Adiel Gorel: Updates. Covid-19. Strategies. Financing. Interest Rates. The Economy.
Raleigh-Durham: New homes in the Research Triangle. Jan Wynns
Oklahoma City: New homes. Great Areas & Cash Flow. Low taxes. Joe Pryor
Orlando & Tampa. Growth corridors in Central Florida. Space Coast. Jean Gillen
EXPERT: 1031 Tax Deferred Exchange and Reverse Exchange. Weiming Peng
Atlanta: New homes in Atlanta Metro. Tyra Connor
Jacksonville: New homes in Jacksonville & Ocala. Brian Scrone
Baton Rouge: New homes, High Rents, Growth. Michelle Ruston
EXPERT: Insurance as 1st line of defense for the RE investor. Joyce Feldman
EXPERT: Tax updates and optimizations for investors. Joshua Cooper, CPA
Adiel Gorel: Recap of day. Extensive Q&A. Covid-19 . Loans. Inflation
I was interviewed by Joe Fairless on his Podcast “The Best Real Estate Investing Advice Ever”.
You can find my interview on Joe Fairless’ podcast website: https://joefairless.com/best-ever-show-2/
My interview can be found under: JF2152 or via a search on my name.
The interview title is:
Joe was a great interviewer, and I enjoyed our talk. I didn’t only discuss the best markets. I talked about the awesome power of the FIXED 30-year financing we get only in the U.S. (it doesn’t exist in other countries, to the best of my knowledge).
Getting a mortgage with a fixed rate means inflation becomes your best friend, as it constantly erodes the real value of your monthly payment, as well as your loan balance. You usually don’t have to wait for 30 years. About half way through the loan term, the balance of the loan usually looks like a joke, and so does the monthly payment. I go into more detail about this important (and overlooked) point in articles I had written, in my books, and in my television show, the PBS Special “Remote Control Retirement Riches”. I’d be happy to send you the articles, as well as a link to the PBS show. Just email us at firstname.lastname@example.org.
I talk about the future financial transformation that buying new single family homes as rentals in the right markets. You buy in a good area. Local brokers help you and local property managers handle the home for you.
Over the past 35+ years, thousands of investors have bought over 10,000 rental homes in the best markets in the country. We have people from across the ocean investing as well. Clearly, the idea is that local managers do the heavy lifting for you. Now you can be as busy as you probably are, and still build a future-changing portfolio.
We started with me as a busy Silicon Valley engineer. I needed managers to handle the properties for me. Now they help you as well.
Joe asked me towards the end about losing money. I forgot to tell the story of how I “lost” money by simply having to learn the “art of doing nothing”. It took a few recessions for me to finally learn that when a recession is in progress, the best action for the owner of a rental home to do is “nothing” (the hardest thing for us to do , or “not do”).
Until I learned how to do nothing, I got rid of homes during recessions, and while that was not a direct loss, it prevented me from benefiting from those homes in the future, to the tune of a lot of money.
I enjoyed the interview very much, and I hope you find it useful. I hope it can change your future.
Adiel Gorel: Updates. Covid-19. Strategies. Financing. The Economy.
Tonya Debnam: Raleigh-Durham: New homes in the Research Triangle. Tonya Debnam
Joe Pryor: Oklahoma City: New homes. Great Areas & Cash Flow. Low taxes.
Jean Gillen: Orlando & Tampa. Growth corridors in Central Florida. Space Coast.
(EXPERT) Mary Joe Lafaye: Create reserves during Covid-19 w Reverse Mortgages.
Tyra Connor: Atlanta: New homes in Atlanta Metro
Brian Scrone: Jacksonville: New homes in Jacksonville & Ocala
Michelle Ruston: Baton Rouge: New homes, High Rents, Growth. Michelle Ruston
(EXPERT) Joe Merante : Make sure your credit does not suffer due to Covid-19
(EXPERT) Brett Lytle, Esq. : Asset Protection, entities. Covid-19 Risk avoidance.
Adiel Gorel: Recap of day. Extensive Q&A. Covid-19 Loans. Inflation.
For more information or to register go to https://icgre.com/events/icg-real-estate-1-day-online-live-expo-saturday-may-16-2020
One of the worries landlords have these days, is that due to the Covid-19 situation, some tenants who may lose their job, will be unable to pay rents.
We have already addressed this (banks also allow leeway in mortgage payments etc.). However one point to consider is the following.
Unemployment benefits have been beefed up aggressively by the government. Once people who are unemployed or partially employed start getting their unemployment benefits (hopefully any minute now), and due to the enhanced payments, many people will earn about as much as they did while they were employed. Especially in the median income territory, where a lot of our tenants live.
This is something to consider, as the fears may have been over-blown. The unemployment payments are slated to be serious, and make a big difference. The idea behind them is that unemployed or partially employed people, could pay rent, buy food and gas etc.
On the issue of the government stimulus overall, the US government has just come out with a stimulus of over 2 trillion dollars. The Fed is also injecting liquidity into the financial markets, to the tune what appears to be 4 trillion dollars. The Government is already seeking a second stimulus (possibly having to do with massive infrastructure once people can be out and work), also seemingly to be about 2 trillion dollars.
With all these trillions of dollars essentially just being “printed by the government”, any economist will tell you that it will very likely create inflation. Possibly a strong one, once things are recovered.
At the same time, interest rates are close to being the lowest in history.
Once again, you can buy a single family home now, with a 30-year fixed rate loan at maybe the lowest rate ever. Then the home price is likely to go quite a bit higher just due to inflation (not even counting real appreciation). The mortgage does NOT go up with inflation, of course. Thus, as I always say, the 30-year loan gets eroded by inflation, and your equity gets built up faster thanks to inflation. Hard assets benefits during inflationary times, and are usually the safe havens investors go to. Single family homes are not only a hard asset , but an undeniable necessity (as opposed to office buildings, for example, since people can work from home. From HOME! Yes they need a home). Also, they are the asset class on which the fixed rate loan, which never changes with inflation for as long as 30 years, can be obtained.
When inflation hits hard, you will likely feel pretty smart having bought single family home investments, with fixed rate loans.
We hear the concern that some tenants may not be able to pay rent due to the Corona virus crisis.
While this is a valid concern, there are a couple of things to consider:
We talk about buying new homes in good areas. When these are the homes you buy, the likelihood of your tenants being “white collar” is high.
White collar employees are the ones who usually have the easiest transition to working from home. These would be high tech employees, engineers, etc. These types of employment lend themselves easily to working remotely, working from home, using Skype and Zoom for video meetings etc.
Thus, the likelihood of white-collar employees not being able to pay their rents is lower.
This is another example of why it makes so much sense to buy good homes in good areas.
Many new investors are attracted to the lower costs and supposed better cash flow (on paper), of house located in bad areas.
What is happening now is just one example of why that may not be a good idea.
An exception is very low-end areas, where most of the tenants are HUD-and-Section-8-helped tenants. HUD and Section 8 will continue to pay rent for the tenants regardless. However, these types of houses are always challenging and their future appreciation may not be as high as good homes in good areas.
During the last recession, which started in 2008, we obviously bought homes not only in good areas, but picked up bank foreclosures in any areas, including blue collar locations. However, during regular times, buying brand new homes in good areas is a staple of smart investing.
There may also be help on the other end for landlords, if rents aren’t being paid, there are forces now working with lenders to give abatements and postponements of mortgage payments. When there is an issue at one end, the other end has to be addressed as well. In California there are already lender concessions to 90-day delay on mortgage payments by some of the major banks, with no repercussions to the mortgage payers, or late fees. It is likely that the rest of the nation will follow suit.
We will discuss this, and other issues, during our next big 1-Day Expo on May 16th. If by May 16th large public gatherings are still not happening, we will have the event online.