Podcast: Three Ways to Get Started in Apartment Investing

Apartment investing is one of the hottest niches in real estate. And for good reason!

Apartments provide economies of scale, lots of cash flow, great tax breaks, and many financing options.

Making the leap into bigger building can be intimidating at first … but it’s actually easier than you may think.

So tune in as our special guest Brad Sumrok explains three ways you can get started in apartment investing … and how you can find out where he thinks the best opportunities are heading into 2020.


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The pension problem is about to get REAL …

Our good friend, multi-time Investor Summit at Sea™ faculty member (who’s back again for 2020!) … and greatest-selling financial author in history …

Robert Kiyosaki thinks pensions are the greatest threat facing the financial world today.

Of course, it’s not like pension problems are breaking news. The whole crisis has been unfolding for a decade as more of a slow-motion train wreck.

But over the last few years, the looming disaster is getting hard to ignore …

America’s utterly predictable tsunami of pension problems
– The Washington Post, 2/22/17

Pension Fund Problems Worsen in 43 States
– Bloomberg, 6/30/17

States have a $1.4 trillion pension problem
– CNN Money, 4/12/2018

The Pension Hole for U.S. Cities and States is the Size of Germany’s Economy
– The Wall Street Journal, July 30, 2018

“Many retirement funds could face insolvency unless governments increase taxes, divert funds, or persuade workers to relinquish money they are owed.”

And it’s not just government pensions. Some of the biggest corporations are also struggling under the weight of their pension burdens …

GE’s $31 billion pension nightmare
– CNN Business, January 19, 2018

Here Are 14 Companies Getting Crushed By Pension Costs
– Business Insider, 8/15/2012

You get the idea. Huge storm clouds have been forming for quite a while … in both the public and private sectors.

In an election year, you’d expect to hear some chatter about it. But we’re guessing you won’t because there’s no politically palatable solution.

Of course, ignoring the problem won’t make it go away.

That’s why Kiyosaki is shining light on it. You can’t prepare for or profit from a problem you don’t or won’t see.

So this is a situation we’ve been watching more closely of late. And clues in the news tell us pension problems pose a threat to real estate investors.

Desperate politicians have already proposed funding their shortfalls with property taxes and cuts to benefits for pensioners … some of whom could be YOUR tenants.

Meanwhile, major corporations like General Electric and United Airlines have already cut their pension benefits.

Of course, the flip side of bad news is GOOD NEWS …

Pension problems also create opportunities for real estate investors.

We think pension managers will eventually concede that for a chance to save their funds from the Federal Reserve’s war on yields …

… they’re going to need to get REAL … real fast.

Pension fund managers will need to funnel more money away from Wall Street and into Main Street.

Think of all the reasons Main Street investors LOVE real estate …

… reasonably consistently achievable double-digit total returns 

… inflation-hedged yields much higher than bonds and without the counter-party-risk …

… assets which aren’t practical as gambling tokens in the Wall Street casinos, and therefore much less volatile in terms of yields and principal value.

We know. You’re already convinced real estate is awesome. And you may be wondering why everyone doesn’t invest in real estate.

But don’t under-estimate the seductive allure of Wall Street marketing and the pervasive political pressure to promote paper assets.

Remember, an argument can be made that government and Wall Street sometimes work together to the detriment of Main Street.

But when Main Street gets mad … it’s every politician and pension manager for himself.

So when poking around the crevices of the internet looking for credible clues …

… and being mindful that things NOT being talked about in well-publicized political discourse is probably more worth paying attention to …

… and we came across a couple of interesting articles …

CalPERS gets candid about ‘critical’ decade ahead
– Capitol Weekly, 8/27/19

Yes, we realize this article isn’t “fresh” … but it’s still relevant today. After all, they’re talking about the “decade ahead” … and again, this is a slow-motion train wreck.

Here’s a notable excerpt …

Quoting a letter written to CalPERS by a third-party consulting company brought in to help figure out what to do …

“ ‘The financial world is changing, and we must change with it,’ said the letter. ‘What we’ve done over the last 20 years won’t take us where we need to go in the future. New thinking and innovation are in order.’ ”

Of course, who knows what they mean by that. “Change”, “new thinking”, and “innovation” are all buzz words that lack meaning apart from a suggestion or context.

But one thing is perhaps becoming clear to the pension managers … Wall Street’s not the answer …

“ Meanwhile, a line [the] letter is a reminder that CalPERS remains at the mercy of the market, as when the stock market crash and recession struck a decade ago: ‘The value of the CalPERS fund fell 24 percent in a single fiscal year, to about $180 billion.’ ”

So it’s against this backdrop that we found the second, more recent, article noteworthy …

Sacramento County launches tender for alternative assets consultant
– Institutional Real Estate, 2/11/20

“The $10 billion Sacramento County (Calif.) Employees’ Retirement System (SCERS) is seeking a consultant for its alternative assets portfolio …”

“The alternative assets consultant works with the pension fund’s investment staff to help develop and maintain strategic plans for the system’s absolute return, private equity, private credit, real assets, and real estate investments.”

Pension problems are rampant in governments … from nations to states to counties and municipalities, as well as corporations all around the world.

As pension managers realize there’s opportunity to grow absolute returns through private placement and real estate 

… it opens up a potential floodgate of money into Main Street opportunities.

Of course, if you’re just a Mom & Pop Main Street investor … or even a fairly successful real estate syndicator doing multi-million-dollar deals …

… you may wonder how YOU can get in on the action.

Like Opportunity Zones, pensions pointing their portfolios at specific markets and niches have the potential to provide a tailwind to EVERYONE already there … or going along for the ride.

So pay attention to pensions … not just for their potential to torpedo the financial system …

… but for the opportunities created as they act out on “new thinking and innovation”.

Lastly, keep in mind that like Fannie Mae and Freddie Mac back in 2008, and the FDIC today …

… the Pension Guaranty Benefit Corporation is a horribly underfunded quasi-government enterprise backing TRILLIONS in potentially failing pensions.

If a substantial number of pensions fail (a VERY real possibility) …

… it’s all but certain the Federal Reserve will need to step in to paper over the mess with trillions in freshly printed dollars.

This weakens the dollar and among the biggest winners are borrowers and owners of real assets.

This makes real estate investors who use mortgages double winners.

So while you may not be able to calm the stormy seas …

… you can choose a boat that’s seaworthy and equipped to sail faster when the winds of change (and a falling dollar) blowhard.

Until next time … good investing!

Brian Tracy on the Power of Self-Esteem and Goal Setting

We’re live on the mic with legendary success trainer Brian Tracy. He’s sharing timeless … and proven … pearls of powerful, high-performance wisdom. 

Success leaves clues and patterns behind for others to follow … which means real estate investors and entrepreneurs can apply successful thinking and behavior to achieve greatness faster. 

Tune in as we talk to a true titan of peak performance training! 

In this episode of The Real Estate Guys™ show, hear from:

  • Your clued-in host, Robert Helms
  • His shoe-in co-host, Russell Gray
  • Success trainer, Brian Tracy

Listen


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Meet Brian Tracy

What are the things that can make you successful as a real estate investor? 

It’s not the map. It’s not the market. It’s not the metrics … It’s you. 

Today we’re talking about the undeniable power of self-esteem and goal setting. Part of being a real estate investor is really understanding and motivating yourself as a person. 

Brian Tracy is an icon in personal development. 

When some people think about personal development, they think about people that give motivational speeches … but really it’s about pragmatic training. That’s what Brian does. 

Brian teaches people how to manage their psychology … because what you think and believe affects your behavior … and your behavior affects the results you produce. 

What you set out to learn should not be how to invest in real estate or how to be successful in business. It’s how to be a successful person. 

Brian has produced dozens of audio and video programs. He has also written more than 85 books … and he is sharing some of that valuable knowledge with us today. 

The secret is self-esteem

Brian always talks about the fact that there are distinctions between people who are successful and those who aren’t. 

These are things that people who are looking for success … in real estate investing or in any area of life … can focus on. 

Everything in life is about self-esteem. 

Self-esteem is defined as how much you like yourself, how much you respect yourself, and how much you appreciate and value yourself. 

You become what you say to yourself. The magic words are, “I like myself.” 

When you say, “I like myself,” you feel happy inside. You feel good. You feel valuable and important. 

Aristotle said that all human activities are aimed at one great goal, and the goal is happiness. 

So, everything you do either raises or lowers your self-esteem … and your happiness. Nothing is neutral. 

Start with the end in mind, and ask yourself, “If my life were perfect and I was really happy, what would it look like? And how would it be different from my life today?”

What would you do more of and what would you do less of to be happier? What would you start doing that you’re not doing today? 

If you want to be successful in life, associate with people who raise your self-esteem, who make you feel valuable and important. 

Simultaneously, you should do everything possible to raise their self-esteem and make them feel valuable and important. 

Listening builds trust

Another great rule of success in life, Brian says, is that listening builds trust. 

Most people don’t trust anybody who tries to sell them anything … including people who are in sales for a living, 

So, every time you ask a person a question and really listen to the answer, it makes the other person feel happy. 

When someone feels happy, they trust you more. 

Each time you ask a question and carefully listen to the answer … your trust and credibility go up and the other person’s fear of doing business with you goes down. 

Eventually, that fear drops to zero and that person is ready to work with you, because they trust you, and they know that you won’t hurt them. 

Talking doesn’t build trust. Listening builds trust. 

Therefore, the most successful people in any business … including real estate … are people who ask a lot of questions and listen carefully to the answers. 

If you feel comfortable, ask if you can take notes while the other person is talking. People feel very complimented when somebody writes down their words. 

It also gives you an opportunity to ask more questions … and when you ask questions, you get more opportunities to listen. 

Another technique Brian shares for being a powerfully persuasive person is feeding the information back to someone. 

“Say, ‘So let me be really clear. What you said was this,’ and that helps them know you really were listening, and it helps you always be on the same page,” Brian says. 

Setting and achieving goals

Brian finds that every time someone completes a task, their self-esteem goes up. 

Every time you learn something new that you think can be valuable to you … self-esteem goes up. You start and complete a project … self-esteem goes up. 

The best thing you can do to find more success is to keep self-esteem at the center. Actively search for tasks that can raise your self-esteem or at the very least do not diminish the self-esteem of another. 

Start by setting and achieving one important goal. This creates a template in your brain of setting and achieving goals. 

Because you have a good feeling from achieving one goal, you’ll want to set another … and you’ll do this again and again. 

For more success-building skills from Brian Tracy … listen in to our full episode!

More From The Real Estate Guys™…

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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The horrible housing blunder …

If you sometimes feel like a small fish in a very big ocean … it’s because you are.

There are LOTS of big, bigger, bigger-still, and downright ginormous other fish … some with very sharp teeth … circling all around you.

There are also mostly hidden forces creating powerful currents and waves … speeding you up, slowing you down, or taking you completely off course.

That’s why we look for clues in the news.

And because mainstream financial media doesn’t cater to Main Street real estate investors, we need to stay alert to notice things often hiding in plain sight.

In a recent trek through an airport on our way to speak at an investment conference … a notable magazine cover hit us in the face like a brick …

The Horrible Housing Blunder
Why the Obsession with Home Ownership is So Harmful
The Economist Jan 18-24, 2020

If you’re not familiar, The Economist is one of those highbrow publications ginormous fish and wave-makers are reading.

The Economist articles provide insights into how powerful people think about small fish like us and the things we care about … like housing.

In The Economist table of contents, the housing blunder topic is introduced this way …

“The West’s obsession with home ownership undermines growth, fairness and public faith in capitalism.

“Housing is the world’s biggest investment class … at the root of many of the rich world’s social and economic problems.

Wow. We didn’t know home ownership is so harmful to our fellow man. We’re ashamed.

But before we dig in, take a minute and simply consider their conclusion …

…and what happens to YOU if powerful people decide to implement policies to protect the world from the evils of housing.

Now you know why we pay attention.

So, on page 9 of The Economist, under their “Leaders” section (think about THAT) …

… they assert housing markets CAUSE both sudden economic crashes AND chronic economic “disease”.

Then they support their conclusion by claiming “a trillion dollars of dud mortgages blew up the financial system in 2007-08”.

Maybe you’ve heard that one before.

Of course, they make no mention of the trillions of dollars of Wall Street concocted derivatives of those dud mortgages …

(Warren Buffett called derivatives “weapons of mass financial destruction” … NOT the mortgages underneath them)

They also don’t account for the dangerously weak lending “standards” (we use the term loosely) Wall Street used to entice weak borrowers.

Nor do they mention the reckless, speculative and highly leveraged bets placed using those mortgage derivatives by arrogant gamblers in the corrupt Wall Street casinos.

Of course, the greed behind all of it is simply a “derivative” of the moral hazard created when everyone in the market KNOWS the Federal Reserve will paper over any problem with freshly printed “money”.

Back to The Economist special report on the horrible housing blunder …

Besides the terror of housing threatening the entire financial systemThe Economist says …

“… just as pernicious is the creeping dysfunction … housing created …” which they define as …

“… vibrant cities without space to grow; aging homeowners sitting in half-empty houses …

… and a generation of young people who cannot easily afford to rent or buy and think capitalism has let them down.”

So it seems cities which selfishly vote to preserve green space for themselves, their families, and the environment are … financial terrorists.

As are old folks who have the gall to stay in the homes they raised their children in … long after the children have successfully (and presumably permanently) moved out.

And speaking of all those independent young people … apparently because of these selfish homeowners, they can’t “easily” afford to put a roof over their head.

Of course, there’s no mention of the terror created through government sponsored student debt which both inflated the cost of college and enslaved a generation into inescapable debt …

… making home ownership … or even renting … far from “easy”.

Ummm … sorry, but how is that housing’s fault?

And what do the social scientists at The Economist suggest is the answer to the horrible housing blunder?

For that we need to flip over to page 44 where we discover that …

“Over the last 70 years, global house prices have quadrupled in real terms.”

For those keeping score, 70 years ago was 1950. Store that for future reference.

“Real terms” means adjusting both incomes and prices for inflation. In other words, prices rose four times faster than incomes.

The solution to all these ills is threefold says the author …

First, is “… better regulation of housing finance …” so that “… people are NOT encouraged to funnel capital into the housing market.”

Yes, every business person knows when you need MORE of something you should starve it of capital. Brilliant.

Next is … wait for it … a better train and road network” to “allow more people to live farther afield.” …

… because who doesn’t enjoy riding public transportation 100 miles a day to go to work?

And last but not least, our personal favorite …

“… abolishing single-family-home zoning, which prevents densification …” and “…boosting the construction of public housing.”

Makes sense (not) because clearly, the only thing better than riding public transportation to and from work for hours a day is coming home to relax in “the projects”.

Of course, as you’ve probably discerned, we think the whole thing is absurd.

But while it’s laughable, it’s also scary … because this is the way those ginormous fish think.

Worse, they’ve assigned the symptom (high housing prices and stagnant real wages) to the wrong disease … so they’re prescribing the wrong medicine.

Housing prices took off in the ‘50s because Bretton-Woods handed the U.S., and then in 1971, the entire world, a completely unaccountable ability to go into unlimited debt.

Worse, it requires the perpetual, unrelenting growth of debt … or the system collapses.

So the wizards must continually find new ways to fabricate affordable debt 

… through mortgages, student loans, government spending, endless wars, or (insert boondoggle of your choice) …

… plus, 40 years of falling interest rates … to zero and beyond!

It would take so much more space than this modest muse permits to delve deeper into the mindset, motives, and methods of the wizards behind the curtain …

… and to explore the MANY opportunities for Main Street investors who are aware and prepared.

For now, we simply encourage you to PAY ATTENTION and THINK. And look for every opportunity to talk with others who are doing the same.

Way back in January 1988, the cover of The Economist boldly warned the world to “Get Ready for a World Currency”.

As we chronicle in our Future of Money and Wealth video, The Dollar Under Attack, and is easily seen through MANY headlines since …

… the dollar’s role as currency of the world is steadily being attacked RIGHT NOW by both friendfoe, and technology.

Here in January 2020, The Economist is overtly prodding the world to take on the threat of housing …

“Bold action is needed. Until it is taken, housing will continue to weaken the foundations of the modern world.”

This hits us all right where we live and invest. We should all be paying attention.

Build-to-Rent Real Estate — Another Look at a Hot Concept

What do you do when a housing shortage meets a shortage of home buyers? 

It’s real estate investors to the rescue! Developers are finding big opportunities building homes to cater to the needs of landlords. 

We’re talking with two developers who are taking the hot concept of build-to-rent to new heights. 

In this episode of The Real Estate Guys™ show, hear from:

    • Your informative host, Robert Helms
    • His inquisitive co-host, Russell Gray
    • CEO of Sage Oak Assisted Living, Loe Hornbuckle
    • Loe’s partner and construction developer, Austin Good

Listen


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A new approach to rental property 

We’re talking about a niche that is getting hotter and hotter by the minute. It’s something that lots of people can participate in … build-to-rent. 

Traditionally, builders have been buying land, building, and then selling what they built. 

But more and more, there is the idea of building the end product not for someone to buy and use … but for someone to rent. 

Most renters are looking at older properties … single family houses, apartments, townhouses … all already up and running and built for owner occupants. 

They may not be ideal as a rental for either the tenant or the landlord, but they work fine. Now, these properties are being built with the tenant specifically in mind instead.

We read a lot about the millennials and their debt load and inability to purchase houses. That means more people renting their homes and a giant demographic of young people that need a place to live. 

On the flip side, you’ve got a lot of interest in real estate as an asset class for the first time … so there is opportunity. 

Big benefits in build-to-rent projects

We’re talking to two men who have found the secret sauce in build-to-rent properties … Loe Hornbuckle and Austin Good. 

Austin started out as a real estate agent and quickly began flipping single family rental properties. But when inventory started to tighten he thought, “Maybe we should just go in, buy land, develop it, and build to rent.”

Doing so meant you could control the entire process a lot better and easier. “And as we did that, we found a lot of demand from investors,” Austin says. 

Some of the benefits of the build-to-rent scene is that investors are usually ready to close right away. You don’t have to wait things out depending on the market as much as a traditional developer. 

Physically, there are ways to optimize properties with renters in mind as well. 

“The biggest differences come down to durability of certain goods. We’ve gotten rid of carpet altogether in all of our deals because LVT flooring is more durable for a rental market,” Austin says. 

Austin also says that they design the homes with the investor’s exit strategy in mind. 

Right now, these properties will be used as rentals … but in 10 years the investor may want to sell to an owner occupant. It all depends on how the market changes. 

On that note, build-to-rent as a niche is fairly recession resistant. 

“These types of properties are a Class-A product that can rent for a Class-B price. You also don’t have to compete in the amenities space like apartment buildings,” Loe says. 

Currently, Austin and Loe build a combination of duplexes and townhomes … so people treat them as single family residences and don’t expect all the extras of an apartment complex. 

The other big pull for this niche, Loe says, are the tax advantages. 

When you sell a product, you’re being taxed. But build-to-rent has the advantage of the government realizing you are building affordable, clean, safe housing, so it offers many breaks and cuts to help you out. 

Then, you have the low turnover rate to consider. The two biggest expenses in renting are turnover and vacancy. If you can minimize those things … you’re in great shape. 

The tenants that come into build-to-rent properties treat them like they are their own, and they become attached and stick around. 

A big appeal of these build-to-rent properties right now is that they give the tenant the chance to rent something that is brand new or only a year or two old. 

Compared to living in a 25-year-old property … new is very appealing. 

In short, build-to-rent is a long-term asset with multiple exit strategies and multiple uses. 

Syndication in build-to-rent

Efficiencies are important when you’re undertaking a large project … and that’s exactly what Loe and Austin are doing. 

Their current project in Denton, Texas, has almost 90 units … which offers opportunities for a streamlined workflow and other efficiencies that mean more profit for builders and a better deal for investors. 

They also have a unique approach to ownership. Instead of selling individual units, they are collectively owning them. 

Many of Loe and Austin’s current projects are in Opportunity Zones. One aspect of investing in these areas is you have to hold the property for 10 years to get the maximum tax benefit. 

For many investors, investing in an opportunity zone is solely for the tax benefit … and with build-to-rent style investments, there are many additional bonuses for passive investors that want to get involved. 

Passive investors can see the tax advantage and return they want and are willing to hold the property for an extended amount of time. 

That’s why Loe and Austin focus on real estate syndication. Individual owners are foregone in favor of a leasing agent and maintenance staff that oversee the project. 

To learn more about syndicating in the build-to-rent niche … listen in to the full episode!

More From The Real Estate Guys™…

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: Brian Tracy on the Power of Self-Esteem and Goal Setting

Legendary success trainer Brian Tracy joins us live on the mic to share some timeless proven pearls of powerful high-performance wisdom.

Success leaves clues … patterns of thinking and behavior that can be applied by anyone to achieve more faster … including real estate investors and entrepreneurs.

So tune in as we talk with a true titan of peak performance training, the amazing Brian Tracy.

 


More From The Real Estate Guys™…

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!

Housing market conditions create challenges … and opportunities …

Housing is the sector of real estate most watched … and worried about … by economists, politicians, journalists, bankers, and investors … from Wall Street to Main Street.

That’s because housing, quite literally, hits us all right where we live.

We can all relate to it and housing is both an objective and subjective measure of individual and national prosperity.

Housing has certainly been in the financial news of late …

Housing Starts Surged in December. Don’t Expect It to Last
MarketWatch, 1/17/20

Housing market falling short by nearly 4 million homes as demand grows
CNBC, 1/21/20

New Risk to World Economy: Synchronized Housing Slowdown
Wall Street Journal, 1/28/20

As you can see, there’s both “good” news and “bad” news. Of course, buried inside of all that is opportunity.

So we think it worthwhile to look at housing through the lens of a tried and true investing strategy which could prove timely in today’s market conditions.

But first, let’s set the context …

Despite low interest rates (and largely because of them), housing is expensive relative to incomes.

That’s a problem for both renters and prospective home buyers … and why affordable housing is a hot topic today.

It’s also why we’re strong advocates of leaning towards affordable markets, neighborhoods, and price points. Demand tends to be stronger there.

We think it wise to be positioned below the top of the range. If interest rates rise or there’s a recession, people above will flow downhill to you.

Meanwhile, be prepared to survive a notch or two below your current price point. Otherwise, you may lose more demand leaking out the bottom of the range than you gain flowing in from the top.

In other words, ALWAYS compete for the loyalty and rent checks of your tenants … even in a high demand market.

Those who push rents to the margin of the range are the first to feel the pullback. Like equity, all rent retraction is at the margin. High rents hurt first.

That’s because when tenants start to feel a financial squeeze, giving a 30-day notice and moving to someplace more affordable is a relatively easy thing to do.

And don’t get suckered into thinking there’s no inflation or high employment based on the highly publicized and potentially “adjusted” official data.

Pay attention to the real world … because that’s where your tenants live.

From a home buying perspective, demand comes from first-time home buyers entering the market and pushing things up.

That’s why pundits are concerned that the average first-time home buyer age has risen to 47 years old.

Perhaps young people would rather rent than own? Maybe. But even if true, we wouldn’t bet on that lasting.

Sure, Millennials saw their parent’s real estate experience turn sour in 2008 … but that’s now 11 years ago … and a LOT of equity has happened since.

Most Millennials we know would like to own. They see prices rising and affordability getting away. Meanwhile, rents are climbing.

So we think Millennial demand will be a substantial factor in housing going forward. Demand is already growing … and it’s a wave you can likely ride over the next 10 years or more.

Also, Millennials are among a large group of Americans standing to inherit about $764 billion THIS YEAR alone.

We’re guessing next to paying off student debt, buying a home is near the top of the wish list for some of those heirs … adding some additional capacity-to-pay to fuel demand.

And speaking of capacity-to-pay …

Interest rates remain crazy low … and aside from a collapse of the dollar or a seizure in the bond markets (which could easily happen somewhere down the road) …

… there’s not much in the near-term to suggest interest rates will rise substantially.

In fact, with the amount of debt in the system, it could be argued there’s FAR more downward pressure than upward.

Still, because you don’t know, it’s not a bad time to stock up on inexpensive good debt. Just be VERY attentive to marrying it to durable income streams to service it.

Of course, another much discussed hindrance to Millennial home ownership is the now infamous and mountainous levels of unforgivable and inescapable student debt.

But in terms of student debt defaults and the resulting dings to credit, it’s only less than 15% of borrowers.

That means 85% of Millennials are chugging along making those payments … and presumably preserving their very valuable credit scores.

Of course, making those student loman payments hinders a young person’s ability to save for a down payment on a home. They start later and it takes longer.

And if a young person doesn’t have parents with equity they’re willing to re-position into a home for junior, or they aren’t on the receiving end of a chunk of that $764 billion inheritance …

… the lack of a down payment is perhaps an even bigger hindrance to Millennial home ownership than student debt.

And even though there are low down payment programs out there, they come with higher interest rates, private mortgage insurance, and larger loan balances …

… all of which converge to make the resulting mortgage payment much bigger than low interest rates can offset.

So that elusive 20% down payment dramatically increases the affordability of home ownership for many Millennials.

ALL this adds up to a great opportunity for real estate investors …

There’s a simple, time-tested strategy to leverage your cash into long-term equity … while preserving your credit and avoiding virtually all land-lording hassles.

It’s “equity sharing”.

In short, a cash rich investor supplies the down payment to a credit worthy owner-occupied home buyer.

The credit partner gets the loan, makes the mortgage payment, and lives in the house for the long term.

After a predetermined period of time … usually 3 to 10 years … an appraisal is done.

Any equity growth net of capital investments (reimbursed to the partner who made them) is split at a previously agreed upon rate such as 50/50.

Of course, there are some legal agreements which need to be put in place … and the borrower needs to work closely with a mortgage pro to make sure nothing is misrepresented in the loan application.

But equity sharing is a profitable way for Main Street investors to help the next generation of homeowners get into the market … so both can ride the long-term equity wave.

The borrower gets a home of their “own” … to live in, care for, and fix up for their personal enjoyment and prosperity.

They don’t feel or act like tenants … and they’re in for the long haul.

And with their name and credit on the line, they’re HIGHLY motivated to make the payment … even if it’s higher than they could rent a similar home for.

They don’t move to save a few bucks the way a tenant would because they have housing stability, tax breaks, long-term equity growth, and pride of ownership.

Meanwhile, the investor gets half the amortization and appreciation over the hold period … and next to no management headaches.

Plus, the investor has no property management expense, no loan on their credit report, no turnover or vacancy expense.

Equity sharing is a great way for an investor to leverage cash without as much risk as traditional land-lording.

Equity sharing is really just a form of syndication and a simple strategy for taking advantage of current market conditions.

For the cash partner, you get to invest in housing for the long-term, while mitigating much of the downside risk in the short term.

For the credit partner, you convert your housing expense into housing security and long-term equity. Half of something is better than all of nothing.

And when it’s hard to find rental housing that cash flows after expenses, equity sharing is a way to ride the housing bull with far less risk than traditional land-lording … while helping a young person get on board the real estate equity train.

Paradise in Your Portfolio — Exploring the Resort Market of Belize

We can’t say enough about resort property investing. 

Like all real estate investing … everything starts with market selection. You’re looking for the right mix of supply, demand, location, team, and demographic. 

Belize is one of the most uniquely positioned resort markets in the world … and it checks A LOT of boxes. 

We’re visiting with a U.S. expat who is very active in the Belize real estate market. Is now the right time to put paradise in your portfolio?

In this episode of The Real Estate Guys™ show, hear from:

  • Your resourceful host, Robert Helms
  • His last resort co-host, Russell Gray
  • From RE/MAX 1st Choice Belize, David Kafka

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Welcome to Belize

One of our personal favorite opportunities is markets that are outside of the norm. Today, we’re going to talk about investing internationally … specifically in beautiful Belize. 

For many years, Belize was basically undiscovered. We first started visiting about 15 years ago. 

Since then, Belize has really grown. It’s definitely been discovered … but there are still great opportunities to ride the wave. 

It’s easy to see the possibilities for the future when you look at Belize through the lens of Cabo San Lucas, Mexico, or Hawaii. 

So, the next thing to do is your homework … making sure that the underpinnings, the things that you think you see, are really there. 

When we first went to San Pedro, Belize, there were 600 rooms for overnight accommodations. Today there are nearly 2000. 

Until two years ago, there wasn’t a single branded hotel on the island. Today, one just opened and three more are opening soon. More airlines are coming too. 

Still, it’s not a very populated place. It’s a small market. Belize only has about 4,000 people that call it home. 

Belize has a mainland … with beautiful rainforests, the largest Jaguar preserve in the world, and Mayan ruins … and then there are the islands with white sand and palm trees. 

With any new market, there are stories of investors and developers who have come in and failed. But there are plenty of people also seeing an amazing increase in equity and cash flow in tourism. 

We get it. Thinking about somewhere like Belize as an investment opportunity is an adjustment. But you have to learn to think bigger than your local market.

The hotels, airlines … they all go where the people, money, and opportunity is. Why should a real estate investor be any different?

There are also many advantages to organizing your business internationally … like tax laws. Belize has been a tax haven for a long time. 

So, if you think an international investment might be the next step for you … look at the market drivers and dynamics. Find out if it is going to help you accomplish your personal investment goals. 

Then, it’s time to build a team. 

Building a Team

You want to find people on the ground who really know the market. 

The best people operate in the market on a daily basis and can help you make tactical decisions and strategic introductions to the resources you’re going to need to go from an idea to implementation. 

David Kafka is one of the most successful real estate brokers in the country of Belize. He has one of the largest brokerage offices with about a dozen agents. 

The average real estate office in Belize has less than two people. 

So, how did he end up in Belize?

“Some friends and I decided we wanted to move internationally. I came to Belize on vacation, and I pretty much never left,” David says. 

David didn’t start off in real estate, but he has always liked it. Several times, he has bought a house, fixed it up, lived in it for a few years, and sold it. 

But once he came to Belize, he was ready to go all in. Now, he splits his time between Placencia and San Pedro. 

David says that one of the unique aspects of Belize is that it is one of the sparsest populated countries in this area of the world … but it has lots of land. 

“It takes an adjustment coming from the bustling United States, but I’d rather have no traffic, no air pollution, great food, and great people,” David says. 

The population of Belize is very diverse … ethnically, culturally, and economically. But they all love the area. 

Most of David’s customers want to purchase a house or a condo now while there is a market opportunity, rent it out for a few years or use it as a vacation home, then have the option to move in permanently. 

But he is starting to see more investors who see Belize as an investment opportunity and more than just a personal experience. 

Investment Opportunities 

David says there are many investment opportunities in Belize. 

There are standard vacation rentals and a high demand for affordable housing. 

Many people who owned apartment buildings saw a rise in tourism and turned their workforce housing into accommodations instead. 

It makes sense. A unit that might rent for $1000 a month would rent for $250 a night. 

But these changes are displacing the locals. That’s where the opportunity lies. So many people come to San Pedro for a job and can’t find an apartment within their budget. 

The result is substandard living. 

If an investor can come in and give someone nice, quality living accommodations and affordable pricing, there will be locals, contract workers, and others ready to take advantage. 

The key is … and you’ve heard us say this a thousand times … great property management. 

When you look at the property management side of the equation, long term rentals are more stable and simple than vacation rentals.

So, there’s a balance either way. 

The good news is that there is no reason investors can’t do a little bit of both. 

And don’t forget, there is a lot of land in Belize that is suitable for agriculture, development, or commercial investment. 

“There’s always some land for any budget,” David says. 

To find out about more opportunities for putting paradise in your portfolio … tune in to the full episode!

More From The Real Estate Guys™…

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: Build-to-Rent Real Estate – Another Look at a Hot Concept

When a shortage of housing converges with a shortage of home buyers … it’s real estate investors to the rescue!

Developers large and small are realizing there’s a big opportunity in building homes to cater to the needs of landlords.

In this episode, we visit with two developers who’ve put a new twist on the build-to-rent concept.

So listen in as take another look at the hot concept of build-to rent.


More From The Real Estate Guys™…

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!

WORST investing advice ever … or is it?

Do you know how five of America’s richest families lost it all? 

Neither did we … until we saw an article in our news feed promising to tell all. So down the rabbit hole we went. 

After all, we’re STILL stinging from the 2008 wipe out. So any lesson about landmines on the road to building and preserving wealth is an enticing topic. 

And if mega-wealthy families can lose nine-figures, it makes street rat investors like us feel less bad about our six-figure screw-ups. 

The author of the article briefly describes the lost fortunes of Cornelius Vanderbilt, John Kluge, George Hartford, Joseph Pulitzer, and Bernhard Stroh. 

Aside from Vanderbilt (as in University) and Pulitzer (as in prize), you might not recognize the others. 

Hartford was a retailer … creating what’s described as “Walmart before Walmart” … the biggest in the world in 1965. 

But the fortune he built was squandered by heirs who could act like wealthy business moguls because they’d inherited the trappings. 

But they didn’t really know what they were doing. If you’re going to fake it ’til you make it … keep the stakes small until you know you know you’re capable. 

Stroh was a beer-maker (we like him already), but when he died, his sons took over and decided to expand faster than their cash flow could support. 

Their $700 million fortune went flat … along with their beer. Tragic. 

Kluge was a media mogul who sold a network of TV stations to what is now Fox for $4 billion. That’s a lot of popcorn. 

Divorce divided the Kluge fortune, and the ex-wife dumped ALL her money into a down payment on a vineyard … to which she added a big mortgage. 

Perhaps unsurprisingly the business failed, the land was lost in foreclosure, and some true real estate investor named Trump picked it up for pennies on the dollar. 

The lesson? 

Well, according to the article’s author, the former Mrs. Kluge should have put her fortune into … wait for it … 

“… low-risk investments like certificates of deposit (CDs), which are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000 per individual.” 

Really? 

But then an astonishing admission … 

“…CDs are promissory notes — essentially IOUs …” 

We’re guessing this author has never heard of counter-party risk, interest rate risk, or inflation risk. Savers take on ALL those … plus lost opportunity. 

Savings in the bank is FAR from safe. 

And while $250,000 of FDIC insurance is great … up to $250,000 … we’re pretty sure Mrs. Kluge was dealing in more sizable sums. 

So the advice in this article is HORRIBLE. 

Or is it? 

As dumb as it is to make a giant unsecured and uninsured low interest loan to a bank, for someone with no financial education, it’s almost reasonable. 

Of course, in the real world, when big money needs a place to “deposit” huge sums of cash … i.e., make low interest rate loans … they go straight to the source: government bonds. 

After all, if the bank fails, they’ll turn to the FDIC (which is woefully underfunded and arguably insolvent), which would then turn to Uncle Sam (ditto), who would turn to the Fed … who just funds everything with inflation (stealing from the workers and savers). 

Read that all again and REALLY think about it. 

But the bigger lesson from the article is … 

“Make informed investments …” 

However, rather than dumb down your investments to your current level of financial education … 

… we think it makes a LOT more sense (and dollars) to RAISE your financial knowledge by investing first and foremost in yourself, your advisor network, and an investor mastermind group. 

In other words, get smart and surround yourself with smart people. 

Money doesn’t make you smart. But smarts can make you money. 

The tragedy of our time is millions of people are facing a bleak retirement because of the pervasive fraud and mismanagement of pensions … 

… the hidden and misunderstood wealth-stealing cancer of inflation … 

… a dangerous ignorance of the important difference between speculation and investing … 

… and a false focus on net worth over passive income as the ultimate metric of wealth. 

You can read the referenced article yourself for the rest of the stories of the rise and fall of the rich families. You’ll find they’re all variations on a theme. 

Our reason for drawing all this to your attention is to remind you that most mainstream financial media is loaded with dumb ideas and devoid of any understanding of the wealth-building power and resilience of income property investing. 

Yet the need for Main Street investors to tap into the power of real estate has never been greater … 

The Fed continues to DESTROY savers. 

Yet ignorant (though perhaps well-meaning) journalists promote saving in banks … loaning money to broke and corrupt institutions which are backstopped by broke and corrupt institutions … as a panacea of safety in uncertain times. 

Wall Street continues to promote “buy low, sell high” speculation as an “investing” strategy. It’s not. 

Besides, Main Street investors are ill-equipped to swim in the shark invested waters of Wall Street for long without losing a few pounds of flesh … which is the entire reason they keep being invited to swim. 

Of course, we’re preaching to the choir. You’re probably already sold on real estate investing. 

But our point is the world needs YOU to be an outspoken, well-prepared, advocate for REAL real estate investing. 

Average people can produce WAY above average results with much less risk though well-managed income producing properties in solid markets and properly structured with optimal leverage for resilient cash-flow, inflation-destroying leverage, and tax-defying deductions. 

If you know real estate, we encourage you to teach it. 

And if you’re a proven producer of real estate profits, consider starting a syndication business to partner your skill with other investors’ money. 

No matter how you do it … join the crusade to move money out of banks and Wall Street and back where it came from, belongs, and does the most human good … on Main Street. 

Until next time … good investing! 

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