7/28/13: From the Floor at Freedom Fest – Coffee, Coins and Capital Controls

The real estate we love to invest in floats in an economic sea teeming with other financial and political life forms.  And each of these denizens of the dollar (after all, the greenback is the world’s reserve currency…at least for now), have an impact on the overall financial ecology.  There are symbiotic relationships, predators and prey, natural and man-made disaster (can you say “derivatives”?), and a host of other factors which affect where we find opportunities and how we manage them.

That’s why we like to attend Freedom Fest each year.  It’s like an ancient watering hole (to switch metaphors) where all kinds of different creatures gather to refresh themselves.

This year was no different.  We arrived with our microphones, set up shop, and started talking to a variety of extremely interesting people.

In the past, we would go for the “big game” and proudly bring back to our tribe (that’s you) interviews with folks like Steve Forbes, Herman Cain and Peter Schiff.  We still like all those guys (Peter’s returning as a faculty member for our 2014 Investor Summit at Sea™), but since Forbes, Cain and Schiff are all on TV and radio all the time, we want to bring some thoughts from people you might not otherwise every hear from.

So, behind the microphones, wearing our real estate wetsuits and diving into the deep sea of discussion at Freedom Fest:

  • Your intrepid hunter of interesting ideas, Robert Helms
  • His gatherer of great guests, Russell Gray
  • International agricultural real estate investing expert, Wayne Kurtz
  • Coffee farmland investing executive, David Sewell
  • Rare coin and precious metals dealer, Van Simmons
  • Economic collapse prepper, Max Wright
  • Freedom Fest founder, economist and author, Mark Skousen

As you can see, we have a pretty full dance card for this episode.  Freedom Fest really is a smorgasbord of ideas. And the first one that whet our appetite is the notion of offshore agricultural investing.

Our first guest is Wayne Kurtz, who is the Chief Commercial Office for Liquid Investments.  We first met the Liquid Investments gang at last year’s New Orleans Investment Conference.  Back then, we were intrigued by their whole program, so we were excited to see them at Freedom Fest and grabbed Wayne for a quick chat.

Liquid Investments offers investors the opportunity for cash flow and long term equity growth through coconut farmland in Brazil.  Really.

But if you think about it, it makes sense.  After all, many Americans and Brits are looking to get their money off-shore.  And while the U.S. is chasing down foreign bank accounts, it’s still relatively private to own real estate offshore.  Even better, it’s nearly impossible to confiscate.  But even if you’re not paranoid about an over-reaching government, the investment still has attractive merits.

Coconuts, like oil, corn, copper and coffee, are a commodity.  And coconuts are surprisingly useful and growing in demand.  So like an oil well, you can turn a coconut farm into a cash flowing machine.  Of course, it all happens on real estate, which is a tangible asset and can be a great hedge against inflation.  Unless you’ve been asleep, you’ve probably noticed that every major country is printing money at a record pace, so a hedge against inflation is probably a good idea.

So we get the quick overview, and invited Liquid Investments to come back on the show to go into more detail. Stay tuned!

Keeping with our theme of agricultural real estate, next on deck is David Sewell.  David is the VP of Investments for Terra Cafetera in Colombia.  Once again, we’re offshore (unless you happen to be from Colombia), and we’re talking farmland.  Except this time, the crop is coffee.  We probably don’t have to tell you how popular coffee is.  Or how unlikely it is that people will ever stop drinking it.  Or that Colombia is renowned for producing some of the best coffee on earth.

So David gives us an overview of what he and his company are doing.  Good stuff…kept us awake. 😉

Next we switch from coffee to coins as we welcome Van Simmons to the microphone.  Van is a numismatic coin dealer.  Mark Skousen says when it comes to this topic, Van is the Man.  That’s good enough for us, so we pried him away from his impressive display of collectible coins and sat down to talk.

What do coins and precious metals have to do with real estate investing?

Directly?  Nothing.  But as we noted at the top of this post, all these various financial vehicles either affect each other or are indicators of potential market changes.  Besides, “real estate” is really just a preface to the core function of being an investor.  So we’re always interested in all kinds of investments.  Yes, it’s true.  We’re investors first, and real estate guys second (don’t tell our producer).

It used to be that the U.S. dollar was “as good as gold”.  In fact, before August 1971, Federal Reserve Notes (those green pieces of paper with pictures of dead presidents) were redeemable in gold.  But after the U.S. went on a giant spending binge in the ’60s, Uncle Sam started hemorrhaging gold, so President Nixon slammed the door to Fort Knox.  It’s took awhile, but after an orgy of money printing at the turn of this century, investors began stocking up on gold as way to hedge against a falling dollar.  You probably know gold was THE investment of the 00’s.

But lately, gold (and silver) have fallen on hard times.  Does that mean the dollar is back?  Maybe.  If it is, then interest rates will likely rise. Now THAT matters to real estate investors.  So while we watch bonds to see how the market feels about the dollar, gold helps us understand how the market feels about currencies (of which the dollar is only one).

(If your head is already spinning, just take a deep breath and make plans to join us on the 2014 Investor Summit at Sea™, where we’ll be talking Schiff with our friend Peter…you’ll catch on fast).

Of course, numismatic coins and bullion are two different animals.  Going into the interview, we weren’t necessarily fans of collectible coins.  It seems like when times get tough, premiums for rare coins would fall, right?

But then when you muse on it a little longer, you realize that (to quote our friend Robert Kiyosaki), “the poor are getting poorer, the middle class is getting wiped out, and the rich are getting richer.”  That’s the impact of inflation.  While consumers’ purchasing power is being eroded by incessantly rising prices (albeit slowly right now, thanks to a very weak labor market), anyone with means is buying investments which hedge or even benefit from inflation.  The uber-rich are playing arbitrage (borrowing cheap and investing for a profit) and buying tangible assets.  And while commodities markets are very volatile (some say manipulated), collectibles are more stable.

Interesting stuff.  As soon as we’re super rich, we’re buying rare coins and fine art.  But in the meantime, it still might be fun to put a coin or two in the portfolio to see what happens.

Our next guest is even MORE interesting…

Max Wright represents an organization called the Success Council.  The short story is they belief the greatest wealth transfer in history in underway right now, and they want to help people be on the right side of it.  Of course, they aren’t the only ones who think this is happening.  But sounding the alarm is one thing, guiding people to safety is another.

Our visit was far too short to draw any conclusions about their theories and practices, but there’s enough credible people proclaiming the same thing that we’re always interested in getting another perspective.  Long time listeners of The Real Estate Guys™ radio show know that since the mortgage meltdown, we’ve sought out a litany of opinions on the topic.  And as the markets continue to gyrate and convulse, you can be sure we’ll continue to bring you a diverse range of viewpoints.

Because when the foundations of the economy are fundamentally changing, it’s important for diligent investors to test their paradigms and make sure they aren’t snoozing when a big economic shift happens.

Last, but not least, we visit with Freedom Fest’s founder and a 2013 Summiteer, Mark Skousen.  He shares with us that this year’s 7th annual Freedom Fest is their best ever -with record attendance and national television exposure.  So while not everyone agrees on policies or priorities, everyone wants to be enjoy more freedom and prosperity – and that’s what Freedom Fest is all about.

So tune in to this edition of The Real Estate Guys™ radio show recorded at Freedom Fest 2013.  Enjoy!

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7/21/13: Nobody’s Business – Privacy Considerations for Real Estate Investors

If you haven’t done anything wrong, does that mean you don’t have anything to hide?How to be invisible by using proven privacy strategies

Sadly, real estate investors are easy targets for frivolous lawsuits, vindictive tenants and financial scam artists.

Why?  Because property values, loan amounts (and therefore equity) and title information are all part of the very public record.  So when you can’t hide the asset (rental properties are big and immobile), the next best thing is to hide the ownership.

Conversing under the Cone of Silence for this episode of The Real Estate Guys™ radio show:

  • Chief secret agent and host, Helms.  Robert Helms.
  • His still trying to Get Smart co-host, Russell Gray

Our good friend and asset protection attorney, Rich Dad Advisor® Garrett Sutton, often opens up his presentations asking the audience, “How many of you have been sued?”

He then follows up by asking, “How many of you haven’t been sued…yet?”

His point is that the U.S. is the lawsuit capital of the world by a fat margin.  And as investors, especially real estate investors, you’re an easy target if your name and equity are posted conspicuously in the public record.

Protect you privacy and learn how to be invisibleYou can avoid the whole issue by being poor, but that’s no fun.  Or you can erect a fortress of insurance and corporate entities around everything you have and summon your bevvy of lawyers to your aid to fend off each onslaught against your assets.  Not only is that no fun, it’s expensive.  And sadly, the U.S. “justice” system isn’t always just to the deepest pockets. (Oops.  Is our cynicism showing?  Hold on while we zip that up…)

There’s no doubt you need to have a great entity structure and portfolio of insurance policies (look for a future episode on integrated asset protection planning), but like a gun, the best use of these weapons is to never need them.

So, in addition to ethical and legal business practices, it’s a really good idea to organize your affairs for optimal privacy.  By “optimal”, we mean finding a balance between expense, inconvenience and effectiveness.  In our cross-indexed database driven digital society, it’s all buy impossible to be completely private.  But given the choice between being “the low hanging fruit” or fruit that’s way up high in the tree hidden, hard to get to and hidden among the branches, we think the latter is better.

If you’ve ever had the sanctity of your peaceful enjoyment of your home invaded by unwanted hostile visitors at your doorstep, then you understand why establishing strong privacy practices is desirable.  Only you can decide if it’s worth it.  But if you’re just starting out, or expect the opportunity to move in the near future, then there are steps you can take to enhance your privacy, such as the the proper use of a PO Box or Postal Mail Box, how you title your vehicles and utilities, and of course, who you hold title to your properties and the entities which contain them.

We discuss many of these item in this episode, which will self-destruct 30 seconds after you listen.  So take good notes. 😉  And if you want a great resource, check out How to be Invisible by J.J. Luna, which is in the Asset Protection section of our Recommended Reading list.

So take a listen to this episode, and then your mission, should you choose to accept it, is to fade into financial obscurity where you can peacefully enjoy the fruits of your labor.  Enjoy!

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed. Visit our Feedback page and tell us what you think!

7/7/13: Moving Market Metrics and What They Mean to Real Estate Investors

Gold, oil, interest rates, the dollar and the Dow.  These are just a few of the many market indicators captains of investment funds watch.  But what, if any, importance do these items have for real estate investors?

In the studio to muse on the meaning of moving market metrics:

  • Your captain of conversation, Robert Helms
  • Co-host and pit chief, Russell Gray

Whether you’re a race car driver or an airline pilot, it’s important to pay attention to your dashboard.  All those little gauges are measuring important factors which affect the performance of your vehicle.  And you’ve probably noticed that the higher the stakes, the more gauges there are.  After all, lives are at stake.

It’s an apt metaphor for investing.  When you’re operating your investment vehicle and navigating the dynamic landscape of the economy, it’s important to watch your gauges.  And the higher the stakes, the more critical it becomes to monitor those indicators.  No wonder the big fund managers obsess on financial market data.

If your plan is to build a big real estate empire, at some point you’ll want to become skilled at watching and interpreting various financial market metrics.  And the sooner you start developing those skills, the sharper you will be when the time comes that you really need them.

But it doesn’t mean you have to be a nerdy rocket scientist (our apologies to all nerdy rocket scientists).  That can be intimidating for average Joes.  But it does mean paying attention, taking time to think and ask questions; and engaging in thoughtful conversations with your advisors and other committed investors.  It’s one of main reasons we do our annual Investor Summit at Sea™ and why you should seriously consider joining us.  Where else can yo go to talk economics and real estate investing for an entire week with people like Peter Schiff and Ken McElroy?

Okay, enough pitching…but you should come with us. 😉

Lots of real estate investors live in a bubble insulated from many of the things that keep paper asset investors up at night.  We think that’s a mistake.  Ignoring the bond market cost a lot of real estate investors a lot of money in 2008.

So gold has been in the news lately.  After a decade long bull run, gold tanked to a 3 year low and at a pace unseen in decades.  So what?

Well, if you start from the premise that gold’s value is fixed and that the value of the dollar is what’s changing, then gold can tell you what people think about the dollar and the American economy.

For example, take a look back over the gold news for the last several weeks.  You’ll find that gold dropped when a positive jobs report came out.  Now we know some might argue the jobs report wasn’t really positive because the U.S. created a lot of part time service jobs and decreased full-time manufacturing jobs. But that’s a different discussion.

The point is that gold’s movement is telling us that something is happening.  And when we dig deeper, we find out that the jobs report was “positive”.  When we dig even deeper, we find the kinds of jobs being created are part time, low-paying, service jobs.

So it may be that America is getting poorer meaning less people will be able to afford to buy and more people will have to rent in lower priced areas.  As a real estate investor, is this good to know?  Might this influence which markets. product types and price points you invest in?  Sure, it’s only one data point, but it’s something to think about.

What about oil?

This one’s a little easier to understand.  High oil cost means high gas prices.  High gas prices means less money to pay rent.  But it also means that EVERYTHING that is transported just got more expensive.  After all, someone has to pay for those increased fuel costs when shipping products from manufacturer to consumer.

If you’re a paycheck to paycheck tenant and you’re commuting every day, will higher gas (and therefore commute costs) affect which areas you decide to live in?  Probably.  Maybe not at first, but if life is getting more expensive, people will move.  This is especially true on the lower end where $25 or $50 a month is a lot of money.

What about the stock and bond market?  We can almost look at those together because usually (not always) they go up and down like a teeter totter relative to each other.  That is, when stocks are up, bonds are down and vice-versa.

Once again…so what?

Well, rising bond prices means lower yields (interest rates).  And rising a rising stock market usually means rising interest rates because as bonds fall, interest rates rise.

It amazes us how many real estate investors are surprised that interest rates have been rising, even though the rising stock market completely predicted it.  But if you don’t think the stock market matters to you as a real estate investor, you don’t pay attention to it, so you’re surprised.

Surprises are fun at birthday parties and at Christmas.  They aren’t fun in investing.  It’s better to pay attention.

We could go on and on (and on and on), but you get the idea.

Our point is that the more you have (or want to have), the higher the stakes are and the more important it is to look at the big picture.  But don’t over-think it.  You’re not looking to crack the code and hit a grand slam home run.  You just want to be a little ahead of the game and avoid unpleasant surprises.

Now for a pleasant surprise, listen in to this episode and have your brain stimulated for a little while.  Then make your plans to join us for a week of education and lively conversation (and some warm Caribbean sunshine) at our 12th annual Investor Summit at Sea™.  It’s going to be awesome!

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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources that help real estate investors succeed. Visit our Feedback page and tell us what you think!