Get Rich Education

The world’s most powerful nation can’t even house its own people. Keith Weinhold discusses housing shortage problems and solutions. Meet our new Investment Coach, Aundrea. Coaching is free for you. It helps you purchase investment properties. Connect with both of our coaches now at: GREmarketplace.com/Coach We discuss: international RE investing, accumulated dead equity, portfolio loans, declining LTVs, rising insurance premiums, and regional markets. Aundrea can help you with properties nationwide. We discuss Southeast Georgia and the Intermountain West. Southeast Georgia has strong cash flow. We discuss mid-term rentals (MTRs) in the area. Many are single-families under $200K. MTRs are furnished and the owner pays the utilities. In LTRs, a 1% rent-to-price ratio is possible. The Intermountain West features new-build duplexes to fourplexes in fast-growth Utah.  These are better for long-term appreciation and inflation-profiting. Often, you get built-in equity. Fourplexes prices are $970K. Aundrea’s coaching makes it easy for you. She’ll learn your goals. If you prefer, she’ll help you: run the property numbers, write your offer, negotiate inspection and appraisal, manage your property, and help you through closing.    Get started at: www.GREmarketplace.com/Coach Resources mentioned: Show Notes: www.GetRichEducation.com/453 Free GRE Real Estate Coaching: www.GREmarketplace.com/Coach Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY’ to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold  

Keith Weinhold and Ken McElroy discuss the impact of rising mortgage rates on the commercial real estate market.  They talk about the foreclosure of a Houston real estate investment firm, and the need for syndicators to anticipate changes in interest rates and have capital reserves in place.  The speakers predict that high-rise commercial office buildings will be the first domino to fall in the commercial real estate market.  They also discuss the potential fallout from the expiration of commercial debt and the upcoming Limitless Expo event in Scottsdale, Arizona. Resources mentioned: Show Notes: www.GetRichEducation.com/452 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY’ to 66866 Attend the Limitless event, June 15th-17th: LimitlessExpo.com $22M Office Building to Convert to Multifamily: https://www.loopnet.com/learn/deal-of-the-month-22m-office-teardown-makes-way-for-multifamily/2115617288/ Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free— text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete transcript:   Keith Weinhold (00:00:02) - Welcome to GRE. I'm your host Keith Weinhold last year's spiking of the Fed funds rate caused banks to fail this year and last year's. Doubling of mortgage rates is causing commercial real estate to fail this year. Why is it happening? How bad is it with commercial real estate and how bad will it get? That's the topic of today's conversation with Ken McElroy on Get Rich Education.   Speaker 1 (00:00:27) - Taxes are your biggest expense. The best way to reduce your burden is real estate. Increase your income with amazing returns and reduce your taxable income with real estate write-offs. As an employee with a high salary, you are devastated by taxes. Lighten your tax burden. With real estate incentives. You can offset your income from a W2 job and from capital gains Freedom. Family Investments is the experience partner you've been looking for. The Real Estate Insider Fund is that vehicle, this fund investing real estate projects that make an impact. And you can join with as little as $50,000. Insiders get preferred returns of 10 to 12%. This means you get paid first. Insiders enjoy cash on a quarterly basis and the tax benefits are life changing. Join the Freedom Family and become a real estate insider. Start on your path to financial freedom through passive income. Text family to 6 6 8 66. This is not a solicitation and is for accredited investors only. Please text family to 6 6 8 66 for complete details.   Speaker 2 (00:01:36) - You are listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Keith Weinhold (00:01:59) - Welcome to GRE from Montreal, Quebec to Monterey, California across North America and spanning 188 nations worldwide. I'm Keith Wein. Hold in your listening to Get Rich Education. Real estate investing is our major here. Minors are in both wealth mindset and the economics of real estate. That's what the matriculated graduates with here at G R E. You can think of an interest rate as how much it costs you to use money and to help you understand the preeminence of the cost of money. Let's you and I step back together for a second. If you go buy apples at the supermarket and Apple cost increase affects you. If you go buy a gallon of paint at Home Depot, a paint cost increase affects you. And if you go buy an acre of raw land, a land cost increase affects you. But rising interest rates mean that there was an increase in your money cost and you use money to buy those very apples paint or raw land.   Speaker 1 (00:03:04) - And now you begin to realize how interest rates touch and percolate into every single thing that you buy as a consumer or as an investor. And we know that interest rates are not currently high. Historically, yeah, you heard that right now that's not much consolation to those that are in trouble. But the Fed funds rate is about 5% and all year here the mortgage rate on an only occupied home has stayed between a range of six and 7%. Actually, mortgage rates are a little low. Their 50 year average is about seven and a half percent. Well, so then what's the problem? Well, the problem is not what are indeed historically normal rates. It's that rates rose so fast last year. You look at a graph and they climbed a wall. In fact, it's unprecedented, at least in you and i's lifetime to have them rise that fast. Just last year alone, mortgage rates spiked from 3% up to 7%. Economists estimate a 56% chance that they indeed are going to raise the Fed funds rate again. Yep. There is another meeting. Just next week, let's learn about commercial real estate deals blowing up with Ken McElroy.   Speaker 1 (00:04:28) - I'd like to welcome back longtime real estate investor influencer and multi-time bestselling real estate author and G R E podcast guest regular. Really? Hey, it's the return of Ken McElroy. How's it going Ken?   Speaker 3 (00:04:40) - Great Keith, how are you? It's good chief. Terrific. Great to see you in Arizona too recently.   Speaker 1 (00:04:45) - Yeah, that's right. We were just together in Arizona a few weeks ago, both there and everywhere across the United States, we know that residential loans are for the one to four unit space where those properties typically have long-term fixed interest rate debt, 15 to 30 years. The five plus unit department space is tied to commercial lending even though it's residential property and they often have variable rate debt for a shorter term. And commercial loans are where the trouble is in this world of higher mortgage rates. And a few months ago it made a lot of news in our world, Ken, that a Houston real estate investment firm that was at one time one of the city's largest landlords with $500 million worth of multifamily. They got foreclosed on and launched 3,200 apartments at the time. And one major reason were these floating interest rates that rose so much and rents couldn't keep up proportionately and more deals are going belly up like that. So Ken, tell us about what you are seeing out there now in regard to rising mortgage rates affecting the commercial lending market.   Speaker 3 (00:05:45) - Well, it's true. Obviously we all know that the Fed raise rates 10 times, so they were obviously fighting inflation. So if you bid around this business enough to know, know, you should have known that the Fed usually increases rates when inflation goes high. And so it is one of the tools that they use to kind of tampering 'em down inflation because that, no, the Fed is more concerned about inflation than interest rates because you obviously inflation affects everyone. So yeah, if you're in the real estate space, you might feel like you're being picked on. But the truth is, it's not surprising to anybody who's been around that they use this interest rate increases as a mechanism to lower inflation or the masses. So some of those mistakes that were made, I think it was Arbor, you have to go back to the experience of the syndicator. They elected not to buy interest rate caps and have other kinds of protections around those assets. And unfortunately, you know, some of those investors that invested in those assets, those were things that maybe weren't very clear to them. Uh, we're not exactly sure of all the details, but what's gonna happen next Keith, is we're going to start to see there's gonna be a big division of the experience versus the inexperience, I would guess   Speaker 1 (00:07:08) - A divergency, yes, of course that Fed has that dual mandate of full employment and stable prices since they're still doing pretty well on the employment. They want to get stable prices and the way to get a handle on that is to continue to raise rates. And when the Fed raise rates essentially from zero to five in just about a year, things are going to break. And we're talking about right now what is breaking first in the real estate space. And you mentioned a syndicator, when one buys an apartment building, oftentimes they get what's called a value add project, this renovation stage. And during that time they often have this variable interest rate debt. So often we are talking about apartment syndicators here, sponsors that put the deal together and what the syndicator essentially does is buy the apartment, renovate it, raise the rent, and then they cash it out to investors by either selling it or refinancing it at a higher value. And right here, these are the people that we're talking about that are in trouble due to their rates being jacked up.   Speaker 3 (00:08:07) - That's exactly right. I think you always have to anticipate a change in interest rates, whether they're up or they're down. And I think a lot of times people just always believe that they would stay as is. And I think that was obviously a flaw in their thinking and a flaw in their strategy. The other one of course is capital reserves. You know, cash, you have to have all these things in place. It looked to me from the article, the articles and the, and the different pictures and and things I've seen that they may have run into the problems on the management side as well. And you know, so there's a number of issues that I could see potentially that affected them. And I actually am hearing others kind of stories around this Keith as well. The first domino really to fall I think is gonna be some of these highrise commercial office buildings.   Speaker 3 (00:09:01) - That would be my guess because in a very different scenario where a lot of the folks that own those and maybe were in those, a lot of those tenants are deciding that they don't want their people to come back. Maybe they're doing a work from home model or the people that work for them decide that they don't wanna be back or whatever scenarios there are. There's definitely a lot of vacancies. I was looking today, you know, we're looking at pretty high uh, vacancies in la we're looking at very high vacancies in San Francisco, Portland, Seattle, New York. When I'm talking about high, I'm talking about unprecedented. We're talking about 30, 40% in many cases and in some cases even more so we know that if you have a vacancy that high, you're definitely not paying the debt. And so there's all kinds of these big landlords that are actually defaulting on their loans of those commercial office buildings.   Speaker 1 (00:10:01) - Now we're talking about vacancy in the office space there and we think really in our residential world, of course people think of you as a multi-family guy, but you also are in, you know, self stores in some other spaces. But we just think about the crux of the problem and how that's centered on residential. Maybe you can just talk to us, Ken, about exactly the details of the problem or maybe you have an example from a case study and just what that, that structure looks like for those in trouble.   Speaker 3 (00:10:29) - Why would I be concerned about it? Is, is probably a really good question. And the reason is is because don't forget, we all go to banks for stuff. So if it's an auto loan, a residential loan, a commercial loan or a business loan, it's still a financial institution and it's all connected even though we might only be going for one piece of that. And so as the commercial paper starts to default and starts to make its way into these large regional, smaller community banks, then what's going to happen is the underwriting criteria is going, they're gonna pull back because they don't care. They just know that they're taking water in the boat and they're in trouble. So, so that's why I look at it, you know, obviously, but you have to look at the real estate, the landscape completely, and you realize that, you know, while you might be just doing one piece of that, there are lot and these banks are connected out in the community in many, many, many ways, right?   Speaker 1 (00:11:30) - Yeah, that's it right there. Maybe people, some don't think about just a complete seizure and a reluctance to want to extend loans at all if they have enough on their books that are in trouble,   Speaker 3 (00:11:40) - Right? So that's why I'm looking at it from the multi-family standpoint as well, because we're already seeing underwriting criteria or in other words, banks are saying we're gonna give you less 50% loan to value, 55% loan to value. So why would that be? The reason is is that you know, they're looking at their, just like you would be and and all your personal assets that you have, stocks, bonds, gold real estate, whatever it is, business, each one is performing differently. A bank looks at it exactly the same way. So if something's happening over here that's negative, it's affecting over here and it's shining a light on the whole thing. And so we're already seeing a tougher underwriting. And what that means is that means that you're gonna have to come up with more money for down payments. And of course the banks are gonna be very cautious about any kind of lending if it's on a single family, if it's on a multi-family, if it's on a residential or retail or industrial or office buildings or self storage or whatever it might be. It we're all connected. And so that's what I think is gonna be hitting us is we're gonna be in a debt and a credit crisis here in the next 18 months.   Speaker 1 (00:12:54) - So there could be downward pressure on loan to value ratios, your bank wanting you to put more skin in the game so that they are less exposed and you are more exposed there. So we're talking about maybe new purchases oftentimes in that discussion. What about those that have a loan? Maybe the interest rate has gone higher, they want to refinance it. You know, a lot of times we talk about cash out refinances is something that we want to do when equity accumulates, but could this be an environment for cash in refinances with a lot of these commercial loans?   Speaker 3 (00:13:29) - Yeah, so we've done a couple cash in personally. Yeah. So what does that mean entirely? So what happens is, well let's say you had a load at three and now of course they're over five. Well our rate caps hit us at five, but we still don't forget, we went from three to five. So that little bit of piece was expensive for us even though we had a cap though, recap is simply just an insurance policy on the original purchase, that's all. So we're like okay, that cost us about 20 grand a month on this one property as an example,   Speaker 1 (00:13:59) - The rate cap below   Speaker 3 (00:14:00) - The rate cap below the rate cap purchase was less, but the three to 5% that increase in the mortgage payment was about 20,000 a month. Okay, so call it 250,000 for the year for one asset. So you're like, uh oh. I went from having great cash flow to having a lot less cash flow because my rate went out now it hit the cap. Well I was protected but it still went up 2%. So we started to take a look at what would it cost for us to fix this rate and it was uh, about a million bucks for a cash in. So we did it, we said let's do a million dollar cash in, fix the rate because I'm also afraid of future rate increases. So that $1 million that we put in to fix the rate at 5.2%, we know it's a four year payback or 250,000 times four is a four year payback.   Speaker 3 (00:14:52) - So it's a four year loan. But really what we're doing is we're hedging the entire time and of course we have that cashflow coming out each and every month. And the beauty of that E as you know, is what you do is you hedge the upside. You can always re refinance on the doubt. And all I was trying to do was protect that thing from when the recap expired, what's usually caps for two or three years, let's say. I didn't wanna be in a position where it was, you know, six or seven or something. So that's why we did it. We were just protecting against the future. And these are the kinds of things that you can do if you've been in the room before, you know what I mean? You, if you have the experience and and you see these kinds of things happening, you could take action to help yourself and help your investors. And that is clear that the arbor had not set up their loans that way. They had not set up their cash that way and they perhaps weren't looking at some of those things critically like that.   Speaker 1 (00:15:49) - Anna and I were each active real estate investors through the global financial crisis. So we know a crisis well, we see what each crisis is a little different when we talk about hedging ourselves against the crisis. Can you talk about rate caps, which is basically this insurance that one can buy to put a cap on how high their rates can go. If you go ahead and buy a property to 3% interest rate and you have a 2% rate cap, that means your cap cannot exceed 5%. So therefore if rates go up to 7%, you're kind of in the money.   Speaker 3 (00:16:19) - That's exactly right. And so it's clear to me that they didn't buy those cap, by the way, they're not the only one. There are others. And so if you shine the light on the multifamily industry, there's a fair amount of people that didn't do that either, not just them. And also there's other people that don't have the cash perhaps like the million dollars that we used to do a cash in. And so they're going out to their investors to try to preserve the asset. The crazy thing about it, as you know is we're still very under supply and on a housing stamp. Yeah, the fundamentals of the apartments are actually good though we're still seeing a a little bit moderate red growth and we're hitting theis and the occupancies are good. The apartment industry is not in any kind of crisis. The one thing that's changed is the cost of debt has got up a lot.   Speaker 1 (00:17:14) - Why don't we talk about that some more and just how bad is it going to get Ken, maybe through the perspective of just how much commercial debt is about to expire.   Speaker 3 (00:17:24) - If you google this, you'll see that there's about 1.4 trillion expiring by the end of 2024. So that's a lot . And so what has to happen is, Keith, let's say you all bought something. Well actually there's already examples. If you Google, there's an office tower that was appraised and valued at 250,000,002 years ago and it just traded at 70 as an example. Wow. So there's a big, big haircut there, right? So first of all, all the equity on that original deal gone wipe down and then the that 70, all that does is cover part of probably the debt. So some bank somewhere took it in the shorts, you know, on that deal. And so that is a good segue to say what happens is anything that was purchased, let's say in uh, call it one to three years ago, is subject to massive valuation change.   Speaker 3 (00:18:23) - And if they have a situation where they're trying to do a cash out refi and they're not going to be able to, if they have a situation where they're going to sell, they're not going to be able to because the value of that asset is probably 20 to 30% less than it was just two years ago. So what's going to happen is if they can wait, they might be able to wait it out. If rates go down like everybody's hoping it will, or cap rates go back down like everybody's hoping it will, then you're going to be fine. The issue is going to be the maturities and when they hit,   Speaker 1 (00:19:01) - There's a 20 to 30% loss in value as we know at a 75% loan to value loan. Yes, that is a complete wipe out of the equity. Ken, when we think this through, of course apartments have debt that someone is holding onto and apartments also have equity that someone else is holding onto and equity could be held by. It's not just investors in a syndication, it's also a pension fund or a family office. And if these go under, we have to think about those ramifications of course, but we think about equity that's held by LPs limited partners, which are those individuals that invest in a syndication. What do you think that LPs should do? What kind of situation are they in? I mean are syndicators communicating with their LPs and letting them know things like, hey, there just isn't gonna be a distribution this quarter and I don't know about next quarter either or, how's that communication been?   Speaker 3 (00:19:52) - So it's hard to know. Obviously if you read the article about Arbor, there was not much and a lot of the investors were surprised. It's interesting though, cuz if you really dial into it, there's no way that they were making distributions for a long time as the things were defaulting. So there must have not been distributions on those assets for some time. That would be obviously a red flag. So I think that some syndicators are probably communicating very, very well. But in this particular case, that wasn't happening because of what some of the people were saying in the article that had invested with them.   Speaker 1 (00:20:31) - And when you're talking about Arbor, you're talking about that group in Houston that I brought yeah, up earlier. That's really become sort of like the poster child for what's coming can often that might make one think like the LP that invests in someone else's syndication that might make a savvy investor wonder, well gosh, I wonder if there's going to be a contagion effect. Even if a syndicator shows me a deal and that one particular deal looks really good, does that syndicator have other deals behind him that are blowing up and could affect this good deal that looks good in front of me right now. So what are your thoughts about any sort of contagion effect that way? Are you seeing any of that out there?   Speaker 3 (00:21:08) - It's certainly possible. I know that a lot of it's gonna be based around the debt itself. So if somebody got a deal like we did like two years ago or one year ago that put fixed rate debt on it, not a problem. So you have to take a look at the maturity of the debt. There's a lot of people that have bought properties that where they assumed alone in the commercial space you can assume something, people are still doing deals, you know, so if you could step into somebody else's loan at three, three and a half percent, let's say you're not gonna have a default issue, you're not gonna have a debt issue where the debt's gonna go up while you bought something, it's fixed. And that was kind of the whole point. As you know, I've been telling people to get in fixed straight debt for two years. If you go back and look at my videos, I probably said it a hundred times, getting fixed straight debt, getting fixed straight debt, getting fixed straight debt because you have to know what your debt payment is month to month to month for a long period of time. You don't want a fluctuating variable number. And so the people who didn't do that, the people that in my opinion were inexperienced and didn't by caps, this is the result of that.   Speaker 1 (00:22:23) - We've been talking a lot about problems here. Of course the flip side of any problem is an opportunity. You are an excellent opportunist. You just talked about situations where apartment values could be down 20 or 30%. So are you seeing opportunity, especially with respect to apartment buildings and what's going on coming ahead?   Speaker 3 (00:22:43) - We looked at four deals on Tuesday, we've been in opera on one of 'em. So to your point, if somebody's sitting on some assets and they need cash for ones that aren't doing well, for example, they might sell a couple of the good assets. And what's a good asset? A good asset would be something that's highly occupied and is stable and has fixed rate debt and it's something that you can easily underwrite, easily buy, and you know it's gonna be like clipping a coupon moving forward. That would be what I would call a good asset purchase. And those are definitely hitting the market. So I mean, you think about your own portfolio, you know, at any given time you're looking at the winners and you're looking at the losers, sometimes you have to sell a winner to pay for some of the losers. So we're starting to see some good assets hit the market.   Speaker 3 (00:23:32) - That might be great. They help somebody that's um, in a situation that might need cash for something else. So that is exactly what does happen. That is what's happening. So we're gonna be all over those issues and try to snap up some of these really, really nice assets. Another really good opportunity is going to be on brand new class A apartments that are just now being completed. So you know, as you know on a new construction deal, you do not get fixed straight debt because there's no asset. It doesn't exist. So you have a land, you have to build it until it's considered in service, which means you have all the occupancy certificates and it's blessed and the city says, okay, it's all ready to move it. That's in service. And until that point you can't put fixed rate debt on anything. So there's going to be this many opportunities on assets that are under construction that are in trouble because of these high interest rates. People that come in with all cash, for example, are going to be able to buy some of those properties. What I would guess at under replacement costs, it's going be a very exciting time moving forward for buying perhaps real trophy assets or assets up that people have already done a lot of work on or under what they're worth.   Speaker 1 (00:24:51) - That could be a good niche to exploit. You're listening to get Resu education. We're talking with Ken McElroy about trouble in the commercial lending market and how that affects real estate. Warren, we come back. I'm your host Keith WeHo with J W B Real Estate Capital. Jacksonville Real Estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor. Since 2013, JWB is ready to help your money, make money, and to make it easy for everyday investors, get started@jwbrealestate.com slash gre. That's jwb real estate.com/gre. GRE listeners can't stop talking about their service from Ridge Lending Group and MLS four 2056. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plexes. So start your pre-qualification and you can chat with President Chaley Ridge personally. They'll even deliver your custom plan for growing your real estate portfolio. start@ridgelendinggroup.com. This is peak prosperity's. Chris Martinson, listen to Get Rich Education with Keith Wein old and don't quit your daydream.   Speaker 1 (00:26:33) - Welcome back to Get Education. We're talking with Ken McElroy, longtime influencer and very successful author, A great influencer in the real estate space. And can you hit mentioned some other sectors outside of the residential and the apartment space earlier, and we look at potential problems or opportunities outside of residential and we think about what's happening to office space. You touched on that earlier, that's probably about the worst real estate sector I can imagine in their high vacancy rates, hotels and retail and warehouses, which actually think about one sector as doing pretty good since the pandemic and online shopping really lifted the warehouse sector. But do you really have any other thoughts about those sectors, how commercial loans affect them or any good opportunities in those outside of residential?   Speaker 3 (00:27:24) - As everyone knows, you know, when you buy a home, they look at your FCO score, right? They look at your credit and they look at you or me as the person paying that home as they should. When you move to the commercial side, they look to the asset. So they're very, very different. One's an individual. Another one is the actual asset. So as these asset values go down, as interest rates go up, I think that anything that's going to need any kind of a loan and the next year or two is going to have a problem from an asset value standpoint. Because what we were all used to in the last 10 years were these value add. So you'd buy something and then you would improve it and it would be worth more money at the credit and debt markets were stable, you know, so you could go, uh, you had a very calculated model where you can go put new debt on there and scoop that out and do a cash out refi that's gone right now because the values are down and of course the cash out refi option is off the table.   Speaker 3 (00:28:30) - So th those are the real problems that people face moving forward. So that could be all kinds of things. It could be retail, it could be industrial, it could be multi-family cuz everything is impacted even though we've had high cracy and red growth in some of those areas. If you're a seller that has a 3% loan and you're trying to sell it to somebody like us who's a buyer, we're probably at six or seven. We're looking at cash flow very differently than they are when our debt costs are almost double. So we're not gonna be able to pay that price. And so that's what the debt, rising debt costs have done. If the income, any expenses are the same, but the debt costs are double, then we as buyers can't afford to pay that. So therefore the prices that we're we can afford to pay are gonna be a lot less. And so that's actually what's happening   Speaker 1 (00:29:26) - And what we think of as perhaps ground zero for problems in the real estate market. I think office first comes to mind, you've talked about office vacancy rates in many American cities being really high earlier, it was a particularly noteworthy stat that was released not long ago that in New York City they have 26 Empire State buildings worth of empty office space. So we talk about all this open office space with more of the work from anywhere crowd and this dearth of residential housing. You know, can you experience, do you learn about very many office buildings being viable for tear down and conversion into residential? Or is that not feasible very   Speaker 3 (00:30:07) - Often? Yeah, so that's the million dollar question. What are we gonna do with these big, big office buildings? And think about this, Keith, let's say it's a 50 story building, which is a very common building all over the place and it's got 20 or 30% occupancy. My guess is, you know, what do you do? Like you have to wait until it's a hundred percent vacant, obviously before you can even do something. So what's going to happen is the banks are actually gonna be taking these back, the banks are gonna be managing these and they're gonna have to figure that out. And the only way to take down an office building is if it's a hundred percent vacant. And even then it might not be worth it because let's don't forget, you step into the shoes on day one of the property taxes of the utilities of the insurance, regardless if it's full or not in order to maintain it.   Speaker 3 (00:30:59) - So there's an operating cost that exists whether there are people in it or not. And so you have to be careful that you're not catching a falling knife. You know, like, I mean if somebody said to me, I'll give you this vacant office building or a dollar, I probably wouldn't take it because unless I had some kind of a solution for the, uh, on the income side. So I'm not saying I wouldn't, but you have to have a solution on the income side to cover your operating expenses. Otherwise you're just gonna be writing checks just like the person before you   Speaker 1 (00:31:34) - That is so well explained on the difficulty of making a conversion feasible from office to residential. Well, if you're like me, you read a lot of Ken McElroy's books like the ABCs of Property Management, the ABCs of Real Estate Investing. Can I read the Return to Orchard Canyon on a beach in India a little over three years ago? Actually, I love that more recent book from you and you have a great live in-person event coming up really soon where the audience can come to see you at a bunch of other speakers. It's a fantastic event. It's a second year, you're doing it, it comes up really soon here in Scottsdale. Tell us about it.   Speaker 3 (00:32:15) - Thank you. It's, I cannot be more excited, especially what's happening right now. It's called Limitless and uh, it's at limitless expo.com. So it's just limitless expo.com. But kicking off the very first day is Joseph Wang, who wrote a book called Central Banking 1 0 1 and he is good. He used to work in New York for the Fed and is going to talk specifically about what's the Fed going to do in the second half of the year in 2024 based on all the things that he did on the open markets desk for the Fed. So that's gonna be very exciting. We've got Chris Martinson as well talking right after him, got kiosaki. We have a whole bunch of people around entrepreneurship and um, kind of side hustle stuff just to try to figure out what the heck is happening and what could we be doing to protect ourself moving forward.   Speaker 3 (00:33:11) - So this is really, this year in particular is a not to miss year because these are things that all of us are trying to figure out. I don't have a crystal ball just like anyone does, and I'm studying like crazy to try to figure out what's happening next. We've got 45 speakers all coming to try to help us understand what we can do next. Chris boss, who's, uh, wrote the book, never Split the Difference. If you guys haven't read that book, you need to read that book. He's the hostage negotiator in the world and he works for the FBI and Harvard. And, and his talk is going to be how to negotiate during troubled times because these are going to be real things, Keith, real things that are happening. You know, when there's a debt maturity or a loan coming up or you have problems with your limited partners or, or whatever it might be, this is the room you wanna be and that's the talk you want to hear. Chris is gonna be there, I'm gonna do a podcast with him. He is gonna do a book signing, so it's really fun. It's gonna be Thursday, uh, the 15th, the 16th or the 17th of June. And uh, it's right in Scottdale, Arizona.   Speaker 1 (00:34:21) - Janice Prager will be there as well. And yeah, it seems like you just keep adding speakers. Okay, I wanna talk to you. Last month it was 40 speakers, now it's 45. So you, you have a buffet that you can sample there as an audience?   Speaker 3 (00:34:34) - We do. I can't wait to meet Dennis Prager. I, I've been to his compasses in la I, I'm a big fan of, you know, his messaging and, and what he, he has a billion downloads last year, A billion with a B. That's incredible. So he's getting to be there. I just think it's like the who's who, right? It's tweet thought   Speaker 1 (00:34:52) - 100%. You can get started@limitlessexpo.com. Can I and our audience have benefited from your knowledge for years? Thanks so much for coming back onto the show.   Speaker 3 (00:35:02) - Yeah, my pleasure. Always great to be on   Speaker 1 (00:35:10) - Most of those speakers at the Limitless event. Were guests here on G R E, so you'll probably find a lot of residents there, including Chris Voss who was the FBI's lead hostage negotiator. He was on the show with us here twice you'll remember. And yeah, you'll remember that pretty fondly  because it was entertaining the first time Chris was here back in episode 331, how the World's Best negotiator and I, Chris Voss did a mock face off in negotiating the purchase of a fourplex building. But getting back to imploding apartment syndications, they aren't just blowing up deals and blowing up investors, but also blowing up banks when the borrower cannot repay the loan. And banks have to take back apartment buildings and office buildings unlike, which is actually pretty unusual in a way that they need to take back apartment buildings. I mean, everyone understands how the work from anywhere movement created, the office space decline, but there is quite a demand for all residential types, single family homes and condos and trailers and apartments.   Speaker 1 (00:36:17) - But it's those resetting rates that blow up apartments despite the demand for people to wanna live there. So what this does, it makes banks more conservative with lower rent values being delivered, lower rent to value ratios also coming on the way. I would expect more of that ratcheting down. And for more people wanting to refi from a variable rate to a fixed rate, you know those syndicators they have got to put cash in in order to meet that lower loan to value ceiling will well capitalize syndicators. They can do that and others can't. Syndicators might very well be asking for capital calls from their investors then for their investors to help fund that cash in refi to keep those deals alive. The timeline for when you should expect a lot of this activity are from the peak 2021 and early 2022 deals that had short-term debt on them.   Speaker 1 (00:37:17) - They are going to face resetting rates late this year and into 2024. You probably noticed that just beyond the halfway point in the chat with Ken. I pivoted from talking about problems to discussing opportunity and the opportunity being that others might sell a good apartment deal because they need the cash to get out of that deal so that they can go take those funds and perform a cash in refi and shore up one of their other deals and get that other deal into fixed rate debt. Most modern offices, you know, they simply cannot be adapted over to residential uses due to their wide and deep floor plates that restrict natural lighting to only the perimeters. And because of the overhauls required to run mechanical and electrical and plumbing to individual residential units in the rare office building where conversions are possible, that sort of thing is wildly encouraged by everyone, developers and brokers and all kinds of governmental bodies.   Speaker 1 (00:38:19) - In fact, there was recently a sale of a 150,000 square foot office building in Orange, California oranges between Anaheim and Santa Ana. It's sold for 22 and a half million dollars and it's planning to be converted from office to residential. But yeah, multi-family conversions like that, they just aren't common. And the full story about that from LoopNet is in the show notes for you today. We've been discussing the difference between one to four unit properties and five plus unit multi-family apartments today. The difference in lending is really what makes all the difference. So those larger apartments bought with variable rate debt, say one to three years ago, they are problematic where the one to four unit space instead stays shielded with long-term fixed interest rate debt. Next week here on the show, you're gonna meet our new investment coach at GRE Marketplace. You have heard this person on the show before. I'll introduce you next week. Yes, we're adding a second one to keep up with demand for you. Until then, I'm your host Keith Wein. Hold, don't quit, it's your daydream.   Speaker 4 (00:39:31) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests on their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Get Rich Education LLC exclusively.   Speaker 1 (00:39:59) - The preceding program was brought to you by your home for wealth building. Get rich education.com.  

Did you expect to hear this about Black people? We have a discussion about equality in housing. First, if you close your eyes and wake up in 10 years, where do you want to find yourself? I explore. For some reason, investors want to time the real estate market, yet they dollar cost average into stocks.  1% down payment mortgages are here. Learn about the latest AI development. The maker of ChatGPT is developing “Worldcoin”. It would verify if you’re human by scanning your eyeballs.  Finally, there’s a long history of racial discrimination in both society and housing. The Fair Housing Act—part of the Civil Rights Act of 1968—helped break down discrimination. The Fair Housing Act protects people from discrimination on the basis of race, religion, national origin, sex, handicap, and family status when they are renting or buying a home, getting a mortgage, or seeking housing financial assistance. Learn the difference between equality of opportunity and equality of outcome. The latter is difficult to administer. Providing equal opportunity in housing is not just the law. It’s the right thing to do. I explain why it actually benefits you. Resources mentioned: Show Notes: www.GetRichEducation.com/451 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY’ to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete transcript:   Welcome to GRE! I’m your host, Keith Weinhold.    If you close your eyes and wake up in 10 years… where do you REALLY want to be? 1% down payment mortgages are here, profound AI impacts in your life…   Then, some contentious and even volatile discussion about racial discrimination and Black people… in housing. You’ll get my opinion on equality of opportunity. Today, on Get Rich Education. ____________   Welcome to GRE! From Allentown, PA to Glen Allen, VA and across 188 nations worldwide, I’m Keith Weinhold and this is Episode 451 of Get Rich Education… where we don’t live below our means. We grow our means.    If you’re being told that you’re crazy or that things aren’t going to work out… you know… hearing that right there can actually be a prerequisite to you being successful.    Are people raising their eyebrows at what you’re doing?    Yeah that could actually be some positive feedback on your direction, as long as your head tells you that it’s right and your gut backs it up.    Don’t trade away your authenticity for approval.   Look, if you close your eyes and wake up in 10 years, what do you want to see when you open your eyes? Awards for work?    I doubt it. Or is it kids, family and relationship-oriented?    Or is it, invisible footprints that you’ve left behind all over earth because you traveled or explored that much?    You DID raft the Grand Canyon, visit the Taj Mahal, see the Eiffel Tower, or dive the Great Barrier Reef?   Yeah, it’s probably those types of things.   Well then, why are you putting 90% of your effort into career-oriented stuff… if that doesn’t help you achieve that goal 10 years from now?    That’s a better set of questions for you to ask yourself.   That’s why we talk about generating residual income when you’re actually young enough to enjoy it here.   Rich people play the money game to win - that’s what we do here. While most people play the money game not to lose.   Real estate is not always easy. It’s not OVERNIGHT wealth, you’ll have your problems. But it can be amazing when you have a strategy and stick to it.   If you want me to make your financial life better in 30 days, maybe I can in some cases but that’s really not what we’re doing here, probably not even in a few months.   But in a few years… yes, definitely.   And I think it helps to remember something simple. The only place that you get money is from other people.   All your life, the only way that dollars have come into your hands or into your bank account is because it came.. from other people.   For many, that’s just one person - one employer that the money comes from.   With each rental property that you add, that is one more person that is paying you…   … that’s of tangible benefit to you in a world where the only place that you get money is from other people.    Now, as we dip into the mechanics about how to achieve that…   What would be different if you HADN’T taken action in RE?   Now, I don’t know what it is, but for some reason, people are trained to TIME THE MARKET in RE.    Yet people might put 10% of their salary - up to $22,500 is allowed this year - $30K if you’re over 50. They put that in their 401(k) - dollar-cost averaging - which is NOT timing the market.   I don’t know why that is. Why some people are predisposed to time the market in RE but yet they DCA in stocks - which is the opposite of timing the market.   Maybe it’s the cost of the property?   Treat RE the same way - DCA there too. Keep adding 1 or 2 a year or whatever you can.   When you consider 401(k)’s low returns and low liquidity, you might not even be putting money into it anymore.   You’ve got the wherewithal to know that very dollar you lock in a 401(k) is a dollar that can’t use OPM.   And it gets even worse.    Because with a 401(k), you are HOPING TO DIE before the money runs out. What kind of a retirement plan or life plan is that?   Doesn’t sound like diving the Great Barrier Reef to me. Ha!   Rocket Mortgage introduced a new 1% down home loan program. This is a new product for them. But some people to think it’s the first.    It’s not the first. It comes on the heels of rival United Wholesale Mortgage rolling out a similar program.   But this particular program is expected to reach a lot of people.   And here’s the thing. It also eliminates the monthly mortgage insurance fee. It deletes monthly PMI.   Now, even if we’re just talking about primary residences here, this affects you in the rental property market. I’ll tell you why in a moment.    But with this 1% down payment program, a buyer using this program who’s purchasing a single-family home, well, their income can be no more than 80% of their area’s median income…   … they are only required to make a down payment of 1% of the purchase price.    Then the lender covers the remaining 2% needed to reach the required 3% threshold for conventional loans.   So it’s not only going to reduce upfront costs, but that monthly mortgage insurance fee for the borrower is gone, which is typically a few hundred dollars a month… That what they had to pay traditionally, if the buyer puts less than 20% down on their purchase. That’s going to help affordability. So with 3% down being reduced to 1% down, then a homebuyer of a $250,000 home would only need a $2,500 down payment instead of $7,500. Now, strict underwriting guidelines are still in place - you need income and credit and assets. There aren’t really as many mortgage borrowers that put 20% down on a home as you might think. In fact, the average new purchase down payment amount in America is only between 6 and 7%. But this 1% option, which it’s estimated that 90 million Americans will qualify for - over the long-term, that is just going to increase the available pool of buyers, of course, because more people that were on the edge of affordability can now qualify. Now, in a normal market, a few of your tenants that were on the brink of qualification might be able to run off - and buy. But you’ve still got those erstwhile strict underwriting guidelines and there’s still just such a lack of supply of this entry-level housing - like I updated you on last week. You can’t move into what doesn’t exist. So this could create some tenant attrition, but it should be pretty limited for those reasons.   But, yeah, with this larger pool of buyers that now qualify, that puts more upward pressure on property prices.    When you make any good or any commodity MORE affordable in the short-term like this, with more buyers & more bidders, it makes that much LESS affordable long-term because that competition pushes prices up.   It’s just like decades ago, as soon as financial assistance came to the college enrollment world with Stafford loans and Pell grants and all that stuff, what did it do?   More people could afford to PAY MORE with more & better loan types and that made college costs skyrocket.   The same effect is happening here when you lower down payment requirements to just 1%.    Though, that factor alone shouldn’t make home prices skyrocket. They shouldn’t shoot up. But it’s just another tailwind on upward price momentum.   Typically when a tech CEO goes in front of a Senate committee, it gets embarrassing. Like, they end up explaining how to use email.  OK, Senate committees are not known for being tech savvy.  Not so a couple weeks ago, when Sam Altman, CEO of ChatGPT-maker OpenAI, testified on Capitol Hill on the future of AI and how the field should be regulated. Now Sam Altman has a lot more going on than just ChatGPT. It’s possible that he’s the future wealthiest man in the world. Now, this is where it gets scary. He’s about to secure a $100 million funding round for an eye scan-accessible global cryptocurrency project, Worldcoin. That’s what the Financial Times told us. Worldcoin is not totally unrelated to his signature project. The company’s goal is to verify whether users are human by scanning their irises to disburse universal basic income… to workers displaced by AI. Now, I’ve explained before how technology actually creates jobs, not destroys them.  But the hearing continued with a discussion of the dangers of an unpredictable, evolving technology that can generate and spread misleading information without us even realizing it’s fake- like those famous fake images of the Pope in a puffer jacket or Trump running from police. Well, for his cryptocurrency, Worldcoin, Sam Altman has already released a World App crypto wallet that can be downloaded to your mobile phone. And he’s got big plans for Worldcoin as the first-ever cryptocurrency to be held by every person on the planet.   It runs on the Ethereum blockchain. You don’t need to know what that means. In practical terms, Worldcoin will look (and trade) a lot like the cryptocurrencies that you’re already familiar with. So in that regard, Worldcoin isn’t breaking any new ground.   What makes Worldcoin stand out is the fact that it has aspirations to be both a cryptocurrency and a global identification system. With a tag line of "the global economy belongs to everyone," Sam Altman plans to distribute Worldcoin tokens to every single human on planet Earth.   And this is where things get really creepy. To pick up your free Worldcoin crypto token and sign up for a Worldcoin ID, you will need to give Sam Altman a scan of your eyeballs.    Yes, you heard that right -- Worldcoin has created a proprietary iris-scanning tool known as the Orb. Once you've had your eyeballs scanned with the Orb, you're good to go.    Altman says this step is necessary to verify that you are a real human and is not meant to be an invasion of your privacy. He won't even ask you for your name.   Yeah… I don’t know if people are going to go for that, especially Americans. Americans are more suspicious and have more resistance to authority than most places.    We’ll see what develops with WorldCoin but expect to hear more about Sam Altman.   If you want more real estate education, your source is GetRichEducation.com   For actually physical property addresses conducive to financial freedom, create one login one time like thousands of others have. You can get started there at GREmarketplace.com   More straight ahead, including a discussion and some contention about racism. I’m Keith Weinhold. You’re listening to Get Rich Education.   ________   Welcome back to GRE. I’m your host, Keith Weinhold. As we’re about to get to racism, now, first…    It's no secret that I prefer investing directly in single-family rental homes and apartment buildings.   But when I look for real estate investments that are even more passive than turnkey...   ... I just thought you might like to know that I personally invest my own money through a company called Freedom Family Investments.   Right from the beginning, they’ve always provided me with exactly their stated return, paid on time.   You might wonder, what makes their funds any better than, say, a Wall Street REIT or a 401(k)? Well, for starters…  It's being paid passive cash flow today, not when I'm age 65+. And Tax benefits that offset W-2 job income and capital gains. This part itself can be life-changing. It might be hard to rake in as much money as Taylor Swift's Eras Tour when you're young enough to enjoy it. But this can get you closer.   The fund invests in real estate projects that make an impact. So consider becoming an insider along with me.   We get preferred returns of 10% to 12%. That means we get paid first. Cash flow is paid quarterly.   You can join us with as little as $50K. It is for accredited investors only.   Freedom Family Investments they ARE THE experienced partner on the most PASSIVE portion of my real estate holdings.   If this sounds interesting, text FAMILY to 66866 and ask about the Real Estate Insider Fund.   Again, text FAMILY to 66866   Let’s discuss racism and discrimination in America.   It’s a topic that I think some people don’t want to discuss. But I will today, because, here we are, Episode 451 and it’s the first time.   This was recently published on our Get Rich Education YouTube Channel, so expect some sound effects as we’re about to play this for you here.   The first voice that you hear is 60 Minutes interviewer Mike Wallace with Morgan Freeman, then Denzel Washington, and finally, Dr. Jordan Peterson.    This is about 10 minutes in length, and then I’ll come back to wrap it up for you.   **PLAY VIDEO**   We’ll end it there. If you’d like to see more, check that out on our Get Rich Education YouTube Channel.   I’ll tell ya. Practicing equanimity, it was kinda difficult for me to discuss a sensitive topic. I’m not sure if you can tell in the video, but my forehead is sweating by the end of it.   The least that you need to know is that 1968's Civil Rights Act includes the Fair Housing Act.   This is a piece of landmark legislation is something that any citizen should know the basics about, and even moreso for a real estate investor.   The Fair Housing Act protects people from discrimination on the basis of race, religion, national origin, sex, handicap, and family status...   ...when they are renting or buying a home, getting a mortgage, or seeking housing financial assistance.    So it’s not just when you’re renting to someone, it’s when you’re lending to someone.   You shouldn't steer your advertising in an exclusionary way. Even terms like "cozy bachelor pad" or "ideal for young couples" should be avoided.   And equal opportunity is simply better for you as a landlord.   Say that you excluded a rental applicant group that comprised 30% of the population.   Then your available renter pool would shrink by that amount, reducing your income potential, reducing your occupancy rate, and reducing your tenant quality. So keep that in mind.   Next week here on the show we are talking about some big problems and really… the toxicity in the apartment market, the commercial real estate market… and how 2022’s sudden spike in interest rates is causing syndications to fail.    Apartment building owners are getting foreclosed on. More of that is coming as their VARIABLE interest rate debt resets to WAY higher levels.   How bad is it going to get? What are you supposed to do as an investor if you’re IN a syndication? What’s it look like if you’re a real estate syndicator yourself?   Who is safe and who is going to go… under?   All that and more will be answered next week when Ken McElroy returns to the show here with us.    I really appreciate you being here this week.    But as always, you weren’t here for me, you were here for you. I’m Keith Weinhold. DQYD!  

Get a 4.75% mortgage rate or 100% financing on new-build Florida income property. Start here. If I gave you $10M, learn why that probably wouldn’t even help you. We revisit how “Real Estate Pays 5 Ways”, a concept that I coined right here on the show in May 2015. Some think real estate pays three, four, or six ways. I revisit why there are exactly five. Real estate has many paradoxical relationships. I explore. Americans are living in homes longer than ever, now a duration of 10 years, 8 months. The active supply of available housing dropped again. Get an update on the gambling industry. A major sports gambling platform has offered to advertise with us. Take my free real estate video course right here.  Zillow expects US home values to rise 4.8% from April 2023 to April 2024.  Months of available housing supply is currently 2.7 per Redfin. Resources mentioned: Show Notes: www.GetRichEducation.com/450 Active Supply of Available Homes: https://fred.stlouisfed.org/series/ACTLISCOUUS Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY’ to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Complete transcript:   Welcome to GRE! I’m your host, Keith Weinhold. If you were gifted $10M right now, why that very well wouldn’t help you at all.   Learn a fresh take on how Real Estate Pays 5 Ways at the same time. A housing market update with perennially sagging inventory supply amounts and more outlooks for stronger home price appreciation than many expected. Today, on Get Rich Education.   Welcome to GRE!    From Montevideo, Uruguay to Montecito, CA and across 188 nations worldwide, you’re listening to one of the longest-running and most listened-to shows on real estate… the voice of real estate investing since 2014. I’m your host and my name is Keith Weinhold.   How would you like it if I gave you $1M?   You know what? That’s not enough to make my point. Make it $10M. I adjusted for inflation - ha! How much would you like it if I gave you $10M? How would that feel?   But what if it comes with this one condition.   What if I told you that I’ll give you the $10M, but you are not waking up tomorrow?    Not waking up tomorrow? No way!   Now you know that waking up tomorrow is worth more than $10M.   This is how you know that your time and your life are worth infinitely more than any dollar amount.   Hmmm… if your time is so valuable. Then why did you check Instagram 15 times yesterday to see who viewed your Stories? Ha!   Why are you spending time with your AI girlfriend? Ha!   Get Rich Education is ultimately about living a rich LIFE - whatever that means to you.   And we do approach that from the financial perspective here. Money does matter… because leverage, cash flow, and inflation-profiting enable you to BUY time.   We’re really one of the few investing platforms… this show is one of the few places with the audacity to tell you that - sure, a little delayed gratification is good… but the risk of too much delayed gratification is DENIED gratification.   Denied gratification is a terrible investing risk that most people either don’t give enough weight to - or don’t factor in at all.   And getting a $10M windfall is not as great as it sounds either.    History shows that the $25M Lottery winner quickly loses their money. Why does that happen?  Because it seemed like it was effortless to get the windfall, and because they don't know how to handle an amount like that.  It’s really similar to a capital gains-centric investor that gets a windfall.  See, cash flow investors like you & I - we can be more measured because your income stream is metered out over time. That’s why you are less likely to be irrational with your gains.     Now, I touched on some of those ways that you’re paid in real estate investing.    Real Estate Pays you 5 Ways™ simultaneously. That’s a concept that I coined right here on the GRE podcast. We since went on to have it trademarked.   Do you know when I first introduced that concept right here on the show - the month & year?    And I’ve since gone on to do a lot with “Real Estate Pays 5 Ways” to help other audiences understand real estate’s five distinct profit sources.   Well, I had someone on Team GRE here do some digging into some of our legacy shows - our past episodes… because I wanted to know when I first said it… and it was apparently in May of 2015, so 8 years ago that I introduced it.   Since then, many other thought leaders have gone on to cite the phrase. Someone other than me even wrote a book on it. And that doesn’t bother me at all. I’d rather that other people and readers get good ideas. That’s more important than getting the credit.   Of course, c’mon, you can recite these 5 now like they’re the Pledge Of Allegiance or something.    This is as automatic as the Lord’s Prayer is for Christians. The five are: Appreciation Cash Flow Your return on Amortization and Tax Benefits and finally Inflation-Profiting But now, let’s dissect this frog here a little. Why five ways? Why not another number, like real estate pays four ways or six ways?   It is five. There are no more or less. Each of the five are a distinct benefit.   A common flawed case that Real Estate Pays 4 Ways is that most real estate teachers omit the Inflation-Profiting benefit on the long-term fixed interest rate debt.   Any GRE devotee knows that with 5% inflation on $1M in debt, you only owe the bank $950K of inflation-adjusted debt after year one, $900K after year two, etc. (And in the meantime, the tenant pays all of your mortgage interest.)   Some that make the 4 Ways case question the Tax Benefit. Could the tax benefit really be considered a profit source, or is it just a deal sweetener?   It's a profit source.   Outside the real estate world, to obtain a tax write-off, you must have a real expense backed up with receipts, like building a new computer equipment or buying a new farm tractor.   Instead, the magic of real estate tax depreciation says that you can just write off 3.6% of the improved property value each year just for doing... nothing all year. No improvements necessary.   It's a phantom write-off, yet legitimate to the IRS.   Then the 1031 Exchange means you can endlessly defer all of your federal capital gains tax for your... entire life.   Yes, it's one of the few places in life where procrastination actually pays.   I've even heard some say that they're a fan of GRE's Real Estate Pays 5 Ways™, but they've discovered a sixth.   This often involves an event that's either unlikely or falls into one of the existing 5 Ways.   For example, "My appraisal value exceeded the contract price. I’m buying it for $320K, but the appraisal is $340K. I got $20K in instant equity. See, I was paid a 6th way."   No.   I mean, good for you, $20K of instant equity is a nice sweetener - that’s a $20K credit in your net worth column that you received the moment you opened up that appraisal e-mail from your lender and saw it. Nice!   But an appraised value that exceeds the purchase price is not COMMON enough to be expected… and the 5 Ways are.   Also, you can make the case that "instant equity" is covered in the first way you're paid, Appreciation.   The reason that we invest in real estate is because there's virtually no other vehicle in the world where you can expect to be paid five ways at the same time.   That’s a foundational principle - it’s a core concept here at GRE.    It’s why we do what we do. It answers the compelling “why” for real estate better than any answer there is…   …and that’s why anything less than a 20 to 25% combined return when you add up all five ways is actually disappointing - and that’s done with low risk - which is paradoxical almost anywhere else in the entire investing world.    If you haven’t yet, take my free “Real Estate Pays 5 Ways” course in order to really understand each of your five distinct profit sources, where they come from, and how that all fits together.    It’s at GetRichEducation.com/Course. The free “Real Estate Pays 5 Ways” short course is free at GetRichEducation.com/Course    Let’s talk about real estate trends.   You know, real estate investing has a lot of relationships that you just wouldn’t expect.    Part of that is because it intersects with the economy. Economies are complex and you get these relationships that are counterintuitive.    For example, in a recession, mortgage rates and all interest rates tend to fall, not rise.    Another exhibit is how debt BUILDS wealth with prudent leverage.   Another one that I’ve explained extensively here and the show and elsewhere is that higher mortgage rates correlate with higher home prices - not lower ones. That throws nearly everyone off.   Some physical real estate trends have been counterintuitive.   About 30 years ago in America - the 1990s - a new trend was fueled that everyone wanted to have a big kitchen.   New homes were often built with a big, fancy kitchen in the center of the home. Open floor concept - no galley kitchens anymore. That began back then.   And this was really the advent of - at the time - what we considered luxury amenities like granite and quartz kitchen countertops.    Anymore, that’s become standard. Even our build-to-rent providers at GRE Marketplace often have new granite countertops in rentals.    But the paradox here is the assumption that a big emphasis on kitchens would mean that more people would start cooking at home.    Oh, no. Just the opposite, in the last 30 years, despite the big kitchens, more people eat out at restaurants and fewer people eat at home. Another real estate paradox.   Another counterintuition was the pandemic. Society locked down, people lost their jobs and you think that there are going to be mass foreclosures because with no job, no one can afford their mortgage payment.   People thought the pandemic will cripple the housing market. Oh, it was just the opposite. That created a housing boom. Everyone wanted their space. Another paradox.   Remember here on the show, shortly after Biden was elected, I told you that this administration - for better or for worse - will not let people lose their homes.    Then we had high inflation on the heels of the pandemic. That was bad for consumers and good for real estate.   But high inflation is supposed to mean that bitcoin and gold would surge. Well, another paradox, that brought crypto winter, and gold did nothing in high inflation, until more recently here.   Rather than high delinquency rates we’ve got low delinquency rates. In fact, the mortgage delinquency rate has been steadily falling for almost 3 years now. That’s because of strong borrowers and tough lending standards.   Now, another real estate investing trend, though there’s nothing paradoxical here, is mortgage rate resets.    Here in the US, on 1-4 unit rental properties, you’re in great shape, whether you locked in your interest rate at 3% or 7% - the thing is that you have a steady payment… and on an inflation-adjusted basis, your same monthly payment amount goes DOWN over time - it’s a tailwind to your personal finances.   Inflation cannot touch your steady, locked-in P & I payment.   But many Canadians are up for renewal with their 5-year fixed rate, 25-year amorts.    Yeah, just across the border in Canada, they don’t have these 30-year fixed rate amortizing loans.    Their rate resets every five years.   One Canadian homeowner that I talked to, he doesn’t live in that posh of a home in Ontario, it’s just a little above the median housing price.    His family’s loan terms are about to reset on the primary residence and it’s expected to increase their monthly payment by $1,280 / mo.   How would you feel if that happened to you overnight? It’s a nuisance at best. It might even crimp your quality of life - or worse.   That can’t really happen to you in the US.    Having a 30-year FRM is like you having rent control as a tenant.    In coastal areas, some tenants that have a rent control deal - New York, California, Oregon - they want to live in their home for decades under rent control because there’s a ceiling on their rent. Move out of their unit - lose the deal and they’d have to reset somewhere else.   It’s the same with you as an American homeowner or REI in the 1-to-4 unit space. Your P&I price cannot rise.    And, I’ve talked about the interest rate lock-in effect before, constraining the housing supply.    Get this. Just last week, First American Title Company informed us that the average resident duration in a home hit a record high.    Amongst this lower intrinsic mobility rate, interest rate lock-in effect, and other societal trends, the average resident duration in a primary home in now 10 years, 8 months.    Lower mobility. Studies show that people are holding onto their cars longer than ever, and people aren’t parting with their real estate either.   So, then, with fewer properties coming to market, let's update the available supply of homes.    This is pulling from the same set of stats that I’ve been citing for years, in order to be consistent. Check this out. This is the FRED Housing Inventory - the Active Listing Count of Available US homes.   Remember, historically, it's 1-and-a-half to 2 million units available. In 2016 it was still 1-and-a-half million.   Then in April of 2020 it dipped below 1 million and fell sharply from there - which I’ve famously called this era’s housing crash.    It was a housing SUPPLY crash - which hedges against a price crash.   It fell to as low as 435,000 a year later in mid-2021. Gosh, under a half million.   It’s rebounded as builders know that they need to build more homes. Six months ago it got up to 750,000 available homes - which is still less than half of what  America needs.   And now, today, did the supply get up toward at least 1 million yet? No.    It has dropped back the other way to just 563,000. This astounding dearth of housing supply - it’s a condition that we could very well be in for over a decade.   This scarce supply is a long-term American condition. Yes, it’s good for your real estate values - both present and future. But it is a problem too. It’s a contributor to homelessness!   The Covid home improvement boom is officially over. So says Home Depot. They posted a revenue drop in the first quarter and warned that annual sales would decline in 2023 for the first time in 14 years.    Home Depot said that shoppers are now holding off on the big-ticket purchases they made during the pandemic and are choosing to break up larger projects—like remodeling a bathroom—into smaller, bite-sized pieces.   There’s a fascinating new study from a bipartisan think tank shows that everyone wants to LIVE ALONE.   That’s what Business Insider just reported on. Now, of course, the term “everyone” is an exaggeration.   But Statista and Our World In Data tells us that - get this - this is the number of SINGLE-PERSON households in the US - people living alone.   Back in 1960, that figure was just a paltry 13%.   By 1970, 17% of households were people were living alone.   Every ten years, that percent crept up to 23, 25, then 26%. By 2010 it hit 27% and by 2022 it hit 29%.   Now, you can’t think that’s good for society - to have all these single-person households. Almost 3 in 10 living alone. C’mon. Find a good spouse.   But in any case, that’s good for you as a REI, when, say, 10 people live amongst 5 homes rather than 3 homes - absorbing all that housing supply and keeping it scarce.     Even if the US population stayed the same, there’s more home demand - with that trend.   Of course, the US population is growing, though really slowly, probably just a few tenths of 1% this year.   But because of all the Millennials and the embedded “Work From Anywhere” trend, housing demand is pretty strong.   The recent rental housing demand and rent boom came almost entirely due to a surge in household formation -- young adults leaving the nest and roommates decoupling to get their own space... especially in urban areas.   People working from home want more space (without a roommate) AND are willing to pay more for it -- and able -- to pay more for it.   So if you're bullish on work-from-home remaining the norm for at least a chunk of the population (and I am), you should be bullish on the rental demand outlook.    And this has really revitalized America’s SUBURBS - that’s the area where you find that space.   The WFH-fueled rise of the suburbs is a wake-up call to cities, where, in the case of NYC, 26 Empire State Buildings’ worth of office space now sits empty.  The typical office worker is spending $2,000–$4,600 less annually in city centers. Because even if they GO to the city to work, they might only do that 2 days a week now - not 5. I’ve got more for you straight ahead, including a new forecast on how much home prices are expected to rise this year.   Again, check out my free video course if you haven’t “Real Estate Pays 5 Ways”. Get it at GetRichEducation.com/Course   I’m Keith Weinhold. You’re listening to Get Rich Education.   Yeah, big thanks to this week’s show sponsors. I’m only bringing you those places that will bring real value to your life.   Now, here at GRE, I recently read an offer that one of these major sports gambling platforms sent us. They want to advertise on the show here.    Do you want to hear sports gambling ads on GRE? I’ve got an opinion about that, that I’ll share with you shortly. Gambling is not the same as investing.    If you’re wondering why you’re hearing more about gambling, especially sports gambling than you had just a few years ago, well…   Now, just last week, it was FIVE years ago that the Supreme Court lifted a federal ban on sports gambling in the US.    That spawned a multibillion-dollar industry that’s transformed how Americans watch, talk about, and experience sports.   Americans bet $95B on sports in legal jurisdictions with consumer protections last year. That’s more money than the amount spent on ride sharing, coffee, or streaming… and you can bet that the off-the-books gambling number, if added in, would make that WAY higher. Two sports betting companies, DraftKings and FanDuel, control 71% of the US market, per gambling analytics firm Eilers & Krejcik. Gosh, that’s almost a duopoly right there. But despite that, these companies have struggled to turn a profit. FanDuel recorded its first quarterly profit just last year, and DraftKings has YET to report a profitable quarter. Well, I’ll just tell ya, it’s one of those two big companies that inquired about advertising on GRE. Of the 50 states, the number is 33 that allow it. That’s 2/3rd of the nation that has legal sports betting (Washington, DC, has it too). Another four states have legalized sports wagering, but don’t have any sportsbooks operating yet. Interestingly, the three most-populous US states—California, Texas, and Florida—have not legalized sports gambling. And they account for 26% of all teams in the major North American pro leagues. The number of women joining sportsbook apps jumped 45% last year, marking the third straight year that new women users exceeded men. Hmmm. I guess that’s the growth market there. My inclination to have gambling advertising and associating with these companies is NOT to do it… not to accept that advertising income. I don’t see how that’s serving you. This feels like a conflict in my gut and in my heart. Gambling is sort of the opposite of investing for a stable rental income stream.  I mean, either way, I guess you’re putting your money at stake. But that’s about the closest common ground I can find.  At least at this time… and probably all-time, it’s a “no” for gambling content here. That’s not any sort of moral judgment on the activity at all. I mean, gosh, as a teenager, I was really into sports gambling, but it was the informal kind. My friend & I each lay a $10 bill next to the TV - Phillies vs. Mets. Winner gets the $20 bucks. So, my inclination is a pretty easy “no”. Hook up with our sponsors - they support GRE. That’s Ridge Lending Group, offering income property loans nationwide. JWB Real Estate Capital - if you want performing income property, JWB really has Jacksonville, FL sewn up & locked down. They do one thing and do it well. Then, Freedom Family Investments. Get started with them for real estate funds that are ultra-low hassle. Text “FAMILY” to 66866.  Where will the next ten years take you & I on the show here? I would love to be along for the ride with you. I hope that you’ll be here with me.   Let me just take a moment to remind you that I’m grateful to have such a large, loyal audience to… well, listen to the words that I say every week. Thank you for your support.   This show has almost reached the 5 million download mark. I’ve been shown that it’s between 4.8 and 4.9 million downloads now. I’m genuinely honored and a little humbled about that even.    Let’s listen in to this 3+ minute CNBC clip. This is Lawrence Yun, Chief Economist at the NAR - the National Association of Realtors talking about the housing market just last week.    Now, a little context here - historically, the NAR has tended to give these dominantly sunny side-up, glowing, everything is always good & getting better kind of remarks on the housing market.   But I’ve been listening to the NAR’s Lawrence Yun for quite a while and think he’s been rather balanced.    Here, he discusses how real estate sales volume is down - which has a lot to do with low supply, that mortgage rates are steady, and that prices are slowly rising in most parts of the nation.   [OK, Vedran. Here’s where we play the insert.]   0:09-3:42 First words to keep are: “Lawrence Yun…” Last words to keep are: “... half of the country.”   https://www.cnbc.com/video/2023/05/17/home-prices-still-rising-despite-sales-dropping-says-national-association-of-realtors-yun.html   Now, Lawrence Yun did go on to say that he thinks that the Fed should lower interest rates by a half point, and more.    Let us know if you’d like us to invite Lawrence Yun onto the show. As always, you can leave your suggestions, questions, or any comments about the Get Rich Education podcast or any of our other platforms at our Contact center at: GetRichEducation.com/Contact   When it comes to national HPA, just last week, we learned that Zillow revised its home price outlook upward.   Between April 2023 and April 2024, Zillow expects home US home values to rise 4.8%.   You’ve got more signs that more & more American markets are being considered a seller’s market rather than a buyer’s market, which tilts toward price appreciation, though I still think pretty moderate price appreciation this year.    CNN recently published an article where they even posited the question: “Are Bidding Wars Back?” Yes, they are in a few markets.     Another measure of housing supply is the MONTHS of available supply. I think you know that 6 to 7 months of inventory is considered a balanced supply & demand market.   If it gets up to 10 months of supply, you tend to see little or no HPA.    Well, indicative of the low housing supply, we hit a winter high of 4-and-a-half months of supply.    And today, it’s down to just 2.7 months per Redfin. 2.7 months. That’s just another sign that demand is outpacing supply.   Then, among those entry-level homes, like the NAR’s Lawrence Yun eluded to, they’re even harder to find… and they’re the ones that make the best rentals.    How hard are these to find? I mean, in some markets this can be even more rare than finding a true friend? Ha!   Is it as rare as the Hope Diamond? Or perhaps a Honus Wagner baseball card? Ha!   Well, the good news is that we actually have the inventory that you want at GRE Marketplace.   Besides that, we actually have something that you really like and that is - mortgage rate relief to help you with your cash flow.    Purchase rates have been hovering around 6 1/2% lately. That’s the OO rate, so for rentals, it could be 7%+.   Well, how about rolling back the hands of time? Through our great relationships here and our free investment coaching, you have access to 4.75% interest rates on investment property - and many of these are new-builds in path-of-progress Florida.   Yes, our free coaching will get you the 4.75% mortgage interest rate, they’ll even help write the sales contract for you if you’re new to this, walk you through the property inspection, the property condition, the appraisal.    Yes, a 4.75% interest rate… today, from these homebuilder buydowns. I don’t know how much longer that can last.    To be clear, you’re not buying an income property FROM us. You’re buying it with our help and our connections. It is all free to you. This is educational support for you.   In fact, our coaching support like this through our sole investment coach, Naresh is becoming so popular, that I can announce that we soon plan to add a second investment coach. Yes! A new one.   And interestingly, you have heard of this soon-to-be second investment coach because they’ve been a guest on the show here a number of times. Yeah, we’ll make that introduction on a future show. You’ll find THAT interesting.   But, our Investment Coach, Naresh, does have some slots open to talk with you and help you out. A lot of the best deals currently with these 4.75% rates are with new-build Florida duplexes and fourplexes.    You can use them for rental SFHs too. Last I checked, the deals were a little better on the duplexes and fourplexes.   You probably thought that Sub-6 and sub-5 mortgage rates are about as unlikely to make a sudden comeback as AOL or Myspace, but we’ve got them here now.    Now, that 4.75% is just one of two options that we have with some Build-To-Rent builders that are fairly motivated. So to review the first one fully… you can get a   4.75% interest rate with a 25% down payment 1 year of free property management and $1,000 off closing costs per deal That’s one. Or, option 2 is: Zero down payment - yes, 100% financing 2 years free property management $1,000 off closing costs per deal Negotiable price, open to offers They are the two options.  It’s rarely more attractive than this. If you hear this in a few weeks, or perhaps months, I doubt that these options will be there any longer.   So I’ll close with something actionable that can really help you now.    If you want to do it yourself, that’s fine, like thousands of others have, get a selection of income property - despite this national dearth of supply at GREmarketplace.com   Or, like I said, right now, it’s really helpful to connect with an experienced GRE Investment Coach - it’s free - our coach’s name is Naresh - for those 4.75% interest rates or zero down program - whatever’s best for you… you can do all that at once at GREmarketplace.com/Coach   Until next week, I’m your host, Keith Weinhold. DQYD!  

Are you living the life that you were created to live? I explore.  People have harbored unfounded real estate fears for years. Here they were: 2012: Shadow inventory 2013: Boomers downsizing 2014: Rates spike 2015: PMI recession 2016: Vacant units 2017: Home prices above pre-GFC peak 2018: 5% mortgage rates 2019: Recession? 2020: Pandemic 2021: Forbearance crisis 2022: Rising rates 2023: Recession US houses prices are heading up this spring. The latest FHFA’s Monthly Housing Report shows 4% national home price appreciation. We explore apartment reputation scores. This is a great proxy for what’s happened in housing the past three years. As an investor, you have a low “loss to purchase” with your tenants. It’s difficult for them to buy their first home. I discuss 12 Ways that you can raise the rent and increase the value of your property. Resources mentioned: Show Notes: www.GetRichEducation.com/449 Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Invest with Freedom Family Investments. You get paid first: Text ‘FAMILY’ to 66866 Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold Credit to BiggerPockets.com   Welcome to GRE! I’m your host, Keith Weinhold. We get clear together - Are you truly living the life that you were created to live?   A housing market update with some perspective that can totally shift your real estate thought paradigm.    Then, 12 Actionable Ways that you can raise the rent and add value to your property. Today, on Get Rich Education.   Welcome to GRE! From Johannesburg, South Africa to Harrisburg, Pennsylvania and across 188 nations worldwide, I’m Keith Weinhold and this is Get Rich Education.   Last night, people were losing sleep over money. At the same time, last night, you made money… as you slept.   Are you living the life that you were created to live?   Your big ideas, your grandiose hopes and ambitions that you promised yourself that you would follow through on someday… have they turned into fears?   Even ones that you had as a child - like to be an astronaut or a firefighter. Today, it might simply be that you would have quit your soul-sucking job by now.   Maslow’s Hierarchy of Needs - how many are you fulfilling? All five? There are five levels. The base level are your… What are you doing to be the most that you can be?    With financial freedom, you can control your time and have a chance at living the life that you were created to live.   How do most people think of financial betterment? In a faulty way, like…   If you get your hair cut at home and brew your own coffee at home, you figure you could save 6 bucks a day.   Hey, Men’s Fast-Pitch Softball at the Moose Lodge is still free. Oh geez. So that’s why it’s your entertainment?   You could save a whopping $80 on flight tickets by adding an extra layover on your trip itinerary.   Or… it’s buy-one-get-one free week on Hillshire Farm brand bacon at the supermarket.   Alright, how do you know that all those things right there don’t move the meter in your life? It’s because, ask:   How many times would you have to do that activity - like add an unnecessary flight layover - in order to acquire wealth?    None. It doesn’t apply. You could practically do that an INFINITE number of times and you wouldn’t acquire wealth to create the time to live the life you want.   But how many times would you need to add a flight layover in order to make you MISERABLE? There IS a number. There is a certain number.   Doing those trivial things only helps ensure that you stay at a soul-sucking job.   Because rather than taking your time - a zero-sum game - rather than HAVING your time engaged in expansionary activities, you were focused on contracting.    You were focused on where there’s a low upside rather than activities that have an upside with no ceiling.   Another way to ask if the activity is expansionary and moving you toward financial freedom is: Did you overcome FEAR in fulfilling that task?   Yes, it’s an inconvenient truth that facing & overcoming fear is what makes you grow.   Did you overcome fear when you brewed coffee at home or got some stupid discount on grocery store bacon?   What are the activities you do that move you toward financial freedom - not debt-freedom - but financial freedom & overcome fear & grow.   That’s an activity like:   Making your first home a fourplex with an FHA loan… or repositioning your dead equity, like Caeli Ridge & I discussed here two weeks ago… or buying an income property across state lines… or learning how to become a savvy private lender… or finding out how to become an accredited investor.   Are you living the life that you were created to live?   Now you’ve got some examples, some milestones, and some checkpoints so that you’ll know if you’re either on the right trajectory - or hopefully - if you’ve been listening here long enough… you’re living that life… now.   Why would you live one more day of your life “below your means” than what’s absolutely necessary. That should only be a short-term life mode.   Don’t live below your means, grow your means.   Live the life that you were created to live.   But the major media channels stir up so much fear - and even niche ones - that it can often paralyze, even some clear thinkers.   Despite the fact that today’s real estate appreciation rates are quite normalized and modestly growing, some people still have unfounded fear over real estate.   And non-doers are always trying to time the market… and timing the market doesn’t work.    Here’s what fearful permabears are concerned about. It’s always something in real estate.    In 2012, it was “Shadow inventory”. Remember that? Never came to pass, just like most of this stuff.   In 2013, the fear was Boomers are downsizing   In 2014: Rates spike   In 2015, it was a PMI recession   In 2016, it was vacant units. Ha! A terrible miss.   In 2017, it was, look, nominal home prices are above the pre-GFC peak. Yeah, so what? They should be.   In 2018, it was 5% mortgage rates. That was the fear.   In 2019, I actually don’t remember what the fear was that year. That was a fairly uniform year but people stirred up fear about something in order to get clicks. Call it a recession.   In 2020, it was the pandemic   In 2021, it was fear of a forbearance crisis.   In 2022, the fear was rising mortgage rates will cause a housing price crash and there’s a collapse in sales volume.   In 2023, what’s the fear? Are we back to recession fears again?    Gosh, people have been steadily forecasting that for 12-18 months now, it still isn’t here, and it still isn’t on the horizon either, as job growth numbers keep beating expectations.    If you’re waiting to invest in the most proven investment of all-time - real estate, or even something else like gold or bitcoin or stocks - if you’re waiting until the uncertainty dissipates, then you’ll never be investing again for the rest of your life.   About the only certain thing in the investing world is persistent inflation and the fact that people are going to need a good place to live.   I invest in the certainties, not get paralyzed with uncertainty.   This way, we don’t get too caught up in the latest investing fad, often like stock investors do.    In 2017, it was anything around “blockchain.” In 2021, it was the “metaverse.” In 2023, “AI” is the term that’s instigated a Pavlovian response from investors salivating over the potential hundreds of billions in value that could be unlocked by the new technology… until that gets oversold. There IS some opportunity in some of those things, but as soon as people lose money in them, they revert back to principles. In a lot of ways, we stick to principles here, even if some of them are countercultural principles - like FF beats DF. Keep your debt & get more of it. More debt means you own more RE.   US house prices have stabilized and are heading up. They've gone from modest declines or steady prices… to modest growth in most regions.   That's the summary from my latest "light reading" duty—FHFA's Monthly Housing Report. It’s released every month.   Some highlights from the latest one, all stats through February, and with nominal pricing… Every division east of the Mississippi is up 5% to 8% annually The Pacific division, which was hurt most, saw a 3% decline National home prices are up 4% And this index covers 400+ American cities Spring numbers will be factored in soon. Since it's property-buying season, appreciation rates will likely rise.   Like I've stated before and am becoming really somewhat known for talking about in the industry. In fact, just last week, I was in Arizona and shared this on Ken McElroy’s show - the housing crash is a 100% certainty. That's because it already happened.    It was a housing supply crash three years ago, which prevented a price crash.   So then, let’s look at some of the best appreciating markets in the US here, just the quick, Top 10.    And notice how widespread the national HPA is. It really just excludes the western third or western quarter of US states.   The market with the 10th most appreciation - and this is all YOY, through Q1 per the NAR:   Santa Fe, NM up 12% 9th is Hickory-Morganton, NC up 12% 8th is Appleton, WI up 12-and-a-half per cent 7th? Milwaukee-Waukesha-West Allis, WI. Up 14%. I’m doing some rounding here. 6th is Oklahoma City, up 15% Elmira, NY - hey I grew up near there - is up 15%. That’s 5th.   4th is Burlington, NC up 15% YOY 3rd is Warner-Robins, GA, up 16%  2nd is Oshkosh-Neenah, WI at 17% #1 in the nation is… the Kingsport-Bristol area, which spans Virginia & Tennessee. Up 19%   I’m going to discuss apartments in a minute. But they are the 10 US areas with the largest single-family home price increase annually.   In the Information Age, a bad reputation will follow you around like your cat, internet tracking cookies, and a song that you can't get out of your head.   Apartment reputation scores are a broad measure of renter satisfaction.   It's amazing to see how closely they track the macro trends that impact tenants and property managers (PMs).   What I’m referencing here is J Turner Research's Online Reputation Assessment scores from today, and going back to March 2020.   This is a very telling pattern here.   Spring - Summer 2020: COVID descends. Lockdowns are here. Reputation scores plummet. PMs struggle to rapidly adjust to a new era where renters live and work inside their units 24/7. Everyone started using Zoom. Maintenance techs could rarely even go inside units for repairs.   Entropy ran rampant. Parents didn't know what to do with their children. Fear reigned. Common spaces closed. Neither tenants nor PMs were happy.   Then, in the…   Fall 2020 - Summer 2021: This was the boom period for apartments. PMs have solved for the new era, adopting new technologies and new strategies. They also re-open amenity spaces and in-unit maintenance.    Hey, foosball in the clubhouse is back. Apartment demand surges, and reputation scores go back up.   Late 2021: Apartment occupancy rates hit record highs. PMs again wrestle with on-site staffing shortages. Could ultra-low vacancy and still-robust leasing traffic put so much strain on property managers that reputation scores start to drop again?   Nope! Because in…   Early 2022: Reputation scores climb back up to new highs again. PMs once again adjust to the rapidly evolving climate, many leaning on early-to-mid phase adoption of centralization tech and management practices.   Mid - Late 2022: Apartment reputation scores inch back again. That’s when consumers saw peak inflation—including renewal rent increases.    At the same time, demand (for all housing types, not just apartments) slowed down and you didn’t see the high rent growth that you had. This puts more strain on PMs.   Inflation hit everyone, with big price hikes in property insurance, taxes, maintenance, turnover, labor, and utilities.   Early 2023: Apartment reputation scores are on the rise again, hitting new highs. Consumer inflation is cooling, while vacancy rates and leasing traffic return to more normal levels.   Some semblance of normalcy has finally returned.   At the same time, new tech adopted in the pandemic era proves to have long-term benefits to both tenants and managers.   In recent years, PMs have focused on resident satisfaction, so it's no coincidence that reputation scores keep improving.   Now today, as an investor, changes are that you have a low LOSS TO PURCHASE.   What’s a “loss to purchase”. Your tenants are leaving to go buy something very often.    You, as an investor in either single-family rentals or condos or apartments - you can retain residents right now because it’s so hard for them to go off and buy their own starter home.   Why’s that? Well, it’s not just the higher mortgage rates. It’s that fact coupled with the fact that credit availability is still tough.    As you know, you need to have a lot of good documentation & income & assets to get a loan. That keeps your rent-paying tenant in place.   In 2005, we were in the opposite condition. Back then, tenants fled my units. I had a hard time retaining tenants in 2005. Why?    Because it was so easy to get a loan, you could just lie about everything on a mortgage application and no one even checked the accuracy. Bloated appraisal values even came flying in.   That’s why my rental property tenants kept leaving. It seems like it was always to buy a first-time condo back in 2005.   Today, you can retain tenants. That’s your upside of today’s harder housing affordability and stringent lending requirements.    So, in this normalizing housing era where tenants have to live in your rental unit longer - because they have no alternative - you can find the properties most conducive to this strategy where thousands of other have created a quick account - at our marketplace: GREmarketplace.com   It’s not like a big box store. It’s more like an organic farmer’s market. That’s where the good stuff is. So, check back often for new inventory at GREmarketplace.com   You’re listening to Episode 449 of the GRE Podcast… and of those 449, I think that two of them were quite good!   Haha!   Coming up shortly, 12 ways for you to raise rent and add value to your property.   If you get value from the show, please tell a friend about the show. I’d really appreciate it. Share it on your social media.   More straight ahead. I’m Keith Weinhold. You’re listening to Get Rich Education.  

The average millionaire has 7 income streams. We discuss 2 income streams today—ATMs and Car Washes. They’re low touch, more passive than turnkey real estate investing. With ATMs, is cash use on the decline? Not among the demographic they serve. We discuss the future of cash use. Some ATM users pay a $3 surcharge to access a $20 bill. That’s why it's profitable. You can buy a unit of five ATMs. They’ve provided a 26.1% cash-on-cash return and high tax advantages. It’s returned $2,262 per month. Learn more about ATMs at: GREmarketplace.com/ATM Car wash profits are enhanced with a subscription model. Few on-site employees are needed.  You can invest alongside a tech-forward car wash franchise, Tommy’s Express Car Wash. The WSJ stated that no business other than car washes can create this much profit on a one acre lot. As society changes, EV, gas-powered, and diesel cars must all go through the car wash. ATMs and car washes demonstrate high operating margins and many tax advantages. You must be an accredited investor. Learn more about car washes at: GREmarketplace.com/CarWash Resources mentioned: Show Notes: www.GetRichEducation.com/448 Learn more about ATMs: GREmarketplace.com/ATM Learn more about Car Wash investing: GREmarketplace.com/CarWash Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Speaker 0 (00:00:01) - Welcome to GRE! I'm your host, Keith Weinhold. It's been said that the average millionaire has seven different income streams. We're going to discuss two distinct income streams that you can add to your life today that lie on the periphery of real estate investing. They are low touch for you because they require little or no management. Today on Episode 448 of Get Rich Education.   Speaker 2 (00:00:29) - You are listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Speaker 0 (00:00:52) - Welcome to G R E from Altoona, PA to Saskatoon, Saskatchewan, and across 188 nations worldwide. I'm Keith Weinhold. This is Get Rich Education. Well, you can't have just one income stream because that's entirely too close to zero. We're talking about two distinct income streams today. People really like the operator and his track record. In fact, he's a longtime friend of mine. We'll talk with him shortly next week. Here on the show, I'm gonna talk about the ways that you can raise the rent and add value to your property. But for today, besides the upside that gets many interested in these two income streams, most investments usually have pros and cons. So I'm gonna ask about the downside. In both, we're talking about the ability to add a couple thousand dollars to your residual income each month with the first of two income streams.   Speaker 0 (00:01:51) - ATMs, yes, automated teller machines. Remarkably, the operator has never missed the monthly distribution or the pro forma return target. What about the future use patterns of cash? Yes. Green dollar bills. We will discuss that. It seems as though ATMs just don't care when there's disruption and chaos in the marketplace. They just sit there, do their business and provide you with consistent monthly cash flow. We'll discuss exactly how much inflation, not a big deal to ATMs recession, they can deal with that. Pandemic ATMs breezed right through it. Is the use of cash in decline? Well, not with the demographic that ATMs serve. How about the political party in power? That just doesn't matter in fact, and perhaps is a little sad. The demographic that ATMs serve is one of the fastest growing in the United States to this group, cash is still the currency of choice. Some of them are unbanked or underbanked. First, we'll talk about ATMs then after that, another diverse income stream for you.   Speaker 0 (00:03:07) - What's it like to invest in ATMs and car washes and what's the direction of their future use patterns, for example, wouldn't cash use with ATMs B declining perhaps? Well, today's guest expert recently spoke about ATM and carwash investing at the Best Ever conference as alternative asset classes that can perform well over the next decade. And when he was finished speaking, there was a line formed at the back door waiting for him so that people could learn more. So settle in. Let's learn about what's happening. I'd like to welcome back onto the show, g r e, regular and super syndicator, Dave Zuck.   Speaker 3 (00:03:43) - Keith, thanks for having me back on your show. It's good to be back and I'm looking forward to having this discussion. I love it.   Speaker 0 (00:03:50) - Well, Dave, you know you've been here to discuss ATMs and car washes before, so we wanna get updates today, including what investor returns are like starting with ATMs. Really, that is a predominant thought about ATM investing today. It's that the use of this new technology like Apple Pay or coming cbd, CS, or even cryptocurrencies, are gonna cause cash use to decline. And I know that when you were here previously, we talked about year over year cash use and how that looks. So is that a question that you often get about just the use of cash that an at m spits out?   Speaker 3 (00:04:24) - Yeah, so one of the challenges to the ATM space in investor's minds in accredited investor's minds is, well, I don't use cash anymore. I'm guessing you don't use much cash anymore. I don't hardly ever use cash, right? And so that must mean that other people aren't using cash. That is the same as an investor thinking, well, I don't live in a C-class apartment building, so I guess nobody invests in C-class apartment buildings, right? So one of the things yes, is cash use in decline. The answer is yes to our peer group. But when you consider the fact that our demographic, who we serve, what I'm saying, saying our peer group, I'm talking about you and I, Keith and probably everybody who's listening to this show, we use last cash and we did three years, five years, 10 years, 20 years ago. Sure. Okay. But that demographic of people that we serve is one of the largest, one of the fastest growing groups in this country.   Speaker 3 (00:05:22) - It's when you really look at the facts. Look back in the early nineties, the Wall Street Journal, there's already a Wall Street Journal that talk about the death of cash. By the end of the nineties, cash wasn't gonna be around anymore. When I started, when I got in the ATM space 12 years ago, the kind of the talk on the street was, yeah, but you got Apple Pay and the Google Wallet and you got all these, this stuff coming on, cash is gonna be dead in two to three years from now. And the fact is, there's more than doubled the amount of currency and circulation today than there was 12 years ago. There's more currency in circulation today than any time in human history. And the peer group who we serve, the demographic who we serve, uses cash and almost transacts entirely in cash. And that's not going away. We've seen that increase. We've done a lot of market research, we see what's going on, but then we also see what's going on inside our own funds and how people are behaving. It's still a vibrant market.   Speaker 0 (00:06:14) - Yes. And you and I have discussed before how some businesses and jurisdictions have tried to ban cash use, but those bans were repealed and it was brought back that you're able to use cash. And you brought up such a brilliant analogy. You as an investor out there, you might be interested in investing in a C-class apartment building, even though if you would do that, you'd probably be less likely to live in one. So yes, a lot of times you're with your circle of friends, you're in your peer group and you tend to think like they do and everyone lives just like you do. But when we talk about different demographic groups from people that you usually hang out with, one reason I've learned through dealing with you over the years, Dave, is that ATMs are so lucrative for ATM investors because this is going to seem incomprehensible to you, the educated listener, but many ATM users pay two to $3 just to get access to a $20 bill. Imagine paying $3 to get access to a $20 bill. And you're thinking, well, who would do that? No one that I hang out with would do that. That's 15% of 15% surcharge to go ahead and access your own money. But yeah, I mean that's one reason why these people are financially disadvantaged, but that's why it's lucrative.   Speaker 3 (00:07:29) - Yeah. And for those people it's a way of life. And when you look at how a person's wage or ACH today, somebody works at a factory, their paycheck gets ACH right into their account. They transact in a lot of cash. You know, it saves them for two or $3. It saves them from getting in a car. Some of 'em don't even have a car or getting in into public transit and going down the road to a, the neighborhood bank where they bank at and then stand in line at a in front of a teller on a Friday night and to try and get, you know, 20, $5,000 in cash. You know that two or $3 to go down to the corner of convenience store. That's pretty inexpensive. But you're right. I mean, there's people who will pay two or $3 to get a $10 bill or $20 bill. It's just crazy.   Speaker 0 (00:08:18) - Now Dave just gave an excellent example because some people might think, are you taking advantage of these people? You're actually helping serve these people and give them an option? And one thing that I know that you really prioritize doing, Dave, with these a t m investments you've been helping people with for years where they can come invest alongside of you, is that for your physical at m locations, you choose high foot traffic areas.   Speaker 3 (00:08:44) - You've heard the saying, what's the three most important things about real estate and its location, location, location. Even more so in this investment because at its core this is a real estate investment. You're monetizing a two foot by two foot piece of real estate and you may be taken at two foot by two foot piece of real estate to its highest and best use. So you're monetizing that piece of real estate. But no, you're adding real value in a community and and serving a community, but it's a real estate play.   Speaker 0 (00:09:15) - Now if you are the listener and the viewer out there, if you think cash is going to disappear completely in say seven years, well then you probably wouldn't be interested in investing in something like this. But the more you read and the more you learn, the more you're gonna be informed on that. So talk to us a little bit more about the future of payments. Dave,   Speaker 3 (00:09:35) - You mentioned a seven year contract and that's what this is. It's a seven year deal. But when you consider the tax impact plus the first 12 months of cash flow and that first 12 months, you're getting about 60 to 70% of your principle back in that first 12 months from the time your cash flow starts, you're getting that first year's tax deduction, 80% right on the front end. You're getting about 60 to 70% of your principal back in that first 12 months. And then you've got an extra six years of cash flow behind that. So although it's a seven year deal, it's not like you have your money at risk for seven years. You get your money at risk count, the tax impact, you got your money at address for less than three years. It becomes a, not only is it a a really good cashflow and income stream play and you can start really beefing up your monthly cash flow, but it's also a tax plan. It's one of the ways that I keep myself tax efficient. You know, it's, you use that big chunk of depreciation in year one and you start getting yourself to the point where you're living the tax efficient life you start gaining on your wealth building journey. You can get momentum quick when you start applying some of those principles and using that depreciation offset, the tax liability and some other income.   Speaker 0 (00:10:52) - We're talking about how investors get 80% bonus depreciation right there at the beginning of a seven year hold time. And Dave, is there a specific number of ATMs that a specific investor owns?   Speaker 3 (00:11:08) - One unit is considered five or six ATMs and it matter, you know, it depends on what kind and sort of location. There's some ATMs that have dual monitors and there's two people using 'em at the same time. So it really depends on, on what ATM that is. But you're talking five or six ATMs for one unit. One unit is $104,000. We do sell half units now. So you can come in as low as $52,000, but that's how it works. You buy a unit of ATMs, you put 'em in our fund, we manage the fund for you, and you get a portion of that surcharge revenue. This is sort of a three-way split. You got the investor getting about a third of the income or 30% of the income. You get the store owner or the the location owner about roughly 30% of the income. And then you got the management company, which is where all the costs flow through. You get the management company getting about 40% of that income. So it's sort of a three-way split, but you're getting as close to the asset as you possibly can get without owning at yourself. And so you're just buying the units, you're paying us to manage them for you and making it totally passive.   Speaker 0 (00:12:18) - As Dave and I have talked about on a previous show, people use ATMs for more than just accessing cash. There are more use cases than just accessing cash. But Dave, when we get back to the numbers and we talk about why you have so many repeat investors that have invested in a lot of ATMs with you years ago and wanna come back and do this more. And that is because this is a cash flow centric investment besides being tax advantaged. However, you as an investor, you shouldn't expect much appreciation on your six or so ATMs that you hold for this seven year or so hold period. Those things are almost fully depreciated in value by the end of your hold period. But this is a tax efficient, cash flow centric investment. So Dave, tell us more about how that looks for the investor, because I know this is actually a highly predictable income stream for investors.   Speaker 3 (00:13:08) - It is highly predictable. We've never missed our monthly distribution payments. Yeah. And we've never missed our proforma and so highly predictable. And the depreciation, the way the depreciation works is it, it really you invest, you get that depreciation, you can use it to offset some other income and you got two choices. You can keep your income stream coming from your ATMs. You can keep that tax free for the first couple years or you can use that even more aggressively. You can use that depreciation, go off and and use it to offset the tax liability on some other income. At the end of the day, it's about living the tax efficient life down and getting out of those high tax brackets, getting out of that 37% tax bracket, moving yourself down into the twenties and the teen   Speaker 0 (00:13:58) - Reducing your marginal income tax bracket with offsets from this investment. People really celebrate your track record. Tell us about those cash on cash returns and just about that income stream that one has historically gotten.   Speaker 3 (00:14:14) - The cash on cash return is uh, right around 26. I think it's 26.1% cash on cash return. Yeah, the IRR is a bit lower. It's uh, right around a 20% i r r. And so you mentioned it earlier about how an at t m machine really actually does depreciate, like, and I'll give you sort of the analogy when you do, when you take depreciation against, let's say a multi-family apartment building and let's say 10 years down the road, you sell that multi-family apartment building for a gain, you not only pay tax on the gain, you also recapture all of that depreciation that you've used and, and now you get taxed on that as well. So it's very different in an at t m investment. In an at m investment, you don't recapture the depreciation, you get a tax break and that depreciation, you never recapture that. So you really need to almost count that into your total return because that affects your bottom line, that affects your tax impact and you never recapture it. And so you'll notice unlike brick and mortar where normally your cash and cash return is lower and your IRR is higher because you get that residue from sale here, it's flip flopped just totally different. And then you get a higher cash on cash return, a lower i r, but it's because of the loss of value of your equipment over that seven year period   Speaker 0 (00:15:36) - In real estate, when you relinquish a property and sell it, unless you do a 10 31 tax deferred exchange, yes you have to pay back the depreciation that you were writing off all of those years. You don't have that obstacle, you don't have that problem with ATMs. And yes, you typically hear about IRRs, which all call synonymously total rate of returns in your real estate as being higher than what your cash on cash return is. But here, this is inverted. This is a cash flow centric investment. And part of the reason why is because your machines, they do go down in value over time. Why your cash flow stays at a steady high rate, 26.1% in this case,   Speaker 3 (00:16:16) - It's been a fun asset class. And it's interesting, you know, you talk about how the depreciation works and you try to introduce somebody who's not real savvy on the tax side. You talk about how it works and how it will affect them, and then they see it on their tax return. It's like, oh my goodness, yeah that works. Like you said, I'm like, oh, well yeah, it becomes part of many of my investors' tax planning on an annual basis. It is part of my annual tax planning. And so it becomes one of those things where it's just easy to start kind of collecting 'em and, and making it sort of an annual thing where you just collect more at t ATM machines, keep yourself tax efficient and and really start building those massive income streams.   Speaker 0 (00:16:57) - Well, you can learn more and get ahold of the proforma and learn more about ATM performance and the projected future use patterns and how to get started as investor if this interests you at gre marketplace.com/atm. Dave, thanks for the great update on ATMs.   Speaker 3 (00:17:15) - All right, thanks Keith.   Speaker 0 (00:17:17) - You listening to get rich education. We've got more with Dave when we come back on car washes. Why they're so lucrative, especially when you add a subscription model. I'm your host Keith Wein. Hold with JWB real Estate Capital. Jacksonville Real Estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor. Since 2013, JWB is ready to help your money make money, and to make it easy for everyday investors, get started@jwbrealestate.com slash g rre. That's JWB real estate.com/g rre GRE listeners can't stop talking about their service from Ridge Lending Group and MLS 40 2056. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plexes. So start your pre-qualification and you can chat with President Chaley Ridge personally though even deliver your custom plan for growing your real estate portfolio. start@ridgelendinggroup.com.   Speaker 4 (00:18:44) - This is the Real Wealth Networks Kathy, Becky, and you are listening to the Always Valuable Get Rich Education with Keith Wine Hole.   Speaker 1 (00:19:04) - Welcome   Speaker 0 (00:19:04) - Back to Get Risk Education. Car washers are a remarkably lucrative real estate business. It's enhanced with a franchise model and selling subscriptions to car wash customers. That's how you get that recurring revenue. So a rainy week doesn't wash out your profits. In fact, in the Wall Street Journal it recently said, and I quote what they wrote here, there is no other operation on a one acre site that can do one to two and a half million dollars in sales and pocket half of that. So our guest expert, Dave, is back because he helps you get investment returns without having to actually operate the car wash yourself. So Dave, tell us more. I know for example, much like other real estate location of a car wash is vital   Speaker 3 (00:19:53) - Even more so with this type of car wash because the whole system is set up to get you a quality wash in two to three minutes. It's designed to get you off the road and back on the road in less than three minutes. So if you can put a really good product like this carwash, everybody that I've ever talked to, whether it's a franchisee, an owner, a a subscription customer or a one-time user, everybody gives Tommy's express carwash a giant thumbs up. It's about volume and you put that on a busy street corner or you know, there's all kinds of metrics that we like and you know, it's, you gotta be where people are already going. You're not creating a an environment where you're drawing people to somewhere you want to. It's all about creating habits. On a Monday morning, my wife gets in her car and she, about eight 15 in the morning, she goes down to Wegmans about a 15 minute drive.   Speaker 3 (00:20:50) - And I promise you if you would introduce her to Tommy's and she would get a car wash when she goes to Wegmans on that Monday morning, she would do that two or three times. She'd be a customer for life. Like she now created a habit kind of like a Starbucks creating a habit. So what we're doing is we're putting this asset in a really good location. Recreating an environment where you don't have to wait in line for 10, 15 minutes, five minutes, get your car wash. It's not one of those white glove people wiping your, it's automated. You get a really good quality wash in two to three minutes. You can get in and out quick.   Speaker 0 (00:21:26) - You help partner investor money with a model that's proving itself with the Tommy's Carwash Express franchise like you just mentioned. So technology really adds the efficiency of getting cars through the carwash quickly in order to make this more lucrative. And Tommy's is very tech forward. For example, I know that customers buy subscriptions and they typically use a phone app   Speaker 3 (00:21:52) - To the point of technology and efficiency. You know, you're talking, especially over the last three years now, what was one of the top concerns or one of the top challenges for employers was getting good quality people. I mean look no further when you go to busy restaurant and you know, I mean there there was some real challenges in finding good employees. One of the things, you know, and then this is due to some of the technology that you just mentioned. You know, we got, because of the systems and technology, we can run two to 300 cars per hour through the scar wash to get washed and maybe even better you can do that with two to three people on site. So very limited overhead in terms of wages employees, you can pay those employees much better because you don't have like 30 of 'em, you got three of 'em. And so really the whole business model, and it also comes back to what you shared earlier about the operating margins. You got 45 to 50% operating margins in this business. It's in terms of percentage, it's one of the most lucrative businesses that I know of and it's just fun business to be involved in.   Speaker 0 (00:23:00) - Yeah. Now when you talk about moving two to 300 cars per hour through a car wash, are you talking about, you know, physically we think of a car wash Now are we talking about one long tunnel with the rate like that? Or are we talking about multiple bays?   Speaker 3 (00:23:16) - Normally it's one long tunnel and the longer the tunnel, the more you can, you know, there's different speeds that you know the track will take you through. And there's different things inside the carwash you can activate depending on how busy, I mean it, it really is. They're real car wash nerves. I mean they're techies and it, they really did perfect this product to the point where let's say you have a 100 car wash hour where you're putting a hundred cars through in an hour and now now you get into the busy time where it's, you know, people are getting off of work where it, now you're ramping up to two to 300 cars per hour. The speed varies on the track and it's, you know, different features of inside the tunnel kind of kick in because of the volume. So there's a lot of automation, a lot of technology going on inside the wash   Speaker 0 (00:24:02) - As society changes, you know, whether it's a gasoline powered car or it's an EV or it's diesel, they all need to go through the car wash. We're talking about that rate at which cars get washed, which is actually pretty important because if I'm a car wash customer, you're talking about your wife's habits earlier with washing her car. If I think about getting my car washed, but I see a long line over there, why might not even go in and use that car wash. And then I'll start to think, oh well what good is my subscription? So keeping that wash tunnel moving also keeps the line short besides increasing your rate of income.   Speaker 3 (00:24:37) - Yeah, for sure. And there is, you know, talking about subscriptions, we're not all about subscriptions, but there's kind of a sweet spot and we figured out that sweet spot's somewhere into 55, somewhere between 50 and 60%. It's where you really want your subscription numbers to be. You don't want 100% subscription model. If you were at 90%, that means your subscription model, you're not priced right. Almost like charging $500 a month for your apartment building and you're always a hundred percent occupancy. It's not good.   Speaker 0 (00:25:09) - It's a problem. Not   Speaker 3 (00:25:10) - Joking. Yeah, that is a problem. Yeah. So that's sort of the things we're watching. We do want a nice mix of retail customers. We think kind of that sweet spots in that 50 to 60% subscription model range.   Speaker 0 (00:25:22) - Oh that's a great point. And that's really interesting when you think about business models and a lot like apartment buildings, car washes are based on their income stream amount, but you're gonna have a different set of expenses with a car wash than you will. And apartment building of course, like you're going to have expenses for example, for water and detergent. Dave spoke a bit about how they keep the labor costs down by having fewer people on site, largely through the use of technology. So we're talking about an innovative car wash type here that's proven itself. Tommy's expressed car wash, their footprint geographically just keeps expanding and expanding and expanding. And in fact Dave, I know when we talked about this last year at least, that that time only Panera Bread in Chick-fil-A, they were the only two franchises that had higher sales revenue per location. Wow.   Speaker 3 (00:26:11) - We're at number three and we're hoping to get to number two here in short order. But, uh, chick-fil-A, that's a hard one to beat , but uh, yeah, no, it's uh, one of the top performing franchises in the anti our country,   Speaker 0 (00:26:24) - Chick-fil-A. Those two crucial pickles on that chicken sandwich. You know, it's, it's really hard to, to compete with there. You need a really efficient car wash to outdo that as far as it is on the investment end and how that actually looks like for one that wants to come alongside you and participate. Before we talk about what the returns look like, talk a a bit about how that is looking for current investors that are already in this investment. Since we first discussed this last year,   Speaker 3 (00:26:52) - We launched this fund as a debt fund. We got into it fairly slowly. We were building a couple washes and we knew that it was gonna ramp up, but we had a lot of work to do on the front end. We were, we had lots that were under contract that we were working on permitting. So we started as a debt fund. We launched phase two as sort of a semi equity, I mean it was an equity fund but it, it sort of captain investor 1.75. You got all the depreciation. The depreciation was not, you didn't have to recapture the depreciation cuz you're dealing with a lot of equipment. In fact, car washes are very unique in that you can take bonus depreciation on the building as if it were equipment. Like you don't need cost sake studies, you don't need you just bonus depreciation the thing out like, you know, the entire building, like it was a piece of equipment right up front.   Speaker 3 (00:27:39) - First year, that's rare. Yeah. And then we sort of ran through that model and we have eight operational sites today. We have seven more coming outta the ground right now. We expect to be somewhere around 20, uh, fully operational by the end of the year. And here's the exciting part, here's the fun part. We're we're looking to build a hundred of these in five years. Wow. And so to really ramp up and take us, get us into phase three and phase two worked great. Investors got all the depreciation, they got all of the cash flow. I'm working free by the way. They got all of the cash flow until they get to their 1.75 and then they exit, then the GP partners start making money. But that model why it worked very good and it's gonna get us to about 30 ish car washes. We're ramping up.   Speaker 3 (00:28:33) - We wanna go under and we're retooling our model. Now that we've uh, got a little bit of experience under our belt, we see how our operations team is operating and see how these car washes are really taken off and really how our team has made these things perform. We want to go to a hundred and to get to a hundred, we're retooling the model. Our investors have spoken. They said, man, we really wanna be, you know, a little bit, kind of give some of that backside you talked about the Wall Street Journal article on Wall Street Journal came out and said that there's PE firms paying 18 to 20 x multiples on EBITDAs and it's just super aggressive. So our investors like to hear that, but they wanted a piece of the upsides. We listened to our investors, okay, we're rolling out an equity model.   Speaker 0 (00:29:19) - And just to back up to jump in. So Dave had been talking about the debt side about how previously this was a raise on the debt side and now in the future going forward, this is how you can get in on the equity side investment of car washes.   Speaker 3 (00:29:32) - It is an equity model and it's gonna allow the investors, it's gonna allow all of our investors to not only be a part of the backend, but there's gonna be a 10% preferred return. There's gonna be aggressive cash flow throughout the hold and the exit. Um, investors gonna be with us all the way through and be a part of that upside, be a part of the exit.   Speaker 0 (00:29:54) - Talk to us about any of the threats that might be out there, whether that's threats to just the overall model of car washes five, 10 or 20 years down the road, and then what the competition is like Tommy's expressed car wash versus other car washes. What are some of the threats   Speaker 3 (00:30:10) - We've seen, much like our investors have spoken and expressed their desires to be a part of the upside and we're getting ready to rule that out to 'em. The general public has given their opinion, uh, with their wallets. And so when you get to understand this model and, and how it works, and then you start paying attention to a lot of the other car washes out there and the look and appearance and how they work. And it takes longer and there's lines and you know, some of 'em are full service and you know, it's pretty inconsistent, but consumers have spoken and they want this product and Tommy's kind of the innovative leader in the car space. And so they're really all about just listening to the consumer and get them what they want. Consumers want a good quality wash for a fair price and they want to get it quickly and efficiently. And that's what we're delivering. So there's competition in the space. There's only one or two competitors of ours who we would say, okay, they are there so we're not building across the street. There's not really a need for us to be there if there's that competitor is there. But most of our competitors, if we were to put a Tommy's Express in a neighborhood, we would steal the show and we have what consumers want and they'll come to us.   Speaker 0 (00:31:30) - When I think about long-term use patterns, Dave, just anecdotally I think of my own lifespan, I only seem to notice more car washes in cities as time goes on per capita. Not fewer. In fact, growing up my dad used to wash his car by hand in or right next to the garage or old Subaru legacy station wagon. Sometimes I would help him out. Well, he doesn't wash it anymore. It's more efficient to go drive through a car wash. That almost seems to be a vestige of yester year where you would regularly wash your own car in your driveway.   Speaker 3 (00:32:02) - Well there's two things there. One is there's a lot more people live in an apartment buildings and, and less out in the country in suburbia. So the, even having the ability to wash your car in some places doesn't make sense. But there's another thing too. You know that by the time I started regularly using a car wash where I actually had to pay some organization to wash my car, I could have bought the car wash . Now, I mean you see it all the time. You got teenagers who's got a nice vehicle and they don't even think twice. They're going through and spending eight or 10 or 15 bucks to wash their car. And I was like, oh my goodness. Okay. But times are changing and it's becoming a standard thing to get your car wash, your car wash and forget the garden hose and the bucket and the soap,   Speaker 0 (00:32:43) - The carwash I use most regularly, the highest tier one now costs $18. That's where they use, you know, rain X on the windshield and everything else. But as far as when it comes to the investor perspective, this is one of those investments, Dave, where you recently spoke at the conference that people are lining up at the back of the room to want to learn more because they're so interested in this investment. I know oftentimes car washes have high cash flow and high tax efficiency for the investors. So tell us about how that's expected to look here On the equity side,   Speaker 3 (00:33:13) - You get a hundred percent bonus appreciation over five years. You get a big chunk of that in the first year because of the amount of development that we have in the fund, you're getting less than half of it the first year, around half of it, maybe just a little bit less than half of it the first year. So you get a big chunk of your depreciation in year one and then you get the rest of the depreciation and it's four years following that. It's a pretty aggressive on the depreciation side. But then on the cash flow side, 10% preferred returns. You've got multiples that are in the two and a half to three x in five to seven years, you're talking aggressive returns and you're talking aggressive, uh, bonus depreciation for tax impact,   Speaker 0 (00:33:57) - You need to be an accredited investor. And what's the minimum investment?   Speaker 3 (00:34:02) - So minimum investment is a hundred thousand dollars and you do need to be an accredited investor.   Speaker 0 (00:34:07) - Tell us about the expected hold time.   Speaker 3 (00:34:09) - We're modeling it five to seven years. So while a private equity firm and with Sam some pretty lucrative offers already, but we've seen, let me back up a second. So this industry is so fragmented that the biggest player in the room has accounts for about 5% of the global revenue. Wow. So that's how fragmented this space is. So there's real opportunity and institutions are desperately trying to get their foot in the door because they see that it's a recession resistant business. They see that it's a, it's got strong operating margin. The Wall Street Journal talked about that where, you know, just crazy operating margin. So they're desperately trying to get their foot in the door and get a foothold in the space and get a little traction in the space. They're not hardly any people who they can write a hundred million checks to. We're building a portfolio that somebody would be able to write a billion dollar check for in a couple years. And so when that happens, we feel like the more mature this space, the more mature this portfolio is, the more cream we can squeeze out for our investors. And so that's where we're going with it. We don't believe that we exit in two to three years, but it could happen. But we're modeling out for five to seven years   Speaker 0 (00:35:30) - In case it takes that long to Sure. Get returns on the conservative side, five to seven years. And yeah, I, I learned a little something there. Okay. The biggest player in the space only has about a 5% share. Very fractured, much like real estate itself is well day's, one of our G R E marketplace providers, you probably already know that. So if you wanna learn more, I'd encourage it and see what makes this business so lucrative. You could do that at gre marketplace.com/carwash. Dave, it's really been stimulating to think about some of these alternative real estate investments. Thanks so much for coming back onto the show.   Speaker 3 (00:36:07) - Thanks Rob me Keith. It was fun   Speaker 0 (00:36:15) - On the ATMs with 100 4K invested that has recently generated $2,262 per month, 2262. And they've never missed the monthly distribution or their proforma return target. And if you go invest quite a bit more than that amount, there is something new to announce. And that is the existence of financing with ATM investments that has the potential to amplify your return some more. So with ATMs, it's a strong cash on cash returns and the I R R along with the quick return of capital, that's what's making it so popular. They have been delivering them to this group for more than a decade now. Now the operator, Dave, he's really proud of what they're doing and that's why he wants to give the opportunity for you to get on the ground in person and see just what they're doing. In fact, in only 10 days, there's a car wash and self storage investor tour.   Speaker 0 (00:37:19) - Yes, it is a one day investor tour on May 18th in Columbia, South Carolina. And you are invited. You'll see a Tommy's Express carwash and Moore meet the team, ask questions about the business plan. There is no cost to attend. You can meet Dave there as well. You'll learn more about that and with hotel accommodations and everything else after you get the free investor report. At G R E Marketplace, we're talking about world class operators in the car wash space here. When you have multiple diverse income streams in your life, what you've done is you've made your income resilient. So to connect more and learn more and see proformas on adding an income stream to your life in the at m space, if that interests you, start@gremarketplace.com slash atm. For car washes, visit gre marketplace.com/wash. Until next week, I'm your host Keith Wein. Hold. Don't quit your daydream.   Speaker 5 (00:38:27) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Get Rich Education L L C exclusively.   Speaker 6 (00:38:55) - The preceding program was brought to you by your home for wealth building. Get rich education.com.

Learn how to harvest equity without giving up your low, fixed-rate mortgage. Today, I discuss: conventional loans for single-family rentals, DTI, refinancing, accessing equity, student loan debt, and down payment requirements for income properties with Ridge Lending Group President, Caeli Ridge. Learn what’s better for a second mortgage—the pros and cons of a HELOC vs. Home Equity Loan. You also get a mortgage market overview. We discuss changes in cash-out refinance seasoning requirements.  Caeli also describes where she believes mortgage rates are headed later this year. Resources mentioned: Show Notes: www.GetRichEducation.com/447 Ridge Lending Group: www.RidgeLendingGroup.com info@ridgelendinggroup.com Join us for tomorrow’s free GRE Florida properties webinar: www.GREwebinars.com Ridge’s All-In-One Loan Simulator: https://ridgelendinggroup.com/aio-simulator/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Speaker 0 (00:00:00) - Welcome to GRE! I'm your host Keith Weinhold. You can get a conventional loan for a single family rental with less than a 20% down payment. Learn why you might want to refinance today. Even though mortgage rates aren't as low as they were a couple years ago, how do you qualify for loans if you've already got student loan debt? All things mortgages and financing today on Get Rich Education, Speaker 2 (00:00:29) - You are listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   Speaker 0 (00:00:52) - Welcome to GRE from K Patis North Carolina to Hattiesburg, Mississippi and across 188 nations worldwide. I'm Keith Weinhold. This is Get Rich Education, the voice of real estate investing since 2014. Before we get into a great education on all things mortgages today, there is still a little bit of time left for you to join us on tomorrow night's G R E Live event. You can join us from the comfort of your own home. This is for new build single family rentals, opt to four plexes in Jacksonville, Ocala, and elsewhere in Florida. Purchase prices are still below 300 K on the single families. Yes, still in the two hundreds in some cases. I don't know how long that can last. Yeah, these are the property types that are quickly vanishing. Our investment coach Naresh Stars in that event tomorrow, he finds you the good deals with the national providers that are actually giving incentives despite the fact that the product that you're buying is in really short supplies.   Speaker 0 (00:01:59) - You're gonna get a good, solid, fundamental education on what makes a durable income property market and a arrest in the Florida provider are going to share with us just for webinar attendees. Those even better than two and two incentives. Yes, for you, the incentives on the webinar are even better than that 2% of your purchase price paid do you in closing costs cash and 2% of free property management. It is going to be even better than that. That's gonna be rolled out tomorrow night, May 2nd at 8:30 PM Eastern, 5:30 PM Pacific. It is free to attend. You can ask questions live, get your questions answered and get access to the actual properties should you so choose. That is the final reminder. So if that's of any interest to you, be sure to sign up now@grewebinars.com. I'm coming to you from the Mojave Desert today here in metro Las Vegas.   Speaker 0 (00:03:04) - It's Henderson Nevada. To be technical next week I'll bring you the show from Phoenix, Arizona. And you know what? It's kind of funny. Sometimes you hear people refer to this general area of the nation this southwest and they say they are going to the desert if they were doing what I'm doing. Well this unrepentant geography nerd will clarify that it is the deserts plural. Yes, Las Vegas is in the Mojave Desert in Phoenix is in the Sonora Desert. There are differences in vegetation type and others that distinguish the two. And the most obvious difference perhaps is the presence of the big iconic Saguaro cactus down in the Sonora that you don't find up here in the more northerly Mojave and perhaps the Joshua tree is the more distinct plant type here in the Mojave. Yes, we're talking about two gigantic pieces of real estate here. Much of it is baron. Two disparate deserts with their own distinctive flora and fauna. As you're about to learn about financing real estate today, let's remember that there is a cash out refinance and then generally if you're performing a refinance without pulling cash out, that is known as a rate and term refinance. Let's get into it.   Speaker 0 (00:04:30) - Well hey, well how do you qualify for more mortgage loans at the lowest interest rate available, Americans have near record equity levels in their homes. What's the best way to access that equity yet keep your low mortgage rate in place? And what about your student loan debt and how that factors into you getting a mortgage or getting a refinance? We're answering all that today with a GRE regular guest and though it's her first appearance back on the show this year, it's the return of the company president that's created more financial freedom through real estate than any other lender in the entire nation, Ridge Lending Group. It's time for a big welcome back to Caeli Ridge.   Speaker 3 (00:05:08) - Keith Wein. Hold. Thank you. You flatter me sir. I appreciate it. Love being here with you and for your listeners.   Speaker 0 (00:05:14) - Well yes, the president is back and everyone loves this type of president because it's not about being a Democrat or Republican. So hail to the chief, great to have you here. And Jaylee mortgage rates, they have settled down a good bit from their recent highs now they peaked back in the fall of last year. So with that and some of the other things in mind, why don't you talk to us about the big picture first, sort of your mortgage market overview.   Speaker 3 (00:05:40) - Interest rates is always top of mind for everybody. I think they're doing pretty well. I do believe I've been sharing with our listeners and and my clients on a day-to-day. I do believe that rates will continue to kind of increase here and there. There's gonna be some ups and downs. Of course the Fed has been very clear with us. Jerome Powell is gonna continue to raise the Fed fund rate just for anybody that doesn't know the two between a mortgage rate and a Fed fund rate while connected, not the same thing. So when they raise that does not automatically mean that we see the increase on the the 30 year mortgage bonds. I think that that's gonna continue to happen, but I think the pace in which it happens or continues to happen is gonna be a lot less aggressive. So I think that's gonna bode well overall.   Speaker 3 (00:06:21) - For interest rates. I know everybody is very, very interested in in are they going up, are they going down, when are they going up, when are they going down? I think that we'll continue to see a little bit of upward movement. I think it's gonna be sometime next year that we start to see interest rates come back down in any meaningful way. And remember gang rates go up much, much faster than they come back down unfortunately. So I think we've got a little bit of way to go. But I'm always the one saying, Keith, you and I have talked about this, um, many, many times you must be doing the math and that the rate as a function of the return of the investment isn't the most important thing. So I'll leave it there for rates. Otherwise, I think that the industry is doing really, really well.   Speaker 3 (00:06:58) - One big announcement that we had this year was that Fannie and Freddie both have extended the seasoning period of time to where a cash out refinance when leverage was used to acquire is applicable. So now you have to wait 12 months to pull, to pull cash out of a property using the A R V that after repair value if you use leverage to acquire the property. Quick distinction because this has been confused. If you paid cash for the property, your source and season funds, that still falls under what's called the delayed cash out refi and no seasoning is required. It's only when leverage was used to acquire the property and then they're trying to use an after repair value to pull cash out in hand. Is that 12 month seasoning rate and term is different. So that doesn't apply either.   Speaker 0 (00:07:45) - Okay. So if you make a purchase and then say it less than 12 months down the road, you want to do a refi but not pull cash out, is that still all right?   Speaker 3 (00:07:55) - That's absolutely fine. No seasoning is required and we can use the arv. It's only when you want cash in your hand that that 12 months is is applicable.   Speaker 0 (00:08:04) - Got it. Okay. That's really helpful to know. Just big picture before we winnow down, are there any other big substantial mortgage stories out there that some should know about? Um, it was only a couple weeks ago, there was a lot of misinformation going around on TikTok and elsewhere about 40 year loans from F H A without people understanding that's just for loan modifications and really other stories like that. Any other big picture things where you can help us see what's happening?   Speaker 3 (00:08:30) - It seems to be par for for the course? I have not. There's nothing that's come across my desk that I would say was newsworthy or noteworthy to share. I think we've got more to unpack here than any of that.   Speaker 0 (00:08:40) - Yeah and things sure are picking up here around G R e. People wanna buy more properties this year. It really slowed down toward the end of last year, right about when the mortgage rates were at their peak. So when we talk about getting loans, we think about leverage. Leverage is created with debt. Has anything changed with the down payment requirements for an income property? And we're largely here in today's discussion talking about one to four unit income properties. Properties that you don't live in yourself,   Speaker 3 (00:09:08) - Correct down payments have have remained the same. There isn't been anything that has changed there. Just to reiterate, for those that may not be aware on a single family residence, conventionally 85% loan to value is applicable. You can leverage all the way up to 85, you're putting 15% down. Keep in mind everybody that that will have pmi, private mortgage insurance attached to it, I would have you look at them side by side. The PMI factors actually pretty low and depending on the loan size it may only be 20, 30 bucks a month. So if you're able to leverage extra, it may make sense. You're gonna have to look at the numbers so that single family and then two to four unit on a purchase transaction different on a refinance transaction but purchase is 25% down or 75% leverage is required for those duplex, triplex, fourplexes.   Speaker 0 (00:09:54) - Okay, so as little as 15% down on a rental single family home. So you're getting up to six to one, seven to one leverage in that case. Sheila, do you find very many people doing that or would they rather pay the 20% down for a rental single family home and not have the pmi?   Speaker 3 (00:10:10) - I find that right now I think that it's less common than maybe it was because interest rates are up from where they were, uh, a year, year and a half ago. So more often than not we see the 20% down. But I still think it's worth looking at. I mean you're never gonna know unless you run the numbers right side by side.   Speaker 0 (00:10:25) - Okay, so we're thinking about how much cash we have to have put aside for a down payment in closing costs. And one thing that we need to do in order to qualify for that loan in the first place of course is some people get hung up on the dti, their debt to income ratio is too high to qualify for property and chaley. Over the past few months I've had a few listeners write in with questions and I thought, well I'll say that question until we have chale on again. And one of them really has to do with student loan debt. Student loan debt often contributes to one having too high of a debt to income ratio so that they didn't have to repay their loan. I know that Biden said that you wouldn't have to pay back student loan debt for a while, but can you talk to us specifically about student loan debt with D T I?   Speaker 3 (00:11:06) - There's gonna be a few pieces to share with everybody depending on whether we're talking about Fannie Mae or Freddie Mac and we won't know who we're gonna end up selling to after the loan funds. And they have slightly different guidelines between the two of them. Similar. But there are some differences as it relates to student loan debt regardless of whether you're in deferment or you've been told that you don't have to repay. If it shows up on an individual's credit report, the calculation will be as follows. They're going to take the outstanding balance times 1%, that's Fannie Mae's rule or the outstanding balance times half a percent. That's Freddie Mac rule and that will be the payment that we include in the debt to income ratio. Uh, I'll mention that the all-in one, which is a very popular loan right now. First Lean HeLOCK, maybe we'll talk about that here today. They will defer to Fannie rules so it'll be 1% of the outstanding debt pulling on the credit report even if it shows a zero payment listed. Now there is one caveat, if the individual has a letter, this happened maybe in the last six months and I'm trying to think about, there was a title, it's pretty rare. But if they're able to gain access to documentation that specifies that they are not going to have to repay that debt and we can take that documentation, then we can zero out that payment in the D T I.   Speaker 0 (00:12:22) - Alright, there's some strategies for how you can approach D T I with respect to any student loan debt that you have and what is the maximum D T I that a borrower can have?   Speaker 3 (00:12:34) - Conventionally and non qm, you're gonna get to 50% debt to income ratio for the all-in-one since we just touched on it, 43% is the absolute max.   Speaker 0 (00:12:43) - Okay. And on prior shows, Chile and I have discussed specifically with examples just how that D T I is calculated. If you're wondering, you can hear that in some past episodes Chile one one goes ahead and they continue to add income properties to their portfolio. Often I recommend that one does that with high leverage but not over leverage. How does one keep their D T I ratio down over time as they continue to add properties so that they can qualify for more properties in the future? Is there a good strategy for that?   Speaker 3 (00:13:14) - There is, and it's such a good question because as investors, right, our qualification primers are not static. They're going to change over time as we buy and sell and refinance. So it's very, very important, especially with the debt to income ratio that we're keeping an eye on it. And there's a few ways in which you can kind of strategize or optimize that D T I. The first is going to be the Schedule E, okay? The Schedule E is where all the rental properties are going to live once you've filed the annual tax return. The easiest way for the time that we have here today, Keith, is gonna be to tell the listeners, send us your draft returns. So on an ongoing basis we tell our active clients do not file federal tax returns until you send us the draft. We're going to run that draft through the pre-formulated calculation that comes straight from Fannie, Freddie and then we're gonna provide you with some feedback, one of which may be Mr.   Speaker 3 (00:14:03) - Jones, you forgot to include your insurance as a deduction and that's actually an add back that's gonna be to your disadvantage. Make sure that you put that in there. You didn't claim the full number of days of income for the property, you forgot to put depreciation on there. That's also an add back. There's a whole slew of things that we can look at and look for and give the individual that feedback so that they are filing at that optimal way while maintaining what the maximized tax credits are, right? There's a nice balance there. The more aggressive you are with the tax deductions, the more it can impact the D T I. So we wanna have eyes on that and work closely with the client and or their CPA is a very common part of what we do. So schedule E a little more complicated, that would be one of the the ways in which we wanna maximize debt to income ratio.   Speaker 3 (00:14:45) - Obviously not obtaining new debt, new consumer debt is is not gonna be to our advantage, right? We don't want more liability than we have income. Another thing is, is that when we talk about credit and a lot of clients that we talk to, they pay their credit cards off monthly, right? Maybe they charge up five grand, eight grand, 10 grand, they get a miles or whatever it is. It's very important to communicate with us to find out when in the month we wanna strategically pull the credit. Because what will happen is is that the day in which we take that snapshot, if there's a minimum payment due, a balance with a minimum payment, that minimum payment will be used in the individual's debt to income ratio regardless of whether they're gonna pay it off at the end of the month. That doesn't matter to us.   Speaker 3 (00:15:26) - There's a payment here, we gotta hit you for it. So strategizing on the day in which we wanna run credit might be another helpful way for D T I. And then finally, and there's probably a few other things, but I think high use would be, I don't like the shorter term amortizations. I think this is something else you and I have talked about many times, Keith, where people wanna pay off quicker, which is great if that's really what they wanna do, that's perfectly fine. I'm not sure that that would be my strategy, but whatever. Don't get yourself into a 15 year fixed mortgage because it's only gonna jack that payment. It's gonna really increase that payment. It's ultimately going to, for long-term optimization, hurt your D T I. You can do the same thing with a 30 year mortgage and not pay extra interest by accelerating the debt if that's what you chose. So those would be the the few things I'd comment on   Speaker 0 (00:16:10) - 100%. And for you the listener and viewer right now with what you just heard from chaley, you can begin to understand the value of working with a lender that works specific with income property investors rather than those lenders that are more geared toward primary residents, borrowers. Nothing wrong with them but they're in their lane during their thing. And you can understand why Chaley over there at Ridge is really a specialist to help you qualifying for as many income property loans as you possibly can and optimizing those loans as well. Chaley, when we talk about interest rates, oftentimes it's of interest to people to look at what are refinance interest rates like versus new purchase interest rates.   Speaker 3 (00:16:54) - I would say on average there's a variety of of variables that dictate what the rate is gonna be. Okay? I talk about this a lot. They're called LPAs loan level price adjustments. And a loan level price adjustment is a positive or negative number that attaches to the characteristic of the loan transaction. So purchase or refi, hash out refi rate and term refi credit score has its own L L P A loan to value, loan size occupancy. All of these come with a positive or negative number attached to them as it relates to purchase versus refinance. Generally speaking, let's take a rate and term refi where you're not getting cash out, you're just maybe taking an arm and making it affix. You're taking a higher rate and making it lower, whatever, maybe about a half a point difference. So if a purchase was at six and a half, the re rate and term refinance might be at 6 75 or 7%, cash out's gonna be a little bit different. I would add a quarter point to that and then if, if it's a two to four unit, add another quarter point on top of that. So those variables do make a difference.   Speaker 0 (00:17:53) - And maybe the listener might think, well why are you talking about refinancing at a time like this? If I wanted to refinance, I would've been more likely to do that about two years ago when mortgage rates read historic lows. But today Americans are sitting on near record equity, oftentimes it might be tied up in a low mortgage rate loan with that equity chaley. I talked to some people out there just lay people, people that aren't even investors and they have a big equity position with a really low mortgage interest rate loan and they seem to think that to refinance it, they would need to go ahead and refinance their entire mortgage and lose that maybe three or 4% loan, but they don't necessarily have to if they can do a second mortgage. So I guess really what I'm getting at and the question chaley is what is the best way to do a rate and term refi versus a cash out refi? And I know there are a lot of scenarios there.   Speaker 3 (00:18:44) - Yeah, lots of scenarios. So to your point, it is not necessary to give up a very low fixed rate mortgage if you want to harvest some of that equity. The ways in which, and I'm gonna have a plug after this for the all in one, but I'll get to that cuz I'm just such a big fan. But the ways in which you can do that both for your primary residents, a second home and an investment will be through a second lien mortgage, whether it be a heloc, home equity line of credit or a he loan, the HE loan is applicable for the rental properties. I do not believe, I hope somebody can give me alternative information, but I do not believe you're able to find second lean HELOCs for rentals today. I feel like those have really dried up if they're out there, the ones that I know of that used to do them are not doing them anymore.   Speaker 3 (00:19:27) - If they're out there and anyone's listening to this, somebody please let me know. Keylock for rental probably not an option. He loan for rental absolutely is an option. And this is guys a fixed rate mortgage in second lean position, just like your 30 year fixed first, this will be a 30 year fixed second interest rates are gonna be higher. And since we were talking about interest rates, I'm gonna say that they're probably anywhere from 10 to 13%, but they're smaller amounts. C L T V combined loan to value for a he loan on a rental would be 85% is what we have access to. So as quick math guys, if you have a value of a home of a hundred thousand and you owe on your first mortgage 50,000, the CLTV would be 85% of a hundred. So 85,000 minus the 50001st, which stays in place, you'd have access to about 35,000 in that example. And that would be access to rental properties that you just do not want to mess with that first lien mortgage different for owner-occupied. And I'll take your queue on when you want me to get into that.   Speaker 0 (00:20:26) - Yeah. Okay. So we are just talking about income property second mortgages there. Tell us about primary residences.   Speaker 3 (00:20:32) - So primary and secondary should be in the same bucket. You can leverage just 90% C L T B, same math as before but up to 90% And these are gonna be, you have HeLOCK and he loan. I'm gonna assume most people are gonna go for the HeLOCK, right? The open-ended revolving is definitely more attractive than a closed-ended fixed I believe in a second lien. And you know Prime is at eight I believe right now. Gosh, I should have checked before we go on, but I think Prime is sitting, it's an index. An indices like the Fed fund rate, that's an index two prime is at about eight. And then depending on the characteristics, those l LPAs that I mentioned, loan level price adjustments are gonna come up with a margin. Maybe it's 2% over prime or one or whatever it is depending on those things. So I would anticipate a HELOC and second lie position on a primary residence will be anywhere from eight to maybe 10%. More often than not is what you should expect. Interest only open-ended.   Speaker 0 (00:21:24) - And on the second mortgages, whether that takes the form of a HELOC or a HE loan, how long is the initial fixed rate period? Typically   Speaker 3 (00:21:32) - There are hybrids where you can fix in for a year or three years, et cetera. Those are available. I'm not sure that you wanna do that in a high rate environment. You probably wanna avoid any fixed rate right now if you had the option to get into it a couple of years ago, you're looking really good right now because you fixed in at at some ridiculously low rate for a period of two, three, maybe five years. I would tell people listening, fixing in on a HELOC right now is not gonna be your advantage when we believe that rates are gonna start coming down over the next year, et cetera. But for the HE loan, it's fixed for 30 years. Just like a 30 year fixed first lie mortgage, it's fixed, you have it four 30 years, it's amortized, it's closed ended. You're making your regular payments until you pay it off after the 30 year period of time.   Speaker 0 (00:22:13) - We're talking about how you can more efficiently borrow in this environment where people and investors have high equity positions and we have hopefully come off the mortgage rate highs from late last year. You're listening to Get Risk Education. Our guest is Ridge Lending Group President Chaley Ridge Morton, we come back. I'm your host Keith White Hole with JWB Real Estate Capital. Jacksonville Real Estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor. Since 2013, JWB is ready to help your money make money, and to make it easy for everyday investors, get started at jw b real estate.com/g rre. That's JWB real estate.com/g R E GRE listeners can't stop talking about their service from Ridge Lending Group and MLS 40 2056. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plexes. So start your pre-qualification and you can chat with President Chaley Ridge personally. They'll even deliver your custom plan for growing your real estate portfolio. start@ridgelendinggroup.com.   Speaker 4 (00:23:45) - This is Rich Dad sales advisor, Blair Singer, listen to Get Rich Education with Keith Wine Hold and above all don't quit your daydream.   Speaker 1 (00:24:03) - Welcome   Speaker 0 (00:24:04) - Back to Get Rich Education. We're learning about how to be a savvy borrower with President of Ridge Lending Group, Chaley Ridge and Chaley. One product you have there that's really flexible and has helped out so many people and helped save borrowers tens of thousands of dollars in interest or more is what's called your all in one loan. Tell us about it.   Speaker 3 (00:24:25) - This is a first Lean HeLOCK everyone. I'm such a big fan, it's not for everybody, but for the right individual, I don't know that there is a loan product to rival it. It's got all the flexibility in the world and as Keith said, the mechanics of this and the concept of this arbitrage, it's called Velocity Banking, infinity Banking. If anybody's familiar with those terms, that's what this does. It allows you all the open flexibility to sort of become your own bank where you have this line of credit. It is a first lien line of credit. So let's take a a step back and talk about those low interest rates that everybody has secured over the last couple of years. We were very lucky to have to two and a half, 3% interest rates. And I'm constantly having this conversation and I'm really trying hard to dispel the psychology of you can never do better than that when it's just not the truth.   Speaker 3 (00:25:14) - And mathematically you will be able to figure this out. I'm gonna plug our website here. There is an interactive simulator that will take you to the all-in-one simulator where you can compare your existing fixed first lien mortgage to the All in one and and the input data is very, very simple. No vials of blood here guys, but if the input is accurate, the results page will tell you very clearly if the all-in one will save interest and Trump over the 30 year fixed at two and a half or whatever it is, or if you're fixed rate mortgage is more to your advantage, it will be very clear there'll be no mistaking it from that. I think further conversations will be necessary for those that see some real value in the All In One. I won't go too far down that rabbit hole, it's a little bit more complicated than we probably have time for here. But the first Lean All In one is such a fantastic tool. I really encourage your listeners to go ahead and and check out at the very least the simulator and see how it applies to you.   Speaker 0 (00:26:08) - The all-in one loan operates much like a first lien heloc. I don't think we have time to describe it all. Like you said, you do have the simulator there on your website@ridgelendinggroup.com where one could see if their existing mortgage it compares favorably or unfavorably to the all-in one loan. But as we know with the first lien heloc, therefore one feature of the All in one loan is the option, not obligation, but option of making interest-only payments to keep your payment down.   Speaker 3 (00:26:34) - Yeah, this is where it gets a little bit tricky for some people when we start talking about payments FirstLine Open-ended HeLOCK, where it's called the All In one because you're replacing not only your mortgage with this revolving open-ended heloc, but also a checking and savings account and combining those two elements whereby simple depository income is being used at dollar for dollar driving down principle balance to save in daily interest accrual. I'm gonna give a quick example and then we can move on and, and I encourage everybody to do the simulator email us, let's talk through it. We'll take you by the hand. It's the learning curve's a little intense, it was even for me. But here's an example of velocity of money and kind of how the all-in-one works. So take a 30 year fixed mortgage and a 15 year fixed mortgage. Both of them started at $400,000 each.   Speaker 3 (00:27:22) - You lock the 30 year at 4% and the 15 year was locked at 7%. Without exception, everybody runs to the 30 year at 4%. I would've done the same if I didn't know the math when in fact the reality is is that you will pay $40,000 more on that 4% 30 year than you would on the 7% 15 year because the amount of time that you're paying on that mortgage is greatly reduced. And that's, I guess a, an easy concept. It's a, the first step of trying to define this for most people, they can kind of see it in those terms because they understand the amortized mortgage. It's the amount of time that you are paying interest. So if you're utilizing your depository checking savings and your mortgage and all of that money is going in there month after month before it's going back out the door for whatever your living expenses are. And then whatever's left over is, is stays in there. 24 7 access. Nothing changes about your current banking techniques or or strategies. It's all the same. But now you're in control. You've become your own bank. It's amazing. I can't say enough about it   Speaker 0 (00:28:24) - Talking about the all in one loan there. You sure can learn more from Ridge on that. Jaylee, is there really like anything else that I guess is noteworthy specifically in helping a borrower qualify for income property loans, maybe a common problem or a borrower hurdle that you see in there at Ridge?   Speaker 3 (00:28:43) - I would just boil it down to education. Just lack of information. It's not dear Google stuff. The guidelines and what's available. All of these things are changing on a consistent basis that real-time information's not available to them. So if I had to pick one thing, I would just say education. And I'm very proud to say that we really focus on that. If there's a value add about Ridge, I think there's quite a few. But the one that I think sticks out for most people is the education that we provide to our investors and shining a light and giving them a look under the hood and what they need to know, teaching 'em how to optimize their qualifications and all of the stuff that we've been talking about here today.   Speaker 0 (00:29:19) - Well that's a good point because when we talk about real estate investing, you're really, they're in one of the more dynamic and fast-changing parts of the industry as opposed to something like home construction where a lot of the methods haven't changed for 50 or more years, if you will. So yeah, it's really staying up and staying informed on that and engaging with a lot of the educational resources increasingly that Ridge has for you to help you stay on top of that as an income property bar yourself. And Shaley can tell us a bit more about that shortly. But why don't you tell us about all of the loan types, the mortgage products if you will, that you offer in there.   Speaker 3 (00:29:52) - That's another great value add about us. We have a very diverse menu, if you will, of loan products that don't just start and stop with the conventional. We're not a one size fits all. So we've got the Fannie Freddy's, we talk about that a lot. Our all in one, my favorite. We have a very diverse non QM product line and for those that aren't familiar with that term, QM stands for Qualified Mortgage. Fannie Mae and Freddie Mac are the, uh, epitome the definition of what a qualified mortgage is. There's a whole definition we don't need to go into today, but, so everything outside of that QM is now non qm. And within non qm, like I said, extremely diverse. There's things called the debt service coverage ratio product where we're not showing borrower income, we're just looking at the properties income offset by the new mortgage payment. There's bank statement products. If you can't show tax returns, we're gonna take deposits and average them asset depletion. If you've got large self-directed ira, we can come up with an income calculation for that. The list goes on. We've got commercial products for commercial properties, but also for residential properties. Cross collateralization. It's pretty diverse. We have a lot for everybody.   Speaker 0 (00:30:54) - When you excel in there, you've been such industry leaders at originating income property loans for investors were proportion of your businesses income property loans and what proportion is primary residence loans?   Speaker 3 (00:31:06) - A lot of people don't realize we can do both and we do both very well. But I would say that it's probably 70 30 not owner-occupied. To owner-occupied. A large part of what we do is the investor loans. But most of our investor clients come to us for their primary needs too because we already have their life on file and, and can get that done very competitively   Speaker 0 (00:31:24) - Too. , right? And you keep growing. You're in almost all 50 states now.   Speaker 3 (00:31:27) - I know. Can you believe it? We're in 47 states. We're not in North Dakota, New York, or Vermont, otherwise we're everywhere.   Speaker 0 (00:31:34) - Letter audience know how they can learn about your resources.   Speaker 3 (00:31:37) - There's a couple ways to find us our website, ridge lending group.com. They can email us, info ridge linen group.com. Our toll free is 8 5 5 74 Ridge 8 5 5 7 4 7 4 3 4 3. And while you're on our website gang, uh, check us out on our community. I have a live event every Tuesday, one 30 Pacific, uh, four 30 Eastern. Uh, lots of good information register and it's free. Lots of good information and, and education like we've been talking about here. Hope to see you.   Speaker 0 (00:32:05) - Oh, it's been a terrific and crucial mortgage market update. Chaley Ridge, thanks so much for coming back into the   Speaker 3 (00:32:11) - Show. Thank you. Appreciate it.   Speaker 0 (00:32:18) - Oh yeah, lots of good concise information there from Chaley. It's a type of content that can have you hitting the rewind button on your pod catcher at times. All right, so we learned that in a lot of scenarios there. Second, mortgages come with rather high interest rates that is prohibitive. But then on the other side, it's encouraging to learn, learn that on primary residences, for example, you can get up to 90% loaned value. That means you only need to keep 10% equity in your home. And as far as that all in one loan simulator, we'll put a link directly to that in the show notes for you. But like Chaley said, you might wanna reach out to them@ridgegroup.com and then they can help walk you through it. Thank you to Caeli for the generous contribution to your learning today. Until next week, I'm your host, Keith Weinhold. Don't quit your daydream.   Speaker 5 (00:33:15) - Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests on their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Get Rich Education L l C exclusively.   Speaker 6 (00:33:43) - The preceding program was brought to you by your home for Wealth building. Get rich education.com.

Grandpa told me to save money and buy a fixer-upper. What about paying off my mortgage ASAP? Learn why I rejected it all. Changing attitudes towards debt and savings began with high inflation in the 1970s.  I compare global home prices and their changes since 2010.  Projects for $300K starter homes are going extinct in America. Keith Weinhold and Naresh Vissa describe the upcoming webinar for new-build properties in Florida—single-family homes up to fourplexes.  It will offer incentives that are even better than the 2% closing cost cash and two years of free property management. Join next week’s Florida properties live event at: GREwebinars.com Resources mentioned: Show Notes: www.GetRichEducation.com/446 Sign up for our Florida webinar next week: www.GREwebinars.com World Housing Prices Since 2010: https://www.visualcapitalist.com/cp/mapped-global-housing-prices-since-2010/ $300K Starter Homes Going Extinct: https://finance-yahoo-com.cdn.ampproject.org/c/s/finance.yahoo.com/amphtml/news/300-000-starter-home-going-151338810.html Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   **Speaker 1** (00:00:01) - Welcome to GRE! I'm your host, Keith Weinhold, learn why I rejected my grandpa's advice about debt and real estate. Global home prices have surged not just since 2020, but really for the last decade plus. How does America compare to the world there? Then the real estate market heats up in Florida. All today on Get Rich Education, **Speaker 2** (00:00:28) - You are listening to the show that has created more financial freedom than nearly any show in the world. This is Get Rich Education.   **Speaker 1** (00:00:51) - Hey, welcome to GRE from England's White Cliffs of Dover to Dover, Delaware, and across 188 nations worldwide. I'm Keith Wein. Hold. This is Get Rich Education. The fact that you want to get lots of good real estate debt, even now that real estate interest rates are off their all time lows from a couple years ago and really most all interest rates. You know, I think to the lay person, it is one of those things that is easy to understand and yet hard to accept to get more debt. Since Americans have near record equity levels. Now, not enough people even ask where that equity came from. I mean, look, you probably don't have a big equity chunk in your home because you paid it down. You have fat equity in your home because it increased in value. Yeah, that's leverage, which was brought into existence by debt. Now lay people can understand that, but yet it's hard to accept that truth.   **Speaker 3** (00:01:59) - What you've just said is one of the most insanely idiotic things I have ever heard. At no point in your rambling, incoherent response, were you even close to anything that could be considered a rational thought. Everyone in this room is now dumber for having listened to it. I award you no points. And may God have mercy on your soul.   **Speaker 1** (00:02:26) - . Yeah, yeah, yeah. That's from an old school movie, Billy Madison from 1995. But did you ever get a reaction or a look like that when you shared abundantly minded G R E principles with them? , debt free doesn't make sense. The wealthiest people have the most debt. The wealthiest and most powerful nation in the world has the most debt. But some people will still clinging to old ways of thinking. They'll rationalize that debt is bad now because we'll say interest rates aren't as low as they used to be. All right, true. Well, also on the flip side, debt is better when inflation is high because it debases that debt. Inflation and interest rates tend to move in lockstep. So therefore, weather interest rates are high or low. That line of thinking cancels out. And of course, 10 is keep debasing your debt by paying down your principle for you no matter how inflation and interest rates are moving.   **Speaker 1** (00:03:27) - And this all plays into how I was taught to think about money myself growing up, including the influence of my own grandfather. And I would go on to reject my grandpa's advice as a kid. Grandpa told me to save money. You certainly heard that growing up when I was about 20, I was visiting my grandparents on college break. And I still remember when grandpa told me that when it's time for me to buy my first house, I should buy a fixer upper. And though he never told me this next thing, he probably would've encouraged me to pay off your mortgage fast. I bet he would've said that one. Well, he meant well. And though I didn't deliberately spur him, I have gone on to disregard all of my late grandpa's financial guidance. He was a great guy. Grandpa served in a war. He and grandma raised my mom and uncle in a small, simple farmhouse on a 13 acre farm in rural Berks County, Pennsylvania.   **Speaker 1** (00:04:31) - And besides raising livestock and growing crops, he was an electrician by trade. He was an even tempered guy with a wiry frame. And grandpa taught me how to fish for bass in their small farm pond, all with his usual thin smile. And he had a wooden trademark kind of toothpick, pursed between his lips a lot of times. But see, grandpa was born and raised in a pre 1971 world. His concept of money was shaped before Nixon deg the dollar from the gold standard. And as we know, inflation ran rampant after Nixon D pegged the dollar from gold. And then in the 1980s, the Bureau of Labor Statistics, they began to sharply manipulate the way that the consumer price index that had line inflation figure is calculated. They used waiting tricks and other tricks to make the soaring inflation figure appear smaller than reality. Well, I was born and raised in a post 1971 world, so rather than focus on saving money, I want to get out of dollars before they're debased by inflation.   **Speaker 1** (00:05:42) - I never bought a fixer upper home though I truly admire grandpa for it. I didn't have the D iy, an electrical skillset that he did that just didn't come naturally to me. And now admittedly, and at its worst, maybe you can say that I'm part of the reason that Americans are less resourceful, or rather, perhaps American life is better. Or maybe it's that with progress, we're all specialists. Now I'd rather pay more for a home that's already new or renovated This way I spend my time, that zero sum game resource of time. I can spend that on my best and highest use and not texturing drywall and not hanging cabinets and not laying tile. I borrow dollars, not save them on rentals, both tenants and inflation payback the debt. So inflation flips dollars upside down, and grandpa might not believe how iconoclastic I sound. Now, the heresy today, I borrow invest and own assets that create residual cash flow.   **Speaker 1** (00:06:53) - And I would even spend dollars in some cases before they're debased. And along the way, I provide contractors and service providers with work. I employ an ongoing property manager and I provide families with good housing. I doubt the grandpa knew about how debt compounds the power of financial leverage. There's something good to be said for hard work, you know? And my grandfather showed me that on the farm, maintaining the tractor, loading the coal bin, harvesting crops and feeding the chickens. I mean, dude was amazing. He was like the showy otani of skillset diversification. But the world changed over the long term. Today's abundance mindset beats grandpa's grind. I love him for wanting the best for me. Grandpa never wavered on that. Ultimately, really, he equipped me to learn what's best for me and what's best for others. And I know I'm preaching to the choir here because our Instagram stories poll about paid off properties.   **Speaker 1** (00:07:58) - It asked you this question, which one do you prefer to pay off your home A S A P, or to leverage up and don't pay it off? Okay? How do you think that result went? Well, the percent that said pay off your home ASAP P was only 16. And those that said leverage up and don't pay it off is 84%. Yeah, you get it. 84% would rather leverage up and keep borrowing against it rather than pay it off your own home is some of the best debt you can get low rates, fixed rates along payback period, and you can legally kind of reneg and go get a lower rate when they fall as well. And mortgage terms are not quite as good on your rental properties, but they are still advantageous when you go compare that. And you know, really another way to think about it is, if you've got a 500 K home, why would you tie up 500 K in your home?   **Speaker 1** (00:09:05) - You could perhaps have just 100 K tied up in that home or in that rental property. Now, I've talked to you before about how many advanced world economies, foreign nations, they have house prices that vastly exceed prices in the United States. Canada's home prices are almost fully doubled that of us home prices right now. Well, I've got some great stats here. They are sourced by the bank for international settlements on not the international house prices this time, but how those prices have changed since 2010. Okay? So what we're looking at here is 2010 all the way up through Q2 of last year. So 2010 all the way up to the middle of last year. And these are all inflation adjusted. So we're talking about a change in real prices. US property was up 63% in that time, basically about the last 12 years. But the United States is not one of the top 10 countries for home price growth over that period.   **Speaker 1** (00:10:10) - And here those countries are number one for growth is Iceland at 103%. Second is Estonia at 97%. Third for world home price growth is New Zealand at 97% as well. Chill at 95% Turkey, 91% Canada up 90%, the top 10 for home price growth are rounded out by Luxembourg, Hong Kong, Hungary, and Israel. They're all between 80 and 85% inflation adjusted price growth over those about 12 years. So they're all greater than the United States, which again was up just 63% over that long period. That makes American home value seem somewhat cheaper when you think of it through that perspective. America is the envy of the real estate world. It's not just our rule of law and high property ownership rights and strong diverse economy. It's that it's one of the few places in the world where you can lever up this much and still get cash flow and at these terrifically advantaged debt term terms.   **Speaker 1** (00:11:19) - And on the flip side, now we look at the worst nations for price appreciation over the last 12 years. It is a story of price contraction. Prices have dropped in these nations. Okay, so these are the worst five. And let's see if you can guess at what all five of these have in common. Those five worst are Spain, Romania, Italy, Greece and Russia. Russia being the worst at minus 33% inflation adjusted house prices. And yeah, do you know what all five of these nations have in common? All five are losing population and losing the real estate prices with them. All right, well what about the United States? How does our population growth look for the future? What we are just about surpassing the one third of a billion people mark. Now we'll have 336 million people by the end of this year. And over the next 30 years, we're expected to have a population increase from 336 million this year up to 373 million Zen 30 years from now.   **Speaker 1** (00:12:34) - And the proportion from immigration is expected to increase while the proportion from the birth rate wanes. And of course, this contributes to the growing renter society in America because people have a harder time affording the entry level home. And you know, really the entry level home threshold that is now largely considered to be right about $300,000. Yeah, that's about two thirds of the value of today's median priced home and housing market research firms Zda. They tracked home prices and home projects across the country and they found, as you might expect, that the share of new projects for homes under $3,000 is declining rapidly all across the country. From Texas to California to Colorado to Ohio, they are vanishing everywhere. 300 K homes aren't just being diminished in creation, they're just completely gone from a lot of markets. Now this share of projects under 300 K are just completely non-existent.   **Speaker 1** (00:13:46) - Yeah. Now coming in at 0% of the market for Riverside and San Bernardino, California. Now of course coastal California, new 300 K homes, they are long gone. But Riverside and San Bernardino, they're about 50 miles inland. They're less expensive markets. Those properties are gone there in Sacramento, they are gone in Denver, 300 k properties are gone. So the swath of non-existent new build 300 k single family homes is growing and increasingly just nowhere to be found. But we have found a place where these properties do still exist in. It's in an American in migration. Hotbed straight ahead, listen to our in-house chat about this and the overall warming temperature of the real estate market and a cool upcoming Jerry event to tell you about where I'd love to see you there. I'm Keith Reinhold. This is G R e with jwb Real Estate Capital. Jacksonville Real Estate has outperformed the stock market by 44% over the last 20 years. It's proven to be a more stable asset, especially during recessions. Their vertically integrated strategy has led to 79% more home price appreciation compared to the average Jacksonville investor since 2013. J W B is ready to help your money make money, and to make it easy for everyday investors, get started@jwbrealestate.com slash gre. That's jwb real estate.com/gre.   **Speaker 1** (00:15:23) - GRE listeners can't stop talking about their service from Ridge Lending Group and MLS 4 2 0 56. They've provided our tribe with more loans than anyone. They're truly a top lender for beginners and veterans. It's where I go to get my own loans for single family rental property up to four plexes. So start your pre-qualification and you can chat with President Chaley Ridge personally. They'll even deliver your custom plan for growing your real estate portfolio. start@ridgelendinggroup.com.   **Speaker 4** (00:15:56) - This is Rich Dad advisor, Ken McElroy. Listen to Get Rich Education with Keith Wine Hold and don't quit your daydream.   **Speaker 1** (00:16:14) - Hey, well I'd like to welcome in GRE's in-house investment coach in Naresh. Now maybe you've never bought a property out of state before and for almost a year and a half, he has personally one-on-one been helping you with that and with your overall investment strategy. And then he gets you matched up with the right financing and direction in actual property addresses through G rre marketplace. And he does that for you free. Hey Naresh, welcome back outta the show.   **Speaker 6** (00:16:41) - Hey, thanks Keith. It's been a while, but looking forward to talking about this great real estate market.   **Speaker 1** (00:16:46) - You are often dealing directly with the providers and you also know what buyers are looking for too, our audience. So just talk to us about the overall state of the income property market today.   **Speaker 6** (00:16:56) - Yeah, well I want to go back a few months and talk about how the market was a few months ago and how it is today. Because I think you can really talk about how things are going, but when it's compared to something else. So if we go back a few months to let's say November, 2022, so this was pretty recent, we're talking about five months ago or so. Yes. The activity in the real estate buying process, just real estate in general building the activity was slim. There were very few people contacting me. There were, if you look at the publicly listed data, there was definitely a slowdown. If people were to look at their own properties and look at a chart of their property values, they'll see that there was uh, a plummeting of asset values. And that was November, 2022. And what's happened since then, because the Federal Reserve, as you've talked about, has slowly hiked up interest rates and interest rates have gone up, mortgage rates have gone up.   **Speaker 6** (00:17:59) - What happened is sellers, agents, wholesalers, brokers, builders, they didn't wanna see a crash. And what they did was they started honing up some of their own capital to incentivize buyers to make up for that higher interest rate. So now we fast forward from November where there was no activity. I mean literally we had zero activity at G R E, not even a single inquiry on a property. So we've gone from that to providers providing incentives like, Hey, the price is negotiable. This is just sticker price. Let's negotiate like we're at a car dealership to free property management for one year or even two years, or free home insurance for one year or two years or 2% closing cost credits or X amount of X thousand dollars off closing costs. The incentives go on and on and on. These were not available in 2022 because we saw a super hot real estate market with a ton of buyers all of a sudden turn into a dead real estate with no buyers.   **Speaker 6** (00:19:11) - So people who are concerned with the state of the real estate market right now, they might say, oh, you know, the interest rates are so high, these incentives cut down on that interest rate. So your lender may quote you for a 25% down payment. And that's the other thing, because of the market we're in, 25% is the best you're gonna get paying no points. If you pay 20% down, now you're gonna have to pay points to buy down that rate and, and those points don't go towards your equity, you're just buying down the rate. So anyway, with that being said, for 25% down with these incentives, we're now looking at the mid to high five. So five and a five to 5.9% interest rate, which is, I mean we're at 20 18, 20 19 levels at that point. So the state of the real estate market is still very strong.   **Speaker 6** (00:20:03) - It's healthy. There's a lot of activity now with buyers, with investors, home builders. We work with a ton of builders. They're essentially trying to sell off all the builds that they were permitted for three years ago, two years ago. So builders aren't building as much as they were like after the lockdowns were lifted in 2020 and they started building like crazy. And this has again, increased the demand of housing where they built a lot and now they're not building, they're just looking to sell what they currently have that hasn't been sold yet. So with an influx of people, we're seeing a baby boom. We have politicians talking about a bigger baby boom within the coming years and more immigration that only increases a demand for housing. So yes, right now is still an excellent, excellent time to buy. November of last year, not so much. But right now, yes,   **Speaker 1** (00:20:57) - It's a paradox with this nationwide dearth of housing supply and knowing that that problem is even more chronic in the entry level space that make the best rentals. Considering those factors, you would think that builders and providers wouldn't need to offer any incentive at all. But they have been recently. Some of them are continuing because of what's gone on in the mortgage market and with mortgage rates. So really that's nationally. And then talk to us about the geographies that we work in that tend to be in the Southeast and Midwest and in the inland northeast.   **Speaker 6** (00:21:35) - Yeah. Well first off, I, I wanna say that we work with a ton. Not all of our partners or providers are offering incentives, but I would say we just happen to work with a majority of them. So if you're listening and you're like, huh, he said a rent guarantee or a two years free property management or free closing costs, if these strike a fancy, then definitely reach out to me because I can share with you the best properties offering such and senates. And these are older properties, these are new construction. There are no more pre-construction that we're dealing with. Cuz like I said, pre-construction is, so two years ago, three years ago, those pre-construction properties are now available for sale and for closing within 30 days. So reach out to me, NAI, and A R E S h I get rich education.com if these interests you.   **Speaker 6** (00:22:28) - Now, as far as who we work with, like who's offering such great deals, what markets we, Keith are still seeing, I would identify two particular markets in southeast South, if you wanna say the south eastern part of the United States. So number one, all of Florida, Florida is still the hottest market that we're dealing with. Our providers are all offering big incentives and we're seeing homes rented really quickly because as you've covered, Florida has become a hotspot along with Texas as a destination over the past three years. And that continues to be the trend. In fact, Ocala, Florida, which we have tons of properties available in Ocala, Florida, brand new constructions, even quads, many of our buyers are so hungry for quads because it's the closest thing to multi-family. And we finally have quads available in a market like Jacksonville, Florida, Ocala, Florida, San Antonio, Texas.   **Speaker 6** (00:23:29) - We have a quad available there. That's a really hot market as well. But I want to bring up Ocala, Florida because U-Haul, the famous trucking transportation company U-Haul has a very good pulse on where people are moving, where their rentals are being rented, right? And the number one destination they found for the year 2022 was Ocala, Florida. So that's an area, it's the world has equestrian headquarters, the largest retirement community in the world is a half an hour away from there. So you have a ton of people servicing these very wealthy elderly people to 55 and up community. So a lot of healthcare, a lot of service industry. You have a lot of it jobs, engineering jobs, because Gainesville, which is home to the University of Florida is only 40 minutes away. And Ocala is more affordable than living in that retirement community is called the Villages very pricey because it's like its own world over there.   **Speaker 6** (00:24:32) - I've been there a couple of times. And then Gainesville also is quite pricey with the university and with the tech community there. So Ocala has become the next biggest city that's not completely rural farmland that has any sense of modernity. And so yes, I'm identifying all of Florida, specifically Ocala, but then also Memphis, Tennessee for older rehabbed properties, both Memphis, Tennessee and Little Rock, Arkansas. We're seeing a lot of activity there because they are lower priced entry level homes. They're rehab properties, fully rehab, turnkey, gutted. So these are properties anywhere from a hundred to $150,000 in Memphis and about 120 to 170,000 in Little Rock. So we work with a provider there who has a lot of inventory and they are also offering some pretty incredible incentives that our other partners in Memphis are not offering. That includes two years closing cost credit. That includes free property management for two years. And it also includes a mortgage guarantee. So if they're not able to rent out your property, they will pay your mortgage for you until they find a tenant who will uh, tenant that property.   **Speaker 1** (00:25:51) - Ah, somewhat different than the rent guarantee that sometimes we hear about where they will pay the market rent for you if you don't have a tenant in the property, but it's paying your mortgage for you.   **Speaker 6** (00:26:00) - Exactly. So you just send them your mortgage bill and, and they will pay it. But I will say the reason why they offer this is because they're putting their money where their mouth is. They're so confident that they will, that both Little Rock and Memphis, just like Florida, have become very strong places for people to move to because they're affordable. And you want to be buying real estate in affordable places because A, it's affordable for you and B, it's gonna be affordable for your tenants, which means you're gonna have a greater tenant pool to fill that property.   **Speaker 1** (00:26:31) - Yeah, so Memphis and Little Rock, some of the most affordably priced cash flowing markets in the nation. And yes, these prices, 100 to 150 K for you Californians and New Jerseyans and New Yorkers. We're not talking about the down payment, we're talking about the total purchase price of a home in a safe neighborhood that can attract a respectable tenant in places like Memphis and Little Rock. And then when it comes to Texas and Florida, you mentioned U-Haul, they put out annual reports where they actually give some really good migration data to the real estate market, but with all the in migration to places like Florida and Texas and the rest, sometimes I wonder how does U-Haul handle, like all their trucks end up in Jacksonville after a few months or all their trucks end up in a place like Ocala or Central Florida where so many people are moving. It's just interesting to think about what they do with that problem. They need to get all their trucks back out of places like that after all of the in migration. And because Florida, it really is so predictable that the in migration will continue. It's been such a long trend it picked up during the health crisis and we have an upcoming webinar in Florida. Tell us about that.   **Speaker 6** (00:27:44) - Yeah, well this is with one of our hottest Florida providers. They've been hot because of a special, you've mentioned it on your podcast, you've mentioned it in your newsletter. I've mentioned it in my communications with students and clients. They had a two plus two program of two years free property management plus 2% closing costs. But we're doing a webinar with them next week. It's going to be next Tuesday evening. If you go to g r e webinars.com, g r e webinars.com, you can find out about the webinar and also register for it. They've gotten rid of that two plus two program because they are unveiling a brand new promotion, a brand new program that is even better than the two plus two. So if you missed out on the two plus two, we're right now in this two and a half week period where there's no promotion and you have to pay retail price.   **Speaker 6** (00:28:44) - But if you stick through it, join us on the webinar next week. They are, like I said, they'll be announcing a brand new promotion that is the two plus two was an incredible, incredible program. I think this is way better than even the two plus two. So this is certainly exciting. They're gonna be coming on the webinar talking about Ocala like we just talked about. They have built the quads in Ocala that we have available. They've built duplexes, single families, and not just in Ocala but all around Florida. And they are offering incentives and discounts to sell these properties. So highly recommend people. Check out G r e webinars.com to register for that webinar next Tuesday evening.   **Speaker 1** (00:29:29) - All right. And for our group attendees on our webinar there, you're gonna have incentives for these new Build Florida properties, oftentimes single family homes up to four plexes and larger that are even better than the 2% closing cost cash at the table for you. And even better than that two years free property management. They are gonna roll that out to you at the webinar next week that you want to be sure to attend. We'd really like to see you there. That is our live event on Tuesday, May 2nd at 8:30 PM Eastern, 5:30 PM Pacific. And the rest is starring in that one. It is completely free for you to attend and the benefit of you attending it in person is it is live. And you'll have a chance to ask questions and maybe we have another attendee that asks a question that you didn't think about asking. That's a really good question. So you can kind of crowdsource all the questions and ask a question yourself there at the live event@grewebinars.com. Do you have any last thoughts, Lorre?   **Speaker 6** (00:30:33) - Well, I will say this, one of the best parts about the webinar for serious buyers who are looking for that next deal is our provider will be providing the best deals they have available. So they're coming with two to three of their best deals. So this isn't one of those things where it's like, oh, you know, NAIA is just gonna send me an email after and I'll see everything. Or I'll watch the webinar replay. Yes, there will be a webinar replay, but the chances of those two deals being sold out during the webinar are extremely high because of the incentives and the deals that the provider is providing. So I highly recommend try to make it live. You want to get in on these deals. Uh, if you miss the webinar, hey, not to worry, we're going to have the replay. Maybe, uh, they'll have some other properties that are comparable, available for sale too. But you wanna be there live, get your questions out of the way and move quickly. Because our last webinar that we did, Keith for Baltimore, it was probably our best webinar yet. And we moved properties, we moved properties very quickly live on air. So that's why I just wanna let our listeners know, hey, things are really picking up in the real estate market. Again, things are picking up at G R E, so you don't wanna be left behind.   **Speaker 1** (00:31:51) - These are attractive incentives for path of Progress Florida, usually new build properties for you next week. Again, at G R E webinars.com. This is exciting stuff. Thanks for sharing this with us and the rest.   **Speaker 6** (00:32:05) - Thank you, Keith. Always a pleasure.   **Speaker 1** (00:32:12) - Yeah, well, 25% down in buying your mortgage rate down into the fives creates some cash flow. But as you'll see a next week's live virtual event, it is going to get better than that purchase prices on these brand new single family homes. They're still below 300 k, still in the 200 s in some cases. Yes. These are the property types that are quickly vanishing. Naresh can find both the good deals for you with the national providers that are actually giving incentives like the ones that we talked about. And this is all despite the fact that the product that you're buying is in really short supply sets for income properties, single family rentals, up to four plexes in Jacksonville and Ocala and elsewhere in Florida. And now if you wanna get ahold of Naresh for the latest on GRE Marketplace Nationwide Properties and who has the best incentives, you can go to G rre marketplace.com/coach and you can get free direction and coaching.   **Speaker 1** (00:33:17) - He would like to see you for next week's live event, though, besides just getting a solid fundamental education on what makes a durable income property market, Naresh and the Florida provider are gonna share with us just for webinar attendees, those even better than two and two in incentives for you. The incentives on the webinar. Yes sir. Even better than the 2% of your closing costs paid to you in cash and two years of free property management. Again, this is next Tuesday. It's May 2nd at 8:30 PM Eastern, 5:30 PM Pacific Naresh Stars. In this one. It is free to attend, get your questions answered, and get access to properties should you so choose. Be sure to sign up now while it's on your mind@grewebinars.com. I'm your host, Keith Wein. Hold. Don't quit your daydream.   **Speaker 0** (00:34:15) - Nothing   **Speaker 7** (00:34:16) - On this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial, or business professional for individualized advice. Opinions of guests on their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Get Rich Education L L C exclusively.   **Speaker 1** (00:34:44) - The preceding program was brought to you by your home for Wealth building. Get rich education.com.

Keith Weinhold answers listener questions about real estate investing.  He advises listeners on how many properties they need to own to become a millionaire, how to invest $40,000 to reach a $100,000 down payment for a rental property, and how to find the best future real estate markets.  Keith emphasizes the importance of positive cash flow, avoiding over-leveraging, and owning properties in multiple job growth markets and states.  He also discusses the potential for hyperinflation and the benefits of owning real assets to combat inflation.  Keith encourages listeners to leave a rating and review for the podcast and consult with professionals for individualized advice. **Taylor's question [00:01:07]** How many properties must I own to become a millionaire? Keith explains that it depends on the profitability of the properties, how much they go up in value, and how much rent is charged.  **Mitrel's question [00:05:04]** Should I invest my $40,000 in the stock market to reach my $100,000 down payment goal for a rental property? Keith advises on risk tolerance and suggests alternative options such as I bonds. **Kevin's question [00:09:08]** What are the forward-looking indicators to find the best future real estate markets? Keith talks about the prospect of hyperinflation and provides insights on finding the best real estate markets. **Forward Looking Indicators for Real Estate Markets [00:09:16]** Keith answers Kevin's question about selecting MSAs with forward-looking indicators, including population growth, employment, and upcoming government infrastructure projects. **Sponsor Ads [00:15:45]** Keith thanks Ridge Lending Group, JWB Real Estate Capital, and Mid-South Home Buyers for sponsoring the show. **House Hacking in Southern California [00:18:03]** Keith advises Connor on whether to invest in an out-of-state rental or house hack in Southern California, considering high real estate prices, tax rates, and tenant protection laws. **Real Estate Financing Options [00:19:03]** Keith discusses financing options for single-family homes and fourplexes, including FHA and VA loans, and the advantages and disadvantages of house hacking in Southern California versus investing out-of-state. **Hyperinflation and the US Economy [00:21:40]** Keith addresses a listener's question about the possibility of hyperinflation in the US economy, defining hyperinflation and discussing the factors that contribute to it, including a nation's debt and foreign demand for its currency. **Leverage in Real Estate Investing [00:25:00]** Keith answers a listener's question about being over-leveraged in real estate investing, explaining the risks of taking on too much debt and emphasizing the importance of buying properties that are cash flow positive. **Real Estate Investing Strategies [00:28:00]** Keith explains how to avoid over-leveraging and how to project positive cash flow from day one. **Benefits of High Leverage [00:29:09]** Keith explains how high leverage can help you build wealth faster and why it's best to finance your properties. **Encouragement to Leave a Podcast Review [00:30:07]** Keith encourages listeners to leave a podcast review and explains how it helps the show reach more people. **Disclaimer [00:31:32]** A disclaimer is given that nothing on the show should be considered specific personal or professional advice. Resources mentioned:  Show Notes: www.GetRichEducation.com/445 I-Bonds: https://www.treasurydirect.gov/savings-bonds/i-bonds/ Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Welcome to GRE! I’m your host, Keith Weinhold. I answer your listener questions today.    A 12-year-old listener asks, how many properties must I own to become a millionaire?  Another asks, “Should my first property be a house hack or an out-of-state rental”?    One question is about the imminent prospect of HYPERinflation.   Also, “What are FORWARD-looking indicators to find the best future RE markets?” Those questions and more questions all answered, today, on Get Rich Education! ___________   Hey, welcome in to GRE. I’m your host and Founder, in fact, of this very show… and all Get Rich Education platforms, a 20-year REI and Active Member of the Forbes Real Estate Council. My name is Keith Weinhold. Ya probably know that by now.   This is Episode 445 of Get Rich Education.   When I do these listener question episodes, I generally begin with some of the more basic questions.   Today’s first question comes from Taylor in Wooster, Ohio. Taylor is age 12 and he simply asks:   How many properties must I own to become a millionaire?   Well, thanks for that, Taylor. I don’t often get questions from a 12-year-old.    I love that you’re listening and the fact that you ARE greatly increases the chances of you building wealth when you’re an adult, yet young enough to enjoy it.   Like a lot of questions in real estate, the answer to how many properties you must own to become a millionaire “depends”.   It depends on how profitable your properties are - how much they go up in value and how much you’re getting from the rents that you charge the tenants, how long you do a good job of keeping them as tenants, as well as how capable you are of controlling your property’s expenses.   So, you could own as little as just ONE property and be a millionaire, Taylor.   Owning MORE properties is better than owning fewer properties. That way, if you have one that isn’t profitable, you’ll have profits from your others.     And you can own more properties when you can use part of your OWN money & part the bank’s money… in owning the property.   Now, Taylor, if you have one million dollars, say, you had a million bucks in stacks stuffed in your closet, you need to understand that that is not enough.    You’re 12 years old now. You might live another 80 years. Then you’d need that million to last you 80 years.    Even a 50-year-old with a million dollar stack of dollars bills in their closet would not have enough money to live on for the rest of their life.   You might need closer to 10 million dollars. That’s called a decamillionaire. So think about setting your net worth target higher. Think, “How can I be a decamillionaire?”   But actually, you don’t just want to think about the height of your stack of dollar bills reaching any certain number of millions ONLY. It matters. But what matters more is how fast your stacks are GROWING.   That’s called cash flow. If your stacks are growing at a rate every year that exceeds all of your expenses, you are financially-free. That’s why it beats being debt-free.   Another thing, Taylor, I know that your hometown of Wooster, Ohio is between Columbus and Akron so - though I’m not familiar with Wooster - but I do know its the county seat of Wayne County -    …you do tend to have markets nearby that can create CF really well - that’s that ability to GROW your cash stacks, hopefully to a height of 10 million someday.    Thanks for your question, Taylor.   You know, it warms my heart to know that kids listen to the show. I remember shortly after launching the show in 2014 that a Dad & son from New Jersey wrote in and told us that they look forward to listening to the show together every week.    I like to do that family-friendly show, from Day 1. A clean lyrics show since inception.   I like to keep it classy. I like to make that show that would make my late Grandma Weinhold proud - though I don’t think she ever knew how to listen to this show.   That’s part of my brand… and it warms my heart to see children in the audience.  ______________   The next question comes from Mitrel. I don’t know where Mitrel is from, because some questions come in on our YouTube Channel, but he says…   I have a good job and $40,000 in savings, expect an upcoming BOOM in real estate and need $100,000 for a down payment.    Does it make sense to gamble my $40K in the high risk stock market to get up to the $100K sooner and capitalize on the RE purchase?   If I lose the $40K, I’ll recover it in time with my job anyway over time.   If I win & get it to $100K, I’ll have my income property and be off to the races with leverage and Real Estate Pays 5 Ways.   If I simply tried to preserve the $40K in a savings account, I’d lose to inflation anyway.   That’s his question. Alright, Mitrel. You’ve got $40K, want to get to $100K for your down payment on some rental property.    Now, we have properties at GRE Marketplace where $30 or $35K is enough to get started… but with your $100K down payment goal, I sense that you might have a specific purchase in mind.   Of course, it’s about getting a 20-25% down payment + 4% CCs  - as a percent of your purchase price - and you’ll want to hold some reserves.   Well, to get your cash stash from $40K up to $100K, it has to do with your risk tolerance.   It sounds like you’re open to risk with putting it in the stock market short-term to try to reach your goal faster.   So, yeah. You would probably want to do that OUTSIDE of a retirement account since they generally have early withdrawal penalties.   In a savings account, yes, you’re aware that with true inflation, that would just debase your savings’ purchasing power.   If you’re open to risk, I guess one could get in & out of crypto at just the right time - if you do that, I’d choose bitcoin.   But you know, whether you go with risky stocks or risky bitcoin, the problem with that is that you have to get your timing right twice.   Ideally, whether it’s a Russell 2000 Index Fund or Apple Stock or Ethereum, you want to buy close to a near-term low and then sell close to a near-term high.   That is more difficult to do than it sounds, and it’s just one reason that stock, ETF, and mutual fund investors don’t build wealth.    One other thing I’ll mention as you’re trying to patch together your first RE down payment is I-bonds. They currently pay a guaranteed 7%.    The way they work is that the interest rate they pay you is the CPI Inflation rate plus a fixed rate on top of that.   You can get I-bonds at TreasuryDirect.gov   But there is a $10,000 annual limit that you can put into I-bonds.    Another disadvantage is that I bonds can't be purchased and held in a traditional or Roth IRA, Mitrel. The I- bonds have to be held in a taxable account.    But that might work for you in this case, Mitrel, since it’s a shorter-term hold, hopefully it’s shorter-term anyway, until you’ve built up your $100K cash to get your RE and get off to the races, hopefully getting paid 5 ways.   Another disadvantage of I bonds is there is an interest penalty if they’re redeemed for cash in the first five years. They knock off 3 months of your earned interest.   I hope that you found at last one insight on those options that helps you out, Mitrel.  ________________   The next question comes from Kevin. He asked this one quite a while ago.   [Listener question played]   3) What are the forward-looking indicators to select MSAs? He typically looks at population growth and employment.    That is a rather astute question, Kevin. Yes, you’re looking at some of the right measures for the tide that floats a RE market up.    First, we want to think about landlord-friendly states. Yes, the MW & South has a preponderance of them. But there are some outliers. You’ll also find pretty favorable eviction processes for LLs in PA, TX and AZ.   When it comes to forward-looking RE indicators and their sources, first, let me give you two resources that most everyone knows about, then we’ll drill deeper.  The NAR publishes forecasts for home sales, prices, and other market trends. Their reports give you future RE market insight at both the national and local level. Zillow offers forecasts too on the housing market, including home values, rents, and other market indicators. Now, one indicator and one place that a lot of people don’t know where to look, Kevin, is your ability to discover upcoming government infrastructure programs. Think about learning where the next new highway intersection or highway interchange will be built. Or perhaps it’s a new seaport expansion project or a new bridge that is going to be built in 5 years. There are a lot of places where you can find out that information ahead of time, and unlike stock investing, it’s completely legal - totally alright - to learn about this ahead of time.  Get a heads up on where the next bridge is going to be built and how that can make nearby property values rise - that’s not considered illegal insider information. You can check the websites of government agencies responsible for upcoming infrastructure development in your target state or region.  That area’s, say, Department Of Transportation makes this public so that contractors can engage in the bidding process for major infrastructure projects. These are known as government PROCUREMENT websites. For example, in Illinois, that’s under an Illinois.gov website. Those sources can be kinda wonky & dry, but putting in the work over there can help you see the future. Now, major news outlets, and just regular, old school, legacy media television channels like good ol’ WPHL in Philadelphia or KMSP Minneapolis or anywhere, they often report on upcoming projects and government initiatives, like an airport expansion. Now, if you happen to LIVE in an investor-advantaged area, Kevin, well and you do, Dayton, Ohio. Joining an “in real life” industry association that focuses on infrastructure development can really give you direction & foresight and you’ll grow your network too. That’ll give you access to upcoming projects - as will attending public meetings like town hall meetings. And then finally, the US Census Bureau and other sources make all kinds of population projections. That helps you see the future.    And hey, you might as well use the Census’ resources since your tax dollars are paying for it.   And those industry associations and public meetings often use & apply those population projections to upcoming major projects.   So, there’s more, but that’s a good bit there. I hope that helps you, Kevin.    Today, I am bringing you the show from Anchorage, Alaska.   Next week, it’ll be from Las Vegas, Nevada.   And in two weeks, I’ll be bringing you the show from Phoenix, Arizona.   So, Anchorage, Las Vegas, and Phoenix. That is the largest city in the 49th, 36th, and 48th states admitted to the union respectively.    Only a remorseless geography nerd like me would break it down that way, wouldn’t I?   Yes, we’ll be constructing makeshift, mobile GRE recording studios coming up.   If you’ve got a question that you’d like me to answer, go to GetRichEducation.com/Contact. That’s where you can either write a message, or leave a voice message listener question - like Kevin did.   I answer more of your listener questions next. I’m KW. You’re listening to Episode 445 of Get Rich Education. ____________   Welcome back to Get Rich Education. I’m your host, Keith Weinhold, grateful to have you here.   Before we return to your listener questions… thanks to this week’s sponsors. They support us so, please, consider supporting them.   That is Ridge Lending Group. Consider YOUR next mortgage loan for income property there and see the difference that a lender that works specifically with investors like you… can make.    They serve almost all 50 states. That’s President Caeli Ridge & all the good-looking people over there at RidgeLendingGroup.com   Then there’s JWB Real Estate Capital. Income property specialists that provide you with the actual investor-advantaged real estate that you can buy in bustling, fast-growing Jacksonville.  That’s all-around good guy Gregg Cohen & the team at JWB. They always have good hair days over there.    They really make it easy for you. Find your next cash flow property at JWBRealEstate.com/GRE   Finally, there’s Mid South Home Buyers, providing you some of the best rent ratios in the entire South in Memphis and Little Rock.    They’ve got the service that you’ve been raving about for years now.    That’s Terry Kerr, Liz Brody and all the fine peeps over there at MidSouth that shake your hand, look you in the eye, have a symmetrical smile, and even regularly recite your first name mid-sentence for ya. (Ha!)   Get started at MidSouthHomeBuyers.com   I have been inside the physical offices of all 3 of those sponsors that I just mentioned.   If your company is interested in advertising on GRE, let us know. We’d like to check you out first. Just like listener questions, you can also indicate that on the same page. Let us know at GetRichEducation.com/Contact You’ll see the “Advertising Inquiry” area there.   Conner asked me a question. “Keith, absolutely love your videos. I live in expensive Southern California (Orange County). Would you recommend my first property be a primary that I house hack or invest in an out-of-state rental?” Thanks, Connor.   OK, Connor. Well, there’s a lot to consider.   Let’s look at the Socal househack.   As you’re surely already aware, real estate prices and tax rates are both very high in California.    California also has a Tenant Protection Act enacted in 2019 that puts strict eviction laws into place. You might have rent control there too.   Now, as a SoCal househacker, that could, of course, take the form of buying one big SFH where you live in one of the rooms and rent out the other rooms.   The younger you are, the more likely it is that you’re tolerant of living with roommates. If you want to stay alone or with your spouse or whatever & want privacy, then you’ll househack a duplex, triplex, or fourplex.   Any one of those, SFH up to 4-plex, you can use an FHA loan on and pay just 3.5% down, or VA loan if you have VA benefits and pay 0% down. With either of those low down payment programs, you must live ON-SITE, usually for at least a year.   FHA recently approved 40-year mortgage loans and they will roll out next month. Yes!   In Orange County, CA, with really high prices, it might take a fixer-upper type home to make it affordable. If you aren’t handy, that’s a disadvantage on the house hack.   Socal is simply one of the most DISadvantaged places in the nation for long-term rental property, though there are still ways to make it work.   Then, if you go out of state, you can make it really passive. It won’t be a more active business like it would there for ya in Orange County.   Now, the downside of buying an out-of-state rental, like through GRE Marketplace, is that it’s going to take a 20 to 25% down payment.   But you can still find respectable properties in safe neighborhoods, in say, Memphis for as little as $100K to $120K. That means you might not have to come out of pocket for much more than you would a SoCal rental with it’s lower PERCENT down payment.   And, of course, the big advantages of the out-of-state rental are low purchase prices, high rents, advantageous LL-tenant law, your property is already renovated or brand new, and it is turnkey PMed if you so choose.   That’s exactly why a lot of people are choosing out-of-state properties at GREMarketplace.    Those are some of the major trade-offs, Connor. Thanks for the question.   The next question comes from Jesse in Reno, Nevada.   “With high inflation for two years and cyclical trends entrenched, more nations making foreign trade deals outside of the dollar, and the Treasury printing dollars like mad, I cannot believe the price for a shopping cart full of groceries at Safeway any more. Are we headed for a hyperinflationary period within the next decade?”   Well, that’s an interesting question, Jesse. Inflation is an awful malady that disproportionately affects the lower classes more than the upper classes.   But do I believe that there’s any significant chance of hyperinflation in the next decade, Jesse? Let me answer that.   Now, first of all, a lot of people - not necessarily you, Jesse - but a lot of people throw around the term “hyperinflation” without really knowing what it means at all.    A consensus of economists define HYPERinflation as an inflation rate of 50% or more every month. Yes, month.    With compounding, that would be inflation of more than 600% per year, not the… closer to 6% CPI inflation that we’ve had lately.   We could very well have longer-term waves of RECURRING inflation.   In America, our debt-to-GDP ratio is high. It’s about 120% right now. Back in 1990, it was just 55%.   Now our debt-to-GDP ratio also hit 120% back in the 1940s, but that was as a result of us having to pay for WWII. And the productivity of the 1950s quickly brought the ratio down.   Here’s the problem. Today’s 120% is not due to war; it’s due to all these politicians’ various accumulated promises over time.    That includes CONTINUOUS military spending.   And you know, historically, every fiat currency ends with the END of that currency. Every single one goes to die. The British pound is the world’s OLDEST currency in use today.   But to get hyperinflation, it generally takes two key factors:   First, a nation needs to have debts denominated in a currency that that nation can’t print.    Now, for emerging markets, its often dollar-based debt that they have and those nations can’t print dollars.    100 years ago, Weimar Germany had gold-based war reparations. That was their problem.    You cannot print gold, so they printed MASSIVE amounts of their currency. In more modern times, Venezuela and Zimbabwe experienced hyperinflation.   The second key reason hyperinflation occurs is when there’s no foreign demand for your currency… so you hyperinflate it.   So, to create hyperinflation, it takes a tremendous amount of printing… plus no demand for that currency.    The US still has foreign demand for our dollar and there’s a lot of debt denominated in the dollar globally. That represents demand for it.   Since the US can print its own currency, we’re not very likely to default on our total of $32T debt at all.    We’re motivated to let inflation keep running, at whatever fluctuating rate, Jesse.   So to answer your question, Jesse, no. No hyperinflation in the US in the next decade.   And as far as the prolonged elevated inflation that we’re having, as a listener, I think you know how to beat that by now. Own real assets.  If you own a house, have a 30-year mortgage. Don’t have it “paid off”. You need a mortgage to benefit most. Thanks for the question, Jesse.   Our last question comes from Zack in Claremore, Oklahoma. Zack asks:   Keith, is there such a thing as being “OVER leveraged?” Would you finance everything you can as long as you can create arbitrage?   Great question, Zack. The short answer is, “Yes, I would. I would finance everything up as much as I could without being overleveraged.”   Now, what “overleveraged” means IN GENERAL - out in the larger business world is that you’ve borrowed too much money in relation to your ability to pay it back.   In real estate, being overleveraged means that you take on so much debt that you can’t make your monthly payments on your principal, interest, and operating expenses.   As long as my properties are cash flow positive, even by a little margin, I have found no limit as to how much I would finance, Zack.   Let me use an example. Say that you buy a rental duplex with $4,000 of monthly rent income. Your mortgage and all of your long-term operating expenses are $5,000, leaving you with a NEGATIVE cash flow hole of $1,000 every month.    A $1,000 per month hole is a $12,000 each year hole that you’ve dug.    If you’re financially precarious elsewhere, that can be a difficult hole to fill in and you could descend into delinquency when you miss your first payment, then deeper into foreclosure when you’re several months behind, then the bank takes over your property.    You lose your property, lose your credit score, and lose the ability to get new loans for years. You were overleveraged.   You’ve borrowed too much money in relation to your ability to pay it back since your rent income was $4,000 and expenses were $5,000.   Well, when you buy right, that’s not likely to happen. First of all, your mortgage loan underwriter is going to check that you have enough income and enough reserves to meet their qualification standards before you can get the mortgage in the first place.    That’s a check against becoming overleveraged, yet things could still go wrong.   For one thing, with FHA loans, your debt-to-income ratio can be an eye-popping maximum of 57% and you can still qualify for the loan.   But you’re usually going to be buying your out-of-state rental property with a CONVENTIONAL loan.   Now, INSTEAD of becoming overleveraged, you would buy in the opposite scenario, projecting positive cash flow from day one.   On your duplex instead, if you had just $4,200 of rent income and $4,000 of expenses, you’ve got just $200 of cash flow, but that is a cushion.   And like I’ve described on previous episodes, historically your rent income rises faster than your expenses since your mortgage P & I payment stays fixed.   That’s why, over time, you often widen that delta from +$200 cash flow so that it just keeps widening to a greater & greater cushion.   So, to review, you’re unlikely to find yourself overleveraged if your income exceeds your expenses on day 1, when you have predominantly FIXED RATE LOANS…   … and then another measure of protection is when you own properties in multiple job growth markets - in multiple STATES even - you’re better protected against any changes in the law or regulations or changes in that region’s economy or even any detrimental disruption to your PM in each of your chosen investment areas.   I dislike overleverage. But I do like HIGH leverage. Because leverage makes compound interest feel really slow.    It is best to FINANCE your properties, even though mortgage rates aren’t as low as they were two years ago.    Look at it this way. With 20% down, you could buy five financed properties instead of one all-cash. Over time, five properties appreciating will build you more wealth than one appreciating.   If the properties don’t cash flow with 20% down, then get three with 33% down on each. That’ll accelerate your wealth-building & help you control the mortgage.   Then… if rates go down, you can still refinance. If rates don’t go down, you’ll be glad that you bought multiple properties instead of one.   Thanks for the question, Zack.   I hope you enjoyed listener questions today. I hadn’t done them for a while. If you did, please, go ahead and tell a friend about the show.   Also, if you’ve ever wanted to tell me what you think about the show… there’s a great way for you to do that & I will see it and read it myself.    You know, I recently learned that in Apple Podcasts Germany, we only have 3 podcast reviews in that entire nation on that platform.    And that prompted me to ask you - whatever nation you're in, to please, you don’t have to, but if you’d be so kind, leave a podcast review.    When you do that, it not only helps our show reach more people, but, I do actually read your review of the show, so I get that feedback.   So if you like what I’m doing here, I’d be grateful if you went ahead, and whatever your podcast platform is…   …Google “how to leave an Apple podcasts review” or “how to leave a Spotify review” and go ahead an do that - leave a rating & review for the Get Rich Education podcast and I’d be grateful.    I hope you found one or more listener questions today that really relate to you or your interests, or YOUR unlimited wealth-building potential. Thanks in advance for telling a friend about the show, and for your rating & review.   Until next week, I’m your host, Keith Weinhold. Don’t Quit Your Daydream.  

In this podcast episode, Keith Weinhold discusses the benefits of investing in stable property markets, the risks and benefits of taking out a second mortgage on a property, and the potential impact of remote work on the real estate market.  Weinhold also touches on the performance of stocks and other asset classes in the first quarter of the year, highlighting the drawbacks of savings accounts, CDs, and money market funds, and suggesting that investing in real estate can be a better option.  Overall, Weinhold emphasizes the importance of investing in stable markets with high rent ratios and strong landlord tenant laws. **Real Estate Prices [00:03:39]** Discussion of the current and future direction of real estate prices, with a recap of the benefits of investing in real estate. **Tapping Equity [00:04:50]** Explanation of the problem with tapping equity and the risks of taking out a second mortgage on a property. **Second Mortgage [00:05:43]** Explanation of how to add a second mortgage onto a property and access cash without refinancing the entire loan, with details on the 80% combined loan value ratio. **Risks of Second Mortgage [00:07:49]** Discussion of the risks of taking out a second mortgage, including interest rate fluctuations and the potential pitfall of borrowing short to go long. **Second Mortgage Benefits and Risks [00:09:51]** Discussion of the benefits and risks of taking out a second mortgage on a property for investment purposes. **Current Direction of Home Prices [00:12:09]** Analysis of the current direction of home prices in the resale market, including a survey of resale agents and national existing home prices. **Regional Real Estate Market Performance [00:18:00]** Discussion of the stability of regional real estate markets, with a focus on the southeast and midwest, and the importance of stable prices, high rent ratios, and strong landlord tenant laws. **WFH Trends and Regional Real Estate Markets [00:20:24]** Analysis of the potential impact of work from home trends on regional real estate markets, including an increase in flexible job postings in major cities. **Virtual Real Estate Investing [00:25:02]** Discussion of the recent failures of metaverse projects and the risks of virtual real estate investing. **Factors Affecting National Home Prices [00:26:15]** Explanation of the headwinds and tailwinds affecting national home prices in 2021, including bank failures, job loss recession, labor and supply inflation, spring home buyer demand, and the supply crash. **Mortgage Rates [00:30:20]** Explanation of the difficulty in predicting mortgage rates and the lack of forecast for their direction. **Various Asset Classes Performance [00:32:17]** Discussion of the performance of different asset classes in Q1 of the year, including precious metals, savings accounts, and real estate. **Benefits of Investing in Real Estate [00:35:14]** Real estate investing as a way to beat inflation and transfer prosperity from dollars to property, with the added benefit of control and potential for five ways of profit. **Reasons to Invest in Residential Real Estate [00:36:27]** Advantages of investing in new or renovated residential real estate, including low maintenance expenses and potential for no capex expenses during ownership. **Expectations for Real Estate Market [00:37:33]** Expectations for the real estate market in the next five years, with a caution that the historically high price run-up may not be repeated. Resources mentioned: Show Notes: www.GetRichEducation.com/444 National existing median home price: https://fred.stlouisfed.org/series/HOSMEDUSM052N National median home price (existing & new): https://fred.stlouisfed.org/series/MSPUS Get mortgage loans for investment property: RidgeLendingGroup.com or call 855-74-RIDGE  or e-mail: info@RidgeLendingGroup.com Memphis & Little Rock property that  cash flows from Day One: www.MidSouthHomeBuyers.com Find cash-flowing Jacksonville property at: www.JWBrealestate.com/GRE Will you please leave a review for the show? I’d be grateful. Search “how to leave an Apple Podcasts review”  Top Properties & Providers: GREmarketplace.com Best Financial Education: GetRichEducation.com Get our wealth-building newsletter free—text ‘GRE’ to 66866 Our YouTube Channel: www.youtube.com/c/GetRichEducation Follow us on Instagram: @getricheducation Keith’s personal Instagram: @keithweinhold   Welcome to GRE! I’m your host, Keith Weinhold.    Would you rather be age 18 and poor or 80 and wealthy?   Learn about how a second mortgage could benefit you.   Historically, what REGIONS of the nation have the most stable and volatile real estate prices?    Then, there are two ominous threats to FUTURE property prices. All that and more, today, on Episode 444 of Get Rich Education.   Welcome to GRE! From Orange County, Florida to Orange County, CA and across 188 nations worldwide, I’m Keith Weinhold, this is Get Rich Education.   Last week marked 50 years since the first-ever cellphone call was placed. The call from the 2.5-pound brick-sized cellphone was placed in NYC - Manhattan.    That phone could NOT fit inside a standard pocket.    Sheesh! Look, I won’t even use a case on my iPhone today because I’m concerned about the weight and friction and it would add!   I want it light and I want to be able to quickly slide it in & out of my pocket. Ha!   Well, I’ve got a more significant trade-off for you to consider.    Would you rather be age 18 and poor or age 80 and wealthy?    I think you and most everyone would rather be 18 years old and poor rather than 80 years old and wealthy.   I am pretty confident that you & I agree on that.   Well, if you’d rather be 18 and poor, then why would you go to a job to trade your time for dollars?   Because that’s exactly how you move away from 18 and poor straight toward 80 & wealthier but probably 80 & still less than wealthy.   Why would you make that trade?   Even if you love your job - if it’s not the activity you’d MOST want to be doing out of anything else in the wide spectrum of life, move away from 18 & poor?   Well, time is going to pass one way or the other, but you can win back your time & end up wealthy rather than “somewhat less than wealthy”...   …when you provide value for society by giving them housing, getting paid 5 ways at the same time, one of which includes a MOSTLY passive income stream, trading relatively little of your life time all the while. That’s why we do here.   That way, you’re not quite going to be 18 & wealthy, but wealthy when you’re young enough to enjoy it.   Over the last three years, property prices are up 30 to 40% in a lot of markets.   We’re going to look at the current & future direction of real estate prices in a moment.    But let’s talk about what you can do with this… what you can do with that dead equity in your properties.   America has near record-high equity levels right now so this is really timely here.   But there’s a bit of a problem with tapping your equity today. Before I get into that, just a recap minute here…   Of course, as any longtime listener knows, since the rate of return from home equity is always zero, you have a chance to harvest your equity.   Having, even an extra $1,000 of equity in any property, including your own home, is like making an extra principal payment of $1,000.   Doing that is like you saying, “Hey, Mr. Banker. Here’s an extra $1,000 principal payment. Don’t pay me any interest on it. If I need it back, I’ll pay you fees, and I’ll try to prove to you that I qualify again.”   That’s the short story on why home equity is unsafe, Illiquid, and its ROI is Zero.   OK, but if you have a mortgage loan that’s set at just 3 or 4% interest, are you really going to refinance that whole loan just to pull some money out - just to convert some equity to cash?   Because if you did, your mortgage rate could go up to 6 or 7%. So accessing equity isn’t as great as it used to be.   Ah, but there’s a way around this.   One your, say, property at, say, Huckleberry Lane, you could keep your existing mortgage in-place at that low 3% or 4% rate, and potentially add a second mortgage onto Huckleberry Lane - and only that second mortgage is at the higher rate. The first loan stays in place and so does its amortization schedule.   Now, if your Huckleberry Lane property is worth $500K, you can often have 80% of that, or $400K borrowed, that’s that 80% combined-loan-to-value ratio.   That means that the amount of cash that you can get your hands on is $400K minus your mortgage balance.    That’s why a lot of property owners are able to access, often, $100K or more cash, without touching their low first mortgage at all.   Get $100K cash out - or whatever you have access to - it’s not providing you with any rate of return anyway.   Though you can often borrow out up to 80% of your primary residence’s property value, the deal isn’t as good as far as getting second mortgages on your rental property.   Second mortgages on a rental are, sometimes available, sometimes not. When they are, it’s recently been just up to 70% that you can borrow out.   Now, as good as this might sound, it doesn’t mean that you SHOULD do it. What are the risks with taking a second mortgage on your home or rental properties?   Well, some second mortgages take the form of a Home Equity Line of Credit - or HELOC.    The interest rate on your HELOC can fluctuate, so there’s interest rate risk. Most HELOCs have a fixed rate period for the first 5 or more years though.   Before I talk more about the risk of a second mortgage, it’s just amazing - the number of people that I run into out there - most of them aren’t REIs - but homeowners that are elated that they got a low mortgage rate 2, 3 years ago (and they should be - congratulations)... but they want to tap their bloated home equity and don’t know about adding a second mortgage.   Now, a risk with a second mortgage is the potential pitfall of borrowing short to go long, meaning your HELOC rate resets in a little as five years - it could go down when it resets and it goes up, and at that time, you’re not liquid enough to deal with the second mortgages higher payments. Now, I know, it’s exciting about getting into more income property, using dead equity from your own home or your own rentals - because it’s “Real Estate Pays 5 Ways” stuff.   You might tell yourself, that when you add up a 5 rates of return from investment property - appreciation, cash flow, amortization, tax benefits and inflation-profiting, that you can surely see a total rate of return on your new rentals of 20% or 30% or more.    So if your second mortgage has an interest rate of 7 or 8%, you’d do that deal and pocket the spread.   Yes, it sure might work out that way, in fact, there’s even a probability that it could work out that way.   But the risk is that you’ve got to stay liquid enough to service the debt if your second mortgage rate rises or any other reason.   And you might be just fine. You might have enough cash flow or cash stored that you’re padded, you’re fine… and your underwriter might help you look at that during your second mortgage qualification.   You might ask Ridge Lending Group or your favorite lender about second mortgage options.   So, now you know. A second mortgage can keep up your velocity of money. There are benefits and there are risks.   Utilizing it successfully looks something like this.   You start off with 50% equity in one property, which is 2:1 leverage, you move some of that into a second property.    Now you’ve got 25% equity in both.   You’ve done MORE than double your wealth-amplifying ability here. You’ve virtually 4Xed.   Because rather than having 2:1 leverage in one property, you’ve got 4:1 leverage in two properties.   That’s how wealth is BUILT.   Let’s talk about those ERSTWHILE home prices.   There are at least two ominous threats to future home prices. And now that it’s Spring and market activity picks up, what's the CURRENT direction of home prices?    Real estate can move slower than glaciers, so March numbers are still scarce.   Home prices in the resale market - alright, that means existing homes, not new-build - those resale prices have stayed remarkably resilient, even when mortgage rates jumped up back in February.   John Burns REC compiles a chart for the latest survey of resale agents. The question that was asked is: “What direction have resale home prices moved in the last month?”    The national survey respondents can pick that prices are either MOST INCREASING, MOSTLY DECREASING, or MOSTLY FLAT.   This February, for the first time since May of 2022, more said that home prices are "mostly increasing" rather than "mostly decreasing":   Note though, that most of the agents in the latest survey show that prices are merely steady at 51%. 26% said “increasing” and 23% decreasing.   Credit to JBREC. This is a national survey of ~2,600 resale agents.    Now just from this chart and THESE stats, note something interesting. October 2022—appears to be housing’s low point. That was then, six months ago—marking housing's recent low point.   So, that’s a different angle on looking at home prices than usual - asking agents what they’re seeing.   National existing home prices, per the FRED stats, month-over-month are up just a little, from about $361K to $363K. Again, that’s through February.   Seasonally, that could go up more. That typically happens each year when spring transitions to summer.   There’s a good chance that national homes prices will be rising these next few months.   If you think that those prices sound a little low, be mindful, this entire discussion, so far, is about EXISTING homes aka resale homes, which tend to be priced lower than new construction homes.    If you combine both existing & new, same source, $468,000 is the national median home price. That was the same quarter-over-quarter. Same source too.   It’s always important to cite the source when it comes to statistics.   You know, some say the 1990s are when America moved into the Information Age. But, at some point, in the 2010s, did we move into the DisInformation Age?   I don’t know. There’s a lot of both out there - a plethora, a profusion of both information and disinformation.   Some of these niche finance social media pages don’t cite their sources, and more often than not, I don’t follow them or I unfollow them if I find that they regularly don’t cite source.   The other type of story that I unfollow or just stay away from, are article headlines or images with the word “Rumor” in it.   I don’t want to follow Rumors. Now, I guess, in the best case, a rumor could turn out to be true and maybe could give you a heads up on something that actually turns out to come true later.   But, the world is full of real information. I don’t want to spend this one finite life I have on earth catching up on rumors. It’s more sports sites that use that word rather than finance sites.   Rumor is just an annoying word, I guess. It’s a synonym for “gossip”.   Hey, the real estate investing and personal finance world has its own quirks and odd spins on words.   One thing I haven’t been able to figure out is how a guru is bad and an obsession is good.   Some people disparage thought leaders and influencers as gurus.   Guru means an influential teacher or an expert. That sounds like someone worth listening to to me.   How are obsessions good. Some say, to succeed, you’ve go to be obsessed.   No, you don’t. That sounds unhealthy.   The definition of obsess is to preoccupy or fill the mind of someone continually, intrusively, and to a troubling extent.   Don’t fall into the trap of an obsession.   Well, to recap what you’ve learned today on Get Rich Education Episode 444 (ha!) rumors and obsessions are bad, and gurus are good.   Enough digression. Getting back to real estate investing.   Like I said at the beginning of the year, I don’t expect much national HPA or price declines this year.   But regionally, the markets that we focus on here - the ones in the Southeast and Midwest and a little in the Northeast, have all performed well.   Many - even most - in our target markets appreciated in 2018 & 2019 & 2020 & 2021 & 2022 & they’re continuing to do so now.   Many Florida markets are still seeing 10%+ appreciation. We’re talking about those stable markets, avoiding the volatile, largely coastal markets where prices are sinking, especially on the West Coast.   As I've long discussed, one reason that we invest where we do are for their stable prices, even during downturns.   Backed by historical data, American housing's long-term regional price volatility is broken down like this: The most stable markets are in the Midwest and the Inland Northeast. The medium volatility markets are in South And the highly volatile markets, which we avoid  are in the West, and the Coastal Northeast - like NYC and Boston. I’m going to guess that you’ve never heard regional home price VOLATILITY described before.  Now, you might wonder, if the Inland Northeast tends to have more stable, long-term pricing than the South, why don’t we favor it more than the South. Well, stable prices are important. But having high rent ratios and having strong LL-tenant laws and high in-migration make the Southeast a strong investment area. Of course, when I describe regions this broad there tend to be some outliers and exceptions. Now, it’s going to be interesting to see how America’s regional pricing level AND its level of stability changes over time. That is set up to change at a faster pace, and you might know why that is - why these geographic regions could see, really more of an amalgamation of characteristics and that is due to… you MIGHT know what I’m going to say. WFH. That actually is not an initialism or acronym for some kind of thinly veiled profanity. It is work-from-home.  The rise in Work From Home Trends could really start to blur these lines over time. Now, it would be a trend that moves slowly.  But consider, that, in January of 2023 six times more work was happening remotely than it was in January of 2019, that’s according to a company called WFH Research. In fact, in major cities like New York and Chicago there are now more job postings for flexible arrangements than at any point during the last three years, according to the NBER & Bloomberg. Now, that’s of less concern to you, the residential property investor. It might just be an interesting trend and create more demand for your product - HOMES! But it could very well put downward pressure price pressure on higher-priced areas like Manhattan, Brooklyn, and San Jose… and more upward price pressure on those lower cost areas where you & I tend to buy property. But with more Americans working from their homes, it is bad, bad, bad for downtown commercial landlords and some central business district companies who survived the 2020 lockdowns… but STILL haven’t fully bounced back three years later. Gosh! GetRichEducation.com is where you can learn more about how to invest in real estate the right way, the profitable way - with articles that I write myself, and our videos and more. It is all free. If you would like to contact us, with a question about the show, you can do so at GetRichEducation.com/Contact More straight head, including two ominous signs for the future of the housing market. I’m Keith Weinhold. You’re listening to Episode 444 of Get Rich Education. ______________________ Welcome back to Get Rich Education. I’m your host, Keith Weinhold.   We are keepin' it real here at GRE. Building real wealth in the real world with real estate.   See the, uh, emphasis on the world “real”. Back in December, on Episode 427, you’ll remember that we did a show devoted to Metaverse Real Estate Investing… and the consensus of the guest & I were that it is risky and in most cases, ill-advised to get involved.   Well, it was recently announced that both Disney and Microsoft have shuttered their metaverse projects.    Popular virtual worlds have seen steep drops in interest, with the median sale price of real estate in Decentraland plummeting 90% YoY. You know, with the real thing, even if your real estate lost value, which isn’t common, it can’t go down too far. You’ve still got the value of the land underneath it and the value of all the materials that your property is built with. What about national home prices for the rest of this year? Of course, it’s always a little odd to discuss national home prices with the tens of thousands of US markets.    It’s kind of like coming up with a national weather average.   Here are the MAIN factors governing national home price direction this year.   The headwinds to price growth - the threats are #1: 1 - We had banks fail early this spring. More regional bank fallout could contribute to tightening lending standards. Tightening lending standards would mean that fewer borrowers could qualify, and that could reduce demand. Reduced home demand is NOT good for prices. So that’s ominous housing threat number #1. But even if that happens, regional banks are often making COMMERCIAL real loans. The government-backed loans you’re getting for residential are more desirable - we’re talking VA, FHA, rural housing mortgage, and conforming loans that are sold to Fannie Mae and Freddie Mac - which are often those types that you’re getting for 1-4 unit income properties at GRE Marketplace. All government-guaranteed stuff. The second substantial threat to some good home price appreciation this year is that there is a small chance of a big "job loss" recession. With it being over a year since the Fed started raising rates, there is a lag effect and we should some at least a few more job losses as we head toward a likely recession. They are the two ominous threats. The tailwinds to price growth - these are the strengths for rising home prices, there are 3. The first one is that labor & supply inflation remains elevated, and well, that obviously keeps upward pressure on home prices. The second positive, or strength for home prices is - like I touched on earlier - increasing spring homebuyer demand hasn’t been factored into the numbers yet - and that always boosts prices. And then the third strength and underlying factor to boost home prices this year is really, what I’ve called “the crash” which has caught some people off guard. Yes, this generation’s housing crash ALREADY happened. It is that SUPPLY CRASH of about 60% in available American homes to buy. We have such a low housing supply, like we’ve discussed in-depth elsewhere on the show so I won’t elaborate on that, but that changes nearly everything and it is one reason that home prices are still so resilient today. Still more demand than supply. National home prices have begun heading up a little, and there are a few more opportunities than there are threats that prices should keep rising, but I don’t expect any huge gain, like no 10% gain nationally this year. I don’t see how that can happen at all. Now, you’ll notice that, mortgage rates, - I didn’t put them into either category - either the upcoming housing threats or strength and that’s simply because we don’t know where mortgage rates are headed. They’re so hard to predict so that’s why I’m not forecasting where I think that mortgage rates will go. You know how when you’re under contract to buy a property and you & your mortgage loan officer are having that strategy session on WHEN you want to lock in your rate. At least one time in your life - and I sure have in mine - you’re tempted to ask your MLO where they think rates are going… well, like I said, they’re just really difficult to forecast.  Your MLO often doesn’t know where they’re going to go. Do you remember, last year, or I sure do because I follow this stuff closely, the number of people and professionals that said mortgage rates would be 8 to 10% by Spring of 2023? Yeah, quite a few people said that emphatically. They’re about 6.3% today. Before I get back to real estate, the quarter recently ended so let’s whip around the asset classes like we do sometimes at quarter-end. Tech stocks got a boost in the first quarter, that helped the S&P be up 7%.   Stocks of the tech giants that are leading the charge in          AI-powered search, Microsoft and Alphabet, outpaced that.   Meanwhile, the second- and third-largest bank collapses in US history happening within 48 hours hurt bank stocks.   Bitcoin was up 72% in Q1. Do we say that crypto winter is over when bitcoin hits $30K?   Oil prices were flat, beginning & ending the quarter at around $80.   Gold was up 7%, partly due to the bank failures.   Silver rose 4% for the quarter.   You know what’s been a really bad investment for the last decade, despite all the good things that you hear about its promise - investing in physical silver. You read that there’s now more silver above ground than below ground.   10 years ago, silver was worth $25 dollars an ounce and it’s still worth… $25 an ounce.   That’s even worse than it sounds to laypeople. If you’ve held any investment for 10 years like that and it’s worth merely the same amount of dollars, inflation just chomped about half of it away.   We might have had 40 or 50% or more real inflation in the last decade… and silver bars didn’t pay you an income stream during that time either. What a poor performer!   Though I think that SOME precious metals can still be a good STORE of value.   That was whipping around the other asset classes in Q1 of this year.   One place to park your money that is NOT a good store of value is… savings accounts and CDs and MMFs.   Their interest rate, though it might feel good getting paid up to 4% or 5% on those, it ensures that you’re losing prosperity every day… because CPI inflation is higher than that, and then the real rate of inflation is higher than that yet. True inflation might be double your savings account rate.   Instead, the smart money BEATS inflation and all the time, a little more of the smart money is GETTING OUT OF DOLLARS too with these rising concerns about foreign nations doing more of their business in yuan or another currency outside of the petro dollar.   The dollar is currently under a lot of stress, besides just the inflation. Dollars in savings accounts & the like… don’t just lose to inflation… they’re actually keeping your prosperity denominated in dollars, which a growing chorus feels precarious about right now.   Is the dollar about to lose its world reserve currency status? I don’t know. I think people having been calling for that since shortly after Richard Nixon took us off the gold standard in 1971.    Instead, what about a fully renovated or brand new investment property, with a rent-paying tenant placed and its all under professional management for you.   That way it’s low hassle for you, yet because you own the asset directly, you have the CONTROL without the hassle, and you’re often paid those five ways.   This way, not only are you getting out of dollars with your down payment - another way to say it is that you’re converting your dollars into real estate…   Then on top of that, when you borrow the dollars for 75 or 80% of the purchase price… you’re getting out of dollars so much that you’ve essentially fund a way to go negative with your dollar position on that property.   When you buy through our network, since the property is new or renovated, you should often expect little or no ongoing repair or maintenance expense in the early years.   And here’s the thing that some investors overlook. You may not have an CapEx expense at all. Those big capital expenditures like a new roof or windows or a furnace.   That’s because when you buy new or rehabbed and you consider that your hold time often isn’t more than 7-10 years due to equity accumulation and leverage ratios, as you lever up into another property, you can leave the Capital Expenditures to the next buyer when you sell.   So, these are some reasons why buying residential real estate makes a ton of sense in this environment.    Will these next five years be as lucrative as the last five years? No, I really wouldn’t expect that - that’s because of the historically high price runup these past few years.   But I still cannot think of a better place to be than that strategically-chosen real estate.   You can go ahead and get started looking at some properties in markets and connect with our free investment coaching there if you so choose.    That’s all at GREmarketplace.com   Hey, I really had a great time chatting real estate and everything else with you today.   Until next week, I’m your host, KW. DQYD!