Boots-on-the-Ground Market Insights: Short Term Rentals

Boots-on-the-Ground Market Insights: Short Term Rentals

July 2020

Short Term Rentals and the Impact of COVID-19

There isn’t a market out there that has not been affected by COVID-19.  In this edition of Boots-on-the-Ground, Russell Gray, co-host of The Real Estate Guys™ sits down with Tim Hubbard and discovers the Short Term Rental market has done quite well! 

As the exodus from densely populated cities continues and work from home options are extended, we see many people are choosing to utilize short term rentals. 

Points of discussion include:

✓ Challenges and Opportunities

✓ Short Term vs. Extended Stay

✓ Changes in Sanitation Procedures

✓ How and Why AirBnB can turn your listing off

✓ And MUCH more!

Learn more about Short Term Rentals and find out if there may be opportunities in this asset class for you … 

Simply fill out the form below to access this edition of Boots-on-the-Ground Market Insights: Short Term Rentals …

 

 


Boots-on-the-Ground Market Insights: Indianapolis

Boots-on-the-Ground Market Insights: Indianapolis

July 2020

 

Find out if Indianapolis is right for your next investment!

 

In this edition of Boots-on-the-Ground, we take an in-depth look at the Indianapolis Marketplace as Russell Gray, co-host of The Real Estate Guys™ meets with Jeff “Shecky” Schechter, CEO and Co-Founder of High Return Real Estate.

Learn:

✓ How COVID-19 has impacted the Indianapolis Marketplace
✓ Status of Indy Rental Revenue
✓ Which major employers and industries choose Indianapolis as their base and how they are currently weathering the storm
✓ And MUCH more!

Simply fill out the form below to access this edition of Boots-on-the-Ground Market Insights: Indianapolis …


Boots-on-the-Ground Market Insights: Cash Management

Boots-on-the-Ground Market Insights: Cash Management

June 2020

Insulate yourself from relying on the balance sheet of the bank …

Just as Insurance companies are either making short term and impulsive decisions or long term and calculated decisions, Russell Gray, Co-host of The Real Estate Guys™  Radio Show interviews Patrick Donohoe, President and CEO of Paradigm Life to discuss how you can make the best long term decisions possible. 

Gain insight and clarity on what can be a confusing process of investing in Insurance companies and annuities. 

Here’s some of the areas Russell & Patrick discuss … 

  • Infinite Banking – How You Can Circumvent the Traditional Banking Systems
  • Tax-Free Growth – How to Mitigate Risk
  • Counterparty Risk – How to Insulate Yourself from Low Yields
  • Publicly Traded Insurance Companies vs. Private and Mutual Insurance Companies
  • Certainty and Uncertainty – What You Can do to Ensure You’re On the Right Side of The Equation
  • And Much More! 

Simply fill out the form below to access this edition of Boots-on-the-Ground Market Insights: Cash Management …

 


Freedom, responsibility, opportunity and hard work …

We’re a little late with this week’s muse … we’ve been busy finishing up an EPIC collection of interviews for our soon-to-be-released COVID-19 Crisis Investing Webinar Series.

The original plan was to do a simple webinar with a collection of our big-brained friends. It turned into a MUCH bigger undertaking … in a GREAT way.

Obviously, there’s a LOT happening in the economy and financial system right now …

… and the issues are much deeper than debates about wearing masks … or whether tearing down statues falls under the heading of peaceful protests.

Meanwhile, as Americans head into our Independence Day celebration, there’s a lot to think about … both at the macro-policy level and the micro-investing strategy level.

Remember … your business and investments operate inside a complex, yet delicate ecology made up of people, resources, organizations, policies, procedures, and a physical environment which sometimes tosses a curveball.

Like your body, this ecology is a finely tuned machine … and though it’s often flexible and resilient … it has its limits.

Injury, disfigurement or worse are often on the other side of exceeding limits. Pain is usually the telltale sign you’re approaching the danger zone.

Ignoring the warning signs almost always ends badly. Yet even mature adults revert to childlike “covering their eyes” trying to hide from scary realities.

You can ignore reality, but you can’t ignore the consequences of ignoring reality.

Of course, pessimists only see the downside and are often paralyzed.

Optimists see only the upside … and sometimes get blindsided by dangers which are obvious in hindsight. We know. We’ve done it.

As real estate investing legend, Sam Zell says … the secret to success is the ability to pursue the upside while keeping the downside in view so it can be managed.

In other words, Sam Zell is a realist … which is probably an appropriate word for a successful real estate investor.

Our world is FULL of downside right now. Pain is everywhere.

It’s fairly obvious that people, businesses, markets, financial systems, and even society itself are all approaching their limits.

Will they bend or will they break? If they break, what does that look like? Do YOU have a plan?

Not only are those frightening contemplations, they’re hard work.

But if you love the freedom to pursue opportunity, own property, build wealth, and retain and enjoy the fruits of your efforts, it’s hard work you’ll need to do.

“Most people do not really want freedom, because freedom involves responsibility, and most people are frightened of responsibility.”
– Sigmund Freud

“If you don’t design your own life plan, chances are you’ll fall into someone else’s plan. And guess what they have planned for you? Not much.”
– Jim Rohn

“Power over a man’s subsistence is power over his will.”
– Alexander Hamilton

(That last one is a little disturbing in a “lockdown” world …)

The challenges all freedom-loving entrepreneurs and investors face in this current crisis are multi-faceted but can be distilled into a few macro and micro components.

In the macro, this could be the endgame for the 49-year experiment of a global debt-based financial system.

Or maybe it’s just a bigger crash on the way to some future endgame.

Most of the bright folks we’ve talked to think the system most of us have operated in for virtually our entire lives is dangerously close to collapse and reset (again) …

… or perhaps even full-blown replacement.

All of which begs the questions … what’s going to happen in the macro and how do you prepare in the micro?

Of course, no one knows what’s going to happen, so it’s important to analyze and anticipate possibilities and probabilities.

It may seem complicated, but it’s really a simple, though potentially catastrophic, sequence of events.

It’s important to be mindful of where we are in the process … and how likely we are to advance the next level of “yikes”.

The health crisis led to the economic shutdown, which has the potential to create a financial system crisis or collapse.

So the Federal Reserve is risking a currency crisis (or collapse) by printing many trillions of dollars trying to stop it.

Will they succeed? And if they don’t, when will we know and how will it impact all of us?

More importantly, what can we each do to prepare for a worst-case scenario?

These are the issues concerned investors are wrestling with … and the subject of our conversations both on and off the mic with our COVID-19 Crisis Investing Webinar Series faculty.

For now, here are some important concepts and actions to consider …

Incomes, whether active or passive, are based on economic activity. When commerce stops, so does revenue, and consequently rents and loan payments.

You might be a little late to the party, but if you don’t have solid liquid reserves, it’s something you probably want to get in place quickly.

The longer this crisis continues, the more likely your revenue will be negatively impacted. Liquidity is essential when revenue wanes.

Liquidity is also a VERY powerful tool when credit markets seize … often taking asset prices down with them.

The best bargains are often found by brave, bold, and liquid investors in the pit of a financial crisis.

Meanwhile, at the macro level, all those missed payments could create major problems not just in credit markets, but the banking system too.

Remember … there were already symptoms of a sick banking system just a few months before the COVID-19 crisis came to light.

And now with big debtors like Chesapeake Energy and Hertz leading a parade of bad debt and corporate bankruptcies …

… the Federal Reserve is printing dollars to not only buy up corporate debtmunicipal debtmortgages …

… but some allege the Fed is indirectly supplying freshly printed dollars to prop up stock prices.

We don’t know. But it seems like there’s a WHOLE lot of printing going on. The big question is whether the dollar is strong enough to endure this severe dilution.

Meanwhile, it seems clear credit markets are full of potentially toxic assets no one but the Fed will buy. That’s a significant warning sign.

So, at the micro-level, consider your dependence on and exposure to credit markets and the banking system.

You might find your credit lines being cut off or reduced without warning through no fault of your own. That’s what happened in the lead up to 2008.

And if you’re not familiar with the concepts of “counterparty risk” and “bail-ins”, this is a good time to expand your financial vocabulary. You may have both in your future.

Remember … these are unprecedented times.

Unimaginable things may not be likely (yet), but they’re definitely moving up the ladder of possibility.

Ignoring the possibilities doesn’t make them go away.

But unless the preparation itself is exorbitantly costly or complicated, it’s better to be prepared and not have a crisis than to have a crisis and not be prepared.

After all, inconvenient or novel isn’t the same as costly or complicated.

Many people are counting on their “leaders” and “advisors” to tackle the tough tasks, stand the night watch, and provide adequate warnings.

Maybe not such a good plan.

So as we consider what America’s founders sought to accomplish when creating the United States of America, it’s important to remember …

… the American system was built by and designed for people who wanted massive freedom and are willing to accept massive responsibility to obtain and retain it.

“Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.”
– Benjamin Franklin

This freedom … to own businesses and property, speak freely and debate ideas, succeed and fail based on individual effort and ingenuity versus a pedigree or birthright …

… are all based on one singular foundation: individual freedom and personal responsibility.

We can debate whether this is the best system, but the founders made it clear …

“Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”
– John Adams

Of course, the freedom we have allows us to debate the details of what morals and religions are best … and those are debates worth having.

But the core basis of both morals and religion are generally accepted to be personal responsibility.

We think it’s clear we’re in Act Two of a four phase cascading crisis.

And while we’re all in this together, we’re each individually responsible to mind our own business first. Just like when the oxygen masks drop in a crisis on an airplane.

So JOB ONE is to get into and stay in a position of excess strength, wisdom, time, and capacity so you can help those in your sphere.

Because if everyone is waiting for somebody to do something then nobody does anything. That’s obviously not good … and a weak, desperate society is often taken advantage of.

So we encourage you to work diligently on what you can control so you’re better positioned to respond strongly to the many things you can’t control.

Study, think, act, learn, and then share your wisdom with the people around you.

This isn’t the time to be passive.

Boots-on-the-Ground Market Insights: Precious Metals

Boots-on-the-Ground Market Insights: Precious Metals

August 2020

It seems that Gold is the canary in the coalmine…

The precious metals market is changing fast, which leads us to believe that the slow motion trainwreck caused by COVID-19 is picking up speed. Russell Gray, co-host of The Real Estate Guys™ Radio Show interviews Dana Samuelson, president of American Gold Exchange to get an update on gold and silver trends.

Listeners will gain great insight on the current markets along with proven methods to protect yourself against counterparty risk and inflation.

Some of the topics Russell & Dana discuss …

  • Gold and its relationship with global currencies and debt
  • Daily changes and rising interest in buying, selling, and pricing
  • Difference between “money” and “currency”
  • Effects of flooding liquidity into the economy
  • Platinum and palladium’s role in the marketplace
  • And MUCH more

Simply fill out the form below to access this edition of Boots-on-the-Ground Market Insights: Precious Metals …

 


Boots-on-the-Ground Market Insights: Cost Segregation

Boots-on-the-Ground Market Insights: Cost Segregation

May 2020

New provisions are available and you’ll want to know!

CARES Act wants to get cash back in pockets quickly.

This interview will provide important information that will help you in the long run.

Join Russell Gray, Co-host of The Real Estate Guys™ Radio Show, and Cost Segregation expert, Erik Oliver, as they discuss how you can…

✓ Take advantage of tax cuts

✓ Use accelerated depreciation on certain real estate components

✓ Boost your cash flow

✓ Amplify opportunity with bonus depreciation

✓ And more!

Discover the secrets …

Simply fill out the form below to access this Boots-on-the-Ground Market Insights: Cost Segregation …

 


Which rabbit to chase?

The person who chases two rabbits catches neither …

Another week and a thousand sub-plots and angles to the COVID-19 story and how all this might affect real estate investors.

In a run-of-the-mill market gyration, those are usually fun and relevant rabbit-trails to go down. But there will be plenty of time for that later.

Sometimes it’s more important to stay focused on the main thing … even if it’s a little boring, redundant, or even (gasp!) political.

This is one of those times.

Think about it …

Virtually all major factors impacting the future of the economy, financial system, and currency that your portfolio and financial security depend on are being driven by policy.

Market participants like buyers, sellers, investors, tenants, and businesses all seem to be left out … or perhaps “locked down” is more accurate … of the process.

And the “gauges” most people focus on to determine the national, state, corporate, and individual health are questionable at best.

Whatever is going on right now is a far cry from “free” markets. It’s all driven by Federal Reserve and government (again, they’re not the same thing) policy.

So are we here to critique policy or rant about what “should” be?

Heaven forbid.

We’re not that smart … or brave. Besides, no one in charge is asking us what we think, so our opinions don’t count much in the real world anyway.

But with a thousand things to distract you, we’re simply pointing out that policy matters … and it’s a good idea to pay attention to policy so you can pivot to avoid problems and capitalize on opportunities.

As of this writing, we’re waiting to see what the Fed will say and do. They’re the makers of those important monetary policies which affect everyone everywhere.

For the uninitiated, the Federal Reserve is the issuer of U.S. dollars. The U.S. dollar currently serves as the reserve currency of the world.

Even though a lot of people know this … very few really understand it … and that’s a problem for both individuals and societies …

“By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

– John Maynard Keynes

The Fed expands and contracts the amount of dollars in the system to directly or indirectly manipulate interest rates, inflation, asset prices … including stocks and real estate.

If you’re paying attention, you’re watching a hyper-active Fed operate in real-time.

The Fed underwrites the United States government’s debt and deficits … including all the stimulus spending, bailouts, and vote-buying handouts by both parties.

If you think of dollars like blood … a currency that flows through the body of the economy supplying nutrition to individual cells (people) and organs (organizations) …

… then it’s easier to understand the impact of the quantity, quality, and velocity of those dollars.

There are MANY issues at play in today’s world. But we think the dollar may well be the most important developing story.

Of course, long-time followers of The Real Estate Guys™ know we’ve been watching the dollar for quite some time.

The long-term demise of the dollar is a mega-trend which began in 1913 …

SO much we could say about this one chart, but we’ll save it for future rants.

Profiting from the dollar’s persistent decline is the essence of leveraged real estate investing and the main thesis of Equity Happens.

Yes, we know we need to re-release Equity Happens. It’s on the to-do list. But it’s kind of flattering to see used copies trading for hundreds of dollars.

In fact, let’s use Equity Happens as a quick case study in inflation …

Right now, the supply of Equity Happens books is small. Apparently, the demand is high, so the price has been bid up.

(Note: We don’t get any of that premium. We wish. But it goes to the used booksellers. We’re still rummaging around the garage looking for copies so we can get in on the action.)

But the high price of Equity Happens isn’t the result of inflation. It’s the result of limited supply against relatively high demand. A copy of Equity Happens is rare.

Compare that to Rich Dad Poor Dad, the best-selling financial book in history.

At the same time Equity Happens is selling for over $400 per copy … nearly a 20x premium to the retail price …

… Rich Dad Poor Dad is selling for $5.39.

Does that mean Equity Happens is the better book? Or the demand for Equity Happens is higher than Rich Dad Poor Dad?

Not at all. In fact, far from it.

Now stick with us because this is the important lesson …

The disparity in price between Equity Happens and Rich Dad Poor Dad is a function of how many copies of Rich Dad Poor Dad have been printed.

While we only printed less than 100,000 copies of Equity Happens … untold millions of copies of Rich Dad Poor Dad are in the marketplace.

As a product, abundant supply is fantastic for the consumer. Mass production creates abundant supply which produces low prices and allows more people to acquire the book.

In other words, falling prices are a boon to consumers. It expands the ranks of the “haves”. Cheaper books mean more people can afford them. Remember this when some official tells you deflation is a threat. It is … but not to you.

What if Rich Dad Poor Dad wasn’t a book, but a currency that you were earning and saving … how’s it working now?

Let’s say you went into the market and traded the blood, sweat, and tears of your labor for 100 copies of Rich Dad Poor Dad at a time when the book sold for $12.

Then suppose Robert Kiyosaki prints another 10 million copies because his printing cost is only pennies per book.

This printing increases supply and drives the book price down from $12 to less than $6.

Yes, more people get copies of Rich Dad Poor Dad. In fact, maybe Kiyosaki deposits books directly into the libraries of readers everywhere.

But you … you worked for your copies at a time when the value of your work was based on a price of $12 per copy.

And you saved your copies in your library so you could trade them later for other books you’d like to read. But now, your copies are worth half as much.

You lose. The act of printing more books diluted the value of the books you already earned.

Now, go back and re-read the story of Equity Happens and Rich Dad Poor Dad … but replace Equity Happens with gold, Rich Dad Poor Dad with dollars, and Robert Kiyosaki with the Federal Reserve.

Monetary policy … the printing of dollars … affects you and EVERYONE earning, borrowing, saving, and investing in dollars.

And just in case you didn’t hear, the Fed is printing TRILLIONS of them … more and faster than at any other time in history.

There are a LOT of angles to the cascading crisis created by COVID-19, so it’s easy to take your eye off the main thing. We could be wrong, but we think the main thing is the dollar.

Unfortunately, most Americans and the pundits who inform them aren’t really talking about the dollar. So we are … and have been for years and years.

Today, everything is moving bigger and faster. Extreme policies are likely to produce extreme results.

Whether those extreme results harm or benefit you and your portfolio depends on how aware, prepared, and responsive YOU are.

But your results also depend on what everyone else in the eco-system does … and the policies they support. So talk with your family and friends. Encourage them to pay attention too.

Spreading financial awareness and preparedness helps flatten the curve of economic impact to the financial system.

Like COVID-19, bad ideas are highly infectious … especially when people are highly vulnerable. Ideas affect individual actions and institutional policies.

We’re not telling you what to think or do.

But if you’ve been hitting the snooze button up to now, it’s probably time to snap to attention and start studying. Think and do is better than wait and see.

There’s a lot more to this chain of events to come.


Thanks to all of you who’ve taken the time to send a little sunshine our way.  It means a lot to us!

Here’s what The Real Estate Guys™ Radio Show community is saying … 

Awesome analogy for gold, dollar, and the Fed! … ” – John Y., 6/10/2020

Pandemic, Civil Unrest, Job Losses and Other Good News for Investors

This year has seen its highs and lows … and the hits just keep on coming. 

Coronavirus, civil unrest, unemployment … an endless parade of bad news. If it’s all starting to wear you thin … listen in!

We’ve seen our fair share of calamity and catastrophe. While what is happening right now is unprecedented, many of the principles for thriving in tough times are timeless. 

We’re talking trials and tribulations … and why you can still have a reason to smile. 

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

  • Your optimistic host, Robert Helms
  • His worn-out co-host, Russell Gray

Listen


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Finding good news to talk about

There is so much going on in the world! 

It’s easy to get caught up in the negativity … but these types of human emotions can often be detrimental to real estate investors. 

The big picture is that the need for real estate isn’t going to go away … we can’t imagine something that eliminates human beings from having to sleep under a roof. 

So, this week we thought we should talk about some good news. 

Tom Hopkins, a personal friend, and mentor said, “I never see failure as failure, but just the feedback I need to improve my performance to adjust my technique.” 

What a great attitude! 

The world is going to go on. People are going to be here 10 … 20 … 30 years from now and real estate is a viable asset class. 

The business model is sound … all the rest of it is just noise. 

You’ve got to calm your spirit a little bit and assess what’s going on. Then, it’s time to move forward with your wits about you.

Bad stuff happens … but in the grand scheme of things, you can find a silver lining and let these events mold you into a better person. 

Managing your psychology

How do you manage your psychology and live to become the best investor possible in light of what’s happening?

The key is to set your filter correctly. 

If you filter out ALL the bad news because you just can’t handle it, then you will be dragged down. You’ll miss the obvious because you filtered it out. 

The flip side of that is there are people that are permanently negative that can never take action because all they can see is the downside. 

If you want an excuse to quit, life is going to give you a million of them every day. 

But, the fact is that there are people out there in the exact same environment that are able to take effective action. 

That’s why the first step is to take your filter off. Look at it objectively. Clean it out. Then, start listening to people that you wouldn’t normally listen to, and read things that you wouldn’t normally read. 

You don’t need to accept things blindly … but you do need to hear them. 

Understanding different points of view is like being a general in an army. You have to get down in the weeds … but you also have to be able to step back and look at the big picture from a mile high. 

Real estate investors by their very nature tend to be in the weeds. We’re very transactionally detail-oriented, which means we can miss a lot of the big picture stuff. 

Remember to take a step back and try to see larger trends. 

Adapting to how things really are

There are people who believe that the housing market is tanked … but a recent article shows that home prices in April 2020 saw their biggest gain in two years. 

There are fewer homes on the market, and there’s still demand … coronavirus or not.

Even though the number of sales may be down, the price being paid for real estate is up. 

That’s why it is so important for real estate investors to learn to remain cool, calm, and collected. The saying goes, when emotions run high, intelligence runs low. 

Humans have found a way over the millennia to find a way to adjust to whatever the world gives them … disease, natural disaster, war, and oppression. 

The only thing you can be certain of is that people are going to find a way. 

One reality to face is that inflation is probably headed our way. When inflation happens, the rich get richer. 

If you don’t want to have your feet taken out from under you, you need to find a way to add value to the people who have resources. 

That’s what syndication is all about. 

When markets fall apart, they create a lot of opportunity for private equity and private capital. That opportunity keeps getting bigger … especially for syndicators. 

You may not have capital … but you probably have time that those with capital don’t have. It can be the perfect partnership. 

Let’s take a look at another example … with riots and unemployment, many businesses are rethinking their very existence. 

These things are causing businesses to evolve and find better ways to do business and new ways to create jobs. 

The opposite of any crisis is opportunity … and we could be seeing some of the best opportunities … especially in real estate … that we’ve ever seen in the coming months and years. 

You can’t control what happens in the world … but you CAN control how you adapt and respond. 

What are some practical things you can actually do to be ready for the opportunities that will come?

The biggest is to be financially ready to go. Shore up your financial house, and make sure you’re in a position to make the right investments. 

See if there are some places you can grab some equity … or find those ways you can be of value to people that have money. 

For more on the good news hidden in all the bad news out there … listen to our full episode!


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Boots-on-the-Ground Market Insights: Alternative Lending

Boots-on-the-Ground Market Insights: Alternative Lending

July 2020

It’s no secret credit markets are changing in the midst of the crisis.

Listen in as Russell Gray, Co-Host of The Real Estate Guys™ Radio Show, and alternative lender Billy Brown, dive deep into the ever changing aspects of Alternative Lending.

Get to know the updates on:

  • Alternative Commercial Lending
  • Alternative Residential Lending
  • Asset-Backed Loans
  • Lender Reserve & Escrow Requirements

Be aware. Get Prepared. Stay Patient. Lenders want a yield on their money and if you’re a good bet …

You’ll be first in line for funding!

Simply fill out the form below to access this edition of Boots-on-the-Ground Market Insights: Alternative Lending …


What Unprecedented Stimulus Means for Real Estate

During the Great Financial Crisis of 2008, the Fed created over $85 billion PER MONTH of “new” dollars … and Uncle Sam spent over $800 billion to “save” the economy. 

And now they’re doing it again. 

To take on the COVID-19 crisis, the Fed has been creating over $80 billion PER DAY … and Uncle Sam is planning on spending nearly $4 TRILLION. 

Is this spending spree going to work? What will happen next … especially in real estate?

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

  • Your stimulating host, Robert Helms
  • His stagnant co-host, Russell Gray
  • Best-selling author and Wall Street insider, Nomi Prins
  • Best-selling author, podcaster, money manager, and outspoken financial pundit, Peter Schiff

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Broadcasting since 1997 with over 300 episodes on iTunes!

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Unprecedented times

The Fed is busy printing cash and sending it out into the economy. When you hear about trillions of dollars in stimulus, the question is … what does that mean for real estate?

Some of you may have started investing in real estate after 2008 … so there is a whole bunch of experience that you don’t have. 

So, if you haven’t gone back and studied what really happened in 2008 … it’s time to do so. 

Understanding what happened then will help you understand what is happening now. 

When the Fed sends more money out into the world … prices go up. And with the COVID-19 crisis, businesses are closed, and many paychecks have stopped … which means payments on a lot of debts are going unpaid. 

What’s most important for investors right now is to reach out and listen to people who have been in a similar situation before. 

That’s what we are doing today. 

What’s happening in the economy now

Our first guest today is Nomi Prins. She is an author, journalist, and public speaker who writes about Wall Street and the American economy. 

She understands that everything happening with the Fed and monetary policy works its way through the markets and affects real estate. 

“We’ve seen tremendous and far greater than during the financial crisis of 2008 electronic money printing, not just from the Federal Reserve but from all of the central banks in the world,” Nomi says. 

The central banks around the world are trying to keep their liquidity, their credit markets, and their economies … and the Fed is trying to create money, provide liquidity, and keep rates at zero. 

Nomi says that, in her opinion, this relates to real estate in two ways. 

One is the cost of money to the banks, to the lenders, and therefore to anyone investing or refinancing real estate. 

Second is the Fed purchasing real estate securities that the banks have created. The Fed has done this in the past and has continued to do the same during this period … both regular individual properties and commercial real estate. 

Unlike in 2008, a lot of the stimulus money has gone directly to people in terms of unemployment or through the PPP program to businesses. Will that make a difference?

Nomi says this method will make a difference for individuals and small businesses, but we’re still dealing with 30 million people who have filed jobless claims in the first six weeks of this crisis. 

So, there is money coming into people … but a lot of people aren’t getting enough or aren’t getting funds effectively. 

And, many people are choosing to save money rather than spend it and put it out into the economy. 

In fact, the savings rate right now is over 13% … it hasn’t been that high since 1981. 

Along with that, people are indicating that they’re less likely to make purchases … like buying homes. 

Investors look at the other side of that … does that mean there’s opportunity? Will there be some bargains to pick up? 

We asked Nomi what she expects the long-term interest rates might look like coming out of this. 

“There’s definitely an opportunity as people, unfortunately, have to make decisions in terms of whether they want to stay in their properties and, ultimately, if they want to downsize,” Nomi says. 

Doing so may mean opportunities for people who have more access to funds. Right now with rates where they are … well, they don’t get much lower. 

“I think this crisis has created a scenario where rates may have seen their bottom for investors, which means it’s a good time right now for people financing, whether it’s for residential, through commercial investment opportunities to lock in those low rates,” Nomi says. 

Looking to the future

Peter Schiff has been talking about the inevitable crash for some time. He warned of the 2008 housing crisis back in 2006. 

Now, he says we haven’t seen anything yet. The real crash is still to come. 

“I think that COVID-19 is the pin that is really putting a gaping hole in this bubble,” Peter says. 

Peter says that, in his opinion, the bubble really began to leak air in 2016 … but Donal Trump threw it for a loop by winning the presidency. 

“In that environment, the Fed was finally able to raise rates up to about two and a half … then all hell broke loose,” Peter says. 

In the fourth quarter of 2018, we had the biggest decline in the stock market since the Great Depression. 

That’s when the Fed did what Peter says he had been warning about. They aborted their attempt to normalize interest rates and started cutting them instead. 

The Fed also started expanding their balance sheet again … then COVID-19 came along and accelerated the process. 

“Everyone thinks that all we have to do is turn the economy back on and everything will go back to being great,” Peter says, “but we can’t re-inflate the bubble.”

Peter says that while COVID-19 is making it worse, the economic problems existed before COVID … and the government cure is far worse than the disease itself. 

It’s not just the shutdown of the economy … it’s that the government is financing the shut down with budget deficits and printing more money. 

Inflation is going to create destruction in the purchasing power of the dollar … which means the real crash is going to be far bigger now than it would have been had it come sooner. 

“People have been lulled into a false sense of security and complacency in thinking that we can print all this money and not have any negative consequences,” Peter says. 

All of this is going to show up in consumer prices in a big, big way. 

We have a reduction in supply and an increase in money … which means higher prices even as demand falls. Peter predicts this could cause the dollar to collapse. 

What does Peter recommend? Invest in gold, silver, mining stocks, oversee assets where income streams are coming in … currencies that are not the dollar that will gain the purchasing power that the dollar loses. 

“You need to be defensive now,” Peter says. 

For more expertise from Nomi and Peter, listen to the full episode!


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