Get Rich Education

Keith explores two big themes shaping real estate investors' futures:
Why more Americans are becoming "forever renters"—and how long-term lifestyle and demographic shifts (not just today's prices and rates) are quietly reshaping the demand for rentals.
The growing conversation around eliminating property taxes—which states are making the most noise, and why the real issue isn't whether property taxes go away, but what would realistically replace them.
Keith also zooms out for a quick year-end tour of major asset classes—from stocks and real estate to metals and crypto—so listeners can see where real estate fits in the broader investing landscape and what these shifts might mean for their wealth-building strategy.
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Complete episode transcript:
 
Keith Weinhold  0:01  
Welcome to GRE. I'm your host. Keith Weinhold, the Forever renter trend keeps getting embedded deeper into American culture. What's behind it? It's more than just finances. Then there's been more talk about eliminating property taxes, if they go away, what replaces them? And we'll discuss more today on get rich education.
 
Keith Weinhold  0:27  
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 guests include 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  1:12  
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  1:28  
Welcome to GRE from Jamestown, New York to Jamestown, North Dakota and across 108 nations worldwide. I'm Keith Weinhold, and this is get rich education. Most investments reduce your income until you can start drawing on it and paying taxes on it in your 60s. That's a lot of decades of living below your means. Here learn how to grow your means and invest in vehicles that pay you when you're young enough to enjoy it and pay you five ways tax advantaged. Hey, there's a big misunderstanding about the housing market taking place right now. Yes, today's higher cost of home ownership contributes to Americans renting longer, for sure, but let's not make the mistake of thinking this is a new phenomenon just because home prices moved higher or mortgage rates began normalizing again a few years ago, that's not what it's about Americans renting longer. That is a trend decades in the making, and it has had and will continue to have major implications on the rental housing market decades into the future, buying your first home at 25 that was your grandparents or maybe your parents. Today, it kind of goes like this in life's journey for the wannabe homeowner, First comes the gray hair, then comes the mortgage. Last year, we learned that the average first time homebuyer age in America has moved up to 40. Back in 1981 it was age 29 per the NAR. More specifically one's real estate journey, it basically now goes like this, rent, rent, rent, have roommates again, go back to renting, chiropractor, Bank of mom and dad, then a mortgage maybe.
 
Keith Weinhold  3:34  
Yeah, the home ownership rate, it keeps falling among every age group, most sharply among 30 somethings. The translation here is that more renters are coming. For those in their 30s, the home ownership rate maxed out at 69% in 1980 it's fallen to just 47% today. Those that are older, for those in their 40s, the homeownership rate maxed out at 78% in 1982 it has fallen to just 62% today and so on. Every 10 year age group all the way to those age 80 plus, the homeownership rate has fallen for all of them over the decades too, every single age cohort. The home ownership rate has fallen over the decades, and that is all per the Census Bureau. I'll tell you why this forever renter trend just keeps strengthening in a moment. But if you don't own your home, here are your current housing options. You can live with your parents. Yes, welcome back childhood bedroom with those glow in the dark stars on the ceiling. Sadly, you can be homeless. That is really not good. Or the other option is you can rent something nice, new, modern, and energy eficient. The group in which home ownership has fallen the most are those 30 somethings. 20 somethings aren't even part of what the Census Bureau reported here. It fell most sharply in the 1980s and then again, after the great recession. And here's what I know you might be thinking because we have some of the smartest listeners around. I bet that during times that buying was cheaper than renting, the trend reversed. That's what you might be thinking. No, it didn't. Regardless of what is cheaper, over time, the home ownership rate just keeps falling despite those periods, whatever is cheaper renting or owning now the overall home ownership rate that's fallen just since 2023 from 66% down to 65% that might not sound like much, but a Full 1% drop there means 1.3 million new renters already, just since 2023 and now you might be thinking, well, this is like totally because home prices and mortgage rates have been higher since that time. They've been higher since 2023 you are, in fact, somewhat correct about the affordability on a median priced home today, which is around 420k, I mean a 10% down payment and closing costs, that means you're out of pocket, probably more than 50k and it's 100k plus for a 20% down payment. And this is often an insurmountable hurdle without financial help from the Bank of mom and dad. But this is all part of a longer, multi decade set of trends. And look, a lot of these trends don't have much of anything to do with finances. People are renting longer because Americans wait longer to marry and have kids, and this has persisted, whether economic cycles are good or bad, and certainly, regardless of what mortgage rate levels are, younger generations value flexibility. That's another reason people are renting longer. Also 30 somethings are just simply more comfortable with subscription models like renting. I mean, look at Netflix and Uber and Spotify. It's been decades since anyone actually bought DVDs or CDs. Yeah, renting is just sort of another subscription model. More. Boomers are also renting for convenience. They would rather play pickleball instead of mow a lawn. This is something that they figured out a while ago. Also higher consumer and educational debt keeps people renting. You've got buy now, pay later. Companies like Klarna that are booming and mortgage eligibility got sucked from souls when all this happened? Hey, I've got more a ton of reasons for why more and more people are renters today, and how this trend is your friend if you are a rental property investor. 
 
Keith Weinhold  8:13  
Also, let's be mindful when we broke the gold standard in 1971 asset prices took off like a Blue Origin launch, and wages stagnated. That makes it tough to patch together a down payment and look, there is still an antiquated notion out there that apartments especially are like replete with paper thin walls and one in every five units is a meth lab. Have you toured apartment buildings, fourplexes, duplexes and single family rentals built in the last 10 years? Sheesh. Great amenities. Expect to see granite countertops, patios, fenced yards, gyms, sometimes even pet spas at Class A apartments, washer, dryer in unit. I mean, that has been standard for a long time, LED lighting, smart locks, increasingly office nooks for remote workers. Those are the modern amenities that you find in a rental. So the bottom line here is that as Americans age, there is an elongated renter stage of life. It's not just prices or rates, it is lifestyle. And this is why, even when affordability improves, the homeownership rate should continue to drop. More rental demand is coming. So yes, an elongated renter stage, this forever renter, if you will. That is somewhat about finances, but it is more, and this shapes the landlordtenant landscape for decades. And of course, your advantage here at GRE is even if you live in a High Cost part of the nation, we know how to buy here, say, a brand new build to rent single family property in an investor advantage place like Indiana, Missouri, Alabama or Florida, and we get it for, say, 300k or so, and you get a tenant that will pay you rent for four years or more in a lot of cases. So we've been talking about where the rental demand is coming from. It is both a lifestyle choice and a financial consideration for your tenant. Now this forever renter trend, that's something that really matters if you are providing housing to people. But some real estate trends just move so slowly, so glacier like that, you can kind of get lulled to sleep, until one day you look up and a trend has crystallized like the one that I just described. Let's compare a trend like that to something that people think matters a lot, and this does matter, but its importance is overinflated, and that is, for example, the President's nomination of a new Fed chair this year, and how that's going to move the real estate market. No, not as much as people think, as we've learned here, mortgage rates actually don't have that much to do with home prices. And yes, mortgage rates do move. They are correlated with the Fed funds rate. Yes, they are. When one is high, the other will be high. When one is low, the other will be low. They just don't move in direct lockstep. Let's listen in to the remarks of one Donald John Trump on the matter, because he talks about housing here. This is about a minute long, and then I come back to comment when Trump says him, he is apparently pointing to Treasury Secretary Scott Besant, who was in the room at the time, but as you'll hear, he's not expected to be the Fed Chair selection. 
 
Speaker 1  12:06  
Have you started the interviews for the Fed chair? Yes. Who have you interviewed? Ithink I already know my choice well. I like to him, but he's not going to take the job very fast. You like Treasury better, right? Much better, sir. So we are talking to various people and the I mean, frankly, I'd love to get the guy currently, and they're out right now,but people are holding me back. He's done a terrible job, hurting housing a little bit. The truth is, we've been so successful, we've blown past his interest rate. Stupidity. He's been wrong. That's why I call him too late. He's too late. Jerome, too late. Powell, he was recommended to me by a guy that made a bad, you know, bad choice, and it's too bad. But despite that, it's having very little impact, because we have, you know, we have all of these things happening, but it has an impact on housing to a certain extent. He's a fool. He's a stupid man, but we have some very good people
 
Keith Weinhold  13:09  
yeah. So this matters, but it's as much entertainment and almost comedy against a demographic trend like the Forever renter propensity, a calendar year recently ended. It's time to make a quick rundown of the overall investing landscape. Once in a while we do that. It's good to check the movement on other asset classes outside real estate. It's our asset class rundown for last year, the s, p5, 100 was up nearly 17% that's the third year in a row of double digit gains in the year that Warren Buffett stepped down as CEO of Berkshire Hathaway, there's a warning. The S and P Schiller price to earnings ratio soared above 40 for only the second time in history. That's an indicator that stocks are overvalued. The only other time that happened was during the.com bubble in real estate, single family home values were up about 2% per the NAR just over 1% per Kay Shiller, apartment building values were flat to a slight decline. There is no such thing as an official apartment building Price Index, CPI inflation, up almost 3% on the year. It now hasn't been at the Fed's target of 2% or lower for a calendar year since 2019 Yeah, it has run hot all that time. Last year, mortgage rates fell from 6.9% to 6.2% and then, as you would expect, the yield on the 10 year treasury note also fell from 4.6 to 4.2 The dollar fell hard with a thud down 9% its worst performance since 2017 WTI oil prices fell from 70 bucks to $58 that's an 18% decline, but really the story of the year among all asset. Classes is what happened with precious metals, gold up a staggering 68% over the past year, touching an all time high of about $4,500 silver, up about 155% leaving investors flabbergasted and slack jawed, touching an all time high of over $80 platinum and palladium had near triple digit gains the real price of gold. This means inflation adjusted even jumped to its all time high last year, significantly surpassing the previous peaks of 1980 2011, and 2020. Realized this. More than 80% of all the recoverable gold on earth has already been extracted. Silver has been the top performing major asset class. In fact, today, a little one ounce silver coin is worth more than a 300 pound barrel of oil. Sticking with the topic of metals, inflation finally killed a penny. The last one was minted in 2025 in Philadelphia, ending a continuous run of the US minting the penny since 1792 no more. Bitcoin was down 6% falling from 93k to 87k the NASDAQ is aiming for near round the clock trading. It currently trades 16 hours a day, five days a week. They are looking to go up to 23 hours a day, five days a week in the second half of this year. That's our year end asset class rundown 
 
Keith Weinhold  16:34  
coming up in future weeks of the get rich education podcast. I am going to do an episode on overpopulation versus underpopulation? Is the world over or underpopulated, and is the United States over or underpopulated? This obviously has huge implications for the housing market. Then on another episode, we're going to discuss a real estate axis strategy we've never discussed before, called the 721 exchange. Now you might have heard of the better known 1031 tax deferred exchange, but the 731 is different. When you get older as a property owner and you realize that you don't want the hassles of landlording anymore, you can sell your properties to a partnership. The 721 exchange dictates that this is not a taxable event, and therefore no capital gains taxes or depreciation recapture are due. Property owners still get the benefits of cash flow and the appreciation across a greater number of properties and markets, and it's a great estate planning tool as well. Yes, that's the 721, exchange. We are going to cover it here. When it comes to investment real estate, I guess we cover nearly everything that's coming up on a future episode. As for today, we're talking about property taxes, if they go away, what replaces them that comes up shortly? Visit get richeducation.com to learn more about how we help you and what we do, and to get connected with real estate. Pays five ways type of properties. Visit gre marketplace.com. I'm Keith Weinhold. You're listening to get rich education. 
 
Keith Weinhold  18:23  
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Keith Weinhold  19:34  
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Jim Rickards  20:05  
this is author Jim Rickards. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.
 
Keith Weinhold  20:22  
Welcome back to get rich education. Episode 588 for the 12th consecutive year here, I'm your host. Keith Weinhold, I look forward to perhaps meeting you in person this coming weekend, as I'll be attending the real estate guys create your future goals retreat event in Colorado Springs. You probably remember that we have had the events host and leader, Robert Helms, of the real estate guys on the show with us here several times in the past. What a class act I am spending a few extra days after the event in Colorado Springs to both look at local real estate in that market and climb the Manitou incline, that's this grueling climbing challenge up a slope of Pikes Peak. If you want to climb with me after the real estate guys event, bring your running shoes and I'll lead a group of us up there 
 
Keith Weinhold  21:13  
if property taxes go away, what replaces them? Realtor.com recently had a terrific article about this that you can look up the property tax revolt is spreading, but the replacement plan isn't let's look at the probability and possibility of eliminating property tax. Think about how property tax elimination would increase the value of your property well, because now every buyer could afford to pay more, since they won't have that property tax expense. And of course, if you were to remove property tax as a line item from your income and expense statement, your cash flow could double, triple, or even five or 10x depending on your current cash, on cash return. But that cash flow part is less likely because most efforts to eliminate the property tax, they focus on homes, primary residences. Well, several states have either active legislation efforts or these sort of informal grassroots movements to significantly cut down or just totally abolish property tax, but no state has fully eliminated them yet. The most prominent efforts are in five states, most notably Florida, where Governor Ron DeSantis has made the most noise about it. He proposed eliminating property taxes on homesteaded which are primary residence properties, and he aims for a constitutional amendment on the November ballot to achieve this, that is 10 months from now. And that proposal, it's still pretty early in the legislative stages, and the state is also considering property tax rebates in the meantime. Now, even if you own rental property, and property tax were only eliminated on primary residences, it would still cause the value of your property to boom pretty nicely, even if it didn't help the cash flow. The state that's made the second most noise is Ohio. A grassroots organization has called Citizens for property tax reform. They have actively campaigned to place a constitutional amendment on their ballot that would just totally abolish property taxes statewide. Third most is Kansas. They propose legislation and that aims to effectively bump up sales tax to replace property tax. The fourth out of five is North Dakota. Let's look at what they're doing following a failed 2024, ballot measure to just totally abolish the property tax outright. Well, there's a new proposal from the governor, and that seeks this phased out elimination for most homeowners over a decade. And see, North Dakota has a slightly better chance of pulling that off, because they can fund that from the state's Legacy Fund, that's their oil well fund, and then making the fifth most abolition of property tax noise is my home state of Pennsylvania. Lawmakers have introduced bills to eliminate all property tax. They also aim for a constitutional amendment to put that issue before the voters. So they are the five states that have made the most noise, and that's what their approach is. 
 
Keith Weinhold  24:43  
Now, seemingly for most of my life, homeowners and landlords have griped about property tax, saying it's the most ridiculous tax of them all, because you pay it year after year after year in perpetuity. And it just never goes away. Unlike other taxes that are just a one time tax, even if your property's mortgage is paid off, you still have a house payment, and that is largely due to property tax. Understand, though, that currently a lot of states give you a reduced property tax once you reach a senior age, usually age 65 plus some start as low as 61 but when it comes to eliminating the property tax, there's a part of the conversation that's really important, and it has been notably absent, and that is a novel solution to replace the lost revenue. And it gets rather interesting to look around and see where else the money might be raised if they eliminate property tax. See, and this is really important to understand, property taxes generate 70% of local revenue, up to 90% of school funding and 25% of all state and local tax revenue in aggregate in Florida. Okay, that's just in Florida those numbers, but a lot of states have a similar scenario, and in Florida, that comes out to about $50 billion a year. That is a big hole to plug, that is a big gap to fill, and it underlines both the burden homeowners are currently shouldering and how hard it's going to be to fill that gap with anything that's more stable or equitable, that's going to last as a funding source, yes, 90% of school funding. You heard that, right? If you talk to an old timer, you know sometimes you still hear an elderly person refer to property taxes as school taxes. So see, this question of, Do you want to abolish property taxes? One reason that's become louder and louder these past few years, and why you hear more about it is due to that increased affordability strain. That's why you're hearing more about it now the question, do you want to abolish property taxes? That is the wrong question. A grassroots push to AX the property tax that's gained traction, really, among some senior homeowners facing property tax bills that are as high as their mortgage. Once was last summer, for example, in Mahoning County, Ohio, the tax delinquency rate hit 18% almost one in five people having trouble paying their property tax, and that county had more than 70 million in unpaid property taxes. In some neighborhoods in Youngstown, as many as one in three homeowners were behind. And in Cuyahoga County, which is basically Cleveland, values jumped 32% on average after reassessments that fueled a $60 million dollar increase in past due balances this whole do we want to abolish property taxes? Question? You're going to see why that's the wrong question and why it's incomplete, because that slogan that skips the only part that really matters here, and that is, what is the replacement plan, realistically, taxpayers should be asked if, in lieu of property tax, they'd rather pay higher sales taxes or higher income taxes, or for those with no state income tax, like Texas or Florida, pay one for the first time. I don't like those answers. I wish governments would spend more efficiently, but that's not the angle that we're looking at here. Property taxes are the true lifeblood of local governments. I mean, they fund everything from public safety to roads to schools, and just because property taxes disappear, well that doesn't mean that the need for firefighters goes away, that the need for police officers goes away, or the infrastructure for public school systems is going to be gone, or the roads go away. So if property taxes are cut, then another revenue generating device has to emerge to keep services funded and running. And it's a little funny. I've been talking about certain states here. But of course, property taxes are exacted and assessed at the county and local level. And look, I mean, you know how the world works, you know what the nature of society is. As soon as someone has their income stream, they quickly grow into that lifestyle and the new larger spending pattern. So taking away an existing income stream or even reducing it a little, I mean, that can almost trigger outrage and protests, for example, the outcry that we had last year about cutting snap payments. But it works this way. With anything. I mean, sheesh. For the majority of Americans, if you cut their income even 10% they would struggle to survive. They would struggle to put food in the fridge. So these repeal the property tax campaigns, they often avoid the reality of the replacement math. 
 
Keith Weinhold  30:19  
Now, some states have taken a swing at replacing property tax revenue, but few, if any, have succeeded. Now, Nebraska lawmakers, what they did is they floated higher cigarette taxes as a way to fund a goal of cutting their property taxes by 40% I mean, nice try. But according to an analysis by the Tax Foundation, that tax base was far too small. I mean to tell you more about what a terrible miss. This example is Nebraska cigarette taxes. They raised about $52 million in 2024 while property taxes raised $5.3 billion that is 100 times more, not even close, even if you could raise more money in the short run, excise revenues like this cigarette tax, they're pretty volatile, and they often shrink as the demand ebbs and flows. So it really makes them a poor backbone for expenses that grow over time, and they don't eliminate the cost so much as concentrated. So what they do is they sort of shift this broad civic obligation funding all this stuff, police, fire, school, from homeowners onto a much narrower group, in this case, people who smoke. That is not going to work for Nebraska, all right, well, what about a bigger deal, like replacing it with sales tax? Well, they run into a different problem. Local economies are not built the same. You might have a sales tax heavy tourist County, well, they can raise far more money than an agricultural county. And Florida is a clear illustration. They have lots of tourism and lots of agriculture replacing property taxes with sales tax. That would require eye popping sales tax rates too. According to the Tax Foundation Florida statewide, they would have to go from 7% to over 15% sales tax in Florida. But it gets even worse, because counties with a thin sales tax base would have to charge over 32% sales tax. My gosh, that is not going to work, all right. Well, how about another big one? Let's have income taxes replace property tax in a lot of states. I mean, the income tax that's large enough to raise pretty meaningful revenue. But the trade off is that income taxes come with their own sort of economic and political distortions, and once they're added, you know, they rarely stay confined to the tidy swap that voters were promised. I mean, look at New Jersey. They adopted an income tax in the 1970s to provide property tax relief, but over time, that swap proved hard to manage and hard to enforce, and now today, New Jersey has one of the highest effective property tax and state income tax rates combined in the nation. So the point is that all these property tax replacement tools are just inherently piecemeal. Each tax or fee has like this different payer base or some different vulnerability. I mean, if tourism dips, for example, revenues could drop really fast. And the same is true if a regulated industry contracts, or if consumption patterns shift. And you know that volatility, that's manageable for some narrow program, but that is dangerous as the foundation for essential services like public safety and street maintenance and police and schools and fire. Well, how about forgetting all that? Let's just have the government then totally get out of providing public safety and not have the government provide street maintenance and have the government get out of schools. I mean, we used to have more private companies provide you with some of those services. We didn't even have a federal income tax at all until 1913 other than a temporary one to fund the Civil War. But all of that is a bigger topic that we are not going to get into today. The point is, instead of asking the question, do you want to abolish property taxes? The better question is, which replacement are you choosing and who pays for it? Because local costs come on, they're just not likely to shrink anytime soon. After all, all of this schools, fire and police departments, public works, divisions, they're all subject to the same inflation and the same rising costs as the rest of the economy is so the property tax is unpopular. As it is, it does have one functional advantage. It is tied to this immovable base of properties. It's collected locally, and it's designed to fund on going services. That is not to say that some homeowners don't need relief. Some of them clearly do. But eliminating property taxes, that just does not eliminate the underlying cost of government. All it does is reallocate it, and that reallocation can get messy, that shifts a bigger burden onto a smaller share of taxpayers, whether it's smokers, like it was in Nebraska, or whether it's rural shoppers like the Florida sales tax example, or doubly on working homeowners, like it is in the New Jersey income tax example. I have studied this, and I have not seen novel approaches that really keep communities funded without creating some new distortion somewhere else. But unfortunately, one thing that I have seen is this repeal rhetoric, and it makes these political platitudes all that want to just conveniently skip the replacement plan, but it all sounds good and popular when someone stands up there and says that they want to eliminate property taxes. So really the honest question on a ballot. It's not, do you want to abolish property taxes? The honest question is, are you willing to pay higher sales taxes or higher income taxes or adopt one for the first time and accept the distortions that those choices to create to eliminate the property tax? I'm not going to get into the political side of all this, because that's not what we do here. The bottom line is, though, that you're probably going to hear more about the property tax going away. It is unlikely, of course, as income property investors here, property tax is largely built into the rent. It is passed along to your tenant, and a small reduction would help you out, probably not so much on your cash flow side, since most of these proposals are only for primary residences, but even a small property tax reduction on primary residences that would boost all property values, even rental property in the one to four unit space. But you shouldn't expect much here. If property taxes are eliminated, there is just no easy and viable replacement. That's your answer today, if you represent a company that serves real estate investors get rich. Education has over 3 million IAB certified downloads and 5.8 million total listener downloads. You can learn more about advertising on the show at getricheducation.com/ad, that's get rich education.com/ad
 
Speaker 2  37:51  
for the production team here at GRE, that's our sound engineer, bedroom jampo, who has edited every single GRE podcast episode since 2014 QC and show notes Brenda Almendariz, video lead, Binaya Gyawali, strategy Tallah Mugal, video editor, Saroza KC and producer me, we'll run it back next week for you. I'm your host. Keith Weinhold, Don't Quit Your Daydream.
 
Speaker 3  38:17  
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  38:45  
The preceding program was brought to you by your home for wealth building, getricheducation.com

Keith explores why the real goal of building wealth isn't luxury—it's protecting yourself from the emotional and practical pain of money stress. 
You'll hear how owning the right kinds of assets can change your lifestyle options over time, and why waiting on the sidelines can quietly erode your financial future.
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Finally, you'll get a sense of the kinds of opportunities and strategies listeners are using right now to move from just getting by to playing to win in their wealth building journey.
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Complete episode transcript:
 
Keith Weinhold  0:01  
Welcome to GRE I'm your host. Keith Weinhold, more important than building wealth is avoiding poverty. It's backed up by research. Learn about a force that constantly gives a boost to real estate values that you probably haven't considered before, and own assets or get left behind. I discuss a plan for doing it today on get rich education.
 
Speaker 1  0:29  
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 guests include 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  1:14  
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  1:30  
Welcome to GRE from Dar es Salaam Tanzania to Darlington, South Carolina, and across 188 nations worldwide. I'm Keith Weinhold, and this is get rich education the voice of real estate investing since 2014 and it's a new year, part of the reason why you need to build durable wealth for yourself is actually not to be wealthy. It's really to avoid a lack of wealth. It's in order to pad yourself against poverty. Now, shortly, I want to talk to you more aspirationally if you are or soon plan to make 500k per year or more. 
 
Keith Weinhold  2:15  
But first, there are a number of studies that show that beyond a certain level, more wealth barely increases your happiness level. In fact, if you ask many people, they say that doubling their income or doubling their net worth is what they really want, like, that's their goal. Like, in their mind, that's the benchmark in which they've made it. And you know what, when they double their income, though, then they want to double it again. They think that that is the next benchmark. So there can be this endless amount of wanting, because once you've doubled, you just want to keep doubling. But what's really more important is padding against money problems, because if having a little more doesn't change your happiness much, well, it's poverty that can really diminish a level of happiness and fulfillment in your life. So money problems don't just hurt your wallet. They actually hurt your emotions. And this isn't just some motivational poster idea, the statistics are clear. Multiple studies show that when money is scarce, when paying the regular bills feels like a monthly street fight, people report more sadness, more worry and even depression, not just sometimes, but constantly. The reality is that about 71% of Americans say that money is a major source of stress. My gosh, more than seven out of 10. So that's not a fringe category. That's the norm that say money is a major source of stress. Another study found that 42% of adults say money negatively affects their mental health. So close to half of the people walking around you right now feel emotionally beat up by their financial situation, and the gap gets even wider when you compare groups, when people experience serious financial hardship, nearly half, 49% show signs of depression among people without any financial hardship, only about 11% of that group show signs of depression. And Northwestern Mutual did an extensive study on all this. So it's not just a small difference, it's a completely different emotional reality, almost like two separate worlds. To put it plainly. For you, money will not guarantee happiness, but a lack of money can absolutely fuel sadness, and this matters. Because financial confidence isn't just about dollars. It's about dignity. It's about feeling like you're able to breathe, and it's about believing that your future can be bigger than your past. I mean, the research also shows the relationship flows in both directions. Money stress can make mental health worse, and poor mental health can make financial decision making harder. So it's sort of this loop, this cycle. And what breaks the cycle? It's not luck. It's not hoping the economy magically fixes all of its problems. It is going on offense, taking steps that build security instead of surrender, for most people, that turning point comes when they start owning assets, not just paying bills. It comes when money stops being a source of fear and it starts being a tool. Because though we focus on real estate investing here at GRE but ultimately it is a lifestyle improvement show. And before we're done today, I'm going to talk about what you can actionably do to go on offense. Now, what if you already have a higher income, or you expect to make a high income in the near term, if you're earning roughly $500,000 per year or more, and you value time efficiency in making sure that you don't live a rough quality of life. You are on the threshold of a tier that helps ensure that you can avoid some misery. Yes, there is a step change here that can help ensure you have a higher standard of living. Do you know what I might be talking about? Any idea 500k of income is where it begins now. It's only beginning here. At this point, to make sense, where you tilt into starting to fly private instead of flying commercial. Yeah, private flights. Now your situation is going to depend on more than just the income. It's whether or not you're single or you have kids and more, but it's at this income level where you can start to cover a $10,000 flight without biting into your essential living expenses. It's most justifiable when your time savings or your productivity gains translate into real value. I'm talking about things like business deals, meetings and schedules and the benefits of flying privately are pretty significant. Time efficiency is the real superpower here, drive up to the plane, wheels up in minutes. The flexibility is there. You can leave pretty much when you want. You can change your flight plans mid trip if you need to. You get access to smaller airports. That means you can land closer to your final destination and skip big city traffic congestion. You've got privacy and security, no crowds, no TSA stuff. You've got quality of experience, comfort, quiet cabins, custom catering, no competing for overhead bin space. Now even affordable private is still pretty expensive. It is substantially more than first class commercial seats, and I have had limited experience flying private, but at 500k of income, flying private can still feel like a stretch, even though it's doable for you, a more comfortable range is a million dollars or more of annual income, that's when private flights feel much easier to justify for business or lifestyle. Now, with $2 million of annual income or more, most heavy private flyers live here in this range, the $2 million plus income level, they can charter, they can fractionally own, or they can use memberships, all with less stress. When you earn this much, and if you're ultra high net worth, we're talking about $5 million worth of income plus or $20 million worth of net worth plus, well, then private flying is really commonplace. This is where you often have a personal jet, concierge services and flexibility on demand. So as the first episode of the year here, I want to give you some opportunity to dream and goal set. Yeah, you need to stretch out and give space to your aspirations sometimes, and this is a good time to do that, really, though, a more important reason for increasing your income and net worth is that it helps you avoid the discomfort of poverty. But yeah, come on, if nothing else, can you believe that before every commercial flight you have to hear that nonsense about how to inflate a raft if you're. Plane crashes in the water, or you could use your seat as a personal flotation device. Come on your seat. Can't even support your back for a three hour flight. If there's ever been a reason to invest Well, it's so that you never have to hear that stuff again before every flight chase 
 
Keith Weinhold  10:19  
last week here on the show, you'll learn more about how stable real estate prices are, why prices have never crashed in your entire life, and also why they can't double in one year. Real Estate is too slow moving 30 days between you making your offer and you closing the deal, that's actually considered pretty fast. In fact, if national home prices ever crash, I will legally change my first name to Fabrice, yes, Fabrice, I would also do that if they doubled in a year. It is almost impossible for either of those things to happen. You learned about how these things have not happened in your entire lifetime on last week's show, yes, even in 2008 in the last 85 years, nominal home prices have risen every single year, except seven of them now. Why is that? Why are the prices of US housing so resilient and just keep going up up up, almost inexorably? Well, it's actually more than just the main well documented reasons that you know about and that we've talked about here. It's about more than these attributes, like population growth, household formation, wage growth, inflation, eroding the currency and land scarcity in desirable areas beyond all of those, one reason that home values just keep going up, up up and are expected to rise again this year is something that We have not discussed yet, and that is government intervention? Yes, in the US and a lot of world places, housing is not a free market. We have a free ish market that sort of comes with training wheels and support animals. Think about how the government helps ensure that home prices stay propped up even through most recessions. We're talking about attributes like ever expanding loan access and mortgage interest deductibility. Then there's depreciation in write offs for investors like us and property tax structures that lag market value when loans have lower down payment requirements or a lowering of credit score requirements and ever expanding loan limits in terms of dollar amounts, well, that increases the demand for those that have the capacity to pay, and it nudges up prices even more incentives, like deducting your mortgage interest in tax depreciation when you don't even have a real expense, but yet you get to write it off anyway. It all heaps on the government driven demand for real estate Now none of these individual things, these government interventions, raise prices overnight, they increase demand structurally. There's evidence that the government is doing even more in recent years to prop up housing demand than they have in the past. This is increasingly a propensity to not let housing fail like it did in 2008 I mean, just look at covid During 2020, and 2021, what a glaring example of how government will prop up home values and not let them fall down if you lost your job during covid. Oh, we'll give you mortgage loan forbearance. That's where you could skip. Oh, just say nine monthly payments, and then you can just tack those nine payments onto the end of your 30 year loan and make those payments decades from now. There was a foreclosure moratorium in effect then too, so you've got forbearance and low rates and stimulus checks and a ban on foreclosures. Well, all of that helped borrowers make payments, and that supported home price growth. There was no fire sailing, really, that could have taken place then, and you will recall that during that time period, in fact, the year 2021 national home prices soared 19% so housing is not a completely free market. You really don't have to look very far to know that. I mean, Fannie Mae and Freddie Mac are both still government sponsored and still in conservatorship. And here's the thing, so far, I've only talked about how government has propped up the demand side. Side of the market. I've only talked about half of it. Don't forget the sometimes unintentional supply restriction the governments induce as well keeping housing supply in check. Well, that helps drive price appreciation. I'm talking about the zoning spaghetti that new homebuilders have to navigate through the permit purgatory, minimum lot sizes that can seem larger than some European countries, environmental reviews that last longer than the movie Avengers. Endgame was that a three hour, two minute movie, all of these roadblocks limit new housing supply that makes it harder to build. So governments provide an ever present tailwind to housing values by both boosting demand and by crimping supply. Government amplifies these forces, sometimes intentionally and sometimes unintentionally, but the result is the same propping up housing values. If all these years since coming out of the Great Recession have shown us anything, and the 2020 pandemic reinforced it, it is to either own assets or get left behind. You've got to own assets or you will be left behind, and that's whether you're trying to stay away from poverty, like I talked about at the top of the show, or whether you're aiming to fly private instead of commercial, something more aspirational, really. That's the lesson I've got more straight ahead here. There will only ever be one get rich education podcast episode 587 and you're listening to it. 
 
Keith Weinhold  16:43  
You know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year, I invest my liquidity with FFI freedom family investments in their flagship program. Why? Fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program. When you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom family investments.com/gre, or send a text. Now it's 1-937-795-8989, yep, text their freedom coach directly again. 1-937-795-8989,
 
Keith Weinhold  17:54  
the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President chailey Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com
 
Dana Dunford  18:27  
this is hemlane's co founder, Dana Dunford. Listen to get rich education with Keith Weinhold, and don't quit your Daydream. You Keith,
 
Keith Weinhold  18:45  
welcome back to get rich Education. I'm your host. Keith Weinhold, we're talking about new angles with respect to how the future belongs to asset owners. Every year, people say, This is my year, but only a few actually take the action to back that up and make it come true. One thing that I've learned is that people love saying, I want an opportunity, but what they really want is certainty. Unfortunately, certainty only shows up after opportunity is gone. History is full of people who walked past moments like this now owning more of an asset like real estate today, and instead they just look and say, Oh, it's probably nothing. Well, what about alternatives? What's your employer's plan for you? I mean, really, what's a typical employer's plan for employees spend 40 years here at this desk, and I guarantee that you'll become moderately comfortable with a nice 401K balance that you can start withdrawing from by the time you're age 65 at which time you'll start paying taxes on it too. So really, that's it. That's their plan for you. Yes, that's their plan for you. Though, as you know, I do not forecast mortgage rates. No one, not one analyst or rating agency, expects mortgage rates to fall substantially any time soon as we look at the real estate landscape, in fact, among 21 different major research groups, which include PNC Bank, Redfin, Moody's, wells, Fargo, the NAR totality, if you average what their forecasts are, one year from now, mortgage rates are expected to be at the same level that they are today, which is about 6.2% if you want to add more assets, prices are probably only going to be higher one year from now. The Fed is involved in QE like behavior again, which resumed last month, that gives the effect of more money printing, and it provides an environment for a continued price run up across not just real estate, but nearly every asset class. Current CPI inflation is 2.7% and long term inflation expectations are elevated. The Fed is cutting rates. The current Fed funds rate is about 3.6% and the President wants the Fed funds rate cut to 1% central banks are stockpiling gold, and the US dollar just had its worst year since 2017 so a lot is lining up to keep supporting housing values. Now, when we zoom out, starting back in 2012 us home prices have now risen 14 years in a row, and the average annual gain since that time is about 6% which is sustainable and close to historic norms. Year after year. Some people keep waiting for the right moment, and meanwhile, the right moment just keeps passing them by. And look, now here's a really interesting way for you to look at things from a long time investor like me, I have bought a wide variety of investment real estate over the years. I bought single family homes to both live in and single family homes to rent out vacant land, agricultural parcels, small apartment buildings and larger apartment buildings on every single one at the time when I purchased it, it was the most that anyone had ever paid for that property in that property's history, and if there were bids and I ended up getting the property, then I was the highest bidder as well. So on. Effectively, every single property purchase of my life, I paid more than anyone ever. And if someone had no understanding of the real estate market. They might think that that sounded bad, like I executed with a poor strategy or a lack of experience or direction, but that's just usually how it works in real estate, with the incessant postulation of almost unceasing appreciation and inflation, and years later, when it was time for me to sell the property, what were those conditions like? What happened then? You guessed it, I sold it for the most that it had ever sold for. So for that next buyer, that was the most then that anyone had ever paid for the property in history, yet again, and if it was a bidding situation, chances are I sold it to the highest bidder. So therefore, that has nothing to do with luck, that has nothing to do with timing, that is simply being an active participant in the real estate market and enjoying the leverage and all the other benefits all the while. So history shows that trying to time things based on market conditions or what you think market conditions are going to be, that does not work. What does work is owning more assets sooner. Every property that you purchase, expect to pay more for it than anyone ever has in that property's history. And then every property that you sell down the road, expect that you're going to sell it for more than what anyone has ever sold it for. Historically, that is normal. Now if your net worth is below $1 million or even below $5 million you really can't play the game not to lose. That's what keeps people stuck. You've got to play to win. The world already has your money. If you want access to it, you have simply got to go out. Out and get it. You play offense now, and you can play defense later, when your financial position is where you want it really and here's a huge insight, more money is lost trying to avoid a downturn than is lost actually being in the market when one finally happens, like I've discussed lately, real estate price downturns are uncommon. Sitting out and waiting is a wealth killer, because even if a downturn does happen, well, if you're already invested, you are positioned for the upturn. You're going to get the full measure of the upturn. That's where the real gains are, and this is where real estate is different. Leverage just keeps working for you. In the background, your 401, k does not do that. There's no leverage beyond maybe a two to one employer match, and then you get taxed when you finally touch the money. Some people like to gamble a little play a prediction market like poly market. Have something in Bitcoin, maybe even have exposure to a risky altcoin. I guess the NFL playoffs start this coming weekend. Some people want to bet on that and have their fun. Maybe even be invested in a high flying tech stock, or even the sp500. These vehicles rarely build wealth when you're actually young enough to enjoy it, because you're probably unleveraged there, you're exposed. You've only got your dollars working for you, not others, and you sure can do some of that day to day stuff. Go on polymarket and bet on when man will first land on Mars or something. Have your fun while the real wealth is built by the quiet, slow moving leverage of your larger real estate portfolio. In the background. Real estate, you can put 20 to 25% down on a 200k income property and control the whole thing. That's what investors are doing with our GRE marketplace properties right now, often in a low cost market like, say, Kansas City or Memphis, say that, for example, you're looking to add four doors this year, four rental units. Now that might take the form of one duplex and two new build Florida single family rentals. Now, with about 250k you can control $1 million of property adding assets this year. And here at GRE our nationwide provider network connects you with the real deals, and our providers often tell us about them before the public knows, for example, the properties where the builder still in this environment buys your rate down to perhaps four and a half percent. That is still happening. And why do the properties that our GRE investment coaches connect you with seem like such good deals at times? Well, there's a few reasons for that. Investor advantage markets just intrinsically have low prices. There's no agent that you have to compensate. It's a direct model that keeps the price down. These providers provide homes in bulk that helps keep the price down. And since we're dealing with investment properties, income producing properties, there are not any of these owner occupied emotions, so you don't get unreasonable sellers that hold out for a high price because there's some sentimental attachment there, or something like that. 
 
Keith Weinhold  28:38  
Let me give you three examples of real properties that our GRE investment coaching helps connect you with right now, and this is the place to be entry level homes, because entry level homes are few long term you are going to own a scarce asset that everybody wants. The first one is a brand new build single family rental in Cullman, Alabama. That's right between Birmingham and Huntsville, booming Huntsville. Now this property is currently vacant. However, it's in an A class neighborhood, so good appreciation potential, but less cash flow on this one, the rent is $2,100 the purchase price is 317k Yes, just 317k for this five bed, three bath, 2500 square foot rental, single family home. That's new build. One advantage Alabama has, and why we often have available Alabama properties is that really low property tax in that state you're going to benefit from a low fixed expense ratio over the long term. Alabama, property taxes are well under 1% per year as a percentage of the property value. In fact, at less than 410 Tax of 1% Alabama has the lowest property taxes in the entire continental United States. Only Hawaii has a lower one, where you're going to find a national average of 1% or a little more than 1% the second property is also brand new construction. It is a duplex in Goddard, Kansas, which is outside Wichita, each side of the duplex has three beds, two baths and 1300 68 square feet combined. Rents both sides are $3,500 and the purchase price is 447k and it is leased. Both sides are rented out. You can contact our free investment coaching and scoop up this or one like it today, and I'm looking at pictures of this really good looking new build duplex in the Wichita area. Looks like a two car garage on both sides, really attractive. And again, on these new builds, oftentimes the homebuilder is still buying down your mortgage rate for you, often under 5% the last one I'll mention, and I'm just giving you three samples to help give you an idea here. And if you're listening to this in a few years, you'll probably wish you could purchase these at prices this low. This last one is not new builds. Unfortunately, I can't quickly find the year of construction, but it looks older. It is a Kansas City single family rental, fully renovated. The cash flow numbers are super attractive. $2,100 rent on a purchase price of just $227,500 and free property management for two years is offered here on this renovated Kansas single family rental. Our investment coaching can answer questions about it for you. When something's renovated, you definitely want to see what the scope of work is. And there are also larger properties available. If you're looking to trade up some of your properties with accumulated equity into something else, we can help build an entire portfolio for you, or you might currently be only invested in one market, where we can help you determine what second market might make sense for you based on your time horizon and your own goals. Hey, maybe you've got a private plane in a decade kind of goal, or maybe we'll help you find out that adding more property does not make sense for you at this time in your situation, even though the opportunities are pretty good right now, because compared to two years ago, the inventory to select from is wider today, And the mortgage rates are lower now too GRE investment coaches are your free trusted advisors. It's like having a silent partner on your deal, someone who gives you insight but doesn't take any equity. There's no compensation for you to provide at all. It's about your portfolio, your goals and your direction. And our coaches also help you with services related to managing your real estate assets long term, like your tax and CPA questions, legal questions, though, that's pretty limited, because we're not attorneys here. For example, what happens if you have an appraisal surprise and the appraisal comes in lower than the amount that you've contracted to buy a property for, we help you with something like that, any inventory issues or inspection issues and property management guidance that you might need. In fact, if you've engaged with our free investment coaching in the past, even a few years ago, and we helped you find a property and say, now you have some sort of property management issue. Let us know. Keep in touch with your GRE investment coach. You tell someone like Naresh here, and he will step in. And when you set up a time to chat, which you can do at greinvestmentcoach.com There's really nothing special that you need to do to prepare if you can bring a 20% down payment. Now the ball is already rolling, and in today's environment with closing costs, that's usually about a 50k minimum. It helps if you're pre approved for a mortgage loan with Ridge lending group, or whomever your lender of choice is. What's interesting is that these deals are good. These are real estate pays five ways, properties that our coaches help connect you with. So sometimes we are buying these properties ourselves here at GRE. We have in the past, but there is no way we can buy them all, not even close. That means that an opportunity remains for you. Yes, we are real estate investors ourselves here at GRE, right now, there are better properties available than ones that we've bought ourselves recently, and there is more overall selection too. You can easily see the coach's calendar, select a time and then have a phone call or a zoom chat, whatever you like. If. From there. Our coaches usually give you their phone number, so then later, you can even text them. Our coach, Naresh, he responded to someone on Thanksgiving. That's the level of dedication here. So here's the next step. Book a time at GREinvestmentcoach.com you can do that now. That's where the calendar lives. There's no back and forth. Just pick a time right there that works. It's Free. Select a 30 minute time slot, and lately they've been available seven days a week. And you're going to walk away with clarity on your goals, your timeline and what's realistic for you, if you're tired of watching from the sidelines, tired of trying not to lose, tired of waiting for perfect conditions, and conditions are never perfect, well, this is your moment to play to win. It's pretty easy to remember to connect with a GRE investment coach. Visit greinvestmentcoach.com Until next week, I'm your host. Keith Weinhold, don't quit your Daydream.
 
Speaker 2  36:10  
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  36:38  
The preceding program was brought to you by your home for wealth building, get richeducation.com

Keith shares a mindset-shifting quote from John D. Rockefeller that challenges the idea of trading time for money. 
He revisits some of the year's most powerful real estate investing lessons, and breaks down the big forces shaping today's housing market—affordability, supply & demand, demographics, and interest rates. 
All of this sets the stage for his data-driven national home price outlook for next year—without the usual crash-and-doom hype.
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For predictable 10-12% quarterly returns, visit FreedomFamilyInvestments.com/GRE or text  1-937-795-8989 to speak with a freedom coach
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Complete episode transcript:
Keith Weinhold  0:00  
Welcome to GRE. I'm your host. Keith Weinhold, learn from a quote attributed to the world's first billionaire, it will change how you see wealth building. I'll explain why national home prices have never crashed. Then it's gre, 2026, home price appreciation forecast. You'll learn the future the exact percent that home prices will appreciate or depreciate next year. Today on get rich education
 
Speaker 1  0:29  
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 guests include 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  1:14  
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  1:30  
Welcome to GRE from Lake Huron, Michigan to Lake Tahoe, California and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education. You know something I love, quotes that shift your entire mindset, paradigm, and once your mind is shifted, actions follow. Actions develop into patterns. Those patterns become habits, and habits become the new, transformed you few quotes hit harder than the one from resource tycoon John D Rockefeller. He lived from 1839 to 1937 in fact, Rockefeller is widely regarded as the world's first billionaire. His quote, you might have heard it before. It is this, he who works all day has no time to make money. That sounds paradoxical, even provocative. It's sort of like it's inviting you to come in and want to learn more about it. And this is because most people's concept of income generating is to work 40 hours a week for a salary or an hourly wage. But what does that quote really mean? He who works all day has no time to make money, and be sure to capture the all day part of that quote that ties right back into the show that I did with you two weeks ago about the K shaped economy breakdown, where you learned about how capital compounds labor doesn't most people sell their time for dollars, but trading time for money makes you too busy to actually build Wealth. Working and building wealth. Those things are two separate distinct activities in how you're investing your time and energy. Now, most people start out with a wage or a salary job. I surely worked by pushing brooms and cubicle dwelling before investing in my first rental property. But if you're working all day in a job, physically or mentally well, then you're consumed by tasks that only pay you. Once you're occupied, you can often get exhausted and you're only concerned with short term output. You're focused on the next deadline, not the next decade, when all your hours are spent on labor, you have no bandwidth to do what you need to do, which is, create vision, acquire assets, build a portfolio, develop systems, learn tax strategy, evaluate investment deals, network with like minded investors, or refine your strategy with a GRE investment coach. Be cognizant that labor only pays today. Wealth building pays forever. Even if your work a day job, salary doubled, you would have to ask, how would that even build wealth? You could retire earlier, but you would have to keep working the hours, and let's remember that wealth equals freedom. You can't architect a wealth plan from the assembly line. Now, that's something that Rockefeller would have agreed with. Wealth requires less. Leverage and labor has none. So working all day means no leverage. You are the engine instead making money, that means using leverage, and instead of you being the engine, well, the engine is something else, like assets, systems, technology, other people's time, other people's money, and borrowing to inflation profit. Rockefeller believed and proved that leverage beats labor 100 to one. He's not discouraging work. In fact, it's just the wrong type of work, because he was one of the hardest working people alive. And really the bottom line here, with this quote, he who works all day has no time to make money, is that Rockefeller meant that if you spend your life doing tasks, you'll never rise high enough to own things that pay you for life. Earning a living is a different activity than building wealth, and once your mindset is shifted, actions follow, yep, actions develop into patterns, and those patterns become the new you. well as the last episode of the year on the show here, 52 weeks worth, I sure hope that I've helped you think, learn and grow your wealth, as have our guest contributors here early in the year, the father of Reaganomics was here, a man that frequently advised a president inside the White House. He told us how much he dislikes tariffs. Tariffs block free trade, and trade improves our lives. Major apartment investor, Ken McElroy, was here this year, and he predicted that the American home ownership rate will fall below 60% that would be major it's currently at 65 if the home ownership rate falls to 60% that would unleash millions of new renters into the market, and it has not been that low in decades, if ever you got a lot of mortgage insights with chailey Ridge, including learning how you can qualify for income property loans without a w2 job, without a pay stub or without tax returns by instead getting a DSCR loan. You'll recall this year that I discussed 50 year mortgages, and I did that before it even hit the news cycle, telling you that it could be coming and that it could be proposed. I explained why I like 50 year mortgages more than 30 year loans, but be aware it is not imminent that they're coming. Also this year, economist Richard Duncan and commentator Doug Casey discussed the Fed. Richard told us how the President is trying to totally restructure who serves on the Fed, trying to get low interest rate pushers in there. And then just last week, Doug and I discussed how fed decisions just keep hollowing out the middle class. A and E television star Todd drillette told us how to negotiate. I had four good discussions with our own investment coach, nuresh this year, more than usual, a pastor and I discussed a rare topic, what the Bible says about money. You learned how to use AI in your real estate investing and when not to. We had a few episodes about that. But above all the shows this year, they were about you, probably more than any other year that we've had here. I did more listener question episodes where I answered your questions as you wrote in, and I also had more listeners come right onto the show and tell me how this show has personally built their wealth. And of course, this year, I got to meet more of you in person when I served as a faculty member on the terrific real estate guys Investor Summit to see and I got to meet you personally for more than just a handshake. The event was set up so that chances are you had dinner with me as well. So rather than this show being a one way chat from me to you this year was more of a dialog between you and I and more two way communication. A lot of new topics are coming for next year, both me teaching and some great guests. If there's something on the show that you'd like to hear more of or less of, let us know. Write into us or use your voice to tell us either way you can do that. At get rich education.com/contact, let us know what you want to hear more of or less of. Do you like shorter term tactics like when and how to increase the rent? Or do you like mid range tactics like how to constantly do cash out refinances and get a tax free windfall from your properties every year. Or do you like more of the long term strategies like specifically how you profit from inflation? Let us know what you like again, at get rich education.com/contact, now, even if you're listening 10 years. Years from now, which I know you very well. May, I'm going to break down next year's home price appreciation forecast, but I'll do it in a way where you'll learn how to analyze a market for all time coming up. It's gre 2026, national home price appreciation forecast. Learn the future to the exact percent. First listen to this from Freedom family investments and Ridge lending group, because I'm a client of both myself and they can help you. I'm your host. Keith Weinhold
 
Keith Weinhold  10:29  
you know, most people think they're playing it safe with their liquid money, but they're actually losing savings accounts and bonds don't keep up when true inflation eats six or 7% of your wealth. Every single year I invest my liquidity with FFI freedom family investments in their flagship program. Why fixed 10 to 12% returns have been predictable and paid quarterly. There's real world security backed by needs based real estate like affordable housing, Senior Living and health care. Ask about the freedom flagship program. When you speak to a freedom coach there, and that's just one part of their family of products, they've got workshops, webinars and seminars designed to educate you before you invest. Start with as little as 25k and finally, get your money working as hard as you do. Get started at Freedom, family, investments.com/gre, or send a text now it's 1-937-795-8989, yep, text their freedom coach, directly. Again, 1-937-795-8989,
 
Speaker 2  11:40  
the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President Caeli Ridge personally. While it's on your mind, start at Ridge lending group.com that's Ridge lending group.com
 
Robert Kiyosaki  12:14  
this is our Rich Dad, Poor Dad. Author Robert Kiyosaki. Listen to get rich education with Keith Weinhold. And there is, I respect Kate. He's a very strong, smart, bright young man.
 
Keith Weinhold  12:35  
Welcome back to get rich education. It's episode 586 the last show of the year. I'm your host. Keith Weinhold, I am proud to present to you in this segment of the show gre 2026, national home price appreciation forecast, where I use my insight and experience so that you'll learn the exact percent that national home prices will either appreciate or depreciate next year. It's the fifth consecutive year that we're doing this. I nailed the first three spot on and then this year happened. I'll get to reviewing my track record, total accountability. First understand something, real estate values have never crashed in your entire lifetime, even if you're 90 years old, to grab eyeballs, slack jawed, tick tock. Call them crash talk. Economists keep making awful predictions about a housing price crash, and none of them have been worse than one that published last month in Newsweek, which outlines a as it's called, correction worse than 2008 and says national home prices will fall 50% five zero, starting as soon as next year. That's absurd, and I can't believe that a respectable publication would platform a view from an analyst like that, and I'm not going to call out that Doomsayer analyst's name. That's not my style. I'm sure you can find it that crash is about as likely as one social media post changing your political affiliation later today. Look, doomsayers don't care about you. They make dire predictions because they care about them. It elevates their clicks, their followers and their name recognition, and they never hang around to follow up on that prediction, but it harms you, because you miss out on the equity gains, and that's the real damage. In fact, this particular analyst also called for this year to have the second largest home price decline since World War Two. Well, national home prices have only fallen twice in that time period. In fact, going further back. Back to the 1930s Great Depression. They've only fallen twice. Yes, that means home prices have risen every single year since the 1930s except for two periods, a small decline of less than 1% around 1990 and then, of course, the severe downturn from the housing bubble and great recession from 2007 to 2011 or 2012 that's where prices dropped in total, 25 to 26% from peak to trough. Now why do I say that that period around 2008 was not a housing price crash. Well, because it wasn't. Instead, it was a slow bleed. The definition of financial crash is a sudden, sharp and widespread drop in prices. That's the definition. Well that can happen in some other asset classes like stocks or Bitcoin or perhaps even precious metals, but not real estate. It is neither sudden nor sharp. The worst year, 2008 saw home prices drop 12% in that one year and some of the other years bracketing it, home prices fell three to 4% in each of those years. So then during this time period of price attrition, during the global financial crisis, each month, real estate values fell just a few tenths of 1% maybe half of 1% or even one full percent, not a crash, a slow bleed. This means that it took about five years for values to fall, a total of near 25% I mean, that makes it really clear that it's not a crash. And again, this period was about 2007 to 2012 don't get me wrong, it was bad. I was a real estate investor both before and during 2008 but to call it a crash is hyperbolic, and that is because words mean things. I think a lot of media consumers get so conditioned to mass media sensationalism that they've forgotten what a crash even means. At some point, it begins to bend our very lexicon back around 2007 I remember I frequently checked a website called implode meter. Yeah, that's the name of it. It tracks, failing banks. I looked the other day and implodemeter.com is still in existence, even though it's not nearly as spicy as it used to be during the GFC, because lending has been pretty stable for a long time, and loans are well and carefully underwritten. So home prices are unusually stable over time, because, in a sense, housing is not a normal market. It is slow, regulated, credit driven, and it's emotionally sticky, even though rental property is less emotional. Well, the values of one to four unit property are tied to primary residence values, and that's where the emotion exists. So if you put all those together, you get prices that creep upward most years and rarely fall at all. Nationally. The real estate market moves too gradually to be crash susceptible. It is the place for real wealth building values also are not going to double annually if you want to scroll for dopamine hits from the couch. Well, you can do that with a prediction market like call she or in crypto with altcoins, while your real estate keeps leveraging dollars in a stable way in the background. That's how you can think about it. All right, so we've established since the Great Depression, home values have fallen twice and once substantially. Well, right now, home prices are up about 2% year over year. Most places have appreciated, especially the more affordable markets. Not only has home price growth been slow, though, rent growth has been slow as well. Single Family rents are up 1% per totality. Apartment rents are down one to 2% per Zumper. But back to our focus today, forecasting national home prices. Everything we're discussing is nominal price change, meaning not inflation adjusted, and it's single family homes up to fourplexes. Well, as we use context to build up to the big reveal today, where I'll tell you the exact percent that home prices will rise or fall next year. Could 2008 happen again any time soon? Let's isolate that out. It's important to look at history rather than. Having some uninformed hunch in both periods with price attrition around 1990 and 2008 these two falls have some attributes in common. So let's look at that. What led to these rare falls in home prices, irresponsible lending, forced selling, a vacancy issue and overbuilding. All four of those factors were in place during those two periods now leading up to 1990 the irresponsible lending was on the commercial side. That was the savings and loan crisis, but it did trickle into the residential market, and then in 2008 it was on the residential side. But of all four of those factors, none of them are in place today. Zero borrowers are strongly underwritten because they've got those full documentation loans, and virtually no one is forced to sell in a fire sale. In fact, homeowners still have these record equity positions of about 300k fewer than 3% of homeowners have a negative equity position, and there is no vacancy issue. Because, in fact, we've been under building. We'll look at that. So for next year, no substantial price of drawdown is coming. None's expected. We can isolate that out. Since I was investing directly in real estate through 2008 I know what happened is that when people walked away from properties, they did so because the economy got rough, their variable rate mortgages rose, they couldn't make their payments, or they just had no motivation to make their payments because they were underwater and had zero protective equity. In a lot of cases, it's almost impossible for that to happen today, homeowners can make their payments, and they're motivated to do so because they have that erstwhile equity to protect, like I said last week, through the Census Bureau data and realtor.com we know a couple things. Four in 10 homeowners have no mortgage at all. They own their property free and clear. Among the group with mortgages, 70% of borrowers still have a mortgage rate locked in at under 5% and blending those together for you means that then 82% of borrowers either have no mortgage or they've got a rate under 5% this translates to really affordable payments, along with The protective equity, even if inflation heats up again, it still cannot touch a borrower's mortgage payment amount because it is fixed. As we're leading up to the big reveal of next year's number, we're about to look at affordability, supply, demand and the effect of mortgage rates on prices. Of course, that word affordability, that has been the most central word to home buying for a couple years now, affordability will improve in three main ways. If either home prices fall, mortgage rates fall, or wages rise, it takes at least one of those three things, the good news is that this year, wages have been rising faster than both stated inflation and home prices. Wages have been rising close to 4% that looks to continue at least into the early part of next year. Well that improved affordability allows home prices to move up, and it gives room for rents to move up as well. Now when it comes to mortgage rates, if you're new to listening to me, it will be groundbreaking for you to realize that today, mortgage rates are low, and increases to mortgage rates usually lead to increases in home prices, not decreases. If you're new here, both of those facts might leave you saying what I thought it was the opposite. How can that be? I won't spend much time on this because longtime listeners already know these two things, but they do go into the forecast the long term 30 year fixed rate mortgage averages 7.7% per Freddie Mac thirst, that set goes back to 1971 and rates are lower than that now, and mortgage rates have risen 1% or more seven different times since 1994 and home prices increased all Seven times right alongside those rising mortgage rates. In fact, when rates more than doubled in 2022 what happened? Home prices soared to their highest appreciation year in a long time. It reinforced this so, yes, way higher rates equaled way. Higher prices. It's not that one directly causes the other. This is correlation versus causation. It's because rate increases confirm that the economy is doing well. I have discussed that extensively in previous episodes, so mortgage rates actually don't have that much to do with home prices, and that's why it is hardly going into the forecast for next year. I'll tell you what trying to forecast mortgage rates to then use that to predict home prices, that is a fantastic way to waste your time. Now, 1x factor that could make that different for next year is that this President, he imposes his will to make rates low no matter what. So even if the economy is good, which typically leads to higher rates, wholesale push to make rates low, and that's an artificial phenomenon. Wouldn't that make home prices boom if we had a strong economy and low rates? The fact that affordability is still historically low today, though, we appear to be off the bottom. Affordability is still historically low today, that has less to do with mortgage rates than most people think, since, again, rates are low when they're in the low sixes, like they currently are. Instead, affordability is soured, because over the long term, decades, wages haven't kept up with true inflation. That's what's really going on with affordability and what everybody misses, and because affordability is still strained, home prices cannot rise a lot, say 10 or 12% next year. That can't happen on a national basis next year, now, a bill is advancing through Congress now to make housing more affordable. It's got bipartisan support relaxing zoning requirements in such a bill that could help build more homes, but if the government tries to help by making access to loans easier, that is going to lead to even higher prices and really will not help with affordability beyond the short term. In fact, just this month, the Fed has resumed QE quantitative easing. And that effectively means that it is ramping up the number of dollars being printed. And these are just more dollars in existence coming in to chase real estate and every other assets values higher we look at the employment picture. Although unemployment has been ticking up lately, it is still low at under 5% what about housing supply versus demand? And future supply versus demand? Well, this is basic econ and it will totally affect future prices. Actually visited the home of the father of economics, Adam Smith in Scotland this year, the man that nearly invented the supply demand concept starting with supply. I think anyone in real estate knows that generally, over six months of housing supply is too much. Under six months is too little. Six months is sort of that balanced point. What does that really mean? Well, months of supply is how long it would take to sell all the homes currently for sale if no new listings came on the market. All right, that's all that means. Well, currently, that level is 4.2 months that is low, and that puts some upward pressure on prices as well. Another way to think about it is with the active listing count of single family homes and condos. All this means is the number of homes currently for sale and available to buy right now. That's what active listing count means when you see that statistic out there? Well, one and a half to 2 million is the normal level of units needed to adequately house our growing population, for single family homes and condos. Well, that figure bottomed out in 2022 and it's only hovered around one or 1.1 million for a few months now, we are under supplied, and it takes a long time to build our way out of it. Now, apartment buildings are a different story. They are oversupplied, but again, today, we're here focused on the future price direction of one to four unit properties. So that's supply, not as tight as it was, but still on the tight side, and then demand. Where is demand coming from? It comes from us. There's more of us. As our population keeps growing, there is a lot of housing demand coming. Not only is there pent up demand from those trying to afford a home as soon as they can, but more broadly. Demographically, I will point back to that period where there was a surge of us births from 1990 to 2010 there were over 4 million births every single one of those years, births peaked in 2007 if you add 40 years to that, because 40 years is now the average age of the first time homebuyer. That's still a mind blowing figure to me, 40 years the average age of the first time homebuyer. You add that to 2007 that peak birth rate year, and this demand won't even peak until about 2047
 
Speaker 2  30:36  
and this doesn't even include additions from immigration, demand, demand, demand, propping up prices for decades, but for next year, improved affordability, which is expected that boosts the demand for those that have the capacity to pay. Well, considering everything we've covered, I'm about to reveal the number for next year. But first, I mean, gosh, don't you wish everyone actually followed up on their past forecasts, like I'm about to I don't think I've ever seen a price crash predictor follow up, because they're always wrong. Well, what is the track record of get rich, education, home, price appreciation forecasts. It's the fifth straight year I'm doing this, and I always release the forecast in the final days of the year in anticipation of the coming year, just like you and I are doing together now. For 2022 I said that prices would rise nine to 10% the year ended, and they came in at 10% 2023 a lot of people said home prices would fall because they had just seen a terrific run up. I said a price fall would not happen, largely due to that jaw droppingly low supply that we had then. I said zero, there wouldn't be any change. They came in at exactly zero. There was no price change in 2023 for 2024 I forecast 4% they came in at exactly 4% this is all documented. You can go back and listen to those episodes. They're all near year end. So yes, three straight years, I nailed it to the exact percent. How about this year? Just before the year began? Do you remember what my forecast figure was from listening here about a year ago, it was 5% home price appreciation. The year is not over yet, and real estate statistics move pretty slowly. Figures lag, but we pretty much know where it's going to end up. And as we look at this same stat set that I consistently use, which is the NARS national median existing single family home price, it is 2.2% as of late in the year, and it's almost certainly going to end up at 2% appreciation. So I would call that a miss, probably not a terrible call, but far enough apart to call that a miss, 5% forecast versus 2% actual for this year. That's the track record. So before I reveal the number for next year, in the last four I've nailed three of them spot on, and why was appreciation less than I expected for this year? Well, a few reasons. One of them is that inflationary pressure from tariffs was postponed. That Tariff Schedule was changed more times than anyone could have possibly forecast, and affordability stayed stubbornly low too. And here we go for 2026 how much home price appreciation or depreciation do I expect? Well, I haven't said this in any of the previous forecasts, because it's the easiest thing to say, and I often avoid saying the easiest thing, but this is just what I see coming, and that is, I expect more of the same. It's the first time I've said more of the same, which is drumroll here, 2% home price appreciation for next year. No wild figure or hyperbolic material here, in order to attract attention that is my best target for the truth, I'm here to do my best to be accurate and help you make the most informed decision, 2% for next year. So a 500k property today should cost you about 10,000 more dollars next year, and as we know, with a figure like 2% which is less appreciation than the long run historic 5% or so, with this 2% appreciation on new purchases, you leverage that five to one with your 80% loan, and you get a 10% return on your down payment. And you add in the other four ways real estate pays to your 10% leverage appreciation and at historic norms, you can end up with a 29% total ROI. That's realistic. I outlined the math of that in an earlier episode this year when I discussed how real estate pays five ways in a slow market, there you have it, 2% forecast home price appreciation for next year. If you want the charts that support the forecast and more, there's a way for you to get a hold of that, and also the best real estate maps, stories and investment opportunities that you won't see in any headlines. They are all in my free weekly newsletter. The newsletter also gives you access to my free real estate pays five ways. Video, course, that is it. GRE letter.com Get it all at one easy place. Gre letter.com I look forward to talking to you in the new year. I'm Keith Weinhold, don't quit your daydrem
 
Speaker 3  36:06  
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  36:34  
The preceding program was brought to you by your home for wealth building, GetRichEducation.com

Keith discusses the Federal Trade Commission's (FTC) new regulations on rental pricing transparency, following a settlement with Greystar. 
Legendary author, Doug Casey, joins the conversation to argue that the Federal Reserve is waging a quiet war on the middle class. 
Casey explains that by creating trillions of new fiat dollars to push interest rates lower, the Fed fuels inflation, which erodes savings, distorts markets, and quietly reduces the average American's standard of living.
He warns of an impending economic downturn due to inflation and government debt.
Resources:
Find the FTC article here.
Visit internationalman.com to read Doug Casey's weekly articles and watch his "Doug Casey's Take" videos on YouTube.
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Complete episode transcript:
Keith Weinhold  0:01  
welcome to GRE. I'm your host. Keith Weinhold, the Fed keeps escalating their quiet war against the middle class. I'm talking about it with one of the most influential financial figures of the past century. Today, also what the recent FTC decision on rents means to real estate on get rich education.
 
Speaker 1  0:25  
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 rights 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 guests include 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  1:11  
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  1:27  
Welcome to GRE I'm your host. Keith Weinhold, let's get right into it, as there's a lot to cover here on our last big show before Christmas. Briefly before we get to the Fed's quiet war against the middle class the Federal Trade Commission just fired off a warning shot to landlords, and here's the translation about what this means to you, advertise your real all in rent amount with mandatory fees included in that amount or expect company and by company, the FTC means attorneys, paperwork and a long headache, and I'll tell you why I think this is a good thing. But really, first what this is all about is that it stems from the antecedent settlement with the massive global real estate company greystar, about transparent pricing. You might know that greystar is the massive global real estate company. They specialize in rental housing. In fact, greystar is the largest apartment operator in the entire US. They're in about 250 markets. The FTC cracked down on greystars add on fees, those fees added on to the rent amount that aren't clear and transparent right from the beginning. Now, in their case, it's things like Package Concierge charges, valet, trash service fees and some of these other line items that magically appear after a renter has already emotionally moved into a unit. Now for your rentals, they might be other things like Pest Control fees, gym fees, pet fees, utility add ons and notice that I use the word might, because clarification is still being sought here, but suffice to say, the least that you should know is really three things, advertise a rental price that excludes mandatory charges and that could be a violation of the law. So then state the total cost of renting the unit up front, no fine print gymnastics. Secondly, do a compliance check. You need to review your ads to confirm that they honestly convey your rental unit's price. That includes working with third party marketing vendors like Zillow or Facebook marketplace to see if they accurately state the all in price, because if they understate the price, it's still your problem. And thirdly, know that the FTC is reviewing harmful practices in the rental housing market. They'll take action against landlords that try to hide mandatory fees, so no hide and seek. And the FTC resource is in our show notes, and I sent it to you in last week's newsletter as well, if you want to read it, all my take here is that this type of transparency is a good thing. I mean, come on, we all know how annoying it is if, say, an airline states like, Hey, we've got prices to this destination. You can fly there for as low as $200 Yeah, but what if it's a 28 hour, four layover journey to fly 300 miles? Okay? What about buying an event ticket to go to a music concert and say you've already got 10 minutes wrapped up in this, but they don't show you the final price with all the fees until you've already invested that 10 minutes a. Then you learn about this in your shopping cart. So that type of thing is deceptive, all right. Well, what this FTC case does is it eliminates that effect in the rental housing market. So if you're a landlord, your competitors shouldn't be able to advertise base rents minus fees against your unit that appears higher priced than it's really not. And then for renters, I mean, the clarity helps expedite their search process. So this lets good assets compete on real value, and that is good business. Now, as far as the Fed controlling the economy, Jerome Powell announced interest rate cuts both last year and some more again this year, and though the effect isn't immediate, mortgage rates do come down with them. Mortgage rates have also fallen this year because the yield spread premium is lower. And you know what the prevailing sentiment is among a lot of armchair economists, it is squarely this, you ain't seen nothing for cuts yet. People say, Oh, watch, once Trump gets his guy in there in May, meaning that's when the newly appointed Fed chair is in power. Oh, you're really going to see some giant rate cuts then, yeah. I mean, a lot of people talk about this like it's certainly coming. They say then the Fed funds rate is going to go way down, meaning mortgage rates are then going to go way down, meaning that home prices are therefore going to soar next year. Well, all that could happen, but it is nowhere close to the certainty camp for everything to respond exactly that way. As you know, as a listener here, paradoxically, mortgage rates have little to do with home prices. Look at history over hunches. In fact, it might be more likely that those things don't happen and don't all break exactly that way, then the probability that they do, and that quickly gets into conjecture territory. As we know, lowering rates is bad too, because it signals that a weak economy needs the help. Typically. What could be different this next time. Well, whether we're in a good or a bad economy, Trump still wants lower rates, and he really imposes his will on the situation. 
 
Keith Weinhold  7:30  
We're about to bring in the author of a new book called The preparation. It's about preparing for the economic future. A lot of the book is mostly for young men and their parents, but we'll speak to both females and males. Today is the middle class both worse off and in a way, better off today than they were a generation or two ago. Talk to your grandparents. They didn't pay for a college education. They didn't get one. They rarely ate out at restaurants. They didn't have a smartphone, which is now practically mandatory to even exist. Today, people are paying for all of that, so no wonder that prospective first time homebuyers almost seem to be going extinct. Let's meet this week's guest.
 
Keith Weinhold  8:21  
Are we going to get a painful financial reset in the form of runaway inflation, a market crash or something else? We'll answer that before we're done today, the Fed is engaged in a quiet war against the middle class. They are going to create trillions more Fiat dollars to lower interest rates further and create inflation that's according to today's guest. He is the International man himself, a legendary and generationally popular author, and he does a lot more than that. He's back with us for a sobering look at this today. Hey, welcome in. Doug Casey,
 
Doug Casey  8:57  
Thanks, Keith. It's nice to be here with you, although care for me is in Buenos Aires, Argentina, where I spend a good part of the year.
 
Keith Weinhold  9:05  
Such a nice place, good year round weather. There. A piece you recently wrote is titled, The Fed's quiet war against the middle class. The Fed recently announced that they're stopping Qt, which basically means they're stopping the destruction of dollars and opening the floodgates to print dollars. You've been known to say that the level of interest rates is the most important single indicator of an economy, and the Fed has made several quarter point cuts over the last year plus, although the President is supposed to stay independent of Fed influence. Oh my gosh, he has been more vocal than any other president ever over how badly he wants low rates. What are your thoughts with regard to all this Doug?
 
Doug Casey  9:53  
Well, the Fed, which most people have been taught to believe, is part of the cosmic firmament. Right? It should be abolished. It serves no useful purpose. The Fed is an engine of inflation. It's what creates Federal Reserve notes. It's an engine of inflation and purely destructive, and it's used by the government to finance itself. So that's the first thing I've got to say. And they don't know what interest rates should be. Neither does Trump neither does anybody else. That's for the market to determine right and interest rates are set by the amount of savings that's done by the people and the amount of borrowing that's done by other people. The problem is with the Fed printing up lots and lots of money, which they are through the banking system, it makes it rather foolish to be a saver. In other words, if you produce more than you consume, which is something everybody should do, you want to save the difference. That's how you become wealthy. But if they destroy the currency with inflation, it's pointless to save, and if there's no savings, there's no capital to lend. This is why we're sliding off a slippery slope in the direction of a third world country where there's no savings, where the money's no good, it's a real problem. I think the average American, despite increases in technology that we've benefited from over many years, the average American has found his standard of living go down a lot, and it's basically because of the destruction of the currency that makes it impossible for him to save and get ahead of things, and results in wild and crazy moves in the stock markets and the real estate markets and the interest rate markets, where things become unpredictable. So everybody's being turned into a speculator, whether they like it or not, and frankly, we're headed towards a real reckoning in the US and in the world generally. So my approach at this point is to hold on to your hat, because we're in for rough running in the years
 
Keith Weinhold  12:14  
to come. To create low rates, the Fed basically needs to create trillions of new Fiat dollars. Tell us about how that works.
 
Doug Casey  12:25  
Well, it's a question of the supply and demand of money. You've got two things happening. Number one, when the Fed has quantitative easing, as they call it, which basically means inflating the dollar. Quantitative easing, or QE is just a nice word for inflating the dollar. They're increasing the supply of dollars out there. You increase the supply of dollars, the price of money goes down in the short run, but in the long run, the value of the dollar also goes down. And nobody's going to lend money if they can't get more in interest than it's being depreciated at. So you've got these two forces fighting against each other making for an unstable system. That's why I say that look before 1933 and when Roosevelt took gold out of the dollar, or in fact, before 1913 when the Federal Reserve was created, before that, there was no central bank. There was no Federal Reserve in the US. Money was just a medium of exchange and a store of value. It wasn't a political commodity, which it is now. Today, everybody is looking at the government to do something to make a decision to raise rates. Some people want them higher or lower them. Some people want them lower. But this is for the market to decide. It shouldn't be a political decision.
 
Keith Weinhold  13:53  
Low rates, which most think are coming, produce an inflationary environment, which then means that longer term, there need to be new higher rates in order to combat that.
 
Doug Casey  14:05  
Well, what we've got is a situation where conflicting advice and beliefs are causing rates, and indeed, most of the economy, to go up and down like an elevator with a lunatic at the controls. And actually, that's a very good analogy.
 
Keith Weinhold  14:22  
And low rates to your earlier point, Doug, they don't encourage anyone to save. And you know what? Government policy doesn't encourage anyone to save either in times of crisis, like, look what happened during covid. Oh my gosh, if these people can't go to work and generate an income, they don't have any savings, obviously. So then let's go ahead and intervene even more and send them stimulus checks, basically a bailout. So low rates discourage anyone from saving, but so does our policy, because every time there's a big catastrophe, oh, they just come in with a safety net anyway. That's Part. The reason why we have such a problem with capital formation of the average American today?
 
Doug Casey  15:04  
Well, it's actually worse than that, because over generations, a lot of debt has built up in the country. In other words, to maintain your standard of living, a lot of people have borrowed. They've done this either by taking the savings of past generations and borrowing it or mortgaging their personal futures. Either way, look, if you and I went out and borrowed a million dollars today, we could raise our standard of living artificially, sure, for the next year, but at the end of that year, we have to pay back the million dollars to lost interest, and that artificial rise in our standard of living will result in a very real decline in our standard of living. And a great deal of the borrowing that's been done to stimulate the economy through the banking system is for consumption, not for production. In other words, a lot of the borrowing is not to create new technologies and new infrastructure and new capital goods to create more wealth. A lot of it's just stuff that you wind up. People are borrowing things to fill their basements and their garages with more junk, consumer borrowing, borrowing for vacations, borrowing for to go to music, shows, all kinds of things. This has become a habit in the US, right? So let's look. It's going to end very badly. It's going to end and is ending as we speak, actually, in what I call the greater depression. It's going to be what we're looking at here, largely because of monetary manipulation, but also because taxes have gone up, up, up, up from zero level. Basically, in 1913 there were no income taxes in the US, the US government lived exclusively on minimal tariffs and excise duties. But today, there's right and they're very high, high levels of inflation, high levels of borrowing. So I think we're coming to the end of the road, as far as that's concerned. And it's bad news. Of course, most of the real wealth in the world, when you have a financial collapse, when you have a depression, most of the real wealth still exists. It just changes ownership, that's all so you want to position yourself so that you're not too adversely affected by what's coming
 
Keith Weinhold  17:31  
this inflation and more coming inflation pumping up the asset values of the asset owners and then ruining the lifestyles of those in the lower middle class and making them trend down lower since they spend a greater proportion of their income on everyday needs like clothing and food, which is a small proportion of people that are well off and the poor don't have the assets to benefit from that inflation. And you know, Doug, it wasn't until I read your recent article that I realized something that initially the fed only had one mandate, price stability, and then later they added that maximum employment was their second mandate. I didn't realize that. So really, it's been an expansion of what they're paying attention to, and a de facto expansion of their powers and influence and control.
 
Doug Casey  18:23  
Well, actually, they have a third mandate now, which is to control long term interest rates, to prop up the mortgage market, to prop up the real estate market. Because, as you know, the real estate market floats on a sea of debt, and if you can't get a mortgage, if you can't borrow, you can't buy real estate, or, for that matter, you can't sell it. So this makes it a very unstable situation, and most people are unaware of the fact that before the last depression, the longest mortgage you could get was five years, and that was with a 20% down payment. So things have changed a lot since then, and the more debt you use to finance anything, the more unstable things become. And the fact that things have become so unstable, and the average guy's standard of living has been sinking, and he has more credit card debt, more mortgage debt, more automobile debt. Used to be paid cash for a car, then was financed for two years and five and seven, and then it was leased where you never even owned it. I mean, this is, this is a trend that's coming to an end at this point, so it's going to be quite a comeuppance for people.
 
Keith Weinhold  19:42  
I think long term financing and the easing of getting financing makes the cost of anything higher. There's probably no greater example than that of what has happened with college tuition over the decades. But you know Doug, when we talk about this centrally planned economy. Rather than letting free market forces take over, I love it. I just absolutely love it when the answer to a problem is actually doing less than what you're currently doing, let go of the reins, rather than the Fed controlling interest rates. If there were a free market doing it, you would have bank loan rates that couldn't become too high, or else they wouldn't attract borrowers. So rates would naturally fall, and then you also couldn't have bank loan rates that are too low, because you've got to compensate the bank for bad borrower risk. So rates would come up, and they would find some natural level, kind of to the point that you made earlier. There would be a natural set point price discovery. That's how I think of a free market working for interest rates rather than announcements by a Fed chair.
 
Doug Casey  20:51  
Well, you're right. The problem is that the high government officials, the elite, if you would, think they know best and try to manipulate things, but they don't know best, quite frankly. And one other comment that you made, which I think is very appropriate, is college tuitions. For years, I've recommended that young people forget about college. It's a huge misallocation of your time and money, you wind up studying things well after you are through partying and drinking and chasing the opposite sex, and the things you learn about have no practical application in the world. And I'm not talking about learning history and the classics and mathematics and science, okay? Those are valuable things. Most of what people are taking in college today are hobby subjects, if you would, or things that are fun to learn in your spare time, but you shouldn't burden yourself with a lifetime of debt to do those things and get a worthless degree. Everybody has a degree and with grade inflation, they're a waste of time. That's listen. That's why I wrote this book with Matt Smith. Is my podcast. It's called the preparation. It's on Amazon, and it explains talking about your standard of living, which is what this is all about, really, why it's foolish to go to college today and exactly what especially a young man should do, instead of misallocating The four most valuable vibrant years of his life, sitting behind a desk listening to Marxist leaning professors corrupt you with all kinds of really bad ideas. So that's why we wrote the preparation. And it tells young men exactly what they should do, instead of burdening themselves under hundreds of 1000s of dollars of debt, which can't be discharged and serves no useful purpose, what they've learned in exchange for it. So, I mean, this is one of the one of the things that people should be doing, but not enough are.
 
Keith Weinhold  23:07  
AI changes things fast. I mean, for a four year college graduate today, what you learned as a freshman three or four years ago could quickly be outdated, and that effect just wasn't nearly as great as it was a few decades ago, but if you're listening in the audio only, Doug just held his book called The preparation, which he co authored with Matthew Smith. If this way of thinking resonates with you, here's some actionable things that you can actually do. You're listening to get rich education. Our guest is international man. Doug Casey, when we come back, I'm your host. Keith Weinhold
 
Keith Weinhold  23:41  
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Keith Weinhold  24:52  
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Robert Helms  25:23  
Hi everybody. t's Robert Allens of the real estate guys radio program. So glad you found Keith Weinhold and get rich education. Don't quit your Daydream.
 
Keith Weinhold  25:34  
Steve, welcome back to get rich Education. I'm your host, Keith Weinhold, we're talking with Doug Casey about how the Fed is quietly intervening and hollowing out the middle class when it comes to interest rates. Since you state about them being the most important indicator for an economy, I think a lot of people don't realize Doug, and maybe you run into this too, that interest rates are not high today. I mean, on the long run, the Fed funds rate averages 4.6% and today it's in the high threes. So they're not actually high today. But with all these crises where we had all this money printing in these low rates, they feel high, but they're not.
 
Doug Casey  26:22  
Well, you're quite correct. The question is, at what rate is the dollar losing value? The official US government figures say, Well, I don't know what they say. They vary, and the numbers are jumbled. And I think the general price level in the US, if we were realistic, is going up well over 5% probably closer to 10% you can make that case. Yeah, I think so, because I'm talking to you now from Argentina and for years, the figures were notoriously and outrageously concocted, made up to make people think things weren't as bad as they are. And here in Argentina, we've just had a revolution, actually a peaceful revolution, with replacing the Peronist government with a man named Javier Malay. It's probably the most unusual and most important election, believe it or not, in world history, because Malay was elected here in Argentina on the platform of basically getting rid of the government disbanding it. In other words, Elon Musk's Doge, but on steroids times 10, and things have gotten a lot better here because of that. And it's too bad that Doge has been eliminated in the US, because a lot of people don't understand that the government doesn't really produce anything at all. All it does is take taxes from you and pass that money around to other people with a lot skimmed off the top to do things that entrepreneurs would probably, or certainly, I'd say, do by themselves, and they make it worse by printing up money to give to people to do those things, and borrowing money, which acts as an albatross around everybody's neck. So I'd make the case that I'm not promoting either the Republicans or the Democrats, I'd kind of say a pox on both their houses. They're just two sides of the same coin. What I think we ought to have is a much smaller, much much smaller government. But are we going to get one? No, we're not getting it right now, because I think a lot of people aren't aware of the fact that the government is running 2 trillion, $3 trillion per year deficits, and those deficits are going up, not down. So where's that money coming from? Well, most of it's being created out of thin air. It's being inflated through the banking system. So the prognosis is not terribly good. Now, along the way, of course, people have hid in real estate, made a lot of money in real estate. Real estate prices have gone up faster than retail inflation has gone up. Yeah, but I'm asking myself whether it's not possible that the real estate market could come unglued at this point, because it floats on a sea of debt. What do you think, Keith, do you have any fears about that?
 
Keith Weinhold  29:27  
Homeowners are in great shape today. They have record equity positions. They're not going to walk away. Many of them are still locked into these really low mortgage rates, so they're in really good shape. This is something very different from the 2008 global financial crisis, when you had irresponsible borrowers that had negative equity positions and an oversupply of housing so they could move out and get something cheaper. Today, if you move out in the great situation that you're in with your low mortgage rate and a high equity position, you'd lose your high equity position and. Might have to go pay rent that's higher somewhere else, so I don't see a lot of real estate appreciation coming over the next year or two, but I don't see any impending crash, largely due to that condition, there's not distress in the market.
 
Doug Casey  30:17  
Are you worried about the fact that most local and state governments are on the ragged edge of insolvency and might be raising their real estate taxes and of course, insurance costs seem to be going up a lot faster than most other costs as well. Right now, utility costs are relatively low because oil and gas prices are low, but that could change too. I mean, is there anything that could take the real estate train off the rails?
 
Keith Weinhold  30:47  
Not that I see. In fact, real estate values have only fallen substantially one time since World War Two, and that was during the 2008 global financial crisis, when we had conditions that are largely the opposite today. That's back when we had an oversupply and an irresponsible borrower that had negative equity so they wanted to walk away, and that created the down drain. To your point, yes, I do see property taxes continuing to increase, but because values aren't increasing as much, they would have to increase the mill rate to get further increases, and then most of the big insurance increases, many feel they are done. They had to come up. Because with inflation, the replacement cost of a property, if you would have a loss, rose and increased that way. So because we're still supply challenge in a lot of places, I see prices holding up but not appreciating like 10% anytime soon, and that's due to an affordability constraint. I don't see how they could possibly do that. And when we talk about that average person Doug, that person trying to make their mortgage payments or their rent payments, I was talking on a recent episode about the K shaped economy, I think it's something that we often visualize in our mind. You see the upper branch of the K rising, the lower branch of the k falling, which is emblematic of this hollowing out of the middle class. But I recently saw it graphically represented, where you have the capital share of income going up for people over the decades. That used to be 5050, between capital share of income and labor share of income. Back 60 years ago, it was 5050, but now, with this K shaped divergence, one's capital share of income is about 57% today, and their labor share of income is only about 43% today. And it's kind of sad. I sort of hate to say it out loud, but it's like, hard work just does not pay off, like it used to. Much of this due to inflation pumping up asset values.
 
Doug Casey  32:52  
Well, I understand what you're saying, and I think you're correct, because there's an old saw. They say the rich get richer while the poor get poorer, and that's kind of what this K shaped economy is telling us. You've got the super rich in the top 1% or 1/10 of 1% that are becoming Ultra double wealthy, and the guy at the bottom, well, his social security taxes have risen from almost nothing to 15% of his wages, and it's a real problem. And it's said that the members of Gen Z can't afford to buy a house today as well. So what do you do about this? Well, my suggestion is, if possible, you don't want to get a job working for somebody else. If at all possible, you've got to work for yourself as an entrepreneur. That's the first thing. It's very hard to get wealthy working for somebody else. The best is to work for yourself, but in order to do that, you have to train yourself with lots of skills and lots of knowledge. And I'm not sure if people are doing that to the degree they ought to either. So I don't know how this is going to end. And of course, you mentioned earlier, artificial intelligence and robotics are tied up hand in glove with artificial intelligence. It's clear that within five years, we'll have robots that may not look entirely like people, but can do almost anything that a human being can do, and this is going to put a lot of pressure on people that don't have special skills, especially with artificial intelligence being programmed into these super competent robots. So the whole world is changing right before our very eyes. Right now,
 
Keith Weinhold  34:39  
when we talk about the middle class struggle. I probably follow the housing market more closely than you do. The NAR recently gave us the latest statistic. Two years ago, the average age of the first time homebuyer was aged 35 last year, it rose to 38 this year, it's now 40 just the average. Age of the first time homebuyer. So in high cost areas, that could very well be 45 I mean, people are getting gray hair before they make a down payment for this middle class that's trying to get into the ownership class.
 
Doug Casey  35:13  
And the further back you go, the younger the age right people were buying houses at So, I mean, it used to be people would try to buy a house right out of school. Frankly, that's out of the question today.
 
Keith Weinhold  35:27  
Yeah, I sure don't remember those days myself, but Yeah, it sure was substantially younger just a couple decades ago. Well, Doug, where are we going with all this? I mean, does a reset eventually happen with either runaway inflation? Do you think that happens first, or some sort of market crash, or is it something else? I mean, what cataclysmic act is likely to happen first?
 
Doug Casey  35:52  
Well, look, I hate to be too gloom and doomy, because everybody, first of all, generally speaking, trends in motion stay in motion, and everything has been maybe gradually descending standard of living wise, but the economy's held together, and we haven't had any catastrophic collapse. Well, almost in 2008 and a couple other times, but I think we're headed for one. So what should you do about it? I would say, consume less if you possibly can, and save what you can, if possible, take a second job while it's still possible, to go out and get a second job or found an entrepreneurial activity so that if you lose your job, you've got a backup system. But with the changes in technology and of course, what's happening in robotics and AI are just part of it. You're not going to be able to rely on what you relied on in the past, because the world is changing very, very radically as far as real estate is concerned. Look, I actually own a lot of real estate, but, you know, I've come to the conclusion that at this point I want to treat my house and other real estate, basically as a not so much as an investment to make money, but to store value. That's right, a store of value where I can put some capital aside. I don't want to keep a lot of money in dollars. That doesn't mean I want debt either. That's risky. For many, many years, I've advocated and bought gold and silver because they are money in its most basic form, and it's worked out really well. I started buying gold at about $40 it's at about 4000 today, and I've always treated it, almost always, as a savings vehicle, not as a speculative vehicle, although, if I want to speculate, I speculate in mining stocks, which are a leveraged way of playing gold and silver, the most volatile class of securities on the planet, actually, and I understand that a lot of people today have Robin Hood accounts and are speculating on the stock market, desperately trying to stay ahead of currency debasement and somehow build a nest egg for themselves by speculating in the market. Generally, that's not a good formula for success you're playing against, you know, extremely smart and well capitalized and knowledgeable big boys, and the fact that everybody's doing it is also, in itself, a tip off to the fact the stock market could be at the tippy top right now, I kind of think it is a bubble in the tech stocks. It's tough, Keith, there's not a lot of places to run and hide at this point.
 
Keith Weinhold  38:39  
Price to earnings ratios are really bloated in the s, p5, 100. I'd love to get your thought on this. Doug, if a person can get a 30 year mortgage rate for a rental property where the rent income meets or exceeds the expenses at a mortgage rate between six and 7% should they do that?
 
Doug Casey  38:57  
Look, if you can cover your mortgage a fixed interest rate mortgage 30 years. One thing that you can almost plan your life around is that dollar is going to lose value every year. So the actual value of your debt, your mortgage, is going to go down every year, right? And presumably the rent that you can charge on your house is going to go up every year. So yep, doing it the way I think you're doing it is an excellent plan for slow and steady long term success. Yeah, it makes sense. You're right.
 
Keith Weinhold  39:30  
We actually have some listener questions on the thing that you brought up, which I call inflation profiting when you borrow long term fixed interest rate debt and get to pay it back with more plentiful dollars down the road. Some people don't understand what you just explained. One way I brought it up with my listeners is we'll just look back 30 years ago, in 1995 the average home cost 130k an 80% loan would be 104k so here, 30 years later, that median home costs over 400 K, and you still just owe 104k on the loan. That's the benefit of what I call inflation, profiting on long term fixed interest rate debt. And of course, your tenant would have paid that down to zero as well. But that kind of makes the benefit be more apparent when we look back into the past 30 years. Well, Doug, as we're winding down here, you have any other thoughts about, just say, the average American out there, what they should do with the Fed behaving and controlling the economy like we do. We're talking about the average American, maybe someone with a mortgage, some rental properties, some savings, maybe a 401, K. How do these potential shifts in Fed policy translate into real life consequences and actions for them. Is there anything else?
 
Doug Casey  40:44  
Well, look, don't count on some outside force to kiss everything and make it better. You've got to look out for number one. And as I said before, the way you do that is you should cut back your expenditures every way you can at this point and when you cut back your expenditures, save that money. Now, what do you do with the money that you save? It's not as easy making that recommendation as it was a few years ago, when I was recommending gold, when it was much cheaper than it is. Now it's at $4,000 now look, save money, get an extra job, earn money, cut back your consumption, learn some new skills, because we don't know how things are going to reorient with the immense advances being made through AI and robotics. That's just generalized advice, but that's all you can do, is well and buy real assets. Nothing wrong with buying a house the way you're talking about if you can buy it and the mortgage is cracked with rent. Eventually, I think we're going to see interest rates go back up to the levels that they were in the early 1980s people don't remember this, but the US government was paying 1518, even 20% for its money, and mortgages were, well, 15, 16% it's going to happen again. So I think if you can lock in a mortgage anywhere in here, on a good piece of real estate that covers the mortgage, that's simple, it's doable. Everybody should try to do it. In addition to the other things I mentioned 
 
Keith Weinhold  42:20  
in 1981 the 30 year fixed rate mortgage peaked at over 18% to our earlier point about the fact that mortgage rates are actually historically low now so are fed funds rates. Well, Doug, tell us one last time about your new book and then any other resources. If our audience wants to engage with you
 
Doug Casey  42:40  
I do a blog will know who he is. We've had him here on the show twice, yeah, well, he writes there for us every week, and we've got great articles. That's number one. Number two, I do a podcast with Matt Smith every week called Doug Casey's take on youtube.com third, I urge everybody to get this book, which talks about, if you have a grandchild, a son, it talks about why you should not go to college and what you should do exactly instead of going to college. So that's another thing to do. And we have a newsletter that also covers mining stocks, which is where I'm concentrated in at the moment. They're very cheap, very volatile, and one of the few places in the market, and I hate to say this, that offer the potential of 10 to one or more returns in the near future. So I guess those are the areas where you can find out more about me.
 
Keith Weinhold  43:49  
Again, the new book from Doug is called the preparation. It shows a compass on the cover, and then internationalmen.com. Is actually where Doug wrote a piece called The Fed's quiet war against the middle class, which spawned this very conversation right here. Doug, it's been valuable as always. Thanks so much for coming back onto the show.
 
Doug Casey  44:08  
My pleasure. Keith, thank you.
 
Keith Weinhold  44:16  
Yeah, real estate is positioned for price stability. I was actually investing directly in real estate through the 2008 global financial crisis, and I know what happened is that people walked away from properties when the economy got rough and they couldn't make their payments. It is almost impossible for that to happen today. Homeowners can make their payments. Look through Census Bureau data in realtor.com we know a couple things here. Four in 10 homeowners have no mortgage at all. They own the property free and clear. And then among that group with mortgages, 70% of those borrowers still have a mortgage rate locked in at. Under 5% yes, still today I'll amalgamate those for you. This means that 82% of borrowers either have no mortgage or they have a rate under 5% so that is really affordable payments, along with the protective equity and inflation can't touch that principal and interest amount in addition to real estate, Doug Casey is a longtime gold and silver guy. Of course, both of those have sort to fantastic new all time highs this year. 
 
Keith Weinhold  45:34  
Merry Christmas and Happy Holidays from me and everyone here at GRE. Next week is another big one. You'll get GRE home price appreciation forecast for next year to the exact percent. I'm Keith Weinhold. Don't quit you daydream.
 
Speaker 3  45:53  
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  46:21  
The preceding program was brought to you by your home for wealth building, get richeducation.com

Keith discusses the K-shaped economy, where income from capital assets is rising while labor income is declining. 
In 1965, 50% of income came from labor and 50% from capital; by 1990, it was 54% and 46%, respectively, and today it's 57% and 43%. Keith emphasizes the importance of how capital compounds over labor and advises on building ownership in real estate and businesses. 
Finally, he answers your listener's questions about: agricultural real estate inflation, profiting on mortgage loans, transitioning from accumulation to preservation and a fast-growing state that no one talks about.
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Complete episode transcript:
Keith Weinhold  0:00  
Keith, welcome to GRE. I'm your host. Keith Weinhold, capital compounds, labor doesn't realizing this can change allocation decisions for the rest of your life. Then I discuss giving. Finally, I answer your listener questions about agricultural real estate inflation, profiting on mortgage loans when it's time for you to stop accumulating properties and a fast growing state that no one talks about today on get rich education
 
Speaker 1  0:33  
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 guests include 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  1:18  
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  1:34  
Welcome to GRE from Williamsburg, Virginia to Williamsport, Pennsylvania and across 188 nations worldwide. I'm Keith Weinhold, and you're listening to get rich education, and I'm somewhat near Williamsport, Pennsylvania today. For years, I've told you about the widening canyon between the haves and the have nots, and that's something that you might have only visualized in your head or merely considered a theory, but now you can see it. There's a chart that I recently shared with our newsletter subscribers that might just make your spine tingle and look, I don't like saying this, but hard work just does not pay off like it used to. This is emblematic of the K shaped economy. Just visualize the upper branch of the K, a line rising over time, and the lower branch of a letter k, that line falling over time, both plotted on the same chart. So what steadily happened over the last 60 years really is quite astonishing. And look, I don't want the world to be the way that I'm about to tell you it is, but that's just what's occurring. The share of one's income from capital assets is rising, while the share from labor keeps decreasing simultaneously. Now just think about your own personal economy. What share of your income is from your invested capital versus how much of your income is derived from your labor. When you're the youngest, it's all labor. When I got out of college and had my first job, all of my income was from labor. I certainly didn't have any rental property cash flow or stock dividends. But for Americans, here is how it's changed over time, and this K shaped divergence is alarming people in 1965 it was 5050 by 1990 54% of income was from capital and 46% labor. Today it's 57% capital and only 43 labor. Gosh, the divergence is real, and it's only getting wider, and I really had to dig for the sources on this K shaped economy chart. They are the BLS, the Tax Foundation and the International Labor Organization. Increasingly, asset owners are the haves. The upper part of this K shaped economy, that line is drifting up like a helium balloon that you forgot to tie to the chair. It just keeps going up and then the labor share of income, which is shrinking, that is also known as how much of the economic pie goes to people who actually work for a living. That is another way to think of it. So frankly, that's why I say hard work just does not pay off like it used to, because with each wave of inflation, assets, pump, leveraged assets, mega pump and wages lag behind, and we can't allocate our resources in the way that we want the. World to be, but how the world really is. In fact, the disparity is even greater than the chart that I just described to you, because it doesn't even include value accumulation, also known as appreciation. I was only talking about income there, and the reality is that working for a paycheck just pays off less and less and less. No amount of working overtime on a Saturday can make you wealthy, but it might make you miserable. Owning assets pays off more and more. In fact, the effect is even more exaggerated than what I even described, because, as we know, the tax treatment is lighter on your capital gains than it is your income derived through labor. As the economy keeps evolving, those who benefit the most, they do not sell their time for money. They're not trading their time for dollars. In fact, let me distill it down here are, yeah, it's just four words that could change the way you allocate your time and your effort for the rest of your life. Capital compounds, labor doesn't. yeah, there's a lot right there. If you want to keep up or get ahead, you need to be on the capital part of the K, the upper part. And what would that really look like for you in real life? What does that practically mean? It means building ownership into your financial life, owning real estate, owning businesses using prudent leverage, owning things that produce income, and even merely owning more things that appreciate. And here's the great news, though, real estate is still the most accessible, leverageable, tax favored capital friendly asset class ever created. That's whether you're just patching together like 43k for a down payment on your first turnkey single family rental, or making a tax deferred exchange into a 212 door apartment complex. Okay, this is how that can look in real life. The bottom line here is that as the economy gets more and more K shaped, with this divergence between Americans capital share of income increasing and labor share decreasing, that you want to stack real income generating assets. That is the big takeaway. 
 
Keith Weinhold  7:44  
Well, this is the time of year where a lot of people feel compelled to give donations. And as a GRE listener that's paid five ways, you've got more ability than others to give, I need to caution you about some things. I'm sorry that it is this way, because I do want to promote giving. It's kind, it's virtuous, and it's not a completely selfless act either, because when I give, it makes me feel good too. You're making a difference, and that feels great. Let's talk about the downsides of giving, though, because few people discuss that. We already know about the upsides when I give to an organization, say, 1500 bucks here, $1,000 over there, well, inevitably, you do get on that organization's contact list. And yeah, I suppose that it is easier to retain a customer or donor than it is to find a new one. Sometimes I just make what I expected to be a one time donation, but they will keep contacting you. Now, I was once on the other side of this. I served on a volunteer committee that organizes athletic events, and a friend of mine, John made a $1,000 donation to our organization one year, which was really kind, and he's just a day job working kind of guy when he didn't make the donation. The following year, someone made it a line item in our meeting minutes to say that John's donation was not renewed. Like that's the only thing they brought up. Oh gosh, that really struck me the wrong way, because here's a guy that traded his time for dollars at a job that I happen to know he doesn't like very much, and the committee statement was that the guy didn't renew his donation. Sheesh, now, when it comes to the tax treatment of, say, $1,000 that you make in a donation, there's a lot of misunderstanding about how that works, and this is the type of subject that you're thinking about now, because sometimes people want to get a tax break tallied up before year end, because some people think that after the year ends, well, the IRS pays you back the $1,000 you donated because it's tax deductible. No, that's how a tax credit. Works. But a tax deduction, which is all that you might be eligible for, means that if your annual income is 100k well then a 1k donation lowers your taxable income to 99k so if you're in the 24% tax bracket, then you'd get 240 bucks back. But you know, in many or even most cases, you're not going to get any tax break at all for making a donation, and this is because you did not exceed the standard deduction threshold, which is now almost 16k if you're single and almost 32k married, you get to deduct those amounts from your taxable income no matter what. So the standard deduction, in a way, it's nice, because you don't have to keep receipts and do all that tracking for everything. So I've had that experience myself where, huh, feeling a little generous throughout the year, giving $1,500 here, $1,000 there. Oh, and then realizing that it does nothing for me on taxes, you have to give more to exceed the standard deduction amount and start itemizing them. And mortgage interest does go into that amount. Okay, it does go into the amount to try to get your total above the standard deduction threshold. So go ahead and give freely, but in a lot of cases, keep in mind that it often does nothing for your taxes, because you're taking that standard deduction if you indeed are. There's been another tip flation trend that's annoying, and that is increasingly when I give a donation online, I'm asked to if I want to leave a tip on top of the donation. That is so weird, a tip is for good service. I'm serving you by being generous enough to give a donation. Sheesh, a tip request on top of a donation. But please do give when you do, one thing that you might want to specify is that it is a one time donation, if that is your intent, or they will constantly follow up with you. 
 
Keith Weinhold  12:06  
Coming up next, I'm going to answer your listener questions. A member of Team GRE, who you haven't heard before, is going to come in to ask me your listener questions, and one of them is going to be among the most important topics that our show has never addressed, and it's about time. I'm Keith Weinhold. You're listening to get rich education. 
 
Keith Weinhold  12:28  
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Keith Weinhold  13:40  
the same place where I get my own mortgage loans is where you can get yours. Ridge lending group and MLS, 42056, they provided our listeners with more loans than anyone because they specialize in income properties. They help you build a long term plan for growing your real estate empire with leverage. Start your prequel and even chat with President Caeli Ridge personally while it's on your mind, start at Ridge lending group.com that's Ridge lending group.com
 
Kristen Tate  14:14  
this is author Kristin Tate. Listen to get rich education with Keith Weinhold, and don't quit your Daydream.
 
Keith Weinhold  14:32  
Welcome back to get rich Education. I'm your host. Keith Weinhold, they say that it takes a village to get some things done and well, it takes a team to prop up this slack jawed operation one GRE team member, capably behind the scenes for more than a year and a half now, is Brenda Almendariz, welcome in. Brenda, Hi, Keith, thanks. Rather than me asking the listener questions this time you. You get to do it, but before we do that, just tell us a bit about your real estate investing. 
 
Brenda  15:07  
Sure. So I started maybe learning a little bit about investing and kind of looking into other options to grow my wealth. And I came across the GRE podcast and a few others. So I think about 2018 I did a little bit of just learning and kind of educating myself. And then 2019 I bought my first turnkey property. Turned out well. And then 2020 I bought my second one. And then in 2021 I decided, okay, this is working really well. Maybe I'll do a house hack. I'll do something a little different, and in a year, then maybe I'll do something else. But I've been in my 2021 home now for about almost five years. I'm looking for the next one, hopefully within the next year. But yeah, it's been great. Turnkey. Just met real estate investment company here at my local REIA, and then I learned that I could actually connect with other companies across other places through GRE but yeah, it's been great.
 
Keith Weinhold  16:02  
Brenda lives in Phoenix, just about as close to the center of Phoenix as you can possibly be. I sat down with Brenda for lunch the last time that I was in Phoenix, and like a lot of people, almost everybody that works here at GRE they started out as a listener before they ever worked here. And really, it's that same story with Brenda as well. So yeah, Brenda will want to ask us the first of what we have about four listener questions today
 
Brenda  16:31  
we do, so I'll go over the first one here. Question is, I would love for you to revisit some of the non traditional example, coffee plantation, CBD manufacturing, teak plantation, Belize resort properties and syndication projects you've discussed on the GRE podcast just to see how they turned out. I'm sure some of them failed to deliver the expected returns, and it's the failures that many of us learn the most from
 
Keith Weinhold  17:02  
Yeah, totally. Okay, so not so much a listener question here, but a comment to discuss more of these agricultural real estate investments or ones that are in syndications off of the investment type that you can't do yourself, is what we're talking about here, rather than direct ownership of residential rental property and an appeal to follow up down the road to see how they really turned out. And you know, Brenda, I'll address you because we don't have the listener name with this question. Most people in my position, if an investment has been discussed on the show, and then that investment didn't go as well as was hoped for, you know what? They never tell the audience about it. However, there's the Panama coffee farm investment. We first discussed that here way back in 2015 and we had a GRE field trip where I met a lot of you in person there in Panama. And as I often do when we discuss a particular investment here, I bought and still own Panama coffee farm parcels myself. That investment, it paid cash flow from the crop yields for a few years, and then it stopped. The good yields stopped due to covid disruption, and since then, there have also been erratic weather patterns like drought and precipitation of the wrong levels and at the wrong time of year, and there's been more of a prevalence of pests in disease like coffee leaf, rust and the operator. They have been communicative and forthcoming all the while they're still issuing the annual report that I read, and sometime after that, I think that a lot of investors were assured, because it sort of made national news, international news, that markets for both coffee and cacao have been suppressed, at least from the standpoint of there's not enough crop yield. I mean, that is a problem in a lot of places worldwide. Now I hope that turns around, and it very well may. In fact, we did something here that very few shows do. Back on episode 431, we had the Panama coffee farm CEO come back on the show to describe exactly what I just told you about there. And few shows are willing to do that. Some people just want you to think that every single investment that's discussed goes as well it was hoped for, or even better than expected. But that is not real world. You got to be authentic in real So, okay. Listener, comment, well, taken there. They appreciate that sort of follow up, and they would like more of that. All right, that's great. What's the next question? Brenda.
 
Brenda  19:40  
Sure. So the next one comes to us from our audience over on YouTube. So in response to our real estate pays five ways in a slow market, YouTube video matrices wrote, There is no inflation profiting. You would have to be paying off the loan with an income that goes up with housing inflation. That's plausible if you are a wage earner, but if your source of income is rental properties, then there isn't a wage increase that reduces the effective loan amount. You are double dipping in the inflation profiting column by counting appreciation which you earn as a real estate investor and inflation profiting, which you earn only if your wages go up at the rate of housing inflation, and you use those wages to pay off the loan, which you don't
 
Keith Weinhold  20:33  
Okay, again, somewhat of a statement here. I suppose there's a question implicit within that for matrices. I'm not sure how you say that name exactly. Wondering about inflation profiting. Are you counting it? Right? I don't know about that. The part about paying off the loan faster if you're a wage earner, I mean, that's plausible, but not if your income is from rental properties. I mean, see that's actually backwards, because your cash flow goes up faster than the rate of inflation due to your biggest payment, your principal and interest staying fixed, so your net rent income goes up even faster than the rate of inflation. So inflation profiting, therefore it's even better than how I've been presenting it and calculating it. Now with that understood matrices, here's one way for real estate investors to understand inflation profiting on your loan if you still have trouble getting with that. 30 years ago, in 1995 the US median home price was 130k with an 80% loan, your mortgage balance at origination would have been 104k and the monthly mortgage payment is 763 with the 8% market mortgage rate level that you would have gotten at that time. Now, even if we don't apply any principal pay down at all, your mortgage balance today is still just 104k and your payment is still just 736 bucks, and it is substantially easier to make that payment today, because your wages and salaries and rent incomes are multiples higher. When you originate a loan, the bank doesn't ask to be repaid in dollars or their equivalent. The loan documents only say dollars and dollars are worth less and less and less. So today, your median priced property is worth over 400k despite still having that tiny 104k loan balance. And of course, your tenant would have paid that down to zero, and we aren't even counting that part, I think, to really exaggerate the effect and help make the inflation profiting concept crystallize for you, matrices. If you go back 100 years, the median home cost was 11,600 bucks. An 80% loan would be just over 9k that you borrowed. Okay, so at a 7% interest rate, 30 year loan, the monthly payment would be 94 bucks, laughably small. That's less than the cost of a nice dinner out today. That's all you owe on a median priced property, which is over 400k today. So because it doesn't feel like you're tangibly walking away with anything when you sell a property, hopefully that helps make it real mitricas. And one last way to think about it is, let's just forget real estate for a moment. Would you loan your best friend 100k for 30 years interest free, even if we're somehow absolutely guaranteed that he would pay you back? Well, of course, he wouldn't do that, because inflation destroys the lender and benefits the borrower. So you would want to be the borrower in that case, because the borrower profits from inflation, profiting just like you're the borrower with income property. That's the position that you want to be in. But I'm glad we brought this up, because a lot of people have that question. That was a good one. Matrices, even though you seem to sort of be doubting if inflation profiting is a real thing with the way you approach the question, hey, I really appreciate it. Anyway, what's the next one? Brenda
 
Brenda  24:10  
yep. So the next one we have is Mark. He wrote into our general inbox, and he says, I have been listening to your podcasts from the beginning, and I believe I have not missed a single show. Wow. Yeah, it would be hard to argue with your strategy of using debt to rapidly increase your returns and expand your rental real estate portfolio. This method is great for the accumulation phase of one's life. However, I believe that you have never addressed the next chapter of everyone's life, phase two. I am, of course, talking about preserving your wealth, which is phase two. Yeah, I only ask this because that is what stage of life I am in. For background, he has 15 rentals, seven mortgages. Age 62. Currently all managed by a property manager, and he is married and an empty nester. Please note, no matter how much money is made from rentals, he said, his wife's view is that it is work, and so she does not want any more homes or work. This would be a great idea for an upcoming show. Please consider thanks, Mark.
 
Keith Weinhold  25:20  
Yeah. Great stuff, Mark. And before Brenda came on, we discussed which questions that she's going to choose. And I definitely wanted to have this one in there, because, I mean, this is one of the most important topics that's never been answered on the show, and it really needs to be answered today. The accumulation phase of Mark's life is done. He wants to know about how to approach the preservation stage. First of all, Mark, congratulations. You've listened to every GRE episode, 584, of them now, and you've clearly benefited from acting so good for you to be in this position. In fact, this show had its inception in 2014 and it doesn't even take these 1011, years to reach financial freedom, if you follow my plan. So you are there. All right, so, Mark, you've got 15 rentals, seven mortgages. You're age 62 they're currently managed by a property manager. You're married in an empty nester. I mean, you've made it, and you know that you've made it when you have enough income to support your desired lifestyle. That's what we're talking about here. Financially Free, beat step free and all of that, I'm going to speculate mark that if you had tried paying all cash for every property, you wouldn't have gotten very far. You wouldn't have made it to this point. You know why this question resonates so well with me, Mark, despite being quite a bit younger than you, I am at that stage as well. I definitely don't need to add more properties for the rest of my life. Now. I don't have kids yet either, so there's no clear air there. In fact, one reason that I hold on to my properties is to help educate our audience to be a real investor in the game and to be able to keep up with trends. You can just kind of tell when someone's not investing in real estate themselves. So if I talk it, I want to keep doing it now for you, Mark, it's not about rushing to pay off your seven mortgages, as you know from listening, that's usually not your best return on capital. If you've already made it, there is absolutely zero reason to add more properties, I would agree, especially if you know, in your wife's eyes, that creates a headache, and maybe yours as well, once you get to a certain point. So as far as this preservation stage, since you've moved away from the accumulation phase, the LLC is the favorite protection structure, not a C or an S Corp. And I have done shows on that with attorneys before. Since I'm not one of your 15 properties, if one or two are less profitable or for whatever reason, you just have difficulty getting those rented during vacancies, okay, you can sell those off if you don't want to do the 1031, exchange into more property, you can pay the tax. That's an option, but you will also have to pay depreciation recapture on those properties and mark. If there's one thing I wish I knew, it's that if you do have children or clear heirs, but the gold standard for passing along properties to heirs is a revocable living trust, and if you only remember one thing about that, a properly drafted living trust is the number one way to pass along rental properties smoothly. And why it's great is that it avoids probate. Probate is a court supervised process. It takes months or years of delay. So instead, with a revocable living trust, heirs get access to your properties almost immediately. Now you are age 62 hopefully this isn't happening anytime soon, but you do keep full control while you're alive, it's easy to update a revocable living trust, but the big one probably is that it prevents family disputes and it keeps everything private. That way there's no public probate record. And the bonus is, if you own properties in multiple states, a trust avoids multiple probates, that's huge. So those are some considerations. Mark as you've Congratulations again. Move from the accumulation phase to the preservation stage. It's a completely normal, natural process. You sure don't have to keep adding properties for ever and ever. Congrats. You made it. You did it. 
 
Brenda  29:37  
Great. We've got another one, Keith. This one is from Tim in Philomath, Oregon, and he says, I would be interested in the days ahead, if you would be able to help us understand why North Dakota is projected to grow so much.
 
Keith Weinhold  29:54  
Okay, thanks, Tim in follow math, Oregon, another word I'm not sure how to pronounce. Now, yeah, you might think it's unusual that I would want to answer this question. For a low population state of under 1 million people, like North Dakota, from today to 2050 there's forecast to be 9% population growth nationally, but in North Dakota, it is 34% that is quite a surge, and that is per visual capitalist via the University of Virginia, but North Dakota's projected growth, it looks surprisingly strong on paper, especially for a cold, rural, low population state. But really, there are at least four major forces behind the fast 2025 to 2050, Outlook, and when you break them down, the growth actually makes sense. So I want to talk about this, because it's really a template for what makes for a growing place and a good future real estate market, no matter where it is. But in North Dakota, you've got this continued energy sector, strength, oil, gas and next generation energy. Part of what's driving the growth is something that's definitely not a new story. It is still the Bach and shale. It's still one of the top US oil fields. You got advances in drilling. That means more production with fewer rigs. That makes a sector more resilient. You've got global demand for liquid fuels projected to remain high through 2050 I know people like to talk about renewables, and there probably is a future there. But it's not like we're going to go all renewable right away. North Dakota is aggressively expanding carbon capture. So energy equals jobs. Jobs equals population retention and in migration, there's a national labor shortage in North Dakota. It's got this skilled worker hole. The US is going to face a major labor shortage through 2050 that's because of trends that you really can't change, like an aging population and low birth rates. That makes these high wage, high demand energy and engineering jobs stickier. North Dakota consistently leads in labor force participation, job availability, good starting wages for skilled trades, and they always seem to have a low unemployment rate, lower than the national average. So in other words, people move where the jobs are, even if it's cold. They really have one of the best economic outlooks in the country. There's a report called Rich states, poor states. In their latest one, they ranked North Dakota fifth nationwide in economic outlook, and that's above Texas and Florida and Tennessee, and that's because North Dakota has low taxes. They're business friendly, they're light on regulation. Businesses like that, their budgets are stable, and they've got strong public finances. So states with those fundamentals, they tend to grow pretty well over long horizons, and North Dakota has this demographic momentum. It's a younger state than all the surrounding states. They have a younger median age, high birth rates, so they've got this faster natural replacement rates, and they have really strong university systems, both und and North Dakota State, and what that does is that retains those graduates for jobs like energy and engineering and agriculture. So North Dakota benefits from this high stay rate, like a lot of people move for jobs, and they end up staying there, and their population growth seems fast, but the overall population small, so a net gain of 150,000 people, that really seems huge in percentage terms. It's steady rather than explosive growth. We're talking about annual gain. So really, a takeaway for investors is that North Dakota's growth is not a fluke. It's from strong economic policy, a big, durable energy engine, high earning jobs. You got this favorable business climate, and really unexpectedly young demographics. I read that the counties that will grow fastest are Cass Williams and stark and, you know, Brenda. If we learn about a reputable North Dakota property provider, maybe we'll talk about them here on the show. So if you the listener or anyone else know about one, write into us at get rich education, comm slash contact, and we'll check them out. And also, more broadly, if you want your listener question answered in the future, that's where to write to us as well, again, at get rich education.com/contact, thank thanks for the North Dakota question, Tim and Brenda, it's nice to have you here to ask the questions in a different voice.
 
Brenda  34:29  
Thanks, Keith. Yeah, it's good to be on this side of the show instead of
 
Keith Weinhold  34:34  
a listener. After all these years, there's one episode I'm sure you'll be listening to, and it's this one that you're on today.
 
Keith Weinhold  34:48  
Yeah, much of our team here were GRE listeners before they ever worked here. We just made another hire two months ago. That woman worked for a payment processor. I said at the time, that sounds really boring. It definitely sounds more interesting to work at the GRE podcast. To review what you learned today, capital compounds labor doesn't though I promote being a giver, there are downsides to giving, but they're manageable. Inflation, profiting is the most often misunderstood of the five ways, and you will reach a tipping point where you've won in which you no longer have to add properties. That is transitioning from the accumulation phase to the preservation phase. That is one of the more important unaddressed things on the show until today, and finally, North Dakota's booming growth projections coming up soon on the show, I'll reveal GRE national home price appreciation forecast for next year, where you will learn the exact percent appreciation or decline expected in the future. Until then, check us out at get richeducation.com I'm your host. Keith Weinhold, don't quit your Daydream.
 
Speaker 3  36:00  
You 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  36:32  
The preceding program was brought to you by your home for wealth building, GetRichEducation.com