Podcast: Inflation, Deflation, Recession, Depression or Dollar Crisis?

While a lockdown stops the economy and slows everything down … putting downward pressure on prices … central banks led by the Fed are conjuring TRILLIONS of fresh dollars out of thin air. And Uncle Sam is making sure they get into circulation.

Will prices rise or fall? Can an economy grow when it’s locked down … or will it recede perhaps even into a dismal depression?

And how long will the world trust a dollar that’s being diluted by the trillions on a monthly basis?

Tune in and find out when we talk all this and more with PhD economist and best-selling author Richard Duncan.


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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Increase Cash Flow Using Powerful Tax Breaks

There’s no such thing as a perfect investment … but real estate sure comes close!

But with any investment … you have to be smart. One important aspect of smart real estate is taking advantage of powerful tax breaks. 

We’re diving deep into one of the best tax benefits that real estate offers to investors like YOU … cost segregation. 

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

  • Your appreciated host, Robert Helms
  • His depreciating co-host, Russell Gray
  • Cost segregation authority, Erik Oliver

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Increase cash flow and reduce taxes

You can make a lot of money in real estate … but you can also pay a lot of taxes. 

Today, we’re going to show you how you can increase cash flow and reduce taxes with investment real estate. 

Beyond monthly cash flow from a real estate property, you can also make money as your property appreciates over time. 

That equity is locked into the property until you do something about it … like refinancing or selling. 

You also have the benefit of amortizing a loan. Every month when you make your mortgage payment, part of it goes to pay interest while the other part pays down the principal. Each time you pay down the principal, you own more of the property.

But the way to make money we are focusing on today is … tax benefits!

CPA Tom Wheelwright has taught us that if you want to know what a nation wants its citizens to do with their invested capital … just look at the tax code.

The tax code is a series of incentives … and these incentives will benefit your bottom line and enhance your cash flow.

The tax code can be especially helpful in those early years of purchasing a property when there is a lot of expense … above and beyond what you get over the life of the property. 

We should remind you that we’re not tax advisors or professionals. We give ideas and information. We’ll be sharing a lot today … but sit down with your tax professional before you make any major decisions. 

Make sure you have a tax professional that truly understands this niche … preferably one who owns investment property themselves or whose practice serves a large percentage of real estate investors.

And … don’t let the tax tail wag the investment dog. 

You don’t want to invest in something just because of a tax benefit. Instead, find a great market, a great property, a great niche. 

Then, you’re going to seek to exploit the tax law legally in your favor to the best degree you can. 

Today, we’re going to talk about a tax benefit that most multifamily and seasoned long-term developers and investors know about … but many smaller investors haven’t discovered yet. 

What is cost segregation?

Erik Oliver is an authority on cost segregation. 

Depreciation accounts for a loss of worth in your asset. Some things depreciate, while others don’t. 

Land doesn’t wear out … so it isn’t depreciable. But gutters do … so they are. 

“Cost segregation is simply accelerated depreciation,” Erik says. Many people get into real estate in order to take advantage of the depreciation loss. 

“We depreciate our real estate over either 27.5 years for residential properties or 39 years for commercial properties,” Erik says. 

Cost segregation means that you accelerate that timeline instead of taking 1/39 of your depreciation each year. 

It starts by identifying the different components of your building and segregating out those components into shorter asset lives. 

For example, the IRS allows you to depreciate carpet over five years. Instead of having to lump that together with your 39-year asset cost, cost segregation comes in and puts a value to that carpet, allowing you to depreciate it over a much shorter time frame. 

Accelerating the depreciation means more tax benefits, sooner. 

Let’s put some numbers to it for a simple example. 

If you own a $270K duplex, you’ll get to write off $10K every year against your income for the next 27.5 years without doing cost segregation. 

If you were to do cost segregation on that duplex, the analysts will identify roughly around 30 percent of that $270K and categorize it into 5, 7, or 15 year property. 

Depending on when you bought the property and what the laws were at that time, you may be able to write off all of that 5, 7, and 15 year property in year one. 

That’s over $70K that can be written off in the first year instead of $10K. 

What does an analysis look like?

Cost segregation is a process generally done in conjunction with an engineering firm and accounting firms. 

In order to complete a cost segregation study, you’ve got to have construction engineers that can go in and reverse engineer these buildings, so to speak. 

You also have to have someone with tax knowledge to take that information and make it work for you. 

Many CPA firms will partner with an engineering firm to offer this service to their clients. 

The IRS has actually put out an audit guide that most cost segregation companies follow. It’s 13 steps and requires a site visit. 

“Typically, we’ll send one of our construction engineers out to the property for them to do an inspection,” Erik says. “They’re looking for things like retaining walls outside, drainage in the parking lot, what type of flooring and window coverings are used, etc.”

The resulting reports are pretty detailed … usually about 40 to 60 pages long. They basically line item every component of the building. 

“We do go over everything from flooring to cabinets to countertops. We’ll even go out and count the trees and bushes,” Erik says. 

Cost segregation studies can cost anywhere from $7K to $15K. Erik says he recommends you get an estimated cost for a study for any property over $200K. 

“Sometimes, depending on a number of variables, it may not make sense to do a cost segregation, but you should always look into it in case it does make sense,” Erik says. 

Most cost segregation companies will do a free benefit analysis to make sure that you are going to get significant tax savings from completing the study. 

For more on cost segregation … listen to the full episode!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


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This ONE chart tells a BIG story …

Most investors don’t really know what it means … or what to do about it …

Real estate investors are more likely to be interested in grading slopes than yield curves. And the Fed’s balance sheet? That’s REALLY esoteric and boring.

BUT … the Fed is the most powerful and influential financial force in the world … affecting the stock and bond markets (where mortgage rates are set), the economy, and even geo-politics.

The Fed seems to prefer hiding in the shadows …

… except when diverting attention from charts like the one below with cryptic congressional testimony and occasional PR appearances on TV.

This chart shows the Fed’s ballooning balance sheet 

Source: St. Louis Federal Reserve

The numbers might be too small to read, but they’re too big to comprehend … with over $7 trillion of assets (nearly double from just 4 months ago).

You may or may not know what it means, but set that aside right now … and just look at the slow and stable trajectory leading into the end of 2008 …

… and the “big” spike at the beginning of 2009.

Bring back any memories?

We found flipping the chart over helps …

Source: St. Louis Federal Reserve

Now, instead of looking like a positive, happy, upward trend … it looks more like the way it felt …

… like you were paddling along on a river until late 2008 when … whoosh! You went into a rough patch of white waters.

Then after a bit of a bumpy ride, you settled into a deep but slow descent into “the eye of the storm” (yes, we just mixed the metaphor) where it seemed stable and trending up.

Then some headwind … you might say your momentum was tapering … and then a little teaser turbulence right before …

WHOOSH!!! Over the waterfall.

This is what it FEELS like for investors riding waves of Fed liquidity via “quantitative easing” (Fedspeak for printing unfathomable amounts of dollars).

Of course, the Fed doesn’t really “print” … that’s so 20th century.

Here’s the official explanation straight from Fed Chairman Jerome Powell’s appearance on 60 minutes:

60 MINUTES: Fair to say you simply flooded the system with money?

POWELL: Yes. We did. That’s another way to think about it. We did.

*** (ANOTHER way to think about it? What’s the first way???) ***

60 MINUTES: Where does it come from? Do you just print it?

POWELL: We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds or other government guaranteed securities. And that actually increases the money supply.

Hopefully, that’s VERY clear.

The Fed, by their own admission, simply conjures dollars out of thin air and uses them to buy government-backed debt.

Keep this in mind when you’re perplexed about why the government not only grows its own debt but seems all too willing to guarantee private debt also.

But don’t think about all that too much now. Let’s focus on the discussion at hand …

The Fed’s balance sheet shows HOW MUCH digital money the Fed conjures out of thin air … as reflected by how much government-backed debt they own.

Think about this …

The Fed creates dollars out of thin air at no cost. At this point, it has no value because it cost nothing to create.

Those fresh dollars only become valuable later when someone who did real work and produced a real product or service is willing to trade their product for those previously worthless dollars.

Doesn’t seem quite fair to the person doing real work. But that’s a rant for another day.

Of course, the Fed doesn’t actually put the money directly into circulation. They loan it to the government, who then must spend it into circulation.

Seems like a pretty good deal for the government. They get to spend lots of money to buy nice things … like votes.

If we didn’t know better, we’d be tempted to think the Fed and Uncle Sam have a bit of a racket going.

Nah.

So if the Fed prints dollars for free and then loans them to the government, wouldn’t this make them separate parties?

Good catch. Yes, they are. Of course, that’s also another rant for another day, and not our point right now.

Today, we’re less concerned with who the Fed is … and more focused on what they’re doing and what it REALLY means to Main Street real estate investors.

It’s a bit more complicated than just interest rates and inflation. Sorry. But it’s important because what’s brewing isn’t your run-of-the-mill financial crisis.

Back to our story …

So the Fed prints money from nothing and lends it to Uncle Sam. But when the government borrows money, who pays it back … and how?

Hint: The Federal Reserve, the income tax, and the IRS were all created at the same time as part of the 16th amendment in 1913.

Why?

Well, it seems there was a financial crisis in 1907, and the politicians and their funders decided to “fix” the situation.

Of course, “fix” is a word subject to interpretation …

“Repair, mend” … OR … “to influence the actions, outcome, or effect by improper or illegal methods”.
– Merriam-Webster Dictionary

And since we’re quoting …

“Never let a crisis go to waste.” 
– Saul Alinsky

“Never let a good crisis go to waste.”
– Winston Churchill

“You never let a serious crisis go to waste. And what I mean by that it’s an opportunity to do things you think you could not do before.”
– Rahm Emanuel

You get the idea. Exploitation of a crisis is a standard operating political principle that’s been around a long time. And the consequences often land on Main Street.

And speaking of principles that have been around a long time …

“The rich rules over the poor; and the borrower is servant to the lender.” 
Proverbs 22:7

Interesting.

We’re guessing you’re smart enough to put all that together for yourself. Must be nice to print money out of thin air and buy up trillions in debt.

Meanwhile, back on Main Street …

You don’t need to be a rocket surgeon to know you can only extract so much tribute … even at zero interest … before the burden is simply too much.

As we noticed last September, there were signs of severe systemic stress BEFORE the COVID-19 crisis hit.

Now everything is moving much faster … so it’s important to pay close attention and be ready to react to both the approaching dangers and opportunities.

Obviously, dollars are nearly free right now. It’s probably not a bad idea to grab all you can while credit markets are still functioning.

We’re noticing small businesses and commercial properties coming on the market at an increased pace … and with “price reduced!” in the pitch.

That’s a clue the crisis sale might be starting.

You also may have noticed precious metals are catching a bid in dollar terms. That’s talking head jargon for gold and silver prices are going UP on dollar price.

This indicates more dollar-denominated investors are choosing to keep some liquidity in precious metals versus currency.

This makes sense as every other currency in the world is already at all-time lows versus gold (i.e., gold is at all-time highs in every currency except the dollar).

When the Fed is printing trillions of dollars each year … and Uncle Sam is aggressively putting them into circulation … the historical result is a falling dollar.

And despite what you may hear on financial TV … we think it can be strongly argued this is setting up a perfect storm for leveraged income-producing real estate.

Remember, Wall Street and the TV gurus who promote them believe investing is “buy low, sell high”.

But real estate investors think “cash flow” … which is the only reliable source of equity. Income creates real equity.

Meanwhile, strategic real asset investors put it all together into a bigger picture …

Real estate (especially residential) is a sector strongly supported by the most powerful constituencies … politicians, bankers, and voters.

That’s a lot of love … and a great place in line when emergency help is doled out.

More importantly, debt is the real investment.

Income property mortgages are essentially a big short of the dollar with a great feature: the income from the property makes the payments.

So while you may not be able to print money like the Fed, using the right real estate debt is pretty close. And …

… the Fed is ALWAYS working on making debtors winners.

And when you use debt to convert real estate equity into precious metals, you have a very powerful shield against a falling dollar.

Yes, it’s true the dollar is catching the “best last paper currency standing bid” …

… but the dollar’s relative strength against other paper currencies at the same time it’s showing weakness against gold …

… is a major clue there’s some real-world weakness likely coming for the dollar in the not-too-distant future.

Yes, we know this is a lot to absorb. It’s why we keep repeating ourselves.

But rather than getting bored, we hope you’re getting inspired to study and prepare. This is a whole new ballgame.

This four-phase cascading crisis is still very early in its life-cycle.

It’s not the time to succumb to a short attention span.

Podcast: Recent Updates Unlock Retirement Account Profit Potential

Tax rules are often used as a tool to motivate people to earn and invest in ways policymakers deem important. So it’s no surprise there’s been some tweaks to the tax rules to help stimulate an economy struggling under the weight of the COVID-19 crisis.

In this episode, we take a look at how retirement accounts are being unleashed … and how real estate investors can get in on the action.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

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.

Podcast: Increase Cash Flow Using Powerful Tax Breaks

While there’s no perfect investment vehicle, real estate done right comes pretty close.

And an important aspect of smart real estate investing is the extremely powerful tax breaks.

In this episode, we dig into one of the best tax benefits real estate offers. Let’s just say you need to see it to depreciate it.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Tragedy strikes again …

Tragedies are a terrible but predictable and commonplace part of living and investing.

You don’t always know when or how tragedy will strike, but you can be certain it will. It’s inevitable.

Of course, tragedy and suffering aren’t primarily intellectual experiences. You FEEL them … and they HURT. It’s intensely emotional.

The Real Estate Guys™ family was hit with tragedy last week for the second time in the last six months when Robert’s father, “The Godfather of Real Estate” Bob Helms passed away.

Thanks to all who expressed condolences and shared memories via email or on social media. It’s a blessing to be reminded how many lives have been touched by Bob’s wisdom, kindness, encouragement, and talent.

For those of us close to Bob, our world stopped. Nothing has mattered but processing the loss and considering a new future without Bob’s presence.

Of course, the rest of the world goes on … as it always does in the midst of a never-ending parade of macro and micro tragedies.

But as the hits just keep coming, it’s ALMOST enough to make you wonder if it’s all worth it.

After all, the “happiness” we all strive for in terms of financial, physical, and relationship prosperity seems so elusive and fragile.

All this has us thinking about the role of pain right now in the world and in the life of every investor reading this. Pain and loss are part and parcel of all areas of the human experience. It’s naive and foolish to think anyone gets a pass.

But pain isn’t something often discussed, and certainly not appreciated, by most people. After all, no one with a broken bone, heart, or portfolio wants to be congratulated and counseled to see the good.

Yet most mature people will tell you the greatest lessons were learned, the strongest relationships forged, the most profound transformations took place through the process of pushing through pain.

It’s analogous to a birthing process. Often the labor of pushing through is intensely painful, yet on the other side awaits one of life’s greatest joys.

So pain and loss are not only normal, they’re required and inescapable. They are part of the process of developing strength, resolve, and wisdom.

So how do we as individuals, investors, entrepreneurs, organizations, and societies deal with the personal and collective pain of inevitable tragedies?

And in case you don’t think this applies to the pragmatic goal of becoming a more powerful investor, consider how pain and the resulting panic can cloud judgment and impair thinking.

“When emotions run high, intelligence runs low.”
– Blair Singer

Good emotional control … even in the midst of tragedy, pain, fear, uncertainty, and doubt … is the hallmark of a powerful investor.

We learned a lot about pain and panic in the financial crisis of 2008. Today, we’re thankful for it. But at the time? Not so much.

In hindsight, if we’d cultivated an attitude of gratitude sooner, we probably would have suffered less, learned quicker, and recovered stronger faster.

After losing Russ’ wife last December and then losing Robert’s father last week … we turned to some profound ancient wisdom to remind ourselves …

“This too shall pass.”

– William Shakespeare, Hamlet

And in case you don’t think a 16th-century playwright understands the complex world you live and invest in, consider this gem …

“What a terrible era in which idiots govern the blind.”

– William Shakespeare

But that’s a different discussion we can have over a virtual beer someday while we’re “Sipping-In-Place”.

So gratitude is an empowering attitude … even in the midst of a tragedy and even if the only thing you can find to focus on is “this too shall pass”.

But as profound and brilliant as William Shakespeare was, we found an even older, arguably wiser author to help keep both our micro-tragedy and the macro-insanity we’re all living through right now in a healthy perspective.

And ironically, it also turned out to provide some practical investment wisdom.

So rather than delve deep into clues in the news this time, we’re using our moment of pain to share some deeper thoughts with you.

Thanks for sticking with us this far.

It’s said King Solomon was the richest man who ever lived. Many suspect he’s the author of the Book of Ecclesiastes in the Bible.

We’re not sure about all that, but this ancient muse (later adopted for a popular song in the ‘60s) offers useful wisdom about life, pain, and investing …

“To everything there is a season, a time for every purpose under heaven;

A time to be born, and a time to die;

A time to plant, and a time to pluck what is planted;

A time to kill, and a time to heal;

A time to break down, and a time to build up;

A time to weep, and a time to laugh;

A time to mourn, and a time to dance;

A time to cast away stones, and a time to gather stones;

A time to embrace, and a time to refrain from embracing;

A time to gain, and a time to lose;

A time to keep, and a time to throw away;

A time to tear, and a time to sew;

A time to keep silence, and a time to speak;

A time to love, and a time to hate;

A time of war, and a time of peace.”

– Ecclesiastes 3:1-8 New King James Bible

Entire books and sermons are dedicated to this passage. We’re certainly not qualified to expound on words many consider divinely inspired.

So we’re not here to say what “truth” is or what you should or shouldn’t do or believe.

But during the inevitable trying times we’ll all face in our individual lives, loves, careers, and portfolios … including the current COVID-19 crisis we’re all currently in together … keep these words handy and remember …

It’s just a season. This too shall pass.

For The Godfather, he came to the place where it was his time to die. We all have one, though we tend not to think about or plan for it. No one likes it.

As we’re writing this, Russ’ 13th grandchild is due any moment. For her, it’s a time to be born.

For aware and prepared investors, 2010 was an excellent time to “plant” real estate investments. Today might be considered a good time to harvest equity.

During most of their life, many baby boomers planted into financial safety nets like social security .. and are expecting to harvest in the coming years.

But it’s possible their hoped for time to dance could turn out instead to be a time to mourn. We hope not, but the system is weak.

Some think many of the important social contracts born in the last 150 years are entering their time to die … to be broken down and cast away.

Many on all sides of the issues are finding it’s no longer time to be silent, but to speak.

It’s conceivable the fundamental rights we depend on to move freely, earn and deploy capital, own and operate properties and businesses … are all subject to upheaval.

And with polls showing a growing number of Americans believing civil war is inevitable, it seems it might be a time for the worst kind of war is approaching.

These are no doubt tumultuous times.

All this to say, we think it’s arguably more important now than ever for investors to reflect on ancient wisdom …

… and consider the sage author’s conclusion that “there’s nothing new under the sun.”

Yes, it’s a dangerous, world and we should all be diligent in staying aware and being proactive …

… but these seasons and cycles have been ebbing and flowing for thousands of years. There’s nothing new under the sun.

Sometimes, the hardest hits help remind you about how small you really are and what really matters in the grand scheme of things.

It’s tempting to allow tragedy to make us bitter, cynical, angry, and withdrawn.

But wise men over the centuries remind us there are predictable seasons in the lives of men and societies, and whether the current time is good or bad, “this too shall pass.”

We think what’s important is to remember who you are, why you invest, and what really matters along the way.

As our great friend, Tom Hopkins often reminds us, “Love people and use money, not vice-versa.”

Encore – The Godfather’s Tips for Working with Investment Specialists

When you’re in need of valuable advice … you talk to a Dad. 

In this Father’s Day encore episode, we are revisiting the sage wisdom provided by the late, great Godfather of Real Estate, Robert’s father, friend, and partner … Bob Helms. 

Listen in as Bob shares his top tips for working with real estate brokers who understand what it means to work with investment property. 

To contribute to the Godfather Scholarship Fund in honor of Bob’s life and legacy, send an email request to [email protected] We’ll get you the details!

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

  • The father and host of The Real Estate Guys Radio Show, Robert Helms
  • The father of outtakes and co-host, Russell Gray
  • The father of Robert Helms and The Godfather of Real Estate, the late, great Bob Helms

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Advice from The Godfather of Real Estate himself

In honor of Father’s Day, we’d like to share some wisdom from the archives. 

We’re throwing back to late 2018 when The Godfather of Real Estate, Bob Helms, shared his best tips for working with real estate agents that understand investment property. 

That’s the thing about advice from world-class dads … it never gets old! 

Bob Helms spent many, many years actively brokering properties, teaching agents, and managing agents. He knew firsthand why it was so important to find and work with great real estate professionals. 

Our philosophy has always been that you should align yourself with professionals in every category … lawyers, CPAs, real estate brokers, and agents. 

Cooperation, not competition

Real estate is a relationship business … and when it comes to the brokerage community, it seems awfully competitive out there.

But here’s the first secret … The brokerage business and the real estate sales business are really ones of cooperation rather than competition.

More often than not, we need other agents in the community to be out there providing the inventory that we need.

You may have heard of the 80/20 rule. That rule says that 80% of the real estate in a market is sold by 20% of the agents.

“The most active agents in the network know each other,” Bob says. “They’re in deals together. They understand both sides have to win. It’s urgently important that you not practice your business by trying to take advantage of the person on the other side of the transaction.”

Many investors think they have to squeeze every last dime out of the deal. But the best transactions are whenthe deal closes and everyone looks around, high fives, and says, “That’s awesome!”

“When that happens, people also tend to say, ‘Let’s do it again!’” Bob says. “This is a relationship business. It’s a long-term business.”

The typical homeowner moves every four to seven years. When they move, they usually move out of the area completely.

That means, when you help somebody sell their house … they’re not coming back to buy a property from you … and that’s why it is so important to have a great relationship with other agents.

Working with your agent

Let’s talk a little bit about working with your agent.

Bob says that one of his biggest tips is to pay your agents … insist that your agents get paid top dollar.

Why wouldn’t you want to negotiate that fee?

“I’m going to suggest that you do negotiate the fee,” Bob says, “and the minute an agent agrees to take a discount, you know not to work with that agent.”

An agent that takes a discount on their fee will roll over when it comes to trying to save or make you money.

You want to work with someone that is firm in their value, understands what they’re worth, and will fight for it.

The reality is that the vast majority of real estate agents don’t really work with investors … not because they have anything against it but because they’ve simply never done it or been taught how to do it.

The difference between working with a typical agent and someone who specializes in working with investors is gigantic.

And, if you’re a real estate agent wondering how you can make more money … working with investors is the answer.

Investors are clients that buy properties again and again and again. The pricing of those properties can also be higher.

Investors tend to purchase larger properties as their portfolio grows … which means larger commissions for the agent.

Resources for getting ahead

Bob’s book, Be in the Top 1%: A Real Estate Agent’s Guide to Getting Rich in the Investment Property Niche, is a great resource for agents looking to get ahead and for investors hoping to understand more about where their agent is coming from.

Bob’s biggest tips for agents are to recognize there is no limit on how much commissioned income you can make … and that you don’t have to stop doing what is already working for you.

If you’re selling single family homes and doing well … you can keep doing it! Just add investment property as a new segment of your business.

As an investor, the person who benefits most from agents who take on investment property is YOU.

As you develop your relationships with agents across markets, they will bring you great deals.

For more tips from The Godfather of Real Estate … Bob Helms … listen to the full episode!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Encore Podcast: The Godfather’s Tips for Working with Investment Specialists

Fathers often provide the most valuable advice in life, career, and investing.

In this Father’s Day encore episode, we revisit sage wisdom provided by the late, great Godfather of Real Estate, Robert’s father, friend, and partner … Bob Helms.

So listen in as Bob shares his tips for working with real estate brokers who understand investment property.

To contribute to the Godfather Scholarship Fund in honor of Bob’s life and legacy, send an email request to [email protected], and we’ll get you 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.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

Passive Investing through Real Estate Investment Funds

There are plenty of people out there who want the benefits of real estate but don’t want to get their hands dirty. 

For those folks, private funds can be a great option. 

While it can be expensive to send your money on the long round trip to Wall Street … Main Street funds are a lot leaner and a lot more transparent. 

We’re visiting with a Main Street real estate fund manager and exploring the benefits of passive investing through real estate investment funds. 

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

  • Your hyperactive host, Robert Helms
  • His passive-aggressive co-host, Russell Gray
  • Real estate investment fund manager, Paul Moore

Listen


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Broadcasting since 1997 with over 300 episodes on iTunes!

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A space for passive investment

You can be an active investor that does all the work … finds the market, puts together the team, rolls up your sleeves, even paints and carpets. 

Or, you might leave that work to somebody else and invest passively in real estate. 

Today we are talking about one of the many ways to passively invest … real estate investment funds. 

A real estate investment fund has a specific purpose. It invests in a particular type of real estate …  maybe in a geographic area, maybe a specific product type. 

The difference is that a fund isn’t typically going to invest in just a single property. And, it’s not a single investor … multiple investors come together to share both the risks and the rewards. 

In today’s environment with the volatility we’ve had in the stock market, many people are looking at other ways to invest. 

Real estate investment funds usually invest in commercial properties, because they’re playing at scale. So, you become a Main Street investor investing in Main Street. 

If you drive around your community and see a new apartment building or self-storage facility going up … it’s likely those aren’t owned by individual investors. But they aren’t usually owned by institutional investors either. 

There is a middle space. 

That space used to be a good old boys club … you could only find them if you knew the right people. 

But things have changed. Depending on the type of investor you are, a fund can make sense for you in so many ways. 

The basics of real estate investment funds 

Our guest today has a multitude of real estate investment funds and is here to show his approach to that business. 

Paul Moore is a fund investor and manager from Wellings Capital. Before COVID-19 hit, Paul and his team raised a record amount of money. By the end of March, they decided to hit pause on the fund. 

“We pressed pause to evaluate opportunities in this new light,” Paul says. “We’ve been evaluating syndicators for years and have a short list of people who meet our criteria to invest with.” 

The fact that the fund is made of passive investors means that Paul had this luxury … it’s not like they were stuck in escrow and wondering if things would work out. 

Let’s talk about what makes the type of funds Paul works with different than your average syndication deal. 

Often, syndication is a single property. You find investors that fit the criteria of your deal and your investment fits them. 

What Paul does in a fund is bigger than that. Funds have multiple properties … which offers great diversity. 

With funds, you’ll see diversification across five or six different metrics. 

You’re diversifying across operators … across geographies … across asset types. You’re also diversifying across strategies and time.

All of that diversity helps create opportunities that are recession proof and still offer promising returns. 

Diversification across time is a particularly intriguing part of a real estate investment fund. 

An investor that joined a fund … say in June 2020 … would get the benefit of assets that have already been purchased by that fund. 

Basically, you’re buying into a portfolio, and about three quarters of the assets have already essentially been de-risked. 

Because a fund is diverse, you’re going to have a home run or two, a grand slam … and maybe a few base hits. 

In Paul’s current funds, you’ll find multifamily properties, mobile home parks, and even self-storage. 

Nothing in investment is guaranteed … but funds are pretty well protected pieces of collateral. 

Understanding operators and managers

When you talk about funds, you have managers and operators. Some people act as both. They have a property management company and they manage portfolios. 

That’s not how Paul’s team operates. They search out properties and operators. 

“We spend a lot of time getting to know the operators,” Paul says. “We get to know everything about them, about their company, about the way they treat their employees. That due diligence really pays off for us in the long run.” 

Paul says that the team is always more important than the property. Once you have a great operator, they can lead you to potential properties. 

The right operator can stay with you and shepherd you through whatever comes in the market. 

Paul’s job as a fund manager is managing and interfacing with these operators on behalf of all the investors who take part in the fund. 

“We have such good operators that we never want to try and take control, but we do stay in close touch with them and get regular updates on what is happening in the market,” Paul says. 

For more information on passive investing through real estate funds and what you could expect from working with Paul and his team … listen to the full episode!


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.


Love the show?  Tell the world!  When you promote the show, you help us attract more great guests for your listening pleasure!

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