8/15/10: How Capitalism Will Save Us – An Interview with Steve Forbes
The Real Estate Guys™ sit down and talk with Steve Forbes about jobs, the economy and real estate.
We don’t know about you, but any time a billionaire, a CEO of a major company, a best selling author or a legit presidential candidate is willing to sit down and chat, our response is always, “Yes!”. In this case, our special guest for this episode, Steve Forbes, is ALL of those things wrapped into one. So we’re super jazzed to bring this exclusive interview to you.
In the broadcast booth at the Freedom Fest conference in Las Vegas:
- Your Host and interviewer extraordinaire, Robert Helms
- The just-happy-to-be-here Co-host, Russell Gray
- Special guest, Forbes Magazine CEO, Steve Forbes
Mr. Forbes was the keynote speaker at the Freedom Fest conference and remained in attendance for the entire event. In spite of a recent neck surgery, he was very accommodating and so Robert was able to sit down with Mr. Forbes for an impromptu interview.
Steve Forbes with Russ and Robert at Freedom Fest. Russ wrestled Steve into doing the interview, which broke Russ' glasses and injured Steve's neck. But the interview went well and we were all smiles afterwards.
We decided to ask him about his latest book, Why Capitalism Will Save Us – Why Free People and Free Markets are the Best Answer in Today’s Economy. Mr. Forbes’ thesis is that too much government is bad for business because it increases costs, diminishes productivity and takes too many resources away from creating jobs for an ever-growing population. He calls for “sensible rules of the road” to provide a basic framework in which free people can conduct business. Of course, the great debate is over what’s “sensible”. His position is that less is more.
What we’re really interested in is jobs. Jobs are where our tenants get their rent money. It’s where home buyers get the income stream to make the mortgage payments that prop up the property values that create passive equity. Jobs are near the top of our due diligence check list when evaluating a market to invest in. It’s one of the reasons we like Dallas right now. Among U.S. markets, it’s doing pretty well. Ironically, another great job market is Washington DC, but if there’s a changing of the guard over the next couple of elections, that could change. But we digress…
So Mr. Forbes shares his thoughts on the economy, job creation and the role of government in real estate, specifically Fannie Mae and Freddie Mac. In his position as the CEO and editor-in-chief of Forbes Magazine, he gets to talk with many of people who shape, interpret and respond to public policy. We really enjoyed our time with him and hope you will too!
On a side note, Steve Forbes is the nicest billionaire we’ve ever interviewed. Actually, he’s the only billionaire we’ve ever interviewed. But he’s still a very nice guy. So, if you’re a billionaire and want to come on the show and be nice to us, just give us a call. Our door is always open. 
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8/8/10: Don’t Say I Didn’t Warn You! Peter Schiff Reveals How He Predicted the Crash
WHO KNEW the crash was coming? Lots of people have been reverse engineering the causes of the financial crisis. It’s easy(er) to be smart when operating from hindsight. But when someone gets it right for the right reasons BEFORE the event occurs…well, that’s just impressive.
Peter Schiff is one of the few guys who called it way in advance. Not only that, but he put it in writing in his 2006 book Crash Proof (the updated version Crash Proof 2.0 is now on our recommended reading list).
Even more impressive is that Schiff appeared on a whole host of TV shows sounding the warning. But people literally LAUGHED at him, as you’ll see in the 10 minute video below. And there are many other videos of Peter aggressively debating all kinds of people – including next week’s guest on The Real Estate Guys™ Radio Show, Steve Forbes.
Featured on this week’s episode:
- Your host, Robert Helms
- Co-host, Russell Gray
- Fund manager, economist, author and outspoken commentator, Peter Schiff
Politics aside (Schiff is running for the Republican nomination for Senate in Connecticut - with the endorsement of Steve Forbes!), considering what Peter predicted and what actually happened, how can you not be at least curious? It was that curiosity that had us go to Las Vegas for Freedom Fest in July, where we were exposed to many economists who follow the Austrian school of thought. There isn’t any way in a blog post to explain all we learned, but a recommended homework assignment is to review the major tenets of the Austrian viewpoint versus Keynesian. We think you’ll find it very interesting, if not highly enlightening!
What we’re really interested in is being able to best anticipate macroeconomic influences that are likely to impact the value of our real estate, the strength of the jobs market, the growth of wages (which fuels growth in rents); and the cost and availability of loans. We don’t care if you’re Democrat, Republican, Libertarian, fans of rap or a drinker of light beer (okay, we find the last one a little offensive) -if you have something to say that proves true and makes sense, we’re interested. Peter Schiff is a guy that has proven true and seems to makes sense.
So for this entire show, we ask Peter to tell us to our face how he knew the crisis was coming and what’s going to happen next. Based on his track record, we think he’s a guy worth listening to. Check it out and let us know what YOU think!
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The Great Wealth Transfer is Underway! Which side are YOU on?
Imagine being a passenger boarding the Titanic for its maiden voyage. Today, we all know how that story ended. But what would you have paid to know what was going to happen BEFORE it happened? Or at least while there was still time to save yourself and your loved ones?
The US economy has long been considered unsinkable. When the economic waves of the world get choppy, investors worldwide seek shelter in US bonds. And the US government has been all too happy to sell those bonds and go deeper and deeper into debt. Today, almost daily we hear about record setting deficits and new debt ceilings. It’s easy to be confused and simply tune out. There were people dancing on the deck of the Titanic even as it was sinking. They were too busy having fun.
They say that people who fail to learn from history are doomed to repeat it. If you thought graduation meant no more studying and no more tuition, you might want to think again. It’s been said that in the history of the world, no economy has survived a 98% devaluation of its currency. The US is at 95% today.
What does all this mean? More importantly, what does it mean to you? MOST importantly, what can you DO about it?
We think the first and most important thing a concerned individual can do is get educated. There are great books, podcasts and seminars available. One of our favorite teachers is Robert Kiyosaki and the Rich Dad Company. He’s a guy that takes a lot of criticism, but for our money he tells it like it is better than anyone else that is readily accessible to everyday people. Anyone who threatens the status quo is going to be the target of critics.
We suggest you read his work, listen to his message and ask yourself if it makes sense to you. The key to your success will be your ability and willingness to research, think and act. Most people will keep dancing on the deck. As for us, we’ll be in Scottsdale on April 30th listening to what Robert Kiyosaki, Mike Maloney and Richard Duncan have to say.
Wealth transfers are nothing new. And Robert Kiyosaki thinks a HUGE wealth transfer is imminent if not underway right now. If you are concerned (and you should be), then we encourage you to attend this event also.
For us, it’s a business decision. If we invest the time and money and go to the event, the worst thing that happens is that we spend 3 days hearing that these men have to say and thinking about the subject. Even if we completely disagree, the 3 days of concentrated thought will help us make better decisions. If we pick up just one of two great ideas that we can act upon, we should easily be able to make enough profit to cover the cost of the event. In either case, we’re likely to meet some interesting people – and who knows what opportunities will open up from that? Our guess it will be more profitable than if we stay at home dancing in the deck.
Mike Maloney says this wealth transfer presents one of the GREATEST OPPORTUNITIES in history. We don’t want to to miss it!
We hope to see you in Scottsdale on April 30th. Click here to join us.
Here’s a replay of our radio interview with Mike Maloney on November 18, 2009:
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Squish Happens
Most people believe bubbles “burst”. When people talk about the decline of tech stock values at the turn of the century, they say “the tech bubble burst”. Of course, lately it’s all about the “real estate bubble” bursting. Over the last two years, The Real Estate Guys™ have taken some criticism over one of our TV shows where we said, “Real estate bubbles don’t burst”.
But we’ll stand by that. Bubbles don’t burst – at least not as long as whatever is underneath them is real. And there isn’t much that’s more real than real estate.
So we say bubbles are squishy. In fact, the term “bubble” (in the context of referring to a rapid run up of prices) is really a misnomer. Better to say “balloon”.
When you squeeze a balloon, it squishes. It comes out the sides or goes between your fingers; it just finds someplace else to go.
So you’ve heard that real estate prices have dropped. There’s deflation. Equity is gone. Everyone’s underwater. Life as we know it is over. It’s real estate Armageddon.
Then you see (like we did) today’s Wall Street Journal article, “Hong Kong Land Sale Raises Worry of a Bubble”.
A bubble? Didn’t it burst?
Well, no. Actually, it squished.
According to the Wall Street Journal:
“Government officials here (Hong Kong) grapple with how to cool off overheating property prices”.
When’s the last time you heard “overheating” and “property prices” in the same sentence? It almost seems like an oxymoron, like “reliable copier”.
Here’s another excerpt:
“The big (land purchase) came after (the real estate developer) sold 900 apartment units in a major new residential complex over the weekend for a total of US$541 million.”
If you do the math, that’s over $600K per unit! In ONE weekend. We haven’t seen THAT in the US for awhile.
More…
“In China…home prices have risen as much as 25% in the past year and land values have doubled.”
That’s this past year, as in 2009. You know, when US prices were in their third year of decline.
Now, consider where much of the money that fueled the US real estate bubble came from. Get it?
The bubble squished. But if your perspective is too narrow, you might think it burst. Especially because that’s what everyone says. And if you think bubbles burst, then you will quit the game and hide in your FDIC insured bank account. Meanwhile, as the dollar crashes, you’re savings become worth less and less.
We have two main points:
First, real estate is an asset class unlike any other. It’s real (permanent). Gold and other commodities can also make this claim so, in and of itself, being real doesn’t make real estate utterly unique as an investment.
But, unlike virtually every other investment, real estate’s value is not universal. Real estate values vary by markets and sub-markets, and those markets are global as we can clearly see.
Compare that to gold, which is also real. If an ounce of gold is selling for $1200, it’s the same price all over the world. There’s no squish, except to another asset class.
To really look at it right, you can’t think of real estate as an asset class. You almost have to think of each property, or at least each market or sub-market, as an asset class. So when one is down, another is up. Squish. Like stocks and bonds, gold and the dollar, etc.
But the big thing (our FAVORITE) that makes real estate unique, is that it can be financed with bank or private funding and debt serviced by tenants. This makes it VERY conservative when structured properly. Why? Because even if the property declines in value, as long as it produces enough net operating income to amortize the loan (meaning the tenants are paying down your loan) some day it will be paid off. Then it just generates cash flow forever. That’s a beautiful thing. Form that perspective, squish doesn’t matter that much.
Our second main point is that right now many people are forming new financial paradigms as a result of what they’re seeing and experiencing. The people who lived through the Great Depression came out of it with very powerful convictions about how they viewed and handled money. There were many great attitudes such as frugality, saving; and loyalty and appreciation for the opportunity to work. We would all be better off by adopting these attitudes.
However, many of those same people missed out on some of the greatest opportunities in modern history because they brought a lot of fear and rigidity out of the trauma of the Depression. Many people were hyper-conservative.
To be clear, we aren’t suggesting anyone should take risks they aren’t comfortable with. And we aren’t criticizing anyone’s personal investment philosophy – no matter how conservative it might be. We’re certainly more cautious about the risks we take these days.
We are merely suggesting to be mindful of the temptation to be hyper-conservative in terms of your willingness to be an investor. If you won’t invest in your education or take time to investigate opportunity, you’ve probably decided “investing is too risky” and have effectively quit. You think the bubble burst, the game is over, and there is no opportunity. Or it’s so far off or you’re so out of position that you’re on investing sabbatical. This is probably not you, or you wouldn’t be reading a blog like this. But, there are lots of people who have quit – or are in various stages of quitting. Make sure you know who you are and that you’re honest about it.
Now is a great time to be getting started (or re-started). Talk to the people you know about real estate investing and see what they say – and watch what they do. How are their attitudes changing as a result of the last three years? What’s their game plan going forward? Ask yourself those same questions.
Remember, squish happens. As an investor, you want to pay attention to the flow of capital and try to be on the right side of squish. And since you know squish happens, be sure to structure your deals to survive if you’re on the wrong end of it. We’ll be talking more about this in the future.
Most of all, make sure you take the right lessons out of this Great Recession. The right lessons are those that make you a better investor, not those that push you back to being merely a saver or a non-participating observer. Invest in your education. Investigate and evaluate opportunities. Keep your head in the game, even if you’re on the sideline temporarily.
We’d love to hear from you! Use our feedback page to tell us how this recession has affected your investing philosophy and strategy. What are the people around you saying and doing? Where do you see opportunity and why? What are you doing to broaden your horizon, increase your education and increase your network?
1/3/10: Happy New Year with Gary Eldred – What Does 2010 Hold?
The easiest thing in the world to do is predict the past. But what about the future? As we enter a brand new decade, what does the future of real estate look like? To find that out, The Real Estate Guys climbed the proverbial technology mountain to connect with a real estate sage – all the way from Dubai!
Sitting on the mountain top for this broadcast:
- Your real estate guru, Robert Helms
- Pillow fluffer and co-guru, Russell Gray
- Trump University faculty member, best selling author, seasoned real estate and renowned consultant, Dr. Gary Eldred, PhD.
Digging through technological challenges, The Real Estate Guys mined some golden nuggets of wisdom from special guest, Gary Eldred who called in all the way from Dubai! As someone who has studied, taught, invested, and consulted on real estate for decades, Dr. Eldred has earned the right to have an opinion. We talk stocks, bonds, gold and real estate. Gary tells us which asset class he believes will outperform all others in the new decade – and why.
Gary also reveals his strategy for hedging against economic uncertainty. He tells us which type of mortgage he prefers right now and why. As one of the most well traveled investors we know, we also were intrigued by Gary’s comments China, India and Africa – and how what’s happening there affects real estate in the US and other parts of the world. Of course, since he was calling from Dubai (where he is currently working) and Dubai’s been top of the financial news recently, we made sure to talk about that too!
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Home Construction Slows – Good or Bad?
The AP headline this morning says “Stock Market Slumps as Home Construction Slows”. Oh no! We can hear the pitter patter of mutual fund investors’ feet running to their computers to check the damage to their 401k.
Funny, but when we look at our computer, we see interest rates on 30 year fixed mortgages back under 5%. Even jumbos are under 6%! Meanwhile, gold, oil, car prices and CPI (Consumer Price Index) are all up. (Hint: those are signs of inflation).
When you put all that in the blender, what do you get? Well, it depends on what color glasses you’re wearing. (Too many metaphors? Sorry.)
Here’s the deal plain and simple: In the US, home and apartment construction is not growing as fast as the population. Rents are not falling as fast as prices. Interest rates are ridiculously low. Toss in gobs of people unemployed, which means they’re missing payments and wrecking their credit. They won’t be able to buy a home for awhile, so if they can’t keep the one they have, they will be renting.
So what do we have?
• A growing population and influx of people going from homeowner to renter means more demand for residential rentals.
• Less new apartments and homes coming on line mean less supply.
• More competition for fewer rental units means upward pressure on rents, in spite of a weak job market. Why? Because people need a place to live. Next to food, it’s pretty high on most people’s priority list.
• Low interest rates means if you or your investment partners are credit worthy, you can get great (i.e., low) long term interest rates on loans just before what many believe will be an inflationary cycle. Inflation means anyone in debt will win as the value of the dollar falls. This is why China is a little miffed at Uncle Sam. China holds a lot (if you think a trillion is a lot) of US debt and are concerned about a falling dollar.
• Low interest rates also mean lower payments. Lower payments make it easier to get a property to cash flow without 80% down. To quote from that fabulous book Equity Happens, “Cash flow controls mortgages. Mortgages control properties. Properties will make you wealthy over time.” This is true with or without inflation (i.e., appreciation), because you are using the tenant’s money to pay off the loan. No other investment lets you do that.
Additional opportunities exist for the extra ambitious. We call it finding and forcing equity. How? With less new units coming on line and many banks and overextended owners letting their properties fall into disrepair, there are opportunities to buy someone else’s problem cheap. Then, fix it up, rent it out and wait. If things go your way, you may be able to refinance to get your original investment out – and now you’re in for free. Kiyosaki calls this “infinite return”. We like it.
Of course, it’s not all rosy. Unemployment is still a concern. And financing (especially refinancing) is harder to qualify for. But, if it were easy, then everyone would do it and there wouldn’t be opportunity. Hey, wait a minute. It’s easy to buy mutual funds, isn’t it? And everyone does it, don’t they? Hmmmmm…..
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11/15/09: Is Gold All that Glitters? Exploring the Relationship Between Debt, Dollars, Gold and Real Estate with Special Guest Mike Maloney
It’s hard not to be impressed with the growth of gold over the last several years. But did you know that there’s a relationship between gold and real estate prices? On this broadcast, The Real Estate Guys explore the relationship between debt, dollars, gold and real estate!
Sitting behind the golden microphones for this episode:
- Host, Robert Helms
- Co-Host and Financial Strategist, Russell Gray
- The Goldfather of Real Estate, Mr. Bob Helms
- Rich Dad’s God Advisor, Mike Maloney
In the wake of a weakening dollar, gold has been breaking records. But what does that really mean for your real estate, mortgages and cash reserves? We start the show with a discussion of inflation and what causes it. Readers of Equity Happens know that when the money supply increases faster than the supply of goods and services, price inflation occurs. Mike Maloney gives us a very interesting historical perspective while clarifying the important differences between money and currency.
Like Russ, Mike Maloney is a guy that likes charts and graphs. He is also a student of history. He tells us what “fiat” currency is and what it’s track record is. You do not want to miss this!
Mike also explains the relationship between gold and real estate prices. He says historical patterns exist and they can provide valuable insight into the future. If you want to make profits, you need to figure out where and which way the money is flowing. If you’re on the wrong end of the move, you lose. Get it right and you win big. But what happens if you decide not to play? Is your money really safe in the bank?
Another fascinating discussion revolves around the “base” money supply and why real estate prices have fallen even though the money supply has grown. Does this mean real estate is “over” or is this a lull before a new wave of appreciation? Mike tells us what he thinks and why.
As we’ve said for quite some time now, the rules of the game have changed. But a bend in the road is not the end of the road unless you fail to make the turn. Tune in to this golden opportunity to pick up some nuggets of wisdom from Rich Dad Gold Advisor Mike Maloney.
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Is Gold All that Glitters?
The AP reports that gold hit an all time high of $1,118 per ounce today. Do you understand why? Do you REALLY understand? And what does gold have to do with real estate (besides that you dig gold out of the ground)?
Great questions!
Gold’s rise is a prime refection of a falling dollar. Why? Because when the dollar “falls”, it takes more dollars to buy anything that’s real. It’s called inflation. Supply and demand play a factor, so just because the dollar falls, doesn’t mean that gold is going to respond immediately and proportionately. But in general terms, a falling dollar means inflation of things that are real. Things like gold, oil and real estate. Typically, gold really takes off when people are nervous about the dollar. So take that for what it’s worth.
The Real Estate Guys don’t claim to be experts at gold, but it’s something we’re very interested in. We watch the demand for gold, oil and treasuries because they give us insight into where cash is moving. When cash moves into real estate or mortgages, then it helps push real estate values up and equity happens. Do you see the connection?
Russ just got back from the Rich Dad Art of a Deal conference with Robert Kiyosaki. Rich Dad Gold Advisor Mike Maloney was there and we invited him to be on The Real Estate Guys show. We figure it he’s smart enough for Mr. Kiyosaki, we’re interested in talking to him. We want to pick his brains on your behalf and find out what he thinks about the movement of cash and its effect on real estate. Sound interesting? Then stay tuned to The Real Estate Guys! To make sure you don’t miss an episode, subscribe to our free podcast. And while you’re at it, sign up for the newsletter – and tell a friend. When you help us grow the audience, we are able to continue to bring you quality guests and programming. Thanks!
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