Epic Real Estate Investing - Real Estate Investing's Comeback Story of the Year | 1164

Episode Date: September 17, 2021

As real estate investing’s comeback story unfolds, time is running out for an entirely new group of people. This time, it is very unlikely to change direction as the long-term implications of these market shifts will play out over years, not months! Stay tuned as Matt will tell you who the group is, why it's happening, and what markets are getting hit.  Additionally, you will learn why “savers are losers” and what to do with your money instead! Finally, you will hear the latest in the news and crypto updates that bring us together and set modern ideas on creating wealth!  Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terio Media. Hey, before we dive into today's show, I wanted to personally invite you to Las Vegas to the Epic Intensive. It's October 14th through the 16th, the creative cash flow event. How to Create Passive Income Using Creative Financing and Real Estate Investing Strategies.

It's the transformational event of the year for real estate investors. And at the Intensive, you will discover the secrets to revealing off-market deals that are hiding in plain sight, the secrets to the art of how to influence sellers and win deals and the secrets to crafting creative deal structure so you can maximize the ROI with every opportunity that crosses your desk and create passive income

using more of your brains and less of your bread. Also, the secrets to putting your money to work so that it works harder for you than you did for it. And also, what's new, what's hot and what's actually working right now in real estate investing. So if you are into the typical rah-rah real estate investing seminars filled with a bunch of fluff, then this is not for you. So please don't come if that's what you're looking for. However, if you'd like to make real estate investing simple, fun, and most importantly profitable, be in Las Vegas, Nevada on October 14th through the 16th. And the first 50 guests registered are in for free. Go to Epicintensive.com. The first 50 guests registered are in for free, epicintensive.com. And the closer we get to the date,

the higher the price is going to go. And that's not some sort of sales trick or anything like that. But just when you're creating these events, when you're coordinating these events and you're getting them all organized, you know, the closer that you get and the more stuff that you put into place, the more expensive things get and the more non-refundable those things get as well. So that's the reason for that. So the sooner you go, the cheaper it's going to be epicintensive.com. I really hope to see you there. All right. So in today's show, just eight months ago, I shared some housing market stats showing that cash flow was all but dead and that time was running out for. buy and hold real estate investors. Well, the tables have turned and turned fast as real estate

investing's comeback story this year unfolds. And now, time is running out for an entirely new group of people. And this time, it is very unlikely to change direction as the long-term implications of these market shifts are going to play out over years as opposed to months. And I'll tell you who, why, and where. Plus, savers are losers. That was a phrase coined by Robert Cashflow Kiyosaki back in 1997. And it wasn't received well by the masses, nor when he said the rich don't work for money. So if you dismissed rich dad, like so many did,

as the crazy uncle in your family and continue down the traditional path to financial freedom, might have been a big mistake. I'm a little concerned for you, especially right now. It's not going to end well. And in the second session, I'll tell you exactly what I mean by that.

Let's go. Welcome to the all-new, epic real estate investing show. The longest running real estate investing podcast on the interwebs, your source for housing market updates, creative investing strategies, and everything else you need to retire early. Some audio may be pulled from our weekly videos and may require visual support. To get the full premium experience, check out Epic Real Estate's YouTube channel, EpicR-E-I.tv. If you want to make money in real estate, sit tight and stay tuned.

If you want to go far, share this with a friend. friend, if you want to go fast, go to rei-aise.com. Here's Matt. Hi, my name is Matt Terrio, CEO of Epic Real Estate, where we show people how to invest in real estate so they can escape the daily grind and retire early. The secret to retiring early, what they don't teach you in school is, rather than focusing on saving money, focus on streaming money. In real estate, we call that cash flow.

Cash flow specifically is when a property rents for. more than the mortgage payment costs. Investing in properties like these has set more people financially free than anything else on the planet. But it has become more and more difficult to find over the years. And as of just eight months ago, had downright become extinct. So much so that I shared right here the last half dozen or so regions where it could still be found. And time seemed to be running out for the cash flow real estate investor. The market, however, has done an about face. driving rents through the roof, well above mortgage payments, something that nobody saw coming. Now, that would be welcome to news as a second chance in overtime if you're in the market for

income property. But the clock is speeding up and time is running out if you're in the market to rent your primary residence. And it can be credited to five unique trends that are unlikely to let up and there are 10 markets right now where it's hitting especially hard. So let's take a look. According to apartment lists national rent estimates, prices jumped over 11% in the first half of 2021. More than doubling the rate of inflation and more than tripling the typical rent growth measured in the several years preceding the pandemic. In smaller cities like Boise, Idaho, Bend, Oregon, and Spokane, Washington, rents are up more than 30% since last March. Here's why. One, there are more households competing for homes than ever before. The early months of the pandemic

saw more people moving in together to living under fewer roofs, where within just three months, we lost nearly two and a half million households. Mostly young adults moved back in with family as they waded out the pandemic, and this contributed to the dramatic rent drops that just swept across the country's expensive cities last year. It was a short-lived trend, however,

as households reformed almost as quickly as they broke apart, to the point we've reached a new high of just over 131 million. Two, home ownership is becoming prohibitively expensive. The supply of homes for sale and their affordability were both worsening in the years leading up to the pandemic. But this trend, it accelerated in 2020 through 2021 when new home construction slowed and wary sellers pulled off the market, resulting in a 48% drop in inventory. This imbalance of supply and demand has caused home prices to surge above affordability for

most people. But as the average household net worth grew during the pandemic, credit source. scores rose and consumer debt fell, and although sales have slowed down a bit, there is still plenty of demand and buying power to push the market even further. I know, crazy, right? And this impacts the rental market because as supply shrinks and prices soar, more and more relatively high income households are unable to find for sale housing that meets their needs and preferences. These households, therefore, remain in the rental market, where they put additional pressure on affordability. If not for the prohibitively high prices, they might otherwise buy homes and take some pressure

off the rental market. Number three, search data suggests many renters are actively looking for a new home right now. This chart here from Google Trends, it shows the popularity of the keyword apartments for rent over the past several years. The purple line that you see there, that represents this year, 2021, and it's well above previous years. Google Trends data stretches back to 2004 and the all-time peak for apartments. hunting searches occurred just a couple months ago in July. Number four, apartment hunters are

searching with increased urgency. ApartmentList.com measures this through their registration flow when asking about their client's urgency to move. And this chart shows that the urgency to move has hit their all-time high since keeping stats in 2019. On average, high urgency movers are searching for a new lease that starts in fewer than 30 days, which causes a more competitive market that drives up prices. And five, apartment vacancy rates are historically low. Vacancies are disappearing. Property managers are having little difficulty filling the empty units that remain. While rents are up more than 11% in 2021, vacancies have shrunk by 36%. This month, only 3.8% of units in this sample sit vacant. With the national apartment rental market shaping up how it is, renters have no choice

but to start looking at single family homes to rent, as they account for about a about. one-third of the nation's rental inventory. So where are the best opportunities for single-family cash flow investors? And where is time running out for those looking to rent their houses? Well, according to Zillow, the typical rent payments were higher than mortgages in 33 of the nation's 50 biggest metros. So the top 10, it breaks down like this. Number 10, Detroit, a difference of $268 between the typical monthly rent and the typical monthly mortgage. Number nine, Oklahoma City, A difference of $279. Number eight, Charlotte, a difference of $290.

Number seven, Orlando, a difference of $314. Number six, Indianapolis, a difference of $331. Number five, Tampa, a difference of $384. Number four, Birmingham, a difference of $403. Number three, Atlanta, a difference of $424. And the biggest surprise on this list to me, number two, Miami, a difference of $5,000. $522. And finally, of which was of little surprise, drum roll please.

Number one, Memphis, a difference of $556. There are a few indicators that signal this summer's rapid rent growth may be starting to cool off, but that is typical as we enter the fall. Vacancy rates appear to be bottoming out while prices are still going up, albeit slower. The resumption of evictions may further reduce price pressure by opening new vacancies. but not likely as previously and very recently demonstrated right here in a deep dive on this subject. So a brief cooling period this winter is unlikely to reverse much of the dramatic price gains that we are witnessing this summer. Rents going into 2022 will assuredly be higher than they were going into 2021.

One factor that remains undetermined is how residential construction will respond to the demand of millennials. The nation's largest generation, aging into their prime home buying and single-family home renting years. In a nutshell, the American housing market is currently undergoing a supply and demand crisis, and it's a trend that shows no signs of letting up. We'll be back with more right after this. Boarding for flight 246 to Toronto is delayed 50 minutes. Ugh, what? Sounds like Ojo time.

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Ever hear someone say, I have too much money? Me neither. Let's get you some more. Back to the show. Savers are losers, said Robert Kiyosaki. And he wasn't talking about the character of people that save money. He was referring to the money they're losing by saving it, due to money no longer being backed by gold, as it was prior to 1971.

This pivotal event, taking the dollar off the gold standard, carried out by President Nixon, gave the government the authority to print money. and they most certainly exercised their authority, especially just in the last year. Money, like anything else, the more there is of it, the less it's worth. And so our money has become worthless ever since. As an example, a $100 suit in 1971 would cost you $674 today, and not because the suit is worth more, but because your dollar is worth less. That's inflation that did that.

And typically, we see 2% inflation annually. which doesn't seem like much, but accumulated, compounded over that same period, that's an inflation rate of 574%. Imagine the current rate of 5% accumulating and compounding. When seeing numbers like this, most people understand its impact, but it's natural to dismiss immediate action because it feels like, you know, we've got time. It feels like it won't be that bad. It feels like this won't happen to me.

Well, let's zoom in from that 50-year period to just this last year. If you put $100 in the bank a year ago and saved it, although your bank account still may show you have $100 in the account, per the consumer price index, its purchasing power is now only worth $95, a $3 bigger loss for you than normal. Now, if that doesn't resonate with you, have you wondered what happened to the $5 foot long at Subway? Or the $1 menu at McDonald's? Or the fact that Starbucks reported a 20% increase in revenue over the last year, despite a decrease in customer traffic. It's because their $4.00.

$25% more. This is where the savers are losers comes from. Your saved dollar buys less. I mean, if you weren't invested in something that earned at least 5% in just the last quarter, you lost. But your 401k, it returned to 10% this year. It was a good year. Well, adjusted for inflation, more like 5%.

And nobody gets rich today off of a single digit return. Most people just don't make enough to save enough for that math to pan out. And speaking of how much people make, if you didn't receive a 5% salary increase in the last 12 months, you're losing there too. Like your savings rate, your salary must keep up with inflation. But still, as a society, we view saving money as honorable. as it speaks to our discipline, our character, and our sense of responsibility. We've got to let that go. For those who hold on to this sacred cow and state is antiquated course, it's not going to end well.

The bad news doesn't stop at saving money either. The monetary policy of the day is creating and accelerating these losses for savers also. And here's how. The effective federal funds rate chart shows currently a zero percent interest monetary policy, of which directly impacts the interest rates of loans that banks give to their customers. And we know they are at historical lows right now. And it would be hard to walk down the street and find someone that thought low interest rates are a bad thing. But here's why they should be a concern.

Interest rates dictate our behavior. When interest rates are low, it makes sense to invest. So investors do, causing asset prices to inflate, making it more difficult for the rest to invest. The more investors invest, the further behind non-investors fall. Salaried employees that don't invest are getting poorer. And this isn't theory either. It's happening right in front of our faces. For example, I took a recent road trip with my son to Jackson Hole, Wyoming. And while we were there, at least half the restaurants were closed at the resort. But for those that were open, lines wrapped around the buildings. I assumed it was due to COVID or the supplemental

federal pandemic employment benefits keeping people at home. But after talking to the guy at the front desk of our hotel, he told me this trend had begun before COVID, citing that it is due to the working class can't afford to live in Jackson Hole. The working force is steadily moving or being pushed away from Jackson Hole for jobs in more affordable cities. I told a friend about this when I got back from our trip and he said the same thing happening in Lake Tahoe. And it's happening in major metropolitan's too, like San Francisco. The chasm between the rich and the working class is getting wider and wider and wider, despite all efforts of the politician of the day to stop it. Or are they trying to stop it? I don't know. Regardless of their intentions, this is the situation. So are you

thoroughly depressed yet? You don't have to be. There is good news here too. That good news is that you have control over which side of that chasm you end up on. There are actions you can take to save yourself and save your family. A simple first step is just to stop saving as much and start investing more into assets that benefit from inflation, like stocks, commodities, real estate, and other physical and digital assets. That's a good start. It's much better than saving alone. The second step to improve your situation even more would be to invest in income-producing assets, like a business or cryptocurrency pools or rental property. When Kiyosaki said, the rich don't work for money, this is what he meant. He meant their money works for their money.

They purchase income-producing assets that pays for all of their stuff, that pays for their livelihoods. You see, the rich, they focus on cash flow. Cash flow defined, is your income less your expenses? Everything is just a math equation. Will this asset make me more than it costs me? Even if I have to use debt to acquire it, even if it's taxed at a higher rate. It's a simple game of just pluses and minuses. But most tend to complicate it because of the labels attached to the minuses. For example, debt is a bad four-letter word to most, but to an investor, it's just a minus in the equation. Tax is another one of those bad words. But to an investor, it's just another minus in the equation.

Expense is another example of a minus. The objective is to simply have more pluses than you have minuses. A typical scenario might look like this. Let's say you bought a $100,000 rental property. And if this sounds like a unicorn in the woods in today's market, check in with Mercedes at Cashflow Savvy. She's got plenty of them. And she's fixed them all up. She's placed tenants in all of them.

She's coordinated property management for them and even has financing options already in place. If you're a busy professional and would rather just delegate all of the heavy lifting of investing in real estate to someone else, you can get some free information about this at CashflowSavvy.com. So we have this $100,000 house. We purchase it in a traditional way with 20% down. The bank gives us an $80,000 mortgage, $80,000 of debt. So we'll make principal and interest payments to the bank. And then there are taxes and insurance to pay as well.

And we'll say that all amounts to a $650 monthly expense for the property. And it rents for $1,000 a month. That leaves the owner with $350 a month. The difference between the property's income and its expenses. The fact that the part of that expense is comprised of debt and tax doesn't matter to the investor. What's left over does. It's just pluses and minuses. Now, historically, the property's value will increase with inflation, and so will the rental income it collects. It's a seemingly small, insignificant step like purchasing one rental property that can keep you on the right side

of that growing chasm between the rich and the poor. Make it a goal to do this one simple thing, I don't know, every other year or so, and the wealth you create will be preserved regardless of how high inflation goes. Exchanging time for dollars won't be enough to keep up. Saving money won't be enough. If you're going to stick to your guns and stay the traditional course, Dave Ramsey, Susie Ormond, and the army of your typical financial planners advocate, understand that it won't end well. Mainstream media is ripping us apart. This is news to bring us together and make some money in the process. Starting today off with news about a man that should be celebrated, a dying breed, really, a man who exercised his free self-expression up until his

last breath. Norm MacDonald, the stand-up comic and Saturday Night Live Legend, died Tuesday at 61 after a battle with cancer, nine years going. And he kept it a secret. No one even knew, not even his family or closest friends. And people have been sharing his jokes and stories all over social media, And it's been a really sad week for me, bittersweet, I guess. It's nice to hear his personality and his delivery. And he just had a way of making me laugh every time I watched him. But it's sad to see him go. One of my all-time favorites.

And I'm really grateful I got to see him here in Las Vegas recently. Pretty sure it was his last performance here. So Norm, rest in peace. And peace and blessings to your family, friends and fans. You're not an easy one to let go of. God bless. I'm not sure how I transition into real estate and business news after that, so I'm not even going to try to make it clever.

We'll just go into it. Consumer prices, as measured by the consumer price index, rose at a slower pace in August than in July. Comforting news for anyone concerned about runaway inflation, heck, even used car prices declined 1.5%. An international group of scientists, including two experts from the FDA, wrote that booster shots of the COVID-19 vaccine were not yet needed for the average person. The U.S. still plans to roll them out in less than a week.

Nice to see after a year and a half we are following the science. Mortgage applications increased 0.3% from one week earlier, according to data from the Mortgage Bankers Association, weekly mortgage applications survey for the week ending September 10th, 2021. The refinance index decreased 3% from the previous week and was 3% lower than the same week one year ago. The red hot U.S. housing market is beginning to cool. There are fewer bidding wars and homes selling above asking price. A recent Redfin report finds, though the demand for homes remained strong across the United States in August,

there are clear signs that the housing market is past its peak. A report from residential brokerage Redfin found that pending sales across 400 metro areas were up 6% year over year in the four weeks that ended September 5th. Still, the 69,563 homes that went into contract represented a 9% decrease from the high points set in May 2021. The decrease in pending sales is just one indicator of a softening in the competitiveness of the housing market. The number of homes with an accepted offer within two weeks on the market fell nine percentage points from the 2021 peak set in March. And the share of homes sold above asking price dropped to of 50.1% from 55% in early July 2021.

Redfin's lead economist Taylor Marr said in a statement that he believes this cooling off in the housing market to be seasonally typical and that he expects demand for homes to remain strong throughout the fall. Also noted as seasonally typical is the 16% decline in new home listings from the 2021 peak in June. Overall, however, new home listings are down 7% from a year ago and total active home listings are down 23% from 2020. This limited inventory and strong demand is reflected in the 14% increase of the median

home sale price to $358,250, $250, with the median asking price of newly listed homes at $353,000,500. Although this price is on par with asking prices in April of this year, it is down 2% from the all-time high set in June. The Redfin report also found that on average nearly 5% of homes for sale each week during the month that ended September 5th had a price drop, which is the highest level of price drops per week since October 2019. This may be a reflection in the median number of days. Homes that sold were on the market increasing to 19 days from an all-time low of 15 days in late June and early July 2021. While the average sale to list price ratio remains above 100% at 101.4%, this is a decrease of 0.9 percentage points from its peak in June and July.

However, it is still two percentage points higher than the high in 2020. While a housing market report by the National Association of Realtors found that existing home sales grew 2% in July from the prior month, first time homebuyers were disproportionately squeezed by tight inventory and rising prices. If substantial relief for those homebuyers comes, it may not be until the fall at the earliest. The Treasury Department and FHFA announced Tuesday that they are suspending certain. requirements that were added in January to the preferred stock purchase agreements between Treasury and Fannie Mae and Freddie Mac. Under those requirements, Fannie Mae had restricted its acquisition of loans secured by second homes and investment properties to 7% of its total

single-family acquisitions and applied stricter underwriting to those loans. The Treasury's statement on the suspension sought to clarify its reasoning for the change. The suspension of these PSPA requirements recognizes that FHFA has the authority and and responsibility for the enterprise's safety and soundness and to foster housing finance markets that support sustainable home ownership and is not intended to stimulate aggregate housing demand given current conditions in the housing market. The Treasury stated in a Tuesday afternoon press release. Home prices have been accelerating rapidly with the annual rate of national home price growth at multi-decade highs. The Treasury release continued. A principal challenge for the U.S.

residential housing market today is an adequate housing supply. The administration is focused on promoting housing stability, which includes advancing housing policies that can sustainably increase the stock of affordable housing units for rent and ownership. Contractors have been struggling with a worker shortage that began with the Great Recession and then was made worse by the pandemic. If one worker on the job site gets sick with the virus, the entire project can be stalled for at least two weeks. And now things are becoming even more complicated as more clients are wanting all workers on their property to be vaccinated. but many available workers are pushing back. Getting the job done has been tough for contractors dealing with the supply chain shortages, rising prices for the materials, and permitting issues.

Add to it that the number of new coronavirus cases hit a seven-day daily average of a 166,000 on September 1st. According to data in the New York Times, the case count has come down a bit since then, but is still above 152,000. Some healthcare professionals are predicting another surge this month because of the Labor Day holiday and social gatherings, while others are saying that the Delta variant moves fast and furious and will be gone as quickly as it came. It's not a passing fad, it's the future of money. What happened this week in cryptocurrency?

Retail crypto investors have the ability to drive the crypto market to a $1 million Bitcoin price all the sooner through their efforts to show Bitcoin to others, or Bitcoin will simply show itself. Rick Ryder, BlackRock's chief in investment officer of global fixed income was asked Friday in an interview with CNBC about his view on Bitcoin, now that the cryptocurrency is legal tender in El Salvador. Part of why I own a small piece of Bitcoin is I do think there are more people who are going to enter the fray over time. I like assets that are volatile, that have upside convexity.

I could see Bitcoin go up significantly. Bitcoin investors are reportedly exempt from taxes in El Salvador. The government of El Salvador will reportedly exempt investors from paying a capital gains tax and an income tax on Bitcoin, according to a presidential legal counsel. If a person has assets in Bitcoin and makes high profits, there will be no tax. This is done obviously to encourage foreign investment. Arguez said, adding that El Salvador will impose no taxes on either the capital increase or the income. Veteran crypto trader, Tone Vase, says Bitcoin should finish. its recent correction relatively soon before going on a sharp rally to six figures.

A $40,000 low coming in either next week or it could get dragged out into early October. And then we break this area of $50,000 in mid to late October. We break $65,000 by early November. And then we're probably hovering above $100,000 by end of December. So I'm still holding to my view that we break $100,000 in December. ARC Invest CEO, Kathy Wood, expects Bitcoin to soar to $500,000 in five years, and her firm's conviction in Ethereum has strengthened tremendously. The star stock picker said in a new interview with CNBC on Monday.

Our confidence in Ethereum has gone up dramatically as we've seen the beginning of this transition, from proof of work to proof of stake, Wood said, we'd still probably do 60% Bitcoin, 40% Ethereum. multinational financial services giant Fidelity Investments has pressed the United States Securities and Exchange Commission to approve its Bitcoin Exchange traded fund, their ETF. A private meeting was held on September 8th among Fidelity Digital Assets President Tom Jessup, six of the firm's executives and several SEC officials. The finance executives laid out a number of reasons why the regulators should approve the investment product. These include increased demand for digital assets and real. products, the prevalence of similar funds in other countries, and the rise of Bitcoin adoption.

And that wraps up the epic show. If you found this episode valuable, who else do you know that might too? There's a really good chance that you do know someone else who would. And when their name comes to mind, please share it with them and ask them to click the subscribe button when they get here and I'm going to take great care of them. God loves you and so do I. Health, peace, blessings and success to you. I'm Matt Terrio. Yeah, yeah, we got the cash flow. You didn't know home for us, we got the cash flow. This podcast is a part of the C-suite Radio Network.

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