The Pink Panther strikes again …

Old dudes like us have fond memories of beer-belly laughing out loud at the hysterical antics of Peter Sellers’ Inspector Clouseau in the original Pink Panther movies.

If you’ve never seen them, check them out.  Two of the best are Return of the Pink Panther (1975) and Revenge of the Pink Panther (1978).

Clouseau is a bumbling idiot.  But through sheer dumb luck he always ends up succeeding … in unexpected ways as a result of unintended consequences.

The Senate’s recent hearings on housing reform remind us of Clouseau.

The purported goal of the Senate shindig is to gather a group of big-brained housing industry leaders and experts to find a solution to the affordable housing “crisis”. 

But … as this Forbes article opines, some perspectives aren’t part of the conversation … perhaps for a reason.

Of course, you may have a differing opinion and that’s fine.  We have our own opinion too.  But that’s not the purpose of today’s muse.

We simply watch what’s happening today and consider how best to capture opportunity or avoid loss based on where things are likely headed tomorrow.

In this case, it seems Uncle Sam is looking for ways to make housing affordable.  That’s a noble objective.  Go team.

There are really just three basic approaches.

One is to increase supply relative to demand.  When supply exceeds demand, prices to drop.  That’s how abundance and productivity create prosperity.  

After all, lower prices make things more affordable to more people, right?

That sounds reasonable.  But it also sounds a lot like deflation.

And when bankers are in the room … the kind who make home loans secured by the dollar value of the property … they FREAK at the idea of falling prices.

So you’re probably not getting sincere ideas from bankers about how to lower prices.

Then there are the builders … 

While builders LOVE the idea of building more houses, they also want to earn a profit.   Profitable building is easier when prices are higher, NOT lower.  So you can guess which direction the builders are leaning.

What about the wizards of Wall Street? 

These guys make money shuffling paper.   So they just want LOTS of paper (i.e., mortgage-backed securities) created, so they have more chips to play with in their casinos. 

And Wall Street knows falling prices frighten the lenders who make the paper possible.  So it’s a safe bet Wall Street votes with the bankers for higher prices.   

Even at the Main Street level, there’s not much motivation to push prices down in pursuit of truly affordable housing. 

Real estate agents (the largest trade association in North America) aren’t raving fans of low prices as the preferred path to affordability … despite their rhetoric.

After all, real estate agents promote buying a home as a great “investment”.  No one wants to make an “investment” that goes down.  So higher is better.

Last but not least, there’s Dick and Jane Homeowner (often registered voters) … whom are keenly aware of their castle’s current market value, even though they have no intent on selling.

Of course, it’s fine for the prices of cell phones and big screen TVs to fall, but not home sweet home.  God forbid.

Plus, its fun for Dick and Jane to use their home equity to reset credit lines with debt consolidation loans, or to augment the falling purchasing power of their incomes.

And everyone knows home equity ATMs only work when housing prices steadily RISE. 

So yes, home BUYERS want the house affordable when THEY buy it. But after that … home OWNERS want up, up, up.  Sorry, next generation.  Figure it out.

When we asked then-candidate Donald Trump for his plan for housing , he simply said … “Jobs”.  Presumably, good jobs with higher pay. 

Higher pay leads to the ability to make higher payments which leads to bigger mortgages (happy bankers, happy Wall Street) which leads to HIGHER prices.

So it’s just a wild guess … but we don’t think there’s a chance in a very hot place that there’s any serious motivation to make housing affordable.

Not if “affordable” means “less expensive”.

ALL the incentives are to make housing MORE EXPENSIVE … but ACCESSIBLE.  That means more, cheaper, and easier FINANCING. 

So even IF the PTB (Powers That Be … it only sounds like Politboro) sincerely believe more and cheaper financing makes things more “affordable” …

(Hey, it worked for college tuition … oh, wait …)

… like Inspector Clouseau, they’ll end up pushing housing prices up by “accident”.   

That’s what happens when you use debt to pull purchasing power from the future into the present.

But whatever the motives, they certainly have the tools to make it happen … 

… lower interest rates, easier lending guidelines, government (taxpayer) guarantees, tax breaks … and the Fed’s all-powerful printing press.

Yes, we know all that is what first inflated and then deflated the housing bubble last time.

But smart, disciplined investors made not only survived the implosion … they made millions from the re-inflation.

So while this may not be the time to speculate on a housing price boom in the short term …

… it’s arguably a great time to liquidate equity, streamline expenses, solidify leases, and prepare for the long game.

Because when Uncle Sam is working on making something “affordable”, it usually means that something is showing serious signs of slowing and needs a boost. 

Of course, when you find reasonable deals in relatively affordable markets and you have a GREAT boots-on-the-ground team, it’s also a great time to use cash flow real estate to stock up on cheap long-term debt.

Remember, real estate … even housing … isn’t an asset class. 

Every individual neighborhood and property is unique.  So while deals might be harder to find, they’re still out there.

And if the cash flow makes sense, you’ll weather the storm … warmed by the notion that everyone with power to influence policy will be voting for HIGHER prices year in and year out … forever. 

Of course, they might break the financial system or crash the dollar trying to do it … so it’s smart to be prepared for that too.

That’s why we like gold, oil, agriculture, and paid for properties in non-leveraged markets … including, and perhaps especially, in non-domestic markets.

Real assets like food, commodities and land tend to hold relative value when currencies struggle.

Gold and silver can almost always be easily converted into any currency … and are a useful way to store liquefied equity privately outside a fragile financial system or hostile jurisdiction.

And if the dollar continues its long-term slide relative to gold, a little gold might go a long way toward retiring dollar denominated debt (like a mortgage).

That’s where we think gold bugs and real estate bugs don’t understand each other.  We know.  We spend a lot of time with both.

Gold is great for reducing counter-party risk and hedging against a falling currency.  But gold doesn’t cash flow.

Real estate is great for using cheap long-term debt to create tax-free cash flow and long-term equity growth. But it isn’t liquid and it takes a long time to retire the debt.

But putting gold and leverage cash-flowing real estate in a falling currency environment together makes each much more powerful.

It takes time to get your mind around it … but we encourage you to dedicate a little of your financial education time and budget to learning more. 

Because once you understand how gold and real estate make each other better, you’ll probably be more excited about both.  We are. 

Until next time … good investing!


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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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Kiyosaki, Griffin and Black on Paying Attention and Choosing Wisely

Our latest show was recorded with you in mind – it’s a special one, unlike anything we’ve ever shared before! It takes place while cruising the open seas during our 15th annual Summit at Sea™.

You get to be a fly on the wall during an organic, non-scripted conversation with three of the world’s smartest experts in real estate and investing. (Lucky you!)

The way we see it, life is a buffet. And it’s up to you to choose wisely about what to put on your metaphorical plate. Our guests are here to help you choose the right portions. They will be dishing out juicy tips about how to get ahead of the game … and stay ahead.

In our latest show you will hear from:

  • Your bold Master and Commander, Robert Helms
  • His co-captain, Russell Gray
  • Mega bestselling author and investing expert, Robert Kiyosaki
  • Legendary author and film producer, Edward Griffin
  • International entrepreneur and founder of “Sovereign Man,” Simon Black

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The buffet is open

Every year at the Summit at Sea™, we witness an interesting paradox. Some of the brightest people gather onboard a beautiful cruise ship and we spend our time sharing wisdom and learning from each other.

But when we come out of our classes and go on deck, we see the other side of the coin. We see people lined up at the buffets and bars who are just waiting for things to happen to them.

“I call these people the victims,” Simon Black says. “The world is changing so fast. Demographics are changing. We have to make decisions on a daily basis about how to create capital. When you have uncertain times, there is something to be said about getting together with the tribe at an event like Summit.”

That’s is something we can all agree on: property sharing at its finest. Intellectual property, that is.

“The truth of the matter is all the great shifts in history have been driven by 1-2% of the population,” G. Edward Griffin says. “The rest were just followers.”

Look who’s talking

We all want to affect real change. Events like Summit at Sea™ are a catalyst for change. The power is palpable.

Ed, Simon, and Robert are three of our outstanding faculty members who use their life experiences to engage the minds of millions by creating valuable educational tools.

Ed’s work is astounding. His books, such as The Creature from Jekyll Island and The Fearful Master have changed how we think about the world around us.

Simon’s international entrepreneurship training teaches others how to make more money and keep that money, which ultimately increases personal freedom.

Robert is best known for his little purple book that continues to cause a financial revolution. Rich Dad, Poor Dad has been motivating people around the world to reshape their financial goals for 20 years.

History repeats itself

The best way to prepare for the future, whatever that may be, is to look to the past for answers to today’s economic and geopolitical questions.

“Everything that is happening has happened before to some extent,” explains Simon. “If we think about the Ottoman Empire, we see that the people existed to support the Empire rather than the other way around. I hope this isn’t our future, but we have seen similar instances in our own lives.”

Civilizations have come and gone. Ancient Rome. Babylon. Greece. Once thriving metropolises left in shambles because people weren’t willing to read the signs.

What are the signs to look for?

“We need to watch for the corruption of money,” says Robert.

As a kid, Robert would collect dimes, quarters, and half dollars because he had a suspicion money wasn’t exactly as it once was. Turns out, he was right.

“In Roman times they would steal silver by filing it off coins,” Robert says. “In 1964, the U.S. did a similar thing by using cheaper metals to plate the coins. And as a kid, I knew what was happening just by the looking at my money.”

Like Robert, we know human beings are intuitively smart about their money. Sometimes their education just needs a little fine-tuning.

“We are smart enough to read the signs,” Robert adds. “We know that when bad money comes into circulation, good money goes into hiding.”

Taxation without representation

What about the new hot-button topic? Taxes.

We want people to start thinking differently about taxes and their income in general. Once people can see innovative answers to basic questions about taxes, debt, capital gain, and investing, we’ll have a nation armed with the keys to success.

“Tax is one of my favorite topics,” says Simon. “Many people still believe the idea of paying taxes is moral. That we are somehow morally obligated to pay. But if we look, we’ll see an overwhelming level of waste and fraud.”

Robert has also been thinking unconventionally about taxes for years. And his financial journey ultimately turned his investments, savings, and other capital — maybe even the coins he collected as a kid — into millions of dollars.

“My whole game is to make millions of dollars while not paying taxes — legally, of course,” Robert says. “The reason the rich are getting richer is because they have no debt and they don’t pay taxes.”

Outsourcing our problems

Ultimately, what we want our listeners to gain from hearing these experts is they have the power to choose. With education and proactivity, they can earn millions, find true success, and make the world a better place.

Today’s problems might reflect our past, but they don’t have to be our future. We CAN’T sit back and let the changes just happen. We CAN’T outsource. We have to be it all — the manager, CEO, and owner of our destiny.

We have to think differently. Past generations may have faced similar issues to our current wealth gaps, stock inflation, and housing bubble, but it’s our job to discover new answers.

At the end of the day, we’d say humanity is something you can always bet on …

… and take straight to the bank.

“I think all the trends point out that we are on the verge of a financial emergency,” Ed explains. “But the root word of emergency is emerge … and those who plan and think will emerge from the rubble better than before.”

The sweetest reward

The buffet of life is spread across the table and you get to choose your reward. So will you take the Jell-O or go for the crème brûlée? There is no better time than now to take control of your life. And there is no better way than joining us and other field experts at our next annual Summit at Sea™ event.

To learn more about upcoming registration, please visit our website for information about the advance notice list.


 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.