Get Rich Education

Keith examines the shift toward a buyer-friendly real estate market and the concessions investors may be able to negotiate.

He speaks with Sharon Lechter, co-author of Rich Dad Poor Dad and a financial education author, about scarcity versus abundance, building income-producing assets, and why action matters as much as access to information.

They also explore women's investing groups, evaluating mentors and AI-generated advice, and doing careful due diligence in today's market.

Sharon shares how her book Old Wealth, New Wealth, True Wealth broadens the conversation beyond money to include family, health, and lasting connections.

Episode Page:

GetRichEducation.com/626

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or 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"

For advertising inquiries, visit:

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Best Financial Education:

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. Don't live below your means. Expand your means. And other timeless wealth-building quotes are attributed to the landmark book Rich Dad Poor Dad. We had its co-author Robert Kiyosaki on the show earlier this year. Today, it's the other co-author of the original book. It is mindset and motivation today on Get Rich Education. For years, I've sent listeners to Mid South home buyers in Memphis, and for years, I've heard the same thing back. Keith, there's a wait list. Well, not anymore. Mid South has grown into three markets: Memphis, Little Rock, and Dallas, with its classic renovations and now brand new construction. For the first time in years, there's enough inventory to buy today, and they've picked now to roll out their best terms in their 25 years. It's called the Triple Five: 5% property management for five full years, half their standard fee, and Mid South buys your mortgage rate down as low as 5% for qualified buyers. If you're paying all cash, ask about the forever five. That's 5% management for as long as you own the property plus special cash pricing with 6200 homes under management, Mid South is the place to turn for turnkey real estate. Book your free investment strategy session at MidSouthHomeBuyers.com. That's MidSouthHomeBuyers.com.

Speaker 1 1:38

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 1:54

Welcome to GRE from Montrose, Colorado, to Monterey, California, and across 188 nations worldwide. I'm Keith Weinhold, and you are inside Get Rich Education. Before we bring in this week's guest, Robert Kiyosaki's Rich Dad Poor Dad co-author, where you'll learn about the way women's investing differs from men's, the money relationship between parents and kids, and a whole lot more about how the 1997 book changed the world. I've got some real estate commentary first. Over the past month, that has turned into more of a buyer's market. Yeah, this environment has turned a little worse for sellers and a little better for buyers. A big part of the reason for this is that mortgage rates, although they're historically at normal levels, they have hit a two and a half year high. Now that part doesn't sound very buyer market friendly, but the reason it is in what's happened is that we already know that mortgage rate buydowns are perhaps the most common concession, especially among home builder sellers, but today, since fewer buyers qualify, you can ask for more concessions than just that. Along with the rate buydown, consider asking for closing cost help too. As a buyer, you can more aggressively negotiate repairs than you could a few years ago, as well. That's more appropriate that you ask. Now I don't know that you want to go as far as to ask the seller to throw in the fridge or the patio furniture, but you can request more concessions than you could previously, and yet it's not so bad for sellers because, depending on the measure that you use, home prices are still up one to 3% over the past year.

Keith Weinhold 3:53

And like I discussed last week on the show, I dug into numbers and I pointed out why concessions like a rate buydown are better for buyers than a discounted price is. If conditions are right, make a move. If they aren't, don't. I know that today's esteemed guest talks about the importance of taking action. You need to have some risk capital in your life-it's the only way that you're going to make it big. All wealthy people have this. It doesn't need to be reckless risk, but you do need a bucket so that you can invest aggressively. Risk capital. Now Warren Buffett, though I don't know if he really said it, Buffett purportedly once asked somebody to show him a billionaire economist. Buffett is still waiting. He has never met a billionaire economist, and the point is that. That's because economists-they just build models. You need to do. You don't get paid for the model. You get paid for the move. With that in mind, let's meet this week's esteemed guest. If you're even a little familiar with the financial education world, this week's guest needs little intro because you know it's really hard to think of anyone more influential in this genre. She is a five-time New York Times best-selling author and has advised 2u.S. presidents on the topic of financial literacy. She was tapped by the Napoleon Hill Foundation to re-energize the Think and Grow Rich books. I happen to know that she was just serving Cardone Ventures shortly before we sat down to speak here. And you know, some people don't actually know that she co-authored the international bestseller Rich Dad Poor Dad, and 14 other books in the Rich Dad series. And you know, frankly, her accolades are too numerous to mention, or else we wouldn't have time for a conversation with her. It includes that she is the only woman ever inducted into the Personal Growth Hall of Fame because she's such a motivator. And today, she's quite an active philanthropist and the CEO of Pay Your Family First. Maybe we'll find out what that is. She has not been with us since 2015. Welcome back to GRE, the incomparable Sharon Lecter.

Sharon Lechter 6:35

Thank you, Keith. I'm delighted to be with you, and I'm just as I said before we even started. I'm so proud of you and the success and the generosity you have in helping people understand the power of real estate. So thank you.

Keith Weinhold 6:47

That's kind of you to say. And you know, Sharon, nearly 30 years after Rich Dad Poor Dad, Americans have more financial content available than they ever have. So why do so many seem less financially prepared.

Sharon Lechter 7:03

Well, I think it comes back to financial mindset, and and I know you agree with this. What happens is we're raised with these old ideas of pinch your pennies, save for a rainy day. Yeah, money doesn't grow on trees, so we we grow up hearing this money negative, money negative, and so we develop a scarcity mindset, and we have to really acknowledge it, and then start shedding it. Because if you think about, we can't afford it. That's a negative, right? So it really reinforces scarcity. And when people start getting successful and they have some money, they start worrying about losing it. And so we have to really, along with financial education, we actually have to help with the mindset change from scarcity to abundance. You know, the whole concept of go to school, get a job, and retire is a thing of the past. And so, there's nothing wrong with being an employee, but you have to realize it's not what you do for your paycheck that determines your financial future is what you do with your paycheck that determines your financial future.

Keith Weinhold 8:07

Well said. You know, even if someone does get some formal financial education, their first teachers are usually their parents, and their parents do tend to reinforce that scarcity mindset. Money doesn't grow on trees, so even if you do get financial education later, you know it's during your formative years when you're impressionable that that scarce stuff sticks with you,

Sharon Lechter 8:29

and you sit back and you watch other people. So all of a sudden you get FOMO, fear of missing out, and yet you still are too fearful to take action. And I think that's why what you do through Get Rich Education is such an incredible gift to people because you are who you hang out with, and if you're hanging out with entrepreneurs and successful people, you're going to have probably it's going to feed your drive and your desire to succeed. But if you're hanging out with people that are just like well, whatever, you know, as Napoleon Hill and outwitting the devil, I share drifting concept. If you're just kind of drifting through life, that's where you're going to stay. You're not going to achieve the goals you set for yourself because you're not paying attention to it and you're not driving towards them.

Keith Weinhold 9:14

Yeah, and I think where scarcity might manifest itself once one grows up into an adult is a lot of times a person thinks they're doing the right financial thing, but it's often misdirected. People don't understand concepts like arbitrage and leverage, and they're concepts that we discuss a lot here. But those things are not complex or arcane. For example, a man will skip a family vacation and work overtime at, say, his medical job in order to make extra principal payments on a mortgage loan with a 4% interest rate. Well, now he and his whole family just lost leverage, arbitrage, and most importantly, lifestyle.

Sharon Lechter 9:58

Time. It's all about time. You know, I talk about you're financially free when the income from your assets exceeds your monthly expenses, and what does that mean? You have your time back, and so you have the opportunity to either spend more time with your family or contribute to society, and that's what has been a lost element. I mean, rich dad, poor dad. When we built the rich dad brand globally. We kind of redefined how people looked at money, and then when I started teaching through the Pullman Hill Foundation and Pay Your Family First, I really wanted to focus people's mindset and start implanting the word asset, asset, asset, asset.

Keith Weinhold 10:35

Yeah.

Sharon Lechter 10:35

You know, and I say assets are sexy to get people to understand that instead of getting asking for overtime or looking for a second job, less buy, build, or create an income-producing asset because then it becomes this 24-hour economic engine working for you, and you don't have to be there. And the more of those you can get, the more that you'll get your time back, and that's the goal. The differential, if you think about the cash flow quadrant, our second book, the left side, employee self-employed. That's you exchanging time for money, and there's only so many hours in the day and so many days in the week. The right side of the quadrant, as a business owner and investor, you have businesses, systems, people working for you. You have your investments, your real estate investments working for you, and so the amount of money you can make on the left side is limited because of the time. The amount of money you can make on the right side is unlimited because we can always get more assets that are generating income to us, and that allows us to have that lifestyle that we deserve,

Keith Weinhold 11:42

sort of assets that pay you versus work that drains you a lot of times, and with this wave of inflation, you know it seems Sharon like this has become even more relevant amidst the K-shaped economy, where I've often reinforced with people, boy, it's rarely been more apparent that capital compounds and labor doesn't.

Sharon Lechter 12:06

Oh, you're so true, Keith. And I think one of the other issues that's really been talking a lot about lately, trying to open people's eyes. There's a difference between being frugal mindset and a scarcity mindset. All right, a frugal mindset is a choice. You're choosing to spend less and keep more. Factual, right? Frugal. I'm just going to fly coach instead of first, so I don't have to spend so much money, right? Scarcity is all fear. It's all fear based. Is I'm never going to have enough, right? And that fear, high emotion, low intelligence. That fear just feeds in us and creates that first step is even harder to take because you're afraid. And so there's nothing wrong with being frugal, if you align yourself with what you keep, how you invest it. Are you investing it in your future? Are you putting in a savings account so you're actually walking backwards instead of forward, and you're investing? And so that's what so many people are doing, particularly women. I had a stat last week: 70% of the holdings for women investors are held in cash.

Keith Weinhold 13:18

I'm not surprised. Women are better than men at some things that might even include investing. But in my experience, I think with what you're touching on is women do tend to be more conservative. They don't think about the opportunity cost of maybe their purchasing power diminishing by 5% annually with money in a quote-unquote safe savings account.

Sharon Lechter 13:39

Yeah, women investing groups actually outperform men investing groups, but that's because the power of the group. Okay, again, your environment, and I think alone, women that fear base comes up, and they're afraid to pull the trigger. They're afraid they're going to lose it, and we find that in every aspect in the business world. Woman makes a mistake and she takes it as a definition of herself, and she carries that mistake around with her forever. Men, oh, that happened. Okay, let's move on. So it's really important to look in in the mirror and say, you know, we each have all the tools we need to be successful. God created us to be perfectly who we are, not someone else, and you have to make the decision. There are three things we can control, Keith, and I know you agree with this: your thoughts, your words, your actions. And when you start with a negative mindset, it impacts what you say, and it impacts what happens to you. Particularly when you're worrying about something, you are causing a physical onslaught to your body. Your negative thoughts you start losing your health, and so when you think about I can't afford it per se, that's a negative statement. Yeah, you just want to go to bed and turn off the lights.

Sharon Lechter 14:57

But instead, if you change the philosophy. And instead, say, "How can I afford it? Do you feel the difference? It opens your mind. It triggers your subconscious mind to go to work figuring out how you can afford it. So, by just changing the thought and how you express it, you change the results. My mother was the queen of worry, so I got a lot of practice, and I still have what I call my little worry storms. But I stop myself, and I go, "Okay, Sharon, instead of focusing on what I'm afraid is going to happen, what I'm worrying about, let's change my thought process, put on a different perspective, and say, I want to focus on what I do want to have happen? It changes everything. It makes you optimistic. It shows you brightness of future. And the world we're living in right now, we all need a little brightness of future. So,

Keith Weinhold 15:51

Don't say I can't afford it. It turns off your mind. Instead, ask how can I afford it. That activates the mind, and that's how something good can happen. You said something so interesting there. I think Sharon that women's investing groups outperform the results from men. Tell us more, including why do you think that is?

Sharon Lechter 16:12

Well, they don't pull the trigger as fast as men do, but because they're together, they do a group analysis and they've got somebody doing the deep dive, somebody who likes to look at the facts and the history, and so because together they feel more powerful, they feel more confident because they're not doing it alone, and the fact that they're looking at that, they're making decisions based on knowledge and information, they tend to outperform. So

Keith Weinhold 16:42

why don't men do that? Do men take on the mindset of more like, "Hey, I'm a rugged individual. I don't need anyone else.

Sharon Lechter 16:48

There's a lot fewer men investment groups. Men tend to invest more individually, or have somebody do it for them, and that you know it's really an issue more as from a women's lens than anything else, but they do outperform typical men's investments.

Keith Weinhold 17:06

Well, Cher, we're talking about a scarcity mindset versus an abundance mindset. I've got to bring up something. Don't live below your means; expand your means. That is a quote attributed to the rich dad world, and I absolutely love it. Tell us more about what is meant by "don't live below your means, expand your means. Because to me, Sharon, it seems like that articulates what people think but don't know how to say.

Sharon Lechter 17:32

And don't know how to do. That's the problem.

Keith Weinhold 17:34

Yeah.

Sharon Lechter 17:35

You know, I was given an incredibly precious gift. I had parents who talked about money at the dinner table? You know, they didn't have a lot, but they built a lot because I often share that I've been a real estate investor since the age of 10. Because my dad had real estate investments, I had to go scrub out bathrooms between tenants. He never learned the power of outside management. He always did it himself. But he also had orange groves, and he said, "Sharon, the oranges give me cash flow every year, but that property will increase in value. And today, that property is part of Sea World in Florida, so he was proven right. He had his own business; he was retired Navy, and so we talked about building assets. And it's interesting because my husband and I we just celebrated 46 years of marriage and our parents. That's actually, yeah. Thank you. We're similar ages. His parents had that scarcity mindset and frugality. You know, his father I think had every penny he ever saw when he passed. He would not spend any money. Now my parents, my father's would you know if he wanted something, he figured out a way to buy it, right? He didn't go into debt except for real estate. He was of the mindset that if I want something, I'm going to figure out a way to get it, and that concept we carried over into rich dad poor dad, and we actually carried that into our business relationship when we first started cash flow, I mean, we needed to buy a printer, and it was $300 or $400 at the time. We said, "Well, how are we going to make extra money? What kind of product are we going to sell to get that money? Because it's a matter of really understanding the power of creation, and if you want something, create a way to get it. Figure it out. Figure out how. When I talk about I can't afford it versus how I can afford it, it's so important for you parents out there to understand.

Sharon Lechter 19:31

When you say to your kids, "We can't afford it, you're continuing a generational impact of scarcity mindset. And so, if your kids ask for something, you say, "Johnny, Mary, how can you afford it? Because I can tell you, kids get very creative about ways to make money. You know, and as long as it's legal, let them do it and let them earn it, reach their goal, buy wha

Keith asks why so many people end up competing in the "Grind Olympics" of the traditional day job, and explains why separating income from time is key to building real wealth.

He then counts down the top five ways to give a rental property a raise by increasing its net operating income, and points to the lever investors most often overlook.

Keith also looks at what has happened to home prices during every major stock market crash since 1980, and shows why negotiating better financing terms can beat simply getting a lower purchase price.

He offers practical strategies for building cash flow, creating value and investing with more confidence in any market.

Episode Page:

GetRichEducation.com/625

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Join Mid South Home Buyers' one-time, free live webinar featuring Keith Weinhold on September 30 at GetRichEducation.com/MidSouth to learn how Memphis' economic expansion could create new real estate investment opportunities, and have your questions answered in real time.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. Does your day job have you competing in the Grind Olympics? It's something that you never signed up for, and the top five ways to increase your rental property's income. Then, when stocks crash, what happens to real estate? You'll see historically today on Get Rich Education. What if I told you that one of America's strongest cash flow real estate markets is also becoming the new brains and brawn behind AI? That city is Memphis, believe it or not. In September 30th, we're going to show you why the smart money is paying attention now, along with an investing opportunity you won't want to miss. Join me, Terry Kerr and Matthew Van Horn of Mid South Homebuyers, the largest turnkey company in Memphis with more than 6000 homes under management, for a free live webinar the likes of which I've never done before. We're going to look at what billions in new investment could mean for jobs, housing demand, neighborhood appreciation, and your portfolio. Everyone who attends live will also get exclusive access to the best deal terms Mid South has ever offered. Reserve your free seat at getricheducation.com/midsouth again. that september 30. Don't say we didn't tell you. Save your spot at getricheducation.com/midsouth.

Speaker 1 1:34

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 1:50

Welcome to GRE from Wheeling, West Virginia, to Whiting, Indiana, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to Get Rich Education. Before I get into basically giving your rental property a raise with the top five ways to increase its income, first let's get the context of pulling back and understanding your compelling why for all of this. You may or may not like investment property itself-it's more likely rather that you love what it does for you. That's how it is for me. What do most people do? It's like they're training for the Grind Olympics. Are you doing this too? But you don't remember signing up? I mean, that's kind of what the day job is, society's vortex gradually pulls you into it. The investment property is what gradually tilts you out of it, or it gives you that option. For so many, the day job, it's sort of like this competition that really no one officially announces it yet. Millions enter it. Who can work the longest hours? Who can answer the most emails? Who can miss the most family dinners? Who can delay their life the longest? And at the end of it all, something we call retirement. If you're a winner, not a loser. The winner, you receive a gold-colored watch, lukewarm sheet cake, and a little party at age 65, and that's assuming that the finish line hasn't been moved to 70.

Keith Weinhold 3:40

This is especially bad and prevalent in the United States, where you start out with just two weeks vacation. That's about the worst grind in the developed world. I really myself started questioning this lifestyle when I was a teenager, and this is because my older friends, sort of those that were getting into their late teens, they were relatable to me, and they started going down this path and telling me about it. And suddenly, they couldn't play baseball or tennis with me during the day because they started working during their summers. Now that's not so bad in itself, but stay with me. I also looked at the adults around me and noticed that most traded the majority of their waking hours for work that they didn't even like. Now, my dad was a good worker. He worked 7 a.m. to 3 p.m. faithfully Monday to Friday, and despite being a good worker, he certainly didn't love his job. As a teen, then I found it confounding that so many people were working Monday through Friday, primarily why, primarily to reach the weekend. Wednesday was celebrated as. Day, this sort of strange admission that the work week was something to climb over and survive. You're surrendering 50 weeks to earn two weeks of vacation. You're repeating that very bargain for 40 years and hoping you still have enough money, energy, and health to enjoy retirement. And what puzzled me most was where this was happening. We are not some impoverished nation with paltry resources and limited opportunity. This is the United States, the most powerful and perhaps the most prosperous nation in the world.

Keith Weinhold 5:40

This is the part that I still can't work out in my head. Almost everybody falls into a narrow, rigid groove and grinds. Eventually, the groove becomes a rut. Then the rut gets a job title and a dental plan. Many even form their identity around this. Fear is the number one motivator that gets employees to show up at work. So then, do most people lead fear-based lives? It's almost insane. Sheesh! We have skyscrapers, interstate highways, world-class universities, abundant natural resources, advantageous geography, rule of law. We've got vast capital markets. We've got technology that sent people to the moon before I was born. Endless possibilities, but yet the standard life plan is to spend our most vivacious years doing something that we didn't even want to do. What a paradox! How could a nation create so much wealth while so many people have such little control over their own time? Even then, as a teenager, I remember thinking, "Gosh, there has got to be a better way than this system somehow. I didn't yet know the way, so I started going to college at age 18.

Keith Weinhold 7:16

But this path put me on that same trajectory of get good grades, land a job, max up my 401k, which would reduce my salary, and work for four decades, and then cross my fingers and just somehow hope that promotions, inflation, taxes, a stock market that I couldn't control, and life itself would cooperate. I mean, that plan could kind of work, but your time is still doing most of the work. Your employer rents your time usually one hour at a time, and if you stop supplying the hours, then soon enough your income stops too. Capital compound. labor doesn't. The better path is to gradually separate your income from your time. That's what I began doing when, while I was working full time, I bought my first income-producing rental property a few years later, a few years after college, in fact, doing that on the side, divergent, black sheep. I was stepping out of the groove. Now I own an asset that created leverage and income, whether I'm working, sleeping, camping, climbing a mountain, or spending time with my family. So the goal then it's not to avoid hard work entirely. I mean, meaningful work that can even provide some purpose and achievement and pride. But what provides wealth? What are you going to do for that? Wealth is what happens when you're not working. Wealth is what happens when you're sleeping. Labor produces income. Assets create wealth. Grinding should be a season, even your contribution to society, but not your primarily financial strategy. So the bottom line is that we don't want to win the grind Olympics, income-producing assets help us build a life that we don't have to postpone. The entire conventional life plan, the whole thing, just never felt right to me. Intuitively and rationally, deep down, you know, think to yourself: Doesn't at least some part of you feel that way too? Thank God that I found real estate. I don't love it. I love what it does for me. You've got to love what it does for you.

Keith Weinhold 9:54

One attribute that your income property gives you is control. So. With that in mind, I put together the top five ways to increase your rental property income countdown style from number five to number one. Since you do own an asset that you can control, so we're talking about giving your rental property a raise here, and you know your property does not even need to appreciate in order for you to make it more valuable, your property doesn't need to sit around waiting for the market to appreciate like it's waiting for a promotion from corporate or something, which always takes too long. You can manufacture more income yourself. So net operating income or NOI, it only has two moving parts. It is property income minus operating expenses. Push income up or pull expenses down, and you've effectively given yourself a raise. Better yet, on an income-valued property like a five-plus unit apartment building, every additional dollar of NOI can create far more than $1 of property value. So here are the top five ways to increase your property's income.

Keith Weinhold 11:10

The fifth best way is to add ancillary income, because monthly rent it's not the only asset inside your property. Now, depending on what property type you have and what the local laws are, you can charge for pets, parking, storage, laundry, furnishings. You can charge for internet packages, utility reimbursement, reserved garages, upgraded amenities, or you can even charge in some cases for application, administrative, or lease break fees. The best ancillary income it provides something that the resident genuinely values. We're here to serve and give value to others. Importantly, it should feel like an option for your tenant with these things, not some toll booth placed between the tenant and their front door. We know how annoying it is to have a tip screen swung around and placed in your face. Even an additional 25 or $50 per unit each month that can become meaningful across several properties. The fourth best way is to cut your controllable operating expenses, and you know what most investors do, and it is easy to fall into this, and I certainly have too at times. You know, most investors they carefully negotiate the property's purchase price at the beginning, and then they spend years casually accepting every recurring bill, audit your expenses rather than just accepting last year's cost plus inflation.

Keith Weinhold 12:49

So closely look at your property management fees, landscaping and snow removal, pest control, cleaning, trash service, water consumption, and any leaks that you might have. Common area electricity, repair labor and material markups, service contracts, and preventive maintenance. Gosh, I really lost a lot of money in pest control one time when the pest would just move from one apartment unit to the other, and we just couldn't get it trapped or stopped. Loyalty is admirable in marriage. It is less compelling when your landscaping company raises its price 14% every year. So solicit competing bids, consolidate your vendors where you can, install efficient fixtures where the payback period makes sense and where the break-even math works. But now, don't confuse expense reduction with maintenance neglect.

Keith Weinhold 13:53

That is one danger. So you know, if you delay a $300 repair until it becomes a $3,000 emergency, well, that really doesn't increase your NOI. It merely makes this month's numbers lie. Now, as I tell you about this list, you might think sometimes, "Oh, I've heard of that one before. Okay, but yeah, are you actually doing it? The third best way to increase your property's income is to challenge taxes and shop insurance because property taxes and insurance they are really among your property's largest operating expenses. So therefore, if you get good at this, you can both increase your net income and you will have gained a new skill that you can apply later and elsewhere. Yet you know a lot of owners they treat property tax and insurance sort of like the weather. They complain about them and then they just assume that nothing can be done. Possible moves that you can make are appealing in excessive property tax assessment, correct inaccurate property records. You can compare insurance carriers as often as annually. Adjust your deductibles when it's appropriate. Be sure you remove redundant coverage. Make sure that there's no overlap there. You can add safety or resilience improvements that qualify for insurance discounts, and then at the same time, sometimes that improves your property's value. You can check the property's classification and claims history for any errors there. So you know every legitimate dollar saved that flows directly into your NOI, your net operating income. Remember, mortgage payments though they do not factor into NOI. Neither do major capital expenditures. Refinancing can improve your cash flow, but that does not increase the property's NOI, and that's what we're talking about today. But when it comes to property tax appeals, you remember a while back on the show, perhaps a year ago, I went into detail on just how you can do that.

Keith Weinhold 16:00

Now we're up to number two. The second best way to increase your NOI is to raise rents intelligently, and really this is the most obvious strategy. But it isn't as simple as typing a larger number into your renewal letter and then just sort of hoping that your tenant doesn't notice. Bring rents closer to market without automatically chasing the absolute maximum. That can include gradual increases at renewal, premiums for upgraded units. How about a premium for the unit with the best view? If you have one of those, higher rent for furnished units, appropriate charges for garages or shorter lease terms. I mean, shorter lease terms, like a six month instead of a 12 month, that can get you a bump up in the rent. Be sure to eliminate any unnecessary concessions, like the first month's rent is free. Do you really have to continue to do that? And use better listing photos and copy to support higher rents. It's easy to have AI write some good snappy copy for you today. So the objective here is economic occupancy, not merely the highest advertised rent, because raising the rent $100, if that's going to create an extra month of vacancy that is stepping over dollars to pick up dimes. Know the market, understand the tenant, and make increases that improve NOI rather than merely improving the asking price for the REM. And the top way, the number one way to increase NOI is reduce vacancy and turnover. Yes, you might have heard that before, but it is still the most overlooked NOI lever, even though it's number one. An occupied unit at a sensible rent that often produces more income than an overpriced empty one.

Keith Weinhold 17:58

The way to improve your occupancy is by you starting renewal conversations 60 to 90 days before that lease comes due. Respond quickly to maintenance requests. I mean, few things frustrate a tenant more than a ceiling that is leaked for a month. Pre-market an upcoming vacancy that you have. Start that process early. Complete your turns faster, screen residents carefully, and unless you're in an especially hot market, consider offering renewal incentives when turnover would cost you substantially more than doing that. So there are a bunch of ideas for reducing vacancy and turnover. Another one, more of a modern-day one, is for you to buy and operate new build property because tenants tend to stay in new builds longer. They love that feeling that no one has ever lived there before. Suppose a unit rents for $1,800 a month. All right. Well, then one vacant month costs you $1,800 before cleaning, repairs, utilities, advertising, and leasing expenses. So the true cost of that turnover could easily be three or $4,000. And when you consider that, then giving a good resident a $250 one time renewal incentive that doesn't look generous that looks profitable for you. Keeping a responsible tenant, you know that might be the biggest quote unquote rent increase available. Just simply keeping a responsible tenant because occupied properties produce income, and empty properties produce invoices.

Keith Weinhold 19:48

Now that I've told you about the five ways to increase your property's income, let me give you some more motivation for this. It's about how $250 can become 50. $1,000. Suppose you select just a few of these five improvements, and say that that increases your NOI by just $250 per month. Okay, that's nice. That's cash in your pocket, and if you happen to apply it to a five-plus unit apartment building, since it's also valued on NOI. You take 250 bucks times 12. That is $3,000 a year at a 6% capitalization rate. Take 3000 divided by point 06. That is $50,000. You just created 50k of additional property value from only $250 of monthly NOI creation. Yeah, you are up 50k now, and here's the thing: you did not do anything that substantial. It's not like you added another story to a property, or you discovered oil underneath your parking lot, or you convinced a celebrity to move in. Okay, these are practical things that you can do in control. You simply operated the property better, and this forced appreciation relationship that applies most directly, though, to commercial and larger multifamily properties because those are the types that are valued based upon their income. A single-family rental or a duplex or a fourplex that is generally appraised primarily through comparable sales. So its higher NOI might not immediately produce the same increase in appraised value, but in either case, higher NOI it still means more cash flow for you, a stronger financial cushion, and a better performing investment. The bottom line here is that you can wait for the market to increase your property's value, or you can operate the property better and create value yourself, raise income, control expenses, and keep good residents. That is how you improve NOI without increasing your blood pressure.

Keith Weinhold 22:10

Coming up on the next few shows, we're going to speak with the original co-author of the book Rich Dad Poor Dad. Yes, we had Robert Kiyosaki on here earlier this year, but we're going to talk with the co-author alongside Robert Kiyosaki. A lot of people don't know who that is. That is going to be interesting on another upcoming episode. The man that wrote the book on the 8020 rule called the Pareto principle, he will be here. That's where 80% of the results come from. 20% of the effort. So here on GRE, there's a lot of education, strategy, and mindset coming up straight ahead today. When stocks crash, what happen

Keith examines why renters made up nearly 80% of U.S. net household growth last year, and how housing supply explains the gap between rents falling 8% in Austin and rising 17% in San Francisco and Chicago.

Terry Kerr and Matthew Van Horn of Mid South Homebuyers join to discuss new-build rentals under $200K in Memphis, Little Rock, and North Texas, in-house property management, duplex deals, and financing incentives with rates bought down into the fives.

The episode closes on the AI buildout reshaping Memphis, where xAI's Colossus, Anthropic, and Google are driving billions in investment and a share of the new tax revenue back into surrounding neighborhoods.

Episode Page:

GetRichEducation.com/624

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Join Mid South Home Buyers' one-time, free live webinar featuring Keith Weinhold on September 30 at GetRichEducation.com/MidSouth to learn how Memphis' economic expansion could create new real estate investment opportunities, and have your questions answered in real time.

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

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. U.S. rent growth is led by cities with AI investment and those with a lack of new housing supply. Then we're talking about new build properties for under 200k that cash flow and with mortgage rates that are bought down into the fives today on Get Rich Education. What if I told you that one of America's strongest cash flow real estate markets is also becoming the new brains and brawn behind AI? That city is Memphis, believe it or not. In September 30th, we're going to show you why the smart money is paying attention now, along with an investing opportunity you won't want to miss. Join me, Terry Kerr and Matthew Van Horn of Mid South Homebuyers, the largest turnkey company in Memphis with more than 6000 homes under management, for a free live webinar the likes of which I've never done before. We're going to look at what billions in new investment could mean for jobs, housing demand, neighborhood appreciation, and your portfolio. Everyone who attends live will also get exclusive access to the best deal terms Mid South has ever offered. Reserve your free seat at getricheducation.com/midsouth again, that september 30. Don't say we didn't tell you. Save your spot at getricheducation.com/mid south.

Speaker 1 1:33

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 1:49

Welcome to GRE from Davenport, Iowa, to Smethport, Pennsylvania, and across 188 nations worldwide. I'm Keith Weinhold. You're listening to Get Rich Education. Hey, near the end of today's episode, I'll announce where I'll be appearing live and inviting you to join me. But first, most real estate headlines that you see out there for quite a while now, they tend to focus on just how difficult buying a home has become amidst higher prices and mortgage rates-it's kind of an old story by now. But for investors, the other side of that story is what matters. When fewer people can buy homes, well, more people have to continue renting them. Only 6 million of America's 50 million renters can afford to buy the median home. In fact, so that means then that only 12 percent of America's renter households can afford the median home. That is just remarkable, and that's exactly why they have to keep renting, but you know what's more remarkable is the growth of this group of people itself. Last year, the U.S. added an estimated 898,000 renter households, but only 234,000 homeowner households. That's per the Census Bureau. All right. So then, renters accounted for nearly 80% of the nation's net household growth. Gosh, that is staggering. Well, let's look at the rent change and their factors in some of America's largest cities over the past three years, in Austin rents down 8% over the past three years, lowest anywhere. San Antonio minus 4% Denver minus 1% and then you got a couple cities, Phoenix and Dallas that are even no rent change the past three years because they've had some overbuilding. Raleigh, North Carolina, up 1% Nashville, Orlando, and Houston all with rents up 2% over the last three years. Still pretty modest. Jacksonville, Tampa, and Charlotte each up 3% Atlanta up 4% Miami also up 4% Los Angeles and Memphis both up 6% Seattle has had rent growth of 8% the past three years. Boston really with a lot of growth in tech jobs and not much new supply added. So Boston, Massachusetts, 10% rent growth. Philadelphia, 11% rent growth. New York City, famously not adding much supply. Rents are up 14% since 2023. San Francisco and Chicago leading the charge rents up 17% in both San Francisco and Chicago over the past three years. Now the biggest reason for the variability in rent change since this time it's largely the same reason for capital price change, for appreciation level, and that is the factor of supply. You know, remarkably, the eight cities that have built the least, they have the eight highest rent growth stories, and most of those are higher cost coastal markets that have high building regulation. I mean, sheesh. That's where approving new housing can take longer than choosing a speaker of the house, and that's how already expensive markets remained resilient.

Keith Weinhold 5:57

Namely, I'm talking about places like New York, Boston, Chicago, and San Francisco, and then you've got these pandemic-era magnets like Austin, Phoenix, Dallas, and Nashville. What these places did is they attracted residents and developers along with them, but yet they've all got really slow rent growth stories, like I just outlined. So what really happened here in these pandemic-era magnet places, again, Austin, Phoenix, Dallas, and Nashville, is that builders showed up like food trucks at a music carnival, and eventually the construction wave caught up with demand. Then you know we got to look at the Sun Belt. A lot of people talk about the Sun Belt like it's just one market or one place, and of course that's not true because I just told you about how Atlanta and Miami rents rose 4% the past three years. Well, a number of other places in the Sun Belt just stayed about even, but it's really the tech hubs like Boston and San Francisco, that are just surging, really soaring with rent growth amidst the AI boom, because they've really been the beneficiaries of that. So yes, apparently even the people building our robot replacements then need a place to live. The robots themselves don't pay rent yet. It's rarely been more apparent that real estate is local when there's this 25% Grand Canyon between Chicago and San Francisco's 17% rent growth, and then Austin's 8% loss. And again, I'm talking about that period just over the past three years. Now rent declines-that's something that really doesn't happen very often.

Keith Weinhold 7:48

They tend to be even more rare than a loss in overall home prices. But you know, rent declines-they can create buying opportunities. What happens is that softer rents-they pressure your current cash flows for sure, and that hurts, no doubt about it. But over the longer term, what that does is that discourages new construction, and then that sets the stage for tighter supply down the road. So that is really the rent growth story the past few years in the United States. We're going to discuss rents and prices some more, and then the excitement of the profound amount of new AI investment into a place where you might not be thinking about it in, and that is Memphis. Listen to what SpaceX, Anthropic, and Google are all in the process of doing there, and what that could do to rents. We'll talk to the premier provider of Memphis rental property, and they also place your tenant and they manage it for you, so that all you do is little more than collect the monthly rent check, and they also offer this in Little Rock, Arkansas, and more recently in North Texas, founded in 2002, Mid South Homebuyers they are one of America's original turnkey real estate providers, and you know they're quite possibly the oldest major provider that still operates today. We're going to talk to the man that actually sets the rents there, and in fact, Mid South is so renowned and respected that for a long time, if you wanted to own rental property from them, there was a waiting list that once reached 24 months, and frankly, in that scenario, investors would just kind of settle for the first property that became available-that doesn't happen anymore. There is no waiting list, and you actually have a choice now. Let's talk to this week's guests. Back on the show today, the Memphis-based team that has provided more. More income property to GRE listeners than anyone in history. They were first on the show with us almost 12 years ago on episode nine. It is Mid South Homebuyers founder Terry Kerr and director Matthew Vanhorn. It's a warm welcome back to the show.

Terry Kerr 10:18

Thank you so much, Keith. Always love being on your show, man.

Matthew Vanhorn 10:22

Yeah, so glad to be back, Keith.

Keith Weinhold 10:24

You know, I was talking with you earlier, and you had brought up something that struck me as interesting, and yet it could be true that when it comes to cash flow in real estate, we are living in the good old days. Now, nationally, cash flow has been challenged because purchase prices and mortgage rates are both up, and rents haven't quite kept up proportionally. But there, in the markets that you deal in, you can still get it with a small down payment because you do have a high ratio of rents in proportion to a low purchase price. Some of them still under 200k for a good rental single-family home, and incentives that get your mortgage rate into the fives. So tell us more about how we could be living in the good old days now.

Terry Kerr 11:09

Well, you know we're very fortunate to be working in some towns where the price to rent ratios are still super favorable comparatively. You know you mentioned that you can get into a house for under 200,000, we even have new construction houses that folks can get into for under 200,000. Yes, one of the other ways that we're able to make the deals pencil out and make it to where these are definitely the good old days is through a promotion that we've had going on for a bit called the Triple Five, where we buy the rate down into the fives and have a 5% management for five years. So these are definitely the good old days here at Mid South.

Matthew Vanhorn 11:51

One thing that you preach on your show, Keith, is about looking at history over hunches. Right, and when I look at the history, everyone. who comes to me now says, "Man, I wish I had bought 10 years ago. I've yet to hear anyone say, "Man, I wish I'd bought less 10 years ago. Never happens, you know. And 10 years ago, well, 10 years ago was 2016, and a lot of people say, "I wish I had bought more then, and the reality is, a lot of people were scared to buy then. You know, their times were uncertain then. We were unsure where things were headed then. Always, and maybe people looked at our prices back then as they started to hit $75,000 for a home, and thought, man, things are getting expensive. But my belief is truly, Keith, that 10 years from now, people will look back and say, man, I wish I had bought more 10 years ago. I mean, we're living at an incredible inflection point. I believe in history, you know, where we know that the world is changing with AI and with various factors that are happening. We're on very much the cutting edge of all of that. You know, I don't have a crystal ball, but I just believe that 10 years from now, people will say, "Man, you guys were so lucky to be able to invest in a time when AI was in its infancy, and like before prices had skyrocketed, like they are now in 2036. That's just my belief, Keith. Looking at history over hunches, there,

Keith Weinhold 13:31

I very well believe that could be true. The truth is, for you as an investor, when you buy a property, it's pretty likely you've paid more for that property than anyone has in history, and it's also pretty likely that when you sell that property down the road, you are going to sell it for more than anyone ever has in history. People always think that times are uncertain, and they're going to continue to feel that way because nobody can know the future, of course. And Terry, you talked about your incentives with the triple five. That's for someone that makes a small down payment where they can get their mortgage rate bought down into the fives. They get five years of property management at 5% and we're big fans of leverage here. However, if someone wants to pay all cash, you also have an incentive known as the Forever Five. Tell us about that.

Terry Kerr 14:26

Yeah, so the Forever Five for somebody who pays cash, they will get 5% property management forever because they are not getting the benefit of the interest rate buydown. So we want to treat our cash buyers fairly as well, and that's been very popular.

Keith Weinhold 14:43

And if you, as a cash buyer, participate in the Forever Five, and then you go on to refinance the property, maybe to pull cash out after you've closed, you still get those incentives for the duration of your ownership of the property.

Terry Kerr 14:56

Absolutely.

Keith Weinhold 14:58

Now, Matthew, interestingly. You talked about an inflection point. We'll get into that later. There is a clear inflection point with Memphis and with AI. But before we do that, why don't you talk about your core business and some of the markets that you serve and what the drivers are there?

Matthew Vanhorn 15:18

Yeah. Right now, when you invest in Memphis, you are investing in stability. We still have great cash-flowing assets in Memphis for as low as $100,000. We have great cash-flowing assets in Little Rock for as low as $120,000, and even Texas, we have assets there for as low as 215,000, which I don't expect you to see those kind of prices in the future. I think we're at a very lucky point where you can get into Texas for as low as 215. We're still seeing strong cash flow in our markets, especially with our triple five promotion. I mean, we've looked and listen. We realize it's harder to find cash flow than it used to be. That is true, and that is why we've rolled out this triple five promotion, where it really helps these deals pencil for our investors. It gives you five years of reduced property management. It gives you 30 years of a fantastic fixed rate on your interest, and my belief is that your rents will continue to grow faster than your expenses. So that five years from now, even if there is a property management adjustment in year six, which that would adjust to the normal rate of 10% or for investors who have more than six homes with us to 8% I believe that you're going to be in a much better place six years down the road because of the factors we know that rents increase, your resident pays down the mortgage, and I believe that this happens at a rate that's faster than your expenses grow.

Keith Weinhold 17:02

Talk to us about what you're doing as far as new build versus resale properties, because so many providers today are finding that they're doing more volume of new build than they are of resale properties, and this is really a good, important, fundamental thing that people like you are doing because amidst the national housing shortage, there's an even greater shortage of those entry-level properties. So now that you've been doing new build for a little while, tell us about that and what kind of effects that makes. How good that is for the investor. How much longer tenants are being retained for a longer duration in the new build property versus resale, and just more about that new build versus resale.

Terry Kerr 17:46

Sure, man. So we got into doing new construction, you know, out of necessity, and also because our investors were asking for it, our renters were asking for it, and so also we couldn't find as many rehabs, and you can't force a good deal to come onto the market to find for rehab. And so we went on a absolute tear for dirt. So within the last 12 months, we picked up over 400 vacant lots, and so we kind of have the dirt stacked up for the next while, and we're doing that in both Little Rock and in Memphis. And so, what we've seen on the leasing and on the acquisitions for our investor side is that our residents absolutely love it. We could ask more in rent than we're getting for these new construction properties, but we're tempering ourselves because we know that what makes a property cash flow for the long term is lease renewals for the residents. So in Memphis, as an example, our average rent for a brand new three-bedroom, two-bath, 1400 square foot house is 1450. And Matthew, what's the price point on that? Is it like 198,000 bucks? Is that it? That's right. And so they're just flying off the shelves from a rental standpoint. And like I said, we could get more in rent and still sell them at that 198 or maybe more. But we're wanting to make sure that we're leaving enough meat on the bone all the way around the horn, and to your question, Keith, about additional length of resident stay, we haven't been doing new construction long enough to really have good data points on that. But if the interest in the new construction product by our residents is an indicator of length of resident stay, it's going to be longer than our rehabs.

Matthew Vanhorn 19:42

Yeah, and another thing that I think that's interesting is that we are often building these new construction homes in the same neighborhoods where we have done our newly renovated homes, and so that continues to bring up the value of our renovated properties. Which I think is a beautiful thing that not all investors have connected the dots on yet with what we're doing in these neighborhoods. I think it's a beautiful thing because some residents are going to prefer that four-two new construction, like Terry mentioned, and other residents are going to prefer to pay a little bit less and get that three-one ranch-style home that we love so much here at Mid South,

Keith Weinhold 20:24

and you, the listener, you might be wondering about really properties, including new build income properties for under 200k. But I can attest to you that I have walked inside these properties myself with Mid South home buyers, several of them, so we're not just talking about the glossy brochure version of how a property looks. This is real with the low purchase prices in Memphis due to them being the transportation hub of the nation and an awful lot of other reasons. But the whole thing that makes this stick together for you, the investor is the property management, and you you never hear anyone rave about their property manager, seemingly. But with your management and making this hands-free for the investor, I have got to say I don't think I have ever heard one complaint about you guys's property management. So tell us about that. When someone gets sort of enamored with owning in one of your markets, Memphis, Little Rock, or with what you're doing in Texas, tell us abou

Keith welcomes back macroeconomist Richard Duncan of Macro Watch to examine where mortgage rates are headed and what's driving them there.

Duncan explains how the U.S. shifted from capitalism to what he calls "creditism" after the dollar left gold in 1971, and why today's AI investment boom, rising defense spending, and a $40 trillion national debt are all pointing inflation and interest rates in the same direction.

He also makes the case for rental property on land as a long-term inflation hedge, and answers a question many have asked: if the government can print currency, why does it collect taxes?

Episode Page:

GetRichEducation.com/623

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Join Mid South Home Buyers' one-time, free live webinar featuring Keith Weinhold on September 30 at GetRichEducation.com/MidSouth to learn how Memphis' economic expansion could create new real estate investment opportunities, and have your questions answered in real time.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

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Follow us on Instagram:

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. You're going to get a good idea of where future mortgage rates are headed as we're talking to one of the world's most brilliant macroeconomists today. Will AI be more inflationary or deflationary? And the profundity of how we're on the brink of moving into a completely new economic system today on Get Rich Education. What if I told you that one of America's strongest cash flow real estate markets is also becoming the new brains and brawn behind AI? That city is Memphis, believe it or not. In September 30th, we're going to show you why the smart money is paying attention now, along with an investing opportunity you won't want to miss. Join me, Terry Kerr and Matthew Van Horn of Mid South Home Buyers, the largest turnkey company in Memphis with more than 6000 homes under management, for a free live webinar the likes of which I've never done before. We're going to look at what billions in new investment could mean for jobs, housing demand, neighborhood appreciation, and your portfolio. Everyone who attends live will also get exclusive access to the best deal terms Mid South has ever offered. Reserve your free seat at getricheducation.com/midsouth again. that september 30. Don't say we didn't tell you. Save your spot at getricheducation.com/midsouth.

Speaker 1 1:34

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 1:50

Welcome to GRE from Lancaster, Pennsylvania, to Lancaster, California, and across 188 nations worldwide. I'm Keith Weinhold. You're listening to Get Rich Education, and I really appreciate that you're here. Yes, those two cities, though spelled the same, are pronounced differently. Framing this entire episode today with our brilliant guest, you'll learn which direction future mortgage rates are probably going to move, and it's decidedly either going to be higher or lower. You'll get a clear answer. Now I've said that trying to predict mortgage rates definitively is foolish. We're only talking about probabilities today. Look, have you ever wondered if the government can just print its own currency? Then why do they have to collect taxes from us. We're going to get that answer today. Back in 1971, the U.S. economy left a system of capitalism, in fact, and embarked on a journey of creditism as defined by today's guest. Well, now we're about to leave creditism. You'll learn what is poised to replace it, and it is an AI-fueled answer. You know, to prep you with some context today, I've said it here before. But when you start talking about the enormity of a national economy, the words billion and trillion start to get thrown around a lot. A trillion seconds ago, you know how long ago that was. That takes you further back than the Roman Empire, because a trillion seconds is 31,700 years. Well, 31,700 years ago, that is just about as far back as when the plains of Europe were being roamed by Neanderthals. Yeah, that was a trillion seconds ago. Coming up on the show here, the man who wrote the book on the Pareto principle 30 years ago. That's the 80-20 principle, where 20% of your effort yields 80% of the results. We'll talk to him and learn how those insights can improve your life on a different upcoming episode.

Keith Weinhold 4:08

Here, the book Rich Dad Poor Dad was originally written by two authors. One of those two was Robert Kiyosaki. We had Kiyosaki on the show here with us in June, and by the way, the New York Post recently wrote an article, and they cited the Get Rich Education podcast in how Kiyosaki revealed on the show here that he is 1.2 billion dollars in debt. You can find that in the September 1st edition of the New York Post. That's the June 1st episode of the Get Rich Education podcast that they're citing. Well, a lot of people they don't know who the other author of Rich Dad Poor Dad is, but we're going to have her here with us on the show soon. So some really fascinating episodes coming up. Let's meet today's guest. Returning this week is one of the foremost macroeconomic minds in the world. He was this show's first ever guest nearly 12 years ago on episode seven. A prolific author, he publishes the popular video series Macro Watch at RichardDuncaneconomics.com, and he's really influential. For example, not long ago, he presented his economic policy proposals to congressional members of the House Ways and Means Committee. Hey, it's a warm Get Rich Education. Welcome back to the incomparable Richard Duncan.

Richard Duncan 5:39

Thank you, Keith. Thank you for having me back on.

Keith Weinhold 5:42

I don't know if you and the audience are ready for this. This is some perspective. It recently made news when the U.S. hit its national public debt milestone of $40 trillion. When Richard made his GRE debut here in November of 2014, it was $18 trillion. That national debt has more than doubled since you were first here, Richard.

Richard Duncan 6:07

That's right. The government has been playing probably the leading role in keeping the economy growing, and a couple of times since then has played the sole role in preventing a new Great Depression in the aftermath of the crisis of 2008 and during COVID, it's the massive government budget deficits, often more than a trillion dollars a year. Last couple of years, it's been 1.8 trillion dollars. That's been driving the economy, and whenever it needs some additional support, the Fed steps in and creates a few trillion dollars here and there, and combined they've been keeping the economy growing and, in fact, booming. And wealth has absolutely exploded as a result of the government spending and the Fed money creation. In 2008, the total wealth of all the Americans net worth $60 trillion. Now, it's tripled to $180 trillion. That that is a direct result of the government's intervention through budget deficits and paper money creation by the Fed.

Keith Weinhold 7:14

I will call that the world's least desirable investment portfolio minus 40 t. That is one way to think about it, but when you bring up interventionism, you know something I shared with the audience about a month ago, Richard. It is just remarkable to think about all the crises we've had just since 2020. We had COVID, we had Russia's invasion of Ukraine, we had Israel, Gaza. We had tariffs. Now we've got the war in Iran, and what is the result of all this? Largely due to government interventionism. Oh, both the stock market and real estate market in the U.S. are near all-time highs.

Richard Duncan 7:54

Who would have imagined? But things work very differently now than they did in the old days when money was backed by gold, and the Fed and the government played a much smaller role in the economy. It's a different world now. That was capitalism. This is creditism. Our new economic system is driven by credit growth, and whenever necessary, the government steps in with massive budget deficits, and the Fed steps in with massive money creation to make sure that credit keeps expanding and the economy keeps growing, because if credit doesn't keep expanding, if it even dips a little bit like it started to in 2009, then the whole bubble implodes and we repeat the 1930s Great Depression, probably followed by what happened in the 1940s.

Keith Weinhold 8:39

This is interesting. When you were first here 12 years ago. You talked about how society isn't so much capitalism that it's creditism, and you expounded on that. And before we're done, I know that we have now morphed into a new ism, post-creditism that Richard is going to share with us, it's fascinating. But Richard, since you were last here, the Iran War is new. It's been going on for over six months now. So I'd like to get your thoughts on that, and principally, if the Iran War is going to create lasting inflation or only a temporary energy spike. What are your thoughts?

Richard Duncan 9:20

Let's broaden this out. I know that your listeners are very interested in in real estate, and of course that's very impacted by interest rates. And interest rates are impacted, of course, primarily by inflation. So it is true that the Iran war is pushing up energy prices, and that's pushing up inflation. It's not just Iran alone. Before that, we had trade tariffs, and that's pushing up inflation. And on top of that, we've simultaneously got this extraordinary AI investment boom, and the investment by the hyperscalers is just mind-boggling. The four biggest hyperscalers-Amazon, Alphabet, Microsoft, and Meta-they're expected just the four of them to invest something close to $750 billion this year. 750 billion, just four of them. Now, to put that into perspective, the U.S. military, in one year, the most recent year, only spends half that much on procurement and research and development, roughly 320 billion. You've got these four hyperscalers spending twice as much as the U.S. military does on procurement and research and development. That is just hard to wrap your mind around, and of course, that's pushing up everything from the cost of memory chips to electrical equipment, the cost of electricity itself, power generation equipment, and all the kinds of materials that go into building data centers. So that's another source of inflation. And then there is this wealth effect that I just referred to a minute ago. Wealth has tripled from $60 trillion to $180 trillion since 2008. All that wealth is giving a lot of rich people a lot of money to spend on a very large scale, and that also is inflationary. So all of those things are inflationary, and none of them seem to be going away in the immediate future. Now, on top of that, the inflation is not the only thing that is affecting the interest rates. Other things are affecting the interest rates as well. For instance, the budget deficit this year looks like the U.S. budget deficit is going to be quite close to $2 trillion. So that will be $2 trillion of government borrowing, and this doesn't look like it's going to go down anytime soon either. President Trump is requesting $1.5 trillion for the total defense budget in fiscal year 2027, which starts in October. That's up from just $900 billion in fiscal year 2025, so that's a huge increase in military spending, which makes the percent-

Keith Weinhold 9:20

Increase plus, y

Richard Duncan 10:52

Going to keep growing, and that spending will be inflationary as well. But so the government is going to have to borrow, so the demand for money from the government is enormous, and as I've just mentioned, because of the AI boon, the hyperscalers and many of the other companies in the AI industry or related to the AI industry, they're also tapping the bond market on a very large scale. So demand for borrowing from these AI-related companies, the demand is pushing up interest rates. This is not directly related to inflation, so you've got a lot of demand for borrowing from the government and from the private sector related to artificial intelligence primarily. So that's on the demand side for money, and on the supply side, well, the United States is not making a lot of new friends these days. We seem to be losing friends pretty quickly, and many of the people who were very enthusiastic about buying American government bonds in the past are becoming increasingly reluctant to do so. Most of them still are. Most of them don't really have any viable options, but on the margin, there are fewer friendly buyers of our debt, and so fewer people willing to buy the debt also puts upward pressure on U.S. interest rates. So recently, the 30-year U.S. government bond hit a 19-year high at 5.33% That's a very high number, and this has spooked the Treasury Department. Treasury Secretary Besant has begun doing some very unusual things that suggest that he's very concerned. He has helped stop the yen from weakening by selling some euros that the U.S. government owned and buying yen. He did this to make the yen stronger, and this meant that Japan wouldn't have to sell its U.S. government bonds in order to have dollars to use to buy yen to make the yen stronger. So that was a strange move.

Richard Duncan 9:20

And then more recently, he's announced that the Treasury Department is going to start buying twice as many long-dated bonds as it has been doing. Each operation now, the Treasury Department has been buying $2 billion worth of bonds at the long end and financing it with short-term borrowing. So borrowing at the short end, the say two-year bonds, which have a much lower interest rate, and using that money to buy 10 or 30-year bonds that have a higher interest rate, in order to push up the bond prices and push down the bond yields at the long end, to try to hold down the 30-year bond yield and the 10-year bond yield, which of course directly affects the mortgage. This is beginning to seem like there's some degree of, well, let's call it perhaps not panic, but deep concern in the Treasury about how high interest rates in the U.S. are going, and just moving forward with this idea, all of these pressures, the inflationary pressures are not likely to go away anytime soon. The demand for borrowing is not going to go away anytime soon. So there's going to continue to be this upward pressure on interest rates. And I think ultimately, what we are going to see is another big round of quantitative easing from the Fed. The Fed is going to have to step back in and announce that it's going to create a great deal of money one more time, and use that money that it creates to buy government bonds to push up their price and to drive down their yield. And we shouldn't forget that already the Fed is currently printing, creating money. It launched a new program. What is it called? Reserve management purchases. This was a program they announced in December last year, where they were just going to create some money and inject bank reserves into the financial system, so that they could manage reserves at a good level, so everyone would have plenty of liquidity. Just since December, they have created $210 billion. This is kind of going under the radar, but $210 billion since December is not an insignificant amount of money.

Richard Duncan 14:49

If the budget deficit this year turns out to be 2 trillion, then that's financing 10% of the government's budget deficit, right? More than 10% So we've already got a significant amount of money creation by the Fed going on currently, and that's not enough to prevent the yields from moving sharply higher. So I think what we're going to get is another much bigger round of quantitative easing in the not too distant future, and that's going to have a lot of ramifications.

Keith Weinhold 17:00

That's a really interesting insight, and Richard, one word keeps popping into my head as we have this discussion. Okay, inflationary pressure correlates with higher interest rates, sure, but how much are these high bond yields, which flow right over to our mortgage rates, a result of an erosion in trust. I'm thinking about trust

Richard Duncan 17:24

to some degree, yes, but not overwhelmingly. The reality is, at the end of the day, there is a certain amount of money in the world that has to be invested somewhere, and that is the most important fact to understand. There is a pool of money; it keeps getting larger, and it has to go somewhere. And U.S. government bonds are considered the safest place for it to go. For instance, the United States has a very large trade deficit with the rest of the world. For the last two years, the current account deficit, which is more or less the trade deficit, has been 1.2 trillion dollars a year. It's easier to understand it as a trade deficit. That's been throwing off 1.2 trillion dollars into the surplus countries. The surplus countries sell things in the United States, countries like China and Vietnam and all the others. They sell things in the United States that they make at home. They get paid in dollars. They take their dollars back home to China and Vietnam and all the other countries, and what do they do with the dollars? They own dollars. They've got to do something with those dollars. They're getting 1.2 trillion more dollars every year. Now, the thing they do with it primarily is they buy treasury bonds with it, and so there is an inherent and growing demand for treasury bonds. You may be thinking, okay, they could take those dollars and they could convert them into euros. That's true, they could, but whoever they buy the euros from, they then own dollars, and they would need to buy U.S. dollar-denominated assets with them. The main driver behind the buying of Treasury bonds is just the fact that there are so many dollars in the world, an increasing amount of dollars outside the United States that need to be invested in U.S. dollar-denominated assets. People can lose confidence in "quote unquote, but what are they going to do with their dollars? It has to go somewhere, and so it ultimately ends up going round and round, and an enormous amount of it ends up in U.S. Treasury bonds, and that's not going to change so long as the U.S. has a very large trade deficit with the rest of the world. The rest of the world is going to keep accumulating dollars for that reason, and they're going to keep accumulating Treasury bonds for that reason.

Keith Weinhold 19:44

Well, what do these effects mean for real estate, Richard? I mean, which force you think will ultimately win for housing here with this increased inflationary pressure? Is it more of a damaged affordability problem, or do we see rising? Placement costs that continue to help float real estate values up.

Richard Duncan 20:05

Real estate prices, home prices, have not been performing very well over the last year to two. Pretty flat, unlike in prior years, immediately after COVID when they were booming. I suppose that's what we're going to continue to see for some time. If interest rates remain high, the affordability is not there. But if we do get this new round of quantitative easing, which I think is a real possibility, then that will effectively push down the interest rates, making home a

Keith breaks down the "baseline trap" in investor psychology, showing how rising income and lifestyle creep can quietly undermine the feeling of financial freedom.

He then shares a grounded outlook for U.S. home prices, outlining how inflation, AI-driven job growth, limited inventory, and strong homeowner equity are shaping the market.

He closes with a data-driven look at where population growth is heading through 2040, especially in Texas and Florida, and what that could mean for long-term real estate demand and investing strategy.

Episode Page:

GetRichEducation.com/622

For access to properties or free help with a

GRE Investment Coach, start here:

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Get mortgage loans for investment property:

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or e-mail: info@RidgeLendingGroup.com

Invest with Freedom Family Investments.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Join Mid South Home Buyers' one-time, free live webinar featuring Keith Weinhold on September 30 at GetRichEducation.com/MidSouth to learn how Memphis' economic expansion could create new real estate investment opportunities, and have your questions answered in real time.

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

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. Investor psychology often falls into the baseline trap. Learn what's going to happen to home prices over the next year. Then more than half of America's population growth until 2040 will occur in just these two states. All today on Get Rich Education. What if I told you that one of America's strongest cash flow real estate markets is also becoming the new brains and brawn behind AI? That city is Memphis, believe it or not. In September 30th, we're going to show you why the smart money is paying attention now, along with an investing opportunity you won't want to miss. Join me, Terry Kerr and Matthew Van Horn of Mid South Homebuyers, the largest turnkey company in Memphis with more than 6000 homes under management, for a free live webinar the likes of which I've never done before. We're going to look at what billions in new investment could mean for jobs, housing demand, neighborhood appreciation, and your portfolio. Everyone who attends live will also get exclusive access to the best deal terms Mid South has ever offered. Reserve your free seat at getricheducation.com/midsouth again. that september 30. Don't say we didn't tell you. Save your spot at getricheducation.com/midsouth

Speaker 1 1:34

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 1:50

Welcome to GRE from Jackson Hole, Wyoming, to Jackson, Mississippi, and across 188 nations worldwide. I'm Keith Weinhold. This is Get Rich Education, and Happy Labor Day. Let's talk about your investor psychology, because as you grow your wealth and your portfolio size, there is a trap that you will almost certainly fall into, and I'm not infallible. I've fallen into this trap to some extent too. That is the baseline trap. It's the tendency for every improvement in your income, your wealth, or your lifestyle to become your new normal. Once this happens, the improvement stops feeling like progress, and you need even more just to feel equally successful, if you get used to flying first class and then you have to drop back to coach again, it feels less like flying and more like being deported. Psychologically, we fall into the baseline trap because the human mind evaluates Life relatively, not absolutely. We don't simply ask ourselves how good is my life, how good is my situation. Instead, we ask how does this compare with what I've recently experienced, what I expected, and what others have, and there are a number of forces that drive the baseline trap. One is hedonic adaptation. Hedonic means pleasure seeking. People rapidly adjust to improvements. The first month of receiving a new $5,000 in passive income that feels transformative. After two years, it feels completely ordinary. The income didn't become less valuable. Your nervous system simply stopped registering it as new. Yesterday's luxury became today's wallpaper. A force driving the baseline trap is a shifting reference point. Gains and losses are measured against a mental baseline. Once your portfolio reaches, say, a $2 million net worth, well, your mind soon begins treating the $2 million as mine. You're like, hey, this is mine now, even if much of it came from recent appreciation. A decline to 1.8 million, therefore, feels like losing 200k rather than still having substantially more wealth than you did just a few years ago. Well, instead, you're only focused on the 200k paper loss. Then there's loss aversion psychologically. Losses generally hurt more than equivalent gains feel good. After a higher standard becomes normal, surrendering and. Any part of it feels like some blood-curdling loss. That's why reducing spending from 20k to 15k per month that can feel painful, even if 15k once felt luxurious to you.

Keith Weinhold 5:16

There's also the lifestyle creep component. People convert variable gains into fixed commitments. What do I mean? I mean like a strong income year. Oh, pretty soon that becomes a larger mortgage. Rental cash flow that becomes a vehicle payment. A bonus that becomes private school tuition, portfolio appreciation. Well, that supports new borrowing. See, pleasures that were once optional have now become obligations. And you got to ask, wait, how did that happen to you? You're supposed to have a life of options and not obligations. That's what financial freedom is supposed to be. The baseline then is no longer merely psychological; it becomes embedded in real monthly expenses. Then there's also the dangerous driver of the baseline trap that's called, oh no, social comparison. We commonly measure success against our peers, but instead, what you should do is measure it against your former self. Because as you become wealthier, see your comparison group changes too. If you've got five rentals, you soon stop comparing yourself with someone that owns none, you might even begin comparing yourself with people who own 50 of them, and why not? It's natural, after all. That is where you want to go, despite enormous progress. See, that's how you can feel left further behind. Then there's the recency bias. Your mind gives enormously disproportionate weight to recent experience. A few years of 15% returns, like what happened in 2021 and 2022 in real estate. Oh, you could begin expecting 15% after rapidly appreciating real estate, continued appreciation feels normal. A favorable cycle gets mistaken for the natural baseline, and then when conditions normalize, ordinary performance feels rather defective. Then there's identity inflation. That's a trap. This is when accomplishments become woven into your very identity, like I'm a multi-million-dollar entrepreneur, or I own 20 properties, or my income always grows. Okay, once success becomes identity, maintaining the baseline feels necessary just to preserve your self worth. Now, with this condition, see a temporary setback. It doesn't merely affect the numbers.

Keith Weinhold 8:08

It feels like evidence that you're becoming a lesser person, and the brain rewards progress more than possession. Humans are energized by movement toward a goal, reaching the goal often produces less lasting satisfaction than you expect. Buying the 10th rental creates a dopamine hit, and owning it three years later does not. The investor therefore creates another target, not always because another property is even needed, but because continued pursuit restores the feeling of progress, success erases the memory of constraint. As your wealth grows, it becomes difficult to remember emotionally what financial insecurity even felt like I mean you might intellectually remember earning 60k, but you no longer experience today's 300k income in comparison with it. Your comparison point quietly changes from your former life to your best recent year. The paradox is that your circumstances improve faster than your experience of them? The goal is not to stop growing; it is to prevent every improvement from becoming a new psychological necessity. Keep growing your means, but don't let success redefine enough every time you achieve it, don't let it redefine enough. Let's say you acquire rentals and you do generate another 5k per month. The trap is that your spending and expectations gradually rise by 5k. You're wealthier, but you don't. Don't feel freer. Instead of investments buying freedom, they merely finance a more expensive baseline, and it can distort how you view your portfolio. 10 properties once felt like an extraordinary accomplishment, and soon 10 feels ordinary, and 20 becomes necessary. You keep moving the finish line, and this is closely related to hedonic adaptation and lifestyle creep. But it extends beyond spending because your definition of enough keeps on rising. So the antidote certainly is not living small forever-it's deliberately separating the growth rates of your assets and your lifestyle. What you want to do is grow your means faster than you grow your baseline. Really, that's the key. You're gonna be more satisfied. Instead of simply living below your means, you sure do want to grow your means, but don't let every gain become a permanent new obligation. Let some additional cash flow purchase you things like time, resilience, and optionality-not merely nicer recurring expenses. If your lifestyle rises as fast as your passive income, you're wealthier, but no freer.

Keith Weinhold 11:28

So here's what you do: when your income rises, let your lifestyle rise about half that much. Otherwise, if you upgrade your lifestyle too much, say that you receive an extra $3,000 in monthly rental income, then you add in a luxury car payment, better vacations, and more expensive restaurants. Pretty soon, that extra 3k that feels necessary instead of liberating, and then there's also the record income comparison part of the trap. Say your business earns $1 million during an exceptional year. The next year, it earns a still impressive 850k, but you experience it as failure because the unusually strong year became your new baseline. Don't let that happen. You can compare yourself to others that can be motivating, but the more important comparison is to the former you. Now, another way that investors fall into the baseline trap in real estate is how an exceptional market becomes the standard. Say that you bought rental properties in 2012. Well, 2012 was perhaps the best time to buy real estate in generations. This was shortly after the global financial crisis, so there was this confluence of low prices, low interest rates, strong cash flow, and you had little competition as well. I mean, you had it all in 2012, and those deals performed spectacularly in today's market. Available properties produce lower initial cash flow, but they could still deliver respectable total returns through appreciation, rent income, principal paydown, tax benefits, and inflation profiting. But a losing investor rejects all of those things because they aren't as attractive as the once-in-a-generation deals of 2012, or even the rock-bottom low-rate days of 2020, they fell into the baseline trap. The trap here is that an unusually favorable period for real estate became the new benchmark. It's sort of like how last week I told you about how the deal structure always changes over time from the Reagan administration until today. Today the deal is with Burr properties, and it's also with buying new builds with rate buydowns. But see, in 2012 there were almost zero available new build properties that were created for investors to rent to others.

Keith Weinhold 14:25

Over time, with these new builds that you're adding now, you're going to have fewer maintenance and repair expenses. Tenants tend to stay in new builds longer, and new builds appreciate better over the long run. See, I wasn't getting any of those benefits in 2012, and I bought rental real estate in 2012, and I bought real estate recently as well. Not falling into the baseline trap, because today it's still difficult to find any investment bet. Than residential real estate with a loan, it is a scarce asset that people are going to continue to need. So here we are today, about 15 years on from 2012. Water market conditions like now. Let's talk about that and what can we expect for the next year? National home prices keep rising, but they're only about one half of 1% higher than they were a year ago. I mean, that's an appreciation level with the enthusiasm of someone attending a seven a.m. meeting. I do expect national home prices to keep rising modestly over the next year. Let me tell you about why, and then what the drivers are. And to be clear, we're talking about single-family homes up to fourplexes here. I'll discuss apartments later today. Well, the drivers for continued price growth are many of the same reasons that home prices are up just a little since last year. There are four of them. These four are inflation, the AI boom, short inventory, and a lack of distressed sellers. So let's unpack all of these four factors that I've identified for putting a floor underneath home prices, inflationary pressure is poised to raise replacement cost, energy, wages, and tariffs make those inputs more expensive, and the more war we have, the more inflation we have. A home is a bundle of land, labor, lumber, concrete, copper, and all sorts of energy inputs, plus 14 trips to Home Depot because someone forgot the correct nails and screws. That's what a home is. Recent home price growth it has lagged today's 3.4% CPI inflation rate. So again, we're not even talking about inflation-adjusted gains here. AI that creates local housing heat. It's not so much a nationwide driver of home prices. And in a moment, I'll tell you the top five housing markets for AI-led home price growth, but how does AI investment push up home prices anyway? How does that happen? People are getting high salaries, signing bonuses, and stock options that produces well-funded buyers. They make big down payments, or they even pay all cash for homes, and when a buyer pays all cash for a home, they can pay absolutely any price because they don't have to get an appraisal that comes along with a loan for a financed property.

Keith Weinhold 17:53

That's how all cash buyers can really push up prices. The growth in AI companies that has really helped push the S and P 500 higher that fuels a wealth effect nationwide that makes everybody feel wealthier regardless of where you live as long as you're invested in the stock market but the localized effects with those higher AI wages and signing bonuses in order they are most potent in San Francisco, San Jose, Seattle, New York City, and Boston, and none of those are good cash flow investor markets. Still, short housing inventory is contributing to higher prices, and hey, it's time that we check on this again. Ever since the inventory crunch started to plummet in 2021 and reached its lowest point in 2022, I've been updating you on the housing supply, and I always keep it same same. I cite the same data source, the Federal Reserve Economic Data's active listing count, Fred's active listing count, which counts single-family and townhomes and condos, all wrapped up in this number. And the figure it still hasn't recovered at 1.1 million homes. Now it is 2% higher than last year, 2% more supply than last year, but overall housing supply is still 9% below pre-pandemic levels. And there's one important thing to keep in mind that most don't think about when you hear that figure that housing supply is 9% below pre-pandemic times in 2019, that does not mean we're 9% short. That is because even in 2019 there was a housing shortage, and we are 9% below that yet, keeping. Upward pressure on prices and the most supply-constrained markets today. It includes both good and poor cash-flowing investor markets.

Keith Weinhold 20:10

They are New York City, Chicago, San Francisco, Hartford, Providence, Milwaukee, Boston, Cleveland, Virginia Beach, and Kansas City. All of those places remain especially tight with housing inventory, and then finally, this fourth of four reasons I've cited for continued upward pressure on home prices are the fact that distressed sellers-they are few and far between-and you need a lot of those in order to have a serious down cycle, after the 2008 housing crash, millions of owners were underwater. They owed more on their homes than they were worth. Lending standards were irresponsibly loose. Adjustable rate mortgages were resetting higher. I mean, a lot of people had little choice but to sell or to hand the keys back to the bank. Distress, distress, distress. Today is almost the mirror image. Here's what's really happening with homeowners having this record equity position today-an average of over $300,000. Many also locked in at fixed mortgage rates below 5% it means that they're enjoying perhaps the cheapest long-term debt that they are ever going to have. Lending standards have been strong, foreclosure rates remain low, and virtually nobody is being forced to sell. That matters more than most people think because housing crashes need a lot of forced sellers, owners who must accept almost any price in order to escape the property. But today, most homeowners they can simply either stay put, or if they're going to move out of the home, keep it and rent out the home, or they can wait for a better offer. No distress. In other words, buyers might be frustrated, but sellers-they're just not desperate. And without desperation, it is difficult for home prices to fall sharply. So the bottom line here with today's home prices and looking into next year, home price growth is apparent, but it's weak. The ingredients for a national price collapse are nowhere to be found, so this does not spell boom or crash. Home prices appear poised to keep slowly grinding higher, but with this low affordability, that keeps them from soaring, say 10 or 12% higher. I don't see that happening. And of course, each December, I make my home price forecast to the exact percentage point for the year ahead, so you can look forward to that soon. The Get Rich Education home price appreciation forecast that I made late last year for this year. It looks like it's going to be almost spot on. Of course, unlike a lot of analysts, transparently, I also give you the result of how closely the forecast hit the target every year, so you can look forward to that too. Hey, if you like this show, there's more content where this comes from. Sign up for our complimentary newsletter. That way, you can see the graphs and charts and maps that I break down. If you like what you hear on Get Rich Education, every week I show you what's really happening with real estate rents, inflation, interest rates, and the economy, and more importantly, what you can do about it. You'll get sharp insights, useful opportunities, and a few laughs along the way. Yeah, a couple knee slappers sprinkled in there with actionable strategies, like the savviest way to get rent increases. Get smarter in just a three to four minute read every week. Join 1000s of smart investors right now at greletter.com because your inbox could use fewer coupons and more financial freedom. That is greletter.com. More straight ahea

Keith explores how real estate strategies have shifted from the 1980s to today and explains why investors need to adapt deal structures to changing interest rates, lending conditions, and market cycles.

He highlights current opportunities in new construction and builder rate buydowns, along with the long-term benefits of fixed-rate debt.

Keith is joined by economic futurist and author Richard Vague, who challenges conventional beliefs about inflation and interest rates and explains how government intervention, war, and supply constraints shape asset prices and leverage decisions.

Together, they provide a big-picture framework for understanding how today's macro environment affects real estate investing decisions.

Episode Page:

GetRichEducation.com/621

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Join Mid South Home Buyers' one-time, free live webinar featuring Keith Weinhold on September 30 at GetRichEducation.com/MidSouth to learn how Memphis' economic expansion could create new real estate investment opportunities, and have your questions answered in real time.

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

For advertising inquiries, visit:

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Best Financial Education:

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Get our wealth-building newsletter free—

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Our YouTube Channel:

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. Learn how dramatically real estate has changed from the 1980s through the late 2020s. We'll be sure that your approach is changing with it. Then a great guest and I discuss how war and future calamities will affect mortgage rates, inflation, and your real estate today on Get Rich Education. What if I told you that one of America's strongest cash flow real estate markets is also becoming the new brains and brawn behind AI? That city is Memphis, believe it or not. In September 30th, we're going to show you why the smart money is paying attention now, along with an investing opportunity you won't want to miss. Join me, Terry Kerr and Matthew Van Horn of Mid South Home Buyers, the largest turnkey company in Memphis with more than 6,000 homes under management, for a free live webinar, the likes of which I've never done before. We're going to look at what billions in new investment could mean for jobs, housing demand, neighborhood appreciation, and your portfolio. Everyone who attends live will also get exclusive access to the best deal terms Mid South has ever offered. Reserve your free seat at getricheducation.com/midsouth. Again, that September 30th. Don't say we didn't tell you. Save your spot at getricheducation.com/midsouth.

Speaker 1 1:35

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 1:51

Welcome to GRE from Cambridge, England, to Cambridge, Massachusetts, and across 188 world nations. I'm Keith Weinhold. You're inside Get Rich Education. You could be doing anything with your time. I'm grateful that you choose to listen to me every week. You know, real estate investors sometimes say, "Ah, there aren't any deals anymore. What they usually mean is the deal structure that they learned five years ago stopped working. There are always opportunities in real estate, but your approach changes with interest rates, lending standards, inventory, construction, government policy, and just the overall economic cycle. The best investors don't wait for yesterday's market to return. That's like someone still hoping for Blockbuster Video Store to reopen. They identify what today's market is offering instead. Just consider this historic retrospective on real estate investing from the Reagan administration to today, in 1981, the 30-year mortgage rate peaked above 18.6%. I mean, just imagine proudly telling your friends that you locked in at 17% before rates went higher. That mortgage needed its own defibrillator. By 1984, rates were still near 16%. The strategy then, the approach, was for a buyer to assume the existing owner's lower rate mortgage that they locked in a few years earlier, perhaps in the late 70s, that's how you got a good deal, assuming that existing owners lower-rate mortgage. You can't do that so easily today.

Keith Weinhold 3:50

By the late 80s and early 90s, the opportunity shifted from assuming attractive debt to buying distressed properties. The S and L crisis was upon us. Savings and loan failed lenders found themselves holding piles of distressed real estate, so investors bought foreclosures and REOs at discounts. They improved neglected buildings and then they repositioned them for income. You probably know that REO stands for real estate owned on a bank's balance sheet. All REO means is bank-owned property, but that's what you did. You found those, and then you scooped up a deal that way. As the 1990s progressed, interest rates declined, and loans also became really easy to obtain. We were tilting into the loosey-goosey easy lending environment. In the 90s, it was popular to buy an undervalued property, renovate it, raise the rent, and refinance it based on the improved value. That process later got a buzzy acronym and became known as the Burr strategy: buy, rehab, rent, refinance, repeat. By 2005, financing got more creative. This is when I was a new real estate investor. I remember obtaining what were known as 8015 five combo loans. This meant an 80% first mortgage, 15% second mortgage, and 5% down payment. You remember those? If you've been around for a while, you do. And see, this way you could avoid paying PMI, and you could control property with an astounding 20 to one leverage ratio due to that 5% down payment, but soon enough lending just got absolutely too creative and easy. The quiet lending party turned into a boisterous kegger, delivering the 2008 financial. crisis, and pretty soon I could no longer get any loans. From 2009 through the early 2010s, you could buy foreclosures and short sales at enormous discounts if you could find the loan.

Keith Weinhold 6:20

Financing was tough, but prices were super low. It might have even made sense to pay cash at that time. Fear was everywhere right after the global financial crisis. I mean, it really took courage to act when others were hiding under the bed. By 2020 and 2021, the opportunity changed from cheap property to cheap money. Mortgage rates dropped below an absurd 3% as a result of the COVID pandemic. You could lock up extraordinarily cheap debt for less than the inflation rate, and then let inflation nibble away at it like Pac-Man. Of course, a lot of us are still benefiting from that today, but that opportunity is long gone now. But it doesn't mean that deals are gone today. Where's the opportunity? One of the best ones is often found in new construction, large build. have got to keep moving their inventory as they build these homes because they have got to keep their crews busy. An unsold house for a builder-I mean-that produces as much income as an unplugged Bitcoin miner. Rather than make conspicuous price reductions, builders use their financial muscle to buy down mortgage rates for you, often in the 5% range or even lower.

Keith Weinhold 7:52

Builders might also offer you closing cost assistance, upgraded finishes, or other incentives that a single resale seller just can't match. So from the Reagan administration to today, over 45 years, the winning strategy just keeps morphing. It started out back then as assume the loan, over to buy distress, then to renovate and refi, then it was a creative financing wave, and then cheap debt, and today take the builders buy down. That's where we are. The mistake is deciding in advance what a deal is supposed to look like. The best deal structure changes, and of course, it's going to change again. The investor who keeps fighting the last war is always going to conclude that the opportunity has disappeared, but it hasn't. It's just changed clothing. Still, though, today's new purchases now-they're not as good as the deals that they were five years ago, but the best investors keep investing. They keep adding to their portfolio. It's what they've always done. Absolutely zero winning investors that are successful over time look back and say things like, "I didn't add anything to my portfolio during that 10-year span for this or that reason, the market changes, and you've got to adapt with it. That's a way to think about it. Take solace in knowing a few things. Deal structure changes over time are inevitable. And larger picture, you are investing in a product that is sustainable residential real estate in the form of long-term rentals. These entry-level properties are a scarce asset that people are going to continue to need. I mean, that's what we do here. Just compare. To the fads that we avoid around here, like NFTs, metaverse real estate, which we discussed on the show a few years ago, but said is highly dangerous, eye buying, value add apartment syndications, SPACs, or how about ICO funded altcoins? We don't chase the latest hot thing here at GRE. It is about what's sustainable, necessary, and cannot be easily disrupted by AI, and that's one reason that Get Rich Education is still standing strong after 52 episodes every year for almost 12 years now. Shortly, we're going to bring in a rather esteemed guest today on the future direction of interest rates and inflation. Interestingly, he believes that raising interest rates does not cool inflation, and that's contrary to popular belief. I'm going to press him on this and ask why, but first, our new Fed chair, Kevin Warsh. He's only been on the job a few months now.

Keith Weinhold 11:07

He is gaining a reputation for not forecasting what they're going to do ahead of time, like his predecessor had. I guess I tend to like his disposition and the way that he communicates, I sense some pragmatism with Warsh, but gosh, it often seems that a new Fed chair gets off to a well liked start, and then they do something that lots of people criticize. Like, remember in 2004, late Fed Chair Alan Greenspan suggested more borrowers could benefit from adjustable rate mortgages shortly before rates rose and ARM resets became financial landmines. In 2007, Ben Bernanke said that subprime mortgage problems were likely to be contained. Oh, right after that, they helped trigger the global financial crisis, and more recently, the Jerome Powell gaffe, which I'll mention in the interview shortly. Here's what current Fed Chair Warsh says about inflation:

Kevin Warsh 12:14

For some households, businesses, and market professionals, five years of high inflation have left a mistaken impression, that's hard to shake, that the Fed's implicit inflation target was somehow above 2% Let me reiterate, there is no soft inflation target. There is no soft implicit target, not on this committee's watch. There's only a target, and it's 2%

Keith Weinhold 12:42

It's obvious that he is serious about getting inflation back down to 2% That tends to point toward interest rate increases. Let's discuss that and more with this week's brilliant guest. This week's guest is an economic futurist keynote speaker, and he's quite a popular author. He is chair of the board of the Public School Employees Retirement System. That's the largest public pension fund in Pennsylvania. Previously, the Pennsylvania governor appointed him as the secretary of banking and securities for the Great Commonwealth of Pennsylvania, he's also the founder and president of several various organizations today, and he serves on several boards, including at the University of Pennsylvania and the School District of Philadelphia. I mean, I hardly know how he has time to do it all, but he made time for us today. Hey, it's great to welcome back Richard Vague.

Richard Vague 13:45

It's such an honor to be with you. I certainly enjoyed our last session, and it's really wonderful to be back.

Keith Weinhold 13:51

Well, and so much has changed since you were last here, Richard. First, why don't we pull back and talk to us about the general state of the national economy today, as you see it.

Richard Vague 14:04

ou know the economy was rocking along okay, and you know since you guys are such experts in real estate, I'll tell you one of the most important statistics, in my opinion, is the number of unsold homes, and by all rights, that number should be about 2 million homes. It's only about a million and a half. So there's a deficiency in our housing stock in the United States, which is, yeah, I think good news for the housing industry. It's always good to have a reason to have to grow. You may recall that in 2007, that had gotten up to four millinomes, which was a catastrophe, as we all know. So, it's the economic statistic I looked at first and most closely, and that was, you know, an okay number, and a lot of the things were going along. You know, not fabulous, but not terrible. Things were kind of moving. And all of a sudden now we have the war in Iran, and that's creating all sorts of problems for us, which you know I think you guys are concerned about. So I generally think the economy's been good, but there's a lot of dark clouds on the horizon.

Keith Weinhold 15:15

You know, Richard, I was recently sharing something remarkable with our audience. To your point, just since 2020, consider all the calamities that we've had: COVID, Ukraine, Israel, Gaza, tariffs, and the Iran War. Just since 2020, what's the result of all that? Both stocks and residential real estate are near all time highs.

Richard Vague 15:42

Yeah, well, you know, one of the things that's true is that this is something I go to in great detail in my book Paradox. But the more debt there is, the higher asset prices go.

Keith Weinhold 15:53

Yeah.

Richard Vague 15:54

You know, in the case of housing, that broadly helps middle America. In the case of the stock market, the top 10% of the country owns 87% of the stocks, so that tends to go to the wealthiest instead of to the broad population. But yeah, those two things are at highs.

Keith Weinhold 16:12

You're touching on your well-received 2023 book, The Paradox of Debt, and you know, Richard, amidst all these calamities and all this potentially unprecedented level of government intervention that we've had-you know-it makes one wonder during the next crisis, which is inevitably going to happen, will the government just step in and provide relief again? And how would that look?

Richard Vague 16:38

You know, I think that's one lesson that government has learned indelibly. Way back in 1929, in the couple of years that followed, the government did not step in, and we saw what happened. And I think there's a generation of economists that understand the role of government in a calamity, and you know it's pretty simple. You know the government comes in and crops up financial institutions as they did in 2008, simply by providing the liquidity or buying the bad assets, or the government steps in with relief checks as they did in such a massive way in 2020. But the government has learned that at least to some degree, it needs to intervene. I can't imagine that ever not being true.

Keith Weinhold 17:26

Goshmright when you think about 2020s stimulus and how emergency lending facilities were set up, you had the payment protection program, stimulus checks, mortgage loan forbearance. It's just like this government won't let the asset holders fail.

Richard Vague 17:46

Well, yeah, you know, there's failure, and then there's something that's hurtful but not quite failure. You know, I can imagine that the government will be able to prevent, in some circumstances, certain asset prices going down some amount, it's actually fairly commonplace for stocks to go down 10 or 20% I can see real estate prices going down as they have in the commercial office space. Yeah, but yes, the government will step in when those things become extreme to prevent a true calamity.

Keith Weinhold 18:19

Of course, one consequence of the interventionism is elevated inflation. I know how you've talked before about how the level of inflation is higher than most people think. For example, you'll see today's CPI numbers in the mid threes. Talk to us some more about why inflation is higher than most people think.

Richard Vague 18:41

Well, I have studied inflation, you know, fairly diligently, and inflation really relates to the constriction of supply. And if you look over the 250-year history of the United States, we haven't had that many episodes of bad inflation, and they've always related to a constriction of supply. Most of them have occurred during a war when, for obvious reasons, you know, supplies are constricted. The big 1970s episode of inflation was because OPEC, which had so much more power back in those days, acted to you know punish the United States by constricting supplies, and the price of a barrel of oil went from $4 to $40 a barrel. Yeah, between 73 and 79. COVID was another instance where inflation related to constriction of supply. That was you know people couldn't go to the meat factory to cut meat. People couldn't go to the factories to build things, so all of a sudden our supplies were decimated, and we had a short burst of very painful inflation. Well, now we've got the straight of four moves, and that is impacting the price of oil. I think it's going to impact the price of oil more going forward because. Because we've been able to rely on reserves, both the U.S. has been able to rely on reserves, and China has been able to rely on even greater reserves. And you know we haven't seen the brunt of that, but unless something's resolved pretty quickly, I think in the fall and winter we're going to see even more problematic prices there. But we know agricultural prices and even the flow of commodities like wheat are constricted by the constraints in the Strait of Hormuz and, frankly, other waterways as well. Now, one of the things the numbers that you see reported tend to underreport inflation because it looks at a year-over-year number and doesn't really capture it if it's moved up more sharply in the last month or two. So we look at it on a month-by-month. We you know we break it down about as to as many parts as you can break it down into. But PPI, which is kind of a leading indicator on the eventual CPI PPI's producer price index, it was 4.7% this last month. That would suggest to you that things which are in the mid threes now, which is more higher than we want, you know, probably trending over. Maybe not next month, but you know, over the next three to six months, I'm not going to be surprised if the number's more in the four to five range. So, yeah, I think inflation's being somewhat underreported at the moment.

Keith Weinhold 21:29

The PPI being that harbinger of consumer prices, often four to six months down the road. And Richard, the last time you were here, when it comes to checking and controlling inflation, you said something so interesting. You said that higher rates, which is typically the response in order to try to quell inflation, higher rates actually do not lower inflation, and you did not get a chance to expand on that because we ran out of time. Tell us more about why higher rates do not reduce inflation.

Richard Vague 22:05

Well, I'm going to answer that a couple of ways. One of them is highe

Keith debunks alarmist predictions of an 80–95% housing crash and explains why inflation, constrained supply, and strong demand continue to put upward pressure on home prices.

He breaks down key trends in renter mobility, highlights how the AI boom is driving record-breaking rents in San Francisco, and contrasts "dopamine culture" and money maxing with GRE's philosophy of growing one's means through income property and leverage.

Keith also discusses how the Seven-Figure Solution framework helps real estate investors more effectively integrate properties, taxes, insurance, and retirement planning.

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. An alarmist calls for a housing price crash of 80 to 95 percent. We'll listen to it. This city's rents are up 26 percent annually. The rise of dopamine culture and money maxing has made its way into personal finance. Then an invitation to join us for a special event today on Get Rich Education.

Keith Weinhold 0:29

What if I told you that one of America's strongest cash flow real estate markets is also becoming the new brains and brawn behind AI? That city is Memphis, believe it or not. In September 30th, we're going to show you why the smart money is paying attention now, along with an investing opportunity you won't want to miss. Join me, Terry Kerr and Matthew Van Horn of Mid South Homebuyers, the largest turnkey company in Memphis with more than 6,000 homes under management, for a free live webinar, the likes of which I've never done before. We're going to look at what billions in new investment could mean for jobs, housing demand, neighborhood appreciation, and your portfolio. Everyone who attends live will also get exclusive access to the best deal terms MidSeal has ever offered. Reserve your free seat at getricheducation.com/midsouth. Again, that september 30. Don't say we didn't tell you. Save your spot at getricheducation.com/midsouth.

Speaker 1 1:35

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 1:51

Welcome to GRE from Naples, Italy, to Naples, Florida, and across 188 nations worldwide. You're listening to one of America's longest-running and most listened-to shows in the real estate world. This is Get Rich Education, and I'm Keith Weinhold. Yes, the very founder of this snaggle-toothed operation right here. I'm a longtime real estate investor myself, erstwhile writer for both Forbes and the Rich Dad Advisors, serving on the Forbes Real Estate Council, you can also see my work in the USA Today and Business Insider. I'm the creator of Real Estate Pays Five Ways and the Inflation Triple Crown. Oh, after all that, really, I'm just a shaved mammal with slack jaw, a highly leveraged hominid of the landed gentry, right before I discuss the housing price crash of 80 to 95% you know, keep in mind that most people think that if you're in real estate, then you've got to be either a realtor or a landlord. I am neither a realtor nor a landlord. People also think that it takes tons of money. It does not. Now you could pursue no money down strategies, but that takes some time to learn and skill to develop. Now I was a landlord in the early years of my real estate investing, but after about six years of that, I hired a property manager and never looked back. Therefore, keeping this mostly passive, a 20 to 25 percent down payment on a carefully selected residential rental property includes ones that today can still have purchase prices below 200k. That's purchased in a geographically investor advantaged market. Okay, that is the center of what we do here because when you own property this way, now you've got the margin where you can pay a property manager to enjoy the five ways that you're paid mostly passively. Be a savvy borrower.

Keith Weinhold 4:02

Now, when you're between deals and accumulating capital to add the next piece of property to your rental portfolio, that's where you can flip and do the opposite in the short term and be a real estate lender for perhaps an eight to 10% stable return. That's what I do, rather than getting three and a half percent, which is the going rate today in a high yield savings account. So be a lender between deals in the short term, or you're a savvy borrower long term. Now the late analyst at Housing Wire, and he was also a past guest here on the show, Logan Modashami, he brought this 80 to 95% housing price crash media piece to my attention. It's in the form of a meta reel that got a lot of attention. Let's play it. I mean, this type of nonsense circulates out. It's not founded on anything substantive, and this just absolutely does not serve anybody. You've got to take this type of thing as entertainment, but it's being presented in a serious, informative way, and just listen to the basis for the claim.

Hayden Weston 5:19

The United States housing market is about to collapse 80 to 95 percent, which means that homes that were worth 1.5 million are going to be worth 300,000. The reason is simple: the U.S. housing market has reached its most unaffordable level in history. People cannot afford to buy homes, and if people cannot buy homes, the market must correct. The question is how hard the market is going to crash, not if it will. According to CPI and price history data, this is predicted to be worse than the 2008 housing bubble. We are going to see prices drop 80 to 95 percent.

Keith Weinhold 6:02

A housing price collapse of 80 to 95 percent. This is from a platform called Hayden Trades. It has got to be the worst example of trying to steal attention rather than serving people. Gosh, don't even make 20% or 50% crash predictions anymore go for far higher, I guess. He says it is according to the CPI and price history data. This doesn't even make sense. Now the low affordability mentioned that part is true, and this is what's slowed home price appreciation. But here in the late 2020s, there was more upward pressure on home prices, not downward inflationary pressure, which is rampant. That is poised to raise replacement cost because a home is a bundle of land, labor, lumber, concrete, copper, and energy. America's best job markets face land and regulatory constraints that pressures prices upward, and regulations are not easily repealed either. There's a large reservoir of sideline buyers that still want to own, and single-family home construction is woefully insufficient, keeping the supply down. Indeed, there is more upward pressure on home prices, not downward. This coming inflation wave, that's exacerbated by war, is unfortunately, or fortunately, if you're positioned, it's poised to widen the K-shaped economy where winners win bigger and losers lose more. The boat is leaving the dock. Are you on it?

Keith Weinhold 7:54

The distance between the boat and the dock just keeps increasing, and eventually you won't be able to make the leap, the jump from the boat to the dock. Now, in the near term, because we're approaching the fall season, when you hear stats about median home prices, note that prices are lower in autumn and winter than they are in spring and summer. It happens pretty much every year. Now, why is this? Well, one reason is that a lot of people don't think about is simply the fact that smaller houses get sold in the winter compared to the summer. And why would this be? This is because families with school-age children who need larger homes get their deals done in summer months before school starts. That is one reason why median home prices are higher in the summer than they are in the winter. When you look at a long-term price chart of homes, this is why you see peaks each summer and dips each winter. Now, investors like us. Now we're not buying so much for school-age children considerations, but this phenomenon affects the median prices that you see quoted in most any market. That is how that works, and why homes present better in the summer too. Green lawns, Leaves, flowers, and natural light improve curb appeal. Some say buy when the snow is flying, sell when the flowers are blooming.

Keith Weinhold 9:32

Shortly, I want to tell you about the city with rents that are up 26% year over year, and there's no end in sight to those rent increases, either. But first, there's a significant national real estate trend. Now, a lot of times, the discussion about the rental market centers around the level of rents or the vacancy rate, and those metrics sure do matter. But what about tenant retention? That is. Renter mobility rate. How long do residents stay? Well, renter mobility is down, down, down. They are not moving around. That's the big trend. Tenants are staying longer. Renters are waiting longer to buy homes than prior generations did. I mean a lot of people are beginning to wonder if their starter home will arrive before their first social security check does? The share of renters planning to move within three years that has plunged since 2019 from 57% then down to just 37% now. This is according to a national survey from the New York Fed. 57 down to 37% that plan to move within three years. Yes, this means that even after the pandemic waned, renters plan to stay in place longer. Everyone is staying put longer, and what exactly is keeping all of those moving boxes in storage? You guessed it. Buying their own home is more difficult to afford. It's kind of like an obstacle course where the down payment is waiting at the finish line, which is a long ways away. It's like an ultra marathon. This decline in renter mobility. This is obviously good news for income property owners and landlords because vacancy and turnover are our greatest expenses. People are paying more.

Keith Weinhold 11:39

You know, it's interesting that many are staying and put because a lot of renters often pay three to 5% annual renewal increases, especially in single-family rentals. Among apartment dwellers, there are currently more move-ups than move downs. People willing to spend a little more, and part of this is because a lot of people have just simply given up, completely given up on buying a home, choosing instead to fritter away their money on DraftKings parlays, couchie predictions, meme coins, burritos whose delivery fees cost more than the burrito, and a dozen forgotten subscriptions quietly feeding on their checking account. Yeah, a lot of people have just given in. Besides falling renter mobility, there is also falling homeowner mobility. One reason it has fallen is due to the well-documented mortgage rate lock-in effect. But mobility is down among both groups, among renters and homeowners, for a few different reasons. Like I've mentioned in previous shows, America is aging, and older people move less. Remote work means people don't have to move for a job, and housing inventory remains limited. This means that there are few attractive alternatives to move into, whether you're a homeowner or a renter. Those are some reasons as to why mobility is down for both groups. And the New York Fed analysis shows that renter mobility it is especially weak among that subgroup that believes that they will never own a home. I mean, this group of people really isn't moving. They are staying in place even longer. This group that believes that they will never own a home, and this is a skew toward lower income renters for sure, but even upper income renters are staying longer. You know, I own a lot of single family rental homes myself, and I'm just thinking now, I can't even remember the last time someone's moved out. It might be over a year since anyone has moved. The average renter's perceived chance of ever owning a home that has fallen, and this is significant for investors. Okay, that percent of renters that ever hope to own a home has fallen from 52% back in 2015 down to just 35% last year. 52% down to 35% The amount of renters that think they'll ever own a home. Both single-family rental and apartment renters are staying longer. This is both types, and it's not because these renters stop wanting homes. About two-thirds say that they would prefer to own if they had the money to do so. This is substantial. The drop in American mobility rate. I mean, that part is actually decades long, and this seems to catch people off guard. A lot of people falsely believe that people are moving more often, and that's something I've touched on before. This deeply hurts.

Keith Weinhold 15:00

Certain industries like moving companies, furniture stores, and yes, real estate agents—all these groups of people have got to be wondering where did everybody go? The answer is nowhere. Apparently, they are not going anywhere. So the bottom line here, with this lack of mobility, is that renters feel locked out, owners feel locked in, and landlords feel locked up with their tenants staying longer. Although this is good news for landlords and investment property owners, you know there is one thing to be careful of amidst these longer tenant stays, and that is, well, say you buy a rental property with an existing tenant in place that's been there for a while, it's more likely then that that tenant is paying below market rent, and why would that be? Well, because generally, the longer a tenant stays, the more likely it is that the previous landlord gave them a break on the rent. Now, why does that happen? Well, landlords can get lazy about bumping up the rent, and see what's really going on is that the previous landlord, perhaps the person you bought the property from, they themselves bought the property at a much lower price years ago than you did today, and therefore their mortgage payment is lower, and therefore the lower rent was able to cover their mortgage payment. So they weren't too worried about it. But if you're buying at today's prices, well, then you cannot stand for yesterday's rent amount, and that's why it's more likely that you need to bump up the rent to market rent. Although national rent growth is pretty flat, San Francisco continues to rewrite its record book per Zumper's national rent report.San Francisco's one-bedroom rent is up 23% year-over-year to 4,180 bucks, and two-bedroom rent is up 26% to over 6K, 6,020 dollars for the median rent in a two-bedroom San Francisco apartment-the first time they've ever topped 6K there. Yes, the city continues to lead the nation in annual rent growth, and even ahead of New York City for two bedrooms. That's because this is where the growth of the AI industry has collided with a supply-constrained housing market, high demand over low supply. I mean, you might remember that San Francisco was hit especially hard by the pandemic, but its bounce back has been amazing. Even beleaguered San Francisco office buildings are filling up again amidst the AI boom. Now, the Bay Area's previous tech boom back a while ago that was led by tech giants like Facebook, Apple, and Google. All right, that boom was largely concentrated in these sprawling suburban office parks in Silicon Valley. Now Silicon Valley is not in San Francisco. It is depending on just where you're going, perhaps 60 minutes south of San Francisco proper. But see, this time the city limits San Francisco finds itself as the epicenter because a lot of the newest, biggest names in tech like Anthropic and OpenAI, they are headquartered in the very same city neighborhoods that were struggling with occupancy just a few years ago, and see a big part of what's going on, and there's a lesson in this for you as when a lot of other cities built like Phoenix and Austin did, San Francisco did not, and what's interesting is that the publication, the San Francisco Standard, it reported that get this last November a two-bedroom apartment overlooking Alamo Square was advertised for $5,000 per month. That was already 30% above San Fran's median two-bedroom rent at the time, but despite that fact, so many people attended the open house that the property manager had to divide them into two touring groups. Qualified applicants were then emailed and told to submit their best offer of rent. Okay, basically an invitation to a bidding war here. One tech worker and her roommate bid $5,100. Management responded that they had reached the second round and invited them to increase their bid again, and they declined to increase their bid and they lost the apartment. Those. Same article reported that an even more extreme marina neighborhood example, the winning renter offered substantially above asking price, six months upfront rent, and twice monthly professional cleaning. What kind of prospective tenant offers their landlord professional cleaning? I've surely never had it happen. That and bidding wars are now taking place for San Francisco rentals. Could an AI surge and a lack of supply make anything like that happen in your rental market? That remains to be seen, and probably not to that extent. I've got more for you straight ahead, including the trend of money maxing. I'm Keith Weinhold. You're listening to episode 620 of Get Rich Education. What if you got your mortgage loans the same place I get mine? You sure can at Ridge Lending Group NMLS 42056. They provided GRE listeners with more loans than anyone because Ridge specializes in investment property. They'll help you build a long-term plan for growing your real estate empire with leverage. Start your prequal and even chat directly with President Chaley Ridge while it's on your mind. Start at RidgeLendingGroup.com. That's ridgelendinggroup.com. Let me ask you something: If you've worked hard to build wealth, is your money positioned to actually support your goals? A lot of accredited investors leave capital sitting in cash because it feels safe, but inflation and missed income opportunities can quietly erode its value. Freedom Family Investments offers freedom notes for investors seeking structured income backed by real estate. It's a straightforward approach built on real assets, not speculation. In full disclosure, I'm an investor myself. What I like is that their team walks you through how it all works, so you can decide if it aligns with your portfolio and income goals. Every investment carries risk, and nothing is guaranteed. But with a track record of consistent, on-time investor payouts, they built real credibility. Go to freedomfamilyinvestments.com to book a clarity call, or text family to 66866. That's family 266866.

Keith Weinhold 17:22

Although national rent growth is pretty flat, San Francisco continues to rewrite its record book per Zumper's national rent report. San Francisco's one-bedroom rent is up 23% year-over-year to 4,180 bucks, and two-bedroom rent is up 26% to over 6K, $6,020 for the median rent in a two-bedroom San Francisco apartment-the first time they've ever topped 6K there

Keith breaks down why global crises, geopolitical shocks, and nonstop "doom" headlines haven't stopped stocks and real estate from reaching near all-time highs, and what that means for investors focused on inflation-resistant assets.

He also discusses Memphis as a surprising cash-flow market poised to benefit from the AI boom, sharing details on an upcoming webinar with Mid South Homebuyers.

Keith is joined by real estate investor and educator Jared Garfield to unpack the "Seven-Figure Solution," a strategy that combines cash-flowing rentals with tax-advantaged life insurance to create liquidity, reduce risk, and support long-term retirement income.

Together, they explore how disciplined portfolio growth, smart leverage, and coordinated tax planning can help real estate investors better align their assets with their long-term financial goals.

Episode Page:

GetRichEducation.com/619

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Join Mid South Home Buyers' one-time, free live webinar featuring Keith Weinhold on September 30 at GetRichEducation.com/MidSouth to learn how Memphis' economic expansion could create new real estate investment opportunities, and have your questions answered in real time.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

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Complete episode transcript:

Keith Weinhold 0:02

Welcome to GRE. I'm your host Keith Weinhold. The world is about to end again. It's the economic disaster that never arrives. I'll break it down. Then you've been earning money and investing well all these years. How does it all go together? It can culminate in the seven-figure solution, it's about seeing your future today on Get Rich Education. What if I told you that one of America's strongest cash flow real estate markets is also becoming the new brains and brawn behind AI? That city is Memphis, believe it or not. And September 30th, we're going to show you why the smart money is paying attention now, along with an investing opportunity you won't want to miss. Join me, Terry Kerr and Matthew Van Horn of Mid South Homebuyers, the largest turnkey company in Memphis with more than 6,000 homes under management, for a free live webinar, the likes of which I've never done before, we're going to look at what billions in new investment could mean for jobs, housing demand, neighborhood appreciation, and your portfolio. Everyone who attends live will also get exclusive access to the best deal terms Mid South has ever offered. Reserve your free seat at getricheducation.com/midsouth again that september 30. Don't say we didn't tell you. Save your spot at getricheducation.com/midsouth.

Speaker 1 1:39

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 1:55

Welcome to GRE from Kankakee, Illinois, to Cherokee, Iowa, and across 188 nations worldwide. I'm Keith Weinhold. This is Get Recid Education, and the world is about to end. Even if you survive, your portfolio surely won't. Oh, jeez. At least that's the impression you get from mass media and what I'll call the Doom Scroll Industrial Complex. Fear creates urgency. Urgency attracts eyeballs. Eyeballs attract ad dollars. And I guess that using a slogan like "everything will probably be fine" well, that's never been a great ratings strategy. Now, can what has happened since 2020. Just this cheery little sequence: COVID, then Ukraine, Israel, Gaza, tariffs, and then the war in Iran. All that just since 2020. I mean, that right there sounds less like an economic timeline and more like a movie plot, or that the world is repeatedly spinning the wheel of misfortune. Yet after all of that, what is the result? Both stocks and residential real estate are near all-time highs. Apparently, the apocalypse has been postponed yet again-at least economically speaking. Now let's zoom out and break down these threats and a few more, all just since 2020, because 2020 is the year where, of course, you had the COVID-19 pandemic, economic shutdowns, the fastest major stock bear market in history, supply chain breakdown. You saw empty shelves, and there was unprecedented government intervention from the Paycheck Protection Program to stimulus checks to mortgage loan forbearance. Then, in 2021 and 2022, you had post-COVID inflation and supply shortages. Now, this was more of a result, not strictly geopolitical, but a major investment threat, and that led to aggressive interest rate hikes. From 2022 to the present, you have Russia's invasion of Ukraine, energy and food shocks came from that, sanctions, instability over in Europe, and really a heightened nuclear risk in 2023. You had the U.S. regional banking crisis. Remember SVB, yes, Silicon Valley Bank, Signature Bank, First Republic. They raised fears of a financial contagion that would spread like fat. Than a secret in a small town, it actually made me buy some gold. From 2023 to the present, you had the Israel-Hamas war and this broad Middle East instability, Hezbollah attacks, Houthi attacks, Red Sea shipping disruptions. It's almost like a geopolitical group project. And then from 2025 to the present, you have renewed U.S. tariffs and a global trade war, and this year you have the U.S.-Israeli war with Iran and the Strait of Hormuz disruption. That is the biggest current geopolitical investment threat because it combines all of these things: war, oil disruption, inflation, higher interest rates, and a recession risk. So it's a lot like this particularly unpleasant smoothie that's been blended together.

Keith Weinhold 5:55

All right. Well, all of that-that is just an absurd amount of uncertainty and disruption only since 2020, and though major markets are at all-time highs in the face of this, let's acknowledge that some were hurt here, like apartment building owners vulnerable to interest rate resets, and certain commercial sectors like office. Even worse, let's be sensitive to the fact that COVID in wars have resulted in a real loss of life. GRE's enduring strategy of primarily owning long-term residential rentals with fixed-rate debt has been comparatively really resilient. In fact, these calamities-they probably made you better off from the inflation that it has spurred. More people work from home. Well, that means that they're consuming our product while higher inflation debased our debt and jacked up our property values and our rents. And you know somehow every. single generation thinks that their collection of crises is uniquely terrifying, and it is not. And what do I mean by this? Well, in the 1980s, people feared war with the Soviet Union, the Cold War. A global population explosion so bad that millions or billions of people would surely die from hunger. You had the AIDS crisis. You had a hole in the ozone layer. Well, all those things. Virtually zero investors make decisions based on that stuff: an imminent Soviet attack or mass starvation from overpopulation. There is one thing that is 100% certain here, and that is that more shocks are coming. In case you don't want to sleep well, you can get worked up over the certainty of future calamities, artificial intelligence is making cyber attacks faster and more scalable. AI has even created entirely novel viruses. A confrontation between China and Taiwan that could create risk in the semiconductor space.

Keith Weinhold 8:18

A blockade that might disrupt the world's advanced chip supply, creating more inflation and more uncertainty. Here is what's changed, though, for what investors care about. You know what has changed with today's set of calamities versus those of the 1980s and earlier, because there is something, and it's a big deal for investors. Here's what's changed: recent history shows that the government does more to intervene during disasters, stimulus checks, liquidity programs where they're printing trillions, bailouts, pushing interest rates down to almost zero, quantitative easing. How about a foreclosure moratorium? Anything you know during COVID, it was a lot of these things, and it was the CARES Act, and it was a student loan payment pause. I mean, the Federal Reserve even set up emergency credit facilities. We now know that when the economic building catches fire, policymakers they rarely stand around admiring the flames. They just flood the place with currency. So the best investors they keep prudently building real estate portfolios in the face of risk, not the absence of risk, because the latter does not exist. This incessant government intervention, whether you agree with it or not, it gives you more safety cushions the next time that things fall apart. That's why what appears risk. Is still risky, but less so. So there is more incentive to take on prudent risk than I've ever seen. You know, no politician wants America to fall apart under their watch. So increasingly, they'll just paper over the problem by printing, printing, printing, and then, therefore, the resultant inflation, the consequence of this, that can be dealt with under the next president's watch, not theirs. In fact, future calamities they almost make you want to own scarce real assets that benefit from inflation, not a hedge, a benefit. Trying to time every war, election, banking crisis, tariff announcement, virus, and Fed decision. Trying to time all of those things-that is usually ineffective. You either own more assets, or you get left behind in everything that's happened since 2020. That just underscores this. In fact, Berkshire Hathaway, the closely watched company that Warren Buffett ran for a long time, but he still has influence in.

Keith Weinhold 11:16

You know, they recently began moving out of cash and into assets, they ended their long net selling stretch. In fact, in the latest quarter ended, they've now done the most buying that they've done since early 2022. They have jumped back in the game. It appears that Berkshire Hathaway got tired of sitting on the sidelines and seeing others make gains, and they're pretty bullish on housing too. They bought a home builder. The bottom line here is that shocks are going to keep arriving, and yet productive assets and well-financed residential real estate has repeatedly survived them and just continued appreciating. Don't wait for a risk-free world because you'll wait forever. When you evaluate all these calamities, just since 2020, again, COVID, Ukraine, Israel, Gaza, tariffs, and war in Iran, and then you realize that both real estate and stocks are near all-time highs anyway, and the government keeps backstopping asset owners like never before. This is just a fresh angle on how much better off you are when you prudently own more inflation-benefiting assets sooner. I want to tell you about something called the seven-figure solution. You've been here listening to me weekly since 2014. You've been earning money. You've been investing well, and now you're going to see how it all goes together. It's about making sure that your real estate and your other assets appropriately fund your retirement in a way that gives you protection against market downturns, a tax advantage pool of liquidity, the death benefit of a life insurance policy, and actually introduces you to a new form of leverage all at the same time. Now the liquidity here is key because this is where a 401(k) or IRA limit you, they have taxes and penalties if you want to use those funds early. This doesn't, but the seven-figure solution-it's not just for retirees. In fact, our own in-house investment coach Narayish uses something like this, and he is in his 30s. Let's discuss it, and then you'll see where I have an invitation for you, where you can get involved. I'd like to welcome in a guest we last had on the show a few years ago.

Keith Weinhold 13:54

He's a frequent guest on popular shows, including our friends over at the Real Estate Guys Radio Show, and this guest has also been a terrestrial radio show host himself. He's a long-time real estate educator and an active investor, just like you and I. So he speaks from experience and not a textbook. He's the creator of what we'll discuss today, called the Seven Figure Solution. Welcome back to the show, Jared Garfield.

Jared Garfield 14:21

Hey, it's great to be with you again. Thanks for having me.

Keith Weinhold 14:25

It's so good. Now you're with the Haven Bridge Group, and you help people, especially real estate investors, with what's called the seven-figure solution. Tell us about it.

Jared Garfield 14:37

it. Well, Haven Bridge, we get the name for that because people are really looking for a haven of safety, and the bridge is kind of what crosses the gaps that could kind of destroy your wealth, and it's the path to get there. So we want to take people on a path to safety, and the seven-figure solution is the idea that if you're going to be drawing out even 4% per year to not outlive your money, because people are living now. To 8590, 95 years old, and so that means you could have 35 years in retirement. And with inflation and different things like that, you really have to have a lot bigger nest egg than what most people realize. So a seven-figure solution is how to get to more than a million dollars liquid that you can draw on in a tax advantaged manner for the rest of your life, while also having living benefits. And we pull real estate in with it because we want people to have 10 or 15 or 20 rental properties by the time they retired. That they 1031 exchange regularly, so that they're always keeping tax advantages. So that even in retirement you have strong tax advantages, and ultimately we think that when you're 65 or 70, you might want to go from 30 single-family houses to 1031 exchange into one institutional asset that's a little bit less management intensive.

Keith Weinhold 15:57

Okay, so this is a tax advantage vehicle that real estate investors can use during their investing career, and those tax advantages then really convert into something that you can use in retirement as well.

Jared Garfield 16:11

Yes, what it does is it's a vehicle that instead of saving the money from your cash flow from your rental properties in the bank, we say, well, why wouldn't you rather invest in something where it grows tax-free, number one, and then number two, you don't have the penalties like you would with a 401k, where you get taxed and you get penalized 10% if you pull it out. It's liquid, usually about 80 to 90% liquid, so you can pull from it whenever you like, and you can use it for down payments to grow your real estate portfolio. But you can earn sometimes between five and even seven or 8% in a tax advantaged manner where you're not taxed on it, but you're earning a much higher return than if you put the cash flow into a bank.

Keith Weinhold 16:51

All right, so you're building this tax advantage pool of capital that grows over time, and this is important to have some liquidity. You know, Jared, I've often talked to our audience, about three to 5% of your portfolio value ought to be kept liquid. Maybe with a vehicle like this, you would want to put in more of that because real estate investors we have expenses, so you have this liquidity to cover things like vacancies and major repairs, or perhaps you could even use this account for future down payments on additional investment properties. Is that how it's utilized?

Jared Garfield 17:27

Yeah, absolutely. And I get it partially this way because in my early 20s, I got up to where I had about six rentals, and at the time, I also owned a real estate brokerage, and I was doing very well. I was making a six-figure income and things. And what happened is, I back when a

Keith Weinhold 17:41

six-figure income was a big deal.

Jared Garfield 17:43

Yeah, back in the early 2000s, it was a little bit better money. But the funny thing was, I had four rental properties that all went vacant at the same exact time, and so now all of a sudden, I was paying like 4500 bucks a month in mortgages, not counting the house I lived in, but I had to cover four mortgages on four of my rental properties all at the same time, and I hadn't saved the cash flow, so I didn't have a huge emergency fund. All my liquid capital went into down payments and into renovation money to rehab the properties. Okay, and so it put me in a real bind, and I was out driving a Volvo S80 around throwing two paper routes in the mornings, and then going to my real estate brokerage after my paper routes to cover those rental properties. And so this was basically meant as a way to say, okay, this is a way that I have the liquidity. I'm getting a higher return, but now my tenants are not only buying me the houses, but they're also giving me a couple million dollars in life insurance, and they're wrapping my investment component or the cash value of that, the cash value part of the policy. They're wrapping that in a way that it grows tax-free, so it just accomplishes a lot of things. But the other thing that's a beautiful thing about it is there's a lot of things that we call living benefits.

Keith Weinhold 19:02

All right, so you have the living benefits and the tax advantages, and I know how you have pointed out that this can save an investor 10s of 1000s of dollars in taxes per year and hundreds of 1000s or more over time. Can you tell us more about that?

Jared Garfield 19:20

Yeah, because what happens is the money that goes in is growing tax-free, so you don't get taxed on any of the growth. But what we really like about it is, let's say that you're cash-flowing $2,000 a month off your rental properties, and you're putting 2000 a month into this policy. Usually, after the first year, if you're max funding, 80 to 90% of that's liquid. So if you've got 24,000 sitting in there, you've got access to 89 to 90% of the money. So it's pretty liquid. But what happens is over a 20 or 30 year period, that money could turn into three or 400,000 a year that you can pull out in the form of policy loans. And by doing that, it's not taxed. And you can pull that out throughout your retirement tax-free. So if you were paying 25% in taxes and you're pulling out 200 grand a year, that's $50,000 a year in retirement that you're saving in taxes. But that could be over a 20 or 30-year period. So over 20 years, that 50,000 could end up being a lot of money. I mean, 500,000 over 10 years, a million over 20, and so that means you don't have to accumulate as much. But a lot of our investors love it because they'll save it up with discipline, and then that way it's there if the furnace blows. So it makes your real estate safer, but it also becomes your down payment funds to expand your portfolio.

Keith Weinhold 20:40

Okay, the seven-figure solution is the vehicle that we're talking about here, and what part of the IRS code, just briefly, is it that gives this tax advantage?

Jared Garfield 20:51

It's Internal Revenue Code Section 79 that allows it to grow tax-free. In the 1980 s, doctors and a lot of very wealthy people were using this to the point that IRS changed the laws. They went and sued the insurance companies because doctors would go in and dump $2 million in, and they would buy a $2 million life insurance policy. So they were self-insure

Keith explains why achieving scale rather than simply earning more is the key to long-term financial freedom and how income property uniquely delivers multiple forms of leverage.

He breaks down 25 years of inflation data to reveal which everyday costs have most outpaced wages and what that means for the real purchasing power of the dollar.

Keith also explains why markets like Memphis—combining strong cash flow fundamentals with a massive new AI infrastructure build-out—are positioned as compelling targets for long-term real estate investors.

Episode Page:

GetRichEducation.com/618

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Join Mid South Home Buyers' one-time, free live webinar featuring Keith Weinhold on September 30 at GetRichEducation.com/MidSouth to learn how Memphis' economic expansion could create new real estate investment opportunities, and have your questions answered in real time.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. When I talk to a 25-year-old, it's an epiphany. When I tell them that they need this one thing that they're lacking, then some fascinating takeaways about the 93% inflation we've experienced in the past 25 years, and what you can do about it today on Get Rich Education. What if I told you that one of America's strongest cash flow real estate markets is also becoming the new brains and brawn behind AI? That city is Memphis, believe it or not. In September 30th, we're going to show you why the smart money is paying attention now, along with an investing opportunity you won't want to miss. Join me, Terry Kerr and Matthew Van Horn of Mid South Homebuyers, the largest turnkey company in Memphis with more than 6000 homes under management, for a free live webinar the likes of which I've never done before. We're going to look at what billions in new investment could mean for jobs, housing demand, neighborhood appreciation, and your portfolio. Everyone who attends live will also get exclusive access to the best deal terms Mid South has ever offered. Reserve your free seat at getricheducation.com/midsouth again, that's September 30th. Don't say we didn't tell you. Save your spot at getricheducation.com/midsouth.

Speaker 1 1:33

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 1:49

Welcome to GRE from Livonia, Michigan, to Laconia, New Hampshire, and across 188 nations worldwide. You are listening to Get Rich Education. I'm your host, Keith Weinhold, heading up this slackjaw operation for another wealth-building week. But at least I'm just a slackjaw. If this slackjaw gets lockjaw, it would probably end the show. Now I've got to tell you, when I meet a 25-year-old, I soon tend to learn about their job because it takes a lot of their time, even if I don't ask them about it, and I find out that a 25-year-old is usually an employee of some sort. They're working for somebody else, depending on our conversational flow. I ask that person this question: Have you considered adding scale to your life? And they usually don't know what I mean. I ask that question because, sadly, today it's less common to live an economically vibrant life if you have a quote normal job like a teacher, engineer, retail manager, app developer, or other normal jobs like a firefighter, truck driver, physical therapist, or social media manager, that is not going to lead to an economically vibrant life with options and freedom. I mean, you used to be able to raise a family of four in New York City. That opportunity is just gone for anyone under a certain age. Well, what about say doctors, corporate executives, and attorneys, including some people that might be older than 25. I mean, professions like this can still pay exceptionally well. But even white-collar careers now have AI breathing down their necks. AI is drafting briefs, reading scans, and virtually attending meetings without pretending to enjoy them. Okay, well, what about the outcome for a 25-year-old that's gone along with the somewhat more nascent trend of rising AI sheltered trades like plumbing, electrical, HVAC, welding, carpentry, equipment repair, and these other types of jobs where ChatGPT can't crawl beneath your sink. Look, here's the thing: it doesn't matter whether you wear scrubs, a suit, or a tool belt. Employment has one stubborn limitation: even if you grind hard, even if your body holds up, even if promotions help you climb to the top of the corporate ladder, when you stop working, the income stops. That's the big problem, and yet people keep designing their life this way, employees lack scale. Now, what is scale? Scale is your ability to increase your wealth or income without increasing your personal time and effort at the same rate. Now, employees can find just a little scale. 401k contributions can compound for decades, sometimes with an employer match. Some employees receive stock compensation or bonuses, but employees generally sell one unit at a time. That unit is an hour. They're selling their hours for dollars, and here scale is limited, if not impossible. Real estate investors can stack several forms of scale simultaneously, and remarkably, doing it takes zero certification, zero qualification, no license, and no permission slip from the dean.

Keith Weinhold 6:05

The first way real estate investors have scale is through something that you already know so well: real estate pays five ways, leverage appreciation, 10 funded income, loan amortization, tax benefits on the entire asset, and inflation profiting on the bank's loan. Secondly, as a real estate investor, you have scale through operational leverage. Property managers, leasing agents, contractors, lenders, insurers, and software all allow just one investor, you, to control multiple properties. You don't personally collect every rent payment or replace every water heater. I mean, sheesh, that could be a plumbing career with less sleep. And this is all tenant funded. Thirdly, real estate investors have geographic leverage. An individual investor living in Los Angeles can own property in Atlanta, Tulsa, Cleveland, and Belize. Physical location does not limit where your capital works. Your body can only work in one city. Your capital can work the night shift in five. The fourth way real estate investors have scale is with replication. Once you learn how to buy and own one suitable rental, the process can be repeated. You buy, stabilize, finance, rent, and repeat. See, the first property is the hardest, and then your second property does not require learning an entirely new profession. It can be replicated. To review what you've learned so far, those are four dimensions where real estate investors achieve scale through real estate pays five ways: operational leverage, geographic leverage, and replication. Here's the important distinction: employees often mistake earning more with achieving scale.

Keith Weinhold 8:16

A surgeon making $900,000 a year earns a nice income, but see that surgeon has limited scale if the income stops when the surgeon stops working. But an investor earning just $150,000 from a portfolio possesses more scale because dozens of tenants, properties, loans, and operating systems continue functioning without your one-for-one labor. That's the distinction. That's why the $150K investor might or might not be living a better life than the 900K surgeon now, but they are set up to live a better life than the surgeon in the future. Now, your employer, the person who hires you, has scale with their many employees. But if you're an employee, you probably don't have scale. You cannot save your way to scale either. That's just stored labor. Savings become scalable only when you convert them into productive assets. Income is how much money comes in. Scale is how little your personal time needs to increase for more money to come in. You can work 20% more hours, but you cannot sustainably work 10 times more hours. Capital can be deployed across 10 assets without requiring 10 times more personal effort. And you know, once I realized this, at a certain point in my life, I was motivated to obtain loans for rental. This helped me scale and own more, replacing my active income with mostly passive income sooner. All right, so what should you do when you have this epiphany? It doesn't mean you should flip over the stupid copier machine as you storm out of work today and announce that you are now a real estate magnet. Not right away, at least employment that can be your launchpad, just like it was for me when I was a humble construction materials inspector for the state DOT. A job does provide you with some benefits like short-term advantages, seed capital, mortgage qualification.

Keith Weinhold 10:45

I'm talking about health insurance and some steady cash flow, and even some skills. But the mistake, whether you are aged 25 or 55, is allowing employment to remain the only economic engine for your entire life. Your job can fund your future, but having just one single linear income source that should not be your entire future. But you know, some people just stay on lazy cruise control at a slow speed and let their life unfurl that way. Others, you know, they merely haven't been exposed to thinking this way, and fortunately, now you have been. Really, the bottom line here is that labor won't scale; capital does scale; it compounds, and few, if any, investments offer more dimensions of scale than real estate. And you also get all kinds of other ancillary benefits by gradually tilting away from active income and toward passive income. Because increasingly, when it comes to taxes, you're going to pay lower capital gains tax rates instead of the higher ordinary income rates. The sooner you optimize this and get into as many properties as you can, you're also going to gain the ability to borrow against your assets tax-free, and so much more. Scale or fail-that's the lesson here, and most people fear change. It's why they stay stuck in relationships longer than they should, and why they stay stuck in jobs longer than they should. They keep settling for a B plus life. Don't settle for a B plus life. This is something that NYU professor Susie Welsh talks about: If you have a D life, oh, everything is lousy. You don't live where you want to live. You don't have reliable transportation. You don't have friends, and you're so very motivated to change that. If you have an A plus life, you've got it all. You get to do what you want to do, who you want to do it with, and you're tremendously incentivized to keep that. But having a B plus life like so many do, and being stuck in it, that is the most dangerous place to be. You could tread water for years and stay stuck in a life that you know you're not fully satisfied with, but it isn't so terrible that you feel compelled to change it. So the people that grow wealth know it means that sometimes you have to give up the good to have the great, and the K-shaped economic divergence that we've had in the past five years. This is really bringing things to a head, so get scale.

Keith Weinhold 13:43

Scale is the difference between grasping the financial abundance that's available to move you toward that A plus life, or staying on the treadmill, stuck and struggling. Two different people living a B plus life, you know, they have the same starting point, and making a plan is your difference maker. We help you with that here. If you're ready to add real estate scale to your financial life, drop a quick email to GRE Investment Coach Naresh for a complimentary strategy session at Naresh at getricheducation.com. You don't need any qualifications. It can take as little as a 20% down payment on a 200k to 400k rental property, and we have access so that you can buy directly from the builders and get a mortgage rate in the fives. And we are chasing the next hot thing here. Last week we discussed co-living on the show. We waited until that strategy was proven. I like strategies that have had some contact with reality. AI can compose a song, or summarize a meeting, or fabricate a photo of some. Wacky like Abraham Lincoln riding a dolphin, but it still cannot download an affordable bedroom, affordable housing. You're scaling into something sustainable that has a future and can't be easily disrupted by AI. Scale or fail. Stop settling for the B plus life. We can help right now at this moment. Drop a quick email to naresh@getricheducation.com. I should spell that out for you. It's n a r e s h@getricheducation.com.

Keith Weinhold 15:36

More straight ahead. I'm Keith Weinhold. You're listening to Get Rich education. What if you got your mortgage loans the same place I get mine? You sure can at Ridge Lending Group NMLS 42056. They provided GRE listeners with more loans than anyone because Ridge specializes in investment property. They'll help you build a long-term plan for growing your real estate empire with leverage. Start your prequal and even chat directly with President Caeli Ridge. While it's on your mind, start at ridgelendinggroup.com. That's ridgelendinggroup.com.

Keith Weinhold 16:13

Let me ask you something: If you've worked hard to build wealth, is your money positioned to actually support your goals? A lot of accredited investors leave capital sitting in cash because it feels safe, but inflation and missed income opportunities can quietly erode its value. Freedom Family Investments offers freedom notes for investors seeking structured income backed by real estate. It's a straightforward approach built on real assets, not speculation. In full disclosure: I'm an investor myself. What I like is that their team walks you through how it all works, so you can decide if it aligns with your portfolio and income goals. Every investment carries risk, and nothing is guaranteed. But with a track record of consistent, on-time investor payouts, they built real credibility. Go to freedomfamilyinvestments.com to book a clarity call, or text family to 66866. That's family to 66866.

Chris Martenson 17:17

This is Peak Prosperity's Chris Martenson. Listen to Get rich education with Keith Weinhold, and don't quit your daydream.

Keith Weinhold 17:33

Welcome back to Get Rich Education. I'm your host Keith Weinhold. Having residual income from real estate, it can make you more comfortable for sure, but for me, I like to primarily use it to buy back my time. I'll tell you how I just did this. It's a small thing, a small win. It is time for my car's annual routine maintenance. Boring. I really don't want to lose my time dropping it off at the dealership in the morning and then picking it up again. Those two boring round trips don't add anything to my life. But the dealership had the option of, for just 100 bucks, picking it up for me and dropping it off for me at the end of the day. Oh well, that is an opportunity for me to buy some time, so that's why I did that. Now, when it comes to flying, sometimes I fly coach and sometimes first class. I just booked a flight and I refused to pay six times as much for first class. It just wasn't really worth it this time because the experience isn't that much better, and it sure doesn't save me any time. I tend to do that if the price is just 3x more, so I'll pay to save time, but not always to borrow a wider seat for five hours. And you and I both make hundreds of time versus money decisions every day, most of them small.

Keith Weinhold 19:04

With the more residual income you have, you're gonna make better decisions where you can choose the time over the money. One thing's for sure: whatever we're doing with our money, and that is that our dollar does not go as far as it used to. Let's look at inflation during the first 25 years of this century. This is really interesting. We're going to see how the cost of goods and services has changed from 2000 to the end of 2025 on some select categories that you spend on, and then I've got some mind-bending takeaways for you once I describe this chart, and this is the same chart that I sent to you last Thursday. If you are one of my newsletter readers, but I can open up and talk about it more here than I can in the newsletter because I keep that short. Overall inflation is about. 93% during this time period. 93% over these 25 years. Now, here are the items that rose less than that much, meaning that they became then more affordable over this span. What fell the most is the price of televisions down more than 90% in the first 25 years of this century? Toys down 74% Computer software down 73% Cell phones down 44% By the way, this all uses the government's CPI inflation rate, clothing up just one and a half percent, and even though it's up, that's still more affordable because it's up less than the overall 93% CPI inflation rate over this span. Household furnishings up 21% and finally new cars up 26% So all those items became more affordable because they rose less than the general rate of inflation. All right, moving on up. Now we're going to go above the line. Items above the 93% overall inflation rate, food and beverages were up 106% housing up 111% average hourly wages up 131% All right, let's pause. Yes, wages then outpacing 93% inflation. but of course, since that 93% uses the government CPI, well, that's pretty understated. Probably, you know, the true dispersing power of the dollar is probably more than 93% So it's debatable about whether there are real wage gains from 2000 to the end of 2025, medical care services up 147% Next in the category that has become less affordable is childcare, up 159% And as I'm naming these, there are some common threads here where I think you're going to have a few epiphanies when I point them out. College textbooks up 177%. Sheesh, what a scam! College tuition and fees up 197%, and finally the major category that became less affordable here at the top is the worst of all: hospital services. They have soared the most, up over 281% All right, there they are.

Keith Weinhold 22:57

And what takeaways do we have here? The items that became less affordable tend to be where the government either provides subsidies or they heavily regulate and mandate the product or service, like education, child care, and medical care. The categories that have become more affordable-that's where there is little or minimal government intervention, like clothing and technology. The lesson is that free market competition kept prices low, and some of these categories that became more affordable-you know-they would have become even more affordable than that if it weren't for profligate dollar printing, sadly, the items that have become less affordable-and this could really upset you-the items whose price increases exceed the overall rate of inflation, like medical care and housing, these are life's necessities. They are not once the stuff you need most got harder to obtain, healthcare is the ultimate example of this. It's sad to say, but you'll either pay the fee or you'll die, and the price reflects this. With hospital services up 281% outpacing the overall rate of inflation by about 3x. Also, items

Keith is joined by Jim Sheils, a seasoned real estate investor and builder who specializes in new construction and co-living properties.

Together they explore why traditional long-term rentals are struggling to cash flow and how co-living—renting individual rooms in purpose-built homes—can dramatically boost returns.

Jim breaks down how the model works, who the typical tenants are, and why platforms like PadSplit are essential for management, compliance, and steady occupancy.

Their discussion highlights how co-living can simultaneously address the affordable housing shortage and today's "cash flow crisis" for real estate investors.

Episode Page:

GetRichEducation.com/617

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. For the first time ever on the show, we're talking about what some call the greatest real estate cash flow strategy today: co-living. Learn about what it is, what it is not, the pitfalls to avoid, and just how terrifically profitable co-living property can be today on Get Rich Education. What if you got your mortgage loans the same place I get mine? You sure can at Ridge Lending Group NMLS 42056. They provided GRE listeners with more loans than anyone because Ridge specializes in investment property. They'll help you build a long-term plan for growing your real estate empire with leverage. Start your prequal and even chat directly with President Caeli Ridge. While it's on your mind, start at ridgelendinggroup.com. That's ridgelendinggroup.com.

Speaker 1 0:59

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 1:15

Welcome to GRE from Dover, Idaho, to Dover, Delaware, and across 188 world nations. You're inside Get Rich Education nation. I'm your host Keith Weinhold. For about five years now, it's been harder to make the cash flow numbers work on long-term rentals, and that's because sure rents are up, but not as much as expenses are, and that's why for your regular income properties, builders buy down your mortgage rate for you so that it works. But now enter co-living properties, and your cash flow can be multiples higher. In fact, today we're going to talk about a model that has seven times the cash flow of a regular long-term rental, for example, instead of renting a detached single-family home to one family, if instead you divide it up into six bedrooms and rent each one of the six bedrooms to an individual, you will drive substantially more income. You've got six rent checks instead of one. That's what a co-living property is in general, and you're usually renting it to tenants that are working a lot. They're away from the property. It's often run through pad split. You'll learn more about what that means. And though co-living is lucrative, you still need the right market, the right layout, the management, which is really key here, and the right operating model. Today, we'll talk to a GRE Marketplace operator that provides co-living properties to investors like us with a management solution. And as you'll see, it gets even better than that. Although they serve just one geographic area in the U.S. which happens to be an investor advantaged area, as you'll see, this is conducive to out of state investors. If you want to own there, we're talking about co living income property today. Next week, there's something vital I want to tell you about, and I can't wait to do that. It's about the way that I talk when I meet a 25-year-old, and I learn that their only source of income is as an employee at a job. And no matter what age you are, what I'm going to share with you is going to apply to you too, and it's pretty transformative. That's next week here on the show. As for today, let's learn about co living. Jim Shields is here. Jim, welcome back to the show.

Jim Sheils 3:56

Keith, good to be here. Thanks for having me.

Keith Weinhold 3:58

Well, Jim, we saw each other in person a few months ago at a conference. I wanted to have you back here today to discuss co living since you're involved in it and you help other investors learn about it. And now you even started providing properties for co living specifically for them. And you know, Jim, with co living, I have seen models in the past where, oh, a single-family home it might be retrofitted, renovated to say have six bedrooms and three bathrooms, and that way you, as the owner, you could rent it to six tenants, really who are each only renting a room rather than renting the whole place to one family. In this way, tenants get cheaper rent because they're only renting one bedroom, and then for the owner, this gives them stronger cash flow because they're renting it to six different parties and not just one. So, with affordable housing really being a struggle for so many, you know, co-living is. Really taking off. So tell us more about what co living is and what it isn't, Jim.

Jim Sheils 5:05

Yeah, co living was something that was brought to us by one of the owners of Pad Split. Actually, they had met me and worked with me on other new construction projects, and and kind of my evolution, as you know, Keith was I I went from doing a ton of fixer uppers for many of years to new construction, and both can get you where you want to go. But I like new constructions. But meeting some of the owners of PadSplits, I found that they were starting to have the same struggles that I was when I was rehabbing a lot of homes. You know, it's not easy to take a three bedroom or four bedroom home and turn it into an eight bedroom or a seven bedroom, and so you know, starting from scratch with new construction, we're able to set up for what they're trying to create, and what they're really trying to create with co living is that affordable housing crisis. There's a lot more single individuals out there not looking for you know whole, not needing whole family dwellings to live. They're more at a basic income level that you know keeps them quite a bit below being able to rent. Like here in Jacksonville, the average price of a one-bedroom apartment is just outside of their qualifying range. So they might have a good job and decent credit, but they can't qualify. So what we've seen co-living do, and again, working through our our management partner of Padsplit, is they are bringing in this system of putting people together in one home, still with the screening, still with certain amenities that you know really help the property get seen, wanted, and rented, and then certain managerial things, where you're providing good options for living in areas that need more affordable living, and for landlord investors like ourselves, you're providing now a new opportunity to beat what I've called the cash flow crisis. You know, we have an affordability crisis, but that's also created a cash flow crisis, Keith. As you know, and the numbers that we've been able to see are quite advantageous for both the renter for the amount they pay and for the owner for the amount they're going to cash flow. And that's what I'm seeing this new co-living movement is about. It's really landlords taking a new risk on a certain type of property and tenants getting a type of property that fits their income and their needs.

Keith Weinhold 7:27

You know, Jim, philosophically, I'm thinking about assisted living homes, and when society changed sometime last century, assisted living homes became more of a trend where a lot of times that's where the elderly people went. Now we have co-living, and you kind of wish the world would be a place like where you know someone freshly out of high school or college could be married and have children, and you know just one or two jobs could float and support that family, and they would be able to afford their own home, either to own or rent. But increasingly, that's just not the world that we're living in. It hearkens back to multi-time GRE guest and legendary investor Jim Rogers. To paraphrase Jim Rogers, Jim Rogers said, "I need to invest in the world with the way that it is, not the way that I want the world to be. That's one thought that keeps coming to mind with co-living.

Jim Sheils 8:29

Yeah, for me too. Honestly, Keith, when I first heard about co-living, it was a few years ago. Someone saw me speak at a mutual event similar to one we last saw each other at. I got off stage, and they came up to me and they mentioned to me we're doing these things called co-living.

Keith Weinhold 8:44

Yeah.

Jim Sheils 8:44

And I was kind of blinded. I was looking backwards instead of forwards, and I said, "Oh, that doesn't sound right. That doesn't sound like it could work, you know. And I had a lot of what ifs, and how do you handle this? Well, you know, as the niches really started to solidify and show real wind at its back, all those questions and doubts I had have been answered, and I've kind of become a believer in why it's working and also the results. You know, for us, build right, finance right, manage right. That's always been our model. That's what's going to help us and our investors succeed. Building it right and managing it right. We had to figure out, but figuring that out-that's key. And it's very cool to see investors today breaking the norms of saying, "Well, you know, we can't have cash flow anymore on a nice new construction property in a growth market like Jacksonville, Florida. You can't have good cash flow. Well, that's just not true with co living coming on because again you're answering the call of a forgotten tenant and their needs.

Keith Weinhold 9:46

Yeah, I just think for any thoughtful investor, it's got to give them pause. But this is where society has gone. Well, we're going to talk about how profitable co living is for investors later. But first, tell us more about the nuts and bolts of how co.

Jim Sheils 10:01

Yeah. So the way that it works is, first of all, you start, you know, again going with our model, build right, finance right, manage right, building it right. When you're starting with new construction, you're able to go into the property with all eyes open, without a lot of surprises, and you're able to build it right to the design that a co-living property of success would entail. You know, we're doing seven bedrooms, seven baths. We're doing 14 bedrooms, 14 baths. We're doing 20 bedrooms, 20 baths. These are all things that we worked with the owners of Padsplit as they've worked and researched areas all over the country, starting here in Northeast Florida. But what we're doing, we figured out exactly what type of build you do you need to do that's going to work? Smaller living areas. There's only one utility box. There's not you know multiple utilities. It's not a multi-unit building. So there's one utility box. You build it to that specimen of either we build anywhere from seven bedroom, seven baths, right up to 20 bedroom, 20 baths, and that's the build part. That way, you're getting into it and not having to, you know, kind of. It's really tough, Keith. I don't need to tell you with your experience to turn a smaller house into that bigger house and starting from scratch with new constructions. Great. The second thing we found was finance. Right, as you know, we do our own in-house financing. Well, a lot of the co-living since the banks didn't understand it. Just like you know, it's become a newer niche. They were locking in at 8% You know, with our in-house financing, we were able to get deals down to five and a half percent. So right there, that helps with the rate, the long-term rate, the cash flow, and then management. Again, we've managed 1000s of properties, but we've really teamed up with PadSplit to help us manage these. This is what they specialize in, not only for attracting investors into their organization, but also for managing the properties and screening the tenants, getting them in, and their management system combined with our Build Right Finance Right has been a great combination.

Keith Weinhold 11:57

Pad Split, somewhat of a platform like Airbnb, but it's for co-living type properties. We'll talk more about pad split shortly. But yes, you are making these more efficient for co-living because right from the beginning, you are building them new construction specifically for co-living type of arrangements, rather than that six-bed, three-bath retrofit example I brought up near the beginning of our chat, but tell us more about who actually lives in co-living homes. What's the tenant profile like?

Jim Sheils 12:29

Yeah, let's go to the opposite end. When I first heard about this years ago, Keith, I said, "Oh my gosh, this is going to be really unqualified, seedy people not working, getting into trouble, and that's just not true. Again, a lot of these people are hardworking, but they can't afford the $1395 for a one bedroom apartment, but they can afford an $825 a month room. And a lot of these people might be working at a local warehouse, at a hospital. They're very localized, blue collar, or some in training jobs, you know, extra five $600 a month makes all the difference. Where it's not going out to rent, not even including utilities, it gives them a nice place to live. So it's really entry level replaceable income people, maybe single people that work at a nearby restaurant. But again, they're trying to save more money in their pocket and not spend it on that higher expense, which the competition would be a one-bedroom apartment.

Keith Weinhold 13:31

Now, the tenancy durations here are shorter than what you're going to have in long-term rentals, of course, because one part of what you do, Jim, is for years you have helped GRE followers with build-to-rent long-term rentals. The resident does get more. They're going to get a furnished room with utilities in co-living arrangements, and they're also probably going to have their utilities bundled as well. So tell us about the typical tenancy duration, and then what all the resident gets.

Jim Sheils 14:00

Yeah. So the residency is going to receive all the things that they have to be turnkey. That's the bed, the desk, the dresser, the closet, the bathroom. Everything is set up there for them, and so they just move in. They're not going to have to pay for electric or water or internet. All that stuff's going to be included. There's a washer dryer normally there. Sometimes they're coin operated, other times they're just included, but that way they're not trying to take out a utility in their name or set up internet. Also, for the investor, that's a good thing because you have one master lease. If you start to do a bunch of leases, well, you could get in trouble with the rules of your community, probably of having multiple leases on one property. It's not a multi-unit building, so you can't do that. So one master lease with one utility and all utilities included allows you to do that. This makes it very easy to move in and out. And the average Tennessee might only be six months, but again, the way that it's set up, what we like about PadSplit is they. Have a very good marketing and screening process, so they're constantly marketing and screening to people in the area, and then they have their own private community with investors. So we'll build it and finance it. Our people will move over to their community for management, so the owners can speak together, and then the tenants, though they're coming through pad split system, and so what I like about that is if they try to not treat the property well, well, they're not allowed back into any pad split properties anywhere within the city. So that's really good for co living protection. So we just see that turnkey approach, and you know you've been preaching turnkey real estate for a long time. Yeah, this is a turnkey room where they're able to move in, they're able to move out easily. They can transfer to another co-living property, and by doing that, you can get people in and out very quickly, which keeps the vacancies low, even with shorter tenancy.

Keith Weinhold 15:57

All right, so an average tenancy duration of about six months, and for you, the prospective investor, as you're trying to understand co-living, maybe think of it as like when you check into a hotel. Co-living residents stay longer than you stay in a hotel, but as far as all the utilities are in the room combined, all into one charge with your WiFi, your water, your electricity, your natural gas, and the room is already furnished. Just one all-inclusive payment, making it easier for that co-living tenant. And Jim, you've been talking about pad split, where you're partnering directly with them, and that's the management part of this. Of course, this is more management intensive than a long-term rental. So, tell us more about Pad Split and how it works. Sort of like an Airbnb platform, but yet for longer-term, affordable room rentals that has the property management infrastructure somewhat already built into Pad Split.

Jim Sheils 16:56

Yeah, I think your comparison to Airbnb is very accurate, Keith. But it's more of a community for both tenants and investors. Airbnb, you know, I have short-term rentals and I use Airbnb. But what I've seen with Padsplit, which I think they've done a good job with, it has a community feel sharing for the investors who are a part of the Padsplit community, and so there's extra communication on your management, how properties are going, what areas are doing that. You know, great source of communication on the ongoing management. But for the tenants too, they know right where to go to find these types of properties, and the tenants also have to join this community. So there's a joining where if you want to rent a pad split, they have to join the community. They have to go through all the approvals and such, so that's pretty much how it's set up. It's seen to be very effective. Again, what held me back from this probably for about two years, Keith, was the management piece. You know, we've always managed our properties. I said, well, this is not our niche. Just like we don't manage short-term rentals, we only rent manage long-term rentals, and so I really had to watch and survey a lot of the existing investors and how they were doing, but it's nice to see someone with a good managerial system for both the tenants and the investors to work together in.

Keith Weinhold 18:12

Does PadSplit handle everything like marketing and tenant screening and rent collection?

Jim Sheils 18:19

So what they handle is the way that pad split works, like here in Jacksonville, where's our main market where we've started building co living properties. Is they will work hand in hand like an Airbnb, but underneath them they'll have preferred property managers that th

Keith welcomes back Todd Drowlette, star of A&E's The Real Estate Commission, to help demystify commercial real estate for residential investors.

They explore which sectors are most resilient to disruption from AI, automation, and Amazon, why certain office and warehouse assets still work, and how service-based retail like nail salons and quick-service restaurants can offer durable returns.

Todd breaks down the basics and advantages of triple net (NNN) leases, key considerations in office-to-residential conversions, and how rising interest rates are reshaping commercial deals.

He also shares negotiation tactics from large commercial transactions that investors can immediately apply to their next rental property purchase.

Episode Page:

GetRichEducation.com/616

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. We're talking with the star of the A&E show, the Real Estate Commission today. What real estate sectors are safe from AI, robots, and Amazon disruption? How many deals on the commercial side are still going to implode due to mortgage rates resetting higher? And some of the best negotiation techniques from $100 million deals that you can use in your own deals, and more today on Get Rich Education. You know, Mid South Homebuyers, that top Memphis turnkey provider. I learned that a secret weapon behind their explosive growth is more than just you buying their properties. It's an executive coach. For nine years now, their CEO Terry Kerr and his COO Pat Nix have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners, his name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally, you can fill out an application for a free consult. This is private one-on-one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to DanielThomashHind.com. H-I-N-D. That's DanielThomashHind.com and sign up before spots fill. What if you got your mortgage loans the same place I get mine? You sure can at Ridge Lending Group NMLS 42056 They provided GRE listeners with more loans than anyone because Ridge specializes in investment property. They'll help you build a long-term plan for growing your real estate empire with leverage. Start your prequal and even chat directly with President Caeli Ridge. While it's on your mind, start at ridgelendinggroup.com. That's ridgelendinggroup.com.

Speaker 1 2:19

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 2:35

Welcome to GRE from Peoria, Illinois to Peoria, Arizona, and across 188 world nations. I'm Keith Weinhold, and you're listening to Get Rich Education. Though we're a show centered on how to build wealth through residential real estate investing, today we're talking mostly about the commercial side with a guest that's more comfortable investing in commercial real estate than he is residential. We'll learn why. He is the star of the new real estate show called the Real Estate Commission that airs on A&E Network. Todd Drowlette, because he was here with us last year shortly before the show debuted, and he had so many interesting things to tell us then. That's why he's back. Now we know that residential real estate is positioned well at surviving the boom in artificial intelligence's influence because everybody still needs a place to live. You can't download a kitchen or living room, and a chatbot can't replace a roof. But some types of commercial real estate are vulnerable to AI. I'm going to ask Todd which types and businesses are the most resilient to survive AI, robots, and Amazon, because there surely are some. He does a good job of making commercial real estate approachable to those that have never invested in it before.

Keith Weinhold 3:59

Contrary to the narrative, he also likes to talk about why office real estate is not dead. Occupying both worlds, I will ask him about office to residential conversions and also get his take on what is happening with commercial loans because apartment investors have been feeling the pain ever since mortgage rates doubled and nearly tripled in 2022. I'll ask about commercial loans blowing up and just how much more of that is expected to happen because the pain is certainly not over there. Let's meet this week's guest. A series on A and E Television and streaming launched last year called The Real Estate Commission, and it's going well enough that it's gearing up for season two. The star of that show is with us today. He was with us last year just before the show debuted, and that's when he shared all kinds of interesting insights with us, like why. A gas station is on a certain side of the road. He's perhaps the most prolific commercial real estate broker in the nation. He's managing director at Titan Commercial Realty Group in New York, closing deals totaling over $2 billion all across commercial real estate sectors. He's represented everyone from local startups to national reits. Hey, welcome back to Get Rich Education, Todd Drowlette.

Todd Drowlette 5:26

Thank you so much for having me back. I appreciate it. It's always great to talk to you.

Keith Weinhold 5:30

Yeah, same. It was so interesting when you were here last year, and I do want to ask you about how it's going with the A and E show later. Most of our listeners own single family rentals or small multifamily, and I think the commercial side, Todd. Frankly, it it intimidates some people. I know I've thought of it that way before. What are some of the misconceptions that the residential side seems to have about the commercial side?

Todd Drowlette 5:56

So a big misconception is that you have to be smart to do it. You certainly do not. A lot of people also think you have to already be a multimillionaire to do it, right? So the same way with residential, there's levels to it. There's levels to commercial real estate. So I say there's pros and cons, right? So in commercial real estate, if you have an office building or a shopping center or a ground lease, you rent to a McDonald's, whatever. You don't get phone calls at two in the morning saying my hot water tank just exploded, my furnace isn't working. So you still get property management calls, but they're typically from you know Monday through Friday, nine to five type of thing, and you don't need millions of dollars. People think you do. It's like you can buy a small two or three tenant office building or a two or three tenant retail shopping center, maybe something has a nail salon, hair salon in it. Depending on the market you're in, that could be a couple $100,000 to buy. If you're in a tertiary town in the United States, if you're in a major metro, it could be a million, 2 million bucks. But the rent is commiserate with what you're paying. So if you can make an 8 or 10% return, a lot of banks will finance startup people as long they're looking in commercial at the quality of the tenant and what the lease is. So you could have no experience, but if you're going to rent to a Hertz rental car, a Starbucks, a McDonald's, even if you personally have like say a 750 credit score, it's decent. It's not a perfect credit score, but you're financeable. They're lending in commercial real estate based on the credit and the length of the leases, not necessarily on your own financials. And a lot of people don't realize that, and they think, "Oh, bank's never going to approve me because I've never done commercial real estate before. Well, nobody's ever done anything until they do it, right? So as long as you start small, banks will lend to people, you know, on smaller things, there's a ton of pros to being in commercial real estate compared to residential. There's less competition. It's easier to repeat deals because once you know one tenant's looking for something, then you can find the next thing they're looking for, and it's a small knit group. You know, if there's 3 million real estate agents in the United States, I would say across the entire country, maybe 10,000 of us are commercial real estate agents.

Keith Weinhold 8:05

Yeah.

Todd Drowlette 8:06

So if you get into commercial, once you get into that network of people with a deal with the tenants and the whatever, you know, if you're in, you're in. If you're out, you're out. That was a very long answer to a very short question.

Keith Weinhold 8:16

Well, some people even have one of the same hangups about residential real estate investing-they think just to buy income property takes an awful lot of money, not realizing you can start with a single-family home of less than 300k or even less than 200k still today and make a small down payment on it. And you know, Todd, I think one thing that refines commercial real estate for some people and piques interest among residential investors is one of the first things that they learn when they're finding out about commercial real estate investing is the triple net lease. Oftentimes, you see that abbreviated NNN out there, and how that can make things somewhat more hands off for that commercial real estate investor. So, can you tell us about triple net leases?

Todd Drowlette 9:00

I sure can. Number one, the funny thing about triple net leases: none of the three things the N's represent start with an N. So your triple nets are literally your real estate taxes, your insurance, and your commonary maintenance. None of which start with an N. Yet it's called N N N.

Keith Weinhold 9:14

It's kind of like reading, writing, and arithmetic. The 3r is what only one of them starts with an R. It's a terrible acronym, but yes.

Todd Drowlette 9:22

Exactly. So there's different types of triple net properties. So essentially, a triple net property, unlike most residential, where you're responsible, you get X amount of rent, and then out of that rent for your income, you're going to subtract out your school tax, your property tax, your property insurance, liability insurance, you know, snow plowing, lawn mowing, all that type of stuff, right? So triple net properties, you have absolute net properties, which is the best thing you can own from a landlord's perspective. Those are things that are called absolute ground leases or an absolute net lease. Typically, you'll see those in like many gas stations. Will be that a lot of McDonald's. Deals are that where essentially you own a piece of property, you buy a piece of property, and you go here. You have X amount of time to put your building up, do construction, get your approvals. You're going to pay me X per month in a ground rent. You build your own building, you own your own building, you're responsible for it, and I just own the dirt. And those are typically 10 to 20 year leases with options. The downside of a triple net ground lease is you can't depreciate anything because it's just ground, right? So you don't get the depreciation you get with other properties, but you have no risk other than the credit of the tenant. So if you're signing a lease with the United States Postal Service and it's the federal government, you know you're getting that. Those will trade typically about one percentage point higher than U.S. Treasuries because there's very, very little risk in it. But there is some risk, so as an investor, you need a little bit better return than the guarantee of a U.S. Treasury.

Todd Drowlette 10:54

Then you have roof and structure triple net properties, where basically, okay, the roof and the structure I'm responsible for as the landlord. Anything inside of that, or you're responsible for, and then the tenants pay the proportionate share of, like I said, the taxes, the snow plowing, whatever. If that's a multi-tenant building, then you run the risk. Oh, tenant moves out as the landlord, you got to pick up that percentage. If if you have a 10,000 foot building and someone's in 2000 feet and they move out, well, now you're responsible for 20% of that tax and CAM and insurance bill until you replace it with a new tenant. But typically, if you're investing in small strip centers, smaller office buildings, which people say office is dead, I've made a fortune in office. Office is not dead. You just have to own the right office in the right place. A lot of downtown offices are dead, where they're moving to the suburbs for drugs and a lot of other issues. But typically, you know, strip centers today, people are buying those for 8% returns to as much as 10, 12% and a lot of times they're vacancy. That's upside you can add into it as well. But again, these are all things that you can get into for a couple $100,000 down, and there's way more room for error than people think there is. As long as you have a professional that's looking at the lease for you before you buy it, you know you just want to make sure the guarantee is on the lease that you have corporate guarantees. But typically, if a bank will finance it, they're also looking at that. But it's not as scary as people think it is, and it's really a strong alternative to investing in single-family homes. Not that I'm knocking single-family homes. There's pros and cons to literally everything you do in life, as you know. 100.

Keith Weinhold 12:28

A triple net lease, where in commercial property the tenant covers three main expenses or nets: property taxes, insurance, and the maintenance and repairs. And in a lot of the situations, like Todd is describing, that really leaves landlords responsible for little more than the mortgage, really increasing the passivity here. And you know, tenants that are willing to shoulder a triple net lease, I don't think of them as taking on those extra costs for nothing. I think about it is in exchange, tenants typically pay lower rent then, and the tenant also gets more control over the property in a triple net arrangement.

Todd Drowlette 13:08

That's a generally safe thing to say, but I hate saying this. I can't believe I'm even saying this, but you know they say location, location, location. So it really depends on the market. The biggest mistake people make to go, oh, I get asked all the time, should I invest in land? I'm like, hell no, raw land. I go when I develop stuff, I have a use for it. Once I get the approvals, then I'll close and buy the land. Land banking stuff and just going and buying land and hoping it goes up in value. I have a number one rule that I always say to people, and it's anytime you can buy $1 for 50 cents, you buy it, but you don't buy property for $1 hoping it goes to $2 because there's no guarantee that that'll happen. In raw land, you know you have a guaranteed. You're paying taxes every year, so just paying taxes on something that's also not returning you anything is a terrible investment, in my opinion. You're speculating. If you want to speculate, just go to the casino, play roulette, pick black or red, and you have roughly a 50-50 shop minus the three greens, but there's a lot easier ways to make money than buying raw land. But shopping centers, triple net properties, there's definitely ways for people to get into that that are much lower risk, and they're not as scary as you'd think. And many banks will finance them.

Keith Weinhold 14:18

Now, if you had to buy one commercial asset today, what would that be? I know that might depend on some factors, but generally, I've got to say, industrial comes to mind for me as one of the hottest commercial real estate asset classes in quite a while.

Todd Drowlette 14:32

So I would pick two strategies. One would be high bay warehouse, whether it's specifically industrial or just warehouse, but things with high ceilings, open floor plans, like you know, a 20,000 foot warehouse, 30,000 feet, something in that range, that a lot of people want that type of use. Warehouse rents have been increasing way faster than office or retail rents have been in the same markets. And as things get more and more automated, you still need to ship stuff. You still need to. Stuff you still need to get things to people's houses, so with the whole AI boom and the crazy things that are happening, I think there's going to be a lot fewer people with jobs sooner than people realize. But I do think the warehouse is a good thing to be invested in, especially if it's on main streets. It could be retail, could be warehouse, could be whatever. The second thing I'll say that's very low risk are any businesses that Amazon can't compete with you for. So, a small strip center that's two or three tenants, that's a hair salon, a nail salon, service type business, retail tenants, because it's a turnover business. So, like nail salons, they're never going to come to your house and do your nails unless you're a billionaire, because they can make more money with people coming to them in back-to-back appointments. So any type of service business tenant that you can have, and typically nail salons, hair salons, they don't usually go out completely. Usually, if they don't want to do it anymore, they'll sell the business to somebody else, and you keep a tenant. From an ownership standpoint, there's very low turnover and having to pay new brokerage fees or do give tenant fit-ups or free rent to like get their business up and running. So I would either go high bay warehouse with loading docks like 18 foot, 20 foot or higher ceilings, open floor plans, overhead doors, 20, 30,000 square feet, or two or three tenant strip malls with high traffic counts, good suburban locations that have service type businesses. Those are your two. Would be very hard to lose as long as you don't overpay when you buy them.

Keith Weinhold 16:25

This is such an interesting thing to say when you think about a resilient business, something that can't easily be disrupted by AI or Amazon, which something like a nail salon would fit into. Tell us about some of those other types that might fit into a small retail center that are resilient that way.

Todd Drowlette 16:45

End caps, so any kind of like a Popeyes, a McDonald's, anything that's drive-through or food. Even you're starting to see, you know, the Tesla robots, and you're seeing more and more of that. However, people will still buy the food. So whether the employees are actually still in there, it's all robots. They still physically need a place that's close and convenient for people to drive to, or even the food delivery apps. Like a lot of the ret

Keith explores how investors can build legacy wealth by owning productive teak timber and the land beneath it in Panama.

Mike Cobb, an international real estate developer with over 30 years of experience, explains why Panama's legal framework, economic stability, and U.S. dollar economy make it a compelling destination for first-time offshore investors.

They discuss the long-term return profile of teak, its resilience as a hard asset, and common mistakes to avoid when investing internationally, along with how a sawmill and vertical integration can enhance returns.

This discussion highlights how the strategy can diversify both geography and asset type while also opening doors to potential residency options abroad.

Episode Page:

GetRichEducation.com/615

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold, talking about a legacy investment. You can profit from this real asset long term, and so can your heirs. It's real estate, but not housing. It's a diverse and more primitive use type. Today on Get Rich Education, you know. Mid South Homebuyers, that top Memphis turnkey provider. I learned that a secret weapon behind their explosive growth is more than just you buying their properties. It's an executive coach. For nine years now, their CEO Terry Kerr and his COO Pat Mix have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners. His name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally, you can fill out an application for a free consult. This is private one-on-one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to DanielThomashind.com. H-I-N-D. That's DanielThomashind.com, and sign up before spots fill.

Keith Weinhold 1:35

What if you got your mortgage loans the same place I get mine? You sure can at Ridge Lending Group NMLS 42056. They provided GRE listeners with more loans than anyone because Ridge specializes in investment property. They'll help you build a long-term plan for growing your real estate empire with leverage. Start your prequal and even chat directly with President Caeli Ridge while it's on your mind. Start at ridgelendinggroup.com. That's ridgelendinggroup.com.

Speaker 1 2:08

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 2:24

Welcome to GRE from Cherokee, North Carolina, to Cherokee, Panama, and across 188 nations worldwide. I'm your host Keith Weinhold. Welcome back to another Wealth Building Week. You are inside Get Rich Education, where financially free beats debt free. Today we're talking about a specific investment that is not residential real estate. In fact, it's a more primordial real estate type that predates housing. So therefore, it is lucid and intelligible. It's easy to understand. Sort of the opposite of more arcane investment like AI data centers or crypto mining. At a basic level, this makes it easy to understand, and there aren't any tenants to manage. It also does not pay you as often as monthly, though as you'll learn, there is income and appreciation is expected too. Now, if you invest outside your home country, you're probably going to want to be diligent and select a politically stable nation that also has an operator based in that region with a fantastic track record. It helps if they're close to the U.S. This small nation is close to the U.S. in both geographic proximity and economically. Their currency is even the U.S. dollar. They even share an electrical system with the U.S. with the same outlets and voltages. As you might be guessing, where I'm talking about, this nation also has a consumer culture somewhat similar to the U.S. with American restaurants and retailers and brands in our real estate world. What we find more important is how, like the U.S. this nation is a constitutional presidential republic, and both nations have these separate executive, legislative, and judicial branches, the three branches and elected presidents, in these competitive multi-party elections, and both America and this place have market-oriented economies that emphasize private property and private enterprise, banking and financial services, international commerce, logistics, ports, and aviation.

Keith Weinhold 4:49

Today, we're talking about the opportunity for you to own productive timber and the land beneath it, teak hardwood trees in Panama, a quarter-acre parcel. At a time with your name on the deed, that direct ownership is known as fee simple ownership. I have directly invested in Panama for about 11 years myself. Now, though teak might be able to survive in a climate like Hawaii, mere survival is not enough in the U.S. It is difficult to impossible to find anywhere that grows productive plantation teak. Here in the late 2020s decade, we've had bouts of El Nino or La Nina a lot of places in the world, and that has severely weakened some crop types. Other providers of different agricultural investments are failing, but not this teak. They're resilient, and we'll get into the physical properties of the teak. I'm going to ask today's distinguished guest about that. He and his business partners planted some select timber 27 years ago, and they've been offering teak hardware parcels to investors for that long, 27 years, and for about the last 10 years to GRE investors. Hundreds of you are participating now, but I'm going to wait to ask more about the physical teak product itself until later, because what's more important are the investment environment and the strength of the operator. So learn more about this and what the projected investment returns are, and just how much exactly does a quarter-acre parcel of teak cost? If you so choose, owning teak parcels also gives you the option of residency status in Panama, and you only need to spend two days there every two years in part of maintaining that status, they offer investor in-person tours of the teak plantations too because they're proud of what they do there. I expect a fascinating discussion with Mike, the teak company co-founder and CEO. This week's guest has become a friend since I met him about 10 years ago. He co-founded and is CEO of an international real estate development company. He's got active projects throughout Central America. He's been doing it for more than 30 years, so he's not a tinkerer and not trying out project concepts.

Keith Weinhold 7:26

And at this point, he's helped thousands of North Americans diversify their portfolios through international real estate ownership and residency planning, and even lifestyle investing. And if you've ever attended an investment conference on something like global diversification. You might have seen him speak there because he's such a frequent, recognized speaker and voice, and he's authored multiple books on real estate, financial freedom, expat living, and just unlocking a better lifestyle. Hey, welcome back onto the show, Mike Cobb.

Mike Cobb 7:59

Oh Keith, nice to be with you. And you're right. 10 years, we've enjoyed one another's company at many conferences. It's always great to be back with you virtually. I look forward to seeing you again personally one of these days as well. And yeah, thank you for the very kind words on the intro.

Keith Weinhold 8:14

Yeah, if I'm teetering on whether or not to attend a conference, I ask myself, is Mike going to be there? That's right.

Mike Cobb 8:20

We'll hang out,

Keith Weinhold 8:22

100% And you know, Mike, he's also an avid reader of GRE's "Don't Quit Your Daydream" newsletter. So then, clearly, he's even smarter than you've ever thought. You heard him on the show before, so you knew he was smart, but now he's even smarter than you ever knew since he's a reader. Tell us what you like about the newsletter.

Mike Cobb 8:40

You know, Keith. I gotta say, every issue that comes in, I read it. By the way, today's issue said read before Thursday, so you give me a couple days tomorrow at least to read it. Anyway, no, you know what? You are so powerfully succinct. The charts that you put in are wonderful. You were a geographer major, and and so spatial things are important. I also recognize. I love the charts. I love the graphs, and I hate to even say I love sort of the I hate to call it the trivial information, but you know enough data points that seem trivial when you put a theory around them actually become meaningful. And what you are able to do is you're able to connect dots that most people don't connect. That's the hallmark of genius, and I think you are a genius, by the way. And I think your newsletter shows that. And so, thanks for putting it out. Your readers are very, very fortunate to have you there, giving them the kinds of information that are super relevant in the marketplace at one level and on a specific level. But even more important, creating the theoretical constructs that allow them to understand the why of something's happening because you know if you understand the why of something you know it makes a lot more sense first of all but it also allows us to maybe forecast the next what coming down the pike and if we can be on the front edge of something or you know being able to look over the hill or around the bend that's. Powerful in the marketplace, and and you bring that power to your readers. Well done, man.

Keith Weinhold 10:04

Thanks. Yeah, it's not just what; it's why this matters. And that was an incredibly kind thing to say. I write every word of the letter myself, and you, the listener, you can get the letter free now@greletter.com I send it about weekly, and Mike, I know that U.S. investors, including some Get Rich Education followers, they've been increasingly looking offshore for one thing many perceive the political risk has palpably higher than it was a few years ago. So, just broadly, tell us more about what North American investors seem to be looking for.

Mike Cobb 10:42

Sure, I summed it up earlier today. I was talking with a conference organizer, and he was really giving me the hard sell on why I should come to his conference. And it's probably not a good fit. But I heard myself say it for the first time. What we really help folks do in certain spheres, but maybe in this sphere, is help people get a good night's sleep, you know, peace of mind, right? And when you've got the political turmoil, you wrote an article or a newsletter a couple weeks ago, and it was about inflation, the kinds of things that were happening, and it was so spot on. And I think your readers, and not just your readers, but people who are tuned into what's really happening from a political standpoint, a financial standpoint. There is no way you can print this much money. There's no way you can have these kinds of things going on all the time that create a huge run-up of debt, right? And it's not even the debt; it's the implications of the debt. What's going to happen next? How's this thing going to unwind, right? And so when you have all of this stuff going on. You have people who are really, really worried about their future. It's a financial future. I say there are two train wrecks. There's a train wreck of debt, which is what I just talked about, and there's a train wreck of freedom. And that train wreck of freedom is really, in some ways, a result of the train wreck of debt. But when you've got a train wreck or two train wrecks happening, we really have three choices. We can ride it out, right? Take the ride and go for the crash, right? We can do something about it, but we really have to do something about it before. I'm going to mix a metaphor here, but if you know a hurricane's coming in three or four days, you don't wait till the wind's blowing 150 miles an hour to put up the plywood, right? You get out there while the sun's still shining. You put up the plywood, and then when the hurricane hits, like you got plywood over the windows, and you can ride out the storm. And this is where I think so many people are today. They're recognizing this hurricane is coming. The problem is, is that I don't think people always know where to go get plywood, right? What do I do? How do I protect myself and my assets, right?

Mike Cobb 12:38

And what this conversation right here is about is here's one kind of plywood you can put up on your window and the diversification overseas the diversification internationally into a hard asset that is not really inflation proof because I'm not sure there is such a thing but largely inflation proof or a big a great hedge against inflation real stuff hard assets real estate timber commodity right this is. what so many people are now looking at, and then the other piece of it is you can layer in a residency, which starts to give you that political plan B. You've got an economic plan B, kind of the hedge against inflation, but you've got this residency component that gives you sort of a hedge against the political uncertainty, and 1000s of folks have moved in this direction. Several 100, I think it's about 600 folks now, have picked up the residency as part of their timber investment as well. So a lot of different things going on, but I think they do circle all the way back to this train wreck of debt and a train wreck of freedom, the political divisiveness kind of what's happening.

Keith Weinhold 13:40

Now, what if someone hasn't invested in a hard asset overseas before, Mike? I'm thinking some people might come ask you. You know, why would I do this? For example, I live in the United States, where we have a rule of law and stable, mature markets and high property ownership rights. So, why should I look to diversify internationally with hard assets,

Mike Cobb 14:01

yeah, I think there's a general answer, and then maybe a couple specific answers. Generally, you know, I would never bet against the U.S. the U.S. economy. We're the largest economy in the world. I would never bet against it, right? But I think that for prudence, we would all want to have at least another basket for a few of our eggs: 5% 10% 20% Pick. Pick a number that's comfortable, but have some of your investable net worth outside your home country. Like that's just prudent, right? Why would you have everything all in one basket? And so we see that as a general answer. Specifically, a country like Panama, where we do have artique plantations, they have public title escritora publica. It's fee simple title, but in the civil law, so it's called escritora publica. The rule of law is strong in Panama. And then the other thing about Panama that I absolutely love is you have the canal, and the canal provides both economic stability and political stability. On the economic side, it generates just. Under $5 billion a year of cash flow, year in year out, right? So just it's like an ATM machine for a country with a population of about 4 million people. Do the math on that; like that's a huge amount of money on a per capita basis, right?

Keith Weinhold 15:13

Narrow water passages have really been newsworthy for a long time now, too.

Mike Cobb 15:16

Well, they have, and just like the Strait of Hormuz, right? You know, people sometimes go. I hear it said, "Oh, the canal is a vital strategic U.S. interest. That is absolutely 100% correct. But if you're a country that produces any goods that ship, or you're a country that receives any goods by ship, that canal is a strategic interest to you, and by definition, that's every country in the world. Every country in the world wants that canal open and transiting, right? Because everybody either produces or receives or both, right? And so you've got the political stability element as well as the economic stability element. You've got the rule of law. Panama is a great, great place for that person who you mentioned who's never done an overseas investment, never gone offshore, right? What's an easy place to start? What's one of the safest places to start is Panama, and it's in this hemisphere too, so it's close. I mean, you can get there for three hours from Miami, three and a half hours from Houston. Flights all over to U.S. Canada. It's easy. So I think a lot of folks see Panama as a very, very easy way to make that first step overseas.

Keith Weinhold 16:25

I happen to know that you just flew in from Panama. You're in the United States today, but you're constantly going to Central America. You span time zones more often than almost anyone I know. You mentioned fee simple ownership in there. For those that don't know, I think of that as direct ownership, where you don't have some weird administrative government layer in there that can dilute your hard asset.

Mike Cobb 16:47

Right, you can own it in your own name, you can own it in a corporation, so it's easy to own it. But yeah, no layering, right? By the way, the Constitution treats owners who are Panamanian the same exact ways it treats all foreign owners, and actually, we do business all over Central America. The one thing that we look for is a a legal regime that protects foreigners and foreign investors the same as it does domestic. Panama does that.

Keith Weinhold 17:12

Yeah, so investing in hard asset in Panama is a bit like investing internationally with training wheels on, due to its close relationship with the United States bolstered by the Panama Canal, but yet if someone hasn't invested internationally first, there are still a few mistakes to avoid. Maybe things that one isn't aware of. Can you tell us more about that?

Mike Cobb 17:33

The biggest danger people have when they make their first foreign investment is what I call margarita madness, right? And a lot of times it happens. You're on vacation in Cancun. You're having the time of your life. You're you just went parasailing, whatever. You're walking down the beach, and some developer says, "Hey, come on up here and take a look at my condo project. You know, and we'll buy you dinner at Senior Frogs tonight. We'll give you a coupon or whatever, right?

Keith Weinhold 17:55

Right.

Mike Cobb 17:55

And a lot of people do that, and then later that night, that's Senior Frogs. They're celebrating the condo they just bought, right? I mean, it's not how we transact real estate in the U.S. and Canada. There's a due diligence process. There's a due diligence period. It takes weeks or months to transact on a property, not hours, right? And

Keith Weinhold explains why inflation has become a permanent part of the post–World War II economy and what that shift means for today's financial system.

He breaks down economist Dr. Mark Skousen's five structural reasons behind never-ending inflation and ties them to the hollowing out of the middle class and the "last generation to live normally" concept.

Keith then introduces opportunity cost as the biggest financial expense most people overlook and illustrates how leveraging low-cost, long-term debt to buy productive real assets can turn inflation into an advantage.

He closes by outlining a practical hierarchy for which debts to eliminate first and which to keep as tools for long-term wealth building.

Episode Page:

GetRichEducation.com/614

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host Keith Weinhold. In less than 40 years, America has gone from 75% gasoline to permanent inflation. Then learn about the biggest financial expense you will ever have in your life. It's not taxes, housing, interest charges, inflation, children, or healthcare. Most people have never heard of it today on Get Rich Education. You know, Mid South Homebuyers, that top Memphis turnkey provider. I learned that a secret weapon behind their explosive growth is more than just you buying their properties. It's an executive coach. For nine years now. Their CEO Terry Kerr and his COO Pat Nix have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners. His name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally, you can fill out an application for a free consult. This is private one-on-one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to DanielThomashHind.com. H-I-N-D. That's DanielThomashHind.com, and sign up before spots fill.

Keith Weinhold 1:41

What if you got your mortgage loans the same place I get mine? You sure can at Ridge Lending Group NMLS 42056 They provided GRE listeners with more loans than anyone because Ridge specializes in investment property. They'll help you build a long-term plan for growing your real estate empire with leverage. Start your prequal and even chat directly with President Chaley Ridge. While it's on your mind, start at ridgelendinggroup.com. That's ridgelendinggroup.com.

Speaker 1 2:14

You're listening to the show that has created more financial freedom than nearly any show in the world, this is Get Rich Education.

Keith Weinhold 2:31

Welcome to GRE from Bavaria, Germany, to Batavia, New York, and across 188 world nations. I'm Keith Weinhold, and you're listening to Get Rich Education. In the 19 the 1988 movie Die Hard, there's a California gas station sign in the background that's visible. You can see it there. The gas price on this sign is a jaw dropper. Unleaded 77.9 cents per gallon, regular 70-4.9 cents per gallon. That now looks like it belongs in a museum next to rotary phones and blockbuster video cards. Yes, California gas for 75 cents, and the movie Die Hard. It had all these actors from yesteryear, like Bruce Willis and Reginald Vel Johnson. Yet you, depending on your age, you might remember 1988. It's not like ancient history. Now we all know that inflation is always and everywhere a monetary phenomenon, like Milton Friedman said, but is there more to this? Is there more than the Fed targeting 2% inflation, just like it says on their website? Oh, there sure is. And by the way, with a little research, it looks like California Gas averaged 95 cents in 1988, not 75 like it shows in Die Hard, but in any case, the point is still there. And today, inflation keeps running hot. Four years ago, the pandemic made CPI inflation peak at 9.1 percent. Today, the hangover effects of tariffs push it up, and the Iran war are turning up the heat even more, with the latest reading above 4% Inflation is running at more than double what the Fed wants. You can even make the case now that inflation is out of control. But here's the thing: inflation has exceeded that 2% target for 60-three consecutive months now. I mean, think about what that means. My gosh, just imagine having an important target that affects every American and missing it 60-three times in a row. That's kind of what's happening now, and they're. Going to keep missing it. So this streak of inflation above 2% started back in March of 2021 during the pandemic hangover, and it is still going strong after 63 months. Nobody knows where this is going to end. Most Americans get crushed by rising prices because their wages don't keep up, and you know collectively they sort of think we are concerned, but then they mostly keep doing the same thing while their lifestyle quietly shrinks. So consumers despise inflation. Everyday investors are lukewarm about inflation, and leverage real estate investors are smiling like they found a 20-dollar bill in last winter's coat. Leverage real estate investors are pretty ecstatic about inflation. Now the history gets super interesting.

Keith Weinhold 5:59

Okay, how did we get into this, where we just always seem to have inflation? So learn the history, and then I'll tie it back to how it affects you as an investor. Because before World War II, inflation behaved differently. The old pre-1945 pattern was that we had inflation during wars and booms. We had deflation after panics and depressions. So therefore, the result was that over long stretches, price levels often just moved sideways. We used to have recessions more often back 80 plus years ago than we do now. So therefore, you just had these price levels move sideways because a recession even prompted deflation, actually a strengthening of purchasing power. But then after World War II, inflation basically went permanently positive. I mean, yeah, permanently positive, where inflation is just always turned on with very few exceptions to that. In wartime, now we have inflation. In peacetime, now we have inflation. During the Super Bowl, now we have inflation. It is inflation, no matter what is going on. Right then, so what changed? Prominent economist and GRE podcast guest here, Dr. Mark Skousen. He has cited five major reasons that inflation became a permanent fixture from 1945 until today. And Mark Skousen was here on the show with us almost exactly two years ago because he's also the founder of a great event called Freedom Fest that Nareesh and I broadcast a show from, the five reasons that Scowson cites for never-ending inflation are first, never-ending wars. Now this doesn't only mean formally declared boots on the ground wars where tanks are rolling, never-ending wars. It means this permanent state of global military readiness that we have today, where we have overseas bases, defense contractors, right with the military-industrial complex. We have NATO commitments.

Keith Weinhold 8:17

We have anti-terror operations, naval patrols, intelligence agencies, and all this enormous machinery that's required to keep America as the world's security backstop. Well, all that costs an awful lot of money, and when government wants more money than it collects, it has a favorite trick: just create more dollars and create them out of nothing. I mean, it's like ordering another round of drinks for the table and then putting it on the unborn grandchildren's tab. The second reason for the never-ending inflation is the 1913 creation of the Federal Reserve and how that's changed over time because the Fed they were originally supposed to defend the dollar, defend the gold standard, and act as lender of last resort. Today it mostly just does the last one. It acts as the lender of last resort, and it's really not even last resort. I mean, she shit seems to patch any significant hole in the economy by creating more dollars and then pumping them into the system. When markets wobble, banks panic, or politicians overspend, or the economy catches any kind of cold, you know, the Fed often just shows up with this fire hose of liquidity. Now, sometimes that's necessary, but either way, it means more currency creation. So, the Fed it began as this sort of sober hallway monitor, but now they're often the responsible party that needs monitoring. But no. No one is going to stand up and do it because no one in power wants austerity under their watch because that is extremely unpopular. The third reason for permanent inflation is the Bretton Woods Agreement. You've probably heard of this, but let me summarize what it briefly means. Okay, Bretton Woods was the 1944 deal that basically created the post-World War II global monetary system? It made the U.S. dollar the world's reserve currency. If you remember anything from Bretton Woods, just remember that it did that. It made the U.S. dollar the world's reserve currency, and the dollar was pegged to gold at $35 per ounce.

Keith Weinhold 13:29

And finally, the fifth reason for never-ending inflation post World War II is Keynesian economics. I mean, you probably at least heard the term before. It's been thrown around here from time to time. Named after John Maynard Keynes, K E Y N E S. And before I go on, I invested in real estate for a long time before I learned all this stuff. Probably close to a decade of investing first. So I taught myself this material, Keynesian economics. That's the belief that demand is what drives economic output and employment. So, if you only remember one thing about Keynesian economics, it's that you need demand, and it stokes demand. It says demand drives everything, and what I mean by that is the spending, spending from households, corporations, and government. So, in plain English, when private demand weakens, the government should step in and spend. That's what Keynesian economics says. Well, that means deficits, borrowing, stimulus, support, programs, relief, rescue packages, emergency measures, and see what happens is that temporary measures somehow become permanent measures wearing a fake mustache. Remember, even Nixon said removal from the gold standard is temporary. Well, that was now 50. 55 years ago, in theory, the government runs deficits in bad times and then tightens up in good times. But that doesn't really happen because, in practice, government often runs deficits in bad times and good times, war times, peace times, election years, non-election years, leap years, all the time running deficits, spending more than we take in, and when deficits become normal, well, then currency creation has got to follow. That's the consequence. Well, these five forces that I told you about for never-ending inflation, the reasons that I just shared with you-they are now structurally embedded. They are not going away.

Keith Weinhold 19:03

I mean, there is even political resistance to deflation in this system. Investors benefit the most when they own one thing: real assets tied to long-term debt. You probably knew that I was going to say that because if the dollar is designed to slowly melt. You don't want to be the one holding the ice cube. You want to own the freezer. That's the control that you have. The first half of the year recently ended. It's time for our asset class rundown. From the midpoint of last year to the midpoint of this year, single-family home values are up only about one and a half percent. That's the average of Case-Shiller and FHFA. Apartment building values are down 1% in the past year. When it comes to rents per Zillow, single-family home rents are up 2.8% in the past year to an all-time record of almost 20-$300 Apartment rents are up just. 1.3% nationally. Sunbelt Apartments were the weak spot. Apartments.com said the South was down seven tenths of 1% year over year, and the mountain region down one and a half percent. With San Antonio, Denver, Austin, and Phoenix among the weaker markets, that's due to oversupply in those areas. 30-year mortgage rates down from 6.8 to 6.6% The S S&P 500 up 21 percent on AI optimism, despite a war in Iran. Though down in past months for the year, gold is still up 21 percent, silver soared 63 percent, Bitcoin down 45 percent. I mean, speculative digital assets have really gotten a cold shoulder. Oil up 4% although it went on a wild ride, and CPI inflation reheated to 4.2% That's our asset class rundown.

Speaker 2 22:59

This is our rich dad poor dad author Robert Kiyosaki. Listen to Get Rich Education with Keith Weinhold. Don't quit your daydream.

Keith Weinhold 23:17

Welcome back to Get Rich Education. I'm your host Keith Weinhold. I want you to listen to something along with me, and then I'll come back to comment. This is from the parallel truth. It's called the last generation to live normally, and it's less than two minutes in length.

Speaker 2 23:32

We have to talk about something that sounds dramatic, but it is becoming true. Your parents may have been the last generation to live a normal life-not an easy life, not a perfect life, but a life where the basic deal still made sense. You could get a stable job, you could buy a house, you could raise children, you could save some money, you could retire one day. And even if life was hard, most people still believed that if they worked honestly, their future would slowly get better. But look at what happened to your generation. You work more, but own less. You study more, but feel less secure. You have more technology than any generation in history, but less peace, less time, and less confidence about the future. Your parents were told, "Work hard, and you will build a life. But you are being told that, "Work hard, and maybe you can afford rent. And the most disturbing part is that this did not happen overnight. It happened slowly. First, housing became an investment instead of a basic need. Then, education became a debt trap. Then, healthcare became too expensive. Then, stable jobs disappeared. Then, everything became a subscription: your house, your car, your software, your entertainment, even your future. Everything slowly became something you rent but never truly own. And while ordinary people were falling behind, the economy kept looking strong on paper. The stock market went up, billionaires got richer, companies made record profits. Politicians kept saying that everything was fine, but if everything is fine, why does an entire generation feel like it is drowning? The truth is, your parents did not live through normal history. They lived through a rare window where ordinary people. People were allowed to share in the wealth of the system, but that window is now closing. The old promise was simple: work hard, buy a home, raise a family, retire with dignity. The new promise is different: work forever, rent everything, delay children, carry debt, and call it freedom. So maybe young people are not lazy. Maybe they are just the first generation honest enough to admit that the old deal is dead. Your parents were not lucky because life was easy. They were lucky because they were the last ones who got the deal before it was taken away.

Keith Weinhold 25:27

Yeah, there it is-the last generation to live normally. That's really a fresh slant on the hollowing out of the middle class. The rules have changed. Inflation is entrenched. Now you know why. Back in 2020, the pandemic accelerated that effect, and yet it's just unbelievable to me that people think working hard and saving money is enough to get you the lifestyle that you desire. Now I am not against hard work, it's the fact that people think that that's all that it takes. Before we hit the permanent inflation era, it might have made sense for you to say, save your money, pay all cash for a cheap fixer-upper property, and work hard for years to fix it up yourself. Oh, and then you could own a modest home debt-free. Today, even if you could do that, why would you? Instead, you can just prudently finance your way through life. You could have instead borrowed for two or three already renovated properties and let debt, inflation, and perhaps even tenants do the work for you. Above all, do the right thing before you do things right. That's what I like to say. Well, the way you get wealthy is by owning a lot of assets, not by grinding in the salt mines to pay off your debt. Those that are debt free are often asset poor. The biggest financial expense that you will ever have in your life. Do you know what it is? It is not taxes or interest charges. It's not even inflation or housing or healthcare or having children, most people have never heard of it. You probably have, but most people have never heard of this biggest financial expense you'll ever have, and they certainly don't know how to avoid it.

Keith Weinhold 27:34

Say that you're 35 years old and you put 100k under a mattress for 30 years until you're 60- years old. Instead, if that would have been invested at a 12% annual return, do you know how much that would have grown to? That would have grown to $2.996 million All right, basically 3 million bucks, a 30x increase. Therefore, it would be a 2.9 million dollar mistake to save money, and what this means is that the biggest expense you'll ever pay in your life is called opportunity cost. Yeah, opportunity cost is life's biggest expense. It's the return that was foregone when you chose one option over another. So opportunity cost is not what you spend; it's what your money could have become had you put it somewhere more productive. All right, now that was a pretty extreme example of 100k under a mattress. As a listener to this show, you are probably more savvy than a person that would save big lumps of money for close to zero return. Let me give you a better example of how when you pay all cash for something, you've usually just made your future self poorer. A friend of mine heard the episode last year where I talked about buying a new car for myself, a BMW X3 SUV. As it is, you probably remember that episode. Though I could have paid all cash for the car, I put the minimum down payment in there and then financed as much as I could because of a favorable 4% interest rate that I got on a car loan. Well, my friend Jesse heard that episode. This influenced him. So what he did is he bought a Subaru for his wife. Although he had planned to pay all cash and could have paid all cash for the car, Jesse got financing, and he did better than me. He got just a 1% interest rate somehow. Wow! It was actually nine tenths of 1% but let's just call it 1% What a deal! Instead

Keith breaks down five major mortgage myths, including the belief that today's mortgage rates are unusually high, that the Fed directly sets them, and that rising rates automatically push home prices down.

Drawing on historical patterns, he explains why mortgage rates and home prices often move together, and why waiting on the sidelines for "better" rates can quietly erode your long-term wealth.

Keith also explains how inflation can benefit borrowers by shrinking the real burden of fixed-rate debt and shows how leveraged real estate can outperform traditional stock investing.

He ties these insights into today's K-shaped economy and the growing role of AI, and explains how strategic action and the right guidance can help position investors on the winning side of these trends.

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host, Keith Weinhold. There are myriad misunderstandings about mortgages. I dispel the myths and discuss the expected mortgage rate level in 2030 You will know more about mortgages than 99% of people today on Get Rich education, you know, Mid South Home Buyers, that top Memphis turnkey provider. I learned that a secret weapon behind their explosive growth is more than just you buying their properties, it's an executive coach. For nine years now, their CEO, Terry Kerr, and his COO, Pat Nix, have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners. His name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally. You can fill out an application for a free consult. This is private one on one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to danielthomashind.com H I N D, that's Daniel Thomas hind.com and sign up before Spotsville. What if you got your mortgage loans the same place I get mine? You sure can at Ridge Lending Group, NMLS 42056 they provided GRE listeners with more loans than anyone, because Ridge specializes in investment property. They'll help you build a long-term plan for growing your real estate empire with leverage. Start your pre-qual, and even chat directly with President Caeli Ridge, while it's on your mind, start at ridgelendinggroup.com that's ridgelendinggroup.com

Keith Weinhold 2:07

Flock Homes helps multifamily owners exit the operator grind, whether it's your six plex or a 50 unit apartment, through a 721 exchange. This defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management. Request your initial valuations. See if your property qualifies at flockhomes.com/gre That's F L O C K homes.com/G R E.

Speaker 1 2:40

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 2:56

Welcome to GRE, from Keene, New Hampshire, to Kenai, Alaska, and across 188 nations worldwide, I'm Keith Weinholding. You're listening to Get Rich Education. Everybody knows that a mortgage rate is the interest rate that a borrower pays on a property loan. Okay, sure, that part is easy. And then, oh boy, the misunderstandings begin about eight seconds later, where will mortgage rates be in 2030 I want to tell you about this and more, because mortgage rates are one of the most talked about parts of real estate, and people discuss them with this confidence and bravado of a guy at a semi quincentennial barbecue that's explaining crypto and nutrition between bites of potato salad, yet he's probably got a lot of things wrong. In the next few minutes, though, you're gonna know more about mortgages than 99% of Americans. Let me tell you about five Goliath mortgage myths that throw a lot of people off, and this includes what mortgage rates are going to be, both next year and in 2030 The first myth is that mortgage rates are high today. I almost can't believe the number of people that say this in the world that I'm in. I hear it almost every day. The reality is that mortgage rates have normalized. The 30 year rate is currently normal to low. Now, I shared with you before that the long term average is 7.7% per Freddie Mac. They have the best, most respected stat set on historic mortgage rates, and theirs go back to 1971 Well, today's rate is between six and 7% They just don't feel low after the freakishly low era about five years ago. Now, after I tell you about mortgage rates in 2030 I'll tell you also about whether we're ever going to go back to the. 3% mortgage times. Understand, it's not just mortgages, but most other interest rate types are also on the low side today. A lot of rate types are based on the effective federal funds rate. What's based off of that are rates for credit cards, HELOCs, some business loans and personal loans, they are all based on the prime rate, which is based off of the federal funds rate. Well, the federal funds rate's long-term average is 4.6% Do you know where they're at today? 3.6% So, the fed rate is fully 1% below the long run average. The second myth, gosh, and this is such a pervasive one too, is that when mortgage rates rise, home prices fall. This is such a myth, and because I've talked about this premise before, let me bring some fresh angles to it for you today, with some historical accounts too, because the reality is that when mortgage rates rise, home prices usually rise right along with them, but sharply rising rates can slow appreciation, and before we move on, one of the most famous, I suppose, American real estate investors ever. He spoke about mortgage rates recently. Let's see what he says. This is under a minute in length. Oh, and he also happens to be the current White House occupant.

Donald Trump 6:34

I made billions of dollars with housing. I know housing better than anybody, maybe anywhere. It's all about the interest rate. Lower the interest rates. You can have all the housing you want, but you have to understand, I don't want to have - I don't want to hurt people that own houses, too. These people, for the first time in their lives, they have valuable houses, they become rich. I don't want to hurt them either. What you want to do is what's good for everyone? Get the interest rates down. We have this num skull that was the head of the Fed before, and he's a stupid person, and we call him too late because he was too late with the interest rates all the time. We need low interest rates. Low interest rates will solve everything, will solve that.

Keith Weinhold 7:18

Well, lower interest rates don't solve the main problem, though. We need to build more housing no other than the fact that low rates could make it a little easier for builders to finance their operations. Lower mortgage rates do nothing to increase the housing supply, and, contrary to what most people think, rates have exceedingly little to do with home prices. When mortgage rates blew past 18% in 1981 they were between 18 and a half and 19% Then, what do you think that home prices did? Well, they kept on rising right through it since 1994 Mortgage rates rose 1% or more six different times, and home prices went up all six times. Even when mortgage rates tripled three years ago, home prices still climbed on a nominal basis. How do they do that? Well, the short version here is that we've got to think about what's happening in the larger economy when rates rise. What does that mean? What does that signal? What is that a symptom of rates rise to keep a hot economy from overheating, and when the economy is hot like this, that usually means people are employed and they're confident and they're financially flush, so then what do they want to do? They want to buy a home, and therefore there are more bidders. That's why higher rates usually lead to higher home prices, and they're talking about raising rates again, because employment has been resilient, and inflation is more than double the Fed target. All right, well, if higher rates usually correlate with higher home prices, then do lower rates mean lower home prices, no, because nominally home prices rarely fall at all. Now, what then did rates do when real estate prices had a rare national fall in those years around the 2008 global financial crisis? Do you know? Do you know what mortgage rates did then? Do you think that mortgage rates were up or down during the global financial crisis? And this is a definitive answer. There's no gray area. They were clearly either boldly up or boldly down. What do you think during the global financial crisis? Mortgage rates plummet. Did more than 2% so the only time since the Great Depression that national home prices fell substantially, mortgage rates also fell substantially.

Keith Weinhold 8:05

The problem in that era, around 2008 is that you often could not get a loan, banks were barely lending, man. People overlook this. You can't just assume that you can get a loan whenever you want it, even if you qualify. But yeah, it's just amazing how many people believe this. I guess second myth. I mean, it is one of real estate's most persistent fairy tales that when mortgage rates rise, home prices fall, that just doesn't happen. And gosh, it feels like I explain this to somebody every week, that when mortgage rates rise, home prices usually do too. If you explain this phenomenon to somebody, I think what you can tell them is that history shows, and as I like to say, take history over hunches. History shows that mortgage rates don't have much to do with home prices. The, I guess, third mortgage myth out of five is that the Fed sets mortgage rates. The reality is that they don't, and you probably already knew about this one, because you're unusually sharp, and you're listening to this. Mortgage rates are more closely tied to the 10 year treasury yield, and inflation expectations, and bond market demand, and lender spreads, and the appetite from investors for mortgage-backed securities, and even your credit score, that's what mortgage rates are tied to. The fourth one here is that you should wait for mortgage rates to fall before buying, and the reality is that maybe you should, but usually not. And again, we can look at history here almost every time you look back at when you purchase property and how much property you owned when you added it into your portfolio, there you know. Do you ever think, oh gosh, I sure would have been better off had I waited two years. Now, if you do wait two years, what happens? Prices will almost certainly be higher, and you don't know where mortgage rates are going to be. Run the numbers, and you'll probably see that waiting is not the free lunch that some people think it is.

Keith Weinhold 9:13

The main problem with waiting is that it delays how the real wealth gets created from the five ways real estate pays, and to my earlier point, if you do wait, you're probably still going to be able to get a loan, but mortgage markets can seize up in times of distress, and you might not be able to get a loan at all. A lot of people just assume that credit is always going to be available. We don't know that for sure. Now, let's take a look at my most ill-timed real estate purchase ever, since we're talking about timing, and this is when I bought a green fourplex building in May of 2007 right on the precipice, just as we were about to tilt in to the global financial crisis. I paid $530,000 for this property. It was pretty nice, like not a beautiful building, but just a good setup where every tenant had their own attached one car garage in that building. Okay, so I did not wait, and by the way, this was a big purchase for me at the time. I mean, 530k perhaps that's about a million dollar purchase in today's inflation-adjusted terms. Back at that time, that was my biggest property yet, until I got into larger apartment buildings and other single-family homes and things like that. But what happened just after I bought this in 2007 Well, that green fourplexes value temporarily went down, and during this time I was paid the other four ways that real estate pays. Rates fell during the global financial crisis, so I had a refinance opportunity, and then that green fourplexes value had fully recovered by about 2012 or 2013 and it paid me positive cash flow every single month that entire time, and that's it. That was actually my worst timed purchase ever. That scenario, the worst mortgage conditions in anyone's lifetime, and it still wasn't so bad. Well, here's what else happens with the strategy of waiting for rates to fall. When rates fall, more buyers tend to rush in, and because you've got more buyers that qualify for a. Mortgage that didn't qualify previously, that means more competition. There are fewer seller concessions, if any, and there are higher prices. It might even create bidding wars, somewhat like we had in 2021.

Keith Weinhold 9:13

The last of the mortgage myths is that mortgage rates can be predicted, so you had better pay close attention to forecasts. Oh no, the reality is that trying to predict mortgage rates is about as predictable as to whether your contractor is actually coming on Tuesday. Let me tell you, all right, what the prominent analysts and agencies have to say about the future of mortgage rates, amalgamating forecasts from Fannie Mae, Wells Fargo, the Mortgage Bankers Association, a Reuters poll of economists, and more. By the end of next year, okay, so about 18 months away, they all cluster in a range of 6.2 to 6.5% This is for the 30 year fixed rate mortgage by the end of next year, and for 2030 it is about 5.8% That's what we're looking at for crystal balls of all these agencies, if you average them together, and you know what I have to say about these numbers, don't count on these at all. These people do not know, nobody does, they'll probably even tell you that they don't know. Okay, they are your forecasts right there. And what about us here? GRE does not make mortgage rate forecasts. We only make a home price appreciation forecast annually, and we are not about to make mortgage rate forecasts here. That is because they're just really hard to predict, and therefore that would not serve you. It's really just a form of entertainment that's a poor use of your time. It doesn't serve you. Making a bold mortgage rate prediction is exactly how economists audition for humiliation.

Keith Weinhold 17:14

Mortgage rates, future direction, that's based on so many factors, like inflation, jobs, treasury yields, deficits, geopolitics, oil prices, and wars, and the future direction of mortgage rates has to do with investor sentiment, which often changes and often doesn't make sense, and whatever new fresh economic surprise is going to wander in tomorrow, and you know, I'll tell you, when I was a pretty new real estate investor, and I had a property under contract, I remember sometimes asking my mortgage loan officer over the phone, now, do you think that mortgage rates are going to be lower next week, because maybe then I should wait and lock in. I mean, that's a question I asked a number of times. I mean, sheesh, it would have been just as useful if they answered by reading me their horoscope. Now, that is not a knock on mortgage loan officers in any way. They're smart people, but they just know the borrowers do want some insight, but it's just so hard to forecast now that you know that most forecasts base around 5% mortgage rates in 2030 which is useless information. Will rates ever be 3% again like they were about five years ago? There is no forecast by any of these agencies that predicts a 3% mortgage rate at all in the next five years, but you know, really, you have to ask, Who saw that there would be such low home loan rates on the horizon back in 2007 and things like the Great Recession and a global pandemic, you know, those sort of black swan events, they're just rarely, if ever, on the radar, and see drastic events like that are what it takes to move mortgage rates down into the seller, but a couple things are for sure, 3% mortgage rates anytime soon are extremely unlikely, and if that does happen, it probably means that there has been a real world calamity. Okay, that's what I can tell you.

Keith Weinhold 19:31

I've got more to tell you here, but to summarize what you've learned so far today, in this era, rates of all types are historically a little low, contrary to popular belief, mortgage rates have little to do with home prices. Waiting for rates to fall rarely works, and mortgage rates are nearly impossible to predict. And my favorite way to make it easy for you to remember how interest rates move in an account. Economy is that they are like walls. A high interest rate is like a high wall. It's an impediment to the movement of money, because people are less likely to borrow and more likely to save, since savings accounts yield more. And then a low interest rate is like a low wall that you can easily just step over it facilitates the movement of money, making you more likely to borrow and less likely to save. And if you want to understand more about how interest rates move economies and affect real estate, and you like analogies like that, I discuss more about how interest rates are like money walls in the latter portion of GRE episode 573 I've got so much more for you today. Straight ahead, I'm Keith Weinhold. You're listening to Get Rich Education.

Keith Weinhold 20:53

Flock Homes helps you retire from real estate and land learning, whether it's one problem property or your whole portfolio through a 721 exchange, deferring your capital gains tax and depreciation recapture. It's a strategy long used by the ultra wealthy. Now, mom and pop landlords can 721 through residential real estate. Request your initial valuation, see if your properties qualify at flockhomes.com/gre that's F L O C K homes.com/G R E. Let me ask you something. If you've worked hard to build wealth, is your money positioned to actually support your goals? A lot of accredited investors leave capital sitting in cash because it feels safe, but inflation and missed income opportunities can quietly erode its value. Freedom Family Investments offers freedom notes for investors seeking structured income backed by real estate. It's a straightforward approach built on real assets, not speculation. In full disclosure, I'm an investor myself. What I like is that their team walks you thr

Keith explores when the U.S. median home price could realistically hit $1 million and what long-term drivers like inflation, construction costs, and housing scarcity mean for investors.

He reveals the hidden issue of America's aging housing stock, explaining how outdated and inadequate homes quietly distort inventory data and reshape opportunities for renovation and build-to-rent strategies.

Keith also draws lessons from former Fed Chair Alan Greenspan and unpacks why some of the "worst" high-crime cities can still offer strong rental fundamentals, helping listeners think more clearly about risk, market selection, and long-term wealth building through real estate.

Episode Page:

GetRichEducation.com/612

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host, Keith Weinhold. When will the median US home value hit the $1 million mark? I have the best answer for the exact year that it will happen, and it's probably sooner than you think. Also, there's a big hidden problem in America's housing market today, and no one is talking about it. It's not prices, mortgage rates, affordability, nor is it inventory. I'll tell you about it and more today on Get Rich Education.

Speaker 1 0:30

Since 2014 the powerful Get Rich Education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord, show host Keith Weinhold writes for both Forbes and Rich Dad Advisors, and delivers a new show every week. Since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top-selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps. Build wealth on the go with the Get Rich Education podcast. Sign up now for the Get Rich Education podcast, or visit getricheducation.com

Keith Weinhold 1:14

You know, Mid South Home Buyers, that top Memphis turnkey provider, I learned that a secret weapon behind their explosive growth is more than just you buying their properties. It's an executive coach for nine years now. Their CEO, Terry Kerr, and his COO, Pat Nix, have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners, his name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally, you can fill out an application for a free consult. This is private one on one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to danielthomashind.com h i n d, that's danielthomashind.com and sign up before Spotsville Flock Homes helps multifamily owners exit the operator grind, whether it's your sixplex or a 50 unit apartment through a 721 exchange. This defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management. Request your initial valuations. See if your property qualifies at flockhomes.com/gre that's F L O C K homes . com / G R E.

Speaker 2 3:00

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 3:16

You're listening to One America's longest running and most listened to shows on real estate investing, not flipping, not speculating, not whatever the latest hot thing is, but prudent long-term real estate investing. This is Get Rich Education. I'm your host, Keith Weinhold. You've got to believe that you were not put on this earth to live a mediocre life and waddle in the safety of mediocrity. Your investing should be a reflection of that. You've got to believe that you can obtain financial freedom when you're young enough to enjoy it. What would be the point of deferring financial freedom until you're old, like, what would that point even be? I mean, just imagine a rich elderly version of you. It cannot buy youth. Youth cannot be bought. Look, right now, if someone offered you $20 million to be age 85 tomorrow, the probability that you would take it is pretty much zero. So then build sustainable, durable wealth now today, and with a sense of urgency. That's what we're doing here. A $1 million national median home price. When do we get there? Well, back in 1990 the median national home price was about 120k and you know, funny as it sounds, you can read about how back in 1990 people thought that homes were highly priced, even overpriced, and that maybe they'd need to start. Going down, why was that? Well, just three years earlier, in 1987 they crossed over 100k for the first time. So psychologically, six figures for a home price, that was still a fairly new phenomenon. In 1990 mortgage rates were 10% then for a 30 year fixed rate loan, and by the way, 10% mortgage rates didn't feel too bad to homeowners and real estate investors in 1990 because as recently as 1984 they were 14 and a half percent. Roll it back a little earlier to 1981 and mortgage rates were over 18% then, and of course, mortgage rates are a friendlier six to 7% today, but remember we're talking about home prices here, and when it comes to the trajectory of home prices, rates are really just trivia, because as I've discussed here on the show for years, to many people surprised, mortgage rates have almost nothing to do with home prices, contrary to popular belief, but to those people in 1990 that were still somewhat freshly getting used to six figure prices that were now 120k at that time today's median home price of 429,000 to $300 would have sounded as absurd as paying $18 for airport trail mix and $24 for airport beef jerky, yet here we are.

Keith Weinhold 6:36

All of those prices are true. That's where we are today, all right. Well, from 1990 till today, home prices have nearly four exed. So, with that backdrop from recent history, what about a million dollars? When do we get to that point? Well, home prices only need to go up about 2.3x from here. Yogi Berra said it's tough to make predictions, especially about the future, and I want to credit Dr. Lawrence Yuen, any our chief economist, for doing this analysis and sort of getting this conversation started, because when we look at the national median home price hitting million dollars, this forecast assumes zero price growth for this year, although home prices are now up 1.8% year over year. Here we go at 3% price growth from today, we get to a million in 2056 at 4% it's 2049 at 5% price growth, it's 2045 and it's 6% home price growth, it's 2042 and that's just 15 and a half years away. One part that I really want to credit Dr. Yoon for is that if you take the actual price trend from the last 25 years with all of its ups and downs, which also gives you an average annual gain of four and a half percent, by the way, and you project this into the future, that path reaches $1 million in 2048 just over two decades away, so taking the past quarter century, then, and extrapolating it into the future means we hit a million dollars in just a little over 20 years. So, therefore, perhaps the most prudent and sensible projection gets us there in 2048 But look, it's easy to make the case that growth is going to be on the higher side of these estimates, I mean, just look at what's going on now.

Keith Weinhold 8:45

Already, inflation is over 4% and there are all kinds of forces that are poised to push that inflation rate higher. I've talked about those in recent episodes. Today, 42 out of 50 states show annual home price gains. Near-term sparks to more home price growth are energy and material price volatility from tariffs and wars, which are poised to push up the replacement cost of homes. And you know, when your property's replacement cost rises, all capital values tend to rise as well. There's also pent-up demand and still paltry supply in most US regions. I'll get to that, but regulatory costs alone are now $132,000 for a new single-family home. You heard that right? Yes, the cost of zoning and other regs is now 132k and that figure is sticky. That does not tend to come down, and then you've got these longer term bonfires, not just the short term sparks that I mentioned, but the longer term bonfires that could make million dollar median home. Dollars occur before 2048 This construction of data centers and all the resources that it takes, and chips, and copper, and electricity, that's all inflationary for our society. When we're building that infrastructure, our currency will keep getting diluted to deal with huge debts like defense and social security payment commitments and interest payments themselves, I mean that part is plain as day new household formation that's expected to push up demand until at least the late 2040s and after that demographically things could turn, but the base case remains 2048 here for the million dollar median home, so this million dollar mark, you know, it's not some sci-fi housing fantasy where your realtor shows up in a flying car, okay, values are already approaching a half million, and this figure of a million that is just 1000 1000, it's not some incomprehensibly gigantic number that's shooting for the moon and the stars, so really the bottom line here is that a million dollar median national home price is an almost inevitable destination and is being pushed up by appreciation, inflation, replacement costs, and scarcity.

Keith Weinhold 11:25

The real question is not whether this happens, but it's when it happens. That's why I gave you the year of 2048 as the base case. I want to talk more about housing scarcity shortly, but first, for some historic perspective, do you want to know how much my parents paid for their home in 1974 I thought I knew the figure, but I wanted to check with Dad, and he let me know, and it was what I thought. All right, first, I think I've shared with you before that my parents still live in the same Countersport, Pennsylvania home, the old smallish Victorian style home built in 1917 They've lived in that continuously since Richard Nixon was our president. And you know, when I go visit my parents, I get to sleep in the same bedroom that I have since I was an infant, just amazing. Also, do you know that that home where I grew up, and they still live in.. Do you know that home is location? Do you know where that location is? On what I'll call the urban to rural spectrum, it's interesting. The home is not in a city, it's not in the suburbs, it's not in the exurbs, it's not in the country, and it's not in a planned community either. What's left? Do you know where it might be? Maybe you're thinking too hard. It is in a small town, that's the answer. A small town with a gridded street pattern and Main Street, that's called Main Street, and old brick businesses. It is a standalone community with its own identity and a really slow pace of life. Its population was about 2600 at the turn of the century, and it's down to about 2100 residents today. And Cowder Sport, Pennsylvania, is a remote place, it's over two hours to the nearest international airport in Buffalo, New York, and there really aren't that many flight routes out of Buffalo either. So, for that detached single-family home that does have a big yard, my parents bought it in 1974 for $20,000 exactly 20k and they quickly got that home paid off back in the day, about 58 years ago.

Keith Weinhold 13:48

The only financing they had, it wasn't a mortgage in the traditional sense, rather my mom's parents gave them a small loan to put toward that 20k and it was an interest-free loan, and the seller kind of gave them my parents there this adjacent grassy lot, practically free. The person that sold it said they didn't feel like mowing it. That wouldn't happen today. Real estate is just more coveted and calculated, I think. It'll just go throw in a lot, and you can guess who had to mow that adjacent grassy lot more than a few times? Yours truly. And hey, I might even mow it again this year when I visit my parents, and my dad listens to this show, and he sure hopes so. It's not a bad looking home today. I definitely did not grow up dirt poor, but just modestly, there was only one bathroom for our family of four that we all shared, and yes, what this meant was patience, timing, and the ancient art of knocking on the bathroom door with urgency sometimes, and we all took baths only until I was age eighteen, there was just simply no shower until then. We all shared one car, a Subaru station wagon, definitely not deprived in a great childhood, just living modestly. Well, today's median home price is now 22 times the 20k that my parents paid for their home in 1974. Homes in countersport are a lot cheaper, so maybe it's just 12x there. But see, the point is that the home doesn't have more utility because it doesn't have any more than the same three bedrooms today. It's got about the same amount of usefulness they did add a second bathroom. What happened is that our currency has just debased enough to be worth about 1/12 as much as it was in 1974 That's why the price is up 12x Before I get to national housing scarcity factor, maybe you've always wondered where I get my abundance mindset from, since I grew up in a small simple remote place, I'm not sure it's just an internal confidence gain from somewhere. Sometimes I wonder if where I grew up actually contributed to growing my means rather than living below my means, because at some point subconsciously I might have thought before that, you know what, if I fail big in life, then I could always move back to old counter sport and own a decent home for just 200k in a town where I know people, maybe it worked that way, and I moved away from that home for good at age 23.

Keith Weinhold 16:44

By the way, that's when I left the nest. As you know, I like to say the most important thing here is that I won the parent lottery - decent, stable married parents. That means considerably more than inflation or economic factors ever could two grade A parents now getting back to housing's scarcity factor. Did you know about what's happening with the available inventory of homes now after four years of rising supply? The inventory trend has flipped. There are now fewer homes for sale nationally than there were a year ago, and this has really thrown off some forecasters that thought inventory would climb about 10% this year. Instead, we have fewer one to four unit properties on the market today than we did last year. This matters because it could signal the next phase of the housing market, it's important to identify these inflection points right here, if it truly is one, because shrinking inventory, that means fewer options for buyers, more competition, and eventually upward price pressure, if the trend holds, but that's not here yet, we haven't seen home prices really take off. A decade ago, there are about one and a half million available homes. The pandemic low in 2022 is where we hit a jaw-droppingly low, 350,000 available homes. I mean, really scraping the bottom, those were the days when there were 40 people in line to see one open house, that was nuts.

Keith Weinhold 18:28

Okay, from those scarce, scarce days that has rebounded to 1.1 million available homes the past year or two, and this year it stepped back a little to about 1 million available homes for sale in this nation, so bigger picture today we have 30 to 35% fewer homes available now than we had a decade ago, and remember we've also got to account for the fact that we've had population growth since that time as well, that's why demand continues to exceed supply, so really the housing shortage is a little worse whenever you factor in population growth. So this really speaks to the scarcity, and so does something else here. And there's a big hidden problem in America's housing market today, and nobody, like no one is talking about this, it's not prices, it's not mortgage rates, affordability, nor is it inventory, it's the fact that America's housing is aging with the median now 45 years old, that's older than America's homes have ever been, and 45 is also about the median age of a TikTok user's parents, I think. Now, an 80s built home isn't exactly ancient, but this really factors in here. Now, in Buffalo, Pittsburgh, and Cleveland, the typical home predates 1960 in Austin and Raleigh, it. Is post 2000 so it feels like the Northeast is replacing avocado green appliances, and the Southeast is just replacing Ring camera batteries, because, as you'd expect, fast growth areas have a young housing stock like Florida and Texas and Tennessee to a lesser extent, and at the beginning of the month, I sent our newsletter subscribers this terrific national map that shows the median age of homes by city, a rare map that's pretty fascinating, and in fact, the oldest homes in the nation are in Elmira, New York. They are about 70 years old, not far from where my parents live in Countersport, Pennsylvania, and this is such an under-discussed part of the housing shortage. See, a market it can technically have what seems like available inventory, but still not actually have habitable, financeable, insurable, affordable housing, and older housing stock that creates friction with repairs and appraisals and insurance and affordability.

Keith Weinhold 21:10

Harvard's Joint Center for Housing studies found that 3.6 million renter households, that's 8% live in inadequate housing with problems in multiple structural deficiencies like water leaks or serious problems with electrical HVAC or other systems, and this is a real threat to NOAA housing. Are you familiar with this term, NOAH? NOAA stands for Naturally Occurring Affordable housing, and it means properties that are affordable purely due to free market conditions, not public funding. What's interesting is that America isn't just not building enough. See, we're also retaining a lot of older homes longer than generations past did in the mid 20th century, what cities routinely did is that they demolished obsolete housing, and they rebuilt aggressively. Today, that just doesn't work in most places. Replacement happens slowly, because of higher construction costs. In this not in my backyard bickering, and zoning restrictions, and labor shortages and environmental rules. I mean, it just doesn't work that way

Keith Weinhold explores why your greatest investment might actually be in yourself.

He's joined by Daniel Thomas Hind, an elite executive coach and former COO who works privately with seven- and eight-figure entrepreneurs and real estate investors to rebuild their health, sharpen their thinking, and strengthen their leadership.

He shares success stories, including Terry Kerr's transformation, and encourages listeners to apply for his private coaching to achieve uncommon results.

Together they unpack how high achievers slip into burnout, sacrifice their well-being and relationships, and unintentionally create company cultures shaped by their own unresolved habits.

Episode Page:

GetRichEducation.com/611

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host, Keith Weinhold. On this investing show, it's been a long time since we've discussed investing in yourself. We do that today with an amazing guest on Get Rich Education.

Keith Weinhold 0:15

Since 2014 the powerful Get Rich Education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being the flipper or landlord. Show host Keith Weinhold writes for both Forbes and Rich Dad Advisors and delivers a new show every week. Since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps. Build wealth on the go with the Get Rich Education podcast. Sign up now for the Get Rich Education Podcast, or visit getricheducation.com

Keith Weinhold 1:04

You know, Mid South Home Buyers, that top Memphis turnkey provider. I learned that a secret weapon behind their explosive growth is more than just you buying their properties, it's an executive coach. For nine years now, their CEO, Terry Kerr, and his COO, Pat Nix have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners. His name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally. You can fill out an application for a free consult. This is private one on one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators and better men. It started by showing up for ourselves. Now it's your turn. Go to Daniel Thomas hind.com H I N D, that's Daniel Thomas hind.com and sign up before Spotsville Flock Homes helps multifamily owners exit the operator grind, whether it's your six plex or a 50 unit apartment, through a 721 exchange. This defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management. Request your initial valuations. See if your property qualifies at flcokhomes.com/gre that's F L O C K homes.com/G R E.

Speaker 1 2:50

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 3:06

Welcome to GRE from Rome, New York to Rome, Oregon, and across 188 nations worldwide. I'm Keith Weinholder. You're listening to Get Rich Education. Your hardest opponent out there is rarely the market, the economy, your boss, or even your schedule, your opponent is the part of you that knows what to do and still hesitates to do it. You are your own biggest obstacle, and deep down you know it. I know this about myself too. We all keep sort of choosing familiar frustration over unfamiliar progress, a personal stay in the same bad routine, same underperforming relationship, same cluttered inbox, same poor money habit, or same low energy pattern, not because you love it, but because it's predictable and it's safe. Growth, though, requires a new identity. Staying stuck only requires repetition, and we all know how to do that already. You delay asking for the sale, or you delay asking the attractive woman out, and you justify that by telling yourself, oh, you're still refining the strategy, but deep down you know that the real issue is discomfort. We're talking about the skills that build yourself today, perhaps somewhat like we did in two episodes with Chris Voss. When you learned how to be a good negotiator, one thing I've learned from today's guest is about culture. Culture is governed by what you tolerate at your company. Do you have a policy? Where you've got to reply to an email within 24 hours. Well, if you start tolerating 48 hour replies, you've tolerated less, and that becomes the new culture. And it also shows that you're going to let other policies slide too. If you let this one slide, do you expect your property manager to physically inspect your unit every six to 12 months, that's something I kind of like. Well, then don't tolerate anything less than that. And parenting is all about tolerance. I'm going to ask our guest about that. I'm also going to ask, how would you even know when you're burnt out at work? What are the hard signs to look for. How would you even know? Another thing that I want to ask about is how he discusses that you are the way that you are because of the shape that you took when you were under pressure. But I want to start by talking about health, and then transitioning. Today's guest talks in a way where you know, at least once today, I'm pretty sure you're going to say to yourself, gosh, it sounds like he's talking about me. It's been the most interesting thing.

Keith Weinhold 6:16

Earlier this year, I learned that a lot of top business owners, including some that you've heard here on the show, have had their life transformed, including pretty explosive growth in their business from working with an executive coach. And then I learned from them all, oh, it's the same guy, it's the same coach. I discovered that he's helping a lot of hard-charging business owners and investors basically get in the best shape of their life, physically, mentally, professionally. He's been especially good with types that burn out. He's also the founder of something called The Apprenticeship, where he helps corporate professionals become pro coaches. In a former life, he was a COO who helped grow a fast-scaling company tenfold, and today he's a marathon runner. He's also a literary novelist working on his second book, and since I met him in person in California recently, I've learned from him too. So I'm pleased to announce that we have this sort of secret weapon behind so many people on the show today. Welcome to GRE, Daniel Thomas Hind,

David Thomas Hind 7:22

Keith. Thank you. That's one heck of an introduction. Hi, I'm gonna have to save that and bring it with me. That's very kind of you to say, and it's a pleasure to be here.

Keith Weinhold 7:31

Oh, you're like, gosh, I can't possibly live up to that now. For those in the audio, only Hind is spelled H I N D, you know, Daniel, I'm happy to have you, because I know, and I've learned that you just really don't market yourself much, frankly, because you don't have to. You just sort of get these organic referrals from people that you already coach, but you do have a website, and it's just uncanny how, when I visited your site, people are doing video testimonials, and I'm like, oh, I know that person, and I know that person, but these people hadn't told me about you for so long, and Daniel, I think when it comes to making the best version of ourselves, or at least moving that way, we talk about wealth building on this show an awful lot, but that has quite an intersection with health.

David Thomas Hind 8:19

Yeah, it does, so my philosophy is first and foremost that health is wealth, right? It's a cliche, but so often hard-charging executive types, whether those are business owners or members of a leadership team, founders, or investors, so often these types of folks, because they're so passionate, they're so driven by the thing that they're working on, that they're building, that they'll often let other things in their life go, and sometimes it's just a season, but often, more often than not, at least with the people that I work with, and see that season turns into many seasons, turns into years, turns into a pattern, right? And it becomes this pattern, this ingrained way of being that, unless gone unchecked, can really cause problems in the long run, and so a lot of people don't exactly know what executive coaching is, and it can mean many different things for many different people. For me, it really is the intersection of your physical well-being, which, of course, includes your diet, your fitness, your nervous system, the health of your nervous system, your sleep quality, it has to do with the way that you organize and structure your days, right? So many of us just enter into a default way of doing life, and we don't. Creatures of habit,

Keith Weinhold 9:55

Yeah

David Thomas Hind 9:56

We're creatures of habit, and for successful people, those habits have helped us succeed and get to where we are, but because of that, we often don't stop and think, well, is this actually serving me anymore, or has some of these habits that used to be healthy and good for me, have they kind of metastasized into something not so healthy, maybe even dangerous or destructive, and then for these sort of people who I'm working with, right, many of them are at the top of organizations, and so these habits, these ingrained ways of being, might seep out and filter out into the company culture, into how we interact with people below us, right, and so my work is an intersection of personal health, personal development, business health, business development company culture, and so we're looking at the leader, the founder, how he shows up for himself in life, how he shows up for others, and how that defines the world around him, that he is usually, or she doesn't have to be, he, he, or she is usually at the center of, right, and so it's quite profound, because I get to be as intimately involved with people I really respect, people who have accomplished so much and who hold themselves to such high standards, and still want more, still know that there's better, still know that there's so much of themselves that they can improve upon, right? So I get a really meaty, holistic, complete inside look of these people's lives and their businesses, and so I get to work in like many businesses at once with incredible people. I'm very blessed and very lucky.

Keith Weinhold 11:37

Well, when it comes to one not having their health, I know a lot of times you told me about how you have a quote successful person, but they're successful in business, not their health. I think a lot of it comes down to one's mental conditioning, even from when they were substantially younger, shaping our worldview. I think a lot of people are programmed with this, I'm supposed to be X, I'm supposed to get this degree within 10 years. I'm supposed to be executive level with a corner office, and I'm supposed to have an eight figure net worth by that age. You know, not that all of these are bad things individually. In fact, it could be a reflection that you're contributing to society, but you know, it's sort of, are you overweighted toward professional accomplishments? Is this program supposed to stuff that you got from somewhere, the stuff that's making you unbalanced and ultimately unfulfilled. So, really, it's the success in one area comes at the expense of what? That's how I think about it. And I know you have a number of stories of helping people with just this,

David Thomas Hind 12:40

I do. And so, let me first comment on the pattern that you're describing, and then I'll, yeah, that I think the best way to really talk about is to show what that looks like in an actual example, so it's it's this shape you took under pressure concept is is a concept that I talk about with all of my clients, so every successful entrepreneur that I know has developed a specific psychological structure that they've adopted to help them survive in the early years, right, when it was just them, or maybe them and their partner, and they were going for it, they were relentless, they were acting with an insane sense of urgency, an inability to sit still. Everything felt at risk, and they really had to sacrifice basically everything else to make this thing happen. It's not the case of everybody, but most people that I know who have accomplished a lot, that they share a similar origin story, and it was like go all in for five years, forget everything else, kind of thing.

Keith Weinhold 13:39

Exactly.

David Thomas Hind 13:40

It looks like some version of that, and so for the ones who succeed and make it through that phase, that's incredible, but you know the cliche is what got you here won't get you there. It's like when by operating that way you have adopted specific ways of being, psychological patterns, ways of relating to other people, beliefs about yourself, and beliefs about, like, how unreliable other people can be, and it can really turn into a dangerous operating system when you have to start building a team and training that team and relying on that team, and then creating a shared team culture, right, a company culture, it's not just like silly exercises that you put like on the wall, like these are our values, doing like trust falls backwards, like a culture is the behaviors that you take on, and like the uniform that you put on that everybody on the team has bought into, right, and so unfortunately, most cultures are shaped by the leadership team's worst qualities, because those qualities are the things that, like, we don't hold together, right? Like, if it's this person who lashes out because somebody doesn't get it, a media. The perfect example of somebody who really has embodied all parts of the coaching, from health to your inner psychology and mindset, and how that impacts your business health and your team and the corporate culture, is my client Terry Kerr. He is the founder of Mid South Home Buyers, and I know that Terry's been a guest on this show a number of times. What an incredible person. I've had the pleasure of working with Terry for close to 10 years now, and I've been working with his COO for close to eight years as well. So, I've gotten a real inside look at that team, and Terry, when he came to me, had let go of parts of himself that he had always held sacred, which was his health and his wellness. Long story short, we started working together. I helped him redesign the way that his life was constructed, pretty much no surprise, everything about his day was oriented towards business, from the second that he woke up to the second that he went to bed. So we really re-architected, we put a lot of intentionality into re-architecting the flow of his day, so that he can make sure that he's prioritizing other parts of himself and his family, his personal health, etc.

David Thomas Hind 13:40

Over time, he lost, I think, that first year he lost something like 60 pounds. He took on meditation as a practice. He started exercising daily, and Terry was a skateboarder growing up, so he was always, yeah, he was big into fitness and in his own ways, and just had let it go for the sake of the company, because for years it was just him building this thing, and most people would say, "Wow, I've done it, like I'm successful, I overcame these things that were weighing me down, and we're done here, but Terry was so opened up by the experience that he wanted to keep going, and he didn't even know what that meant, but over time he's invited me into the way that he operates. Period. As a leader, making decisions for his business, how does he interact with his employees, with his leadership team, so I've effectively become like the inside man, basically become like an AI, but a person who you can run decision making through, right? So, as to check those parts, those impulses, those impulsive parts of ourselves that just like want to do something, I've become like a check for him, so we're communicating on a daily basis. What are the most important things that we need to accomplish today? Are we making sure that you're spending time with your family? Are we making sure that you're getting your exercise in? Is your assistant organizing your food and dinners and everything else for you? Where are you going out to restaurants?

David Thomas Hind 17:59

Right, it's that level of intentionality of being part of almost every decision that over time, like at first we have to put a lot of attention into, because we're building new habits and we're breaking old ones, but over time these become ingrained and then we can start to take on new projects, new habits and routines and ways of being that we want to basically program, and so over these past 10 years, the company has absolutely exploded, and I'm not going to say that it's because of me, but I am going to say it's because Terry has taken on personal growth and growth in general as a vocation, and not allowing his own stops and blocks get in the way of the company going where it needs to go, and so over that time they've really changed the leadership structure. They've let a lot of people who weren't cultural fits go. They have assembled an entire leadership team now below the owners who have a lot more responsibility, whereas everything used to just go right up to the owners, and, and they were pretty much deciding on everything. So we really created a structure, a culture. We've let people go who no longer fit. We brought new people in who do, and you know, I will say that it's a direct result of that level of intentionality and specificity that Terry brings to his day every day, and Terry has given me his blessing to talk about him, or else I would never reveal so much of a person's inner life and inner work like that. But it's just his story is such an inspiring one for me, and that is so cool to get to share with others.

Keith Weinhold 19:38

I'm glad that you checked with Terry, because as you're talking about this I'm thinking I better talk to Terry after this and ask him if this is okay, but it's been said that culture, including company culture, is not what you say or what you do, it's what you tolerate.

David Thomas Hind 19:54

Yeah, well, that's what we said before, is that most found. Treat culture as like an HR ex

Keith shares his "dirty dozen" due diligence questions every investor should ask before buying property, from gauging build-to-rent saturation and local job growth to testing cash flow and exit strategies.

He explains why even new-builds still need inspections and how to think about rents that may stay flat while expenses rise.

Aundrea Newbern, an experienced investor, broker, and property manager active in Southeast Georgia and Michigan, offers a real-world look at today's long-term and short-term rental markets, including shifting tenant behavior and local restrictions.

She also details how she's using AI to streamline property management, improve screening, optimize pricing, and cut maintenance costs, giving listeners practical ideas to apply in their own portfolios.

Episode Page:

GetRichEducation.com/610

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE. I'm your host, Keith Weinhold, talking about vital due diligence questions that you have to know the answers to before you buy your next property. Even advanced investors don't know to ask some of these. Then a terrific guest tells us how she is practically applying AI to increase rental occupancy, save on maintenance expenses and drive rental income today on Get Rich Education.

Speaker 1 0:28

Since 2014 the powerful Get Rich Education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord show host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week. Since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests and key top-selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps. Build wealth on the go with the Get Rich Education podcast. Sign up now for the Get Rich Education podcast, or visit getricheducation.com

Keith Weinhold 1:11

You know, Mid South Home Buyers, that top Memphis turnkey provider, I learned that a secret weapon behind their explosive growth is more than just you buying their properties, it's an executive coach for nine years now. Their CEO, Terry Kerr, and his COO, Pat Nix, have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners, his name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life physically, mentally, and professionally, you can fill out an application for a free consult. This is private one on one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to danielthomashind.com H I N D, that's Daniel Thomas hind.com and sign up before Spotsville Flock Homes helps multifamily owners exit the operator grind, whether it's your sixplex or a 50 unit apartment through a 721 exchange. This defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management. Request your initial valuations. See if your property qualifies at flockhomes.com/gre that's F L O C K homes.com / G R E.

Speaker 2 2:57

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 3:13

Welcome to GRE. I'm your host, Keith Weinhold. The world's biggest problems are also the world's biggest businesses. That's not a coincidence, and it squarely includes the problem of having enough quality housing. We talk about how to do that profitably and diligently, and on the topic of diligence, I've got a dirty dozen due diligence questions, call it I suppose these are smart questions to ask before you get under contract to buy your next property, and some of these could just as well apply to your existing rental property. Build to rent properties have become so popular, but ask the question, are these build to rent properties becoming overbuilt in this neighborhood? That's the first due diligence question, and a lot of investors overlook this, so you got to be mindful that build to rent often means lots of new construction in one smaller defined area. What you should do is ensure that new supply is being absorbed by renters. Some red flags to look out for are if multiple nearby communities are offering heavy concessions or free rent enticements, that is a sign that they're having difficulty luring in new renters to the area, and now taking a couple months to rent a brand new build isn't that unusual, but does the whole thing kind of feel like a mattress liquidation sale? Renters shouldn't have more signing bonuses than NFL free agents. The next due diligence question: Does this market still have population? And job growth, or am I late to the party? New workplace construction is a bullish market sign. Workplace construction, I'm talking about like a new office building, especially a new medical clinic, a new data center, a new factory. These signs are super bullish for an area, because not only does that attract the jobs and support the housing, as you can imagine, but see, that also means that whomever built the new workplace, oh, they probably did some research, and they're bullish about that area for a reason, they're going to look into that and do their due diligence that you can leverage before they spend perhaps 10s of millions of dollars or more in building a new workplace.

Keith Weinhold 5:45

The population should be stable or rising. Red flags are if growth already peaked and layoffs are increasing, don't arrive late to the party after the DJ has already packed up. The next question, when you're looking into a property, is is this unit likely to cash flow on day one? You know, you need to wonder, is the unit occupied or vacant. Some investors don't even think to ask that question until they get down the road a ways. When it's occupied, does the rent meet or exceed expenses with a buffer for maintenance and vacancy, now, if it's negatively cash flowing and you're solely enjoying the other four ways real estate pays, that might be okay, but you need to be comfortable with adopting a monthly bill that may or may not work. And do you know what I call a negatively cash flowing property? I call it a 401k property, because you have to keep feeding it every month like it's a 401k. A negatively cash flowing property effectively reduces your salary like a 401k does, and anyone that is serious about building real wealth when they're young enough to enjoy it would not invest in a 401k outside of the employer match portion.

Keith Weinhold 7:07

I'm your host Keith Weinhold. Here on Get Rich Education, episode 610 I've answered three out of twelve dirty dozen due diligence questions, and with abundantly minded grow your means answers that you're just not going to find on ChatGPT. Before I get to the fourth one, do you know what the word diligence means? Anyway, you probably have some idea. The definition of diligence is the quality of working carefully and persistently, demonstrating steady effort and thorough attention to a task. It implies a strong work ethic, meticulousness, and a commitment to completing duties well. All right, that is the definition. Diligence is the opposite of negligence. The next one, does my new build property need an inspection first? And this is a question, actually, that came in from Jake in Manhattan. Yes, it always does, whether it's resale or new build. It is always a good idea to get an inspection. One of the biggest misconceptions, really, is that new build means problem free.

Keith Weinhold 8:16

People just equate new build with problem free. No, that is not the case. New build can have problems. There could still be foundation cracks that are beyond normal settling, perhaps improperly installed roof flashing that could cause leaks, maybe windows or doors that are installed out of square, and a bunch more stuff that could be wrong, even in new build a presale inspection after you get the property under contract that only costs 350-650 dollars for single family rentals and 500-900 dollars for a duplex. This is cheap insurance. It's also good peace of mind, get it done. Sometimes investors want to skip the inspection when they need a quick close. Buyer, beware of the risk. The fifth due diligence question: What happens to my numbers if rents flatten for two years? And this is a more germane question than usual today, because rent growth is slow here in this cycle. Single-family rents are up just 1.3% year over year per totality, and expenses tend to rise with inflation. All right, so if your rents flatten for two years, project that ahead like your other expenses are rising, and see that the property would still remain financially stable. We cannot build a business plan on motivational quotes. Next, am I buying near major employers or near hopes and dreams with work from home trends, which can probably better be called. Called work from anywhere, trends buying near major employers is actually less important today, but it still matters. It is good to have diversified employers and stable payrolls somewhat nearby. Promises about future development might never happen. Sheesh, some areas have been up and coming since cassette tapes, the seventh due diligence question, what's the property tax trajectory here? That's the question. Taxes are often stable and increases predictable, but is there a local budget shortfall? And see, this is the type of due diligence that few people do keep in mind, and I'm bringing up new build a lot, because there are so many new build income properties today on new builds. Also, look out, year one taxes can look deceptively low until improved property is assessed in year two, and any reputable provider, and when you contact our GRE investment coaching here, we're going to point that out to you.

Keith Weinhold 11:05

This is how you can, though, sometimes get unusually low property taxes in year one if they have not assessed the improvement yet. Question eight, and this comes from Violet in Peoria, Arizona, is the builder offering real incentives, or are they just hiding the true price? Okay, well, incentives - they should genuinely improve your deal without inflating the pricing. Here, look out for sunglasses and a fake mustache for financing. It's mandatory that you have an appraisal. This protects you against overpaying in an appraisal, even though it's done for bank collateral purposes, checking the quality of their collateral, which is the property, you know, it is also a good independent third-party valuation check. This is a good tool to keep you from overpaying. Back around the 2008 days, the global financial crisis, you know, often then the lender and the appraiser could collude to give you favorable appraisals, somewhat inflated values, and as it turned out, I was an investor then and ended up being the beneficiary of some of those favorable appraisals, but since then the CFPB, the Consumer Financial Protection Bureau, stepped in. They were formed to step in, so that those parties are no longer in cahoots with each other, and yes, incentives are explicitly disclosed to the lender and appraiser. For example, if you have a seller that offers to pay half of your closing costs if you pay their full sale price. Okay, the appraisers do know that they have that information before they provide you with the appraised value. Ninth, what's the vacancy rate in this area right now? This is a good due diligence question to ask. A balanced market has about five to 6% vacancy, eight to 10% or more. That can often be the sign of a weak market, but this might be all right in build to rent communities, and that's due to longer initial lease up periods that you have there. Due diligence question 10. Would I still want this property if appreciation slowed dramatically? You want to ask yourself this question because you cannot predict appreciation. The answer to this question is most likely yes.

Keith Weinhold 13:35

You would still want the property even if appreciation slowed dramatically, because as a listener here, you understand that with a 20% down payment, just 2% price appreciation creates a 10% return on your equity, and you're also benefiting from the other four ways real estate pays, but if you're absolutely counting on appreciation to do all of the heavy lifting over the long term, that's less investing, and that is more hoping with spreadsheets. What's more predictable is something like inflation profiting on your loan, which is a force on its own. Next, ask this question: How old are the big ticket items like the roof, HVAC, plumbing, sewer, and electrical? I mean, if you get a number of expensive items that are near the end of their life, you could soon become emotionally attached to ibuprofen. At GRE Marketplace, we work with either extensively renovated properties or new build properties, so this is rarely a concern. These big capex items, capital expenditures, and that is really the way to go. Extensively renovated or new build property, because see that way the cost of having all this done for you both. Before you buy the property, that means that what you're essentially doing is financing the cost of all this into the loan, you're financing into the new roof, HVAC, plumbing, sewer, electrical, if any of that applies, and if you're buying a fixer upper, well, then a lot of times you need to pay cash for these items, and you lose repair time where the property could have been rented during that renovation time. Work with our investment coaching here, and you're going to be all set. Those big ticket items are rarely a concern. And then what happens is, if you have a break even or a positively cash flowing property. The tenant covers all of your operating expenses with the rent payment, and you never have to pay any money at all for these big ticket items. They pay for your mortgage and everything else, and you never lose the time because these things were done before you bought.

Keith Weinhold 16:01

And the last one question 12. What you want to ask is, what's the exit strategy if I ever want to sell? That's the last question. Begin with the end in mind. The fewer doors the property has, the easier it is to sell. Single family homes win big here. I mean, your eventual buyer down the road, they could be a gleeful owner occupant, even if the rental math were poor. That buyer wouldn't even know that the rental math is poor, because they're not renting it out, they're going to live there themselves. Sometimes your single family rental tenant even becomes your eventual buyer. This can work with duplexes too. Sometimes you can get an owner occupant, or your tenant stays there and continues to reside there as they're the owner, and they rent out the other side as well. But if you're trying to sell at 30 duplex, well, now you're exposed to cap rates and investor sentiment and market cycles, it's sort of like trying to offload a small corporation. That doesn't mean that apartments are bad, but they are substantially less liquid than single family rentals. That's your exit strategy that we're looking at. They are the dirty dozen due diligence questions every investor feels bumps, I have you will too, but these questions and answers are really going to go a long way toward helping you own right, and when you stick with it, real estate is a forgiving and lucrative asset class because you're paid in so many ways. Hey, coming up shortly, a guest that you haven't heard from in a while, and I know that some of you have missed hearing her voice. We'll talk a bit about the state of the real estate market here in a period where prices are remarkably stable, housing transactions are only about 80% what they usually are, and then we'll discuss how she's using AI in her real estate investing today. It's how she's increasing her occupancy and optimizing the amount of rent being collected. She splits her time in a couple ways between real estate markets in both Michigan and Georgia, and then in both the short term and long-term rental markets. That's next. I'm Keith Weinhold. You're listening to Get Rich Education. What if you got your mortgage loans the same place I get mine?

Keith Weinhold 18:31

You sure can at Ridge Lending Group, NMLS 42056 They provided GRE listeners with more loans than anyone, because Ridge specializes in investment property, they'll help you build a long-term plan for growing your real estate empire with leverage. Start your prequal, and even chat directly with President Chayley Ridge. While it's on your mind, start at ridgelendinggroup.com that's ridgelendinggroup.com Let me ask you something, if you've worked hard to build wealth, is your money positioned to actually support your goals? A lot of accredited investors leave capital sitting in cash because it feels safe, but inflation and missed income opportunities can quietly erode its value. Freedom Family Investments offers freedom notes for investors seeking structured income backed by real estate, it's a straightforward approach built on real assets, not speculation. In full disclosure, I'm an investor myself. What I like is that their team walks you through how it all works, so you can decide if it aligns with your portfolio and income goals. Every investment carries risk, and nothing is guaranteed, but with a track record of consistent on-time investor payouts, they've built real credibility. Go to Freedom Family investments.com to book a clarity call, or text Family 266-866 that's Family 266-866,

Speaker 3 20:02

Hi, this is Russell Gray, co-host of the Real Estate Guys Radio Show, and you're listening to Get Rich Education with Keith Weinhold. Don't quit your daydream. We've got a special treat for you today is for the first time in a few years we hear from someone that's served since 2020 in house here in both operations and as an investment coach. Today she serves GRE in a different capacity internally, but a lot of you still ask about her. That's why she's here. She's got both the formal education with her MBA, and is about as robust in being a real estate investor as you can be at the same time. Oh, it's a warm welcome back to the talented Andrea Newburn.

Aundrea Newbern 20:51

Hey, Keith, it's so great to be back. It's been a l

Keith talks with data-driven investor Neal Bawa, the "mad scientist of multifamily," about why apartment values have dropped 20%–30% while single-family prices have stayed resilient.

They break down how interest rate shocks, the homeowner lock-in effect, and a wave of new multifamily supply are reshaping returns for today's investors.

Keith and Neal also dissect the build-to-rent model—who it really serves, how apartment oversupply is pressuring its rents, and why pending legislation could upend the space.

Neal closes with a specific, data-backed timeline for when multifamily rents and values may finally turn the corner, giving listeners a concrete roadmap instead of vague market guesses.

Resources:

Grocapitus Website - https://www.grocapitus.com

Multifamily U's Free eBook: Location Magic - https://multifamilyu.com/lp/location-magic-ebook/

Multifamily U's Investor Club – https://multifamilyu.com/club

Episode Page:

GetRichEducation.com/609

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:00

Keith, welcome to GRE. I'm your host, Keith Weinhold. The single-family real estate market is steady, but with apartment building values down 20 to 30% since 2022 when will the multifamily Armageddon end? We ask our qualified guest, and how will slowing birth rates in immigration affect real estate? And more today on Get Rich Education. You know, Mid South Home Buyers, that top Memphis turnkey provider. I learned that a secret weapon behind their explosive growth is more than just you buying their properties, it's an executive coach for nine years now, their CEO, Terry Kerr, and his COO, Pat Nix, have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners. His name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally, you can fill out an application for a free consult. This is private one on one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to Daniel Thomas hind.com H I N D, that's Daniel Thomas hind.com and sign up before Spotsville Flock homes helps multifamily owners exit the operator grind, whether it's your six plex or a 50 unit apartment, through a 721 exchange. This defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management. Request your initial valuations. See if your property qualifies at flockhomes.com/gre That's F L O C K homes dot com slash G R E.

Neal Bawa 2:13

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 2:29

Welcome to GRE from Valencia, Spain to Valencia, California, and across 188 nations worldwide. America's favorite shaved mammal on a microphone is back with you for another wealth building week. I'm Keith Weinhold, and you're listening to Get Rich Education. The world's biggest problems are the world's biggest businesses. That's not a coincidence, and that's why we discuss housing here. And there's been a chronic shortage of affordable housing last month at a commencement speech, Harrison Ford, yes, the guy that played both Han Solo and Indiana Jones, talked about how a fulfilling life has both passion and purpose. Passion is what gets you out of bed in the morning, purpose is what helps you sleep at night, you and I. We can bring this mindset to our lifestyle, to the business we do, and to our investing. Treating tenants well is what helps real estate investors sleep well at night. While we're doing well, we can be doing good too. Multifamily syndicators keep failing, going out of business, and losing all of their investors' money due to mortgage rate resets. It just keeps happening. What this really means, that these groups that pooled together investor money to buy apartment buildings, largely that were set up in 2022 and earlier keep blowing up almost fully due to the fact that interest rates reset higher. Some of them had a fixed rate for five years. Well, rates spiked four years ago, and that's why a lot of them have yet to blow up, and these apartments have lost so much value that no one will refinance them, you know. Even if that apartment operator increased the net operating income over the years, even if rents went up, it doesn't matter. So, you still haven't heard the last of it. Do you remember a couple years ago, when a lot of people in the apartment space, they were saying just stay alive till 25 and that nonsense, like if you keep your head above water until 2025 oh well, then rates are certainly going to fall, and everyone's going to be okay. Well, 2025 is long gone.

Keith Weinhold 5:01

Mortgage rates haven't fallen in any significant way, so that survive until 25 thing or whatever mantra derivative people used that was a farce, like I've said on the show here for years. You cannot predict interest rates, so I didn't make the call that they were going to go up or down at all, because you can't predict them, but so many people said, oh, rates will fall substantially by now, no way, you just can't make that assumption, you've got to take history over hunches, and all of that, a lot of those multifamily deals 100% depended. depended on refinancing at favorable rates, and that's exactly why they failed. A surefire way to look foolish is to predict interest rates. We'll talk more about the multifamily Armageddon with today's guest. I also want to get into what's called the 21st century road to housing act, because that became one of the most hotly debated housing policy provisions this year. And what this is, is a Senate bill, and it would require certain large institutional investors that develop these bills to rent single family communities. It would force them to sell those homes to individual buyers within seven years. So, in other words, what a big firm could do is build a neighborhood of rental homes, lease them for up to seven years, but they couldn't hold on to them any longer than that. They couldn't hold them indefinitely as rentals, this bill is not aimed at you, the individual investor. It is aimed at big institutions, and what I mean by that is that's generally defined as owning 350 or more homes. That's what we're talking about here. Small landlords and mom and pop investors are not the target, it targets corporate portfolios, and this means groups whose names you've probably heard of, like Blackstone, First Key Homes, Progress Residential, and Invitation Homes. They are some of the heavyweights that the government is looking to clamp down on, so whenever you hear someone talk about big Wall Street landlords, that is who they're talking about. Now, some groups are pretty worried about the 21st Century Road to Housing Act, like the NHB, that's the National Association of Home Builders, and a lot of multifamily groups are concerned, and why is that? Well, the effect is it could dramatically reduce new housing production.

Keith Weinhold 7:44

See, a big institution like First Key Homes or Blackstone, they wouldn't want to even get into this business anymore. They wouldn't want to build big build to rent communities anymore if they have to sell them all within seven years. See, they want to buy and hold for the long term, kind of like what you and I are doing, because you and I know that owning a group of selective buy and hold single family rentals is a really profitable place to be, but so if they don't want to build, then that creates a reduction in supply, which could make prices go up, and then obviously hurt those trying to afford their own home. Well, that would defeat the purpose of this whole thing. I mean, my gosh, this always seems to happen when government gets involved. So, the 21st Century Road to Housing Act could limit supply, which is the exact opposite of its intent to get first-time home buyers into their first home, and if this passes, it does have bipartisan support. This lower supply, then yes, indeed puts upward pressure on prices. Just amazing. So then it could actually go on to help the everyday mom and pop investor, like you and I, that already owns property, the individual at last check, though they're looking to pass a version that still restricts some of these giant institutions from getting into build to rents, but yet it does not have that seven year sale requirement. What's really important to remember here is that Washington, they're looking to stifle big Wall Street players from the rental market, which could reduce supply. They're not targeting individual investors. The context that's important is that these groups, they own 10s of 1000s of homes, they don't own hundreds of 1000s, and they don't own a million, so it's a really small percentage of the housing market, whatever direction policy breaks, then the headlines that it creates are just greater in magnitude than the effect on the market is. It's an important frame of reference here. Let's meet this week's guest. This week we're welcoming back a guest that we haven't heard from in a year or two in real estate circles. He is popularly known as the mad scientist of multifamily. He's quite an in-demand speaker. He has a $500 million multifamily portfolio that he essentially shares with over 1300 investors. He's sharp, a good educator, and a straight shooter. That's why he's here. It's a warm welcome back to Neal Bawa.

Neal Bawa 10:32

Thanks for having me on the show again. It's delightful to be here, and so many interesting things to talk about in the world these days.

Keith Weinhold 10:38

There really are.. I don't know if we can get it all in, Bawa is spelled B A W A. Neal, I want to get to your future housing market outlook later. How you think the future looks, including when multi families quasi Armageddon might end. But first, you're known as a data driven real estate guy. Tell us about that, and how being data driven makes you profitable.

Neal Bawa 11:03

I see concern, and I'll tell you why. The single family and multifamily market have been atrociously incredibly divergent since the first quarter of 2022 They have not tracked yet each other at all, even though if you look at the last 50 years, they tend to track each other. So you know, 2008 was a Armageddon for single family, Armageddon for multifamily, and they both sort of came up in 2012 2013 and then they had a really good time until Covid.

Keith Weinhold 11:30

Yeah,

Neal Bawa 11:31

but the second quarter of 2022 is when Fed started raising rates, and since then we've sort of slid - multifamily has gone down in terms of pricing between 20 and 30% depending upon the metro, you know, and depending upon whether it's new construction, new construction assets have gone down more than 30% and existing assets that are filled up have gone down by 20 to 30% depending upon the metro. So, metros that have a large amount of supply, closer to 30% decline in value, the metros that have less supply probably closer to 20% decline in value, right.

Keith Weinhold 12:03

Demand demand has been pretty resilient. It's more of a supply story.

Neal Bawa 12:06

It's a huge supply story, right. So, if you look at, you know, occupancy, essentially what's happened is there was so much supply that came in that really people started on those projects in 2022 maybe they didn't start a construction until 2023 they didn't finish construction until 2025 so they started leasing up in 2025 They had to give offer concessions two months, sometimes three months free, and so that pushed down the rents in 2025. And they're not done, because you typically can't rent an apartment in six months. If it's brand new, it's going to take you about 18 months to rent it, and sometimes 24 months, and so it's affected our rents in 2025 it's affecting our rents in 2026. Now it's unlikely to affect it in 2027 but we'll go there, you know, at a later stage. But at the moment, we, what we've seen is negative rent growth in the United States for multifamily for the last 12 to 15 months, and what I think is going to be negative rent growth in Q of this year and Q2 of this year, so Q1 was negative, Q2, which we are in now, is likely to be negative or flat now. Single family, on the other hand, has gone in a different direction, which has been very difficult to understand, and I believe it's taken me a while to really understand this, but I think I've finally figured it out. Single family prices are not down since 2022 which makes no sense at all, because the average mortgage in the United States today is almost double, almost double, not quite double, but almost double of what it was in at the beginning of 2022 when interest rates were about 3.3 3.4% Right now we're sitting around, you know, six and a half percent interest rates, so not quite doubled interest rates, but they've obviously gone up a fair bit, and as a result, your average, you know, mortgage has almost doubled, but home prices haven't dropped, which makes no sense if you really think about it, because home prices are a factor of demand, and they're also a factor of people's ability to pay, so if all of a sudden within four years you're paying, the mortgage is doubled, then less people are going to be able to buy, but it stayed up, the market has stayed up, and the biggest reason it stayed up is because of what is known as the lock-in effect. So, the US market typically has a million new homes every year, and there's more than a million existing homes that are transacted, right? So, it's an open market, it's a perfect competition market, but it hasn't been perfect competition for the last four years, because so many people locked in ridiculously low interest rates.

Neal Bawa 14:28

Perfect example, in 2021 and 2022 I have a 15 year mortgage at 1.75% If I sell my house back to myself, my mortgage quadruples, quadruples, right, because it goes from 1.75% to six and a half percent, so I can't even imagine even think about leaving my home, right, because it's just such a perfect loan. Most people don't have anywhere near 1.75% but there's lots of people with more mortgages in the 3% three and a half percent, and 4% range that basically can't go anywhere, and because those homes are not coming into the market. The last three years the market has had this unusual not enough supply factor, and that's been keeping prices up. That is ending. That is ending, because what we've been tracking is the percentage of homes in the United States that have low mortgages. Low is simply defined as anything under four and a half percent, and that percentage is going down each quarter, because you know divorces happen, deaths happen, you know people move for jobs, and so every time that happens, that locked in rate goes away, because you sell your home and move on, and so for a while that lock in effect was predominant, it was controlling everything, but as time has gone on, interest rates were higher in 2324 2526 For also almost four years have passed since the rate started going up. So each quarter the percentage of homes in the US that have these low interest rates has slowly moved down, and we're almost back to a normal timeframe.

Neal Bawa 15:53

And this is causing the single family market to not have a conniption, but we're starting to see a balancing of the market, where it's not just a buyer's market anymore, in some places it's actually seller's market, some places it's a buyer's market. So we're now starting to see home prices drop in number of markets in the United States. I can't say that they've dropped in super majors, but we're seeing a flattening out effect of home prices in most metros in the US, and there should be a flattening effect. Just to be blunt, I mean, obviously I own a bunch of single-family homes, so I just wanted them to keep going up for selfish reasons. But if you think about it, we had huge home price growth in like 30 plus percent in number of years, 2021 22 and even 23 and during those years, salaries only went up by two to 3% a year. In one year, they went up by 4% and rents also went up like crazy. There was a 2021 was 15% rent growth year. So, at some point, there had to be an adjustment, and we are in that period of adjustment where single family prices are basically flat on a national basis. Yes, going up in the San Francisco Bay Area because of AI, and going up in a couple other technology-heavy metros because of AI, but otherwise fairly flat, and I don't expect that to change for the next year. So, my forecast is next 12 to 18 months, home prices in the US are going to be flat on a nominal basis, they're going to be down on an inflation-adjusted basis, but you know, because of the Iran, more inflation's three and a half percent, so home prices should go up three and a half percent. So, if they stay where they are, well, they're really dropping three and a half percent.

Keith Weinhold 17:29

Yeah, before this year began, I released our forecast, it was for 2% nominal home price appreciation in the one to four unit space for the US this year, and I still like how that looks. There's so much to unpack with what you just talked about. In my view, there's nothing unusual at all that when mortgage rates rose sharply a few years ago, that home prices rose as well. Why? Because actually, that's what usually happens, which is counterintuitive to most people. In all of our lifetimes, residential real estate prices have only fallen significantly one time, that was around 2008 due to a number of unusual circumstances. The only thing that's a bit different this time is, of course, how fast rates increased in 2022 and 2023 and people wondering if residential real estate prices could still keep up, and they certainly have, but yeah, you brought up this dichotomy, this bifurcation about how the apartment market and the one to four unit space kind of separated from each other in 2022 or 2023 That's what's so interesting.

Neal Bawa 18:36

I do want to point out a couple things, though, and I don't want to be a Pollyanna here and talk about negative stuff, but I think that there's big difference between 2008 and that timeframe and where we are today, and that difference is, and it has multiple parts. Not all of your audience is aware of this. Until about 2012 the United States had very reasonable birth rates. You know, we were one of those countries that had avoided the debacle that Japan, Korea, China, and a number of other countries are seein

Keith welcomes back Rich Dad author Robert Kiyosaki to discuss why debt, inflation, and financial education are critical in today's economy.

Robert challenges traditional advice like "save money and pay off your house," explaining how understanding good debt and owning real assets can accelerate wealth while inflation quietly punishes savers.

They explore how family background and early beliefs shape our money mindset, and why questioning conventional wisdom is essential.

The conversation ultimately stresses that financial education only matters if you take action and intentionally position yourself for turbulent times instead of fearing them.

Episode Page:

GetRichEducation.com/608

For access to properties or free help with a

GRE Investment Coach, start here:

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or e-mail: info@RidgeLendingGroup.com

Invest with Freedom Family Investments.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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Complete episode transcript:

Keith Weinhold 0:00

Keith, welcome to GRE. I'm your host, Keith Weinhold. This week, the number one selling personal finance author of all time, Robert Kiyosaki of Rich Dad Poor Dad, returns to the show, revealing that he's in debt to the tune of $1.2 billion with a B. Why he believes a depression is coming, and he strongly espouses financial education today on Get Rich Education,

Keith Weinhold 0:29

you know, Mid South Homebuyers, that top Memphis turnkey provider. I learned that a secret weapon behind their explosive growth is more than just you buying their properties, it's an executive coach for nine years now, their CEO, Terry Kerr, and his COO, Pat Nix, have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners. His name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally, you can fill out an application for a free consult. This is private one on one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to Daniel Thomas hind.com H I N D, that's Daniel Thomas hind.com and sign up before Spots Fill

Keith Weinhold 1:41

Flock Homes helps multifamily owners exit the operator grind, whether it's your sixplex or a 50 unit apartment, through a 721 exchange. This defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management. Request your initial valuations. See if your property qualifies at Flock homes.com/gre That's F L O C K homes.com/gre

Corey Coates 2:14

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 2:30

Welcome to GRE from Williamsport, Pennsylvania, to Williams, Arizona, and across 188 nations worldwide. You're inside one of America's longest running and most listened to real estate shows, this is Get Rich Education. I'm your host, Keith Weinhold. And with Father's Day this month, it's apropos to talk about Rich Dad. It's been said that the objective of parenting is to turn a liability into an asset. The book Rich Dad Poor Dad has now sold over 40 million copies, and it's been translated into 51 languages. One strong thesis in the book: well, there are a few of them: the rich don't work for money, savers are losers, and your house is not an asset. I think any regular listener here to the GRE podcast is already initiated on this. Savers or losers, because inflation debases your prosperity, and your house is not an asset, because it takes money out of your pocket every month. An asset puts money in your pocket every month instead. And I can see Robert now as he's preparing to take the mic with me here, he's got a blown up visual of his cash flow board game behind him, and then in front of him he's got a few books, including two books that he co-authored with Donald Trump, but this is before Trump was ever a political candidate, so it was before all that, and we're certainly not here to talk politics today. A central theme of the Rich Dad world is that the path for your significant financial betterment is rather than cutting your expenses, increase your income. This is the root action behind the mantra: don't live below your means, grow your means, but see, living below your means is easier. That's the easy thing to do. It's even myopic, say move into a lesser housing situation, or cut out going on vacations. Growing your means takes some education, like how to start a business, or how to own real estate. See, when you deposit money into a bank, all of a sudden that bank has a problem, they owe you interest on it, it's an expense for them. So the bank's job is now to lend your money out to somebody else and make a higher interest rate on it than. Lower interest rate that they're paying you on your deposit. All right. Well, then one direction to focus your education is to start acting like a bank yourself. How do you practically do that? How do you be the bank? Well, just like the bank, you can borrow real estate at a 7% mortgage rate. Now you've got the problem, you've got a monthly mortgage payment you need to make, so you need to beat 7% How are you going to do that? You better get it right. Well, with tax deductions, you might really be paying five to 6% Meanwhile, the real estate that you've carefully identified and invested in with your borrowed capital can earn multiples more without taking high risk, and actually that five to 6% effective cost of capital that you've got is zero, because that monthly payment is all outsourced to your tenants anyway, and what made all this possible for you? Debt made it possible, and now you're acting like the bank, and banks often have the tallest skyscrapers in your city for a reason, because they make money on those spreads all over the place, and now you're doing the same thing. This is an example of growing your means. The bank will hand you 500k to buy a new home or rental property, not for stocks. They won't do that for crypto, not for your 401k not for a business idea that popped into your head at 3am Only real estate, the same institutions, banks that manage your savings and study every asset class, and are very conservative, and have armies and armies of analysts. They will only lend you a half million dollars for one thing: real estate. For a few years, I was a writer for the Rich Dad Advisors blog when that was a thing. Robert and I were most recently together publicly last year when we both served as faculty members on the Terrific Real Estate Guys Investor Summit at Sea in the Caribbean. Let's talk to Robert.

Keith Weinhold 7:18

I'd like to welcome back to the show for his fifth appearance here on the GRE podcast. Well, just the number one selling personal finance author of all time. He wrote Rich Dad Poor Dad in 1997 and has ruled the Rich Dad world ever since. It's a warm get worse education. Welcome back to Robert Kiyosaki.

Robert Kiyosaki 7:38

Thank you, Keith. You know, nobody's more surprised about the success of Rich Dad Poor Dad than me, because it was turned down by every publisher in New York. It was like Simon and Schuster and all these guys, and they said, Why are you turning it down? They said, You don't know what you're talking about. It was consensus about the five editors of different book companies was what you're saying doesn't make sense, that's how strange it was back 1997 and now it's the number one in the world.

Keith Weinhold 8:10

This is often how it is when something strikes someone differently, like the Star Wars movies had difficulty getting traction because it was so unusual, and fortunately, Robert, today the consensus among readers has seen that, oh my gosh, Rich Dad Poor Dad changed my thinking more than anything else. The contrarian thinker,

Robert Kiyosaki 8:34

you know, strike Rich Dad, Poor Dad. My poor dad was academic, you know, PhD, yeah. So he'd be the kind of guy that says your book makes no sense, whereas my rich dad never went to school because his father died when he was 13 and he had to take over the family business. So much of a young person's life is predicated upon their parents or where the family or the culture you come from, and I've been studying more of that, like let's say I was raised in Alabama, I'd have a southern accent but because of the environment it presents it upon you, as the same as money, if a child is born into a poor family, or in my case an academic family, the value systems are all different. My family, and it's still true today. Got to go to school, get a job, and get a pension with the government. That's their whole belief system, and they're so proud of this. Is my brothers and uncles, and all that. They're so proud when their child has what's called a GS, and a government service pension, that's the whole idea on finance, get that pension, job security,

Keith Weinhold 9:49

yeah,

Speaker 1 9:49

nothing wrong with it, nothing wrong with it, but a lot of times we can't hear something because of what's been compressed into us by our culture, our. Family, so my, you know, my poor dad was always, you have to get your PhD, or what? God got a PhD. So my brothers and sisters, their kids are all getting their PhDs. It's fascinating. It's fascinating.

Keith Weinhold 10:14

Yeah, when your poor dad tells you you need to get your PhD, and you're asking for what? Maybe the answer was for him. So our parents, yes, they're often our first teachers.

Speaker 2 10:25

It's just values, very different values. And the more I kind of study it, I don't think I'm a good student of it, but there's this thing called a paradigm matrix, and a paradigm matrix is what is like a cookie cutter, so like father, like son, you know, like mother, like daughter, so much of our lives are transferred by our parents and our schools and things like this, and so that's why Rich Dad Poor Dad, for some people it works, but when it first came out, 1997 as you said, it was strange. I said, you know, the savers were losers, and today everybody knows inflation is going to the roof. I said, your house is not an asset. I got hammered for that one.

Keith Weinhold 11:11

Right.

Speaker 1 11:11

Rich don't work for money. Those are my three rich dad rules. Rich don't work for money, savers are losers, and your house is not an asset. I built Rich Dad Poor Dad around those three rules. I didn't follow my poor dad, those were his guiding lights. You know, you have to have job security, and you have to have a government pension, and my house is my biggest asset. And so you can't hear the person because you already have that paradigm magic, or that cookie cutter inside of you. This is my value system in my family. If I didn't get my PhD, I was stupid. I never got one. But anyway, you know,

Keith Weinhold 11:50

just because you believe something for a long time doesn't make it true,

Speaker 1 11:55

correct? And what's happening? Because I wrote Rich Dad Poor Dad, because I could see this economic times coming, 1971 named Nixon took the dollar off the gold standard, and I knew at that time we're going to have hyperinflation, so that it hasn't hit us quite yet. 1971 was august 15. Nixon's taking the dollar off the gold standard, and you watch what's going to happen next few years. We're going to have hyperinflation that we've never seen before, and it's gonna make the poor and middle class poorer. The rich will get richer, but poor and middle class will get poorer. Tragically,

Keith Weinhold 12:30

that is such an appropriate time to bring this up, Robert, because a lot of people are drawing parallels between the 1970s two waves of inflation during that decade, and what's going on today. I mean, there is so much fuel now that could ignite higher inflation. You've got the cumulative effects of the Iran war and the energy shocks and bottled up supply chains. And Robert, I don't know if you've heard it yet, but you and I's mutual friend, Dr. Chris Martinson, yeah, peak prosperity, there, Chris Martinson, he recently said that he would not be surprised to see 18 to 20% annual inflation in the next two to three years. That's exactly what he said.

Speaker 2 13:12

Yeah, but it's good for those who have assets, right? You see what, when things inflate, you know, like chickens and eggs and milk go up, but so do assets go up, most of them, like gold and silver, will go up, but the purchasing of the dollar will come down. Inflation is a tax, that's all it is.

Keith Weinhold 13:33

So much potential for inflation there, and a lot of this really ties in with debt, about how debtors can be enriched inflation. I think about the cantillion effect, meaning that in inflationary times those closest to the money printer win, and that usually tends to be governments, large banks, corporations with easy credit scores, but a lot of people don't realize that we can benefit from that too is everyday investors that use leverage prudent debt,

Speaker 1 14:05

right, and tell you, in effect, is basically what interest rate can you get, and how easy is money for you, and I use debt, I'm 1,000,000,002 in debt, and that scares the crap out of most people, but I use debt to get rich, and most people use debt to get poor, and again, that's family, what your education says. So, a lot has to do with early childhood development, and all that stuff. The more I study it, it really goes back to before a child was like 15. The cookie cutter has been cut.

Keith Weinhold 14:36

Yes, it goes back to not always having to believe everything that you think.

Speaker 2 14:40

We all have access to education. I have my cash flow game here. I teach people how to use debt, and Dave Ramsey says don't use debt. Well, he's a smart man too, Dave. I like him a lot, and most people should listen to Dave Ramsey, but if you're going to use debt, you'd better take some education, so. To go 1,000,000,002 in debt, man, you better know something. People aren't living paycheck to paycheck, they're living credit card to credit card now, and getting wiped out. I hate to laugh, but it's so obvious. You go, because they have no financial education, and that's why my book was turned down by all those academics in New York City, the publishers say, you don't know what you're talking about. How can I say your house is not an asset? How can I say savers are losers? How can I say the rich don't work for money? And that's what Don't Rich Dad Poor Dad on. And now it's been an international best seller, number one in the world for like 25 years.

Keith Weinhold 15:39

Yeah, well, it's so interesting that you bring up Dave Ramsey here, Robert. He often gets his followers to make a debt-free scream when they're debt free, and you know what I think, Robert, for those that scream that they're debt free, what they're doing is they're postponing screaming that they're job free or job optional, they could have been prudently leveraging dollars for profit, instead, like you and I do.

Speaker 2 16:06

Well, let me just say, Dave Ramsey's advice is good for most people. I'm saying, if you're going to learn to use debt, you know, if all you want is a job and a pension, you don't have to study that much. The biggest mistake I think ever made was at 401 k. It's going to wipe out boomer generation. It's going to.. that's the memos. I wrote this book. Here's who stole my pension, and that's when it's going to nail the boomers. They're finished, because their pensions are going to get stolen. They're four 1k IRAs. They're finished, but they do.. they listen. No, they go, they send their kids to school to get their MBA and get a, get a 401 k.

Keith Weinhold 16:46

Well, I kind of think when you have education around debt, you sort of understand this difference between productive debt and what I'll call ego debt. So, can you talk to us more about what kinds of debt make people rich today and what kinds of debt can quietly destroy them.

Speaker 2 17:02

Well, they should read Rich Dad Poor Dad. Really, I'm serious. That's all it is about, really, is I use debt to get rich, and Dave Ramsey's advice is good for those who don't want to study. So, if you're a PhD in microbiology, and you're a doctor, Dave Ramsey's advice is good for you, because you have no financial education, it's not between your right ear and your left ear. So, I had to study debt, that's the difference. It's what we study.

Keith Weinhold 17:29

And for those that are uninitiated on this, what we're talking about here is, if you've got, say, 200k to invest in real estate, and real estate's going to go up 5% a year. Okay, if you pay all cash, you only have a 5% gain on your 200k but if you get an 800k loan and now you invest in a million dollars worth of real estate, you have that entire million dollars going up 5% not just 200k and you have the tenants servicing the 800k in debt for you. This is really the path to wealth through debt, which is counterintuitive.

Speaker 1 18:02

You don't just get into debt. I mean, you really got to understand debt, and real estate doesn't always go up. It's about to crash again, and I like crashes. Don't get me wrong, I love crashes, because a crash in a stock market, bond market, real estate market is something going on sale, so like if Walmart had a sale, every poor person would run in there, but when the real estate market has a sale, all the poor people run away. I like crashes, that's when you get rich, one's coming big time, big time.

Keith Weinhold 18:33

Well, I want to learn more about that, because residential real estate in our lifetimes has only fallen significantly one time, that was in 2008 and circumstances are so different today. Today, you have responsible lending, and you don't have this oversupply that you had in 2008 So, tell us more about a potential real estate crash that's going to interest a lot of people.

Speaker 1 18:53

Well, real estate crashes, because the currency crashes. It's really the problem with the world today, and this is the whole world, is America is now what, the biggest debtor nation in world history.

Keith Weinhold 19:05

Yeah,

Speaker 1 19:05

39 trillion or something like that. And Japan is a bunch of idiots on Japanese, I can say that they save money. Why would you save money when Japan was the biggest money printer of all times? That'd be like somebody you know, sticking water in your gas tank. Why would you go and fill up with water? But that's what the Japanese were doing. They're saving money. It makes no sense. I mean, I just.. I'm just a different person, you know. I just didn't go to school like my family did. I mean, I have a college education and all that, but

Keith explains how rent payments are starting to factor into credit scores, boosting accountability for tenants and strengthening landlords' position.

He introduces the "GRE Duck" to show how a plain long-term rental can quietly build wealth through several profit centers beyond visible cash flow. Keith also shares why he expects a new era of heightened inflation and how owning real assets with long-term fixed-rate debt can help investors stay ahead of it.

Finally, Keith is joined by a GRE Investment Coach, Naresh Vissa, to highlight Oklahoma as an under-the-radar, business-friendly market that many investors see as a promising "next place" for cash-flowing rentals.

Episode Page:

GetRichEducation.com/607

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

To get in the best physical, mental, and professional shape of your life, go to DanielThomasHind.com and apply for Daniel's intensive 1-on-1 coaching for burnt-out entrepreneurs and executives.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host, Keith Weinhold. The American consumer is in real trouble today, and persistent inflation is poised to make it worse. How should real estate investors adjust their strategy? Learn the difference between delinquency, default, and foreclosure. Why making an early mortgage payoff is almost always ill-advised, then we explore an investment market that's poised for potential today on Get Rich Education.

Keith Weinhold 0:32

You know, Mid South Homebuyers, that top Memphis turnkey provider, I learned that a secret weapon behind their explosive growth is more than just you buying their properties. It's an executive coach for nine years now. Their CEO, Terry Kerr, and his COO, Pat Nix, have worked privately with a coach who I've now learned from too, and he doesn't market himself online anywhere. After 12 years behind the scenes, that coach is now making himself available exclusively for GRE listeners. His name is Daniel Thomas Hind. If you're a hard-charging business owner or investor who wants to get in the best shape of your life, physically, mentally, and professionally, you can fill out an application for a free consult. This is private one on one coaching for those willing to go to uncommon lengths to achieve uncommon results. Thanks to Daniel, we've all become better leaders, better operators, and better men. It started by showing up for ourselves. Now it's your turn. Go to danielthomashind.com H I N D, that's danielthomamashind.com and sign up before spots fill.

Keith Weinhold 1:45

Flock Homes helps multifamily owners exit the operator grind, whether it's your sixplex or a 50 unit apartment through a 721 exchange. This defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management. Request your initial valuations. See if your property qualifies at Flock homes.com/gre that's F L O C K homes.com/gre

Corey Coates 2:18

You're listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.

Keith Weinhold 2:34

Welcome to GRE from Arcadia, California to Arcade New York, and across 188 nations worldwide. I'm Keith Weinhold. You're listening to Get Rich Education. Around here, we don't look at a house and see four walls, we see five profit centers quietly doing jumping jacks behind the drywall. At the same time, most people seem to think cash flow is something that you catch in a stream. Hey, well, Who's in trouble out there amidst persistent and rising inflation? Well, you know the answer, it's just another reflection of the K-shaped economy and the hollowing out of the middle class. Now we can look at how many Americans are missing their mortgage payments. The mortgage delinquency rate is historically between one and 2% That just means that's the proportion of borrowers that get seriously behind on their mortgage payments. That's the normal range over the long run. Today's figure is pretty low at 1.1% so on the low end of that historic one to 2% range. So homeowners are in good shape, but credit card and automobile loan delinquencies are now deeply concerning, and a lot of times these people can be your rent paying tenant for credit card delinquency. Back in 2022 the rate was 8% Now 13% of credit card users are seriously behind on their payments. How about automobile delinquency? Back in 2022 it was 3.6% Now it's 5.6% and then there's student loans. The proportion of seriously delinquent student loans is 10.3% That's the highest since 2020 So the average borrower entering student loan default is now fully 40 years old. Before the pandemic, it was just 36 and a half. Now, there's surprisingly few hard statistics on the exact average age at which Americans fully pay off student loans, but the best available evidence from a platform. Called the Education Data Initiative, it suggests that the typical borrower who successfully repays on a standard timeline finishes somewhere in their early to mid 40s, and a substantial share of borrowers still carry student debt into their 50s and even 60s, so the US student loan crisis is intensifying. How about your tenant in that rent payment? About one in eight renters are behind on their rent payments per the CFPB. Almost every tenant catches up. Some live a paycheck to paycheck timing game. The payment that renters are most likely to miss is for credit cards, and, like I just put the numbers to, they are more than twice as likely to miss a credit card payment than they are an automobile payment. To most tenants, losing the car would mean losing the job, so they'll make the car payment before the credit card payment, and eviction is catastrophic, so they don't want to face that. They'll make that rent payment before a credit card payment too. Alarmingly, half of American credit card users carry balances from month to month, fully half the average interest they're paying is 21 to 22% I mean, sheesh, if Luboo is in a collection of wildly overpriced Stanley tumblers that all look big enough, waste of money. Now, some debtors can tap home equity to pay their consumer debt, but a lot of them aren't homeowners, all right. So, what does this all mean for residential income property owners? Well, since 1980 rent increases have compounded at 3.9% annually, that's the number, so almost 4% rent growth since about the time that Ronald Reagan became president, but rent growth is currently lagging behind this, and I expect that rent hikes will continue to be pretty paltry for the next couple years. Inflation is stressing tenants' consumer purchases too much for them to deal with steep rent hikes. The median household income of a US renter is $55,000 Overall, it's $84,000 All right, so to be clear, that 84k household income is not for homeowners, it's 84k overall for every American household. The 55k number is just for renters. What all this means is that this coming higher wave of inflation from the Iran war, where you're now poised to potentially see the highest rate of inflation of your entire life occur in the next couple years is that when you're looking at adding rental property on your pro forma, you can see how the numbers would be with those historic 3.9% rent increases each year, but it's wiser to run your numbers with no rent increase at all, because higher inflation on all these consumer products means it's less likely that they can handle a rent hike

Keith Weinhold 8:25

In the mortgage world. What's the difference between delinquency, default, and foreclosure, anyway? Because some people use a couple of those terms interchangeably, but there is a difference. The timeline is that once you're 30 days late, that is delinquency, and this condition occurs the moment that a single payment is missed. And at this early stage, your bank still hopes that this is temporary, because the bank actually doesn't want to take back your property. They're not in the business to do that. They want you to be able to keep making your payments in general, because if a borrower keeps missing payments and a bank has to take possession of the property, well, then that bank has to pay legal fees and court costs, and even property taxes if they end up taking back the property. Yeah, the bank pays all of that if they have to take it all right, so that's 30 days. What about when a borrower gets to 90 days late on payments, where we're trending closer to the bank having to take back the property? Well, 90 days, that's the point at which we're in mortgage default. When a homeowner's 90 days late on payments, the lender kind of says to themselves that bank is saying, hey, this is serious, and they file what's called a notice of default with both the homeowner and the courts at the 120 day mark. This is pre foreclosure, right? So, after about four months or more of missed pay. Payments and state timelines vary. Texas is famously Formula One fast, really lender friendly, then, but timelines can drag on for one to three years in a bunch of northeastern states, Florida, Illinois and Ohio, so they're more borrower protective, and during Covid, this was overridden, and even fast states became slow. Beyond 120 days of non-payment, this is foreclosure, the legal seizure process. This is when the home sells that auction to the highest bidder. That's sort of like Sotheby's for distressed drywall, but if no bidder raises their paddle, well, then the property returns to the bank and becomes R E O. You've probably heard this term before, that stands for real estate owned, R E O. It also kind of means bank owned, and bank owned is the phrase that kind of makes more sense. That's what REO is, all right. Yes, this is when the bank becomes the home's reluctant landlord, and if the occupant has not left, the bank can formally file for eviction. Banks don't like being in this position, and they might sell the home cheaply. Why would they do that? Because, again, banks are not in the business of owning property, and they don't want to pay those holding costs, besides paying legal fees and court costs, and the banks now having to pay property tax because they do temporarily own that foreclosed upon property. Now they're also usually paying for maintenance, repairs, and insurance, a non-paying borrower like this can typically cost a lender 1000s per month. So this is the difference between delinquency, default, and foreclosure. But, like I said, we are at a time when mortgage delinquency rates are historically low. Instead, it's consumer debtors that are more likely to default today on things like their credit cards and their automobile loans. The takeaway for real estate investors here is that in today's inflationary times, renters are increasingly cost-burdened, rent increases are historically slow. That's sort of the bad news. And then the upside, the good news is it also means that tenants must delay home ownership and keep on renting from you, because as they struggle to pay these rising expenses, it's also harder and harder for them to form a down payment and go buy their own place, that's the real lesson with the parts of the economy where you see default trends today.

Keith Weinhold 12:52

Now, if you're an income property owner, like I am, you probably have mortgages with a bunch of different banks, lenders like I do. You've probably noticed more than once that various banks and mortgage servicers, a lot of times, they feature these early payoff tools, enticing you to pay your mortgage off ahead of time, before it goes its full 30 year term, or whatever your full loan duration is. I mean, a lot of banks love it when you try to pay off your own early. It's often good for them and bad for you. And there are a few reasons that banks do this. They reduce their default risk if a bank convinces you, the borrower, to aggressively pay down your principal. It also builds equity faster, and you become less likely to walk away, so it's safer for the bank during downturns. Say there's a borrower with a 300k property and a 50k loan balance, meaning it's mostly paid off. Oh, that's far less risky to the bank than one with a 300k property and a 200k loan balance, meaning that you have less equity in it. So banks value stability. Another reason that some banks want to roll out the red carpet to try to get you to pay off your mortgage early is because banks recycle capital. They don't simply hold every mortgage for 30 years. A lot of loans are sold to Fannie Mae or Freddie Mac, or they're bundled into mortgage-backed securities, or they're serviced for fees. So your originating bank, when they first made that loan with you, oh, they've already earned their origination fees and servicing income and cross-selling opportunities, so getting principal back from you sooner allows them to reissue new loans sooner, and see rising interest rate environments like we've been in lately that changes the incentives for banks too, because if current mortgage rates are higher than your old rate a. Wow, then banks really love getting your old low rate loan paid off. Just say, for example, you have a 3% mortgage that you got five years ago, and new mortgages today are 7% Oh, if you pay off or refinance the old loan, oh well, now the bank can redeploy that money into higher yielding loans. Now they can lend it out at today's 7% that is really valuable to them. So encouraging your payoff, that is often just some consumer service positioning and marketing. You'll see messaging like, hey, make extra payments, or hey, you can own your home faster if you make extra principal pay downs, that's sort of marketing psychology. Because emotionally, a lot of consumers, they're not thinking big, they still emotionally love debt freedom, because a lot of them don't even consider true financial freedom is something that's in the realm of possibility for them, so banks provide tools because customers oftentimes want them and like them. Regulators actually like this position too. It's positioned as responsible lending optics, and financially healthy borrowers are deemed to be safer customers, but a bank sure does not want delinquency or foreclosure from a wealth building perspective. Productive low-cost debt benefits you, the borrower, enormously.

Keith Weinhold 16:34

And on previous episodes, I've talked extensively about how making extra principal pay downs on your mortgage is a bad idea, and that's whether it's rental property or your own home, and you know, I'll bring a new example to this for you. It might feel good to pay off your mortgage faster. Your bank probably likes that, as I just explained, but feeling good doesn't build your wealth. Let's just take a 400k mortgage at a 6% mortgage rate. We'll keep it simple. With a 30 year loan, your payment is about 2400 monthly, so you'll pay 864k over the life of the loan. Well, instead, with a 15 year loan, your payment's 3376 and you'll pay just 608k over the life of the loan. So, by paying extra principal with the 15 year, you save about 255k in interest over the life of the loan, and that's it. Most people stop right there, and they think, oh well, then the 15 year paying down principal faster than that has got to be the smarter way, look, I can point to this on paper and show you, no, but with that extra about $1,000 per month of mortgage payment that you made by going with the 15 year, if instead you would have just invested that at an 8% return, you would have about 1.1 million more dollars in your pocket. Some people say they sleep better because their house is paid off, but I would rather sleep knowing that my money is growing faster than my debt is costing me. I only used 8% as a return, too. If your dollars were instead invested in a different vehicle, say in buy and hold income property. We know that it can be multiples higher than 8% and all the while, if we keep our own money and avoid making an early pay down, our cash is also going to remain more liquid than if we sunk it into the house, because houses make terrible banks. It is indeed rather myopic to make extra principal payments on a mortgage loan in most cases. In fact, somewhat related to this, coming up on a future show, I'm going to tell you about the biggest financial expense you will ever have in your life, it is not taxes, it's not housing, it's not interest charges, it's not inflation, it's not paying for children, and it's not health care. Most people have never heard of it. The biggest financial expense that you'll ever have in your life. I'll talk about that coming up in a future episode.

Keith Weinhold 19:23

Is today's American housing market a buyer's market or a seller's market? In fact, it's somewhat of a discussion that you can have. There's not a clear cut answer, because more so than usual, it depends on which region of the nation you're looking at. As we know, six months of available supply is a balanced market nationally. There's only 4.4 months of existing housing supply, but almost twice that much new housing supply. National median home values are only up about 1.1% year over year. And what's the future of the investment market? Good, I'm going to discuss this and more with a guest later today. I would like to seriously thank you for your listenership. GRE is a platform largely built on long form trust, podcast listeners, newsletters, coaching calls, and referrals, releasing a show 52 weeks a year for between 11 and 12 years now, and the show is delivered every week from me, a real human flesh and blood host with a pulse and sometimes a cowlick in my hair, really human stuff going on here. I say this because robot podcast hosts are becoming more common, though I still wouldn't say that robot hosts are widespread. Amazon's Alexa Plus now produces AI-generated podcasts featuring chats between two robot co-hosts, but here on GRE it's always been human delivered with no plans to change that promise, and speaking of human connection, I learned that a number of successful guests that you've heard here on the show, they've gotten counsel from a rather special executive coach that's really developed some of these people that you've heard on the show. This coach has helped people show up as the best version of themselves and build them into better leaders, better operators, and better men and women, just like you, I know there's a gap between who you are and who you could be. When someone points out that gap to you, that can be a motivator alone, and when you learn the steps to close that gap, you really start to fulfill your potential. It often takes a trained eye from the outside to get you on the right trajectory and build the sort of person that compounds and builds you closer to your optimal self and people of enormous success have a coach or mentor behind them. Steve Jobs did, Michael Jordan, Tom Brady, Taylor Swift does the accountability piece alone is often enough to elevate your performance. I just learned about this coach this year. This man has been the behind the scenes key to s

Keith describes how a plain long-term single-family rental can quietly build wealth in ways most investors overlook, using his "GRE Duck" framework to illustrate returns beyond simple cash flow. He also emphasizes the passive income potential of buy-and-hold properties, detailing factors like: appreciation, principal paydown, tax benefits, and inflation.

An Oklahoma-based investor and provider then joins Keith to introduce Oklahoma City and nearby markets as emerging options for cash flow–focused buyers.

Together, they explore why this lesser-known market and a straightforward buy-and-hold approach may deserve a closer look from investors.

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Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE. I'm your host. Keith Weinhold, the real estate duck is quacking. Learn what that's all about. See how you could expect to profit $2,500 every month just from a normal long term rental. Then the most important message that I have to tell you in years. And finally, we explore a market where new build single family rentals cost $145,000 all today on get rich, education, flock homes helps multi family owners exit the operator grind, whether it's your six Plex or a 50 unit apartment through a 721 exchange. This defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management request your initial valuation, see if your property qualifies. At flock homes.com/gre that's F, L, O, C, K, homes.com/g, R, E,

Speaker 1 1:07

you're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:23

Welcome to GRE from Hudson, Colorado to Hudson, New York and across 188 world nations. I'm Keith Weinhold, and this is get rich education with perspective every week that you won't hear from the average slack jawed finance talking head. Just a few weeks ago, it was announced that rent payments will now factor into credit scores. Yes, I suppose that now tenants can say, See, my rent is not like throwing money away. I'm investing in my FICO score. This is good news for landlords. It can be good news for tenants too, actually, and I think it's just good for society that being accountable and making timely rent payments get tracked and can be rewarded. Yes, the news is that weeks ago, Fannie Mae and Freddie Mac are allowing rent and utility payments to be included in credit reports that are factored into eventual mortgage approvals. It is good that your tenant is informed of this, and therefore they'll be more incentivized to pay you the rent on time. So yes, rent is now a credit builder and hmm, does this mean that America finally admitted that shelter is more important than your tenant's Banana Republic Visa card? This is something that should have been done a long time ago now. This also helps in the rent to own strategy, if you ever employ that with a tenant. Yeah, the rent to own strategy. That's where a tenant, they rent a home from you today, with the option to buy it from you later at a pre agreed price. It's basically a hybrid between renting and buying. And the advantage is you can sell your rental at a greater profit than you could otherwise, when you employ that and the reason that having rent payments be on a credit report now gives you some assurance that your tenants will improve their credit scores enough to qualify for a mortgage and actually buy your rental. So that's always an exit option for you the rent to own strategy benefiting too from this change. Now let me tell you about the GRE duck, because this duck is quacking, making some noise, and we talk about what you might think of as a more base investment strategy. And this might be your base investment strategy. It is just simple long term buy and hold investing. Some people mistakenly think that to be a big profiteer in real estate, that it takes a lot of time and money, or they think that you've got to flip a property or wholesale or do rent to own plans with your tenant, like I just mentioned, or that you have to house hack. You don't have to do any of that heavy hands on stuff. You can be highly profitable without opening up some active business inside your property, like an assisted living home or doing some co living arrangement that you self manage, or doing short term rentals. No, you don't have to do any of that. No sledge hammer required. Let's talk about the GRE duck and how normal long term rentals are super profitable. In fact, you can profit $2,500 per. Per month from just one ordinary, single family investment property, just a regular long term rental with, say, a small down payment on a 300k income property.

Keith Weinhold 5:14

Now $2,500 that might seem high to be clear, that's not the rent amount. That's not the gross. This is your net, $2,500 in total profit every month. And you know, from the outside, the uninitiated might say, Well, wait, how could one plain house really perform this? Well, all right, say that it creates $200 in monthly cash flow, your rent income, minus expenses. This only represents the part of a duck that is visible on top of the water there on the lake surface, because that's all that most people see. And it's not a decoy duck. This is the real thing, because the duck also kicks up less visible underwater returns of another $2,300 monthly. And here's how what's beneath the surface, those duck legs are paddling like they're doing CrossFit. Here's a plausible scenario. Let's just use an appreciation rate of 5% mortgage rate of 6% and say inflation is 3% Well, the first thing that the duck is furiously kicking up underwater is that erstwhile appreciation of 5% on a 300k property. This is $15,000 a year that you're benefiting, which is $1,250 per month of profit to you. Next, there's principal pay down, also known as your ROA, that return on amortization your tenant is chipping away at your loan balance for you $3,000 a year from an amortization table, that's 250 bucks a month. Then there's the tax benefits. Say the estimated depreciable value is 240k after land divide that by 27 and a half years for your depreciation schedule, that is an $8,700 a year deduction. If you're in a 25% tax bracket, that's 2200 bucks a year, nearly another $200 a month from this alone. And there are more tax benefits than that depreciation, but that's all we're going to use for simplicity. And finally, inflation, profiting 3% inflation on your 240k loan, that is 7200 bucks a year. Yes, another 600 bucks a month. Now let's put it all together to see what the duck is doing. You've got $200 worth of cash flow, which is the visible duck, and then the rest of the paddling legs, with what they're doing underwater, it's $1,250 of appreciation, 250 in principal pay down, 200 in tax benefits, and 600 in inflation profiting. This is how your total financial benefit is $2,500 a month, and this is $30,000 of annual benefit to you. Yes, on average, you are 30k wealthier annually just from this 20% down payment on one plain, single family rental with something about as passive as it gets in real estate, that $200 per month of cash flow, that's only the part that you can see the duck gliding on the surface. And now, of course, your exact number is going to be higher or lower. Oh, maybe some downers on this is if there's a surprise insurance claim that dense things like a tree falling on your fence or a roof leak or a plumbing backup, you'll also have closing costs that you need to pay one time, a three to 4% of the loan amount when you buy so the duck could get splashed. And then this could be even better than I laid out. You might have a refinance opportunity that could increase your number. Your mortgage rate could be less than the 6% number that I use. Many builders are buying it down to under 5% for you still, and this will grow your profit number beyond $30,000 a year, and in this case, the duck would enjoy a tailwind.

Keith Weinhold 9:45

Today, you do often need a seller to provide incentives to make deals create cash flow. I did some rounding for simplicity in that example, which is really like a fresh spin on real estate pays five ways that I laid out there. So essentially, this $30,000 of annual benefit this occurs whether you show up to work or not, whether you stay in bed or not, and you're probably working on it one hour per month or less. Yes, this is simply buy and hold property. None of this flipping or wholesaling or active businesses that you need to run inside it buy and hold property that's either new build or it's turnkey renovated. I mean, it's even kind of boring, no market timing, no next hot thing, nothing loud, nothing risky, nothing Instagramable. Yet so many people miss out on all of this and why? It's because they only see that $200 visible part of the duck, and they sort of think, why bother? And then you have other investors that don't stick with it long enough to realize and capture the benefit. It could take a few years to really feel a wave of appreciation or inflation. These things are more apparent, like a duck that starts quacking and getting noticed, the GRE duck helps you understand how even a modest portfolio of four or five or 10 ordinary houses builds lasting wealth. Some people think that they need to own 100 doors worth of apartment building units or something like that in order to quit their job. That is just not true. I describe precisely how the middle class can get ahead. You could quietly out earn your day job with just a small pack of properties. This is embodied and symbolized by the GRE duck. Later today, we'll talk about the exact types of properties that are conducive to this. Let me tell you what's really interesting. Now, when we look at a five year arc, here's what's remarkable. In 2022 mortgage rates tripled and home prices rose anyway. In 2024 and 2025 the level of inventory soared and home prices rose anyway. Last year, available inventory was up about 30% from the prior year. Well now it's only up about 4% from last year, the growth in available housing supply has really slowed. It is going to be fascinating if supply shrinks this year, and this is the trend, this is the direction that the market is going, which could put accretive upward pressure on prices, but not as much as something else could. Now, sometimes here on the show, I inform you about micro real estate issues, or like the savviest strategy to achieve rent increases with your tenant, but there is a macro force that could reshape real estate markets in your purchasing power for years. In fact, I'm about to share with you this is the most important, newsworthy message that I have had in years. CPI inflation keeps rising. Jerome Powell is now newly out as Fed Chair Kevin Warsh is the new guy, and he's in there at a moment where global expectations and interest rates and currencies and housing and investor psychology could all shift at once. Now, frankly, I think it would be reckless to cut rates into the fresh inflationary shock that we have from the war in Iran now, but that's exactly what some market participants are betting on, and this time, inflation is not Coming from stimulus checks and peloton bikes, like it did during covid. At this point, we have already weathered a pandemic and lockdowns and money printing and tariffs. Now it is even more we have added in a kinetic war and severe energy shocks and supply chains that are now tied into knots, the profundity of the Iran war effects are coming two time.

Keith Weinhold 14:53

GRE podcast guest, Dr, Chris Martinson and I, you know, we are not some Doomer. Spouting baseless hyperbole to get fear clicks. This month, Chris stated that he would not be surprised to see 18 to 20% inflation in the next two to three years. Yes, you heard that right. This would make the pandemic inflation spike look like a warm up act. Remember back in 2022 that's when inflation peaked at 9.1% back then, in one year, home prices exploded about 20% rents surged 15% grocery prices went to orbital and a trip to Costco suddenly felt like financing a small boat. Well, today, things are poised to get even worse. Since the start of the Iran war, we've seen the prices of jet fuel go up 70% sulfur up 60% Brent crude has spiked 52% heating oil is also up 52% since the start of the Iran war. WTI crude oil up 48% urea also up 48% diesel up 45% gasoline up 40% all of these are not obscure commodities that are sitting in a warehouse somewhere. They are the hidden ingredients inside everyday American life. Diesel moves almost everything that you buy. Urea grows the food. Oil becomes plastics, packaging, chemicals and electronics, pharmaceuticals, cosmetics, paint, asphalt and 1000s of petroleum based consumer products. I mean, effectively, this massively raises the blood pressure of the entire economy, there is still cargo that's been sitting in or around the Persian Gulf and hasn't been able to transit the Strait of Hormuz for almost three months now. That's per Reuters. Even if a permanent peace agreement were signed today, this doesn't just all magically snap back by next week, it could take more than a year to normalize shipping routes, in inventories, in refining operations and supply chains. And in fact, it is even worse than that if the new Fed chair worsh decides to jack up interest rates. See, even that would do little to fix the supply side problem, because higher rates don't produce oil, they don't reopen shipping lanes, higher rates don't unclog ports. So this is not a time to sit in excessive cash and hope that your purchasing power survives. For a lot of investors, this is the time to accumulate more productive real assets while maintaining some prudent liquidity. You've always got to maintain some the alternative is to start eating losses. When we had two big waves of inflation in the 1970s bonds were mockingly called certificates of confiscation back then, and why? It's because investors earned 5% while inflation hit 15% the people who win in inflationary eras are really three groups, owners of productive real assets, people with pricing power and strategic long term fixed rate borrowers. It is pretty rare that I draw a line in the sand to identify a major inflection point and really encourage others to act. The last time that I did that distinctly was in November of 2021 because that's when mortgage rates were 3.1% inflation was double that at 6.2% and I urged investors to borrow big, and I showed you the evidence of when I stated that in last week's newsletter. I showed you right where that was published, and at that time it sounded aggressive, but today, those borrowers are sitting on yesterday's debt while they're earning today's inflated dollars. I mean, you have profited handsomely from that while there were others that were calling for a real estate price crash back in 2021.

Keith Weinhold 19:44

Gosh, that was the biggest appreciation rate year that we've had in a long, long time. Well, today, it's another inflection point, because you and I may be about to witness the highest inflation of our lifetimes, the prudent move is not paralysis. It is positioning. It means owning more productive real assets and ideally tying them to that long term fixed interest rate debt before the window closes again. So if you've been thinking about investing, repositioning your portfolio or making a plan before inflation accelerates again, you can speak directly to an MBA with real world real estate investing experience. It's a more crucial time than usual to book a free call with a GRE investment coach, which you can do at greinvestmentcoach.com. Windows like this do not stay open forever. It is the right time to act. In my opinion, that's the big message. The war inciting high inflation and hitting the point of no return for that. And I expect those free open slots to fill up fast, book a time again at GRE investment coach.com and plot out a plan. A lot of great shows coming up here on the GRE podcast, including two weeks from now, the number one selling personal finance author of all time, Rich Dad, Poor Dad. Author Robert Kiyosaki will be back on the show with us. As for later today, it's interesting to learn about a new market that we have not discussed in depth before, especially when it's a cash flow market. It includes new build single family rentals for $145,000 and now it's really small, but it also includes granite and LVP flooring. That's next.

Keith Weinhold 20:20

I'm Keith Weinhold. You're listening to get rich education. What if you got your mortgage loans the same place I get mine. You sure can at Ridge lending group, NMLS, 42056, they provided GRE listeners with more loans than anyone. Because Ridge specializes in investment property. They'll help you build a long term plan for growing your real estate empire with leverage. Start your pre qual and even chat directly with President chailey Ridge while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com, let me ask you something, if you've worked hard to build wealth, is your money positioned to actually support your goals? A lot of accredited investors leave capital sitting in cash because it feels safe, but inflation and missed income opportunities can quietly erode its value. Freedom family investments offers freedom notes for investors seeking structured income backed by real estate. It's a straightforward approach built on real assets, not speculation and full disclosure. I'm an investor myself. What I like is that their team walks you through how it all works, so you can decide if it aligns with your portfolio and income goals. Every investment carries risk and nothing is guaranteed, but with a track record of consistent on time investor payouts, they built real credibility. Go to freedom family investments.com. To book a clarity call or text family to 66866, that's family. 266866,

Richard Advani 23:19

This is hem lanes, co founder, Dana Dunford, listen to get rich education with Keith Weinhold, and don't quit your Daydream.

Keith Weinhold 23:35

We have the chance to discuss a cash flowing real estate market today that isn't talked about very often with Richard, an income property provider in Oklahoma. And Richard, you have over a decade of experience working and investing in the Oklahoma market. And then you your wife and your daughter, you move there because it is a rather attractive investment climate. You've been prolific in the industry. You've spoken at hundreds of real estate events, so welcome and tell us more about yourself and really that attraction to Oklahoma.

Richard Advani 24:09

Yeah, it's great to be here and share, you know, more of what I learned as an investor the last 10 years. Yeah, it's been amazing, because when I first invested here, it was more of a diversification play for me, and I didn't expect a lot of growth, but, you know, it had good fun

Keith breaks down why real wealth is built through concentration, not diversification and explains how focusing on one main vehicle—like a specific real estate strategy, business, or career niche—creates the expertise and asymmetric returns diversification can't.

He also clarifies that diversification isn't useless; it's most powerful later in life as a wealth preservation tool, not a wealth builder. Contrasting building wealth with simply earning a living, showing why specialization is the key to higher income.

Finally, he highlights the one area where diversification truly shines: your relationships and network, which provide resilience, perspective, and long-term support.

Episode Page:

GetRichEducation.com/605

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, is wealth built through diversification or concentration? There is one clear answer. Then, in five year age increments, how should you think about wealth building and real estate at age 2025, 3035, and so on, all lay out each one today on get rich education.

Keith Weinhold 0:26

Flock homes helps multi family owners exit the operator grind, whether it's your six Plex or a 50 unit apartment through a 721 exchange, this defers your capital gains tax. It's a strategy long used by institutions. Now you can swap tenants and toilets for passive income and zero management request your initial valuation, see if your property qualifies at flock homes.com/gre, that's F, l, O, C, K, homes.com/gre,

Speaker 1 0:59

you're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:15

Welcome to GRE from Buffalo New York to Buffalo Wyoming and across 108 nations worldwide. I'm Keith Weinhold. You're listening to get rich education. I am back here with easy to understand language to help you learn why and how real estate has made more ordinary people wealthy than anything else, and in your personal path to wealth building, how do you think that wealth is achieved is it through diversification or concentration? Because there is a clear cut answer. There is no squishy wishy washy, a little of this and a little of that, or no major exceptions. No gray area here. And it's interesting because I have a CFA friend, that means chartered financial analyst who's really smart and really well trained, and yet he seems confused by this. We disagree on this one straight away. Do you think that you're going to build wealth if you diversify or if you concentrate? And if you're still undecided here, I'll give you a hint. I'm going to ask this integral question one last time and stress a word in this sentence for you. This could really help you out. Is wealth built through diversification or concentration? With that emphasis on built accumulated? The answer is that overwhelmingly, wealth is built through concentration, not diversification. Most people who actually create any really meaningful wealth, they didn't go sprinkle a little money everywhere. Instead, they really focused hard on one thing, whether that thing was a business or a career niche or a narrow set of high conviction investments or a specific real estate strategy, for example, single family rentals or self storage facilities or assisted living homes. And why? Well, because concentration amplifies your upside. It lets you develop expertise which gives you an edge over everybody else, and it's what turns average returns into asymmetric ones. Think about how Warren Buffett made massive gains early with concentrated bets. Or how Jeff Bezos went all in on just a few ventures, or Sarah Blakely on just a few ventures. Those that say don't put all your eggs in one basket, well, all right. I mean, you can look at the world that way, that is a diversification path. Though you're going to end up working full time until you're age 68 and you'll probably be safe and you might just have a sound retirement, but you have done so much trading away of your time in your best years for dollars. I mean, that's it. That's not a wealthy path. Your employer wants you to invest any of your extra income in a diversified way so that you're not going to build enough wealth to leave that employer early. And yes, we're back to the old Andrew Carnegie. Put all your eggs in one basket and then really watch that basket. Carnegie's concentration was in the steel industry, wealth. That's what we're talking about here, like something outstanding, extraordinary, not just a good enough retirement nest egg. Maybe real wealth is built through concentration. This is why we concentrate on one thing here on this show. Largely real estate investing, because you don't build wealth from diversification. All right now, yes, there could be a little diversification even inside residential real estate investing, say, maybe you want to get into three markets. Call it Atlanta, Indy and Kansas City. But overall, that is still concentration in residential real estate investing. And if you want to be outstanding, you have got to embrace the heterodox, meaning a departure from the Orthodox. Orthodoxy is spreading all your money around in, say, the s and p5 100 index, we're almost guaranteed then to get a pedestrian like outcome. And now look, once you've built something and you've got something to protect, which is however you've decided to build your wealth through concentration, oh, now that's when the game changes. You'll probably best protect your wealth, not build it protect what you've built through diversification that being done when you're older. And what diversification does for you is that it reduces your downside risk, it smooths volatility, and it prevents a single mistake from wiping you out. So at this stage, you're no longer trying to win big. You're just trying not to lose big. The mistake most people make is that they diversify too early, and that usually ends up leading to mediocre returns, no real expertise, and these sort of portfolios that are busy but not wealthy, it's sort of like planting 20 seeds and then not watering any of them enough.

Keith Weinhold 6:47

All right. So here's a smarter progression across your investing life. In your early stage, which is your wealth building phase, you want to concentrate your time, your energy, your capital, you want to build skill and conviction, and then you want to take calculated asymmetric bets after, say, 10 or even 20 years of that, you enter the mid stage. That's where you'll start spreading across related areas, for example, multiple property types, but still in markets that you understand. And then finally, after 10 or 20 years of this mid stage, it is later stage, which is wealth preservation only. Then is where you diversify broadly across asset classes and all sorts of geographies. And then you protect yourself against tail risks. So the bottom line is that concentration creates wealth, diversification preserves it. If you try to flip that order, you are going to stay stuck. And if you're young and you're still diversified, and you might think you're okay, and you even project that you're going to have something built up, like, say, $8 million in retirement. If you just keep this up, what you've just done is that you're making my point for me, because 8 million, that is not going to be an outstanding amount at all by the time you reach conventional retirement age, you had better flip to concentrating in something, whether it's residential real estate or data center construction or pressure washing. All right, so that was wealth building. Now, how about instead of wealth? Say that you're trying to make a living, all right, this is a different subject. Now, if you're trying to earn a living, should you diversify, or should you concentrate? How do you make a good living? Which is working at your day job? That's what we're talking about here. Now, once again, the answer is, through concentration, not diversification. We became a society of specialists by the Industrial Revolution 200 years ago, if not sooner, making a good living that comes from being valuable at something specific, not average at a whole bunch of things. One strong income engine beats five weak ones. Depth pays more than breadth. People are willing to pay you for expertise, not for dabbling around. This is whether it's a niche in real estate or a specific profession or a focused business model, you need one thing that reliably throws off good income and a little story here. I don't want this to be disparaging to Uber drivers, because I appreciate what they do and where they drive me. But I recently had an Uber driver. It happened to be in Hollywood, and this uber driver is also a stand up comedian there in West Hollywood. Well, those are two very diverse activities, driving and being a comedian, and that tells me something he's not a very successful. Stand up comedian. If you try to diversify too much, your attention gets split, your skill development slows, and your income plateaus at just okay. Now I'm fortunate enough to have had some good success at what I do, real estate investing, and then talking about real estate investing with you here, that is my specialty, my concentration. I don't mow my own lawn. A specialist does that. I don't shovel my own snow. A specialist with all the right equipment and all the expertise does that. I don't do my own accounting. Now in what feels like a previous life to me, when I used to work a day job for the Department of Transportation, and there were problems with paving a specific type of asphalt on the roads in cold weather, a specific specialist would fly out to help us troubleshoot that. He was a high paid consultant, because he is in a niche that's very tiny. So when it comes to the matter of making a living, where diversification fits is once your primary income stream is stable and predictable, well then maybe you could add a second complementary stream, and not something that's random, build redundancy so that you're not fragile. But just think of that as a backup engine. You don't want to think in terms of 10 side hustles. For an example, a real estate investor adds another market or a strategy, a w2 professional well, they had maybe one serious side income, and that's just a matey. Surely not six apps and gigs if you're out there chasing everything, then you are going to earn less. And now that I've discussed how you want to concentrate, not diversify if you want to build wealth, and you also want to concentrate not diversify if you want to make a good living, well then you might wonder, gosh, does diversification have any place in my life? Is there any life facet at all where diversification gives you an advantage? Yes, there definitely is. Do you have any idea where diversification helps you as you look at all areas of your life, because there is one clear cut place, and that is relationships. Yeah, whether it's romantic relationships, like dating a potential spouse or in the broader sense, I mean, when you met your eventual husband or wife, it's not very likely that you impress them by going deep on some nuance that has to do with asphalt paving, or how you or how you increase your cash on cash return with management efficiencies on your single family rental portfolio in Little Rock Arkansas,

Keith Weinhold 12:57

In relationships, you become attractive to people because you can say, show a soft side, or be a good listener or know how to dance a little all while you can make a good living a diversified relationship portfolio. Now for you, that might mean having close friends for fun and honesty and a professional network for opportunities and perspective, and you might have a mentor or two in your life for guidance, and then you've got family relationships for roots and support. So every one of them plays a different role, and that way, no single relationship has to carry everything and what this protects you from is having just one friendship. You don't want that, otherwise, your whole social life can collapse. It protects you from a career setback, because you'll still have emotional support. Having diverse relationships prevents you from falling into echo chambers. Instead, you're going to get better, broader thinking. So having diversification in relationships that is basically risk management for your life and in this life, facet smart diversification makes you resilient. It makes you grounded. It makes you harder to knock off course. So let's review here in relationships, diversify to build wealth, concentrate and to make a good living, concentrate. And with that said, you know, if you want to get mega, mega wealthy, like stupid rich, let's just call that a billionaire with the letter B, if you want to reach that level, then I don't think that investing in rental property is the fastest or the best way to get there, although it can give you a good start. And then what's the point of this show? The point is that real estate investing is the most proven way to build wealth when you concentrate on it. If you want enough net worth and income so that you never have to work again all while you're still young enough to enjoy it, direct investment in real estate. Hey, that's great. If you want to get up to the $10 million net worth level, or even to say, $50 million that is totally doable. And the good news is that it's almost inevitable if you apply yourself and yes, concentrate, because that's all most people want, options and freedom. Those words are often a proxy for wealth. But if you're trying to get on the Forbes list of the world's wealthiest 100 people or whatever, which is where you need to concentrate on a novel business idea. All right, you can go for that, and then your risk of failure goes up substantially. You might even reach the billionaire level. As a real estate investor, more likely the DECA or the Centa millionaire level. But there are other ways of doing that outside of real estate. Real estate investing is great if you want to get sort of regular wealthy. Maybe even say that can be as little as 15 million or 25 million plus when you're young enough to enjoy it. And you know even half or 1/3 of those levels are enough as a freedom number for most people. With all that said, when you concentrate to build wealth, you do have to pick a proven vehicle. You can't say you're going to concentrate on sports gambling or prediction markets like call sheep or polymarket. They are not proven wealth building vehicles. Most people lose money on Poly market if you've wagered your mortgage that Mr. Beast is going to be the next President of the United States, perhaps reconsider that approach. In fact, according to an analysis that Bloomberg just performed, nearly every poly market trader either loses money or they make little or no profit. More than 100,000 accounts lost $1,000 since the start of last year, and that is twice the number of accounts that made at least $1,000 in aggregate, traders lost $131 million on this prediction market over that time, the tiny number of accounts that make lots of money appear to be mostly bots. That's what Bloomberg found. And there was a separate study that found that since 2022 69% of traders lost money, while three quarters of total profits were won only by the top 1% of users. So gambling, wagering, this speculation, it is not a proven vehicle, and it's not the same as investing. The cleanest way to think about the difference is that investing means putting money into something that produces value over time. Instead, gambling means putting money at risk on an outcome that you cannot influence, usually with a negative edge. And gosh, one reason that this is on my mind is, you know how I recently shared with you that I stayed at the Bellagio in Vegas. I didn't gamble at all. And in fact, I don't even know if I'm going to stay there again. That's just not congruent with who I am. But I marveled with my mouth agape when I watched a few games at the roulette wheel. Yeah, you're allowed to watch if you're not gambling. A typical scene is that perhaps five players were wagering their chips at the roulette wheel. Now the way it works is that the casino, they often have two and sometimes three of their own staff, like uniformed employees, that are there facilitating and monitoring the roulette wheel. I mean, look right there, if the casino is paying two or three staff members to facilitate the roulette wheel, well, the player should know that the odds are tilted against them. I mean, those casino dealers make, you know, they usually just make 50 to 70k a year with tips, all right, well, so the house needs to have enough of an advantage to pay their employees that are at that table and still profit. And they sure do profit. If you don't understand the game, when you play roulette, you can basically either wager that the ball is going to land on either red or black, but two of the 38 spaces on the wheel are green. They benefit the house directly. So with every bet that a player makes, they've got 18 winning spots and 20 losing spots. This is why roulette, like most gambling schemes, is for losers. And this roulette metaphor, I mean, this is a easily intuitive example for How the house has the advantage, whether it's the DraftKings app on your phone or it's a physical in person Casino. And look, I had another Uber driver recently. Yeah, lots of Uber drivers in my life lately, as I've been traveling in Pennsylvania, New York, California and Nevada, all right, interestingly, this uber driver is a dealer at the Horseshoe Casino, which is near the center of the Las Vegas Strip. While he drove me around, he opened up and told me that he doesn't understand why anyone is a serious gambler in his life history, he divulged to me that he has never known one long term winner. That's a gambler. It's amazing that he would admit that himself as an employee there. So suffice to say, wealth is built through concentration, not diversification, and certainly not through gambling.

Keith Weinhold 20:56

How should you think of building wealth for yourself at different age profiles, 20,25,30,35, and so on. I'll discuss each age profile that's next. I'm Keith Weinhold. You're listening to get rich education.

Keith Weinhold 21:13

What if you got your mortgage loans the same place I get mine. You sure can at Ridge lending group NMLS, 42056,they provided GRE listeners with more loans than anyone. Because Ridge specializes in investment property, they'll help you build a long term plan for growing your real estate empire with leverage. Start your pre qual and even chat directly with President chailey Ridge while it's on your mind, start at Ridge lendinggroup.com that's Ridge lendinggroup.com

Keith Weinhold 21:44

Let me ask you something, if you've worked hard to build wealth, is your money positioned to actually support your goals? A lot of accredited investors leave capital sitting in cash because it feels sa

Keith explores how real estate investors can use mortgage strategies to build long-term wealth.

Seasoned lending expert and repeat guest Caeli Ridge joins Keith to discuss why debt isn't something to avoid but to optimize, and how negotiating terms can matter more than price. They walk through practical approaches for new and experienced investors, from house hacking to scaling a rental portfolio. The conversation also tackles common myths about qualifying for investment property loans and what really matters to lenders.

Finally, they emphasize focusing on fundamentals—cash flow, risk management, and informed decision-making—rather than fixating on interest rate headlines.

Episode Page:

GetRichEducation.com/604

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE I'm your host. Keith Weinhold Some mortgage guidance out there is costing you wealth today. I'm talking about how you can negotiate to get better terms. I'll tell you the exact questions to ask. Then a guest clears up mortgage myths and misconceptions and how you can borrow to win today on get rich education

Keith Weinhold 0:28

let me ask you something, if you've worked hard to build wealth, is your money positioned to actually support your goals? A lot of accredited investors leave capital sitting in cash because it feels safe, but inflation and missed income opportunities can quietly erode its value. Freedom family investments offers freedom notes for investors seeking structured income backed by real estate. It's a straightforward approach built on real assets, not speculation and full disclosure. I'm an investor myself. What I like is that their team walks you through how it all works so you can decide if it aligns with your portfolio and income goals. Every investment carries risk and nothing is guaranteed, but with a track record of consistent on time investor payouts, they built real credibility. Go to freedomfamilyinvestments.com to book a clarity call or text family to 66 866, that's family to 6866

Speaker 1 1:32

you're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:48

Welcome to GRE from Albany, New York to Albany, Oregon and across 188 nations worldwide. You're listening to get rich Education. I'm your host. Keith Weinhold, as we know, debt isn't something to avoid. It's something to optimize. As a real estate investor, I would rather have lower mortgage rates than higher ones, and now you can call me Captain Obvious. Yet there are some reasons that higher mortgage rates benefit us as investors, though they're not as great as the lower rates are I'll discuss some of that today. This stuff obviously influences marketplace behavior. In fact, here we are now, years after rates made their historic surge and nearly tripled between 2022 and 2023 and yet still, 70% of mortgage borrowers have an astoundingly rock bottom rate below 5% today, lower than the ocean floor, and they won't sell those properties. That's just one contributor to the low supply hangover that still lingers. Are today's buyers still anchored to an unrealistic baseline. It certainly reframed how investors think about normal borrowing costs and what that word normal means. My first ever rental property, many years ago, was purchased at a 30 year fixed rate of six and three eighths percent. One year later, I got to refinance a full 1% lower at five and three eighths. I'm happy that I bought one I did because starting year earlier, got all my real estate benefits rolling that much sooner, the leverage and everything else, and when I did that, refinance many years ago, from six and three eighths down to five and three eighths, I was able to roll all of my loan refinance costs into the new mortgage balance, and that way I didn't have to pay anything out of pocket. So financing is negotiable. A lot of investors don't realize that buy down your rate if you want roll the loan costs into the loan amount, like I did. In fact, I would usually rather have a higher mortgage rate and then not have to come out of pocket at the table. I would rather do it that way. Sometimes I take a higher rate and even get cash back at the closing table. So I walk away from the closing table with a property and cash, but yet with a bigger mortgage. And what's the strategy there? Well, with more inevitable Inflation, I want to load up on the dollars that I get now and then make those paybacks over the long term with future cheaper, diluted dollars for 360 months, sometimes I don't have to ask the lender for any sort of favor to get that zero help from the lender at the closing table to get cash back. How do I do that? Well, I ask the seller to give me cash at the closing. Closing table in return for offering the seller full asking price, or sometimes even over the asking price. I have done it the strategy of offering full price or even a little more than the full list price. See, that's often easier than getting a price cut from the seller, and that works great, because getting the closing table, cash is going to benefit you more than the price cut would anyway, in almost every circumstance, and when it comes to your lender, ask them questions that cut through the noise. Now, lenders have to make their profits somewhere and stay in business, but I've asked the question, what's the break even point on this rate buy down. That's something you can ask today. That can be an even better question for you to ask of builders with all of the buy downs that they're doing for you now, most people know about a mortgage rate lock. That's when you're in contract to buy a property. At some point, you and your mortgage company, you lock in your rate for, say, 30 to 60 days, and that way, if the rate rises before the deal is completed, you are protected. You are locked in. But some lenders also offer float downs. That's for if you lock and then rates go lower before you get the deal closed. In that case, you get the lower rate, and now you successfully played both sides, but most borrowers don't know to ask about a float down for larger apartment buildings, sometimes you can negotiate away prepayment penalties or instead a shorter penalty window. The thing to keep in mind is that smallest borrowers negotiate price, but savvy investors negotiate structure. That's what we're talking about here, and that's why you often hear that terms are more important than price. So there's plenty of opportunity here, even if historically low rates is not where today's opportunity lies. Today, we're going to discuss some things about mortgages that most people believe but are just flat out wrong. Also, what separates the borrowers who build real estate portfolios from the ones who stay stuck on property one, let's have a conversation with this week's repeat guest, a real favorite here at GRE for her mortgage clarity.

Keith Weinhold 7:35

Hey, the president of ridge lending group, Chaley Ridge is back with us. We'll get into things like rates and loan strategy shortly, but first, let's discuss some fun. What would you do? Chili, what would you do if you're 35 and have 100k to invest in real estate? What's your first move? Ooh, good question.

Caeli Ridge 7:55

So let's think five years ago for me now I'm 35 what would I do if I had that was a joke for all you listeners, obviously, you know, I think that if I could go back and knowing what I know now, I would probably invest that into an owner occupied house hack using an FHA loan. Probably look for newer construction if I could find it, and I would probably target a four unit residential property. I'd probably put three and a half percent down lowest rates with that. FHA, I would leverage my money, and I would get three other tenants in units, two, three and four to pay my mortgage, and then I'd use the rest to go buy an investment property

Keith Weinhold 8:32

much like I started out with the owner occupied four Plex, live in one unit, rent out the other three. FHA, three and a half percent down. What if someone, however, lives in a market where the numbers just don't work and the law really tilts toward the tenant rather than the landlord.

Caeli Ridge 8:47

You know, that's a good point. There's a lot of factors, obviously, right? And there's exceptions to all rules, etc. So I don't want to generalize, but I would probably take the 100,000 and maybe look at some kind of a burr in that case, maybe pivot and do some math and see if buy rehab rent refi might be more applicable. To take that 100 grand and leverage it that dollar bill, as far as I could make it go

Keith Weinhold 9:10

sometimes you have to get scrappy when you're starting out another what would you do now? Say you've got some more experience. You already own two rentals. How do you scale that to 10.

Caeli Ridge 9:21

You know, my biggest piece of advice for investors, especially newer ish investors, is to make sure that you've got your eye on some level of diversification. Scaling from two to 10 can sound pretty daunting to some people, but I think that diversification advice comes in handy when you're not singularly focused on, let's say, a core philosophy of single family, residence, cash flow only in one market instead, maybe layer in some appreciating markets where you can earn and count on longer burn appreciation that you can then leverage from to then purchase the next to the next to the next, right. Cash. Refinances borrowed funds are non taxable. I would probably say diversification is the core answer to that question. For me,

Keith Weinhold 10:07

yeah, if you've already got two properties, maybe if you've had those for a few years, yes, you can do a cash out refinance and basically use one of your first two properties to fund that third and fourth and so on, right exactly? How about if rates drop 1% tomorrow? What's the next thing you would do? Immediately?

Caeli Ridge 10:29

I would do the math. Is what I would do, Keith, and I know you love that answer. So if I had a portfolio of X number of properties and rates just dropped 1% tomorrow, I would take a hard look at what I had in the queue, and I would say, Okay, how much does a one percentage point rate save me in monthly payment, aka, earn me in cash flow, and what is it going to cost me? It is imperative that the investor is actually doing the math. 1% may sound amazing, but if it's only going to save you 5060, bucks a month, and maybe that's enough, but it might cost you five grand. Does that math work for you? So that's my answer. Do the math?

Keith Weinhold 11:08

Yeah, if rates drop 1% does that make you want to perform more purchases? Does that make you want to refi something that you already have and at the same time that you do that refinance? Okay? That may or may not save you a lot in payment. But another consideration is, okay, well, at the same time you do that refinance, oh, maybe you could take cash out and use it as a down payment for another property, or just use that money for something else,

Caeli Ridge 11:33

absolutely, and you know what we're talking about. That from a purchase perspective, if rates drop 1% tomorrow, from an investment perspective, what do we think is going to happen to the rest of the market? The homeowners are going to be coming out of the woodwork, right? The owner occupied the competition is going to get very, very stiff, steep. I would say that if you are banking on or waiting for rates to do X, Y and Z, you are missing massive opportunities today. So there's a lot of reasons not to hesitate and be waiting on some magic, massive rate drop.

Keith Weinhold 12:04

All right. Well, those were three interesting what would you do scenarios you mentioned the possibility, and it's surely only a possibility that mortgage rates will drop sometime in the near future. Let's expand on that. If someone is indeed waiting for rates to drop. What are they risking in the meantime?

Caeli Ridge 12:25

You know, this is such a good but complicated question. There's a lot of layers to this. If someone has a magic number in their head, again, I'm going to press back and say you have to be doing the math. All right. So a lot of people conveniently, maybe not so conveniently. But a lot of people forget that interest rates, by nature, always drop or reduce much slower than they're going to climb. Okay, historically, go back and do your own research here. Interest rates, when they go up, they tend to kind of go up quickly. When they come down, they really kind of trail, and it's a slow, progressive landing. It's not a quick thing when they come down. So if we know that that's true, or at least historically, that's been true an interest rate reduction of an eighth or a quarter or three, it's of a point. Maybe that takes us a month or two or six or a year. What does that really mean to that payment? You have to be doing the math so, largely dependent on the loan amount. Okay, if you think that interest rates are going to be reduced in a month from now by a quarter of a percentage point, what does that mean to the payment? Does it mean $12 a month? Does it mean $100 a month? And in that scenario, in that calculation, what are you giving up by waiting the month or two or six for a what if I think that you are diminishing your rates of return by waiting on a come that one may never happen, and two, the significance is probably far less relevant than you are giving it credit for.

Keith Weinhold 13:52

Now, I think generally real estate investors want low mortgage rates. Obviously, it gives us a better refinance opportunity. It gives us a better purchase opportunity, potentially, okay. In general, we want lower rates. However, there are some reasons a lot of people don't think about as to why lower mortgage rates are actually bad for a real estate investor. If you just look historically, when have we had extraordinary low mortgage rates here in these past 20 years? Well, they've been to get us out of huge economic problems, late to global financial crisis or the covid pandemic. So if you're wishing for really rock bottom rates, which again, is tempting to do, and is advantageous, in a sense, there is a downside as well. If there are super low rates, a lot of people might be out of work, including your tenants. So that's the reason that we want to be careful as to what we wish for, with rates being super low and artificially low, like they were a couple times in the past two decades. And you know, Caeli another reason why I'm not fully in love. With low mortgage rates, although I liked them, is the fact that I look back and notice as being a property investor for more than two decades now, is that I have had tenants leave when mortgage rates are too low and lending is too easy, especially leading up to the global financial crisis, it was so easy to get first time homebuyer loans at really attractive rates. So I had higher vacancy because mortgage rates were so low that my tenants left and became first time homeowners. So yes, we generally want lower mortgage rates, but there is a downside to that as well.

Caeli Ridge 15:35

And I think there's probably a sweet spot, I think such a good point that most people probably don't think about Keith, and I couldn't agree more, when rates have been at their lowest. To your point, all hell is breaking loose economically in so many other sectors. Yeah, be careful what you wish for.

Keith Weinhold 15:51

Any old time, real estate investor would find it really humorous and almost cute that people think mortgage rates between six and 7% are high. You and I know they're historically low. 7.7% is the long term owner occupied, 30 year fixed mortgage rate going back to 1971 per Freddie Mac the most reliable stat set that we have. But now that we have come up back into what's really a more normal range, just like we started to do in 2022 How should someone think overall in not a high but a higher mortgage rate environment? What are some things that actually matter more now than they did before back five plus years ago?

Caeli Ridge 16:32

I want to give you some statistics. So from 1990 to now, the average owner occupied rate was 6.08 now that's owner occupied, and more often than not, you can add about a point percentage point spread between that and non owner occupied in general. So we are right in line with the last 36 year swing of where interest rates have been. So please keep that in mind. Again, that psychology piece. But overall, I think that what we need to be paying attention to, even if, over the last five years, 10 years, interest rates are a little bit higher than we came to recognize them, the pandemic was an outlier. You guys. Okay, let that lie that's hopefully never to repeat itself. But what we want to be focusing on, and I know that I'm beating a dead horse here, is that you have to get rid of the mental block that you have about that number that we call an interest rate. You need to be looking at a property holistically that says, does it cash flow based on this tenant application? What about this tenant application? What is my exit strategy? Is my property management doing the job that it needs to be doing? Can I trust them to ensure that my vacancy is low? And if I have to evict somebody that they know what they're doing and they know all the rules in the different cities and counties, I think that those are going to be more prevalent to the successful real estate transaction that gives you the financial freedom that you want long term, stop fixating on the rate. That's my advice.

Keith Weinhold 17:53

Some of those operations that you talked about are controllable, and the mortgage rate is largely uncontrollable outside of maybe getting a better credit score to get a lower rate or something like that, focus more on what you can control. And Caeli, you touched on something interesting that I think a lot of people don't understand, and that is investor financing versus owner occupant financing. A lot of people just don't understand the differences as to why investor loans cost more, tell us about that.

Caeli Ridge 18:25

Yeah, good question. It happens to be about secondary markets, so I won't get too technical, but when we talk about mortgage backed securities right Wall Street, and this is an asset class that is bought and sold and traded, etc, etc, there are demands, obviously, and then you've got layers of risk. So the baseline thinking is that an owner occupant is less likely to default on the home that they live in, right? Something is going on financially with them. They've got some hardships, etc. They're going to cut loose the rental property before they're going to default on their primary so that's just kind of the overall basic. There's other variables in there, but that's the one that makes the biggest difference. Is default rates on an owner occupied versus a non owner occupied. Now I may argue, if I can just add to thi

Keith shows how simple buy-and-hold real estate can be a powerful path to long-term wealth.

He explains how the tax system and inflation often reward property owners—especially those with fixed-rate debt and rental income—turning modest rent increases into outsized gains in cash flow.

Keith also explores how broader economic forces and neighborhood trends shape real estate markets, and why even an extra $1,000 a month in passive income can meaningfully increase your freedom, reduce reliance on a single job, and move you closer to financial independence.

Episode Page:

GetRichEducation.com/603

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

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

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE I'm your host. Keith Weinhold. Learn how rent inflation makes real estate investors wealthy. Do certain grocery stores in your neighborhood stoke real estate prices, then how just $1,000 of extra monthly cash flow can be surprisingly life changing. Today, on get rich education,

Keith Weinhold 0:24

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Speaker 1 1:28

you're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education. You Chris,

Keith Weinhold 1:44

Welcome to GRE I'm your host. Keith Weinhold, it's the show that coined the phrase real estate pays five ways. This is get rich education. You learned how to work at your job. The reason we're here is to make you aware that capital compounds labor doesn't, and that's almost why you have to be an investor today. A couple weeks ago, we had tax day in the USA, and that's not quite a holiday. Virtually no one celebrates it. Yes, here in our 250th year of existence as a nation that erstwhile mentioned semi quincentennial. How did America go from fighting a revolution over a 2% tax on a breakfast beverage at the Boston Tea Party to what we pay today? Have you really processed what this has come to now we're taxed when we earn money, taxed when we spend it, taxed when we save it, taxed when we invest it, even taxed when we die with it. And that's just the start. Think about your typical day, your routine. We commute to work in a car, were taxed to register driving on roads. Were taxed to build fueled by gas that's taxed again and then often paying tolls on top of that. Well, those taxes are supposed to maintain the infrastructure, like bridges, highways and tunnels, but yet, they already have billions of taxpayer dollars allocated to them. Then we arrive at an office that's taxed to exist inside a business that's taxed to operate that requires permits and licenses that act like other layers of taxation. When we finally get our paycheck, our employer matches payroll taxes on top of our wages, just incredible. And at the end of the day, we go home to a property we're taxed to own every single year, purchased with income that was already taxed in the first place, and somehow all of this is considered normal. Here's the turning point. Most people when they realize this, feel frustrated and saddened and even victimized. But instead, real estate investors flip the frame from victim to strategist, the same system that taxes seemingly everything quietly rewards those who own assets through depreciation, we report a loss even when the property produces real cash flow. Last week, I told you how you can specifically lower your property taxes step by step, then through mortgage interest and operating expenses, we can reduce that amount of our income that's even taxable at all through long term leverage, we're often repaying debt with inflated dollars, while our tax burden stays surprisingly low, and then it gets even more power. Powerful, more advanced real estate investors use a cost segregation and bonus depreciation to pull years of deductions forward into today. And it's something that's not really that sophisticated or tough to understand either. And then when we sell a property 1031, and 721, exchanges help us defer the capital gains tax. And when you start to think about it, could these turnabouts even get us patriotically excited for a dare I say, semi quincentennial.

Keith Weinhold 5:36

our system of taxation, it can feel punitive. Some high earners lose more than 55% of their income to taxes, both federal and state. Real estate investors don't just earn gains in income. We reshape it. We continue to thrive in a tax system that rewards ownership. Not only is wealth built from owning things rather than having a high salary, tax breaks are gained by owning things rather than having a high salary. And now it's somewhat common knowledge that war leads to inflation. The latest Middle East conflict entails a lot of military spending, and it's been made worse by disrupting an energy producing region. Four weeks ago, I told you about why wars are inflationary and just how bad it can get. That is why the first major wartime inflation reading that we got was so telling. And wow, inflation grew at the fastest annual rate from one month to the next since the pandemic spike back in 2022 it went from 2.4% up to now 3.3% just like that. And with more inflation poised to come along, even if the war winds down, and I want to talk more about how this benefits you shortly. And yes, if you're a newer listener, you're not used to inflation benefiting you, but it benefits the educated and the aware. GRE listener. And first, here's what fewer people pay attention to. M2 money supply that's jumped 4.8% annually to a record of almost $23 trillion now the money supply, this is the 24th consecutive monthly increase the supply was only about $5 trillion back in 2000 10 trillion by 2012, 15 trillion in 2020, and then the pandemic made the money supply explode, and it's almost 23 trillion today. And what does this all mean that the US dollar is losing purchasing power at a historic pace, because, look, inflation is actually not rising prices. The thing that's now up to 3.3% the CPI. Rather, inflation is an expansion of the money supply. It inflates. That is the very etymology of the word people often overlook that. That's why I'm talking about the historic expansion rate of the money supply, and how that can show up in higher prices later. High prices are not inflation. Rather, they are a consequence of inflation. And I want to tell you more about what this means to you, and explain how this builds your wealth in a new way. But first, I mean, my gosh, have you been as flabbergasted about inflation as I am, just at the consumer shelf and aisle level in a store, and I'm a guy that likes to spend money, yet I've got to say sticker shock. It still gives me pause when I'm in a store, even on the cheapest of items, I recently went inside a gas station convenience store after I filled up a regular size York Peppermint Patty, 1.4 ounces cost $3.19 this consequence of inflation has left me slack jawed, but already was a Slack jaw however, has it left you slack jawed? All right, let me tell you about how the wildly overpriced York Peppermint Patty makes real estate investors rich in their sleep. Did you know that the classic economist, Milton Friedman, discussed the concept of get rich. Education's inflation, Triple Crown, essentially. Now we didn't call it that. In fact, he discussed it before GRE existed in 2014 let's listen into this. Friedman won a Nobel Prize in 1976 I'm going to guess that this is him speaking in about 1980 essentially, he. Discuss the first two crowns, which are also the ones that homeowners with a mortgage benefit from which are asset price, inflation and debt debasement. This is about two minutes in length.

Speaker 3 10:11

If I ask people, are you in favor of inflation or not? Everybody is against inflation. But when I explore a little bit further, if I say to people, tell me, have you gained from inflation? Oh, no, you say I haven't gained. And yet, the fact is that a great many people have gained from inflation. There are many, many people who have benefited. Of course, the major gainer from inflation is the federal treasury, as I've already said, but almost everybody who has bought a home in the past 30 years has gained from inflation. He was able to borrow on a mortgage, which inflation has paid off, along with paying off the government debt, so that almost all homeowners in this country are beneficiaries from inflation. Indeed, one of the things that makes inflation such a bad social disease is precisely that it tends to be divisive, because some people do very well during an inflation period, and some people do very badly. And as a result, the population gets split into people who are seeming in great prosperity and people who are in great distress. When most people say they want to stop inflation, what they mean is that they want the prices of the things they buy to go down and the prices of the things they sell to go up. But since what one man sells is what another man buys, that's a neat trick, if you can do it. And as a result, people aren't really serious when they say they want to stop inflation, certainly not in the early stages, not before they fully understand, not before it's gotten to the point where it is really creating serious social problems. Everybody wants to stop inflation at somebody else's expense.

Keith Weinhold 12:11

That was classical macro economist Milton Friedman discussing the rarely talked about benefits of inflation. He also served as an advisor to President Reagan and to British Prime Minister Margaret Thatcher Friedman extolled the virtues of free markets and minimal government intervention. Well, yeah, he discussed the first two crowns of get rich, education's inflation, triple crown. So let me discuss the third one, because you benefit from this when you rent out property. And what's interesting about what I'm going to tell you is that this example is going to make it more apparent than it ever has to you, that rent inflation makes landlords rich in their sleep. In fact, the positive effect on you is even greater than I thought I double checked these numbers I'm about to share with you before I came on the air, because I didn't expect this high of a degree of cash flow enhancement. And also, I was talking about what I'm going to show you on YouTube earlier, and it generated a negative, biting comment from a viewer. I'll tell you about that, but yeah, I showed this to a guy that's been investing in real estate for 36 years, and he didn't even understand this. Here it is with general monetary inflation. Rent inflation is a consequence. So let's keep this simple. Say that you charge rent of $2,000 and that could very well be a realistic rent amount for a single family rental property that our GRE investment coaches help you find today, although the average is probably a little less than that. So in any case, $2,000 rent. When you subtract out your fixed rate mortgage payment of $1,000 and your operating expenses of $800 This leaves you with $200 of monthly cash flow. We'll say that's your scenario today. Next rents rise 3% This means you're getting $2,060 now. Doesn't sound so exciting, yet your mortgage payment stays locked in at $1,000 inflation can't touch it. That's the key to this. Your operating expenses also rise 3% up to $824 This leaves you with cash flow of 236 okay. So what happened there is your cash flow went from 200 up to 236 that's not a 3% gain, inflation gain 3% this is an 18% increase in your income. 200 up to 236, an 18% cash flow spike off just a tiny rent adjustment will extrapolate that effect. Right across your portfolio. I mean, this is like your annual income going from 100k up to 118k and then compounding like that every single year. That is power, because inflation couldn't touch your fixed mortgage payment. And this is something I've explained before. It's the third crown of get rich education's inflation Triple Crown called Cash Flow enhancement. But it's a better example than I've ever had for it, and it's a germane time to talk about it with inflation on the rise again. Now here's an angle. Does what I just explained feel wrong in any way. The thing is, you aren't fleecing your tenant. It's just an adjustment to inflation, a little 3% bump to them, a big 18% difference to you. You didn't get rich off your tenant. You got rich because, again, you're leveraging the bank's money, but you're doing it in a way that most people don't see or think about and of course, mortgage free owners lose this entire benefit. It is just another way that real estate investors get rich in their sleep. Yet few ever understand how. But like I said, I was talking about this on YouTube just a little bit ago, and a commenter simply wrote, this makes you a bad person.

Keith Weinhold 16:27

Now, the viewer of GRE YouTube channel, sometimes it's you, but you know, sometimes it's someone that doesn't listen to this audio show here, where we do more learning, the casual or occasional YouTube viewer. They just probably don't understand all of what you do. But yes, like me, you have probably run into people out there that think that landlords are bad because they charge tenants rent and they adjust the rent as their expenses rise. And some of these people even say something like, I believe housing is a human right. I seem to hear that more and more, okay, that's one thing, but they imply that the taxpayer should pay for their housing. I mean, does that even work over time? You can see how often government provided housing fails and it ends up being exorbitantly expensive when the free market prevails. Instead, you know, I think that this sentiment has gotten a little worse because of the K shaped economy, more people having to sleep in their cars makes those people resentful. America, you know, we're in better shape when we have a strong middle class. What can really help you a lot is if you haven't yet. Finally, watch the three part video series, the inflation triple crown. The video really helps reinforce your learning well, because it's helpful to show numbers on screen, like you can in a video. You can watch that directly by going to get rich education. COMM, slash inflation, Triple Crown, or shorter. You can just go to the abbreviated get richeducation.com/itc, it takes you to the same place. It really shows you how to optimize your income increases and do it the right way. I mean, if someone thinks you're a bad person for raising the rent 3% commensurate with 3% inflation, well, you know what? Then if that person is an employee, should they also feel bad for getting a 3% pay raise at work? Well then they should, right, because they're charging their employer 3% more for their services as an employee. Well, of course, that's okay. So that sentiment doesn't make one bit of sense, all right. Well, let's temper the 3% rent inflation that I used in our example here. There's both bad news and good news around this, because today, rent increases are below average nationally. In fact, Zillow has forecast only a 1.1% rent increase in single family rentals this year. And then the good news is that the average rent increase since 2020 is 6% and we only used 3% in our example. The bottom line here is that few real estate investors ever have the epiphany that cashflow enhancement is yet another significant way that inflation makes them wealthy, and it's just another reason why carefully selected simple buy and hold. Residential real estate makes people wealthy. Just buy and hold you don't have to dig in and do a bunch of aggressive value add or get into a niche like self storage or short term rentals or assisted living homes that you sure can do those things. And there's nothing wrong with niching down. You just don't have to, and sometimes we even discuss those nichey vehicles here on the show. In fact, we've done four episodes on assisted living homes, but it's hard to beat the relative passivity and the durability of simple buy and hold residential not the latest hot thing, not speculation, but just what's proven. But you have to understand these forces and then act on them. I mean, I gave an example there of $200 in cash flow, and since that's only the most visible component of the five ways real estate pays. When you add it all up, you might be getting $1,500 of monthly benefit on a single family rental property that only costs 300k 1500 a month on a 300k property that you might have only put 20% down on. And for that 1500 a month, it might only take one hour per month of your asset managing of your property to get that $1,500 of benefits. So that is $1,500 an hour. That's great, but it's only one hour a month, and that's exactly what makes you want to scale with buy and hold property as soon as you get into a lot of real estate niches, which, again, it can be worthwhile, whether that's self storage or assisted living homes or something like that. Well, now it's more like an active business that you have to run, and you're probably going to spend substantially more hours there. But yes, a guy that's been investing in real estate for 36 years. Did not understand cash flow enhancement from Rent inflation until I showed this to him and watch it all. He watched the three part video series, which, again, you can watch for free at get rich education.com/inflation. Triple Crown or shortened simply, get rich education.com/itc. Open it up now and watch it later, because I'm back with more next. I'm Keith Weinhold on episode 603 of get rich education.

Keith Weinhold 22:13

Flock homes helps you retire from real estate and landlording, whether it's one problem property or your whole portfolio through a 721 exchange, deferring your capital gains tax and depreciation recapture. It's a strategy long used by the ultra wealthy. Now Mom and Pop landlords can 721 the residential real estate request your initial valuation, see if your properties qualify@flockhomes.com slash GRE that's F, l, O, C, K, homes.com/g R, E,

Keith Weinhold 22:49

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a lon

Keith explains how to increase real estate cash flow by appealing and reducing property taxes.

Then welcomes high‑energy real estate investor and educator Thach Nguyen.

Thach shares his refugee‑to‑multimillionaire story, breaks down his roadmap to retiring with rentals, and explains how ADUs (Accessory Dwelling Units) are transforming both investor returns and affordable housing—especially in Seattle.

Resources:

Follow @ThachNguyen on Instagram and all major social platforms.

Episode Page:

GetRichEducation.com/602

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, talking about how to increase your cash flow by obtaining a successful appeal and reduction in your property taxes. Then real estate personality Thatch Nguyen and I discuss mindset and some creative real estate techniques today on get rich education,

Keith Weinhold 0:23

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Speaker 1 0:57

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:13

Welcome to GRE from Mount Holly New Jersey to Hollywood, California and across 188 nations worldwide. I'm Keith Weinhold. This is get rich education, and I'm still not wearing Dockers, and I am in Hollywood, California today. More on that later. Among all the major investment classes when it's bought right real estate is the second safest investment class to bonds. Bonds are the safest among them all. Real estate has the highest returns, so it's the second safest and has the highest returns. And that's why it's our focus on this show. But if you want to be in real estate for two years or less, well, then it's likely best to invest elsewhere, at least with long term rentals, because you need time to defray your transaction cost. And for real estate pays five ways to start compounding. Coming up shortly, it's pretty popular real estate personality Thatch Nguyen. He will be here, and I did not know Thatch until recently, when we were introduced by our mutual friend Scott Saunders. And Scott, who I had on the show here a few years ago, is one of the nicest guys you'll ever meet in real estate. Well, besides those high return, low risk real estate attributes. Of course, when you own property directly, you also get a big measure of control if you want it. Now, control comes really with that option A lot of times to get involved and make your real estate investing less passive, just an option, because successful real estate can be as simple as buy and hold, but today we're discussing strategies. If you want to get a little hands on, if you so choose, you can attempt a successful appeal of the amount of property tax that you're paying. And of course, every dollar that you lower your property tax is $1 where you increase your income. And this feels like a germane conversation, since tax day in the USA was just last week. Ah, yes, property tax, hmm, it's like a version of the government charges you rent on your own property in perpetuity. That's what it is. And before I get into how to potentially get your property tax lowered, property taxes are under pressure. Some states are still making their serious push to completely eliminate the property tax, namely in Florida, Texas and Indiana. Those are three of the front running states, probably the big three. And I won't get into all of that again, because I devoted an episode segment to that topic a few months back. Others are considering elimination too, Georgia, North Dakota, Pennsylvania, Ohio, Oklahoma, South Dakota, but it's just more talk than anything in those six states. Now, if a state undertook property tax abolition, it would probably only apply to owner occupied property, homeowners or voters, and those property values would soar. But these new comparables, what they could do, in turn, is lift the value of your out of state rental property as well, because you could always sell your investment property to an owner occupant. But in my opinion, no state is going to eliminate the property tax. I mean, sheesh, it's kind of like trying to eliminate gravity. It's just too hard to replace the revenue from elsewhere. Schools, police and fire and infrastructure heavily rely on property tax, so instead, what's realistic is a tax cap, a ceiling on the amount of property tax that you pay, and with an income producing property of course, your tenant essentially pays the property tax for you now, even before buying a property or for one that you already own, the most accurate way you can check the tax amount for your exact address is on the county assessor's website.

Keith Weinhold 5:38

The next best places are listing websites like Zillow and Redfin. This is all public information. The way to find a county assessor's website for your property is with a simple four word search. What you should google is the county name, and then the words assessor property search, those are the only four words that you need. And then what if you discover that you're paying more than you are for nearby, similar properties? Oh, well, there we go. That's a sign that you're over paying. You can usually file an appeal form at the same website. And before we talk about how to do it, realize that only about 5% of property owners ever file an appeal, and in a bit, I'll tell you what your percent chance for success is at lowering your property tax, your chances of it being lowered. So if you believe that you have a case for lower property taxes, first, it helps to know what you're arguing. And this is important, it's something that can trip you up. You're actually not arguing that taxes are too high. You're arguing my property is overvalued compared to the market. That's it. That's your basis of contention. Yeah, if you walk in talking about things like fairness or inflation or government spending, then you've already lost the county assessor's office isn't the place for your best rant on how fiat currency is garbage or something like that. Now you might not even have to physically walk in anywhere today. Sometimes you can get your appeal rewarded informally. Other times you go before what's called a Board of Equalization in most places and in person, hearings have become less common. Video calls have become quite a bit more common since the pandemic, but you want to review your property details with them. You want to be sure to point out if there's incorrect square footage or the wrong lot size, or missing depreciation, or condition issues or upgrades that are overstated and even small errors can swing your value by 10s of 1000s of dollars and then, and it's whether this is with rental property or with your own home build your comparables Like an investor, not a homeowner, because this is really where you win or lose. You need three to five strong comparable sales in the same neighborhood, or really close ones that sold recently, ideally within the last six months, and they should be of a similar size and age and condition. And then make adjustments. Inferior comps support a lower value. And we don't just want to cherry pick garbage comps. We want to keep it credible, and then for your best chance of getting your property tax lowered, find your angle, and really this is your leverage point. Most winning appeals hinge on one clear argument, either a condition gap, meaning that your property is worse than the comps are, or it's an argument like market timing, and this is if values have softened since the assessment date, or the income approach for rentals. Therefore it's the value based on noi, not emotion. You could take that track or other external issues like noise or location drawbacks or obsolescence, so only pick one of those four primary arguments here, condition, gap, market timing, the income approach or external issues and document everything. This is really where you separate yourself. You want to show photos and have them dated and be clear and honest. Nothing dramatic there repair estimates or contractor bids, inspection reports, rent rolls or income statements. So you're not telling a story. You're presenting evidence this way, and be sure to package it cleanly. This matters more than you think. Assessors see sloppy appeals all day. So you're going to stand out by being organized and concise, like a one to two page summary and some exhibits, and keeping it professional meaning, no emotional language, so you're making it clean and easy for them to agree with you, and this is the place to be. Calm and not combative. It isn't a debate club. It's the right form to be respectful, stick to facts, not interrupt and not get defensive, because the person across from you, they actually did not set your rate, they didn't set your tax rate, they're evaluating your evidence, and then it's helpful for you to know the likely outcome. You don't need a gigantic win, even a five to 10% reduction, that can mean 1000s saved over your life of owning the property. You want to remember that some jurisdictions are more flexible than others, and if you're denied informally, like just doing it online, then you can often escalate your property a tax appeal to a board review. And this is a long game, not every swing is going to end up in a base hit. Investors have an advantage. If you own rentals, you've really got a stronger argument, because you can use that income based verification like cap rate and noi, you can show actual rent versus market rent, and you can highlight your expenses, and assessors often default to sales comps. So this is how you can shift the frame here. The blunt truth is that when people lose appeals, it's usually because they show up unprepared, or they argue emotionally, or they just don't understand valuation. And so this is one of those rare moments where being methodical is actually better than being smart. 40 to 60% of property tax appeals succeed nationwide, and with professional level prep, you can make that 70 to 80% for a success rate, and the typical result if you win is a 10 to 15% reduction in assessed value. So that can be worth doing. And you know, just like buying your first out of state rental property seems to be the hardest. Making your first property tax appeal seems to be the hardest as well. And there you go a way to reduce your expenses and increase your cash flow. Yes, I am in LA today, West Hollywood, California. Though I do expect to produce some real estate media here. That's not the typical Hollywood type filmmaking that I'm doing, I just happen to be staying in Hollywood, although I do plan to run up to the Hollywood sign and do some fun stuff out at Venice Beach. Later next week, I will be in Las Vegas, and will probably even bring you the show from the Bellagio with a view of the Bellagio fountain. As for this week, let's meet our guest.

Keith Weinhold 12:49

This week's guest has an amazingly powerful story. Today. He's quite well known in real estate circles for his high energy in person events, but he came to the United States as a Vietnamese refugee, experienced homelessness early in life, and went on to build a real estate portfolio valued at over $100 million I'm not making light of the fact that he's homeless. Once I started talking about this, he kind of, you know, beat his chest a little bit. He's a high energy, playful guy here, but he's completed more than 1000 real estate projects and transactions through his mentorship program, he's helped 1000s of people build long term Real Estate Wealth with his platform, it's called springboard to wealth, and along the way, he's built a strong audience, with 1.4 million followers on Instagram. Hey, welcome to the show Thatch Nguyen.

Thach Nguyen 13:41

I'm honored to be here, my man, I'm honored

Keith Weinhold 13:43

to hear, Oh, it's so good to do it Thatch. And before we're done, we'll discuss some actionable tactics. But first, that is just an amazing story to have started from homelessness. I guess I'm most interested to know what you would identify as kind of that turning point from destitution to success. Talk to us about that.

Thach Nguyen 14:03

You know, coming from Vietnam, we was a refugee. We left out of the last plane. My dad was a translator for the US Army. Back in the days, military pulled out of South Vietnam during the war, they asked my dad, would you want to leave with us? And so we decided to leave. But of course, my dad, the owner, who actually spoke some bit of English. None of us didn't speak no English. We only had $100 one suitcase for eight of us, gosh, and I was five years old. But if my dad didn't leave, he would have been captured, and then he would have been killed. Because you work for the US government, because it's still, you know, is a communist country, right? And so we left, we came over here, we landed in San Diego, lived in the shelter out there, and then we moved up to Washington State, Seattle, and lived in a shelter there for a few months. And then finally, we lived in a sponsorship house, right, with a guy named Charles Zettler. I graduated from high school in. 88 I went off to fix aviation airplane my two older brother, because they in the aviation business. And then I got a job working for Alaska. But I didn't want to leave to Denver to go work out there, so I decided to stay back. And I went to work at, you know, like, odd job, like at a body shop. I was the dairy manager at a grocery store, like, called Ralph. Was called Safeway, and I was parking car in Chinatown. And I think the pivoting point was, I'm sitting there, and one of my friends says, you know, you would do very well in real estate, yeah, because you have a good energy, you have a good mouthpiece, I think you do well, see, but I didn't hear all that. I heard you get 7% commission checks. Oh, Sign me up. You know what? I think, but I didn't realize quickly, selling real estate, you don't make that kind of money unless you do a lot of volume. I got to real estate. I started doing well in real estate as a agent. But the tipping point, I think, for me, was a mentor named Saul. And Saul said to me, Keith, I know you appreciate this. He said, You can be rich selling real estate for the rest of your life. Yeah, you'll never be wealthy unless you own the real estate, right? And that was the light bulb that came off of me that I need to take the money I make from selling real estate to then Park the money in long term rental. But I didn't quit my real estate. I just bought real estate, rented it, let it ride. And I just kept selling real estate for years. And at the moment I made, the more property I bought. The moment I make, the more property I bought. And then from there, I just start to learn new construction. I start to learn fix and flip. I start to learn about the BRRRR strategy. And then today, you know, we're going to talk more about this. But today, the hot thing is adu and accessory dwelling unit, and that's what I do a lot today is a lot of new construction, a lot of ADUs.

Keith Weinhold 16:49

Oh, that's great to hear about your come up. Fetch, yeah, I find it remarkable, too, the amount of people that are in the real estate industry, and they're doing something adjacent to being an investor, which I think is the best place to be. For example, they're a property manager, or they're a mortgage loan officer or the real estate agent, but yet they don't own rental real estate, right? They're so close. How could you not be doing this?

Thach Nguyen 17:13

And I say today, because I understand this. Now, if you don't take the active income you make from whatever you do, say, as a real estate agent, then you always trading your time for money for the rest of your life, and you're always on that treadmill and that grind, but you can't get off, because the moment you get off, Keith, you got no income, and you got no passive income either. So you're stuck on this wheel like a hamster that you got to keep running until you old and die.

Keith Weinhold 17:40

Well, you know, it's unavoidable to talk about you've got the word mindset on big letters on a hooded sweatshirt that you're wearing right now, so, you know, I think you're touching on it somewhat. But yeah, talk to us more about this mindset and how to break through the barriers. Because most people's connotation with income is merely that they have got to trade their time for dollars.

Thach Nguyen 18:01

Of course, you know, mindset is 80% of the result that we want, that we get. Because someone could have a mindset to go, I'm going to be the top real estate agent, and that mindset would drive them to be the top agent for many, many year. But they always trade their time for money so they never get wealthy. I have that mindset because I was selling 100 homes a year in my early 20s. But when Saul said to me, you know one day that when you get into your 40s and your 50s, do you want to keep trading time for money, or do you want to trade your money for time? And see, that's a mindset shift. And of course, who want to be in their 50 Keith with a gun in their head, always trading time for money. And so when I heard that, it shifted the mindset to, you know what, I'm going to make money selling real estate because I need that money, then I'm going to take that money and park it into a rental. So when I get into my 40s and my 50s, I have the option to work or not work, and that was a mindset shift. So owning rental property is a mindset more than a strategy.

Keith Weinhold 19:08

I and I think a lot of us, came up with the mindset that, oh, you get wealthy by obtaining a high salary, and then no later, you learn you don't get wealthy through high salaries, especially if wealth equals freedom, you get wealthy through owning assets. So Thatch after you know your homelessness, and you're new to the United States, and you've come up like you described, and you realize that real estate is the way in doing it with a relative amount of passivity, rather than actively being in it as a realtor, you sort of get this roadmap for retiring with rental properties, even from starting at zero like you did. So tell us more about that roadmap to retire with rental properties.

Thach Nguyen 19:47

You know, when I started, I had this roadmap where you got to learn what you need to learn about real estate investing, what why do you want to own it? What's the benefit? What would it do for you? At the end of the day, and a lot of that is goals and vision and mindset. For me when I got clear Keith on the knowledge, because I start off with kno

Keith explores how long-running social and economic shifts are redefining the American Dream—especially for younger adults who are putting off milestones like moving out, starting families, and buying homes.

He connects these trends to today's housing scarcity, elongated renter stage, and what that means for long-term rental demand and real estate investors.

Keith also zooms out to place the current moment in the sweep of American history, then welcomes Redfin Chief Economist Dr. Daryl Fairweather for a data-driven conversation on affordability, supply constraints, renting versus owning, and how demographic changes could shape the next wave of opportunities in both ownership and rental markets.

Episode Page:

GetRichEducation.com/601

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

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

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Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE I'm your host. Keith Weinhold, learn just how far behind today's 30 year olds are then American history by decade as the nation approaches its 250th birthday. Finally, a conversation about what's next for the housing market with Redfin's chief economist Darrell fairweather today on get rich education.

Corey Coates 0:27

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android. Listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Keith Weinhold 1:10

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally, while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Speaker 1 1:44

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:54

Welcome to get rich Education. I'm your host. Keith Weinhold, the voice of real estate investing since 2014 almost nobody talks about a really important story going on in America today. And I find this really astonishing. I mean, you could almost never think of America the same way again, as you'll hear while you've got these other headlines out there, constantly sucking oxygen out of the room, like decisions from the White House and inflation and wars. One big story. It moves so slowly that it kind of creeps up on you. It is the jaw dropping change in American society over the last 40 years. And then we'll discuss its seismic changes for real estate. And this is sourced from a Census Bureau supplement. It's about how fewer us adults reach typical life milestones by age 30, and this is partly because more adults opt for college than in previous generations. Oh, well, college doesn't sound like such a bad thing. I'll get to that. And by the way, 30 is an age that has come and gone for me, so I've lived through it. We're looking at a period from 1985 to 2025 so 40 years first, it's those that live on their own. In 1985 it was 83% today it's just 67% so then the percentage that don't live on their own and probably live with their parents or roommates, that has doubled. You see even more drastic declines for other milestones since 1985 those that have ever married from 77% down to 45% those that live with a child and the responsibility that this entails that's fallen from 59% down to 36% and those that own a home 48 down to 29% and again, this is for all 30 year olds since 1985 this steady, sliding, relentless decline of those who live on their own, are married, have a child, or own a home, is pretty stunning, and this is inside the most powerful nation on Earth. And here's the thing, this pattern from about 40 years ago, it unabatedly crosses through booms and busts and bubbles and bailouts, sort of like it didn't even notice those things. Somewhat ironically, what's grown during this time is the percentage that have a bachelor's degree. It's gone from 25 up to 43% so therefore, here we. Are. We've got this generation that's better educated than ever, and yet more of them are stuck down on the launch pad. It's like we built better rockets yet we can't light the fuse. And before I help you make sense of this and tell you what I believe the main force behind it to be, you just got to consider what an unfathomable aberration this has all become. At age 25 James Madison was the key architect of the US Constitution. A lot of constitution signers were in their 20s and 30s. At age 21 Steve Jobs started Apple in a garage at 20 Bill Gates co founded Microsoft at 19 Mark Zuckerberg built Facebook in a dorm room. And sure, some of these are exceptional examples, but these people committed early, and then they figured it out on the fly.

Keith Weinhold 5:59

Well, what about women? The US birth rate has hit an all time record low, because today, nearly half of 30 year old women are still child free. Okay, so some of this is logical. You can connect a few dots here more time in school, yeah, all right, that means later marriages and later kids. Sure, student debt that equals financial Gravity Boots that keep you in place. Urban living means smaller spaces. But when you stack all this together, like I just laid out later, it's not just later anymore. It is really later. That is the huge change that really startles you when you put all of this together and again, remember, over this same time span, 1985 to today, I've mentioned before how the average age of the first time homebuyer has ballooned from 29 up to 40. I mean 40 that can really take some time to sink in. And again, that's just the average in high cost housing areas. This number could be 45 or higher. I mean, sheesh, the starter home is now like a midlife purchase, and it's made right around the time that your back starts to make decisions for you, consider where we are here now, the term home ownership that is increasingly linked to older people. Those things home ownership and older people are increasingly synonymous terms. Now, owning a home, it's like a luxury good for the already established. I mean, it is pretty jaw dropping. And one contributor to these friends is the lack of available housing supply, still a 60 to 70% collapse in some populous northeast states, but really something like that. That's just a small thing. When you amalgamate it all together, it's become cultural really. The bigger trend that underlies this decline in meeting life milestones at age 30 is that long term true inflation exceeds wage increases over the decades, but there are big social shifts too. And by the way, I left my parents home for good at age 23 and some surely do so younger than I did marriage and children, they are the classic triggers to buy a house, and the longer that these type of milestones get postponed, the more likely people are to favor then flexibility over committing to a mortgage, and this then means that there is an elongated renter stage of life. Renters are no longer just passing through they're no longer just graduated from college, renting a year or two and then buying a home. Instead, they are planting flags and really pounding in stakes. And there are countless surveys that show that renters value the ability of being able to relocate without the hassle of having to sell a house. And on top of all of these trends as America ages overall, something really interesting starts to happen. This is why single family rentals have really begun to shine over the past few years, and why you had this Advent and popularity of new build and build to rent rental properties coming onto the market because single families give people the feeling of home and space and privacy and a backyard for the dog, but yet at the same time, it's commitment light, a lighter version. Now apartments benefit too, of course, and for investors, this isn't just. The trend, this is a long term tailwind, fewer life transitions. It means more stable occupancy and longer renter life cycles that lead to fewer turnovers and vacancies and repairs, so less churn, more consistency and better predictability. So the bottom line here is that this delay of life milestones, it's not subtle. It is pretty seismic, and increasingly people say that the American dream no longer even includes home ownership. Demography is destiny, and they must rent from you. And here at GRE we invest like these trends are real, but I really want to emphasize that this elongated renter stage of life really is a long term, long tail phenomenon. And I want to emphasize that because, like I said last week, in the short term, we really aren't seeing any significant rent increases due to that affordability constraint. Now we're nearly five years after America had a big wave of consumer inflation, and that really hurt kind of people this age that I'm talking about, people in their 20s and 30s, that really hurt them the most because they don't own assets that compound with the concurrent asset price inflation, they only had to deal with the bad stuff, the consumer price inflation.

Keith Weinhold 11:30

And as America approaches its 250th birthday, let's think about how this era compares to other decades. And by the way, do you know what a 250th anniversary is called? I put a line about this in my newsletter that I sent you the other day. It is called a semiquincentennial, or, I guess, semi quincentennial. I don't think that anyone's going to be using that word after the fireworks. Semiquincentennial. That sounds like a word that an Economic Committee came up with during a recession to kind of mask a worse problem or something. I suppose that the etymology makes sense. If you break it down, quincentennial would be 500 and semi would be half of 500 in any case, as you try to compare this American era to others, listen to this from the parallel truth. This is about three minutes long, and then I'll come back to comment. It's America by decade, starting all the way back in the 1770s This is a decent summary here, although it can get unnecessarily gloomy at times.

Speaker 2 12:41

Imagine you could live in the United States one decade at a time, not the America you see in movies, not the America in textbooks, but the real America. Let's start with the 1770s the decade of independence. This is not a freedom story, yet. It's a war story. Most people are farmers, roads are mud, medicine is almost nothing. And if you're a young man, your future is simple, fight or starve. Then came the 1800s The decade of expansion. America is still small, but it's hungry, new land, new states, New promises, but there is also growing slavery. Native tribes are being pushed out, and the country is quietly building a conflict it can't avoid. Now it's the 1860s the decade America almost died. There is civil war, Brother versus brother. Cities are burning. If you lived here, you didn't watch history, you survived it. Next is the 1900s The decade of industrial America, factories, railroads, steel, oil. The country becomes a machine. Cities explode with workers, but life is brutal, long hours, dirty air, child labor, you might earn money, but you will pay with your health. It's the 1920s now, the decade of jazz and madness. This is America's first big party decade, cars, radio, Hollywood. Everyone thinks the future is unstoppable. Then came the 1930s the decade the party ended. The Great Depression happens, banks collapse and jobs disappear. People line up for bread. A man with a suit could be broke in one week. This decade teaches America one lesson, that money is not real until it's in your hand. It's the 1940s now the decade America became the world's boss. World War Two turns the US into the world's factory. While Europe is burning, America is building. And when the war ends, America comes out richer than anyone in history. It's the 1950s the decade of the American dream, suburbs, big houses, one salary supports a whole family, TV dinners, new cars, new highways. This is the decade America sells the world the idea of perfect life. Next came 1960s the decade of rebellion, civil rights, Vietnam assassinations, the country feels like it's splitting. You could be hopeful or terrified, sometimes both in the same week, 1970s was the decade the system started breaking, oil crisis, inflation, crime rate, and in 1971 America quietly changes money forever. The dollar stops being backed by gold. From this point onward, America runs on trust. It. The 1980s the decade of Wall Street, America, big business, big spending. The stock market becomes religion. America looks confident again, but the middle class starts weakening slowly. Then came the 1990s the decade America felt unstoppable. The Soviet Union has collapsed and the US feels untouchable. The internet is born. This is the decade where Americans truly believe that they have won. It's the 2000s now the decade of shock, 911, wars, fear, surveillance, then 2008 hits, banks crash, housing collapses, and America learns something painful. The people who caused the crisis don't pay for it. It's the 2000s and 10s, the decade of the digital trap. Social media becomes reality, politics becomes war. Everyone is online, but nobody feels connected. The economy recovers, but normal people don't. And finally, it's the 2020s. The decade, chaos became normal. Pandemic changes everything. Supply chains are collapsing, inflation returns, AI arrives and trust collapses. And by 2026 America is still rich, but it feels exhausted. People are working harder, owning less, and trusting nobody. And the strangest part is that America didn't collapse. It just slowly became a different country, not through invasion, not through revolution, but through decades of small changes that added up to a completely new reality. So the real question is, if you could choose one decade to live in? Which one would you pick?

Keith Weinhold 16:22

Yeah, which decade would you pick to live in? A lot of people say the 1950s where we had, like they touched on there the post war boom and how one salary could support an entire household. Some people say the 1990s because the Cold War ended, we had the start of Wide Internet use, and it's before you had these stark political divisions where people started to put party ahead of country. Now some people would probably say, Are you kidding me? I'd rather live in this decade right here. I can work from home more easily than I ever could have before. And I think you can make valid cases for all of those things. And speaking of this era, a quarter just ended, and we do this quarterly at most. It's our asset class rundown. Year over year, national home prices are only up about half of 1% per the nar 1% Case Shiller and totality, single family rent index shows just 1.3% rent growth. That's year over year. This quarter, the s, p5 100 was down 5% stocks of all types are down largely to the Iran war. The yield on the 10 year treasury note rose from 4.1 up to 4.3% due to higher inflation expectations. Why does that matter so much? That's what influences 30 year mortgage rates, which also rose from 6.2 up to 6.5% West Texas Intermediate oil prices soared from 59 bucks to over 100 last quarter. Gold hit an all time high of 5400 bucks in the quarter, and then fell to about 4600 by the end of the quarter. Other precious metals hit their all time peak. Bitcoin fell from 88k down to 68k That's the asset class rundown. I'll return with Redfin's chief economist, Dr Darrell fairweather and more. I'm Keith Weinhold. You're listening to get rich education.

Keith Weinhold 18:18

Let me throw out a simple idea. Sometimes doing nothing with your money is actually a decision. Leaving it parked might feel safe, but over time, purchasing power changes. So the conversation isn't about chasing returns, it's about intentionally placing money somewhere. Freedom, family investments works in real estate people use every day. Housing, senior communities, essential properties, things tied to living and not trends. Their freedom notes offering is built for accredited investors looking for structured income backed by real assets, not speculation. I am an investor with them myself. The Freedom team makes themselves available to walk through their approach, structure and operating philosophy so you can ask questions and determine alignment before moving forward. While past performance doesn't guarantee future results, their historical operating philosophy has yielded 100% investor payouts backed by over 20 years of experience. If you want clarity before making any moves, book a clarity call@freedomfamilyinvestments.com or text family to 66 866, text the word family to 66 866,

Keith Weinhold 19:41

flock homes helps you retire from real estate and landlording, whether it's one problem, property or your whole portfolio through a 721, exchange, deferring your capital gains tax and depreciation recapture, it's a strategy long used by the ultra wealthy. Now. Mom and Pop landlords can 721, the residential real estate request your initial valuation, see if your properties qualify@flockhomes.com slash GRE, that's F, l, O, C, K, homes.com/gre.

Robert Helms 20:16

Everybody. It's Robert Helms of the real estate guys radio program, so glad you found Keith Weinhold and get rich education, don't quit your Daydream.

Keith Weinhold 20:35

This week's guest is the chief economist of Redfin during the housing crisis. She worked at the Boston Fed, studying why homeowners enter foreclosure. Since 2023 she served at the Federal Reserve Bank of Dallas. She holds her BS from MIT, and she really knows her way around campuses, because she received her Master's and PhD in Economics at the University of Chicago, where she specialized in behavioral economics, that's interesting. Welcome to GRE. Darrell fairweather,

Daryl Fairweather 21:06

thank you for having me.

Keith Weinhold 21:08

Hey, Daryl. I'd like to get to some of the statistics later in the things that Redfin does and compiles, but tell us about the behavioral side of the housing market that's often so interesting and evencounterintuitive

Daryl Fairweather 21:22

yeah, one of the most interesting things about the housing market is that people get really emotional when making this huge financial decision. It's

Keith challenges the belief that all debt is bad and reframes it as a tool for building wealth when used intentionally.

He contrasts destructive consumer debt with productive investment debt, especially in real estate, and explains how inflation, long-term fixed-rate loans, and rental income can work together to grow net worth.

Keith explores the mindset shift from prioritizing safety and being debt-free to pursuing growth through leverage, highlights the opportunity cost of avoiding debt, and offers practical guidelines for using borrowing rationally rather than emotionally.

He also shows how modern economies and many wealthy individuals rely on strategic debt, positioning it as a key part of a more intentional, asset-focused version of the American Dream.

Episode Page:

GetRichEducation.com/600

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text FAMILY to 66866

Unlock truly passive real estate income—visit flockhomes.com/GRE today to see if your properties qualify for a 721 exchange with Flock Homes.

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:00

welcome to GRE. I'm your host. Keith weinholder, there's bad debt, good debt and great debt. Are you using debt wisely, and are you ensuring that you stay in debt? Because debt is the American dream today, on get rich education milestone episode 600

Corey Coates 0:23

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard in every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Keith Weinhold 1:06

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Speaker 1 1:40

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:56

Welcome to GRE from Kennewick, Washington at Kennebunkport, Maine and across 188 nations worldwide. I'm Keith Weinhold, and you are inside get rich education. Yes, America's favorite slack jawed mammal on a microphone has got his act back on track, for your listening pleasure, since 2014 This is our 600th wealth building week in a row, you've been misled, not maliciously, not even intentionally, but somewhere along the way, a really expensive idea got planted inside your head, and it was once planted inside my head, that debt is bad, just blanketly bad, that the goal is to be debt free, that owing money to somebody else is something to escape as fast as possible. And look, I get it, if your mindset is in the old middle class consumer credit world like mine was for much of my life, debt feels heavy, it feels like risk, it feels like obligation, but the people telling you to avoid debt, they're the same people that never built much wealth now a reliance on 22% APR, credit card debt just To pay basic living expenses, because it's the only way that you could do it, merely making the minimum monthly payment that right there is the road to ruin. Why? Well, because the interest rate is high, because you have to pay it back yourself, and because it's unsecured, meaning that there's no collateral, and at the same time, the people quietly getting rich, what are they doing? They're using debt every single day. So debt is not the enemy, it's just the tool, and like any tool, it can build a house, or it can smash your thumb if you miss the nail. Well today we're going to separate the two, because if you understand this one concept, then you stop playing defense financially and start going on offense. In fact, I'll go further. Debt isn't the opposite of the American Dream used correctly. Debt is the American dream. Now, my turning point was really fueled when I made my first ever home, that $295,000 blue four Plex Building Two decades ago, with just my three and a half percent down payment. That meant that 96 and a half percent was borrowed. That's debt, and that fueled everything for me, and got the ball rolling on using that seminal four Plex to leverage even more debt and more property with 1031 exchanges and cash out refinances debt made that American dream free. Me because I could not have afforded $295,000 all cash back then. Now, a guest that we had on the show last year and the owner of a commercial lending company, Hannah Hannan, she recently talked about the virtues of debt. I met Hannah because we were both faculty members on last year's real estate guys Investor Summit at sea cruise. Well, Hannah went on a different cruise and saw in Jamaica that there were all these vacant and uncompleted houses just sort of weirdly stuck at different stages of construction. She asked the tour guide, why are these houses all abandoned? And and the tour guide answered, we don't have loans here in Jamaica. People have to work make money and then start the build, and then the build pauses while they make more money, and then they have to construct the next phase of the build as they go and go back to making more money like that. I mean, sheesh, that's awful. Can you imagine if you had to build a home or a rental property for yourself that way? Well, back here in the US, access to debt is what allows people to build wealth faster, especially in real estate, you can use other people's money control large assets, pay less in taxes and compound off a much smaller amount of capital. That's the difference. Debt availability is really good in the US compared to other nations, and that's the emphasis on the American part of today's episode. Debt is the American dream. Now, when it comes to the big misunderstanding, most people think that debt is really just one thing. They just lump it all like it's all bad, credit cards, car loans, student loans, mortgages. A lot of people, they really do. They just still throw it all into one mental bucket that's sort of labeled da, avoid that at all costs. I'm telling you, no way you cannot do that. I mean, this is like saying food is bad because candy exists. No, there's junk food and there's fuel. It's the same with debt. Consumer debt is a wealth killer. Investment debt is a wealth creator, and if you don't know the difference well, you end up avoiding the very thing that could move your life forward. Here's another way to think about it, debt doesn't make you poor. Using debt poorly makes you poor.

Keith Weinhold 7:36

In real estate, inflation is quietly paying your mortgage, even if you never made a principal payment at all. When you really understand this, it almost sounds too good to be true. Most people think inflation is just rising prices, and it is that, but they miss the other side of the equation. Inflation also shrinks debt, something I've been talking about for more than 10 years here. If you have a 30 year fixed rate mortgage, you're paying back that loan with future dollars that are worth less, and meanwhile, rents tend to rise, wages tend to rise, and asset values tend to rise, but your mortgage, it stays fixed. Inflation can't touch it, and that means that over time, your payment gets easier and easier to make. Oh, and then if you've got a tenant in place as well, oh, they're the one sending in the check for everything. And inflation is not just happening to you. It's now working for you. If you've got, say, a $500,000 mortgage loan, and inflation is 3% well, then inflation enriched you by $15,000 every single year. That's $1,250 a month just on this 500k mortgage loan. And if you've got an investment property rented out. You've even got the tenant paying down, oh, maybe $400 in monthly principal for you on the property, plus this $1,250 in inflation profiting, plus $100 of cash flow. This is $1,750 in monthly benefit before we've even added in your tax benefits and the appreciation potential. What made this all happen debt is what made it all a reality for you. When we talk about why the middle class fears debt, yeah, there is a mindset divide here. On one side, it simply says, get out of debt, stay out of debt and avoid risk. On the other we ask, How can I use that to acquire assets? So it's really like the first group is focused on safety and the second group is focused on growth, and after a while you have to ask bigger X. Potential questions like, do you want to live a life of safety, or do you want to live a life of growth? Now, I'm not knocking discipline, but there is a hidden cost to avoiding debt entirely. It's called opportunity cost. When you pay all cash, oh, well, then you lose leverage, you lose scalability, you lose tax advantages, and you often lose time. Hey, just like I would have by postponing my first four Plex purchase for, say, five plus years until I could have saved up all that money by myself. That's why playing it safe is often the riskiest move, because while you're sitting on the sidelines, inflation and rising prices are still in the game, and you've taken yourself out of the game. When we talk about the American dream, look, America was built on debt leverage.

Keith Weinhold 11:01

Zoom out for a second. This isn't just about you and me. America itself was built on debt. Railroads were financed with borrowed money that helped Cornelius Vanderbilt build his railroad empire in the 1800s in the 1900s highways were funded through government debt. Today, our entire suburbs are built on mortgages. Leverage didn't break the system. It built the system. So it's kind of ironic that today people are told the safest move is to avoid the very mechanism that built this modern economy that you and I are living inside every day. Debt is how things get done. Now, practically, yes, debt can absolutely wreck you if it's used poorly. So we think about some simple guardrails then favor fixed rate debt over variable match long term debt with long term assets, and you want to chiefly borrow for cash flowing or appreciating assets, and also stress test your deals assume that things won't go perfectly. So this certainly is not about being reckless. It's about being intentional. Debt should serve you, not the other way around. And now notice how I said to chiefly use debt for cash flowing or appreciating assets. I didn't say solely because you'll remember how last year, I talked to you about how I bought a new car for myself and financed as much as I was allowed, almost 100% debt. I had to make, like, a two or 3k down payment on the car because it was a special order. And once they start, you know, building it and customizing it for me, well, then they're at risk if they don't have a deposit, all right? Well, I found a way to make this car debt pretty good debt. Oh, and you might be thinking, oh, yeah, of course. Well, if you use it for business, you probably get some deductions that way. Oh, no, no. Business use totally a personal car, almost leveraged to the hilt, but it's not bad debt, and I'll tell you why. By the way, this isn't some high end exotic car. It's a BMW x3 SUV. It was like 53 or 55k and now how could I possibly call this good debt? Nope, I'm not running it out to other people or anything like that, because here, unlike income property, where a tenant pays it down, I do have to make these car payments myself. Well, in a word, the reason I did it this way is for the arbitrage. I got a fixed 3.99% interest rate for five years. Call it 4% Oh, I am almost certainly going to beat that by investing those dollars in real estate. So the 55k almost that I did not have to allocate to a car. Oh, well, that amount is enough for a down payment and closing costs on a cash flowing rental. That's probably going to pay me five ways with a total ROI that I expect to be multiples above the 4% interest rate, but the car's value depreciates. What about that debt on a depreciating asset? A car depreciates at the same rate whether it's bought all cash or all debt. It doesn't matter. Here is the better question, why tie up that much in a depreciating asset? 55k if I had paid all cash which I could have, I would have foregone returns and paid opportunity cost. Now, arbitraging car debt this way. That's not great debt. I don't put it in that category like real estate that pays for itself is and that is mostly because no tenant services. My personal car debt. For me, this car debt is just good debt, not great debt. Now how about some more guardrails? How can you keep yourself from going nuts and just trying to arbitrage everything. How would you know if you've gone too far? I mean, any person that's savvy with personal finance has to ask themselves a question, and that is always, what is the risk associated with this investment, or what is the risk associated with this debt, right? Because I already talked about the upsides of car debt this way. Well, the first risk is that I don't successfully arbitrage it. Rather than having the 55k sunk into the car, I have it invested elsewhere than say, it doesn't achieve a greater than 4% return. Well, the risk of that happening is small, maybe about a 10% chance. What's another big risk of leveraging car debt this way? Well, it's if you cannot make the monthly payment, which for me is about $1,050 a month, 1050 that's a comfortable payment. For me, if you can't make the payment that's called, you got yourself into an over leveraged condition. But for me, these risks are manageable. And this is applied thinking. This is clear eyed thinking, rational decision making, a level headed approach, a long term approach. It's common sense investing. Have a strategy and then invest your plan, not your emotions. Look paying off debt. That's often an emotional response, like when the debt is at a low interest rate and yes, understanding that debt is the American dream. Okay, this is still a pretty unconventional understanding, for sure, but it is pragmatism over emotions. When emotions go up, intelligence goes down. You can see that in a lot of places in your life. I can too. I think that a lot of the emotion happened to us when we were really young, perhaps age 12. And maybe you're saying, Oh, well, grandpa, he would not have arranged his finances this way. Grandpa wouldn't have leveraged all this real estate debt, and he sure wouldn't have thought that arbitraging car debt is savvy, but your grandpa was born before 1971 back when the dollar was still gold, backed if you're older now, your grandpa might have even been affected by living through the 1930s Great Depression. Our world does not work that way. Today, the dollar is no longer tethered to gold. It's just borrowed and lent into existence, and another Great Depression that's actually really unlikely. In the 1930s President Herbert Hoover refused to provide government support to prop up the economy, and sheesh today, any crisis is like immediately propped up by us printing a ton of dollars and then giving them out, just like covid stimulus checks and mortgage loan forbearance and all of that debt, debt, debt. Now I don't think that all of that is good, but you got to acknowledge that that's the world we live in today. If you're debt averse, because grandpa always said to stay out of debt, well then you know what you can take solace. Take comfort in the fact that today, ultimately, grandpa would have understood that the world changed, and he would want what is best for you.

Keith Weinhold 19:03

I'm get rich education. Host Keith Weinhold, this week, we're talking about why debt is the American dream on episode 600 with guidance that's practical, contrarian investor first and non emotional. Contrarian does not mean reckless. And by the way, just because something is mainstream, well, that doesn't necessarily make it bad, but in this case with debt, it often does. Here we're kind of back onto the old Mark Twain quote. Go out on a limb, that's where the fruit is. This is independent thinking for real world investors. It's where theory meets what actually works, and I'll discuss some specific actionable guidance for you before we're done today. But this is largely about ignoring the masses and following a clear incentive path. And what do the masses do? Now they kind of all gel together and get pumped up when they follow these debt free call in radio shows where the host advises the caller to always desperately retire debt at all costs. They'll even tell you work a second and a third job. You got to postpone vacations. They'll tell you to defer your life and go into lifestyle debt. Then in order to desperately stay out of financial debt, we're never going to get that time back. So just chill, take it easy with a lot of debt types inflation and sometimes tenants both passively pay it back for you. I mean, on these debt free call in radio shows, almost every time they give guidance, I kind of chuckle when I listen to this stuff. I sort of quietly ask myself, how would that path ever build wealth like when people are advised to retire 3% mortgage debt? Why dreadful sounding guidance like this happens is because it keeps irresponsible people from going over a cliff. That's all it serves to do. I mean, you're here listening to me because you're good with money, or you desire to be good with money and not give all your money away to creditors used intelligently. Debt isn't reckless. It's a tool, and it's one that lets you scale without trading every hour of your life for dollars. It seems to me that some of the groups of people that need to hear the debt is the American Dream message. They tend to be in a few groups. I need to be careful here, but I'm talking about groups like people with less financial education, engineers and women. It doesn't mean that people with less financial education are any less intelligent. And then when it comes to the engineering profession, you know that type of person tends to be unusually conservative, and I've worked for engineering firms in the past, so I wouldn't know this is somewhat of a paradox. Since engineers are the calculating types, you would think that they would have leverage and arbitrage figured out, and then women are a group that they tend to be more debt averse than most, and this is not a knock on women at all. In fact, women generally do a lot of things better than men do. I mean, I could go on and on there, like emotional intelligence and social awareness and relat

Keith explores how major geopolitical conflicts tend to reshape—not destroy—real estate markets, redirecting demand away from active war zones and toward safer, more stable regions. He explains how inflation, interest rates, and supply disruptions interact with property values over time, and why certain locations and asset types are more resilient than others.

Investor and CEO Dani Lynn Robison, joins the conversation, to talk about building long-term wealth through "needs-based" real estate and the idea of a personal "wealth window" — the finite period when combining active income with compounding can have the biggest impact.

They discuss the shift many investors make from being hands-on operators to more passive capital allocators, and why calm, long-term strategies focused on essential housing and services can help investors navigate uncertainty and technological change without panic.

Resources:

"Ready to see how these strategies could fit your own wealth plan? Book a free 20‑minute Capital Architecture Call with Dani‑Lynn's team—just text WINDOW to 66866 to get started.

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, wars are extremely expensive. The one to $2 billion spent on the Iran war every day is stoking inflationary pressure. How do wars affect real estate and will values appreciate 10% or more this year? You'll get clear answers, then I'll speak with a woman that I entrust with my own funds today on Get Rich Education.

Corey Coates 0:34

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Keith Weinhold 1:17

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your pre qual and even chat with President chailey Ridge personally, while it's on your mind, start at Ridge lendinggroup.com, that's Ridge lendinggroup.com.

Speaker 1 1:51

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 2:07

Welcome to GRE from Canterbury, England to Sunbury, Pennsylvania and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education. How does war affect real estate? The war with Iran that began one month ago has really brought this to light. Now, a lot of armchair analysts and even some people with experience, they succumb to folly by having an emotionally driven hunch, as we like to say here at GRE take history over hunches. First look at what's actually happened historically, and at least let that inform the hunch Oh, and now you've brought pragmatism to the question of what happens to real estate in wartime. Now the latest war in the Middle East happened at a time where the existing picture is that US residential real estate prices are stable. Values are not rising or falling very much, and it's been rather slow overall and historically low transaction volume, fewer sellers and fewer buyers, and mortgage rates are near historic norms. I'll get back to us real estate shortly. But as you might imagine, real estate values that are actually in direct war zones, they get pummeled. So we're talking about many parts of the Middle East at this time in history, Iran, Israel, Lebanon, the UAE. In fact, values in the war zones collapse fast when there's physical danger. Properties can be damaged or totally leveled. Insurance becomes unavailable or meaningless, buyers disappear, liquidity dries up. The result is that prices fall hard, sometimes to near zero in active conflict zones. And that completely makes sense. I mean, would you want to make an offer to buy a property in an active war zone, I wouldn't now in safe regions that are adjacent to the war zone. Oh, the opposite has happened historically. Values surge because you've got refugees and migrants that flood into those nearby safer cities. Rental demand spikes immediately, and vacancy collapses. So in these adjacent safe areas, rents jump first, and then prices follow. In fact, when Russia invaded Ukraine back in 2022 this is exactly what happened across Eastern Europe. Cities like Warsaw Poland saw rent Spike. Almost overnight. All right, historically, what has war done to interest rates and inflation, like I alluded to last week, I think you already know that they both rise during wartime, and they sure are Now historically, war triggers energy shocks like oil and gas, and during this war, the energy shocks are greater than usual due to the Middle East being oil rich, war trigger supply chain disruptions and government spending surges. It's been well documented that the US has been spending one to $2 billion every single day on the war with Iran, and this is what can lead to that higher inflation and higher interest rates. And here's the tension for real estate, higher mortgage rates often put downward pressure on real estate prices, but yet inflation puts upward pressure on housing and all types of real assets. So the result there is this short term tug of war longer term, the real estate wins in inflation because it's a hard asset with debt attached. But back to the direct war zones, construction slows and supply tightens, and that's because war disrupts the very availability of labor and materials like steel and fuel and shipping developer confidence goes down the tubes too, and the result is that fewer homes get built, and then existing inventory becomes more valuable after the war, and this is The underappreciated force. Less supply later means higher prices later. Now let's talk outside the war zone. And before I do you know, gosh, it's amazing, whenever the US is involved in a war, it's almost never on American soil that's us hegemony and geography at work. There stuff's always getting blown up on the other side of the world. Rarely where I live in America, but here at home, military and government hubs can boom during war because the war spending is not spread out evenly. Defense contractors expand military bases, scale up logistics hubs get busier with that stuff. In mind, you can think then about which us locations can really boom with economic activity during wartime, as sad as it is for the active combatants and casualties, so the result is for the US to have localized housing boom, something that's often overlooked, but it's very real. And the big takeaway, and this is what most people miss, is that war does not crash real estate. It reroutes demand in destruction zones, there's collapse in safe, stable areas, like certain us regions, there's often a surge and on a national level in the US now, the result is mixed and resilient. And over time, inflation plus constrained supply plus population shifts tend to push values higher in the surviving markets. That is history over hunches. So then a better question than, how do wars affect real estate is instead, where does demand go next? That's a great question. Now, when you think about US military and defense corridors that benefit that's places like Tampa, Huntsville, Alabama, Norfolk, Virginia, and say, San Diego, because historically, defense budgets expand. Contractors hire aggressively and military personnel increases if higher mortgage rates persist and it keeps housing affordability strained, the winners tend to be lower cost resilient markets, places like Cleveland, Memphis and Kansas City. When the war with Iran began, 30 year mortgage rates were 5.98% and then they quickly shot up to about six and a half. They are still lower today than they were a year ago, even during geopolitical chaos, domestic migration really doesn't stop. People will keep piling into boring Sunbelt suburbs in Florida, Texas and Arizona. Now, if war causes domestic travel to drop in the US, and that's an if what happens historically is that short term rentals and hospitality driven real estate can get hurt. Think places like Las Vegas and Orlando. Now, let me have a word with you on interest rates. For a couple years now, people have talked with certainty about how mortgage rates and interest rates have all turned. Types are gonna go down like they've just gotta go down like it's a foregone conclusion or something. And as you know, all this time, I have been resolute in conveying the fact that you cannot predict interest rates with any certainty, and trying to spend time doing so is a fantastic way to waste your time, and sure enough, with a new war, rates rose, they didn't fall. I will forecast home prices, but no one can predict rates. Today, the Fed talks about increasing the rate more than cutting the rate. Now, inflation has been in this small range between two and a half and 3% for almost the year now, inflation has been above the Fed's 2% target. Do you realize this every single month for more than five years now, floating high for more than 60 months in a row before I discuss what Ward does to the rate of inflation.

Keith Weinhold 11:06

let me share something kind of humorous with you. My height of five feet, 11 inches. This is the most honest height that a man can be. Here. I am 511 I weigh 174 every other man of my height rounds up and says they're six feet tall. I'm telling you, heightflation among men is every bit as rampant as price inflation among consumers, but you don't have any choice in the price inflation, so History doesn't repeat, but it often rhymes. Back in the 1970s America experienced what some people call this famous double hump inflation, because in 1974 It peaked at over 12% and then just about five years later, you had another peak of almost 15% inflation and that ran into the beginning of 1980 back in the 70s, those inflation homes were caused by an oil embargo, Nixon, severing the dollar from gold and the Iranian Revolution. Yes, Iran back then too. All right, well, here in more modern times, could we experience a double hump again? Because we had the covid inflation wave that peaked in 2022 and next, could we have another inflation wave five or six years later, just like the 70s? Did you probably already know the story back then, that's when inflation only got crushed. How did we deal with it? Then when Fed Chair Paul Volcker ruthlessly jacked the Fed funds rate to near 20% and that made mortgage rates blast past 18% in 1981 yeah, that all makes today's mortgage rates sound rather adorable, doesn't it? The war with Iran, it is already the biggest oil supply disruption in history, more than double the previous record in the 1950s This is not a small deal. There's a real potential for inflation to spike higher. The oil supply shocks things, because oil is the master ingredient of the global economy. Even if the war winds down, it takes time for things to get back online, but really, the way to think of oil is the master ingredient, that's the way to think of it, the master ingredient. I mean, it's embedded in nearly everything except your morning coffee, plastics, chemicals, fertilizers, transportation. So like an economic octopus, oils. Tentacles extend everywhere. For example, higher fertilizer costs now mean higher food prices later and yep, eventually even your morning coffee, although the US does not rely directly on the Strait of Hormuz for oil, those prices are set on the global market. I myself sailed through the Strait of Hormuz in 2020 and it didn't feel so perilous to me then I was on a cruise ship. But in wartime, you don't want to be on an oil tanker. Why not? Well, it's just the slowest moving vehicle on Earth, packed with the most flammable liquid on earth through the most active war zone on Earth. About a week later, I also flew over the heart of Iran, and it is quite an inhospitable looking place, arid with tall mountains. In fact, they have the highest mountain in the Middle East there. It's called Mount damavanda, about 18,400 feet In Iran

Keith Weinhold 15:01

Dubai, real estate is not going to be the same for a long time, maybe ever. It's said. It's been bombed pretty often this year. So all of this is not ephemeral, what the US calls operation epic fury. It could elevate inflation for years. Wars are expensive, missiles, aircraft carriers, troop deployments, all the logistics, we are not going to pay for all of that with savings. Lol, let's all pause right now for the audience laughter. We don't have savings. We pay for it with debt, and the easiest way to pay for gigantic spending programs is to just quietly and sort of surreptitiously print more dollars. That's inflation. It dilutes every single dollar that you own now, every $20 bill in your wallet, every $100 in your savings account, inflation also debases every dollar of your real estate equity and every dollar in your stock portfolio. You'll remember that about six months ago, right here, I pointed out that though Trump says he wants low inflation, his behavior is highly inflationary. One thing to keep in mind is that, whether you like the President or not, what he does is when he sees the economy hurting, like with high gas prices or with the sinking stock market, what he does is he acts much like he did on tariff tweaks, but at some point it becomes too late to reverse course. You've got to ask, Have we cut rates too much? The Fed made rate cuts both last year and the year before, and meanwhile, a monetary puzzle keeps on brewing. The war could make things awkward, because we're supposed to have a new Fed chair, Kevin Warsh, coming in a month and a half. Trump wants him to lower rates, but if inflation heats up, the obvious solution is to jack up rates. US stock investors are already feeling it, because the indices entered correction territory last week due to the war a correction means a drop of 10% or more from a recent peak, and us real estate investors are well insulated. Like I said, long term high inflation boosts values. Rents are even more stable than prices and rents, as long as you're outside of the direct war zone, have very little relation to the war. But systemic supply chain disruptions can be a real thing that fuels inflation, and here's why. See, manufacturers used to keep eight to 12 weeks of inventory in stock, but no longer. Today, we've got the efficient just in time supply chains and there is less stock on the shelf. The system is fragile. That's why this domino effect can create this long term economic headache of shortages and inflation. Have you seen any empty shelves yet, like we did during the pandemic, I have not but as we know, during inflationary times, investors flock to hard assets, it can help to have a little gold, I think, truly just a little. But in wartime, the most advantaged investment class is right where we already are. It is residential real estate held with debt. We are out here winning the GRE inflation triple crown because property values rise, debt becomes cheaper in real dollars and rents increase over time, all while inflation cannot touch your fixed mortgage payment amount. Now, during the last wave of high inflation, that was 2021 and 2022 us real estate prices were up 10 to 20% in each one of those years, not aggregate, but each one of those years. Do I think that this can happen again if we have another big wave of war generated inflation? No, I don't, I do not believe that national real estate prices can rise as much as 10% over the next 12 months, even amidst this low supply condition, and that is because of the ongoing affordability constraint. As for inflation, the cobasy Letter reported an inflation expectation of 5.2% over the next 12 months. There are other projections in the fours out there, but so much will change between now and then. So I think even they would acknowledge that that is a guess. Above all, wars are tragic. Let's acknowledge that the bottom line here is that wars are expensive too. They create inflation, and residential real estate held with debt is more than an inflation hedge. It's an inflation profiting machine. Straight ahead, we'll talk more about what's happening in the real estate market, in some different sectors. It's with a woman that I invest my own funds with for a stable real estate backed return. I'm Keith Weinhold. You're listening to Episode 599 of get rich education.

Keith Weinhold 20:39

Let me throw out a simple idea, sometimes doing nothing with your money is actually a decision. Leaving it parked might feel safe, but over time, purchasing power changes. So the conversation isn't about chasing returns, it's about intentionally placing money somewhere. Freedom, family investments works in real estate people use every day, housing, senior communities, essential properties, things tied to living and not trends. Their freedom notes offering is built for accredited investors looking for structured income backed by real assets, not speculation. I am an investor with them myself. The Freedom team makes themselves available to walk through their approach, structure and operating philosophy so you can ask questions and determine alignment before moving forward, while past performance doesn't guarantee future results, their historical operating philosophy has yielded 100% investor payouts backed by over 20 years of experience. If you want clarity before making any moves, book a clarity call at Freedom. Familyinvestments.com or text family to 66 866, text the word family to 66 866,

Keith Weinhold 22:00

flock homes helps you retire from real estate and landlording, whether it's one problem property or your whole portfolio, through a 721 exchange, deferring your capital gains tax and depreciation recapture, it's a strategy long used by the ultra wealthy. Now Mom and Pop landlords can 721, the residential real estate request your initial valuation, see if your properties qualify@flockhomes.com slash GRE, that's F, l, O, C, K, homes.com/g R, E.

Kristen Tate 22:39

This is author, Kristin Tate. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.

Keith Weinhold 22:55

Today we're talking about the wealth window. Why this moment in real estate is

Hear how real estate investors can transition out of active landlording while staying invested in the asset class.

Keith speaks with Ari Rubin, founder of Flock Homes, about using a 721 Exchange to move from directly owned rental properties into a professionally managed partnership structure.

They discuss why exit planning is essential, how this strategy can defer taxes, reduce hands-on management, and provide diversified, passive income and appreciation potential for long-time landlords and portfolio builders alike.

Resources:

To see whether a 721 Exchange could work for your rentals, request a free property evaluation at flockhomes.com/gre

Episode Page:

GetRichEducation.com/598

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE I'm your host. Keith Weinhold, when it's time for you to sell your rental property, there's a vehicle you may not have heard of that allows you to exchange it into a partnership. This makes it hands off for you. Defers your capital gains tax and depreciation recapture, while you still can enjoy appreciation and cash flow. It's the exit strategy that helps you retire from landlording, known as the 721 exchange today on get rich education,

Corey Coates 0:34

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast, sign up now for the get rich education podcast or visit get rich education.com

Keith Weinhold 1:17

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally, while it's on your mind, start at Ridge lending group.com, that's Ridge lending group.com,

Speaker 1 1:51

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 2:07

Welcome to GRE I'm your host. Keith Weinhold, the voice of real estate investing since 2014 today's show should help a lot of people as you grow your real estate portfolio over time. You add to it and you multiply it. You do that by using more of your own money and more of other people's money and more of your equity from one property to buy another property. But we've all got to begin with the end in mind, today's show is about your exit strategy, how to sell your property, whether it's selling all of them or some of them, and you're doing that in both a tax efficient way and a management efficient way, because it's about how to exchange them into a partnership. Still get financial upside for appreciation and cash flow, but yet you achieve about as much passivity as what you would have with a Schwab or say, Vanguard mutual fund. Now, back when GRE began, over 11 years ago, we wouldn't have done a show like this because most new listeners were in acquisition mode learning about the GRE way, and that might still be true, but today, we've got both new listeners and longtime listeners that have engaged with GRE investment coaches and learned from listening to each weekly episode, and have built their portfolios and have turned get rich education into got rich education. Congratulations. A lot of you have now achieved financial freedom, and you're looking for an eventual exit. Now, even if you own dozens of rental properties like I do, you don't feel much management strain most of the time, because also, like I do, you outsource to property managers, but some of you self manage, and you can then achieve real relief when you exit before we bring in our expert guest and discuss The 721 exchange. Hey, you've seen me write about the Iran war in our newsletter, and you've seen me discussing it on YouTube. The short story is that war is really expensive, war is inflationary, and war in Iran could very well be setting us up for another inflationary wave like we had from 2021 to 2023 I'm probably going to talk more about it next week, if the war is still ongoing, and what it means to real estate investors. Also a lot of great episodes coming up here at GRE including the show debut. Two of Redfin chief economist Darrell fairweather PhD, who will be here with us soon as for this week, let's learn about an efficient real estate exit strategy.

Keith Weinhold 5:17

This week's guest is someone that is going to help a lot of you, so I've really anticipated having him on educated at Harvard and Stanford. He went on to become a somewhat conventional investment manager, until he was motivated by his parents experience as Chicago landlords to launch another venture in 2021 which you'll learn about today. Welcome to GRE Ari Rubin

Ari Rubin 5:42

Keith, thank you so much for having me on the show today, and to all your listeners out there. It's great to meet all of you, and thanks for listening in today.

Keith Weinhold 5:49

Yeah, Rubin is spelled r, u, B, I N, yeah, I understand you've heard from some of our listeners

Speaker 2 5:55

exactly, I actually heard about your podcast and your show from a number of our clients will go more into the problem that we're solving and the types of landlords that we work with, but some of them have been listening you to you for a long time. Some of them got motivated to get into real estate because of your show. So yeah, really excited to be here chatting with you today.

Keith Weinhold 6:17

Well, thanks so much. Basically, what you do is you help people retire from landlording, but not real estate. We'll get more into that later. But a lot of times when investors have been in the direct real estate investing game for a while, they begin to feel like they've got their dollars trapped in this real estate game. And it can be easy to argue there's no other place you'd rather have it, but tell us more about that trapped feeling with managing rental properties.

Speaker 2 6:45

Yeah, So Keith, maybe just to start out, I want to just talk about the problem that we're solving at flock. So as everyone knows, and there's a lot of resources out there, real estate is a great place, a great way to build wealth, and it's a lot of work, and it takes a lot of effort and a lot of skill and a lot of time, but we find that not enough folks think about, once you get in, how do you exit? And just for those on the show who are listening, who aren't even in real estate yet, or maybe they're just a couple of years into real estate, you always want to think about your exit, and at a certain point, once you've owned real estate for five years, 10 years, 30 years, at some point in your life, you're going to want to exit, and that's because, at the end of the day, managing and owning Real Estate takes work. You can hire a property manager, but you still have to manage even the best property manager doesn't really solve all the problems of being a landlord. For example, if you have an eviction, you still have to pay for that. If you have a massive capital improvement, roofs to replace, HVACs to do, you're still on the hook for that. Ultimately, you're liable when you own real estate, right? You could be sued. You have a feeling, and you should be responsible for your residence and for the homes. So at the end of the day, at a certain point, every single person in this world will get to the point where they're like, I'm done owning real estate. I want to retire. I want true peace of mind. But the problem with that is, when you're ready to exit, you got to sell. That's really the only way out. Maybe you're fortunate enough to have some kids who want to take over the business or the properties, but you know, if you're like a lot of clients that we work with, your kids, maybe they're on to bigger and better things. They've moved across the country. Or, you know, this generation doesn't fix things like the last one did, right? And so unless you have kids who are really, really ready to step up and be super hands on, you don't have an exit and selling, of course, triggers a huge tax liability. So when you sell real estate, you not only have to maybe kick out your tenants and stage the house and pay all the frictions and all the fees, the biggest thing is you have to pay capital gains and depreciation or capture taxes. And we'll come back into what all that means and all how that looks like. So in summary, when you sell real estate and you've owned for a long time, you could be faced with losing upwards of 30% of your equity, which is a lot of money. That's a big chunk of your nest egg, of your net worth. You also you love real estate, you've done really, really well with real estate. So at flock, we've built the retirement solution for landlords, and we'll go more into how this all works, but essentially, we help people with the most cost efficient, seamless exit strategy by exchanging their equity for shares. In our larger fund. So that's just very quickly, the problem that we're solving and some of the clients, the problem that we work with

Keith Weinhold 10:08

this is important. I'm a longtime real estate investor. I have not self managed in many years, but I basically asset manage my managers oftentimes reading their monthly statements, replying to emails about various things, but yeah, there is some day in which I probably wish to not have to do that anymore, and indeed, selling it all would incur a steep capital gains tax. Now what I've done is I've done cash out refinances and 1031 exchanges along the way to continue to defer any tax obligation that I have. But of course, when I do a 1031, exchange, I grow my portfolio, and there's more to manage,

Speaker 2 10:50

exactly. So you know, you just laid out two excellent options out there for ways to sort of consolidate, or, you could say, even better, leverage your equity in real estate. You can do a cash out refi, and that's of course, where you pull cash out of the properties so you're more liquid, or you buy more real estate, or you can do something called a 1031 exchange. And Keith, I'm sure a lot of your listeners out there know what a 1031 exchange is, but just for everyone listening in in or in case folks are less familiar, a 1031 exchange is essentially a real estate loophole. It used to apply to artwork and airplanes and a lot of other stuff. Now it's just real estate, and it's a part of the tax code that says you can sell your real estate, and if you follow this process within a certain timeframe, and then use what's called a Qualified Intermediary, you can roll those proceeds forward and buy new real estate and defer that tax liability into the future. Now the benefit to that is you just achieve tax deferral, but as you said, you still own real estate, and so for a lot of younger investors out there, a 1031 exchange is a really effective way to continue to grow their portfolio, or be more thoughtful about their approach. But for longer time real estate investors, a 1031 exchange doesn't really solve your problem. You still own real estate, you're still liable for tenants, for toilets, for trash, right? And so if you're trying to really retire from being a landlord, a 1031 exchange doesn't really do that. And of course, a cash out refi, all that does is just take on more debt and more risk and more liability. Great option if you're young and you're still trying to grow when we hear from a lot of clients, maybe not the best option in the second half of your life as you're really trying to focus on wealth preservation.

Keith Weinhold 12:51

Yes, a lot of our listeners are indeed familiar with the 1031, tax deferred exchange. You're typically trading up and deferring your tax on the way. And that trading up, it really just gets you even more into real estate investing, because with almost every 1031 exchange, you're going to own more doors than when you began the process. However, a lot of people aren't as familiar with the 721 exchange. Why are people less familiar with it? Ari

Speaker 2 13:21

great question, Keith, and you're right, less people are familiar with it. So in plain English, the 721 exchange, it's also part of the tax code. It's not a real estate loophole. It actually applies to equities or many other asset classes. And in plain English, what it says is, Keith, you own, let's say a million dollars worth of assets you can exchange. You can contribute those assets into a partnership and receive back a million dollars worth of shares or units of the partnership. And in doing so, it's a tax deferred exchange. There are some nuances that you have to be mindful of, just like in a 1031 exchange in terms of boots and cash out refis, but as a general rule, it's a lot more flexible and a lot more seamless than a 1031 exchange. And so again, Keith, you sell, you exchange, you contribute your properties into a fund or into a partnership using the 721 exchange. You now own shares of that partnership. You get all the returns and cash flow and ongoing tax benefits from owning shares in the partnership. To your question, why do less people know about the 721 exchange? It's very common in large commercial real estate, big real estate investment trusts have been using the 721 exchange for decades. The problem with it is it's really complicated to do. So these transactions are quite laborious. There's lots of paperwork. Historically, you would need an army of lawyers and accountants and tax professionals just to consummate one of these things. Surely, if you had a $500 million apartment building or office complex, you would be familiar with this. But until now, no one had really built this for the little guy. And I'm putting that in quotes, right? Because, you know, if you own 10 single family rental homes, 50 single family rental homes, even one single family rental home, you could have hundreds of 1000s of dollars, millions of dollars of equity. You're not such a little guy or gal, right? But these are the moms and pops who own the vast majority of real estate in this country. And so our idea at floc was to go out and, for lack of a better term, democratize access, to give access to this really powerful wealth preservation tool, the 721 exchange, a mechanism that's been used by ultra high net worth families and big institutional investors and big Wall Street firms for decades, and really enable it to the masses out there, To the millions and millions of hardworking Americans who have built up these properties, these portfolios, for decades.

Keith Weinhold 16:27

I've got to say I had heard of the 721 exchange quite a long time ago, but it wasn't until last year that I became more familiar with it, and more familiar with what you do, and realizing that this could help an awful lot of people. You're listening to get rich education. We're talking with flock homes founder, Ari Rubin, about the 721 exchange, how it works and how it might be able to help you more when we come back, I'm your host. Keith Weinhold,

Keith Weinhold 16:53

let me throw out a simple idea, sometimes doing nothing with your money is actually a decision. Leaving it parked. Might feel safe, but over time, purchasing power changes. So the conversation isn't about chasing returns, it's about intentionally placing money somewhere. Freedom. Family investments works in real estate people use every day, housing, senior communities, essential properties, things tied to living and not trends. Their freedom notes offering is built for accredited investors looking for structured income backed by real assets, not speculation. I am an investor with them myself. The Freedom team makes themselves available to walk through their approach, structure and operating philosophy so you can ask questions and determine alignment before moving forward, while past performance doesn't guarantee future results, their historical operating philosophy has yielded 100% investor payouts backed by over 20 years of experience. If you want clarity before making any moves. Book, a clarity call at Freedom family investments.com or text family to 66 866, text the word family to 66866

Keith Weinhold 18:15

flock homes helps you retire from real estate and landlording, whether it's one problem, property or your whole portfolio, through a 721 exchange, deferring your capital gains, tax and depreciation recapture. It's a strategy long used by the ultra wealthy. Now Mom and Pop landlords can 721 the residential real estate request your initial valuation. See if your properties qualify@flockhomes.com slash GRE. That's f, l, O, C, K, homes.com/g R, E.

Todd Drowlette 18:54

This is the star of the A and E show the real estate commission. Todd rollette. Listen to get rich education with my friend, Keith Weinhold, and don't quit your Daydream. Welcome

Keith Weinhold 19:04

back to get rich Education. I'm your host, Keith Weinhold, here on episode 598 we're talking with flock homes founder, Ari Rubin, where they help real estate investors retire from landlording, but not so much real estate with a 721, exchange is something that can be used for retiring landlords along with active landlords if they're just looking to offload one or two properties to exchange into this partnership that we've been talking about. And Ari on your website. It was interesting. I watched the video of you and a woman where you somewhat had to convince the woman to start this fund that did not have any properties in it yet, which is really interesting. And before we're done, we'll talk about. How many properties you have in the portfolio and how many investors you have, but this is something that an investor can exchange their properties into, and yet they still receive the financial upside of both cash flow and appreciation. So tell us more about that

Speaker 2 20:16

exactly. So I'll just quickly explain how it all works. And I do want to also touch on our first client ever, our first landlord ever. Surely, everyone has their story of how they got started in real estate. But you know, for us, at the end of the day, it's a people business. You know, our clients are the millions and millions of mom and pop landlords out there. Shirley was a single mom, Navy vet physician, had this home that she used to live in. She knew she should be building wealth through real estate, so she held on to the property. It was the middle of covid. She had a long term tenant. The tenant moved out,

Keith sits down with the youngest guest in show history—a 19-year-old college sophomore and student-athlete who's already deeply immersed in real estate and economics, Hunter Taddy.

You'll hear a candid Gen Z perspective on money, debt, and the shifting social landscape, along with what's really being taught in today's real estate and econ classrooms.

They explore how young people are navigating college costs, work, and early investing decisions, and how hands-on property management education is shaping one student's path.

If you're curious about where the next generation of investors is headed—and what that might mean for your own strategy—this conversation offers a rare, on-the-ground look without the usual clichés.

Episode Page:

GetRichEducation.com/597

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

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Follow us on Instagram:

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Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE. I'm your host. Keith Weinhold talking with a 19 year old guest that I befriended last year. He's a college sophomore with a real estate investing related major. What does he think about generation Z's future is in person, social life, dead. And what do you really learn about real estate and economics in college today on get rich education.

Corey Coates 0:27

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android. Listener phone apps build wealth on the go with the get rich education podcast, sign up now for the get rich education podcast, or visit get rich education.com

Keith Weinhold 1:11

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally, while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Speaker 1 1:44

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 2:00

Welcome to GRE from Concord, New Hampshire to Concord, California and across 188 nations worldwide, you're listening to one of America's longest running and most listened to shows on real estate investing. I'm your host, Keith Weinhold, and this is get rich education. Increasingly, you know, people ask why even go to college? Is the value of higher education even worth it to drag yourself to an 8am American Lit class while living off of dining hall Breakfast Biscuits and chicken strips for $100,000 a year, it's been estimated that one in seven men are meats, n, e, e, t, that means not in education, employed or training. Why put on a suit and tie and show up at a job when you have a reasonable facsimile of life online and you have discord and Reddit and trade stocks on Robinhood and crypto on Coinbase. Now I don't think that's going to be good for you, and I still think that there are a lot of positives about attending college. At least 15 to 20 colleges close each year in the United States. And despite this, you know, most people that I talk to, they still seem to be mostly positive about college, or they have this expectation that their kids go to college. So anecdotally, this hasn't changed. I probably wouldn't even be as aware of this shift if I didn't read media like I do, if I just talked to people informally, I really wouldn't know. One thing that has not changed also is the notion of the broke college student. I used to be one of those. Now America is just a couple years removed from that wave of elevated inflation and war in Iran has positioned to stoke a second wave of inflation. Today's guest told me that he does pay credit card finance charges, even though he makes more than the minimum payment, just kind of like I did as a college student. The default state of teenage society today is different. It used to be boredom, and now that's been replaced with anxiety. That part has certainly changed, and often it tends to be teen anxiety over such nonsense things. I mean, I have a teenage niece. One example is the burden of maintaining your Snapchat streak? Oh my gosh, if you're a Gen Z or you know what I'm talking about, basically a snap streak where you've got to send a friend a photo or video every single day to keep your streak going, two people have to send it to each other, and people with long streaks, they even like send each other a photo of the floor, just. To keep the streak going. I mean, talk about anxiety over the wrong things.

Keith Weinhold 5:04

Well, today's team guest Hunter, he has a somewhat better grip on life. I haven't met his parents yet, but they've done an amazing job. In fact, Hunter's dad owns rental property, which kind of helps to fuel some of his interests and desire. But in order to cope with inflation and expenses, buy now pay later programs have really taken off. They're widely known, but less widely known. Our rent now pay later plans. They're booming. Platforms like livable, flex and affirm. They're used by lower income and lower credit score tenants that often live paycheck to paycheck. And how it works is that these tenants are extended money at the beginning of the month to pay the rent. They often pay a flat subscription fee plus 1% of the rent. And you know, hey, that could be better than the tenant paying late fees to the landlord. I learned from one tenant that had trouble paying his $1,850 in rent that flex charged him a $15 monthly subscription plus 1% of the total rent for providing the service. So his total fees for the app were around $33 a month rent. Now pay later. You're probably only going to hear more about it, but if you're a landlord, you probably do not know that your tenant is using a rent now, pay later plan, because you just received the full payment on time, and then your tenant pays back the service later. Remember, it is called rent. Now, pay later. Oh, before we bring in our guest, can I ask you for some quick help? Maybe you wanted to tell me what you think about the show. You could have been listening for years, but you don't think that you can reach me. If this show has helped you become a better investor, the best way to support the podcast is to leave a quick rating or review. It helps more investors discover the show. Just tap the five stars in your podcast app. It can take as little as 10 seconds, and I will read it myself. Thanks in advance for leaving a rating and review. Let's meet this week's guest.

Keith Weinhold 7:22

This week's guest is the youngest we've ever had in show history. He's a teenager, so he's about a generation younger than me, and it's his first time on a podcast. He is a sophomore student athlete at the University of Alaska Anchorage, where he competes in the 800 meters for the track and field team. He runs about a 155 his major is management, with a specialization in real estate and property management, and he's just into so many things beyond athletics and academics, he serves as an ambassador for the Widener property management and real estate program. He's also an officer of the real estate management and investment club from Wisconsin. He's 19 years old, a straight A student. He's also an RA that's a Resident Assistant there helping out students at the dorms. Welcome to GRE Hunter, toddy.

Hunter Taddy 8:18

Yeah, I'm happy to be here. Thanks for having me.

Keith Weinhold 8:20

Taddy is spelled T, A, D, D, Y. I met Hunter almost six months ago. A property manager introduced us just thinking that we might have some things in common, and she sure was right. We've gotten together a few times, including going running at one time where, well, I had more than a little trouble keeping up with an active college athlete. The last time we sat down for coffee, just last week, I looked at my watch. We were done, and we sat almost two and a half hours like how many teenagers could really hold my attention for that long? But he just understands the world and politics surprisingly well. For a 19 year old. He's confident and well thought out. He's read War and Peace. He even got some of his own cooking and avoids seed oils. And you know, Hunter being born in 2006 when GRE debuted in 2014 you were eight years old. So before we talk about you, let's talk about your generation, generation Z What do you think some of the markers of your generation are?

Keith Weinhold 9:28

Yeah, so it's as I've shared with you in the past. It's interesting, because especially at UA, I'm mostly surrounded by like, athletes. So athletes tend to be a lot more social, just like how they grown up, they're always around people that tend to be a lot more driven. But then when I talk to, like, non athletes, it's a little bit different. Like, my generation is definitely they're on their phone a lot. I mean, I've told you before, like, I avoid social media. Well, I wouldn't say like the flag, but I avoid it a lot, because I know, hey, how addicting it is. And B, just like, you know, the.The word of my generation is slop or brain rot, and which is most of the stuff on the internet, but Yeah, seems to be like, there's a lot of anxiety in my generation, a lot of, like, lack of accountability, which I've noticed a lot lot of, like, lack of responsibility. And it's almost like self indulgent in a way, where it's like, oh I'm so lazy, or Oh, I'm so this, or I'm so that, and it's just kind of weird. You don't really get that much with like the athletes. Back to the social aspect. I don't know if you've seen that headline recently, that's like, the alcohol industry has lost eight, $30 million over the past four years because he doesn't drink. The real story isn't about Gen Z not wanting to drink alcohol. It's about Gen Z, not like really being social, right? I mean, I don't see that many like, Hangouts as much as, like, when I hear from, like my parents, you know, every night you're going somewhere with your friends or your you know, you're going to the bar, you're going to a bonfire, or things like that. And it's just, you don't see it as much. A lot of people are just in their rooms or online and, you know, the online gaming, online gaming, I don't game a lot, but gaming with friends is actually really fun to do sometimes. But everything's a lot more digital, you know, from the communication to like the spaces, you know, where you hang out, whether it's video games or whether it's VR chat, and some people do that, or discord, or just like internet forums and things like that. Yeah, just lot more digital.

Keith Weinhold 11:24

Yeah, you use little or no social media. Personally, I know you manage the Instagram page for your real estate organization, but yeah, there is more of this perception of in person, social life, maybe not dead, but dying. I've learned that 51% of 18 to 24 year old men have never asked out a woman in person you were sharing with me at how you know people have anxiety just about ordering food in person at a restaurant in Gen Z.

Hunter Taddy 11:54

That's actually funny. So because of how that conversation escalated, I technically did ask her out in Snapchat, but then she was like, you have to ask me out in person. And then I did eventually ask her out in person.

Keith Weinhold 12:06

Now, when it comes to in person meetings, after a few meetings with you, I noticed something rare when it's about seeing people in person, you have virtues that I think are somewhat rare for Generation Z. I mean, you actually show up on time. This this chat we're having right now. It's the fourth time we've gotten together, and you actually showed up early each of the four times, which is something that I really notice and appreciate, which, even for people my age, it seems like it's a virtue that they've lost. I mean, showing up on time is just common decency. That's just doing what you said that you were going to do. I find that pretty interesting. But when it comes to your generation being in college now, I mean, college is tough. You know, when I went to college, I took on student loans. My parents and I each paid for half of the tuition, and also worked a part time job while I was there. So I mean, you hang out with a lot of athletes, but how is it with balancing, you know, the income and student loans? Because, you know, college kids are still pretty poor

Hunter Taddy 13:10

I wanted to run for a division two program, because you can get athletic scholarship. I came in as a walk on. I'm not on any athletic scholarship. I get free housing and free meals for being an RA. Yeah, with my RA position, I actually got the RA position my second semester. So I got it as a freshman, which was like, really, really clutch. So my dad was in the Air Force for 20 years, and I got the GI bill for like, I think, six months. So I got my two first semesters of tuition paid for, and then I got some, like, some money for, like, housing and stuff. I mean, I pocketed most of that just because, I mean, I got it for free already. I don't get any more help from the GI Bill, because I'm not in Wisconsin. But if I went to Wisconsin, I could go to any school for free, like, tuition free. So, I mean, sometimes I do think about that, but with my real estate program. I mean, oh my gosh, the scholarship deadline. Every year they give out like, $50,000 in scholarships. A lot of them are from Widener and then just other like local real estate companies in the area. Last year, I got a $2,500 scholarship to travel to the National Apartment Association's apartmentalized It's like, their yearly conference in Las Vegas, and that was pretty cool. So that stuff kind of went over my head, but a lot of the stuff about AI was, like, just really interesting to hear, especially just about property management. And it's crazy to me, because, like, AI is almost like, my generation's thing, since we're, like, growing up with it, yeah. And then hearing, like, a lot of like, the older people in the property management profession talk about, I mean, they're still talking about when they had to keep their records on pen and paper, or, like, files and stuff. And I'm like, This is crazy. So I have scholarships with the real estate program, if I'm lucky, I can get up to almost $10,000 after the spring. It's.That means I pay in state tuition because I live on campus. It was a deal they were running after covid. So that's only like $5,700 I mean, my scholarships will be able to cover that. This semester, I paid like 2000 of it or something, and then my parents were kind enough to cover the rest, and then I'm going to pay them back right away after the year ends once I get those scholarships. And then, yeah, I get $11 an hour for working desk at my RA job. It's tax free, so, I mean, it's not totally bad, but I don't working desk hours that much because we only have them at night. And then, you know, being an athlete, I don't like staying up until, you know, one o'clock sometimes. I mean, the other night, I had to work a nine to three desk shift, and that screwed my whole for an entire week. Yeah. Okay,

Keith Weinhold 15:48

so when you graduate college in a few years, you could very well come out with a lower student loan balance than a lot of others did, although you might still have an informal loan with dad in there as well. How do you and a lot of people of your generation see your financial future? They sure can be hard to predict, but a lot of people see this crushing debt with student loans, and I wonder, even though it could be far into the future if really Gen Z thinks that they're ever going to be able to afford a home. Now, when it comes to the student loans, I know I shared with you when we sat down for coffee that I had a balance. I think it was like a $20,000 balance when I graduated, because again, my parents paid half of it and I worked part time when I went to school, I shared with you that I just took that balance and paid very little interest on my student loan balance because I kept transferring it repeatedly onto these 0% APR credit cards, and when my introductory rate expired on one card, I would just transfer it onto another card. So I've long been comfortable with debt.

Hunter Taddy 16:52

So me, personally, I do not want to take out a loan from any entity. I'm very fortunate and privileged that my parents are able to, you know, front that money for me when I need it. When I need it, I try to pay them back right away. I do not want student loans like my goal is to get out of college, you know, without owing anybody any money. It's weird, because I'm from such a small town in Wisconsin, and I view trades a lot differently than, like a lot of my peers who grew up in the big cities, I know blue collar millionaires, right? People who just, you know, put their nose to the grindstone, pouring concrete. You know, working driving a semi. Only do that for maybe five or 10 years, like my cousins. My cousin pours concrete, and then the other one, I think, works for construction company, the Midwestern work ethic, they're sitting on 10s of 1000s of dollars in their savings account right now. You can make the argument. Well, their back is going to give out in a couple years. And some of that's true. But also, you know, you don't have to be the guy pouring concrete for how long. You could be the business owner, or you could be the guy who's the plumber for 510, years, and then, you know, start your own plumbing business. That's why I don't look at student loans as, like, I need this college degree to, like, make money or be successful. Like, I've met a lot of people who legitimately have that mindset. That's like, I understand that if you've grown up in that sort of, like sphere, you've grown up with those ideas. But to me, it's like, I know if I can't pay for college, or if I don't graduate college, I know I'm going to be fine. I could go, you know, work construction, or I could go, you know, mow lawns or something. I know, I guess I just view it differently. But a lot of people think they need those student loans. So, I mean, they sign up for them. And I looked it up the other day, the average time to pay off student loans is, like, 20 years or something like that. Yeah, I believe it. That is kind of sad. That's insane to me. I want my lawyers going to college. I want my doctors going to college. I want to college. I want all these people to have a good education. But I mean, like 100,000 to $200,000 I just see that, and it's l

Keith is joined by housing market intelligence authority Rick Sharga—a frequent guest on outlets like CNBC and Bloomberg who "quietly gets it right" rather than chasing clickbait crashes.

Together, they dig into whether America really has a housing shortage and how that lines up with what you're seeing in prices and inventory.

They explore why entry-level homes are so constrained and what that means for both investors and homebuyers.

They also examine how mortgage rates, builder behavior, and demographic shifts could shape housing demand and investment opportunities over the next several years.

Episode Page:

GetRichEducation.com/596

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

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Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE I'm your host. Keith Weinhold, does America really have a housing shortage? And if so, how long will it last? Those answers and more, with an expert guest and I today on get rich education.

Speaker 1 0:19

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Keith Weinhold 1:03

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Speaker 2 1:36

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 1:46

Welcome to GRE from Nantucket, Massachusetts to Pawtucket, Rhode Island and across 188 nations worldwide. America's favorite shaved mammal on a microphone has got his slack jawed act back on track for another wealth building week with you. I'm Keith Weinhold. This is get rich education. I'm still not wearing a pair of knockers, and I've returned here to bring you more value than your HOA dues. It's kind of crazy that America First put a man on the moon, and we're the first nation to put a man on the moon in 1969 and yet today, we have trouble housing our own people here on Earth. Shortly, we're going deep on does America really have a housing shortage first? Sometimes real estate investors can learn lessons from the stock market about the future direction of housing prices and demand and just simply what assets people have demand for, how AI is disrupting some stock sectors. Has been rather germane lately. One CEO made this perfect example. It's about how two different stocks travel search engine Expedia and Delta Airlines, those two stocks were once closely tied together. Their share prices used to be correlated, but they've gone in separate directions. See, Expedia offers you a service that can be replicated by bots, but delta has actual planes that take you somewhere, and it's hard for AI to replace that. This is why there's been a recent push toward more tangible stocks and tangible assets, a divergence, an attraction to assets that give you a share of either a tangible good, or, in the case of something like an airline, a service that's directly tied to something tangible. And similarly, commodities like gold, silver and copper cannot be replaced by AI. Neither can real estate. There is a growing sense to own things that can't be disrupted, dematerialized and demonetized by AI, like so much software can. In fact, as overall stock market valuations are lofty. You know, some people have become rather wary of an AI speculative bubble that perceptive to this demand. Just a few weeks ago, Goldman Sachs introduced an everything but AI index, yeah, where you can invest in a basket of companies that are sheltered from Ai disruption, this everything but AI index that's attracting investors. In fact, there's another trend that interfaces with real estate that just launched recently too today, you can wager on future homes. Prices through the platform, poly market, yes, place bets for profit or loss on the future direction of the median home price. In fact, one recent college graduate joked, I was born too late to afford a house, and born just in time to gamble on people who can buy a house? Yeah, you're probably familiar with poly market by now. It's the prediction market that lets you speculate on things like elections and Fed rate decisions and various geopolitical events and other real world outcomes. Well, they have launched a set of real estate markets that allow users to bet on future home values. The way it works is that you can wager on future home values in New York, Los Angeles, Miami, San Francisco and Austin, Texas, as well as US national home values. So that's six different markets. Now I haven't gambled on Poly market, I had checked it at times to get an idea of where people really think markets are headed or what's going to happen next. Because, rather than major media, where sometimes as a hype machine, they create headlines that scare you in order to try to get clicks, well, instead of all that, regular people are placing their money on polymarket, and you can look at what that action is like, because that can be a more reliable harbinger of future price direction at last check with a national median home price of about 420k with the numbers, poly market is using one month from now, 66% of people think that home prices will rise. And it's more nuanced than that. You can bet on just what price range you believe home prices will fall into one month from now. And this is nothing that I recommend wagering on, but besides an interesting trend, yeah, you can get that idea of where real people actually believe markets are headed. As we're about to talk to national housing expert Rick sharga on whether or not we really have a housing shortage, we've got new data about the level of housing permits. Of course, housing permits are a gage of the level of future housing inventory, because after a permit is issued, it's typically six to 12 months until a single family home is built. But I'll share that with you near the end of the show, because it makes sense to cover this with you in chronological order. We'll discuss housing supply first, and then I'll tell you about the future supply direction based on housing permits. Now, you know from the inception of this show in 2014 I talked about the why of real estate investing before the how with anything in life, it's only when you truly know why you're doing something that you'll profoundly care about the how and you'll want to do it well. In fact, when I do an in person real estate presentation, one of the modules that I teach most often is simply called Why real estate. The biggest Why is not altruistic, although that matters, and that's part of it. But instead it's that real estate pays five ways. That's the biggest why any GRE devotee knows that the five ways are simultaneously paid, are appreciation, cash flow, ROA tax benefits, and not inflation hedging. But specifically inflation profiting. Yet I have found multi decade real estate investors that don't understand this, the most valuable hour that you can spend is knowing all the ways that you're paid and seeing and believing how your total rate of return of 20% 30% or even 40% is not far fetched or risky, but it's actually common and even estimated conservatively. If you're initiated on this, you already know, but if you aren't, it can sound a little hard to believe what I just said right there, I recently reshot the entire real estate pays five ways video course, and it's the most valuable hour of investing video content that you're likely ever to see. It's premium, masterclass level content. I'm just giving it away for free because people need to know this. And actually, on the newest shoot, I've condensed it down into just 40 minutes of content across the five videos, one instructional video for each of the five ways you're paid. The videos average eight minutes. So that's about 40 minutes total, and they build on. Each other. So at the end of each one, you get to see your cumulative rate of return. It just keeps adding up, and you know exactly where all of the numbers come from. That's why it's more conducive to video form than audio form. I know that many of you have seen it, but if not, it is foundational, and I cannot recommend it enough. It's free and available to you now. At get richeducation.com/course, get that now, while it's on your mind. At get rich education.com/course, more next, I'm Keith Weinhold, this is get rich education.

Keith Weinhold 10:39

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Keith Weinhold 11:16

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program. When you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom, family investments.com/gre, or send a text. Now it's 1-937-795-8989 Yep. Text their freedom coach directly. Again, 1-937-795-8989,

Kathy Fettke 12:27

this is the real wealth network's Kathy betke, and you are listening to the always valuable get rich education with Keith Weinhold. You

Keith Weinhold 12:46

Is America really short millions of homes? If so, that doesn't mean every market is undersupplied, and prices can only go up because of it. If there's a housing shortage, why are prices falling in some cities? So the shortage? Is that something that's real, or is it just misunderstood, and you're gonna learn what it means to you? I'm get rich education's Keith Weinhold along with an intelligence authority today that usually gets it right. In fact, I found an old clip of him on Bloomberg where he suggested home prices bottoming in 2011 and as it turns out, they sure did today, together, we're answering the question, does America really have a housing shortage? And my guest has often appeared in major media, CNBC, Fox NPR. He's the founder of the CJ Patrick company. Hey, welcome back to the show. Rick sharga,

Rick Sharga 13:39

good to see you again. Keith, thanks for inviting me.

Keith Weinhold 13:41

You know, it's funny. Four years ago, Rick and I found each other, and we sort of checked each other out. I found him to be an authority that just doesn't go on saying this bombastic and absurd stuff just to get attention. Instead, he quietly gets it right, and when he knew I had a real estate YouTube channel, similarly, I resonated, because I'm not one of these people that's constantly saying that housing prices are going to crash just to get views and then those crash. People never follow up when they're wrong, and they've been wrong for about 14 years now. But Rick, rather than prices, we're here to understand if there's really a housing shortage today, most agencies believe we have a shortage. Moody's will tell you 2 million. Zillow, four to 5 million. Congressional Republicans have gone on to say 20 million. I sure don't know about that. And then yet, Rick sometimes at the same time, you do see these conflicting stats, where it says that sellers outnumber buyers today, which sort of flies in the face of a housing shortage. So what is your take amidst all this?

Rick Sharga 14:46

Well, Keith, I think what we're seeing is a fairly obvious example that if you torture data enough, you can make it say anything in the right you wanted to say. And there is a lot of confusion about how much. A housing shortage we really do have. It's not like we have 20% of the population unable to find anywhere to live. Most people still prefer to live indoors, and they've been able to do so, but the fact of the matter is that all of the math suggests that we are underserved in terms of the number of housing units available across the country, and we can go through some of the math. The big question, of course, is, how many houses are we short? How many housing units are we short? And the reason the numbers are all over the place, and as you suggested, let's set aside the Republican estimate of 20 million, because there's, there's certainly something political going on there, but the estimates range from around a million to as high as five or 6 million. And the reality is all of those estimates are counting something different. Some are counting housing growth versus population growth. Some are counting vacancy rates compared to historic levels, some are counting inventory available for sale today versus inventory available to sale in prior years. So each of these organizations, and they're all pretty reliable organizations, Moody's is certainly good. Zillow's research team is top notch. Fannie Mae and Freddie Mac the National Association of Realtors. None of these people are hiring dime store economists. They're all good folks, but they're all measuring something slightly different, which is why these numbers come out all over the place, and the one of the fundamental challenges is trying to figure out housing shortages compared to what, or compared to when. All of these estimates assume that there was some point in history when we had exactly the right number of housing units to suit the needs of the population. So they start with some point in time, and I think if you did enough research, you find they all start at slightly different points in time, and then kind of work their way forward from that and come to very different conclusions, again, based on where they started and where they ended up, and what they count. The one thing I would push back on a little bit from some of your comments in the intro is that I am highly, highly skeptical, extraordinarily skeptical of the reports that talk about how many more sellers we have than buyers, because that makes some wild assumptions about the number of people that are actually interested in buying a house. And I've never seen any research methodology that's really nailed that number accurately. Because nobody knows if you're thinking about buying a house right now, until you go to an open house until you do a search on on Zillow, or realtor.com or homes.com until you actually are applying for a loan or making a deposit. So the notion of being able to mind read three 40 million Americans to figure out how many of them are interested in buying, I think, is a neat trick, but I do think it's at least in part one of those methods that people use to get a lot of clicks to their website

Keith Weinhold 18:05

right? This whole thing of and I think when we talk about sellers versus buyers, that's shorthand. What we really mean are, there are some stats out there that show that prospective sellers outnumber prospective buyers, in some cases, which, yeah, I think I agree with you there. I doubt that as well. And yeah, of course, I think you're getting on some of the nuance here. We're trying to predict how some people would behave. For example, how much pent up demand is there when we're talking about sellers versus buyers, and we're talking about a shortage, for example, say, the 28 year old living with their parents that could move out and afford to buy a home if mortgage rates hit 5% like for example, how do you count that? Or, how would you even know to

Rick Sharga 18:53

it's a valid point. Keith, and I think that fundamentally, is my question. With that particular report, you really can't count that person. We do have some metrics that we follow, and it's funny, you mentioned that 5% mortgage, because as we record this, mortgages have broken that 6% threshold for the first time in a number of years. And just about every kind of mortgage you could buy right now is below 6% so that's a good thing. And every time we've gotten close to that 6% mark. In recent years, since mortgage rates doubled back in 2022 we've seen a huge influx of people applying for purchase loans, for those mortgage loans to buy a house, those numbers are up somewhere between 13 and 15% year over year right now, and that's before we've really had these mortgage rates dip below 6% so to me, that suggests there really is pent up demand out there, and I judge that just based on what I see in terms of a number of people actively applying for a loan.

Keith Weinhold 19:54

Yeah, there's a lot of nuance here. HUD tells us that we have more. Homeless people than we've ever had in this nation. So that's sort of an extreme affordability problem. To your point earlier about how most people want to live indoors, and I'm sure not making light of homelessness. It's a sad situation, but we're always going to have homeless people regardless of whether we have excess housing or a housing shortage. We have about 146 million housing units in the United States. The census shows and suggests that 8 million of those 146 million are housing units where people have doubled up and are sharing space with non relatives. That's one way to think about the level of pent up demand within the shortage,

Rick Sharga 20:44

I don't know if that's a result of shortage necessarily, or if that's a result of having the weakest affordability for people looking to buy homes that we've had in over 40 years. The last time affordability was as bad was the 1980s and the reason affordability was bad back then was because mortgage rates were at 1819, 20% and it made it very difficult for people to afford homes. But we're coming out of a very unusua

Keith breaks down where the U.S. housing market appears to be headed and which regions and states are quietly winning or losing in the population shuffle since 2020—and what that could mean for real estate investors.

You'll also hear about an intriguing cash-flow play in single-family rentals in select Southern markets.

Then, Keith is joined by financial strategist and comedian Garrett Gunderson, who challenges the usual "scrimp and save" advice. Together, they explore how to build real wealth without sacrificing your life today, how high-net-worth individuals often get money wrong, and a different way to think about financial independence, freedom, and investing in yourself.

Resources:

Get Garrett Gunderson's Killing Sacred Cows audiobook free: DM @GarrettBGunderson on Instagram with the words "Keith Cows."

Episode Page:

GetRichEducation.com/595

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE. I'm your host. Keith Weinhold, is the future direction of the housing market trending up or trending down? Which states have seen the most population growth? Then powerful wealth mindset tactics with a financial comedian today on get rich education

Speaker 1 0:20

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads and 188 world nations. He has a list show guests and keep top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Keith Weinhold 1:04

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally. While it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Speaker 2 1:38

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:54

Welcome to GRE from Mount Rainier to Mount Rushmore and across 188 nations worldwide. I'm Keith Weinhold, and this is get rich education. I am not a Lambo driving influencer that will take any brand deal just to shill a gambling platform instead. Our core strategy at GRE is aging. Well, I've spoken with a lot of LP investors with capital calls and deals that lost all their money. Well, we approach wealth building with discipline and consistency. It doesn't sound dazzling, but it really shines when things go wrong elsewhere, because at least for the core of our portfolios, we get long term fixed rate debt for income property get paid five ways and win the inflation triple crown, and we do it all with a high degree of passivity. Right before I took the mic today, I got a two sentence email from a property manager that said an air conditioning unit's air handler board had to be replaced for $420 I don't even know what an air handler board really is. Now, the manager sent some photos in a written estimate. I quickly checked chat GPT, and I saw that the price was about right, and replied to my manager to go ahead and have that done. That's it an example of relative passivity. US residential real estate has nominally appreciated over every single 10 year period in modern history, despite some occasional short term downturns, even those are not common. Well, we recently had a guest mention that it's 20 years at the longest like 20 years or less is the period of time between which real estate never goes down. He was right. But you actually can't find any 10 year period where home values fell. What about the 2008 global financial crisis, I think that's the first place that the mind goes. Well back then, home values bottomed out at 208k in 2009 before they started growing again. And 10 years before that, the median price it was 157k in 1999 so even when home values hit their GFC low at that point, they were still up 32% from the previous 10 years. So you can confidently say then that over any 10 year period, home prices are up nationally. Now, how about the future? Well, for the future, there is more evidence of rising home prices. Building permits for new homes have fallen to their lowest level since 2019 that's according to the census bureau. So fewer single family homes are being built. Now we plan to discuss that more on. Next week show when we dive deep on does America really have a housing shortage? But this week, more reasons for future home price bullishness is that the labor market now, it's not doing that great. It sure isn't white hot, but unemployment, which was already low, that recently dropped a touch lower to just 4.3% inflation has fallen to 2.4% and wages are rising faster than that. In fact, our own Fed Chair recently remarked at how he's surprised at the strength of the economy. The property market analytics firm kotality, they now expect home prices to appreciate another four and a half percent this year. They and other firms continue to believe that the Midwest will be the hottest area of home price growth even more than that four and a half percent in that region. That is because not only is the Midwest underbuilt, it's that the prices are so affordable that it's attracting young people. The other factor is that mortgage rates recently dipped just below six into the high fives again, and that can release this pent up housing demand, and think about where we've come from. In late 2023 mortgage rates were about 8% and now lower mortgage rates also reduce the lock in effect, so it can create both more sellers and more buyers. The thing to remember is that 70% to 80% of home sellers are also home buyers because they've got to live somewhere. And first time homebuyers, of course, they buy only, they don't sell anything. In fact, former GRE guest in housing wire lead analyst Logan modeshami and Barry Habib were just positing on this at housing wire's latest summit on how the volume of home sales has been depressed for so long that lower rates could very well trigger a rush of buyers, these kind of people that have been delaying purchasing for years, this pent up housing demand being released if indeed rates go lower. People think they know the future, but we don't really know that that's going to happen for sure. But a lot of optimism about this phase of the housing market supported by not great, but decent economic conditions. Of course, that new housing demand is going to manifest unevenly across the nation. So let's talk about the places that have seen the most population growth from 2020 to today, basically the states that support that housing demand. Well, between 2020 and today, the US has grown by about 10 million people. That's over 3% nearly every state grew. But the bigger story is where that growth is happening. And really, here's the jaw dropper as a region, the South, gained more people than all of the other regions combined, about 7.6 million new residents in the south since 2020 the South's population is up 6% the West's almost 2% the Midwest population is up more than 1% and The Northeast up seven tenths of 1% again, this is not per year. This is total population growth from 2020 to today, Florida and Texas, they led the nation among the big states, both up almost 9% sprinting like they just found out that income tax is optional. The Carolinas in Tennessee are big southern growers too. People clearly keep moving toward warmer weather, a lower cost of living, lower taxes and job markets. Nothing new there. California in New York are the biggest losers in absolute numbers, California losing half of 1% of population in New York, a full 1% people keep moving away from these traditionally expensive, high tax coastal states like a buffet when the crab legs run out, people just getting up and leaving. That's not any sort of news story there, either. These trends help cash flow residential real estate investors like us, because the south aligns with that favorable landlord tenant law and those high ratios of rent income to purchase price. Luckily for us, that's where people are moving too. The Midwest has those phenomena as well, although their growth has been slower.

Keith Weinhold 9:39

Now a few Midwest highlights for you. Since 2020 the population of Indiana is up 2.8% quietly benefiting from Illinois. Escape Velocity, Missouri up almost 2% and that's growing mostly in Kansas City and St Louis suburbs. Ohio at almost 1% that's pretty modest growth overall, but Columbus up 5% that is flexing like it just landed a semiconductor plant there in Columbus, the intermountain west has bicep bulging growth, but it rarely works for us, because rents are only a little higher, but property prices are way higher. Yes, those pretty Rocky Mountain states, great Instagram, tough cash flow now Louisiana, it is a state that confounds people. It's a warm place, and it has a low cost of living, you would think Louisiana would be attracting people in droves for those reasons. Well, then why is its population following Louisiana down nine tenths of 1% since 2020 Well, you've got bleak job prospects that make Louisianans leave its tax competitiveness ranks 31st property insurance costs are high thanks to environmental risk. Louisiana has more swamps than beaches. Even the NFL saints were six and 11, and if they had made the playoffs, that wouldn't have made people move back. And hey, no personal shade here, I enjoy going to the New Orleans investment conference in Cajun culture, in Airboat Tours through the alligator filled Bayou, fun stuff, but for income producing property, you got to seek out different characteristics than just vacation Glee or how Good the gumbo tastes keep emotion separate from investing, Hawaii is America's biggest percentage loser. Its population is down one and a half percent since 2020 its cost of living is stratospherically high, with a median home value of just a little over a million dollars. That results in net outmigration to the mainland parts of the Aloha state now experience natural decrease. That means that deaths exceed births. Natural decrease. That's mostly a phenomenon on the Big Island. That's not where Honolulu is. That's where you have Kona and Hilo when young people can't afford to stay demographic gravity kicks in population loss. Hawaii is also highly dependent on tourism, meaning more volatility in recessions. It has contractor availability issues and higher repair costs, partly due to shipping materials to the remote islands. What about the upsides of Hawaiian real estate? Well, you're just going to have this inherent, strong, long term land scarcity and lifestyle desirability overall. Hawaii isn't bad. It's just hard. And I like Hawaii as a place to vacation, so the best times in my life were in Hawaii. Now, with all this said, These are broad generalities about states which are big places themselves right now. There are certainly Missouri real estate investors listening to me that are actually losing, and Hawaii real estate investors that are winning, and even cash flow positive. I'm talking general trends here, and this is with respect to long term rentals, not short term rentals. If your rent to price ratio is as low as point three or point four, like it often is near the coasts, well then you are speculating on appreciation. That's what that means. All 50 states have opportunity. All 50 states have no go zones. People keep moving south. That's a trend that the pandemic accelerated six years ago. More opportunity is concentrated there. That's got nothing to do with vacation excitement. That is population math, and I'm talking about swimming with the tide here in our Don't quit your Daydream newsletter I recently sent you that colorful population change map that I was describing some of there. More recently, I also emailed you that great and rare map of landlord friendly versus tenant friendly states mapped out and a lot of other great stuff.

Keith Weinhold 14:17

Before we bring in our firebrand guest, Garrett Gunderson, I just learned about a really strong opportunity for a provider of single family rentals and duplexes in Memphis and Little Rock. They're providing a locked in 5% interest rate and 5% property management for five years. Yeah, that's not a throwback to 2020 it's what mid south homebuyers calls their triple five program. They are the oldest and most trusted, maybe turnkey investment provider in the country, operating since 2002 and what they do is they offer these fully renovated, occupied rental properties in Memphis and Little Rock, two of the strongest cash flow markets in the South. With financing and management and rates that make the math work like it hasn't in years. So again, 5% interest, 5% property management fees for a full five years. You know those markets, they already had these investor advantage numbers with rent to price ratios mere point eight in Memphis and Little Rock. But yeah, that low 5% mortgage rate, even for renovated properties, not just new build. That's the kind of spread that turns a good deal into a great one. So to give you an idea, if you get a 30 year fixed rate mortgage loan amount of 125k with a 7% mortgage rate, your principal and interest payment is 832, at a 5% rate, it's just 671, so that's $160 more cash flow right there, and it's made a tad sweetener than that with just a 5% Property Management rate. And I don't know how long that offer is going to last, but it is available now and for the next little while, you can ask about it. When you visit mid southhomebuyers.com that's mid southhomebuyers.com and you can ask them about their triple five program. More next. I'm Keith Weinhold. You're listening to Episode 595, of get rich education.

Keith Weinhold 16:19

Flock homes helps you retire from real estate and landlording, whether it's one problem property or your whole portfolio, through a 721 exchange, deferring your capital gains tax and depreciation recapture, it's a strategy long used by the ultra wealthy. Now Mom and Pop landlords can 721, the residential real estate request your initial valuation, see if your properties qualify@flockhomes.com slash GRE, that's F, l, O, C, K, homes.com/gre. You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre, or send a text. Now it's 1-937-795-8989 Yep. Text their freedom coach directly. Again, 1-937-795-8989,

Dani-Lynn Robison 18:08

this is freedom family investments. Co founder, Danny Lynn Robinson, listen to get rich education with Keith Weinhold, and don't quit your Daydream. You Brenda.

Keith Weinhold 18:24

Today's guest is someone that America knows as the long haired, bearded money guy in the past, he's drawn physical appearance comparisons to Jesus Christ. He's a prominent financial strategist. Founded an eight figure company, hit the Inc 500 he's both a New York Times and Wall Street Journal bestselling author. He is just an electric speaker, including appearances in front of dozens of billionaires. And he's just got this great way of speaking to financial freedom that hits you differently. He even has a comedy special that's great to welcome back to the show. Garrett Gunderson,

Garrett Gunderson 19:02

that's good to be back. Man. Is really good. Love your energy. Has a nice intro.

Keith Weinhold 19:07

Well, you give a lot of like, nice guidance to people that's somewhat different than they're used to hearing. You know, Garrett, I think a lot of the conventional guidance is, you know, it's not very far above Elementary School advice like, put your credit card in the freezer so you don't use it too often, but a lot of times you speak to either business owners or people that have already had some success, and I think a lot of your underlying mantra is, hey, you better live your best life now

Garrett Gunderson 19:35

I kind of feel like you are your greatest asset, and if you starve out that asset because you don't feed it with knowledge, or you don't invest in yourself, or you don't gain the skills that really matter because you're so addicted to scrimping and sacrificing and building your balance sheet right, trying to build savings accounts and retirement plans and doing all you can to pay off that mortgage. Yeah, you could become a millionaire on paper. But will you live like one? Will you enjoy your. Life. What about all the memories that you miss along the way? What about having quality of life today and creating a life you don't want to retire from? The wealthy people, they didn't get that way because they shrunk their way there. They didn't get that way because they were amazing budgeters. They built businesses. They created value. They learned how to, you know, sell or speak or market or have business acumen that grow business or to hire people, and having those systems that actually impact more people or more deeply impact the people that they serve, because it's about value creation and their value creators. And I think this notion of just thinking, Oh, I could just trade time for money and set money aside. Man, that's a really painful way to get to a million dollars, but Northwestern Mutual, they just put out an article that said, 32 or 34% of millionaires don't feel wealthy, because if you have money tied up in an account that isn't kicking off cash flow, it doesn't feel like wealth. You can't spend that net worth. It's just a statement if you don't learn how to create cash flow. And I love financial independence, where people have cash flow from assets to cover their expenses now their lifestyle is covered from that cash flow. Now they can reinvest every active dollar into themselves and their quality of lif

Keith digs into what's really going on with apartments now that values in many markets have dropped 20–40%. You'll hear why larger multifamily properties have been hit so much harder than one-to-four unit rentals, and what that means for both current owners and new buyers.

"The Apartment King," Brad Sumrok, joins the conversation to share how recent economic shifts, financing structures, and market forces have reshaped the apartment landscape—and why he believes we may be near a key turning point in the cycle.

You'll also learn how investors are approaching deals differently today, what makes certain markets and property types more attractive right now.

Resources:

Learn more about Brad here.

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GetRichEducation.com/594

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Get mortgage loans for investment property:

RidgeLendingGroup.com or call 855-74-RIDGE

or e-mail: info@RidgeLendingGroup.com

Invest with Freedom Family Investments.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE. I'm your host. Keith Weinhold us. Apartment Building values have fallen 2030, even, 40% over the past few years. Investors lost millions. What are all the reasons that it happened? And when will apartments turn around? I'm joined by the apartment king today on get rich education.

Corey Coates 0:26

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold, writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Keith Weinhold 1:09

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com you

Corey Coates 1:40

you're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:59

Welcome to GRE from Monterrey, California to Monterrey, Mexico and across 188 nations worldwide. America's favorite shaved mammal on a microphone has got his slack. John, act back on track for another wealth building week with you. I'm Keith Weinhold. This is get rich education, and I'm still not wearing a pair of Dockers. We all know that the one to four unit space single family homes, up to four plexes have held under their values despite soured affordability, but five plus unit apartment buildings are a drastically different story. We're going to talk about just how much value they've lost recently, and the reasons why it's about more than just the interest rates doubling and tripling that began in 2022 Today's guest is an apartment educator. His students have had both losses and wins over time. I'll ask about both, because adversity is where you get the lessons now today, you might buy an apartment building at a steep discount compared to what it sold for five years ago. And who might you buy an apartment from today, it might not be the type of seller that you're thinking about because of owners defaulting you might now be buying it from a bank that had to basically repossess it. Yeah, you might try to buy it from a lender at 60% of the loan amount. Well, a lender doesn't want to do a 40% write down, so they're going to try to get more and see. That's how this could practically look today for an apartment owner that survived the crisis and is still standing today. They're asking themselves, now, why would I sell at a discount if I don't have to? So they're probably going to try to hold on. And then, of course, the tenants in these apartments don't know that any of this is going on now. I own a lot of single family rental homes myself, also apartment buildings in the one to one and a half million dollar range is where I've played, and often that ends up being eight to 12 units, because in that space, I don't need partners to invest in assets of that size. One to $2 million is also small enough so that you're not competing with institutional money and other players. Today, I'll tell you what I did with some of those buildings myself when interest rates reset about four years ago, and before you and I wrap up the show today, I've got something to tell you about what's coming in future. GRE episodes here stuff that's really unexpected as the apartment King waits in the wings. One last thing to tell you about, like I mentioned to you recently, investors say that they want an opportunity, but what they really want is certainty. Once certainty arrives, the opportunity. Is gone.

Keith Weinhold 5:01

Our GRE live event last Thursday was a success. It is about how central Florida is the most compelling housing market right now, with the builder offering rate buy downs as low as 3.75% and, you know, I just ran the numbers on something, and I can hardly believe this. All right, right. Now owner occupied mortgage rates are near 6% this means investment property rates are almost 7% with the rate by down to 4% here's how your cash flow looks with a 30 year fixed rate mortgage on a 300k loan with a 7% rate, your p and i payment is 1996 at a 4% rate. It's just 1432, this is a reduction of $564 per month, a whopping payment difference. That's really the difference between treading water and stacking cash flow on these brand new build properties that we're talking about here in Central Florida. So talking about opportunity and certainty, that is a big measure of both. Yeah, before I ran the numbers, I didn't realize that the spread was this wide. With high demand for these properties, the builder does have some more available, a long term fixed rate of around 4% it should be up for you now you can see the limited time replay of GRE, freshest live event at grewebinars.com, in case you want to look into This again, grewebinars.com let's discuss the apartment market. Foreign apartment building values have fallen at 20% 30% even 40% over the past few years, depending on the market that they're in today, we're going to learn how bad it is, why it happened, and if that actually creates an opportunity here in the late 2020s, decade, our guest is known as the apartment king. He is the number one nationally known educator and mentor for apartment investing. He started with a bang in 2002 by making his first ever real estate investment, not a four Plex like I did, but a 32 unit apartment building, and he's now owned and invested in over 11,000 units and over 1 billion in assets under management. He's received awards like the naa independent owner of the year, and he's the star of the massively popular in person events that he puts on, which you'll learn about soon. Hey, it's been several years. Welcome back to the show. Brad sumrock,

Brad Sumrok 7:46

hey, Keith. It's really good to be on again. Nice to be here.

Keith Weinhold 7:50

Brad and I were together in person last month, and we also talked physical fitness. Then Brad is one of the fittest guys you'll ever meet in person. He just looks fantastic. We want to hear about your apartment forecast shortly. Brad, let's talk about the hard stuff. First, you've endured adversity since we last had you here several years ago. Tell us about that.

Brad Sumrok 8:14

Well, look, I mean, I think anyone that's been serious about investing in apartments over the last five years. And I'll also say it this way, anyone who did a deal and say 21 the middle of 21 till probably the end of 2022 it's very likely that that property is worth less today than than it was when we bought it. So that, in itself, has created, you know, adversity, because I got into the business in 2002 and the market went up until 2008 and we went through a downturn in 2008 nine and 10, as is, I'm sure you're aware. And then the market went up again until around 2021, mid year. And then, due to so many reasons, and I could go into those reasons, but let me just just cut to the chase. That you alluded to is we had another downturn, and so the downturn, you know, impacts property values, it impacts confidence, it impacts investor appetite to do deals. It impacts just about everything related to the business, on the investment side, and the other business that I'm in, which is the seminars, the events and the mentoring. So it's been a big downturn, and we could go into those, you know, into the reasons why, and I'm sure you'd like to know my take on that. But now is a great time, because things are recovering, and one of the things Tony Robbins teaches Keith is pattern recognition. It's like I've been through two downturns, and I could see the patterns, and it occurs to me that we're at or near the bottom of a cycle. So like it's also a good time to be gearing up.

Keith Weinhold 9:50

Now, many realize but for those uninitiated on this, the one to four unit space really didn't feel much pain starting in 2022 so much of that is time. Two people get long term fixed interest rate debt on the one to four unit property, but it's shorter term debt on five plus unit apartment buildings. So when interest rates went up, people soon had to pay those higher rates. They were underwater. That's really the genesis of so much of the apartment building pain.

Brad Sumrok 10:19

Well, and I would say, look, it was, I'm going to throw a bunch of things at you here. So we had the pandemic, right? And during the pandemic, people got paid to stay home from work, right? The government printed, what, $5 trillion worth of money, right? And so that kicked off what became a period of, like, very high inflation. And you know, the published number was 9% but I think a lot of people experience certain items that were a lot more than 9% like, for example, for sure, in 2022 when we bought a 286 unit property, you know, we were able to replace all the appliances inside of a unit in The kitchen, you know, for $1,800 and even today it's like $3,200 so that's a little bit more than 9% and so we had that. So we had the printing of money, we had inflation, we had variable rate debt. Why did people do variable rate debt? The first thing I'll say is there is a place for variable rate debt. But what happened in 2021 and 2022 is the fixed rate lenders, which are typically the government sponsored agencies Fannie and Freddie. They were still lending money, but because of their criteria for lending, if you would go with one of those loans, you would get like 50% leverage the shorter term lenders that would give you the three year loans, you can still get like 75 to 80% leverage. So the vast amount of people that were buying anything in 2021 and 2022 I mean, I'm not just talking about myself. I'm talking about people with 2030, 4050, 70,000 doors all over the country, they were buying with short term debt. And historically, short term debt performs at or better than long term debt. I mean, think about it, when you get a long term, 10 year fixed rate loan and multifamily you have prepayment penalties. You know, when the market's constantly going up like it did, from 2012 to 2022 you could get that fixed term loan. You could pay it off early, you could pay the seven figure prepayment penalty, and you could still make lots and lots of money, and that's what people were doing. So when you bake in the prepayment penalties on long term debt, you know short term debt is oftentimes the better option. Well, nobody saw the Fed raising rate 16 times in 12 months. And look, I don't care what anybody says, Nobody predicted it. If they had predicted it, they would be probably the richest person in the world right now, right nobody saw a comment like, there may have been some people that said, hey, yeah, this is going to happen, or this is going to happen. But what actually happened with the Fed rates over a very short period of time was unprecedented. Unprecedented means it never happened before. So it's not something you could anticipate or something anyone can model. Okay? And so what that did is most of us had what's called an interest rate cap, which is an insurance policy that if the rates go up too much, that yours is capped. But the problem with those rate caps is they're only good for like, two years, right? So we're buying these deals in 2021 and we're getting short term debt, which is a three year debt. And in two years, in 2023 the rate cap expires, and now the rates are 9% instead of 3% and when we bought the deal, the rate cap insurance was $40,000 and now it's a million dollars. And so you're in a very awkward, unfriendly financial situation. And it wasn't just that. So it wasn't just inflation, it wasn't just interest rates. And many of us sung belt markets, specifically Texas and Florida, which historically have been some of the best markets to invest in, because of migration and no taxes, and then landlord and business friendly environments. Well, these states also suffered a lot of named storms, with, you know, hurricanes and wind storms and hail storms and so in these markets, at the same time, we had rising rates. At the same time, we had massive inflation. Now we also have insurance rates doubling or even tripling in some occasions. And then the final thing was, during the pandemic, a lot of the multifamily projects that were in the middle of being built, these development projects, they all slowed down. People couldn't work. And so back in 2020, or after we're fully recovered from the pandemic, some of these markets, like Nashville and Austin and Dallas and Houston and Phoenix, they got deluged Keith with new supply coming on, like a disproportionate amount of new supply. So there's like five. Five things that contributed to multifamily being really tough in the last few years. And so it wasn't just people with short term debt that had challenges. It was probably just about anybody that bought a deal within an 18 month timeframe that I outlined before that just really experienced challenges, and some of those people are still in deals, right? And so let's just take a deal that's, you know, a $10 million deal with a $7 million loan. Well, that deal right now might be only worth 7 million, yeah, and that's the opportunity. So the owner that has that deal may get punched in the face, so to speak, you know, by the market, and they may lose their equity in that deal, but the borrower coming in, or the buyer coming in, like one of my mentees right now, had a deal that was listed at 11 million, and he's picking it up for seven, which is, like, at or below the current loan value. So one buyer group's loss is the new buyer group's opportunity, if that makes sense

Keith Weinhold 16:03

right? 100% there's nothing unusual at all about the mortgage rate levels that began to go higher about four years ago. The unusual part, and Brad has touched on it, is the rate of increase, with mortgage rates doubling or tripling in a short period of time, within about a year or so, but yeah, it's a great point. It's about more than the mortgage rates. It's about increasing insurance costs and increasing expenses of all types, like you talked about with the appliances there, and then, even if you were able to weather all that as an apartment building owner, with all of the supply coming on to the market, when supply exceeds demand, we know what happens to price, and we also know that you can't raise rents very much with all of this supply coming on the market, but the supply of new apartment buildings, that inflow, that wave, is beginning to die down, because builders got the memo quite a while ago that they need to stop building at such a fast pace in places like Florida and Texas and you know, Brad, there are a lot of asset classes that have been beaten up lately. We can always point to a few. You can look at Bitcoin or nfts or even commercial office space. Now those assets might bounce back, but they don't have to, because no human needs those things. But I expect apartments to bounce back because having a place to live is a primordial Maslow and human need. It's almost inevitable. In fact, shelter is at the base of Maslow's hierarchy of needs. So a bounce back has almost got to happen. Yeah.

Brad Sumrok 17:46

Look, it's becoming the big word right now in politics. Right is affordability. And so when you look at affordability, if you take a median priced home in this country of say, $400,000 I don't know if that's the actual median, but maybe it's around 400 420,000 100, $420,000 yes, to buy that home. And who's going to buy a $420,000 home? It's going to be a working class family making 60 to 70,000 a year, right? They could rent a median priced apartment unit for $1,800 a month, or they could pay a 20% or a 10% down payment on a $400,000 homes, and they need 40 to 80,000 down right, or maybe less, but they still need a down payment and that p i, t i, the principal, interest, tax and insurance is going to be around $3,100 okay, so there's a $1,300 per month gap, and that's a big, big gap for that working class family. And so where are they going to live? Like we're becoming more and more of a renter nation? Keith, and the statistics that I read say that only 27% of American families can even qualify to get a mortgage, yeah, on a $400,000 home. So we're becoming more and more and more of a nation of renters by necessity. And so the demographics like look, all markets are not equal. You got to know what's going on in your market. But there are markets, ie locations, geographies that have even a higher affordability gap. You know, some markets have a 2000 a month or a $2,500 a month affordability gap. So you're going to find more and more people renting in these markets.

Keith Weinhold 19:37

Yes, there is a premium to ownership opening up that gap, and that's why we have this wave of renters that's really already begun. In about the last year, the American homeownership rate has fallen from 66% to 65% 1% doesn't sound like much, but that already means that we have 1.3 million new renters. We're going to talk to Brad some more, including about. His apartment market forecast you're listening to get rich education. Our guest is apartment King. Brad sumrock, more when we come back, I'm your host. Keith Weinhold,

Keith Weinhold 20:09

flock homes helps you retire from real estate and landlording, whether it's one problem property or your whole portfolio through a 721 exchange, deferring your capital gains tax and depreciation recapture. It's a strategy long used by the ultra wealthy. Now Mom and Pop landlords

Keith explores how a shift in mindset can change the way you build wealth, why so many new landlords are entering the market, and what recent economic trends could mean for future rents.

You'll also hear how one Florida investor is navigating a changing housing landscape, and learn about a timely opportunity in one of the country's fastest‑growing real estate markets—all without needing to be a hands-on landlord.

Episode Page:

GetRichEducation.com/593

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, the risk of delayed gratification is denied gratification. There's a new wave of landlords. Wages are rising faster than both inflation and home prices. Learn what that's going to mean for rents. Hear the voices of five different Federal Reserve chairs, then GRE announces our biggest event of the year, and you're invited today on get rich education.

Corey Coates 0:32

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Keith Weinhold 1:16

mid south home buyers, with over two decades is the nation's highest rated turnkey provider, their empathetic property managers use your return on investment as their North Star. It's no wonder smart investors line up to get their completely renovated income properties like it's the newest iPhone headquartered in Memphis, with their globally attractive cash flows, mid south has an A plus rating with the Better Business Bureau and 4000 houses renovated, there is zero markup on maintenance. Let that sink in, and they average a 98.9% occupancy rate with an industry leading three and a half year average renter term. Every home they offer you will have brand new components, a bumper to bumper, one year warranty, new 30 year roofs. And wait for it, a high quality renter in an astounding price range, 100 to 150k GET TO KNOW mid south enjoy cash flow from day one at mid southhomebuyers.com that's mid southhomebuyers.com

Corey Coates 2:19

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 2:35

Welcome to GRE from the Adriatic Sea to the Atlantic Ocean and across 188 nations worldwide, I'm Keith Weinhold, and this is get rich education. Sometimes we all need a mindset reset, and this can include me. Sometimes. James clear, the author of atomic habits, says there are four types of wealth, financial wealth, which is money, social wealth, which is status, time, wealth which is freedom, and physical wealth, which is health. Be wary of jobs that seduce you with one and two but rob you of three and four. That is to say, be careful with jobs that seduce you with financial and social wealth but rob you of time and physical wealth that is definitely going to happen to you during your life, especially early in your working career. But many people, even most people, they don't do much about this. They just go on and on, selling their soul to their employer for decades. Sometimes paychecks aren't compensation. They're a bribe from an employer to give up your dreams early in your career, delayed gratification actually makes some sense, because you need capital formation, you need down payments, you need dry powder. That is totally fair and the time in your life for delayed gratification. But there's a point that most people miss, the point where delayed gratification quietly mutates into denied gratification. This is huge. Most people miss this inflection point. When is this point in your life? That's when I'll do it later becomes, well, I guess I never did it at all. They look up at what they've got at age 65 and realize that they have a respectable title. They still wear Dockers pants. They have a 401, K that they must start paying tax on, and knees that creak louder than. The front door. Compound Interest hardly outpaces taxes and inflation. That's just going to keep you in one spot, you know, and you're never going to get that time back. There is no do over there. So you need to get to the point where you can be more frugal with your time than your money. Younger people have a harder time adopting this mindset, and that's a little natural, because they have more time and less money. Sooner than later, you must desperately get financially free so that you can simply be your self workaholics, optimize income instead of assets, and you can't let that happen, because labor does not compound and capital does compound, your quality of life will exceed your cost of living when your life is funded by what you own, not by what you do that takes a different mindset. You can either be a conformer or you can build wealth when you invest in real estate that pays five ways. It's like what you're doing is buying future Tuesdays, where you never have to work again and then later, add on future Wednesdays, where you never have to work again because you got the compound leverage instead of the impotent compound interest. I mean, just consider your two and a half million dollar portfolio that is passively doing the same work as someone who sells 40 to 50 hours a week of their life away for 100k in yearly salary. All right, maybe you're thinking, Oh, that all sounds thought provoking, but if you're not engaged on that, it can sound airy and philosophical and even risky. It's sort of like, yeah, you're cueing the acoustic guitar music and slow motion images of someone pensively gazing at a sunset.

Keith Weinhold 7:12

All right, what is the concrete plan? It's not all about mindset. It only starts with mindset. You got to make that actionable. Well, we constantly provide concrete plans for you here on this show, and I've got another concrete plan for you toward the end of the show today. This harkens back to what I discussed with you seven weeks ago, seven episodes ago on the show. That's when I discussed the world's first billionaire, John D Rockefeller and his enduring quote from about 100 years ago, he who works all day has no time to make money. Yeah, that's the quote a little review. What you learned seven episodes ago is that Rockefeller meant, if you spend your life doing tasks, you're never going to rise high enough to own things that pay you for life. The bottom line here is that earning a living is a distinctly different activity than building wealth. That's what we're talking about here.

Keith Weinhold 8:14

Well, there is a new wave of landlords entering the market, and they are reshaping what owning rentals looks like. One survey by rental platform avail of nearly 2000 users. It's really influential. It found that 53% of landlords became landlords in the last five years. So you have a lot of new landlords with the most 17% of landlords entering the market in just the last year, most purchased a property specifically to rent it out, and 1/3 sort of backed into this business by renting out their former residence. Of course, some people want to rent out their former residence today, if they got locked into that sexy owner occupied three and 4% financing from 2022 and earlier, the survey went on to tell us with some really good takeaways here, 72% of landlords manage between one and four units, and this avail survey. I mean, it's just another one that shows that the majority of landlords operate small portfolios, classic mom and pop investors. That one's not too surprising. The top three reasons that landlords gave for entering the rental market, they're pretty interesting. The number one reason for getting into this at 41% of respondents is building long term wealth. Next 33% for generating passive income, and the third most popular one, it's a distant third, it is preparing for retirement at 13% so building long term wealth is the number one reason for getting into this, and that is the right reason. Them when it comes to ownership structure, 64% said that they own the property individually, whether that's through a single member LLC or in their own name, doing it, yeah, individually, rather than with a family member or a business partner. So really, the summary of this terrific, recent avail landlord survey is that if you're just getting started, you're not alone. A lot of people are most own properties solely in their own name, and the number one reason for doing it is to build long term wealth. Now there's another pervasive set of economic trends out there in the broader economy, but it's really a benefit for real estate investors, and that is the fact that wage growth has now outpaced consumer price growth for three years. Yeah, another way to say that is that wage growth has outpaced inflation for fully three years. Yeah, most people just aren't feeling it yet. So you might be taken somewhat aback by that, and why aren't people feeling that wage growth is faster than inflation, the pandemic inflation spike that was so huge, it was like getting hit with a freight train, and then someone tells you, good news, the train has stopped. Yeah, that's nice. You are still lying on the tracks, rubbing your ribs. That's because we're all still absorbing spiked prices for everything from a lumber two by four to a York Peppermint Patty, year over year, wages are up 3.8% and consumer inflation is 3% All right, so wages above inflation, that means things are getting a little more affordable, but both wages and inflation have grown faster than home prices, which have only grown about one and a half percent, and this is all per the BLS in the FHFA, so wage growth Being more than double home price growth. Well, that trend really makes properties more affordable, but historically, they're still not that affordable. Everybody knows that home prices soared until about 2023 that was the turning point, and now wages are in their catch up phase. All right, but what really matters to real estate investors is, when will this wage growth translate to rent growth, historically, big rent growth that lags big home price growth by about two to four years. So you have the big home price growth, big rent growth hits two to four years later, historically. Now, if that holds true, we should finally see substantial rent growth this year or next year. Rent growth has still been pretty soft in the one to four unit space, and even there are rent decreases in the overbuilt apartment space. Future income growth promises to make homes more affordable. Affordability has already improved, with mortgage rates hovering near three year lows. There's one problem, though, that most people overlook, and that is this wage growth has been skewed toward the higher income deciles, renters, especially workforce renters, they don't feel it until later. So this 3.8% wage growth, it's heavier for higher income people, and it's lighter for lower income people. I swear, when there are enriching economic trends, it always hits the higher income people first, and it doesn't trickle down until later. So if you as an investor, are positioned before the rent wave hits, you are surfing, and if you wait to feel it, you're swimming behind the boat. Higher wages should translate to higher rents in the next one to two years. And as far as some other forces, as we all know, the man occupying the oval office in the White House, the President, he wants lower rates. The current Fed Chair isn't so willing to do that. The next one, the one he appointed, Kevin Warsh, who arrives in May. He seems more receptive to lower rates, but it's gonna take a while. It all moves so slow. We have had 16 fed chairs before worsh over 112 years. And look how much of an econ nerd Are you? Are you as bad as me? These voices are in chronological order, and I can name each speaker.

Corey Coates 14:47

You're going to have to live with the fact that forecasts have a range of uncertainty, irrational exuberance.

Corey Coates 14:54

In my opening remarks, I'd like to briefly first review today's policy decision, but

Corey Coates 14:58

first I'll review recent. Economic developments in the Outlook, and we are well positioned to wait to see how the economy evolves.

Keith Weinhold 15:06

If you can name each of those speakers, I would love to give you a free property from gremarketplace.com but I can't quite swing that in order. Those voices are Paul Volcker. He served from 1979 to 87 he was known for crushing double digit inflation by jacking rates to near 20% it was painful medicine, but it worked the next one. Alan Greenspan sir, from 1987 to 2006 that was a long reign, almost 20 years. He oversaw the 90s economic boom, the.com bubble and the early housing bubble. Years so far, Greenspan is the only Fed chair that I have met in person. Then Ben Bernanke, he was the Fed chair from 2006 to 2014 he took the helm right before the 2008 financial crisis. He rolled out QE and emergency lending on an historic scale. In fact, he was nicknamed helicopter Ben because it's like he would print so much money that he just dropped it out of huge sacks, dollar bills in huge sacks, dropping them from an airplane, metaphorically, not literally. Then Janet Yellen, 2014 to 2018 she kind of continued this post crisis normalization, and she was the first woman to chair the Fed and then, of course, Jerome Powell serving from 2018 to 2026 he navigated the covid stimulus, ultra low rates. And then after that, the fastest rate hiking cycle in decades to fight inflation back in 2022 being the Fed chair is the most important job in this economy, and over the decades, there's been more of a movement of the fed into the public eye. You just hear about them more in the media than you used to. But like I touched on last week, it just still doesn't mean as much to real estate investors as a lot of people think, people sometimes look for someone else to come save them, but it's more about you and the choices that you make that's what means more housing supply and demand means more real estate investors have profited during every one of those Fed Chair reigns, which go back almost 50 years from Volcker to today, I think everybody knows that fed chairs don't control property prices, and they don't even control long term interest rates. What's a little paradoxical is that Trump has been vocal about how he wants more affordable home prices, yet at the same time he wants existing homeowners to have their home prices go up, those two things seem to be in tension. They're in conflict with each other. The only way you can possibly get both are through lower mortgage rates. But is he going to see later today you as a GRE follower, you don't have to wait for lower rates income, property still feels less affordable than it did five years ago, because it is that's real but here's the key distinction in what makes real estate investors different from owner occupied homeowners. Affordability isn't about the price of the property, it's about whether the property pays for itself and grows your net worth while inflation does the heavy lifting. Higher prices don't kill investors. Inaction during inflation does you're not buying a say, $350,000 property. You're controlling it with $70,000 while your tenant and inflation do the rest. We do not rely on hope or appreciation. We start with income tax benefits and debt pay down and then leverage appreciation typically happens as well. GRE only succeeds when investors close on properties that perform long term. One bad referral costs us years of trust, so we don't do that. The best question for you really isn't whether property is affordable. The question is whether owning an investment property is better than inflation compounding against you. That's the investor lens today.

Keith Weinhold 19:24

coming up next week on the show here, we're going to discuss apartments. It's been a truly be leaguered sector, where their prices have fallen 2030, and 40% in many markets. We've discussed apartments here on the show a lot before, like with Grant Cardone on episode 264, with Ken McElroy, countless times with me monologuing about apartments. And next week, we're going to talk to a multifamily educator who is known as the apartment King. Later on, a future show, we've got the return of the financial. Firebrand, and lately, the financial comedian Garrett Gunderson, a powerful speaker. That's definitely going to be interesting. As for today, you'll hear a first person account from a Florida resident about why he's moved to Florida and why he invests there. You've heard of this guy before. That's next. I'm Keith Weinhold. You're listening to Episode 593, of get rich education.

Keith Weinhold 20:26

Flock homes helps you retire from real estate and landlording, whether it's one problem property or your whole portfolio, through a 721, exchange, deferring your capital gains tax and depreciation recapture, it's a strategy long used by the ultra wealthy. Now Mom and Pop landlords can 721, the residential real estate request your initial valuation, see if your properties qualify@flockhomes.com slash GRE. That's f, l, O, C, K, homes.com/G. R, E,

Keith Weinhold 21:02

you know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program. When you speak to a freedom coach there, and that's just one part of their family of products. They've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre, or send a text. Now it's 1-937-795-8989, yep, text their freedom coach directly again. 1-937-795-8989,

Keith Weinhold 22:13

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personall

Keith looks at how a changing Federal Reserve leadership might shape the interest rate environment, then zooms in on what's really happening with homebuilders versus remodelers across the country.

You'll hear about a lesser-known strategy some investors are using to step back from day-to-day landlording while keeping their income, and then we head to Central Florida to explore why one fast-growing market is quietly becoming a hotspot for new-build rental properties.

Along the way, a longtime Florida builder joins the show to explain how they're creating affordable, investment-friendly homes and what kinds of rents and tenant demand they're seeing on the ground—plus a way you can learn more live if this opportunity fits your own portfolio plans.

Episode Page:

GetRichEducation.com/592

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE. I'm your host. Keith Weinhold, the naming of a new Federal Reserve Chair. Then are homebuilders in trouble today? There are a dwindling number of them, and their profits are down. I'll talk to a homebuilder. Listen to what amenities tenants want today, and it's interesting. We'll learn how low of a mortgage rate builders will give you. Now there's an opportunity here today on get rich education.

Corey Coates 0:30

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Keith Weinhold 1:14

mid south home buyers with over two decades as the nation's highest rated turnkey provider, their empathetic property managers use your return on investment as their North Star. It's no wonder smart investors line up to get their completely renovated income properties like it's the newest iPhone headquartered in Memphis, with their globally attractive cash flows, mid south has an A plus rating with the Better Business Bureau and 4000 houses renovated, there is zero markup on maintenance. Let that sink in, and they average a 98.9% occupancy rate with an industry leading three and a half year average renter term. Every home they offer you will have brand new components, a bumper to bumper, one year warranty, new 30 year roofs. And wait for it, a high quality renter in an astounding price range, 100 to 150k GET TO KNOW mid south enjoy cash flow from day one at mid southhomebuyers.com that's mid southhomebuyers.com

Speaker 1 2:17

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 2:33

Welcome to GRE from countersport Pennsylvania to Davenport Iowa and across 488 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education now more than ever, where you learn about personal finance and real estate investing matters. There's more AI generated content out there. This show is all flesh and blood me. There's also more clickbait content out there that says something like the housing market is about to have a price crash. No, it's not. They're just there to get short term attention. So your information source really matters today. New incoming Fed chair, Kevin Warsh, was recently named. He will replace the outgoing Jerome Powell on May 15. I want to tell you more about that in a moment. But first, just imagine if this scenario were to occur, say that we get a Fed chair that has to deal with really high inflation. And so what this Fed chair does is that he successfully brings inflation down, and he does that without triggering a recession that's called a soft landing. Well, you know what? That's exactly what Jerome Powell did the past three years. Yeah, that's what he's accomplished, and he doesn't get credit for it. He only gets a lot of criticism. Now this doesn't mean that I love Powell. I don't even know that the Fed should exist at all, but Powell got a lot of criticism for calling 2022, wave of inflation transitory, and being too late to respond to it. So he gets some credit here as his term of more than eight years winds down. Let's listen in to some of Jay Powell's recent comments about succession,

Speaker 2 4:23

you've obviously experienced a lot during your time as Fed chair, served under multiple presidents. I'm wondering what advice you have for whoever your successor might be.

Speaker 3 4:34

Honestly, I'd say a couple of things. One is, you know, stay out of elected politics. Don't get pulled into elected politics don't do it. And that's another thing. Another is that you know, our window into democratic accountability is Congress, and it's not a passive burden for us to go. To Congress and talk to people. It's an affirmative, regular obligation. If you want democratic legitimacy, you earn it by your interactions with the our elected overseers. And so it's something you need to work hard at, and I have worked hard at it so and the last thing is, you know, it's easy to it's easy to criticize government institutions so many ways. I will tell whoever it is you're about to meet the most qualified group of people you not only have ever worked with, you will ever work with and when you meet fed staff. And not everybody's perfect, but, but there isn't a better cadre of professionals more dedicated to the public well being than work at the Fed.

Keith Weinhold 5:43

Yeah. So to Powell's point, the next Fed chair, worsh, does champion fed independence, much like Powell has. That is a good thing that keeps America from turning into a banana republic that maintains a strong dollar. Warsh was actually a Fed Governor back during the 2008 global financial crisis, so he's got that experience when he comes in as Fed Chair in three months, he's widely expected to lower interest rates more than Powell did, much like the president wants. Kevin Warsh looks a lot like Michael Scott from the office. He has got to be less bumbling than him, though, overall, the effect on real estate and mortgage rates by shifting from PAL to worsh, I mean, that should be pretty mild. Maybe you'll see rates go a little lower than if pal had stayed and speaking of rates, wait till you see how low the mortgage rate is that our homebuilder guest is offering today. What's really happening with homebuilders now? How much trouble are they in? Homebuilders have largely been maligned. Overall. There are fewer homebuilders today in America than there were 20 years ago, and there are more remodelers than there were 20 years ago, fewer home builders, more remodelers, and that's for a few different reasons. Over the past couple decades, we just have substantially higher labor and material costs, stricter building and energy codes, higher interest rates, and that disproportionately hurts long duration construction projects. We've got zoning constraints and land constraints that make ground up development slow and uncertain and risky. So while the number of Home Builders in America is down, the number of remodelers are up, because America's housing stock is getting older. Its median age is over 40 years, and that creates constant demand for upgrades. Capital prefers faster, lower risk cycles. That's what remodels offer, and homeowners with locked in low mortgage rates choose to stay in place. And what does that make them do? That makes them renovate and remodel, not move. So this is why, compared to 20 years ago, you have fewer home builders and more remodelers. Today, that's per the NAHB and the Census Bureau and all these forces, they've resulted in a lower profit margin for homebuilders. Yes, homebuilder margin compression for a lot of the bigger builders, including DR Horton, just as you might guess in this cycle, their profits were greatest in 2022 and they have fallen since then. Higher mortgage rates came in, and builders had to lose profits by offering more incentives to entice buyers. You're going to learn more about that today and how it really spells quite an opportunity for you and I. When the final change in national home prices was tallied for the end of last year, they had risen in 16,500 zip codes. All right, that's 63% of America's zip codes, and prices were lower from a year earlier in the other 37% home price gains were concentrated in the Northeast and Midwest, and the story there continues to be too many buyers and not enough homes. In fact, over 85% of zip codes saw price growth in Illinois, Connecticut, Wisconsin and Indiana, slow, steady, stubborn, kind of like winter refusing to leave. Losses were predominant in the Sun Belt. Prices caught their breath there. There was price attrition in Florida, with 96% of zip codes, so nearly all of Florida, then California, 78% of zip codes had a price loss. Texas, 75% of them and Arizona, 73% the biggest pocket of opportunity appears to be in Florida. Florida property is on sale. And because real estate is local. A lot of times we talk here nationally, but to get to that local level, sometimes you have to dig in to a local market to really find out what's going on. We're going to do that today. Now, central Miami, Orlando and Tampa, they're not generally the spot for obtaining cash flow from long term rentals. I've identified an opportunity. We'll get into that with this Florida homebuilder shortly. It's kind of funny. You'll run into people that say they want opportunity, but what they really want is certainty. How it plays out, though, is that once the certainty arrives, the opportunity is gone, and that's how to think about Florida and maybe Texas and some of these other markets today that have had price attrition.

Keith Weinhold 10:48

Now, three weeks ago, here on the show, I discussed the 721 exchange for the first time. So I won't get into all those details again when it comes time for you to sell your investment property, the 721 can be the best way for you to cash out. Perhaps you've been investing in real estate for a while and you have turned get rich education into got rich education. How the 721 exchange works is they basically say you have a case where you're a rental property owner and you realize that you don't want the hassles of landlording anymore. Oftentimes, this can mean you're older and real estate investing already took you where you wanted it to take you in life's journey, but you still like the financial benefit that ownership gives you. What you can do is exchange your properties into a partnership and receive shares in that partnership. Now that's different than a 1031, exchange. That's where you trade up some of your property that you directly own for what's usually more and larger property that you directly own. Well, instead, here's the big deal with exchanging your properties into a 721, partnership. The rules stipulate that this is not a taxable event, and therefore you don't have to pay any capital gains tax or depreciation recapture. Now that you're an owner in the partnership, you still get some of the benefits of owning the property, like appreciation and cash flow and such, yet no management or landlording at all like you would have with a 1031 and with a 721 you get all these benefits across a greater number of properties and markets diversification because you're a fractional owner in the other properties that are in the partnership, not only your own, and when you eventually pass away, your shares are stepped up in basis and can be distributed equally to heirs and C It's surely easier for you to divide shares among, say, your three children, than it is to divide your 18 rental houses among three children Who are going to have different goals and varying degrees of financial savvy. So the 721, exchange is a great estate planning tool too. You will have this partnership that makes an offer to buy your property. You're exchanging them for partnership shares. There's a firm that does this called flock homes, and they have a certain Buy Box to be clear with the 721, exchange, you can basically trade your rentals for shares in a diversified, professionally managed Real Estate Fund. This means that you keep your hard earned equity defer capital gains and other taxes, and you still get access to steady income and long term appreciation without the hassle of landlord duties, and you can visit flockhomes.com/gre, and get a free valuation. Get an offer for your property, see if it fits their buy box and see how much they'll pay you. There's often no need to pay to fix up or stage the property for sale or pay agent commissions for a certain investor type. This really can be a rather life changing experience for you to liquidate some or all of your property have zero tax obligation and still enjoy income and appreciation. So again, what you can do is stop by flock homes.com/gre, that's F, l, O, C, K, homes.com/g, R, E, let's discuss the home building climate today.

Keith Weinhold 14:38

I'd like to bring in a premium Florida homebuilder guest to the show, Jim, because there has been more homebuilding in Florida such that some areas of the state have excess supply. And when you add that onto the fact that the hot pandemic migration to Florida has slowed such that home prices have made a rare dip in the state, that is why it. A timely topic. Jim, you're on GRE Welcome to the show. Keith, great to be here. Thanks for having me. Yeah, and we did the IRL thing in Colorado there a few weeks ago. That was great hanging out in person. You provide entry level new build homes, mostly in Central Florida. And these are properties that are conducive to real estate pays five ways. These are properties that investors chiefly buy as rentals. So just bigger picture, tell us about that overall experience over, say, the last five years, as the pandemic wound down,

Jim Sheils 15:35

yeah, as the pandemic wound down, obviously Florida had a lot of attention. Some of it, rightly so, some of it, I think a little more inflated and commercial attention getting thrown at it. And you know, the type of deals that you and I have always stayed away from were very popular in Florida. You know, we're talking really nice houses. Keith, beautiful, nice HOAs people got in in 2021 let's say, with those very low interest rates on a six or $700,000 home, but now they're realizing that it's not going up $100,000 a year as they thought. And when they try to sell it, well, people trying to buy in $700,000 home, they're not getting that low interest rate. And if these people try to hold it and rent it, well, it doesn't cash flow, so it breaks one of those rules. It's not putting money in people's pockets, taking it out. And so we're seeing there was a large distribution of those types of houses around Florida. And then there were some builders like us that really focused on what was the most needed, and that was workforce housing. Now workforce housing, though, Keith, as you know, a lot of the builders don't want to build it. Why? Let's be straight. It's because the margins are lower right. But as you know, with me and my partner Chris, it was always let's make less margin and do more volume. That was always our model, and that was the area of the market where we felt we could build it right, we could get it financed right, and we could manage it right to hit the five things. And so we're seeing today, post pandemic, there are still key markets where the population growth is still the highest, coming into Florida, the prices are still the lowest, and there is a shortage of this type of workforce housing.

Keith Weinhold 17:11

Yes, you've identified a geography within Florida that have some of these characteristics like you're talking about. Tell us more about that region.

Jim Sheils 17:20

Yeah, we call it the Ocala region, so Central Florida, just west of Orlando. Right now, for example, u haul does their U haul top markets rankings every year? So where are the most U haul trucks going to now, you don't want to be on their side where they're coming from, Keith, because that's obviously the opposite. But for the second year in a row, the greater Ocala area has been the number 1u haul destination place in the country. So there's still a ton of population growth going there. Central Florida, I'm not going to say it sat out the growth during the pandemic that a lot of areas of Florida did, but it was starting at such a low basis with such a small amount of attention that today, even when people say, oh gosh, like I just said, house is 600 700 800,000 we're building new construction single family homes for under 300,000 the 270s a lot of the time. And we're building duplexes sometimes for under 400,000 and a lot of our you know, investors coming from the west coast. Say, are these fully built? Are they? But again, Central Florida has had a great affordability. Remain intact. It has a large population going in. There is a ton of job resource just blowing up in the area. And as you know, these are the things we look for. So we bought a lot of lots there. I'm gonna give credit to my partner, Chris. He saw calla more than I did, and we bought a lot of lots there in 2020 so before all the rises. So we got into the land basis, right? So that means we can build them at a great price. Our land basis is low, and that obviously passes along to our clients. And again, Central Florida is a perfect match for our goal. Because, you know, our goal is workforce housing, that cash flows on day one. But also nothing wrong with fixer uppers. I own a lot. I used to do a lot, but the new construction seems to have a little bit more of a less involvement, which it seems like a lot of our clients want.

Keith Weinhold 19:15

That was really prescient, as it turned out, for your business partner, Chris there to gobble up a lot of that land in 2020 before prices went soaring. And this is one reason why you can do things like offer a duplex for less than 400k That's a new build, which has some people saying like, does that thing include a roof even? But it surely does. These are very good quality livable properties. And the reason I have you here, Jim is because you are rare. There are fewer builders today than there were in decades past, and also those that build to your point earlier. They only want to build higher end properties, not the more affordable ones that you offer. We'll get more details on your price points and what properties. Products you offer later. But yeah, we have more remodelers today and fewer builders. And though it's a few years old, I found it interesting that census statistics

Keith shares how a recent trip to Colorado Springs and a changing commission landscape reveal what really matters for real estate investors now

From there, the show dives into the three levers investors truly control—leverage, operations, and relationships—before welcoming lender Caeli Ridge to break down the major mortgage options for investors.

You'll hear how different loan types fit different strategies: from your first conventional "golden ticket" loans, to DSCR loans based on property income, to short-term fix-and-flip and bridge loans that prioritize speed and flexibility.

The episode then moves into how more advanced investors can scale beyond 10 doors, navigate debt-to-income and tax strategy, and even approach financing for short-term rentals—all while highlighting why having the right lending partner and long-term plan can make a big difference to your results.

Episode Page:

GetRichEducation.com/591

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Follow us on Instagram:

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold with new ways to think about your life through goals momentum in the real estate market. Then learn about various mortgage loan types, conventional DSCR, fix and flip, bridge loans, short term rental loans and more. Knowing which loans to use can save you millions and learn the fatal mortgage mistakes you must avoid today on get rich education.

Corey Coates 0:29

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads and 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Speaker 1 1:14

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:30

Welcome to GRE from Winnebago, Minnesota to Winnipeg, Manitoba, and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education, the voice of real estate investing since 2014 before we get into the mortgage discussion, where we'll discuss five or 10 different investor loan types and their various pros and cons, which could save you millions over the course of your life. I shared with you that I traveled to Colorado A couple weeks ago, for a goals retreat hosted by the real estate guys, top notch event, I spent extra time there in Colorado Springs, because I find it really livable, and I spent five hours with a local realtor there, one day out and about visiting properties in the area I'm potentially looking for a home or a second home. And by the way, how is this for a price range? The realtor wanted to know what my Buy Box is, and since I'm just learning the Colorado Springs market, I told him I'm willing to spend between 400k and 1.2 million on the property, yeah, pretty wide range, a mile wide. Fortunately, my other Buy Box criteria are more narrow and specific, and I have got to say, I'm surprised at how low the area's home prices are. I thought they'd be higher. Interestingly, before touring homes, my buyer agent wanted me to sign a six month exclusive representation agreement. Fair enough, that's standard stuff. It was on the agreement, though, that I as the buyer pay a 3% commission up on the purchase, and the seller would presumably pay the other 3% to make up that total 6% commission for the agent compensation. Well, historically, the seller paid the entire 6% and this, of course, goes back to the NAR settlement, and that ruling that became effective in August of 2024 you probably remember this, and I talked about it on the show back then, and how it's not really that big of a deal, especially to investors like us, because at GRE marketplace and with our GRE investment coaching, it's a direct model. There's zero commission on either side, and then you, in turn, get some of those savings, but out in the larger world and in the owner occupant world. Well, that rule change that started a year and a half ago. It means that sellers are no longer required to pay the buyer's agent. Instead, the fee is now negotiable between buyers and their agent. The other change is that property listings no longer display the buyer agent's commission offer. But here's what's interesting in practice, and what really ends up happening in the end, in most cases, is that the seller still pays the full commission and compensates both agents that full 6% sometimes it's 5% instead of six buyers and buyer agents, they still operate under the seller pays. And that's largely because that has just been the norm. It's what's seemingly always been done. It's what buyers are used to. And the reason that that often persists. Is because the seller is the party in the transaction that has that thick equity in the property, deep equity, and buyers are the ones often just trying to scrape together whatever they can for a down payment and closing costs. Buyers are not going to be able to come up with another 15k for an agent commission when they're buying a 500k property, that's 3% especially today, this is true because American homeowners the seller then still have record equity positions of about 300k an all time high. Nearly half of mortgaged homes are considered equity rich. What does equity rich mean? It means that the loan balance is less than half of the home's value, yeah, the seller has the means to pay the full commission. So the point is, in practice, the seller, yeah, still pays that full five to 6% commission in the overwhelming majority of cases, and the buyer pays nothing. And if that does change, it's going to take a long time. You know, a lot of these evanescent real estate stories that people think are going to have some seismic impact. It rarely does, like this erstwhile NAR ruling or the 50 year mortgage proposal or banning big institutions for buying more single family rentals. You know, this stuff is like one little baseball sized asteroid striking an entire planet. I mean, it's like a barely discernible impact. Real estate is anchored in one place like Jabba the Hut. It is solid. These stories are interesting, but they're not impactful.

Keith Weinhold 6:52

Instead, I've mentioned it before. What are three things you control in real estate that really matter. And these are evergreen things. First, it's, how many dollars are you leveraging? That's where your wealth is going to come from. In fact, we're going to discuss that today with mortgage loan types. Second, what's the efficiency of operations on your existing properties? And thirdly, what is the quality of your relationships? And actually, we're addressing the third one today too, talking to a lender that you could make part of your team. You can control these three things. They're unyielding, they're evergreen, they're long term, and they all have gratitas and impact those three things, leverage operations and relationships. Now my agent drops me off and picks me up from my hotel here at the Broadmoor in Colorado Springs. This was also the event hotel for the goals retreat. I just extended my stay to hang out in the area. Look at real estate, do some climbing on Pikes Peak. Pro tip for you on hotel room rates, talk to a human being before I booked my stay, I called the front desk and asked them if they could extend the attractive event room rate to more nights on my extended stay. And they agreed. You might have heard of the Broadmoor. It is well known. It's been here for more than 100 years, and it is such a fine place to stay. Let me tell you about this special piece of real estate. In fact, I've thought it through, and I will now hereby proclaim that it is the finest us hotel experience that I've ever had in my life. I say us because I stayed at an amazing place in Dubai. But what makes the Broadmoor stand alone? It's the details and the service. A lot of hotels are nice, but this is on a different level. And I don't say this to brag, and this is because you probably can afford to stay here, yeah, like I have. You might have paid more elsewhere in your life for a lesser hotel, although I am here in the low seasons. Okay, now, sure, you've got views of the Rockies and a man made lake and waterfall and even a beautiful chandelier in my hotel room. The thing that sets it apart, though, is you have this service that feels old world and not corporate. That's what makes the difference. The Broadmoor is horse themed, since horses are a symbol of the American West. There are about 800 rooms here. It's kind of like a self contained adult Disneyland championship golf courses, a world class spa, even an outdoor lap swimming pool like that has lanes that I swam in one morning for. Fine dining, casual dining, access to hiking, fly fishing, even falconry, zip lines, tennis, pickleball pools. Take the cog railway to the Pikes Peak, Summit. Okay. Now, other nice hotels have attractions that are sort of like that, but when I rave about the service, it's the little things they are knocking on my door before 10am to come in and clean the room. And you know how so commonly, when you first check into your hotel room and you look in the closet, there are not enough clothing hangers, and they're all like stupidly mismatched. These all match. They're all nice wood, and there are plenty of them. So I'm talking about these details. I'm telling you. I had dinner at one of the broadmoor's restaurants the other night. I just happened to take a close look at the tag on the napkin. Sure enough, it is made in Italy. I mean, jeez, no detail is overlooked at this stellar place. In fact, here's what I'll do. You know, I'll just completely stop my Colorado Springs home search right now. Instead, I'm going to stop down by the Broadmoor front desk, tell him to give me some moving boxes, because I'm moving into the Broadmoor and I'll be here for the next decade. Start forwarding my mail here and everything. And hey, at least I was courteous enough to give them notice. I can't stay here too long, or my standards will be rising faster than my net worth. Yeah, yeah. Can't go to sleep with a mint on your pillow every night, I suppose.

Keith Weinhold 11:38

Now, the reason I came here now is to attend that aforementioned goals retreat, and let me take all the time and all the resources that I put into being here and distill them into just a few of the most salient takeaways for you. Goals should be smart, strategic, measurable, actionable, relevant and time based, they must be written down. Now, how would you describe yourself to somebody else that didn't know who you were? Write that down next. What do you think your reputation is? How would others describe you? Write that down now that you can see how you describe yourself and how others describe you, you can see that there's a gap there. That gap is what you need to work on. I learned that goal should be written in the present tense, not the future tense. I did not know that before. For example, say it is January 1, 2035, and I own $5 million in rental property. That's an example of how you would do that. So take future events and write them in the present tense. Other questions at the goals retreat that got really introspective are, what are you really going to do with your life? And write down that answer. Sheesh, that is tough. And if you think that's a hard question for you to ask of yourself, the next one is even harder. It's simply why? Why is that where you're going with your life? And then write that down? I mean, would you answer questions like this for yourself? And you really think about it, that can occupy a new segment of your entire headspace. It is a big cognitive load, and a last one to leave you with is to dream not just big, but gigantic. Get it out there, write down a dream that interests you, but it's so grandiose that you're actually embarrassed to tell someone about this stretch dream, for example, for me, it's the first person to walk on another planet. No human has ever done that, and this would most likely happen on Mars. See, this is so grand that is sort of embarrassing for me to even share that with you. It almost makes you sound Loony, like I would have to learn so many new skills to travel to and walk on Mars. But you should write down a bunch of other goals too. You're sort of brainstorming on goals, attainable goals. Recall that is the A in the SMART goals acronym, you want to write down a bunch of attainable ones, not just that stretch one. So for attainable ones, one of them is for me to become the highest man on earth. To give you an example. And I attempted that goal two years ago, and I failed. I told you about that at that time. But see now, compared to my embarrassing stretch goal of walking on Mars, the highest man on earth feels attainable, I know what it takes to achieve it, and it's worth doing, ah, but it's a grind to get there, yet it would be worth it. Those are some quick take. Ways from the real estate guys goals retreat while on stage the event host Robert helms he took a minute respite from the goals material, and he recognized the fact that, as he calls it, the four OG real estate podcasters are all in the same room. One of them is helms himself, and now I feel like the other three are all older and doing it longer than me. I was one of the four that he mentioned. But you know, there is only one podcast that was mentioned from stage, and that is that Robert helms told the audience that they should be listening to the get rich education podcast. That was a nice thing to say, and he is always a gracious giver.

Keith Weinhold 15:45

Next, we're talking about four major loan types, conventional DSCR, fix and flip and then bridge loans. When we discuss the first two parts of it could sound repetitive, but you'll see why we do this, because then you'll be able to compare it to nichey loan types that we discuss, for example, the speed of a bridge loan, where you can get funded in just one week, compared to a slower conventional loan. The mortgage landscape changes. I still remember how in 2012 we had still somewhat freshly emerged from the global financial crisis, and back then, you could only get four conventional loans, four rental properties, not 10 like you can today, 20 married. So get your loans while you can, you probably won't always be able to get 10 loans. We'll start with loan types that are more for beginners, and then we'll get to advanced material. Let's welcome back one of our favorite recurring guests.

Keith Weinhold 16:54

You can make millions more throughout your life by understanding mortgage loans. This is key, and today it's the return of the woman that's created more financial freedom through real estate than any other lender in the entire nation, because she's the president of ridge lender group. Hey, it's time for a big welcome back to the incomparable, yet somehow still so approachable Chaley Ridge

Caeli Ridge 17:16

my Keith, thank you for having me. I love being here. I love what you're doing. It's my pleasure, sir.

Keith Weinhold 17:23

And our followers, our listeners, have been approaching you since 2015 you're one of the longest running guests, truly one of the OGS around here at GRE and now Caeli, before we discuss loan types. You know, we don't really talk politics on this show rather policies, and we're in the midst of a presidential administration that often, in the name of the word affordability, is trying to supremely shake things up in the housing market. Help us dissect what matters and what won't.

Caeli Ridge 17:58

I have found that at least as it relates to current administration, whoever that might be, I wait for the buzzwords or the taglines to become the actual policy. Like you said, That's a good point in this case. You know, you've got things floating around, like the 50 year mortgage cutting off the hedge fund guys and that kind of thing. Whether or not, those things come to fruition. I'm happy to give my opinion on them. I do not think that it's going to move the needle much for the people that you and I serve with regard to I mean, just taking them one at a time, I don't think that the 50 year is going to come to fruition. Just first and foremost, if it did do, I think it would be a good idea for a homeowner, probably not, but for an investor, maybe if there's some way that we can keep our payment lower, given the maturity date of a mortgage for an investment property is usually about five years. I mean, I know that this is a 30 year fixed mortgage, but statistically speaking, the average shelf life of a non owner occupied mortgage is about five years. So getting a 50 year amortization, if that were going to reduce the payment, I don't think is a bad thing for an investor, however, and this may get a little bit technical for the listeners, so I apologize in advance if we were to go to a 50 Year am the adjustments, something called, and you and I have talked about this before, something called an llpa, that stands for loan level price adjustment, I think would be such that it could end up defeating the purpose of having the longer term amortization, because I think the interest rates would be higher and I think they may offset so that was a long way to say. One, I don't think it's going to happen. I don't think it's actually going to get to its final resting place. And two, would it be a good idea for investors, yeah, I think it would be worth considering if it kept the payment lower. Okay, that's that as the other piece to cutting off the hedge funds, the big, you know, BlackRock, some of the big players, and giving them access to the residential housing and first right of infusion or etc, because they've got such deep pockets. You. It's such a small amount to what our individual investors are going to have access to that I don't think that that moves the needle either. So I don't know if I'm answering the question, except to say anything that they're going to tout, I would wait for it to actually become written in stone and pass by the rest of the powers that be before I would get excited about or concerned about any of it.

Keith Weinhold 20:21

This is pretty parallel with what I've been telling our listeners. All these things seem to make splashy news, but I haven't seen anything that's going to make a deep impact yet, whether it's the 50 year mortgage, which probably won't even come to fruition, or if it's doing these mortgage bond buy downs in order to bring more liquidity into the market and bring rates down, or if it sees any of these other things bein

Keith challenges the usual "overpopulated vs. underpopulated" debate and shows why that's the wrong way to think about demographics—especially if you're a real estate investor.

Listeners will hear about surprising global population comparisons that flip common assumptions.

Why raw population numbers don't actually explain housing shortages or rent strength.

How household formation, aging, and migration really drive demand for rentals.

Which kinds of markets tend to see persistent housing pressure—and why the US has a long‑term demographic edge.

You'll come away seeing population headlines very differently, and with a clearer lens for spotting where future housing demand is most likely to show up.

Episode Page:

GetRichEducation.com/590

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE. I'm your host. Keith Weinhold, is the world overpopulated or underpopulated? Also is the United States over or underpopulated? These are not just rhetorical questions, because I'm going to answer them both. Just one of Africa's 54 nations has more births than all of Europe and Russia combined. One US state has seen their population decline for decades. This is all central to housing demand today. On get rich education

Keith Weinhold 0:36

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Speaker 1 1:21

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:31

Welcome to GRE from Norfolk Virginia to Norfolk, Nebraska and across 188 nations worldwide, you are inside. Get rich education. I am the GRE founder, Best Selling Author, longtime real estate investor. You can see my written work in Forbes and the USA Today, but I'm best known as the host of this incomprehensibly slack John operation that you're listening to right now. My name is Keith Weinhold. You probably know that already, one reason that we're talking about underpopulated versus overpopulated today is that also one of my degrees is in geography and demography, essentially, is human geography, and that's why this topic is in my wheelhouse. It's just a humble bachelor's degree, by the way, if a population is not staying stable or growing, then demand for housing just must atrophy away. That's what people think, but that is not true. That's oversimplified. In some cases. It might even be totally false. You're going to see why. Now, Earth's population is at an all time high of about 8.2 billion people, and it keeps growing, and it's going to continue to keep growing, but the rate of growth is slowing now. Where could all of the people on earth fit? This is just a bit of a ridiculous abstraction in a sense, but I think it helps you visualize things. Just take this scenario, if all the humans were packed together tightly, but in a somewhat realistic way, in a standing room only way, if every person on earth stood shoulder to shoulder, that would allow about 2.7 square feet per person, they would sort of be packed like a subway car. Well, they could fit in a square, about 27 kilometers on one side, about 17 miles on each side of that square. Now, what does that mean in real places that is smaller than New York City, about half the size of Los Angeles County and roughly the footprint of Lake Tahoe? So yes, every human alive today could physically fit inside one midsize us metro area. This alone tells you something important. The world's problem is certainly not a lack of space. Rather, it's where people live and not how many there are. So that was all of Earth's inhabitants. Now, where could all Americans fit us residents using the same shoulder to shoulder assumption, and the US population by mid year this year is supposed to be about 350,000,00349 that's a square about five and a half kilometers, or 3.4 miles on each side. And some real world comparisons there are. That's about half of Manhattan, smaller than San Francisco and roughly the size of Disney World, so every American could fit into a single small city footprint. And if you're beginning to form an early clue that we are not overpopulated globally, yes, that's the sense that you Should be getting.

Keith Weinhold 5:01

now, if you're in Bangladesh, it feels overpopulated there. They've got 175 million people, and that nation is only the size of Iowa. In area, Bangladesh is low lying and typhoon prone. They get a lot of flooding, which complicates their already bad sanitation problems and a dense population like that, and that creates waterborne diseases, and it's really more of an infrastructure problem in a place like Bangladesh than it is a population problem. Then Oppositely, you've got Australia as much land as the 48 contiguous states, yet just 27 million people in Australia, and only 1/400 as many people as Bangladesh in density. Now we talk about differential population. About 80% of Americans live in the eastern half of the US. But yet, the East is not overpopulated because we have sufficient infrastructure, and I've got some more mind blowing population stats for you later, both world and us. Now, as far as is the world overpopulated or underpopulated, which is our central question, depending on who you ask and where they live, you're going to hear completely different answers. Some people are convinced that the planet is bursting at the seams. Others warn that we're headed for a population collapse. But here's the problem, that question overpopulated or underpopulated, it's the wrong question. It's the wrong framing, especially if you're into real estate, because housing demand doesn't respond to total headcount or global averages or scary demographic headlines. Housing demand responds to where people live, how old they are, and how they form households. And once you understand this, a lot of things suddenly begin to make sense, like why housing shortages persist, why rents stay high, even when affordability feels stretched, why some states struggle while others boom, and why population headlines often mislead investors.

Keith Weinhold 7:20

So today I want to reframe how you think about population and connect it directly to housing demand, both globally and right here in the United States. And let's start with the US, because that's probably where you invest.

Keith Weinhold 7:33

Here's a simple fact that should confuse people, but usually doesn't, the United States has below replacement fertility. I'll talk about fertility rates a little later. They're similar to birth rates, meaning that Americans are not having enough children to replace the population naturally and without immigration, the US population would eventually shrink, and yet in the US, we have a housing shortage, rising rents, tight vacancy and a lot of metros and persistent demand for rental housing, which could all seem contradictory. Now, if population alone determine housing demand, well, then the US really shouldn't have any housing shortage at all, but it does so clearly, population alone is not the main driver, and really that contradiction is like your first clue that most demographic conversations are just missing the point. Aging does not reduce housing demand. The way that people think a misconception really is that an aging population automatically reduces housing demand. It does not, in fact, just the opposite. If a population is too young, well, that tends to kill housing demand, and that's because five year old kids and 10 year old kids do not form their own household. Instead, what an aging population often does is change the type of housing that's demanded, like seniors aging in place, some of them downsizing. Seniors living alone. Sometimes after a spouse passes away, others relocating closer to health care or to family. So aging can increase unit demand even if population growth slows. So already, we've broken two myths here. Slower population doesn't mean weaker housing demand, and aging doesn't mean fewer housing units are needed. Now let's explain why. Really, the core idea that unlocks everything is that people don't live inside, what are called Population units. They live in households. You are one person. That does not mean that your dwelling is then one population unit. That's not how that works. You are part of a household, whether that's a house a Household of one person or five or 11 people, housing demand is driven by the number of households, the type of households and where those households are forming, not by raw population totals. So the same population can have wildly different demand. Just think about how five people living together in one home, that's one housing unit, those same five people living separately, that is five housing units, same population, five times the housing demand. And this is why population statistics alone are almost useless for real estate investors, you need to know how people are living, not just how many there are. The biggest surge in housing demand happens when people leave their parents' homes or when they finish school or when they start working, or you got big surges in housing demand when people marry or when they separate or divorce. So in other words, adults create housing demand and children don't. And this is why a country with a youngish, working age population, oh, then they can have exploding housing demand. A country with high birth rates, but low household formation can have overcrowding without profitable housing growth. So it's not about babies, it's about independent adults, and what quietly boosts housing demand, then is housing fragmentation. Yeah, fragmentation. That's a trend that really doesn't get enough attention, and that is the trend, households are fragmenting, meaning more single adults later marriage, like I was talking about in a previous episode. Recently, higher divorce rates, more people living alone and older adults living independently, longer. Each one of those trends increases housing demand without adding any population whatsoever. When two people split up, they often need two housing units instead of one, and if you've got one adult living alone, that is full unit demand right there. So that's why housing demand can rise even when population growth slows or stalls for housing demand. What matters more than births is migration. And another key distinction is that, yes, births matter, but they're on somewhat of this 20 year delay and migration matters immediately, right now. So see, when a working age adult moves, they need housing right away. They typically rent first. They cluster near jobs, and they don't bring housing supply along with them. They've got to get it from someone else. Hopefully you in your rental unit.

Keith Weinhold 12:57

This is why migration is such a powerful force in rental markets, and you see me talk about migration on the show, and you see me send you migration maps in our newsletter. It's also why housing pressure shows up unevenly. It gets concentrated around opportunity. If you want to know the future, look at renters. Renters are the leading indicator, not homeowners and not birth rates. See renters create housing demand faster than homeowners, because renters form households earlier. They can do it quickly because they don't need down payments. Renters move more frequently and immigration overwhelmingly starts in rentals, fresh immigrants rarely become homeowners, so even when mortgage rates rise or home purchases slow or affordability headlines get scary, rental demand can stay strong. It's not a mystery, it's demographics. So births surely matter, but only over the long term. It's like how I've shared with you in a previous episode that the US had a lot of births between 1990 and 2010 those two decades, a surge of births more than 4 million every single one of those years during those two decades, with that peak birth year at 2007 but see a bunch of babies being born in 2007 Well, that didn't make housing demand surge, since infants don't buy homes. But if you add, say, 20 years to 2007 when those people start renting, oh, well, that rental demand peaks in 2027 or maybe a little after that, and since the first time, homebuyer age is now 40. If that stays constant, well, then native born homebuyer demand won't peak until 2047 so when it comes to housing demand, the important thing to remember is migration has an immediate effect and births have a delayed effect.

Keith Weinhold 15:02

and I'm going to talk more about other nations shortly, but the US has two major migration forces working simultaneously, domestic and international migration. I mean, Americans move a lot, although not as much as they used to, and people move for jobs, for taxes, for weather, for cost of living and for lifestyle. So this creates state level winners and losers, and Metro level housing pressure and rent growth in those destination markets and national population averages totally hide this. So that's domestic migration. And then on the international migration. The US has a long history, hundreds of years now on, just continually attracting working age adults from around the world. This matters immensely, because they arrive ready to work, and they form households quickly. They overwhelmingly rent first. They concentrate in metros, and this props up rental demand before it ever shows up in home prices. And this is why investors often feel the rent pressure first those rising rents.

Keith Weinhold 16:17

I've got more straight ahead, including Nigeria versus Europe, and what about the overpopulation straining the environment? If you like, episodes that explain why housing behaves the way it does, rather than just reacting to the headlines. You'll want to be on my free weekly newsletter. I break down demographics, housing, demand, inflation, investor trends and real estate strategy in plain English, often complemented with maps. You can join free at greletter.com that's gre letter.com

Keith Weinhold 16:53

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Keith Weinhold 17:54

you know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom, family investments.com/gre, or send a text. Now it's 1-937-795-8989Yep. Text their freedom coach directly again. 1937795, 1-937-795-8989,

Keith Weinhold 19:05

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Chris Martenson 19:37

this is peak prosperity. Is Chris Martinson. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.

Keith Weinhold 19:53

Welcome back to get rich Education. I'm your host, Keith Weinhold, and this is episode 590 yes, we're in my Geography wheelhouse today, as I'm talking human geography and demographics with how it relates to housing, while answering our central question today is the world and the US overpopulated or underpopulated? And now that we understand some mechanics here, let's go global. Here's one of the most mind bending stats in all of demographics. Are you ready for this? When you hear this, it's going to have you hitting up chat, GPT, looking it up. It's going to be so astonishing. So jaw dropping. Every year, Nigeria has more births than all of Europe plus all of Russia combined. Would you talk about Willis?

Keith Weinhold 20:47

Yeah, yes, you heard that, right? Willis, that's what I'm talking about. Willis. The source of that data is, in fact, from the United Nations. Yes, Nigeria has seven and a half million births every year. Compare that to all of Europe plus Russia combined, they only have about 6.3 million births per year. So you're telling me that today, just one West African nation, and there are 54 nations in Africa. Just one West African nation produces more babies than the entire continent of Europe, with all of its nations plus all of Russia, the largest world nation by area. Yes, that is correct. One country in Africa produces more babies every year than France, Germany, Italy, Spain, the UK, all of Europe, including all the Eastern European nations, and all of Russia combined. This is a demographic reality, and now you probably already know that less developed nations, like Nigeria have higher birth rates than wealthier, more developed ones like France or Switzerland. I mean, that's almost common knowledge, but something that people think about less is that poorer nations also have a larger house

Keith Weinhold breaks down how recent presidential housing policies could influence real estate investors and everyday homebuyers.

Then he walks through four different ways to eventually exit your investment properties—including a little-known strategy most investors have never heard of—so you can start thinking about how you'll one day harvest your gains, potentially with minimal or no taxes, while still preserving your wealth and flexibility.

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Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE. I'm your host. Keith Weinhold, the presidential administration has made some weighty decisions that could affect the real estate market for years. Then when it's time for you to sell your investment property, there are some smart ways to do it and some big mistakes to avoid. We're talking about four options for your real estate exit strategy, including the little discussed 721 exchange today on get rich education.

Keith Weinhold 0:32

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Russell Gray 1:18

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:28

Welcome to GRE you're inside one of America's longest running and most listened to shows on real estate investing. This is Get Rich Education. I'm your host. Keith Weinhold, if you're working for the weekend, then you had better examine your Monday to Friday and start investing for leverage in income that's generated today. The good news is that down the road, when it comes time for you to sell your investment property, hopefully, after decades of handsome profits, even if that is years away, there are a lot of good options for you, including multiple ones that are tax deferred and effectively tax free. I'll discuss that later today, what we know, and what history has proven, is that savers lose wealth, stock investors maintain wealth, real estate investors build wealth. And I contend that within the discipline of real estate, being the investor is the best job of all of them, because, look, realtors rarely build wealth. Property managers that don't actually own the real estate, they also rarely build wealth. And the people on your maintenance team, they don't build wealth either. Now, as much as we might appreciate all these service professionals, I mean, I sure do this is not meant to disparage them. I'm trying to help you pick the right lane in real estate. Know that you're doing the right thing. Do the right thing before you do things right. By their own admission, the National Association of Realtors, the NAR they will tell you that the median gross income for a realtor is. Do you want to guess? Any guess as to what the median gross income for a realtor is? It is $58,100. that's it.

Keith Weinhold 3:37

And realize that's the figure being reported by the trade organization that represents the industry too licensed sales agents. Median income that's even lower. It is $41,700 also per the NAR I see myself realtors that have been in business 20 years, 30 years, 40 years, and all that time, they have never bought a single investment property for themselves. Instead, a lot of them spend their entire career helping other people get rich while they never get on the treadmill. But do you know what is even crazier to me, crazier than that, it's the number of people that manage properties, including some of my own property managers that I hire, and they don't own any investment real estate themselves. And I think that's crazy, because managers are doing what is one of the toughest jobs in real estate, always having to walk that tightrope, arbitrating between the property owner and the tenant, and as a result, often pleasing nobody. They're sort of like the football referee, the baseball umpire, the property manager they have to deal with The problem tenant. The manager has to bug the tenant to collect the late rent, and then your maintenance people. You know, I just met up with a contractor that's putting new flooring in one of my rentals. He's got a sense of humor, and he wore this great t shirt that says, I'm here because you broke it. I love that. But now his compensation isn't too shabby, but he's trading his time for dollars, and the income stops when his work stops. The lesson is, be the asset owner.

Keith Weinhold 5:35

Now this presidential administration has shaken up a lot of policies, good or bad we've got a bunch of new directives centered on the housing market. And really, this shouldn't come as any sort of surprise, since be mindful, the current White House occupant is a long time New York City Real Estate Investor, some of the more recent weighty moves that can affect you are banning institutional investors from buying single family homes that they turn into rentals, and the other one is a $200 billion bond purchase program aimed at reducing mortgage rates. Okay, whether those two things happen or not, it's good to look at their effect, how they move a real estate market, because when you understand the effects, then you learn a lesson, even if you're listening to this episode 10 years from now, the move to ban institutional investors. We're talking about conglomerate groups like Blackstone and invitation homes. The move to ban them from buying single family rentals is to try to reduce the demand and therefore, hopefully lower the price of single family homes in order to help affordability. Okay, that could work in concept. But here's the other thing that it does, there would be fewer rentals available on the market, because most institutional investors do buy those build to rent properties, that's what they're looking to acquire. So it's sort of what most any real estate investor would want. They would get higher rents and maybe some somewhat lower purchase prices, or at least a lower appreciation rate. But this whole move to ban institutional investors, that is mostly a nothing burger, that's all we're talking about here. And here's why you cannot undo the institutional purchases that were already made, and a lot of those got made, a lot of them during the pandemic. So it would only be banning new purchases. And another important point to consider here is how small this market is. I think these institutional buyers make a whole lot of outsized noise and often get pointed to as the boogeyman for running up prices of real estate. But that's not true. Only about two to 3% of single family rentals are owned by these giant investors, at least the ones that have over 1000 units. Okay, so this all sounds good as a political platitude. You trying to do something about it? I sort of understand that, but this ban, it just would not move the market very much at all now, perhaps a slight move could be triggered in cities that do have a lot of institutional ownership, like Atlanta, Jacksonville, Charlotte, but really little effect. The second directive from the President is having Fannie Mae and Freddie Mac buy $200 billion worth of mortgage bonds. This is really an effort to drive down mortgage rates and bring down monthly payments and make the cost of home ownership more affordable. The translation here for you is that whenever you inject money into something, money tends to flow more freely and rates get lower, kind of lowering the dam wall height, like I have given to you in other examples, when you buy bonds that demand pushes up bond prices, which lowers bond yields. And mortgage rates are tied to those lowered bond yields. And as soon as this was announced, like the very next day, mortgage rates fell into the high fives, yes, under 6% for the first time in three years. But the last thing effect of this that's been studied, and it's been shown to reduce mortgage rates by about three tenths of 1% so not nothing, but sort of small. However, if they're buying down rates like this one time, well then they might do it multiple times. So there you go. There are two recent directives from the president banning institutional investors from buying single family homes and buying mortgage bonds to lower mortgage rates.

Keith Weinhold 10:00

Either one of them with seismic effects. It's sort of like the 50 year mortgage proposal that the administration made a while ago, and that's probably not going to become a reality anytime soon, if ever. Here's a question that I have for you, and I'll let you answer. Do you like free markets, or would you rather have big government? Well, each of these directives are more government intervention into the free market, whether you like that or not. Another way to say it is that stuff like this makes a lot of splashy headlines, but it's not a bigger deal than a Philadelphia Eagles football game,at least. You know how these forces can move markets now

Keith Weinhold 10:46

straight ahead, it's the concise, definitive audio guide to selling your investment property. I'm going to detail four different ways that you can do it in this guide, including tax deferred and effectively, tax free methods. When you're able to defer taxes over and over again throughout your entire life, they effectively become tax free. You never have any tax obligation. Also, I will discuss one way of selling your property that you're probably not familiar with and you might have never heard about before in your life. I'm Keith Weinhold. You're listening to Episode 589 of get rich education.

Keith Weinhold 11:27

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre. Or or send a text now it's 1-937-795-8989, yep, text their freedom coach, directly. Again. 1-937-795-8989,

Keith Weinhold 12:39

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage, start your pre qual and even chat with President chailey Ridge personally, while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Russell Gray 13:12

Hi. This is Russell Gray, Main Street capitalist. You're listening to the get rich education show with Keith weinholden. Remember, don't quit your Daydream.

Keith Weinhold 13:20

You welcome back to get rich Education. I'm your host, Keith Weinhold, and I'm coming to you from Colorado Springs today, where I'm attending the real estate guys create your future goals retreat event, yeah, a goals event allows one to get introspective. One part of it is learning how I can serve you better on this show. Every week, since I do pour a lot of thought into what I share with you here. How much yeah, just, how much did this event mean to me? Well, my team is in the NFL playoffs, and I was willing to miss some playoff football for this.

Speaker 1 14:07

That's inexcusable, inexcusable. Playoffs. Don't talk about playoffs. You kidding me? Playoffs? I just hope we can win a game.

Keith Weinhold 14:19

Yeah, yeah. That is, that is, of course, the classic rant from a former NFL coach, Jim Mora. Maybe Jim needs to attend the goals retreat to put things into perspective here. now, whether it's just a few years from now or it's decades into your future, at some point we're all going to exit the real estate investing game, even if that's not until the day we die. I'll talk about that with whatever endeavor you're in. It is good to begin with. The end In mind. there's a good chance that you're either in real estate acquisition mode now, or you once were. Or where you're going to be in that real estate acquisition mode in the future, but after this accumulation phase of your life, hopefully, which you've turned into financial freedom through real estate, after that, you're going to be in the mode where, since you've already made it, you're going to want to just maintain the portfolio that you have or stop acquiring or you will want to sell eventually. The good news is that there are a lot of good options for selling your property and doing it, tax deferred and effectively tax free. Now I will not talk about selling your primary residence so much, though, this is focused on exiting from your investment property, primary residence sales rules with the IRS is that your first 250k of gain is exempt from capital gains tax if you're single, and your first 500k is shielded from tax if you're married. Quite a marriage incentive there.

Keith Weinhold 15:59

But as we focus on investment properties. This is influenced by a question from one of our older GRE listeners, 62 year old, Mark, who wrote in last year, was such a good question and I answered his question on air last month. I'll basically expand on that answer today. Mark said he has listened to every GRE episode ever, and therefore, congratulations, he made it. He reached financial freedom, and he's got a sizable portfolio. Some of his properties are paid off. Others are leveraged. But see, Mark is hesitant to buy more property because he's already made it his wife doesn't want more properties because she associates it with him having to do more work. Now, when you're still in pursuit of financial freedom, well, you don't mind investing a small slice of your time each month into real estate, a little light management, remotely, maybe, but once your residual income exceeds all of your expenses, well, then at that point, your time is going to start to become more valuable. So let's look at four here, four solid options for exiting your property, and then I'm going to examine the pros and cons of each one. The first of four is simply to sell real estate in the conventional way, just a plain sale to a buyer, where you see that it gets fixed up and you list it and you sell it outright. Well, the pros of this are is that it gets you to your exit, and it also turns your equity into cash. The cons, the downside of doing it this way is that you're going to give up your ongoing stream of income. Your Cash Flow is going to be gone. You might have to remove tenants, depending on your scenario. You have to fix up and stage the home to prepare it for the market. That could be as little as 5k or as much as 50k or more, depending on the size of your real estate, you're going to have to pay a real estate agent a commission of 3% or more and pay capital gains tax of 15% or more. That's one five. And you'll also have to pay depreciation recapture, and of course, you don't have to pay 15% of the total asset value. It's just 15% of the value gain during the time that you held this property, right? So the tax and fix up cost can eat into your profit with this first of four ways to sell your property, although you are still probably in for a pretty nice windfall upon the sale if you've held it for a while. All right, so the first way is a plain sail, and a lot of people would agree that is not the best way to do it. Okay, it gets far better from here. The second sale option that you have is something that a lot of real estate investors like us are familiar with, or have at least heard of, and the general public has not, and that is the 1031 exchange. You'll also hear it be called the 1031 tax deferred Exchange, or the 1031 like kind exchange, because you trade your property up for another property that's kind of like it. It is a hugely powerful wealth building and wealth preservation tool, okay, section 1031, of the IRS tax code that allows an investor to exit a property without incurring any capital gains taxes. That also does not trigger depreciation recapture when you sell your property, but in order for you to get those tax deferred benefits. Importantly, you have to roll your game into another piece of real estate. Now there are a lot of rules and nuances around 1031 ones. I have done multiple 1030 ones in my life, and they are so worth doing and amplifying your wealth, building power I will not cover all the rules and nuances those things like the three properties rule and the 200% rule, and that rule about how you need to identify your replacement property within 45 days and close on it within 180 days, and all of that. Because what I've done is I've completely broken that down on the show with you here previously, and as always, I explained it in the most clear, incoherent way that I could for you. I best did that on episode 143 of get rich education. The name of that episode is your 1031 exchange guide, tax deferral for life. Now, there do get to be some numbers flying around here, so you want to listen closely, you might find yourself skipping back for simple example purposes, in a 1031assume that you bought a $200,000 duplex 20 years ago, and it's now worth 500k you depreciated the value of the duplex every year, as is actually required by the IRS, assuming you took a total of 100k of depreciation over the life of your ownership of it, and you did not make any improvements to it. The basis of your property is then 100k because it's your 200k purchase price, minus 100k in total depreciation write offs. When you sell the property for 500k you now have a gain of 500k minus 100k which is 400k depreciation, recapture and capital gains are not taxed at the same rate, and it depends on some things, but let's assume that your blended tax rate is 20% that means you would owe 20% on your 400k so that would be 80k in taxes if you just did the plain sale. But not many people want to stroke a check to the IRS for 80k so instead, if you take your

Keith explores two big themes shaping real estate investors' futures:

Why more Americans are becoming "forever renters"—and how long-term lifestyle and demographic shifts (not just today's prices and rates) are quietly reshaping the demand for rentals.

The growing conversation around eliminating property taxes—which states are making the most noise, and why the real issue isn't whether property taxes go away, but what would realistically replace them.

Keith also zooms out for a quick year-end tour of major asset classes—from stocks and real estate to metals and crypto—so listeners can see where real estate fits in the broader investing landscape and what these shifts might mean for their wealth-building strategy.

Episode Page:

GetRichEducation.com/588

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

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Best Financial Education:

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, the Forever renter trend keeps getting embedded deeper into American culture. What's behind it? It's more than just finances. Then there's been more talk about eliminating property taxes, if they go away, what replaces them? And we'll discuss more today on get rich education.

Keith Weinhold 0:27

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:12

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:28

Welcome to GRE from Jamestown, New York to Jamestown, North Dakota and across 108 nations worldwide. I'm Keith Weinhold, and this is get rich education. Most investments reduce your income until you can start drawing on it and paying taxes on it in your 60s. That's a lot of decades of living below your means. Here learn how to grow your means and invest in vehicles that pay you when you're young enough to enjoy it and pay you five ways tax advantaged. Hey, there's a big misunderstanding about the housing market taking place right now. Yes, today's higher cost of home ownership contributes to Americans renting longer, for sure, but let's not make the mistake of thinking this is a new phenomenon just because home prices moved higher or mortgage rates began normalizing again a few years ago, that's not what it's about Americans renting longer. That is a trend decades in the making, and it has had and will continue to have major implications on the rental housing market decades into the future, buying your first home at 25 that was your grandparents or maybe your parents. Today, it kind of goes like this in life's journey for the wannabe homeowner, First comes the gray hair, then comes the mortgage. Last year, we learned that the average first time homebuyer age in America has moved up to 40. Back in 1981 it was age 29 per the NAR. More specifically one's real estate journey, it basically now goes like this, rent, rent, rent, have roommates again, go back to renting, chiropractor, Bank of mom and dad, then a mortgage maybe.

Keith Weinhold 3:34

Yeah, the home ownership rate, it keeps falling among every age group, most sharply among 30 somethings. The translation here is that more renters are coming. For those in their 30s, the home ownership rate maxed out at 69% in 1980 it's fallen to just 47% today. Those that are older, for those in their 40s, the homeownership rate maxed out at 78% in 1982 it has fallen to just 62% today and so on. Every 10 year age group all the way to those age 80 plus, the homeownership rate has fallen for all of them over the decades too, every single age cohort. The home ownership rate has fallen over the decades, and that is all per the Census Bureau. I'll tell you why this forever renter trend just keeps strengthening in a moment. But if you don't own your home, here are your current housing options. You can live with your parents. Yes, welcome back childhood bedroom with those glow in the dark stars on the ceiling. Sadly, you can be homeless. That is really not good. Or the other option is you can rent something nice, new, modern, and energy eficient. The group in which home ownership has fallen the most are those 30 somethings. 20 somethings aren't even part of what the Census Bureau reported here. It fell most sharply in the 1980s and then again, after the great recession. And here's what I know you might be thinking because we have some of the smartest listeners around. I bet that during times that buying was cheaper than renting, the trend reversed. That's what you might be thinking. No, it didn't. Regardless of what is cheaper, over time, the home ownership rate just keeps falling despite those periods, whatever is cheaper renting or owning now the overall home ownership rate that's fallen just since 2023 from 66% down to 65% that might not sound like much, but a Full 1% drop there means 1.3 million new renters already, just since 2023 and now you might be thinking, well, this is like totally because home prices and mortgage rates have been higher since that time. They've been higher since 2023 you are, in fact, somewhat correct about the affordability on a median priced home today, which is around 420k, I mean a 10% down payment and closing costs, that means you're out of pocket, probably more than 50k and it's 100k plus for a 20% down payment. And this is often an insurmountable hurdle without financial help from the Bank of mom and dad. But this is all part of a longer, multi decade set of trends. And look, a lot of these trends don't have much of anything to do with finances. People are renting longer because Americans wait longer to marry and have kids, and this has persisted, whether economic cycles are good or bad, and certainly, regardless of what mortgage rate levels are, younger generations value flexibility. That's another reason people are renting longer. Also 30 somethings are just simply more comfortable with subscription models like renting. I mean, look at Netflix and Uber and Spotify. It's been decades since anyone actually bought DVDs or CDs. Yeah, renting is just sort of another subscription model. More. Boomers are also renting for convenience. They would rather play pickleball instead of mow a lawn. This is something that they figured out a while ago. Also higher consumer and educational debt keeps people renting. You've got buy now, pay later. Companies like Klarna that are booming and mortgage eligibility got sucked from souls when all this happened? Hey, I've got more a ton of reasons for why more and more people are renters today, and how this trend is your friend if you are a rental property investor.

Keith Weinhold 8:13

Also, let's be mindful when we broke the gold standard in 1971 asset prices took off like a Blue Origin launch, and wages stagnated. That makes it tough to patch together a down payment and look, there is still an antiquated notion out there that apartments especially are like replete with paper thin walls and one in every five units is a meth lab. Have you toured apartment buildings, fourplexes, duplexes and single family rentals built in the last 10 years? Sheesh. Great amenities. Expect to see granite countertops, patios, fenced yards, gyms, sometimes even pet spas at Class A apartments, washer, dryer in unit. I mean, that has been standard for a long time, LED lighting, smart locks, increasingly office nooks for remote workers. Those are the modern amenities that you find in a rental. So the bottom line here is that as Americans age, there is an elongated renter stage of life. It's not just prices or rates, it is lifestyle. And this is why, even when affordability improves, the homeownership rate should continue to drop. More rental demand is coming. So yes, an elongated renter stage, this forever renter, if you will. That is somewhat about finances, but it is more, and this shapes the landlordtenant landscape for decades. And of course, your advantage here at GRE is even if you live in a High Cost part of the nation, we know how to buy here, say, a brand new build to rent single family property in an investor advantage place like Indiana, Missouri, Alabama or Florida, and we get it for, say, 300k or so, and you get a tenant that will pay you rent for four years or more in a lot of cases. So we've been talking about where the rental demand is coming from. It is both a lifestyle choice and a financial consideration for your tenant. Now this forever renter trend, that's something that really matters if you are providing housing to people. But some real estate trends just move so slowly, so glacier like that, you can kind of get lulled to sleep, until one day you look up and a trend has crystallized like the one that I just described. Let's compare a trend like that to something that people think matters a lot, and this does matter, but its importance is overinflated, and that is, for example, the President's nomination of a new Fed chair this year, and how that's going to move the real estate market. No, not as much as people think, as we've learned here, mortgage rates actually don't have that much to do with home prices. And yes, mortgage rates do move. They are correlated with the Fed funds rate. Yes, they are. When one is high, the other will be high. When one is low, the other will be low. They just don't move in direct lockstep. Let's listen in to the remarks of one Donald John Trump on the matter, because he talks about housing here. This is about a minute long, and then I come back to comment when Trump says him, he is apparently pointing to Treasury Secretary Scott Besant, who was in the room at the time, but as you'll hear, he's not expected to be the Fed Chair selection.

Speaker 1 12:06

Have you started the interviews for the Fed chair? Yes. Who have you interviewed? Ithink I already know my choice well. I like to him, but he's not going to take the job very fast. You like Treasury better, right? Much better, sir. So we are talking to various people and the I mean, frankly, I'd love to get the guy currently, and they're out right now,but people are holding me back. He's done a terrible job, hurting housing a little bit. The truth is, we've been so successful, we've blown past his interest rate. Stupidity. He's been wrong. That's why I call him too late. He's too late. Jerome, too late. Powell, he was recommended to me by a guy that made a bad, you know, bad choice, and it's too bad. But despite that, it's having very little impact, because we have, you know, we have all of these things happening, but it has an impact on housing to a certain extent. He's a fool. He's a stupid man, but we have some very good people

Keith Weinhold 13:09

yeah. So this matters, but it's as much entertainment and almost comedy against a demographic trend like the Forever renter propensity, a calendar year recently ended. It's time to make a quick rundown of the overall investing landscape. Once in a while we do that. It's good to check the movement on other asset classes outside real estate. It's our asset class rundown for last year, the s, p5, 100 was up nearly 17% that's the third year in a row of double digit gains in the year that Warren Buffett stepped down as CEO of Berkshire Hathaway, there's a warning. The S and P Schiller price to earnings ratio soared above 40 for only the second time in history. That's an indicator that stocks are overvalued. The only other time that happened was during the.com bubble in real estate, single family home values were up about 2% per the NAR just over 1% per Kay Shiller, apartment building values were flat to a slight decline. There is no such thing as an official apartment building Price Index, CPI inflation, up almost 3% on the year. It now hasn't been at the Fed's target of 2% or lower for a calendar year since 2019 Yeah, it has run hot all that time. Last year, mortgage rates fell from 6.9% to 6.2% and then, as you would expect, the yield on the 10 year treasury note also fell from 4.6 to 4.2 The dollar fell hard with a thud down 9% its worst performance since 2017 WTI oil prices fell from 70 bucks to $58 that's an 18% decline, but really the story of the year among all asset. Classes is what happened with precious metals, gold up a staggering 68% over the past year, touching an all time high of about $4,500 silver, up about 155% leaving investors flabbergasted and slack jawed, touching an all time high of over $80 platinum and palladium had near triple digit gains the real price of gold. This means inflation adjusted even jumped to its all time high last year, significantly surpassing the previous peaks of 1980 2011, and 2020. Realized this. More than 80% of all the recoverable gold on earth has already been extracted. Silver has been the top performing major asset class. In fact, today, a little one ounce silver coin is worth more than a 300 pound barrel of oil. Sticking with the topic of metals, inflation finally killed a penny. The last one was minted in 2025 in Philadelphia, ending a continuous run of the US minting the penny since 1792 no more. Bitcoin was down 6% falling from 93k to 87k the NASDAQ is aiming for near round the clock trading. It currently trades 16 hours a day, five days a week. They are looking to go up to 23 hours a day, five days a week in the second half of this year. That's our year end asset class rundown

Keith Weinhold 16:34

coming up in future weeks of the get rich education podcast. I am going to do an episode on overpopulation versus underpopulation? Is the world over or underpopulated, and is the United States over or underpopulated? This obviously has huge implications for the housing market. Then on another episode, we're going to discuss a real estate axis strategy we've never discussed before, called the 721 exchange. Now you might have heard of the better known 1031 tax deferred exchange, but the 731 is different. When you get older as a property owner and you realize that you don't want the hassles of landlording anymore, you can sell your properties to a partnership. The 721 exchange dictates that this is not a taxable event, and therefore no capital gains taxes or depreciation recapture are due. Property owners still get the benefits of cash flow and the appreciation across a greater number of properties and markets, and it's a great estate planning tool as well. Yes, that's the 721, exchange. We are going to cover it here. When it comes to investment real estate, I guess we cover nearly everything that's coming up on a future episode. As for today, we're talking about property taxes, if they go away, what replaces them that comes up shortly? Visit get richeducation.com to learn more about how we help you and what we do, and to get connected with real estate. Pays five ways type of properties. Visit gre marketplace.com. I'm Keith Weinhold. You're listening to get rich education.

Keith Weinhold 18:23

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why? Fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products. They've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre, or send a text. Now it's 1-937-795-8989,yep, text their freedom coach directly. Again, 1-937-795-8989,

Keith Weinhold 19:34

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage, start your pre qual and even chat with President chailey Ridge personally while it's on your mind. Start at Ridge lending group.com that's Ridge lending group.com

Jim Rickards 20:05

this is author Jim Rickards. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.

Keith Weinhold 20:22

Welcome back to get rich education. Episode 588 for the 12th consecutive year here, I'm your host. Keith Weinhold, I look forward to perhaps meeting you in person this coming weekend, as I'll be attending the real estate guys create your future goals retreat event in Colorado Springs. You probably remember that we have had the events host and leader, Robert Helms, of the real estate guys on the show with us here several times in the past. What a class act I am spending a few extra days after the event in Colorado Springs to both look at local real estate in that market and climb the Manitou incline, that's this grueling climbing challenge up a slope of Pikes Peak. If you want to climb with me after the real estate guys event, bring your running shoes and I'll lead a group of us up there

Keith Weinhold 21:13

if property taxes go away, what replaces them? Realtor.com recently had a terrific article about this that you can look up the property tax revolt is spreading, but the replacement plan isn't let's look at the probability and possibility of eliminating property tax. Think about how property tax elimination would increase the value of your property well, because now every buyer could afford to pay more, since they won't have that property tax expense. And of course, if you were to remove property tax as a line item from your income and expense statement, your cash flow could double, triple, or even five or 10x depending on your current cash, on cash return. But that cash flow part is less likely because most efforts to eliminate the property tax, they focus on homes, primary residences. Well, several states have either active legislation efforts or these sort of informal grassroots movements to significantly cut down or just totally abolish property tax, but no state has fully eliminated them yet. The most prominent efforts are in five states, most notably Florida, where Governor Ron DeSantis has made the most noise about it.

Keith explores why the real goal of building wealth isn't luxury—it's protecting yourself from the emotional and practical pain of money stress.

You'll hear how owning the right kinds of assets can change your lifestyle options over time, and why waiting on the sidelines can quietly erode your financial future.

Keith also pulls back the curtain on a major, often overlooked force that has helped keep real estate values resilient for years, and what that means for anyone thinking about adding more property to their portfolio.

Finally, you'll get a sense of the kinds of opportunities and strategies listeners are using right now to move from just getting by to playing to win in their wealth building journey.

Episode Page:

GetRichEducation.com/587

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

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Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE I'm your host. Keith Weinhold, more important than building wealth is avoiding poverty. It's backed up by research. Learn about a force that constantly gives a boost to real estate values that you probably haven't considered before, and own assets or get left behind. I discuss a plan for doing it today on get rich education.

Speaker 1 0:29

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:14

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:30

Welcome to GRE from Dar es Salaam Tanzania to Darlington, South Carolina, and across 188 nations worldwide. I'm Keith Weinhold, and this is get rich education the voice of real estate investing since 2014 and it's a new year, part of the reason why you need to build durable wealth for yourself is actually not to be wealthy. It's really to avoid a lack of wealth. It's in order to pad yourself against poverty. Now, shortly, I want to talk to you more aspirationally if you are or soon plan to make 500k per year or more.

Keith Weinhold 2:15

But first, there are a number of studies that show that beyond a certain level, more wealth barely increases your happiness level. In fact, if you ask many people, they say that doubling their income or doubling their net worth is what they really want, like, that's their goal. Like, in their mind, that's the benchmark in which they've made it. And you know what, when they double their income, though, then they want to double it again. They think that that is the next benchmark. So there can be this endless amount of wanting, because once you've doubled, you just want to keep doubling. But what's really more important is padding against money problems, because if having a little more doesn't change your happiness much, well, it's poverty that can really diminish a level of happiness and fulfillment in your life. So money problems don't just hurt your wallet. They actually hurt your emotions. And this isn't just some motivational poster idea, the statistics are clear. Multiple studies show that when money is scarce, when paying the regular bills feels like a monthly street fight, people report more sadness, more worry and even depression, not just sometimes, but constantly. The reality is that about 71% of Americans say that money is a major source of stress. My gosh, more than seven out of 10. So that's not a fringe category. That's the norm that say money is a major source of stress. Another study found that 42% of adults say money negatively affects their mental health. So close to half of the people walking around you right now feel emotionally beat up by their financial situation, and the gap gets even wider when you compare groups, when people experience serious financial hardship, nearly half, 49% show signs of depression among people without any financial hardship, only about 11% of that group show signs of depression. And Northwestern Mutual did an extensive study on all this. So it's not just a small difference, it's a completely different emotional reality, almost like two separate worlds. To put it plainly. For you, money will not guarantee happiness, but a lack of money can absolutely fuel sadness, and this matters. Because financial confidence isn't just about dollars. It's about dignity. It's about feeling like you're able to breathe, and it's about believing that your future can be bigger than your past. I mean, the research also shows the relationship flows in both directions. Money stress can make mental health worse, and poor mental health can make financial decision making harder. So it's sort of this loop, this cycle. And what breaks the cycle? It's not luck. It's not hoping the economy magically fixes all of its problems. It is going on offense, taking steps that build security instead of surrender, for most people, that turning point comes when they start owning assets, not just paying bills. It comes when money stops being a source of fear and it starts being a tool. Because though we focus on real estate investing here at GRE but ultimately it is a lifestyle improvement show. And before we're done today, I'm going to talk about what you can actionably do to go on offense. Now, what if you already have a higher income, or you expect to make a high income in the near term, if you're earning roughly $500,000 per year or more, and you value time efficiency in making sure that you don't live a rough quality of life. You are on the threshold of a tier that helps ensure that you can avoid some misery. Yes, there is a step change here that can help ensure you have a higher standard of living. Do you know what I might be talking about? Any idea 500k of income is where it begins now. It's only beginning here. At this point, to make sense, where you tilt into starting to fly private instead of flying commercial. Yeah, private flights. Now your situation is going to depend on more than just the income. It's whether or not you're single or you have kids and more, but it's at this income level where you can start to cover a $10,000 flight without biting into your essential living expenses. It's most justifiable when your time savings or your productivity gains translate into real value. I'm talking about things like business deals, meetings and schedules and the benefits of flying privately are pretty significant. Time efficiency is the real superpower here, drive up to the plane, wheels up in minutes. The flexibility is there. You can leave pretty much when you want. You can change your flight plans mid trip if you need to. You get access to smaller airports. That means you can land closer to your final destination and skip big city traffic congestion. You've got privacy and security, no crowds, no TSA stuff. You've got quality of experience, comfort, quiet cabins, custom catering, no competing for overhead bin space. Now even affordable private is still pretty expensive. It is substantially more than first class commercial seats, and I have had limited experience flying private, but at 500k of income, flying private can still feel like a stretch, even though it's doable for you, a more comfortable range is a million dollars or more of annual income, that's when private flights feel much easier to justify for business or lifestyle. Now, with $2 million of annual income or more, most heavy private flyers live here in this range, the $2 million plus income level, they can charter, they can fractionally own, or they can use memberships, all with less stress. When you earn this much, and if you're ultra high net worth, we're talking about $5 million worth of income plus or $20 million worth of net worth plus, well, then private flying is really commonplace. This is where you often have a personal jet, concierge services and flexibility on demand. So as the first episode of the year here, I want to give you some opportunity to dream and goal set. Yeah, you need to stretch out and give space to your aspirations sometimes, and this is a good time to do that, really, though, a more important reason for increasing your income and net worth is that it helps you avoid the discomfort of poverty. But yeah, come on, if nothing else, can you believe that before every commercial flight you have to hear that nonsense about how to inflate a raft if you're. Plane crashes in the water, or you could use your seat as a personal flotation device. Come on your seat. Can't even support your back for a three hour flight. If there's ever been a reason to invest Well, it's so that you never have to hear that stuff again before every flight chase

Keith Weinhold 10:19

last week here on the show, you'll learn more about how stable real estate prices are, why prices have never crashed in your entire life, and also why they can't double in one year. Real Estate is too slow moving 30 days between you making your offer and you closing the deal, that's actually considered pretty fast. In fact, if national home prices ever crash, I will legally change my first name to Fabrice, yes, Fabrice, I would also do that if they doubled in a year. It is almost impossible for either of those things to happen. You learned about how these things have not happened in your entire lifetime on last week's show, yes, even in 2008 in the last 85 years, nominal home prices have risen every single year, except seven of them now. Why is that? Why are the prices of US housing so resilient and just keep going up up up, almost inexorably? Well, it's actually more than just the main well documented reasons that you know about and that we've talked about here. It's about more than these attributes, like population growth, household formation, wage growth, inflation, eroding the currency and land scarcity in desirable areas beyond all of those, one reason that home values just keep going up, up up and are expected to rise again this year is something that We have not discussed yet, and that is government intervention? Yes, in the US and a lot of world places, housing is not a free market. We have a free ish market that sort of comes with training wheels and support animals. Think about how the government helps ensure that home prices stay propped up even through most recessions. We're talking about attributes like ever expanding loan access and mortgage interest deductibility. Then there's depreciation in write offs for investors like us and property tax structures that lag market value when loans have lower down payment requirements or a lowering of credit score requirements and ever expanding loan limits in terms of dollar amounts, well, that increases the demand for those that have the capacity to pay, and it nudges up prices even more incentives, like deducting your mortgage interest in tax depreciation when you don't even have a real expense, but yet you get to write it off anyway. It all heaps on the government driven demand for real estate Now none of these individual things, these government interventions, raise prices overnight, they increase demand structurally. There's evidence that the government is doing even more in recent years to prop up housing demand than they have in the past. This is increasingly a propensity to not let housing fail like it did in 2008 I mean, just look at covid During 2020, and 2021, what a glaring example of how government will prop up home values and not let them fall down if you lost your job during covid. Oh, we'll give you mortgage loan forbearance. That's where you could skip. Oh, just say nine monthly payments, and then you can just tack those nine payments onto the end of your 30 year loan and make those payments decades from now. There was a foreclosure moratorium in effect then too, so you've got forbearance and low rates and stimulus checks and a ban on foreclosures. Well, all of that helped borrowers make payments, and that supported home price growth. There was no fire sailing, really, that could have taken place then, and you will recall that during that time period, in fact, the year 2021 national home prices soared 19% so housing is not a completely free market. You really don't have to look very far to know that. I mean, Fannie Mae and Freddie Mac are both still government sponsored and still in conservatorship. And here's the thing, so far, I've only talked about how government has propped up the demand side. Side of the market. I've only talked about half of it. Don't forget the sometimes unintentional supply restriction the governments induce as well keeping housing supply in check. Well, that helps drive price appreciation. I'm talking about the zoning spaghetti that new homebuilders have to navigate through the permit purgatory, minimum lot sizes that can seem larger than some European countries, environmental reviews that last longer than the movie Avengers. Endgame was that a three hour, two minute movie, all of these roadblocks limit new housing supply that makes it harder to build. So governments provide an ever present tailwind to housing values by both boosting demand and by crimping supply. Government amplifies these forces, sometimes intentionally and sometimes unintentionally, but the result is the same propping up housing values. If all these years since coming out of the Great Recession have shown us anything, and the 2020 pandemic reinforced it, it is to either own assets or get left behind. You've got to own assets or you will be left behind, and that's whether you're trying to stay away from poverty, like I talked about at the top of the show, or whether you're aiming to fly private instead of commercial, something more aspirational, really. That's the lesson I've got more straight ahead here. There will only ever be one get rich education podcast episode 587 and you're listening to it.

Keith Weinhold 16:43

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why? Fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program. When you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre, or send a text. Now it's 1-937-795-8989, yep, text their freedom coach directly again. 1-937-795-8989,

Keith Weinhold 17:54

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Dana Dunford 18:27

this is hemlane's co founder, Dana Dunford. Listen to get rich education with Keith Weinhold, and don't quit your Daydream. You Keith,

Keith Weinhold 18:45

welcome back to get rich Education. I'm your host. Keith Weinhold, we're talking about new angles with respect to how the future belongs to asset owners. Every year, people say, This is my year, but only a few actually take the action to back that up and make it come true. One thing that I've learned is that people love saying, I want an opportunity, but what they really want is certainty. Unfortunately, certainty only shows up after opportunity is gone. History is full of people who walked past moments like this now owning more of an asset like real estate today, and instead they just look and say, Oh, it's probably nothing. Well, what about alternatives? What's your employer's plan for you? I mean, really, what's a typical employer's plan for employees spend 40 years here at this desk, and I guarantee that you'll become moderately comfortable with a nice 401K balance that you can start withdrawing from by the time you're age 65 at which time you'll start paying taxes on it too. So really, that's it. That's their plan for you. Yes, that's their plan for you. Though, as you know, I do not forecast mortgage rates. No one, not one analyst or rating agency, expects mortgage rates to fall substantially any time soon as we look at the real estate landscape, in fact, among 21 different major research groups, which include PNC Bank, Redfin, Moody's, wells, Fargo, the NAR totality, if you average what their forecasts are, one year from now, mortgage rates are expected to be at the same level that they are today, which is about 6.2% if you want to add more assets, prices are probably only going to be higher one year from now. The Fed is involved in QE like behavior again, which resumed last month, that gives the effect of more money printing, and it provides an environment for a continued price run up across not just real estate, but nearly every asset class. Current CPI inflation is 2.7% and long term inflation expectations are elevated. The Fed is cutting rates. The current Fed funds rate is about 3.6% and the President wants the Fed funds rate cut to 1% central banks are stockpiling gold, and the US dollar just had its worst year since 2017 so a lot is lining up to keep supporting housing values. Now, when we zoom out, starting back in 2012 us home prices have now risen 14 years in a row, and the average annual gain since that time is about 6% which is sustainable and close to historic norms. Year after year. Some people keep waiting for the right moment, and meanwhile, the right moment just keeps passing them by. And look, now here's a really interesting way for you to look at things from a long time investor like me, I have bought a wide variety of investment real estate over the years. I bought single family homes to both live in and single family homes to rent out vacant land, agricultural parcels, small apartment buildings and larger apartment buildings on every single one at the time when I purchased it, it was the most that anyone had ever paid for that property in that property's history, and if th

Keith shares a mindset-shifting quote from John D. Rockefeller that challenges the idea of trading time for money.

He revisits some of the year's most powerful real estate investing lessons, and breaks down the big forces shaping today's housing market—affordability, supply & demand, demographics, and interest rates.

All of this sets the stage for his data-driven national home price outlook for next year—without the usual crash-and-doom hype.

Episode Page:

GetRichEducation.com/586

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

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Complete episode transcript:

Keith Weinhold 0:00

Welcome to GRE. I'm your host. Keith Weinhold, learn from a quote attributed to the world's first billionaire, it will change how you see wealth building. I'll explain why national home prices have never crashed. Then it's gre, 2026, home price appreciation forecast. You'll learn the future the exact percent that home prices will appreciate or depreciate next year. Today on get rich education

Speaker 1 0:29

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:14

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:30

Welcome to GRE from Lake Huron, Michigan to Lake Tahoe, California and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education. You know something I love, quotes that shift your entire mindset, paradigm, and once your mind is shifted, actions follow. Actions develop into patterns. Those patterns become habits, and habits become the new, transformed you few quotes hit harder than the one from resource tycoon John D Rockefeller. He lived from 1839 to 1937 in fact, Rockefeller is widely regarded as the world's first billionaire. His quote, you might have heard it before. It is this, he who works all day has no time to make money. That sounds paradoxical, even provocative. It's sort of like it's inviting you to come in and want to learn more about it. And this is because most people's concept of income generating is to work 40 hours a week for a salary or an hourly wage. But what does that quote really mean? He who works all day has no time to make money, and be sure to capture the all day part of that quote that ties right back into the show that I did with you two weeks ago about the K shaped economy breakdown, where you learned about how capital compounds labor doesn't most people sell their time for dollars, but trading time for money makes you too busy to actually build Wealth. Working and building wealth. Those things are two separate distinct activities in how you're investing your time and energy. Now, most people start out with a wage or a salary job. I surely worked by pushing brooms and cubicle dwelling before investing in my first rental property. But if you're working all day in a job, physically or mentally well, then you're consumed by tasks that only pay you. Once you're occupied, you can often get exhausted and you're only concerned with short term output. You're focused on the next deadline, not the next decade, when all your hours are spent on labor, you have no bandwidth to do what you need to do, which is, create vision, acquire assets, build a portfolio, develop systems, learn tax strategy, evaluate investment deals, network with like minded investors, or refine your strategy with a GRE investment coach. Be cognizant that labor only pays today. Wealth building pays forever. Even if your work a day job, salary doubled, you would have to ask, how would that even build wealth? You could retire earlier, but you would have to keep working the hours, and let's remember that wealth equals freedom. You can't architect a wealth plan from the assembly line. Now, that's something that Rockefeller would have agreed with. Wealth requires less. Leverage and labor has none. So working all day means no leverage. You are the engine instead making money, that means using leverage, and instead of you being the engine, well, the engine is something else, like assets, systems, technology, other people's time, other people's money, and borrowing to inflation profit. Rockefeller believed and proved that leverage beats labor 100 to one. He's not discouraging work. In fact, it's just the wrong type of work, because he was one of the hardest working people alive. And really the bottom line here, with this quote, he who works all day has no time to make money, is that Rockefeller meant that if you spend your life doing tasks, you'll never rise high enough to own things that pay you for life. Earning a living is a different activity than building wealth, and once your mindset is shifted, actions follow, yep, actions develop into patterns, and those patterns become the new you. well as the last episode of the year on the show here, 52 weeks worth, I sure hope that I've helped you think, learn and grow your wealth, as have our guest contributors here early in the year, the father of Reaganomics was here, a man that frequently advised a president inside the White House. He told us how much he dislikes tariffs. Tariffs block free trade, and trade improves our lives. Major apartment investor, Ken McElroy, was here this year, and he predicted that the American home ownership rate will fall below 60% that would be major it's currently at 65 if the home ownership rate falls to 60% that would unleash millions of new renters into the market, and it has not been that low in decades, if ever you got a lot of mortgage insights with chailey Ridge, including learning how you can qualify for income property loans without a w2 job, without a pay stub or without tax returns by instead getting a DSCR loan. You'll recall this year that I discussed 50 year mortgages, and I did that before it even hit the news cycle, telling you that it could be coming and that it could be proposed. I explained why I like 50 year mortgages more than 30 year loans, but be aware it is not imminent that they're coming. Also this year, economist Richard Duncan and commentator Doug Casey discussed the Fed. Richard told us how the President is trying to totally restructure who serves on the Fed, trying to get low interest rate pushers in there. And then just last week, Doug and I discussed how fed decisions just keep hollowing out the middle class. A and E television star Todd drillette told us how to negotiate. I had four good discussions with our own investment coach, nuresh this year, more than usual, a pastor and I discussed a rare topic, what the Bible says about money. You learned how to use AI in your real estate investing and when not to. We had a few episodes about that. But above all the shows this year, they were about you, probably more than any other year that we've had here. I did more listener question episodes where I answered your questions as you wrote in, and I also had more listeners come right onto the show and tell me how this show has personally built their wealth. And of course, this year, I got to meet more of you in person when I served as a faculty member on the terrific real estate guys Investor Summit to see and I got to meet you personally for more than just a handshake. The event was set up so that chances are you had dinner with me as well. So rather than this show being a one way chat from me to you this year was more of a dialog between you and I and more two way communication. A lot of new topics are coming for next year, both me teaching and some great guests. If there's something on the show that you'd like to hear more of or less of, let us know. Write into us or use your voice to tell us either way you can do that. At get rich education.com/contact, let us know what you want to hear more of or less of. Do you like shorter term tactics like when and how to increase the rent? Or do you like mid range tactics like how to constantly do cash out refinances and get a tax free windfall from your properties every year. Or do you like more of the long term strategies like specifically how you profit from inflation? Let us know what you like again, at get rich education.com/contact, now, even if you're listening 10 years. Years from now, which I know you very well. May, I'm going to break down next year's home price appreciation forecast, but I'll do it in a way where you'll learn how to analyze a market for all time coming up. It's gre 2026, national home price appreciation forecast. Learn the future to the exact percent. First listen to this from Freedom family investments and Ridge lending group, because I'm a client of both myself and they can help you. I'm your host. Keith Weinhold

Keith Weinhold 10:29

you know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program. When you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom, family, investments.com/gre, or send a text now it's 1-937-795-8989, yep, text their freedom coach, directly. Again, 1-937-795-8989,

Speaker 2 11:40

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President Caeli Ridge personally. While it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Robert Kiyosaki 12:14

this is our Rich Dad, Poor Dad. Author Robert Kiyosaki. Listen to get rich education with Keith Weinhold. And there is, I respect Kate. He's a very strong, smart, bright young man.

Keith Weinhold 12:35

Welcome back to get rich education. It's episode 586 the last show of the year. I'm your host. Keith Weinhold, I am proud to present to you in this segment of the show gre 2026, national home price appreciation forecast, where I use my insight and experience so that you'll learn the exact percent that national home prices will either appreciate or depreciate next year. It's the fifth consecutive year that we're doing this. I nailed the first three spot on and then this year happened. I'll get to reviewing my track record, total accountability. First understand something, real estate values have never crashed in your entire lifetime, even if you're 90 years old, to grab eyeballs, slack jawed, tick tock. Call them crash talk. Economists keep making awful predictions about a housing price crash, and none of them have been worse than one that published last month in Newsweek, which outlines a as it's called, correction worse than 2008 and says national home prices will fall 50% five zero, starting as soon as next year. That's absurd, and I can't believe that a respectable publication would platform a view from an analyst like that, and I'm not going to call out that Doomsayer analyst's name. That's not my style. I'm sure you can find it that crash is about as likely as one social media post changing your political affiliation later today. Look, doomsayers don't care about you. They make dire predictions because they care about them. It elevates their clicks, their followers and their name recognition, and they never hang around to follow up on that prediction, but it harms you, because you miss out on the equity gains, and that's the real damage. In fact, this particular analyst also called for this year to have the second largest home price decline since World War Two. Well, national home prices have only fallen twice in that time period. In fact, going further back. Back to the 1930s Great Depression. They've only fallen twice. Yes, that means home prices have risen every single year since the 1930s except for two periods, a small decline of less than 1% around 1990 and then, of course, the severe downturn from the housing bubble and great recession from 2007 to 2011 or 2012 that's where prices dropped in total, 25 to 26% from peak to trough. Now why do I say that that period around 2008 was not a housing price crash. Well, because it wasn't. Instead, it was a slow bleed. The definition of financial crash is a sudden, sharp and widespread drop in prices. That's the definition. Well that can happen in some other asset classes like stocks or Bitcoin or perhaps even precious metals, but not real estate. It is neither sudden nor sharp. The worst year, 2008 saw home prices drop 12% in that one year and some of the other years bracketing it, home prices fell three to 4% in each of those years. So then during this time period of price attrition, during the global financial crisis, each month, real estate values fell just a few tenths of 1% maybe half of 1% or even one full percent, not a crash, a slow bleed. This means that it took about five years for values to fall, a total of near 25% I mean, that makes it really clear that it's not a crash. And again, this period was about 2007 to 2012 don't get me wrong, it was bad. I was a real estate investor both before and during 2008 but to call it a crash is hyperbolic, and that is because words mean things. I think a lot of media consumers get so conditioned to mass media sensationalism that they've forgotten what a crash even means. At some point, it begins to bend our very lexicon back around 2007 I remember I frequently checked a website called implode meter. Yeah, that's the name of it. It tracks, failing banks. I looked the other day and implodemeter.com is still in existence, even though it's not nearly as spicy as it used to be during the GFC, because lending has been pretty stable for a long time, and loans are well and carefully underwritten. So home prices are unusually stable over time, because, in a sense, housing is not a normal market. It is slow, regulated, credit driven, and it's emotionally sticky, even though rental property is less emotional. Well, the values of one to four unit property are tied to primary residence values, and that's where the emotion exists. So if you put all those together, you get prices that creep upward most years and rarely fall at all. Nationally. The real estate market moves too gradually to be crash susceptible. It is the place for real wealth building values also are not going to double annually if you want to scroll for dopamine hits from the couch. Well, you can do that with a prediction market like call she or in crypto with altcoins, while your real estate keeps leveraging dollars in a stable way in the background. That's how you can think about it. All right, so we've established since the Great Depression, home values have fallen twice and once substantially. Well, right now, home prices are up about 2% year over year. Most places have appreciated, especially the more affordable markets. Not only has home price growth been slow, though, rent growth has been slow as well. Single Family rents are up 1% per totality. Apartment rents are down one to 2% per Zumper. But back to our focus today, forecasting national home prices. Everything we're discussing is nominal price change, meaning not inflation adjusted, and it's single family homes up to fourplexes. Well, as we use context to build up to the big reveal today, where I'll tell you the exact percent that home prices will rise or fall next year. Could 2008 happen again any time soon? Let's isolate that out. It's important to look at history rather than. Having some uninformed hunch in both periods with price attrition around 1990 and 2008 these two falls have some attributes in common. So let's look at that. What led to these rare falls in home prices, irresponsible lending, forced selling, a vacancy issue and overbuilding. All four of those factors were in place during those two periods now leading up to 1990 the irresponsible lending was on the commercial side. That was the savings and loan crisis, but it did trickle into the residential market, and then in 2008 it was on the residential side. But of all four of those factors, none of them are in place today. Zero borrowers are strongly underwritten because they've got those full documentation loans, and virtually no one is forced to sell in a fire sale. In fact, homeowners still have these record equity positions of about 300k fewer than 3% of homeowners have a negative equity position, and there is no vacancy issue. Because, in fact, we've been under building. We'll look at that. So for next year, no substantial price of drawdown is coming. None's expected. We can isolate that out. Since I was investing directly in real estate through 2008 I know what happened is that when people walked away from properties, they did so because the economy got rough, their variable rate mortgages rose, they couldn't make their payments, or they just had no motivation to make their payments because they were underwater and had zero protective equity. In a lot of cases, it's almost impossible for that to happen today, homeowners can make their payments, and they're motivated to do so because they have that erstwhile equity to protect, like I said last week, through the Census Bureau data and realtor.com we know a couple things. Four in 10 homeowners have no mortgage at all. They own their property free and clear. Among the group with mortgages, 70% of borrowers still have a mortgage rate locked in at under 5% and blending those together for you means that then 82% of borrowers either have no mortgage or they've got a rate under 5% this translates to really affordable payments, along with The protective equity, even if inflation heats up again, it still cannot touch a borrower's mortgage payment amount because it is fixed. As we're leading up to the big reveal of next year's number, we're about to look at affordability, supply, demand and the eff

Keith discusses the Federal Trade Commission's (FTC) new regulations on rental pricing transparency, following a settlement with Greystar.

Legendary author, Doug Casey, joins the conversation to argue that the Federal Reserve is waging a quiet war on the middle class.

Casey explains that by creating trillions of new fiat dollars to push interest rates lower, the Fed fuels inflation, which erodes savings, distorts markets, and quietly reduces the average American's standard of living.

He warns of an impending economic downturn due to inflation and government debt.

Resources:

Find the FTC article here.

Visit internationalman.com to read Doug Casey's weekly articles and watch his "Doug Casey's Take" videos on YouTube.

Episode Page:

GetRichEducation.com/585

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com or text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE. I'm your host. Keith Weinhold, the Fed keeps escalating their quiet war against the middle class. I'm talking about it with one of the most influential financial figures of the past century. Today, also what the recent FTC decision on rents means to real estate on get rich education.

Speaker 1 0:25

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold rights for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:11

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:27

Welcome to GRE I'm your host. Keith Weinhold, let's get right into it, as there's a lot to cover here on our last big show before Christmas. Briefly before we get to the Fed's quiet war against the middle class the Federal Trade Commission just fired off a warning shot to landlords, and here's the translation about what this means to you, advertise your real all in rent amount with mandatory fees included in that amount or expect company and by company, the FTC means attorneys, paperwork and a long headache, and I'll tell you why I think this is a good thing. But really, first what this is all about is that it stems from the antecedent settlement with the massive global real estate company greystar, about transparent pricing. You might know that greystar is the massive global real estate company. They specialize in rental housing. In fact, greystar is the largest apartment operator in the entire US. They're in about 250 markets. The FTC cracked down on greystars add on fees, those fees added on to the rent amount that aren't clear and transparent right from the beginning. Now, in their case, it's things like Package Concierge charges, valet, trash service fees and some of these other line items that magically appear after a renter has already emotionally moved into a unit. Now for your rentals, they might be other things like Pest Control fees, gym fees, pet fees, utility add ons and notice that I use the word might, because clarification is still being sought here, but suffice to say, the least that you should know is really three things, advertise a rental price that excludes mandatory charges and that could be a violation of the law. So then state the total cost of renting the unit up front, no fine print gymnastics. Secondly, do a compliance check. You need to review your ads to confirm that they honestly convey your rental unit's price. That includes working with third party marketing vendors like Zillow or Facebook marketplace to see if they accurately state the all in price, because if they understate the price, it's still your problem. And thirdly, know that the FTC is reviewing harmful practices in the rental housing market. They'll take action against landlords that try to hide mandatory fees, so no hide and seek. And the FTC resource is in our show notes, and I sent it to you in last week's newsletter as well, if you want to read it, all my take here is that this type of transparency is a good thing. I mean, come on, we all know how annoying it is if, say, an airline states like, Hey, we've got prices to this destination. You can fly there for as low as $200 Yeah, but what if it's a 28 hour, four layover journey to fly 300 miles? Okay? What about buying an event ticket to go to a music concert and say you've already got 10 minutes wrapped up in this, but they don't show you the final price with all the fees until you've already invested that 10 minutes a. Then you learn about this in your shopping cart. So that type of thing is deceptive, all right. Well, what this FTC case does is it eliminates that effect in the rental housing market. So if you're a landlord, your competitors shouldn't be able to advertise base rents minus fees against your unit that appears higher priced than it's really not. And then for renters, I mean, the clarity helps expedite their search process. So this lets good assets compete on real value, and that is good business. Now, as far as the Fed controlling the economy, Jerome Powell announced interest rate cuts both last year and some more again this year, and though the effect isn't immediate, mortgage rates do come down with them. Mortgage rates have also fallen this year because the yield spread premium is lower. And you know what the prevailing sentiment is among a lot of armchair economists, it is squarely this, you ain't seen nothing for cuts yet. People say, Oh, watch, once Trump gets his guy in there in May, meaning that's when the newly appointed Fed chair is in power. Oh, you're really going to see some giant rate cuts then, yeah. I mean, a lot of people talk about this like it's certainly coming. They say then the Fed funds rate is going to go way down, meaning mortgage rates are then going to go way down, meaning that home prices are therefore going to soar next year. Well, all that could happen, but it is nowhere close to the certainty camp for everything to respond exactly that way. As you know, as a listener here, paradoxically, mortgage rates have little to do with home prices. Look at history over hunches. In fact, it might be more likely that those things don't happen and don't all break exactly that way, then the probability that they do, and that quickly gets into conjecture territory. As we know, lowering rates is bad too, because it signals that a weak economy needs the help. Typically. What could be different this next time. Well, whether we're in a good or a bad economy, Trump still wants lower rates, and he really imposes his will on the situation.

Keith Weinhold 7:30

We're about to bring in the author of a new book called The preparation. It's about preparing for the economic future. A lot of the book is mostly for young men and their parents, but we'll speak to both females and males. Today is the middle class both worse off and in a way, better off today than they were a generation or two ago. Talk to your grandparents. They didn't pay for a college education. They didn't get one. They rarely ate out at restaurants. They didn't have a smartphone, which is now practically mandatory to even exist. Today, people are paying for all of that, so no wonder that prospective first time homebuyers almost seem to be going extinct. Let's meet this week's guest.

Keith Weinhold 8:21

Are we going to get a painful financial reset in the form of runaway inflation, a market crash or something else? We'll answer that before we're done today, the Fed is engaged in a quiet war against the middle class. They are going to create trillions more Fiat dollars to lower interest rates further and create inflation that's according to today's guest. He is the International man himself, a legendary and generationally popular author, and he does a lot more than that. He's back with us for a sobering look at this today. Hey, welcome in. Doug Casey,

Doug Casey 8:57

Thanks, Keith. It's nice to be here with you, although care for me is in Buenos Aires, Argentina, where I spend a good part of the year.

Keith Weinhold 9:05

Such a nice place, good year round weather. There. A piece you recently wrote is titled, The Fed's quiet war against the middle class. The Fed recently announced that they're stopping Qt, which basically means they're stopping the destruction of dollars and opening the floodgates to print dollars. You've been known to say that the level of interest rates is the most important single indicator of an economy, and the Fed has made several quarter point cuts over the last year plus, although the President is supposed to stay independent of Fed influence. Oh my gosh, he has been more vocal than any other president ever over how badly he wants low rates. What are your thoughts with regard to all this Doug?

Doug Casey 9:53

Well, the Fed, which most people have been taught to believe, is part of the cosmic firmament. Right? It should be abolished. It serves no useful purpose. The Fed is an engine of inflation. It's what creates Federal Reserve notes. It's an engine of inflation and purely destructive, and it's used by the government to finance itself. So that's the first thing I've got to say. And they don't know what interest rates should be. Neither does Trump neither does anybody else. That's for the market to determine right and interest rates are set by the amount of savings that's done by the people and the amount of borrowing that's done by other people. The problem is with the Fed printing up lots and lots of money, which they are through the banking system, it makes it rather foolish to be a saver. In other words, if you produce more than you consume, which is something everybody should do, you want to save the difference. That's how you become wealthy. But if they destroy the currency with inflation, it's pointless to save, and if there's no savings, there's no capital to lend. This is why we're sliding off a slippery slope in the direction of a third world country where there's no savings, where the money's no good, it's a real problem. I think the average American, despite increases in technology that we've benefited from over many years, the average American has found his standard of living go down a lot, and it's basically because of the destruction of the currency that makes it impossible for him to save and get ahead of things, and results in wild and crazy moves in the stock markets and the real estate markets and the interest rate markets, where things become unpredictable. So everybody's being turned into a speculator, whether they like it or not, and frankly, we're headed towards a real reckoning in the US and in the world generally. So my approach at this point is to hold on to your hat, because we're in for rough running in the years

Keith Weinhold 12:14

to come. To create low rates, the Fed basically needs to create trillions of new Fiat dollars. Tell us about how that works.

Doug Casey 12:25

Well, it's a question of the supply and demand of money. You've got two things happening. Number one, when the Fed has quantitative easing, as they call it, which basically means inflating the dollar. Quantitative easing, or QE is just a nice word for inflating the dollar. They're increasing the supply of dollars out there. You increase the supply of dollars, the price of money goes down in the short run, but in the long run, the value of the dollar also goes down. And nobody's going to lend money if they can't get more in interest than it's being depreciated at. So you've got these two forces fighting against each other making for an unstable system. That's why I say that look before 1933 and when Roosevelt took gold out of the dollar, or in fact, before 1913 when the Federal Reserve was created, before that, there was no central bank. There was no Federal Reserve in the US. Money was just a medium of exchange and a store of value. It wasn't a political commodity, which it is now. Today, everybody is looking at the government to do something to make a decision to raise rates. Some people want them higher or lower them. Some people want them lower. But this is for the market to decide. It shouldn't be a political decision.

Keith Weinhold 13:53

Low rates, which most think are coming, produce an inflationary environment, which then means that longer term, there need to be new higher rates in order to combat that.

Doug Casey 14:05

Well, what we've got is a situation where conflicting advice and beliefs are causing rates, and indeed, most of the economy, to go up and down like an elevator with a lunatic at the controls. And actually, that's a very good analogy.

Keith Weinhold 14:22

And low rates to your earlier point, Doug, they don't encourage anyone to save. And you know what? Government policy doesn't encourage anyone to save either in times of crisis, like, look what happened during covid. Oh my gosh, if these people can't go to work and generate an income, they don't have any savings, obviously. So then let's go ahead and intervene even more and send them stimulus checks, basically a bailout. So low rates discourage anyone from saving, but so does our policy, because every time there's a big catastrophe, oh, they just come in with a safety net anyway. That's Part. The reason why we have such a problem with capital formation of the average American today?

Doug Casey 15:04

Well, it's actually worse than that, because over generations, a lot of debt has built up in the country. In other words, to maintain your standard of living, a lot of people have borrowed. They've done this either by taking the savings of past generations and borrowing it or mortgaging their personal futures. Either way, look, if you and I went out and borrowed a million dollars today, we could raise our standard of living artificially, sure, for the next year, but at the end of that year, we have to pay back the million dollars to lost interest, and that artificial rise in our standard of living will result in a very real decline in our standard of living. And a great deal of the borrowing that's been done to stimulate the economy through the banking system is for consumption, not for production. In other words, a lot of the borrowing is not to create new technologies and new infrastructure and new capital goods to create more wealth. A lot of it's just stuff that you wind up. People are borrowing things to fill their basements and their garages with more junk, consumer borrowing, borrowing for vacations, borrowing for to go to music, shows, all kinds of things. This has become a habit in the US, right? So let's look. It's going to end very badly. It's going to end and is ending as we speak, actually, in what I call the greater depression. It's going to be what we're looking at here, largely because of monetary manipulation, but also because taxes have gone up, up, up, up from zero level. Basically, in 1913 there were no income taxes in the US, the US government lived exclusively on minimal tariffs and excise duties. But today, there's right and they're very high, high levels of inflation, high levels of borrowing. So I think we're coming to the end of the road, as far as that's concerned. And it's bad news. Of course, most of the real wealth in the world, when you have a financial collapse, when you have a depression, most of the real wealth still exists. It just changes ownership, that's all so you want to position yourself so that you're not too adversely affected by what's coming

Keith Weinhold 17:31

this inflation and more coming inflation pumping up the asset values of the asset owners and then ruining the lifestyles of those in the lower middle class and making them trend down lower since they spend a greater proportion of their income on everyday needs like clothing and food, which is a small proportion of people that are well off and the poor don't have the assets to benefit from that inflation. And you know, Doug, it wasn't until I read your recent article that I realized something that initially the fed only had one mandate, price stability, and then later they added that maximum employment was their second mandate. I didn't realize that. So really, it's been an expansion of what they're paying attention to, and a de facto expansion of their powers and influence and control.

Doug Casey 18:23

Well, actually, they have a third mandate now, which is to control long term interest rates, to prop up the mortgage market, to prop up the real estate market. Because, as you know, the real estate market floats on a sea of debt, and if you can't get a mortgage, if you can't borrow, you can't buy real estate, or, for that matter, you can't sell it. So this makes it a very unstable situation, and most people are unaware of the fact that before the last depression, the longest mortgage you could get was five years, and that was with a 20% down payment. So things have changed a lot since then, and the more debt you use to finance anything, the more unstable things become. And the fact that things have become so unstable, and the average guy's standard of living has been sinking, and he has more credit card debt, more mortgage debt, more automobile debt. Used to be paid cash for a car, then was financed for two years and five and seven, and then it was leased where you never even owned it. I mean, this is, this is a trend that's coming to an end at this point, so it's going to be quite a comeuppance for people.

Keith Weinhold 19:42

I think long term financing and the easing of getting financing makes the cost of anything higher. There's probably no greater example than that of what has happened with college tuition over the decades. But you know Doug, when we talk about this centrally planned economy. Rather than letting free market forces take over, I love it. I just absolutely love it when the answer to a problem is actually doing less than what you're currently doing, let go of the reins, rather than the Fed controlling interest rates. If there were a free market doing it, you would have bank loan rates that couldn't become too high, or else they wouldn't attract borrowers. So rates would naturally fall, and then you also couldn't have bank loan rates that are too low, because you've got to compensate the bank for bad borrower risk. So rates would come up, and they would find some natural level, kind of to the point that you made earlier. There would be a natural set point price discovery. That's how I think of a free market working for interest rates rather than announcements by a Fed chair.

Doug Casey 20:51

Well, you're rig

Keith discusses the K-shaped economy, where income from capital assets is rising while labor income is declining.

In 1965, 50% of income came from labor and 50% from capital; by 1990, it was 54% and 46%, respectively, and today it's 57% and 43%. Keith emphasizes the importance of how capital compounds over labor and advises on building ownership in real estate and businesses.

Finally, he answers your listener's questions about: agricultural real estate inflation, profiting on mortgage loans, transitioning from accumulation to preservation and a fast-growing state that no one talks about.

Episode Page:

GetRichEducation.com/584

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

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Best Financial Education:

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Complete episode transcript:

Keith Weinhold 0:00

Keith, welcome to GRE. I'm your host. Keith Weinhold, capital compounds, labor doesn't realizing this can change allocation decisions for the rest of your life. Then I discuss giving. Finally, I answer your listener questions about agricultural real estate inflation, profiting on mortgage loans when it's time for you to stop accumulating properties and a fast growing state that no one talks about today on get rich education

Speaker 1 0:33

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Corey Coates 1:18

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:34

Welcome to GRE from Williamsburg, Virginia to Williamsport, Pennsylvania and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education, and I'm somewhat near Williamsport, Pennsylvania today. For years, I've told you about the widening canyon between the haves and the have nots, and that's something that you might have only visualized in your head or merely considered a theory, but now you can see it. There's a chart that I recently shared with our newsletter subscribers that might just make your spine tingle and look, I don't like saying this, but hard work just does not pay off like it used to. This is emblematic of the K shaped economy. Just visualize the upper branch of the K, a line rising over time, and the lower branch of a letter k, that line falling over time, both plotted on the same chart. So what steadily happened over the last 60 years really is quite astonishing. And look, I don't want the world to be the way that I'm about to tell you it is, but that's just what's occurring. The share of one's income from capital assets is rising, while the share from labor keeps decreasing simultaneously. Now just think about your own personal economy. What share of your income is from your invested capital versus how much of your income is derived from your labor. When you're the youngest, it's all labor. When I got out of college and had my first job, all of my income was from labor. I certainly didn't have any rental property cash flow or stock dividends. But for Americans, here is how it's changed over time, and this K shaped divergence is alarming people in 1965 it was 5050 by 1990 54% of income was from capital and 46% labor. Today it's 57% capital and only 43 labor. Gosh, the divergence is real, and it's only getting wider, and I really had to dig for the sources on this K shaped economy chart. They are the BLS, the Tax Foundation and the International Labor Organization. Increasingly, asset owners are the haves. The upper part of this K shaped economy, that line is drifting up like a helium balloon that you forgot to tie to the chair. It just keeps going up and then the labor share of income, which is shrinking, that is also known as how much of the economic pie goes to people who actually work for a living. That is another way to think of it. So frankly, that's why I say hard work just does not pay off like it used to, because with each wave of inflation, assets, pump, leveraged assets, mega pump and wages lag behind, and we can't allocate our resources in the way that we want the. World to be, but how the world really is. In fact, the disparity is even greater than the chart that I just described to you, because it doesn't even include value accumulation, also known as appreciation. I was only talking about income there, and the reality is that working for a paycheck just pays off less and less and less. No amount of working overtime on a Saturday can make you wealthy, but it might make you miserable. Owning assets pays off more and more. In fact, the effect is even more exaggerated than what I even described, because, as we know, the tax treatment is lighter on your capital gains than it is your income derived through labor. As the economy keeps evolving, those who benefit the most, they do not sell their time for money. They're not trading their time for dollars. In fact, let me distill it down here are, yeah, it's just four words that could change the way you allocate your time and your effort for the rest of your life. Capital compounds, labor doesn't. yeah, there's a lot right there. If you want to keep up or get ahead, you need to be on the capital part of the K, the upper part. And what would that really look like for you in real life? What does that practically mean? It means building ownership into your financial life, owning real estate, owning businesses using prudent leverage, owning things that produce income, and even merely owning more things that appreciate. And here's the great news, though, real estate is still the most accessible, leverageable, tax favored capital friendly asset class ever created. That's whether you're just patching together like 43k for a down payment on your first turnkey single family rental, or making a tax deferred exchange into a 212 door apartment complex. Okay, this is how that can look in real life. The bottom line here is that as the economy gets more and more K shaped, with this divergence between Americans capital share of income increasing and labor share decreasing, that you want to stack real income generating assets. That is the big takeaway.

Keith Weinhold 7:44

Well, this is the time of year where a lot of people feel compelled to give donations. And as a GRE listener that's paid five ways, you've got more ability than others to give, I need to caution you about some things. I'm sorry that it is this way, because I do want to promote giving. It's kind, it's virtuous, and it's not a completely selfless act either, because when I give, it makes me feel good too. You're making a difference, and that feels great. Let's talk about the downsides of giving, though, because few people discuss that. We already know about the upsides when I give to an organization, say, 1500 bucks here, $1,000 over there, well, inevitably, you do get on that organization's contact list. And yeah, I suppose that it is easier to retain a customer or donor than it is to find a new one. Sometimes I just make what I expected to be a one time donation, but they will keep contacting you. Now, I was once on the other side of this. I served on a volunteer committee that organizes athletic events, and a friend of mine, John made a $1,000 donation to our organization one year, which was really kind, and he's just a day job working kind of guy when he didn't make the donation. The following year, someone made it a line item in our meeting minutes to say that John's donation was not renewed. Like that's the only thing they brought up. Oh gosh, that really struck me the wrong way, because here's a guy that traded his time for dollars at a job that I happen to know he doesn't like very much, and the committee statement was that the guy didn't renew his donation. Sheesh, now, when it comes to the tax treatment of, say, $1,000 that you make in a donation, there's a lot of misunderstanding about how that works, and this is the type of subject that you're thinking about now, because sometimes people want to get a tax break tallied up before year end, because some people think that after the year ends, well, the IRS pays you back the $1,000 you donated because it's tax deductible. No, that's how a tax credit. Works. But a tax deduction, which is all that you might be eligible for, means that if your annual income is 100k well then a 1k donation lowers your taxable income to 99k so if you're in the 24% tax bracket, then you'd get 240 bucks back. But you know, in many or even most cases, you're not going to get any tax break at all for making a donation, and this is because you did not exceed the standard deduction threshold, which is now almost 16k if you're single and almost 32k married, you get to deduct those amounts from your taxable income no matter what. So the standard deduction, in a way, it's nice, because you don't have to keep receipts and do all that tracking for everything. So I've had that experience myself where, huh, feeling a little generous throughout the year, giving $1,500 here, $1,000 there. Oh, and then realizing that it does nothing for me on taxes, you have to give more to exceed the standard deduction amount and start itemizing them. And mortgage interest does go into that amount. Okay, it does go into the amount to try to get your total above the standard deduction threshold. So go ahead and give freely, but in a lot of cases, keep in mind that it often does nothing for your taxes, because you're taking that standard deduction if you indeed are. There's been another tip flation trend that's annoying, and that is increasingly when I give a donation online, I'm asked to if I want to leave a tip on top of the donation. That is so weird, a tip is for good service. I'm serving you by being generous enough to give a donation. Sheesh, a tip request on top of a donation. But please do give when you do, one thing that you might want to specify is that it is a one time donation, if that is your intent, or they will constantly follow up with you.

Keith Weinhold 12:06

Coming up next, I'm going to answer your listener questions. A member of Team GRE, who you haven't heard before, is going to come in to ask me your listener questions, and one of them is going to be among the most important topics that our show has never addressed, and it's about time. I'm Keith Weinhold. You're listening to get rich education.

Keith Weinhold 12:28

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth every single year I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and healthcare. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom, family investments.com/gre, or send a text now it's 1-937-795-8989, yep, text their freedom coach, directly again, 1-937-795-8989

Keith Weinhold 13:40

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President Caeli Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

Kristen Tate 14:14

this is author Kristin Tate. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.

Keith Weinhold 14:32

Welcome back to get rich Education. I'm your host. Keith Weinhold, they say that it takes a village to get some things done and well, it takes a team to prop up this slack jawed operation one GRE team member, capably behind the scenes for more than a year and a half now, is Brenda Almendariz, welcome in. Brenda, Hi, Keith, thanks. Rather than me asking the listener questions this time you. You get to do it, but before we do that, just tell us a bit about your real estate investing.

Brenda 15:07

Sure. So I started maybe learning a little bit about investing and kind of looking into other options to grow my wealth. And I came across the GRE podcast and a few others. So I think about 2018 I did a little bit of just learning and kind of educating myself. And then 2019 I bought my first turnkey property. Turned out well. And then 2020 I bought my second one. And then in 2021 I decided, okay, this is working really well. Maybe I'll do a house hack. I'll do something a little different, and in a year, then maybe I'll do something else. But I've been in my 2021 home now for about almost five years. I'm looking for the next one, hopefully within the next year. But yeah, it's been great. Turnkey. Just met real estate investment company here at my local REIA, and then I learned that I could actually connect with other companies across other places through GRE but yeah, it's been great.

Keith Weinhold 16:02

Brenda lives in Phoenix, just about as close to the center of Phoenix as you can possibly be. I sat down with Brenda for lunch the last time that I was in Phoenix, and like a lot of people, almost everybody that works here at GRE they started out as a listener before they ever worked here. And really, it's that same story with Brenda as well. So yeah, Brenda will want to ask us the first of what we have about four listener questions today

Brenda 16:31

we do, so I'll go over the first one here. Question is, I would love for you to revisit some of the non traditional example, coffee plantation, CBD manufacturing, teak plantation, Belize resort properties and syndication projects you've discussed on the GRE podcast just to see how they turned out. I'm sure some of them failed to deliver the expected returns, and it's the failures that many of us learn the most from

Keith Weinhold 17:02

Yeah, totally. Okay, so not so much a listener question here, but a comment to discuss more of these agricultural real estate investments or ones that are in syndications off of the investment type that you can't do yourself, is what we're talking about here, rather than direct ownership of residential rental property and an appeal to follow up down the road to see how they really turned out. And you know, Brenda, I'll address you because we don't have the listener name with this question. Most people in my position, if an investment has been discussed on the show, and then that investment didn't go as well as was hoped for, you know what? They never tell the audience about it. However, there's the Panama coffee farm investment. We first discussed that here way back in 2015 and we had a GRE field trip where I met a lot of you in person there in Panama. And as I often do when we discuss a particular investment here, I bought and still own Panama coffee farm parcels myself. That investment, it paid cash flow from the crop yields for a few years, and then it stopped. The good yields stopped due to covid disruption, and since then, there have also been erratic weather patterns like drought and precipitation of the wrong levels and at the wrong time of year, and there's been more of a prevalence of pests in disease like coffee leaf, rust and the operator. They have been communicative and forthcoming all the while they're still issuing the annual report that I read, and sometime after that, I think that a lot of investors were assured, because it sort of made national news, international news, that markets for both coffee and cacao have been suppressed, at least from the standpoint of there's not enough crop yield. I mean, that is a problem in a lot of places worldwide. Now I hope that turns around, and it very well may. In fact, we did something here that very few shows do. Back on episode 431, we had the Panama coffee farm CEO come back on the show to describe exactly what I just told you about there. And few shows are willing to do that. Some people just want you to think that every single investment that's discussed goes as well it was hoped for, or even better than expected. But that is not real world. You got to be authentic in real So, okay. Listener, comment, well, taken there. They appreciate that sort of follow up, and they would like more of that. All right, that's great. What's the next question? Brenda.

Brenda 19:40

Sure. So the next one comes to us from our audience over on YouTube. So in response to our real estate pays five ways in a slow market, YouTube video matrices wrote, There is no inflation profiting. You would have to be paying off the loan with an income that goes up with housing inflation. That's plausible if you are a wage earner, but if your source of income is rental properties, then there isn't a wage increase that reduces the effective loan amount. You are double dipping in the inflation profiting column by counting appreciation which you earn as a real estate investor and inflation profiting, which you earn only if your wages go up at the rate of housing inflation, and you use those wages to pay off the loan, which you don't

Keith Weinhold 20:33

Okay, again, somewhat of a statement here. I suppose there's a question implicit within that for matrices. I'm not sure how you say that name exactly. Wondering about inflation profiting. Are you counting it? Right? I don't know about that. The part about paying off the loan faster if you're a wage earner, I mean, that's plausible, but not if your income is from rental properties. I mean, see that's actually backwards, because your cash flow goes up faster than the rate of inflation due to your biggest payment, your principal and interest staying fixed, so your net rent income goes up even faster than the rate of inflation. So inflation profiting, therefore it's even better than how I've been presenting it and calculating it. Now with that understood matrices, here's one way for real estate investors to understand inflation profiting on your loan if you still have trouble getting with that. 30 years ago, in 1995 the US median home price was 130k with an 80% loan, your mortgage ba

Keith reviews the state of the real estate market, noting that existing home sales are down about 33% from their 2021 peak, while prices remain firm due to low supply and high demand.

Affordability challenges are driven by stagnant wages, inflation, and higher mortgage rates, with 70% of mortgage holders still locked in at rates below 5%.

He observes that in certain markets, new construction may now offer better investor terms than comparable existing properties, especially where builders buy down rates.

The episode highlights a comparison of nearly a century of asset class returns, reporting real estate's long-term annual appreciation at approximately 4.7%.

Episode Page:

GetRichEducation.com/583

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com or text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE. I'm your host. Keith Weinhold, how do other audiences feel about the GRE mantras that we've come to love here, like financially free beats debt free and don't get your money to work for you? Then sometimes it's not what you're attracted to in life, but what you're running away from finally comparing the returns from six major asset classes over the past century all today on get rich education

Keith Weinhold 0:29

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Corey Coates 1:18

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:34

Welcome to GRE from Kennebunkport, Maine to Bridgeport, Connecticut and across 188 nations worldwide. It is the voice of real estate investing since 2014 I'm Keith Weinhold, and I'm grateful to have you here with me, and we're doing something a little different today, as you'll soon listen in to me as I was on the hot seat being interviewed on another prominent real estate show. But first, when you pull back and ask yourself, why you're really an investor in the first place? There are so many reasons. Maybe you just want a few properties in order to supplement your day job income. Maybe you want to have more than a few so that you can completely replace that active income, or perhaps rather than going the route of building up your cash flow, which is valid, but some think that it's the only way to real estate financial freedom. Instead, you could own, say, nine doors or 22 doors, and even if they all had zero cash flow, you can just keep borrowing against that leverage and equity tax free and live off of that whatever you do when it comes to your day job, income, your degree of disdain for your nine to five job that is going to be greater or less than it is for some others. So your motivation for self improvement, it isn't always about what you're running to in life, which could be real estate investing, but it's also what you're running away from, especially if you don't get a deeply rooted sense of meaning from your job. So you could have both a push factor and a pull factor in what motivates you. There's a scene from the 1999 movie Office Space that just does this incredibly unvarnished job of saying out loud how so many of us feel today. What I'm going to share with you, I mean, you know that you have felt this at least once in your life. Office space wasn't supposed to be a mega hit movie, but it kind of was, because it's so relatable. Let's listen in to part of this clip. This is Ron Livingston playing a disgruntled male employee talking to Jennifer Aniston at a restaurant about his job in the movie Office Space.

Speaker 1 4:09

I don't like my job, and I don't think I'm gonna go anymore. You're just not gonna go. Yeah, won't you get fired? I don't know, but I really don't like it, and I'm not gonna go.

Keith Weinhold 4:24

Then it continues when she asks. So you're just gonna quit? No, not really. I'm just gonna stop going. When did you decide all of that? About an hour ago? Really? Yeah, aren't you going to get another job? I don't think I'd like another job. What are you going to do about money in bills and all that? I've never really liked paying bills. I don't think I'm going to do that either.

Keith Weinhold 4:53

That's it. That is the end of that classic dialog from office space that we can. All relate to you did not wake up to be mediocre, but a lot of people's jobs pummel them into a rather prosaic state. You were born rich because you were born with this abundance of choices, this huge palette in menu, but society often stifles that and makes you forget it, and it gets really easy to just fall into your groove and stay there. The main reason we aren't living our dreams is really because we're living our fears. Failure doesn't actually destroy as many dreams as people think fear and doubt. Does fear and doubt destroy more dreams than failure ever does financial runway? That is a phrase for the amount of time that you can maintain your lifestyle without the need for a paycheck. And it's critical for you to lengthen this runway if you hope to retire early, and it will dramatically reduce your stress level. An example is say that you currently earn 150k per year after taxes, and you spend 126k of that, all right. Well, that means you've got a surplus of 24k a year. Well, it's going to take you a little over five years to accumulate that 126k that you need to annually support your lifestyle. That's what happens if you don't invest. And see investing helps you lengthen your financial runway, that amount of time you can maintain your lifestyle without the need for a paycheck. That's what we're talking about here. Last week I brought you the show from Caesar's Palace in the center of the Las Vegas Strip. So therefore, what I've done is I have gone from the ostentatious and flamboyant over here to the familial and simple as this week I'm in Buffalo New York, broadcasting from a somewhat makeshift GRE studio here, the Buffalo Bills had a home game yesterday, so the city and hotels are busier than usual. Next week, I will bring you the show from upstate Pennsylvania, as I'm traveling to see my family. Let's listen in to me on the hot seat. I was recently a guest on Kevin bups long running real estate investing show. You're going to get to see how I present information and GRE principles for the first time to a different audience. And as I do, you're going to hear me provide new material, but you'll also hear me say quite a few things that I have told you before, even then, the concepts might land differently when I'm explaining them to a new audience. The show is based in Florida, so We'll also touch on the real estate pain and opportunity there. After I'm interviewed, I'm going to come back and tell you about something fascinating. I'm going to compare the returns from six major asset classes over the past century, since 1930 anyway, and that's going to include the first time on the show where I'll tell you real estate's annual appreciation rate over the last entire century. Just about what do you think it is? 8% 5% 3% you're gonna have, perhaps the best answer you've ever had. Here we go.

Kevin Bupp 8:31

Now, guys, I want to welcome back a guest that we've had on. It's been a number of years now. Keith Weinhold, I went back to look at the last episode we had him on. I think it's been about four years. So, you know, four years ago, the world was in the very different state. It was a very different time. And so, you know, thankfully, we're out of the covid era and on to newer and greater things. So for those that don't know Keith, he's the founder of get rich education. He's the host of the popular get rich education podcast. He's a longtime thought leader in the real estate investing space, and like myself. Keith was also born and raised in Pennsylvania. For those that know don't know, I was born and raised in Harrisburg, Pennsylvania, Keith, I believe, a couple hours away from where I was. But Keith has very much a unique perspective on wealth, building debt, and really the housing market as a whole. And today, you know, we'll be diving into everything you know, from why the property itself? This is something that Keith kind of coins, why the property itself is less important than you think, to how the housing crash has already happened in a way that most people don't even realize, to the role inflation and debt play in building long term wealth. And so again, it's been a number of years here, so I'm excited to welcome Keith back here. So my friend, Keith, welcome to the show. It's it's a pleasure to have you back here again, my friend.

Keith Weinhold 9:43

Oh, Kevin, it's good to be here and be in the auspices of another fellow native Pennsylvanian as well.

Kevin Bupp 9:49

That's right, that's right, yeah, no, Pa is rocking and rolling as I think I told you this little, this little tidbit last time everyone, every time I speak with someone from Pennsylvania, they never know this. But I'm going to share this fun fact. Are you already know, Keith. I'm gonna share it with the rest of the listeners here today, Pennsylvania, those that are born and raised there. It's the only state where, if you're from Pennsylvania, you refer to it by its initials, and you assume that everyone else, everywhere else across the country, they know what you're talking about when you say I'm from PA and that's the only state that does that. So I think it's pretty neat.

Keith Weinhold 10:19

That's right. No one else does that. No one else says, I'm from TN, if they're from Memphis, right?

Kevin Bupp 10:24

They don't, they don't. So with that, my friend. So, you know, it's, again, it's been a number of years since we, since we had you last on here, you know, let's start with just, let's back up a little bit. You know, what have you been up to? I mean, what, what have the last few years look like for you? Where have you been spending your time, energy and efforts? Obviously, it's, you know, we've gone through some quite a bit of turmoil over the last five years, and would love to just get an update as to what's going on your life.

Speaker 2 10:48

Well, one of the big words in real estate investing, we all know it, even the person that cuts your hair and cleans your teeth knows it, and that's affordability. You know, really, affordability has been under fire, under pressure. By a lot of measures, we have the worst affordability for home buying since the early 80s, when the Jeffersons was on television. So it's been helping a lot of people deal with that. It's really the effect of three things, general inflation, higher home prices and higher mortgage rates. Really, those three things the crux of the problem. It's not exactly inflation, really. It's the fact that over the long term, wages don't keep up with inflation. And really that's the crux of the affordability problem. So I've been helping people deal with that and put that in perspective, really, Kevin,

Kevin Bupp 11:42

what does that mean for, you know, investment, real estate? I mean, are you still still doing deals? Are you seeing deals still get done by your students? I mean, what? What's your world look like?

Keith Weinhold 11:52

Yeah. I mean, I think you're asking, you know, how many deals are taking place? One way to measure that on a national basis is existing home sales. You know, existing home sales have been down substantially. And when a lot of people hear that, they think, prices, oh no, we're not talking about prices. We're talking about existing home sales. That means sales volume. That means the amount of overall transactions. So to give an idea of a real estate market, a residential one that's become pretty lethargic and not very vibrant, is that sales volume. It had its recent peak of about 6 million home sales back in 2021 I mean, 2021 was crazy, kind of the crux of the pandemic, you know, Kevin, that's when for an open house. You saw cars wrapped around the block for just one open house. Okay, well, that year 2021 there were 6 million existing home sales. Today, we're on pace to do about 4 million, and we also did only about 4 million last year. So if you put that in perspective and think about what that means, prices have stayed stable, but that's a 33% reduction in transactions. So investors, you know, people like you and I, Kevin, we're not as affected by this as some other industries. But think about the mortgage loan industry. If you're doing 33% fewer transactions, think about the hard decisions companies have to make and lay people off. 33% fewer transactions for title companies. It's probably close to 33% fewer transactions for furniture companies as well. So really it's both affordability that's been a problem, and that's led to this relative lethargy, kind of a slow, not very interesting residential real estate market, at least from the transaction perspective, really, really slow.

Kevin Bupp 13:58

But Could, could one not argue, I don't know the data points. Keith, I guess, what did it look like? 2021? Was kind of the peak. I think you'd reference 6 million units a year. Transactionally, what did it look like prior? What, what was, what was a more normal year like? And maybe 2020, wasn't a normal year either, right? Because a lot of folks thought the role was ending for a period of time. You know, 2019 maybe just again, trying to, trying to find maybe a better baseline to use. And then, you know, does, I guess, in my mind, and I don't follow these data points as much as you do, is that maybe 2021, was, you know, somewhat artificial inflation, right? Lots of lots of money pumping into the marketplace. And ultimately, we had to get back to a sense of normalcy at some point in time. And so are we at a at a place of normalcy? Are we still behind the eight ball a little bit?

Keith Weinhold 14:44

We're still behind the eight ball a little bit. 5 million is more of a normal long term number. But yeah, I mean, if we've got 4 million now, that's, you know, 25% less still than 5 million, sort of this long term normalcy rate of existing. Home transactions. And if you're a careful listener, you notice I've been using the word existing that doesn't include new build. So you know, when you the listener out there reading headlines, always look at that closely. We talking about existing? Are we talking about new build? You can learn a lot from that when you introduce new build data that introduces an awful lot of noise. For example, even when we look at prices, sometimes we want to exclude new construction. So why is that? Why do we want to focus on existing a lot? Well, because new build can introduce a lot of aberrations to the market. For example, the size of new build properties has dropped substantially the past few years, again, coming back to the central theme of affordability to help make a home more affordable. So we're not looking at same same when the square footage of a property drops a lot. And also, another thing that's been happening as a response to the lack of affordability is you have more builders building further and further out from a central business district where there are lower land costs for that new build property as well to help meet affordability. So the takeaway is, yeah, we want to be careful when we look at numbers. Are we looking at existing? Are we looking at new? Are we looking at overall properties.

Kevin Bupp 16:22

If you believe that if rates come down, we really is that the is that the lever that has to be pulled in order for that transactional volume to kick back up and, you know, make homes more affordable for the average home buyer,

Keith Weinhold 16:34

yeah, it's certainly going to help. I mean, really lower rates is the most likely significant lever that can help with the affordability crisis. Prices are pretty firm. Home prices are up 2% year over year. It's difficult for home prices to fall. In fact, home prices have only fallen one time substantially since World War Two. A lot of people don't realize that. So home prices are firm. I expect them to stay firm. And then the other lever is if we get a huge surge in wage increases, which I really don't expect anytime soon, unless we have another really big bout of inflation. So to your point, yes, lower mortgage rates like, that's the biggest lever that can help affordability return. And to speak to mortgage rates, Kevin and help put all of this into perspective, including this affordability component, is the fact that today, mortgage rates are low, and that gives a lot of people pause. They're like, What are you talking about? Mortgage rates were 3% even as low as two point some percent, just as recently as 2021 and early 2022 What are you talking about? Like, mortgage rates are 2x to 3x that today we look at a long term perspective when we look at the arc of mortgage rates, instead of in setting up expectations where we think rates could go. And we need to look at a frame of reference. Mortgage rates peaked over 18% in 1981 that's if you had a good credit score and everything on a 30 year fixed rate mortgage. That's what we're talking about here. In fact, Freddie Mac, they're the ones that have the best, most reliable stat set for mortgage rates, and that goes back to 1971 the average mortgage rate since 1971 all the way up to today, through all these presidential administrations you know, Nixon and in the Reagan years, and Clinton and the bushes and Obama, everything You know up to today, from 1971 until today, the average 30 year fixed rate mortgage is 7.7% so that's why I talk about how mortgage rates are, you know, moderate to a little low today. That takes a lot of people back. I don't see any impetus. It's going to get us back to, say, 3% mortgage rates. So some real perspective here.

Kevin Bupp 19:06

Yeah, yeah, no. And, you know, the interesting thing again, you might have data points on this to see, is a lot of the lack, do you feel that a lot of the lack of transactional volume is also related to those folks that have locked in, you know, 3% you know, mortgages, right? Like they're they, why would they sell and ultimately trade into a, maybe a, you know, a, you know, upgrade of a home, but ultimately be paying significantly more than that of what they're paying at the present time, you know, double the cost of capital. Your rates today, 30 year, rates are where the six and a half, 7% range, I don't follow it, but yeah.

Keith Wei

Keith discusses seven ways to get a lower mortgage rate, emphasizing the historical impact of the 1940s GI Bill on homeownership and wealth creation.

Caeli Ridge, founder of Ridge Lending Group, digs into smart tactics like adjustable rate mortgages, DSCR loans, and down payment options, plus insider tips on boosting your creditworthiness, timing your rate lock, and planning ahead so you can maximize your returns.

They also explore trends like 50-year mortgages and portable mortgages, and the benefits of FHA and VA loans for first-time buyers.

Resources:

Want expert guidance on your next real estate investment or mortgage? Reach out to Ridge Lending Group for personalized support and a full range of loan options—whether you're a first-time buyer or seasoned investor. Visit ridgelendinggroup.com or call 855-74-RIDGE to take your next step!

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, seven ways you can get a lower mortgage interest rate. We'll break them down loan types available to you that you never heard of, and learn how the 1940s GI Bill shaped the mortgage that you get today on get rich education

Speaker 1 0:22

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:07

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education. You Keith,

Keith Weinhold 1:23

welcome to GRE from the Romanian Black Sea to the Egyptian Red Sea and across 188 nations worldwide. I'm Keith Weinhold, and this is the indefatigable get rich education before we discuss the seven ways that you can get a lower mortgage rate and more in the 1940s before my dad was born, the GI Bill gave veterans returning from World War Two access to cheap home loans, and that single policy decision might have done more to shape the modern American Housing landscape than Anything else in the last 100 years. Think about it, millions of young men, almost kids, really had just spent the better part of their early adulthood in Europe or the Pacific. They came home, married their sweethearts, started families, and suddenly America had this booming demand for housing, but demand alone doesn't build homes. You also need money. You need access to credit, and that's where the GI Bill stepped in. It didn't just thank returning service members for their sacrifice. It handed them something way more powerful, the ability to buy a home with little money down a low interest rate and underwriting standards that would frankly look like a fantasy today, that access to credit sparked one of the biggest housing booms in American history. You had these entire suburbs that sprang up overnight, Levittown in New York, Lakewood in California. These were master planned communities, and they really became a blueprint for Post War America. We had the booming 50s, and this had a lot to do with it. Here's the part that most people don't understand. This wasn't just about housing. This was about wealth creation, because for better or worse, home ownership has been the primary wealth building vehicle for the American middle class these past 100 years, when you give millions of people a subsidized path into property ownership, you're not just giving them a roof. You're giving them equity appreciation, leverage, tax benefits. You're giving them the engine, this flywheel that spins up generational wealth in a lot of ways. The GI Bill is the earliest institutional example of what I at least tell you here on the show, real estate pays five ways. Now they didn't call it that in 1947 but that's exactly what it was. Veterans earned appreciation as suburbs grew. They had amortization working for them, they collected tax advantages. Inflation slowly eroded their fixed rate mortgage balances too. And here's the thing, these weren't even speculative investments. They were homes that they lived in. Now, of course, the GI bill wasn't perfect. It expanded opportunity for millions of people, but it excluded a lot of people too. Lenders and local governments often blocked black veterans and other minorities from accessing the same benefits. That's a whole story unto itself, but the takeaway for today is, when you combine demographic momentum with favorable financing, you can remake a nation, and that's why housing policy still matters today, which we'll get. Two shortly, when you change access to credit or just tweak it, you change the trajectory of families and markets for generations, and the GI Bill proved that. So when we talk about interest rates, affordability, supply shortages, or any of the high frequency housing data that we cover here, remember that the stories aren't just about numbers. They really are about people. They're about giving ordinary Americans the chance to build wealth the same way that those World War Two veterans did through ownership, stability and the quiet compound leverage, not compound interest. Compound leverage that real estate delivers over time.

Keith Weinhold 5:49

I'm bringing you today's show from, I suppose, a somewhat exotic location. I am inside Caesar's Palace, which is right near the very middle of the famed Las Vegas Strip, that's where I'm at. The hotel staff is always accommodative of the show setup. This might seem a little strange to you, because I'm not a gambler. The reason I'm here is that my brother lives 25 minutes away, and I've been with him during Thanksgiving. Next week, I'll bring you the show from Buffalo, New York, and then two weeks from now, I have something heart warming to tell you about that, and it is a real estate story. I'll be broadcasting the show from upstate Pennsylvania. I'll be there to visit my parents. My brother's also coming in from Nevada to be there. That's where the four of us, mom, dad, my brother and I will sit around the same dining room table in the same kitchen of the same home that my parents have lived in since the 1970s nothing has changed, and all four of us know our spots at the table. And actually, it's not even called the dining room table. It is the supper table, as my parents call it so, from flashy Caesar's Palace today to Buffalo and then to Appalachian simplicity in Pennsylvania, the stability and continuity of my parents living in the same home and four wine holds sitting around the table during the holidays, it is so rare. I imagine less than one or 2% of people can do this. I'm just profoundly grateful and proud of Kurt and Penny Weinhold for being the best, most stable parents I could have asked for. It's almost too much to ask, and if you don't have that in your life. Ah, you can do something about that. You can provide the same decency and stability for your children.

Keith Weinhold 7:50

Let's talk about seven proven ways you can get a lower mortgage rate with this week's terrific guest. Though, we'll focus on investment properties. A lot of this applies to primary residences as well.

Keith Weinhold 8:07

We are joined by the founder of the lender that's created more financial freedom for real estate investors than any other mortgage originator in the nation, the eponymous Ridge lending group. And though that sounds impressive, my gosh, she didn't even need that introduction for you the listener, because she's one of the most recurrent guests in show history. Welcome back to GRE Caeli Ridge,

Caeli Ridge 8:30

I am delighted to be here as always, Keith, thank you for your support and acknowledgement. I love what you do, and I'm hoping that I can bring more value today to your listeners in what it is that we do, educating the masses, right?

Keith Weinhold 8:42

You've been doing that here for about 10 years. And yes, we're talking about a woman with a reputation for writing emails in all caps, yet still maintains a great relationship with everybody. I mean, congrats, shaile. I couldn't possibly pull that off myself.

Caeli Ridge 8:58

Thank you, Keith. And you know, I'm going to stay by my all caps, man, it's a speed thing. It all boils down to the number of seconds in the day that I can just move quickly through an email. Yeah, I love my all caps.

Keith Weinhold 9:09

Apparently recipients are still replying, well, you can get a lower mortgage rate in at least seven ways. You can get an adjustable rate mortgage, do a midweek lock in, negotiate seller credits. Have a high credit score. Do a two one buy now, which is kind of old school, but some home builders are using it boost your DTI or buy now, not later. Those are some of the strategies for lowering your mortgage rate. What are your thoughts with regard to that?

Caeli Ridge 9:39

I think all of those are viable. I would just say on the adjust for a mortgage. The pushback I would give there is, is that for residential property, specifically, single family, up to four units, we are not finding that spread between the arm and a 30 year fix. We've been the industry as a whole, secondary specifically been on the inverted yield. Now this gets a little tough. Nickel, and I won't go down that rabbit hole, but 08, 09, the housing and lending crash created an environment within secondary markets where an inverted yield has made a 30 year fixed mortgage more favorable in the rate department. Now that's not always going to be the case. I am a huge fan of the adjustable, but what would work right now is an adjustable with the all in one not to take too much time on that topic, but that would be an adjust rate mortgage that I think would save interest or reduce the rate of which interest is accruing,

Keith Weinhold 10:30

the all in one loan, which we discussed extensively back at the beginning of this year here on the show. Long term, though, I have seen adjustable rate mortgages work for a lot of people, because really, the compelling proposition of the arm is that it guarantees that you get a lower rate in the near term, and yet there's only a chance that you're going to have a higher rate in the long term

Caeli Ridge 10:53

and further. Let's I mean, let's dissect that a little bit. I am a huge proponent. I love an adjustable rate mortgage when the arm is pricing a half or a full percentage point plus over a fixed especially for non owner occupied and the reason for that is, and this is statistically speaking, feel free to look this up, guys, the average shelf life of a mortgage for an investment property is about five years. Great point, right? And we know that if that's the case, right, we're refinancing to harvest equity. We're refinancing maybe to reduce an interest rate from where the market was before, et cetera, et cetera. So that would be the first thing I would say. And then also remember, you guys the first 10 years of an amortized mortgage, 30 year fixed, amortized mortgage, how much of that payment is going to the principal? Because people will often push back by saying, well, either an interest only, or an adjustable and what happens if it changes or it goes up? Most of your payment is going to the interest anyway, and that reset to harvest equity. Borrowed funds are non taxable. We always say that, right? I think it's fully justified. So I love an arm, I just don't know, in comparison to a 30 year fixed today, like a five year ARM versus a 30 year fixed we are in a place that it makes sense, but normally, to your point, absolutely. Fan

Keith Weinhold 12:06

that spread needs to widen for the arm to make more sense. What about doing a mid week rate lock in? Is that a thing?

Caeli Ridge 12:13

Yeah. And you know, I don't have any empirical evidence here. Okay, I don't have any data points that actually prove this, except for 25 years in the business and locking loans every day of my life. There's something about a Monday and a Friday. And I have some conspiracy theories. I don't know that. I it's necessary to share them here, but midweek locks tend to be more favorable in both points and interest rate than you'll find on a Friday and a Monday. I think largely it has to do with, you know, the stock exchanges shutting down for the weekend, right? You got a Friday, you got two days in between. You got foreign markets, and all the things that can explode and happen during that amount of time. So I think they hedge a little bit. So on Friday, going into the weekend, I think that there's something about that and why interest rates are a little less favorable. And then Monday, of course, coming off the weekend, similarly, maybe there's some truth to that too.

Keith Weinhold 13:02

Now, negotiating seller credits has really been a trend to help with affordability. Tell us about specifically what you're seeing there, what's common.

Caeli Ridge 13:11

So we're talking to investors. I can tell you that the loan products you guys are going to have access to are going to cap you, okay, you're going to cap at, per guideline, 2% of the purchase price. Okay, remember that your points that you're paying when you get into locking an interest rate are going to be calculated on the loan size, all right. So the first thing to know is seller paid closing costs, maximum is going to be 2% per underwriting guidelines. That 2% is based on your purchase price. Anything that you're paying points for is going to be on the loan balance, the loan size, so there's going to be a little extra there for you that can contribute or can pay for some other closing costs, right, depending on the numbers. Now, if you're smart enough, or lucky enough, or whatever, the market is viable enough that you can negotiate more than 2% from the seller to pay towards closing costs, you're going to be limited on what you can do on the loan side. But let's say that you go and you've negotiated 4% seller will pay 4% towards your closing costs. Then in that case, you can reduce, you got the two points that you're allowed per guideline. And then you can reduce the purchase price by the difference you don't want to leave that money on the table.

Keith Weinhold 14:15

That's how it's done. And then there's just simply having a higher credit score. What's the highest credit score that really helps you get the lowest mortgage rate for both primary residences and non owner occupied properties. Loan product

Caeli Ridge 14:29

type dependent. But I would say overall, 760 and above is kind of that threshold. There are products that go 780 maybe even on the rare occasion, 800 and above. If I had to pick a number as the absolute pinnacle, I'm going to go 780

Keith Weinhold 14:41

All right, so having a credit score above those thresholds really doesn't help get you a lower interest rate. It's really just a little flex that you've got an 811, credit score, or whatever it is. Now the two, one buy down. That's something that we used to see long ago. A few home builders are bringing it back. And what that does it allow? Homebuyers to pay a lower interest rate for the first two years with the seller covering the difference, and that allows the seller to get their price. They don't have to lower the price of the home at all. But the two one buy down, and you see that written, two, one that has been employed more recently. Tell us about that.

Caeli Ridge 15:18

Well, the builders are struggling in some cases, right? The affordability buzzword is all over the place. So they've had to get creative and find ways in which they can move their inventory. So I think they've done a good job at kind of shaving off some of their margins to satisfy or improve the terms for the consumer. So I like the two. One, if you can get it

Keith Weinhold 15:37

now, one can boost their DTI as well their debt to income ratio and Taylor. When we've talked about that before, we've usually talked about reducing your debts in order to improve your DTI. However, a lot of people don't think about the fact that, oh, well, you can increase your income that lowers your DTI to help you qualify. So tell us what is the max DTI that you can have

Caeli Ridge 16:00

maximum debt to income ratio, in most cases on a full dock loan is going to be 50% now, depending on the type of income that you earn or that you've demonstrated, how you calculate that can get a little bit tricky. But if you're just a straight w2 wage earner, we don't have, you know, commissions or bonuses or anything that we consider variable income, then you just take your gross income times 50% whatever that number is, all of your liabilities on the credit report, we do not count ordinary living expenses like food and gas and utilities and cell phone bills. It's the minimum payments on the credit report. As long as whatever that add up is fits within that 50% you're good to go.

Keith Weinhold 16:37

Now, when it comes to improving our DTI to get a lower mortgage rate, I tend to think it's easier to knock out some debts to improve your DTI. But what about the other side of it? What about increasing your income to improve your DTI, lower your mortgage rate and qualify? Can you talk about some of the strategies for increasing your income with respect to DTI?

Caeli Ridge 17:02

Absolutely. And the biggest one, I think that we probably want to focus on most is going to be on a schedule E, right? That's the one that you're going to have more control over. So when we talk about rental income and how we might be able to boost that first, it might be important to share that there are two ways in underwriting that we will calculate or quantify rental income. The first way is called the acquisition year formula. I'll give you that in just a second. It's very easy, but the way I think we focus on here, because acquisition year is going to be what it is, you're going to have very little ability to manipulate or change that once our rental properties fall on our tax return, specifically the Schedule E of a federal tax return, you as the taxpayer or the borrower are going to have some access to maximize or increase the income, or, let's actually get a little bit more granular there to maximize the gain or minimize the loss, by means of depreciation, maybe a cost seg, maybe we make sure that one time, extraordinary expenses are demonstrated on the tax return in the appropriate way so that underwriting can add those things back. So I know that this sounds technical, but the scheduli

Keith tells how much he paid for his first property and how he traded up for more and larger properties.

He highlights the benefits of owning real estate, noting that 63% of the median American's net worth is in home equity and retirement accounts, while the top 1% has 45% in private business and real estate.

He also shares his personal journey and emphasizes using other people's money to grow assets.

Discover why outdated rent control policies harm housing supply and affordability.

Learn innovative ways to turn your property's unused spaces into effortless cash flow with today's best peer-to-peer platforms.

Sign up at GREletter.com to grow your means, and join a thriving community passionate about breaking free from financial limits!

Resources:

These platforms let property owners creatively monetize underutilized spaces.

Neighbor.com – Rent out your garage, basement, driveway, or unused space.

Swimply.com – Rent out your swimming pool by the hour.

StoreAtMyHouse.com – Rent out your attic, closet, or other home storage spaces.

SniffSpot.com – Rent out your backyard as a private dog park.

PureStorage.co – Rent out extra storage space such as garages or sheds.

PeerSpace.com – Rent out your space (home, backyard, loft, warehouse, etc.) for events, meetings, or photoshoots.

Episode Page:

GetRichEducation.com/581

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

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Follow us on Instagram:

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, talking about how I personally built and grew wealth myself with real numbers and real properties, what a rent freeze actually means to you, and how you could be losing income by not creatively generating more rent from properties that you already own. I'll talk about exactly how today on Get Rich Education.

Speaker 1 0:27

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:12

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:29

Welcome to GRE from Stonehenge, England to Stone Mountain, Georgia and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education. I visited Stonehenge and made, by the way, today I'm back for another incomprehensibly slack jawed performance here, still a shaved mammal too. Status hasn't changed. And remain profligate and unrepentant about the whole thing. You probably know it by now that if you're listening here and you want to learn and do things the same way that everyone else does things, then you are squarely in the wrong place. I really mean it more on that later. But you know, Wall Street doesn't scorn real estate because it's risky. They dislike it because it doesn't scale the way that they need it to private real estate can get messy, operational, illiquid. Every real estate deal is different. Every market has its own physics. You can't package it into a fund with a push button deploy strategy. And that's precisely the point. The modern financial system rewards frictionless products that trade constantly and generate fees instead building real, durable wealth has never been frictionless. Here's what the wealth distribution actually shows for the median American. 63% of net worth is in home equity and retirement accounts. For the top 10% that tier, 25% is in real estate and private business ownership. But for the top 1% that highest tier, 45% combined is in private business equity and real estate. So as you approach the top 1% it's more skewed toward owning a business and directly owning real estate. Wall Street, they only offer derivative exposure to real estate through mega funds and REITs. But exposure isn't ownership. Your best risk adjusted returns live in the deals that are too small and too messy for institutions to touch, and that's where your yield lives. The control, the opportunity, the world's enduring fortunes weren't built just by buying exposure. They were built by owning things, land companies, assets that require some sweat to get them going. The next decade favors owners over allocators, the stuff that pays you perpetual dividends. So the irony is that the very things Wall Street avoids the messy hands on part of real estate. Oh, well, that's what makes it such a powerful wealth builder. And see, even, as we somewhat found out last week when we talked about AI property management here on the show, you can't fully automate relationships or construction or management, but that friction is exactly where the margin lives. What makes real estate frustrating for institutions is exactly what makes it valuable for operators and long term owners like you and I. It's the nuance, the inefficiency and the need to actually. Know something about a market, rather than just model it. Wealth that lasts comes from assets that you can influence, not just monitor, and that is the difference between you having mere exposure and true ownership. You can't outsource legacy, the messy path of ownership is often where meaning in real freedom is found. You've got to tend to the garden somewhat, whether your properties are professionally managed or self managed, but some people get overwhelmed if they're asked for a log in and a password, even we all know that feeling somewhat well, then they stay metaphorically logged out of success. Think about how easy remotely managing your real estate portfolio is today. Sheesh 200 years ago. There was no anesthesia. We had smallpox, brutal physical labor, no electricity today. What if a website tells you that you've got to reset your password? Oh my gosh, is the deal often just overwhelming? Can you imagine the effort now, two weeks ago, I mentioned to you that I went back and visited the first piece of real estate that I ever owned, that seminal blue fourplex. But did I ever tell you how I grew that seed into a massive real estate portfolio, and how you can do it by following GRE principles? Let me take you through the early steps here so you can see how you can get something similar going. Of course, your path will look different, but this is going to spawn a lot of ideas for you. I think you already know about my 10k to 11k down payment into that first ever fourplex as the FHA three and a half percent down. Owner occupied, but I didn't buy another piece of real estate for over three years, because real estate just was not that driving thing in my life yet. So I lived in one of those really modest four Plex units longer than I had to three plus years after that, I moved out to a pretty modest, still single family home five miles away, that I had just bought. And since I vacated one of the four Plex units in order to do that. Now, I had four rent incomes instead of three. But here is really the pivot point with what happened next. Now, what would most people do? They might hold on to that four Plex, keep self managing it, and when they could, perhaps aggressively, make principal payments, getting the building paid off before its organic 30 year amortization period. And then what else would they do once it was paid off? Say that would take them 12 years, which would entail a lot of sacrifice, like working overtime at their job and skipping vacations. Oh, they think something like, Oh, now the cash flow is really going to pour in with his paid off fourplex? Yeah, it sure would increase a lot, but after 12 years of toil and sacrifice cashflow off of one fourplex still wouldn't even let you quit your job. Staying small doesn't work, plus you live below your means for a really long time that is sweat and time that you're never going to relinquish. You started working for money. Rather than letting other people's money take over and work for you, it is right there waiting to do that for you. So instead of that path, what I did is when equity ran up in that first fourplex building. Its value increased from 295, to 425, in three and a third years, I did exactly the opposite. I borrowed the maximum out of that first fourplex building, 90% CLTV, and used those tax free funds. Yeah, tax free funds, when you do that to both spend money, well on vacations and make a 10% down payment on a second fourplex building that costs 530k now I'm still living in the single family home while I've got the two fourplex buildings, both with 90% loans on them, still cashflowing A little so eight rent incomes, more debt than I ever had, 10 to one leverage on two fourplexes, and this was all less than five years from the time that I bought the first fourplex. And yes, it probably took some password resets in there. Then next I learned that investing in only one Metro, which is what I had done to that point, that's actually pretty risky, because all eight of my rent incomes, plus my own primary residence, were exposed to the whims fortunes and misfortunes of only one economy. This was in 2012 now, so I started buying turnkey single family. Rentals in other economies that make sense. Investor advantage places is what you've got to look for, Florida, Texas, Ohio, Alabama, Tennessee. My first turnkey was bought in the Dallas Fort Worth metro. I know I've told you that before, all right, but how was I buying more even though I was still working a day job in a cubicle for the D, o, t. Well, it wasn't from my job, because that job is working for money. What it was is borrow tax free and grow, borrow tax free and grow, borrow tax free and grow. By then, enough equity had accumulated in the first two fourplexes that I traded, one for an eight Plex and the other for an 11 Plex. Now we're getting up to $3,500 of monthly cashflow at this point, which is probably 5k plus per month in inflation adjusted terms. And the 8plex cost 760k and the 11 Plex cost 850k back then, and I still remember that that was a big day for me back then, those buildings closed on either the same day or on consecutive days. I forget. Well, that was 1.6 million in purchases. Maybe that's two to two and a half million in today's dollars. And see that is sure more than what one paid off fourplex would have given me on that old slow track, yet I had all of this faster than waiting 12 years to aggressively pay off one fourplex. And you know, some could say back at that time, they would look at that situation from the outside and say, Keith, where did you get the money to make 20% down payments on that 1.6 million worth of real estate, that is 320k cash? Did you save up all the money? No, I didn't. I didn't have the ability to save that much money at my job. Did you use your existing properties like ATMs, raiding one property to buy another. Yeah, that's exactly what I did. That is the use of other people's money that is wiser than spending my time away from loved ones by selling my time for dollars that I'm never going to get back. And by the way, I have always been the sole owner of properties. No partners here. Now, at this point, I've got dozens of running units spread across multiple states, all professionally managed. And by the way, eight doors is the most that I've ever self managed, because I got professional management involved after that. Oh, there are a ton of lessons in there about what I just told you, many of them, which I've sprinkled through more than 500 episodes now, but now that I told you where I came from, do you know the lesson that I want to leave you with here on this one, for the most part, it's that I'm not even using my own money to do this now, I did add some of my own money for down payments. Sure, by far the minority portion, primarily and centrally. I keep leveraging the bank's money, and they make the down payment for me on the next property. Borrow tax free and grow, borrow tax free and grow, borrow tax free and grow. Yes, the pace of you doing this is going to fluctuate over time, but that is the playbook that I just gave you right there. Now I've done it in cycles that feel slower because appreciation is lower, but interest rates tend to be lower during those times. And I keep doing it in cycles that move faster because appreciation is higher and interest rates tend to be higher during those times. I've done it when lending was loose, like pre Dodd Frank, and I've done it when lending was tight and inflationary. Times supercharged this whole thing. Sooner than later, you would rather get $5 million worth of real estate out there under your belt, all floating up with inflation and appreciation, not just $1 million worth, $1 million worth, that's more like sticking with one fourplex and trying to pay it off. Anything worth doing, anything in your life is worth doing. Well, look, other people's money is still available to me and to you. So using my own money back when I was an employee, I mean, that's exactly when I would have had to trade more of my finite time for dollars and see, that's what the masses do, and that's precisely what keeps them as the mediocre masses. I really mean it. Now, I wanted to make things real for you with that soliloquy.

Keith Weinhold 14:47

Later today, I'll discuss the GRE principles. Did that formative story spawn? A few weeks ago, it made substantial news inside and outside the real estate world that Zohran Mamdani was elected to be the next New York City Mayor. His first day on the job will be the first of the coming year. And actually, it's easy for you to remember how New York City mayoral terms work, because it is the same as the President of the United States. Each term lasts four years, and they can serve up to two consecutive terms eight years. Let's you and I listen into the audio from this short video clip together. This Mamdani campaign spot ran back before election day, but it tells you what he stands for and where he's coming from with regard to rent. In a slightly corny way, the ad shows various tenants popping their heads out of apartment windows and such, saying like, Hey, wait, what? You're going to freeze my rent?

Speaker 2 15:50

I'm Assemblyman Zohran Mamdani, and I'm running for mayor to freeze the rent for every rent stabilized tenant.

Unknown Speaker 15:57

Wait, you're gonna freeze my rent?

Speaker 3 15:59

Yes, did I hear rent freeze?

Speaker 4 16:02

Yes, this guy's gonna freeze the rent. No. Pike none. This guy's gonna freeze the

Unknown Speaker 16:09

rent. It's true.

Dani-Lynn Robison 16:12

As your next mayor, I will freeze your rent paid for by Zoran for NYC.

Speaker 5 16:17

The banner at the end of the ad reads, Zoran for an affordable New York City. Oh, yeah, slogans like that are so catchy for anything. All right, he says he's going to freeze the rent for every rent stabilized tenant. And rent control and rent stabilization, they mean very similar things, ceilings on the rent. I'm soon going to tell you what I think about that, and I've got more on Mamdani shortly, but it's not going to be political This is not that kind of show. This is an investing show. I think that even our foreign listeners know how big and influential New York City is. It's not the political capital, but it is the capital of so many things in the United States, it's America's largest city by far, eight and a half million just in the city proper, 20 million in the metro. And New York's growing in sheer number of people. The Metro gained more population than any other city, almost a quarter million people added just last year, even if you doubled the population of the second largest city, LA, New York City would still be larger. All right. Well, how did we get here? A quick story of New York City rent control is that in 1918 New York City passed its first flavor of rent control, and that was the first US city to do so that didn't solve the problem. So in 1943 Congress passed the emergency price control act, and its name implied a temporary patch during World War Two. But even after it expired, and even after the war ended, New York State chose to make it basically permanent in 1950 that didn't solve the problem. So in 1962 New York state passed a law allowing cities to enact expanded rent control if they declared a, quote, housing emergency. Well, New York City did, and that housing emergency has essentially continued unresolved. Still, what they consider an emergency condition persists today, yeah, all these decades later. I mean, really a what, 60 to 70 year long emergency condition that didn't solve the problem. So in 1969 new york city passed what they called rent stabilization. It's really just a new flavor of rent control, and this greatly expanded the number of properties that were subject to these rent regulations. And about half of New York City's apartments are subject to that law that didn't solve the problem. So more expansion and more tweaks of regulating the rent were made in the decades that followed. You had notable ones in 1997 2003 2011 in 2015 but none of them solved the problem. So in 2019 New York expanded rent stabilization to include what they call vacancy control. Now what that means is rent caps are now applied to new renters, not just those existing tenants renewing a lease, and it also granted more tenant protections that didn't solve the problem. So in 2024 New York State passed what they call good cause eviction. That is a third expansion of rent regulation in these tenant protections. This time, they just gave it a slick name, kind of apropos of Madison Avenue's famed market. Marketing prowess. I suppose that didn't solve the problem. And by the way, rent caps came in below not only the rate of inflation, but also below household income growth almost every year over the last decade, and in some years, no increase was allowed at all. That is a rent freeze. But that didn't work either. And meanwhile, New York's public housing agency has 80 billion in deferred maintenance needs, and it's running a $200 million plus operating deficit. So government run housing that hasn't worked either. All right? Well, that brings us to 2025 where New York City is electing a mayor who campaign on freezing the rents and expanding public housing. So New York City now has, for over a century, chosen to expand and rebrand these ideas that just haven't worked, and yet they keep coming back for more and yeah, what exactly is the word for doubling and tripling and quadrupling down on ideas that have proven not to work? Is that word stupidity? Hmm, so throughout that history that I just bro

Keith discusses the evolving role of AI in real estate, highlighting its impact on property management and tenant interactions.

He contrasts traditional AI, which excels in IQ tasks but lacks emotional intelligence (EQ), with agentic AI, which can perform autonomous actions.

Dana Dunford, CEO of Hemlane, explains how their platform uses AI to streamline repair requests, leasing, and tenant communication. She emphasizes the importance of human oversight for tasks requiring EQ.

Looking ahead, Dana predicts increased standardization and remote-first investing, with technology playing a crucial role in enhancing real estate management efficiency.

Resources:

Explore Hemlane's property management platform and request a demo at www.hemlane.com

Mention the GRE podcast when signing up with Hemlane to receive a 20% discount on the first year.

Episode Page:

GetRichEducation.com/580

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

GREletter.com or text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE. I'm your host. Keith Weinhold, what will real estate look like in five years as AI keeps making inroads into our lives, learn how people have begun using it to manage their rental properties and doing it more cost effectively than humans can. It's a forward looking episode today on get rich education.

Speaker 1 0:26

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:11

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:27

Welcome to GRE from Long Island's Hamptons to Hampton Roads, Virginia and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education way back in the year 2010 when someone said AI, that could only mean one thing they were talking about, Alan Iverson today, it means artificial intelligence, because chatgpt debuted three years ago this month, and gosh, that changed a lot. It changed how you search for answers to everyday questions. We'll get into applying AI to real estate and property management shortly. But more broadly, look, here's what's interesting, the very premise of a chat bot, like just hearing that word, it sounds really cold and impersonal, yet think about it, Google was way less personal. When you Google something a decade ago, say list the three best paints for drywall, you'd get a list of links, and then you had to dig in and synthesize things and often interpolate to find your answer, or maybe you wouldn't even get the right answer. Instead, today, a chatbot on chatgpt or Gemini gives you the answer in nice, friendly sentences. Maybe they'll list some acrylic and latex paint varieties, and then after the answer, they come back and ask you a good follow up question. If you'd like to dig in for a deeper answer, they'll bring up something that you hadn't considered before, perhaps like it'll turn around and ask you if you want them to refine their answer to just the best latexes and acrylics specifically for rentals. And then it will ask, Would you like me to do that for you? And when you see that, you quickly feel like it's more friendly than that old list of links from a Google search. Yeah, that's a friendly Chatbot. And you can start to see what I mean here. It's not so cold and impersonal. Understand that these platforms ask you a friendly follow up question, because they want to keep you on that platform, just like anywhere else, does you already hear less about hallucinations than you used to when it would just cough up these weird errors? I feel like it's giving better answers than it did just a year or two ago. In my experience, one place where you need to be careful is that these platforms are being so nice to you at times they seem a little too agreeable. One way to break that is to tell the AI challenge my thinking, just those three words can give you a more complete answer. Challenge my thinking, as we already know, one danger about AI is everyone is quickly becoming really reliant on it, and this could be especially harmful to kids that haven't developed independent skills yet. Now I heard from a young teacher who quit her job. A lot of kids don't know how to read today. Why would they when they can just hit a button and it reads it out loud for them, between third and fourth grade, that's when children should transition from learning to read over to reading to learn. Kids have aI right in their hand now, not every kid, but increasingly, they aren't writing a full essay by hand with their own thoughts that they conjured up. Of course, chatgpt does that for them. Now it's probably good to teach chatgpt to kids in older grades, that is, if they don't already know it better than the teachers do, but you've increasingly got teens and young adults that say don't know how to write a cover letter for a resume because it's done for them. Now, much of what I've been talking about so far is called generative AI, and all that means is that it creates new content in response to your prompt. Today, we'll also talk about agentic AI in real estate that is spelled like agent and with IC at the end. How agentic AI is different from Oh, the chat GPT or Gemini prompts that I was talking about is that it acts on its own to perform a series of actions to reach a goal. So agentic AI gets kind of autonomous.

Keith Weinhold 6:06

Before we bring in a great guest to talk more about AI and property management. If you're looking for another episode on how to use AI more broadly in your life and broadly in real estate, check out episode 543 of the get rich education podcast that was a great episode from back in March again, that was episode 543 titled How to use AI for real estate.

Keith Weinhold 6:34

Now let's pull back and humanize things a little before we talk about bots. I just caught myself doing something kind of funny. Now, the other day, I used the hand ergometer at the gym. If you don't know what that is, while you're oftentimes standing up, you basically use your hands to crank this device's pedals in much the same way that bicycle pedals move. It exercises your biceps, triceps, forearm muscles. I have never seen anyone use this device at the gym before, not one person, but I wanted to try them, right? It seems like I often want to try something different from everyone else, and it looks just slightly odd to use this hand ergometer machine. Well, that's not the funny part. The next day, I was throwing a football around with a friend, and I couldn't figure out why throwing a spiral was so difficult for me and why my throwing accuracy was dreadful. Later, when I got home, my forearm started feeling sore. Oh, and I realized it was from using that hand ergometer. You know, this is such a typical guy thing to do, I made sure to DM that friend immediately to tell him that my football throws were lousy only because I had used a hand ergometer at the gym the day before. And he basically replied, yeah, your throws were really bad. It's funny that I felt so compelled to DM him like, hey, I really don't want ed thinking that I can't throw a football like that is so important or something. I could have done anything else with that two minutes of my life, but I cannot go about the rest of my day if Ed thinks I've got a bad football spiral like so important, like, my flight to Paris leaves in 30 minutes, but I'll put that whole trip in doubt, because I can't forget to tell ed I can usually throw a spiral on a football better than what he's thinking. Because, admit it, everybody has an ego. Some are just bigger than others. Well, I am bursting at the seams with a lot of broad real estate investing techniques and developments for you, but I'm putting that on hold until after today's show.

Keith Weinhold 8:45

We're talking with the CEO and co founder of property management platform, hemlane. It's spelled H, E, M, L, A, N, E, hemlane. I'll ask her where real estate will be within five years. She's a really intelligent woman and fully aware that your tenants don't want a bot to handle all of their maintenance requests. It's a lot like how you don't want to say representative to an automated phone system. It's hard to be nice when you're trying to clearly articulate it for the third time representative. Let's meet this week's guest.

Keith Weinhold 9:33

This week's guest is the CEO and co founder of hemlane. They're a property management platform with over 28,000 rentals and a billion dollars in payments process, just like we have been since day one here at GRE She is a strong advocate of purchasing properties anywhere. So that's often going to be outside your home state, because if best investments typically aren't right in your backyard, and why would you limit yourself? She supports real estate investors in setting up the most intelligent process to manage rentals from a distance, in case you want to self manage and do that. She's been named one of the top 20 women leaders and influencers in real estate tech. She has a distinguished resume previously working at Apple, and she received her MBA from Harvard Business School. She's an interesting person too. In her free time, she's an avid equestrian, paraglider and skier, so like me, she sort of has this substantial life outside of real estate too. Come on. You need to do that for your sanity. Well, we've been talking for almost a year now, but this is your first time on the show. Hey, welcome. It is the GRE debut of Dana Dunford.

Dana Dunford 10:44

Thanks so much Keith for having me. I'm so excited to be on your show and have been following it for a long time. So huge fan.

Keith Weinhold 10:52

Appreciate that Dunford is spelled D, u n, f, O, R, D, for listeners in the audio only. And this is a rather forward looking episode streamlining how to use AI in real estate and as a property management solution, putting that in your hands so that you could do that yourself. And before we're done, Dana is going to tell us what real estate investing will look like in five years, and if it's a good time to invest now. But first, Dana, I know you're an expert in leading having autonomous agents handle the tenant relations, things like communication and repair orders to a unit and rent collection. But I think a lot of people aren't really sure what an autonomous agent is. They're like, Hmm, is that somewhere between an autonomous car and a Roomba or something? So what is an autonomous agent?

Dana Dunford 11:42

Yeah, so there's two different types of AI, and where we are right now is with traditional AI. There's also agentic AI, where essentially AI will just take over, be proactive, think about things in advance, know exactly how to solve and make decisions. But Keith, to your point, very many out there here, AI, it's very much of a buzzword, and so I love some sort of parallels, just like you had mentioned with like the robot vacuum. I think a really good parallel would be self driving cars, because that's something that's applicable. We can all relate to. You know, you have Tesla, I have one, and it can drive me to and from work at any time, fully on that autonomous but there will be occasionally times in San Francisco where it will require me to take over the wheel because it's too foggy. There's something that goes on that's too complex of a situation. That is where I would say AI is today that traditional, where it's like it can follow exactly a process, but if the process messes up, like there's something in its way, it can't make a decision. It beeps at you and says, take over, whereas if you look at something like Waymo on the self driving car side, that is fully autonomous. There's no one there. There's no one making decisions. But it's very limited on where it can go, what it can do. Now the technology is better, and that's for another conversation, but it's just slower to go to market. And so with traditional AI, and what we're seeing now, it's fast to market. Everyone can use it, but you can't rely on it 100% you can't say it takes the wheel 100% of the time. And I don't have to think about it. And so that is where we are. I think a lot of experts in the space will say 2030, is when we will see this agentic AI. Will see it completely take over, but we're just not there today.

Keith Weinhold 13:47

All right, we're talking about the transition from traditional AI, which is in place today, to agentic AI, perhaps the Advent or popularity of that in five years, when I think about autonomous agent a lot of times, I like to look at etymology. Just what does that specifically mean? So we're talking about for another AI or a bot, if you will, to have autonomy over decision making. And when we think about autonomous agency with property management, how can we think of that application?

Dana Dunford 14:20

Yeah, I think that you need to break it down into what AI does very well right now, and what you could have aI fully take over, and where you might have some problems. And let me back up to if everyone remembers Watson, who beat Jeopardy, this was a while ago. The reason was, was actually because AI is very good at IQ. It can look up a ton of facts, or it can solve a really complex math problem. So anything on like the IQ side, AI is great to solve, but it's EQ that AI. Lacks, yeah, and EQ is me picking up the phone and saying, you know, Keith, I'm so sorry I messed up on, you know, whatever it was for you. If you're my boss, I'm so sorry here. So I'm going to make it right. Blah, blah, blah, blah, blah. And so that's where AI is not as good. And so when I think about any kind of system with real estate, you know, putting together your pro forma and looking at the cash flow and all of that, like AI can actually do it well, if you set up these are all the prompts that I would need, or take everything from insurance to interest rates and come up with the pro forma. But where AI will fail is a lot of times on the tenant communication side. And the reason for that is, let's just say, Keith, you have a apartment complex and there is the heat out. Well, if someone has a screaming baby in the background when you pick up the phone, you are going to answer that question, or you're going to talk to that tenant a lot differently if you're human versus if you're AI, you're going to say, oh my gosh, you have a four month old baby. You know, I also have kids. I know exactly what you're going through. And just so you know that HVAC technician is coming out right away, I will be here for you. I'm going to call you in five minutes. And so I always say, especially in real estate, because real estate is a people business, you really need to what, what you're trying to automate, or what you're trying to use, AI into four quadrants, and one axis, the horizontal axis, is IQ. Anything along that access it does well, but the vertical axis is EQ. And so the higher up you go on EQ, where you need relationships, the less likely it is, or my recommendation, would be, put a human in there. And so when we think about AI, it's like, if you're calling someone to confirm an appointment and remind them that, like an electrician is going to be there in an hour, you don't really need a human to do that. That's something that AI can do, and someone's going to have a delightful experience, right? But if it's something that requires that, EQ, that's where you're still going to have to have humans there.

Keith Weinhold 17:11

One thing that I often think about is, some years ago, popular email providers like Gmail, when someone would send you an email message asking you a question, Gmail basically started reading that email for you and giving you three little bubbles to click on the bottom, basically where you can click a yes answer, no answer or a follow up for more information, does that help give some relativity to what We're talking about here in property management and those tenant relations.

Dana Dunford 17:43

Yeah. I mean, I think that the Gmail with like, yes, no or No, thank you, or you get it also on LinkedIn that almost has zero EQ, because it's really just answering a question. It's not saying, Keith, I hope you had a wonderful weekend. You know, on your run, blah, blah, blah, blah, blah. It's not doing any of that. And so I think that is very much of a case of like, it's responding exactly to the email. I do think AI is getting better, where it's having that human touch involved in it when it responds to things. So now in Gmail, where you can have it draft you a response, but at the same time, it's not quite there unless it has enough context. And what I mean by context, and Gmail is such a good example, let's just say Keith today, if you look at Gmail and it's responding to an email, it is literally only responding based on the context it has in that email, right? But let's just say Keith, that you could increase context. So I gave you two axes, like EQ and IQ, high and low on both. Imagine if I could add a third axis on there, so it's almost like 3d and it's context. Now imagine that email you just mentioned came in, and it also could look at my messages, Keith with you on, let's just say Facebook, it also could look at the last shows that you had out there. It also just looked online at things, and maybe it could look at other, you know, information that you might have posted on LinkedIn. And maybe you posted on LinkedIn about your run this weekend. Now I can respond with a lot more context. Hey, Keith, saw on LinkedIn. You had this that is actually adding EQ to it, where it's making it much more personalized. And I think that is where the future of technology is going, and that's why data is such a big play here, because the more context you have, the better you are. And you know, we see that personally as a tech company, we wanted to control more of the data. We don't want to have a ton of APIs with other companies running maybe self guided tours for us, or running the maintenance coordination, because we need that all in our system. Because if we don't have access to the lease agreement to know specifically, do they have an occupant under one years old in the place it makes it. Lot more difficult for us to respond in a very eloquent way and help solve that EQ problem that a lot of AI has today.

Keith Weinhold 20:09

Talk to us more about how today autonomous agents

Register here to attend the live virtual event "How to Scale Your Portfolio, with Tenanted Cash Flowing, New Construction Properties" on Thursday, November 13th at 8pm Eastern.

Keith discusses Billie Eilish's views on billionaires and contrasts her stance with Grant Cardone's, emphasizing the value billionaires bring.

Hear about the Fed's decision to end Quantitative Tightening (QT), predicting lower interest rates.

GRE Investment Coach, Naresh Vissa, joins the conversation to highlight the benefits of new build properties, such as lower maintenance and higher tenant quality, and mentions a 10% cashback incentive from builders.

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Complete episode transcript:

Keith Weinhold 0:00

Keith, welcome to GRE. I'm your host. Keith Weinhold, should billionaires even exist? Why do so many people think that interest rates of all types are headed even lower than as a real estate investor, how to identify and capitalize on an opportunity in this era? It's something that I've never seen before. Today on get rich education

Speaker 1 0:27

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:13

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:29

Welcome to GRE from flatiron, Manhattan to Flatbush, Brooklyn, across New York City and 188 world nations. This is Get Rich Education. I'm your host. Keith Weinhold, it's the longest federal government shutdown in US history. This whole thing has now lasted longer than most gym memberships. I guess the GDP stands for government doesn't produce, hmm. Before we get into our core investing and real estate content today, Billie Eilish, the singer, recently made some public remarks on whether or not billionaires should even exist. Yeah. Now if you're not familiar with her, Billie Eilish is known for her kind of unique style, sort of these baggy clothes, neon hair, avant garde fashion, and she has a reputation for being outspoken about a lot of things like mental health and body image and environmental issues. Now, in general, I respect people for speaking their mind, whether I agree or not, because a lot of people are just afraid to do that. Let's listen in to this short clip on what she said. You might have heard this because it was pretty widely broadcasted. Eilish spoke after receiving recognition at the Wall Street Journal innovator awards. This is courtesy of the AP. And then I'll come back to comment.

Speaker 2 2:58

We're in a time right now where the world is really, bad and really dark, and people need empathy and help more than kind of ever, especially in our country. And I'd say if you have money, it would be great to use it for good things and maybe give it to some people that need it and love you all, but there's a few people in here that have a lot more money than me, and if you're a billionaire, why are you a billionaire? No hate, but yeah, give your money away. Shorties. Love you guys. Thank you so much.

Speaker 3 3:40

First of all, without explicitly saying it, she's basically referencing how inflation widened the canyon between the haves and the have nots and GRE listeners that have acted have been on the right side of that canyon. I actually want to give Billie Eilish some credit here. Giving is virtuous. That is a good thing. In fact, next month, I plan to discuss the pros and cons of giving here on the show as we approach Christmas. Billie Eilish, she's certainly not a hypocrite either, because she's given away more than $10 million of her estimated $50 million dollar net worth. She's into feeding people and climate initiatives that right there is giving away more than 20% of your net worth, and that is really kind. Now, you heard her say there's a few people in here that have a lot more money than me, and she's right. Mark Zuckerberg was in that room. His net worth of over 200 billion means that his net worth is more than 4000 times greater than Billy eilish's. It sounds loosely like she's. shaming him for not giving away more of his wealth. And I don't know just offhand how much Zuck gives away, but this is where my credit to Billy Eilish stops. I think that it's okay for a person to be a billionaire. I wouldn't question that. I mean, a lot of times it meant that that person was willing to take risks that others would not dare try. A billionaire probably means you're a person of great value, and that you've hired hundreds or 1000s of other people, creating jobs for them. A billionaire has almost certainly created a product that society values. Jeff Bezos pioneered one day delivery. Zuckerberg connects people through his meta platforms. And now I'm not going to say that either one of those billionaires are perfect people. They are flawed, just like you and I. Billionaires probably pay more tax than the average person as well. That supports the infrastructure that you and I and everybody use, like building bridges or creating a fiber optic network. I would expect that a billionaire would be a giver as well. And see, if you're a billionaire, you have more ability to give than the average person does, you can make a greater impact. And see, this is where things really break down and not make sense. So if Billie Eilish is net worth is 50 million, Oh, apparently that's just okay. That's fine with her. But once it gets to 20 times greater than that, which is 1 billion, then it's not okay. So that means the line is drawn somewhere in there. That makes zero sense to me. The ceiling on what you're supposed to have in net worth is between 50 million and 1 billion. Like, I really do not get the logic on that one. And you know, a guest that we've had on the show here, Grant Cardone, whether you like him or not, he has had some on point remarks about these Billy Eilish comments himself to the question that she posited, which is, if you're a billionaire, why are you a billionaire? Cardone's answer is, if you're a pop star, why are you a pop star? Billy said, give your money away. Cardone's response to her is, give your music away. That's some food for thought there. That's my take on the Billy Eilish remarks on whether or not billionaires should exist. And if you want to hear Grant Cardone and I's conversation here on GRE, that was episode 264 the title of it is Keith Weinhold and Grant Cardone 10x your wealth number 264, a lot of listeners like that episode saying something like it was a dream to hear grant and I together for the first time. Like that, their favorite sales trainer on their favorite real estate show. You can listen by either scrolling way back to get rich education episode 264 in your podcatcher, or you can listen directly by going to get rich education.com/ 264,

Keith Weinhold 8:11

now the Fed has said that they are going to slow or end Qt, next month. All right, when Jerome Powell says something like this, what does that really mean to you as an investor? What can you expect ending QT? Well, you probably already know that QE quantitative easing that has the effect of creating dollars. Qt is the opposite. It has the effect of destroying dollars. So if they're ending Qt, this helps keep more dollars around in the future. So ending Qt then, like we expect soon, that really parallels a lower interest rate environment, because see lower rates already make dollars flow more freely. You probably remember the analogy that I introduced to you on the show earlier this year about how lower rates are like lowering the height of a dam wall. It makes it easier for water to flow, so then lowering rates makes it easier for money to flow, and that's because low savings account rates make people get money out of those vehicles. Okay, that's that low dam wall and low borrowing rates make that money flow as well. People will unlock dollars if rates are low, late last year, the Fed dropped rates a full 1% then they didn't make any moves for a while, until late this year, they've now dropped rates another half a percent. That's the environment that we're in. So then more QE and less QT. That further eases the flow of dollars, and it correlates with even lower rates that are coming in the future. Now it doesn't mean that they will. I'm not saying that they certainly will. There is just that tendency, that correlation. So we had pandemic era QE there about five years ago, that ended as we moved to Qt in 2022 and now what we're doing is unwinding Qt, moving back toward more flow, and it surely gets more technical than that. Ending Qt allows the Fed to expand its balance sheet again. Treasuries and mortgage backed securities, once matured, can now be replaced, and that injects liquidity into the system once again, and that is where we're going. Bank reserves are reaching ample levels again, and there is no need to put liquidity stress on money markets. A lot of these moves are here. What they're here for is to help ease the concerning labor market. It's been almost exactly three years now since chatgpt launched, and a while back, I mentioned how companies were newly interested in hiring the shiny new job that didn't exist before the AI prompt engineer that was one of the hottest jobs. Well, yeah, that was true back in 2023 but not so much. Now. A lot of companies have figured out that the employees that wanted to keep their job, well, they figured out real quick how to be the Ask AI, good questions guy, and we are seeing more layoffs later today, my guest and I will talk about that, and also he's going to make somewhat of a future mortgage rate forecast, or at least talk about the direction that they're going in. I think you're really going to like that. I don't predict rates myself, but sometimes a guest will. That's what's happening today. My point here is that with Qt ending, which again lowers the damn wall height and eases the flow of money, that parallels the fact that we have lower interest rates now than what we had one year ago, and we have lower interest rates now than what we had two years ago. As well, be mindful that you cannot get it all as a real estate investor. You cannot get soaring employment and low interest rates together. You cannot get those two things together, at least not for long. High employment means high rates. Low employment means low rates. Today's guest, and I will get into that as well.

Keith Weinhold 12:43

Well as we've had lower rates, hence a lower wall height, don't buy property and expect that you'll be able to refi into a lower rate within a year. If it happens, great. Don't buy expecting rents to go up or rates to go down, although many think that will happen. Just enjoy it. If it does, rent vesting has been on the rise lately. Yes, rent vesting. What that means is when you pay rent in the property where you live, and then the only properties that you own are rental properties. Rent vesting makes sense if you live in California, New York City and Boston, since rent to price ratios are so low there, and then you invest your dollars inland, that's how you can live in a high cost place and yet still benefit from cheap rental property and have income streams from them. You might remember that some months ago, I interviewed two listener guests on the show, everyday listeners, just like you, and California based investor and GRE listener, Joshua Fang, told us about his rent vesting. He pays rent in his primary residence, since the rent to price ratio might be three tenths of 1% there and then he owns property in GRE marketplace markets, I think it was Memphis and elsewhere where you're benefiting from, say, eight tenths of 1% that is called rent, vesting, investing in properties that make sense that you buy through GRE marketplace. And remember when Josh told us that passive income gives him time to enjoy life and even stop and watch two lizards for 15 minutes? Oh, what passive income can do. It's the quirky things that you remember. See. The point is that smart people in high cost states are rent vesting, if that's what you've got to do in order to own real assets. Then do it get on the right side, as this difference between the haves and the have nots just keeps expanding. I just did something that you might find interesting over the weekend for the first time in years. I visited that first fourplex building that I ever owned, which is also the first piece of real estate that I ever owned, that blue colored fourplex, and it is still blue. The address of that property is 925 east, 45th court, and it's in Midtown Anchorage. It has never been a pretty neighborhood, and I confirmed that it still is not. It looks a touch worse than when I owned it. I straightened up the curb appeal more than today's owner does. I bought the four Plex over 20 years ago for $295,000 and at that time, on the day that I bought. The total rents were $2,900 because it was 725 per door. I just looked on Zillow. And do you want to guess at its zestimated value today? Yes, it cost 295k back in 2002 and today, the Zestimate is 625k I don't know what today's rents are. My guess is that they're just short of $6,000 for all four units combined, two bed, one bath, 960 square foot units, really plain vanilla, boring looking housing, but it's certainly not like a crime ridden slum. It's just that depressing looking block that's just chock full of disorder and these other four Plex buildings and dumpsters all over the place. But yeah, that's how it all began for me. I visited that building again, and I haven't owned it in a while. I 1031 exchange out of it and into an eight Plex in 2013 if it weren't for that building, you would not be listening to me right now, and you would not have heard of me, because this show wouldn't exist big thanks to the three and a half percent down FHA loan for someone that came from humble means, like me.

Keith Weinhold 17:03

Last month, I did a running race that goes up a ski jump that was pretty cool. It gets so steep that you have to grab onto a cargo net to pull yourself up. It's almost like a rope ladder. I did not win. I got fifth out of 21 competitors in that race. Hey, I like to get out and physically challenge myself. After talking real estate all day, my body weight is up a little. It's currently sitting at 178 pounds. That's 81 kilograms for our European listeners, and it hit its recent bottom of 172 back on the Fourth of July. That's by design. I need to be really leaned out for a big Independence Day race every summer. You know, I'm one of those guys where I still cannot compete with bodybuilders because I'm too lean, and yet I don't win running races because I'm too bulky, so I'm more of an all around guy. I do about seven different sports, and that's exactly how I win nothing and always get like, fifth place or worse. This major mammal has got to keep himself moving, In any case.

Keith Weinhold 18:17

next week here on the show, we'll talk to a Harvard grad. She's super interesting. She used to work at Apple, and then she founded an AI centric property management company so that you can use her platform to self manage and leverage AI. But are we at the point where your tenant would really talk to a chatbot? Would that fly? And if society is there, well then do property management fees and everything start trending towards zero. I'm going to ask her about that. That's next week. As for today, you know, the world series ended about a week ago, and what I did is that I watched 10 commercials during the World Series, and then I jotted down the name of each sponsor, and here's who the World Series advertisers were just in this one segment where I paid attention to them. They're all big brands that you've heard of atnt Liberty, mutual nature made brand items like vitamins and supplements, Starbucks, Coors, light, Qdoba, Capital One, Home Depot, crest, white strips and Jim Beam, all right, those were the 10. What do those 10 have in common? More or less, any ideas there those 10 products and companies are all for consumer products. That's the common link. And that might seem so obvious that you wouldn't even think of it. Well, this is because most ads are for consumer products. Those ads fuel consumerism. And there's nothing wrong with that at all. That. Represents an economy. In fact, I use some of those very companies in my personal life.

Keith Weinhold 20:04

But here's the difference here at GRE our sponsors help you produce, not consume. Think about that as you listen to me in this spot for freedom, family investments and then Ridge lending group, then I'm coming back for more with a terrific guest.

Keith Weinhold 20:23

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Keith Weinhold 21:34

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com

John Lee Dumas 22:08

this is Entrepreneur on fires, John Lee, Dumas, don't follow Money. Make money. Follow you with get rich. Education.

Keith Weinhold 22:22

So we have a familiar voice b

Register here to attend the live virtual event "How to Scale Your Portfolio, with Tenanted Cash Flowing, New Construction Properties" on Thursday, November 13th at 8pm Eastern.

Keith introduces a profound life perspective: humans are typically allotted only 30,000 days. What will you do with the days you have left?

Every moment not spent building wealth is a moment lost forever.

Adam Schroeder, a real estate investment strategist, joins the conversation to talk about current opportunities with new build properties with significant builder incentives and the potential for high appreciation.

Resources:

Switch to listening to the podcast on the Apple Podcasts or Spotify app, as the dedicated GRE mobile app will be discontinued at the end of the month.

Show Notes:

GetRichEducation.com/578

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Get mortgage loans for investment property:

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or e-mail: info@RidgeLendingGroup.com

Invest with Freedom Family Investments.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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Complete episode transcript:

Keith Weinhold 0:01

Keith, welcome to GRE. I'm your host. Keith Weinhold, the real estate market is slow when this happens in a cycle. What does it mean to a real estate investor? What type of return can you really expect today? I'll tell you exactly, and you'll be surprised. Learn more about new build properties and why investors often prefer DSCR loans over conventional loans today on get rich education,

Keith Weinhold 0:28

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:13

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:29

Welcome to GRE I'm your host. Keith Weinhold, yes, America's favorite shaved mammal on a microphone is back with you for another wealth building week. Just the talking primate that's heavily mortgaged here. I'm also a landlord still waiting for a security deposit from back in 2018

Keith Weinhold 1:51

Hmm, oh, I'm so into self deprecation today that I forgot about the place names hitting you, from Dover, Delaware to

Keith Weinhold 2:01

Andover, Massachusetts and across 188 nations worldwide, you're listening to get rich education. There's a realization that can sharpen your investor focus when you think about the fact that, in a sense, how little time you are allotted in your life. It's something that I've thought about more. You're only given about 30,000 days. That's the typical lifespan of a human being, and that goes for both shaved mammals and others. Well, you've already spent 1000s of your 30,000. The question is, what are you doing with the rest? At some point, people understand or they better that they need to go out on a limb. There are people less qualified than you living the life you want to live simply because they chose to believe in themselves, and really, that's the moment everything shifts. belief. It's not a feeling. It is a decision backed by action. Too many people learn this lesson the hard way. They discover, often too late, that relying on one income stream is the most dangerous financial plan of all. A job can vanish. Federal Workers found that out amidst a government shutdown, a business model can change. AI can intrude. A paycheck can stop. But when you own assets that pay you month after month, no matter what you're doing, you slowly begin to untether yourself and move toward freedom. And here's the truth about pain and money. Poor and middle class households work for money, so to them, that's why every dollar spent feels like a little loss. It can even hurt, and that is why they hesitate even on opportunities that could change everything. The wealthy, on the other hand, own assets that pay them, so therefore every dollar spent feels like a seed, because it grows when you own enough income property, you can move away from constantly asking yourself, can I afford this? And start asking, What will this investment earn me? Over time, this mindset shift changes everything at that time when other people's money starts working for you, not the other way around.

Keith Weinhold 4:45

And here's the thought experiment I use, take the hourglass of your life and flip it, watch the sand fall. That's time, 30,000 hours, 30,000 grains. That is. Is time the one resource that you cannot get more of. So every day you delay prudently investing the sand does not pause. It just keeps flowing. But you can choose how that time compounds the sand that's left over and hasn't fallen through the neck of the hourglass. Yet that is your opportunity to build multiple income streams from real estate, from ownership and from leverage, it is your chance to replace anxiety with well autonomy. Every family with generational wealth can trace it back to one person, one risk taker who decided to stop trading hours for dollars. They believed in ownership and control. They believed in themselves. They acted before the sand ran out. If you've already started real estate investing, well, then you've already begun to break that cycle. If you've done it for a time, you're going to have more time, more income and more options than you had before. That is worth celebrating and scaling, because the best time to start was yesterday, and the next best time is before the next grain of sand hits the bottom.

Keith Weinhold 6:22

Later today, I'll talk about taking this sentiment and moving it towards something very specific and actionable. Now, in this era, the real estate market is slow. That is in terms of transaction volume, there just aren't as many sales. Sometimes this whole thing feels more sluggish than Jabba the Hutt after Thanksgiving dinner.

Keith Weinhold 6:49

5 million is a typical number of existing homes sold every year in the US. 5 million. That's normal. That's baseline during the pandemic frenzy. It reached over 6 million, and now it's about 4 million. That's why I say that housing transaction volume has slowed, and appreciation is only about 2% that's below historic norms, and rent growth is like barely doing push ups. It's two to 3% in single family homes volume now it has picked up a little here lately with lower mortgage rates, and so have home prices. Redfin now tells us that home price appreciation is 3% but most outlets say 2% some analysts that are more optimistic than me call today's housing market healthy. They don't call it slow. And why is that? Well, it's the healthiest it's been since covid, because now you have a good balance of buyers and sellers. The real estate market isn't so miserably deprived of inventory like it was back in 2022 in 2023 but I am going to go with slow now, as you know, I coined the phrase real estate pays five ways back in 2015

Keith Weinhold 8:09

But how exactly does that hold up in today's slow transaction market? Could an income property buyer's return even be disappointing now? Well, let's do it. Let's determine what you can expect if you purchase an investment property here in these slow market conditions, we'll determine your total rate of return in year one. And you know, this will be sort of like dating someone that's not the first date, but to really get to know them, to know if they're potential spouse material. You want to see them at their worst and be sure that they look good on their bad days. So let's just be conservative and use 2% home price appreciation. Say that you buy a 200k single family rental. Now a 20% down payment means 40k down. Sellers are willing to give you concessions now, say that they're going to pay your closing costs, because the 200k that you're paying is their full asking price, so it's your terms and their price. Well, say that you don't get any cash flow. The rent only covers the expenses exactly. Okay, so we're really painting on a not so pretty picture. Here, it would seem. Here we go, in a slow market, the first of five ways you're paid is that erstwhile appreciation. Your property only appreciates 2% from 200k up to 204k not so exciting, until, of course, as we know around here, you realize that your return is your gain on your skin in the game, your 4k gain divided by your 40k down payment gives you a 10% ROI. There it is leverage. Didn't just show up. It brought donuts. 10% just from the first of five ways you're paid. The second way is cash flow. Say that rent minus your 160k mortgage payment here and your operating expenses, that merely breaks even, like I was saying. So 0% additional return from cash flow. And before we add on numbers three, four and five to get your total rate of return in a slow market, let's take a moment to check on Jabba. How's Jabba doing? No, Jabba still hasn't gotten up from that heavy Thanksgiving dinner. It's still a slow market. We've confirmed that we're going to continue

Keith Weinhold 10:41

the third way you're paid, as any GRE listener knows by now, is with that ROA return on amortization, also known as principal pay down with a 7% mortgage rate in your 160k loan on this property, an amortization table shows you 1625 bucks a tenant made principal pay down. Divide that by your 40k down again, that is another 4% return. All right, so you add that to your 10% from leverage depreciation, and you've now got 14%

Keith Weinhold 11:17

next is your tax benefit. It's a 150k structure value, not the full 200k because raw land can't be depreciated. Multiply that by 3.6% depreciation, that means you've tax sheltered 5400 bucks. That is like a phantom loss that you get to show the IRS. Just a little more math here, and this is as far as you have to stretch it, in visualizing numbers in an audio format at a 24% income tax rate. That is 1296 saved on 40k down again, another 3% for you, and your running total is a 17% ROI before we get to the last one, which is inflation profiting, not inflation hedging, which almost everyone mistakenly says in real estate investing, it is inflation profiting.

Keith Weinhold 12:13

Your 160k loan gets eaten by 4800 bucks at a 3% inflation rate, divided by 40k down. And you know, inflation is usually the villain. Now it is the hero. You've got another 12% from inflation profiting. And here's the sum in this slow market, your total year one rate of return is 29%

Keith Weinhold 12:43

and you're like, my gosh, did that really just happen? Now you might want to skip back on some parts of that to help make it crystallize in your mind. I've got to tell you before I ran these numbers in this slow market with this 2% appreciation and even assuming zero cash flow, I thought your total rate of return would be in the low 20s, not this high, not 29%

Keith Weinhold 13:09

the numbers don't lie. They just don't get enough attention on CNBC.

Keith Weinhold 13:16

Now I did use shorthand and simplify. You would also have to adjust your 29% for inflation, just like you do for any investment. So then about a 26% inflation adjusted return for you. Wow. And if you want to know more about what I just used shorthand on, you can always watch the five videos on the five ways real estate pays for free at getricheducation.com/course that's get richeducation.com/course, the most valuable video course you'll ever see on real estate investing, but a huge investor lesson here, an epiphany today, is that it does not take a high growth market to build wealth. Even when it seems like real estate's half asleep, it can still work five jobs for you, we could be near the nadir of the cycle here.

Keith Weinhold 14:16

Appreciation has picked up in recent months, with mortgage rates being lower than they've been in a while, but even when appreciation and rent growth slows now, you can see that the ROA tax benefit and inflation profiting just keep working overtime. The bottom line here is that income property still pays a lofty 29% if you buy today, even in a slow market, and this is at a time when investors, a lot of them, don't know what to do with their money, since every market type seems to be near an all time high, and people don't want to buy in at those high levels, and savings accounts pay you less than a gumball machine, owning investment property proves its resilience. I mean, this is why we do this. It's kind of like stocks can party with a surge in an upcycle, and then they can bust and boom and bust and boom. But all the while, instead of partying, real estate just keeps its head down and works the night shift for you, your wealth quietly compounds in the background while the rest of the world panics or debates interest rates on LinkedIn or something.

Keith Weinhold 15:33

All right. Well, with that in mind, where can we take advantage of that real estate return and expect to do even better with it, even if the market did stay slow. Well, builders have unsold inventory in places like Texas and Florida, like I mentioned before, and to a lesser extent, in parts of the West as well, but the prices are too high out in the west for a cash flow investor. So today, you can buy at a discount in a way that you absolutely could not during the height of the pandemic.

Keith Weinhold 16:06

A guest and I are going to talk about a specific opportunity in today's market, and then how you can exploit it. The National Association of Homebuilders has even noticed that home flippers have switched gears, and increasingly, what flippers are doing is instead buying new build properties and then renting them out, because new builds have lower upkeep costs come with a lower mortgage rate because the builder is buying it down for you, they have lower insurance and they attract a better quality tenant that stays longer, even if the HVAC did break. That's okay, because new build homes often come with a warranty. The smart money knows that new build is where the opportunity is today. That's something that I've discussed for a while here, but today we're getting more actionable. CNBC let us know that the CJ Petra company reports that investors now make up the highest share of Homebuilders in five years. And you'll recall that we've had CJ Patrick, company founder, Rick sharga, on the show a lot with me here the past few years. Some say that the smart money is waking up again. I don't know investor activity is steady, but it's not really that much. It only seems like a lot because the wannabe owner, occupant, buyer has been priced out. So it's better to say that investor activity has been steady. Investors bought fully 1/3 of single family homes this past summer, and that is up from 27% in q1 I'll discuss that more soon.

Keith Weinhold 17:44

Hey, you know one thing that makes GRE different is that our show sponsors are here to supplement and benefit your specific investor activity. And another thing is that I use them myself. Thank God we are not here to tell you about pneumococcal pneumonia or your moderate to severe plaque, psoriasis. I don't even know what that stuff means. Freedom, family investments and Ridge lending group. I very know what they're about. I'm a satisfied client with each of them myself. So listen in.

Keith Weinhold 18:21

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom, family investments.com/gre, or send a text. Now it's 1937795898, 377958989, yep, text their freedom coach directly. Again, 1-937-795-8989,

Keith Weinhold 19:32

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group NMLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President Caeli Ridge personally while it's on your mind, start at Ridgelendinggroup.Com, that's Ridge lending group.com

Kathy Fettke 20:05

this is the real wealth network's Kathy betke, and you are listening to the always valuable get rich education with Keith Weinhold.

Keith Weinhold 20:14

I'd like to welcome in a new guest to the show. He is a real estate investment strategist that's been working in the media industry since 2001 and throughout the career, he's held the title of a local news reporter, podcast host and producer for nationally syndicated companies like NPR. He's been in real estate nearly 20 years. Adam Schroeder, welcome to the show.

Adam Schroeder 20:48

Thanks for having me on. I really appreciate it.

Keith Weinhold 20:50

Yeah, I'm looking for your read on today's real estate market, just the general landscape overall, because Adam, I've shared that national transaction volume is down about 25% appreciation is still there, although it's been slow. Rents are just steady. We do, however, still have this supply that is down among entry level homes, something a lot of media articles broad brushstroke and don't understand, and really it's still a valid question to ask, even today. Is there any better risk adjusted return than income property that's bought, right? So what are your thoughts on the overall real estate investing landscape?

Adam Schroeder 21:30

Yeah, overall real estate investing, it's kind of like what you said, entry level housing. I remember I saw a heat map. This was probably five or six this was pre covid. It was maybe even seven or eight years ago. It was a heat map that showed, like, new construction, home pricing, and, you know, there was like 500,000 and up. Was just this massive chunk. And then there was all these ones, ones that were under about 300,000 it was around, like six or 8% or something like that. It was really, really small. If you look around, it hasn't gotten bigger. And so the question of inventory and availability and pricing, they're never going to talk about it on the national media, because there is no entry level home in Chicago, in New York, in LA, you're

Keith discusses strategies for amplifying investing returns and reducing lifetime tax burdens through real estate, geography, and industry.

He compares tax burdens by state and explains how investors can leverage low-income tax states and low-property tax states.

Podcast host, investor and developer, Victor Menasce, joins the conversation to highlight the industrial real estate market, emphasizing the demand for warehousing and logistics.They touch on the potential in industrial outdoor storage and the complexities of data center investments.

Reach out to Y Street Capital to learn more about their projects and the real estate espresso podcast.

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Complete episode transcript:

Keith Weinhold 0:00

Welcome to GRE. I'm your host. Keith Weinhold, we're talking about how you can use real estate, geography and industry to amplify your investing returns over the course of your life and permanently reduce your lifetime tax burden today on Get Rich Education.

Keith Weinhold 0:21

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products. They've got workshops, webinars and seminars designed to educate you before you invest, start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom, family investments.com/gre, or send a text. Now it's 1-937-795-8989 77958989, yep, text their freedom coach directly. Again, 1-937-795-8989,

Corey Coates 1:34

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 1:49

Welcome to GRE from Milford, Delaware to Milford, Utah and across 188 nations worldwide. I'm Keith Weinhold, and this is get rich education, the voice of real estate investing since 2014 now, what do you think about a multi week government shutdown? That means there's a cut in your service level, but of course, oh geez, there's no commensurate cut in the amount of taxes that you pay. This is the government's version of charging rent on a vacant unit. That's what's happening. That's what we've been looking at in the biggest expense you'll ever pay in your life. It isn't housing, it's taxes. Before I get to how you can reduce the amount of taxes that you'll pay throughout the course of your life, which is huge. Let's pull back, and I guess it's a bit of a real estate geography riddle for you, imagine if there were a place that existed, and this place is within a 15 minute drive of a seacoast, 15 minutes of mountains, within 15 minutes of an urban core of about 300,000 people, and within 15 minutes of an international airport and a decent airport that has direct, non stop flights to Europe. Even, could that place exist all of that? I mean, it almost sounds too good to be true when I put it like that, yes, it does, and it's in the United States. On top of that, this same place with proximity, within 15 minutes of all four of those things, has zero state income tax and zero sales tax. Yes, all this is in the same place, and that's where I am coming to you from today, Anchorage, Alaska. I traveled a good bit, and I can't think of another place in the US quite like it. A quick check of Chad GPT corroborates this, saying that the US places that come closest are Honolulu, Juneau and Bellingham, Washington. They come the closest to that. Now, the biggest downside, in my opinion, is a long, dark, cold winter. Well, that's when I do more traveling, but I spend many months of the year right here in Anchorage. And my guest today, who you'll hear from later, I haven't had him on the show in years, where recently he I and his wife, Natasha, toured Anchorage. I drove them around.

Keith Weinhold 4:29

first, let me tell you about a creative way to pay both a low property tax and a low income tax, and that is no matter what state or province that you live in now, the big three taxes that people pay throughout their lives are income tax, sales tax and a property tax. Those are the big three, and when you combine those to come up with the highest and lowest tax burdens by state, you'll notice that coastal states often pay the most. They generally have the biggest burden, because coasts attract people, and therefore those highly populated areas, they need infrastructure, say, for example, more bridges, and they often have more social services for people, and it costs tax money to maintain all of that. Now, look, will people move to an area specifically because they can get low taxes there? Like is that amenity in itself an attractant? Actually, not so much. No, you do get some people to move to Puerto Rico, predominantly for that reason. But interestingly, the two states with the lowest overall tax burden, that is, when you combine income, sales and property tax, the lowest are Alaska and Wyoming, and yet they have the fewest people living there, under 1 million people each. So the two states with the lowest tax burdens are also the two least populous states. So it is not making people flock there. So where you choose to live? Oh, that has more to do with your overall quality of life. And you know that's probably as it should be. Well, whether you own your home or you rent your home, you effectively do pay property tax, because tenants end up subsidizing the landlord's expenses. Most property tax maps that you see out there, those national property tax maps, they show the average tax bill that a household pays by state, regardless of real estate values. Well, that's not so useful. You might remember that a few weeks ago in our newsletter, I sent you the best and the smartest property tax map that I have by county. You'll remember that it showed the property tax paid as a percentage of the home value, so that relative basis is what matters more. When we look at property tax paid that way, we can more transparently see that the highest property taxes are generally paid in three US regions. Those three regions with the highest property taxes are the northeast, much of the Great Plains and Texas now a 1% property tax rate is, for example, when you have to pay 4000 bucks a year on a property value of 400k That's that 1% and the lowest are in the Western US and the nation's southeast quadrant, often under 1% we're just talking about the property taxes only here. Now out west, lower property taxes, they still rarely create investor cash flow, and that's because purchase prices are too high out west, and rents don't keep up with them proportionally. But low taxes, they do adequately sweeten the most investor advantaged areas, that is in the southeast Indiana, Missouri, Oklahoma, Hawaii, and a bunch of the Mid Atlantic states. All right, so they are the investor advantaged areas that also have low property tax. The nation's lowest property tax rate is in Alabama. Roll tide, I think I've mentioned that on the show before. All right, so that's property tax, but states have to get their revenue somewhere, so oftentimes, if their property tax is low, well then they have to make up for that. So therefore their income or sales tax can be high. Now as far as income tax, each state has their own of course, the high ones are New York, New Jersey, California and Hawaii. Those are many of the high ones. But there are nine states with zero, absolutely zero, state income tax, and those nine states that are free of income tax are the aforementioned, Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming and Washington gets somewhat of an asterisk that has a little wrinkle in it. That's one of the nine with the wrinkle, you'll pay zero income tax on your wages in Washington. It only applies to high earners, capital gains tax income there, all right. Well, all of that is true for everybody there, every US citizen. But here's the arbitrage that a real estate investor can create. If you live in one state and you own property in another state, you always pay property tax where the property is physically located, not where you live. I mean, any longtime out of state real estate investor knows that. So you can therefore live in a state with little or no income tax, for example, Texas, and then a Texas resident can skirt Texas's higher property tax by investing in a different state that has low property tax, like, say, Alabama or Tennessee. Oh, well, now both your property tax and your income tax are low this way. And congratulations, you have just legally exploited the tax system. Some examples of a low income tax home state where you live and a low property tax investor state where your investment property is, so that you get the best of both worlds. They are, Texas is your home state, and Alabama is your investment property state, like I just described, and then a few other scenarios, so that you can legally use the system to pay both a low income tax and low property tax. Are having Pennsylvania as your home state and Missouri as your investor property state, having New Hampshire as your home state and Tennessee is your investor property state. And then another example, having Washington as your home state and Arkansas as your investor state. Those are just some examples of combinations there about how you can live in a low income tax state and then also enjoy having your investment property in a low property tax state and see perhaps now you're doing this without having to move. Yes, investing in low property tax states. Now, of course, property taxes are set at the county or city level. They're not set federally, but just within one state. Sometimes property tax can vary dramatically, which you probably know, but two of the biggest examples of this are in Illinois, Cook County, which is Chicago, and also Miami, Dade County, Florida. I mean those jurisdictions, they have tax rates that can make wallets cry more than their surrounding counties do, and some states have maximums, legal limits ceilings on property taxes. California proposition 13 famously limits property tax to 1% of assessed value, and then the increases are capped as well. I mean this means the two California neighbors with identical homes can pay wildly different taxes, and Florida is still looking to completely eliminate the property tax. Can you imagine that? I mean, it seems doubtful that that will happen, but you can conceive of how much more desirable that would make Florida properties, and that would probably make all Florida housing values skyrocket now, just because a property has a high property tax rate that doesn't disqualify it as an investment property alone, it's just one consideration that'll show up in your proforma, your cash flow. So the bottom line is that as an income property owner, property tax is mostly passed on to your tenant, but paying a low rate still keeps you more flexible and profitable. So think of a map of states with low property taxes, sort of like a treasure map, but instead of x marking the spot, it marks where your money will go the furthest.

Keith Weinhold 13:36

And if you want real estate maps like I'm talking about here, and stories and great charts and investment opportunities that I cannot fit onto the channel. Here, you can grab them in my free weekly newsletter at gre letter.com and part of this is because I just cannot adequately describe a map or a chart to you here in an audio format. You get more in the letter free wealth, building insight every week. And it comes straight from me. 1000s of investors read it every week. Don't live below your means. Grow your means. Get It At gre letter.com Again, that's gre letter.com

Keith Weinhold 14:20

something interesting just happened when Wells Fargo released their housing forecast for the next two years. Let's discuss that between today and 2027 they expect the federal funds rate to drop by a full 1% but they don't expect mortgage rates to drop as much only about a quarter point drop over the next two years in the 30 year fixed rate. For next year, they expect home prices to rise three and a half percent, and then the year after 3.7%. looking down the road a couple years here, and this is sorced by Wells Fargo economics and the US Department of Labor and the FHFA and more. All right, so only a small reduction in mortgage rates and a pickup in home price appreciation, although still pretty moderate. Now you gotta take any interest rate prediction with a grain of salt, like I've told you here before. I personally, I do not forecast interest rates, and when you're looking at interest rate predictions, you are squarely looking at a waste of your time.

Keith Weinhold 15:34

Now, a recent Gallup poll wanted to find out what Americans consider to be the best long term investment. That's the question that the pollsters asked, what is the best long term investment? And the findings were that 16% said stocks. I mean, despite the fact that stocks only seem to make insiders wealthy, still somehow 16% of Americans consider stocks to be the best long term investments, a higher share of Americans, 23% said gold. That actually surprises me, that nearly one quarter of Americans say that gold is the best long term investment, when only about 10% of Americans own gold in the physical form, like bars or coins. And part of this could be driven by the recent hype, where the gold price has more than doubled just since last year, and it broke above $4,000 an ounce for the first time in history this month. All right, so 16% said stocks, 23% said gold. And what's number one in the Gallup poll for what Americans believe is the best long term investment? It's real estate. Ah, well, they got that right. That actually gives me a little more faith than Americans there. Now, when it comes to real estate investment, you know, there's this long running mantra or catchphrase out there that I really disagree with. I mean, you've certainly heard this before, but it just does not resonate with me. And that is, appreciation is just the icing on the cake. That's the catchphrase I am not feeling the vibe there. How in the heck is appreciation just the icing on the cake? The presumption, the inference here, is that cash flow is the main driver of an investment philosophy, and then if you just happen to get appreciation too, oh, well, that's a little sweetener. Like the mantra would say cash flow is the cake, the majority piece, and then appreciation since the icing, oh, that's only a little thing. No, that's misleading. You usually get more of a return from appreciation than you do cash flow.

Keith Weinhold 17:56

I mean, on, say, a 400k income property, what if you only get $200 of cash flow? That can happen? That's $2,400 a year. But instead, 5% appreciation on that property gives you $20,000 a year. That is almost 10x. I think what the icing on the cake, curious catchphrase means is that cash flow is important because it controls the mortgage. Well, then I think it's just better to say that appreciation is not an inconsequential thing. It's often the biggest thing. So is appreciation just the icing on the cake? No, it certainly is not. In fact, I'm going to talk more about that next week when I've got something special planned for you here on the show. What I'm going to do then is look at the ways real estate pays you five ways in a slow market, the real estate market is slow. If you look at it on a basis of transaction volume, say that you buy a property today and over the next year, you don't even get what Wells Fargo forecasts say you only get 2% appreciation and zero cash flow. Just break even on a monthly basis. I mean, there's surely some disappointing numbers, but just say that's what happens. Well, next week, I'm going to add up what your total rate of return would be even in this dour scenario, and I think that you are going to Marvel be flabbergasted at how profitable you are if you just got 2% appreciation and zero cash flow. That's next week.

Keith Weinhold 19:36

As far as today, I'm about to bring in a super smart guest that hasn't been on the show here in a few years. He's usually a fellow faculty member on the real estate guys invest or summit at sea. But he wasn't there with me this year, so we met up in Anchorage. Instead, we're talking about changes to commercial real estate that market, and the opportunities that you might be able to find there from Industrial land, an activity that well generates noise, like Bitcoin mining operations and growing data centers with the increased use of AI. And as you listen, see if you know what I mean about how he feels professorial in his approach, and I mean that in the best possible way you can learn from him. He's from Ottawa, Canada, an international conversation coming up next. I'm Keith Weinhold. You're listening to Episode 577, of get rich education.

Keith Weinhold 20:34

If you're scrolling for quality real estate and finance info today, yeah, it can be a mess. You hit paywalls, pop ups, push alerts, Cookie banners. It's like the internet is playing defense against you. Not so fun. That's why it matters to get clean, free content that actually adds no hype value to your life. This is the golden age of quality email newsletters, and I write every word of ours myself. It's got a dash of humor. It's direct, and it gets to the point, because even the word abbreviation is too long, my letter takes less than three minutes to read, and it leaves you feeling sharp and in the know about real estate investing, this is paradigm shifting material, and when you start the letter, you'll also get my one hour fast real estate video, course, completely free as well. It's called the Don't quit your Daydream letter. It wires your mind for wealth, and it couldn't be simpler to get visit gre letter.com while it's fresh in your head, take a moment to do it now at gre letter.com Visit gre letter.com

Keith Weinhold 21:46

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com, that's Ridge lending group.com,

Tarek El Moussa 22:19

what's up? Everyone. This is hgtvs Tariq al Musa. List

Keith sits down with Terry Kerr and Matthew Vanhorn, the leaders of America's oldest turnkey real estate provider, Mid South Home Buyers, to unpack the practical systems that keep thousands of rental units profitable and tenants happy.

With national renter mobility dropping, longer stays are now the norm. Average resident stay is 4 years—double the industry average, thanks to proactive maintenance and relationship-driven management.

Instead of fighting for eyeballs on Zillow, they target HR departments at hospitals, universities, and major employers, tapping into pre-screened, income-verified tenants with stable paychecks and predictable work schedules.

Invest where returns still make sense. Visit midsouthhomebuyers.com to book your investor tour and get $500 off your first property.

Resources:

Switch to listening to the podcast on the Apple Podcasts or Spotify app, as the dedicated GRE mobile app will be discontinued at the end of the month.

Show Notes:

GetRichEducation.com/576

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE I'm your host. Keith Weinhold, learn about how to cut your rental property vacancies and keep tenants twice as long. Why Memphis, Tennessee stays the cash flow King, and exactly where to find really low cost, quality properties today. That make sense from day one today on, get rich education.

Keith Weinhold 0:26

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There is real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program. When you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre, or send a text now it's 1-937-795-8989, yep, text their freedom coach, directly. Again, 1-937-795-8989,

Corey Coates 1:39

you're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:49

Welcome to GRE from New York's Long Island Sound to Washington's Puget Sound and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education. There's an economic trend that you need to be aware of. We're going to talk about how you can play it in this era, sources ranging from Redfin to Housing Wire and others, you know they're all in agreement that the transiency rate, that mobility rate for Americans, is down. And what that means is, when people find a place to live, whether they're a property owner or a renter, they are staying put longer. They put this big, heavy anchor down, and that kind of goes along with employment. Although the unemployment rate is low right now, there aren't very many people moving jobs or changing jobs. So the rate of hiring is low, that's bad, but the rate of employer firings is low, that's good. So on balance, Americans are keeping their job if they've already got one, and they're keeping their home if they've already got one. But because movement has slowed, as we are in this slower housing market, I'll drastically oversimplify here. All right, a few years ago, you might have had a tenant stay for two years, and then there would be a one month vacancy between tenancies today, double both of those. You're more likely to see a four year stay, but two months between vacancies. So your occupancy rate, therefore, is the same in both scenarios, but there's less movement. Again, oversimplifying, but you can see the effect a longer vacancy period is bad, a longer tenant retention period is good, all right. Well, how do you increase your tenant's length of stay and decrease that vacancy in order to be more profitable as an investor and yet give your tenant a satisfactory experience too well. One thing that you can do is list your vacant unit with an employer. Yeah, advertise it through a local stable company. You're going to end up with higher quality tenants. See, there's already this built in screening that was done for you. The employer basically did that for you. So when you work directly with especially hospitals, universities, corporate campuses or military bases, what you're doing is you're fishing from a pond of already vetted, income verified and drug screened candidates. See these tenants what they had to do. They already had to pass HR background checks and employment verification in order to get their job. So for you, that saves you both risk and time compared to the you know, the Craigslist style roll the dice crowd. Now, Of course, we cannot discriminate against certain groups of people, and we'll get into that shortly. But of course, steady employment equals steady rent tenants sourced through employers. They usually have reliable paychecks, often through direct deposit. They've got predictable work schedules, and there's going to be less income volatility. So that means that you'll have fewer late payments and lower eviction risk. And some landlords, you know what they do, they even structure rent payments through payroll deduction. I mean that essentially automates the rent collection. Yes, you can do that. Employees who move for a job, they often sign longer leases, because relocating again would be a hassle. So many will stay in your unit as long as they stay employed. That could be two years or five years, especially in the health care, education and tech sector. So less turnover means fewer make ready costs for you, fewer showings and just more ease and peace of mind. So advertising through employers that is a really low competition marketing channel as well. You know, most landlords, they blast their listings on Zillow apartments.com or maybe Facebook marketplace. Well over there, your post is just one out of hundreds, instead of all that competition, what you're doing is you're finding quiet, uncrowded channels when you utilize these employer housing boards and their HR relocation departments, and this way you can even get inside that company's internal newsletters so you're reaching renters before they can even start scrolling listings over on Zillow and see employers love this too. It's not like the employer is having to do a favor for you. They love it, because when they can help new hires or transferees find housing, it's better for that company. It reduces the employee's stress. It improves the retention at that company. If they have an employer that's satisfied and has a good place to stay, and it really boosts that company's recruiting success. So you're helping yourself, you're helping that company, and you're helping their new employee, which is your tenant. So this makes HR departments. They are surprisingly receptive to you. They might even circulate your listing internally or add you to their housing resource list. So this is a perfect fit for these hands off turnkey investors. So if you're doing that or you're managing properties remotely, this employer outreach, it really gives you a nice extra layer of reliability. And as far as the people that will be your tenants, think about nurses, engineers. IT staff, sometimes teachers, sometimes military based personnel. I mean, they are all ideal long term tenants. Now the way that you can actually do this and put it into practice is identify major employers that are near your property, that could be hospital systems, that could be universities or manufacturing plants, then contact their HR or the relocation department, and after that, it's not hard just provide them with a concise PDF or a one page flyer with your property photos and the monthly rent amount. And one thing you can do, and you should in this case, is put the distance or the time it takes to travel to the employer from your rental unit, and then add your contact info. That is exactly how you do it. You can offer a small incentive, like $50 off the first month for employees. So this is a slick way to advertise your vacancy with employers and make you more profitable over time.

Keith Weinhold 7:02

Now today, we're going to talk to who is actually America's oldest turnkey real estate company. As far as we know, they're based in Memphis, Tennessee, and we'll learn how they advertise a vacant unit and screen prospective tenants and place them and maintain their units over time. They are called mid south homebuyers. You've heard them on the show before, and because of their success, both investors and other real estate companies, they actually listen in intently to what these people have to say. I mean, others study them and learn from them. These are the people other companies study, and you're still going to hear from their principal and their sales lead about reducing your vacancy time and increasing your tenant duration. And, you know, it's just kind of funny how often Memphis, Tennessee, which is where they're based, how often this comes up in cash flowing real estate conversations that you have out there over time? I mean. And Memphis consistently has the best cash flow, maybe, amongst any substantial Metro in the nation. We'll just say among metros that are big enough to have a major pro sports team. I mean, Memphis does have the NBA Grizzlies. There aren't many other cities that can even compete with Memphis as the cashflow King, although there are some that you can work into the conversation. Indianapolis, Cleveland and Oklahoma City are some of those places. Now, before we're done, you'll also learn about how, even following this generation's big inflationary wave, how purchase prices are still as affordable as they are in both Memphis and Little Rock. I mean, this is going to make you ask out loud today, how could they still be so low? We'll also talk about conventional, enduring property management techniques today, now next month here on the show, we're going to talk about how you can use AI to self manage your properties, and that show next month is going to be with an expert straight from Silicon Valley. We're going to talk to the CEO of hemlane then and their AI driven property management software. She used to work for Apple, and she's got a Harvard Business School degree. That is next month today. It's about tried and proven techniques to make you more profitable as an investor

Keith Weinhold 11:24

I'd like to welcome in longtime friends of the show, with the emphasis on long time since they were first here with us, nearly 11 years ago, They are those ever steady property providers based in Memphis, mid south homebuyers. They also serve Little Rock, Arkansas. I have physically walked their offices and properties in person myself. They are, in fact, America's oldest turnkey real estate provider. And it's the return of their founder and principal, Terry Kerr and a second guest who you'll meet shortly, Terry, welcome back on of the show.

Terry Kerr 12:04

Thanks so much, Keith, so glad to be back.

Keith Weinhold 12:07

Congrats on your success. Your model and operation is prominent and exemplary nationally. You've now grown to 110 w2 employees there, and your 13 plus year property management guru who's been leading that entire division is now your sales director. It's terrific to introduce him to the world today. Matthew Van Horn,

Matthew Vanhorn 12:31

Keith, so great to be on here. Long time listener of the show. Really great to meet you.

Keith Weinhold 12:36

Yeah. Appreciate it now you'll soon be listening to yourself on the show. GRE, listeners are familiar with the turnkey real estate model. What you do is buy a distressed property, you rehab it, and then you place a tenant in the property, and you hold on to that for investors across the nation for the production of long term cash flow. Well, let's get an update between Memphis and Little Rock. How many properties do you hold under management for investors now and then? What percent are single family rentals versus other types?

Terry Kerr 13:07

Right now, we're about 57 maybe a little closer to 5800 and the vast majority of them are single family houses. I'm going to say probably. What 5% are duplexes? Matthew, something like that. Yeah, something like that. So no other multis, just single family, most of them rehabs. And of course, now we're doing a new construction direct to rental as well.

Keith Weinhold 13:29

Interestingly, with 58 to 5900 rentals, I mean, you can easily sort of be your own surveying outfit in an informal way, in finding out what's happening with the market, what all the dynamics are. So why don't we start at the beginning, when you're marketing and advertising and looking to place a tenant, tell us about just what you look for, just what you need to avoid. I mean checking for the tenant. That typically involves an employment check, a credit check, a rental history. Sometimes something might appear like a red flag, say, a 590 credit score. Would you always accept tenants in that condition? Because there are times when there are extenuating circumstances when a tenant with a 590 credit score actually might be a good placement. So tell us more about that screening.

Terry Kerr 14:17

As you know, it is renters that drive our returns as investors, and so selecting the right renter is where the money is made in this business, for sure, we are doing as much screening as we can for our renters. There's a lot that goes into that. We actually have a whole processing department. You know some people here who spend their whole day working in the processing division. And what you really got to watch out for, as far as red flags, is just fraud. There are so many ways you can use machines to defraud, and we have people who are able to detect and weed out the bad actors there, but we know what works really well. We have, for instance, in. Arkansas, the main employer of our residents is Baptist Health Medical Center, and we love our healthcare workers there. So that's a place that, you know, starting from the marketing side, we're going to dial up our marketing in those places we're going to go to the HR department, or we're often in the HR department of Baptist Health Medical Center, pushing and asking for referrals from them, you know. And same with just referrals in general, good tenants tend to refer other good tenants. We're of course, looking for strong income that we can verify. And more than anything, we're looking for strong, credible current rental history, so someone who's paying the rent today somewhere to a verified landlord, not their sister, you know, but a very verified landlord. That's the big thing, Keith.

Keith Weinhold 15:50

Tell us more about that. That's great that you're being proactive and getting right in there with a stable, steady employer. That is where our rent comes from. After all, are there any other red flags, maybe things that people would not think about identifying as a red flag when it comes to that employment, in that credit, in that rental history

Matthew Vanhorn 16:11

one reason I bring up the localized marketing that some people may not think about is that renters who move from Out of state often will land in a place and then stay there for one year, which is fine, but then they often don't renew their lease and they'll move somewhere else. Now, of course, what we have to do above all is we have to be legal, you know, so we can't discriminate against someone from coming from out of town, but what we can do is dial up our localized marketing so that we're getting people who are in the neighborhood, who love the neighborhood already where they are, and so that contributes to longer residence days, and it's just little things like that. Once again, you're looking for employment that you can verify, so that you know that you're getting a quality renter.

Terry Kerr 16:59

I'll also say that one of the ways that we try to attract the most potential residents we can is by having a free application. So typically, a property management company is going to charge, you know, 50 to 75 bucks per applicant. And we're very fortunate that we've get a terrific deal from Equifax, because we're also lenders, we do some lending to our investors, which gives us a really good deal on paying for credit checks. And so we waive those fees for our residents. And so a lot more folks are going to apply with us, because it doesn't cost them anything to apply. And of course, the more people that apply, you've got a much better shot at a filling the property quicker, but also finding a much better resident.

Keith Weinhold 17:44

well this is a great part of building the connection. One of the first interactions they have with you is realizing that you don't have any application fee. And AI can be great for marketing and for doing things like writing listing descriptions, but you build that human connection there. For example, you do in person showings. You invite prospective tenants in current tenants into your physical office, kind of replacing society's trust crisis with humanity.

Matthew Vanhorn 18:14

Yes, that's right, Keith. In the last 12 months, we've spent more money than ever on technology, so we are leaning heavily into creating the systems and processes that allow us to get to our service quickly. And at the same time, we've invested more into staffing up in the past 12 months, into inviting people into our office, you know, and we can still do everything remotely. We can do it virtually for folks who want that, we found that a lot of residents love to look us in the face, and they like to come down to our office, and they like to sit across from Karen and across from Gabby, and they just love the personalized experience that we give them. It's hard to quantify it, Keith, but I just really believe that it drives longevity, right?

Keith Weinhold 19:04

Having a face behind that rental because your properties are freshly rehabbed, or, in some cases, they're new builds, so hopefully you won't have too many tenant service calls once they do become a resident, and you don't need to interact with them all the time, though you're there for them, but once you have chosen a tenant, and that tenant is placed, you know somebody has to be the adult in the lease, and we sincerely hope that the tenant is one of them. So with regard to that, how do you help ensure that tenants keep making on time payments, and you can keep tenants and not get ones that break the lease. So can you speak to us about that, how you can help identify that in the screening and then that ongoing relationship?

Matthew Vanhorn 19:47

I will say that perfect vetting does not necessarily lead to perfect collections, because it turns out that every one of our r

Keith discusses the rising cost of the American dream, now estimated at $5 million, due to inflation and housing prices.

He highlights the affordable housing crisis, with more Americans living in RVs and homelessness up 18% since last year.

The NAR's "Best Week" report highlights the benefits of buying during this time, including lower prices and more favorable terms.

Resources:

IMPORTANT: GRE mobile app listeners - Switch to listening to the podcast on the Apple Podcasts or Spotify app, as the dedicated GRE mobile app will be discontinued at the end of the month.

Check out the free video course on real estate investing at getricheducation.com/course.

Show Notes:

GetRichEducation.com/575

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE. I'm your host. Keith Weinhold, the American dream now costs $5 million learn just what that will mean for you. The beauty of 50 year mortgages, then after 11 years, I share the most depressing thing I've ever said on the show today on get rich education.

Keith Weinhold 0:26

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre or send a text now it's 1-937-795-8989, yep, text their freedom coach, directly. Again, 1-937-795-8989,

Corey Coates 1:39

you're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:55

Welcome to GRE from Norwich, Connecticut to Norwich, North Dakota, and across 188 nations worldwide, you're listening to get rich education. I'm Keith Weinhold. You probably know me by now, but if you're new, I am an active member of the Forbes real estate Council. You can see my work in the USA Today. And of Paramount import, I am an active real estate investor. We're talking about America's top shaved mammal on a microphone here, but suffice it to say, this mammal has at least shaved just how can this slack jawed mammal persist in this environment? Well, I don't know, but I've been doing it here for more than 11 years now. More on that later. This is episode 575, and each episode's release is a bigger deal than releasing the Epstein files. Today is no exception, although today's show release will get fewer people in trouble than the release of the Epstein files. Speaking of people in trouble. It is the middle class. It's the average American and the average Canadian too, because it now costs $5 million to fuel the American dream. But yet, at the same time, hordes of people are now going the other direction, and they're getting poorer. The affordable housing crisis that we've talked about here seems to probably still have not reached its crescendo. Or perhaps, if you know music, it's the opposite a diminuendo. Things are getting to a low point. How bad is it? Getting well priced out of a permanent home. More and more Americans are living full time on RVs, not like nice, fancy RVs either. Beaters. 486,000 Americans are now estimated to live in RVs because they are out of options. And the more soul crushing part of this is that that number has more than doubled just since 2021 I've got two minutes of astonishing audio footage of this to share with you shortly about the RV living homelessness is up 18% Since last year, that figure is sourced by HUD. HUD has the best stat set on homelessness, and that's a problem that's increasingly visible in your own city, more likely than not. And you know, I have personally gotten into more than just surface level chats casually with food servers and baristas, just these quick chats with them. And you know what they divulge to me, that they're living in their car. Yeah, I'm not probing and asking about that sort of thing, but they just share that with me, yeah, food servers and baristas that I just met. They will often tell me that they're living in their car within five minutes of chatting with them, and when they do that, by the way, it also makes me wonder if they're trying to get me to feel bad for them, and they're freely telling me that just to get a tip from me. Well, today, mobile homes are even being coveted. I mean living in a trailer park that is affordable housing. We covered that on last week's show now the real estate company Redfin and Ipsos, they conducted a survey of more than 4000 US homeowners and renters, and they asked respondents about the struggle to afford housing. And it was astounding to learn that to string together a life where they have stable housing, how people are doing all these things, they're delaying having children, they're getting rid of their pets, and some are going through the discomfort of living with an ex spouse just to have affordable housing, as far as what is now almost half a million Americans living full time on RVs and growing since they can't afford a home. NBC covered this, and it is sad. Let's listen into just how squalid the living conditions are, quickly profiling two people as this reporter goes on their tiny RVs. I mean, as you listen to this, okay, keep reminding yourself, keep telling yourself this is America today. And as you'll see, this isn't even in a high cost part of the nation that we're about to profile here again, tell yourself this is America today. Well, this NBC field reporter gets shown the insides of two different RV units by two separate owners, each living by themselves, first a man and then a woman. This is about two minutes in length

Speaker 1 6:53

for Gus Francis. This is home a 20 year old camper he bought for $5,000 parked in an RV lot in Graysville, Tennessee, just north of Chattanooga. I got all my rosaries for protection everywhere. Books, books, books. now retired, he worked for decades as a commercial diver and hoped to live closer to his widowed mother, but when he sought a more conventional home, I just can't see how people with their normal job making 15 bucks an hour can afford an apartment without multiple roommates. Meals are made in the microwave, the stove unused for fear of a gas leak. Right next door is Debbie Williams. She sold her house in Kentucky to be closer to her grandchildren, but housing prices near Chattanooga increased by almost 50% since 2020 apartments are like about 1200 a month, but then you got your utilities to pay. This is permanent, plus it include is like 550 a month includes electric water, saving over everything. It includes everything. Debbie works nights, helping adults with disabilities, and says she likes her setup, even if the exercise bike doesn't fit inside. Okay? I like my shower. It's really nice. And then my bedroom, Debbie and Gus now among the nearly half a million people in the US living in RVs full time. I sometimes thought, Man, if I could have saved more money in the past. But what it was is, I don't blame myself, either, because I raised four kids with no child support, despite the tight quarters, plenty of room to build a community that matters. Ellison Barber, NBC News, Graysville, Tennessee

Keith Weinhold 8:46

gosh, cramped and modest conditions there again. Tell yourself this is America today, and see, here's the thing. From all outward signs, these two people profile. They're not substance abusers. They're not criminals that can't get a job. These are American workers that have been productive people throughout their lives. The first guy, Gus said he worked for decades as a commercial diver, and that part of Tennessee, it's not a place in the nation where the cost of living is exorbitant, either the crux of the problem here is not just the wave of inflation that started in 2021 the essence of it is the fact that inflation has outpaced wage growth. Will you ever get to having a $5 million net worth? Because that's what it takes to live the American dream today. Now, a while back, I told you how, if you amass $5 million really that's the number, that's the threshold where you could probably stop working and just invest such that you could live off it forever. But inflation. Changes that and it keeps upping that number. Well, since then, Investopedia recently came up with this $5 million price tag that's just for living the American dream in today's dollars. Let's look at what that really means, and then we'll add up the spending categories. This is really interesting. All right, the definition of the American dream. What that means is owning a home, raising two kids, retiring comfortably, and maybe throwing in an annual vacation or two. So a nice life, for sure, but nothing extravagant and okay, yes, there is this other angle of like, Money cannot buy the best things in life, and that's true. There's a lot to be said for that, but this is not a relationships in a dating show, okay? So that's why I'm covering the financial angle here, and later today, I'll tell you how much the typical American makes throughout their lifetime, which is much less than 5 million bucks. But to get to that exact $5 million total, which is the least that you now need in net worth, the estimated lifetime costs of eight milestones most often associated with a dream were added up by Investopedia. And now, of course, everyone's dream is different, and housing costs differ nationally. But, I mean, this is pretty reasonable. Here they are. This is how much it takes for each of them today. And I'm doing some rounding retirement, over $1.6 million that's what it takes now. Healthcare, 414k this is all spent over the course of your lifetime, a wedding 38k And I hope that is wedding singular, not weddings plural, owning a home, 957k raising two children and paying for college that costs. 876k and then owning a new car, that is another 900k Yeah, that sounds like a lot, but that will include costs of financing and insurance and depreciation on cars throughout your life, and then a yearly vacation is 180k throughout your life, and pets, 39k All Right. There it is. That is the $5 million total for the American dream. And again, that is only in today's dollars. Inflation will, of course, make all of these future costs run up. All right, housing is really the biggest part of the dream. I mean, second to retirement anyway, all right. Again, the lifetime cost of housing, like I said, is 957k just a year ago, it was 930k okay, well, the national median list price of a single family home is about 430k I guess that makes sense. Most people live in multiple homes throughout their lives. Well, the price per square foot is up 50% just since 2019 that is what is pricing people out. That is what is making people become your renter instead of a homeowner. Well, this $5 million required for the dream, that is why more people are homeless or more people are living in RVs. This means that the demand for the product that you're providing to the marketplace affordable housing, that demand is considerable, and that demand is durable, and the median lifetime earnings for one American with a bachelor's degree is only $2.8 million. All right, so that's just over half as much as it takes to live the dream. But here's what's appalling. Are you ready? Here we go. This could be the most depressing and concerning stat you've heard on this show, maybe one of the most depressing and concerning in your entire life when you really think this through. All right, now, what do you think of as sort of a model for someone that is stable? How about both married and a homeowner? I mean, yeah, they're two big markers, married and home ownership that is foundational stuff when your kids grow up to be adults, if they become married in a homeowner. I mean, come on, who would be disappointed with that? That would probably make you feel proud and fulfilled. I mean, the future of the nation that is children and stable household formation material, right there. Well, by age 30, how many people do you think are married in a homeowner today, and how has that changed over time? What do you think this is the percent of 30 year olds who are both married and homeowners in the US? Right back in 1950 it was 52%. today Okay, it is just a quarter of that. Only 13% of American 30 year olds are married homeowners today. Gosh, is that appalling? Or what? I mean, it doesn't exactly give you hope for the future, since Owning a home is a key pillar of the American dream, then the best thing that our local, state and federal lawmakers can do is to make it easier to build new housing. That is one of the most depressing stats I gave in 11 years of doing the show, probably the most depressing another thing we can do is not protest or block new development, no nimbyism.

Keith Weinhold 15:45

Now, earlier this year, the White House announced that they are considering declaring a national housing emergency. In fact, you saw me put a link to that in the section of our newsletter that we call the five, though we haven't seen a national housing emergency declared yet. If we do it all, the motivation behind it is largely to make housing affordable. One piece that's been floated out there is the introduction of a 50 year mortgage so that way mortgage payments are spread out and made lower than they are with the most popular mortgage in America today, by far, the 30 year fixed rate mortgage. Now, I wouldn't say that a 50 year mortgage is eminent and is about to happen. We can't say that, but it could be creeping closer. I mean, a 40 year mortgage that is already more of a thing. You've got 40 year HUD loans and 40 year DSCR loans both already here for residential property. We do know that buyers buy property more so based on a payment than they do the overall price of the property. Now look, I'll tell you if I could somehow magically snap my fingers and convert all of my 30 year mortgage loans over to 50 year loans. Oh, I sure would. It would lower my payment and increase my cash flow. Yes, my debt would hang around longer and well, we're right back to, you guessed it, financially free beats debt free. Let's run that comparison on a 300k loan at 6% interest, a 30 year mortgage payment, that is 1800 bucks a month, but on a 50 year loan that would be just 1580 Yeah, $1,800 versus 1580 1580 Well, that is going to boost your cash flow by $220 a month on that property, just by going from a 30 year to a 50 Year at the same interest rate. So maybe not as much of a difference as you thought, but probably worth doing, at least in the mortgage world debt free. I mean that concept of debt free that makes most people, in exchange for that debt free condition, grind and toil and work overtime and lose family time and eat dirt for decades because inflation and all these other forces work against them. And yes, this is just with mortgage debt that I'm talking about here. Of course, some debt is bad, like unsecured, high interest rate credit cards or doing a buy now, pay later, plan on a pizza that you split into four payments. That's ridiculous. And those are the type of debts you've also got to pay yourself. That's not what we're talking about here. In fact, it gets even worse for the mortgage debt free person. That extra $220 you're paying by having a 30 year loan instead of a 50 year loan, that would mean you're accumulating more dollars in home, which are illiquid. And again, 50 year loans don't exist yet, but understanding this concept and this trade off helps you be a better investor. Look, a debt free person can still be broke in the short term if they have a meager income, and they can be broke in the long term if they are not leveraging assets and debt. Being debt free, that is like bragging that you quit the gym so that you'll never pull a muscle again. I mean, you're safe for now, but you're going to be weaker in the long run. Let's use a different example. Let's just run a different set of numbers. Let's say you've got a 400k mortgage at three and a half percent interest, though your monthly payment is 1796 on a 30 year fixed. Some people think, Oh, if I just throw an extra $1,000 a month at this, I'm going to be debt free years sooner. And the truth is, yes, you will save 90k in interest, and you are. Going to own the house outright earlier. But what's the opportunity cost if that same 1k a month went into investments earning even 7% annually, after 15 years, it grows to about 311k

Keith Weinhold 20:16

Well, that is more than three times the interest savings, which again, was only 90k so for some paying off the mortgage early feels like some sort of emotional win, but it is rarely the best financial win. I mean, that is like benching LeBron to save money on Gatorade. I mean, that is a bunch of nonsense. So debt free is the floor. Financially Free is the ceiling. I mean, do you know about those popular call in shows where people are advised to lower their standards, diminish their quality of life, not go on vacations in order to get debt free? Oh, dear. I mean, those shows have got to be screening their callers closely to ensure that no one savvy actually gets on the air. Somebody, hey, how about you? Why don't you get on the air? Get on that show. Ask them some tough questions about getting mortgage debt free. You tell them yeah. Tell them that your ROI on all that equity is zero because home values change regardless of equity positions. Tell them that a home is never paid off because you'll still owe property tax and maintenance and repairs and utilities and maybe insurance and an HOA. Tell them you lost the gift of inflation eating your debt while you sleep. Tell them mortgage interest is often tax deductible. Tell them that their leverage is gone, and all these facts, every one of those I just stated, they're now figuratively not just talking. They're yelling. They're screaming now, because markets of all types are at all time highs. So instead, if you had used those funds to pay off a property, they would have really missed out on earning big returns for years elsewhere, a steep opportunity cost. Suffice it to say, I would love to see the widespread adoption of 50 year mortgages, and I would use them. The other thing that would happen is that it would make home prices rise further, because more people can afford the lower payments to bid up the price. So actually, here's something that I'm wondering about with you. Did you ever have a paid off property, and then realize all of this, and then go and get new financing on it again. Have you ever done that? If you have that would be really interesting.

Are You Missing Out on Real Estate's Best-Kept Secrets?

Imagine investing in properties where:

-Tenants fix their own roofs

-You can boost income with a few tech upgrades

-Most investors are too scared to even look

This episode reveals two underground real estate niches that could change your wealth strategy forever:

Mobile Home Parks and Parking Lots

Special Guest: Kevin Bupp, an investor with over $1 BILLION in real estate transactions under his belt shares how everyday investors are building wealth in places others overlook.

Resources:

Grab your FREE real estate investment white papers and unlock hidden wealth strategies at InvestwithSunrise.com

Show Notes:

GetRichEducation.com/574

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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.

For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text 1-937-795-8989 to speak with a freedom coach

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

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Complete episode transcript:

Keith Weinhold 0:00

Welcome to GRE. I'm your host. Keith Weinhold, talking about first mobile home park investing and then investing in parking lot assets. What makes them profitable? What gets investors excited about mobile home parks and parking lots? What are the risks and what's the future of both of these real estate asset classes? All with a terrific guest today on get rich education.

Keith Weinhold 0:28

You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program when you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre or send a text now it's 1-937-795-8989, yep, text their freedom. Coach, directly. Again, 1-937-795-8989,

Corey Coates 1:40

you're listening to the show that has created more financial freedom than nearly any show in the world.This is get rich education.

Keith Weinhold 1:56

Welcome to GRE from Burlington, Vermont to Burlington, Washington and across 188 nations worldwide. I'm Keith Weinhold, and you are inside get rich education. We are all firmly in the fall season. Now, autumn, if you prefer. And as we often do, we're discussing residential real estate investing today, but it's two different and distinct niches within that, and I guess they both have to do with wheels, as it turns out, mobile home parks in the first part of the show and then parking assets later today. I think there's a compelling future use case for at least one of those two to speak to our international audience for a moment, but this will actually help clarify things for you. If you're a North American too, though it's called a mobile home, well, it doesn't really have that much to do with wheels. There might not be any wheels on it. And if a resident lives inside one of these for, say, a decade, well then it's probably going to remain attached to that same location on the ground all 10 years. That's why a mobile home is often referred to now as a manufactured home. What it is is it's a factory built residence, constructed on a permanent chassis and then transported to a site. I mean, that's what we're talking about here, and they are a less expensive alternative to traditional homes that have, say, a cast in place, concrete foundation. So therefore, understand, mobile homes are affordable housing, highly affordable housing, and that's really important in this housing affordability crisis. And I've talked quite a bit about that on the show, and the meager national supply of that all types of affordable housing, they are recession resilient. I mean, that's just one reason why we love affordable housing types here at GRE where we're often buying rental property just below an area's median price. You know, people think of mobile home parks MHPS, that they're all crime ridden and that there are slumlords. But that is not true in every case. There are actually nice ones. If you're an MHP investor, you often only own the land beneath the structure, and not the mobile home itself. The resident owns the mobile home itself. So therefore, if there's a leaky roof or a window needs replacement, or flooring needs replacement, that is on the resident to fix, not you. MHP dwellers, they often don't have to pay property tax, though, because, like I said, they don't own the land. The landlord, or the community, therefore, is the one that has to pay the property tax. So there's some thoughts on mobile home parks for you, parking asset, real estate that's still settling into its post pandemic pattern with Return to Office mandates that aren't really fully matured yet. We're still settling in and seeing how that is going to look. And then when it comes to parking lots, you got to wonder about its future. When you consider the proliferation of autonomous cars, will that make parking lots obsolete? I'll have our guest address that longtime GRE listeners, you might remember episode 13 of this show, yeah, almost 11 years ago, that episode was about how autonomous cars will affect your future and your real estate and the very need for parking lots and a lot of what I discussed there in early 2015 that is beginning to come true, but this autonomous car adoption that is way slower than a lot of people thought. I mean, most Americans, they still have not been inside an autonomous car at all. A lot of people are still saying that they don't trust that that should change soon. But as for now, I'm just guessing that fewer than one in 10 Americans have been inside an autonomous car, probably quite a bit less than that. Today's terrific guest has over $1 billion in real estate transactions under his belt. This should be interesting. He is a specific investor in both mobile home parks and parking assets.

Keith Weinhold 6:26

Today's guest is a seasoned real estate investor entrepreneur, and he's a prominent voice in the space, because he hosts the real estate investing for cash flow show. He's built a strong reputation as an expert in two niches that have less competition than some other investments, and we'll discuss those two today. They are mobile home parks and also parking asset investments too often overlooked yet pretty profitable niches, and he and I have a lot in common. I'm on the Forbes real estate Council. He is on the Forbes Technology Council. He and I are both native Pennsylvanians. It's been quite a few years. Hey, welcome back to GRE it's Kevin Bupp.

Kevin Bupp 7:06

Hey, Keith, thanks for having me back. And yeah, excited to be here, my friend, and excited to finally get caught up. When you referenced that, it was nearly eight years since we last spoke. I was taken back a little bit because A lot's happened in past eight years.

Keith Weinhold 7:21

I know that's wild with where things are at. People didn't even know the meaning of the word pandemic when you were last here on the show, Kevin, let's talk about really the case for mobile home parks. I know they can be a strong, cash flowing asset once people are really dialed into them. I think what's interesting is, since you were last here on the show, really, from the pandemic on, it's been a well documented national story where lay people just know about how the supply of housing just is not adequate in order to meet demand, and what that usually means, just talking about the single family space is, of course, they're building, but they're not building fast enough to keep up with population growth and housing demand. But what's so compelling about mobile home parks is, I mean, they're barely even building them anymore, like they are contracting in supply in a lot of areas. So tell us more about the compelling case for mobile home parks.

Kevin Bupp 8:16

Yeah, well, you had a big one. You know? It's an asset class that has a diminishing supply, right? We can get into the reasons behind that. But, you know, just from a high level perspective, one of the other factors as it relates to, you know, available homes, available housing for the growing population, is that while they are building stick boat homes, they're not fulfilling the needs of those that actually need affordable housing. So there's not a lot of the average working household can't necessarily afford the starter home any longer, and so mobile home parks are unique. I truly feel they're the best vehicle to help us fill this void of housing, affordable housing that is really needed throughout the entirety of the country. I mean, there's very few markets in this country that are still affordable. There's some places you can still go buy. You can probably go to Flint, Michigan, buy a home for 50 or $60,000 but generally speaking, I think the median home price today, I think it's crested over 400,000 I don't have the exact number, but I do believe over $400,000 and the average starter family, or even folks that are, you know, just working two jobs, making 40, $50,000 a year, they can't afford to purchase that type of home, a $400,000 home. And so again, these mobile homes you had mentioned, they're not building mobile home parks any longer. However, they're still building new mobile homes, and it's kind of interesting what's evolved over the past 10 years. The quality of the product is it's like a night and day difference of what it looked like 1015, years ago, of the homes themselves to what they look like today, and what you get for your money. You know, the average single wide that we might be putting into a community, brand new home, 13, 1400 square feet. Someone could come in and for roughly $80.70 $80 a foot, can buy a brand new home that's never been lived in before, that's unheard of, that's absolutely unheard of when you compare it to the average or the median home price across the US today. So it really is kind of the last frontier, and it's typically any market that we're in, if you take the same comparable quality of an apartment complex in the same, you know, area of town, the same school districts, we're typically about 20% less all in cost to actually own your own home, versus that of even renting the comparable size apartment. So it's a very compelling reason for folks that are looking for an affordable place, but not just affordable, but clean, safe and quiet. I mean, like we run very respectable communities, they're in the really good school districts. They're places that folks are proud to live and raise their families, then,

Keith Weinhold 10:22

yeah, that's true. This would really help meet that affordability challenge, another problem that's been so well documented. Talk to us more about what makes mobile home park investing different from investing in single family rentals or even a fourplex or a 20 unit apartment building.

Kevin Bupp 10:40

A lot of the fundamentals are similar, and I would say that it's probably more comparable to that of an apartment complex to a certain degree. Just think of it as a horizontal apartment complex, where units aren't stacked on top one another. They're just layout horizontally more wider than they are tall. But the bigger difference is in most instances, we don't actually own the homes, so the residents own the mobile homes, whereas we as community owners own the infrastructure, we own the land. We own the roads, when the sewer lines, the water lines, the common areas, if it has a clubhouse, if it has amenities, so we maintain and we own all that collective area where the folks basically come and they bring their home, they fix it to the ground, and then ultimately pay a slot rent to have their home there on that premise. And so for us, it's very attractive in that the resident that's in their home, if they have a Roofing Leak, they have a plumbing leak, they have their HVAC system go out. They're not calling us like they enter an apartment complex. It's on them, yeah. So they're homeowners. And a couple other really attractive elements of that that come as a result of having residents that live there, not just renters, is that they're very sticky. And so just like in a standard single family subdivision, where you've got folks that might have lived there for generations, you just reference that your parents literally live in the same house, and so they've lived there a very long time. It is quite common to find residents and even multi generations of the same family that live in our communities. And a couple come to mind. We just celebrated a woman's 50th year of living one of our communities in brendalin. And so you've got sticky resident base. There's not a lot of turnover. And then the last big piece of it that is really attractive us is a homeowner mentality is very different than a rental mentality as far as upkeep. And so you got folks that they plant flowers, they ensure that their units have curb appeal, right? They put flags out, they put decorations out during the holidays. It's a lot more warmth than that of what you might find in a traditional rental apartment complex.

Keith Weinhold 12:26

So what all does the tenant pay for? You mentioned that they pay for the lot rent. What other expenses do they have? How does that look for them?

Kevin Bupp 12:36

Typically, you know, utilities. So they'll have their own individual meter. They'll pay, you know, direct to the utility company, utility provider, water and sewer as well. They'll pay for their water and sewer usage. And that can come in many different forms. Sometimes, where our communities have public utilities, where it's built directly by the utility provider, sometimes it's more of a private system, where we're actually acting and participating as utility provider and building them back for their usage. Really the standard things that you might pay for if you live in a single family home. I think so the areas where it might differ. And honestly, this is really community by community for us, some of our communities, literally, the residents, they pay for the utility use, but outside of that, literally, we mow the grass, we shovel their driveway, we shovel their walkways, we handle all those type of elements, whereas some other communities, the residents we might require that they actually maintain their own grass so they their own grass, so they have to mow it, or hire a a third party vendor to come in and mow it. They might have to actually shovel their own driveway. And a lot of how we run a community really is depend on how it used to be run when we took it over. You know, if it's not broke, we don't fix it. And so a lot of times we don't like shaking things up too much. If they're used to a certain way, we just keep it status quo and continue rolling on of how the prior ownership used to manage it really similar elements of what a folks, an individual living in a single family home, might pay for so very similar.

Keith Weinhold 13:48

Okay, so they pay you the rent for the lot. This puts nearly all the maintenance and repair burden on them. So is there any sort of HOA like body here?

Kevin Bupp 13:58

Not in our community. You do find some communities, and most of these that have an HOA are typically a community that's gone through more of a co op type arrangement to where the actual individuals only like fractionalized share of the community, the residents that live there, and so then they have a the oversight from an HOA that's managing the daily operations, managing the financing, managing the budget, things like that. But in our communities, no, there is not an HOA, I'd say the one other thing that's typically included in lot rent is they don't have property taxes, right? So we own the land, and so the individuals that live in these units aren't paying individual property taxes. A lot of states require that they have a registration fee, just like you do in your vehicle, that they would have to pay on an annual basis. And then most of them have insurance as well. You know they're covering you're carrying homeowners insurance on the actual dwelling itself. Outside of that, it's, again, just pretty straightforward,

Keith Weinhold 14:47

yeah. So here we are in this low competition, low supply niche that we're talking about here we think about communities and nimbyism and building, not in my backyard. ISM oftentimes that's a sentiment that residents of a certain area have, residents say something like, ah, we don't want this new 200 unit apartment building or mobile home park here in our single family home neighborhood, like, that's nimbyism. But in mobile home parks, to me, it seemed like nimbyism is often at a different level. It's at the government or the municipal level, like your town or city, might not want one, because it doesn't generate as much property tax revenue as a new single family neighborhood would. Is that the reality? Kevin,

Kevin Bupp 15:31

that's absolutely the reality. And that's why you don't see new parks getting built. I think last year, ones that I know of, there are about a dozen that were built, many more than that. They're actually shut down, you know, for redevelopment purposes. And so that is absolutely huge part of it. In fact, you know, it's frustrating, because pretty much every municipality across the country the topic of affordable housing, it's on the radar, and it's probably one that is discussed quite often. And in all reality, again, these mobile home parks really would help resolve that challenge at most of these you know, municipalities are the shortage of homes, affordable homes, that they're facing across the country. And so, you know, another big piece of it, you mentioned the tax basis, absolutely, you know, the municipality would make, they'd have much better tax revenue from pretty much anything else that could be built there. And so that's a big barrier. But the nimbyism piece of it, I think a big part of that is it's unfortunate. I think it's getting better over time. There's bad operators in our space, just like they're bad operators in the apartment space, just like there's bad operators landlords that have single family homes that just let them deteriorate over time and don't repair things. Unfortunately, we kind of get lumped all the mobile home parks get lumped in that bad bucket. And so while there's, you know, I always joke and say there's mobile home parks that are on the wrong side of town, wrong side of the tracks, right? You don't want to go to and during the daytime. Well, guess what? There's subdivision, the single family home, neighborhoods that are the same thing, and there's apartments that are like that as well. You don't go anywhere near them. And you've got the middle of the road, right? You've got just the good, hard working, blue collar folks that want to send their kids to good public schools. We've got those communities apartments are that way too s

Imagine a world where your investments work smarter, not harder. Keith reveals the truth about why real estate trumps stocks, and how the current economic landscape is creating a once-in-a-generation wealth opportunity.

Discover:

-Why traditional investing wisdom is leaving younger generations behind

-Why owning assets is the ultimate key to breaking free from economic uncertainty

From the dying middle class to the rise of strategic real estate investing, Keith exposes the game-changing insights that most investors never see.

-Inflation is reshaping the economic landscape - and you can either ride the wave or get swept away

-Generation Z faces unprecedented economic challenges

Want to learn more? Your financial transformation starts here.

Resources:

Text FAMILY to 66866

Call 844-877-0888

Visit FreedomFamilyInvestments.com/GRE

Show Notes:

GetRichEducation.com/573

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

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GetRichEducation.com

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GR, I'm your host. Keith Weinhold, talking about real estate versus stocks, how housing has been in a recession that could now be thawing. Then why the war on the young and the vanishing middle class threatens to get even worse today on get rich Education.

Keith Weinhold 0:19

You It's crazy that most people think they're playing it safe with their liquid money when they're actually losing savings accounts and bonds don't keep up when true inflation can eat six to 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments and their flagship program with fixed 10 to 12% returns that have been predictable and paid quarterly. There's real world security. It's backed by needs based real estate like affordable housing, Senior Living and healthcare. Ask about the freedom flagship program when you speak to a freedom coach there. And here's what's cool. That's just one part of FF eyes family of products. They include workshops and special webinars, educational seminars designed to educate before you invest start with as little as 25k and finally, get your money working as hard as you do. It's easy to get started. Just grab your phone and text family. 266866, text the word family. 266866, that's family. 266866,

Corey Coates 1:37

you're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:47

Welcome to GRE from Rocky Mount North Carolina to Mount Shasta, California and across 188 nations worldwide. I'm your host, Keith Weinhold, and you are inside for another wealth building week of get rich education. A lot of people have been building wealth lately. Do you even understand all the markets that are either at or near all time highs, real estate, stocks, gold, all recently hit those levels, also nested home equity positions of American property owners are at all time highs. Silver is also near an all time high, and so are FICO credit scores. All this means that the haves are in really good shape, and the have nots aren't more on that later. Let's then you and I talk about real estate versus stocks. I've invested in both for decades, and it's not something that I do on the side. This is the core of what I do and talk about with you every week. And I've never felt more inclined toward investing in real estate ever the resilience of residential real estate, a major reason is that I've always found real estate investing easier to understand than the s and p5 100, and it comes down to the mechanics of each one in The stock market, a company can be well run, it can be profitable, and it can even be growing, yet its stock price might fall anyway. Why? Because expectations weren't met for a quarterly earnings report, or investor sentiment just happened to shift for a while, people just tended to focus on the bad stuff instead of the good stuff, even though it was always there, and that's why the stock price went down. So what makes a stock move more often than not, is kind of laughable. It isn't a word sentiment, emotions. It's how investors collectively feel about a stock and that can change on a dime. One quarter's earnings miss an interest rate hike, geopolitical news or even a single social media comment from a CEO that can move billions of dollars of market value in an instant real estate, on the other hand, that strips away a lot of that noise and that ability for other people's emotions to ruin the price of your apartment building that cannot happen at its core, the value of a property is tied to its income stream and the market that It sits in, that makes it far more direct and way more controllable. If I buy a property, I can see the levers in front of me and ask my property manager to push or pull them or even do it myself. For example, I just asked them to replace flooring in three of my apartment units. With pricier luxury vinyl plank rather than new carpet, and that's because I plan to hold that building for another five years or more. I'll attract a better quality tenant that can afford to pay me more rent. So I know that if I improve operations and increase occupancy, reduce expenses or reposition the asset down the road. I mean, that is directly going to increase net operating income, and that increase will directly affect my valuation. So there's a logic to this that's almost mechanical, and that is not to say that real estate is without nuance or risk. The risk lies in execution. You have to underwrite carefully. Is the location of your property sustainable long term? Are the demographics supportive of Lent growth? What capital improvements are truly lucrative to you and provide the tenants with value, and what kind of improvements are only cosmetic? So real estate isn't just tangible, it's also something that you can interact with. You can walk a property, you can even speak to tenants, study the neighborhood and know exactly what you're dealing with. It's not a ticker symbol reacting to opaque forces that you'll never see or control, and for me, that tactile nature creates clarity. When you buy the right property in the right market with the right strategy, then the path forward is not mysterious. It isn't whimsical, it's deliberate. Real Estate is easier to understand than the S p5, 100. And that also doesn't mean that real estate is simple, because there is that due diligence and strategy, but it's the cause and effect relationship between what you do and the outcome that you get that's far more direct with stocks. You can be completely right about the fundamentals. I mean, you can nail it. You can Bullseye that stock target, and after all that, yet still lose with real estate. If you execute well, the fundamentals eventually do show up in the returns and see because of that direct cause and effect relationship, you can improve yourself as a real estate investor faster than a stock investor can, and that's because you can learn about how your upgrade drove your properties, noi, that information, that feedback that you got, that's something that you can either replicate again or improve upon in your own investor career. So between real estate and stocks, execution is the real differentiator, and control is a key one as well. To me, that sweet spot is control that I have. But through a property manager that way, control doesn't mean that you're losing your quality of life, your standard of living. Now, some people, they do, have the right handyman skills to maintain the property and the right people skills to maintain the tenants. So self managing it can work for just a few people. I sure don't have the handyman skills myself. Sheesh, if I even try to hang a picture on a wall, there's a 50% chance that it's going to end in a drywall patch job. When you can see the cause and effect between your decisions and the property's performance, it creates that level of control that stocks and bonds just don't offer. And I'm also being somewhat kind to stocks by discussing a benchmark like the s, p5, 100, even harder to control and understand are the Wall Street derivatives and financial mutations that the people invested in them don't even understand. Unlike stocks, you own, the levers you own, the operations, the expenses and the occupancy, both have risks, but real estate's risks are more perceptible, more knowable. You won't have to cringe when a company's CEO posts a tweet that's either pro Israel or pro Gaza. Billions of market cap is wiped out, and your investment goes down 12% in one hour. This is why we talk about real estate on the show. There is less speculation and conjecture. It is concrete stuff, and that's all besides how real estate pays you five ways at the same time, as if that wasn't enough.

Keith Weinhold 9:38

Now, when we talk about real estate investing in this decade, do you realize that we have been in a housing recession for two years? A recession in real estate? I mean, it might not feel like it with those home prices at erstwhile mentioned all time highs. We don't need to have falling prices to have a recession. Investors are obviously. Making money in this housing recession. The recession I'm talking about is the slowdown in housing activity stemming from less affordability, lower sales volume and less available inventory. But we do now have signs that we are breaking out of these housing doldrums. As far as affordability, national home prices are staying firm. But what's helping there is that mortgage rates have fallen, and we've also had wages that are rising faster than rents and wages that are rising faster than mortgage payments. In fact, wages have been rising faster than both of those for most of the last year now, and that's sourced by Freddie Mac Federal Reserve stats and rental listings on Redfin. Yes, year over year, American wages are up 4.1% rents are up 2.6% and mortgage payments are basically unchanged over the past year, up just two tenths of 1% and of course, these facts, combined with lower mortgage rates, all supports more real estate price growth. Now to kick off the show, I mentioned how real estate stocks and gold all recently hit all time highs. Well, that's denominated in perpetually based dollars, of course. However, one thing that affects you that certainly has not reached all time highs is the level of available homes, the number of homes for sale, that inventory is up off the recent bottom in 2022 yet it is still below pre pandemic levels. We have had quite a recovery here. National active listings definitely on the rise. They are up 21% between today and this time last year. Well, that means that buyers have gained leverage, mostly across the south, where lots of new building has occurred, and some areas of the West as well. Yet today, we are still, overall here 11% below 2019 inventory level. So nationally, we're basically still 11% below pre pandemic housing inventory levels. And in the Midwest and Northeast, the cupboard looks even more bare than that, since new construction totally hasn't kept up there, we will see what happens. But with the recent drop in mortgage rates, buyers might take more of that available inventory off the shelf. But here's the twist that I've heard practically no one else talk about no media source, no one in conversation. Nobody. It is the paucity of available starter homes. It's the entry level home segment that has the great scarcity, and it's these low cost properties that are the ones that make the best rental properties. Their paucity is jaw dropping, as sourced by the Census Bureau and Freddie Mac starter home construction in the US. I mean, it is just fallen precipitously. Are you even aware of the trend? All right, defined as a home of 1400 square feet or less, all right, that's what we're calling a starter home. Their share of new construction that was 40% back in 1982 Yeah, 40% of new built homes were starter homes. Then by the year 2000 it fell to just a 14% share, and today, only 9% of new built homes are starter homes, fewer than one in 10, and yet, that's exactly what America needs more of. So although overall housing inventory is still low, it's that entry level segment that is really chronically underserved, and that won't change anytime soon, we remain mired in a starter home slump because builders find it more profitable to build higher end homes and luxury homes. Yet for anyone that owns this workforce rental property, which is the same thing we've been focused on doing here on this show, from day one, you are sitting in an asset class that's going to remain stubbornly in demand over the long term. And when it comes to starter homes, the ones Investors love most, they are more scarce than bipartisan agreement in Congress, really. That is the takeaway here.

Keith Weinhold 14:39

So last week, I had an interesting in person meet up at a coffee shop with a 19 year old college student because he's a real estate enthusiast, rapping Gen Z there. He's an athlete too, an 800 meter runner. Well, his dad read Rich Dad, Poor Dad, and his dad has 60 rental properties. Where they're from in Wisconsin, and maybe you're wondering, oh, come on, what could I learn from this 19 year old? I don't think that way. Now, I told him about some foundational GRE principles like financially free, beats debt free and things like that. It was also insightful to get his take on how he sees the world, and for me to learn what his professors are teaching him about real estate investing in his classes, he talked about how his professors show them, for example, what affects apartment cap rates. Also about how, whenever they run the numbers on a property, it always works out better to get the debt, get that mortgage, and how that leverage increases total rates of return. I was really happy that he's learning that over there at the university, but I was really impressed how at age 19, he's responsible and understands so much about society, politics, investing, athletics and even diet. I mean, this guy is rare, talking about his preference for avoiding food cooked in seed oils and choosing beef tallow instead. He also lamented on how Generation Z is so screwed up, saying that no one reads, no one's having kids, no one can buy a home, no one's going to be able to buy a home, and that people his age are so used to looking at screens that they're anxious about in person interactions, even in person, food ordering from a waiter at a restaurant gives them anxiety. He and I are planning to go running together next week. We'll see how that goes. As a college 800 meter runner, he's going to have the speed advantage on me, but we're running up a steep, 40 minute long trail where I've got a shot at an endurance advantage. So it was rather interesting to get his take and see what college professors are teaching on real estate. I mean, this generation that's coming of age now, Gen Z is the worst generation since George Washington to have it worse off than their parents. I'm going to talk about that today, shortly. next week, on the show here, I plan to help you learn about what's going on with some real estate niches and what their future looks to be over the next 10 to 20 years, including mobile home park real estate and parking lot real estate, one of these asset classes I really don't like the future of That's all next week on the future of some certain real estate niches. Straight ahead today, I want to tell you about mortgage rates in a way that you've never thought about before and more about the war on the young and the vanishing middle class. I'm Keith Weinhold. There will only ever be one. Get rich education podcast episode 573, and you are listening to it.

Keith Weinhold 17:53

If you're scrolling for quality real estate and finance info today, yeah, it can be a mess. You hit paywalls, pop ups, push alerts, Cookie banners. It's like the internet is playing defense against you. Not so fun. That's why it matters to get clean, free content that actually adds no hype value to your life. This is the golden age of quality email newsletters, and I write every word of ours myself. It's got a dash of humor. It's direct, and it gets to the point, because even the word abbreviation is too long, my letter takes less than three minutes to read, and it leaves you feeling sharp. And in the know about real estate investing, this is paradigm shifting material, and when you start the letter, you'll also get my one hour fast real estate video course, completely free as well. It's called the Don't quit your Daydream letter. It wires your mind for wealth, and it couldn't be simpler to get visit gre letter.com while it's fresh in your head, take a moment to do it now at gre letter.com Visit gre letter.com

Keith Weinhold 19:06

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President Chale Ridge personally. While it's on your mind, start at Ridge lendinggroup.com that's Ridge lendinggroup.com

Todd Drowlette 19:38

this is the star of the A E show the real estate commission, I'd roll that. Listen to get rich education with my friend Keith Weinhold, and don't quit your Daydream.

Speaker 1 19:49

Welcome back to. Get Rich Education. I'm your host. Keith Weinhold, as a reminder that show the real estate commission starring our friend Todd Drolet, who is a guest on the show here with us at the beginning of this month, it starts October 10, on A and E, that's that reality based commercial real estate show. Late last year, the Fed lowered interest rates, and they're doing the same thing again this year, when interest rates rise and fall, think of it like a wall that's being raised and lowered. Cutting rates is like lowering the height of a wall or a dam. That's because it allows for the free flow of capital. Savings rate accounts. Well, since they'll now pay at a lower rate with this rate cut, they're more likely to get shifted out and invested somewhere and flow into something else, driving up that other asset's value. Mortgages are more likely to originate because you pay less interest. Lowering rates lowers the impediment to the flow of money. It eases that flow. Oppositely, raising rates is like increasing the height of a wall or a dam, because if your savings account rate goes from 4% up to 5% oh well, you more likely to keep it parked there a higher wall or dam around your money, and raising rates makes your mortgage costs higher, so you're more likely to stay put and not move money around, constrained by the higher wall, that's how interest rates are like walls and lower walls also increase inflation, since they increase The flow of money, and hence the demand for goods and services. Well, then why did the Fed cut rates, lowering the wall opening the door for inflation this last time? Well, I think you know that was due to the evidence of a sputtering job market. You know that, if you follow this stuff, a slowing job market slows the flow of money, hence why they lowered the wall to increase the flo

Keith discusses the pros and cons of being a hands-on landlord versus hiring a property manager.

Self-management offers cost savings, quality control, and better tenant relationships but can be challenging due to tenant and contractor management.

Keep up with inflation and market trends, by using tools like Rent Finder.ai for market analysis.

Dani-Lynn Robison with Freedom Family Investments joins the conversation to highlight their recession-resilient real estate funds offering 8-16% returns, with options for liquidity and growth.

Resources:

Text FAMILY to 66866 Call 844-877-0888 Visit FreedomFamilyInvestments.com/GRE

Show Notes:

GetRichEducation.com/572

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

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Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE I'm your host. Keith Weinhold, being a hands on landlord versus professional property management. Which one is right for you? How often and how much should you raise the rent? Then learn how, rather than a landlord, to be a landlord and increase your income by becoming a real estate lender. Today on get rich education,

Speaker 1 0:28

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:13

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Speaker 2 1:30

Welcome to GRE from Charleston, South Carolina to Charleston, West Virginia and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education before we talk about, should you be your own landlord or not, and how often do you raise the rent? Let's get more personal. I want to get introspective with you with three questions, do you focus more on what you have or on what's missing? Yeah, and not just as an investor, but in your overall life. Do you focus more on what you have or on what's missing? As for me, it's what's missing, and that might be a shame. I'm definitely grateful for what I have, but probably not grateful enough if you also focus more on what's missing from your life rather than what you have. Maybe you need to be more grateful for what you've got too. But those like me that focus more on what's missing are often accomplishment driven people always trying striving for more. The second question is, do you focus more on your past, present or future. Now we all focus on all three, but which one do you focus on the most? For me, it's the present and then the future after that. The third question that you can ask yourself to learn more about yourself is, do you focus more on what's in your control or out of your control, I focus more on what's in my control. So there you go. Certain combinations of those questions can tell you a lot about yourself. For example, if you answered that, you're most focused on your future and what's out of your control, you could be setting yourself up for some sleepless nights. Oh, gosh, did I lock the car door or really, it's more like, Geez, how is that meeting really going to go tomorrow? I do some of that too fretting too much about the future for things outside your control that won't change your future one bit, but yet, ostensibly, that steals your peace of mind in the present. And I don't know who to attribute those questions to. Who originated them, but I heard Tony Robbins talking about them, and that helps you figure yourself out for some of what we're talking about here on today's show. I want to start off real basically here most first time real estate investors, they find themselves diving into the world of property management with zero experience and tons of uncertainty. You don't have to put management experience on a resume before you hire yourself to manage your own property. Self managing a rental property, it can be daunting in the beginning, but it also offers you some real benefits, like greater control and cost savings and some hands on learning. But self management comes with its own set of challenges, like tenant management and handling maintenance issues, so let's weigh some of those pros and cons of self landlording versus outsourcing it to a professional manager, there are about four key advantages to self managing. I think that most obvious one is the cost savings, because property management companies typically charge eight to 10% of the monthly. Rent amount for their services, along with an additional fee for placing a tenant or renewing a lease, and maybe even a fee for certain maintenance types. By self managing, you can then avoid these fees and keep more of the rental income for yourself and thereby making your investment more profitable. Say that your property is rented for $2,000 a month. That $200 management fee, because that's 10% Well, multiply that by 12, that's $2,400, a year, plus a typical leasing fee when a new tenant is placed is a half months rent. That's $1,000 in this case, now, you're probably not going to have a new tenant placed every single year, but if you did, then that's $3,400 annually to the manager in total, between the management fee and the leasing fee. Another advantage of DIY ing is quality control. Now, I think people that tend to be control freaks, oftentimes have to self manage, and they care a little too much. But when you self manage, you do have direct control over the maintenance and tenant selection and the overall condition of your property, and that is going to ensure that your investment is well maintained and that your tenants are satisfied. Property managers, they often manage multiple properties, so your rental might not get as much attention. And the most common, recurring issue that I hear from investors that use a professional management company is that they don't feel like their property is getting enough attention, or that the property manager doesn't really care that much about them after their contract is signed. And if you think that through, from the property management industry side, you know most managers, they're only making that 100 to 200 bucks of recurring revenue per month on each property they manage, and these are pretty thin margins overall. So in order to run a profitable business and pay their employees and cover their other business expenses, these property managers, they need to onboard hundreds of clients, and in turn, that's going to spread out their efforts pretty thin if you've only got a few properties with a manager. Well, their main priority sometimes ends up being their bigger clients. So the smaller you are, the further down the callback list you might be. But I'll tell you, even staying in touch with my professional managers a little bit, even the ones I only have a few properties with, I feel like I get what I need. A third advantage to managing yourself is better tenant relationships. You've got a level of control that allows you to build relationships with your residents that can lead to longer retention and less of that costly turnover, and having that direct communication that builds some trust, that builds some respect between you and your tenant, they appreciate a landlord like you is probably going to respond quickly to maintenance requests and the fact that you're approachable if an issue comes up, and also, by you being more involved in the tenant screening process, you can ensure that you select a pretty good tenant that's going to stay Long Term and really take care of your property. Another advantage to you self managing is that you do build some valuable skills. I mean, managing a property on your own that teaches you a big range of pretty versatile skills, from like handling maintenance and repairs to negotiating leases and just overall, managing your finances, these can be pretty helpful skills, not just for your rentals, but for your future business ventures. So really, those are some of the upsides of self management. Now, how about the flip side, the challenges of self managing your own rental property? Well, the problem is managing your tenants. I mean, some say that this whole discipline that's called Property Management ought to be called tenant management and handling tenant relations. That's one of the most critical aspects of being a self managing landlord. I mean, even if you try to build tenant relationships, mismanagement that can lead to vacancies or disputes or can even go into legal issues. So educating yourself on landlord tenant laws and best practices, that's pretty essential. If you want to head off problems, you've got proper tenant screening and addressing tenant concerns and ensuring that rent is paid on time. I mean, all that stuff's crucial. Most tenants are pretty reasonable, but you know, there are always going to be a few that will challenge your patients, and it really requires that you be tactful and professional to manage well, managing contractors. I mean, property maintenance, that's another key responsibility you have to. Fine and hire and coordinate contractors for repairs and upkeep and poor contractor management that could lead to cost overruns or really shoddy work and more, knowing how to negotiate contracts and oversee projects that's crucial to maintaining the tenant satisfaction and the overall quality of your property. Another downside of self management is handling emergencies, I mean plumbing leaks or electrical issues, that stuff could happen anytime. And as a self managing landlord, you might not always be available to respond immediately, which can lead to property damage or unhappy tenants. So self managers, they really need to be problem solvers. Self managing a rental property, things go fine 99 plus percent of the time, but it could get emotionally taxing, especially if those tenant relations become a problem. So you got to keep personal feelings out of it, that stuff can cloud your judgment and negatively impact your decisions. If you want to self manage, you've got to maintain professionalism and set clear boundaries and remain objective when you're dealing with tenants and property issues, so creating systems and processes help you minimize those emotionally driven decisions, and can help you ensure consistency in managing approach. And then there is that legal side you ought to keep up on that local area's landlord and tenant law. So in conclusion, on whether to be your own landlord or outsource it to professional management, while these challenges are pretty real, you should still be able to self manage your properties, even remotely, even across state lines or from 1000s of miles away. I mean, most of these worst case scenarios that you hear about, like a flood at 2am I mean that stuff just never happens. I mean, it's never happened to me, even if you don't have previous experience, you really can effectively manage your rental properties and see positive results when you got the right tools and the right mindset. And today's tech tools make remote management easier than it's ever been in human history. But any long time listener knows that I do not manage my own properties. My time is simply too valuable. As a frequent guest on the show here, Robert helm says life is too short for property management, I just feel a personal sense of freedom and autonomy and some headspace clearance by knowing that no tenant can contact me directly yet that my manager is taking care of them. I mean, it's just not worth doing it myself to get that last 2% toward perfection. When you buy in the most investor advantage areas, you should have enough margin to pay for a manager.

Keith Weinhold 13:03

All right, well, let's change topics now, and whether you self manage or you outsource it to a pro, you know, you've got to ask, how much and how often should landlords raise the rent? That is the question. Let's say you've crunched the numbers and expenses are climbing like they have these past few years, and the market is shifting and your rent hasn't changed. That really leaves you with one big question, Should you raise the rent? And should you raise it every year? And if you're new to landlording, it can kind of feel complicated. It could feel like if you raise the rent too much, you risk losing a great tenant if you raise it too little or not at all, and you might fall behind on costs then, or even undervalue your property if you don't keep your rents up there, because five plus unit property values are based on the rent, which goes into the NOI your net operating income. And really, this is one of the more common dilemmas that landlords face. But really, the good news is that there's a pretty clear way forward. So let me help you determine when a rent increase makes sense, and then figure out an amount that keeps your unit competitive. It keeps your rental income on track. Now some people, they actually believe that landlords are required to raise the rent every year and to a tenant, it might seem like that's what happens, but no, landlords are not required to raise the rent every year. They often choose to do so to keep up with inflation or stay competitive and high demand markets, and keep up with shifts in local rental trends, gradual, smaller increases can help you avoid the need for making larger jumps later, that stuff can surprise or frustrate your tenant. You want to go for those big rent jumps, but two. 19 tenancies. We've covered that part before. Now, some landlords prefer to keep rent steady, like when they have long term reliable tenants, or they're just focused on building equity over time, and they want to stay hands off, and don't really need the cash flow so much. Now, in a lot of cases, maintaining that same rent amount that sure can reduce your turnover in vacancy costs, those things are your biggest expenses, but often that is not the best approach in the long run, because you probably are a leveraged investor, meaning that you have a loan on the property. Well, then a rent increase that helps you out more than it does for the less educated, paid off free and clear property owner, because you can widen your delta faster. You widen your cash flow faster because your biggest expense, your principal and interest payment, stays fixed. Yes, you are getting leverage on both the asset value overall and the income. Yes, this is winning that third crown of GRE s inflation triple crown. So ultimately deciding how often to raise the rent, that really depends somewhat on your goals and also the condition of the rental. You got to factor in how satisfied you think that your tenant is. That's part of it, and the state of the market as well. Now, if you're unsure what the right rent price is for your area, there are increasingly sophisticated tools for helping you figure that out. Rent finder.ai, can help you. One of my property managers uses it. It's a really cool AI driven report that looks at 25 rent comparables in the area. Again, that tool is rent finder.ai.

Speaker 2 16:52

Now, when should landlords raise rent? Finding the right time to do this that helps you stay aligned with the market value all while supporting your financial goals. But there are also times where it might be smarter to hold off on hiking the rent. The most common times that you implement a rent increase are at least renewal. That's really the most common and appropriate time to raise the rent, provided that you give proper notice. You usually got to give 30 to 60 days notice. Another common time to raise the rent are after you make significant upgrades, like installing new appliances or renovating a kitchen or updating flooring. I mean, this is when it might be reasonable to adjust rent to reflect that added value. Another time is when overall market rents are rising, even if you haven't improved the unit or anything, because if rental prices in your area are up, well, then raising your rent helps keep your property in line with local rates. But you got to keep in mind that rent price increases require a well thought out strategy to avoid pushing away good tenants. Another time to increase the rent is to keep up with inflation and expenses over time, especially these last few years, we've all had higher operational costs like higher insurance, higher property taxes, higher maintenance costs. So even a small annual rent increase definitely helps offset those rising expenses, but you have got to avoid basing your rent price solely on operating expenses. When you do raise the rent for this reason, though, let the tenant know just which operating expense rose. That is going to help reduce tenant frustration. Now, on the flip side, there are times when keeping your rent steady could be the better choice, especially if you have a long term reliable tenant. I mean good tenants that pay on time and take care of the property. They are worth retaining, not all times, but sometimes avoiding that rent hike can help you maintain a good relationship. There another time to avoid it is when the rental market is soft. I mean, if there's more competition in your area, or high vacancy rates in your area, well then raising the rent could lead a tenant to look somewhere else, especially if there are vacant properties nearby that they could move into. Another time to not raise the rent is if the property hasn't changed, if you haven't made any of those improvements, sometimes a rent increase might not be justified, or obviously you don't want to raise the rent if you really, really want to avoid a vacancy. So keeping the rent the same might encourage them to renew. So factors to consider before raising the rent and how to calculate an appropriate increase if a unit is aging or needs repairs, raising the rent without improvement that could discourage renewals. So consider creating a value checklist to quantify certain improvements, like new apps. Appliances could be 25 to $50 a month in additional rent, or a renovated kitchen, $75 a month or new HVAC. That could be 30 to $50 a month. Think about neighborhood changes like gentrification or new schools or increased transportation access or nearby commercial development. I mean, all that stuff can raise demand, building a Whole Foods nearby, having a new office space with high wages nearby, that can increase your rent. Look at City Planning announcements and local news. You can help stay ahead of the trends that way, and if your neighborhood has seen a rise in new businesses or housing demand. I mean, that is justification for a moderate increase and a modest annual rent increase tied to inflation that can help offset

Keith discusses the potential takeover of the Federal Reserve by President Trump, highlighting the macroeconomic implications.

Economist, author and publisher of Macro Watch, Richard Duncan, joins the show and explains that central bank independence is crucial to prevent political influence on monetary policy, which could lead to excessive money supply and inflation.

Trump's policies, including tariffs and spending bills, are inflationary, necessitating lower interest rates.

Resources:

Subscribe to Macro Watch at RichardDuncanEconomics.com and use promo code GRE for a 50% discount. Gain access to over 100 hours of macroeconomic video archives and new biweekly insights into the global economy.

Show Notes:

GetRichEducation.com/571

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, the President has a plan to completely take over the Fed, a body that historically stays independent of outside influence. Learn the fascinating architecture of the planned fed seizure and how it's expected to unleash a wealth Bonanza and $1 crash with a brilliant macroeconomist today, it'll shape inflation in interest rates in the future world that you'll live in today. On get rich education.

Speaker 1 0:33

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Corey Coates 1:21

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Speaker 1 1:31

Welcome to GRE from Fairfax, Virginia to Fairfield, California, and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education. The Federal Open Market Committee is the most powerful financial institution, not only in the nation, but in the entire world, and when an outside force wants to wrestle it and take it down. The change that it could unleash is almost incredible. It's unprecedented. The President wants full control. Once he has it, he could then slash interest rates, order unlimited money creation, and even peg government bond yields wherever he wishes, and this could drive wealth to extraordinary new highs, but this also carries enormous risks for the dollar and inflation and overall financial stability. And I mean, come on now, whether you like him or not, is Trump more enamored of power than Emperor Palpatine in Star Wars or what this is fascinating. Today's guest is going to describe the architecture of the takeover the grand plan. Our guest is a proven expert on seeing what will happen next in macroeconomics. He's rather pioneering in AI as well. But today, this all has so much to do with the future of inflation and interest rates. We're going to get into the details of how, step by step, Trump plans to infiltrate and make a Fed takeover.

Keith Weinhold 3:23

I'd like to welcome back one of the more recurrent guests in GRE history, because he's one of the world's most prominent macroeconomists, and he was this show's first ever guest back in 2014 he's worked with the World Bank and as a consultant to the IMF. He's contributed a lot on CNBC, CNN and Bloomberg Television. He's a prolific author. His books have been taught at Harvard and Columbia, and more recently, he's been a guest speaker at a White House Ways and Means Committee policy dinner in DC. So people at the highest levels lean on his macroeconomic expertise. Hey, welcome back to GRE joining us from Thailand as usual. It's Richard Duncan

Richard Duncan 4:03

Keith, thank you for that very nice introduction. It's great to see you again.

Keith Weinhold 4:08

Oh, it's so good to have you back. Because you know what, Richard, what caught my attention and why I invited you back to the show earlier than usual is about something that you published on macro watch, and it's titled, Trump's conquest of the Fed will unleash a wealth Bonanza, $1 crash and state directed capitalism. I kind of think of state directed and capitalism as two different things, so there's a few bits to unpack here, and maybe the best way is to start with the importance of the separation of powers. Tell us why the Fed needs to maintain independence from any influence of the president.

Richard Duncan 4:44

Central banks have gained independence over the years because it was realized that if they didn't have independence, then they would do whatever the president or prime minister told them to do to help him get reelected, and that would tend to lead to excessive money supply. Growth and interest rates that were far too low for the economic environment, and that would create an economic boom that would help that President or politician get reelected, but then ultimately in a bust and a systemic financial sector crisis. So it's generally believed that central bank independence is much better for the economy than political control of the central bank.

Speaker 1 5:24

Otherwise we would just fall into a president's short term interests. Every president would want rates essentially at zero, and maybe this wouldn't catch up with people until the next person's in office.

Richard Duncan 5:35

That's right. He sort of wants to be Fed Chair Trump. That's right, president and Fed Chairman Trump on the horizon. It looks like won't be long, Now.

Speaker 1 5:45

that's right. In fact, even on last week's episode, I was talking about how Trump wants inflation, he won't come out and explicitly say that, of course, but when you look at the majority of his policies, they're inflationary. I mean, you've got tariffs, you've got deportations, this reshaping of the Fed that we're talking about the hundreds of billions of dollars in spending in the one big, beautiful Bill act. It is overwhelmingly inflationary.

Richard Duncan 6:12

It is inflationary. And he may want many of those things that you just mentioned, but what he doesn't want is what goes along with high rates of inflation, and that is high interest rates, right? If interest rates go up in line with inflation, as they normally do in a left to market forces, then we would have significantly higher rates of inflation. There would also be significantly higher rates of interest on the 10 year government bond yield, for instance. And that is what he does not want, because that would be extremely harmful for the economy and for asset prices, and that's why taking over the Federal Reserve is so important for him, his policies are going to be inflationary. That would tend to cause market determined interest rates to go higher, and in fact, that would also persuade the Fed that they needed to increase the short term interest rates, the federal funds rate, if we start to see a significant pickup in inflation, then, rather than cutting rates going forward, then they're more likely to start increasing the federal funds rate. And the bond investors are not going to buy 10 year government bonds at a yield of 4% if the inflation rate is 5% they're going to demand something more like a yield of 7% so that's why it's so urgent for the President Trump to take over the Fed. That's what he's in the process of doing. Once he takes over the Fed, then he can demand that they slash the federal funds rate to whatever level he desires. And even if the 10 year bond yield does begin to spike up as inflation starts to rise, then the President can instruct, can command the Fed to launch a new round of quantitative easing and buy up as many 10 year government bonds as necessary, to push up their price and to drive down their yields to very low levels, even if there is high rate of inflation.

Keith Weinhold 7:58

a president's pressure to Lower short term rates, which is what the Fed controls, could increase long term rates like you're saying, it could backfire on Trump because of more inflation expectations in the bond market.

Richard Duncan 8:12

That's right. President Trump is on record as saying he thinks that the federal funds rate is currently 4.33% he said it's 300 basis points too high. Adjusting would be 1.33% if they slash the short term interest rates like that. That would be certain to set off a very strong economic boom in the US, which would also be very certain to create very high rates of inflation, particularly since we have millions of people being deported and a labor shortage at the moment, and the unemployment rate's already very low at just 4.2% so yes, slashing short term interest rates that radically the federal funds rate that radically would be certain to drive up the 10 year government bond yield. That's why President Trump needs to gain control over the Fed so that he can make the Fed launch a new round of quantitative easing. If you create a couple of trillion dollars and start buying a couple of trillion dollars of government bonds, guess what? Their price goes up. And when the price of a bond goes up, the yield on that bond goes down, and that drives down what typically are considered market determined interest rates, but in this case, they would be fed determined interest rates Trump determined interest rates.

Speaker 1 9:28

Inflationary, inflationary, inflationary, and whenever we see massive cuts to the Fed funds rate that typically correlates with a big loss in quality of life, standard of living, and items of big concern. If we look at the last three times that rates have been cut substantially, they have been for the reasons of getting us out of the two thousand.com bubble, then getting us out of the 2000 day global financial crisis, then getting us out of covid in 2020, I mean, massive rate cuts are. Are typically a crisis response

Richard Duncan 10:02

yes, but if we look back, starting in the early 1980s interest rates have have trended down decade after decade right up until the time covid hit. In fact, the inflation rate was below the Fed's 2% inflation target most of the time between 2008 the crisis of 2008 and when covid started, the Fed was more worried about deflation than inflation during those years, and the inflation rate trended down. And so the interest rates tended to trend down as well, and we're at quite low levels. Of course, back in the early 1980s we had double digit inflation and double digit interest rates, but gradually, because of globalization, allowing the United States to buy more and more goods from other countries with ultra low wages, like China and now Vietnam and India and Bangladesh, buying goods from other countries with low wages that drove down the price of goods in the United States, causing goods disinflation, and that drove down the interest rates. That drove down the inflation rate. And because the inflation rate fell, then interest rates could fall also, and that's why the interest rates were trending down for so long, up until the time covid hit, and why they would have trended down again in the absence of this new tariff regime that President Trump has put into place. Now, this is creating a completely different economic environment. President Trump truly is trying to radically restructure the US economy. There is a plan for this. The plan was spelled out in a paper by the man who is now the Chairman of the Council of Economic Advisors. His name is Steven Moran, and the paper was called a user's guide to restructuring the global trading system. It was published in November last year, and it very clearly spelled out almost everything President Trump has done since then in terms of economic policy. It was truly a blueprint for what he has done since then, and this paper spelled out a three step plan with two objectives. Here are the three steps. Step one was to impose very high tariffs on all of the United States trading partners. Step two was then to threaten all of our allies that we would no longer protect them militarily if they dared to retaliate against our high tariffs. And then the third step was to convene a Mar a Lago accord at which these terrified trading partners would agree to a sharp devaluation of the dollar and would also agree to put up their own trade tariffs against China in order to isolate China. And the two objectives of this policy, they were to re industrialize the United States and to stop China's economic growth so that China would be less of a military threat to the United States, which it is currently and increasingly with each passing month. So so far, steps one and two have been carried out very high tariffs on every trading partner, and also threats that if there's any retaliation, that we won't protect you militarily any longer. And also pressure on other countries to put high tariffs against China. The idea is to isolate China between behind a global tariff wall and to stop China's economic growth. So you can see that is what President Trump has been doing. And also in this paper, Stephen Marin also suggested that it would be very helpful if the Fed would cooperate to hold down 10 year government bond yield in this environment, which would naturally tend to push the bond yields higher. So that paper really did spell out what President Trump has done since then.

Keith Weinhold 13:59

This is fascinating about this paper. I didn't know about this previously, so this is all planned from tariffs to a Fed takeover.

Richard Duncan 14:08

That's right, the idea is to re industrialize the United States. That's what President Trump has been saying for years. Make America Great Again. And it's certainly true that America does need to have the industrial capacity to make steel and ships and pharmaceutical products and many other things in his own national self defense. But there's a problem with this strategy since the breakdown of the Bretton Woods system, and we've talked about this before, so I will do this fast forwarding a bit when the Bretton Woods system broke down up until then it broke down in 1971 before then, trade between countries had to balance. So it wasn't possible for the United States to buy extraordinarily large amounts of goods from low wage countries back then, this thing that's caused the disinflation over the last four decades, trade had to balance because on the Bretton Woods system, if we had a big trade deficit. Deficit, we had to pay for that deficit with gold. US gold, and gold was money. So if we had a big trade deficit and had to pay out all of our gold other countries to finance that deficit, we would run out of gold. Run out of money. The economy would hit a crisis, and that just couldn't continue. We'd stop buying things from other countries. So there was an automatic adjustment mechanism under the Bretton Woods System, or under the classical gold standard itself that prevented trade deficits. But once Bretton Woods broke down in 1971 It didn't take us too long to figure out that it could buy extraordinarily large amounts of things from other countries, and it didn't have to pay with gold anymore. It could just pay with US dollars, or more technically, with Treasury bonds denominated in US dollars. So the US started running massive trade deficits. The deficits went from zero to $800 billion in 2006 and now most recently, the current account deficit was $1.2 trillion last year. So the total US current account deficit since the early 1980s has been $17 trillion this has created a global economic boom of unprecedented proportions and pulled hundreds of millions of people around the world out of poverty. China is a superpower now, because of its massive trade surplus with the US, completely transformed China. So the trade surplus countries in Asia all benefited. I've watched that firsthand, since I've spent most of my career living in Asia, but the United States also benefited, because by buying things from low wage countries that drove down the price of goods, that drove down inflation, that made low interest rates possible, that made it easier for the US to finance its big budget deficits at low interest rates, and so with Low interest rates, the government could spend more and stimulate the economy. Also with very low interest rates, stock prices could go higher and home prices could go higher. This created a very big economic boom in the United States as well. Not only did the trade surplus, countries benefit by selling more to the US, but the US itself benefited by this big wealth boom that has resulted from this arrangement. Now the problem with President Trump's plan to restructure the US economy is that he wants to bring this trade deficit back down essentially to zero, ideally, it seems. But if he does that, then that's going to cut off the source of credit that's been blowing this bubble ever larger year after year since the early 1980s and we have such a big global credit bubble that if this source of credit has been making the bubble inflate, the trade deficit, if that were to significantly become significantly lower, then this credit that's been blowing up, the bubble would stop, and the bubble would implode, potentially creating very severe, systemic financial sector crisis around the world on a much, probably a much larger scale than we saw in 2008 and leading to a new Great Depression. One thing to think about is the trade deficit is similar to the current account deficit. So the current account deficit is the mirror image of capital inflows into the United States. Every country's balance of payments has to balance. So last year, the US current account deficit was $1.2 trillion that threw off $1.2 trillion into the global economy benefiting the trade surplus countries. But those countries received dollars, and once they had that 1.2 trillion new dollars last year, they had to invest those dollars back into us, dollar denominated assets of one kind or another, like government bonds or like US stocks, and that's what they did. The current account deficit is the mirror image of capital inflows into the United States. Last year was $1.2 trillion of capital inflows. Now if you eliminate the current account deficit by having very high trade tariffs and bringing trade back into balance, you also eliminate the capital inflows into the United States, and if we have $1.2 trillion less money coming into the United States a year or two from now, that's going to make it much more difficult to finance the government's very large budget deficits. The budget deficits are expected to grow from something like $2 trillion now to $2.5 trillion 10 years from now, and that's assuming a lot of tariff revenue from the tariffs, budget deficit would be muc

Keith discusses the factors driving rent growth, emphasizing income growth, supply constraints, and affordability.

He highlights that population growth has a weak correlation with rent growth, citing examples like Austin and San Francisco. The fastest rent growth is in San Francisco (4.6%), Fresno (4.6%), and Chicago (4%), while Austin (-6.8%), Denver (-5%), and Phoenix (-4.1%) show declines.

GRE Coach, Naresh Vissa, joins the conversation to talk about the administration's focus on lowering rates and the potential for higher inflation as a result. He encourages investors to stay informed and take advantage of opportunities when rates are low.

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Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, vital trends are moving the rental real estate market. And learn what really drives rent growth. It's probably not what you think. Then inflate, baby. Inflate. Why this administration wants inflation today on get rich education.

Speaker 1 0:22

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:08

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:18

You Keith, welcome to GRE from Whippany New Jersey to Parsippany New Jersey. Not much distance there and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to this week's episode of Get rich education, where it's not just about your ROI. It's about your roti, your return on time invested, and your return on life. Everyone says that population growth is what drives rents, yes, but that's just one part of it, and it probably isn't even the most important factor. There is evidence of this, from Harvard research to what HUD has found. Austin, Texas recently added 500,000 people, rents spiked, and then supply flooded in and rents stalled. Head count wasn't enough. I discussed that in depth when I walked the streets of Austin last year. San Francisco lost population, but yet rents rebounded and remain among the highest in the nation. Harvard's housing research shows that population growth only has a weak correlation with rent growth. So what actually does drive rents? Well, income growth, supply constraints, and then staying under the 30% affordability ceiling, which is HUD's definition of what a cost burdened household is, right? That means that a tenant spends more than 30% of their income on rent. That is cost burden, and this pattern holds from ancient Rome to modern Manhattan, rents follow paychecks, not head counts and on the supply side, well, not all metros are created equal. Some have quantified it with what's called a supply elasticity score, places like Houston can seemingly build endlessly, while Manhattan and San Francisco cannot. So it's that difference that explains why incomes turn into rent growth in one market but not in the other. So if you're chasing fast growing metros, okay, but be careful, because headcount does not equal pricing power. Paychecks are what do well today, rents are falling in boom towns, but they're climbing in what we would call legacy, established metros, the year over year, rent change across US, metro areas really has a striking contrast. The three with the fastest rent growth are San Francisco up 4.6% Fresno also up 4.6% and Chicago up 4% and the three biggest declines in rent are Austin down 6.8% Denver down 5% and Phoenix Down 4.1% rent contraction in those three cities. And here's the problem during that 2020, to 2022, real estate surge. Years ago, investors piled into Sun Belt markets, and they sort of expected this endless growth, but then new supply flooded Austin, Phoenix and Denver, pushing rents down and vacancies up, and all three of those are cities that I visited during the boom and I saw the. Cranes in the air myself, and yet, at the same time, older supply constrained metros, like in the northeast, in Chicago and in San Francisco, they are quietly regaining momentum. That's where demand is steady. Construction is limited, and that's why rents are ticking higher. So this is why, like I've talked about before, it's good for you to invest in some Sunbelt areas, say, like Florida and then others that have this steady demand, like, say, a place in Ohio. And it's worth pointing out, too, how unusual it is that a city like Austin has a 6.8% rent contraction. We all know that housing prices are more stable than stocks, sure, but real estate rents are even more stable than housing prices, so this rent aberration that was caused by such wild overbuilding in Austin. Now, I recently attended a presentation on the rental housing market. It was put together by John Burns. He's the one that presented it, and he's the owner of the eponymous John Burns research and consulting. And people pay good money to attend these presentations, and he's a guy worth listening to, always with good housing market insights, and some of his insights while they're the same ones I've shared with you for a while, like how there's been a persistent lack of housing supply in the Northeast and Midwest, and still an abundant supply in the south. The Northeast is the only region of the nation that's adding more jobs than new homes at this time, the top amenities that tenants want today are a driveway in a yard. Pretty simple things. They're not a pool in a clubhouse. They're a driveway in a yard. And if you think about them, it totally makes sense, and that's why single family rentals have become such a booming industry, because that's where tenants are getting a driveway and a yard and burns. Also pointed out that most US job growth is in low income jobs. The presentation talked mostly in terms of headwinds versus tailwinds. Lower immigration. Well, that's a headwind. That's a bad thing for real estate investing, since immigrants tend to be renters. The tailwinds The good thing that includes less future supply coming out of the market, fewer apartments and fewer build to rent, deliveries coming online, fewer being added between today and 2028 and another positive for the next two decades at least, is the fact that since people are having fewer kids, that makes people less likely to settle down, buy a home and need a good school district. Well, that is good for people renting longer, longer tenancy durations, and John Burns also spotlighted how building material cost inflation is up 40% from pre pandemic times fully 40% more in material costs. But that Spike has since flattened out. However, it is just another reason why home prices can't really fall substantially. Today's prices are baked in, and his summary overall is to be bullish and bet on the tailwinds those real estate investing positives that is mostly due to future rent growth because the new supply is going away, and it's going to continue to stay difficult to buy a home, more rent growth, and that's the end of what he had to say. So as you're out there, targeting the right areas and renters for your properties, I've talked before about how new build rental property is a sweet spot, since your builder will often buy down your mortgage rate. For you, new build is where you can attract a good quality tenant. Look for a moment, just forget finding a tenant that can just barely afford your unit because they're spending 30 to 33% of their income to pay you rent, because, see, in that condition, there's no room for you to get a rent increase. If you can offer great value to your residents and target a 10 to 15% rent to income ratio, aha, you are really in good shape, because the easiest rent growth is retaining happy residents that are conditioned to accept 5% rent increases. Well, that is more likely in a nice new build property. That's where you attract a better tenant. And if they were to move out, they would have to take a lesser property so they will stay and pay the rent in. Increase, and they're going to have the capacity to do so when the rent is only 10 to 20% of their income.

Keith Weinhold 5:25

Now, when we talk about a major factor that trickles down to rents, the level of inflation, a lot of this comes down to the Fed chair and even the president, to some extent. And you know what's interesting, half the nation bashes whoever is president, and the entire nation bashes whoever is the Fed chair. Look, every recent Fed Chair has been maligned and bashed more than a pinata at a toddler's birthday party, bashed open more than an umpire at a little league game. Well, since 1980 there have been five of them, Volker, then Greenspan, then Bernanke, then Yellen and now Jerome Powell, most of that group is known for substantially lowering interest rates, yet they've remained unpopular anyway. And you know the irony here? The most popular of these five is Paul Volcker. He's the only Fed chair that's celebrated, and yet he jacked rates in the 1980s to up near 20% yes, 20% he really made borrowers feel the pain, but yet he's the only guy that's celebrated, because that's how he stomped that out of control inflation fire, 45 years ago, in 1981 mortgage rates peaked between 18 and 19% yet Somehow he's the Fed share that we celebrate? Well, here in more modern times, will the Fed eventually have to do the same thing? This is because Trump wants inflation now. The short term, talk is about lowering interest rates, but there are so many inflationary forces that you've got to wonder about how interest rates could very well go much higher later to get on top of this inflation that I'm telling you Trump actually wants. Now, of course, no one is going to come out and explicitly say that they want inflation, but that is now so implied, there are a ton of policies that the administration favors that are super inflationary. Some are a little deflationary, like deregulation, but they are overwhelmingly inflationary. Look tariffs, that's inflation on goods, mass deportations, that's labor inflation, reshaping the Fed in order to lower rates. That's inflation, the one big, beautiful bill, act that's lots of spending and largely inflationary. I'm telling you, Trump wants inflation now I'm not here to evaluate these policies for being good or bad. This is about policies, not politics, and understand it's not just the US government. It's every government everywhere that secretly wants inflation. And why do they want that? Well, first, it fuels spending. If you know that your dollars are going to shrink in purchasing power tomorrow, well then you're going to spend today, and consumer spending makes up 68% of us. GDP, yes, Amazon, thanks, you. Secondly, inflation shrinks the government's debt. The third reason that governments everywhere want inflation is because it foils deflation. In a deflationary world, people hoard cash like its gold bullion, tax revenue dries up and the economy stalls, and also inflation. It facilitates wage adjustments. It helps the labor market function. If economic conditions are weak, well, then employers can implement real wage cuts just by keeping salaries flat right where they're at. I mean, that is so preferable to cutting nominal wages directly and giving employees a pay cut notice. Everyone hates seeing that. So those are what four big reasons why governments will take their gloves off and fight in a steel cage match to the death to ensure inflation. So most expect a rate cut at the Feds meeting next week. But if this continues and there were massive cuts, you know, there's something else you've got to ask yourself, do you really want to live in an economy where massive rate cuts occur. I mean, that's what the 2008 global financial crisis and the covid pandemic in 2020 brought to us. So massive cuts mean there's some giant problem out there. Therefore, although the Trump and Powell rivalry, it might make you. Interesting theater and headlines. You know, let's not get carried away. Let's put things in perspective. What matters to you more is how many dollars you're leveraging, the efficiency of your property operations and the quality of your business relationships. Really, the bottom line is that fed tweaks are background noise inflation, that is the long term engine that makes your real estate profitable. Focus there, and let the politicians keep doing the yelling concerns about ongoing inflation and what that means for real estate investors, that's next. I'm Keith Weinhold. You're listening to get rich education.

Keith Weinhold 8:57

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Keith Weinhold 8:57

You know what's crazy your bank is getting rich off of you. The average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your cash can pull in up to 8% returns, and it compounds. It's not some high risk gamble like digital or AI stock trading. It's pretty low risk because they've got a 10 plus year track record of paying investors on time in full every time. I mean, I wouldn't be talking about it if I wasn't invested myself. You can invest as little as 25k and you keep earning until you decide you want your money back, no weird lockups or anything like that. So if you're like me and tired of your liquid funds just sitting there doing nothing, check it out. Text family. 266, 866, to learn about freedom. Family investments, liquidity fund again. Text family, to 66866,

Ken McElroy 17:26

this is Rich Dad advisor Ken McElroy. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.

Keith Weinhold 17:34

we have a familiar voice back on the show. It's an in house discussion here with our own GRE investment coach since 2021 he's helped you completely free, usually over the phone, learning your own personal goals and then helping you find the market that's the right fit for you, and even help connect you with the exact property address that helps you win the inflation Triple Crown, like say, 321, Mulberry Street in Chattanooga, Tennessee. They say that formal education will make you a living self education will make you a fortune. Well, he's got them both. He's slinging an MBA, and he's an active real estate investor just like you and I. Hey, welcome back to the show investment coach and race Vista.

Naresh Vissa 18:25

Hey, Keith pleasure, to be back on.

Keith Weinhold 18:27

Inflation is something that affects real estate investors even more so than it does the general public. Since we're borrowing large sums of money and the inflation discussion sure has been interesting lately, you just can't quite get rates back down to 2% still, they've been elevated for years. So talk to us from your vantage point about inflation and future inflation concerns.

Naresh Vissa 18:51

Well, Keith, I am concerned about inflation. This is the first time in a year or so that I'm concerned with the direction and with the policy surrounding inflation, here's why. And I brought this up when I was on your podcast in July, the current administration is not talking at all about the fact that inflation is rising. We saw the CPI, for example, hit 2.3% which was four year low earlier this year, and since then, inflation has gone up. That is concerning, that inflation is going back up without any rate cuts. Yet it's gone back, I don't want to say gone back up, but it's gone up. And remember, the Federal Reserve inflation target is 2% so we want to get as close to 2% as possible. And the number one issue in the 2024 election, and the number one issue today is still the cost of everything is right, is too much, which we'll talk about, from gas prices to home values to rents to grocery that's the. Big one, the cost of groceries, the stuff that you buy at grocery stores, etc, everything is just too expensive. Of course, education, you name, childcare, everything is just too expensive. Inflation is still, I think the administration needs to really tackle this problem. They need to really, really tackle it, because it is the number one issue. It is what people essentially, their vote is, is based on it's not necessarily based on some peace agreement in a foreign nation. It's not based on some social issue. The number one issue is going to be this inflation problem. It's are things affordable? Do I have money in my bank account to pay for X, Y and Z? So I am concerned because, yes, tariffs are inflationary. That's kind of common sense. Now I think tariffs can be good. Tariffs can keep inflation in check. If they're handled the right way, we will see that. But my bigger concern is that inflation has been rising. We're not anywhere close to that 2% and we know with a very high degree of certainty that the Federal Reserve is beginning their rate cutting cycle next week with the September rate cut, and that's going to be extended. We've seen President Trump. He's very public, his Treasury Secretary, his Secretary of Commerce, all the economic advisors who he has, they're very transparent about the fact that they want rates slashed, and they want rates slashed quickly. And so we know that we're going to get a rate this is going to be a rate slashing cycle. It's going to be great for the upper class, if you want to call it, it's going to be great for real estate investors, but for the common man, the byproduct of that is going to be higher inflation. There's just no way that you can cut rates so quickly, so low, and you're not going to see inflation. That's my concern. Now on the other hand, and again, we have to see how this plays out. On the other hand, I brought up earlier this year, I've referenced Doge. I think Doge is doing a good job cutting government spending, trying to scale back some of the government initiatives, not that the government's always going to spend we know that, but it's you need to cut back, and doges is trying to do th

Todd Drowlette, a commercial real estate broker with over $2 billion in closed deals, joins to discuss his upcoming A&E show, "The Real Estate Commission," which premieres October 12.

Todd emphasizes that commercial real estate is "a trillion dollar industry hiding in plain sight."

He points out that people interact with commercial real estate every day - when they go to a grocery store, coffee shop, gas station, or office building - without consciously thinking about it.

Commercial real estate loans are about to face a major challenge, with many 5-year loans needing refinancing at much higher interest rates, potentially creating significant market opportunities for investors.

Check out the "The Real Estate Commission" show on A&E starting October 12th.

Resources:

Follow Todd Drowlette on Instagram at @bettertalktoTodd and check out Real Estate Commission

Show Notes:

GetRichEducation.com/569

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

Welcome to GRE I'm your host. Keith Weinhold, why is that convenience store, gas station or coffee shop located on that exact corner that it's on? It's strategic, and how does a deal like that really get negotiated? We're discussing this and more with an A and E television and streaming star today on get rich education

Keith Weinhold 0:28

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Speaker 1 1:14

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:30

Welcome to GRE from Sudbury, Ontario to Sudbury, Pennsylvania, and across 188 nations worldwide, you're listening to one of America's longest running and most listened to real estate investing shows this is Get Rich Education. I'm your host. Keith Weinhold, how did that ever happen? Here I am more slack jaw than a patient in a dentist's chair. But back with you for the 569th consecutive week. Anyway, this is the time of year where many people have just gone back to school. Here at GRE you go forward to school as you learn about what's really going to make a difference and move the financial meter in your future. Now, the world's best known negotiators include Mahatma Gandhi and Nelson Mandela today, the former FBI agent Chris Voss is perhaps the world's best known negotiator. You'll recall that we've hosted Chris Voss on the show twice here and talked a good bit about real estate negotiation. Then, I mean, who can forget my mock negotiation with him over a four Plex building, which played out right here on air. It was obvious who won that debate, but Chris is an all around negotiator, not specific to real estate. I thought, wouldn't it be great to get sort of a Chris Voss, but specific to real estate here on the show for you, and that's what we're doing today. So you're really going to enjoy this week's guest. He's also the star of a real estate reality show on the A E Network that's going to make its big, flashy debut next month. Now I had a small negotiation, I suppose, over email with one of my property managers in Florida recently, yeah, I got an email from my manager saying that an air conditioning unit needed to be removed and replaced in one of my single family rental properties there in Florida. Attached was a quote that they obtained from a company for $6,350 and there's conveniently a button for me to hit to approve this charge. But I did not hit the Approve button on that 6350, price. I requested that they provide me with two more quotes. And yes, remember, you pay your property manager often eight to 10% of the monthly rent in management fees they are working for you. So what are they working on to earn that make them go to work and do this for you? All right, for substantial work items, it's a reasonable request for you to seek three quotes. And all right, while they were tracking down the two other quotes, I went to AI. I asked chat GPT, what should the cost be to remove and replace an air conditioner in a 1500 square foot home in Florida? Chat GPT answered, 5500 to $7,500. For a standard three ton system in a 1500 square foot home. All right, so the first number the manager gave me that was sort of right in the middle of that range. A few days later, the second quote came in at 6150, all right, 200 bucks less than. The first one, I replied to them that if the third one doesn't come in substantially lower, that I am going to go seek quotes myself. A couple days later, the third and final quote came in, and it was 4990, yes, so I accepted it. This is about $1,300 less than the first quote that they gave me just for returning a few emails, and it will make the tenant happy to have a new air conditioning system. Newer systems tend to be more efficient, so it's probably going to make the tenant's electricity bill lower as well, and it probably makes it easier for me to justify future rent increases too. That tenant's been there for quite a few years. I'm thinking six years, and today's low home buyer affordability is probably going to keep them renting for a while. And the other thing that could keep them there longer is a new air conditioning system, and that is the biggest rental property expense, or the most I even had to get involved in quite a while, because remember, at GRE marketplace, almost every property there is either brand new or completely renovated. Your cap x expenses should be small for years. Let's meet this week's featured guest.

Keith Weinhold 6:31

Have you ever wondered why that coffee shop is on that corner that they're on, or why your grocery store is located just where it is? And how do those deals get negotiated? That's what you'll see on an upcoming new series on A and E. It starts October 12. It's called The Real Estate Commission. There are no scripts. The show captures real life deals as they unfold, as they crumble and fall apart and maybe come back together again. The star of that show is with us today. He believes he will tell you that he's the most prolific commercial real estate broker in the nation, and he has the experience and the gravitas to back that up, because he brings over two decades as a broker, and he's the managing director at Titan commercial Realty Group in New York. He's closed more than 1700 deals. Yes, 1700 deals totaling over $2 billion across the commercial real estate sectors. He's represented everyone from local startups to national REITs. Hey, welcome to get rich education, Todd Drowlette

Todd Drowlette 7:36

thank you, and that was quite the introduction. I don't think I could pop up myself.

Keith Weinhold 7:40

You've got a full interview is worth the time here to live up to that. Todd, you know, more than 10 years ago, I started living this life where it seems like everything that I say gets recorded and uploaded to the internet, and now you're gone down that same road similar to that. Tell us about your forthcoming reality TV and streaming show that starts next month. What can viewers really expect to see?

Todd Drowlette 8:04

There's over 100 shows on national TV about slipping houses, renovating houses, residential brokers. Ours is the first show ever on television to feature commercial real estate and to be entirely about commercial real estate. So it's a docu series. It's an there's eight episodes in the season. It follows my team at Titan and I doing actual real deals, from helping a divorce attorney search for new office space to investors to selling multi family properties. So viewers will be able to kind of see behind the scenes and see actual documented deals as they happen, fall apart, come back together again. I'm hoping the viewers will take away the fact that, yes, you have to be sophisticated and understand what's going on, but it's something that the average person can be involved in. Commercial real estate is a trillion dollar industry hiding in plain sight. You know, people go to the grocery store, like you said, they go to the coffee shop, they go to the gas station, they go to their office building. People use and interact with commercial real estate every single day. It's just like the air. You're not consciously thinking about it, even though you're using it almost every moment of the day,

Keith Weinhold 9:10

right? It's something that we all need and interact with. It's almost non discretionary, whether we're buying something at a retail store or filling up at a gas station? Yeah, I think to some people, commercial real estate sounds unapproachable. And as you watch this series, you're thinking, Oh, that's the life that that somebody else lives. It's really not that unapproachable. Does this series really help break that down?

Todd Drowlette 9:36

It does, and we made a very conscious decision. So I represent some very large corporations, but the series follows like smaller business and entrepreneurs, and seeing kind of people from the beginning or in different transitions of their business, like I'm growing but you're seeing in real life, actual successful business people. You're seeing them to react to real situations and that kind of moment where there. Like, Man, I think I'm ready to grow and expand. But what if I'm wrong? What if the economy turns Am I doing the right thing? And you're kind of watching us guide them through that process. But you see, you know so much of the internet is reception and people going, Oh, look at this. Look how successful I am. This. You're seeing successful people, and knowing that there's no guarantee in life like the best you're ever going to make is a calculated decision. But there's no point where your life where you're so successful that it just doesn't matter if you lose. Like the deals get larger and the stakes get higher, and every decision you make is potentially a pitfall. So you're going to see real entrepreneurs and real business executives dealing with those decisions of, when do I move? Do I invest? Do I buy? You know, I have this property, I need to get rid of it, and what's that process look like? I love commercial real estate. I can go on, on about it. What I'll be really excited to see is if the everyday person finds commercial real estate interesting,

Keith Weinhold 10:54

doers don't wait for uncertainty to abate, or else they would never get anything done. Doers educate themselves and make strategic moves despite the uncertainty and Todd shortly, I do want to ask you more about negotiation and just how that coffee shop gets that prime corner spot, if you will. But first dropping back a bit more introspective, I know that some have called this the series that launched five new real estate careers already. So how transformative is this? Personally for you to do this show, besides making mom proud, it probably changes how others think of you and how you think of yourself.

Todd Drowlette 11:32

Well, my mom thought I was nuts to national television, but she's proud, but thinks I'm crazy and she's probably not wrong. How this whole thing came about was we had a show also called The Real Estate Commission, that was on Facebook watch that we averaged about 1.3 million views per episode. The premise of that show that was also called The Real Estate Commission, was, Can four successful real estate brokers take just anyone off the street and turn them into the next 100 million dollar real estate agent. It was two commercial brokers, two residential brokers. When covid happened, I said to Brandon in my office, who's part of the cast of the show, on a I was, you know, looking back now, we know how covid played out, but at the time, it was like they made the announcement, I'm somebody who works 80 hours a week, and I'm looking at potentially, could we be a year with not working and doing nothing. So I'm like, we really need to do something to market. I go, why don't we do a reality show about real estate? And he's like, What in the hell do you know about producing a TV show? I go, well, nothing, but the whole world stopped. There's got to be people. We must know, people in TV who might be sitting at home and might be willing to help produce the show. And he started laughing. He goes, Well, actually, one of my college roommates is high up at Viacom, so we called him, and we put together a whole production team of 50 people in the middle of covid, put out a casting call and filmed the show, and it did really well. And then we kind of went around to the networks and made a deal with a E, but with A and E, I really wanted to show off commercial real estate and kind of show it to the average person and show them, hey, here's this thing that people can participate and be a part of. And it's a super interesting industry because, like, when I was 22 I was the youngest exclusive Starbucks broker in the country. So have you said that coffee shop that ends up in the corner? I was the guy that, you know, Starbucks would run their software and say, you run traffic counts that are available on, you know, state, D, o, t websites. People don't realize when you're driving down the road and you see the rubber thing goes, that's actually either a traffic engineer or the state, and they're seeing how many cars a day, but they're also tracking to the hour on which side of the road. So like, why is McDonald's on the pm side of the road? Or why is Starbucks or Duncan or seven brew coffee? Why are they on the am side of the road? Because they know, looking at the traffic patterns, who's going where. So when we would negotiate a deal like that, they would say, Hey, here's the target markets we want to be in. I was the boots on the ground, so to speak. That says, Okay, let me look up the tax records and let me look up the tax maps. I know they need three quarters of an acre to an acre to fit on. They want to be at a traffic light. We need this many cars per day. Hey, it's great. If we're across the street from a university or a hospital or a major office park or a grocery anchored shopping center. Can we get out in the out parcel? There's a deal structure to it, and then you negotiate the rent and how much tenant improvement dollars, or what contributions the landlord is going to make to the deal. And that's kind of how we identify, you know, locations and negotiate. And as a broker, I get paid a percentage of that overall lease value or a sales transaction,

Keith Weinhold 14:36

well, talking about making decisions in the face of uncertainty. I mean, there it is. Case in point, you put together the architecture of a show like this during the pandemic, during the height of uncertainty. That was a really interesting thing that you said when you talk about how, for example, you probably do want to have a coffee shop located, I would imagine when you're in bound on the right. Side of the road there sort of for am traffic, 100%

Todd Drowlette 15:05

the same reason, like restaurants that are more dinner based business, businesses will be on the pm side the afternoon drive home. Or liquor stores typically like to be on the pm side of the road because people are going home, they pop in and just continue on their way home,

Keith Weinhold 15:20

right? That makes total sense to me. Todd, you do have this great command of real world negotiation tactics, helping to be sure that those prime locations, sort of like we just described, play out and happen from this $2 billion in closed deals, which is a remarkable figure. I'm sure a lot of it has to do with who you work with, who you're negotiating with. Trump was negotiating Manhattan real estate deals, and now that's pretty different, as he's trying to broker a ceasefire agreement among foreign nations. So you've got all these stories, from working with small business owners to multinational brands. So can you tell us about how who you work with changes your approach?

Todd Drowlette 16:04

You have to always know what your goal is, and the more research you know about who you're negotiating with, and the more you understand them, the better you're going to do right. Sometimes winning in negotiation is about winning. Sometimes winning in negotiation is just about not losing so sometimes I have clients that say, Get me that particular piece of real estate. I don't care what it costs me. Just get it under any circumstances. I don't care you have I have other clients like, I represent a clothing chain that's like, similar to a TJ Maxx or Marshalls. They've been around 40 years, called label shopper. They're in secondary and tertiary markets all over the country. They are very inexpensive, and they pay very low rent, and they're opportunistic. So the approach for every single deal is completely different on depending what the person's trying to do, but the tactics always the same. I always try to, as a broker, you're in the middle, so I'm always trying to figure out what are the actual deal breakers and what's motivating this side that side, and then you meet somewhere in the middle. And I try to do deals where nobody feels like you bend them over a barrel, you know, and they have a vendetta for 20 years, because it's a very small world in a very long life. So if you really stick it to somebody to the point where they hate you over it, you don't know what's that deal next week or 20 years from now that you really need and find out that person is the kid of the person you really stuck it to, and now, all of a sudden, that deal you need comes back to haunt you from the deal that you won 20 years ago. So I try to like, let people keep their pride intact, and there's a lot of like for just general negotiations. A lot of people negotiate against themselves without even realizing it. So most people fear silence, and I always say, whoever talks first loses. So if I throw out like a number, like if you were selling me something, and I said, I think my top number is $100,000 I will not speak until the other person speaks, because most people are afraid of silence. And if I throw that number out, I'm gonna go, Oh my God, he's not responding. That number is too low, and I'm instantly gonna go, well, maybe I could pay 120 or maybe I could pay 150 I've seen people do it a million times. So when I'm negotiating against people, whatever they say to me, I never respond until they talk a second time, because I wanna see how much line there is in that run before it gets to the end, and whatever number they stop at, that's where the negotiation starts. And so many people do that. The

Keith discusses the impact of political rhetoric on mortgage rates, emphasizing the importance of central bank independence.

President of Ridge Lending Group and GRE Icon, Caeli Ridge, joins in to explain the benefits of 30-year mortgages over 15-year ones, advocating for extra principal payments to be reinvested rather than accelerating loan payoff.

They also cover the potential effects of Fannie and Freddie going public, predicting higher mortgage rates. Caeli Ridge elaborates on cross-collateralization strategies, highlighting the advantages of commercial blanket loans for real estate investors.

Resources:

RidgeLendingGroup.com or call 855-74-RIDGE

or e-mail: info@RidgeLendingGroup.com

Show Notes:

GetRichEducation.com/568

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Keith Weinhold 0:01

welcome to GRE I'm your host. Keith Weinhold, the President has called the Fed chair a dummy and worse. How does this all affect the future of mortgage rates? Also, I discuss 30 year versus 15 year loans. Can you bundle multiple properties into one loan? Then how Fannie and Freddie going public could permanently increase mortgage rates today on get rich education

Keith Weinhold 0:28

since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Speaker 1 1:14

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:24

Welcome to GRE from Pawtucket, Rhode Island to Poughkeepsie, New York and across 188 nations worldwide. I'm your host. Keith weinholdin, this is get rich education, not to inflate a sense of self importance, but each episode is an even bigger deal than a New York Jets preseason football game. You might have thought you knew real estate until you listened to this show, from street speak to geek speak. I use it all to break down how with investment property, you don't have to live below your means. You can grow your means as we're discussing the mortgage landscape this week. You know, I recently had a bundle of my own single family rental homes transfer mortgage servicers from Wells Fargo over to Mr. Cooper. And that was easy. I didn't have to do anything. The automatic payments just automatically transferred over. And yes, Mr. Cooper, it's sort of a funny sounding name that you don't exactly see them putting the naming rights on stadiums out there, but the new servicer prominently wanted to point out the effect of me making extra $100 monthly principal payments and how much in interest that would save me over time, sort of suggesting that it would be a good idea for me to do so. Oh, as you know, like I've discussed extensively, extra principal pay down is a really poor use of your capital. It's a lot like how in the past, now you've probably seen it like I have, your mortgage company promotes you making bi weekly payments all year, so you'd effectively make some extra principal pay down each year. That way. Don't fall for it. Banks promote biweekly payments because it sounds borrower friendly, it encourages an earlier loan payoff. Well, that actually reduces lender risk and increases your risk. And the whole program can come with extra fees too. It just ties up more of your money in something that's unsafe, illiquid, and with a rate of return that's always zero, since that's exactly what home equity is. As we're about to talk mortgages with an expert today, I will be sure to surface that topic. We'll also talk about the housing market effect of a president firing a Fed chair. When you're living under the rule of a president that desperately and passionately wants lower interest rates, you've got to wonder what would happen if a president just had the power to go lower them himself, which is actually what most any president would want to do, but you almost don't have to wonder what would happen. You can just look at what actually did happen in Turkey. Now, yes, Turkey already did have an inflation problem, worse than us, for sure, but Turkish President Erdogan went ahead and lowered Turkey's interest rates despite persistent inflation. I mean, that's a situation where most would raise rates in order to combat inflation. Well, lowering rates like that soon resulted in substantially higher inflation to the tune of almost 60. Yes, six 0% per year before cooler heads prevailed and the Turkish government was forced to drastically raise rates. But it was too late. The damage was already done to the reputation of Turkey's economy and its everyday citizens and consumers. I mean, that was a painful, real world example of how critical central bank independence is. You've also got to ask yourself a question here, do you really want to live in the type of economy where we would need a bunch of rate cuts? Because when rate cuts happen, it usually results from the fact that people are no longer employed, or we're in a recession, or financial markets are really unstable. So there are certainly worse maladies out there than where we are today, which is with moderate inflation, pretty strong employment and interest rates that are actually a little below historic levels. I mean, that is not so bad. Before we talk both long term mortgage lessons and more nascent mortgage trends today coming up on future episodes of the show here, a lot of info and resources to help you build wealth as usual. Also an A E TELEVISION star of a real estate reality show will make his debut here on GRE.

Keith Weinhold 6:24

Hey, do you like or even live by any of the enduring GRE mantras, like, Don't live below your means, grow your means, or financially free, beats debt free, or even, don't quit your Daydream. Check out our shop. You can own merch with sayings like that on them, or simply with our GRE logo on shirts and hats and mugs. And I don't really make any income from it. The merch is sold at near cost, and it actually took a fair bit of our team's time to put that together for you. So check out the GRE merch. You can find it at shop.getricheducation.com that's shop.getricheducation.com

Keith Weinhold 7:18

today we're talking to the longtime president of ridge lending group. They specialize in providing income property loans to real estate investors like you, and she's also a long time real estate investor herself. I've shared with you before that ridge is where I get my own loans. They've worked with 10s of 1000s of real estate investors, not just primary residence owners, but real estate investors as well as homeowners all over the country, and at this point, she's like a GRE icon, a fixture regularly with us since 2015 Hey, welcome back to get rich education the inimitable Chaley Ridge,

Caeli Ridge 7:54

ooh, Mr. Keith Weinhold, thank you, sir. So good to see you, my friend. Thanks for having me

Keith Weinhold 8:00

opening up that thesaurus tab right about now, I think maybe JAYLEE, why don't we have the chat everyone wants to have? Let's discuss interest rates, starting with the vitriol from Trump to Powell has reached new heights. This year, Trump has called Powell a numbskull, Mr. Too late, a real dummy, a complete moron, a fool and a major loser, among other names. And you know, at times, I've seen Realtors even blasting Jerome Powell for not cutting rates. Well, the Fed doesn't directly control mortgage rates, and it's also not the Fed's job to boost Realtors summer sales. It's to protect the long term stability of the US economy. Tell us your thoughts.

Caeli Ridge 8:48

So this is a rather complicated topic, okay, and there's a lot that under the hood that goes into how a long term mortgage bond interest rate is going to go up or going to go down. As you said, it's not necessarily just the Fed and the fed fund rate, which, by the way, for those that are not familiar with this, the fed fund rate is the intra daily trading rate between banks. So while there is a connection between that and that of the 30 year long term fixed rate mortgage, they are not the same thing. And in fact, statistically, I believe I read this last week, the last three fed fund rate reductions did the opposite to long term rates, right? So we went the other direction. So please be clear that the viral, as you say, of President Trump and what his opinions are about Mr. Powell and his decisions to keep that fed fund rate unchanged for the last several meetings that they've had, I think, is more of a distraction, but that's another conversation overall. I would say that, is he too late? Is he right on time? You know, there's so much data and so many data points that they're looking at, and there's this thing in the industry called a Lag that, in truth, they're not getting the actual data points that they need real time. It's lagging, so the data that's coming out to them today isn't going to be what's relevant and necessary to make changes tomorrow, next month and next week. Most recently, you probably saw in the news the BLS Bureau of Labor and Statistics and the jobs report came in far under what the expectation was. So that might have been the catalyst. I think that will drive Powell and group to reduce that is the overwhelming expectation that the fed fund rate is going to come down by how much. We don't know. Secondary markets are already baking that in, by the way. So when we talk about long term interest rates, I'm starting to see some changes on the day to day. I get access to that stuff, and I'm looking at it daily, the ticker tape of where the treasury bonds and things are. So I'm starting to see some slight improvement to interest rates in preparation of that market expectation, interest rate on the fed fund level will probably reduce. But I think overall, Keith that the Fed is in a really difficult position, because when you think about what really is going to drive the fed fund rate, and then potentially the long term rate, is counterintuitive to what most people or consumers expect, right? They think if the fed fund rate reduces by a quarter of a percentage point, then a long term 30 year fixed should probably reduce by the same amount. It does not go hand in hand like that. Now, while there are trends right, that doesn't happen that way, and more often than not, the worse our economy is doing, the better a 30 year interest rate will be. So in my industry, I'm kind of always playing on the fence, thinking I don't want anything bad for our country and the economy. However, the worse it does, the better interest rates are going to become. And if you've been paying attention, the economy is in decent shape. We're not doing that bad. Inflation is still up, so the metrics that they're using to kind of gage and predict that lag and where we're going to be are not in line to say that interest rates are going to drop a half or a point or a point and a half in the next year to 18 months. Those signs are not out there for me. All of that said, I know that interest rate is top of mind for I mean, I'm on the phone all day long. I like that part of my job where I'm still interfacing with investors on day to day. Big chunk of my day is spent talking to clients, and that is one of the top questions, probably one of the first questions that come out of their mouth, where interest rates? What are interest rates? And what I have sort of started to really form and say to that question is, if interest rates are the catalyst to your success in real estate, you probably need to do a little bit more research, because interest rates should not be the make or break for your success. Well, as a real estate investor

Keith Weinhold 12:45

the Fed has a dual mandate of maximum employment and stable prices. Inflation, though still somewhat elevated, has stayed about the same the past few months. History shows us that the Fed is more comfortable with inflation floating up than they are with suppressed employment levels. To your point about recent reports about us not adding many jobs, and the Fed being concerned about that, the translation for those that don't know is, if the job market is weak, lowering rates, which is what increasingly people think they tend to do later this year. Lowering rates helps encourage businesses. It's more likely that businesses will borrow and expand and hire more people. Therefore, if rates are low now, whether that translates into a lower mortgage rate or not, by lowering that fed funds rate? Yes, there is that positive correlation. Generally, the lower the Fed funds rate goes, the lower mortgage rates tend to go although that isn't always the case. To your point. Shailene, late last year, there were three Fed funds rate cuts, and mortgage rates actually went up, which is somewhat of an aberration that usually doesn't happen that way, but that's the environment we're in. Most people think Fed rate cuts are coming later this year.

Caeli Ridge 14:04

Yeah. And I would say, you know, the other thing too, when we talk about the pressure that the Fed is under right now, specifically, Powell, he's being attacked, fine, and whether I agree or disagree, really important for listeners to understand that the indifference that the Fed is supposed to have right bipartisan, it's not supposed to have a dog in that fight. If it did the calamity, I think what would happen economically in this country would be devastating if other economic powers were to see that our particular financial institutions are swayed one way or another. Politically, that would be devastating to us. So I think Powell has done a decent job at staying the course. He's continued to do what he says, says what he does. So so far, I'm okay. Is he late to reduce rates? I don't know that I'm qualified to say that, maybe. But at the same time, I think that his impartiality has been consistent, and that for that part of it, I'm. Grateful

Keith Weinhold 15:00

for those who don't understand if Trump just told Powell what to do and Powell followed Trump's orders, how does that devastate the economy?

Caeli Ridge 15:09

It shows partiality to or Fieldy to one particular party, right? It's not an independent institution where financial policy quantitative easing, quantitative tightening, all of those different things that are necessary to keep the pistons pumping. It isn't it's very specific to Fieldy and the leader of telling based on potentially ego or other elements that have not a lot to do with fiduciary responsibility.

Keith Weinhold 15:37

If Powell did everything Trump said, I feel like we would have negative interest rates right now

Caeli Ridge 15:43

that could be a problem, especially if the economy and inflation is on the rise, and then you get the tariffs. I mean, there's so much layering to this. I mean, we could go on and on about it, but overall, let me close with this. I think that interest rates are probably on the run, if I had to guess. Now, there's all kinds of variables that could make that statement untrue, but overall, in the next year to two years, I do think we'll see some relief in interest rates, barring any major catastrophe. But again, investors, if your success, if you're tying your real estate portfolio, your real estate investing, whatever modality you're interested in, if you're tying that to an interest rate, and there's a certain number that you have ethereal in your mind, you're going to lose your success in real estate. Interest rate is a component of it, but it should not be tied to your success or failure. You should be able to do the math and look at the differences in real estate opportunities, investment, whether it be long term, short term, midterm, single family, two to four appreciation, cash flow, all those things should be considered, and you will find adequate returns independent of an interest rate. If you're diversifying that way

Keith Weinhold 16:49

there is more evidence that Americans have warmed up and gotten somewhat used to normal mortgage rates. This normalization of mortgage rates, they are pretty close to their historic norms. In fact, a recent housing sentiment survey done by turbo home found that in q1 of this year, 41% of homeowners surveyed said that a 6% mortgage rate was the highest they would accept on their next purchase. Right that was back in q1 today, up from 41%, 52% of respondents now say a 6% mortgage rate is the highest that they would accept. Evidence that people are warming up and normalizing this.

Caeli Ridge 17:30

The other thing too is the pandemic rates. Right? That's been a very hard shell to crack. The people that got these two and 3% interest rates during 2020 2021, part of 22 they're really reticent to let those go, and I think that they're doing themselves a disservice as a result. If you can get a second lean HELOC, okay, fine, but overall, if you're just going to let that untapped equity sit, it's going to be to your disadvantage. If you have any desire to increase your portfolio and your long term financial stability and wealth

Keith Weinhold 17:59

you're listening to get rich education. Our guest is Ridge lending Group President Cheley, Ridge much more when we come back, including 30 year versus 15 year loans. Which one is better and more things that the administration is doing to shake up the mortgage market. I'm your host. Keith Weinhold.

Keith Weinhold 18:15

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President Cheley Ridge personally while it's on your mind, start at Ridge lendinggroup.com. That's Ridge lendinggroup.com.

Keith Weinhold 18:46

You know what's crazy? Your bank is getting rich off of you. The average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your cash can pull in up to 8% returns and it compounds. It's not some high risk gamble like digital or AI stock trading. It's pretty low risk because they've got a 10 plus year track record of paying investors on time in full every time. I mean, I wouldn't be talking about it if I wasn't invested myself. You can invest as little as 25k and you keep earning until you decide you want your money bac

Keith discusses the recent executive order by the White House, which could bring Americans closer to retirement plan access for real estate, private equity, and crypto.

He also interviews two listeners:

Luke Frizell, a Navy officer who leverages principles from the show to invest in residential assisted living (RAL) properties, and Dr. Axel Meierhoefer, who uses turnkey properties and agricultural investments to build a diversified portfolio.

Both guests share their strategies and insights into real estate investing.

Resources:

Explore the exclusive Texas income property deals available to Get Rich Education listeners, with up to $41,000 in incentives, book a strategy session here.

Show Notes:

GetRichEducation.com/567

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

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Complete episode transcript:

Keith, welcome to GRE. I'm your host. Keith Weinhold, it's an episode focused on you as we feature two GRE listener guests today. See how they've leveraged listening to this show into real world, real estate investing action then a property opportunity to announce to you on get rich education.

Keith Weinhold 0:27

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Speaker 1 1:12

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:22

Welcome to GRE from Mannheim, Germany, to Mannheim, Pennsylvania and across 188 nations worldwide. You're listening to get rich Education. I'm your host. Keith Weinhold, you probably grew up playing the board game Monopoly. Well, imagine playing Monopoly and never buying an asset that generates income. What if you just went around the board collecting $200 giving your money to the rich and trying to stay out of jail. Does that sound ridiculous? Well, that's how most people live their lives. We don't do that here at GRE we add real assets that pay us while we own them, and more and more people can potentially soon get exposure to these asset types. The White House recently reported that Trump made an executive order that is bringing Americans closer to getting retirement plan access to real estate, private equity and crypto. I mean, think about what that could do to overall real estate demand, pushing up prices. It could make the industry boom. Sort of how the advent of 401, KS helped the stock market boom. Also, another development is that in order to qualify for mortgage loans, crypto could soon be used as an asset in your mortgage qualification. That's per the FHFA, and that's what they're moving toward. Now there's been a lot of novel information and developments and stories like that this year, as we're in a presidential administration that shakes up all kinds of status quo policies, from foreign wars to tariffs to us real estate. Journalistically, it's important to be accurate and avoid misinformation and false news as the AI era is near its nascency. Still, you have got to be increasingly cautious about where you get your information. I got a stark reminder of this recently, now former presidential candidate and HHS Secretary, Robert F Kennedy Jr and I recently did a stair climber workout together at a gym. You probably know that RFK Jr leads the MaHA movement make America healthy again, which I support, and much like me, he's an avid fitness enthusiast, and that's the kind of stuff that we talk about. Well, there are now some photos of RFK, JR And I out there exercising together, something that's okay with me. I'm even proud of that. I shared one of those on my social media myself. He and I don't talk politics or vaccines or even diet or just exercise enthusiasts. That's what we talk about. That's our common ground. Well, a Facebook post of RFK JR and I exercising together, and here's where the terribly irresponsible misinformation comes in. Meta AI has a one touch link from there to what they call Weinhold and RFK Jr collaborations. Here's how it reads. I'll read it all word for word, and so much of it is false. Keith Weinhold and Robert F Kennedy Jr have a close friendship that has garnered significant attention. Keith Weinhold, a businessman and podcaster, has been a vocal supporter of Kennedy's work and advocacy their friendship has been built around shared interests and values, including their passion for environmental issues and their skepticism of mainstream narratives. Weinhold has often featured Kennedy as a guest on his podcast, where they discuss issues ranging from vaccine safety to corporate accountability. Together, they have collaborated on various projects, including the promotion of Kennedy's book the real Anthony Fauci. Their friendship has been subject to scrutiny, with some critics accusing them of spreading misinformation. That's the end of the meta AI page. What in the world? How do they come up with this stuff? The only shared interest we've collaborated on is fitness at the gym. And you as listener know that he's never been a guest on this show. Now, if his expertise were real estate investing or economics, well, then I might invite him on. How does meta AI come up with this stuff about vaccines and Fauci I mean, that is so far away from my area of focus. I haven't weighed in on any of that stuff. My gosh, this meta AI page, it is published work for all to see, and it is about 90% false. So my point is, there's a lot of information out there about everything from real estate investing to endangered sharks to cooking tomato soup. Be careful. Pay attention to information that has cited reliable sources. And AI in its current fledgling stage, it really muddies the picture. One thing that might help is that open AI's chatgpt Five, which recently debuted, it is better. It's an improvement. For example, if it does not know the answer to a question that you have, it will tell you that it does not know the answer, instead of making up something fake just to give some sort of answer like previous versions. Did we need more of that coming up here on the show. In future weeks, we have vital monolog material from me, as always prominent guests, new guests and repeat guests. Last week, I answered your listener questions here on air, you can always write in with your questions or comments at get rich education.com/contact this week, it's interviewees like you, as I talk to the first of two listener guests.

Keith Weinhold 8:17

He has been an avid GRE listener for a few years, and says that he shifted from bigger pockets and other content over almost exclusively to get rich education for real estate and market content. He uses the principles taught through GRE to focus on his niche, which is residential assisted living, R, A, l, investments at the single family home level, he owns two single family units that also have ADUs and a handful of Ral units, which has helped him reach his goal of replacing his military income with property cash flow. He is a husband, father of three boys and active duty Navy officer currently stationed in Virginia Beach, Virginia, a buy and hold investor. He began investing in real estate in 2017and now owns a portfolio that includes rental properties in San Diego, five Ral homes in Phoenix and GP stakes in two Ral syndications. He is also the founder of open range capital in the Ral room, there are two platforms dedicated to scaling the Ral model. Again, that's residential assisted living, scaling those across the US. And when he's not serving or investing, you can find him on the lacrosse field, playing, basketball, training, Jiu Jitsu or chasing down any kind of competition. Hey, welcome to GRE. Luke frazell,

Luke Frizzell 9:37

Keith, thank you for the introduction. Appreciate that very kind. And once I started investing in 2017 I got started with the bigger pockets train, and pretty avidly listened to their podcast and taking some action on my own, I actually found your podcast and your website, and it was so much more efficient in the information that I needed to hear. I. Know, and the the time that I could spend actually paying attention to real estate news and the important things that I need to be paying attention to as an investor, that I exclusively and paying attention through your email list and through your podcast, it's always great information. So I appreciate being on and thanks for having me. Keith,

Keith Weinhold 10:18

thanks. I try to keep things nutrient dense around here, Frizzell is spelled F, R, I, z, E, L, L, and look, I know your investing philosophy is strongly influenced by one of GRE most seminal and central mantras, and something that the world first learned right here on this show back in 2015 real estate pays five ways. Tell us about that.

Luke Frizzell 10:42

That is one of the best just mantras for whenever I'm talking to people about getting into real estate, yes. And I literally say, what the five ways that real estate pays, because that's how I heard about it was through you. And I was like, That is such a perfect illustration of why this beats, let's say, the stock market, or why this beats a lot of other investment vehicles, because you're not just getting the cash flow, which is a huge reason why people get involved in it, and that's actually the first thing that I'm scrubbing for whenever I'm looking for an investment. But of course, you're hoping for the appreciation, which I really just count as the cherry on top. And if I'm looking at a market from the macro lens, I'm making sure that the the city is growing, the jobs are coming in, there's a decent population, and at a macro level, that's the first thing you need to do before you dig into a city to make sure it's good to go. When appreciation happens, it's probably because those things are all in the right spot. And you're you're picking the right neighborhood, but just, you know, leverage, and being able to buy with 20% of the full amount down, that's a huge piece. And just the hedge against inflation that you get through a loan all the ways, I'm probably missing one, but that's one of the first things that I say when somebody's on the fence on whether they get into real estate investing is, Hey, these are the five ways I learned it from Keith's website, and I'll point them to you guys. That's how I found residential assisted living was really Yes, I had been an investor in San Diego and had great success there with, you know, the buy, rehab, rent, refinance, repeat, the burn method, and putting those five ways into practice. But what I really wanted, as I was looking towards getting out of the military in a few years was more the cash flow piece. So that's what drew me to Phoenix. I actually heard a podcast where somebody was talking about this strategy where you buy a home and you lease it out to a senior care operator and they are paying two to three times the lease amount that you would pay or get from a single family rental, and yet you're also getting all the benefits of real estate. So it seemed pretty hands off, which checked the box for me on that since I was working an active duty job, and then it was also very high, high cash flow. So that's what got me into residential assisted living, and has kept me into it, and I've brought a couple partners into what we're doing, and really bringing my partners in is brought us so much further than I would have ever gone myself. The core tenets of five ways real estate pays has definitely influenced my thoughts as an investor and everything that I've done

Keith Weinhold 13:16

yeah, I can't believe more people don't talk about the compelling why for real estate investing? And I think real estate pays five ways. Is the most efficient and comprehensive way of doing that for sure, when it comes to Property selection and adding to your portfolio, like you touched on, I know that you like to say that you don't chase doors, you chase quality, and you have sort of this peace of mind with intentional investing over scale. Can you tell us about that?

Luke Frizzell 13:43

That's a great question. It was really a forcing function that formed my investor mindset was it has to be quality, because I don't have the time as somebody who's doing a full time job that's very time intensive, and sometimes I'm leaving for months on end before I come back and in my spouse works in something completely separately, so she doesn't have time to manage properties and things like that. It was forced upon me to be very efficient with what I invested in, and my wife was not. She, just like me, didn't grow up learning about real estate investing, so they had to really hit bang for buck whenever we made that first investment in order to buy her or get her buy in on it. And when that first rental check came in, I was able to take her out to a sushi dinner and say it was paid for by our our tenants. And that was kind of the first buy in piece Got it, got us in there. But, yeah, I really Chase quality. And we were very fortunate, and got a little bit lucky with the timing of our properties in California with covid and the interest rates we bought to early on in 2017 and then in 2020 before interest rates started going up, before prices got crazy out there. And those have done really well for. For us. But as interest rates continued to rise and as prices on homes continued to rise, I had to keep the efficient piece in the back of my mind. That's when I heard about the senior care investing number one. I was like, hey, yeah, the demographics, it makes sense. There's so many, that demographic of seniors, the boomer generation, reaching, you know, 80 years old, and coming to that time of life where they need care that is not going down. The medical system as flawed as it can be in our country. You know, people are living longer, and we need to house them, and people don't want to stay in a big box facility anymore that feels like a hotel and not personal, and you have a one caregiver to 30 resident ratio. People want more personalized care, like you would get at a private school. At a public school, you get what you get, and you don't throw a fit, which kind of the analogy I make for a facility versus residential assisted living. So what we invest in is the residential level, where you actually buy just a regular house and it may have four or five bedrooms in it, and let's say three bathrooms, and if it's a single story home that has, let's say 3000 square feet, that is a prime home to actually build out into a senior care home. And every state needs these. Every state has different laws and rules and regulations as to what some are going to require, different size door frames, different width requirements in the halls, ramp requirements, of course, for wheelchair access and such. At the end of the day, every state needs more housing for seniors, and it's really going to be an education piece on getting people up to speed. We have five homes in Phoenix doing this, this model. There's a lot of network already available there. Like people love to retire in warm weather. Phoenix is just a hotbed for these residential assisted living homes. So that's where we got started. But when you move into, you know, let's say rural Nebraska, it's not going to be as as prevalent. So you really got to do a lot more networking and education to zoom back to your question about quality over quantity. If you think about scaling to $10,000 per month in passive income, quote, unquote, passive, the way I look at it, if I can have one residential assisted living home that nets $10,000 per month when I talk about the one residential assisted living home that could make net $10,000 per month that would be running the operations yourself, where you have let's say the average resident across America is going to pay 4000 to $6,000 per month to stay in a home like what I'm talking about if One home, let's go with the low end of $4,000 per month has a capacity of 10 residents in the house, then you can have 10 residents at $4,000 per month. So that's $40,000 gross. And then if you the average, if you're running an efficient home, just having straight up staffing costs, that maybe cost you $15,000 per month, and then you have your mortgage and your debt, that takes you another $10,000 per month, and let's say another five for excess costs and food and things, that's $30,000 of expenses. So 40,000 minus 30,000 is $10,000 per month. That's an efficiently run home. But that is not the height of what someone could do with this strategy. We have partners that do $40,000 net per month in this strategy, and that's generally in the dementia care, memory care space. What we did when we started was something called the lease to operator model, and that's a little bit more hands off, actually, I would say a lot more hands off than the actual operations of the home, like what I just said, because if you're doing the staffing and you have the business liability, that's all pretty involved, and there's a lot of education and a lot of networking that you need to do to get to that point. When I got started in this, I did the least operator model, because I was time constrained and I didn't want to actually get involved with the hands on care number one, because I was in Virginia Beach, and the homes that we were buying were in Phoenix, so there was no possible way for me to do that when we bought our first home at 10 capacity, so there's 10 residents that can fit in the home. I found an operator and vetted them and moved them into the house, and they're paying me a lease for five years, so it's somewhat of a commercial lease, but it's a residential home, and I actually got residential insurance on the house. The business owner that is leasing from me has the business liability insurance, and now they're paying me two and a half times what would have been the regular lease amount that I could have gotten for that home. So in that area, they're paying me $8,000 per month on a five year lease, and that goes up 3% per year. However, if I was renting that out like a normal house, I'm. Be getting 2020 $500 per month, every month, on a long term lease.

Keith Weinhold 20:05

That's this way the manager operates it, rather than you, right? So I

Luke Frizzell 20:09

actually empower the manager, or this operator, is what we call them. That's why it's leased to operator. I empower this manager to actually run it themselves. I don't tell them you can't paint the inside of the house. I don't tell them you can't redo the floors when you want. If t

Erratum: At 37:31, replace "Florida" with "California".

Keith fields listener questions on: changes to realtor fees, down payment strategies for investment properties, and how the new 100% bonus tax depreciation really works, then staggering inflation statistics that motivate you to invest in real assets.

He explains that realtor fees have shifted from a 6% listing fee to a 3% seller fee, with potential buyer contributions negotiable.

For down payments, he advises maximizing leverage while avoiding over-leverage.

Bonus depreciation allows for significant tax deductions in the first year, benefiting high-income investors.

Resources:

Connect with a recommended cost segregation engineer to take advantage of bonus depreciation here.

Show Notes:

GetRichEducation.com/566

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:00

Welcome to GRE. I'm your host. Keith Weinhold, fielding your listener questions on changes to realtor fees, your down payment strategy, and how the new 100% bonus tax depreciation really works, then staggering inflation statistics that motivate you to invest in real assets today on Get Rich Education.

Keith Weinhold 0:26

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week. Since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Speaker 1 1:12

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:22

Welcome to GRE from Athens, Pennsylvania to Athens, Georgia to Athens, Greece, and with listeners across 188 world nations. You are listening to get rich Education. I'm your host. Keith Weinhold, yeah, you and I are back together for a 566th wealth building week. This is not where you learn how to create wealth through careful sports wagering at DraftKings. We also don't try to do everything like WalMart. We talk about investing actually pretty aggressively yet reasonably and responsibly at the same time. Usually those attributes are opposites, but because we are leveraging the most proven wealth building vehicle of all time, real estate, where you don't have to be the landlord. You don't need to get deeply hands on with house flipping, and you don't need to own property in your local market, though you could. We are not day trading. We are decade trading. There's not a get rich quick element here at GRE, because that doesn't work. We're owning mostly long term rental properties, bringing the financially free beats debt free approach and cognizant that compound leverage Trumps compound interest. And from the day you start focusing on this, you can retire in five to 10 years, and you can take it as far as you want, because unlike many professional sports, the sport of real estate investing doesn't have any salary cap at all. I'm starting off with three of your listener questions today. You write into the show with your questions and what I've got a few that I think could help a lot of you. I answer them here. And as usual, I start with the more introductory question, and then I proceed to the more advanced. The first one comes from Sherry In Sellersburg, Indiana. I know where that is. It's just across the river and to the north of Louisville, Kentucky. Sherry asks when I go to sell my duplex, how have last year's changes in realtor fees affected my sale costs? Yeah, thanks for the question, Sherry. And a lot of people still wonder about this first and a big little technical here, but this benefits other listeners Sherry is that a realtor means that they are a member of the NAR, the National Association of Realtors. So not all people that you enlist to help you market and sell your property are realtors, because not all agents belong to the NAR. In fact, the best catch all term for this person is not an agent. Depending on the state you're doing business in, it's probably licensee, someone licensed to act as your professional intermediary in a real estate transaction. And by the way, the name of an NAR member is a realtor. It is not pronounced real utter it's realtor, like doctor and lawyer. You wouldn't call a doctor a doctor two syllables, realtor, but to get to the crux of your question, Sherry, the changes to realtor compensation took effect almost exactly a year ago. It was last August, and it has less. Of an effect on the industry than many thought. I stated last year that it likely wouldn't affect things much, especially here on the investor side, and it really hasn't. The simplified version is that the old landscape was that when you used to list the property for sale, the listing agent charged you a fee, traditionally, 6% they offered half of that to any cooperating broker that brought the buyer to you. That was simple, and that worked for decades. That changed one year ago now, when any realtor or really licensee, when they work with you, now they simply contract with you for their fee, only like 3% as a seller of the property, you no longer have an obligation to pay for the buyer side agent as well, like you used to. But when you sign a listing agreement, you can indicate that you may be willing to concede and give an allowance to the buyer when they engage a licensee on their side to help them purchase your property. So Sherry, your voluntary contribution to the buyer side is negotiable, and it's part of the offer that the buyer presents to you. Now that's what you'll see as the seller and what you should expect as a buyer. The new landscape is that buyers negotiate a personal service agreement upfront with their licensee. Their service isn't free. I mean, these people can't work for free, and the buyer side licensee acknowledges that they will try to negotiate to get the seller to pay that fee. So Sherry, in reality, that's still what often happens. So the seller still pays that fee. In the end, the reason why is that not only is this traditional, but buyers cannot normally afford to pay for their own representation on top of their down payment and closing costs. They're often spread pretty thin already, but sellers can typically afford it. They have the upper hand financially in the form of equity in the property. And here, when you're buying properties at GRE marketplace, you don't have to pay any of those fees. We use a direct model without a licensee. So that's sort of the short version of the change, and why. I hope that helps sherry. It's a good question. Even licensees are struggling with the new rules.

Keith Weinhold 7:38

The next question comes from Jezebel in Yonkers, New York. Jezebel asks, what is the ideal percent down payment that I should make on a rental property? I'm trying to figure out the trade off between debt level, cash flow, leverage and risk. I'm still trying to get past the mindset that paid off property is best. All right, that's Jezebel's question, and Jezebel The short answer is that you want to make the smallest down payment possible while avoiding over leverage. Over leverage, meaning that your monthly payments are so big that you struggle to make them. Now, many investors that buy rental property, they're going to make a 20% down payment on a conventional loan for a single family rental. At last check on duplexes and up the down payment has to be at least 25% now you can make a down payment as low as 15% at least on a single family rental, although you would then be subject to an extra fee a PMI premium. Now, why would one do such a thing for the leverage? Because leverage is almost seven to one at 15% down, but you've got to balance that with a PMI premium. Run the numbers and see what works for you. Now, since you can make just a 20% down payment on a single family rental, conversely, why would you put 25% down? Your leverage position would slide from five to one down to four to one, where you can often get a slightly lower interest rate if you put 25% down. But when you run the numbers, you'll find that it's often better to maintain strong leverage and only put 20% down. Now, Jezebel, as soon as you start putting 30% down on a property that is questionable at 30% or more, because at that point you really have to start asking why the rate of return from home equity is always zero. It actually makes your risk go up, like I've discussed extensively before, with 30% down, your leverage ratio has been cut to 3.3 maybe the answer could be that 30% down is what it takes to produce. Positive cash flow, but putting 30% or more down is clearly not ideal. Think about how good we've got it as real estate investors here, for example, imagine that you're attracted to a dividend paying stock because it pays a 4% yield, unless you're borrowing on margin, you would need to make a 100% down payment to get that 4% cash on cash return from a dividend paying stock, 100% sunk into this, which isn't even a down payment anymore. That's just an outright free and clear stock purchase. Well, instead, in real estate, when you realize that property prices rise or fall in value regardless of how much equity is in a property, you don't have an incremental increase in your equity growth. It's a quantum leap. And here's what I mean. Jezebel, say you're investing 100k in real estate, that's how much you're going to put into it, and it appreciates at 5%. All right, there are two scenarios with that. Scenario A, you put that 100% down into just one 500k property, well, then you've got just a 25k gain after a year. Instead, with Scenario B, you put 20% down on five 500k properties, then you've got a 25k gain after a year, not just 5k Said another way more powerfully. Scenario A, you only got a 5% return on one property. In Scenario B, you got a 25% return on all of five properties. Wow. That's why the leverage light bulb, when that goes off, that is an incredible flex that you've got. That's why I say it is not an incremental gain in your wealth. It is a quantum leap. So I hope that some of those considerations really help temper your strategy there. Jezebel, that really helps you see how financially free beats debt free and exposes the opportunity cost of a paid off property. Thanks for the question.

Keith Weinhold 12:19

The next question comes from Ed, and he is a personal friend of mine, so he submitted this question by text message to me, but I wanted to address his question here, because I've had other people in my friend group ask me about this. It's about bonus depreciation, what it is. It's about bonus depreciation, what it is and how it works. And what's interesting here is that even those that aren't active real estate investors have been asking me about bonus depreciation. This was part of Trump's OB BBA, the one big, beautiful Bill Act that was signed into law back on the Fourth of July, and I told you about that last month, but because of all the questions about it and the lack of clarity around people's understanding of bonus depreciation, although it gets a little busy, let me give you a real world example with numbers on how bonus depreciation really works and how you can put 10s of 1000s of dollars in your pocket with it the next time you file your taxes. And by the way, my friend Ed that asked this question is a cargo pilot, so he is probably the most well traveled friend that I have. Yeah, through our chats and on social media, I often see that he's in China or Vietnam or a bunch of other places, but he lives in the US. In fact, bonus depreciation is encouraging more people that haven't even been real estate investors previously to newly invest in real estate because it is for properties acquired January, 20, 2025, or later, Trump's inauguration day for his second term or later. And I expect this to be effective for at least four years from that date. I think I mentioned that part to you a few weeks ago. All right, the property has got to be newly placed in service, not something that you bought, say, five years ago. Bonus depreciation does not apply to primary residences. We're talking about rental property, although it does apply to more than just rental property, because it can apply to property used in a business, like equipment, machinery and furniture, but within rental property, it applies to certain components of the real estate, not the building itself. That is on a regular depreciation schedule, and not the bare land. Land cannot be tax depreciated at all. All, neither through regular depreciation or bonus depreciation. You probably already know that a residential building itself can be depreciated over 27 and a half years. That works out to 3.6% of the value each year that can be depreciated or written off on your taxes, right? Well, what if there were portions of your building that you could write off faster, like over just five years, meaning 20% of their value each year you can, and others over seven years, meaning 14% of their value each year you can. And there's 15 year items as well. All right, so what if, instead of all that, you could take those five seven and 15 year components and just write them all off in the first year of ownership, so that you didn't even have to wait the five seven in 15 years, you can, you can write them all off in year one of your ownership of the property, and that is what 100% bonus depreciation is right there. That is in addition to writing off the main building over 27 and a half years. All right, with that understanding generally, let me break this down in more detail. Use an example, and that will also help reinforce what I just taught you, the components of rental property that bonus depreciation applies to, include the stuff that wears out faster than the building, and they are indoor items, appliances, flooring and cabinetry. At times, it can include HVAC systems, all right, that is written off in five to seven years. And then outdoor items known as land improvements, that includes fences, parking lots and landscaping. They're typically written off over 15 years. All right, let's look at a real world example on how this can benefit you. You can use bonus appreciation on single family rentals, duplexes, fourplexes and larger buildings. Let's use an example of an apartment building that you purchase for $1.2 million one we'll say the land value is 200k that is not depreciable. So the building, the depreciable asset, has a value of $1 million you must have performed what is called a cost segregation study in order to break down that $1 million building into those erstwhile faster depreciating components. And no, you cannot do the cost seg study yourself. You need to pay a few $1,000 to hire a Cost Segregation engineer to do this study. All right, let's look at the cost seg breakdown, the result of what he or she finds for you, let's say the personal property that's worth 150k its recovery period is five to seven years, and yes, it is eligible for bonus depreciation. Then you have the land improvements say that's another 50k over 15 years for a recovery period. And yes, it is bonus depreciation eligible. And then finally, you have the structure, or the building worth 800k It has a recovery period of 27 and a half years. No, it is not eligible for bonus depreciation, just the regular type. All right. Well, let me define more of this personal property for you here these five or seven year assets, these are what are eligible for 100% bonus depreciation in qualifying years. So we're looking inside the units, appliances like refrigerators, ovens, dishwashers, microwaves, washers and dryers, also flooring, carpet, vinyl and removable floating floors, not typically hardwood or tile, cabinetry and countertops in some cases, especially if they're not load bearing. Window treatments like blinds, drapes and curtain rods, ceiling fans and light fixtures, they've got to be detached from the structure and furniture, if it's a furnished rental, like perhaps a midterm rental or short term rental. So we're talking about things like beds, couches, in chairs and then in common areas. This five to seven year personal property includes fitness equipment in the gym, leasing office, computers, desks, chairs, clubhouse furniture or TVs, package lockers, like places where your tenants have their Amazon packages, playground equipment and trash compactors. All right, to be clear, that was all personal property that can be depreciated over five to seven years. And then there are those land improvements, the. 15 year assets also eligible for bonus depreciation, sidewalks, fencing, landscaping and irrigation, parking lots and striping, outdoor lighting, retaining walls and signage. Okay again, those are the land improvements, the 15 year items, things that are not eligible for bonus depreciation are the building structure itself, like I mentioned. That includes the roof framing, drywall foundations, and also things like elevators, structural plumbing and wiring and HVAC systems that serve the whole structure. Okay, all that stuff falls in the category of regular 27 and a half year depreciation. All right, so what is the 100% bonus depreciation effect? All right, well, your eligible amount in our example is 150k of personal property plus 50k of land improvements. That's 200k that you can deduct all in one year, rather than having to spread it over five and seven and 15 years. But all in year one of you owning the property that's 200k and again, the remaining 800k structure is depreciated over 27 and a half years. That works out to about 29k a year. This is where it gets exciting. Here we go. So your total year one depreciation, the year that you bought this asset and put it into service, with your bonus depreciation items adding up to 200k and your regular building depreciation at about 29k your total year one deduction is about $229,000 Wow, before I break that down some more and tell you about how it really helps you, let's just be really clear. How did you really get to the 200k of bonus depreciation. All right, let's say the cost segregation study allocated 80k to appliances, flooring and fixtures. Remember, they are the five to seven year items. Another 70k to common area, furniture and office equipment, that was the seven year stuff. All right, so there's 150k or personal property, and then another 50k to that outdoor stuff, the depreciable items known as land improvements, like the parking, landscaping and fencing, those 15 year items, that's how we got to 200k all bonus depreciation eligible, all fully deductible in year One under the 100% bonus depreciation rules, all r

Keith discusses strategies to avoid capital gains tax on primary residences, highlighting the potential impact of the "No Tax on Home Sales Act" proposed by Representative Marjorie Taylor Greene.

He explains the current tax exemption thresholds of $250,000 for singles and $500,000 for married couples, noting that 34% of homeowners could exceed the single filer threshold.

Keith also explores the rise of small investors in the housing market, representing 30% of purchases, and the potential of peer-to-peer storage and parking platforms to generate income from underutilized property.

And concludes with a critique of government dependency through Section 8 housing.

Resources:

You can see the video footage of that section 8 clip here.

Show Notes:

GetRichEducation.com/565

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, when you sell your primary residence, you need to pay capital gains tax. Learn how to avoid it, then how to increase your rental income with new peer to peer platforms. And finally, a perspective on capitalism and collectivism, with Section Eight housing today on get rich education.

Speaker 1 0:27

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Speaker 1 1:12

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:28

Welcome to GRE from st, Joseph, Missouri to st, Albans, Queens in New York City and across 188 nations worldwide. I'm Keith weinholden. You and I are back together here for another wealth building week. This is get rich education, the Treasury and the Fed keep conspiring to print dollars like crazy, create currency, debasing every single dollar that you're currently holding onto. They are stealing your purchasing power, stealing the value of your work and your grit. It makes dollars pretty fake, since they can just be conjured out of thin air, therefore your job is to convert fake dollars into real assets. That's what you need to do, and this is a strategy that dominates. Like Sydney Sweeney, they print more money, causing inflation, so you have to invest in assets, but then they put a capital gains tax on those assets so that most people never escape inflation. But of course, as real estate investors, we have a strategy to avoid capital gains taxes. Well, I'll talk about that more later.

Keith Weinhold 2:46

I mentioned to you on an earlier episode that I recently attended my high school class reunion in Pennsylvania. It was just a few weeks ago, out in a rural area with a lodge and trees and grass and inflation came up in a conversation between me and a few classmates that was some time before we played cornhole in badminton. I talked about how I sort of enjoy spending money. One classmate replied that he is cheap. I don't really directly respond to something like that, but my preeminent thought when someone says that they're cheap is that life is too short to be cheap. There is a way to guarantee an improvement to your quality of life and your standard of living, and that is spending it can do exactly that invest Well, first, that's an antecedent, and then you can spend now, in the short run, when you're young, living below your means that can make some sense, until you've accumulated some Capital, sure, but when you're age 30 to 35 plus, like my classmates and I are Sheesh, you've got to have yourself figured out better by then than to still be cheap make your quality of life exceed your cost of living, because at least here on Earth, this is your last life ever the risk of too much delayed gratification is denied gratification. So be more frugal with your time than your money. And a lot of people point to external circumstances for their circumstances. Most people wait for the economy to change, not realizing that your mindset is the economy that you live in with each property that you own, you just created another small economy that you are in control of. You are at the top of it. Yeah, you created. Another small economy, the actors in it are you, your tenant, your lender, your property manager, your contractors, your utility companies and more, and you control it all. Most people think wealth is created from high salaries, and they go their entire life, therefore chasing the wrong thing, thinking that wealth is created by high salaries all along it squarely is not you get wealthy by owning things, and you certainly won't get wealthy by being cheap. Now, when it comes to owning things, the government taxes you when you profit on those things during your ownership period of them at sale time through the capital gains tax. And of course, we've talked about the specifics in how real estate investors can completely duck out of that with the 1031 tax deferred exchange. But what about homeowners, primary residence owners, they often have to pay it well. President Trump and Representative Marjorie Taylor Greene recently suggested either removing this tax or reforming it. Now this would require congressional approval, but most members of Congress own their home, so they could very well be in favor of it. And green introduced what is simply called the no tax on home sales act.

Keith Weinhold 6:29

Let's discuss how this can affect you, especially if you're a homeowner, or even if you don't own a home under the current law, which has been in place since 1997 on a primary residence, your first 250k of profit is sheltered from tax if you're single, the first 500k is sheltered if you're married. This is called the primary residence capital gains tax exemption or exclusion. Let's use an example. Say you bought a home years ago for 500k you're married and you sell the home for $1.3 million that's an 800k gain, alright? Since the first 500k is sheltered from capital gains tax, you would therefore have to pay the tax on just 300k on all but the lowest earners, your capital gains tax is 15 to 20% so this means if you sell this home on that 300k of profit, you'd have to pay a tax bill of between $45k and $60k and you might not be done there. You could also be subject to a net investment income tax of 3.8% on top of that, you cannot duck out of this because the 1031 exchange that's only for investment property, not primary residences, like we're talking about today, with home prices on the rise so much over the last five years, how many people exactly could be subject to this tax? 34% of homeowners could exceed the single filer threshold, and 10% could exceed the married filer threshold. Another way to say this is that only about 10% of US homes have more than 500k of equity in them, and it's the homeowners in high cost states that are most likely to be impacted here, New York, New Jersey, Massachusetts, California and Hawaii, states like that. So therefore this tax it acts as a deterrent to people selling their homes. Now, what about, say, an elderly person with a really modest income that bought a home in Los Angeles for $30,000 back in 1970 and now it's worth $15 million well, they actually would not get caught in this net, because, like I said, for those with lower incomes, and it's below about 47k for single or 94k married, the capital gains tax rate is zero. For most of you listening again, it's going to be 15 to 20% one reason for the President and others wanting to cancel the capital gains tax on primary residences like this is to get the housing market moving again and get more homes available for sale on the market. Now these 250k and 500k thresholds, they have not moved since 1997 almost 30 years here, they haven't been adjusted for inflation and the median home sales price, it's jumped about 190% in that time it was 145k back in 1997 it's 435k today. So is. Home prices appreciate, more and more people will get caught up in paying the capital gains tax if your home value goes up by 10k That's another 10k that's subject to this 15 to 20% Capital Gains Tax, with that erstwhile possible net investment income tax on top of that. Well, what can you do about this growing capital gains tax obligation that you'll have that a lot of homeowners aren't even aware of? Well, even fewer realize that it is possible to reduce your home sales profit by adding capital improvements. That means making home renovations to the original purchase price. So therefore that home kitchen renovation that you were thinking about doing, well that might not be as costly as you think, if it reduces your capital gains tax at sale time to reset what we're talking about here, it's been proposed that the capital gains tax be removed when you sell your primary residence. Usually, we discuss tax on investment properties here, but this is a significant proposal, and whether it happens or not, it helps you understand the housing market and how to limit your personal tax hit now see if the tax were removed, it could be costly, because it would decrease the government's tax revenue, of course. So in my opinion, what I think is really going to happen here, a more likely course of action would be that instead of eliminating this tax they would just move up the threshold, say, from 250 and 500k up to 500k and $1 million another angle to keep in mind is that relaxing the tax that helps out wealthy people more than it helps the poor. Now, house flippers want to pay particular attention to what happens here, for instance, simply eliminating capital gains tax on house sales that could benefit those who buy and flip homes for profit. If policymakers want to benefit only homeowners, then they need to parse that out. Otherwise, this would be a huge boon to eliminating the capital gains tax on House flippers an absolute godsend, a windfall. In any case, relaxing the tax would mean that homeowners who move they would therefore retain more capital to reinvest in their next property, which you could use to outbid others. What does that do that would drive up home prices even more. I mean talking about the capital gains tax on primary residences, its proposal to be removed and what this would do to the housing market.

Keith Weinhold 12:50

Before I tell you about an interesting real estate investing niche and trend, let's pull back and look at the national housing market. The NAR recently let us know that national home prices hit yet another all time high. The median existing home price reached a record high of $435,300 and that is a 2% increase compared to last year. At this time, it's also the 24th consecutive month of year over year price increases. And you know, it's funny, I recently talked to an investor based in Phoenix that also does a little investing in Las Vegas. She thought that national home prices were falling because she sees a little price flattening in her home area, which is a little overbuilt. Well, prices are up as much as 10% in some areas of the Northeast and Midwest, because those areas are substantially underbuilt. I mean, for some perspective here just one metro area, New York City, one city with its population of over 20 million people, has twice as many people as both Arizona at 7 million and Nevada at just 3 million combined. One city twice as much as two entire states combined with all their cities. So it's remarkable how little perspective some people have see my geography degree holder perspective strikes once more again, national existing home prices are up 2% year over year, nominally, pretty modest growth, not that exciting. And who is doing the buying of these homes supporting and driving up prices. Well fewer and through of them are first time home buyers due to the well documented affordability strain. More and more of them are investors. Just last week, the Wall Street Journal reported that investors are responsible for fully 30% of the purchases of. Of both existing homes and new construction homes this year, and this is the highest share since property analytics firm kotality started tracking it 14 years ago. Investors are really buying today, and what kind of investors? Interestingly, it is people just like you. The Wall Street Journal went on to report that smaller investors who own fewer than 100 homes are doing most of the buying. That's a big change from when massive private equity firms like Blackstone and Starwood Capital Group dominated the market. So this 30% of single family home purchases being made by investors today. Smaller investors are 25% and larger ones only accounted for 5% so yeah, the little guys, people like you, they can take bigger risks because they don't have boards and shareholders to answer to, and plus builders with too much inventory are offering them discounts that were once reserved only for the bigger fish. They're being passed on now to smaller investors like you. That's exactly what the journal went on to say, much like we discussed on the show here last week, where builders are giving massive discounts.

Keith Weinhold 16:22

Well, you probably heard it said that Airbnb doesn't own any real estate. Uber doesn't own any cars. Facebook doesn't own any content, and Tiktok has no original videos. Yet, they all dominate their industries. Well, when you own the real estate, you can make the rules and leverage some of these connector platforms to help you rent out space that you own and increase your income. Do you own any property that's sitting vacant with nothing going on on the lot, perhaps even overgrown with weeds and shrubs. You can use an app like neighbor that helps you rent them out as parking spaces. Neighbor.com customers request your space, and you can approve it. They can park their cars on your space or RVs, boats, boats, trailers. This can be especially lucrative if you're a few miles from an airport, and then there are platforms that let you leverage them, sort of like the Airbnb of storage. Roughly one out of every nine Americans is renting a self storage unit, and that's not even counting all the people searching for a spot to park an extra car, boat or RV. At the same time, there are millions of garages, basements, attics, driveways and backyards sitting underutilized across the country now, platforms like store at my house, Pure Storage and park for share, that one is spelled Park, the number four and share, they're all stepping up to connect people who have extra space with the people that need it. And the result is that renters can typically save 50% or more compared to them using traditional storage companies they can rent from you, and it's often more convenient for renters, since the space they're renting that might be just around the corner instead of across town. Neighbor.com is one of the biggest players in this space, though, its founder, his name's Joseph Woodbury. He says you'd be amazed at what people will pay to store something if the location is good and the price is right, they have had a tiny three foot by five foot closet in Manhattan that rented out in a snap, almost instantly in Woodbury. He even uses the platform himself, leasing part of his own driveway to someone with a camper. Now, you probably want to check with your HOA before you do something like that. But like Airbnb neighbor, they earn money by taking a cut of the host's revenue. But unlike Airbnb neighbor, hosts average just 16 minutes per month managing their listings now Woodbury, the neighbor.com owner, he calls it the most efficient, least time intensive form of passive income in America. And the peer to peer storage trend, that's become a great entry point for new investors, especially those that aren't ready to buy a full property. But it's also catching the eye of experience real estate investors who want to squeeze more cash flow out of the land that you already own. Some are turning unused sheds into rentable storage units. Others are converting open acreage into long term parking. I know someone that's hosting campers and. RVs on his 10 acres in Florida, and he expects to earn about $100,000 this year alone from that land. And they say it's mostly hands off. And now, whenever he buys he looks for acreage plus a home so that he can generate multiple income streams from one property. Well, can this peer storage and parking shake up the $500 billion self storage and parking industry the same way that Airbnb rattled the hotel world? Some think the potential is huge, with national occupancy rates for storage centers hovering around 93% there really is not any sign that the market is oversupplied. In fact, even public storage, that's the company name, public storage, they are the country's largest self storage space operator, even they use neighbor to help lease out their leftover inventory, and so do some REITs that have extra space at their office, retail or apartment properties. And as far as the types of listings, people are getting creative on these platforms. They're monetizing everything from empty barns to church parking lots. Think about how much of the week church parking lots sit vacant to vacant strip mall storefronts, and they're using that as parking so more and more people are realizing that there's hidden value in the real estate that they already own, and you can too. If you own the real estate, you make the rules. So check out those four platforms that I mentioned, if you think it can benefit you to increase the income at your properties in this growing peer to peer storage and parking industry. It was around 2010 when Airbnb really started to take off and really take market share away from hotels, and today, these platforms like neighbor store at my house, peer storage and park for share, are taking market share away from traditional, centralized self storage spaces to review what you've learned so far today, if you're going to Live life full time, you can't be perpetually cheap. Be aware of the primary residence capital gains tax and its elimination proposal. Small investor interest is growing now, making up fully 30% of today's home purchases, and grow your income with Pure Storage and parking platforms coming up next, a viral audio clip that borders on the unbelievable and gives you a new perspective on capitalism, collectivism and Section Eight housing, you'll be flabbergasted. I'm Keith Weinhold. You're listening to Episode 565, of get rich education.

Keith Weinhold 23:00

the same place where I get my own mortgage loans is where you can get yours. Ridge lending

Keith discusses the impact of inflation and interest rates on real estate investing, emphasizing passive income strategies.

He highlights the Florida housing market, noting a 26% increase in listings post-pandemic.

Investor and Florida homebuilder, Jim, joins this episode to explain the overbuilding in the emotional market versus the underbuilt workforce housing.

His company focuses on new construction in areas like Ocala, offering 40-year loans with 5.25% fixed rates, and boasting an average tenancy duration of over three years. They also provide two years of free property management and a 10-year builder warranty.

Resources:

Schedule a free strategy session with a GRE Investment Coach to evaluate the opportunity at GREinvestmentcoach.com

Show Notes:

GetRichEducation.com/564

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

welcome to GRE. I'm your host. Keith Weinhold, what control do you have over inflation and interest rates? Then, with the Florida housing oversupply and resultant attrition and price levels, wouldn't it be interesting to talk to a prominent Florida homebuilder? That's just what we do today on get rich education.

Speaker 1 0:27

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Speaker 2 1:12

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:28

Welcome to GRE from coral, Illinois to Cape Coral, Florida and across 180 nations worldwide. I'm Keith weinholden. You are inside for another wealth building week. This is get rich education, the voice of real estate investing since 2014 with inflation on the upswing and is currently approaching 3% again, the formula is small. Down payment. Bank buys you the house. Tenants pay down the loan. Property Manager handles nearly everything. You collect cash every month. Inflation builds you massive wealth, and that's real estate, all right. And no one really knows what's going to happen with inflation and interest rates, those two positively correlated indicators, but at times we have an illustrious guest that will make a prediction. And GRE episode 224, from January of 2019 has been getting some attention lately. That's back when interest rates of all types were really low, and when I interviewed legendary investor Jim Rogers in Singapore, listen in to what he told you, and I on that episode, then

Speaker 3 2:49

you ask me, we're now headed up again, and interest rates are going to go go much, much, much higher over the next few decades, and it's going to ruin a lot of people. I hope none of your listeners get ruined. I hope I don't get ruined, but rising interest rates are here for a long time. Keith, be worried. Be careful.

Keith Weinhold 3:08

Yeah, some real Jim Rogers prescience there in Episode 224 he has seen some cycles. Now as investors, we've got regional phenomena and national phenomenon mortgage rates. They're a national one, because more or less, whenever you finance property anywhere in the nation, your rate is going to be the same nationwide. Perhaps you feel then like you don't have any control over your mortgage rate. Well, I've got two points to that. First, understand that today, mortgage spreads are almost back to normal. Now, what does that mean? Mortgage spreads from listening to the show, you probably know that the mortgage rate you pay is dictated more on the level of bond yields than it is the Fed funds rate that your own Powell controls. Well, 30 year mortgage rates are historically almost 2% above the bond yield, meaning they're 2% above the yield on the 10 year T note, okay, that's the bond yield. The spread was recently above 3% now it is down to about two and a half. To be clear, mortgage rates are now just about two and a half percent above bond yields in this narrowing, that means there's more investor confidence in the mortgage market, and that suggests that lenders are willing to offer loans at competitive rates without succumbing to volatility. So lenders are less concerned about the risk of you quickly refinancing out of the loan that they just worked to make for you, the translation is that this opens the door to make it easier for mortgage rates to fall to 6% and they've been nearly seven for a while. Though I don't predict rates. I'm speaking about probabilities here. Now some people want to lock up property before rates fall, because when rates fall, many think home prices will surge because more people can afford property than higher demand. And I think we all know that the conventional wisdom is to lock in your price now and then if rates fall, you refinance. Conversely, if rates go higher, well then you'll be glad you bought today when rates were lower. But today we're talking about how you can really control the mortgage rate you pay when you work with a builder that won't only see that your mortgage rate gets bought down, they'll ensure that they are the ones paying for the pie down, not you. That's key, as we talked to a home builder in Florida today, a state that makes headlines for being overbuilt, it's a case study in how a market gets to an overbuilt condition, or does it really get overbuilt? It depends on this segment of the real estate market that you're focused on as an investor, as you'll see today, let's meet this week's guest.

Keith Weinhold 6:05

I'd like to welcome Jim onto the show today. He's one of the founding partners of a prominent Florida home builder. They built over 9000 residences, and they have 120 plus full time employees, and it's been such an interesting time in Florida home building and the real estate market, so that's why we're chatting today. Hey Jim, welcome onto the show. Keith, great to be back. Thanks for having me. Let's talk about the problem statewide. Florida has about 26% more listings, more available housing inventory, as compared to pre pandemic levels. That's created some problems, some price attrition. Talk about, why did Florida get over built? Or are they not truly overbuilt when we segment that by product type.

Jim Sheils 7:02

Well, like you said, Keith, product type is really important to decipher here, because it does help dissect the problem a little more clearly. There's a lot of different markets happening, but two of the main things that I've seen that have caused the softening of certain segments of the market is one insurance if you are buying a 1957 home in southwest Florida, a few blocks from the beach, it is possible that your insurance has gone up four to five times. Yeah, the annual thing. So that is going to really start to shake people who own those properties. They're going to feel a little triggered to sell, and it's going to be more difficult to sell, because if you have an agent go and show that property and they ask for a good faith estimate from a lender, and they say, Well, what's your current insurance? That can really scare people. So that type of property normally properties older before 2004 when the rules changed, with higher insurance, that can change it. The second thing is, the emotional market always seems to take a hit, Keith, and I've heard you talk about this before. Now, the emotional market that I talk about is we have our median value in any of the real estate markets, right? And you go about 25% above the median, maybe 30% above the median values. That's what I call the emotional market. These are the really nice houses that are fun to visit. You know, nice to stay in, nice to live in, but they are emotional. This is an emotional market. The cash flow numbers have never worked. They're not on the ultra high end that those people normally own cash and they don't really care the fluctuation. It's that level above the median where I see the emotional market really take the hit, because when the emotion comes out, while the people it's harder to sell to find the buyers, especially with the rates jumping the way that they have over the last two years, there's not the ability to sit back and say, Well, you know what, Keith, I'm just going to hold this and rent it, because their negative position, their negative cash flow every month, begins to sink them quickly, and so that's where you see that pressure downward on that emotional market. If that makes any sense.

Keith Weinhold 9:06

did Florida really get ahead of itself with the increase in pandemic migration? Was there more building because they projected that high migration rate to continue, and it just didn't. Is that why areas of Florida are overbuilt.

Jim Sheils 9:22

What I believe happened was the migration was there, Keith, but again, you have to look at the sectors of the market. Now, when you're looking at a large national home builder, their goal is to sell the property with the greatest profit spread. It's just that simple, and those are the properties when times are good and times are hot, this emotional market, you know, 20, 30% above the median value for an area that's a very easy time to promote and to sell those types of properties and make the best spread for them. And so, yes, in that area, they got ahead of themselves, because it was easy to market to, easy to promote to. And again. In. Some people untrained investors, or people just emotional and saying, Well, I'm gonna have a second home in Florida, and I'll get there more often than I think I will. That causes that issue now, but going to the lower segment, like the workforce housing, like you and I have talked about, well, that has been underprepared for the migration and affordability. That is my word of the year, affordability, the affordable housing, the workforce housing. When you look at the stats, I think it was last year we found the stat that for every 25 workforce housing, new construction workforce housing, there's 100 renters. And so the workforce housing has been underdeveloped, and why? You know, we're a niche builder. It's very rare for a builder like us to focus on workforce housing. That's not the focus of many of the larger builders. They're on that more emotional market. So that's where we focus. But with builders like us focusing on that, no one else that part of the market, Keith has been under supplied, actually in the last few years, because the net migration didn't need those emotional houses. They needed the workforce housing.

Keith Weinhold 11:05

This is a great distinction. We can look at a stat like there's 26% more available housing inventory in Florida statewide than there was pre pandemic, but you've got to parse that by product type, workforce housing, which you specialize in, including build to rent, housing has not been oversupplied, not nearly to that same extent. It could even be undersupplied, depending on where you're at. These are the properties that make the best long term income properties. I hope you the listener caught it there. Jim gave an important date. 2004 is a key year when there were changes to building codes, which results in what your insurance premiums are going to be. Tell us more about that.

Jim Sheils 11:50

Yeah, 2004 right through Punta Gorda, Florida, where we build now. There was Hurricane Charlie came through. My dad's cousin, I have actually lived there at the time. I mean, that place got decimated. Keith, it got absolutely decimated, and the government called timeout. They said, timeout. Okay, we got to stop this. New rules. Moving forward, we're going to change the structural design requirements. We're going to change the elevation requirements. This is the big one. So you know, back in the day, you and I, if we were back in 1962 in Fort Myers, Florida, we could build a house at two feet or three feet above sea level. Those days are gone. If you're going to build a property like going back to Punta Gordon, now today, you have to build it 13 to 14 feet above sea level. So that means builders like us got to bring in a lot of dirt, and we grumble and complain about it until a storm goes through and we have no flooding on any of our properties. But that was a requirement, then stronger fasteners and structural design, because they just didn't want that risk or this type of damage. And it's been interesting, because they've been two hurricanes, you know, since 2004 that have really gone right over the eye. The main power of the storm has gone through. Punta Gorda. I've actually showed this on some videos that we've done on YouTube, like the flyover the next day, and you would think, Oh, well, maybe there was like a strong wind that went through, because there's palm fronds down and some fencing, but the houses are intact, and it's because things had to be rebuilt to today's standards. So I always tell people, hey, you know, we'd love to help you get a house, but if you're just going down there to find a house, I would highly recommend you look at the elevation and look if your house was built before the year 2004 or after, because that is really when things started to change. Not that a house earlier might not have what you're looking for, but elevation is such a key component when you're near coastal areas in Florida, the elevation of your home.

Keith Weinhold 13:41

Is it that simple? Pre 2004 you're likely to pay substantially higher insurance premiums on your Florida property than you are if the build year was 2004 or later.

Jim Sheils 13:52

It's a main component, Keith, another component will be to that is, you know, how close are you to the beach? If you're within, you know, a half a mile of the beach that can have an on lower ground of an older property, those combinations for risk analysis for an insurance company will come up not in your favor, and so you have to put that into account too. Again, the further you move inland, especially the further you move north, and the further you move inland in Florida, the insurance premiums go down because the risk assessment of the last 100 Years of hurricanes has been so much dramatically lower of actually causing issue.

Keith Weinhold 14:29

We'll talk about the Florida areas that you build in later. But first, let's just pull back. Talk about statewide. How bad is it? How bad is it with the overbuilt condition in some segments of the residential market, and how that's led to price attrition, a lack of rent growth or rental occupancy rates that are hurt potentially. Can you speak to that? How bad is it now,

Jim Sheils 14:54

again, going to the segment of the emotional market, so we're talking 20 to 30% above the median. In price in an area that's going to be bad, that's where you're going to have to have downward pressure. You're going to have to your property may have appreciated Well, if you did in 2020, but you're not selling a peak pricing. You're going to have to come off your numbers a good amount, because there's not as many buyers. And also, you got to remember, coupled with that pricing coming down, it's also the interest rates we got pretty spoiled. You know, three and a half percent interest rates, two and a half percent interest rates for some homeowners, that's just not the norm now. So when you're going off those numbers, the affordability, the ability to make that payment, has really been affected. So that emotional market, I think we're going to see a continued softening in that and again, in that emotional market too. To what I saw was, and I own some short term rentals, and I like short term rentals, but what we saw there was a rush, like, almost like a California gold rush, here in Florida, to people coming in and buying what they consider a short term rental, which was not really desirable for short term rent. It could get a few people here and there, but they would buy it, this emotional market, and then the numbers wouldn't work out. Now that, as well, is starting to put pressure on people saying, Oh, I'm losing so much money every month. Let's just sell and again, that emotional market, that area, 20, 25% 30% above median value. That's where we're seeing that. So you're going to see some pressure downward of that, I'd say at least another 10% because there's already been a dip in some areas 15 to 20% so there has been a correction in those and I think we'll continue to see that until some of this stabilizes.

Keith Weinhold 16:32

Talk to us about how the rental segment's doing, statewide

Jim Sheils 16:36

rental, we saw a stagnation for about a year and a half to two years, and just in the last six months, we've seen an increase in some of our main markets here. Again, when I say they main markets here, I'm always speaking, because that's what we stick to, the workforce housing. So we've seen workforce housing some of our main central Florida markets and some of our Northeast markets go up another 50 to $100 which was great, because it was stagnant for about two years. About two years. And then you'll see a continued dip of probably, you know, 10 to 15% on some of that emotional market rentals, because now there's a rush to try to rent them, and again, there's not as much of a demand for that segment of the market.

Keith Weinhold 17:17

We're talking with a prominent Florida home builder about Florida's temporarily overbuilt residential housing type. We've already learned that 2004 is a key year for what your insurance rates are likely going to be. We've also learned about how you need to segment these residential housing markets between workforce housing and the emotional side of the market. You're listening to get rich education more when we come back on Florida real estate, I'm your host, Keith Weinhold.

Keith Weinhold 17:46

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your pre qual and even chat with President Chaley Ridge personally while it's on your mind, start at Ridge lendinggroup.com that's Ridge lendinggroup.com.

Keith Weinhold 18:18

You know what's crazy, your bank is getting rich off of you, the average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your c

Keith highlights the decline in college town real estate due to demographic changes and reduced international student enrollment.

The national housing market is moving towards balance, with 4.6 months of resale supply and 9.8 months of new build supply.

Commercial real expert and fellow podcast host, Hannah Hammond, joins Keith to discuss how the state of the real estate market is facing a $1 trillion debt reset in 2025, potentially causing distress and foreclosures, particularly in the Sun Belt states.

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, are college towns doomed. There's a noticeably higher supply of real estate on the market. Today is get rich education. America's number one real estate investing show. Then how much worse will the Apartment Building Loan implosions get today? On get rich education.

Speaker 1 0:27

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week since 2014 there's been millions of listener downloads in 188 world nations. He has a list show guests and key top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:12

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:28

Welcome to GRE from Orchard Park, New York to port orchard, Washington and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education. How most people set up their life is that they have a job or an income producing activity, and they put that first, then they try to build whatever life they have left around that job. Instead, you are in control of your life when you first ask yourself, what kind of lifestyle Am I trying to build? And then you determine your job based on that. That is lifestyle design, and that is financial freedom, most people, including me, at one time. And probably you get that wrong and put the job first. And then we need to reverse it once you realize that, you discover that you found yourself so far out of position that you try to find your way back by putting your own freedom, autonomy and free agency first. There you are lying on the ground, supine, feeling overwhelmed, asking yourself why you didn't put yourself first. Then what I'm helping you do here is get up and change that by moving your active income over to relatively passive income, and doing it through the most generationally proven vehicle of them all, real estate investing for income. We are not talking about a strategy that didn't exist three years ago and won't exist three years from now. It is proven over time, and there's nothing avant garde or esoteric here, and you can find yourself in a financially free position within five years of starting to gradually shift that active income over to passive income.

Keith Weinhold 3:29

Now, when it comes to today's era of long term real estate investing, we are in the midst of a real estate market that I would describe as slow and flat. Both home price appreciation and rent growth are slow. Overall real estate sales volume is still suppressed. It that sales volume had its recent peak of six and a half million homes moved in 2021 which was a wild market, it was too brisk and annual sales volume is down to just 4 million. Today, more inventory is accumulating, which is both a good news and a bad news story. I'm going to get to this state of the overall market shortly. First, let's discuss real estate market niches, a particular niche, because two weeks ago, I discussed the short term rental arms race. Last week, beach towns and this week, in the third of three installments of real estate market niches are college towns doomed? Does it still make sense to invest in college town real estate? Perhaps a year ago on the show, you'll remember that I informed you that a college closes every single week in the United States. Gosh, universities face an increasingly tough demographic backdrop ahead. We know more and more people get a free education. Education online. Up until now, universities have tapped a growing high school age population in this seemingly bottomless well of international students wanting to study in the US. But America's largest ever birth cohort, which was 4.3 million in 2007 is now waning. Yeah, that's how many Americans were born in 2007 and that was the all time record birth year. Well, all those people turn 18 years old this year. This, therefore, is an unavoidable decline in the pool of potential incoming college freshmen from the United States. And on top of that, the real potential of fewer international students coming to the US to study adds to the concern for colleges. This is due to the effects and the wishes of the Trump administration. It already feels like a depression in some college towns now among metro areas that are especially reliant on higher education, three quarters of them suffered weaker economic growth over the past 12 years than the US has as a whole. That's according to a study at Brookings Metro. They're a non profit think tank in DC, all right, and in the prior decade, all right, previous to that, most of those same metros grew faster than the nation did. If this was really interesting, a recent Wall Street Journal article focused on Western Illinois University in McComb Illinois as being symbolic of this trend, where an empty dorm that once held 800 students has now been converted to a police training ground, it's totally different, where there are active shooter drills and all this overturned furniture rubber tipped bullets and paintball casings, you've got to repurpose some of these old dorms. Nearby dorms have been flattened and they're now weedy fields. Two more dorms are set to close this summer. Frat houses and homes once filled with student renters are now empty lots city streets used to be so crowded during the semester that cars moved at a crawl. That's not happening anymore. It's almost like you're watching the town die, said a resident who was born in Macomb and worked 28 years for the Western Illinois Campus Police Department. Macomb, Illinois is at the heart of a new rust belt across the US colleges are faltering, and so are the once booming towns and economies around them. Enrollment is down at a lot of the nation's public colleges and universities starting next year due to demographics like I mentioned, there will be fewer high school graduates for the foreseeable future, and the fallout extends to downtown McComb. It's punishing local businesses. There's this multiplier effect that's diminishing. It's not multiplying for generations. Colleges around the US fueled local economies, created jobs and brought in students and their visiting families to shop and spend and growing student enrollment fattened school budgets, and that used to free universities from having to worry about inefficiencies or cutting costs. But the student boom has ended, and college towns are suffering. And what are some of the other reasons for these doomed college towns? Well, first, a lot of Americans stopped having babies after the global financial crisis, you've got a strong dollar and an anti foreigner administration that's likely to push international student numbers down on top of this, and then, thirdly, US students are more skeptical of incurring these large amounts of debt for college and then, universities have been increasing administrative costs and tuition above the rate of inflation, and they've been doing that for decades. Tuition and operating costs are detached from reality, and in some places, student housing is still being built like the gravy train is not going to end. I don't see how this ends well for many of these universities or for student housing, so you've really got to think deeply about investing in college town housing anymore. Where I went to college, in Pennsylvania, that university is still open, but their enrollment numbers are down, and they've already closed and consolidated a number of their outlying branch campuses. Now it's important notice that I'm focused on college towns, okay, I'm talking about generally, these small. Smaller, outlying places that are highly dependent on colleges for their vibrancy. By the way, Pennsylvania has a ton of them, all these little colleges, where it seems like every highway exit has the name of some university on it. That is starting to change now.

Keith Weinhold 10:21

Conversely, take a big city like Philadelphia that has a ton of colleges, Temple University, Penn, which is the Ivy League school, St Joseph's, Drexel LaSalle, Bryn Mawr, Thomas Jefferson, Villanova. All these colleges are in the Philly Metro, and some of them are pretty big. Well, you can be better off investing in a Philly because Philly is huge, 6 million people in the metro, and there's plenty of other activity there that can absorb any decline in college enrollment. So understand it's the smaller college town that's in big trouble. And I do like to answer the question directly, are college towns doomed? Yes, some are. And perhaps a better overall answer than saying that college towns are doomed, is college towns have peaked. They've hit their peak and are going down.

Keith Weinhold 11:23

Let's talk about the direction of the overall housing market now, including some lessons where, even if you're listening 10 years from now, you're going to gain some key learning. So we look at the national housing market. There is finally some buyer selection again, resale housing supply is growing. I'm talking overall now, not about the college towns. Back in 2022, nearly every major metro could be considered not just a seller's market, but a strong seller's market. And it was too much. It was wild. Three years ago, buyers had to, oftentimes offer more than the asking price, pay all cash. Buyers had to waive contingencies, forgo inspections, and they had to compete with dozens of bidders. I mean, even if you got a home inspection, you pray that the home inspector didn't find anything worse than like charming vintage wiring, because you might have been afraid to ask for some repairs of the seller, and that's because the market was so hot and competitive that you might lose the deal. Fast forward to today, and fewer markets Hold that strong seller's market status. More metros have adequate inventory. And if you're one of our newsletter subscribers, you saw that last week, I sent you a great set of maps that show this. As you probably know, six months of housing supply is deemed as the balance point between buyers and sellers over six months favors buyers under six favors sellers. All right, so let's see where we are now. And by the way, months of housing supply, that phrase is also known as the absorption rate nationally, 4.6 months of resale supply exists. That's the current level, 4.6 months per the NAR now it bottomed out at a frighteningly low one and a half months of supply back in 2022 and it peaked at 12 full months of supply during the global financial crisis, back in 2010 All right, so these are the amounts of resale housing supply available for sale, and we overbuilt homes back in the global financial crisis, everyday people owned multiple homes 15 years ago because virtually anyone could qualify for a loan with those irresponsible lending standards that existed back in that era. I mean, back then, buyers defaulted on payments and walked away from homes and because they had zero down payment in the home. Well, they had zero skin in the game to protect and again, that peaked at 12 months of supply. Now today, Texas and Florida have temporarily overbuilt pockets that are higher than this 4.6 month national number and of course, we have a lot of markets in the Northeast and Midwest that have less than this supply. But note that 4.6 months is still under six months of supply, still favoring sellers just a little, but today's 4.6 months. I mean, that's getting pretty close to historic norms, close to balance. All right, so where is the best buyer opportunity today? Well, understand that. So far, have you picked up on. This we've looked at existing housing supply levels here, also known as resale homes. The opportunity is in new build homes. What's the supply of new construction homes in the US? And understand for perspective that right now, new build homes comprise about 1/3 of the available housing supply. And this might surprise you, we are now up to 9.8 months of new build housing supply, and that's a number that's risen for two years. That's per the Census Bureau and HUD. A lot of builders, therefore, are getting desperate right now, builders have got to sell. The reason that they're willing to cut you a deal is that, see, builders are paying interest costs and maintenance costs every single day on these nice, brand new homes that are just languishing, just sitting there. Understand something builders don't get the benefit of using a home. Unlike the seller family of a resale or existing home, see that family that has a resale home on the market, they get the benefit of living in it while it's on the market. This 9.8 months of new build supply is why buyers are willing to cut you a deal right now, including builders that we work with here at GRE marketplace.

Keith Weinhold 16:30

And we're going to talk to a builder on the show next week and get them to tell us how desperate they are. In fact, it's a Florida builder, and we'll learn about the incentives that they're willing to cut you they're building in one of these oversupplied pockets. So bottom line is that overall, an increasing US housing supply should keep home prices moderating. They're currently up just one to 2% nationally, and more supply means better options for you. Hey, let's talk about this very show that you're listening to, the get rich education podcast. What do you like to do while you're listening to the show? In fact, what are you doing right now while you're listening to the show? Well, in a recent Instagram poll, we asked our audience that very question you told us while listening to the show, 50% of you are commuting, 20% are exercising, 20% are at work, and 10% are doing home chores like cleaning or dishes. Now is this show the number one real estate investing podcast in the United States, we asked chatgpt that very question, and here's how they answered. They said, Excellent question. Real estate investing podcasts have exploded over the past 10 to 12 years, but only a handful have true long term staying power. Here's a list of some of the longest running, consistently active real estate investing podcasts that have built serious legacies. And you know something, we are not number one based on those criteria. This show is ranked number two in the nation. Number one are our friends at the real estate guys radio show hosted by Robert Helms. How many times have I recommended that you go ahead and give them a listen? Of course, I'm just freshly coming off spending nine days with them as one of the faculty members on their summit at sea. Their show started in 1997Yes, on actual radio, before podcasts even existed, and chat GPT goes on to say that they're one of the OGS in the space. It focuses on market cycles, investing strategies and wealth building principles known for its international investor perspective and high profile guests like Robert Kiyosaki. All right, that's what it says about that show. And then rank number two is get rich. Education with me started in 2014 and it goes on to say that this is what the show's about. It says it's real estate centric with a macroeconomic and financial freedom philosophy. It focuses on buy and hold investing, inflation, debt strategy and wealth building. Yeah, that's what it says. And I'd say that's about right? And this next thing is interesting. It describes the host of the show, me as communicating with you in a way that's clear, calm and slightly academic. That's what it says. And yeah, you've got to be clear. Today. There's so much competing for your attention that if I'm not clear with you, then I'm not able to help you calm. Okay? I guess I remain calm. And then finally, slightly academic. I. Hadn't thought about that before. Do you think that I'm slightly academic in my delivery? I guess that's possible. It's appropriate for a show with the word education in our name. I guess it makes sense that I'd be slightly academic. So that fits. I wouldn't want to be heavily academic or just academic, because that could get unrelatable. So there's your answer. The number two show in the nation for real estate investing.

Keith Weinhold 20:29

How are things going with your rental properties? Anyway, I had something interesting happen to me here these past few months. Now I have a property manager in one market that manages quite a few of my properties, all these single family homes and I had five perfect months consecutively as a real estate investor. A perfect month means when you have 100% occupancy, 100% rent collection, and zero maintenance or repair costs. Well, this condition went on for five months with every property that they managed. For me, which is great, profitable news, but that's so unusual to have a streak like that, it kind of makes you wonder if something's going wrong. But the streak just ended. Finally, there was a $400 expense on one of these single family homes. Well, this morning, the manager emailed me about something else. One of my tenants leases expires at the end of next month. I mean, that's typical. This is happening all the time with some property, but they suggested raising the rent from $1,700 up to 1725, and I rarely object to what the property manager suggests. I mean, after all, they are the expert in that local market. That's only about a one and a half percent rent increase, kind of slow there. But again, we're in this era where neither home price growth nor rent growth have been exceptional.

Keith Weinhold 22:02

I am in upstate Pennsylvania today. This is where I'm from. I'm here for my high school class reunion. And, you know, it's funny, the most interesting people to talk to are usually the people that have moved away from this tiny town in Appalachia, counter sport, Pennsylvania, it's not the classmates that stayed and stuck around there in general are less interesting. And yes, this means I am sleeping in my parents home all week. I know I've shared with you before that Curt and Penny Weinhold have lived in the s

Keith discusses the rising cost of real estate, predicting that million-dollar homes will become common by 2033 due to: supply scarcity, demographic demand, inflation, and regulatory costs. Over half of U.S. states have cities with starter home prices over $1 million.

Hear about the challenges of investing in beach towns, citing rising insurance costs and maintenance expenses

GRE Investment Coach, Naresh, joins the conversation to highlight the BRRRR strategy for income property investment.

Resources:

Register here for the live online event to learn about 'Unlocking BRRRR Deals in Little Rock' on Thursday, 7/17.

Show Notes:

GetRichEducation.com/562

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, million dollar homes will be normal by 2033 I'll discuss why and exactly where they'll be arriving. Why are more beach towns going bust? What's in the big, beautiful bill for real estate investors? Then how to own income property with just 10% equity in it today on get rich education.

Keith Weinhold 0:28

Mid South home buyers, I mean, they're total pros, with over two decades as the nation's highest rated turnkey provider. Their empathetic property managers use your ROI as their North Star. So it's no wonder that smart investors just keep lining up to get their completely renovated income properties like it's the newest iPhone. They're headquartered in Memphis and have globally attractive cash flows and A plus rating with the Better Business Bureau and now over 5000 houses renovated, there's zero markup on maintenance. Let that sink in, and they average a 98.9% occupancy rate, while their average renter stays more than three and a half years. Every home they offer has brand new components, a bumper to bumper, one year warranty, new 30 year roofs. And wait for it, a high quality renter. Remember that part and in an astounding price range, 100 to 180k I've personally toured their office and their properties in person in Memphis, get to know Mid South. Enjoy cash flow from day one. Start yourself right now at mid southhomebuyers.com that's mid south homebuyers.com.

Speaker 1 1:53

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 2:10

Welcome to GRE from Palm Bay Florida to Palm Springs, California and across 188 nations worldwide, you are inside one of the longest running and most listened to shows on real estate investing. This is Get Rich Education. I'm your host. Keith Weinhold, I think you know that by now, you can also find my written work in both Forbes and the USA. Today, million dollar homes could be coming to right where you live only as the average home, a typical home. Best said is the million dollar median priced home. They're increasingly common across America. We're going to look at the exact areas where this is going to happen next, and why. Though, real estate prices are only up about 2% annually. This time, a plethora of forces are conspiring to push median American home prices ever higher to a million bucks by 2033 the reasons for ever higher future prices on a national basis are supply scarcity. Though, homes aren't as scarce as they were, say three years ago, incessant demographic demand, continued inflation, tariff pressures, heightened regulatory costs, the rate lock in effect remote work and a perpetual construction labor shortage that makes it easier to find a unicorn than, say, a good plumber out there. All these things are conspiring to push long term prices up, up, up, and sadly, this will make first time home buyer dreams, well only dreams, not a reality for so many Americans. CBS News recently called first time homebuyers an endangered species for this reason. Hmm. Then I wonder if the US Fish and Wildlife Service is now protecting these beleaguered, endangered first time homebuyers. Now the typical Canadian single family home costs 779,500 Canadian dollars today. And get this now, of course, some US regions will have rising prices, and others falling prices in the shorter term, although the general direction is up, but more than half of us, states, 28 out of 50, already have at least one city where the median price for a starter home, just a starter home, is a million dollars or more. This is per realtor.com economist. More than half of states have that condition. Now I want a starter home that's defined as 80% or less of the price of an area's median Well, here we go. It is not just trophy cities anymore that are on the precipice of the million dollar club. It's these moderately priced cities that are next in line, and one trend is that they're located near already expensive markets. For example, Stockton, California is two hours inland from San Francisco, and Stockton is best known for well being two hours from San Francisco. That's about it, all right. Well, here is the 2023 median price. And it's 2033 projection, only eight years away, really, just a little over seven years away. This is where we're going. All right, Boise, from 465k up to $1,163,000 million $163,000 Boston, from 623k to 992k and again, these are 2023 median home prices, and then what they're projected to be in 2033 as these million dollar homes become typical, just in these somewhat moderately priced. US areas, let's continue Colorado Springs. 455k up to $1,020,000 I've made two trips to Colorado Springs in the past two years. I really like it. They're really livable with a nice little airport Denver. 548k up to $1,297,000 Honolulu, 638k up to $1,144,000 Portland, 501k to more than doubling to $1,052,000 Sacramento, 558 up to over $1.1 million Salt Lake City, more than doubling from 493k up to $1,064,000 Seattle, 694k up to $1,486,000 and finally, the aforementioned their Stockton, California, 579k up to $1,447,000 million dollar homes are increasingly abundant into places that are surely Not trophy cities anymore. They're projected to come to all these places by 2033 and this is very realistic, because consider this, what will a million dollars even be worth in 2033 just a little more than seven years away, what will a million dollars even be worth then at 3% inflation, just $789,400 All right. Well, what should you do with this information? It gives you perspective, waiting is not helping get comfy with million dollar homes that are like just kind of all right? And here's the thing, a million dollar home that used to be like posh that used to come with a waterfront view or a celebrity neighbor, and today you just get a popcorn ceiling in a mysterious draft in some entire counties, like I've told you before, in San Mateo County, California, the median home price is already over $2 million just an average home county wide. And I also mentioned to you that there's another California County, Santa Clara, California, where the median price is over $2 million but there are more Nantucket, Massachusetts, Pitkin, Colorado and Teton County, Wyoming, all over $2 million county wide. I mean, in places like this, a million dollar home is a gut job. I mean, it needs a renovation. In these places, a million dollar home costs less than half of the county median. So therefore it is so broken down that you might not even be able to get a conventional loan for that property. And notice that the Sun Belt is not on any of these lists for now, despite its growth, there's still vast land and cheaper housing there the southeast and the Midwest, they still feel like America's affordable housing frontier. But you've got to wonder, for how long and what else does this continued low affordability mean? It's the American. Emerging trend that few people see coming, but we've talked about here, it's that common tidal wave, this horde of new renters that are coming, priced out of million dollar homes. Your renters are coming, and what does this mean for you? Well, consider owning low cost rental property in those low cost parts of the nation. We help you do that here, completely free, at GRE investment coach.com a tidal wave of future renter demand means higher rents and higher occupancy rates. Your renters are coming.

Keith Weinhold 10:39

now, last week, on the show, I discussed the Airbnb arms race, how short term rentals really need a serious glow up and some major investment to compete in a lot of markets anymore. This week, let's discuss the trends in another real estate niche that's largely fallen on some harder times, and that is investing in beach town, something that might be more top of mind for us, as we are here in mid summer. The very best beach town for a bikini slim budget is Pascagoula, Mississippi, a gulf shore escape, where the typical listing will run you a mere 166k can you believe that now this gulf coast town of 22,000 people, it is somewhat of an aberration, though, be careful, Pascagoula is affected by a FEMA rule that really limits the amount of renovation that you can do there? Atlantic City, New Jersey, it's another beach town with a jaw droppingly Low typical list price of 242k yeah. Atlantic City, AC is the name long synonymous with gambling and Trump property port. Ritchie, Florida is another notably cheap beach town with just a 255k typical list price. And it's notable because back in 2019 GRE did a real estate field trip there where I and the property provider and a few speakers, we hosted you, and then we toured properties together in a coach, a tour bus, but those neighborhoods were actually about two miles inland, Myrtle Beach, South Carolina, still just 299k. Corpus Christi, Texas and Ocean City, Maryland, are two more notably cheap beach towns now, especially after talking about the million dollar homes and then you hearing about these cheap beach towns. You might be wondering, gosh, should I buy property for cheap in these beach towns? But, you know, buying the beach house is just the start. Rising. Insurance costs and maintenance costs have forced a lot of investors to question whether beach homes are too big of a gamble now with a few investor profiles here were interviewed first Levi Rogers, a retired Green Beret and a real estate broker in San Antonio, he recently shared how his property on the Gulf Coast went from $3,200 a year for insurance to over $11,000 and that's if you can even get coverage without bizarre exclusions, throw in new flood zone Redeterminations and wild HOA fee hikes due to inflation, and your profits are wiped out in an instant. That's what Levi Rogers says about his particular situation. Honestly, coastal property makes me more nervous than my first Million Dollar Listing. Despite loving beachfront real estate, that's what Los Angeles real estate agent Wesley Kang says he's seen changes that would shock most investors. Insurance costs broke another record at his Marina del Rey listing the owner just got hit with a $68,000 annual premium up from 15k last year, while his neighbor, two blocks inland, pays just 7k so in addition to hurricanes and slow and steady beach erosion, that has caused some homes to simply collapse and fall into the sea. Kang, the Los Angeles real estate agent, said his Malibu client just spent his entire summer rental income on mandatory seawall repairs. Another had to install $100,000 worth of water barriers just to keep his insurance. So is a beach home a good investment? Well, owning it really is not the easy, dreamy investment that it used to be. There are some investors that still think it's worth it, but they need to change their strategy. Roger said that he hasn't sold yet. He just. Had to adapt. That's the San Antonio real estate broker. He cut his rental period down to only the high season months. Raised his rates by 22% just totally ended low season bookings, and he promoted high end upgrades to make the numbers work. He says you have to run it like a hospitality business now, not a passive rental, so the ROI can still be there, but only if you're really on top of it, actively managing risk and costs and the guest experience. Otherwise, what you're doing is that you are just financing someone else's vacation. And this is along the lines of what I was discussing last week with short term rentals in general. Real Estate Investor Daniel Roberts, based in Idaho, he says beach properties are now riskier. He has reinvented his approach to stay solvent. He says we improved our rental by presenting the property as a luxury destination, adding concierge services with dining and boat tours and even fitness sessions. With this rental arrangement, we earned 18% more on rental income last year compared to the previous year, is what he says. However, still, our profits have decreased a little since we now pay so much more each month for insurance and for maintenance, if you're shopping for a beach house and hoping for a deal, it might pay to search a bit inland for cheaper properties and insurance rates, and then it's not really a beach house anymore. Elevation is your friend. Certain oceanfront areas are experiencing a steep drop in some places like Florida. I mean, can you buy the dip if you're looking for opportunities in investor areas like Florida, which saw a huge run up of people heading there during the pandemic, but their jobs require them to return to the office. If you're in the market for a vacation property that you can rent out and possibly use as a second home. There are beginning to be more and more choices. So the bottom line here is that many beach towns are in a bust. Their profitability is under attack, chiefly from these insurance premiums that have as much as 3x or more for many in the past three or four years, Hoa costs are up due to inflation, and then there's just simply the threat of more storms and more beach erosion, and just the stress and concern that causes even outside of the insurance cost, short term rentals tend to be right on the coast or A short walk from the beach. The best long term rentals tend to be inland, inland. Long term rentals are long where we have focused here on this show, and they tend to be stable and steady and frankly, kind of boring, but somehow boring in an interesting way, if that's possible, they plod along paying you five ways.

Keith Weinhold 18:05

Hey, is get rich education the number one real estate investing podcast in America. Are we number one? I've got an answer for you on an upcoming episode. It looks like the big, beautiful bill that was signed into law on the Fourth of July will be advantageous for real estate investors. It extends a lot of Trump's 2017, tax cuts and Jobs Act. There are modifications to opportunity zones in the big, beautiful bill. But the big story is that 100% bonus depreciation has been restored, reset, huge that applies to qualified property placed in service from January 20, 2025 through the end of 2029 now is the Time to accelerate acquisitions and renovations to leverage 100% bonus depreciation. I mean, this is great for investors. And what this does is it allows you to fully deduct the cost of qualifying renovations, property improvements and certain building components immediately, instead of you, having to spread the deductions out over several years. Major however, the big, beautiful bill does not do much of anything to help those beleaguered first time homebuyers that endangered species. In fact, in a previous version of the bill, it was going to open up millions of acres of public lands for new development. Now, if that happened, that could have added more housing supply and therefore kept home prices from perpetually rising, and therefore maybe helped first time home buyers. But that provision was removed from the bill before it got passed. All right, so those public. Lands will not be developed. That was not part of this bill, and that's a quick overview of what Trump's big, beautiful Bill means to real estate investors. To review what you've learned so far. Today, million dollar homes are coming to more places, and that's due to supply scarcity, demographic demand, incessant inflation, tariff pressures, heightened regulatory costs, the rate lock in effect, remote work and a perpetual construction labor shortage. More beach town properties are going bust due to surging property insurance costs and the big beautiful Bill has some serious positives for real estate investors, but not for first time home buyers.

Keith Weinhold 20:45

There is a lot happening here at GRE we, including me and our investment coaches here, are talking with you, our investors. We're talking with the nation's top property providers, as we always do, and there's just a lot of real estate news. How can you follow us to keep up on all this? Well, there are three main ways, and they're all free. There's no subscription cost. That is, firstly, through this show, the get rich education podcast. Secondly, our YouTube channel called get rich education. Yes, we are consistently branded. And the third main way to follow us is with our Don't quit your Daydream newsletter. Sign Up Free by texting GRE to 66 866, that's text GRE to 6668 66 and there you go. They're in they are the three main ways to follow us, podcast, YouTube channel and newsletter, and then also our social media channels, get rich education can be found at all the usual places, Facebook, Instagram, Tiktok and x, but our handle is Get Rich ed on x because there is a character count limit there. That's how to follow us. You can find our recommended property providers at GRE marketplace when you're getting actionable, and then to engage with us for a free strategy session to learn your goals and really put you on a financially free trajectory. You can do that with our investment coaches directly book time on their calendar at GRE investment coach.com

Keith Weinhold 22:25

what is happening with the future of the Fed and interest rates, and how can you put as little as 15% even 10% down on an income property? That's next. I'm Keith Weinhold. You're listening to get rich education

Keith Weinhold 22:39

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your pre qual and even chat with President Caeli Ridge personally, while it's on your mind, start at Ridge lendinggroup.com. That's Ridge lendinggroup.com.

Keith Weinhold 23:11

You know what's crazy? Your bank is getting rich off of you. The average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your cash can pull in up to 8% returns and it compounds. It's not some high risk gamble like digital or AI stock trading. It's pretty low risk, because they've got a 10 plus year track record of paying investors on time in full every time. I mean, I wouldn't be talking about it if I wasn't invested myself. You can invest as little as 25k and you kee

Keith discusses the competitive nature of short-term rentals (STRs) and the need for hosts to offer luxury amenities to attract guests.

Long time investing pro, Alex, joins us to cover the BRRRR strategy in Little Rock, Arkansas, an investor-advantaged market, emphasizing its low property taxes and stable cash flow. They explain the BRRRR process, including: buying, renovating, renting, refinancing, and repeating.

The strategy allows investors to scale their portfolios with minimal initial capital, offering a 0% management fee in year one and 4% in year two.

Resources:

Register here for the live online event to learn about 'Unlocking BRRRR Deals in Little Rock on Thursday, July 17th at 8PM Eastern.

Show Notes:

GetRichEducation.com/561

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

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Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE I'm your host. Keith Weinhold, anymore when you own short term rentals like Airbnbs and vrbos, you are in an all out arms race competing to provide amenities like never before. Then what happens when you take the popular burr real estate strategy and overlay it with one of the most investor advantaged markets in all of America. It's a lucrative opportunity. You'll see how and why today on get rich education.

Keith Weinhold 0:32

Mid south home buyers, I mean, they're total pros, with over two decades as the nation's highest rated turnkey provider, their empathetic property managers use your ROI as their North Star. So it's no wonder that smart investors just keep lining up to get their completely renovated income properties like it's the newest iPhone. They're headquartered in Memphis and have globally attractive cash flows, an A plus rating with the Better Business Bureau, and now over 5000 houses renovated their zero markup on maintenance. Let that sink in, and they average a 98.9% occupancy rate, while their average renter stays more than three and a half years. Every home they offer has brand new components, a bumper to bumper, one year warranty, new 30 year roofs. And wait for it, a high quality renter. Remember that part and in an astounding price range, 100 to 180k I've personally toured their office and their properties in person in Memphis. Get to know mid south enjoy cash flow from day one. Start yourself right now at mid southhomebuyers.com that's mid southhomebuyers.com

Speaker 1 1:58

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 2:14

Welcome to GRE from North Conway, New Hampshire to North port, Florida and across 188 nations worldwide. I'm Keith Weinhold, and this is get rich education, happy July, the second half of the year. And my favorite month of the year is your Airbnb fancy enough, because anymore STRS short term rentals have gotten so competitive that hosts treat their properties like white lotus level hotels. Now, STRS were never passive, but they become even less so it is active income. Once upon a time, Airbnb hosts could just sort of drop a few colorful throw pillows on their fold out couch and make a killing. But no more those days are so far gone. The STR game has changed drastically. I mean, you used to be able to list a basic home with generic furniture that you got at Costco, minimal amenities, no Wi Fi, and still get it booked, but today, it will sit empty unless you offer more than just a place to sleep. You have to build an experience for Airbnb guests. Now, increasingly, hosts are doing things like adding outdoor kitchens, arcade machines, putting greens, even basketball. And now, though these upgrades do cost a lot up front, they can pay off. These amenity types can double your nightly rate, but they come with more responsibility and more to maintain. I mean, more guests are expecting a flawless experience. The trend is that Airbnbs are becoming full scale hospitality operations, and if you don't treat it like one, you're going to fall behind. So simply having a nice house that just no longer cuts it, running a short term rental today is nothing like it was even two or three years ago. You used to be able to stand out with a decent bed and colorful throw prolos, but now guests are basically comparing your place to boutique hotels. Hosts are deeply investing in design, forward furniture, layered lighting and featuring spaces that some market as what they call moments like cozy reading corners in these luxurious bathroom setups, adding things like welcome guides and even complete brand identities with a proper. Name and even a logo and a story to give the place some personality, even writing up a history for your property, even if it's not that historic. Now, these sorts of tactics, they actually do, seem to work. Guests will give you more bookings, better reviews, and guests even share the space on social media like it's somewhat of a lifestyle destination now sometimes STR hosts, they team with these other platforms to add welcome champagne in ice buckets on site, sommeliers, private chefs, daily, housekeeping on demand. 24/7 textable concierges, heated plunge pools and other amenities through you partnering with some of these platforms and these upgrades don't come cheap. The publication called the playbook, they featured an STR in Sag Harbor, New York, where the property owner invested $85,000 into overhauling the landscaping and adding a James Turrell Inspired LED light installation. But overall, these improvements boost rental revenue by an average of 40% over what the property was collecting previously. All right, so this is a case study now, though, this STR trend of offering deep hospitality and luxury amenities has turned into more of a job and less about passive income. You know, really, this is free market capitalism, because this is competition to see who can provide the best service at the lowest price, but that's what it is. So this is making real estate less of a good and more of a service. Short term rentals soaring supply, day rate compression and AI driven pricing tools. That means that the just this all nice house with good photos thing that no longer cuts it. It is an amenities arms race now, and of course, this is a national trend. It doesn't mean that it's happening absolutely everywhere. In some places, hosts are able to charm guests simply with something like a freshly baked loaf of banana bread, but the consensus is whether they spend a little or a lot, Airbnb hosts unanimously say that they've got to work harder in order to keep guests happy. It's become more of a business and less of a side hustle than it used to be. You've got more hosts leaning into higher upfront investments because they know guests will pay for a sort of turnkey, Instagrammable experience. And this really is a classic early adopter issue, just like a lot of things, Airbnb launched in 2007 by the way, so this sort of first wave of Airbnb hosts back around 2012 to 2015 they were riding a blue ocean back then. There was virtually no competition. There weren't any standards, and there were plenty of bookings, and that made a lot of hosts pretty fat and happy. But that's not where we are now, really. The bottom line is that in many markets, short term rentals have transitioned from partial passivity to all out hospitality. That's the Airbnb arms race. The average Airbnb nightly rate for North America. Do you care to venture a guess at the average nightly rate? It is approximately $216 per night, and that right there is up 26% from 2020 so it is not up as much as house prices over that five year period from 2020 really, the Airbnb rate is up about as much as the long term rental rate.

Keith Weinhold 8:58

While we're talking numbers a quarter recently ended. Let's hit on our asset class rundown. What's happened to home prices in the past year? Well, when you aggregate all these sources, Zillow, Freddie, Mac case, Shiller, FHFA, in totality, home prices are up 2% single family rents are up 3% apartment rates are down 1% due to their oversupply. The 30 year mortgage rate was 6.9% a year ago, and it's 6.8 now. CPI inflation is 2.4% expressed in year to date terms. Now the SP5 100 is up 5% in the first half of this year, ending near 6200 the dollar is down. That means that it takes more of them to buy gold, which is over $3,300 an ounce, gold is up 27% just from the start of this year, and the oil price is still depressed in the 60s. Per dollar for a barrel, Bitcoin still strong, ending the quarter at 106kthat's your asset class rundown, which we do about quarterly.

Keith Weinhold 9:57

Hey, I really enjoyed meetingside. Of you on this year's terrific real estate guys Investor Summit at sea was concluded about a week ago. It was two days on land in Miami, followed by a week of conferences and fun aboard a Caribbean cruise ship. I really got to meet you and get to know you, because we had nine days together, and as one of the faculty members, I hosted a table at dinner every night, and each night the attendees rotated around to my table, so I got to meet a lot of you and really get to know you, and you got to know me. Yeah, it was as interesting for me to meet you in person, perhaps, as it was for you to meet me, because I like to hear what you're doing in real estate, investing, in everything else. I gave a main stage presentation that was almost an hour of all me, all GRE and also served on five different panel discussions. Oh, it's such a unique event. Get this, I was kind of dressed up to give my main stage presentation, which so many of you, by the way, told me afterwards, that that was your favorite presentation of them all, all week long, because each faculty member made a main stage presentation. But what I want to tell you is, just a few hours after I presented, on the cruise ship, I was shirtless in the water throwing a football around at the beach in St Thomas Virgin Islands. What an event. Fantastic to meet a number of you in person. So far today, I hope what I've shared with you has been informative. Next. It's something informative and really actionable that you can make lucrative that's next. I'm Keith Weinhold. You're listening to get rich education.

Keith Weinhold 11:45

The same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your pre qual and even chat with President Caeli Ridge personally, while it's on your mind, start at Ridge lendinggroup.com. That's Ridge lendinggroup.com.

Russell Gray 12:16

You know what's crazy your bank is getting rich off of you, the average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your cash can pull in up to 8% returns, and it compounds. It's not some high risk gamble like digital or AI stock trading. It's pretty low risk because they've got a 10 plus year track record of paying investors on time in full every time. I mean, I wouldn't be talking about it if I wasn't invested myself. You can invest as little as 25k and you keep earning until you decide you want your money back, no weird lock ups or anything like that. So if you're like me and tired of your liquid funds just sitting there doing nothing, check it out. Text family to 66866, to learn about freedom. Family investments, liquidity fund again. Text family to 66866.

Russell Gray 13:30

Hi. This is Russell Gray, co host of real estate guys radio show, and you're listening to get rich education with Keith Weinhold, don't quit your Daydream. You Keith,

Keith Weinhold 13:38

welcome back to get rich Education. I'm your host. Keith Weinhold, we're talking to a guest not only about an investor advantaged market, but when you overlay a certain strategy with it, this can be highly lucrative for investor returns, and we're with a long time investing pro Alex, welcome onto the show.

Alex Craig 14:04

Hi Keith, thank you.

Keith Weinhold 14:05

Well talking about top US cashflowing market, let's get right to it. Tell us about yours.

Alex Craig 14:11

Little Rock, Arkansas. It's a market that we've been in since 2012. I personally invest there. I've got about 75 doors of multi family, single family. And the reason why it works is just cash flow. Over the years, we've had investors from around the country that have owned portfolios where maybe they're somewhere in Phoenix or Dallas, where they're kind of speculating. This is not a speculation market, and that's why it works for myself. It's consistent. It's very linear, and linear is a word that we use a lot to describe. And if you're going to be a cash flow investor, and that's why I'm in it, it's you want a linear market. You don't want ups or downs, and then you want to make sure it's a growing market too. And Little Rock checks all the boxes of what you would want in a stable cash flow environment market.

Keith Weinhold 14:57

And I think a lot of our investor listeners are. Already pretty keen on that. You get a high ratio of rent income to purchase price. You have laws that heavily favor landlords over tenants. But Alex, in today's environment, people are more conscious about rising operating expenses and higher mortgage expenses, and that's really one advantage that Arkansas can give right now, is with those low property taxes

Alex Craig 15:20

Keith,it's so interesting you mentioned that because I did have a conversation with a client of ours that had a property in another market that he had mentioned how his property taxes had gone up and gone up substantially, which that's to expect. I mean, after COVID, there was a lot of markets saw a huge boost, especially with markets that saw hedge funds come in. Hedge Funds, I believe, ruined a lot of markets, raised the prices. And another reason I like Little Rock, it flies under the radar. You think is Little Rock is a small market, but it's really not. It's, I mean, the population of the city is 250,000 but the metro area, which is a 50 mile radius around Little Rock, is much bigger. And the entire, not only the entire market, metro area, feeds off little rock, really, the entire state does too. But that being said, because it's floating under the radar, the property tax have remained low. They've taken a little bit of bump over the years, because the values steadily go up, but they started low anyway. So with operating costs of insurance, insurance has gone up for a lot of for my own properties in other markets, it's going up, and it's going up in Little Rock too. I mean, it's just the name of insurance, but property taxes have remained low. They've always been low, and that's really a big help as to why this market works for us.

Keith Weinhold 16:30

Talking about flying under the radar, you're talking about, therefore evading a lot of that hedge fund money. Tell us more about the market and some of those anchors and drivers.

Alex Craig 16:40

It's a blue collar town. You've got logistics. Is a market, or is a segment of the industry that has really come on strong over the last few years, Amazon has really put a footprint in the market. Healthcare is a huge, huge market, like I mentioned earlier, not only does the region feed off the direct to the entire state, it's the hub of healthcare for the entire state of Arkansas, of course, it's government. Government provides a lot of jobs. The good thing about government jobs is they're maybe not on a national level anymore, but on a local, state level, they're very it's hard to get let go from a government job, unless now, not on a federal level, but it's very steady, so a lot of steady blue collar jobs, and that's what you want for a strong resident base, especially in the type of properties and 1000 to $1,200 price range, you want those blue collar study growing jobs.

Keith Weinhold 17:31

Yes, you do have those there. It's funny. I'm smiling a bit because I used to be a state government employee, and there's just no way that they ever would have fired me. I was so protective I had to quit in order for them to have to replace me at that job. I'm wondering about the new supply that's come on, Alex, because a number of markets have added supply. I know, for example, that Redfin reports that little rock median home price appreciation is up 7.3% year over year, and with the dynamics going on in the market recently, that typically tells us that there hasn't been that much new supply added. Is that what's going on there?

Alex Craig 18:11

No, there hasn't been a lot of new supply. I just think with little rock and every other market, the mortgage rates have gone up. Home ownership is down during COVID. It was really hard to get an investment property. For what we did, sending out our list every week. It was basically send out our properties, people hitting send and not even knowing what they were reserving. Rates were just low, right? Everybody's jumping in. It was hard to get inventory. So now what we have is, you know, higher rates that scares some people off. It pushes some people out on the market, but it also creates opportunity. I feel like this is the easiest time I've been investing in real estate since 2007 that was the foreclosure crisis, Great Recession, and it was a lot of foreclosures on the market, and that's how I built a big chunk of my portfolio. But now it's just a matter of there's not as many people in it. So for us, there's just more acquisitions for us to go out and get. There's still distressed homes on the market where individuals don't want to hire a realtor, they just want all cash offers. They're ready to get rid of them, and that's where we step in. And without as much competition like I said, we kind of fly under the radar. I feel it creates more just supply inventory for us and for me as an investor, but also for our clients too

Keith Weinhold 19:23

with that in mind, and again, a lot of our audience is already on board, knowing that little rock in Arkansas is a good cash flow market with stable, long term fundamentals, but in order to make it more profitable, you've overlaid it with a certain strategy there in Little Rock. Tell us about that.

Alex Craig 19:45

So the BRRRR strategy, yes, it's able to work now because there's not as many buyers in the market. So basically, the way the burrs strategy works is we acquire a property. I'm just going to use very round, simple numbers for simple math makes it easier on me

Keith Weinhold 19:58

and we're talking the BRRRR. Strategy that's buy, renovate, rent, refinance, and repeat. Those are the five investor steps.

Alex Craig 20:07

correct. And so that's what we do, is we buy. Let's just say the B. Let's take the B, for example, we buy a home, and we buy it for 60,000 where I'm just talking like if I own the home, and then I put $20,000 into the deal. So now I'm all into it for 80,000 and you have to remember, there's some in between, cost of c

Keith discusses the evolution of the real estate market over the past five years, highlighting a 43% price surge from March 2020 to June 2022 due to low mortgage rates, remote work, and government stimulus.

By 2024, single-family home prices stabilized, but apartment values dropped by 30%.

Mortgage rates have remained around 6-7.5% for 20 months, with national home prices rising 2% in the past year.

We introduce two listener guests: Josh Fang, a 28-year-old investor who bought five properties using his income from a mortgage loan officer job, and Nate O'Neil, an experienced investor who leveraged his corporate job to fund his real estate portfolio.

Show Notes:

GetRichEducation.com/560

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host, Keith Weinhold, over the past five years, the real estate market has changed forever. So what are you supposed to do now? Then I talked to two GRE listener guests back to back. Here's some relatable stories this week on get rich education.

Mid south home buyers. I mean, they're total pros, with over two decades as the nation's highest rated turnkey provider, their empathetic property managers use your ROI as their North Star. So it's no wonder that smart investors just keep lining up to get their completely renovated income properties like it's the newest iPhone. They're headquartered in Memphis, and have globally attractive cash flows, an A plus rating with a better business bureau and now over 5000 houses renovated. There's zero markup on maintenance. Let that sink in, and they average a 98.9% occupancy rate, while their average renter stays more than three and a half years. Every home they offer has brand new components, a bumper to bumper, one year warranty, new 30 year roofs. And wait for it, a high quality renter. Remember that part and in an astounding price range, 100 to 180k I've personally toured their office and their properties in person in Memphis. Get to know Mid South. Enjoy cash flow from day one. Start yourself right now at mid southhomebuyers.com that's mid south homebuyers.com.

Speaker 1 1:48

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education. You

Keith Weinhold 1:58

Keith, welcome to GRE from Augusta Maine to Augusta Georgia and across 188 nations worldwide. I'm Keith Weinhold, and you are back inside get rich education if you got trapped in a cave back in 2020, and then you came above ground into the sunlight of 2025 and wondered what happened to the real estate investment market over the last five years. Here's the answer, and what it means to you, even if you weren't trapped in a cave, and I sure hope you didn't have to fight off a bat colony either. During the pandemic housing boom of 2020, to 2022 housing demand soared, in fact, from March of 2020, to June of 2022, prices surged a staggering 43% and rents ballooned too. And that was all amidst a few things, ultra low mortgage rates, a remote work boom and government stimulus. And for many, this unlocked Americans work from anywhere arbitrage. High earners were able to keep their income in, say, New York City or LA, pack up their laptop and head for state income tax free havens like Tampa or Nashville, and builders could not keep up. See housing supply, stock is not as elastic as demand. It's like steering a cruise ship. It doesn't turn out a dime. Inventory was drained, and you know, we had a full on housing supply crash that dipped to its Nadir in February of 2022 but just after that, all types of interest rates spiked later in 2022 to help stifle rising inflation, and what that did is that that quickly quelled homeowner affordability. Return to Office mandates began to gain momentum. National housing demand pulled back a near 180 was quickly underway. Sales volume tanked, and that put a lot of people in the industry out of business, realtors, mortgage loan officers, even furniture companies out of business by 2024 prices in the single family to fourplex space stabilized just with a slow growth rate, but apartment values lost as much as 30% from 2022 to 24 due to devastating interest rate resets under shorter term loans, and meanwhile, the income required to buy a modest starter home rose from 49k in 2020 to 101k last year. That's pretty NAR and the term forever renter became both a meme and a. Reality, and since construction, efforts to build have been uneven, apartment supply actually exceeds demand in a lot of markets, and over in the one to four unit space by adding inventory, there's now 30% more available year over year, but it remains under supplied nationally, especially like I've discussed in the Northeast and Midwest, where building has been meager to completely non existent. That's why it can still feel impossible to find a house in much of Ohio or New Jersey, but you can rent an apartment in Austin, Texas faster than you can get a Wendy's drive through order. Mortgage rates have now stayed in this same range of six to seven and a half for 20 months, and national home prices are up just about 2% in the past year. Now, when Trump began his second term in January of 2025 markets got giddy with business friendly optimism, but this Trump bump that reversed fast when he slapped half the planet with tariffs housing demand cooled again, because no one buys a house when they feel like their job might vanish, alright? So amidst all of that. How do you adjust your strategy with what's changed over the past five years? Well, real estate still pays five ways, and since you're not betting it all on price growth like you would be with most other asset classes, this way, you've always got a side to play with. Affordability down now, rental demand is heating up. With more inventory on the market for you to purchase, there are more motivated sellers, especially those shiny build to rent homes. You do still have to deal with mortgage rates that are higher than they were four or five years ago. Refinance on the rate dips if there's low inflation rates fall if there's high inflation, well, then your debt arose faster. So this is what I mean about you having the ability to play both sides today, and this is big, the number of renter households are at a record high, and they're rising. Landlords are giving fewer concessions. Increasingly, they hold the cards in the single family rental space and annual rent growth is expected to heat up from its current zero to 3% Well, what is next? Short term housing value should stay stable, but not sore, and don't count on a big mortgage rate drop at all for the rest of the year long term, expect more inflation in strong demographic demand. Those things are almost certainties, and that's the good part for real estate investors. So really the overall market report card today, let's grade it out in a report card, sellers are doing just okay. Buyers are strained. First time home buyers are in the worst, the roughest shape. I mean, they grade out at an F single family rental landlords are in good shape because people that want to buy a single family home can't, so they rent apartment landlords, they are strained, and renters are holding steady. They're doing pretty well until steeper rent increases kick in. So really, the bottom line here is that it's been a more tumultuous five years than usual. Housing demand lapse supply and now it's coming closer back into balance today, home prices are stable, the amount of buyers are waning, and the hordes of renters are growing. And where are we today? Well, earlier this month, our president called our Fed chair a numbskull.

Donald Trump 8:56

If we cut our interest by one point for years, we save 300 billion. If we cut it by two points, we save because it's pretty equivalent we're going to save, we're going to spend 600 billion a year. 600 billion because of one numb skull that sits here. I don't see enough reason to cut the rates now.

Keith Weinhold 9:21

oh dear leaving you with a little knee slapper on the five year summary there. Look poor and middle class people feel like everything is expensive. That's because they pay for everything with money they've exchanged their time for. That means they feel like they're paying for everything with their life, because they are and that's exactly why money feels like a scarce resource. Instead, real estate investors pay for things according to what our assets are producing for us and what other people's money is producing for us. And that's why we can pay for what we want, and money feels like an abundant resource, not a scarce one. That's what today's two listener guests discovered somewhere along their path, fueled by this show. Now sometimes I answer your listener questions here on the show when you write into us at get rich education.com/contact, other times, I bring listener guests right here onto the show. That's what we're doing today. Today's both happen to be based in California. The first guest is a young investor, and the second guest more experienced. These were just recorded. Understand they aren't professional speakers. And also, if you bear with a few early audio difficulties with our first guest, you're going to be rewarded with some relatable takeaways. Our first listener guest, Josh Fang, started listening to the get rich education podcast as a college student in 2016 or 17. He first heard episode 84 that's when Robert Kiyosaki made his first appearance here. That episode was called the rich don't work for money. Then he went back to Episode One and listened to them all, 560 episodes. Now let's meet him.

This week's GRE listener guest is a 28 year old real estate investor based out of Irvine, California. That's SoCal, and he has already reached what he calls semi work, optional status, fantastic. He's been a GRE listener since 2017 that was at age 20 when he was a junior in college. The GRE podcast inspired him to become a mortgage loan officer, and he's become a top performer at doing that, originating loans after graduating college. He used the money from that mortgage loan officer job starting at age 22 to buy five income properties, two through mid south home buyers and three elsewhere. By the way. Again, he's 28 now. GRE quite literally shaped his adult life, and having enough passive income to fully retire is pretty much his only goal. Now he's got passion for talking financial freedom through smart borrowing, strategic thinking and action over perfection. Oh, I love that. Hey, welcome to GRE. Josh Fang, thank you for having me. I really appreciate it here on the show, I talk about borrowing and lending a good bit, because if you're gonna make something of yourself, you need to leverage the efforts of others. So tell us about how you got your first job in the mortgage industry and how it set the foundation for your investing journey. Josh,

Josh Fang 12:31

when I graduated, it was really rough. I had a business degree which didn't really open up too many doors. At that time, I couldn't find a job for six months, I was just applying everywhere that I could. Now keep in mind this entire time, I'm looking for a job. I'm listening to your podcast, and you know, how can I the income and the money to purchase some rental properties for some passive income? And one company responded to my resume for a mortgage company. So I was able to get an interview, and I actually got the job by quoting, you know, mortgage guidelines that I learned from your podcast. Your Podcast, such as, for an FHA loan, you need three and a half percent down. For a conventional you need 20% down, just the most basic of the most basic mortgage guidelines. And actually was able to land a job, and in the very beginning, they start you off pretty much. I mean, as a telemarketer, it's pretty rough, long hours, you work weekends, I was making $17.48 at the time per hour, and with that basic income, the 17.48 an hour, I actually was able to buy my first rental property without even the two years work history. And the way I did that was by using my college degree as work history, because there is actually a guideline to where, if you have degree that is in the same field as where you work, it does actually be counting work history. And it was really funny at the time, I was living with my parents, another document that I needed to go through underwriting. I needed a letter from my dad, a signed letter from my dad saying I didn't pay rent because I was living at home. And off that 17.48, an hour, I was able to buy my first rental property. And from mid south home buyers, everyone there was so great. They were so helpful in helping me through the loan process, through selecting a property, and I was able to close. And the time that I bought my first rental I was only 22 years old.

Keith Weinhold 14:20

This is remarkable on a few levels, with just those few lines, about three and a half percent down FHA or 20% down conventional that sounded compelling enough for someone to want to give you an opportunity and then off that modest starting wage, how that really helped you accumulate to buy income property and yeah, when you're buying in those investor advantage places, those prices are low, but that's still pretty remarkable that you were able to do that. So talk to us some more about that, buying your first rental property at age 22 surely younger than most people about that process and the mindset and really that leap of faith that it takes Josh because most people are not doing this.

Josh Fang 15:00

Yeah, absolutely. And I think I had a really big leg up in terms of mindset, because I was starting to listen to your podcast when I was so young, when you're young and you're growing up and you're a young adult in college, you know, you hear from your teachers, your parents, your friends, older people, and they say, oh, invest in the stock market. Buy a primary residence to live in. And the big thing that I learned is I don't live in the same world as the world that my parents grew up in, and I can't invest the same as well. Great point there's, I live in Southern California. The medium house price of where I live in, in the city of Irvine, is $2 million yeah, that's ridiculous. I would never, ever be able to purchase a primary residence out here, and buying stocks are at all times highs. I mean, that's arguable, but I think stocks are quite overfit. So investing there didn't make too much sense. And what you always talked about in terms of building a second flow of income, having that be passive to where I don't need to work regularly, is what really motivated me to move towards that. And in terms of making the first step, I think the most important thing by far, is just setting a goal, saying at least for myself, it was, hey, I want to own a property. I want to provide safe, affordable housing to a tenant, and I want to be able to make money off of that, to where I don't need to do something physically for it every single day. And then after that, it just about taking the steps. The first things first is I reached out to some of the house providers. In that case, it was mid south home buyers, gave them a call, spoke to them, say, Hey, can I please be put on your list? Perfect. Then it was just continuing the work, doing more research, continue listening to your podcast, learn tidbits here and there, lots of Googling, lots of Googling, looking up terms that I didn't understand when I read through the analysis of the property. Hey, what does this mean? What does that mean, Googling it, learning one step at a time. And then when it came time and I was actually receiving properties that I could buy, it was about getting the mortgage, and it was about, hey, let's just move one step at a time. Okay, today I need to get these documents, and the next step, I need to get these documents. And before you knew it, I was signing with a notary closing on my first property,

Keith Weinhold 17:10

the autodidactic approach, meaning the self taught approach, with some assistance from my show. But yeah, oftentimes listening to the show can be the stimulus to make you want to learn more, probably, because I talk about the why for real estate, and if you don't know your why, you won't care about how So Josh, are you doing something that some people do in high cost areas, like you live in in SoCal? Are you renting your own place? And then you provide rental housing to others outside your own area. In investor advantage places is that your setup?

Josh Fang 17:44

100% where I live in Irvine, it is extremely, extremely low crime. Everything's a planned unit development. It is beautiful out here. There's trees, there's lots of different foods from different cultures. I absolutely love living here. The only issue is is it's ridiculously expensive. I live in a very nice luxury apartment complex, and I pay of extremely high rent that normal people probably wouldn't be able to pay. But rather than coming out of my pocket, I use the cash flow for my rentals to pay for my rent over here. So it's kind of like I'm building equity, even though I'm just renting, and I get to live the life that I want to live, where I want to live it, while still being able to invest the proper way. In my opinion

Keith Weinhold 18:26

that's beautifully said and well thought out. And part of doing that, Josh is this borrowing money, which I think to lay people, is scary, and for someone in their 20s to borrow money, that could really bring a good bit of trepidation, because that goes against the grain of what so many people do. But of course, we talk around here about how borrowing money like you have for your rental properties in other states outside California really is not something to fear. So can you tell us more about how you approach that mindset?

Josh Fang 18:57

Absolutely, and it's always hilarious when someone asks you if you if you have any debt, and you tell them $500,000 when you're 23,24 years old, the biggest thing about borrowing money is now, again, there's different types of debt. So I'm not saying, hey, go buy some expensive car that you're going to be backwards on in a few months. Don't get a bunch of credit card debts at 24% interest rates. I'm talking about debt from a with a collateral attached to it, such as a mortgage. The way I like to think about borrowing money is borrowing like a bank, because your money has value. Whenever I have money in the actual bank, it doesn't feel like it, but I'm actually lending money to the bank. They're taking the money that I have deposited and lending it out to other people at higher rate than what they're paying you back. That's how they're actually making the money. I'm thinking like a bank. And of course, that's exactly how it is with borrowing money for rental properties. The interest rate that I have to pay on my mortgage is so much lower than how much income I'm receiving by actually renting it out and providing housing for someone. And then, of course. Tax deductions.

Keith Weinhold 20:00

Sure you're creating arbitrage there when it comes to paying off or aggressively paying down a property. I me

Keith discusses the new power shift in the housing market, where buyers now have more power in the Northeast and Midwest.

Ken McElroy joins us to discuss the current state of the real estate market, highlighting a significant decline in apartment building values and a predicted further drop in home ownership rates, potentially below 60%.

They note that while some states, like Arizona, have surpassed pre-pandemic housing supply levels, others, like the Northeast and Midwest, still face shortages. Ken emphasizes the importance of affordability and the shift towards renting, predicting a significant increase in renters.

He also shares insights on strategic property investments and the benefits of buying at current market lows.

Resources:

Use the discount code "KEN10" to get a discount on the Limitless Expo event.

Show Notes:

GetRichEducation.com/559

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, apartment building values have crashed about 30% in the past few years. Well, it's the opinion of today's qualified guest that it's going to get even worse from here. We'll also discuss why rents in the Phoenix area are declining, and a bold prediction on a collapse in the home ownership rate and the hordes of renters that that will create all today on get rich education.

Mid south home buyers, I mean, they're total pros, with over two decades as the nation's highest rated turnkey provider, their empathetic property managers use your ROI as their North Star. So it's no wonder that smart investors just keep lining up to get their completely renovated income properties like it's the newest iPhone. They're headquartered in Memphis and have globally attractive cash flows and A plus rating with a better business bureau and now over 5000 houses renovated. There's zero mark up on maintenance. Let that sink in, and they average a 98.9% occupancy rate, while their average renter stays more than three and a half years. Every home they offer has brand new components, a bumper to bumper, one year warranty, new 30 year roofs, and wait for it, a high quality renter. Remember that part and in an astounding price range, 100 to 180k I've personally toured their office and their properties in person in Memphis, get to know Mid South. Enjoy cash flow from day one. Start yourself right now at mid southhomebuyers.com that's mid south homebuyers.com

Speaker 1 1:59

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 2:15

Welcome to GRE from the Tigris to the Euphrates to the Mississippi and across 188 nations worldwide. I'm Keith Weinhold GRE founder Forbes real estate council member, Best Selling Author, look for my work in the USA today as well, and you are back inside for another wealth building week of get rich education. What's all that really mean? Ah, I'm just another slack jawed mouth breather with a mic here. Before we get to today's guest, Ken McElroy, let me tell you about housing's new power shift and where we're at today. Three to five years ago, sellers held all the power in virtually every market because the housing supply was so miserably low everywhere. So you had more one tours of real estate and few that were willing to sell. That is still mostly true on a national level, but the new power shift is about the fact that the Northeast and Midwest are replete with home buyers. Queues of buyers are lining up for the few available properties like I've touched on before, and look low available housing supply in these areas, the Midwest and Northeast, that's not a symptom of mass in migration. Hordes of people are not stampeding into Buffalo for the nightlife. It's all due to chronic under building, partly from strict regulation, especially in the Northeast. A big part of the power shift, though, is that we now have fully 10 states that are above pre pandemic supply levels, and you'll notice that none of these are in the Midwest and Northeast. The 10 states are Arizona, which we'll talk about more today, Colorado, Florida, Idaho, Hawaii, Oregon, Tennessee, Texas, Utah and Washington. Here in these places, is where the tables have turned, because supply is catching up with demand in those 10 states. So that's where we're seeing softer home price growth and where buyers have the power, these are some of the states where you can find better deals. Motivated sellers and builders in these places will often buy down your mortgage rate, give you closing cost credits or reward you with incentives, like a free year of property management. In fact, our GRE investment coaches guide you for free to exact property addresses where builders will buy down your mortgage rate to 5% today, one of them will even give you a $9,800 post close credit instead, if you so choose. Often do. Those like that are in those 10 states. They're elsewhere too. You can get started at GRE investment coach.com, conversely, 40 states have less for sale housing inventory than they did as compared to pre pandemic times. This is where sellers still have the power some of the most competitive markets in the nation are buffalo, Hartford, Providence and Boston, where more than 10 active home buyers vie for every single listing. That's per Zillow. That's sort of the real estate equivalent of a Taylor Swift or Beyonce ticket queue. At the other end of the spectrum, shoppers have an easier time in Miami with only 2.6 shoppers per listing, followed by Houston at 3.4 New Orleans at 3.5 and San Antonio at 4.3 nationally active listings are up 31% over last year. That's quite a bit, but we're still 12% below pre pandemic, 2019 inventory levels. And is all this good news or bad news? It totally depends on who you are. If you're holding property in the Northeast and Midwest, you're pretty happy about this strong appreciation in the single family space, but in the southeast, appreciation is non existent. There's even mild depreciation, especially in parts of Florida. If you're looking to own more property in the nation's southeast quadrant, you're now enjoying less buyer competition. In fact, sellers are competing for you, and let's avoid being too assuming. Here I've been talking about things on the state level. States are not monoliths. Philadelphia is not Pittsburgh, Seattle is not Yakima. Cities have different supply situations. Even within one city, the scenario varies, of course, really the bottom line here is that today's recovery from 2022 national supply abyss has been an uneven recovery, where builders are frozen, appreciation soars, where builders hustle, buyers win. So if you're looking for deals, find that short queue.

Today's guest is a familiar one to GRE listeners. He's based in Scottsdale, Arizona, which is the Phoenix Metro. Arizona, though it's fast growing, is still just the 14th most populous state, but Arizona is an interesting market, because we're going to get to see what happens when you have an overbuilt condition, like we do there. We'll discuss that market and the national market as well. Get a key gage on the direction of rents, occupancy and prices, first in the single family space, and then we'll talk about apartments. Anyone that's paid attention to real estate that past few years. Knows that when mortgage rates spiked in 2022 single family values have held up, apartment values plummeted due to their interest rate resets. We'll get insight on if the beleaguered apartment space has bottomed out price wise, or if apartment values still have further to fall.

I'd like to welcome in frequent GRE guest, and he was also one of our earliest back in 2015 Ken McElroy. Ken authored a bunch of successful books, both within and outside of the rich dad series. He's also a well known, successful apartment syndicator with over 10,000 units across several states, and he's also in other parts of the commercial real estate sector, including billboards and self storage. So it's really great to have back on the show. Ken McElroy

Ken McElroy 8:57

good to be here, Keith, thank you. It's been 10 years, man, since we've been doing

Keith Weinhold 9:01

this? Yes, 10 years back in episode 25 since you were first here, more than a decade of this. So we know each other's work really well, and it's such an interesting time in the apartment space. I want to get to that later in our conversation today and really find out if you think that the apartment space has bottomed out. But before we do that, let's talk about the single family space. The audience should know that you can meet both Ken and I in person, as we're both faculty members on the spectacular real estate guys Investor Summit C, which is actually underway now. We're recording this just before the summit. So let's discuss the direction of rents and occupancy. We'll get to price later and Ken although most states still have a housing shortage statewide, Arizona's active housing inventory for sale is 24% above pre pandemic levels. That's what realtor.com tells us, and this. Deeply due to a lot of building, a lot of building usually does not bode well for price growth or rent growth. So tell us about rent, direction and occupancy in the single family space in the Phoenix Metro.

Ken McElroy 10:15

There's a bunch of things happening in the Arizona market. First of all, one is we've had a lot of people move here right in the last 4,5,6, years. Yeah, post pre pandemic, post pandemic, all of that. We are a pretty small state. You got Phoenix, got Tucson, you got Flagstaff, a bunch of other small cities that kind of surround some of those. But it's not like a Texas or a Washington or a lot of these California, like a lot of states, and have a lot of cities to draw from. If people move to Phoenix, that's pretty much where they're they start a lot of times, not every time, but and so it's really interesting. When we have net in migration into Arizona, it really moves the needle for most of these cities. Is kind of the point. And so we're always going to be affordable, we're always going to have great weather, it's safe. We got pretty normal politics, I should say, as compared to some of the others, we really do have a growing population. And so what happened? We had a nice run on the real estate. As you do, you know, we had a nice run on the apartments. We had a nice run on the single family that tapered off when the interest rates went up, essentially, right? You know, we actually built too much. We built too many apartments. We built too many houses. When interest rates went up, people kind of pulled back. That's what you're seeing now. So right now, it's a great time to be a home buyer. It's a great time to be a renter in most of those cities in Arizona specifically. And why would that be? It's because they have a lot of choices. So on the single family side, the listings have gone up, and therefore some of the prices have you know, people are starting to negotiate a little bit more. Now here's the interesting thing, Keith, if you measure it on last year or the year before, it has huge numbers, like you just quoted, you know, 24% but what's happening is things are on the market like 40 days, you know, you know what I mean, like from a week or two, it's doubled or tripled, as you know, that's still not a very realistic market. The market is still, in my opinion, pretty healthy. It's not unbalanced, and before it was a seller's market, and so it's just normalizing. And normalizing, to me, if you go over year, over year, over year, is I think MLS says four to six months of inventory, right? I think things are just normalizing. But if you've been through the run, this is like the end of the world, right? But it's not. It's just things are settling down, and it's the greatest time because they're supposed to be a little bit of friction between the seller and the buyer. I believe there should be just about right. It's never just right, as you know, it's usually pulls on one harder on one side or the other. But we just went through an incredible time where the sellers pretty much got whatever they wanted and the landlords pretty much got whatever they wanted, and so this is just pulling back, you know, the tide's going back out. There's no cause for concern, at least in my world at all. It's supposed to be this way, and we need affordability. We need people to be able to buy homes. We need people to be able to rent. Yeah, I'm in the landlord business, but I don't want rents to run. There needs to be a balance there, even though it's good for me, if it does, but it's not good, because what happens is, then the government gets involved, and what they need to get involved in is adding supply, right? And not capping the rents. You know, what they need to do is just work with developers. And you know, because we're growing here in Arizona right now, we're seeing a pullback, but I think it's needed. There's nothing wrong with this. It weeds out a lot of, you know, realtors that weren't doing much, that just got their license, were hanging around, say, with mortgage folks and title people and lazy contractors and all that stuff. So whenever there's a pullback, the professionals win.

Keith Weinhold 14:01

Well, this is some really good perspective here. We're all victims of the recency bias, and, yeah, you're talking largely about market normalization. What sure wasn't normal or healthy, in a lot of ways, was back in 2021 when you might have had 50 offers for one available property, and people had to bid 50k over the asking price, and they might have waived their inspection, which is typically not a good idea when we talk about rents in the direction of rents, especially there in the Phoenix metro with single family homes, which I know your wife, Daniil, is pretty intimately involved with. Typically, this new supply increases competition. It increases the competition for landlords competing for more of those tenants, which is something that typically is not good for rents. Have we seen declining rents in the local market there in Phoenix?

Ken McElroy 14:54

Of course, yeah. And I'll tell you, there's a bunch of factors. So there's always cross currents. People want one. Answer, but there's not right, like, so let's just pick on a whole bunch of things that went wrong at the tail end of all of this. It was Airbnb. Like, Phoenix and Scottsdale are a huge Airbnb market. I've rented Airbnbs there. Sure. It's incredible, right? And so what happened was a lot of people said, oh, I can buy this house, throw some furniture in it. And, you know, I can get 10,15, 20 grand a month in rent out of these things. And they were right. And then what happened was, there just was too many, so became oversaturated. So you're definitely seeing those back on the market. And so interesting fact, Heath, all you got to do is look at the pictures. And if you see bunk beds. You know, it used to be an Airbnb like, you know what I mean? So that was the one, but two, let's don't forget this run that we just had put a lot of people into the rental market for the first time on the single family side too. So we never really had this many landlords on the single family side as well. And so there's all these mistakes that people made. They bought incorrectly. They had capex work. They bought with floating rate debt. And when rates went up, they weren't cash flowing. They wouldn't know how to manage them. So So there's all this stuff that was kind of going on behind the scenes, on the apartment side of the equation, which is where I hang out. Mostly, I watch all this. And because my class A buildings are competing for single family. They have single family typically wins because it has a yard, has a garage. Nonetheless, I gotta pay attention to it. So it's been interesting to watch. At one point you could not find a home in the Scottsdale area under 500 grand period like nothing. And now, of course, those are starting to come down a little bit more, and there's some softness in the rent, so the renters are have more choices. Now, why is that? There's a couple reasons. If you're a renter and you're looking for a place, you know, I'm sure you're considering a house, but not everybody wants a house, especially if you're single or maybe it's just you and somebody else, and maybe you don't have a pet. There's a lot of reasons that people just don't want to have to a home. So you've got condos and you've got apartments and you've got homes, and then you have school districts. So people definitely want to be in certain school districts based on their children. So you have all these cross currents going on, on where people want to be. And so what does all that mean? What that means is there are certain markets, from a rental standpoint, that are doing extremely well, still, both on apartments, on condos and houses. And then there are other markets that absolutely are not just depends on the concentration of all those things and all those factors that are going on. The one thing that's actually disrupting a market more than anything is apartments and condos. Because, for example, Danielle just had a condo that she owned, and the condo was worth, let's say, 300 grand, but it's probably 25 years old now, yeah, and there's apartments going up, you know, a block from there, right? So her renter is said, you know, I'd rather go over here. Brand new amenities, nine foot ceilings, brand new fitness center, all this stuff. So apartments really do reach into that rental market a little bit. And so there is some spillover between that. But primarily what's going on in Phoenix is there's a lot of new construction. And not just Phoenix. This is Tucson and Greater Phoenix. There's a lot of new construction that was started when rates were low. They were started in 2122 and you know, like, because I'm a builder, it could be a year to 18 months when we're opening a project from the time we put our the shovel in the dirt, we're not even open for a good 18 months. So there's a lag period. And those started opening in 23,24 and certainly 25 and these big projects, two, 300 unit projects, which I have several going right now, they're one to two year lease ups, so you could be looking at two or three year lag on some of the housing that's being provided. So that's all here now that is been good for renters. There's a couple horror stories going on, and I'll just explain. So downtown Phoenix, there was a whole bunch of apartment projects and condo projects that were built trying to attract people to live in downtown Phoenix? Well, there's challenges for downtown Phoenix too, and we won't have to get into that. I don't particularly think that there was ever the real demand for the amount of housing. So what you've done is people build a lot of housing in concentrated areas around the stadium in West Phoenix, near the Cardinal Stadium downtown Phoenix, you know, right in the heart of the business district. So if you were to rent something today, it would be four months free on a 12 month lease.

Keith Weinhold 19:48

Wow, that's about the steepest concession I've ever heard of in my lif

Founder of the Raising Capitalists Foundation and previous co-host of The Real Estate Guys Radio show, Russell Gray, joins Keith to discuss the historical and current devaluation of the U.S. dollar, its impact on investors, and the broader economic implications.

Gray highlights how the significant increase in interest rates has trapped equity in properties and affected development. He explains the shift from gold-backed currency to paper money, the role of the Federal Reserve, and the impact of the Bretton Woods Agreement.

Gray emphasizes the importance of understanding macroeconomic trends and advocates for Main Street capitalism to decentralize power and promote productivity. He also criticizes the idea of housing as a human right, arguing it leads to inflation and shortages.

Resources:

Connect with Russell Gray to learn more about his "Raising Capitalists" project and his plans for a new show. Follow up with Russell Gray to get a copy of the Beardsley Rummel speech transcript from 1946.

follow@russellgray.com

Show Notes:

GetRichEducation.com/558

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GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, what's the real backstory on why we have this thing called the dollar? Why it keeps getting debased? What you can do about it and when the dollar will die? It's a lesson in monetary history. And our distinguished guest is a familiar voice that you haven't heard in a while. Today on get rich education.

Mid south home buyers, I mean, they're total pros, with over two decades as the nation's highest rated turnkey provider, their empathetic property managers use your ROI as their North Star. So it's no wonder that smart investors just keep lining up to get their completely renovated income properties like it's the newest iPhone. They're headquartered in Memphis and have globally attractive cash flows and A plus rating with a better business bureau and now over 5000 houses renovated. There's zero markup on maintenance. Let that sink in, and they average a 98.9% occupancy rate, while their average renter stays more than three and a half years. Every home they offer has brand new components, a bumper to bumper, one year warranty, new 30 year roofs. And wait for it, a high quality renter. Remember that part and in an astounding price range, 100 to 180k I've personally toured their office and their properties in person in Memphis, get to know Mid South. Enjoy cash flow from day one. Start yourself right now at mid southhomebuyers.com that's mid south homebuyers.com

Russell Gray 1:54

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 2:10

Welcome to GRE from St John's Newfoundland to St Augustine, Florida and across 188 nations worldwide. I'm Keith weinholden. You are inside get rich education. It's 2025. The real estate market is changing. We'll get into that in future. Weeks today. Over the past 100 years plus, we've gone from sound money to Monopoly money, and we're talking about America's currency collapse. What comes next and how it affects you as both an investor and a citizen.

I'd like to welcome in longtime friend of the show and someone that I've personally learned from over the years, because he's a brilliant teacher, real estate investors probably haven't heard his voice as much lately, because until last year, he had been the co host of the terrific real estate guys radio show for nearly 20 years. Before we're done today, you'll learn more about what he's doing now, as he runs the Main Street capitalist platform and is also founder of the raising capitalists foundation. Hey, it's been a few years. Welcome back to GRE Russell Gray.

Russell Gray 3:19

yeah, it's fun. I actually think it's been maybe 10 years when I think about it, I remember I was at a little resort in Mexico recording with you, I think in the gym. It was just audio back then, no video.

Keith Weinhold 3:24

Yeah, I remember we're trying to get the audio right. Then I think you've been here more recently than 10 years ago. But yeah, now there's this video component. I actually have to sit up straight and comb my hair. It's ridiculous. Well, Russ, you're also a buff of monetary history. And before we discuss that, talk about the state of the real estate market today, just briefly, from your vantage point.

Russell Gray 1 3:55

I think the big story, and I'm probably not telling anybody anything they don't know, but the interest rate hike cycle that we went through this last round was quite a bit more substantial, I think, than a lot of people really appreciated, you know. And I started talking about that many years ago, because when you hit the zero bound and you have 6,7,8, years of interest rates below half a point, the change when they started that interest rate cycle from point two, 525 basis points all the way up to five and a quarter? That's a 20x move. And people might say, well, oh, you know, I go back to what Paul Volcker did way back in the day, when he took interest rates from eight or nine to 18. That was only a little bit more than double. Double is a far cry from 20x so we've never seen anything like that. Part of the fallout of that, as you know, is a lot of people wisely, and I was on the front end of cheerleading This is go get those loans refinanced and lock in that cheap money for as long as possible, because a loan will actually become an asset. The problem is, when you do that, you're kind of married to that property. Now it's not quite as bad. As being upside down in a property and you can't get out of it, but it's really hard to walk away from a two or 3% loan in a Six 7% market, because you really can't take your same payment and end up getting more house. And so that equity is kind of a little bit trapped, and that creates some opportunities, but I think that's been the big story, and then kind of the byproduct of the story. Second tier of the story was the impact it had on development, because it made it a lot harder for developers to develop, because their cost of funds and everything in that supply chain, food chain, you marry that to the 2020, COVID Supply Chain lockdown and that disruption, which, you know, you don't shut an economy down and just flick a switch and have it come back on. And so there's all of that. And then the third thing is just this tremendous uncertainty everybody has, because we just went from one extreme to another. And I think people, you know, they don't want to, like, rock the boat, they're going to kind of stay status quo for a little bit, whether they're businesses, whether they're homeowners, whether they're anybody out there that's thinking about moving them, unless life forces you to do it, you're going to try to stay status quo until things calm down. And I don't know how close we are to things calming down.

Keith Weinhold 6:13

One word I use is normalized. Both the 30 year fixed rate mortgage and the Fed funds rate are pretty close to their long term historic average. It just doesn't feel that way, because it was that rate of increase in 2022 that caught a lot of people off guard, like you touched on Well, Russ, now that we've talked about the present day, let's go back in time, and then we'll slowly bring things up to the present day. The dollar is troubled. It's worth perhaps 3% of what it was 100 years ago, but it's still around since it was established in the Coinage Act of 1792 and it's still the world reserve currency. In fact, only three currencies have survived longer than the dollar, the British pound, the Japanese yen and the Swiss franc. So talk to us about this really relentless debasement of the dollar over time, including the creation of the Fed and the Bretton Woods Agreement and all that.

Russell Gray 7:09

That's a big story, as you know, and I always like to try to break it down a little bit. One of my specialties I'd like to believe, is I speak macro and I speak Main Street. And so when I try to break macroeconomics down, I start out with, why do I even care? I mean, if I'm a main street investor, why do I even care? In 2008 as you know, is a wipeout for me. Why? Because I didn't think anything had happened in the macro I didn't think Wall Street bond market. I didn't think that affected me. One thing I really cared about was interest rates. And I had a cursory interest in the bond market. We just try to figure out where interest rates were going. But for the most part, I thought, as a main street real estate investor, I was 100% insulated. I couldn't have been more wrong, because it really does matter, because the value of the dollar, in other words, the purchasing power of the dollar, and usually you refer to that as inflation, right? If inflation is there, the dollar is losing its purchasing power, and so the higher the inflation rate, the faster you're losing that purchasing power. And you might say, well, maybe that matters to me. Maybe it does. But the people who make the money available to the mortgage community, right to the real estate community to borrow that comes out of the bond market. And so when people go to buy a bond, which is an IOU, they're going to get paid back in the currency that they lent in, in this case, dollars. And if they know, if they're making a long term investment in a long term bond, and they're going to get paid back in dollars, they're going to be worth a whole lot less when they get them back. One of the things they're going to want is compensation for that time risk, and that's called higher interest rates. Okay, so now, if you're a main street investor, and higher interest rates impact you, now you understand why you want to pay attention. Okay, so let's just start with that. And so once you understand that the currency is a derivative of money, and money used to be you mentioned the Coinage Act Keith money, which is gold, used to be synonymous with the dollar. The dollar was only a unit of measure of gold, 1/20 of an ounce. It was a unit of measure. So it's like, the way I teach people is, like, if you had a gallon of milk and you traded, I'm a farmer, and I had a lot of milk, and so everybody decided they were going to use gallons of milk as their currency. Hey, where there's a lot of gallons of milk. He's got a big refrigerator. We'll just trade gallons of milk. Hey, Keith, I really like your beef. I you know, will you sell me some, a side of beef, and I'll give you, you know, 100 gallons of milk, you know, like, Oh, that's great. Well, I can't drink all this milk, so I'm going to leave the milk on deposit at the dairy, and then later on, when I decide I want a suit of clothes, I'll say, well, that's 10 gallons of milk. So I'll give the guy 10 gallons of milk. So I just give him a coupon, a claim, a piece of paper for that gallon of milk, or 20 gallons of milk, and he can go to the dairy and pick it up, right? And so that's kind of the way the monetary system evolved, except it wasn't milk, it was gold. So now you got the dollar. Well, after a while, nobody's going to get the milk. They don't care about the milk. And so now. Now, instead of just saying, I'll give you a gallon of milk, you just say, well, I'll give you a gallon. And somebody says, Okay, that's great. I'll take a gallon. They never opened the jug up. They never realized the jug is empty. They're just trading these empty jugs that used to have milk in them. Well, that's what the paper dollar is today. It went from being a gold certificate payable to bearer on demand, a certain amount of gold, a $20 gold certificate, what looks exactly like a $20 FEDERAL RESERVE NOTE. Today they look exactly the same, except one says FEDERAL RESERVE NOTE, which is an IOU backed by nothing, and the other one said gold certificate, which was payable to bearer on demand, real money. So my point is, is he got money which is a derivative of the productivity, the beef, the soot, the milk, whatever, right? That's the real capital. The real capital is the goods and services we all want. Money is where we store the value of whatever it is we created until we want to trade it for something somebody else created later. And it used to be money and currency were one in the same, but now we've separated that. So now all we do is trade empty gallons, which are empty pieces of paper, and that's currency. So those are derivatives, and the last derivative of that chain is credit. And you had Richard Duncan on your show more than once, and he is famous for kind of having this term. We don't normally have capitalism. We have creditism, right? Everything is credit. Everything is claims on wealth, but it's not real wealth, and it's just when we look at what's going on with our current administration and the drive to become a productive rather than a financialized society, again, as part of this uncertainty that everybody has. Because this is not just a subtle little adjustment on the same course. This is like, No, we're we're going down a completely different path. But fundamentally, your system operates on this currency that is flowing through it, like the blood flowing through your body. And if the blood is bad, your body's sick. And right now, our currency is bad, and so it creates problems, not just for us, but all around the world. And now we're exacerbating that. And I'm not saying it's bad. In fact, I think it's actually it's actually good, but change is what it is, right? I mean, it can be really good to go to the gym and work out before we started recording, you talked about your commitment to fitness, and that if you stop working out, you get unfit, and it's hard to start up again. Well, we've allowed our economy to get very unfit. Now we're trying to get fit again, and it's going to be painful. We're going to be sore, but if we stick with it, I think we can actually kind of save this thing. So I don't know what that's going to mean for the dollar ultimately, or if we end up going to something else, but right now, to your point, the dollar is definitely the big dog still, but I think it's probably even more under attack today than it's ever been, and so it's just something I think every Main Street investor needs to pay attention to.

Keith Weinhold 12:46

And it was really that 1913 creation of the Fed, where the Fed's mandates really didn't begin to take effect until 1914 that accelerated this slide in the dollar. Prior to that, it was really just periods of war, like, for example, the Civil War, where we had inflation rise, but then after wars abated, the dollar's strength returned, but that ceased to happen last century.

Russell Gray 13:11

I think there's a much bigger story there. So when we founded the country, we established legal money in the Coinage Act of 1792 we got gold and silver and a specific unit of measure of gold, a specific unit, measure of silver was $1 and that's what money was constitutionally. Alexander Hamilton advocated for the first central bank and got it, but it was issued by Charter, which meant that it was operated by the permission of the Congress. It wasn't institutionalized. It wasn't embedded in the Constitution. It was just something that was granted, like a license. You have a charter to be able to run a bank. When that initial charter came up for renewal, Congress goes, now we're not going to renew it. Well, of course, that made the bankers really upset, because bankers have a pretty good gig, right? They get to just loan people money. They don't have to do any real work, and then they make money on just kind of arbitraging, you know, other people's money. Savers put their money in, and they borrowed the money out, and then they with fractional reserve, they're able to magnify that. So it's, it's kind of a cool gig. And so what happened? Then he had the first central bank, so then they got the second central bank, and the second central bank was also issued by charter this time when it came up for renewal, Congress goes, Yeah, let's renew it, right? Because the bankers knew we got to go buy a few congressmen if we want to keep this thing going. But President Andrew Jackson said, No, not going to happen. And it was a big battle. Is a famous quote of him just calling these bankers a brood of vipers. And I'm going to put you down. And God help me, I will, right? I mean, it was like intense fact, I do believe he got shot at one point. I think he died from lead poisoning, because he never got the bullet out. So, you know, when you go to up against the bankers, it's not pretty, but he succeeded. He was the last president that paid off all the debt, balanced budget, paid off all the debt, and we got kind of back on sound money. Well, then a little while later, said, Okay, we're going to need, like, something major, and this would. I should put on. I got my, this is my hat, right now, I'll kind of put it on. This is my, my tin foil hat. Okay? And so I put this on when I kind of go down the rabbit trail a little bit. No, I'm not saying this is what happened, but it wouldn't surprise me, right? Because I know that war is profitable, and so sometimes, you know, your comment was, hey, there's the bank, and then there was, you know, the war, or there's the war, then there's a bank, which comes first the chicken or the egg. I think there's an article where Henry Ford and Thomas Edison went to Congress. I think it was December. The article was published New York Tribune, December 4. I think 1921 you can look it up, New York Tribune, front page article

Keith Weinhold 15:38

fo those of you in the audio only. Russ started donning a tin foil looking hat here about one minute ago.

Russell Gray 15:45

I did, yeah, so I put it on. Just so fair warning. You know, I may go a little conspiratorial, but the reason I do that is I just, I think we've seen enough, just in current, modern history and politics, in the age of AI and software and freedom of speech and new media, there's a lot of weird stuff going on out there, but a lot of stuff that we thought was really weird a little while ago has turned out to be more true than we thought. When you look back in history, and you kind of read the official narrative and you wonder, you kind of read between the lines. You go, oh, maybe some stuff went on here. So anyway, the allegation that Ford made, smart guy, Thomas Edison, smart guy. And they go to Congress, and they go, Hey, we need to get the gold out of the banker's hands, because gold is money, and we need money not to revolve around gold, because the bankers control gold. They control the money, and they make profits, his words, not mine, by starting wars, because he was very upset about World War One, which happened. We got involved right after Fed gets formed in 1913 World War One starts in 1914 the United States sits off in the background and sells everybody, everything. It collects a bunch of gold, and then enters at the end and ends it all. And that big influx created the roaring 20s, as we all know, which ended big boom to big bust. And that cycle, which then a crisis that created, potentially a argument for why the government should have more

Keith Weinhold plays a "financial superhero", defending investors against the "greedy landlord" myth.

A Zillow survey reveals the secret sauce of rental success: budget, location, and bedroom count - with pets stealing the show as the ultimate tenant dealbreaker.

He exposes the dollar's sneaky inflation plot, showing how savvy investors can turn borrowing into a wealth-building adventure. Imagine homes that cost half their gold price from 100 years ago - mind-blowing!

Real estate investing isn't just a strategy - it's an epic journey of wealth creation!

Resources:

GREmarketplace.com/OklahomaCity

GREmarketplace.com/Tulsa

Show Notes:

GetRichEducation.com/episode/557

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

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www.youtube.com/c/GetRichEducation

Follow us on Instagram:

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE I'm your host, Keith Weinhold. Are Real Estate Investors greedy by nature? Learn why? In a sense, today's homes are actually half price compared to 100 years ago. Then results from a huge tenant survey that reveals the amenities that you must give renters or else they will leave how media headlines can trick you and more today on get rich education.

Mid south home buyers, I mean, they're total pros, with over two decades as the nation's highest rated turnkey provider. Their empathetic property managers use your ROI as their North Star. So it's no wonder that smart investors just keep lining up to get their completely renovated income properties like it's the newest iPhone. They're headquartered in Memphis and have globally attractive cash flows and A plus rating with the Better Business Bureau and now over 5000 houses renovated. There's zero markup on maintenance. Let that sink in, and they average a 98.9% occupancy rate, while their average renter stays more than three and a half years. Every home they offer has brand new components, a bumper to bumper, one year warranty, new 30 year roofs. And wait for it, a high quality renter, remember that part and in an astounding price range, 100 to 180k I've personally toured their office and their properties in person in Memphis, get to know Mid South. Enjoy cash flow from day one. Start yourself right now at mid southhomebuyers.com that's mid south homebuyers.com

Corey Coates 1:56

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 2:12

Welcome to GRE from Cape Hatteras, North Carolina to the Cape of Good Hope, South Africa and across 188 nations worldwide. I'm Keith Weinhold, and this is get rich education. 100 years ago, you could buy the average home with eight kilos of gold. Today, it only costs you four more on that later. But first, as a real estate investor, has a critic or a tenant ever insinuated some form of these two questions to you, either, is it ethical for you to own multiple homes, or even, are you greedy? Now, I doubt that you're going to be asked that question directly, but sometimes you can feel that that's the vibe that someone else is on. Well, there sure are greedy people in the world. You could be rich and greedy, or you could be poor and greedy. Even the definition of greed is an excessive and selfish desire for more wealth than one needs, often driven by a destructive motive. All right, that's the definition like you're willing to destroy other people in the pursuit of wealth that is rather different than acquiring wealth, which is usually done only when you first fulfill the needs of others. All right? Well, say that your critic makes $60,000 per year. Oh, well, then that means that they're in the top 1% of global income earners. I mean, sheesh, then they're like the Jeff Bezos of the developing world. So to help even things out, should your critic have to send half of their salary to Senegal or Mauritania or Burkina Faso if the critic's home has more than one bathroom in it, or they even own one car. Well, then they're fabulously wealthy by world standards. Then do they have to give it away to avoid being greedy? What if they ever worked overtime for extra money? Like is that evidence of certain greed? All that stuff is ridiculous, preposterous amounts don't create greed Spirit does. There is no implicit Machiavellian intent. If you have more wealth than average, where would you even draw the line? Like, once you hit seven rental properties? Oh, that's just fine, but eight of them is too many, or once you live in a home that costs 50% more than an area's median, then is that when it becomes greed? I mean, this doesn't make sense. Higher housing prices these past five years has to do with the lack of housing supply and with the. Abundance of dollar printing. It's those two things. The culprits aren't rental property owners. The culprits are burdensome development regulations and the Federal Reserve printing all the dollars, not your local landlord. Responsible landlords provide and maintain sound housing, and they do that for complete strangers, they're taking a lot of faith. Oh, so then could the tenant actually be the greedy one, if they both resent and expect that treatment from a stranger for free? I mean, real estate investors, hey, we take on risk, DEBT, TAXES, maintenance, insurance, market volatility, and we have the responsibility of building and maintaining a good credit score in most cases. I mean, you're the one that's truly invested in the property, not a tenant that can choose to move out in 30 or 60 days. Landlords are a bit like umpires. They're rarely appreciated, and they only get noticed when they do something wrong. I know I mentioned to you before that when I buy a property pretty soon, I casually mention to my tenant that, you know, each month, I just have to make them aware. Each month I make a big mortgage payment and I have to pay for property tax and insurance on this place. I mean, it's amazing to see how far that little mention goes with both timely rent collection and that they don't resent you as a landlord over time. See, tenants often don't know this because they've never owned property themselves, and actually, as you know, since I use property managers now, I don't make this mention to tenants anymore. See, to tenants often it can feel like they're just sort of renting air, and the rent payments they make to you are very visible to them. What's invisible to them are all of your expenses. You're the one as the investor that's contributing to communities. You are the good steward of a neighborhood's housing stock, and you provide homes for people who either can't or don't want to buy the myth of the evil landlord. It really just ignores realities. I mean, mom and pop investors own 72% of single family rental homes, and the typical landlord owns fewer than three units. Many don't have 401 Ks. I mean, rental properties are their retirement plan. So most landlords, real estate investors, they're not cigar chomping tycoons twirling mustaches atop piles of gold like Scrooge McDuck. They're regular people. So perspectives like this that can really help you ward off both critics and unaware tenants. And you know what odds are, if they had the opportunity, they would often do the same thing at a time when pensions are rare and inflation runs rampant. Who could blame anyone for seeking assets that grow in value and generate income. Here's what you need to know. Everyone plays the financial game in the context of their own economy. You Your critic and your tenant, your awareness and your mindset from listening to the show is merely more broad than others. If everyone understood that being wealthy is actually a choice like you do, we would all be better off. So the bottom line here is that real estate investors are not villains. They're just people trying to build a financial life raft in a financial ocean that is full of icebergs. Rich people aren't necessarily greedy, just like poor people aren't necessarily lazy. Greed exists in somebody's spirit, not in the amount of your net worth or whatever your income level is,.

All right., Well, heading into the summer here, there are more tenant moves than any other season. Rental demand has stayed fairly strong, not super strong, just fairly strong, with rents only up about 2% annually. When you amalgamate single family rentals and apartments, the share of rentals with a concession is dropping because the rental market is fairly strong, and when renters find a place, a lot of them are staying put, like it's the last lifeboat off the Titanic. Of course, these are all phenomena on a national level, and each local area is different. I mean that right, there is something that I could say on nearly every episode with low affordability, the home ownership rate is down and renter numbers are up. Now. I told you a while ago that it would go down that home ownership rate, and in the latest quarter ended, that home ownership rate has dropped from 65.7 down to 65.1 Percent. And that might not sound like much, but homeownership down six tenths of 1% in just a quarter. That means that there are at least about 500,000 new renters in America. More renters means more rental demand, more occupancy, and it's crucial for you to know what those renters want so that you can best serve them again. You're not greedy. You're trying to serve them as well as you can now, Zillow has an arm. It's called the Zillow group population science. It's something I hadn't even heard of until recently. What Zillow did with this group is they surveyed 36,000 US renters of both single family rentals and apartments to find out what trends are and what renters want. And I read their entire lengthy report. I think it was 40 pages, so that you don't have to and what I did is I pulled out the most salient pieces to help you attract and retain tenants, and the top three criteria that renters really consider essential when deciding whether or not to rent your property are the first thing, and 95% said this is that it's got To be within their budget, second, at 85% preferred location. Hmm, does that mean near tacos and coffee shops? And then the third most important thing renters consider essential at 84% is the preferred bedroom count. After that, the Floor Plan and the layout that fits their preferences was most important. After that, it's the preferred number of bathrooms. So note that the preferred number of bedrooms, then, is more important in making the rental decision than the preferred number of bathrooms, although they both matter. And then after that, in order of decreasing importance, is broadband internet, allowing pets and having common amenities like a gym, a business center, a rooftop and a lounge and those things, those common amenities, they were substantially more important for apartment renters than for single family home renters, as you would imagine. And here's key, a separate survey question was asked, What is the main reason that you passed on a particular property and decided not to rent it. Number one easily was that the property prohibited pets. The second biggest choice had to do with pets as well. It was that the property restricted the pet breed or size. The reasons that renters passed on a particular property are so centered around pets. What do pets rule this housing market? Now, that's kind of how it seems. Now, another thing that this survey revealed is like, gosh, it also seems like the age for doing almost anything in America is up. The median renter is age 42 did you have any idea there? 42 probably older than you thought. And the older people are, generally, the quieter they are, and the less they move. The most common application fee paid is $50 that's what the survey found. Hey, maybe that's one thing that hasn't been slapped with tariffs. It's an online world. The typical renter surveyed reported taking only one in person tour. Everything else is swiping, scrolling or going deep on Google Street View. Basically what tenants do is they check out everything online, and then once they've chosen the place that they want to rent, they often make that decision right there online, and then basically that one in person visit is just them showing up to confirm that there aren't any red flags at that place, that they mostly know that they won. And this is good for you if you're self managing and you're showing the places yourselves. I mean, there are just fewer tire kickers than there were back in the day. I mean, hey, talk to your parents. 25 years ago, rental ads were like four lines in a newspaper, no photos at all, so tenants then they had to show up in person to see what a rental place even looked like. Let's look at the percent of renter households in America by household income, less than $50,000 57% of renters were in that range, 50 to 100k 29% and 100k or more, 15% as far as how much security deposit you need to give, 75% of renters said their first month's rent was required to Secure the rental, and only 25% said that they also had to fork over last month's rent to secure it. In a really strong rental market, you can more often ask for that both first and last month's rent to get in. 40% reported getting their entire security deposit back at the end of the rental. Hmm, I guess the. Others pay for that mysterious carpet stain. Most pay additional fees on the rental, 58% and that's things like water, sewer, garbage, recycling or other utilities. And it even includes payment processing. There some landlords charge for that. And again, what I'm talking about here is single family rentals and apartments combined. All right, so more single family renters are going to pay for separate utilities on top of the rent. Of course, about half of American renters have renter's insurance. At 48% I suppose the others are living dangerously. A typical renter uses four websites or apps in their search and as I'm continuing on here with the results from this Zillow Rental survey of 36,000 renters, it also showed that the top three reasons that current renters say that they decide to stay long term are and this is big. I mean, this is about your retention rate. 72% stay long term because they say rental costs are a good deal, that's why they stay next most important is quiet neighbors. Yes, no drum kits or free range toddlers will help in apartments. One noisy neighbor can upset a lot of tenants, but a noisy neighbor that might not be a problem at all when people are dispersed in a single family rental and then the third most important thing in long term retention is 68% of renters stay in a unit because they can't afford to move elsewhere. Two thirds of tenants said their landlord or property manager notified them of a rent increase in the past two years, 37% of renters said they would be very or extremely likely to buy a home if mortgage rates fell. All right, that's about three in eight renters say that as far as the length of leases in America, 64% signed on for a one year lease, and 24% said their lease is longer than a year. So really, to summarize what you've learned here from that survey is that you need to know your audience, 42 year olds with pets and a strong preference for quiet neighbors. Keep your pricing competitive. Embrace tech. People want to apply and pay and do things online, and your tenants will stick around longer. You can either give a man a fish and feed him for a day, or teach a man to fish and feed him for a lifetime.

Here at GRE, we do both get riched occasion.com. Is where you learn through this very show and our videos over there, and our blog articles and more. The name gre marketplace.com is where you take action and see the markets and providers that make the best income properties nationwide. GRE marketplace is also where you get access to our totally free investment coaching strategy sessions with a real human being that has both an MBA and investing experience. And that's something we added three or four years ago that really helps you be profitable as an investor, get paid five ways so that you can have more income and wealth and perhaps even retire early. We help you find the right exact property addresses. That's what we help you do compared to 100 years ago, homes are half price today. This is fascinating. I'll get into that shortly. I'm Keith Weinhold. You're listening to get rich education.

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Speaker 1 20:17

what's up? Everyone? This is HGTV. Tarek al Musa. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.

Keith Weinhold 20:35

Welcome back to get rich Education. I'm your host. Keith Weinhold, the headlines say homes are so expensive that you'd think millennials would be forced to live in IKEA showrooms. Now, a year or two ago, here on the show, I think I mentioned to you that at that time, it took eight kilos of gold to buy the average home, about 100 years ago, and at that time, only six. Well today, it took eight kilos of gold to buy an average home in 1920 but it's only four kilos now, in terms of gold, homes are half the price today, and I sent you that pretty shocking image showing this in our newsletter a month or two ago. So what in the monetary twilight zone has happened in the past 100 years? Well, a lot of things. The 1913 creation of the Federal Reserve inflated away your dollar's purchasing power over time. This was basically like giving your teen a credit card with no limit and hoping for the best, then removing the dollar's last link to gold redeemability in 1971 that freed the rains for unlimited dollar creation. And Robert Kiyosaki was here to discuss exactly that on the show with us on episode 358 go back and listen to episode 358 if you haven't heard it and you want to. Before long, dollars got so flimsy that dive bars started stapling them to the wall as decor, and it seems like the next stop for the dollar is kindling for your ba

Author and financial expert, Chris Whelan, joins Keith as they explore the intricacies of the housing market's potential future.

Chris drops an intriguing prediction of a possible 20% price correction. They dive deep into the complex world of real estate, examining the pandemic's significant impact on mortgages and economic trends.

The conversation reveals the behind-the-scenes challenges of the housing market, from government interventions to the nuanced effects of interest rates and forbearance programs.

They unpack the struggles in commercial real estate, particularly highlighting the unique challenges in markets like New York's rent-controlled properties.

Chris's new book "Inflated: Money, Debt, and the American Dream" promises an insightful journey through America's economic transformation, tracing how the nation evolved from an agrarian society to a global economic powerhouse.

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, what's the state of the housing market for the next five years, and could what's happening in the foreclosure market affect it? I see relative housing market price stability. My guest sees cracks. This could be somewhat of a debate today, then two great new cash flow and real estate markets in the same state that we're helping your portfolio with on get rich education, mid south home buyers, I mean, they're total pros, with over two decades as the nation's highest rated turnkey provider. Their empathetic property managers use your ROI as their North Star. So it's no wonder that smart investors just keep lining up to get their completely renovated income properties like it's the newest iPhone. They're headquartered in Memphis and have globally attractive cash flows and A plus rating with the Better Business Bureau and now over 5000 houses renovated. There's zero markup on maintenance. Let that sink in, and they average a 98.9% occupancy rate, while their average renter stays more than three and a half years. Every home they offer has brand new components, a bumper to bumper, one year warranty, new 30 year roofs. And wait for it, a high quality renter, remember that part and in an astounding price range, 100 to 180k I've personally toured their office and their properties in person in Memphis, get to know Mid South. Enjoy cash flow from day one. Start yourself right now at mid southhomebuyers.com that's mid south homebuyers.com.

Corey Coates 1:56

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 2:12

Welcome to GRE from Edison, New Jersey to Edinburgh, Scotland, where I am today, and across 188 nations worldwide, I'm Keith Weinhold, and you are back for another wealth building week on get rich education. Today's guest came to me recommended. It came from a guest that we've had on the show here before, Jim Rickards and his daughter Ally Rickards. His name is Christopher Whelan. He has a distinguished background. Comes from a prominent family, and he's the author of a new book that just published a few weeks ago. His father, Richard Whelan, was the biographer of Joe Kennedy, and was advisor to presidents and Fed chairman and today's guest, his son there, Chris. He has done a lot of work in DC. He lives just north of New York City today. So I guess coming recommended from Jim Rickards and learning a few things about today's guest helped me want to host him on the show. So though I'm just meeting him for the first time right here on the show, as it turns out, I learned that he has mentioned on other channels that real estate prices could correct down 20% and fall back to 2020 levels. I absolutely don't see how that's possible in any way. I'm going to bring that up with him, so we'll see. This could turn into somewhat of a debate. Like I said last week, I believe that significantly falling housing prices. That's about as likely as grocery store prices falling back to 2020 levels. Yes, I am in Edinburgh, Scotland today. It's my first time here. My mom, dad and also my brother's entire family came over from the US to meet up. It's been great. We're taking in all the best sites, Edinburgh Castle, other castles, the Scottish Highlands, Loch Ness, though I don't believe in any Loch Ness monster at all. I mean, come on, what a hoax. And we're seeing some other sites, though it didn't really interest the others, which I could understand. I visited the home where Adam Smith once resided, and I might put my video about that on our get rich education YouTube channel, so you could check that out over there. Of course, Adam Smith is considered the father of modern day economics for his work on supply versus demand and the GDP concept, the invisible hand, concept, much of that work conveyed in his magnum opus, The Wealth of Nations, published in 1776 as for the present day, let's meet this week's guest, including me, meeting him for the first time.

I'd like to welcome in a first time guest. He's the author of a widely acclaimed new book. It's named inflated money, debt and the American dream. It just released, and the book couldn't be more timely with the multitude of challenges related to inflation, many involving the housing market in his earlier books, he's been known, frankly, for just telling his readers the truth. He's worked at the Federal Reserve Bank of New York in politics and as an investment banker for more than 30 years. Today, he runs Whalen Global Advisors. You've seen him on CNBC in the Wall Street Journal, and now you're hearing him on GRE Welcome to the show. Chris Whalen.

Chris Whalen 5:43

Thank you, Keith, appreciate your invitation.

Keith Weinhold 5:45

Whalen is spelled W, H, A, l, e, n, if you're listening in the audio only, Hey, Chris, we're in a really interesting time in the economic cycle. We all know the Fed has a dual mandate, high employment and stable prices. What's interesting to me is, late last year, they cut rates by a full 1% and this is despite inflation being above target. Makes me wonder if they care more about high employment and they're rather willing to let inflation float higher. What are your thoughts?

Chris Whalen 6:18

I think historically, that's been the case. You know, the dual mandate Humphrey Hawkins, that drives the Fed's actions today was a largely socialist compromise between the Republicans and the Democrats. The Democrats wanted to guarantee everybody a job after World War Two, the legislation was really about soldiers and people who had served their country in many, you know, places around the world, for a long time, and then you would have the depression. So you had a whole generation or more of people that were looking for help when they came home. And that's what this was. But today, you know, there's another mandate, which is called keeping the treasury bond market open. We saw it was during COVID in 2020 President Trump got up, declared that people didn't have to pay their rent or their mortgages, and then didn't do anything. There was no follow up. At the time, folks in mortgage industry kind of looked at each other funny for about 60 days and said, What's going to happen? Because they have to advance principal, interest, taxes and insurance to protect the house. The first rule in mortgage finances protect the asset. But it all worked because the Fed dropped interest rates to zero and we had a boom. We refinanced two thirds of every mortgage in the United States, and that cash flow allowed the finance forbearance for millions of Americans. Now the unfortunate part, of course, was home prices went up double digits for six years. So why we had no affordability today? So, you know, it helped, but it certainly didn't help in some ways,

Keith Weinhold 7:48

mortgage loan forbearance back in the COVID era about five years ago, where you could basically just skip your mortgage payment and then they increase the overall duration of your loan period.

Chris Whalen 8:00

That's right. So you know, your government market, your conforming market, were falling. They also had various schemes, state forbearance for non agency loans. Nobody thought at all about the multifamily sector and the developers that didn't get paid for two years. And we're feeling the impact of that. Of course, today, that's probably the biggest pain point in US economy today is commercial real estate and multi family real estate, and neither one of them involves a consumer. So it gets no attention at all. You read about it in the specialty press, but that's about it.

Keith Weinhold 8:34

And by talking about multi family not affecting the consumer, you're just talking about who's on the owner side there?

Chris Whalen 8:40

precisely if all of the consumers have problems, you'd hear about it, and you do, especially in some of the blue states. I live in New York, so we have some of the more aggressive rent stabilization, rent control laws in the country. And they go back to World War Two. They go back almost a century,

Keith Weinhold 8:58

right? It's those people in the one to four unit space in residential real estate investing that really got the help there.

Chris Whalen 9:06

Well, at least, you know, the world didn't end. Imagine if all of those people had gone to foreclosure. The industry wouldn't have done that. Of course, they would have thrown up their hands and cried for help. But the point is, they made it work. But the cost of making it work that zero interest rate regime that the Fed put in place is still being felt today. If you look at banks which typically have prime large mortgages on their books, the loss given default is zero. Home prices are so high that if somebody actually goes to foreclosure, they sell the house, they pay off the loan easily, and there's usually a large residual left, which would go to the homeowner. So today, you know, if somebody gets in trouble, we do a short sale, we do a deed in lieu, and off they go. And that's why the stats don't show you the pain that many American families are feeling today, because about 60% of all payoffs of one to four family mortgages are people who. Are exiting the market, they're not going to buy another house. So what that means is that the cost of home ownership, or whatever other factors are involved, has made them make the decision not to go to another home mortgage.

Keith Weinhold 10:13

Yes, we have this historically low affordability that's beginning to be reflected in the home ownership rate. It's trended down from about 66 to 65% recently, we continue to be in this environment here, Chris in the one to four unit space, where those existing homeowners are in really good shape. They have record high equity levels of over 300k A lot of them have their home paid off. About 40% of American homeowners own their home free and clear, and of the remainder, those borrowers, 82% still have a mortgage rate of under 5% and of course, that principal and interest payment stays fixed. So even if there's economic hardship, it's pretty easy for people to make their payments and stay in their homes.

Chris Whalen 11:02

Well, it certainly is for most of the marketplace. If you look at the bottom 20% the FHA market, also the VA market, there's a little more stress there. There's still an awful lot of people who are in various types of forbearance in that market. That's going to end in October. So the Trump administration is pushing most of the rules back to pre COVID approaches for delinquency, for example, what we call the waterfall. And what that basically means is that if an FHA borrower gets in trouble, they'll have one shot at a modification where they lower the loan cost and stick part of the loan out the back to be paid off when the house is sold. If that doesn't take, if they don't re perform, then they're going to go to a foreclosure. We just ended another program for veterans. You know, they had three weeks notice, so now you're going to see a lot of veterans going to foreclosure. Unfortunately.

Keith Weinhold 11:56

yes, this administration is basically making sure that people are responsible or resume their payments. We've seen that student loan repayments needing to resume as well. Most foreclosure rate types are still pretty low, but yes, FHA foreclosure rates are higher than those for conventional loans.

Chris Whalen 12:15

Yeah, the interesting thing is, the veterans delinquency rate is half of the FHA rate, and even though people in uniform don't make a lot of money, they pay their bills. Yeah, it's quite striking.

Keith Weinhold 12:25

Why don't you talk to us more about areas where you see distress in the housing market before we talk about more inflation? Chris, the

Chris Whalen 12:34

key areas of housing stress at the moment are commercial real estate that has become underutilized. COVID drove a lot of this, but also the fact that industries could change their work practices. It could have people work from home. Look at housing. We sent everybody home in 2020 while we increased headcount by a third to address a surge in lending volume. It was insane. I gotta tell you, we were hiring people that we didn't see for months that changed the business model assumptions for a lot of industries. A lot of them moved out of blue states and went down to Florida and Texas. In the mortgage industry particularly, and so we have a lot of older real estate particularly, that is suffering. It has dropped in terms of appraised values. You also have higher interest rates and higher cap rates, that is to say the assumption of returns on the part of investors. So that hurdle has made a lot of these properties impaired, essentially. And then the other subclass is older multifamily properties. Think about those beautiful old apartments in the middle block up on the east side or the west side of Manhattan. They're not big enough to be viable, and so they have become this kind of subprime asset class, much in the way if you recall the signature bank failure, they typically bank these sorts of real estate properties, and now there's nobody that wants them. I think you're going to see some very specific pain coming out of HUD, and also Fannie Mae and Freddie Mac because they bank some of these smaller properties that really aren't bankable by commercial banks. That's what it comes down to. If you're going to read about this and hear about it a lot in the commercial market over next several years. And again, you know, the losses on bank owned multifamily properties today are averaging 100% so that means that there are a lot that have more expenses than simply losing the full loan amount. And you know, if you want to have a bank loan, they're not taking these properties. They don't want them, right? So the bank, REO rate, if you look at the data from the FDIC, is zero. And what that tells you is that they can't sell the properties they don't want them, because if they take ownership, the city's not going to let them abandon the property. They'll have to keep it and maintain it. It's a tough situation. This is. Has evolved over the last 20 years or so, because consumer incomes have been kind of stagnant in real terms. But the cost of operating a property in New York City is not going down. It's going up quite a lot, and the legislation we've seen from Albany doesn't allow owners to recapture expenses, doesn't allow them to renovate apartments. So if I have a rent stabilized apartment, I'll use a real example, in a beautiful building on Central Park South right, to renovate a unit that's been occupied for 20 years, new kitchen, new bathroom, sir, everything services. That's $150,000 so if I'm the owner and I can't recapture that cost. What do I do? I lock the door, I gut the apartment, and I lock the door, and I hope that the laws will change in the future, because I can't rent it, my insurance underwriter will not allow me to rent out an apartment that's not brought up to code. That's New York law, but the folks in Albany don't care about that. We have some really unreasonable people in positions of authority, unfortunately, in some of these states, and you talk to them about these issues, and they don't care. They just pander to consumers, regardless of whether or not it makes sense or not. And that's just the way it is.

Keith Weinhold 16:15

Those evil landlords, quote, unquote, most right evil. They're just mom and pop investors that are trying to beat inflation with real assets, and they have real expenses. Rent Stabilization basically just being a genteel term for rent control, which gives no one an incentive to improve a property for sure

Chris Whalen 16:35

and it reduces the availability of housing ultimately, because nobody builds. You see that in New York right now the home market is pretty tight, up to the conforming limit for Fannie Mae and Freddie Mac so you figure a million, 1,000,002 here in New York. But above that, it's quieted down quite a lot. There's compression in some of the higher end homes. And you know, if you go down south, you see a different problem, which is over building. They didn't want to build here, so they went down to the Carolinas and Texas and Florida. There's a huge amount of both multi family condo type developments and single family homes too. But above that average price level way above half a million dollars.

Keith Weinhold 17:15

Sure, it's made this dynamic where things have been flip flopped in the Northeast and Midwest, where the populations aren't growing very fast, those markets have been appreciating more than those in the high growth southeast, all coming back to supply. They're not bringing on enough new supply in the Northeast and Midwest, Chris has just laid out a few reasons for that, due to this high regulation. And then in the southeast, a high growth area, even though that's where people are moving, we're not getting much appreciation there, because you're able to build and that supply is able to keep up with demand. Well, Chris and I are going to talk more about the housing market and about inflation. When we come back, you're listening to get rich education. Our guest is Chris Whelan, the author of a great new book. I'm your host. Keith Weinhold.

the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your pre qual and even chat with President Caeli Ridge personally. While it's on your mind, start at Ridge lendinggroup.com. That's Ridge lendinggroup.com.

You know what's crazy? Your bank is getting rich off of you. The average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your cash can pull in up to 8% returns and it compounds. It's not some high risk gamble

Discover powerful strategies to maximize your rental property returns and minimize costly vacancies. Learn how top investors are transforming their approach to property management, from tenant retention techniques to smart staffing solutions.

Key Insights:

Master the art of keeping great tenants and reducing turnover

Understand when to scale your property management approach

Explore innovative investment opportunities beyond traditional real estate

Market Trends Spotlight:

Rental demand is on the rise

Emerging investment options offer unique wealth-building potential

Strategic diversification is key to long-term financial success

Explore alternative investment opportunities like sustainable teak forestry - a generational wealth strategy that offers:

Low entry point

Long-term growth potential

International diversification

Whether you're a seasoned investor or just starting out, these insights will help you make more informed, profitable real estate decisions.

Resources:

Learn more about the teak tree investment opportunity at

Gremarketplace.com/teak

Show Notes:

GetRichEducation.com/555

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, learn how to reduce a giant operational expense that you'll have over time your tenant vacancy and turnover, including how many units you must own before you hire your own on site property manager as your employee. Whatever happened to agent commissions in light of last year's NAR settlement, then a timely update on teak tree investing today on Get Rich Education.

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You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Welcome to GRE from Manchester, New Hampshire to Manchester, England and across 188 nations worldwide, I'm Keith Weinhold, and you are back inside one of America's longest running and most listened to shows on real estate investing. This is get rich education. What's all that stuff really mean? I'm just another slack jawed and snaggletooth podcaster, a shaved mammal with a microphone. I'm joining you from here in London, England this week for the first time ever on the show. More on that later. Let's talk about reducing the biggest operational expense that you're ever going to have as a real estate investor, at least the one that you can exert a good measure of control over. That is reducing your tenant vacancy and turnover, that constant menace. Now, I suppose you might say that property tax is your biggest ongoing ops expense, but you've got less control over your property tax rate. So yeah, we're talking about increasing your net income by lowering your VIMTUM operating expenses. Vacancy is the V in that acronym. This is big because this can make or break your ability to have your property create positive cash flow and getting tenant turnover right both increases your income and reduces your expenses. It is springtime currently, and it's soon going to be summer, so it is the right time to talk about this. It's when there is more tenant turnover. The goal here is for you to really move the dial in increase the likelihood that your tenant is going to renew their lease. Now, sure if your tenant gets a new job out of town, they're going to move out. But if they're moving because of too many maintenance issues, well then that's something that you could have fixed. The average tenancy duration in the US over time is two to three years. And of course, that's going to be longer in single family rentals and shorter in apartments. And how long your tenant stays is driven by three factors, the price of your unit, the quality of your maintenance and the quality of your management. Let's say that your tenant moves out. To be conservative, that your vacancy period is two months between tenants. Okay, that's the turnover and the time to lease. It two months is a somewhat longish vacancy period. But come on, it happens sometimes, especially if you're going to make upgrades between tenancies and you're busy with other things in your life, if you have a move out every year at that rate, well, that is too often. That would amount. To a vacancy percentage of 14% you might think it's 17% but it isn't, because it's a 12 month vacancy plus two vacant months, all right, but if instead that tenant moves out every two years, that's just 8% vacancy, and every three years that's just 5% vacancy. Of course, if you keep your vacancy period to only one month rather than two, you can have all those numbers. You can really see how you are increasing your income by retaining the tenant. The most vital thing for you to keep in mind is that fast quality maintenance and good communication are by far the best forms of customer service that a property manager can provide, so prompt, quality maintenance. That's a retention strategy. Being a proactive helps. One strategy you can engage in is to reach out to the tenants two months before their lease is set to renew, and that's the time to give them the new lease price and ask them if they intend to stay. If they say, No, they're not, ask them why. And occasionally, you can sway them if there's been a misunderstanding in your relationship, for example, a lingering maintenance issue that hasn't been addressed, and perhaps they didn't bother to contact you about that, if nothing else, I think I mentioned this to you one time before offering a small reward, like a gift card helps. I mean, creating this sense of reciprocation is really one of the best retention tactics out there, even if the items being reciprocated aren't anywhere near equal value, like the value of a 12 month lease versus you giving them, say, a $50 gift card now, say you've tried those strategies, and none of that works, and your tenant does decide to leave, perhaps 45 days from now, but you know that you've got time in your life to turn over the unit now, and You know that you're going to be really busy with other things in 45 days. One thing that you can do then is shift your strategy to pay the tenant. Say you can pay them as little as 10 or 20 bucks a day to leave early. This way they'll vacate during a period where you've got the time to devote to the vacancy and the turnover and the showings to prospective new tenants, and that way, it's not going to linger vacant as long now, a technique like this is a little similar to an eviction, where if a tenant has violated their lease or becomes non paying, without you having to go through the length of Your court driven formal eviction process, you can pay them a lump sum to leave early. Hopefully that's not your situation, but that can come up. And I think you've heard of it before. This is known as the Cash for Keys strategy. That means to get a tenant that's made some violation against their lease, and you want to have them vacate the unit sooner. This means that you get the keys in your hand and the right to enter when you pay them to leave, rather than having to go through the not so fun eviction process and see a tenant wants to avoid a formal eviction as well, because that goes on their record, and then it can make it tough for that tenant to get rental housing elsewhere. But I dislike the Cash for Keys strategy in order to hold off from a formal eviction, because what that does is that rewards a person that violated a lease, although we know that that might also shorten your economic vacancy period, and it could actually be economically beneficial to you, Cash for Keys. It's just not ethical, though. I know it might be tempting for you, the landlord, the cash for key strategy. It rewards societally immoral behavior. Now, of course, you might be using a professional property manager that does all of this stuff for you, like I do today, but still, these are often the best practices for your manager. And I started out self managing, just like a lot of real estate investors do in the beginning, and that's where I learned strategies and techniques like this for reducing your tenant vacancy and turnover. Now, here's a really interesting question that you may not have had to ask yourself yet, but you may down the road, if you've grown your portfolio to a certain size and you're serious about reducing your vacancy and turnover expense, it might be time to ask yourself one big question, and that is for your management and maintenance. Should you use contractors, or should you start to hire your own employees? Now, if you have a small portfolio, it won't be enough work for you to keep an employee busy, so you should go with contract. Contractors. On the other hand, if you have an apartment complex with on site property management, I would definitely recommend having a make ready crew on site, because it's just so easy for them to get to and from a job site. Now, you should still maintain relationships with contractors as a backup, of course, and you should also have specialists like plumbers, electricians and HVAC people ready to call now, most investors are small and they use off site management, but if you grow big enough someday, or maybe it's two day, the important point about employees is that you really need to stay on them, because every extra hour costs you. You don't want anyone out there who's thinking that speed isn't essential, because they're like, ah, you know, I get paid by the hour. Contractors, on the other hand, they quote you or your manager a job up front. So while an extra day hurts because it's one more day you can't lease the unit, it hurts less than it does if you have your own employees. One problem with contractors is they often can't start right away, and this tends to be more true if you're self managing. See if you use a professional manager. They might have their own in house people so you can leverage their employees without having to manage employees yourself, even if your manager brings in an off site contractor, like an electrician or a plumber. Well, that contractor probably gets a lot of business from your property manager, and they have some sense of loyalty to your property manager, therefore, they're incentivized to show up on time faster than if you're trying to self manage, say, your small portfolio of five properties, and you or your tenant are the ones that call the electrician or the plumber. Well, those contractors are going to be less likely to prioritize you and your infrequent requests, and this is just another reason that I like to employ professional management and not self manage. Now, virtually no new real estate investor is going to hire their own employees, and most are never going to at all. All right, but how do you know? How would you know when it's time to hire your own property manager or your own contractor, and have them on your own payroll and you are their boss, if you've got under 20 to 30 units, all right, typically third party property management or self management with contractors, that's going to make more sense, because having a full time, dedicated employee, it's just not financially justifiable. Below 20 or 30 units, you're not going to be able to keep that employee busy. And I'm generally talking about if you have one apartment building here, or a bunch of single family rentals, only if they're in small, close proximity to each other. What about if you grow up to 30 to 60 units? All right now you're in a gray area. If the property is something that's pretty management intensive, like high turnover, or you own an older building, or you generate a lot of work orders, or you're in a challenging area. Well, at 30 to 60 units, you might justify a part time on site person. So how that could practically work in this 30 to 60 unit gray area, what you can do is have a resident manager that gets free rent, plus perhaps a small stipend from you. Okay, so that's a strategy that you can play in this gray area zone. That way they can be responsive to tenant requests, and you can keep your vacancy and turnover costs down. All right, how about when you're going even bigger and you reach 60 to 100 units. Now you're in the range where a full time on site manager or a maintenance person, starts to make financial and operational sense, because here it's 60 to 100 units. Your staffing model, it might be that you have one full time manager, they do the leasing, the tenant relations, in the admin stuff, and you'll also have a second person, a full time maintenance tech if they're needed, all right? And the final tier here, if you reach more than 100 units, oh, okay, now it is standard for you to have a full on site team. You could be in the hundreds of units. So we're talking about a property manager, a leasing agent, a maintenance lead, a groundskeeper and sometimes also a part time assistant manager. So that's it. That's the hierarchy of how, based on your portfolio size and where they're located, how you can serve tenants well and reduce your vacancy and turnover expense. Yes. All right now, what are some things that can shift those thresholds, those unit counts? Well, high rent or luxury buildings, they often need on site staff at a smaller unit count, very low rent or section eight properties, they may need more intensive oversight, buildings that have amenities, like some of these newer apartment buildings that have a pool and a gym, okay, that can trigger some more staffing needs. And if you own multiple properties that are nearby to each other, well, then you can share employees across those properties. And you've got to look at local labor costs in places like New York City, northeastern New Jersey, parts of New England, Miami or LA, those high cost places. Then breaking even on staffing. That probably takes a bigger property than those numbers that I talked about. But here, we tend to invest in those investor advantage areas, the inland northeast, the South, in the southeast, in the Midwest. Now, if you've got, say, even 50 smaller properties, but they're scattered all over the place, in multiple states, well then of course, you're not going to hire employees. A good general metric to leave you with here is that one on site employee for every 50 to 80 units that you own in the same area, that is common, that is a common industry practice in market rate multifamily apartments right now, these are pretty timeless strategies I've been talking about with you here.

As for what's happening in The market lately, I continue to slowly get more optimistic about the long beleaguered apartment market. A few weeks ago, I talked about how there's finally been greater apartment rent increases, although those rent increases are still historically low. What recently we learned that apartments are seeing a longer duration of tenancy and today, per real page, every single one of the 50 largest apartment markets has posted month over month occupancy gains, and then that's somewhat commensurate with what we're seeing on the one to four unit side, because the home ownership rate has fallen. It just fell from 65.7% down to 65.1 quarter over quarter. Now that doesn't sound like much, but that's actually a substantial drop in the home ownership rate in just one quarter. And fewer homeowners means more renters. So this basically means that the percent of Americans, renting has gone up because you just take the flip side of those numbers. So the rentership rate has essentially risen from 34.3 up to 34.9 in just one quarter. Something that completely makes sense, because we all know that home ownership affordability, especially for that first time, home buyer is lower, more renters. Is good for rental property owners. It's bringing more rental demand, more occupancy and more future pressure on rising rents. Now I want to follow up with you on a story from last year that made a lot of waves in the larger real estate world, but not so much for real estate investors. You surely remember this. That is the NAR settlement that a lot of people thought would result in lower real estate agent fees. Lowered commissions were coming. That's what everybody thought last year. Stories about that were all over the place that realtor fees are about to shrink. What's happened since then? Well, not much realtor fees, they still haven't fallen in any significant way, although the settlement was more than a year ago and this went into effect nine months ago. So to back up for a moment, in case you missed it, what happened is that a group of sellers accused the NAR, the National Association of Realtors, of inflating home costs by letting buyer side and seller side agents communicate about commission rates on the MLS home database, which only agents can see. And a jury agreed, so the NAR settled the lawsuit for over $400 million in damages, and it barred agents from sharing commission rates on those MLS databases. So that was a huge change that was expected to extinguish the globally high five to 6% realtor fee in the United States, because global averages are between one and 3% so as a result, the US real estate industry, they were bracing themselves for up to a 30% drop in the commissions that Americans pay annually in fees. But the new rules. Things have been nothing other than a big nothing burger. It only took a matter of weeks, really, for most agents to realize, you know, what did the agents do? They just simply moved their conversations off the NAR website and over to phone, text and email. That's it. Yes, that's all they did. So since that time, the average commission for buyers agents has barely budged. It ticked down less than 110 of 1% so for example, it ticked down less than 500 bucks on a 500k home that's per Redfin. So agents still expect sellers to pay five to 6% now I'm not against agents. Not only can an agent guide you through the process, what they can do is get you a higher sale price than they could have otherwise, because they really know how to market and advertise your property and reach a greater pool of buyers, but their commission rates have hardly budged. And of course, here at GRE marketplace, we typically use a direct model where agent

Keith discusses the mortgage landscape, emphasizing the benefits of cash-out refinances with Ridge Lending Group President, Caeli Ridge.

They unpack the Trump administration's plan to privatize Fannie Mae and Freddie Mac, which could impact the mortgage market.

Investors are discovering powerful strategies to leverage property equity and optimize their financial portfolios.

By understanding innovative borrowing techniques, savvy real estate investors can access tax-efficient capital and create sustainable wealth-building opportunities.

Consider working with a lender that specializes in investor-focused loan products and provides comprehensive education on the options available.

Resources:

RidgeLendingGroup.com or call 855-74-RIDGE

or e-mail: info@RidgeLendingGroup.com

Show Notes:

GetRichEducation.com/554

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

GetRichEducation.com/ad

Best Financial Education:

GetRichEducation.com

Get our wealth-building newsletter free—

text 'GRE' to 66866

Our YouTube Channel:

www.youtube.com/c/GetRichEducation

Follow us on Instagram:

@getricheducation

Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, we're talking about the mortgage loan landscape in this era. Is title insurance a rip off today? Is it worth it for you to pay discount points at the closing table to get a lower interest rate? Learn about how a cash out refinance. Is your ability to borrow tax free, much like a billionaire does, and what are the dramatic changes that the current administration could take to alter the mortgage environment for years, all today on get rich education.

Speaker 1 0:34

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, who delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast or visit get rich education.com

Corey Coates 1:20

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:36

Welcome to GRE from Liverpool, England to Livermore, California and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education, the voice of real estate. Since 2014 it's been estimated that there are about 800 billionaires in USA, and hey, you might be one of them, but there's a pretty good chance that you aren't well. When it comes to lending and mortgages, you can actually take a page out of a billionaires playbook and do something very much like what they do whenever you perform a cash out refinance if you've got dead equity in a property, and you can borrow against your own home to a greater extent than you can against your rental properties, even either one of those is a tax free event, you've now got tax free cash, and you can use that money on anything from investing it in the stock market To using your proceeds for a down payment on more real estate or buying a boat or going to Disneyland, and you didn't have to relinquish your asset at all. You continue to hold on to the asset. Now, the mechanics are somewhat different, sure, but when you do a cash out refinance like this, it's a bit like billionaires borrowing against their stock. Instead, you're borrowing against the value of your real estate. In fact, listening to this short clip, it's Trevor Noah talking about how billionaires do exactly this, and you'll notice that the crowd laughs because it actually sounds funny that you can really do this,

Speaker 2 3:22

the shares that they hold in a company, because it is an unrealized gain, right? So they go like, yeah, you're worth 300 billion, but we can't tax you on those stocks because you haven't sold the shares, so you don't, like, have the money. And I understand the argument. They go like, No, you don't have it. It's just what it's worth, because it will also crash, and then you have nothing, so we can't tax you on it. Then I'm like, Okay, I understand that. Then Elon Musk offers to buy Twitter, all right? He offers to buy it. And then he says in his offer, he goes, I'm putting up my Tesla stock as collateral. Then I'm like, so you do have it? Then he's like, no, no, no, no, I don't have it. I don't have it. I'm just gonna say so then they accept the offer. He now buys Twitter. Now that they've accepted his offer, he now goes to private equity and banks and like other rich people and whatever. He goes like, can you guys borrow me the money to buy Twitter? And then he's like, I'm I want to buy Twitter because I don't want to sell any of my Tesla shares, so I want to use your money to buy Twitter. And then it's like, but then they're like, What are we loaning it against? And he's like, Well, my Tesla shares. Then I'm going, like, Wait, so, so you, you can, you can buy a thing based on what you have, yes, but when we want to tax you, you can say, I don't have it. Do you hear what I'm saying here?

Keith Weinhold 4:46

Yeah, you can borrow against your real estate if you have substantial equity in it. We'll talk about just how much now billionaires borrow against their stock holdings using financial products like portfolio lines of credit or. For securities based loans. These are the names for how they do it, essentially taking out loans and using their stock as collateral. And this allows them to access cash without selling their assets and without incurring capital gains taxes, much like you can so you can say that you don't want to sell your property in you don't have to go through some capital raising round either, like a billionaire might have to when they're borrowing against their stock. You can just have a more standard mortgage application for your cash out refinance, and you don't even have to have a huge portfolio. I mean, even if you just own one 500k property with 50% equity in it, you can do this so it's available to most any credit worthy person, again, tax free. But of course, this doesn't mean that you always should take this windfall, because it often creates a higher monthly payment. You've got to be the one that makes that decision in controlling your cash flows, that is key. I'll talk about that some more with today's terrific guests. Also the Trump administration's desire to privatize Fannie Mae and Freddie Mac we're going to talk about that and what that would do to the mortgage landscape. I am in the USA today, next week, I'll be bringing you the show from London, England for the first time, the following week, from Edinburgh, Scotland. Yes, the mobile GRE Studio will be in effect. I typically set it up myself, and I usually don't need the help of the hotel staff for an appropriate Sound Studio either. And then shortly after that, I will be in Anchorage, Alaska, where I'm competing in these fantastic mountain running races. And then by next month, that's where I hope to meet up with you in person for nine days of learning and fun, as I'll be in Miami as part of the faculty for the terrific real estate guys invest or summon at sea, where we're all going to disembark from Miami and go to St Thomas, St Martin and the Bahamas, and then after that great event, it is a long flight from Miami back to Anchorage again. And that's got to be one of the longer domestic flights, not just in the nation, but in the world, Miami to Anchorage, and then shortly after that, I will be in the Great Northeast early this summer, New York and Pennsylvania, including for my high school reunion. So I'll really be putting the miles on these next couple months. One interesting thing that I've noticed for next week's show, where I'll be joining you from London, is how much I'm paying per night at both my hotel in England and then later my hotel in Scotland. That's obviously a short term real estate transaction. These are some of the more expensive places in the world, really. So next week and then the week after, I just think you'll find it interesting. I'll tell you how much I'm spending per night in both London and then Edinburgh. And they're both prime locations, where the hotels are the center of London and then right on Edinburgh's Royal Mile. That is in future weeks as for today, let's talk about the mortgage landscape with this week's familiar and terrific guest.

I'd like to welcome in one of the more recurrent guests in our history, so she needs little introduction. She's the longtime president of the mortgage company that's created more financial freedom for real estate investors than any lender in the nation because they specialize in income property loans. It's where I get my own loans for my own rental properties. Ridge lending group. Hey, welcome back to GRE Caeli ridge.

Caeli Ridge 8:57

Thank you, Keith. You know I love being here with you and your listeners. I appreciate you having me.

Keith Weinhold 9:01

You've helped us for so long. For example, who can forget way back in episode 56 Yeah, that's a deep scroll back when Chaley broke down each line of a good faith estimate for us, that's basically a closing statement sheet. She told us exactly what we pay for at the closing table, line by line like origination fee, recording costs and title insurance so helpful. It's just the sort of transparency that you get over there. Buyers pay for title insurance at the closing table. It is title insurance a rip off. A few years ago, a lot of people speculated that title insurance would fade away because the property's ownership could be transparent and accessible to everybody on the blockchain, but we don't really see that happening. So tell us about title insurance, and really, are we getting value in what we pay for there at the closing table?

Caeli Ridge 9:54

Well, I think the first thing I would say is that it really isn't going to be an option as far as I. Know, as long as the individual is going to source institutional funding leverage use of other people's money, they're going to require the lender, aka Ridge lending, or whoever you're working with, they're going to require that title insurance that ensures their first lien position. Doing that title search, first and foremost, is going to make it clear that there isn't some cloud on title, that there isn't some mechanic lien that had been sitting out there for however many years it may have just been around. And those types of things never go away. So for a lending perspective, it's going to be real important that that title insurance is paid for and in place to protect their interests, things like judgments, tax liens, like I said, a mechanic's lien, those will automatically take a first lien position in front of a mortgage. So obviously we're not going to risk that and find ourselves in second lien position in the event of default and somebody else is getting paid before we are. So not really an option. Is it a rip off? I don't know enough about how often it's paid out, and not to speak to that, but I will tell you that it isn't a choice.

Keith Weinhold 11:07

Title Insurance, like Shaylee was talking about. It protects against fraud related to the property's ownership, someone else claiming rights to the property, and this title search that an insurer does it also, yeah, it looks for those liens and encumbrances, including unpaid taxes, maybe unpaid HOA dues, but yeah, mortgage lenders typically require title insurance, and if you the borrower, you might think that's annoying. Well, it does make sense, because the bank needs to protect their collateral. If a bank ever has to foreclose, they need to have access to you, the borrower, to be able to do that without any liens or ownership claims from somebody else. Caeli, how often do title insurance companies mess up or have to pay out a claim? Does that ever happen?

Caeli Ridge 11:50

I mean, if I have been involved in a circumstances where that was the case, it's been so many years ago, they're pretty fastidious. I don't know that I could recall a circumstance where something had happened and the title insurance was liable. They go through the paces, man, they've got to make sure that, and they're doing deep dives and searches across nationwide to make sure that there isn't any unnecessary issue that's been placed on title Not that I'm aware of. No.

Keith Weinhold 11:50

Are there any of those other items that we tend to see on a good faith estimate that have had any interesting trends or changes to them in the past few years?

Caeli Ridge 12:27

Yeah, I've got a good one, and this is actually timely credit reports. So over the last couple of years, something has been happening with credit reports where, you know, maybe three, four years ago, a credit report, let's say a joint credit report, a husband and wife went and applied that credit report might cost 25 bucks. Well, now it's in excess of 100 plus. Some of what we're going to be talking about today, it kind of gets into the wish list of Jim neighbors, who is the president of the mortgage brokers Association. He's been talking to the administration about some of his wishes, and credit report fees is actually one of the things that they're wanting to attack and bringing those costs down for the consumer. So when we look at a standard Closing Disclosure today, credit report costs have increased significantly. I don't have the percentages, but by a large margin over the last couple of years,

Keith Weinhold 13:21

typically not one of your bigger costs, but a little noteworthy. There one thing that people might opt and choose to have on their good faith estimates, so that borrower therefore would actually pay more out of pocket with today's higher mortgage rates. And I'm sure not to say high, because historically, they are not high. Do we see more people opting to pay discount points at the closing table to get a lower rate and talk to us about the trade offs there

Caeli Ridge 13:46

right now, first and foremost, that there isn't a lot of option for investment property transactions, whether it be a purchase or refinance. There's not going to be that option where the consumer gets to choose to say, Okay, I want to pay points for a lower rate or not pay points for a higher rate the not paying points is the key here. There isn't going to be a zero point option for investment property transactions. And this gets a little bit convoluted, and then I'll circle back and answer the question of, when does it make sense to pay the points, more points versus less points? We have been in a higher rate environment that I think a lot of people have become accustomed to as a result secondary markets, where mortgage backed securities are bought and sold, they keep very close tabs on the trends and where they think things are headed. Well, something called YSP, that stands for yield, spread, premium, under normal market circumstances, a consumer can say, okay, Caeli, I don't want to pay any points. Okay, I'll take this higher interest rate, and I don't want to pay any points, because that higher interest rate is going to have YSP, yield, spread, premium to pay compensation to a lender, and you know, the other third parties that may be involved in that mortgage backed security. But. Sold and traded, etc, okay? They have that choice under normal market circumstances. Not the case right now, because when this loan sells the servicing rights, whoever is going to pick up the servicing rights, so when Mr. Jones goes to make his mortgage payment, he's going to cut a check to Mr. Cooper. That's a big one, right? Or Rocket Mortgage, or Wells Fargo, whoever the servicer is, the servicing rights are purchased at a cost. They have to pay for the servicing rights, and let's say that's 1% of this bundle of mortgage backed securities that they're purchasing. Well, they know the math is, is that that servicer is going to take about 36 months before that upfront cost is now in the black or profitable. This all will land together. Everybody, I promise you stick with me, so knowing that we've got about a 36 month window before a servicer that picked up the rights to service this mortgage is going to be profitable in a higher rate environment, as interest rates start coming down, what happens to the mortgage that they paid for the rights to service 12 months ago, 18 months ago, that thing is probably going to refinance right prior to the 36 month anniversary of profitability. So that YSP seesaw there is not going to be available for especially a non owner occupied transaction. So said another way, zero point rates are not going to be valid on a non owner occupied transaction in a higher rate environment when secondary markets understand that the loans that are secured today will very likely be refinanced prior to profitability on the servicing side of that mortgage backed security that is a risk to the lender, yes. So we know that right now you're not going to find a zero point option. Now that may be kind of a blanket statement. If you were getting a 30% loan to value owner occupied mortgage with 800 credit scores, you know that's going to be a different animal. And of course, you're going to have the option to not pay points. The risk for that is nothing. Okay, y SP is going to be available for you, the consumer, to be able to choose points at a lower rate, no points higher rate. When does it make sense to pay additional points? Let's say to reduce an interest rate, the break even math. And you know, I'm always talking about the math, the break even math is actually the formula is very simple. All you need to do is figure out the cost of the points. Dollar amount of the points, let's say it's $1,000 and that's what it's going to cost you to, say, get an eighth or a quarter or whatever the denomination is, in the interest rate reduction. But you aren't worried about the interest rate necessarily. You're looking at the monthly payment difference. So it's going to cost you $1,000 in extra points, but it's only going to save you $30 a month in payment when you divide those two numbers, what's that going to take you 33 months? 30 well, okay, and does that make sense? Am I going to refinance in 33 months? If the answer is no, then sure pay the extra 1000 bucks. But that's the math, the cost versus the monthly payment difference divide that that gives you the number of months it takes to recapture cost versus cash flow or savings, and then you be the determining factor on when that makes sense.

Keith Weinhold 18:10

It's pretty simple math. Of course, you can also factor in some inflation over time, and if you would invest that $1,000 in a different vehicle, what pace would that grow at as well? So we've been talking about the pros and cons of buying down your mortgage rate with discount points before we get into the administration changes. Cheley talk about that math in is it worth it to refinance or not? It's

The Father of Reaganomics, David Stockman, joins us to explore the complex world of international trade and its impact on investors.

Key insights include:

Challenging conventional wisdom about trade policies

Understanding economic forces that drive investment opportunities

Gaining expert perspective on global economic trends

Stockman provides a candid analysis of current trade strategies, revealing:

The true drivers of economic competitiveness

Potential pitfalls of protectionist approaches

Critical insights for strategic investors

The episode cuts through political noise to offer clear, actionable economic intelligence for informed decision-making.

Smart investors look beyond headlines to understand the deeper economic forces shaping their financial future.

Resources:

Check out David Stockman's Contra Corner Newsletter

Show Notes:

GetRichEducation.com/553

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREinvestmentcoach.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"

For advertising inquiries, visit:

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:01

Welcome to GRE. I'm your host. Keith Weinhold, I sit down with a long time White House occupant who was the official economic advisor to an ex president. We get the real deal on tariffs and what they mean to you. Trump gets called out and the ominous sign about what's coming six months from now, today on, Get Rich Education.

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being the flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guests include top selling personal finance author Robert Kiyosaki. Get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com

Corey Coates 1:14

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:30

Welcome to GRE from Brookline, Massachusetts to Brooklyn, New York and across 188 nations worldwide. I'm Keith Weinhold, and you are listening to get rich education, just another shaved mammal behind this microphone here. I recently spent some time with the father of Reaganomics, David Stockman, in New York City, and sometimes an issue so critical surfaces that real estate investors need to step back and understand a broader force in the economy. Three weeks ago, here, I told you how the second and third way, real estate pays you. Cash flow and ROA are sourced by your tenants employment and the future of your tenants employment is influenced by tariffs and other policies of this presidential administration. This is going to affect rates of inflation and a whole lot of things. Now, an organization called the American Dialect Society, they actually name their word of the year, and this year, it is shaping up to be that word, tariff. In fact, Trump has described that word as the most beautiful word in the dictionary. And I think we all know by now that a tariff is an import tax that gets passed along to consumers when it comes to materials used in real estate construction that's going to affect future real estate prices. Well, several key ones so far were exempted from recent reciprocal tariffs, including steel, aluminum, lumber and copper exempted. Not everything was exempted, but those items and some others were but who knows if even they are going to stay that way. And now, when it comes to this topic. I think a lot of people want to make immediate overreactions in even posture like they're an expert in become an armchair economist, and I guess we all do a little of that, me included. But rather than being first on this and overreacting, let's let the policy which Trump called Liberation Day last month when he announced all these new tariffs. Let's let policy simmer a little and then bring in an expert that really knows what this means to the economy and real estate. So that's why I wanted to set up this discussion for your benefit with the father of Reaganomics and I today. In fact, what did Reagan himself say about tarrifs back in 1987 this is part of a clip that's gained new life this year. It's about a minute and a half.

Speaker 1 4:13

Throughout the world, there's a growing realization that the way to prosperity for all nations is rejecting protectionist legislation and promoting fair and free competition. Now there are sound historical reasons for this. For those of us who lived through the Great Depression, the memory of the suffering it caused is deep and searing, and today, many economic analysts and historians argue that high tariff legislation passed back in that period called the Smoot Hawley tariff greatly deepened the depression and prevented economic recovery. You see at first when someone says, Let's impose tariffs on foreign imports, it looks like they're doing the patriotic thing by protecting American products and jobs, and sometimes for a short while at work. Price, but only for a short time. What eventually occurs is first, home grown industries start relying on government protection in the form of high tariffs. They stop competing and stop making the innovative management and technological changes they need to succeed in world markets. And then, while all this is going on, something even worse occurs. High tariffs inevitably lead to retaliation by foreign countries and the triggering of fierce trade wars. The result is more and more tariffs, higher and higher trade barriers, and less and less competition, so soon, because of the prices made artificially high by tariffs that subsidize inefficiency and poor management, people stop buying. Then the worst happens, markets shrink and collapse, businesses and industry shut down, and millions of people lose their jobs.

Keith Weinhold 5:50

Now, from what I can tell you as a listener in the GRE audience, maybe you're split on what you think about tariffs. In fact, we ran an Instagram poll. It asks, generally speaking, tariffs are good or bad? Simply that 40% of you said good, 60% bad. Over on LinkedIn, it was different. 52% said they're good, 48% bad. So it's nearly half and half. And rather than me taking a side here, I like to bring up points that support both sides, and then let our distinguished guests talk, since he's the expert. For example, if a foreign nation wants to access the world's largest economy, the United States, does it make sense for them to pay a fee? I mean, it works that way in a lot of places, when you want to list a product on eBay or Amazon, you pay them a fee. You pay a percentage of the list price in order to get access to a ready marketplace of qualified buyers. All right. Well, that's one side, but then the other side is, come on, let's look at history. Where have tariffs ever worked like Where have they ever been a resounding, long term success? Do they have any history of a sustained, good track record? I generally like free trade. Then let's understand there's something even worse than a steep tariff. There are quotas which are imposed, import limits, trade limits, and then there are even all out import bans. What do terrorists mean to the economy that you are going to live in and that your tenants live in? It's the father of Reaganomics, and I on that straight ahead on Get Rich Education. I'm your host. Keith Weinhold.

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Hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group and MLS, 42056, they provided our listeners with more loans than any provider in the entire nation because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridge lendinggroup.com, that's ridgelendinggroup.com.

Hey

Robert Helms 9:28

Hey everybody. It's Robert Helms of the real estate guys radio program. So glad you found Keith Weinhold in get rich education. Don't quit your Daydream.

Keith Weinhold 9:48

when it comes to White House economic policy like tariffs, taxes and inflation, don't you wish you could talk to someone that's often been inside the White House. Today, we are even better. He was the official advisor to an ex president on economic affairs, a Wall Street and Washington insider and Harvard grad. Today's guest is also a former two time congressman from Michigan. He's a prolific author, and he is none other than the man known as the father of Reaganomics. He was indeed President Ronald Reagan's budget advisor. He was first with us last year, but so much has happened since. So welcome back to the show. David Stockman,

David Stockman 10:26

very good to be with you, and you're certainly right about that. I think we're really in uncharted waters. Who could have predicted where we are today, and therefore it's very hard to know where we're heading, but you have to try to peer through the fog and all the uncertainty and the noise and the, you know, day to day ups and downs that's coming from this White House in a way that we've never seen before. And I started on Capitol Hill in 1970 so I've been watching this, you know, for more than a half century, actually, quite a while. And man, it's important to go through all this, but it's sort of uncharted waters.

Keith Weinhold 11:04

Sure, it's sort of like you wake up every day and all you do know is that you don't know. And David, when it comes to tariffs, I want to give you my idea, and then I want to ask you about what the tariff objective even is. Now, to be sure, no one is asking me how to advise the President. I'm an international real estate investor, but I do most of my business in the US, and I sure don't have international trade policy experience. It seems better to me, David, that rather than shocking the world with new tariffs that kick in right away, it would have been better to announce that tariffs begin in, say, 90 days, and then give nations space to negotiate before they kick in. That's my prevailing idea. My question to you is, what's the real objective here? What are terrorists proposed to do? Raise revenue, onshore companies merely a negotiation tactic? Is the objective? Something else?

David Stockman 12:00

Well, it might be all of the above, but I think it's important to start with a predicate, and that is that the problem is not high tariffs abroad or cheating by foreign competitors or exporters. There is a huge problem of a chronic trade deficit that is not benign, that does reflect a tremendous offshoring of our industrial economy, the loss of good, high paying industrial and manufacturing jobs. So the issue is an important one to address, but I have to say, very clearly, Trump is 100% wrong when he attempts to address it with tariffs, because foreign tariffs aren't the problem. Let me just give a couple of pieces of data on this, and I've been doing a lot of research on this. If you take the top 51 exporters to the United States, our top 51 trade partners, and this is Mexico and Canada and the entire EU and it's all the big far eastern China, Japan, South Korea, India, you know, all the rest of them. If you look at the and that's 90% of our trade, we have 2.9 trillion of imports coming in from all of those countries, and the tariff that we Levy, this is the United States, on those imports, is not high. It's higher than it was in the past, mainly because of what Trump did in the first term, but it's 3.9% now compared to bad times historically, decades and decades ago. That's relatively low. But here's the key point, if we look at the same 51 trading partners in terms of the tariffs they levy on our exports to China and to the EU and to Canada and Mexico and South Korea and all the rest of them. The tariff average, weighted average that they levy is 2.1% so let me restate that the average US tariff is about twice as high 4% around things as what our partners imposed 2% now the larger point is whether it's 4% or 2% doesn't make a better difference. That's not a problem when it comes to 33 trillion of world trade of which we are, you know, the United States engages in about five and a half trillion of that on a two way basis, import, export, in the nexus of a massive global trading system. So he's off base. He's wrong. The target is not high tariffs or unfair foreign trade. Now there are some people who say, Well, you're looking at monetary tariffs. So in other words, the import duty they levy on, you know, exports to South Korea or India or someplace like that, right? And that, the real issue, supposedly, is non tariff barriers. For instance, you know, some governments require you that all procurement by government agencies has to be sourced from a domestic supplier, which automatically shuts out us suppliers who might want that business. Well, the problem is we're the biggest violator of the non tariff barrier in that area. In other words, we have something like $900 billion worth of state, federal and local procurement that's under Buy America policies, which means EU, Mexico, Canada, China, none of them can compete. Now I mention that only as one example, because it's the kind of classic non tariff barrier, as opposed to import duty that some people point to, or they point to the fact that while foreign countries allegedly manipulate their currency, but you know the answer to that is that number one, overwhelming, no doubt about it, largest currency manipulator in the world, is the Federal Reserve. Okay, so it's kind of hard to say that there's a unfair trade problem in the world because of currency manipulation. And then there is, you know, an argument. Well, foreign governments subsidize their exporters. They subsidize their industrial companies, and therefore they can sell things cheaper. And therefore that's another example of unfair trade, but the biggest subsidizer of tech industry, and of a lot of other basic industry in the United States is is the Defense Department. You know, we have a trillion dollar defense budget, and we put massive amounts of dollars in, not only to buying, you know, hardware and weapons and so forth, but huge amounts of R and D that go into developing cutting edge technologies that have a lot of civilian applications that, in fact, we see all over the world. That's why we're doing this broadcast right now. The point is that problem is not high tariffs because they're only low tariffs. The problem is not unfair trade, because there's all kinds of minor little interferences with pure free markets, but both, everybody violates those one way or another due to domestic politics. But it's not a big deal. It doesn't make that big a difference. So therefore, why do we have a trillion dollar trade deficit in the most recent year, and a trade deficit of that magnitude that's been pretty continuous since the 1970s the answer is three or four blocks from the White House, not 10,000 miles away in Beijing or Tokyo. The answer is the Federal Reserve has in the ELLs building there in DC, not far from the White House. Yes, yes, right there, okay, the Eccles building the Fed has a huge, persistent pro inflation bias, sure. And as a result of that, it is pushed the wage levels and the price levels and the cost levels of the US economy steadily higher, and therefore we've become less and less competitive with practically everybody, but certainly a lower wage countries nearby, like Mexico or China, far away. And you know, there's, it's not that simple of just labor costs and wages, because, after all, if you source from China, you've got to ship things 10,000 miles. You've got supply chain management issues, you've got quality control issues, you've got timeliness issues. You have inventory carry costs, because there's a huge pipeline, and of course, you have the actual freight cost of bringing all those containers over. But nevertheless, when you factor all that in, our trade problem is our costs are too high, and that is a function of the pro inflation policies of the Fed. Give one example. Go back just to the period when the economy was beginning to recover, right after the great recession. And you know the crisis of 208209 and I started 210 unit labor costs in manufacturing in the United States. Just from 210 that's only 15 years, are up 55% that's unit labor costs. In other words, if you take wage costs and you subtract productivity growth in that 15 year period, the net wage costs less productivity growth, which is what economists call unit labor costs, are up 53% and as a result of that, we started, you know, maybe with a $15 wage difference between the United States and.China back in the late 1990s that wage gap today is $30 in other words, the fully loaded way at cost of average wages in the United States. And I'm talking about not just the pay envelope, but also the payroll taxes, the you know, charge for pension expense, health care and so forth. The whole fully loaded cost to an employer is about $40 an hour, and it's about $10 in the United States and it's about $10 an hour in China. Now that's the reason why we have a huge trade deficit with China, because of the massive cost difference, and it's not because anybody's cheating. Is because the Fed, in its wisdom, decided, well, you know, everybody will be okay. We're going to inflate the economy at 2% a year. That's their target. It's not like, well, we're trying to get low inflation or zero inflation, but we're not quite making it. No, they're proactive. Answer is, we've got to have 2% or the economy is not going to work. Well, well, 2% sounds well, that's a trivial little number. However, when you do it year after year, decade after decade, for a long period of time, and the other side is not inflating at the same rate, then in dollar terms, you have a problem, and that's where we are today. So this is impor

In this power-packed episode, Keith delivers a masterclass on the current real estate landscape, blending personal insights with market-changing trends. From the nuanced world of home flooring to the pulse of national housing markets, Keith breaks down complex real estate dynamics into actionable intelligence.

The episode reveals a market at a critical inflection point: declining home sales, shifting apartment dynamics, and emerging investment opportunities. Keith provides listeners with a strategic roadmap to navigate these changes, emphasizing the importance of adaptability and informed decision-making.

Exclusive Takeaway: Get Rich Education offers free investment coaching to help you turn these insights into wealth-building action. Your real estate success journey starts here.

Free Resources:

Connect with a free GRE investment coach at GREinvestmentcoach.com

Show Notes:

GetRichEducation.com/552

For access to properties or free help with a

GRE Investment Coach, start here:

GREmarketplace.com

GRE Free Investment Coaching: GREmarketplace.com/Coach

Get mortgage loans for investment property:

RidgeLendingGroup.com or call 855-74-RIDGE

or e-mail: 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"

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Complete episode transcript:

Automatically Transcribed With Otter.ai

Keith Weinhold 0:00

Keith, welcome to GRE. I'm your host. Keith Weinhold, there's been a real estate tragedy in my family. Then this past month, national home sales have plummeted to their worst level since 2009 then something is happening in the market for apartment buildings that shocked everybody and more all today on get rich education.

Speaker 1 0:24

Since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors, and delivers a new show every week. Since 2014 there's been millions of listener downloads of 188 world nations. He has a list show guessing the top selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast, sign up now for the get rich education podcast, or visit get rich education.com

Speaker 2 1:09

You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.

Keith Weinhold 1:25

welcome to GRE from Montreal, Quebec to Montrose, Michigan and across 188 nations worldwide. I'm Keith Weinhold, and you are back inside get rich education here in our 11th year, you're listening to one of America's longest running the most listened to shows on real estate investing, indeed, the 552nd consecutive week before we delve into the sad topic of terrible national home sales, the worst since 2009 which is a serious topic, first, a bit More of a light hearted topic, a real estate tragedy of sorts, has taken place inside my family, right inside my parents home, the same home that I grew up in. And you know, it's been a while since I had a good rant in an episode. So before we get to our core content today, my parents just replaced the nice, plush, warm, soft, inviting wall to wall carpets in both of their living rooms with laminate, hardwood floor. Oh no, this is disastrous. I mean, this is an abject property atrocity right in the home that I grew up in. Now, if you're a longtime listener, you know what I'm talking about. If you're newer here, it's probably been a couple years since I mentioned it. You know, everyone has their own quirks and idiosyncrasies, like you have certain ways of thinking about some things in your life, where you just know that you're in the minority of society with how you behave with that thing. Yeah, there are some things that you're counter cultural on. It's part of your unique personality, and it's what makes you you, well, one of my real estate idiosyncrasies and unorthodoxies is that I love deep, plush carpet, not hardwood floor, and hey, I don't expect you to agree with me on this. It's what makes me different. Now we'll talk about the flooring that you choose to use in your rental units in a moment and compare their prices and when you might want to use those things and when you don't. But we're just talking about home here, the flooring that you live on your primary residence. Why would anyone replace carpeting with hardwood, plank flooring? It is uninviting. It is cold, hard, and it even transfers noise more than quiet, comfortable, plush carpeting. And yes, hardwood floors can be heated. And some homeowners do that. They use what are called radiant heating systems, and they are installed beneath the floor, and these systems use either electric cables or sometimes mats or hydronic tubing, which are pipes filled with hot water in order to radiate that heat upwards into the floor. Now, something like that is what you'd be more likely to do in your own home, and not a rental unit, but even if you do that, hard floors are still, well, hard and noisier, like I just don't get it deep, plush carpet is superior. I'm not talking about the shag carpet that was popular 50 years ago, just plush carpet that hit its peak. In the 1990s Oh yes, that is the stuff I'm telling you. I mean plush carpet. That is the stuff that turns a house into a home. Well, my parents did just the opposite. They turned their home back into a house. Oh, dear. And, hey, it's their home. They can do whatever they want. Now, what are the main reasons that I hear about why people prefer laminate, hardwood flooring or luxury vinyl plank flooring over carpeting? That's what the majority of people want to do, and that's not what I want. Well, one reason, and this is the main reason that my parents did it, is that it looks nicer. In their opinion, looks nicer. I don't get it at all. I mean, even most cheap $1,000 apartments have been using like hardwood, plank flooring for close to 25 years now, there's nothing special about the way that it looks. Most of it anyway, some of it can look pretty cool. Now, some people want the hardwood because, well, they say that it's easier to clean. Easy to clean. Why in the world would you have trouble keeping your own home clean? I mean, if there's any space in the world that you keep clean, it is your humble abode. Now I know that it's easier for me to say that because I don't own any pets and still don't have kids, maybe you do replacing carpet for hard flooring is just an unspeakable act. What an uncalled for abhorrence, a repugnance. Other reasons that people say they prefer hardwood or vinyl plank over carpet is that it is allergy friendly. All right. Well, I don't have any trouble with allergies. But here's the thing that's even more confounding, most people that install a hard flooring. Well, the next thing that they do, and this is exactly what my mom and dad say that they're going to do next now that they put the hardwood floor in, is find some area rugs and cover it up so people put carpet on top of the hardwood floor anyway, but then yet, that carpet cannot be plush and padded underneath like real Carpet would be, because it's just like a piece that's rolled out, plus it cancels out, then all these pet friendly and allergy free benefits, plus it might be even harder to clean, because now you got to clean both the carpet and the edges of the room where the stupid hardwood flooring is showing I mean, it makes zero sense, so this just all compounds how I am confounded on how almost everybody in the world, it seems they want hardwood floor. I feel like I'm the only person in the world sticking up for carpeting. I do not expect you to agree with me here. It is just my, I guess, oddball preference. I also do a lot of exercises down on the floor. That's where the best high intensity interval training workouts take place. Down on the floor. Plush carpet is best for that too. Oh, the myriad reasons that carpet is superior, I'll tell you. Well, I'll next be staying at my parents place in two months, as I'll spend a lot of July there, and that's when I will first be witness to this transgression, this incomprehensible abomination. I mean, it is almost malfeasance.

The reason that I care more about this than most sons of parents would is that my parents have lived in the same home since I was age one. I have a lot of memories there, and when I visit my parents in rural upstate Pennsylvania, I sleep in the same exact bedroom that I have since age one. Really special continuity there. What's more important than the flooring changing in the two living rooms is that, like I've told you before, I won the parent lottery, I did not have an affluent upbringing, but my brother and I had a top 1% childhood anyway, because we have two married, committed parents that are still together, still healthy and loved us. I phone my parents at least weekly, and I send them messages all the time. I guess it's a good time to think about that as this is the last episode before Mother's Day, and if you did not win the parent lottery, like I did in the way that I just described. Well, the good news is that you can do something about it. You can provide that same stable, nurturing environment to your children, and that way, they will win the parent lottery. Now, when it comes to. My rental properties, I do have hardwood flooring virtually everywhere and in every property, from single family rentals up to apartment buildings, because I don't have to live on it now, I probably do have some bedrooms in those rentals where there's carpeting, yeah, I mean hard floors that makes sense for the durability in a rental. I mean, with rentals, you might have to replace the carpet every three to five years. That is cost prohibitive. So for real estate investing, hardwood flooring, which, again, it's really a trend that became widespread in America about 25 years ago. I mean, that trend was really good for real estate investors. Tenants actually prefer this intolerable condition, perhaps much like you do. Now let me talk about five main types of flooring, how much they cost per square foot, and where you might want to use different flooring types in different situations, as we've already established. For me, it is carpet, carpet, carpet, wall to wall, everywhere, except for kitchens, bathrooms and maybe the laundry room. Seriously, though, for you and how you want to think about this and these prices include the total for both the material and the installation is for hardwood plank flooring, which is that atrocity that my parents committed. Expect to pay about $25 per square foot. And of course, all these costs are going to vary based on the wood species, the finish and the part of the world that you're in for LVP, luxury vinyl plank that's about $8 installed. LVP is a good choice because it mimics the hardwood esthetics. It's waterproof, and as you can see there, its cost is less than half of that of hardwood plank. So LVP can be a good choice for bathrooms and maybe a kitchen, and though the name luxury might be cheapened or diluted somewhat in that name, LVP, it's a bit over named. I suppose it's that that name is given to help distinguish it from vinyl flooring. Because when you hear the term vinyl flooring, what do you think of you think of sheets, something that comes in a roll in sheet vinyl only costs maybe about $5 installed. And then carpeting installed, my favorite at home, but not in rentals that costs about $6 per square foot. And then the last major flooring type is tile, and the cost of tile is really all over the place because of its different material types. Tile can be made of so many things, going from cheapest to most expensive ceramic. That's about $20 per square foot. Again, this is the cost installed for both the materials and the time it takes to install it, porcelain, 20 to 25 natural stone tile can be 40 bucks or more, and then glass tile can be a little more expensive than that, yet. So those are the approximate prices for your flooring, what you can expect to pay because, of course, plank flooring and tile, it doesn't have to be replaced as often as carpet and sheet vinyl. That's something to keep in mind when you think about those prices. But yeah, I have bought apartment buildings before, where, when I bought it, every unit was carpeted, and then as each tenant moved out, one by one, I would have my property managers contractor replace it with hard plank flooring, the radiant heat that you'd place beneath hard flooring that I described earlier, that is cost prohibitive to put in a long term rental in almost every case, that's something you'd only want to do in your own home, or maybe, just maybe a luxury short term rental in a cold climate, Like a ski resort town or something like that. So yes, you have now learned about one of my odd quirks, and you've learned about flooring types. Another of my idiosyncrasies is my preference for back scratching rather than massages. But that has nothing to do with real estate, and we've got more important topics to move on to heck. Come on, though, you might have some weird quirks, even more weird than mine. In fact, maybe real estate investors in general have more quirks than mainstream society. Because, you know, real estate investing is a little countercultural itself, right? We own things that pay us to own it every month with mainstream society and 401, KS, you have to pay it with every paycheck. Now. Who in the heck would do that?

The title of this week's episode has to do with the fact that spring existing home sales are now at their worst level since two. 2009 the worst in all that time. Now, and understand when I say home sales, that means the volume of sales, the number of transactions. We're not talking about the prices now, the outlook for home prices is also less rosy now as well. I'll get to that shortly. But why are the number of property transactions at their lowest level in 16 years like this? Let's listen in to Diana Olick at CNBC. She's talking about March, but that's the newest month reported. You got to remember that real estate stats run in arrears more so than most essay classes. This report is a real bellwether for the spring housing market and how this year could turn out. This is a little over a minute, and then I'll be back to comment.

We also have some housing data just cross the tape. Diana olik Has that for us. Diana, Well, David, existing home sales in March fell a much wider than expected, 5.9% from February to a seasonally adjusted annualized rate of 4.0 2 million units sales down 2.4% from March of last year, and that is the slowest March sales pace since 2009 the Great Recession. Now remember, this count is based on closing, so its contracts likely signed in January and February, when mortgage rates were over 7% but it was before the market volatility of April, supply is rising fast, 1.3 3 million units for sale at the end of March, up nearly 20% from the year before. That makes a four month supply, which is still on the lean side. Six months is considered a balanced market. More inventory and slower sales are starting to put the chill on prices. The median price of an existing home sold in March was $403,700 that's still an all time high for the month, but it's only up 2.7% from last March, and that annual comparison is shrinking. First time, buyers made up 32% of the market, the same as last year, they should be around 40% all cash dropped to 26% from 28th the year before, but investors house steady at 15% of sales. Sarah, all right, have a bad combo, weaker sales, higher prices. Diana, thank you very much. Diana Olek.

okay, we just learned that the latest month shows the slowest spring housing market for that month since 2009 and that the supply of available homes is up 20% since last year. All right? Well, if the supply of homes is up, then why is the volume of sales down? Well, it's the same reasons that we've had for a couple years soured affordability and the ongoing lock in effect, and that soured affordability is just more set in I hope you caught it. Note that this 16 year low in sales volume is for existing homes, okay, brand new home sales are healthier. The nation is still undersupplied of housing Overall, though, with four months of supply, of course, six months is that balance point. Now, the worst news here, with this low sales volume is not affecting the homeowner or the investor. It is affecting the renter somewhat more, because they're having to stay as renters. But it's really tough. Just horribly bad news for people that are in the business of home sales, like realtors and other agents. Mortgage lenders are losing business too. So are title insurers, moving truck companies, furniture companies, and for those consumers in the market to buy and sell homes. It's actually troublesome news for society. Less residential mobility means less economic mobility and more people stuck in place. And how are we going to get Americans moving again? It is lower mortgage rates. It's probably not going to come from a substantial lowering of prices. Prices keep rising, as you heard in that clip, up 2.7% year over year, but as we look out in future months, you know, I can feel it. Price growth seems to be flattening out. Zillow and some other agencies have lowered their home price appreciation forecast for the year, I really keep up on this stuff in research, in my estimate is that the consensus is that there will be zero to 2% home price growth this year. That's not me saying that. That's me amalgamating what others say, and they don't always get it right, and this year still has a long way to go, but you know, there is just this sort of general malaise in the real estate market where there's not a lot of activity for primary residence buyers. In that clip, you heard that investor purchases are steady, constituting 15, one 5% Of home purchases, just like they did in the previous period. So that's what a low sales volume means, and that's who is affected. It is not a vibrant market out there. I still don't see anything on the horizon that could make home prices jump as much as 10% this year, not even substantially lower mortgage rates could do that. In my opinion, tariffs impact to construction costs over the next few months. You know, it's probably quite a bit less than you think. The prevailing current view among the number of developers for now is that construction costs will increase between one and 3% on wood frame builds. And wood frame builds that represents the vast majority of apartment and build to rent projects and now that one to 3% that's by no means immaterial, but it's also not some crazy surge like some headlines have suggested. So as you're out there listening to media reports on the housing market, as you can see, you've got to listen closely to what you're being told. The volume of sales and the median price are two very different things, and they're both moving in different directions, sales down, price up, also the existing home market and the new build home market are, of course, different, but you got to listen closely sometimes in order to pick that up. That also helps to be attentive to if you hear that new build prices are falling, you got to think about wh

Keith discusses strategies for building wealth in real estate, emphasizing efficient property operations and leveraging. He suggests setting tenant occupancy limits, sub-metering utilities, and increasing rentable space.

He explains the leverage ratio, which measures the relationship between debt and equity, and advises maintaining a high ratio for better returns.

Hear his take on the Florida's real estate market, including falling property values, oversupply, and rising insurance premiums. Despite these issues, Keith remains optimistic about Florida's long-term potential due to its population growth and low taxes.

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Complete episode transcript:

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Keith Weinhold 0:00

Welcome to GRE I'm your host. Keith Weinhold, today, the two things you've got to focus on if you're ever going to build wealth as a real estate investor, why Trump wants to fire Fed Chair Jerome Powell, then, is Florida real estate doomed with falling property values, a housing oversupply, spiking insurance premiums and slowing population growth. It's episode 551, of get rich education.