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Real Estate Investing with Keith Weinhold
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Keith discusses the current state of the real estate market, highlighting that single-family rents have risen 41% since pre-pandemic times, while multi-family rents have increased by 26%. Single-family rents have been rising faster than prices for nine months, benefiting investors.
Austin, Texas, is an example of how increased supply can lower rents, as seen in their drop in rents after the city relaxed building regulations.
Show Notes:
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Complete episode transcript:
Automatically Transcribed With Otter.ai
Keith Weinhold 0:01
Welcome to GRE I'm your host. Keith Weinhold, build it and rents will fall. I discuss the direction of rents and prices today on get rich education.
since 2014 the powerful get rich education podcast has created more passive income for people than nearly any other show in the world. This show teaches you how to earn strong returns from passive real estate investing in the best markets without losing your time being a flipper or landlord. Show Host Keith Weinhold writes for both Forbes and Rich Dad advisors and delivers a new show every week since 2014 there's been millions of listener downloads of 188 world nations. He has a list show, guess who? Top Selling personal finance author Robert Kiyosaki, get rich education can be heard on every podcast platform, plus it has its own dedicated Apple and Android listener phone apps build wealth on the go with the get rich education podcast. Sign up now for the get rich education podcast, or visit get rich education.com
Corey Coates 1:13
You're listening to the show that has created more financial freedom than nearly any show in the world. This is get rich education.
Keith Weinhold 1:29
Welcome to GRE from elizabeth new jersey to Elizabeth, Colorado and across 188 nations worldwide. I'm Keith Weinhold, get rich education, founder, Forbes real estate council member, Best Selling Author and long time real estate investor, you are inside, get rich education. What's that all really mean? Ah, I'm just another slack jod and snaggletooth podcaster.nationally, rents for single family homes are growing faster than for multi family apartments. Okay, that you might have already known, because for a few years, we've been in this era where available single family rentals are scarce and apartments are closer to being adequately supplied across the nation. We're now at the point where median single family home rents are up 41% since those blissful and Halcyon pre pandemic days, and yet, multifam rents are up just 26% since that time. So it's 41 versus 26 and that's all according to a new report from Zillow. Now you probably listen to this show every week, so although that might be a helpful update, you probably don't find those facts surprising at all. But here's a more nascent trend that could surprise you. Every single month for the past nine months now, single family rents have risen faster than single family prices. Yeah, the John Burns home value index is up 3.3% annually, and the rent index shows that those rents are up 3.6% so 3.6 versus 3.3 really not a big gap there, but single family rents rising faster than prices for nine months. You know that's exactly what swings things into your favor as a real estate investor, it increases your ratio of rent income to purchase price. This has been happening because for someone that needs housing out there, paying rent has looked more affordable than buying a home. So then those things have to soon come back into balance. Now you remember that five months ago, I visited Austin, Texas, walked the streets and with all of the new building of apartment towers there, I called it America's oversupply, ground zero for apartments. Well, I'm not sure if you've noticed, but here, a few months later, major media sources are now reporting on the same thing that I was telling you about on the ground five months ago, and this is really insightful for real estate investors in a real world case study that will be on every intro to economics syllabus this fall, rents in Austin, Texas plunged. They fell 22% from their peak a couple years ago after the city accelerated permitting processes and scaled back the rules on building height, and this is exactly what created Austin's apartment supply surplus and therefore lower prices for renters. Bloomberg was the one recently reporting on this. So Austin's, if you build it, rents will fall mantra that created about 50,000 new units over just the past two years, a 14% increase. I mean, that is the biggest spike in supply of any US city. Over that time, just tons of cranes in the air. And by the way, the median asking rent in Austin, Texas is now $1,400 remarkably, though, that is down a full 400 bucks from the height of the pandemic. I mean, that is such an aberration That is so weird and rare. Yeah, Austin rents dropped from $1,800 down to $1,400 in in fact, that is so weird, and they've fallen so much that notoriously pricey Austin is no longer the most expensive city in Texas. It's now DFW. And you know, this is astounding on a few levels, because typically rents are even more stable than home prices. Gosh, but now to take off our investor hat for just a minute. Don't worry, we'll put it right back on. This is what society needs. I mean, how in the world are we the nation that put a man on the moon in 1969 yet we can't house our own people today. It's what I've discussed before. We need to build more. If you build it, rents will fall. If you build it, home, prices will become affordable. Again, we're not doing enough of that. Not enough places are following Austin's model. Up zoning, as I've told you before, up zoning. That's the name for allowing taller building heights. And you know what? That's something that both developers and environmentalists often like. Both types developers get what they want, and environmentalists know that housing and the economics of that are more efficient. There's less energy use in everything when we build up and we build apartments rather than single family homes, Austin relaxed regulations and they got it done. So congrats to them. I mean, that is a model for what we can do to address not only housing affordability, but the swelling homelessness problem like I enjoy talking about as well. So yeah, congrats, Austin, though you might have gotten too far ahead of your growth for the short term. America really needs the housing so thank you.
Now here's some ominous news for society and the economy. I wouldn't make too much of it yet, but the Atlanta Fed tracker has plunged. They're now forecasting a shrinking economy this quarter, minus one and a half percent. GDP is a projection which that gets us going down into recession territory, and part of the reason for that is this recent drag in consumption. But news like that can come and go, and we all know how frightfully just laughably bad recession predictions have been for years. We haven't had one in five years. So I want you to get the longer term lesson here, because things pop up like this over time. What usually happens to real estate in a recession? Because we know that there's going to be one. No one knows when. What happens is that unemployment rises. That is bad, home prices go up. Yes, home prices typically rise modestly in a recession. Just remember, since World War Two, home prices only fell significantly in one period, and it was a bad one in those years around 2008 what happens to interest rates? Interest rates of all kinds. In a recession, they fall. Interest rates fall. The Fed make sure that happens, and the reason for that is rates fall because the economy needs the help to review what you've learned so far today, single family rents are rising faster than apartment rents. Single Family rents are rising faster than single family home prices, although not by much. And Austin is proof that if you build it, prices will fall. And during recessions, residential real estate is a good place to be. I'm Keith Weinhold. You're listening to get rich education.
You know what's crazy, your bank is getting rich off of you. The average savings account pays less than 1% it's like laughable. Meanwhile, if your money isn't making at least 4% you're losing to inflation. That's why I started putting my own money into the FFI liquidity fund. It's super simple. Your cash can pull in up to 8% returns, and it compounds. It's not some high risk gamble like digital or AI stock trading. It's pretty low risk because they've got a 10 plus year track record of paying investors on time in full every time. I mean, I wouldn't be talking about it if I wasn't invested myself. You can invest as little as 25k and you keep earning until you decide you want your money back, no weird lock ups or anything like that. So if you're like me and tired of your liquid funds just sitting there doing nothing, check it out. Text, family to 66866, to learn about freedom. Family investments, liquidity fund, again. Text family to 66866,
hey, you can get your mortgage loans at the same place where I get mine, at Ridge lending group NMLS, 42056, they provided our listeners with more loans than any provider in the entire nation, because they specialize in income properties, they help you build a long term plan for growing your real estate empire with leverage. You can start your pre qualification and chat with President Caeli Ridge personally. Start Now while it's on your mind at Ridge lendinggroup.com, that's Ridge lendinggroup.com.
Richard Duncan 12:46
This is Richard Duncan, publisher and macro watch, listen to get rich education with Keith Weinhold, and don't quit your Daydream.
until next week. I'm your host. Keith Weinhold, don't quit your Daydream.
Speaker 1 40:20
Nothing on this show should be considered specific, personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own. Information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of get rich Education LLC, exclusively.
Keith Weinhold 40:48
The preceding program was brought to you by your home for wealth, building, getricheducation.com
A crying, sniffling mother reveals how inflation is ravaging her family. Despite a two-parent income, she tells us that they're trending toward poverty due to wages that struggle to cover inflated prices.
For home prices to fall, many homeowners need to walk away. But if they tried that today, they'd have to pay more in rent than they would on their low mortgage payment.
It's absurd to only have one source of income.
401(k)s are considered a scam by some. I explain. Plan participants buy an income stream "probably later". Real assets that cash flow provide income "surely now".
There's no such thing as: rent inflation, food inflation, or energy inflation. Inflation comes from the central bank.
One dollar in 1776 has the purchasing power of $35.36 today.
The worst consequence of inflation is that one parent could work to be middle class in the 1950s. It became two by the 1990s. After the 2020s inflation wave, two parents might not be enough anymore.
I explain why the Fed should keep interest rates the same for at least one year. But I doubt that they will.
Resources mentioned:
Show Notes:
Terrific inflation resource, charts:
https://www.officialdata.org/us/inflation/1776
For access to properties or free help with a
GRE Investment Coach, start here:
Get mortgage loans for investment property:
RidgeLendingGroup.com or call 855-74-RIDGE
or e-mail: [email protected]
Invest with Freedom Family Investments.
You get paid first: Text FAMILY to 66866
Will you please leave a review for the show? I'd be grateful. Search "how to leave an Apple Podcasts review"
Top Properties & Providers:
GRE Free Investment Coaching:
Best Financial Education:
Get our wealth-building newsletter free—
text 'GRE' to 66866
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Keith's personal Instagram:
If you own a real estate entity (like an LLC), the new Corporate Transparency Act (CTA) must be complied with soon.
I have my own attorneys on the show to discuss this today, Garrett and Ted Sutton.
You must report ownership information to the federal government. It must only be done one-time, not annually.
The penalties for non-compliance with the CTA can be as high as $10,000 in fines or up to 2 years in jail. Those penalties would be for the most egregious acts.
The intent behind the CTA is to prevent money laundering and terrorist financing.
If you don't own real estate in an LLC, you probably won't need to comply. There are pros and cons of using LLCs, which I discuss.
For help complying with the CTA, you can contact Corporate Direct at CorporateDirect.com or (800) 600-1760.
Resources mentioned:
Show Notes:
Corporate Direct:
CorporateDirect.com
1-800-600-1760
Video platform with kids' FinEd:
SunnStream.com/fivetricks
For access to properties or free help with a
GRE Investment Coach, start here:
Get mortgage loans for investment property:
RidgeLendingGroup.com or call 855-74-RIDGE
or e-mail: [email protected]
Invest with Freedom Family Investments.
You get paid first: Text FAMILY to 66866
Will you please leave a review for the show? I'd be grateful. Search "how to leave an Apple Podcasts review"
Top Properties & Providers:
GRE Free Investment Coaching:
Best Financial Education:
Get our wealth-building newsletter free—
text 'GRE' to 66866
Our YouTube Channel:
www.youtube.com/c/GetRichEducation
Follow us on Instagram:
Keith's personal Instagram:
Will higher interest rates and inflation persist for a decade?
An upcoming recession always seems to be perpetually just around the corner. Learn when it should finally happen.
Macroeconomist Richard Duncan joins me. I tell you a funny story about when he was GRE's first-ever guest in 2014.
Currency is now being destroyed—called Quantitative Tightening.
Negatives for future asset prices: QT, higher rates, student loan debt repayment, stronger dollar, asset prices already inflated, high personal asset-to-income ratios, higher oil prices, looming government shutdown.
Positives for future asset prices: monetary stimulus hangover, high employment, CHIPS and Science Act, Inflation Reduction Act, The AI Revolution, prospect of lower future inflation and interest rates.
Richard provides his opinion and insight on today's real estate market.
If inflation-adjusted credit growth is less than 2%, expect a recession. If it goes negative, expect a depression.
Get a 50% Discount on Richard Duncan's MacroWatch video newsletter. Use the code "GRE" at: RichardDuncanEconomics.com
Resources mentioned:
Show Notes:
Get a 50% Discount on Richard Duncan's MacroWatch video newsletter. Use the code "GRE" at:
For access to properties or free help with a
GRE Investment Coach, start here:
Get mortgage loans for investment property:
RidgeLendingGroup.com or call 855-74-RIDGE
or e-mail: [email protected]
Invest with Freedom Family Investments. You get paid first: Text 'FAMILY' to 66866
Will you please leave a review for the show? I'd be grateful. Search "how to leave an Apple Podcasts review"
Top Properties & Providers:
GRE Free Investment Coaching:
Best Financial Education:
Get our wealth-building newsletter free—
text 'GRE' to 66866
Our YouTube Channel:
www.youtube.com/c/GetRichEducation
Follow us on Instagram:
Keith's personal Instagram:
At age 20, you're actually happy to trade your time for money.
At 30, many have realized that they don't want to work at their job for the rest of their lives.
At 40, if you have collected things that pay you to own them, you're financially-free.
Instead, by age 50, corporate ladder-climbers often realize that their ladder was leaning up against the wrong building.
Most people play the wrong financial game all their life. You want to get financially-free first. You can get debt-free later.
"The Debt Decamillionaire" concept is revisited.
Learn how to get 4.75% mortgage rates for Florida income property with what is known as a "builder-forward commitment". Start here.
What about hotly spiking Florida property insurance? We discuss how premiums have been kept in-check with post-2004 built property and more.
Expect $3,200 rents on a new-build $474K duplex with 4.75% mortgage rates in Southwest Florida.
SFRs are available too. Start here.
There's free PM for the first year too.
Resources mentioned:
Show Notes:
4.75% mortgages in Florida:
If you'd like help with one of
GRE's Investment Coaches (free), start here:
Get mortgage loans for investment property:
RidgeLendingGroup.com or call 855-74-RIDGE
or e-mail: [email protected]
Invest with Freedom Family Investments. You get paid first: Text 'FAMILY' to 66866
Will you please leave a review for the show? I'd be grateful. Search "how to leave an Apple Podcasts review"
Top Properties & Providers:
GRE Free Investment Coaching:
Best Financial Education:
Get our wealth-building newsletter free—
text 'GRE' to 66866
Our YouTube Channel:
www.youtube.com/c/GetRichEducation
Follow us on Instagram:
Keith's personal Instagram:
Monologue transcript:
Welcome to GRE! I'm your host, Keith Weinhold. Financially, you need to play a game worth winning. It's not about being debt-free. Instead, I discuss how at each age-when you're 20, 30, 40, 50 and beyond, it's about being financially-free.
Then, in an era where mortgage rates are 7 to 8%, we go straight to the source, in Florida, on how to get 4¾% mortgage rates on new-build property. Today, on Get Rich Education.
___________
Welcome to GRE! From Framingham, MA to Dillingham, AK and across 188 nations worldwide, yeah, you & I are back together here on Episode 471 of Get Rich Education. I'm your host, Keith Weinhold.
You've got to play a game worth winning - with your personal finances. Most play the wrong game.
Now, you're already initiated on this. Debt-free just means that you don't owe anyone anything. FF means that you've got enough passive income that you can do what you want to do, when you want to do it. FF is the flex.
Now, when you're around age 20 - you might be new to full-time employment.
And you know what, it actually can feel kinda good when you're in your early twenties are you're being paid what feels like a respectable income for the first time in your life.
Now, ten years go by, and by the time that you're 30, you know, I think that a lot of work-a-day job types - you might tell yourself, ya know, making money is alright at this point. But I really don't want to do this for the rest of life.
Maybe around age 30, you pursue alternative avenues of more RESIDUAL income.
But some people just keep plowing ahead hating big chunks of their life and devoting energy at a full-time job, because somehow, you feel like you HAVE to.
Others, though it's a minority, it's you. Because, instead, maybe around age 30, you tell yourself that you'd rather start building things that pay you to own them.
The mindset supersedes the grindset.
And by age 40, you're out. You're out of that soul-sucking job and you're living that life that you've always dreamed of living already. It sure could happen earlier.
And by age 50, you're so glad that you chose the financially free financial track in life - rather than the debt-free track.
Back on the slow, scarce debt-free track - the people that mistakenly think that debt-free is the game worth winning - they're still losing their zero-sum, non-replenishable resource of time in their 30s and 40s and 50s and 60s and maybe 70s.
Perhaps somewhere around 30, abundantly-minded, aware people like you developed your divergent, not-running-with-the-herd FF path instead.
You believe that money is an abundant resource - because you start having it all around you.
You built a financial windfall for yourself with simultaneous RE cash flow, leverage, and arbitrage while you're young enough to enjoy it.
Instead, the "work at a soulless job" type tries to get debt-free, climb the corporate ladder, and believes that money is a scarce resource (which is why they think they need to be debt-free). They defer their life and get eaten up by inflation and zero passive cash flow.
THAT person, by age 50, is asking themselves where all the time went. It went to a job that you're not passionate about - and you can't change history. All those time chapters of your life… are… gone.
And you begin to realize that the corporate ladder that you climbed… was leaning up against the wronggggg building for decades.
Those are two paths of those in their productive working years - the "there's never enough" debt-free world vs. the "money is abundant" FF world.
If you retire debt, like paying off a mortgage early, all those dollars are gone, when they could have been leveraging, say, 5 properties at once.
Now, if you're late to realize this, like you didn't have the FF epiphany by 30 or whatever. It's not too late.
You'll remember that in recent months here, we had two GRE listeners come on the show for two different episodes - Scott Saunders and then Shawn Finnegan.
Shawn - you might remember that was the inventor of a home gym system - he didn't hear this show & start until he was 52 and he's gotten to his first $2,000 of passive cash flow fairly quickly.
FF beats DF. And FF is the game worth winning.
Retiring debt early means your dollars can't be employed in true wealth-building activities.
Now, look. You might call me old-fashioned on this. But I like the integrity of doing what I say that I'm going to do, following through, and following up.
We check back at the end of the year to see how GRE's housing price appreciation forecast from the previous year actually went.
Back in January, we had the return of an agricultural RE principal where the cash flows DIDN'T hit what were targeteded, so we followed through and discussed why THAT happened.
And now…
You might remember that a few years ago, here on the show, I introduced you to the novel concept of being the Debt Decamillionaire.
That means that you've achieved $10M in debt - which doesn't sound like an achievement to most people. That's the Debt Decamillionaire. I recommended this as a desirable path for you - though many could deem it iconoclastic or even heretical.
If the only thing that I knew about you is that, say, you had $10M in real estate debt, I'd know that the chances are good that you're a financial WINNER.
Yep, it's actually unlikely that $10M in debt would make you a loser.
Not only would you have to be creditworthy to even get $10M of debt… just think about if you would have tied up that much debt, say, five years ago.
Well, how has it actually gone for the person with $10M in income property debt over the past 5 years?
We've had perhaps… 25% cumulative inflation since then - with higher wages, prices, salaries, and rents.
So then, your $10M debt is whittled down to just $7½M of inflation-adjusted debt.
So inflation passively beat down your debt for you, plus your tenants would have paid it down to somewhere below $7M.
So now, you'd be $3M wealthier, just off the debt debasement alone.
Meanwhile, over on the asset side, your property value that you borrowed against might have gone from something like $12M up to $18M… and all
While it created ALL that leverage plus some cash flow and tax benefit for you at the same time.
If you only managed to tie up $1M in investment property debt, then just take 10% of all those numbers.
And pat yourself on the back for being a debt MILLIONAIRE. Ha! Not Debt Decamillionaire.
Instead, high inflation made the debt-free approach hurt - really sting over the last five years. The opportunity lost!
DF is playing small ball, saying money is a scarce resource, and it even correlates more with people being addicted to a paycheck.
There's a benefit to a paycheck. But is the trade-off worse? Paycheck dependence is like you being addicted to a TIME thief.
That is, unless you get an unusually extraordinary amount of meaning from your work. In that case, great.
Now, a high interest rate environment could narrow the gap between how much better FF is than DF. But we're not in one of those. We're in a historically average interest rate environment.
But in just a few minutes here, we'll bring in a prominent American homebuilder of BTR homes that'll tell you how to still get mortgage rates as low as 4¾%.
In fact, the time in the market cycle is really right for talking about this. You'll remember that last month, Housing Intelligence Analyst Rick Sharga & I discussed why today's market is a good opportunity for residential REIs.
It's a bad market for primary residence HBs
It's a bad market for flippers
It's a bad market for real estate agents - with lower sales volume.
And it's a… decent market for many homebuilders.
I am in Chicago today.
Next week, I'll be in - my home state - the Keystone State of PA. I'll Sit down with Richard Vague, the Secretary of Banking and Securities for the great Commonwealth of PA from 2020 to 2023, there in the state capital, Harrisburg.
It is a cabinet-level agency.
He was appointed to that position by PA's Governor.
He also sits on the Ivy League University of Pennsylvania Board of Trustees.
I'll be sure he understands some core GRE principles here and get HIS opinion on those. That should be a really interesting episode next week. I don't know what kind of turn that's going to take.
To review what you're learned so far, I think you already know that FF beats DF.
Rushing to be debt-free exacts an opportunity cost on you. It postpones what you really want - Financial Freedom… and once you get FF, if you do desire to be debt-free then, hey, great!
Let's discuss how to get lower Florida insurance premiums, 4¾% mortgage rates and a free year of property management.
A lot of our listeners have acted on this. And I don't want you to miss out because I don't know how long it can last.
___________
Usually, you see fewer investors that want to exchange their properties in a higher interest rate environment, because you're trading in a lower rate property for a higher rate property.
But here, 1031s look more attractive because we've bent that back with rates down to 4.75% + lower insurance premiums on post-2004-built Florida property plus 1 year of free PM.
So many of you have been acting here on this - either by yourself at GRE Marketplace, or working through one of our free Investment Coaches. So, if it can help you, don't miss out. This won't last forever.
You can get started at: GREmarketplace.com/Southeast
Until next week, I'm your host, Keith Weinhold. DQYD!