial freedom than nearly any show in the world.   Speaker 2 (00:01:18) - This is Get Rich Education.   Keith Weinhold (00:01:27) - Welcome to Gary from Oak Park Heights, Minneapolis, to Crown Heights, Brooklyn in New York City and across 188 nations worldwide. I'm Keith Weinhold, and this is Get Rich education. When you have that epiphany, that leverage creates wealth, it can be enough to make you want to be the town iconoclast. Walk around, beat your chest, and boldly proclaim that financially free beats debt free. You might remember that I helped drive that point home a few weeks ago when I talked about the old fourplex owner, Patrick, who owned his fourplex next to mine years ago. He wanted to pay his down and I wanted to leverage mine up. I told you then that rushing to pay off one property by making extra payments on the principal is like drilling a deep hole into one property. And the deeper you drill, the more likely that hole is to cave in. Your return goes down and now you've got more of your prosperity tied up in just one property, just one neighborhood and just one market.   Keith Weinhold (00:02:34) - The most sure fire way to wealth, and exactly what wealthy people do, is optimize and almost maximize the number of properties that you own. And as long as you buy right as they inevitably inflate, just keep borrowing against them. And that way you never have to pay capital gains tax either. And that goes beyond just real estate. That's assets of many types. You'll want to own more assets. The way to do that is with more loans. And paradoxically, that is why the richest people have the most debt. As you watch your debt column grow, watch your column grow even faster. And as we're talking about mortgages and the direction of interest rates today, us as real estate investors, you and I, we have a somewhat neutral relationship with mortgage rates. Yeah, it's often a neutral relationship. Now, prospective homebuyers, they often want mortgage rates to be low. Sellers often want rates to be low two so that they'll have more home bidders, legacy landlords, ones that own a bunch of property and they're not buying anymore.   Keith Weinhold (00:03:52) - They often want mortgage rates to be high because it hurts first time homebuyer affordability, and then it keeps the rents high and it keeps the occupancy high. And then you and I see we both own real estate. We also look to opportunistically put more in our portfolio. Well then we want rates to be high in a sense and low in a sense too. So you might have relative neutrality, feeling aloof about it all because you're thinking about it from both sides. But in any case, we can always predict the future. But the one thing that you know for sure is what you have now. A lot of people don't optimize their potential for what they have now. Instead, they speculate about the future. Now, one thing a lot of people have now is so many Americans are still loving their 3% and 4% mortgage rates they locked in 2 or 3 years ago, and they're refusing to give it up. However, over the past two years, when the number of real estate listings were at historic lows, a lot of life changing events have occurred in the past two years 7 million newborn babies with a need for a larger sized home and a desire to get out of the starter home.   Keith Weinhold (00:05:11) - Also in the last two years, 3 million marriages, including some of those marriages, are among older couples who now need to sell a home that can help solve the market. And then, of course, most home sellers. They also become home buyers. Next, they need another place to live. So home sellers, they often don't add a net one to the supply. We had a million and a half divorces, 7 million Americans turning 65 years old that might want to trade down during the retirement years and also during the last two years. Consider that there were 4 million deaths and 50 million job changes, some of those inconsequential, while others with fundamentally changed commuting patterns. So the point here is that life moves on. For some, though still a minority, but a growing minority, it is time to give up the three and 4% mortgage rate. Still not enough of them, but for better or worse, that is what it's going to take to move this market and put some available supply out there.   Keith Weinhold (00:06:18) - Now, today we have apparently finally just come off this period where home price of. Affordability had hit 40 year lows for 40 years for decades. Again, with low affordability, you dislike that if you're a home buyer or seller, you might feel neutral about low affordability as a landlord or a real estate investor because it makes your new purchases less affordable. But it keeps your renters as renters when you buy that income property. From an affordability standpoint, the very best time to buy was 2013. Yep, 2013 is when prices hadn't fully recovered from the GFC and mortgage rates had fallen dramatically. Now, to open up that range in years, from an affordability standpoint, it was just a sensational time to buy a home or property from 2009 to 2021, just historically extraordinary, that sensational affordability level during that decade or so, 2009 to 2021, that added to the exceptional rise in home values over end since that time. But yeah, a few months ago, affordability reached its worst level in 40 years and it has since improved.   Keith Weinhold (00:07:43) - I mean, 40 year lows in affordability reach then in 1984 and what happened in 1984, that is when Ronald Reagan defeated Walter Mondale for his second presidential term. Steve Jobs launched the Macintosh personal computer. John Schnatter opened the first Papa John's store in Indiana. LeBron James was born in 1984, and on television running were The Cosby Show and The Dukes of Hazzard. Hey, if you were alive then and you watch those shows, um, I know you wouldn't confess to watching Charles in Charge back then, and you'll never get back those socially redeeming hours that you spent watching Punky Brewster, and you would not admit to doing that either. What is this show, the Jeffersons still on TV in 1984? Look into that. Yeah. You know, that was kind of a real estate ish show. The deluxe apartment in the sky. Yes. It was on then. Yeah. Sherman Hemsley, Isabel Sanford Q that up.   Speaker UU (00:08:55) - Where we're moving on now? All up to this island, to a deluxe apartment in the sky.   Keith Weinhold (00:09:06) - Yeah, they even had the episode where the landlord came over and threatened not to renew their lease. I'll tell you. Has there ever been a television show in history where the landlord was depicted as a good guy? I mean, a landlord in television, they're always cast is a money hungry bad guy that won't fix anything, or is just trying to unscrupulously kick out the tenant, a slack jawed slumlord, every single time. I never really understood that show's theme music, either Beans or Burden on the grill or something. Let's get back to mortgage loans. Understand this. It might be in a way that, okay, you've never thought about it before. It's the power of leverage in borrowing. Now, you probably won't hold any 30 year fixed rate loan all 30 years in reality, but they'll make this effect clear. Let's just act like you have done this on a property. Now the median home price is near 400 K today. But what was it not 40 years ago, but in this case 30 years ago? All right.   Keith Weinhold (00:10:14) - So 1994, per the Fred numbers, which are sourced from the census and HUD, it was 130 K. Yes, a 130 K median priced home in 1994. So then if you put a 20% down payment on that property, you'd have a loan principal balance of 104 K. Now imagine it was an interest only loan somehow, and you still just owed a 104 K balance on that home today, whose median price is up to 400 K. Well, that 104 K. That just seems like a little math that you could almost swat away. I mean, this is how inflation makes the numbers of yesteryear feel tiny. But now if you're 104 K loan were an amortizing loan and the principal were being paid down to hopefully all principal pay down made by the tenant. During all those years, mortgage rates were 9% back then. So if you were making the final payment today on what's now still a median priced home, today your mortgage payment would just be 837 bucks a month. It feels like nothing. Inflation benefited you both ways on the total principal balance and the monthly payment.   Keith Weinhold (00:11:35) - Just feeling lighter and lighter and lighter in inflation adjusted terms now. And if your mortgage rate were 6% on that property, your payment would only be 623 bucks. You might have refinanced to something like that. I mean, 623 bucks. That is lower than the average new car payment today of 726. But if you had not gotten that loan back in 1994 and instead would have paid all cash for the 130 K property, were you 130 K all cash that was put into the property back then? Well, that would have had the purchasing power of today's approximately 400 K reflected in the price of today's median priced home. But to take it back ten years further to 1984, the George Jefferson year, the median home price was 80 K and your loan would be 60 4k. I mean, these numbers feel like little toys or almost lunch money or something. So this is the power of optimizing your borrowing and perhaps but not quite maximizing your borrowing power because that does risk over leverage. That is the inflation profiting benefit that you're feeling right there.   Keith Weinhold (00:12:59) - Coming up in just a few minutes, the president of one of the most prominent national mortgage companies for investor loans will be here with me. We're going to talk about mortgage rates some more, the overall temperature of the mortgage market. And I expect that she'll give a firm mortgage rate prediction for where we're going to be at year end, because she's done that with us before. They see so many investor loans in there at their lending companies. They've really got a great pulse on the market. We have set up the makeshift gray studio again for yet another week. Here is this week I'm in Nevada, where I will be the best man at my brother's wedding. I have been on the road a lot lately. That's what a geography guy like me does. Gotta get out and see the world. Life is meant to be lived, not postpone. Before we discuss both general and some intermediate Murray's concepts shortly. If you happen to be new to real estate investing. And you just like to listen to that one episode that tells you, step by step, how to get started and how to build your credit score and make an offer on a property, and best navigate the inspection process and the property appraisal inside the management agreement and more.   Keith Weinhold (00:14:15) - You can find that on get Rich Education podcast episode 368. It's simply called How to Buy Your First Rental Property. More next. I'm Keith Reinhold, you're listening to get Rich education. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns are better than a bank savings account up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation.   Keith Weinhold (00:15:24) - If you want to invest where I do, just go ahead and text family to six, 686, six. Role under the specific expert with income property, you need Ridge Lending Group and MLS for 256. In gray history, from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four plex's. Start your pre-qualification and chat with President Charlie Ridge. Personally, though, even customized plan tailored to you for growing your portfolio. Start at Ridge Lending group.com. Ridge lending group.com.   Speaker 3 (00:16:12) - Hi, this is Tom Hopkins, and I can't tell you how smart you are to be with get rich education and make these ideas you.   Keith Weinhold (00:16:32) - What is the future direction of mortgage rates? How do you qualify for more mortgage loans at the best terms with the lowest interest rates, and Americans have at near record equity levels in their properties? So what's the best way to access that equity yet? Keep your low rate mortgage in place. We're answering all of that today with a company president that's created more financial freedom through real estate than any other lender in the entire nation.   Keith Weinhold (00:16:57) - That is, the top tier and eponymous ridge lending group is time for a big welcome back to Charlie Ridge. Keith, you flatter me. Thank you very much.   Caeli Ridge (00:17:07) - I'm very happy to be here, sir. Good to see you.   Keith Weinhold (00:17:09) - Well, you help us here because debt and loan are our favored four letter words around here at gray. Can you help us efficiently optimize them both, Charlie? Interest rates have just been on so many people's minds. Shortly after, they had their all time low in January of 2021, and they since rose and then have settled down. Charlie, I've been trying to think through myself why people seem to put this over emphasis on the interest rate now. It's surely important. It is your cost of money. But the way I've thought that people overemphasize the rate is because maybe people love to discuss the direction of interest rates, even more so than real estate prices in rents is because prices and rents nearly always go up in interest rates can go up and down. So therefore it's maybe more interesting for people to talk about.   Keith Weinhold (00:17:57) - I also think about how rates sort of tap into that human fear of loss by paying interest, trumping the triumph of gain through cash flow or appreciation. And then maybe as well, it's because higher mortgage rates, they mean higher rates of all types which permeate into all of one's life's debt. So these are my thoughts about why people maybe put an over emphasis on mortgage interest rates. What are your thoughts?   Caeli Ridge (00:18:23) - I'm sure there's probably something to that. And you're right, Keith. Interest rates are always the hot topic. Everybody wants to talk about interest rates. I think that overall though, it is a lack of education and there's a psychology to it. You and I have talked about interest rates at nauseam over the years, and I do understand, but I think you and I agree, because we live in this space and we're constantly looking at the math. They are probably third or fourth on the list of priorities. When you're deciding on if this investment is valid. For fitting into my goal box, I think it's more about getting information out there and informing the masses about interest rates, and doing that math to make sure that they're not just pigeonholing themselves into keeping a 3% interest rate, or not expanding their portfolio because they're afraid of giving up what they have and not really realizing the power of the equity, the tax deduction, the rent increases.   Caeli Ridge (00:19:15) - All of those variables are often ignored when people start talking about interest rates, until you start to have that reasonable, rational conversation that helps them identify what the math is. Because the math won't lie, right? The math will not lie.   Keith Weinhold (00:19:29) - Yeah, that's right. Things more important than interest rate with an investment property might be the price you're paying for that property, or the level of rent that's there, or even maybe knowing you already have a good property manager that you trust in that market where that property is. But of course, rates matter somewhat. Now we're going to get a future looking prediction from you later. But your last mortgage rate prediction, Charlie, you may not remember the details of it. It was made here on the show in November of 2022. That's when rates were 7%. Back at that time, you said that rates should keep climbing but at a slower pace, and that happened. And you predicted the peak by spring of 2023 of 7.625%. What happened is in October of 2023, they hit 7.8% per Freddie Mac.   Keith Weinhold (00:20:17) - So you almost completely nailed it because most everyone believes that that was the peak for this cycle. And if so, you're within a few months in just 2/10 of 1% of identifying the peak.   Caeli Ridge (00:20:32) - Thank you Keith. I appreciate that acknowledgement. I get it right a lot. My crystal ball has been broken several times over, especially the last couple of years, so I'll want to acknowledge that too. I pay attention to the fed and as a good friend of mine is always saying, don't fight the fed if you are listening to what they're saying, actually listening to the words that are coming out of their mouths, it's not too terribly hard to kind of predict where we're going to be in certain milestones of any given year. So I do have a good prediction for this year. We'll share later. As you said, rates are not completely irrelevant. I just want to impress upon your listeners that they really should be looking at the investment holistically, and not just laser focused on that interest rate. There's more to it.   Keith Weinhold (00:21:15) - That was excellent. You have more audacity than me when it comes to predicting interest rates. It's a business I typically stay out of, so I'm going to outsource that to you later. I'll predict things like real estate prices, but I think rates are notoriously difficult. And what's happened with rates now that they have come off their peak substantially from back in October of 2023. What's happened with the refinance business, is that something that's picked up again there?   Caeli Ridge (00:21:39) - Yeah, we're starting to see a bit more. I would say that last year refi numbers were down right for obvious reasons. But we are seeing some more business in the refinance department. I think depending on the individual and largely the strategy of the investment, the long term versus the mid-term versus the short term, we're seeing a little bit more on the refi side for the short term rentals than we are in the long term. But overall, yes, I would agree that they're starting to pick up. I may mention to Keith it might be useful for the listeners.   Caeli Ridge (00:22:06) - So while I agree, we've seen that interest rates started on their descent, which was great news, everybody was excited to see that. We're still finding that the points that are being secured or paid on, especially investment property loans, are still on the high end of the spectrum. And for those that aren't aware of the why behind that, how might be important. Just to mention that when we talk about mortgage backed securities, the overall servicing of these mortgage backed securities that are bought and sold and traded on on the secondary markets, they're pretty smart in forecasting when rates are high, what happens to those mortgages? When they come back down, they start to refinance, right? They start to pay off. And the servicing rights of these loans take 2 to 3 years before they're even profitable. So the servicers and the secondary markets know that they have to charge those extra points to hedge their losses, because when the loans that they're paying for and servicing today are going to pay off in six months or 12 months, they're going to be at a loss.   Caeli Ridge (00:23:01) - If it takes them 24 to 36 months to be profitable. That's why investors are seeing especially investors are seeing extra points being charged on the loans that they're securing today.   Keith Weinhold (00:23:12) - Oh, that's a great explanation. And really, this is because there's no prepayment penalty associated with residential mortgage loans in the United States typically. So therefore, the person that's on the back end of these loans, the investor there needs to be sure that they're compensated somehow when one goes ahead and maybe refinances out of their loan at a presumably lower interest rate, maybe in as little as 12 months or so.   Caeli Ridge (00:23:39) - Yes, sir. Exactly right. Yeah. And prepayment penalties on conventional. There are no prepayment penalties on conventional. Just to clarify on a non QM product which of course we have to, you know, debt service coverage ratio products etc. on non-owner occupied those typically will have prepayment penalties. But the Fannie Freddie stuff, the GSE stuff no prepay ever.   Keith Weinhold (00:23:57) - Now the rates have come down presumably off their peak in this cycle. You know, I think a lot of people wonder about all right now, what's a prudent way for me to harvest my equity since we have near-record equity levels in property and yet keep my low rate mortgage in place? I think a lot of people don't even understand that you can do that and take a second mortgage to access some of that dead equity.   Keith Weinhold (00:24:20) - What are your thoughts?   Caeli Ridge (00:24:21) - I love a keylock in general. We do now have one of our newer product lines is a second lien lock. We have two options there. Both of them cap at 70% LTV. That's combined loan to value. So all you need to do to figure out what you're going to have access to is take the value that you think the property would appraise for times 70% from that number, subtract the first lien balance, and that will give you what your line on a key lock. Secondly, and position you lock would be. And I love it.   Keith Weinhold (00:24:49) - All right. So therefore if one has 50% equity in a property they could access 20% more up to that 70% CLTV. That combined loan to value ratio between your first mortgage and your second mortgage, which might take the form of a keylock a home equity line of credit.   Caeli Ridge (00:25:07) - Perfectly said. We also have second lien he loans worth mention. He loan is really exactly the same thing as your first lien mortgage. It's a fixed rate.   Caeli Ridge (00:25:15) - Second it's just in second lean position 30 year fixed. Those go to 85% CLTV. So you get quite a bit more leverage. But the rates are going to be on the 1,213% range.   Keith Weinhold (00:25:27) - That's interesting. Tell us about some more of the trade offs between the key lock, where we typically have a fixed rate period in a floating period afterwards, and the he loan some more of those trade offs as we devise our strategy.   Caeli Ridge (00:25:41) - Yeah. The key lock is variable right. The interest rate can change. As you said. The reason I prefer the He lock, if the numbers made sense, is that you're only paying interest on monies that you're using at that point in time. So if you had $100,000 key lock and you're only using 20,000 of it for whatever investment purposes or whatever, then you're paying interest just on the 20 that he loan is exactly as you would expect. You're getting all of that money at once, and you will be paying interest on all of it, whether or not you're using it.   Caeli Ridge (00:26:10) - There's less flexibility on a key loan. While it does provide extra leverage, I do generally prefer that he lock.   Keith Weinhold (00:26:18) - Now, sometimes a question that I've asked myself in the past, Charlie, when I was new as an investor, is sort of why wouldn't I take a second mortgage? He lock or he loan? Because I don't necessarily have to draw against it, but it might be good for me to have it as an option just to be sure that it's there.   Caeli Ridge (00:26:36) - Absolutely. Especially the key lock, because like I said, I will not pay interest on anything you're not using. And to have it when the time comes, right. If you want to be prepared, which I think is huge. We both agree there. The one thing I would mention about that though, is oftentimes on the helocs there will be a minimum draw at closing. You can put it right back after closing, but chances are there's going to be a 50,000 or 100,000 minimum draw, depending on what the line limit is.   Caeli Ridge (00:27:01) - Maybe 75% of the entire limit is what the minimum draw would be. But again, you can put it right back after closing. So maybe you pay 30 days of interest on that before you're able to to stick it back in the lock. Otherwise, it's one of my favorite strategies for investors and having access to those funds when the time comes.   Keith Weinhold (00:27:20) - That's an interesting piece there. So you as an investor is you're devising your strategy as you're looking at the equity position in your own home as well as your rental properties. Maybe you're looking at a low rate of, say, you have a 4% mortgage loan, but you've had a bloated equity position, and you go ahead and you take out a second mortgage in any of the forms of Charlie is talking about. And that second mortgage has, say, a 10% interest rate. Well, you don't simply take the 4% on your first loan and your 10% on the second and average it and say, well, now I'm paying 7%. Of course, you have to wait those averages.   Keith Weinhold (00:27:56) - It's pretty likely that you have a higher mortgage balance on your first loan than your second loan. So depending on their balances, therefore, if your first mortgage has a 4% interest rate and your second mortgage has a 10% interest rate, you're blended rate might be something like five and a half.   Caeli Ridge (00:28:10) - Exactly right. And there's all kinds of tools and calculators online. If somebody wanted to check that out you can find them very easily. Just the weighted average of mortgage rates. And you can plug in your numbers. It'll tell you exactly if you're using this amount or this amount or whatever it is, what your weighted average would be.   Keith Weinhold (00:28:27) - Yeah, definitely important for you as an investor checking your arbitrage and your cash flow. Certainly, Charlie, I wonder now that we are in an environment finally where rates have actually fallen, how is the appetite for arms adjustable rate mortgages looked in there?   Caeli Ridge (00:28:44) - We're still on what's called an inverted yield from the 0809 housing and lending kind of debacle, we found ourselves in a place where adjustable rate mortgage or arm's actually priced in interest rate higher than a 30 year fixed, creating that inverted yield.   Caeli Ridge (00:28:58) - We have yet to see the correction of that. So we're still kind of in that place where depending on the characteristics of the transaction, the arm might be a higher interest rate. Maybe it's about the same as the 30 year fixed. If there is a scenario where the arm is lower, it might be an eighth or a quarter of a percentage point. So it's unlikely that we would recommend an arm over a fixed. There'd be have to be some very specific circumstances. If it's only a quarter point improvement to rate for a five year arm versus a 30 year fixed.   Keith Weinhold (00:29:26) - Charlie, you deal with so many investors in there, both newer investors and veteran real estate investors. So when we talk first about the new investors, are there any just sort of common obstacles to overcome that you see in there for people that are looking to get their first investment property?   Caeli Ridge (00:29:45) - I think they're why a lot of times we'll have investors come to us and really not even understand more than they just don't want their money in the stock market anymore, and they want to find another venue or another vehicle in which to create their investment freedom, their financial freedom through.   Caeli Ridge (00:29:59) - So I would say for brand new investors, really start to ask that question, what is your why? What is it that you want to get out of this? Do you want total replacement income of your ordinary income today? Do you love what you do for work and you just want supplemental income? How much does that income need to be? Does it need to be what you're making today? Can it be a little bit less? Does it need to be more based on what you expect your lifestyle to be? So lots of different questions to be asking yourself. So I would say that commonly just really understanding at least a baseline. And then we can start connecting some dots together and planting seeds that I talk about a baseline of, of what it is that you're hoping to accomplish through real estate.   Keith Weinhold (00:30:37) - So that's what you often see with the beginning investor. How about that repeat investor. Their obstacles to overcome that are common in there on expanding one's portfolio. Maybe that's a debt to income ratio threshold that one reaches and you need to strategize with them there.   Caeli Ridge (00:30:54) - Yeah, the debt to income ratio problem ultimately when you get there is probably a good problem to have, right when you're having to have conversations that way. I think that the obstacles to overcome is making sure that you have a good support team, and I think that would start with your lender, someone that has a multitude of loan products that aren't just one size fits all. I would say that we check that box very well, but strategizing. One of my favorite conversations with my clients is having those strategy one on one calls about their debt to income ratio and figuring out from a scheduling perspective, how can we maximize their deductions, because that's one of the beautiful things about real estate investing, right? Is that schedule E so maximizing over there without it taking you over certain thresholds to continue to qualify, there can be a weighted scale there as well. And those are the conversations that we have with our clients usually earlier in the year. But we're always looking at our client's draft tax returns. That's important.   Caeli Ridge (00:31:47) - Before you ring that bell, get us copies of your draft tax returns so that we can run the math, and we'll even show them how the pluses and minuses work. It's pretty interesting to most people. And then come up with a solution that says, okay, if you want to do this for 2024, here are our recommendations X, Y, or Z. And then they can make the informed decision that fits what their goals are for the year.   Keith Weinhold (00:32:08) - Yeah, these are the scenarios that a mortgage loan company that specializes in income property loans can help you with your future planning. How can you set yourself up considering your personal situation, your tax deductions, how much income do you want to show, and all those sorts of things to give you more runway to add income properties to your portfolio. And you do see so many scenarios in there and so many investors. Sometimes when you're here, I like to ask you to get a temperature of the appraisal market. What percent of appraisals are you seeing coming high on and what percent are coming in low? Approximately.   Caeli Ridge (00:32:43) - We're probably over 50% on the high, but not by any large margin. I'll see 10,015 thousand regularly over what we had expected in the actual value. Pretty commonly, just right on the money, right on the mark. I think it's real market specific, to be sure. I don't see that the short values come in all that much. If it is, generally it's probably because the investor is brand new, didn't unfortunately talk to us in advance. They were doing the BR method and they didn't get the right comps or have the right advice about what that RV might end up being. So they got trapped in a situation where they learned the hard way.   Keith Weinhold (00:33:21) - Interesting. I don't know that I remember that from the past, where more than 50% of appraisals have come in high. That pretends well for future valuations, at least here in the near term. All right, Charlie, well, we talked about your record with mortgage rate predictions here and how good that track record was. Why don't you let us know where you think mortgage rates are going to be by the end of 2024.   Caeli Ridge (00:33:45) - I do think that the rates are going to be higher for longer. Don't fight the fed, remember? Listen to what they have to say. I would preface this by saying that all of the indicators for inflation, except for one of them, have been hot to the side. That does not help us with interest rates. The employment jobs report, you've got the CPI, all these different metrics have come in hot where they're higher than what we would want to see them for that inflationary measure, where the feds have been extremely clear that they want to hit that 2% mark, where that number came from, I don't know. That's another conversation. There's only been one metric that actually worked to the rate environment to get it lowered, which is the PCE, the personal consumption expenditure. For those that aren't familiar with that acronym, I think they're going to be higher for longer. There's been a lot of headlines out there saying that I'm getting to a rate. I promise. I'm just going to to preface this first, that March might be the first reduction in the fed funds rate, which, by the way, remember, is not the same as a long term 30 year fixed mortgage rate.   Caeli Ridge (00:34:42) - There are links to them, but they are different. I don't think that's going to happen. I think that if we're going to see rates come down, the first fed funds rate reduction, probably sometime in June, is where I may put my predictions. And then by the end of the year, the interest rate, I'm going to put at 6.125 for 30 year fixed mortgages and non-owner occupied purchase with 25% down. That's my prediction.   Keith Weinhold (00:35:09) - You are on the record though, and it's so interesting, at least with what the fed does with rates generally. It's like an entire world where good news is bad news, right? If you've got great job growth and great GDP, well, that's bad news because they're probably going to keep rates high since those things tend to keep inflation high. It's like, what if you want the lowest mortgage rate, everyone in the world would be unemployed except you. You know, it's just so funny. I'm glad you said that. Yeah.   Caeli Ridge (00:35:36) - The worse the economy is, the better the rates are.   Keith Weinhold (00:35:38) - Yeah. That's right. You offer so many products in there, mostly to investors, but you have other ones that it's not just for buy and hold type of investors. It's for those that are doing better strategies like you mentioned in other strategies. Well, you tell us about all the loan types that you offer in there.   Caeli Ridge (00:35:54) - Yeah, we do have quite a few. Thank you for asking. So we start with the Fannie Freddie's. We call these the golden tickets. Everybody. Highest leverage, lowest interest rate. A lot of times the newer investors will start by exhausting those. There are ten per qualified individual. If you're a married couple, you can have up to 20, as you and I have talked about in the past, Keith. Beyond that, we've got something called Non-cumulative. QM stands for Qualified Mortgage. Fannie Mae and Freddie Mac are the definition of what a qualified mortgage is. So everything outside of that box of underwriting is now non QM. And non QM in and of itself is extremely diverse, not just for investors, for anybody, but within that subset of product you've got debt service coverage ratio where there is no personal income documentation.   Caeli Ridge (00:36:33) - It's all about the properties rents divided by the payment. We have bank statement loans in there. We've got asset depletion. So if you've got $1 million in an exchange, a stock exchange account, there's a formula that we can use to utilize that as income. Beyond that, we have short term bridge loans for those that are fixed and flipping or fixed and holding where you need cash for the purchase and the renovation or rehab. So we have second lien helocs. Those are newer to our product line. So I'm pretty excited about those. We touched on that. We have commercial loans for commercial property, commercial loans for residential if it were applicable. And then of course the all in one, which is a first lien Helocs still my favorite, but we've spent lots of time talking about that. So that's probably a good overview or at least abbreviated checklist of products we have.   Keith Weinhold (00:37:16) - And I've got investor loans in there myself or new purchases I've done investor loans in there myself or Refinancings. I mean, you're who I go to for my own loans and you're in nearly all 50 states, right? And these are the states where the property is not where the investor resides.   Caeli Ridge (00:37:34) - Yes, sir. Exactly right. We are in 48 states. We are not in New York or North Dakota. Otherwise we're going to be funding everywhere that they're looking to purchase, refi, sell, etc..   Keith Weinhold (00:37:45) - We'll let our audience know where they can learn more, because I know you offer a lot of good free tools, like something we didn't get a chance to talk about a first lien helocs all in one loan. Like for example, you have a simulator there when an investor can just go ahead and run through that. So we're one find all of those resources.   Caeli Ridge (00:38:03) - So check out our website. There's a lot of good information on there. Lots of video content free education. The simulator link will be on there. If you wanted to check out the comparison between what you have now, your 3% interest rate, or your 2.5% interest rate compared to this all in one. I'll tell you guys that I've run that scenario all the time, and people are very surprised when they see that this adjustable rate first line is beating the pants off of a 2.25% rate.   Caeli Ridge (00:38:26) - So check that out. Our community is in the website we meet every other Tuesday. It's called live with Charlie. That's Ridge Lending group. Com. Email us info at Ridge Lending Group. Com and then you can call us of course toll free at (855) 747-4343. The easy way to remember is 85574 Ridge.   Keith Weinhold (00:38:45) - Charlie Ridge. Informative as always. And brazen. With the mortgage rate predictions. You can learn more about how they can help you at Ridge Lending group.com. It's been great having you back on the show Charlie.   Caeli Ridge (00:38:58) - Thank you Keith.   Keith Weinhold (00:39:06) - Oh, yeah, there's such experienced pros in there. And as you can see, they offer nearly every loan type. In fact, there were so many that I almost asked her, do you even loan lunch money to elementary school kids? Uh, because, uh, because they've seemingly got a loan type for most every real estate investment scenario that there is primary residence loans as well. Helpful people over there at Ridge. In fact, I even visited their headquarters office and I was hosted by Charlie there one day.   Keith Weinhold (00:39:38) - See what they can do for you in there. They are real strategists in helping you grow your real estate portfolio, going beyond just what a typical retail mortgage company does. It helps people with primary residences. You can join their free community events too, and they've really expanded their educational offerings to a giant degree the past couple of years. Financially free beats debt free, and she helps bring it to life and make it real. So big thanks to Charlie Ridge at Ridge Lending Group. Until next week, I'm your host, Keith Wangled. Don't quit your day dream.   Speaker 5 (00:40:17) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Speaker 6 (00:40:45) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Learn the pros and cons of bitcoin, the world’s largest cryptocurrency. Bitcoin can be moved well across space and time. You can’t move dollars over time due to inflation; you can’t  move gold over space due to weight and security concerns. Real estate, bitcoin, and gold are all scarce and take real-world resources to produce. Bitcoin is a global digital currency that’s decentralized. Nick Giambruno joins us to discuss why bitcoin has value today.  Since there can only be 21 million bitcoin, it cannot be debased like dollars are. By April, bitcoin will experience a halving. Rather than 900 new bitcoins brought into issuance daily, there will be 450.  The SEC’s recent Spot EFT approval will give more investors bitcoin access. The higher the stock-to-flow ratio, the harder the asset.  What about governments shutting down bitcoin, regulating it, or taxing it to death? We discuss. Bitcoin price volatility is a problem in currency adoption. Lots of energy is used in bitcoin mining. But much of it is stranded energy. Bitcoin cannot produce income. Keith Weinhold stresses his preferred way to hold bitcoin. Timestamps: Bitcoin's value proposition (00:00:01) Keith Weinhold introduces the topic of Bitcoin's value and why it is relevant to a real estate show. Jamie Dimon's criticism of Bitcoin (00:05:27) JPMorgan Chase CEO Jamie Dimon expresses his disdain for Bitcoin and blockchain technology in a heated conversation. Bitcoin's resistance to debasement (00:07:19) Keith Weinhold discusses the resistance of Bitcoin to debasement and the skepticism of governments and financial institutions towards it. The origin and value of Bitcoin (00:08:18) Nick Giambruno, an international investor, explains the history and value proposition of Bitcoin, emphasizing its decentralization and resistance to debasement. Bitcoin's hardness and production rate (00:14:21) Nick Giambruno delves into the concept of Bitcoin's hardness and its production requirements, comparing it to other assets like gold and real estate. Bitcoin's upcoming halving event (00:16:28) Nick Giambruno discusses the significance of Bitcoin's upcoming halving event, which will impact its stock-to-flow ratio and reinforce its value proposition. Bitcoin's scarcity (00:19:42) Bitcoin's limited supply and its unique scarcity attribute, compared to other commodities like gold. Upcoming halving event and Bitcoin ETF approval (00:20:53) Discussion on the significance of the upcoming halving event and the approval of a new spot for Bitcoin ETF, indicating the growing acceptance of Bitcoin. Bitcoin as a currency and value proposition (00:22:42) The value of Bitcoin as a currency for transferring value and its resistance to debasement, emphasizing the importance of self-custody of Bitcoin. Global adoption of Bitcoin (00:24:30) Comparison of Bitcoin adoption in different nations, highlighting the potential benefits for early adopters and the impact of Bitcoin on the world's financial landscape. Bitcoin's market potential and investment consideration (00:27:27) The potential market share of Bitcoin in the global economy and the consideration of Bitcoin as an investment asset. Government's ability to regulate Bitcoin (00:34:11) Discussion on the government's potential regulation and taxation of Bitcoin, emphasizing the power of economic incentives and Bitcoin's resilience to government intervention. Bitcoin's uniqueness and credibility (00:36:12) Differentiating Bitcoin from other cryptocurrencies, highlighting its credibility and resistance to change, making it the real innovation in the crypto space. Bitcoin as a Store of Value (00:37:55) Discussion on Bitcoin's role as a store of value and its comparison to gold. Bitcoin as an Emerging Form of Money (00:38:25) Explanation of Bitcoin as an emerging form of money and its distinction from established money like gold. Bitcoin's Transaction Network and the Lightning Network (00:39:37) Explanation of Bitcoin's transaction network, scalability, and the use of the Lightning Network for smaller transactions. Earning Income from Bitcoin (00:41:40) Discussion on earning income from Bitcoin through related companies, dividends, and caution regarding Bitcoin lending services. Bitcoin Exchanges and Custody (00:44:20) The importance of custodying your own Bitcoin and the risks associated with centralized Bitcoin exchanges. Connecting with the Guest (00:45:13) Information on how to connect with the guest and access a helpful Bitcoin guide. Bitcoin's Energy Use and Price Volatility (00:46:01) Insights into Bitcoin's energy use, price volatility, and the use of stranded energy sources by miners. Real Estate vs. Bitcoin (00:47:04) Comparison of real estate as a wealth builder with the merits and risks of owning gold and Bitcoin. Disclaimer and Conclusion (00:47:54) Disclaimer about the content and a conclusion to the episode. Resources mentioned: Show Page: GetRichEducation.com/488 More on Nick Giambruno: FinancialUnderground.com For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to GRE. I'm your host, Keith Weinhold. Why does Bitcoin have any value? And why is a real estate show dedicating one episode to this topic now? The benefits and criticisms of the world's largest cryptocurrency Bitcoin today on Get Rich Education. If you like the Get Rich Education podcast, you're going to love art. Don't quit your day. Dream newsletter. No, I here I write every word of the letter myself. It wires your mind for wealth. It helps you make money in your sleep and updates you on vital real estate investing trends. It's free. Sign up egg get rich education com slash letter. It's real content that makes a real difference in your life, spiced with a dash of humor rather than living below your means, learn how to grow your means right now. You can also easily get the letter by texting gray to 66866. Text gray to 66866.   Corey Coates (00:01:06) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:22) - Work degree from Quito, Ecuador, where I am today, to the Mosquito Coast, Nicaragua, and across 188 nations worldwide.   Keith Weinhold (00:01:29) - You're listening. One of the United States longest running and most less than two shows on real estate investing. I'm your host, Keith Reinhold. Yes, we're a real estate show, but with 488 episodes, it's time to focus at least one of them. Finally, on Bitcoin. We'll bring it back to US real estate next week. Now, this is for a few reasons. Today, Bitcoin is largely misunderstood. It's become so big that it's hard to ignore. And there are two recent Bitcoin events two happenings with global impact that makes now the right time to cover this. Now look, I think that it's human nature that when you learn about something new for the first time and you don't understand how it works like Bitcoin, it's sort of innate to you start criticizing it or sort of discounted in your mind, chiefly because you don't understand it. Though Bitcoin's pseudonymous creator, Satoshi Nakamoto wrote the Bitcoin paper in 2008 and the first Bitcoin was issued in 2009. And, you know, when I first heard about it sometime after that, I probably discounted it in my mind as well.   Keith Weinhold (00:02:45) - And I think most people that don't understand Bitcoin, you know, they first think something like, oh come on, what is this. Just magic internet money. How does that work? How could that have any value. And I think is one matures when encountering the unknown. They inquire rather than criticize it. Look now and I'm getting really personal here, aren't I? I don't do drugs and I never have. But I don't criticize those that do drugs because it's a world that I just don't understand at all. Last year I was having dinner with a couple. They asked me what book I'm currently reading, and I told them that it's a 350 page book about Bitcoin, and the response was laughter, sort of dismissing it. And they said, well, how could anyone write that many pages about Bitcoin just completely discounting the whole thing? Well, for me, a turning point on Bitcoin is when I found highly intelligent people that understood it well and they were excited about it and they endorsed it. Now real estate has more intrinsic value than the dollar or gold or Bitcoin.   Keith Weinhold (00:04:02) - Because real estate is essential to your survival. You can make arguments that the dollar, gold and Bitcoin all have questionable backing. But today enough people agree that the dollar, gold and Bitcoin all have value. People are agreeing all three gold, the dollar and Bitcoin have varying levels then of anthropogenic faith. Today you and I, we live in a digital world that's comprised of 195 world nations. Well then, shouldn't money be made of something that's digital and doesn't know any national borders? Think of Bitcoin's value proposition this way you cannot move dollars across time. That's due to inflation. You can't move gold across space that's due to weight and security. But consider this Bitcoin can be officially moved across both space and time. Its supply is absolutely fixed. At 21 million, there can never be more than 21 million bitcoin either. It's traded on the blockchain, which is basically a digital ledger, but not every intelligent or influential finance person believes in Bitcoin. Of course, not every one of them. For example, it gets a little heated here from last month.   Keith Weinhold (00:05:27) - This is one of the most powerful men in the world. JPMorgan Chase CEO Jamie Dimon. He's getting annoyed about CNBC asking him about Bitcoin just entirely too often. What do you make of the other firms the BlackRock's of the world.   CNBC (00:05:42) - That that obviously and Larry Fink change his view of this obviously. And maybe he changed his view because you think he genuinely believes in Bitcoin or or believed it because he thinks that there's a marketplace for it and he wants to be part of that market. But what do you think of the there's about a dozen big financial companies, fidelity included.   Jamie Dimon, JP Morgan Chase (00:05:59) - Number one I don't care. So just please stop talking about this. And and I don't know what he would say about blockchain versus currencies to do something versus Bitcoin that does nothing. And maybe that's not different than me. But you know, this is what makes a market. People have opinions. This is the last time I'm ever in state. In my opinion.   CNBC (00:06:18) - Gold really didn't do anything either.   Jamie Dimon, JP Morgan Chase (00:06:21) - Yet because it's limited in supply.   Jamie Dimon, JP Morgan Chase (00:06:23) - So it's and it's been used. Uh, so you think so, huh? I do think there's a good chance that when bitcoin when we get to that 20 million bitcoins 42 know that Satoshi is going to come on there laugh hysterically. Go quiet. All Bitcoin is going to be erased I think. How the hell do you know it's going to stop at 21? I've never met one person who told me they know for a fact they take that as it's not.   CNBC (00:06:44) - It hasn't happened because by the last one will be mined in 2150. And it gets harder and harder every time there's another halving. But but, Jamie, I do like looking back over.   Jamie Dimon, JP Morgan Chase (00:06:55) - Just do what you want. I'll do what I want. Ask for gold.   CNBC (00:06:57) - You can. The six characteristics that make gold valuable for 4000 years. They're all present in Bitcoin. That's all I'm saying. I love you and I don't want to. And I also don't I don't also don't want to be a you may enjoy Joe.   Jamie Dimon, JP Morgan Chase (00:07:08) - You may be right.   Jamie Dimon, JP Morgan Chase (00:07:09) - Yeah. Like I don't own gold either. So okay. That's what.   CNBC (00:07:11) - I mean.   CNBC (00:07:12) - Couple of quick final question.   Jamie Dimon, JP Morgan Chase (00:07:12) - I like to own things that pay me incomes, but it doesn't cost money to carry anyway. And it costs money to carry Bitcoin to. By the way.   Keith Weinhold (00:07:19) - Uh, that was Jamie Diamond. Now governments and banksters like Jamie Diamond, they often dislike bitcoin because it cuts out the use of their chief product, the dollar. So governments are especially hesitant to want to promote bitcoin, a lot of them in the world. Anyway, I've got a conversation with a bitcoin expert coming up. We're going to talk about its value proposition and then the criticisms. Yes, I'm in Quito today. I was last year in Ecuador two years ago, this Colorado sized nation of 18 million people. I plan to attempt climbing to the summit of a 20,000 foot mountain later in the week. As for today, let's continue with why should Bitcoin have any value? Today's guest is the founder of the Financial Underground, and he is the editor in chief of that publication.   Keith Weinhold (00:08:18) - He's a renowned international investor, and he specializes in identifying big picture geopolitical and economic trends ahead of the crowd. And you've seen him featured seemingly in everything from Forbes to the Ron Paul Liberty Report. He was a speaker at the well-known New Orleans Investment Conference as well. Hey, it's great to welcome on to gray, Nick. Jim Bruno.   Nick Giambruno (00:08:41) - Hey, Keith, great to be with you.   Keith Weinhold (00:08:43) - I think a lot of our listeners are real estate investors are going to be wondering now, why are you talking about Bitcoin on a real estate show? Actually, I think there are a few more commonalities here than what a lot of people think. What a real estate in Bitcoin have in common. They're both scarce, neither can be easily deluded, and they both take real world resources to produce more of. You could apply those same three attributes to gold. So real estate gold and bitcoin they have this scarcity. And really I think that's a wise investing theme. Go ahead and invest in what's scarce. Limit what's abundant and take zero cost to produce like dollars.   Keith Weinhold (00:09:21) - So really that's the commonality between real estate in Bitcoin. But on a real estate show, I think we have a lot of listeners that just don't have an overall common understanding. Nick, of just what is bitcoin and why does it have any value in the first place?   Nick Giambruno (00:09:37) - Well, that is a some very good observations and a very profound question. What is Bitcoin. Well, Bitcoin is a relatively new asset. However it has been decades in the making. People don't understand that Bitcoin didn't just fall out of the sky, or is some kind of accident in some mad sciences garage. This is something that has been in the the works basically since the late 70s, and it came out of the Cypherpunk movement. Now, you may have heard of these people. You may have not. The Cypherpunks are basically I find them as the good guys. They are involved in creating technologies that empower the individual and disempower the state. They are behind some of the most prominent freedom oriented technologies that you and I may take for granted, including encryption.   Nick Giambruno (00:10:27) - And that's another story in and of itself. Let me just briefly get into that, because that's what puts the crypto cryptography in cryptocurrency. Cryptography is a very important field. It's basically the method of encoding information so that only the recipient can see it. And it's very important to understand that while we take for granted the average person has access to unbreakable cryptography today, that was not always the case. Cryptography has been around since the time of the ancient Greeks, and maybe even before, but it's always been a government monopoly until very recently in terms of historical standards, when cryptography was made available to the average person. That is a very profound thing, because now the average person can secure their information and secure their online life in a way that nobody can break. The US government can't break it. Chinese government can't break it, nobody can break it. And that is very important. And that laid the foundation for Bitcoin. So what is bitcoin. It's just a summit. But it is a superior alternative to central banking.   Nick Giambruno (00:11:27) - And that is a very revolutionary thing. It basically does the job of what a central bank does but much much, much better and removes all of the corruption, all of the nastiness that goes along with central banking. So what we have here is a genuine, workable alternative to central banking, and we can get into the details of that. But if you want to look at it, what it is, that's what it is. And at the same time, it's a form of money that is not just resistant to debasement, it's totally resistant to debasement. You're talking about gold and real estate. Well, gold. What made gold money over thousands of years? Yes, it is scarce. However, I always like to use this example. There's a concept that's related to scarcity, but it's not that it was scarce. And the reason is, is think about platinum and palladium. There's actually scarcer than gold, like there are fewer ounces of platinum and palladium in the world than there are gold ounces. So why don't people use platinum and palladium as money? It's a very, very important point.   Nick Giambruno (00:12:26) - The reason is, is because the platinum and palladium supply is not resistant to debasement. So it's scarcer, but it's not resistant to debasement. What does that mean? It means the annual supply growth of platinum and palladium are basically equal to the stockpiles. So depending on what this year or next year's annual production of platinum or palladium are going to be, it can wildly swing the market. That is not true of gold. Gold is only about 1.5% growth per year. And that's very, very consistent. What does that mean? That is a very important concept. So the gold supply only grows at about 1.5% per year.   Keith Weinhold (00:13:02) - And this is basically an inflation rate.   Nick Giambruno (00:13:04) - Yes it is its inflation rate. But it's very small and nobody can really change that. Think about it. There's a. It's not as if people don't want to increase the gold supply. They would love to. The way that the gold is distributed in the world, and the cost it takes to mining it puts a really hard limit on what you can produce each year.   Nick Giambruno (00:13:22) - So that's what makes it a good store of value. And if something is not a good store of value, it's not going to be a good money. These are some very, very fundamental concepts I'm talking about because they also apply to Bitcoin.   Keith Weinhold (00:13:35) - Then when someone asked me what Bitcoin is to give it a really short definition, I call Bitcoin a global digital currency that's decentralized. And you brought up the decentralization. That's really important. That's where I can make a peer to peer payment without having to go through an intermediary where I can send my Bitcoin directly over to Nick. There was no bank involved in that transaction, for example, the decentralization of Bitcoin. But we talk more about why Bitcoin has value. I believe you began touching on it there, Nick. Bitcoin has this hardness, which is a strange term to people because Bitcoin is digital. So can you tell us more about Bitcoin's value that comes through its hardness.   Nick Giambruno (00:14:21) - Let me just touch on a quick point you made also. So simply put, the value proposition of Bitcoin is that it allows anybody, anywhere in the world to send and receive value without depending on any third party.   Nick Giambruno (00:14:32) - At the same time. It's a form of money that is 100% resistant to debasement. That's its value proposition. That's a very profound thing. So going to the hardness. Yes, hardness is a concept that a lot of people get confused. Look, I love gold, I own gold, I recommend gold chain from the gold community. And I know the gold community. So I think a lot of people in the gold community get confused around this hardness now. They think it's hard, like physically hard, like abrasive metal. That's not what art means. Hard. And in terms of a hard asset, what it means is hard to produce. That's what it means. Yeah, that's what a hard asset is. It's hard to produce. And what is the opposite of that? Something that's easy to produce. Nobody would want to store their value, store their savings, store their economic energy into something that somebody else can make with no effort, almost like, you know, oh, let's put our life savings in arcade tokens or frequent flyer miles.   Nick Giambruno (00:15:26) - It's ridiculous when you think of it in that way. But that is, in my humble opinion, the most important attribute of money is that it's hard to produce all the other attributes of money. Quite frankly, are meaningless if the money is not hard to produce. Because if it's not hard to produce, none of the other stuff matters. And that's the most crucial attribute of money.   Keith Weinhold (00:15:45) - Yes, reinforcing why we have that investing theme of invest in something that's scarce and difficult to produce and takes real world resources to produce, much like real estate does. Much like gold with all the mining and assaying and much like Bitcoin, because to produce new Bitcoin, it takes electricity, it takes hardware and it takes software, some real world resources in order to produce Bitcoin. We talk about the production rate or the inflation rate in just a couple months. Here we're coming up on something really interesting, which is really one reason why I have you on the show talking about Bitcoin now. And that is the having event, the halving being that rate of new Bitcoin issuance is cut in half every four years.   Keith Weinhold (00:16:28) - So tell us more about that and bring the stock to flow ratio into the conversation here. We're at a cusp.   Nick Giambruno (00:16:34) - Of a very important moment in monetary history. Because you can quantify the hardness of an asset. It is quantifiable. It is basically the inverse of the supply growth. And there's another way of saying that, as you mentioned, the stock to flow ratio basically. In short, you got the stockpiles. That's what's available. And then you have the flow which is like the new supply. So the higher the stock to flow, the harder the asset is and the more resistant to debasement it is. And same thing when you take the the supply growth, you want a smaller supply growth. It's just the inverse of the stock to flow. So gold has always been mankind's artist money for thousands of years and gold's stock to blow ratios about I think it's around 60 which means it takes about 60 years of current production to equal current supplies. If you look at silver, it's much less than gold.   Nick Giambruno (00:17:25) - And every other commodity is closer to one, which means that every year the new production basically equals the existing stockpiles. And that's not a very good attribute for something that you want to have as a store of value. Now, what is going to happen in this having that's coming up in around April of this year? You can quantify the stock that flow. I just told you how to quantify it. So right now Bitcoin and gold have about equal stock to flow ratios in about equal hardness. However a key feature of the Bitcoin protocol is that every four years the new Bitcoin supply issuance gets cut in half until around the year 2140, when it is just goes to zero. So Bitcoin is not only going to exceed gold's hardness in a few months, it's going to double it. Now that is a very interesting moment in monetary history because mankind has not had a harder money than gold I don't think. Ever. So this is all going to be very important and it's coming very soon in April. Late April I think is when it's going to happen.   Nick Giambruno (00:18:28) - So a very important moment in monetary history.   Keith Weinhold (00:18:31) - There is real profundity there with the stock to flow ratio of Bitcoin exceeding that of gold with the upcoming having. And if you, the listener still hung up on the stock to flow ratio, we're talking about the ratio of the existing stock, how much of this stuff already exists, whether it's real estate or gold or Bitcoin divided by the rate of new issuance. So the higher the stock to flow ratio, and as it has the greater hardness it has. And currently 900 new bitcoins per day are being produced. And the having means just what it sounds like in April that will drop to 450 new bitcoins being mined into existence each day. So really you can think of Bitcoin as being disinflationary. It will continue to inflate until the year 2140. Like Nick described. That's when new bitcoin will cease to be mined. And until that point, the new amount the flow continues to get halved. Every four years, there will only ever be 21 million Bitcoin that exist, and 19.6 million of those have already been mined.   Keith Weinhold (00:19:36) - So you can get an idea of the hardness and how this helps supply the value of Bitcoin.   Nick Giambruno (00:19:42) - Well, absolutely. And it's he talks about that. I think it's something like 93% of the time, supply has already been mined, and the remaining 7% are going to come online over the next 120 years or so. You might want to get some before other people figure this out. There is definitely not enough Bitcoin for every millionaire to have one bitcoin, it's far less. I think there's something maybe 50 million millionaires in the world, probably more. They can't all have a bitcoin. It's a very tight supply and we have a situation here too that is related. Because Bitcoin is the only asset, the only commodity were higher prices cannot induce more supply. If gold went to 10,000, you can be sure there are going to be more gold miners getting into the business, more economic deposits being found and and exploited and more supply eventually coming on to the market. Great point. And the same is true for every commodity.   Nick Giambruno (00:20:38) - Gold is just the most resistant to that process. However, Bitcoin, no matter how high the price goes, it cannot induce the production of more Bitcoin. That's a very unique scarcity attribute that I don't think people really appreciate very much. It's certainly there.   Keith Weinhold (00:20:53) - So this upcoming halving event is one reason why I'm having Nick on the show now to do our first ever Bitcoin episode in almost 500 episodes. And the other reason is the nation see of the SEC approving a new spot to Bitcoin ETF. And all that basically means is it helps give everyday investors really easy access to Bitcoin without having to set up a crypto wallet and bam, hey, your mom can become a crypto bro now.   Nick Giambruno (00:21:22) - It is certainly a milestone in acceptance. I think it signifies that Bitcoin is no longer a fringe. It's here to stay. It took over ten years for the SEC to approve one of these things. I think the Winklevoss twins applied over ten years ago for the first Bitcoin ETF, so they reluctantly did it. I don't think they want it to do it.   Nick Giambruno (00:21:43) - I think they lost a couple of key court cases that kind of forced their hand, but they did approve it. I frankly don't recommend the ETFs. It's not really Bitcoin because what you have is a Bitcoin IOU, several Bitcoin IOUs. So let's say you buy the Blackrock Bitcoin ETF. Will you have an IOU from your broker for the Blackrock ETF share. And the broker has an IOU from Blackrock. And then Blackrock has an IOU from Coinbase which actually holds the Bitcoin. So I always tell people look it's a spectrum. If you want to take that trade off and you're taking a trade off for convenience over a security and sovereignty, if you want to take that trade off, that's go right ahead. But be have your eyes wide open and be conscious of the trade off that you're making. I always prefer to, uh, tell people Bitcoin is unique. This is a bearer asset. People forget about bearer assets. Bearer assets are a very good thing. They give the people who hold them ownership over them.   Nick Giambruno (00:22:42) - I think people who are interested in sovereignty. One thing too that's very important is that even if the Bitcoin price stays flat forever, it doesn't go up at all. It still offers people tremendous value as what we were talking about before, even if it stays flat and doesn't go up ever again, it's still offers anybody, anywhere in the world the ability to send and receive value from anybody else, anywhere in the world, and to hold money that's resistant to debasement, that's hugely valuable, even if the price doesn't go up. So and you can only get those benefits if you hold Bitcoin properly in your own bitcoin wallet, where you control the keys and only you control the keys, because that's who has ownership to this. Bitcoin is by who controls those private keys. You can just kind of think of that like the password dear Bitcoin. So that's what you want to do. If you can learn how to drive a car you can learn how to self-custody Bitcoin.   Keith Weinhold (00:23:33) - I love what you did there, Nick, because what you helped us do is you helped us transition from talking about Bitcoin as an investment asset to using bitcoin as a currency, if you wish to use it to transfer value.   Keith Weinhold (00:23:47) - Really, Nick, I think a lot of people in the United States, one reason that they're not that interested in Bitcoin is because our currency, our United States dollar, it sure has problems. It sure recently went through a big wave of inflation, but our currency just is not as bad as some of these worthless pieces of paper have been in the Argentine currency or in Turkey or in Iran or Haiti. So maybe Americans don't have enough of a reason to want to go ahead and get a currency that holds its value. So what are your thoughts with what people in other nations are doing, including El Salvador, with immediate legal tender versus the United States, where we have this dollar that's being debased but just not quite at the rate of most other world nations.   Nick Giambruno (00:24:30) - That's a good point. I see this in my travels around the world. It may seem like an advantage for the Americans, but I think it's a disadvantage because they're going to be catch on to this last because they're going to have, oh, we've got the dollar.   Nick Giambruno (00:24:43) - The dollar's great. So why do I need to look at other alternatives. And and they're going to be the last people. So you're going to have I think what you could see over this the next few years, and certainly over the longer term, is that countries like El Salvador, the countries that are experiencing the highest rates of inflation now and are thus more motivated to look at a superior form of money like Bitcoin or gold, but a lot of them are going to Bitcoin. These are going to be the countries that might fare better over the long term, because they're going to be relatively early adopters in this superior monetary technology. Nobody takes a horse and buggy from New York to California anymore. No, you don't need to because you have airplanes, you have cars, superior technologies for transportation. And likewise, we now have a superior technology for money, which is to say storing and exchanging value. That's all money is. People think it's all confusing. You need a PhD and there's all these charts and confusing jargon.   Nick Giambruno (00:25:38) - Money is not confusing. It's actually intuitive and anybody in the world can understand it. It's just something that stores and exchanges value. It's really quite simple. So now we have a superior technology for storing and exchanging value. And I think people who adopt it first are going to reap the most benefits. There are a lot of Americans who have adopted it, but they have been spoiled by the fact that the dollar has been the world's reserve currency. Now, I think that's going away. That's a whole other story. I think that's the two big reasons why, you know, you shouldn't just depend on the dollar one. We can talk. This is a whole new discussion about the dollar as the world reserve currency. I think it's going away. But now despite that we also have a superior alternative with Bitcoin. So yeah, I think the people who are going to adopt this technology sooner are going to reap the most benefits.   Keith Weinhold (00:26:24) - Well, Nick, in your opinion, is Bitcoin's takeover inevitable and how does that look?   Nick Giambruno (00:26:30) - I don't think anything's inevitable.   Nick Giambruno (00:26:32) - I think it's a good that I mean, if I thought it was inevitable, I would sell everything and buy it. I have a more diversified portfolio, but I have a strong conviction in it, very strong conviction in it. But nothing is certain. Nothing's 100%. So I never tell people, you know, and I'm not giving anybody any investment advice. I'm not a registered investment advisor or anything like that. But in any case, even if I was, I wouldn't tell anybody to go all in on anything. And that's certainly not how I manage my risk. However, I do have a very high conviction in it, and I think as it stands now, it has an excellent chance at gaining huge market share in the market for money. And people don't think of money as a market, like a real estate market or a technology market, or the market for any industry. But money is a market. It's probably the biggest market. And I think Bitcoin is you need to put it into perspective, the market cap of all the gold in the entire world is about $13.7 trillion.   Nick Giambruno (00:27:27) - The market cap for all Bitcoin in the world, last I checked, is around $850 billion. So we're less than 10% of gold's market cap. It has. And that's not even including all the fiat currencies. All the fiat currencies have a much larger market cap than even gold. So Bitcoin is just a blip on people's radars. So I think it has a lot of upside from here.   Keith Weinhold (00:27:46) - One important question an investor can ask themselves once they learn more about Bitcoin is, can I really afford to have absolutely none? You're listening to get reciprocation. We're talking with Nick Bruno of the Financial Underground Warren. We come back when now we've talked about the upside of Bitcoin. Let's talk about a lot of the criticisms you're listening to get rejection I'm your host Keith Weiner. Role. Under this a specific expert with income property, you need Ridge Lending Group and MLS for 256. In gray history, from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's.   Keith Weinhold (00:28:29) - Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. 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If you want to invest where I do, just go ahead and text family to six, 686, six.   Keith Weinhold (00:29:52) - This is Richard Duncan, publisher of Macro Watch. Listen to get Rich education with Keith Winchell. And don't quit your day dream. You're listening to SOS created more financial freedom for busy people just like you than nearly any show in the world. This is jet versus cash, and I'm your host, Keith Whitehall. We're talking with the Financial Underground's Nick Bruno. We're talking about Bitcoin in a dedicated episode for the first time ever here in the history of the show. And when we had a chance to talk to Nick Bruno, you can see why we wanted to do this. But, Nick, a lot of people in the United States are concerned that the US government might do something similar to what China did and just go ahead and shut down Bitcoin and shut down cryptocurrency because Bitcoin, it basically competes with the US government's product, the dollar. So what are your thoughts when people say, oh I don't know about that. The government can just shut Bitcoin down.   Nick Giambruno (00:30:53) - I'm glad you mentioned China because the communist governor of China is a very powerful governments.   Nick Giambruno (00:30:58) - It's one of the most powerful and maybe arguably the most powerful government in the world. And they've tried many times to ban Bitcoin. You know how it turned out. It was a total failure because Bitcoin is basically code in its mathematics. So it's not the easiest thing to ban even if they wanted to ban it. You're trying to ban mathematics because that's all Bitcoin is. And further many Bitcoin wallets and it all works on cryptography. As and as I said, cryptography is just advanced mathematics. Many Bitcoin wallets have a way to back up your funds a 12 word phrase. So if you can memorize well words, which represents your wallet, you can potentially store billions of dollars just in your head. Now this is how are you going to ban that? You can't ban that. It's completely impractical. I always tell people, you know, look at how governments have tried to ban cannabis. Everybody has been able to buy cannabis in any city they wanted to. And then also other countries have tried to ban US dollars.   Nick Giambruno (00:31:57) - Argentina tries to ban U.S. dollars, Venezuela tries to ban U.S. dollars. You know what it does? It creates nothing. But an underground market doesn't extinguish people's desire to have dollars. And I think that's what we have here. I think economic incentives are more powerful than governments. And aside from that, I don't think that's going to happen because what they approve all these ETFs, that they were just going to turn around and ban it? I don't think so. Further, you have lots of court cases. There is established federal court cases that have ruled that computer code, which Bitcoin is just computer code, is equivalent to free speech protected under the First amendment of the US Constitution. Oh yes, I understand the Constitution is not people can change it and it's malleable. But still, that complicates any government's desire to ban it. They're going to have to overturn those federal court cases. That's not going to be easy. And even if they do, how are you going to ban something that somebody can just memorize with 12 words written on a piece of paper or in their head, it's completely impractical.   Nick Giambruno (00:32:58) - And then, of course, you have the example of China, which has banned Bitcoin several times. You know what? Absolutely nothing happened. But Bitcoin business is moving out of China and Bitcoin adoption among regular Chinese people going up. They can hinder businesses and large like entities that have big presences. They can hinder that certainly. But Bitcoin is global. It'll just go where it's treated best. It's like water. It'll just move to wherever it's treated best. I always say this too. So even if like the northern hemisphere disappeared, let's say there's an all out nuclear war between Russia and the US that will basically wipe out the northern hemisphere. You know what? Bitcoin won't miss a beat in the southern hemisphere. It'll still keep going in the southern hemisphere because it is decentralized and un over tens of thousands of computers around the world. And if even one of those computers survives Bitcoin lives on. So I think this is a very, very hard I wouldn't want to be trying to ban this thing because it's not practical.   Keith Weinhold (00:33:56) - Other critics say, all right, if the government can't ban it, well, the government can just then allow it make it be legal, but they can regulate the heck out of it and they can tax it at really high rates. What are your thoughts there?   Nick Giambruno (00:34:11) - Well, the government can do whatever it wants, but I think, yes, it can do all of those things. But I think here's the main point is that Bitcoin is we talked about economic incentives. Economic incentives are more powerful than politicians. And I think that's a truism. So as more people become holders of bitcoin aware of bitcoin, I don't think restricting bitcoin or banning bitcoin or adding regulations to Bitcoin or adding taxation to it, I don't think that's going to help anybody win an election. Is that going to help anybody win an election? I don't think so. That would be extremely politically unpopular. Yeah, that could happen. It would be bad news for the people who live in that jersey. But you know what? It's not going to kill bitcoin.   Nick Giambruno (00:34:52) - It's going to just be a hindrance for the people who live under these Luddite politicians who would do such a thing. But I don't think they're going to do such a thing. They just approve the ETF. I think Bitcoin has reached escape velocity in terms of its political popularity. I don't think anybody is going to win an election by being tough on Bitcoin.   Keith Weinhold (00:35:11) - A number of congresspeople hold bitcoin, Cynthia Loomis being one of the more prominent ones. And then you and I talked about the SEC spot Bitcoin ETF approval earlier. Well, that's a bit of a de facto stamp of approval on bitcoin really in a sense. And I think another criticism Nick, in my opinion this is easy to dispel. But some people will say, well, there are tens of thousands of cryptocurrencies out there. This stuff's just junk. There's something like hump coin that a prominent rapper promotes. I mean, all this stuff is just a bunch of junk. When all these cryptocurrencies come out. And I tend to think that's very different than Bitcoin.   Keith Weinhold (00:35:50) - Just like if there's some new stock IPO with zero fundamentals that comes out, I mean that doesn't diminish blue chippers like Apple or Microsoft at all. So I think of Bitcoin as the first or one of the first cryptocurrencies with a finite supply. So these overnight fly by night new cryptos I don't think that's really a very good criticism of Bitcoin.   Nick Giambruno (00:36:12) - No, I think this is one of the most popular misconceptions is that there is this crypto asset class and that Bitcoin is just one of 20,000 cryptocurrencies. And I think this is transparently false. It's like saying, oh, you know an increase in the pyrite supply is going to, you know, dilute the gold or something right. So it's kind of ridiculous. And the reason behind this is very simple. Bitcoin is the only one that nobody controls. Nobody can change bitcoin. It's the only one that is like that from Ethereum which is number two on down. They can be changed. A group of people can get together and change it. And in fact, Ethereum's monetary policy has been changed more often than the Federal Reserve's monetary policy.   Nick Giambruno (00:36:54) - It's just instead of the FOMC getting together and deciding what we should do with the money supply, it's a group of Ethereum developers and insiders that get together and change it. And the same thing is true of every other cryptocurrency. So that's the very defining feature of Bitcoin is that nobody can change it. That's what makes it interesting. If somebody could change Bitcoin, it wouldn't be interesting. And we don't need to get into the weeds of that. But needless to say, Bitcoin is the only one where the supply has credibility. We all know the bitcoin supply is 21 million. Nobody can do anything to change that. What is the Bitcoin supply going to be in five years? I could tell you with precision what it will be in five years. I can tell you with precision what it'll be in ten years. And you tell me what the Ethereum supply is going to be in five years. Can you tell me what the supply is going to be in ten years? You tell me what any cryptocurrency aside from Bitcoin supply is going to be in five years.   Nick Giambruno (00:37:41) - No you can't because it depends on how the developers are going to change it. So it's quite ridiculous to lump these two things together. They're entirely separate. Crypto is a cesspool. Quite frankly. Bitcoin is the real innovation.   Keith Weinhold (00:37:55) - And immutable protocol as they call it. Nick, I think one criticism is to pull back. We all know that money is three things. It's a store of value. It's a medium of exchange and it's a unit of account. And a lot of people say, I don't think Bitcoin can be a legitimate currency because all people do is store it. So it might meet the store of value criterion of those three. But I don't know about its legitimacy as a currency. Does that matter? I mean, people kind of use gold as a store of value, but not a currency. What are your thoughts?   Nick Giambruno (00:38:25) - Yes, it does matter. And it's a good question. The answer is is Bitcoin is not an established money. Take gold for example. Gold has been around for thousands of years.   Nick Giambruno (00:38:34) - It is an established form of money. Bitcoin is an emerging form of money. It's a very big distinction. So I personally think the way this will go and you know people disagree. But I think just logically, if you look at it, yes, story of value comes first. Why. Because once people store their value in Bitcoin, the monetary network of people who will be willing to exchange that bitcoin for something else grows and you can't have one before the other in terms of like nobody's going to exchange bitcoin if they're not already storing bitcoin. So the more people that store bitcoin have it available to exchange it for other people, it's like a network effect, any kind of network effect. That's a monetary network effect. And that's time to build further Bitcoin related misunderstanding is you kind of view Bitcoin in a different lens than just paying for like a cup of coffee, because that's really not what it's made for. The Bitcoin network has a hard limit on the number of transactions that I can process every day in order to keep it decentralized, because if it processed everybody's coffee transaction, you would need huge data centers to run the Bitcoin software.   Nick Giambruno (00:39:37) - The matter is, is that the Bitcoin software needs to be decentralized. So right now, anybody who has an average laptop, an average Raspberry Pi can run Bitcoin. That is very important for its decentralization. And if you were putting everybody's retail transaction on the Bitcoin blockchain would be impossible. You need large data centers. Now does that mean Bitcoin can't scale to become a medium of exchange? Absolutely not. You have to just think of bitcoin. What is a Bitcoin transaction represents. It represents final international settlement and clearance. So it's more akin to an international wire transfer. You wouldn't pay for a cup of coffee with from a Swiss bank account to Starbucks in New York. That's basically what you're talking about. What you do is you build layers. There are different layers that are built on top of that bedrock, which is the Bitcoin network that is immutable, unchangeable, and then you build transaction networks on top of that. So what we have with Bitcoin, the most prominent one right now is called the Lightning Network, which is another network that's built on top of Bitcoin that is really more suitable for smaller day to day coffee transactions.   Nick Giambruno (00:40:43) - You can actually send about 1/32 of a penny over lightning. So you can do all sorts of micro-transactions. Very interesting. So that's akin to, you know, like a credit card or a credit card is kind of like a layer two network that's built on top of central banks, which do international clearing and settling, and credit cards are built on top of that. And you can think of the same kind of solutions that are going to be built on Bitcoin. You're going to have different layers for different applications. And in terms of these medium of exchange and transaction network in Bitcoin it's the Lightning Network. And it's very exciting to use.   Keith Weinhold (00:41:19) - Yeah the Lightning Network it's been around for a while. It's been getting more adoption to help promote payments through Bitcoin. Being a real estate investing show here, oftentimes our listeners are interested in buying a property that will produce income from a tenant that's in that property. Can Bitcoin produce income?   Nick Giambruno (00:41:40) - Bitcoin itself cannot produce income because it's just simply money. It's simply an asset in the same sense that gold doesn't produce income.   Nick Giambruno (00:41:47) - If you want to earn income from Bitcoin, invest in Bitcoin related companies and Bitcoin related businesses that pay dividends. There are some and there is going to be many more. There are Bitcoin mining companies. These are companies I specialize in covering. In my financial research. They're relatively new. They don't pay dividends yet, but there are several that are looking to establish dividends. You can also lend your bitcoin I mean that's not bitcoin giving you a yield. That's you earning a yield from lending your bitcoin. I would caution you because there's been a lot of these kinds of bitcoin lending services that have gone bankrupt. BlockFi Celsius I'd be. And so whenever I hear about Bitcoin yields I caution people to be not just vigilant, be double vigilant of how you would normally be because there's been so many scams in this area and bad companies that have gone bankrupt. Taking advantage of people looking to earn a yield on their bitcoin. It's really a nascent industry. And you know what? Look at Bitcoin's compounded annual growth rate over any period of time for years.   Nick Giambruno (00:42:50) - You don't need a yield. It's going up if the trends continue. And I always tell people if you're going to invest in Bitcoin, have at least a four year time horizon, because that's a long time horizon. But the reason is, is because that gives you through one halving cycle, these having cycles go every four years. It's almost impossible. There's maybe a couple of instances, a couple of days where the bitcoin price wasn't higher than it was four years ago. So I always tell people have a four year time horizon when you're dealing with Bitcoin. And when you look at the returns, that could be possible. And I think the pastor. Returns. Past performance doesn't guarantee anything in the future, but I think that being said, we can expect this cycle to be similar to the other cycles. When you see that kind of potential, it should really make you not interested in these yield products.   Keith Weinhold (00:43:39) - You mentioned a couple of bankrupt crypto exchanges there, BlockFi and Celsius. I got caught up in some of that.   Keith Weinhold (00:43:48) - Now I keep all of mine on a hard wallet because really what these exchanges do is they're centralize something that's supposed to be decentralized like Bitcoin, and it gives Bitcoin a really bad name. Nick, I had some people reach out to me when FTX imploded and people said, this proves that Bitcoin is a scam. And I had to gently explain to people, whoa whoa whoa whoa whoa whoa whoa. Just because Wells Fargo or Chase fails. We didn't say the dollar failed. It wasn't a failure in Bitcoin. It was a failure in these exchanges.   Nick Giambruno (00:44:20) - Oh, yes. This has been going on for a long time. And before FTX, there's Mt. Gox. There's a lot of these things. So I think the underlying lesson here in all of these examples is that don't trust third parties. And with Bitcoin you don't need to trust their authorities because if you can learn to custody your own Bitcoin, you are totally responsible, totally in control of your destiny. You don't have to worry about one of these bitcoin companies going bankrupt because you hold it and only you hold it.   Nick Giambruno (00:44:48) - And I think that's what makes it special.   Keith Weinhold (00:44:51) - This has been a great chat and I think a really good Bitcoin 101 for a person that still doesn't understand very much about it. And you help people understand Bitcoin, you do an awful lot of other things, including informing people about global trends and macroeconomics. So if someone wants to connect with you and learn more from you, what's the best way for them to do that?   Nick Giambruno (00:45:13) - The best place is Financial Underground Comm. I have a really helpful Bitcoin guide that shows people how to use it in the most sovereign and the most private ways possible, and I keep that guide up to date with the current best practices, because these things change very frequently. Like what is the best wallet, what is the best hardware wallet, and so forth. So I keep this guide alive with the best current practices. I think that would be a big help for people. Could definitely save them many, many hours of time by simply just identifying today's best practices. So I think that would be very helpful.   Nick Giambruno (00:45:45) - You can find all that at Financial underground.com.   Keith Weinhold (00:45:49) - Nick Bruno has been super informative. Thanks so much for coming on to the show.   Nick Giambruno (00:45:54) - Thank you Keith, great to be with you.   Keith Weinhold (00:46:01) - Another Bitcoin criticism is its energy use. Oh, look at all the electricity that mining consumes. What a waste. But the more you learn, you find that Bitcoin miners, they often use stranded energy sources that might not get used otherwise. In fact, miners have an economic incentive to use stranded and low cost energy. Volatility in Bitcoin's price has been a real problem if you want to use it as a currency. The price for one Bitcoin peaked at almost $70,000 in late 2021, and just a year later it was under 16 K, and now the price has swelled up a lot again from that recent low. In any case, if you choose to own Bitcoin or any other crypto, please store it on a cold wallet for security. It's a small device. It's about three times the size of a thumb drive. It looks like a thumb drive, and there is a learning curve that you have to meet in order to use one.   Keith Weinhold (00:47:04) - I don't own much gold or bitcoin, just a little. They both have their merits and risks like we've discussed. I'm a real estate guy. Even most gold and bitcoin proponents that I've talked with seem to agree with me that real estate is the proven wealth builder. I'm not sure if we'll ever devote another episode to Bitcoin here. I hope that today's episode at least equipped you to ask better questions, in case you want to know more about it. Today's episode had a more international than usual feel. Bitcoin has no boundaries. I'm in Ecuador and our guest Nick joined us from Argentina today. I'll be back in the US next week when I have some really important real estate trends to tell you about. Until then, I'm Keith Reinhold. Don't quit your daydream.   Speaker 7 (00:47:54) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss.   Speaker 7 (00:48:09) - The host is operating on behalf of get Rich education LLC exclusively.   Keith Weinhold (00:48:22) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Immigrants keep pouring into the US’ southern border.  How are we going to house them? We’re already millions of housing units undersupplied. Some migrants get free housing. Yet there are homeless veterans. Here’s what to expect from more immigration: more rental housing demand, more multigenerational dwellings, more homelessness, higher labor supply. Get a simple explanation about title insurance. Our in-house Investment Coach, Naresh, joins us with a real estate market update.  Two popular investment markets are Memphis BRRRRs and Florida new-builds. He provides free coaching at GREmarketplace.com. Timestamps: The immigrant crisis worsens (00:00:01) Discussion on the increasing number of immigrants and the housing shortage crisis in the United States. Housing supply shortage (00:02:44) Analysis of the shortage in housing supply, estimated to be around 4 million units, and the decline in available housing units. Impact of immigration on housing demand (00:05:07) Forecasted impacts of immigration on housing demand and the expected population growth due to immigration. Challenges and solutions for housing immigrants (00:09:03) Discussion on the challenges of housing immigrants and potential solutions, including easing construction restrictions and promoting the building of entry-level housing. Title insurance explained (00:17:29) Explanation of title insurance, its types, and its significance in real estate transactions. Update on property manager's situation (00:15:08) An update on the property manager's situation involving stolen rent payments and the tenant's agreement to compensate for the loss. Mortgage rates and inflation (00:21:52) Discussion on the current mortgage rates and their correlation with inflation, as well as predictions for future rate movements. Mortgage Rates and Fed's Strategy (00:22:54) Discussion on the impact of the Fed's decision to hold rates and its potential effect on mortgage rates. Incentives and Real Estate Markets (00:25:08) Explanation of incentives offered in Memphis and Florida real estate markets, including the BR method and new build properties. Real Estate Investment Strategies (00:29:04) Comparison of the Memphis BR method and Florida new build as investment strategies, emphasizing the benefits of each approach. Property Investment Insights (00:32:16) Discussion on the impact of property ownership and the potential for life-changing outcomes through real estate investment. Economic Uncertainty and Real Estate (00:37:07) Anticipation of potential economic volatility and its impact on real estate investment decisions, emphasizing the stability of real estate during uncertain times. Resources mentioned: Show Page: GetRichEducation.com/487 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to GRE. I'm your host, Keith Weinhold. Hold. The immigrant crisis worsens. Where are we going? To house all these people. A simple explainer on what title insurance is. Then where do you find the best real estate deals in this market today on get Rich education. If you like the get Rich education podcast, you're going to love our Don't Quit Your Daydream newsletter. No, I here I write every word of the letter myself. It wires your mind for wealth. It helps you make money in your sleep and updates you on vital real estate investing trends. It's free! Sign up and get rich education.com/letter. It's real content that makes a real difference in your life, spiced with a dash of humor. Rather than living below your means, learn how to grow your means right now. You can also easily get the letter by texting gray to 66866. Text gray to 66866.   Speaker 2 (00:01:06) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:22) - Welcome to jewelry heard in 188 world nations from Lima, Ohio to Lima, Peru. I'm your host, Keith Weinhold. Get rich education founder, Forbes Real Estate Council member and longtime real estate investor. Our mission here. Let's provide people with good housing, help abolish the term slumlord and get paid five ways at the same time. Immigrants keep pouring into our southern border. In fact, federal agents encountered roughly 2.5 million migrants there just last year alone. Now, though, not all will become permanent residents. Understand? 2.5 million. That's the population of the city proper of Chicago or Houston. All in just one year. How are we going to house all these migrants? This crisis has only worsened in that 2.5 million migrants in a year figure is, according to US Customs and Border Protection data. Now, understand first that America has about 140 million existing housing units. That's what we're dealing with today. By every estimate out there, we already have a housing shortage. The layperson on the street knows that and estimates about its magnitude.   Keith Weinhold (00:02:44) - I mean, they're all over the map, some as high is America is already 7 million housing units undersupplied in order to house our current population. And you have other estimates as low is that we're only 1.5 million housing units. Undersupplied. So let's interpolate and kind of be conservative, or just use a figure closer to a common consensus and say that we are 4 million housing units. Undersupplied. All right. But if that's our given, here's what that means. 4 million housing units undersupplied to merely reach a balanced housing supply, we'd need to build enough homes to meet population growth, plus 400,000 on top of that. And we'd have to do that every single year for an entire decade. Just astounding. And to be clear, that's not to be oversupplied with housing. That's just to reach an equilibrium between supply and demand. Now, the supply of available housing, and this is basically what I'm going to talk about next, is the number of homes for sale at any given time, right. That began gradually descending in 2016.   Keith Weinhold (00:04:02) - And back then it was one and a half to 2 million available units. And in the spring of 2020, like I've talked about before, the housing supply just crashed to well below 1 million, and it still hasn't gotten up from its mighty fall. In fact, it's only about 700,000 units available today. All right, that is the Fred active listing count and Fred's sources there. Statistics from Realtor.com. All right, so that's what we're dealing with. That's a dire situation. All right, well, how do housing starts? Look, are we building up out of the ground enough to maybe start getting a handle on this sometime in the next decade? I mean, is there anything that could be more encouraging than more housing starts? Well, really, there's nothing encouraging there at all. In fact, new housing construction starts have hit a ten month low. My gosh. So that's the supply side. All right. What about the housing demand side? Well America's population grew by 1.6 to 1.8 million people between 2022 and 2023.   Keith Weinhold (00:05:07) - And that number is forecast to climb during the next few years, worsening the housing shortage crisis. And with US births falling and deaths rising, it's immigration, immigration is what is going to fuel the majority of population growth for the next decade. Immigrant related growth that is going to impact local housing markets across the country. And it's expected to hit especially hard in the northeast, Florida, California, Nevada and Texas. And what's happening is outraging some people. Some cities are housing migrants in public places, even arenas, including ones that Texas Governor Greg Abbott has bused to the northeast. And, of course, New York City Mayor Eric Adams has been outspoken about how to handle the migrant crisis. Understand that there are homeless veterans out there in America, yet the state of Maine is giving migrants up to two years of free rent for new apartments. In that right there has made a lot of people. And there are a lot of other cases out there like that of migrants getting free housing. Now, just consider this John Burroughs research and consulting.   Keith Weinhold (00:06:31) - They provide a lot of good information to the real estate market, and they have for a long time credit to them. And by the way, if you'd like us to invite John Burns onto the show here or if you have any other comments or questions or concerns, feel free to write into us through get Rich education. Com slash contact. So you can send either an email or leave a voice message. Well, according to their industry respected data, some of which is compiled through the US Census Bureau back in 2021, that's when we reached an inflection point where the US population grew more through immigration than it did through natural increase in natural change. That is simply the births minus deaths, and that is continued each year since there is more US population growth through immigration than there is through natural increase. In fact, bring it up to last year, our population grew by 1.1 million through immigration and just 500,000 through natural increase, more than double more than double the increase through immigration as natural change. And John Burns makes the forecast through the year 2033.   Keith Weinhold (00:07:47) - So the next nine years, the growth through immigration will outstrip that some more and become double to triple that of natural growth overall. Every single year through 2033, we'll add 1.7 to 2 million Americans. And they all need to be housed somewhere. So the bottom line here is that immigration fueled growth already outstrips natural growth. And that should continue and only be weighted more heavily toward immigrants every single year for the next decade, probably beyond the next decade. We just don't have projections that far yet. Well, how are you going to house all these people when we're already badly undersupplied and understand I'm not making any judgments on saying who or who should not be able to enter our nation. That is for someone else to decide. And in fact, I'm the descendant of immigrants. They're my ancestors. And you may very well be too. And over the long term, immigrants can be an asset. I am simply here asking where and how are we going to house them for the next decade and what that means to you.   Keith Weinhold (00:09:03) - Tiny homes, 3D printed homes, shipping container homes none of them seem to be the answer. And of course, population forecasts. When you look out in the future like that, they're going to vary based on the percentage of successful asylum seekers in the 2024 presidential election winner, and more. So, the figures that I shared with you, they are only the average case. In any case, the crisis is poised to worsen because now you've seen that there is a terrible mismatch between population growth and housing starts. How are you going to solve this? The government needs to ease construction restrictions and promote the building of entry level housing. More up zoning should be allowed. Do you know what up zoning is? It means just what it sounds like increasing the housing density, often by building taller buildings. So up zoning is taller building heights. All right. Well let's look at really.   Speaker 3 (00:10:02) - Four.   Keith Weinhold (00:10:03) - Big impacts that this immigration wave is having on America's already scarce supply of housing. New immigrants typically rent property. They don't buy property.   Keith Weinhold (00:10:16) - So that's higher rental housing demand. Secondly, expect more multigenerational and family oriented dwellings. That's what's needed with additional bedrooms and affordable price points like entry level single family rentals. If you want to own rental property, that right there is the spot for durable demand. And thirdly, I'm sorry, another impact is expect to see more homeless people in your community like I've touched on before. In fact, homelessness is already up 12% year over year. That's partly due to inflation, and that is already the biggest jump. Since these point in time surveys have been used. The biggest ever jump in homelessness are ready. Those stats only go back to 2007. That's when they begin measuring it. And that's according to HUD and federal officials. And then the fourth and final impact of all this immigration is that builders and manufacturers will probably see a small uptick in labor availability these next. Few years. Okay, that part could help. America could help with this labor shortage crunch. But all the other major impacts put more demand and strain on what's already a paucity of American housing supply.   Keith Weinhold (00:11:36) - And the bottom line is that there are too many people competing for too little housing, driving up prices and driving up rents this decade. I've been talking about lots of people moving north across borders. Me, I've recently moved south across borders, though for only a few weeks here. I'm joining you from here in Medellin, Colombia today, where in between doing my real estate research here, I'll be trekking in the Colombian Andes this week and the Ecuadorian Andes next week, when I'll be based in Ecuador's national capital of Quito. And, you know, there's a real estate lesson in this itself. Really? Okay, me traveling to Colombia and Ecuador, people often label and mischaracterize areas that they haven't been to or say they hear of the drug trade in Colombia or of some of the more recent, I guess, civil unrest in Ecuador, where I'll be next week. And they think, sheesh, isn't it dangerous in those places? Oh come on, I mean, sheesh, Colombia is a nation of 52 million people and it's almost twice the size of Texas.   Keith Weinhold (00:12:44) - The question is where? Where in Colombia do you think is dangerous? Don't you expect there would be great variability there? Now you the great listener. You're smarter than the average American. So I think that you get it with last month's continued civil uprising in Ecuador, seeing that story in the news that actually reminded me to book a trip there, the opposite of staying away when they held up all the people at that TV station that was way out in Guayaquil, Ecuador. To tie in the real estate lesson here. Back to your home nation. If you do live in the US or wherever you live like I do, see our investment coach, Andrea. She moved from Georgia to the Detroit Metro a couple of years ago. I don't think you'd want to invest in real estate in Andrea's neighborhood, where she lives in Detroit, because it's too nice. The property prices are high and the numbers wouldn't work for you in an upper end neighborhood of metro Detroit. But people that haven't been to Detroit don't think about areas being too ritzy for investment.   Keith Weinhold (00:13:49) - Well, of course, some of the areas are. Some of my point is, stereotypes are hard to shake. I encourage you to get out and see the world now. I've got an interesting and really an unlikely update on my property manager that had the tenant rent payments stolen from his drop box, meaning I didn't get paid the rent. The property manager, he didn't make good on that and pay me the rent. He wanted me to take the loss from the rent payment that he failed to secure from the paper money order stolen from his overnight drop box. So the manager doesn't want to take the loss. I don't want to take the loss well, and I can hardly believe this, but apparently the tenant has agreed to make the property manager hold. The tenant would effectively pay rent twice for that month, and then the property manager will apparently finally pay me the missing rent after it flows through him. The manager. I don't know if the property manager had to convince the tenant that it's the tenant's responsibility to put the payment right into the manager's hands, or what? So the tenant, what they're going to do is pay an extra $200 a month until the $1,950 stolen rent is compensated, I guess what, eight months of stepped up rent.   Keith Weinhold (00:15:08) - And so I was just really surprised that the tenant would agree to do that. And, you know, in this saga that I've been describing to you for, I guess, the third week in a row now, you know, one Jerry listener, they asked me something like, doesn't your property manager know that you're rather influential in the real estate world? Like thinking maybe I'd get preferential treatment? Oh, to that I say, no, I don't want preferential treatment. I mean, few things are more annoying in society than people that position themselves like that. But I will tell you that I actually did meet this property manager in person before he started managing my properties, and he did wear a suit and tie in the conference room for meeting me, which I thought was interesting. Later today on the show, we've got a guest that's familiar to you. He was somewhat bearish on real estate when he was here with us back in November. That's when he talked about how activity was slow, and you might even want to sit on the sidelines of adding more property to your portfolio.   Keith Weinhold (00:16:10) - We'll see if that's changed today. Now over on YouTube, you might very much like watching me in our explained. Video series because in a video format, I can show you where the numbers come from at. Very simply, break down an investing term like net worth for one video or cash flow, or your return on amortization in another one. There's also a new video in our explained series about title insurance, and this is what you'll hear over there. The title to a house is the document that proves that the owner owns it. Without that proof, the house can't be bought or sold, and title insurance is written by title insurance companies. What a title insurance company does is research the history of the house to see if there are any complications, also known as clouds, in its ownership issues that cloud the title could be like an outstanding old mortgage that the prospective seller has on the property. A previous deed that wasn't signed or wasn't written correctly and unresolved legal debt or a levy by a creditor, like an old lien placed by a contractor who once did some work on the windows and was never paid for it.   Keith Weinhold (00:17:29) - They're all examples of clouds on a title, and make transferring the property ownership difficult or impossible. But if the title appears to be clean, no clouds, then the title insurer writes a policy promising to cover the expenses of correcting any title problems if they would happen to get discovered after the sale. Title companies may refuse to insure a clouded title to be transferred, so it's important to know about any potential issues as soon as possible. Now there are two types of title insurance. There is lender's title insurance and owner's title insurance. First, lenders title insurance. In most areas of the country, the mortgage lender requires that the property buyer purchase a lender title insurance policy to protect the lender's security interest in the real estate. Lender's title insurance is issued in the amount of the mortgage loan and the amount of coverage decreases and finally disappears as the mortgage loan is paid off. And then secondly, owner's title insurance. It protects the homebuyers interest and is normally issued in the amount of the purchase price of the property. Coverage means that the insurer will pay all valid claims on the title as insured, and in most real estate transactions, separate title policies are purchased for the lender and the buyer, and although it can vary by location, the buyer typically purchases the policy for the lender, whereas the seller often pays for the policy for the buyer.   Keith Weinhold (00:19:12) - And that's title insurance, if you like. Simple to the point education by video like that, and you'd want to get a really good look at me for some inexplicable reason. Uh, for more, check out the new explained series. It is now on our get Rich education YouTube channel or next. I'm Keith Reinhold, you're listening to get Rich education. Render this a specific expert with income property you need. Ridge lending Group Nmls 42056. In gray history, from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns are better than a bank savings account up to 12%.   Keith Weinhold (00:20:35) - Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, six eight, six, six.   Speaker 4 (00:21:21) - Anybody? It's Robert Elms with a Real Estate Guys radio program. So glad you found Keith White old and get rich education. Don't quit your day dream.   Keith Weinhold (00:21:40) - Hey. Well, I'd like to welcome in someone that you might have met by now. That is one of our terrific investment coaches. Narration. The race. Hey, welcome back onto the show.   Naresh Vissa (00:21:49) - Keith. It's a pleasure to be back on race.   Keith Weinhold (00:21:52) - I know you've got mortgage rates on your mind. It's been such an interesting topic lately, since they peaked at about 8% back in October of 2023, and almost everyone this year anticipates that now that embedded inflation is lower, that rates of all types are going to fall, rates in inflation are typically correlated. And why don't you talk to us with your thoughts about where mortgage rates are currently and where they go from here?   Naresh Vissa (00:22:19) - Like you said, mortgage rates peaked around October. The fed did their last rate hike in July 2023, so that's why the lagging effect caused rates to rise a little. And then they've been slowly creeping down since October. And what does that mean? Or where do we go from here in this new year 2024? I've been pretty spot on with what the Fed's going to do. I think they made some mistakes. I think they should have done 2 or 3 more 25 basis point hikes in 2023 because we're seeing inflation creep back up.   Naresh Vissa (00:22:54) - And that's a huge problem for the fed because their target is 2%. But that's a completely different topic. We get Monday morning quarterback the fed all we want. The fed has essentially come out and said that their rate hiking campaign is over. They've hiked enough and it's a take it or leave it. They're just going to hold and hold and hold until inflation reaches that 2% target. So what does that mean for mortgage rates? If we know that the fed isn't going to raise rates anymore, that means we are. We've already seen it. Mortgage rates have slowly creeped down. And there is a legitimate chance that the inflation rate that the CPI hits 2% by this summer, there is a chance of that. Right now we're at 3.3 or 3.4%, but there is a good chance that by the end of this summer, let's say August, we hit that 2% target, which means the fed will immediately start cutting rates after that whenever the next meeting is, I think September 2024, they'll start cutting rates, which means that's going to have an effect on mortgage rates.   Naresh Vissa (00:24:00) - We can see mortgage rates plummet even more later this year going into 2025. Now, this is just a prediction. There's a chance that inflation could go up if there is a middle East crisis or World War three or whatever you want to call it, there's a chance that inflation spikes back up and the fed just they could hold rates where they are for two years. I don't have a crystal ball in front of me. There was a black swan event that happened in 2020. Obviously, there could be a black swan event that happens in 2024. We won't know. But what we do know is the fed is done hiking rates and they're going to hold as long as possible until we get to that 2% inflation target. What does that mean for real estate? If mortgage rates are going back down, you're getting a better deal today than you were in October 2023 or November 2023. So it's almost 100 basis points lower from the peak that we saw in October. So interest rates have gone down. They've somewhat normalized to a level that digestible for investors, still not quite digestible for the average homeowner.   Naresh Vissa (00:25:08) - And the best part about this, Keith, is that the providers who we work with are still offering amazing incentives, the same amazing incentives, if not better, with the lower interest rates. So previously we brought up a 5.75% interest rate incentive program, one year free property management, another program that was two two for two years of free property management, 2% closing cost credit, $4,000 property management credit, all sorts of incentives. And those incentives are still in play while interest rates have gone down. So instead of 5.75% incentive that these providers are offering, they're now offering 4.5% interest rate. So that's why I think if there were no incentives, hey, you know what? We should probably wait until the fed starts cutting again. But with these incentives, this is incredible because they're going to be gone again the moment the fed starts cutting aggressively. These incentives are all gone. So you may as well get in. Now when home values have somewhat corrected and some markets are seeing precipitous declines, home value declines, real estate declines.   Naresh Vissa (00:26:20) - So right now it's still an excellent time to invest. Given this economic landscape.   Keith Weinhold (00:26:26) - Gray listeners are pretty savvy. And you the listener, you realize that changes in the fed funds rate don't have a direct change, and they don't move in lockstep with the 30 year fixed rate mortgages. The fed has really loaded up with the fed funds rate near 5%. Now they basically have a whole lot of ammo in the cartridge where they can go ahead and lower rates if the economy begins to get into trouble. One reason mortgage rates are higher than other long term rates is that US mortgages can be prepaid without any penalty. The anomaly in what's been different and what's been happening here is that typically there's a spread of about 1.75% between the ten year note, which has been 4% or so recently. And the 30 year mortgage rate is about 1.75% higher, which. She would put it at 5.75, but instead mortgage rates have been almost 7%. So a greater than usual historic spread between the ten year teno, which is more what mortgage rates are based off of and what that rate actually is, and the reason that that spread has been so high as this perceived greater credit risk or anticipated economic changes like this recession that is always just perpetually around the corner.   Keith Weinhold (00:27:44) - So we don't really know where mortgage rates are going to go. We know that they're not high. They're actually below their long term average. But of course, they just feel high because the only thing that was unusual is the rate at which they've increased. With that in mind here as we talk about mortgage rates nowadays. Why don't you tell us more about the incentives that are being offered right now?   Naresh Vissa (00:28:03) - The incentives are still being offered. The question is, Keith, I want to share two different strategies or two different markets. It's kind of a mix of strategy and market. The two most popular markets we are seeing right now are in Memphis, Tennessee, and in Florida. Still, Florida continues to be hot. Why is that? Why these two markets? Well, number one, Memphis still has a lot of rehab properties that you can purchase in the 100 to $150,000 range. Before the pandemic, it was common to see properties selling for 60 to $80,000. Those properties are a dime a dozen now, because of what we've already talked about the inflation, the home values, rising real estate going up.   Naresh Vissa (00:28:51) - Memphis still offers those options. Now we work with a provider in Memphis who specializes in the BR method, the B or R r. So it's for cause the BR.   Keith Weinhold (00:29:04) - It's not the February temperatures. BR yes.   Naresh Vissa (00:29:07) - Yeah. It's not the February temperatures. It stands for you buy rehab rent then you refinance and then you repeat it with the next property. So buy rehab rent refinance repeat. So this is a little different from your traditional real estate investing where you're just buying. It's already rehabbed. So you're buying renting it out. And then end of story here. It's a strategy that is meant to build equity. Almost immediately. You rehab it. And look we're not going to get into the details of this right now. I highly recommend that, folks, they can go to the GRE marketplace and set up a meeting with me if they want to talk some more about BR or if their experience and they know about BR, they may not know that we offer BR properties. But our investors have loved Memphis, BR.   Naresh Vissa (00:30:02) - They have loved it. They have bought more and more is one of our hottest asset classes or strategies right now. Memphis BR so highly recommend it. What are the incentives? There actually no incentives that our Memphis, BR provider is offering, because the incentive of the BR strategy is enough to get people to keep buying. They keep getting inventory, they don't run out. They find ways to make it work. Now in Florida, we work with a provider who we've featured on this show a couple of times before, and they're owned by the largest Japanese real estate developer called Sumitomo Forestry. They're one of the largest Japanese companies in the world. Warren Buffett owns a huge stake, Berkshire Hathaway in Sumitomo. So I highly recommend this Florida provider because they're able to offer properties that values that other providers can't compete with at prices that other providers can't compete with. They're offering the incentives that I told you, the 4.5% program, in some cases, you can buy down the rate all the way down to 4.25% if you want.   Naresh Vissa (00:31:10) - They have two years free property management or one year free property. It just depends on the package that you choose. They're offering closing cost credits. You can negotiate the list price. These are the two most popular partners we are currently working with, and I highly recommend if you are liking this real estate market, you're seeing lower interest rates. You're seeing that there's been a correction in home values and you want to get in right now. Contact your investment coach. If you don't have an investment coach, go to the marketplace. You can select me if you want, or you can select the other investment coach Andrea, it's up to you and we can share more information.   Keith Weinhold (00:31:52) - You're talking about two different strategies here, the Memphis BR and the Florida Newbuild. And I think of the Memphis burger is something that's lower cost. It's for an investor with a more aggressive disposition where it will take some of your involvement, even though it's still only going to be remote involvement. And then on the flip side, with the Florida new build, you're going to benefit from those low bought down rates that the builder will buy down for you.   Keith Weinhold (00:32:16) - The longer you plan to hold the property, the more the rate buy down is going to benefit you. And then also think of the Florida new build is kind of being a low noise investment.   Naresh Vissa (00:32:29) - You're absolutely correct, Keith. So I highly recommend those who are sitting on the fence. I've come on this podcast before and said, hey, Keith, you know, right now I'm not really sure where things are going. Like it's a little dead. Maybe investors should hold off.   Keith Weinhold (00:32:44) - Yeah, back in November, that was your guidance?   Naresh Vissa (00:32:46) - Yep. That was. And now I think because we've seen the lower interest rates, you can just get in at a much better deal. Everyone can be happy. I think our investors would be happy. And it's a great time to start investing in real estate again. Don't put it off. I remember when I first got into real estate, I was putting it off, putting it off, and I look back and I say, man, I should have gotten in four years earlier or five years earlier.   Keith Weinhold (00:33:13) - How many properties do you think it took for you to buy until it changed your life? For me, it was probably when I bought my second fourplex and I had eight units. But I think if you're buying single family homes, it takes probably fewer units than that to really start changing your life.   Naresh Vissa (00:33:30) - Yeah, one units aren't going to change your life. Two units aren't going to change your life. In my case, it's just a personal story. I bought one the first year, another one the second year, and then my third year I scaled from 2 to 7. That was the life changing experience right there. And the last two properties I bought were new construction. So number seven and number eight were new constructions. And that also changed my strategy too, because I said, hey, new construction is just so much better than these older rehab properties, just less headache. We've talked about this before on previous episodes, and so moving forward, I'm actually saving up right now to buy my next new construction property.   Naresh Vissa (00:34:13) - New construction. Me personally, I think that's a way to go, there's no doubt about it. And because I went from 2 to 7, that was the game changer for me, at least on the taxes on the passive cash flow. And look, I'm relatively young. I'm in my mid 30s. But when I think about retirement, which I don't think about much, but sometimes I do, and when I do think about it, I'm like these eight properties, if I hold on to them, that's a nice retirement that I have in retirement. That's a great passive cash flow. By then the mortgages will be paid off. Although we believe in refi til you die. Just to get a little more specific about some of these incentives, I'm looking at the Florida ones right in front of me. Option one, for example, is a 4.25% interest rate. That's where the buy down the 2.75% buyer paid point buy down. But it comes with two years of free property management. I think the best deal if you want zero buy down it's two years of free property management seller paid closing costs of 1.5%.   Naresh Vissa (00:35:19) - So that's a 1.5% closing cost credit and a 5.75% interest rate that you'll be locked into. I think that's a pretty darn good deal.   Keith Weinhold (00:35:30) - There are some attractive options there. Yeah. It's interesting you raised when you talk about how many properties does it take to change one's life. Yeah. You're right. When you buy your first property, your second property, it isn't life changing. You probably haven't own property long enough yet to benefit from leverage, and surely not cash flow just off 1 or 2 properties. But what happens is you accumulate more is sometimes you don't have to use and save up your own money to buy a new property. You might want to do that, but at the same time, the properties that you bought a few years ago have built up enough equity. So now that rather than your money buying new properties, it's like your properties, buy your new properties for you as you do these cash out refinances. And that's where you really get things rolling. So it can take a few properties and a few years.   Keith Weinhold (00:36:16) - But nowadays you're so right about the opportunity really being with New Build. Today I'm a guest on other shows and a lot of people are just an economics host. They think about real estate investing, they think about higher mortgage rates, and they're like, you know, where's the opportunity for an investor today? And that's usually what I tell him. It's with these builder rate buy downs on new build properties. Take advantage of that this year.   Naresh Vissa (00:36:38) - Absolutely. So like I said great marketplace. You can get more information set up meetings with Andrea or me or whoever you're assigned investment coaches. If you don't have an assigned investment coach, take your pick and let's get your real estate investment journey either started or on cruise control.   Keith Weinhold (00:36:57) - If you have any last thoughts, whether that's this year's direction of prices or rents or the economy as it relates to real estate or anything else at all.   Naresh Vissa (00:37:07) - Well, Keith, I think we're about to see and we don't get political on here, but for whatever reason, we tend to see crazy financial markets during election years, whether it's presidential elections or midterm elections.   Naresh Vissa (00:37:22) - We saw the stock market drop wildly in 2022 during a midterm election year. Of course, 2020 will never forget the craziness of lockdowns and masking and social distancing and what the financial markets did. I mean, all the at least the stock market. President Trump lost all the gains that he had in the stock market as president, were lost in over a two month period in February and March 2020 because of pandemic. And then they came surging back. So the point that I'm making here is economically, I shared my vision of just systematically, I think inflation is going to hit the 2% by the end of the summer. The experts initially thought it would hit the 2% by March. In the latest CPI reading showed that inflation actually went up. I think we're going to see some type of, I don't want to call it a black swan, but this year is not going to go according to plan. Maybe the inflation plummets because something deflationary happens. Or maybe the inflation rises again because something inflationary happens. That's just not on our radar.   Naresh Vissa (00:38:30) - So how does that affect real estate. Well that doesn't change what we said five minutes ago, which is right now, today. Given all this uncertainty, today is still a great time to jump in, because if there is a deflationary event, you can always refinance your rate in a year or two when rates are much lower. And remember, mortgage rates are tax deductible.   Keith Weinhold (00:38:54) - A presidential election year brings more uncertainty than usual. You can buffer yourself from that volatility with real estate and investment that's more stable than most anything else out there. I encourage you, the listener, to check out Naresh and the other coach, Andrea at Great Marketplace, and it can really help you out and help you put a plan together. Hey, it's been great having your thoughts. I think the listeners are going to find this helpful. Thanks for sharing your expertise. Thanks, Keith. Yeah, there's some valuable guidance from Naresh on where the real deals are in this market today. Memphis Bears and Florida, new builds. They're really just two of the dozens of options from Gray's nationwide provider network.   Keith Weinhold (00:39:44) - Learn more, see all the markets or connect with a coach all at Gray marketplace.com. Enjoy the Super Bowl I'm Keith Weinhold. Don't quit your Daydream.   Speaker 6 (00:39:59) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Speaker 7 (00:40:27) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

California is strengthening protections for tenants. I discuss. It’s already a disadvantageous state for real estate investors.  My Property Manager had my tenant’s $1,550 rent payment stolen from his drop box last year. He expects me to take the loss. I won’t. Who is liable for the payment - the thief, bank, tenant, manager, or the investor (me)? Tom Wheelwright, CEO of WealthAbility, joins me. We discuss the role of property tax in funding essential services.  The conversation touches on the regressive nature of property tax, alternatives to it, and the importance of understanding tax strategies. US taxes of all types keep ratcheting higher over time. But they’re still lower than most world nations.  The episode also considers the impact of elections on tax policies, emphasizing the need for informed voting regarding taxation. You need a tax professional that knows how to find you all the deductions for real estate investors here: GetRichEducation.com/Tax Timestamps: Landlord-Tenant Relationships (00:00:00) Discussion on landlord-tenant relationships, stolen rent payment, and potential elimination of property tax. New Renter Protections in California (00:02:30) Overview of new laws in California regarding upfront deposit amounts, eviction protections, and banning of crime-free housing policies. Options for Homeowners in California (00:03:50) Details about new housing laws in California, including more options for accessory dwelling units and their impact on the housing crisis. Stolen Rent Payment Dilemma (00:05:53) Narrative about a stolen rent payment, liability concerns, and the property manager's proposed resolution. Feasibility of Eliminating Property Tax (00:13:45) Discussion on the possibility of abolishing property tax and its funding of schools, fire departments, and police services. Property Tax Funding (00:18:37) Insights into the funding of property tax and its allocation to schools, fire departments, and police services. Property Tax and Its Impact (00:19:37) Discussion on the challenges and implications of property tax as a wealth tax and its regressive nature. National Property Tax Rates (00:20:40) Exploration of the national average property tax rate and its impact on property value and inflation. Proposition 13 in California (00:21:34) Analysis of the impact and benefits of Proposition 13 in California, which limits property tax increases for homeowners staying in the same home. Alternatives to Property Tax (00:23:27) Exploration of alternative taxation methods, such as transaction tax and the potential elimination of property tax in favor of a transaction tax. Primary Residence Capital Gains Tax Exemption (00:25:16) Insights into the primary residence capital gains tax exemption and its impact on homeowners, including the need for inflation adjustments. Future Taxation Trends (00:27:24) Discussion on the potential for heavier taxation and comparisons with taxation policies in other countries. Potential New Tax Types (00:29:16) Exploration of the possibility of new tax types, including the concept of a poll tax and its implications. Value Added Tax and Tax Reduction Strategies (00:31:17) Insights into the potential implementation of a value-added tax in the United States and strategies for tax reduction through understanding the tax code. Selecting the Right Tax Advisor (00:33:00) Advice on choosing a qualified CPA and the importance of having a knowledgeable tax advisor for effective tax planning. Election Year and Taxation Policies (00:34:54) Analysis of the potential impact of the upcoming election on taxation policies and the importance of considering tax implications when voting. Property Tax and School Funding (end) Perspective on property tax funding for schools and the broader community impact, addressing objections to paying property tax. Property Tax (00:37:07) Discussion on the controversial nature of property tax and its impact on property ownership. Tax Strategy and Deductions (00:38:13) Importance of finding the right tax professional for real estate investors to maximize deductions and benefits. Disclaimer (00:39:25) Legal disclaimer regarding the information provided in the podcast and the need to consult appropriate professionals for personalized advice. Resources mentioned: Show Page: GetRichEducation.com/486 Get matched with the right tax pro: www.GetRichEducation.com/Tax Tom’s book, “Tax-Free Wealth”: https://www.amazon.com/Tax-Free-Wealth-Massive-Permanently-Lowering/dp/1612681204 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. California and new renter protections. My own property manager had my tenants rent payments stolen from his drop box, and he wants me to take the loss. Then Tom Wheelwright joins me for a discussion about can we abolish the property tax today on get rich education? If you like the Get Rich Education podcast, you're going to love our Don't Quit Your Daydream newsletter. No, I here I write every word of the letter myself. It wires your mind for wealth. It helps you make money in your sleep and updates you on vital real estate investing trends. It's free. Sign up and Get Rich Education. Com slash letter. It's real content that makes a real difference in your life, spiced with a dash of humor. Rather than living below your means, learn how to grow your means right now. You can also easily get the letter by texting GRE to 66866. Text GRE to 66866.   Speaker 2 (00:01:06) - You're listening to the show that has created more financial freedom than nearly any show in the world.   Speaker 2 (00:01:13) - This is get rich education.   Keith Weinhold (00:01:22) - Welcome to GRE! From Montpelier, France, to Montpelier, Vermont, and across 188 nations worldwide. And Keith Weinhold, in your listening to get rich education across the United States, it's fortunate for us that states with landlord friendly policies also tend to be those states where the numbers make sense to. And for landlord tenant relationships, it's the state and local policies that often trump the national ones. Now, of course, in residential real estate or any real estate for that matter. I mean, you can make money in all 50 states, of course, but there's a reason that we generally avoid certain places, and that includes California. One difficulty in California has long been the process of getting a prompt eviction. It can be hard to do that even if you have just cause, where it can take months and months, or even longer than a year to get an eviction. Let's listen in to this minute and a half clip on how tenants rights are being strengthened in California. Just a little more.   Speaker 3 (00:02:30) - Well, every month, renters in California spend a hefty portion of their paychecks on housing. And as we kick off, 2024, seven is on your side with the new laws. Renters should know to save some money and also protect themselves against eviction. Before you lock in an apartment, you usually need your first month plus a security deposit in advance. Well, now the amount you have to pay up front could potentially drop by thousands of dollars.   Speaker 4 (00:02:54) - Landlords can now charge just one month of security deposit up front, and previously they could charge two months if the unit was unfurnished or even up to three months of the unit was furnished.   Speaker 3 (00:03:05) - Renters are also getting new eviction protections. Soon, it will be harder for landlords to evict a tenant under the no fault, just cause policy. Currently, a tenant can be evicted if the landlord or landlord's family is going to move in, but starting April 1st, the landlord or their family will have to move in within 90 days and live there for at least a year.   Speaker 3 (00:03:24) - Local governments are also now banned from crime free housing policies. Cities and counties can't mandate penalties or evictions against people who have been charged, convicted or had police called on them. The ban also applies to the family members of tenants. Now, renters are not the only ones benefiting from the new housing laws. Homeowners will now have more options when it comes to so-called granny flats or accessory dwelling units.   Speaker 4 (00:03:50) - Now they can separate and either build or sell an Adu and accessory dwelling unit and sell that separately as a condo. Lawmakers think that that's something that's going to help the state's housing crisis.   Speaker 3 (00:04:02) - And with housing prices sky high, this could give many would be homebuyers the opportunity they need to afford a starter home.   Keith Weinhold (00:04:09) - Yeah. So there it is in California this year. Lower upfront deposit amounts for tenants and more protection from evictions. California landlords, they can now charge just one month of security deposit upfront. That's the most they can charge. Previously, they could charge two months if the unit was unfurnished and up to three months security deposit if the unit was furnished.   Keith Weinhold (00:04:36) - Now, on the flip side, you've got to give California credit for helping homeowners, existing homeowners. They will now have more options when it comes to so-called ADUs accessory dwelling units, which some people call granny flats, because now they can separate and either build or sell in Adu. They could sell that separately as a condo, and that might help California's affordable housing crisis and the housing shortage crisis that could give more California homebuyers the opportunity that they need to afford a starter home. So that is better for first time homebuyers in California. And whether you live there or not, this matters. California has the same population as all of Canada in between 11 and 12% of all US residents are indeed Californians. Let me tell you about a completely weird situation that I have with one of my property managers. Now, I own rental properties in different states around the US, and each of those local markets has their own manager, and you might have this situation as well. Or perhaps that's what you would soon like to do to have this situation of having properties in multiple markets.   Keith Weinhold (00:05:53) - Well, about 12 months ago now, I got a message from a property manager that manages a bunch of single family homes for me in this one particular area, and he let me know that I was not going to be seeing a rent payment for one of my tenants. And that's because the tenant paid the rent, but they paid it with a paper money order that was left in the manager's overnight drop box and the mail from that box. Was broken into by a thief and stolen. And then apparently the thief converted the money order at the bank by in this house. Unbelievable. By waiting out the name of the money order recipient, which I guess would have been the manager. And then the thief wrote in his own name on the Wite-out. Now there were three tenants that had their payments stolen from my property manager like this. So mine was one of the three from my tenant. And the thief also broke into two other real estate offices around the same time. So the thief broke into three offices total, apparently.   Keith Weinhold (00:07:01) - Now, the question that we're leading up to here is, I tell you more about this. Who is liable for this missing payment? And really, there are five parties here where you could give an answer. Is it the thief, the manager, the tenant, the bank or me? The investor who is liable for that stolen payment? Who should make good on it? Who will make good on it? Now, the amount that we're talking about is a stolen rent of $1,550. Okay. This is a rental single family home that I have. So I've been out this $1,550 for about a year now. And by the way, the tenant that had the rent payment stolen a full year ago, they still live there in their rent is now 1750, but it was 1550 them. Now I'm only making a thing of this a full year later and starting to ask my manager to make me whole now. And that's just because I've got a lot going on in life and $1,550. That's just not enough to make that big of a deal over.   Keith Weinhold (00:08:03) - But when life took a pause and I got to thinking about this some more, the principle of it is really bothersome. Wouldn't it bother you? I mean, if I let others like my manager get away with something like this, then I could get walked all over in other ways. Now, when I requested that the manager paid me because it was their drop box that it was stolen from, really, the only answer that they want to give me is that they can't pay because they don't have insurance to cover that type of loss. Well, I don't either. Now, should the bank be the liable party here for processing a payment where the pay to name was whited out, and then the criminal wrote over it with his name? And by the way, the criminal used his real name. And that's also part of how he got caught, which is unbelievable. And they also, though they do know who the criminal is because they have video surveillance of him at the bank depositing the money orders. I mean, how should he have been able to catch them? But the process of trying to get the criminal to remedy this or the bank to remedy this, those approaches have not worked.   Keith Weinhold (00:09:14) - And I think that the manager wants me to take the loss and pay because he doesn't want to take the loss. And you know, something? Admittedly, between the tenant, the manager and I, I'm probably the one that could most afford the loss, but that does not make it right now. At last, check the property manager who keeps refusing to pay up. They propose something ridiculous that I want to share with you in a moment. You're not going to believe it. Well, as you know, you have a written management agreement when you enter in an agreement to have your manager manage your property for you and that management agreement that's between you, the investor and your manager, just those two parties. And as we know, one job that your manager does for you is that they collect the rent for you. So I figured what I would go do is look at my management agreement, and I'm going to go cite that line where it says that the manager collects the money for the property owner.   Keith Weinhold (00:10:16) - But would you believe it? Nowhere in our agreement does it state that the manager collects the payment for the owner. So here's one lesson. The next time you're signing a new management agreement, see that that line is in there. I think it's just kind of easy to assume that it is. But, you know, those agreements, they're typically written by the property management company. So they might write it in ways that protect them. But here's the thing. The manager still doesn't want to pay $1,550 and was stolen from the drop box. They had proposed something that seems wild to me when I said I'm not going to let go. They told me that their plan is to ask the tenant to pay by adding an extra 150 or $200 to their monthly rent payment until the deficit is paid up. So that would be what, something like eight months of payments. Now, I doubt that the tenant would agree to something like that. If the manager is accepting rent in a drop box, it seems like it's the manager's responsibility to make sure that it's secured.   Keith Weinhold (00:11:20) - So to me, of the five parties involved here, it should be either the criminal, the bank for processing the payment that way, or the manager that should be held liable. One of those three parties, not the property owner and not the tenant. So you've got to believe that I consider firing this property manager and using someone else. And by the way, whenever you have to do that, if you ever do have to do that, and I've had to do it before, you can ask the provider that sold you the property for new property management recommendations, or you can find some new property managers by checking online forums with other clients that have actually used property managers. If you replace your manager. What that does is that your manager, they're going to lose more than just that 8 to 10% monthly management fee. They'd also lose future leasing fees. They lose any arrangements that they have with service providers to service your property, like plumbers and electricians. When it comes time for you to sell your properties that your manager manages for you, that manager might also lose the ability to collect referral fees at that, manager has the real estate license so you can make firing your manager hurt them more than you might think.   Keith Weinhold (00:12:40) - Now, I don't like hurting anyone in business. That's why I'm trying to find a constructive way to resolve this. But the manager has had a long time to make this right with me. They're probably just hoping I would forget about the whole thing. The property manager does not want to take the loss, and I will not either. I'll keep you updated on how this weird situation concludes here, but yeah. Hey, I'm an investor just like you. I want to dig in and get involved sometimes and see if something like a stolen rent payment happened with a stock that you own. I mean, you might take the loss there and you wouldn't even know that it happened. So I like real estate investing trends agency with a manager. I don't have the day to day involvement responsibility, but yet I can see a lot of what's going on with the monthly statements that they send me. Or if I have a concern, I know who I can directly contact to remedy something. And if you're a new real estate investor, please be mindful that this situation with my manager and the stolen rent payment is not typical at all.   Keith Weinhold (00:13:45) - In 20 years of doing this, I have never had a situation like this. In a few minutes here, we're going to discuss how feasible it is that America could eliminate the property tax altogether. And our guests. He's also going to tell us why he's been seeing more people like you paying tax on the gain from the sale of your primary residence. Hey, would you like to see me at breaking down real estate investing concepts on a whiteboard? Yes, a magic marker in hand with a whiteboard and an easel. Well, you can watch me do that from the comfort of your home. Over on our YouTube channel, we recently launched our explained series, and I begin it by breaking down basics and just showing you an actual net worth and actual cash flow statement, and then figuring out how you can take those and learn exactly when you can quit your job and retire. It's easier to do the numbers over there than it is here on an audio format, and later I'll whiteboard some more advanced concepts for you soon, like explaining an inverted yield curve.   Keith Weinhold (00:15:00) - Watch me on the whiteboard in our explained series. It is free on YouTube right now and our channel is pretty easy to find because it's called get Rich education. Eliminating the property tax. Next I'm Keith White hold. You're listening to get rich education. Role under the specific expert with income property, you need Ridge lending group and MLS 42056 in gray history, from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns are better than a bank savings account up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them.   Keith Weinhold (00:16:20) - It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six.   Speaker 5 (00:17:02) - This is author Christine Tait. Listen to get Rich education with Keith Reinhold and don't quit your Daydream.   Keith Weinhold (00:17:19) - A renowned tax and wealth expert is back on the show with us today. He's also a CPA, and he's the CEO of a terrific tax firm called Wealth Ability. He's the best selling author of the Mega-popular book Tax Free Wealth, which you may very well want to check out again, because he just updated that book with a third edition. I have the original tax free wealth on my bookshelf.   Keith Weinhold (00:17:40) - Welcome back to Dr. Tom Wheelwright. Thanks, Keith. Always good to be on your show. Tom, we have a lot of real estate investors listening. Why don't we talk about property tax? It applies to one whether they own income, property or whether they own a primary residence. Tom, I thought about the discussion that we were going to have today. I was thinking about it yesterday. And you know what happened? I looked out my window and the garbage had just been picked up from the curb, and this was shortly after my driveway was plowed of snow. Okay, now, if an alien came down from another planet and we described that there's a property tax in the United States, so we'll probably believe, oh, all right. Well, they're going to like, pick up your trash and like, plow your driveway for you and everything for that property tax you pay. It's like, oh no. Well those are separate services that I pay. So really what I'm getting at is maybe more philosophically in big picture, should there be a property tax? That's a big question.   Keith Weinhold (00:18:37) - Yeah. But let's do talk about what property tax funds. So property tax funds schools. It's the primary funding mechanism of schools. If you talk to an old timer they still call it school tax sometimes. Yeah it funds schools. It funds fire departments. It funds the police. So those are the three big services that have funds. This is why, by the way, Keith, when there was that group in Seattle that took over that section of the city and the government refused to send to kick those people out. I don't know if you remember this a couple of years ago. And I'm going, wait a minute, why are we paying property taxes? Because the police force and the fire department were being paid by property taxes on the buildings that had been taken over by this renegade group. Wow. And so I have a commercial property. I pay a huge property tax on that commercial property doesn't house children, so I don't send children to school, but I still pay tax for education. Why? Because I need educated employees, so I'm happy to do that.   Keith Weinhold (00:19:37) - I pay for fire protection. I pay it for police protection. I think what the money is used for generally is fine. I don't have an issue with that. The challenge I have with the property tax is twofold. One is it is a true wealth tax. If your property goes up in value, you pay more tax and it's a tax on inflation, because if you're a property goes up in value because of inflation, you pay more tax. And then second of all, you're out to sell your property. But it's also a regressive tax. So people who have no more income, they're on fixed income, they're Social Security. They have a pension plan whatever that their property goes up because of inflation, not because it's a better property and they're paying more tax even though their incomes not going up. That's my biggest challenge with property tax. That's really a good point. I had never thought about it that way before. The property tax can be a regressive tax. Therefore you pay a higher rate with a lower income, which is what a regressive tax means.   Keith Weinhold (00:20:40) - I know that some jurisdictions try to help senior citizens out with that. Maybe you both say like the first 100 K of assessed property value is exempt. But yeah, on basis you're right about that. With it being a regressive tax. Tom, I kind of look around the landscape. We deal with a lot of markets and properties and providers nationwide here at gray, and I seem to see a national effect of property tax rate of about 1%, something like that's pretty common 1% of value on a 500 K property. You're going to pay about $5,000 in property tax. Of course, that varies substantially. New Jersey is a really high one. So the states in the Deep South are really low ones. But what are your thoughts about that 1% average national effect? Think about that tax rate. Let's say you bought that property for $50,000. You bought the property for $50,000 based on your income. You bought it for $50,000. Now, because of inflation, it's $500,000. Now it's really a 10% of what you bought it for.   Keith Weinhold (00:21:34) - So it's not really 1% anymore. It's 1% of the price value. It's not 1% of what you paid for it. This is where California with prop 13 they apt their property tax. Right. If you didn't move into a new property. I loved that proposition. Frankly, I love prop 13 because what I said was, look, if you're staying the same home, your property tax isn't going to go up. Because you get no more value out of it than you did when you bought it. So why are you getting more tax even though you're not getting more value? That makes no sense. I'm not a big fan. You know, like Texas has a they rely heavily on property. Remember we have three types of taxes. We have an income tax. We have a transaction tax which the biggest one is sales tax. But it's also excise taxes. And then we have property tax. And property tax and estate tax are the only two wealth taxes we have. And property tax is a true wealth tax.   Keith Weinhold (00:22:29) - Why is it allowed. Why can we have a property tax in our hometown. But we can't have a federal property tax because Constitution doesn't allow a federal property tax. But our state constitution probably does allow a state property tax. And so robbery taxes are really interesting. I talk about in tax free wealth. Tax wealth has a chapter on property sales and property tax. It's my least favorite tax because again A it's regressive and B it's a tax on something I've never realized. The only benefit I have is that I live in it. But that benefit's not gone up even though the property tax goes up. You brought up so many interesting things there. Sure, that proposition in California is what kept people staying in their homes for a very long time. But we think about property tax and should there even be one? As we ponder that big question, what do other nations do? Because a lot of times I know you look at foreign nations tax policies. Most localities. A lot of them have a local property tax.   Keith Weinhold (00:23:27) - I don't think it's uncommon. What's interesting to me is that Missouri is looking at getting rid of their property tax and putting in a transaction tax instead. So in other words, you don't pay a tax for owning the property. You only pay a tax when you sell it. Well, that actually makes more sense. You know, in previous episode we talked about more versus United States. We talked about that whole idea of a wealth tax and realized gain. And some states do this already. California does this, Hawaii does this, Pennsylvania does this where you have a tax when you sell the property, an excise tax when you sell the property, or a transfer tax, if you will? That makes some sense because you did get the money. You actually have the ability to pay the tax. It's not coming out of your earnings. It came out of the sale of the property. So it's a tax on the sale. Frankly, if I had to choose, I would probably choose the transaction tax.   Keith Weinhold (00:24:23) - I mean, I would choose to have very little tax. I think we need fire. We need police. Those two things we absolutely need we need roads. We should have taxes to pay for those school. I'm a fan of school choice. And should we have property tax pay for those? Or is that something that we ought to pay for some other way? I don't know, there is argument that, again, that should be maybe you ought to pay that out of sales tax or a transaction tax. Yeah. I think I'm feeling your vibe on that one time that a transfer tax of real estate is somewhat more palatable than this ongoing property tax that you have to pay, because the transfer tax probably is realizing a gain there. Along with that, even though we probably don't like that piled on top of ongoing property tax, for sure. We think about property taxes, something that applies to every homeowner, whether they own income, property or not, is the pretty well known primary residence capital gains tax exemption for quite a while.   Keith Weinhold (00:25:16) - That's been 250 K if you're single and 500 K if you're married. Can you tell us more about that and where the direction of that's going? And is that adjusting with inflation or what are your thoughts. Yeah, it's not adjusting for inflation unfortunately. It's interesting. Some things adjust for inflation. Some things don't. Tax brackets adjust the exclusion for your primary residence doesn't. And your deduction for miles driven for charity doesn't adjust for inflation. But your deduction for miles driven for work does adjust for inflation. So it's very interesting to see what does Congress say. We're going to adjust for for inflation. What they don't. That came into effect under Bill Clinton prior to his presidency. You had to actually put your new house, had to be worth more than your old house is very much like a 1031 exchange where as long as you bought a new house that was equal to or greater in price than the sales price of your old house, you paid no tax but the minute you went down. So when, for example, you're retiring and you decide, well, I don't need all this house, my kids are gone, I'm going to go move into a condo on the golf course, or I just don't need that much space.   Keith Weinhold (00:26:25) - Then you had to pay tax. What happened in the Clinton era was we actually got this exclusion, which is as long as you live in the house for two years, two out of the last five years, you get 100% exclusion on the gain, up to 250, like you said, 250 single, 500 joint. I would love to see them index that. I think it needs to be indexed. Frankly, they need to adjust it retroactively because too many people got caught in this last run up where for the first time ever, I saw a lot of people paying tax on the gain from the sale of their house. Yeah, that's something that you hope that you don't have to do. We'll see if and when they do adjust that for inflation. I'm not always talked about property tax bill. Why don't we open it up somewhat more and talk more about what we discussed the last time you were here on the show with us? Well, I think we already learned then whether Americans, just over time, over the long term, are more likely taxed or more heavily taxed.   Keith Weinhold (00:27:24) - It seems like they're always piling on more and more taxes. What are your thoughts with where we're going on lighter taxation or heavier taxation? I said, well, we rarely get taxed less. We're actually taxed less than just about any other country. Just to be clear, we pay a lower share of our income in taxes than just about any other country. But of course, we have much, many fewer benefits. We don't have national health care. We have Social Security, but it's a small amount, right. In France, remember, they had these big protests, right? Because the French president raised the retirement age from 62 to 64. Why were so many people protesting that? Well, it's because in France the salaries aren't enough to keep up. And so they're relying on that. They can't save up and say, I'm going to retire earlier because I've saved up money. There's not enough income for them to save. So they're relying on the government to save for them. That was a hard thing for them.   Keith Weinhold (00:28:18) - We have a hard time understanding that in the US because our tax rates are so much lower. France, for example, I was. Reading. That's the other day. 50% of GDP goes to taxes in France. In the US it's about 26% of GDP. So we're almost half of what percentage of our GDP goes to taxes. So they're the highest. What's happening is you're seeing Germany. There's this going up Korea. Theirs has gone up, Japan theirs has gone up. And the US, they expect ours to be up. It's 28% of GDP within a few years. So it's all relative, right. The problem is, is that the taxes are more and more as a proportion of our gross domestic product. If you think the government should stay out of our lives, then you're on the wrong end of that stick, because that means that the government's getting more and more involved, and more and more money is being spent by the government instead of the private sector. Well, Tom, you've been here on the show with us a lot of times.   Keith Weinhold (00:29:16) - We've talked about how your rental income gets taxed. We've talked about capital gains tax and property tax and sales tax and income tax, one tax type we haven't talked about. When we think about whether things just get worse as the government piles on more taxes, is there any threat in your mind of a tax for those that don't know what that is? That's basically a head tax. That's a tax that's imposed on you just for existing. Is that a possibility? Zionist capitation tax and not a decapitation tax. It might feel like one. Yeah. It's, uh, commonly called the poll tax write poll. As in poll. You go to the polls that the number of people that is actually allowed, the government could impose that that is allowed under a constitution, a poll tax. Great Britain has a poll tax. So it's not unheard of. I haven't heard a lot of people talk about. The problem is, is that a poll tax is a tax on voters. And we know politicians don't want to put a tax on voters.   Keith Weinhold (00:30:16) - Right. So where's the incentive to vote? They're more likely to put a tax on corporations who don't vote. I'll tell you the favourite tax. The favourite tax is to put a tax on out-of-towners. Somebody who's coming into your place like a travel tax. One of the key policy points of any tax unit is you want to export your tax to people who don't vote for you. So you're always trying to put the tax on somebody who doesn't can't vote for you. Because if you put on people who do vote for you, you will soon lose your job. Interesting point. That's why you see taxes on Ubers and taxis and hotels, resort taxes. You see those kind of tax skills are basically export tax, right? They're taxing people who don't live and vote in your state or in your location. A poll tax would be a tax on people who do live in your state or location. I have a hard time seeing that one coming down the line. More likely is you really wanted us to be more competitive with the rest of the world.   Keith Weinhold (00:31:17) - We'd have a value added tax in the United States, we do not have one. And if you wanted to make us more competitive with the rest of the world, if you really want to raise funds or you want to pay off the deficit, or you want to get rid of an income tax, the best way to do it would be a value added tax. Well, maybe you, the listener, just have a shred of a little something to be thankful for. There are tax types you've heard of that we don't actually have yet. There actually are some remaining. It seems like they'll all get used up. Europe has a. Europe uniformly has a 20% value added tax that just goes to increases the price of your meals at a restaurant, increases the price of every product you buy. That's a value added tax. That's a national sales tax that is common in the rest of the world. We're the only major developed country that doesn't have one. Well, at least in Europe, they're not asking that.   Keith Weinhold (00:32:06) - When you get your restaurant meal bill that you add a tip onto the tax about, like what's happening a lot of times here. And I think a lot of people aren't even aware of that. That's another absurdity. Yeah. Another absurdity of being a consumer in the United States today. Tom, you're really an expert in helping people understand that there are so many parts of the tax code out there for reducing one's taxes. The tax code, mostly most of the pages are about tax reduction. There are just a few pages about the tax tables. And then basically the rest of the tax code says you have to pay the tax in those tables if you don't do these other things. So tell us more about how one and everyday people can learn and get informed by being matched up with the right professional, so they can learn about all those exceptions to paying those taxes in the tables. I appreciate your promotion of tax free wealth because that's the starting point. You really do need to understand the concepts, and the concepts are all in tax free wealth.   Keith Weinhold (00:33:00) - Okay, so really inexpensive way for you to get an education. Once you've got the education though, you do need a team around you. And what I think the most important person, well outside of your bookkeeper, who I actually think is the most important person of that team, I think your number two person is your CPA. And I'm going to be very specific. There are a lot of people who hold themselves out as tax advisors, and I would not touch them with a ten foot pole. Whether it's I don't want a financial planner giving me tax advice, nor do I want a CPA, give me financial advice. Let's have a specialist do the specialist work. I don't want an enrolled agent. And the reason I don't want enrolled agent. If I'm really simple, that's great. But remember enrolled agent, they have very little education. They took a test. An IRS test that takes a couple of hours. That's all they did. If you're a business owner, you're a serious investor. You need a CPA and you need a CPA who cares more about you than they do about protecting themselves from the IRS.   Keith Weinhold (00:33:59) - This is one of my big complaints about some of my fellow CPAs is they seem to be so concerned about an audit. And my question is, if you're so concerned about an audit, does that mean you're afraid of the IRS? And if your CPA is afraid of the IRS, it's probably time to get a new CPA. That's right. Well, please, I tell you, we have a resource on our website where you can connect with Tom's team and get messed up with the right advisor. That is it. Get rich education complex. But like Tom said, a good thing to do is read his book, Tax Free Wealth first. That way you'll be able to ask the right questions so you can get the right answers from the right professional that you can be messed up with. Tom, do you have any last thoughts? Here is we're still relatively new in a year here when it comes to taxation, and one taking their plans forward through the year. Let's remember that we have an election coming up this year.   Keith Weinhold (00:34:54) - And one of the biggest issues in this election is going to be taxation. There's certain politicians that would like to take the 2017 tax reductions and extend them. There are others that would like to eliminate them and actually raise taxes. A couple of years ago, we had a proposal called Build Back Better. Great. Started as a $6 trillion proposal and ended up being $2 trillion and change the name to, quote unquote, the Inflation Reduction Act, or as I like to call it, the Inflation Enhancement Act. But that's going to be back. So you may love one party. You may hate the other party. Just know that when you go to vote, think about you are voting for a tax increase or a tax decrease depending on who you vote for. Look at their policies. Look at what they propose. Look at what they've been talking about. Don't believe for a second that they're gonna all of a sudden say, well, we're not going to raise taxes, when in fact they're looking at you and they're going, is that my money in your pocket? It is a presidential election year.   Keith Weinhold (00:35:59) - The good news is you now have a way for your voice to be heard this year in taxes are part of that, Tom. We're right. It's a great having you back on the show. Thanks, Keith. Sometimes I hear people that pay property tax but yet don't have any children themselves. They say that, well, since property tax often funds schools that they're opposed to paying it. Well, let's look at it this way. I'm a person that doesn't have any kids yet. And even if I never do have kids, well, when I was a kid myself, I attended public school. So therefore I was the beneficiary of adults paying property tax to fund the school that I went to. So therefore, when you think of it in those terms, it's more palatable for a, I suppose, non father like me to pay it forward, pass it along and pay school tax for others. So though there may be other objections to paying property taxes, not having children, that's often not such a valid reason when you think about it that way.   Keith Weinhold (00:37:07) - Now, I think that the Liberty First Society's Christian Hall, she has an interesting take on property tax. Here's what she said. And I quote, property tax should end when you complete the sale or purchase, just like you do when you buy groceries or a bicycle. It's theft of ownership to keep paying property taxes, especially when government has the authority to take your property. When you don't pay your taxes for three years. That's not property tax, that's rent, and you're a tenant in your own home. Property tax makes government the owner of your property, not you. End quote. And again, that is from the Liberty First Society's Chris Ian Hall, thought provoking, if nothing else. Now, when it comes to finding the right professional to get real estate investors, all of our generous and legitimate deductions that we enjoy, I mean, it is one of the five ways real estate pays. After all, you do need to find the right pro so that they can find all the deductions for you.   Keith Weinhold (00:38:13) - And this is just the time of year to get that right. For more than ten years now, I have had the world's number one tax firm do my wealth strategy, my tax strategy and my tax preparation. I even use my bookkeeper through them. They understand what real estate investors need. They make sure that I don't miss out on optimizing benefits and deductions for mortgage interest and tax depreciation and property tax and cost segregation, which accelerates my deductions. And they make sure I get infinite capital gains tax deferrals and bonus depreciation and so much more. All the good things that real estate investors get when you work with an investor centric tax professional. In this way, you can also legally write off many of your expenses for property management and maintenance and utilities and even your travel. So you can do that by connecting with Tom's team by visiting get rich education.com/tax. That is this week's actionable resource. Until next week I'm your host Keith White. Hold don't quit your day dream.   Speaker 6 (00:39:25) - Nothing on this show should be considered specific, personal or professional advice.   Speaker 6 (00:39:29) - Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Speaker 7 (00:39:53) - The preceding program was brought to you by your home for wealth building. Get rich education.com.  

Has America already descended into a depression worse than the 1930s Great Depression? Today’s guest, Doug Casey, suggests that we have. He joins us from Buenos Aires, Argentina, where inflation has been 100%+. Is real estate cheap, adequately priced, or overpriced? America’s national debt is so bad that we must now spend $1T annually just on the interest alone.  Keith Weinhold and guest Doug Casey explore the silent economic depression in America, discussing signs and impacts on daily life.  They compare real estate affordability across locations, viewing housing as a consumer good. Doug offers insights on Argentina's housing market, inflation, and the new president's influence.  They critique government intervention, fiat currency, and advocate for gold-backed currency, emphasizing moral values.  Strategies to counter currency debasement, like investing in durable goods and property improvements, are shared, alongside the benefits of spending on experiences and potential tax advantages of real assets. Timestamps: The silent economic depression (00:00:00) Discussion on the concept of a silent economic depression and how it may be affecting America. Real estate and property management issues (00:02:32) An unusual property management incident and the impact of inflation on real estate in Argentina. The guest's background and consistency (00:03:53) The guest's background, consistency in views, and a discussion on diverse viewpoints. Comparison of housing costs (00:04:59) Comparison of housing costs and other expenses between the Great Depression era and the present day. Real estate in the United States and Argentina (00:06:08) Comparison of real estate prices and living expenses in the United States and Argentina. Housing as a consumer good (00:09:29) Discussion on housing as a consumer good and the impact of government policies on housing and wealth creation. Comparison of housing costs and amenities (00:10:56) Comparison of housing costs, amenities, and political changes in Argentina. Impact of inflation on standard of living (00:14:37) The impact of inflation on capital, standard of living, and the unsustainability of the current economic situation. Government deficits and inflation (00:18:05) Discussion on government deficits, inflation, erosion of the middle class, and the role of the government in creating inflation. A Currency and Gold (00:20:22) Doug Casey discusses the benefits of using gold as currency and the potential impact of government involvement. Investing and Loans (00:22:42) Keith discusses investing in real estate and loans, providing insights and tips for beginners and veterans. Government Numbers and Inflation (00:24:54) Doug challenges the accuracy of government unemployment and inflation figures and predicts higher inflation levels due to excessive money creation. US Involvement and Financial Meltdown (00:27:57) Doug discusses the impact of US military involvement, potential financial meltdown, and the unstable foundation of global debt. Strategies to Counter Currency Debasement (00:32:05) Doug presents the concept of saving in durable goods as a strategy to counter currency debasement and avoid capital gains tax. Beating Inflation (00:34:41) Keith proposes spending money as a way to beat inflation and improve quality of life, while Doug emphasizes the importance of saving for the future. Doug Casey's Novels and Publications (00:36:44) Doug promotes his novels and encourages listeners to subscribe to internationalman.com and watch his YouTube channel for more insights. Improving Quality of Life and Beating Inflation (00:38:03) Keith suggests making improvements to one's home as a way to beat inflation and improve quality of life, without incurring higher tax assessments. These are the timestamps covered in the podcast episode transcription segment, along with their respective topics. Resources mentioned: Show Page: GetRichEducation.com/485 Doug Casey’s YouTube Channel: https://www.youtube.com/@DougCaseysTake Doug Casey’s blog: InternationalMan.com Doug Casey on Donahue in 1980: https://youtu.be/uAk6_74m_kI?si=qeQw0404xcTIAsOU For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. Is America suffering from a silent economic depression? It's gradually creeping into your life, but you just haven't noticed. That's what today's guest believes. Where do you look for signs of this? And what do you do about it? A silent depression today on get rich education. If you like the get Rich education podcast, you're going to love art. Don't quit your day dream newsletter. No, I here I write every word of the letter myself. It wires your mind for wealth. It helps you make money in your sleep and updates you on vital real estate investing trends. It's free! Sign up a get rich education.com/letter. It's real content that makes a real difference in your life, spiced with a dash of humor. Rather than living below your means, learn how to grow your means right now. You can also easily get the letter by texting gray to 66866. Text gray to 66866.   Speaker 2 (00:01:06) - You're listening to the show that has created more financial freedom than nearly any show in the world.   Speaker 2 (00:01:13) - This is get rich education.   Keith Weinhold (00:01:22) - Welcome to GRE, heard across 188 world nations, including Equatorial Guinea. I'm your host, Keith Weinhold. This is get rich education, the voice of real estate investing since 2014. How can your quality of life and your one and only standard of living actually be getting worse today, especially here in the United States? From your iPhone, with fast Wi-Fi to a stable electrical grid to a bounty of produce for you to select at the supermarket, well, we'll soon learn why today's renowned guest and prolific author feels like we've already entered a silent depression. He is going to make his case. We have plenty to get to with our guest. But first, I've got a problem with one of my property managers, and this is a really weird one. In two decades of doing this. This is among the weirdest. What happened a while back is that one of my ten ends that this manager manages. Okay, the tenant paid his rent with a paper money order and he placed it in the property managers drop box.   Keith Weinhold (00:02:32) - They're at their offices. The money order was stolen out of the drop box by a thief. The manager doesn't want to take responsibility for it. And I'm the one that's been out. The rent money, the $1,550. I've told the manager, no, I'm not going to be pushed around like that. So there are more details on that, which I expect to tell you about next week. It is an interesting situation to say the least. I'll give you more on the payment stolen from the manager's overnight drop box. Now today's guest will join me from Buenos Aires, Argentina, where they currently have inflation of perhaps 100% or 200% per year. We're going to talk about real estate and probably more with what he calls the silent, depressed. Now I'm probably a more upbeat, optimistic sort than our guest in general, but that does not make him wrong at all with this silent depression. But here, in a world where we've increasingly heard the word diversity a lot for the last decade, well, there are a lot of ways to think of diversity, and I like to champion some diversity of thought around here with our guests viewpoint today.   Keith Weinhold (00:03:53) - Now, I just recently saw a YouTube video of today's guest on The Phil Donahue Show in 1980. It was probably about the best known talk show that there was back in that era. And by the way, I'll leave that link in the show notes for you so that you can watch it too. And since today's episode is episode number 485, you can get the show notes either it get Rich education comp 485 or on your pod catcher. But yeah, Phil Donahue, he was kind of before my time. But yeah, really well-known show. And it's interesting to see today's guest and what he looked like back then. And from watching that video myself, I can tell you that one place where I do need to give this guest credit is with consistency. Now, does every single the world is going to end sort of thing that he says will happen? Does that end up happening? That's up for you to determine. But, you know, he has been consistent on promoting his ideals for a smaller government and more he's returning.   Keith Weinhold (00:04:59) - Guest. Let's meet him and discuss the silent depression. Are we on the verge of an economic depression known as a silent depression, where you're not aware of it? Today's guest has pointed out that during the 1930s Great Depression, the average home cost just three times the average income, but today it costs about eight times as much. The average car costs about 46% of a year's earnings back then. Today, it eats up about 85% of the annual average wage. Rent, which previously claimed just 16% of yearly income, now demands an astounding 42%. So by these metrics and others, you might wonder if the average person is actually in a worse position than during the Great Depression, which was the most challenging economic period in the last hundred years. A lot of people feel it. You might be getting squeezed, and by the end here you'll hear some new ideas for what you can actually do about it. We have a rather revered guest here with us today. He's been here a few times before to discuss other economic and real estate concepts.   Keith Weinhold (00:06:08) - He's a very popular author, often writing around the topic of crisis investing and known as the International Man. He hosts a podcast on YouTube called Doug Castaic. He's known as the International Man because he's extremely well traveled. He has residences in multiple nations today. Hey, it's great to have back on GRI the incomparable Doug Casey. Thanks. Okay.   Doug Casey (00:06:30) - It's a pleasure to be here. At the moment I'm in Buenos Aires, where I've lived part of the Earth for a long time.   Keith Weinhold (00:06:38) - Truly the international man living up to it today. Doug, I touched on housing to start with. With real estate show housing is one's biggest recurring expense in life, unless it's taxes. But today I actually think it's a valid question. Is real estate cheap in the United States? Is it adequately priced or is it overpriced? Now, depending on how you slice it, the median U.S. home value is 450 K, but if your mind shoots right to dollars like that, when you consider valuation, the dollar has been debased so much that it's a pretty poor measuring stick.   Keith Weinhold (00:07:15) - I know you like gold. A bar of gold is the same today as it was 100 years ago and a thousand years ago, and today it takes about 40% fewer ounces of gold to buy a home today than the long run 100 year average. So what we just did there is we got rid of dollars. We compared the relative cost between two real assets gold and real estate. You brought up a really good point in one of your articles, though. I think it's a better way to measure the cost of housing as a percent of one income, it takes two and a half times to three times as much of that annual income to own a home or rent a home today than it did in the 1930s. So when we think about housing costs, what are your thoughts?   Doug Casey (00:07:58) - It depends on where you are and where should I start? Right now, as I said, I'm in Buenos Aires and the apartment that I'm in here is about 5500ft² in a part of town, which is very much like the Upper East Side of New York.   Doug Casey (00:08:16) - It's called the Recoleta. Now, what would a a very classy top building with 24 hour security apartment of 5500ft² cost you in, uh, on the Upper East Side of New York, I'd say probably $20 million, roughly here in the Buenos Aires. This apartment is really got a current market price of about $1 million. In other words, 5% of what it is in New York. Yeah, costs of maintaining it are in line with that. That's point number one. Point number two is in most of the world, or certainly here in South America, when you buy something, you buy it for cash. In the U.S., when you buy something, it's usually for a mortgage. And the old saying, I'll give you the price you want if you give me the terms I want. Right. Not quite as attractive as it was just a while ago, where the average mortgage, now 30 year mortgage fixed in the US 7%, and for a while it was 8%. What do I think of the price of housing in the US? That's where most of your listeners live.   Doug Casey (00:09:29) - First of all, housing is not, in my opinion, an investment. It's a consumer good. It's very expensive. Consumer goods are not throwaway consumer goods like toothbrushes. Longer live consumer goods like a suit of clothes longer yet like a car and a house is just a longer alive consumer good. But an investment is something that produces new wealth, right? Housing doesn't it? Can? I mean, if you use it as a business. Yes. Okay, look, treat your house like a consumer. Good. That's the first mistake that everybody makes. They think it's an investment. That's going to go up. It's not. It's like a car. It should depreciate. It's got expenses to maintain it. That income that maintains you. I know you can rent it out and so forth, but.   Keith Weinhold (00:10:20) - Yeah, we champion residential income property around here. Something that I think you and I do consider an asset. But yeah, you're completely right. When you talk about the primary residence side, a home is primarily a liability, not an asset.   Keith Weinhold (00:10:32) - Why is that? Because a home takes money out of your pocket every month. Rather than putting money into your pocket every month like you touched on. Doug, before we go on about that 5500 square foot apartment there in Buenos Aires, I'm not familiar with the area. Can you just tell me a little bit more about the amenities that you have there? Are there very steep condo association dues? Is there a doorman? Tell me more about it.   Doug Casey (00:10:56) - Well, we have a doorman here in the building. We only have six apartments in this building. I have a two story penthouse, so it's probably the best apartment in the building. This area, the Recoleta. Like I said, it's like the Upper East Side of New York. We have lots of fine restaurants with short walk away. I pay my maid. We have a full time maid here. In addition, she earns $1,000 a month. Where can you get a full time maid in the US for a thousand bucks a month? Let me point something out.   Doug Casey (00:11:25) - That's very interesting. In Argentina, they elected a new president. And this is one of the most radical political changes in all of Western history. The new president of Argentina is a chap named Javier Mula. He identifies radically and openly as an anarcho capitalist. In other words, what he's interested in doing is basically tearing apart the government of Argentina and getting rid of as much of it as he can, all of it that we can. Now. Argentina is full of taxes, full of regulations. That's a delightful place to live. But if you want to do business or create wealth, it's a very bad place to live.   Keith Weinhold (00:12:10) - Well, with inflation.   Doug Casey (00:12:11) - Yeah, exactly. I mean, right now they have inflation of about, they say 140% per year, but it's more like 200 or 300% per year. You can trust the Argentine government's figures at all. You can only trust the US government's figures marginally more. But Melaye, as we talk, is firing massive numbers of government employees. It's eliminating agencies and so forth, and the government and the next step will be radically reduced taxes, radically reduced regulations.   Doug Casey (00:12:41) - So this department here is, I think, within the next five years, going to be selling for about what one what its sister on the Upper East Side of New York might be selling out. So I hope to make 10 to 1 on my money on this piece of real estate as a speculation. And it's a nice place to live in the meantime.   Keith Weinhold (00:13:01) - Yeah, with Malay in Argentina, it'll be interesting to see if he sticks with their currency moving from the Argentine peso to the dollar. It sounds like he might already be backing off of that. But getting back to your condo there, Doug. And yeah, that would be a terrific arbitrage play if you indeed bought low in the Buenos Aires market goes up, it sounds like an exceptional value you get there. We talk about our homes overpriced today, especially in the United States. Or are they underpriced? We talked about how one spends more of their proportion of income on housing today, and if that might make them trend toward this silent depression. But of course, you also get more home today.   Keith Weinhold (00:13:39) - I mean, 100 plus years ago in the United States, a new Victorian style home, it had sparse amenities and maybe 950ft². And today, an American home averages 2415ft². That's the figure. So you might pay two and a half times more of your income, but you might get two and a half times more square footage and of course, maybe like you're finding in your place there in Argentina, Doug, the average American home, it has features today that would have been considered unthinkable a hundred years ago. Luxuries, things that would have been considered luxuries back then like air conditioning and multiple bathrooms, quartz countertops, closets so vast that you could play pickleball inside them. So you're getting more home today, and it really hardly feels like a depression era lifestyle for many. But there are some less fortunate people, and inflation has widened this gap between the haves and the have nots. So what are your thoughts, especially when it comes to housing and the fact that you're getting more today? But not everyone is.   Doug Casey (00:14:37) - Because advances in technology, number one and number two, the fact that the average person is wired to produce more than they consume and save the difference, of course, we have more today than we did 100 years ago. That goes without saying, but it doesn't seem that way because even though workers are more productive than they were in the past, everything is fine. As with debt today, people talk about inflation as if it's just part of the cosmic firmament. It just happens. It doesn't happen. The government is the sole and entire cause of inflation. It does it by printing up money directly and indirectly. And what that does is it destroys the capital that you save. Americans save in dollars. Okay. You want to get ahead. You use more than you consume and you save the difference in dollars. But when the government destroys those dollars through inflation, your standard of living goes down. Now, that's been disguised through that. It used to be that when you bought a house, you paid cash for it.   Doug Casey (00:15:52) - Then many years ago, it started out with the. A five year mortgage with 20% down. Now we're talking about 30 year mortgages so that you really never own your home. Inflation is the real problem. It destroys capital. It destroys people's standard of living. The standard of living, generally speaking, in the US is going down. It's disguised by the fact that when you borrow money, you're either taking capital that people have saved in the past and you're using it for consumer goods now, or you're mortgaging your future for a higher standard of living. Today, all of that we have in the US, I think is unsustainable. And we could have either a credit collapse if they don't create money fast enough, or if they raise interest rates too high, or we can have something resembling a hyperinflation we have down here in Argentina. Either way, it's going to be very, very bad news because in an advanced industrial society like the US, to poison the money supply with inflation is asking for economic catastrophe.   Doug Casey (00:17:06) - So I think what we're looking at over the next ten years, and this is true for a number of reasons, not least of them, is the fact that Americans have elected in Washington people that are the equivalent of Jacobins during the French Revolution. I mean, they have the same ideas. I'm looking for very, very tough times, quite frankly, not just in the US, but almost everywhere in the world.   Keith Weinhold (00:17:32) - Today in the United States, compared to 100 years ago, one spends more of their income on housing and transportation and healthcare, and less on food and clothing. And yet, Doug, to your point about inflation, like dollars are such a poor measuring stick. That's why earlier, when we look at the cost of housing, I tried to discard dollars by going ahead and looking at the ratio between the home price and the gold price. I brought up the point last month with our audience that actually there's no such thing as grocery inflation or rent inflation. It's the government that creates the inflation.   Keith Weinhold (00:18:05) - So it's not landlords or grocers that are creating inflation. Those higher prices are just the consequence of the inflation that the central bank creates. And that's creating this erosion of the middle class, because those in the lower middle class and the poor, they don't have assets that benefit from the inflation. Yet they have the same fixed consumer costs that we're talking about here, like housing, transportation, health care, food and clothing. Talk to us some more about the problem in the government and how that could help lead us toward a silent depression. I know you brought up the point that the US government is running embedded deficits of $2 trillion per year, and that number is going to go much higher, if only because the interest cost alone is $1 trillion per year.   Doug Casey (00:18:49) - Yeah, people have to stop looking at the government as being their friend. It's not. It's a predator. It's a dead hand on top of society. It's certainly not a cornucopia, which is the way most people see the government. The government will give them stuff, right? The government will do stuff now it doesn't.   Doug Casey (00:19:08) - The government produces absolutely nothing that it doesn't take away first from society as a whole. So they have people have to stop looking at the government. It's a friendly big brother. It's more like increasingly the kind of big brother that you might have discovered in George Orwell's 1984. If we want to save the idea of America, which is one of the best ideas that humanity has ever had, we have to get rid of the government or as much of it as we can, and go back to the values, moral values, social values type of thing that this country had 200 years ago, what it was founded. I mean, that's my answer to the question. And the money, the dollar itself is a floating abstraction. It's a fiat currency. It's an IOU. Nothing on the part of a bankrupt government which can't even tax enough to give the money value. It just prints up more money and people out of inertia accept them. Well, there's nothing else they can use to trade Buck. We should go back to gold as being money and even a gold backed currency.   Doug Casey (00:20:22) - A currency is money. It's just a medium of exchange and a store of value. You don't need to insert the government and a central bank in between you and what you do with your fellow citizens in a country. That's why we should use gold, which for thousands of years has proven to be the best thing to use is money. It's one of 92 naturally occurring elements. And just as aluminum is particularly good for building airplanes, uranium is particularly good for making nuclear. Power plants. Gold has unique characteristics that make it unique. Almost unique. Uses money so the government shouldn't be involved in this. In all, this is a radical thought. I know that's something that most people have even thought about. They'll say, oh, this is completely ridiculous off the wall. This is unrealistic. This is the direction that the country should be going, but it's going the opposite direction at an accelerating rate. So yeah, we're looking at a nasty depression and it's been building up for many years. This isn't a recent phenomenon that's come up just since Biden, although the Biden pieces are making it much worse.   Doug Casey (00:21:37) - This is a trend that's been building up slowly for decades.   Keith Weinhold (00:21:42) - With the government having all of that debt that I just mentioned, that would create the propensity for them to create even more dollars so they can pay back their own debt, which could create more inflation and just this perpetually vicious cycle. Doug and I are going to come back and talk more about where all this is headed. When you think about the profundity of some of these things, if our currency went on to a gold standard or a Bitcoin standard, the fact that the government would not even be involved in currency issuance anymore, as you think about that, Doug and I have more on the silent depression when we come back. This is Jeffrey situation. I'm your host, Keith Weintraub. Role under the specific expert with income property, you need Ridge Lending Group and MLS for 256. In gray history, from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four plex's.   Keith Weinhold (00:22:42) - Start your pre-qualification and chat with President Charlie Ridge. Personally, though, even customized plan tailored to you for growing your portfolio. Start at Ridge Lending group.com. Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns are better than a bank savings account up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains in your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, six eight, six, six.   Speaker 4 (00:24:04) - This is Rich dad, sales advisor Blair Singer. Listen to get Rich education with Keith Winehouse. And above all, don't quit your day dream.   Keith Weinhold (00:24:22) - Welcome back to get Rich. And we're talking with Doug Casey, the international man, about the Greater Depression. That's really a silent depression as he sees it. And Doug, I want to know where you see us headed, because a lot of people see today unemployment under 4% in the United States, we have GDP growth that's decent. The rate of inflation is still higher than the fed target but has come down substantially. The Fed's even talking rate cuts this year. So where do you see this all headed with the silent depression.   Doug Casey (00:24:54) - First of all, it's a big mistake to trust the government's numbers. If you look at the way the government computed unemployment and the way it computed inflation back in 1980, it's very, very different from the way these numbers are computed today. And if you computed them the way they did way back when in 1980, you'd find that our current unemployment is something more on the order of 10%, and current inflation is not I don't know what they say.   Doug Casey (00:25:27) - It is not 2%, 3%, 4%. It's also more like 10% or more. But with the amount of money that they've created, I mean trillions of dollars that have been cranked out of Washington in recent years. I expect we're going to see inflation go back to much, much higher levels. There's no limit to how bad it can get. And since the government has promised all these things to various pressure groups in the US, they have to be paid. The taxes aren't there to do it. The borrowing they can't borrow anymore, especially as interest rates go up. And incidentally, I point out that because of the debasement of the currency, that's a better phrase to use than inflation. The basement of the currency is an actual thing that's done by the government and its central bank, whereas inflation people think, well, maybe inflation falls on the butcher or the baker or the gasoline maker. No it's not. Those people fight the effects of inflation. Inflation is something that comes out of Washington because the government has all these pressure groups that get all kinds of benefits.   Doug Casey (00:26:43) - They're going to have to keep printing up money to pay for these things, and you're going to wind up in the same position as Argentina has wound up. In fact, it's going to be worse because unlike Argentina, which doesn't have any foreign involvements, they had a war with the Falklands 40 years ago. But there's basically no Argentine Army. There's no Argentine Navy to speak of. But the US has 800 military bases scattered all over the world. They're very expensive to maintain. The natives aren't particularly happy to have foreign soldiers in their lands. In addition to the war in the Ukraine, why were involved in a border war between two countries is a mystery to me. And now we have Israel and Gaza dusting it up. Literally, I feel sorry for both sides, but on the other hand, I don't epoxide both their houses. It's not our problem. This has been going on between these people for 2000 years, and the US getting involved in it is going to add on to our ongoing bankruptcy and maybe start World War three.   Doug Casey (00:27:57) - There's new wars popping up all over the world that are going to cost us huge amounts of money. And of course, the Defense Department spends giant amounts of money building high tech toys, which are basically useless in today's military world. It goes on and on. It's a big problem, and I suspect we're going to reach a crescendo by the 2024 election, assuming we have one. I don't know who's going to win that election if had anybody, quite frankly. So it's we're looking at chaos, political chaos, economic chaos, the potential for a financial meltdown because the whole world is built upon a foundation of debt, which is a very unstable foundation to build things on. And of course, you've got all kinds of sociological problems, starting with total and absolute corruption of the US educational system, which is spread like poison throughout society. We're seeing that now, incidentally, with the presidents of Harvard and Penn, MIT, but all of the higher educational institutions in the US suffer from the same problem. This is like a many headed hydra.   Doug Casey (00:29:10) - Where are we going to take any one instance of a problem in society? And when we examine it, you find that it's even worse than you might think. Like I was talking about education. Your kids are being indoctrinated a great cost. I think it's the University of Michigan has 161. I believe that's the number for the University of Michigan D administrators. That's the diversity, equity and inclusion administrators. All are earning over six figures. And what are they doing? Well they're justifying their positions by doing absolutely ridiculous things in education that shouldn't be about educating as opposed to. Enforcing somebody's goofy ideas of diversity and equity and inclusion. So anyway, we've got lots of problems beyond real estate and beyond the high level of rent that people have to pay today. But listen, it's so hard to build a new house. God forbid, build a new apartment building today by the time you jump through all the hoops. Local. County. State. Federal. The cost of construction is probably twice what it should be.   Doug Casey (00:30:21) - Because of inflation. Because of regulations. I hate to be so gloomy, Keith, I do, but.   Keith Weinhold (00:30:28) - Well, there's a lot there. We talk about diversity. We're in an era where people are very conscious of that. But a lot of people think of it with regard to race or gender or perhaps religion. But I like to champion diversity of thought as well. And then when it comes to we.   Doug Casey (00:30:44) - Don't have any of that anymore.   Keith Weinhold (00:30:45) - Yeah, yeah, that's for sure. But when it comes back to the root of productivity, I think that's really important because whether the government gives away money to programs in the United States or outside the United States to Ukraine or Israel, whether you believe in that or not. And a lot of the giveaways have been in the hundreds of billions of dollars to those nations were now running a national debt of over $34 trillion. And my point is, is that the United States doesn't produce as much as they used to. However, the United States produces a lot of dollars and a lot of debt.   Keith Weinhold (00:31:17) - And when the government has giveaways, either domestically or internationally, a productive person is the one that has to end up paying for that. So, Doug, we think about a lot of the problems out here, much of it coming back to the root of inflation. But you tell us more about what can be done. In fact, I know you have a practical, common sense way where you don't save in dollars. You and I have talked before about how real estate or gold can give you a hedge or even help you profit against inflation, but you've talked about the importance of real material things, like food that you can store, or light bulbs that you can put away, or tools that you can use because you're also not taxed on those sorts of things. So can you tell us more about that?   Doug Casey (00:32:05) - There was a book written years ago, and it's still available on Amazon by an old friend of mine named John Pugsley, and the book's name was The Alpha Strategy. The point that John made in that book was that rather than trying to save in dollars, you should save in things that have a long shelf life that you're going to need and use.   Doug Casey (00:32:30) - So, for instance, if light bulbs common thing, they burn out if you wait until there's a sale on light bulbs. Get them cheap. Buy them in quantity, buy them extra cheap, put them aside. You're not going to have to buy a light bulb forever. Whereas if you don't plan ahead and do it that way. If your light bulb burns out, you don't have one. You got to get in your car or in gasoline. Buy it at the convenience store where it's going to cost you. License much, and you can do this with many areas of your life planning ahead. In other words, this is a variation, if you would on the old Mormon idea. A lot of people are aware that Mormons or their religion tells them that they should put aside three months or a year worth of food, and it's storing food which is properly canned and so forth, so that no matter what happens, they'll always be able to eat. Well, the alpha strategy is something that you take that attitude towards food and you apply it to all the consumable things that you have in life.   Doug Casey (00:33:37) - And as they go up in price, lightbulbs go up from $1 to $5. With inflation, if you made an investment that kept pace $1 to $5, you'd have to pay capital gains tax on it. But you don't on the consumable that you put aside. So, I mean, this is just one of a number of strategies that you can use to counter the effects of currency debasement.   Keith Weinhold (00:34:03) - I love that as a strategy on what you can do. You are not taxed on the gain in price or value of an entire pallet of food or tools, like a tractor or ladder or table saw. So it's a really elegant way to beat inflation. Doug, I have an idea, and it might not be one that you heard before. It might even make the listener laugh a little bit. Here. I have an elegant way to beat inflation and improve your quality of life at the same time. And it's something really simple. And that solution is to spend your money. It's an elegant way to beat inflation and improve your quality of life.   Keith Weinhold (00:34:41) - At the same time. If a mediterranean cruise for you and your wife is going to cost $18,000 this year, and you think it's going to cost $22,000 next year, spend beat inflation and get an experience that you'll never forget that as long as you've got something set aside already spend, it's a way to beat it and live a better life.   Doug Casey (00:35:01) - I can't argue with that case. But on the other hand, it's wise to put aside capital for the future, because once you consume that grows, the capital is not there anymore, and you may need it in the future. But this is one of the problems created by currency debasement. People start thinking in terms of live for today, because tomorrow we might die with their money, and that's not a good way to get wealthy. Although it's true, you do beat some of the effects of currency debasement that way.   Keith Weinhold (00:35:34) - Yeah, if there were no inflation, there would be less incentive to do something like that. In spend would also be less incentive to invest.   Keith Weinhold (00:35:41) - But Doug, you've given us a lot of good ideas today for this creeping of the silent depression fueled by inflation and some actionable things about what we can do about it. Give us any last thoughts and then how our audience can learn more about you.   Doug Casey (00:35:56) - I've written a series of novels. Well, they're quite well written that explain a lot of these principles in the form of an exciting story. They're called speculator, where our hero, uh, gets involved in gold mining in Africa and a bush war and so forth, and it becomes a drug lord. Or we show a drug lord can also be a good guy, and then he becomes an assassin because he's so pissed off. There are four more novels to come. So I suggest people go on Amazon, pick up those three novels that are out there. That's one thing they should do. Second thing, I'd encourage you to go and subscribe to International man.com, and you'll get a great free daily blog from me and other people. It's really a good publication.   Doug Casey (00:36:44) - And the third thing on YouTube is we have Doug Cassie's take where once or twice a week I, uh, talk about different subjects.   Keith Weinhold (00:36:54) - Though our subject is depression, our conversation has not been thoroughly depressing. So thanks so much for coming back out of the show.   Doug Casey (00:37:02) - I see you again, Keith.   Keith Weinhold (00:37:10) - Well, you might wonder what kind of prepper weirdo is going to save a bunch of durable goods like tires or crescent wrenches, or even store an extra car, or a few extra cords of firewood that may or may not be feasible for you, some of it having to do with your storage capacity, whether you live urban or rural. But what you can do if you're really concerned about persistent inflation is to beat it by making improvements to your own home, and you can do that sooner rather than later. And see, that way you might actually get to enjoy the item and integrated into your lifestyle. For you, that might mean getting yourself new windows, or a new water heater, or renovating a bathroom, or remodeling the kitchen.   Keith Weinhold (00:38:03) - And if you can avoid activities, though, that create a higher tax assessment, then you will not get taxed on those real assets, all while improving your quality of life at the same time. So there's an idea, some real guidance, spurred from today's chat with Doug Casey. Big thanks to him. Next week, I'll tell you more about the weird problem with my rent payment that was stolen from my property manager and what I'm going to do about it. My manager says he's not taking the loss. I'm not taking the loss either. Interesting stuff. Until then, I'm your host, Keith Weintraub. Don't quit your day dream.   Speaker 5 (00:38:44) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively. The.   Speaker 6 (00:39:12) - The preceding program was brought to you by your home for wealth building.   Speaker 6 (00:39:16) - Get rich education.com.

Join our live, virtual event for Alabama income properties tomorrow at: https://gremarketplace.com/webinar/ Learn a lesson from a story about when I was a landlord. My neighbor was a fourplex owner-occupant, just like me. We built a fence together. He told me that he can’t wait to get his building paid off. Don’t pay down your mortgage debt. In most cases, you can invest those dollars elsewhere for a higher return. I discuss two things build wealth: 1) Leverage. 2) Borrowing against your assets, tax-free. You don’t have substantial equity in your properties because you paid them down. You have substantial equity because its value has appreciated. Today, you can report tenant rent payments to the credit reporting agencies. Alabama has low property prices and the nation’s 2nd-lowest property taxes. GRE Investment Coach, Aundrea Newbern, MBA, joins me.  Join our live event for Alabama income properties Tuesday, January 16th at 8 PM Eastern. The provider is offering 5.99% interest rates and 3% PM fees on your first three properties. Sign up now at: https://gremarketplace.com/webinar/ Timestamps: The introduction (00:00:01) Keith Weinhold introduces the podcast and mentions the topics to be covered, including lessons from being a landlord, a formula for wealth, and a focus on a lucrative property market. Keith's early real estate experience (00:02:46) Keith shares his early experience as a landlord, comparing notes with another landlord and discussing their strategies for living for free in their fourplexes. Debt mindset and wealth building (00:05:30) Keith discusses his divergent mindset from his fellow landlord, emphasizing the importance of leveraging debt for wealth building and portfolio expansion. The power of leverage and portfolio growth (00:10:08) Keith explains how he leveraged equity to expand his real estate portfolio, emphasizing the benefits of using accumulated equity to acquire more properties. Real estate market diversification (00:11:22) Keith advocates for buying properties across different states and markets to access better deals and maximize portfolio growth. Tenant management and credit reporting (00:13:42) Keith shares tips on tenant management, including the option to report rent payments to credit bureaus to incentivize timely payments and manage tenant relations. Financial perspectives and real estate strategies (00:16:12) Keith discusses contrasting financial perspectives with a CFO friend, highlighting the benefits of leveraging debt for real estate investments. Market pulse and expense control (00:20:26) Andrea discusses the market pulse for income properties, focusing on the Southeast region, and addresses the trends in controlling investors' expenses, particularly related to insurance rates. Conclusion and invitation (00:22:02) Keith and Andrea conclude the segment by discussing the migration trends in the Southeast and the importance of controlling expenses for real estate investors. Lower Property Management Costs (00:22:55) Discussion on the stabilization and decrease of property management costs due to technology and institutional investment money. Investment Timing and Market Trends (00:25:01) Encouragement for investors to take advantage of the current market conditions, including interest rates, prices, and inventory. Alabama Market and Incentives (00:28:24) Details about the Alabama market, including low property prices and incentives such as the 333 property management fee and 5.99% interest rate. Live Event and Registration (00:32:33) Information on how to register for the live virtual event to learn about the Alabama market and have questions answered in real time. Final Encouragement and Event Promotion (00:33:27) Encouragement to attend the live event to learn about the Alabama market and connect with an investment coach. Resources mentioned: Show Page: GetRichEducation.com/484 Join our live, virtual event for Alabama income properties at: https://gremarketplace.com/webinar/ For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Speaker 1 (00:00:01) - Welcome to Dr.. I'm your host, Keith Weinhold, with lessons from being a landlord myself including some tough ones. A simple formula for how to get wealthy and stay wealthy without paying any taxes legally. Then we focus on one of the most lucrative property markets in the United States, and it includes an invitation to you today on get Rich education. If you like the get Rich education podcast, you're going to love art. Don't quit your day dream newsletter. No, I here I write every word of the letter myself. It wires your mind for wealth. It helps you make money in your sleep and updates you on vital real estate investing trends. It's free. Sign up at get Rich education.com/letter. It's real content that makes a real difference in your life, spiced with a dash of humor. Rather than living below your means, learn how to grow your means right now. You can also easily get the letter by texting gray to 66866. Text gray to 66866.   Speaker 2 (00:01:12) - You're listening to the show that has created more financial freedom than nearly any show in the world.   Speaker 2 (00:01:19) - This is get rich education.   Speaker 1 (00:01:28) - Welcome to GRE! From Dorchester, Massachusetts, to Westchester, Pennsylvania, and across 188 nations worldwide. I'm Keith Weinhold. Hold in your listening to get Rich education. I trust that you're prosperous and well in a still somewhat new year here, along with my usual gray research of market trends, teams, and properties I've been serving on and writing for the Forbes Real Estate Council. Next week we have a thought provoking show on whether America is actually undergoing a silent depression that's creeping up on us, but I've got an important story to tell you today. It's really rather formative and foundational to the, I suppose, mind spring of abundantly minded real estate ideation. When I bought my first Seminole fourplex building for $295,000 about 20 years ago, you know, there was an identical fourplex right next to it. It was bought about the same time as mine, and it was bought by another guy about my age. His name's Patrick. We each had these blue fourplex next to each other, and I still remember his full name, although I'll just stick with his first name, Patrick here.   Speaker 1 (00:02:46) - He was a data and security engineer. Really sharp guy. And by the way, he only paid 275 K for his nearly identical fourplex next to mine. And since I paid 295, I felt like I overpaid. But he and I, we got to know each other a little bit. We kind of had a similar path. All right, as owner occupants, each living in one of our four units and renting out the other three and doing that right next to each other. We would compare notes as to how it was going with being an on site landlord. And, you know, Patrick and I, we both kind of figured out that we were living for free. And that's because the three $725 rent incomes, there were enough to pay our mortgages and our operating expenses on the buildings, but after that, there was really nothing left over. But we effectively had a free place to live in one of the fourplex units. Now, a few times, Patrick and I collaborated on some projects together to improve things around our contiguous fourplex buildings, and I specifically remember that one day we had bought materials at Home Depot, and then we met outside to build a fence together, and it was just this cheap host and rail style fence that we made with two by fours and painted blue is something that he and I built at the back of our buildings in order to keep vagrants from cutting through our yards.   Speaker 1 (00:04:19) - This was in Anchorage, Alaska, and Anchorage has a lot of these paved bike paths all throughout the city. And vagrants also use those to get around. And we had this bike path right behind our fourplex. Now, as you know, I am not that good at building stuff or fixing broken stuff. Okay, but this fence project that we were doing, it wasn't too complicated. And I had Patrick right there to help. Now, by this time, I had probably owned the fourplex for about two years, and I was really just starting to get this realization for what real estate investing could do for me, because I had only made a small down payment, yet the fourplex had appreciated quite a bit. This was around 2005, and I didn't even know that that effect was called leverage yet. But anyway, Patrick and I, as we're building this fence together or talking about our properties, he said one thing I can distinctly remember, and it's something that a lot of people say, and that is, I can't wait until I have this property paid off.   Speaker 1 (00:05:30) - Now, back at this time, there was no gray, yet I'm still rather fresh and new to real estate investing. This fourplex was the only property that I owned, but already this desire to have the property paid off, that is not a feeling I shared that did not resonate with me. Okay, I responded to him with something like, oh, do you think that's the best use of your money? All right, because I had a mortgage interest rate of five and 3/8 at the time, and his was probably pretty close to that too. Well, I told him that I want to keep the debt on my property because instead I could invest my spare dollars elsewhere and get a better return than five and 3/8. And that fact would be true even if my interest rate were eight or more. Really, his only reply to that is that he just simply doesn't like having debt. That's about the only answer that he had, even though it's usually irrational to. Pay off good debt like that. Now my financial freedom ideas, they were still in their nascent period back then.   Speaker 1 (00:06:34) - I sure wasn't going around and saying that financially free beats debt free or anything like that. That wasn't quite putting it that way yet. I sure didn't say, hey, don't you know that the scarcity mentality is abundant and the abundance mentality is scarce? Or that compound interest is weak in compound leverage is powerful? Or that a rich man digs for gold and a poor man is concerned with the cost of a shovel. But I already knew that if you focus on debt paydown like taking all your extra dollars to accelerate the principal pay down on, just say one fourplex building, you are just borrowing one deep hole in to the property. It's like a deep hole that might even cave in. Instead, wealth is built by expanding your portfolio size. More doors, more income, more leverage, serving more people with housing, and actually more safety because you can be in more markets that way. See, you gotta give your money multiple jobs. So the lesson is, Patrick and I were already on divergent mindset paths because by that time I had read books like Rich dad, Poor Dad, and it got me thinking differently.   Speaker 1 (00:07:54) - You know, it was the whole don't get your money to work for you get other people's money to work for you and that whole thing.   Speaker 3 (00:07:59) - I don't even think about it. I'm built a little differently, I guess, because I have had people come up to me and say, how do you do it, sir? How do you do it? I don't even think about it.   Speaker 1 (00:08:10) - Nuh uh. Geez. I, I do it because if you don't want to run with the herd, then you've got to think and act differently in order to diverge from the herd. Keep leveraging more income property. So Patrick and I built the fence that day, and I don't really know how much he paid down his building's principal balance, which is a lot like sending off your dollars to go die. But I can tell you what I did. Okay. About another year went by after building the fence. So now we're into year three of me owning the fourplex. What I did is I kept the building, but I got a home equity line of credit, second mortgage on the fourplex, and then I use those funds to make a down payment on a single family home so that I could live offsite and get some privacy from my fourplex tenants.   Speaker 1 (00:09:06) - So this is the start of me acting diversely from the herd. It was the opposite of paying down my property, borrowing against it instead. Yeah, I took more debt out on it, which is a tax free event, by the way, and you could go to 90% loan to value back then. Yes, that's back when dollars were being lent out more freely. I mean, that's what wealthy people do. What do wealthy people do when they need money? They just keep borrowing against the value of their assets. And it's a tax free event since the IRS does not tax debt. So if you want to be wealthy, that's what you do. What I also did by doing this was expand my portfolio size, increase my leverage ratio. And since I vacated one of the four fourplex units, now I had four rent incomes rather than three. I mean, that is, some don't live below your means grow. You mean stuff right there. And then two years after that, I kind of did the same thing again.   Speaker 1 (00:10:08) - I borrowed against my properties, and I used the funds as a 10% down payment on a second, more expensive fourplex building. So now I lived in a single family home and I had to fourplex buildings. And then a few years later, when equity accumulated in those two fourplex buildings, I sold them and did a 1031 exchange into two larger apartment buildings. Everything I've done so far is tax free, all expanding the portfolio, all serving more tenants, all reducing my risk despite increasing my debt, because the tenant pays the debt for me. And it was all with almost none of my own money. Instead, it's just using accumulated equity from one property and rolling it into more. Just keep rolling those same funds forward. Okay, so that is all what I'll call one line of leveraged equity. And by then I was beginning other lines because I started to buy property out of state and in multiple states. And it wasn't until 2012 that I discovered that buying across state lines is possible. It's proven. And that's where the real deals are.   Speaker 1 (00:11:22) - I mean, you might want to own some properties in your local market or you might not. But see, the thing is, is that there are 387 MSAs, Metropolitan statistical areas in the US as defined by the Census Bureau. So if you're only buying in your local market, chances are you're not getting the best deals. And another way to think about your portfolio's growth in your real estate equity management is to consider the fact that you don't have substantial equity in your home right now because you paid it down. You have equity in your home because it increased in value. So you can use equity from your home to buy perhaps ten other rental homes, as long as you can control cash flow. So it's about trading away antiquated notions of safety and security in exchange for freedom. But now most of Patrick and I's conversation about being neighboring fourplex landlords for a few years was, I would say, more anthropogenic meaning relating to human activity. Yes, that is dealing with tenants because although the discipline is called property management, it could just as well be called tenant management.   Speaker 1 (00:12:39) - And early on, this is where my naivete got exposed, like with a tenant that was laid on the rent and he said he'd pay it, but then he didn't pay rent and I had to a victim early on. I inherited that tenant from the previous owner, so I did not get to screen him. Now, three weeks ago here on our Christmas episode, when we did How the Rent Stole Christmas. That was fun. I shared a lot of my tenant relations tips with you on how to help ensure that your rent gets paid, but today you can do something that you couldn't do when I got started in real estate, you can report your tenants rent payments to the credit reporting agencies and affect their credit score. So if you are a do it yourself landlord today and you're doing your screening, you know, I would tell prospective tenants that before they even apply for your vacancy and put it in a positive light, make it known that one attribute of renting from you is that with their timely rent payments, it can help their credit score.   Speaker 1 (00:13:42) - So position it positively rather than any sort of threat, and it's going to help you get more timely rent payments if that's been a problem for you. Yes. Institute reporting to the credit bureaus, the credit scoring agencies, Equifax, Experian and TransUnion. That is another handle that you have as a landlord today. Yes. The only guarantee is that there will be some inevitable real estate problems for you. But like problems with anything else in life, your mind and my mind, we tend to inflate the significance of problems, whether it's a tenant that you just can't get to change their AC filters, or an unexpected water leak, or an overgrown tree that you have to pay an arborist to handle, or a persistently late paying tenant. Oftentimes, your fear about the problem is worse than the problem itself. In fact, it was the stoic philosopher Seneca that said, there are more things likely to frighten us than there are to crush us. We suffer more often in imagination than in reality. Gosh, isn't that so? On point? Yeah, we suffer more in imagination than we do in reality.   Speaker 1 (00:15:01) - You can say that about most any problem that you've ever had in your life. Now, some things have changed and some things have stayed the same since I began my real estate journey with that blue Anchorage fourplex. It looks like there are some signs of hope for financial education in the near future here. Formal financial education. When it was recently announced that Pennsylvania, my native state, will become the 25th US state to have a formal, standalone financial education class in high school. Hey, that's a really good start. But one constant seems to be that the dispiriting saying don't live below your means. You know, that still seems to trump the aspirational grow your means. And it's not about whether a person is intelligent or unintelligent in adopting one or the other. It's really more about having the ability to think freely. Now, today, I have a friend that's the chief financial officer, the CFO of a publicly traded corporation. He and I got together a few times last year, and he can talk about earnings reports and EBITDA.   Speaker 1 (00:16:12) - And he knows that language of business. He's a super sharp guy. But he told me that he has his house, his family's primary residence paid off. And I asked him about that, and I told him that I keep the maximum debt on mine. And why now? Your primary residence. It's not like a fourplex where your tenant pays your debt for you, but you've got to pay your own debt on your own home. Yet the mortgage rate on a primary residence is lower than it is on a rental. So the question persists is that really the best place to park your dollar? Is that where it's doing multiple jobs? You've got to consider that it's illiquid and its ROI is zero. Now, I didn't quite put it that starkly with my CFO friend, but in any case, and remember, this is a chief financial officer. He's a guy that's good with money. You know, at least he did give me this. He said from a financial perspective, he knows that it makes zero sense to have a paid off home.   Speaker 1 (00:17:16) - It just makes him feel better. And, you know, I accepted that this is not the way that I view the world. And that's okay. Coming up next in in-house chat with one of our gray investment coaches as we talk about the real estate market overall, controlling your rising expenses as a real estate investor and about real estate in the southeast Alabama, as well as an invitation for you with some pretty generous incentives that I think you're going to be excited about. I'm Keith Reinhold, you're listening to get Rich education. Role under the specific expert with income property you need. Ridge lending Group Nmls 42056. In gray history, from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns are better than a bank savings account up to 12%.   Speaker 1 (00:18:45) - Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. They've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, six eight, six, six.   Speaker 4 (00:19:34) - This is our rich dad, Poor dad author Robert Kiyosaki. Listen to get rich education with eat whine oh God put your daddy.   Speaker UU (00:19:45) - You you you you you you you you.   Speaker 1 (00:19:53) - Hey. Well, today I'd like to welcome you in our terrific investment coach, Andrea, for an in-house chat here. How's it going, Andrea?   Speaker 5 (00:20:01) - Hey, Keith.   Speaker 5 (00:20:02) - Doing good. Trying to recover from the holidays. How are you?   Speaker 1 (00:20:05) - Yeah, it's still a fairly new year here. The holidays were a few weeks ago with the advent of a new year. Andrea, a lot of people make a resolution to increase the residual income, often by expanding the real estate portfolio. So really just taking the temperature here. How's your feel about the pulse of today's income property market?   Speaker 5 (00:20:26) - It's been interesting the past year, right? We've had a lot of ups and downs. I would say what we've typically seen from the different markets across the US, particularly the southeast, which is what we're going to talk about a little bit more today. We have seen that there's still inventory out there right now. We've seen interest rates slightly go down, not significantly, but we have seen some decreases. And we're seeing pretty steady demand for income properties right now.   Speaker 1 (00:20:49) - Yeah. Mortgage interest rates down more than 1% from their peak in October last year. Yeah. Oftentimes real estate and the pulse of the market comes down to supply and demand.   Speaker 1 (00:21:00) - To your point the demand sure is not going away. We've got a population growth, and we have a lot of pent up demand from the huge millennial cohort. And then over there on the supply side, there is so much new building in the multifamily space, but there's really a dearth of supply and a dearth of new supply coming onto the market for 1 to 4 unit properties.   Speaker 5 (00:21:23) - Yes, there is. And we're seeing a lot of that growth, like I mentioned in the southeast, which are the markets that I personally invest in. And I, you know, have a lot of our listeners go to to purchase as well. So very excited about what we're seeing happen in 2024 and what that means for our investors.   Speaker 1 (00:21:38) - Yeah. Now, back at the beginning of the year, two prominent moving companies, U-Haul and United Van Lines, they released their migration report for the year ended last year. And the southeast quadrant of the nation by far, that had the most net migration growth states in their list easily.   Speaker 5 (00:21:58) - It did. And I think that's going to continue. We're going to talk about that a little bit.   Speaker 1 (00:22:02) - Well, we pull back in. Just think nationally before we go into the southeast. You know, oftentimes investors of course are thinking about controlling their expenses. That's been a big issue that bubbled up last year is probably going to continue to be one this year. So we're talking about investors controlling their expense side from mortgage rates to property insurance rates that have really spiked. So do you notice any trends with controlling investors expense side? Since you and I are active investors ourselves?   Speaker 5 (00:22:34) - A couple of things that I've noticed in the southeast and my personal investments, as well as some of the markets that we have turnkey relationships with. Keith, we are seeing insurance continue to go up just a little bit, but we're not seeing those reckless, you know, doubling that we saw over the last 2 to 3 years. So it's going up not seeing doubling. So I'm hopeful that that continues. And it's not we're not seeing that fast rapid increase.   Speaker 5 (00:22:55) - The other thing that we're seeing a lot of is a lot of our turnkey companies that we work with, we're starting to see kind of property management costs stabilize or go down in certain areas. So we're seeing that expense decrease. The other thing is we're not seeing as rapid of increases and material costs and labor costs right now still going up. Things are not, you know, going down by any means, but we're not seeing those costs go up as much either. So this is allowing the investors to have a little bit more money in their pocket than they did over the last 2 to 3 years during the pandemic.   Speaker 1 (00:23:25) - Yeah, it's not that big of a consideration for an investor on the expense side. But yes, I do see more evidence of lower property management costs. So can you talk to us more about that trend? Is it more of the infiltration of technology into the space that's bringing the cost down for property management?   Speaker 5 (00:23:44) - Such a great question. And I do think that is part of it for sure.   Speaker 5 (00:23:47) - We're seeing a couple of things here. We're seeing some of these smaller kind of mom and pop property management companies. They are stepping out. They can't really afford to keep up with the technology and all the changes that are happening in the property management space, and what's causing that happen is these property management companies that can do a little bit larger scale. They're able to get these nicer systems and this better technology and things for their investors to be able to use as well as their tenants. And we are seeing that bring the cost down of property management a little bit.   Speaker 1 (00:24:16) - You're seeing more infiltration of institutional investment money into the single family rental space and rentals up to $4 per unit. And those companies, those institutional investors have deep pockets, and they have the ability to go ahead and implement a lot of these technology systems. So that's making it so that others, including these smaller mom and pop property management companies, they need to keep up with their technology that's lowering property management costs across these mom and pop property managers are going to be put out of business.   Speaker 1 (00:24:48) - So there are so many pros and cons about institutional investment money coming into the space. And that's just one of the potential pros for everyday investors.   Speaker 5 (00:24:57) - You're exactly right. I have nothing to add to that because you were spot on with that comment.   Speaker 1 (00:25:01) - Anything else, just in general that you see across the real estate market that you really think a real estate investor needs to know today?   Speaker 5 (00:25:08) - One thing that I really think is important for people to keep in the back of their minds is I talked to a lot of our listeners who are very, very interested in dipping their toes in the water, or they've been kind of sitting to the side the last few months, kind of seeing what will happen with the market. Right now is the time for you to invest. If you wait a few months, I suspect in several of these markets you may see interest rates come down, but you're going to see prices go up and you're going to see even more of a lack of inventory. So just kind of keep that in mind as you're thinking about where to invest, how to invest and when to invest.   Speaker 1 (00:25:38) - Here in gray. We've often talked about the fact that higher mortgage interest rates actually correlate with higher prices, not lower ones. And I think some people were sitting on the sidelines saying, is that really going to be the case? Yeah, we saw mortgage interest rates triple and prices still went up. A lot of people think rates are poised to fall this year. It's probably going to put more upward pressure on prices. Andrea, when we talk about one controlling their expense side, I think something that a lot of people overlook, and this is so simple, is buying in a state or buying in a market that simply has low property prices, because that's the best indicator of giving you a high ratio of rent income to purchase price. Low priced states.   Speaker 5 (00:26:23) - That's right. Yeah. And so I mentioned this in the last couple of minutes. But the southeast and the Midwest are those two areas where you really do have those lower cost properties that even if you're an entry level investor, you can get in there pretty easily.   Speaker 1 (00:26:36) - And now we've had a lot of investor interest in Florida with all their in-migration. We still like that market, but prices have really run up there. So we've increasingly had investor interest from our followers and people that you help coach about another southeastern state.   Speaker 5 (00:26:52) - That's right. So that market is Alabama. So we have had a provider that has been offering turnkey, fully renovated properties and sometimes new construction in the Alabama market. And it has been an absolute wonderful market for our listeners that have actually invested in that area.   Speaker 1 (00:27:09) - Alabama, compared to a place like Florida, has substantially lower property prices. We're talking about you as an investor here controlling the expense side. Alabama has the second lowest property taxes in the entire nation, second only to Hawaii. So that's something that's really baked into your recipe here with income property in Alabama.   Speaker 5 (00:27:32) - That's right. I mean, there's been increases in property taxes across the US over the last few years as values come up. But of course, in Alabama you haven't seen those fast rises.   Speaker 5 (00:27:42) - And because the rates are so low, it's going to adjust kind of accordingly with the market. So you're not going to see anything creep up really quickly there as well.   Speaker 1 (00:27:49) - In general. And a lot of jurisdictions you see property taxes increase commensurately with the value of your property. And we've been in Alabama with a really renowned provider there that provides property almost statewide across Alabama, and you're going to co-host with them on a great live event for Alabama Income Properties, because right now they're really offering a good set of incentives and they have available properties. So tell us more about that.   Speaker 5 (00:28:24) - Like you mentioned, they have properties across the state. So you have kind of an option of which geography within Alabama that you would want to invest in. They have different kind of price points as well. And then like you mentioned, they have some very exciting incentives. And I don't think that I have seen an incentive this good as far as property management goes in a really long time. So what they are offering our listeners is called the 333.   Speaker 5 (00:28:50) - And essentially what this is, is if an investor wants to purchase up to three properties, you can purchase one, 2 or 3. You're not committed to a certain number. You're going to get a 3% property management fee for three years on these three properties. Once you go over three, it does revert back to the normal price of 9% for the property management that you can get 3%, which is kind of crazy.   Speaker 1 (00:29:11) - So the incentive offered on this great live event that you're going to co-host tomorrow night is that three, three, three incentive. Let me just review it so that we have it right for a limited time. There's going to be a 3% property management fee for three years on up to three properties.   Speaker 5 (00:29:29) - That's exactly right. Yep.   Speaker 1 (00:29:31) - That is really attractive when it comes to controlling the investors expense side.   Speaker 5 (00:29:36) - It certainly is. That's not the only incentive they have, though. So they're also offering across their entire inventory, 5.99% interest rate on the purchases of any of these properties. And that's really low.   Speaker 1 (00:29:48) - That is really compelling. Yes. So that's substantially lower even than what you can get for an income property rate today. Income property rates are typically, oh, something like three quarters of 1% higher than what you typically see on that 30 year fixed rate mortgage. And that's what we're talking about here. This builder and provider buying down your mortgage rate for you to 5.99% interest. Do you know about the terms on that. Is that 30 year fixed advertising or.   Speaker 5 (00:30:14) - Yes, that is 30 year fixed amortizing. So you're not looking at anything variable. You're looking at kind of your mortgage payment every single month, which is really nice.   Speaker 1 (00:30:22) - Yeah. That's like rolling back the clock to to three years with getting a mortgage rate like that. That's going to help a number of people. Andrea, I'd like to get your thoughts. Do you have very many people that you work with? Here are followers when you're coaching that want to self-manage remotely or do they want that remote property manager?   Speaker 5 (00:30:41) - I don't think in the past year I've spoken with one investor that plan to actually purchase and manage themselves remotely.   Speaker 5 (00:30:47) - Everyone wants to use the property management function, which this particular provider does have property management in house.   Speaker 1 (00:30:55) - So they will want to use that 3% property management fee. Not being a do it yourself or, you know, they're probably taking after me. I don't want the job of property management. That's just a business. I don't really want to have that much to do with. I love to outsource that duty to somebody else. A big reason that a lot of people self-manage their property is because they just don't have that much of a gap between their income and their expenses. So when you buy in an investor advantaged market like Alabama, where you have a high ratio of rent income to purchase price, you can therefore have one of those expenses. Be your property manager, especially when it's only 3% in this case. So those are some really good incentives. The three, three, three and a 5.99% interest rate. Is there anything else you can tell us, especially with on tomorrow night's live event with what markets within Alabama we're going to be talking about?   Speaker 5 (00:31:44) - Yeah.   Speaker 5 (00:31:45) - So we're going to focus on a couple different markets. We're going to look at Huntsville as well as Birmingham. We may also talk about some markets that are in the southeast that they have some properties in outside of Alabama. So just stay tuned. I'm not promising that. But we may talk about that a little bit depending on how things go. The other thing that I think is really important to keep in mind is we're going to have a live buying opportunity. So we're actually going to show you some of the properties that are available right now. You're going to be able to see all the financials on them. And you can reserve them as soon as you want right after we get off. While we're on it, however you want to do it, we can buy it tomorrow.   Speaker 1 (00:32:18) - That is a really actionable event. Tell us more about the event, how one can register and be on there with you so that they can have their questions answered by you and the provider in real time. That's really the benefit of you attending tomorrow.   Speaker 5 (00:32:33) - You can go out to GR webinars. Com you'll be able to register there. It'll be at the very top of the page. Make sure that you know you fill in all of your information. You'll get an automatic email that'll remind you to get on to the webinar tomorrow, and you can jump on. You're going to have the opportunity to ask live questions. So we're going to be there to answer them. And then we'll go through the properties. And if you're ready to reserve, I can hop on a call with you right after we get off of the webinar and kind of talk through what inventory that we have available and help you through that process.   Speaker 1 (00:33:03) - Well, Andrew, before I ask you if you have any last thoughts, just summing it up here. I really encourage you, the listener, to join the live virtual event because you can see real properties like Andrea mentioned in an Investor Advantage market and get any questions answered that you have answered in real time, whether it's about the cash flow or property insurance costs or your property manager.   Speaker 1 (00:33:27) - It's Grace live event for Alabama Income Properties tomorrow, the 16th at 8 p.m. eastern. So go ahead and sign up right away at Grace webinars.com. Any last thoughts? Andrea?   Speaker 5 (00:33:39) - No, I'm just excited to see more faces, see old faces and talk to you all about the market and the properties that are available.   Speaker 1 (00:33:46) - This is really going to help a lot of people. Thank so much for coming back onto the show.   Speaker 5 (00:33:49) - Thank you.   Speaker 1 (00:33:56) - Yeah. Here's an opportunity for you to learn about a market and connect with Andrea. Of course, when we talk about the Alabama real estate market, that entails many market varieties and geographies. In fact, Alabama has 12 of the nation's 387 MSAs. I very much encourage you to attend the live event from the comfort of your home. It's for you if you want to learn about a market and really the fundamentals that drive investor advantage markets, you can meet Andrea and perhaps add some property to your portfolio. It can give you long term equity growth and short term cash flow.   Speaker 1 (00:34:34) - And I have actually been inside walked Alabama properties with this provider. And it is exactly what they do. This isn't some side venture. And they've been in business a long time too. They serve out of area investors and they do the management for you too. This is Grace live event for Alabama income, property and overall in America, entry level homes are few. You're going to have a chance to own scarce assets that seemingly everyone is going to want over time. It's coming up fast. It's tomorrow night, the 16th at 8 p.m. eastern. Sign up now! It is free at Grace webinars.com. Until next week, I'm your host, Keith Weinhold. Don't quit your day dream.   Speaker 6 (00:35:23) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Speaker 7 (00:35:51) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Yes, simply "five". The number "5" has remarkable symbolism on both real estate investing the GRE way, and elsewhere in your life pathway. See how real estate actually performed when compared to other asset classes in the past year: stocks, gold, bitcoin, and bonds. Everyone knows that some commercial real estate is sagging, like office. Industrial is steady. Retail is actually booming. Recession predictions were so bad. In the past year, we had low unemployment, rising GDP, solid corporate profits, and inflation fell.  I explain what an inverted yield curve means and why it matters to you. Not only does “Real Estate Pay 5 Ways”, but the number “five” often has significance in both symbolism and numerology. Using a $40K down payment on a $200K property, I add up how “Real Estate Pays 5 Ways” and sum a lofty 46% total rate of return with today’s real-life numbers.  We have available inventory of income property. If you’re ready to buy, contact our Investment Coaches. It’s free at www.GREmarketplace.com/Coach GRE Marketplace properties are less expensive because: there’s no agent to compensate, selective investor-advantaged markets, and not dealing with owner-occupant emotions. Timestamps: Asset Class Performance (00:01:25) Comparison of various asset class performances in the past year, including stocks, global stock markets, bitcoin, treasury notes, gold, and residential real estate. Inverted Yield Curve Explanation (00:07:47) Explanation of an inverted yield curve, its significance as a predictor of economic downturn, and a simplified example to illustrate the concept. Five Ways Real Estate Pays (00:12:18) Discussion of the five ways real estate provides returns to investors: appreciation, cash flow, return on amortization, tax benefits, and inflation profiting, with a focus on the symbolic significance of the number five. Real Estate Returns Calculation (00:18:49) Illustration of a simplified method to calculate the total return on investment from a real estate property, covering appreciation, cash flow, return on amortization, tax benefits, and inflation profiting. Investment Opportunities (00:16:23) Promotion of investment opportunities with Ridge Lending Group and Freedom Family Investments, emphasizing the potential returns and benefits of investing with them. Upcoming Episodes and Conclusion (00:17:44) Teaser for upcoming episodes featuring investment coaches and discussions on property tax, and a conclusion expressing the significance of real estate returns and investment. Replacing Toilet Flappers and Spackle (00:23:56) Discussion on conservative estimates, tax benefits, and property management costs in real estate investment. Visual Explanation of Five Ways (00:25:09) Explanation of the five ways real estate pays returns and the simplicity of real estate math. Introduction to Get Rich Education (00:26:17) Overview of Get Rich Education's history, team, and independent voice in the market. Real Estate Market Inventory (00:28:40) Discussion on the slowing real estate market, available inventory at GRE marketplace, and the importance of free coaching. Ethical Use of Other People's Money (00:29:51) Explanation of the formula for starting or growing a portfolio of buy-and-hold properties, emphasizing the use of a small down payment. Benefits of Off-Market Properties (00:31:13) Explanation of competitive off-market property prices and the advantages of buying direct, investor advantage markets, and property management solutions. Safeguards in Property Purchase (00:33:57) Importance of property inspection, lender appraisal, and independent third-party property inspection in property purchase. Free Coaching and Financial Readiness (00:35:03) Emphasis on the free coaching at GRE marketplace, the absence of upselling to paid courses, and the importance of financial readiness before investing. Disclaimer and Host Information (00:36:05) Disclaimer regarding the content of the show and information about the host operating on behalf of Get Rich Education LLC. Resources mentioned: Show Notes: GetRichEducation.com/483 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Speaker 1 (00:00:00) - Welcome to GRE. I'm your host, Keith Weinhold. I compare real estate to how other asset classes have performed. Give you a simple example to help you understand an inverted yield curve. Describe the significance of the five in your life. Then help find a match with the right income property for you today and Get Rich Education. If you like the Get Rich Education podcast, you're going to love art. Don't quit your day dream newsletter. No, I here I write every word of the letter myself. It wires your mind for wealth. It helps you make money in your sleep and updates you on vital real estate investing trends. It's free! Sign up and get rich education.com/letter. It's real content that makes a real difference in your life, spiced with a dash of humor rather than living below your means, learn how to grow your means right now. You can also easily get the letter by texting gray to 66866. Text gray to 66866.   Speaker 2 (00:01:09) - You're listening to the show that has created more financial freedom than nearly any show in the world.   Speaker 2 (00:01:16) - This is get rich education.   Speaker 1 (00:01:25) - Welcome to GRE. From Johannesburg, South Africa, to Mechanicsburg, Pennsylvania, and across 188 nations worldwide. I'm Keith Weinhold and you're listening to Get Rich Education. This is where your educational major is real estate investing. And your minors are in real estate economics and wealth mindset. That's what we do here. It all culminates with your doctorate in financial freedom. Before we talk about real estate, we recently had a year that just ended. And to know their real estate is the right place for you long term at times, especially after a year ends, we need to compare that to other asset classes. So what actually happened last year? Elsewhere in the investing world? Stocks, the S&P 500 was up 25%, even though for most of it invest in stocks, you're only paid one way, not five ways, but still 25%. That's a pretty healthy return on tech companies accounted for most of the gains, yes, what they call the Magnificent Seven that is putting the team on its back.   Speaker 1 (00:02:33) - Yeah, these are the seven tech mega caps Microsoft, Apple, alphabet, Nvidia, Tesla, meta and Amazon. They surged more than 75% last year, while the other 493 companies in the S&P 500 have gained just 12%. Yes, the Magnificent Seven now accounts for nearly 30% of the index's entire value. That's per the Wall Street Journal. And speaking of the S&P 500, it just added a prominent new member a few weeks ago, and that is Uber zooming outside, the United States, global stock markets had their best year since 2019. Bitcoin was up 157%. Yes, you heard that right. 157 as the crypto winter thawed out last year, the yield on the ten year Treasury note was up just eight basis points. That's virtually unchanged. Very little movement. And see, that's also why mortgage rates ended the year at the same level they started at, which is near 6.5%. That is because mortgage rates track that ten year note. Gold was up 11%. And here in residential real estate it was up 4%.   Speaker 1 (00:03:51) - That's on the median price of existing homes. But it's only through November, not the full calendar year. Yes, real estate is such a laggard with reporting statistics. So almost everywhere y'all look prices are up up, up. Yes. It's not just for those essentials on your last grocery store run where they're up okay. The value of your assets fortunately is up too. And really, one of the few places that pain was felt was in the commercial real estate market. I think you know that. But let me tell you how that pain is positioned to get even worse shortly here. All right. U.S. office vacancy rates hovered around 20% last year. Now, that's a rate that was actually worse than during the 2008 financial crisis. More companies told workers, hey, get back to your desk, okay? Calling workers back to the office at Salesforce, Amazon, Blackrock. But still, card swipe data in America showed that only about half as many people are making the trip into the office compared to pre-pandemic numbers.   Speaker 1 (00:05:03) - And you've got some companies like meta, the parent of Facebook and Instagram, they're getting creative and actually subleasing their office space to other tenants. But not all commercial real estate is struggling. The retail vacancy rate fell to just 4.8% last year. Retail is not dead, and that retail vacancy rate, that is actually the lowest in 18 years since the real estate firm CBRE started tracking it. And big box stores and malls, shockingly, are. So back. There's also a big real estate demand for warehouses, data centers and industrial space, thanks to the recent surge of AI and that pandemic induced e-commerce boom. But we probably haven't seen the worst of it yet because, okay, within the next four years, about two thirds of commercial real estate loans will likely be refinanced, with interest rates much higher than they were the first time around. The last thing that we have to recap for you that we learned from last year is all of those god awful, dreadfully wrong predictions. A recession. So many predictions were so wrong.   Speaker 1 (00:06:27) - Instead, we had historically low unemployment and solid corporate profits. Inflation fell. Now there is one prominent financial media platform, one of the nation's biggest. I won't mention their name, though you've surely heard of them. This agency gave zero room for any other outcome because they predicted a 100% chance of a recession last year. 100%. All right. They really look wrong. Although let's be mindful, technically, due to a statistical lag, we often don't know if we are in a recession until after the fact. But if you think that we were late last year, understand though, not absolutely everyone was a Debbie Downer, say back in late 2022, let's give some credit where it's due. Moody's Analytics chief economist Mark Zandi, he was one of the few experts who kept the faith for a soft landing. He pointed out the recessions typically come out of the blue, and that there was a good chance the fed would get inflation under control without taking the economy. Now, one condition that a lot of people pointed to saying that a recession should be here by now, is that dreaded condition that you probably heard of? Maybe.   Speaker 1 (00:07:47) - Maybe not. But that is known as an inverted yield curve, which is deemed as a harbinger of bad things to come, usually recession. Okay, now that phenomenon inverted yield curve. That sounds intimidating. I think when you hear that. Okay. And what that means in inverted yield curve is that the interest rate on long term bonds is lower than the interest rate on short term bonds. And that that right there is what's often a bad sign for the economy. Now, if what I just said right there kind of makes you scratch your head and say to yourself, what was all that gobbledygook again? And why does it matter? Why don't I give you a simple example of an inverted yield curve? Then you can actually remember. What I'll do is make this personal to you. A bond is just a fancy name for a loan. Let's say that you need a loan for $10,000, and you've got this great friend, a lifelong and trusted friend, and he will let you borrow the money from him.   Speaker 1 (00:08:56) - Now, if you take out the loan and tell him that you'll pay him back as quickly as next week, which is our short term bond. In this example where your friend might not charge you any interest on the loan at all, then just say that he wanted you to pay him a small 1% interest rate. Okay, see, your rate is low because there's not that much risk for him since you'll pay him back next week. That's not too long for him to wait. But say that you want to take the same $10,000 loan from that friend, but you're going to pay him back for ten years. An entire decade? Well, for him to want to make you that loan, he's going to need to get compensated more with a higher interest rate for the heightened risk in that long payback period. Okay, what if you move or if you aren't even alive in ten years? All right. That entails more risk for him, the lender. So therefore your loan comes with a 10% interest rate that you've got to pay your friend.   Speaker 1 (00:09:57) - This is analogous to the long term bond. All right right there I've just explained the normal yield curve condition right there. That's normal. The longer someone lends money out for to you, the more that they must get compensated. And that should make sense to you that that is a normal world. One week was 1% interest, one decade was 10% interest that you'd have to pay. That's normal. However, in inverted yield, curve simply flips that normal world upside down. It inverts it. It's the opposite of the arrangement that I just described with your friend. So this is where the shorter duration that one makes a loan for the higher interest rate they're compensated with. See, that's a weird world. That's an inverted yield curve. Because if your friend thinks that the world is going to crash soon with a recession or a depression, or Earth gets hit with an asteroid soon, well, then he'd want high compensation, even on a short term, week long loan, because freakish things are happening. And that's an inverted yield curve.   Speaker 1 (00:11:10) - And that's why having one like we have recently signals something dire, like a recession coming to many. Now, at the top of the show, I talked about the returns of various asset. Over the past year. Of course, that is only in terms of capital appreciation. That's all that most investors think about simply, did it go up or did it go down? It's an important question, but around here we know that real estate is a special asset class because when it's bought, right, it can pay you five ways at the same time. When it comes to the numbers, that number five, that is symbolic of why we do what we do here at gray. So let me talk about really, the existential and symbolic virtues that resonate with you across your life and the meaning behind that special number five. And it's about more than our real estate pays. Five ways, which is any listener knows is appreciation, cash flow, return on amortization, tax benefits, and then fifthly, inflation profiting.   Speaker 1 (00:12:18) - And I'm holding up five fingers right now, as I say this, according to numerology, the number five symbolizes freedom, curiosity and change, a desire to have adventures and explore new possibilities. But it signifies more than just high energy and excitement. In numerology, the five negative traits can include talking too much and overconfidence. Okay, that's what numerology says. Five ways real estate pays is a freedom formula. So that's actually numerology appropriate, I suppose. Now we don't do astrology or tarot cards here. Nothing hokey, concrete evidence though I will venture to guess that at least in some other facet of your life, five resonates with you. You've got five senses. Each one of your limbs has five fingers or five toes. In Christianity, there are the five wounds of Jesus Christ. If you're Muslim, there are the five pillars of Islam. Muslims pray to Allah five times a day. In Judaism, the Torah contains five books. Aristotle said that the universe is made up of five classical elements water, air, earth, fire, and ether.   Speaker 1 (00:13:41) - A lot of more popular folklore celebrates the five like Indiana Jones sort, the Sankara stones. They were five magical rocks. In music. Modern musical notation uses a musical staff made of five horizontal lines. Sports. The Olympic Games have five interlocked rings. When you shake hands to close your next real estate deal, you're each using those five fingers. In law, five is what renders a verdict. Five is the number of justices on the Supreme Court of the United States necessary to render a majority decision. There's a show on Fox called the Five and near the top of our Don't Quit Your day dream letter. We've got the five. Five is defensible in your investment fortress, just like the Pentagon is a five sided building in D.C. known for defense. Real estate pays five ways. And hey, even that phrase is five words. And it's a concept that was first introduced to the world right here on the Gerry podcast in 2015. So we're done with the touchy feely stuff, but look around five. It has a lot of meaning in your life.   Speaker 1 (00:15:02) - And in fact, the next time someone asks you why you're invested in real estate, hold up five fingers and confidently tell them that real estate pays five ways. What better way to affirm this than to come back with a concrete example shortly on how this helps you navigate toward financial freedom in your life, in ever changing real estate markets, we're going to use today's real life numbers in summing up the five. I hope you enjoyed me whipping around the asset classes in explaining what an inverted yield curve really means to you. More next, I'm Keith Reinhold. You're listening to get Rich education. Role under the specific expert with income property, you need Ridge Lending Group and MLS for 256. In gray history, from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's. Start your pre-qualification and chat with President Charlie Ridge personally. They'll even customize a plan tailored to you for growing your portfolio. Start at Ridge Lending group.com Ridge lending group.com.   Speaker 1 (00:16:23) - You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns are better than a bank savings account up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate. And I kind of love how the tax benefit of doing this can offset capital gains in your W-2 jobs income. They've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, six eight, six, six.   Speaker 3 (00:17:26) - This is Rich dad advisor Ken McElroy. Listen to get Rich education with Keith White.   Speaker 3 (00:17:32) - Hold and don't quit your day dream.   Speaker 1 (00:17:44) - Welcome back to get Rich education. I'm your host, Keith Wayne. Hold. You've been with me here every single week since 2014. A lot of you have anyway. You're listening to episode 483, and I'm deeply appreciative for you, the listener, coming up here on the show and in house chat with one of our investment coaches, Doug Casey, on the Silent Depression. And like I told you last week, soon, a return of Tom. We write when we discuss whether the US can just completely do away with and delete the property tax. Wouldn't that be amazing? Around here? We like to say that when we provide good housing to people, we can help abolish the term slumlord. But your real estate investing venture isn't solely altruistic. There are generous profits, too. And, you know, it's incredible to me how more real estate investors don't even understand the answer to basic questions like how do I get paid in? How much do I get paid, and where the sources of where that money comes from.   Speaker 1 (00:18:49) - And really, these are all huge reasons for why you and I are even investing in real estate at all. So I love doing this. Let's add up the five ways and come up with a total ROI. And it's always a little awe inspiring to do this, even with conservative numbers, to see how high your return gets. And let's use the year 2024 sort of numbers. And it's kind of funny in a sense. I dislike real estate elements where down the outside tenants might get difficult to manage on the inside, and you're certainly going to have some problems, including some weird problems along the way in your investor journey. So although in a sense I dislike real estate, rather I like what real estate does, for me, it's largely about those giant returns. So let me demystify real estate returns with a quick breakdown. And I think you know that the five ways are not for fix and flip property. This is just with buy and hold investing on a property that's ready to go, ready to be moved into turnkey.   Speaker 1 (00:20:03) - Here's a simplified method the concrete numbers. Right. Let's say that you make a 20% down payment. In this case that is a 40 K initial investment on a 200 K income property in just a year. Here's what can happen. The first way appreciation. You've got that initial property value of 200 K and appreciation rate of just 5%. Where your new property's value is now 210 K, you just experienced an equity gain of ten K divided by your 40 K initial investment. That is a 25% return to you just from the first of five ways you're paid. That is due to the magic of leverage, because you got the gain on both your down payment and the money that you got to borrow from the bank. The second way is with cash flow. Let's say your rental income is $1,600 a month, but things are running a little thinner on this property, and your expenses are $1,500 a month with the mortgage and all the operating expenses, that gives you leftover cash flow of only 100 bucks a month. That's 1200 bucks a year that's still divided by that same 40 K initial investment you made.   Speaker 1 (00:21:13) - All right. That is another 3% return to you. The third way you're paid is that ROA return on amortization. Also known as principal pay down. All right. Will you have a 160 K loan on this property? We'll use an 8% interest rate. So all you got to do is search for a loan amortization table, bring it up, and you'll see that you have a monthly principal reduction of about $110 a month. That is $1,320 a year that your tenant paid down, not you. So right here, your $1,320 equity gain is still divided by your same 40 K skin in the game down payment. That is yet another 3% gain. Then the fourth of five ways are your tax benefits. All right. Your property value is 200 K. That's how much your property is worth on the day that you bought it. And your building value might be about 70% of that. And the other is in the value of the land. So therefore you're building value. Or that improved portion of the property is worth about 140 K will annual depreciation is about 3.6% of that.   Speaker 1 (00:22:30) - That gives you a $5,000 tax depreciation benefit. If you're at the 25% tax rate, that's 1250 bucks a year divided by your same 40 K initial investment, that is another 3% return to you just piling on. And then the fifth and final way is your inflation profiting you profit from inflation as your debt gets debased by inflation. This is the least understood of the five ways you've got that 160 K loan amount at a 3% inflation rate. That gives you an annual debt debasement of $4,800, again divided by your same 40 K initial investment. This is another 12% return to you. All right. There we go. Now let's add up all of those ROI from the five ways real estate pays. You had 25% from appreciation plus 3% from cash flow, plus 3% from your ROA, plus 3% from your tax benefit, plus 12% from your inflation profiting that equals a 46% total ROI that you have from this property. I mean that right there. That is exactly why you're a real estate investor. That is exactly why I'm a real estate investor.   Speaker 1 (00:23:56) - What do you think it was for to replace toilet flappers and spackle? Drywall? Hey, this stuff's important, but I don't personally do it myself. That's the kind of stuff I dislike because I'm not good at it. Now, at a number of steps when I went through that, you'll notice that I was conservative or rounded down. I used an 8% mortgage rate and 3% inflation. Although there are numerous tax benefits, the only one I considered is tax depreciation. Your seller can often help pay your closing costs if you make a full price offer. So to keep it simple, I did not roll closing costs into that. See, all these numbers are realistic. While paying a property manager is accounted for. And as a reminder, that was only in year one. Your subsequent years returns. They are going to gradually diminish as equity accumulates in your property. And of course, that's an example. You are real life numbers. You're really going to be better than that or worse than that. And yes, we could get more precise numbers if we like, discuss numbers from 20 spreadsheets and really made your head hurt.   Speaker 1 (00:25:09) - But we're not going to do that. And you do enough years of this, and you're going to have hordes of people lurking in the viewers of your Instagram story about your latest month long vacation in the Maldives islands. Okay, now, if you need to see what I just explained visually and your newer to our platform and you haven't seen that yet, I also explain the five ways in a free mini video course so that you can really get a good look at all those numbers and where they come from. And you can get that at get Rich education. Com slash course. The cool thing about real estate math like I just did there is it simplicity. All we did there was addition, subtraction, multiplication and division. It real estate. I've never had to do trigonometry, calculus or use exponents. Okay, it's not about complicated maths. All it is is knowing what numbers to use. And in fact, that's probably why I'd expected. My skills are pretty rusty in calculus and trigonometry right now. I don't need to use that stuff.   Speaker 1 (00:26:17) - You can do all this with a pen and a napkin at. Lunch. And that is a big part of the beauty of this. So here at gray, we brought the world in awareness to this for about nine years now, and shortly after show inception, we helped lead you to the actual property addresses that are conducive to this because you kept asking me, where can I actually find properties, where this works? And then more recently, we added free coaching to help get you started or to help you get your next income property. And by the way, if you've ever wondered, there are eight of us that are here on the team at gray, and we often recruit new team members. We do that through our newsletter subscribers like you, because you already understand abundantly minded concepts like financially free beats debt free. We are not owned by any parent company. So when you tell a friend about the show or you interact with our sponsors, you're really supporting an independent voice here. And that's not to disparage the big corporate in any way.   Speaker 1 (00:27:26) - That's just simply not who we are. It was recently reported that Warner Brothers and Paramount are in early merger discussions. Well, gray won't be facing scrutiny from antitrust regulators anytime soon. And our sponsors, like you hear on our ads here during the show, they are ones that I use myself. We don't produce AI generated material here either. This is organic, original content, and a number of people on our team here have been with us for a while. Our investment coach Andrea since 2020, nourish since 2021, and our podcast Sound Engineer and has helped produce this show that you're listening to right now, every single week since episode three, in 2014, almost since inception, nine plus years now, Gray Marketplace is where you'll find the income properties for almost two years now. To make it even easier for you, you can even find and select from our two investment coaches on that page in order to help you out. And since our coaching is truly free, please respect their time. They're not there just to chat.   Speaker 1 (00:28:40) - It is for action takers now. Seven weeks ago, we did an episode here on how the real estate market is slowing it down. And of course, when we're talking about slowing down, the slow real estate market is in terms of the number of sales or the sales volume, not as many homes are transacting as usual. For one thing, there's always a lag around the holidays, but there's also an overall lack of American housing inventory, as you probably know well, I am happy to tell you that we do have inventory at GRE marketplace and a good selection. Everything from an older, renovated Ohio single family income property for a sales price of, say, 110 K to Alabama and new build single families for 300 K to Florida. New build duplexes for 500 to 600 K to four plex's for upwards of $1 million. If you want to benefit from everything that we discuss here on the channel, the actionable way for you to do that is with our free coaching. Yes, I'm talking about you. Make yourself that long term.   Speaker 1 (00:29:51) - Five ways profiteer. By not focusing on getting your money to work for you. That is a fixed mindset paradigm shift to ethically getting other people's money to work for you. Like we discuss here. That is, you simply put a small down payment on an income producing property. I mean, that's most of the formula right there. That's it. We're talking about how you can start or grow your own portfolio of buy and hold property, not fixing flips. It's often entry level property which is what makes a good long term rental property that's either already renovated or it is brand new. Oftentimes it's single family homes. Up to four plex is sometimes some apartment buildings. They're now a great marketplace. You can either shop off market property yourself, or have the free help of one of our great investment coaches. And your coach learns your goals, guides you, and makes it easy for you. They help you shop. The great marketplace properties, tell you where the real deals are nationally, and sometimes they tell you how to get improbably low mortgage rates when new home builders make those available, and your coach if you don't have one already, they give you the insights, the news on the latest good deals.   Speaker 1 (00:31:13) - For about a year now, a lot of new home builders have got to keep building and they have to keep moving properties to stay in business. So that's why amidst. Higher mortgage rates. You can get an interest rate for income property in the fives now because the builder buys it down for you and or even get a year's worth of free property management. Yeah, builders are often able to buy down your mortgage rate for you, because what they do is that they buy big chunks of money from lenders in bulk, where instead, if a lender does it directly with you, they have more documentation that they have to do with each individual investor for their smaller loan sizes. That's how builders are buying down your rate. They buy money in bulk from lenders. Now you'll see that grey marketplace properties are often less expensive than you'll find elsewhere. For properties that are turnkey and ready to be tenant occupied. Like this. Now, how are these off market property prices so competitive? Really? Where's the advantage come from here? Well, first of all, there is no real estate agent that the seller has to compensate with a traditional 5 or 6% commission.   Speaker 1 (00:32:30) - Instead you get to buy direct. Secondly, investor advantage markets just intrinsically have lower prices than the national median. They tend to be in the Midwest, southeast and Inland Northeast, and they come with a property management solution. And thirdly, the providers in our network, they're not mom and pop flippers that provide investors like you with just 1 or 2 homes a year. Instead, these are builders and renovation companies in business to do this at scale. So they get to buy their materials in bulk, keeping the price down for you. And really a fourth reason that you tend to find good deals at Gray Market Place is that you aren't buying properties from owner occupants where their emotions get involved, and they sometimes expect irrationally high prices for some offbeat reason because the living room is where they open their Christmas stockings every year for a decade or something like that. Now, just like buying your own home to live in, these income properties come with a lot of the same safeguards when you buy. We suggest that once your coach helps you make an offer and you're under contract for a property, that you have an independent third party property inspection done, and then the seller typically fixes any inspection findings for you at their expense, the seller's expense, before you close the deal.   Speaker 1 (00:33:57) - And we're talking about anything from a window that doesn't close properly to a faucet that drips. You want to have those conditions cured and taken care of before you buy. Now, as a buyer, it's not legally required that you do an inspection, but I recommend it even if it slows down your purchase process a little. Inspection is like cheap insurance for you. Don't rush that part as a condition of your mortgage lender giving you the loan, there will be an independent lender appraisal of the property's value before you buy. That part is mandatory. And this appraisal? It's another safeguard to keep you from overpaying. If you don't have an investment coach yet, it is truly free. They're there to help you out. Read a few sentences about each coach and pick the coach that you think resonates with you. Or just pick the one that you think has the best smile over there on that page. Uh, they are really well qualified. They have their MBAs, but more importantly, the coaches are relatable because they're active real estate investors themselves, just like I am.   Speaker 1 (00:35:03) - Coaching is truly something that's free. We don't try to upsell you to some paid course or some fee based coaching program later. There's nothing like that. So just create one login one time and connect with them at Gray marketplace.com. And it's really helpful if you're financially ready. First check with your mortgage loan company and get pre-approved unless you're paying all cash. Really? Today, with inflation about as little as you'd want to spend on a rental property, they won't give you an inordinate amount of problems. Is your 20% down payment on a 100 to 150 K property? Well, you should find this most helpful. You can get started with investor advantaged off market deals and investment coaches at Gray marketplace.com I'm Keith Reinhold. I'll chat with you next week. Don't quit your day dream.   Speaker 4 (00:36:05) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss.   Speaker 4 (00:36:20) - The host is operating on behalf of get Rich education LLC exclusively.   Speaker 1 (00:36:33) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

After discussing the direction of rents, learn about an ominous new tax that’s proposed. SCOTUS and Congress are considering a tax on unrealized gains.  For example, if your gold or furniture appreciates from $5K to $8K, would you have to pay a tax on the $3K gain, even if you keep owning the gold or furniture? Tom Wheelwright from WealthAbility joins us to discuss this. Though this is considered a “wealth tax”, the middle class would have to pay it. The tax case being heard is called “Moore vs. United States”. We expect it to be decided this year.  Tom & I discuss how few people understand marginal income tax rates’ progressivity. The last dollar that you earn is taxed at your highest rate. The first dollar that you earn is taxed at your lowest rate. Timestamps: Factors Driving Rent Growth (00:02:45) Inflation, lack of inventory, expired rent freezes, shifting workforce, demand for single-family homes, high employment, barriers to homeownership. Promising Development in Multifamily Construction (00:05:33) Multifamily construction reaching a 15-year high, new supply likely to slow down apartment rent growth, inclusionary housing requirements for new construction. Current Rent Trends (00:08:04) Single-family rents up 5%, apartment rent growth at 3%, highest rent price growth in the northeastern quadrant of the US. Supreme Court Case: Moore v. United States (00:11:47) Overview of the case, implications of taxing unrealized gains, arguments for and against the taxation of unrealized income, potential impact on everyday investors and citizens. Challenges of a Wealth Tax (00:18:07) Discussion on the problematic nature of a wealth tax, potential impact on individuals and assets, comparison to estate tax, and potential implications of a wealth tax on various assets. The tax on unrealized gains (00:22:43) Discussion on the potential impact of a proposed wealth tax on unrealized gains and the complexities of taxing assets while they are still held. The regressive nature of wealth taxation (00:24:38) Exploration of the regressive nature of wealth taxation and the challenges in implementing and managing taxes on wealth. Tax laws and equal protection (00:27:19) Insights into how tax laws apply equally to everyone and how billionaires benefit from better advisors to minimize tax payments. Tax rate misconceptions (00:30:15) Clarification of misconceptions about tax rates, including the progressive nature of tax tables and the impact of earning more income. Tax strategies and investment decisions (00:32:17) Exploration of tax benefits related to investment strategies, including the impact of deductions and the suitability of IRAs for different investment types. Updates on tax laws and book release (00:34:57) Announcement of the third edition of the book "Tax-Free Wealth" and the incorporation of major tax law changes into the updated edition. Wealthy's tax contributions and future episode preview (00:36:03) Discussion on the tax contributions of the wealthy and a preview of a future episode topic on the feasibility of abolishing property tax. Conclusion and show updates (00:37:13) Closing remarks on upcoming content, including the landmark episode 500, and a call to subscribe to the show for valuable insights. Resources mentioned: Show Notes: GetRichEducation.com/482 For access to properties or free help with a GRE Investment Coach, start here: GREmarketplace.com Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: [email protected] Invest with Freedom Family Investments.  You get paid first: Text FAMILY to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com GRE Free Investment Coaching: GREmarketplace.com/Coach Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete episode transcript:   Keith Weinhold (00:00:01) - Welcome to GRE. I'm your host, Keith Weinhold, and it's a new year. We talk about what drives the growth of rents. Then a gigantic new tax is being proposed that could fundamentally change virtually every current investment you own and future investment you make today on Get Rich education. When you want the best real estate and finance info. The modern internet experience limits your free articles access, and it's replete with paywalls. And you've got pop ups and push notifications and cookies. Disclaimers are. At no other time in history has it been more vital to place nice, clean, free content into your hands that actually adds no hype value to your life? See, this is the golden age of quality newsletters, and I write every word of hours myself. It's got a dash of humor and it's to the point to get the letter. It couldn't be more simple. Text GRE to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free. It's called the Don't Quit Your Day dream letter and it wires your mind for wealth.   Keith Weinhold (00:01:18) - Make sure you read it. Text grey to 66866. Text GRE to 66866.   Speaker 2 (00:01:30) - You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.   Keith Weinhold (00:01:46) - What could go from Beckley, West Virginia, to Boise, Idaho, and across 188 nations worldwide. You're listening. To get rich education, I'm your host, Keith Weinhold. What about this new proposed wealth tax? Should there be one? How big is it? As you're gonna find out, you would probably even have to pay this huge new proposed tax. If you're in the middle class. That's all. If it gets legislated, that's coming up shortly. But first, last week I told you about the future direction of home prices. As I revealed our 2024 National Home Price Appreciation Forecast this week, let's talk about the direction of rents in America, higher prices for everything that could make tenants feel tapped out. Although we have now had a few months of wage growth picking up before we get into the rent trend, this is get rich education.   Keith Weinhold (00:02:45) - So focusing on the education part as we often do, what are the factors that drive rent anyway? What drives rent growth and how did rent get to feel so expensive for a lot of people? Well, the fast growth of rent costs since 2020 that derives really from a number of factors, including inflation and also including a lack of inventory. There is a shortage of vacant rental properties in general and of affordable ones in particular. You've also got those expired rent freezes and expired discounts. I mean, landlords are making up for pandemic era rent freezes and steep discounts in urban areas. And by doing that, what they've done now is hiked up prices on new units and on lease renewals. Another factor that drives rent growth is what's happening with the workforce. And we've had a shifting workforce. As the pandemic increased, the popularity of remote work, you had deep pocketed renters that sought out larger homes, often single family homes, in areas that had previously been pretty low cost. So this migration then it increased the rents in suburban and outlying areas more than it lowered them in urban ones.   Keith Weinhold (00:04:06) - And see that trend overall that yielded a net increase in rents. And then another factor is that you have more demand for people to live alone. Prospective renters are increasingly looking for studio in one bedroom apartments, driving up demand for available housing, and that drives demand for space and therefore rent growth, because living alone, that means that rather than two people demanding to live in one unit, two people demand two places to live. And of course, high employment like we've had. That's another factor that drives rent growth over time. And the last factor that I'll share with you as a rent growth driver are barriers to homeownership. Yeah. Prospective homeowners, they remain renters for longer because they face high demand and low inventory on those existing homes. Like I've talked about before, higher mortgage rates. And you had those supply chain disruptions that really began a few years ago. Most of those are alleviated now, but that made it more expensive and more difficult to construct new homes. And then as mortgage rates rose starting back in early 2021, housing prices, they cooled off faster than rents, and rents are finally rising at a slower pace now then they did in the past two plus years.   Keith Weinhold (00:05:33) - And so those are the factors that drive rent growth. Now. Back in 2022, a promising development began, promising for those that are looking to pay less for housing in the future anyway. From their perspective, and that is the fact that multifamily construction reached a 15 year high nationwide, and that new supply is what's likely to slow down apartment rent growth. And since many cities require really this inclusionary housing, that means that a portion of new housing needs to be affordable. Well, therefore, new construction also means new affordable housing. Again, that's predominantly on the apartment side. But see, many families, they want a single family home. They want that privacy. They want that separation. They want to live in something that feels like their own, but they can't afford a single family home to buy. So they rent one. And, you know, I thought Zillow recently pointed it out really well when they said that single family rentals are the new. Their homes. They appeal to those that are priced out of buying.   Keith Weinhold (00:06:49) - And now you can see this reflected in rent growth. So now that we talked about some of the longer term drivers of growth, let's talk more about the current period of time. We don't have Q4 numbers in yet, but through Q3 we can see that the growth of single family rents is 5%. All right. That sounds healthy. And it is. And that's per John Burns research and Consulting. But that 5% increase is down from two years ago when it had its recent peak of between 9 and 10%. So again, right there, we're just talking about the annual growth rate in single family rents. It's about 5% through the latest quarter that we have stats for now. Compare that 5% to apartment rent growth, which is about 3% today. Even in an economic slowdown, rents rarely fall. And by the way, if rents ever do fall, I call it falling rents. Or perhaps I use the phrase declining reds for some reason. If price is contracting anything, some economists and analysts and others, they refer to this as negative growth.   Keith Weinhold (00:08:04) - I don't tend to use the term negative growth. That's confusing. I just call it a decline. Okay. Negative growth. That makes you wonder if someone means slowing growth rates or do they mean an outright decline. So negative growth is an oxymoron like jumbo shrimp or black light or friendly fire, or telling someone to act natural, or perhaps a working vacation? Okay, that's what negative growth means to me anyway. Now rents, whether it's single family rentals or apartments, when you blend those together regionally, you're seeing the highest rent price growth in the northeastern quadrant of the United States, which oddly contains a good chunk of the Midwest. So you just look at the northeastern quadrant of the United States. So leaders in red growth we're talking about here Providence, Rhode Island, Hartford, Connecticut, Cincinnati, Columbus, Saint Louis, Milwaukee and Chicago, they are all on that list. The highest rent growth blended together, single family rentals and apartments. By the way, two months ago I was in Hartford, Connecticut for the first time in a while.   Keith Weinhold (00:09:18) - Nice skyline there. Yeah, Hartford. You have an impressively urban feel for a city that's not among America's largest. Now. You're seeing slight rent price declines this past year in a lot of their really big, swaggering, broad shouldered gateway cities New York City, San Diego, San Francisco, San Jose, and also in Raleigh, North Carolina. I'm not sure what's going on in Raleigh, North Carolina, with their sluggish rent growth, but here, as testimony to the fact that rents don't often fall far, all of those bigger cities that I just mentioned, these big losers, they're only down between one half of 1% and 1% for year over year rents. So to review nationally in the last year, single family rents are up 5% and apartment rent growth is up 3%. But both have slowed from a couple years ago. Can the federal government tax your unrealized gains, also known as a wealth tax? We're going to talk about what that means. But how far could this go? If your home appreciates a 30 K in a year, but you want to keep living in it, might you have to pay tax on that gain even though you don't sell it, you just want to keep living there.   Keith Weinhold (00:10:41) - Could that even apply to you? If you own furniture that goes up in value, but you kind of like dining at that nice mahogany table of yours, could you get taxed on that every year? If the value of that goes up? And then you would have to ask the question, where are you supposed to get the money from in order to pay the tax? Might you have to sell that asset in order to pay the tax on it? So let's discuss a wealth tax that is tax on your unrealized gains. A renowned tax and wealth expert is back on the show with us today. He's also a CPA and the CEO of a terrific tax firm called Wealth Ability. He's the best selling author of the Mega-popular book Tax Free Wealth, which I have on my bookshelf. And a third edition is about to come out. He's going to tell us more about that. Hey, welcome back to Dr. Tom Wheelwright. Thanks, Keith. Always good to be with you. It's good to be with you, too.   Keith Weinhold (00:11:47) - And I think it's going to be especially informative and maybe disturbing this time, Tom, because really, it's been called the quadrillion dollar question. This is where Supreme Court justices decide whether the federal government can tax certain unrealized gains. And what this means is that these are assets that you own, but yet you haven't sold yet. So, Tom, tell us about this Supreme Court case hearing it known as more Maori versus the United States. Yeah. So this is a couple that invested in a company in India. They owned, I think, 12 or 13% of the company. And when the 2017 Tax Act was passed, what we commonly think of as the Trump Tax Act, one of the provisions was that in order to go to a taxation where you couldn't just put off bringing back the money all the time, they said, well, look, we're going to have a one time tax, we're going to have a tax on repatriated earnings. Some of you have heard that term repatriated earnings as if they came back.   Keith Weinhold (00:12:56) - Okay. So whether or not they came back as if they came back. And if you're a shareholder of 10% or more, then you have to pay that tax in certain situations. And so the laws actually had to pay the tax. This was the tax on the income of their corporation. So the corporation could have its own tax. But this is actually a tax on the shareholder. So that's actually where this is interesting because is similarly frankly we have taxes on partners and partnerships. Right. If you're a partner in a partnership you're taxed on that income. Whether or not you get the money in a corporation, typically you're not taxed on the income unless you get the money. That's a dividend. If you don't get the money, the corporation's taxed, but you aren't taxed. This was a situation where it's a corporation, but the shareholders were taxed. The Moores are arguing, well, this is equivalent to a wealth tax. And it's actually why I think the Supreme Court took this up, because it's not a case that you would normally think the Supreme Court would agree to hear.   Keith Weinhold (00:13:57) - Well, I think where this concerns people is, could this open up things so that the everyday person and the everyday investor could have to pay these unrealized gains on assets that they own, that have not sold? I mean, even their primary residence, if that appreciates from 500 K to 550 K, are they going to owe tax on that 50 K even if they plan to continue to stay there and hold on to it because they want to live their. That's what certain members of Congress would like. Liz Warren would absolutely like that to happen. Bernie Sanders absolutely like that to happen. I actually think that's why the Supreme Court took up the case, is because I don't think the Supreme Court believes that that should happen. I think it's going to come out. They're going to narrow what a wealth tax can and can't be, because I think they need to because they need to say, look. So we've had oral arguments already. So we expect a decision out sometime this year. But basically the arguments by the IRS were we do this all the time.   Keith Weinhold (00:14:56) - We have taxes, unrealized income. We have mark to market on stock trading. So that's a tax on unrealized income. We have a tax on partnerships. That's a tax on realized by undistributed income. The reality is this tax the Moores are are arguing against is a tax on realized but undistributed income. I think that's where the Supreme Court would come down. I'm actually willing to make a prediction on this because I think the Supreme Court say, well, this isn't a wealth tax, and a wealth tax would be prohibited under the Constitution because that would have to be based on population. A property tax, for example, is a wealth tax. Then the US that's reserved to the locales. We can't do a federal tax. We couldn't have a federal property tax. And that's, I think, what the Supreme Court is going to say. You can't have a federal property tax that's prohibited by the Constitution. You now have local property taxes because the locals can do whatever they want. But unless you have it apportion among the states based on population, you'd literally have to have a poll tax, which is a tax per person, as opposed to a tax on the value of what a person owns.   Keith Weinhold (00:16:07) - That's the difference. So there's a lot of complications. That's a direct tax versus indirect tax, all that kind of stuff. I think the important thing is to understand that there are realized, but undistributed income, that's like a partnership, right? You can be a partner in a partnership. The partnership really uses the income. They get the money, but they don't distribute it. As a partner, you're taxed on your share of that income. It has been realized you just haven't gotten it yet. This is, by the way, very similar to the Moore situation. That money, that income was earned that just hasn't been distributed yet. And the question is the fact that they haven't distributed, does that mean they can't tax it? The odd thing is, is I think the Moores are going to lose the case. Moores will lose the battle and win the war. This is a small amount of money, right. So this is obviously the Moore is not trying to save money. There's way more money being spent on legal counsel than the tax.   Keith Weinhold (00:17:03) - So the Moores aren't doing this. This is people behind saying this is a good test case. We need to put a stop to the wealth tax conversation of Liz Warren and Bernie Sanders and Wade. And this is a case to do that. That's really what kind of the background is. That's all the background of this court case is what's really going on and what's really going on is the Ninth Circuit made it sound like any taxes find. And the Supreme Court said, well, we're going to take this up because I think a majority thinks we don't think any tax is fine because clearly under the Constitution, not any taxes. Fine. We're going to help define that. And so I think we're going to get some better clarity on what kind of taxes Congress can enact. Ultimately, I think the Morse will lose their case. Yes, the more clarity is good. I mean, the Supreme Court knows that this is a contentious issue, and I sure want any discussion to get shut down. It might lead to everyday investors and citizens paying tax unrealized gains.   Keith Weinhold (00:18:07) - I mean, with that example that I gave you of, say, a couple that owns a 500 K home and they want to keep living in it, but it just happened to go up to 550 K. I mean, where would they get the tax to pay on that. Well yeah. Well that's another problem. You can talk to any fixed income retiree and they'd have the same complaint about property tax. Sure. Yeah I don't know where this could go. I mean, what if you own rare furniture in your home? Okay. This furniture is worth more at the end of the year than it is at the beginning of the year. But yet you didn't sell it. You just continue to use your furniture. I mean, could that get taxed? It's a terrible slippery slope. And, you know, they talk about, well, don't give me I'm billionaires. I'm going okay. But let's face it, the income tax was only supposed to be on billionaires, okay. The equivalent of billionaires.   Keith Weinhold (00:18:51) - You had to make a lot of money to be subject to income tax in 1913. Yeah okay. So we know it's going to come down. It always does the tax law. You know politicians never like to give up any tax money. They always are trying to apply to more and more people more and more income. So it is problematic. You know, the idea of a wealth tax is very problematic. You know, several European countries have tried it and they've all failed. France tried it. And people like Gerard Depardieu, um, the actor, he just left France, you know, people leave now, what Bernie Sanders wants to do, this is fascinating. He wants to put an exit tax. So if you do leave, you still have to pay the tax. You actually have to pay a tax to leave. So basically what Trump is, he wants the Berlin Wall, but he wants an economic Berlin Wall. Right. That's what he wants. He wants an economic wall. He's going to complain about the wall bordering Mexico, but he's going to put an economic wall around everybody and not allow you to leave.   Keith Weinhold (00:19:50) - It'd be like somebody, California, putting a wall literal wall up and saying, you can't leave California, right. That's kind of the idea that. And if you do leave California now, California, in fact, they talked about it in 2023. And actually, interestingly, the governor defeated it. They talked about imposing an exit tax. So if you leave California, you have to pay a tax for leaving. And fortunately he defeated that. He crushed that. I mean, not sure why he did that, but he did understand the states have more power to tax than the federal government does. Federal government is limited in its taxing power, and it's really limited by the 16th amendment that allowed a pure income tax. The question and this is the argument that Sanders and Warren are making, is that it is income. And the reality is we do have billionaires who pay no tax. And the reason they pay no tax is because their stocks, which are public, go up in value. They're not required to sell them.   Keith Weinhold (00:20:51) - They can borrow against them and they never pay tax. So the argument is, well, wait a minute, that's not fair. That's a decent argument. Honestly. The challenge is yeah, if you could really say we're going to limit it to billionaires and we're going to limit it to publicly traded stock, you're fine. Not a big deal. But it never gets limited. And that's the problem. It never ever gets limited. Once the camel gets its nose under the tent it just right going on taxation all over the tent piling on and not get pulled away. They don't remove layers of taxation. It seems once the president is sent somewhere, it just seems like it continues to spread. Tom, if I could just give one last example on this. If this ever goes to where unrealized gains get taxed and how absurd this all is, just say you. Oh, gold and gold goes from $2000 to $5000. You don't sell it, you just keep holding on to it. And then you'd have to find the income to go ahead and pay the tax.   Keith Weinhold (00:21:48) - Well, you'd have to sell gold. And that's actually what they want. They actually want you to have to sell the gold. Oh, they would want gold to be sold to sell the gold. I want you to sell the stock. So the goal behind the wealth tax is to force you to sell these assets and pay the tax. Okay. Now we have a wealth tax. It's called an estate tax. That is a wealth tax. And there are businesses. There are families who have to sell their family home. They have to sell their family business. They have to sell their family farm because of the estate tax. And so this is another argument that the proponents of wealth tax are making is, wait a minute, we have a wealth tax already. It's called an estate tax. If we can have an estate tax, why can't we have a tax currently? Why do we have to wait until somebody dies to impose that tax? It's an interesting argument. I'm not a policy guy. I'm not one to make policy.   Keith Weinhold (00:22:43) - I want to explain policy. It is a question. If I can have a tax on wealth when you die, why can't I have a tax on wealth while you're alive? Sure. And I thought through the scenario as well. If the river is a tax on unrealized gains, whether that's your house going up in value or furniture or gold after you would pay this unrealized tax, then in the end, when you do want to sell it, what if you sold it for less than you thought it was worth? And then how the heck do you go back and adjust that for the tax that you are now in it? And it actually gets worse than that. Keith. Let's say we have a boom market this year and next year we have a recession. Are we going to get the money back? Exactly. And that's the hardest part because the answer is clearly, no, we're not. I mean, because think of it right now, we have a provision in the law that taxes capital gains.   Keith Weinhold (00:23:35) - There's an argument capital gains should never be taxed because especially at least if there are a capital gain because of inflation, they should never be taxed. If you actually went up in value, yes, they should be taxed. But if they're just inflated in value, why are you paying a tax on something that's not worth anymore than it was five years ago that got the same value? It's just got a different price. But we have a capital gains tax. But think about this. Let's say you have a year and you sell stocks and you have this big game. And the next year you have a loss because you sell stocks because everything went down well. You don't get to use those losses to offset your income. You have to carry those losses forward forever until you have gains again, you don't get go backwards with those losses and recapture the gains that you paid, you know, last year. So we already have this problem built into the system. And now all you'd be doing is exacerbating it. The other problem with, by the way, is that it's very regressive in that you're talking about people taxing their wealth.   Keith Weinhold (00:24:38) - Now, you can put limits, right, which is what you would have to do. And you say, well, look, your personal residence, we're not going to tax, you know, we're only going to tax the excess, which is, by the way, what income tax originally was. It was only excess investment income. You were never taxed on wages. When the 16th amendment was passed there was no tax on wages. We didn't get a tax on wages until 1944. You go, well, we'll exempt all these today. What about tomorrow? And that's always the issue. I'll tell you, the taxes just keep piling and piling on. We're going to talk more about taxation with Tom. We're right when we come back you're listening to University Kitchen. I'm your host Keith Reinhold. I render this a specific expert with income property you need. Ridge lending Group Nmls 42056. In gray history, from beginners to veterans, they provided our listeners with more mortgages than anyone. It's where I get my own loans for single family rentals up to four Plex's.   Keith Weinhold (00:25:39) - Start your pre-qualification and chat with President Charlie Ridge. Personally, though, even customized plan tailored to you for growing your portfolio. Start at Ridge Lending group.com. Ridge lending group.com. You know, I'll just tell you, for the most passive part of my real estate investing, personally, I put my own dollars with Freedom Family Investments because their funds pay me a stream of regular cash flow in returns are better than a bank savings account up to 12%. Their minimums are as low as 25 K. You don't even need to be accredited for some of them. It's all backed by real estate and that kind of love. How the tax benefit of doing this can offset capital gains and your W-2 jobs income. And they've always given me exactly their stated return paid on time. So it's steady income, no surprises while I'm sleeping or just doing the things I love. For a little insider tip, I've invested in their power fund to get going on that text family to 66866. Oh, and this isn't a solicitation. If you want to invest where I do, just go ahead and text family to six, 686, six.   Tom Wheelwright (00:27:02) - Anybody? It's Robert Elms or the Real Estate Guys radio program. So glad you found Keith Reinhold and get rich education. Don't quit your day dream.   Keith Weinhold (00:27:19) - Welcome back to cash. We're talking with Tom Wheelwright, the author of the Mega-popular book Tax Free Wealth. He runs the terrific tax firm called Wealth Ability. Tom, you often like to talk about how really, in a lot of cases, tax laws can apply to everyone, but do business operate really under the same tax laws as a middle class or us in the middle class? Really take a page out of what billionaires are doing. How can we best do that? So we have a wonderful aspect of the Constitution, a clause called the Equal Protection Clause. And what it says is taxes have to be applied equally to everybody in the same situation. So what we're billionaires are different is they have better advisers. That's where they're different. So their advisors know all the rules of the tax law. They pay them hundreds of thousands, millions of dollars a year to make sure that they're paying the least amount of tax possible.   Keith Weinhold (00:28:14) - Presumably, all they're doing is following the law. Those same laws apply to you and me. So that's why, for example, somebody who owns a single family home that they rent out to an unrelated person is entitled to the same tax benefits as somebody who owns a 200 unit apartment complex or somebody who owns Trump Tower, as an example. Okay. You get the same tax benefits in the same situation. The challenge that, you know, the average person has is not enough access to those advisers and a misunderstanding of how the tax law works, because this whole idea will the billionaires get different tax than the average person is just false. That's just a falsehood that is propagated by a certain part of the public in a certain part of the administration that wants to add another tax to billionaires. The reality is we all get the same tax. The difference is, is that if you're a billionaire, let's say you made $1 billion a year and you paid $400 million in tax. You still have $600 million left over, which is more than 99.999999% of people have in a lifetime.   Keith Weinhold (00:29:25) - So it doesn't really hurt you. It doesn't change your lifestyle. Whereas if you put a 40% tax on somebody who makes $200,000 a year, now they're going from 200 to 120, and that has a major impact. And you're really just explain one reason why in the United States, we have tax tables set up that are what we would call progressive, where the more you make, the more you pay. But yeah, you're right, Tom. There are just there's such a knowledge gap out there. I have something happen to me. I bet it still happens to you a lot. Or I will talk to people and they say something like, well, I don't want to earn too much money this year. I'll go from the 24% tax bracket to the 30% tax bracket, and they act like all of their income is then going to be taxed at 30%. So they don't want to earn too much. So I'll tell you a funny story. Yeah. So I used to teach a class every month we'd have anywhere from 30 to 100 people in the class.   Keith Weinhold (00:30:15) - And I'd always do an example and I'd say, okay, let's say that you earn X amount of dollars and you get a $5,000 bonus. What's the cost of that $5,000 bonus from a tax standpoint? And I would say a good 40% of the class would come up with about $8,000. Was the cost of the $5,000 bonus, because just like you say, well, that puts me in a new bracket there for all my income is being taxed in the new bracket. No, it is progressive, meaning the last dollar you earn is taxed at the highest rate, but the first dollar you earn is taxed at the lowest rate. And that's important distinction because we're never taxed on more than right now. It's actually 40% because we have net investment income tax. So you're never taxed on more than 40% of your income by the federal government. You just can't be. So you can make whether you make a, you know, $1 million a year, $1 billion a year, $10 billion a year, your maximum tax rate is 40%.   Keith Weinhold (00:31:14) - That's an epiphany to some people to learn that tax rates are progressive, like you just explained with that $5,000 bonus example, why don't you tell us about another tactic or another example like that? We have a lot of savvy listeners. A lot of Marty realize that marginal example. Can you give us another one about how there's something relatively simple that can really elevate one's and lower their tax rate? Yeah. Let's go to the flip side of that. If the last dollar you earn is taxed at your highest rate, the first dollar you deduct is deducted at your highest rate. Great point. This is why, by the way, and if you read my book, The Windmill Strategy, I talk about this in chapter eight. I used to say for a long time that you never got a permanent tax benefit from putting your money in an IRA for one K and I ran the numbers and win win. And I was wrong. That's not true. And the reason is because let's say you put in $10,000 a year for 30 years, that deduction that you get for that $10,000 you put into your IRA for one K, you get a deduction at the highest tax bracket.   Keith Weinhold (00:32:17) - When you start pulling the money out, you're going to pull it out and you get all the tax brackets. So you put the money in, you get a deduction of the highest, you pull the money out, you get basically the combination of the different tax brackets. So you are actually better off. So for example, if somebody says I want all I investment to go on in the stock market, I would say you need A41K. That is the answer because self-directed would be best. Absolutely. Because you get a deduction now at your highest tax rate bracket. But down the road you're going to pull it out. Basically, even if you have the same income you can pull out a lower rate. Now that only applies if you're going to put the money in the stock market. If you're going to put the money into real estate for one, K is a terrible idea because real estate is a tax shelter and you lose all the tax benefits of a tax shelter. If you put it in an IRA, you actually take a tax shelter and make it a tax expense by putting it into an IRA for one K.   Keith Weinhold (00:33:14) - So there are certain things you would never do in an IRA. A reformed K real estate is one of those. Energy is one of those businesses. One agriculture. You'd never do those in an IRA or for one K, it's a terrible idea. But if you want to invest in the stock market, the bond market, things like that, IRAs make all the sense in the world. So really, that's why people ask me, well, should I do it for one K I'm going. I have no idea. What's your investment strategy? What's your wealth strategy? Where are you putting your money? People all the time. I have some imitators and they'll ask this question, well, how do you make your money? We can reduce your taxes. I'm going. That's the first question you have to ask. But I'm more interested in what are you going to do with your money? Because what you're going to do with your money has a much bigger impact on how we set things up from a tax side, how much money you're going to make, what kind of investments you're going to do, all that is impact by what you can do with your money.   Keith Weinhold (00:34:06) - That question about, you know, how do I make my money is a simple question that, frankly, I can do that kind of a tax strategy on stage in ten minutes. Well stated. That is a good point. Well, Tom, this has been great. You mentioned your latest book, the Win win. Well, strategy, but in one of your very well-known books, Tax Free Wealth, you've got another edition coming out. Tell us about that. Yeah, we have the third edition. So for the second edition we did that. When the Trump Tax Law 2017 was enacted, we needed to put in fact, we did a kind of in a rush. So we just added in things. Since 2017, we've had six major tax law changes, six major tax law changes during Covid. And so what we felt we want to do is let's roll it all in to a third edition will take the Trump tax law. Changes will roll those in. We'll take all the new tax law.   Keith Weinhold (00:34:57) - Changes will roll those in. So now tax free wealth is up to date. I think it's a better book. When I went through it of course I spent hours and hours and hours going through it. This is the best version of tax free wealth we've ever released. There are so many critical updates there. Again, the name of his book is Tax Free Wealth. I recommend checking that out. Tom. We're right. It's been informative. As always. Thanks so much for coming back out to the show. Thanks, Keith. Yeah. Sharp insights from Tom. As always, you can keep following along with the more versus United States case this year. Now, sometimes the wealthy, they will point something out that you've got to consider. It's got to give you a little pause. And that is actually should the wealthy get a tax rebate yet not get taxed more heavily because in the US see the top 1% pay about 42% of federal income taxes, and you might say, okay, well, that's the top 1%.   Keith Weinhold (00:36:03) - Why don't we bring in some of the middle class and revisit this? Well, the top 25% pay nearly 90% of the taxes. And that's all from a recent year per the Tax Foundation. Should the wealthy then get a tax rebate? Because you could say that they pay more than their fair share. Whatever fair share really means. Well, that is a valid question. Ask at the least. Well, today is the first time that we've had the marvelous, successful author, Tom. We're right on the show here in more than a year and a half. That's just a little unusual because he is the most recurrent guest here in history. And so therefore, for some more catch up coming down the road, Tom is going to return here to discuss a big question that I have for him. And in that future episode, Tom and I are going to discuss, should there even be such thing as a property tax, does it make more sense to say, abolish the property tax and then the government can get their revenue from somewhere else, as well as where that proposal might not be feasible? That should be super interesting.   Keith Weinhold (00:37:13) - Asking the question should there even be a property tax? In the meantime, check out Tom's third edition of his book Tax Free Wealth. It is a good read as far as tax reading goes. You're listening to episode 482 of the get Rich educational podcast. We have got a big year in store with plenty of original, groundbreaking content planned, including a memorable landmark episode 500 Coming Up, which will release on May 6th of this year. If you haven't already, I encourage you to subscribe to or follow the show here on your favorite podcasting device, or tell a friend about the show. I think they'll find it really valuable. Until next week, I'm your host, Keith Reinhold. Don't quit your day dream.   Speaker 4 (00:38:05) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get Rich education LLC exclusively.   Speaker 5 (00:38:33) - The preceding program was brought to you by your home for wealth building. 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