Profitable Niches – Lifestyle Investing

You may have heard that it’s bad to mix business with pleasure. But, when it comes to lifestyle investing, part of the fun is owning property in a place you love.

Yes, it is possible to make lifestyle investing make sense for you … as long as you follow some important guidelines to line up the numbers, location, and opportunity.

In this episode of The Real Estate Guys™ show you’ll hear from:

  • Your vacation ready host, Robert Helms
  • His in dire need of vacation co-host, Russell Gray
  • Guest, Nick Rohrbach, from The Grove Resort and Spa in Orlando, Florida

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Why a lifestyle investment might be a good fit

Life is too short to be involved in an asset class you don’t enjoy. Too many times in real estate, we get hung up on the ROI and let it rule the day. Lifestyle investing spices things up by adding personal enjoyment and personal use into the mix.

With the right strategy, you can tap into a FANTASTIC opportunity for growth. Premium properties fetch a premium price from renters and vacationers. Of course, you’ll also be able to enjoy the property with your family and friends.

We’ve all been on vacation and experienced that “I never want to leave” feeling. But remember, just because a place is nice to visit doesn’t mean it makes sense from an investment point of view. Here are a few recommendations to keep in mind.

 

  • Know the market

 

As with any real estate investment, your research into the market will be worth its weight in gold. This is especially true for lifestyle investing where the durability of rent, the ability to fill occupancy, and the property’s long-term profitability will be the difference between a fun investment and a bust.

With a good location, property, and market your investment has the opportunity to weather downturns. People in higher income brackets can afford to go on vacation even if the economy is down.

 

  • Bring on a stellar management team

 

The difference between a fun, hands-off lifestyle investment that you’ll love visiting and a drag is a good management team. Property management comes at a higher cost than single-family homes … sometimes upwards of 50 percent … but it gives you peace of mind AND access to amenities that delight and excite high-end vacationers and renters.

Your management team will handle all the bookings, and they have access to wholesale outlets such as Travelocity, Hotwire, Priceline … all the big names people use to get their vacation rentals.

And bonus! When things break, they fix them.

Opportunities abound in Orlando

Orlando, Florida, is the #1 traveled to place in the world. Thanks to Disney World, Universal Studios, and a THRIVING convention market, there’s no end of things to do for business travelers and families. And did we mention it’s a no income tax state?

We could go on and on about the many reasons why Florida is a consistently hot market and one of our favorite places to visit:

  • It’s centrally located to beaches
  • It has access to direct flights out of many places from the beautiful Orlando airport
  • The weather and attractions are top-tier
  • Convention business is strong and growing

Nobody knows this better than Nick Rohrbach, our guest from The Grove Resort and Spa.

Beyond tourism, Florida has a vibrant, booming economy. “There are 19 [amusement or theme] parks in central Florida alone,” Nick says. “Medical City is booming, we have one of the largest universities in the country, University of Central Florida, and over 150 VA hospitals.”

Plus, unlike many destinations, Orlando is not seasonal. The average occupancy is about 75 percent year round. Even during the economic recession in 2009, average occupancy never fell below 60 percent.

All of these elements make Orlando a place you might want to keep your eye on.

Filling a niche in the lifestyle investing market

When you’re looking for a lifestyle investment, one of the important questions you need to answer is how a particular property sets itself apart from competitors.

Florida’s economy is one of the reasons The Grove is such a unique opportunity. Rohrbach explains that the project was originally built in 2007, 2008, and 2009, and all the units were sold to UK investors without closing on a transaction.

While all the units were structurally built, only 184 condos were completed. With some additional cash, amenities, and building out the insides, these units are essentially brand new.

The new ownership at The Grove Resort and Spa has a couple strategies to fill a niche in Orlando:

  • Amazing amenities including restaurants, 800 sq. ft. of convention space, and a newly opened water park.
  • Spacious condos with 2-3 bedrooms perfect for families.
  • Close proximity to Disney World … only 3 miles away!

For potential investors and owners, there are plenty of opportunities as well. The Grove has a stellar management company that keeps the property looking fantastic, takes care of you and any guests, and manages all the bookings, repairs, and maintenance.

“The key is really the management,” Nick says. “When you talk about having everything in place for lifestyle turnkey investing, you need that professional management so you don’t have to deal with anything. The guest experience is very important.”

Not only that, but The Grove is continuing to expand, with 878 total units coming online at completion. Only 450 rooms are available now, and they’re at 100 percent occupancy! As demand goes up, so will rates … and cash flow from a potential investment.

Make sure the deal works for you

Lifestyle investing can sound like a dream come true, but it still has to make financial sense for you.

Look at a market that appeals to you personally, and then start running some numbers.

For instance, syndication might be the right way to go. You could get creative and discover investment opportunities in a few locations so you’ll have access to a bunch of prime vacation spots.

Blurring the line between a pure ROI, detached investment and something you get to enjoy too doesn’t have to be out of reach. If the numbers, market, and property make sense, don’t be afraid to go for it!

Want to know more about turnkey lifestyle in Orlando, Florida, and things to avoid in the marketplace? Send an email to lifestyle@realestateguysradio.com. We’ll hook you up with a special report with all the details. 


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.

Is this the end of easy money …

We’re just back from another incredible Investor Summit at Sea™ … and it was EPIC!

With 234 people, 2018 was our biggest ever … and many have already reserved their place for next year.  Click here to get YOUR name on the Advance Notice List.

We kicked off the 2018 Summit with a two-day land conference based on our theme, The Future of Money and Wealth.  Our speakers hit it out of the park!

Fortunately, we videotaped the whole thing.  Watch for more details … or if you already know you want it, click here to pre-order the entire two-day series.

Meanwhile, it seems the world continued to spin while we were gone.  So as much fun as it might be to keep cogitating on currency, bonds, gold, oil and interest rates …

… we decided to dig into our real estate news feed and see what’s happening with our favorite investment sector.

But a funny thing happened …

A couple of related headlines jumped out as particularly interesting after a week of contemplating the future of money and wealth.

First …

CRE Valuations Are Trending Down – NREI Online, April 6, 2018

For the uninitiated, CRE is short for Commercial Real Estate.  And when the industry talks CRE, it includes large multi-family.

But even if you’re a Mom & Pop single-family home investor, you can still learn a lot from following CRE trends.

So this first article opens with …

“… real estate investors can expect that property prices will trend downward in the near future …”

“‘Value appreciation has practically stopped …”’

“However, there are variations among sectors.  Industrial … has seen rising values … malls have seen big losses …”

“Cap rates have been inching up … for all sectors except industrial …”

After two days at Future of Money and Wealth, then another seven days at the Investor Summit at Sea™, these comments make a whole lot more sense to us.

First, interest rates are rising.  But the impact on real estate is much deeper than just mortgages getting more expensive.  If only it were that simple.

So without getting lost in the weeds, consider the impact of rising rates on the overall economy …

With record levels of consumer, corporate, and government debt … rising rates put a pinch on budgets at every level.

This means it’s harder for consumers to spend more, for businesses to sell more, and for landlords to raise rents on those consumers and businesses.

And when you realize income property values are driven by income, it’s easy to understand why stagnant rent growth means stagnant equity growth.

But this article also reminds us why we LOVE real estate … “there are variations among sectors” … so while retail (malls) are losing value, industrial is gaining.

We discussed this trend in our February 14 newsletter, so we won’t revisit it here.  The point is …. when things shift, pain and profit are NOT equally distributed throughout the economy.

So if you’re alert and proactive, you can get in front of an opportunity … or out of the way of a problem … faster than investors on cruise control.

Meanwhile, while rising cap rates can come from income rising faster than prices, most of the time it’s from prices falling.

(Again … no investor left behind … cap rate is income divided by price.  Just grab a calculator and play with numbers until you understand. It’s an essential investor skill.)

So why might cap rates be “inching up” … that is, why would buyers be offering less for the income?

Conversely, why would sellers be offering more income for less price?

(That’s two different ways of saying the same thing … go back and play with the numbers until you get it.)

One likely reason is investors aren’t willing to overpay today (bid up) expecting income to grow in the future.  The numbers need to make sense TODAY.

So cap rates are like a barometer of sentiment.  Rising cap rates are an indicator of a less bullish, more bearish outlook.

If rents rise (creating more income) and/or interest rates decline (reducing expenses), then cash flows improve.

If the rents don’t rise (stagnant income) and/or interest rates climb (expenses increase), then cash flows stagnate or decrease.

So investors are saying the think either rents won’t rise, or interest rates won’t decrease (or even increase), or both.  That is, they don’t expect market forces to improve cash flows going forward.

Make sense?

Which leads to the next headline …

Competition Intensifies for Value-Add Assets, NREI Online, April 17, 2018

“… competition is becoming increasingly stiff as the industry faces the likely end of the cycle and rent growth has moderated for core assets.”

“As yields get lower and lower … two strategies have emerged … speculative building and value-add …” 

Quoting a research director at a commercial research firm …

“‘Value-add has become quite attractive … people are less afraid to take on vacancy risk and reposition buildings.’”

So let’s break this down real quick, then you can go get a snack …

When you hear “the likely end of the cycle”, it’s code for “the party’s nearly over.”

Real estate, like the rest of the economy, has been partying on easy money since 2009.

At Future of Money and Wealth, Fannie Mae chief economist Doug Duncan reminded us we’ve been in one of the longest (and weakest) recoveries in modern history.

In other words, we’re nearing “the likely end of the cycle.”  Duncan thinks the U.S. will be in full-fledged recession in 18-24 months.

So now instead of just buying a property and riding a wave, you actually have to buy smart and do some real work to improve the income … like “take on vacancy risk and reposition buildings.” 

And if you’re like our pal, the apartment king Brad Sumrok, and you’ve already been doing value-add and achieving spectacular results … be prepared to settle for “only” solid results.

Here’s the bottom line …

Rising interest rates are moderating the economy, so it’s important to focus your growth plans on things you have more control over.

This is probably not the environment to bet big on rising rents, falling rates, and lots of passive equity growth.  You’ll need to buy smart, have a good plan, and work hard.  We call it “force the equity.”

Pick your sectors, markets, properties, and financing structures for the long haul.

And remember … real estate is a highly inefficient investment vehicle with lots of nooks and crannies for good deals to hide.

So when you’re well-connected, diligently searching, and properly prepared with a solid team and resources so you can act quickly and carefully, you improve your odds of landing profitable opportunities.

Until next time … good investing!


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.

Expert Tips for Navigating Uncertain Times

In uncertain times, we all need a little wisdom to guide us to the right path.

So today, we bring you the words of the wise.

Property prices are continuing to inch upward in many markets. And the stock market is starting to tumble down. How should investors navigate the turmoil?

Listen in to hear from some of the smartest folks we know on their predictions for what the future holds … and their best tips for staying smart and focused in the midst of the storm.

In this episode of The Real Estate Guys™ show you’ll hear from:

    • Your expert host, Robert Helms
    • His amateur co-host, Russell Gray
    • Brien Lundin, author of the Gold Newsletter
    • Economist Peter Schiff
    • Chris Martenson and Adam Taggart, authors of Prosper!
    • Rich Dad Poor Dad author Robert Kiyosaki

 


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Brien Lundin on metals and money supply

Brien Lundin is our go-to expert on precious metals. He writes the Gold Newsletter and directs the New Orleans Investment Conference.

His predictions about the metals market have been spot on. We asked him how he keeps his thumb on the pulse. The short answer? “Experience,” says Brien.

Three decades of reading, researching, and making connections have given Brien enough information to come to the conclusion that, “Metals have settled into a fairly reliable long-term pattern.”

In fact, he says the future for metals is as close to inevitable as possible in the investing world.

High debt in the U.S. and other countries means their currencies will be depreciated, at least to some extent, and that means higher gold prices in the long term, says Brien.

With a predicted three or four rate hikes coming from the Fed in the next year, Brien predicts we’ll continue to have a weaker dollar for several years.

Why should real estate investors be interested in metals? Alternative investments like precious metals allow you to divorce yourself from the levers the government pulls to adjust the economy, says Brien.

Confused about the options? “Roll up your sleeves,” and dive in, says Brien.

Brien also had some words of advice … “Look around you to get the best investment advice.”

One way to do that? Attend the New Orleans Investment Conference. The conference is packed with people looking to learn. Off-mic conversations are part of the package!

Peter Schiff on the global economy and Puerto Rico

“It’s easier than people think to predict the future. The hard part is predicting the ‘when,’” says Peter.

Economists have been predicting a dollar crisis for a while, and Peter thinks we are in the beginning of that crisis … “The dollar is dropping like a stone against the Chinese yuan,” he says.

Why? According to Peter, it’s payback for monetary policy mistakes from the Fed that led to the major economic crises of the past few decades, including the dot-com bubble and the housing bubble.

“As the dollar is falling, prices are rising,” says Peter. Oil prices are up. Bond yields are rising, and that means interest rates are rising too. Peter predicts the combination of rising prices and high interest rates will be too much for the market to bear.

Crisis is coming, he says.

“What’s going to kill us is the government’s cure,” Peter adds. After the real estate bubble collapsed, the government attempted to pump up the market by slashing interest rates … and succeeding in completely re-inflating the bubble. That bubble will make the crisis worse, he says.

Peter has started his own investment fund through Euro Pacific Capital. He aims to help investors diversify out of the U.S. dollar.

Gold stocks have moved up, says Peter. “We are really poised now for major gain.”

And what about Puerto Rico? If you’ve been listening to the show, you’ll know Peter not only invests in Puerto Rico, but lives there too.

“It’s green again,” says Peter. There are some problems due to service providers who have left the island. But overall, “People think it’s worse than it is,” he says.

In fact, Peter thinks there’s more opportunity in Puerto Rico than before Hurricane Maria. Abandoned properties and foreclosures could be the perfect opportunity for investors to step in.

Chris Martenson and Adam Taggart on social capital and the Summit at Sea™

Chris Martenson and Adam Taggart, co-authors of the invaluable book Prosper!, chatted with us about some tangible steps to help YOU prosper.

Key among them is social capital.

“What are your strengths and weaknesses?” asks Adam. “Find people who have complementary skills and can fill in your weaknesses.”

“No one can really have a handle on everything,” Chris adds. In our rapidly changing world, he says it’s wonderful when you can recognize people as kindred spirits … and learn from many points of view.

One way to get around some kindred spirits is to attend our annual Investor Summit at Sea™. In fact, all of the guests in this episode will attend the Summit.

It’s more about context than content, Chris and Adam agree … and we’re sure the context of the Summit will be the environment of your investor dreams.

Robert Kiyosaki on humility and getting around smart folks

Robert Kiyosaki doesn’t believe in school. “The trouble with going to school is that you have to be an expert by yourself, and that keeps you small,” he says.

More important than money or school smarts? “A very smart team” that operates on the basis of mutual respect and trust.

Robert recommends hanging around people who DON’T think they’re the smartest people in the room. Humility is a great tool, he says.

“All coins have three sides. Most people think there’s only one side … theirs,” says Robert. “It’s impossible for a coin to only have one side. Intelligence equals standing on the edge and looking at both sides.”

Like F. Scott Fitzgerald once said, “The test of a first-rate intelligence is the ability to hold two opposed ideas in mind at the same time and still retain the ability to function.”

Robert recommends getting around other investors so you can get around a variety of ideas. He recommends the Summit … and you’ll be able to meet him if you come!

Plus, Robert’s wife Kim Kiyosaki will hold a special ladies-only session at the Summit. Robert encourages female investors and partners of investors to attend and learn about why they don’t need a man to get ahead.

Meet and mingle with smart people

No one knows where the future is headed with certainty … but there’s one thing all our smart investor friends are certain about, and that’s the importance of getting around the right people and assembling your team.

Want to reach out? The Investor Summit at Sea™ is the perfect first step.

Unable to attend the entire Summit? Consider joining us on land for the first two days. We’re holding a brand-new event, a conference we’re calling The Future of Money and Wealth.

Hoping to see you there!


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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.

Market Diversification for More Stable Income

One of the most important pieces of advice we give to investors new and old is “Live where you want to live, but invest where the numbers make sense.”

Once you break out of your market comfort zone, you can experience incredible personal and business growth … and build a diversified, stable portfolio.

In this episode, we discuss the various types of markets available to real estate investors … and chat about how to pick a market based on your personal goals.

Listen in! In this episode of The Real Estate Guys™ show you’ll hear from:

  • Your diversified host, Robert Helms
  • His divergent co-host, Russell Gray

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The two major market types

Let’s start from the top! Investment markets can be categorized into two major types … cash flow markets and equity growth markets.

Whether a market produces strong equity growth or stable rents is a byproduct of supply and demand.

Cash flow markets have a steady demand for rentals from working-class tenants with stable income. These factors combine to create high occupancy rates and reliable income.

These markets don’t sizzle … but they offer steady returns.

On the other side of the coin, markets like San Francisco and Los Angeles are proven, stable equity growth markets. Investors won’t get reliable cash flow in these markets … but if they get in before the market gets hot, they’ll get hefty equity growth.

You can predict the next equity growth markets by looking at markets where the ability to supply new housing is beginning to be restricted.

Buying a property for equity growth is a completely different style of investing than cash flow investing, and it comes with some challenges … like finding properties that make sense, choosing markets with a good probability of growth before they get too hot, and managing your income.

It requires caution … because if you choose the wrong market … or the right market at the wrong time … your investment can go against you.

Of course, these two major market types are two extremes. The reality is that markets fall onto a continuum … and yes, there are markets that combine equity growth and cash flow.

Some markets have the capacity to supply housing as they continue to grow in value. However, inevitably that market will begin to slow down and shift through the cycle.

There are some trade-offs to combining equity growth and cash flow … for example, cash flow isn’t quite as good as prices go up. To evaluate a current market, look at the trajectory of other major markets like New York or even Dallas.

Markets are cyclical, and almost every market evolves the same way. There are four basic stages in a market cycle:

  1. Growth. The market is expanding as more people are drawn to the area.
  2. Equilibrium. After a period of growth, the market slows down and is mostly developed.
  3. Decline. This can happen when a market falls out of favor or loses employers.
  4. Revitalization. The market starts to pick up again when demand increases.

The key? Study markets you want to invest in. Understand there is an evolution process, and even if a market is currently great for cash flow, it can absolutely evolve into an equity market in the future.

How to allocate your real estate assets

You’ve probably heard the saying, “Diversity is a recipe for mediocrity.” And while that rings true in some cases, we think diversity can be your key to a stable portfolio.

Investors can benefit by using a basic asset allocation recipe … and remember, these numbers are yours to fiddle with:

  • 50% of your portfolio should be allocated to solid cash flow markets.
  • 30% should be invested in aggressive equity growth markets that show signs of being in the path of progress, such as supply and demand imbalances.
  • And your remaining 20% should be liquidity funds … dry powder you can have on hand so you can swoop in and pick up great deals when everyone else is strapped.

Here’s a good question … how do investors approach aggressive growth markets?

To leverage an equity growth market, you need to invest while the market is still emerging.

That doesn’t mean investing in brand-new markets … it means looking for markets that are starting to take off with signs of job growth and increasing demand.

You want to avoid being spread too thin across markets … but you also want to be leery about banking on any one type of market. As the saying goes, “Don’t put all your eggs in one basket.”

There are, of course, some advantages to sticking with a single market, like efficiencies of scale. But if you stick to a single market and that market declines, your whole portfolio is affected.

Unique market types

Of course, every market has unique factors, but some markets stand out from the crowd in particularly distinctive ways.

  • The college market.

You can make a great income investing in housing near colleges and universities. It’s a captive market with constant need and a built-in client base … most students have good income durability.

You do have to consider the nature of technology, social trends, and educational trends when investing in a college market, however.

A great resource for information is the college or university itself … they can provide great data on the student population. If you’re careful, this can be a stable market.

  • The retirement market.

Jobs aren’t the only driver of strong markets, as retirement markets prove. Retirees today are more active and less likely to buy a house.

They can also make excellent tenants, especially because retirees are no longer geographically linked to their income, whether that’s social security, a pension, or investment returns.

By positioning yourself in markets like Boca Raton or Palm Springs, you can benefit from retirees who are searching for an affordable, attractive lifestyle that doesn’t tie up a bunch of capital.

  • The lifestyle market.

Making a lifestyle investment means picking a market YOU want to spend time in.

This often involves renting a property on a monthly, weekly, or even nightly basis … which translates to high income, even when offset by higher management costs.

A major benefit of a lifestyle market is the chance to use the property yourself, whether that’s for a few months every year or during your own retirement.

  • The international market.

Investing outside of your country is a great way to diversify. The United States is not the only country in the world that offers great places to invest.

Investing outside of the U.S. also gives you the chance to create income in a different currency and park your wealth in a different economic environment.

And international investments are a sort of lifestyle investment … they certainly give you a good excuse to travel!

Although international investments can often require a steep learning curve, they’re something every serious investor should take a look at.

There’s always a great-performing market if you know where to look.

  • The sleeper market.

Sleeper markets aren’t on the top 50 metropolitan statistical areas. These are boutique markets … the markets no one else is talking about.

They allow you to make returns no one else can make … but there isn’t as much ballast, so you have to be very, very careful.

Don’t forget to consider property type

We’ve discussed market types in this episode … but another important part of your investment decision is property types.

The choice of single-family, multi-family, commercial, development, or land-holding property is an important factor when balancing your portfolio of well.

And different markets hold different opportunities with regard to property type.

We want to get you thinking about where to look for your next investment … and market type is a great place to start!


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.

Low rates and huge opportunity …

Financial planning 101 says create equity first, then invest it for cash flow later.

Of course, real estate investors know cash-flow creates equity … but that’s a different discussion.

With paper assets, the basic formula is to buy stocks young to grow equity, then sell them later to buy bonds in retirement that will produce cash flow to live on.

But for folks trying to retire today (and there’s millions of them!), today’s pitifully low rates pose a BIG problem.

They either need to have a TON of equity … or be willing to live a miserly existence.

Think about it … even $1 million dollars invested at two-percent only creates a meager $20,000 per year passive taxable income.

In other words, thanks to the Fed, you can be a cash millionaire … and only have enough interest income to live just above the poverty level.

When someone is trying to retire on savings and they can’t get enough yield to live on, besides staying in the workforce (which many boomers are doing), other options are …

… consume the principal and hope you don’t outlive your savings …

… or stay in equities (stocks) and hope the next inevitable correction (crash) doesn’t cut your nest egg in half.

Of course, if the stock market crashes, history says the Fed’s probable response is to LOWER interest rates.  For retirees, that’s a DOUBLE-WHAMMY … crushing both asset values and interest income.

Thankfully, as real estate investors, we don’t have to worry about most of this.

But non-real estate investing boomers have a BIG problem.  Their best hope of getting the Fed on their side is to stay in the stock market.

We think it’s fairly easy to make the argument real estate is a FAR better equity play than stocks … but that’s not today’s message … and you probably already know it anyway.

Today is about OPPORTUNITY … the HUGE opportunity for real estate investors because of what’s going on in today’s market.

For small-time operators, this is a great time to search for equity-rich owners who are selling so they can retire on liquidated equity.

So don’t just offer to buy the property … ask the seller what they plan to do with the proceeds. Uncover their problem so you can offer a solution.

If their plan is to put the money into bank CDs or government bonds … they’re looking at puny yields of less than three-percent.

Sure, we know there are bond funds with TOTAL returns of six to eight percent, but that includes capital gains on bond values.  If rates rise, those capital gains become LOSSES.

And if anyone wants to compare total returns … a typical leveraged single-family rental destroys bonds.  But that’s also a conversation for another day.

Our point today is LOW interest rates are creating a BIG PROBLEM for a HUGE group of people … and a TREMENDOUS opportunity for real estate investors to profit from helping.

Because when you approach equity rich property owners with an offer to pay them six or eight percent when they carry back their equity …

… you can triple or even quadruple their income compared to bank CD’s or bonds.

Let’s do the math …

$1,000,000 carried back equity at six-percent = $60,000 per year taxable

Of course, you may not want their specific property, so a carry-back isn’t always the best play.  But it doesn’t mean you can’t create a win-win deal anyway.

Suppose you have other properties you do want, but need financing … and for whatever reason you can’t or don’t want conventional loans.

The approach is the same, except the equity-rich property owner uses their equity to loan against the property you do want.

Now if you take this approach to the next level, instead of just one property owner and one or two properties …

… you could set up a syndication and aggregate several individual investors into a bigger pool to do bigger deals.

So even though the scale is bigger, the concept is the same …

Help people who need income and have stock or real estate equity, by showing them how to move the equity into higher yielding vehicles … with YOU.

Even if there’s interest expense involved in freeing the equity, as long as the risk-adjusted spread is positive, it’s a win.

For example, if a property owner has $100,000 in idle equity which can be unlocked with a fixed-rate long term loan of four-percent … they have interest expense of $4,000 per year (typically tax deductible).

When you offer an eight-percent yield through a private mortgage (loan) or a cash-flowing property (equity share) … you provide them $8,000 per year passive income.

Now you’ve delivered them $4,000 per year of additional free cash flow, while YOU own all or part of an investment property funded with their equity.

Once you understand the concept, you can just add investors, zeroes, commas … until you have a portfolio that’s as big as you’re capable of making it.

The bottom line is low-interest rates create HUGE opportunities for real estate investors big and small … and it’s not just simply going out and getting bank loans.

When you learn how to help people solve their cash flow problems through strategic equity management, you set yourself apart from investors who aren’t as creative.

Until next time … good investing!


 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.

North Korea and you …

With so much craziness in the world, we thought we’d consider what it might mean for real estate investors.

After all, why should paper asset investors get all the thrills of global instability?  Real estate investing might be stable, but it doesn’t have to be boring!

Biggest sword competition …

You may have heard that U.S. President Trump and North Korean Supreme Leader Kim Jong-un recently publicly compared sword sizes.

Since both the U.S. and North Korea are nuclear powers … this has the world understandably jittery.  Though things seem to have calmed down the last few days.

Still, geo-political jitters usually amplify the two basic emotions of investing … fear and greed.

Scared money tends to flee to “quality.”  (Trapped money flees to Bitcoin … but that’s a different discussion …)

Frightened investors are more concerned about preserving capital and purchasing power (which aren’t necessarily the same thing) … than making a profit.

For much of recent history, a flight to quality meant piling into the U.S. dollar and U.S. bonds.

But with another debt-ceiling debacle on the horizon, record debt at every level, pensions in crisis, huge unfunded liabilities, and an economy sending very mixed messages …

… it’s not inconceivable the world might not continue to see the U.S. dollar and bonds as the financial fallout shelter of choice.

Meanwhile, greedy money tends to focus on front-running the scared money, and buying up the scared money’s abandoned assets at bargain basement prices.

As for real estate investors …  we sit on the sideline munching popcorn and collecting rent checks.

But that doesn’t mean there aren’t risks, opportunities and lessons for real estate investors to learn from all the drama.

War is expensive …

We recently discussed the potential shift from “monetary” stimulus (cheap money funneled from central banks to the financial markets) …

… to “fiscal” stimulus (government spending funneled into the economy on infrastructure and military spending).

Now we’re not saying Uncle Sam is purposely pursuing war to stimulate the economy.  That would be far too cynical for two happy-go-lucky real estate guys.

But IF more war happens, it’s sure to be expensive.  And because Uncle Sam already operates at a deficit and has no savings (technically “broke”) … it means a lot more borrowing.

The big question is … from whom does Uncle Sam borrow?

This matters because whom Uncle Sam borrows from to pay for more war … and how it’s done … will probably impact asset prices and interest rates.

Watch your monitors …

If Uncle Sam issues bonds (borrows) and the bids are soft, interest rates rise.  It also says something about the way the world views the dollar (not good).

Of course, this means rising interest rates in the whole swimming pool … including good debt (your mortgages) and bad debt (your tenants’ credit card and car loans).  Either or both of those affect your bottom line.

Another sign confidence in the dollar is declining will be a spike in gold prices.  

If gold catches a bid, it could mean scared money would rather hide in a barbarous relic with no yield … over stacks of paper with pictures of dead people printed in green ink.

(Not sure how green paper is less useless than yellow metal … but that’s a different debate …)

But if big money prefers gold over greenbacks, it’s a clue about the direction of the dollar.

And assuming your assets, liabilities, and income are all denominated in dollars, we’re guessing the value of the dollar is of interest to you … or should be.

Pre-emptive strike …

So what do you do when you don’t know what’s going to happen?

Here are some things to think about …

Uncle Sam already has a huge debt problem.  Another war doesn’t change anything … it just speeds it up.

In the short term, a flight to quality could be temporarily good for the dollar and drop rates by creating demand for both dollars and bonds.

If rates fall for a season (and even if they don’t … they’re pretty low right now), it might be a great time to back up the truck and load up on lots of good debt … and use it to acquire assets that conservatively yield more than the cost of the loan.

That’s effectively going “short” the dollar based at a time of temporary strength.

You can also go a little further short by adding some gold to the mix.  But remember, gold isn’t about profit … it’s about preservation of purchasing power.  

Sure, a falling dollar causes gold to go “up” in dollar terms, but so does everything else, so more dollars doesn’t put you ahead … it just keeps you from falling behind.

Side note …

If you’re not really sure about gold or how it fits into what you’re doing, join us when we speak at the New Orleans Investment Conference in October.   

Some of the biggest brains in precious metals and resource investing will be in New Orleans … along with our friends Robert Kiyosaki, Simon Black, Peter Schiff and Simon Black.  It’ll be like an Investor Summit at Sea™ reunion!

Back to our story …

Something else to consider carefully right now are the markets you’re invested in … because the idea of “flight to quality” applies to real estate markets too.

People and businesses will move to where they can get a better life at a better price.

We like affordable markets in low tax, business friendly, fiscally sound states …

… places with good infrastructure (transportation, utilities, medical, education, resources), strategic location (distribution, travel hub, geographic amenities), and diverse economic drivers.

Also, take a look at your current debt and equity structure.

It might be wise to harvest excess equity and lock in low long-term rates on properties you’re committed to owning long term.

You can then use the proceeds to pick up additional properties in growth markets … or add some cash, precious metals, or high-yield private mortgages to add some diversification into your portfolio.

Stay calm and invest on …

It’s easy to freak out when the world is weird.  But it’s been weird before and it’ll be weird again.

Meanwhile, unlike so many other styles of investing, real estate allows you to hedge most probable outcomes.

Plus, there’s the time-tested assurance that virtually every major power player in the food chain has a vested interest in supporting real estate.

No one wins when real estate loses … and even as we learned in 2008 … if a bomb goes off in real estate, the powers-that-be move heaven and earth to fix it as quickly as possible.

Sure, there’s risk.

But it’s risk that’s largely understandable, reasonably mitigated and … so long as you’re structured to weather the occasional economic storm …

… real estate is arguably the most stable and easily operated investment vehicle available to everyday people.

Until next time … good investing!


 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.

Digging for gold in a pile of bull …

Well, there’s sure been some interesting headlines recently!  WAY more fun than just trying to reverse engineer the logic behind the Fed’s rate increase.

With that said, we watch gold because we think it provides valuable insight into the dollar, bonds, and the financial system.  For more on all that, read James Rickards’ trilogy about money.

But something REALLY weird just happened in gold …

Gold Plunges After 1.8 Million Ounces Were Traded in One Minute –Bloomberg Markets, June 26

“Bullion sank at 9 am in London on Monday after a huge spike in volume in New York futures that traders said may have been the result of a ‘fat finger,’ or erroneous order. Trading jumped to 1.8 million ounces of gold in just a minute, an amount that’s bigger than the gold reserves of Finland.”

“Thin activity and automated trading may exacerbate such moves.”

“… trader may have … underestimated the market’s ability to absorb so much gold.”

Ya think? 

Of course there was “thin activity!”  It was 9 am in London on Monday.  That’s Sunday in the U.S., so American markets were closed at that time.

Coincidentally, markets were closed in India and Turkey, two of the largestphysical gold buyers, because they were observing Ramadan.

This is notable, because this fat-fingered trader was selling PAPER gold.  If a sizable physical buyer were on the other end, it could get messy if Mr. Goldfatfinger actually had to deliver the metal.

This Reuters article says …

” … somebody sold it by mistake and bought it back quickly, triggering stops below $1,250.”

A “mistake”???  REALLY?  Who does that? 

“Oops.  Just accidentally sold $2.3 BILLION of gold I don’t have … in ONE minute.  Silly me.  My bad.”

Now we don’t trade paper gold, so maybe we’re uninformed. 

But it seems like anyone with an account big enough to make a $2.3 billion order would have some kind of double check before hitting submit.  Our computers don’t even let us permanently delete an email without a double check.

 “Are you SURE you really want to place a GIGANTIC MULTI-BILLION DOLLAR order for gold you don’t have?  Okay then … click submit … and good luck!”

But it’s okay.  It worked out for Mr. Goldfatfinger.  Because after triggering the stops at $1250, he “bought it back quickly”.  Whew!  That was a close one.

If you’re not familiar, a “stop” or “stop-loss” is when you own a paper asset … and you limit a potential loss by placing an order to sell it AUTOMATICALLY when the price hits a certain level on the way down.

It’s designed to protect from a larger loss by getting you out fast when the market’s in free fall.  Of course, to work, there have to be buyers in the market when your sell order is placed.

As we’ve discussed, the timing for this order was such that the market was “thin”. 

In this case, Mr. Goldfatfinger’s $2.3 billion boo-boo triggered other investors’ stop losses, and when their computers started selling into a “thin market”, it put even more downward pressure on pricing.

But it all worked out … at least for Mr. Goldfatfinger … because he was conveniently able to buy all that gold back … probably at an even better price than he “accidentally” sold it for.  What amazing luck!

Mr. Goldfatfinger must just really have that Midas touch.  For the stops who got flushed … not so much.

So what does this have to do with real estate investing?  Maybe nothing.  Then again … maybe something.

Remember just a couple of weeks ago Bitcoin hit an all-time high?

Then on the same day as Mr. Goldfatfinger’s gold flash crash … cryptos Bitcoin and Ethereum crashed too. 

Same day?  That’s weird.  Probably just a coincidence. 

But with gold and cryptos looking so sketchy, it seems everyone worried about Italian bank bailoutscentral bankers’ concerns about a China led global financial crisis, and (insert whatever unnerving geo-political /economic event of your choice) …

… should stay calm, and move in an orderly fashion into the firming U.S. dollar and stock market.  After all, the Fed’s raising rates and talking tough.  Go dollar!

Okay.  So what are we getting at?

Consider these thoughts:

You don’t have to be a wild-eyed conspiracy theorist to suspect financial markets are probably manipulated by a variety of players … including central banks, big Wall Street firms, and the occasional rogue trader.

Why anyone would trust their financial future to “assets” used as gambling chips in the paper trading casinos is hard to fathom.

But we know many people feel they have no choice.  Paper investing is all they know. 

That’s why we train real estate investors to raise money from paper investors to invest in real estate.

So if you know how to make money in real estate, and are willing to take on private investors, you can build your wealth by helping other people build theirs … and provide a valuable public service.

Now we’re not saying real estate markets aren’t subject to attempted manipulation.  But usually, any attempts to affect real estate pricing is to the UP side.  Voters don’t like it when their home prices crash.

Fortunately, because real estate isn’t highly liquid, it’s also not highly volatile … and if you focus your assessment of value on cash-flow rather than price action, real estate is even MORE stable.

That’s because while paper asset prices gyrate … and even when real estate prices peak and retreat … rents are pretty darn steady.

The closest real estate could come to being dumped would be if some big Wall Street investor decided to “close their position” in housing and dump their portfolio on some unsuspecting neighborhood.

But the odds of that happening are small.

First, there’s no stop-losses to trigger.  There’s no flushing of other players to get at their inventory.  So there’s no motivation to purposely crash the price.

And fund managers are probably smart enough to meter out their sales so as NOT to cause prices to fall (though we WISH they would!).  They want to get the best price they can when they sell … unlike Mr. Goldfatfinger.

Plus, both homebuyers and mom-and-pop investors are standing by to gobble up any inventory dumped by hedge funds … and would welcome the opportunity to do so.

In fact, this Dallas News article says “mom-and-pop investors have more than made up for the pullback of big Wall Street and hedge fund homebuyers.”

Uh oh.  Why would big players be pulling back?  Is that a bad sign?

Not necessarily.  In the article, Daren Blomquist from ATTOM Data Solutions says, ‘The big guys have been priced out of the markets like Denver and Dallas.”

That’s because they need big volume and can’t find it.  The low-hanging fruit is gone and they’ve moved on to other things.

And in this case, the Dallas market appears to be doing just fine. 

In fact, the real challenge is getting good deals in a hot market … though this may be the calm before the next wave … because some are saying more renters are expected to choose homeownership in 2017.

All this to say, real estate goes through cycles just like the economy and financial markets.  But we think the cycles are much more honest, stable, and safer.

And if you’re careful to choose properties in strong markets, measure value by cash flow and not just momentum, and use stable financing structures which can endure rising interest rates, we think there’s still a LOT of investment opportunity out there in real estate.

Until next time … good investing! 


 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.

Ask The Guys – Super Session Part One

Ask The Guys is our radio segment where YOU ask us your burning questions … and we give our best shot at answering them.

Lately, we’ve received so many excellent questions we decided to do not one, but TWO episodes of Ask The Guys! In this first installment, we discuss finding deals that make sense, breeding equity, how to keep going when you’re out of money … and much more!

Before you get into the good stuff, we have to give you our standard disclaimer. We’re not tax advisors, and we’re definitely not attorneys, so we never provide any advice … just IDEAS.

In this episode of The Real Estate Guys™ show you’ll hear from:

  • Your problem-solving host, Robert Helms
  • His problematic co-host, Russell Gray

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Question: I’m looking into local real estate, and the numbers don’t make sense. What do I do?

This question comes from Walter, a Canadian listener.

Can you guess our first response? You got it … “Live where you want to live, and invest where the numbers make sense.”

Investing locally means you can have a heavy hand in daily business and management operations. Investing in other markets means someone else will do the work for you.

That can be a really good thing … IF you have the right team.

As you know, the market overall is quite tight right now. If you’re looking for deals in a tight market, you might spend all your time searching out deals that fit your criteria. That’s why it’s a good idea to look for markets that fit your criteria, then build relationships with a trustworthy team.

Of course, start out by building a solid personal investment philosophy.

Next, find your market and get set up with a good team. THEN you can work on finding a property to invest in.

Starting by finding a property first can be a disaster. We know because we’ve seen it.

Think this information sounds great, but wondering where to start? There are a few steps you can take:

  1. Start networking with folks in your area who are investing elsewhere. Get to know them and get familiar with what they’re doing.
  2. Research different markets, identify a handful that fit your criteria, and then check them out … in person!
  3. Get your resource network set up by seeking out credible management folks who know what they’re doing.

Whatever you do, ALWAYS evaluate whether a market makes sense before you even start looking for deals. Always.

Question: Can I reposition my equity to buy more properties?

Ari from West Hollywood, California, asked us whether it was prudent to use the equity from current properties for the down payment on a new property.

The short answer is yes.

The long answer is that equity repositioning can be a good idea, with some caveats.

You CAN take equity out of a property through cash-out refinances (or 1031 exchanges, if you want to relinquish the property).

And with today’s low-interest rates, this process allows you to harvest your equity.

A word of caution … it is possible to run into trouble. It’s NOT the act of moving equity that can work against you, but the act of taking on additional debt and income.

Any time you move your money, you have to weigh your ability to manage your income against your debt. It doesn’t make sense to take money out and invest in a property with low or negative cash flow.

When done right, equity optimization allows you to move easily from mature markets to emerging ones and diversify your holdings.

Always remember these words of wisdom … “Do the math, and the math will tell you what to do.”

Question: We’re purchasing our first property. Should we create an LLC to protect our personal assets?

Jonathan in New York City, is buying his first rental unit in the U.S. state of Maine (congratulations on taking action, Jonathan!).

He’s wondering whether it’s prudent to form an LLC in order to purchase the property … but worried that buying as an LLC will force him into a commercial loan with 10-year terms.

How to protect your personal assets is a common newbie question … and it’s a good one!

The primary question Jonathan has to ask himself is whether the added expense will be worth the protection. That answer will vary.

If Jonathan has a ton of assets, it might be worth it to form an LLC. Keep in mind there are other places he can move his money to … primary residences and retirement accounts come to mind.

The bigger question, though, is whether Jonathan will need the protection in the first place. Investors like Jonathan can put up a three-pronged line of defense:

  1. Consistent, good business practices.
  2. Clear documentation and legal paperwork with built-in arbitration clauses.
  3. Insurance, which will cover most problems that might arise.

The reality is that most people who use entities are usually working on bigger projects. And not all lenders will be willing to lend to an LLC with no operating history.

If you’re in Jonathan’s situation, you have to weigh the pros and cons. We recommend doing your homework … and checking with a local tax attorney.

Question: When is the next Investor Summit at Sea™, and when do tickets come out?

Adrian from Salt Lake City, Utah asked this timely question. Thanks for asking, Adrian!

The next Summit will be early to mid-April, 2018. Exact dates will be announced shortly!

We roll out registration in three phases … alumni first, then our syndication mentoring club, and then our advanced notice list.

Your best chance at getting a ticket? Get on the list! Sign up now if you’re serious about attending next year.

Question: Will it be more profitable to invest on our own or with a syndicate? (And should we invest for equity growth or cash flow?)

This question comes from Sheryl, in Pacifica, California. Sheryl told us she and her husband are newly debt free. Her question is best in her own words:

“Our goal is to save $100,000 this year and buy a rental property on the big island of Hawaii, where we eventually plan to live, to start establishing some cash flow. We also plan to take a year off and live off my spouse’s retirement while visiting Southeast Asia, South America, and Africa. We are frugal and have simple needs. Would it be better to invest $100,000 with a syndicate for better monthly cash flow return?”

Sheryl, you could invest in a property that provides cash flow and will be well-suited for your eventual retirement home.

But we’d caution you that one property may not be able to solve multiple needs.

One solution would be to buy a cash flow property, then use the equity you’ve saved to buy a perfect retirement home when the time is right.

Another solution might be to look for a property that will provide long-term price appreciation instead of a high cash flow. It’s a different investment vehicle that could carry you to the same destination.

And of course, syndication is always an option, and it might be a good one if you’re traveling and need a hands-off investment.

If you decide to come alongside a syndicator, you do have to be careful. Vet the deal and the sponsor just like you’d vet a deal of your own.

Make sure you line up your investment objectives and the timing with the investment and manager you choose. And above all, be certain you understand the underlying risks.

Question: I’m out of money. How do I extend my property portfolio?

This listener hails from London, England. (A side note: we LOVE hearing from listeners around the world!)

A former nurse, Bobby purchased a couple of properties in the outskirts of London. He loves real estate and wants to expand, but he’s out of money.

Maybe this sounds familiar to you … you got enamored with real estate, got educated, pulled the trigger and took action, then quickly realized your money was gone. This happens to a lot of folks.

If you’re like Bobby, the first thing you should do is ask yourself, “Knowing what I now know, would I still invest in these properties?”

If the answer is no, it might be time to switch things up.

We’ve found the best way to expand when you have limited resources is to force equity from properties by adding value, then use that equity in other properties.

The other way to go would be to syndicate. Leverage your knowledge, and use your skills to acquire and manage assets on behalf of clients who do have money … taking small slices from the pie along the way.

Because Bobby came from a demanding career path and wants to make his way in what can be a very demanding real estate world, we’d also caution him to be very careful about what he chooses to do and how he structures his business.

It’s no good to pursue real estate for less stress and then fall into the same pattern of stressful days and no fun.

Question: I’m a syndicator. What’s a good percentage to offer investors?

Our last question for this episode comes from Joel in Boston, Massachusetts. Joel puts deals together for investors, but he’s new to the game and isn’t sure whether he’s offering a percentage that’s too high.

He wants to find the sweet spot, and that’s a laudable goal … one every syndicator should have.

Our answer? There is no magic formula.

We’ve done deals about every way possible, and in our experience, the right structure is one that attracts the right capital and the right investors for YOU.

Finding the right number can be a dance and an art form. But there is a place you can start.

Begin by having conversations with investors and gauging their responses. Ask, “What number would make sense for you?”

And realize number may vary with each deal you make.

If you’re just getting started with syndication, err on the side of giving more to the investor.

The purpose of your first few investments ISN’T to build a fortune. You’re trying to start a business, so you need to emphasize your dependability, focus on predictable results, and build your track record.

Ultimately, the magic number is one you’re willing to get up every day and work for!


 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.

The dollar could be dangerous right now …

If you earn, save, borrow, invest, or denominate wealth in dollars, this CNBC headline might concern you:

Why Being Long the Dollar is “Very Very Dangerous Right Now”

Comments from readers showed people were confused …

“Why being long the US dollar is ‘very very dangerous’ right now” … what the hell does that mean?”

“1st prize for ambiguous headline”

This commenter feels trapped …

“All Americans are long on the Dollar. There is no other place to be right now.”

As we often say, mainstream financial news and its readers tend not to understand real estate investing. Conversely, many real estate investors get confused by mainstream commentary.

So let’s break this down for real estate investors …

Being “long” just means you own it.  If you’re long a stock, you own it for the long haul.  You think its future is bright.

Being “short” means you’ve sold it.  With stocks, “short selling” is borrowing a stock you don’t own to sell at today’s price.

You’re betting the stock will go down, so you can buy it back cheaper later to pay back the broker you borrowed it from.

It may seem weird to sell something you don’t own.  But it’s not any weirder than spending money you don’t have.  People do that all the time.

So “long” the dollar is holding cash or dollar denominated bonds.  Being a bond holder is basically the same as being a lender.  You lend dollars and accept dollars in repayment.

Borrowing is being short the dollar.  You’d rather “sell” (i.e., spend or invest) dollars today at today’s value … and then pay back later with cheaper (inflated) dollars.

So if you think the dollar will get stronger over time, you’d pay off debt and save cash.

This chart might influence your opinion:

Source: https://fred.stlouisfed.org/series/CUUR0000SA0R

If you think the dollar will continue it’s 104-year slide, you’d “short” the dollar … by borrowing and converting dollars into real assets.

The author of the subject article is clearly bearish on the dollar.  He thinks it’s “very, very dangerous” to be long the dollar.

So the commenters who complain the headline is ambiguous or confusing simply don’t understand history … or the concepts of long and short.

And the comment that “all Americans are long the dollar” and “there’s no place else to be right now” isn’t accurate either.

Real estate can be a great way to short the dollar.

Using a purchase or cash-out mortgage, you can leverage the income from a rental property to borrow (short) dollars with a mortgage.

Just pay attention to cash flow and the spread.

If you can borrow money at 5% and buy a property cash flowing at 8%, you’re earning a 3% spread on the borrowed money. Nice.

For liquid savings, you can use other currencies, precious metals, Bitcoin, or other highly liquid dollar alternatives.  You don’t need to save dollars just because you earn them.

Real estate is also awesome because you can “straddle” … basically going long and short at the same time.

To straddle using real estate, you’d use a cash out mortgage (debt) to short the dollar.

Let’s say it costs you 6%, which would be deductible in most cases (check with your tax pro).  So your net cost might only be 4%.

You can go long the dollar by lending the loan proceeds against a high equity property at 9%.

Now, you’re long and short equal amounts at the same time.  You’ve got a positive spread (9% income against 4-6% expense) and positive cash flow.

Plus, the loan you made is backed by a property you’d be happy to own if the borrower defaults.  High equity and good cash flow.  If there’s not, you shouldn’t have made the loan to start with.

Now, you’re prepared for a strong or falling dollar.

Think about it.

If the dollar falls (inflation), you’re in good shape.

Inflation causes real assets and income, like real estate and rents, to go up in dollar terms.  Meanwhile, your debt and debt service remains fixed.  You win.

Meanwhile, even though you’re long the dollar with the loan you made, the cost of the funds (your debt) is fixed.  So you’re fixed on both sides.  You’re even.  And with a positive spread, you win.

Plus, inflation causes the property you loaned against and the income it produces to go up in dollar terms.  So the loan you made is safer because the collateral got better.  You win.

But what if the dollar gets strong?

First, let’s define “strong.”

There’s “strong” compared to other currencies, like what’s been happening over the last few years.  That’s very different than “strong” in terms of purchasing power and against real assets.

The former is relative strength.  The latter is REAL strength.

Recently, the dollar has gotten strong relative to other currencies.  Yet real estate and rents both went up.  A relatively strong dollar didn’t hurt real estate.

It would take REAL dollar strength to push down the dollar-denominated price of real estate and wages. That’s REAL deflation.

MAYBE that could happen.  But imagine the reaction of the Fed, the politicians, the banks, and the voters, to falling real estate prices and wages.

You don’t have to imagine.  We all know… because it’s what happened in 2008.  They pulled out ALL the stops to reflate everything.  They had to.

That’s because the banks hold trillions in debt, and the federal government owes trillions.  Inflation serves them both best. They’re scared to death of deflation.

That’s because banks need property values to hold or increase … otherwise, upside down borrowers walk.  Banks fear holding non-performing loans against negative equity properties.

And no one’s more motivated to pay back cheaper dollars than the world’s biggest debtor, Uncle Sam. Debtors LOVE inflation.  It makes their debt easier to pay.

So … the long and the short of the dollar is it’s that it’s probably better to be short for the long haul. And nothing lets you do that better than leveraged income producing real estate.

Until next time … good investing!


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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