TGCI 154: Is it a good time to invest in real estate? Why do the prices keep going up?

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Episode 154: Is it a good time to invest in real estate? Why do the prices keep going up?

Copy of EP #18 - 2 Guests

Summary

In today’s show, Pancham interviews Kathy Fettke – Co-Founder and Co-CEO of Real Wealth Network, host of the Real Wealth Show, and author of Retire Rich with Rentals.

Asset prices have been continuously growing – stock markets, real estate investments, cryptocurrencies, gold, and many other assets. So with prices inflating, when is the perfect time to invest in real estate? Kathy is back on the show to help us answer your unanswered questions!

In today’s episode, listen as she unpacks her insights on real estate investing as she’ll share her insights in what is actually going on in the market today. With her knowledge, she’ll discuss her assessment on the impact of Federal Reserve’s changes in interest rates, the current trends in real estate investments, and her criteria on what you should look for when investing.

 

Listen and enjoy the show!

PanchamHeadshotTGCI
Pancham Gupta
Screen Shot 2021-08-27 at 2.22.45 PM
Kathy Fettke

Tune in to this show and enjoy!

Copy of Quote #00 - 1 Guest

Timestamped Shownotes:

  • 1:04 – Pancham introduces Kathy to the show
  • 3:24 – On 18 years of investing and why she’s still captivated by it
  • 7:17 – Why assets prices inflate and what you should pay attention to
  • 13:07 – How the increase in money supply impacted the market
  • 20:17 – Why job and population growth should be considered when investing
  • 24:40 – Focusing your investments on business-friendly areas
  • 29:23 – How eviction moratoriums affected investor’s businesses
  • 34:27 – Why investors should know that not investing is the real risk
  • 38:18 – Where you can connect with Kathy

3 Key Points:

  1. Price inflation has been happening due to money printing and its increase in supply, and unlimited mortgage buying that its liquidity has to go to different kinds of assets.
  2. Analyze the supply and demand when you would invest in a certain area. Invest in properties that you’ve predicted will cashflow.
  3. Massive demographic shifts such as the rise of millennials are anticipated so it’s best to look at their growth and trends.

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Read Full Transcript

Welcome to The Gold Collar Investor Podcast with your host, Pancham Gupta. This podcast is dedicated to helping the high paid professionals to break out of the Wall Street investments and create multiple income streams. Here’s your host, Pancham Gupta.



Hi, this is Joe Fairless. If you want to diversify out of Wall Street investments, then listen to The Gold Collar Investor Podcast. 

 

Pancham Gupta  Thank you for joining me today. I really appreciate you for being here. I hope you’re enjoying the podcast and also learning at the same time. You know, every day, the real estate prices are going up, the stock market is going up the day I’m recording this gold hit all-time highs, gold and silver is going up. All prices are going up, crypto prices are going up. It’s becoming unaffordable for many people to even buy a starter house. So, I get this question all the time. And I don’t blame anyone for asking that question. And the question is, is it a good time to invest now? So, to help answer this question, I have invited Kathy Fettke back on the show. She is a co-CEO and co-founder of Real Wealth Network. Kathy specializes in teaching people how to build multimillion dollar real estate portfolios through creative financing and planning. She is passionate about researching and then sharing the most important information about real estate market cycles and the economy. Author of the number one best seller, Retire Rich with Rentals. Kathy is a frequent guest expert on media such as CNN, CNBC, Fox News, NPR, and CBS Market Watch. She actually wants debated Robert Shiller, who is the inventor of the Shiller Index, which tracks the prices of real estate all across the country. Glad to have her back on the show. Kathy, welcome to the show. 

 

Kathy  Thank you so much for having me back. 

 

Pancham Gupta  Yeah, I’m super excited to have you back on the show. Last time we recorded the show was in February of 2020. And I do remember that date so succinctly is that because that was my last conference, probably yours last conference too before the pandemic hit.

 

Kathy  Yeah, we were at an event with a thousand or more people, I don’t know a lot of lots of people. And there was food sitting out on tables that people were talking over and probably spitting on. And you know, we’re at dinner events passing food. Yeah, we were pretty clueless.

 

Rajan  Yeah. And I remember was pretty much last week of February and second week of March, we were in complete lockdown. Yeah, so it’s like a lot has changed since then. It was supposed to be 14 week, flatten the curve to here we are year and a half later. So really, really happy to have you back. And listeners, if you have not listened to that show, It’s really interesting. We talked about retreat in Costa Rica that Kathy was working on. And if you haven’t listened to that show, you can go to thegoldcollarinvestor.com/show33. So, Kathy, are you ready to fire up my listener break out of Wall Street investments? 

 

Kathy  Absolutely. Let’s do it. 

 

Pancham Gupta  Yeah, I’m super excited here. So, you know, for people who have not heard your first show, and they don’t know much about you. Can you tell us about your background? And more importantly, the person behind that background?

 

Kathy  Oh sure. Yeah, I’m the co-founder and co-CEO of Real Wealth. And we have over 57,000 members now. I have the real wealth show podcast is one of the first ones that was out, I’m still finding new things to talk about after all these years, because real estate just never is boring and there’s always, always changes and things going on, so it stays interesting, which is probably why we’re all addicted to it. And I also wrote the book Retire Rich with Rentals back in 2002, 2003, my husband was diagnosed with melanoma, it looked like it had spread. The doctor told him he had maybe six months at best, they didn’t really have the treatments that they have today. Fortunately, he is fine today. And we just make sure he gets his skin checked all the time, because he’s a redhead. But at that time in 2003, we didn’t know, you know, we just didn’t know. So, we spent a lot of money, we kind of depleted our emergency funds and savings and retirement during that time because obviously, if the doctor was right, working for the last six months of his life was not the best idea. So, I kind of took over the finances, and he stopped working and we had medical bills. And that’s when I went on this mission to find out what’s an alternative. I know I’m not the only person who’s run into emergencies or surprises that kind of deplete the savings. It can be a whole lot of things right. So, I went on a mission to learn from others. How can you create multiple streams of income? What is this thing called passive income like nobody understands it, but some people do. You know, most people don’t so I just started interviewing as many people as I could find who did understand it and who could enlighten me. And here I am. What is it now? 18 years later, still obsessed with it. still learning and still teaching still acquiring properties that, you know, that provide that?

 

Rajan  Yeah, awesome. And you know, you mentioned your podcast, believe it or not, before I even started my own podcast, actually, before I got into really full time into real estate, I really used to listen to pretty much a lot of shows and the podcasts and people who have not listened to it. Go check out it’s right behind if you’re watching it on YouTube, right behind on Kathy’s wall, Real Wealth Show, and real estate news.  Real estate news is actually really, really good because you actually do very short five minute, whatever, 5-10 minutes of clips from that week or that day. So yeah really, really kudos to you for doing those and it’s awesome.

 

Kathy  Thank you. Yeah, it was really my way of staying on top of the news because back in 2012, I was asked to be on Fox news to debate Robert Shiller, The Case Shiller index. And I was absolutely terrified, but I also couldn’t turn down that opportunity. He was debating that in 2012. It was a dangerous time to invest in real estate and I was debating like, no, it’s the best time ever, and you’re getting properties for 10 cents on the dollar and cheap interest rates, and you can, you know, get triple the cash flow of your mortgage payment. I’m like, no, no, this is the biggest transfer of wealth ever. By the end of that debate, he agreed with me. And then that led to so many more live TV interviews worldwide. And I just thought, oh, boy, I better know what I’m talking about. So, I thought, what better way than to start a podcast, a real estate news shows so that every day I’d be responsible for providing news. And then if I got a last minute call to be on a big major news outlet, I would be prepared. So that’s kind of how that started.

 

Rajan  Wow. That’s an amazing story. So, it’s funny, you mentioned your debate with you know, Robert Shiller in 2012, where he was debating that why it is not a good time to invest and you were debating why it is a good time to invest, right? 

 

Kathy  Yeah, 

 

Pancham Gupta  Here we are. Actually, you know, believe it or not, in 2021, nine years later, we have, you know, there is a lot, a lot going on in the economy and a lot of people say there’s a shadow economy, there’s a lot going on there. And in last one and a half years, some unprecedented things have happened, right? The lock downs, the stimulus packages, which never seem to end, the eviction moratoriums, which never seem to end, we went through a change in presidency right there. It’s been a roller coaster ride, right? And at this point, asset price inflation is happening at a record pace, you take anything, stocks, Bitcoin, any of the cryptocurrencies and you take real estate you take, you know, gold and silver for somewhat and the commodity, the gas prices, everything is going up, right. So, what do you think is going on and is it the right time to invest in real estate?

 

Kathy  Yeah, it’s such a good question. If you asked me back during that debate how long the bull run would go? I’m not sure I would have expected for a full decade. Although what we did see was it was kind of a slow recovery over the past 10 years. It just chugged along. If you look at the charts, the recovery took much longer than past ones. And it really was the one of the few recessions that affected real estate, because it really was kind of caused by real estate, right, by the bad mortgages, past recessions. real estate didn’t really dip that much, which is kind of interesting, right? But you know, so here we are. And there’s been a few times over the past 10 years that I thought, okay, we probably hit the peak. Now, we might be there. And I think in in 2018, I was pretty sure of it, because that was the time when the Fed was raising interest rates, short term overnight rates and called tapering, which means not buying the mortgage backed securities anymore. So, without that liquidity without the Fed coming in and bringing all this money into the mortgage market in 2018. things really did slow down for a few months. That’s when, as you may recall, I’m afraid to say his name because people get mad when even say it. But anyway, our president at that time was name sounds like.

 

Pancham Gupta  Yeah. Anyway, President,

 

Kathy  President Trump, so he had an argument with the chairman of the Fed at the time and said you need to lower rates stop raising them or you’re going to take us into a recession. I don’t know if it was the right thing or the wrong thing. I don’t know, all I know is there was a battle there, Trump won it, the Federal Reserve started lowering rates again, right in 2019 and then 2020, hit right. So then, of course, they lowered rates more. Anytime you lower rates, that’s the whole intention is to, it fuels the economy. And anytime you raise rates, the whole point of that is to slow things down, so it doesn’t overheat. It’s sort of this lever that the Fed has to control things. And sometimes they overdo it or undo it in the past, it was almost always overdoing it almost every time that they would raise rates, they raised it till there was a crash. That seems to be a pattern in the past. And the President at that time did not want that to happen on his dime, right? So, it reversed, and interest rates came down, and the market took off again. So, it was only maybe six months of slowdown, but not a drop in prices by any means just a slowdown of the frenzy.

 

Pancham Gupta  Yeah, and that like little bit of flattish

 

Kathy  Kind of flat, we were, you know, we have seven, maybe five now, subdivisions that we’ve syndicated, and we bought land, and we’re building houses. So being in the house building business, in addition to helping investors buy rental properties, it was a really scary time, when you start to see interest rates go up and sales sort of slowed down on our projects. Well, then, as you know, you know, we were together and Colorado in February of 2020, right before everything shut down. And I had given an actually at that event, I’d given my predictions. And my predictions were, everything seems fine, but it could change on a dime. And you’ve got to be prepared for that. And you’ve got to make sure that your underwriting is prepared for the possibility of rents to go up or down. We just don’t know. There could be a black swan event. And little did I know that as I was speaking, the Black Swan had arrived. 

 

Pancham Gupta  Exactly. It was dead knocking on the door; we just didn’t know it. 

 

Kathy  So, so you know, of course, panic and then very quickly, I think it was March, right ,when things shut down, the Fed came in and said we will, we will do an unlimited quantitative easing, unlimited purchase of mortgage backed securities to help the commercial real estate and residential real estate stay afloat. Without that. I don’t know where we’d be today. I don’t think we’d be where we are right now. But without an unlimited supply of money to lend at low rates. I mean, let’s be honest, where, you know, we would not have a booming housing market, it’s also dependent on what the Fed does. So that’s what we really have to be paying attention to, right.

 

Rajan  Right. So, what you’re saying is that because of that unlimited, mortgage buying, like, you know, the spending spree basically, and it’s money printing, that happened, that is really taking off and that took off. And because of that liquidity, it kind of had to go somewhere. And it went into all these separate different kinds of assets. Even the things which are not assets are going up for whatever reason, you know, these NF T’s? I don’t know, in crypto market, they went up. And so given that all that has happened, and now we are talking about this $3.5 trillion of infrastructure, well, I don’t have not gone through the like the highlights of the bill. I don’t even know what’s in there. How much is it really infrastructure and how much is , I’ve not infrastructure, 

 

Pancham Gupta  Lots of work, right, but nevertheless, 3.5 trillion is a lot of money in terms of percentage, if you think compared to 28 trillion of total supply, it’s more than like, 10% of that. So that could happen. If that happens here. This thing, in my opinion, would not stop it will continue and will who knows when it would stop? But if that does not happen? I don’t know. So, like, what’s your take on like how long this forever, Bull Run will stop? I know, it’s if you don’t have a crystal ball, but like, are you buying stuff in this market? Let me put it this way?

 

Kathy  Lots of work?  Well, I can, I can tell you that politicians are addicted to this ability to print money. And that’s been evident, since the Great Recession, there was some restraint before 2008 where there was a lot of talk and discussion about Ooh, should we add to the money supply? No, Billy a few billion. And that was a big deal. That was a big discussion. Then after 2008 and we were talking trillions and now we throw trillions around like it’s nothing and we’re all pretty addicted to how good that feels to suddenly have a whole bunch of money and money for all the things you want. Oh, let’s write off student debt. 

 

Pancham Gupta  Yeah, give everything out, like you know.

 

Kathy  Whatever. I mean, all these things are good. Not all but you know, a lot of the things that the money goes to is like, well, yeah, why wouldn’t you want that? The problem is nothing is free, and there isn’t a lot of understanding of what happens next, then nobody really knows that’s kind of the scary thing, because we’ve never done this. And, you know, we don’t know how it’s going to end. But we do know that as a, here’s the thing, if you have a limited number of assets that you know, things people want, let’s say, there’s 20 people in a room, and there’s 10 cookies, and everybody’s hungry, and a box of money goes around, and it’s like free money free money, you know, you’re going to spend whatever you need to spend to get that cookie if you’re hungry. So, when there’s a limited number of things that people want, and a whole lot of money chasing it, obviously, asset values are going to go up and the value of the currency is going to go down, because more of it keeps coming into the room, right. So that is the addiction that we’re seeing is political addiction to creating money because, again, if you can provide what constituents want you get reelected. And if that money sort of seems free, then why wouldn’t you? So, what we’ve seen in the past, is when this much money is created, it happened over the last 10 years, the result is lots of money circulating to the things that people want. Well, people want real estate, if there was a lot of real estate available, if you and I could just say, hey, I’ve got this 3D printing machine, and I can print a thousand houses in Sacramento, I mean, all you have to do is drive an hour from a big metro area, and you’ll find plenty of land, right? There’s land. It’s not like it’s limited, you go right outside the San Francisco Bay Area, and all you see is farmland, right? It’s everywhere. So, if we said, I got a 3D printer, I can 3D print water and utilities and electrical and solar and put up some houses and roads. And you know, very quickly and easily, then it doesn’t really matter how much money is circulating at some point. It’s like, there’s enough of it. And we don’t need to compete, right? If you’re in that room, and there’s 20 people and 100 cookies, there’s not a problem. But the problem is, there’s not enough housing right now. And we have a very large group of, you know, very large group of Americans who are coming of age as a first time homebuyer age. The largest group of millennials are 29 years old right now, that is the largest cohort. And they are smart, well educated, many of them are tech savvy, and many of them can live anywhere and have been living in expensive places in cool parts of town. And they’re starting to do what normal generations ahead of them have done, which is fall in love and have babies and want to settle down and want more space, so that they’re no different than any of us. You kind of realize living downtown with a baby is no fun. In a high rise, it was real fun. When you’re single, not fun, when you’ve got kids running around, you got to take them to a park or something like that. And it’s really not fun when you’re locked inside of that condo or that apartment exactly for a year. So, you know, this huge group of people is like they’re ready for the suburbs. You talked to them three years ago, and they’d say never, now they’re ready, which is pretty well predictive if that’s what they would do once they got there. So that’s what we’re seeing. But the difference is that, you know, many good things come out of hard times, and good things came out of this this past year. And that is people companies learned that you don’t have to be sitting in the same place with an office right next to each other or the other workers in the other room because chances are you’re sending them emails anyway, right. You’re in the office, and you’re all online, you know. So, I think 2020 showed, oh, well, we don’t have to be able to go to the watercooler or get interrupted all the time. Or, you know, we can do this anywhere. Yeah, not everyone. But this group of 29 year old millennials good chance that if they’ve gone to college, they can work anywhere. And again, that’s what we’re seeing. So, they take their San Francisco salary, or their New York or LA salary, and they can go live, even if they just went an hour away from where their office is, they can live so much better, a much bigger lifestyle, and now maybe be able to go in and commute and go into their office once a week, twice a week, but not every day. And that’s what we’re seeing that this ability for people to expand and live in places where they can spread out a little and do more, put their kids in better schools and so forth and have a backyard. So, it seems like oh my goodness, why are prices and let’s I’m trying to think the place that had the highest growth, I mean, Sacramento, again, Sacramento, California, it’s an hour from San Francisco, and it’d be an hour and a half. So why would prices go up so much because you can get so much more, right? You can get so much more and there’s an airport there, too.

 

Pancham Gupta  Yeah. So, let me ask you this, right, like, given what you just said, and I 100% agree with you, whatever you mentioned here and for the average investor, right, like they, like I talked to a lot of these investors, some of these people, when coming out of COVID, like in back in last summer, right? They were scared to invest anywhere even in stock market. But now with all this money printing and you know, the risk level, the tolerance has gone up for a lot of people that I talked to. Now, here we are, and what you just said makes a lot of sense. What do you suggest given a suggestion, what are you doing with your money or what would you suggest personally? 

 

Kathy  Yes, I didn’t answer your question. 

 

Pancham Gupta  Yeah. Like, how are they going to spend? What do you suggest for them to where to invest today given that beyond.

 

Kathy  Yeah. No, I apologize for not answering that question. I can tell you the most recent acquisition that Rich and I actually we’re we haven’t even closed on it yet, based on our own development in Park City, Utah, because Salt Lake City came in as the place that actually had more job growth over 2020 than they had before, you know, before the COVID hit. So that’s just an interesting statistic for us, we have a development in Park City, those homes just came online, we’re starting to some so rich diagrammed by one, because first of all, when you’re when you buy a first phase of any development, even if it’s your own, it’s the cheapest, right, we have to pay the same price as anybody because, you know, we can’t have a conflict with our investors. But we just really believe that, you know, that is going that we’re getting in at a good price. It’s not cheap, like our $200,000 rental properties that we recommend this is closer to 900,000. in Park City, you know, where we can put it on the short term rental market, make a bunch of money and also use it when we want to go there. So that’s just one thing that that we you asked what we’re doing, we’re going into areas that have very strong job growth, very, very strong population growth, Utah is 100% that and then you go to the nicest part of that area, which is really Park City. If you know Salt Lake, people love going to Park City because it’s cooler in the summer. People think of it only as a Winter Haven. But you know, they a lot of just kind of local park city people go to park, Salt Lake go to Park City for vacation. So, we see the short term rental market and high end areas as pretty lucrative and that’s just one thing. We’ve got a lot of investors, we’re helping do that in Florida as well, kind of higher end properties that people might want to, you know, people are comfortable, more comfortable. And in short term rentals, single family units where they don’t share air. It really took off on in 2020. So, we love this short term rental. Yeah. Which was it was unsure at first, right?

 

Pancham Gupta  Yeah. So, are you buying these I know, this is your own development, and also people who are investing, you know, you’re helping invest? Are you buying pretty much based on the cash flow that you expect or to check from the short term rental business that you’re going to be doing on these properties are your like, in your specific case, it might be different reasons. But for investors who’s like, you know, listening to this right now, like, what would you suggest to him in terms of investing, like invest for cash flow in higher end cities?

 

Kathy  You know, cash flow always right. I mean, anytime you do anything, but cash flow, it’s speculative. We have enough evidence that our Park City project will cash flow as a short term rental, even if it’s only rented 10 days out of the month. So, we feel pretty confident based on what we’ve seen. You never know till you do it, right. 

 

Pancham Gupta  Yeah, exactly. 

 

Kathy  It’s not finished yet. It won’t be finished till December. So, we’ll really know then but based on the ones that have already been built, they’ve done really well. Because here’s another thing and these really hot vacation areas where, like Park City where you have very, very wealthy people who owned vacation properties there, guess what? They thought they might retire in those properties, now they can live there and work remotely. So many of the rental, the short term rentals that were available to rent aren’t anymore. The owners have moved in. So many of those really nice vacation resort areas do not have enough rental property available.

 

Pancham Gupta  Wow. Okay, so when did you start this development project in Park City? When was the inception of this? 

 

Kathy  I think it was 2017 or 2018 and it was a distressed situation. So, we you know, we got a great deal on it. But I had no idea. I didn’t really understand the shortage of housing. And I think a lot of people missed the mark on that. Not Realizing there was this misunderstanding of millennials like they were somehow not like normal generation

 

Pancham Gupta  At didn’t want houses yet.  Everyone said that like they want to rent and it’s not the case anymore because..

 

Kathy  It’s no I mean, they were young, they were kids, you know there was all this talk about they went through the Great Recession, they don’t want to own a home. No, no, no, this is a group of highly educated people. When I started real estate, there was no place I could go, it was very hard to find information on how to invest in real estate. Now they, they go on Google a little bam, they can be an expert real estate investor overnight, or really, they there’s so much information available, they’re smart, they get it, they get that they can get these low interest loans and lock them in, and that that’s the same as rent, if not cheaper. And so anyway, I just, I think there was a lot of people and experts that missed the mark and didn’t see that this huge wave of buyers was coming, and that there wasn’t enough housing to make up for plus the houses that came off the market from, you know, the short term rentals. And then you’ve got seniors who they thought they were going to downsize and move downtown. I mean, there was just a lot of missing what people were going to actually do. And so, a lot of seniors are staying in place and living longer. So, you know, there’s a there’s just not enough housing out there. So, and then to answer your question again, like what else are we where should investors go? I think another big lesson that came out of 2020, that not everyone has learned yet. But one of the places there are company real wealth has focused on his areas that are business friendly, right? Because if you’ve got a business friendly state, then businesses move there. And when businesses move there, they create jobs, and people need jobs and people move there. And then you have a need for housing. It’s pretty basic, right? Pretty basic, not nothing too hard to figure out here.

 

Pancham Gupta  

See, the thing is that a lot of things are very common sense. Common sense but it’s not that common, right?

 

Kathy  Exactly. Texas has been big on our list for the job friendly environment, and Florida for the same reason and we’re seeing just a massive demographic shift to those areas. And because it’s there’s less regulation on building prices have been able to stay lower and be more affordable, you still can’t keep up with demand, but at least they have enough building going on that prices can stay fairly low. And so, you can still cash flow in the same with Georgia and the Carolinas. And so, these are areas we were already highly promoting before because we saw the growth and we saw the cash flow. That’s my favorite if I can go into an area that I can see ahead of time. Like in 2005, when we were buying in Texas, we could see oh my gosh, all these businesses are moving there is so job friendly. All these jobs are being created. But housing is so cheap. So, we can buy $120,000 house that rents for $1500 a month. That’s a great deal.

 

Pancham Gupta  Yeah, amazing deal. And that $150,000 $120,000 house is probably 500,000 today, or maybe even more,

 

Kathy  Exactly. You could see that coming because you can’t just throw a subdivision up overnight, it takes time, I don’t care where you are, if you’re in Texas or anywhere, you got to get utilities, and it takes time. So, when job growth is happening faster than how homes can be built, you’re gonna see prices go up. And then eventually, there’s no more room to build in that little area. So, prices go up there, and then it spreads out, which is exactly what’s happened in the Dallas area. So over 2020, this thesis really was tested, and it came through just as we predicted that think about the states that really kind of stayed fairly open during 2020. And the ones that really shut down, it became very obvious which states are more business friendly. So, if you’re running a business, where do you want to be at a time when politicians have, you know, been showing that they can shut you down if they want to 

 

Pancham Gupta  New York?

 

Kathy  Right. So, you look at Elon Musk? He’s like, well, I’m gonna move my headquarters to Austin, you know, this is a place where I can do business instead of California. And Elon Musk is not gonna be the only one with that thinking. Anyone who doesn’t want to get shut down again, is going to move to the states that have proven to not, you know, interfere as much. So, the demographic shift that was already happening will probably accelerate and that’s what we’re seeing.

 

Pancham Gupta  Yeah. And to add to that, I don’t know what’s your experience has been during the COVID situation, this eviction moratoriums, right. And you’ve seen again, the states have been really different than we have been always promoting. Typically, the business friendly states are also very pro, the fair in terms of the housing laws in terms of general they’re more business friendly, right. And, you know, we’ve seen that in our like, I’m in New York and we do have some properties here, but you know, here versus we have  properties in Florida, all these places you mentioned, that’s where we are like Carolinas and Florida and they’ve been overall, you know, really nice in terms of our, you know, business proceedings, as you may call them. So, have you seen that impacting your business a lot?

 

Kathy  Yeah, we did a survey, we have over 57,000 members at real wealth now. We did a survey to see how people were doing. And we did get a large group of people who said they were affected by the moratoriums, and when we fast further and looked into who, who they are and where they’re invested. They were people that had not invested through our network, they had bought on their own, and they were largely in California, and they were really suffering. They were having a hard time paying the bills because they weren’t collecting income. Whereas the rest of the group that had you know, bought through our network, and Florida and Texas, and the Carolinas, and Ohio, no effect at all, no effect at all. And I think that has a lot to do with the teams that we work with through real wealth, our investors themselves, and many of them own their own property management companies. And they pivoted so quickly, in March, when they saw what was happening, they reached out to their tenants to make sure that their tenants were taken care of that they knew where to go to get government assistance, to get stimulus checks, to get the PPP checks, to find new jobs, to get any help from charities, and really reached out to take care of their tenants. And as a result, you know, I can only think of one of our members who was suffering, you know, and not getting paid for like seven or eight months, but it was somebody who was already, this is where we, you know, frustrating when the government interferes with business, right, with contracts that were made between people. These are contracts that were agreed upon. So anyway, there was somebody who was just about to evict someone, someone who hadn’t paid for months already, then COVID hit, then the eviction moratorium. So, this person who was already, you know, defaulting no fault at all of COVID. You know what, it had nothing to do with it, it was able to stay for a year. And it really put this first time investor in a terrible place because they didn’t really have the reserves to hold a property for a year like that. I’ve always said have six to 12 months reserves in place, in case anything happens, but boy, didn’t expect something like that. 

 

Pancham Gupta  Yeah. It’s crazy. I you know, I live in New York, even though we don’t have much here. I’ve been staying here but now this has really got me thinking and I might move to one of those places that you mentioned here just because of those reasons, because they’re more business friendly, even though our business is in those states but still, I mean, just move out of New York, I don’t know about you, I know California is pretty.

 

Kathy  I mean, I love, I love where I live too much. I wish I didn’t, but I do. And I will never leave probably unless it just really became impossible to be happy. But we just would have a hard time leaving. But if I had a business, I can tell you, there was a woman who had a restaurant in downtown LA and she was of course shut down and she had to just when they opened up, she hired everyone back and ordered all the food. And then next day was like, oh, no, we’re shutting down again. So, all their food was spoiled. And the employees finally were like, I gotta find new work, I get, you know, I for whatever, like she went out of business. And when she tried to, you know, stay open in ways that wouldn’t affect the public, maybe just cooking and they turned off the electricity. And, you know, so she lived and would have lost her license, that I understand public health, obviously very important. What was frustrating is that literally in the parking lot of where her clients would park, a film company was able to set up a restaurant. What? So, this ,that was the thing is like, how come some people get to do this and I don’t, you know, so it’s like, play fair but that was her whole kind of issue. So anyway, bottom line is if I had a business like that in California, I would definitely consider.

 

Pancham Gupta  Okay, all right. Well, thank you so much, Kathy, for your time here. And you know, we’re gonna skip our second round, because we definitely discussed that in our first go round here. And I want to talk about, you know, how can people connect with you if they want to learn more about your business? Before I do that, I do have one final question for you and that question is for someone who’s listening, and they’ve been through COVID now, right, seen the market highs and they’re kind of scared to invest given everything is that all time high, petty much right, what advice would you give them?

 

Kathy  It’s a really scary time to do anything because there’s so much uncertainty with the variants that are out there and are we gonna get shut down again, and, you know, there’s certainly a lot of fear and with Afghanistan and so forth. You know, here’s what I would say, we’ve been through wars in the past, we’ve been through challenges, recessions and when you look at this slide, all you have to do is look up Fred, which is the Federal Reserve website for St. Louis. And existing home sales or existing home prices are. And you’ll see that there’s just this trajectory over time, even in spite of recessions, in spite of wars, in spite of all the stuff that happens all the time, right. And every decade, when we lived through the Cold War, right, you know, that was a really scary time, but my father bought a house during the Cold War, for $75,000. That was worth $1,000,000, 10 years later, of course, that’s California. But my point is that we live in a very manipulated time where paper, you know, the dollar is being devalued every time that money is printed, it devalues the dollar. So, it takes more dollars to pay for the same thing, right. So, you know, we call it inflation, we’re acting as if the property’s gone up in price but all it really is, is more dollars are needed to buy that same property. Here’s the real risk. If you do not buy assets, that inflate, that inflate with inflation, you will get left behind. And this is why I am so passionate about getting people to understand you’ve got to acquire hard assets because as the paper assets devalue, these go up, and you’re going to be stuck with these papers that can’t afford anything. But if you do, if you do something else and buy the asset, now you’re keeping up with all of it. I just can’t, whatever it takes, if you got to borrow that 3% for the down payment, you know, you can get a loan, you can get a property with just 3% down if it’s your primary, and it can be a four plex, you know, and you can rent the other three units. If you live in New York, then you probably need to look at buying out of state. And when you see what’s available out of state, you’ll be like, well, why didn’t I do that before? You could buy a brand new home in Florida for $200,000, completely out of the flood zone, out of the hurricane zone. And there’s so many so many people moving there. So that’s the biggest risk is keeping your wealth in a currency that’s being devalued every day.

 

Pancham Gupta  

Yeah, no, such as the way you said this is makes a lot of sense. And I say this to like people who are not in assets, hard assets, you know, they are going to be left behind. And before, if you were not doing this in 2010, and you’re in 2020, the amount of impact, the velocity at which it was getting devalued, is far different than the velocity of devaluation today, given all the stimulus packages and all that that we’re talking about in the beginning of the show, I don’t have the numbers, or I cannot calculate the velocity but it totally feels like to me that the velocity has gone up 100x that you know, the same dollar is worth a lot less in very little amount of time than one minute, you know, compared to 2010 or 2011.  It’s just mind boggling. Well, thank you, Kathy, for explaining that. So how can people connect with you if they want to reach out learn more about real wealth and your amazing podcasts that you have?

 

Kathy  No, thank you. realwealthnetwork is the website, it’s free to join our network and then you’ll get access to over 500 webinars that go really in depth on how to take advantage of tax, you know, tax incentives for owning real estate, how to get you know what to look for in a really good loan and where to get them. We have a whole list of lenders that come highly recommended. Someone just called, I just did an interview where someone called us a crowd based real estate company. And I thought that’s so cool. That’s actually what it is. It’s our crowd of 56,000 people who tell us who to work with. We have 15 teams nationwide who help people find real estate, they fix it up for them, and they rent it. And they come highly recommended by this crowd, you know, and if they don’t, if we get complaints, they’re off the list. So, you know, you get a lot of support in this process of buying specifically out of state in areas that are growing, but where you don’t live and where it makes sense to invest but might feel really scary because it’s far away. So real wealth, network comm lots and lots of free educational webinars, you can speak with an investment counselor, all of our three and four investment counselors own a big portfolio of real estate, and they offer guidance and support. We get paid a referral fee like any real estate broker when a real estate agent send someone to another real estate agent. They share the commission that’s how we get paid so no mystery around that. So realwealthnetwork.com. The Real Wealth Show podcast you can find anywhere, and Retire Rich with Rentals is on Amazon. That’s my book. 

 

Pancham Gupta  That’s great. Thank you Kathy for your time here and glad to have you back at some point. Man, all these stops, we’ll see. 

 

Kathy  Oh yeah. We’ll see. 

 

Pancham Gupta  Thank you. 

 

Kathy  All right, thank you. 

 

Pancham Gupta  I hope that you guys enjoyed what Kathy had to say about the economy and what’s going on and you got that cookie example. That was pretty cool, I thought. So, you know, definitely share this podcast with other people you know, who are asking the same question. I feel that this is going to continue if that $3.5 trillion infrastructure bill gets passed. With that, I really appreciate you for joining me today. Thank you for listening. If you have any questions email me at p@thegoldcollarinvestor.com. This is Pancham signing off. Until next time, take care.



Thank you for listening to The Gold Collar Investor Podcast. If you love what you’ve heard and you want more of Pancham Gupta, visit us at www.thegoldcollar investor.com and follow us on Facebook @thegoldcollarinvestor. The information on this podcast are opinions.  As always, please consult your own financial team before investing.

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