If you like to dream big, you'll love this podcast. In this episode, Kathy and Rich Fettke celebrate their 25th wedding anniversary with a conversation about their marriage and their investing experience. They were supposed to be skiing down some wild terrain in Utah after getting dropped off by helicopter on a snowy mountaintop, but weather conditions delayed those plans. Instead, they are safely inside their hotel room, with some amazing memories and stories about where they’ve been, where they are now, and where they are going next! Rich and Kathy are the co-founders of the real estate investing company RealWealth, as well as the creators of this podcast, The Real Wealth Show! They launched the company in 2003 which currently has almost 63,000 members. It’s free to join and you'll gain access to hundreds of free webinars, articles, and podcasts. You will also get access to the Investor Portal where you can make an appointment with an investment counselor and connect with our network of property teams nationwide. Please join RealWealth at realwealthshow.com, and remember to subscribe to the podcast and please leave us a review! Links: Rich mentions taking a RealWealth Assessment in the podcast, which you can access here. Kathy mentions a Couples’ Adventure Weekend which you can inquire about by emailing her assistant Tonya at: tonya@realwealth.com.

In this episode, you’ll hear the amazing story of a 12-year-old boy who wanted to upgrade his family home, so he called a real estate agent and said: "I want to buy a house!" He did the legwork, and closed on a home that put his family on a path to financial freedom. And today, he's helping others do the same. Our guest, Larry Taylor, has been a real estate investor for more than four decades. He’s now the CEO of a Malibu-based investing company called Christina, which focuses on the Westside region of Los Angeles. He shares his personal story in this interview, along with his experience as an investor who’s lived through various political and economic cycles, and can explain how they relate to investor concerns today – concerns like inflation, asset values, rent growth, where people want to live and work, and finding a good deal as an investor. If you’d like to learn how to invest in cash flow rental properties in the fastest growing metros in the U.S., go to realwealthshow.com and sign up, for free. Once you're there, you can set an appointment with one of our very experienced investment counselors who can help you find the best market and property teams to help you with for your investing goals. And please remember to subscribe to our podcast and leave a review! Thank you!

When I started investing in real estate, I didn't run into a lot of women on the job sites. And, I certainly didn't see very many women doing the renovation work themselves. But that's exactly how today's guest got started and her hard work has paid off because she's now a big-time real estate boss-lady. As a single mom, Kelly Stumphauzer bought a fixer upper for $46,000 and moved in with her three young kids. She was making about $13,000 at the time. Now, just a decade later, she runs a large renovation and property management company and has been featured on the front page of the Wall Street Journal for her success. She shares her story in this episode. If you’d like to learn more about how you can buy cash flowing rentals, go to realwealthshow.com and sign up, for free. As a member, you’ll get access to the Investor Portal where you can see sample properties and connect with our network of resources. That includes experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. And please remember to subscribe to our podcast and leave a review! Thank you!

Some people get stuck in analysis paralysis, meaning no matter how much they study, they just can't take the plunge. Meanwhile, others jump right in. In this episode, you’ll hear from someone who couldn't wait to get started in real estate, so he made his first acquisition while he was in high school! Kyle Nott wasted no time. He attended what he calls “Windshield University” to educate himself about real estate. That’s the time he’s spent driving from one construction job site to another listening to podcasts, and learning from other investors. And here he is now, educating others on my podcast. He shares the ups and downs of his journey in this interview, which is both inspirational and educational. Thank you for joining me here on the Real Wealth show. I want to let you know I'm giving my 2022 Housing Forecast during the first week of January. If you want to get my take on where real estate is headed, considering that rate hikes are on the way, just visit realwealthshow.com. You can join for free and get access to the upcoming webinar, or the replay, along with recordings of all our past webinars. You’ll also have access to the Investor Portal where you can see sample properties and connect with our network of resources. That includes experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. And please remember to subscribe to our podcast and leave a review! Thank you!

This is a Real Wealth Story about focus, discipline, connection, and working together with your partner! Our guests started off with nothing when they got married, but were determined to get rid of their student debt, and work toward a financial strategy that gave them as much free time as possible. They are now in their early 30’s, own several investment properties, and recently hit the one million dollar net worth milestone. In this episode, Rich and Kathy interview their good friends, Dusty and Cecily Breeding, who share their secrets for a successful marriage and the building of wealth together toward a common goal. They met at Pepperdine University, graduated in 2010, and were married in a village outside of Nairobi, where they spent their first year of marriage working with homeless teenagers. After returning from Kenya, the Breedings spent the last decade paying off their student loan debt. Dusty worked as a minister and Cecily, as a photographer. They bought their first property through RealWealth in January of 2019 and currently own five properties with a total of nine doors in two states. They have both become job optional, and recently launched the Skull and Bones Society, which is a life coaching practice that helps others intentionally live well. Link for Skull and Bones Society: https://www.skullandbonessociety.co Join Real Wealth for free: https://tinyurl.com/joinrealwealth Subscribe to the podcast: https://tinyurl.com/RWSsubscribe

If you’re interested in becoming a landlord and would like to avoid some of the mistakes that other investors have made, you’ll learn a lot from this interview. Our guest became an accidental landlord and found out the hard way that active management of rentals can be a lot of work. He quickly learned that having good property managers that send you checks every month is the way to go. In this episode, Jim Pfeifer tells some interesting stories about the mistakes he’s made so you don’t have to repeat them. Jim is a former financial advisor and stock market investor who has turned his attention to real assets. It wasn’t his choice to become a landlord at first, but after he saw the potential for passive wealth, he was hooked. He’s been involved with single-family and multi-family rental units as a landlord, but is currently focused on syndications. He has more than 45 passive syndications under his belt including apartments, mobile homes, self-storage, private lending and notes, ATM’s, commercial and industrial triple net leases, assisted living facilities and international coffee farms and cacao producers. As the founder of Left Field Investors, he also helps other people get started in passive real estate syndications. And, he’s the host of the podcast: Passive Investing from Left Field. You can learn more about the ins and outs of passive real estate investing with good property management at our website, RealWealthShow.com. Sign up for free, and get access to the Investor Portal where you can see sample properties and connect with our network of resources. That includes experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. And please remember to subscribe to our podcast and leave a review! Thank you!

Billions of dollars are being poured into build-to-rent communities and the industry is booming! Are developers able to keep up with demand for new rental homes? How long will it take to balance demand with supply? Is “now” the time to invest in this kind of rental property? Or maybe developers are overestimating future demand for this kind of rental and will end up flooding the market? In this episode, you’ll hear from housing market economist Brad Hunter on this mushrooming segment of the real estate industry. Brad has been doing market analysis for 35 years and has conducted hundreds of housing demand studies at national and local levels. His market insights are available for builders, developers, investors, and lenders through his company, Hunter Housing Economics, in West Palm Beach, Florida. His opinions and forecasts are also widely covered in the media. Past positions include chief economist and national director of consulting at Metrostudy, managing director at RCLCO, and chief economist for HomeAdvisor. Brad was recently quoted in the following articles: Building and Renting Single-Family Homes Is Top-Performing Investment - WSJ Built-to-Rent Suburbs Are Poised to Spread Across the U.S. - WSJ This is a piece he wrote as a special contribution to Forbes: Ten Billion Reasons Why There Is A Built-For-Rent Land Rush - Forbes You can also follow him on Twitter: @bradleyhunter Thanks for listening to the Real Wealth Show! Like what you hear? Subscribe to the Real Wealth Show on Apple Podcasts (or all other major platforms) and leave a rating and review, we really appreciate it! And if you haven't yet, join RealWealth for free today at www.realwealthshow.com. As a member, you have access to the Investor Portal where you can view sample property pro-formas and connect with our network of resources, including experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more.

Congress is tinkering with the rules for IRA accounts. It’s part of a crackdown on individuals with millions in their retirement accounts, tax free. According to the Senate Finance Committee, the number of mega IRAs has grown substantially in the last decade. In 2011, there were about 8,000 taxpayers with $5 million or more in their accounts. In 2019, the data shows more than 28,000 taxpayers had that much in their accounts, and another 500 taxpayers with much more than that. (1) The legislation has set off alarm bells among investors who use self-directed IRAs to buy real estate. In this episode, Kaaren Hall joins me to talk about the proposed legislation and the changes that lawmakers are likely to adopt. She is the founder and CEO of UDirect IRA Services which provides self-directed account management. She started the company in the midst of the Great Recession after the stock market crashed. She's been helping people move their retirement funds into self-directed IRAs since then, so they can invest in things like real estate, land, startups, and more. Before that, she spent 20 years in mortgage banking, real estate, and property management. If you’d like to learn more about self-directed IRAs and real estate investing, you’ll find articles on our website at realwealthshow.com. While you are there, please sign up. It’s free and will give you access to our Investor Portal where you can view sample properties and connect with our network of resources, including experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more. And please remember to subscribe to our podcast and leave a review if you like what you hear! Thank you!

The economy exists by and for the benefit of people. Yet so often, even today, many economists miss the mark when it comes to understanding demographics. In this episode of the Real Wealth Show, you’ll hear from an internationally respected demographer who has been able to forecast economic, cultural and political phenomena with uncanny accuracy. Ken Gronbach is president of KGC Direct, LLC and author of “Upside: Profiting from the Profound Demographic Shifts Ahead“ and “The Age Curve: How To Profit from the Coming Demographic Storm.” Every time I do an interview like this, I think, I better get off my behind and buy some more real estate even if the numbers don't pencil as nicely as they did a few years ago. If you feel the same way, and you’d like to find income property in some of the fastest growing areas, consider booking a free consultation with one of our experienced RealWealth investment counselors by joining the network (for free!) at www.RealWealthShow.com. And please remember to subscribe to our podcast and leave a review if you like what you hear! Thank you! TRANSCRIPT Announcement: [00:00:00] You're listening to The Real Wealth Show, with Kathy Fettke, the real estate investors' resource. Kathy Fettke: The economy exists because of people, and yet so many economists have totally missed the mark when it comes to demographics. I'm Kathy Fettke, and welcome to The Real Wealth Show. Our guest today is an internationally-respected demographer, who's been able to forecast economic, cultural and political phenomenon with uncanny accuracy. Ken Gronbach is president of KGC Direct, and author of the current book, Upside: Profiting from the Profound Demographic Shifts Ahead, and The Age Curve: How to Profit from the Coming Demographic Storm. He's here to share his insights with us on the Real Wealth Show. With that, Ken, I want to welcome you to The Real Wealth Show. I got to hear you on Marcus & Millichap, and I was so blown away. I said, "Okay, we've got to get you on this show," and here you are, so thanks for being here today. Kenneth Gronbach: My pleasure. Kathy Fettke: Obviously, demographics play a huge role in economics, right? We know that the baby boomers drove a lot of economics. We're aging now, so we're buying different things than we did 40 years ago. What is the largest demographic group today, and how are they affecting the economy? Kenneth Gronbach: Are you talking about the United States? Kathy Fettke: Yes, let's start with the United States. Kenneth Gronbach: Okay. Well, the largest group is a group born in 1985 to 2004, the current generation Y millennials, and there are 88 million of them, roughly 10 million, give or take more than the boomers. They're the boomers' kids, for the most part, and they're huge. In terms of housing, they don't have any. They're going to live in their cars, and that's the big story. Because unless we step up our building or structure of the housing units, over the course of their generation, really for the [00:02:00] next 15 years. We're about 25 million housing units short. That's a lot of housing. Kathy Fettke: Wow. Okay. There has been so much fear that we're going to have another 2008, there's going to be a housing crash, prices are up. Kenneth Gronbach: That's impossible. Kathy Fettke: That's what I keep telling my daughter who is at the peak age of the millennials, she's 29 years old, and she keeps saying, "I'm just going to wait for home prices to go down," and I'm like, "Okay, you're going to be waiting a long time, honey." Kenneth Gronbach: Yes, tell her to buy now. That's what I tell my kids. I've got a daughter, 26, and a daughter, 29. Kathy Fettke: Okay, yes, she did own in Chico, California, but it was $250,000 to buy a house. She was 24 years old. She just sold it. She made money on it. She has a down payment, she can buy another, but she's like, "Mom, I'm 29 years old. I can't be buying a million-dollar house." What matters is the payment, right? The payment, if she bought that house, would be the same as she's paying in rent. I think so. Kenneth Gronbach: Sure. It's scary. I just spoke in Canada. Oh, you don't want to be in Canada and be a young person, because housing prices up there are-- it's not uncommon for houses to go for a million bucks, a million dollars. Kathy Fettke: Sure. Yes, it's pretty normal here in Southern California too. Kenneth Gronbach: Right, [unintelligible 00:03:18] Kathy Fettke: Yes. Well, she's not buying here, but just over the hill. We were looking at houses for her a few years ago, and there was a really nice one with a view for $750,000. I'm sure it's close to a million now. Kenneth Gronbach: Sure. Kathy Fettke: I think a lot of people are in that boat, just waiting for prices to go down. Why would you-- Okay, besides the fact that we know it's a huge generation, and the largest group of millennials is about 29. People were talking for so many years that the baby boomers and seniors would be moving on, and there would be a glut of housing because of that, but that story has died. [laughs] Kenneth Gronbach: Yes, well, because it's nonsense. Baby boomers, for the most part right now, are 57 to 76, [00:04:00] and they don't have dying on the punch list. If they're not going to die, they have to live some place, and if they have live some place, then we need housing for them. There's roughly 155 million housing units in the United States. Population is 330 million. The combination of the baby boomers is 80 million, and their 88 million kids, is 168 million. Finally, the kids are leaving home. They stretched out the adolescence till 30, and now they're leaving home. They're 17 to 36 years old. We're going to need housing for, and at least the next 15, 20 years. It's not going anywhere. It's only going to go up. It's the only place it can go. Kathy Fettke: You don't foresee a slowdown. I figured there would be a boom from 2020 to 2024 because I knew that's when this large group of millennials would be coming into the home-buying age, but then I thought there might be a slowdown in 2024. You don't see that? Kenneth Gronbach: No. No, not at all. In fact, the peak of our kids' generation was 1990, so, what does that make them? 31? Kathy Fettke: Yes. Kenneth Gronbach: Yes, but we're still producing 4 million plus kids per year in that generation. We've got to house them, and the boomers are not giving up their houses and going to live in tents. We have to build houses. I live in South Florida. You can't believe what's going on down here. It's almost scary. It's almost a vibration of housing. Because multi-family housing is huge. We just did a big research project for a bank capital real estate to that end, and there's no end in sight. There is no end in sight. Kathy Fettke: Yes, we are really bullish on the [00:06:00] Florida area. We see that. We very much see the growth happening there. I hate to say it, but a lot of us Californians are moving out there, so you might see some changes. [laughs] Kenneth Gronbach: Actually, in data-wise, you're moving to Texas. Well, you just lost a house seat, and Texas picked up too. It's going to be interesting to see what happens. The people are escaping from California, might even turn Texas blue. Kathy Fettke: Yes. That'll be an interesting day. In Florida, they're mostly coming down from the northeast? Kenneth Gronbach: Yes, they come down route 75, and route 95. We were just remarking about that last night. I live in South Florida, just above Naples. My wife and I moved here full-time this last summer. We sold our house in Connecticut and moved down here. It's a favorite thing of ours to check out the license plate, where are they coming from, and they come from up north. Kathy Fettke: New Jersey, New York. Kenneth Gronbach: For the most part, the people from the Jersey, New York and the Northeast Pennsylvania, from [unintelligible 00:07:17] Hampshire, Massachusetts, Maine, come down 95, and stay on the east side. The ones that stay on the west side are from, essentially Midwest, but still big cities, but they're moving here, and they're moving here in droves. Kathy Fettke: Wow. All right. Do you think that COVID-19 and the pandemic also accelerated some of these moves? Kenneth Gronbach: Yes. I wouldn't say accelerated. I think what it did is it stalled them for a bit. Once we get on the other side of COVID, which we appear to be doing as soon as people all get vaccinated, you're going to see a baby boomers retire [00:08:00] like lemmings. They're going to bail like you cannot believe. A lot of them stayed in the labor force, which is what really screwed up Generation Y, the millennials, because the baby boomers didn't leave the labor force. Now baby boomers are 57 to 76, so come on, it's time. Let's go. Kathy Fettke: Well, and they've probably made a lot of money in the stock market and in their properties, so they can retire now. Kenneth Gronbach: Yes, how about that? Our latest calculation is they're somewhere around 100 trillion. Kathy Fettke: Oh, my goodness. Kenneth Gronbach: Oh, yes, when you take into consideration the value of their real estate, the value of their stock market holdings, and savings, it's pretty close to 100 trillion. That's a lot of money. Kathy Fettke: Well, it is, when you compare it to 2008, when people who were trying to retire and thought they could suddenly sell their holdings, get wiped out in the stock market and in housing, and maybe had to work another 10 years. People who were able to hold on to those things and onto their assets, really are retiring in a much better position. Kenneth Gronbach: Much better. Kathy Fettke: 12 years later. Kenneth Gronbach: Absolutely. Kathy Fettke: Amazing. You add to it, the quantitative easing, all the money that's been created. We already have a problem with more demand than supply, but then you add that inflation factor, how are people going to be able to afford real estate? Kenneth Gronbach: I don't know. You know what? They'll find a way. We always do. That's who we are. We find a way. I always tell people, I said, "When it comes to the United States, don't target on a superman's cape, because we're the best people from the rest of the world." Clear, and demographically, we are absolutely the best people from the rest of the world, because the rest of the world is in trouble, for the most part, demographically. In the United States, the Americas, Canada, United States, Mexico, Central and South America are not. Canada, to a degree, but we're in good shape, the Americans." Kathy Fettke: What do you mean by that? They're [00:10:00] not having babies? Kenneth Gronbach: Yes. What's going to happen. Obviously, one of the things that's contributing to inflation right now is supply chain. If you can't get stuff, and you don't have enough of it, and you have demand, price goes up. Simple as that. You also have a situation, in China, for instance, where under 40 years old, they're missing a half billion people, 500 million, because of their one-child only policy. What's happened to their labor force? Well, their labor force started to shrink three years ago. What will happen to it? They're not going to have one. If they don't have a labor force, if they don't have a labor force that will work for 25% of what the rest of the world will work for, then they're not going to fill up Walmart with their goods. It's just not going to happen. You're not going to have ships stalled off of [unintelligible 00:10:49] Manufacturing is already coming back to the United States. Why? Because we have labor and they don't. It's all relative to your given population. They're in trouble. Are you following the whole, I can't think of the name of it right now, but there's a development company in China that builds everything. They build all the infrastructure, and they build office buildings, and they build the housing, but it's empty. Why is it empty? It's because they built for a population that doesn't exist. China's big issue is going to be, how are they going to care for their elderly? Are they going to have hundreds of millions of elderly who cannot feed themselves? United States is in good shape, we're fine. Kathy Fettke: Do you think China will take immigrants to cover the labor issue? Kenneth Gronbach: No, they're xenophobic, they don't do it. They don't like immigrants. It's like Japan. Japan doesn't do immigrants. The same thing with South Korea. South Korea is in big trouble because they're just not having babies. They'll have fun for a while, they'll have a demographic dividend because they won't have the dependency [00:12:00] of children, and that does spike an economy. If you don't want kids, you're about 20, 25 years away from not having any labor, and then what? Kathy Fettke: Wow. I remember, one of my best friends went to France and ended up falling in love and marrying a Frenchman. You were paid by the government if you would get pregnant and have a baby. All your childcare, all your health care, everything was paid for because they saw the problem that the French were just not having children. They had everything covered. They were given diapers, because they ended up having twins. I don't know, has Europe improved with their demographics? Kenneth Gronbach: Well, it depends on your perspective. Europe has essentially had a self-imposed one-child only policy for about 30 years, maybe a little bit more. Where'd they pull their labor? Because you needed labor for the people that needed labor in France, let's say. Where did it come from? It came off of North Africa, and it came in the form of folks who were Muslims. The Muslim culture, God bless them, their people, but their culture does not mix with Western culture, it just doesn't. The Muslim culture is having six kids, and the indigenous folks are having one. What do you think's going to happen to Europe? Muammar Qaddafi said the Muslims will overtake Europe without firing a shot, and he was absolutely correct. It's only a matter of time. What we're seeing already is high net worth folks from the EU coming here, and they're coming to Canada, they're coming to the United States, Mexico, Central, and South America. It's just a better place to live, for them. Kathy Fettke: I just came back from a trip to Europe, and I forgot how magical and wonderful it is. It was crowded, but we're certainly seeing some shifts. What is it about America? Why are we so prolific in [00:14:00] making babies? Kenneth Gronbach: 1957 was a record year for us, with 4,300,000 babies, 1957. We broke that record 51 years later in 2007 with 4,316,000 babies, 25% of which were Latino. Latinos are the best thing that's ever happened to the United States, essentially saved the country. I tell folks, I say, "You have a problem with Latinos? Go find Latino, kiss them on the lips and thank them for coming, because without them, we don't have a country in 2050 because we don't have enough people to run it, and we don't have enough taxpayers. We don't have enough labor." You want evidence of that? Come on down to South Florida and look at who's working. We have kids, and we've been cruising a little low right now. Replacement level fertility is 2.2 kids. We've been about 16.17. That's not death, but it's not good. It's not wonderful. What we're seeing happening now, and the thing where all demographers are holding their breath is, are our kids, Generation Y, Millennials going to have children? Now, granted, they've waited late, so their bodies might not cooperate, but we're counting on them having kids, at least two, maybe three. The Latinos that we have here are having kids, and they're wonderful because they assimilate. They're Catholics, they fit right into our western culture. While we don't necessarily feel them yet, and I would say, they could be as many as 20 to 30 million of them in the core of our nation. We don't know. I apologize for that, but the Bureau of labor statistics, census data, and all the rest are very vague on that, on exactly where that is. Kathy Fettke: I remember when I was in high school, many years ago, there was talk that California would have more Hispanic population than [00:16:00] White. I don't know at what point that is supposed to happen or if it has already. Kenneth Gronbach: I think it has happened already. I think you are a minority-majority. I know Texas is a minority-majority. Florida is close, but that will happen. Period. It will happen nationwide, by about 2045. Kathy Fettke: Interesting. Like I said earlier, the economy is based on demographics, what people are buying, and what age groups. What are you seeing? What sectors of the economy will grow based on the current demographics? Kenneth Gronbach: The big ones are housing. The second one, which is probably even bigger, it's healthier. Baby Boomers have money. Baby Boomers don't have dying on their punch list, baby boomers are moving to warmer climates. Florida will be the healthcare capital of the world, hands down. We will beat cancer, we will beat heart disease, we will beat Alzheimer's. How do I know that? Yes, that is subjective, and that's my opinion. When you have mass, and money, and motivation, that's what it takes. I believe that's exactly what we're seeing. Other sectors, anything that people consume. I don't know, your daughters have moved out of your house, right? Kathy Fettke: Yes. Kenneth Gronbach: They're consuming everything. When my daughters moved out, they didn't take our lawnmowers, they didn't take the vacuum cleaner, they didn't take our beds, they left all of that, they went out and consumed their own. What you have is a body of 88 million people, which is the largest generation in history, is going to consume everything. Who buys the most cars in the United States, automobiles? Men and women of 40 to 45. I don't know why that is, but I believe it's because of the size of a family and all the driving that they must do. You have a generation right now that's the largest one in the United States history that is [00:18:00] 17 to 36 years old. Once in five or six years, Detroit's going to get hit, and automobiles are going to get hit like a tsunami. All you have to do is look at the size of the people, the size of the generation in the parade that's moving through a time continuum, and ask yourself the question, if you're selling stuff, "How big is my end-user market? Is my end-user market getting bigger or smaller?" Because if my end-user market is getting bigger, I have an opportunity, and I'm going to prepared for it. If my end-user market is getting smaller, I have a problem. I've got to deal with that. You want a couple of examples? Kathy Fettke: Of course. Kenneth Gronbach: Okay. I get a call from Levi Strauss, Levi Strauss chief marketing officer in 1998. This was when I was shifting gears in my career. I'm very, very familiar with the jean market because I grew a company from $10 million to $400 million selling jeans in the Northeast. Levi's knew that, and I think that's why they called me. Levi Strauss called me and he said, "Ken, we are seeing we can't make our product fast enough. We've been selling our product like hotcakes for 20 years, but all of a sudden, some of our markets are softer, we have a demographic issue." I said, "Who's your customer?" He said, "An 18 to 34-year-old man or woman. I said, "You cut it off at 34. You started at 18, you cut it off at 34." "Yes." "Why do you cut it off?" He said, "Well, basically, it can't fit in the product anymore. No offense, but that's what it is." I said, "You know you're a baby boomer business," and he said, "Of course, we do." I said, "The last baby boomer was born in 1964." He said, "Yes." I said, "Add 34 years to 1964. What year do you come up with?" He thought for a moment, he said, "1998." I said, "What year is it?" He said, "1998. Then we have a problem?" I said, "Yes, you do. This is what will happen?" I said, "You'll see." Well, that went from $8 billion in sales to about $3 billion in about three years. [00:20:00] That was because you can't mess around with this. You asked me if demography affects economics, it's the other way around, economics is precipitated by demographics, period. Without people, you don't have anything, you don't have economics. Demographics invented economics. Kathy Fettke: Well, I do like my sweat pants, now that you mentioned it. Kenneth Gronbach: [unintelligible 00:20:27] Okay, go back, old story, Lee Iacocca. Lee Iacocca went to the Henry Ford II and said, "We're building the wrong car, this is 1960." He said, "We need to build a lightweight, two-door, powerful car that's fun to drive." In 1964-1/2, they came out with the Mustang. Lee Iacocca would have been a hero if he sold 100,000 units in '64-1/2, and then the '65 model year. They sold 700,000. They could have sold about 4 million. This is the power of shifting demography, and that's the story. Kathy, there's evidence of it everywhere. You can pick up multi-family housing now, because of what, because of student loans, and the Generation Y Millennials build it, you're going to need it. You're absolutely positively are going to need it. Kathy Fettke: Wow, that's been tough building though. We're in the building business. The supply chain issues make it a challenge, so it's not going to be quick that we're going to be able to bring on new supply. Kenneth Gronbach: Let me tell you a quick story about that. I'm very tight with the plastics industry, and I'm very tight with the concrete industry. Guess what we're going to build houses out of? Concrete plastic. Kathy Fettke: Wow, okay. Kenneth Gronbach: Yes, we will. Europe has already been doing it for centuries, I don't know. Kathy Fettke: Makes sense, especially in Florida. Kenneth Gronbach: [00:22:00] Especially in Florida. Kathy Fettke: Yes. [chuckles] Or anywhere in the South. We're going to get some demographic lessons here. Let's see, what is a demographic dividend? Kenneth Gronbach: Demographic dividend would be something similar to trying to work with a one-child only policy. All of a sudden, they did not have to worry about a dependency ratio. Dependency ratio is having one person working, who cares for kids and cares for elderly. I grew up in a huge family. My brothers and sisters who didn't have kids had bigger cars, bigger houses, went on longer vacations. That was a demographic dividend. What China did is, they mandated the one-child only policy. The parents left the child with the grandparents, went into the city, and worked for 25% of what the rest of the world would work for. They experienced a huge 6% GDP increases, demographic dividend, but short-term. It's always short-term. You can't mess with nature. A family is a family. When you have no aunties, no uncles, nieces, nephews, no cousins, which is what China did, they erased those categories of people, and they went with four grandparents, two parents, and one child. They destroyed their economy, and it's going to get a lot worse in China, a lot. Kathy Fettke: Fascinating. What country benefited the most from this dividend in the last 20 years? Kenneth Gronbach: United States, cheap stuff. We're calling this inflation now, it's not inflation, it's what things should cost. I'm sorry, but when you go into Walmart and the prices of things keep on going down and they're all made in China, what the heck is that? What is that? Kathy Fettke: Got you. All right, then let's go to another lesson. What is the demographic dependency ratio? Kenneth Gronbach: A dependency ratio, you really can't have more than [00:24:00] a one working person, and a couple of kids, and maybe a parent or two. That's a dependency rate, so it'd be one to four. What's happening in China? In China, there's no one working. If your labor starts to go down and all the people, 40 plus, have participated in a one-child only policy for the last 40 years, what you have is elderly with no family. You know what they do? They find them dead for months- Kathy Fettke: Wow. Kenneth Gronbach: -with no family, there's nobody who checks on them. It's exactly the same thing, it's a little more sophisticated in Japan, but that's what happens in Japan. They have governmental groups whose designation is to go out and find dead elderly. Kathy Fettke: Oh, my goodness. Kenneth Gronbach: [crosstalk] Kathy Fettke: They're living alone and their kids are working, well. Kenneth Gronbach: No, there are no kids. Kathy Fettke: Right. Kenneth Gronbach: Think about it, why does China have 90 million more men under 40 than women? It's because they know that Chinese, if it's a one-child only policy, they cannot depend on a daughter to support them. The daughter supports the husband's parents. She works with the husband's parents, not with her parents. They do gender basis infanticide. 90 million more men than women under 40, that's the population of Mexico. Think about it. Kathy Fettke: Oh, my goodness. Okay, well, for years we've been talking about robots taking people's jobs, and there was a lot of concern about that. Based on everything you're saying, it would be great to have more automation. Do you see that coming online soon, where we won't need as much labor? Kenneth Gronbach: No, we'll always need labor. Robots are fine, and I get a kick out of them. I'm sure they will go a long way to solve the problem, but [00:26:00] they don't solve the problem. Numerically, they just simply don't. When robots can think, really think, then maybe they'll make a difference, but we're not there yet. Kathy Fettke: I appreciate you saying we're smarter than robots, I haven't heard that much lately. [laughter] All right, politics, and I'll just go into this briefly. There was a lot of people who felt that the last election was rigged. You said something really interesting in your presentation with Marcus and Millichap, that, "Hey, it's just demographics." What did you mean by that? Kenneth Gronbach: First of all, there's no data to support the rigging of the election. That would be as difficult as hiding a 747 in a Walmart parking lot to rig an election like that. It didn't happen. No, Biden won. Biden won hands down. It wasn't a huge win, but he won. What we're experiencing right now, and I think that's going to influence politics dramatically, at least for them, and I've calculated out about the next 11 years, is we're losing a conservative every 16 seconds because they're dying, and that number is going up. As time continuum, if you grow from new voter to dying, the new voters tend to be liberal. Remember, wasn't it to what Mr. Churchill said, "I₣ you're not a liberal when you're young, you don't have a heart. If you're not a conservative when you're older, you don't have a brain." That's okay, and I don't care about that, but it's absolutely true. Kathy Fettke: Sure. Kenneth Gronbach: Okay, we have a monster crop of liberals, and they're not even voting age yet, they're still 17 to 36. We're going to be more, and more, and more liberal because they're coming of age to vote every eight seconds. Every eight seconds, we have a new voter who's a liberal. We're losing our conservatives, and the people in between, the people, probably you, but unless you are-- You're not a millennial. Are you born at '35? Kathy Fettke: I am right on the cusp, I'm 1964. Kenneth Gronbach: [00:28:00] '64? Kathy Fettke: Yes. Kenneth Gronbach: Oh, you don't look that, it's very good. Kathy Fettke: All right, thank you. Kenneth Gronbach: You're a boomer. Kathy Fettke: I'm a boomer, don't say it out loud. Kenneth Gronbach: The generation born 1965 to 1984 is called Generation X. Generation X is a diminutive population. It's a small generation, only 69 million people born. Very, very little immigration to support that, except when we started accepting the Latinos. We took in millions of them because Generation X could not supply us with labor. As a political force, they're diminutive. What we have is a huge crop of liberals, dying conservatives, and our moderates are tiny and they're augmented by Latinos who haven't really exercised their political force yet. What's going to happen? We're saying the next two election cycles, presidential election cycles, will be liberal. That's three more years of President Biden, and then two years whoever runs. We'll see. Kathy Fettke: I think it's important for conservatives to understand demographics so they do know what's coming instead of claiming certain things. Kenneth Gronbach: Listen, I speak to mostly very, very right-wing conservative groups. I'm saying, folks, it's numbers. Stop trying to take the mystery out of this, it's math. It's not even trigonometry or algebra, it's math, so roll with it. We live in a republic that is the best one on the planet, and the republic can sustain a hit like you cannot believe. How do I know? Because I grew up with hippies, and [unintelligible 00:29:43] the late '60s and '70s, they wanted a revolution, did they get it? No. What happened to them? The hippies grew up, amassed wealth, and became Republicans. It's all part of the system. Kathy Fettke: That's what people need to understand, these baby boomers were hippies once, they understand you. The beautiful thing about politics, even though it's [00:30:00] hard to find any beauty in it these days, there is the balance. We need each other. Either side given too much power, it's not good. We need each other to balance each other, and right now, for the next, as you said, 11 years, there's going to be more liberal policy. Kenneth Gronbach: Well, look at it this way. President Trump was very, very conservative. Did he get his way on everything? No, he didn't. Don't worry about it. Neither will the Liberals. What we have is a pendulum. It just keeps on going back and forth, and it's the strength of our republic. Kathy Fettke: Let's stop hating our differences and instead recognizing and respecting each other for what each side brings to the table because, as you said, it is what makes us America. Kenneth Gronbach: [unintelligible 00:30:49]. Kathy Fettke: You say that human resource is the new financial resource. What do you mean by that? Kenneth Gronbach: Well, I got to tell you, I don't miss this, but at one point in my life I was very involved in HR. When we hired baby boomers, we would run an ad in the newspaper for help. They'd wrap around our building. Once the baby boomers aged out of that, we went begging. Now what's going to happen is you have three generations in a workplace. You have baby boomers who are still in the workplace, 57 to 76 years old. You have a good 10 million of them in the labor force anyway. Then you have Generation X who are currently 37 to 56, and they're a diminutive population. They're augmented by Latinos. Then you have Generation Y who are 17 to 36, 88 million. These are all culturally very different groups. You're going to have to have all of them work for you. To be able to handle that complexity is going to require some wicked smart people. I tell folks, [00:32:00] "Do not, do not, do not bring in a B player for HR." This is not personnel. This is not where you pick up your forms. This is where you determine your fate demographically for your business. You absolutely have to understand these three generations and how they're going to work because you will literally have a Generation Y millennial who will have a baby boomer working for them. Now, how do you think that's going to go? HR is far more important right now than it will ever be probably again or it has been. Kathy Fettke: That's a really good point. Actually, I interviewed somebody who was brought on as a consultant for Airbnb because the guys that founded Airbnb were so young they felt like they needed an elder to help them, and he called himself the elder, to just bring in things that they don't know. Just like you said, he was in his late 50s and working for these 20-somethings. 20-something billionaires, I might add. [laughs] Kenneth Gronbach: It's not fair. Kathy Fettke: [laughs] Is there anything else that you want to add that I didn't ask about? Kenneth Gronbach: Yes. Can I give you some statistics that are a little scary? Kathy Fettke: Sure. Let's go with a little fear. [laughter] Kenneth Gronbach: Right now we have a labor issue in our country, yes? Kathy Fettke: Yes. Kenneth Gronbach: We have a truck driver shortage. We have a manufacturing shortage. We have a shortage, period. If we checked the number of people that were 25 to 55 in the United States, this is about 120 million of us. Take away the women. Forgive me now. That's not being biased, but I just want to make a point. That leaves 60 million men. True? Kathy Fettke: Yes. Kenneth Gronbach: What percentage of that 60 million men can't work, don't work, won't work because they're felons? Do you want to guess? Kathy Fettke: I have no idea. Kenneth Gronbach: A third. Kathy Fettke: Oh my. Kenneth Gronbach: The reason [00:34:00] they can't work is they're not bondable. You can't insure them. They can't drive trucks. They can't work in the hospitals. They almost can't do anything. We need to address that. If we address that, and my clients and the clients that I encourage to do that, I say, one, negotiate with your insurance company because they will bond these people if you can ensure that you've vetted the people as good as you possibly can and contracted with them for subpar behavior. They'll be the best workers you've ever had. Because what we're doing is we're putting people back to work. We're putting people back into caring for their families. We're creating dads instead of just fathers. It's got to happen, especially for Black Lives Matter, because that's one of their principal issues, because their males don't work, and can't. It's tragic. I'm not making this up. These are real numbers. These are state department numbers. It's what it is, but we don't know about it. Kathy Fettke: That's really interesting. That's a great point. I dated a felon when I was younger. [laughter] Kathy Fettke: That's when I learned a little bit more about the system. He was 13 years old. He ran away from home from an abusive situation and found a family who took them in and they happened to be drug dealers. He was doing the drug running because he was adorable and young and got caught, went to jail, and was a felon. When they let him out, they gave him $100 and a bus ticket and sent him to California. How are these people to get back on their feet? He was able to and has become really a productive person in society. A lot of times, people, like you said, don't give a second chance. I love that. I love that. I hope that there are programs helping. I know here where I live, [00:36:00] you can hire felons for different jobs around the house and stuff, and we do that a lot. Fascinating. All right. Well, that's it. Thank you so much. There's so much more I'd love- Kenneth Gronbach: My pleasure. Kathy Fettke: -to ask, but I'm sure you're busy. I hope to have you back again. Kenneth Gronbach: My pleasure, Kathy. You take care. Kathy Fettke: Thank you for joining me here on the Real Wealth Show. Every time I do an interview like this, it makes me want to just run out the door and buy some more real estate. Even if the numbers don't quite pencil as well as they did a few years ago, they're probably going to look pretty good a few years from now as rents and home prices continue to rise. If you're looking for income property in some of the fastest-growing markets, consider meeting with one of the investment counselors at Real Wealth Network. You can visit them at realwealthshow.com. Announcement: The views and opinions expressed in this podcast are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities, or to make or consider any investment or course of action. For more information, go to realwealthshow.com. [00:37:11] [END OF AUDIO]

My daughter Krista is living in Barcelona as Part II of a study abroad program that was interrupted last year by the pandemic. She’s doing it all on her own, financially, by her own choice. I'm visiting her right now and am so impressed with her independence at such a young age, I grabbed a mic and asked if I could interview her for The Real Wealth Show! It’s confusing as a parent to know when to give and when to say “no.” We want to be loved by our children, and sometimes think that our constant stream of giving will earn that love. But perhaps it’s not the financial gifting that matters as much as the gift of belief -- that they can have whatever their heart desires -- if they commit to it. In this episode, you’ll hear more about Krista’s experience being raised in our family during a time, initially, when we had very little financial resources but tremendous wealth nonetheless. And how witnessing the growth of Real Wealth Network over the years, from the inside, has had a great impact on her wealth mindset. And please remember to subscribe to our podcast and leave a review if you like what you hear! You can also find out more about improving your financial world through real estate by joining our network at realwealth.com. It's free to join, with free educational materials on real estate investing. As a member, you also get access to the Investor Portal where you can view sample properties and connect with our network of resources, including experienced investment counselors, property teams, lenders, 1031 exchange facilitators, attorneys, CPAs and more.