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: info@RidgeLendingGroup.com 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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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) -

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: info@RidgeLendingGroup.com 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.

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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.

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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?

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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

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: info@RidgeLendingGroup.com 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

Is real estate cheap, adequately valued, or overpriced? I explore.  Everything considered includes: inflation-adjusted price, affordability, quality, and other nations’ prices.  Stadium trends are affecting urban real estate. More plan to move outside of downtowns. I divide society into four groups of people. Then I discuss who is harmed by inflation and who benefits most: 1: The poor—lose 2: Paid-off homeowners—hedge 3: Mortgaged homeowners—hedge and profit 4: Mortgaged income property owners—hedge, profit, and increase income  Learn how to talk to your tenant so that they never think “How the Rent Stole Christmas”. It’ll help ensure timely rent payments. Many tenants don’t understand that you have a mortgage to pay. Finally, I reveal the exact percentage number that indicates GRE’s 2024 National Home Price Appreciation Forecast. Timestamps: Real Estate Valuation and Gold Ratio (00:02:53) Explains the concept of using the home price to gold ratio as a measure of real estate value and compares it to the long-term average. Global House Prices (00:05:28) Discusses how US home prices are comparatively cheaper than those in other developed nations, such as Australia and Canada. Impact of Quality on Real Estate Value (00:06:40) Highlights the increase in home size, amenities, and safety features over time, suggesting that today's homes offer more value at a potentially lower inflation-adjusted price compared to the past. The trend of sports complexes with casinos (00:12:15) The speaker discusses the trend of building sports complexes with casinos, mentioning examples such as Mark Cuban's plan for a new Mavs arena and the proposed entertainment complex and casino next to Citi Field. The necessity of a second job due to inflation (00:13:36) The speaker explains why inflation makes a second job necessary, emphasizing the importance of investing money at a rate higher than inflation to maintain prosperity and quality of life. The four groups and their relationship with inflation (00:14:46) The speaker categorizes four groups of people based on their ownership of property and how they are affected by inflation, highlighting the benefits and disadvantages each group experiences. The Landlord-Tenant Relationship (00:24:22) Discussion on maintaining open lines of communication with tenants and addressing misconceptions about landlords being greedy. Explaining Property Expenses (00:25:37) Informing tenants about the various expenses that landlords have to cover, such as mortgage, insurance, taxes, and maintenance. Forecasting Home Price Appreciation (00:29:04) Discussing past predictions and forecasts for future home price appreciation, including insights from various agencies and factors influencing prices such as housing supply and interest rates. Home price appreciation forecast (00:35:22) Keith Weinhold discusses his forecast for home price appreciation for the next year, which he predicts to be 4%. Investment decisions based on forecast (00:36:51) Keith Weinhold mentions that people are increasingly making investment decisions based on forecasts, but reminds listeners that forecasts are not guarantees. Resources mentioned: Show Notes: GetRichEducation.com/481 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: info@RidgeLendingGroup.com 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. Today is real estate underpriced, adequately priced or overpriced? All outline a hierarchy of winners and losers with inflation in real estate. How the rent stole Christmas. Then the verdict is in as I reveal GRE’s 2024 home price appreciation forecast 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 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 grey 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 Day dream letter and it wires your mind for wealth. Make sure you read it. Text grey to 66866. Text grey 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 to GRE! From North Pole, New York, to North Pole, Alaska, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to Get Rich Education on Christmas. Happy holidays. Today is real estate cheap? Adequately valued or overpriced? Well, to many it doesn't feel like a relative bargain today, when you see how much housing prices and payments have escalated these past three years. There are a lot of ways to approach the question about whether today's U.S. real estate is cheap, adequately priced, or overpriced, so let's approach them. But when you ponder that question, didn't dollars quickly come to mind? Well, the median home price is $431,000 today, depending on how you slice it. Let's not be quick to forget that when you're looking for a measuring stick to determine the value of real estate or anything, dollars are an exceedingly poor way to track value.   Speaker 1 (00:02:53) - Because also, starting about three years ago, their slow, steady debasement turned into a rapid debasement and dilution of purchasing power. Dollars keep getting so relentlessly debased that, well, of course, it would take substantially more of those dollars to buy most anything today than it did three years ago. Property included. And this is precisely why the car that you own today costs more dollars than your grandparents first home did. Okay, so let's cancel out dollars. For 5000 years, gold has had enduring value. It's been a loose barometer for inflation all that time. As the dollar goes down, it takes more of them to buy the same amount of gold. So rather than pricing the home in dollars, wouldn't it make more sense to use the home price to gold ratio? Yeah, that is just what it sounds like. Instead of comparing home prices to dollars, compare it to how many ounces of gold it takes to buy a home and track that over time. Well, we find out that today it only takes about half as many ounces of gold to buy a home today as the long term average.   Speaker 1 (00:04:12) - And that's dating all the way back to the year 1889, yet just half as many. Yeah, that is a data set in the past 130 plus years, when you take the long term average of how many ounces of gold it takes to buy a median single family home, realize how special this comparison is. You now see the value of two of the most popular real assets relative to each other. All right, so home prices now appear low since it takes just 50% as much gold to buy a home today. But isn't that measure right there in itself enough evidence to say that real estate is under priced? No, that's certainly not. But it is one powerful touch point. We need more than that. Consider global house prices. So much of the world is a renter nation compared to the US, because home prices are substantially higher in other developed nations, from Australia to Canada, Canadian home prices are still nearly double the price of the same US home. This is a second powerful measure that US home prices are cheap here in the middle of the 2020s decade.   Speaker 1 (00:05:28) - Well, let's add some more. Consider affordability. Can people afford homes? Well, there is wage growth, which often lags home price growth in, you know, your wage growth. It often lags inflation until the latter part of an inflationary cycle like where we could be now. But let's look at what really happens. Most people don't buy property based on its price as much as its monthly payment. It's the affordability of that payment that most people are looking at. Today's mortgage rates, though, they don't feel low because of where we were a few years ago. Like I mentioned here on the show before, mortgage rates are still below their long run average of 7.7%. This is another important measure of how real estate prices in America today are not overpriced. But what I'm going to do now is turn the prism in another direction here so that the sunlight strikes it differently. Let's shine the light somewhere else, because we still have not adjusted for something extremely important. When you're valuing real estate or anything for that matter.   Speaker 1 (00:06:40) - Let's look at the attribute of quality. Yes, we need to adjust for quality since 1889. And. An ounce of gold is just still that same ounce of gold. Its physical properties have not changed one bit since the year 1889, which is one reason why it's a good measuring stick and why I brought it up earlier. But in 1889, let's look at real estate. It has changed to an astounding degree. A new Victorian style home back then had sparse amenities and perhaps 950ft². And yet that was a normal sized home back in that era. In 2023, a home average 2415ft² in today's home has features that would be considered unthinkable luxuries yesteryear like air conditioning, multiple bathrooms, quartz kitchen countertops and closets vast enough that you could play pickleball inside them so you're getting more, more home today. Between today's home size, lot size, amenities, and safety features, you can make the case that you're getting five x more, or perhaps even ten x more home than you were in 1889. And you're getting that perhaps even at a lower inflation adjusted price.   Speaker 1 (00:08:13) - And the more you realize all of this, you can increasingly validate asking the question, why are homes still so cheap in America today? And there are some other factors too. But all things considered, one can surely make the case that today's US residential real estate is not overpriced. It's cheap. As we're talking about the relative valuation of homes today. Here's a hint this plays into when I'll reveal Gary's 2024 home price depreciation forecast at the end of the show today, where I will pin the projected appreciation number down to the nearest whole percent for you. That's how exact we're going to get before we talk about residential real estate again. When we discuss how the Reds stole Christmas, let's discuss a niche of the commercial real estate market here that we've never discussed that Gary, before. And it's so interesting whether you are a sports fan like me or you're not. And that is stadiums. Yes, sports stadiums have a lot to do with urban real estate dynamics, and they're even more important amidst this struggling office sector that's already hollowing out parts of some downtowns.   Speaker 1 (00:09:30) - Well, the reason that I'm telling you about this with stadiums is that it looks like a new trend now. About 30 years ago, there was a trend toward having urban stadiums beginning to use these great city skylines or old historic buildings as backdrops. Everyone points to Camden Yards in Baltimore in the 1990s as kicking off the urban real estate ballpark trend. All right, we'll fast forward 30 years to today. Earlier this month, Ted Leonsis, the owner of the NBA's Wizards basketball team and the NHL's capitals hockey team, both in Washington, DC. They announced the deal to move both teams from downtown D.C. across state lines to Alexandria, Virginia, although at last check no official documents had been signed. So, yes, moving them out of the central city, the move looks like a huge win for Virginia. By the way, it's the most populous state without any big league sports teams. That's where the two teams could play. At the heart of a new proposed $2 billion, 12 acre entertainment complex as soon as 2028.   Speaker 1 (00:10:46) - But it is a huge bummer for the nation's capital. Yes, Washington, D.C. it has one of the highest rates of people working remotely in the US, so that hollows out the urban core. DC's once buzzing downtown is still struggling to recover post-Covid. Now, DC Mayor Muriel Bowser, who has made a last minute offer to Leonsis to keep the teams right there in the city, faces the potential loss of two major fan bases and a sports hub. It's right there in the city's Chinatown area. Yeah, this could be a new trend in stadiums in shaping the complexion of urban real estate. Now Leonsis is playing for Virginia. That really places him, among other billionaire franchise owners that want to build these massive entertainment complexes near their teams in order to capitalize on this growing synergy between sporting events and other nightlife and entertainment, and part of what's really going on here. Is the legalization and the spreading of sports gambling. That's the big prize that some other franchise owners are chasing a casino as part of this complex next to the stadium, and oftentimes you're going to have to move the team out of the city center to build these big multi acre complexes that will surround the sports stadium.   Speaker 1 (00:12:15) - Earlier this month, Dallas Mavericks owner Mark Cuban he came one step closer to his dream of building a new Mavs arena in the middle of a resort and casino after he struck a deal to sell his majority stake of the team to a casino mogul named Miriam Adelson. In November, New York Mets owner Steve Cohen, along with hard Rock international, they proposed an $8 billion entertainment complex and casino to be built next to Citi Field. These are major urban projects, so this trend of sports complexes with casinos is really picking up in the nation, but not absolutely everywhere in Oklahoma City. There is an exception there. In OKC, voters approved a good old fashioned 1% sales tax for the next six years to fund the construction of a new downtown arena for the OKC Thunder, and with that agreement, the Thunder could stay in OKC through 2050. We're talking about how a trend worth tracking in urban real estate is stadiums leaving downtowns. Now, one reason that I often talk about the power of inflation ravaging most people's lives here on gray is because it's so bad that it means you need a second job.   Speaker 1 (00:13:36) - Yes, you do not in the traditional sense. But look, if you are, say, during the day, a corporate attorney or you're a financial systems analyst or you're a crab fisherman, why can't you just do a really good job at your day job in that position and then go home and at the end of the week, call it good enough? Why can't you just do that? Well, you cannot do that because if you're being paid in dollars, your second job is learning how to invest those dollars at a rate higher than inflation. Otherwise, your prosperity gets diminished in your one quality of life and one set of opportunities are going to suffer. That's why inflation makes a second job a necessity. So your second job is investing. The other reason that I often discuss this topic is because, as we know, real estate helps you profit from inflation three ways at the same time. Two weeks ago I told you that if you want to learn more about how that works with the Inflation Triple Crown, that you can go to get rich education.   Speaker 1 (00:14:46) - Com slash Triple Crown to watch my free three part video series, I did that because I've described the inflation Triple Crown here on the show before, and I don't want to be too repetitive, but seeing that it is an enduring great principle. I've got a new way to explain this to you. Whether you're a long time listener or a newer one, then you're going to get some perspective out of this. I think you're really going to like it. What we're going to do is let's look here at four groups of people and see how much they benefit from or lose to inflation. We're going to view this through a real estate lens. Let's go from the worst off group to the best off group. And then what you can do is see which one of these four groups you belong to. The first group are the poor. They don't own any property and therefore they don't benefit from inflation one bit. This first group, the poor, their grocery and energy expenses are exacerbated by inflation, but yet they have no assets to benefit from it if they have a job.   Speaker 1 (00:15:54) - But the poor tend to have the job type wage that lags inflation, so the poor lose to inflation. The second group. So getting a little better off as we move through here. They are the primary residence homeowner with a paid off mortgage. So they benefit from one crown of the inflation triple Crown, yet they are better off. Two of every five homeowners have a paid off mortgage, just like this second group does here. And if there's 10% inflation over, oh, a couple years, well then there are 500 K home price floats up to 550 K and now they got 10% more dollars. But each one's worth 10% less. So at least they didn't lose purchasing power. But they are right back where they started. So this homeowner with the paid off mortgage does not profit from inflation. They are merely hedged. Then we have the third group out of four. This third group is homeowners. Again, just primary residence owners with a mortgage. Yep. They're actually better off than Group two with the paid off mortgage.   Speaker 1 (00:17:04) - Just in terms of who benefits from inflation. So like the second group, 10% inflation makes this third group's 500 K home rise to 550 K. But this mortgaged homeowner has another benefit. There are 400 K mortgage on this property, gets water down to just 360 K of inflation adjusted debt. And that is because inflation makes salaries and wages and prices and rents float higher, making the debt easier to pay back over time. Banks and lenders don't ask you to repay them with inflation adjusted debt, they will accept your diluted future dollars. It's like they got you locked in to a contract that was good for you years earlier. That effect is called debt debasement. And this is why this third group now benefits from two crowns as primary residence homeowner with the mortgage. And then come on, you know who this fourth group is? The coup de gras landing, the deathblow to inflation because they really make out in profit, benefiting from all three crowns. This fourth group owns income property with a mortgage. If you listen to this show, you're constantly trying to add more income property with a mortgage.   Speaker 1 (00:18:30) - And that's precisely what we hope you do here in gray. And this fourth group has both asset inflation like the second group and the debt debasement benefit like the third group. And additionally the rent income will outpace inflation enriching them. Now listen to this part closely for just a minute or two because the math is simple. But there are a few numbers here. Say you begin with $2,000 of monthly rent income on your rental property, minus your $1,200 mortgage, -$600 of expenses. That's $200 a monthly positive cash flow left over. All right. We're going to add 10% inflation on all that. And this inflation could happen in one year or over a number of years like magic. Now you've got $2,200 of rent income up from 2000 minus that same $1,200 mortgage balance because it stays fixed, -$660 of expenses, up from 600. All right. You're now left with $340 of cash flow. That's up from 200 bucks before the inflation. Do you understand the significance of this? Do you see how you're really on the superhighway to financial freedom? This is big because the mortgage principal and interest payment stays fixed with just 10% inflation.   Speaker 1 (00:19:58) - You just saw the money you feel in your pocket each month skyrocket from $200 to $340. In that example, that's 70% more income, 70% more. Extrapolate that effect across your entire rental portfolio. Wow. That is called cash flow enhancement. The third and final crown of the inflation Triple Crown. You just won all three with a loan on an income property. And hey, congratulations. If you caught that and you would have had to skip back to listen again, you are really on your way to understanding a path for creating wealth in your life. Now. I sure kept that example general in order to simplify things. And also some people span multiple groups. For example, poor people in terms of income could still be homeowners. Let's review what you just learned there. With inflation in real estate, the poor lose paid off, homeowners hedge, mortgaged homeowners hedge in profit mortgages income property owners hedge profit and increase income. So look and this is kind of weird. Once you've got income property, you might notice that the price for a pound of salmon rises from 1599 up to 1899, or that a Ford F-150 truck price spikes from 50 K up to 55 K over time, these could actually be strangely positive signs.   Speaker 1 (00:21:40) - It's a soft indicator that your real estate wealth is growing, though people would think you're nuts. I mean, you might secretly start. Rooting for inflation as avidly as an NFL Philadelphia Eagles Tailgater. Now, I'm not really sure if you'll pump your fist after the first time that you pay 12 bucks for a gallon of gas. We'll see about that. Well, hey, now that you've done the hard learning coming up straight ahead, a little more entertaining here how the rent stole Christmas and the anticipated 2024 Jerry housing price appreciation forecast. I'm Keith Weiner. You're listening to episode 481 of 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 (00:23:00) - 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, 686, six.   Speaker 3 (00:24:04) - This is Ridge Lending Group's president, Shale Ridge. Listen to get Rich education with Keith Wine.   Speaker 3 (00:24:10) - Hold and remember don't quit your daydream.   Speaker 1 (00:24:22) - Welcome back to get Rich education. I'm your host, Keith Reinhold. Be friendly, not friends. Those four words are the best concise guidance for how a landlord should keep their relationship with tenants. But there's a persistent school of thought out there among some in the general public. And it is that landlords are greedy. Landlords like you even want rent on January 1st. Who do you think you are, the Grinch that stole Christmas? Well, as a landlord, of course, you should maintain open lines of communication with your tenants if you're also managing them. When it comes to things like those top priorities, I mean repair and maintenance issues. But when I've had conversations with tenants and by the way, I don't anymore, my property managers do. Let me share with you some pieces that I have gently inserted into my conversations with tenants in regard to rent collection. This has done a lot to ensure timely payments, and they've always known then that my intent is not to steal Christmas.   Speaker 1 (00:25:37) - I see a lot of tenants. They're smart people, but they just don't understand your situation as an income property owner, often with a mortgage on your rental property, many tenants think that you just take their rent payment of, say, $1,800 and that that money is all yours for, say, a big Hawaiian vacation. You and I both know that most of that rent income is spoken for and already passed along for your expenses. One thing that you can tell tenants is, I have a big mortgage on this property to pay every month. That's what you tell them. Younger tenants are less likely to know this at all. Another thing that you can say is 90 to 95% of the rent goes toward all the property expenses, which are always going up. Yeah. I mean, these are your mortgage, insurance, property tax, maintenance, repairs, turnover, utilities and more. That's what I've called mortgage plus vim. Tom expenses, vim Thomas vacancy insurance, maintenance, taxes, utilities and management. Yeah.   Speaker 1 (00:26:47) - Even with the decently cash flowing mortgage rental, this statement is true. 90 to 95% of that rent is gone. It's not yours. Another thing you can tell tenants is I'll be in debt all my life. That's another thing you can mention. And of course, you and I both know that that's good debt. Another thing that you can say to tenants, and really, this is just something else that could be said to broader society that thinks that landlords are greedy. And you can say this, I build up my credit score, made a big down payment and put my money at risk. That's what you say? Yep. Ian, you did all this to provide good housing to strangers. How is that greedy? You can also just simply say I don't have a 401 K, and the more you listen to this show, the more you would ask yourself, why would you want one? And I'll leave you with this last one. I must constantly maintain this property. That's what you say, and you should constantly maintain that property.   Speaker 1 (00:27:52) - Now, you probably only need to bring up 1 or 2 of those sentences with tenants. The best time for you to do it is actually. Just before they're officially attendants. Say those things right at the beginning of the relationship. When you're just reviewing the lease, when you're going over that with them and they're about to sign that initial lease. Or you could also mention this months later when they pay the ongoing rent. So this is about your ongoing tenant relations. So they understand your situation. They're going to know that you're a human and you have your own set of issues in financial obligations and you have to take care of. And it's always about telling the truth. Only a Grinch would lie during the holidays. So it's always about being honest and informative. And, you know, with all of that said, it is somewhat of a paradox that all of this can be true. And yet at the same time, strategically bought property is so profitable on your side and see with your tenants, this is not the optimum time to wax poetic about how financially free beats debt free.   Speaker 1 (00:29:04) - Yes, it's really remarkable that all these statements can be true, even if 90 to 95% of your written income goes toward your mortgage and operating expenses, all while real estate pays five ways at the same time. And now they'll know that the rent they pay is not the rent. It's still Christmas, and you sure are not the Grinch. Let me prepare you for Gary's National Home Price Appreciation Forecast for 2024. First things first how well have past predictions performed? Well, let's take a look at this using the Nars number of median existing single family home prices. Understand that the forecast that I make here is always made near the end of the year, prior to the year forecast. It's all done ahead of time and unlike a lot of agencies, we don't revise our forecast later. It's all set in stone before the forecast year begins in late 2021. Recall that we had just come off a year there, 2021, when national home prices were up 20%, and some people predicted that prices would fall in 2022.   Speaker 1 (00:30:12) - Oh no. I let you know in late 2021 that home prices were going to rise a healthy 9 to 10% for 2022. That was the forecasts made at the time, and the result was 10%. Then late last year, you had more agencies predict that prices would fall. I let you know. I did not see how with such low housing supply and some of the other reasons. So I forecast 0% for this year. Yeah. Forecast, no gain, no loss. And as far as the result there it is too early to know yet. The year isn't done. All right. We'll build some context here as I make the reveal the forecast for next year. How about other agencies. What are they forecasting for next year. At last check, the NBA mortgage Bankers Association says home prices will rise 4%. Fannie Mae 3%, Freddie Mac 3%. The HP's. That is the home price expectation survey. They forecast 2% appreciation. Goldman Sachs also 2%. The Na 1%. Zillow 0%. Realtor.com -2%.   Speaker 1 (00:31:23) - If you take all of those and average them, you get a forecast of about 1.5% appreciation for next year. I'll tell you as we lead up to our forecast here, I'll let you know that it is not that close to the 1.5% average from those agencies. And none of those figures understand, including mine, are inflation adjusted. So nominal prices. All right. Well let's look at what we use to determine the trajectory of home prices. How is housing supply looking. We know demand is strong. Well with the fed active listing count data that I usually use where the normal supply is 1.5 million units or more will. The current amount is about 750,000. So it has rebounded somewhat, but it's still less than half of what's needed. And this dearth of supply supports more upward prices. Let's look at interest rates. Recent developments from the last fed meeting show us that Jerome Powell does not plan to put a rate hike lump of coal in your Christmas stocking now or anytime soon. Everyone wants to talk about how far rates are going to fall next year.   Speaker 1 (00:32:40) - But here's the thing to remember. Like I've discussed before, mortgage rates hardly matter when it comes to prices. They don't have much to do with housing prices at all, and I've discussed why a few times before. In short, that is because when rates rise, yes, it hurts affordability, but rates also rise when the fed is trying to cool a hot economy in that hot economy is what helps prices.

Most people float through life without direction. You must get clarity of focus before you can even begin setting goals. Robert Helms of The Real Estate Guys, a professional real estate investor, reveals a framework for goal-setting.  Goals should be SMART—Specific, Measurable, Attainable, Relevant, and Time-Based. I provide examples of two athletic goals that I failed to achieve this year. It’s vital to surround yourself with the right people. Goals should be written down. It helps to set intermediate benchmarks within the goal. It’s difficult to stretch more than 50% from year-to-year. Keep the goal achievable. Is your life destined or is your life made? Our recent Instagram Poll result is that 75% chose “destined”, 25% “made”. You can attend the highly-rated Goals Retreat, hosted by Robert Helms, January 12th to 14th in Dallas, Texas. You’ll learn how to get clear on who you really are and really want to be, then set goals. Timestamps: Setting Goals and Achieving Growth (00:02:40) Keith Weinhold discusses the importance of setting clear goals and the need to step out of one's comfort zone for personal growth. The Influence of Others on Goal Setting (00:08:01) Robert Helms emphasizes the impact of surrounding oneself with the right people and being strategic about the influences in one's life. The SMART Goal Framework (00:09:44) Keith Weinhold mentions the SMART goal framework as a well-known framework for setting goals and achieving success. Setting SMART Goals (00:10:03) The speaker discusses the SMART goal framework and how it helps in setting specific, measurable, attainable, relevant, and time-based goals. The Importance of Specific and Measurable Goals (00:11:08) The speaker emphasizes that goals need to be specific and measurable in order to track progress and determine success. Breaking Down Outcome Goals into Activity Goals (00:13:56) The speaker explains the importance of breaking down outcome goals into specific steps or activity goals to make them more achievable and actionable. Discover Your Destiny (00:19:40) Discussion on the belief in destiny and the importance of clarity in goal setting. Success Stories (00:21:14) Examples of individuals who have achieved success and life satisfaction through goal setting and clarity. The Importance of Clarity (00:26:30) The significance of clarity in goal setting and the initial steps to take before setting goals. The assessment of personal skills (00:28:38) Discussion on the importance of assessing one's skills and areas for improvement in personal development. The goals retreat (00:30:12) Information about an in-person event called the goals retreat, where participants can focus on setting and achieving their goals. The structure of the goals retreat (00:30:59) Details about the schedule and activities of the goals retreat, including journaling, answering questions, and turning goals into action plans. Resources mentioned: Show Notes: GetRichEducation.com/480 Attend the Jan. 12th-14th Goals Retreat: GoalsRetreat.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: info@RidgeLendingGroup.com 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's episode is rated PG for personal growth. Most people just float through life with hopes and wishes that are never realized, because they never turned those ambitions into concrete goals. How do you get clarity of mission, vision, and values before you set the right goals for yourself? It's a transformative episode today with a terrific 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 grey to 66866. And when you start the free newsletter, you'll also get my one hour fast real estate course completely free.   Keith Weinhold (00:01:18) - It's called the Don't Quit Your Day dream letter and it wires your mind for wealth. Make sure you read it. Text grey to 66866. Text grey 266866.   Corey Coates (00:01:36) - 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 (00:01:52) - Welcome to GRE! From Toms River, New Jersey, to Hood River, Oregon, and across 188 nations worldwide. I'm Keith Weinhold and you are tuned in to get rich education. Now, why do you live the almost same routine that you live day in and day out? How are you spending your highest order in finite resource of your time? Maybe you're intentional, and maybe you don't really enjoy shoveling your snow or mowing your lawn all that much, but you do it just because it's the way that you've always done things, but at the cost of what higher order activities could you instead fill with that time? And that's exactly what a lot of people have never explored. I know that today's guest and I both admire the Robert Heinlein quote.   Keith Weinhold (00:02:40) - In the absence of clearly defined goals, we become strangely loyal to performing daily trivia until ultimately we become enslaved by it. One other axiom that I find so frustratingly inconvenient, because it's simultaneously true, is that your growth happens outside of your comfort zone. So then you've got to get comfortable being uncomfortable. And once you do enough of that, you'll become so enamored of growth that you'll soon find yourself being uncomfortable when you get comfortable. The best version of you. It means constantly disrupting yourself. Well that's disruptive. Now, within real estate, I've had various goals, and you might too. If you work at a dissatisfying day job, you might have a passive cash flow goal through real estate so that you can replace your job income. That's a pretty common one. Now, when I made my first ever property, that first fourplex, I didn't have much of a financial goal then. I just knew that I was effectively living for free, supplemented by the other three rent incomes. And when I first bought that building, I didn't even know what cashflow meant.   Keith Weinhold (00:03:57) - But once I did snowballing my cash flows became a goal until I could use that to replace my day job. Once that was achieved, the goal became how many doors can I control? Because that's a measure of service and influence. And today, one strong real estate goal is reaching more people like you with this very show right here today, we're talking to an expert at setting goals and helping you live the life that you were meant to live. He has had a deep influence on me and my growth. In fact, if it weren't for him, Jerry might not even exist and you would not have even heard of me. That's how much. Let's talk about setting and achieving goals to get the outcome that you want for your life. Today's guest is a professional real estate investor with experience in nine states and six nations, and I have toured some of that property with him in person internationally. He is also taught real estate practices and appraisal at the college level, but you might know him as the host of the nationally syndicated radio show The Real Estate Guys, now in its 27th year of broadcast.   Keith Weinhold (00:05:10) - You know that I've recommended that show to you, the listener, today. It's great to give a warm welcome back to Robert Helms.   Robert Helms (00:05:19) - Hey, Keith. So good to see you.   Keith Weinhold (00:05:21) - Robert. It's good to see you too. But we're not here today to talk so much about real estate, because a lot of people use real estate to fuel their other goals in life outside the real estate world, you brought a keen awareness to the fact that most people just kind of go floating through life without any real direction. And I think we're all aware, Robert, that there is a gap between who we are and the most that we can be. So can you talk to us about how finding our trajectory can perhaps be an exercise in connecting these dots that we call goals?   Robert Helms (00:05:58) - Yeah, I love this topic, as you know, because if we're left to our own devices, human nature is we're just going to bounce from thing to thing, like a boat without a rudder. And we get excited about something and it's a shiny object and we go off and pursue that.   Robert Helms (00:06:11) - And maybe real estate is that thing for you. And then, you know, you've got all the rest of your life to contend with. And whether you're a full time real estate investor or a part time real estate investor, I've found that one of the great keys to be able to discipline yourself, to do the things necessary to get the results you want in your life, is to set goals. And goal setting is pretty simple, but at the same time, it's almost alarmingly simple because if it seems too easy, people don't do it right. And the crux of goal setting is to figure out what you want, and then put that down in a way that you can be driven towards the things you have to do to make those things happen.   Keith Weinhold (00:06:52) - Maybe before we talk more about ourselves and what each of us really wants, maybe we can talk about what we don't want. And so many of us, me included, are influenced in life by the people that we surround ourselves with. You and I are both familiar with the quote from the late business philosopher Jim Rohn.   Keith Weinhold (00:07:11) - You are the average of the five people that you spend the most time with. A lot of people probably wouldn't like to admit it, but the statistics are kind of alarming with how much time one spends around their co-workers versus how much time spends around their family and friends, and with influences from co-workers. And that temptation to maybe just go with the flow. You know, it's pretty interesting because your coworkers are not chosen by you. They're chosen by your employer. Now, maybe that's good because it opens you up to a new set of ideas and a new context for your life, and that might adjust the goals you set. But then on the other side, if you don't have that and you don't have those coworkers, maybe those coworkers can help keep you out of one think silo and just thinking all the same way. So you talk to us about the influences of other people in one's lives. As you think about the life that you want to create for yourself.   Robert Helms (00:08:01) - This is such an important topic. I'm glad you bring it up at the beginning here because it is subtle, right? We don't get shoved off course.   Robert Helms (00:08:10) - We get nudged off course little by little by little. One of those five people you spend the most time with says, hey, let's go out drinking Friday night. And you were thinking, well, I was going to work on a podcast or a chapter on my book, or I was going to, okay, I'll just go out drinking and before you know it, like, that's not a bad decision. You get to spend time hanging out and there's some time in your life you want to be able to hang out with friends. But I think it's important that you become very strategic about your time. Time is a zero sum game, and it's also the most interesting resource because once this minute is gone, it's never coming back. What we do with this minute, we get a chance to do once, whether that's an hour, a day, a week. But at the same time, what happens after this minute? Well, another one and another month and another week. And so time can get away from you.   Robert Helms (00:08:58) - And if you're strategic about it, this is the key to success. Just spending time with people that have you going places, having you looking at your future, excited about what's happening now, you know, you mentioned your coworkers and you don't get to pick them. And that's true. But that's true about your family too. So you don't want to just write off your family. But let's face it, we probably all have negative people in our lives, whether it's friends, lifelong friends, people from college, but sometimes people in our family. So it's not that you don't spend any time with those people. It's your strategic about how and where you spend time with those folks. And the influences in our life probably have more impact on how well we do in life than any other factor.   Keith Weinhold (00:09:44) - We talk about being strategic and intentional with goal setting. There isn't a have you here today is because you're an expert in helping people set goals and help define a mission for their life, so I'm sure a lot of people, Robert, have come to you with a pretty well known framework for setting goals, called the Smart Goal Framework.   Keith Weinhold (00:10:03) - That's an acronym that stands for the fact that goals should be specific, measurable, attainable, relevant, and time based. So now I do think about the Smart goal framework before I set a goal, but I'm sure not to muddy up goals with a mission and all personalizes for a moment to give a good example for the audience. Robert, you can let me know what you think about this. And this is something outside of real estate investing. But when it comes to physical training, I have this mission of longevity and lean musculature. But to me, that's only a mission because it's kind of fuzzy and hazy. And then I have goals within that. For example, I had a couple goals within that. This year. I failed at them both. By the way. One was to be under £180 by June 1st, and the other was to run uphill up this trail in under 40 minutes by the end of the season. To me, those two things were goals, the body weight in the running, both of which I failed at within this broader mission of longevity and lean musculature.   Keith Weinhold (00:11:02) - So what are your thoughts about the Smart Goal Framework? Does that help people set goals and get them where they want to be?   Robert Helms (00:11:08) - Yeah, 100%, because just wanting something like, I want to be healthier or I want to be richer, those are great sentiments, but those aren't goals. What makes it a goal is the things you mentioned in the Smart framework works great. There's kind of the 101, which is if you've never set goals before, there's three things to focus on. The first is that a goal has to be specific and measurable. If you can't measure it, you don't know whether or not you hit it. So when you talk about something like your health and being lean, well, there's a couple of metrics in there. Percentage of body fat is a number and it's measurable how much weight you want to gain or lose is a number. And it's measurable. So that will help you instead of just I want to be lean. It's how lean do I want to be. And of course you might seek some counsel in that regard, either from a trainer or a doctor or someone to say, what's a good, healthy weight for me and so on.   Robert Helms (00:12:00) - So that's the specific part, which is also measurable. I kind of put that in as one thing, and the second is having a time deadline, a time limit or a deadline. So the best way to think of those two things is how much buy win, and your example of being able to do a specific amount of time metric by a certain date. That's exactly right, specific and measurable and with a time limit. And then the third thing is that to be effective, goals have to be written down. If you don't write down your goals, they're worth the paper they're written on. And it's not just so you won't forget. It's that something magical happens when we take pen to paper and writing it down. Using your computer, keyboard or voice to text is not the same as getting a good old fashioned pen or pencil and writing out your goals. Now that's the 101 write to take it. Beyond that, there are some few things in the smart model. It's either attainable or achievable for the A, and what that means is it has to be somewhat realistic.   Robert Helms (00:13:03) - You don't want to put limits on yourself, but if you say, well, you know, Robert, I made $50,000 this year and next year I'm going to make 5 million. Okay, well that's possible. People do that. There are people that go from 50,000 to 5 million. It's just not very likely. So unless you have some information that would show why that would happen, a much better way to think about it is how much can I stretch and still make the goal? If you made $50,000 a year for the last three years, Zig Ziglar says you can stretch to about 50% $75,000. That's a stretch, but it's realistic. So that's the attainable part, and it is a great framework. Now the other part, which is awesome when you're talking about how do I affect what I'm going to do. This is the crux of golf setting. There are two types of goals. If we were to narrow it down, there are outcome goals. That's how it's going to be at the end.   Robert Helms (00:13:56) - And then an even more important there are activity goals. So let's say you're in real estate sales and you want to sell 20 houses in 2024. That's a great goal. That's an outcome goal. At the end of 2024, I want to have listed and sold 20 houses. Okay, so January 2nd, when you get back, you know from your celebrating January 1st, what do you do? It's nebulous to say, well, gosh, to get to 20 houses by the end of the year. So what you do is you break down those 20 houses, that outcome goal into the specific steps necessary, and it would be different depending on every goal, right? It would be different for health than it was for relationships, than it was for your income. But to use this example, you might say, well, in order to sell 20 houses. Maybe I have to list 30 houses. Okay. To list 30 houses, I have to talk to 60 people. Okay, well, to talk to 60 people, I got to get 200 people on my list and so on and so forth.   Robert Helms (00:14:56) - Until you break it down to the actual activity, you can do January 2nd. So it might look like this. On January 2nd, I have to talk to four new people. I have to send out emails or letters or postcards to ten new people. And if I do that, if I do those two things, following the numbers all the way to the end of the year, that should result in my 20 houses. Now, how do you know what those numbers are? That's from your practice. You've done this before. If you're brand new in the business, you would get counsel from folks that are already doing that. Back to the five people you spend the most time with, right? Surround yourself with folks that have already done what you want to do, and then break down the outcome goal into the activities necessary to achieve the goal.   Keith Weinhold (00:15:40) - Oh, this is great step by step guidance. After I knew I failed at those two goals I shared with you, Artemis tried to reassure myself and tell myself that, well, you know, a lot of people don't even set concrete goals, so I ought to be okay about it because I've definitely ended up more fit.   Keith Weinhold (00:15:54) - But then at the same time, I don't always want to be comparing myself to normalcy or that's just a recipe for mediocrity. But maybe just here, as the introductory beginner goal setter that I am, I would have been more successful had I written them down, and had I made more intermediate steps in order to reach those two goals that I told you about? So I learned a little something there. I'm your host, Keith Weinhold, with Robert Helms of the Real Estate Guys. More on goals when we come back. You're listening to get Rich education. Render 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. 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%.   Keith Weinhold (00:17:22) - 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. 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.   Robert Kiyosaki (00:18:09) - This is our rich dad. Poor dad. Author Robert Kiyosaki. Listen to get Rich education with Keith whine old Dot Prichard, Adrienne.   Keith Weinhold (00:18:27) - Welcome back to get Rich education. We're talking with Robert Helms of the Real Estate Guys about goals or not talking so much about real estate today because many people use real estate in order to fuel their other goals in life.   Keith Weinhold (00:18:40) - So many people just go floating through life without many goals. I could do a better job with my goal framework myself, as I think you just learned there, Robert. I think some people, they might be dismissive of goals because some people have the mindset where they're thinking, well, I'm just ordained to live a life like this, or I'm just destined to live a life like this. I don't know that our audience necessarily thinks that way, but I'd like to get your input on this. We recently had an Instagram poll over on our Instagram page, and the poll was simple are you destined or are you made? And 75% of respondents chose that they are made rather than that they are destined. So what are your thoughts with regard to that as we set goals for this trajectory in our life?   Robert Helms (00:19:28) - That is a world class question. We always say, if you want great answers, you have to ask great questions. And that's a great question and something people don't think about. There are folks that believe that they are completely self-made and that it's up to them.   Robert Helms (00:19:40) - If it's to be, it's up to me and I completely respect that. And then there are folks that believe that no something is written on my heart. Something tugs towards me. I have a destiny. I have a life work that I need to pursue, and I respect that as well. So we for years have done an annual goal setting retreat that we call Create Your Future. But people wrestle with this, and I kind of witnessed the same thing. About three quarters of the people resonate with Create Your Future. But the very first evening of the event, I also submit to the attendees that if you feel called, if you feel like I have a destiny, but I'm not clear about it, then I just suggest that they reframe the entire event by the original title we use, which was Discover Your Destiny. So whether you believe that there is a destiny, a calling for you, or you've got to figure it out, this process of thinking about your goals, breaking them down to action steps, making sure they're in alignment with your vision, having that mission that you talked about, right.   Robert Helms (00:20:45) - All those things will serve you kind of either way.   Keith Weinhold (00:20:49) - Yeah, that's a rather deep existential question that I think some people need to figure out, I would imagine, before they develop their goals. So now that we've talked about mission and goals somewhat, Robert, can you tell us about some of your more successful people and some real success cases you've seen with people that have actually achieved goals and gotten this life satisfaction about becoming the most that they can be?   Robert Helms (00:21:14) - I love that the reason I keep doing this part of my life is because of the results people get. It's absolutely astounding. We've watched people go from modest means to incredible success, and not just monetarily, although that certainly happened. One of my favorites is a young gentleman who was dragged along to this, the goal setting event we do every year by his dad. His dad had been through a four years, brought his son and his son was kind of lackadaisical, had a job that paid okay, but he was living in a home. He was £50 overweight, just kind of plodding through life.   Robert Helms (00:21:51) - After three years. This guy was a brand new guy and he has completely changed his life. He's fit as can be. He found the woman of his dreams, which was something he thought might never happen. He's no longer working at a job that he just deals with. He loves his career like everything has changed and he gives credit to that, to finding this clarity. So here's the essence of goal setting. Your two best friends are clarity and focus. You have to get clear on exactly specifically what you want and the steps to get there. Most people are not clear. They're vague, they're nebulous. They kind of know what they want to do, but they aren't sure. And so you need a process to help you uncover and get that clarity. And then once you have that clarity, focus, right? Tracy says. And this is a deep one. All of life is the study of attention. What you think about comes about, said Earl Nightingale. And so the point is, what if we focus on something? Think about in your life, you've had some experience that's been successful.   Robert Helms (00:22:59) - It's probably because you put a lot of focus into that, a lot of attention. Sure. I remember all those years ago when we were talking about, hey, you said, I'm thinking about starting a podcast, and I'm like, awesome, right? And I was encouraging of it. I was thrilled you'd thought you'd already recorded a couple episodes. Yeah. And so many guys or gals come up and say they want to start a podcast, and most never do. But because you had the passion for it and you were committed to it and you did all the hard work, right? Those first several episodes where you got six or 7 or 10 listeners, you can't get to the first million until you get to the first ten. And this is what life is. It's focusing on the things that you want in your life. Instead of spending our focused time on distractions, things that the advertisers in our life want us to do, things that those friends that maybe like us but don't necessarily have our best interests at heart.   Robert Helms (00:23:54) - They want us to come to you. So there's a lot to figuring out who you want to be when you grow up. But if you'll take the time to figure that out and then work towards it, it's extraordinary what can happen now as far as success stories, I'll tell one more story because this is a reality check. It's not all happy high notes four years ago. At the end of the Create Your Future Goals retreat, I had a gentleman come up to me, pretty well-known guy, and so I won't mention who it is. But he said, Robert, you don't know this about me, but you saved my marriage this weekend. He said, I came with my wife. She was really reluctant to come. We were on the verge of divorce and we spent our time to separate parts of the room. But as you recommended, we came together Saturday night for dinner and we just connected like we haven't in years. And I saw this guy a couple weeks ago thrilled with his marriage, with everything that's like, awesome.   Robert Helms (00:24:49) - Now, I have to tell you, the other part of the story, which is that same evening, I talked to another gentleman who came up to me and he said, I'd like to talk to you about something. My wife and I came to this event and we both played full out, and we took all the notes and we really got clear on on what we want to have and be and do in our lives. And we've made the decision that we're going to get a divorce. I'm like, wow. So here's my point. If that was in their trajectory, if the best thing for them really was to separate, like, how soon would you want to know that versus the other couple that for all those reasons, they have strife and challenges in their marriage, but when they really looked at who they were and who they were becoming, they figured out they were much stronger together. So all that to say that when you get into the tough stuff, right, that squishy part of your heart and your soul, that stuff will come up for you.   Robert Helms (00:25:42) - You know, at the event, we put Kleenex out everywhere and people are like, what is a cold going around? Like, no, you. May need this. You may not. But I will tell you most people, if to get it done right, you have to be emotional because emotion is what will create motion, and that motion in your life will change your life.   Keith Weinhold (00:26:01) - Well, you talked about how clarity is an early step and wow, that's astounding for a couple to get the clarity that they want, amend things or a couple to get the clarity that they should end things. So we talked about goals kind of the back end and everyone knows what goals are. But kind of on that front end in the clarity, in winnowing down toward your goals. Can you speak to us more about that clarity piece? Because really, I think that's what a lot of people lack, because it probably takes some real vision.   Robert Helms (00:26:30) - Boy sure does. And it's the part I think, that people don't teach.   Robert Helms (00:26:33) - So the simple part of goal setting, you know, the Smart goals that works, but it it assumes you already know what you want. And so at our workshop the first day, we don't spend a minute on goal setting. And people are like, isn't this a goal setting workshop? Yeah, there's a whole bunch of stuff you have to do before you can set goals, right? And so I'll give the listeners some nuggets. The first is to get clear on who you are. Now, that sounds too vague and too big of a question, but specifically your principles and values that govern your life. And I've discovered that most people have about a half a dozen. There's about a half a dozen things that you value that really, really matter to you. And I don't even want to prime the pump. I don't even want to put words out. So people jump into that. Oh yeah, that sounds good. Instead, you have to spend some time alone or with some awesome music, or how whatever's best for you to get in that state, and then really delve deep on to the things that matter in your life.   Robert Helms (00:27:36) - What principles guide your life? What's super important to you? If you could only have 2 or 3 things in your life, what would they be? And then you start to get clear on really what matters. Because most of us are busy. We're busy doing all kinds of different things. And busy is not necessarily the path to success. Sometimes you have to take things off your plate in order to do more. As we like to say, you have to say no to the good in order to say yes to the great right. And most busy people really need to do some changes in that regard. First, the things that maybe you've been doing but you really aren't suited to or you don't enjoy doing, you offload those things. You learn how to delegate some of that. And then if you can spend time thinking through what matters to you as a person independent of real estate or your career, or even your family life, just the values and principles that guide you now you start to open up to that clarity, and then we take you through a whole bunch of exercises to imagine what life would be.   Robert Helms (00:28:38) - And, you know, pay attention to things that you are good at. Most people don't give themselves enough credit for their skill sets, and there's two schools of thought in personal development getting

A crying, sniffling mother reveals how inflation is ravaging her family. Despite a two-parent income, she tells us that they're trending toward poverty due to wages that struggle to cover inflated prices. For home prices to fall, many homeowners need to walk away. But if they tried that today, they’d have to pay more in rent than they would on their low mortgage payment. It’s absurd to only have one source of income. 401(k)s are considered a scam by some. I explain. Plan participants buy an income stream “probably later”. Real assets that cash flow provide income “surely now”. There’s no such thing as: rent inflation, food inflation, or energy inflation. Inflation comes from the central bank. One dollar in 1776 has the purchasing power of $35.36 today. The worst consequence of inflation is that one parent could work to be middle class in the 1950s. It became two by the 1990s. After the 2020s inflation wave, two parents might not be enough anymore. I explain why the Fed should keep interest rates the same for at least one year. But I doubt that they will. Resources mentioned: Show Notes: GetRichEducation.com/479 Terrific inflation resource, charts: https://www.officialdata.org/us/inflation/1776 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: info@RidgeLendingGroup.com 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

If you own a real estate entity (like an LLC), the new Corporate Transparency Act (CTA) must be complied with soon. I have my own attorneys on the show to discuss this today, Garrett and Ted Sutton. You must report ownership information to the federal government. It must only be done one-time, not annually. The penalties for non-compliance with the CTA can be as high as $10,000 in fines or up to 2 years in jail. Those penalties would be for the most egregious acts. The intent behind the CTA is to prevent money laundering and terrorist financing. If you don’t own real estate in an LLC, you probably won’t need to comply. There are pros and cons of using LLCs, which I discuss. For help complying with the CTA, you can contact Corporate Direct at CorporateDirect.com or (800) 600-1760. Resources mentioned: Show Notes: GetRichEducation.com/478 Corporate Direct: CorporateDirect.com 1-800-600-1760 Video platform with kids’ FinEd: SunnStream.com/fivetricks 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: info@RidgeLendingGroup.com 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