How to Find a Mentor and Make It Work
If we’ve said it once, we’ve said it a thousand times … a mentor makes a difference.
Finding, vetting, and thriving, with a mentor is one of the quickest shortcuts to success.
Talk to a successful real estate investor, and chances are that they can point to one or more people whose example and encouragement helped them along their way.
But finding a great mentor … and making the relationship work through real world challenges … isn’t always easy. We’re here to share our tips with you!
In this episode of The Real Estate Guys™ show, hear from:
- Your master mentor host, Robert Helms
- His mental co-host, Russell Gray
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What makes a mentor
Your success in real estate is going to come down to a few critical things … and one of those things is your relationships.
We never would have had the success that we’ve had in our lives … in business and personally … without input from the people we consider mentors.
Real estate investing is a people business.
Yes, you need to know numbers, property, and markets … but you also need a team. One of the most critical members of that team is a mentor.
A mentor is an experienced and trusted advisor … a guide, a confidant, and a counselor. And a mentor is different than a coach.
Coaching relationships are finite. They’re focused on specific behaviors and needs.
A mentor is a long-term relationship that supports you in your development. They’re interested … but not financially tied necessarily … to your results.
If you do it right, you’re going to have a lot of mentors in your career. You should always have people in your life who are further down the path.
A mentor doesn’t have to be older than you … but they do need to have more experience and more success in the area you are interested in.
A lot of people think of a mentor as a technical teacher … but that’s not necessarily true.
If you really think about what investing is, it comes down to exercising good judgment.
Judgment is something you learn by being in close proximity to someone … seeing why they make the decisions they make and absorbing what they’ve gleaned from their life experience.
Your mentor should be an example … a role model … of what you aspire to be.
What you bring to a mentoring relationship
There are lots of people that believe they can learn everything they need to learn from the internet, webinars, books, and podcasts … but that’s not our experience.
Those types of learning are a great starting point … but you’ve got to get into conversations with people that have been there, done that … in the REAL WORLD.
It’s very tempting to align yourself with people who are just like you … but you actually want to align with people who are a little bit different than you.
Take a look at yourself and ask, “What is it about my personality that’s holding me back? Where am I not being effective?”
You know what your weaknesses are. Your mentor can be someone who is strong in areas where you struggle.
By being around people with attributes that don’t come as easily for you … you will improve!
You also want to consider your strengths. The best mentor relationships are equitable … each side brings something to the party.
Brainstorm ways that you can be a value add to the mentor you have in mind.
Mentoring is also a cyclical relationship. You may be green around the ears today … but a few years from now you could be a mentor yourself.
Finding a mentor in the real world
One way to get a mentor is to hire one. There ARE organized mentor programs … we have one ourselves.
Before you pay money for a mentor relationship, check out the reviews. Just remember that the results people get have a lot more to do with how they react to the advice their mentor gives.
Paying for a mentor collapses the timeframe it takes to find one … but often … in our experience … the best mentor relationships happen organically.
This type of strategy DOES take more time and effort. You have to be in the right environment to meet the right person … that’s a lot of trips, events, and social engagements.
Beyond that, your mentor relationship is really what you make of it. You have to have the mindset that you are going to be one of the top people out there when you’re done.
If you’re looking to be average and ordinary … to just go with the flow … you might get a trophy for being on the team, but you’re not going to get the paycheck.
So, keep asking yourself, “What are the people at the TOP doing? How can I be more like them?”
Begin to think the way they think … and you’ll begin to do what they do. And ultimately, you can find yourself producing the same results.
A great mentor knows exactly what you need and what you have to go through to get there … and they create an environment for that to play out.
You mentor can’t make your success happen for you. You have to make it happen.
Our motto has always been, “Education for effective action.” Finding a mentor is one of the most educational … and effective … paths you can pursue.
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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
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Podcast: How to Find a Mentor and Make It Work
Finding, vetting, and thriving with a mentor is one of the biggest shortcuts to success in real estate investing and in life.
Nearly every successful person can point to one or more people whose wisdom and encouragement played a critical role in their development.
But recognizing the value of a mentor is one thing. Finding a great mentor and making the relationship work in the real world is where the rubber meets the road.
So tune in as we take on the topic of finding, vetting, and thriving with mentors.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
This niche is VERY inviting …
As we often say, real estate is NOT an asset class. There are MANY different niches you can invest in to earn big profits … both capital gains and cash flow.
And we’ve been watching an exciting niche which is starting to attract the attention of alert investors …
“Value-add investors are finding this sector ripe with opportunity, offering strong returns and having very little competition.”
– National Real Estate Investor, 5/6/19
Sound inviting? It is!
It’s rehabbing resort properties.
If you’re a fan of the long-running TV show Hotel Impossible featuring Anthony Melchiorri, you know there are a LOT of hotels out there … and many aren’t run very well.
In fact, some fail and are sitting empty and dilapidated … waiting to be resurrected by an enterprising real estate entrepreneur.
So there’s a LOT of value-add opportunity in these often potentially beautiful properties.
And the opportunity isn’t limited to a particular geography … these opportunities are available in a variety of markets.
In fact, we recently enjoyed interviewing an experienced resort rehabber in New Jersey (yes, there’s even resort opportunity in New Jersey!)
We also got the inside scoop on a fascinating resort rehab project in Orlando, Florida.
The message is clear … there’s big opportunity in resort property … and it’s not just money.
Think about it …
Most investors don’t get excited about spending the night or a romantic weekend in their Section 8 rental home, C-class apartment, or mobile home park.
There’s nothing wrong with any of those. They’re all great for cash flow. But when you can get cash flow PLUS lifestyle benefits too? That’s double prizes.
Imagine taking a tax-deductible trip to check in on your beautiful resort property … walking a lush vineyard or relaxing on the beach … and enjoying a fine meal while watching a gorgeous sunset.
Of course, before you get to enjoy all the amenities … there’s work to be done.
And fixing up an entire resort … well, that’s a heavy lift even for the most seasoned house-flipper.
But who says YOU need to do all the work? Or ANY of it?
What if there’s a way for you to get in on the action without putting on your work boots and safety glasses?
There is.
One way is to let someone else “fatten the cow” … then you buy in to “milk it” for cash flow over the long-haul. Listen to this episode to learn more about this approach.
If you’re accredited, then there’s a whole world of investment opportunities available to you … including investing passively into an experienced resort rehabber’s project.
Of course, if you’re super-ambitious and industrious … you can become an active resort-property re-habber. Because it’s capital intensive, it’s an ideal activity to syndicate.
If you choose the active route … here are some things to think about.
One way to learn the business is to go to work or volunteer with an active resort re-habber.
But before you go that far, it’s probably smart to start with just talking to some folks in the business to see if it’s the right niche for you.
Fortunately, we’ll have an active resort property rehabber … along with a whole bunch of other really interesting niche investors … at our next Secrets of Successful Syndication seminar. So if this all sounds interesting, make plans to join us.
But whether you choose active, passive, or syndication … take a look at the opportunities for profit and lifestyle in the resort property investing niche.
Resort properties are a great way to earn rental income from affluent people who would probably never rent their home from you.
Until next time … good investing!
More From The Real Estate Guys™…
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The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
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Ask The Guys – Getting Started, Analyzing Deals, and Understanding Cycles
One of the best parts of our job is hearing from our amazing audience … and in this week’s episode we have more great questions from all of you.
That’s right, it’s Ask The Guys!
We’re talking about getting started in real estate investing, analyzing deals, understanding how economic cycles affect real estate investing … and more.
Remember, we are not legal or tax professionals. We don’t give advice … just ideas. Join our quest to answer your questions!
In this episode of The Real Estate Guys™ show, hear from:
- Your book-smart host, Robert Helms
- His street-smart co-host, Russell Gray
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Getting started in real estate investing
Our first question comes from Daryl in Boonville, Missouri.
Daryl wants to know the best ways to get started investing in real estate.
Lots of folks find themselves interested in real estate investing … but they don’t really know where to start.
There are so many books, blogs, podcasts, and seminars on the subject. It can be a little overwhelming … yet the basics of real estate are pretty simple.
What’s the best way to get started? Well, it depends on what you have to start with, where you want to go, and what you want to do.
But generally speaking, real estate is done with debt.
The first place to start is to take an assessment of where you’re at in terms of debt. Begin work on preparing yourself to be an efficient, effective borrower.
Go meet with a mortgage professional. Find out what your credit score is as far as real estate is concerned, what your documentable income is, and what types of loan programs you would qualify for.
Figure out what you need to invest.
Typically you need credit, a down payment, and technical advisors … like a football coach, you need to build your team.
Next, think about what you’re trying to accomplish. Most people want to grow … so it really starts with education and understanding your borrowing power.
Education doesn’t have to cost you a lot of money … but it will take your time.
Set aside and budget your time to be serious about investing. Go to a seminar or class. Join a local real estate investment club. Read books about the type of real estate that you’re interested in.
A great way to get started if you don’t have a lot of capital is to offer to help someone who is busy doing the thing that YOU want to be doing.
A lot of folks who are successful in real estate investing have more money than time … you might have more time than money.
The opportunity to lend a hand in exchange for learning can be huge.
You might even consider your first deal as a partnership in some way. One of our favorite ways to partner is through real estate syndication.
Syndication simply means a lot of people putting their money and their time together to do something.
Make sure that the person … or people … you are partnering with honestly know what they are doing.
Analyzing and understanding deals
Chris in Sun Valley, California, wants to know how to better analyze and understand deals.
First of all, there’s no such thing as a bad question … except the one you don’t ask.
Everybody who is at the front of the line was once at the back of the line … everybody who owns real estate today started with their first property.
It’s true that analyzing deals is one of investing’s critical skill sets.
If you’re analyzing deals for income, you need to understand an income statement for a piece of property.
One way to do this is to look at other deals. They’ll come with pro formas. You’ll be able to look at the financials … and then go out and look at other real world deals.
You’ll learn by doing that research … and once you feel like you’ve got the fundamentals down and understand the basics of financial analysis, you can take things to the next level.
The other side of the coin is actually analyzing the market, analyzing the physical construction of the property, and analyzing the condition of the neighborhood.
Like so many things in real estate investing, if you can find somebody who is active in the space and learn by helping them … you’ll pick up a lot.
You can’t get really good at analyzing deals by reading textbooks and taking classes … you will also need hands on experience.
So, start with basic education … and then, find a mentor.
Learning about the economic cycle
Laura in Austin, Texas, is looking to learn more about how real estate plays into the economic cycle … and how it’s affected by ebbs and flows. She wants to know what resources and topics we can recommend.
First up is a book by our dear friend Peter Schiff called How an Economy Grows and Why It Crashes.
It’s a simple book that is done in a way that makes the economy easy for everyone to understand … but it is also super, super powerful.
It has taken us years to wrap our minds around this stuff. The reason we cover broader picture economics and not just real estate is that every real estate investor is first and foremost an investor.
We all swim in the economic sea of the financial system that we are blessed … or cursed … with. So, it is imperative that we understand it.
There is definitely a lot you can learn by listening to people who have different opinions.
The Summit at Sea™ is a great place to do that. We get people who come in with so many different backgrounds and from many different niches and markets all over the world.
We also recommend studying the Federal Reserve and the bond markets … because that is where interest rates derive from.
Study demographics … because that dictates where the people are.
Then, understand the way CEOs think about business … and where they want to be and don’t want to be.
Taxes are another area you’ll want to learn about.
In the United States, we’ve now made real estate arguably the most tax advantaged investment anyone can make … which should attract even more money into real estate going forward.
Like any ecosystem, there are lots and lots of components … and you’re not going to master them all. But if you can understand the relationships between them, then you can get into conversations with the masters in each area.
There are lots of great books, podcasts, and conferences to expand your knowledge. Be sure to check out the resources available on our website. We particularly recommend a video series we did called “The Future of Money and Wealth.”
Brian Tracy says that if you read an hour a day in whatever area of interest you have, in 10 years you’ll become a nationally known expert.
We believe that’s true. It happened to us.
More Ask The Guys
Listen to the full episode for more questions and answers.
Have a real estate investing question? Let us know! Your question could be featured in our next Ask The Guys episode.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
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- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook, and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
A reality check you can cash …
If you’ve been around awhile, you know there are optimists, pessimists, and realists.
Optimists see the upside and sunshine in everything. They’re chargers and they’re not afraid to take bold … even impulsive action.
Of course, optimists sometimes run full-speed into a brick wall they COULD have seen, but chose not to … because it didn’t fit their worldview.
Still, if you take enough shots on goal, you’re bound to score eventually … so there’s something to be said for unbridled optimism.
Then there are the pessimists …
Pessimists see the dark and down-side in everything. There’s no amount of upside that can outshine the enormous list of every possible thing that might go wrong.
Pessimists are pros at predicting problems … including many that never happen … and saying “I told you so” when things do go wrong … and worse, are often quite content to sit “safely” on the sidelines doing nothing.
Of course, you can’t win if you don’t play.
But when your definition of winning is “not losing” … for those who see mistakes as devastating failure rather than valuable learning opportunities … that’s okay.
But perhaps there’s a productive middle-ground …
Multi-billionaire real estate investor Sam Zell says his strength is his ability to see the downside in a deal … and move forward anyway.
Zell says everyone can see the upside. This doesn’t take any special skill or fortitude … except perhaps to keep believing after losing repeatedly.
But to soberly acknowledge the risks … and then find a path to proceed based on probabilities and a reasonable risk-adjusted return … THAT’s Sam Zell’s billionaire super-power.
Sam Zell is a realist.
We like listening to billionaires. And we’re careful to listen to people both inside and outside of real estate … especially those who manage mega-amounts of money.
These big-time money managers have the time, the smarts, the resources, and the responsibility to gather lots of data and opinions, think long and hard, and then make great decisions more often than not.
Billionaire Jeffrey Gundlach is founder and CEO of DoubleLine Capital, which is a huge investment firm.
Gundlach’s a renowned expert in bonds and has been recognized as one of the top 50 most influential people in the world by Bloomberg Markets.
Of course, real estate investors should always pay close attention to the bond markets. The bond market is WAY bigger than the stock market … and directly impacts the cost and availability of money and mortgages.
More importantly, bond investors are arguably the most astute observers of the economy, the Fed, the dollar, and the politics affecting prosperity.
So when we saw a recent Reuters headline reporting on Jeff Gundlach’s comments about the economy in a recent investor call … we thought it worth noting.
“’Nominal GDP growth over the past five years would have been negative if U.S. public debt had not increased,’ said Gundlach.”
“ ‘… the GDP … is really based exclusively on debt – government debt, also corporate debt, and even now some growth in mortgage debt.’ ”
Wow. We’d call that a reality check.
Think about that. Five years of “growth” in a decade long “recovery” is really just a bunch of borrowed money fluffing things up.
That’s like using your credit card to remodel your house, buy a new car, and take a fancy vacation. Your friends and neighbors think you’re prosperous. But your income didn’t really grow … just your spending.
Of course, if you’re using debt for productive investment … where investment returns exceed the cost of debt … then you could make the argument going into debt is smart.
That’s like using your credit card to buy new tools, remodel a property, hire a lot of workers, and then rent the property out for a profit.
Time will tell if enough of the new debt generated will be productive enough to pay for itself and add to real GDP. Right now, according to Gundlach, it’s still net negative.
Meanwhile, we stay with our long-held belief that it’s probably wise for real estate investors to focus on niches and areas which hold up well or are more attractive in weaker economies.
It doesn’t take much smarts to do well in a booming economy. A rising tide lifts all boats. The biggest risk is getting sloppy and not being ready for a slow down.
But in any economy, even recessions, rich people tend to fare well.
Of course, it’s hard to collect residential rents from the affluent. But resort and medical are two areas where affluent people will continue to spend … even in a stagnant economy.
For working class folks and their employers … low-tax, affordable markets with good infrastructure, nice quality of life, and a business-friendly environment will likely continue to grow at a disproportionate rate.
A realist sees both the opportunity and the risks … then finds a path forward.
And for all the pessimists, here’s another reality check …
Check out this list of GDP growth indexed to notable events, including wars, depressions, recessions, and a variety of crises.
Take a look at it and ask yourself if there’s any point in the history where you wouldn’t wish you bought more real estate 20 years earlier.
Real estate is fundamental to human existence. As long as there are people, there will be demand and opportunity in real estate.
So watch for clues in the news … to both find opportunity and to get reality checks from unbridled optimism … but don’t let the fear-mongering put you on the sideline.
Sometimes the biggest risk is not taking one. Be bold. Be smart. And stay connected to people and ideas that expand your thinking and possibilities.
Until next time … good investing!
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
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- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook, and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
Tariffs, Taxes and Trade Wars – Insights for Real Estate Investors
There’s a lot of talk in the media about tariffs, taxes, and trade … what does all of that really mean for real estate investors?
As a real estate investor, you need to understand what is going on economically. What’s happening at an international level can trickle down to your local playing field.
To help you navigate the news, we brought in our good friend Peter Schiff. Peter is an author, stock broker, and financial commentator … and he has some strong ideas to share.
Learn to more successfully sail the economic sea and weather financial storms.
In this episode of The Real Estate Guys™ show, hear from:
- Your financial seafaring host, Robert Helms
- His economically seasick co-host, Russell Gray
- Author, stock broker, and financial commentator, Peter Schiff
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Broadcasting since 1997 with over 300 episodes on iTunes!
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Tariffs and the big picture
If you’re the type of investor who reads the headlines … and you should be … then you’ve probably seen lots of talk about tariffs, taxes, and trade.
But most investors don’t understand what these headlines mean for their money.
What’s the deal with these three big “Ts” … What are they? How do they work? And why do they impact your business?
As a real estate investor, you’ve got to understand the economic and financial sea that you swim in.
You need a basic understanding of all things economic.
Tariffs … in particular … are a great place to start.
Before 1913, the United States didn’t have an income tax. Instead, we funded our federal government through tariffs.
A tariff is a tax on people that want to sell in our markets … and today, President Trump is using tariffs as leverage in negotiations to level the international playing field.
You may agree or disagree with these politics … but whatever your personal opinions, you still need to know what such action really means for you.
Any kind of tax or tariff affects how much things cost in our economy … and it can also affect where jobs are created … which affects where people live.
By instituting tariffs, the federal government hopes to bring more manufacturing jobs back to the United States … potentially resurrecting manufacturing ghost towns.
Real estate investors need to look out at the horizon and see the bigger picture. You want to be riding the wave … not chasing the trend.
That’s why we asked our good friend Peter Schiff to share his knowledge and experience with us.
The US-China trade relationship
Peter says a great place to start increasing your understanding of the current economy is to look at the US relationship with China.
According to Peter, China does TWO big things for the US … they supply us with real goods, and they lend us money.
We get everything from China. It’s all manufactured products that make our lives better.
People go to Walmart and buy cheap stuff … and where is it coming from? China, of course.
China is also the biggest buyer of US bonds … which means they are our lender. They are lending us money that we would otherwise not have.
While the federal government talks about losing $500 billion a year to China, Peter thinks the US is still getting the better end of the deal.
China supplies us with real goods … and in exchange the US gives them a stack of paper that is arguably worth less every day that they hang on to it.
So, if the US places tariffs on China and enters a trade war, who is worse off in the end?
Peter says the Chinese will still have all their stuff … and we’ll just have a stack of paper.
The US government hopes that by instituting tariffs, companies will make their products in the US instead. Peter says that is easier said than done.
Pulling together the infrastructure, raw goods, and man power to manufacture these products in the US could take years … and it will cost businesses more money … not to mention a major shortage of goods in the meantime.
Peter explains that switching the US back over to a more manufacturing-based economy would require tremendous changes … and most likely result in a huge depression until the new economic flow was established.
“When we were a big manufacturer in the past, we had limited government, lower taxes, fewer regulations, a lot of savings, and a skilled workforce. We don’t have that stuff now,” Peter says.
Peter does mention that the US is probably going to have to make some of these changes eventually … but proposed tariffs and trade wars would accelerate the timeline in a painful way.
And the United States doesn’t realize how painful it will be.
If tariffs make it harder for the Chinese to sell stuff to America … they’ll sell it domestically instead.
As the Americans get poorer … the Chinese would be getting richer.
Right now, the Chinese labor, and we get the fruits. Suddenly, they would get both.
And what about our intellectual property?
“They’re going to keep ripping off our intellectual property because we can’t stop it, but now they’re not going to be giving us this big subsidy by loaning us money and supplying us with goods,” Peter says.
Preparing for a drop in the dollar with gold
Another notable headline today … the Chinese and Russian governments are buying gold and putting it away.
Peter says that the Chinese and Russian governments recognize that the dollar’s day as the reserve currency are numbered.
Nobody knows when the dollar’s time will be up … but if it loses its role as the primary reserve asset for central banks, what will take its place?
Right now, what gives a currency value are the foreign reserves … we’ve got this huge pile of US dollars that gives currency value.
Before central banks used other currencies as their reserves, everybody used gold. That’s what backed up your paper.
Originally, the transition from the gold standard to the dollar standard happened because the dollar was as good as gold.
US Federal Reserve notes were obligations of the Federal Reserve to pay. So, foreign central banks held Federal Reserve notes, which were redeemable on demand in gold.
Then, in 1971 the US said it would not give other countries gold for these reserves. The value of the dollar went down … and the value of gold went up.
All the central banks kept holding the dollar as a reserve even though it wasn’t backed by gold anymore.
Peter says that the US has borrowed so much money … and printed so much money … that it is heading for a currency crisis.
“In that environment, central banks are going to have to show that their currency is backed by something,” Peter says.
Some banks are buying more of other currencies … like the euro or the yen … but if people lose confidence in the dollar, the same could go for other currencies.
“I think that central banks are thinking they better have actual money in gold, because in the future, gold could be a much more important component of their reserves,” Peter says.
And if the price of gold continues to rise, the appreciation alone is going to increase the percentage of their reserves that are in gold.
Preparing yourself for the future
So what’s an investor to do?
Peter recommends getting out of US stocks in general … and bonds are way over-priced right now.
“If you’ve been fortunate enough to have invested in US stocks and seen a big gain, you need to cash in. Take that gain before the market takes it away from you,” Peter says.
That doesn’t mean you shouldn’t own stocks … Peter says it just means to think about moving out of dollar-dominated US stocks.
Consider taking a look at foreign stocks … emerging markets and developed markets are looking really good right now.
These stocks are international and derive their revenues outside of the US. If the dollar crashes … these stocks will rise in proportion to that decline.
Peter also believes that investors should have some sort of gold in their portfolio. It’s a good way to get diversified.
There’s no sure way to know what will happen in the future. We can only do our due diligence and make an educated guess.
Remember that not every strategy works for every investor. Find what works best for you. Always talk to an expert that understands your financial needs and situation.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook, and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
Finding stability in an unstable world …
We’re just winding up a multi-part real estate investing webinar series we’re doing for our friends Chris Martenson and Adam Taggart at Peak Prosperity.
The webinar series is called Real Estate Investing for Profit and Safety.
The first episode, The Case for Real Estate, is nearly two hours long and free of charge. You can check it out here. If you love it, share it with your friends. If not, let us know.
Our theme, which we think is an important one, is how real estate creates RESILIENT wealth when strategically located and structured.
Of course, if you’re a seasoned real estate investor … meaning you’ve lived through at least the 2008 financial crisis … you may already be convinced.
Even if you’re in the group who lost a bunch in 2008 (we feel your pain), hopefully by now you’ve realized there were lots of people who not just survived … but THRIVED.
So obviously, real estate wasn’t the problem.
If you’re an active or aspiring syndicator, you may find the series useful for explaining to your prospective investors why real estate is an attractive investment vehicle … and the value YOU bring to them by helping them get in the game.
Of course, for anyone who cares about their financial future, the daily news is full of reasons to look for ways to create stability in their portfolio.
Wild stock market price swings … rampant (seemingly systemic) corruption in large financial institutions … highly uncertain geo-political tensions …
… unprecedented levels of government, corporate, and consumer debt … severely underfunded private and public pensions … Social Security …
Yikes.
So there’s a LOT to be worried about … IF you’re betting your financial future on fickle and fleeting asset PRICES.
And with “safe” havens like banks and bonds paying very low to no interest for over a decade, many Mom & Pop investors (and their financial planners) have succumbed to “buy low, sell high” as the means for creating spendable cash.
Think about that.
“Buy low, sell high” is an investment strategy that tempts amateurs into the rigged casinos to compete with the pros.
Trading also produces commissions for Wall Street, capital gains for the IRS, and cash float deposits for bankers (who lever it up 10-20x for fat profits so they can afford all those big fines).
And the challenge with “buy low, sell high” is it’s SUPER volatile and unpredictable. Unless you’re tethered to the news with lightning fast judgment and reflexes, it’s easy to be late to enter or exit the party.
The “solution” offered Mom & Pop investors is to buy trading software to compete with the pros …
… or “invest for the long haul in a well-diversified portfolio” because the long-term upward (inflationary) “trend is your friend”.
Thanks to the Fed’s printing press, buy and hold works for boosting your balance sheet. But it’s only PAPER wealth … unrealized gains. You can’t spend it.
To have real spendable money to live on, folks need CASH.
To get it … and avoid capital gains taxes … they borrow (confident in their paper wealth).
Or they liquidate capital (eating “the golden goose”) …. or take on substantial counter-party risk by purchasing higher yielding, riskier bonds.
Of course, if you’re a real estate investor, this is all foreign to you. It’s a game you don’t play. But MILLIONS of people do.
And as baby boomers pile into retirement in a debt-ridden world where low and falling interest rates are a necessity of systemic survival …
… finding inflation-hedged, asset-backed sources of reliable, resilient, high-yield, tax-advantaged income is the Holy Grail.
While not perfect, there’s nothing better than income-producing real estate to meet this huge and growing need.
Of course, as we often point out, small-time real estate investing is far too troublesome and inefficient for busy or retired folks to take on personally.
That’s why we keep beating the drum for the HUGE opportunity for real estate savvy entrepreneurs to get into the syndication business.
Syndication isn’t just about making money. It’s an important industry to help solve some of the most pressing economic problems facing the United States.
In fact, it’s SO important that both the Obama AND Trump administrations took bold action to remove barriers and stimulate the flow of capital into real estate syndications.
THAT alone should tell you something.
You may wonder why the mainstream financial press isn’t reporting on this.
But think about it …
How many mainstream financial journalists are real estate investors or syndicators?
Not many.
And who buys all those expensive ads on mainstream financial programs?
Big Wall Street firms.
But whether there’s some grand conspiracy to herd an unsuspecting public into the sheering pens of the Wall Street / banking cartel’s casinos …
… or if it’s just big money using their clout to buy ads and exposure for their products and services …
… it’s clear most Main Street investors don’t understand or appreciate the power of income producing real estate to create resilient wealth.
But if YOU do, then YOU have a BIG opportunity … both as an investor and as an entrepreneur.
So be careful about getting paralyzed by the daily drama of mainstream financial news … especially when it’s related to real estate.
After all, most real estate commentary on mainstream news is directed at homeowners and people buying home builder stocks.
But when home ownership is down, prices are high, or builders aren’t building and selling as much … it’s all GOOD for landlords.
Besides, no matter what happens economically …
As long as there are people, they’ll need real estate … for homes, offices, food, and distribution centers to get products to consumers. And people always needs places to relax, play, and heal.
Your mission is to acquire the skills, knowledge, and relationships to build a resilient portfolio …
… whether you manage only your own investments, invest through others, or create a business to help others take advantage of all that real estate provides.
Time will tell … but it seems the global financial order is in the process of concurrent major disruptions.
For some it will be traumatic and chaotic. For others it will be exciting and profitable.
The difference, of course, depends on awareness, preparation, and effective action.
And if it all turns out to be a lot of hype over nothing … well, better to be prepared and not have a crisis … than to have a crisis and not be prepared.
Chaos or calm, real estate is a historically proven place to effectively build, protect and pass on real, resilient wealth. Tell a friend.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook, and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
Podcast: Ask The Guys – Getting Started, Analyzing Deals, and Understanding Cycles
Lots more great questions from The Real Estate Guys™ audience!
In this episode we talk about getting started in real estate investing, analyzing deals, understanding how economic cycles affect real estate investing … and a whole lot more!
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
Opportunity Zones Update – Defer, Reduce, and Even Eliminate Taxes
Everybody is talking about Opportunity Zones … and they should be. They can be a great opportunity (just like the name says)!
But many investors have found themselves scratching their heads. How exactly does someone take full advantage of Opportunity Zones?
Recently released guidelines are giving investors and syndicators much needed clarity for moving forward … and making the most of their Opportunity Zone investments.
We sat down with attorney Mauricio Rauld to discuss how Opportunity Zones can help investors like you defer, reduce, or even completely eliminate capital gains taxes.
In this episode of The Real Estate Guys™ show, hear from:
- Your zoned-in host, Robert Helms
- His zoned-out co-host, Russell Gray
- The “Anti Lawyer” attorney, Mauricio Rauld
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Zoning in on Opportunity Zones
The wait is finally over.
The rules for investing in Opportunity Zones … and the potential tax breaks that come from it … are out.
In case you haven’t heard, Opportunity Zones are basically a capitalist version of wealth redistribution. They provide tax incentives to get rich people to voluntarily put their money where the government wants it to be.
Opportunity Zones exist in every state and in Puerto Rico. These areas tend to be blighted with some issues … they need some gentrification.
Each governor in the United States was taxed with the job of figuring out what areas in their states needed the most help … and where private enterprise could step up, do the work, and get benefits.
We’re not legal experts … but we know someone who is.
Mauricio Rauld is known around here as the “Anti Lawyer” … but he is actually a practicing lawyer who helps people primarily with syndications.
Since we first learned about Opportunity Zones last year, Mauricio has spent his time discovering the good, the bad, and the ugly sides of these types of investments.
The good side of Opportunity Zones
Let’s start with the good.
Opportunity Zones offer huge tax benefits … four in particular.
The first is that you get to defer the tax from whatever capital gains you’re investment is coming out of.
For example, if you have a piece of real estate … or any other asset, like precious metals, stocks, bonds, even your collectible car … you can take those gains and reinvest within 180 days into a qualified Opportunity Zone fund and defer the tax.
You aren’t deferring the tax indefinitely like a 1031 … but you will get to defer for at least the next seven years … until December 31, 2026.
The second benefit is that if you hold onto your new investment for a period of five years, you get a 10 percent discount on the capital gains you would have paid on the original investment.
Benefit number three kicks in if you hold onto your investment for seven years. Now, you’ll qualify for a 15 percent discount on your capital gains.
The biggest benefit of all … number four on our list … applies after holding your asset for a decade. After 10 years or more, the entire gain from your investment is tax free.
It’s all about taking an appreciated asset, putting it into an Opportunity Zone fund, and not paying taxes right away. The longer you wait … the less tax you pay.
One important thing to highlight once again is that the money you place into these Opportunity Zones doesn’t have to be in real estate to begin with.
A lot of the money we foresee coming into Opportunity Zones hasn’t historically been in real estate. They’re in other types of investments where there are big gains to be paid … like the stock market or precious metals.
As always, talk to your tax professional before making any decisions … but if you are sitting on a big tax gain, Opportunity Zones could be an attractive option.
Another positive … there is very little government interference and regulation on this project.
It’s a self-certification … meaning that whoever is putting together the fund simply checks a box on the first year tax returns to certify that it qualifies as an Opportunity Zone.
During your holding period, the government will check with you every so often to ensure you comply with program … but it won’t be dealing with the SCC or going through an approval and registration process.
The bad side of Opportunity Zones
There are some downsides … the bad … of getting into Opportunity Zones … and really it isn’t so much “bad” as it is things to consider fully before diving in.
The first is a rush for time.
In order to fully gain the benefits … to get seven years under your belt before December 31, 2026 … you need to make the investment before the end of 2019.
That means you will need to liquidate your asset and invest in a fund pretty quickly to get the 15 percent discount.
If you don’t make that deadline, you can always go for the 10 percent … and either way you should want to hold the investment for 10 years or more to make it tax free. If that’s your plan, there is less of a rush.
The other important consideration is the substantial improvement requirement.
This requirement means that if you buy a price of property you must put the same amount of money that you purchased the property for into renovations. The government wants you to improve the property.
This requirement only applies to vertical construction … meaning the buildings, not the land.
So, if you buy a property for $1 million and 20 percent of that is in the land with 80 percent in the building … then you only need to invest $800,000 in improvements.
There are a few exceptions to this rule. If you purchase a piece of property that has been vacant for the last five years … the substantial improvement requirement doesn’t apply.
Remember, the whole idea behind Opportunity Zones is for folks to put private capital to work in revitalizing these areas.
The other important requirement for your property to qualify is that it must involve an active trade or business. This is still a bit of a gray area … but we expect more guidance from the Treasury Department soon.
The ugly side of Opportunity Zones
Mauricio says that when it comes to “the ugly” of Opportunity Zones … a lot of personal opinion comes into play.
Much of the work Mauricio does is with syndicators, and there are pros and cons for them in this type of investment
Syndicators can promote Opportunity Zones as a great chance for investors because of the extensive tax benefits.
But syndicators themselves don’t get the tax benefit for the carried interest.
If this is a traditional syndication, the syndicator will get a cut for sweat equity … let’s say 20 percent.
The investors get 80 percent AND all the tax benefits … but the syndicator will have to pay taxes on the 20 percent they made. They can’t defer that.
This could be ugly … because as a passive investor you want an incentive for your syndicator who is running the project to be excited about the deal.
But on the other hand, most syndicators aren’t going after these deals for tax benefits for themselves. Instead they see them as an opportunity to court capital from a completely new and different source.
Someone who has been in the stock market or private equity or in precious metals that has avoided selling because they didn’t want to pay tax can now work with syndicators in real estate and find a win-win situation.
Another ugly truth … you can’t get into Opportunity Zones alone.
You have to put together a fund … some kind of entity. It doesn’t have to be a syndication … but it has to be a partnership. You need at least two people to get started.
Mauricio also cautions investors to be aware of artificial demand.
Opportunity Zones are designed so that people are investing in areas that they wouldn’t have originally invested in. You’ve got to make sure the investment still stands on its own merits.
Because it is an artificial demand, you could be potentially overpaying for the property in the long run. At some point you could be paying so much more that the tax benefits may not make sense.
Talk to an expert
Think Opportunity Zones might be the right opportunity for you? Talk to your tax professional.
At the end of the day, it’s a tax matter. There are forms to check and rules to follow. You want a tax expert to keep you on track.
And you’ll need an attorney to help you put together a fund, make sure it is structured properly, and ensure the investment itself is eligible.
There are no guarantees in investing … but doing your due diligence gives you the best chance at success.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook, and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
Love the show? Tell the world! When you promote the show, you help us attract more great guests for your listening pleasure!
Podcast: Tariffs, Taxes and Trade Wars – Insights for Real Estate Investors
Peter Schiff is our special guest as we talk tariffs, taxes, trade wars … and how real estate investors can successfully navigate the news.
More From The Real Estate Guys™…
- Sign up for The Real Estate Guys™ Free Newsletter
- Check out all the great free info in our Special Reports library.
- Don’t miss an episode of The Real Estate Guys™ radio show. Subscribe on iTunes or Android or YouTube!
- Stay connected with The Real Estate Guys™ on Facebook and our Feedback page.
The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.
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