Show notes
Most people sell their time for dollars. Were you really meant to do what you're doing right now? Mark Twain said, "Why not go out on a limb? That's where the fruit is." Culture conditions most people to live an average, stale life. Don't trade away your authenticity for approval. In over 6,000 years of human history, being a conformer is not a success recipe. 40 rental doors x $150 cash flow = $6,000 per month. This buys you time. Don't fear failure; fear not trying. Powerful assignment: write your own obituary. No one achieves anything extraordinary by playing it safe. People that say, "I want to live frugally." actually want to say, "I want to live well." But they don't know how. Get residual real estate income at: www.GREturnkey.com I update you on asset class prices over the past year. Americans paid $4.5T in rent this past decade. The median homebuyer age is up to 47. Corelogic expects a 5.4% housing price jump in 2020. Housing shortages should continue at the low end of the market. Nearly every news outlet reports a stable housing environment. Why? Demand exceeds supply, appreciation rates are sustainable, stringent loan requirements, inflation-adjusted home prices are often still below 2005 levels. **The entire episode's lyrics are at the bottom.** __________________ Resources mentioned: Turnkey income properties: GREturnkey.com Americans Paid $4.5T Rent Last Decade: Zillow article Median Age Of Homebuyers Up To 47: HousingWire article Fannie Boosts 2020 Housing Forecast: CNBC article Lenders, Builders More Conservative: CNBC article Home Prices To Rise In 2020: Yahoo Finance article Homes Under $250K Near Extinction: HousingWire article Mortgage Loans: RidgeLendingGroup.com eQRP: Text "QRP" to 72000 or: TotalControlFinancial.com By texting "QRP" to 72000 and opting in, you will receive periodic marketing messages from eQRP Co. Message & data rates may apply. Reply "STOP" to cancel. JWB New Construction Turnkey: NewConstructionTurnkey.com Best Financial Education: GetRichEducation.com Find Properties: GREturnkey.com Follow us on Instagram: @getricheducation Welcome to Get Rich Education, I'm your host, Keith Weinhold. Mark Twain said,"Why not go out on a limb? That's where the fruit is!" I tell you how YOU can go out on that limb to get that fruit - that prosperity in your life. And, and update on markets and housing here in the new decade. Today, on Get Rich Education. Welcome to Get Rich Education, I'm your host, Keith Weinhold. This is Episode 275 ... and you know something? It has always fascinated me that people will trade time for dollars. You have traded your time for dollars … and I have sold my time for money in the past, as well. Yeah, amazes me that people will work, often doing something that they don't EVEN LIKE - and spend that time away from their family or for things that they don't enjoy doing … just for money. It's actually even worse than that. The long-term plan - the OUTCOME for this sacrifice - isn't even satisfying. It's for you to retire old, and THEN only begin to really live … maybe. Well, ironically, the answer to your potential freedom is something that you actually slept inside last night - a piece of real estate. But you need to invest in real estate in a strategic way. You don't need to be a landlord and you don't need to know how to fix things - but few know the way. Here on this show, I simply tell you the things that I would have wanted to know before I started down this road to freedom back in 2002, which is when I bought that seminal four-plex building. You are where you are today because of you. Your life isn't a fluke and it isn't an accident either. You are where you are because of your choices. Well, let me ask you - were you meant to be doing what you're doing now? Were you put on this earth to do … that? You probably know definitively without me even having to get specific - you already know - yes or no - if you were MEANT to be doing what you do for money now. See, the #1 limiting reason that people give for why they can't do something that they really want to do in their life … is … money. So, time vs. Money is something that we discuss a lot on the show. It's something that's infinitely interesting to me … and what you need to do is "Go Out On A Limb". I'm going to discuss that with you a lot more later today. But first, since we're a few weeks into this new decade, let's talk about some more broad and contemporaneous news items - this investor environment that you live inside every day. Whipping around the asset classes like we do from here time-to-time here - in the year that was, last year, what really happened? S&P 500 was up nearly 29% - it's best performance in years. Of course, it's volatile. In fact, it was just DOWN 6% the previous year. Year-over-year, many commodities were up. Gold was up 18%, Silver up 15%. Oil - Light Sweet Crude - was up 22%. Recession fears peaked back in September - four months ago. Columnists and economists and everyday people don't really talk about recession as much as they did late last year. Last year, the 10-year Treasury Note yield fell seven-tenths of one percent down to 1.9%. Now, why do you care about what you'll hear people just shorten and call "the 10-Year T-Note?" Economists say it that way with their slang. That is because it's the rate most closely tied to long-term mortgage interest rates. I just told you that the note yield fell SEVEN-TENTHS of one percent last year. Well, see, the most popular mortgage in America, the fell EIGHT-TENTHS of one percent last year down to 3.7%. That's the 30-year loan. So, pretty closely correlated. And of course, that's the mortgage interest rate for primary residences. For investment property, it's often nearly one percent higher. Last year, the Freddie Mac House Price Index was up 3.6%. I like to look at the Freddie Mac Index because it includes pricing for all 50 states and Washington, D.C. The Case-Shiller Housing Price Index only measures 10 to 20 large cities. One news story that we experienced in the past year is one that almost no one talks about. Now, you generally want there to be higher wages out there. That means your tenants can afford to pay you more rent. Higher wages mean higher inflation which means higher asset prices and also, faster debasement of debt that you owe. Now, whether you agree that there should be a minimum wage or not ... The minimum wage keeps getting higher across the country. More than 20 states are bumping up pay for minimum wage workers this year, here in 2020, while Seattle's large employers will now pay a nationwide-high of at least $16.39/hr to employees. Meanwhile, the FEDERAL minimum wage has remained parked at $7.25. But these higher state wages - are a positive for real estate investors. Now, I've aggregated a number of news stories that matter to you - all that have published over the past few weeks. Just about everything is positive for a stable housing environment. Zillow report an astonishing figure. Over the last decade, do you have any idea how much Americans paid in rent - in total? Americans paid $4.5 TRILLION - with a "T" - dollars in rent in the last decade - the decade that just ended a couple weeks ago - the 2010s. Well, that's a gigantic number. It's so giant, that it's more of a fun figure to contemplate and hard to put it into context. What CAN you compare this to? Well, this is greater than the GDP of Germany - which is the world's 4th-largest economy. Yes, it's been a rather lucrative decade for landlords - partly due to the fact that the homeownership rate fell through the decade and - consequently - there are more renters now. So, yes, you only need a small slice of this $4.5T dollar pie to win a substantial degree of financial freedom yourself. Housing Wire has reported on what the median age of a homebuyer is in America today. Do you have any idea what that age is? Well, I'll tell you, to give you some context here, that in 1981, the year that Ronald Reagan first became President, the median age of a homebuyer then was … 31. Age 31 back in 1981. The median age of a homebuyer today is … higher than that. Just dramatically higher. Almost unbelievably higher … it is age 47. 47! So … how did this happen? There are VARIOUS reasons for this delay, including a dramatic increase in student loan debt - like we've discussed before - and a general shifting of attitudes towards the traditional homebuyer cycle. People are waiting longer to marry, have kids, and buy houses. Household formation is postponed now. These are some things that you've already realized. But you may be surprised to learn that the RESULT of this is now a 47-year-old median age homebuyer. That's like … old enough to be a grandparent perhaps. Just remarkable - and again, great news if you're renting property to others. People are renting longer - or just renting forever. Now understand something else - and look, you can't discriminate against a tenant based on age or for any other reason. But just think about what else this means - there's a renter pool today with more, say, 35 and 40-year-olds in it than there used to be … … and therefore, a smaller proportion of 25-year-olds. You have this aging of tenants … and older tenants tend to live more quietly in your property and be more gentle on your housing unit. Long-term demographic trends exactly like these are why we talk about what we talk about here - how everyday, busy people and working professionals can create residual income with these investment properties. CoreLogic expects a 5.4% home price jump in 2020. Yes, this would be a greater appreciation rate than that 3.6% we saw last year. Fannie Mae has significantly boosted ITS 2020 housing forecast. Overall housing DEMAND, they say, is incredibly high, especially at the lower end of the market, which is exactly the end of the market where builders are least active. Prices are rising fastest on the low end, sidelining some first-time buyers. Fannie Mae's Chief Economist Doug Duncan says: "Housing appears poised to take a leading role in real GDP growth over the forecast horizon for the first time in years, further bolstering our modest-but-solid growth forecasts through 2021." Now, CNBC recently reported that: U.S. homebuilders and lenders are to blame for the country's housing shortage, Marcus & Millichap CEO Hessam Nadji said. Home construction companies have reduced speculation and lowered risk-taking in an effort to prevent "the lessons — if you will, the hard lessons — learned in the 2008-2009 Housing Crisis & Great Recession - from happening again," is what he said. "All of that is frustrating from a consumer perspective, but it's actually very healthy from an investment and economic perspective for the U.S. as a whole," he said. Yahoo Finance - really all these news outlets are reporting various sources that home prices are expected to rise modestly and that housing shortages are expected to continue. Rather than reporting on another similar story about this … I've been saying for years on this show that if you're waiting for housing prices to drop substantially … well, anything is possible. But I don't see what could possibly make that happen. And that's primarily due to three or four reasons that housing stays firm: The #1 reason - the chief one is that housing demand exceeds supply. That's just basic economics. And the housing crash of … now 13 years ago ... was due to the opposite condition. Back then, there was overbuilding - back then supply exceeded demand. The second of three reasons is that appreciation rates ARE sustainable: Less than 4% per annum lately. Leading up to the housing crash, they were TEN TIMES that in some markets - totally unsustainable. The third reason that supports housing is that lending practices are responsible. To get a loan, you DO need to supply a somewhat-annoyingly high amount of documentation. You need to have income, reserves, and some decent credit. That didn't happen in the Great Recession buildup either - ANYONE qualified - and then that ARTIFICIAL demand helped push up home prices unsustainably. Really a fourth reason - or a bonus - is that once you adjust for inflation - which so many people and even reporting outlets forget to do - many housing markets still haven't even reached their pre-recession peak from way back in 2005. So, these 4 reasons to be bullish about housing are all MY takes. Links to all of the articles that I cited are in the show notes. Next week, Tom Wheelwright returns to the show with me. Yes, it's the long-awaited show where it'll be Weinhold and Wheelwright on 401(k)s and going deep on how you can obtain the desired "RE Professional Designation" and the GREAT tax advantages that that gives you. Are 401(k)s worth contributing to - even if you get an employer match? We'll take that one head-on next week. And I think you're going to get some really surprising answers. During the holidays a while back, we had all FRESH shows. San Diego-based Get Rich Education listener Andrew Stanton - and his layoff story reminded us of the importance of having multiple income streams. Should you - as they say "Rent out your backyard" with an ADU - accessory or auxiliary dwelling unit. Well, in places like California where they're popular ... Why don't you instead enjoy your backyard and invest in markets in the Midwest & South where the numbers make better sense anyway. Two weeks ago, CFP Brent Sutherland & I discussed why conventional financial advisors don't discuss RE with you. Last week, we had the "hands-on" perspective with Kevin Cross, asking, "Should you self-manage your rental property and your tenants?" For him, the answer is "yes" - with some help - and that's fine. For me, the answer is "no". I want control without having day-to-day responsibility. Let's do good in the world and provide people with clean, safe, affordable, functional housing. But I make sure my manager does that. I want to directly invest in real estate, with property titled in my own name - that way I get paid up to 5 different ways. But, I don't want it - I'll say in my grip - as in - I don't want to hold real estate right in my hand - otherwise it's on my plate & on the front burner. But I do want it within my arm's reach so that I have CONTROL, and yet a FAIR measure of passivity. If you want more out of your life, you've got to go out on a limb. I'm going to talk about that with you today … next … I'm Keith Weinhold. This is Get Rich Education. ________________________ Welcome back to Get Rich Education. I'm your host, Keith Weinhold. When it comes to your day job ... or how you spend most of your waking day, were you meant to be doing what you're doing now? I think that a lot of people get culturally conditioned that you have one path that you just MUST take throughout life, and if you deviate from it too much, that's bad … because now you're a non-conformer. Yes, one path. This narrative through the Industrial Revolution that you should go to school, get this amount of formal education, this amount of college debt, a good job, work for one company, marriage, kids, buy a big house … … get a new car every 5 years, just 2 or 3 weeks of vacation per year (my goodness - are you kidding me?), work for 40 years, then retire & play golf … or something like that. That's what's supposed to qu…
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